Delhi High Court
Abaskar Construction Pvt. Ltd. vs Pakistan International Airlines on 9 February, 2011
Author: V.K. Jain
Bench: V.K. Jain
THE HIGH COURT OF DELHI AT NEW DELHI
% Judgment Reserved on: 7.2.2011
Judgment Pronounced on: 09.02.2011
+ CS(OS) No. 1128/2006
ABASKAR CONSTRUCTION PVT. LTD. .....PLAINTIFF
- versus -
PAKISTAN INTERNATIONAL AIRLINES .....DEFENDANT
Advocates who appeared in this case:
For the Plaintiff: Mr. Neeraj Kishan Kaul, Sr. Adv. with Mr.
Jasmeet Singh, Mr. Saurabh Tiwari,
Mr.Karan Luthra and Mr.K.D.Sengupta, ,
Advs.
For the Defendant: Mr. Sanjeev Kapoor, Ms.Shahana Farah
and Mr.S.Patra, Advs.
CORAM:-
HON'BLE MR JUSTICE V.K. JAIN
1. Whether Reporters of local papers may
be allowed to see the judgment? Yes
2. To be referred to the Reporter or not? Yes
3. Whether the judgment should be reported Yes
in Digest?
V.K. JAIN, J
1. This is a suit for mandatory injunction and
recovery of Rs.69,84,900/-. The defendant was a tenant
under the plaintiff in respect of flat No.102, Kailash
Building, 26 Kasturba Gandhi Marg, New Delhi-110001.
CS(OS)No.1128/2006 Page 1 of 22
The premises to the defendant were let out vide lease deed
dated 31st December, 1996, which was registered on 2 nd
January, 1997. The case of the plaintiff is that under the
terms of the lease deed, particularly Clauses 4(ix) and 5(i)
thereof, the increase, if any, in the house tax was to be
borne by the defendant. On receipt of bills for the
assessment years 1997-98, 1998-99 and 1999-2000 for
Rs.93,936/-, 93,936/- and 1,17,420/- respectively, the
plaintiff demanded the aforesaid amounts from the
defendant . The increase in amount of house tax for the
year 1999-2000 was duly paid by the defendant. However,
the bills for the years 1997-98 and 1998-99 were forwarded
by the defendant to its Head Office. For the year 2000-01,
the plaintiff received a bill for Rs.1,17,400/- and accordingly
it requested the defendant to reimburse the amount of
Rs.46,948/- being increase in house tax payable by the
defendant for the year 2000-01. The defendant made
payment of the increase in house tax for the years 1997-98,
1998-99 and 2000-01 vide its cheque dated 24th January,
2001. The bills for the years 2001-02 and 2002-03 were
also received by the plaintiff and the defendant was asked to
reimburse the amount of Rs.70,416/- to the plaintiff being
CS(OS)No.1128/2006 Page 2 of 22
the amount of increase in house tax for the years 2001-02
and 2002-03.
2. It is further alleged that the ratable value of the
property was increased to Rs.45,89,400/- with effect from
1st September, 1999 and to Rs.55,53,200/- with effect from
1st September, 2002. Based on the above referred
assessment order, the NDMC issued a bill to the plaintiff
demanding a sum of Rs.60,83,958/- being the difference of
tax for the period from 1st April, 1999 to 31st March, 2004.
Being aggrieved, the plaintiff filed a suit for injunction
against the NDMC and the demand was stayed by this
Court, subject to the plaintiff depositing a sum of
Rs.40,00,000/- with the NDMC. The plaintiff, in
compliance of the order of the Court, deposited the aforesaid
amount with NDMC. The plaintiff also asked the defendant
to pay the amount of Rs.40,93,884/- being the difference in
the amount of house tax for the period from 1 st April, 1999
to 31st March, 2004. The defendant vide its letter dated 18 th
May, 2004 denied its liability to make payment of increase
in house tax.
3. It is also alleged that for the year 2004-05, the
plaintiff received a bill for Rs.15,15,960/- from the NDMC
CS(OS)No.1128/2006 Page 3 of 22
and paid that amount on 21st November, 2004. The
plaintiff, thereafter, asked the defendant to reimburse the
amount of Rs.14,45,508/- along with earlier demanded sum
of Rs.40,93,884/-. For the year 2005-06 also, the plaintiff
received a bill for Rs.15,15,960/- and paid that amount to
the NDMC. The increase in house tax which, according to
the plaintiff, was payable by the defendant in terms of lease
deed is claimed to be Rs.14,45,508/-. The plaintiff has now
claimed the aforesaid three sums making a total sum of
Rs.69,84,900/-.
