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RESPONDENT:P. MERIAPPA GOUNDER AND ORS.
DATE OF JUDGMENT07/02/1979
BENCH:SARKARIA, RANJIT SINGHBENCH:SARKARIA, RANJIT SINGHTULZAPURKAR, V.D.SEN, A.P. (J)
CITATION: 1979 AIR 1214 1979 SCC (3) 150
ACT: Mesne Profits-Liability for mesne profits, principleof-Section 2(12) of the Code of Civil Procedure 1908 (Act Vof 1908). Civil Procedure Code, 1908, Order XX Rule 12-Construction of decree explained-Nature of the decree of theCourt dated April 22, 1958 clarified. Words and Phrases-"Whichever event first occurs" inRule 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 andappellant 1 in C.A. 2375/69 filed a suit on August 23, 1950in the District Court, Trichur, for specific performance ofan agreement dated May 22, 1950 made by one SoliappaChettiar. The said Soliappa Chettiar pleaded inability toperform the contract in view of the refusal of oneNeelakanta Iyer a lessee of the factory to give uppossession. Pending the suit Late Kochivareed, husband ofthe appellant in C.A. 466/69 obtained an assignment of thelease from Neelakanta Iyer on March 5, 1951. On March 8,1951 Soliappa Chettiar executed a sale deed of the suitproperty in favour of one George Thatil, a nephew ofKochivareed. In the course of the proceedings the trialcourt appointed a Receiver to manage the suit property. OnMarch 21, 1951, Late Kochivareed obtained a lease, of thesuit property at a rent of Rs. 15,000/-for a period of oneyear which was renewed for another year from the Receiverand a sum of Rs. 30,000/- SO collected as rent for two yearswas deposited in the Court by the Receiver. The District Court on August 28, 1952 decreed the suitfor specific performance and mesne profits at a reduced rateof Rs. 15,000/- per annum, instead of at Rs. 30,000/- perannum as claimed. Against the decree two appeals were filedin the High Court by Kochivareed and George Thatil. The HighCourt allowed the appeals and dismissed the suit by itsjudgment dated March 21, 1953. The appeal filed by MeriappaGounder (CA 129/56) was allowed by this Court as per itsjudgment and decree dated April 22, 1958. On the question of the liability of the mesne profits,the present appeals arose out of interpretation of thedirection (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 inevery case can be laid down and the "Court may mould itaccording to the justice of the case". Even so one broadbasic principle governing the liability for mesne profits isdiscernible59from section 2(12) of the Code of Civil Procedure whichdefines 'mesne profits' to mean 'those profits which theperson in wrongful possession of property actually receivedor might with ordinary deligence have received therefromtogether with interest on such profits, but shall notinclude profits due to improvements made by the person inwrongful possession." [68G-H, 69A] Wrongful possession of the defendant is the veryessence of a claim for mesne profits and the very foundationof the defandant's liability therefor, Generally, the personin wrongful possession and enjoyment of the immovableproperty is liable for mesne profits. But, where theplaintiff's dispossession, or his being kept out ofpossession can be regarded as a joint or concreted act ofseveral persons, each of them who participants in theCommission of that act would be liable for mesne profitseven though he was not in actual possession and the profitswere received not by him but by some of his confederates.Possession through another, such as a tenant may besufficient to create liability for mesne profits, if suchpossession is wrongful. [69A-C and G] 2. In such a case, where the claim for mesne profits isagainst several tresoassers who had combined to Keep theplaintiff out of possession, it Is open to the Court toadopt either of the two courses. It may by its decree holdall such trespassers jointly and severally liable for mesneprofits leaving them to have their respective rightsadjusted in a separate suit for contribution; or it may, ifthere is proper material before it ascertain and apportionthe liability of each of them on a proper application madeby the defendant during the same proceedings. [69C-D] 3. A decree under Order XX Rule 12 of C.P.C., directingenquiry into mesne profits, howsoever expressed must beconstrued to be a decree directing the enquiry in conformitywith the requirements of Rule 12(1)(c), 80 that thedecreeholder 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 thepreliminary decree. [69E-Fl Chitturi Subhanna v. Kudappa Subbanna,  2 SCR661; referred to. 4. The words "whichever event first occurs" in subclause (c)(iii) of clause I of Rule 12 of Order XX CivilProcedure Code imply that the maximum period for whichfuture mesne profits can be awarded is three years from thedate of the decree for possession and mesne profits, finallypassed. The period of three years is to be computed from thedate of decree of this Court i.e. from April 22, 1958 and itwill expire on the date on which possession was delivered orrelinquished by the defendant in favour of the decreeholderpursuant to that decree. In other words, the decreementioned in sub clause (iii) of clause (c) would be theappellate decree dated April 22, 1958 of this Court. Theperiod of three years mentioned in the said subclause is,therefore, to be reckoned from April 22, 1958. [73G-H, 74A-B] 5. Section 144 of the Code of Civil Procedure, interms, says that for the purpose of the restitution, theCourt may make any orders, including orders for the paymentof interest, damages compensation and mesne profits whichare properly consequential on variation or reversal of thedecree. [77A-B] There is nothing in the decree, dated April 22, 1958 ofthis Court which expressly or by implication, prohibits thepayment of interest on the sum of60 Rs. 30,000/- withdrawn by defendant 3 by way ofrestitution. The trial court had rightly allowed interest.