Court clarifies that interim compensation for occupation after license termination need not be at market rate and applies to gratuitous licensees; compensation payable from date of application
In a significant judgment dated August 27, 2026, the Bombay High Court, presided over by Justice Arun R. Pedneker, ruled that gratuitous licensees occupying premises after termination of their license can be directed to pay interim compensation under Order XV-A of the Code of Civil Procedure, 1908 (CPC). The ruling came in the case of Anand Alidas Choithani v. Naresh Hariram Choithani, involving a long-pending family dispute over residential premises in Mulund Colony, Mumbai.
The dispute revolved around residential premises allotted under the Displaced Persons (Compensation and Rehabilitation) Scheme post-Partition. The petitioner, Anand Alidas Choithani, claimed continuous possession of part of the premises, originally allotted to his late father Hariram Alidas Choithani. The respondent, Naresh Hariram Choithani, filed a suit for eviction on the grounds that the petitioner was a gratuitous licensee occupying without paying rent or license fees.
During the pendency of the eviction suit, the Trial Court directed the petitioner to deposit compensation amounting to Rs. 14,41,000 for the period January 2012 to August 2023, with further monthly payments thereafter. On appeal, the Appellate Bench modified this order, reducing compensation to Rs. 10,000 per month from August 31, 2023, and allowed withdrawal of the deposited amount subject to furnishing an undertaking to redeposit in case of adverse orders.
The petitioner challenged the directions to pay compensation on the ground that Order XV-A CPC applied only to lessor-lessee or licensor-licensee relationships and not gratuitous licensees, particularly where title was disputed. The High Court rejected this argument, holding that Order XV-A's scope extends to gratuitous licensees as well, recognizing the equitable need to protect landlords from prolonged occupation without payment during litigation.
Crucially, the Court emphasized that the compensation need not be at market rate but must be reasonable and sufficient to reflect the occupation. It held that compensation should generally be payable from the date of the application for compensation rather than the date of suit filing, aligning with precedents such as Apsara Development Corporation v. Rafique Siddique.
The Court observed that the plaintiff's claim in the suit was for Rs. 8,500 per month till judgment, and compensation awarded exceeding this amount would amount to "travelling beyond the pleadings." Therefore, it partly modified the appellate order by directing payment of Rs. 8,500 per month as interim compensation from the date of the application.
Additionally, the Court allowed the licensor to withdraw the compensation amount deposited in court, subject to an undertaking to redeposit if the final judgment goes against him.
This judgment clarifies the application of Order XV-A CPC in landlord-licensee disputes, reinforcing the principle that even gratuitous licensees occupying premises after license termination can be made liable to pay interim compensation. It balances the interests of landlords awaiting long litigation outcomes and occupants whose title claims remain disputed.
Bottom Line:
Gratuitous licensees occupying premises post-termination of license can be directed to pay interim compensation under Order XV-A of the Code of Civil Procedure, 1908. The compensation should be reasonable and not necessarily at market rate.
Statutory provision(s): Code of Civil Procedure, 1908 - Order XV-A
Anand Alidas Choithani v. Naresh Hariram Choithani, (Bombay) : Law Finder Doc Id # 2971319
