Saturday, 27 October 2018

Whether small causes court can grant interim compensation during pendency of L.E.&C. Suit?

 In my opinion, the approach of the Appellate Court to say the
least is perverse. After extracting Section 74, still, the Appellate Court
observed that the question of awarding damages on the basis of breach
of contract is a matter of evidence and is to be appreciated in the
proceeding and the burden is on the party, who claimed damages. So at
this stage, the question of awarding damages does not arise. In my
opinion, the said finding is in the teeth of Section 74 of the Act. This is
more so when in paragraph 21, the Appellate Court observed that “At
this stage, we are bound by the facts that the leave and licence
agreement has been registered by the parties to the proceedings. So
parties to the proceedings are bound by the leave and licence
agreement”. In view thereof, the impugned order passed by the
Appellate Court deserves to be set aside 
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CIVIL APPELLATE JURISDICTION
WRIT PETITION NO.10718 OF 2018

Ida Celene Mathias Vs. Mobin Ahmed Khan 

CORAM : R. G. KETKAR, J.
DATE : OCTOBER 22, 2018



Heard Mr. Godbole, learned Senior Counsel for petitioners in Writ
Petition No.10718 of 2018 as also for respondent No.3 in Writ Petition
No.9952 of 2018 and Mr. David, learned Counsel for respondent in Writ
Petition No.10718 of 2018 and for petitioner in Writ Petition No.9952 of
2018 at length.
2. Both these Petitions take exception to the judgment and order dated
07.08.2018 passed by the Appellate Bench of the Small Causes Court in
Revision Application No.56 of 2018. By that order, the Appellate Court
partly allowed the Revision Application in the following terms:
“ The order by the learned trial Judge C.R.No.34 below
Exh-13 in L.E.&C. Suit No.16 of 2017 dated 17.04.2018 is
hereby set aside and substituted as under:
The order directing the defendant to deposit the

damages @ Rs.20,000/- per day from 1-5-2016 with
liberty to the plaintiffs to withdraw the said amount
is hereby set aside.
The operative order clause No.3 is hereby
modified and defendant is directed to deposit
monthly licence fee of Rs.2,00,000/- from 1-5-2016
till 1-8-2018 total amounting to Rs.52,00,000/- in 8
installments on or before 15th day of each month
starting from August 2018.
The defendant is hereby directed to deposit
monthly licence fee of Rs.2,00,000/- from the date
of order till disposal of suit on or before 15th day of
each succeeding month in the Court.
Addl. Registrar, Small Causes Court, Bandra
Branch is directed to invest the amount of licence
fee as and when deposited by the appellant in the
fixed deposit for the term of atleast one year in the
Nationalized Bank.
No order as to costs.”
3. Mrs. Ida Celene Mathias and four others, hereinafter collectively
referred as 'Mathias', have instituted Writ Petition No.10718 of 2018
challenging that part of the impugned order whereby the Appellate Court
has set aside the order dated 17.04.2018 passed by the learned trial
Judge directing petitioner in Writ Petition No.9952 of 2018 (hereinafter
referred to as 'Mobin Khan') to deposit damages @ Rs.20,000/- per day
from 01.05.2016 with liberty to Mathias to withdraw that amount. They
have also challenged the order on the ground that though Mobin Khan is
directed to deposit monthly licence fee of Rs.2,00,000/- from the date of
the order till 01.08.2018 amounting to Rs.52,00,000/- in 8 installments
on or before 15th day of each month starting from August 2018 and is
further directed to deposit monthly licence fee of Rs.2,00,000/- from the
date of the order till disposal of the Suit on or before 15th day of each
succeeding month, Mathias are not permitted to withdraw that amount.
4. Mobin Khan has instituted Writ Petition No.9952 of 2018

