Tuesday, 17 October 2017

Whether mesne profit of tenanted premises can be determined on basis of estimated value of property?

In the case of (Fateh Chand v. Balkishan Dass) MANU/SC/0258/1963 : [1964]1SCR515 , the question was whether or not 'mesne profits' should be based on the estimated value of the property? The Supreme Court while dealing with the question in para 17 page 1413 observed as under:

The normal measure of mesne profits is the value of the user of land to the person in wrongful possession. The assessment made by the High Court in respect of compensation at the rate of five per cent of what they regarded as the fair value of the property based not on the value of the user, but on an estimated return on the value of the property cannot be sustained.

(Emphasis supplied)

It is thus clear that the mesne profits are to be calculated on the basis of advantage derived by the person in wrongful possession by the user of the property and not the fair value of the property.
The Supreme Court in the case of (Dalhousie Properties Ltd. v. Sooraj Mall Nagar Mall) MANU/SC/0008/1976 : 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.
IN THE HIGH COURT OF BOMBAY

Chamber Summons Nos. 1539 of 2006 and 1820 of 2007 in Suit No. 1996 of 2006

Decided On: 23.04.2008

 Humayun Dhanrajgir and Ors.Vs. Ezra Aboody


Hon'ble Judges/Coram:
V.C. Daga, J.
Citation: 2009(1) ALLMR 844
Read full judgment here; Click here
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