Calcutta High Court
The Jute Corporation Of India Ltd. vs Sudera Enterprises Private Ltd. on 11 August, 1999
Equivalent citations: (2000)1CALLT63(HC), 1999 A I H C 4809, (2000) 1 CALLT 63
Author: Ruma Pal
Bench: Ruma Pal
JUDGMENT S.N. Bhattacharjee, J.
1. This appeal is directed against the order passed by a learned single judge or this court dated 14.7.98 whereby the plaintiffs application being G.A. No. 3057 of 1997 In suit No. 93B of 1997 was allowed.
2. On 6.11.74 an agreement was entered Into between the appellant and the respondent herein whereby the respondent agreed to grant lease in respect of the centrally air-conditioned 7th floor of the premises No. 1. Shakespeare Saranl, containing an area of 17320 sq. ft. on the terms and conditions contained therein for a period of 21 years with an option of renewal of further term of 10 years. The lease was to commence upon the completion of the 7th floor which was under construction. On the same day by a registered deed of mortgage the respondent mortgaged in favour of the appellant the entire premises No. 1. Shakespeare Saranl, Calcutta, in order to secure repayment of a sum of Rs. 17,14,680/- which was lent and advanced by the appellant. The terms of repayment were stated therein. On 1.1.76 by a registered deed of lease the appellant granted 21 years of lease with a stipulation that option of renewal for another term of 10 years of lease will have to be exercised in writing two months before the expiry of the lease. On 19.12.96 the respondent gave a notice to the appellant for delivery of quiet and peaceful possession of the lease of the premises as the appellant failed to exercise its option for renewal of the lease. On 3.1.97 the appellant informed the respondent that the option to renew the lease was verbally exercised in September 19. 1996 to Mr. B.K.Modi, a representative of the respondent and Sri Modi allegedly agreed to confirm the proposal. The respondent denied such communication through Mr. Modi. After a flurry of correspondence that followed between the parties the respondent Instituted suit No. 93B of 1997 against the appellant claiming, a decree for recovery of vacant possession and for mesne profits. The plaintiff filed an application dated 14.8.97 under Chapter XIIIA of the Original Side Rules of this court for final Judgment against the defendant for a decree of khas possession and mesne profits.
3. The defendant contested the application by filing Affidavit-in-oppo-sition contending, inter alia, that the application under Chapter XIIIA is misconceived and that the exercise of option by the defendant for renewal was verbally communicated to Mr. Modi, the representative of the plaintiff in September, 1996 long before the expiry of the lease and the same was ratified by a letter dated 3rd January, 1997. The defendant further contended that in the deed of agreement dated 6.11.74 there was no question of exercising option in writing but the stipulation for exercising option in writing two months before the date of expiry of the lease was incorporated in the lease dated 1.1.76. According to the defendant, the application for Invoking the provision of Chapter X11IA of the High Court Rules is premature and misconceived Inasmuch as no written statement has been filed and no is sues have been settled.
4. The learned trial Judge dealt with the provisions of Chapter X111A of the Original Side Rules of the High Court extensively and discussed in details the authoritative Judicial decisions on the point whether there are triable is sues entitling the defendants to unconditional leave to defend. The learned trial Judge discussed the decisions in Kopil Deo Pandey v. Vosudeb Deushonkar Shukla reported in (89 CWN 728), Kiranmoyee Dasi v. Dr. J. Chatterjee reported in AIR 1949 Calcutta 479 : 49 CWN 246 and also M/s. Mechalec Engineers & Manufacturers v. M/s. Basie Equipment Corporation . Having considered the right of the defendant to have the leave to defend conditionally or unconditionally the learned trial Judge observed.
"The controversy, in substance, narrows down to the construction of the renewal clause with reference to the question as to whether a notice in writing is an essential feature or a mandatory requirement for exercising the option of renewal by the lessee. That to my mind is the crux of the controversy and upon decision of that question the other controversies alluded to above on factual aspects may not be of much significance. In other words if the issuance of notice in writing is not the essence or mandatory requirement of the contract between the parties it can be said that the defendant has raised a triable is sue in the case and final Judgment on summary application of the plaintiff is not warranted and in which event the defendant would be entitled to unconditional leave to defend."
5. Thereafter the learned trial Judge proceed on the basis of the relevant decisions whether the issuance of notice in writing of two months before the expiry of the lease is the essence or mandatory requirement of the contract between the parties. The learned trial Judge relied upon the Supreme Court's decision in (i).Caltex (India) Ltd. v. Bhagwan Devi Marods ; (ii) Halsbury's Laws of England, 3rd ed.. Vol.3, Article 281, 165; (iii) Fos's General Law of Landlord and Tenant, 8th ed., Article 453 page 310; (iv) Hill and Redman's Law of Landlord and Tenant 4th Ed.. Page 54; (v) Eaton v. Lyon (1978) 3 Vos Jun 690. 622-3. 695-6 = 30 ER 1223, 1224 - 1226.
6. Thereafter the learned trial Judge came to the following finding.
"Giving of a notice in writing is thus an essential or mandatory term of the contract between the parties. Unless such a notice is given in writing by the lessee to the lessor it cannot be said that the lessee has either compiled with or performed its part of the convenient entitling it to the right of renewal of the lease in terms of the said renewal clause. The defendant not having exercised the option of renewal in the manner prescribed, that is by a notice in writing and within the time limited by the said clause, is not entitled to the privilege of the renewal. The verbal communication, even if there be such, cannot be held to be in compliance with the covenant as stipulated between the parties entitling the defendant to a renewal."
