Delhi High Court
S. Tech Info. Pvt. Ltd. vs Lord Krishna Bank Ltd. (Now Hdfc Bank ... on 26 April, 2017
Author: Rajiv Sahai Endlaw
Bench: Rajiv Sahai Endlaw
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Date of Decision: 26th April, 2017.
+ CS(COMM) 313/2016 & CC No.191/2008
S. TECH INFO. PVT. LTD. ..... Plaintiff/Counter-Defendant
Through: Mr. Rajesh Gupta, Mr. Harpreet
Singh and Mr. Pranjal Saran, Advs.
Versus
LORD KRISHNA BANK LTD.
(NOW HDFC BANK LTD.) ..... Defendant/Counter-Claimant
Through: Mr. Ajay Monga and Mr. Amol
Sharma, Advs.
CORAM:
HON'BLE MR. JUSTICE RAJIV SAHAI ENDLAW
1. The plaintiff, on 2nd April, 2008 instituted this suit for recovery of
Rs.1,00,00,000/- with interest, pendente lite and future, pleading (i) the
plaintiff is the owner of Industrial Plot No.A-25, Mohan Co-operative
Industrial Estate, Mathura Road, New Delhi - 110 044 ad measuring 10254
sq. yds. and a building comprising of basement, ground, first and second
floor constructed thereon; (ii) that the defendant Bank intended to take a
portion of the said building on lease for opening Information Technology
(IT) Department of their Bank and pursuant to the proposal by letter dated
8th February, 2005 of the plaintiff, a formal Memorandum of Understanding
(MoU) dated 18th February, 2005 as under was executed between the
parties:-
CS(COMM) No.313/2016 & CC No.191/2008 Page 1 of 26
"MEMORANDUM OF UNDERSTANDING
This Memorandum of Understanding is arrived at New Delhi on this day
of 18th February 2005.
BY AND BETWEEN
This Memorandum of Understanding is signed between M/s S. Tech Info
Private Limited having their registered office at A-25 Mohan Co-
operative Industrial Estate, Mathura Road, New Delhi 110044 through
its Director Shri Harpreet Sigh Batra, duly authorized vide Board
Resolution No...... Dtd. 17-2-2005 passed by the Company.
AND
Lord Krishna Bank Ltd., a Banking Company registered under
Companies Act 1956 and having its registered and Administration Office
at New India Express Building, Kaloor, Kochi 682017 through its
authorized signatory Shri R.K. Anand, Asst. General Manager - LAW,
Regional Office, New Delhi of the other Part.
WHEREAS
M/s S. Tech Info Private Limited is the absolute owner and in
possession of First Floor, A-25 Mohan Co-operative Industrial
Estate, Main Mathura Road, New Delhi - 110044 measuring to
29,750 sq. feet (carpet area) (subject to actual measurement). M/s
S. Tech Info Private Limited is the absolute owner and seized and
possessed of or otherwise well and sufficient entitled to the
Property as Owner of the said property more particularly
described by way of their offer as Annexure I.
1. M/s S. Tech Info Private Ltd represents that they have duly and
fully fulfilled, performed and discharged all their obligations
towards the concerned local authorities and to every body else
concerned pertaining to the said premises and every part thereof
including the payment thereof and discharge of the dues of the
authorities and that there are no impediments, prohibitions of
restriction from the Authorities or from anybody else in the matter
of creation of the lease and M/s S. Tech Info Private Ltd. have
good right, full power and absolute authority to create the lease
later on.
CS(COMM) No.313/2016 & CC No.191/2008 Page 2 of 26
2. Lord Krishna Bank Ltd is desirous of opening Bank's Regional
Office at First Floor, A-25 Mohan Co-operative Industrial Estate,
Main Mathura Road, new Delhi - 110044 measuring to 35,000 sq.
ft. (covered area) and 29,750 sq. feet Carpet area (subject to
actual measurement) and has agreed to take on lease
admeasuring to 35,000 Sq. feet (covered area) and 29,750 Sq.
Feet Carpet area (subject to actual measurement and as
earmarked earlier) and in the circumstances after negotiations
between the parties hereto, M/s S. Tech Info Private Ltd. have
offered, unto the Lord Krishna Bank Ltd. the demise of the
aforesaid premises and Lord Krishna Bank Ltd. have agreed to
take the said demised premises broadly on the terms and
conditions hereinafter appearing.
NOW THIS INDENTURE WITNESSETH AND IT IS HEREBY
AGREED BY AND BETWEEN THE PARTIES HERETO AS
FOLLOW:
In consideration of fair market rent as specified and in the further
consideration of the Covenants herewith contained on the part
hereby accepts the demised premises together with all the rights
easements and appurtenances agreed by M/s S. Tech Info Private
Ltd., hereunder commencing from the date to be agreed upon
initially for a period five years which is to be extended in the like
manner - maximum two times i.e. for a period of 5+5+5 years
(with lock-in-period of First Five Years) i.e., 180 calendar months
provided that the rent shall be enhanced 15% after the expiry of
five years and further 15% after the expiry of ten years provided it
is the fair market rent prevailing at the time. No such revision
shall be made for the first five years of the lease period.
COVENANTS - LORD KRISHNA LTD
a) Fair Market rent has been agreed between both the parties at
Rs.47.50 per sq. ft. on 35,000 sq. ft. covered area and 29,750 sq.
ft. carpet area amounting to Rs.16,62,500/- per month of the First
Floor fully furnished as per layout/design provided by the Bank
and as mentioned herein above.
