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PETITIONER: L. KOCHIVAREED

       Vs.

RESPONDENT: P. MERIAPPA GOUNDER AND ORS.

DATE OF JUDGMENT07/02/1979

BENCH: SARKARIA, RANJIT SINGH BENCH: SARKARIA, RANJIT SINGH TULZAPURKAR, V.D. SEN, A.P. (J)

CITATION:  1979 AIR 1214            1979 SCC  (3) 150

ACT:      Mesne Profits-Liability  for mesne  profits,  principle of-Section 2(12)  of the Code of Civil Procedure 1908 (Act 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 Code. S. 144-Scope of.

HEADNOTE:      Meriappa Gounder  respondent No.  1 in  C.A. 466/69 and appellant 1  in C.A. 2375/69 filed a 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  Iyer   a  lessee  of  the  factory  to  give  up possession. Pending  the suit  Late Kochivareed,  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  Kochivareed obtained  a lease, of the suit property  at a  rent of Rs. 15,000/-for a period of one year which  was renewed  for another  year from the Receiver and a sum of Rs. 30,000/- SO collected as rent for two 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 the  question of the liability of the mesne profits, the present  appeals arose  out  of  interpretation  of  the

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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 invariable  rule governing  their award and assessment in every case  can be  laid down  and the  "Court may  mould it according to  the justice  of the  case". Even  so one broad basic principle governing the liability for mesne profits is discernible 59 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 received or might  with ordinary  deligence have  received  therefrom together with  interest  on  such  profits,  but  shall  not include profits  due to  improvements made  by the person in wrongful possession." [68G-H, 69A]      Wrongful  possession  of  the  defendant  is  the  very essence of a claim for mesne 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’s  dispossession,   or  his   being  kept  out  of possession can  be regarded  as a  joint or concreted act of several persons,  each  of  them  who  participants  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 his 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 G]      2. In such a case, where the claim for mesne profits is against several  tresoassers who  had combined  to 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 profits  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. [69C-D]      3. A decree under Order XX Rule 12 of C.P.C., directing enquiry into  mesne profits,  howsoever  expressed  must  be construed to be a decree directing the enquiry in conformity with  the   requirements  of  Rule  12(1)(c),  80  that  the decreeholder is  not entitled  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-Fl      Chitturi Subhanna  v. Kudappa  Subbanna, [1965]  2  SCR 661; referred to.      4. The  words "whichever  event first  occurs"  in  sub clause (c)(iii)  of clause  I of  Rule 12  of Order XX Civil Procedure Code  imply that  the  maximum  period  for  which future mesne  profits can be awarded is three years from the date of the decree for possession 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 will expire on the date on which possession was delivered or relinquished by  the defendant in favour of the decreeholder pursuant  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 subclause is, therefore, to  be reckoned from April 22, 1958. [73G-H, 74A-

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B]      5. Section  144 of  the Code  of  Civil  Procedure,  in terms, says  that for  the purpose  of the  restitution, the Court may  make any orders, including orders for the payment of interest,  damages compensation  and mesne  profits which are properly  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 60      Rs.  30,000/-  withdrawn  by  defendant  3  by  way  of restitution. The  trial court  had rightly allowed interest. [77B-C]      6. The  decree dated April 22, 1958 of this Court was a composite decree,  partly final,  and party  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  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 was/were liable for payment of those  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 means that only the defendant or  defendants  found  in  actual  possession  and enjoyment of the property would be liable for mesne profits. [70A-C]      In the instant case:       (a) The third defendant was 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 Neelakanta Iyer.  In terms  of the  decree  of  this  Court, therefore defendant  3 alone  is liable for mesne profits in respect of  the period  he was  in possession (excepting the period during which the property was 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 was  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 were joint-tortfeasors and therefore jointly and severally liable for mesne profits. [69H, 70C, G]      (c) There  is nothing in the decree of this Court dated April 22  1958, indicating  that the amount deposited by the plaintiff towards the price should have been sel off against the liability  of defendant  3 for  mesne  profits.  On  the contrary, it  allowed deduction  of the  amounts  found  due against defendant  1 and defendant 2 from the deposit of Rs. 85.000/- to  be made by the plaintiff towards 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 1) 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 towards  the  liability  of  defendant  3,  there  being  no evidence whatever,  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