7. In this appeal the above decision has been under challenge before us.
8. The learned counsel appearing for the appellant has argued that the learned trial Judge erred in law in falling to appreciate that the appellant raised triable issues Indicating that it has a fair or bonafide or reasonable defence and therefore, entitled to unconditional leave to defend and that such triable is sues, inter alia, are set out as follows :-
(a) "whether the oral notice for renewal of the lease was given in September, 1996 and was confirmed on behalf of the landlord? This is recorded in the appellants letter dated 3rd January, 1997 which has been replied on by a letter dated January 14, 1997."
(b) "if it be held on evidence that in September, 1996 the Landlord/ Plaintiff had received the oral notice and agreed to grant renewal of the lease for 10 years, would it be equitable for the Landlord to take the stand Immediately after expiry of the original tenure of the lease that the renewal of lease would not be granted because two months previous notice before expiry of the lease was not given in writing?"
(c) "Whether giving of notice in writing for renewal is essential or mandatory in term of the renewal clause contained in the Deed of Lease."
(d) "Whether having taken overall view of the fact of this case, the appellant should be entitled to equitable reliefs against failure to give notice in writing within stipulated time."
(e) "Even if it is held that two months previous notice in writing is essential term of the lease, whether in the facts of the case it should be held that the appellants having given written notice only two days after expiry of the tenure of lease (3rd January, 1997). The true Intent and meaning of the renewal clause has been substantially performed by the appellant/tenant and the appellant should be granted renewal of lease for 10 years."
9. According to learned counsel for the appellant, the learned trial Judge failed to appreciate that the triable is sues raised by the defendant required adduction of evidence for effective adjudication and could not have been decided on affidavits alone.
10. It is to be noted that if the triable issues raised by the defendant are all taken to be genuine for the sake of argument the defence of the defendant will still founder against the bedrock of established principles of law, both in India and outside.
11. The decisions relied upon by the learned trial Judge as mentioned above in arriving at his finding need not be repeated by us. The learned advocate for the respondent has further cited a decision fn Smt. Munni Devi &. Another v. State of U.P. & OrS. reported fn . In that case the original lease dated 1.12.69 provided that on expiry of the period of 30 years the lease would further be renewed for another term of 30 years, provided the lessee asked for its renewal and executed a kubullat. The lessee did not make such request and did not perform all the conditions precedent as mentioned in the renewal clause of the lease deed. His Lordship held, "it is a well-settled proposition that when the covenant of renewal is subject to condition precedent, the right of renewal only arises when notice is given to the lessor in terms of the renewal clause and the lessee has performed all conditions precedent as mentioned in the renewal clause."
12. In this decision of Allahabad High Court the decision reported in AIR 1976 J & K page 5 (Union of India v. Narayan Singh) was also consulted.
13. In Samuel Properties (Developments) Ltd. v. Hayek reported in 1972 (2) All England Reports page 881 wherein a question of failure on the part of the lessor to exercise the option to review the rent at the end of 7th year of the term on condition that the lessor must serve notice of intention to exercise option not later than two quarters before the expiry of the 7 year was in is sue. In that case the lessor sent a notice on 22nd February. 1971 informing the defendant that they wished to avail themselves of the opportunity offered by the agreement to increase the rent of the flat as from 7th July, 1971. The defendant's solicitor replied that under the agreement it was necessary to give two quarters i.e. six months: and, therefore, the plaintiff ought to have given notice on or before 6th January, 1971.
14. K was held that the plaintiffs could not be granted the equitable relief sought; when one party was in the position of being able to act unllateratly to secure a benefit for himself and provision was made for such unilateral action by one party, subject to the observance of certain conditions, those conditions must be strictly adhered to if the party entitled to the benefit was to be allowed to secure It; the option to Increase the defendant's rent at the end of 7 years was a 'benefit' to the plaintiffs and the time limit for giving notice laid down in Sch. 4, para 2, had to be strictly complied with.
15. In West Country Cleaners (Fatmouth) Ltd. v. Saty reported in (1966) 3 All England Law Reports the tenant made a trivial breach of the convenient in that the ceiling was not painted whereas the other conditions of the covenants were fulfilled. In that case also notice to exercise option of renewal was given in due time but the landlord refused to grant further lease on the ground that the tenants are in default as regards the performance of the covenants contained in the lease. The refusal of the landlord to grant further lease was upheld in appeal. The facts of the case are although different, the principle enunciated is that the option of this character is a privilege which has always been treated by the law as requiring complete compliances with the terms and conditions which the option is to be exercised. In that Judgment a passage occurring in. 'Halsbury's Laws of England (3rd ed.J page 165 para 281 was referred to :
"An option for the renewal of the lease, or for the purchase or repurchase of property, must in all cases be exercised strictly within the time limit for the purpose, otherwise it will lapse."
16. We are, therefore, of the opinion that the learned trial Judge rightly held that the right to exercise option of renewal of the lease in the facts and circumstances of the case lapsed and became unenforceable. The learned trial Judge, therefore, rightly allowed the application under Chapter X11IA of the Original Side Rules of the High Court, decreed the suit and appointed referee to assess the mesne profits giving liberty to the parties to file objections against the report of the referee. The appeal is , therefore, devoid of any merit and accordingly, the appeal is dismissed but under the facts and circumstances of the case without any order as to costs.
The Court:
17. Let xerox copies of this Judgment and Order, duly signed by the Assistant Registrar of this court, be made available to the parties upon their undertaking to apply for and obtain certified copies thereof on payment of usual charges.
18. Appeal dismissed