Legal Review and Analysis of K Subramanian D Thr LRs vs Ms Krishna Mills Pvt Ltd 2025 INSC 1309

In-Short

Case: K. Subramanian (D) Thr. LRs vs M/S Krishna Mills Pvt. Ltd. (2025 INSC 1309): A Supreme Court judgment defining "wilful default" for eviction, holding that a tenant's failure to pay court-determined fair rent for years, while challenging the order without seeking a stay, constitutes a deliberate and intentional default, warranting eviction.

1. Name and Citation of the Judgment

K. Subramanian (Died) Through Lrs. K.S. Balakrishnan & Ors. vs M/S Krishna Mills Pvt.Ltd.
Civil Appeal No. 2561 of 2025
Supreme Court of India
Decided on: November 11, 2025
Citation: 2025 INSC 1309

2. Related Laws and Statutes

The judgment is a definitive interpretation of tenancy law, primarily under the following statutes:

• The Tamil Nadu Buildings (Lease and Rent Control) Act, 1960: The entire case revolves around Section 10(2)(i) of this Act, which provides for eviction on the ground of "wilful default" in payment of rent. The Court extensively analyzed the proviso and explanation to this section.

• The Code of Civil Procedure, 1908 (CPC): Order XLI, Rule 5(1) was crucial to the judgment, establishing that an appeal does not automatically operate as a stay of the order under challenge.

• The Tamil Nadu Regulation of Rights and Responsibilities of Landlords and Tenants Act, 2017: The Court noted that this newer act was not applicable to the present tenancy, which was governed by a written agreement.

3. Basic Details of the Judgment

• Court: Supreme Court of India

• Bench: Justice Dipankar Datta and Justice Manmohan

• Nature of Case: Civil Appeal arising from eviction proceedings.

• Parties: The Appellants are the legal heirs of the original tenant, K. Subramanian. The Respondent is the landlord, M/s Krishna Mills Pvt. Ltd.

• Core Subject: Whether the appellants/tenant committed "wilful default" in the payment of rent, justifying an order of eviction.

4. Core Principles, Issues, and Judicial Analysis

This judgment provides a authoritative exposition on what constitutes "wilful default" under rent control legislation, particularly in the context of protracted litigation over the fixation of "fair rent."

A. The Central Legal Dispute

The sole question before the Supreme Court was whether the High Court was correct in affirming the eviction of the appellants on the ground of "wilful default" under Section 10(2)(i) of the Tamil Nadu Buildings (Lease and Rent Control) Act, 1960. The dispute originated from the landlord's claim that the tenant had defaulted in paying the "fair rent" as determined by the Rent Controller and subsequently modified by the High Court, despite the tenant making payments in compliance with various interim court orders over a long period. (Paragraph 20)

B. The Supreme Court's Legal Reasoning and Analysis

The Court's analysis focused on the conduct of the tenant and the legal implications of challenging a decree without seeking a stay on its operation.

i. Defining "Wilful Default" and the Tenant's Conduct

The Court relied heavily on the landmark three-judge bench decision in Sundaram Pillai & Ors. v. V.R. Pattabiraman (1985) 1 SCC 591. It reiterated that a default is "wilful" if it is deliberate, intentional, calculated, and conscious. The Court meticulously examined the tenant's conduct:

• The fair rent was fixed by the Rent Controller on January 10, 2007, payable from February 1, 2005.

• The tenant challenged this order in appeal and revision but crucially did not seek any stay of the operation of the fair rent order from any appellate forum.

• Despite the fair rent attaining finality at the appellate authority level on February 20, 2008, and later being modified by the High Court on September 9, 2011, the tenant continued to pay only a fraction of the determined amount for years.

• The tenant cleared the entire arrears only on January 11, 2013, nearly six years after the initial fair rent order. (Paragraphs 21-22, 24)

ii. The Critical Legal Principle: No Automatic Stay

The Court emphasized a fundamental legal principle encapsulated in Order XLI, Rule 5(1) of the CPC: "an appeal shall not operate as a stay of the proceedings under a decree or order appealed from." It endorsed the reasoning from Girdharilal Chandak & Bros. v. Mehdi Ispahani (2011 (5) CTC 252), holding that if a party does not seek a stay of an order from a superior forum, it indicates either a willingness to comply or no objection to its execution. Therefore, the mere pendency of appeals and revisions did not excuse the tenant from the obligation to pay the rent that had been legally determined. (Paragraphs 23-24)

iii. The Significance of the "Without Prejudice" Clause

The tenant argued that since they eventually cleared the arrears as per the Supreme Court's order dated March 23, 2012, the issue was closed. The Court rejected this, highlighting that the said order explicitly allowed payment "without prejudice to the rights of the parties in the pending proceedings." This meant the landlord's right to pursue the eviction petition on the ground of wilful default, which had already occurred, remained intact despite the subsequent payment. (Paragraph 29)

iv. Clarification on the Requirement of a Notice

The Court also addressed the tenant's argument regarding the absence of a two-month notice as mentioned in the Explanation to Section 10(2)(i). Relying on Sundaram Pillai, it held that such a notice is not an indispensable condition precedent. The Rent Controller has the discretion to determine wilfulness even in the absence of such a notice. The Explanation merely provides an instance where a default can be presumed to be wilful, but it does not obliterate the Controller's power to examine the facts of each case. (Paragraphs 25-27)

5. Final Outcome and Directions

The Supreme Court dismissed the appeal, upholding the eviction order passed by the appellate authority and affirmed by the High Court. The Court concluded that the tenant's conduct, characterized by a failure to seek a stay and a delay of several years in paying the legally determined fair rent, unequivocally amounted to "wilful default."

However, granting a concession on humanitarian grounds, the Court allowed the appellants six months' time to vacate the property, subject to filing the usual undertakings within a fortnight. Failure to comply would entitle the landlord to initiate execution proceedings immediately. (Paragraphs 33-35)

6. MCQs Based on the Judgment

Question 1: In the case of K. Subramanian vs M/S Krishna Mills (2025 INSC 1309), which legal principle was pivotal in the Supreme Court's finding of "wilful default" against the tenant?
a) That a tenant is always entitled to withhold rent until all legal challenges are exhausted.
b) That the filing of an appeal automatically stays the execution of the order under challenge.
c) That a tenant who challenges a fair rent order but fails to seek a stay of its operation cannot use the pendency of litigation as an excuse for non-payment.
d) That a notice under the Explanation to Section 10(2)(i) of the Rent Control Act is mandatory for establishing wilful default.

Question 2: According to the Supreme Court's interpretation in this judgment, what is the legal consequence of the phrase "without prejudice" used in the order dated 23.03.2012 that dismissed the tenant's special leave petitions?
a) It extinguished the landlord's right to pursue the eviction petition on the ground of wilful default.
b) It meant that the tenant's payments towards arrears would be considered a full and final settlement of all claims.
c) It preserved the landlord's right to proceed with the eviction case based on the default that had already occurred, despite the subsequent payment.
d) It required the landlord to issue a fresh legal notice before continuing with the eviction proceedings.