Appeal Court Fee Must Cover Decreed Mesne Profits, Allahabad HC Holds in UP Tenancy Act Case

Dismissing an Article 227 petition, the Allahabad High Court held that a memorandum of appeal under the UP Regulation of Urban Premises Tenancy Act, 2021 must be valued on the entire decretal liability, including crystallised mesne profits awarded by the Rent Authority.

The Allahabad High Court has dismissed a petition challenging a Rent Tribunal direction to pay court fee on the entire decretal amount — including mesne profits — before an eviction appeal could proceed. Hon'ble Dr. Justice Yogendra Kumar Srivastava, sitting singly in Court No. 35, held that Section 39 of the U.P. Regulation of Urban Premises Tenancy Act, 2021 does not freeze appellate court fee at the level paid in the original proceedings. Where a composite decree has already quantified a mesne profits liability, that liability becomes part of the subject-matter in dispute in the appeal and must be reflected in the court fee on the memorandum of appeal. The judgment resolves a recurring interpretive tension between Section 39 of the Act and the Court Fees Act, 1870.

The Dispute Before the High Court

The underlying tenancy dispute began when Smt. Roshan Jahan, the landlady, instituted Rent Case No. 4309 of 2024 before the Rent Authority, Varanasi, under Section 21 of the Act, 2021. She sought eviction of Arif Khan from three adjoining shops at premises No. CK-47/23, Sarai Harha, Ward Chowk, Varanasi, along with recovery of arrears of rent and mesne profits.

After considering pleadings and affidavits, the Rent Authority by order dated 19 February 2026 allowed the application. It directed the petitioner to vacate within one month and held him liable to pay arrears of rent together with mesne profits at Rs. 2,000 per day until delivery of possession, besides other consequential monetary liabilities.

Arif Khan preferred Misc. Case No. 322 of 2026 before the Rent Tribunal, Varanasi under Section 35 of the Act. Along with the memorandum of appeal he deposited Rs. 7,00,000 — asserting compliance with the fifty per cent pre-deposit requirement under the proviso to Section 35 — and affixed court fee of Rs. 26,324, being the same amount as had been paid by the landlady when instituting proceedings before the Rent Authority.

The landlady then filed an objection (Paper No. 13-Ga) contending that the memorandum of appeal was deficient in court fee because no fee had been paid on the mesne profits component of the decree. By the impugned order dated 22 May 2026, the Rent Tribunal upheld that objection and directed Arif Khan to deposit additional court fee on the entire decretal amount, including mesne profits, on or before 30 May 2026. He thereupon invoked the supervisory jurisdiction of the High Court under Article 227 of the Constitution.

The Statutory Framework in Issue

Section 35 of the Act, 2021 provides a right of appeal to the Rent Tribunal against orders of the Rent Authority, subject to a mandatory pre-deposit of fifty per cent of the entire payable amount under the impugned order.

Section 39, which the court described as the principal provision governing the levy and computation of court fee under the Act, operates in three sub-sections. Sub-section (1) makes the Court Fees Act, 1870 applicable to applications and appeals before the Rent Authority or Rent Tribunal. Sub-section (2) enacts a statutory fiction: for the purposes of computing court fee, both an application for recovery of possession before the Rent Authority and a memorandum of appeal before the Rent Tribunal shall be deemed to be suits between the landlord and the tenant. Sub-section (3) prescribes that court fee for an application before the Rent Authority shall be the same as for an interlocutory application in a civil court.

Section 42 of the Act confers overriding effect on its provisions over inconsistent State laws. Section 7 of the Court Fees Act read with Article 1 of Schedule I provides for ad valorem court fee on a memorandum of appeal according to the value of the subject-matter in dispute in the appeal. Section 11 of the Court Fees Act contemplates payment of additional court fee where mesne profits ultimately decreed exceed the amount on which court fee had previously been paid.

The Petitioner's Case

Senior Counsel appearing for Arif Khan argued that Section 39 constitutes a complete code and, by placing an application before the Rent Authority and a memorandum of appeal on the same footing through the deeming provision, the legislature intended that the court fee payable in appeal cannot exceed the fee paid at the institution stage. Since the fee of Rs. 26,324 matched what the landlady had paid, the requirement was fully met.

It was further urged that mesne profits, by their nature, remain uncertain and incapable of precise valuation until finally determined, and therefore do not attract separate court fee in appeal. The Rent Authority's own decree had directed that court fee on the mesne profits component would be realised from the landlady at the execution stage, making it impermissible to require the appellant to pay fee on that component. Reliance was placed on the Supreme Court decision in State of Maharashtra v. Mishrilal Tarachand Lodha and two High Court decisions dealing with future mesne profits.

It was also submitted that the Tribunal had erroneously invoked Section 42 of the Act when the issue was squarely governed by Section 39 alone, and that the decision in Alok Kumar Jain v. Indra Bhushan Sawhney was distinguishable because it had not arisen in the context of a composite decree under Section 21 of the Act, 2021.

The Respondent's and State's Positions

Counsel for the landlady supported the Tribunal's order. He contended that the decree of 19 February 2026 was composite — directing eviction, recovery of arrears, and payment of mesne profits — and that the petitioner had challenged it in its entirety. Since the subject-matter in dispute in the appeal extended to the whole decretal liability, court fee was payable on all of it. He distinguished the authorities on future mesne profits by pointing out that in the present case the Rent Authority had already quantified the liability at Rs. 2,000 per day from a specified date, so the amount was no longer contingent.

