Saturday, 22 August 2015

What is method for valuation of mesne profits?

 It is settled law that while ascertaining mesne profit the
test to be applied is, not what the landlord has lost or would have
earned by letting out or using the property himself but the test is
what the wrongful occupant had actually received or might with
ordinary diligence have received therefrom. (Umayun Dhanrajgir Vs.
Ezra   Aboody
 2008 (6) Bom. C.R. 862
,     Kesardeo   Vs.   Nathmal   Kisanlal   Goenka 
1964  Indian Law Reports 364
,
Smt.Purificacao Fernandes Vs. Hugo Vicente de Perpetuo
AIR 1985 BOMBAY 202
 and Fateh
Chand Vs. Balkishan Dass 
AIR 1963 SC 1405
).
22 How to measure mesne profit or the methods of valuation
have   been   summarized   in   Umayun   Dhanrajgir   Vs.   Ezra   Aboody

(supra).  Paragraph­31 of the said judgment reads as under :­
“31.   Having   taken   survey   of   the   various   cases   and
methods of valuation, it can be broadly summarised as
under :­
(i) The claim for `Mesne Profit  remains floating till
the   decree   of   possession   is   passed   in   favour   of   the
plaintiff, which can also be termed as royalty ;
(ii) The measure of Mesne Profits is the value for the
use of the premises and not necessarily the value of the
property ;
(iii) Value for use will be determined by :­
(a) What that value will be in the hands of the person
in wrongful possession ;
(b)   comparables,   if   available   and   applicable   in   real
sense ;
(c)   finding out the prevailing rate of rental at which
the wrongful person ought to have found equivalent
accommodation.”
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
 CIVIL  APPELLATE JURISDICTION
CIVIL REVISION APPLICATION NO.790 OF 2012
IN
MISC. APPEAL NO.158 OF 2011
IN
MISC. NOTICE NO.909 OF 1993
IN
L.E.SUIT NO.291/338 OF 1983
Mridangraj Hiralal Suchak )
alias Barfiwalla,
V/s.
Bank of Baroda )

CORAM: K.R.SHRIRAM, J.
DATED  : 18TH  MARCH 2015
Citation; 2015(4) MHLJ 282 Bom


1 Both, the plaintiff and defendant before the trial court have
filed independent Civil Revision Applications.   The plaintiff decreeholder
has filed Civil Revision Application No.790 of 2012 and the
defendant has filed Civil Revision Application No.406 of 2012. Both
the   Civil   Revision   Applications   can   be   disposed   by   this   common
judgment. For convenience, the description of the parties in the trial
court is maintained.

2 Facts, in brief, that led to the filing of the said two revision
applications are as under :­
3 The suit property being commercial property consisted of
three shops on the ground floor of a building by name “Coronation”
at Block No.C­57­59, Vithalbhai Patel Road, Mumbai­400 004. It is
situated at C.P.Tank junction which is one of the busiest locality in
that part of Mumbai, a junction of 5 roads and had access to it from
the main road itself. The said 3 shops were joint together and the
total area of the premises was 2255 sq. ft. (the suit premises).
4 The plaintiff was not the owner of the suit premises but a
tenant and inducted the defendant as a licensee.  In the year 1969,
the plaintiff had inducted the defendant as the licensee for a period
of 10 years with renewable clause.  The license was renewed in the
year 1981 for 10 years but the renewal took effect from 1979.  This
would mean the leave and license term was upto 1989.  The agreed
license fee was Rs.5.25 per sq.ft.   per month which rate was fixed
without any escalation clause.  The rate therefore, was to remain firm
for the entire duration of 10 years, i.e., upto 1989.
5 On 12.12.1983, the plaintiff filed an eviction suit being
L.E.   Suit   No.291/338   of   1983     before   the   Small   Causes   Court,
Mumbai after terminating said leave and license agreement.   The
said suit for possession was decreed on 27.2.1992 against which the
defendant filed an appeal before the appellate bench of the Small
Causes Court.  While decreeing the suit the trial court also ordered
inquiry for determination  of mesne profit from the date of filing of
the suit for eviction till handing over possession.  The appeal came to
be dismissed on 30.3.1993.
