Tenant Continuing In Possession After Expiry Of Tenancy Liable To Compensate Landlord By Paying 'Mesne Profits' : Supreme Court

The Supreme Court held that if the tenant continues to remain in the rented premises even after the tenancy rights are extinguished, then the landlord would be entitled to receive compensation in the form of 'mesne profit' from the tenant.

“While the above-stated position is generally accepted, it is also within the bounds of the law, that a tenant who once entered the property in question lawfully, continues in possession after his right to do so stands extinguished, is liable to compensate the landlord for such time period after the right of occupancy expires.”, the bench comprising Justices JK Maheshwari and Sanjay Karol said.

The question that appeared before the Supreme Court was whether the tenant would be liable to pay compensation to the landlord in the form of 'mesne profit' when there was no eviction order against the tenant but continued to remain in the rented premise.

Answering affirmatively, the Judgment authored by Justice Sanjay Karol observed that the tenant would be liable to pay the mesne profit to the landlord for the period he had been a 'tenant at sufferance'.

"Tenant at sufferance" is a tenant who enters upon the land by lawful title but continues in possession after the title has ended.

The Court's observation drew support from its Judgment of Indian Oil Corporation Ltd. v. Sudera Realty Private Limited, 2022 LiveLaw (SC) 744, where also it was observed that the tenant while continuing in possession after the expiry of the lease became liable to pay mesne profits.

“In our considered view, the effect of the words 'determination', 'expiry', 'forfeiture' and 'termination' would, subject to the facts applicable, be similar, i.e., when any of these three words are applied to a lease, henceforth, the rights of the lessee/tenant stand extinguished or in certain cases metamorphosed into weaker iteration of their former selves…Therefore, in any of the these situations, mesne profit would be payable.”, the court observed.

“we may record a prima facie view, that the respondent-tenant has for the reasons yet undemonstrated, been delaying the payment of rent and/or other dues, payable to the petitioner-applicant landlord. This denial of monetary benefits accruing from the property, when viewed in terms of the unchallenged market report forming part of the record is undoubtedly substantial and as such, subject to just exceptions, we pass this order for deposit of the amount claimed by the petitioner-applicant, to ensure complete justice inter se the parties.”, the court concluded.

For Petitioner(s) Mr. Rana Mukherjee, Sr. Adv. Ms. Vijaya Bhatia, Adv. Mr. Ganesh Shaw, Adv. Mr. Kunal Chatterji, AOR Ms. Maitrayee Banerjee, Adv. Mr. Rohit Bansal, Adv. Ms. Kshitij Singh, Adv. Mr. Sohhom Sau, Adv. Mr. Samarth Mohanty, Adv. Mr. Arjun Bhatia, Adv.

For Respondent(s) Mr. Rupak Ghosh, Adv. Mr. Debdut Mukherjee, Adv. Ms. Sonia Dube, Adv. Ms. Kanchan Yadav, Adv. Ms. Surbhi Anand, Adv. Mr. Tanishq Sharma, Adv. Ms. Saumya Sharma, Adv. M/S. Legal Options, AOR

Case Title: BIJAY KUMAR MANISH KUMAR HUF VERSUS ASHWIN BHANULAL DESAI

Citation : 2024 LiveLaw (SC) 413

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