Delhi District Court
Mrs. Shalini Sahdev vs Som Distilleries & Breweries Ltd on 28 March, 2018
In the Court of Ms. Vineeta Goyal: Additional District Judge
(South District) Saket Court Complex, New Delhi.
CS No. 8434/2016
CNR No. DLST010022212016
In the matter of :
1. Mrs. Shalini Sahdev
W/o Late Shri Rajesh Sahdev
2. Mrs. Reema Puri
W/o Sh. Deepak Puri
3. Shri Rohit Sood
S/o Sh. H.S. Sood
4. Mrs. Veena Sood
W/o Sh. H.S. Sood
5. Sh. H.S. Sood
S/o Late Sh. Ram Singh
All residents of Flat no. 14,
BlockI, Ground Floor,
Behind Charmwood Plaza
Post Office Suraj kund,
Faridabad - 121 109
Haryana ......Plaintiffs
V E R S U S
Som Distilleries & Breweries Ltd.
IA, Zee Plaza, Arjun Nagar,
Safdarjung Enclave,
Kamal Cinema Road,
New Delhi 110 029
Also at
CS No:8434/16 Page no. 1 of 27
Som Distilleries & Breweries Ltd.
23, ZoneII
Maharana Pratap Nagar,
Bhopal, Madhya Pradesh - 462 011
Through its Director
Mr. S. Lal .......Defendant
Date of institution : 04.06.2016
Reserved for Judgment : 26.03.2018
Date of Judgment : 28.03.2018
Appearance: Ms. Priyadeep, Counsel for plaintiffs.
Ms. Devyani, Counsel for defendant.
JUDGMENT
1. The plaintiffs have filed a suit for recovery of Rs.25,46,742/ alongwith damages and interest against the defendant.
2. Facts as epitomized in the plaint are that plaintiffs are lawful owners of Flat no. 503A, 503B, 503C, 503E, 503D and 503F respectively having total super area of 1175 sq. feet situated at 5 th floor, BlockE, International Trade Tower, Nehru Place, New Delhi - 110019 (hereinafter referred to as the 'demised premises') which were purchased by the plaintiffs vide separate Standard Space Buyers Agreements all dated 15.02.1981 from M/s Nehru Place Hotels Limited. Sh. H.S. Sood is plaintiff no. 5 and is general power of attorney holder of plaintiffs no. 1, 2 and 3. The defendant is a Public Limited Company duly incorporated under the Companies Act, 1956 having its registered office at New Delhi and a Branch office at Bhopal, Madhya Pradesh.
CS No:8434/16 Page no. 2 of 27 2.1. It is averred that defendant approached the plaintiffs and expressed its willingness to take on lease the demised premises alongwith the furniture, fixtures, movable and immovable properties installed in the demised premises. The plaintiffs and defendant first entered into a primary lease deed dated 22.04.2015 which was executed between the parties on 05.05.2015 and registered vide Registration no. 3935 in Book no. 1, Volume no. 13798 on pages 3455 on 13.05.2015 before Sub RegistrarV, New Delhi at a monthly rent of Rs.1,58,895/ from the date of commencement of lease i.e. 01.05.2015 for a period of 2 years and 3 months with an option to renew the same for further two terms of 3 years each upto a maximum of 8 years and 3 months period subject to escalation of rent as per details contained in Clause 1 (a) & (b) of lease deed. It is further averred that as per Clause 1 (d) of lease deed, the defendant also deposited a sum of Rs.4,76,685/ with the plaintiffs as an interestfree refundable security deposit i.e. equal to 3 months lease rent. As per Clause 1 (h) of said lead deed, the defendant agreed that lease shall be irrevocable from its side for a period of 24 months commencing from lease commencement date i.e. 01.05.2015 and in the circumstances, if the defendant would surrender demised premises to the plaintiffs before the expiry of lockin period of 24 months provided in the lease deed, the defendant shall be liable to pay the rent @ Rs.1,58,895/ for the remaining unexpired lockin period alongwith maintenance and other charges and applicable taxes. In terms of Clause 1 (I) of said lease deed, the defendant was further liable to pay to the plaintiffs, maintenance charges @ Rs.17.82 per sq. ft. per month. It is next averred that defendant in terms of Clause 4 of lease deed, agreed to pay the charges for the water consumed in the demised premises in accordance with separate meter. As per Clause 5 of the lease deed, the defendant has agreed to pay electricity charges as consumed in the demised premises to BSES Rajdhani Power Ltd. It is CS No:8434/16 Page no. 3 of 27 also averred that in terms of Clause 31 of the lease deed, the plaintiffs have the right to transfer or to make adjustment in the ownership of said flats (demised premises) and defendant has to attorn such transferee.
2.2. It is next averred by the plaintiffs that plaintiffs received a notice dated 12.02.2016 from the defendant seeking revocation of lease deed dated 22.02.2015 which was subsequently executed on 05.05.2015 and registered on 13.05.2015. Vide the said notice, the defendant sought revocation of lease deed and raised various frivolous issues and allegations to wriggle out of responsibility of lease deed. A reply on 20.02.2016 was sent and the defendant after receiving the said reply withdrew the notice dated 12.02.2016 vide letter dated 26.02.2016 through its President Mr. Raju Vaziraney.
