Delhi District Court
Mrs. Soni Dave vs M/S Trans Asian Industries Expositions ... on 11 April, 2026
IN THE COURT OF SH. POORAN CHAND, DISTRICT
JUDGE-05, SOUTH DISTRICT, SAKET COURTS, NEW
DELHI
IN THE MATTERS OF:-
CS DJ 209346/2016 (OLD NO. 2330/2008)
CNR No. DLST01-006025-2016
MRS. SONI DAVE
....PLAINTIFF
Vs.
M/S TRANS ASIAN INDUSTRIES EXPOSITIONS PVT. LTD.
...DEFENDANT
AND
CS DJ 9347/2016 (OLD NO. 2331/2008)
CNR NO. DLST01-006024-2016
M/S G.S. BERAR AND CO. PVT. LTD. AND ANR.
....PLAINTIFFS
Vs.
M/S TRANS ASIAN INDUSTRIES EXPOSITIONS PVT. LTD.
....DEFENDANT
Date of Institution : 10.11.2008
Date of judgment : 11.04.2026
JUDGMENT
CS DJ No. 9346/16 & 9347/16 Page 1 of 144
1. As the issues involved in both the suits are common, therefore, I shall dispose of the above mentioned both the suits vide this common judgment.
2. The two suits being CS DJ 9346/2016 (filed by Ms. Soni Dave- hereafter called the "Soni Dave" suit) and CS DJ 9347/2016 (filed by M/s. G.S. Berar & Co. (P) Ltd-hereinafter called the "the Berar" suit).
3. The suit bearing CS DJ 9346/2016 titled as Mrs. Soni Dave Vs. M/S/ Trans Asian Industries Expositions Pvt. Ltd, is time bound suit by order of Hon`ble Supreme Court of India in the SLP (Civil) No. 25390/2025 and Misc. Application No. 1927/2025 vide dated 31.10.2025, by which this Hon'ble Supreme Court of India pleased to direct this Court as under:-
1. 'Once the appeal is disposed of by the High Court, the trial shall thereafter shall proceed further on the issue of mesne profits and pass appropriate order in accordance with law.
(Para 5)
2. The trial Court shall complete the proceedings within a period of two months.' (para 6)
4. Initially, the suits were filed before the Hon'ble High Court of Delhi in the year 2008, however, due to change in pecuniary jurisdiction, the suits were transferred to District Courts. In both the suits, the plaintiffs had sought vacant and peaceful possession of the suit properties as well as recovery of mesne profits and damages. Both the suits were decreed by CS DJ No. 9346/16 & 9347/16 Page 2 of 144 Hon'ble High Court under Order XII rule VI CPC qua relief of possession with respect to suit property vide two separate orders dated 05.08.2015. Aggrieved by this order, the defendant filed a review petition in both the suits before Hon'ble Judge, High Court of Delhi. The said review petition filed in both the suits were dismissed with cost of Rs. 5 lac each having been imposed upon the defendant vide common order dated 13.10.2015. Thereafter, the defendant challenged the said order by filing a Regular First Appeal. Vide order dated 18.05.2016, the Hon'ble High Court of Delhi confirmed the decree passed under order XII rule 6 CPC vide order dated 05.08.2015 and further modified the order dated 05.08.2015 qua interim mesne profits and damages. Aggrieved by the said order dated 18.05.2016 of Hon'ble High Court of Delhi, the defendant approached the Hon'ble Supreme Court of India by filing Special Leave Petition Nos. 19429- 19430/2016 which was also dismissed vide order dated 29.07.2016 granting further time to defendant to vacate the suit premises till 31.10.2016 and thereafter the defendant handed over the vacant and peaceful possession of the suit properties to the plaintiff.
Therefore, now the remaining issues involved in both the suits are mesne profits and damages. Though the evidences were recorded separately in both suits and further, the cross examination of DW-6 Mohd. Yasin Mir conducted in Soni Dave suit was adopted by the defendant in the Berar suit as well.
5. The brief facts, as culled out from the plaints are that in the Soni Dave suit, recovery of possession, mesne profits and CS DJ No. 9346/16 & 9347/16 Page 3 of 144 damages with respect to the suit/tenanted premises being front portion on the ground floor of property bearing No. M-1, Hauz Khas, New Delhi admeasuring approximately 1200 sq. feet was sought. In the Berar suit, recovery of suit/tenanted premises being (a) basement measuring 5250 sq. feet approximately and
(b) a portion of the ground floor behind front flat measuring 1275 sq. feet of M-1, Hauz Khas, New Delhi was sought.
Soni Dave suit :
5. (i) That the plaintiff is the owner of a front portion on the ground floor of a property located at M-1. Hauz Khas, New Delhi measuring approximately 1200 sq ft (hereinafter referred to as the suit premises).
(ii) It is averred that the defendant was a tenant under the plaintiff and her late mother Late Smt. Raj Kuman Berar) in respect of the suit premises. Late Smt. Raj Kumari Berar passed away on 3 June, 2008 leaving behind the plaintiff as her sole surviving heir. Hence the defendant has attorned the plaintiff in respect of the share of Late Smt Raj Kuman Berar. The fact of the passing away of Late Smt. Raj Kumari Berar has been communicated to the Defendant and the Defendant has also accepted the plaintiff as her sole surviving hair. Thus the Defendant has tendered rents to the plaintiff even in respect of the erstwhile share of Late Smt. Raj Kuman Berar under another tenancy. The lease was on month to month basis though the parties had agreed that it would be until the end of June 2008 after which the defendant would vacate the suit premises unless the parties agreed to an extension. For the period ending June CS DJ No. 9346/16 & 9347/16 Page 4 of 144 2008 the agreed rent was Rs.1,60,000-00 (Rupees one lakh sixty thousand only) and the defendant had tendered such rent by way of post-dated cheques to the plaintiff and her late mother. The last such cheque for rent was for the month of June 2008 and was deposited in the month of June 2008. Thus for the period after 30th June 2008 no further payment was tendered by the defendant in respect of the suit property. The permitted user was as per law. The rents were paid after deduction of tax at source.
(iii) It is further averred that as stated earlier the permitted user was as per law. Hence in the event that the Defendant were to put the suit property to any use that was not normally permitted under law but could be permitted upon payment of applicable charges, the Defendant was liable to tender such charges as applicable in respect thereof including any penalties, interest etc. thereon. Since the Defendant was using the suit property as a showroom, the applicable charges were to be additionally borne by it. Since the plaintiff has not been furnished with any copy of any such receipt, the plaintiffs do not know if the Defendant has tendered any amount towards conversion charges. It has not done so it will be liable to do so and, in the event that the plaintiff has to do so, she shall be entitled to claim it from the Defendant at such time. This is being stated here for the record though the plaintiff is not seeking the recovery of any such amount by way of the present suit since as of date no such demand has been made on the plaintiffs.
(iv) It is also averred that the Plaintiff had been asking the defendant if it wanted to renew the tenancy, and if so, to discuss the new rents that would apply w.e.f July 2008. However, CS DJ No. 9346/16 & 9347/16 Page 5 of 144 the Defendant had been avoiding the subject. With effect from June 2007 as, the Income Tax Act had also imposed a liability for the payment of service tax on the amount of the rent. This lability was of the tenant, however, the landlord was to recover the amount from the tenant and to pay it to the government. Though the Plaintiff had been asking the Defendant to pay the amount so that she could deposit it as required by law, ever since June 2007, the Defendant had not been doing so and had been avoiding it on one excuse or another. It has not paid the said amount till date. Since the plaintiff shall be filing a separately suit for the recovery of the service tax for the period that the said property had been rented to the Defendant i.e. till 31.6.08, she is not seeking the amount in the present suit. However, they are seeking the amount of the service tax on the damages/use / mesne profits for the period thereafter.) It is also averred that the Defendant had made an unauthorized construction of a kitchen / pantry in the rear of the ground floor of the suit property which it refused to remove despite repeated requests and warnings. This portion was also not under its tenancy. It had also kept a large electricity generator on the premises without obtaining the prior permission of the plaintiff which also it refused to remove despite repeated requests and warnings. This portion was also not under its tenancy. Whether it had the necessary permissions under law from the prescribed authorities for the purpose is not known since it has not furnished any such document to the plaintiff despite repeated requests. The defendant is hereby called upon to state the facts in relation thereto else it shall be presumed that permissions had not been obtained. The plaintiff further states that in the event that CS DJ No. 9346/16 & 9347/16 Page 6 of 144 any charges / penalties etc, are applicable for such unauthorized constriction and / or the electricity generator, the Defendant shall be liable to pay them. In the event that the plaintiff has to pay any such sum, she shall he entitled in recover them from the Defendant.
(v) It is further averred that since the parties could not come to any understanding about the various misusers and/or the rent, the defendant was liable to and should have vacated the suit premises. However, it did not do so. However, in the meanwhile vide notice dated 5.5.08. The plaintiff, her mother and another entity (who were owners of the said other portion) had given notice of termination of another tenancy in the same building to the same defendant. Thereupon the Defendant held negotiations with them and, on 21 May 2008 certain terms were agreed to regarding that portion. The defendant also requested the plaintiff and her mother to await the finalization of documents relating to that property and assured them the plaintiff and her mother) that thereafter this would also be amicably resolved. The plaintiff and her mother agreed to await the said matter to be so resolved but made it clear that the tenancy of the suit property had already come to an end and in the event that there was no agreement regarding it, the defendant would be liable to vacate the suit property as and when so called upon and to pay use and occupation charges at the market rate. The defendant had agreed thereto. The defendant also agreed to tender the service tax due for the period June 2007 till end of June 2008 within the next one week. It is further averred that the defendant did not pay any amount after June, 2008. It is further averred that the defendant CS DJ No. 9346/16 & 9347/16 Page 7 of 144 raised disputes with respect to payment of service tax, which was payable in accordance with law, since June, 2007. Thereafter, the plaintiff served legal notice upon the defendant on 08.08.2008, demanding handing over of vacant and peaceful possession of the suit property. It is further averred that defendant resisted the demand which led to filing of the present suit. That the cause of action arose on or about 30th June 2008/1st July 2008 when the period of tenancy came to an end but the Defendant did not vacate the suit property. It also arose on 8th August 2008 when the plaintiff caused notice dated 08.08.2008 to be issued to the Defendant. It also arose on or about three days thereafter when the same was served on the defendant. It also arose on 01.07.2006 when the defendant stopped paying any amount. It also arose on or about 26.08.2008 when the period of the notice expired. The defendant continues to be in the illegal occupation of the suit premises.
(vi) In this suit, the plaintiff has sought following reliefs:
"(a) a decree for the eviction of the Defendant from the suit property and handing over of possession to the plaintiffs;
(b) pass a money decree for a sum of Rs.
16,00,000/- (Rupees sixteen lakhs only) by way of damages/mesne profits/use and occupation charges for the period 1.7.08 till 31.10.08 and interest of Rs.
30,000/- (Rupees thirty thousand only) thereon as of the date of filing of the suit in favour of the plaintiff and against the Defendant for the unauthorized use and occupation of the suit property;
CS DJ No. 9346/16 & 9347/16 Page 8 of 144 (c) pass a money decree for a sum of Rs.
1,48,000/- (Rupees one lakh forty eight thousand
only) and penalty and interest of Rs. 20,000/- (Rupees twenty thousand only) thereon as of date by way of service tax on the sum of damages/mesne profits/use and occupation charges for the period 1.7.08 till 31.10.08 in favour of the plaintiff and against the Defendant with interest and penalties thereon as per law;
(d) pendente lite interest @ 18% per annum on Rs. 16,30,000/- (Rupees sixteen lakhs thirty thousand only)since the date of filing of the suit till the date of realisation of the amount in favour of the plaintiffs and against the Defendant;
(e) pendente lite damages/mesne profits/use and occupation charges with interest @ 16% per annum thereon with effect from the respective dates of the beginning of each month and service tax, interest and penalty thereon in favour of the plaintiff and against the Defendant till the date of its unauthorized use and occupation of the suit premises;
(f) award exemplary and punitive costs of the suit in favour of the plaintiff and against the defendant;"
BERAR SUIT :
6. (i) The plaintiffs have averred that they are the owners of
a) a basement (measuring approximately 5250 sq. ft.) and;
b) a portion on the ground floor behind the front flat (measuring approximately 1275 sq. ft.), CS DJ No. 9346/16 & 9347/16 Page 9 of 144 located at property no. M-1, Hauz Khas, New Delhi (hereinafter referred to as the suit property). It is further averred that as of date, Plaintiff no.1 owns 5/6th share and plaintiff no.2 owns the remaining 1 /6th share. The plaint is signed on behalf of Plaintiff no.1 by Mr. Adit Dave who has been authorized to institute this suit and to sign all papers including this plaint, affidavit and vakalatnama in relation thereto.
(ii) It is further averred that the defendant was a tenant under the plaintiffs and the mother of plaintiff no,2 Late Smt. Raj Kumari Berar in respect of the suit premises. The lease was on month to month basis. The permitted user was as per law. The rents were paid after deduction of tax at source. Late Smt. Raj Kumari Berar passed away on 3 June, 2008 leaving behind plaintiff no.2 as her sole surviving heir. Hence the defendant has attorned to plaintiff no.2 in respect of the share of Late Smt. Raj Kumari Berar. The fact of the passing away of Late Smt. Raj Kumari Berar has been communicated to the Defendant and the Defendant has also accepted plaintiff no.2 as her sole surviving heir. Thus, the Defendant has tendered rents to plaintiff no.2 even in respect of the erstwhile share of Late Smt. Raj Kumari Berar.
(iii) That as stated earlier, the permitted user was as per law. Hence in the event that the Defendant were to put the suit property to any use that was not normally permitted under law but could be permitted upon payment of applicable charges, the Defendant was liable to tender such charges as applicable in respect thereof including any penalties, interest etc. thereon. Since the Defendant has been using the suit property as a CS DJ No. 9346/16 & 9347/16 Page 10 of 144 showroom, the applicable charges were to be additionally borne by it. Since the plaintiffs have not been furnished with any copy of any such receipt, the plaintiffs do not know if the Defendant has tendered any amount towards conversion charges. If it has not done so it will be liable to do so and, in the event that the plaintiffs have to do so, they shall be entitled to claim it from the defendant at such time. This is being stated here for the record though the plaintiffs are not seeking the recovery of any such amount by way of the present suit since as of date no such demand has been made on the plaintiffs.
(iv) It is further averred that the Plaintiffs had been asking for revision in rent for quite some time but the Defendant had been avoiding the subject. With effect from June 2007 the Income Tax Act had also imposed a liability for the payment of service tax on the amount of the rent. This liability was of the tenant. However, the landlord was to recover the amount from the tenant and to pay it to the government. Though the Plaintiffs had been asking the Defendant to pay this amount so that they could deposit it as required by law, ever since June 2007 the Defendant had not been doing so and had been avoiding it on one excuse or another. It has not paid the said amounts till date. (Since the plaintiffs shall be filing a separate suit for the recovery of the service tax for the period that the said property had been rented to the Defendant i.e. till 31.8.08, they are not seeking the amount in the present suit. It was also alleged that defendant stopped paying the rent with effect from February, 2008. Its officers avoided the plaintiffs and refused to discuss the question of arrears of rent. The parties held CS DJ No. 9346/16 & 9347/16 Page 11 of 144 negotiations and on 21.05.2008, it was agreed that the rent would be revised to Rs. 5 lacs per month with effect from 01.06.2008. The defendant also agreed to tender outstanding and overdue rent for the period from February 2008 to May, 2008. These payments were to be made after deduction of tax at source; the parties further agreed that the permitted use of the property would be in accordance with the rules and regulations and bye laws governing it. Furthermore, the defendant agreed to remove and take apart the unauthorized constructions and other items such as the electricity generator and or obtain the requisite permission to keep it. It is further averred that the defendant started tendering enhanced rental at Rs. 5 lacs per month towards rent after deducting tax at source with respect to the same property. It is also averred in the plaint that in all about Rs. 5 lacs after deduction of tax at source was paid to both the plaintiffs on 10.07.2008, however, the defendant did not tender any service tax as agreed. It is further averred that despite being called upon to pay the service tax, the defendant did not pay the service tax arrears. Therefore, notices dated 22.08.2008 and 26.08.2008 were issued by the plaintiff, whereby the defendant was asked to vacate the suit premises and deliver vacant and peaceful possession thereof within 15 days of the receipt of the notice.
(v) The defendant did not vacate the premises and instead resisted the legal notice by letter dated 30.08.2008. The defendant sought to create confusion with respect to the property and occupation. The defendant was a tenant under the plaintiff and another entity with respect to basement, rear portion at the CS DJ No. 9346/16 & 9347/16 Page 12 of 144 ground floor and another front portion at ground floor but under a separate lease. The second plaintiff had called upon the defendant to vacate her portion of the suit premises. There are other allegations made in the plaint as far as the cause of action was concerned and lastly it is averred that the rent in respect of comparable premises in the area of similar size would be Rs.7 lacs per month. Service tax in addition would be payable. Therefore, similar following reliefs, as have been sought in the Soni Dave suit, are sought in the present suit.
(a) a decree for the eviction of the Defendant from the suit property and handing over of possession to the plaintiffs;
(b) pass a money decree for a sum of Rs.
14,00,000/- (Rupees fourteen lakhs only) by way of damages / mesne profits / use and occupation charges for the period 1.9.08 till 31.10.08 and interest of Rs.30,000/- (Rupees thirty thousand only) thereon as of date of filing suit in favour of the plaintiffs and against the Defendant for unauthorized use and occupation of the suit premises;
(c) pass a money decree: for a sum of Rs.1,74,000/- (Rupees one lakh seventy four thousands only) and penalty and interest of Rs.20,000/- (Rupees twenty thousand only) thereon as of date by way of service tax on the sum of damages/mesne profits / use and occupation charges for the period 1.9.08 till 31.10.08 in favour of the plaintiffs and against the Defendant with ink rest and penalties thereon as per law;
(d) pendente lite interest @18% per annum on CS DJ No. 9346/16 & 9347/16 Page 13 of 144 the sum of Rs. 14,30,000/- (Rupees fourteen lakhs thirty thousand only) and on the sum of Rs. 1,74,000/- (Rupees one lakh seventy four thousand only) and interest of Rs.20,000/- (Rupees twenty thousand only) thereon since the date of filing of the suit till the d ate of realisation of the amount in favour of the plaintiffs and against Defendant;
(e) pendente lite damages / mesne profits / use and occupation charges with interest @18% pa thereon wef the respective dated of the beginning of each month and service tax, interest and penalty thereon in favour of the plaintiffs and against the Defendant till the date of its unauthorized use and occupation of the suit premises until paid;
(f) award exemplary and punitive costs of the suit in favour of the plaintiff and against the defendant.
WRITTEN STATEMENTS:
7. The defendant filed Written Statements in both the suits. Though the defendant has filed separate Written Statement in Soni Dave case but it is mentioned in the Written Statement that the contentions / issues raised in the amended Written Statement of Berar Suit be also read in the Soni Dave suit.
Therefore, the relevant portion of the Written Statement of the defendant in Berar suit is reproduced herein under for better appreciation:-
1. The Defendant is filing the present Written Statement in Reply to the Suit filed by the Plaintiffs.
The Defendant states that no allegation, statement, averment and contention contained in the Suit should be deemed admitted save and except to those CS DJ No. 9346/16 & 9347/16 Page 14 of 144 which are specifically admitted by the Defendant to be true and correct. In the absence of the above, it is respectfully submitted that such allegation, statement, averment and/or contention by the Plaintiffs should be treated as a specific denial by the Defendant.
2. The Defendant states that for each of the averments detailed hereunder the plaint is liable to be dismissed in limine as being misconceived and devoid of merits.
3. The Plaintiffs have filed the present Suit stating the wrong and incomplete facts. For assistance of this Hon'ble Court, the Defendant is setting out herein below, a brief overview of the factual matrix (details of which have been provided subsequently in the Written Statement) between the Parties, leading up to the filing of the present suit.
3.1 The Plaintiffs and Defendant entered into a Primary Lease Agreement on 02.12.1989 in respect of the Suit Property which comprised the basement measuring upto 5078 sq. ft. and a portion on the ground floor (behind the front flat) measuring approximately 1065 sq. ft. and also inclusive of an area on the Building consisting of a Pantry.
3.2 Some of the salient terms of the Primary Lease Agreement were as follows:
(i) the term of the lease was three (3) years, renewable for a further period of three (3) years and renewable thereafter for a further period, each being of three (3) years (Clause 2);
(ii) the monthly rental was fixed for the said period of three (3) years. At the time of renewal, the rental was subject to an upward revision of fourteen per cent (14%) for the renewed term (Clause 2);
(iii) the lease was granted for residence, storage, exhibition of handicraft items (Clause 7);
(iv) it was the responsibility of the Plaintiffs to bear all taxes/charges to the Municipal Corporation of Delhi (Clause 10);CS DJ No. 9346/16 & 9347/16 Page 15 of 144
(v) The Defendant was entitled to install generator provided that the same does not cause any nuisance or health hazard to other occupants (Clause 13).
3.3 Before proceeding to explain the evolution of the Primary Lease Agreement leading upto the present Suit, the Defendant wishes to bring the following to the notice of this Hon'ble Court:
(i) the Defendant is the owner of Flat C on the First Floor of the Building'
(ii) the owners of property in the Building are entitled to a portion on the ground floor, proportionate to their ownership in the Building.
(iii) as part of its right as an owner, the Defendant placed the electricity generator on its entitled part on the rear of the Building in the suit property.
3.4 The Parties, with mutual consent, based on the terms and conditions of the Primary Lease Agreement, kept renewing the lease from time to time, each time for a period of three (3) years till January, 2008. However, the upward revision in the lease rentals to be paid by the Defendant was approximately twenty five per cent (25%) instead of the fourteen per cent (14%) as envisaged under the Primary Lease Agreement. This upward revision of approximately 25% was done each time with the consent and the agreement of the parties.
3.5 During the lease period, the Defendant had made substantial investments of fixed nature in the Suit Property with the consent of the Plaintiffs, which gave the Defendant rights in the Suit Property of permanent character.
3.6 In addition, the Defendant has also added substantial value to the Suit Property by having the Suit Property converted for use from residential to commercial by using its good offices and spending substantial amounts of money and by making payment of conversion charges pursuant to the Public Notice issued by Municipal Corporation of Delhi which has converted the status of the Suit Property from residential to commercial.
CS DJ No. 9346/16 & 9347/16 Page 16 of 1443.7 In January, 2008, the Lease rentals were being paid by the Defendant at Rs. 1,63,125 (Rupees One Lac sixty three thousand one hundred and twenty five only). In the same month, parties had entered into discussions for revising the rentals. However, no amount was agreed upon.
3.8 In March, 2008, the Plaintiffs demanded an increase in the rental from Rs. 1,63,125 (Rupees One Lac sixty three thousand one hundred and twenty five only) to Rs. 4,00,000/- (Rupees Four Lacs) for a term of two (2) years. This constituted an upward revision of 145%, which was a sharp increase from the 25% upward revision, being earlier agreed upon. However, the Defendant in light of huge investments made in the property agreed to even this upward revision to Rs. 4,00,000/- (Rupees Four Lacs Only) on the condition that there will be no further revision for a long period. The Defendant paid this upward revision of 145% only to be in peaceful use and possession of the Suit Property. Since the Plaintiffs retracted on their commitment and initiated the present court proceedings, the rent payable to the Plaintiffs for the period beginning February, 2008 is Rs. 1,85,962/- (Rupees One Lac, Eighty Five Thousand, Nine Hundred and Sixty two).
3.9 It is pertinent to note at this point, that these extensions of the term of Lease and revision of Lease Rentals were being effected under the aegis of the Primary Lease Agreement dated 02.12.1989.
3.10 The Defendant attempted to make payments to the Plaintiffs at the rate of Rs. 4,00,000/- (Rupees Four Lacs only) per month, but the Plaintiff refused to accept the payments and started insisting for further revision in rentals. In view of this conduct, the Plaintiffs disentitled themselves from receiving the enhanced rentals. The Plaintiffs are only entitled to receive use and occupation charges at the rate of Rs. 1,85,962/- (Rupees One Lac, Eighty Five Thousand. Nine Hundred and Sixty two) per month.
3.11 On or around, 5.5.2008, 08.05.2008 and 12.05.2008 the Plaintiffs issued notices terminating the Lease to the Defendant. Issuance of the said notices (as explained in details at Para 5.83 were merely a stratagem by the Plaintiffs to exert undue CS DJ No. 9346/16 & 9347/16 Page 17 of 144 pressure on the Defendant to comply with unjustified demands for increase in rentals made by the Plaintiffs.
3.12 On 21.05.2008, the Parties, together with their respective counsels, met to mutually resolve the issues arising between the Parties. The discussions were in terms of the Primary Lease Agreement and it was agreed, that the following revisions be made:-
(i) the term of the lease would now be for a period of two (2) years, renewable for two (2) years thereafter, and subsequently thereafter for such period on the mutual consent of Parties;
(ii) rental rates were to be revised annually (instead of the earlier three (3) years period under the Primary Lease Agreement). For the first year, rentals were agreed to be paid at Rs.
5,00,000/- (Rupees Five Lacs only) per month w.e.f. 01.06.08;
(iii) conversion charges (in the past and future) were to be borne equally between the parties;
(iv) the Defendant was to bear payment of service tax w.e.f. 01.06.2008.
Other pertinent points in respect of this Agreement dated 21.05.08:
(v) Parties also decided to enter into a fresh lease Agreement, however, this agreement on 21.05.08 was in terms of, and under the Primary Lease Agreement dated 02.12.1989.
The execution of a fresh lease was not a condition precedent to this Agreement being given effect.
(vi) This Agreement dated 21.05.2008, was a firm and biding Agreement between the parties and was arrived at, based on mutual consent.
However, the Plaintiffs did not act on this Agreement. Not only was the lease deed not executed on the terms agreed on 21.05.2008, but the Plaintiffs failed to give the Defendant peaceful CS DJ No. 9346/16 & 9347/16 Page 18 of 144 occupation of the Suit Property, thus eroding the very basis of the Defendant having agreed to enhanced rents. The Plaintiffs disentitled themselves to receipt of any enhancements in the rental amounts. The Plaintiffs are liable in law to refund all the excess amounts received by them from the Defendant. Defendant was liable to pay enhancements to the Plaintiffs on the last paid rental of Rs. 1,60,000/- (Rupees One Lakh, Sixty Thousand).