CS(COMM) No.313/2016 & CC No.191/2008 Page 3 of 26
b) Premises will be use to open the proposed Regional Office at First
Floor, A-25 Mohan Co-operative Industrial Estate, Main Mathura
Road, New Delhi - 110044 by Lord Krishna Bank Ltd.
c) Shall give three (3) months interest free rent (Two (2) months as
advance rent at the time of execution of MoU and one month
advance rent at the time of possession) To be refunded at the time
of vacating the premises.
COVENANTS - OWNER
a) Shall obtain necessary permission from appropriate authorities
for opening the Bank Regional Office in the demised premises and
is ready and willing to make payment of any fees/charges/levies
that may be levied / governed by the concerned authorities also
assures the Lord Krishna Bank Ltd. to obtain any other consent,
permission and approvals as may be necessary in law or
otherwise for purpose of opening Regional Office of bank thereof.
b) Landlord to provide full furnished premises as per layout / design
provided by the bank and to remove on their own cost the non -
load bearing walls of the said premises and possible structural
changes as per requirement of bank and shall also carry out the
required, additions or alterations in order to make the premises fit
for purpose herein mentioned.
c) Shall arrange for necessary repairs in respect of any structural
damages, water supply lines, sanitary pipes, electrical
installations and communications and other facilities that may be
required for purpose mentioned herein.
d) Municipal Taxes, rates, charges and outgoing in respect of the
said premises that would be determinate / fixed varied from time
to time by the Municipal Corporation / Municipality or any other
local authority shall be paid by M/s S. Tech Info Private Ltd.
e) Shall allow and provide adequate space on roof / terrace or any
suitable place for installation of V-SAT Dish Antenna and other
allied equipments committed herewith.
CS(COMM) No.313/2016 & CC No.191/2008 Page 4 of 26
f) Shall provide the Bank with 100% power back up facility which is
included in the rent above.
g) Shall provide with adequate electricity load. However, any legal
charges / any other charges to be paid to the concerned
authorities by the Bank.
h) shall allow and provide to affix / display its name board, signage,
advertisement material banners etc. across the breadth and length
of the said premises.
i) Shall provide the bank with 100% air-conditioned facility which is
included in the rent, however running charges (Diesel) of Rs.5.50
per Sq. per month for 66 hours in a week will be borne by the
Bank. Anything over and above 66 hours will be charged @
Rs.1100/- per hour which will be application for Sunday also.
j) Shall provide the Bank with 40 reserved car parking space inside
the building complex at no extra cost.
k) To provide necessary NOC / permission from DDA / MCD any
other local authorities for sub-letting space to our Bank at the
said premises.
l) Periodical maintenance will be done by the landlord however
common maintenance charges payable by the tenants to be paid
by the Bank directly to maintenance society as applicable to other
occupants of the building.
m) Landlord shall hand over the fully furnished premises complete in
all respect by 31st March, 2005 as per approved layout plan
prepared and forwarded by the Bank.
STAMP DUTY AND REGISTRATION CHARGES
Stamp Duty and registration charges and expenses incidental to the
execution of lease agreement shall be borne shared by both the parties
equally (i.e. 50% - 50%).
JURISDICTION
In the event of any dispute between both the parties for the said demised
premises, the same shall be subject to jurisdiction of Delhi Courts.
IN WITNESS WHEREOF THE PARTIES HERETO HAVE SIGNED
THIS MEMORANDUM OF UNDERSTANDING ON THIS DAY OF
CS(COMM) No.313/2016 & CC No.191/2008 Page 5 of 26
18th FEBRUARY 2005 IN THE PRESENCE OF THE FOLLOWING
WITNESSES
LORD KRISHNA BANK LTD. OWNERS
M/s S. Tech Info Private Ltd.
Through their Director
Shri Harpreet Singh Batra"
(emphasis supplied)
(iii) "initially tentative covered area of 35000 square feet was mentioned in
the MoU, but finally on actual measurement taken on 21.02.2005 jointly
between the parties, it was found that the area actually measured 29,635
square feet of covered area and 25,698 square feet of carpet area. The
defendant accepted the said actual area to take on lease and gave its consent.
The parties agree to the measurements, and as their respective acceptance
thereto endorsed their signatures on the site plan prepared at the site" (iv)
even though the plaintiff‟s offer was for taking the premises on lease for
"opening IT Department of the Bank" and talks had progressed on that
premise but inadvertently in clause "a" under Covenants in the MoU, the
words "opening the Banks regional office" were used; (v) on noting this
inadvertent slip, the plaintiff addressed a letter dated 18th February, 2005 to
the defendant Bank and the defendant Bank accepted the same and
addressed a letter dated 23rd February, 2005 to the Delhi Development
Authority (DDA) clarifying the same; (vi) "the said MoU was acted upon by
the parties in as much as, after execution of the said MoU the property was
measured and a gross covered area of 29653 sq. ft. (sic for 29,635 sq. ft.)
