Case Background

• The property—about 15,500 sq. ft.—was leased in parts between 1999 and 2001 to K. Subramaniam (M/s Royal Agencies) at rents ranging between ₹15,000 and ₹48,000 per month.

• The landlord later claimed the total rent was ₹48,000 per month, while the tenant claimed it was only ₹33,000.

• In 2004, the landlord filed for fixation of fair rent, which was determined in 2007 by the Rent Controller as ₹2,43,600 per month, effective from February 2005.

• The tenant appealed but failed to obtain a stay, and despite dismissal of his appeal in 2008, he continued paying only a small fraction of the rent.

• In 2011, the Madras High Court revised the fair rent slightly to ₹2,37,500 per month. The landlord demanded arrears exceeding ₹1.2 crore.

• The tenant challenged this in the Supreme Court, which in 2012 dismissed the case but allowed arrears to be paid in monthly instalments of ₹15 lakhs plus rent, stating this was “without prejudice” to the landlord’s rights.

• After Subramaniam’s death, his heirs (the appellants) continued paying rent but were later subjected to eviction proceedings for wilful default.

Lower Court Proceedings

1. Rent Controller (2019): Dismissed the eviction petition, holding that since payments were made per court orders, no wilful default existed.

2. Appellate Court (2020): Reversed, holding that delayed and piecemeal payments despite final orders fixing fair rent amounted to wilful default.

3. High Court (2021): Upheld the eviction, ruling that non-payment despite absence of any stay made the default deliberate and intentional.

The tenants’ heirs then appealed to the Supreme Court.

Appellants’ Arguments

Senior counsel Jaideep Gupta argued:

• The tenant had paid rent as per court directions, so default could not be “wilful.”

• The liability to pay fair rent arose only after it attained finality upon the Supreme Court’s 2012 decision.

• Since arrears were later cleared, eviction was harsh.

• Cited Chordia Automobiles v. S. Moosa (2000), Visalakshi Ammal v. T.B. Sathyanarayana (1997), and P.M. Punnoose v. K.M. Munneruddin (2003) to argue that delayed payment due to legal disputes is not wilful default.

Respondent’s Arguments

Senior counsel V. Mohana for the landlord contended:

• The tenant never obtained a stay, so the fair rent order was operative.

• Payments made years later were clearly wilful defaults.

• Even after the High Court’s 2011 order and Supreme Court’s 2012 directions, full rent was paid only in 2013, six years after fixation.

• Under Section 10(2)(i) of the Rent Control Act, continued non-payment despite determination of rent constitutes wilful default.

Supreme Court’s Reasoning

1. No Stay = Rent Order Binding:
   The Court held that since the tenant never sought a stay of the fair rent order, it remained valid. Under Order XLI Rule 5 CPC, an appeal does not operate as a stay automatically. Thus, arrears accrued legally from 2007 onward.

2. “Wilful Default” Defined:
   Referring to the three-judge ruling in Sundaram Pillai v. V.R. Pattabiraman (1985) 1 SCC 591, the Court clarified that wilful default includes deliberate, intentional, or conscious non-payment without just cause. Even without a two-month notice under the Act, the Rent Controller retains power to determine wilfulness.

3. Pendency of Appeal Not a Defense:
   Merely challenging the fair rent order did not suspend the tenant’s duty to pay. Payment after six years was not bona fide compliance but a deliberate delay.

4. Effect of “Without Prejudice” in 2012 Order:
   The Supreme Court’s earlier order allowing instalment payments did not extinguish the landlord’s right to seek eviction for prior defaults. The phrase “without prejudice” preserved those rights.

5. Finality Argument Rejected:
   The appellants’ reliance on Rupa Ashok Hurra v. Ashok Hurra (2002) was rejected—the doctrine of finality does not protect a party who fails to pay rent without a stay.

Judgment

The Supreme Court dismissed the appeal, affirming eviction on grounds of wilful default.

• The Court granted the appellants six months to vacate the property and hand over peaceful possession to the landlord.

• Each party was directed to bear its own costs.

Significance

This judgment reiterates that:

• Appeals do not automatically stay rent orders; tenants must seek explicit stays.

• Delayed or partial payments, even during litigation, can constitute wilful default.

• The landlord’s right to eviction survives even if arrears are later cleared.

The ruling strengthens landlords’ protection under rent laws while emphasizing tenants’ obligation to comply promptly with rent determinations.