2.3. It is further averred that the plaintiffs, thereafter, on 22.04.2016 informed the defendant that in view of dissolution of "H.S. Sood HUF", the ownership of Flat no. 503D, originally in the name of H.S. Sood HUF has been transferred to plaintiff no. 5 Sh. H.S. Sood. The defendant duly acknowledged the receipt of letter dated 22.04.2016 and invoices raised by the plaintiff in terms of lease deed towards general maintenance charges and monthly lease rent, however, thereafter, the defendant in order to wriggle out from its responsibility sent another notice dated 25.04.2016. The defendant again arbitrarily thursted revocation of lease deed on flimsy grounds that they were not comfortable in carrying out the operation from the demised premises due to the change in the composition of owners and the change was made without prior intimation to them. It is averred that as per the lease deed, the plaintiffs were not required to give notice to the defendant in respect of change in ownership and there was no confusion in respect of the CS No:8434/16 Page no. 4 of 27 applicable taxes as alleged, however, the conduct of the defendant shows that they were trying to leave their responsibility without abiding by the terms and conditions of lease deed and pursuant to that the keys of the demised premises were allegedly handed over to one guard supervisor of building on 30.04.216 and the same was intimated to the plaintiffs that the letter dated 25.04.2016 may be treated as handing over of possession of demised premises w.e.f. 01.05.2016.
2.4. It is alleged that the plaintiffs at no point of time had authorized anyone to issue instructions or take the possession of the demised premises and/or keys on their behalf and the act of the defendant is in contravention to the Clause 8 of the lease deed.
2.5. The plaintiffs vide its reply dated 07.05.2016, again clarified to the defendant that there had been change in the constitution of ownership in respect of Flat no. 503D only and the same as a result of dissolution of "H.S. Sood HUF" and as such the flat has gone to the share of Sh. H.S. Sood, plaintiff no. 5 and as such there is no material change in the constitution of ownership and in terms of lease deed, the plaintiffs were not in obligation to bring to the notice of defendant or to take consent prior to the change in ownership. It is also clarified that handing over possession of demised premises on 30.04.2016 to Guard Supervisor of the building does not amount to handing over possession to the plaintiffs. The guard has no authority to take possession from the defendant on behalf of the plaintiffs. The plaintiffs also cautioned the defendant that in case it does not wish to continue with the lease deed then it has to terminate the same strictly in terms of lease deed and pay the amount of Rs.24,86,019/ after adjusting security deposit of Rs.4,76,685/ towards rent and maintenance charges alongwith service Tax, electricity bill for CS No:8434/16 Page no. 5 of 27 the month of April, 2016 and other dues for unexpired lockin period plus 3 months notice period rent as per terms of the registered lease deed which were accrued uptill date of reply dated 07.05.2016. It is further averred that despite receiving the aforesaid reply, the defendant has neither paid the amount due in terms of registered lease deed nor delivered the possession of demised premises to the plaintiffs. It is further averred that defendant was liable to pay electricity bills as per terms of lease deed, however, it failed to pay the electricity bills even for the period from 30.03.2016 till 27.05.2016 and due to abundant caution and for the safeguard of demised premises, the plaintiffs have taken the keys from the building guard and deposited a sum of Rs.10,460/ towards the electricity bills with BSES.
2.6. It is also averred that beside the amount of Rs.25,46,703/, the defendant is entitled to pay interest @24% p.a. and also liable to pay damages as per Clause 8 of the Lease Deed for wrongful/early termination of the Lease Deed towards mental stress and agony suffered by the plaintiffs.
2.7. It is further averred that suit is within the period of limitation and the defendant is liable to pay outstanding amount of Rs.25,46,742/ alongwith interest and damages, hence this suit.
3. Pursuant to notice issued, the defendant entered appearance and filed written statement. The defendant in its written statement admitted the execution of lease deed, however, submitted that while signing the lease agreement on 22.04.2015, the defendant raised several queries with respect to the term of lease agreement including concerns on the furniture required by the defendant, structural alteration to be made CS No:8434/16 Page no. 6 of 27 in the office, affixation of name plates outside the office amongst others. The plaintiffs assured the defendant that they would cooperate with these requests including any reasonable changes to be made to the leased premises, in view thereof, the defendant signed agreement and agreed to occupy the demised premises. It is further submitted that while signing the lease agreement, the defendant made payment of Rs.4,76,685/ towards interestfree security deposit equivalent to 3 month's lease rent and Rs.62,922/ equivalent to 3 month's maintenance charges and Rs.4,76,885/ towards advance payment of 3 month's rent. It is further submitted that immediately upon occupying the premises, the defendant faced several interruptions such as parking, carrying on business during work hours amongst others. Various issues were hindering the business activities of the defendant and the same were communicated to the plaintiffs and it was assured that the issues being faced by the defendant would be dealt with by the plaintiffs in due course of time but despite several oral requests, the same were not entertained by the plaintiffs.
