Delhi District Court
M/S Round The Clock Stores Ltd vs M/S Sewa International Fashions Ltd on 19 November, 2014
IN THE COURT OF DR. ARCHANA SINHA
ADDL. DISTRICT & SESSIONS JUDGE (CENTRAL - 03)
TIS HAZARI COURT/DELHI
Date of institution : 30.10.2005
Judgment reserved on : 12.11.2014
Judgment delivered on : 19.11.2014
Suit No. 356/12 Unique Case ID No.02401C0058272006
M/s Round The Clock Stores Ltd.
Having its registered office at
32, Hanuman Road, New Delhi110001 ....Plaintiff
Versus
M/s Sewa International Fashions Ltd.
'MGF House' 17B Asaf Ali Road,
New Delhi - 110002 ....Defendant
J U D G M E N T
1. This is a suit for declaration, specific performance and injunction filed by M/s Round The Clock Stores Ltd., the plaintiff against M/s Sewa International Fashions Ltd., the defendant.
2. In nutshell, the brief resume of the case of the plaintiff is that M/s Round The Clock Stores Ltd., the plaintiff, is a Limited Company duly incorporated under the Companies Act, 1956 having its office at Suit No. 356/12 M/s Round The Clock Stores Ltd. Vs. M/s Sewa International Fashions Ltd. 1 32, Hanuman Mandir, New Delhi - 110001, and has been running various casual dining/fast food restaurants in and around Delhi under the trade name of 'Mircheez' and that the suit is being represented by one Sh. Gaurav Jain, one of the Directors of the company, who was authorized to sign, verify and execute the plaint, on behalf of the plaintiff vide the Board Resolution dated 02.01.2006.
3. It is averred that the defendant approached various business houses including the plaintiff company for booking of the space in their City Square Mall, Rajouri Garden, New Delhi110027, for a particular food counter therein and the plaintiff booked a space in food counter of the defendant bearing food counter No.8 in the City Square Mall, having an area of 317 Sq. feet approximately, specifically shown in red colour in the site plan (hereinafter referred as 'the suit premises') and had entered into an agreement dated 02.12.2005 for leasing the suit premises in question.
Also that said agreement dated 02.12.2005 incorporating all the terms and conditions of the lease was executed on 07.12.2005 and a sum of Rs.51,000/ as token money was paid by a cheque No. 773782 dated 02.12.2005 drawn on American Express Bank Ltd., Suit No. 356/12 M/s Round The Clock Stores Ltd. Vs. M/s Sewa International Fashions Ltd. 2 New Delhi and as per the terms of the agreement, the lease in respect of the suit premises was for an initial period of three years with option to renew/extend for another two terms of the years and it was agreed that the parties shall execute a formal lease agreement in respect of the suit premises in question and that after execution of formal lease agreement, the defendant will allow 45 days' time for carrying out fit out activities from the date of handing over the possession of the site and during such period of 45 days' no rent would be charged.
4. Further that the defendant had sent a copy of draft lease agreement to the plaintiff for consideration and the plaintiff had suggested some modifications therein for finalization of the terms of the lease and the execution of formal lease agreement and that vide email letter dated 21.12.2005 the defendant called upon the plaintiff to start the fit out work pending execution of the formal lease agreement and the plaintiff responded vide letter dated 24.12.2005, accepting the offer given by the defendant to start renovations pending execution of the final lease agreement and reaffirmed to complete the interiors and fit out work within 45 days' taking over the possession of the premises for the said purposes. Suit No. 356/12 M/s Round The Clock Stores Ltd. Vs. M/s Sewa International Fashions Ltd. 3
5. And that the defendant instead of handing over the possession of the suit premises to the plaintiff to carry out the interiors, cancelled the booking of the suit premises vide letter dated 27.12.2005 and vide letter dated 28.12.2005 returned the advance of Rs.51,000/ vide a cheque enclosed therewith and that the unilateral cancellation was uncalled for. Hence the suit.
6. The defendant through its contra pleadings in the written statement raised preliminary objections that the claim in the suit is based on the Letter of Intent dated 02.12.2005 (hereinafter referred as 'LOI') executed on 07.12.2005 between the parties and the said LOI was not a concluded contract and the formal contract was to be executed that was never executed between the parties and thus, the LOI has not given any right to the plaintiff to enforce it. Also that there was an Arbitration agreement in the contract and civil court has no jurisdiction to entertain the suit and the suit was bad within the several provisions of Specific Relief Act, 1963.
7. On merits, all the allegations made in the suit were denied pleading that the suit is liable to be dismissed in limine as the Letter Suit No. 356/12 M/s Round The Clock Stores Ltd. Vs. M/s Sewa International Fashions Ltd. 4 of Intent was not determinable to seek any specific performance under the Specific Relief Act.
8. Replication has been filed on behalf of plaintiff to the written statement filed by the defendant, in which the averments made in the written statement have been denied and those made in the plaint have been reiterated as correct.
9. On the basis of the pleadings vide order dated 04.11.2009, the following issues were framed :
ISSUES
(i). Whether the plaintiff is entitled for the decree of declaration, as prayed? OPP
(ii). Whether the plaintiff is entitled for the specific performance of the agreement dated 02.12.2005 executed on 07.12.2005, as prayed? OPP
(iii).Whether the plaintiff, in the alternative, is entitled for the recovery of Rs.8,38,500/ being the damages along with the interest @ 18% p.a from the date of suit till realization from the defendant, as prayed? OPP
(iv). Whether the plaintiff is entitled for the decree of permanent injunction, as prayed? OPP
(v). Whether the suit of the plaintiff is without any cause of action? OPD
(vi). Whether the suit of the plaintiff is not maintainable? OPD
(vii).Whether the suit is not properly valued for the purposes of court fee and jurisdiction, if so, its effects? OPD
(viii).Relief.
