In a licensor-licensee relationship, failure to pay rent post-agreement expiration results in the licensee losing their defense in eviction proceedings.

ORDER :

1. Leave granted.

2. The present appeal arises from the impugned order¹ [Impugned order dated 01.12.2023 passed in Writ Petition No. 12142 of 2023] 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 [Code of Civil Procedure, 1908] for grant of injunction and damages, to the extent of 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 [L.E.& C. Suit No. 113 of 2019] 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 creating third party rights along with other ancillary reliefs.

5. Upon notice and entering appearance, the respondent filed a Suit⁴ [R.A.D. Suit No. 44 of 2022] 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 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 31.1