The main legal point established in the judgment is the need to consider the value for the use of the premises and not necessarily the value of the property in determining mesne profits and royalty. The court also emphasized the importance of determining the amount of royalty following principles of natural justice.

Both chamber summonses are directed against the order passed by the Court Receiver dated 30th November 1980 fixing monthly royalty at the rate of Rs. 3,70,000/- in respect of the premises being Flat No. 34/34-A in Block-F, Dhanraj Mahal, situated at C.S.M. Road, Appollo Bunder, Mumbai 400 039 (hereinafter referred to as "the suit property"), around which the entire dispute revolves.

FACTUAL MATRIX

2. The factual matrix reveals that on 1st March, 2002, inter alia; two agreements were entered into between the plaintiffs and the defendant of which one was leave and licence agreement. By the said agreement, the defendant was permitted to occupy the suit property/flat 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 a d before six months there from, vide lettered 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. 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.

3. The correspondence ensued between the parties shows the various differences between them. Plaintiffs, therefore, filed a suit seeking declaration that no valid option was exercised by the defendant to purchase the suit premises and also sought possession of the suit property with a prayer to grant and determine mesne profit.

4. The plaintiffs, in the suit, took out Notice of Motion No. 2259/2006 praying for appointment of the Court Receiver and restraining the defendant from parting with possession of the suit premises in favour of any third party. The defendant contested the notice of motion by filing his affidavit-in-reply. Learned Single Judge (Shri S.K. Shah, J.) (as he then was) vide his order dated 1st September, 2006 was pleased to make the notice of motion absolute subject to the terms and conditions recorded therein.

5. Not satisfied with the above order an appeal was filed by the defendant before the learned Division Bench. The.1earned Division Bench vide its order dated 9th October, 2006 was pleased to affirm the order passed by the learned Single Judge dated 1st September, 2006 appointing the Court Receiver; J however with slight modification.

6. The learned Division Bench permitted the Court Receiver to take formal possession of the suit premises from the defendant and allowed the defendant to remain in de facto possession of the suit premises as agent of the Court Receiver subject to the fixation of the monthly royalty by the Court Receiver. The defendant was directed to deposit Rs. 1 crore with the Registry of this Court, out of which Rs. 50 lakh were ordered to be kept as security with direction to invest the same in fixed deposit with any nationalised Bank by the Court Receiver and remaining Rs. 50 lakh, after adjusting the amount of Rs. 12 lakh which were already lying with the plaintiffs by way of security deposit, were allowed to be paid to the plaintiffs calculated @ Rs. 1,30,000/- per month from October, 2003 till 31st January, 2006 towards use and occupation of the suit premises by the defendant. The tentative royalty @ Rs. 1,30,0001for November, 2006 and subsequent months, until final determination of the royalty monthly compensation by the Court Receiver, was permitted to be paid to the plaintiffs until balanc