This case concerns a long-standing dispute between the legal heirs of a tenant (lessee) and the landlord, M/s Krishna Mills Pvt. Ltd., over alleged wilful default in the payment of rent under the Tamil Nadu Buildings (Lease and Rent Control) Act, 1960. The Supreme Court was called upon to decide whether the High Court was justified in upholding the eviction order based on wilful default.
The case is significant for its detailed discussion on the meaning of “wilful default,” the consequences of not seeking a stay on a fair rent order, the effect of the tenant’s conduct across years of proceedings, and the interpretation of Section 10(2)(i) of the Rent Control Act.
Title of the Case: K. Subramaniam (Died) Through LRs K.S. Balakrishnan & Ors. v. M/s Krishna Mills Pvt. Ltd.
Citation: 2025 INSC 1309
Court: Supreme Court of India
Judges: Justice Dipankar Datta and Justice Manmohan
Date of Judgment: 11 November 2025
Factual Background
1. The Lease Arrangements
The landlord, M/s Krishna Mills Pvt. Ltd., owned a large godown property measuring 15,500 sq. ft. in Coimbatore. The original tenant, K. Subramaniam, proprietor of M/s Royal Agencies, entered into multiple lease agreements between 1999 and 2001:
- 1999: 5,000 sq. ft. leased for ₹15,000 p.m.
- 2000: Additional 5,000 sq. ft. for ₹15,000 p.m.
- 2000: A 500 sq. ft. shed for ₹3,000 p.m.
- 2001: Yet another 5,000 sq. ft. for ₹15,000 p.m.
Total rent claimed by landlord: ₹48,000 per month
Tenant’s stand: Rent was only ₹33,000 per month
2. Fixation of Fair Rent Proceedings
In 2004, the landlord applied for the fixation of fair rent under the Rent Control Act, arguing the existing rent was inadequate. The Rent Controller:
- 10 January 2007: Fixed fair rent at ₹2,43,600 per month, effective from 01.02.2005.
- The tenant appealed unsuccessfully; the appellate authority upheld the determination in 2008.
- The tenant filed a revision before the High Court.
3. Interim Orders by the High Court
During revision proceedings, the High Court directed the tenant to:
- Deposit ₹25,00,000
- Pay ₹75,000 per month, without prejudice
The tenant complied.
On 09 September 2011, the High Court partially modified the fair rent to ₹2,37,500 per month.
4. Arrears & Legal Notice
Following the High Court’s order, the landlord issued a legal notice on 01 October 2011, demanding arrears of ₹1,22,22,000, after crediting payments already made.
The tenant paid some amounts under protest and then filed SLP (C) Nos. 6500–6501 of 2012 before the Supreme Court.
5. Supreme Court Order of 23 March 2012
The Supreme Court dismissed the SLPs but granted conditional liberty:
- Tenant to pay ₹15,00,000 per month towards arrears
- Plus regular rent of ₹2,37,500 per month
- Payments to be made without prejudice
The tenant made payments in May and June 2012.
6. Eviction Proceedings
The landlord had earlier filed RCOP No. 134/2007 seeking eviction on the ground of wilful default. After the tenant’s death, his sons (the present appellants) were impleaded.
06 February 2019: The Rent Controller dismissed the eviction petition, holding that no wilful default was established.
25 February 2020: The Appellate Authority reversed the decision and ordered eviction.
22 June 2021: High Court dismissed the tenant’s revision and affirmed the eviction.
The matter reached the Supreme Court via the present appeal.
Arguments of the Appellants (Tenant’s Heirs)
1. No Wilful Default
The appellants argued:
- The rent was in dispute, and the tenant regularly paid the originally agreed rent.
- Payments made under various interim orders proved bona fides.
- The tenant promptly complied with all court directions.
They relied on:
- Chordia Automobiles v. S. Moosa (2000) – dispute in arrears negates wilful default.
- Visalakshi Ammal (1997) – liability to pay fair rent arises only after final determination.
- PM Punnoose (2003) – Controller should give tenant a reasonable time to clear arrears.
