Delhi District Court
M/S Perfect Wellness Pvt. Ltd vs Mr. Sanjeev Narula on 4 February, 2014
IN THE COURT OF CIVIL JUDGE, SOUTH EAST DISTRICT,
SAKET COURTS COMPLEX, SAKET, NEW DELHI
Presiding Officer: Sh. Dinesh Kumar
Suit No.526/2013
Unique Id no. 02406C0325492012
In the matter of:
M/s Perfect Wellness Pvt. Ltd.
having its Corporate Office at
Plot no.7, Sector27A
Main Mathura Road
Faridabad121003 ..........Plaintiff.
vs
Mr. Sanjeev Narula
Lilliput Kidswear Ltd.
D99, Okhla Industrial Area,
PhaseI, New Delhi110020
ALSO AT:
Lilliput Kidswear Ltd.
Head Office
D95, Okhla Industrial Area
PhaseI, New Delhi110020 ..........Defendant.
Date of institution : 02.01.2013
Date on which order was reserved : 30.01.2014
Date of pronouncement of the order : 04.02.2014
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Present: Sh. K.K. Tiwari, Counsel for the plaintiff.
Sh. Sachin Midha, Counsel for the defendant.
SUIT FOR RECOVERY OF Rs.1,25,000/.
JUDGMENT
1. Vide this Order, I shall decide the suit for recovery of Rs. 1,25,000/ with interest. The plaintiff has stated its case as under:
1.1. The defendant is owner of property bearing no. W57, First Floor, Greater KailashI, New Delhi (hereinafter called 'the premises').
1.2. The plaintiff was in search of a commercial premises for opening a dental clinic and health club. Mr. Amit Patwa, on behalf of the plaintiff, contacted the defendant. The defendant represented that the premises was vacant and it was a commercial property which came in 'Mixed Land Use Policy' of Government of NCT Delhi as per 'Master Plan 2021'. The defendant further represented that the premises was a commercial premises and he himself was running his own business of showroom of Lilliput in the subject premises. 1.3. Believing this information, Mr. Amit Patwa, on behalf of the plaintiff, contacted the defendant for taking the premises on rent. After various meetings a 'Letter of Intent' (hereinafter called CS No.526/13 M/s Perfect Wellness Pvt. Ltd. vs Mr. Sanjeev Narulla Page 2 of 16 'LOI'), dated 30.03.2012, for taking the premises on rent was signed between the parties. The plaintiff also paid to the defendant an amount of Rs.1,25,000/ vide a cheque. It was agreed that the final lease would be subject to the satisfaction of the plaintiff with respect to the title / ownership of the subject premises and it being commercial as per the local laws. As per the Letter of Intent the rent of the premises was to start after 60 days which was conversion period. 1.4. A proposed draft of lease was also prepared and it was sent by the plaintiff to the defendant through email for acceptance. The defendant made certain changes and again sent the same to the plaintiff. During the discussion, the changes were made with mutual understanding, and the defendant sent a draft of final lease agreement on 04.05.2012. It was specifically mentioned in the lease deed that the subject premises was being taken on rent for the business of the plaintiff who is in the business of health care services and retails. It was also agreed that all the legal formalities and liaisoning with the competent authority to obtain commercial usage certificate shall be done by the plaintiff and the defendant shall extent all possible support for making the premises usable for commercial purpose. The cost of such work was to be borne by the defendant.
1.5. However, the defendant did not provide help in getting CS No.526/13 M/s Perfect Wellness Pvt. Ltd. vs Mr. Sanjeev Narulla Page 3 of 16 the certificate as aforesaid. He insisted that first the lease agreement should be entered into an only then he would assist in obtaining the permission for commercial usage. It created doubts in the mind of the plaintiff with respect to the nature of the premises. The plaintiff made various inquiries in relation to the premises. It came to the knowledge of the plaintiff that the premises was not a commercial property and it could not be used for the purpose of opening a dental clinic and health club. When the plaintiff told this fact to the defendant, he again represented that the property was a commercial property. However, he did not help in getting the certificate as aforesaid. The plaintiff also got some information by filing application under RTI Act to the MCD. On the basis of the information, it becomes very clear that the premises is a residential property and therefore it cannot be used for commercial activities.
1.6. Finally, the plaintiff issued a legal notice dated 30.05.2012 demanding refund of the amount of Rs.1,25,000/.
However, the defendant did not repay the money. Rather, he sent false reply dated 03.07.2012. Hence, the present suit has been filed seeking recovery of RS. 1,25,000/ along with interest @ 24% per annum.
