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Scope Of Enquiry And Judicial Notice While Granting Mesne Profits And Damages For Unauthorized Occupation Of The Leased Premises

NIRAJ Singh
15 Oct 2020 12:45 PM GMT
Scope Of Enquiry And Judicial Notice While Granting Mesne Profits And Damages For Unauthorized Occupation Of The Leased Premises
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A person doing something with full knowledge of its adverse consequences must face the consequences. Applying such a principle to cases of continuation of occupancy despite termination of lease, it is to be held that such a person is liable for paying mesne profits and damages at a rate which may be higher than the agreed rent and may be equivalent to the then the prevalent market rate of rent. It is also a common sight in our litigation system that unscrupulous parties delaying the disposal of cases and even when the landlord succeeds in obtaining a decree for possession in his favour, the execution of such a decree still takes a long time. It is, therefore, necessary for the Courts to remain mindful of such extenuating circumstances and award reasonable mesne profits, as per the prevailing market rent the grant of enhanced mesne profits, in such circumstances, to accommodate the loss of rent endured during the pendency of the suit proceedings cannot be deemed as granting relief beyond the pleadings of the parties. A substantive right of this nature cannot be diluted on the pretext of a technicality and a landlord of the suit property cannot be estopped from claiming a larger sum as mesne profits than what was claimed in the plaint.

It would be appropriate to first refer to Section 2(12) of the CPC, which defines mesne profits and also to Order XX Rule 12 CPC, which prescribes the procedure to be followed by the Court while dealing with a claim for grant of mesne profits. These aforesaid provisions read as under:-

"Section 2(12) "mesne profits" of 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;"

"Order XX Rule 12:-Decree for possession and mesne profits.- (1) Where a suit is for the recovery of possession of immovable property and for rent or mesne profits, the Court may pass a decree-

(a) for the possession of the property;

(b) for the rents which have accrued on the property during the period prior to the institution of the suit or directing an inquiry as to such rent;

(ba) for the mesne profits or directing an inquiry as to mesne profits;

(c) directing an inquiry as to rent or mesne profits from the institution of the suit until—

(i) the delivery of possession to the decree-holder,

(ii) the relinquishment of possession by the judgment-debtor with notice to the decree-holder through the Court, or

(iii) the expiration of three years from the date of the decree, whichever event first occurs.

(2) Where an inquiry is directed under clause (b) or clause (c), a final decree in respect of the rent or mesne profits shall be passed in accordance with the result of such inquiry."

The calculation of mesne profits always involves some guesswork and the Courts in several cases, taken judicial notice of the prevalent market rents of different areas within the city while awarding mesne profits. Rents may vary based on location of properties, nature of construction, a period of construction, purpose/ user for which the premises are let, variation between demand for tenanted premises and availability of premises and even factors relating to the position of the economy. In this regard, reference may be made to judgment of Suman Verma & Ors V. Sushil Mohini Gupta & Ors – 2014 (10) DRJ 595 wherein it was held as under:-

"(a) though undoubtedly the Division Bench of this Court in National Radio & Electronic Co. Ltd. supra has held that judicial notice, only of a general increase in rent in the city of Delhi and not of the rates of rent, in the absence of proof thereof can be taken but it cannot be lost sight of that the Courts are for doing justice between the parties and not for, on hyper technicalities, allowing the parties to suffer injustice.

b) the property of the respondents/plaintiffs which the appellants/defendants are admittedly in unauthorized occupation of, is situated in one of the poshest colonies of the city of Delhi, properties wherein fetch high rentals and which only the elite, affluent, expats and foreigners are able to afford.

(c) the said property is a independent bungalow constructed over 400 sq. yd. of land and comprising of two and a half floors.

(d) the calculation of mesne profits always involves some amount of guess work, as held by this court in International Pvt. Ltd. Vs. Saraswati Industrial Sundictes Ltd. (1992) 2 RCR 6, M.R. Sahni Vs. Doris Randhawa and reiterated in Consep India Pvt. Ltd. supra and applicability of prevalent rents in the city and of which the Judges manning the Courts and who are born and brought up in the same city, are generally aware of.

e) The Division Benches of this court in Vinod Khanna Vs. Bakshi Sachdev AIR 1996 Delhi 32 and S.Kumar Vs. G.K. Kathpalia 1991 (1) RCR 431, taking judicial notice, refused to interfere with the rate of mesne profits even where the landlord had not led any documentary evidence. Notice of such increase has also been taken by the Supreme Court in Saradamani Kandappan Vs. S. Rajalakshmi (2011) 12 SCC 18."

