# L. KOCHIVAREED v. P. MERIAPPA GOUNDER AND ORS

- **Citation:** [1979] 3 S.C.R. 58
- **Court:** Supreme Court of India
- **Decided:** 1979-02-07
- **Bench:** R. S. Sarkaria, V. D. Tulzapurkar, A. P. Sen
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/l-kochivareed-v-p-meriappa-gounder-and-ors-7653
- **Pages:** 20

## Headnote

Mesne Profits-Liability for mesnt profits, principle of-Section 2(12)
of the Code of Civil Procedure 1908 (A.ct V of 1908).
Civil Procedure Code, 1908, Order XX Rule 12-Construction of decree
explained-Nature of the decree of the Court dated April 22, 1958 clarified.
Words and Phrases-"Whichever event first occurs" in Rule 12(1)(c)(iii}
of order XX C.P.C.-Meaning of.
Civil Procedure Codt~. S. 144-Scope of.
Meriappa Gounder respondent No. 1 in C.A. 466 /69 and appellant I in
C.A. 2375/69 filed e suit on August 23, 1950 in the District Court, Trichur,
for specific performance of an agreement dated May 22, 1950 made by one
Soliappa Chettiar. The said Soliappa Chettiar pleaded inability to perform
the contract in view of the refusal of one Neelakanta Iy'er a lessee of the
factory to give up possession.
Pending the suit Late Kochiyareed, husband of
the appellant in C.A. 466 /69 obtained
an assignment of
the lease from
Neelakanta Iyer on March 5, 1951. On March 8, 1951 Soliappa
Chettiar
executed a sale deed of the suit property in favour of one George Thatil, a
nephew of Kochivareed.
In the course of the proceedings
the trial
court
appointed a Receiver to manage the suit property. On March 21, 1951, Late
Kochivarced obtaffied a lease of the suit property at a rent of Rs. 15,000/-
for a period of one year which was renewed for
anqtber
year
fron1
the
Receiver and a sum of Rs. 30,000 /- so collected as rent for t\VO years was
deposited in the Court by the Receiver.
The District Court on August 28, 1952 decreed the suit for specific performance and mesne profits at a reduced rate of Rs. 15,000/- per annum, instead
of at Rs. 30,000/- per annum as claimed. Against the decree two appeals were
filed in the High Court by Kochivareed and George Thatil. The High Court
allowed the appeals and dismissed the suit by its judgment dated March 21,
1953. The appeal filed by Meriappa Gounder (CA 129 /56) was allowed by
this Court as per its judgment and decree dated April 22, 1958.
On tlte question of the liability of the mesne profits, the present appeals
aro6e out of interpretation of the direction ( e) of this Court's decree dated
April 22, 1958.
Allowing the appeals by certificate in part the Court,
HELD : 1. Mesne profits being in the nature of damages. no
invari&t~te
role governing their award and assessment in every case can be laid do\vn and
the "Court may mould it according to the ju~tice of the case''.
Even so one
broad basic principle 2oveming the liability for mesne profits is
discernible
•
\..
-~
' ....
,.
A
>
~ ....
t• Ii
...
" ... \
L. KOCHIVAREED V. P. M. GOUNDER
59
from section 2 ( 12) of the Code of Civil Procedure which
defines
'mesne
A
profits' to mean 'those profi~ which the person in wrongful
pos.Jes:Jion
of
property (lctually received or might with ordinary deligence havo
received
therefrom together with interest on such profits, but shall not include profits
due to improvements made by the person in wrongful possession." [680-H, 69A]
Wrongful pos.session of the defendant is the very essence of a claim for
n1esne profits and the very foundation of the defandant's liability therefor,
Generally,
the
person
in wrongful possession and enjoyment of the immovable property is liable for mesne profits.
But, where the
plaintiff'~ dispOiiesaion, or his being kept out of
possession
can be
regarded
as
a
joint or concreted act of several persons, each of them who participates in
the Commission of that act would be liable for mesne profits even though he
was not in actual possession and the profits were received not by him but by
some of hii confederates. Possession through another, such as a tenant may
be sufficient to create liability for mesne profits, if such possession is wrongful.
[69A-C and GJ
2. In such a case, where the claim for mesne profits
is
against several
trespassers 'vho hnd combined to keep the plaintiff out of possession, it IS
open to th~ Court to adopt either of the two courses. It may by itli decree
hold all such trespa

## Text

_Characters 0–38,668 of 54,085. This is a partial read: ask again with offset=38668 for what follows._

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58
L. KOCHIVAREED
v.
P. MERIAPPA GOUNDER AND ORS.
February 7, 1979
[R. S. SARKARIA, V. D. TULZAPURKAR AND A. P. SEN, JJ.]
Mesne Profits-Liability for mesnt profits, principle of-Section 2(12)
of the Code of Civil Procedure 1908 (A.ct V of 1908).
Civil Procedure Code, 1908, Order XX Rule 12-Construction of decree
explained-Nature of the decree of the Court dated April 22, 1958 clarified.
