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Concept Of Mesne Profits Under Code Of Civil Procedure, 1908

The underlying principle based on which the Code of Civil Procedure, 1908 functions is Ubi Jus Ibi Remedium that signifies where there is a right, there is a remedy. The concept of Mesne Profits has been developed from this principle because it is the law of nature to provide the right to compensation where there has been an infringement or breach of a legal right. Before delving into the concept of Mesne Profit, it is necessary to discuss the meaning of the terms Ownership and Possession.

While the former is an exclusive collective right of a man to possess, enjoy, transmit, destroy a property owned by him/her, the latter acts a prima facie evidence of the former. The right to possess property is protected in the eyes of law until and unless another individual claim to have a better title on that property.

When this claim arises, the law acts as a shield to protect the original owner of the property, thereby, ensuring compensation from the illegal or unlawful possessor. Mesne Profits is a mode of such compensation facilitating remedy to the aggrieved party refraining the wrongful possessor from enjoying profits derived from such property.

The dictionary meaning of the term Mesne Profits is the profits of an estate received by a tenant in wrongful possession and recoverable by the landlord. It is further explained as the profits which have accrued while there was a dispute over land ownership. And if it is determined that the party using the land did not have legal ownership, the true owner can sue for some or all of the profits made in the interim by the illegal tenant, which are thus called 'Mesne Profits.

Considering the legal sanction of the term, Mesne Profits of property has been defined under Section 2 (12) of the Code of the Civil Procedure, 1908 as those profits which the person in wrongful possession of such 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.

The measure of Mesne Profits is the profits which the person in wrongful possession actually received or might with ordinary diligence have received from the property, together with interest on such profits, and not what the original Claimant loses by his/her exclusion from the property. Mesne Profits include those profits which the person in wrongful possession of such property actually received or might with ordinary diligence have received therefrom.

Wrongful possession of the Defendant is the very essence of a claim for Mesne Profits and the very foundation of the Defendant's liability therefor. Liability to pay Mesne Profits goes with actual possession of the land. Generally, the person in wrongful possession and enjoyment of the immovable property is liable for Mesne Profits. A person is said to be in wrongful possession when he/she enjoys such possession despite, another person is entitled to it under law.

Concept Of Ownership & Possession

As defined by 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. Ownership consists of an innumerable claims, liberties, powers & immunities with regard to the things owned. The idea of ownership developed slowly with the growth of civilization. The transition from a pastoral to an agricultural economy made the idea of ownership as developmental phenomena. The concept of Ownership is easy to understand but difficult to define with exactitude. In Black's Law Dictionary, Ownership has been defined as collection of rights of rights to use & enjoy property, including the right to transmit it to others.

Possession is prima facie evidence of Ownership and law always protect right to possession. Savigny regards protection of possession as an extension of the protection of the person. He further stated that possession is not protected because it is so intimately connected to the Ownership, but in the interest of public order and safety.

According to Windschids, protection to possession stands on the same ground as protection against injuria i.e. violation of private legal right. In the property law, Possession is considered as a sufficient proof of Ownership. Every person may keep what he/she possesses but contrary to this, if the possession is illegal then the person who has legal possession over the property may claim damages including the profits which the illegal possessor may have accrued from the property. Those profits are termed as Mesne Profits.

Origin Of The Concept Of Mesne Profits

The concept of Mesne Profits has its origin in the medieval period. Under the Feudal System, the owner of the land (at that time King used to be the Sole Owner of all the land) would let out a part of these lands to others on the condition that they will provide their service and labour to the Owner.

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 land to the 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 chain of tenancies was born.

The person to whom they paid rent became known as the Mesne Landlord. The word meant intermediate in Old French. phrase was originally Mesne Rents and Profits meaning all the rent and profit from the land that could be extracted by the intermediate landlord. In the modern time, the term Mesne Profits means the claim that lawful owner of the property has against the unlawful possessor of the property. The word Mesne is derived from the root word demesne. This concept is common in countries which follow English Legal System including many former British Colonies.

Nature Of Mesne Profits

All the legal system, which governs the civilized nations of the world agree upon the basic principal 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/she 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/her property even though he/she 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. The burden of proof would depend on the nature of the claim made by the Plaintiff. If the Plaintiff limits his/her claim to the actual profits which the Defendant is said to have received, obviously, in such a case, as the Defendant is the person who had special knowledge of the actual receipt of the profits received by him/her, the burden would lie on him to prove the actual receipts made by him/her.

If, on the other hand, the Plaintiff wants to make the Defendant liable for the profits which the Defendant ought to have received by the use of ordinary diligence in event, it cannot be said that the matter is within the special knowledge of the Defendant and the burden of proof would rest on the Plaintiff to prove the probable receipts in respect of the disputed property.

Scope Of Mesne Profits

The scope of Mesne Profits is very wide in its own circle. Until now it is clear that Mesne Profits are granted on property but are restricted only to those profits which are derived by a person in wrongful possession of property belonging to another. They have no application to profits accountable by a person not in wrongful possession of the property such as by a co-sharer, before partition. The possession of a co-sharer can never be wrongful as he/she has right and interest in every inch of the undivided property.

