Order XV-A (Bombay Amendment): Mandatory Interim Deposit of Contractual Licence Fee; Liquidated Damages Not Awardable Interim Without Evidence

1. Introduction

Case: ATUL J DOSHI v. PRAMUKH PROPERTIES AND DEVELOPERS PVT. LTD (2025 INSC 1345), Supreme Court of India, decided on 08-10-2025.

The dispute arose from a commercial Leave and License Agreement dated 08.10.2013 for 36 months (01.11.2013–31.10.2016), with an agreed annual increment of 7%. After expiry, the respondent-licensee did not vacate, and according to the licensors (appellants), also did not pay licence fee with increments.

The licensors filed a suit for eviction/recovery of possession and arrears under the Maharashtra Rent Control Act, 1999 read with the Presidency Small Causes Courts Act, 1882, seeking (i) possession, (ii) arrears, and (iii) mesne profits/liquidated damages at Rs.10,000/- per day (as per Clause 19 of the Agreement), along with injunctive relief against alienation/third-party rights. The licensee later filed a separate suit seeking a declaration of tenancy.

At the interim stage, the Trial Court (and Appellate Court) directed payment of Rs.10,000/- per day relying on Order XV-A of CPC (Bombay Amendment). The High Court under Article 227 maintained the injunction but set aside the interim direction for liquidated damages. The licensors appealed to the Supreme Court.

Key Issues

• Whether, in an interim application under Order XXXIX Rules 1 and 2 CPC, the court can award mesne profits/liquidated damages stipulated in the agreement (Rs.10,000/day) without evidence.
• Whether Order XV-A CPC (Bombay Amendment) required (and empowered) the court to direct deposit of arrears and ongoing contractual licence fee during pendency of an eviction suit, failing which defence may be struck off.
• Whether the High Court, after setting aside liquidated damages, erred in not ensuring deposit of contractual licence fee under Order XV-A.

2. Summary of the Judgment

• The Supreme Court declined to uphold interim liquidated damages of Rs.10,000/day granted by the Trial Court/Appellate Court at the interim stage.
• The Court held that Order XV-A CPC (Bombay Amendment) squarely applies: the licensee must deposit arrears and continue to deposit monthly licence fee as claimed, consistent with the contractual terms, pending adjudication.
• The High Court was not justified in setting aside interim liquidated damages without directing deposit of arrears and ongoing licence fee under Order XV-A.
• Arrears were quantified (on parties’ calculation) at Rs. 1,46,37,440/- till 31.10.2025. The respondent was granted two months to deposit arrears (with adjustment for amounts deposited in the tenancy-declaration suit) and must continue to pay monthly licence fee with 7% annual increase.
• Non-compliance would permit the licensors to seek consequences under Rule 2 of Order XV-A (striking off defence after notice).
• Both suits were directed to be placed before the same court and decided within one and a half years. The issue of liquidated damages was left open for final decision after evidence.

3. Analysis

3.1 Precedents Cited

The judgment is primarily textual and purposive, turning on the construction and object of Order XV-A of CPC (Bombay Amendment) and the contractual clauses. No prior judicial precedents are cited by name in the provided text; the Court instead derives the governing rule from:

• the express ingredients of Order XV-A (arrears + continuing deposit + consequence of strike-off), and
• the admitted contract terms (fixed rent schedule, 7% annual increment, and post-expiry Clause 19).

The absence of case-law citation is notable: the Court treats the matter as one of applying a specific local CPC amendment designed to address the practical problem of defendants continuing in possession without payment during lengthy eviction litigation.

3.2 Legal Reasoning

A. Distinguishing interim rent deposit (Order XV-A) from interim damages/mesne profits (Order XXXIX)

The Supreme Court draws a functional boundary:

• Order XV-A (Bombay Amendment) is a protective, case-management mechanism in eviction suits to secure the plaintiff’s interest by ensuring the defendant deposits arrears up to the date of order and continues to deposit monthly rent/licence fee claimed during the suit, failing which defence may be struck off.
• By contrast, awarding liquidated damages/mesne profits (particularly at a penal-like daily rate) is treated as requiring adjudication on evidence and therefore is not appropriate as a straight interim direction in an injunction application under Order XXXIX Rules 1 and 2.

Accordingly, the Court holds: interim liquidated damages of Rs.10,000/day were not to be sustained; however, interim deposit of contractual licence fee (arrears + ongoing) was necessary and within Order XV-A’s design.