10. For proving its case, the plaintiff has examined Sh. Udhister Khatri as PW1, who produced his evidence by way of an affidavit Ex.PW1/A and has relied on the documents Ex. PW1/1 to 11 Suit No. 356/12 M/s Round The Clock Stores Ltd. Vs. M/s Sewa International Fashions Ltd. 5 viz:
Ex. PW1/1 is the copy of the resolution dated 02.10.2006, Ex. PW1/2 is the site plaint of the property in question, Ex. PW1/3 is the original agreement dated 02.12.2006, Ex. PW1/4 is the office copy of the letter dated 07.12.2006 along with the photocopy of cheque for Rs.51,000/, Ex. PW1/5 is the original receipt dated 08.12.2006, Ex. PW1/6 is the copy of the draft lease agreement, Ex. PW1/7 (colly.) is the office copy of the letter dated 24.12.2005 along with the proof of its posting and courier receipt, Ex. PW1/8 & 9 are the original letters dated 27.12.2005 & 28.12.2005 respectively, Ex. PW1/10 is the office copy of the letter dated 30.12.2005 along with its original postal receipt and original AD card & Ex. PW1/11 is the Annexure 'A' providing the details of losses suffered by the plaintiff.
11. Thereafter, in support of his defence, the defendant has examined its Authorized Representative Sh. Gopal Verma as DW1, who produced his evidence by way of an affidavit Ex.DW1/A and has relied on the documents Ex. DW1/1 & 2 & Mark1 viz:
Ex. DW1/1 is the resolution dated 17.01.2001, Ex. DW1/2 is the print out of email dated 08.12.2005 & Mark1 is the copy of the lease agreement dated 23.01.2006
12. I have gone through the records meticulously in the light of the contentions of Sh. P.K. Jain and Sh. Sanjay Sahni, Ld. counsels Suit No. 356/12 M/s Round The Clock Stores Ltd. Vs. M/s Sewa International Fashions Ltd. 6 for the plaintiff and Sh. Mohd. Rashid, Ld. Counsel for the defendant and have given my thoughtful consideration to the authorities relied upon.
13. My issuewise findings are as below:
Issue No. (vii) Whether the suit is not properly valued for the purposes of court fee and jurisdiction, if so, its effects? OPD Vide order dated 29.03.2014 on the statements of the Ld. counsels of both the parties, this issue was permitted to be dropped and thus, this issue needs no observation, findings or decision.
14. Issue Nos. (i), (ii) & (iv)
(i) Whether the plaintiff is entitled for the decree of declaration, as prayed? OPP
(ii) Whether the plaintiff is entitled for the specific performance of the agreement dated 02.12.2005 executed on 07.12.2005, as prayed? OPP
(iv) Whether the plaintiff is entitled for the decree of permanent injunction, as prayed? OPP All these three issues are relating to the claim of the plaintiff in the suit and thus, are interrelated, interdependent and based on the same evidence of the parties, thus, all these three issues are taken together.
Suit No. 356/12 M/s Round The Clock Stores Ltd. Vs. M/s Sewa International Fashions Ltd. 7 The onus of proving these issues was laid on the plaintiff.
15. To establish these issues, the plaintiff has pleaded in para2 to 11 of the plaint and deposed through his affidavitin evidence Ex. PW1/A that the plaintiff company that runs various fast food restaurants under the trade name of 'Mircheez', had entered into an agreement dated 02.12.2005, executed on 07.12.2005 vide Letter of Intent dated 07.12.2005 in respect of the lease of the tenanted premises (one food counter) and paid a sum of Rs.51,000/ as a token money vide cheque No.773782 dated 02.12.2005 drawn on American Express Bank Ltd., New Delhi. The Letter of Intent dated 07.12.2005 and the receipt of the payment of the amount are exhibited as Ex. PW1/3 to 5.
16. It is also deposed that the plaintiff has always been ready and willing to perform its part of agreement dated 07.12.2005 but the defendant has failed to perform its part inspite of repeated requests and demands and thus the plaintiff is entitled for a declaration, specific performance of the agreement and of the injunction and/or in alternative a relief of damages of an amount to the tune of Rs. 8,38,500/ in lieu of the loss incurred as detailed in AnnexureA i.e Suit No. 356/12 M/s Round The Clock Stores Ltd. Vs. M/s Sewa International Fashions Ltd. 8 Ex. PW1/11, in case the relief of declaration, specific performance and injunction cannot be granted.
17. To contest the claim, the defendant has pleaded in its contrapleadings by way of written statement that the claim of the plaintiff is based upon the letter of intent dated 02.12.2005 executed on 07.12.2005 between the parties and such letter of intent was not a concluded contract and therefore, cannot be enforced as on finalization a detailed lease agreement was to be executed and signed within 10 days of signing of such letter of intent and the said lease agreement had never been executed upon between the parties.