6 The defendant challenged this by way of writ of petition.
The writ petition came to be dismissed and in pursuance of the
decree   passed   by   the   trial   court,   the   defendant,   on   31.7.1993,
surrendered to the plaintiff, possession of the suit premises.
7 The plaintiff thereafter filed Misc. Notice No.909 of 1993
in   L.E.   Suit   No.291/338   of   1983.     By   the   said   application,   the
plaintiff   made   two   alternative   pleas.     It   was   contended   that   the
plaintiff was entitled to mesne profit on the basis of actual profits
earned   by   the   bank   from   time   to   time   while   the   bank   was   in
possession of the suit premises from December­1983 till 31.7.1993.
It was alleged that the bank displayed   profits made by it on the
notice board in the branch of the bank at the suit premises and the
plaintiff was entitled to profits that was made by the defendant while
utilizing   the   suit   premises   for   the   aforesaid   period.     It   was   also
contended that the plaintiff would be entitled to 25% of the net
profit which was made by the bank during the aforesaid period and
the said 25% of net profit was calculated to be Rs.3,33,75,000/­. The
plaintiff also claimed interest of Rs.2,22,00,000/­ upto date of filing
of the said application.
8 The alternative claim of the plaintiff was that the plaintiff
would otherwise be entitled to the amount that the bank would be
required to pay for having obtained an other suitable premises, had
the bank vacated the suit premises and was required to obtain such
premises during the aforesaid period i.e., from 1983 till 1993.  It was
also contended by the plaintiff that the plaintiff was an estate broker
who   had   shown   willingness   to   give   premises   similar   to   the   suit
premises   to   other   banks   and   the   defendant   bank   and   it   was
contended that similar premises were available at the rate of Rs.110
per sq. ft. in the same locality and therefore, the plaintiff will be
entitled to that amount. It was also contended that the defendant
had acquired an area very close to the suit premises @ Rs.45/­ per
sq.ft. per month exclusive of taxes and if the taxes were included in
the said rate, then the aggregate rate would be Rs.72 to Rs.75 per
sq.ft. and that is the rate that the plaintiff was entitled to per month
because that would be the net amount that the bank would have
paid.   The   plaintiff   also   claimed   interest   and   in   all,   claimed   an
amount of Rs.2,81,00,000/­ as an alternative figure/amount.
9 The defendant resisted the demand of the plaintiff and
suggested   other   methods   of   deciding   the   mesne   profits   which
according to the defendant was more correct.
10 Before I go into what the defendant had submitted, the
plaintiff's stand that the defendant should pay 25% of the profit that
it made to the plaintiff is scarcely credible.  It is beyond the bounds
of possibility that the defendant would have displayed, in its branch
office, on the notice board, the profits that it had made.  There has
been no evidence also to that effect.   Moreover, the profits of the
bank is calculated on the basis of the profits of all the branches
together and therefore, it is seemingly impossible to calculate branch
wise profits.  It is also not conceivable that the profits earned by the
bank, have been earned from the premises within the meaning of
definition of section 2(12) of the Code of Civil Procedure.  Therefore,
this claim of the plaintiff cannot be accepted. In fact, the counsel for
the plaintiff also did not press this point.
11 On   the   alternative   method   claimed   by   the   plaintiff   for
calculating the mesne profit, the stand of the bank was  no evidence
was produced by the plaintiff to prove the actual market rate of rent
in respect of the suit premises or vicinity nor any evidence placed on
record that would show what was the actual market rate at which the
said alternative premises would have been available to the bank, had
the bank opted for the same between the period December­1983 to
July­1993.
