Interim Courts Cannot Grant Liquidated Damages Without Trial, But Must Secure Arrears and Ongoing License Fee Under Order XV-A CPC

Introduction

In a significant ruling clarifying the scope of interim judicial powers in eviction disputes, the Supreme Court has held that courts cannot award liquidated damages or mesne profits at the interim stage without a full-fledged trial. At the same time, the Court emphasised that trial courts are statutorily bound to protect the interests of licensors by directing deposit of arrears and continued payment of license fee during the pendency of eviction proceedings under Order XV-A of the Code of Civil Procedure, as applicable in Maharashtra.

Partly allowing the appeal filed by the licensors, the Court ruled that while the Bombay High Court was justified in setting aside the interim award of liquidated damages imposed by the courts below, it committed a serious error in failing to direct the respondent to deposit admitted arrears and ongoing license fee. The judgment carefully balances procedural fairness with the need to prevent unjust enrichment by occupants who continue in possession after expiry of their contractual rights.

Case Background

The dispute arose out of a Leave and License Agreement dated 8 October 2013 executed between the appellants, Atul J. Doshi and others, as licensors, and Pramukh Properties and Developers Pvt. Ltd., as licensee. The agreement pertained to commercial premises situated in Mumbai and was executed for a fixed term of thirty-six months, commencing on 1 November 2013 and expiring on 31 October 2016.

Under the terms of the agreement, the respondent was required to pay a monthly license fee, subject to an annual escalation of seven percent. During the subsistence of the agreement, the respondent regularly paid the license fee in accordance with the contractual stipulations.

Upon expiry of the agreement, however, the respondent neither vacated the premises nor continued payment of license fee with the agreed increment. Faced with continued occupation without payment, the licensors instituted proceedings before the Court of Small Causes, Mumbai, seeking recovery of possession, arrears of license fee, future mesne profits, and permanent injunction restraining alienation or creation of third-party rights in respect of the premises.

Orders of the Trial Court and Appellate Court

During pendency of the eviction suit, the licensors moved an application under Order XXXIX Rules 1 and 2 of the CPC seeking interim injunction and monetary relief. Relying on Order XV-A CPC (Bombay Amendment), the Trial Court directed the respondent to pay liquidated damages at the rate of ₹10,000 per day as an interim measure.

The Appellate Court affirmed this direction. The respondent thereafter invoked the supervisory jurisdiction of the Bombay High Court under Article 227 of the Constitution. The High Court set aside the interim direction requiring payment of ₹10,000 per day, holding that liquidated damages could not be granted at an interlocutory stage. However, the High Court did not issue any direction for payment of arrears or continued license fee.

Aggrieved by the High Court’s failure to secure their monetary interests during pendency of the suit, the licensors approached the Supreme Court.

Issues Before the Supreme Court

The Supreme Court was called upon to examine:

• Whether courts can award liquidated damages or mesne profits as interim relief without trial;
• The correct scope and application of Order XV-A CPC (Bombay Amendment);
• Whether the High Court erred in not directing deposit of arrears and continued license fee;
• The extent to which Article 227 jurisdiction can be exercised in matters governed by a specific statutory framework.

The Supreme Court’s Analysis

Interim Relief Versus Final Adjudication

The Supreme Court began by reiterating the well-settled distinction between interim and final relief. It held that liquidated damages or mesne profits, even where contractually stipulated, require adjudication on evidence. Such determination involves examination of breach, loss, and enforceability, all of which fall squarely within the domain of trial.

Granting liquidated damages at the interim stage, the Court held, amounts to granting final relief without adjudication and violates fundamental principles of civil procedure. Interim orders are intended to preserve rights and prevent irreparable harm, not to conclusively determine monetary liability.

Object and Scheme of Order XV-A CPC (Bombay Amendment)

The Court undertook a detailed examination of Order XV-A CPC, which was introduced in Maharashtra to remedy a persistent problem: prolonged occupation of premises by tenants or licensees without payment during the pendency of eviction litigation.

Order XV-A empowers courts to direct the defendant to deposit arrears up to the date of the order and to continue depositing rent or license fee during the pendency of the suit. The provision also authorises striking off the defense in the event of non-compliance. The Court emphasised that this mechanism is protective rather than punitive and is designed to maintain fairness between the parties.

Error Committed by the High Court

While agreeing with the High Court that liquidated damages could not be awarded at the interim stage, the Supreme Court held that the High Court gravely erred in failing to apply Order XV-A CPC to secure arrears and ongoing payments.

The existence of the agreement, its expiry, and the rate of license fee were undisputed. The respondent had admittedly paid license fee with annual increments during the subsistence of the agreement. Upon expiry, continued occupation without payment rendered the respondent a gratuitous licensee. In such circumstances, the High Court ought to have ensured that the licensors were not deprived of consideration during the pendency of litigation.

Consequences of Non-Compliance

The Court reiterated that striking off the defense for non-compliance with deposit directions is not a discretionary afterthought but an integral part of Order XV-A. Courts cannot dilute this consequence under the guise of judicial discretion, as doing so would defeat legislative intent.

Supervisory jurisdiction under Article 227, the Court held, must be exercised to advance statutory objectives, not to nullify them.

Statutory Interpretation

Interpreting Order XV-A CPC (Bombay Amendment), the Court clarified that it operates independently of Order XXXIX CPC. While Order XXXIX governs injunctive relief, Order XV-A specifically addresses interim monetary protection in eviction suits.

The judgment draws a clear doctrinal distinction between adjudication of damages, which is substantive and requires trial, and securing admitted or contractual payments, which is procedural and interim in nature. This interpretation ensures balance between protecting property rights and preserving procedural fairness.

Why This Judgment Matters

This judgment provides authoritative guidance in commercial eviction litigation, particularly in metropolitan jurisdictions where licensor–licensee arrangements are common. It prevents trial courts from overstepping by granting de facto final monetary relief at the interlocutory stage.

Equally, it strengthens the efficacy of Order XV-A by reaffirming the obligation of courts to actively secure arrears and ongoing payments, thereby discouraging dilatory tactics by occupants who continue in possession without title or payment.

For practitioners, the ruling clarifies how interim applications should be framed and resisted, and reinforces the importance of statutory mechanisms designed to balance equities during prolonged litigation.

Final Outcome

Partly allowing the appeal, the Supreme Court upheld the High Court’s decision setting aside the interim award of liquidated damages. However, it directed the respondent to deposit arrears of license fee amounting to ₹1,46,37,440 up to 31 October 2025, calculated in accordance with the agreement.

The Court granted two months’ time for payment of arrears and directed continued monthly payment of license fee with the agreed annual escalation until disposal of the suits. In the event of default, the licensors were granted liberty to seek striking off of the defense under Order XV-A CPC. The Court further directed that the eviction suit and the declaratory suit be heard together and disposed of expeditiously.

Case Details

• Case Title: Atul J. Doshi & Ors. v. Pramukh Properties and Developers Pvt. Ltd.
• Citation: 2025 INSC 1345
• Court & Bench: Supreme Court of India (J.K. Maheshwari and Vijay Bishnoi, JJ.)
• Date of Judgment: 8 October 2025

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