was found available for lease. The defendant Bank accordingly paid
Rs.28,15,325/- on 23.02.2005 as interest free security equivalent to the two
CS(COMM) No.313/2016 & CC No.191/2008 Page 6 of 26
months rent"; (vii) the plaintiff had commenced renovation work of the
premises prior to execution of MoU and simultaneously with the plaintiff‟s
offer and the renovation work was commenced as per the liking and
instructions of the defendant Bank and the defendant Bank monitored the
renovation to suit its purpose; (viii) the plaintiff also applied for necessary
permission and deposited Rs.2,40,000/- with the DDA; the permission was
granted vide letter dated 17th March, 2005; (ix) the premises were ready in
the second week of March, 2005 and the defendant Bank after inspection
approved the premises and sought time for execution of lease, to complete
their in-house formalities, taking final permission from the head office and
the like; (x) the defendant Bank however kept on delaying execution of the
lease deed for some reason or the other; (xi) the defendant Bank approved
the final plans on 16th March, 2005 and submitted 14 such plans in respect of
entire layout, interior fittings, furnishing, sitting arrangement and the like;
(xii) the plaintiff expedited the said work and completed it within the agreed
time and offered the defendant Bank to take possession in the second week
of April, 2005; (xiii) the plaintiff spent around Rs.80,00,000/- in renovating
the premises and interior designing, office furniture / furnishing, electrical
fittings and the allied works as per desirability of the defendant Bank; (xiv)
however the defendant Bank became dishonest and unscrupulously refused
to take possession of the premises on the evasive and dishonest plea that
requisite permission had not been obtained; (xv) the plaintiff was
constrained to forfeit a sum of Rs.28,15,325/- that was paid pursuant to
MoU as interest fee security deposit equivalent to two months rent; (xvi) the
defendant Bank vide letter dated 6th May, 2005 sought refund of the security
amount on the ground that the plaintiff had failed to adhere to perform its
CS(COMM) No.313/2016 & CC No.191/2008 Page 7 of 26
obligations under the MoU; (xvii) the defendant Bank filed a Company
Petition for winding up of the plaintiff which was registered as C.P.
No.258/2006 of this Court and which was pending consideration; (xviii) the
defendant Bank‟s abrupt refusal to take delivery of possession of the
premises on 31st March, 2005 in terms of MoU is unjustified and deliberate
and has put the plaintiff in financial loss and damage solely attributable to
the defendant Bank; and, (xix) not only has the plaintiff spent Rs.80,00,000/-
in making the premises ready as per the taste and liking of the defendant
Bank but has also deposited Rs.2,40,000/- with the DDA and has suffered
loss of rent from April, 2005 to October, 2005 and after deducting the
amount of Rs.28,15,325/-, the defendant Bank is liable to compensate
damages in the sum of Rs.1,00,00,000/- to the plaintiff.
2. The suit was entertained. On 20th August, 2008 it was informed that
the defendant Bank Lord Krishna Bank Ltd. had been amalgamated with the
Centurion Bank Limited and subsequently with the Housing Development
Finance Corporation (HDFC) Bank Ltd.
3. The defendant Bank contested the suit by filing a written statement
along with Counter Claim, pleading (i) that the plaintiff requested the
defendant Bank to send a letter to DDA and elaborate the functions of the
proposed office which the defendant Bank intended to set-up and also
requested to give a written assurance that there would be no public dealing
in the suit property; the plaintiff represented that such letter was required to
assist the plaintiff in obtaining the requisite permissions for sub-letting the
property; the defendant Bank being unaware of the mala fide intentions of
the plaintiff, issued a letter dated 23rd February, 2005 to the Commissioner
CS(COMM) No.313/2016 & CC No.191/2008 Page 8 of 26
(Lands), DDA on request of the plaintiff informing that it intended to open
its Operation Sub Unit at the premises which consists of "handling complete
data base of all branches, setting up of computer planning and policy
department and will be a totally IT enabled office" and assuring that "there
will not be any public dealing"; (ii) the said letter was not in accordance
with the MoU and the factum of the plaintiff taking such letter from the
defendant Bank itself shows that the plaintiff was unable to perform any of
its obligations under the MoU; (iii) that since there was a breach of the MoU
on the part of the plaintiff, the defendant Bank issued letter dated 6th May,
2005 for refund of Rs.28,15,325; (iv) that on non-payment by the plaintiff of
the aforesaid amount the defendant Bank applied for winding up of the
plaintiff; during the hearing of Company Petition no.258/2006 the plaintiff
agreed to deposit the amount of Rs.28,15,000/- in this Court and the winding
up petition was dismissed; (v) denying that the defendant Bank intended to
take the said building on lease for its IT operations and pleading that the
defendant intended to open its Bank‟s regional office in the property and
further denying that there was any mistake in clause „a‟ of the Covenants in
the MoU; (vi) denying the receipt of the letter dated 18 th February, 2005
from the plaintiff and pleading that the same has been fabricated by the
plaintiff; (vii) the letter dated 23rd February, 2005 was written on the
representation of the plaintiff and not in modification of the MoU; (viii)
denying that any renovation work was commenced by the plaintiff or that
the defendant Bank was monitoring the same; (ix) the defendant Bank was
to take the property on lease subject to certain conditions to be fulfilled by
the plaintiff and one of which was to take the necessary permission from the
appropriate authority (DDA) for opening the Bank‟s regional office and
CS(COMM) No.313/2016 & CC No.191/2008 Page 9 of 26
unless such permission was taken / obtained, the defendant Bank could not
have taken the property on lease and there was no occasion for the plaintiff
to start the renovation of the suit property; (x) denying that the requisite
permission was granted by the DDA and pleading that the permission
granted vide letter dated 17th March, 2005 is in terms of the MoU; (xi)
denying that the defendant Bank inspected the property or approved the
renovation or approved any plans: (xii) since the requisite permissions in
terms of MoU were not obtained, the question of the defendant Bank taking
the premises on rent did not arise; (xiii) denying that a sum of
Rs.80,00,000/- was spent by the plaintiff in renovating the premises; (xiv)
denying that the plaintiff was entitled to forfeit the amount of Rs.28,15,325/-
; (xv) denying that the plaintiff has suffered any loss attributable to the
defendant Bank; (xvi) the plaintiff having not fulfilled the terms of the MoU,
the defendant Bank is entitled to refund of Rs.28,15,325/- with interest at
18% per annum; (xvii) the plaintiff has filed the suit with mala fide design to
avoid refund of Rs.28,15,325/-; (xviii) that the winding up petition earlier
filed by the defendant Bank was dismissed after directing the plaintiff to
deposit Rs.28,15,000/- in this Court and in view of the fact that there is a
disputed question for which the present suit had been filed; and, (xix)
seeking recovery of Rs.46,31,207/- with future interest at 18% per annum.
