Delhi High Court
Silicon Graphics Systems India Private ... vs Nidas Estates Private Limited & Ors on 30 August, 2011
Author: V.K. Jain
Bench: V.K. Jain
THE HIGH COURT OF DELHI AT NEW DELHI
% Judgment Reserved on: 25.08.2011
Judgment Pronounced on: 30.08.2011
+ CS(OS) 1661/2003
M/S. SILICON GRAPHICS SYSTEMS INDIA PRIVATE
LIMITED ..... Plaintiff
Through: Mr. Rajiv Tyagi, Adv.
versus
NIDAS ESTATES PRIVATE LIMITED & ORS ...Defendants
Through: Ms. Malavika Rajkotia, Adv.,
Mr Ravi Awasthi and Mr Ramakant
Sharma, Advs.
&
+ CS(OS) No. 2108/2011
(SUIT NO. 100/2005/02 of District Court)
M/S NIDAS ESTATES PRIVATE LTD. ....Plaintiff
versus
SILICON GRAPHICS SYSTEMS INDIA PRIVATE LIMITED
.... Defendant
CORAM:-
HON'BLE MR JUSTICE V.K. JAIN
1. Whether Reporters of local papers may
be allowed to see the judgment? Yes
2. To be referred to the Reporter or not? Yes
3. Whether the judgment should be reported
in Digest? Yes
CS(OS) 1661/2003 & CS(OS) 2108/2011 Page 1 of 51
V.K. JAIN, J
CS(OS) 1661/2003
1. This is a suit for recovery of Rs.45,23,414/-. The
plaintiff and defendant No.1, both of which are Private
Limited Companies, entered into a license agreement dated
1st September 1995 in respect of premises bearing No.305-A
and 305-B, Embassy Square, 148 Infantry Road, Bangalore.
Under the agreement the aforesaid premises was given to
the plaintiff company on license for a period of 36 months
and license was renewable for another term of three years.
The license was accordingly renewed for a further period of
three years expiring on 31st August 2001. The plaintiff
company also deposited a sum of Rs.2,02,100/- as security
with Karnataka Electricity Board on behalf of defendant
No.1 company. This amount according to the plaintiff was
agreed to be refunded to it by defendant No.1 on expiry of
the license. Another sum of Rs.6,25,000/- was deposited by
the plaintiff with defendants No.2 and 3 for providing
standby generating sets and upkeep and maintenance of the
premises subject matter of the license agreement, and
CS(OS) 1661/2003 & CS(OS) 2108/2011 Page 2 of 51
according to the plaintiff was to be refunded to it on expiry
of the term of the license. It is alleged that on expiry of the
term of the license defendant No.1 requested the plaintiff
not to take refund of the deposits made by it with Karnataka
Electricity Board and defendants No.2 and 3 since it wanted
to retain the benefit of the higher load sanctioned by
Karnataka Electricity Board as also the generator sets made
available by defendant No.2 and 3 and agreed to pay an
equivalent amount to the plaintiff company.
2. Vide letter dated 4th September 2001 the plaintiff
called upon defendant No.1 to either renew the license on
the terms contained in the letter or to take back possession
of the licensed premises, against refund of security deposits.
Defendant No.1, however, did not agree to the terms offered
by the plaintiff for renewal of the license and the plaintiff
had to repeatedly call it upon to take possession of the
licensed premises against security deposits. This led to a
meeting between the officials of the plaintiff and defendant
No.1 on 5th October 2001, wherein the possession of the
licensed premises was again offered to defendant No.1
against refund of security deposits. It is alleged that
CS(OS) 1661/2003 & CS(OS) 2108/2011 Page 3 of 51
defendant No.1 did not come forward to take possession of
the premises and also did not refund the security deposit,
despite repeated reminders. It rather sent a notice claiming
a sum of Rs.25,29,582.50 from the plaintiff towards license
fee for the period from September to December, 2001. In a
legal notice dated 14th February 2002 defendant No.1 also
raised a claim of Rs.9,58,448/- on the plaintiff company,
after adjusting the security amount of Rs.27,45,000/-.