18. The defendant to prove its plea has examined Sh. Gopal Verma as DW1 who has deposed in paras2, 6 & 7 of the affidavit Ex. DW1/A that the plaintiff had booked a space for lease in the food counter No.8 Square City Mall, Rajouri Garden, New Delhi and had executed a letter of intent dated 02.12.2005 on 07.12.2005 on payment of token money of Rs.51,000/ and was to execute a detailed lease deed in a time bound manner and as the formal lease agreement could not be executed upon between the time span, thus, Suit No. 356/12 M/s Round The Clock Stores Ltd. Vs. M/s Sewa International Fashions Ltd. 9 vide letter dated 27.12.2005, the booking of the premises in question was cancelled and the booking amount of Rs.51,000/ was refunded by a cheque No.864895 dated 27.12.2005.
19. Sh. Mohd. Rashid, Ld. counsel for the defendant has raised the contention that no lease agreement as a concluded contract has been executed upon within the time span given to the plaintiff and that the letter of intent dated 02.12.2005 cannot be legally enforced being not a concluded contract.
He has relied upon the law settled in AIR 1976 SC 2621, 1987 CCC 257, 1989 CCC 177, 1997 (1) LOR 96 and 1993 (2) PLR
262.
20. Sh. P. K. Jain, Ld. counsel for the plaintiff has submitted that the letter of intent dated 02.12.2005 executed on 07.12.2005 was a concluded contract as it was containing all the necessary terms and conditions of the agreement entered upon by the parties and the execution of the lease deed within 10 days was only a mere formality and nonexecution of such lease agreement will not affect the rights of the plaintiff enforceable under the law of contract on the Suit No. 356/12 M/s Round The Clock Stores Ltd. Vs. M/s Sewa International Fashions Ltd. 10 basis of letter of intent above mentioned. It has further submitted that time was never treated as an essence of the contract between the parties and thus, such plea is not tenable in the light of terms and conditions of the letter of intent and further communications between the parties.
He has relied upon the law settled in M/s Nanak Builders & Investors Pvt. Ltd. Vs Vinod Kumar Alag AIR 1991 Delhi 315 Suraj Bhan Vs Om Prakash & Anr. AIR 1976 SC 640 & M/s Round The Clock Stores Ltd. Vs M/s Aggarwal Entertainment Pvt. Ltd. in CS (OS) No. 1194/2006 Delhi High Court (uncited)
21. It is observed that the parties have not disputed either the facts regarding booking of the space by the plaintiff or the documents or communications placed on record and relied upon by the parties except for one letter dated 24122005 Ex. PW1/7 (colly), produced by the plaintiff, receipt of which is disputed by the defendant vide its letter dt. 02012006.
Also that only a basic question raised relating to the Letter of Intent dated 02.12.2005 executed on 07.12.2005 (hereinafter referred as 'LOI') as to 'Whether such LOI can be treated as a concluded contract or not'? Suit No. 356/12 M/s Round The Clock Stores Ltd. Vs. M/s Sewa International Fashions Ltd. 11
22. The plaintiff has asserted that the LOI was a concluded contract, executed and signed by both the parties, binding in nature of contract as of any general contract and that the plaintiff was always willing and is willing to enforce his part of obligations under such contract and the defendant be directed for the specific performance of such contract as the same is having a binding force.
23. Whereas the defendant has vehemently challenged the claims of the plaintiff basically on the ground that LOI is not valid and binding contract between the parties and it can not be enforced in the eyes of law and that as per the aforesaid LOI, the parties have agreed that a detailed formal lease agreement was to be signed by both the parties within 10 days of signing of the said LOI. Also that no such lease agreement was ever executed between the parties and thus, there is no question of specific performance of the LOI dated 07122005.
24. Thus, the short question on controversy need to be determined for deciding the issues No. (i), (ii) & (iv) is as to Whether the LOI dated 07122005 was a contract having a binding force? Suit No. 356/12 M/s Round The Clock Stores Ltd. Vs. M/s Sewa International Fashions Ltd. 12
25. On appreciation of evidence of the parties, it is observed that PW1, the sole witness of the plaintiff has testified that the original agreement dated 02122006 Ex. PW1/3 was executed only on 07122005 and the plaintiff has paid a sum of Rs. 51,000/ as a token money vide cheque No. 773782 dated 02122005 receipt of which was Ex. PW1/5.
Further, it was deposed that the defendant vide letter dated 27122005 ( Ex. PW1/8) informed the cancellation of the booking of the food counter and returned the advance of Rs. 51,000/ vide a cheque through letter dated 28122005 ( Ex. PW1/9), enclosed therewith the letter.
26. It is also deposed that it was agreed that the parties shall execute formal lease agreement in respect of the premises in question within 10 days of signing of the LOI and that after execution of the formal lease agreement, the defendant will allow 45 days' time to the plaintiff for carrying out fitout activities from the date of handing over the possession of the site.
Suit No. 356/12 M/s Round The Clock Stores Ltd. Vs. M/s Sewa International Fashions Ltd. 13
27. Also that after the execution of the agreement dated 02122005 executed on 07122005, the defendant sent a copy of draft lease agreement to the plaintiff for consideration and that after going through the said draft lease agreement, the plaintiff suggested some modifications therein so that the terms of lease may be finalized and the formal lease agreement was to be executed at the earliest in pursuance to the LOI dated 02122005 executed on 07122005. The copy of the draft lease agreement is Ex. PW1/6.
