Bombay High Court
State Trading Corporation Of India ... vs Mrs. Neelam Shamsunder Choudhar on 16 October, 2024
Neeta Sawant
2024:BHC-AS:41178 CRA-111-2019-FC
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CIVIL APPELLATE JURISDICTION
CIVIL REVISION APPLICATION NO. 111 OF 2019
State Trading Corporation of India Ltd. } ......Applicant
(Orig. Defendant)
: Versus :
Mrs. Neelam Choudhary } ....Respondent
(Orig. Plaintiff)
______________________________________________
Mr. Navin Arora, for the Applicant.
Mr. Ravinder Singh, Power of Attorney Holder of Respondent appearing in
person.
______________________________________________
CORAM : SANDEEP V. MARNE, J.
Judgment Reserved on : 8 October 2024.
Judgment Pronounced on : 16 October 2024.
JUDGMENT :
1) The Applicant-Defendant has filed this Revision
Application challenging the judgment and order dated 5 July 2018
passed by the Appellate Bench of the Small Causes Court in Appeal
No.123 of 2016, by which the Appellate Court has dismissed its Appeal
preferred by the Revision Applicant and has confirmed the order of
the Small Causes Court determining mesne profits in respect of the
premises at Rs. 160/- per sq. ft. per month from September 2003 to
December 2007 and at the rate of Rs. 300/- per sq. ft. per month from
January 2008 to 28 August 2012 alongwith interest at the rate of 6%
p.a.
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Neeta Sawant CRA-111-2019-FC
2) Respondent filed T.E.& R. Suit No.75/88 of 2008 against
the Applicant-Defendant for recovery of suit premises bearing Office
No.610, admeasuring 347 sq.ft. situated on 6th floor of the building
'Maker Chamber No.4', Nariman Point, Mumbai-21. The Suit came to
be decreed on 24 April 2012 directing handing over of possession of
the suit premises to Plaintiff in addition to conduct of enquiry into
mesne profits under Order 20 Rule 12 of the Code of Civil Procedure
(the Code). It appears that Applicant/Defendant filed Appeal No. 30 of
2012 in the Appellate Bench of the Small Causes Court challenging the
decree dated 24 April 2012. However, on account of non-grant of stay
to execution of decree, the decree was put into execution by Plaintiff,
who recovered possession of the suit premises from the Defendant on
28 August 2012. It appears that the Appeal filed by Defendant
challenging the substantive decree was subsequently dismissed.
3) In the above factual background, Plaintiff filed Mesne
Profits Application No. 886/2012 before the Small Causes Court for
determining amount of mesne profits under Order 20 Rule 12 of the
Code. Plaintiff prayed for fixation of mesne profits at the rate of
Rs .425/- per sq.ft per month in respect of the period from September
2003 till 28 August 2012 alongwith interest at the rate of 18% p.a.
Defendant appeared in the application and opposed the same by
taking a defence that it, being a Government of India Undertaking,
cannot be made to bear liability to pay hefty amount of mesne profits.
Reliance was placed by Defendant on covenants of Lease Agreement
dated 11 September 1980, in which the amount agreed at the end of
maximum permissible period of license was fixed at Rs. 12/- per sq. ft
per month. Defendant also raised a plea of huge amount of Rs.
80,157/- being kept with Plaintiff towards security deposit at the time
of execution of the agreement.
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Neeta Sawant CRA-111-2019-FC
4) Both the parties led evidence in support of their
respective contentions. After considering the pleadings and evidence
on record, the learned Judge of the Small Causes Court determined
the quantum of mesne profits at the rate of Rs. 160/- per sq. ft per
month for the period from September 2003 till December 2007 and the
rate of Rs. 300/- per sq. ft. per month from January 2008 till 28 August
2012 with interest at the rate of Rs.6% p.a. Applicant-Defendant filed
Appeal No. 123/2016 before the Appellate Bench of the Small Causes
Court, which has been dismissed by judgment and order dated 5 July
2018, which is the subject matter of challenge in the present Revision
Application.