Finally defendant No.1 took possession of the premises
using a duplicate set of keys and also failed to release the
security deposits and other deposits amounting to a total
sum of Rs.35,72,100/-. According to the plaintiff,
defendants No.2 and 3 have also failed to refund the
amount of Rs.6,25,000/- which it had deposited with them,
in respect of the aforesaid premises, taking the stand that
this deposit was made by the plaintiff on behalf of defendant
No.1. The plaintiff has now claimed the aforesaid sum of
Rs.35,72,100/- from all the defendants along with interest
on that amount @ 18 % per annum amounting to
Rs.9,51,314/-, thereby raising a total claim of
Rs.45,23,414/-. Alternatively the plaintiff has sought
Rs.36,74,647/- comprising security deposit of
CS(OS) 1661/2003 & CS(OS) 2108/2011 Page 4 of 51
Rs.27,45,000/- and a sum of Rs.2,02,100/- deposited with
Karnataka Electricity Board along with interest on that
amount @ 18% per annum making a total sum of
Rs.36,74,647/- and a sum of Rs.8,48,767/- from
defendants No.2 and 3 which comprises Rs.6,25,000/-
towards security deposit and the balance amount towards
interest @ 18% per annum.
3. The suit has been contested by defendant No.1. It
is alleged in the written statement that defendant No.1
wanted the plaintiff to remove the fixtures and restore the
premises to its original condition as per the terms of the
license agreement, but the plaintiff wanted a sum of Rs.5
Lacs for those fittings and was refusing to vacate the
premises till its demand for such payment was met.
Defendant No.1, however, was not willing to pay Rs.5 lacs
which the plaintiff was demanding for those fittings and
fixtures comprising false ceiling air condition ducting with
pipes, fire protection pipes, electrical control panel and was
willing to take vacant possession of the premises on
payment of its just dues which comprised license fee arrears
of two months at that time. It is further alleged that when it
CS(OS) 1661/2003 & CS(OS) 2108/2011 Page 5 of 51
became clear to defendant No.1 that the plaintiff had no
intention of returning the premises it entered the premises
exercising its right under the license agreement. Defendant
No.1 has however admitted having entered into license
agreement dated 1st September 1995 and having raised a
sum of Rs.27,45,000/- as deposit from defendant No.1. It is
also admitted that the plaintiff deposited a sum of
Rs.2,02,100/- for sanction of additional load of electricity
and Rs.6,25,000/- with defendants No.2 and 3 for providing
standby generators and for maintenance charges.
This is also the claim of defendant No.1 that the
plaintiff is entitled to pay rent for the months of September
2001 and October 2001 as no notice to terminate the
license was given by it.
CS(OS) No. 2108/2011 (Suit No. 100/2005/02 of
District Court)
4. This suit filed before the District Court, Delhi was
transferred to this Court and was consolidated with CS(OS)
No. 1661/2003 vide order dated July 13,2011. The case of
the plaintiff in this suit, which is defendant no.1 in CS(OS)
No. 1661/2003 is that it is entitled to a sum of
CS(OS) 1661/2003 & CS(OS) 2108/2011 Page 6 of 51
Rs.37,03,448/- from the plaintiff which comprises
Rs.1,17,425/- being the deficient license fee for September
1995, Rs.1,37,750/- towards license fee arrears,
Rs.6,69,828/- towards license fee from June to August,
2001, Rs.21,62,336/- towards additional license fee from
September 2001 to 10th February 2002, Rs.258754/-
towards interest @ 18% per annum and Rs.357855/-
towards maintenance charges, and that after adjusting
Rs.2745000/- deposited by the plaintiff company, it is yet to
recover a sum of Rs.958448/- from it. The claim for
additional license fee is based on the license agreement
which provided for payment of additional fee of Rs.5,000/-
per day upto 30 days and thereafter at the rate of 10% of
the total license fee payable immediately prior thereto for
each 30 days period after the first 30 days period, in case
the licensee continued to use the premises beyond the
terms of the license.
5. The following issues were framed in CS(OS)
No.1661/2003:-
1. Has the plaintiff been always
willing to make over possession w.e.f
1.9.01 and accordingly not liable to pay
any charges for any period beyond
CS(OS) 1661/2003 & CS(OS) 2108/2011 Page 7 of 51
1.9.01?
2. Has the defendant been in
possession w.e.f. 1.9.01 by virtue of
Clause of the Licence Deed?
3. Is the defendant entitled to adjust
the security amount in the manner stated
by him in the written statement?
4. Is the plaintiff entitled to recover
the suit amount and if so from whom?