challenging that part of the impugned order whereby the Appellate Court
modified clause 3 of the operative part of the trial Court's order and
directed him to deposit monthly licence fee of Rs.2,00,000/- from
01.05.2016 till 01.08.2018, total amounting to Rs.52,00,000/- in 8
installments on or before 15th day of each month starting from August
2018 and further directed him to deposit monthly licence fee of
Rs.2,00,000/- from the date of the order till disposal of the Suit on or
before 15th day of each succeeding month in the Court.
5. Rule. Learned Counsel for the respective respondents waive
service. Having regard to the narrow controversy raised in these
Petitions and at the request and by consent of the parties, Rule is made
returnable forthwith and the Petitions are taken up for final hearing. The
relevant and material facts that are necessary for the disposal of the Writ
Petitions are as follows:
6. On 23.11.2015, a registered leave and licence agreement was
entered into by and between Mathias on one hand and Mobin Khan on
the other. Clause 2 thereof provided that the duration of the licence is for
a period 6 months commencing from 01.11.2015 and ending by efflux of
time on 30.04.2016. Clause 3 thereof provided that in consideration of
the Mathias permitting Mobin Khan to use and occupy the licensed
premises, namely, commercial premises on the ground floor of the
building known as Mathias Bakery admeasuring about 2160.50 sq.ft.
(carpet area) alongwith an adjoining A.C. shed (for short 'suit premises')
on leave and licence basis, Mobin Khan shall pay to Mathias a sum of
Rs.2,00,000/- per month as and by way of licence fee and / or
compensation for the use and enjoyment of the suit premises for a period
of 6 months. The said licence fee shall be deemed to be a standard
licence fee or compensation payable in respect of the suit premises.
Clause 4 thereof provided that in addition to the payment of

Rs.2,00,000/- per month, Mobin Khan shall also be liable to pay
directly, electricity and water charges for the electricity and water
consumed in the suit premises as per the meter installed for the purpose.
Clause 12 thereof provided thus,
“12. In the event of the Licensee (Mobin Khan) failing to
handover to the Licensors (Mathias) possession of the
licensed premises on the expiry or sooner determination or
termination of the licence hereby granted as hereinabove
provided and continues to remain in occupation and
possession of the licensed premises, then in that event,
notwithstanding the right conferred upon the Licensors
(Mathias), the Licensors (Mathias) shall take such steps as
may be advised to take physical possession of the licensed
premises. The Licensors (Mathias) shall also be entitled to
charge the Licensee compensation and / or damages for the
use and occupation of the licensed premises at the rate of
Rs.20,000/- (Rupees Twenty Thousand Only) PER DAY,
which the Licensee (Mobin Khan) agrees, undertakes and
confirms to pay.”
7. After the efflux of time as Mobin Khan did not handover
possession of the suit premises, Mathias instituted L.E.&C. Suit No.16
of 2017 on or about 03.01.2017 in the Small Causes Court at Bombay
(Bandra Bench) inter alia praying for possession of the suit premises; for
directing Mobin Khan, his servants, agents, family members or any
person/s claiming through him to remove themselves with all their
belongings from the suit premises or any part thereof and to quit, vacate
and handover quiet, vacant and peaceful possession of the suit premises;
for direction to Mobin Khan to deposit quantified compensation /
penalty / damages at the rate of Rs.20,000/- per day during the pendency
of the Suit with liberty to withdraw the same; for direction to Mobin
Khan to deposit accrued licence fee at the rate of Rs.2,00,000/- per
month with liberty to withdraw the same.
8. Mathias took out application exhibit-13 under Order XV-A of the
Code of Civil Procedure, 1908 (for short 'C.P.C.') inter alia praying for

direction to Mobin Khan to deposit pre-estimated genuine quantified
compensation and / or liquidated damages @ Rs.20,000/- per month
from 01.05.2016 till the disposal of the Suit; for further direction to
Mobin Khan to deposit accrued monthly licence fee @ Rs.2,00,000/- per
month from 01.05.2016 with liberty to withdraw the same.
9. Mobin Khan filed reply exhibit-20 dated 18.04.2017 opposing
that application. By order dated 17.04.2018, the learned trial Judge
allowed the application in the following terms:
“2. Pending the hearing and disposal of the present suit,
the defendant is directed to deposit the pre-estimated genuine
quantified compensation and / or liquidated damages @
Rs.20,000/- per day from 01/05/2016 with liberty to plaintiffs
to withdraw the same.
3. Pending the final hearing and disposal of present suit,
the defendant is directed to deposit accrued monthly licence
fees @ Rs.2,00,000/- per month from 01/05/2016 and
plaintiffs are at liberty to withdraw the same.”
10. Aggrieved by this decision, Mobin Khan instituted Revision
Application No.56 of 2018. Mobin Khan has also instituted R.A.D.Suit
No.221 of 2017 on 17.04.2017 inter alia praying for declaration that he
is a lawful tenant of the suit premises; for perpetual injunction
restraining Mathias from dispossessing him from the suit premises
without following due process of law; for permitting him to deposit an
amount of Rs.3,00,000/- towards 4 months rent @ Rs.75,000/- per
month on or before 10th day of every succeeding month. Mobin Khan
also instituted R.A.D.Suit No.346 of 2018 in or about August 2018 inter
alia praying for declaration that the leave and licence agreement dated
23.11.2015 is sham and colourable document; for declaration that the
said document is never to be acted upon; for declaration that Mathias are
not entitled to any reliefs under the said agreement. By that impugned
order, the Appellate Court partly allowed the Revision Application as
indicated earlier. It is against this order, Mobin Khan has instituted Writ