5) Mr. Arora, the learned counsel appearing for the Revision
Applicant would submit that the Trial and the Appellate Courts have
failed to appreciate existence of specific agreement between the
parties, under which compensation at the rate of Rs. 12/- per sq.ft.
per month was agreed. That once there exists an agreement between
the parties providing for payment of specified amount compensation
in respect of the period after expiry of the lease, the Court cannot
award amount in excess of such agreed amount even while
determining mesne profits. That otherwise an inconsistency gets
created between the amount agreed under the Agreement and higher
amount claimed by Plaintiff, contrary to the Agreement. He would
submit that in similar case involving premises bearing Block No.222 in
the same building, the Trial Court fixed the amount of mesne profits
at the rate of Rs.12/- per sq. ft. per month and the Appellate Court
upheld the said amount. That the lessor/Plaintiff in the said case
(Vijay Shankar Bajoria) has filed Civil Revision Application in this
Court which has been admitted. He would therefore submit that the
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Neeta Sawant CRA-111-2019-FC
present Revision Application also needs to be admitted by staying the
orders passed by the Trial and the Appellate Courts.
6) Mr. Arora would further submit that both the Courts
below have failed to appreciate that large amount of security deposit
of Rs. 80,000/- was lying with the Plaintiff and while deciding the
quantum of mesne profits, the said security deposit of Rs.80,000/- is
totally ignored. Mr. Arora would submit that the quantum of mesne
profits determined by the Trial Court and confirmed by the Appellate
Court are otherwise excessive and needs to be substantially reduced
considering the position that Applicant-Defendant is a PSU.
7) The Revision Application is opposed by Mr. Ravinder
Singh, constituted attorney of Respondent, who appears in person. He
would submit that the challenge made by the Applicant-Defendant to
the orders passed by the Trial and the Appellate Court travel beyond
the scope of revisionary jurisdiction of this Court under Section 115 of
the Code. That neither of the three conditions of (i) wrongful
assumption of jurisdiction, (ii) non-exercise of vested jurisdiction or
(iii) material irregularity in exercise of jurisdiction is demonstrated
by the Revision Applicant and the present Revision Application is
nothing but an appeal filed in disguise. He would therefore submit
that since no valid grounds are made out for exercise of revisionary
jurisdiction under Section 115 of the Code, the Revision Application
deserves to be dismissed. In support of his contention, he would rely
upon judgment of the Apex Court in Keshardeo Chamria Vs. Radha Kissen
Chamria and others1 and Masjid Kacha Tank, Nahan Vs. Tuffail Mohammed2.
1 (1952) 2 SCC 329
2 1991 Supp (2) SCC 270
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8) Mr. Singh would further submit that mesne profits cannot
be determined with reference to amount specified in the License
Agreement as the same is not towards mesne profits. That mesne
profits are payable in respect of wrongful possession under the
provisions of the Code and therefore the amount agreed in the
Agreement cannot be the basis for determining the mesne profits. He
would submit that the Applicant-Defendant unlawfully squatted on
premises located in a building situated at India's premier business
district and therefore it is rightly made liable to pay mesne profits at
a very reasonable amount determined by the Trial Court. He would
pray for dismissal for the Revision Application.
9) Rival contentions of parties now fall for my
consideration.
10) Possession of the suit premises is secured by Plaintiff
consequent to eviction decree dated 24 April 2012 during execution
proceedings on 28 August 2012. While decreeing the suit, the Small
Causes Court directed conduct of enquiry into mesne profits from
September 2003 onwards till the date of recovery of possession, which
in the present case is 28 August 2012. Therefore, there is no dispute
amongst the parties about the period during which mesne profits are
payable by the Applicant/Defendant, which is from September 2003 to
28 August 2012.
11) The suit premises comprise of Office bearing No. 610
admeasuring 347 sq.ft on 6th floor in building named 'Maker Chambers
No. 4' Nariman Point, Mumbai-400 0021. There is no dispute to the
position that the suit premises are located in one of the premier
business districts of Mumbai City. The Small Causes Court has
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determined mesne profits at the rate of Rs. 160/- per sq. ft. per month
for the period from September 2003 to December 2007 (Rs. 55,520 per
month) and at the rate of Rs.300/- per sq. ft. per month from January
2008 till 28 August 2012 (Rs. 1,04,100 per month).