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that both  defendants 2  and 3 were liable for mesne profits jointly and severally, then also, the plaintiff could at his option. recover  the whole  of the  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 defendants only. [72A-C]      (e)  Defendant   3  entered  into  possession  of  suit property under  a-l assignment of sham lease from Neelakanta Iyer on March 5, 1951 during the 61 pendency of  the plaintiffs  suit, which  was instituted  on August 25,  1950. The A plaintiff had deposited Rs. 50,000/- sometimes after  the presentation  of the  plaint. Under the agreement of  the sale, dated May 22, 1950 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 registration of  the sale  deed which was to be executed and registered on  or before  July  15,  1950.  It  was  further stipulated that  on  payment  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 assignee of  sham   lease  from  Neelkanta  Iyer,  and  then  further purchased the  property with  his  on  funds  in  favour  of defendant 2  pendente lite,  he was  fully conscious that he was purchasing  a litigation.  His possession  was therefore wrongful qua the plaintiff from its inception [72E-H]      (f)  Disallowance   of  the  claim  for  deduction  for interest on  the deposit  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  annum for  the  said  period,  after  deduction  the interest for  the period during which the property was under the management of the Receiver. [74D-E]      (g) The  plaintiff‘s claim for mesne 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 did  not produce  any other reliable evidence, the High  Court was  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]

JUDGMENT:      CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 466 and 2375 of 1969.      From the  Judgment and Order dated 6-8-78 of the Kerala High Court in Appeal Suit Nos. 27/63 and 245/63.      K. S. Ramamurthy, Miss Pushpa 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      SAKARIA, J.-These  two appeals on certificate arise out of execution  petition No.  118 of  1962 on  the file of the

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Subordinate Judge,  Trichur, 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 passed on  April 22,  1958. The  common facts,  out of which these appeals arise, are as follows:      The plaintiff  filed a  suit on  August 23, 1950 in the District Court,  Trichur, for  ’specific performance  of  an agreement, dated  May 22,  1950, made  by Soliappa  Chettiar (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  1.  It  was stipulated in  the agreement  that the  sale  deed  must  be executed and  registered on  or before July 15, 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  in 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. Accordingly, the plaintiff sent  a registered  notice, dated  July  7,  1950, through his  lawyer to  defendant 1,  to  which  the  latter replied the  same day, that the factory was in possession of one Neelakanta  Iyer as  lessee, who  had refused to give up possession and  therefore, it  had become impossible 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 favour 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 agreement to sell.      The suit  was contested  by defendant 1 (who originally was the sole defendant). - His case was that, although 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" the contract for sale had become incapable of performance. He denied that the lease in favour of Neelakanta was a sham transaction. 63      Pending the  suit,  T.  V.  Kochivareed  (the  deceased husband of the A 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

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defendant 2  at his own request, when the appeal was pending in this Court.      On December 23" 1950, the Court appointed a Receiver to manage 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 mesne 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’ 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 64      days from the date of receipt of the notice of the said      deposit execute  and register  a sale deed in favour 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...........           (d) ..................           (e) .... AND THIS COURT DOTH FURTHER DE CLARE that      appellant shall be entitled to:           (a) mesne  profits against such of the respondents      (Is may  have been in possession of the property except      during the  period that the property was in the custody      and management  of the  receiver appointed by the trial      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 hold an enquiry about the mesne pro fits      and such  sums 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

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    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) pendent 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 65 the  plaintiff   and  the  possession  of  the  property  in consequence thereof was delivered to him on March 29. 1959.      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 iliability for  mesne profits, as he was never in possession and occupation  of the  suit property.  He further 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 delivery 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 possession  of the property.      On December  22, 1962,  the  court  of  first  instance passed orders  in respect  of mesne  profits, costs  etc. It found that  defendant 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. l, 239.02 on account of costs  recovered by  defendant 2  from decree-holder  and payable by  former with  interest by way of restitution, Rs. 2,577.01 on  account of-costs  in the  High Court,  and  Rs. 8125/-on account  of mesne profits from the factory from the date of  suit till  date of  Ex. D-3.  The aggregate! amount 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.  l  57.086.81 consisting of these items:      (a) Rs.  7,298.l0, by  way of restitution on account of costs recovered  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 Court; and 66      (d) Rs.  1,08,636.71 net  mesne profits  payable by him from April  1, 1963  to the  date of delivery of possession,