2. The defendant has appeared. He has filed Written Statement (WS). He has taken various objections. It has contended, CS No.526/13 M/s Perfect Wellness Pvt. Ltd. vs Mr. Sanjeev Narulla Page 4 of 16 inter alia, as under:
2.1. The plaintiff has no cause of action against the defendant. The defendant had executed an LOI with Mr. Amit Patwa.
No document was ever executed between the plaintiff and the defendant. There is nothing on record to show that Mr. Amit Patwa had entered into an LOI on behalf of the plaintiff. Therefore, there was no privity of contract between the plaintiff and the defendant. 2.2. The plaintiff has not stated true and correct facts. The true facts are that during the end of March 2012 a broker had approached the defendant on behalf of the plaintiff expressing the intention of the plaintiff to take the property on lease for the purpose of running health clinic. It was represented by the broker that the activity was permissible in terms of clause4 and 5 of chapter 15 of MPD2021 and activity was in the nature of professional services permissible from any floor of the building.
2.3. Prior to the execution of LOI, the plaintiff had also shared a draft lease agreement and it was informed that property was to be used by the plaintiff for the purpose of running clinic. However, at no point of time it was represented that that plaintiff wanted to operate a health club or fitness center at the property. 2.4. After execution of LOI, the defendant repeatedly CS No.526/13 M/s Perfect Wellness Pvt. Ltd. vs Mr. Sanjeev Narulla Page 5 of 16 followed up with the plaintiff for execution of lease agreement. It was further agreed that first the lease agreement would be executed and only thereafter necessary procedural formalities would be performed for obtaining the permission of the commercial authority for commercial usage. The same was mentioned even in the clause 15 (g) and 16 (g) of the proposed lease deed. On 08.05.2012 he purchased the stamp papers for the proposed lease agreement by paying stamp duty of Rs.32,000/. However, after that the plaintiff back out of the deal and he is now giving unusual and fictitious reasons to justify its illegality. The plaintiff has made false allegations against him. Therefore, the suit may be dismissed.
3. The plaintiff has filed replication in which he has denied the contentions of the defendant and reiterated the facts stated in the plaint.
4. The parties have admitted the following documents:
a) copy of cheque of Rs.1,25,000/ dated 30.03.2012 is Ex.P1;
b) legal demand notice dated 19.03.2012 is Ex.P2.
5. On the basis of the pleadings following issues were framed vide order dated 15.07.2013.
1. Whether the plaintiff is entitled to recovery of Rs. CS No.526/13 M/s Perfect Wellness Pvt. Ltd. vs Mr. Sanjeev Narulla Page 6 of 16 1,25,000/ from the defendant ? OPP
2. Whether the plaintiff is entitled to an interest @ 24% P.A. as prayed for ? OPP
3. Whether there was no privity of contract between the plaintiff and the defendant ? OPD
4. Relief.
6. The plaintiff has examined Sh. Vijay Kumar Sharma as PW1 to prove its case. PW1 has reiterated the facts stated in the plaint. He has relied upon the following document:
a) Power of Attorney is Ex. PW1/1;
b) letter of intent (LOI) is Ex. PW1/2;
c) draft of lease agreement sent to defendant through email is Ex. PW1/3;
d) draft of lease agreement sent back by the defendant to the plaintiff is Ex. PW1/4;
e) Cheque is Ex.P1(mentioned in affidavit as Ex. PW1/5);
f) legal notice dated 30.05.2012 is Ex. PW1/6 (colly);
g) copy of reply dated 03.07.2012 is Ex. PW1/7;
h) copy of RTI application is Ex. PW1/8;
i) copy of reply dated 16.08.2012, 23.08.2012, and 04.09.2012 under RTI are Ex. PW1/9 (colly);
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j) copy of Chapter 15 of MPD2021 is Ex. PW1/10 (colly);
k) copy of receipt of stamp paper purchased by plaintiff is Ex. PW1/11;
7. The witness was cross examined and discharged. Plaintiff did not examined any other witness and PE was closed.
8. The defendant has examined Sh. Rajesh Kanwal as DW1 to prove his case. He has reiterated the facts stated in the WS. The witness was cross examined. The defendant did not examine any other witness. The DE was closed.
9. I have heard the rival submissions of the Ld. Counsel of the parties and carefully perused the material on record. My issue was findings are as follows.
