Property Law

In Property Law, The term property in common parlance indicates the economic status of a person. Any property is held by an individual to draw out benefit from it.In Property Law, Transfers are made by owners themselves, ostensible owners and the co-owners or we can say joint owners. When two or more persons enjoy common ownership of a property, for example say in a coparcenary, the male members and now even daughters have a common and an equal interest in the ancestral property, any co-owner can transfer his own share in the property to a stranger or another co-owner. And that transferee steps in the shoes of the co-owner (transferor) and gets clothed with all his assets and liabilities. We can say that the transferee becomes the co-owner.

Section 44 of the Transfer of Property Act, 1882, deals with transfers by one co-owner. It also deals with the rights of a transferee in this type of a transaction.
EXPLANATION OF SECTION 44 TPA, 1882 ( With reference to Section 4 of the Partition Act, 1893)
Section 44 says –
Transfer By One Co-Owner- Where one of two or more co-owners of immovable property legally competent in that behalf transfers his share of such property or any interest therein, the transferee acquires, as to such share or interest, so far as is necessary to give effect to the transfer, the transferors right to joint possession or other common or part enjoyment of the property, and to enforce a partition of the same, but subject to the conditions and liabilities affecting, at the date of the transfer, the share or interest so transferred.

Where the transferee of a share of a dwelling house belonging to an undivided family is not a member of the family, nothing in this section shall be deemed to entitle him to joint possession or other common or part enjoyment of the house.

This section of Transfer of Property Act deals with rights and liabilities of a transferee from a co-owner, as to the enjoyment of the property transferred ( should be immovable for this section). The first part of the section merely incorporates the principle that a person who takes the transfer from another, steps into the shoes of his transferor, and is clothed with all the rights and becomes subject to all the liabilities of his transferor. In short, we can say that he becomes as much a co-owner as his transferor was before the transfer. The second part of the provision provides an exception to the general rule stated in the first part and is based on convenience. It is designed to prevent an outsider from forcing his way into a dwelling house in which other members of the transferors family have a right to live.

But the remedy is to claim partition. When we read the section there are some terms which we need to understand like-
Who is a co-owner?
Legal Competency of a Co-owner to Transfer?
Rights and liabilities of a transferee from a Co-owner?
What is a dwelling house and Undivided family?

Who Is A Co-Owner?

Ownership consists of an innumerable number of claims, liberties, powers with regard to the thing owned. Ownership is of different kinds. There are absolute and limited, sole ownership, co-ownership, vested ownership, contingent ownership, corporeal, incorporeal. When a person owns a property at one time it is called sole ownership, but if the property is owned by more than one person then it is called joint ownership. By means of partition, one can have co-ownership changed into sole ownership.

The expression co-owner is wide enough to include all kinds of ownership such as joint tenancy, Tenancy in common, Coparcenary, membership of undivided Hindu family, etc. The very fact of the reference to the property that the parties have certain shares indicates that they are co-owners.
In Indian Law, a co-owner is entitled to three essentials of ownership-
# Right to possession
# Right to enjoy
# Right to dispose

Therefore, if a co-owner is deprived of his property, he has a right to be put back in possession. Such a co-owner has an interest in every portion of the property and has a right irrespective of his quantity of share, to be in possession jointly with others. This is also called joint-ownership.

The following are the types of co-ownership:

Tenants in Common
When the type of co-ownership is not specifically stated, by default a tenancy in common is likely to exist. Each tenant in common has a separate fractional interest in the entire property. Although each tenant in common has a separate interest in the property, each may possess and use the whole property. Tenants in common may hold an unequal interest in the property but the interests held by each tenant in common is a fractional interest in the entire property For e.g. B owns a 25% interest in the property and A owns a 75% interest. Each tenant in common may freely transfer his/her interest in the property.

