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Judgment
This civil revision application filed under Section 115 of the Code of Civil Procedure by the landlord, challenging an order passed by the Appellate Bench of the Small Causes Court at Mumbai, on the issue of calculation of mesne profit.
The trial Court by its order dated 30 August 2008, while granting mesne profit, decided that the mesne profit would be an amount of Rs.1,38,253/- per month, i.e., @ of Rs.51.30 per sq.ft and the period for which the mesne profit was calculated was from the date of Notice i.e. 1 June 2001 till the date of the possession i.e. 11 January 2004. The interest was granted @ 6% p.a. from 1 June 2001. Hence, the amount payable came to Rs.45,81,662.61 paisa.
Being dissatisfied with the order passed by the trial Court, the Defendant-Bank challenged the same before the Appellate Court. While the appeal was admitted, the entire amount granted by the trial Court was deposited by the Defendant–Bank in the trial Court in order to secure stay to the decree passed by the trial Court.
After hearing the parties, the Appellate Court granted mense profits at the rate of Rs.67,800/- p.m. and granted it for the period from 4 November 2002 (that was the date on which the Lease Deed was supposed to come to an end) to 11 January 2004 (when the possession of the suit premises was handed over to the landlord). However, the interest was granted @ 18% p.a. from 4 November 2002.
I have heard learned counsel for both sides and with their help I have gone through the documents on record.
Since the possession of the suit premises has been received by the landlord from the respondent–Nationalized Bank on 11 January 2004, the dispute between the parties is only as regards the calculation of the mesne profit.
The dispute can be divided into three parts viz.
the principal amount calculated the mesne profit;
the period for which the mesne profit is payable;
the interest to be calculated on the said principal amount.
In the judgment of Humayun Dhanrajgir v. Ezra Aboody reported in [2008 SCC OnLine Bom 420] Single Judge of this Court specifically dealt with the issue of mesne profits, and the discussion made in the said judgment about the issue of mesne profits would be relevant in the present proceedings. Paragraph Nos. 19 to 23, 27, and 28 read as under:
“19.The term 'mesne profit' is used for damages for trespass, a wrongful act relating to immovable property and the said wrongful act forms one of the torts affecting realty i.e. immovable property. The enlarged scope of this term is meant to claim profit from one whose possession did not originate in trespass but is nevertheless wrong, as for example when the tenant or occupier of a property is dispossessed legally and decree of possession has been passed in favour of the landlord, still the tenant/occupier holds over the property for a specified period before handing over the possession to the rightful owner. Though the tenant had a rightful possession when he entered the immovable property but it is the decree of possession which makes his possession wrongful.
20.The concept of 'Mesne Profits' has been codified in section 2(12) of Code of Civil Procedure, 1908 in the following words: -
“Mesne Profits” of a property means those profits which the person in wrongful possession of such property actually received or might with ordinary diligence have received therefrom together with interest on such profits, but shall not include profits due to improvements made by the person in wrongful possession.”
21.The purpose of using adjective 'Mesne', which means middle or intermediate, is to indicate the pecuniary benefits translated in terms of money payable by a person in wrongful possession to his landlord in place of rent.
22.The dissection of the aforesaid definition reveals that wrongful possession of the person is the very essence for the claim for mesne profits.
23.The measure of 'Mesne profits' is not what the landlord had lost by not being able to get possession, but what the user of the property meant to the defendant who was in wrongful possession. In other words, the basis for determining the quantum of mesne profit is: what the defendant might with ordinary diligence have received from the property. The person in wrongful possession cannot be heard to say that he has not utilized the property, made no profits, no rent is being derived from the property in dispute as such not liable to pay mesne profit. At the same time person in wrongful possession is not liable to realize highest possible rates of rent or profit. A plain reading of the definition of mesne profit would leave no manner of doubt that the real test to be applied is, not what the plaintiff decree holder had lost or would have earned by letting out or using the property himself, but what the person in wrongful possession, namely, with ordinary diligence would have received from it. The wrongful possession of defendant is the very essence of a claim for mesne profits. The very foundation of the defendant's liability to pay the mesne profit goes with actual possession of the land. That is to say, generally the person in wrongful possession and enjoyment of the immovable property is liable to pay mesne profits. Thus the claim for mesne profits is virtually the claim for damages and has to be assessed by proper exercise of judicial discretion.
27.In the case of (Fateh Chand v. Balkishan Dass), 1963 DGLS (soft) 2 : AIR 1963 SC 1405, the question was whether or not 'mesne profits' should be based on the estimated value of the property? The Supreme Court while dealing with the question observed as under: -
“The normal measure of mesne profits is the value of the user of land to the person in wrongful possession. The assessment made by the High Court in respect of compensation at the rate of five per cent of what they regarded as the fair value of the property based not on the value of the user, but on an estimated return on the value of the property cannot be sustained.” (Emphasis supplied)
28.It is thus clear that the mesne profits are to be calculated on the basis of advantage derived by the person in wrongful possession by the user of the property and not the fair value of the property." (Emphasis supplied)
In the present proceedings, both the parties had filed Valuer’s Report in support of the calculation made by them.
