Mesne Profits Can Become Payable On Continuation Of Possession By Tenant After Expiry, Determination, Forfeiture Or Termination Of Lease: SC

The Supreme Court observed that mesne profits can become payable on continuation of possession after ‘‘determination’, ‘expiry’, ‘forfeiture’ and ‘termination' of lease.

The Court was considering some interim applications in Special Leave Petition (SLP) filed by an HUF i.e., Hindu Undivided Family challenging the judgment of the Calcutta High Court.

The two-Judge Bench of Justice J.K. Maheshwari and Justice Sanjay Karol observed, “It is to be noted that the Court in Sudera Realty (supra) observed that mesne profits become payable on continuation of possession after ‘expiry’ of lease. In our considered view, the effect of the words ‘determination’, ‘expiry’, ‘forfeiture’ and ‘termination’ would, subject to the facts applicable, be similar, i.e., when any of these three words are applied to a lease, henceforth, the rights of the lessee/tenant stand extinguished or in certain cases metamorphosed into weaker iteration of their former selves. Illustratively, Burton’s Legal Thesaurus 3rd Edn. suggests the following words as being similar to ‘expire’ - cease, come to an end; ‘determine’ is similar to - come to a conclusion, bring to an end; ‘forfeiture’ is similar to – deprivation/destruction of a right, divestiture of property; and ‘terminate’ is similar to – bring to an end, cease, conclude. Therefore, in any of these situations, mesne profit would be payable.”

Senior Advocate Rana Mukherjee appeared for the petitioner while Advocate Rupak Ghosh appeared for the respondent.

In this case, due to alleged non-payment of rent, the lease was forfeited and the petitioner initiated proceedings for ejectment under the Transfer of Property Act, 1882 (TPA). A suit was filed before the City Civil Court at Calcutta seeking a) recovery of possession by eviction of defendant (respondent- tenant); b) permanent injunction against the respondents and his agents, servants, employees or associates etc., from alienating, transferring or parting with possession of the property. The respondent filed an application seeking rejection of the plaint on the grounds of jurisdiction and for the premises to be governed under the Tenancy Act alleging particularly that the possession was sought in respect of a lease that was yet undetermined.

Allowing the matter not to rest there, the respondent pursued the matter further. The High Court upheld the dismissal of the application under Order VII Rule 11 and eventually, the court directed the remand of the matter. The Trial Court in all four suits, answered the issues in favour of the plaintiff. It was in appeal from such order of the Trial Court that the judgment was passed. The High Court while upholding the jurisdictional issue in favour of the respondent-tenant, dismissed all the four suits of the plaintiff for the same not to be maintainable. Thus, the issue was whether the order of the High Court holding the respondent to be governed by the Tenancy Act was legally sustainable or not.

The Supreme Court in view of the facts and circumstances noted, “Having considered the submissions made across the Bar, we note that the disputed nature of the lease deed, in other words, its continuation or forfeiture on account of non-payment is heavily contested and stemming therefrom, so is the nature of payment to be made. We also note that the location of demised premises is in the heart of Kolkata and if the submissions of the petitioner are to be believed, they have been deprived of rent for a considerable period of time. Taking a lock stock and barrel view of the present dispute, the averments and the documents placed before us, we may record a prima facie view, that the respondent-tenant has for the reasons yet undemonstrated, been delaying the payment of rent and/or other dues, payable to the petitioner-applicant landlord.”

The Court added that such denial of monetary benefits accruing from the property, when viewed in terms of the unchallenged market report forming part of the record is undoubtedly substantial.

“… as such, subject to just exceptions, we pass this order for deposit of the amount claimed by the petitioner-applicant, to ensure complete justice inter se the parties, After all, we cannot lose sight of the fact that the very purpose for which a property is rented out, is to ensure that the landlord by way of the property is able to secure some income”, it said.

The Court observed that if the income remains static over a long period of time or in certain cases, yields no income, then such a landlord would be within his rights, subject of course, to the agreement with their tenant, to be aggrieved by the same.

“Keeping in view the location of the demised premises, the rent as agreed, the alleged non-payment of rent, the default in payment of interest, as alleged, and other such like factors we are inclined to accept the calculation of dues as made by the petitioner-applicant, submitted to this Court during hearing, as reproduced hereinabove”, it further said.

Accordingly, the Apex Court directed the respondent to deposit Rs. 5,15,05,512/- with the Registry within four weeks.

Cause Title- Bijay Kumar Manish Kumar HUF v. Ashwin Bhanulal Desai (Neutral Citation: 2024 INSC 445)

Appearance:

Petitioner: Senior Advocate Rana Mukherjee, Advocates Vijaya Bhatia, Ganesh Shaw, AOR Kunal Chatterji, Advocates Maitrayee Banerjee, Rohit Bansal, Kshitij Singh, Sohhom Sau, Samarth Mohanty, and Arjun Bhatia.

Respondent: Advocates Rupak Ghosh, Debdut Mukherjee, Sonia Dube, Kanchan Yadav, Surbhi Anand, Tanishq Sharma, Saumya Sharma, and AOR M/S. Legal Options.

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