Tenants in common do not have the right of survivorship. Therefore, upon the death of one tenant in common, his/her interest passes via will or through the laws of intestacy to another person who will then become a tenant in common with the surviving co-owners.
Joint Tenancy
The most attractive feature of joint tenancy is the right of survivorship. Upon the death of one joint tenant, his/her interest immediately passes to the surviving joint tenants and not to the decedents’ estate. Joint tenants hold a single unified interest in the entire property. Each joint tenant must have equal shares in the property For e.g. B and A each hold a 50% interest. Each joint tenant may occupy the entire property subject only to the rights of the other joint tenants.

Unlike tenants in common, joint tenancy has several requirements that must be met in order to be properly created. Massachusetts law requires that in order for a joint tenancy to be created specific language must be included in the conveyance or devise. Such language includes that the grantees take the land: “jointly”; “as joint tenants”; “in joint tenancy”; “to them and the survivor of them”; or using another language in the instrument that it was clearly intended to create an estate in joint tenancy. However, even if such language is contained in the conveying instrument, a joint tenancy may not exist. There are four additional common law requirements necessary in order to create a joint tenancy.

The four unities are
(1) Unity of time. The interests of the joint tenants must vest at the same time
(2) Unity of possession. The joint tenants must have undivided interests in the whole property, not divided interests in separate parts
(3) Unity of title. The Joint tenants must derive their interest by the same instrument (e.g. a deed or will)
(4) Unity of interest. Each joint tenant must have estates of the same type and same duration. All four unities must exist. If one unity is missing at any time during the joint tenancy, the type of co-ownership automatically changes to a tenancy in common. A joint tenancy may be created by a will or deed but may never be created by intestacy because there has to be an instrument expressing joint tenancy. A joint tenancy is freely transferable.

Tenancy by the Entirety
This type of co-ownership is exclusively for husband and wife. Similar to joint tenancy, tenancy by the entirety provides the right of survivorship. To exist, tenancy by the entirety requires that the four unities of joint tenancy exist plus the fifth unity of marriage between the two co-owners. However, even if all five unities exists, the type of co-ownership may still be joint tenancy if the conveying instrument indicates such. Unlike joint tenancy, tenancy by the entirety does not allow one spouse to convey his interest to a third party. However, one spouse may convey his/her interest to the other spouse. A tenancy by the
entirety may only be terminated by divorce, death, or mutual agreement by both spouses. A terminated tenancy by the entirety becomes a tenancy in common.

In Konchunju Nair v. Koshy Alexander it was held that if a co-owner wants to erect a dwelling house on the land he is free to do so. If division of co-ownership of property takes place, the co-owner can claim, that, the said property be allotted to his share. The Court would ordinarily grant such an equitable right.

When Is A Co-Owner Legally Competent To Make A Transfer?
Section 7 of the Transfer of Property Act, 1882 provides that every person competent to contract i.e. a major and of sound mind or is not disqualified by law for contracting. Therefore even the interest of a co-owner or co-sharer can be sold, mortgaged, leased to another co-sharer or to a stranger. The fact that the partition has not taken place by metes and bounds , does not stand in the way of the interest of a co-owner.

According to the law prevailing in some areas, a coparcener of a Hindu Joint Family can alienate his share in the Joint Family Property for consideration. Such a coparcener is a legally competent person. But in some cases of Mitakshara coparcenary, the consent of other coparceners is required before any such transfer.
Also, where one co-owner is in exclusive possession of a plot of a joint land and lets it out to a tenant without the consent of other co-sharer landlords, such a tenancy will not bind the latter. The lease in such a case will only be confined to the interest and share of the lessor.

In Baldev Singh v. Darshani Devi it was held by the Court that a co-owner who is not in actual physical possession over a parcel of land cannot transfer a valid title of that portion of the property. The remedy available to the transferee would be to get a share out from the property allotted after the partition or to get a decree for joint possession or can claim compensation from the co-owner.

In Rukmini and others v. H.N T. Chettiar it was held by the High Court of Madras that a co-sharer cannot be allowed to cause prejudice to the other co-sharers by putting up a substantial construction during the pendency of a suit for partition filed by the other co-sharers.

