Bangalore District Court
M/S Acetech vs Team Thermoformings And Allieds on 29 April, 2025
KABC170006032024
IN THE COURT OF LXXXIII ADDL. CITY CIVIL & SESSIONS JUDGE,
COMMERCIAL COURT, BENGALURU (CCH-84)
Present: Sri S. Sudindranath, LL.M., M.B.L.,
LXXXIII ADDL. CITY CIVIL & SESSIONS JUDGE
BENGALURU.
COM.O.S.No.321/2024
Dated on this 29th day of April 2025
Plaintiff/s M/S ACETECH
A partnership firm registered under the
Indian Partnership Act, having its
registered office at No.B-226, 4th
Cross, 1st Stage, Peenya Industrial
Area, Bangalore - 560058.
Rep. by its Partner
Mr Viveck Jayant Shah
(By Smt. Sneha Nagaraj, Advocate)
// versus //
Defendant/s 1. TEAM THERMOFORMINGS AND ALLIEDS
A partnership firm registered under the
Indian Partnership Act, having its
registered at Plot No.73, Sompura 1st
Stage, Industrial Area,
Nelamangala Taluk,
Bangalore.
2. MADINENI SURESH
R/at 39, 3rd Cross,
Near Sri Krishna Temple
Gyana Jyothi Nagar, Malathahalli
Bangalore 560056.
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KABC170006032024
3. SRI. RAGHAVENDRA SWAMY T.V.
(Deleted)
(D1 & D2 - by Sri. Vamshi Krishna,
Advocate)
(D3 - Deleted)
Date of Institution of suit : 28/02/2024
Nature of the suit : Recovery of money
Date of commencement of : 06/11/2024
recording of the evidence
Date on which the : 29/04/2025
Judgment was pronounced.
: Year/s Month/s Day/s
Total duration
01 02 01
JUDGMENT
This is a suit filed by the Plaintiff Partnership Firm against Defendants No. 1 to 3 of which Defendant No. 1 is the Partnership Firm and Defendants No. 2 and 3 are its Partners, for recovery of sum of Rs. 1 crore along with interest, on the premise that, it is the amount paid as security deposit under a lease deed. Be it noted at this stage itself that after the filing of the suit, Plaintiff filed IA for deletion of Defendant No. 3 which was allowed by Order 3 CT 1390_Com.O.S.No.321-2024_Judgment.doc KABC170006032024 dated 30-10-2024 and therefore Defendant No. 3 now stands deleted from the suit.
2. The case of the Plaintiff is that, Defendant No. 1 is the absolute owner of an industrial site bearing plot No. 73, Sompura, I Stage Industrial Area, Dabbaspete, Nelamangala Taluk, Bangalore measuring 4026.50 sq.m consisting of an industrial shed. The Plaintiff and the Defendant No. 1 entered into a lease agreement dated 1-8-2019 in respect of the said property under which Plaintiff took the same on lease for 36 months from 1-8-2019 to 31-7-2022 by paying security deposit of Rs. 1 crore on the understanding that, no rent is payable in view of the payment of the said security deposit and the said security deposit shall be returned at the time of vacating of the property. It is the further case of the Plaintiff that in June 2022, Defendants requested the Plaintiff to vacate and accordingly on 30-6-2022, Plaintiff vacated the property and handed over the possession to the new tenant. In spite of vacating of the property by the Plaintiff, it is the grievance of the Plaintiff that Defendants have not refunded the security deposit amount of Rs. 1 4 CT 1390_Com.O.S.No.321-2024_Judgment.doc KABC170006032024 crore in spite of several requests and reminders and ultimately Defendants issued a cheque dated 19-9-2023 towards refund of the said security deposit amount of Rs. 1 crore but on deposit of the same, same was dishonoured for the reason payment stopped. Hence for recovery of the said sum of Rs. 1 crore on the ground that it is the security deposit amount paid under the lease agreement dated 1-8- 2019 which was agreed to be refunded and Defendants have defaulted in repayment of the same in spite of Plaintiff having vacated the lease premises, the present suit is filed.
3. At this stage, it is to be noted that initially the suit was filed as a summary suit. The Defendant No. 1 and 2 appeared and sought for leave to defend and leave to defend was granted unconditionally as per detailed orders of the court dated 13-8-2024. And thereafter Defendant No. 1 and 2 have also filed written statement. And thereafter the procedure as in the case of regular commercial suit has been followed in view of Order 37 Rule 7 of the CPC.