3.1. It is further submitted that issues faced by the defendant could have been easily remedied by the plaintiffs as was the intent of 13
(a) and 14(c) which clearly stated that upon the consultation with plaintiffs the defendant could alter the premises to make it more suitable work space as well as put up a name plate to identify its business, however, despite being capable of addressing the practical problems faced by the defendant, plaintiffs refused to allow alterations to the demised premises and putting up a sign board causing undue and unnecessary interruption in the business of defendant. It is also submitted that over the course of few months, the issues faced by the defendant escalated whereby the plaintiffs restrained the defendant from moving and adding furniture other than provided by the plaintiffs to the defendants as per CS No:8434/16 Page no. 7 of 27 Clause 3 of lease agreement. The furniture provided by the plaintiffs was insufficient for the large office space and constrained the proper functioning of defendant's business and the defendant made repeated requests to the plaintiff for changing the furnishing to meet the needs of the defendant, however, the pleas of the defendant were not entertained. It is also averred that defendant sought permission and requested the plaintiffs for making repairs and additional air conditions within the premises in terms of Clause 16 of the lease agreement, however, the plaintiffs refused without any reasonable explanation for the same. The defendant has also faced interruption while conducting business from the demised premises whereby the defendant was not allowed to move furniture, transport goods or import office material even during the hours allotted to the defendant as provided under Clause 17 of the lease agreement which provides that the same shall be transported only between 06:00 a.m. to 09:00 a.m. and 06:00 p.m. to 09:00 p.m. on any working day and for all hours on holidays. It is further averred that since the plaintiffs were in clear breach of Clause 12 of lease agreement, the defendant served notice to the plaintiffs on 12.02.2016 surrendering the lease. The defendant also stated about the practical difficulties being faced by it everyday making it difficult to conduct business resulting in undue harassment and loss to the defendant. In response to the aforesaid notice, the plaintiffs approached the defendant to settle the disputes amicably and in an attempt to reconcile the defendant appointed Sh. Raju Vaziraney vide letter dated 15.02.2016 authorizing him to conduct a meeting with the plaintiffs and on 20.02.2016 the defendant received a reply to the said notice. On the basis of meetings and assurances given by the plaintiffs, the defendant vide letter dated 26.02.2016 withdrew the notice dated 12.02.2016.
CS No:8434/16 Page no. 8 of 27 3.2. The defendant in its written statement further admitted that on 22.04.2016, the defendant received a letter from plaintiffs intimating the change of the constitution of ownership of lease agreement without any consent or prior notice to the defendant. The defendant however stated upon enquiry about the pending complaints and their status, the plaintiffs gave hollow assurances without any action towards reconciliation. Despite being in constant talks with the plaintiffs for the settlement of pending deserves, the prospective change in the constitution of lease deed was never brought forth. The defendant has alleged that during the term of lease, the plaintiffs were in clear breach of the terms and conditions as laid down in Clause 12, 13 (a), 14 (c), 16, 17 and 31 of lease agreement whereby the plaintiffs have been negligent in performing their obligation as laid down in the said lease agreement. It is averred that since several attempts to reconcile the differences between the parties failed, the defendant was left with no other option but to revoke the lease and give back possession of the demises premises. In view of the huge loss and hindrance to the business of defendant, the defendant communicated termination of lease vide letter dated 25.04.2016 to the plaintiffs and handed over the possession of the demised premises by giving keys of the demised premises to Guard Supervisor Sh. Mishra on 30.04.2016 w.e.f. 01.05.2016. The plaintiffs collected the keys of the demised premises from the Guard Supervisor. The defendant relinquished the possession of demised premises and surrendered the lease w.e.f. 01.05.2016 which was subsequently accepted by the plaintiffs. The plaintiffs cannot now seek rent beyond 01.05.2016 in view of clear acceptance of possession. It is further submitted that lockin period as provided for in Clause 1 (h) of lease agreement is not applicable as the plaintiffs have been in breach of their obligation and have made the performance of contract impossible for the defendant. On aforesaid CS No:8434/16 Page no. 9 of 27 grounds a prayer was made that the suit deserves dismissal.
4. Replication to written statement was filed denying the averments made in the written statement and reaffirming the contents of the plaint.
5. From the pleadings of the parties, following issues were framed on 19.12.2016 : 1 Whether the defendant is not entitled to terminate Lease Deed Ex.P.1 and is liable to pay rent at the rate of Rs.1,58,895/ per month and maintenance charges at the rate of Rs.17.82/ per sq. feet per month for the unexpired lock in period?OPP 2 Whether the defendant is liable to pay electricity charges for the period from 30.03.2016 to 27.05.2016?OPP
3. Whether the defendant is also liable to pay electricity and water charges, if yes, for what period and what amount?OPP
