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NON-REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NOS. 9677-9678 OF 2011

GULAB CHAND BHORA & ORS. ... APPELLANT (S)

VERSUS

PUNJAB NATIONAL BANK & ANR. ... RESPONDENT (S)

J U D G M E N T

RANJAN GOGOI, J.

1. Delay  in  filing  the  application  for  substitution  is  

condoned.

2. Application for substitution is allowed.

3. Aggrieved by the reversal of the decree passed in their  

favour by the learned Trial Court and the dismissal of the  

cross  objection  filed,  the  plaintiffs  have  filed  the  present  

appeals.

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4. The appellants-plaintiffs are the owners of the premises  

which were let out to the respondent-bank.  The area of the  

tenanted premises measures 7565 square feet  located on  

the ground, first and second floor of a building situated in  

Ward No.13 of Kharagpur Town in the State of West Bengal.  

The aforesaid tenancy was on the basis of an unregistered  

agreement  between the parties  effective from 01.06.1978  

for a period of 6 years with the option of continuance of the  

tenancy for a further period of 5 years.  The monthly rent  

was agreed between the parties at  Rs.2200/-.   By mutual  

agreement, the tenancy continued on expiry of the initial 5  

years thereof until 30.06.1989.  Thereafter, the appellants-

plaintiffs  claimed  enhanced  rent  at  the  rate  of  Rs.3/-  per  

square  feet.   It  appears  that  the  Senior  Manager  of  the  

defendant  Bank  and  the  plaintiffs  arrived  at  a  mutual  

settlement for enhancement of the rent to Rs.2/- per square  

feet. This was on 12.11.1990.  However, the higher authority  

in the Bank disowned the authority of the Senior Manager to  

take  such  a  decision.   Thereafter,  the  regional  building  

committee of  the bank in its  meeting held on 05.07.1993  

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also recommended renewal of the lease agreement at the  

enhanced rent  of  Rs.2/-  per  square feet  for  a  period of  5  

years  with  effect  from  the  date  of  expiry  of  the  earlier  

agreement  i.e.  01.07.1989  and,  thereafter,  further  

enhancement of rent at the rate of 45% for an additional  

period of 5 years.    The aforesaid recommendation of the  

regional  building  committee  was  signed  by  the  Manager  

(GAD), Senior Manager as well as the Regional Manager of  

the defendant-bank.

5. It  appears  that  notwithstanding  the  above,  the  

defendant-bank  continued  to  occupy  the  premises  on  

payment of rent at the old rate.  This led the appellants to  

institute Money Suit  No.143 of  1994 claiming a decree of  

Rs.9,46,892.50/-  being  the  balance  of  the  arrears  of  rent  

calculated at the rate of Rs.2/- per square feet for the period  

from  01.07.1989  to  30.06.1994  and,  thereafter,  for  the  

period  from  01.07.1994  upto  the  end  of  the  month  of  

November, 1994 (suit was filed on 23.11.1994) at the rate of  

Rs.2.90/- per square feet.  Along with the aforesaid amount,  

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the appellants-plaintiffs had also prayed for grant of interest  

at the rate of 12% per annum.

6. The claim in the suit  was resisted by the defendant-

bank  contending  that  there  was  no  fresh  agreement  

between  the  parties  on  expiry  of  the  earlier  tenancy  on  

30.06.1989.  According to the defendants, the demand for  

enhanced  rate  raised  by  the  appellants-plaintiffs;  the  

decision dated 12.11.1990 and the recommendations of the  

regional building committee dated 05.07.1993 did not give  

rise  to  any  concluded  agreement  between  the  parties  in  

order to entitle the appellants-plaintiffs to the reliefs claimed  

in the suit.   

7. The learned Trial  Court,  after  noticing  the  respective  

stand of  the parties;  the evidence brought on record and  

after specifically taking note of the stand taken before it on  

behalf of the defendant-bank that the bank was ready to pay  

the rent as per the recommendations dated 05.07.1993 of  

the  regional  building  committee,  by  its  judgment  dated  

11.02.1999 thought it fit to decree the suit for enhanced rent  

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at  the  rate  of  Rs.2/-  per  square  feet  for  the  period  from  

01.07.1989 to 30.06.1994 and further at the rate of Rs.2.90/-  

from 01.07.1994 to 30.06.1999.  However, for the reasons  

assigned by the learned Trial Court, the claim of interest was  

declined.  It may be specifically noticed that the learned Trial  

Court while decreeing the suit as aforesaid took into account  

the  recommendation  of  the  regional  building  committee  

which document was duly exhibited in the suit (Exbt.20).