It is important to note that the list of facts mentioned in Section 57 of the Indian Evidence Act, 1872 of which the Court can take judicial notice is not exhaustive and indeed the purpose of the section is to provide that the Court shall take judicial notice of certain facts rather than exhaust the category of facts of which the Court may in appropriate cases take judicial notice. In the case titled M.C. Agrawal Vs. Sahara India and Ors., 183 (2011) DLT 105, Hon'ble High Court of Delhi has held that in absence of any evidence led by the landlord in respect of rent prevalent in the area even then judicial notice of increase of rent in urban areas can be taken by applying Sec.114 and Sec.57 of Evidence Act, 1872. In the aforesaid case an increase of 15% every year was awarded to the landlord for illegal occupation. The relevant portion of the aforesaid judgment reads as:­

""8. What is now therefore to be determined is that what should be the mesne profits which should be awarded to the landlord in the absence of any evidence having been led by the landlord with respect to the rents prevalent in the area If there is no registered lease deed for a fixed period of three years, then, the tenant continues to stay in the premises, not because of any relationship of landlord and tenant pursuant to a lease of three years but only as an unauthorized occupant after the expiry of lease period by efflux of time. I therefore do not agree with the argument of the learned counsel for the tenants and I hold that since in this case tenancy expired by efflux of time on 30.11.2000 and the suit was filed on 3.4.2001, clearly, the tenant would become liable to pay mesne profits from 1.12.2000. Though it has not been argued on behalf of the landlord, I would like to give benefit to landlord of various precedents of this Court and the Supreme Court which take judicial notice of increase of rent in the urban areas by applying the provisions of Sections 114 and 57 of the Evidence Act, 1872. In my opinion, considering that the premises are situated in one of the most centrally located commercial localities of Delhi, situated in Connaught Place, an increase of 15% every year should be awarded (and nothing has otherwise been shown to me for the increase to be lesser) during the period for which the tenants have over stayed in the tenanted premises. Putting it differently, for the first year of illegal occupation, the tenant will pay 15% increased rent over the contractual rent. For the second year of illegal occupation, 15% increase will be over the original contractual rent plus the additional 15%. It will be accordingly for all subsequent years of the illegal occupation till the premises were vacated on 3.4.2005. I rely upon and refer to a Division Bench judgment of this Court in the case of S. Kumar v. G.R. Kathpalia 1999 RLR 114, and in which case the Division Bench has given benefit to the landlord and has taken judicial notice of increase in rent, and has accordingly allowed mesne profits at a rate higher than the contractual rate of rent."

In the case of National Radio and Electronic Co. VMotion Pictures Associations-122 (2005) DLT 629(DB), the Division Bench of Hon'ble Delhi High Court observed as under:-

"31. We find that this Court has in several cases taken judicial notice of the factum of increase of rent and made awards of mesne profits and damages. Noteworthy in this behalf is a judicial pronouncement of the Division Bench reported at (supra) entitled Vinod Kumar v. Bakshi Sachdev………

21……..It is true that no substantial evidence has been led by the plaintiff in respect of the increase of rent in the properties like that of the suit property. However, it is a well known fact that the amount of rent for various properties in and around Delhi has been rising staggeringly and we cannot see why such judicial notice could not be taken of the fact about such increase of rents in the premises in and around Delhi which is a city of growing importance being the capital of the country which is a matter of public history. At this stage we may appropriately refer to the Court making judicial notice of the increase of price of land rapidly in the urban areas in connection with the land acquisition matters. Even the Apex Court has taken judicial notice of the fact of universal escalation of rent and even raised rent of disputed premises by taking such judicial notice in case of D.C. Oswal v. V.K. Subbiah.

22. In that view of the matter we have no hesitation in our mind in holding that the Trial Court did not commit any illegality in taking judicial notice of the fact of increase of rents and determining the compensation in respect of the suit premises…….."

