C.E. Construction Ltd. vs Ajay Relan and Others

Mukul Mudgal, J.—The Appellant has filed the present application for an ex parte ad interim order and the accompanying Appeal against the impugned judgment and order dated 4th January, 2008 passed by the learned Single Judge of this Hon''ble Court in Execution Petition No. 321/2003. By the impugned judgment, the learned Single Judge had dismissed the objections filed by the Appellant to the execution of the judgment and decree, which were to the effect that the judgment and decree dated 28th March, 2003 in CS(OS) No. 749/1994 had been obtained by playing fraud on the Hon''ble Court by the Respondent Nos. 1 to 4.

The case of the appellant is as follows:

(a) The respondent No. 1 filed a Suit bearing No. 749/1994 in this Court seeking specific performance of the Agreement to Sell dated 30th April, 1993 in respect of Property No. S-23, Panchsheel Park, New Delhi (hereinafter referred to as ''the suit property''). The Appellants were not made a party to these proceedings and the suit was contested by Respondent No. 2 by filing its written statement stating that the Agreement to Sell dated 30th April, 1993 was entered into by the respondent No. 2 as the power of attorney holder of K.D. Somaia who had expired thereafter. Subsequently, an order and decree dated 28th March, 2003 came to be passed by a learned Single Judge of this Hon''ble Court recording the settlement between the parties as follows:

Statement of the plaintiff as also of defendant No. 6, Managing Director of defendant No. 5 have been recorded. Application Ex.C-1 is signed by the plaintiff and its counsel. It is also supported by affidavit of the plaintiff. The application is also signed by defendants No. 6 & 7 which is duly supported by an affidavit of defendant No. 6. Mr. Arun Kathpalia on behalf of defendant No. 2 to 4 has stated that the said defendants claim no interest in the property and have no objection to the suit being decreed in terms of Exh. C-1. Defendant No. 1 is proceeded ex-parte vide order dated 1.5.1998. The suit is, accordingly, decreed in terms of Exhibit C-1. Exhibit C-1 shall form part of the decree. Parties will abide by terms as set out in Ex.C-1. The undertaking given by defendant No. 6 on behalf of defendant No. 5 to vacate and hand over possession of the entire first floor to the plaintiff within a month from today is accepted. The said defendant shall also deliver the remaining documents of title. Parties are left to bear their own costs. It is made clear that the mere factum of the decree being passed in terms of Ex.C-1 shall not tantamount to waiver or discharge from payment of any stamp duty or statutory levy.

(b) The decree dated 28th March, 2003 was put into execution by the respondent No. 1 by way of Ex.P. No. 321/2003 for being put into possession of the first floor and by execution of the documents of title in his favour. The appellant filed objections to the execution petition claiming to be in possession of the first floor of the suit property. By way of the impugned judgment dated 4th January, 2008, the objections of the appellant were dismissed and the appellant was directed to hand over the possession to the respondent No. 1 within 30 days from 4th January, 2008.

The learned Single Judge on 16th May, 2007 framed the following issues:

Whether the obstructionists acquired any right or interest in the suit property? If so, the date thereof? Onus on the obstructionists .

Whether the decree in question was obtained in collusion between the parties to the suit and suffers from any fraud in turn affecting the rights of obstructionists? Onus on the obstructionists.

Relief.

The issues were answered in negative against the appellant in the following terms:

I am thus unable to accept the plea of the learned Counsel for the obstructionist that the testimony of the decree holder has to be looked at with any greater degree of scrutiny than for the said purpose. It is not for the decree holder to answer queries in respect of transactions alleged between judgement debtors 5 to 7 and the obstructionist. The decree holder would have no knowledge of such transactions. It is the obstructionist who was claiming right to occupy the property and for that had to establish that some interest had been acquired in the suit property.

The obstructionist other than claiming possession of the original documents has not been able to substantiate any of its pleas and thus has miserably failed to discharge the onus. The transaction thus pleaded by the obstructionist is vague. No exact amount has been stated in the testimony of the witness. The amount is stated to be at the relevant stage varying between Rs. 2.00 to 3.00 crore. There is no document evidencing such dues owned from M/s. Durga Builders to the obstructionist....

The obstructionist has really not been able to establish the date from which they came into possession because there is no writing and evidence for the same. The Local Commissioner who went to visit the premises during the pendency of the suit found no such possession. No doubt the visit of the Local Commissioner is stated to be not for verifying possession but on his visit the status of possession has been put in the report. There were no boards or any other material to show such user by the obstructionist. It is the own case of the obstructionist that after the initial use, the room was used only as a storage space. The bills for electricity, water, telephone, etc. have also not been produced to establish any user or occupation of the same at the relevant period of time. The only defence of the obstructionist is that it is M/s. Durga Builders, which was paying the same pre-2000. This plea is difficult to accept.