[77B-C] 6. The decree dated April 22, 1958 of this Court was acomposite decree, partly final, and party preliminary. Itwas final in so far as it granted the reliefs of specificperformance and possession on deposit of the price by thePlaintiff. It was preliminary in as much as it directed aninquiry with regard to the assessment of mesne profits andas to who out of the defendants was/were liable for paymentof those mesne profits. But? it laid down in no uncertainterms that only such of the defendants would be liable formesne profits "as may have been in possession of theproperty". This direction in the decree means that only thedefendant or defendants found in actual possession andenjoyment of the property would be liable for mesne profits.[70A-C] In the instant case: (a) The third defendant was in sole, actual possessionand control of the suit property from March 3, 1951, when heobtained the alleged assignment of lease in his favour fromNeelakanta Iyer. In terms of the decree of this Court,therefore defendant 3 alone is liable for mesne profits inrespect of the period he was in possession (excepting theperiod during which the property was under the management ofthe Court Receiver). [71E-F] (b) The contention that the possession of defendant 2was the legal possession of an owner while that of defendant3 was derivative possession of a lessee or licensee underthe former is not correct, since at no stage, in the Courtsbelow defendant 3 took up the position that he was inderivative possession of the property under defendant 2. Norwas there even a whisper in the pleadings that defendant 2and defendant 3 were joint-tortfeasors and therefore jointlyand severally liable for mesne profits. [69H, 70C, G] (c) There is nothing in the decree of this Court datedApril 22 1958, indicating that the amount deposited by theplaintiff towards the price should have been sel off againstthe liability of defendant 3 for mesne profits. On thecontrary, it allowed deduction of the amounts found dueagainst defendant 1 and defendant 2 from the deposit of Rs.85.000/- to be made by the plaintiff towards the price, andfurther directed that after such deduction, the balance ofsuch deposit made by the plaintiff, if any, shall be paid tothe third respondent (defendant 2) who is the assignee ofthe second respondent (defendant 1) pendente lite. [71F-H] (d) The plaintiff was not bound to suffer a set off infavour of defendant 3, merely because defendant 2 or hisassignee withdrew the price deposited by the plaintiffwithout furnishing any security for its refund or adjustmenttowards the liability of defendant 3, there being noevidence whatever, on record to show that such withdrawalwas the result of any collusion or conspiracy between theplaintiff and defendant 2 and defendant 3. Even assumingthat both defendants 2 and 3 were liable for mesne profitsjointly and severally, then also, the plaintiff could at hisoption. recover the whole of the amount of mesne profitsfrom either of them; and how such inter se liability of thedefendants was to be adjusted or apportioned was a matterbetween the defendants only. [72A-C] (e) Defendant 3 entered into possession of suitproperty under a-l assignment of sham lease from NeelakantaIyer on March 5, 1951 during the61pendency of the plaintiffs suit, which was instituted onAugust 25, 1950. The A plaintiff had deposited Rs. 50,000/-sometimes after the presentation of the plaint. Under theagreement of the sale, dated May 22, 1950 made by defendant1 in favour of the plaintiff, the total sale considerationswas fixed @ Rs. 90,003/-. Out of it Rs 5,003/- had been paidto defendant I on the very date of the agreement. It wasfurther stipulated that out of the balance, Rs. 50,000/-would be paid by the plaintiff-purchaser at the time of theregistration of the sale deed which was to be executed andregistered on or before July 15, 1950. It was furtherstipulated that on payment of the further sum of Rs.50,000/- the plaintiff would be entitled to be put inpossession of the suit property. Thus when defendant 3entered into possession, first under the garb of an assigneeof sham lease from Neelkanta Iyer, and then furtherpurchased the property with his on funds in favour ofdefendant 2 pendente lite, he was fully conscious that hewas purchasing a litigation. His possession was thereforewrongful qua the plaintiff from its inception [72E-H] (f) Disallowance of the claim for deduction forinterest on the deposit of Rs. 50,000 which the plaintiffhad 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 theinterest for the period during which the property was underthe management of the Receiver. [74D-E] (g) The plaintiff`s claim for mesne profits @ the rateof Rs. 25,000/- has correctly been negatived. Since theplaintiff did not object to the lease granted by theReceiver 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 mesneprofits should be on the basis of this rental value of Rs.15,000/- [76A-C] (h) The plaintiff, in view of the long drawn outlitigation is entitled to interest @ 6% per annum upto March29, 1959. [76E-F]JUDGMENT: CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 466 and2375 of 1969. From the Judgment and Order dated 6-8-78 of the KeralaHigh Court in Appeal Suit Nos. 27/63 and 245/63. K. S. Ramamurthy, Miss Pushpa Nambiar and A. S. Nambiarfor the Appellant in C.A. 466/69 and R 1 in C.A. 2375/69. P. Govindan Nair, S. Balakrishnan and K. L. Rathi forR. 