Words and Phrases-"Whichever event first occurs" in Rule 12(1)(c)(iii}
of order XX C.P.C.-Meaning of.
Civil Procedure Codt~. S. 144-Scope of.
Meriappa Gounder respondent No. 1 in C.A. 466 /69 and appellant I in
C.A. 2375/69 filed e suit on August 23, 1950 in the District Court, Trichur,
for specific performance of an agreement dated May 22, 1950 made by one
Soliappa Chettiar. The said Soliappa Chettiar pleaded inability to perform
the contract in view of the refusal of one Neelakanta Iy'er a lessee of the
factory to give up possession.
Pending the suit Late Kochiyareed, husband of
the appellant in C.A. 466 /69 obtained
an assignment of
the lease from
Neelakanta Iyer on March 5, 1951. On March 8, 1951 Soliappa
Chettiar
executed a sale deed of the suit property in favour of one George Thatil, a
nephew of Kochivareed.
In the course of the proceedings
the trial
court
appointed a Receiver to manage the suit property. On March 21, 1951, Late
Kochivarced obtaffied a lease of the suit property at a rent of Rs. 15,000/-
for a period of one year which was renewed for
anqtber
year
fron1
the
Receiver and a sum of Rs. 30,000 /- so collected as rent for t\VO years was
deposited in the Court by the Receiver.
The District Court on August 28, 1952 decreed the suit for specific performance and mesne profits at a reduced rate of Rs. 15,000/- per annum, instead
of at Rs. 30,000/- per annum as claimed. Against the decree two appeals were
filed in the High Court by Kochivareed and George Thatil. The High Court
allowed the appeals and dismissed the suit by its judgment dated March 21,
1953. The appeal filed by Meriappa Gounder (CA 129 /56) was allowed by
this Court as per its judgment and decree dated April 22, 1958.
On tlte question of the liability of the mesne profits, the present appeals
aro6e out of interpretation of the direction ( e) of this Court's decree dated
April 22, 1958.
Allowing the appeals by certificate in part the Court,
HELD : 1. Mesne profits being in the nature of damages. no
invari&t~te
role governing their award and assessment in every case can be laid do\vn and
the "Court may mould it according to the ju~tice of the case''.
Even so one
broad basic principle 2oveming the liability for mesne profits is
discernible
•
\..
-~
' ....
,.
A
>
~ ....
t• Ii
...
" ... \
L. KOCHIVAREED V. P. M. GOUNDER
59
from section 2 ( 12) of the Code of Civil Procedure which
defines
'mesne
A
profits' to mean 'those profi~ which the person in wrongful
pos.Jes:Jion
of
property (lctually received or might with ordinary deligence havo
received
therefrom together with interest on such profits, but shall not include profits
due to improvements made by the person in wrongful possession." [680-H, 69A]
Wrongful pos.session of the defendant is the very essence of a claim for
n1esne profits and the very foundation of the defandant's liability therefor,
Generally,
the
person
in wrongful possession and enjoyment of the immovable property is liable for mesne profits.
But, where the
plaintiff'~ dispOiiesaion, or his being kept out of
possession
can be
regarded
as
a
joint or concreted act of several persons, each of them who participates in
the Commission of that act would be liable for mesne profits even though he
was not in actual possession and the profits were received not by him but by
some of hii confederates. Possession through another, such as a tenant may
be sufficient to create liability for mesne profits, if such possession is wrongful.
[69A-C and GJ
2. In such a case, where the claim for mesne profits
is
against several
trespassers 'vho hnd combined to keep the plaintiff out of possession, it IS
open to th~ Court to adopt either of the two courses. It may by itli decree
hold all such trespas!l!ers jointly and severally liable for mesne profits leaving
them to have the.ir respective rights adjusted in n separate suit for contribution;
or it may, if there is proper material before it ascertain and
apportion the
liability of each of them on a proper application made by the defendant _during
the same proceedings.
[69C-Dl
3. A decree under Order XX Rule 12 of C.P.C., directing enquiry
into
mesne profit~, howsoever expressed must be construed to be a decree directing
the enquiry in conformity with the requirements of Rule 12(1)(c), eo that the
decree holder is not entit1ed to mesne profits for a period (commencing from
the date of the institution of the suit) extending beyond three years from the
date of the preliminary decree.
[69E-F]
Chitturi Sub.hanna v. Kudappa Subbanna, [1965] 2 SCR 661; referred to.
4. The words "whichever event first occurs"
in
sub clause (c)(iii)
of
clause 1 of Rule 12 of Order XX Civil
Procedure Code imply th•t the
maximum period for which future mesne profits can be awarded is three ye\\rs
from the date of the decree for posl!Cssion and mesne profits, finally passed.
