Atul J Doshi & Ors. vs Pramukh Properties and Developers Pvt. Ltd.

REPORTABLE 2025 INSC 1345 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 CPC2 for

grant of injunction and damages, to the extent of Signature Not Verified Digitally signed by NIDHI AHUJA Date: 2025.11.22 14:34:15 IST Reason: 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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CA No. / 2025(@ SLP (C)No. 871/2024)

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 Suit3 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. 2 CA No. / 2025(@ SLP (C)No. 871/2024)

creating third party rights along with other ancillary

reliefs.

5) Upon notice and entering appearance, the respondent

filed a Suit4 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. 3 CA No. / 2025(@ SLP (C)No. 871/2024)

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

5 CA No. / 2025(@ SLP (C)No. 871/2024)

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 1st November, 2013 and expiring on 31st 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

1st 12 Months 1st November 2013 to Rs.80,000/- 31st October 2014 per month

2nd 12 Months 1st November 2014 to Rs.85,600/- 31st October 2015 per month

3rd 12 Months 1st November 2015 to Rs.91,600/- 31st October 2016 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 7 CA No. / 2025(@ SLP (C)No. 871/2024)

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 8 CA No. / 2025(@ SLP (C)No. 871/2024)

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 9 CA No. / 2025(@ SLP (C)No. 871/2024)

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

12 CA No. / 2025(@ SLP (C)No. 871/2024)

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

13 CA No. / 2025(@ SLP (C)No. 871/2024)

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 7% Rent

Period Number of months Normal Rent per Total month Outstanding Rent

May 2016-Oct 6 91,600 5,49,600 2016

Nov 2016-Oct 12 98,012 11,76,144 2017

Nov 2017-Oct 12 1,04,873 12,58,474 2018

Nov 2018-Oct 12 1,12,214 13,46,567 2019

Nov 2019-Oct 12 1,20,069 14,40,827 2020

Nov 2020-Oct 12 1,28,474 15,41,685 2021

Nov 2021-Oct 12 1,37,467 16,49,603 2022

Nov 2022-Oct 12 1,47,090 17,65,075 2023

Nov 2023-Oct 12 1,57,386 18,88,630 2024

Nov 2024-Oct 12 1,68,403 20,20,834 2025

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

15 CA No. / 2025(@ SLP (C)No. 871/2024)

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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