5. Relief.
The following issues were framed in suit
No.100/2005/02 of District Court:-
1. Whether plaintiff is entitled to
relief claimed?
2. Relief.
Issues No.1 to 3 in CS(OS) 1661/2003 and issue No.1 in
suit No.100/2005/02 of District Court
6. In CS(OS) 1661/2003, the plaintiff has filed
affidavit of its Financial Controller Shri Sanjay Bhanot by
way of evidence. Defendant No.1 in this suit has filed the
affidavit of its Director Mr. Rajesh Dutta by way of evidence.
The suit against defendants No.2 & 3 in CS(OS) 1661/2003
was decreed for recovery of Rs.6,25,000/- since they failed
to deposit a sum of Rs.6,25,000/- which they were required
to deposit as a pre-condition for grant of leave to contest the
suit.
7. In 100/2005/02, Mr. Rajesh Dutta has appeared
CS(OS) 1661/2003 & CS(OS) 2108/2011 Page 8 of 51
in the witness box as PW-1 and Mr. Sanjay Bhanot has
been examined as DW-1. In his affidavit by way evidence,
Mr. Sanjay Bhanot has stated that on expiry of the licence
agreement, the plaintiff called upon defendant No.1 several
times to take over vacant possession of the premises, but,
defendant No.1 did not come forward to take possession
since the rentals at that time were falling and it was not
able to find another suitable tenant. According to him, the
plaintiff had taken a new accommodation at 405/406, P-2,
Prestige Metropolitan, M.G.Road, Bangalore, with effect from
01.09.2001, vide lease agreement PW-17 and it was always
ready and willing to handover the possession of the
premises to defendant No.1. According to him, the plaintiff
having already vacated the premises, defendant No.1 could
have taken its possession at any time, but, it did not come
forward to take the possession until its own pressing need
arose in this regard.
8. Mr. Rajesh Dutta, Director of defendant No.1
Company has, in his affidavit, stated that the plaintiff was
holding defendant No.1 to ransom by insisting upon large
payments, ostensibly for fixtures like control panel and
refusing to vacate the premises till the payment demanded
CS(OS) 1661/2003 & CS(OS) 2108/2011 Page 9 of 51
by it was made. According to him, the plaintiff was in
possession and occupation of the premises till they
re-entered the premises on 15th February, 2002. According
to him, defendant No.1 had entered into a fresh agreement
commencing 15.02.2002 to let out the premises in question.
9. The license deed, executed between the parties,
initially provided as under:-
"As a security for the due payment by the
Licensee and due performance by the
Licensee of its obligations hereunder, the
Licensee shall at the time of the execution
of this Agreement deposit with the
Licensor a sum of Rs 27,45,000/-
(Rupees Twenty Seven Lac forty five
thousand only) which the Licensor shall
hold until the Licensee vacates the
licensed Premises.
Without prejudice to any other right or
remedy which the Licensor has in this
behalf the Licensor shall be entitled to
adjust from the security deposit any
License Fee or other amounts payable
hereunder, which remain unpaid by the
Licensee and, upon such adjustment the
Licensee shall forthwith replenish the
security deposit to bring it to an amount
of Rs 27,45,000/- (Rupees twenty seven
lacs and forty five thousand only) and pay
interest on the amount adjusted @ 18%
per annum from the date of adjustment
up to date of repletion.
The Licensor shall refund to the Licensee
CS(OS) 1661/2003 & CS(OS) 2108/2011 Page 10 of 51
the unadjusted amount of the security
deposit remaining in the hand of the
Licensor simultaneously at the time of
the Licensee vacating the Licensed
Premises, free of any liability of interest
and after deducting a reasonable amount
for any damage caused to the premises.
However, should the Licensor fail to make
the refund of the security deposit
stipulated above simultaneously with the
Licensor delivering the vacant possession
of the Licensed Premises, the Licensor
shall be liable to pay interest during the
period the unadjusted amount of security
deposit remain unpaid by the Licensor to
the Licensee. Such interest on the
unadjusted amount of the security
deposit shall be payable by the Licensor
to the Licensee at the rate of the 18% per
annum (payable on a per day basis) for
up to the first 30 days during the period
the amounts remain unpaid and
thereafter at a rate which is enhanced by
10% (ten percent) of the rate immediately
prior thereto for each 30 (thirty) days
period after the first 30 (thirty) days
period of non-refund of the unadjusted
amount of security deposit. Interest at
the enhanced rates of interest shall be
payable on a cumulative basis.
