As per case facts, a licensee failed to vacate the premises after the three-year Leave and License Agreement expired on October 31, 2016. The licensors (appellants) filed a suit for ...
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2025 INSC 1345
1
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. OF 2025
(Arising out of SLP (C)No. 871 of 2024)
ATUL J DOSHI & ORS. APPELLANT(s)
VERSUS
PRAMUKH PROPERTIES AND
DEVELOPERS PVT. LTD RESPONDENT(s)
O R D E R
1) Leave granted.
2) The present appeal arises from the impugned order
1
of the High Court of Bombay in exercise of its
jurisdiction under Article 227 of the Constitution of
India. The High Court partly set aside the concurrent
orders of the Court of Small Causes, Mumbai (Bandra
branch) (hereinafter referred to as ‘Trial Court’) dated
03.08.2022 and the Appellate Court dated 02.09.2023 in
an application under Order XXXIX Rules 1 and 2 CPC
2
for
grant of injunction and damages, to the extent of
1 Impugned order dated 01.12.2023 passed in Writ Petition No. 12142
of 2023.
2 Code of Civil Procedure, 1908.
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directing payment of liquidated damages/ mesne profits
at Rs.10,000/- per day.
3) Briefly stated, the facts not in dispute are that
the appellants (licensors) and the respondent (licensee)
executed a Leave and License Agreement (hereinafter
referred to as ‘Agreement’ in short) dated 08.10.2013
for a period of thirty-six months, from 01.11.2013 till
31.10.2016. In terms of the Agreement, the license fee
was stipulated to increase at the rate of 7% annually.
4) Even after expiry of the said period, the respondent
did not vacate the premises, therefore the appellants
were constrained to file a Suit
3
before the Trial Court
under Section 41 of the Maharashtra Rent Control Act,
1999 read with the Presidency Small Causes Courts Act,
1882 praying for recovery of vacant and peaceful
possession and to pay Rs. 1,39,56,905/- as arrears of
license fee up to 31.03.2019; along with a direction to
pay mesne profits at the rate of Rs. 10,000/- per day
in terms of the Agreement or at such other rate, and
praying to restrain the respondent from alienating or
3 L.E.& C. Suit No. 113 of 2019.
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creating third party rights along with other ancillary
reliefs.
5) Upon notice and entering appearance, the respondent
filed a Suit
4
on 25.10.2021 after about two and a half
years before the Trial Court seeking relief to declare
it as tenant of the premises.
6) On filing the said Suit, the appellants filed an
Application under Order XXXIX Rules 1 and 2 of CPC, in
their suit for recovery of possession, to restrain the
respondent from alienation or to part with possession
of the premises, and also to grant mesne profits at the
rate of Rs.10,000/- per day.
7) The Trial Court, relying on Order XV-A of CPC (Bombay
Amendment), directed payment of liquidated damages at
the rate of Rs. 10,000/- per day, in terms of the
Agreement. On filing an appeal by the respondent, it was
dismissed by the Appellate Court, upholding the order
and findings as recorded by the Trial Court.
8) Being aggrieved with the orders of the Trial Court
and the Appellate Court, the respondent invoked the
jurisdiction under Article 227 of the Constitution of
4 R.A.D. Suit No. 44 of 2022.
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India, wherein the High Court vide the impugned
judgement did not interfere with the order of grant of
injunction, however, set aside the direction to pay Rs.
10,000/- per day as liquidated damages. Challenging the
same, the present appeal has been filed.
9) Learned counsel for the appellants fairly submits
that the terms of the Agreement are not in dispute and
despite lapse of the license period, the premise was
neither vacated nor the license fee was paid with
proportionate increase, hence, the suit seeking recovery
of possession along with ancillary reliefs was filed.
It is further submitted that while setting aside the
order of liquidated damages, the High Court has
interpreted Order XV-A of CPC (Bombay Amendment) without
looking at the object to bring such a provision. While
the respondent was a licensee only till 31.10.2016, as
per the Agreement, future mesne profits could have been
granted. When the Trial Court and the Appellate Court
have allowed such benefit by exercising their due
discretion, interference by the High Court in the
petition under Article 227 of the Constitution of India
was not warranted.
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10) Further, while setting aside the order of paying
liquidated damages of Rs. 10,000/- per day, the High
Court failed to direct payment of rent/license fee with
proportionate increase, even though it was incumbent,
to protect striking off of his defense in a suit for
eviction/recovery of possession. In view of the said
submission, it is urged that the order passed by the
High Court warrants interference.
