Central Board of Excise & Customs v. Ashoka Promotors P Ltd & Ors

ORDER %

19.11.2013 CM No.8671/2013(exemDtion^ Allowed, subject to just exceptions. Application stands disposed off. CM No.8670/2013(for condonation of delay in filing the appeal) CM No.8672/2013(for condonation of delay in re-filing the appeal) For the reasonsstatedin the applications,the ajjplicationsare allowed and delay is condoned. CMs stand disposed off. RFA(OS) 56/2013 & CM No.8669/2013(stay)

¶1The Central Board of Excise and Customs has preferredthe present appeal aggrieved by an order of learned Single Judge in CS(OS) No.1611/2000. By the said judgment dated 29^ November, 2012, the learned Single Judge decreed the plaintiffs claim for damages/mesne profits for the use and occupation of the suit premises being five storeyed building measuring 14,010 square feet bearing No.G-80, Preet Vihar, Delhi. The appellant submits that the damages and mesne profits were calculated erroneously by the learned Single Judge. It is pointed out by the learned Additional Solicitor General in this regard that the learned Single Judge premised his findings entirely upon the consideration of the three lease deeds presented to him i.e. Ex.PW-1/10, Ex.PW-1/11 and Ex.PW-1/12. Counsel submitted that each of these leases deeds were in respect of ground floor premises in commercial property and had been leased by banks in 2000-2001. In the present case, the calculation of damages and mesne profits had to be on the basis of the agreed facts whereby the arrangement had to have ended by efflux of time in the year 1996. It was submitted that apart from the excessiveamountof Rs.30/-per square feet ultimatelyfixed by the Court, the impugned order is also in error inasmuch as the learned Single Judge has directed 15% cumulativeyearly increase for the period with effectfrom 1.5.1998to 11.11.2004(latterbeingthe date when the suit premises were vacated). Counsel highlighted the fact that the yearly increase together with the 9% per annum simple interest on the arrears of mesne profits amountto a windfall earning which was not warrantedin the circumstances of the case.

¶2Counsel for the respondents/plaintiffsubmittedthat no interferenceis called for with the impugnedorder. It was emphasisedthat the three lease deedswere in respectof commercialpremisesthat existsin that vicinityand were in respectof the same periodwhenthe appellantwas in occupationof the premises. Counsel also submittedthat the learnedSingle Judge in the impugned order had even observed that for the period of 1999-2000the monthlyrent could be upto Rs.60/-per squarefeet for the groundfloor and as low as Rs.18.32 per square feet for the basement. Having considered these circumstances, the Court consciously awarded an average sum of Rs.30/- per square feet per month in respect to the entire 14,010 square feet area of the suit which can neither be considered unreasonable nor excessive. Counsel emphasised upon the fact that the direction to pay 15% cumulative increase every twelve months for six and a half years period between

1.5.1998 to 11.11.2004 was supported by authority i.e. M.C. Agrawal

(HUF) vs. Sahara India Pvt. Ltd. 183 (2011) DLT105.

¶3The learned Single Judge after setting out the details of the defendants'lease deeds, discussedthe effectof the three lease deeds which formedthe basisof the awardof mesneprofits. They havebeenreproduced inatabularform inpara5ofthe impugnedorderand are extractedbelow;- "Detaiis of plaintiffs lease deed s. No. Lease Deed Date of Lease Deed Property demised Rent agreed upon (p.ni.) Area under Lease Rate of rent

¶1Ex.PWl/10

17.8.2001 G-83, Preet Vihar, Delhi (Ground Floor) Rs. 1,60,000/- 2700 sq.ft.

59.20 sq.ft.

¶2Ex.PWl/11

22.10.2001 C-61, Preet Vihar, Delhi (Ground Floor) Rs. 1,20,000/- 2588 sq.ft.

46.36 sq.ft.