Where there is a severance in the status of a Joint Hindu Family and the coparceners thereupon become merely tenants-in-common, in a Suit for Partition filed by one of them against the others the only right he/she has is the right to claim accounts of the past and future Mesne Profits until the date of actual partition by metes and bounds after making all just allowances in favour of the collecting tenant-in-common. The tenant-in-common who is in possession cannot be said to be in wrongful possession though he may be liable to render accounts relating to his/her share, such a claim for accounts is not a claim for Mesne Profits. Mesne Profits can be claimed regarding immovable property and not with regard to movable property.

Legal Provision Related To Mesne Profits

Mesne Profits may be defined as the profits or other pecuniary benefits, which one who disposes the true Owner receives between disseizing and the restoration of possession. Therefore Mesne Profits corresponds 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) of the Code of Civil Procedure, 1908.

Section 2 (12) of the Code of Civil Procedure, 1908 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 one 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) of the Code of Civil Procedure, 1908 a person becomes entitled to Mesne Profits only when he/she has right to obtain possession but another person whose occupation is unauthorized keeps him/her deprived of that possession. The first and foremost condition for awarding Mesne Profits is unlawful possession of the occupant of the property.

In [Phiraya Lal alias Piara Lal Vs Jia Rani AIR 1973 Del 186], Hon'ble 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. 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 [Nataraja Achari Vs Balambal Ammal, AIR 1980 Mad 2228], taking into consideration the definition of Mesne Profits provided under Section 2 (12), Hon'ble High Court observed that there are three different types of cases in which question ofrights 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 Plaintiff's remedy is to have an account of such profits making all just 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/her right would have to be worked out on that basis.

The second legal provision relating to Mesne Profits is provided in Order XX Rule 12 of Code of the Civil Procedure Code, 1908.

It provides for the provisions of decree for possession and Mesne Profits as:

  1. Where a Suit is for the recovery of possession of immovable property and for rent or Mesne Profits, the Court may pass a decree:
    1. For the possession of the property;
    2. For the rents which have accrued on the property during the period prior to the institution of the Suit or directing an inquiry as to such rent;
      (b-a) For Mesne Profits or directing an inquiry as to such Mesne Profits;
    3. Directing an inquiry as to rent or Mesne Profits from the institution of the Suit until:
      1. The delivery of possession to the decree holder,
      2. The relinquishment of possession by the Judgment-debtor with notice to the Decree-holder through the Court or,
      3. The expiration of three years from the date of the Decree, whichever event first occurs.
  2. Where an inquiry is directed under Clause (b) or Clause (c), a final Decree in respect of the rent or Mesne Profits shall be passed in accordance with the result of such inquiry.
    Order XX Rule 12 of the Code of Civil Procedure, 1908 provides for the passing of a decree in a Suit for the recovery of possession of immovable property and for rent or Mesne Profits.

Order XX Rule 12 of the Code of Civil Procedure, 1908 makes an exception to the general rule that a Plaintiff can only sue on such cause of action as has arisen on the date of instituting his/her Suit; the object is to avoid multiplicity of litigation, as it would be clearly inconvenient and unfair that the person unlawfully kept out of possession of his/her lands should be obliged to file Suits every three years for Mesne Profits accruing after the institution of his/her Suit in ejectment.

The Rule is not mandatory but merely directory. The Court has discretion to direct an inquiry into future Mesne Profits; it is under no obligation to do so. Direction as to future Mesne Profits is within the discretion of the Court. Irrespective of whether the Plaintiff has prayed for them or not, if the Court thinks fit to give direction as to future Mesne Profits it can give direction as to future Mesne Profits under Order XX Rule 12 of the Code of Civil Procedure, 1908. The Court has only to see whether the case of the Plaintiff is governed by Order XX Rule 12 of the Code of Civil Procedure, 1908. In case, if it is applicable, the Court is fully empowered to grant future Mesne Profit also.

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) of the Code of Civil Procedure, 1908 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 the Court to determine the rate of interest but the same should not exceed six per cent per annum.

In [Mahant Narayana Dasjee Vs Tirupathi Devasthanam, 1965 SC 1231], the Hon'ble Supreme Court observed that:
Under Section 2 (12) of the Code of Civil Procedure, 1908 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/herself gets the benefit of the interest on such income

In [Tarquino Raul Henriques Vs Damodar Mangalji & Co. Pvt. Ltd., AIR 1989 Bom 309], 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 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 negative. The issue was whether the grant of interest is implicit when an order for Mesne Profits is directed under the Code of Civil Procedure, 1908.

Having considered the observations of the Supreme Court in N. Dasjee v. Tirupathi Devasthanam (supra) 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, therefore, the grant of interest is implicit in the Mesne Profits.

Assessment of the Mesne Profits

In tort claims and in breach of contract claims, damages are sometimes measured as the loss in monetary value that one party experiences as a result of another party's alleged wrongful actions. That wrongful act may be a breach of contract, an act causing injury (e.g., tort, infringement, or fraud), or a violation of a duty that resulted in a loss of revenue, profits, or possibly long-term value (i.e., lost profits). In a lost profits claim, the Plaintiff should prove that the injury and the damages were caused by the Defendant.