11) Per contra, learned counsel representing the
respondent submits that passing of an order directing
liquidated damages in an Application under Order XXXIX
Rules 1 and 2 of CPC by the Trial Court at the interim
stage without evidence, and affirmed by the Appellate
Court, amounts to exercise of jurisdiction, contrary to
the spirit of the provisions. As such, the High Court
has rightly set aside the direction for grant of
liquidated damages.
12) In reference to Order XV-A of CPC (Bombay
Amendment), it is submitted that the Court while passing
an order of deposit of arrears of rent till the date of
passing the order, as per Clause (1), can only direct
for depositing rent or license fee as prayed for in the
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suit in the succeeding month. Therefore, the grant of
liquidated damages by the Trial Court and the Appellate
Court is not within jurisdiction, that too at the
initial stage without any inquiry on the issue.
13) After hearing and considering the submissions made
before us regarding the prayer of restraining the
respondent from alienating or creating third-party
rights, as directed by the Trial Court, Appellate Court
and High Court, the parties are in agreement, and with
their consent, the said issue is not required to be
dealt with.
14) In view of the foregoing, the only issue which
survives for consideration is whether in a suit for
eviction based on a licensor-licensee relationship, the
Trial Court and Appellate Court were justified in
awarding mesne profits/liquidated damages under the
Agreement as an interim measure, pursuant to an
application under Order XXXIX Rules 1 and 2 of CPC, or
whether the High Court has rightly set aside the same?
15) In order to appreciate the controversy, certain
clauses of the Agreement are relevant, and are therefore
reproduced for ready reference as under:
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“1. The LICENSOR hereby grants to the LICENSEE and
the LICENSEE hereby accepts from the illegible to
occupy and use the said premises. The LICENSE will
be for a period of 36 (thirty-six) months commencing
from 1
st
November, 2013 and expiring on 31
st
October,
2016 both days inclusive.
2. The licensee a for its occupation and use of the
said premises shall pay as per the following
details:
MONTHS PERIOD MONTHLY RENT
1
st
12 Months 1
st
November 2013 to
31
st
October 2014
Rs.80,000/-
per month
2
nd
12 Months 1
st
November 2014 to
31
st
October 2015
Rs.85,600/-
per month
3
rd
12 Months 1
st
November 2015 to
31
st
October 2016
Rs.91,600/-
per month
16. The LICENSEE shall not at any time put any claim
of tenancy or sub-tenancy of any other right of
title into or in respect of the said premises under
any law presently in force and any laws which may
be enacted hereafter and the Agreement shall not be
construed to create any such right whatsoever in
favour of the LICENSEE.
18. The LICENSEE shall use the said premises for
commercial purposes only and will not use the same
for any other purpose or purposes. It is agreed by
and between the parties hereto that the LICENSOR
shall not be liable or responsible for any
Government of semi-Government, dues, arrests,
demands, claims and actions pertaining to the
business required to be conducted by the LICENSEE
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in the said premises.
19. The LICENSEE shall vacate and give-vacant
possession of the said premises to the LICENSOR on
expiry of this agreement, in the events of the
LICENSEE failing to abide by this agreement. In that
event the LICENSEE shall be bound and liable to pay
to the LICENSOR Rs.10,000/- (Rupees Ten Thousand
only) per day as and by way of liquidated illegible
such time the LICENSEE ceases to remain and carry
on business in the said premises of any part
thereof.”
16) In this regard, reliance has been heavily placed by
the learned counsel for both the sides on Order XV-A of
CPC (Bombay Amendment). The said provision is relevant,
and therefore, is reproduced as under:
“Order XV-A
STRIKING OFF DEFENCE IN A SUIT BY A LESSOR
(1) In any suit by a lessor or a licensor against
a lessee or a licensee, as the case may be, for his
eviction with or without the arrears of rent or
license fee and future mesne profits from him, the
defendant shall deposit such amount as the Court
may direct on account of arrears up to the date of
the Order (within such time as the Court may fix)
and thereafter continue to deposit in each
succeeding month the rent or license fee claimed in
the suit as continue to deposit in each succeeding
month the rent or license fee claimed in the suit
as the Court may direct. The defendant shall unless
otherwise directed continue to deposit such amount
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till the decision of the suit.
