Who gets the gains from il­le­gally oc­cu­pied prop­erty?

The law­ful owner of a prop­erty has a right to stake a claim to ‘mesne’ prof­its re­ceived by the per­son in wrong­ful pos­ses­sion of the struc­ture

HT Estates - - HTESTATES - Su­nil Tyagi

Many cases of un­law­ful pos­ses­sion of im­move­able proptery are pend­ing in var­i­ous courts around the coun­try. Set­tling and ad­ju­di­ca­tion of such dis­putes usu­ally take a long time.

Now the ques­tion is: What hap­pens to the gains made by the ‘illegal’ posses­sor from the prop­erty dur­ing the pe­riod of pos­ses­sion? Can the the law­ful owner also stake a claim to such gains? The Code of Civil Pro­ce­dure pro­vides for ‘mesne’ prof­its, which are prof­its that the per­son in wrong­ful pos­ses­sion of a prop­erty re­ceives to­gether with in­ter­est on the profit. As a prin­ci­ple, the law­ful owner has a right to mesne prof­its.

The is­sue of mesne prof­its is likely to arise dur­ing a suit for eject­ment or re­cov­ery of pos­ses­sion of im­move­able prop­erty. For in­stance, ‘A’ leased his im­move­able prop­erty to ‘B’ for a pe­riod of 40 years. Af­ter the end of the lease evic­tion pro­ceed­ings were in­sti­tuted against B and the case was fi­nally de­cided in favour of A. The court asked B to pay A the rent at mar­ket rate for the pe­riod af­ter ex­piry of the lease term.

As it is not prac­ti­ca­ble to set out a uni­form stan­dard for eval­u­at­ing the quan­tum of mesne prof­its, courts con­sider cer­tain fac­tors to as­cer­tain the value of mesne prof­its such as lo­ca­tion of the prop­erty, com­par­a­tive value of the prop­erty, con­di­tion of the prop­erty and the prof­its ac­tu­ally gained or that may be gained from rea­son­able use of the prop­erty.

While cal­cu­lat­ing the mesne prof­its, the prof­its due to im­prove­ments made by the per­son in wrong­ful pos­ses­sion are not in­cluded.

For in­stance, if the un­law­ful posses­sor fur­nished the flat be­fore rent­ing it out, then the ad­di­tional rent earned by him due to the added fur­nish­ings will not be in­cluded while cal­cu­lat­ing mesne prof­its, ie if the ac­tual rent to be re­ceived is ₹ 30,000 but due to in­te­ri­ors work adding value to the prop­erty he re­ceives ₹ 40,000 as rent, then the mesne prof­its would amount to ₹ 30,000 only along with in­ter­est.

The Honourable Supreme Court has held that mesne prof­its will be granted by the court of law only if the same are specif­i­cally prayed for by the per­son who has filed the suit and claims own­er­ship of the im­move­able prop­erty.

The court of law will not on its own ac­count grant mesne prof­its to the owner of the prop­erty af­ter the dis­pute has been ad­ju­di­cated upon.

There­fore, if one is claim­ing own­er­ship to an im­move­able prop­erty in the ap­pro­pri­ate court of law, one must pray for mesne prof­its along with pos­ses­sion and oc­cu­pa­tion of the prop­erty as this is also a right of the law­ful owner of the prop­erty against illegal pos­ses­sors of the im­move­able prop­erty.

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