The period of three years is to be computed from the date of decree of this
Court i.e. from April 22, 1958 and it wiiJ expire on the date on which possession 1"B! delivered or relinquished by the defendant in favour of the decreeholder punn1ant to that decree. In other words, the decree
mentioned in
sub clause (iii) of clause (c) would ·be the appellate decree dated April 22,
1958 of this Court. The period of three years mentioned in the said
11ubclause is, therefore, to be reckoned from April 22, 1958. [73G-H, 74A-B]
5. Section 144 of tI:e C.ode of Civil Procedure, in termc;, says that for the
purpose of the restitution, the Court may make any orders, including orders
for the payment of interes-t, damages compensation and· mesne profits which
are JYOperly consequential on variation or reversal of the decree.
[77A-B]
There is nothing in the decree, dated April 22, 1958 of this Court which
expresSly or by implication, prohibits· the payment of interest on the sum of
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SUPREME COURT REPORTS
[1979] 3 s.c.R.
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Rs. 30,000/- withdrawn by defendant 3 by way of restitution. l"he trial court
had rightly allowed interest.
[77B-C]
B
6. The decree dated April 22, 1958 of this Court was a compoiite decree,
partly fin&l, and partly preliminary. It was final in so far as it granted tho
reliefs of specific performance and possession on deposit of the price by the
Plaintiff.
It was preliminary in as much as it directed an inquiry with regard
to the assessment of mesne profits and as to who out of the defendants ViiU6 /
were liable for payment of thos~ mesne profits.
But, it laid down
in
no
uncertain terms that only such of the defendants would be liable for mesne
profits "as ·may have been in possession of the property"'.
This direction in
the decree n1eans that only the defendant or defendants found in actual po~session and enjoyment of the property would be liable for mesne profits.
{70A-CJ
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In the instant case :
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(a) The third defendant \Vas in sole, actual possession and control of the
suit property from March 3, 1951, when he obtained the alleged assignment of
lease in his favour from Neclakanta Iyer.
In tern1s of the decree of
thi~
Court, therefore defendant 3 alone is liable for mesne profits in respect of the
period he was in possession (excepting the peroid during which the property
wa<; under the management of the Court Receiver).
[71E-F]
(b) The contention that the possession of defendant 2
was
the
legal
possession of an owner while that of defendant 3 V.'as derivative possession of
a lessee or licensee under the former is not correct, since at no stage,
in the
Courts below
defendant 3 took up the position that he was in
derivative
possession of the property under defendant 2.
Nor was there even a whisper
in the pleadings that defendant 2 and defendant 3 v.1ere joint-tortfeasors and
therefore jointly and severally lia-ble for mesne profits.
[69H, 70C, GJ
(c) There is nothing in the decree of this Court dated April 22,
1958,
indicating that the amount deposited by the plaintiff to\.vards the price should
have been set off against the liability of defendant 3 for mesne profits.
On
the contrary. it a1lowed deduction of the an1ounts found due against defendant 1 and defendant 2 from the deposit of Rs.
85,000/~ to be made by the
plaintiff t0\1/ards the price, and further directed that after such deduction, the
balance of such deposit made by the plaintiff, if any, shall be paid to the
third respondent (defendant 2) who is the assignee of the second respondent·
(defendant I) pendente lite.
[71F-H]
(d) The plaintiff was not bound to suffer a set off in favour of defendant
3, merely because defendant 2 or his assignee withdrew the price deposited by
the plaintiff without furnishing any security for its refund
or adjustment
G
towards the liability of defendant 3, there being no
evidence
whate~ver, on
record to show that such withdrawal was the result of any collusion ·or conspiracy between the plaintiff and defendant 2 and defendant 3.
Even assuming that both defendants 2 and 3 were liable for mesne profits jointly and
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severally, then also, the plaintiff could, at his option, recover the whole of the
f "
amount of mesne profits from either of them; and how such inter se liability
of the defendants was. to be adjusted· or apportioned was a matter between the
11
defendanls only.
[72A-C]
(e) Defendant 3 entered into possession of suit property under an
assianment of sham lease from NeelkantQ Iyer on March 5, 1951 during the
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L. KOCllIVAREED v. P. M. GOUNDER (Sarkaria, J.)
61
pendency of the plaintiffs suit, which was instituted on August 25, 1950. The
plaintiff had deposited Rs. 50,000/- sometimes after the presmtation of th<
plaint. Under the agreement of salei dated May 22, 195() made by defendant 1
in favour of the plaintiff, the total sale considerations was fixed @ Rs. 90,003/-.
Out of
it Rs. 5,003/- had been paid to defendant I on the very date of
the agreement. It was further stipulated that out of the balance, Rs. 50,000/-
would be paid by the plaintiff-purchaser at the time of the reJ:istration of the
sale deed which wa~ to be executed l\nd registered on or before July 15, 1950.
It was further stipulated that on :i:byment of the further sum of Rs. 50,000/-
the plaintiff would be entitled to be put in possession of the suit
property.
,.
Thus when defendant 3 entered into possession, first under the garb of an
t\.
assignee of sham lease from Neelkanta Iyer, and then further purchased the
f- property with his own funds in fa.vour of defendant 2 pe11dente lite, he v,ras
f
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fully conscious that he was purchasing a litigation. His posSessioll was, therefore V.Tongful qua the plaintiff from its. inception.