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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  representative (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, as well as the plaintiff and the second defendant, preferred appeals 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 (A.S. 248/63) filed 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  property  during  the  period  in question. The  Trial Court’s  findings with  regard  to  the quantum of  mesne profits  per year,  were not  found  satis factory. The High Court assessed the mesne profits 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. i 1,000/ 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  Rs.  85,000/- 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.      We will first take up Civil Appeal 466 of 1969 filed by the widow of defendant 3.      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 67 light of  the material on record and the law on the subject, then three  consequences inevitably follow:      (i) Both defendant 2 and defendant 3 would be deemed to be in  possession of  the suit property during the period in question. The  possession of  defendant 2  was juridical  or legal possession  of an owner, he being the purchaser of the property from  defendant l; while that of 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 be jointly and severally liable for mesne profits or compensation.      This being  the case, the plaintiff was bound to suffer a set  off to the purchase price (Rs. 85,000/-) deposited by him, against  his claim  for mesne profits against defendant 3. But  after the  decree of  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

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thus precluded  by his  conduct from  claim-  in  that  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 obtained the conveyance in his favour on March 16, 1959. The possession of defendants 2 and 3 as  against the  plaintiff 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 under 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  of the  suit and ending on the expiration of three years from the date of the decree of  the Trial  Court. The  expression  "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  mesne 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. 68      Upon the  above premises, Mr. Ramamurthy maintains that the plain  tiff 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  decision of  this Court  in  Chitturi  Subbanna  v. Kudapa Subbanna & Ors.(l) 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  defendants was/were in actual possession, would be liable for the mesne profits from  the date  of the  suit till  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

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suit property.      Before dealing  with the  contentions canvassed on both sides,  it   will  be   profitable  to  notice  the  general principles relating to the liability formesne profits.      Mesne profits  being in  the  natural  of  damages,  no invariable rule  governing their  award  and  assessment  in every case,  can be  laid down  and "the  Court may mould 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 wrongfil possession of property actually received or might with ordinary      (1) [1965] 2 S.C.R. 661. 69 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 clear 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  and enjoyment of the immovable property is liable  for mesne  profits. But,  where  the  plaintiff’s dispossession, 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 possession  and the  profits were received not by him but by some of his confederates.      ln such  a case  where the  claim for  mesne profits is against  several   trespassers  who  combined  to  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 profits,  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 Subbanna v.  Kudapa Subbanna  (ibid) ’is that a decree under Order XX  Rule 12  of the Code, directing enquiry into 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 mesne profits for a period (commencing from the date  F 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  sufficient to  create liability for mesne profits if ’such possession is wrongful.      We will  now deal  with the contentions advanced by Mr. Ramamurthy, 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  question. It  is contended  that  the possession of  defendant 2  was the  legal possession  of an owner while  that of  defendant 3 derivative possession of a lessee or licensee under the former. 70      A perusal  of the  decree dated April 22, 1958, of this Court, extracted  in a  foregoing  part  of  this  judgment,

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show’s that  it was a composite 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 was 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 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".  Construed  in  conformity  with  the  legal principles enunciated  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 pos  session  and  occupation  of  the  same". Defendant 3  further vehemently  pleaded that  it was  never intended at  any time  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  suit  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.      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 71 2 was  not, in  actual control, management and possession of the 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 is idle for him 3  to pretend  otherwise". Indeed,  the third  defendant himself had repeatedly admitted in various documents that he was in possession. In his application, Ex 77(a), made in the Court of  first instance,  on March  7, 1951,  the defendant admitted  that   he  was   in  possession  in  pursuance  of assignment of  lease made. in his favour by Neelakantha Iyer on March 5, 1951. This lease has been found by this Court to be a  sham transaction.  Further, defendant  3 on  March 21, 1951, executed  a lease  in favour of the Receiver appointed by the  Court. In  this cease  also, he admitted that he had been in  possession of the property since March 5, 1951. The lease executed  by defendant  3 in  favour of  the  Receiver