8. Aggrieved  by  the  decree  of  the  learned  Trial  Court  

dated 11.02.1999 the Bank filed an appeal before the High  

Court.   In the said appeal  the appellants filed their  cross-

objections as against the refusal of interest.  The High Court  

by its impugned judgment and decree dated 08.02.2008 and  

28.01.2008 respectively set aside the decree passed by the  

learned Trial Court leaving it open to the appellants-plaintiffs  

to move the Rent Controller for fixation of fair rent for the  

premises  in  question.   Consequently,  the  cross-objection  

filed by the appellants was dismissed.  In doing so, the High  

Court came to the conclusion that as there was no concluded  

contract between the parties with regard to enhanced rent  

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on  expiry  of  the  period  of  the  lease,  it  is  only  the  Rent  

Controller  under  the  Tenancy  Act  who  could  have  

determined the fair rent of the premises.  The High Court,  

therefore, left it open to the appellants-plaintiffs to move to  

the Rent Controller.  Aggrieved by the aforesaid reversal of  

the decree passed in their favour and the dismissal of the  

cross-objection, the present appeals have been filed.   

9. We have heard learned counsel for both the parties.

10.  From the several documents exhibited in the suit by  

the appellants-plaintiffs, it is clear that prior to the expiry of  

the  lease  the  appellants-plaintiffs  had  given  notice(s)  for  

continuance of the tenancy at the enhanced rate(s) claimed  

therein.  The rent, as claimed, was on the basis of the rent  

prevailing in the locality where the premises was located.  Of  

particular significance would be the minutes of the meeting  

held  between  the  Senior  Manager  of  the  bank  and  the  

appellants-plaintiffs  on  12.11.1990  wherein  the  rent  of  

premises was agreed at the rate of Rs.2/- per square feet  

with effect from 01.07.1989.  Though the Bank appears to  

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have denied the authority of the Senior Manager to sign the  

said  minutes,  as  already  noticed,  the  regional  building  

committee of the Bank in its  meeting held on 05.07.1993  

had, once again, favoured renewal of the tenancy at the rate  

of Rs.2/- per square feet for the initial period of 5 years and  

thereafter  at  an  enhanced  rate  of  45%  for  an  additional  

period of 5 years.  The aforesaid admitted documents proved  

in the course of trial of suit were relied upon by the learned  

Trial  Court  to  come  to  the  finding  that  the  appellants-

plaintiffs  were  entitled  to  enhanced  rent  in  terms  of  the  

recommendation of the regional  building committee dated  

05.07.1993.   Accordingly,  the  suit  was  decreed,  however,  

without any interest.  

11. The  demand  raised  by  the  appellants-plaintiffs  for  

enhanced  rent  and  acceptance  thereof  by  the  bank  

authorities as evident from the documents dated 12.11.1990  

and  05.07.1993,  in  our  considered  view,  reflects  a  clear  

understanding  between  the  parties  that  the  tenancy  

agreement would continue at an enhanced rent of Rs.2/- per  

square feet  for  the period from 01.07.1989 to 30.06.1994  

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and thereafter at further enhanced rent of 45% for the next  

5 years.  Abundant materials had been brought on record by  

the appellants-plaintiffs to show that the claim for enhanced  

rent for the premises and the understanding reached was in  

tune with or even less than the prevailing market rate of rent  

in respect of similar premises.  If the above is the basis on  

which the Trial Court had thought it fit to decree the suit of  

the appellants-plaintiffs we do not see how the High Court  

can be found to be justified in reversing the said decree and  

requiring  the  appellants-plaintiffs  to  move  the  Rent  

Controller  for  fixing  the  fair  rent  of  the  premises.   The  

exercise directed by the High Court was, therefore, wholly  

unnecessary  besides  being  inequitable  and  litigious.   It  

should have been best avoided. We, therefore, consider it  

proper to set aside the judgment dated 08.02.2008 and the  

decree  dated  28.01.2008  passed  by  the  High  Court  of  

Calcutta  and  restore  the  decree  dated  11.02.1999  of  the  

learned Trial  Court.  The appellants-plaintiffs  would now be  

entitled to the amount decreed by the learned Trial  Court  

and also rent at the enhanced rate of Rs.2.90/- with effect  

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from  01.07.1999  till  the  present  date  and  until  mutually  

altered.  In so far as the claim of interest is concerned, in the  

peculiar facts of the case, we decline the same.

12. Before parting, we would like to observe that during the  

course of hearing of the appeals it became known that the  

bank has no further need to retain the second floor of the  

tenanted premises in view of certain subsequent facts and  

events that have occurred during the pendency of present  

appeals.   In  the  above  situation  we  do  not  consider  it  

necessary to require the appellants-plaintiffs to approach the  

court, once again, to recover possession of the second floor  

of the tenanted premises which the bank admittedly is ready  

and  willing  to  surrender.   We,  therefore,  direct  the  

respondent-bank to act accordingly in so far as the second  

floor of the tenanted premises is concerned within a period  

of three months from the date of receipt of this order.

13. With  the  above  observations,  both  the  appeals  shall  

stand disposed of in the manner indicated above.  

…………..………………………J.

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                                                 [H.L. GOKHALE]               

…………..………………………J.                                                   [RANJAN GOGOI]             NEW DELHI NOVEMBER 11, 2013.

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