4. The defendant has contested the suit. It has taken
preliminary objection that the suit is barred by limitation. It
is also alleged that the claim of the plaintiff for the amount
of Rs.40,00,000/- deposited in compliance of the order
passed by this Court in CS(OS) No.387/2004 having not
attained finality, it cannot recover the aforesaid amount
from the plaintiff and to this extent the suit is premature.
On merits, referring to Clause 4(ix) of the lease deed, it has
been stated that the aforesaid clause applies only in case of
increase in levies or rates other than the rates of house tax
and ground rent. It is also stated by the defendant that
since what has been increased is ratable value and not the
CS(OS)No.1128/2006 Page 4 of 22
rate of house tax, no liability in respect of house tax can be
imposed it. As regards payment of Rs.46,948/- to the
plaintiff with respect to increase in house tax for the year
1999-2000, it has been claimed that the letter dated 22 nd
February, 2000 enclosing cheque for the aforesaid amount
was written under a bona fide mistake and
misunderstanding. Similar stand has been taken by the
defendant with respect to payment of Rs.93,916/- for the
years 1997-98, 1998-99 and 2000-01.
5. The following issues were framed on the pleadings
of the parties:-
(i) Whether the suit is within limitation? OPP.
(ii) Whether the increased house tax was to be borne by
the defendant? OPP.
(iii) Whether the plaintiff is entitled to interest? If so, at
what rate and to what amount? OPP.
(iv) Relief.
ISSUE NO.(i)
6. It is not in dispute that amount of Rs.40,00,000/-,
which the plaintiff deposited in compliance with the interim
order passed by this Court in CS(OS) No.387/2004 was
deposited with NDMC vide cheque dated 26th April, 2004.
The plaintiff had absolutely no cause of action to claim this
CS(OS)No.1128/2006 Page 5 of 22
amount from the defendant without first paying it to NDMC.
Computed from 26th April, 2004, the suit, having been filed
on 23rd May, 2006, is well within time. The payment of
Rs.15,15,960/- for the year 2004-05 was made by the
plaintiff on 20th November, 2004 whereas payment for the
year 2005-06 was made on 13 th January, 2006. The suit
with respect to both these payments is also well within time.
The issue is, accordingly, decided against the defendant and
in favour of the plaintiff.
ISSUE NO.(ii)
7. There is no dispute between the parties with
respect to facts and the parties agreed not to lead evidence.
The lease deed executed between the parties is exhibit D-1
and is an admitted document. Clause 2, 4(ix) and 5(i) of the
lease deed to which the parties have referred during
arguments read as under:-
" 2. The aforementioned monthly rental
of Rs.338200.00 and of
Rs.13000.00 totaling
Rs.351200.00 is, inclusive of
house tax, ground rent and other
levies, taxes, rates, cesses, out
goings etc. whatsoever imposed by
the Government or any authority
or local body whatsoever, subject
to the terms and conditions
contained in Clause 4(ix)
CS(OS)No.1128/2006 Page 6 of 22
hereinafter.
4(ix) To pay to the Lessor for increase in
the existing levies, rates, cesses
that may be affected by the
Government or any statutory
authority including all out goings
that a Lessee is liable to pay
proportionate to the area of the
Building „Kailash‟ in occupation of
the Lessee subject to the Lessee
being satisfied about the payment
of the same by the Lessor.
5(i) To pay all house-taxes, ground
rents and other municipal levies, cesses
and taxes, out goings whatsoever etc.,
imposed from time to time by the
Government, local authority or any other
statutory body, including the Municipal
Authority, Land and Development Officer,
Delhi Development Authority as well as
any increase therein imposed in respect of
the building „Kailash‟ or the demised
premises, subject to the provisions of
Clause (ix) of Para 4 herein before, it being
further agreed that in case of reduction in
any existing levies, rates cesses referred
to in Clause (ix) of para 4 herein before
which the Lessee is liable to pay, the
Lessee shall have the benefit thereof
proportionate to the area of the building
„Kailash‟ in occupation of the Lessee."