Petition No.9952 of 2018 and Mathias have instituted Writ Petition
No.10718 of 2018.
11. In support of Petition instituted by Mathias, Mr. Godbole has
invited my attention to clauses 1, 2, 3 and 12 of the leave and licence
agreement. He submitted that the learned trial Judge allowed the
application on 17.04.2018 and directed Mobin Khan to deposit preestimated
genuine quantified compensation and / or liquidated damages
@ Rs.20,000/- per day from 01.05.2016 with liberty to Mathias to
withdraw the same. The learned trial Judge further directed Mobin Khan
to deposit accrued monthly licence fees @ Rs.2,00,000/- per month from
01.05.2016 and permitted Mathias to withdraw the same. He submitted
that the period of leave and licence agreement was from 01.11.2015 to
30.04.2016. The said period is admittedly over and despite that, Mobin
Khan has not handed over possession of the suit premises. Though
Mobin Khan is occupying the suit premises, he is neither praying
accrued licence fee of Rs.2,00,000/- per month nor paying damages @
Rs.20,000/- per day, after the expiry of the licensed period, namely with
effect from 01.05.2016. He relied upon Section 74 of the Indian
Contract Act, 1872 (for short 'Act') to contend that when a contract is
broken, if a sum is named in the contract as the amount to be paid in
case of such breach, or if the contact contains any other stipulation by
way of penalty, the party complaining of the breach is entitled, whether
or not actual damage or loss is proved to have been caused thereby, to
receive from the party who has broken the contract reasonable
compensation not exceeding the amount so named or, as the case may
be, the penalty stipulated for. In the present case, in terms of clause 12,
Mobin Khan agreed to pay compensation and / or damages @
Rs.20,000/- per day. He is also liable to pay monthly licence fee @
Rs.2,00,000/- per month in terms of clause 3 of the leave and licence

agreement.
12. Mr. Godbole further submitted that though the learned trial Judge
has permitted Mathias to withdraw the compensation and / or liquidated
damages @ Rs.20,000/- per day from 01.05.2016, the same may be
ordered to be deposited in the Small Causes Court with further direction
to invest the same pending the Suit filed by Mathias. In so far as the
direction to Mobin Khan to deposit monthly licence fee @ Rs.2,00,000/-
per month from 01.05.2016 is concerned, Mathias may be permitted to
withdraw the same, unconditionally.
13. On the other hand, Mr. David submitted that the Appellate Court
was not justified in modifying clause 3 of the operative part of the trial
Court's order and directing Mobin Khan to deposit monthly licence fees
@ Rs.2,00,000/- from 01.05.2016 till 01.08.2018 and further directing
him to deposit monthly licence fee of Rs.2,00,000/- from the date of the
order till disposal of the Suit. He submitted that Mobin Khan's father
was inducted in the suit premises by Robert Mathias as far as back as in
the year 1977. Thus, father of Mobin Khan entered in the suit premises
way back in the year 1977. From 1980 till 1992, various agreements
were executed between the parties. The agreements between 1980 and
1992 are in possession of Mathias and not in possession of Mobin Khan.
The agreements executed between 1992 and 2015 are in possession of
Mobin Khan. He submitted that Mobin Khan has instituted Suit
challenging the agreement dated 23.11.2015. He has sought declaration
that the leave and licence agreement dated 23.11.2015, which was
executed by his Power of Attorney, is sham and colourable document
and that the said agreement was never to be acted upon. He has also
prayed for further declaration that Mathias are not entitled to any benefit
under the said agreement. Mathias, till date, have not filed written