[72E-ll]
(f) Disallowance of the claim for deduction for interest on the depo1it of
Rs. 50,000 which the plaintiff had withdrawn on August 19, 1953
and had
redeposited on 9-2-1959 is incorrect. The defendant is entitled
to
interest
@ 6% per tinnum for the said period, after deducting the interest for the
period during which the property was under the management of the Receiver.
[740-E]
(g) The plaintiff's claim for rnesne profits @ the rate of Rs. 25,000/- has
correctly been negatived. Since .the plaintiff did not
object
to
the
lease
granted by the Receiver to defendant 3 on an annual rental of Rs. 15,000/-
and since he di<l not produce any other reliable evidence, the High Court 'Ml•
not wrong in holding that the mesne profits should be on the basis of this
rental value of Rs. 15,000/- [76A-C]
(h) The plaintiff, in view of the long drawn out litigation is entitled to
interest @ 6% per annum upto March 29, 1959.
[76E-F]
Crv1L APPELLATE JURISDICTION : Civil Appeal Nos. 466 and 2375
of 1969.
From the Judgment and Order dated 6-8-78 of the Kerala
High
y'Court in Appeal Suit Nos. 27 /63 and 245/63.
""'
K. S. Ramamurthy, Miss Pushpd[Nambiar and A. S. Nambiar for the
- ..
Appellant in C.A. 466/69 and R. 1 in C.A. 2375/69.
P. Govindan Nair, S. Balakrishnan and K. L. Rathi for R. 1 in C.A.
466/69 and Appellant in CA 2375/69.
N. Sudhakaran, S. L. Aneja and K. L. Aneja for RR 2-3, in C.A.
466/69 and For RR 3-4-in C.A. 2375/69.
The Judgment of the Court was delivered by
SARKARTA, J.-These two appeals on certificate arise out of execu- ·
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tion petition No. 118 of 1962 on the file of the Subordinate Judge, TriH
chur, filed by P. Meriappa Gounder (hereinafter referred to as
the
plaintiff) to execute the decree of the Supreme Court in C.A. 129/56
62
SUPREME COURT REPORTS
(1979] 3 s.c.R.
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passed on April 22, 1958.
The common facts, out of. which these appeals arise, are as follows
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The plaintiff filed a suit on August 23, 1950 in the District Court,
Trichur, for :Specific. performance of an a~cement, dated May 22, 1950,
made by Soliappa Che.ttiar (hereinafter referred to as defendant 1) to
sell a factory known as "Sivakami Tiles Works", for a consideration of
Rs. 90,003/-.
The plaintiff made an advance payment on
that very
date of a sum.of Rs. 5,003/- to defendant!.
It was stipulated in the
agreement that the sale deed must be executed and registered on
or
before July ~5, 1950.
It was further provided that out of the balance
of sale consideration, Rs. 50,000/- would be paid by the plaintiff at the
time of the registration and for the'remaining Rs. 35,000/-, the plaintiff was to execute a mortgage of the suit property to be redeemed on or
before May 31,, 1951.
It was further agreed that on payment
of
Rs. 50,000/- at the time of registration, the plaintiff would be put i;i
possession of the suit property.
The plaintiff pleaded that he was ready
and willing to perform his part of the agreement, but came to know that
defendant 1 was trying to evade his obligation under the agreement. AccordinJ:ly, the plaintiff sent a registered notice, dated July 7, 1950, through
his lawyer to defendant I, to which the latter replied the. same day, that
the factory wa·s in possession of one NeeAakanta Iyer as lessee, who had
refused to give up possession and therefore, it had become impossib'e
to give effect to the agreement to sell the factory, as giving possession to
the plaintiff was a condition precedent to the execution of the sale deed. _
The plaintiff further pleaded that the suit property was really in possession of defendant 1 and the alleged lease in fav,our of Neelakanta Iyer
was a sham transaction and a device to evade payment of income tax.
and hence defendant 1 was bound to carry out the terms of the agree-
•
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ment to sell.
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The suit was contested by defendant 1 (who originally was the sole
defendant).
His case wa·s that, aQthough there was an agreement to
sell the suit property, it had been made clear at the time when negotiation for sale was going on, that the factory was in the possession
of
Neelakanta Iyer as lessee and that it was a condition precedent to the
sale that Neelakanta Iyer would 'surrender his right under the lease and
give up possession and that if he refused to do so, the agreement to sell
would not be given effect to.
The defendant urged Neelakanta Iyer
to surrender the possession, but he refused to do so.
In the circumstances,, tho contract for sale had become incapable of performance.
He
denied that the lease in favour of Neelakanta was a sham transaction.
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L. J(OCHIVAREED v. P. M. GOUNDER (Sarkaria, J.)
63
Pending the suit, T. V. Kochivareed (the deceased husband of the
appellant, Lucy Kochivareed in C.A. 466/69) obtained an assignment
of the lease (Ex. D-3) from Neelakanta Iyer on March 5, 1951. Since
Kochivareed was later on, when the suit was pending in the Supreme
Court impleaded as defendant 3, for the sake of convenience the appellant in C.A. 466/69, will hereinafter be referred to as defendant 3.
