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2003 (11) TMI 630 - SC - Indian LawsDetermination of quantum of mesne profit - Rate of interest to be awarded on the decretal amount - Wrongful use of the property - rate of interest - Principles of res-judicata - computation of net amount payable - Term 'goodwill' - HELD THAT - We have no reason to differ with the view of the High Court on this aspect. We are not required to reappreciate the material. As a matter of fact during the course of hearing, counsel for the appellant indicated willingness to go by the Commissioner's report in this behalf. Therefore, we accept the finding of the High Court on this issue. Total amount by way of mesne profits as per the impugned judgment of the High Court comes to ₹ 39,41,920/-. This figure does not include interest. Interest is leviable on the amount of mesne profits. The High Court has in its impugned judgment awarded interest w.e.f 5th May, 1970 till 5th August, 1986 on periodical basis at varying rate of interest. Periods have been fixed based on change in bank rate of interest. The rate of interest varies between 10% p.a. to 19% p.a. The award of interest by the High Court is based on its earlier order dated 16th December, 1985 regarding levy of interest as per prevailing bank rate of interest on commercial transactions from time to time. This part of the judgment of the High Court in our view, is not correct. The rate at which is to be awarded is being separately considered under Point No. 2. That decision will govern the award of interest on mesne profits. A mistake has been committed by the High Court in calculation of interest on mesne profits. Interest has to be calculated on yearly basis because the amount of mesne profits on which interest is to be awarded has to be arrived at on year to year basis. Mesne profits for the first year would be from 5th May, 1969 to 4th May, 1970, for the second year it will be from 5th May, 1970 to 4th May, 1971 and so on. It keeps adding on from year to year. The total amount of mesne profits found due by the High Court on the basis of Commissioner's report comes to ₹ 38,41,920/-. This amount is the total of mesne profits calculated on yearly basis. Interest cannot be allowed on the whole amount from the beginning. Interest had to be worked out on amounts falling due towards mesne profits on yearly basis i.e. on the amount of mesne profits which could be taken to be due to the plaintiff at the end of each successive year. A bare reading of Order VI Rule 17 of Code of Civil Procedure shows that amendment is of a plea contained in the pleadings and the object of allowing amendment of pleadings is to determine the real questions in controversy between the parties. This means the parties have to be given a chance to contest the questions in controversy and the Court has to give its decision ultimately on such contested issues. This procedure was not followed in the present case. The procedure followed is wholly illegal. This Court had occasion to pronounce on this issue in J. Jermons v. Aliammal and Ors. 1999 (8) TMI 974 - SUPREME COURT . It was held that a new plea cannot be allowed to be raised without effecting amendment of pleadings, without giving reasonable opportunity to the opposite party to file further pleadings and adduce evidence. Thus the decision of the High Court in allowing interest on mesne profits at rate of interest charged by nationalised banks from time to time on commercial transactions is wholly illegal and unsustainable. As noted earlier even the High Court while passing the final decree felt that in its earlier order dated 16th December, 1985, it should not have proceeded on the basis of amended Section 34 of the Code of Civil Procedure while awarding interest at the rate charged by nationalised bank on commercial transactions from time to time. The impugned award of interest is thus wholly unwarranted and illegal and has to be set aside. A decree for mesne profit was granted in favour of the plaintiff respondent for wrongful use of the property. The quantum of mesne profit can be arrived at by the High Court keeping in view the well-known principles of valuation for determining the same. The Court is not enjoined with any duty to accept the quantification determined only on the basis of books of account maintained by the defendants, particularly when the same had not been proved. The High Court in our opinion has rightly considered the matte from different angle. Even if any of the methods adverted to the High Court and referred to hereinbefore is adopted, the plaintiff would have been entitled to much more amount than claimed by her. We are, therefore, of the opinion that the findings of the High Court being just and proper need not be interfered with. So far as the question of rate of interest is concerned , it may be noticed that the High Court itself found that the rate of interest should have been determined at 6%. The principles of res judicata which according to the High Court would operate in the case, in our opinion, is not applicable. Principles of res-judicata is a procedural provision. The same has no application where there is inherent lack of jurisdiction. We, therefore, are of the opinion that in the facts and circumstances of the present case, the principles of res judicata was not applicable. The term 'goodwill' signifies the value of the business in the hands of a successor, so far as increased by the continuity of the undertaking being preserved in the shape of the right to use the old name and otherwise. It is something more than a mere chance of probability of old customers maintaining their connection, though this is a material part of the practical fruits. 'Goodwill' may be the whole advantage belonging to the firm, its reputation as also connection thereof. It, thus, means that every affirmative advantage as contrasted with negative advantage that has been acquired in carrying on the business whether connected with the premises of business or its name or style everything connected with or carrying the benefit of the business. The goodwill has been claimed for the firm's continuous business since 1954. The court has proceeded to calculate the amount of goodwill on the basis of the profits derived by the firm for the last five years on an average. It is not contended that such a method is unknown in commercial field. Whenever a firm is dissolved the value of the goodwill has to be worked out and divided between the partners. The claim of the appellant to the effect that the plaintiff's husband was liable to pay 13% interest to the defendants has been rejected by the High Court inter alia on the ground that no such case had been made out in the written statements. Even no counter claim therefore was filed. We, therefore, accept the reasonings of the High Court recorded in relation to the said items. For the reasons aforementioned, I respectfully agree with the opinion of Brother Arun Kumar, J.
Issues Involved:
1. Determination of quantum of mesne profits payable to the respondent-plaintiff by the appellants. 2. Rate of interest to be awarded on the decretal amount. 3. Adjustment of admitted liability of Pravinlal towards the partnership firm in the sum of Rs. 4,13,364.24 paise. Summary: Point No. 1: Determination of Quantum of Mesne Profits The liability to pay mesne profits is not disputed, only the amount payable is contested. The High Court appointed a Commission to determine the mesne profits, which reported a sum of Rs. 33,32,847.83. The High Court, after reviewing the Commission's report and other relevant materials, determined the total mesne profits as Rs. 39,41,920/-. The Supreme Court found no reason to differ with the High Court's findings and accepted the quantum of mesne profits determined by the High Court. Point No. 2: Rate of InterestThe original plaint claimed interest at 6% per annum. The High Court allowed an amendment to claim interest at 13% per annum in para 18(c) but not in para 18(b). The High Court awarded interest based on the rate charged by nationalized banks on commercial transactions, which was found to be incorrect. The Supreme Court held that interest should be calculated at 6% per annum on mesne profits on a yearly basis and on the lump sum amount of Rs. 39,41,920/- from 6th August 1986 till realization. Similarly, for the decree for accounts as per para 18(b) of the plaint, interest at 6% per annum on Rs. 1,23,111.37 from 5th May 1969 till realization was deemed appropriate. Point No. 3: Adjustment of Admitted LiabilityThe appellants argued for the adjustment of Rs. 4,13,364.24 paise liability of Pravinlal towards the partnership firm. The High Court found that this amount had already been adjusted. The Supreme Court upheld the High Court's findings, noting that the adjustment had been made as far back as 1972. Conclusion:The appeals were allowed to the extent of modifying the rate of interest awarded by the High Court. The decree for accounts and mesne profits was modified to award interest at 6% per annum instead of 13%. The Supreme Court upheld the High Court's findings on the quantum of mesne profits and the adjustment of Pravinlal's liability. The appeals were disposed of with no order as to costs.
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