10. Issue no.3: Whether there was no privity of contract between the plaintiff and the defendant ?
This issue is taken first as it is related to the maintainability of the suit. The onus to prove this issue was on the defendant. Ld. counsel for the defendant has argued that there was no privity of contract between the plaintiff and the defendant. The LOI was executed between the plaintiff and Mr. Amit Patwa. However, the plaintiff has not shown that Amit Patwa was related to the plaintiff in any manner. Therefore, there was no privity of contract between the CS No.526/13 M/s Perfect Wellness Pvt. Ltd. vs Mr. Sanjeev Narulla Page 8 of 16 parties. Hence, it is argued that the suit is not maintainable.
11. I have considered the arguments. I do not find merits in the argument. It is correct that the LOI was signed by Mr. Amit Patwa. However, in his WS as well as in evidence the defendant has admitted that the agreement for lease of the property was with the plaintiff. DW1 in para3 of his affidavit has stated as under:
"3. I say that when we had dealing prior to signing the LOI no representative of Perfect Wellness ever stated that they want to open health club what they said was that they want to open some health club or clinic regarding eye care or dental clinic so Mr. Sanjeev Narulla agreed to give the said property on lease to Perfect Wellness and in continuation LOI was drafted and signed."
12. Perusal of this para would show that the defendant has admitted that LOI was signed by Amit Patwa on behalf of the plaintiff. As the defendant himself has admitted this fact, therefore, his objection is not maintainable. Hence, issue no. 3 is decided against him and in favour of the plaintiff.
13. Issue no.1: Whether the plaintiff is entitled to recovery of Rs.1,25,000/ from the defendant ? The onus to prove this issue was on the plaintiff. It is relevant to mention here that it is admitted fact that the defendant had CS No.526/13 M/s Perfect Wellness Pvt. Ltd. vs Mr. Sanjeev Narulla Page 9 of 16 received advance payment of Rs.1,25,000/. It is also admitted fact that the lease deed was never executed between the parties.
14. Ld. Counsel for the plaintiff has argued that the object of the plaintiff for taking the property on lease was to open a dental clinic and a health club. The defendant had represented that the premises was suitable for commercial purpose for opening dental clinic and health club. However, later on the plaintiff discovered that the property was not fit for the purpose for which it wanted the property. The deal was cancelled. Therefore, it sent a legal notice for refund of its amount. However, the defendant has not refunded the money which he was under obligation to refund.
15. Per contra, the contention of the Ld. Counsel for the defendant is that the plaintiff had approached the defendant for taking the premises on rent for the purpose of running a health clinic. It is specifically stated by the defendant that the plaintiff had not mentioned that it wanted to open a health club. It is contended that the property is suitable for opening a dental clinic as it falls under "Category B" of the 'MPD2021'. However, with some ulterior motives the plaintiff did not come forward for registration of the lease deed even though the defendant had already purchased the stamp papers for execution of the lease deed. Due to this, the defendant CS No.526/13 M/s Perfect Wellness Pvt. Ltd. vs Mr. Sanjeev Narulla Page 10 of 16 incurred the losses and therefore he has forfeited the amount of Rs. 1,25,000/.
16. I have gone through the material on record. There are two documents on record which might be relevant to find out as to what was the intention/ purpose of the defendant for taking the premises on rent. The first document is 'LOI' dated 30.03.2012 which is Ex.CW1/2. The execution of this document is not in dispute. In this document nowhere the purpose for which the plaintiff wanted to take the premises on rent is mentioned. The document is a lengthy document. It contains various particulars/ details in relation to the premises. However, it does not show that the plaintiff had an object of using the property for the purpose of opening a dental clinic and health club.
17. Then, there is a draft of a lease deed which is Ex.PW1/4 (colly). Both the parties have relied upon this lease deed. While the plaintiff has contended that it was the final draft of the lease deed sent by it to the defendant for approval, the defendant has contended that he never accepted it as a final draft, and therefore, he had returned it after making necessary alterations/ changes in the said lease deed. This lease deed could not be executed. However, this document becomes relevant to find out the intention of the parties. Ex. PW1/4 is the draft CS No.526/13 M/s Perfect Wellness Pvt. Ltd. vs Mr. Sanjeev Narulla Page 11 of 16 of lease deed which was sent by the defendant after making changes.
18. As per the case of the plaintiff he had mentioned in lease deed also that the premises was required for the purpose of dental clinic and a health club.
19. I have gone through the entire lease deed. However, nowhere it is mentioned that the premises was to be taken on lease for the purpose of opening a health club and a dental clinic.
20. Ld. counsel for the plaintiff has argued that in this lease deed it is expressly mentioned that the plaintiff company is engaged in the business of Health Care Services and resale. Therefore, it is implied that the plaintiff wanted to open a health club and dental clinic in the premises.