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 outof execution petition No. 118 of 1962 on the file of theSubordinate Judge, Trichur, filed by P. Meriappa Gounder(hereinafter referred to as the plaintiff) to execute the,decree of the Supreme Court in C.A. 129/5662passed on April 22, 1958. The common facts, out of whichthese appeals arise, are as follows: The plaintiff filed a suit on August 23, 1950 in theDistrict Court, Trichur, for 'specific performance of anagreement, dated May 22, 1950, made by Soliappa Chettiar(hereinafter referred to as defendant 1) to sell a factoryknown as "Sivakami Tiles Works", for a consideration of Rs.90,003/-. The plaintiff made an advance payment on that verydate of a sum of Rs. 5,003/- to defendant 1. It wasstipulated in the agreement that the sale deed must beexecuted and registered on or before July 15, 1950. It wasfurther provided that out of the balance of saleconsideration, Rs. 50,000/- would be paid by the plaintiffat the time of the registration and for the remaining Rs.35,000/-, the plaintiff was to execute a mortgage of thesuit property to be redeemed on or before May 31, 1951. Itwas further agreed that on payment of Rs. 50,000/- at thetime of registration, the plaintiff would be put inpossession of the suit property. The plaintiff pleaded thathe was ready and willing to perform his part of theagreement, but came to know that defendant 1 was trying toevade his obligation under the agreement. Accordingly, theplaintiff sent a registered notice, dated July 7, 1950,through his lawyer to defendant 1, to which the latterreplied the same day, that the factory was in possession ofone Neelakanta Iyer as lessee, who had refused to give uppossession and therefore, it had become impossible to giveeffect to the agreement to sell the factory, as givingpossession to the plaintiff was a condition precedent to theexecution of the sale deed. The plaintiff further pleadedthat the suit property was really in possession of defendant1 and the alleged lease. in favour of Neelakanta Iyer was asham transaction and a device to evade payment of incometax, and hence defendant 1 was bound to carry out the termsof the agreement to sell. The suit was contested by defendant 1 (who originallywas the sole defendant). - His case was that, although therewas an agreement to sell the suit property, it had been madeclear at the time when negotiation for sale was going on,that the factory was in the possession of Neelakanta Iyer aslessee and that it was a condition precedent to the salethat Neelakanta Iyer would surrender his right under thelease and give up possession and that if he refused to doso, the agreement to sell would not be given effect to. Thedefendant urged Neelakanta Iyer to surrender the possession,but he refused to do so. In the circumstances" the contractfor sale had become incapable of performance. He denied thatthe lease in favour of Neelakanta was a sham transaction.63 Pending the suit, T. V. Kochivareed (the deceasedhusband of the A appellant, Lucy Kochivareed in C.A. 466/69)obtained an assignment of the lease (Ex. D-3) fromNeelakanta Iyer on March 5, 1951. Since Kochivareed waslater on, when the suit was pending in the Supreme Courtimpleaded as defendant 3, for the sake of convenience theappellant in C.A. 466/69, will hereinafter be referred to asdefendant 3 On March 8, 1951, defendant 1 executed a sale deed ofthe suit property in favour of George Thatil, who is thenephew of defendant 3, and will hereinafter be referred toas defendant 2. Like defendant 3, he also joined asdefendant 2 at his own request, when the appeal was pendingin this Court. On December 23" 1950, the Court appointed a Receiver tomanage the suit property. On March 21, 1951, defendant 3obtained a lease of the suit property at a rent Or Rs.15,000/- for a period of one year from the Receiver. Theterm of the lease was extended for one more year and twoyears' rent, amounting to Rs 30,000/- was collected anddeposited in the Court by the Receiver. The District Court, Trichur, on August 28, 1952,decreed the suit for specific performance and mesne profitsat 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 werefiled in the High Court-one by defendant 3 and the other bydefendant 2. The High Court allowed the appeals anddismissed the plaintiff's suit by a judgment dated March 31,1953. Aggrieved, the plaintiff filed C.A. 129/56 in thisCourt. The plaintiff' appeal was allowed by this Court asper its judgment and decree, dated April 22, 1958. Since a good deal of argument centers round theconstruction of this Court's decree, dated April 22, 1958,it will be pertinent to extract here the material part ofthat 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 3064 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 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 anapplication in the District Court for execution of the saiddecree, dated April 22, 1958" in respect of all the reliefsallowed thereunder. After the decree-holder had deposited asum of Rs. 85,000/-, as directed in the decree, theexecution application was eventually made over to theSubordinate Judge, Trichur. As per the decree, the sale deedwas executed on March 16" 1959! by the Court on behalf ofdefendants 1 and 2 in favour of65the plaintiff and the possession of the property inconsequence thereof was delivered to him on March 29. 1959. Thereafter, the plaintiff filed Miscellaneous PetitionNo. 