Delhi High Court
Shri Dhruv Varma vs Abn Amro Bank Nv & Ors. on 28 January, 2016
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ OMP Nos. 495/2007, 496/2007 & 497/2007
% Reserved on: 7th January, 2016
Pronounced on: 28th January, 2016
+ O.M.P. No. 495/2007
SHRI DHRUV VARMA ..... Petitioner
Through: Mr. Uttam Datt and Mr. Saksham
Marwah, Advocates.
Versus
ABN AMRO BANK NV & ORS. ..... Respondents
Through: Mr. Samrat K. Nigam, Mr.
Abhimanyu Walia and Ms. Ankita
Mahajan, Advocates.
+ O.M.P. No. 496/2007
M/S RATTAN LAL VARMA & SONS ..... Petitioner
Through: Mr. Uttam Datt and Mr. Saksham
Marwah, Advocates.
Versus
ABN AMRO BANK NV & ORS. ..... Respondents
Through: Mr. Samrat K. Nigam, Mr.
Abhimanyu Walia and Ms. Ankita
Mahajan, Advocates.
OMP Nos.495/2007, 496/2007 & 497/2007 Page 1 of 17
+ O.M.P. No. 497/2007
M/S DHRUV PROPERTY & INVESTMENT PVT. LTD.
..... Petitioner
Through: Mr. Uttam Datt and Mr. Saksham
Marwah, Advocates.
Versus
ABN AMRO BANK NV & ORS. ..... Respondents
Through: Mr. Samrat K. Nigam, Mr.
Abhimanyu Walia and Ms. Ankita
Mahajan, Advocates.
CORAM:
HON'BLE MR. JUSTICE VALMIKI J.MEHTA
To be referred to the Reporter or not? YES
VALMIKI J. MEHTA, J
1. These three petitions are filed under Section 34 of the
Arbitration and Conciliation Act, 1996 (hereinafter referred to as 'the Act')
impugning the Award of the Arbitrator dated 28.5.2007. The operative part
of the Award reads as under:-
"ISSUE NO.11
Whether the respondents are entitled to recover any amount? If so, what
amount, from the claimant?
69. As already held, the respondents are not entitled to recovery any
amount from the claimant, as it was the respondents who committed
default in terms of the Memorandum of Agreement and as already held the
respondents are not entitled to claim any rent of the premises after 31st
OMP Nos.495/2007, 496/2007 & 497/2007 Page 2 of 17
January, 2001 or mesne profits or damages. Thus, this issue is decided
against the respondents.
70. I make the award as follows:-
I That the respondents shall pay to the claimant jointly and severely
Rs.1,11,39,358/- (one crore eleven lacs, thirty-nine thousand, three
hundred and fifty eight only). The liability of the respondent No.2, is
restricted to only Rs.1,07,11,500/- (one crore, seven lac, eleven thousand,
five hundred only).
II That the respondents shall pay Rs.2 lac (two lac) as cost of these
proceedings to the claimant.
III That the respondents shall pay aforesaid amounts on or before 1st
August, 2007 failing which the respondents shall pay interest @ 16% per
annum from 1-6-2007 on the unpaid amount till payment.
IV That the counter claims raised by the respondent are rejected."
2. At the outset, counsel appearing for the petitioner in OMP
No.496/2007 states that Sh. Rattan Lal Varma who was the karta of the HUF
has expired yesterday ie on 6.1.2016, however, that would not have any
effect on OMP No.496/2007 which is filed by an HUF concern and which is
a separate legal entity as per Order XXX of the Code of Civil Procedure,
1908 (CPC) than the individual coparceners who constitute the HUF. For the
record, it is also noted that the name of the respondent M/s ABN Amro Bank
NV has already been changed to Royal Bank of Scotland and which factual
aspect is taken on record. Respondents will accordingly file the amended
memo of parties within four weeks.
OMP Nos.495/2007, 496/2007 & 497/2007 Page 3 of 17
3. Petitioners in these OMPs represent the owners/landlords of the
suit premises comprising a total area of 4,550 sq ft of the 9th floor on the
building of Dr. Gopal Das Bhawan, Barakhamba Road, New Delhi.