28. It is admitted by PW1, during the course of examination, that 'the Ex. PW1/3 (LOI) was with regard to booking of food counter' and 'that there was no other agreement executed between the parties except LOI Ex. PW1/3' 'that the defendant has sent a draft lease agreement Ex. PW1/6' 'the terms and conditions mentioned in Ex. PW1/6 i.e. the Draft Lease Agreement were 'a little bit different' from that of Ex. PW1/3 (LOI)' 'the clause 2 (a), (b), (c), (d), (f), clause 7 (c), are the terms and conditions which are different that of Ex. PW1/3' 'there were a few deem pencil marks and noting on Ex. PW1/6 for carrying out corrections or consideration' he has seen the copy of Ex. PW1/6 sent to the defendant along with the summons in the file of the defendant's Suit No. 356/12 M/s Round The Clock Stores Ltd. Vs. M/s Sewa International Fashions Ltd. 14 counsel which bears the same marks and noting for corrections Ex. PW1/DX is clear and readable copy of Ex. PW1/6 the terms and conditions as mentioned in Ex. PW1/6 (and of Ex. PW1/DX) were not settled between the parties and as such the disputes between the parties arose.
Also that, 'the cheque for Rs.51,000/ bearing No.864895 dated 27.12.2005 drawn on .................... (Ex. PW1/D5) ... given by the defendant was not encashed by us'.
29. From the ocular evidence of Sh. Udhister Khatri, PW1, the sole witness produced by the plaintiff, it is observed that the Ex. PW1/3 (LOI) dated 02.12.2005 executed on 07.12.2005 admittedly was with regard to booking of food counter No.8 in City Square Mall, Rajouri Garden, New Delhi and that there was no other agreement executed between the parties except LOI, Ex. PW1/3.
Also that the document Ex. PW1/3 is not in dispute by either party for its contents or for its execution and that the LOI Ex.PW1/3 was executed by the parties for booking of a food counter in the shopping complex.
30. Further it is observed that as per evidence of PW1, the Suit No. 356/12 M/s Round The Clock Stores Ltd. Vs. M/s Sewa International Fashions Ltd. 15 defendant had sent another document i.e lease agreement Ex. PW1/6 (also exhibited as Ex. PW1/DX, produced and relied upon by the defendant) to the plaintiff for finalizing/consenting the terms and conditions of the lease agreement that was to be executed between the parties within 10 days of execution of LOI Ex. PW1/3 in terms of its last clause that reads as under:
'a detailed agreement is to be signed by both parties within 10 days of signing of this LOI'.
'Both RTCSL (the plaintiff herein) and M/s Sewa International Fashions Ltd. (the defendant herein) will be bound by the terms of this LOI on the signing of the same'.
31. Thus, the LOI Ex. PW1/3 is a clear consensus of both the parties that within 10 days of signing of this LOI, a detailed agreement was to be signed by both the parties.
32. On appreciating the evidence of PW1, the sole witness, it is observed that the so called detailed agreement (lease agreement) Ex. PW1/6 (Ex. PW1/DX) was sent by the defendant to the plaintiff on the very next day i.e on 08.12.2006 and such document i.e. Lease Deed Ex. PW1/6 was never finalized or executed as on such document there were certain cuttings and remarks that were given by Suit No. 356/12 M/s Round The Clock Stores Ltd. Vs. M/s Sewa International Fashions Ltd. 16 the plaintiff in the form of suggestions or corrections to arrive at the 'consensus' of the terms and conditions of the lease deed to be executed between the parties within 10 days of execution of LOI Ex. PW1/3.
PW1 has testified in the court that the terms and conditions as mentioned in Ex. PW1/6 (and Ex. PW1/DX) were not settled between the parties and as such the disputes between the parties arose.
It is also admitted that the terms and conditions mentioned Ex. PW1/6 were a 'little bit different' from that LOI Ex. PW1/3. It was specified in detail that the clauses 2 (a), (b), (c), (d), (f), clause 7 (c), are the terms and conditions which are different to that of (LOI) Ex. PW1/3 and that there were a few deem pencil marks and noting on Ex. PW1/6 for carrying out corrections or considerations.
33. Thus, it is clear from the facts established on record that a booking of a food counter vide LOI Ex. PW1/3 was made by the plaintiff with the defendant and as per such LOI, the parties were to enter into a lease agreement within 10 days of execution of the LOI on 07.12.2005 but such lease agreement were never finalized to arrive at a 'consensus' on the terms of lease for creating the lease Suit No. 356/12 M/s Round The Clock Stores Ltd. Vs. M/s Sewa International Fashions Ltd. 17 regarding the food counter booked by the plaintiff but due to some disputes arose between the parties, the lease agreement Ex. PW1/6 could never executed to enter into lesseelessor relations. It is fairly admitted by PW1 that except execution of LOI Ex. PW1/3, no other 'agreement' was executed between the parties at any point of time.
34. It is further observed that the booking amount of Rs. 51,000/ received by the defendant, was admittedly returned vide cheque No.864895 dated 27.12.2005 drawn on Bank of India, Asaf Ali Road, New Delhi but that was not encashed by the plaintiff, as per testimony of PW1.
35. Thus, it is established that the defendant, on executing the LOI Ex. PW1/3 with the plaintiff, has 'promptly acted' to proceed further in the directions of executing the lease agreement with respect to the booking of food counter No.8 booked by the plaintiff vide LOI Ex. PW1/3. But it is clear that LOI though it mentions certain terms but the parties had intentions to be bound by such terms only on execution of a detailed lease agreement within 10 days, that was to be executed between the parties.
