Mesne Profits

Indian Legal System > Civil Laws > The Code of Civil Procedure > Mesne Profits

The right to possession is a sacred right guaranteed to all law-abiding citizens. If the rightful owner is deprived of his possession and at the same time he is deprived of the income he can obtain from such possession, then he should be compensated with damages. In such situation the concept of mesne profits comes into play. Mesne profits are profits to which a person is entitled but from, which he has been kept out by the defendant. Simply ‘Mesne Profits” means rents or profits accruing during the rightful owner’s exclusion from his land and interest accrued on the profit. A claim for mesne profits is usually joined with the action for recovery of the possession of the land. Relevant provision of law concerned with mesne profits are

1. Section 2(12) of C.P.C.
2. Order 2, Rule 4 and order 20 Rule 12 of C.P.C.

Concept of Ownership:

The concept of ownership is one of the fundamental juristic concepts common to all system of law. Ownership is a relation of a person to an object which is exclusive or absolute and ultimate. The person who stands in this relation is called the ‘owner’ and he has a right of complete control and enjoyment of the object. Ownership consists of an innumerable number of claims, liberties, powers & immunities with regard to the things owned.

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 includes four kinds of rights within itself.

• Right to use a thing;
• Right to exclude others from using the thing;
• Disposing of the thing;
• Right to destroy it.

In Blacks Law Dictionary, ownership has been defined as “collection of rights of rights to use & enjoy property, including the right to transmit it to others”.

Concept of Mesne Profits:

According to Section 2(12) of the Civil Procedure Code, 1908, “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 there from, together with interest on such profits, but shall not include profits due to improvements made by the person in wrongful possession.

It is to be noted that this definition explicitly excludes any profit earned due to improvement in the property made by the person in unlawful possession of such property.

Illustration 1:

A is in wrongful possession of B’s house. B has rented some part of this house to some subtenants. Thus depriving A, B is receiving profits from such property. Such profits are known as ‘Mesne Profits’. Hence A has right to claim for the profits which have been received by B from the unlawful possession of the property, together with interest on such profits.

Illustration 2:

‘A’ a trespassers, claims B’s house and collects rents. This is Mesne Profits. He digs a bore-well in the land, constructs a group house and gives it for rent. According to definition of mesne profits given in the Code, mesne profits shall not include profits due to improvements made by the person on the property which is in his wrongful possession. In this case A has done improvement by digging a bore well and constructing a group of house. Hence B can claim for rent collected by A from B’s house as mesne profits but he cannot claim the profits from well and newly constructed group of house as mesne profits.

Illustration 3:

‘A’ (Mortgagee) has mortgaged his property to ‘B’ (Mortgagor). An order of foreclosure of the mortgage and decree of redemption is passed, but ‘B’ does not give possession to ‘A’. Then the profit earned by B using this property or he can earn with due diligence is mesne profits. Hence A has right to claim for the profits which have been received by B from the unlawful possession of the property, together with interest on such profits.

Thus “Mesne profits” are the profits, which the person in wrongful possession actually earned or might have earned with the ordinary diligence.

In Purificacao Fernandes v. Hugo Vincente de Perpetuo Socorro Andhrade, AIR 1985 Bom. 202 case, the Court observed that 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.

In Nataraja Achari v. Balambal Ammal, AIR1980 Mad 222 case, taking into consideration the definition of mesne profits provided under Section 2(12) the 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.”

Objects of Mesne profits:

The right to possession is a sacred right guaranteed to all law-abiding citizens. We have to understand that in this case the rightful owner is deprived of his possession and at the same time he is deprived of the income he can obtain from such possession.  The fundamental object of passing Mesne Profit Is to compensate the actual owner of the property for all the loss he has suffered. Thus the mesne profits are compensation paid to the real owner.

In Lucy kochuvareed v. P Mariappa gounder, AIR 1979 SC 1214, the Court observed that the object of awarding a decree for 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 thereof.

