The Supreme Court has ruled that tenants cannot avoid eviction for non-payment of fixed rent merely because an appeal is pending, holding that rent must be paid unless a specific stay order is obtained.
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NEW DELHI: The Supreme Court has ruled that a tenant cannot escape eviction for wilful default merely because proceedings challenging the fixation of fair rent are pending. Unless the tenant secures a stay of the fair rent order, the obligation to pay rent at the revised rate continues, the Court held.
A Bench of Justice Dipankar Datta and Justice Manmohan dismissed an appeal filed by the heirs of a lessee from Coimbatore, affirming the eviction order passed against them.
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Background of the Case
The dispute concerned a godown in Coimbatore, Tamil Nadu, leased to K. Subramaniam by M/s Krishna Mills Pvt. Ltd.. While the landlord claimed the monthly rent was ₹48,000, the tenant maintained it was ₹33,000.
Following disagreements, the landlord approached the Rent Controller in 2004 seeking the fixation of fair rent. On January 10, 2007, the Rent Controller fixed the rent at ₹2,43,600 per month, effective from February 1, 2005.
When the tenant failed to pay rent at the newly fixed rate, the landlord filed an eviction petition in 2007 on the grounds of wilful default.
Appeals and Interim Orders
The tenant’s appeal before the Rent Control Appellate Authority was dismissed in 2008. In the subsequent revision before the Madras High Court, an interim order directed the tenant to deposit ₹25 lakh and pay ₹75,000 per month, but crucially, no stay of the fair rent order was granted.
In 2011, the High Court slightly reduced the rent to ₹2,37,500 per month. The tenant’s special leave petitions before the Supreme Court were dismissed in 2012, with the Court allowing instalment payments “without prejudice to the rights of the parties.” The arrears were finally cleared only in January 2013.
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Lower Courts’ Findings
The Rent Controller initially dismissed the eviction petition in 2019, holding that the tenant’s conduct did not amount to wilful default. However, the Appellate Authority reversed this decision in 2020, holding that the delayed clearance of arrears, even after dismissal of the tenant’s SLPs, constituted wilful default.
The Madras High Court upheld the eviction in 2021, leading to the present appeal before the Supreme Court.
Arguments by the Parties
Tenants’ Stand:
Senior Advocate Jaideep Gupta, appearing for the appellants, argued that there was a bona fide dispute about the rent amount and that the tenant had complied with the interim directions. He cited decisions such as Chordia Automobiles v. S. Moosa and Visalakshi Ammal v. T.B. Sathyanarayana to argue that liability to pay fair rent arises only after the order attains finality.
He also relied on Rupa Ashok Hurra v. Ashok Hurra to suggest that finality was reached only after the Supreme Court’s 2012 order.
Landlord’s Response:
On the other hand, Senior Advocate V. Mohana, appearing for the landlord, maintained that the tenant had never obtained a stay of the fair rent order. She argued that the long delay in paying arrears, from 2007 to 2013, clearly showed wilful default.
She relied on Giridharilal Chandak & Bros. v. Mehdi Ispahani to emphasize that filing an appeal does not automatically stay an order, and referred to Sundaram Pillai v. V.R. Pattabiraman to argue that prior notice under Section 10(2) of the Tamil Nadu Rent Control Act is not mandatory for eviction.
Supreme Court’s Ruling
The Supreme Court agreed with the landlord, holding that the tenant’s failure to seek a stay was fatal to their case.
“An appeal shall not operate as a stay of the proceedings under a decree or order appealed from,”
the Bench said, citing Order XLI Rule 5(1) of the CPC.
The Court observed that once the fair rent was fixed in 2007, the tenant was bound to pay at that rate unless a stay was granted. The lessee’s conduct, it said, “cannot be reconciled with bona fide doubt as to liability.”
On the issue of notice, the Bench clarified that while the Explanation to Section 10(2) creates a presumption of wilful default after notice, the absence of such notice does not prevent the Rent Controller from determining wilfulness on the facts of the case.
The Court further held that the 2012 Supreme Court order’s “without prejudice” clause preserved the landlord’s right to pursue eviction.
The Court concluded,
“The High Court, in exercise of its revisional jurisdiction, rightly refrained from re-examining factual determinations and such an approach being reasonable and unexceptionable, it committed no error in affirming the appellate order of eviction passed against the appellants on the ground of wilful default.”
Finding no merit in the appeal, the Supreme Court dismissed it, upholding the eviction. However, the appellants were granted six months to vacate the premises, subject to filing an undertaking within two weeks.
“The appellants are, however, granted time of six months from the date of this order to vacate and hand over vacant possession of the decretal property to M/s. Krishna, subject to the usual undertakings being filed within a fortnight from date positively. In default, grant of time of six months shall stand vacated and M/s. Krishna would be at liberty to institute execution proceedings in accordance with law to recover possession.”
Case Title:
K. SUBRAMANIAM (DIED) THROUGH LRS K.S. BALAKRISHNAN & ORS. VERSUS M/S KRISHNA MILLS PVT.LTD.
CIVIL APPEAL No. 2561 OF 2025
READ JUDGMENT
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