Mesne profit-based royalty must reflect user value and comparable rentals, not isolated capital-value estimates.

Monthly royalty for wrongful occupation is to be assessed on the value of user to the occupier, treating it as analogous to mesne profits, and the exercise should reflect comparable rentals, prevailing market rent, annual letting value and other reliable indicators of rental value. A determination based only on estimated property value or expected return, without considering relevant rental data and alternative valuation methods, was treated as unsustainable. The royalty fixed on that limited basis was set aside, the matter was remitted for fresh determination on proper principles, and an interim payment was directed pending reassessment.

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Issues: (i) What should be the basis for determining the amount of monthly royalty? (ii) Whether the order determining monthly royalty at Rs. 3,70,000 was legal, valid and proper?

Issue (i): What should be the basis for determining the amount of monthly royalty?

Analysis: Monthly royalty in such matters was treated as analogous to mesne profits and the governing test was the value of the user of the premises by the person in wrongful possession, not merely the estimated value of the property or a return on capital. The valuation exercise was expected to take into account comparable rentals, prevailing market rent for equivalent accommodation, and the annual letting value, so that the amount fixed reflects a balanced assessment of use and occupation.

Conclusion: The basis of determination must be the value of user to the person in wrongful possession, assessed with relevant comparables, prevailing rentals, and other reliable indicators of rental value.

Issue (ii): Whether the order determining monthly royalty at Rs. 3,70,000 was legal, valid and proper?

Analysis: The royalty was fixed on a valuation report that adopted only one method and proceeded substantially on estimated property value and estimated return, without adequately considering other relevant methods and material. Since the process did not incorporate the necessary indicators of rental value and fair assessment, the determination required reconsideration. The Court also fixed a temporary interim royalty pending fresh determination so that the competing interests of the parties were protected.

Conclusion: The impugned order was unsustainable and was set aside, and the matter was remitted to the Court Receiver for fresh determination of royalty.

Final Conclusion: The royalty determination was reopened for fresh assessment on proper legal principles, while an interim payment was fixed pending that reassessment.

Ratio Decidendi: Mesne profit or royalty for wrongful occupation must be determined primarily by the value of user to the occupier, using reliable rental indicators and comparable data, and not by an isolated estimate of the property's capital value or expected return therefrom.

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