In the event of any default in making the deposits,
as aforesaid, the Court may subject to the
provisions of sub-rule (2) strike off the defense.
(2) Before passing an order for striking off the
defense, the Court shall serve notice on the
defendant or his advocate to show cause as to why
the defense should not be struck off, and the Court
shall consider any such cause, if shown in order to
decide as to whether the defendant should be
relieved from an order striking off the defense.
(3) The amount deposited under this rule shall
be paid to be plaintiff lessor or licensor or his
advocate and the receipt of such amount shall not
have the effect of prejudicing the claim of the
plaintiff and it shall not also be treated as a
waiver of notice of termination.
Explanation.— The suit for eviction shall
include suit for mandatory injunction seeking
removal of licensee from the premises for the
purpose of this rule.”
17) We have perused the object to bring the amendment
inserting Order XV-A of CPC (Bombay Amendment) which was
made applicable w.e.f. 01.10.1983. The intent behind it
appears to be to secure the interest of the landlords
with respect to the premises gratuitously occupied by
the licensee even after termination of the lease or
license, as the case may be, without payment of rent or
license fee. To eradicate the said prejudice against
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landlords in a suit for eviction, which may take some
time to be finally adjudicated, the order for payment
of rent or license fee may be directed.
18) On perusal of the aforesaid, it becomes clear that
the following ingredients are necessary to apply the
Order XV-A of CPC (Bombay Amendment) — first, lessor or
licensor must file a suit for eviction; second, the said
suit consists of a prayer with or without arrears of
rent or license fee and future mesne profit; third, in
such suit, there must be a direction on account of arears
up to the date of order by the court; fourth, on such
direction, the defendant shall deposit such amount as
ordered within the time specified and continue to
deposit in each succeeding month the rent or license
fee, claimed till decision; fifth, in case of any
default made by the lessee or licensee, the defense can
be struck off following the procedure as prescribed in
Rule 2; sixth the amount so deposited shall be paid to
the plaintiff.
19) In this view, it can be inferred that the said
amendment was brought with the well-intended object that
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in a suit based on lessor-lessee or licensor-licensee
relationship for eviction and arrears of rent, the
Court, in exercise of its discretion, can direct the
lessee or licensee, as the case may be, to pay arrears
of regular rent or license fee, as the case may be and
further payment of month to month rent or license fee,
otherwise, the defense of the licensee can be struck
off.
20) In our view, the said provision squarely applies to
the present case. The Agreement dated 08.10.2013 is not
in dispute. On perusal of its terms, Clause 1 makes it
clear that the parties have executed the said agreement
for a period of thirty-six months commencing from
01.11.2013 till its expiry i.e. 31.10.2016, both days
inclusive. In Clause 2, the amount of payment of rent
has been specified which indicates an increase of 7%
annually. As per Clause 19, after expiry of the period
of the Agreement i.e., on 31.10.2016, the licensee shall
vacate and hand over the vacant possession of the
premises to the licensor. In case of failure to abide
by the said condition, the licensee shall be bound and
liable to pay Rs. 10,000 per day by way of liquidated
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damages, till such time the licensee ceases to remain
and carry on business in the said premises or any part
thereof.
21) In terms of the clauses of the Agreement, the
respondent has admittedly paid the rent as specified in
Clause 2 of the Agreement with proportionate increase,
during the period in which the agreement was in vogue.
After expiry of the period of license, when the premises
was not vacated and license fee with proportionate
increase was not paid, as such he has become a gratuitous
licensee and the gratuitous licensee cannot take his
defense in a suit filed by the licensor seeking eviction
and arrears of rent until arrears and regular rent has
been paid. However, in our view, it was the duty of the
Court to exercise its discretion and pass an order with
respect to arrears and regular rent in terms of Order
XV-A of CPC (Bombay Amendment), as discussed above.
Otherwise, the non-deposit of arrears and regular
license fee may entail striking off the defense in terms
of Clause 2 of Order XV-A of CPC (Bombay Amendment).
22) As informed, it is seen from the record that the
respondent has filed a suit seeking declaration as
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tenant, directly contrary to Clause 16 of the Agreement,
that too after a gap of two and a half years of filing
the suit for eviction by the appellants. In the said
suit, deposit of rent or license fee at the rate of Rs.