Suit No. 356/12 M/s Round The Clock Stores Ltd. Vs. M/s Sewa International Fashions Ltd. 18 The records reveal res ipso facto (things speaks itself) that LOI was only a formal expression of 'intentions' of the parties to enter into a 'lease agreement' qua food counter No.8, to be executed upon within 10 days of signing of the LOI for entering into a contract (agreement) regarding the lease of such food counter to be leased out to the plaintiff by the defendant on certain terms to be agreed between the parties.
Also it is an established fact on records that the terms of lease agreement Ex. PW1/6, as proposed, were never finalized and the parties could not arrive at a 'consensus' on the terms of lease agreement at any point of time, to finalize the lease deed to be executed by the parties, to act upon any such 'contract' of lease.
Ld. Counsel for the plaintiff has raised a contention that the LOI Ex. PW1/3 was containing all the essential ingredients of contract and thus despite naming as LOI it would not be deprived it to be called as a contract and the plaintiff is entitled to seek specific performance of it.
36. In the support of the contentions raised Ld. counsel for the Suit No. 356/12 M/s Round The Clock Stores Ltd. Vs. M/s Sewa International Fashions Ltd. 19 plaintiff has heavily relied on an authority titled as M/s Nanak Builders & Investors Pvt. Ltd. Vs Vinod Kumar Alag AIR 1991 Delhi 315, submitting that 'a mere heading or title of a document cannot deprive the document of its real nature and that the document titled as receipt acknowledging the receipt of earnest money for sale of plot containing other essential ingredients of contract embodied therein, is a contract and a vendee can seeks specific performance'.
37. It is observed that the judicial opinion expressed therein is not applicable to the present facts and circumstances as the document referred in such authorities above mentioned did not contain any mention that a formal agreement to sale will be executed whereas in the instant case the LOI Ex. PW1/3 sought to be specifically performed as contract, contains a specific stipulation to that effect that a detailed lease agreement shall be executed by the parties within 10 days of signing of such LOI and the parties shall be bound by the terms only on execution of such lease agreement. Thus, the law settled therein has no application for the instant case, being both the cases based on distinguishable facts regarding the contents of the document.
Suit No. 356/12 M/s Round The Clock Stores Ltd. Vs. M/s Sewa International Fashions Ltd. 20
38. Also, the facts of the case titled as CIT Punjab & Haryana & Ors. Vs M/s Panipat Woolen & General Mills Company Ltd. AIR 1976 SC 640, and of the instant case are absolutely distinct and distinguishable, as the transactions mentioned therein the case in the authority were not at all compatible to the documents in question of the instant case, thus, the judicial opinion expressed therein is not helpful to the plaintiff in view of the observations of the Apex Court that 'in order to construe an agreement, the court has to look to substance or the essence of it rather than its form'. In the light of such view, when the facts of the instant case are looked into, it is observed that in the substance and essence of the LOI Ex. PW1/3, basically while executing such document, the intentions of the parties were only to book a space in the Mall and that only on finalizing the terms and conditions of a lease agreement, the lease deed was to be executed between the parties within 10 days of such booking and it is clear from the facts established on record that the parties had never arrived at a 'consensus' to execute the lease agreement to enter into the lessorlessee relationship qua the suit property i.e. the food counter in question. Suit No. 356/12 M/s Round The Clock Stores Ltd. Vs. M/s Sewa International Fashions Ltd. 21
39. It is a well settled principle of law as settled in Von HatzfeldtWlldenburg V. Alaxander ((1912) 1 Ch 284 at p.289) and that view was also approved in Shankarlal Narayandas Mundade V. New Mofussil Co. Ltd. (AIR 1946 PC 97), wherein it was observed :
"It is a question of construction whether the execution of the further contract is a condition or term of the bargain or whether it is a mere expression of the desire of the parties as to the manner in which the transaction 'already agreed' to will 'in fact' go through."
It is clearly established as per PW1, that the LOI Ex.PW1/3 was different on certain clauses to that of document Ex.PW1/6, the lease deed, proposed to be signed and the terms of lease deed were never agreed of.
40. Also the principle laid in case titled as Madras 39 Maheshwari Metals and Metal Refinery, Bangalore2 Vs. The Madras State Small Industries Corporation Limited cited as AIR 1974 Madras 39 is also worth mentioning wherein the similar Suit No. 356/12 M/s Round The Clock Stores Ltd. Vs. M/s Sewa International Fashions Ltd. 22 situations and circumstances were dealt with wherein the successful tenderer was required to execute an agreement within 10 days of the announcement of the acceptance of the tenderer for fulfillment of the contract and it was held :
'that the intention of the parties was that, till such an agreement was executed, there was no contract'
41. In the instant case, on executing the LOI for booking of the commercial place in question on payment of the token amount, the plaintiff was required to execute a detail lease agreement within 10 days of the execution of the LOI for entering into the lease agreement and such intentions were clearly depicted in the conduct of the defendant who had sent a detailed lease agreement Ex.PW1/6, the very next day of execution of LOI, for approval of the terms of lease to be executed upon but such terms were not finalized by the plaintiff and within 10 days no lease agreement was executed to construe that there could be a binding contract of lease between the parties.
