Tenant Can't Evade Rent Payment Citing Pendency Of Appeal Against Rent Fixation Order When There's No Stay : Supreme Court

A tenant who challenges a “fair rent” order but does not obtain a stay on it cannot rely on the pending case to avoid eviction, the Supreme Court has held. The Court upheld the eviction of a tenant for “wilful default” in rent payment, noting that although the tenant appealed against the enhanced rent, he never sought a stay on the fair rent fixed by the Court.

“Mere filing of an appeal does not operate as a stay of the decree/order under appeal is the statutory ordainment in sub-rule (1) of Rule 5 of Order XLI, CPC.”, observed a bench of Justices Dipankar Datta and Manmohan referring to Order XLI Rule 5 of Civil Procedure Code (“CPC”), reiterating a legal principle laid down in Girdharilal Chandak and Bros. v. Mehdi Ispahani 2011 (5) CTC 252, that “If a person does not seek stay of an order passed by a Court below, it would only indicate either of the two things viz., (i) that he is willing to comply with the order, or (ii) that he has no objection to the orders of the Court below being put into execution.”

Since the appellant-tenant continued to pay only a fraction of the fair rent even after the High Court had upheld it, the Supreme Court rejected the tenant's plea of rent uncertainty as a valid defence against the charge of wilful default leading to eviction.

The Case

The dispute stemmed from a lease of a commercial godown in Coimbatore. While the landlord claimed the rent was ₹48,000 per month, the tenant insisted it was ₹33,000. On January 10, 2007, the Rent Controller fixed the fair rent at ₹2,43,600 per month, effective from February 1, 2005. The tenant appealed but did not seek a stay of this order, continuing to pay only a fraction of the determined rent.

Although the Appellate Authority and the High Court later upheld the rent fixation, with minor modifications, the tenant failed to pay arrears exceeding ₹1.22 crore until 2013, long after the Supreme Court had dismissed their Special Leave Petition in March 2012. The landlord then pursued eviction on grounds of wilful default.

While the Rent Controller initially rejected the eviction plea, the Appellate Authority allowed it in 2020, and the Madras High Court affirmed that decision in 2021. The tenants, through legal heirs, approached the Supreme Court.

Issue

The issue was whether the High Court was correct in affirming eviction for wilful default under Section 10(2)(i) of the Tamil Nadu Rent Control Act when the tenant claimed a bona fide rent dispute pending appeal

Decision

Affirming the High Court's decision, a judgment written by Justice Datta held that since the appellant had not sought a stay of the fair rent determination before filing the appeal, it must be presumed that the appellant had no objection to the operation of that order.

“In the present case, the lessee challenged the fixation of fair rent but did not seek a stay of its operation before the appellate or revisional fora.”, the court said adding that the “Payments were made belatedly and only after protracted litigation. Such conduct cannot be reconciled with bona fide doubt as to liability. Appellants, it is clear, defaulted in payment of rent and such default, on facts and in the circumstances, is undoubtedly a wilful default. The concurrent finding of the appellate authority, affirmed by the High Court, that the lessee and thereafter the appellants had been in wilful default, rests on sound appreciation of the legal position and the appellants' own admissions.”

Principle Of Finality Of Judicial Decision Inapplicable When Appeal Filed Without Seeking Stay

The appellant argued that he should not be evicted for wilful default because the fair rent issue was pending before the Supreme Court until 2012. He said he kept paying the rent that had been fixed, so he could not be treated as a wilful defaulter.

Rejecting this argument, the Court said that a tenant cannot defer compliance on the ground that litigation is pending as the liability accrues once the fair rent is judicially determined unless stayed. By withholding payment for years, the appellants effectively deprived the landlord of the fruits of a lawful order.

“Judicial proceedings attain finality upon a decision being rendered by the apex court in the hierarchy of courts. There is, as such, no quarrel with the said proposition of law. Nonetheless, proceedings do attain finality even at the level of the high courts, or the district courts or the trial courts if the immediate next superior forum is not approached by the party suffering the decree/order of the court seized of the lis. However, the principle of finality of a judicial decision would have no applicability in a situation where a party, despite owing money (unpaid rent, here) to his adversary in terms of a judicial determination, approaches the superior forum but prefers not to seek a stay of such determination pending the proceedings leaving the other party deprived of the benefits flowing from the said judicial determination. The bogey of judicial finality cannot, thus, be pressed into service to unfairly deny a party the benefits of a judicial decision, operation of which does not suffer from any interdiction by the superior court.”, the court observed.

Accordingly, the appeal was dismissed, and the order of eviction was upheld.

Cause Title: K. SUBRAMANIAM (DIED) THROUGH LRS K.S. BALAKRISHNAN & ORS. VERSUS M/S KRISHNA MILLS PVT.LTD.

Citation : 2025 LiveLaw (SC) 1098

Click here to read/download the judgment

For Appellant(s) : Mr. Jaideep Gupta, Sr. Adv. Mr. Senthil Jagadeesan, Sr. Adv. Mr. Sajal Jain, AOR Mr. Punit Manoj Agarwwal, Adv. Ms. Racheeta Chawla, Adv. Mr. Riddhi Bose, Adv. Ms. Rishi Agarwal, Adv. Ms. Sampriti Baksi, Adv.

For Respondent(s) :Mrs. V Mohana, Sr. Adv. Mr. Pr Ramakrishnan, Adv. Mr. B Ragunath, Adv. Mrs. Nc Kavitha, Adv. Mr. Sriram P., AOR Ms. Sreepriya K, Adv. Mr. S Padmanaban, Adv.