Petitioners/landlords let out the premises and the furniture/fixtures etc with
respect to the premises to the respondent no.1-tenant. The lease deeds with
respect to the total area of 4,550 sq ft are dated 12.10.1994 and were for a
period of three years. Simultaneously, with the lease deeds, an Agreement
of the same date i.e 12.10.1994 was entered into between the parties with
respect to furniture and fixtures installed in the subject premises comprising
of an area of 4550 sq ft. Besides the rent and fixture charges payable for the
tenanted premises, and which rental etc aspect is not material for disposal of
the present petitions, the owners/landlords were also paid interest free
security deposits of Rs.82,12,500/- +20,25,500/- +34,12,500/- by the
respondent no.1-tenant. Disputes and differences arose between the parties
on account of the fact that respondent no.1 contended that returning of
possession of the tenanted premises at the conclusion of the tenancy was to
be simultaneously with petitioners refunding the security deposits but the
petitioners contended otherwise. Respondent no.1 ultimately filed a suit in
this Court being suit no. 2117/2001. In this suit, the Arbitrator was
appointed by consent between the parties vide Order dated 23.9.2005. It is
OMP Nos.495/2007, 496/2007 & 497/2007 Page 4 of 17
the Award by this Arbitrator being the Award dated 28.5.2007 with its
operative portion as stated above, directing the recovery of amounts in
favour of the respondent no.1 and against the petitioners alongwith interest
which is impugned in these three petitions under Section 34 of the Act.
4. The original lease deeds were for a period of three years with an
option of extension of another period of three years and which was
exercised. This extended period of three years would have come to an end
on 31.10.2000, and hence the respondent no.1 who did not want to continue
as a lessee wrote its letters dated 18.8.2000 and 1.9.2000 stating its intention
to terminate the lease. Respondent no.1 wanted to terminate the lease,
inasmuch as, respondent no.1 is stated to have taken on rent a premises in
DLF Centre, Sansad Marg, New Delhi and lease deed in this regard was
already executed on 16.8.2000. Correspondence thereafter ensued between
the parties, and details of which would not be relevant for the purposes of
the present judgment, however the final position which emerged was that the
respondent no.1 was to be liable to pay the rental charges only till 31.1.2001
which was agreed as per the respondent no.1 to be a mutual date for the
respondent no.1 to vacate the tenanted premises and for the petitioner to
simultaneously refund the total amount of security deposits which the
OMP Nos.495/2007, 496/2007 & 497/2007 Page 5 of 17
petitioners had received from the respondent no.1. Thereafter further events
transpired whereby the respondent no.1 on 30.4.2001 issued five post dated
cheques as detailed below:-
Sl. Cheques Amount
No. Dates
1. 15.5.2000 Rs.15,41,397.50 p by Mr. J.K.
Varma
2. 16.5.2001 Rs.41,06,250/- by petitioner
and respondent No.2.
3. 16.5.2001 Rs.21,42,951.50 P by petitioner
and respondent No.2.
4. 16.5.2001 Rs.17,06,250/- by respondent
No.3.
5. 16.5.2001 Rs.17,06,250/- by respondent
No.3.
Out of the aforesaid five cheques, first two cheques were
cleared but the remaining three cheques were dishonoured on presentation
resulting in the respondent no.1 serving a Legal Notice upon the petitioners
on 16.10.2001. Whereas the petitioners claimed that the respondent no.1 was
liable to pay use and occupation charges/rent as also maintenance charges to
the building society till respondent no.1 continued to occupy the premises
(and also that the respondent no.1 was liable to pay enhanced house tax for
OMP Nos.495/2007, 496/2007 & 497/2007 Page 6 of 17
such period) even though petitioners did not want to refund the security
deposits at the time when the respondent no. 1 wanted to vacate the tenanted
premises, however, the respondent no.1 claimed recovery of unpaid amounts
of the security deposits lying with the petitioner alongwith accrued interest
by stating that till security deposit amounts were paid back, the respondent
no.1 was entitled to hold on to the possession without payment of rental and
other related charges. This was the main dispute to be decided in the
arbitration proceedings.
5. In the arbitration proceedings, the following issues were
framed:
"I. Whether the Memorandum of Agreement dated 30th July, 2001 is
non-est and not binding as alleged by the respondents?
II. In case Issue No.1 is not proved, whether the Memorandum of
Agreement dated 30th July, 2001 does not cover all the disputes pending
between the parties at that point of time?
III. Whether the claim of refund of security deposit is barred by time?
IV. Whether it was agreed terms amongst the parties that the claimant
was to first hand over the possession of the lease premises, furniture,
fittings and fixtures before claiming refund of the balance security
amount?
V. Whether it was agreed amongst the parties that the possession of
the lease premises and furniture, fittings and fixtures was to be handed
over simultaneously with refund of security deposit?
VI. Whether delay in handing over possession of the said premises and
furniture, fittings and fixtures occurred due to failure of the respondents
to refund the security deposit and claimant has been ready and willing to
hand over the possession of the same at all relevant time?