4. The plaintiff has filed replication to the written statement and written
statement to the counterclaim and the defendant Bank has filed replication to
the written statement to the counterclaim but since neither counsel has
referred thereto during the hearing, need to refer thereto is not felt.
5. Inspite of completion of pleadings, the suit has languished.
CS(COMM) No.313/2016 & CC No.191/2008 Page 10 of 26
6. The Counter Claim of the defendant Bank was accompanied with IA
No.12944/2008 under Section 14 of the Limitation Act, 1963 and vide order
dated 14th August, 2013 the said application was allowed, reasoning that
both parties having proceeded on the basis that the Company Petition as well
as the suit pertained to the same matter and issue, the plaintiff is not justified
in resisting the prayer of the defendant Bank for condonation of delay in
filing the Counter Claim and that the Counter Claim could have been filed
only at the time of filing of the written statement and admittedly the written
statement was within time and the defendant Bank had been diligently
pursuing its remedy for recovery of the monies claimed by it to be due from
the plaintiff.
7. The plaintiff has preferred FAO(OS) No.475/2013 against the
aforesaid order dated 14th August, 2013 allowing the application of the
defendant Bank under Section 14 of the Limitation Act.
8. The suit, though ripe for framing of issues, was adjourned from time
to time on the request of the counsel for the plaintiff on the ground of the
pendency of the appeal aforesaid.
9. The suit, originally numbered CS(OS) No.608/2008, on coming into
force of the Commercial Courts, Commercial Division and Commercial
Appellate Division of the High Courts Act, 2015, was found to be arising
out of a commercial dispute and accordingly renumbered as a commercial
suit.
10. On 18th October, 2016, again request was made for adjournment.
However it was enquired, whether there was any stay of proceedings in this
suit. The reply was in the negative. Observing that the suit being a
CS(COMM) No.313/2016 & CC No.191/2008 Page 11 of 26
commercial suit and being of the year 2008 could not be so kept pending,
the matter was posted to 10th April, 2017 for framing of issues.
11. On 10th April, 2017 the counsels handed over proposed issues but on
reading of pleadings in the suit and in the Counter Claim it appeared that no
trial is necessary in the present suit and the suit can be decided on the basis
of documents.
12. I have already hereinabove re-produced the MoU between the parties.
I re-produce hereinbelow the letter dated 17th March, 2005 of the DDA to
the plaintiff and which, according to the plaintiff grants the permission in
terms of MoU and according to the defendant Bank does not grant the
permission in accordance with the MoU:-
"M/s. S. Tech. Info. Pvt. Ltd.,
A-25, MCIE, Mathura Road,
New Delhi-44.
Sub:- Regarding plot No.A-25, Mohan Co-operative Indl.
Estate, Mathura Road, New Delhi (Sub-letting
permission).
D/Sir,
With reference to you letter dt.21.02.05 and 28.02.05
respectively on the above noted subject, I am directed to inform
you that your request for permission to sublet an area of 18500
sq. ft. to M/s E. Serve International Ltd., and M/s Lord Krishna
Bank for an area 20000 sq. ft. for a period of 12 months for
carrying the use for Information Technology exclusively has
been acceded to subject to the following conditions.
1. The trade to be run by the tenant will be the same as per
sub-leas deed executed on 18.12.71.
2. No sub division for the plot is allowed in any manner.
3. Sub-letting charges @ Rs.1/- (Rs. one only) per sq. ft. per
month is payable in advance on annual basis for a period
CS(COMM) No.313/2016 & CC No.191/2008 Page 12 of 26
of 12 months only from the date of issue of this letter.
4. No Banking Services shall be allowed in the premises in
the name & style of M/s Lord Krishna Bank.
Yours faithfully,
Dy. Director (Indl.)"
13. It was on 10th April, 2017 enquired from the counsel for the plaintiff,
whether not the claim of the plaintiff for damages is dependent upon the
interpretation of the MoU and the letter dated 17 th March, 2005 and if on
interpretation thereof it is held that the requisite permission envisaged was
not obtained, the question of the plaintiff being entitled to any amount by
way of damages would not arise and ipso facto the plaintiff would be liable
to refund the security deposit. Accordingly need for evidence was enquired
from the counsel for the plaintiff.