3.13 It is important to note that during this meeting 21.05.2008, the Defendant paid the Plaintiffs rentals for the month of February- May, 2008 at the rate of Rs. 4,00,000/- (Rupees Four Lacs only) per month. These amounts were duly accepted and encashed by the Plaintiffs. The amounts paid towards enhancements of rent are liable to be refunded to the Defendant since enhanced rent was only tendered under the clear understanding that the Plaintiffs will give peaceful possession of the Suit Property to the Defendant. However, in breach of the said understanding, the Plaintiffs first issued termination notices and thereafter initiated the present suit proceedings, disentitling themselves to any enhancements in rentals.
3.14 The Defendant agreed to the further revised rentals (despite the earlier revision, on,inter alia the following reasons:-
(i) the Defendant's sentimental attachment to the Suit Property as the Defendant had been occupying the same for over nineteen (19) years and the Suit Property forms the Defendant's principal place of business since 1989;
(ii) the huge investments made by the Defendant in the suit property;
(iii) agreement by the Plaintiffs to contribute equally to the payment of conversion charges, for 2 years and thereafter to be borne by the Plaintiffs.
However the Plaintiffs are liable to refund all amounts received by the Plaintiffs towards enhanced CS DJ No. 9346/16 & 9347/16 Page 19 of 144 rentals in excess of the market rents of the Suit Property in view of them failing to give peaceful possession of the Suit Property to the Defendant.
3.15 The Defendant duly paid rentals as per the revised arrangements i.e. at Rs. 5,00,000/- (Rupees Five Lacs) per month from 01.06.08 till the period ending 31.08.08. These amounts were accepted by the Plaintiffs and encashed. The Plaintiffs are liable to refund amount paid in excess of the market rentals by the Defendant.
3.16 In the month of August 2008 and while the Defendant was paying the agreed rentals of Rs. 5,00,000/- (Rupees Five Lacs) per month, the Plaintiffs, without just cause or basis, issued several termination notices to the Defendant. The said termination notices were issued with malafide intent (as explained in paras 5.22 to 5.23) and a tactic to exert further unreasonable demands on the Defendant and enforce compliance with ancillary issues. Upon issuance of the said termination notices, the Plaintiffs disentitled themselves to any enhancements in rents.
3.17 For the period beginning 01.09.08, the Defendant made several attempts, through its officers and even counsel to deposit rentals at the amount of Rs. 5,00,000/- (Rupees Five Lacs) to the Plaintiffs and/or their counsel, but the Plaintiffs and/or their counsel arbitrarily and unjustifiably, refused to accept the cheques. The Plaintiffs (without informing this Hon'ble Court of their own refusal to accept the said cheques) are now misrepresenting to this Hon'ble Court that the Defendant has not paid rentals for the said period.
3.18 Continued attempts were made by the Defendant, through its officers and counsel to deposit rent but the said attempts were futile.
3.19 On 01.11.2008, the Plaintiffs filed the present Suit seeking eviction of the Defendant from the Suit Property and damages.
3.20 The Plaintiffs have thus resiled from the Agreement reached between the parties on 21.05.2008 under the aegis of the subsisting Primary Lease Agreement dated 02.12.1989, and have CS DJ No. 9346/16 & 9347/16 Page 20 of 144 refused to accept payments at the agreed Lease rentals of Rs. 5,00,000/- (Rupees Five Lacs) per month. The amount of rent payable for the suit property, therefore, needs to be fixed and decided as on date, before the Defendant can tender any payment towards lease rentals. The Defendant was only liable to pay the rent of Rs. 1,85,962/- (Rupees One Lakh, Eighty Five Thousand, Nine Hundred and Sixty Two) for the period between February, 2008 to February, 2010.
3.21 However, the Defendant cannot and ought not be evicted from the suit property since it is a valid and lawful tenant, deriving its rights from a fixed term lease whose term is operative at least till 01.06.2010 and further renewable till 01.06.2012 and renewable again at the mutual consent of the parties. The Defendant has a right to remain in occupation of the Suit property.
3.22 The Plaintiffs committed a fraud on this Court and on the Defendant in as much as the Plaintiffs pursued the present litigation for possession against the Defendant without just cause. At the same time, the Defendant without prejudice to its rights in law, under orders of this Hon'ble Court tendered enhanced rentals to the Plaintiffs. The Plaintiffs were never entitled to any enhanced rentals as the Plaintiffs failed to provide peaceful use and occupation of the Suit Property to the Defendant.
3.23 The Defendant having enhanced the intrinsic value of the Suit Property on account of investments in the Suit Property of fixed nature, are entitled in law to damages and compensation by the Plaintiffs.
Preliminary Objections:
4. At very outset, the Defendant seeks to raise inter alia, the following Objections to the present Suit:
4.1 The Summary above clearly establishes that the Plaintiffs have not come to this Hon'ble Court with clean hands and the present Suit is not maintainable and ought to be dismissed with costs.
The Defendant is a valid and lawful tenant under the fixed term lease and cannot be dispossessed/evicted CS DJ No. 9346/16 & 9347/16 Page 21 of 144 from the Suit Property without just cause or reason.
Suit is peppered with contradictory statements and attempted to mislead the Hon'ble Court on facts 4.2 The Plaintiffs have misrepresented the material facts. They have made an incorrect statement pertaining to the area occupied by the Defendant and in Para 1 of the Plaint, the Plaintiffs have stated that the basement area measures approximately 5250 sq. ft. and the portion on the ground floor behind the front flat measures approximately 1275 sq. ft. In fact, the Basement area measures approximately 5078 sq. ft. and the portion on the ground floor measures to 1065 sq. ft. It is stated that the areas actually occupied by the Defendant have been /purposely inflated to enable the Plaintiffs to seek a much higher rental from the Defendant.
Suit is based on the frivolous grounds, is an abuse of the process of this Honb'Ie Court and is not maintainable 4.3 The Plaintiffs have withheld material facts from this Hon'ble Court and have approached this Hon'ble Court with unclean hands. The Plaintiffs are not deprived of the possession of Property given that they own and occupy other Properties within the said Building, namely, the Flat on the First Floor as well as the Flat on the Barsati Floor. It is evident that the Suit for Possession filed by the Plaintiffs is an attempt to extract further and undue monies from Defendant. The reliefs sought by the Plaintiff, by way of the present Suit ought not to be granted and the Suit deserves to be dismissed on this ground alone.
4.4 Further, the Defendant has always been a good tenant, who has maintained and in fact, improved upon the Suit Property. The Defendant has never defaulted and has made timely payments towards rent for the past nineteen (19) years.
4.5 Despite the above, the Defendant, who is presently in occupation of the Suit Property has made several attempts to meet the Plaintiffs and/or their authorized representatives to forward the on CS DJ No. 9346/16 & 9347/16 Page 22 of 144 account without prejudice rental payments for the period beginning 01.09.2008 till date but the Plaintiffs and/or their authorized representatives have refused and rejected the said Payment. The Defendant contends that the non-acceptance of payment is a further evidence of abuse by the Plaintiffs as the Lessor to put the Defendant in a prejudicial position, in order to rely upon an "alleged" non-receipt of payment to wrongly impute before this Hon'ble Court that the Defendant has not complied with its payment obligations.
4.5 (A) It is relevant to state that during the pendency of the present litigation, the Plaintiffs negotiated with the Defendant and vide emails dated 19.01.2010, 20.07.2009 and 18.08.2009, the Plaintiffs had agreed to a consolidated rental of Rs. 7,50,000/- (Rupees Seven Lakhs Fifty Thousand only) for the Suit Property as also for the property forming part of suit bearing number CS(OS) 2330/2008. However, the Plaintiffs kept on oscillating only in order to extract more monies from the Defendant and no agreement could be reached between the Parties. The Plaintiffs misused the process of the Courts to make unlawful gains and are liable to refund all amounts received from the Defendant as are in excess of the market rents.
Conduct of the Plaintiffs' disentitles it from obtaining any reliefs from this Hon'ble Court 4.6 The Defendant has placed the electricity generator on the Suit Property since 1989 and the Pantry was in existence before the Defendant became the Lessee of the Suit Property. The electricity generator in fact has been placed on a small portion of the Suit Property in the rear of the Building i.e. which the Defendant is entitled to place by virtue of its right as an owner of Flat C on the First Floor of the Building and as also permitted under the Primary Lease Agreement. The Defendant, in the interest of renewing the relationship with the Plaintiffs had agreed to relocate the said electricity generator and refurbish the Pantry. The Defendant states that these are ancillary matters and the Plaintiffs have unnecessarily placed reliance on the same to seek relief. It is relevant to state that during the pendency of the present litigation, the Defendant CS DJ No. 9346/16 & 9347/16 Page 23 of 144 removed the pantry and re-located the electricity generator as per the wishes of the Plaintiffs. The Defendant incurred huge costs in carrying out the same however to no avail. The Plaintiffs continued to litigate the present matter thereby disentitling themselves to any enhancements of rent. The Plaintiffs caused huge loss to the Defendant and are liable to compensate the Defendant.
4.7 Apart from the above, the Plaintiffs have also unreasonably relied on the issue of service tax to seek relief prayed for. The Notification for imposition of service tax on immovable properties was announced in 2007 and Section 68 of the Finance Act, 1994 clearly stipulates that liability to pay the same falls on the service provider, in the present case, the Lessors. The Defendant had agreed to bear the liability of service tax w.e.f. 01.06.2008. The Plaintiffs' liability at most is for a minimal period from June, 2007 to May, 2008. The Plaintiffs instead of clearing their own dues have unreasonably and without basis sought to impose this additional liability on the Defendant and by their conduct, attempted, threatened and have in fact now refused to proceed with discussions. In any case, in view of the failure of the Plaintiffs to give peaceful use and occupation of the Suit Property to the Defendant and in view of the fact that the Plaintiffs pursued the present litigation, in law, no agreement can be said to have been arrived between the Parties as to payment of service tax. Liability of payment of service tax rests solely with the Plaintiffs being service providers. The Defendant is not liable in law to make any payments to the Plaintiffs on account of service tax. In fact, the Plaintiffs are liable to compensate the Defendant for loss and damage caused to the business of the Defendant and also liable to refund the excess rent collected from the Defendant without letting the Defendant be in peaceful occupation of the Suit Property.
4.8 A perusal of the table at Para 16 of the Paragraph wise Reply clearly illustrate the soaring increase in rent which the Plaintiffs were claiming, this is particularly obvious in respect of the without prejudice on account payment towards rentals claimed from January, 2008 to date.
CS DJ No. 9346/16 & 9347/16 Page 24 of 1444.9 It is clear and evident from the conduct of the Plaintiffs that they are raising frivolous issues. This Suit is clearly an attempt at wrongful extraction of further monies from the Defendant.
It is the Defendant who has been prejudiced and made to suffer by the Plaintiffs act of unilaterally terminating the present Lease 4.10 The Plaintiffs are well aware that the Defendant is emotionally attached to the Suit Property in question given that it has been the Lessee in the Suit Property for over nineteen (19) years now and it is the primary place of the Defendant's business since 1989. The Plaintiffs are also well aware that the Defendant has with the Plaintiffs' consent and knowledge spent substantial amounts of money in refurbishing the Property on the understanding that it was going to be in occupation of the Property for a long period.
The Suit is simply a stratagem to force and coerce the Defendant to comply with the demands in respect of the present Property and evidence of the Plaintiffs abuse of power as the Landlord/Lessor 4.11 A narrative of the facts pertinent to the present Suit (as contained in the brief overview above, and the Preliminary Submissions below) and the various Objections that the Defendant has to the present Suit, it is evident that the present Suit is only a means to an end. The Plaintiffs have undeniably filed the present Suit to exert unreasonable pressure and coerce the Defendant to submit to the demands placed in respect of the present Suit Property, As a means of further frustrating and pressurising the Defendant into submission, the Plaintiff No.2 has also commenced separate proceedings against the Defendant vide Suit No. 2330, which is also pending before this Hon'ble Court. It is clear beyond doubt that the Plaintiffs have clearly abused their power and superior bargaining position as the Landlord/Lessor.
4.12 Admittedly, the Plaintiff does not require the Suit Property for its use and/or occupation. There is CS DJ No. 9346/16 & 9347/16 Page 25 of 144 no such bonafide requirement expressed even in the present Suit. Given the fact that the Defendant has in the past paid, amounts which are well above the prevalent current market rates The Plaintiffs conduct is suspicious and reeks of mala fides. The Plaintiffs are liable to refund all amounts paid by the Defendant over and above the market rental rate of the Suit Property.
Facts Though the Defendant has summarized the facts in brief that have culminated in the present frivolous and non maintainable Suit, a detailed narration of facts relevant to the present suit, are given below:
5.1 Description of Building where Suit property is situated/Ownership Structure/Rights Associated: The Building located at M-l Hauz Khas, New Delhi - 110 016, is comprised of nine (9) individual apartments and one (1) basement. There are four (4) apartments on the Ground Floor, four (4) apartments on the First Floor and one (1) apartment on the Barsati Floor. The entire Plot is approximately 1300 square yards and the ownership structure of the Suit Property is as follows:
(a) two (2) Flats on the Ground Floor are owned by the Plaintiffs (and is leased to the Defendant under two (2) different leases. One lease is the subject matter of dispute in the present Suit);
(b) one (1) Flat on the Ground Floor owned by Mr, A.D. Aggarwal and Others, which is also leased to the Defendant;
(c) one (1) Flat on the Ground Floor is owned and occupied by Mr. Manak Chand Rawat;
(d) one (1) Flat on the First Floor is owned and occupied by the Plaintiffs;
(d) one (1) Flat of the First Floor is owned and occupied by Dr. RC Taneja;
(e) one (1) Flat on the First Floor is owned and occupied by the Defendant;CS DJ No. 9346/16 & 9347/16 Page 26 of 144
(f) one (1) Flat on the First Floor is owned and occupied by the Agarwal's/Rawat family;
(g) one (1) Flat on the Barsati Floor is owned and occupied by the Plaintiffs;
(h) The Basement owned by the Plaintiffs, is leased to the Defendant (and is part of the area in the lease under dispute).
5.1.1 Each Owner of the property in the said Building is entitled to, as a matter of right, custom and usage, portion in the land, proportionate to its share in the Property. A copy of the Plan of the Building together with industrial markings identifying the ownership in the Building as well as their individual entitlements to the portions on the land is annexed to the List of Documents and may be referred to at the time of hearing.
5.2 The Defendant is a company incorporated under the provisions of the Companies Act, 1950 and is engaged in the business of organized retail with main items of focus being handicrafts.
5.3 As indicated in Para 5.1.1, the Defendant is also an owner of Flat C on the First Floor of the same building, which it had purchased pursuant to a Sale Agreement dated 20.09.1992 with Recondo India Ltd. The Defendant had then subsequently executed a Sale Deed on 10.02.2005 with the Plaintiffs (as the Primary Owners of the Property). A copy of the Sale Agreement and Sale Deed are annexed to the List of Documents and may be referred to at the time of hearing. As explained in Para 5.1.1 above, all the Owners in the said Building are entitled to a portion of the land on the ground floor proportionate to its share in the Building for their own personal use. In this regard, the Defendant, as the lawful Owner of Flat C on the First Floor, used its part of the land to place the electricity generator. It is further stated that the said electricity generator was located in an area which would not in any manner whatsoever, cause problems and/or disturbance to any of the other individual owners in the said Building.
CS DJ No. 9346/16 & 9347/16 Page 27 of 1445.4 The Suit Property comprises the basement area (measuring approximately 5078 sq. ft.) and a portion on the ground floor behind the front flat [(measuring approximately 1065 sq. ft. which includes a flat and such part of the area (which consisted a Pantry)], which is leased by the Plaintiffs to the Defendant ("Suit Property"). Plaintiff No. 1 owns 5/6th share of the Suit Property whilst Plaintiff No.2 owns 1/6th share of the Suit Property. On the Plaintiffs demand, the Defendant removed the pantry during the pendency of the present litigation.
5.5 The Defendant has been in occupation of the Suit Property since 1989 (more than nineteen years), since the Lease was first entered into between the Plaintiffs and the Defendant on 02.12.1989 ("Primary Lease") 5.6 Details of Primary Lease and Rentals: The Primary Lease was for a period of three (3) years, starting from December 1989 to December 1992. This was in respect of the total area of Suit Property, which was renewable on the same terms and conditions every three (3) years and thereafter on the mutual consent of the Parties. The monthly rental was for the sum of Rs. 72,369/- (Rupees Seventy Two Thousand Three Hundred and Sixty Nine) which was to be increased by fourteen per cent (14%) for the next three (3) year period. At the time of execution of the Primary Lease, the Defendant had already paid the Plaintiffs six (6) months rental in advance as a deposit amounting to Rs. 4,48,800/- (Rupees Four Lakhs Forty Eight Thousand Eight Hundred). This payment was to act as a further interest fee deposit to the Plaintiffs and was to be continued for all subsequent renewals of the Lease Period. The rent was to be paid before the 10 th calendar date of each month.
5.6.1 The Primary Lease was granted for residence, storage and exhibition of handicraft items in the leased out areas (Clause 7 of the Primary Lease).
5.6.2 Vide Clause 10 of the Primary Lease, the Plaintiffs agreed to bear all taxes/charges to the Municipal Corporation of Delhi (MCD). The CS DJ No. 9346/16 & 9347/16 Page 28 of 144 relevant part of Clause 10 reads as follows "That all the present rates, taxes ground rent, property tax, and other charges, outgoings, penalties and assessments imposed or payable in respect of the tenanted premises to the M.C.D. Government shall be paid by the Lessors and Lessor shall keep the Lessee free and indemnified at all times for the same.... "
5.6.3 Vide Clause 13 of the Primary Lease, the Plaintiffs agreed that the Defendant may apply for additional electricity and that it will not object to the installation of a generator provided that the same does not cause any nuisance or health hazard to other occupants. The said Clause 13 is reproduced and reads as follows "The Lessee may apply for additional electricity load at its own cost to which the Lessors shall have no objection provided that the same confirms to the byelaws and in no way endangers the building or other occupants. Any papers, applications etc that may be required in this regard shall be signed and executed by the Lessors as aforesaid. The Lessors shall not object to the installation of a generator for energising lights and fans at the premises by the Lessee at its own cost, provided that the same does not cause any nuisance or health hazard to other occupants. "
5.6.4 Details of Security Deposit Agreements: In addition to the six month advance rental deposited by the Defendant (as set out in Para 5.6 above) pursuant to Clause 5 of the Primary Lease, the Defendant deposited a sum of Rs.4,25,000/- (Rupees Four Lakhs Twenty Five Thousand Only) as interest free security deposit. This amount was to be refunded by the Plaintiffs to the Defendant on the expiry of the Primary Lease Agreement or on the earlier determination thereof. In total therefore, the Defendant had deposited a sum of Rs. 8,73,800.00 (Rupees Eight Lakhs Seventy Three Thousand and Eight Hundred only) \by way of security deposit with the Plaintiffs. It is submitted that the said sum of Rs. 8,73,800.00 (Rupees Eight Lakhs Seventy Three Thousand and Eight Hundred Only), still remain with the Plaintiffs till date is liable to be refunded alongwith appropriate interest with effect from 01.10.2016. A copy of the Primary Lease Agreement dated 02.12.1989 is annexed to the List of Documents and may be referred to at the time of CS DJ No. 9346/16 & 9347/16 Page 29 of 144 hearing.
5.7 Upon expiry of the initial three (3) year period, the Primary Lease Agreement was renewed for a further period of three (3) years, that, is, from 1992 to 1995 on the same terms and conditions but on the increased rental of Rs, 82,500.00/- (Rupees Eighty Two Thousand Five Hundred) per month as set out in Clause 2 of the Primary Lease. The earlier Security Deposit paid by the Defendant and six (6) month advance rental continued to remain with the Plaintiffs.
5.8 Further and upon expiry of this renewed period of three (3) years, in 1995, the Plaintiffs and Defendant mutually agreed to renew the Lease and had in fact, renewed the Lease for four (4) further separate terms (of three years each) based on the same terms and conditions as the Primary Lease Agreement. The rental rates raised for the period ending January, 2008 was Rs. 1,63,125.00 (Rupees One Lac Sixty Three Thousand One Hundred and Twenty Five).
5.8.1 The rental rates from December 1989 to November 1992 was Rs.72,369/- (Rupees Seventy Two Thousand Three Hundred and Sixty Nine) and the rental rates from December 1992 to November, 1995 was Rs. 82,500/- (Rupees Eighty Two Thousand Five Hundred) which evidences an increase of 14%. The rental rates from December 1995 to October, 1998 was Rs. 1,03,000/- (Rupees One Lac Three Thousand) which was an increase of 24.8% from the last agreed rental. Thereafter, from November, 1998 to April, 2004 the rental rates were Rs. 1,28,906/- (Rupees One Lac Twenty Eight Thousand Nine Hundred and Six) which was increase of 25% from the last agreed rental. The rental rates from May, 2004 to January, 2008 was Rs. 1,63,125/- (Rupees One Lac Sixty Three Thousand One Hundred and Twenty Five) which was an increase of 25.5% from the last agreed rental. A perusal of the above illustrates that the rental has been increasing consistently at about 25% as opposed to the 14% revision provided for under the Primary Lease Agreement. Once the revised rental had been agreed upon, the same remained frozen/fixed for a period of three (3) years.
CS DJ No. 9346/16 & 9347/16 Page 30 of 1445.8.2 The pattern of increasing rent, agreed to by the parties, evident by their conduct, acceptance of rent, was all of a sudden sought to be departed from by the plaintiffs. From end of January, 2008 the plaintiffs demanded rental payments of Rs. 4,00,000/- (Rupees Four Lacs) per month. This was 145.5% increase to the last agreed rental of Rs. 1,63,125/- (Rupees One Lac Sixty Three Thousand One Hundred and Twenty Five). Consequent to the several discussions and exchange of e-mails, the defendant confirmed consolidated rental of Rs. 4,00,000/- (Rupees Four Lacs) per month. However, the said payment of enhanced rental was under the unequivocal understanding that the Defendant would be entitled for peaceful possession of the Suit Property for a long duration.
5.8.3 On or about May, 2008 the Plaintiffs again unreasonably and unjustifiably demanded that the rent be increased to Rs. 5,00,000/- (Rupees Five Lacs) per month. This further upward revision in rental was demanded by the Plaintiffs in response to the termination notices issued by the Plaintiffs on or about May, 2008. .A copy of the Notices dated 05.05.2008, 08.05.2008 and 12.05.2008 are annexed to the List of Documents and may be referred to at the time of the hearing. It can be gathered from the conduct of the Plaintiffs that this was a pre-mediated conscious act by the Plaintiffs being well aware of the Defendant's sentiment in respect of the Suit Property. The threat of eviction was employed by the Plaintiffs as a tactic to pave way for demanding further increase of rentals. In view of the subsequent conduct of the Plaintiffs, the Plaintiffs disentitled themselves from receiving any enhancement in rentals as was tendered to the Plaintiffs from time to time by the Defendant.
5.8.4 As has been detailed herein after, in the parawise reply, this steep increase in lease rentals demanded by the Plaintiffs, was at complete variance with the prevalent rental rates in the area where the Suit Property is situated. All amounts paid to the Plaintiffs in excess of Rs. 1,85,962/- (Rupees One Lakh, Eighty Five Thousand, Nine Hundred and Sixty Two) for the period between February, 2008 to February, 2010 are liable to be refunded to the CS DJ No. 9346/16 & 9347/16 Page 31 of 144 Defendant. It is also prayed that this Court may adjudicate the amounts that ought to have been tendered for the subsequent periods, keeping in mind the aforesaid amounts as also the market rent.
5.8.5 The Plaintiffs have also become liable to refund the security deposit to the Defendant since the Defendant has handed over the possession of the Suit Property to the Plaintiff.
5.9 Details of Investment: In 2005 alone, the Defendant had spent an amount to the tune of approximately Rs.2,00,00,000/- (Rupees Two Crores) for internal renovation and refurbishment of the Suit Property necessitated to meet the imperatives of the business of the Defendant as the Suit Property was used as a showroom of high class and quality. Prior to that, the Defendant had also expended several crores of rupees towards refurbishment, external improvements, maintenance of the Suit Property. The Defendant states that all such renovation and refurbishment works were carried out with the prior consent of the Plaintiffs. The Defendant states that the nature of the said investment created rights for the Defendant in the Suit Property, which are of permanent character. The Defendant further states that it made such investment on the further understanding and assurance of the Plaintiffs, that, the Defendant would be in continued occupation of the Suit Property, given the good relationship between the Plaintiffs and the Defendant.
After taking into consideration the appropriate depreciation in the cost of renovation, refurbishment and the other value adding improvements, the value of the existing finishing/furnishing items in the Suit Property as also in the Property forming part of CS(OS) 2330 of 2008 was Rs. 65,35,413.17 (Rupees Sixty Five Lacs, Thirty Five Thousand Four Hundred Thirteen and Seventeen Paisa) when the physical possession of the Suit Property was handed over to the Plaintiffs on 19.10.2017. The Plaintiffs are liable to compensate the Defendant for the amount of Rs. 42,48,018.56/- (Rupees Forty Two Lakhs, Forty Eight Thousand, Eighteen, Fifty Six Paisa).
CS DJ No. 9346/16 & 9347/16 Page 32 of 1445.10 Payment of Conversion Charges: Apart from investment as explained in Para 5.9 above, the Defendant also invested the sum of Rs. 7,77,946/- (Rupees Seven Lakhs Seventy Seven Thousand and Nine Hundred and Forty Six) as conversion and parking charges for the conversion of the Suit Property from residential status to commercial. After handing over possession of the Suit Property, the Defendant is entitled to the refund of the amount of Rs. 5,95,591/- (Rupees Five Lakhs Ninety Five Thousand and Five Hundred and Ninety One) paid for the Suit Property by the Defendant on behalf of the Plaintiffs.
5.10.1 The above payments were made by the Defendant pursuant to Official Notification and Public Notice issued by Ministry of Urban Development and MCD which designated certain areas with residential status to be converted to commercial status and thereby avail the benefit of mixed land use. This benefit was only conferred upon payment of conversion charges. Briefly, the following must be noted:
(i) the Suit Property did not fall within the purview of the first notification issued by the MCD dated 11.09.2006;
(ii) however, upon representations made by the Defendant to die appropriate authorities and after much persuasion, the Defendant convinced the authorities concerned that the Suit Property also needs to be brought within the ambit of the notifications;
(iii) in this regard, the 2nd notification dated 14.09.2006 was issued by the MCD and the Suit Property was included as the designated areas;
(iv) the Public Notice subsequently issued specified a cut off date for the payment of conversion charges. The consequence of failing to pay the conversion charges within the said cut off period had the effect that die Parties would not be able to avail the benefit of mixed land use and all efforts, made by the Defendant to facilitate the same would have CS DJ No. 9346/16 & 9347/16 Page 33 of 144 been futile;
(v) the efforts expended by the Defendant, in time of time, money and effort resulted in the adding of value to the Suit Property, benefit of which accrued exclusively to the Plaintiffs;
(vi) the Defendant paid conversion charges pursuant to the time line specified in the Public Notice. The said notifications, Public Notice together with the Official Receipts evidencing payment are annexed to the List of Documents and may be referred to at the time of hearing.