12 It was also submitted that the plaintiff himself being a
tenant in respect of the suit premises, was not entitled to charge
anything over and above the standard rent during the period 1983 to
1993.  The Bombay Rent Act was in force at that point of time and
the Bombay Rent Act prohibited the tenants to sub­let the premises at
any rate in excess of the standard rent.  The plaintiff, since he was
paying only Rs.681/­ per month to the main landlord, cannot claim
anything more than the said amount.
13 In the alternative, it was submitted by the defendants that
the rates will have to be calculated only on the ready reckoner rate
and that also only the plaintiff was in a position to show that the
property would go for such rate by keeping in mind the fact that the
suit   premises   was     tenanted   premises.     Therefore,   if   such   sale
consideration   is   calculated   as   per   the   ready   reckoner   value   and
returns is taken as 6% to 10% of the ready reckoner value, then such
amount would, at the most, be what the bank will have to shell out
for   obtaining   such   premises   on   leave   and   license   or   lease   basis.
Therefore, the plaintiff is not entitled to anything over and above the
same.
14 The defendant also submitted in the alternative that the
leave   and   license   in   any   way   was   to   expire   only   in   1989   and
therefore, upto 1989 the plaintiff would have received only, had he
not   terminated   the   agreement,   Rs.5.75   per   sq.ft   per   month   and
therefore, upto 1989, the plaintiff should be paid Rs.5.75 per sq. ft.
per month.  It was also submitted that for the balance period even
though the defendant had obtained in the year 1993, an alternative
premises @ Rs.45 per sq. ft. per month, excluding taxes, that rate
cannot be the basis for calculating mesne profit for the suit premises
and it would be much lower than that.  How much lower, was left to
the discretion of the court but the defendant submitted that the court
should consider the fact that the new premises for which defendant
was paying Rs.45/­ per sq. ft. per month was of about 3500 sq.ft. as
compared to the suit premises which was 2255 sq. ft. , the new
premises was in a newly constructed building which was on the main
road, in better locality and better suited business­wise, whereas the
suit premises was in a very old building.
15  In fact, these are the same grounds which the defendant
took in the present Civil Revision Application and while making their
submissions.  The plaintiffs, however, were happy with the decision
of the appeal bench except to the extent of interest.  The appeal court
had granted 6% interest from the date of the decree until possession
was handed over, whereas the plaintiffs wanted at least 18% for the
entire period, i.e., from the date of the suit until possession was
handed   over,   because   (a)   the   defendant   had   lent   money   to   the
plaintiff at 22% and (b) the defendant had also claimed the 3 months
compensation   which   the   defendant   had   paid   to   the   plaintiff   as
advance rent/deposit be adjusted with interest thereon @ 18% per
annum.
16 Before the trial court, on the issue of mesne profits, the
parties went in for trial and evidence was led.  The trial court granted
mesne profits at the rate based on ready reckoner value.  The trial
court considered the ready reckoner rates and granted thereon fair
and reasonable mesne profit @ 12%  per annum.  This was for the
period 1990 to 1993.  As the valuer had not stated what was the rate
of ready reckoner for the period 1983 to 1989, the court reduced the
mesne profit rates @ 15% per annum.   The ready reckoner rates
provided by  the valuer in the year 1990 was Rs.4000/­ and the
mesne profit @ 12% of Rs.4000/­ per month came to Rs.40 per sq.ft.
per month.  Therefore, the trial court took Rs.34 per sq. ft. per month
for 1989, Rs.29 per sq. ft. per month for 1988, Rs.25/­ sq.ft. per
month   for   1987   and   concluded   at   Rs.13   per   sq.   ft   per   month
approximately for 1983.
17 Being aggrieved by the said judgment passed by the trial
court, both the parties went into appeal before the appellate bench of
the Small Causes Court. The grievance of the defendant was that the
trial court should not have granted mesne profit at any rate over and
above the standard rent of the premises. Both the appeals came to be
disposed of by a common judgment dated 22.3.2012 whereby the
appeal filed by the bank was dismissed and the appeal filed by the
plaintiff was allowed and the appellate bench held rate of Rs.80/­ as
the basic rate for the year 1992 with reduction of Rs.5 per sq. ft. per
year   either   downwards   or   upwards.     The   appellate   bench   also
granted interest @ 6% p.a. from the date of the decree till actual
realization of the amount.
