Inquiry and Award of Mesne Profits under Order 20 Rule 12 CPC

An Exposition of Order 20 Rule 12 of the Code of Civil Procedure: The Law of Inquiry and Award of Mesne Profits in India

Introduction

The concept of 'mesne profits' is a critical component of civil litigation involving immovable property in India. It represents the compensation that a person, rightfully entitled to possession of property, can claim from another who has been in wrongful possession of it. The Code of Civil Procedure, 1908 (CPC) provides a structured mechanism for the ascertainment and award of mesne profits, primarily through Order 20 Rule 12. This rule empowers the court, in a suit for recovery of possession of immovable property and for rent or mesne profits, to pass a decree not only for possession but also for past and future mesne profits, often necessitating a separate inquiry. This article undertakes a comprehensive analysis of the legal framework governing the inquiry into and award of mesne profits under Order 20 Rule 12 CPC, drawing upon statutory provisions and significant judicial pronouncements from Indian courts.

Defining Mesne Profits: The Statutory Foundation

The term "mesne profits" is statutorily defined under Section 2(12) of the CPC:

"Mesne profits" of property means 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.

This definition underscores several key elements. Firstly, the liability for mesne profits arises from "wrongful possession" of the property.[1] The possession must be without legal authority or justification. As observed in Lucy Kochuvareed v. P. Mariappa Gounder, mesne profits are damages arising from wrongful possession.[2] Secondly, the quantum of mesne profits is not limited to the profits actually received by the person in wrongful possession but extends to those profits that "might with ordinary diligence have been received." This implies an objective standard of what a prudent person could have derived from the property.[3] Thirdly, mesne profits include interest on such profits, acknowledging the time value of money and the deprivation suffered by the rightful owner. Lastly, profits attributable to improvements made by the person in wrongful possession are expressly excluded, ensuring that the wrongdoer does not benefit from their own unauthorized enhancements, nor is the rightful owner unjustly enriched by them.[4] The Supreme Court in Fateh Chand v. Balkishan Dass reiterated that mesne profits are a form of compensation for use and occupation of property by a person in wrongful possession.[5]

Order 20 Rule 12 CPC: Procedural Framework for Mesne Profits

Order 20 Rule 12 of the CPC outlines the procedure for passing a decree for possession and mesne profits. It states:

"(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—
(a) for the possession of the property;
(b) 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;
(ba) for the mesne profits or directing an inquiry as to such mesne profits;
(c) directing an inquiry as to rent or mesne profits from the institution of the suit until—
    (i) the delivery of possession to the decree-holder,
    (ii) the relinquishment of possession by the judgment-debtor with notice to the decree-holder through the Court, or
    (iii) 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."

Scope and Application

Order 20 Rule 12 CPC provides a comprehensive mechanism for dealing with claims for mesne profits in suits for recovery of possession. The Patna High Court in Ramgulam Sahu v. Chintaman Singh noted that the Code of 1908 effected a change from the earlier Code of 1882, requiring inquiries into mesne profits to be made in the suit itself, culminating in a final decree.[6] The Allahabad High Court in Muhammad Ishaq Khan v. Muhammad Rustam Ali Khan also observed this change, emphasizing that the court hearing the suit is to ascertain mesne profits, whether pre-suit or post-suit, and make a final decree.[7]

Past Mesne Profits (Clause (b) and (ba))

Clauses (b) and (ba) of Order 20 Rule 12(1) empower the court to pass a decree for rents or mesne profits that have accrued prior to the institution of the suit. The court may either determine the amount directly or direct an inquiry for this purpose. It is generally understood that a claim for past mesne profits must be specifically made in the plaint and be within the period of limitation.[8]

Future Mesne Profits (Clause (c))

Clause (c) deals with future mesne profits, i.e., those accruing from the institution of the suit until one of three events occurs: delivery of possession, relinquishment of possession by the judgment-debtor with notice through the court, or the expiration of three years from the date of the decree, whichever is earliest. The Supreme Court in Chittoori Subbanna v. Kudappa Subbanna And Others affirmed this three-year limitation, holding that a decree directing inquiry into mesne profits beyond this period should be construed in accordance with the law.[9] This provision ensures that the decree-holder is compensated for the period they remain out of possession post-institution of the suit, but also sets a temporal limit to prevent indefinite liability.

Final Decree Post-Inquiry (Sub-rule (2))

Sub-rule (2) of Order 20 Rule 12 mandates that where an inquiry is directed under clause (b) or (c), a final decree for rent or mesne profits shall be passed in accordance with the result of such inquiry. This bifurcated process—a preliminary decree establishing the right to mesne profits and directing an inquiry, followed by a final decree quantifying them—is a hallmark of this provision.[10] The proceedings for ascertainment of mesne profits, pursuant to a preliminary decree, are considered a continuation of the suit, and no separate limitation period applies for initiating the inquiry once the right has been decreed.[11]

Judicial Interpretation and Key Principles

The application of Order 20 Rule 12 CPC has been the subject of extensive judicial interpretation, leading to the evolution of several key principles.

