Law Web: Whether appellate court should determine mesne profits for determining interim compensation while staying eviction decree?

If this Court indulges in a threadbare analysis and judicially

determines the relative merits of the rival mesne profits reports at an

interlocutory stage—more so under Order 41, Rule 5 of CPC—that

preempts the trial Court’s legitimate adjudicatory powers under Order

20, Rule 12 of CPC. Here, what this Court intends, or requires, to do is

to use the “commonsense which is a cluster of life's experiences” rather

than depend on the rival facts presented by warring litigants.”

(g) Pragmatic Pursuit:

32. Indeed, any adjudication, if it were, under Order 41, Rule 5

of CPC involves an element of ad hocism, a permissible level of guess

work, and a dose of discretion. That provision is a step-in-aid in appeal

proceedings; it tries to keep both the rivals in the litigation on an even

keel. One has the reality of a decree; the other a possibility of its

reversal. The decree, say in an eviction suit, alters the characters of

parties. The tenant is no longer a tenant; he is, at best, an occupant.

And that occupation stands branded as unauthorised. The suspension

of the decree does not obliterate the judicial findings; it only keeps its

effect—its execution—at bay. So to have the legitimate judicial dictum

put on hold in the name of stay, the appellant needs to submit himself

to certain terms. The terms of, for example, paying monetary

compensation. A stay is not for mere asking. Nor can the appellant

paint himself a victim under Order 41, Rule 5 of CPC. That said, I

must also acknowledge that the appellate courts will not lose sight of

the distinction between what is ideal and what is practical; what is

discretionary and what is arbitrary; what is a fair guess and what is a

wild whim.

33. With judicial overload, docket explosion, and clogging

adjudicatory avenues at every echelon, we cannot expect a mini-trial

even under Order 41, Rule 5 of CPC, for fixing, say, an interim

compensation. It is ideal. But with the litigious multitude knocking at

the court’s doors clamouring for speedy justice, it is an unaffordable

legal luxury.

34. Here, in the revision, the appellant cannot insist on

reappreciation of his case on merits. This Court can only examine the

jurisdictional errors, if any, committed by the Appellate Bench.

Therefore, the tenant seeking to stall the execution of a decree from a

final court of fact has more burden to bear.

(h) The Result:

35. So, I reckon this Court’s interim arrangement needs no

interference, for this adjudication under Order 41, Rule 5 of CPC has no trappings of a judicial determination of mesne profits under Order

20, Rule 12 of CPC. The tenant will continue to pay Rs.25,000/- per

month to have the decree stayed, and the eviction stalled. Between the

two extremes of Rs.71,500/- per month and Rs.12,846/-, as projected

by the landlords and tenant respectively, my altering the figure

Rs.25,000/- can be nothing more than a cosmetic consideration. This

interim arraignment does not prevent the landlords from invoking

Order 20, Rule 12 of CPC. In that event, both the rival contenders can

invite a reasoned order from the trial Court.

IN THE HIGH COURT OF JUDICATURE AT BOMBAY

CIVIL APPELLATE JURISDICTION

CIVIL REVISION APPLICATION (ST.) NO.33250 OF 2018

Previn Govind Sharma Vs Dinyar Jal Jamshedji

CORAM : DAMA SESHADRI NAIDU, J.

DATE : 21st JUNE 2019.

Rule. Rule made returnable forthwith. Heard finally by consent

of the parties.

Facts:

2. The tenant has filed this CRA and has had the Appellate

Court's decree of eviction stayed. In that process, this Court tentatively

fixed Rs.25,000/- as a monthly compensation to be paid to the

landlords. As a condition precedent, this Court has also observed that

once the rival parties place on record the necessary material, it will fix

the interim compensation to be paid pending the Civil Revision

Application.

3. In the context of fixing the interim compensation, I may set

out the facts briefly. Initially, before the City Civil Court, Mumbai, the

landlords filed Suit No.162 of 1996 against the applicant–tenant for

eviction. But the plaint was returned under Order VII Rule 10 to be

presented before the proper court. The landlords, instead, instituted

RAE Suit No.141/260 of 2008; the trial Court dismissed it on 16th

September 2013. But the landlords succeed in Appeal No. 124 of 2013;

the Appellate Bench of the Small Cause Court, Mumbai, allowed it on

6th October 2018. Aggrieved, the tenant filed this Civil Revision

Application. And on 12th December 2018, she secured an interim stay.