The Licensee may apply for and obtain
additional electricity/power for the
purposes of its office activities and the
Licensor shall provide all necessary
assistance to enable the Licensee to
security such additional electricity/power
requirements from concerned authorities,
to the paid or made for the additional
load.
CS(OS) 1661/2003 & CS(OS) 2108/2011 Page 11 of 51
In so far as such payments shall
constitute refundable deposits the
Licensee shall on determination of the
license give the Licensor an option to
retain the original load, and if the
Licensor opts to retain the load, the
Licensor shall pay the Licensee the
refundable amount of such deposits. If
the Licensor opts not to retain the
additional load, the Licensee will be at
liberty to withdraw the refundable
deposits with respect to addition loan and
the Licensor shall execute any and all
documents and authorities as are
required to enable the Licensee to obtain
the refund.
The Licensee shall not make any structural
alterations in the Licensed Premises.
However, the Licensee may make any
additions or alterations in the Licensed
Premises for making enclosures, cabins,
false ceilings etc., and install air
conditioners, exhaust fans, coolers and
other electric appliances and wiring for
local area network without in any manner
damaging the Licensed Premises and on
termination of the license, the Licensee
shall be entitled to remove the same. The
Licensee may remove the wall connecting
the licensed premises to flat nos. 304A and
304B. However, the LICENSEE shall on
determination of the license restore the
Licensed Premises to its original condition,
including the partition wall or pay the
Licensor the costs likely to be incurred for
such restoration.
The Licensee shall stop using the Licensed
Premises on the expiry of this license
either by efflux of time or revocation by the
Licensor. If the Licensee commits default,
CS(OS) 1661/2003 & CS(OS) 2108/2011 Page 12 of 51
the Licensee shall be bound to pay apart
from the license fee payable under Clause
(2) supra, an addition fee of Rs.5000/-
(Rupees five thousand only) per day during
the period in which it continues to use the
Licensed Premises for upto 30 (thirty) days,
and thereafter an additional license fee
enhanced by 10% (ten per cent) of the total
license fee payable immediately prior
thereto for each 30 (thirty) days period
after the first 30 (thirty) days period of use
beyond the term of license. Acceptance of
such amount, however shall not constitute
acceptance of a fresh license, and shall be
without prejudice to all recourse/remedy
that the Licensor may have to repossess
the premises."
10. It is an admitted case that the license agreement
expired on 31st August, 2001. Vide letter dated 04th
September, 2001 (Ex.PW-8), the plaintiff proposed renewal
of the lease/license for two years on payment of rent/license
if which was lower than the rent/license fee which it was
paying up to 31st August, 2003. It also requested defendant
No. 1 to refund the security deposit and accept vacant
possession of the premises if the terms proposed for the
renewal of the lease/license were not acceptable to it.
Admittedly, the lower rent/license fee proposed by the
plaintiff was not accepted by defendant No. 1. Vide letter
dated 05th September, 2001 (Ex.PW-9), defendant No. 1
CS(OS) 1661/2003 & CS(OS) 2108/2011 Page 13 of 51
proposed renewal of the lease at the rent of Rs 60 per sq.
feet as against the rent Rs 50 per sq. feet offered by the
plaintiff. This, obviously, was not acceptable to the plaintiff,
which vide its letter dated 28th September, 2001 (Ex.PW-11),
referring to its letter dated 04th September, 2001, reiterated
its request for refund of the security deposit and asked the
plaintiff to send its representative to accept vacant
possession of the premises and complete the formalities in
this regard not later than 05th October, 2001. In reply to
plaintiff's letter dated 28th September, 2001, defendant No.
1 wrote a letter dated 1st October, 2001 (Ex.PW-12)
informing that its representative will get in touch with the
plaintiff on 05th October, 2001 to take the possession of the
premises in tenantable condition, subject to the premises
being restored to its original condition and to hand over
security deposit after deducting outstanding dues against
the premises, including cost of restoration to original
condition if it was found necessary and deducting rent
arrears in accordance with a statement, enclosed with the
letter. The statement indicated that a sum of Rs
13,71,055/- was due to defendant No. 1 from the plaintiff.