On March 8, 1951, defendant 1 executed a sale deed of the suit
property in favour of George Thatil, who is the nephew of defendant 3,
and will hereinafter be referred to as defendant 2. Like defendant 3,
he also joined as defendant 2 at his own reqnest, when the appeal was
pending in this Court.
'
On December 23,. 1950, the Court appointed a Receiver to manage
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the suit property.
On March 21, 1951, defendant 3 obtained a lease
of the suit property at a rent or Rs. 15,000/- for a period of one year
from the Receiver.
The term of the lease was extended for one more
year and two years' rent, amounting to Rs. 30,000/- was collected and
deposited in the Court by the Receiver.
The District Court, Trichur, on August 28, 1952, decreed the suit
for specific performance and
mcsne profits at a reduced rate
of
Rs. 15,000/- per annum, instead of Rs. 30,000/- per annum claimed
by the plaintiff.
Against the decree of the, Trial Court, two appeals were filed in the
High Court-one by defendant 3 and the other by defendant 2.
The
High Court allowed the appeals and dismissed the plaintiff's suit by a
judgment dated March 31, 1953.
Aggrieved, the plaintiff filed C.A. 129/56 in this Court.
The plaintiff's appeal was allowed by this Court as per its judgment and decree,
dated April 22, 1958.
Since a good deal of argument centers round the construction of
this Court's decree, dated April 22, 1958, it will be pertinent to extract
' here the material part of that decree .
"(a) That the appellant herein do deposit within thirty
days of the receipt in the decree of this Court the sum of
Rs. 85,000/- in the District Court of Trichur and that on the
aforesaid amount being deposited the said District Court of
Trichur do forthwith give notice, thereof to the respondents
abovenamed and that on the aforesaid amount of Rs. 85,000/-
being deposited respondents Nos. 2 and 3 herein,, namely
S. M. R. Solaiyappa Chettiar and George Thatil do within 30
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SUPREMI! COURT REPORTS
[1919J 3 S.C.R.
days frbm the date of receipt of the notice of the said deposit
e<Kecute and register a sale deed iri favo1lr of the plaintiff (Appellant) in respect of the suit property.
·
(b) ................... .
( c)) That the respondents above-named do pay to the
appellant the cost incurred by him in the Court of the District Judge, Trichur, in Suit No. 183 of 1950 and the costs incurred by him in the former High Court of ............. .
(Kl) . . . . . . . . . . • . . . . • . . • . . •
(e) .... AND 1HIS COURT DOTH FURTHER DECLARE that appellant shall be entitled to :
(a) mesne profits against such of the respondents 11~ may
have been in possession of the rproperty except during the
period that the property was in the custody and management
of the receiver appointed by the tri~I court;
(b) the net sum collected by the Receiver during
his
'
management; and
(c) credit for all such sums as he may have advanced to
the receiver under the direction of the Court for the management of property;
AND THIS COURT DOTH ACCORDINGLY DIRECT
that the trial Court do bold an enquiry about the mesne profits and such snm·s as may be found to be due on inquiry
against the second and third respondents in respect of the
mesne profits be deducted from the amount to be deposited in
cash in the Court by the appellant aforesaid in accordance
with clause (a) supra, and do direct the payment of the
remaining amount, if any, to the third respondent (defendant
2) who is the assignee of the second respondent (defendant
1) pendente lite;"
(Emphasis supplied)
On September 12, 1958, the plaintiff filed an application in the District Court for execution of the said decree, dated April 22, 1958,, in
respect of all the reliefs allowed thereunder. After the decree-holder
had deposited a sum of Rs. 85,000/-, as directed in the decree, the
execution application was eventually made over to the
Subordinate
Judge, Trichur.
As per the decree, the sale deed was executed on March
16,. 1959, by the Court on behalf of defendants 1 and 2 in favour of
'
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L. KOCHIVAREED v. P. M. GOUNDER (Sarkatia, J.)
6 s
the plaintiff and the possession of the property in consequence, thereof,
was de1iveted to him oh March 29, 1959.
A
Thereafter, the plaintiff filed Miscellaneous Petition No. 229 /60 in
the Trial Court.
Before the Court, defendant 3 on November
11,
1958, filed objections that he was not >liable for mesne profits, as he was
never in possession and occupation of the suit property.
He further :a
,
-4
contended that his liability for mesne profits. if any, was limited to the
period commencing from the date of notice of the deposit in Court of
the amount of Rs. 85,000/- till the date of dellivery of possession and
that the plaintiff was not entitled to interest on mesne profits, or on
costs by way of restitution.
Defendant 2-contended that he was not
liable for mesne profits as he had never been in possession and management of the suit property, and that the entire liability, if at all any, for
mesne profits was that of defendant 3, who had been in exclusive po%ession of the property.
On December 22, 1962, the court of first instance passed orders in
respect of mesne profifs, costs etc.