14. It was further observed on 10th April, 2017 that only if the defendant
Bank was held to be in breach would the question of putting the suit to
evidence for plaintiff to lead evidence of the damages suffered would arise.
15. The counsel for the plaintiff stated, that after the receipt of the letter
dated 17th March, 2005, the defendant Bank agreed to the terms thereof and
made the plaintiff continue with the work of preparation of the premises for
the defendant Bank. However the counsel for plaintiff, on being asked to
show the plea to this effect, invited attention to paras 11 and 12 of the plaint
which are as under:-
"11. Regarding obligation to take permission, the
plaintiff had applied to the DDA for necessary permission
for which purpose the plaintiff had deposited
CS(COMM) No.313/2016 & CC No.191/2008 Page 13 of 26
Rs.2,40,000/- with DDA. The permission was granted by
its letter dated 17th March, 2005.
12. The premises were ready as per tentative layout
plan by second week of March, 2005. The defendant
inspected the premises and approved the renovation done
in terms of layout plan submitted on 21.02.2005. For
purpose of execution of lease defendant sought time to
complete their in-house formalities, taking final
permission from head office and the like. However, the
defendant kept on delaying and avoided it on one pretext
or the other citing varied reasons viz., staff is to be
deployed, permission is awaited, sanction from head
office, and the like. Thought the premises were ready in
all respects but was only awaiting approval of detailed
final layout plans. The plaintiff delayed such plans and
finally held detailed discussion with plaintiff that resulted
in its preparation with concurrence of defendant's
representatives. The defendant finally approved the said
final plans on 16.03.2005 and submitted 14 of such plans
in respect of entire layout, interior fitting, furnishing,
sitting arrangement and the like".
16. It was in the order dated 10th April, 2017 observed that the aforesaid
paragraphs of the plaint do not support what was orally contended by the
counsel for the plaintiff and that even otherwise, the defendant, a banking
organisation having acted in writing through an MoU, could not be accepted
to have, without writing, agreed to terms at variance with what was recorded
in the MoU. It was further observed that the plaintiff had not even pleaded
as to with which officer of the defendant Bank and on which date was the
said understanding reached or even that the letter dated 17 th March, 2005 of
the DDA which is addressed to the plaintiff was handed over to the
defendant Bank.
CS(COMM) No.313/2016 & CC No.191/2008 Page 14 of 26
17. It was further observed in the order dated 10th April, 2017 that without
a registered document, no lease for any definite period and for breach
whereof damages can be claimed, can be said to have been arrived at
between the parties.
18. The counsel for the plaintiff then drew attention to the letter dated 18th
February, 2005 of the plaintiff to the defendant Bank requesting for some
changes to be made in the MoU and to the letter dated 23 rd February, 2005
written by the defendant Bank to the DDA and stated that owing thereto,
issues be framed and the matter be listed for evidence.
19. The counsel for the defendant Bank on enquiry stated that the
defendant Bank disputed the receipt of letter dated 18th February, 2005 but
admits the letter dated 23rd February, 2005 to have been written by the
defendant Bank.
20. It was however observed in the order dated 10th April, 2017 that even
if it were to be believed that the permission granted by DDA for sub-letting
to the defendant Bank for information technology use and without any
banking services is in terms of the agreement between the parties, according
to the plaintiff also there is no change in the MoU insofar as for the area of
the premises to be let out and the period for which the premises were to be
let out and on that account alone it cannot be said that the permission
granted by DDA was in terms of MoU.
21. On request on 10th April, 2017 of the counsel for the plaintiff, the
matter was adjourned to today. Today the counsel for the plaintiff has first
argued that the MoU aforesaid is infact a lease. However upon being put to
the counsel for the plaintiff that if it is a lease, it being unstamped and
CS(COMM) No.313/2016 & CC No.191/2008 Page 15 of 26
unregistered, cannot be looked into at all, he states that it is not his argument
that it is a lease. To avoid any confusion, it is deemed appropriate to record
verbatim the argument:
"This document is a complete meeting of minds as to
the intention of the parties to enter into and execute a
lease. All covenants and necessary aspects have been
arrived at and agreed under this MoU and this
document was sufficient for registration and was a
final execution after the permission had been
obtained".
22. The counsel for the plaintiff, upon being asked to clarify, whether his
contention aforesaid amounts to the MoU being an Agreement to enter into a
lease or a lease, states:
"It would not be an Agreement to Lease because it is
nowhere so recorded that a lease would be executed.
This document itself had to be registered as a lease
after the permission had been obtained".
23. The counsel for the plaintiff has referred to Kollipara Sriramulu Vs.
T. Aswathanarayana AIR 1968 SC 1968 laying down that a mere reference
to a future formal contract will not prevent a binding bargain between the
parties.
