Order 41 Rule 5 CPC | Tenant Facing Eviction Decree Liable To Pay Mesne Profits At Market Rate Till Delivery Of Possession: Himachal Pradesh High Court

"It is not in dispute that after the eviction order, till the actual delivery of the possession to the landlords, the tenant is required to pay mesne profit/use and occupation charges." High Court of Himachal Pradesh, in a significant ruling delivered on October 16, 2026, held that once an eviction decree is passed against a tenant, the relationship of landlord and tenant ceases, rendering the occupant liable to pay mesne profits and use and occupation charges assessed on prevailing commercial market rates until the actual delivery of possession.

A single-judge bench of Justice Virender Singh observed that "after the eviction order, till the actual delivery of the possession to the landlords, the tenant is required to pay mesne profit/use and occupation charges," while exercising powers to enhance the interim monthly occupation charges from ₹7,500 to ₹15,000 per month.

The dispute arose after the Rent Controller, Una passed an eviction order against the tenants on February 9, 2024. Aggrieved by the eviction order, the tenants preferred statutory appeals before the Appellate Authority under the Rent Control Act, Una, during which the landlords filed applications under Section 151 of the Code of Civil Procedure seeking use and occupation charges at ₹30,000 per month based on the commercial value of the shop situated in the main market. The Appellate Authority partly allowed the plea on May 16, 2025, fixing the charges at ₹7,500 per month from the date of the eviction order, prompting cross-petitions from both the tenants, who claimed the amount was exorbitant, and the landlords, who contended it was excessively low.

The primary question before the court was whether a tenant suffering an eviction order is obligated to pay compensation for use and occupation unbound by the contractual rent during the pendency of an appeal. The court was also called upon to determine whether the commercial potentiality and market rentals of the locality must govern the fixation of interim charges under Order 41 Rule 5 CPC.

Appellate Court's Power To Put Appellants On Terms Under Order 41 Rule 5 CPC

Justice Virender Singh reiterated the settled position of law that the power to grant a stay on execution under Order 41 Rule 5 CPC is purely discretionary and equitable, meaning an appellant possesses no absolute statutory right to an unconditional stay merely by preferring an appeal. The bench emphasized that any party seeking the equitable relief of a stay must do equity by compensating the decree-holder reasonably against the deprivation of possession during appellate delays.

The court extensively cited the landmark decision of the Supreme Court in Atma Ram Properties (P) Ltd. versus Federal Motors (P) Ltd. (2005), which established that dispossession during the pendency of an appeal constitutes substantial loss, but an appellate court retains inherent jurisdiction under Order 41 Rule 5 CPC to put the party seeking stay on terms to balance justice.

"To secure an order of stay merely by preferring an appeal is not the statutory right conferred on the appellant. So also, an appellate Court is not ordained to grant an order of stay merely because an appeal has been preferred and an application for an order of stay has been made. Therefore, an applicant for order of stay must do equity for seeking equity."

Determination Of Tenancy And Liability For Damages Beyond Contractual Rent

The High Court observed that while dealing with interlocutory protection, courts must follow the restitutionary doctrine articulated in South Eastern Coalfields Ltd. versus State of M.P. (2003), ensuring that interim orders do not prejudice the successful litigant at the conclusion of proceedings. Under general principles and Section 111 of the Transfer of Property Act, 1882, the determination of a lease terminates the tenant's right to continue in occupation, immediately subjecting them to damages for use and occupation equivalent to the market rate at which the landlord could have let out the property upon vacation.

Relying on the Constitution Bench dictum in Olga Tellis versus Bombay Municipal Corporation (1985) that judicial common sense is often more dependable than rival factual claims, the bench underscored that appellate judges must utilize judicially noticeable facts and robust commercial knowledge to evaluate interim user charges.

"Common sense which is a cluster of life's experiences, is often more dependable than the rival facts presented by warring litigants."

Commercial Potentiality Of The Locality Guides Fixation Of User Charges

Evaluating the ground reality of the premises, the High Court took judicial notice of the fact that Una is a rapidly expanding commercial hub of the State. The bench examined the lease agreement cited before the Appellate Authority, which revealed that a comparable commercial shop in the vicinity had been leased to M/s AERO Club at rental rates escalating from ₹66,700 to ₹76,705 per month.

Although noting that comparable lease deeds are not absolute determinative factors, the bench held that they offer a vital benchmark of the commercial potentiality of the demised premises. Finding the Appellate Authority’s assessment of ₹7,500 per month inadequate, the court enhanced the use and occupation charges to ₹15,000 per month from the date of the eviction order, directing the tenants to clear all arrears within three months and pay ongoing charges by the 7th of every calendar month.

The High Court modified the Appellate Authority's order by doubling the interim use and occupation charges to ₹15,000 per month payable from the date of eviction until actual delivery of possession. This ruling reinforces the procedural leverage available to landlords under Order 41 Rule 5 CPC to secure market-rate mesne profits during the pendency of rent appeals.

Date of Decision: October 16, 2026