5.10.2 It is pertinent to note that the Defendant made payment of conversion charges for the entire areas leased from the Plaintiffs and this included the area on the front portion of the ground floor, which is the subject matter of another Suit, before this Hon'ble High Court, CS No.2330 of 2008.
5.10.3 It is also pertinent to highlight that whilst payment of such charges and taxes under Claus 10 of the Primary Lease Agreement were solely the responsibility of the Plaintiffs, the Defendant, in good faith had discharged the same, at the outset, on behalf of the Plaintiffs. The Plaintiffs are liable to refund the said amounts to the Defendant.
5.11 The Defendant had all material times, properly discharged it duties and responsibilities as a tenant, particularly, in respect of timely deposit of rentals, repairs to the Suit Property, maintenance of the Suit Property (at the Defendant's own cost) without any trouble whatsoever to the Plaintiffs and in the interest of all occupants of the said Building including but not limited to the Plaintiffs, providing security service (by way of provision of security guards) at the Defendant's own costs for the entire Building.
5.12 It goes without saying that the Defendant is emotionally attached to the Suit Property given that it has been in a Lessee of the Property for over nineteen (19) years and the customers of the Defendant identify the Suit property as the venue for the business of the Defendant.
CS DJ No. 9346/16 & 9347/16 Page 34 of 144Events Leading to the present Suit 5.13 The renewal of the Primary Lease Agreement (after the further three (3) year term provided in the Primary Lease Agreement) based on upon the same terms and conditions was carried out four (4) further terms as described in Pare 4.6 above.
5.14 Upon expiry of this 4th renewal term, that is on January, 2008, the Plaintiffs and Defendant, in continuation and in reliance upon the Primary Lease Agreement entered into further discussions on or about March 2008 for the renewal of the Lease for the further period. The Plaintiffs proposed rent of Rs. 4,00,000/- (Rupees Four Lacs) in continuation of the Lease Deed of 1989 for two years and also suggested measures regarding ancillary issues, in response to which the defendant confirmed consolidated rental of Rs. 4,00,000/- (Rupees Four Lacs) per month pursuant to the discussions. A copy of the email exchanged dated 21.03.2008 between the parties is annexed to the List of Documents and may be referred to at the time of hearing. The said enhanced rent was only confirmed under the assurance of the Defendant remaining in peaceful possession of the Suit Property and the Plaintiffs are liable to refund the said amounts to the Defendant.
5.14 The Plaintiffs and Defendant continued to discuss the remaining terms for the renewal of the Lease. As no resolution was achieved between the Parties, the Parties, together with their lawyers met at the Defendant's lawyers office in order to arrive at an amicable resolution of the outstanding issues. The meeting took place on 21.05.2008 and the agreement arrived at came to be incorporated and confirmed by the Defendant's lawyers in their e-mail dated 22.05.2008. The renewal of the lease in accordance with the primary Lease Agreement was confirmed in the following terms:
(a) Term- the term of the Lease was to be for a period of two (2) years with the Lessee's option to renew for a further period of two (2) years and thereafter, subject to mutual consent for such term as may be mutually agreed;
(b) Monthly Rent- the rental for the first year CS DJ No. 9346/16 & 9347/16 Page 35 of 144 would be Rs. 5 Lacs + service tax; rental for the second year would be Rs. 5.5 Lacs + service tax; rental for the third year would be Rs. 7.5 Lacs + service tax and rental for the fourth year would be Rs. 8 Lacs 4- service tax.
(c) Conversion charges-conversion charges were to be borne in equal parts by the Plaintiffs and Defendant for the duration of the period.
(d) Security Deposit- the amount for the security deposit would be revised to Rs.
30,00,000/- (Rupees Thirty Lacs). As the Plaintiffs continued to hold the previously deposited amount, i.e. the sum of Rs.
8,73,800.00 (Rupees Eight Lacs Seventy Three Thousand and Eight Hundred Only). The Defendant would deposit the balance sum on the commencement date of the second year of the Lease, that is on 01.06.2009.
(e) That Defendant had settled the earlier rental for the period February to May 2008 at Rs. 4,00,000/- (Rupees Four Lacs) per month under cover of the letter dated 21.05.2008.
A copy of the Defendant's lawyers' e-mail dated 22.05.2008 recording the terms of agreement during the meeting and the Plaintiffs' lawyers e-mail dated 23.05.2008, clarifying the equal payment of the conversion charges are annexed to the List of Documents and may be referred to at the time of hearing.
It was also desired by the parties that the agreement already achieved during the meeting on 21.05.2008 would be incorporated in the formal Lease Deed. The Defendant say that the exchange of correspondence, in the facts and circumstances of the case, the renewal of the Lease period on enhanced rent for four years and thereafter for further renewal stood concluded and enforceable in law. The Plaintiffs also okayed all the terms except that they wanted that the conversion charges to be borne by the parties equally throughout the period of lease and the extended lease. The very basis of the agreement arrived between the Parties was that the CS DJ No. 9346/16 & 9347/16 Page 36 of 144 Defendant shall be entitled to peaceful possession of the Suit Property. The same was the essence of the Agreement.
5.16 That though the parties agreed to the renewal of the lease enhancement of rent, security deposit etc. Plaintiffs' counsel even after consensus and agreement on 21.05.2008 reverted with further demands on behalf of the Plaintiffs which demands deal with ancillary issues. Some of these demands were as follows:-
a. the TDS certificates for the past period had to be given at the time of execution of the Lease Deed;
b. the service tax arrears for past period must be cleared.
c. applicable parking charges ought to be paid as the Plaintiff alleged that the Defendant parked its busses there;
d. removal and relocation of the generator, air conditioner and pantry. A copy of the Plaintiffs' lawyer's email dated 25.05.2008 and recording the terms of agreement during the meeting and the Plaintiffs' lawyer's e-mail dated 25.05.2008 is annexed to the List of Documents and may be referred to at the time of hearing.
5.16 A The Plaintiffs having failed to give peaceful possession of the Suit Property to the Defendant are not entitled to the enhanced rents as have been tendered to the Plaintiffs from time to time. The agreement reached between the Parties on 21.05.2008 stood vitiated and was never accepted by the Plaintiffs and the Hon'ble Court. The Plaintiffs cannot place reliance on the said Agreement to claim rental charges from the Defendant as the essence of the agreement between the Parties was peaceful possession of the Suit Property.
5.17 In respect of the electricity generator, it is important to note the following. First that the electricity generator was located on such part of the land where the Defendant was entitled to place the same by virtue of its ownership in the First floor of the Property. Secondly, the Plaintiffs had vide CS DJ No. 9346/16 & 9347/16 Page 37 of 144 Clause 13 of the Primary Lease agreement consented to the Defendant installing the same, so long as it done at the Defendant's own cost and it does not cause any nuisance or health hazard to other occupants. Thirdly, the electricity generator was installed with the prior permissions, consent and knowledge of the Plaintiffs. Fourthly, the said electricity generator is maintained by the Defendant at its own cost, does not cause any nuisance-
whatsoever and is not a health hazard to any of the occupants.
However, in the interest of continuing the Lease with the Plaintiffs the Defendant requested a four (4) month period to relocate the generator and requested the Plaintiffs to revert on the available area to place the same. It must be emphasized that the demand made by the Plaintiffs seeking relocation of the generator is unjust and unreasonable given that the generator is essential feature to the commercial dependence of the Defendant's business and more so, it was located in an area where the Defendant was entitled to place the same. As for the air conditioner, the Defendant agreed to relocate one of the air conditioners on the approval of the plans for relocation, first being approved by the Plaintiffs. The Defendant requested this time period but added that the same was subject to appropriate permissions first being obtained from the relevant authorities. The Defendant also requested the Plaintiffs to revert with the breakdown in respect of the on account payments post May, 2008. A copy of the Defendant's lawyer's e-mail dated 04.06.2008 to the Plaintiffs' lawyers is annexed to the List of Documents and may be referred to at the time of hearing.
5.18 Negotiations as regards ancillary issues continued to deteriorate as the Plaintiffs continued to renege their commitments by putting unreasonable pressure and demand on the Defendant. To begin with:-
(a) The Plaintiffs demanded removal of the generator/air conditioner which were in fact, on areas that were part of the Suit Property and partly entitled to be used by the Defendant by virtue of its ownership of Flat C on the First Floor;
The Plaintiffs continued to press their demand for service tax which it was pointed out to them was the CS DJ No. 9346/16 & 9347/16 Page 38 of 144 obligation of the Lessor under the Primary Lease Agreement and also under the law. The relevant provision in law, Section 68 of the Finance Act, 1994 reads as under "Every person providing taxable service to any person shall pay service tax at the rate specified in Section 66 in such manner and within such period as may be prescribed" The relevant provision, being Clause 10 under the Primary Lease Agreement read as under "That all the present rates, taxes ground rent, property tax, and other charges, outgoings, penalties and assessments imposed or payable in respect of the tenanted premises to the M.C. D. Government shall be paid by the Lessors and Lessor shall keep the Lessee free and indemnified at all times for the same... "
(b) The Plaintiff was specifically informed that the Defendant had agreed to pay service tax from 01.06.2008 onwards and that the past liability of the service tax was to be cleared by the plaintiffs. The Defendant invited the attention of the plaintiffs to section 68 of the Finance Act 1994, Clause 10 of the Primary Lease Agreement and also to the case titled "Retailers' Association of India and Others V/S Union of India (2008-TIOL-379-HC-Mum-ST). As stated hereinabove, the Defendant is not liable to pay any service tax for the period after 01.06.2008 as well.
(c) In so far as conversion charges are concerned, the position in respect thereto is as follows:
(i) In August 2007 & April 2008, the Defendant made payment of conversion charges to the MCD amounting to Rs. 7,77,946/- for areas under the present Suit Property as well as areas leased by the Defendant from the Plaintiffs under a separate Suit, which is also the subject matter before this Hon'ble Court, CS No. 2330 of 2008;
(ii) in May, 2008 when certain issues were discussed and settled, the Parties agreed that the rent of Rs. 16,00,000/- (Rupees Sixteen Lacs) (for the period of February to May 2008, calculated at Rs.
4,00,000/- (Rupees Four Lacs) per month) needs to be adjusted in the following manner:-
• Plaintiffs would bear 50% of the amount CS DJ No. 9346/16 & 9347/16 Page 39 of 144 paid by the Defendant as conversion charges i.e. Rs. 3,88,973/- (Rupees Three Lacs Eighty Eight ; Thousand Nine Hundred Seventy Three), leaving the balance of Rs. 12,11,027/-
(Rupees Twelve Lacs Eleven Thousand Twenty Seven) to be paid;
• the balance was subject to TDS Deductions;
• Rs.6,25,500/- (Rupees Six Lacs Twenty Five Thousand Five Hundred) (less TDS) were paid to the Plaintiffs by cheque and the balance were paid to the Plaintiffs in cash.
A copy of the payment breakdown is annexed to the list of Documents and may be referred to ; at the time of hearing.
(iii) the understanding between the Parties was that the ' Defendant would pay the conversion charges in advance and will recover an equal part payment of the same from the Plaintiffs by an adjustment of the rental payable to the Plaintiffs. This understanding was consented upon by the Plaintiffs.
(d) Despite the above , the Defendant had ,post February ,2008 by way of without prejudice on account payments(in gross) deposited and paid the sum of approximately Rs. 30,20,641/- (Rupees Thirty Lacs Twenty Thousand Six Hundred and Forty One) to the Plaintiffs. A copy of the Defendant's letter dated 21.05.2008, duly acknowledged (along with copies of the relevant cheques) and the Defendant's counsel's letters dated 07.09.2008 and 18.08.2008.duly acknowledged (along with copies of the relevant cheques) are collectively annexed to the List of Documents and maybe referred to at the time of hearing.
5.19 The agreement had as a consequence of various communications, understandings concluded the issue of extension in the period of lease, payment of rent, service tax, security deposit etc as an integrated settlement and extended the lease in CS DJ No. 9346/16 & 9347/16 Page 40 of 144 accordance with Primary Lease Agreement, as the parties had been doing for last nearly two decades. The Defendant acted on the settled issues and paid rent of Rs. 5,00,000/- (Rupees Five Lacs) per month for the months of July, August and September,2008 through their counsel. The Plaintiffs accepted the rent encashed the cheques. The Parties have, therefore acted on the settlement. It is an integrated settlement. The difference in the ancillary issues would not affect the settlement. The Plaintiff by instituting the present Suit, in essence are seeing invalidation of the settled matter and in that situation the parties would be relegated to the same position as it was before January,2008. The Plaintiffs, on the one hand, in law, cannot say that the rent per month is the same as agreed to by the parties in their meeting of 21.05.2008, and on the other hand, refuse to acknowledge renewal of the lease, period thereof, which extends beyond initial period of four years and proceed on the premises as if after January, 2008 the correspondence between the parties, their agreements, settlements and the payments received by the Plaintiffs are of no legal consequence. The Defendant says that the correspondence, conduct of the parties, understandings, settlements, payments made by the Defendant to the Plaintiffs and its acceptance by the Plaintiffs all constitute in law renewal of the Primary Lease Agreement in the same manner as it was for previous years and that the Defendant have acquired enforceable rights in law for which the Defendant reserve their right to institute appropriate legal proceedings. The Plaintiffs are estopped. The Plaintiffs cannot in law be allowed to approbate and reprobate. The Plaintiffs have to suffer legal consequence of their own conduct. A copy of the Certificate from the Defendant's bank is annexed to the list of documents and may be referred to at the time of hearing 5.20 Further discussion ensued between the Parties, but the Plaintiffs continued to maintain their unreasonable demand which the Defendant did not agree to. At this stage, to somehow or the other, to pressurise the Defendant into agreeing to the demands, the Plaintiffs issued a letter of termination with respect to the Lease of Flat on the front portion on the Ground Floor. This termination is the matter of another suit before this Hon'ble Court, being C.S. CS DJ No. 9346/16 & 9347/16 Page 41 of 144 (OS) No. 2330/2008). This was even though it was clearly agreed between the Parties that this lease would be renewed on the same terms and condition as the lease in the present Suit.
5.21 Despite the above, the Defendant, who is in occupation of the Suit Property , has made several attempts to meet the Plaintiffs and/or their authorized representatives to forward the without prejudice on account payments for the month of Septemper,2008 till date but the Plaintiffs and/or their authorized representatives have refused and rejected the said Payment. The Defendant contends that the non-acceptance of payment is a further evidence of abuse by the Plaintiffs as the Lessor to put the Defendant in a prejudicial position, in order to rely upon an "alleged" non-receipt of payment to wrongly impute before this Hon'ble Court that the Defendant has not complied with its payment obligations. A copy of the Defendant's counsel's e- mail dated 05.09.2008 to the Defendant informing the Defendant of the refusal of the Plaintiffs' counsel to accept the without prejudice rental payment is annexed to the List of Documents and may be referred to at the time of hearing.
5.22 The Defendant says and submits that the Plaintiffs had issued Notices(through Counsel) dated 22.08.2008, 26.08.2008 and 27.08.2008 to the Defendant to immediately hand over vacant and peaceful possession of the premises within fifteen (15) days without affording time for reply. The notices were issued within a short span of time at the Defendant's registered office in Kashmir knowing fully well that the Defendant carried on their business principally from the Suit Property.
5.23 The Plaintiffs have in the present Suit attempted to create a confusion with respect to the understanding recorded on 21.05.2008. The understanding recorded on 21.05.2008 was in respect of the future, i.e. commencements of the Lease from 01.06.2008 and not for the past period. It is the Plaintiffs' who have sought to renege from this understanding achieved between the parties leading to a breakdown in the negotiations. It is further evident that the Plaintiffs are simple using the present Suit and the aforementioned notices, and the CS DJ No. 9346/16 & 9347/16 Page 42 of 144 refusal to accept on account without prejudice payments towards rentals, as a means of extorting and extracting further monies from the Defendant. It is settled law that the Plaintiffs cannot rely upon their own refusal to accept payment as a means of alleging nonpayment of the rental by the Defendant. The Defendant has never refuted and/or denied its obligation to pay rent. The Defendant has also not refuted and/or denied its commitment to pay service tax for the period going forward, i.e. w.e.f. 01.06.2008. The Defendant states that it is and has always been desirous of continuing the Lease with the Plaintiffs. The Defendant's intention is evident if regard is also had to amount of investment made by the Defendant in the Suit Property and the fact that it is the principal place of the Defendant's business since 1989.
5.24 The Defendant's solicitors' by the letter dated 30.08.2008 had responded to the Plaintiffs' counsel's Notice and sought to place on record the agreed terms and conditions between the Parties in respect of the present Suit Property. The Defendant had never denied the ongoing negotiations between the Plaintiffs and the Defendant as well as between its respective counsel in respect to the other Property. The Defendant only wishes to state that reliance on the other discussions in the present Suit is misplaced. The Defendant's solicitors had issued two (2) further letters dated 23.09.2008 and 30.09.2008 to the Plaintiffs' solicitors indicating that it will revert with instructions from the Defendant. Further to the issuance of said letters, the Defendant's solicitors, pursuant to the Defendant's instructions had liaised with the Plaintiffs' counsel by way of telephone discussions towards a resolution of the matter. However, given the unreasonableness of the demand and the continued abuse of the Plaintiffs* position as the Landlord to combine discussions of the Suit Property and other Property rendered discussions futile.
5.25 That by instituting the suit and thereafter pursuing it and thus impairing the Defendant's right to peaceful use and occupation of the Suit Property, the Plaintiffs have breached the understanding dated 21.05.2008. The Plaintiffs are not entitled to any of the following -
CS DJ No. 9346/16 & 9347/16 Page 43 of 144(a) The Plaintiffs are not entitled to enhanced rents as were tendered to the Plaintiffs with effect from February, 2008.
(b) The Plaintiffs are not entitled to claim any service tax from the Defendant
(c) The Plaintiff is liable to bear all amounts towards conversion charges, Additional FAR charges and parking charges 5.26 That on 23.02.2010, the Defendant received at the Suit Property, a notice dated 13.02.2010 from the Municipal Corporation of Delhi ("MCD") directing deposit of the conversion charges, one time additional FAR charges and one time parking charges, in respect of the Suit Property, for the period upto June, 2009. The Defendant immediately contacted the Plaintiffs and its counsel and informed them about the notice. The Plaintiffs were then liable to tender one half of the conversion charges in terms of the understanding dated 21.05.2008 and whole of one time parking charges and additional FAR charges. As one-time payment attaches to the property in question and it was the obligation of the Plaintiffs to make payment of the same within time.
5.27 That since the Plaintiffs avoided payment of its share of the conversion charges therefore to avoid the sealing of the entire Suit Property; the Defendant deposited the entire amount of conversion charges. The Plaintiffs are liable to reimburse the amount of Rs. 2,18,617/-(Rupees Two Lacs, Eighteen Thousand, Six Hundred and Seventeen) being the amount paid by the Defendant for and on behalf of the Plaintiffs along with interest thereon.
5.28 That thereafter, during the pendency of the present suit, the MCD sealed the basement portion of the Suit Property, on 09.03.2010 till 31.10.2010 in which the Defendant was carrying on his business, due to non-payment of one time additional FAR Charges and Parking charges which the Plaintiffs were liable to pay. The entire stock and inventories of the Defendant were sealed in the basement. This sealing caused huge business losses/damages to the Defendant. The fact is evidenced by Writ Petition (Civil) bearing no. 6440/2010 filed by the Plaintiffs CS DJ No. 9346/16 & 9347/16 Page 44 of 144 against the MCD for de-sealing of the Basement of the Suit Property. The sole intention of the Plaintiffs in getting the Suit Property sealed was to pressurize the Defendant to vacate the Suit Property without following due process of law.
5.29 That the Defendant is therefore not liable to pay any rent to the Plaintiffs for the period 09.03.2010 till 31.10.2010.
5.30. That during the period when the basement of Suit Property was lying sealed, Plaintiffs continued to recover certain reduced amount of rent, which ought not have been recovered. Over and above, the Defendant suffered business loss and recorded a decline in the turn over during the period March, 2010 to October, 2010, in comparison to March, 2009 to October, 2009 to the tune of Rs.
5,99,54,542/- (Rupees Five Crore, Ninety Nine Lakh, Fifty Four Thousand and Five Hundred and Forty Two).
5.31 That even otherwise the amount of loss of turn over would be much more considering that the Commonwealth Games were held during the period of sealing, during which period the Defendant had expected increase in income. The Commonwealth Games and the expected rise in revenue during the period when the said event was being hosted in New Delhi had been used by the Plaintiffs while demanding increased rental for the Suit Property. The sealing of part of the Suit Property during the Commonwealth Games and that too on account of the conduct of the Plaintiffs entitles the Defendant to punitive damages.
5.32 That due to the sealing of the basement of the Suit Property, the Defendant had to incur a cost of Rs. 1,98,800/- (Rupees One Lakh, Ninety Nine Thousand and Eight Hundred) in repair, replacement as well as paint and polishing to get the Suit Property back in working condition.
5.33 After de-sealing of the. premises, the Defendant's business suffered huge set back since loyal customers had shifted to other vendors, and walk-in customers had reduced considerably, for which the losses/damages are being assessed @ Rs. 2,00,000/- (Rupees Two Lacs) per month till CS DJ No. 9346/16 & 9347/16 Page 45 of 144 December, 2011. The Defendant's management suffered great mental agony and pain during this period for which the Defendant is entitled to damages. Thereafter with great hardwork and determination of the management, the business slowly started to return to normal from January, 2012 and picked up later during the same year.
5.34 The Defendant is entitled to and has, in fact set off the above damage against all claims of the Plaintiff, be it in the nature of rent/damage/mesne profits.
5.35 The Defendant continued in possession of the Suit Property. On 1.10.2016, the Defendant called upon the Plaintiffs to jointly inspect the Suit Property and to take possession. The Plaintiffs refused to jointly inspect the Suit Property. Accordingly, the Defendant had constructively handed over possession of the Suit Property to the Plaintiffs on 01.10.2016. In view of the illegal denial of the Plaintiffs to jointly inspect the Suit Property, the Defendant filed an application before this Hon'ble Court on 08.10.2016 after serving the same on the Plaintiffs through counsel. The Plaintiffs malafide failed to appear before the Court in Order to delay the handing over of the possession. Since no hearing of the applications took place, the Defendant was constrained to handover the actual and physical possession of the Suit Property on 19.10.2016 after video-recording the condition of the said Suit Property.
5.36 Upon the handing over of the Suit Property, the Defendant became entitled to refund of security deposit of sum of Rs. 8,73,800.00 (Rupees Eight Lakhs Seventy Three Thousand and Eight Hundred Only) from the Plaintiffs along with interest at the rate of 18 percent per annum with effect from 1.10.2016.
5.37 That the value adding improvement works, refurbishment done by the Defendant to the Suit Property was of permanent nature. The Plaintiffs accepted the Suit Property along with all the fittings and fixtures installed by the Defendant. The Defendant had added great value to the Suit CS DJ No. 9346/16 & 9347/16 Page 46 of 144 Property. The Defendant got the fittings and fixtures of fixed nature installed at the Suit Property valued by a Government approved valuer. After taking into consideration the appropriate depreciation in the cost of refurbishment, the value of the existing finishing/furnishing items in the Suit Property as also in the Property forming part of CS(OS) 2330 of 2008 was Rs. 65,35,413.17 (Rupees Sixty Five Lacs, Thirty Five Thousand Four Hundred Thirteen and Seventeen Paisa) when the physical possession of the Suit Property was handed over to the Plaintiffs on 19.10.2017. The Plaintiffs are liable to compensate the Defendant for the said amount.
5.38 After taking the physical possession of the Suit Property from the Defendant, Plaintiffs along with Mr. Aditya Dave started interfering in the peaceful occupation of the other portions of M-l, Hauz Khas, New Delhi and the Defendant has initiated appropriate proceedings against the Plaintiffs for the same.
5.39 The Defendant has tendered use and occupation charges to the Plaintiffs way above the market rent for the Suit Property. As per the Defendant the market rent for the Suit Property would be as follows-
Sr. No. Period Market Rent
Ground Floor First Floor Basement Second Floor
(Per Sq. Ft.) (Per Sq. Ft.) (Per Sq. Ft.) (Per Sq. Ft.)
1. 2009 Rs.55-60 Rs.40 - 45 Rs. 35 Rs. 30-35
2. 2010 Rs.55-60 Rs.40-45 Rs. 35 Rs.30-35
3. 2011 Rs.55 Rs.40 Rs.30-35 Rs.35
4. 2012 Rs.60 Rs.45 Rs.35 Rs.35
5. 2013 Rs.60 Rs.45 Rs.35 Rs.35
6. 2014 Rs.70 Rs.55 Rs.35 Rs.40
7. 2015 Rs.70 Rs.55 Rs.35 Rs.40
8. 2016 Rs.70 Rs.55 Rs.35 Rs.40 After the final adjudication of the use and occupation charges by this Hon'ble Court, the Defendant shall be entitled to refund of amounts paid in excess of the market rent.
ISSUES:-
CS DJ No. 9346/16 & 9347/16 Page 47 of 1448. Considering the pleadings of the parties, vide order dated 30.10.2017, following issues were framed in both the suits.
"1. Whether the plaintiff is entitled for mesne profits, if so, at what rate and for which period? OPP.
2. Whether the plaintiff is entitled for interest, if so, at what rate and for which period? OPP.
3. Whether the defendant is entitled to deduct any amount in respect of removal of pantry and relocation of electricity generator from the amount which they are liable to be paid to the plaintiff, if the issues No.1 & 2 are decided in favour of the plaintiff? OPD
4. Relief."
9. After framing of issues, both the sides led their evidences in order to support their claims/contentions.
PLAINTIFF'S EVIDENCE:
IN BERAR SUIT:
10. Plaintiff has examined two witnesses i.e. plaintiff no. 2 Mrs. Soni Dave as PW-1 and Mr. Aditya Dave as PW-2 in the above suit for proving the case.
10.1 PW-1 Mrs. Soni Dave has proved the documents as relied by her in her evidence affidavit. She was cross examined at CS DJ No. 9346/16 & 9347/16 Page 48 of 144 length through question answer format.
10.2 As per the report of Ld. Local Commissioner filed in the Court on 09.09.2022, PW-2 Mr. Aditya Dave was put to cross examination by Ld. Local Commissioner without recording his examination-in-chief (i.e. without the affidavit of evidence tendered in evidence) and certain questions regarding Ex.D-12 i.e. 1989 lease were put to him regarding compulsory registration as the said Lease was for a period of 03 years.