The only conclusion which, thus, has to be arrived at is that though the obstructionist did come into possession, the same was only at some subsequent stage after the injunction order restraining the handing over of possession was passed. It is apparent that the obstructionist derived their claim from judgement debtors 5 to 7, they have to go with judgement debtors 5 to 7. The present proceeding is not for settlement of inter se claims between judgement debtors 5 to 7 and the obstructionist....

I am afraid the aforesaid plea cannot be accepted. It is not necessary that the parties must keep on fighting endlessly and go in trial. The suit was contested for a period of nine years which itself belies that there was any immediate development. The litigation fatigue had set in and the parties compromised. There is thus no collusion or fraud established by the obstructionist of which the onus had been put on it.

In view of the findings arrived at on the aforesaid issues being against the obstructionist, the obstructionist is held not entitled to the continued possession of the first floor of the property and must forthwith hand over possession to the decree holder within a period of thirty(30) days from the date of the judgment failing which warrants of possession would be liable to be issued. Since the decree holder is the owner of the property, the original documents of transaction filed by the obstructionist in Court are liable to be handed over to the decree holder on certified copies of the same being placed on record. The objections are accordingly dismissed with costs of Rs. 15,000.00 against the obstructionists.

The learned Senior counsel for the appellant Mr. Arun Jaitley submitted that the suit property bearing No. 23, Panchsheel Park, New Delhi had been purchased by the respondent No. 2 from the amounts due and outstanding to the Appellant in the course of their contractual relationship. All the original documents in relation to the property were deposited with the appellant soon after its purchase by the respondent No. 2 in 1993. By a letter dated 28th January, 1993, the parties had agreed on a sharing arrangement and in pursuance thereof, the appellant was put in possession of the first floor and the common areas of the suit property. The appellant has continued in peaceful, uninterrupted and unhindered possession of these areas since 1993 as demonstrated by the Report of the Local Commissioner. The respondent No. 2, to further secure the interest of the appellant had also obtained a Will and General Power of Attorney from late K.D. Somaia, the original recorded owner of the property, contemporaneously i.e. in 1993 in favour of the Managing Director of the appellant. The entirety of these facts clearly proves the interest of the appellant.

He further submitted that the respondent No. 1 acting in collusion with the respondents No. 2 to 4 filed a suit being CS(OS) No. 749/1994 seeking specific performance of the Agreement to Sell dated 30th April, 1993 entered into with the respondent No. 2 for the sale of the suit property. The appellant was not impleaded in these proceedings and a collusive decree dated 28.3.2003 was obtained by concealing material facts and evidence from this Hon''ble Court. This decree was a clear evidence of the conspiracy of the respondents No. 1 to 4 to avoid and side step the legal rights of the appellant interalia by playing a fraud on this Court.

The learned Counsel for the respondent No. 1, Mr. Rajiv Endlaw, submitted that the appellant is merely an obstructionist to a decree. Even though it was the submission of the respondent No. 1 that the objection of the appellant did not even merit any trial but the respondent No. 1 did not challenge the order putting the said objections to trial in view of the same having been made time bound. The appellant however, in spite of the opportunity of trial having been granted to it has failed to make out any case whatsoever. The appellant has neither pleaded nor proved any independent title to the first floor of the house and in fact, it is the case of the appellant that it came into possession of the said first floor through the judgment debtor-respondent No. 2. Having been into possession through the judgment debtor-respondent No. 2, the appellant derives his rights, if any, only through the judgment debtor-respondent No. 2, and cannot have rights higher than the respondent No. 2.

He further contended that the appellant is enjoying the use and occupation of the first floor of the house No. S-23, Panchsheel Park, New Delhi. The appellant is enjoying the said premises without paying anything and therefore the appellant for this reason only is interested in prolonging these proceedings. The objections of the appellant remained pending for more than three years due to the dilatory tactics adopted by the appellant. Even after the learned Single Judge by the order dated May 16, 2007 framed issues and directed time bound trial, the appellant did everything possible to delay the trial. The appellant sought adjournments before the Local Commissioner appointed to record evidence. The appellant moved as many as three applications for filing additional documents and examining additional witnesses. The appellant even preferred an appeal being No. EFA(OS) No. 26/2007. The learned Counsel for the respondent emphasized on the delaying tactics of the appellant and the intent of the appellant to prolong his free stay in the premises.