18          The High Court has a very limited jurisdiction under Section
115 of the Code of Civil Procedure. The High Court while exercising
the revisional jurisdiction can interfere with the order passed on
appeal  by the  appellate  authority  only  on three  grounds, i.e., 
(i) Where the original or appellate authority exercised a
jurisdiction not vested in it by law ;
(ii) Where the original or appellate authority failed to
exercise a jurisdiction so vested, or
(iii) Where   in   following   the   procedure   or   passing   the
order, the original or appellate authority acted illegally or
with material irregularity.
19 The present case of both the plaintiff and the defendant do
not fall under  the first two of the aforesaid situations as both,  the
trial court as well as the appellate court have decided the matters in
due exercise of jurisdiction so vested in them.  At the same time, the
High Court is not bound to interfere merely because the conditions in
the section are satisfied. Notwithstanding that the High Court cannot
say that it will not interfere merely because the conditions are not
satisfied.  General equities of the case are matters to be taken into
account in considering whether the High Court, even in cases where
the conditions which attract jurisdiction exist or not, should exercise
its jurisdiction.
20 Before we proceed further let us see what does mesne
profit mean.  Mesne profit is defined in section 2 (12) of the Code of
Civil Procedure as under :­
“mesne profits  of property means those profits which
the  person  in  wrongful  possession  of such property
actually received or might with ordinary diligence have
received   therefrom,   together   with   interest   on   such
profits,   but   shall   not   include   profits   due   to
improvements   made   by   the   person   in   wrongful
possession”.
21 It is settled law that while ascertaining mesne profit the
test to be applied is, not what the landlord has lost or would have
earned by letting out or using the property himself but the test is
what the wrongful occupant had actually received or might with
ordinary diligence have received therefrom. (Umayun Dhanrajgir Vs.
Ezra   Aboody1
,     Kesardeo   Vs.   Nathmal   Kisanlal   Goenka2
,
Smt.Purificacao Fernandes Vs. Hugo Vicente de Perpetuo3
 and Fateh
Chand Vs. Balkishan Dass4
).
22 How to measure mesne profit or the methods of valuation
have   been   summarized   in   Umayun   Dhanrajgir   Vs.   Ezra   Aboody
(supra).  Paragraph­31 of the said judgment reads as under :­
“31.   Having   taken   survey   of   the   various   cases   and
methods of valuation, it can be broadly summarised as
under :­
(i) The claim for `Mesne Profit  remains floating till
the   decree   of   possession   is   passed   in   favour   of   the
plaintiff, which can also be termed as royalty ;
(ii) The measure of Mesne Profits is the value for the
use of the premises and not necessarily the value of the
property ;
(iii) Value for use will be determined by :­
1 2008 (6) Bom. C.R. 862
2 1964  Indian Law Reports 364
3 AIR 1985 BOMBAY 202
4 AIR 1963 SC 1405
(a) What that value will be in the hands of the person
in wrongful possession ;
(b)   comparables,   if   available   and   applicable   in   real
sense ;
(c)   finding out the prevailing rate of rental at which
the wrongful person ought to have found equivalent
accommodation.”
23 The   appeal   bench   did   not   accept   the   trial   courts'
calculation   of  mesne profit  based on ready reckoner rates.   The
appellate court was correct in disregarding the same because the
ready reckoner is applicable only to determine the stamp duty and it
does not give any indication qua the market value/rent.  In fact, the
ready   reckoner  method   of  calculation   had  been  given  up  by   the
defendants.   In paragraph­16 (internal page­14) of the impugned
judgment, it is recorded as under :­
“So far as determination of the appropriate quantum of
mesne   profits   is   concerned,   the   learned   counsels
discussed three prominent methods for determination of
mesne profits.  The same are (1) actual profit received,
(2) comparable method and (3) ready reckoner method.