8. It would be seen from a perusal of Clause 2 above
that the monthly rent of Rs.3,51,200/- agreed between the
parties was inclusive of house tax and ground rent besides
other levies, taxes etc. and out goings, to the extent they
were imposed by the Government or any local body, which
CS(OS)No.1128/2006 Page 7 of 22
in this case would be NDMC. This, of course, has been
made subject to Clause 4(ix) of the lease deed. A lease deed,
in which it is specifically stated that the agreed rent was
inclusive of house tax, would be different from the lease
deed, which provides that it will be the responsibility of the
lessor. In the former case, it becomes the contractual
liability of the lessee, whereas in the later case it does not
form part of the rent and therefore does not become a
component of his contractual obligation to the lessor.
Though in its letter dated 18th May, 2004, which is Exhibit
P-6, the defendant claimed that to expect a lessee to
contribute towards payment of house tax on the same being
enhanced in future would be an unconscionable and illegal
term of agreement, not enforceable in a Court of law, my
attention has not been drawn to any legal provision, which
would render such an agreement illegal or unenforceable in
law. There is no illegality in the tenant agreeing to bear
increase in house tax of the premises taken by him on rent.
Section 23 of the Indian Contract Act, 1872, to the extent it
is relevant, provides that the consideration or object of an
agreement is lawful, unless (a) it is forbidden by law; or (b)
is of such a nature that, if permitted, it would defeat the
CS(OS)No.1128/2006 Page 8 of 22
provisions of any law; or (c) is fraudulent; or (d) involves or
implies, injury to the person or property of another; or (e)
the Court regards it as immoral, or opposed to public policy.
None of the above referred elements are present in an
agreement by a tenant to agree to pay increase in the
amount of house tax, so long as he is in occupation of the
tenanted premises. Since, none of the clauses contained in
Section 23 of the Indian Contract Act, 1872 are attracted to
such an agreement, the agreement is perfectly legal and
binding on the parties.
9. The next contention of the learned counsel for the
defendant was that the defendant can be made liable only if
there is an increase in the rate on which the house tax is
levied and will not be liable in case there has been increase
in the ratable value, without any change in the rate of tax.
This was also the stand taken by the defendant in its letter
dated 18th May, 2004. I, however, find no merit in the
contention. There can be no logic behind agreeing to pay
increase in the amount of house tax as a result of increase
in rate at which tax is levied on the ratable value and not
paying in case the increase is due to enhancement of ratable
value. What is material to the parties is the net outgo
CS(OS)No.1128/2006 Page 9 of 22
towards house tax, irrespective of whether it
increases/decreases due to revision of ratable value or due
to revision of rates. It is important to note in this regard
that the words used in Clause 4(ix) of the lease deed refer
not only to rates but also to „all out goings‟, which the lessee
(defendant) was liable to pay, proportionate to the area of
the building „Kailash‟ which it had taken on rent and the
outgoing would be the amount of house tax, irrespective of
the ratable value or the rate on which it is calculated.
Clause 2 of the lease deed is quite clear in this regard and
there can be no dispute that the amount of Rs.3,51,200/-
per month, which the defendant had agreed to pay as
monthly rent was inclusive of house tax meaning thereby
that house tax was a contractual liability of the defendant in
terms of Clause 2 of lease deed though it was included in
the monthly rent agreed between the parties. In fact, there
would be „outgoings‟ agreed to be paid by the defendant, if
house tax and ground rent are kept out of its ambit and,
therefore, would form part of the „outgoings‟, which the
defendant was liable to pay. In fact the word „out goings‟,
which has been used not only in Clause 2 but also in
Clause 4(ix), leaves no scope for any dispute in this regard.
CS(OS)No.1128/2006 Page 10 of 22
Hence, the amount of house tax irrespective of ratable value
fixed by the NDMC or the rate of tax decided by it for a
particular, which the plaintiff was required to pay the
NDMC would be covered under the expression out goings
used in Clause 4(ix) of the lease deed.
