1998 (5) TMI 415 - HC - Indian Laws

Summary

Issues Involved:
1. Whether the amount of royalty/compensation should exceed the amount of rent payable by the tenant to the landlord.
2. Determination of the appropriate amount of royalty for Shop No. 6.
3. Compliance with the Court Receiver's orders and execution of the Agency Agreement by the defendant.

Detailed Analysis:

1. Whether the amount of royalty/compensation should exceed the amount of rent payable by the tenant to the landlord:
The primary issue raised by Defendant No. 1 was whether the royalty/compensation amount fixed by the Court Receiver could exceed the actual rent payable to the landlord, which was Rs. 169 per month. Defendant No. 1 argued that charging Rs. 5,000 per month as royalty was excessive and lacked a real basis, asserting that it violated the provisions of the Rent Act. The defendant relied on a precedent from a Division Bench of the Bombay High Court, which stated that the amount of royalty could not exceed the rent payable to the landlord. The court upheld this view, emphasizing that the royalty should be a compensation for the use of the property and should not exceed the rent payable to the landlord.

2. Determination of the appropriate amount of royalty for Shop No. 6:
The Court Receiver initially fixed an ad-hoc royalty of Rs. 5,000 per month based on a Valuation Report suggesting Rs. 7,000 per month. The plaintiff argued that the shop's prime location and the business profits justified a higher royalty, suggesting Rs. 12,000 to Rs. 14,000 per month. However, the court found that the Court Receiver's reduction to Rs. 5,000 lacked a cogent and legal basis. The court concluded that the royalty should not exceed the rent payable to the landlord, which was Rs. 169 per month. However, considering the defendant's admission, the court fixed the royalty at Rs. 750 per month, allowing the Court Receiver to cover other expenses.

3. Compliance with the Court Receiver's orders and execution of the Agency Agreement by the defendant:
The court directed Defendant No. 1 to comply with the Court Receiver's orders, including the deposit of three months' rent as a security deposit and the execution of the Agency Agreement. The court emphasized that the defendant must abide by these orders to preserve the tenancy rights of Shop No. 6. The court also allowed the Court Receiver to take forcible possession of the premises if the defendant failed to execute the Agency Agreement within four weeks.

Conclusion:
The court made the Chamber Summons absolute in terms of prayer Clauses (b) and (c), directing Defendant No. 1 to pay Rs. 750 per month as royalty to the Court Receiver and comply with the other orders. The court concluded that the royalty amount could not exceed the rent payable to the landlord and emphasized the need to preserve the property during the litigation. The Chamber Summons was disposed of with no order as to costs, and the Court Receiver was directed to act on an ordinary copy of the order.