4. In the written statement filed by the Defendant No. 1 and 2, the defense taken is that, the aforesaid industrial 5 CT 1390_Com.O.S.No.321-2024_Judgment.doc KABC170006032024 plot bearing No. 73 was allotted on lease-cum-sale basis in favour of Defendant No. 1 and in 2019, the Plaintiff agreed to acquire the leasehold rights of the said land and had paid the sum of Rs. 1 crore towards the cost and expenses that would entail for seeking transfer of the leasehold rights in the records of KIADB and on understanding that the said amount would be adjusted towards the sale consideration. And it was in pursuance of the said transaction that Plaintiff was put in possession of the property. And after the Defendant had incurred substantial expenditure for change of the leasehold rights into the name of the Plaintiff, the Plaintiff backed out of the transaction. And at that time, the Plaintiff had agreed to set off the expenses against the sum of Rs. 1 crore which was paid and to receive only the balance amount. And in the meantime, the Plaintiff vacated the premises and considering that Plaintiff was in possession for a period of 2 years and 11 months which would entail a monthly rental of at least Rs. 4 to 4.50 lakhs and considering the expenditure incurred by the Defendants for seeking transfer the leasehold rights to the Plaintiff and 6 CT 1390_Com.O.S.No.321-2024_Judgment.doc KABC170006032024 setting off the same against the interest that would be earned on the amount of Rs. 1 crore, it was agreed between both sides that the Plaintiff will receive back Rs. 55 lakhs and the remaining amount will be adjusted towards the rent payable and expenses incurred before the KIADB and Defendant No. 1 and 2 have specifically pleaded at paragraph 10 of the written statement that, even now they are ready to pay Rs. 55 lakhs to the Plaintiff. The Defendant No. 1 and 2 specifically denied the lease agreement dated 1-8-2019 inter-alia on the ground that whereas the document purports to be dated 1-8-2019, the stamp paper is purchased only on 28-8-2019. Denying all other plaint averments, the Defendants prayed for dismissal of the suit.
5. On the basis of the above pleadings, this Court has framed the following issues:
(1) Whether the Plaintiff proves that under the lease agreement dated 1-8- 2019, the Plaintiff took the suit schedule property on rent from the Defendants and under the said lease 7 CT 1390_Com.O.S.No.321-2024_Judgment.doc KABC170006032024 agreement, Plaintiff has paid a security deposit amount of Rs. 1 crore which was repayable on the date of Plaintiff vacating the said property and Plaintiff vacated the property on 30-6-2022 and therefore Plaintiff is entitled to recover the security deposit amount of Rs. 1 crore from the Defendants?
(2) Whether the Defendants No. 1 and 2 prove that in fact the transaction between the parties was a sale agreement and towards expenditure to be incurred for transferring the property in the records of KIADB to the Plaintiff, the Plaintiff had paid advance sale consideration of Rs. 1 crore which was to be adjusted towards KIADB expenditure and sale consideration and Defendants 8 CT 1390_Com.O.S.No.321-2024_Judgment.doc KABC170006032024 incurred expenditure for the purpose of transferring the suit schedule property to the Plaintiff and thereafter, since the Plaintiff backed out of the transaction, the Defendants No. 1 incurred further expenditure to transfer the leasehold rights back to the name of Defendant No. 1 and after adjusting the rent during the period when Plaintiff was in possession of the suit schedule property and the expenditure incurred, the Defendant No. 1 was prepared to refund Rs. 55 lakhs to the Plaintiff and therefore, Plaintiff is not entitled to any further amount from the Defendants?
(3) Whether the Plaintiff is entitled to the reliefs claimed?
(4) What order or decree?
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6. In the trial, the partner of Plaintiff is examined as PW1 and got marked Ex. P1 to P13. In addition, in the cross- examination of DW1 on behalf of the Plaintiff, Ex. P14, P15 and Ex. D5 are marked. On behalf of the Defendant No. 1 and 2, Defendant No. 2 is examined as DW1 and got marked Ex. D2 to D4. Ex. D1 was marked in the cross- examination of PW1 itself. As already noted, Defendant No. 3 is already deleted from the suit.
7. After closure of evidence of both sides, I have heard the arguments of both sides and perused the records of the case.
8. My answer to the issues are as follows:
Issue No. 1 to 3 : As per finding. Issue No. 4 as per final order for the following :
REASONS.
Issue No. 1 to 3 :-
9. These issues are interconnected and hence considered together to avoid repetition of facts.
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10. The case of the Plaintiff in brief is that, Defendant No. 1 is the absolute owner of an industrial site bearing plot No. 73, Sompura, I Stage Industrial Area, Dabbaspete, Nelamangala Taluk, Bangalore measuring 4026.50 sq.m consisting of an industrial shed. The Plaintiff and the Defendant No. 1 entered into a lease agreement dated 1-8- 2019 in respect of the said property under which Plaintiff took the same on lease for 36 months from 1-8-2019 to 31- 7-2022 by paying security deposit of Rs. 1 crore on the understanding that, no rent is payable in view of the payment of the said security deposit and the said security deposit shall be returned at the time of vacating of the property. It is the further case of the Plaintiff that in June 2022, Defendants requested the Plaintiff to vacate and accordingly on 30-6-2022, Plaintiff vacated the property and handed over the possession to the new tenant. In spite of vacating of the property by the Plaintiff, it is the grievance of the Plaintiff that Defendants have not refunded the security deposit amount of Rs. 1 crore in spite of several requests and reminders and ultimately Defendants issued a 11 CT 1390_Com.O.S.No.321-2024_Judgment.doc KABC170006032024 cheque dated 19-9-2023 towards refund of the said security deposit amount of Rs. 1 crore but on deposit of the same, same was dishonoured for the reason payment stopped. Hence for recovery of the said sum of Rs. 1 crore on the ground that it is the security deposit amount paid under the lease agreement dated 1-8-2019 which was agreed to be refunded and Defendants have defaulted in repayment of the same in spite of Plaintiff having vacated the lease premises, the present suit is filed.