It found that defendants 1, 2 and
3 were jointly and severally liable to the plaintiff for a sum of
Rs. 10, 162.67 on account of costs of the Trial Court and the Supreme
Court. The Court further found that defendant 2 was separately liable
to pay to the plaintiff, a sum of Rs. 11,941.63 consisting of three items,
namely, Rs. 1, 239.02 on account of costs recovered by defendant 2 from
decree-holder and payable by former with interest by way of re'stitution,
Rs. 2,577.01 on account of costs in the High Court, and Rs. 81251on account of mesne profits from the factory from the date of suit till
date of Ex. D-3.
The aggregatti amaunt under these two heads came
to Rs. 23,103.70, which was allowed to be set off against Rs. 85,000/-
deposited in Court by the plaintiff and the balance was directed to be
paid to the second defendant's mother, his assignee.
Apart from the sum of Rs. 10,162.67 jointly and severally payable
by the third and second respondents, the District Court found that the
third defendant was separately liable to pay the plaintiff a sum
of
Rs. 1,57,086.81 consisting of these items :
la) Rs. 7,298.10, by way of restitution on account of costs reco-
• '
vered from the decree-holder including interest thereon;
(b) Rs. 39,975.00-Rent deposited and withdrawn by him
together with interest thereon;
(c) Rs. 1,177.00, costs payable by him for the appeal in the High
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SUPREME COURT REPORTS
(1979] 3 S.C.R.
(d) Rs. 1,08,636.71 net mesne profits payable by him from April
1, 1963 to the date of delivery of possession, during which period, he
was found to be in· possession and management.
After giving credit ·
of a sum of Rs. 48,321 deposited by the third defendant in Court on
March 9, 1959, a net sum of Rs. 1,08,765.81 was directed to be realised
by the plaintiff from the estate of defendant 3 in the hands of his legal
repre•entative (appellant in C.A. 466/69). By the same order, the
Court dismissed Misc. Petition No. 229/60 that had been filed by the
plaintiff for determination of the extent of waste committed upon the
property by defendant 3.
Aggrieved by that Judgment and Order, Lucy Kochivareed, wife of
defendant 3, a• well as the plaintiff and the second defendant, preferred
appeafa in the High Court of Kerala.
By a common judgment, dated
August 6, 1968, the High Court partly allowed the appeals filed respectively, by the plaintiff and the legal representatives of defendant 3;
but dismissed the appeal (AS. 248/63) file'd by defendant 2.
The
High Court,, inter alia, affirmed the finding of the Trial Court that the
third defendant was in sole and exclusive possession of the suit propeny during the period in question.
The Trir1l Court's findings with
regard to the quantum of rnesne profits per year, were not found satisfactory.
The High Court assessed the mesne profifs at a flat rate of
Rs. 15,000/- per year and determined the obligations of the parties accordingly.
The High Court further found that the second and third
defendants were jointly and severally liable to pay Rs. 10,200/- by way
of costs, and the second defendant alone was liable to pay Rs. 11,000/-
by way of restitution, costs in the High Court and mesne profits to the
plaintiff, and that the aggregate of Rs. 21,200/- be set off against the sum
of R~. 85,0001- deposited by the plaintiff and the balance be paid to the
mother of defendant 2.
Aggrieved by the judgment, dated August 8, 1968, of the High
Court, Lucy Kochivareed, wife of the deceased defendant 3, has filed
Civil Appeal 466 of 1969; while the plaintiff has preferred Civil Appeal
No. 2375 of 1969.
Both the appeals will be disposed of by this common judgment.
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We will first take up CM! Appeal 466 of 1969 filed by the widow of
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defendant 3.
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The main contention of Mr. K. S. Ramamurthy, learned counsel for
the appellant (\Luci Kochivareed), is that if the' decree, dated April 22,
1958, passed by this Court in C.A. 129/56 is properly construed in the
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L. KOCHJVAREED v. P. M. GOUNDER (Sarkaria, J.)
67
light of the material on record and the law on the subject, then three
comequences inevitably follow :
(i) Both defendant 2 and defendant 3 would be deemed to be in
pos5ession of the suit property during the period in question,
The
posgession of defendant 2 was juridical or legal possession of an owner,
he being the purchaser of the property from defendant 1; while that of
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defendant 3 was on actual permissive possession with the consent of
defendant 2. · Defendant 2 and defendant 3 being in the position of
joint-tort-feasors would he jointly and severally liable for mesne profits
or compensation.
This being the case, the plaintiff was bound to ·suffer a set off to the
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purchase price (Rs. 85,000/-) deposited by him, against his claim fot
mesne profits against defendant 3.
But after the decree ol this Court,
the plaintiff in pursuance of a collusion between him and defendant 2,
allowed the High Court to cancel the security given by defendant 2 for
withdrawal of Rs. 62,900/- out of the purchase price deposited by the
plaintiff.
The plaintiff was thus precluded by his conduct from cl aimD
ing tbat much amount from defendant 3.
After setting off the entire
deposit of Rs. 85,000/-, defendant 3 will be liable only, for the balance
of the mesne profit, jointly with defendant 2.