42. Ld. Counsel for the plaintiff has raised a contention that the LOI was a concluded contract as it was comprising of all the terms and conditions of lease and signing of a detailed lease agreement Suit No. 356/12 M/s Round The Clock Stores Ltd. Vs. M/s Sewa International Fashions Ltd. 23 was only a formality and that the defendant has wrongly, illegally and unilaterally cancelled the booking of the food counter vide its letter dated 27.12.2005 and wrongly has returned its booking amount vide letter dated 28.12.2005 and that the plaintiff is entitled for the specific performance of the LOI that was a binding contract.
He has heavily relied on the orders dated 29.02.2008 passed in I.A. No. 6507/2006 in C.S.(OS) No. 1194/2006 of Hon'ble High Court in case titled as M/s. Round the Clock Stores Ltd. Vs. M/s. Aggarwal Entertainment Private Limited submitting that vide such orders the I.A. Seeking interim relief under Order 39 Rule 1 & 2 of CPC was allowed observing that the letter dated 09.03.2004 was concluded contract and that such letter dated 09.03.2004 was exactly similar to the LOI Ex.PW1/3 of this case.
43. On careful perusal of the observations made by the Hon'ble High Court in the case referred above, in the light of the facts of the instant case, it is observed that certain facts and conduct of the parties and the communications interse the parties are the decisive factors to determine as to whether the execution of a document was only a formality or was a condition precedent for coming into Suit No. 356/12 M/s Round The Clock Stores Ltd. Vs. M/s Sewa International Fashions Ltd. 24 existence the contract between the parties to determine as to 'whether the document i.e. LOI Ex.PW1/3 in question could be treated as conclusive and binding contract on not'.
44. In a case titled as J. K. Industries Vs. Mohan Investment cited as AIR 1992 Delhi 305, certain principles were laid to determine whether the document by itself could be an agreement or a contract binding in nature and it was held that :
It will depend on the peculiar facts of particular case whether parties have entered into a contract and the execution of a document was only a formality and was not a condition precedent for coming into existence the contract between the parties.
45. Also, in the case titled as Dhulipudi Namayya Vs. Union of India cited as AIR 1958 Andh. Prad 533, it was held that in order to decide these matters, the entire negotiations and the correspondence on which the contract depends must be considered.
46. Further, it is a well settled proposition of law that before granting the equitable relief of specific performance within the provisions of the Specific Relief Act, there has to be a concluded contract, oral or in writing, with certainty of its terms and the party Suit No. 356/12 M/s Round The Clock Stores Ltd. Vs. M/s Sewa International Fashions Ltd. 25 seeking to performance of a contract must satisfy all the requirements necessary for seeking such relief in equity and in exercising discretion, it is obligatory to the court to take into consideration all the circumstances of the case, conduct of the parties and the respective interests under the contract.
Also, that the basic tenet of a contract is that the parties must be 'adidem' on the essential terms of the contract.
47. On taking into consideration all the facts and circumstances, the conduct of the parties and the subsequent communications of the instant case in comparison to that of the case vide C.S. (OS) No. 1194/2006, relied upon, it is observed that though both the cases are relating to the facts of booking of a commercial space in a Mall and payment of a token money on executing one letter/correspondence signed by both parties, but the facts and circumstances subsequent thereupon to show the conduct of the parties and their adidem status on the terms of lease agreement were entirely different to lead to different conclusions in the light of above stated principles laid on to adjudicate upon a case of specific performance.
Suit No. 356/12 M/s Round The Clock Stores Ltd. Vs. M/s Sewa International Fashions Ltd. 26
48. In the case vide C.S. No. 1194/2006, the plaintiff had booked the space in the Mall vide letter dated 09.03.2004 and paid a token money of Rs.51,000/ to the defendant but the execution of the lease was dependent on the precondition that the defendant will provide the mall opening schedule and thus, the defendant was under an obligation to further communicate the plaintiff about the schedule.
Whereas, in the instant case, there was no contingent event for executing the lease deed on happening of any particular event like Mall opening schedule as was in that case, and in this case there was a stipulation in the Letter of Intent (LOI) Ex.PW1/3 dated 02.12.2005 executed on 07.12.2005 of execution of detailed lease agreement within 10 days and thus, the opening of food counter in the Mall was not dependent on any contingent event of its opening on any scheduled date to be provided by the defendant on a future date and thus, even the facts and circumstances of the cases were not similar.
49. Also the conduct of the parties and the subsequent Suit No. 356/12 M/s Round The Clock Stores Ltd. Vs. M/s Sewa International Fashions Ltd. 27 communications of the parties were of great relevance in that case to determine as to whether the communication dated 09.03.2004 could be treated as binding contract or not and as to whether the execution of the lease deed was treated as condition precedent to contract, by the parties or not.
50. In such case it was the plaintiff who had sent a number of communications to the defendant but the defendant has not addressed even a single communication in response or even never communicated the Mall opening schedule.
51. Whereas, in the instant case, the subsequent communications between the parties reveal that it was the defendant who was continuously contacting the plaintiff to proceed further for the execution of the lease deed regarding finalization of the terms of lease and the defendant was asking the plaintiff vide its communications to execute lease agreement at the earliest to arrive at consensus on the terms of the lease for executing the concluded contract of lease between the parties, but the plaintiff was not responding at all to any of the communications on one or the other pretext submitting that the person authorized to act upon was out of Suit No. 356/12 M/s Round The Clock Stores Ltd. Vs. M/s Sewa International Fashions Ltd. 28 station in Bangalore or was sick however, relying only a single communication dated 24.12.2005 allegedly sent to the defendant who has denied of receiving of any such communication and the plaintiff failed to establish its service on the defendant.
