Calcutta High Court

T. E. Thomson And Company Limited vs Rajshri Productions Private Limited on 7 October, 2024

Author: Sugato Majumdar

Bench: Sugato Majumdar

                       IN THE HIGH COURT AT CALCUTTA
                    ORDINARY ORIGINAL CIVIL JURISDICTION
                                 ORIGINAL SIDE


Present:
The Hon'ble Justice Sugato Majumdar


                                IA NO. GA/5/2024
                                 In CS/257/2018
                      T. E. THOMSON AND COMPANY LIMITED
                                        Vs
                     RAJSHRI PRODUCTIONS PRIVATE LIMITED

                                 IA NO. GA/6/2024
                                  In CS/257/2018
                       T. E. THOMSON AND COMPANY LIMITED
                                         Vs
                      RAJSHRI PRODUCTIONS PRIVATE LIMITED


For the Plaintiff                 :      Mr. Arindam Banerjee, Adv.
                                         Mr. Chayan Gupta, Adv.
                                         Mr. Ritick Chowdhury, Adv.
                                         Mr. Dwip Raj Basu, Adv.


For the Defendant                 :      Mr. Rajarshi Dutta, Adv.
                                         Mr. Varun Kothari, Adv.
                                         Mr. A.P. Agarwalla, Adv.


Hearing concluded on               :     01/10/2024

Judgment on                        :     07/10/2024


Sugato Majumdar, J.:

GA 5 of 2024 and GA 6 of 2024 are taken up together for final disposal of the

suit.

Page |2

The Plaintiff leased out an area of 4000 sq. ft. on the first floor of the premises

no. 9A, Sidhu Kanu Dahar (previously known as 9A, Esplanade Row), Kolkata -

700069 together with 120 sq. ft. space of staff quarter at the rear portion of the

building in favour of M/S Rajashri Pictures Pvt. Ltd., a sister concern of the

Defendant in terms of the lease deed dated 27/11/1970, for a period of 25 years

commencing from 01/09/1970. From the month of April 2009, tenancy was changed

in the name of the Defendant. The Defendant's last paid rent was Rs.10,080/-.

Tenancy of the Defendant was determined by the Plaintiff in terms of the

notice dated 13/02/2018. Thereafter, the Plaintiff instituted the suit for recovery of

possession. An application was filed by the Plaintiff under Chapter XIIIA of the

Original Side Rules being GA no. 1 of 2019. Another application was filed being GA

no. 2 of 2020, by the Plaintiff, praying for occupational charges. In terms of the

Order dated 04/09/2020, the Defendant was directed to pay occupational charges at

a rate of Rs.10,000/- per month within seventh day of every month. The Defendant

was also directed to pay arrears within 30/09/2020.

In terms of the Order dated 13/12/2022, GA 1 of 2019 was allowed and decree

of eviction was passed. Mr. Vivek Basu, the Learned Advocate, was appointed as a

Special Referee to ascertain the quantum of mesne profit.

The Special Referee conducted the proceeding for ascertainment of mesne

profit. The Plaintiff adduced two witnesses one of whom was an empanelled valuer

of this Court. In the valuation report, the valuer assessed fair rent for the said

premises at a rate of Rs.109/- per sp. ft. per month and Rs.88/- per sp. ft. per month

for the staff quarters. According to the valuer fair rent of the premises was Page |3

Rs.4,36,000/- per month. Fair rent for the staff quarter was valued at Rs.10,560/-

per month.

The Learned Special Referee filed his report on 20/12/2023. The Special

Referee assessed mesne profit payable by the Defendant to the Plaintiff, from

01/03/2018 to 15/06/2023 for a sum of Rs.1,94,20,836/-. Rent payable per month

in the year 2018 is Rs.2,42,400/- and for a month in the year 2023 is Rs.3,90,387/-.

In other words, the Special Referee assessed mesne profit at a rate of Rs.60/- per sq.

ft. per month in the year 2018 for the premises and Rs.20/- per sq. ft. per month for

the staff quarter. Mesne profit is to be increased by 10% annually.

GA 5 of 2024 is filed by Defendant challenging the finding of the Special

Referee, with a prayer to set aside the Report.

GA 6 of 2024 is filed by the Plaintiff challenging the finding of the Special

Referee.

The Learned Counsel for the Defendant, Mr. Dutta, argued, firstly, challenging

the Report of the Special Referee, that according to the Special Referee held the

Report of the valuer as vague and contradictory; yet the Report of the Special Referee

is perverse in the sense the same is silent how the figures Rs.60/- per sq. ft. per

month and Rs.20/- per sq. ft. per month were arrived at. No reason is apparent to

justify such findings.