Necessity of Prayer for Mesne Profits

A distinction is often drawn between past and future mesne profits regarding the necessity of a specific prayer in the plaint. For past mesne profits (accrued before the suit), a claim must generally be made.[8]

However, for future mesne profits (from the date of suit institution), the position is more nuanced. The Supreme Court in Gopalakrishna Pillai And Others v. Meenakshi Ayal And Others held that under Order 20 Rule 12, the court possesses the discretion to decree future mesne profits even if not specifically prayed for, provided the suit is for recovery of possession.[12] This principle was reiterated by the Delhi High Court in Smt. Santosh Arora And Others v. Sh. M.L Arora, citing Supreme Court decisions in R.S. Madanappa v. Chandramma and Bhagwati Prasad v. Shri Chandramaul, stating that Order 20 Rule 12 mandates the court to direct such an inquiry.[13] Similarly, in K.L Garg v. Rajesh Garg & Ors., it was noted that a decree for mesne profits follows a decree for possession, with an inquiry under Order 20 Rule 12 to determine the rate.[14]

Conversely, the Supreme Court in Ganapati Madhav Sawant (Dead) Through His Lrs. v. Dattur Madhav Sawant remitted a matter to the High Court to consider the grant of mesne profits where the High Court itself had noted at the notice stage that the plaintiff had not prayed for an inquiry, suggesting that the absence of a prayer can be a pertinent issue if raised.[15] The Patna High Court in Tausif Ahmad And Others… v. Munshi Baharuddin And Others… suggested that if a claim is made only for past mesne profits and the decree allows only this claim, remaining silent about future mesne profits, the latter might be deemed refused.[16] This indicates that while the court has the power, its explicit exercise or the framing of the decree can be crucial.

Wrongful Possession as a Prerequisite

The cornerstone of a claim for mesne profits is "wrongful possession" by the defendant. As held in Girraj Prasad & Ors. v. Smt. Tara Devi & Ors., the possession of a co-sharer is generally not considered wrongful until partition, as a co-sharer has rights over every inch of undivided property; thus, a claim for mesne profits against a co-sharer in possession may not be maintainable prior to ouster or partition.[17]

The Bombay High Court in Purushottam Bajranglal Agarwal v. Nag Vastra Bhandar clarified that a stay order granted by an appellate court during the pendency of an appeal does not render the possession legal if it has already been adjudged wrongful by the trial court; the liability for mesne profits continues.[18] In Ambalal Sarabhai Enterprises Limited v. Rajeev Daga And Another, the Calcutta High Court noted that possession by a court-appointed receiver is generally considered possession by the court and not wrongful possession by the defendant, unless there is a specific finding that the defendant was in wrongful possession during the period the property was with the special officer.[1]

Quantum of Mesne Profits and Basis of Assessment

The assessment of mesne profits aims to compensate the rightful owner for the loss sustained due to wrongful deprivation of property. The Supreme Court in Atma Ram Properties (P) Ltd. v. Federal Motors (P) Ltd. indicated that mesne profits can be awarded at the current market rent, especially when a tenant continues in possession after an eviction decree.[19] The Delhi High Court in S. Kumar v. G.R Kathpalia & Anr. held that during an inquiry under Order 20 Rule 12 CPC, the court can determine mesne profits based on evidence of prevalent market rent and may award an amount higher than what was initially claimed in the plaint for the post-suit period, provided the plaintiff undertakes to pay additional court fees.[20] The guiding principle is what the person in wrongful possession "actually received or might with ordinary diligence have received."[3]

Timing of Inquiry

An inquiry into future mesne profits can commence even before the delivery of possession or the expiry of the three-year period stipulated in Order 20 Rule 12(1)(c). The Bombay High Court in Purushottam Bajranglal Agarwal v. Nag Vastra Bhandar found no prohibition in the CPC against commencing such an inquiry before any of the three terminal events occur.[18]

Distinction from Other Claims (e.g., Partition Suits)

It is important to distinguish proceedings under Order 20 Rule 12 CPC from those under other provisions, such as Order 20 Rule 18 CPC, which deals with decrees in suits for partition or separate possession of a share. The Karnataka High Court in Abdul Rahiman v. M.L Narasimhiah noted that Order 20 Rule 18 does not circumscribe the limits for an inquiry into a share of mesne profits in a partition suit in the same way Order 20 Rule 12 does for suits primarily for recovery of possession.[10] This distinction was also highlighted in Tausif Ahmad And Others… v. Munshi Baharuddin And Others….[16]

Mesne Profits in Specific Performance Suits

The Madras High Court in Karuppa Kudumban v. Arokiam Servai observed that the question of mesne profits seldom arises in a suit for specific performance of an agreement to sell. In such suits, the plaintiff seeks to acquire title, and the defendant's possession is not typically unlawful until a conveyance is executed and registered. Therefore, a claim for mesne profits is generally misconceived in this context.[21]

The Nature of the Inquiry under Order 20 Rule 12 CPC

The inquiry directed under Order 20 Rule 12 CPC is a judicial process to determine the quantum of mesne profits. The court, or a commissioner appointed by it, undertakes this task by taking evidence from the parties. The Bombay High Court in SATYABHAMA BAI WD/O SANTOSHRAO RADKE AND OTHERS v. SHEELADEVI W/O RAMASHANKAR PRASAD observed that under Order 20 Rule 12(ba), the court may pass a decree for mesne profits or direct an inquiry. It implies that if sufficient evidence is already on record, the trial court might be able to determine the mesne profits without a separate, protracted inquiry.[22] However, typically, a separate inquiry is conducted after the preliminary decree, leading to a final decree for the quantified amount.

Conclusion

Order 20 Rule 12 of the Code of Civil Procedure, 1908, provides a robust and equitable framework for the award of mesne profits in suits for recovery of possession of immovable property. It balances the right of the decree-holder to be compensated for wrongful deprivation with procedural safeguards and limitations to prevent undue hardship to the judgment-debtor. The judicial interpretations over decades have clarified various aspects, including the definition of wrongful possession, the necessity of specific prayers, the method of assessment, and the temporal limits for such claims. The provision for an inquiry ensures that the quantification of mesne profits is based on evidence and due diligence, ultimately aiming to restore to the rightful owner the economic benefits they were unlawfully denied. The mechanism of a preliminary decree followed by a final decree post-inquiry facilitates a focused and just adjudication of claims for mesne profits, reinforcing the rule of law in property disputes in India.

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