Landlord Entitled To Mesne Profits From Tenant When Execution Of Decree Of Eviction Is Stayed : Supreme Court

The Supreme Court has reiterated that once a decree for eviction is stayed, it is necessary for the appellate court to fix the mesne profits to be paid by the tenant to the landlord for continuing the possession of the premises.

"Thus, after passing the decree of eviction the tenancy terminates and from the said date the landlord is entitled for mesne profits or compensation depriving him from the use of the premises", observed a bench comprising Justices Indira Banerjee and JK Maheshwari in the case M/s Martin & Harris Private Ltd vs Rajendra Mehta.

The bench noted that in Marshall Sons & Co. (I) Ltd. vs. Sahi Oretrans (P) Ltd. and Another – (1999) 2 SCC 325, the Supreme Court held that once a decree for possession has been passed and the execution is delayed depriving the decree holder to reap the fruits, it is necessary for the Appellate Court to pass appropriate orders fixing reasonable mesne profits which may be equivalent to the market rent required to be paid by a person who is holding over the property. In the case of Atma Ram Properties (P) Ltd. vs. Federal Motors (P) Ltd. – (2005) 1 SCC 705, the Court held that Appellate Court does have jurisdiction to put reasonable terms and conditions as would in its opinion reasonable to compensate the decree holder for loss occasioned by delay in execution of the decree while granting the stay. 

The bench further noted that the view taken in the case of Atma Ram (supra) has been reaffirmed in the case of State of Maharashtra vs. Super Max International Pvt. Ltd. and others ­ (2009) 9 SCC 772 by three Judges Bench.

The bench made these observations while considering a special leave petition filed by a tenant challenging an order of the Rajasthan High Court putting a condition to pay Rs 2.50 lakhs as monthly rent to the landlord to stay the execution of the eviction decree.

The appellant contended that as per Section 20 of Rajasthan Rent Control Act, 2001, the maximum amount of mesne profit may be payable three times of the standard rent in case the premises is let out for commercial purposes. It was argued that the mesne profit, as determined by the High Court, is excessive without looking to the year of construction of premises, location of the property which is on inside road of colony and also without taking note of the DLC rate, therefore, the order impugned may be set aside and the quantum of mesne profits may be revised to three times of the amount of rent making it Rs.1,35,000/­ per month. 

The Supreme Court noted that the 2001 Act came into effect from 01.04.2003 and had no applications to the proceedings initiated under the 1950 Act (which was applied in the present case).

The Court further observed the the basis of determination of the amount of mesne profit depends on the facts and circumstances of each case considering place where the property is situated i.e. village or city or metropolitan city, location, nature of premises i.e. commercial or residential are and the rate of rent precedent on which premises can be let out are the guiding factor in the facts of individual case.

It did not find any fault with the manner of determination adopted by the High Court and dismissed the petitions.

Case Title : M/s Martin & Harris Private Ltd vs Rajendra Mehta

Citation : 2022 LiveLaw (SC) 568

Headnotes - Tenancy & Rent Control Law - Mesne Profits - After passing the decree of eviction the tenancy terminates and from the said date the landlord is entitled for mesne profits or compensation depriving him from the use of the premises - Once a decree for possession has been passed and the execution is delayed depriving the decree holder to reap the fruits, it is necessary for the Appellate Court to pass appropriate orders fixing reasonable mesne profits which may be equivalent to the market rent required to be paid by a person who is holding over the property -Appellate Court does have jurisdiction to put reasonable terms and conditions as would in its opinion reasonable to compensate the decree holder for loss occasioned by delay in execution of the decree while granting the stay - Followed : Marshall Sons & Co. (I) Ltd. vs. Sahi Oretrans (P) Ltd. and Another – (1999) 2 SCC 325,Atma Ram Properties (P) Ltd. vs. Federal Motors (P) Ltd. – (2005) 1 SCC 705,State of Maharashtra vs. Super Max International Pvt. Ltd. and others ­ (2009) 9 SCC 772

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