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TMI Blog2008 (4) TMI 804X X X X Extracts X X X X X X X X Extracts X X X X ..... as a licensee for three years. By the other agreement of the same date, an option to purchase the said suit property/ flat was given to the defendant. The said agreement, inter alia; provides the time by which the option to purchase could be exercised by the defendant. The defendant claims to have exercised the said option after expiry of 18 months of the leave and license agreement and before six months therefrom, vide letter dated 23rd August 2004. On the other hand, plaintiffs contend that the defendant was not entitled to exercise the said option due to breaches committed by him. 3. According to plaintiffs, breaches committed by the defendant were communicated by them to the defendant vide letter dated 2nd September 2004. According to the plaintiffs, by their letter dated 2nd September, 2004 they allowed the defendants to exercise the said option, subject to compliance of the terms and conditions mentioned therein. Plaintiffs are alleging breach of the said terms and conditions contained in the letter dated 2nd September, 2004. 4. The correspondence ensued between the parties shows the various differences between them. Plaintiffs, therefore, filed a suit seeki ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of monthly royalty of the suit premises. The Court Receiver appointed one M/s. S.S. Joshi Associates as Valuers and on 28th November, 2006, the said Valuer submitted its valuation report, and determined yield of the property in the sum of ₹ 3,70,865/- per month, which was received by the Advocate for the parties on 28th November, 2006. The Court Receiver vide its order dated 29th November, 2006 fixed the monthly royalty at ₹ 3,70,000/- and settled the draft of the agency agreement. RIVAL CHAMBER SUMMONSES: 9. Being aggrieved by the order of the Court Receiver dated 29th November, 2006, the defendant has taken out chamber summons No. 1539 of 2006 contending that the valuation of suit property made by the Valuer is very high and that the amount of royalty fixed is unreasonable for the reasons set out in the affidavit dated 1st December, 2006 filed in support of the motion. The defendant has thus prayed for setting aside the report of the valuer dated 28th November, 2006 as well as order of the Court Receiver dated 29th November, 2006. 10. The above chamber summons is opposed by the plaintiffs contending that the amount of royalty f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... port indicates that the valuation of property is not based on correct principles. As such, the valuation done is in utter violation of the principles of natural justice and fair play and that the same is liable to be set aside. 14. Per contra, Mr. Chhagla, learned Senior Counsel for plaintiffs strongly opposed the submissions canvassed on behalf of the defendant. He urged that by no stretch of imagination, the valuation made by the Valuer could be said to be improper. He further points out that out of ₹ 1 crore, ₹ 50 Lac have already been exhausted having used the said amount for payment of arrears and monthly interim royalty as per the directions given by the learned Division Bench vide its order dated 9th October, 2006. He further submits that so far as balance amount of ₹ 50 Lac is concerned, the said amount is lying in a fixed deposit as ordered by the Division Bench and hence the said amount is not available for the benefit of the plaintiffs. He, thus, submits that the deposit of ₹ 1 crore was rightly excluded from consideration while determining the amount of royalty. He, thus, prayed for dismissal of Chamber Summons No. 1539/2006 taken out by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case to do justice between the parties. 19. One may use different words like compensation, licence, royalty and mesne profits, all in one form or another are diverse forms of rents in generic sense and what is the true colour of the payments made by one party to another for use and occupation of the property is to be decided by the Court looking to the circumstances of the case and evidence on record. Rent in English Law is said to be a profit from the property demised. It may assume the form of rent service or rent charge. 