229/60 in the Trial Court. Before the Court, defendant 3on November 11, 1958, filed objections that he was notiliability for mesne profits, as he was never in possessionand occupation of the suit property. He further contendedthat his liability for mesne profits, if any. was limited tothe period commencing from the date of notice of the depositin Court of the amount of Rs. 85,000/- till the date ofdelivery of possession and that the plaintiff was notentitled to interest on mesne profits, or on costs by way ofrestitution. Defendant 2 contended that he was not liable,for mesne profits as he had never been in possession andmanagement of the suit property, and that the entireliability, if at all any, for mesne profits was that ofdefendant 3, who had been in exclusive possession of theproperty. On December 22, 1962, the court of first instancepassed orders in respect of mesne profits, costs etc. Itfound that defendant 1, 2 and 3 were jointly and severallyliable to the plaintiff for a sum of Rs. 10,162.67 onaccount of costs of the Trial Court and the Supreme Court.The Court further found that defendant 2 was separatelyliable to pay to the plaintiff, a sum of Rs. 11,941.63consisting of three items, namely, Rs. l, 239.02 on accountof costs recovered by defendant 2 from decree-holder andpayable 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 thedate of suit till date of Ex. D-3. The aggregate! amountunder these two heads came to Rs. 23,103.70, which wasallowed to be set off against Rs. 85,000/- deposited inCourt by the plaintiff and the balance was directed to bepaid to the second defendant's mother, his assignee. Apart from the sum of Rs. 10,162.67 jointly andseverally payable by the third and second respondents, theDistrict Court found that the third defendant was separatelyliable to pay the plaintiff a sum of Rs. l 57.086.81consisting of these items: (a) Rs. 7,298.l0, by way of restitution on account ofcosts recovered from the decree-holder including interestthereon; (b) Rs. 39,975.00 Rent deposited and withdrawn by himtogether with interest thereon; (c) Rs. 1,177.00, costs payable by him for the appealin the High Court; and66 (d) Rs. 1,08,636.71 net mesne profits payable by himfrom April 1, 1963 to the date of delivery of possession,during which period, he was found to be in possession andmanagement. After giving credit of a sum of Rs. 48,321deposited by the third defendant in Court on March 9, 1959,a net sum of Rs. 1,08,765.81 was directed to be realised bythe plaintiff from the estate of defendant 3 in the hands ofhis legal representative (appellant in C.A. 466/69). By thesame order, the Court dismissed Misc. Petition No. 229/60that had been filed by the plaintiff for determination ofthe extent of waste committed upon the property by defendant3. Aggrieved by that Judgment and Order, Lucy Kochivareed,wife of defendant 3, as well as the plaintiff and the seconddefendant, preferred appeals in the High Court of Kerala. Bya common judgment, dated August 6, 1968, the High Courtpartly allowed the appeals filed respectively, by theplaintiff and the legal representatives of defendant 3; butdismissed the appeal (A.S. 248/63) filed by defendant 2. TheHigh Court,, inter alia, affirmed the finding of the TrialCourt that the third defendant was in sole and exclusivepossession of the suit property during the period inquestion. The Trial Court's findings with regard to thequantum of mesne profits per year, were not found satisfactory. The High Court assessed the mesne profits at a flatrate of Rs. 15,000/- per year and determined the obligationsof the parties accordingly. The High Court further foundthat the second and third defendants were jointly andseverally liable to pay Rs. 10,200/- by way of costs, andthe second defendant alone was liable to pay Rs. i 1,000/ byway of restitution, costs in the High Court and mesneprofits 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 themother of defendant 2. Aggrieved by the judgment, dated August 8, 1968, of theHigh Court, Lucy Kochivareed, wife of the deceased defendant3, has filed Civil Appeal 466 of 1969; while the plaintiffhas preferred Civil Appeal No. 2375 of 1969. Both the appeals will be disposed of by this commonjudgment. We will first take up Civil Appeal 466 of 1969 filed bythe widow of defendant 3. The main contention of Mr. K. S. Ramamurthy, learnedcounsel for the appellant (Luci Kochivareed), is that if thedecree, dated April 22, 1958, passed by this Court in C.A.129/56 is properly construed in the67light 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 tobe in possession of the suit property during the period inquestion. The possession of defendant 2 was juridical orlegal possession of an owner, he being the purchaser of theproperty from defendant l; while that of defendant 3 was onactual permissive possession with the consent of defendant2. Defendant 2 and defendant 3 being in the position ofjoint-tort-feasors would be jointly and severally liable formesne profits or compensation. This being the case, the plaintiff was bound to suffera set off to the purchase price (Rs. 85,000/-) deposited byhim, against his claim for mesne profits against defendant3. But after the decree of this Court, the plaintiff inpursuance of a collusion between him and defendant 2,allowed the High Court to cancel the security given bydefendant 2 for withdrawal of Rs. 62,900/- out of thepurchase price deposited by the plaintiff. The plaintiff wasthus precluded by his conduct from claim- in that muchamount from defendant 3. After setting off the entiredeposit of Rs. 85,000/-, defendant 3 will be liable only,for the balance of the mesne profit, jointly with defendant2. (ii) The plaintiff's right to possession of theproperty under the decree accrued when he deposited theprice in Court and thereafter obtained the conveyance in hisfavour on March 16, 1959. The possession of defendants 2 and3 as against the plaintiff became wrongful only from thedate on which the conveyance was executed in his favour, atany rate on the date (September 12, 1958) on which he fullydeposited the price in Court. (iii) The period for which the mesne profits have beenawarded., is to be restricted to the one permissible underOrder XX Rule 12(1) (c) of the Code of Civil Procedure. Suchperiod in the light of this provision would be the onecommencing from the date the institution of the suit andending on the expiration of three years from the