Out of these three methods, both the learned advocates
submitted  that determination  of mesne profits  on the
basis of ready reckoner method is not proper method.”
24 In   view   of   the   above,   we   need   to   look   into   only   the
comparable method, the actual profit received having been rejected
earlier.
25 The defendants' submission that the parties had agreed as
per the leave and license agreement for a rate of Rs. 5.75 per sq. feet
per month and therefore, the plaintiff should be paid only that much
amount as compensation also cannot be accepted.  The plaintiff had
in this case terminated the leave and license agreement and the
termination was held to be valid by all courts including this court.
Applying the principles emanating from the judgments in the matter
of Smt. Purificacao Fernandes Vs. Dr.Hugo (supra) and Kesardeo Vs.
Nathmal Kisanmal Goenka (supra), the defendant cannot proceed on
the   basis   that   leave   and   license   agreement   was   not   terminated.
Though in those cases the agreement in question was a tenancy
agreement that makes no difference to this principle. 
Paragraph   14   of   the   judgment   in   the   case   of   Smt.
Purificacao Fernandes (supra)  reads as under :­
14. Mesne profits are defined in S. 2(12) Civil P.C. as
meaning   those   profits   which   the   person   in   wrongful
possession   of   such   property   actually   received   or   might
with ordinary diligence have received therefrom, together
with interest on such profits, but shall not include profits
due   to   improvements   made   by   the   person   in   wrongful
possession of other's property has to pay for such wrongful
occupation to the owner of the land.  It further appears
that mesne profits are a compensation, which is penal in
nature.   According   to   the   definition,   the   mesne   profits
correspond to the profits which the person in wrongful
possession is receiving or might receive with due diligence
for his wrongful occupation of the land. Nowhere, mesne
profits are linked with any benefits that the owner of the
land may get from the said land. This being so, in my
view,   it   is   difficult   to   accept   the   submission   of   Mr.
Usgaonkar only because, under the provisions of the Rent
Control Act, the landlord cannot get a rent higher than the
one he was getting from the original lessee. Mesne profits,
as already said are by definition, to be calculated on basis
of the profits which the person in unlawful possession is
receiving or might have received. It is true that, in Dwarka
Prasad case , a division Bench of the Allahabad High Court
has held a different view. It was observed in that case that
the plaintiff was not free to let the premises concerned to
anyone with whom he could strike a bargain and that if he
had been free in that respect the amount of damages could
be fixed on the probable amount which he could have
obtained from the person desirous to rent the premises.
However, the Control of Rent and Eviction act controls the
amount   of   rent   which   a   landlord   can   get   for   any
accommodation   and   it   also   provides   as   to   whom   the
accommodation is to be let. In view of this, the Allahabad
High   Court   held   that   the   mesne   profits   were   to   be
calculated on basis of the rent that the landlord/plaintiff
could have got under the provisions of the control of Rent
and Eviction act. this view appears, however, to be in a
collision course with the definition of mesne profits itself,
as I already observed and, therefore, cannot be accepted. I
am fortified in this opinion by the decision of Paranjpe J.,
in Kesardeo's case. In the said case, the learned Judge,
relying on the decision of the Supreme Court in  Fateh
Chand v. Balkishan Dass, AIR 1963 SC 1405, observed that
the   mesne  profits   are  to   be   calculated   on   basis   of   the
profits that a person in wrongful possession has received
or might have received with due diligence. It has been
observed in the said case as follows:­­ 
"The Rent Control Order was, no doubt, for the benefit and
protection of tenants , but it will be going too far to say
that   the   protection   was   to   continue   even   to   erstwhile
tenants   despite   the   fact   that   their   possession   was   as
trespassers   on   the   termination   of   the   relationship   of
landlord and tenant. The moment a person ceased to be a
tenant, he dis­entitled himself from the privileges he could
have got under the Rent Control Order. Accepting this
submission of Mr. Bobde in this connection would virtually
amount to giving a legal status of a tenant of a person who
has been held by competent Courts to be a rank trespasser
after the termination of tenancy. No authority was shown
in support of this impossible position. The defendant, who
was no longer a tenant, could not still insist on saying that
the rent which the plaintiff could have got under the Rent
Control   Order   should   be   treated   as   the   measure   of
damages.   The   claim   of   the   defendant   that   the   mesne
profits   must   be   limited   to   the   rent   recoverable   by   the
plaintiff under the provisions of the Rent Control Order
would virtually mean that the quantum of mesne profits
was,   not   what   the   defendant   had   actually   received   or
might with ordinary diligence have received but what the
plaintiff as a landlord lost or had not been able to get.