IN SONI DAVE SUIT:
10.3 Plaintiff has examined two witnesses i.e. plaintiff Mrs. Soni Dave as PW-1 and Mr. Aditya Dave as PW-2 in the above suit for proving the case.
10.4 PW-1 Mrs. Soni Dave has proved the documents as relied by her in her evidence affidavit Ex.PW1/X. She was cross examined at length.
10.5 PW-2 is Mr. Aditya Dave (husband of plaintiff). He has proved his evidence affidavit u/s 65B of Indian Evidence Act as Ex.PW2/A in support of the emails filed by PW-1 in her evidence affidavit.
DEFENDANT'S EVIDENCE:
11. Defendant(s) has examined 10 witnesses in order to prove its case.
It is pertinent to mention here that total 10 witnesses have been examined by the defendant in the Berar suit, however, CS DJ No. 9346/16 & 9347/16 Page 49 of 144 it is appearing as if 11 witnesses have been examined as the last witness examined by the defendant is DW-11 but the fact of the matter is that only 10 witnesses have been examined as inadvertently, the numbering of the defendant witnesses has been wrongly made after the examination of DW-7, the next defendant witness was given DW-9.
Further, all the defendant witnesses examined in Berar suit have been examined in the Soni Dave suit except DW-11.
11.1 DW-1 is the witness from Building Department, MCD, South Zone, New Delhi. He did not bring the requisite document sought to be proved by the defendant.
11.2 DW-2 is the Advocate from the previous law firm of the defendant namely Amarchand Mangaldas & Co. He stated that the required document i.e. an email dated 05.09.2008 is not available with them.
11.3 DW-3 is the witness from the Department of Publication, Old Secretariat, Delhi. He has proved the certified copy of notification dated 07.09.2006 bearing SO 1456(E) issued by Ministry of Urban Development (Delhi Division) as Ex.DW3/A. 11.4 DW-4 Dr. S.N. Bansal, is a govt. approved valuer. He has proved the duplicate Valuation Report dated 14.10.2016 with respect to property M-1, Hauz Khas, New Delhi as CS DJ No. 9346/16 & 9347/16 Page 50 of 144 Ex.DW4/A. 11.5 DW-5 is the witness from the Raj Digital Photo studio. The copy of bill No.0053 dated 19.10.2016 in the name of defendant company by Raj Digital Photo Studio is mark A. The Mouserbaer DVD is mark B. 11.6 DW-6 is the witness from Building Department (HQ), Civic Centre, MCD, New Delhi. He has proved the certified copy of letter dated 23.06.1982 which pertains to sanction of building plan of Plot M-1, Hauz Khas, New Delhi as Ex.DW6/1 and certified copy of letter dated 30.06.1984 which is regarding revalidation of building plan of Plot M-1, Hauz Khas, New Delhi as Ex.DW6/2. He has also proved sanctioned building plan of Plot M-1, Hauz Khas, New Delhi as Ex.DW6/3.
11.7 DW-7 is the Planning Surveyor, Town Planning Department (HQ), Civic Centre, MCD, New Delhi. He has proved the notifications No. F33/T.P./823/C & C dated 11.09.2006 and No. F33/T.P./827/C & C dated 14.09.2006 as Ex.DW7/1 and Ex.DW7/2 respectively.
11.8 DW-9 Mohd. Yaseen Mir is the AR of the defendant company. He has proved the documents of the defendant company as relied by it in his evidence affidavit. He was put to lengthy cross examination.
11.9 DW-10 is Sh. Anchit Agarwal. His entire deposition is reproduced as under:
CS DJ No. 9346/16 & 9347/16 Page 51 of 144"I am the summoned witness in this case. I have brought the registered lease deed dated 22.02.2000 executed between Mrs. Rita Agarwal and Mr. Anchit Agarwal with defendant company for the period of two years i.e. w.e.f 01.03.2000 to 20.02.2002 with the monthly rent of Rs. 75,000/-. The same is exhibited as Ex.DW9/1 (running into
12 sheets (24 pages) ) (OSR) (Objected to by Ld. Counsel for plaintiff since this document has not been summoned and copy thereof has not been filed).
I have brought the registered lease deed dated 01.04.2005 executed between Mrs. Rita Agarwal and Mr. Anchit Agarwal with defendant company for the period of three years i.e. w.e.f 01.04.2005 to 31.03.2008 with the monthly rent of Rs. 60,000/-. The same is exhibited as Ex.DW9/2 (running into 06 sheets (12 pages) (OSR) (Objected to by Ld. Counsel for plaintiff since this document has not been summoned and copy thereof has not been filed).
I have brought the lease deed dated 28.12.2015 executed between Mrs. Rita Agarwal and Mr. Anchit Agarwal with defendant company for the period of 11 months i.e. w.e.f. 01.01.2016 to 30.11.2016 with the monthly rent of Rs. 1,60,000/-. The same is exhibited as Ex.DW9/3 (running into 05 sheets) (OSR) (objected to by Ld. Counsel for plaintiff as this lease deed on Rs. 100 stamp paper and the balance stamp duty has not been paid and therefore, this cannot be CS DJ No. 9346/16 & 9347/16 Page 52 of 144 exhibited or taken in evidence and is liable to be impounded).
XXXXXXXXX by Sh. Saurabh Prakash, Ld. Counsel for plaintiff.
It is correct that the suit property is located at the corner of Aurobindo Marg and Neeli Masjid lane. It is correct that on Aurobindo Marg there is also a service lane right in front of M-1, Hauz Khas, New Delhi. This service lane merges with the main road further ahead. I do not know how many plots are there in between. It is correct that there is a U-turn about 100-200 metres just before said property if you are coming from the direction of AIIMS but I am not sure about the distance. It was constructed recently but I cannot say when. I cannot say whether there is an opposite U-turn near AIIMS. Vol. I am not a frequent visitor to Delhi. It is correct that our flat on the ground floor is the third flat from the front.
We purchased this property by installments which started in the year 1984-85. As far as I recall, the sale deed was registered in the year 1996. Vol. In between the property was also sealed by the MCD but I do not recall when. After that, it must have been de-sealed before we were given possession. We did not have possession of the property until the sealing lasted. I do not have any documentary proof of the sealing.
It is correct that Ex.DW9/1 dated 22.02.2000 was for a monthly rent of Rs. 75,000/- which was proposed to increase to Rs. 86,250/-after two years. It is signed by my father and mother.
CS DJ No. 9346/16 & 9347/16 Page 53 of 144My father has signed as my Power of Attorney Holder. Prior to the defendant, the property was rented to another tenant and since we got a higher lease amount from the defendant, we leased it to them. It is correct that defendant was already a tenant in the building and our portion was just adjoining the portion that the defendant was having, however, I do not know who the landlord was. We did not know what rent the defendant was paying to that landlord.
We leased the property to them in 2005 vide Ex.DW9/2 at a monthly rent of Rs. 60,000/- but I cannot say why the rent was reduced because my father used to look after these affairs. It is signed by my father. My father has signed as Power of Attorney Holder for me and my mother. I have not brought the Power of Attorney from me and my mother in favour of my father.
We again leased the property to them vide lease deed dated 01.04.2010 vide mark at a monthly rent of Rs. 1,25,000/- and bears my signatures. The original of this document has been misplaced. It is correct that the said document states "attorney for lessor" but the same is signed by the lessor.
I am not aware if my father wanted to sell this flat to Mr. Aditya Dave and Mrs. Soni Dave. I cannot admit or deny if my father had asked Mr. Aditya Dave to buy at a price twice the market rate because his front flat were adjoining our flat. Prior to 2010, the defendant had demolished the wall that was between our flat and flat in front.
CS DJ No. 9346/16 & 9347/16 Page 54 of 144This was later reconstructed around the year 2015-16 or 2017 but I cannot say when. Again said, I am confused about the exact year in which the wall was reconstructed but when I got the possession of my portion, it was a separate unit. We did not get any police verification done at any time during this entire period. We were not aware if there was any criminal case going on against the defendant. (objected to by Ld. Counsel for defendant as the same is irrelevant and not relating to the issue in controversy between the parties).
It is correct that the lease deed dated 28.12.2015 Ex.DW9/3 is signed by only one witness. I cannot say whether this document was not signed on 28.12.2015.
Q. I put it to you that this was not signed on 28.12.2015 because the stamp paper is dated 26.02.2016, what do you have to say?
A. It is correct, however, since the lease was the continuing one and may be the lease was signed when my father had travelled to Delhi.
Q. I put it to you that this document has been created subsequently and you did not give possession of your property to the defendant at any time after the 2005 lease expired and only signed these documents at the request of defendant. What do you have to say?
A. It is incorrect.
Q. Is it correct that in the summons that you received you had been asked to bring the lease deed of 2010 only?
CS DJ No. 9346/16 & 9347/16 Page 55 of 144A. I received summons 3-4 days before the last hearing but I have not brought the same with me but I do not recall whether it required me to bring only the lease deed of 2010 but the defendant Counsel had advised me to bring the other documents also in original and on the last date also, I had mentioned it to the Court and the Court had also told me that I could bring whatever documents I had with in original.
Q. Why did you not register the lease deeds of 2010 and 2015?
A. I cannot say.
Q. I put it to you that they were not registered because you did not actually give possession to the defendant under either the lease deed of 2010 or 2015?
A. It is incorrect.
It is incorrect to suggest that I am deposing falsely. It is incorrect to suggest that I have been paid by the defendant to make this statement."
11.10 DW-11 Sh. Rajesh Gupta is the Chartered Accountant/Auditor. He was auditor for the defendant company during the year 2009-2010. After seeing the certificate dated 21.05.2011 issued by Rajesh Radhey & Associates, Chartered Accountant pertaining to decline in the turnover during period March 2010 to October 2010 of the defendant company, he stated that this document was not issued by him and that same bears his forged signatures.
CS DJ No. 9346/16 & 9347/16 Page 56 of 144PRELIMINARY OBJECTIONS:
12. The defendant have raised some preliminary objections in their written submissions, though same have not been made preliminary issues, however, still I am giving my findings on those issues before going to deal with the issues framed in the suits.
DEFENDANT'S ARGUMENTS:
13. The defendant have raised following arguments in support of their contentions.
Argument regarding competency of Mr. Aditya Dave and Mrs. Soni Dave.
13.1 The defendant has challenged the authority of Mrs. Soni Dave in Soni Dave suit as well as that of Mr. Aditya Dave in Berar Suit to file the respective suits and as such, both the suits have not been filed through duly authorized representatives.
It is argued that Mr. Aditya Dave though named as PW-2 did not enter into the witness box on behalf of Plaintiff no.1 and did not depose as he was dropped as a witness on 20.03.2024 on which date the Plaintiff's evidence was closed. It is also submitted that Mr. Aditya Dave was not even competent to file Berar Suit on behalf of Plaintiff no.1 company as no minutes of the alleged meeting dated 05.06.2008 was filed on record. Therefore, the authority of Mr. Aditya Dave as the AR of the Plaintiff No. 1 Company is in dispute. It is evident that Mrs. Soni Dave had no personal knowledge of the subject matter and CS DJ No. 9346/16 & 9347/16 Page 57 of 144 her knowledge is derived from her discussion with her husband Mr. Aditya Dave which clearly shows that her entire knowledge regarding the subject matter in dispute is merely hearsay in both Berar suit and Soni Dave suit. Though Mr. Aditya Dave could be a credible witness for the Plaintiff to depose on the facts as stated in the plaint but for reasons best known to the Plaintiffs themselves, he was dropped from the List of Witnesses in Berar Suit and in Soni Dave suit, his testimony is limited only to the electronic evidence. Further, in none of the emails exchanged between the parties regarding the meeting dated 21.05.2008 Mrs. Soni Dave was marked CC on her email id [email protected]. Furthermore, her entire testimony is full of ambiguities and contradictions, which clearly proves the case of the Defendant that she was not a credible witness as such, it is pertinent to point out order dated 18.02.2022 passed in CM(M) 162/22 by the Hon'ble High Court of Delhi wherein it is held unequivocally stated that an adverse inference is to be drawn in case the Witness refuses to answer certain questions with respect to the dispute. Pursuant to order of the Delhi High Court, vide proceeding sheet dated 12.07.2022, the Ld. Local Commissioner made the following observation:
"During the cross examination of Mrs. Soni Dave she has refused to answer question Nos. 55, 64, 86, 144, 145, 152, 153, 156, 179, 182, 185, 225, 240, 241, 242, 260, 261, 266 and 308 in terms of the order of the High court dated 18.02.2022"CS DJ No. 9346/16 & 9347/16 Page 58 of 144
Given that the questions mentioned above were of utmost importance and relevant to the dispute at hand, it is imperative for this Court to draw an adverse inference with regards the testimony of Mrs. Soni Dave.
Moving on to the questionable testimony of Mrs. Soni Dave in the following questions she has deposed that her husband is the best person to answer as she has no knowledge, she does not recall and have given contradictory statements as to the case setup by her in the plaint.
(Refer Q.No. 92 to 94, 111 to 117, 126 to 129, 133, 149 to 151, 166, 168 to 170, 184 to 185, 187, 191 to 192, 203 to 216, 219, 225, 233, 235, 240 to 242, 246, 258 to 262, 269, 271 to 273, 275 to 280, 290 to 292, 300 to 301, 303 to 309, 312 of the cross examination of PW1 in CS DJ 9347/16 from Page No. 173 to 236.
13.2 Argument regarding legal right or ownership of of basement of property M-1, Hauz Khas, New Delhi :
The Defendant argues that the Plaintiffs have no valid ownership or legal right over the basement of property M-1, Hauz Khas, New Delhi, and therefore could not have legally leased it. The alleged lease deed dated 02.12.1989 is claimed to be void ab initio, as it was executed through fraud and misrepresentation, violating Section 105 of the Transfer of Property Act, 1882 and Section 19 of the Indian Contract Act, 1872.
It is further argued that the ownership of the basement and front lawn is under dispute in suits pending adjudication i.e. CS DJ 297/2022 Jammu & Kashmir Bank vs CS DJ No. 9346/16 & 9347/16 Page 59 of 144 G.S. Berar Co. Pvt. Ltd. & Ors. and CS DJ 113/2017 (Trans Asian Industries Expositions Pvt. Ltd. vs Aditya Dave & Ors.). It is argued that Plaintiffs allegedly only held 1/6th share, not the entire basement and as such, the basement is a common area, jointly owned by multiple flat owners as per the Collaboration Agreement dated 01.11.1984.
It is further argued that no specific demarcation existed for the Plaintiffs' share, making leasing impossible. It is also argued that Plaintiffs falsely represented themselves as absolute owners/lessors and had concealed material facts about ownership and common area rights. Further, the sale deeds show inconsistency as Plaintiffs claimed full ownership earlier but later admitted limited rights. It is also argued that plaintiffs allegedly illegally sold common areas (basement, front lawn) to a third party (Vijay Sales). This was done despite pending litigation and in violation of Section 52 of TPA (lis pendens). A court order has restrained further third-party interest. It is further argued that Collaboration Agreement (1984) is Central document establishing shared ownership of common areas. Plaintiffs denied its existence in court despite relying on it in past transactions.
It is further argued that Section 116 of the Evidence Act (tenant estoppel) does not apply due to fraud and because possession has already been returned. It is further argued that Plaintiffs were themselves illegal occupants. Criminal complaints for fraud, cheating, and breach of trust are pending. Plaintiffs allegedly misappropriated approximately ₹17.8 crore. The Property suffered from defects, demolition orders, and sealing, affecting usability and rental value. Plaintiffs approached the CS DJ No. 9346/16 & 9347/16 Page 60 of 144 court with unclean hands, suppressing material facts.
PLAINTIFF'S ARGUMENTS:
14.1 So far as the argument of the defendant challenging the authority of Soni Dave as well as Mr. Aditya Dave in both the suits is concerned, it is submitted that no such defence has ever been raised in the Written Statement in either matter and no such issue has been framed. This issue cannot be raised at this late stage.
In para 1 of the plaint it was pleaded that:
"...This plaint is signed on behalf of Plaintiff no.1 by Mr. Adit Dave who has been authorized to institute this suit and to sign all papers including this plaint, affidavit and vakalatnama in relation thereto."
A copy of the Board resolution was filed with the suit. Parawise reply thereto is:
"The contents of para 1 of the Plaint are a matter of record and hence admitted."
There was thus no need to prove any further capacity. The resolution passed by the Company in favour of Mr. Aditya Dave also bears the signatures of Ms. Soni Dave. Being Directors of the company and hence its principal officers they were both authorised to sign and depose even without any resolution. Ms. Soni Dave could also have instead signed the plaint. They do not need any other authority to depose on behalf of the company. In any case the matter is essentially based on records and certified copies of documents and most of the correspondence between the parties is admitted. Further, she has stated in the affidavit as follows:
"The plaint is signed on behalf of G.S.Berar & Co. Pvt. Ltd. by Mr. Aditya Dave who has been CS DJ No. 9346/16 & 9347/16 Page 61 of 144 authorized to institute this suit and to sign all papers including this plaint, affidavit and vakalatnama in relation thereto. His authorisation is at page 52 of the documents filed by the Plaintiff on 24.10.2008 and is Exhibit PWl/1. I have signed this authorization. He has signed the plaint, affidavit and vakalatnama. I can recognize his signatures because I have seen him sign in the usual course of our work. I have also signed the plaint and vakalatnama. Mr. Aditya Dave is my husband. He and I discuss all our money/property matters and take joint decisions about them. Usually my husband stays in touch with our lawyers over the phone as well as by personal meetings and he also receives emails from the lawyers. He then discusses the matter with me. I have also often attended such meetings. After we have decided on the course of action he instructs the lawyers. I have seen all the emails and documents referred in this affidavit and I confirm that the emails that were sent by our lawyers were in my knowledge at the time and had been issued with my consent. I have refreshed my memory while preparing this affidavit. I stand by whatever is stated in them."
All the documents filed by the Plaintiffs form part of the record of the Company.
The evidence on record shows that the parties have consistently proceeded on the basis that Mr. Aditya Dave is the person negotiating with the Defendant, receiving and sending the relevant emails, and dealing with the subject properties, both for the G.S. Berar ("Berar property") and the Soni Dave premises.
CS DJ No. 9346/16 & 9347/16 Page 62 of 144There is no requirement in the law that a witness who appears on behalf of the Company can only depose if there is a board resolution in his favour. ( Judgment Pawan Kumar Dalmia). Further, on the aspect of authority to institute, the Director is competent to institute the case on behalf of the Company. (Judgment United Insurance).
The Defendant counsels were aware throughout that there were 2 separate suits in both of which Ms. Soni Dave was a Plaintiff. They nevertheless addressed their emails only to the Plaintiffs' counsel and to Aditya Dave concerning both the matters. Consequently, it does not lie in their mouth to now question whether Ms. Soni Dave was represented and or had participated in the proceedings as a landlord. Moreover, in law it is not even necessary for a party to be personally present during any meeting or to hold discussions directly with the other. It is well recognized that their counsels or other representatives can do so on their behalf.
14.2 It is argued on behalf of plaintiff that the Defendant initially admitted the Plaintiffs' title and claimed a contractual right to remain in possession until 2012, on which basis interim protection was granted. However, even after this period expired, the Defendant did not vacate and was ultimately evicted through orders of the Single Judge, Division Bench, and Supreme Court. Subsequently, the Defendant changed its position, denying both the contract and the Plaintiffs' title, raising inconsistent and untenable pleas.
It is further argued that the principle of res judicata CS DJ No. 9346/16 & 9347/16 Page 63 of 144 applies, as the issue of title was clearly pleaded by the Plaintiffs and expressly admitted by the Defendant in Written Statements (2009 and 2017),and conclusively decided through multiple judicial orders.
Further, a consent order (2015) and later decisions under Order 12 Rule 6 CPC confirmed that the Defendant had no right to remain in possession. These findings were upheld up to the Supreme Court of India.
The Defendant cannot now dispute title because admissions in pleadings cannot be withdrawn, and attempts to amend pleadings were rejected (even if on delay, they would fail on merits).
It is further argued that the 2022 suit by Jammu & Kashmir Bank also does not help the Defendant, since the Bank claims through the Defendant and is therefore bound by the same title.
It is further argued that even if GS Berar & Co. lacked title, only Ms. Soni Dave would have the locus to challenge it. The Defendant's reliance on a Collaboration Agreement is contradictory--claiming rights under it while also denying the Company's title makes its position legally inconsistent.
FINDINGS:
15.1 As far as the argument of defendant disputing the competency of Mr. Aditya Dave to file the present suit, it is seen that in the Written statement of the defendant, nowhere this issue was raised througout the proceedings of this case and this issue CS DJ No. 9346/16 & 9347/16 Page 64 of 144 has been raised for the first time at the fag end of the matter when the matter is now being adjudicated. The Board Resolution in his favor has been duly proved on record as Ex.PW1/1 in the Berar suit. Further, even the defendant has admitted the para 1 of the plaint which states as under:
This plaint is signed on behalf of Plaintiff no.1 by Mr. Adit Dave who has been authorized to institute this suit and to sign all papers including this plaint, affidavit and vakalatnama in relation thereto."
So far as another argument of defendant challenging the competency of PW-1 Mrs. Soni Dave is concerned and that she was evasive in replying to certain questions as mentioned above, it is seen that the questions which have not been answered by her are not relevant to the fact in issue and therefore, her testimony cannot be discarded on this ground alone. Moreover, Mrs. Dave is one of the Directors of the plaintiff company and as such, she is competent to depose on behalf of the company as well as in her own capacity as a Director.
In the case of Pawan Kumar Dalmia Vs. M/s HCL Infosystems Ltd. & Ors. passed in RFA Nos.180/2004, 235/04 & 239/04, Hon'ble High Court of Delhi has held as under:
"any person who is aware of the facts of the case and whose evidence would be a relevant evidence in terms of the Evidence Act, 1872, is competent to depose. A witness can depose as per facts in his knowledge or as per records. There is no CS DJ No. 9346/16 & 9347/16 Page 65 of 144 provision in the Companies Act, 1956 or in the Evidence Act, 1872 which requires that a witness who appears on behalf of the company can only depose if there is a resolution of the Board of Directors of the company permitting him to depose on behalf of the company."
Therefore, in view of the above discussion, it is clear that the argument raised by the defendant is frivolous and have been raised for the first time when the matter has reached its final stage. Even in the cross examination, the witness has not been evasive and has given reply as per her knowledge of the facts. Furthermore, the defendant has also cross examined PW-2 Mr. Aditya Dave, husband of PW-1 Soni Dave, and as such, they had ample opportunity to put all the questions to him which could not be answered by Mrs. Soni Dave herself, and as such, now this Court has no reason to draw adverse inference against the testimony of PW-1 Mrs. Soni Dave and to dispute the competency of both the witnesses and as such, the argument raised on behalf of defendant is not relevant and accordingly rejected.
It is pertinent to mention that as per the report of Ld. Local Commissioner filed in the Court on 09.09.2022, PW-2 Mr. Aditya Dave was put to cross examination by Ld. Local Commissioner without recording his examination-in-chief (i.e. without the evidence affidavit tendered in evidence) and the defendant was aware of this fact that PW-2 had not tendered any CS DJ No. 9346/16 & 9347/16 Page 66 of 144 evidence affidavit and was directly cross examined by the defendant, therefore, now the defendant cannot raise this plea that PW-2 was dropped by the plaintiffs and as such, the defendant did not get any opportunity to cross examine PW-2 Mr. Aditya Dave.
15.2 So far as the arguments of defendant that plaintiffs have no valid ownership or legal right over the basement of property M-1, Hauz Khas, New Delhi, and therefore could not have legally leased it and that the ownership of the basement and front lawn is under dispute in suits pending adjudication are concerned, I am in complete agreement with the submissions raised on behalf of the plaintiff that principle of res judicata applies once the issue of title as clearly pleaded by the Plaintiffs and expressly admitted by the Defendant in Written Statements (2009 and 2017), has been conclusively decided through multiple judicial orders.
A perusal of the order dated 05.08.2015 vide which a consent decree under order 12 rule 6 CPC was passed clearly established the relationship of landlord-tenant between the the plaintiff and defendant. The said order was challenged by the defendant, however, the said decree was confirmed by Hon'ble High Court of Delhi vide order dated 18.05.2016. Aggrieved by the order dated 18.05.2016 of Hon'ble High Court of Delhi, the defendant approached Hon'ble the Supreme Court of India by filing Special Leave Petition Nos. 19429-19430/2016 which was also dismissed vide order dated 29.07.2016.
CS DJ No. 9346/16 & 9347/16 Page 67 of 144Therefore, it is clear that once the defendant has admitted that he was a tenant under the plaintiffs, he cannot be allowed to agitate or challenge the title of the plaintiffs qua the suit properties in view of the application of rule of res-judicata and as such, same cannot be considered again by this Court.
Furthermore, the argument that the other suits i.e. CS DJ 113/2017 titled as Trans Asian Industries Expositions Pvt. Ltd. vs Aditya Dave & Ors.) pending in this Court and other suit bearing No. CS DJ 297/2022 titled as Jammu & Kashmir Bank vs G.S. Berar Co. Pvt. Ltd. & Ors. is pending in the court of Ld. DJ-02, South, Saket wherein the defendant and J & K Bank have challenged the title of the plaintiff qua the suit property in this Court, it is not within the jurisdiction of this Court and as such, same cannot be considered at all as it would amount to exceeding the jurisdiction of this Court. Further, judicial propriety demands not to give any observation on the issues which are are still sub- judice in other Courts. It is pertinent to mention that the above two suits were filed after the decree passed under Order 12 rule 6 CPC and after handing over the vacant possession of the suit property to the plaintiffs and as such, it is clear that it is an after- thought of the defendant to file these suits.
16. Now, I shall deal with issues framed in these suits and give my issue-wise findings.
ISSUE NO.1.
Whether the plaintiff is entitled for mesne profits, if so, at what rate CS DJ No. 9346/16 & 9347/16 Page 68 of 144 and for which period? OPP.
16.1 In order to adjudicate upon this issue, since both the sides have disputed the area of the suit premises in both the suits, therefore, it is imperative for this Court to give its findings on the area of the suit premises.
In the Berar suit, the plaintiff has mentioned the area of suit property as under:
(i) area of basement (measuring approximately 5250 sq. feet.) and;
(ii) a portion on the ground floor behind the front flat at 1275 sq. ft. (approx.).
Thus, the total area, as per the plaintiff in Berar suit is 6525 sq. feet.
16.2 Similarly in Soni Dave Suit, the Plaintiff has mentioned that the Plaintiff is the owner of the front portion on the ground floor of a property located at M-1, Hauz Khas, New Delhi measuring approximately 1200 sq. ft.
Thus, the total area, as per the plaintiff in Soni Dave suit is 1200 sq. feet.