(ii) The plaintiff's right to possession of the property under
the
decree accrued when he deposited the price in Court and thereafter obE
tained the conveyance in his favour on March 16, 1959.
The possession of defendants 2 and 3 as against the phintiff became wrongful only
from the date on which the conveyance was executed in his favour, at
any rate on the date (September 12, 1958) on which he fully deposited
the price in Court.
(iii) The period for which the mesne. profits have been awarded., is
to be restricted to the one permissible nuder Order XX Rule 12( 1) ( c)
of the Code of Civil Procedure.
Such period in the light of this
provision would be the one commencing from the date the institution ol the suit and ending on the expiration of three years from the
date of the decree of the Trial Court.
The expres·sion "the decree,",
occurring in the aforesaid clause (according to the counsel) means the
decree of the Trial Court.
In other words, the maximum period for
which mcsne profits can be awarded-and would be deemed to have
been awarded-is three years from the date of the decree of the Trial
Court; and the Courts below were wrong in awarding mesne profits for
a period of more than six years, commencing from the date of the institution of the suit till the delivery of possession in accordance with the
decree of this Court to the plaintiff.
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SUPREME COURT REPORTS
[1979] 3 s.c.R.
Upon the above premises, Mr. Ramamurthy maintains that the plaintiff will not be entitled to any mesne ·profits because his right to possession did not accrue within three years of the date of the decree of the
Trial Court.
Such a right, according to the counsel, accrued to the
plaintiff only on April 22, 1958 when his amended suit for specific
performance and possession and future mesne profits was decreed.
In the alternative, as already noticed, counsel submits that mesne
profits could not be awarded for any period prior to the date (September 12, 1958) on which the plaintiff deposited the price, because
his right to possession accrued on that date and not earlier.
In support of his contentions, Shri Ramamurthy has cited a decis'on
of this Court in Chitturi Subbanna v. Kudapa Subbanna & Ors.(') He
has also referred to some other rulings, wherein some general principles
have been enunciated as to who can be made liable for mesne profits.
On the other hand, Mr. Govindan Nair, learned counsel for
the
plaintiff, submits that the decree,, dated April 22, 1958 of this Court is
crystal-clear.
There is no ambiguity in it.
Read in the light of this
Court's judgment, it unmistakably shows that whosoever, out of the de-
• fendants was/were in actual possession, would be liable for the mesne
profits from the date of the suit tlll the delivery of possession.
It is
pointed out that in the courts below, the positive stand taken by defendant 3 was that he was never in possession of the suit property and
therefore, was not liable for mesne profits. It was never the case of
defendant 3 that he was in derivative possession under defendant 2.
Counsel submits that defendant 3 should not be allowed to take a
stand diametrically opposed to the one taken by him in the courts
below.
It is further submitted that the decree of this Court was final
decree so far as it laid down that the liability for the mesne profits
shall be fixed on the basis of the defendant found in actual possession
of the suit property.
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Before dealing with the contentions canvassed on both sides, it wi11
be profitable to notice the general principles relating to the liability for
mesne profits.
Mesne profits being in the nature of damages, no invariable rule
governing their award and assessment in every case, can be laid down
and "the Court may monld it according to the justice of the case". Even
so, one broad basic principle governing the liability for mesne profits is
discernible from Section 2(12) of the Code of Civil Procedure which
defines 'mesne profits' to mean "those profits which the person
in
wrongful possession of property actually Jeeceived or might with ordinary
(I) [196512 S.C.R. 661.
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L. KOCHJVAREED v. P. M. GOUNDER (Sarkaria, !.)
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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".
From a plain reading of this definition, it is
dear that 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.
As a rule, therefore, liability to,pay mesne profits
,goes with actual possession of the land.
That is to 'say, generally, the
person in wrongful possession am] enjoyment of the immovable property is liable for mesne profits,
But, where the plaintiff's disposscs-
~ion, or his being kept out of possession can be regarded as a joint or
.concerted act of several persons, each of them who participates in the
,commission of that act would be liable for mesne profits even though he
was ,not in actual pos'scssion and the profits were received not by him
but by some of his confederate,s,
In such a case where the claim for mesne profits is against several
trespassers who combined tn keep the plaintiff out of possession; it is
·Open to the Court to adopt either of the two courses.
It may by its
,decree hold all such trespassers jointly and severally liable for mesne
vrofits, leaving them to have their respective rights adjusted in a separate suit for contribution; or, it may, if there is proper material before
'it, ascertain and apportion the liability of each of them on a proper
,application made by the defendant during the same proceedings.
Another principle, recognised by this Court in Chitturi Subba11na v.
Kudapa Subbanna (ibid) is that a decree under Order XX Rule 12
.of the Code, directing enquiry intn mesne profits, howsoever expressed,
must be construed to be a decree directing the enquiry in conformity
with the requirements of Rule 12(1) ( c), so that the decree-holder is
not entitled to mesnc profits for a period (commencing from the date
.of the institution of the suit) extending beyond three years from the date
of the preliminary decree.
