Supreme Court of India
MOHIT SURESH HARCHANDRAI & ORS.versusHINDUSTAN ORGANIC CHEMICALS LIMITED
- Citation
- 2025 INSC 812
- Decided
- 6 May 2025
- Disposal
- Disposed off
- Bench
- SANJAY KAROL
Holding
An order of ejectment establishes the tenant's liability to pay mesne profits at a uniform rate of Rs 160 per square foot per month, and the interest payable should be reduced to 6% per annum.
Summary
Hindustan Organic Chemicals Ltd. (HOCL) occupied a premises leased from the Harchandrai family for over three decades before the landlords served a notice of termination in 2000 and obtained an eviction decree. After a protracted litigation spanning more than 25 years, the Supreme Court examined the appropriate per‑square‑foot rate for mesne profit and the interest payable. The Court affirmed that, following the order of ejectment, HOCL was liable to pay mesne profits at a uniform rate of Rs 160 per square foot per month, rejecting the High Court's reliance on erroneous rates from license agreements. It held that a public‑sector undertaking is not entitled to special protection under Section 3 of the Maharashtra Rent Control Act, 1999. While upholding the High Court’s finding of liability, the Court reduced the interest rate from 8% to 6% per annum and directed payment within three months. The appeals were consequently disposed of.
Issues considered
- What is the appropriate per‑square‑foot rate for mesne profit in this landlord‑tenant eviction case?
- Whether a Public Sector Undertaking tenant is entitled to special protection under Section 3 of the Maharashtra Rent Control Act, 1999 for mesne profit calculation.
- Whether the interest rate of 8% per annum awarded by the High Court is appropriate.
- Whether the High Court erred in accepting incorrect rates from the license agreements in determining mesne profit.
Legislation cited
- Code of Civil Procedure, 1908s. Order XX Rule 12
- Maharashtra Rent Control Act, 1999s. 3, s. 3(1)(b)
Headnote
Issue for Consideration The crux of the dispute is the ‘per square foot rate’ at which the mesne profit is to be calculated in connection with Hindustan Organic Chemicals Ltd.’s (HOCL) occupation, as ‘tenant’. The High Court held that application of uniform rate of the rate of interest payable at 8% p.a. would be appropriate in the facts and circumstances of the present case. Headnotes† Mesne Profit – Calculation of – The tenant originally entered into the demised premises and 2nd floor thereof, totalling 7825 Sq.ft built-up area, as a
Subjects
Mesne ProfitOrder for ejectmentEviction ProceedingsLandlord-tenant disputesLong period of pendencyDuty of CourtEnjoyment of the propertyMonetary benefits
Judgment
[2025] 5 S.C.R. 764 : 2025 INSC 812
Mohit Suresh Harchandrai & Ors.
v.
Hindustan Organic Chemicals Limited
(Civil Appeal No. 7188 of 2025)
06 May 2025
[Sanjay Karol* and Manoj Misra, JJ.]
Issue for Consideration
The crux of the dispute is the ‘per square foot rate’ at which the
mesne profit is to be calculated in connection with Hindustan
Organic Chemicals Ltd.’s (HOCL) occupation, as ‘tenant’. The High
Court held that application of uniform rate of Rs. 160/- per sq.ft.
per month with the rate of interest payable at 8% p.a. would be
appropriate in the facts and circumstances of the present case.
Headnotes†
Mesne Profit – Calculation of – The tenant originally entered
into the demised premises and 2nd floor thereof, totalling
7825 Sq.ft built-up area, as a lessor having leased it from the
landowners for 3 years, i.e., 01.04.1962 to 31.03.1966 – In the
year 2000, the landlord filed a suit for eviction and recovery of
possession – After various rounds of litigation, the property
was vacated and possession handed over on 23.04.2014 – As
regards the payment of mesne profit, the High Court held that
application of uniform rate of Rs. 160/- per sq.ft. per month
would be appropriate in the facts and circumstances of the
case – Correctness:
Held: In the instant case, an order for ejectment has been passed
against the tenant – The tenant, therefore, had no right to continue
in the possession and enjoyment of the property – Entitlement to
mesne profits is thus clearly established – There is no reason to
interfere with the finding arrived at by the High Court – Considering
the totality of the circumstances, while not interfering with the
overall conclusion of the High Court, this Court finds it fit to reduce
the rate of interest payable to 6% (simple in nature, per annum)
instead of the 8% as awarded by the High Court. [Paras 11, 12]
* Author
[2025] 5 S.C.R. 765
Mohit Suresh Harchandrai & Ors, v.