20. It is described in generic sense as compensation for use and occupation and in legal sense, it is recompense paid by the tenant to his landlord for exclusive possession of the premises enjoyed by him. However, rent flows by virtue of the contract express or implied and after the contract of tenancy is terminated it will be damages or compensation. After the suit for possession is filed, monetary payments for use and occupation against the wish of the landlord assume the format of 'mesne profits'. CONCEPTS OF MESNE PROFITS: 21. The term 'mesne profit is used for damages for trespass, a wrongful act relating ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... laintiff decree holder had lost or would have earned by letting out or using the property himself, but what the person in wrongful possession, namely, with ordinary diligence would have received from it. The wrongful possession of defendant is the very essence of a claim for mesne profits. The very foundation of the defendant's liability to pay the mesne profit goes with actual possession of the land. That is to say, generally the person in wrongful possession and enjoyment of the. immovable property is liable to pay mesne profits. Thus the claim for mesne profits is virtually the claim for damages and has to be assessed by proper exercise of judicial discretion. 24. The base for measure of mesne profits has come up before the Courts from time to time whether in Rent Control period or pre-rent control period. Number of decisions of the Courts have gone on legal record with respect to the subject of mesne profits, a few are quoted hereafter to sieve the indicators or measure of mesne profits. 25. The Privy Council in the case of (Gurudas Choudhury v. Kumar Hemandra Kumar Roy) 1929(56) I.A. 290 and (Harry Kampson v. Bhagu Mian) observed as under: The te ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of the tenant is akin to that of a trespasser and he cannot say that the measure of damages awardable to the landlord should be kept tagged to the rate of rent payable under the provisions of the Rent Control Order. 29. If the real value of the property is higher than the rent earned then the amount of compensation for continued use and occupation of the property by the tenant can be assessed at a higher value. The Supreme Court convinced with this view of the Nagpur High Court in the case of Atmaram Properties Pvt. Ltd. (supra). 30. The Supreme Court in the case of (Dalhousie Properties Ltd. v. Sooraj Mall Nagar Mall) AIR1977SC223 , laid down yet another principle of determination of the concept of present rental value in the field of law of Mesne Profits. The above referred decisions have recognized some of the principles to be followed while determining mesne profits/royalty/ compensation. The method of valuation may well depend upon the nature of property and the purpose for which the valuation is required. The prospective profit from the property is also one of the methods adopted generally, only if comparative data is not available. 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... consider even two or all those methods for the reason that an exact valuation is not always possible as no two properties can be same in respect of situation or extent of potentiality nor is it possible in all cases to have reliable material from which the valuation can be accurately determined. In (Smt. Neelavati v. CWT) 1980(125) I.T.R. 605, it was held that where there was a wide disparity in the value obtained by two methods, an averaging could be taken. Same is also the view taken in (U.N.V. Pratap v. CWT) [1988]170ITR461(AP) . Thus, majority of the High Courts are of the view that where there are more than one resultant valuations, that which is the nearest to the market value, taking into account all circumstances should be taken as the applicable value. 34. The same principle can very well be followed in determining the amount of royalty with possibility of minimum error since mathematical certainty is not demanded nor is it possible. The Court Receiver while determining me amount of royalty is also expected to bear in mind the observations made by the learned Single Judge in the case of (Pradeep C. Modi v. Shashank) A.I.R. 1998 Bom 352, wherein it was ob ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... find equivalent accommodation and after collecting all the necessary data, the amount of royalty ought to have been determined taking a balanced view of the matter. Having not done so, the matter requires a fresh look by the valuer as well as the Court Receiver. 38. In the aforesaid view, the impugned order passed by the Court Receiver is unsustainable. The same is set aside and the proceeding stand remitted back to the Court Receiver with directions to decide the question of royalty afresh as indicated herein following principles of natural justice. The Court Receiver is expected to complete the process of determination of royalty afresh within three months from the date of this order. 39. Having said so, now the question is what should be the amount of interim royalty to be paid by the defendant pending determination of the amount of royalty afresh by the Court Receiver. The best guide for determination of the amount of interim royalty would be the basis of the Chamber Summons taken out by the defendant with slight variation. If one turns to the chamber summons and affidavit in support thereof, the defendant himself has admitted that the suit premises admeasure ..... X X X X Extracts X X X X X X X X Extracts X X X X
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