The High Court of Punjab and Haryana in a case of Hazara Singh v. Faqiria where a co-owner contended that he had, by adverse possession, a peaceful undisturbed possession by the other co-owners had become the sole owner of a land, held that the possession of a co-owner is possession of all the co-owners. It cannot be adverse to them unless there is a denial of their right to knowledge by the person in possession. If a co-sharer is in possession of the entire property, his possession cannot be deemed to be adverse he possesses the property on behalf of all others.

What are the Rights of a Transferee in such a Transaction
Basically, this section deals with the rights of a transferee and also safeguards their rights. The transferee steps into the shoes of his transferor ie the co-owner, and is clothed with all the rights and becomes subject to all the liabilities of his transferor. In short, we can say that he becomes as much a co-owner as his transferor was before the transfer. Following are his rights after the transfer-

Right to joint possession
Every joint owner or co-owner of the property has a proprietary right in the whole estate. After the transfer, the transferee becomes the co-owner and gets all his rights. He also has the right to joint possession of property except for a dwelling house. If a co-owner or his transferee is ousted from joint possession, he is entitled to joint possession by a suit and is not necessarily forced to sue for partition. A co-sharer can sue for possession either for the benefit of the entire body of co-sharers or for the partition and possession of the plaintiffs share.

Right to peaceful possession
If instead of remaining in exclusive possession of his separate plot, the co-owner transfers it, his transferee cannot be disturbed by the other co-owners until and unless a final partition takes place. It was also held that where a tenant of a land who derives his title from all co-owners cannot be disturbed by one co-owner without the consent of all. But where the co-owners are enjoying the common property in separate plots for the sake of convenience, the court will not decree to one co-owner joint possession of the portion in the actual cultivation of the other.

Right to make improvements
If a co-owner can make out a case that he is entitled to make construction on any part of the joint land, he should be allowed to do so. But he is not entitled to make construction on any other portion of the joint holding or to the detriment of the other co-owners.

Right to enforce partition
In all cases of joint partnership, each party has a right to demand and enforce a partition; in other words a right to be placed in a position to enjoy his own right separately without interruption and interference by others. Under this section, not only a transferee of a share in the property but a transferee of any interest can sue for partition. A lessee, a mortgagee and even a life tenant is entitled to seek partition so far it is necessary to give effect to the transfer.

A claim of the partition will only be refused on the ground of inconvenience. Partition does not depend on the duration of right. In a celebrated case a monthly tenant was also entitled to partition just to protect the rights of the plaintiffs. But a partition effected at the instance of a person having a temporary interest lasts only till the expiry of that interest.

The transferee also gets the liabilities with all the benefits. The rights of the transferee are subject to the conditions and
liabilities that attach at the date of the transfer to the share or interest so transferred.

Lalitha James and others v. Ajit Kumar and others AIR 1991 MP 15
P.S. Chouhan held vast properties. He died unmarried and issueless and he decided to give away the said properties to his 2 sisters (Mrs. Dayabai and Gracebai) and executed a gift deed in 1935. There had been no partition between them. Mrs. Dayabai was survived by appellants 2,3and 4. Gracebai is survived by appellant 1, Mrs Lalita Jaems and respondent no. 3. Mrs. Park. The 5.74 acres of land was divided between the survivors of Gracebai. Respondent no. 3 sold her share to Respondent no. 2 for Rs. 14,000/-.After the purchase, the transferee started digging on the land to raise a structure, it was objected by appellant no.1. A suit was filed by the Respondent 2.

At the Trial Court the suit was dismissed as the vendor was not in possession and the sale did not confer any right or title on them and they can get their money refunded

In the First Appeal Court it was held that the respondent no 3 was in exclusive possession of the land and rightfully sold it to the respondent no 2.