In fact, even the term „levies‟, in the context the
word has been used in Clause 4(ix) of the lease deed when
read with Clause 2 thereof would also include the house
tax, payable to NDMC. The term „levy‟ as defined in Shorter
Oxford English Dictionary includes the collection of an
assessment, duty or tax and since house tax is collected on
assessment and is also a tax, there is no scope for disputing
that the term „levy‟ would include the amount of house tax,
payable to a local/statutory body such as NDMC, which
imposes this levy in exercise of the statutory powers
conferred on it by the NDMC Act.
10. Clause 5 of the lease deed, to the extent it is
relevant, to my mind, means that the plaintiff was required
to pay, to the concerned Statutory Authority, the house tax
imposed from time to time as well as any increase thereon,
in respect of the tenanted premises and subjecting it to the
provisions of Clause 4(ix) of the lease deed mean that the
CS(OS)No.1128/2006 Page 11 of 22
increase in house tax, once paid by the plaintiff, was to be
borne by the defendant, to the extent it pertained to the
premises let out to the defendant. Another noteworthy
feature of Clause 5(i) of the lease deed is that any reduction
in the existing levies/rates, which to my mind would include
house tax and which the defendant had agreed to pay to the
plaintiff, was to be passed on by the plaintiff to the
defendant. Moreover, the contention that the increase in
house tax, irrespective of whether it was on account of
revision of retable value or revision of rates was not to be
reimbursed by the defendant to the plaintiff, runs contract
to the stand taken by the defendant in its letter dated 18 th
May, 2004.
11. It was also the contention of the learned counsel
for the defendant that the terms of the lease deed do not
indicate that increase in the house tax was to be
reimbursed by the defendant. In this regard, his submission
was that omission of house tax and ground rent in Clause
4(ix) and the later part of Clause 5(i) of the lease deed
cannot be lost sight of and that had the parties agreed for
reimbursement of increase in house tax by the defendant to
the plaintiff, there could be no reason for them to omit the
CS(OS)No.1128/2006 Page 12 of 22
words „house tax and ground rent‟, particularly from Clause
4(ix) of the lease deed. I, however, do not find myself in
agreement with the learned counsel for the defendant, for
three reasons. Firstly, the term „all out goings‟, which has
been used in Clause 4(ix) of the lease deed, would include
the liability towards house tax, which under Clause 2(i) of
the lease deed was a part of the rent agreed between the
parties and was an out go from the pocket of the plaintiff.
There could have been no reason for the parties to use a
general expression such as „out goings‟, which is a word of
wide amplitude, if the intention was to exclude house tax
and ground rent from the scope of the sub-clause.
Secondly, as I have said earlier, the term „levy‟ would
include the house tax, which NDMC can recover in exercise
of statutory powers conferred upon it by NDMC Act and this
expression has been used in Clause 4(ix) as also in the later
part of Clause 5(i) of the lease deed. Thirdly, my attention
has not been drawn to any other levy or cess imposed by a
statutory authority on a commercial building. When the
parties agreed vide clause 4(ix) that any increase in the
existing levies will be paid by the lessee to the lessor, in
proportionate to the area building Kailash in occupation of
CS(OS)No.1128/2006 Page 13 of 22
the lessee and further agreed vide later part of clause 5(i)
that in case of reduction in any existing levies referred to
clause 4(ix), the lessee shall have the benefit thereof,
proportionate to the aforesaid area, there must have been
some levy existing at the time the lease deed was executed.
Use of the expression „existing‟ in clause 4(ix) and later part
of clause 5(i) cannot be meaningless and, therefore, this
expression could have been intended only in respect of
house tax. It is difficult to accept that the defendant agreed
to pay increase in „existing‟ levies, imposed by the
Government or statutory authority without there being any
existing at that time. Since no existing levy other than
house tax has been brought to my notice, the obvious
inference is that the parties, while referring to increase or
decrees in existing levies, had the house tax payable in
respect of the tenancy premises, in their mind.
12. It is settled rule of interpretation of document that
the intention of the parties has to be gathered by reading
the document as a whole and as far as possible, the Court,
while construing the terms and conditions contained in an
document, should try to construe them in such a manner so
as to give effect to all of them and not to make any of them
CS(OS)No.1128/2006 Page 14 of 22
nugatory or superfluous.