4. The interim order, as I have noted, directs the tenant to pay

Rs.25000/- per month as compensation until the Court fixes a

reasonable amount as interim compensation. Based on the material

either party placed on record, including the mesne profits reports

prepared by the Government approved valuers, both the counsel have

advanced their arguments.

Submissions:

Applicant’s:

5. Shri Amrut Joshi, the learned counsel for the tenant–

applicant, contends that the building was constructed in 1915 and is

dilapidated. According to him, the area does not exceed 600 sq. ft. In

this context, he submits that the landlords have admitted in their

pleadings that the property is about 600 sq. ft., but it has later gone

back on its own admission. That is, the landlords now assert that the

property measures over 1,000 sq. ft.

6. To support his contentions, Shri Joshi has also drawn my

attention to the landlords’ pleadings in the plaint to the effect that the

leased property is 600 sq. ft, and that the initial rent was Rs.562/-. As

per the pleadings, the rent was later raised to Rs.662/-. So it now stands

at Rs.1200/- per month.

7. Shri Joshi argues that the landlords constituted a Charitable

Trust, and that Trust is expected to lease out the property to the needy.

It should not be swayed by profit motive. Besides, Shri Joshi elaborates

on, what he calls, the well-established principles that weigh with the

Court in its fixing the interim compensation. On that count, he has

relied on these decisions: (i) Niaz Ahmad Khan v. Mahmood Rahmat

Ullah Khan and anr.[1], (ii) Atma Ram Properties (P) Ltd. v. Federal

Motors (P) Ltd.[2], (iii) Chanddrakant Dhanu v. Sharmila Kapur[3].

8. Further, Shri Joshi has drawn my attention to the mesne

profits reports on record. According to him, the landlords’ valuer

prepared the report without inspecting the property. So the valuer has

fixed the fair market rent for the suit property at Rs.71,500/- per

month. And that amount, according to Shri Joshi, is exorbitant. On the

other hand, he stresses that the fair market rent fixed by the tenant's

valuer is about Rs.12,000/-. This amount must be the just interim

compensation.

Respondents’:

1 [1] (2008) 7 SCC 539

2 [2] (2005) 1 SCC 705

3 [3] 2009 (2) Mh.L.J. 243

9. Per contra, Shri Foroze Bharuka, the learned counsel for the

landlords, has initially touched on the merits. He contends that though

the applicant–tenant now claims the status of a tenant, she has actually

trespassed on the suit property. To elaborate, Shri Bharuka submits that

the applicant claims to be the adopted daughter of the original tenant,

who died both intestate and issueless. At any rate, he submits that he

will not take that issue further.

10. Then, Shri Bharuka has drawn my attention to the relative

merits of the rival mesne profits reports. According to him, the tenant’s

valuer has treated the property as if it were vacant land and, then, went

on to calculate the probable monthly rent. Shri Bharuka, again, stresses

that the property is over 1000 sq. ft. Faced with the landlords’

admission about the extent—that it is 600 sq. ft.,—Shri Bharuka

submits that it is a verifiable fact. Even at the landlords’ cost, this Court

may have the area measured before it could fix the interim

compensation. In that context, he submits that even an admission can

be explained.

11. Shri Bharuka submits that the landlords’ mesne profits report

has considered all aspects and opined that Rs.71.500/- is the just

compensation. About the landlords’ valuer not visiting the property, he

submits that the applicant did not allow him to enter the property.

Reply:

12. In reply, Shri Joshi, the learned counsel for the tenant,

submits that it is the landlords’ suit that has occasioned this CRA. The

landlords’ having sued the applicant showing her as a tenant, it does

not lie in their mouth to call the applicant a trespasser.

13. Heard Srhir Amrut Joshi i/b. Shri Sanket Mungale for the

applicant and Shri Foroze Bharuka for the respondents 1 to 8.

Discussion:

(a) The Decree:

14. In September 2013 the trial Court dismissed the landlords’

RAE & R Suit No. 141/260 of 2008. But in Appeal No.124 of 2013,

the Appellate Bench of the Small Cause Court decreed the suit—that is,

it reversed the trial Court’s verdict. While allowing the appeal, it

ordered:

“1. Appeal is allowed.

2. The judgment and decree passed in RAE & R Suit

No.141/260 of 2008 on 16.09.2013 is set aside and

the suit is decreed.

3. The defendants are hereby ordered to vacate the

suit premises and deliver quiet and peaceful

possession of it to the plaintiffs within three months

from the date of this order.