24. There is no merit in the above contentions and I am unable to
comprehend the reason for which this judgment aforesaid is cited. Of course
there is a binding bargain between the plaintiff and the defendant Bank to let
out of the premises. However that letting was contingent upon the plaintiff
obtaining necessary permissions from DDA for opening of the defendant
Bank‟s Regional Office in the premises and to obtain any other consent,
permission, approvals as may be necessary in law or otherwise for purpose
CS(COMM) No.313/2016 & CC No.191/2008 Page 16 of 26
of opening Regional Office of Bank in the premises on the terms agreed
between the parties and recorded in the MoU. The MoU also provided for
execution of lease. The plaintiff itself has filed before this Court its letter
dated 18th February, 2005 to the defendant Bank, in clause 5 of which the
plaintiff has requested the defendant Bank to enter into Lease Agreement
latest by 7th March, 2005 so as to enable the defendant Bank to complete all
formalities including legal bindings. It is obvious that the arguments of the
counsels are being taken to get out of a sticky situation. The defendant Bank
was admittedly not put in possession of the premises. The MoU remained
„an agreement to give on lease‟ on the part of the plaintiff and an „agreement
to take on lease‟ on the part of the defendant Bank on the terms contained in
the MoU and contingent upon the parties fulfilling the obligations they were
required to fulfil prior to the actual letting. If defendant Bank had failed to
take the premises on lease on the terms contained in MoU inspite of plaintiff
fulfilling its obligations, certainly the plaintiff would be entitled to damages
caused thereby.
25. With respect to the query made on 10th April, 2017 as to how the
permission contained in the letter dated 17th March, 2005 of the DDA for
letting out of an area of 20000 sq. ft. and for a period of twelve months only
is in terms of MoU where the plaintiff had agreed to let covered area of
35,000 sq. ft. (carpet area 29,750 sq. ft.) subject to measurement, for a
period of 5+5+5 years, the counsel for the plaintiff contends that no area was
specified in the proposal dated 8th February, 2005 made by the plaintiff to
the defendant Bank for letting; the defendant Bank was looking for renting a
complete floor.
CS(COMM) No.313/2016 & CC No.191/2008 Page 17 of 26
26. Not only is the aforesaid contention of the counsel for the plaintiff
contrary to clause 2 of the recitals and clause „a‟ of the Covenants of the
defendant Bank in the MoU and to the proposal dated 8th February, 2005
filed by the plaintiff itself which mentions the covered area and carpet area
offered for letting as 35,000 sq. ft. and 29,750 sq. ft. respectively but also to
the pleadings re-produced hereinabove of the plaintiff wherein the plaintiff
has pleaded that initially tentative covered area of 35000 sq. ft. was
mentioned in MoU but finally, on measurement taken on 21st February, 2005
jointly between the parties, it was found that the area actually measured
29635 sq. ft. (covered area) and 25698 sq. ft. (carpet area) and that
accordingly the amount of Rs.28,15,325/- was computed and paid by the
defendant Bank to the plaintiff on 23rd February, 2005.
27. The counsel for the plaintiff then draws attention to clause 2 of the
recitals of the MoU wherein it is mentioned that the areas mentioned of
35000 sq. ft. (covered area) and 29750 sq. ft. (carpet area) were subject to
measurement.
28. I do not agree. The MoU records that rent was to be paid on per
square feet per month basis. At the time of MoU, the defendant Bank had
not verified the exact area which as per the plaintiff was to be 35,000 sq. ft.
(covered area) and 29,750 sq. ft. (carpet area). The MoU provides for actual
measurements to be done jointly by the plaintiff and the defendant Bank. It
is the plaintiff‟s own plea that it was so measured and accordingly exact rent
per month and the security deposit payable in terms of clause (a) of the MoU
computed.
29. The counsel for the plaintiff then draws attention to the letter dated 6 th
CS(COMM) No.313/2016 & CC No.191/2008 Page 18 of 26
May, 2005 of the defendant Bank to the plaintiff refusing to take the
premises on rent and states that it was not stated therein that the defendant
Bank was not taking the premises on rent for the reason of the permission by
the DDA being only for letting of 20,000 sq. ft. of area for a period of 12
months only and it only mentioned the reason of the permission for opening
the regional office having not been given.
30. The letter dated 6th May, 2005 is of an officer of the Bank and is not
by a legal person. Though the same mentions the ground of permission to
open the regional office having not been given and the plaintiff having failed
to give possession on or before 31st March, 2005 but also, generally
mentions that the plaintiff had failed to perform the obligations on its part as
per the MoU. For failure to specifically mention in the said letter the reason
of permission having not been granted for letting of 29,750 sq. ft., it cannot
be deemed that the defendant Bank has waived the said condition, especially
when the defendant Bank had also paid security deposit on the basis of the
actual measurements carried out and the premises to be let out to it to be
having the carpet area of 29,750 sq. ft. intended to waive.
31. Supreme Court recently in Galada Power and Telecommunication
Limited Vs. United India Insurance Company Limited (2016) 14 SCC 161
reiterated that waiver cannot always and in every case be inferred merely
from the failure of the party to take the objection and that waiver can be
inferred only if and after it is shown that the party knew about the relevant
facts and was aware of his rights to take the objection in question. It was
further held that waiver presupposes that the person to be bound is fully
cognizant of his rights, and that being so, he neglects to enforce them, or
CS(COMM) No.313/2016 & CC No.191/2008 Page 19 of 26
chooses one benefit instead of another. Waiver was held to be an intentional
relinquishment/conscious abandonment of an existing legal right, advantage,
benefit, claim or privilege which except for such a waiver, a party could
have enjoyed. Waiver was held to be an agreement not to assert a right and
thus there can be no waiver unless the person who is said to have waived, is
fully informed as to his rights and with full knowledge of the same,
intentionally abandons the same.
