Gratuitous Licensee Can Be Directed To Deposit Licence Fee In Eviction Suit Under Order XV-A CPC: Bombay High Court
The High Court also held that compensation under Order XV-A is interim and compensatory in nature, but cannot travel beyond the plaintiff’s own pleadings in the eviction suit.
The Bombay High Court has held that a suit for eviction of a gratuitous licensee is not completely outside the scope of Order XV-A of the Code of Civil Procedure, 1908, and that where the licensor shows that the gratuitous licence has been terminated but the licensee continues to occupy the premises, the Court can direct deposit of an appropriate amount towards licence fee.
The Court was hearing two writ petitions arising from orders passed in an eviction suit before the Small Causes Court, Mumbai, where the Trial Court had directed deposit of arrears and monthly compensation under Order XV-A CPC, and the Appellate Bench had reduced the amount while also declining withdrawal of the deposited sum.
A Single Judge Bench of Justice Arun R. Pedneker observed: “...the suit for eviction of a gratuitous licensee does not appear to be completely out of the purview of the provisions contained in Order XV-A, ... it would be contextually relevant to note that Rule (1) of Order XV-A came to be substituted by the Notification dated 11 January, 1990. Inter alia, the expression, 'In a suit by a lessor or a licensor against a lessee or licensee' as the case may be, came to be substituted for the expression 'In a Suit by a lessor for eviction of a lessee'. The Rule-making authority thus found it necessary to empower the court to direct a licensee as well to deposit the license fee in a Suit instituted by the licensor for eviction, with or without arrears of license fee".
The Court further observed: “The term 'licensee' covers within its fold a gratuitous licensee. If the landlord succeeds in demonstrating that the Defendant was a gratuitous licensee, that license has been duly terminated and yet such licensee continues to occupy the subject premises, as a matter of principle, the Court cannot be precluded from directing such licensee to deposit the amount towards license fee as the Court may find appropriate in a given case.”
Advocate Vikramjit S. Garewal appeared for the petitioner; Advocate Pradeep Thorat appeared for the respondent.
Background
The dispute concerned residential premises originally allotted under the Displaced Persons (Compensation and Rehabilitation) Scheme following Partition. An additional portion was later constructed adjoining the original premises, and disputes arose between two branches of the family over their respective rights in the property.
The plaintiff/licensor instituted an eviction suit before the Small Causes Court contending that the defendant was a gratuitous licensee. During the pendency of the suit, the Trial Court allowed an application under Order XV-A CPC and directed the defendant to deposit arrears of compensation and further monthly compensation.
The Appellate Bench partly modified the Trial Court’s order by directing compensation at ₹10,000 per month from the date of the application, instead of from the date of institution of the suit. The occupant challenged the direction to deposit compensation, while the licensor challenged the reduction of compensation and the refusal to permit withdrawal of the amount deposited.
The occupant argued that Order XV-A CPC would apply only to a lessor-lessee or licensor-licensee relationship and not to a gratuitous licensee, particularly when title was itself under dispute. The licensor submitted that the declaratory suit concerning the premises had already been dismissed, that Order XV-A was an equitable remedy, and that the compensation fixed by the Appellate Bench was inadequate.
Court's Observations
The Court noted that the defendant’s suit seeking declaratory reliefs in respect of the same property had been dismissed and that an appeal was pending. It also referred to the Trial Court’s finding that the alleged transfer by the plaintiff’s father in favour of the defendant was without consideration.
The Court observed: “Prima facie, therefore, the original title of the Plaintiff in the present suit is not under a cloud.”
The Court examined the compensation claimed in the eviction suit and found that the plaintiff had claimed ₹8,500 per month till judgment, without pleading an enhanced rate for every year.
The Court held: “Considering the prayer clause in the suit, particularly that the Plaintiff has claimed an amount of Rs.8,500/- per month till the date of the judgment, the compensation awarded under Order XV-A beyond Rs.8,500/- amounts to travelling beyond the pleadings.”
On the starting point for payment, the Court applied the principle that compensation under Order XV-A is interim in nature and should run from the date of the application.
The Court observed: “Since the relief is in the nature of interim compensation, there is no justification for granting such compensation from the date of filing of the suit.”
The Court referred to the object of Order XV-A, observing that the provision was intended to protect the landlord where the occupant continues in possession after termination of the lease or licence without paying rent or licence fee.
The Court noted: “The object of the said provision appears to be to secure the interest of the landlord, as the continued occupation of the Suit Premises by a lessee or licensee after termination of the lease or license, as the case may be, without payment of rent or license fees, would cause grave prejudice to the landlord.”
While holding that compensation could be directed even against a gratuitous licensee, the Court clarified that market-rate principles need not strictly govern such cases. Referring to Atma Ram Properties (P) Ltd. v. Federal Motors Pvt. Ltd. (2005), it observed that those principles may not strictly apply to a gratuitous licensee.
The Court stated: “However, the Court needs to be alive to the fact that the Defendant is in the occupation of the subject premises post revocation of the gratuitous license, without paying any premium or fees for the same.”
The Court further noted that “although the compensation may not be at the market rate, it has to be sufficient, being conscious that the gratuitous licensee is occupying the premises, and that a reasonable fee for such occupation has to be determined by this Court.”
Applying the above principles, the Court partly modified the Appellate Bench’s order and reduced the compensation to the amount supported by the pleadings.
The Court held: “Considering the principles of law laid down in various judgments of this Court, this Court would partly modify the order of the Appellate Court by directing the payment of compensation to the extent of Rs. 8,500/- per month from the date of the application.”
Conclusion
The High Court partly allowed and disposed of both writ petitions. It directed payment of compensation at ₹8,500 per month from the date of the Order XV-A application. It also permitted the prima facie licensor/owner to withdraw the amount deposited before the Court, subject to an undertaking that the amount would be redeposited if any adverse order was passed.
The Court directed that the arrears be paid within six weeks and that monthly compensation be deposited regularly thereafter.
Cause Title: Anand Alidas Choithani v. Naresh Hariram Choithani (Neutral Citation: 2026:BHC-AS:35357)
Appearances
Petitioner: Advocate Vikramjit S. Garewal, with Advocates Sagar Deb, Anmol Bartaria and Mohak Bartaria
Respondent: Advocate Pradeep Thorat, instructed by Advocate B.R. Dalal