B. “Gratuitous licensee” and the logic of Order XV-A

The Court reasons that after expiry of the licence term and non-payment, the respondent becomes a gratuitous licensee. In such circumstances, Order XV-A is engaged precisely to prevent a defendant from enjoying possession while litigating without payment. The Court emphasizes that the trial court should exercise discretion under Order XV-A to direct deposits, because the rule also embeds a consequence: striking off the defence (subject to notice and consideration under Rule 2).

C. Contractual primacy for interim deposits where the agreement is admitted

A key factual/legal pivot is that the Agreement and its payment structure were not disputed, and were complied with for three years. The Court therefore treats the contractual licence fee (with 7% annual increment) as the appropriate benchmark for interim deposits. It also criticizes the fixation of Rs.18,000 per month in the tenancy-declaration suit as “completely misplaced and farce on the face of the document” (given the admitted contractual rent history).

D. Article 227 supervision and the High Court’s omission

While the Supreme Court does not frame an abstract rule on Article 227, it effectively holds that once the High Court set aside liquidated damages, it should still have ensured protection of the licensor’s interest through Order XV-A deposits. The error lay less in interference with liquidated damages and more in failing to substitute an appropriate Order XV-A direction.

E. Quantification and compliance architecture

The Court accepts parties’ computation of arrears at Rs.1,46,37,440/- up to 31.10.2025, grants two months to deposit, allows adjustment of amounts already deposited under the tenancy-declaration suit order, and mandates continuing monthly payments with the contractual 7% annual increment. It preserves enforcement through Order XV-A Rule 2 (notice and then strike-off).

3.3 Impact

A. Clear operational rule for Maharashtra (Bombay Amendment jurisdiction)

The decision strengthens a practical litigation principle: in eviction suits by licensors/lessors, courts should use Order XV-A to require arrears + ongoing deposits based on the rent/licence fee claimed, especially where the underlying agreement is admitted. This reduces incentives for post-expiry holdover without payment.

B. Limits on interim monetary relief styled as “liquidated damages/mesne profits”

The ruling cautions trial courts against effectively granting final-like monetary relief (particularly contractually stipulated liquidated damages) at the interim injunction stage without evidence. Plaintiffs may still claim such amounts, but their adjudication is pushed to trial.

C. Strategic implications for parties

• Licensors/landlords: can seek robust interim protection via Order XV-A (arrears + ongoing deposit), even if liquidated damages must await evidence.
• Licensees/occupants: cannot expect to contest eviction while depositing an artificially low amount, where the agreement and past payment history clearly establish a higher contractual rate.

D. Case management: consolidation/expedition

The directive to place both suits before the same court and decide within 1.5 years reflects concern over parallel proceedings (eviction suit and tenancy-declaration suit) and the possibility of procedural delay. This may encourage tighter docket control in similar dual-suit scenarios.

4. Complex Concepts Simplified

• Leave and Licence: A permission to use premises without transferring an interest in property; typically time-bound and revocable/terminable per contract.
• Mesne profits: Compensation for wrongful possession after the right to occupy ends—often assessed on evidence of market rent/actual gain.
• Liquidated damages: A pre-estimated sum agreed in a contract payable upon breach (here, Rs.10,000/day for failure to vacate). Courts may still examine enforceability and factual basis at trial.
• Order XXXIX Rules 1 and 2 CPC: Interim injunction provisions meant to preserve the subject matter/status quo, not to conclusively decide disputed monetary liabilities without evidence.
• Order XV-A CPC (Bombay Amendment): A special rule in lessor/licensor eviction suits requiring the defendant to deposit arrears and continue monthly deposits; default can lead to striking off the defence after notice.
• Article 227: High Court’s supervisory jurisdiction over subordinate courts; typically corrects jurisdictional errors and grave procedural injustices rather than re-trying issues.
• Striking off defence: A sanction that prevents the defendant from contesting the suit on merits if they fail to comply with deposit directions, after the court follows the notice-and-hearing safeguard in Rule 2.

5. Conclusion

This judgment establishes a balanced interim framework in licensor-licensee eviction litigation within the Bombay Amendment regime:

• Courts should not grant interim liquidated damages/mesne profits at the injunction stage without evidence, even if the contract stipulates a daily rate.
• Courts must, however, actively apply Order XV-A CPC (Bombay Amendment) to secure the plaintiff’s interest by directing deposit of arrears and continued monthly deposits of the contractual rent/licence fee claimed (particularly when the agreement is undisputed), with the structured consequence of potential strike-off of defence upon default.
• The decision also underscores judicial disapproval of attempts to dilute admitted contractual payments through collateral tenancy-declaration claims and low interim deposit orders.

In broader context, the ruling reinforces that interim proceedings in possession disputes should protect entitlement and prevent unjust enrichment, while reserving contested, evidence-dependent monetary claims (like liquidated damages) for final adjudication.