Hindustan Organic Chemicals Limited
Maharashtra Rent Control Act 1999 – s.3 – HOCL-tenant
vacated the premises after landlord filed a suit for eviction
and recovery of possession – The High Court observed that
if it was not for the protection to Public Sector Undertakings
being removed as per s.3 of the Maharashtra Rent Control
Act 1999, the tenant would have continued to occupy the
premises – Correctness:
Held: It was in fact the landlord who had sent the notice for
termination of the tenancy – That apart, being the Government,
does not entitle a tenant to any extra consideration – Similarly, a
PSU, even though substantially owned by the Government, stands
on the same footing as any other tenant and cannot be given any
special treatment. [Para 11]
Eviction Proceedings – Landlord-tenant disputes – Long period
of pendency – Duty of Court:
Held: When it comes to landlord-tenant disputes, there is an angle
of being deprived of the enjoyment of the property and also the
monetary benefits that accrue from owning such property – The
courts, being the courts of law and justice, are duty-bound to ensure
that on their account, no party is made to suffer – In these kinds
of disputes delayed adjudication means that both parties bear the
brunt – The landlord suffers on account of not receiving, in some
cases, the property itself, and in other cases, the monetary dues
therefrom; and the tenant suffers on account of being directed to
pay large sums of money within a short period of time when the
matter is finally decreed – Even though the payment arises out of
an obligation, making the requisite arrangements to pay the same is
still an arduous task – Keeping in view the same, the Chief Justice
of the High Court of Bombay directed to take appropriate steps
or issue directions to further the cause of expeditious disposal of
these cases. [Para 13]
Case Law Cited
Bijoy Kumar Manish Kumar (HUF) v. Ashvin Bhanulal Desai [2024]
5 SCR 859 : (2024) 8 SCC 668 – referred to.
List of Acts
Maharashtra Rent Control Act, 1999.
766 [2025] 5 S.C.R.
Supreme Court Reports
List of Keywords
Mesne Profit; Order for ejectment; Eviction Proceedings; Landlord-
tenant disputes; Long period of pendency; Duty of Court; Enjoyment
of the property; Monetary benefits.
Case Arising From
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 7188 of 2025
From the Judgment and Order dated 04.12.2024 of the High Court
of Judicature at Bombay in WP No. 16741 of 2024
With
Civil Appeal No(s). 7189-7190 of 2025
Appearances for Parties
Advs. for the Appellants:
S.D. Sanjay, A.S.G., Khushal Kolwar, Shubham Prakash Mishra,
Ms. Nikita Sethi, Ms. Prerna Dhall, Anmol Chandan, Digvijay Dam,
M/s. Parekh & Co..
Advs. for the Respondent:
Mahesh Jethmalani, Sr. Adv., Sumit Goel, Ms. Preeti Ramani, Ms.
Sonal Gupta, Abhishek Thakral, M/s. Parekh & Co..
Judgment / Order of the Supreme Court
Order
Sanjay Karol, J.
Delay Condoned.
2. Leave Granted.
3. These are cross-appeals filed by both parties against the judgment
and order passed by the High Court of Judicature at Bombay in
WP No. 16741 of 2024, dated 4th December 2024. The crux of the
dispute is the ‘per square foot rate’ at which the mesne profit is to
be calculated in connection with Hindustan Organic Chemicals Ltd.’s
(HOCL) occupation, as ‘tenant’ of ‘Harchandrai House’ situated at
81/A, Maharshi Karve Road, Mumbai1. The Appellants in CA@ Diary
1 hereafter referred to as the demised premises
[2025] 5 S.C.R. 767
Mohit Suresh Harchandrai & Ors, v.
Hindustan Organic Chemicals Limited
No. 19731 of 2025 are the ‘Landlords’. CA@ SLP (C) 5754-5755
shall stand disposed of in accordance herewith.
4. The tenant originally entered into the demised premises and 2nd floor
thereof, totalling 7825 Sq.ft built-up area, as a lessor having leased
it from the landowners for 3 years, i.e., 1st April 1962 to 31st March
1966. Rent for the extent of the lease was Rs.10,955/- per month
and Rs.55,557/- per month as administrative charges. Upon the
expiry of this lease, HOCL continued on the property as a ‘monthly
tenant’ This landlord-tenant relationship between the parties had
been ongoing for 34 years when, on 25th April 2000, the landlord
sent a notice of termination. On 2nd September 2000, the landlords
filed a suit for eviction and recovery of possession before the Small
Causes Court, Mumbai, being T.E & R Suit No. 122/152 of 2000. The
Small Causes Court, by judgment and order dated 15th April 2009,
entered a finding in favour of the landlords and decreed handing
over of possession of the demised premises within three months
from the date of judgment. It was also directed that mesne profits,
which were to be determined by way of an enquiry under Order
XX Rule 12, Code of Civil Procedure, 1908, shall be payable from
1st June 2000 till the date possession is restored.