¶3Ex.PWl/12

23.02.2000 F-21, Preet Vihar, Delhi (Ground Floor) Rs.98,800/- 2600 sq.ft. 38/ sq.ft.

¶4Thereafterthe impugned order proceeded to fix the damages and mesneprofitsatRs.30/-per monthon the basisofthe followingreasoning:- "8. There is always involved some amount of reasonableguessworksintheexerciseof computationof mesne profitsinasmuchas rent of exactlysimilarpremisescannotbe calculatedto the last squarefeet and to the last rupee. In the facts of the presentcasethere is no leasedeedof the year 1996, from when I have to start calculation of mesne profits. Consideringall the above documentswhichhave been filed on behalf of both the parties, and consideringthe fact that the plaintiffitselfhas prayedfor rent from 1996 to 1999 at Rs.32/- per sq.ft.permonthand from 1.11.1999to 30.4.2000atRs.50/- per sq.ft. per month, and since the rate of rents provedby the different lease deeds (of course for a different period) varies from Rs.18.32/- per sq.ft.(only for basement) to Rs.60/- per sq.ft (for the ground floor), I am of the opinion that the rate of rent for the purpose of grant of mesne profits should be fixed at Rs.30/- per sq.ft. per month for the leased premises of 14,010 sq.ft. with effect from 1.11.1996. I am fixing this rate by factoring in various aspects includingthe aspects of the lease deeds filed and provedon record being of differentyears than 1996, the lease deeds being only of the ground floor or basement, since not being of the same neighbourhood and so on. I also note that the suit premises comprise of basement, ground floor, mezzanine, first floor, second floor and third floor.

¶9Since the premises were let out for non-residential purposes of an office, in terms of my judgment in the case of M.C. Agrawal (HUF) vs. Sahara India Pvt. Ltd. 183 (2011) DLT1051 grant 15% cumulativeyearlyincreaseevery twelve months from 1.5.1998 till the premises were vacated on

11.11.2004."

¶5This Courthas consideredthe submissionsof the parties. The claim of the appellant for the basic fixation of Rs.30/- as the rate for calculation of damages/mesneprofits being excessive,in this case, is without force and insubstantial. As is evidentfrom the reasoningofthe learnedSingleJudge the rates of rents discerniblefrom an overallreadingofthe lease deeds and the material varied, floor-wise as well as period-wise from a low of Rs.18.32/-per squarefeet for the basement,to a high ofRs.60/-per square feet in respectofgroundfloor. The learnedSingleJudgethereforeaveraged out the variousratesand directedthat Rs.30/-bethe basis for calculationof mense profits/damages with effect from 1.11.1996. The Court was conscious that the exercise carried out by it was based on some empirical data and also involved a reasonable and fair degree of guess work. This Court is of the opinion that no fault can be found with such an approach. So far as the grant of 15% cumulative increase for six and a half years period between 1.5.1998 to 11.11.2004is concerned, the Court is of the opinionthat there cannotbe a uniformjudicial approachin suchmatters,but judicial notice can be taken of the fact that rents tend to increase which depend on the situation of the premises and the demand felt for such premises.

¶6Under these circumstances to adopt a uniform or consistent approach and direct a yearly cumulative increase might not be justified. This Court is not ruling out the possibility of such a grant in some cases provided there is a material to support it. However, no such material is available on the record in the facts of this case. Consequently, the Court is of the opinion that an award of 15% cumulative increase every twelve months is not justified. Instead, the Court modifies the said direction to increase the amounts cumulatively by 15% every three years.

¶7In view of the above discussion, the appeal is allowed in part to the I SI extentof the modificationin respectof the 15% cumulativeannualincrease. In the circumstances of the case, there shall be no orders as to costs. The appealandthe applicationfor stayare disposedoffaccordingly. NOVEMBER 19,2013 ak S. RAVINDRA BHAT, J NAJMIWAZIRI,J

$-7 * IN THE HIGH COURT OF DELHI AT NEW DELHI + RFA(OS) 56/2013 CENTRAL BOARD OF EXCISE & CUSTOMS Appellant Through: Mr. Rajeeve Mehra, ASG with Mr. Kamal Nijhawan, Sr. Adv. & Mr. Sumit Gaur, Adv. versus ASHOKA PROMOTORS P LTD & ORS Respondents Through: Mr. S.N.Gupta with Mr. S.S.Sukla, Advs. CORAM: HON'BLE MR. JUSTICE S. RAVINDRA BHAT HON'BLE MR. JUSTICE NAJMIWAZIRI