11. In support of its case, the Plaintiff has examined its partner as PW1 and got marked Ex. P1 to P15, of which Ex. P1 to P13 are marked in the chief examination of PW1 and Ex. P14 and P15 are marked in the cross-examination of DW1.
12. Ex. P1 is the order of the District Registrar for having received deficit stamp duty on lease agreement dated 1-8- 2019. Ex. P2 is the original lease agreement dated 1-8-2019 under which the Plaintiff claims to have paid the advance amount of Rs. 1 crore to the Defendant No. 1 whose recovery is being sought in the present suit. Ex. P3 is the 12 CT 1390_Com.O.S.No.321-2024_Judgment.doc KABC170006032024 cheque for Rs. 1 crore dated 14-9-2023 purported to be issued by Defendant No. 1 for a sum of Rs. 1 crore and it is the case of the Plaintiff that said cheque was issued for refund of the security deposit amount under the lease deed which is the suit claim. Ex. P3 also contains the cheque return memo under which the cheque is returned for the reason payment stopped by Drawer. Ex. P4 is the bank account statement of the Plaintiff to show the payment of Rs. 1 crore to the Defendant No. 1 by way of bank transfer. Anyhow, the receipt of the said sum of Rs. 1 crore by Defendant No. 1 is not denied in the written statement of Defendants and the dispute between the parties is only as to whether the said amount was paid as security deposit amount under the lease deed as contended by the Plaintiff or as advance sale consideration amount to be adjusted towards the expenditure to be incurred for transfer of leasehold rights and also in respect of the sale consideration as contended by Defendant No. 1 and 2. Ex. P5 is another bank account statement of the Plaintiff to show the dishonor of the cheque at Ex. P3. Ex. P6 is the 13 CT 1390_Com.O.S.No.321-2024_Judgment.doc KABC170006032024 email purported to be issued by the Plaintiff to Defendants stating that on completion of the lease the possession of the property is handed over to the new tenant of Defendants and calling upon the Defendants to refund the security deposit amount. Ex. P7 is a letter issued by the Plaintiff to Defendants again requesting them to refund the security deposit amount, along with the postal receipts. Ex. P8 is letter dated 9-9-2023 issued by the Plaintiff to Defendant No. 3 intimating that Plaintiff will present the cheque at Ex. P3 for encashment. Ex. P9 is email issued by Plaintiff to Defendant No. 2 and 3 again intimating regarding presenting the said cheque. Ex. P10 is the legal notice caused by the Plaintiff to Defendant No. 1 in respect of dishonor of the cheque under Section 138 of Negotiable Instruments Act. Ex. P11 is the non-starter report of PIM. Ex. P12 is printout of the website of Defendant No. 1. Ex. P13 is a 65B certificate.
13. Ex. P14 and P15 are marked in the cross-examination of DW1. Ex. P14 is a letter dated 18-1-2020 which was in fact produced along with the written statement but not 14 CT 1390_Com.O.S.No.321-2024_Judgment.doc KABC170006032024 marked since it is only a photocopy. It is a letter issued by KIADB to Defendant No. 1 calling upon Defendant No. 1 to deposit Rs. 27,27,680 towards transfer of leasehold rights in favour of the Plaintiff. Ex. P15 is a photocopy of the same cheque whose original is already marked as Ex. P3 i.e. cheque No. 500592 dated 14-9-2023 purported to be issued by the Defendant No. 1 represented by its partners in favour of the Plaintiff for Rs. 1 crore. Ex. P15 is marked in the cross-examination of DW1 since DW1 has admitted his signature thereon at paragraph 20 of his cross-examination.
14. Ex. D5 is also marked on behalf of the Plaintiff (in the cross examination of DW1). It is a photocopy of the partnership deed of Defendant No. 1 which is produced by the Defendants. The context in which it is marked is that DW1 in his cross-examination at paragraph 32 has stated that Defendant No. 3 who is now deleted from the suit was not authorized to execute the lease agreement at Ex. P2 on behalf of Defendant No. 1. In support of his answer, he has stated that the partnership deed requires two signatures for authorization. When the photocopy of the partnership deed 15 CT 1390_Com.O.S.No.321-2024_Judgment.doc KABC170006032024 was shown to DW1 he has relied upon paragraph 6 of the partnership deed as the basis of his answer that at least two partners have to authorize on behalf of the partnership firm. In these circumstances, since the said paragraph 6 of the partnership deed was relied upon by DW1 at the instance of the Plaintiff, only the said paragraph is marked as Ex. D5. Anyhow, in the same cross-examination DW1 has admitted that paragraph 6 only pertains to authorization for opening bank account and not for other kinds of authorizations such as for entering into agreement on behalf of the partnership firm.