12) It is the contention of the Revision Applicant-Defendant
that while determining the quantum of mesne profits, the Trial Court
should have considered the agreement between the parties for
payment of compensation in respect of the period after expiry of
tenure of the lease. Accordingly, reliance is placed on Clause-15 of the
Agreement dated 11 September 1980 which reads thus :
15. If the Leasee shall punctually pay the amounts payable by the Lessee
to the Lessor under the Lease and if the Lessee shall have duly performed
the obligation on the part of the lessee to be performed within 6 months
prior to the expiry of the period of 9 years and nine months of the said
Lease the Lessee shall have option to renew the Lease a further period of 5
years six months but on such renewal, the rental payable by the Lessee
shall be calculated at the rate of 8 per sq. foot per month (such rent also
being net rent as herein provided) and on the other terms and conditions
excluding the payment of deposit as herein contained. The Lessee in that
case shall not be under any obligation to make any deposit and/or
advance rent for the renewal period. The Renewal Lease shall also contain
provisions for the renewal of the lease for further period of 4 years and 9
nine months by the Lessee on the same terms and conditions as herein
contained but rent in that event for the further period of 4 years and 9
months shall be calculated at the rate of Rs.9 per sq. foot per month and
such lease shall not contain the provisions for renewal the intension of
the parties being that the lessee shall have a right to occupy the said
premises for total of 20 years from the date of possession. If the Lessee
shall not vacate the said premises and after the period of 20 years the
Lessor shall without prejudice to his other rights and remedies, and
charges, damages and/or compensation from the Lessee for such
unauthorised use at the rate of 12/- per square foot per month and/or
outgoings as set out in clause 5(b) and 5(c) and the Lessee shall pay the
Lessor.
(emphasis added)
13) Clause-15 of the Lease Agreement dated 11 September
1980, which was modified on 31 May 1983 (without any modification
in clause 15), essentially dealt with covenants relating to operation of
renewal of lease for a period of 5 years 6 months before expiry of
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Neeta Sawant CRA-111-2019-FC
initial tenure of 9 years 9 months. If the option for renewal was to be
exercised, such renewal was to contain a provision for further
renewal of lease by a period of 4 years 9 months. The rent in respect
of the first renewal period of 5 years 6 months was agreed at the rate
of Rs.8/- per sq.ft. per month. In respect of the second renewal of 4
years 9 months, the agreed rent was Rs.9/- per sq. ft. per month. The
clause further provides that the Defendant could not occupy the suit
premises after maximum permissible period of 20 years from the date
of possession. In the event the Defendant failed to vacate possession
of the premises after the period of 20 years, Plaintiff, without
prejudice to her other rights and remedies and charges/damages
and/or compensation would be entitled to receive Rs.12/- per sq. ft.
per month plus outgoings from the Defendant.
14) Applicant/Defendant reads Clause-15 of the agreement to
mean that after expiry of total period of 20 years, the charges agreed
for payment of compensation at Rs.12/- per sq. ft. per month, which is
the maximum amount that can be awarded towards mesne profits. I
am unable to agree. Clause-15 clearly uses the words 'without prejudice
to his other rights and remedies, and charges, damages and/or compensation
from the Lessee'. Firstly, the amount specified in the agreement is not
towards mesne profits. Secondly, the specified amount is without
prejudice to rights of lessor to claim higher amount by exercising her
remedies. Thus, mere specification of amount of compensation of Rs.