Mesne Profits- against whom means profits can be ordered?

Generally, Court can award Mesne Profits against the following persons:

• Tenants in a suit for recovery of possession. (Anderson wright v. Amar Nath Roy, AIR 2005 SC 2457)
• Persons against whom a decree for possession of the immovable property was passed. (Gopal Krishna Pillai v. Meenakshi Ayal, AIR 1967 SC 155)
• Trespass (Sita Ram Lakshmanji v. Dipnarain Mandal, AIR 1977 SC 1870)
• Mortgagors in possession of mortgaged property against whom a decree for foreclosure was passed. (Shiv Kumar Sharma v. Santhosh Kumari, AIR 2008 SC 171)
• Mortgagors in possession of the property after a decree for redemption was passed. (Prabhakaran v. M. Azhagiri Pillai, AIR 2006 SC 1567).

Conditions for Claiming Mesne Profits:

1. There should be a wrongful or unauthorized possession of a property
2. A person possessing the property is getting some profit out of the property or can obtain profit from such property with ordinary diligence.

Wrongful possession of the defendant is the essence of a claim for mesne profits and very foundation of the defendant’s liability therof.

In Mohadei v. Kaliji Birajman, 1969 All LJ 896 case, the Court held that the expression ‘mesne profits’ as defined in Section 2(12) of the Code means those profits which a person in wrongful possession of such property either actually received or might have received with due diligence. It is not always necessary that there should be proof of actual receipt.

It is plaintiff’s responsibility to lead evidence to prove the compensation defendant may have received due to illegal possession. In the absence of such proof the Court may reject the plaint for mesne profits.

In Kishen Kumar Narayandas Jobanputra v. Purushottam Mathuradas Raithatha, 2006 (2) Civil Court cases 600 (Bom) case, where the plaintiff did not lead any evidence, it was held that he was not entitled to claim mense profits.

In Lucy kochuvareed v. P Mariappa gounder, AIR 1979 SC 1214, where the plaintiff is dispossessed by several persons. The Court held that all the trespassers are jointly and severally liable, leaving them to have their respective rights adjusted in a separate suit for contribution, or, may ascertain and apportion the liability of each of them.

What does Mesne Profit Include?

Mesne profit includes theprofits received by him or might have been received by him with ordinary diligence; and the interest on such profits. The rate of interest payable is not fixed and it depends upon the discretion of the court subject to the limitation that it may not exceed 6% per annum. The determination of the amount rests entirely at the discretion of the court and it is difficult to lay down fixed principles which can be applied in every case.

In Mahant Narayana Dossjee Varu vs The Board of Trustees, Tirupati Devasthanam, AIR 1959 AP 64 case, the Court held that under the express terms of the definition, mesne profits are profits received by a person in wrongful possession and they are made up of two items

• The profits received by him or might have been received by him with ordinary diligence; and
• The interest on such profits.

Mesne Profits Includes Interest on Such Profit:

Mense profits includes interest on such profits and interest shall be allowed when computing the mesne profits.

In Mahant Narayana Dasjee Varu v. Tirupathi Devasthanam, AIR 1965 SC 1231 case, the Court observed that the Code of Civil Procedure 1882, for the first time, included interest in the definition of mesne profits. It was rightly done because interest is an integral part of mense profits and has therefore, to be allowed while computing items.

In Kalidas Bakshit v. Saraswati Dasi, AIR 1943 Cal 1 (11) case, the suit was for possession and for mesne profits. After the preliminary decree was passed, there was an enquiry into mesne profits under Order 20, Rule 12, CPC. It was argued that interest should not be awarded. Mitter J. observed: “We do not see why the plaintiff should not get interest. Interest is a part of mesne profits.”

Assessment of Mesne Profit:

In Fateh Chand v. Balkrishna Dass, AIR 1963 Sc 1405 (1412-13) case the Court observed that the mesne profits are in the form of damages, no invariable rule governing their award and assessment in every case can be laid down and the Court may mould it according to the justice of the case.

