Case Note & Summary
The dispute arose from a commercial property consisting of three shops in Mumbai. The plaintiff, Mridangraj Hiralal Suchak, was a tenant and had inducted the defendant, Bank of Baroda, as a licensee in 1969 for 10 years, renewed in 1981 for another 10 years at a fixed license fee of Rs.5.25 per sq.ft. per month. In 1983, the plaintiff filed an eviction suit (L.E. Suit No.291/338 of 1983) against the bank. The trial court decreed eviction and directed an inquiry into mesne profits under Order 20 Rule 12 CPC. The trial court later passed an order directing the defendant to pay mesne profits at the contractual rate of Rs.5.25 per sq.ft. per month from the date of termination of license until possession is delivered. Both parties filed Civil Revision Applications: the plaintiff (decree-holder) sought mesne profits at market rate, while the defendant (judgment-debtor) challenged the maintainability of the revision and the order itself. The High Court held that the trial court's order was erroneous because mesne profits must be determined based on market rent prevailing at the time of determination, not the contractual license fee. The court noted that the license had expired and the defendant was holding over, making it liable for mesne profits at market rates. The court allowed the plaintiff's revision and dismissed the defendant's revision, setting aside the trial court's order and directing the trial court to determine mesne profits afresh after considering evidence of market rent.
Headnote
A) Civil Procedure Code, 1908 - Order 20 Rule 12 - Mesne Profits - Determination - After termination of license, the licensee holding over is liable to pay mesne profits at the market rate prevailing at the time of determination, not the contractual license fee. The trial court erred in fixing mesne profits at the contractual rate without considering evidence of market rent. (Paras 10-15) B) Civil Procedure Code, 1908 - Section 115 - Civil Revision Application - Maintainability - An order under Order 20 Rule 12 CPC directing payment of mesne profits is a 'case decided' and revisable under Section 115 CPC. The revision applications are maintainable. (Para 9) C) Property Law - Mesne Profits - Licensee - A licensee who continues in possession after termination of license is liable for mesne profits, which are compensation for use and occupation at market rates, not the agreed license fee. (Paras 10-12)
Issue of Consideration
Whether the trial court was correct in directing payment of mesne profits at the contractual rate of Rs.5.25 per sq.ft. per month instead of the market rate, and whether the Civil Revision Applications are maintainable.
Final Decision
Civil Revision Application No.790 of 2012 filed by the plaintiff is allowed. Civil Revision Application No.406 of 2012 filed by the defendant is dismissed. The impugned order dated 30th January 2012 passed by the trial court is set aside. The trial court is directed to determine mesne profits afresh after giving opportunity to both parties to lead evidence on market rent.
Law Points
- Mesne profits must be determined at market rate
- not contractual rate
- after termination of license
- Civil Revision Application maintainable against order under Order 20 Rule 12 CPC
- Licensee holding over is liable for mesne profits
- Court can determine mesne profits at final stage after evidence.
