In CIVIL APPEAL NOS. 4646-47 OF 2022-SC- Tenancy terminates after decree of eviction is passed and from said date, landlord is entitled for mesne profits or compensation for depriving him from use of premises: SC Justices Indira Banerjee & J.K.Maheshwari [06-07-2022]

Read Judgment: M/s. Martin & Harris Private Limited & Anr v. Rajendra Mehta & Ors 

Tulip Kanth

New Delhi, July 8, 2022: In a case pertaining to the Rajasthan Premises (Control of Rent and Eviction) Act, 1950 (old/repealed Act), the Supreme Court has clarified that if suit or proceedings are pending on the date of notification issued by the State Government for applicability of the Rajasthan Rent Control Act, 2001(New Act), then such proceedings would continue under the Old Act and New Act will have no application.

While observing that the order fixing the mesne profit and the order passed on the review petition, filed by the Appellants were  just and proper, the Bench of Justice Indira Banerjee and Justice J.K.Maheshwari said, “Therefore, in our considered view, the High Court has rightly rejected the contention while dismissing the review petition and rightly held that Section 20 of the New Act, by which three times mesne profits to the standard rent was made permissible for the suit or proceedings started under the New Act, have no application in suit or proceedings initiated under Old Act and pending on the date of commencement of New Act.” 

In this case,the Plaintiffs/Respondents being the owners of the suit property filed a suit  for eviction, recovery of rent and permanent injunction. The said suit was filed in 2002 invoking the Provisions of Section 13 of the Rajasthan Premises (Control of Rent and Eviction) Act, 1950. The suit was decreed and on filing the appeal, it was dismissed. The Second Appeal was filed challenging both the judgments before the High Court. 

On filing an application under Order XLI Rule 5 read with Section 151 of the Code of Civil Procedure  by the Plaintiffs/Respondents asking mesne profit due to continuation of stay on eviction decree it was decided by an order whereby the appellants were directed to pay the mesne profit @ Rs.2,50,000 per month from the date of filing of the application  till disposal of the appeal. The appeals filed by both the parties against the said order were pending before the High Court.In the present appeals the order of the High Court directing to pay the mesne profits @ Rs.2,50,000  per month with other ancillary directions had been questioned. 

On the issue of of determination of the amount of mesne profits, the Bench referred to the judgments of the Top Court in Marshall Sons & Co. (I) Ltd. vs. Sahi Oretrans (P) Ltd. and Another and  Atma Ram Properties (P) Ltd. vs. Federal Motors (P) Ltd. and asserted, “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. 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 of this Court.” 

Therefore, looking into the fact that the decree of eviction passed by Trial Court had been confirmed in appeal against which second appeal was pending, however, the Apex Court opined that after stay on being asked the direction to pay mesne profits or compensation issued by the High Court was in consonance to the law laid down by this Court, which was just equitable and reasonable.

On the issue of determination of mesne profits, the Bench held that the basis of determination of the amount 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. Also, nature of premises i.e. commercial or residential and the rate of rent precedent on which premises can be let out are the guiding factor in the facts of individual case. Thus, holding that the amount of mesne profit as fixed @ Rs.2,50,000/- was also just and proper looking at the span of time i.e. 10 years from the date of fixing of the standard rent and six years from the date of passing of the decree of eviction, the Bench dismissed the appeals.