12/- per sq. ft. per month in the agreement did not preclude Plaintiff
from claiming mesne profits payable under the provisions of the Code
from the Defendant. The term 'mesne profits' has been defined under
the provisions of Section 2(12) of the Code as under:
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2(12) "mesne profits" of property means those profits which the person in
wrongful possession of such property actually received or might with
ordinary diligence have received therefrom, together with interest on
such profits, but shall not include profits due to improvements made by
the person in wrongful possession.
15) Thus, mesne profits represent the amount which the
person in wrongful possession of the property has actually received or
might, with ordinary diligence, have received from wrongful
possession of the property. Thus, mesne profits in the present case
would represent the rent which the Defendant would have been made
liable to pay for occupation of the premises upon expiry of the
Agreement for Lease. In that view of the matter, the amount of mesne
profits would have no correlation with the agreed amount of
compensation provided for in Clause-15 of the Lease Agreement. The
Trial and the Appellate Court have rightly rejected the contention of
the Revision Applicant in this regard. Since the Plaintiff reserved her
right to adopt necessary remedies for claiming
damages/compensation for failure on the part of Defendant to vacate
the premises at the end of maximum tenure of 20 years, the agreed
amount of Rs. 12/- per sq.ft. per month, would at the highest, be
construed to mean the amount which the Defendant would upfront
pay to the Plaintiff in respect of the period during which there was
delay in handing over possession of the premises. Acceptance of such
amount of Rs.12/- per sq. ft. per month does not preclude her from
exercising her remedies not only for eviction of the Defendant but
also to recover necessary damages and compensation from it. If
contention of Revision Applicant-Defendant about mesne profits not
exceeding Rs.12/- per sq. ft. per month is to be accepted, the same
would result in Defendant unlawfully occupying the office premises
located in one of premium business localities in Mumbai at
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Neeta Sawant CRA-111-2019-FC
ridiculously low amount of Rs. 4644 per month. There is no end limit
specified in the Agreement till which such amount at the rate of
Rs.12/- per sq. ft. per month was to be paid. This would mean that if
Defendant was to remain in unlawful possession of the premises for
the next 25 years, he would enjoy possession by paying paltry amount
of Rs.12/- per sq. ft. per month.
16) Clause-15 of the Agreement cannot be interpreted to
mean legalization of wrongful possession of Defendant by paying
paltry sum of Rs.12/- per sq. ft. per month and the agreement
specifically reserved the right of the Plaintiff to exercise her rights
not only for ensuring Defendant's eviction, but also to recover
necessary damages and compensation. If mesne profits are to be
restricted to Rs.12/- per sq. ft. per month as sought to be canvassed by
the Applicant, the same would result in Plaintiff's deprivation of
amount of market rent which she would have earned after recovering
possession of the premises from Defendant. Thus, period of pendency
of suit for recovery of possession, and execution proceedings cannot
enure to the benefit of person in wrongful possession.
17) In the present case, while decreeing the suit, the Trial
Court has directed conduct of enquiry into mesne profits under Order
20 Rule 12(c) of the Code from September 2003 onwards. Under Order
20 Rule 12, the Court is empowered to make a decree in accordance
with the enquiry into mesne profits conducted under Clause-(c) of
sub-rule (1) of Rule 12 of Order 20. Since definition of the term 'mesne
profits' includes those profits which could have been earned by
person in wrongful possession, the Defendant must be made liable to
pay the market rent in respect of the suit premises, during the period
it remained in wrongful possession of the premises. Therefore, the
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contention of Revision Applicant about payment of mesne profits at
the rate of Rs.12/- per sq. ft. per month is required to be outrightly
rejected.
18) So far as the quantum of mesne profits is concerned, the
Appellate Court has neither considered the issue nor has determined
whether the quantum determined by the Trial Court is appropriate or
not. After rejecting the contention of Applicant about cap of Rs. 12 per
sq.ft. towards mesne profits, the Appellate Court has not gone into the
manner in which the Trial Court has determined the quantum of
mesne profits. The Trial Court has rejected two license agreements at
Exhibit 29-Colly on the ground of non-examination of witness to
prove the same. However, it has taken into consideration the license
agreement in respect of premises located on 6 th floor (same floor) of
the building by which licenses are granted by various licensors to M/s
Quaint Capital Pvt. Ltd., in which the license fees are indicated at Rs.