That would militate against the definition of mesne profits
in S. 2(12), of Civil P.C. 
These observations are, as already said, based on what had
been held by the Supreme Court in AIR 1963 SC 1405 .
The   Supreme   Court   observed   therein   that   the   normal
measure of mesne profits is the value of the user of the
land of the person in wrongful possession. It is, therefore,
clear   that   there   can   be   no   manner  of   doubt   after  this
decision of the Supreme Court that that mesne profits are
to be calculated on basis of the advantage the person in
unlawful occupation sets by the use of the property. The
same view was otherwise held by a Division Bench of this
Court in Kakubhai &Co's case. I am, therefore, unable to
accept the submission of Mr. Usgaonkar that the mesne
profits were to be calculated on basis of the maximum rent
that the respondents could have fetched if the premises
were freshly let out.
(emphasis supplied)
26 Therefore, the submissions of the defendants that Rs.5.75
should be the amount payable, cannot be accepted.
27 The   defendants'   submission   that   only   standard   rent   of
Rs.681/­ is payable,  also cannot be accepted.  The defendant was not
a protected tenant at all.  The privity between the plaintiff and the
defendant was the leave and license agreement and the suit filed was
for eviction under the leave and license agreement.  In view of this,
the provisions of standard rent is not applicable in the facts of the
present   case.     The   courts   have   held   that   once   the   agreement   is
terminated, the protection cannot continue because on termination,
the possession is as that of a trespasser.  Even for a tenant, once the
tenancy   is   terminated,   it   would   dis­entitle   the   tenant   from   the
privileges he could have got under the Rent Control Act.  Therefore,
the submissions of the defendants that the plaintiff is only entitled to
standard rent cannot be accepted.
28 On the rates applied by the appeal court viz. Rs.45/­ per sq.
ft. per month + Rs.30/­ towards taxes and increase/decrease of Rs.5
per month is something in which this court will not interfere under
Section 115.  The plaintiff had led evidence and was cross­examined
by the defendant.  The plaintiff in his evidence had deposed that he
was invited for the inauguration of the newly acquired premises of
the respondent.  The plaintiff also deposed that then branch manager
of the defendant had told the plaintiff that the premises was acquired
at the license fee of Rs.45/­ per sq. ft. per month excluding taxes.
The payment of property taxes is the liability of the landlord and the
payment of the same is made on behalf of the landlord and is a
matter of convenience and to ensure this payment.  This is because
when a party takes a premises on leave and license on   long term
basis, if the landlord after collecting the license fee including taxes,
does not pay the municipal taxes for whatever reason, any action
taken by the authorities will have a direct effect on the licensees'
enjoyment   of   the   licensed   premises.     The   defendant   was   paying
property taxes separately in addition to the license fee that they were
paying   to   their   licensor.     The   defendant   had   an   opportunity   to
controvert this figure themselves or at the very least produce the
leave and license agreement which was exclusively in their possession
and also the tax receipts.  The defendant did not produce.  In fact, the
defendant   was   called   upon   twice   to   produce   leave   and   license
agreement but still they did not.
29 For   the   comparative   study,   the   appeal   court   has   also
considered the fact that the defendant's witness who was employed in
the concerned branch, had stated in the cross­examination that the
present premises of the bank is a marriage hall and are partly situated
on the 1st  floor and partly on the 2nd  floor.   The appeal court also
considered in its judgment the evidence of the plaintiff that the suit
premises was situated on the ground floor and that there was access
from the main road and it was situated at a junction of 5 roads etc.
