Case Note & Summary
The petitioner, New Shivam Co-operative Housing Society Ltd., is a co-operative housing society that entered into a Leave and License Agreement with the respondent, M/s. Raj Publicity, a partnership firm, in 1986, permitting the respondent to erect an advertisement hoarding on the society's premises. The agreement was renewed periodically, with the last renewal on 28th October 2010 for a period ending on 31st March 2018. As the license period was about to expire, differences arose between the parties regarding renewal. The respondent filed Suit No.73/2018 in the Court of Small Causes, Mumbai, under Section 41 of the Presidency Small Causes Court Act, 1882, seeking an injunction to restrain the society from dispossessing it. The trial court dismissed the injunction application on 7th August 2018. The respondent appealed, and the Appellate Bench of the Small Cause Court, by order dated 21st September 2018, reversed the trial court's order and granted an ad interim injunction restraining the society from dispossessing the respondent without due process of law, also observing that the society could claim interim compensation. The society challenged this appellate order by filing a writ petition in the Bombay High Court. The society argued that the respondent was a chronic defaulter in payment of monthly charges, that the license had expired, and that the respondent had no independent right to remain in possession. The respondent contended that it was entitled to renewal under the agreement and that the society had not followed due process. The High Court, after hearing submissions, dismissed the writ petition, holding that the Appellate Bench's order was justified as the licensee's possession was permissive and the licensee could not be dispossessed without due process of law. The court noted that the trial court had failed to consider that no threat of force was alleged and that the appellate court's interference was not perverse. The High Court upheld the interim injunction, directing the society to seek eviction through proper legal proceedings.
Headnote
A) Contract Law - Leave and License Agreement - Interim Injunction - Protection Against Dispossession - Presidency Small Causes Court Act, 1882, Section 41 - Licensee sought injunction to restrain licensor from dispossessing after expiry of license period - Appellate Bench granted ad interim injunction holding that licensee cannot be dispossessed without due process - Held that even after expiry of license, licensee is entitled to protection against forcible dispossession and must be evicted only in accordance with law (Paras 4-5). B) Civil Procedure - Interim Injunction - Appellate Court's Power to Reverse Trial Court's Discretion - Code of Civil Procedure, 1908, Order 39 Rules 1 and 2 - Trial Court dismissed injunction application; Appellate Bench reversed and granted injunction - Held that appellate court can interfere if trial court's discretion is exercised arbitrarily or perversely, and here the trial court failed to consider that licensee's possession was permissive and no threat of force was alleged (Paras 8-10). C) Contract Law - Renewal Clause - Conditions Precedent - Leave and License Agreement - Licensee claimed right to renewal under agreement - Held that renewal is subject to compliance with contract conditions, including regular payment of charges; mere default does not entitle licensor to forcibly dispossess without following legal process (Paras 9-10).
Issue of Consideration
Whether the Appellate Bench of the Small Cause Court was justified in granting an ad interim injunction restraining the licensor from dispossessing the licensee without due process of law, despite the license period having expired and the licensee being in default.
Final Decision
The High Court dismissed the writ petition, upholding the Appellate Bench's order granting ad interim injunction. The court held that the licensee's possession was permissive and the licensee could not be dispossessed without due process of law. The society was directed to seek eviction through proper legal proceedings.
Law Points
- Licensee's possession is permissive
- not adverse
- Licensee entitled to protection against dispossession without due process
- Interim injunction can be granted to prevent unlawful dispossession
- Appellate court can reverse trial court's discretion if perverse or unreasonable
- Renewal clause does not create automatic right to renewal
- Default in payment does not justify forcible dispossession.