OMP Nos.495/2007, 496/2007 & 497/2007 Page 7 of 17
VII. Whether the counter claims/set off respondents are barred by
limitation?
VIII. Whether the lease agreement and hire agreement continue to be in
operation even after efflux of the period fixed? If so, with what effect?
IX. What is the effect of the claimant depositing the key of the
premises in question with the High Court?
X. Whether the claimant is entitled to recover any amount? If so, what
amount and from which of the respondents?
XI. Whether the respondents are entitled to recover any amount? If so,
what amount, from the claimant?
XII. Whether either of the parties is entitled to claim any interest? If so,
for what period and on what amount and at what rate?
XIII. Relief."
The discussion given below will show that this Court does not
have to look into and decide each of the issues as aforesaid.
6. So far the finding of the Arbitrator in the impugned Award that the
claims of the petitioner are time barred, this finding is not a legally correct
finding, inasmuch as, there really was no counter claim of the petitioners as
such in the arbitration proceedings because actually petitioners already had
monies in their pockets being the security deposits paid by the respondent
no.1 to the petitioners, and therefore, essentially the counter claim filed by
the petitioners in the arbitration proceedings was in the nature of defence for
adjustment of the amounts of security deposits which the respondent no.1
claimed in the arbitration proceedings against the claims of petitioners for
OMP Nos.495/2007, 496/2007 & 497/2007 Page 8 of 17
charges for the tenanted premises payable by the respondent no. 1 till the
petitioners did not receive the possession of the tenanted premises vide
Walchandnagar Industries Ltd. Vs. Cement Corporation of India 2012(2)
Arbitration Law Reporter 219 (Delhi). The claim with respect to rental and
other related charges of the petitioners are from 1.11.2000 onwards to
31.5.2004, inasmuch as, though the respondent no.1 in the suit filed by it in
this Court had deposited in the court the keys of the premises when the suit
was filed, but, the keys were released to the petitioner only later vide Order
dated 14.5.2004 i.e possession of the subject premises came to the
petitioners only in May, 2004.
7. If one single main issue has to be crystallized for the decision
of the present objections under Section 34 of the Act, the same would be
whether the respondent no.1 was entitled to retain possession of the tenanted
premises without payment of rent etc till the petitioners simultaneously
refunded the amount of security deposits lying with the petitioners on the
respondent no. 1 handing over possession to the petitioners i.e whether the
return of possession and refund of security deposits were to be simultaneous
actions of the parties.
OMP Nos.495/2007, 496/2007 & 497/2007 Page 9 of 17
8. In the opinion of this Court, the issue which is called for
decision would stand decided in terms of the admitted Agreement/MOU
dated 30.7.2001 entered into between the parties and since the terms of this
MOU would be relevant for deciding the issue, I am reproducing the entire
MOU Ex.C-18 as under:-
"MEMORANDUM OF AGREEMENT
THIS MEMORANDUM OF AGREEMENT made this the 30th day of
July 2001 BETWEEN.
1) ABN AMRO Bank N.V., a body corporate organized under the Laws
of the Netherlands having one of its offices in India at DLF Centre,
Sansad Marg, new Delhi - 110001 (hereinafter referred to as "ABN
AMRO" with expression shall wherever the context admits mean and
include its Successors and assigns)
OF THE ONE PART; AND
(2) (i) R. L. Varma & Sons (HUF), A-25 New Friends Colony, New Delhi
- 110025, through its Karta Mr. Ratna Lal Varma (hereinafter referred
to as "R.L. Varma" which expression shall wherever the context admits
mean and include each of its coparceners and their respective heirs,
administrators, executors, successors and assigns).
(ii) Dhruv Property & Investment Pvt. Ltd. A-25, New Friends
Colony, New Delhi - 110065 (hereinafter referred to as "Dhruv
Properties" which expression shall wherever the context admits mean
and include its successors and assigns).
OF THE OTHER PART
WHEREAS:-
A) ABN AMRO took on lease office space admeasuring 3650 sq. ft. on
9th floor of the building known as Gopal Das Bhawan, Bharakhamba
Road, New Delhi, from R.L. Varma pursuant to lease agreement
dated 12.10.94, initially for a period of 3 years which was thereafter
extended up to 31.10.2000.
OMP Nos.495/2007, 496/2007 & 497/2007 Page 10 of 17
B) ABN AMRO also entered into an agreement dated 12.10.94 with
Dhruv Properties for hire of furniture and fittings initially for a period
of 3 years which was extended up to 31.10.2000.