32. Applying the aforesaid principle, merely from the factum of the
defendant Bank in the letter dated 6th May, 2005 not mentioning the grounds
of DDA having not granted permission for letting out of covered area of
29,635 sq. ft. (carpet area 25,698 sq. ft.) or for letting out by the plaintiff to
the defendant Bank of the premises for 5+5+5 years, it cannot be said that
the defendant Bank had waived its rights under the MoU to take on lease the
premises on the said terms or had agreed to take an area of 20,000 sq. ft.
only for a period of 12 months only. It is not even the plea of the plaintiff in
the plaint that the defendant Bank had waived its rights under the MoU or
had in supersession of the MoU agreed to take an area of 20,000 sq. ft. only
for a period of 12 months. In the absence of pleadings, it is not open to the
counsel for the plaintiff to even contend so.
33. The counsel for the plaintiff next argues that even if the plaintiff had
not fulfilled the conditions of the MoU, it would still be entitled to damages
because the defendant Bank made the plaintiff carry out the works in the
premises.
34. I am unable to agree with the aforesaid contention.
35. The MoU has to be read in its entirety. Under the MoU the defendant
CS(COMM) No.313/2016 & CC No.191/2008 Page 20 of 26
Bank had agreed to take on rent the premises of the plaintiff "commencing
from the date to be agreed upon...." "and in the further consideration of the
covenants" contained in the MoU. One of the covenants was that the
plaintiff shall obtain necessary permission from the appropriate authority
and the other covenant was that the plaintiff shall provide full furnished
premises as per layout design provided by the Bank. Taking of the premises
by the defendant Bank was thus dependent on all the covenants which the
plaintiff was to fulfil and the plaintiff cannot in law compel the defendant
Bank to take on rent or to allege that the defendant Bank has wrongly
refused to take on rent by fulfilling some of the said covenants only and not
fulfilling all the covenants.
36. Reference can be made to an old judgment of the Division Bench of
the High Court of Madras in Simson Vs. Virayya MANU/TN/0126/1886.
The contract between the parties therein was for sale of 5,000 bags of white
gingelly seed; 2/3rd of the entire price was paid in advance and the bags were
to be delivered in five instalments of 1,000 bags each with the purchaser
agreeing to pay 1/3rd balance price of each instalment at the time of delivery.
The seller however delivered only 3,000 bags and did not deliver the
remaining 2,000 bags. The purchaser sued for damages. The defence of the
seller was that since the purchaser did not pay the balance 1/3 rd price of
3,000 bags delivered, he was justified in not delivering the balance 2,000
bags. The question for decision before the Division Bench was, whether the
seller was justified in refusing to deliver 2,000 bags for non-payment of the
balance 1/3rd price of 3,000 bags delivered. It was held that the contract was
for delivery of entire 5,000 bags, as the advance paid of 2/3 rd of the price
CS(COMM) No.313/2016 & CC No.191/2008 Page 21 of 26
was of all 5,000 bags and it was not the term that the delivery of successive
instalments of 1,000 bags each was dependent upon the payment of balance
1/3rd price of the earlier instalment. It was further held that the contract was
not capable of being divided into as many independent contracts as are the
instalments to be delivered and that such a division would be at variance
with the primary intention of the contracting parties.
37. Similarly here, the defendant Bank had agreed to take the entire
29,635 sq. ft. covered area (25,698 sq. ft. carpet area) for a period of 5+5+5
years and could not be compelled to take 20,000 sq. ft. there out of or for a
period of 12 months only and cannot be held liable for damages for not
taking the premises on rent. Judicial notice can be taken of the fact that for
none, except may be for students or persons on short assignments, taking a
premises, whether for residence or for business, for a short term of 12
months, makes sense. Commercial organisations and more so Banks, are
known to take premises for a long term as commercial goodwill of their
business gets attached and/or is relatable to the premises. The agreement on
the part of the plaintiff to let out and the agreement on the part of the
defendant Bank to take on rent the premises for 5+5+5 years and which
owing to the land underneath the premises having been granted to the
plaintiff on leasehold basis by DDA was possible only after receipt of
permission and which permission was granted for a period of 12 months
only, was thus an essential pre-requisite for the defendant Bank to take the
premises on rent and the failure of the plaintiff to get such permission from
DDA goes to the root of the matter entitling the defendant Bank to refuse to
take the premises on rent and to seek refund of the security deposit.
38. The High Court of Patna, comparatively recently in M/s Suraj Kana
CS(COMM) No.313/2016 & CC No.191/2008 Page 22 of 26
Pharmaceutical Vs. Bihar State Financial Corporation AIR 2009 Pat 91,
has held that under the laws of contract, there is a principle known as
fundamental breach i.e. a breach by either party of a term which was
fundamental to the contract and once the said fundamental basis is breached,
the contracting parties are relieved of their obligations which are reciprocal,
and that a party who has committed the fundamental breach, cannot enforce
and ask the other party to perform his part of the obligation without fulfilling
his own obligations.
39. A promisee is not bound to accept part performance of a contract.
Reference in this regard can be made to the old judgments of the Division
Bench of Lahore High Court in The Firm Shamas Din-Mehr Bakhsh and
Company Vs. Agha Muhammad Khalil Shirazi MANU/LA/0227/1920 and
Mathra Das Vs. Secy. of State AIR 1930 Lah 979.