The Additional Advocate General, appearing for the State of Uttar Pradesh at the court's invitation given the statutory interpretation dimension, likewise supported the impugned order. He submitted that court fee serves not only a fiscal purpose but also the legislative aim of discouraging frivolous litigation and securing procedural discipline. He argued that the incidence of court fee at the institution stage and the obligation in appeal arise in distinct settings, and acceptance of the petitioner's construction would allow an appellant to displace substantial decretal liability while paying fee only on the pre-adjudication valuation.

How the Court Reasoned

Dr. Justice Yogendra Kumar Srivastava began by identifying what Section 39(2) does and does not do. The statutory fiction — deeming both original applications and memoranda of appeal to be suits between landlord and tenant — is created solely for identifying the legal regime governing computation of court fee. It brings both classes of proceedings within the fold of the Court Fees Act, 1870. It does not, however, obliterate the distinction between original and appellate proceedings, and it does not enact that court fee in appeal must always equal the fee paid at institution. Once the fiction performs its function of attracting the Court Fees Act, the valuation of the appeal is governed by the principles of that Act applicable to appellate proceedings.

The court drew a conceptual distinction between the incidence of court fee (whether a proceeding attracts liability at all) and the measure of court fee (how that liability is quantified). Section 39(1) resolves the former by making the Court Fees Act applicable. Section 39(2) prescribes the juridical basis for computation. The quantification itself must then follow the valuation principles of the Court Fees Act.

On the fundamental principle of appellate valuation, the court reiterated that a memorandum of appeal is valued not by the valuation adopted at institution but by the value of the subject-matter in dispute in the appeal — that is, the extent of the decree from which the appellant seeks relief. A plaintiff pays court fee on the relief claimed; a defendant who becomes an appellant pays court fee on the decretal liability he seeks to have reversed. The court fee paid by the landlady when filing the original application cannot furnish the measure of the appellant-tenant's liability in appeal.

Turning to the mesne profits issue, the court identified the decisive distinction running through all the cited authorities: the distinction between future or contingent mesne profits, which remain incapable of present ascertainment, and mesne profits which have already accrued or been rendered capable of precise arithmetical computation. The Supreme Court's decision in Mishrilal Tarachand Lodha was explained as being concerned with pendente lite interest that had not been independently challenged in appeal — it did not lay down that every monetary component of a decree falls outside the subject-matter in dispute, nor that the institution-stage valuation must always govern the appeal.

The Madhya Pradesh decision in Shivaji v. Deoji and the Kerala decision in Ratnamma v. Karthiyani Pillai were treated as having proceeded on the footing of future contingent mesne profits and were held not to support any absolute proposition that every award of mesne profits stands outside appellate valuation. By contrast, the Andhra Pradesh decision in In re Kudappa Subbamma and the Full Bench decision of the Allahabad High Court in Ragho Prasad v. B. Pratap Narain Agrawal were relied upon to show that once the rate, period or amount of mesne profits is determined or rendered ascertainable, the liability crystallises into a monetary obligation that forms part of the subject-matter in dispute in appeal. The Full Bench observation that the valuation of an appeal seeking relief against an entire money decree “must be related to the relief sought” was specifically extracted.

On the specific facts, the Rent Authority's order of 19 February 2026 had fixed mesne profits at Rs. 2,000 per day from a specified date until delivery of possession. The petitioner had challenged that decree in its entirety before the Rent Tribunal without confining his appeal to the eviction direction alone. The subject-matter in dispute in the appeal was therefore co-extensive with the entire decretal liability. The mesne profits component — to the extent it had accrued or become capable of precise ascertainment by the date of presentation of the appeal — formed part of the decretal burden the petitioner sought to displace.

The argument that the landlady's obligation to pay court fee on mesne profits had been deferred to the execution stage was rejected. That direction regulated the landlady's fiscal liability as a decree-holder and could not override the independent statutory obligation of the appellant to value the memorandum of appeal under Section 39 of the Act read with the Court Fees Act. Similarly, the argument founded on Section 2(4) of the Court Fees Act — which includes a first appeal within the definition of “suit” — was held not to freeze the valuation at the institution stage; that inclusive definition merely extends the operation of the Court Fees Act to appellate proceedings.

The court also addressed the scope of Article 227 jurisdiction. Supervisory jurisdiction is not an appellate power, and the court will not substitute an alternative statutory interpretation for that of the Tribunal unless the Tribunal's order discloses patent lack of jurisdiction, manifest perversity, or an error going to the root of the decision-making process. The Rent Tribunal's interpretation of Section 39 was found to be consistent with the scheme of the Act, the Court Fees Act, and settled principles of appellate valuation. The Tribunal had, additionally, not rejected the appeal outright but had given the petitioner an opportunity to remove the court fee deficiency — a course described as consistent with settled procedural practice.

Order

The High Court dismissed Article 227 No. 8728 of 2026 as devoid of merit. No order as to costs was made.

The court recorded the following legal position for proceedings under the Act, 2021: where an appellant challenges a composite decree of the Rent Authority directing eviction together with recovery of arrears of rent and payment of mesne profits, the memorandum of appeal under Section 35 is liable to be valued with reference to the subject-matter in dispute in appeal. To the extent the decree embodies an existing liability towards mesne profits that has accrued or become capable of precise arithmetical ascertainment by the date of presentation of the appeal, that liability forms part of the decretal burden sought to be displaced and must be taken into account when computing the court fee payable on the memorandum of appeal.