In a suit for eviction under a lapsed license agreement, the Supreme Court ruled that the trial court cannot grant liquidated damages as an interim measure under Order XXXIX Rules 1 & 2 CPC. However, it upheld the application of Order XV-A CPC (Bombay Amendment), directing the licensee to pay ascertained arrears and ongoing license fees with annual increments, failing which the defense can be struck off.
Facts Of The Case:
The case originated from a Leave and License Agreement executed on 08.10.2013 between the appellant licensors and the respondent licensee for 36 months, from 01.11.2013 to 31.10.2016, with a 7% annual increase in license fee. Clause 19 stipulated liquidated damages of Rs. 10,000 per day if the licensee failed to vacate upon expiry. After the license period lapsed, the respondent neither vacated the premises nor paid the post-agreement license fee. Consequently, the appellants filed a suit in 2019 before the Small Causes Court, Mumbai, for possession, arrears, and mesne profits. In response, the respondent later filed a separate suit in 2021 seeking a declaration of tenancy. In the possession suit, the Trial Court, and later the Appellate Court, granted an interim injunction and directed payment of the agreed liquidated damages of Rs. 10,000 per day. The Bombay High Court, in its writ jurisdiction, upheld the injunction but set aside the liquidated damages order. The licensors appealed to the Supreme Court, challenging the High Court’s decision to overturn the liquidated damages directive while also failing to order payment of regular arrears under applicable procedural law.
Procedural History:
The procedural history began with the appellants filing a suit for eviction and recovery of possession before the Court of Small Causes, Mumbai (Trial Court) in 2019. In this suit, they filed an application under Order XXXIX Rules 1 and 2 CPC, seeking an injunction and interim mesne profits. The Trial Court granted the injunction and directed payment of liquidated damages of Rs. 10,000 per day. The respondent’s appeal against this order was dismissed by the Appellate Court, which upheld the Trial Court’s direction. Aggrieved, the respondent approached the Bombay High Court under Article 227 of the Constitution of India. The High Court, vide its impugned order, maintained the injunction but set aside the direction for payment of liquidated damages. Challenging this partial relief, the appellants filed a Special Leave Petition before the Supreme Court, which granted leave and led to the present civil appeal.
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Court Observation:
The Supreme Court made key observations centered on the interpretation of Order XV-A of the CPC (Bombay Amendment). It held that while the trial court was not justified in awarding liquidated damages as an interim measure under Order XXXIX Rules 1 & 2 CPC, the High Court erred in not directing payment of ascertained arrears and regular license fees under Order XV-A. The Court emphasized that upon the license’s expiry, the respondent became a gratuitous licensee and, to maintain a defense in the eviction suit, was obligated to deposit the admitted arrears and continue monthly payments as per the original agreement’s terms, including the 7% annual increase. It clarified that the consequence of non-compliance would be striking off the defense under Rule 2 of Order XV-A. The final adjudication on the claim for liquidated damages under Clause 19 was left open for decision based on evidence at the suit’s final disposal.
Final Decision & Judgement:
The Supreme Court partly allowed the appeal. It upheld the injunction against alienation but set aside the interim order granting liquidated damages of Rs. 10,000 per day. The Court directed the respondent-licensee to pay the calculated arrears of license fee, amounting to approximately Rs. 1.46 crores till October 2025 (with a 7% annual increase), within two months, after adjusting any amounts already deposited. Furthermore, the licensee was ordered to continue paying the regular license fee on a month-to-month basis with the stipulated 7% annual increase until the suit’s disposal. Failure to comply would entitle the licensor to seek striking off the licensee’s defense under Order XV-A Rule 2 of the CPC (Bombay Amendment). The Court also directed the clubbing and expeditious disposal of both related suits within one and a half years, leaving the final determination on liquidated damages to be decided upon evidence at trial.
Case Details:
Case Title: ATUL J DOSHI & ORS. vs. PRAMUKH PROPERTIES AND DEVELOPERS PVT. LTD Citation: 2025 INSC 1345 Appeal No.: (Arising out of SLP (C) No. 871 of 2024) Date of Judgement: October 08, 2025 Judges/Justice Name: Justice J.K. Maheshwari and Justice Vijay Bishnoi
Download The Judgement Here