15. As against the above case of the Plaintiff and the oral and documentary evidence adduced by the Plaintiff, the defense of the Defendant is that, the aforesaid industrial plot bearing No. 73 was allotted on lease-cum-sale basis in favour of Defendant No. 1 and in 2019, the Plaintiff agreed to acquire the leasehold rights of the said land and had paid the sum of Rs. 1 crore towards the cost and expenses that would entail for seeking transfer of the leasehold rights in the records of KIADB and on understanding that the said 16 CT 1390_Com.O.S.No.321-2024_Judgment.doc KABC170006032024 amount would be adjusted towards the sale consideration. And it was in pursuance of the said transaction that Plaintiff was put in possession of the property. And after the Defendant had incurred substantial expenditure for change of the leasehold rights into the name of the Plaintiff, the Plaintiff backed out of the transaction. And at that time, the Plaintiff had agreed to set off the expenses against the sum of Rs. 1 crore which was paid and to receive only the balance amount. And in the meantime, the Plaintiff vacated the premises and considering that Plaintiff was in possession for a period of 2 years and 11 months which would entail a monthly rental of at least Rs. 4 to 4.50 lakhs and considering the expenditure incurred by the Defendants for seeking transfer the leasehold rights to the Plaintiff and setting off the same against the interest that would be earned on the amount of Rs. 1 crore, it was agreed between both sides that the Plaintiff will receive back Rs. 55 lakhs and the remaining amount will be adjusted towards the rent payable and expenses incurred before the KIADB and Defendant No. 1 and 2 have specifically pleaded at 17 CT 1390_Com.O.S.No.321-2024_Judgment.doc KABC170006032024 paragraph 10 of the written statement that, even now they are ready to pay Rs. 55 lakhs to the Plaintiff. The Defendant No. 1 and 2 specifically denied the lease agreement dated 1-8-2019 inter-alia on the ground that whereas the document purports to be dated 1-8-2019, the stamp paper is purchased only on 28-8-2019. Denying all other plaint averments, the Defendants prayed for dismissal of the suit.
16. In support of their case, Defendant No. 2 is examined as DW1 and got marked Ex. D1 to D4. Amongst these, Ex. D1 is marked in the cross-examination of PW1 and Ex. D2 to D4 are marked in the chief-examination of DW1. Ex. D1 which is marked by confronting to PW1 is a copy of letter dated 16-3-2020 issued by the Plaintiff to KIADB, withdrawing request for transfer of leasehold rights to the Plaintiff and said document is marked since PW1 has admitted his signature thereon. Ex. D2 to D4 are marked in the chief-examination of DW1. Ex. D2 is printout of WhatsApp communication exchanged between the parties which contains WhatsApp dated 6-11-2023 issued by DW1 to the Plaintiff stating that he is willing to settle the matter 18 CT 1390_Com.O.S.No.321-2024_Judgment.doc KABC170006032024 for Rs. 55 lakhs which is in consonance with the defense taken in the statement.
17. Ex. D3 is a certificate under Section 63 of BSA. Ex. D4 is the covering letter issued by KIADB dated 24-2-2025 furnishing information under RTI Act and the information furnished is the copy of the letter dated 16-10-2019 purported to be issued by the Plaintiff in favour of KIADB seeking transfer of leasehold rights of the plot from the name of Defendant No. 1 into the name of the Plaintiff. It is this request for transfer of leasehold rights which has been withdrawn as per the letter at Ex. D1.
18. Ex. D5, which is marked at the instance of the plaintiff in the cross-examination of DW1, is already discussed supra.
19. Having considered the rival contentions of both sides and the oral and documentary evidence on record, at the outset, a technical contention raised by the learned counsel for Defendants may be taken note of. He submitted that the Plaintiff is a partnership firm and it is elicited in the cross-examination of PW1 that there are five 19 CT 1390_Com.O.S.No.321-2024_Judgment.doc KABC170006032024 partners, but, authorization letter issued by all the partners in favour of PW 1 is not produced and therefore, it was argued that, PW1 is not authorized either to sign the plaint on behalf of the Plaintiff partnership firm or to depose on behalf of the Plaintiff partnership firm.
20. This contention cannot be accepted because under Section 18 of the Partnership Act, a partner is considered to be the agent of the firm and under Section 19, the partner has the implied authority to act as the agent of the firm and the act of a partner binds the firm. The only exceptions are for referring a dispute to arbitration, opening a bank account, compromising a claim or withdrawing a suit or admitting liability or acquiring immovable property or entering into partnership on behalf of the firm. Therefore, it is clear that the implied authority of a partner to act as agent covers filing of suit on behalf of the partnership firm. In this case, the requirement of Section 22 of the Partnership Act is fulfilled because in the verification of the plaint, the PW1 has signed on behalf of the partnership firm and as partner thereof. Therefore, even without any specific 20 CT 1390_Com.O.S.No.321-2024_Judgment.doc KABC170006032024 authorization issued by all the partners, since PW1 is undisputedly a partner of the Plaintiff partnership firm, he had the authority to file the suit on behalf of the Plaintiff partnership firm. For the same reasons, PW1 also had the authority to depose on behalf of the Plaintiff partnership firm. Further, it is to be noted that in the Written Statement, at paragraph 4 it is pleaded that, entire transaction was negotiated by Mr. Vivek Shah, i.e., PW1 with defendant No. 2, and thereby, the personal knowledge of PW1 with respect to the suit transaction is admitted. Therefore, viewed from this angle also, P.W.1 is competent to depose in the present suit since admittedly he has personal knowledge of the facts of the case. Accordingly, the first technical contention requires to be rejected.
