Pendency of Appeal Without Stay Does Not Shield Tenant From Wilful Default: Supreme Court Upholds Eviction for Non-Payment of Judicially Fixed Fair Rent

“A Party Cannot Seek Shelter Under Appeal If He Fails to Obtain a Stay Against a Judicial Determination” – Supreme Court of India, in a significant ruling on tenancy law, affirmed the eviction of a tenant for wilful default in paying judicially fixed fair rent, despite long-pending litigation over its determination.

The key takeaway from the judgment is that non-payment of rent fixed by the Rent Controller—when not stayed—amounts to wilful default under Section 10(2)(i) of the Tamil Nadu Buildings (Lease and Rent Control) Act, 1960, even if the order is under challenge.

“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.” – Supreme Court [Para 24]

“Wilful Default Is Not Erased By Pendency Of Litigation—Tenants Must Comply With Unstayed Rent Orders”: SC Refuses Relief To Heirs of Lessee

The Court rejected the appellants' claim that the tenant's default was not “wilful” since the fair rent order was under challenge until the Supreme Court dismissed his SLPs in 2012. The Bench made it clear that judicial orders fixing rent become binding unless stayed, and default in compliance—despite continued possession—invites eviction.

The Bench observed:

“Despite the appellate authority having dismissed his appeal on 20.02.2008, thereby confirming the fair rent, the lessee persisted in paying only a fraction thereof… Such conduct cannot be reconciled with bona fide doubt as to liability.” [Para 24]

Protracted Litigation Over Fair Rent Ends in Eviction

The dispute arose over 15,500 sq. ft. of leased premises in Coimbatore, where K. Subramaniam, the original lessee, had entered into a lease with M/s. Krishna Mills Pvt. Ltd., the landlord, in phases beginning in 1999. While the landlord claimed a monthly rent of ₹48,000, the tenant asserted the rent payable was ₹33,000.

In 2004, the landlord initiated fair rent proceedings under the 1960 Act. By order dated 10.01.2007, the Rent Controller fixed the fair rent at ₹2,43,600/- per month, effective from 01.02.2005. Though this order was appealed and marginally modified to ₹2,37,500/- by the High Court in 2011, no stay was granted at any stage.

Still, the tenant continued to pay reduced amounts and cleared the arrears only in January 2013, after multiple rounds of litigation, including SLPs dismissed by the Supreme Court on 23.03.2012.

The landlord's eviction petition, filed in 2007, was initially dismissed by the Rent Controller in 2019. However, the appellate authority reversed the decision in 2020, holding that the lessee’s conduct amounted to wilful default. The High Court affirmed this view in 2021, and the tenant’s heirs approached the Supreme Court.

“Wilful Default Exists Even Without Two-Month Notice Under Explanation to Section 10(2)(i)” – SC Upholds Rent Controller’s Discretion

A key contention raised by the appellants was the absence of a statutory two-month notice by the landlord demanding arrears prior to initiating eviction. The Supreme Court rejected this as a misreading of the law, relying on the three-Judge Bench ruling in Sundaram Pillai v. V.R. Pattabiraman:

“Where no notice is given by the landlord in terms of the Explanation, the Controller… has the undoubted discretion to examine whether or not the default committed by the tenant is wilful.” [Para 25, citing Sundaram Pillai]

The Court affirmed that even without such notice, wilfulness can be inferred from conduct, especially when arrears remain unpaid despite final judicial determinations.

“The nature of default committed by the lessee satisfies the attributes of a wilful default… and leaves little room for us to hold that no wilful default had been committed.” [Para 28]

“Appeal Without Stay Is No Defence—Tenant Had No Protective Umbrella Against Rent Liability”

The Court also addressed a wider legal principle: Does the pendency of appeal or revision protect a tenant from liability to comply with a rent order? The answer, the Court made clear, is No:

“A party, despite owing money… but prefers not to seek a stay… leaves the other party deprived of the benefits flowing from the said judicial determination.” [Para 30]

Referring to Girdharilal Chandak and Bros., the Court noted:

“If a person does not seek stay of an order… it would only indicate either that he is willing to comply with the order, or that he has no objection to its execution.” [Para 23]

This principle was central to the Court's finding of default: the tenant had allowed arrears to accumulate from 2005 to 2012 without securing any stay or complying fully with the Rent Controller's order.

Tenant’s Instalment Payments After SLP Dismissal Did Not Cure Past Default

The appellants argued that full payment had been made in 2013 after the Supreme Court’s dismissal of the SLPs, and that the eviction should therefore be set aside. The Court rejected this defence:

“Payments were made belatedly and only after protracted litigation… Such conduct… is undoubtedly a wilful default.” [Para 24]

The Court also clarified that its earlier direction to pay rent and arrears was made “without prejudice”, which did not bar the landlord from seeking eviction on the same arrears:

“‘Without prejudice’ used in the order of dismissal… did not amount to waiver of Krishna Mills' right to proceed for ejectment owing to wilful default.” [Para 29]

Eviction Upheld, Time Granted to Vacate

In the final analysis, the Supreme Court upheld the High Court’s refusal to interfere with concurrent findings on wilful default. It ruled 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.” [Para 32]

The appeal was dismissed as unmeritorious, but the Court granted the appellants six months' time to vacate the property, subject to filing an undertaking within two weeks. Failure to comply would entitle the landlord to initiate execution proceedings.

“The appellants are, however, granted time of six months from the date of this order to vacate… subject to usual undertakings being filed within a fortnight from date positively.” [Para 34]

Date of Decision: November 11, 2025