Secondly, Mr. Dutta argued that there is no reason why mesne profit should

be increased at a rate of 10% per annum. Normally, such increment at a rate of 10%

enhances at every three years. There must be special circumstances warranting 10%

enhancement annually, which is absent in this case.

Page |4

Thirdly, it is argued by Mr. Dutta that the Special Referee has not provided for

any adjustment of the sum of Rs.6,72,720/- or any part thereof, paid on account of

occupational charges, in terms of the Orders dated 04/09/2020 and 09/10/2020.

The Defendant, therefore, is entitled to adjustment on account of occupational

charges, already paid.

The forth limb of argument is that the Special Referee should not have placed

reliance on copies of lease deeds, adduced in evidence before him by the Plaintiff's

witness, since the Plaintiff was not a party to the deeds.

The fifth limb of argument of Mr. Dutta was that the Special Referee held that

the premises is inside an alley with dead end without having any frontage and it was

not situated on the main road. No common factor exist between the buildings leased

out in terms of Ext. E, F, G, K & L and that of the suit premises. Rent payable in

respect of those premises cannot be compared with payable rent in respect of the suit

premises. It is further argued that there is no locational advantage of the suit

premise in comparison to other properties which are all located on the main road.

Sixthly, it is argued that P.W. 1 admitted in course of cross-examination that

the property is encumbered and let out to various tenants and sub-tenants. One of

the tenant pays rent at a rate of Rs.10,080/- per month. Another tenant occupies

space measuring 10,800 sq. ft. but the Plaintiff did not disclose that rent. According

to the Learned Counsel for the Defendant, the Special Referee did not take into

consideration the best evidence.

Seventhly, it was argued that there was no proper maintenance of the

building. There is no proper lift/elevator facility though the building was meant for

commercial purpose. It was wrongly considered by the Special Referee that the Page |5

building has a car parking facility. Except a bore-well, there is no water supply

facility in the building. The Special Referee did not take into consideration all these

aspects.

In nutshell, according to the Learned Counsel for the Defendant, the Report of

the Special Referee should be discarded.

Mr. Banerjee, the Learned Counsel for the Plaintiff argued that in accordance

with the definition of mesne profit, as provided in Section 2(12) of the Code of Civil

Procedure, 1908, it is the value of the user of the land to the person in wrongful

occupation. Mr. Banerjee referred to the observation of the Five Judge's Bench of the

Supreme Court of India in Fateh Chand Vs. Balkishan Das [AIR 1963 SC

1403]. Referring to Martin & Harris Pvt. Ltd. Vs. Rajendra Mehta [(2022)

8 SCC 527], Mr. Banerjee argued that basis of determination of the amount of

mesne profit depends on the facts and circumstance of each case considering the

locality, user of the premises and other factors. It is not the actual rent which a

landlord could have earned had the tenant vacated the premises; it is more in the

nature of profits which a person in wrongful possession has gained. Rent could only

be a parameter. The property is situated at the commercial hub of the city. The

Defendant did not lead any evidence. According to Mr. Banerjee, mesne profit

should be calculated at a rate of Rs.109/-per sq. ft. per month, as assessed by the

valuer. Mr. Banerjee also referred to the decision of this Court in Apeejay House

Pvt. Ltd. Vs. Coal India Ltd. [(2023) SCC OnLine Cal 3416].

Second limb of argument of Mr. Banerjee is that the valuer duly considered

the factors like old age of the building, situational disadvantage, lack of maintenance,

absence of facilities and amenities in the building, and made deductions in the Page |6

valuation on those accounts. The argument of the Learned Counsel for the

Defendant in this respect is not tenable, according to Mr. Banerjee.

Thus, it is argued that mesne profit at a rate of Rs.109/- per sq. ft. per month

should be allowed.

I have heard rival submissions.

Section 2(12) of the Code of Civil Procedure, 1908 defines mesne profit as

follows:

"(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;"

A tenant continuing in possession after the expiry of the lease may be treated as a

tenant at sufferance, which status is a shade higher than that of a mere trespasser,

as in the case of a tenant continuing after the expiry of the lease, his original entry

was lawful. But a tenant at sufferance is not a tenant by holding over. While a tenant

at sufferance cannot be forcibly dispossessed, that does not detract from the

possession of the erstwhile tenant turning unlawful on the expiry of the lease. Thus,

the appellant while continuing in possession after the expiry of the lease became

liable to pay mesne profits (Indian Oil Corporation Vs. Sudera Realty Pvt.