In DDA vs. Durga Chand Kaushish, AIR 1973 (2)
SCC 825, the Supreme Court reiterated the following
propositions of law laid down by it in Radha Sunder Dutta
vs. Mohd. Jahadur Rahim and Ors. AIR 1959 SC 24
"Now, it is a settled rule of interpretation
that if there be admissible two
constructions of a document, one of
which will give effect to all the clauses
therein while the other will render one or
more of them nugatory, it is the former
that should be adopted on the principle
expressed in the maxim „ut res magis
valeat quam pereat‟".
It was observed by a Division Bench of this Court
in Sharda Nath vs. Delhi Administration and Ors. 149
(2008) DLT 1 that where two clauses of a document disclose
some conflict and contradiction, but the clauses can be
reconciled, one should give effect to all the clauses rather
than render one or more of them as nugatory.
If the interpretation given by learned counsel for
the defendant is accepted, Clause 4(ix) of the lease deed
would be rendered superfluous since no levy other than
house tax or ground rent was either applicable or even in
contemplation of parties, at the time when the lease deed
was executed.
CS(OS)No.1128/2006 Page 15 of 22
13. The admitted facts also clearly show that the
defendant had understood the terms and conditions of the
lease deed to mean that any increase in the quantum of
house tax was to be paid by it to the plaintiff to the extent
the increase pertained to the premises let out to it in
Kailash building. Admittedly, the defendant paid increase in
house tax in the year 1997-98 to 2000-01. Had the
intention of the parties been to the contrary, the defendant
would not have reimbursed the increase in house tax for the
aforesaid years to the plaintiff.
It was contended by the learned counsel for the
defendant that these payments were made under a mistake.
However, the written statement does not specify how and in
what circumstances the alleged mistake came to be
committed by the defendant. In the absence of any such
explanation, the plea taken by the defendant in this regard,
cannot be considered to be a genuine plea and needs to be
out rightly rejected.
14. It was also contended by the learned counsel for
the defendant that the suit is premature since the demand
of house tax has been challenged by the plaintiff in a civil
suit and in the event of the suit being decided in its father,
CS(OS)No.1128/2006 Page 16 of 22
the amount deposited by the plaintiff with NDMC would be
refunded to it. In my view, the contention is misconceived.
NDMC has already raised demand on the plaintiff. The
demand was stayed by this Court subject to deposit of Rs
40 lakhs with NDMC. Therefore, the money has gone out of
the pocket of the plaintiff to the pocket of NDMC. Once the
plaintiff has made payment to NDMC, whether of its own or
under an order of the Court, it is entitled to recover the
increase in house tax to the extent it pertains to the
premises which was let out to the defendant from the
defendant. Of course, in the event of the Court deciding in
favour of the plaintiff and directing NDMC to either refund
or adjust the whole or part of the amount of Rs 40 lakhs
deposited by it with NDMC, the defendant would be entitled
to immediate refund of that amount from the plaintiff. In the
event of NDMC paying any interest to the plaintiff on the
aforesaid amount, the defendant will also be entitled to
payment of that amount from the plaintiff. As far as
demands for the years 2004-2005, 2005-2006 is concerned,
the plaintiff having already deposited the same with the
NDMC is entitled to recover that amount from the
defendant. The issue is decided against the defendant and
CS(OS)No.1128/2006 Page 17 of 22
in favour of the plaintiff.
Issue No. 3
15. The plaintiff has not claimed any interest for the
pre-suit period. The pendente lite and future interest,
however, it is in the discretion of the Court, as provided in
Section 34 of the Code of Civil Procedure. The issue is
decided accordingly.
16. It was contended by the learned counsel for the
defendant that since no registered sale deed was executed
after the lease deed dated 31st December, 1996 expired by
afflux of time, the terms and conditions contained in clause
4(ix) of the lease deed are not binding on the defendant and
consequently, the house tax for the period after expiry of the
agreed term of the lease cannot be recovered from the
defendant. In this regard, he placed reliance on Section 49
of Registration Act, which provides that no document,
required by Section 17 or by any provisions of Transfer of
Property Act, 1982 to be registered shall affect any
immovable property comprised therein, or be received as
evidence of any transaction affecting such property unless it
has been registered. I, however, find no merit in this
contention. The reliance on Section 49 of Registration Act,
CS(OS)No.1128/2006 Page 18 of 22
in my view, is wholly misplaced for the simple reason that
the lease deed dated 31st December, 1996 was duly
registered on 02nd January, 1997 and, therefore, the
disability attached to a document, which is required to be
compulsorily registered and is not registered, is not
attracted to this document.