In short, the appeal court has considered all the factors and came to
the conclusion at the rate at which mesne profit has to be paid.  In the
judgment of the Apex court in the matter of DLF Housing Company
etc.   Vs.   Sarup   Singh1
,   the   Apex   Court   has   held   that   it   is   not
competent to the High court to correct errors of facts or errors of law
unless such errors have relation to the jurisdiction of the court to try
the dispute itself.   This is not the case where the appeal court has
exercised  jurisdiction  not vested  in  it  or  it  has  failed  to  exercise
jurisdiction so vested in it.   Therefore, this court will not interfere
into the issue of the mesne profit calculation arrived at by the appeal
court.
30 What remains now to be considered is the plaintiff's claim
for pendente lite interest and to be paid interest in excess of 6% that
was awarded for the period from the time of decree of eviction till the
payment thereof. The counsel for the plaintiff submitted that by not
awarding interest pendente lite the courts below failed to exercise
jurisdiction so vested in them as mandated by the Statute under the
definition of mesne profit and in this regard intervention of the court
is necessitated.
31 Mesne profit is defined as those profits which the person in
wrongful possession of such property actually received or might with
ordinary diligence have received therefrom, together with interest on
such profits  but shall not include profits due to improvements made
by the person in wrongful possession.  Therefore while determining
the quantum of  mesne profit, awarding interest on  mesne profit  is
1 AIR 1971 SUPREME COURT 2324
mandated by the Statute.  The courts below have given their findings
on interest.  Should this court interfere while exercising the revisional
jurisdiction ? 
32 In the DLF Housing Judgment (supra)  the Apex Court has
held that the words “illegality” and “with material irregularity” as
used in clause ­c of Section 115 do not cover either errors of fact or
either law ; they do not refer to the decision arrived at but merely to
the manner in which it is reached.  The errors contemplated by this
clause may relate to either to breach of some provision of law or to
material defects of procedure affecting the ultimate decision, and not
to errors either of fact or law after the prescribed formalities have
been   complied   with.   Paragraph ­8   of   the   said   judgment   reads   as
under:­
The position thus seems to be firmly established that
while exercising the jurisdiction under s. 115, it is not
competent to the High Court to correct errors of fact
however gross or even errors of law unless the said
errors have relation to the jurisdiction of the Court to
try the dispute itself. Clauses (a) and (b) of this section
on their plain reading quite clearly do not cover the
present case. It was not contended, as indeed it was not
possible to contend, that the learned Additional District
Judge had either exercised a jurisdiction not vested in
him by law or had failed to exercise a jurisdiction so
vested   in   him,   in   recording   the   order   that   the
proceedings under reference be stayed till the decision
of the appeal by the High Court in the proceedings for
specific   performance   of   the   agreement   in   question.
Clause (c) also does not seem to apply to the case in
hand.  The   words   "illegally"   and   "with   material
irregularity" as used in this clause do not cover either
errors of fact or of law; they do not refer to the decision
arrived   at   but   merely   to   the   manner   in   which   it   is
reached. The errors contemplated by this clause may, in
our view, relate either to breach of some provision of
law or to material defects of procedure affecting the
ultimate decision, and not to. errors either of fact or of
law,   after   the   prescribed   formalities   have   been
complied with. The High Court does not seem to have
adverted to the limitation imposed on its power under
s.  115  of  the  Code.  Merely   because  the  High  Court
would have felt inclined, had it dealt with the matter
initially,   to   come   to   a   different   conclusion   on   the
question of continuing stay of the reference proceedings
pending   decision   of   the   appeal,   could   hardly   justify
interference on revision under s. 115 of the Code when
there.   was   no   illegality   or   material   irregularity
committed by the learned Additional District Judge in
his manner of dealing with this question. It seems to us
that in this matter the High Court treated the revision
virtually as if it was an appeal. 