date of thedecree 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, themaximum period for which mesne profits can be awarded-andwould be deemed to have been awarded-is three years from thedate of the decree of the Trial Court; and the Courts belowwere wrong in awarding mesne profits for a period of morethan six years, commencing from the date of the institutionof the suit till the delivery of possession in accordancewith the decree of this Court to the plaintiff.68 Upon the above premises, Mr. Ramamurthy maintains thatthe plain tiff will not be entitled to any mesne profitsbecause his right to possession did not accrue within threeyears of the date of the decree of the Trial Court. Such aright, according to the counsel, accrued to the plaintiffonly on April 22, 1958 when his amended suit for specificperformance and possession and future mesne profits wasdecreed. In the alternative, as already noticed, counselsubmits that mesne profits could not be awarded for anyperiod prior to the date (September 12, 1958) on which theplaintiff deposited the price, because his right topossession accrued on that date and not earlier In support of his contentions, Shri Ramamurthy hascited a decision of this Court in Chitturi Subbanna v.Kudapa Subbanna & Ors.(l) He has also referred to some otherrulings, wherein some general principles have beenenunciated as to who can be made liable for mesne profits. On the other hand, Mr. Govindan Nair, learned counselfor the plaintiff, submits that the. decree" dated April 22,1958 of this Court is crystal-clear. There is no ambiguityin it. Read in the light of this Court's judgment, itunmistakably shows that whosoever, out of the defendantswas/were in actual possession, would be liable for the mesneprofits from the date of the suit till the delivery ofpossession. It is pointed out that in the courts below, thepositive stand taken by defendant 3 was that he was never inpossession of the Suit property and therefore, was notliable for mesne profits. It was never the case of defendant3 that he was in derivative possession under defendant 2.Counsel submits that defendant 3 should not be allowed totake a stand diametrically opposed to the one taken by himin the courts below. It is further submitted that the decreeof this Court was final decree so far as it laid down thatthe liability for the mesne profits shall be fixed on thebasis of the defendant found in actual possession of thesuit property. Before dealing with the contentions canvassed on bothsides, it will be profitable to notice the generalprinciples relating to the liability formesne profits. Mesne profits being in the natural of damages, noinvariable rule governing their award and assessment inevery case, can be laid down and "the Court may mould itaccording to the justice of the case". Even so, one broadbasic principle governing the liability for mesne profits isdiscernible from Section 2(12) of the Code of CivilProcedure which defines 'mesne profits' to mean "thoseprofits which the person in wrongfil possession of propertyactually received or might with ordinary (1)  2 S.C.R. 661.69diligence have received therefrom together with interest onsuch profits, but shall not include profits due toimprovements made by the person in wrongful possession".From a plain reading of this definition, it is clear thatwrongful possession of the defendant is the very essence ofa claim for mesne profits and the very foundation of thedefendant's liability therefor. As a rule, therefore,liability to pay mesne profits goes with actual possessionof the land. That is to say, generally, the person inwrongful possession and enjoyment of the immovable propertyis liable for mesne profits. But, where the plaintiff'sdispossession, or his being kept out of possession can beregarded as a joint or concerted act of several persons,each of them who participates in the commission of that actwould be liable for mesne profits even though he was not inactual possession and the profits were received not by himbut by some of his confederates. ln such a case where the claim for mesne profits isagainst several trespassers who combined to keep theplaintiff out of possession; it is open to the Court toadopt either of the two courses. It may by its decree holdall such trespassers jointly and severally liable for mesneprofits, leaving them to have their respective rightsadjusted in a separate suit for contribution; or, it may, ifthere is proper material before it, ascertain and apportionthe liability of each of them on a proper application madeby the defendant during the same proceedings. Another principle, recognised by this Court in ChitturiSubbanna v. Kudapa Subbanna (ibid) 'is that a decree underOrder XX Rule 12 of the Code, directing enquiry into mesneprofits, howsoever expressed, must be construed to be adecree directing the enquiry in conformity with therequirements of Rule 12(1)(c), so that the decree-holder isnot entitled to mesne profits for a period (commencing fromthe date F of the institution of the suit) extending beyondthree 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 bothdefendants 2 and 3 were in possession of the suit propertyduring the period in question. It is contended that thepossession of defendant 2 was the legal possession of anowner while that of defendant 3 derivative possession of alessee or licensee under the former.70 A perusal of the decree dated April 22, 1958, of thisCourt, extracted in a foregoing part of this judgment,show's that it was a composite decree, partly final, partlypreliminary. It was final in so far as it granted thereliefs of specific performance and possession on deposit ofthe price by the plaintiff. It was preliminary inasmuch itdirected an inquiry with regard to the assessment of mesneprofits, and as to who out of