40. The question, whether the permission granted by the DDA vide letter
dated 17th March, 2005 for letting of the premises to the defendant Bank for
carrying the use for IT exclusively with no banking services in the name and
style of the defendant Bank, is in accordance with the change agreed to by
the defendant Bank in its letter dated 23rd February, 2005 to the DDA is a
disputed question of fact which will have to be put to evidence. It is however
not disputed that even the said permission was for an area of 20000 sq. ft.
and for a period of 12 months only, instead of for covered area of 29,635 sq.
ft. (carpet area 25,698 sq. ft.) agreed to be taken on rent in the MoU for a
period of 5+5+5 years. The plaintiff, for this reason alone, has not fulfilled
its part of the Agreement.
41. The plaintiff having been unable to obtain the permission from DDA
CS(COMM) No.313/2016 & CC No.191/2008 Page 23 of 26
for letting out of covered area of 29,635 sq. ft. (carpet area 25,698 sq. ft.) of
its premises for a period of 5+5+5 years, cannot possibly blame the
defendant Bank of breach for not taking the premises on rent in terms of the
MoU and claim damages therefor and the suit of the plaintiff is
misconceived.
42. With respect to the Counter Claim of the defendant Bank, the counsel
for the plaintiff contended that it is beyond time. It was argued that the
defendant Bank refused to take the premises on 6th May, 2005, and the
present Counter Claim filed on 15th October, 2008 i.e. more than three years
therefrom is barred by time.
43. However the said aspect has already been adjudicated by this bench
while allowing the application of the defendant Bank under Section 14 of
the Limitation Act and the plaintiff, at least before this bench, is not entitled
to re-agitate the same.
44. Though the plaintiff in the plaint has referred to payment of
Rs.28,15,325/- as interest free security but the nomenclature thereof in the
MoU is "interest free advance rent to be refunded at the time of vacating the
premises".
45. The counsel for the plaintiff has also argued that even if the plaintiff
has not fulfilled its obligations under the MoU, it is still entitled to forfeit the
amount owing to having spent the monies on the works carried out in the
premises as desired by the defendant Bank.
46. I am unable to understand the basis of the said argument. I have
already hereinabove held that even if the plaintiff has performed one part of
its obligation under the MoU, of having carried out works in the premises as
CS(COMM) No.313/2016 & CC No.191/2008 Page 24 of 26
desired by the defendant Bank, for the reason of the plaintiff having not
fulfilled its other obligations under the MoU, it cannot compel the defendant
Bank to take the premises on rent and cannot claim any damages from the
defendant Bank for breach of agreement or cannot seek to recover from the
defendant Bank the monies spent by it on partly performing its obligations
under the MoU. Once that is so, the question of the plaintiff being entitled
to withhold the interest free advance rent, which by its very nature was
refundable to the plaintiff at the time of vacating the premises, does not
arise.
47. The plaintiff also in fact in the plaint has not forfeited the said sum of
Rs.28,15,325/-, as has been argued. The plaintiff on the contrary has
adjusted the said amount in the damages claimed to have been suffered.
Once the plaintiff is not found to be entitled to any damages or costs if
incurred by plaintiff in making the premises ready, the plaintiff is liable to
refund the said amount.
48. The only other contention of the counsel for the plaintiff in defence to
the claim of the defendant Bank for recovery of Rs.28,15,325/- with interest
is, that there is no provision for refund thereof. It is contended that the said
payment by the defendant Bank was in the nature of guarantee and which
the plaintiff is entitled to forfeit.
49. The defendant Bank as aforesaid was never put in possession of the
premises. The plaintiff having not fulfilled its obligation did not have a right
to call upon the defendant Bank to occupy the premises as a tenant and thus
the plaintiff was liable to immediately return the advance rent received from
the defendant Bank. Even if the plaintiff has spent any monies on making
the premises ready for the defendant Bank in the hope that the plaintiff
CS(COMM) No.313/2016 & CC No.191/2008 Page 25 of 26
would be able to fulfil its other obligations under the MoU, it was the risk
taken by the plaintiff and which risk neither had the defendant Bank agreed
to ensure nor is the plaintiff entitled in law to cover itself from the
refundable advances received from the defendant Bank.
50. As far as the claim of the defendant Bank / counter-claimant for
interest is concerned, I am of the view that in the facts and circumstances,
the claim of the defendant Bank / counterclaimant for interest at the rate of
18% per annum w.e.f. 23rd February, 2005 is unjustified and justice would
be served if the defendant Bank / counterclaimant is awarded interest @
10% per annum w.e.f. 1st June, 2005 (because the defendant Bank /
counterclaimant for the first time called upon the plaintiff to refund the
money on 6th May, 2005) till the date of deposit by the plaintiff in this Court
of the sum of Rs.28,15,000/-, whereafter the defendant Bank /
counterclaimant shall be entitled to interest as accrued on the said amount
while deposited in this Court.
51. The defendant Bank / counterclaimant shall also be entitled to costs of
the counterclaim from the plaintiff.
52. Decree sheet be prepared.
53. The amount lying deposited in this Court together with interest
accrued thereon be released to the defendant Bank.
RAJIV SAHAI ENDLAW, J.
APRIL 26, 2017 „pp/bs‟ (corrected & released on 15th May, 2017) CS(COMM) No.313/2016 & CC No.191/2008 Page 26 of 26