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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.      We have  absolutely  no  reason  to  differ  from  this concurrent finding  of  the  courts  below  that  the  third defendant was  in sole, actual possession and control of the suit property  from March  3, 1951,  when  he  obtained  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  p(excepting (excepting the period during which the property was under he 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, 1958, of this Court which say’s that such a  set off  should be  allowed.  On  the  contrary,  it allowed deduction of the amounts found due against defendant 1 and  defendant 2  from the  deposit of  Rs. 85,000/- to be made  by  the  plaintiff  towards  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 1  respondent (defendant 2) who is the assignee of the ’second respondent (defendant l ) pendente lite." 72      Assuming arguendo,  that both  defendants 2 and 3 were, liable for  mesne profits  jointly and severally, then also, the plaintiff could, at his option, recover the whole of the 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 defendants only. 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 towards the liability  of defendant  3,  there  being  no  evidence, whatever, on  record to  show that  such withdrawal  was the result of  any collusion or conspiracy between the plaintiff and defendant 2 against defendant 3.      Assuming  further,  for  the  sake  of  argument,  that defendant 2  and defendant 3 were’ both acting in concert to keep the  plaintiff out of pos session, it was not necessary for the  courts below  to decide  the issue  with regard  to apportionment  of   liability  and  its  adjustment  between defendants 2  and 3.  Indeed, the  adoption of such a course would have  militated against  the finding  that defendant 3 alone was  in exclusive  possession and  control of the suit property ever since March 5, 1951.      We therefore,  negative the  first  contention  of  the appellant.      This takes  us to  the second  and third points pressed into argument  by Mr.  Ramamurthy. It  is to  be noted  that defendant 3  entered into  possession of  the suit  property under an  assignment of  sham lease  from Neelkantha Iyer on March 5,  1951 during  the pendency  of the plaintiff’s suit which was  institute‘d on August 25, 1950. The plaintiff had deposited Rs.  50,000/- some  time after the presentation of the plaint Under the agreement for sale, dated May 22, 1950, made by  defendant 1  in favour  of the plaintiff, the total sale consideration was fixed at Rs. 90,003/-. Out of it, Rs.

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5,003/- had  been paid to defendants on the very date of the agreement.  It  was  further  stipulated  that  out  of  the balance, Rs.  55.000/-  would  be  paid  by  the  plaintiff- purchaser at  the time  of the registration of the sale deed which was  to be  executed and  registered on or before July 15, 1950.  It was  further stipulated that on payment 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  assignee of  a sham  lease from Neelakantha Iyer, and then further  purchased the  property with  his own funds in favour of defendant 2, pendente lite, he was fully conscious that he  was purchasing  a litigation.  His possession was,, therefore,  wrongful   qua  the   plaintiff  from  its  very inception 73      The material part of Rule 12(1) of Order XX of the Code of Civil procedure, provides:           "Where a suit is for the recovery of possession of      immoveable property  and for rent or mesne profits, the      Court may pass a decree-           (a) for the possession of the property;           (b) ...................           (ba) ..................           (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  expiration  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." D      Mr. Ramamurthy  argued, if  we may say so with respect, somewhat inconsistently,  that the  word  "decree"  in  sub- clause (iii)  of clause  (c) of  the aforesaid  rule  12(1), means the  decree for possession and mesne profits which the trial court  ought to  have passed, and that in this view of the matter,  the period  of three  years mentioned  in  sub- clause (iii)  will be counted from August 28, 1952, the date of the  trial court’s  decree, whereby  mesne profits at the reduced rate  of Rs.  15,000/- instead  of Rs.  30,000/- per annum claimed  by the  plaintiff, were awarded. In that view of the  matter, according  to the counsel, the plaintiff was not entitled under the law to get a decree for mesne profits beyond August  27, 1955.  It is  pointed out  that since the plaintiff  had,  as  a  result  of  the  acceptance  of  the defendants’ appeal  and dismissal  of his  suit by  the High Court, withdrawn  the deposit  of Rs. 50,000/- on August 19, 1953 and he had not redeposited the amount until February g, 1959, he  was  not  then  entitled  to  possession  and,  in consequence, to any mesne profits during this period.      The argument  is certainly  ingenious,  but  untenable, being founded  on fallacious  premises. The  period of three years mentioned  in sub-clause  (iii) of  clause (c) of Rule 12(1) is  to be computed from the date of the decree of this Court, i.e.  from April  22, 1958  and it will expire on the date on  which possession  was delivered  or relinquished by the defendant  in favour  of the  decree-holder pursuant  to that decree.  In other  words, the  decree mentioned in sub- clause 6-196SCI/79 74

