Tenants are required to pay mesne profits equivalent to standard rent from the point they lose entitlement to occupation, regardless of their status as a Public Sector Undertaking.

ORDER :

SANJAY KAROL, J.

1. Delay Condoned.

2. Leave Granted.

3. These are cross-appeals filed by both parties against the judgment and order passed by the High Court of Judicature at Bombay in W.P. No. 16741 of 2024, dated 4th December 2024. The crux of the dispute is the ‘per square foot rate’ at which the mesne profit is to be calculated in connection with Hindustan Organic Chemicals Ltd. (HOCL) occupation, as ‘tenant’ of ‘Harchandrai House’ situated at 81/A, Maharshi Karve Road, Mumbai1. The Appellants in C.A. Diary No. 1973¹ [hereafter referred to as the demised premises] of 2025 are the ‘Landlords’. C.A. SLP (C) Nos. 5754-5755 shall stand disposed of in accordance herewith.

4. The tenant originally entered into the demised premises and 2nd floor thereof, totalling 7825 Sq. ft. built-up area, as a lessor having leased it from the landowners for 3 years, i.e. 1st April 1962 to 31st March 1966. Rent for the extent of the lease was Rs. 10,955/- per month and Rs. 55,557/- per month as administrative charges. Upon the expiry of this lease, HOCL continued on the property as a ‘monthly tenant’ This landlord- tenant relationship between the parties had been ongoing for 34 years when, on 25th April 2000, the landlord sent a notice of termination. On 2nd September 2000, the landlords filed a suit for eviction and recovery of possession before the Small Causes Court, Mumbai, being TE & R Suit No. 122/152 of 2000. The Small Causes Court, by judgment and order dated 15th April 2009, entered a finding in favour of the landlords and decreed handing over of possession of the demised premises within three months from the date of judgment. It was also directed that mesne profits, which were to be determined by way of an enquiry under Order XX Rule 12, Code of Civil Procedure, 1908, shall be payable from 1st June 2000 till the date possession is restored.

5. The tenants filed an appeal against this decision before the Small Causes Court (Appellate Bench), which was Appeal No. 266 of 2009. An enquiry was carried out as per the above, and two different valuation reports were filed. In the pendency of the appeal, the landlords filed Mesne Profit Misc. Application No. 9700 of 2010 before the Small Causes Court, Mumbai. The appeal against the original order of recovery of possession was decided vide judgment and order dated 13th August 2012, whereby the order of eviction was confirmed. The tenant’s revision² [CRA No. 912/2012] against the confirmation of the decree of eviction was dismissed by the High Court.³ [Order dated 9th May 2013] The property was, accordingly, vacated, and possession handed over on 23rd April 2014.

6. The Court seized of the Mesne Profit Miscellaneous Application and decided the same after reviewing the evidence led by both the parties, as well as appreciating a fresh valuation report. Vide order dated 2nd May 2022, the tenant was directed to pay mesne profits @ Rs. 138/- per square ft. per month for the period 1st June 2000 to 31st December 2006 and @ of Rs. 274/- per square-foot. per month for the remaining period of occupation along with interest @ 9% per annum till the date of realisation within a month of the order.

7. The tenant's appeal, Appeal No. 306 of 2022, calling into question of the above order, was filed on 30th June 2022 and an interim order was passed therein on 4th March 2023. The order dated 2nd May 2022 passed by the Small Causes Court was stayed subject to the condition of depositing Rs. 18,43,78,137.99. A challenge to this order at the instance of the tenant, invoking Article 227 of the Constitution of India⁴