Final Judgement:
The Madhya Pradesh High Court emphasized that it is the strength of the plaintiff’s title and not the absence of title of the defendant that matters. A purchaser from a co-owner of a portion of undivided property is not entitled to possession of any particular part of the joint property. His right would be for joint ownership and not for exclusive ownership of any particular part of the joint property. A transferee is not in a better position than the co-owner himself. Section 44 gives sanction to this principle.

The Respondents will be only entitled to enforce partition of the joint estate. The sale of the exclusive property cannot be accepted. Therefore, the appeal was allowed.
Second part of the Section 44
This is an exception to the rule provided in the first part. Where a share in a dwelling house belonging to an undivided family is transferred to a stranger; the transferee cannot claim joint possession or any common part or enjoyment of the house. He can enforce his right over the property by a suit for partition. The principle underlying the provision is that it is inequitable to permit a stranger to intrude himself upon the privacy of an undivided family residence. Restriction contained in this part is applicable even if there is only one male member of family in occupation of family dwelling house.

In Balaji Anant v. Ganesh Janarthan Westropp C.J, observed as follows:
We deem it a far safer practice to leave a purchaser to a suit for partition than to place him by force in joint possession in the Hindu Family, which may be not only of a different caste from his own, but also different in race and religion.
In order to grant relief under section 44 there should be two things satisfied
1) the property transferred should be a dwelling house
2) the transferee should not be a member of the family.

In other words he should be a stranger. The right of a stranger transferee to have the house partitioned is, subject to Section 4 of the Partition Act, 1893. Under this section, a stranger claiming partition by metes and bounds may be compelled, at the option of the other members of the family to forego his legal right to partition and accept pecuniary compensation.

Explanation of Dwelling House
In the case of Durga v. Debidas, the members of the family were separated in mess and were residing in different places. They stayed in the house in the village for attending kali pooja. The house was otherwise used for collection of paddy. The court said that the stray use of the propert for a short residence for a specific purpose will not turn it into a dwelling house. There must be ancestral dwelling in existence on the suit land. The members of the family must not have abandoned the property.

Aahim Ranjan Das v. Smt. Bimla Ghosh AIR 1992 Cal 44
The disputed property belonged to 4 brothers A, B, C, D. A purchased 1/5th share of D by a deed in 1969. A died in 1975 leaving behind him the plaintiffs as his legal heirs. B died leaving four sons and daughters. C is alive and the property is an undivided family dwelling house of the plaintiffs and co-sharers. C and B transferred their interest to the defendants. A monthly tenancy was created in favour of the lessee-defendant and he was also delivered the possession of the same.

The Plaintiffs filed a suit under Section 44 to restrain the lessee from interfering with their possession.The Judgment of the court was that the plaintiffs can very well ask for a protection. There is no controversy that the defendant is a stranger to the family. The co-sharer is entitled to protection under section 44.There was enough evidence to show that the house was a dwelling house and that the family was undivided and event the defendant was a stranger. The court relied on various judgments where it was held that upon a transfer of an undivided share of a dwelling house by a co-sharer, the other co-sharer may maintain a suit for injunction to restrain the transferee from getting into possession. Moreover it was said that a stranger purchaser is reduced to a trespasser. Section 4 of the Partition Act spells out the right to partition of such a stranger. Thus the appeal was dismissed.

In the case of Ramdayal v. Mannaklal where the defendant had purchased a house from the plaintiffs father and was put in possession thereof. The Plaintiff filed a suit challenging the validity of the sale for the absence of a legal necessity. The court was of the opinion that if the purchaser files a suit for partition in a certain period then he can be in possession till the pendency of the suit. He can be legally handed over that property if it is not in excess of the share of the coparcener. But if the coparcener transfers more than his share then in such a situation the purchaser can acquire what belongs to the co-owner i.e only his share. On looking at the material in records it was found that the property purchased was less than the share of the vendor. So the defendant was given possession.