the defendants was/were liablefor payment of those mesne profits. But, it laid down in nouncertain terms that only such of the defendants would beliable for mesne profits "as may have been in possession ofthe property". Construed in conformity with the legalprinciples enunciated above, this direction in the decree,means that only the defendant or defendants found in actualpossession and enjoyment of the property would be liable formesne profits. In the courts below, at no stage, defendant 3 took upthe position that he was in derivative possession of theproperty under defendant 2. On the contrary, in hisobjection-petition filed before the District Court onNovember 11, 1958, defendant 3 emphatically asserted that he"is not liable for mesne profits for the suit property as hewas never in pos session and occupation of the same".Defendant 3 further vehemently pleaded that it was neverintended at any time that he (defendant 3) "should be alessee of the property nor was he a lessee at any time". Inpara 3 of his petition, defendant 3 further pleaded that thepurchase of the factory was made in favour Of defendant 2,with money advanced by him (defendant 3), and the intentionthen was that the suit property should be worked bydefendant 2 with funds advanced by defendant 3 who should be"recouped from the profits accrued from the proper-y orotherwise in respect of the purchase money advanced by himas also the advances for the working expenses". In paragraph5, he further pleaded that "in any event he cannot be heldliable for any amount more than what is stipulated in thelease deed (EX. I) in favour of Neelakantha Iyer". There is not even a whisper in the pleadings thatdefendant 2 and defendant 3 were joint-tort-feasors andtherefore, jointly and severally liable for mesne profits. The plea now pressed into argument by Mr. Ramamurthy isthus a complete somersault of the position that had beentaken in the courts below. The Court of first instance after an exhaustive.consideration of the overwhelming evidence, oral anddocumentary, on record reached the finding that ever sinceMarch 5, 1951, defendant 3 was, while defendant712 was not, in actual control, management and possession ofthe suit property, and therefore, in terms of the decreedated April 22, 1958 of this Court, defendant 3 alone wouldbe liable for mesne profits of the property. In appeal, theHigh Court found that "the Court below was perfectly rightin holding that the 3rd defendant was in sole and exclusivepossession during the period in question and it is idle forhim 3 to pretend otherwise". Indeed, the third defendanthimself had repeatedly admitted in various documents that hewas in possession. In his application, Ex 77(a), made in theCourt of first instance, on March 7, 1951, the defendantadmitted that he was in possession in pursuance ofassignment of lease made. in his favour by Neelakantha Iyeron March 5, 1951. This lease has been found by this Court tobe a sham transaction. Further, defendant 3 on March 21,1951, executed a lease in favour of the Receiver appointedby the Court. In this cease also, he admitted that he hadbeen in possession of the property since March 5, 1951. Thelease executed by defendant 3 in favour of the Receiverensured for a period of two years on a yearly rental of Rs.15,000/- and he deposited Rs. 30,000/'- therefor as rentalin Court. Then, the Bank accounts of the factory (except fora short period from March 25, 1953 to November 11, 1954)were throughout in the name of the third defendant as lesseethereof. We have absolutely no reason to differ from thisconcurrent finding of the courts below that the thirddefendant was in sole, actual possession and control of thesuit property from March 3, 1951, when he obtained thealleged assignment of the lease in his favour fromNeelakantha Iyer. In terms of the aforesaid decree of thisCourt, therefore, defendant 3 alone is liable for mesneprofits in respect of the period he was in p(excepting(excepting the period during which the property was under hemanagement of the Court Receiver). As regards the appellant's contention that the amountdeposited by the plaintiff towards the price should havebeen set off against the liability of defendant 3 for mesneprofits, it may be observed that, there is nothing in thedecree, dated April 22, 1958, of this Court which say's thatsuch a set off should be allowed. On the contrary, itallowed deduction of the amounts found due against defendant1 and defendant 2 from the deposit of Rs. 85,000/- to bemade by the plaintiff towards the price, and furtherdirected that after such deduction, the balance of suchdeposit made by the plaintiff" if any, shall be paid "to thethird 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 theamount of mesne profits from either of them; and how suchinter se liability of the defendants was to be adjusted orapportioned, was a matter between the defendants only. Theplaintiff was not bound to suffer a set off in favour ofdefendant 3, merely because defendant 2 or his assigneewithdrew the price deposited by the plaintiff withoutfurnishing any security for its refund or adjustment towardsthe liability of defendant 3, there being no evidence,whatever, on record to show that such withdrawal was theresult of any collusion or conspiracy between the plaintiffand defendant 2 against defendant 3. Assuming further, for the sake of argument, thatdefendant 2 and defendant 3 were' both acting in concert tokeep the plaintiff out of pos session, it was not necessaryfor the courts below to decide the issue with regard toapportionment of liability and its adjustment betweendefendants 2 and 3. Indeed, the adoption of such a coursewould have militated against the finding that defendant 3alone was in exclusive possession and control of the suitproperty ever since