It is observed that the parties were in communication through email but admittedly there was no email communication of the letter dated 24.12.2005 allegedly sent by post by the plaintiff to the defendant.
52. It was observed that all the communications between the parties whether by post or by email were admittedly received without any dispute except that of the letter dated 24.12.2005. But from the communications between the parties, it is clear that it was the defendant who was eager to get the lease deed executed.
53. Further, it is observed that in the instant case, the defendant was very much 'prompt' in addressing the finalization of terms of lease by sending the draft lease agreement on the very next day on 08.12.2005 of execution of LOI (executed on 07.12.2005) for finalization of the terms of lease deed to the plaintiff so that the Suit No. 356/12 M/s Round The Clock Stores Ltd. Vs. M/s Sewa International Fashions Ltd. 29 parties could be adidem, on the terms of the lease, to enter into the lease agreement, to make it a binding contract. Thus, the subsequent communications between the parties and the conduct / response of the parties were entirely different in both the cases viz the instant case and the case vide C.S. No. 1194/2006 relied upon by the plaintiff to determine whether the execution of the lease deed was condition precedent for the binding contract between the parties.
54. Thirdly, in the case vide C.S. No. 1194/2006, the cheque of the booking amount of Rs.51,000/ received by the defendant was duly encashed and that amount was never been returned and it continued to be with the defendant to reflect an intention to treat the communication dated 09.03.2004 was treated as concluded contract or not.
Whereas, in the instant case the defendant had return the token money of Rs.51,000/ vide a cheque vide its letter dated 27.12.2005, just within 10 days of expiry of the period of executing the lease deed, that could not be executed between the parties as some dispute arose, as admitted by PW1, and the defendant informed the plaintiff with the return of the booking amount that the Suit No. 356/12 M/s Round The Clock Stores Ltd. Vs. M/s Sewa International Fashions Ltd. 30 booking has been cancelled and the cheque was admittedly duly received by the plaintiff.
Therefore, even the conduct of the parties in both the cases were entirely distinguishable facts.
55. More so, in the case vide C.S. No. 1194/2006, the issue before the court was to decide an interim relief that was to be determined, as to whether there was a prima facie case, balance of convenience or irreparable loss in favour of the plaintiff or not whereas the instant case was of granting of the equitable relief of specific performance within the provisions of the Specific Relief Act and for that there has to be a concluded contract, oral or in writing, with certainty of its terms and the party seeking to performance of a contract must satisfy all the requirements necessary for seeking such relief in equity and in exercising discretion, it is obligatory to the court to take into consideration all the circumstances of the case, conduct of the parties and the respective interests under the contract and the issues on the basis of evidence of the parties were to be determined regarding the specific relief of performance claimed by the plaintiff to determine the rights and liabilities of the parties. Suit No. 356/12 M/s Round The Clock Stores Ltd. Vs. M/s Sewa International Fashions Ltd. 31
56. Thus, in view of the above discussions on the facts and circumstances, the subsequent communications interse the parties and the conduct of the parties, it is observed that the instant case is absolutely based on the distinguishable facts to that of the one relied upon above referred, thus the judicial opinion expressed therein has no application to the instant case for the proposition of law settled therein to determine as to whether LOI could be treated as concluded contract or not, thus is of no help to the plaintiff.
57. Thus, it is observed that the facts and circumstances of both the cases, one that was relied upon and the other i.e. the instant case, were entirely different and the communications and the conduct of both the parties were entirely different to determine that in the first case referred as an authority, the communication dated 09.03.2004 may be in the nature of finalization of the terms of agreement as the terms of lease might have been agreed by the opposite party in the subsequent communication whereas in the instant case it was clearly admitted by PW1, the sole witness of the plaintiff that on execution of LOI Ex.PW1/3, though it was stipulated in Ex.PW1/3 to execute lease deed within 10 days, but the finalization of terms of lease could never Suit No. 356/12 M/s Round The Clock Stores Ltd. Vs. M/s Sewa International Fashions Ltd. 32 take place despite the draft of lease agreement sent was sent by the defendant to the plaintiff, but the terms of lease could not be finalized as certain corrections / suggestions / considerations were raised by the plaintiff and the parties were not adidem on the terms of lease as the parties that could never concluded or executed upon at any point of time as some dispute arose between the parties.
58. Thus, it is observed that on the basis of above discussions, the facts and circumstances established on record, the conduct of the parties and the communications reveal that in the case in hand on execution of the LOI Ex.PW1/3, before entering into the lease agreement, the parties had to be adadem on the terms of lease before entering into the binding contract of lease and the parties could never reach to consensus for the terms of lease and it leads to only one conclusion that LOI Ex.PW1/3 was not treated as a binding contract by the parties rather an execution of lease agreement was a condition precedent for the parties to enter into a lesseelessor relationship qua the suit property.
59. Thus, the plaintiff could not establish on record that there was a concluded and binding contract / agreement between the Suit No. 356/12 M/s Round The Clock Stores Ltd. Vs. M/s Sewa International Fashions Ltd. 33 parties on the basis of LOI dated 02.12.2005 executed on 07.12.2005. Hence, the plaintiff could not establish that it was entitled for the reliefs claimed in the suit.
Therefore, Issue No. (i), (ii) & (iv) are decided in negative and against the plaintiff.
60. Issue No. (iii) As Issue No. (i), (ii) & (iv) are decided in negative and against the plaintiff, thus no specific observation or finding is required for issue No. (iii) and the same is also decided in negative and against the plaintiff.