However, in the written statement filed in Berar suit, the defendant has mentioned the Basement area as 5078 sq. ft. (approx.) and the portion on the ground floor measures to 1065 sq. ft. (approx.) in Soni Dave Suit as 1040 sq. ft. thereby disputing the areas in both the suits.
16.3 It is an admitted fact between the parties that both the plaintiff and defendant, with the mutual consent, based on the CS DJ No. 9346/16 & 9347/16 Page 69 of 144 terms and conditions, entered into a Lease Agreement dated 02.12.1989 Ex.D-12 which the defendant treated as Primary Lease Agreement. The said Lease Agreement, kept renewing the lease from time to time till January, 2008.
16.4 It is also pertinent to mention that the dispute between the parties arose in the year 2008 on the issue of service tax and thereafter, both of them could not arrive at any settlement on the issue of service tax and the plaintiffs terminated the tenancy in the same year i.e. 2008.
16.5 It is also very important to note that in the para-wise reply and the defendant has categorically admitted in para no.1 in both the suits i.e. Berar suit and Soni Dave suit which are reproduced as under:
BERAR SUIT PLAINT:
1. That the plaintiffs are the owners of
(a) basement (measuring approximately 5250 sq. ft.) and
(b) portion on the ground floor behind the front flat (measuring approximately 1275 sq. ft.) located at property no. M-1, Hauz Khas, New Delhi (hereinafter referred to as the suit property).
Soni Dave Suit plaint:-
1. The content of para 1 of the plaint are a matter of record and hence admitted.
16.6 Thus, it is clear that defendant has very specifically admitted the area of the suit premises in both the suits.
16.7 Further, the defendant amended its written statement CS DJ No. 9346/16 & 9347/16 Page 70 of 144 in the year 2017 in both the suits i.e. when the lease was terminated and quite conveniently taken the objection qua the area of the suit properties in both the Suits. Since this is an admitted position that from the year 1989 till the year 2008, both the parties were having landlord-tenant relationship for 19 long years and during this period, the defendant/tenant never raised any issue qua the area of the suit properties. Thereafter, at later stage i.e. after the tenancy was terminated, the defendant cannot be allowed to dispute the same. Moreover, it is also the matter of fact that defendant has placed a large electricity generator in driveway and had constructed pantry and a toilet in the driveway on the ground floor and if this area is also included, the total area of the Berar suit would easily exceed the area of 6525 sq. feet.
16.8 Further in Primary Lease Agreement dated 02.12.1989, admittedly the column of area is blank and it mention the rate of rent, ₹11/- per sq. ft. As per WS filed by defendant, the initial rent of suit property in Berar suit was ₹72,369/- p. m. If, ₹72,369/ is divided by 11, the area comes to 6579 sq. ft. It is very strange that for a period of about 19 years, defendant was paying excess rent to the Plaintiff and now all of a sudden in amended Written Statement (which was filed on 06.03.2017 alongwith an application under Order 6 Rule 17 of CPC for amendment of the Written Statement and the said application was allowed and amended Written Statement was taken on record on 06.07.2017.), very conveniently objected the area in both the suits, which is not allowed.
16.9 Thus, in view of the above discussion and clear CS DJ No. 9346/16 & 9347/16 Page 71 of 144 admission by the defendant in its written statement, I hold that the area of 6525 sq. feet in Berar suit and 1200 sq. feet in Soni Dave suit would be used for the computation of mesne profits besides other factors viz. service tax, conversion charges, parking charges etc. as have been agitated by both the parties.
ISSUE OF SERVICE TAX:
17. The main dispute which led to the termination of tenancy and filing of the present suits is the service tax liability. Therefore, I shall now deal with the issue of service tax liability.
17.1 It is argued on behalf of plaintiffs that the Defendant did not tender service tax for June, July and August 2008 despite the express understanding of 21 May 2008, thereby compelling the Plaintiffs to terminate the tenancy.
It is further argued that though Defendant has argued that it is not liable to pay service tax due to some alleged exemption and the Plaintiffs do not dispute that the Defendant may be exempt from service tax on its export services, however, the Defendant has not explained how that would exempt it from tax on rental payments made to a third party. Service tax is a tax on the service provider, here the landlord, and therefore the question of taxability would have to be determined with reference to the landlord.
17.2 In support of above contentions, the plaintiffs have relied upon the following judgment.
CS (OS) 1016/2008 & I.A. No. 6532/2008 & CS (OS) 1018/2008 & I.A. No. 6537/2008 titled as 'Pearey Lal Bhawan Association Vs. M/S. Satya Developers Pvt. Ltd.' Delhi High Court:
CS DJ No. 9346/16 & 9347/16 Page 72 of 144"14. It is true, that the contracts entered into between the parties in this case, spoke of the plaintiff lessor's liability to pay municipal, local and other taxes, in at least two places. The Court, however, is not unmindful of the circumstance that service tax is a species of levy which the parties clearly did not envision, while entering into their arrangement. It is not denied that leasing, and renting premises was included as a "service" and made exigible to service tax, by an amendment; the rate of tax to be collected, is not denied. If the overall objective of the levy - as explained by the Supreme Court, were to be taken into consideration, it is the service which is taxed, and the levy is an indirect one, which necessarily means that the user has to bear it. The rationale why this logic has to be accepted is that the ultimate consumer has contact with the user; it is from them that the levy would eventually be realized, by including the amount of tax in the cost of the service (or goods).
15. It would be noteworthy to recollect Section 64-A of the Sale of Goods Act, 1930, which visualizes and provides for situations where levies of tax are imposed after the contract (for sale of goods) is entered into. The provision prescribes that:
"64-A. In contracts of sale, amount of increased or decreased taxes to be added or deducted. - (1) Unless a different intention appears from the terms of the contract, in the event of any tax of the nature described in sub-section (2) being imposed, increased, decreased or remitted in respect of any goods after the making of any contract for the sale or purchase of such goods without stipulation as to the payment of tax where tax was not chargeable at the time of the making of the contract, or for the sale or purchase of such goods tax-paid where tax was chargeable at that time, -
(a) if such imposition or increase so takes effect that the tax or increased tax, as the case may be, or any part of such tax is paid or is payable, the seller may add so much to the contract price as will be equivalent to the amount paid or payable in respect of such tax or increase of tax, and he shall be entitled to be paid and to sue for and recover such addition; and
(b) if such decrease or remission so takes effect that the decreased tax only, or no tax, as the case may be, is paid or is payable, the buyer may CS DJ No. 9346/16 & 9347/16 Page 73 of 144 deduct so much from the contract price as will be equivalent to the decrease of tax or remitted tax, and he shall not be liable to pay, or be sued for, or in respect of, such deduction.
(2) The provisions of sub-section (1) apply to the following taxes, namely; -
(a) any duty of customs or excise on goods;
(b) any tax on the sale or purchase of goods."
The above provision also clearly says that unless a different intention appears from the terms of the contract, in case of the imposition or increase in the tax after the making of a contract, the party shall be entitled to be paid such tax or such increase. Although there is no explicit provision to that effect, enabling lessors such as the plaintiff, to the service tax component, this Court is of the view that there is sufficient internal indication in the Act, through Section 83 read with Section 12- A and Section 12-B suggesting that the levy is an indirect tax, which can be collected from the user (in this case, the lessee). This issue, is therefore, answered in the plaintiff's favour, and against the defendant."
17.3 On the other hand, the defendant has argued that the plaintiffs under the garb of Mesne Profit, in both the suits, have also erroneously and with malafide intentions tried to slip in an egregious amount of service tax, which they have purportedly paid and have tried to slide on the liability of the same towards the defendant. Plaintiffs aver that they duly paid service tax during the impugned period of 2008 - 2016, and this incorrect and fallacious contention again points to the ill-intention and conduct of the Plaintiffs.
17.4 It is pertinent to mention here that the when the Division Bench of Delhi High Court vide judgment dated 18.05.2016 in RFA(OS) 106/15 and RFA (OS) 107/15 had set the CS DJ No. 9346/16 & 9347/16 Page 74 of 144 interim Use/Occupation Charges, there was no mention of service tax. While in the order dated 05.08.2015 of the Single Bench of Delhi High Court in both the suits, the Service Tax was to be added. Since the order of the Single Judge was modified by the Division Bench hence the interim Use/Occupation Charges were inclusive of Service Tax and was not separate for the reason that the single bench while passing the order dated 05.08.2015 disposed of IA No. 536/2012 in CS DJ 9347/16 and IA No. 6038/2010 in CS DJ 9346/16 which was relating to the payment of service tax with interest and penalty filed by the Plaintiffs. In any case, with regards to the case laid out by the Plaintiff, service tax is not payable by the defendant for 2 primary reasons:
17.5 Firstly, No bills/ invoices/challans were ever raised by the Plaintiffs to the defendant in lieu of use and occupation charges, for which the service tax was purportedly paid by the Plaintiffs. It is pertinent to refer to the erstwhile Service Tax Rules, 1994 to look into the statute surrounding this contention.
Rule 4A categorically states that the statutory period to raise a bill by a person providing service shall raise a bill with respect to the same not later than 30 days from the date of completion of such taxable service, and the bill shall be in the form of a challan, shall be serially numbered and shall also spell out the specifics person who is providing service and to whom it is being provided. It is unequivocally stated that no such bill was ever raised and no input credit was ever taken by the Defendant.
17.6 Secondly, and more surprisingly, the Plaintiffs have annexed a table of purported payments in its evidence by way of CS DJ No. 9346/16 & 9347/16 Page 75 of 144 affidavit which are bereft of logic and the service tax amounts paid are fictitious as these do not correspond to any use and occupation charges that the Hon'ble Delhi High Court had fixed. No justification has ever been given and no evidence has been led to show that these purported payments were made, let alone the rationale behind the amounts being paid. In such circumstances, it is imperative for this Hon'ble Court to categorically reject this contention, especially since the erstwhile Service Tax was a Tax to be paid to the Government and it seems that under the cloak of Mesne Profits, the Plaintiffs are trying to siphon off funds due to the Government. Even assuming without admitting that the Plaintiffs paid Service Tax in the impugned period, they should've paid at the rate determined by the Hon'ble High Court and not their own numbers. Furthermore, as has the case been on multiple different points, Plaintiffs have led NO evidence to prove their contention and only rely on bald averments.
17.7 In support of its contentions, the defendant has relied on following judgment:
In case titled as Bai Mamubai Trust & Ors. V. Suchitra, MANU/MH/2567/2019, Hon'ble High Court of Bombay has held as under:
26 (v). Relying on the decision of this Court in Humayun Dhanrajgir vs. Ezra Aboody 3, Mr. Jagtiani submitted that the true nature of the payments made by one party to another / the Court Receiver for use and occupation of property is to be decided by the Court looking to the circumstances of the case and CS DJ No. 9346/16 & 9347/16 Page 76 of 144 evidence on record. If, upon ascertaining the true nature of the payment the Court is of the view that the transaction or activity is a supply, GST is payable. For example, during the tenure of permissive use of a property, what is paid by the occupier to the right owner is the contractual consideration. If such permissive use or occupation is terminated or comes to an end and the occupation becomes unlawful, the nature of payment to be paid to the right owner changes from contractual consideration to damages or mesne profits for unauthorized use and occupation of the property. GST is payable on the former contractual consideration, but not on damages payable for unauthorized use and occupation of the property. The fact that the measure of damages is to be based on market rent should not conflate the nature of the payment being made i.e. a payment to compensate the right owner for violation of his legal right.
(vi) In the facts of the present Suit, where royalty is to be paid by the Defendant as 'compensation' for prima facie unauthorised occupation of the Suit Premises, the royalty is in the nature of compensation for violation of the Plaintiff's legal right and not towards payment of contractual consideration which is agreed to be paid but is otherwise not paid / refused to be paid.
68. In Humayun Dhanrajgir vs. Ezra Aboody (supra) this Court held as follows:
" CONCEPTS OF ROYALTY:
17. In the case of (Kamakshya Narain v. I.T. Commissioner)1, A.I.R. 1943 P.C. 153, the Privy Council observed that the royalty is "in substance a rent; it is the compensation which the occupier pays the landlord for that species of occupation which the contract between them allows." Thus, royalty in substance is rent. It appears that the concept of royalty is to compensate a right owner of the property who permits or allows others to use his rights from his property. This CS DJ No. 9346/16 & 9347/16 Page 77 of 144 concept is also understood as 'Mesne proft' in legal parlance. Strictly speaking during the tenure of contractual tenancy what is paid by the tenant to his landlord is the contractual rent. After quit notice from the date of termination of tenancy, the characteristics of the subject matter is changed to damages for use and occupation of the premises and after fling of the suit for eviction till the possession is handed over, if the decree of possession is passed in favour of the landlord, the characteristic is changed to mesne profits. To what extent the quantum changes with the change of such characteristics is for the Courts to decide which the Courts do mould according to the facts and circumstances of the case to do justice between the parties.
18. One may use different words like compensation, licence, royalty and mesne profits, all in one form or another are diverse forms of rents in generic sense and what is the true colour of the payments made by one party to another for use and occupation of the property is to be decided by the Court looking to the circumstances of the case and evidence on record. Rent in English Law is said to be a profit from the property demised. It may assume the form of rent service or rent charge. It is described in generic sense as compensation for use and occupation and in legal sense, it is recompense paid by the tenant to his landlord for exclusive possession of the premises enjoyed by him. However, rent flows by virtue of the contract express or implied and after the contract of tenancy is terminated it will be damages or compensation. After the suit for possession is fled, monetary payments for use and occupation against the wish of the landlord assume the format of 'mesne profits'.
CONCEPTS OF MESNE PROFITS: 19.
The term 'mesne profit' is used for damages for trespass, a wrongful act relating to immovable property and the said wrongful act forms one of the torts affecting realty i.e. CS DJ No. 9346/16 & 9347/16 Page 78 of 144 immovable property. The enlarged scope of this term is meant to claim proft from one whose possession did not originate in trespass but is nevertheless wrong, as for example when the tenant or occupier of a property is dispossessed legally and decree of possession has been passed in favour of the landlord, still the tenant/occupier holds over the property for a specified period before handing over the possession to the rightful owner. Though the tenant had a rightful possession when he entered the immovable property but it is the decree of possession which makes his possession wrongful.
22. The dissection of the aforesaid definition reveals that wrongful possession of the person is the very essence for the claim for mesne profits". (Emphasis supplied herein)
69. The judgment in Humayun Dhanrajgir vs. Ezra Aboody (supra) clearly states that the true colour of the payment depends on the facts and circumstances of the case. For example, it acknowledges that on termination of contractual occupation, the right holder is entitled to damages if the occupant continues to remain in what is now an unauthorised or illegal occupation of the property. In fact, in Paragraph 19, the Court says that the term 'Mesne Profits' is 'used for damages for trespass, a wrongful act relating to immovable property and the said wrongful act forms one of the torts affecting realty i.e. immovable property. The enlarged scope of this term is meant to claim profit from one whose possession did not originate in trespass but is nevertheless wrong, as for example when the tenant or occupier of a property is dispossessed legally and decree of possession has been passed in favour of the landlord, still the tenant/occupier holds over the property for a specified period before handing over the possession to the rightful owner. Though the tenant had a rightful possession when he entered the immovable property but it is the decree of possession which makes his possession wrongful.'. The decision supports the CS DJ No. 9346/16 & 9347/16 Page 79 of 144 submissions of the Learned Amicus Curiae and Mr. Jagtiani.
70. This view is also supported from the decision of the Supreme Court passed in Senairam Doongarmall vs. Commissioner of Income Tax (supra) cited by the Learned Amicus Curiae. As a matter of illustration, the Amicus Curiae submits that in a cause of action of trespass or illegal occupation, the computation of damages will involve the determination of rental income payable in surrounding areas to determine mesne profits. The Amicus Curiae submits that as held in Senairam Doongarmall vs. Commissioner of Income Tax (supra) it is the quality of the payment and not the method used to determine its measure that determines its character namely whether it is 'consideration' or damages. The method of computation is not material.
72. I am of the view that although the measure for quantifying a payment of royalty to the Court Receiver may be determined by looking at consideration payable under a contract or arising out of a business relationship, the royalty may still be in the nature of payments towards a potential award of damages or Mesne Profits, and therefore not liable to attract GST for reasons separately stated.
74. I am also unable to accept the State of Maharashtra's submission that the Defendant's occupation of the Suit Premises is a 'supply' since it falls within the definition of 'renting in relation to immovable property' i.e. Item No. 5(a) of Schedule II to the CGST Act. The State of Maharashtra has relied upon the definition of 'renting in relation to immovable property' found in Clause 2(zz) of Notification No. 12/2017-State Tax (Rate) Mumbai, dated 29th June 2017 in support of this submission. Clause 2(zz) provides that:
"(zz) "renting in relation to immovable property" means allowing, permitting or granting access, entry, occupation, use or CS DJ No. 9346/16 & 9347/16 Page 80 of 144 any such facility, wholly or partly, in an immovable property, with or without the transfer of property and includes letting, leasing, licensing or other similar arrangements in respect of immovable property;"
I find that the definition relied upon by the State uses the terms 'allowing, permitting or granting access, entry, occupation, use' which connotes that there must be a positive act by the property or right owner to permit the occupier to use the property in question. As discussed above, an act of illegal occupation, which may be compensated in damages by mesne profits, does not amount to a voluntary act of allowing, permitting, or granting access, entry, occupation or use of the property. The submission made by the State of Maharashtra as well as the Union of India that the Order of the Court permitting the Defendant to occupy the Suit Premises is notionally a contract between the Court Receiver and the Defendant overlooks the nature and meaning of a contract and ignores the character of damages and the circumstances necessitating the same to be paid under a decree of the Court."
17.8 I have carefully gone through the submissions made on behalf of both the sides and considered the judgments relied by both the sides on the issue of service tax.
17.9 In this regard, it is very significant to read the communications post meeting dated 21.05.2008.
17.10 The defendant has expressly admitted the liability of service tax alongwith the rent. The draft lease deed contains all the recitals including this fact that the defendant shall pay rent @ Rs. 5 lacs + service tax.
17.11 Further, the liability of paying service tax is of the CS DJ No. 9346/16 & 9347/16 Page 81 of 144 landlord towards the government. It is also the fact that whatever terms agreed between the landlord and the tenant qua the inclusion of service tax in the rentals, the liability of paying service tax remains with the landlord.
17.12 The defendant has argued that since no service was being provided to it, it was not liable to pay service tax.
17.13 It is an admitted fact that the defendant was running an exhibition from the suit properties and was enjoying this business from the suit premises since 1989 till 2008 when the service tax liability came to haunt the defendant and which led to dispute between the parties.
17.14 So far as the period from June, 2008 till termination of tenancy in August, 2008 is concerned, the defendant has admitted that liability of service tax alongwith the rentals. The defendant in para no. 3.12 has admitted the liability of paying service tax. The said para is reproduced hereunder:
"On 21.05.2008, the Parties, together with their respective counsels, met to mutually resolve the issues arising between the Parties. The discussions were in terms of the Primary Lease Agreement and it was agreed, that the following revisions be made;-
(a) the term of the lease would now be for a period of two (2) years, renewable for two (2) years thereafter, and subsequently thereafter for such period on the mutual consent of Parties;CS DJ No. 9346/16 & 9347/16 Page 82 of 144
(b)rental rates were to be revised annually (instead of the earlier three (3) years period under the Primary Lease Agreement). For the first year, rentals were agreed to be paid at Rs. 5,00,000/- (Rupees Five Lacs only) per month w.e.f. 01.06.08;
(c) conversion charges (in the past and future) were to be borne equally between the parties;
(d) the Defendant was to bear payment of service tax w.e.f. 01.06.2008."
17.15 Therefore, it is clear that defendant has in its written statement, has categorically admitted that liability of service tax w.e.f 1st June, 2008 and as such, the liability of the defendant to pay service tax is limited to the period when the lease was terminated i.e. till August, 2008.
17.16 Further, beyond the period of termination of Lease Agreement, this Court cannot adjudicate as to the liability of service tax because post termination of lease agreement, only the question of mesne profits remains and the service tax cannot be adjudicated by this Court as it is not a Tax Adjudicating Court. Court has to decide the mesne profit on the basis of settled principles of law and evidence at the same rate at which the landlord would have able the let out the premises in present and earn the profit -if tenant would have vacated the premises.
CS DJ No. 9346/16 & 9347/16 Page 83 of 144CONVERSION CHARGES:
18. Now, coming to the other component which both the parties have agitated is the Conversion Charges. Though, this is not the issue framed in both the suits, however, still I am dealing with it for the appreciation of the matter.
18.1 The plaintiff has argued that defendant in its Written Statement in para No. 5.15 has mentioned the agreed terms of lease :
"...The renewal of the lease in accordance with the primary Lease Agreement was confirmed in the following terms:
2. Term- ......
3. Monthly Rent-......
4. Conversion charges-conversion charges were to be borne in equal parts by the Plaintiffs and Defendant for the duration of the period.
5. Security Deposit-
6. ........."
18.2 It is also argued that vide e-mail dated 22.05.2008, the defendant's lawyers has confirmed that conversion charges are to be borne in equal parts by the Lessors and the Lessee during the 1st and 2nd year of the lease and by the Lessors (in its entirety) during the 3rd and 4th year of the lease.
18.3 Therefore, it is quite clear that the conversion charges were to be borne in equal parts by the Lessor and the Lessee.
CS DJ No. 9346/16 & 9347/16 Page 84 of 14418.4 It is argued on behalf of defendant that the responsibility of bearing conversion charges is of the lessor as the conversion charges are paid towards the enhancement of the property, which gives long-term benefit to the landlords. Hence, the tenants are not liable to bear the conversion charges. The admitted lease of 1989 i.e. Ex. D-12 specifically contains a clause, i.e. Clause 10 that all rates, taxes, ground rent, property tax and other charges, outgoings, penalties, and assessments imposed or payable in respect of the tenanted premises to the MCD Government shall be paid by the Lessors and Lessor shall keep the Lessee free and indemnified at all times for the same.
18.5 It is further argued that there is no misuse of the suit properties as claimed by the Plaintiffs in their suits. The suit property in Berar Suit as is evident from the Clause 7 of the lease of 1989, was given for residence storage, and exhibition of handicraft items. Exhibition is a commercial activity. Therefore, now for the Plaintiffs to say that they were not aware that the Defendant were doing commercial activity without their permission cannot be believed. From 1989 till 2006 when the Hauz Khas road was notified as mixed land the Plaintiffs have permitted the Defendant to carry on their retail activity from the suit properties and has been taking rent for the same without any dispute. So much so that the Plaintiffs were so happy with the Defendant as tenants that on 01.06.2005 they gave another portion in the building i.e. suit property in Soni Dave suit to the Defendant for commercial purposes as is admitted by the PW-1 in her cross examination dated 14.10.2025 wherein she admits CS DJ No. 9346/16 & 9347/16 Page 85 of 144 that the suit property was prior to giving on rent to the Defendant was being used by a company named "Good Earth" for commercial purpose. Hence, to say that the Defendant misused the suit properties by using the same for commercial purposes is fatal to the Plaintiffs' own case.
18.6 It is also argued that the meeting dated 21.05.2008 wherein the Defendant agreed to bear 50% of conversion charges was only for the reason that the peaceful use and occupation of the suit properties will be given to the Defendant as the Defendant has been the Plaintiffs' tenant since the year 1989 and has made huge investments in the suit properties for its renovation and refurbishment by taking huge amount of loan facilities from the bank. As submissions made in the aforesaid paragraphs as to the meeting dated 21.05.2008, it is once again reiterated that no concluded contract was executed between the parties. Hence, the reliance placed by the Plaintiffs on the said meeting dated 21.05.2008 is of no consequences and deserves no consideration. In fact, the Plaintiffs under the garb of meeting dated 21.05.2008, the Plaintiffs got interim use and occupation charges fixed from the Hon'ble High Court which are not final. The conversion charges of Rs.7,77,946/- so paid by the Defendant are to be refunded by the Plaintiffs as the Defendant is not liable to pay the same. Since, the benefit of conversion charges was conferred upon the Plaintiffs being landlords and which charges are towards the enhancement of suit properties.
18.7 It is also argued that the lease deed of M-3, Hauz Khas and M-5, Hauz Khas relied upon by the Plaintiffs for fixing CS DJ No. 9346/16 & 9347/16 Page 86 of 144 of mesne profits also contains the clauses where the conversion charges, commercial charges, property tax, service tax, GST etc. are payable by the lessors and not the lessee. Hence, the Plaintiffs have no case for asking payment towards conversion charges from the Defendant rather, the Plaintiffs have to return Rs. 7,77,946/- to the Defendant paid by them on behalf of Plaintiffs.
FINDINGS:
18.8 I have considered rival submissions on the issue of conversion charges.
18.9 The notification (dated 13/14.03.2008) Mark E for mixed land use came in the year 2006. The defendant has stated that the conversion charges of Rs.7,77,946/- were paid by it i.e. ₹5,95,591/- vide receipt no. Ex.P-23 (in G.S. Berar suit) and ₹1,82,355/- vide Mark F (colly) in Soni Dave Suit. While perusing the documents, only a receipt Ex.P-23 is seen which shows the payment of Rs.5,95,591/- having been made towards conversion charges in respect of basement of M-1, Hauz Khas by the defendant Mohd. Yasin Mir, however, there is no clarity regarding payment of remaining amount of conversion charges.
Only a receipt Mark F shows the payment of Rs.1,82,355/-, however, from this receipt, it is not clear whether the said amount was made in respect of which of the property to the MCD as it is the fact that defendant is owning a flat C in M-1 Hauz Khas, New Delhi besides being a tenant in the suit property. The plaintiffs have no where denied this payment of conversion charges by defendant in their replication.
18.10 I have also carefully perused the Primary Lease CS DJ No. 9346/16 & 9347/16 Page 87 of 144 Agreement heavily relied upon by the defendant in support of its contentions that the admitted lease of 1989 i.e. Ex. D-12 specifically contains a clause, i.e. Clause 10 that all rates, taxes, ground rent, property tax and other charges, outgoings, penalties, and assessments imposed or payable in respect of the tenanted premises to the MCD Government shall be paid by the Lessors and Lessor shall keep the Lessee free and indemnified at all times for the same.
18.11 For better understanding, it is imperative to reproduce the relevant portion i.e. clause 10 of the Primary Lease Agreement Ex.D-12 which deals with this issue of conversion charges. Same is as under:
10. That all the present rates, taxes, ground rent, property tax and other charges, outgoings, penalties, and assessments imposed or payable in respect of the tenanted premises to the MCD Government shall be paid by the Lessors and Lessor shall keep the Lessee free and indemnified at all times for the same.