4. Whether the plaintiff is entitled to interest on such sums, if yes, at what rate?OPP
5. Whether the plaintiff is entitled to any relief.
6. Both the parties led their respective evidences and I have heard arguments advanced by Ld. Counsel for parties and perused the material available on record. My issuewise findings are as follows: Issue no. 1 to 4 6.1. Issues no(s). 1 to 4 are taken up together being inter connected. The onus probandi of these issues was upon the plaintiff. The plaintiffs in order to establish their case, examined Sh. H.S. Sood, plaintiff no. 5 and GPA holder of plaintiffs no. 1, 2 and 3 as PW1. He tendered his evidence by way of affidavit Ex. PW1/A and made statement in accordance CS No:8434/16 Page no. 10 of 27 with the averments made in the plaint. He produced and provided documents viz. General power of attorney dated 24.07.1996 executed by the plaintiff no. 1 in favour of plaintiff no. 5 Ex. PW1/1, General power of attorney dated 24.07.1996 executed by the plaintiff no. 2 in favour of plaintiff no. 5 Ex. PW1/2, General power of attorney dated 24.07.1996 executed by the plaintiff no. 3 in favour of plaintiff no. 5 Ex. PW1/3, Standard space buyers agreement dated 15.02.1991 in respect of Flat no. 503 A Ex. PW1/4, Standard space buyers agreement dated 15.02.1991 in respect of Flat no. 503 B Ex. PW1/5, Standard space buyers agreement dated 15.02.1991 in respect of Flat no. 503 C Ex. PW1/6, Standard space buyers agreement dated 15.02.1991 in respect of Flat no. 503 D Ex. PW1/7, Standard space buyers agreement dated 15.02.1991 in respect of Flat no. 503 E Ex. PW1/8, Standard space buyers agreement dated 15.02.1991 in respect of Flat no. 503 F Ex. PW1/9, lease deed dated 22.04.2015 executed on 05.05.2015 Ex. PW1/10, notice dated 12.02.2016 Ex. PW1/11, reply dated 20.02.2016 Ex. PW1/12, acknowledgment card Ex. PW1/15, letter dated 26.02.2016 Ex. PW1/16, Memorandum of complete partition dated 07.05.2016 Ex. PW1/17, letter dated 22.04.2016 Ex. PW1/18, notice dated 25.04.2016 Ex. PW1/19, reply dated 07.05.2016 Ex. PW1/20, postal receipts and delivery reports of reply dated 07.05.2016 Ex. PW1/21 (colly) to PW1/22, electricity bill for the period of 30.03.2016 till 27.05.2016 Ex. PW1/23, statement of account showing dues against defendant Ex. PW1/24.
6.2. This witness categorically stated that as per the agreed terms of lease deed, the defendant is liable to pay for the unexpired lockin period plus three months notice period rent alongwith other charges such as maintenance charges, water charges, electricity charges alongwith service tax. He also stated that plaintiffs are also entitled for damages in CS No:8434/16 Page no. 11 of 27 terms of Clause 8 of lease deed for wrongful/ earlier termination of lease deed towards mental stress, agony, loss and damages suffered by the plaintiffs as per statement of accounts Ex. PW1/24. This witness was subjected to crossexamination and during crossexamination he denied the suggestion that he gave any assurance to the company beyond lease deed and further denied the suggestion that defendant paid all the dues till March, 2016 and also denied that defendant raised any issue in respect of parking. This witness also denied the suggestion that defendant raised grievances in respect of installation of air conditions in the demised premises. He also denied by stating that it is incorrect that defendant approached him for affixation of name plate. He denied that the defendant raised grievance in respect of insufficient furniture in the demised premises. He also denied by stating that it is incorrect that he stopped movements of furniture/ office material of the suit property. He also denied that defendant approached him for some repair in the suit property. He further denied the suggestion that any steps were required to be taken by him as per the allegations. He further stated that defendant did not approach to him for amicable settlement. He further stated that it is incorrect that he did not resolve the problems of the defendant that is why the defendant withdrew the notice dated 12.02.2016. He further denied that Mr. Vaziraney of defendant approached him for any grievances of the defendant. He further stated that presently there is no tenant in the suit property. He also stated that after unilateral revocation of lease deed by the defendant, there is no tenant in the suit property. He further stated that he has not given any advertisement for renting out the suit property and he is in possession of the suit property.
CS No:8434/16 Page no. 12 of 27 6.3. The plaintiff further examined Ms. Veena Sood as PW2. She tendered her evidence by way of affidavit Ex. PW2/A and too deposed on the lines of the deposition made by PW1 and during her cross examination, she too denied the suggestions and stated that since there was no grievances raised by the defendant, so there was no reason to resolve that. She too stated that no advertisement has been given for renting out suit premises, however, they contacted with some property dealers and agents to get the property rented out and some parties through property dealer approached them to take on rent the suit premises but they did not find them suitable/ sound for the suit premises.
6.4. On the other hand, the defendant has examined DW1 Sh. Ashok Bhandari. He tendered his evidence by way of affidavit Ex. DW1/A and made statement in accordance with the defence made in the written statement. This witness was subjected to lengthy crossexamination. During crossexamination, he denied the suggestion that he does not have any authority to sign the written statement on behalf of defendants or to depose the evidence by way of affidavit on behalf of defendant. He stated that he was part of entire transaction with the plaintiffs, therefore, he knows each and every fact about the present matter. He also stated that he is aware of terms and conditions of lease deed entered between the plaintiffs and defendant. He has signed the lease deed on behalf of defendant. It was discussed before the execution of deed and the plaintiffs agreed that they will install three air conditions in the suit premises. He further stated that before the execution of lease, the plaintiffs assured the defendant to put a big signboard outside the premises and after execution of said lease deed while shifting the office, the defendant came to know that big signboard cannot be affixed at the suit premises. He further stated that he cannot say anything in respect of Clause 14(c) of lease deed CS No:8434/16 Page no. 13 of 27 with regard to affixation of name plate, board or any sign board which were to be affixed outside the suit premises. He, in his crossexamination, stated that he knew that it is mentioned in the lease deed that defendant was not entitled to any structural changes in the suit premises and there was no other issue/s in respect of suit premises. He further submitted that plaintiffs have no parking rights in the building as such no parking rights in the building have been given by the plaintiffs to the defendant in terms of Clause 2 of the lease deed. He also stated that there was no interruption on behalf of plaintiffs for carrying on business in the suit premises during the working hours. He communicated these difficulties to the plaintiffs telephonically but he expressed his