18,000 per month has been ordered. In the absence of
non-denial of the Agreement and further non-denial of
payment of license fee as specified in Clause 2 of the
Agreement, fixing Rs. 18,000 per month by the Trial
Court is completely misplaced and farce on the face of
the document, which is not in dispute and complied for
three years during its existence. For the sake of
argument, in terms of Clause 19, in case the liquidated
damages were required to be calculated at the time of
disposal of the suit, but without deposit of arrears
of rent and payment of regular rent, the licensee does
not have any right to take his defense in the court in
terms of Order XV-A of CPC (Bombay Amendment), in
particular when a consequence of non-deposit of arears
and regular rent or license fee has been specified.
23) In view of the above, we are not inclined to uphold
the order of grant of liquidated damages of the Trial
Court and Appellate Court passed on an application under
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Order XXXIC Rules 1 and 2 at interim stage. At the same
time, the High Court, by interfering with the said
orders, was not justified in not directing payment of
the arrears and regular rent or license fee in terms of
Order XV-A of CPC (Bombay Amendment). In our view, since
the Agreement and its clauses are not in dispute, and
during its subsisting period of three years commencing
from 01.11.2013 till 31.10.2016, the licensee has paid
the license fee as agreed with proportionate increase,
therefore, the arrears and the regular payment of the
license fee must be paid by the licensee in the same
terms. Therefore, on the question as posed, we are of
the view that direction for payment of arrears and
regular license fee deserves to be issued. In case of
non-compliance of such direction, the licensee shall
face the consequence as stipulated under Rule 2 of Order
XV-15A (Bombay Amendment).
24) During the course of argument, learned counsel for
the parties have submitted the calculation by adding the
dues of the license fee along with proportionate
increase in terms of the Agreement. The said calculation
is reproduced for ready reference as under:
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Increment Rental as per Agreement
Increment
Rent
7%
Period Number of months Normal Rent per
month
Total
Outstanding Rent
May 2016-Oct
2016
6 91,600 5,49,600
Nov 2016-Oct
2017
12 98,012 11,76,144
Nov 2017-Oct
2018
12 1,04,873 12,58,474
Nov 2018-Oct
2019
12 1,12,214 13,46,567
Nov 2019-Oct
2020
12 1,20,069 14,40,827
Nov 2020-Oct
2021
12 1,28,474 15,41,685
Nov 2021-Oct
2022
12 1,37,467 16,49,603
Nov 2022-Oct
2023
12 1,47,090 17,65,075
Nov 2023-Oct
2024
12 1,57,386 18,88,630
Nov 2024-Oct
2025
12 1,68,403 20,20,834
Total 1,46,37,440
25) As per the above calculation, the arrears of license
fee come to Rs. 1,46,37,440/- till 31.10.2025.
Thereafter, applying the proportionate annual increase
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of 7%, the respondent is required to pay the license fee
on month-to-month basis. Learned counsel for the
respondent, at this stage, prays for some time to clear
the arrears as calculated above subject to adjustment
of Rs. 18,000/- per month being deposited by it in the
suit filed to declare him as a tenant. In our view, the
prayer, as made, appears to be fair and reasonable,
therefore, we grant two months’ time for depositing the
arrears and direct that the licensee shall continue to
pay regular license fee with proportionate increase in
terms of the clauses of the Agreement till disposal of
the suit.
26) In view of the foregoing, the appeal stands allowed
in part and to the extent indicated hereinabove.
Consequently, the order of grant of injunction is hereby
maintained with a further direction to the licensee to
pay license fee as calculated in paragraph 25, after
adjusting the amount paid in terms of the order passed
in the suit for declaration of tenancy, within two
months from the date of uploading of this order. The
licensee shall further pay regular rent on month-to-
month basis with proportionate 7% annual increase. On
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refusal to comply such direction, the licensor is at
liberty to take recourse as permissible under Rule 2 of
Order XV-A of CPC (Bombay Amendment).
27) Since the suit filed by the appellant(s) seeking
eviction and the suit filed by the respondent for
declaration relate to the same property, therefore, we
direct to the District Judge concerned to place both the
suits in the same Court which shall be decided as early
as possible but not later than one and half a year. We
further make it clear that the adjudication of the issue
of liquidated damages is left open and the same be
decided after taking evidence of the parties at the time
of disposal of the suits.
28) Pending application(s), if any, shall stand disposed
of.
…………………………………………………………., J.
[ J.K. MAHESHWARI ]
…………………………………………………………., J.
[ VIJAY BISHNOI ]
New Delhi;
October 08, 2025.
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