(emphasis supplied)
33 The trial court granted simple interest @ 6% only from the
date of the decree till actual realization of the amount.  The Division
Bench did not interfere with the interest granted by the lower court.
For the period upto 1992 when the decree was passed, the appeal
court has in paragraph­31 presumed the rate of Rs.80 per sq. ft. per
month inclusive of taxes by keeping in mind the interest component
as well.
34 It would not be correct  to say that the Appellate Court
failed to award interest pendente lite.  If one reads paragraph­31 of
the impugned order which reads as under :­ 
31  As stated earlier, we have already held that
the Bank has secured a new premises at the rate of
Rs.72/­ to Rs.75/­ per sq.ft. p.m. in the year 1992, just
near the suit premises.  Therefore, considering the old
nature of the suit premises,  and also keeping in mind
the aspect of interest, the prevailing market rental value
in the year 1992 can safely be presumed at the rate of
Rs.80/­   per   sq.   ft.   p.m.   inclusive   of   taxes.   Further
deduction of Rs.5/­ per year would be reasonable to
ascertain the rate of prevailing market rate of the suit
premises for the preceding years upto 1983.  Likewise
rise of Rs.5/­ in the market rate of the year 1992 would
fetch us market rent of Rs.85/­ per sq.ft.p.m. for the
year 1993 regarding the suit premises.” 
(emphasis supplied)
35 Therefore, the question of granting any interest separately
for the  period  upto  the decree  does  not  arise  and  there  was  no
illegality or irregularity.
36 For   the   period   from   the   date   of   decree   until
payment/realization @ 6% p.a., though it was discretionary on the
part of the trial court and has been confirmed by the appeal court,
only the appeal court in paragraph­32 of the impugned judgment has
given reasons.  The reason is defendant­ bank was a nationalized bank
implementing   various   schemes   of   Government   for   the   common
people.   That cannot be a reason for giving only 6% p.a. rate of
interest.  If this explanation has to be accepted, then in cases where a
charitable trust or a Government agency is in wrongful possession of
a property, it would that mean that they should not be asked to pay
any   interest   at   all.     The  Appellate   Court,  therefore,   erred   in   the
manner in which this conclusion was reached. There was, hence,
material irregularity   in  the manner in which the  Appellate Court
arrived at its conclusion.
37 The grievance of the plaintiff is that when the bank lent
money to the plaintiff,  the rate of interest was almost 22% and the
bank was be claiming set off for the amount which the defendant had
paid to the plaintiff as advance rent/deposit together with @ 18%
p.a.   The counsel therefore, submitted that the plaintiff should be
paid atleast 18% p.a. 
38 As per the definition of mesne profit the amount payable is
those   profits   which   the   person   in   wrongful   possession   of   such
property   actually   received   or  might   with   ordinary   diligence   have
received there from together with interest on such profits.  For the
period from the date of the decree until possession was handed over,
the   defendant   held   on   to   the   money   that   was   payable   to   the
plaintiffs.   If that amount had been placed in fixed deposit with
defendant­ bank, the plaintiff would have earned about  8% to 10%
on   an   average.     The   bank   would   have   lent   that   money   to   its
borrowers at interest in the range of 14% to 18% p.a. thereby making
a profit of 6% to 8%  p.a.  using the plaintiff's money.  In my view,
that profit would be the profit which the defendant who was in
wrongful possession has received.  This profit, it would meet interest
of justice,   if it is shared with the plaintiff.   Therefore, the rate of
interest  @ 6%  p.a. from the date of decree until actual realization of
the amount is increased to 9% p.a.   The rest of the appeal court's
judgment remains unaltered.
39 Both   the   Civil   Revision   Applications   are   accordingly,
disposed of.      
     (K.R.SHRIRAM, J.)
 
40 At this stage, the Advocate appearing for the defendants
requests stay of this judgment.  The plaintiffs not to execute  decree
for a period of four weeks from today.
(K.R.SHRIRAM,J)

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