21. At this stage itself, be it noted that, there is another technical issue, which although not raised by the Defendants, needs to be considered. Admittedly, the Plaintiff is a partnership firm and therefore, the Plaintiff can maintain the suit only if it is a partnership firm registered with the Registrar of Firms because suit by an unregistered 21 CT 1390_Com.O.S.No.321-2024_Judgment.doc KABC170006032024 partnership firm for enforcing any right under contract would be barred by Section 69(2) of the Partnership Act. No doubt, in this case, the Plaintiff has not produced and got marked the extract of the Registrar of Firms to show that Plaintiff is registered with the Registrar of Firms. However, in the plaint cause title itself, the Plaintiff is described as a partnership firm registered under the Indian Partnership Act. And this is not denied anywhere in the written statement. A fact which is not specifically denied is deemed to be admitted, and a fact which is admitted need not be proved. Therefore, on this basis, I hold that the Plaintiff is a registered partnership firm and therefore, the present suit is not hit by Section 69(2) of the Partnership Act.
22. Having disposed of the above technical contentions, let me now turn to the merits of the case. In essence, the present suit is filed by the Plaintiff on the premise that Plaintiff has paid refundable security deposit of Rs. 1 crore under the lease agreement dated 1-8- 2019 at Ex. P2 and since Plaintiff has vacated the premises 22 CT 1390_Com.O.S.No.321-2024_Judgment.doc KABC170006032024 on 30-6-2022, Plaintiff is entitled to recovery of the security deposit amount of Rs. 1 crore.
23. In this regard, it is undisputed that the industrial plot No. 73, Sompura I Stage, originally belonged to Defendant No. 1 partnership firm, of which Defendant No. 2 and Defendant No. 3 are the partners. Of course, now Defendant No. 3 stands deleted from the suit. Further, it is undisputed that Defendant No. 1 partnership firm has received a sum of Rs. 1 crore from the Plaintiff. However, the defence is that the said sum of Rs. 1 crore was not received as refundable security deposit amount under the lease agreement at Ex. P2, but was received as advance sale consideration since Plaintiff had expressed interest to purchase the said industrial plot No. 73, which was under leasehold rights from KIADB, and therefore Rs. 1 crore was paid for meeting the expenses for transferring the leasehold rights of the said property from Defendant No. 1 to the Plaintiff in the records of KIADB, and it was agreed that the said amount shall be adjusted towards the final sale consideration payable for the said property.
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24. On this premise, the Defendant No. 1 and 2 contend that towards transfer of the leasehold rights, they had incurred substantial expenditure and later on, Plaintiff withdrew his offer to purchase the property, and after adjusting the expenditure already incurred and the expenditure which was subsequently incurred for re- transferring the leasehold rights to Defendant No. 1 and after adjusting the rent during the period when Plaintiff was in possession, the Defendant No. 1 is liable to repay only Rs. 55 lakhs and not the entire amount of Rs. 1 crore.
25. Therefore, the crucial question to be considered in the present suit is whether the sum of Rs. 1 crore was paid as security deposit under lease agreement at Ex. P2 or as advance sale consideration for getting transfer of leasehold rights in favour of the Plaintiff.
26. Having considered the facts and circumstances of the case, it is difficult to accept the case of the Plaintiff that the sum of Rs. 1 crore was paid as security deposit amount under the lease agreement at Ex. P2 for the following reasons.
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27. Firstly, Ex. P2 lease deed is dated 1-8-2019, but the stamp paper on which it is drafted, which is stamp paper of Rs. 1,000, is issued only on 28-8-2019, which is subsequent to the date of the document itself. Therefore, this document is tainted with suspicion because a document dated 1-8- 2019 cannot be drafted on stamp paper which is purchased subsequently on 28-8-2019. In this regard, reference may be made to the observation made by the Hon'ble Apex Court in the case of Girish Yadav v. State of M.P., (1996) 8 SCC 186 : 1996 SCC (Cri) 552 at page 197, as follows;
17. It was next contended that the courts below had erred in placing implicit reliance on the eyewitness account of the witness Badri PW 1 as he himself has signed an affidavit Ex. D-1 showing that he was not present on the scene of offence at the relevant time. This submission is stated to be rejected for the simple reason that witness PW 1 when confronted with this alleged affidavit Ex. D-1 candidly stated that it was got signed from him under influence of liquor. It has to be kept in view that the incident occurred as early as on 4-9-1982. Statement of the witness was recorded by the police during investigation while the so-called affidavit Ex. D-1 is said to have been sworn by the witness on 3-12-1983. It, therefore, appears that after the lapse of about one year and three months the accused 25 CT 1390_Com.O.S.No.321-2024_Judgment.doc KABC170006032024 seem to have tried to tamper with this witness. The witness was honest enough to admit in the court at the stage of trial that the so-called affidavit was got signed from him under influence of liquor. It is also interesting to note that the stamp paper of this affidavit was purchased on 3-12-1983 and it was allegedly sworn by the witness before Notary on 4-12-1983 but the notarial seal and endorsement bear the date 10-11- 1983. Thus, the affidavit was sworn about 26 days before the stamp paper was even purchased! To say the least such a document cannot be touched by a pair of tongs and was rightly discarded by the trial court and the High Court.