Ltd. [(2022) SCC OnLine SC 1161]).

In Martin & Harris Pvt. Ltd. Vs. Rajendra Mehta & Ors. [(2022) 8

SCC 527], the Supreme Court of India observed:

Page |7

"19. The basis of determination of the amount of mesne profits, in our

view, depends on the facts and circumstances of each case considering

the place where the property is situated i.e. village or city or

metropolitan city, location, nature of premises i.e. commercial or

residential area and the rate of rent precedent on which premises can

be let out are the guiding factor in the facts of individual case."

The Learned Special Referee drawn up proceeding for quantification of mesne

profit. The Plaintiff adduced evidence including testimony of an empanelled valuer

of this Court. The valuer also submitted his Report before the Special Referee. The

Defendant did not adduce any evidence as a result of which nothing is in the record

to show what amount the Defendant thinks proper as mesne profit. The valuer in his

report stated that the prevailing market rent of similar type of units in the locality is

considered for Rs.76/- to Rs.109/- per sq. ft. per month depending upon the location,

age of the building amenities and facilities. In the Report, the valuer calculated as

prevailing market rent of the first floor of the premises being 400 sq. ft. is Rs.109/-

per sq. ft. However, in the Report, the valuer showed age of the building to be 70

years, rent of the comparable units was assessed at Rs.182/- per sq. ft. per month. So

far as the present suit property is calculated, rate of rent stands at Rs.109/- per sq. ft.

per month allowing about 40% deduction of rent from the standard rent.

The Learned Special Referee, however, discarded the Report of the valuer on

the ground that the valuer was not quite confident in what he is saying and further

there are instances where he corrected himself later on. Thereafter, the Special

Referee took the burden of assessment of rent on his own shoulder and calculated

rent at a rate of Rs.60/- per sq. ft. for 4000 sq. ft. area and Rs.20 per sq. ft. for 120

sq. ft. staff quarter. There is no manifest proper reason mentioned in the Report of Page |8

the Special Referee as to why the valuer's Report should not be accepted. It is

admitted in course of cross-examination by the valuer that there may be errors in the

Report but it is not wrong. It is also stated by the valuer in course of cross-

examination that the present rate of rent in the suit property is less than the market

rent. However, the Report of the valuer suffers from one set back; the valuer noted

the age of the building to be 70 years whereas it is more than 100 years although it

may not look so, according to the valuer. There might be an error in calculation but

that does not render the report infirm. Report of the valuer is more reliable since he

is an empanelled valuer of this Court and has special knowledge in valuation of

property. Since the building is older than conceived in the report of the valuer, and

since the premises suffer certain disadvantages as mentioned above, even though

located at the business and commercial hub of the city, more deductions in the

valuation, made by the valuer should be allowed.

The building is more than 100 years old but is not in dilapidated condition.

Existence of number of tenants and sub-tenants indicate that the building is in well-

habitable condition. Report of the Special Referee also speaks that the building

seems to be seventy years old. The building is located at the commercial hub of the

city. This is one of the prime locations.

After hearing rival submissions and going through the material documents,

this Court is of opinion that the Plaintiff is entitled to mesne profit from the

Defendant in the order as follows:

a) The Defendant shall pay the Plaintiff mesne profit at a rate of

Rs.90/- per sq. ft. per month from 1st March, 2018 to 15th June,

2023; from 16th June, 2023 till payment, the Defendant shall pay Page |9

mesne profit at a rate of Rs.95/- per sq. ft. per month. This is in

respect of 4000 square ft. area.

b) So far as 120 sq. ft. staff quarter is concerned the Defendant

shall pay mesne profit at a rate of Rs.60 per sq. ft. per month

from 1st March, 2018 to 15th June, 2023. The rate will be Rs.65/-

per sq. ft. per month form 16th June, 2023 till payment.

c) Mesne profit, so payable, shall be treated as the principal sum.

This principal sum shall carry simple interest at a rate of 8% per

annum from 01/03/2018 till expiry of ninety days from the date

of drawing up of the decree.

d) Decretal amount shall be paid within ninety days from the date

of drawing up of the decree.

e) If the principal amount is not paid within ninety days from the

date of drawing up of the decree, the Defendant shall be liable to

pay further interest at a rate of 5% per annum on the

outstanding principal sum, as it may stand by that time, till

payment.