Water and electricity charges shall be borne by the Lessee as shown in the submeters to be installed for the tenanted premises by the Lessee. All penalties and 50% of enhanced taxes for misuse of the premises shall be borne by the Lessee."
18.12 From a perusal of clause 10 of the Lease Deed, it is clear that the Lessee shall be indemnified by the Lessor in respect of all rates, taxes, ground rent, property tax and other charges, outgoings, penalties, and assessments imposed or payable in respect of the tenanted premises to the MCD Government.
CS DJ No. 9346/16 & 9347/16 Page 88 of 144Further, I am in agreement with the submissions of defendant that as per the clause of Lease Deed, it was categorically mentioned that the suit premises will be used for storage, exhibition of handicrafts. In other words, the suit premises would be used for commercial activity, therefore, the plaintiff cannot claim that the defendant was using the suit premises for commercial property and hence would be liable to pay the conversion charges.
18.13 It is also the admitted fact that prior to the defendant being inducted as a tenant, the company Good Earth was a tenant and was also using the suit premises for commercial activity.
18.14 Therefore, in view of the above, the defendant would be entitled to claim the conversion charges to the extent of Rs 5,95,591/- and I would deal with this under the head "set-off".
SEALING PERIOD:-
19. Now, I shall deal with another ancillary issue which both the parties have disputed i.e. sealing period.
19.1 The issue before this Court is whether defendant was liable to pay use and occupation charges during the sealing period.
19.2 It is argued on behalf of defendant that since the property remained sealed for the period w.e.f 01.03.2010 till 31.10.2010 and as such, he was unable to use it, therefore, he is not liable to pay any use and occupation charges for the said sealing period.
19.3 On the other hand, the plaintiff has argued that defendant was in occupation of the suit property even during the CS DJ No. 9346/16 & 9347/16 Page 89 of 144 sealing period. If the defendant did not want to use the suit property, the lease of which was already terminated, he could have walked out from the suit property, however, he did not chose to do so and remained in the suit property and hence, defendant is liable to pay the use and occupation charges for the sealing period as well. In support of his contentions, the plaintiff has relied upon the judgment passed by Hon'ble High Court of Delhi in case titled as Chander Mohan Jain And Others Vs. State Bank of Patiala And Another, Interim Application No. 6869 of 1993 and 3162 of 1994 and Suit No. 252 of 1993 Decided on :
03-05-1994. In the said case, it was held as under:
"(3) It is in the reply that a part of the roof had collapsed on 13.10.1990, and the building was sealed by the New Delhi Municipal Committee on 05.10.1990, by declaring it to be unsafe. Section 108(e) of the Transfer of Property Act, 1882, has remained unchanged since 1882. If the defendant/ tenant was so minded, it had the option of voiding the lease. It has not done so. So long as the lease has not been voided, the defendant bank is liable to pay the rent.
(4) MR.J.K. Seth relies on the case reported as 1973 Rajdhani Law Reporter (Note) 68, being S.A.O. No.30 of 1969 (Chamber of colour and Chemical Pvt. Ltd. v. Trilok Chand), where it was held by this Court that a tenant cannot treat a lease as subsisting and suspend payment of rent. I am in respectful agreement.
(5) The defendant bank has not voided the lease in question. It continues to regard itself as tenant. As a tenant it has to pay the agreed rent. I, therefore, direct the defendant to deposit the rent of Rs.1,02,600/- per month, which has admittedly not been paid since 31.10.1990, in Court within ten days, as it is said by the defendant's counsel that there is no difficulty in paying the rent.
(6) The sealing of the premises by the New Delhi CS DJ No. 9346/16 & 9347/16 Page 90 of 144 Municipal Committee has no bearing on the matter, as the defendant bank has chosen not to void the lease. Case be listed before the joint Registrar on 04.08.1994."
FINDINGS:
19.4 I have considered rival arguments advanced from both the sides and have perused the judgment relied upon by the plaintiff.
19.5 In the present case, it is the admitted fact that the tenancy of the suit premises was terminated in the month of August, 2008. The suit property in Berar suit was sealed by the order of MCD on 01.03.2010 and it was de-dealed on 01.11.2010 by the orders of Hon'ble High Court dated 02.11.2010 in Writ Petition No. 6440/2010 filed by the plaintiff.
19.6 It is the fact that since the lease of the suit property in Berar suit stood terminated in the month of August, 2008, however, the defendant did not vacate the suit property and hence, he was still using the suit property as an unauthorized user. Therefore, it is the admitted position that during the sealing period, the suit property in question was under the use and occupation of the defendant.
19.7 In the case Chander Mohan Jain (supra), it is held by Hon'ble High Court of Delhi that since the defendant bank did not chose to void the tenancy, it was liable to pay the agreed rent.
Similarly, in the case at hand, the defendant had the option to vacate the suit property, however, he chose not to do so and continued to use the suit property even during the sealing period CS DJ No. 9346/16 & 9347/16 Page 91 of 144 and thereafter also.
19.8 Therefore, in view of the case Chander Mohan Jain (supra) and above discussion, I hold that defendant is liable to pay use and occupation charges for the sealing period i.e. w.e.f 01.03.2010 till 31.10.2010 to the plaintiffs.
ISSUE OF REFUND OF SECURITY DEPOSIT OF RS. 8,73,800/- IN CS DJ 9347/16 AND Rs. 10,00,000/- IN CS DJ 9346/16 BY PLAINTIFFS TO THE DEFENDANT WITH INTEREST:
20.1 It is submitted by Ld. counsel for Plaintiff that Plaintiffs had already adjusted this security amount in their dues in 2016. However, while tendering payments of occupation charges in 2017 pursuant to a Court order, the Defendant deducted these amounts, and as such, defendant was ordered to be paid vide order dated 31.05.2023 in Execution Petitions 3081-
3082/2016. These orders have been challenged before the Hon'ble High Court (in CM Main 1098-1099/2023). The Hon'ble High Court has directed the defendant to deposit the said amount of security and said amount is now lying deposited before the Registry of Hon'ble High Court. Hence, this issue has already been decided and is still pending before Hon'ble High Court and cannot be adjudicated again.
20.2 On the other hand, it is submitted on behalf of defendant that it had paid a sum of Rs.8,73,800/- in CS DJ 9347/16 in December 1989 and Rs.10,00,000/- in CS DJ 9346/16 CS DJ No. 9346/16 & 9347/16 Page 92 of 144 on 01.06.2005 as security deposit in both the suits refundable by the Plaintiffs at the time of vacation of the suit properties by the defendant. It is also submitted that on 01.10.2016, the Defendant called upon the Plaintiffs to jointly inspect the suit properties and take possession, however, the Plaintiffs refused to jointly inspect the suit properties accordingly, the Defendant handed over the constructive possession of the suit properties in CS DJ 9347/16 and CS DJ 9346/16 on 01.10.2016. In view of the illegal denial of the Plaintiffs to jointly inspect the suit properties, the Defendant filed an application before Hon'ble High Court on 08.10.2016 after serving the Plaintiffs through counsel but the Plaintiffs with mala fide intent did not appear in the court in order to delay the handing over of the possession and earn extra use and occupation charges. The Plaintiffs took the physical possession of the suit properties on 19.10.2016 after video recording of the condition of the suit properties in compliance of order dated 29.07.2016 passed by the Hon'ble Supreme Court of India in SLP(C) 19429-19430/2016. However, the Plaintiffs have not refunded the sum of Rs. 18,73,800/- of security deposit till date to the Defendant and in fact, has unilaterally and wrongly adjusted the said amount of Rs. 18,73,800/- towards unauthorized construction of staircase, conversion charges, service tax, interest on account of late payment and damages as set out in the letter dated 16.12.2016 sent by the Plaintiffs' counsel to the Defendant.
20.3 It is further submitted that the Hon'ble High Court vide order dated 18.07.2023 passed in CM(M) 1098/2023 and CM(M) 1099/2023 has observed that the Court has not CS DJ No. 9346/16 & 9347/16 Page 93 of 144 adjudicated upon the validity of the unilateral adjustment made by the Plaintiffs of the security deposit during the pendency of both the suits.
20.4 It is also submitted that in the CM(M) 577/2021 Defendant filed review petition bearing no. 66/2024 in CM(M) 577/2021 and by order dated 23.02.2024 passed by Hon'ble High Court, this Court is to adjudicate the unilateral adjustments made by the Plaintiffs in both the suits.
20.5 It is further submitted that in the letter dated 16.12.2016, the Plaintiff has calculated ₹20,70,548/- towards unauthorized construction of staircase, conversion charges, service tax, interest on account of late payment and damages for deduction from the security deposit mentioned in the said letter, however, the said facts have not been proved by the Plaintiffs in both the suits as no evidence has been placed on record to substantiate the said deductions except the letter dated 16.12.2016.
20.6 It is further submitted that the Plaintiffs have wrongly deducted the security deposit of Rs. 18,73,800/- vide letter dated 16.12.2016 towards the different charges as mentioned in the said letter. It is further submitted that Plaintiffs have not filed or led any evidence to show that they were unable to find new tenant. Even PW-1 hilariously responds during her cross-examination in Soni Dave Suit admitted that no advertisement was given to re-let the suit property. PW-1 has also admitted that no written communication issued to the defendant regarding structural changes in the suit property. PW-1 has also CS DJ No. 9346/16 & 9347/16 Page 94 of 144 denied of any knowledge regarding filing of any document on record approving that ₹2,50,000/- was incurred for restoration of staircase. PW-1 has also admitted during cross-examination that the suit properties in both the suits were sold to Vijay Sales India Pvt. Ltd. on 16.09.2021 alongwith the staircase.
20.7 It is further argued that the contention of the Plaintiff that the adjudication regarding the letter dated 16.12.2016 is pending in CM(M) 1098/2023 and CM(M) 1099/2023 filed by the Defendant therefore, this Hon'ble Court should not deal with the said issue as the Hon'ble High Court is seized of both the petitions, is perverse.
20.8 It is further submitted that Plaintiffs have failed to prove the deductions made vide letter dated 16.12.2016 in both the suits, hence, Plaintiffs are required to refund the security deposit of Rs.18,73,800/- to the defendant in both the suits with interest from 01.10.2016 as despite handing over of the possession of the suit properties, the security deposit is held as hostage.
FINDINGS:
20.9 I have perused the order dated 01.09.2021 passed by Hon'ble High Court of Delhi in CM (M) 576/2021 and CM (M) 577/2021 as well as order dated 23.02.2024 passed in the CM (M) 577/2021 on the review petition of the defendant seeking review of order dated 01.09.2021 in the said petition as well as order dated 18.07.2023 passed in CM (M) 1098/2023 and 1099/2023 in both the suits. Ld. counsel for defendant has submitted that this Court has to adjudicate that the issue of wrong CS DJ No. 9346/16 & 9347/16 Page 95 of 144 adjustment of security amount of ₹18,73,800/- in view of the order of Hon'ble High Court dated 01.09.2021. Perusal of record also shows that vide order dated 18.07.2023 passed in both the petitions i.e. CM (M) 1098/2023 and 1099/2023, Hon'ble High Court has stayed the order dated 21.05.2023 and 07.07.2023 passed by Ld. Predecessor of this Court in the execution petition, subject to the petitioner/defendant depositing the security amounts of ₹8,73,800 and ₹10,00,000/- respectively and given the liberty to the respondent/ plaintiff to place on record the documents which are already forming part of the executing court or trial court within a period of 4 weeks and adjourned both the petitions for 04.12.2023.
20.10 Both the petitions are still pending before Hon'ble High Court of Delhi. The only issue in both the petition agitated by the petitioner / defendant is regarding adjudicating the letter dated 16.12.2016 qua unilateral adjustment of the security deposit by the Plaintiff.
20.11 It is pertinent to mention that vide order dated 30.10.2017, only 3 issues were framed in both the suits as follows:-
"1. Whether the plaintiff is entitled for mesne profits, if so, at what rate and for which period? OPP.
2. Whether the plaintiff is entitled for interest, if so, at what rate and for which period? OPP.
3. Whether the defendant is entitled to deduct any amount in respect of removal of pantry and relocation of electricity generator from the amount CS DJ No. 9346/16 & 9347/16 Page 96 of 144 which they are liable to be paid to the plaintiff, if the issues No.1 & 2 are decided in favour of the plaintiff? OPD"
20.12 Since no issue is framed regarding unilateral adjustment of the refundable security deposit of the defendant and Court has to give its findings only on the issue framed in both the suits, therefore, this Court cannot give any findings qua unilateral adjustment of the security deposit. Even in order dated 18.07.2023 passed in both the petitions, there is no such direction to decide about the letter dated 16.12.2016. This Court is conscious of the fact that since the issue of unilateral adjustment of security amount is pending before Hon'ble High Court, the judicial propriety demands that this Court should not give any findings on the said issue.
HANDING OVER OF POSSESSION OF SUIT PROPERTIES:
21. It is argued on behalf of Plaintiffs that pursuant to orders dated 29.07.2016 passed by Hon'ble Supreme Court of India in SLP (C) 19429-19430, Defendant vacated the suit property and handed over the possession to the Plaintiffs on 19 th October 2016. It is further submitted that though the Defendant had offered possession on 1st October 2016, but the same was conditional one and since the Plaintiffs did not accept the said conditions, the defendant did not thereafter, offer possession until 19th October 2016. It is further argued that on 01.10.2016, the premises was not vacant and this fact is duly proved from the testimony of defendant witness DW-4 Dr. S.N. Bansal, who in his CS DJ No. 9346/16 & 9347/16 Page 97 of 144 cross-examination, has admitted that on 14.10.2016 (when he claimed to have conducted a site survey at the request of the defendant to make an estimate of the value of the movable assets therein), the premises were not vacant, and some kind of work was still going on, though he could not tell whether the defendant were preparing to enter the premises on a fresh lease or to leave them.
It is further argued that even the premises were not ready for delivery of possession even as of 14.10.2016 and the Defendant had merely made a bogus offer to avoid having to pay the use and occupation charges for the period up to 19.10.2016 knowing fully well that the Plaintiffs would refuse to take such conditional possession. It is also argued that defendant has made a fictitious claim for a sum of ₹65,00,000/- even before the movable items had been valued by the surveyor. Hence, it is argued on behalf of Plaintiff that the use and occupation charges should be decreed till 19.10.2016.
21.1 It is argued on behalf of defendant that defendant had handed over the constructive possession of the suit properties in CS DJ 9347/16 and CS DJ 9346/16 on 01.10.2016. It is further argued that in view of the illegal denial of the Plaintiffs to jointly inspect the suit properties, the Defendant had to filed an application before the Court on 08.10.2016 after serving the Plaintiffs through counsel, but the Plaintiffs with mala-fide intent did not appear in the court in order to delay the handing over of the possession and to earn extra use and occupation charges. It is further argued that Plaintiffs took the physical possession in both the suits on 19.10.2016 after video recording of the condition of CS DJ No. 9346/16 & 9347/16 Page 98 of 144 the suit properties.
21.2 It is further argued that though the constructive possession of the suit property was handed over to the plaintiff on 01.10.2016, however, defendant has not come forward for the joint inspection and thereafter with the order of Court, physical possession was handed over on 19.10.2016 pursuant to the order dated 29.07.2016 of Hon'ble Supreme Court of India in SLP(C) 19429-19430/2016.
FINDINGS:
21.3 I am in agreement with the submissions made on behalf of Plaintiffs that it is evident from the evidence of DW-4 Dr. S.N. Bansal who had conducted the survey of the suit premises to make an estimate value of movable assets on 14.10.2016, how could Plaintiffs took the possession on 01.10.2016, when the suit property was not vacant. Even on 14.10.2016, suit property was not vacant in view of the testimony of DW-4. Even otherwise, defendant has not filed any evidence to show that the constructive possession was handed over to the Plaintiffs on 01.10.2016.
Hence, this Court is of the view that the possession of the suit properties was handed over to the Plaintiffs by the defendant on 19.10.2016.
SET OFF CLAIMED BY DEFENDANT:
22.1 In its Written Statement, Defendant has claimed different amounts under the head of 'set off' in both the suits which are as under:CS DJ No. 9346/16 & 9347/16 Page 99 of 144
(i) Defendant has claimed refund of ₹65,35,413.17/- i.e. ₹42,48,018.56/- (in G.S. Berar suit) and ₹22,87,394.61/- (in Soni Dave suit), deprecated value of ₹2 crores which was invested in 2005 for internal renovation re-
refurbishment of the suit property necessitated to meet the imperative of business of defendant as suit property was used for high class and quality.
(ii) Defendant has also claimed refund of ₹7,77,946/- i.e. ₹5,95,591/- vide receipt no. Ex.P-23 (in G.S. Berar suit) and ₹1,82,355/- vide Mark F (colly) in Soni Dave Suit, invested in payment of conversion and parking charges of the suit property from residential status to commercial.
(iii) Defendant has also claimed ₹1,98,800/- invested in repair/ replacement as well as paint and policing to get the suit property back in working condition after de-sealing of the suit property.
(iv) Defendant has also claimed refund towards business loss suffered during and after sealing period as walking customer has been reduced considerably, for which the losses/ damages are assessed @ ₹2,00,000/- per month till December 2011.
CS DJ No. 9346/16 & 9347/16 Page 100 of 14422.2 It is argued on behalf of defendant that pursuant to the amendment application dated 06.03.2017, the Defendant was permitted to amend its written statement vide order dated 06.07.2017 in both the suits and Written Statement were same taken on record on the same date. It is further argued that in the amended Written Statement defendant has claimed / refund of above mentioned amount under the head of 'Set Off' against all claims of the Plaintiffs be it in the nature of rents/ damages/ mesne profits.
22.3 It is further argued that though no evidence has been led by the Defendant on the above said amount but it is evident from the record and the submissions made by way of written submissions filed on record, the sealing of the basement from March 2010 to Oct 2010 is an admitted fact and it is quite obvious that the customers tend to shift for their requirements to other vendors when the work of any vendor is stopped due to force majeure circumstances. It is further argued that the Defendant left the said claim at the wisdom of this Hon'ble Court to grant just compensation/ damage for the mental pain and agony suffered by the Defendant during the said period.
22.4 It is further argued that defendant has not led any evidence for seeking his claim claim towards removal of pantry and relocation of electricity generator set to prove issue no.3. It is further submitted that the electricity generator was kept in the common area and part of lease of 1989 and Plaintiff has admitted that they never objected to the electricity generator which is evident from the testimony of PW1. Even no evidence has been CS DJ No. 9346/16 & 9347/16 Page 101 of 144 placed on record by the Plaintiff that the generator was the source of nuisance to them and other occupant of the building. Therefore, it is argued that the above said amount be refund or adjusted against all claims of Plaintiff of any nature in both the suits.
22.5 Per contra, it is argued on behalf of Plaintiff that the claim of Set Off by the defendant are bogus and liable to be dismissed on various ground as under:-
(i) Firstly, it is argued that no such issue qua the claim of set off by the defendant is framed in both the suits and secondly no such counter-claim / set-off was permitted by the Court. The only Set-off / claim that it was permitted to claim the charges towards the alleged removal of pantry and relocation of electricity generator. Thus, issue number 3 was framed as under:
"Whether the defendant is entitled to deduct any amount in respect of removal of pantry and relocation of electricity generated from the amount which they are liable to be paid to the plaintiff, if the issues No.1 & 2 are decided in favour of the plaintiff? OPD"
(ii) It is further argued that the Defendant claims to have spent Rs. 2 crores on refurbishment since 2005, but no proof of such alleged expenditure has been filed and there is no explanation as to how the value of this alleged expenditure stood at Rs.65 lakhs in 2016. Principles of depreciation make it fully depreciable after 10 years. Hence, it was zero in 2015. It is further argued despite the onus to prove the expenses towards removal of pantry and relocation of electricity generator had been placed upon the Defendant, but no such proof was forthcoming, simply CS DJ No. 9346/16 & 9347/16 Page 102 of 144 because it had done no such thing.
(iii) It is further argued that in March 2017 the Defendant filed an application seeking amendment of its Written Statement thereby seeking to introduce a counter- claim/ set-off, however, while arguing it, Defendant only pressed its counter-claim. Even this was disallowed. It is further argued that once the counter-claim, is disallowed how can a set-off be now claimed.
(iv) It is further argued that the Defendant later also filed an application seeking amendment of issues, virtually seeking to introduce the very same claims as issues. The same was also dismissed vide order dated 18.08.2020.
(v) At the strength of law laid down by the Division Bench of Hon'ble Karnataka High Court in case titled as The State Trading Corporation Of India Vs Vanivilas Co- Operative Sugar 2001 (5) KarLJ 570, it is argued that Hon'ble High Court has clearly held that a set-off can be claimed of sums that have been quantified by the date of the filing of the suit, while a counterclaim must be of amounts due by the date of the Written Statement. It is argued that none of these claims were due on such dates. It is also argued that a plea of set-off requires payment of Court fee as per law. Since Defendant has not filed any Court Fees on any of the claims claiming under the head of 'Set Off', it is not entitled for any relief and its claim of Set Off / refund be dismissed.
22.6 Before proceeding further, the relevant paras of the State Trading Corporation case (supra) are reproduce as under:-
CS DJ No. 9346/16 & 9347/16 Page 103 of 144"13. Before examining these points we may refer to the legal position relating to 'payment', 'adjustment', 'set-off and 'counter-claim' with reference to Order 8, Rules 6 and 6-A of the Code of Civil Procedure ('CPC', for short) and Sections 8, 14 and Article 1 of Schedule I of the Karnataka Court Fees and Suits Valuation Act, 1958 ('KCF Act', for short).
15.2 An 'adjustment' is an act of a party by which he seeks to extinguish a debt or part thereof by an act of appropriation and adjustment. But a claim to set-off is a request or prayer to the Court for adjustment by the Court. A plea of 'adjustment' does not require payment of Court fee. A plea of set-off requires payment of Court fee. The need for such payment of Court fee is obvious. So long as the matter is one governed by a contract or acts of parties, a party can adjust an amount due by him to the other party towards an amount due by the other party to him, and there is no intervention of Court. But, once the other party (plaintiff) files a suit for recovery of the amount due to him, such claim of the other party is seized by the Court and therefore, the party (defendant) who wants to adjust the amount due by him towards the amount due by the other party (plaintiff) has to seek the leave of the Court.
15.3 It is also well-settled that what can be adjusted, either before filing of a suit by way of adjustment, or after filing of a suit by claiming a set-off, is only an amount due by him to the other towards an ascertained amount due by the other to him. Thus, if the amount claimed by him (defendant) as due by the other (plaintiff) is not an ascertained or admitted sum due, but is merely a claim for damages by him (defendant) against the plaintiff, then the plaintiff is not really due any amount, until a Court of law determines the liability and the quantum of damages. Where the amount claimed by defendant is damages, defendant cannot say that the plaintiff is 'due' in any ascertained sum due which could be adjusted towards the amount due by the defendant to the plaintiff. Where the claim of defendant is for damages, he cannot seek set-off, but will have to make a counter-claim.
15.5 What could be set-off against the suit claim and CS DJ No. 9346/16 & 9347/16 Page 104 of 144 in what circumstances, set-off can be claimed, is contained in Order 8, Rule 6 of the Code of Civil Procedure. Sub-rule (1), which is relevant, is extracted below:
"Rule 6. Particulars of set-off to be given in written statement.--(1) Where in a suit for the recovery of money the defendant claims to set-off against the plaintiffs demand any ascertained sum of money legally recoverable by him from the plaintiff, not exceeding the pecuniary limits of the jurisdiction of the Court, and both parties fill the same character as they fill in the plaintiffs suit, the defendant may, at the first hearing of the suit, but not afterwards unless permitted by the Court, present a written statement containing the particulars of the debt sought to be set-off'.
It is clear from Order 8, Rule 6 of the CPC that set- off can be claimed by defendant, only if the following conditions are fulfilled:
(a)the suit by the plaintiff must be for recovery of money;
(b)the defendant's claim against the defendant which is sought to be set-off must be an ascertained sum of money, which is legally recoverable from the Plaintiff;
(c)both the parties to the claim for set-off should fill the same character as they fill in the suit of the Plaintiff;
(d)the amount claimed by way of set-off should not exceed the pecuniary jurisdiction of the Court;
(e)the amount must be recoverable by defendant from the plaintiff or all the plaintiffs;
...
...
18. We may now conveniently note the points of difference between set- off and counter-claim as follows:
Set off Counter claim
1. Amount claimed should be an ascertained sum of money.
1. Claim can be for an ascertained sum or for damages.
2. Can be claimed only in a suit for recovery of money.CS DJ No. 9346/16 & 9347/16 Page 105 of 144
2. The claim can be in any suit.
3. Is a ground of defence.
3. Is a weapon of offence enabling the defendant to enforce the claim as effectually as an independent action.
4. Both parties should fill the same character, as they fill in the plaintiff's suit.
4. Character of parties in regard to plaint and counter-claim need not be same.
5. The amount claimed must be recoverable by defendant from plaintiff on the date of suit by plaintiff.
5. The amount must be recoverable on the date of written statement. A cause of action accruing after the date of suit by plaintiff can also be the subject- matter of the counter-claim.
6. Court is bound to adjudicate upon the claim for set-off.
6. The Court may on its discretion exclude counter-
claim from consideration in the suit and direct defendant to file a separate suit.
7. The defendant admits the whole or part of the suit claim and then seeks to extinguish it by way of adjustment.
7. The defendant need not admit any part of the suit claim.
By making provision both for set-off and counter- claim in the CPC, the need to differentiate between a set-off and counter-claim has now practically disappeared. If a claim is not one falling under Order 8, Rule 6 dealing with set-off, it will fall under Order 8, Rule 6-A dealing with counter-claims. Insofar as procedure is concerned, there is virtually no difference between set-off and counter-claim. Both are in the nature of cross suits and both attract the same Court fee and are covered by Section 8 and Article 1 of Schedule I of the Karnataka Court Fees and Suits Valuation Act, 1958. In both, the written statement setting up a claim for set-off or a counter- claim, is treated as a plaint in a cross-suit and the plaintiff is given an opportunity to file written statement in answer to the claim for set-off or counter-claim. In both, Court fee is chargeable in the same manner as a plaint and should be paid when the claim is made and not when claim is adjudicated.
18....... "In both, the written statement setting up a CS DJ No. 9346/16 & 9347/16 Page 106 of 144 claim for set-off or a counter-claim, is treated as a plaint in a cross-suit and the plaintiff is given an opportunity to file written statement in answer to the claim for set-off or counter-claim. In both, Court fee is chargeable in the same manner as a plaint and should be paid when the claim is made and not when claim is adjudicated", 19.6 ........"If the Court fee is not paid by the defendant on the set-off or counter-claim and the plaintiff is not given an opportunity to file his written statement to the claim of defendant, it is not permissible to the Court to consider or grant the set- off or counter-claim, as it would amount to granting a decree against plaintiff without giving him due opportunity to meet the claim against him."