4. A separate inquiry as to mesne profits be held as

per the provisions of Order 20 Rule 12 of the Code of

Civil Procedure and the plaintiffs are entitled to get

mesne profits at the rate determined in such inquiry

from the defendant no.3 from date of the suit till the

date they get possession of the suit premises.

5. The defendant no.3 to pay the cost throughout to

the plaintiffs.

6. A decree be drawn accordingly.”

(italics supplied)

15. Aggrieved, the tenant filed the Civil Revision Application.

This Court, through its order on 12th December 2018, granted to the

tenant ad-interim protection against eviction. It was on a few

conditions. One of them is that the tenant should deposit in the Court

“compensation assessed on an ad-hoc basis at Rs.25,000/- per month

from 1st November 2018, on or before 5th day of each succeeding

month.”

16. Besides that, the Court permitted both parties to place

material before the Court to assist it in its determining the

compensation amount as per the Supreme Court’s ruling in Atma Ram

Properties.

(b) Mesne Profits:

17. Lexically speaking, mesne (pronounced “meen”) denotes the

idea of occupying a middle position; it has two important senses in the

law. We may consider the second sense. Mesne may signify “occurring

or performed at a time intermediate between two dates” (as defined by

the Oxford English Dictionary). Thus, mesne profits are the profits of

an estate received by a tenant in wrongful possession between two dates

—that is, between the commencement of a lawsuit and its termination.

18. As Section 2(12) of the Code of Civil Procedure defines,

mesne profits are those profits which a person in wrongful possession of

the property actually received or might with ordinary diligence have

received by using that property. Those profits carry interest but do not

include profits made by a person in wrongful possession. Plainly put,

the mesne profits are a penal compensation. Thus, the object of

awarding a decree for mesne profits is to compensate the person kept

out of possession and deprived of enjoying his property despite his

entitlement to possession.[4]

19. A decree for mesne profits can be passed against a trespasser

or against a person who has suffered a decree of restoring possession to

the true owner. Order 20, Rule 12 governs this process. Here , that

process has not begun. Instead, the parties want the interim

compensation fixed under Order 41, Rule 5, as a precondition so the

landlords’ decree could be stayed. For that, they want the Court to

follow the ratio of Atma Ram Properties. Let us examine that case.

20. In Atma Ram Properties, the respondent, first, suffered a

decree of eviction. Then, he approached the Rent Control Tribunal,

which stayed the eviction subject to his depositing in the court

Rs.15,000/- per month as compensation, besides the contractual rent,

which may be paid directly to the appellant. The compensation was

ordered to be retained with the court; neither party could withdraw the

4 [4] C. K. Thakker’s Code of Civil Procedure, Vol. 1, P.247 (E-book Reader)

amount until the appeal was finally decided. The respondent-tenant

challenged it before the High Court. He contended that the Tribunal

ought not to have required him to deposit more than the contractual

rent. The High Court accepted that contention; it modified the stay

order. So the appellant-landlord went to the Supreme Court.

21. In Atma Ram Properties, the Supreme Court observed that

“the litigation goes on for an unreasonable length of time and the

tenants in possession of the premises do not miss any opportunity of

filing appeals or revisions so long as they can thereby afford to

perpetuate the life of litigation and continue in occupation of the

premises.” It has quoted with approval the aphoristic observations of

Chief Justice Chandrachud, who spoke for the Constitution Bench in

Olga Tellis v. Bombay Municipal Corporation[5]: "[C]ommonsense

which is a cluster of life's experiences is often more dependable than

the rival facts presented by warring litigants".

22. Atma Ram Properties has observed that once the lease or

tenancy stands determined, say, through a decree from a competent

court, the tenant’s right to continue to possess the leased property ends.