C) Pursuant to the aforesaid agreements and subsequent renewals thereof
ABN AMRO provide interest free security deposits of
Rs.82,12,500/- in aggregate to R.L. Varma, and Rs. 34,12,500/- in
aggregate to Dhruv Properties.
D) On or about 18.8.2000, ABN AMRO intimated its intention to vacate
the premises against refund of security deposits.
E) The sequence of events thereafter led to ABN AMRO causing a legal
notice dated 15.6.01 to be served on R.L. Varma and Dhruv
Properties claiming refund of security deposits together with interest
@ 16% p.a. as also compensation for loss / damage said to have been
suffered by ABN AMRO as set out therein.
F) R.L. Varma and Dhruv Properties caused replies dated 22.6.01 to be
sent to the said legal notice controverting the claims of ABN AMRO on
the grounds set out therein.
G) The Parties thereafter entered into negotiations and have arrived at an
amicable settlement between them as set out hereinafter.
NOW THIS MEMORANDUM WITNESSETH AND THE PARTIES
MUTUALLY AGREE AND DECLARE AS UNDER:-
1. R.L.Varma and Dhruv Properties agree and firmly bind themselves to
refund and pay to ABN AMRO the outstanding balance of security
deposits lying with them, namely, Rs.21,42,951.50 and Rs.34,12,500
aggregating to Rs.55,55,451.50. In addition thereto R.L.Varma and
Dhruv Properties shall pay to ABN AMRO interst @ 13.5% p.a. on the
amounts and for the period set out in the Appendix I hereto.
2. R.L.Varma and Dhruv Properties will pay to ABN AMRO
(i) a sum of Rs.60,00,000 (Rs. Sixty lacs, comprising
Rs.55,55,41.50 being the aggregate of the balance principal
amount of deposits and a sum of Rs.4,44,548.50 as per payment
towards interest, on or before 05.08.01; and
(ii) The balance amount of Rs.2,35,719.74 due towards
interest on or before 31.08.01 for which a post dated cheque shall
be given on or before 05.08.01.
OMP Nos.495/2007, 496/2007 & 497/2007 Page 11 of 17
Computation of interest up to 05.08.01 is appended hereto as
Appendix I. Failure to pay the aforesaid amounts by the due dates
mentioned above will render R.L.Varma and Dhruv Properties liable to
pay additional interest on the unpaid amount @ 16% p.a. for the period
of delay.
3. ABN AMRO shall vacate the demised premises within a period of 7
(seven) days from realisation of the first payment of Rs.60 lacs
provided for in Clause 2 herein above." (emphasis added)
9. As per Sections 91 and 92 of the Indian Evidence Act, 1872
once a written contract is entered into between the parties, only that contract
has to be seen to decide the aspects which are the subject matter of the
written agreement. As per Section 92 of the Indian Evidence Act, no parole
evidence can be led to in any manner contradict or vary or alter etc the terms
of the written agreement between the parties. The issue to be looked into is
that whether the MOU dated 30.7.2001 determines the issue of entitlement
of respondent no.1 to retain possession of the suit premises without making
payment of any rental or other related charges till the petitioners refund the
security deposits with them or that the respondent no.1 continues to be liable
to pay rent for use and occupation alongwith all other related charges till the
respondent no.1 was in possession of the premises, even though the
petitioners do not refund the security deposit amounts. In view of Sections
91 and 92 of the Indian Evidence Act, all correspondences as also
agreements etc which are of dates prior to the date of MOU dated 30.7.2001,
OMP Nos.495/2007, 496/2007 & 497/2007 Page 12 of 17
to the extent that they are the subject matters of MOU dated 30.7.2001, all
such aspects necessarily merge and achieve finality as per the terms
contained in the MOU dated 30.7.2001. As per Sections 91 and 92 of the
Indian Evidence Act except the terms of the MOU nothing else can be
looked into to determine the entitlement of the respective parties as to
whether the respondent no.1 can continue in possession without payment of
rental and other related charges till security deposits are refunded or whether
there was entitlement of the petitioners to claim payment of rental and other
related charges without refund of the security deposits simply because the
respondent no.1 has possession of the suit premises.
10(i) In my opinion the issue to be decided is answered when we
refer to para 3 of the MOU dated 30.7.2001 and which in clear terms
specifically provides that only on the amount of Rs.60 lacs; which was also
the subject matter of para 2(i) of the MOU dated 30.7.2001; being paid by
the petitioners to the respondent no.1, it is at that stage only that the
respondent no.1 was to hand over the possession of the premises to the
petitioners and not before. In effect therefore the MOU removed any doubt
in this regard by clarifying that handing over of possession by the
respondent no.1 to the petitioner was necessarily linked to the petitioner
OMP Nos.495/2007, 496/2007 & 497/2007 Page 13 of 17
refunding the security deposit amount of Rs.60 lacs alongwith interest as
stated in para 2(i) of the MOU dated 30.7.2001.