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(iii) of  the aforesaid  clause (c),  would be the appellate decree, dated  April 22,  1958, of this Court. The period of three years  mentioned in the said sub-clause is, therefore, to be  reckoned fro‘m  April 227  1958. The words "whichever event first  occurs" in  sub-c1ause  (iii)  imply  that  the maximum  period  for  which  future  mesne  profits  can  be awarded, is  three years  from the  date of  the decree  for possession and  mesne profits,  finally passed.  The  courts below, therefore,  while holding that defendant 3 was liable to  pay  mesne  profits  for  a  period  of  about  6  years commencing from  March  5,  1951/March  21,  195l  till  the delivery of  possession in  September, 1958 (less the period during which  the property  was under  the management of the Receiver), were  acting in  conformity with  the law and the terms of the decree, dated April 22, 1958, of this Court.      We, therefore, reject these contentions, also.      Another contention canvassed by Mr. Ramamurthy was that the courts  below  have  wrongly  disallowed  deduction  for interest on the deposit of Rs. 50,000/-, which the plaintiff had withdrawn  on August  19, 1953  and had  redeposited  on February 9, 1959. It appears to us that in all fairness, the defendant is  entitled to  deduction for  interest  for  the period from  August 19,  1953 to February 9, 1959 on the sum of Rs.  50,000/-, which,  at ,6  per cent  per annum,  after deducting the  interest for  the  period  during  which  the property  was   under  the   management  of   the  Receiver. (According to  the agreed  calculations made the counsel for the parties  it works  out to Rs. 14,000/- approximately. We see no  reason why  deduction of  this amount be not allowed from the mesne profits assessed against defendant 3.      We will now take up Civil Appeal No. 2375 of 1969 filed by the plaintiff      Mr. Govindan  Nair, learned  counsel for the plaintiff- appellant. has contended-      (i) that  mesne profits  ought to  have been awarded at the Rate  of Rs.  25,000/- per  annum. The High Court was in error in awarding the same at the rate of Rs. 15,000/-;      (ii) that  the High Court was not justified in reducing the rate  on interest  from 6  per cent per annum awarded by the Trial Court to 4 per cent per annum;      (iii) that interest at 6 per cent per annum was rightly awarded by  the court  of first  instance on  the sum of Rs. 30,000/-, which  was two  years rental  paid by defendant 3, under the  lease taken from the Receiver for the period from August 19,  1953 to March 9, 1959, and the High Court was in error in disallowing that interest; and 75      (iv) that  the  Courts  below  were  not  justified  in denying costs  to the  plaintiff in  the inquiry as to mesne profits or in appeal arising therefrom.      We will deal with these contentions ad seriatim. Contention (i):      In this  connection, Mr.  Nair drew  our  attention  to Exhibits D-8  to D-15, which are Balance Sheets and Profit & Loss Accounts  of the  Sivakami Tile  Works, relating to the period from  March 31,  l953  to  November  S,  1958.  These documents  were  prepared  at  the  instance  of  the  third defendant for  the purposes  of his  Income-tax returns. The High Court found that these Balance Sheets and Profit & Loss Accounts prepared  for Income-tax  puropses were  suspicious documents and  by themselves  were not  proof of the profits derived. Mr.  Nair has  no quarrel  with this  finding.  He, however, contended  That the High Court ought to have worked out the  real profits by taking into account the quantity of clay  purchased   according  to  these  documents.  In  this

