calcutta high court

Calcutta High Court: In an application seeking the issuance of final decree based on report of the Special Referee appointed by the court to determine the monthly market rent for mesne profits, a Single-judge bench comprising of Krishna Rao,* J., modified the Special Referee’s report, determining mesne profits from 01-04-2014, and adjusted the monthly rent based on the Cost Inflation Index for subsequent years and directed the defendant to pay monthly rent with interest on the outstanding amount.

Factual Matrix

In the instant matter, the plaintiff initiated the present application seeking acceptance of the report of the Special Referee and the issuance of a final decree. The plaintiff initially filed a suit against the defendant, seeking recovery of vacant possession of the suit premises, arrears of rent from 01-03-2012, to 31-05-2012, and mesne profits from 31-05-2012, until the delivery of possession. The plaintiff also filed an application under Chapter XIII-A of the Original Side Rules for summary judgment for eviction. The court granted the decree in favor of the plaintiff for eviction and arrears of rent and appointed a Special Referee to determine the monthly market rent for mesne profits. The Special Referee submitted a report on 28-04-2017, specifying the monthly rates of rent from June 2012 to March 2017. The plaintiff accepted the Special Referee’s report and sought a final decree based on its findings.

Parties’ Contentions

The defendant argued that the Special Referee did not consider the lease renewal clause properly. The defendant contended that the original lease continued during the extended term, and holding over indicated a fresh tenancy. The defendant contended that holding over after the lease term would create a fresh tenancy, and the Special Referee overlooked the applicability of Section 116 of the Transfer of Property Act and erred in assessing the fair rental value. Moreover, the defendant raised concerns about the valuation process conducted by the Special Referee and argued that the fair rental value was not accurately determined, emphasising on the need to consider the market changes and the valuation report provided by the defendant’s valuer.

The plaintiff countered by asserting that the suit was filed based on the termination notice, not the lease expiry and cited precedents to support his entitlement to mesne profits from 01-06-2012, to 14-03-2017. The plaintiff also contended that the valuation report provided by the defendant’s valuer was accepted by the Special Referee after thorough analysis.

Court’s Assessment

The Court considered the arguments and examined the Lease Deed’s renewal clause (Clause VII), which allowed for an extension of the lease period upon the lessee’s request. The Court acknowledged that the defendant continued possession beyond the original term, paying enhanced rent until February 2012. The Court also noted the plaintiff’s acceptance of these payments.

Referring to Provash Chandra Dalui v. Biswanath Banerjee, 1989 Supp (1) SCC 487, the Court distinguished between “renewal” and “extension”. The Court held that, based on the Lease Deed, the defendant’s possession after the original term was an extension, not a renewal, and a new lease document was not required.

Regarding mesne profits, the Court agreed with defendant that the Special Referee erred in considering the period from June 2012 and determined that the mesne profits should be calculated from April 2014, aligning with the extended lease period. The Court also addressed the valuation discrepancies, noting that the Special Referee did not adequately consider the defendant’s valuer’s analysis and other relevant documents. The Court modified the report, adjusting the monthly rents based on the defendant’s valuer’s findings and incorporating the Cost Inflation Index as follows:

“a. Monthly enhance rent of 20% of the original rent with municipal tax from the month of June 2012 to March 2014.

b. The mesne profit of the suit premises shall be from 1st April, 2014 to March, 2017.

c. Monthly rent from April, 2014 to March, 2015 … Rs. 68,700/- per month.

d. Monthly rent from April, 2015 to March, 2016 … Rs. 72,525/- per month.

e. Monthly rent for April, 2016 to March, 2017 … Rs. 74,480/- per month.

f. The defendant shall also pay the interest at the rate of 8% per annum on the balance amount outstanding from the respective debts till the payment is made.”

Court’s Decision

The Court modified the Special Referee’s report, determined the mesne profits from 01-04-2014, adjusted the date of mesne profits and recalculated the monthly rental rates based on the Cost Inflation Index for subsequent years. The Court also ordered the defendant to pay enhanced rent and mesne profits from 01-04-2014, to March 2017, with monthly rent adjustments. Interest at 8% per annum was also imposed on the outstanding balance.

[P.C. Chandra & Sons (India) (P) Ltd. v. Union of India, 2024 SCC OnLine Cal 953, order dated 02-02-2024]

*Judgment by Justice Krishna Rao

Advocates who appeared in this case:

Mr. Ranjan Bachawat, Sr. Adv., Mr. Shuvasish Sengupta, Mr. Ankit Dey, Counsel for the Plaintiff

Mr. Joy Saha, Sr. Adv., Mr. Ranojit Chowdhury, Mr. Sudipto Chowdhury, Ms. Aparupa Chakraborty, Counsel for the Defendant

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