The question as to whether the plaintiff can be awarded future mesne profits at a rate higher than what has been claimed in the plaint has been dealt with in various decisions. In the case of Santosh Arora V M. L. Arora -2011 (2014) DLT 312 where the Division Bench of Delhi High Court held that the rate of mesne profits, is to be determined by evidence and is not a matter of contract. The relevant portion of the judgment reads as under:-

"25. The Supreme Court in Gopalakrishna Pillai Vs. Meenakshi Ayal AIR 1967 SC 155 has held:-

"With regard to future mesne profits, the plaintiff has no cause of action on the date of the institution of the suit, and it is not possible for him to plead this cause of action or to value it or to pay court-fees thereon at the time of the institution of the suit.."

It is for this reason only that payment of Court Fees of future mesne profits decreed is a condition to the execution thereof and is not to be paid at the time of institution of the suit. At the time of institution of the suit and which often remain pending for long, it is not possible for the plaintiff to state as to what benefits the defendant in wrongful possession of the property would receive from time to time.

27. In our opinion the plaintiff in such a situation would be entitled to such higher rate since he was not obliged to make a claim for future mesne profits, not obliged to pay Court Fees thereon and could not have in any case known to future mesne profits at what rate he would be entitled to as observed by the Supreme Court in Gopalakrishna Pillai supra. Once it is held to be the duty of the Court under Order 20 Rule 12 to award future mesne profits even without a specific prayer in this regard, the specific prayer even if made by the plaintiff cannot limit the entitlement of the plaintiff to future mesne profits.

29. The Division Bench of the Calcutta High Court in Gauri Prosad Koondoo Vs. Reily ILR 9 Cal 112, High Court of Andhra Pradesh in Magunta Kota Reddy Vs. Pothula Chendrasekhara Reddy AIR 1963 AP 42 and the High Court of the Rajasthan in Prithvi Singh Vs. Pahap Singh MANU/RH/0369/2006 have also held that a plaintiff is not estopped from claiming a larger sum as mesne profits than what was claimed in the plaint."

It is also settled proposition of law that interest forms an integral part of the mesne profits and, therefore, once the Court awards mesne profits, the interest accruing thereon has to be allowed in the computation of the mesne profits itself. A tenant cannot be permitted to urge that mesne profits which in fact ought to have been paid years ago, should not bear any interest. In the case of Consep India Pvt Ltd V CEPCO Industries Pvt Ltd –(2010) ILR 3 Del 766 wherein the Hon'ble Delhi High Court, after examining the decision of the Hon'ble Supreme Court in State Bank of Bikaner and Jaipur v. I.S. Ratta and Ors.- 120 (2005) DLT 407, observed that interest is an integral part of the mesne profits and, therefore, the same has to be allowed in the computation of mesne profits itself.

A common vein of the judgment is that mesne profits, which a landlord is entitled to receive from a tenant who is continuously in the occupation of the lease property despite the termination of the lease, has been laid down to mean the rate of rent which would otherwise, accrue on a suit premises during the period of its illegal occupation by a tenant. However, the burden which the Courts are often tasked with is to determine the appropriate amount payable to the landlord towards such mesne profits. This process of determination of mesne profits begins with the landlord discharging the onus placed upon him to prove his claim for mesne profits, in accordance with the law. Thereafter, it is for the Court to ascertain the appropriate mesne profits to be awarded to the claimant by adhering to the parameters as set out in Order XX Rule 12 CPC which prescribes that while passing the decree for possession, the Court may either straightaway pass a decree for mesne profits or direct that an inquiry be conducted for assessing the rate of mesne profits payable. If the Court finds that it is sufficient and authentic evidence available on record for determination of the landlord's claim for mesne profits, the Court may, in its discretion, award the same by relying on such evidence. In the alternative, in situations when the Court finds that the evidence brought on record is not sufficient for such determination, The court may direct that an inquiry be conducted thereto, in accordance with the provisions of the CPC and/or take judicial notice under Section 114 and 57 of the Evidence Act, 1872.

Mr. Niraj Singh is a Partner at RNS Associates. Views are personal.

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