2. Delay Explained by Pending Litigation
- Fair rent proceedings attained finality only in 2012 after the Supreme Court dismissal of SLPs.
- Until then, no wilful default could be attributed.
3. “Without Prejudice” Clause
Appellants argued the payments made under the Supreme Court’s order settled all arrears, leaving no ground for eviction.
4. Notice Requirement
They contended that no notice under the Explanation to Section 10(2)(i) was issued, which should defeat the eviction petition.
Arguments of the Respondent (Landlord)
1. Continuous Default Despite Final Orders
- Tenant paid only ₹33,000/48,000 p.m. even after the fair rent was fixed in 2007.
- No stay was sought at any stage.
- Arrears accumulated for over six years until 2013.
2. Pendency of proceedings does not stop liability
- Citing Giridharilal Chandak & Bros. v. Mehdi Ispahani (2011):
- Filing an appeal does not operate as a stay.
- Unless stayed, the fair rent order remains fully enforceable.
3. Notice is Not Mandatory
- Under the Rent Control Act, prior notice is optional.
- Tenant never objected to the lack of notice during earlier proceedings.
4. Tenant’s Conduct Shows Wilful Default
- Even after fair rent was upheld in an appeal (2008), the tenant continued paying a lesser rent.
- Arrears were cleared only in 2013.
Issue Before the Court
- Whether the High Court justified in affirming the eviction order on the ground of wilful default?
Supreme Court’s Analysis and Findings
The Supreme Court dismissed the appeal, holding that the tenant and his heirs were clearly guilty of wilful default.
1. Fair Rent Order Was Never Stayed
A crucial factual aspect:
- Fair rent was fixed in 2007.
- Appeal dismissed in 2008.
- High Court revised rent in 2011.
- SLPs dismissed in 2012.
Despite this, the tenant never sought a stay, meaning:
- The fair rent order remained operative from day one.
- The tenant was legally bound to pay ₹2,43,600 per month (2007–2011), and then ₹2,37,500.
2. Mere Filing of Appeal Does Not Suspend Operation
The Court cited Order XLI Rule 5 CPC:
“An appeal shall not operate as a stay of decree unless specifically ordered.”
Thus, the tenant could not rely on the pendency of a revision/appeal to avoid paying enhanced rent.
3. Payments Were Highly Delayed
The Court noted:
- From 2005 to 2013, arrears piled up without lawful excuse.
- Arrears were cleared only six years after the fair rent was fixed.
This showed deliberate non-payment.
4. Interpretation of Section 10(2)(i) & the Explanation
The Court relied on the majority view in Sundaram Pillai v. V.R. Pattabiraman (1985):
- Notice is not mandatory.
- Without notice, the Controller must examine whether the default was wilful.
Prolonged, unexplained, deliberate non-payment constitutes wilful default.
5. The Tenant’s Behaviour Was Wilful and Calculated
The Court found:
- The tenant knowingly chose to pay lower rent despite no stay.
- Interim payments were made only after prolonged litigation.
- He cannot rely on “without prejudice” clause to escape earlier defaults.
6. Finality Argument Rejected
The Court held:
- Finality of the Supreme Court judgment does not erase pre-existing liability.
- Absence of stay meant liability accrued continuously.
Supreme Court’s Decision
Outcome
- Appeal dismissed.
- Eviction upheld.
- Appellants granted six months to vacate the property, subject to filing undertakings.
Costs
- Each party to bear its own costs.
Conclusion
The judgment is a strong reiteration of the principle that tenants cannot avoid payment of fair rent merely because they are litigating the issue. The Supreme Court held that default becomes wilful when:
- the tenant consciously fails to pay rent despite clear legal liability;
- does not seek a stay;
- allows arrears to mount for years.
Since the tenant in this case satisfied all these conditions, the eviction was held justified.
This decision strengthens landlord rights in cases where tenants exploit procedural delays, and clarifies the interplay between fair rent proceedings, interim orders, and liability for rent under the Tamil Nadu Rent Control Act.
Important Link
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