Supreme Court Increases Mesne Profits in Property Dispute: Anar Devi vs. Vasudev Mangal (2022)

Date of the Judgment: March 10, 2022

Citation: Civil Appeal Nos. 1852-1859 of 2022

Judges: M.R. Shah, J., B.V. Nagarathna, J.

When a property owner seeks to recover possession and mesne profits from a licensee, how should a court determine fair compensation for the use of the property during the legal proceedings? The Supreme Court of India addressed this question in a recent case concerning a dispute over mesne profits, clarifying the criteria for assessing such compensation. The bench, composed of Justices M.R. Shah and B.V. Nagarathna, delivered the judgment, with Justice M.R. Shah authoring the opinion.

Case Background

The appellant, Anar Devi, had filed four separate suits against the respondents for recovery of possession of her residential property. She argued that the respondents were in possession of different portions of her house as licensees and that she was entitled to regain possession and receive mesne profits after terminating their licenses. The trial court ruled in favor of Anar Devi on November 27, 2019, decreeing all four suits.

The respondents, dissatisfied with the trial court’s decision, appealed to the first appellate court. They also sought a stay on the trial court’s judgment. On February 12, 2020, the first appellate court stayed the execution of the trial court’s decree, directing the respondents to pay mesne profits at varying rates:

• Vasudev Mangal: Rs. 10,000/-
• Mohan Lal Mangal: Rs. 5,500/-
• Chimman Lal: Rs. 3,000/-
• Shyamlal Mangal: Rs. 7,000/-
• Total: Rs. 25,500/-

Both parties then filed writ petitions before the High Court. Anar Devi sought to increase the mesne profits, while the respondents sought to reduce them. The High Court partly allowed the respondents’ petitions, reducing the mesne profits to:

• Vasudev Mangal: Rs. 4,000/-
• Mohan Lal Mangal: Rs. 3,300/-
• Chimman Lal: Rs. 1,500/-
• Shyamlal Mangal: Rs. 4,000/-
• Total: Rs. 12,800/-

Anar Devi, through her legal representative, then appealed to the Supreme Court against the High Court’s reduction of mesne profits.

Timeline

Course of Proceedings

The original plaintiff, Anar Devi, filed four suits against the respondents for recovery of possession, arguing they were licensees. The trial court decreed the suits in her favor. The respondents appealed, and the first appellate court stayed the trial court’s order, setting mesne profits. Both parties challenged this order in the High Court. The High Court reduced the mesne profits, leading to the present appeal before the Supreme Court by the original plaintiff.

Legal Framework

The judgment primarily deals with the determination of mesne profits, which are essentially the profits a person in wrongful possession of property has received or might have received with ordinary diligence. The Court is tasked with determining a fair rate of compensation for the use of the property during the pendency of the appeals.

Arguments

The appellant argued that the High Court erred in reducing the mesne profits, failing to consider the current market value of the property. The appellant contended that the High Court focused on the age and residential nature of the property, as well as the DLC rate, without considering the potential market rate. The appellant also argued that even if the valuer’s report was for commercial use, a 50% reduction in mesne profits was excessive.

The respondents, on the other hand, argued that the High Court’s reduction of mesne profits was justified, given the residential nature and age of the property, and that the first appellate court’s initial mesne profit determination was too high.

Issues Framed by the Supreme Court

The primary issue before the Supreme Court was:

1. Whether the High Court was justified in reducing the mesne profits awarded by the first appellate court.

Treatment of the Issue by the Court

Authorities

The Supreme Court did not cite any specific cases or books in this judgment. The focus was on the factual matrix and the proper application of principles for determining mesne profits.

Judgment

What weighed in the mind of the Court?

The Supreme Court was primarily concerned with ensuring that the mesne profits awarded reflected the fair market value of the property. The Court noted that the High Court had not considered the market rate and had mechanically reduced the mesne profits by 50%, which was deemed unjust. The Court emphasized that even if the property was residential and old, the mesne profits should reflect the current potential of the property.

The Court stated, “From the impugned common judgment and order passed by the High Court, it appears that while reducing the amount of mesne profits, what has weighed with the High Court is that the premises is residential, being used for residential purposes and the construction is about 100 years old and that the report of the approved valuer dated 9.2.2020 was with respect to commercial premises.”

The Court further noted, “The High Court has thereafter considered the DLC rate. However, the High Court has not at all considered the market rate as per the current potential of the suit property. The High Court has mechanically reduced the mesne profits to 50%.”

The Court concluded, “In the facts and circumstances of the case, we are of the opinion that if the mesne profits are awarded as under, it will meet the ends of justice and it can be said to be awarding just mesne profits, while staying the common judgment and decree passed by the learned trial Court.”

Key Takeaways

• Mesne profits should reflect the current market value of the property, not just its age or residential nature.
• Courts should not mechanically reduce mesne profits without considering the property’s potential.
• Even if a valuation report is for commercial use, a drastic reduction in mesne profits for a residential property is not warranted.

Directions

The Supreme Court modified the High Court’s order, increasing the mesne profits to:

• Vasudev Mangal: Rs. 7,500/- per month
• Mohan Lal Mangal: Rs. 4,500/- per month
• Chimman Lal @ Pradeep Kumar through LRs: Rs. 2,250/- per month
• Shyamlal Mangal through LRs: Rs. 5,500/- per month

The Court also directed that the appeals before the first appellate court should be expedited.

Development of Law

The Supreme Court clarified that when determining mesne profits, courts must consider the current market value of the property and not just its age or residential nature. This judgment reinforces the principle that mesne profits should reflect the fair compensation for the use of the property during the legal proceedings.

Conclusion

The Supreme Court partly allowed the appeals, modifying the High Court’s order and increasing the mesne profits payable by the respondents. The Court emphasized the importance of considering the current market value of the property when determining mesne profits. The judgment underscores that mesne profits should reflect fair compensation for the use of the property during legal proceedings, and not be reduced arbitrarily.

Category

Parent Category: Property Law

Child Categories: Mesne Profits, Recovery of Possession, Licensee, Civil Appeals

FAQ

Q: What are mesne profits?

A: Mesne profits are the profits a person in wrongful possession of property has received or might have received with ordinary diligence. It’s essentially compensation for the use of the property during the period of wrongful possession.

Q: How should a court determine mesne profits?

A: A court should consider the current market value of the property, its potential for use, and not just its age or residential nature. The mesne profits should reflect fair compensation for the use of the property.

Q: Can mesne profits be reduced if the property is old or residential?

A: While the age and residential nature of the property can be considered, a court should not mechanically reduce mesne profits. The current market value and potential of the property must also be taken into account.

Q: What did the Supreme Court decide in this case?

A: The Supreme Court increased the mesne profits awarded by the High Court, emphasizing that the High Court had not considered the current market rate and had mechanically reduced the mesne profits. The Supreme Court directed that the mesne profits should reflect the fair market value of the property.