The relevant statutory provision in this regard
would be Section 116 of Transfer of Property Act which, to
the extent it is relevant, provides that if a lessee remains in
possession of the tenancy premises after the determination
of the lease granted to him, and the lessor or his legal
representative accepts rent from the lessee, or otherwise
assents to his continuing in possession, the lease is, in the
absence of an agreement to the contrary, renewed from year
to year, or from month to month, according to the purpose
for which the property is leased, as specified in Section 106.
Section 106 of Transfer of Property Act, to the extent it is
relevant, provides that in the absence of a contract or local
law or usage to the contrary, a lease of immoveable property
for other than agricultural or manufacturing purposes shall
be deemed to be a lease from month to month, terminable,
on the part of either lessor or lessee, by fifteen days' notice.
CS(OS)No.1128/2006 Page 19 of 22
Therefore, since the plaintiff allowed the defendant to
continue in possession of the tenancy premises and also
accepted rent from it, even after the term of the lease had
expired by afflux of time, the lease came to be renewed from
month to month being a lease for commercial purpose. The
use of the expression „renewed‟ in Section 116 of Transfer of
Property Act clearly implies that the parties in the event of a
tenant holding over the property on determination of the
lease, would be governed by the terms and conditions of the
lease which stands determined, unless they enter into a
fresh agreement contrary to the terms and conditions of the
lease which stand determined.
This was the view taken by the Division Bench of
Calcutta High Court in Krishna Char an Sukladas vs.
Nitya Sundari Devi AIR 1926 Calcutta 1239 as well as by a
Division Bench of Allahabad High Court in Zahoor Ahmad
Abdul Sattar vs. State of Uttar Pradesh and Anr. AIR
1965, Allahabad 326 and by Madras High Court in K.
Gnanadesikam Pillai and Ors. vs. Antony Benathu
Boopalarayar AIR 1934 Madras 458. The decision of the
Allahabad High Court in the case of Zahoor Ahmad (supra)
was affirmed by Supreme Court in The State of U.P. vs.
CS(OS)No.1128/2006 Page 20 of 22
Zahoor Ahmad and Anr. AIR 1973 SC 2520. This was also
the view of the Federal Court in Kai Khushroo Bezonjee
Capadia vs. Bai Jerbai Hirjibhoy Warden and Anr. AIR
1949 FC 124, where the Court agreed with the following
statement contained in Woodfall‟s "Law of Landlord and
Tenant"
"Where a tenant for a term of years holds
over after the expiration of his lease he
becomes a tenant on sufferance, but
when he pays or expressly agrees to pay
any subsequent rent at the previous rate
a new tenancy from year to year is
thereby created upon the same terms and
conditions as those contained in the
expired lease so far as the same are
applicable to and not inconsistent with
an yearly tenancy."
I, therefore, hold that even on expiry of the terms
of the lease, the terms and conditions contained in the lease
deed continued to bind the parties, so long as the defendant
was holding over the tenancy premises.
Issue No. 4
17. In view of my findings on the issues 1 to 3, the
plaintiff is entitled to a decree for Rs.69,84,900/- against
the defendant.
CS(OS)No.1128/2006 Page 21 of 22
ORDER
In view of my findings on the issue, a decree for Rs.69,84,900/- with costs and pendente lite and future interest at the rate of 6% per annum is hereby passed in favour of the plaintiff and against the defendant, subject to the plaintiff filing an undertaking, in the form of an affidavit, stating therein that if any part of the amount, paid by it to the NDMC, towards payment of increase in house tax, in respect of the premises which was let out to the defendant is refunded to it, or is adjusted against any other dues/liability, it will refund that amount to the defendant, without demand from it within four weeks of getting the refund/adjustment. The plaintiff will further undertake that if any interest is paid or allowed to be adjusted to it by NDMC, in respect of aforesaid amount that also will be refunded to the defendant.
Decree sheet be prepared accordingly.
(V.K. JAIN) JUDGE FEBRUARY 09, 2011 Vk/bg CS(OS)No.1128/2006 Page 22 of 22