5. The tenants filed an appeal against this decision before the Small
Causes Court (Appellate Bench), which was Appeal No. 266 of
2009. An enquiry was carried out as per the above, and two different
valuation reports were filed. In the pendency of the appeal, the
landlords filed Mesne Profit Misc. Application No. 9700 of 2010
before the Small Causes Court, Mumbai. The appeal against the
original order of recovery of possession was decided vide judgment
and order dated 13th August 2012, whereby the order of eviction
was confirmed. The tenant’s revision2 against the confirmation of the
decree of eviction was dismissed by the High Court3. The property
was, accordingly, vacated, and possession handed over on 23rd
April 2014.
6. The Court seized of the Mesne Profit Miscellaneous Application
and decided the same after reviewing the evidence led by both the
2 CRA 912/2012
3 Order dated 9thMay 2013.
768 [2025] 5 S.C.R.
Supreme Court Reports
parties, as well as appreciating a fresh valuation report. Vide order
dated 2nd May 2022, the tenant was directed to pay mesne profits
@ Rs. 138/- per square ft. per month for the period 1st June 2000
to 31st December 2006; and @ of Rs. 274/- per square-foot. per
month for the remaining period of occupation along with interest @
9% per annum till the date of realisation within a month of the order.
7. The tenant’s appeal, Appeal No. 306 of 2022, calling into question
of the above order, was filed on 30th June 2022 and an interim order
was passed therein on 4th March 2023. The order dated 2nd May
2022 passed by the Small Causes Court was stayed subject to the
condition of depositing Rs. 18,43,78,137.99. A challenge to this order
at the instance of the tenant, invoking Article 227 of the Constitution
of India4 was dismissed.5 The Small Causes Court, Appellate Bench
decided the appeal finally by an order dated 3rd September 2024
directing that mesne profit be not paid at different rates for different
periods as directed by the Small Causes Court, but at a uniform rate
for the entire period @ Rs. 183/- per square-foot per month @ 9%
interest within 2 months from the date of the order.
8. This was the order impugned before the High Court. The learned
single Judge pointed out various errors in the findings arrived at by
the appellate bench of the Small Causes Court. The two ‘comparable
instances’ referred to are on the 4th and 6th floors of the same building.
In respect of the unit on the 4th floor (admeasuring 4610 square
feet), the High Court questioned as to when the licence agreement
records the rate as Rs.135/- per square feet per month, how could
the appellate bench have taken the same as Rs.150/- per square feet
per month. Similarly, regarding the unit on the 6th floor (admeasuring
1300 square feet) it is observed that the total licence fee was
Rs. 2,25,000/- and so, the rate becomes Rs.173/- per square feet
and not Rs.183/-, as taken by the appellate bench. Further, it is
observed that the payment was directed to be made in respect of
the entire area of 8604 square feet and not the built-up area which
is 7825 square feet. It was so concluded that interference in this
order was warranted.
4 WP No. 4816 of 2023
5 Vide Order dated 6th March 2024.
[2025] 5 S.C.R. 769
Mohit Suresh Harchandrai & Ors, v.
Hindustan Organic Chemicals Limited
9. Determining the actual rate to be paid, it was observed as follows:
“31) In my view, slight reduction in the rate of mesne profits
is justified on account of (i) obvious error in accepting
the figures of Rs.150/- and Rs.183/- in Agreements
at Exhibits-19 and 20 respectively, which are factually
incorrect and (ii) selectively accepting the higher rate of
Rs.183/- by ignoring the lower rate of Rs.150/-. Therefore,
slight reduction in the rate of mesne profits from Rs. 183/-
to Rs. 160/- would meet the ends of justice. The rate of
Rs.160/- per sq.ft. per month would also balance the two
rates of Rs.183/- and Rs.150/- in License Agreements at
Exhibits-19 and 20 (though factually those are not the
correct rates in those agreements). It must also be borne
in mind that the Petitioner/Defendant is a Public Sector
Undertaking and is required to vacate the suit premises
on account of loss of rent control protection on account
of provisions of Section 3(1)(b) of the Maharashtra Rent
Control Act, 1999. If it was not a PSU, it would have
continued possessing the premises as protected tenant.
Therefore application of uniform rate of Rs. 160/- per
sq.ft. per month would be appropriate in the facts and
circumstances of the present case.”
10. This Court in Bijay Kumar Manish Kumar (HUF) v. Ashwin Bhanulal
Desai6, considered the question of payment of mesne profits in detail.