Mesne Profits.
The law of nature gives the primary right to compensation against the breach of legal right. Likewise, wrongful interference with the immovable property of another is a legal wrong and law of nature gives primary right to damages or compensation for such legal wrong.

The term ‘mesne profits’ relates to the damages or compensation recoverable from a person who has been in wrongful possession of immovable property. The Mesne profits are nothing but a compensation that a person in the unlawful possession of others property has to pay for such wrongful occupation to the owner of the property. It is settled principle of law that wrongful possession is the very essence of a claim for mesne profits and the very foundation of the unlawful possessor’s liability, therefore. As a rule, therefore, liability to pay mesne profits goes into actual possession of the land. That is to say, generally, the person in wrongful possession and enjoyment of the immovable property is liable for mesne profits.
Before comprehending the concept and relevant provision of mesne profits in the Code of Civil Procedure, 1908, it would be appropriate to discuss & understand the concept of ownership and possession in nutshell.

1.1 Ownership & Possession
The concept of ownership is one of the fundamental juristic concepts common to all system of law. Ownership consists of an innumerable number of claims, liberties, powers & immunities with regard to the things owned. According to some jurists, there is no point in having the concept of ownership without these claims.

The idea of ownership developed slowly with the growth of civilization. So long as the people were wandering from place to place and had no settled place of residence they had no sense of ownership. The idea began to grow when they started planting trees, cultivating land, building their homes. The transition from a pastoral to an agricultural economy held the development of the idea of ownership. People began to think in terms of ‘mine & thine’.

The concept of ownership is easy to understand but difficult to define with exactitude. The Jurists have defined the ownership in different ways.
· According to Austin “ownership means a right which avails against everyone who is subject to the law conferring right to put thing to user of infinite nature”.
· According to Hibbert “ownership involves four rights and those are the rights of using the thing, excluding others from using it, the disposal of thing and the destruction of thing.
· In Blacks Law Dictionary, ownership has been defined as “collection of rights of rights to use & enjoy the property, including the right to transmit it to others”.

From the analysis of aforementioned definitions one can conclude that the ownership is nothing but a right, which is available against everyone who is subject to the law. Such claim consists of following rights.
1. Right to possess & use,
2. Right to exclude others from possessing & using it,
3. Right to transmit, and;
4. Right to destroy thing owned.

Therefore ownership comprises a number of rights, and among these rights, one of the most significant rights is possession of the property. Possession is prima facie evidence of ownership and law always protect right to possession. According to Savigny protection of possession is a branch of protection to person and as any act of violence to person is unlawful, so is the act that disturbs possession by fraud or force. He further stated that possession is not protected because it is so intimately connected to the owner but in the interest of public order and safety. If the law allows self-help it would certainly lead to the breach of peace. Therefore in the interest of public order and safety no one should be allowed to take the laws into his own hands. According to Windschids protection to possession stands on the same ground as protection against injuria i.e. violation of private legal right. Possession is well protected as a part of criminal law with the objective to preserve & maintain peace. Possession is also protected as a part of law of tort.

In the property law, Possession is considered as a sufficient proof of ownership. Every person may keep what he possesses unless someone can prove that he has better title. And the moment some one can prove the better title against the person who was in prior possession, he is entitled to compensation against the unlawful possessor of property. Mesne profits are one such mode of compensation that can be claimed against a person in unlawful possession. Mesne profits are in the nature of damages for being deprived of the benefit, which the person in possession derives from the property.

1.2 Origin of the Concept of Mesne profits
The concept of mesne profits has its origin in the medieval period. Under the feudal system, the King owned all land. The King would let out a part of these lands to his barons on the condition that they will provide him with soldiers whenever he wanted to raise an army.

Soon this turned into a nice way of raising money by charging rent for the land. In turn, the barons would let out part of the land to tenant farmers and they would pay rent – usually in kind, by providing livestock or crops – for the privilege of being able to keep some of the produce for themselves. Thus the concept of chains of tenancies was born.

