Supreme Court Dismisses Tenant’s Appeal In Wilful Default Eviction Case; “mere filing of an appeal does not by itself operate as a stay” As No Stay Was Obtained Against Fair Rent Order
Kiran Raj
The Supreme Court of India, Division Bench of Justice Dipankar Datta and Justice Manmohan held that a tenant who contests a fair-rent determination but fails to secure a stay cannot rely on the pendency of such proceedings to avoid the consequences of non-payment. Upholding an eviction on the ground of wilful default, the Court observed that the tenant continued to remit only the earlier contractual rent even after the fair rent had been judicially fixed and remained operative throughout, since no stay was ever obtained. The dispute centred on the tenant’s prolonged non-payment of the enhanced rent and the landlord’s claim that arrears accumulated over several years. The Court affirmed that this sustained non-compliance constituted wilful default and dismissed the appeal.
The dispute arose between the landlord, owner of a large extent of commercial premises in Coimbatore, and the tenant, who had taken multiple portions of the property on lease at various stages beginning in 1999. The total area leased amounted to 15,500 sq. ft., with the landlord asserting that the agreed monthly rent was ₹48,000, whereas the tenant claimed it was ₹33,000.
In 2004, the landlord initiated proceedings for fixation of fair rent, asserting that the original rent was ₹48,000 and seeking a substantially higher fair rent. The Rent Controller partially allowed the application in 2007 and fixed the fair rent at ₹2,43,600 per month with effect from February 2005. The tenant challenged this determination before the appellate authority, which dismissed the challenge. He subsequently filed a revision before the High Court, which required him to deposit ₹25,00,000 and to remit ₹75,000 monthly. During the pendency of the revision, the tenant complied with these interim requirements.
In 2011, the High Court partly modified the fair-rent order and reduced the rent to ₹2,37,500 per month. The landlord later issued a legal notice demanding arrears calculated on this basis. The tenant disputed the arrears but made certain payments under protest. After the tenant filed special leave petitions, the Supreme Court dismissed them in 2012 while permitting payment of arrears in monthly instalments of ₹15,00,000 along with the regular rent.
Subsequently, further payments were made and the landlord acknowledged receipt of arrears without prejudice to ongoing eviction proceedings. The landlord later asserted that service tax dues remained unpaid, an assertion denied by the tenant.
Following the tenant’s demise, his heirs were impleaded in the eviction proceedings. The Rent Controller dismissed the eviction petition, holding that wilful default had not been proved. On appeal, the appellate authority reversed this finding and held that failure to promptly pay the fair rent constituted wilful default. The High Court upheld this view, following which the tenant’s heirs approached the Supreme Court.
The Court recorded that despite the Rent Controller’s order fixing fair rent in 2007, “the lessee continued to pay only the earlier contractual rent at the rate of Rs. 48,000 p.m., leading to an accumulation of arrears from 01.02.2005 to 30.06.2007”. It noted that no stay had been obtained against the fair-rent order and stated that “the lessee, however, neither sought nor obtained a stay of the said order before the appellate or revisional fora.”
The Court observed that even after the appellate authority dismissed the tenant’s appeal confirming the fair rent, “the lessee persisted in paying only a fraction thereof.” It recorded that although the High Court later modified the fair rent marginally, “instead of settling the arrears, the tenant merely remitted Rs. 2,13,750/- (after TDS) on 21.10.2011 towards rent for September 2011 and allowed the arrears to mount.”
Addressing the tenant’s argument regarding pendency of proceedings, the Court stated that “the plea that pendency of proceedings created uncertainty as to the quantum payable is of no avail to the appellants.”
The Court referred to prior precedent and observed that “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.” It concluded that “payments were made belatedly and only after protracted litigation. Such conduct cannot be reconciled with bona fide doubt as to liability.”
Discussing the legal position under the Rent Control Act, the Court stated that “the Explanation merely provides an additional instance where, upon service of notice and continued non-payment, the default may be presumed to be wilful; it does not, by necessary implication, obliterate the discretion vested in the Controller under the proviso to determine wilfulness even in the absence of such notice.”
On the effect of the Supreme Court's earlier order, the Court recorded that “the implication of ‘without prejudice’ used in the order of dismissal would mean… such payments were not to be seen as a waiver of M/s. Krishna’s rights to realise unpaid rent and even to proceed for the lessee’s ejectment owing to wilful default committed by him.”
Ultimately, the Court held that “appellants… had no protective umbrella over him/them so as to remain absolved from tendering payment to M/s. Krishna.” It concluded that “the High Court, in exercise of its revisional jurisdiction, rightly refrained from re-examining factual determinations… and committed no error in affirming the appellate order of eviction.”
The Court stated: “The appeal, in our view, is unmeritorious. It is liable to be and is, accordingly, dismissed. 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. Parties shall, however, bear their own costs.”
Advocates Representing the Parties
For the Appellants: Mr. Jaideep Gupta, Senior Counsel
For the Respondent: Ms. V. Mohana, Senior Counsel
Case Title: K. Subramaniam (Died) Through LRs v. M/s Krishna Mills Pvt. Ltd.
Neutral Citation: 2025 INSC 1309
Case Number: Civil Appeal No. 2561 of 2025
Bench: Justice Dipankar Datta, Justice Manmohan