We are not inclined to go into the merits of the appeal at this stage of the proceedings and the same is subject to the final outcome of the appeal. We are, however, of the view that prima facie the learned Single Judge had rightly observed that the appellant is merely an obstructionist to the decree. The appellant had neither pleaded nor proved any independent title to the first floor of the suit property and in fact it is the case of the appellant itself that he came into possession of the said first floor of the suit property through the judgment debtor-respondent No. 2. Prima facie, the appellant would be liable to go out of the premises in execution of the decree against the judgment debtor respondent No. 2 and the rights, if any, of the appellant can only be claimed against the judgment debtor i.e. respondent No. 2 only.

Prima facie, it is also pertinent to note that the appellant had come into possession of the suit property either during the pendency of the suit or thereafter when interim orders were operating against the judgment debtors 5 to 7. The original injunction order was passed on 18th April, 1994 restraining taking over of possession by judgment debtors 6 and 7, but since the judgment debtors 5 to 7 claimed to be in possession, the said injunction order was modified on 20th May, 1998 to the extent that the said judgment debtors were not to part with possession or alienate the property without the leave of the court. On 25th May, 1994, the local Commissioner appointed by the court gave his report to the effect that respondent No. 2 was in possession of the entire house. The doctrine of lis pendens is applicable in the present case and in the subsequent circumstances, the claim of the appellant is subject to the ultimate decision of the pending EFA(OS) No. 5/2008.

In our view the respondent No. 2 after contesting the suit for specific performance of the Agreement to Sell for 9 years entered into a compromise to sell the suit property to respondent No. 1 on receipt of the balance consideration of Rs. 1.80 crores and to execute the Sale Deed and put respondent No. 1 into possession of the house. The respondent No. 1 paid the balance consideration of Rs. 1.80 crores in accordance with the terms of the compromise in March 2003 and the decree was passed on 28th March, 2003 in terms of Exhibit C-1 as mentioned herein above. Thus, it is to be noticed that the legal proceedings in this matter has been pending for the last 18 years and the respondent No. 1 has been deprived of the possession of the house for which he had paid Rs. 60 lacs as far back as on 30th April, 1993 and the balance of Rs. 1.80 crores in accordance with the terms of the compromise decree in March 2003. Pursuant to the order dated 5th February, 2008 the respondent No. 1 made the valuation of the letting value of the premises in question to be not less than Rs. 1,25,000/- with effect from 2003 and not less than Rs. 1,70,000/- with effect from 2005 and not less than Rs. 2,20,000/- with effect from 2006. Since the appellant is admittedly in physical possession since at least March 2003, we do not think that at this interim stage during the pendency of this appeal, it is necessary to disturb the appellant''s possession and accept the respondent''s suggestion that the property be handed over to them upon payment of the current rate of Rs. 2,20,000/- per month.

In view of the above discussion, this application for stay of the impugned order dated 4th January, 2008 passed by the learned Single Judge cannot be granted without ensuring that use and occupation charges pursuant to the decree dated 28th March, 2003 are secured and the pendency of this appeal does not prejudice the parties. However, we are not deciding the issue of the legality of the possession of the appellant at this stage as it is subject to the final outcome of the appeal on merits.

This Court passed the following order on 5th February, 2008:

Caveat Appl. No. 8/2008

Since the learned Counsel for the respondent has put in appearance, the caveat has been rendered infructuous and accordingly stands disposed of.

CM No. 1774/2008

Exemption allowed subject to all just exceptions.

CM stands disposed of accordingly.

EFA (OS) No. 5/2008 and 1773/2008

Issue notice.

Notice accepted by the learned Counsel appearing for the respondent.

Reply be filed within three weeks. Rejoinder thereto, if any, within two weeks thereafter. List on 20th March, 2008.

It is open to the parties to compute the market rent of the damages from 28th March, 2003 upto date and file a valuation of the market rent of the premises.

The execution of the Sale Deed may go on in the meanwhile, but the status quo with respect to the possession shall be maintained by the parties till the next date of hearing.