61. Issue No.(v) Whether the suit of the plaintiff is without any cause of action? OPD
62. The defendant has taken a plea in the preliminary objections of the Written Statement that the suit of the plaintiff is liable to be dismissed, as one is without cause of action in as much as the booking of the said food court stood terminated due to delays/default on the part of the plaintiff in the compliance of terms Suit No. 356/12 M/s Round The Clock Stores Ltd. Vs. M/s Sewa International Fashions Ltd. 34 and conditions of the letter of intent dated 02.12.2005. Also that the plaint does not disclose any cause of action and no right to sue or seek any relief of permanent or temporary injunction subsists in favour of the plaintiff as per own allegations and documents of the plaintiff itself, in view of provisions of Section 38 & 41 of the Specific Relief Act, 1963.
63. Ld. counsel for the defendants has raised the contentions that all the allegations regarding the specific performance of LOI dated 07.12.2005 do not permit any relief as prayed within the provisions of Specific Relief Act due to the fact that the basic nature of the said LOI is determinable by efflux of time on the date of expiry of the period given therein, submitting that the suit does not disclose any cause for which any relief/action could not be granted and that no liability could be raised against the defendant and hence there was no cause of action.
64. In legal phraseology, the cause of action is a set of facts, sufficient to justify a right to sue, to obtain money, property, or the enforcement of a right against another party. The term also refers to the legal theory upon which a plaintiffs brings suit. It can be any Suit No. 356/12 M/s Round The Clock Stores Ltd. Vs. M/s Sewa International Fashions Ltd. 35 communication notifying the party to whom it is addressed or an alleged fault which resulted in damages from which it originates, often expressed in amount of money, the receiving party should pay/reimburse.
To pursue a cause of action, plaintiff may plead or allege facts in the form of a complaint or the pleadings that initiates a lawsuit. A cause of action generally encompasses both the legal theory (the legal wrong the plaintiff's claims to have suffered) and the remedy (the relief a court is asked to grant).
65. It is a well settled proposition of law that by nature and by definition, 'a cause of action means every fact, which, if traversed, it would be necessary for the plaintiffs to prove in order to support his right to a judgment of the court. In other words, it is a bundle of facts which taken with the law applicable to them gives the plaintiffs a right to relief against the defendants. It must include some act done by the defendants since in the absence of such an act no cause of action can possibly accrue. It is not limited to the actual infringement of the right sued on but includes all the material facts on which it is founded' (Reliance is placed on the observations made in Swamy Atmananda Vs. Swami Bodhananda, AIR 2005 SC 2392; 2005 (3) SCC 734) Suit No. 356/12 M/s Round The Clock Stores Ltd. Vs. M/s Sewa International Fashions Ltd. 36
66. In the above noted facts and circumstances of the case, it is observed that the plaintiff has raised a set of facts to claim a specific performance on the basis of terms of the LOI signed by both the parties stating particular reliefs and in alternative damages allegedly caused to the plaintiff for nonperformance in certain sum of amount against the defendant and the defendant has not specifically denied the execution of LOI rather questioned it on the plea that it was no contract in the eyes of law, however, raising a controversy on another set of facts to contest such claim and as such the cause of action is basically a set of facts that give rise to the plaintiff for raising a cause to take action against the defendant, thus, in the instant case, the plaintiff has placed a set of facts on the basis of which it has claimed certain rights to raise cause of action in the suit against the defendant, thus there exits sufficient facts to assume that there was a controversy based on certain set of facts pleaded by one party and contested by another and thus, a cause of action exists in the suit.
67. Therefore, on the set of facts brought by the plaintiff in the suit, it is duly proved on record that there exists a cause of action in the suit.
Suit No. 356/12 M/s Round The Clock Stores Ltd. Vs. M/s Sewa International Fashions Ltd. 37 This issue no. (v) is decided against the defendant and in favour of the plaintiff.
68. Issue No. (vi)
(vi) Whether the suit of the plaintiff is not maintainable? OPD In view of the findings on Issue Nos. (i), (ii) & (iv) that were decided in negative and against the plaintiff, no specific finding is required on this issue and thus, this is decided accordingly, against the plaintiff and in favour of the defendant.
69. Relief In view of the above observations and findings on the issues above discussed, the suit of the plaintiff is dismissed.
No orders as to costs.
Decree sheet be drawn accordingly.
File be consigned to R/Room.
Announced In the open Court (Dr. Archana Sinha) 19th Day of November, 2014. Addl. District Judge (Central03) Tis Hazari Courts/Delhi 19.11.2014 Suit No. 356/12 M/s Round The Clock Stores Ltd. Vs. M/s Sewa International Fashions Ltd. 38 CS No.356/12 M/s Round The Clock Stores Ltd. Vs M/s Sewa International Fashions Ltd.
19.11.2014 Present: Sh. Sanjay Sahni, Ld. counsel for the plaintiffs.
Sh. Mohd. Rashid, Ld. counsel for defendant.
Vide separate judgment of even date announced in the open court, the suit of the plaintiff is dismissed.
No orders as to costs.
Decree sheet be drawn accordingly.
File be consigned to R/Room.
(Dr. Archana Sinha) Addl. District Judge (Central03) Tis Hazari Courts/Delhi 19.11.2014 Suit No. 356/12 M/s Round The Clock Stores Ltd. Vs. M/s Sewa International Fashions Ltd. 39