March 5, 1951. We therefore, negative the first contention of theappellant. This takes us to the second and third points pressedinto argument by Mr. Ramamurthy. It is to be noted thatdefendant 3 entered into possession of the suit propertyunder an assignment of sham lease from Neelkantha Iyer onMarch 5, 1951 during the pendency of the plaintiff's suitwhich was institute`d on August 25, 1950. The plaintiff haddeposited Rs. 50,000/- some time after the presentation ofthe plaint Under the agreement for sale, dated May 22, 1950,made by defendant 1 in favour of the plaintiff, the totalsale consideration was fixed at Rs. 90,003/-. Out of it, Rs.5,003/- had been paid to defendants on the very date of theagreement. It was further stipulated that out of thebalance, Rs. 55.000/- would be paid by the plaintiff-purchaser at the time of the registration of the sale deedwhich was to be executed and registered on or before July15, 1950. It was further stipulated that on payment of thefurther sum of Rs. 50,000/-, the plaintiff would be entitledto be put in possession of the suit property. Thus, whendefendant 3 entered into possession, first, under the garbof an assignee of a sham lease from Neelakantha Iyer, andthen further purchased the property with his own funds infavour of defendant 2, pendente lite, he was fully consciousthat he was purchasing a litigation. His possession was,,therefore, wrongful qua the plaintiff from its veryinception73 The material part of Rule 12(1) of Order XX of the Codeof 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 thetrial court ought to have passed, and that in this view ofthe matter, the period of three years mentioned in sub-clause (iii) will be counted from August 28, 1952, the dateof the trial court's decree, whereby mesne profits at thereduced rate of Rs. 15,000/- instead of Rs. 30,000/- perannum claimed by the plaintiff, were awarded. In that viewof the matter, according to the counsel, the plaintiff wasnot entitled under the law to get a decree for mesne profitsbeyond August 27, 1955. It is pointed out that since theplaintiff had, as a result of the acceptance of thedefendants' appeal and dismissal of his suit by the HighCourt, 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, inconsequence, to any mesne profits during this period. The argument is certainly ingenious, but untenable,being founded on fallacious premises. The period of threeyears mentioned in sub-clause (iii) of clause (c) of Rule12(1) is to be computed from the date of the decree of thisCourt, i.e. from April 22, 1958 and it will expire on thedate on which possession was delivered or relinquished bythe defendant in favour of the decree-holder pursuant tothat decree. In other words, the decree mentioned in sub-clause6-196SCI/7974(iii) of the aforesaid clause (c), would be the appellatedecree, dated April 22, 1958, of this Court. The period ofthree years mentioned in the said sub-clause is, therefore,to be reckoned fro`m April 227 1958. The words "whicheverevent first occurs" in sub-c1ause (iii) imply that themaximum period for which future mesne profits can beawarded, is three years from the date of the decree forpossession and mesne profits, finally passed. The courtsbelow, therefore, while holding that defendant 3 was liableto pay mesne profits for a period of about 6 yearscommencing from March 5, 1951/March 21, 195l till thedelivery of possession in September, 1958 (less the periodduring which the property was under the management of theReceiver), were acting in conformity with the law and theterms of the decree, dated April 22, 1958, of this Court. We, therefore, reject these contentions, also. Another contention canvassed by Mr. Ramamurthy was thatthe courts below have wrongly disallowed deduction forinterest on the deposit of Rs. 50,000/-, which the plaintiffhad withdrawn on August 19, 1953 and had redeposited onFebruary 9, 1959. It appears to us that in all fairness, thedefendant is entitled to deduction for interest for theperiod from August 19, 1953 to February 9, 1959 on the sumof Rs. 50,000/-, which, at ,6 per cent per annum, afterdeducting the interest for the period during which theproperty was under the management of the Receiver.(According to the agreed calculations made the counsel forthe parties it works out to Rs. 14,000/- approximately. Wesee no reason why deduction of this amount be not allowedfrom the mesne profits assessed against defendant 3. We will now take up Civil Appeal No. 2375 of 1969 filedby the plaintiff Mr. Govindan Nair, learned counsel for the plaintiff-appellant. has contended- (i) that mesne profits ought to have been awarded atthe Rate of Rs. 25,000/- per annum. The High Court was inerror in awarding the same at the rate of Rs. 15,000/-; (ii) that the High Court was not justified in reducingthe rate on interest from 6 per cent per annum awarded bythe Trial Court to 4 per cent per annum; (iii) that interest at 6 per cent per annum was rightlyawarded 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 fromAugust 19, 1953 to March 9, 1959, and the High Court was inerror in disallowing that interest; and75 (iv) that the Courts below were not justified indenying costs to the plaintiff in the inquiry as to mesneprofits or in appeal arising therefrom. We will deal with these contentions ad seriatim.Contention (i): In this connection, Mr. Nair drew our attention toExhibits D-8 to D-15, which are Balance Sheets and Profit &Loss Accounts of the Sivakami Tile Works, relating to theperiod from March 31, l953 to November S, 1958. Thesedocuments were prepared at the instance of the thirddefendant for the purposes of his Income-tax returns. TheHigh Court found that these Balance Sheets and Profit & LossAccounts prepared for Income-tax puropses were suspiciousdocuments and by