inability by stating that he does not remember on which date he informed the plaintiffs about such difficulties. He has not filed any telephone bill or any other document to show that he informed the plaintiffs that defendant is facing any such difficulty. He does not have any record regarding the same and he cannot produce the same. He further in his crossexamination stated that Clause 13 (a) of the lease deed issues faced by the defendant can easily be resolved and plaintiffs were under obligation to install three air conditions. The defendant sought consent of plaintiffs in June, 2015. The said consent was asked by him verbally over the telephone. He does not have any record in respect of such request. He further stated that he asked for replacement of round table with the side tables in suit premises. He sought consent for replacement of round table with side table telephonically in June, 2015. He does not have any record in respect of such requests. He, further in his crossexamination, stated that before execution of lease deed, he had seen the suit premises and suit premises was duly furnished. The suit premises was suitable for the business of defendant at the time of execution of lease deed. He in further cross examination, stated that they wanted to add furniture such as big table on CS No:8434/16 Page no. 14 of 27 reception and new chairs at their own costs in September, 2015, however, the plaintiffs did not give consent for the same. He sought consent for the same verbally over the telephone. He does not have any record for the same. Mr. Sood used to say it cannot be done. He further stated that defendant faced interruption to move furniture, transport goods and office material during the allotted hours i.e. 10:00 a.m. to 06:00 p.m. However, stated to be correct that for transporting any goods, furniture, fixture to the suit premises, allotted timings were 06:00 a.m. to 09:00 a.m. and 06:00 p.m. to 09:00p.m. He also admitted to be correct that before transporting heavy material, it can be done after due intimation to Estate Manager of hotel company to enable him to depute their representatives to be present at site to oversee that no damage is caused to any part of building. He further stated that he does not know the terms of lease deed breached by the plaintiffs. During crossexamination he has stated that after the termination notice, Mr. Raju met with Sh. H.S. Sood for resolution of problems faced by the defendant. He and Mr. Raju called Sh. H.S. Sood after the meeting, however, he did not pick up the phone. Mr. Raju called H.S. Sood at around 11:00 a.m. or 12:00 noon in February, 2016 in his presence. Mr. Raju met with Sh. H.S. Sood between 1520 February, 2016. He however stated that he was not part of meeting and he was told by Mr. Raju that he will resolve the problem. He also stated that in month of March, 2016 they received a reply to notice issued by defendant in February, 2016 and in the reply Sh. H.S. Sood confirmed that the resolution of the problems the defendant asked for, is not possible. After receiving reply in March, 2016, they vacated the premises. He expressed his inability by stating that he does not remember the date of withdrawal whether it was before the meeting or after the meeting but admitted that they withdrew the notice issued in February, 2016 vide letter dated 26.02.2016. During crossexamination this witness also admitted that CS No:8434/16 Page no. 15 of 27 they did not write any letter to the plaintiffs for termination of lease. They vacated the suit premises on 30.04.2016 after giving the keys to the hotel guard. He also stated that they did not give anything to the plaintiffs at the time of vacation including rent and other charges for the lockin period and further admitted that defendant is liable to pay the plaintiffs for the lockin period in accordance with lease deed, however, they did not pay. Further voluntary stated that since they vacated the premises, therefore, they did not pay anything for lockin period. He also denied the suggestion that defendant did not face any difficulty to run the business from the demised premises and inform plaintiffs about the same at any point of time. He also denied the suggestion that defendant has concocted a false story to wriggle out of contractual terms of lease deed. He also denied suggestion that defendant owe any money to the plaintiff.
6.5. Thus, in the epitomised manner, after judicial scanning of evidence adduced by respective parties, the entire controversy can be briefed that the demised premises were rented out to the defendant through registered lease deed dated 05/05/2015 Ex.PW1/10 with effect from 01/05/2015. This lease agreement contained a lock in period of 24 months and with liberty to either party to vacate the premises with another notice of three months. In this background, the plaintiff claims that the demised premises could not have been vacated before 30/04/2017 followed by notice period of 3 months. It is a matter of record that the keys of demised premises were handed over to the security guard on 30/04/2016 allegedly with effect from 01/05/2016. In these circumstances, the plaintiff has filed suit of recovery of an outstanding amount of Rs. 24,86,019/-. The details of this amount has been shown in the statement of accounts Ex. PW1/24. A perusal of this state of accounts Ex. PW1/24 shows that the plaintiff has calculated the amounts which is summarized as under:
CS No:8434/16 Page no. 16 of 27
Rent 01/05/2016 to 4,76,685 50,327 5,27,012
31/07/2016
01/08/2016 to 4,76,685 52,063 5,28,748
31/10/2016
01/11/2016 to 4,76,685 52,063 5,28,748
31/01/2017
01/02/2017 to 4,76,685 52,063 5,28,748
30/04/2017
Rent/ 4,76,685 52,063 5,28,748
Notice period of
three months
TOTAL 26,42,003
Maintenance 01/05/2016 to 67,972 7176 75,148
for 4 quarters 31/07/2016
01/08/2016 to 67,972 7424 75,396
31/10/2016
01/11/2016 to 69,785 7622 77,406
31/01/2017
01/02/2017 to 73,410 8018 81,427
30/04/2017
TOTAL 3,09,377
Electricity April, 2016 9028
Water charges 01/04/2016 to 2295
30/04/2017
TOTAL 29,62,704
LessSecurity 4,76,685
deposit
BALANCE 24,86,019
6.6. Per contra, the defence of the defendant was that the demised premises was never fit for occupying and use of the business purposes and various defects were pointed out to the plaintiff which were never rectified. The plaintiff all through has been making promises to set right the facts pointed out in the demised premises but never took seriously or made efforts to rectify the said issues. After quoting various other clauses contained in the Lease Agreement, this point was pressed CS No:8434/16 Page no. 17 of 27 upon that until and unless the plaintiff has made the demised premises fit for use of business, there was no obligation upon the defendant company to honour the lock in period as contained in the lease agreement. However, a perusal of the evidence adduced by the defendant and discussed above, it is evident that defendant has not filed any document in support of its defence rather it appears from the deposition of DW1 Sh. Ashok Bhandari, who has stated that the demised premises was suitable for the business of defendant at the time of execution of lease deed and lease deed was executed after reading and understanding the terms thereof. The defendant has failed to prove any single breach of the plaintiff.