Pursuant to the order dated 5th February, 2008, the respondent No. 1 computed the market rent for the damages from 28th March, 2003 upto date and filed the valuation of the current market rent of the premises in occupation of the appellant with effect from 2003 and calculated the market rent of the disputed premises to be not less than Rs. 1,25,000/- per month and with effect from 2005 not less than Rs. 1,70,000/- per month and with effect from 2006 not less than Rs. 2,20,000/- per month. The appellant did not file any valuation in spite of the order of this Court. The learned Counsel for the respondent No. 1 had even agreed to give a deposit for the compensation to the appellant at the rate at which the valuation was computed by him, provided the possession of the property was given to him during the pendency of the appeal in this Court. We have, however, not accepted the plea of the respondent to the effect that the possession of the property may pass to the respondents.

In view of the long pendency of litigation and in pursuance of the order dated 5th February, 2008 of this Court wherein liberty was granted to the parties to compute the market rent of the damages from 28th March, 2003 upto date and file a valuation of the market rent of the premises, we deem it necessary to ourselves compute the occupation charges payable by the appellant for the continued possession of the first floor of the suit property during the pendency of the present appeal. The position of law is settled by the judgment of the Hon''ble Supreme Court in the case of Atma Ram Properties (P) Ltd. Vs. Federal Motors Pvt. Ltd., where while construing Order 41 Rule 5 of Code of Civil Procedure, 1908, it was held as under:

It is well settled that mere preferring of an appeal does not operate as stay on the decree or order appealed against nor on the proceedings in the court below. A prayer for the grant of stay of proceedings or on the execution of decree or order appealed against has to be specifically made to the appellate Court and the appellate Court has discretion to grant an order of stay or to refuse the same. The only guiding factor, indicated in the Rule 5 aforesaid, is the existence of sufficient cause in favour of the appellant on the availability of which the appellate Court would be inclined to pass an order of stay. Experience shows that the principal consideration which prevails with the appellate Court is that in spite of the appeal having been entertained for hearing by the appellate Court, the appellant may not be deprived of the fruits of his success in the event of the appeal being allowed. This consideration is pitted and weighed against the other paramount consideration: why should a party having succeeded from the Court below be deprived of the fruits of the decree or order in his hands merely because the defeated party has chosen to invoke the jurisdiction of a superior forum. Still the question which the Court dealing with a prayer for the grant of stay asks to itself is: Why the status quo prevailing on the date of the decree and/or the date of making of the application for stay be not allowed to continue by granting stay, and not the question why the stay should be granted.

Dispossession, during the pendency of an appeal of a party in possession, is generally considered to be ''substantial loss'' to the party applying for stay of execution within the meaning of Clause (a) of Sub-rule (3) of Rule 5 of Order 41 of the Code. Clause (c) of the same provision mandates security for the due performance of the decree or order as may ultimately be passed being furnished by the applicant for stay as a condition precedent to the grant of order of stay. However, this is not the only condition which the appellate Court can impose. The power to grant stay is discretionary and flows from the jurisdiction conferred on an appellate Court which is equitable in nature. To secure an order of stay merely by preferring an appeal is not the statutory right conferred on the appellant. So also, an appellate Court is not ordained to grant an order of stay merely because an appeal has been preferred and an application for an order of stay has been made. Therefore, an applicant for order of stay must do equity for seeking equity: Depending on the facts and circumstances of a given case an appellate Court, while passing an order of stay, may put the parties on such terms the enforcement whereof would satisfy the demand for justice of the party found successful at the end of the appeal. In South Eastern Coalfields Ltd. v. State of M.P. and Ors., this Court while dealing with interim orders granted in favour of any party to litigation for the purpose of extending protection to it, effective during the pendency of the proceedings, has held that such interim orders, passed at an interim stage, stand reversed in the event of the final decision going against the party successful in securing interim orders in its favour; and the successful party at the end would be justified in demanding compensation and being placed in the same situation in which it would have been if the interim order would not have been passed against it. The successful party can demand (a) the delivery to it of benefit earned by the opposite party under the interim order of the High Court, or (b) compensation for what it has lost, and to grant such relief is the inherent jurisdiction of the Court. In our opinion, while granting an order of stay under Order 41 Rule 5 of the CPC, the appellate court does have jurisdiction to put the party seeking stay order on such terms as would reasonably compensate the party successful at the end of the appeal in so far as those proceedings are concerned. Thus, for example, though a decree for payment of money is not ordinarily stayed by the appellate Court, yet, if it exercises its jurisdiction to grant stay in an exceptional case it may direct the appellant to make payment of the decretal amount with interest as a condition precedent to the grant of stay, though the decree under appeal does not make provision for payment of interest by the judgment-debtor to the decree-holder. Robust commonsense, common knowledge of human affairs and events gained by judicial experience and judicially noticeable facts, over and above the material available on record - all these provide useful inputs as relevant facts for exercise of discretion while passing an order and formulating the terms to put the parties on. After all, in the words of Chief Justice Chandrachud, speaking for the Constitution Bench in Olga Tellis and Ors. v. Bombay Municipal Corporation and Ors. - "commonsense which is a cluster of life''s experiences, is often more dependable than the rival facts presented by warring litigants....