The person to whom they paid rent became known as the ‘mesne landlord’. The word meant ‘intermediate’ in old French. The phrase was originally ‘mesne rents and profits’ meaning all the rent or profit from the land that could be extracted by the intermediate landlord. In the modern time the term ‘mesne profits’ means the claim that a lawful owner of the property has against the unlawful possessor of the property.

1.3 NATURE OF Mesne Profits
All the legal system, which governs the civilized nations of the world agree upon the basic principle of natural justice to obtain reparation for wrongs or infringement of legal rights. In other words, the law of nature gives primary right to a compensation for injuries. Mesne profit is one such right to compensation granted against injuria i.e. breach of legal right. Mesne profit is a positive right available against infringement of private legal right.

The main object of awarding mesne profit is to compensate the actual owner of the property for all the loss he has suffered. In other words the object of awarding a decree of mesne profits is to compensate the person who has been kept out of possession and deprived of enjoyment of his property even though he was entitled to possession of property, and the word compensation would embrace in its purview any actual loss suffered by a lawful owner. The idea of granting mesne profits as compensation normally connotes reparation for some past wrongful act i.e. unlawful possession.

Legal provision related to Mesne Profits

Mesne profits may be defined as the profits or other pecuniary benefits, which one who disposes of the true owner receives between disseizin and the restoration of possession. Therefore mesne profits correspond to the profits which the person in wrongful possession is receiving or might receive with due diligence for the wrongful occupation of property. Mesne profits are defined under Section 2(12) if Code of Civil Procedure.

Section 2 (12) of the Code of Civil Procedure provides that: “Mesne profits” of property means those profits which the person in wrongful possession of such property actually received or might with the ordinary diligence have received therefrom, together with interest on such profits but shall not include profits due to improvement made by the person in wrongful possession.

From the analysis of the above stated definition on can conclude that “Mesne profits” are the profits, which the person in unlawful possession actually earned or might have earned with the ordinary diligence. According to Section 2(12) a person becomes entitled to mesne profits only when he has right to obtain possession but another person whose occupation is unauthorized keeps him deprived of that possession. The first and foremost condition for awarding mesne profits is unlawful possession of the occupant of the property. The section further provides that Mesne profits also include interest on such profits. However it explicitly excludes any profit earned due to improvement in the property made by the person in unlawful possession of such property.

In Phiraya Lal alias Piara lal v. Jia Rani Hon’ble Delhi high Court while defining the term mesne profits observed that, “when damages are claimed in respect of wrongful occupation of immovable property on the basis of the loss caused by the wrongful possession of the trespasser to the person entitled to the possession of the immovable property, these damages are called mesne profits”.

In Nataraja Achari v. Balambal Ammal, taking into consideration the definition of mesne profits provided under Section 2(12) Hon’ble Madras High Court observed that there are three different types of cases in which question of rights of profits arise:

  1. Suit for ejectment or recovery of possession of immovable property from a person in possession without title, together with a claim for past or past and future mesne profits.
    2. A suit for partition by one or more tenants in common against others with a claim for account of past or past and future profits.
    3. Suits for partition by a member of joint Hindu family with a claim for an account from the manager.

The Court observed, “In the first case, the possession of the defendant not being lawful, the plaintiff is entitled to recover mesne profits such profits being really in the nature of damages. In second case the possession and receipt of profits by the defendant not being wrongful the plaintiffs remedy is to have an account of such profits making all jus allowance in the favour of the collecting tenant in common. In the third case the plaintiff must take the joint family property as it exists at the date of the demand for partition and is not entitled to open up past account or claim relief on the ground of past inequality of enjoyment of the profit, except where the manager has been guilty of fraudulent conduct or misappropriation. The plaintiff would, however, be in the position of the tenant in common from the date of severance in status and his right would have to be worked out on that basis.