6.7. The legal proposition of compensation in consequences for breach of the contract are provided in Chapter VI of the Contract Act which contains three sections, namely, Section 73 to Section 75. As per Section 73 of the Contract Act, 1872 the party who suffers by the breach of contract is entitled to receive from the defaulting party, compensation for any loss or damage caused to him by such breach, which naturally arose in usual course of things from such breach, or which the two parties knew when they make the contract to be likely the result of the breach of contract. This provision makes it clear that such compensation is not to be given for any remote or indirect loss or damage sustained by reason of the breach. The underlying principle enshrined in this section is that a mere breach of contract by a defaulting party would not entitle other side to claim damages unless the said party has in fact suffered damages because of such breach. Loss or damage which is actually suffered as a result of breach has to be proved and the plaintiff is to be compensated to the extent of actual loss or damage suffered.
CS No:8434/16 Page no. 18 of 27 6.8. The rule applicable for determining the amount of damages for the breach of contract to perform a specified work is that the damages are to be "assessed" at the pecuniary amount of difference between the state of the plaintiff upon the breach of the contract and what it would have been if the contract had been performed and not the sum which it would cost to perform the contract, though in particular cases the result of either mode of calculation may be the same. The measure of compensation depends upon the circumstances of the case. The complained loss or claimed damage must be fairly attributed to the breach as a natural result or consequence of the same. The loss must be a real loss or actual damage and not merely a probable or a possible one. When it is not possible to calculate accurately or in a reasonable manner, the actual amount of loss incurred or when the plaintiff has not been able to prove the actual loss suffered, he will be, all the same, entitled to recover nominal damages for breach of contract. Where nominal damages only are to be awarded, the extent of the same should be estimated with reference to the facts and circumstances involved. The general principle to be borne in mind is that the injured party may be put in the same position as that he would have been if he had not sustained the wrong.
6.9. In case of Murlidhar Chiranjilal v. Harishchandra Dwarkadas and Anr., AIR 1962 SC 366, the Hon'ble Supreme Court highlighted two principles which follow from the reading of Section 73 of the Contract Act. The first principle on which damages in cases of breach of contract are calculated is that, as far as possible, he who has proved a breach of a bargain to supply what he contracted to get is to be placed, as far as money can do it, in as good a situation as if the contract had been performed; but this principle is qualified by a second, which imposes on a plaintiff the duty of taking all reasonable steps to mitigate the loss CS No:8434/16 Page no. 19 of 27 consequent on the breach and debars him from claiming any part of the damages which is due to his neglect to take such steps.
6.10. Thus, while on one hand, damages as a result of breach are to be proved to claim the same from the person who has broken the contract and actual loss suffered can be claimed, on the other hand, Section 74 of the Act entitles a party to claim reasonable compensation from the party who has broken the contract which compensation can be predetermined compensation stipulated at the time of entering into the contract itself. Thus, this section provides for preestimate of the damage or loss which a party is likely to suffer if the other party breaks the contract entered into between the two of them. If the sum named in the contract is found to be reasonable compensation, the party is entitled to receive that sum from the party who has broken the contract. Interpreting this provision, the Courts have held that such liquidated damages must be the result of a "genuine preestimate of damages". If they are penal in nature, then a penal stipulation cannot be enforced, that is, it should not be a sum fixed in terrarium or interregnum. This action, therefore, merely dispenses with proof of "actual loss or damage". However, it does not justify the award of compensation when in consequence of breach, no legal injury at all has resulted, because compensation for breach of contract can be awarded to make good loss or damage which naturally arose in the usual course of things, or which the parties knew when they made the contract, to be likely to result from the breach.