425 per sq. ft. per month. After observing that the Plaintiff would not
be able to secure rate of Rs. 425 per sq. ft., the Trial Court has reduced
the same at Rs. 300/- for 2007 to 2012 and Rs. 160/- for 2003 to 2007.
In doing so, the Trial Court has apparently done a guess work, which
it is entitled to do. Though the rates determined by the Trial Court
cannot be held as too excessive, in my view, judicial notice will have
to be taken of the trend of shifting of Commercial Business District of
Mumbai from Nariman Point to Bandra Kurla Complex and Lower
Parel during last 10 to 15 years. It is no longer Mumbai's premier
business hub and has undoubtedly lost shine to more attractive
locations like BKC and Lower Parel. Though Nariman Point is now
regaining its lost shine steadily, it did remain lukewarm during the
relevant time from 2003 to 2012. In that view of the matter, slight
correction in the rate fixed by the Trial Court would meet the ends of
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justice. It also bears mention that the Revision Applicant is a
Government Undertaking and has secured several small premises
from different owners to secure entire 6 th floor of the building.
Therefore, slight reduction of rate of mesne profits would offer some
solace to the Applicant, without majorly impacting the Respondent
considering the smaller area of only 347 sq. ft. of the suit premises.
Though the License Agreement executed in favour of M/s. Quaint
Capital Pvt. Ltd. is not placed before me, since the Trial Court's Order
reflects its location as 6th floor of the same building, it appears that
the same is executed after Revision Applicant vacated the premises on
6th floor. Therefore the rate of license fees made applicable after
vacation of premises by Applicant may not present correct indicator
for deciding the quantum of mesne profits payable during the past
period. Therefore, application of monthly rate of Rs. 150/- per sq. ft.
per month for the period from September 2003 to December 2007 and
Rs. 250 per sq. ft. per month for the period from January 2008 to 28
August 2012 would be appropriate.
19) Mr. Singh has relied on judgments of the Apex Court in
Keshardeo Chamria (supra) and Masjid Kacha Tank, Nahan (supra) in
support of his contention of limited scope of revisionary jurisdiction
of the Court under Section 115 of the Code. In my view however, the
Appellate Court has committed jurisdictional error in not examining
the manner of qualification of amount of mesne profits by the Trial
Court. It framed the point only relating to fixation of mesne profits @
Rs. 12 per sq. ft. as per the Agreement and did not go into the issue of
correctness of rate fixed by the Trial Court for determining the
amount of mesne profits. Though concurrent findings of Trial and
Appellate Court on the main issue urged by Applicant about
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Neeta Sawant CRA-111-2019-FC
determination of mesne profits @ Rs. 12 per sq. ft. as per the
Agreement do not warrant interference in exercise of revisionary
jurisdiction of this Court, slight reduction in the rate at which mesne
profits are determined by the Trial Court is called for in the facts and
circumstances of the case.
20) I accordingly proceed to pass the following order:
(i) Judgment and Decree passed by the Small Causes Court
dated 19 December 2015 as confirmed by the Appellate
Bench on 5 July 2008 is modified to the extent that mesne
profits payable by Defendants to Plaintiff shall be @ Rs.
150/- per sq. ft. per month from September 2003 to
December 2007 and Rs. 250/- per sq. ft. per month from
January 2008 to 28 August 2012 along with interest @ 6 %
p.a.
(ii) With the above directions Revision Application is partly
allowed.
[SANDEEP V. MARNE, J.]
Digitally
signed by
NEETA
NEETA SHAILESH
SHAILESH SAWANT
SAWANT Date:
2024.10.17
13:13:20
+0530
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