(ii) I cannot agree with the argument urged on behalf of the
petitioners that payment/refund of security deposit is not in any manner
linked to return of possession of the suit premises by the respondent no.1 to
the petitioners because para 3 of the MOU dated 30.7.2001 makes it crystal
clear that handing over of possession is only when the payment of Rs.60 lacs
is made by the petitioners to the respondent no.1. Implied thus in para 3 of
the MOU is the entitlement of the respondent no.1 to retain the possession of
the premises without payment of any rental or other related charges till the
petitioners pay the amount of Rs.60 lacs; with the fact that the balance
amount of Rs.2,35,719.74/- which was payable by 31.8.2001 was not linked
to the handing over of possession by the respondent no.1 to the petitioners.
11. The issue to be decided by this Court can also be looked at from
another angle and which is that the provision of Section 34 of the Act does
not empower this Court to interfere with one possible and plausible
finding/conclusion of the arbitrator which the arbitrator has arrived at on the
interpretation of a document/evidence on record in the arbitration
proceedings. Arbitrator has arrived at one possible and plausible
OMP Nos.495/2007, 496/2007 & 497/2007 Page 14 of 17
interpretation of the terms of the MOU dated 30.7.2001 that the respondent
no.1 was not liable to hand over possession till respondent no.1 received
payment of the amount of Rs.60 lacs and respondent no.1, till then would
not be liable to make payment of rental and other related charges. As already
stated above, the claims of the petitioners are not being held as time barred
as has been held by the Arbitrator in view of the judgment of the Division
Bench of this Court in the case of Walchandnagar Industries Ltd. (supra),
however, even if the claims are not time barred, these claims are not payable
to the petitioners with respect to the rental and other related charges for the
suit premises as all the rights of the parties stood crystallized as per the
terms of the MOU dated 30.7.2001 and which does not require the
respondent no.1 to pay any rental and other related charges of the
suit/tenanted premises to the petitioners till the amount of Rs.60 lacs is paid
by the petitioners to the respondent no.1 in terms of the MOU dated
30.7.2001. Therefore, even on setting aside the findings of the Arbitrator
with respect to the issue of limitation, yet the other findings of the Arbitrator
are not found in any manner to be perverse or illegal for this Court to
interfere with the conclusion of the Arbitrator in the Award which holds that
the respondent no.1 was entitled to continue to hold on to the possession of
the suit premises without payment of rental and other related charges unless
OMP Nos.495/2007, 496/2007 & 497/2007 Page 15 of 17
the petitioners paid the security deposits lying with the petitioners of an
amount of Rs.60 lacs.
12(i) Learned counsel for the petitioners finally argued that the
Agreement/MOU dated 30.7.2001 was without consideration and hence
invalid. This aspect has been correctly dealt with in detail in the Award
while discussing issue no.1, however in addition to the said discussion and
conclusion of the Arbitrator which is not in any manner illegal or perverse,
so as to sustain that conclusion we can also refer to the definition of
consideration under Section 2(d) of the Indian Contract Act, 1872. As per
this definition an act or an abstinence or a compromise is a valid
consideration ie a monetary amount or a particular and a specific type of
consideration is not the only consideration which is envisaged as a
consideration under law. Section 2(d) of the Indian Contract Act,1872 reads
as under:-
"Section 2. Interpretation -clause
xxx
(d) When, at the desire of the promisor, the promise or any other
person has done or abstained from doing, or does or abstains from
doing, or promises to do or to abstain from doing, something, such act
or abstinence or promise is called a consideration for the promise"
(underlining added)
OMP Nos.495/2007, 496/2007 & 497/2007 Page 16 of 17
(ii) An agreement is defined as a set of reciprocal promises as per
Section 2(e) of the Indian Contract Act and it cannot be doubted that the
MOU dated 30.7.2001 does contain reciprocal promises and hence is an
agreement supported by the consideration. A reciprocal promise given by
one party is a consideration for the reciprocal promise of the other party
resulting in a set of reciprocal promises becoming an agreement/contract.
The argument of the petitioners that there was no consideration is thus a
flawed argument and is therefore rejected.
13. The petitions under Section 34 of the Arbitration and
Conciliation Act, 1996 are therefore dismissed leaving the parties to bear
their own costs.
JANUARY 28, 2016 VALMIKI J. MEHTA, J.
OMP Nos.495/2007, 496/2007 & 497/2007 Page 17 of 17
