The main legal point established is that the valuation of leased agricultural land with produce should be based on the income from the produce, and the defendants should not be allowed to profit from the land pending the trial.

R.S. Dalvi, J.

1. The suit was initially filed in 1992 against defendant Nos. 1 to 3. Defendant Nos. 4 and 5 have been added as party defendants in 2008. This Court passed an order of appointment of Court Receiver on 24th March, 2009 upon seeing that the defendant Nos. 4 and 5 have no right in respect of the suit property. Defendant No. 5 was appointed agent of the Court receiver and had to pay royalty as determined by the Court receiver.

2. Court Receiver sought valuation of the suit property to determine the royalty. The valuation report was filed on 8th June, 2009. Defendant Nos. 4 and 5 filed objections to the valuation report on 11th August, 2009. The Court Receiver passed the order of payment of royalty pending the suit on 19th January, 2010 after obtaining the valuation report. The defendants have challenged that valuation and consequently the payment to be made to the Court Receiver.

3. The suit property is stated to be agricultural land. It has 800 mango trees. Defendant Nos. 4 and 5 claim as lessees of the land. The lease deeds in favour of defendant Nos. 1 to 3 which was for the initial lease of 99 years is challenged in this suit. A rent of Rs. 40,000/- p.a. was payable thereunder. It was to be increased by 10% after 10 years. The lease is now 24 years in the making. The valuation is based upon the aspect of what the price of land would be if the value of the land was invested. Upon the valuation of Rs. 12 lakhs, the Court Receiver has ordered Rs. 6 lakhs to be paid as royalty.

4. Defendant Nos. 4 and 5 would claim that such valuation cannot be made in respect of a lease. Defendant Nos. 4 and 5 have relied upon the judgment in the case of (Shashikant C. Mody & Ors. Vs. Court Receiver, High Court, Bombay), 1998(3) Bom.C.R. 823 to show that a property which is tenancy would require to be valued upon the extent of the rent payable. The suit in that case was for determination of ownership. The Court observed that the ownership of the property was yet to be decided, pending which the property was to be preserved and protected. Consequently the valuation made without any real basis was rejected and the payment of the monthly rent which was required to be paid regularly was considered as the determinative factor since that was the only amount that was observed to be required to be paid to preserve the tenancy rights. Hence it was observed that the Court Receiver could not charge more than the rent as the amount of royalty.

5. Defendant Nos. 4 and 5 would claim that the since lease rent is Rs. 40,000/- p.a. and it was to be increased by 10% after 10 years, the royalty amount would have to be fixed at that amount. It must be remembered that the determination of the declaration sought by the plaintiffs is that they are owners and have applied for cancellation of certain leases as having been fraudulently executed. Consequently reliefs upon the document which itself is challenged to determine the amount of royalty would not be the correct mode of determination of royalty.

6. Counsel on behalf of defendant Nos. 4 and 5 also relied upon the judgment in the case of (Humayun Dhanrajgir & ors. Vs. Ezra Aboody), 2008(6) Bom.C.R. 862 upon which he contends that the basis of valuation was to be the actual letting rate in case of leased property. That was the case of leave and license agreement between the parties with option to purchase. The defendants exercised the option to purchase which the plaintiff refuted upon the claim of several breaches committed by the defendant. Since the defendant was in possession, the Court Receiver was appointed and the defendant was to pay the monthly royalty. Both parties disputed the amount of royalty payable. The Court had to determine the basis of amount of the royalty. The Court referred to the earliest case of the (Privy Council in Kamakshya Narain Vs. I.T. Commissioner), A.I.R. 1943 P.C. 153 which observed that the royalty was in substance a rent; it is the compensation which the occupier