This amount comprised Rs 1,37,250/- towards past arrears,
CS(OS) 1661/2003 & CS(OS) 2108/2011 Page 14 of 51
Rs 2,54,675/- towards rent for September, 1995, Rs
8,93,104 towards rent from June, 2001 to September, 2001
@ Rs 2,23,276 per month and Rs 2,23,276/- towards one
month's additional rent in lieu of notice as per agreement.
After amount of tax required to be deducted at source, the
net amount payable by the plaintiff to defendant No. 1, as
per this statement, came to Rs 11,15,314/-.
11. Admittedly, a meeting was held on 05 th October,
2001 between Mr. Ashish Randhawa of defendant No. 1-
Company and Mr. K.V. Subramanian of plaintiff-company.
The minutes of the meeting, signed by both these persons,
read as under:-
1. NEPL acknowledge the receipt of security deposit of Rs
6,25,000/-.
2. NEPL also has confirmed from Embassy Group, the
deposit of Rs 6,25,000/- for genset paid by SGI to
Embassy Group on NEPL's behalf. This amount needs
to be refunded to SGI. Embassy Group and NEPL to
decide amongst themselves as to who would refund
this.
3. NEPL have claimed that rent for the month of
CS(OS) 1661/2003 & CS(OS) 2108/2011 Page 15 of 51
September, 1995 (Rs 152,500 less TDS of Rs 35,075/-)
has not been received by them. SGI to reconcile this
account by Tuesday the October, 9, 2001 and get back
to NEPL.
4. NEPL has also claimed Rs 1,37,250 being the balance
due against arrears received in the month of May,
1998. SGI to reconcile this as well by Tuesday the
October 9, 2001 and get back to NEP.
5. NEPL has requested SGI not to surrender the
additional electrical load obtained by SGI to KEB since
NEPL wants to retain the same. NEPL to apply to KEB
for transferring the same from SGI to NEPL. Any
deposits paid by SGI would be refunded to SGI by
NEPL. All charges pertaining to this would be borne
by NEPL.
6. The vacant possession has already been offered by SGI
to NEPL at the end of the lease period, against refund
of Security Deposit.
7. SGI offers the following to NEPL against payment.
Amounts to be mutually decided.
False Ceiling
CS(OS) 1661/2003 & CS(OS) 2108/2011 Page 16 of 51
Air Condition ducting with pipes
Fire protection pipes
Electrical Control Panel
12. The following facts emerged from the above-
referred correspondence and minutes of the meeting held on
05th October, 2001:-
(a) Though the offer of the plaintiff to renew the
lease/license for two years on payment of rent at
the rate of Rs 50 per sq. feet, made vide letter
dated 04th September, 2001, was rejected by
defendant No. 1 on the very next day and a
counter offer for renewal of lease at the rate of 60
per sq. feet was given, there was no response from
the plaintiff, to the counter offer till 28 th
September, 2001. If the counter offer made by
defendant No. 1 was not acceptable to the plaintiff,
it ought to have rejected the same immediately on
receipt of the letter dated 05th September, 2001.
Moreover, the plaintiff itself had requested
defendant No.1, vide letter dated 28th September,
2001, to take possession by 05 th October, 2001.
CS(OS) 1661/2003 & CS(OS) 2108/2011 Page 17 of 51
Hence, it is difficult to accept that the plaintiff had
unequivocally offered vacant possession of the
premises to defendant No. 1 on 04th September,
2001;
(b) The plaintiff having sought refund of security
deposit and having requested defendant No. 1 to
depute its representative to accept vacant
possession of the premises not later than 05 th
October, 2001, it made an unambiguous and
unequivocally offer to defendant No. 1 to take
possession of the premises and refund the security
deposit. In fact, defendant No. 1 also had no
doubt in its mind regarding the intention of the
plaintiff in this regard and that is why it informed
the plaintiff that its representative would get in
touch with them on 05th October, 2001 to take
vacant possession of the premises.
(c) The letter of defendant No. 1 dated 01st October,
2001 leaves no doubt that defendant No. 1 was not
prepared to accept vacant possession of the
premises in the condition in which the premises at
CS(OS) 1661/2003 & CS(OS) 2108/2011 Page 18 of 51
that time was and wanted to accept possession
only when the premises was restored to its original
condition. Admittedly, the plaintiff, in terms of the
provisions of the license agreement, had installed
fittings and fixtures comprising false ceiling air
condition ducting with pipes, fire protection pipes,
electrical control panel in the tenancy premises.