It would be pertinent to note here that as per the Lease Deed, the respondent was paying compensation to the landlord @ Rs.11/- per sq.ft. till receipt of Notice of termination in the year 2001. The termination Notice is dated 1 June 2001. The Lease Deed was to end on 4 November 2002. The trial Court had calculated the period from the date of Notice i.e. 1 June 2001 to 11 January 2004. The Appellate Court had calculated period from 4 November 2002 till 11 January 2004. Therefore, the end date of both the Court is same whereas the starting dates differs. However, the fact remains that as per the Lease Deed, the last payment made in the year 2001 was @ Rs.11 per sq.ft. The trial Court had calculated the figures at Rs.51.30 per sq.ft. whereas the Appellate Court calculated the rate @ Rs.25 per sq.ft. I am unable to understand the calculation made by the trial Court from Rs.11 to Rs.51.30 and there is no justification to the same. Though the Appellate Court had reduced the figure to half. The Appellate Court has considered the valuation report filed by the respondent herein (Original Defendant). And has also considered that the plaintiff has agreed with the Valuation Report of the defendant. However, before me it was submitted that the landlord – plaintiff is disputing the said fact. It is a matter of record that the plaintiff- landlord has not approached the Appellate Court seeking review of the order passed by the Appellate Bench of the Small Causes Court, Mumbai. Hence, in my view, as per record the plaintiff had agreed to the valuation report of a Government valuer which was filed by the defendant. Therefore the rate decided by the Appellate Court, is the correct rate for calculation of mesne profit.
As far as the issue of period is concerned for calculating the mesne profit, the date of termination of the Notice issued by the landlord was 1 June 2001, however, the lease period as per the Lease Deed was to end on 4 November 2002 which means roughly around one year five months after the landlord terminated the lease. The Appellate Court has held that the termination of the lease period was void as there was dispute between of the electricity charges and the water charges. According to me, in the present proceedings the period for calculating the mesne profit should start from 4 November 2002 and would conclude on 11 January 2004, when possession of the suit premises was handed over to the landlord.
As regards the interest payable on the principal amount, it was the case of the landlord that as per the interest calculated and as per the judgment passed by the High Court and the Supreme Court, it would be the Court discretion to grant interest percentage on the principal amount. The Appellate Court has granted interest @ 18% p.a. whereas the trial Court had granted interest @ 6% p.a. The respondent is a Nationalized Bank who offers interest on the savings account @ of around 5% and to certain amounts @ 6% to 7% while when they offer loans on housing, they charge interest @ 8% and in certain cases, it would be slightly higher than 8%. Hence, in my view, the interest @ 9% could have been justifying.
Since the respondent has not filed cross objection or a separate civil revision application, challenging the order passed by the appellate court and the fact that the appellate court has tried to balance issue of mesne profit between both the parties, it has reduced period and it has increased interest rate.
The judgment referred by the counsel appearing for the Applicant-Landlord, namely Atma Ram Properties (P) Ltd. v. Federal Motors (P) Ltd. Reported in [(2005) 1 SCC 705], deals with the issue of market rent payable by the tenant during the pendency of appeal. who has suffered an eviction decree, Hence, the law laid down by the Supreme Court in the said judgment is not applicable to the present proceedings.
14.1) Similarly, the judgment of Mujabir Rehman Haji Israr Alam Siddiqui v. K.T. Kubal & Co. reported in [2017 SCC OnLine Bom 6305], the judgment of Hongkong and Shanghai Banking Corporation v. Maharashtra SEB reported in [2024 SCC OnLine Bom 3806], the judgment of Balkrishna Das Agarwal v. Radha Devi and ors reported in [1988 SCC OnLine All 868], and the judgment of Kikabhai Abdul Hussain v. Kamlakar [1974 MPLJ 485] do not deal
with the issue of mesne profits, which has to be calculated after the decree has been passed. Hence, the findings recorded in these judgments are not applicable to the present proceedings.
Hence, in my view, there is no perversity in the impugned judgment passed by the appellate court. This is a well-balanced judgment passed by the Appellate Court, hence, no interference in Revision is required.
As the respondent-bank has already deposited the decretal amount in the trial Court as per the order passed by Appellate Court, and the said amount has been invested by the trial Court which as of now has accumulated to a sum of Rs.1,00,00,000/- (Ruppees One Crore only). The amount payable to the applicant – landlord would be around Rs.24,39,000/-. The said amount of Rs.24,39,000/can be withdrawn by the applicant-landlord from the trial Court. The balance amount can be withdrawn by the respondent – bank.
Accordingly, the civil revision application stands disposed of.
In sequel, the civil application also stands disposed of.