The Plaintiff typically retains an analyst to assist counsel in proving that but for the alleged wrongful actions of the Defendant, the affected business would have realized a certain amount of income (e.g., profits or cash flow) during the damages measurement period. The objective of the lost profits analysis is to restore the Plaintiff to an equivalent economic position but for the alleged wrongful act—and not to make the Plaintiff better off than it otherwise would have been.

The Civil Procedure Code, 1908 doesn't provide any specific criteria as to how the Mesne Profits should be assessed. The provision only states that the interest on such profits is included and any profits derived because of improvement are ruled out. Also according to the law of equity, Mesne Profits must be in net profits.

So, it's upon the discretion of the Court to determine the quantum of Mesne Profits based on the following things:

  • Nature and Condition of the property;
  • Location of the property;
  • Value of the property;

The actual profit gained by the possessor or reasonably might have received with the use of the said property.

The Court also measures the Mesne Profits based on what the Defendant has gained or reasonably might have gained with ordinary diligence by wrongfully possessing the property and not what the Plaintiff has lost because of being deprived of possession.

Mesne Profits are in the nature of damages which the Court may mould according to the Justice of the case, and each case must be dealt on merits. Mesne Profits are something which a Plaintiff cannot evaluate; it is solely for the Court to determine on the evidence before it. The amount of Mesne Profits to which the rightful owner of the property is entitled is not fixed either by an agreement or some statute and depends on the result of the inquiry conducted by the Court with a view to ascertain the amount which the rightful owner of the property is entitled to get from the person in wrongful possession. Mesne Profits are, therefore, un-liquidated damages.

The true test for assessment of Mesne Profits is clearly not what a person has lost by his/her exclusion, but what the trespasser has or might reasonably have made by his/her wrongful possession. In determining the Mesne Profits, the Court should aim at doing Justice between the parties having regard to all the circumstances of the case, the object being to see that the person wrongfully kept out of the possession is put in the same position.

In the case of agricultural land the true test in calculating Mesne Profits is what the ordinary prudent agriculturist would have grown on the land from which the Plaintiff has been excluded. [Jagannath Prasad & Ors. Vs Badiul Mulk Khan & Ors., AIR 1954 Pat. 447 at P. 448 (D.B)].

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. Now the normal measure of Mesne Profits is the value of the user of the land to the person in wrongful possession. A person in wrongful possession of immovable property has to pay compensation computed on the basis of profits he/she actually received or with ordinary diligence might have received.

In [Dr. J Bhakthavasala Rao & Ors. Vs Industrial Engineers, Nellore & Ors., AIR 2005 AP 438], 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 the 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 bearing of this. And, therefore, the Mesne Profits cannot be determined solely on the basis of rental value of the land.

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/she had been in possession, should be deducted from the gross earnings. These expenses include, expenses incurred for maintenance of 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.

The right to possess is a fundamental right that all the people living in the country are granted. If the rightful owner is stripped of his/her possession while also losing the profits he/she should have earned from that possession, he/she should be credited with damages. The idea of Mesne Profits comes into play in this scenario. Mesne Profits are profits that an individual is entitled to but the Defendant has kept him/her out of the courtroom. Simply put, Mesne Profits refer to leases or fees. Profits earned during the rightful owner's exclusion from his/her estate as well as interest earned on the benefit. Typically, a lawsuit for Mesne Profits is filed along with an action to reclaim land ownership.

Legal rights and remedies for the breach of legal rights are two sides of the same coin. Stated simply legal rights and remedies for the breach of these rights have always co-existed. Accordingly unlawful interference with the immovable property of another person amounts to breach of a legal right; and there is remedy in the form of Mesne Profits for wrongful interference with the property. Section 2 (12) of the Code of Civil Procedure, 1908 provides for Mesne Profits.

According to Section 2 (12) the term Mesne Profits relates to the 'the damages or compensation recoverable from a person who has been in wrongful possession of immovable property. Then Order XX Rule 12 of the Code of Civil Procedure, 1908 provides for the decree for possession and Mesne Profits. It states the provision for application of Suit to be filed before the Court for possession of the property along with the Mesne Profits which aroused or may have been profited. The term Mesne Profits, under Section2 (12) of Code of Civil Procedure, 1908 also includes within its ambit interest on such profits, but it does not include profits made due to improvement in the immovable property.

Plethora of Judgment signifies that the wrongful possession of the Defendant is the very essence of the claim of Mesne Profits. And the moment the Plaintiff is successful in establishing the wrongful possession of the other person he/she is entitled to claim Mesne Profits. Mesne Profits being in the nature of compensation, the enactment rightly does not lay down any uniform standard for the assessment of Mesne Profits.

And the assessment of the quantum of Mesne Profits is rightly left at the discretionary power of the Court depending on the facts and circumstances of each case. The Courts are required to consideration various factor while determining the quantum of Mesne Profits and thereby use their power judiciously.

Written By: Dinesh Singh Chauhan, Advocate - High Court of Judicature, Jammu.
Email: [email protected], [email protected]

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