No Right on Property after Expiry of Lease, Rules HC


Mumbai, Mar 28: A leave-and-licence agreement does not confer the licensee any right on the property, the Bombay high court has held. "Leave-and-licence generally does not create a right in the property or interest in the property," a division bench of Justice S B Mhase and Justice Prasanna Varale said. "It is only a right to enjoy the property for a specified period without creating any interest in the property."

The court was adjudicating a dispute between cosmetic company L'Oreal and Global Earth Properties Developers over the premises occupied by the former at a prime location at Peninsula Tower I, Lower Parel.

The judges ruled that since the 33-month leave-and-licence agreement, signed by L'Oreal for office space and 27 car-parking slots had expired, it was a "trespasser" on the property. The court also struck down a single judge's observation that L'Oreal could continue to occupy the space on the basis of the L&L agreement till its legal battle with GEPD was decided. This paves the way for the GEPD to move the court to recover compensation of Rs 1.18 lakh a day from L'Oreal for the period it has overstayed.

Advocate Darshan Mehta of Dhruve Liladhar and Company, which represented L'Oreal, told TOI: "We will challenge the order in the Supreme Court."

The judges said L'Oreal could be in unlawful possession of the property according to the agreement's terms but GEPD would still have to follow the due process of law to evict it.

"It is a well-settled principle that even a trespasser cannot be removed by taking the law in one's hands and the person entitled to possession of the property shall obtain it by following the due process of law... that is the method in a civilised society."

L'Oreal deposited Rs 2.12 crore and signed an agreement with Piramal, the original owners of Peninsula Towers, in November 2003. Piramal subsequently sold the property to GEPD. When the original term of the L&L agreement expired in May 2007, GEPD asked L'Oreal to move out. The matter then went to the courts.

L'Oreal claimed that it had signed an additional document with Piramal that allowed for automatic renewal of the licence for 15 months and further renewals of 18 months and 33 months; it meant it could occupy the property till November 2012. L'Oreal's lawyers claimed that GEPD was bound to honour the agreement, which the latter denied.

The high court upheld an order of a single judge refusing L'Oreal protection from eviction and stay on the suit filed by GEPD against it. The court further said that the question of the validity of the additional document for renewal could be gone into by the trial court. The HC has stayed its order for eight weeks. 


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Title: No Right on Property after Expiry of Lease, Rules HC

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