To sum up, our conclusions are:

(1) while passing an order of stay under Rule 5 of Order 41 of the Code of Civil Procedure, 1908, the appellate Court does have jurisdiction to put the applicant on such reasonable terms as would in its opinion reasonably compensate the decree-holder for loss occasioned by delay in execution of decree by the grant of stay order, in the event of the appeal being dismissed and in so far as those proceedings are concerned. Such terms, needless to say, shall be reasonable;

(2) in case of premises governed by the provisions of the Delhi Rent Control Act, 1958, in view of the definition of tenant contained in Clause (I) of Section 2 of the Act, the tenancy does not stand terminated merely by its termination under the general law; it terminates with the passing of the decree for eviction. With effect from that date, the tenant is liable to pay mesne profits or compensation for use and occupation of the premises at the same rate at which the landlord would have been able to let out the premises and earn rent if the tenant would have vacated the premises. The landlord is not bound by the contractual rate of rent effective for the period preceding the date of the decree;

(3) the doctrine of merger does not have the effect of postponing the date of termination of tenancy merely because the decree of eviction stands merged in the decree passed by the superior forum at a latter date.

Order 41 Rule 5 of the Code of Civil Procedure, 1908, reads as follows:

Stay by Appellate Court - (1) An appeal shall not operate as a stay of proceedings under a decree or order appealed from except so far as the Appellate Court may order, nor shall execution of a decree be stayed by reason only of an sufficient cause order stay of execution of such decree.

[explanation - An order by the Appellate Court for the stay of execution of the decree shall be effective from the date of the communication of such order to the Court of first instance, but an affidavit sworn by the appellant, based on his personal knowledge, stating that an order for the stay of execution of the decree has been made by the Appellate Court shall, pending the receipt from the Appellate Court of the order for the stay of execution or any order to the contrary, be acted upon by the Court of first instance.]

In light of the aforementioned position of law and as directed by the Hon''ble Supreme Court in the case of Atma Ram Properties (supra) it is amply clear that the Appellate court is not bound to grant an order of stay merely because an appeal has been preferred and an application for an order of stay has been made. An applicant who comes to the court for seeking a stay order must do equity for seeking equity. While granting an order of stay under Order 41 Rule 5 of the CPC the appellate court does have the jurisdiction to put the parties seeking the stay order on such terms, as would in its opinion reasonably compensate the decree holder, for the loss occasioned by the delay in the execution of the decree by the grant of stay order. The learned Single Judge in his judgment dated 16th May 2007 had categorically held that the appellant is not entitled to the continued possession of first floor of the suit property and must hand over possession to the decree holder within a period of 30 days as the decree holder is the owner of the property. In the facts and circumstances of the present case, this Court before passing an order of stay deems it necessary to put the applicant on such reasonable terms as would, in our opinion, reasonably compensate the decree holder for the loss occasioned by delay in the execution of the decree by grant of the stay order, in the subsequent event of the appeal being dismissed, as the case of the decree holder respondent No. 1 herein stands on a higher pedestal than a successful litigant in a Suit for eviction as the Appellant is in fact an objector/obstructionist in the proceedings for execution of the decree.

While admitting the appeal we direct that the appellant is, therefore, liable to deposit in this Court from the date of the decree i.e. 28th March, 2003 a sum of Rs. 50,000/- per month from April 2003 to March 2004; @ Rs. 60,000/- per month from April 2004 till March 2005; @ Rs. 70,000/- per month from April 2005 till March 2006; @ Rs. 80,000/- per month from April 2006 till March 2007; @ Rs. 90,000/- per month from April 2007 per month till March 2008 and @ Rs. 1,00,000/- per month from April 2008 until further orders. Upon the deposit of the above amount due from the appellant as mesne profits/use and occupation charges with effect from March 28, 2003 to March 27, 2008, stay of the operation of the impugned judgment dated 4th January, 2008 shall be continued. In case there is a failure to make the above deposit within the stipulated period, the interim order shall stand vacated. The amount so deposited shall be invested in a short-term fixed deposit by the Registry of this Court which shall accrue for the benefit of the successful party in the appeal.