21. I do not agree with this submission of the Ld. Counsel for the plaintiff. Just because the plaintiff has mentioned that it is engaged in the business of health care services and resale, it does not mean that it would be presumed that it wanted the premises to open a health club and dental clinic in the premises.
22. After going through the material on record, I am of the considered opinion that there is no document or any other evidence to show that the plaintiff had conveyed to the defendant that it wanted the premises on rent for the purpose of opening a dental clinic and health CS No.526/13 M/s Perfect Wellness Pvt. Ltd. vs Mr. Sanjeev Narulla Page 12 of 16 club. Therefore, it cannot be said that the property was not suitable for the purpose for which it was taken on rent. Therefore, the argument of the Ld. counsel for the plaintiff that the plaintiff had paid the earnest money on the basis of misrepresentation made by the defendant is without merits.
23. Be that as it may, the premises was never let out to the plaintiff. The defendant never handed over the possession of the premises to the plaintiff. The amount was paid by the plaintiff as earnest money. However, the purpose was never achieved. However, it is the contention of the defendant that he had suffered losses and therefore, he has forfeited the money.
24. There is no material on record to show that it was agreed between the parties that in case of default by the plaintiff, the defendant was entitled to forfeit the amount. It is not even pleaded by the plaintiff. Therefore, it stands proved that there was no compensation or damages clause agreed between the parties. Therefore, the defendant is not entitled to the damages under Section 73 or S. 74, the Indian Contract Act (9 of 1872).
25. The defendant has failed to prove that he had suffered any losses. The defendant has taken the defence that he had incurred huge losses as his property was held up by the plaintiff during the said CS No.526/13 M/s Perfect Wellness Pvt. Ltd. vs Mr. Sanjeev Narulla Page 13 of 16 period and that he had also spent an amount of Rs.32,000/ for purchasing the stamp papers for registration of the lease deed. However, the defendant has failed to lead any evidence to prove that he had suffered any losses due to non execution of the lease deed. He has failed to prove that he had purchased stamp papers worth Rs. 32,000/. He has not filed those stamp papers.
26. The DW1, in his cross examination, has stated that the premises was lying vacant since 24 months prior to the first visit of the plaintiff. This admission is sufficient to show, on the balance of probability, that the premises was not a very hot property. The defendant has not led any evidence to prove that some other people had also contacted him for taking the property on rent. It is not even pleaded by him. Therefore, I am of the considered opinion that the defendant has failed to show that he had incurred any losses due to non execution of lease deed. Therefore, I hold that he did not have right to forfeit the amount of earnest money given by the plaintiff. He was under the obligation to return the amount to the plaintiff. He has admittedly not return the amount to the plaintiff. Therefore, the plaintiff is entitled to recovery of amount from the defendant.
27. In the light of discussion hereinabove, I hold that the plaintiff is entitled to recovery of Rs.1,25,000/ from the defendant. CS No.526/13 M/s Perfect Wellness Pvt. Ltd. vs Mr. Sanjeev Narulla Page 14 of 16 Accordingly, the issue no.1 is decided in favour of the plaintiff and against the defendant.
28. Issue no. 2: Whether the plaintiff is entitled to an interest @ 24% P.A. as prayed for?
The onus to prove this issue was on the plaintiff. However, he has failed to prove that the claimed rate was agreed rate of interest. In the absence of any agreement, the plaintiff is entitled only to reasonable rate of interest. Further, the plaintiff has claimed the interest from the date of giving the money. The amount was paid by the plaintiff on 30.03.2012. It sent legal notice on 30.05.2012. However, the suit has been filed on 02.01.2013. The plaintiff has not explained such a delay in filing the present suit. It can not take the benefit of its own wrong. Therefore, the plaintiff is entitled to interest only from the date of filing of the suit.
29. In terms of the above order, issue no.2 is decided in favour of the plaintiff.
30. Issue no. 4: Relief In the light of the discussion hereinabove, the suit of the plaintiff is decreed. The plaintiff is entitled to a decree of recovery of Rs.1,25,000/ from the defendant. It is also entitled to interest @ 6% per annum from the date of filing of the suit till realization of the CS No.526/13 M/s Perfect Wellness Pvt. Ltd. vs Mr. Sanjeev Narulla Page 15 of 16 amount. It is also entitled to the cost of the suit.
Decreesheet be prepared accordingly.
Pronounced in the open Court (Dinesh Kumar) on this 04th day of February, 2014. Civil Judge, South East, Saket Court, New Delhi.
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