FINDINGS:-
22.7 Hon'ble High Court in State Trading Corporation case (supra) has held that if the Court fee is not paid by the defendant on the set-off or counter-claim and the plaintiff has not been given an opportunity to file written statement to the claim of defendant, it is not permissible to the Court to consider or grant the set-off or counter-claim, as it would amount to granting a decree against plaintiffs without giving due opportunity to meet the claims made against the plaintiffs.
22.8 Admittedly, as mandated by law, Defendant has not paid any Court Fee on any amount claimed as set off. Record also speaks that no such issue towards claim of set off is framed in both the suits. Record also speaks that as mandated by law in case State Trading Corporation case (supra), no opportunity to file Written Statement to rebut the claim of defendant as Set off was afforded to the Plaintiff.
22.9 Therefore, this Court is of the view that as no issue CS DJ No. 9346/16 & 9347/16 Page 107 of 144 has been framed, no Court Fee paid by the defendant against set off claimed, Defendant is not entitled for any relief under this head.
Hence, claim of set off by defendant is dismissed in view of the aforesaid reasons.
ADMISSIBILITY/ EVIDENTIARY VALUE OF LEASE DEEDS RELIED BY THE PARTIES:-
23 Now, I shall proceed to decide whether the lease of M-3 and M-5 properties relied by the plaintiff and 04 Lease Deeds of Anchit Aggarwal relied by the defendant can be considered while deciding the mesne profits of the suit property.
23.1 It is argued on behalf of plaintiff that the lease deeds of M-3 and M-5, Hauz Khas being properties similar to suit property may be considered for comparison in arriving at the prevalent market rate.
23.2 It is further argued that the suit property is a corner property and the defendant was given the front portion on the ground floor with the entire facade as also the front lawn.
23.3 It is also argued that the property that comes closest to comparison with the suit property is M-3 not only because it is the closest but also in view of the fact that just like the suit properties, it also comprises both the ground floor and the basement thereby making the comparison easier.
23.4 It is further argued that though defendant states that these Lease Deeds of Anchit Aggarwal have been proven and even CS DJ No. 9346/16 & 9347/16 Page 108 of 144 accepted by the Plaintiffs as showing a higher rate than their own property and should be adopted, however, what has been admitted are the lease deeds of the years 2000 and 2005 which are registered deeds. The later lease deeds have not been proved.
23.5 Section 35 of the Stamp Act requires that even by consent of parties an improperly stamped document may not be received in evidence. This causes a loss to revenue and parties are not free to agree thereto. This is why the first provision allows such documents to be admitted in evidence in certain circumstance:
"(a) any such instrument shall be admitted in evidence on payment of the duty with which the same is chargeable, or, in the case of any instrument insufficiently stamped, of the amount required to make up such duty, together with a penalty of five rupees, or, when ten times the amount of the proper duty or deficient portion thereof exceeds five rupees, of a sum equal to ten times such duty or portion;
Hence, the defendant should have paid the stamp duty thereon, with penalty. It is only then that under Section 36 it can be admitted in evidence.
23.6 It is further argued that the 2010 Lease Deed is unregistered. Even the original was not produced. It is also not witnessed by 2 people. The witness also did not identify the signatures of anyone thereon. Since these were not certified copies of registered documents or even registered documents, Section 67 of the Indian Evidence Act required the Defendant to prove the signatures of the executants. For all these reasons it was not exhibited. How can Defendant rely upon this document? It cannot be read in evidence.
CS DJ No. 9346/16 & 9347/16 Page 109 of 14423.7 It is further argued that the later deed is dated 28.12.2015, which is marked as Mark J and proved as Ex.DW10/3 by DW10 Anchit Agarwal. This stamp paper of this deed is purchased on 26.02.2016, and on the very same page of stamp paper, the deed states that it is executed on 28.12.2015. Further, proper stamp duty is also not paid on this deed. The witness also did not identify the signatures of anyone on this document either. The Defendant counsel showed a note in the Bare Act and submitted that it proved his contention that since it was not impounded, it can be relied upon. However, the judgment in Jupudi Kesava Rao Vs Pulavarthi Venkata Subbarao And Others 1971 AIR 1070 clearly states otherwise and disproves the contentions of the defendant.
23.8 The Plaintiffs had taken an objection to this lease deed on 12.01.2026 as stamp duty had not been paid . Later, on 14.01.2026, Plaintiff did not press for impounding, but that only meant that if the Defendant paid the applicable stamp, it could be received in evidence. The Defendant did not pay anything. This deed is also not witnessed by 2 people.
23.9 Therefore, the defendant cannot rely upon the lease deeds of Anchit Aggarwal as stated above.
23.10 Further, so far as M-3 and M-5 Lease are concerned, the plaintiffs have relied upon the judgment passed by Hon'ble Supreme Court of India in Appaiya V. Andimuthu@Thangapadi & Ors. in Civil Appeal No. 14630 of 2015 (@ SLP (C) No.10013.
23.11 On the other hand, the defendant has relied upon the 04 Lease Deeds by Mr. Anchit Agarwal and Mrs. Rita Agarwal i.e. CS DJ No. 9346/16 & 9347/16 Page 110 of 144 of the years 2000, 2005, 2010 and 2015 as the property was in the SAME building, ie, M1, Hauz Khas and faces the same threat as the suit properties and enjoys the same benefit as well, it would be of no consequence for this Court to consider any other Lease apart from the one prevalent in the same property itself, let out for the same use, ie, residential cum office (1989 lease was let out for residential storage cum exhibition). Even otherwise, the Plaintiffs have categorically stated in their written submissions that the rental earned by Mr. Anchit Agarwal and Mrs. Rita Agarwal was better and the Plaintiffs were ignorant and not vigilant.
23.12 Further, the Lease for Mr. Anchit Agarwal and Mrs. Rita Agarwal pertains to the Ground Floor and is a like for like comparison with the portion in Soni Dave suit on the Ground Floor and the Ground Floor portion of Berar Suit. With regards to basement portion in Berar suit, the same rent cannot be taken for computation of Mesne Profits for the reason that the Basement of a property fetches much lesser rent than the upper floors, as due to restrictions in the Building Bye-Laws for the basement, many activities are non-conforming in the Basement and hence, they cannot be treated in the same way as the upper floors, which face no such restriction. Hence, by taking market analytics, a factor of 70% has been applied on the rental of the Basement viz-a-viz the Ground Floor.
23.13 It is argued on behalf of defendant that the certified true copies of M-3, Hauz Khas and M-5, Hauz Khas relied upon by the plaintiffs to claim Mesne Profits are forged and fabricated. That despite a specific question put to the Plaintiffs witness during CS DJ No. 9346/16 & 9347/16 Page 111 of 144 her cross-examination in both the suits, she has admitted that she has not called any witness to prove the correctness of the contents of the said certified copies.
23.14 It is further argued that plaintiffs entire case is based on purported Certified True Copies of two Lease Deeds, namely M3, Hauz Khas and M5, Hauz Khas to fix the value of Mesne Profits of the period 2008-2016. It is further argued that only the Certified copies of these two Lease Deeds have been presented as evidence, and the original of the said documents were not produced, neither any oral testimony of any witness is led by the Plaintiffs to ascertain the veracity of the contents of the documents. This clearly puts a cloud on the same. It has been held in a catena of judgments that the Certified copy of a document can be admitted as a secondary evidence, however, the truth of the contents of certified copies of public documents needs to be established by leading oral evidence to prove the correctness of the contents/facts stated in the said Certified copy. In support of these contentions, reliance is placed upon the judgment titled as N. Divakaran v. David Livingston, 2024 SCC OnLine Ker 4015 of the High Court of Kerala.
23.15 The defendant has also placed reliance on the judgment of the Patna High Court in Seema Afzal v. Ekbal Khan, in Civil Misc. Jurisdiction No. 1588/2019 and the judgment of the High Court of Andhra Pradesh in Gonepalli Rajamallaiah v. Ratnashree Jain, MANU/AP/0166/2017 to substantiate this assertion.
23.16 It is, therefore, argued that certified copies of the CS DJ No. 9346/16 & 9347/16 Page 112 of 144 leases of M5, Hauz Khas and M3, Hauz Khas are devoid of any secondary evidence to prove the contents of the documents and cannot be read by this Court to ascertain the value of mesne profits during the period 2008 - 2016 for the suit properties.
23.17 It is further argued that the Lease of M3, Hauz Khas cannot be considered in any case as it was never brought on the record and no application to bring it on the record of the Hon'ble Court was ever moved by the Plaintiffs. There is no formal order passed by this Hon'ble Court for taking on record the Lease of M-3, Hauz Khas. The Plaintiffs filed an application dated 24.01.2018 for placing on record additional document in Berar suit. From a bare perusal of the said additional document application, it can be seen that lease of M-3, Hauz Khas was not sought to be placed on record. The said documents filed with the application dated 24.01.2018 were taken on record vide order dated 14.03.2018 passed by this Hon'ble Court subject to cost of Rs. 1000 to be deposited with the DLSA (South). The judicial record reflects that the said cost of Rs. 1000 was only paid on 07.09.2022 as reflected in order dated 13.10.2022 passed in CS DJ 9347/16 on an objection raised by the Defendant during the recording of the Plaintiffs evidence. The defendant, during the recording of Examination-in-chief of PW1 on 01.10.2021, has raised objection as to the exhibition of the Certified copy of M-3, Hauz Khas and as such, the said lease is not on record vide a judicial order and hence, cannot be read by this Hon'ble Court. Even otherwise, the suit properties cannot be compared with the Lease of M3, Hauz Khas as suit properties suffer from major CS DJ No. 9346/16 & 9347/16 Page 113 of 144 inherent defects.
23.18 The submissions of the Plaintiffs that the lease deeds filed by Mr. Anchit Agarwal are forged/fictitious has no merit and deserves no consideration as it is proved beyond doubt that the Defendant was tenant of Mr. Anchit Agarwal and Mrs. Rita Agarwal for the portion measuring 1,238 sq. ft. on the Ground Floor of M1, Hauz Khas, New Delhi from 22.02.2000 till 23.11.2018.
FINDINGS:
23.19 I have considered rival submissions and have also considered judgment relied by both the sides.
23.20 So far as the Lease deeds of M-3, Hauz Khas are concerned, the argument of defendant is that the said lease was not sought to be taken on record and on an application of the plaintiff for filing additional documents including Lease of M-3, the same was ordered to be taken on record subject to depositing of cost of Rs. 1000/- vide order dated 14.3.2018, however, the cost was paid only on 07.09.2022 and therefore, same cannot be read into evidence is not tenable. It is clear from the judicial record that plaintiff have paid the cost on 07.09.2022 and hence, the Lease of M-3 was duly taken on judicial record and same was proved by PW-1 Mrs. Soni Dave in her examination-in-chief, therefore, this document M-3 Lease can be read into evidence.
23.21 So far as the contentions of the defendant that Lease of M-5 and M-3 cannot be read into evidence being certified copies, the judgment of Hon'ble Supreme Court of India in case CS DJ No. 9346/16 & 9347/16 Page 114 of 144 Appaiya V. Andimuthu@Thangapadi & Ors. in Civil Appeal No. 14630 of 2015 (@ SLP (C) No.10013 is very relevant.
The relevant paras of said judgment are as under:
"19. We will consider whether the High Court was legally correct in holding that owing to the non production of any document by the plaintiff (the appellant) evincing as to how the sons of Vellaiya Thevar obtained the suit property in a partition Exhibit A1, being a registration copy (secondary evidence), could not be admitted in evidence as proof of the contents of its original. At the outset, it is to be stated that while holding thus the High Court has failed to consider the relevant provisions under the Evidence Act and also the Registration Act, 1908 appropriately. If the relevant provisions under the said enactments were properly applied to the facts of the case, the High Court would not have placed reliance on R. Nainar Pillai's case (supra) to hold that since Exhibit A1 being a registration copy, the presumption of due execution of the original under Section 90 of the Evidence Act, particularly in the absence of independent witness would not be available. We say so because proper consideration of the provisions under Sections 61, 63, 65, 74, 76, 77 and Section 79 of the Evidence Act would have definitely brought out that it was absolutely unessential to consider the applicability of Section 90 as also Section 110 of the Evidence Act. Needless to say, that in such circumstances there would not have been any necessity to seek proof through an independent witness, as well.
....
....
21. Section 74 deals with documents which are public documents. Sub-section (2) thereof makes public records kept [in any State] of private documents within the purview of "public document" under Section 74. Going by Section 76, certified copies of public documents shall be given, on demand, by the public officer having the custody of public document, together with a certificate written at the foot of such copy that it is a true copy of such document or part thereof, as the case may be, and such certificate shall be dated and subscribed by such officer with his name CS DJ No. 9346/16 & 9347/16 Page 115 of 144 and his official title. Such copies so certified shall be called certified copies in terms of Section 76.
22. It is to be noted that in the case on hand, a certified copy of Exhibit A1 sale deed dated 27.08.1928 was produced by the appellant. As noted earlier, the Courts below found that it is registered with the Sub- Registrar's Office. The contention of respondent(s) is that it is only a certified copy and not the original document. In the light of the aforementioned provisions under the Evidence Act there can be no doubt with respect to the permissibility for the production of such a certified copy as secondary evidence in law, in regard to the existence, condition or contents of a document. As per Section 77 of the Evidence Act such certified copies may be produced in proof of the contents of the public document concerned. Section 79 deals with presumption as to genuineness of certified copies. Section 77 and 79 of the Evidence Act reads thus:-
"77. Proof of documents by production of certified copies. -- Such certified copies may be produced in proof of the contents of the public documents or parts of the public documents of which they purport to be copies.
79. Presumption as to genuineness of certified copies. - The Court shall presume [to be genuine] every document purporting to be a certificate, certified copy or other document, which is by Law declared to be admissible as evidence of any particular fact, and which purports to be duly certified by any officer [of the Central Government or of a State Government, or by any officer [in the State of Jammu and Kashmir] who is duly authorized thereto by the Central Government]: Provided that such document is substantially in the form and purports to be executed in the manner directed by law in that behalf. The Court shall also presume that any officer by whom any such document purports to be signed or certified, held, when he signed it, the official character which he claims in such paper."
23. In view of the provision under Section 79 of the Evidence Act, Section 57 (5) of the Registration Act CS DJ No. 9346/16 & 9347/16 Page 116 of 144 assumes relevance in the context of the case and it reads thus: "57. Registering officers to allow inspection of certain books and indexes, and to give certified copies of entries.
(1)..
(2)..
(3)..
(4)(5) All copies given under this section shall be signed and sealed by the registering officer, and shall be admissible for the purpose of proving the contents of the original documents."
(Underline supplied)
29. Having regard to all the aforesaid circumstances and in the light of the various provisions of the Evidence Act mentioned hereinbefore we will firstly consider the question whether the appellant/plaintiff had succeeded in proving the contents of Ext.A1. Going by Section 65(e) when the original of a document is a public document within the meaning of Section 74, secondary evidence relating its original viz., as to its existence, condition or contents may be given by producing its certified copy. Ext.A1, indisputably is the certified copy of sale deed No. 1209/1928 dated 27.08.1928 of SRO Andipatti. In terms of Section 74(2) of the Evidence Act, its original falls within the definition of public document and there is no case that it is not certified in the manner provided under the Evidence Act. As noticed hereinbefore, the sole objection is that what was produced as Ext.A1 is only a certified copy of the sale deed and its original was not produced in evidence. The hollowness and unsustainability of the said objection would be revealed on application of the relevant provisions under the Evidence Act and the Registration Act, 1908. It is in this regard that Section 77 and 79 of the Evidence Act, as extracted earlier, assume relevance. Section 77 provides for the production of certified copy of a public document as secondary evidence in proof of contents of its original. Section 79 is the provision for presumption as to the genuineness of certified copies provided the existence of a law declaring certified copy of a document of such nature to be admissible as evidence. When that be the position under the aforesaid provisions, taking note of the fact that the document in question is a registered sale deed, falling within the CS DJ No. 9346/16 & 9347/16 Page 117 of 144 definition of a public document, the question is whether there exists any law declaring such certified copy of a document as admissible in evidence for the purpose of proving the contents of its original document. Subsection (5) of Section 57 of the Registration Act is the relevant provision that provides that certified copy given under Section 57 of the Registration Act shall be admissible for the purpose of proving the contents of its original document. In this context it is to be noted that certified copy issued thereunder is not a copy of the original document, but is a copy of the registration entry which is itself a copy of the original and is a public document under Section 74(2) of the Evidence Act and Sub-section (5) thereof, makes it admissible in evidence for proving the contents of its original. There is no case that foundation for letting in secondary evidence was not laid and as noted earlier, both the trial Court and the First Appellate Court found it admissible in evidence. Thus, the cumulative effect of the aforementioned sections of the Evidence Act and Section 57(5) of the Registration Act would make the certified copy of the sale deed No. 1209/1928 dated 27.08.1928 of SRO Andipatti, produced as Ext.A1 admissible in evidence for the purpose of proving the contents of the said original document. When this be the position in the light of the specific provisions referred hereinbefore under the Evidence Act and the Registration Act, we have no hesitation to hold that the finding of the High Court that the certified copy of Ext.A1 owing to the failure in production of the original and proving through an independent witness is inadmissible in evidence, is legally unsustainable. In the other words, the acceptance of the admissibility of Ext.A1 found in favour of the appellant/plaintiff by the trial Court and confirmed by the First Appellate Court was perfectly in tune with the provisions referred hereinbefore and the High Court had committed an error in reversing the finding regarding the admissibility of Ext.A1.
30. When the execution of Ext.A1 was not disputed by the respondent (in fact in the circumstances it was indisputable) and when the contents of the original sale deed bearing No. 1209/1928 dated 27.08.1928 of SRO Andipatti was proved by production of the certified copy there was absolutely no reason to look for the application of Section 90 or 110 of the CS DJ No. 9346/16 & 9347/16 Page 118 of 144 Evidence Act, in the instant case. For the purpose of proving the admissibility and evidentiary value of Ext.A1 or Ext.A5 in the circumstances involved in the instant case, there was absolutely no requirement to look into Section 90 or Section 110 of the Evidence Act. In this context it is relevant to note that once the title of plaintiff's vendor Puliyankaladi acquired under Ext.A1 sale deed is established and purchase of the same property by the plaintiff, of course his father on his behalf, under Ext.A5 registered sale deed is upheld by the High Court there was no reason or justification to interfere with the concurrent judgments of the Courts below. Before dealing with this question further, in the fitness of things we will refer to another aspect. A bare perusal of the impugned judgment of the High Court would reveal that virtually, the High Court also, in troth, agreed with the admissibility of Exts.A1 and A5. The High Court held that 96 cents were purchased under Ext.A5 by the appellant/plaintiff. In paragraph 14 of the impugned judgment the High Court held:-
"However, even though the first appellant property/plaintiff has prayed for declaration to the entire suit property as admitted by the appellant/ defendant that the title of the plaintiff Puliyankaladi purchased the property from Velaiya Thevar and his property is only entitled to 96 cents and as said the first respondent/ plaintiff has titled over the 96 cents as per sale deed Ex.A.5 and not grant that and accordingly, he is entitled to the title as well as the possession."
23.22 The judgment Appaiya (supra) relied by the plaintiff clearly provides that a certified copy is admissible in evidence, even if the original of the same is not produced in the Court and as such, the lease of M-3 and M-5 are admissible and can be read in evidence.
23.23 As regards the Lease Deeds by Mr. Anchit Agarwal and Mrs. Rita Agarwal of the years 2000, 2005, 2010 and 2015 relied by defendant are concerned, it is seen that the plaintiffs have CS DJ No. 9346/16 & 9347/16 Page 119 of 144 admitted the lease of years 2000 and 2005 and also the same are registered and as such, same are admissible in evidence.
23.24 So far as Lease of 2010 and 2015 are concerned, my findings are as under:
LEASE OF 2010:
23.25 It is unregistered, the original was not produced, and it lacks proper attestation. Further, no witness identified the signatures. Under Section 67 of the Indian Evidence Act, the defendant failed to prove execution of the document, so it was rightly not exhibited and cannot be relied upon and is inadmissible in evidence.
LEASE OF 2015:
23.26 It contains inconsistencies, as the stamp paper was purchased after the stated execution date. Proper stamp duty was not paid, and no witness identified the signatures. The Defendant's argument that it can be relied upon without impounding is contradicted by the judgment in Jupudi Kesava Rao v. Pulavarthi Venkata Subbarao (1971). Further, although the Plaintiff initially objected and later did not press for impounding, this only allowed admission upon payment of proper stamp duty which the Defendant failed to do and as such, even this Lease Deed is not admissible in evidence.
23.27 Therefore, in view of my above discussion, I hold that the Lease of M-3 and M-5 relied by plaintiff and the Lease of Anchit Aggarwal of the years 2000 and 2005 are admissible in evidence.CS DJ No. 9346/16 & 9347/16 Page 120 of 144
Now, I shall proceed to deal with the main issue of Mesne profits.
24.1 It is important to mention here that the Hon'ble Supreme Court of India and the Hon'ble High Court of Delhi in their orders have directed that this Court should not be influenced by the orders passed by them. This Court is conscious of this fact and will be determining the issues without being influenced by any such orders.
24.2 As already stated above, the defendant handed over the vacant and peaceful possession of the suit properties to the plaintiff on 19.10.2016. It is also the admitted fact that the tenancy in both the suits was terminated in the month of August, 2008. Therefore, it is clear that the suit properties in both the suits were under the use and occupation of defendant till 19.10.2016 and as such, the plaintiff is entitled to mesne profits.
24.3 It is the admitted position that in Soni Dave suit, the last rentals paid by the defendant were till June, 2008 and in Berar suit till August, 2008. Therefore, the period for computation of mesne profits is as under:
In Soni Dave suit - 01.07.2008 till 19.10.2016 In Berar suit - 01.09.2008 till 19.10.2016 Now, the next thing to be determined is the rate for use and occupation charges of the suit properties for the period as stated above.
24.4 Firstly, I shall determine as to which of the Lease CS DJ No. 9346/16 & 9347/16 Page 121 of 144 deeds can be considered for determination of the rate for computation of mesne profits towards use and occupation charges of the suit premises by the defendant.
LEASE OF 2000 AND 2005 OF ANCHIT AGGARWAL:
24.5 So far as the Lease of Anchit Aggarwal for the years 2000 and 2005 are concerned, it is seen that Service Tax Act on renting of immovable property for commercial purpose came into force by the Finance Act, 2007 whereas both the lease are for the period when there was no liability towards service tax as the service tax was to apply on rent on immovable property used for any commercial purpose from May, 2007. Moreover, as per the Written Statement, vide second notification dated 14.09.2006 issued by MCD, the Suit property was converted from residential status to commercial. Therefore, in view of the fact that the lease of 2000 is much prior to the period when Service Tax became applicable as also the conversion of property from residential to commercial. As far as lease of 2005 is concerned, this lease commenced from 01.04.2005, when neither the suit property was converted as commercial nor service tax was to apply on rent on immovable property in existence. Therefore, in view of the foregoing reasons, both the Lease deeds cannot be considered for determination of mesne profits.
LEASE OF 1989:
24.6 The plaintiff has argued that the Lease of 1989 cannot be considered as this was an unregistered lease deed and CS DJ No. 9346/16 & 9347/16 Page 122 of 144 had also expired by efflux of time and hence its clauses could not be read. It is further argued that the 1989 Lease gave the defendant only one right of renewal which was exercised.
24.7 On the other hand, the defendant has argued that the 1989 Lease can be considered for computation of the rentals starting from 1989 with an increment of 14% after every 3 years.
24.8 I have considered rival submissions.
24.9 As regards the 1989 Lease, it cannot be considered for the simple reason that it was unregistered and also it had expired and it will not be appropriate for taking this Lease for computation of mesne profits.
DEFECTIVE TITLE:
25.1 It is argued that the Plaintiffs are not entitled to mesne profits as they have failed to establish either valid title or wrongful possession of the Defendant. The ownership of the basement is itself under dispute in pending civil suits, thereby rendering any claim for mesne profits untenable.
25.2 It is further argued that the Plaintiffs never had ownership rights over the entire basement and, at best, held only an undivided 1/6th share. Under Section 105 of the Transfer of Property Act, 1882, a lease requires transfer of a lawful right to enjoy property. Since the Plaintiffs had no such transferable right, the lease deed dated 02.12.1989 is void ab initio.
25.3 Also, the lease was obtained by fraud and misrepresentation, as the Plaintiffs falsely projected themselves as absolute owners while concealing that the basement formed CS DJ No. 9346/16 & 9347/16 Page 123 of 144 part of common areas belonging to all flat owners under the Collaboration Agreement dated 01.11.1984. Such a contract is void under Section 19 of the Indian Contract Act, 1872.
25.4 It is further argued that the doctrine of estoppel under Section 116 of the Indian Evidence Act, 1872 does not apply, as the tenancy itself was induced by fraud and possession has already been handed back. The Plaintiffs cannot benefit from their own misrepresentation.
25.5 It is also argued that the Plaintiffs have themselves admitted defects in title through subsequent sale deeds and have acted in violation of Section 52 of the Transfer of Property Act by creating third-party interests during pendency of litigation.
25.6 In view of the above, the Plaintiffs lack locus, the lease is void, and the Defendant's possession cannot be termed wrongful. Accordingly, the claim for mesne profits is liable to be dismissed.
25.7 On the other hand, the plaintiff has argued that the argument regarding defective title is not part of the pleadings and hence, cannot be raised at this stage. However, it is submitted that in 2007, the Defendant obtained loans from the Jammu and Kashmir Bank mortgaging inter alia their own flat and the leasehold rights in the suit properties. The property documents were submitted to the Bank on 06.04.2009. On 16.03.2011, further credit facilities were sanctioned by the Bank extending charge over the same mortgaged properties. Hence, on three separate occasions the Bank had occasion to check the papers to satisfy that the property was in order. It is presumed that it did so.
CS DJ No. 9346/16 & 9347/16 Page 124 of 14425.8 After that on 01.04.2011, all the Directors of the Defendant filed a joint affidavit with the Bank and same was filed in suit bearing No. CS DJ 297/2022 Jammu & Kashmir Bank vs G.S. Berar Co. Pvt. Ltd. & Ors. pending in another court swearing inter alia that "6.That the above said immovable properties which stands/to the Bank are free from all sorts of encumbrances, charges and liens whatsoever except the one created/to be created in favour of the Bank, and the said Immovable Properties have been constructed in compliance with the sanctioned plan and all building bye laws and is not located in any unauthorized colony". This, therefore, proves that on that date the entire building was found to be properly constructed. How can the Defendant later be permitted to deny it when convenient? Even a Public Sector Bank has accepted this position.