themselves were not proof of the profitsderived. Mr. Nair has no quarrel with this finding. He,however, contended That the High Court ought to have workedout the real profits by taking into account the quantity ofclay purchased according to these documents. In thisconnection, it is submitted that according to the evidenceproduced on the side of the plaintiff about five candies ofclay are required for producing 1000 small tiles and evenaccording 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 Courthas fully considered the evidence produced on the side ofthe plaintiff. It noted that the plaintiff, also, had notproduced any cogent evidence to show what were the profitsearned by him by working the factory in dispute for theperiod of one year preceding the date of his examination. Bythe time plaintiff appeared in the witness-box, he had beenworking this factory for about one year. In the alternative, Mr. Nair submitted that even duringthe period of two years when the Receiver was there anddefendant 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 incomefor the first year ending 1952 was Rs. 20,000/-. The pointpressed into argument is that the highest profit made by himaccording to these Balance Sheets and Profit & Loss Accountsduring any year by defendant 3, should be taken as the ratefor calculating the mesne profits. The contention does not appear to tenable. Once it wasfound that these Balance Sheets and Profit & loss Accountswere not reliable, nor the evidence produced by theplaintiff, the only reliable evidence left on the file wasthe rate at which the factory was leased out76by the Receiver to defendant 3. When the lease for thesecond year was granted to defendant 2 by the Receiver on arental of Rs. 15,000/-, the plaintiff should have objectedthat the rent was less or he could himself take the lease onpaying higher rent. The High Court was, therefore, not wrongin holding that this rent fixed under the lease granted bythe Receiver represented the real rental value of thefactory during the year in question and in the absence ofany other reliable evidence for assessing the profitsactually earned or which, with due diligence, could havebeen 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 6per cent per annum on the mesne profits assessed by it. TheHigh Court reduced that rate to 4 per cent, with theobservation that having regard to all the circumstances ofthe case, including that the plaintiff had the use of thesum of Rs. 85,000/- which he was to pay towards the price ofthe property a rate of 4 per cent per annum would bereasonable and just. Even Mr. Ramamurthy has not been able to support thisreduction in the rate of interest. It was after a long drawnout litigation that the plaintiff got possession of theproperty. The Trial Court, therefore rightly awarded theinterest at the rate of 6 per cent per annum. We, therefore, accept this contention and direct thatinterest as part of the mesne profits assessed in this case,shall be payable at the rate of 6 per cent per annum uptoMarch 29, 1959 when possession was delivered in pursuance ofthe decree of this Court, to the plain tiff and furtherinterest at 6 per cent per annum on the outstanding amountshall be payable till the date of payment.Contention (iii): A sum of Rs. 30,000/-, being the rent collected by theReceiver from the third defendant, was deposited in Court.This amount was withdrawn by the third defendant on August19, 1953 following the dismissal of the plaintiff's suit, bythe High Court. When the plaintiff's appeal succeeded inthis Court and a decree was passed in his favour by thisCourt, then defendant 3 redeposited the sum of Rs. 30,000/-,only on March 9, 1959. The Trial Court had awarded interestat 6 per cent per annum on this amount of Rs. 30,000/- forthe period from August 19, 1953, the date on which thedefendant withdrew that deposit, until March 9, 1959, thedate when he redeposited the sum. The High Court hasdisallowed interest on this account77for the aforesaid period on the ground "that the SupremeCourt does not award that". We are unable to agree with this reasoning. Itoverlooked the fact that interest on the sum of Rs. 30,000/-was being claimed under Section 144 of the Code of CivilProcedure, by way of restitution. Section 144 in terms saysthat for the purpose of the restitution, the Court may makeany orders, including orders for the payment of interest,damages, compensation and mesne profits which are properlyconsequential on variation or reversal of the decree. Thereis nothing in the decree, dated April 22, 1958, of thisCourt which expressly or by implication prohibited thepayment of interest on this sum, by way of restitution. TheTrial Court had rightly allowed interest on amount for thisperiod at 6 per cent per annum, and we restore the samedirection.Contention (iv): The argument is that costs have been unfairly denied tothe plaintiff by the Courts below. We do not agree. TheCourts below could not have been oblivious of' the fact thatdefendant 3 has since died and the respondent is his widow.We, therefore, do not want to interfere with the discretionof the Courts below in the matter of costs. For the foregoing reasons, we, partly allow theplaintiff's appeal (Civil Appeal No. 2375 of 1969) to theextent indicated above, with proportionate costs. We willdismiss the defedant's appeal (Civil Appeal No. 466 of 1969)except to the extent that the defendant shall be allowed aset off in the sum of Rs. 14,000/-, being the interest onthe 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 theoutstanding amount at 6 per cent per annum shall be payabletill the date of payment. In Civil Appeal 466 of 1969,however, the parties will bear their own costs in thisCourt. CA 2375/69 allowed in part. CA 466/69S.R. dismissed with modifications.78