And for his continued use and occupation of the property for any

period thereafter, he must pay damages at the rate the landlord could

have let out the premises if there had been no tenant or the tenant had

vacated with the lease termination. Thus, Atma Ram Properties has

summed up the principles of interim compensation:

(1) while passing an order of stay under Rule 5 of Order

41 of the Code of Civil Procedure, 1908, the appellate

5 [5] (1985) 3 SCC 545

Court does have jurisdiction to put the applicant on such

reasonable terms as would in its opinion reasonably

compensate the decree-holder for loss occasioned by delay

in execution of decree by the grant of stay order , in the

event of the appeal being dismissed and in so far as those

proceedings are concerned. Such terms, needless to say,

shall be reasonable;

(2) in case of premises governed by the provisions of

the Delhi Rent Control Act, 1958, in view of the

definition of tenant contained in clause (l) of Section 2 of

the Act, the tenancy does not stand terminated merely by

its termination under the general law; it terminates with

the passing of the decree for eviction. With effect from

that date, the tenant is liable to pay mesne profits or

compensation for use and occupation of the premises at

the same rate at which the landlord would have been able

to let out the premises and earn rent if the tenant would

have vacated the premises. The landlord is not bound by

the contractual rate of rent effective for the period

preceding the date of the decree;

(3) the doctrine of merger does not have the effect of

postponing the date of termination of tenancy merely

because the decree of eviction stands merged in the decree

passed by the superior forum at a later date.

(italics supplied)

23. After setting out those principles, Atma Ram Properties has

taken stock of the prevailing market condition in Delhi. It has judicially

acknowledged that the value of the real estate and the rents have

skyrocketed. It estimated the probable rent the leased property would

fetch if let out to a third person—Rs.3,50,000/-per month—and then

restored the Tribunal’s conditional stay. That is, the respondent was

asked to pay Rs.15,000/- per month for his continued presence in the

leased property pending the appeal.

24. I may note that Rs.3,50,000/- as the estimated rent and

Rs.15,000/- as the conditional interim compensation may have no

parity or congruity. But, to me, the Supreme Court has refused to

interfere with the Tribunal’s discretion and impose its view in an

interlocutory matter.

(d) Niays Ahmad Khan:

25. In Niyas Ahmad Khan, the landlord sued the tenant for

eviction. He set up the bona fide requirement as the ground of eviction.

But both the primary authority and the appellate authority disbelieved

the landlord’s version and rejected the application. The landlord, then,

approached the High Court, challenging the concurrent rejection. In

the writ petition, he wanted the High Court to quash the impugned

orders of the authorities under the rent control regime and to grant an

order of eviction.

26. There was, indeed, no prayer for a direction that the tenant

should pay the rent at an increased rate. Plainly put, the grievance in

the writ petition was only about the authorities’ refusal to grant an

order of eviction.

27. In the above factual backdrop, Niyas Ahmad Khan has

reckoned that the High Court has exceeded its jurisdiction. For it fixed

an arbitrary figure as the conditional interim compensation to be paid

by the successful tenant to an unsuccessful landlord. And the landlord

never sought that relief, though. It has felt there is no justification for

directing payment of a higher rent either pending consideration of the

writ petition or otherwise. It has also observed that when the statute

specifically provides for fixation of rent and increase in rent, it is

impermissible for the High Court to ignore those provisions and direct

the tenant to pay an arbitrarily assessed rent. I am afraid Niyas Ahmad

Khan does not affect this case. Here, the tenant suffered a decree of

eviction; now he rendered himself an unauthorised occupant, if not an

illegal one. His continuation as a tenant in the face of a decree is

impermissible unless an appellate or revisional forum stays that decree.

And that stay comes at a premium called interim compensation as

recognized by Order 41, Rule 5 of CPC. Yet it has nothing to do with

mesne profits under Order 20, Rule 12 of CPC, for they stand on a

different footing.

(e) Chandrakant Dhanu:

28. In Chandrakant Dhanu, the petitioners-tenant suffered a

decree of eviction. In the appeal, the Appellate Bench of the Court of

Small Causes, fixing Rs.50,000/- as the monthly compensation for the

tenant to pay as a precondition to have the decree stayed. Aggrieved, he

filed a writ petition before this Court.

29. Chandrakant Dhanu, per a learned Single Judge, holds that

“there is no question of fixing any compensation without any basis.

The burden is on the landlord to prove his claim of fair and reasonable

compensation by putting the material on record, including expert

opinion report and other such instances etc.” It permits the tenant, too,

to show the contra material, if any.

(f) What is determined now?

30. I may put the issue in perspective. What this revisional

Court now considering or determining are not mesne profits. It is only

laying down the condition or conditions under Order 41, Rule 5 (3) (c)

& (5) of CPC. Nothing more. Here, the contractual rate is Rs.1,200/-.

The landlords’ mesne profits report recommends Rs.71,500/- per

month; the tenant’s report, as expected, recommends Rs.12,846/-—a

lower figure.

31. If this Court indulges in a threadbare analysis and judicially