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WITH
CHAMBER SUMMONS NO. 1820 OF 2007
IN
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SUIT NO. 1996 OF 2006
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V/s.
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I.M.Chhagla, senior counsel with J.P.Sen
and Sharan Jagtiani i/b.
Rashmikant for the plaintiffs.
Federal &
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D.H.Mehta with Chirag Balsara i/b. Daru
Shah and Co. for the defendant.
CORAM: V.C.DAGA, J.
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ORDER:
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2. The factual matrix reveals that on 1st March,
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between the plaintiffs and the defendant of which one
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agreement, the defendant was permitted to occupy the
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purchase the said suit property/flat was given to the
defendant.
the time by
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The said agreement, inter alia;
could be
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exercised by the defendant. The defendant claims to
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conditions mentioned therein. Plaintiffs are alleging
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the letter dated 2nd September 2004.
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3. The correspondence ensued between the parties
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declaration that no valid option was exercised by the
defendant
sought
to
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purchase the suit
prayer
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to grant and determine mesne profit.
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5. Not satisfied with the above order an appeal
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Bench. The learned Division Bench vide its order
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order passed by the learned Single Judge dated 1st
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6.
Receiver
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The learned Division Bench permitted the Court
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2003 till 31st January, 2006 towards use and
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tentative royalty @ Rs.1,30,000/- for November, 2006
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the royalty/ monthly compensation by the Court
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DETERMINATION OF ROYALTY:
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7. The Court Receiver pursuant to the aforesaid
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settled the draft of the agency agreement.
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RIVAL CHAMBER SUMMONSES:
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9. Being aggrieved by the order of the Court
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that the valuation of suit property made by the Valuer
is
unreasonable
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very high and that the amount of royalty fixed
November, 2006.
needs to be enhanced.
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Court Receiver to cause fresh valuation of the suit
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amount of monthly royalty and, in the alternative,
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him to execute fresh agency agreement in respect of
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with a direction to pay service tax thereon at the
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prevailing rate as per Finance Act, 2007.
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12. The reliefs claimed in both the aforesaid
order.
Rival Submissions :
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measured the suit property as 2,477 sq.ft. as per the
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Rs.9,500/- per sq.ft. He, thus submits that on proper
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property works out in the sum of Rs.2,00,31,500/-.
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Rs.1,00,31,500/-. Thus, the amount of monthly royalty
ought
at 10% return.
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to have been fixed in the sum of
the Court
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Receiver has valued the property on the basis of
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that the valuation of property is not based on correct
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violation of the principles of natural justice and
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14. Per contra, Mr.Chhagla, learned senior counsel
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canvassed on behalf of the defendant. He urged that
by
the
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stretch of imagination, the valuation made
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taken out by the defendant and went on to press in
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plaintiffs praying for fresh valuation report and
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This chamber summons was opposed by learned counsel
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taken out by the defendant.
15. During
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the course of rival submissions, an
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attempt was made by both advocates to canvass various
fixed.
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Receiver determining monthly royalty in the
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proper ?
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Consideration :
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17. Having heard rival parties, before touching
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the merits of the issues framed, let me first consider
Concepts of Royalty :
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royalty is to compensate a right owner of the property
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his property. This concept is also understood as
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during the tenure of contractual tenancy what is paid
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tenancy, the characteristics of the subject matter is
changed
premises
to
and
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damages for use and
for
of
eviction
the
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till the possession is handed over, if the decree of
parties.
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one party to another for use and occupation of the
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circumstances of the case and evidence on record.
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property demised. It may assume the form of rent
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legal sense, it is recompense paid by the tenant to
his
enjoyed by him.
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landlord for exclusive possession of the premises
profits.
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enlarged scope of this term is meant to claim profit
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trespass but is nevertheless wrong, as for example
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dispossessed legally and decree of possession has been
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period before handing over the possession to the
rightful
possession
owner.
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possession wrongful.
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benefits translated in terms of money payable by a
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of rent.