It may be helpful to extract certain paragraphs of the said decision
hereinbelow:-
“18. Landlord-tenant disputes often make their way to this
Court, and obviously, the payment of rent/mesne profits/
occupation charges/damages becomes, more often than
not a matter of high contest.
… … …
25. It has been held that tenants shall be liable to pay a rent
equivalent to mesne profits, from the date they are found
6 (2024) 8 SCC 668
770 [2025] 5 S.C.R.
Supreme Court Reports
not to be entitled to retain possession of the premises in
question. In Achal Misra v. Rama Shanker Singh [Achal
Misra v. Rama Shanker Singh, (2005) 5 SCC 531] this
Court held : (SCC p. 542, para 23)
“23. From the material available on record it does
not appear that any rate of rent was appointed at
which rent would be payable by the respondents
to the landlord. The respondents also do not
seem to have taken any steps for fixation of
rent of the premises in their occupation. They
have been happy to have got the premises in
a prime locality, occupying and enjoying the
same for no payment. We make it clear that
the respondents shall be liable to pay the rent
equivalent to mesne profits with effect from
the date with which they are found to have
ceased to be entitled to retain possession of
the premises as tenant and for such period the
landlord’s entitlement cannot be held pegged
to the standard rent. Reference may be had to
the law laid down by this Court in Atma Ram
Properties (P) Ltd. v. Federal Motors (P) Ltd.
[Atma Ram Properties (P) Ltd. v. Federal Motors
(P) Ltd., (2005) 1 SCC 705] ”
This position was reiterated in Achal Misra (2) v. Rama
Shanker Singh [Achal Misra (2) v. Rama Shanker Singh,
(2006) 11 SCC 498] .
11. Undisputedly, in this case, an order for ejectment has been passed
against the tenant. The tenant, therefore, had no right to continue in
the possession and enjoyment of the property. Entitlement to mesne
profits is thus clearly established. Having given our attention to the
case record, we find no reason to interfere with the finding arrived
at by the High Court. We may however observe the observation of
the High Court that if it was not for the protection to Public Sector
Undertakings being removed as per Section 3 of the Maharashtra
Rent Control Act 1999, the tenant would have continued to occupy
the premises. It was in fact the landlord who had sent the notice
for termination of the tenancy. That apart, being the Government,
[2025] 5 S.C.R. 771
Mohit Suresh Harchandrai & Ors, v.
Hindustan Organic Chemicals Limited
does not entitle a tenant to any extra consideration. Similarly, a
PSU, even though substantially owned by the Government, stands
on the same footing as any other tenant and cannot be given any
special treatment.
12. Considering the totality of the circumstances, while we do not interfere
with the overall conclusion of the High Court, we find it fit to reduce
the rate of interest payable to 6% (simple in nature, per annum)
instead of the 8% as awarded by the High Court. The entire sum of
money shall be paid by the tenant to the landlord within 3 months
from the date of this order.
13. Before we part with this order, we note with deep concern that
from inception to its end, this dispute has been in the domain of
the courts for more than two-and-a-half decades. The landlord took
steps for termination of tenancy at the turn-of-the-century in 2000,
and today, after a quarter of the century has already passed, only
now, will they get the monetary fruits of the property that belongs to
them. The application for mesne profits, as the order of the Small
Causes Court itself reflects, took 11 years and more to decide. It
is true that in some cases, the delay is squarely attributable to the
litigating parties, but it’s also equally true that in many cases, the
litigants have to wait for years on end for their disputes to be resolved
by judicial fora. When it comes to landlord-tenant disputes, there
is an angle of being deprived of the enjoyment of the property and
also the monetary benefits that accrue from owning such property.
The courts, being the courts of law and justice, are duty-bound to
ensure that on their account, no party is made to suffer. In these
kinds of disputes delayed adjudication means that both parties bear
the brunt. The landlord suffers on account of not receiving, in some
cases, the property itself, and in other cases, the monetary dues
therefrom; and the tenant suffers on account of being directed to
pay large sums of money within a short period of time when the
matter is finally decreed. Even though the payment arises out of an
obligation, making the requisite arrangements to pay the same is
still an arduous task.
14. Keeping in view the above, we request the learned Chief Justice,
High Court of Judicature at Bombay, to take up this issue and call for
a report from the concerned courts regarding the period of pendency
in landlord-tenant disputes. Should it be found that there are many
772 [2025] 5 S.C.R.
Supreme Court Reports
such instances as the present case, then appropriate steps should
be taken or directions issued to further the cause of expeditious
disposal of these cases.
15. With the directions above, modifying the rate of interest, the Civil
Appeals are disposed of. Pending application(s), if any, shall also
stand disposed of.
Result of the case: Civil Appeals disposed of.
†
Headnotes prepared by: Ankit Gyan
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