statement in the said Suit and the Suit is proceeding ex-parte. He
submitted that Mobin Khan is in exclusive possession of the suit
premises. He submitted that Mathias have never raised demand for
payment of licence fee @ Rs.2,00,000/- per month. Even in the demand,
which was raised firstly on 10.01.2017, they did not claim licence fee @
Rs.2,00,000/- per month. In fact, Mobin Khan is paying Rs.75,000/- per
month to the plaintiff No.3. He submitted that the Appellate Court was
not justified in directing Mobin Khan to deposit monthly licence fees @
Rs.2,00,000/- from 01.05.2016 till 01.08.2018 and further directing him
to deposit monthly licence fee of Rs.2,00,000/- from the date of the
order till disposal of the Suit. The said amount can be quantified only
after evidence is adduced by the parties. At the interlocutory stage, the
Appellate Court was not justified in passing the directions impugned in
the operative part of the order.
14. I have considered the rival submissions advanced by the learned
Counsel appearing for the parties. I have also perused the material on
record. I have already extracted clause 12 of the leave and licence
agreement. Clauses 2 and 3 of the said agreement read thus,
“2. The duration of the license hereby granted shall be for a
period of 6 (Six) months only commencing from the date 01st
November 2015 (and ending by efflux of time on 30th April
2016 or on sooner determination thereof, as recorded in the
terms and conditions herein) the Licensors puts the Licensee
in permissive user and occupation of the licensed premises.
3. In consideration of the Licensors permitting the
Licensee to use and occupy the licensed premises on leave and
license basis, the Licensee shall pay to the Licensors a sum of
Rs.2,00,000/- (Rupees Two Lakhs only) per month as and by
way of license fee and / or compensation for the use and
enjoyment of the licensed premises for the said period of 6
(six) months. The said license fee shall be deemed to be
standard license fee or compensation payable in respect of the
said premises. If the Licensee challenges the said license fee
payable in respect to the said premises as not being standard
license fee or compensation before any Court or Forum, then

and in that event, this Agreement shall come to an end and the
Licensee shall forthwith quit, vacate and hand over quiet,
vacant and peaceful possession of the said premises.”
15. A perusal of clause 2, extracted hereinabove, show that the
duration of licence is for a period of 6 months commencing from
01.11.2015 and ending on efflux of time on 30.06.2016. A perusal of
clause 3 shows that Mobin Khan agreed to pay licence fee of
Rs.2,00,000/- per month for use and enjoyment of the suit premises for a
period of 6 months. Clause 12 extracted earlier shows that Mobin Khan
agreed, undertook and confirmed to pay Rs.20,000/- per day in the event
of his failure to handover possession of the suit premises on the expiry
or sooner determination or termination of the licence.
16. As noted earlier, Mathias have instituted Suit on or about
17.04.2017. A perusal of prayers made in that Suit clearly shows that as
and way of interim order, they have claimed compensation / penalty /
damages @ Rs.20,000/- per day as also direction to deposit accrued
licence fee @ Rs.2,00,000/- per month. Mr. David submitted that they
have, however, not claimed these amounts from a particular date. I do
not find any merit in this submission. Admittedly, the licensed period is
over on 30.04.2016. Equally, admitted position is that Mobin Khan
continues to be in occupation of the suit premises. In view of clause 3 of
the leave and licence agreement, he has agreed to pay licence fee @
Rs.2,00,000/- per month. Section 55 of the Maharashtra Rent Control
Act, 1999 (for short 'Maharashtra Rent Act') reads thus,
55. Tenancy agreement to be compulsorily registered.- (1)
Notwithstanding anything contained in this Act or any other
law for the time being in force, any agreement for leave and
licence or letting of any premises, entered into between the
landlord and the tenant or the licensee, as the case may be,
after the commencement of this Act, shall be in writing and
shall be registered under the Registration Act, 1908 (XVI of
1908).