In Granish vs. Soshi Skildar (MP) case, the court held that the mesne profits are due from the moment possession is wrongfully held by the defendant an interest on such mesne profit is due from the day on which each instilments becomes due. A decree which is salient as to interest must, be taken to mean that mesne profit shall carry interest on them.

In P. L. Kapur v. Jia Rani, AIR 1973 Del 186 case, the Court observed that the criteria for calculation of mesne profits is not what owner loses by reason of deprivation from possession but what trespasser received or might have received with ordinary diligence.

In Sri Ramnik Vallbhdas Madhvani v. Taraben Pravinlal Madhvani, (2004) 1 SCC 497, the Supreme Court held that A mistake has been committed by the High Court in calculation of interest on mesne profits. Interest has to be calculated on yearly basis because the amount of mesne profits on which interest is to be awarded has to be arrived at on year to year basis. It keeps adding on from year to year. Interest cannot be allowed on the whole amount form the beginning. Interest had to be worked out on amounts falling due towards mesne profits on yearly basis i.e. on the amount of mesne profits which could be taken to be due to the plaintiff at the end of each successive year.

In Gray v. Bhagumian, (1939) 57 I.A. 105 case where the person in wrongful possession planted indigo for use in his adjacent factory and it was proved that an ordinary farmer would have grown sugarcane, wheat or tobacco, their Lordships of Privy Council assessed mesne profits on the profits of cultivation of those more profitable crops.

Deductions from Mesne Profits:

The Court must allow the following deductions from the gross profit of the defendant in possession of the property:-

1. The charge for collecting rent, etc.
2. The costs of cultivating and reaping the crops, and
3. Public charges made from the preservation of the property, e.g., Government revenue.

In Dakshina v. Saroda, ILR (1894) 21 Cal 142 (PC) case, the Court held that while awarding mesne profits, the Court may allow deductions to be made from the gross profits of the defendant in wrongful possession of the property, such as land revenue, rent, cesses, cost of cultivation and reaping, the charges incurred for collection of rent, etc. In other words, mense profits should be net profits.

Types of Cases in which Question of Rights of Profit Arises:

1. Suit for ejection  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 prof
2. A suit for possession by one or more tenants in common against others with a claim for account of past or past and future profits.
3. Suits for possession by number of Joint Hindu Family with a claim for an account from the manager.

Principals to be Applied to Award Mesne Profits:

The Court must apply the following settled principles to award mesne profits:-

1. the profit to be taken into account is that made by a person in wrongful possession;
2. the aim should be restoration of status before dispossession of the Decree-holder;
3. the use to which the decree-holder may have put the property if he himself was in possession is relevant only as evidence of what the defendant might with reasonable diligence have received.

Provisions in the Limitation Act:

The defendant is liable for all mesne profits received by him or which he might with ordinary diligence have received during the 3 years before suit and not before Section 109 of the limitation Act.

Conclusion:

Mesne profits are profits to which a person is entitled but from, which he has been kept out by the defendant. A claim for mesne profits is usually joined with the action for recovery of the possession of the land. The relevant provision of law concerned with mesne profits are a) Section 2(12) of C.P.C. and b) Order 2, Rule 4, and order 20 Rule 12 of C.P.C. The fundamental object of passing Mesne Profit Is to compensate the actual owner of the property for all the losses he has suffered. Mesne profit includes the profits received by him or might have been received by him with ordinary diligence, and the interest on such profits. The criteria for calculation of mesne profits is not what the owner loses by reason of deprivation from possession but what the trespasser received or might have received with ordinary diligence. Mesne profits are in the nature of damages and the right to sue for mesne profit is the right to sue for damages. Such a right cannot be attached and sold in execution of a decree against the person entitled to the decree under section 60.

Indian Legal System > Civil Laws > The Code of Civil Procedure > Mesne Profits