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22. The dissection of the aforesaid definition
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The Measure of Mesne Profit :
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no manner of doubt that the real test to be applied
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would have earned by letting out or using the property
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namely, with ordinary diligence would have received
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foundation of the defendants liability to pay the
mesne
That to
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profit goes with actual possession of the land.
mesne profits.
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25. The Privy Council in the case of Gurudas
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290 and Harry Kampson Vs. Bhagu Mian, AIR 1930 P.C.
82 observed as under:-
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"The test set by the statutory definition of
"mesne profits" was clearly not what the
plaintiff has lost by his exclusion but what
the trespasser has or might or would have
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made can only be relevant as evidence of
what the trespasser might, with reasonable
diligence have received. The possession of
the
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judgment debtor and his wrongful
possession are thus the prime matter of
consideration and not the possession of the
landlord the decree holder".
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26. In the case of P. Ranga Rao Vs. Rama Doss
AIR 1959 A.P. 182 the Court has laid down principle
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dealing with the question in para 17 page 1413
observed as under:-
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" The normal measure of mesne profits is the
value of the user of land to the person in
wrongful possession. The assessment made by
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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
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property cannot be sustained".
(Emphasis supplied)
.
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It is thus clear that the mesne profits are to be
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calculated on the basis of advantage derived by the
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measure of damages which a successful landlord should
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possession and enjoyment of the property. The learned
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tenancy, the position of the tenant is akin to that of
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tagged to the rate of rent payable under the
provisions
value
of
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the Rent Control Order.
earned
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then the amount of compensation for continued use and
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some of the principles to be followed while
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method of valuation may well depend upon the nature of
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required. The prospective profit from the property is
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31.
methods
Having
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taken survey of the various cases
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a. What that value will be in the hands
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b. comparables, if available and
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c. finding out the prevailing rate of
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accommodation.
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APPLICATION OF ABOVE PRINCIPLES:-
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ruled by the Apex Court in the case of Fateh Chand
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estimated value of the property and estimated returns
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Profits. The valuer in addition to the method adopted
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addition, the valuer ought to have found out the
comparables
rentals or
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coupled with the prevailing
the
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wrongful person could have found equivalent
Collector of Ranchi,
Ranchi AIR 1972 SC 1417 recognized the
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of situation or extent of potentiality nor is it
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which the valuation can be accurately determined. In
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(Karnataka), it was held that where there was a wide
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in U.N.V. Pratap Vs. CWT (1988) 170 ITR 461 (A.P.).
there
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Thus, majority of the High Courts are of the view that
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property pending determination of the rights of the
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undisputed owner of property. Where the ownership
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to preserve the property. The Court appoints its own
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to take every such action which would protect the
property
discharge
and
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further the Court
though
to
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he has to take all necessary steps to preserve and
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impossible for occupant to pay. The exercise ought
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measure. The Court Receiver should not make it
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thereby force him to surrender the possession. It is
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realise the amount while protecting the security and
at the
deprived of use,
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same time to see to it that occupant
of
not
the
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premises pending litigation, while striking the
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to find out the prevailing rentals at which the
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and after collecting all the necessary data, the
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a balanced view of the matter. Having not done so,
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37.
passed
In
by
the
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aforesaid view, the
The
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same is set aside and the proceeding stand remitted
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would be the basis of the Chamber Summons taken out by
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the Chamber Summons and affidavit in support thereof,
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premises admeasures as 2477 Sq.Ft. and the total
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the orders of the Appeal Court on 9.10.2007, leaving
of property @ 10%.
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balance of Rs,1,35,31,500/- for calculating the return
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amount of Rs.1,85,31,500/- and considering rise in
rental over and above the return @ 10% per annum, the
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defendant can be directed to pay Rs.1,75,000/- with
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the amount of royalty by the Court Receiver.
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received by the Court Receiver shall be retained in
deposit
deposit
until
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suit is decided so that the amount
suit property.
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terms of this order. Order accordingly.
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41. At this stage, Mr.Chhagla, learned senior
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of the operation of the order pronounced. The said
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for the first time brought to my notice that the order
the
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passed by the Court Receiver is actually acted upon by
Order accordingly.
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