Again, possession through another, such as a tenant, may be suffi-
,cient to create liability for mcsne profits if 'such possession is wrongful.
We will now deal with the contentions advanced by Mr. Rama-
:murthy, in the light of these principles.
The first argument, as already noticed, is that both defendants 2
and 3 were in possession of the suit property during the period in ques"
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tion. It is contended that the possession of defendant 2 was the !~gal
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possession of an owner while that of defendant 3 derivative possession
.of a lessee or licensee under the former.
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SUPREME COURT REPORTS
[1979] 3 s.c.R.
A perusal of the decree dated April 22, 1958, of this Court, extracted in a foregoing part of this judgment, show's that it was a composi'e
decree, partly final, partly preliminary.
It was final in so far as it
granted the reliefs of specific performance and possession on deposit of
the price by the plaintiff. It wa' preliminary inasmuch it directed an
inquiry with regard to the assessment of mesne profits, and as to who
out of the defendants was/were liable for payment of those mesne profi's.
But, it laid down in no uncertain terms that only such of the defendants
would be liable for mesne profits "as may have been in possession of
the property". Construed in conformity with the legal principles enun·
ciated above, this direction in the decree, means that only the defendant
or defendants found in actual possession and enjoyment of the property
would be liable for mesne profits.
In the courts below, at no stage, defendant 3 took up the position
that he was in derivative possession of the property under defendant 2.
On the contrary, in his objection-petition filed before the District Court
on November 11, 1958, defendant 3 emphatically asserted that he "is
not liable for mesne profits for the suit property as he was never in possession and occupation of the same".
Defendant 3 further vehemently
pleaded that it was. never intended at any •ime that he (defendant 3)
"should be a lessee of the property nor was he a lessee at any time". In
para 3 of his petition, defendant 3 further pleaded that the purchase of
the factory was made. in favour of defendant 2, with money advanced
by him (defendant 3), and the intention then was that the snit property
should be· worked by defendant .2 with funds advanced by defendant 3
who should be "recouped from the profits accrued from the proper•y or
otherwise in respect of the purchase money advanced by him as also
the advances for the working expenses''.
In paragraph 5, he further
pleaded that "in any event he cannot be held liable for any amount more
than what is stipulated in the lease deed (Ex. I) in favour of Neelakantha
Iyer".
There is not even a whisper in the pleadings that defendant 2 and defendant 3 were joint-tort-feasors and therefore, jointly and severally
liable for mesne• profits.
The plea now pressed into argument by Mr. Ramamurthy is thus a
complete somersault of the position that had been taken in the courts
below.
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The Court of first instance after an exhaustive. consideration of the
overwhelming evidence, oral and documentary, on record reached the
finding that ever since March 5, 1951, defendant 3 was, while defendant
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L. KOCH!VAREED v. P. M. GOUNDER (Sarkaria, J.)
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2 was not,, in actual control, management and possession of ihe
·suit
property, and therefore, in terms of the decree dated April 22, 1958 of
this Court, defendant 3 alone would be liable for mesne profits of
the property.
In appeal, the High Court found that "the Court below
was perfectly right in holding that the 3rd defendant was in sole
and
exclusive possession during the period in question and it i's idle for him
to pretend otherwise".
Indeed, the third defendant himself had re-
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peatedly admitted in various documents that he was in possession.
In
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his application, Ex. D-77(a), made in the Court of first instance, on
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March 7, 1951, the defendant admitted that he was in possession in pur·
\..~- suance of assignment of lease made, in his favour by Neelakantha Iyer on
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March 5, 1951.
This lease has been found by this Court to be a sham
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transaction.
Further, defendant 3 on March 21, 1951, executed a
lease in favour of the Receiver appointed by the Court.
In this Qease
also, he admitted tpat he had been in posses'sion of the property since
March 5, 1951.
The lease executed by defendant 3 in favour of the
Receiver ensured for a period of two years on a yearly rental of
Rs. 15,000/- and he deposited Rs. 30,000/- therefor as rental in
Court.
Then, the Bank accounts of the factory (except for a short
period from March 25, 1953 to November 11, 1954) were throughout
in the name of the third defendant as lessee thereof.
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We have absolutely ·no reason to differ from this concurrent finding
of the courts below that the third defendant was in sole, actual po•scssion and control of the suit property from March 3, 1951, when he ob.
tained the alleged assignment of the lease in his favour from Neelakantha
Iyer.
In terms of the aforesaid decree of this Court, therefore, defendant 3 alone is liable for mesne profits in respect of the period he was
in pMsession (excepting the period during which the property was under
the management of the Court Receiver).
As regards the appellant's contention that the amount deposited by
the plaintiff towards the price should have been set off against the liability of defendant 3 for mesne profits, it may be observed that, there is
nothing in the decree, dated April 22, 1'958, of this Court which say's
that such a set off should be allowed.
On the contrary, it allowed deduction of the amouuts found due against defendant 1 and defendant 2
from the deposit of Rs.