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connection, it  is submitted  that according to the evidence produced on  the side of the plaintiff about five candies of clay are  required for  producing 1000  small tiles and even according to  the evidence of the second defendant as C.P.W. 2, 51 to 6 candies are required for 1000 small tiles.      We are  not impressed  by this argument. The High Court has fully  considered the  evidence produced  on the side of the plaintiff.  It noted  that the  plaintiff, also, had not produced any  cogent evidence  to show what were the profits earned by  him by  working the  factory in  dispute for  the period of one year preceding the date of his examination. By the time  plaintiff appeared in the witness-box, he had been working this factory for about one year.      In the alternative, Mr. Nair submitted that even during the period  of two  years when  the Receiver  was there  and defendant 3 worked the factory as a lessee under the former, he had  made a  profit of  Rs. 22,000/-.  Our attention has, also been  drawn to  the document (Ex. D-8), that the income for the  first year  ending 1952 was Rs. 20,000/-. The point pressed into argument is that the highest profit made by him according to these Balance Sheets and Profit & Loss Accounts during any  year by defendant 3, should be taken as the rate for calculating the mesne profits.      The contention  does not appear to tenable. Once it was found that  these Balance  Sheets and Profit & loss Accounts were  not   reliable,  nor  the  evidence  produced  by  the plaintiff, the  only reliable  evidence left on the file was the rate at which the factory was leased out 76 by the  Receiver to  defendant 3.  When the  lease  for  the second year  was granted to defendant 2 by the Receiver on a rental of  Rs. 15,000/-,  the plaintiff should have objected that the rent was less or he could himself take the lease on paying higher rent. The High Court was, therefore, not wrong in holding  that this  rent fixed under the lease granted by the Receiver  represented  the  real  rental  value  of  the factory during  the year  in question  and in the absence of any  other  reliable  evidence  for  assessing  the  profits actually earned  or which,  with due  diligence, could  have been earned the mesne profits may reasonably be fixed at Rs. 15,000/- per annum. We, therefore, negative the first contention of Mr. Nair, Contention (ii):      The Trial  Court had  awarded interest at the rate of 6 per cent  per annum on the mesne profits assessed by it. The High Court  reduced that  rate  to  4  per  cent,  with  the observation that  having regard  to all the circumstances of the case,  including that  the plaintiff  had the use of the sum of Rs. 85,000/- which he was to pay towards the price of the property  a rate  of 4  per  cent  per  annum  would  be reasonable and just.      Even Mr.  Ramamurthy has  not been able to support this reduction in the rate of interest. It was after a long drawn out litigation  that the  plaintiff got  possession  of  the property. The  Trial Court,  therefore rightly  awarded  the interest at the rate of 6 per cent per annum.      We, therefore,  accept this  contention and direct that interest as part of the mesne profits assessed in this case, shall be  payable at  the rate  of 6 per cent per annum upto March 29, 1959 when possession was delivered in pursuance of the decree  of this  Court, to  the plain  tiff and  further interest at  6 per  cent per annum on the outstanding amount shall be payable till the date of payment. Contention (iii):      A sum  of Rs. 30,000/-, being the rent collected by the

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Receiver from  the third  defendant, was deposited in Court. This amount  was withdrawn  by the third defendant on August 19, 1953 following the dismissal of the plaintiff’s suit, by the High  Court. When  the plaintiff’s  appeal succeeded  in this Court  and a  decree was  passed in  his favour by this Court, then defendant 3 redeposited the sum of Rs. 30,000/-, only on  March 9, 1959. The Trial Court had awarded interest at 6  per cent  per annum on this amount of Rs. 30,000/- for the period  from August  19, 1953,  the date  on  which  the defendant withdrew  that deposit,  until March  9, 1959, the date when  he  redeposited  the  sum.  The  High  Court  has disallowed interest on this account 77 for the  aforesaid period  on the  ground "that  the Supreme Court does not award that".      We  are   unable  to  agree  with  this  reasoning.  It overlooked the fact that interest on the sum of Rs. 30,000/- was being  claimed under  Section 144  of the  Code of Civil Procedure, by  way of restitution. Section 144 in terms says that for  the purpose of the restitution, the Court may make any orders,  including orders  for the  payment of interest, damages, compensation  and mesne  profits which are properly consequential on  variation or reversal of the decree. There is nothing  in the  decree, dated  April 22,  1958, of  this Court which  expressly  or  by  implication  prohibited  the payment of  interest on this sum, by way of restitution. The Trial Court  had rightly allowed interest on amount for this period at  6 per  cent per  annum, and  we restore  the same direction. Contention (iv):      The argument is that costs have been unfairly denied to the plaintiff  by the  Courts below.  We do  not agree.  The Courts below could not have been oblivious of’ the fact that defendant 3  has since died and the respondent is his widow. We, therefore,  do not want to interfere with the discretion of the Courts below in the matter of costs.      For  the   foregoing  reasons,  we,  partly  allow  the plaintiff’s appeal  (Civil Appeal  No. 2375  of 1969) to the extent indicated  above, with  proportionate costs.  We will dismiss the defedant’s appeal (Civil Appeal No. 466 of 1969) except to  the extent  that the defendant shall be allowed a set off  in the  sum of  Rs. 14,000/-, being the interest on the sum  Or Rs. 50,000/- for the period from August 19, 1953 (the date of the withdrawal of the deposit by the plaintiff) to  the  date  when  he  redeposited  it.  Interest  on  the outstanding amount  at 6 per cent per annum shall be payable till the  date of  payment. In  Civil Appeal  466  of  1969, however, the  parties will  bear their  own  costs  in  this Court.                                           CA 2375/69 allowed                                           in part. CA 466/69 S.R.                           dismissed with modifications. 78