6.11. Hon'ble Supreme Court in the case of Union of India v. Raman Iron Foundry, AIR 1974 SC 1265, expounded this very principle in the following words:
CS No:8434/16 Page no. 20 of 27 "9. Having discussed the proper interpretation of Clause 18, we may now turn to consider what is the real nature of the claim for recovery of which the appellant is seeking to appropriate the sums due to the respondent under other contracts. The claim is admittedly one for damages for breach of the contract between the parties. Now, it is true that the damages which are claimed are liquidated damages under Clause 14, but so far as the law in India is concerned, there is no qualitative difference in the nature of the claim whether it be for liquidated damages or for unliquidated damages. Section 74 of the Indian Contract Act eliminates the somewhat elaborate refinements made under the English common law in distinguishing between stipulations providing for payment of liquidated damages and stipulations in the nature of penalty. Under the common law a genuine pre estimate of damages by mutual agreement is regarded as a stipulation naming liquidated damages and binding between the parties : a stipulation in a contract in terrorem is a penalty and the Court refuses to enforce it, awarding to aggrieved party only reasonable compensation. The Indian Legislature has sought to cut across the web of rules and presumptions under the English common law, by enacting a uniform principle applicable to all stipulations naming amounts to be paid in case of breach, and stipulations by way of penalty, and according to this principle, even if there is a stipulation by way of liquidated damages, a party complaining of breach of contract can recover only reasonable compensation for the injury sustained by him, the stipulated amount being merely the outside limit. It, therefore makes no difference in the present case that the claim of the appellant is for liquidated damages. It stands on the same footing as a claim for unliquidated damages. Now the law is well settled that a claim for unliquidated damages does not give rise to a debt until the liability is adjudicated and damages assessed by a decree or order of a Court or other adjudicatory authority. When there is a breach of contract, the party who commits the breach does not eo instanti incur any pecuniary obligation, nor does the party complaining of the breach becomes entitled to a debt due From the other party. The only right which the party aggrieved by the breach of the contract has is the right to sue for damages. That is not an actionable claim and this position is made amply clear by the amendment in Section 6(e) of the Transfer of Property Act, which provides that a mere right to sue for CS No:8434/16 Page no. 21 of 27 damages cannot be transferred. This has always been the law in England and as far back as 1858 we find it stated by Wightman, J., in Jones v. Thompson [1858] 27 L.J.Q.B. 234 "Exparte Charles and several other cases decide that the amount of a verdict in an action for unliquidated damages is not a debt till judgment has been signed". It was held in this case that a claim for damages does not become a debt even after the jury has returned a verdict in favour of the plaintiff till the judgment is actually delivered. So also in O'Driscoll v. Manchester Insurance Committee [1915] 3 K. B. 499, Swinfen Eady, L.J., said in reference to cases where the claim was for unliquidated damages : "... in such cases there is no debt at all until the verdict of the jury is pronounced assessing the damages and judgment is given". The same view has also been taken consistently by different High Courts in India. We may mention only a few of the decisions, namely, Jabed Sheikh v. Taher Mallik 45 Cal. Weekly Notes, 519, S. Malkha Singh v. N.K. Gopala Krishna Mudaliar 1956 A.I.R. Pun. 174 and Iron & Hardware (India) Co. v. Firm Shamlal & Bros. 1954 A.I.R. Bom. 423. Chagla, C.J. in the last mentioned case, stated the law in these terms:
In my opinion it would not be true to say that a person who commits a breach of the contract incurs any pecuniary liability, nor would it be true to say that the other party to the contract who complains of the breach has any amount due to him from the other party.
As already stated, the only right which he has is the right to go to a Court of law and recover damages. Now, damages are the compensation which a Court of law gives to a party for the injury which he has sustained. But, and this is most important to note, he does not get damages or compensation by reason of any existing obligation on the part of the person who has committed the breach. He gets compensation as a result of the fiat of the Court. Therefore, no pecuniary liability arises till the Court has determined that the party complaining of the breach is entitled to damages. Therefore, when damages are assessed, it would not be true to say that what the Court is doing is ascertaining a pecuniary liability which already existed. The Court in the first place must decide that the defendant is liable and then it proceeds to assess what that liability is. But till that determination there is no liability at all upon the defendant. This statement in our view represents the correct legal position CS No:8434/16 Page no. 22 of 27 and has our full concurrence. A claim for damages for breach of contract is, therefore, not a claim for a sum presently due and payable and the purchaser is not entitled, in exercise of the right conferred upon it under Clause 18, to recover the amount of such claim by appropriating other sums due to the contractor. On this view, it is not necessary for us to consider the other contention raised on behalf of the respondent, namely, that on a proper construction of Clause 18, the purchaser is entitled to exercise the right conferred under that clause only where the claim for payment of a sum of money is either admitted by the contractor, or in case of dispute, adjudicated upon by a court or other adjudicatory authority. We must, therefore, hold that the appellant had no right or authority under Clause 18 to appropriate the amount of other pending bills of the respondent in or towards satisfaction of its claim for damages against the respondent and the learned Judge was justified in issuing an interim injunction restraining the appellant from doing so.
6.12. Further, Hon'ble Supreme Court in the matter of ONGC Ltd.
v. Saw Pipes Ltd., AIR 2003 SC 2629, has discussed provisions of Section 73 and 74 of the Indian Contract Act and observed as under:
"Under Section 73, when a contract has been broken, the party who suffers by such breach is entitled to receive compensation for any loss caused to him which the parties knew when they made the contract to be likely to result from the breach of it. This Section is to be read with Section 74, which deals with penalty stipulated in the contract, inter alia [relevant for the present case] provides that when a contract has been broken, if a sum is named in the contract as the amount to be paid in case of such breach, the party complaining of breach is entitled, whether or not actual loss is proved to have been caused, thereby to receive from the party who has broken the contract reasonable compensation not exceeding the amount so named. Section 74 emphasizes that in case of breach of contract, the party complaining of the breach is entitled to receive reasonable compensation whether or not actual loss is proved to have been caused by such breach. therefore, the emphasis is on reasonable compensation. If the compensation named in the contract is CS No:8434/16 Page no. 23 of 27 by way of penalty, consideration would be different and the party is only entitled to reasonable compensation for the loss suffered. But if the compensation named in the contract for such breach is genuine preestimate of loss which the parties knew when they made the contract to be likely to result from the breach of it, there is no question of proving such loss or such party is not required to lead evidence to prove actual loss suffered by him. Burden is on the other party to lead evidence for proving that no loss is likely to occur by such breach..."