2.1 Interest on Mesne profits
The definition of the term ‘Mesne profit’ provided under section 2(12) of the Code of civil Procedure, 1908 explicitly provides that interest is an integral part of mesne profits. From the expression ‘together with interest on such profits’ in Section 2(12) it is apparent that ‘mesne profit’ includes within its fold an interest component. And the rate of interest to be allowed in regard to mesne profits varies depending upon the facts and circumstances of each case. Since the statute does not fix any rate of interest it is left at the discretion of court to determine the rate of interest. Generally, the rate of interest is awarded at 6 % per annum.

Very early in the year 1922, in Lata Prasad v. Sri Ganeshji[10] Hon’ble Allahabad High Court, held that the term ‘Mesne profits’ also includes interest on the profits earned by the unlawful possessor of the property and where the decree of granting mesne profits say nothing about interest, the decree holder can claim that the decree of mesne profits includes interest.

In N. Dasjee v. Tirupathi Devasthanam, Hon’ble Supreme Court observed that, “Under Section 2(12) of the Civil Procedure Code which contains the definition of mesne profits, interest is an integral part of mesne profits and has, therefore, to be allowed in the computation of mesne profits itself. That proceeds on the theory that the person in wrongful possession appropriating income from the property himself gets the benefit of the interest on such income”.

In Tarquino Raul Henriques v. Damodar Mangalji and Co. Pvt. Ltd., the question directly came up for the consideration before the Hon’ble Bombay High Court. In this case appellate filed review application against the order of the Hon’ble Court. The impugned order granted mesne profits but it was silent interest as far as interest on such profits was concerned. It was, therefore, urged by the appellate that the interest being an integral part of the mesne profits it was implicit in the order. On the other hand defendants contended that grant of interest is discretionary and once the impugned order is silent on the point of interest it is safe to assume that the interest was negatived. The issue was whether the grant of interest is implicit when an order for mesne profits is directed S. 2(12) of Code of Civil Procedure. Having considered the observations of the Supreme Court in N. Dasjee v. Tirupathi Devasthanam and the definition of the term ‘Mesne profits’ under Section 2(12) the court held that the expression “together with interest on such profit” clearly indicates that the mesne profits would not only include the actual damage suffered as a result of wrongful possession, but also the interest accrued thereon and in that sense the mesne profits would always comprise both the damage and the interest. And the grant of interest is implicit in the mesne profits.

2.2 Improvements in the property by unlawful possessor
The latter part of Section 2(12) expressly provides that mesne profits do not include profits due to the improvement made in the property by the person in wrongful possession.

In The Hindustan Petroleum Corporation Ltd., Chairman and Managing Director v. Khwaja Asadullah Baig and Ors[13], while assessing the quantum of mesne profits Hon’ble Andhra Pradesh High Court held that, taking into consideration concept of mesne profits under Section 2(12), the courts have to exclude the profit attributable to the improvements made on the property.

However a person in wrongful possession of the property is not entitled to claim expenses incurred on improvements in such property. In other words, plaintiff in not bound to pay the defendant compensation for improvements as a condition precedent to obtaining possession. The defendant being in the rank of trespasser is not entitled to such compensation.

2.4 Assessment of the Mesne profits.
One broad principle governing the liability for mesne profits is evident from Section 2(12) of the Code of Civil Procedure, 1908 which defines ‘mesne profits’ to mean “those profits which the person in wrongful possession of 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”. But the Section does not provide any fixed rule for the assessment of such profit. The provision simply states that mesne profits include interest on such profits. And profits due to improvement are excluded from the assessment of the quantum of mesne profits.

In the lights of this broad principle, the determination of quantum mesne profits is left at the discretion of the court. And mesne profits being in the nature of damages even the Court cannot lay down any invariable rule governing award and assessment of mesne profits in every case. The Court may mould award and assessment of mesne profits according to the justice of the case. In other words there is no uniform criterion for the assessment of mesne profits. The quantum of mesne profits depends upon the facts and surrounding circumstances of each case.