(2) The responsibility of getting such agreement registered
shall be on the landlord and in the absence of the written
registered agreement, the contention of the tenant about the
terms and conditions subject to which a premises have been
given to him by the landlord on leave and licence or have been
let to him, shall prevail, unless proved otherwise.
(3) Any landlord who contravenes the provisions of this
section shall, on conviction, be punished with imprisonment
which may extend to three months or with fine not exceeding
rupees five thousand or with both.”
17. A perusal of the above extracted provision shows that after
commencement of the Maharashtra Rent Act, the agreement of tenancy
or for leave and licence is required to be in writing and further it is
required to be registered under the Registration Act, 1908. The
responsibility of getting such agreement registered is on the landlord and
in the absence of the written registered agreement, the contention of the
tenant about the terms and conditions subject to which a premises have
been given to him by the landlord on leave and licence or have been let
to him, shall prevail, unless proved otherwise.
18. In the instant case, the leave and licence agreement is admittedly
a registered instrument. In view thereof, prima facie, the contention of
Mobin Khan about the terms and conditions subject to which premises
have been given to him on leave and licence basis cannot be accepted at
this stage. As he is occupying the suit premises even after expiry of the
licensed period, he is bound to pay monthly compensation @
Rs.2,00,000/-.
19. In so far as the payment of compensation and / or damages @
Rs.20,000/- per day is concerned, a perusal of the order of the Appellate
Court shows that Appellate Court undoubtedly reproduced Section 74 of
the Act. After reproducing Section 74, it was observed in paragraph 25
thus,

“25. The above facts indicates that the question of awarding
damages on the basis of breach of contract is a matter of
evidence and is to be appreciated in the proceeding and the
burden is on the party who claimed damages. So at this stage,
the question of awarding damages does not arise. The order
passed by the learned trial Court regarding awarding damages
of Rs.20,000/- per day from 1-5-2016 and liberty to the
plaintiffs to withdraw the same is not legal and proper and
deserves to be set aside.”
20. In my opinion, the approach of the Appellate Court to say the
least is perverse. After extracting Section 74, still, the Appellate Court
observed that the question of awarding damages on the basis of breach
of contract is a matter of evidence and is to be appreciated in the
proceeding and the burden is on the party, who claimed damages. So at
this stage, the question of awarding damages does not arise. In my
opinion, the said finding is in the teeth of Section 74 of the Act. This is
more so when in paragraph 21, the Appellate Court observed that “At
this stage, we are bound by the facts that the leave and licence
agreement has been registered by the parties to the proceedings. So
parties to the proceedings are bound by the leave and licence
agreement”. In view thereof, the impugned order passed by the
Appellate Court deserves to be set aside thereby allowing application
exhibit-13 in the following terms:
(a) Pending the hearing and final disposal of L.E.& C. Suit No.16 of
2017, Mobin Khan shall deposit the pre-estimated genuine quantified
compensation and / or liquidated damages @ Rs.20,000/- per day from
01.05.2016 till disposal of the Suit in the trial Court;
(b) The arrears of liquidated damages shall be deposited for the
period from 01.05.2016 till 31.10.2018, within 8 weeks from today,
under intimation in writing to the Advocate for Mathias;
(c) Upon deposit, the said amount shall be invested in any Fixed
Deposit, initially for a period of 3 years and shall be renewed during
pendency of the Suit;

(d) Pending the hearing and final disposal of L.E.&C. Suit No.16 of
2017, Mobin Khan is directed to deposit monthly licence fee of
Rs.2,00,000/- from 01.05.2016 till 31.08.2018 total amounting to
Rs.56,00,000/- within 8 weeks subject to adjustment of deposits /
payments made to Mathias;
(e) Pending the hearing and final disposal of L.E.&C. Suit No.16 of
2017, Mobin Khan shall deposit monthly licence fee @ Rs.2,00,000/- for
the period from 01.09.2018, on or before 10th day of the succeeding
month/s under intimation in writing to the Advocate for Mathias;
(f) Mathias are permitted to withdraw the amount referred in clauses
(d) and (e) hereinabove, unconditionally.
21. Rule is made absolute in Writ Petition No.10718 of 2018 and
Rule is discharged in Writ Petition No.9952 of 2018 with no order as to
costs.
(R. G. KETKAR, J.)

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