(Emphasis Supplied)
28. In the light of the above observation, and considering that entering into the lease agreement on 1-8-2019 when the stamp paper is purchased subsequently is an impossibility, Ex. P2 is an unreliable document without any evidentiary value.
29. Apart from this, it is noted that as per Ex. P2 at paragraph 7, it is stated that the lease shall be in force for a period of 36 months. It is trite that any lease for a period of more than 11 months can be only by way of a registered document. Therefore, Ex. P2 is a compulsorily registrable 26 CT 1390_Com.O.S.No.321-2024_Judgment.doc KABC170006032024 document. It is to be noted that although initially Ex. P2 was marked without objection, subsequently, Counsel for Defendant No. 1 and 2 filed an application and by the orders dated 6-1-2025, this Court held that it shall be construed that Ex. P2 is marked subject to objection that it is an unregistered document.
30. Being an unregistered document, Ex. P2 cannot be accepted as proof of lease for a period of 36 months on consideration of payment of refundable security deposit of Rs. 1 crore. Although an unregistered document which is compulsorily registrable can be looked into for a collateral purpose, the unregistered document cannot be proof of the transaction which requires compulsory registration. Since lease deed of more than 11 months requires compulsory registration, Ex. P2 cannot be accepted as proof of payment of refundable security deposit of Rs. 1 crore towards lease for 36 months. Consequently, Ex. P2 has to be eschewed from consideration.
31. Apart from Ex. P2, no other document is produced to show that the sum of Rs. 1 crore has been paid as 27 CT 1390_Com.O.S.No.321-2024_Judgment.doc KABC170006032024 refundable security deposit under the lease agreement. Ex. P3 is a cheque for Rs. 1 crore issued by Defendants in favour of the Plaintiff. However, as per the plaint averments, it was issued after the Plaintiff vacated the industrial plot No. 73. Whereas, in cross-examination, at paragraph 8, PW1 says that the cheque was given earlier to termination of the lease deed. In view of this contradiction in the Plaintiff's case, the contention of the Defendants that the cheque was issued for security purpose deserves acceptance. Therefore, the cheque at Ex. P3 cannot be accepted as proof that the sum of Rs. 1 crore was paid as refundable security deposit and that for return of the refundable security deposit, Ex. P3 was issued.
32. Ex. P4 and P5 are bank accounts of the Plaintiff, but they will not take the Plaintiff's case any further because the receipt of Rs. 1 crore is anyhow admitted by the Defendants and so also the dishonor of the cheque at Ex. P3. Ex. P6 is an email issued by the Plaintiff to Defendants regarding completion of the lease, but DW1 in his cross- examination denies having received the said email since he 28 CT 1390_Com.O.S.No.321-2024_Judgment.doc KABC170006032024 says that the domain name was not functioning at that point of time. Ex. P7 and P8 are letters issued in the year 2023, that is after the property was admittedly vacated on 30-6-2022 and therefore they cannot constitute proof of the lease agreement because by the time the said letters were written, the lease agreement even according to the case of the Plaintiff had been terminated by vacating the property on 30-6-2022 itself. The same reasoning also applies to the email at Ex. P9.
33. Therefore, it is seen that once Ex. P2 lease agreement is eschewed from consideration for the reasons already discussed supra, Plaintiff has not produced any document to show that Rs. 1 crore was paid under the lease agreement as refundable security deposit.
34. However, this is not fatal to the Plaintiff's case because I am of the view that Plaintiff is entitled to the relief of recovery of Rs. 1 crore on the basis of the defence of Defendant No. 1 and 2 itself. In this regard, it is to be noted that Defendant No. 1 and 2 admit having received the said sum of Rs. 1 crore. However, their case is that it was 29 CT 1390_Com.O.S.No.321-2024_Judgment.doc KABC170006032024 received as advance amount under the transaction in which Plaintiff agreed to purchase the industrial plot No. 73 and the sum of Rs. 1 crore was paid to meet the expenses for transferring the leasehold rights in favour of the Plaintiff in the records of KIADB and the understanding was that the said sum of Rs. 1 crore would be adjusted towards the total sale consideration payable.
35. Further case of the Defendant No. 1 and 2 is that after the Defendants had incurred substantial expenditure for transfer of leasehold rights, the Plaintiff backed out of the transaction as a result of which the Defendants had to incur further expenditure for getting back the leasehold rights to Defendant No. 1, and the Defendant No. 1 is also entitled to claim rent for the period of 2 years and 11 months when Plaintiff was put in possession in pursuance of the sale transaction and after adjusting the above amounts, it is only Rs. 55 lakhs which is refundable to the Plaintiff.