Earlier the rental value of the property formed the basis of assessment of mesne profits. The courts used to award mesne profits taking into consideration rental value of the property. This practice of assessing mesne profits on the basis of rent was inappropriate and later on the Courts rightly struck it down.

In Kesardeo Baijnath Vs. Nathmal Kisanalal, it was held, “that determination of mesne profits on the basis of rental value of the property would be in correct test in the context of the definition of menses of profits in section 2[12] Rent could be relevant factor, for considering the quantum of mesne profits but not a decisive of the matter”.

In Dr. J K Bhakthavasala Rao v. Industrial Engineers, Nellore, Hon’ble Andhra Pradesh High Court observed that, “fixing the damages for the use and occupation of the suit building by its very nature, involves adjudication of a pure question of fact and there exists hardly any uniform and standard pattern of assessment in this regard. The court should take into consideration comparative assessment of nature, location etc of the suit premises vis-à-vis similar characteristics of premises in the surrounding area. It is, however, very difficult to find the premises of similar nature, size and quality of at the same location. Even if there exists any broad similarity in this aspect, the rent in respect of such premises would depend, mostly, upon the need of lessee and the circumstances under which the leases are granted. Prevalence of amity or enmity, as the case may be, between the landlords and the tenants and the duration of lease are certain factors, which would have the bearing of this. And therefore the mesne profits cannot be determined solely on the basis of the rental value of the land”.

While assessing the quantum of mesne profits, the factors such as location of the property, comparative value of the property, condition of property in question, profits that are actually gained or might have been gained from the reasonable use such property are generally taken into consideration by the courts. Moreover it is settled principle of law that the criteria for the calculation of mesne profits is not what the owner loses by the deprivation of possession but profits should be calculated on the basis of what the person in wrongful possession namely, the defendants had actually received or might with ordinary diligence have received therefrom.

Moreover, the law of equity requires that mesne profits should be the net profits i.e. the profits derived after making deduction toward necessary expenditure for earning such profits. Therefore all such payment made by the person in wrongful possession, as the plaintiff would have been bound to make if he had been in possession, should be deducted from the gross earnings. These expenses include expenses incurred for maintenance of the property, cess paid on the property etc, depending upon the nature of the property. For instance, in case of agricultural land cost of cultivation, seasonal fluctuation etc should be deducted.

Likewise, the court should also deduct the profits made by unlawful possessor through improvement in the property. It would be unjust on the part of the court to award mesne profits without deducting these expenses.

In short with regard to the assessment of mesne profits, we can say that there is no uniform criteria for the assessment of mesne profits. The quantum of mesne profits depends upon the facts and circumstances of the case and courts can mold it according to the justice of the case. In the early stages, the rent formed the basis of assessment of mesne profits. But with the passage of time, the courts struck down the practice of assessing mesne profits on the basis of the rental value of the property. Today, there are various factors that are taken into consideration while assessing the quantum of mesne profits as discussed earlier. Moreover, the profits should be ascertained on the basis of what the wrongful possessor of the property earned or might have earned with the due diligence and not on the basis of what the plaintiff has lost. And the expenses incurred by the wrongful possessor of the property, for the maintenance of the property, must be deducted from such profits.

2.5 Burden of Proof
It is settled principle of law that in case of mesne profits the burden of proof rests on the claimant i.e. the plaintiff. And mesne profits being in the form of compensation, before claiming mesne profits the plaintiff has to establish before the Hon’ble court that he was the lawful owner of the property and he was deprived of it by the unlawful possession of the defendant. The plaintiff having proved the aforementioned facts becomes entitled to mesne profits. Further, the onus of proving what profits he might have received with the ordinary diligence lies on the claimant.

In the case of Ramakka v. Nagesa, Hon’ble Madras High Court while considering the question of onus of proof in case of mesne profits held that “onus of proving what profits might, with due diligence, have been received in any year lies upon the party claiming mesne profits”. The court further observed that “Plaintiff may also adduce evidence to prove that the occupant was not diligent and might have got greater profits by proper diligence”.

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