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

Not available · 2025 INSC 1345Decided 8 Oct 2025
Not available
Justice J.K. Maheshwari · Justice Vijay Bishnoi

Background

The appellants (licensors) had let out commercial premises in Mumbai to the respondent (licensee) under a Leave and License Agreement for 36 months from November 2013 to October 2016, with a clause that unpaid overstay would attract Rs. 10,000/day in liquidated damages. The respondent did not vacate after the license expired and stopped paying with the agreed annual increases, prompting the licensors to sue for possession and dues. The Trial Court and Appellate Court both ordered the respondent to pay Rs. 10,000/day as damages, but the Bombay High Court set aside that direction while upholding an injunction against alienating the property.

Decision Breakdown

The Supreme Court held that once the license period expired, the respondent became a "gratuitous licensee" with no right to occupy without paying rent, and that Order XV-A of the CPC (Bombay Amendment) required the trial court to direct payment of arrears and ongoing rent/license fees at the agreed rate, rather than leaving the licensee to occupy without payment during litigation. The Court found the Rs. 18,000/month rent fixed in a separate suit filed by the respondent (claiming tenancy) was arbitrary and unsupported, given the undisputed license agreement terms. It calculated arrears of about Rs. 1.46 crore up to October 2025 based on the agreed 7% annual increase, gave the respondent two months to pay (adjusting for amounts already deposited), and directed continued monthly payments at the escalating agreed rate until the underlying suits are decided, leaving the separate question of liquidated damages open for trial.

Lesson Learnt

A tenant or licensee who overstays after a lease or license period expires cannot simply keep occupying the property rent-free by dragging out litigation. Courts can and should order continued payment of rent at the agreed rate (with contractual escalations) as a condition of staying in possession, even while the larger dispute is still being decided.

Official source (sci.gov.in)View Judgment (PDF)

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