FINDINGS:
25.9 As far as the plea of defective title raised on behalf of defendant is concerned, I am in agreement with the submissions made on behalf of plaintiff. It is seen that nowhere in the Written Statements, this plea of defective title was raised.
25.10 It is the admitted fact that the tenancy in both the suit premises were terminated in August, 2008 and the defendant vacated the suit property on 19.10.2016. Both the suits were filed in the year 2008. It is pertinent to mention here that defendant filed two suits bearing No. CS DJ 297/2022 Jammu & Kashmir Bank vs G.S. Berar Co. Pvt. Ltd. & Ors. pending in another court and CS DJ 113/2017 (Trans Asian Industries Expositions Pvt.CS DJ No. 9346/16 & 9347/16 Page 125 of 144
Ltd. vs Aditya Dave & Ors.) pending in this Court challenging the title and ownership of the plaintiffs, which are still pending adjudication. It is interesting to note that no issue of defective title was raised by the defendant in their Written Statements filed in both suits under consideration and for the first time, this plea of defective title was raised in the above mentioned in the present case the above mentioned suits after the defendant had vacated the suit premises and as such, it is clear that this issue has been raised as an after-thought.
25.11 It is also pertinent to note that plaintiff has filed the copy of affidavit of defendant submitted while obtaining loans from the Jammu and Kashmir Bank mortgaging inter alia their own flat and the leasehold rights in the suit properties. In the said affidavit, it is stated that the suit properties are free from all encumbrances. Though, the defendant has objected to filing of these documents and that same cannot be considered, however, it is also the admitted fact that defendant themselves have filed a copy of plaint of the suit bearing CS DJ 297/2022 Jammu & Kashmir Bank vs G.S. Berar Co. Pvt. Ltd. & Ors., pending in another court before this Court while moving the application for stay of the proceedings of both the above suits as well as moving another application before Ld. Principal District & Sessions Judge, South, Saket seeking consolidation of all the suits pending between the parties. Therefore, since the defendant has also relied upon the documents pertaining to the suit bearing CS DJ 297/2022 Jammu & Kashmir Bank vs G.S. Berar Co. Pvt. Ltd. & Ors., this Court can take judicial notice of the same and as such, CS DJ No. 9346/16 & 9347/16 Page 126 of 144 the defendant cannot be allowed to take both the arguments of defective title and at the same time, taking loan against the said properties. This observation is made in order to show the conduct of the defendant.
25.12 Since the issue of defective title of the suit premises is not part of the pleadings in both the suits, hence, same cannot be adjudicated at all. Moreover, the judicial propriety demands that the issue of defective title ought not to be considered as it would amount to exceeding the jurisdiction of this Court and as such, this Court cannot give any observation on the issues which are still sub-judice.
OTHER FACTORS:
26.1 It is argued on behalf of defendant that the basis of determination of Mesne Profit depends on facts and circumstances of each case, with factors including location of premises, nature of premises (commercial or residential), etc. He has relied on judgment titled as Martin & Harris (P) Ltd. v. Rajendra Mehta, (2022) 8 SCC 527 wherein the Supreme Court held as under:
"19. The basis of determination of the amount of mesne profits, in our view, depends on the facts and circumstances of each case considering the place where the property is situated i.e. village or city or metropolitan city, location, nature of premises i.e. commercial or residential area and the rate of rent precedent on which premises can be let out are the guiding factor in the facts of individual case."CS DJ No. 9346/16 & 9347/16 Page 127 of 144
26.2 It is argued that the suit property had inherent defects. The suit properties were not built as per sanction plan of the MCD and even the suit properties had not received any occupation and completion certificates by the competent authorities. Because of these inherent defects, the suit properties were sealed by the MCD. Also, because of these inherent defects, the suit properties were not able to fetch good rentals and even after the same were vacated by the defendant in the year 2016, same could not be leased further till the time the same were sold to Vijay Sales in the year 2021. Therefore, it is clear that for 05 years, the plaintiffs could not find any tenant for giving the suit properties on lease which makes it amply clear that suit properties could not have fetched rentals as being claimed by the plaintiffs.
26.3 It is also stated that the steep increase in rent is a complete paradox when compared to the prevailing market rental rates of comparable properties in the Hauz Khas Area which continued to decrease with the fall in the real estate market and construction of metro right in front of the Suit Property, The construction of metro continued in front of the Suit Property thereby making it nearly impossible to access the Suit Property. The Plaintiffs were, in fact, not entitled to any monies for the period for which the Metro construction continued and all monies paid for the said period are liable to be refunded to the Defendant. The Defendant has procured valuation certificates from reputed property agents in respect to rentals of comparable properties in the Hauz Khas area.
26.4 On the other hand, it is argued on behalf of plaintiffs CS DJ No. 9346/16 & 9347/16 Page 128 of 144 that assuming that M-1, Hauz Khas, New Delhi was not built according to sanctioned building plan, SDMC order dated 12.10.2021 clearly holds that by virtue of the NCT of Delhi Act, 2007, it was all protected. Hence, it could have been leased in 2008 as protected construction. It is also a fact that such protection has lasted for the entire period that the defendant continued to occupy the premises till the time the suit properties were vacated on 19.10.2016. It is argued that since what needs to be determined is mesne profits and not rent and as such, what one must examine is what happened during that period while looking back. If the possession of the Defendant was not disturbed on this account, then they cannot complain.
26.5 I have considered rival submissions on this point. 26.6 I am in agreement with the submissions made on behalf of plaintiff. The defendant continued to use and occupy the suit premises despite the termination of tenancy and was running his business of exhibition of handicrafts. 26.7 It is also significant to note that plaintiff has filed the copy of affidavit of defendant submitted at the time of increasing credit facilities from the Jammu and Kashmir Bank mortgaging inter alia their own flat and the leasehold rights in the suit properties. In the said affidavit dated 01.04.2011, it is stated that the suit properties are free from all encumbrances and that the said immovable properties have been constructed in compliance with the sanctioned plan and all building bye laws and is not located in any unauthorized colony. Therefore, it is clear from this affidavit that defendant themselves have admitted that the suit premises have been built as per sanctioned plan and now, it CS DJ No. 9346/16 & 9347/16 Page 129 of 144 cannot retract from this admission. Hence, I hold that the suit premises were having minor deviations as per the MCD but were used optimally by the defendant while running his business of exhibition of handicrafts and as such, the defendant cannot be allowed to take this plea to deny the claim of mesne profits to the plaintiffs.
26.8 As regards the argument of defendant that due to construction work of Hauz Khas metro station, the real estate value of the area had gone down as the area was difficult to access, it is seen that the construction work of Hauz Khas metro station started in the year 2007-2008 and it became operational from the year 2010. In the meeting dated 21.05.2008, both the sides agreed to increase the rentals as per their mutual agreement as is mentioned in the written statement of the defendant. Pursuant to the said agreement dated 21.05.2008, the defendant had even tendered rental @ Rs. 4,00,000/- per month to the plaintiffs for the months of February - May, 2008. It is incomprehensible to understand that if the defendant was finding it very difficult to run its business because of the construction work of Hauz Khas metro, why it acted upon the agreement 21.05.2008 and even paid rent @ Rs. 4 lacs per month for four months. Therefore, this argument of defendant is an after-thought and has been made in order to deprive the plaintiff of its rightful mesne profits and running away from its obligations.
27 Now, I shall determine whether M-3 and M-5 Lease can be considered for determination of the mesne profits in respect of the suit properties.
CS DJ No. 9346/16 & 9347/16 Page 130 of 14427.1 It is argued on behalf of plaintiffs that Lease of M-3 and M-5 are like properties and can be considered for determining the mesne profits. It is further argued that the covenants in both these Lease are also identical and hence, can be considered. The plaintiff has also given the calculation of rent amount as well as security deposit and interest which could have accrued thereon, on the basis of both these Lease for arriving at the mesne profits for the suit properties. 27.2 Per contra, the defendant has argued that both the Lease of M-3 and M-5 cannot be considered. With respect to the lease of property bearing number M5, Hauz Khas, which was leased out to one Gym., two separate purported leases have been exhibited by the Plaintiffs, one pertaining to the basement and ground floor of M5, Hauz Khas and the other with respect to the 1st floor of M5, Hauz Khas. This Lease too is at a much higher pedestal than the suit properties, for the number of services it offers, and the inherent nature of the land itself. It is well known that rent of Basement is much lower than all the upper floors. Applying the same rate of rent of upper floors to an area which is prominently of the basement and derives much lesser rent than upper floors clearly shows the ill-intention of the Plaintiff. Hence, this again is not an apple to apple comparison. 27.3 It is further argued that the properties in both the Lease were completely commercial and secondly, it provided many benefits like right for parking at frontage for clients with minimum of 2 cars, area to install water tank, commercial load of 80KV, 400sq ft. area on the roof for solar plant, none of which were given with the suit properties.
CS DJ No. 9346/16 & 9347/16 Page 131 of 14427.4 It is also argued that plaintiffs have calculated the service tax @ 20% whereas the service tax in the year 2008-2009 was only 12.36% which is considerably lower then what is sought to have been claimed by the plaintiff. 27.5 Therefore, it is argued that none of the properties i.e. M-3 and M-5 can be compared with the suit properties and hence, their rentals cannot be considered for calculation of mesne profits. The defendant have also given different calculations for computation of mesne profits.
27.6 I have carefully perused the record and considered rival submissions.
27.7 It is argued on behalf of defendant that the lease deeds of M-3, Hauz Khas and M-5, Hauz Khas relied upon by the Plaintiffs for fixing of mesne profits also contains the clauses where the conversion charges, commercial charges, property tax, service tax, GST etc. are payable by the lessors and not the lessee.
27.8 It is also argued that the lease of M-3, Hauz Khas at Article 3C itself records that the Lessor is bound to pay all the taxes including but not limited to commercial charges, Municipal taxes and other charges qua the lease property. The Plaintiffs vehemently relies upon the M-3, Hauz Khas lease, then the claim of the Plaintiffs upon the Defendant to pay conversion charges, FAR charges and One-time parking charges for the suit properties itself fails. The said Clause 3C, in fact, supports the case of the Defendant that the charges such as FAR charges and one-time parking charges are always borne by a Lessor as the said charges are towards the enhancement of his/her property and only he/she CS DJ No. 9346/16 & 9347/16 Page 132 of 144 will bear the fruits of such enhancement. Hence, the Defendant, being the Lessee, is not responsible and liable to pay such charges so as claimed by the Plaintiffs as damages in both the suits.
27.9 It is further argued that plaintiff though mentioned about Article 3(iv) but have not mentioned contradiction in Article 3C, wherein it unequivocally stated that all taxes and charges are payable by the Lessor. Since no evidence was ever led, it cannot be assumed which interpretation of the 2 clauses is correct and hence, the question of payment of Service Tax by the Lessee in the M3 Lease is left unanswered. Reliance on the judgments of Ramkishore Lal v. Kamal Narain, (1963) AIR (SC) 890 and Radha Sundar Dutta v. Mohd. Jahadur Rahim and Others, (1959) AIR (SC) 24 by the Plaintiffs to contend that in the event of conflict in the clauses of a document, the earlier clause should prevail and the latter should be disregarded, is misplaced for the reason that in Clause 3A(iv), it is specifically mentioned that the Lessor has to raise an invoice upon the Lessee and in default on the part of the Lessor, he is bound to pay in terms of Clause 3C the Service Tax. Admittedly, in the present suits, the Plaintiffs have not raised any invoice/challans to the Defendant for the Service Tax.
27.10 On the other hand, it is argued on behalf of plaintiff that the submission of defendant that under Clause C of the M3 lease, the liability for service tax was of the landlord is false. Clause 3a(iv) expressly says that "The Service Tax, if applicable on the monthly rent shall be borne and payable by the LESSEE upon receipt of invoice from the LESSOR". The rule regarding CS DJ No. 9346/16 & 9347/16 Page 133 of 144 interpretation of contracts / documents is that a subsequent clause cannot override a previous one. The Plaintiffs rely on Radha Sundar Dutta v. Mohd. Jahadur Rahim AIR 1959 SC 24 1959 SCR 1309 where there is conflict between the earlier clause and the later clauses and it is not possible to give effect to all of them, then the rule of construction is well established that it is the earlier clause that must override the later clauses and not vice versa] and Ramkishorelal vs Kamalnarayan AIR 1963 SC 890 = 1963 Supp (2) SCR 417 [In a disposition of properties, if there is a clear conflict between what is said in one part of the document and in another where in an earlier part of the document some property is given absolutely to one person but later on, other directions about the same property are given which conflict with and take away from the absolute title given in the earlier portion, the earlier disposition of absolute title should prevail and the later directions of disposition should be disregarded.] 27.11 A similar contention was advanced in respect of M5 lease based on Clause 2.1 which does not mention service tax. However, Clause 2.4 of the M5 lease deed also expressly states that "However the service tax or any hoarding charge, if and when levied shall be borne by the Lessee". This seems to have been so prescribed because on 04.07.2009 when this lease was being entered into the incidence of service tax had been struck down by the Hon'ble Delhi High Court. Of course, if service tax had finally not been levied, neither would the said tenant have had to pay it, nor would the Plaintiffs have claimed it. But it has been upheld.
27.12 I have considered rival submissions.
CS DJ No. 9346/16 & 9347/16 Page 134 of 14427.13 The argument advanced on behalf of defendant that service tax liability was of the lessor does not inspire confidence as in view of judgment Ramkishorelal and Radha Sunder Dutta (supra), it is clear that the liability to pay service tax is of the lessee in view of the overriding effect of the earlier clause provided in Article 3 A (iv) and the interpretation proposed by the defendant is misconceived.
27.14 So far as the argument of defendant that the plaintiffs did not raise service tax invoice on the interim use and occupation charges received till the vacation of the suit property, it is seen that this argument is not tenable as the plaintiff was not in a position to raise invoice of service tax as the use and occupation charges were interim and not final. Further, there was no direction from any superior court to raise invoice as has been alleged by the defendant.
27.15 So far as the submissions of the defendant's counsel with respect to service tax is concerned, I am in agreement with his submissions. Vide amendment in the Finance Act, 2007, the rate of service tax was fixed at 12.36% per annum on rent amounts falling under the sub-clause (90a) under the category of (zzzz).
27.16 Therefore, the service tax calculated by the plaintiff @ 20% is not as per law.
27.17 As far as Lease of M-3 and M-5 properties are concerned, both the properties were being used for commercial purposes. Both the properties are in the vicinity and hence, are more suitable for the purposes of comparison. Further, their comparison with the suit properties will give a realistic idea CS DJ No. 9346/16 & 9347/16 Page 135 of 144 about the prevalent market rate and thus, will enable this Court to determine the market rent of the suit properties which was prevalent at that time.
27.18 Further, the superior courts in catena of judgments have held that the calculation of mesne profits is not limited to the original contractual rent, it should reflect what the landlord could have earned in the open market, what the wrongful occupant actually received, during the period of unauthorized possession.
27.19 Therefore, I now proceed to compare the Lease of M-3 and M-5 with the suit properties.
27.20 In order to arrive at the rate of rent per month, the comparison between the properties of M-3 and M-5 is being made as hereunder:
27.21 LEASE OF M-5 1ST LEASE:
Basement & Ground floor- Area 5220 sq. feet. Rent Rs.800,000 + service tax @12.36% which comes to Rs. 97,000/- + interest free security deposit @ 7% p.a. on the Security deposit of Rs. 48 lacs ( 8 lacs x 6 months) which comes to Rs. 28,000/- per month.
2ND LEASE:
First Floor - Area 1800 sq. feet Rent Rs.3,00,000 + service tax @12.36% which comes to Rs. 37,086/- + interest on interest free security deposit @ 7% p.a. on the Security deposit amount of Rs. 18 lacs (3 lacs x 6 months) CS DJ No. 9346/16 & 9347/16 Page 136 of 144 which comes to Rs. 10,500/- per month. TOTAL OF BOTH THE LEASE OF M-5:
Area (5220 +1800) = 7020 sq. feet.
Total Rent (8 +3 lacs) =11,00,000 + Service Tax (97,000 + 37,086) = Rs. 1,34,086 + Interest on interest free security deposit (28,000 + 10,500) = Rs. 38,500/-, the grand total of these comes to Rs. 12,72,586/-
Now, for computing the rate of rent per square feet, the total rental of Rs. 12,72,586 is divided by the area of 7020. The rate per square feet comes to 181 per square feet.
Applying this rate of 181 per sq. feet to the area of 7725 gives the following figures:
Area 7725 x 181 per sq. feet = Rs. 13,36,425/- rent per month (inclusive of service tax) in the year 2009.
Now, coming to the Lease of M-3.
27.22 LEASE OF M-3:
Basement (front portion)- 1834 sq. feet Ground floor ( front portion)-1877 sq. feet Total area - 3711 sq. feet Rent Rs.11,25,000 + service tax @12.36% which comes to Rs. 1,39,050/- + interest free security deposit @ 7% p.a. on the Security deposit of Rs. 67,50,000/- ( 11.25 lacs x 6 months) which comes to Rs. 39,375/- per month.
Therefore, the total rent comes to Rs. 13,03,425/-
Now, for computing the rate of rent per square feet, the total rental of Rs. 13,03,425/- is divided by the area of 3711.CS DJ No. 9346/16 & 9347/16 Page 137 of 144
The rate per square feet comes to 351 per square feet.
This lease had commenced in the year 2013 whereas the rate of rent which we are determining is for the year 2008.
It is also pertinent to note that this lease is for three years extendable by another three years and the rentals are to be revised by 15% per annum every three years.
Therefore, for arriving at the rentals in the year 2008, the rent amount of Rs. 13,03,425/- must be reduced by 25% of it ( minus Rs. 3,25,856/-) which comes to Rs. 9,77,569.
This rent of Rs. 9,77,569/- is divided by the area of 3711- Rs. 263 per square feet in the year 2008.
Applying this rate of 263 to the area 7725 sq. feet in the present two suits, the following rate of rent arrives.
Area 7725 x 263 per sq. feet = Rs. 20,31,675/- per month (inclusive of service tax) in the year 2008.
27.23 Now, that we have arrived at the estimated market rate of rentals of the properties located in the Hauz Khas on the basis of Lease of M-3 and M-5. We have got two different rates of these two separate lease of M-3 and M-5 which are the properties in the vicinity of suit properties. 27.24 It is pertinent to note that the mesne profits which we are trying to determine for the suit properties is for a long period of 08 years w.e.f June, 2008 till 19.10.2016 in Soni Dave suit and in respect of Berar suit, w.e.f September, 2008 till 19.10.2016.
27.25 Therefore, in order to arrive at the prevalent market rate for 08 years, I deem it appropriate that the combined rate of CS DJ No. 9346/16 & 9347/16 Page 138 of 144 M-3 and M-5 would give a fair market rate for determination of mesne profits. Hence, I now proceed to calculate the combined rate of lease of M-3 and M-5.
27.26 COMBINED RATE OF M-3 AND M-5 LEASE:
In view of the above calculations, we have two different rates:
Rs. 263 per sq. feet (on the basis of M-3) Rs. 181 (on the basis of M-5 Lease).
For arriving at the average of these two rates, both these rates are being added and then divided by 2 to arrive at the average rate.
Average of both the rates- 263+181=222 per sq.feet. Therefore, the rate of Rs. 222/- per square feet would be just and fair market rental value of the suit properties. 27.27 Hence, since the mesne profits are to be computed from June, 2008 till 19.10.2016, I deem it appropriate to refer to the decision passed by Hon'ble High Court of Delhi in Sneh Vaish & Anr. Vs. State Bank of Patiala & Ors. relied by the plaintiff wherein it is held:
"That is however not the end of the matter, inasmuch as, Courts have been taking judicial notice of increases in the rent in urban areas such as Delhi. A Division Bench judgment of this Court taking judicial notice of increase in rents is the judgment in the case of S.Kumar vs. G.R.Kathpalia, 1999 RLR
114. I have also had an occasion to consider this aspect in the judgment in the case of M.C. Agrawal HUF vs. M/s.Sahara India & Ors., CS DJ No. 9346/16 & 9347/16 Page 139 of 144 183 (2011) DLT 105, wherein I have held that the Courts can take judicial notice of 15% annual increase in rent. In this case, the last rate of rent which was paid before the tenancy was terminated was `40,472/-. I therefore hold that the appellants/plaintiffs/landladies are entitled to increased rent of 15% over `40,472/- with effect from 24.10.1998 to 23.10.1999. However, with effect from 24.10.1999 the mesne profits payable would be 15% more than what were payable on 23.10.1999. Every year there will be a cumulative increase of 15% over the last rate payable for mesne profits till the vacation of the premises on 31.12.2002.
27.28 Therefore, in view of the judgment Sneh Vaish (supra), the plaintiffs shall be entitled to annual increase of 15% on the mesne profits. Further, every year, there will be a cumulative increase of 15% over the last rate payable for mesne profits till the vacation of the suit premises on 16.10.2016.ISSUE NO. 1
28. In view of my above discussion, this issue is decided in favour of the plaintiffs and against the defendant. The plaintiffs shall be entitled to mesne profits at the rate of Rs. 222/-
per square feet and from the date of filing of the suit till realization of the amount, from the end of the month for which the mesne profits fell due till the date of payment.
Now, I shall proceed to decide Issue No.2.
CS DJ No. 9346/16 & 9347/16 Page 140 of 144RATE OF INTEREST:
29.1 The plaintiffs have sought pendente lite interest @ 18% per annum.
29.2 The defendant has objected to this rate of interest. 29.3 I have perused the entire record. In para 80 of evidence affidavit of defendant Mohd. Yasin Mir examined as DW-9, has claimed refund of security deposit from the plaintiff alongwith interest at the rate of 18% per annum. 29.4 On the one side, defendant is claiming interest @ 18% per annum on his security deposit and on the other side, he is rejecting the claim of plaintiff of pendente lite interest @ 18 per annum. The Plaintiffs have relied on the decision of the Hon'ble Delhi High Court dated 13th May, 2014 in FAO(OS) 579/2013 titled "Smt. Santosh Arora & Ors Vs Sh. M.L. Arora", and on the judgment of the Hon'ble Supreme Court in BPL Limited Vs. Morgan Securities and Credits Private Limited 2025 INSC 1380 whereby it was held that a rate of interest of 36% pa is not unconscionable or against public policy, especially in commercial transactions between parties of equal bargaining power.
29.5 Similarly, in RFA 249/2021, CM Nos. 15993/2021 & 15995/2021 titled as Pawan Kumar Gupta And Gurucharan Gupta versus Veena Dhingra And Another, High Court Of Delhi, dated December 08, 2021 has held as under:
24. Taking note of the aforementioned facts, insofar as the interest is concerned, the justification given by the learned Trial Court while granting interest @ 18% per annum is that the tenancy being commercial. Such a conclusion is reasonable in the facts of this case.CS DJ No. 9346/16 & 9347/16 Page 141 of 144
29.6 Therefore, in view of the judgments cited above, the plaintiff is entitled to pendente lite interest @ 18% per annum from the date of filing of the suit till the realization of the amount.
ISSUE NO. 2:
29.7 In view of my above discussion, this issue is decided in favour of the plaintiffs and against the defendant. The plaintiffs are entitled to interest at the rate of 18% per annum on mesne profits from the date of filing of the suit till realization of the amount.
ISSUE NO.3:
Whether the defendant is entitled to deduct any amount in respect of removal of pantry and relocation of electricity generator from the amount which they are liable to be paid to the plaintiff, if the issues No.1 & 2 are decided in favour of the plaintiff? OPD
30. The onus of proving this issue is upon the defendant, however, defendant did not lead any evidence and as such, this issue is decided against the defendant and in favour of the plaintiffs.
RELIEFS:
31. For the convenience, this Court has taken the date of awarding of mesne period from 01.09.2008 in Soni Dave Suit as tenancy was terminated vide notice dated 08.08.2008. Similarly, CS DJ No. 9346/16 & 9347/16 Page 142 of 144 in Berar suit, this Court has taken the date of awarding of mesne period from 01.10.2008 as tenancy was terminated vide notices dated 22.08.2008 and 26.08.2008. Therefore, the Plaintiffs shall be entitled for the mesne profits/ damages/ use and occupation charges as per table given hereunder:-
IN SONI DAVE SUIT :
Mesne Profits/ Damages From To Amount 01.09.2008 31.08.2009 Rs. 2,66,400/- per month 01.09.2009 31.08.2010 Rs. 3,06,360/- per month 01.09.2010 31.08.2011 Rs. 3,52,314/- per month 01.09.2011 31.08.2012 Rs. 4,05,161/- per month 01.09.2012 31.08.2013 Rs. 4,65,935/- per month 01.09.2013 31.08.2014 Rs. 5,35,825/- per month 01.09.2014 31.08.2015 Rs. 6,16,199/- per month 01.09.2015 31.08.2016 Rs. 7,08,629/- per month 01.09.2016 18.10.2016 Rs. 8,14,923/- per month IN BERAR SUIT :
Mesne Profits/ Damages From To Amount 01.10.2008 30.09.2009 Rs. 14,48,550/- per month 01.10.2009 30.09.2010 Rs. 16,65,832/- per month 01.10.2010 30.09.2011 Rs. 19,15,707/- per month 01.10.2011 30.09.2012 Rs. 22,03,063/- per month 01.10.2012 30.09.2013 Rs. 25,33,522/- per month 01.10.2013 30.09.2014 Rs. 29,13,550/- per month 01.10.2014 30.09.2015 Rs. 33,50,583/- per month 01.10.2015 30.09.2016 Rs. 38,53,170/- per month 01.10.2016 18.10.2016 Rs. 44,31,146/- per month 31.1 The amount already paid by the defendant to the plaintiff towards mesne profits/damages in terms of order dated CS DJ No. 9346/16 & 9347/16 Page 143 of 144 18.05.2016 of Delhi High Court shall be adjusted against the total of the mesne profits/ damages awarded hereinabove in both the suits.
31.2 The defendant is directed to pay to the plaintiff interest @ 18% per annum simple from the end of the month for which the mesne profits are payable on the differential balance amount of the mesne profits/ damages till the actual realisation.
31.3 Costs of the suit is also awarded to the plaintiffs.
32. The plaintiff shall furnish the deficient court fee on the mesne profits/ damages awarded. The decree shall be executed after the deficient court fee is furnished.
33. Decree sheet be prepared accordingly. A copy of this common judgment duly signed is placed in both the above mentioned suits.
34. File be consigned to record room.Digitally signed
Pronounced in the open court Pooran by Pooran chand on 11.04.2026 chand Date:
2026.04.11 16:49:59 +0530 (POORAN CHAND) DISTRICT JUDGE-05, SOUTH, SAKET COURTS, NEW DELHI CS DJ No. 9346/16 & 9347/16 Page 144 of 144