6.13. In the present case, the matter has to be seen from the perspective that the defendant remained in occupation of the demised premises for a period of one year commencing from 01/05/2015 to 30/04/2016. By virtue of the aforesaid lease agreement, the lock in period was to end on 30/04/2017 which means the plaintiff is demanding lease rent for one more year. Further, a demand for 3 month notice period has also been raised. The plaintiff is demanding payment of service tax also alongwith other liabilities. The entire factual matrix need to be understood from the fact that whether or not clause 1(h) of the above mentioned lease agreement was in the nature of ascertaining liquidated damages or it was operating as a penalty clause.
6.14. In the lease agreement Ex. PW1/10, the underline intention of the parties to provide any specified property to the other for a defined period for the purposes of enjoyment and in lieu of the same rent is paid. The interest of the owner of the premises can be enumerated as that there is no damage caused to the premises, a reasonable continuity of the lease is secured and timely payment of the rent is also ensured. On the other hand, the interest of the other party taking premises on lease can be counted as being no ambiguity in the monthly rent, no escalation periodically, the leased premises is enjoyed seamlessly and a reasonable CS No:8434/16 Page no. 24 of 27 continuity of the lease over a period of time. Both the parties are interested for continuance of lease deed over a particular period of time in the interest of both. The owner of the property intends to avoid the hassle of finding tenant now and then there is the taker of the property does not want to get evicted frequently. The lock in period, therefore defined in any lease deed works in the interest of both the parties but the question arises that this cannot operate as a penalty clause so as to secure the compliance of the agreement of lease. The liquidated damages contained therein cannot said to be operative immediately on breach of contract. The other party is under an obligation to demonstrate that untimely and early vacation of premises by the tenant has resulted in to actual loss of income which is attributable exclusively and directly to the action of the tenant.
6.15. This can be understood from the viewpoint that if the demised premises are located in an area we are finding of tenant is not difficult, then early vacation of the premises will not prejudice the interest of the owner. On the contrary, if the same is located in the area which is not very popular than the tenant cannot be held responsible for consequential vacancy in the premises of the owner because it is not directly attributable to his action but due to the reasons of the location of the property.
6.16. Another noticeable feature of agreement of lease can be that the demised premises took some time approx. one year to find tenant in substitution and during this period when there was no such new tenant, the demised premises remained vacant which is directly attributable to the conduct of the earlier tenant. This kind of loss is directly and exclusively attributable to the act of vacancy of the premises prior to the locking period. The defendant is liable for this loss because the same is CS No:8434/16 Page no. 25 of 27 emerging from the breach of contract. During this period of 3 months when the owner of the property was searching for the alternative tenant, any further expenses might have been borne which are in the nature of maintenance expenses, these are also attributable to the default of erstwhile tenant. The defaulting party is liable for making good of these expenses also. Besides the above, there can be certain set of expenses which are actual and have remained unpaid, there is no confusion that the defaulting party has to pay the same. Last but not the least a nominal compensation also need to be paid to the owner of the property for making good of the expenses which are likely to be incurred for induction of new tenant such as lease deed papers, miscellaneous expenses etc. 6.17. In consideration of the discussion above, in the light of the present case it is expedient that the plaintiffs are entitled to the following amounts :
a) Payment of rent for 3 months for the period 01/05/2016 to 31/07/2016 as has been calculated at Rs. 5,27,012/ as per statement of accounts Ex. PW1/24.
b) Payment of maintenance charges for 3 months for the period 01/05/2016 to 31/07/2016 as has been calculated at Rs. 75,148/ in the legal notice issued by the plaintiff.
c) Payment of unpaid electricity for April 2016 as has been calculated at Rs. 9,028/ in the legal notice issued by the plaintiff.
d) Payment of water charges as has been calculated at Rs. 2295/ in the legal notice issued by the plaintiff.
e) Besides the above, the plaintiff are also entitled to a lump sum amount of Rs.3,00,000/ as compensation towards incurring of expenditure for finding new tenant, entering into agreement and other miscellaneous expenditures.
6.18. The total entitlement of the plaintiffs comes to Rs.9,13,483/ (5,27,012 + 75,148 + 9028 + 2295+ 3,00,000) out of which amount to be CS No:8434/16 Page no. 26 of 27 deducted would be as admitted by the plaintiffs being in possession of security deposit to the extent of Rs. 4,76,685/. The final amount which becomes payable is Rs.4,36,798/ (Rs.9,13,483 Rs.4,76,685). The plaintiffs are also entitled to payment of interest at the rate of 9% from the date of filing of suit till payment of the aforesaid amount of Rs. 4,36,798/-.
6.19. In view of above discussion, issues no. 1 to 4 are partly decided in favor of plaintiffs and against the defendant.
Relief
7. In view of discussion in issues no(s). 1 to 4 the suit of plaintiffs is partly decreed to the extent that plaintiffs are entitled for Rs.4,36,798/ alongwith interest @ 9% p.a. from the date of institution of suit till its realization alongwith cost. Decreesheet be prepared accordingly.
File be consigned to record room.
Pronounced in the Open Court on 28.03.2018 (Vineeta Goyal) Additional District Judge South District: Saket: New Delhi CS No:8434/16 Page no. 27 of 27