Landlord-Tenant Dispute and Mesne Profits: Supreme Court’s Ruling on Lease Termination

The case of M/s Raptakos, Brett & Co. Ltd. vs. M/s Ganesh Property revolves around a landlord-tenant dispute concerning the termination of a lease and the subsequent claim for mesne profits by the landlord. The Supreme Court was called upon to decide whether the fresh suit for mesne profits was maintainable after the landlord had relinquished the claim in earlier proceedings. The judgment provides significant clarity on the applicability of Order II Rule 2 of the Code of Civil Procedure, 1908, and the principles of res judicata and estoppel.

Background of the Case

The dispute arose from a lease agreement dated March 16, 1964, under which the respondent, M/s Ganesh Property, leased premises at 6, Marquis Street, Calcutta, to the appellant, M/s Raptakos, Brett & Co. Ltd., for 21 years. The lease term commenced on March 16, 1964, and expired on March 15, 1985. The lease was originally for a monthly rent of Rs. 2,045/-.

Prior to the expiration of the lease, the landlord initiated Suit No. 1023 of 1982 before the City Civil Court, Calcutta, seeking eviction on the ground of bona fide requirement. However, the suit was dismissed on August 6, 1986. Subsequently, the landlord filed another eviction suit, Title Suit No. 1481 of 1986, before the City Civil Court, Calcutta, on grounds of wrongful occupation and also sought mesne profits. The suit was decreed in favor of the landlord on April 18, 1991, but the court refused to grant mesne profits since the claim was not pressed.

The tenant (appellant) appealed against the eviction order. The Division Bench of the Calcutta High Court, in First Appeal No. 253 of 1992, upheld the eviction decree on July 9, 1991 and granted the tenant six months to vacate the premises. The appellant challenged this decision before the Supreme Court in Civil Appeal No. 1657 of 1998, which was dismissed on September 9, 1998. The Supreme Court, however, granted the tenant time until October 8, 1998, to vacate the premises.

The tenant vacated the premises on October 8, 1998. Following this, the landlord filed Civil Suit No. 457 of 1998, seeking damages and mesne profits of Rs. 3,23,56,695/- for the period of wrongful possession.

Arguments of the Petitioner (M/s Raptakos, Brett & Co. Ltd.)

• The tenant argued that the claim for mesne profits had already been given up in the earlier proceedings and could not be revived through a fresh suit.
• The tenant contended that the landlord had accepted the court’s orders setting the occupation charges at Rs. 2,500/- per month and was, therefore, estopped from claiming additional mesne profits.
• The petitioners submitted that the fresh suit was barred by Order II Rule 2 of the Code of Civil Procedure, as the claim for mesne profits had not been pressed in the earlier suit.
• The tenant also argued that the fresh suit was barred by the principle of res judicata and estoppel.

Arguments of the Respondent (M/s Ganesh Property)

• The landlord contended that they had waived their claim for mesne profits only up to the date of the decree in the previous suit but retained the right to claim mesne profits for the period after the decree.
• They argued that the continued occupation of the premises after the lease had expired constituted wrongful possession, entitling them to mesne profits.
• The respondent also submitted that under settled legal principles, a landlord could file a separate suit for mesne profits for the period after the eviction decree.

Supreme Court’s Observations

The Supreme Court examined the key legal issues in the case:

• The Court noted that in Title Suit No. 1481 of 1986, the landlord had expressly waived its claim for mesne profits. Since this waiver was unconditional, it could not be revived in a fresh suit.
• The Court ruled that the principle of Order II Rule 2 applied because the landlord had omitted to sue for mesne profits in the earlier suit. The rule bars a party from splitting a cause of action into multiple suits.
• The Court held that the tenant had occupied the premises after the lease expired, but only under court orders allowing continued possession in exchange for a fixed occupation charge. Therefore, the possession could not be considered wrongful trespass.
• The Court also observed that the landlord had accepted the occupation charges fixed by the court in previous orders and had not objected at the time. This constituted estoppel against claiming additional mesne profits.

The Court cited previous judgments, including:

“The plaintiff cannot be permitted to draw the defendant to court twice for the same cause by splitting up the claim and suing, in the first instance, in respect of a part of the claim only.” – Bhanu Kumar Jain vs. Archana Kumar (2005)

“The provisions of Order II Rule 2 are based on the principle that a defendant should not be vexed twice for the same cause of action.” – State Bank of India vs. Gracure Pharmaceuticals (2014)

Final Ruling

The Supreme Court allowed the appeal and ruled in favor of the tenant. The key directions included:

• The fresh suit for mesne profits filed by the landlord was barred under Order II Rule 2 and was therefore not maintainable.
• The possession of the premises by the tenant after the lease expiration was not illegal, as it was governed by court orders.
• The landlord’s acceptance of occupation charges fixed by the court estopped them from claiming additional damages.
• The suit was dismissed with no further claims allowed.

Conclusion

This judgment reinforces critical legal principles related to landlord-tenant disputes. It clarifies that once a party relinquishes a claim in one suit, they cannot subsequently bring a fresh suit for the same claim. The ruling also highlights that possession under court orders does not amount to wrongful trespass. The decision is a landmark in reinforcing the scope of Order II Rule 2 and ensuring that litigation remains fair and final.

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