Mesne Profits After Termination Of Tenancy Be Based on Market Rate, Not Statutory Provisions: Allahabad HC

The Court noted that after the tenancy is terminated, the status of the petitioner would be trespasser and he cannot take any benefit or advantage of any provision of Uttar Pradesh Regulation of Urban Premises Tenancy Act, 2021.

The bench of Justice Neeraj Tiwari observed, “…in case of termination of tenancy by notice under Section 106 of Transfer of Property Act, 1882, enhancement of mesne profit shall be determined on the basis of market rate not on the basis of provision of any statutory provision.”

Brief Facts-

The revisionist Punjab National Bank Earlier Oriental Bank Of Commerce challenges the order by the Small Causes Court. Before the Court the revisionist agreed to vacate the commercial property within one year and pay a monthly rent of Rs. 3.27L. The revisionist also contested the 15% annual increase in mesne profits. He was granted one year by the Court to vacate, subject to filing an affidavit, depositing the decretal amount, and paying monthly rent on time. Failure to comply will void the Court's order. The revision is disposed of concerning vacating the property only.

The Court noted that there is no doubt on the issue that the suit was filed in the year 2008 and on that date Act No. 2021 was not in existence, therefore, according to the Court any provision of Act would not be applicable.

However, the Court perused Section 9 of Uttar Pradesh Regulation of Urban Premises Tenancy Act, 2021 which provides for revision of rent and noted that it has nothing to do with mesne profits.

According to the Court it is not the case of payment of rent, but mesne profit, therefore, even in case Act, 2021 is applicable, petitioner is not entitled for benefit of Section 9 of Act, 2021.

The Court mentioned the decision in Atma Ram Properties (P) Ltd. Vs. M/s. Federal Motors Pvt. Ltd. reported in 2005 (2) ARC 936 and according to the Court SC held, “after determination of tenancy, the position of tenant is akin to that of a trespasser and he cannot claim that the measure of damages, should be awarded under the provision of Rent Control Order. In case the real property is higher than the rent earned, amount of compensation for use and occupation of property can be assessed at the higher value.”

The Court noted that in the present case notice was served, tenancy was terminated and status of petitioner became trespasser. As per the Court the mesne profit with the enhancement at the rate of 15% per annum is based upon the market rate produced by the plaintiff respondent not controverted or denied by the petitioner-defendant.

The Court found no illegality in the impugned order.

Accordingly, the Court dismissed the Revision.

Cause Title: Punjab National Bank Earlier Oriental Bank Of Commerce v. Sanjeevani Shiksha Samiti (Neutral Citation: 2024:AHC:95793)

Appearance:

Appellant: Sr. Adv. Saurabh Kumar Pandey

Respondent: Adv. Utkarsh Birla

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