36. By taking up this defense, the defendants admit receipt of Rs. 1 crore from the plaintiff and also admit that the defendant No. 1 and 2 are liable to refund Rs. 55 lakhs 30 CT 1390_Com.O.S.No.321-2024_Judgment.doc KABC170006032024 out of the said amount to the plaintiff. Further, it is an admitted fact that on 30-6-2022, the plaintiff has vacated the property. This is admitted since in the written statement at paragraph 9 it is stated that the plaintiff has been in occupation of the property from 1-8-2019 to 30-6-2022 for a duration of 2 years and 11 months. It is further admitted that presently the property has been sold to a third party. This is admitted by D.W. 1 at paragraph 7 of cross- examination wherein he has stated that "plot No. 73 was sold in 2023 to a private limited company of one Mr. Rame Gowda for approximately Rs. 5.85 crores.
37. In this fact scenario, even accepting the defense of the defendant No. 1 and 2, when they admit that they have received Rs. 1 crore under the sale agreement instead of under a lease agreement, and they admit that they have to refund Rs. 55 lakhs, and their case is that the remaining Rs. 45 lakhs is to be forfeited towards expenditure incurred with KIADB and towards the rent payable for the period when the plaintiff was in possession, it follows that even according to the defendants, the sum of Rs. 1 crore received as advance 31 CT 1390_Com.O.S.No.321-2024_Judgment.doc KABC170006032024 under the sale transaction is not forfeited and it is to be refunded, subject to adjusting towards expenditure and rent. It is crucial to note that the defendant No. 1 and 2 have not produced a single document to show that they incurred any expenditure with KIADB in respect of transfer of leasehold rights to the plaintiff or for re-transfer of leasehold rights from the name of the plaintiff to defendant No. 1. In this regard, it is elicited in the cross-examination of DW1 at para 14 that although under Ex. P14, the KIADB directed defendant No. 1 to pay Rs. 27.27 lakhs towards expenditure for transfer of leasehold rights, DW1 says that only a portion of the said amount was paid to KIADB. However, DW1 in the same cross-examination admits that he has not produced any document to show the said payment and defendant No. 1 and 2 have also not produced the bank account statement to show transfer of any amount to KIADB. DW1 admits at paragraph 15 of his cross- examination that KIADB has not made any endorsement on the lease-cum-sale agreement and possession certificate regarding transfer of leasehold rights to the plaintiff. At 32 CT 1390_Com.O.S.No.321-2024_Judgment.doc KABC170006032024 paragraph 16 of cross-examination, when DW1 is asked whether they approached KIADB for refund of the part payment made by them, he makes a very important admission that it cannot be done and the part payment made can only be adjusted towards a future transaction. Thereby, it is clear that, firstly, no document is produced by defendants to show that any expenditure has been incurred for transfer of leasehold rights in the KIADB. Secondly, even considering that some amount was spent by Defendant 1 and D2 for the purpose of transfer of leasehold rights to the plaintiff, the said amount can always be adjusted to any future transaction, as admitted by DW1 at para 16 of cross examination. Admittedly, in this case, the property was subsequently sold to a third party. Such being the case, it follows that even considering that some expenditure was incurred by Defendant No. 1 and 2 for transfer of leasehold rights, the same has been adjusted at the time of transferring the property to the subsequent purchaser. Thereby, defendant No. 1 and 2 have not incurred any loss and therefore, they cannot claim to withhold any amount 33 CT 1390_Com.O.S.No.321-2024_Judgment.doc KABC170006032024 out of the sum of Rs. 1 crore received from the plaintiff. Anyhow, defendant No. 1 and 2 have not produced any evidence to show that they spent any amount for transfer of leasehold rights. Crucially, although DW1 claims to have paid the amount to KIADB by way of cheque, the bank statement of defendant No. 1 is not produced to show any such payment. Therefore, adverse inference has to be drawn against the defendant No. 1 and 2 and it has to be held that defendant No. 1 and 2 have totally failed to prove that they paid any amount to KIADB for transfer of leasehold rights in favour of the plaintiff.
38. Insofar as adjustment of amount towards rent for a period of 2 years and 11 months when the plaintiff was admittedly in possession of the property is concerned, it is to be noted that in the present suit, the defendant No. 1 and 2 have not claimed any set-off by paying the court fee under Order 8 Rule 6 CPC. Apart from this, although in the written statement the defendant No. 1 and 2 contend that the adjacent properties are fetching rent of Rs. 4 lakh per month, absolutely no material is produced in respect 34 CT 1390_Com.O.S.No.321-2024_Judgment.doc KABC170006032024 thereof. Therefore, the contention that out of the sum of Rs. 1 crore, Rs. 45 lakhs is to be deducted towards KIADB expenditure and rent is unacceptable. Instead, it has to be held that admittedly the defendants had the benefit of retaining Rs. 1 crore throughout the period and up to the date of the suit and therefore the amount towards rent stands adjusted as against the interest that could be earned from the said sum.
