The Supreme Court of India, in the case of K. Subramaniam (Died) Through Lrs vs. M/s Krishna Mills Pvt. Ltd., has dismissed an appeal from a lessee’s heirs, upholding an eviction order. The Court affirmed that the mere pendency of proceedings challenging a fair rent fixation does not protect a tenant from “wilful default” for non-payment, especially when the tenant did not secure a stay of the order fixing the rent.
The appeal, Civil Appeal No. 2561 of 2025, was heard by a bench of Justice Dipankar Datta and Justice Manmohan. It challenged a 2021 order from the High Court of Judicature at Madras, which had confirmed an appellate order for eviction.
Background of the Case
The dispute involved a godown in Coimbatore, Tamil Nadu, owned by the respondent, M/s. Krishna Mills Pvt. Ltd., and leased to K. Subramaniam (now deceased, represented by the appellants). A dispute arose over the quantum of monthly rent, with the landlord claiming Rs. 48,000/- and the lessee contending it was Rs. 33,000/-.
In 2004, the landlord filed an application (RCOP No. 44 of 2005) for fixation of fair rent. On January 10, 2007, the Rent Controller fixed the fair rent at Rs. 2,43,600/- per month, effective from February 1, 2005.
Subsequently, on July 17, 2007, the landlord filed an eviction petition (RCOP No. 134 of 2007) on the ground of wilful default, citing failure to pay the newly fixed fair rent.
The lessee’s appeal against the fair rent order was dismissed by the Rent Control Appellate Authority on February 20, 2008. The lessee then filed a revisional application before the High Court. The High Court passed an interim order directing the lessee to deposit Rs. 25,00,000/- and pay Rs. 75,000/- per month, but the judgment noted that the court “had not granted any stay of the order.”
On September 9, 2011, the High Court reduced the fair rent to Rs. 2,37,500/- p.m. The lessee’s subsequent special leave petitions to the Supreme Court were dismissed on March 23, 2012. That order directed the lessee to pay arrears in instalments, “clarifying that such arrangement was without prejudice to the rights of the parties in the pending proceedings.” The lessee made a final payment in full settlement of arrears on January 11, 2013.
In the eviction proceedings, the Rent Controller initially dismissed the petition on February 6, 2019, finding no wilful default. However, the Appellate Authority (Principal Subordinate Judge, Coimbatore) reversed this on February 25, 2020, holding that the “clearance in instalments, even after dismissal of the special leave petitions, amounted to wilful default.” This eviction order was affirmed by the High Court in its revisional order dated June 22, 2021, leading to the present appeal.
Appellants’ Arguments
Appearing for the appellants, senior counsel Mr. Jaideep Gupta contended that the eviction petition was untenable as there was a bona fide dispute over the rent quantum. He argued that the lessee’s conduct was not wilful, as they had complied with interim orders and paid rent. Relying on Chordia Automobiles v. S Moosa, it was argued that it was reasonable to follow interim arrangements when the amount was disputed.
Mr. Gupta further submitted, citing Visalakshi Ammal v. T.B. Sathyanarayana, that the liability to pay fair rent arises only upon the order attaining finality. He argued finality was only reached after this Court’s order on March 23, 2012, citing Rupa Ashok Hurra v. Ashok Hurra.
Respondent’s Arguments
Per contra, senior counsel Ms. V. Mohana, for the respondent-landlord, argued that the default was clearly wilful, as the fair rent was fixed on January 10, 2007, but the lessee cleared the arrears only on January 11, 2013.
She heavily relied on the High Court decision in Giridharilal Chandak & Bros. v. Mehdi Ispahani to argue that “mere filing of an appeal does not by itself operate as a stay.” She pointed out that the lessee never obtained a stay of the fair rent order. Ms. Mohana also submitted that the “without prejudice” clause in the 2012 Supreme Court order explicitly preserved the landlord’s right to pursue eviction.
Furthermore, citing Sundaram Pillai & Ors. v. V.R. Pattabiraman, she argued that a prior notice under Section 10(2) of the Rent Control Act, 1960, is not a mandatory precondition for seeking eviction.
Supreme Court’s Analysis and Decision
The Supreme Court, addressing the sole question of whether the High Court rightly upheld the eviction, agreed with the respondent.
The bench found the appellants’ plea that the pendency of proceedings created uncertainty to be “of no avail.” The judgment observed that despite the fair rent fixation in 2007, the lessee “neither sought nor obtained a stay of the said order before the appellate or revisional fora.”
The Court endorsed the principle discussed in Girdharilal Chandak, which itself relied on Order XLI, Rule 5(1) of the Code of Civil Procedure, 1908, that an “Appeal shall not operate as a stay of the proceedings under a decree or order appealed from.” The Court held that the lessee’s 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 bench concluded.
The Court also addressed the appellants’ argument regarding the lack of a two months’ notice under the Act. Analyzing the three-Judge Bench decision in Sundaram Pillai, the Court held it was “not persuaded to accept the contention” that this absence was fatal. The judgment noted: “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.”
The Court also held that the “without prejudice” phrase in the 2012 order meant the landlord’s right to seek ejectment was not waived. It distinguished the principle of finality from Rupa Ashok Hurra, stating it “would have no applicability in a situation where a party, despite owing money… approaches the superior forum but prefers not to seek a stay of such determination.”
Finding the appeal “unmeritorious,” the Supreme Court dismissed it. The appellants were “granted time of six months from the date of this order to vacate and hand over vacant possession,” subject to filing the usual undertakings within a fortnight.