39. Therefore, I conclude by holding that the defendant No. 1 and 2 are liable to refund the entire sum of Rs. 1 crore to the plaintiff which is admittedly received by them. Apart from this, another factor which supports this conclusion is the admission made by DW1 himself at paragraph 23 of his cross-examination, wherein DW1 has stated that initially PW1 had approached for purchasing the property and then due to some financial difficulties, he did not want to go on with the transaction and at that point of time, defendants had agreed to refund the entire amount of Rs. 1 crore to PW1 and therefore he issued the cheque at Ex. P3/P14. Therefore, from this 35 CT 1390_Com.O.S.No.321-2024_Judgment.doc KABC170006032024 admission of DW1, it becomes clear that at an undisputed point of time, there was agreement and understanding between the parties to refund the entire amount of Rs. 1 crore. Therefore, it does not now lie in the mouth of defendant No. 1 and 2 at this point of time to turn around and claim that out of the said sum of Rs. 1 crore, Rs. 45 lakhs is liable to be retained towards rent and expenditure incurred with KIADB. Accordingly, I answer issue No. 1 to 3 by holding that the plaintiff is entitled to recovery of the entire sum of Rs. 1 crore which is admittedly paid by the plaintiff to defendant No. 1. Defendant No. 2 being a partner of defendant No. 1 is jointly and severally liable to repay the said sum. Since defendant No. 3 is already deleted from the suit, it follows that relief can be granted only in respect of defendant No. 1 and 2.
40. Insofar as the interest component is concerned, the plaintiff has not claimed any interest prior to the suit and the plaintiff has also paid the court fee only on the principal suit claim of Rs. 1 crore. Therefore, the plaintiff is entitled to interest only from the date of suit onwards. Insofar as the 36 CT 1390_Com.O.S.No.321-2024_Judgment.doc KABC170006032024 rate of interest is concerned, considering that it is a commercial transaction between the parties, I am of the view that the appropriate rate of interest to be awarded is 9% per annum from the date of suit till the date of realization.
41. Insofar as the costs of the suit are concerned, considering that the suit is being decreed on the basis of the defense taken by defendant No. 1 and 2, although the case of the plaintiff has been disbelieved, I am of the view that defendant No. 1 and 2 cannot be saddled with the costs of the suit. Accordingly, I answer issue No. 1 to 3.
Issue No. 4:-
42. Having answered issue No. 1 to 3 as above, I proceed to pass the following :-
ORDER.
The suit is partly decreed. It is held that the plaintiff is entitled to recover sum of Rs. 1 crore along with interest at the rate of 9% per annum from date of suit till date of realization, from 37 CT 1390_Com.O.S.No.321-2024_Judgment.doc KABC170006032024 the Defendant No. 1 and 2 jointly and severally.
Considering the facts and circumstances of the case, parties to bear their own costs.
Office to draw decree accordingly.
Office to issue soft copy of this
judgment to both sides, by email, if
furnished.
[Dictated using MacWhisper Pro 10.8.1, transcript revised, corrected, signed and then pronounced by me in open court on this the 29th day of April, 2025] SUDINDRA Digitally signed by SUDINDRA NATH S NATH S Date: 2025.05.03 15:17:13 +0530 (S. Sudindranath) LXXXIII ADDL.CITY CIVIL AND SESSIONS JUDGE, COMMERCIAL COURT, BENGALURU ANNEXURE
1. List of witnesses examined on behalf of Plaintiff/s:
PW1 : Sri. Viveck Jayant Shah
2. List of witnesses examined on behalf of
Defendant/s:
38
CT 1390_Com.O.S.No.321-2024_Judgment.doc KABC170006032024 DW1 : Sri. Suresh Maineni
3. List of documents marked on behalf of Plaintiff/s:
Ex.P1 : Orders of District Registrar regarding remitting of deficit stamp duty.
Ex.P2 : Original lease deed dated.01.08.2019 along with certificate of District Registrar Ex.P3 : Original cheque bearing No.500592 along with cheque return memo Ex.P4 : Attested copy of bank account statement along with plaint Ex.P5 : Digital copy of bank account statement.
Ex.P6 : Print out of email. Ex.P7 : Office copy of letter dated 04.01.2023 (3 in Nos.)
along with original RPAD receipt (3 in Nos.) Ex.P8 : Office copy of letter dated. 09.09.2023 (5 in Nos.) along with original RPAD receipt (5 in Nos.) and RPAD acknowledgement card (1 No.) Ex.P9 : Print out of email.
Ex.P10 : Office copy of legal notice dated. 11.10.2023 along with 2 RPAD receipts and one acknowledgement card.
Ex.P11 : Non starter report of PIM Ex.P12 : Print out of website of defendant Ex.P13 : 65B certificate Ex.P14 Letter of KIADB dated 18.01.2020 Ex.P15 : Photocopy of cheque 39 CT 1390_Com.O.S.No.321-2024_Judgment.doc KABC170006032024
4. List of documents marked on behalf of Defendant/s:
Ex.D1 Letter dated 16.03.2020 Ex.D2 Printout of Whatsapp communciation Ex.D3 Certificate under Section 63 BSA. Ex.D4 Letter dated 24.02.2025 issued by KIADB along
with information furnished under RTI Act Ex.D5 Clause-6 page-11 of Partnership deed (Cross of DW1) (S. Sudindranath) LXXXIII ACC & SJ, (COMMERCIAL COURT), BENGALURU