Defendant No. 1, obviously, wanted the plaintiff to
remove those fittings and fixtures before it took
possession of the premises from the plaintiff.
(d) The letter of defendant No. 1 dated 01st October,
2001 also shows that defendant No. 1 was not
willing to refund the whole of the security deposit
to the plaintiff at the time of taking vacant
possession of the premises and wanted to deduct
from it a sum of Rs 11,15,314/-, as detailed in the
annexure of the letter.
(e) though defendant No. 1 had claimed a gross sum
of Rs 13,71,055/-, net amount of Rs 11,15,314/-
after deduction of tax at source amount to Rs
2,55,714/-), the whole of the demand was not
CS(OS) 1661/2003 & CS(OS) 2108/2011 Page 19 of 51
justified, as is evident from the minutes of the
meeting held on 05th October, 2001, wherein
defendant No. 1 claimed only a sum of Rs
1,17,425/- towards arrears of license fee and Rs
1,37,250/- toward balance due against arrears
received in May, 1998. Hence, it cannot be
disputed that defendant No. 1 had not offered to
refund the whole of the amount due to the plaintiff,
after adjustments which were permissible in terms
of the license deed.
(f) Even on 05th October, 2001, defendant No. 1
acknowledged that the plaintiff had offered vacant
possession of the premises to it at the end of the
lease period, against refund of security deposit.
Thus, it cannot be disputed that the plaintiff was
ready and willing to deliver possession to the
defendant on the refund of the security deposit.
13. The next question which comes up for
consideration is as to whether defendant No. 1 could have
insisted upon removal of the fittings and fixtures and
payment of the aforesaid sums of Rs 1,17,425/- and Rs
CS(OS) 1661/2003 & CS(OS) 2108/2011 Page 20 of 51
1,37,250/- before accepting possession of the premises.
14. As noted earlier, the licensor was required to
refund the unadjusted amount of the security deposit to the
licensee simultaneously at the time of the licensee vacating
the licensed premises, after deducting a reasonable amount
for any damage caused to the premises. The
correspondence between the parties up to the meeting held
on 05th October, 2001 does not indicate that defendant No.
1 had adjusted any unpaid amount of the license fee from
the security deposit by the plaintiff-company with it, though
it had claimed initially a sum of Rs 13,71,055/-, which was
later reduced to two sums one of Rs 1,17,425/- and the
other Rs. 1,37,250/-. Defendant No. 1, under clause 3 of
the license deed could definitely have adjusted the arrears of
license fee or any other amount payable to it under the
license deed from the security amount, deposited with it.
The question which arises for consideration is whether any
amount was actually due to defendant No. 1 towards
arrears of license fee on 1st October, 2001 when it wrote to
the plaintiff or on 05th October, 2001 when its
representative had a meeting with the representative of the
CS(OS) 1661/2003 & CS(OS) 2108/2011 Page 21 of 51
plaintiff-company. A perusal of the minutes of the meeting
held on 05th October, 2001 would show that the plaintiff-
company did not admit its liability for payment of the
aforesaid amounts to defendant No. 1 though it agreed to
reconcile its account by 09 th October, 2001 and get back to
defendant No.1-company. There is no evidence of the
plaintiff-company having written back to defendant No. 1 in
this regard at any point of time. In my view, if any amount
was actually due to defendant No. 1 from the plaintiff,
defendant No. 1 was very much entitled to adjust that
amount while refunding the security deposit to the plaintiff-
company. It was contended by the learned counsel for the
plaintiff that the arrears which defendant No. 1 had claimed
from the plaintiff-company had become barred by limitation
by 1st October, 2001 and, therefore, even if it is assumed
that these amounts were due to defendant No. 1 from the
plaintiff-company, they could have adjusted while refunding
the security deposit. I, however, do not find myself in
agreement with the learned counsel for the plaintiff. The
period of limitation, prescribed in Limitation Act, bars the
remedy of filing a suit for recovery of an amount which has
become barred by limitation, but it does not bar the claim
CS(OS) 1661/2003 & CS(OS) 2108/2011 Page 22 of 51
for an amount which is otherwise due and payable and,
therefore, even if some arrears had become barred by
limitation, defendant No. 1 was entitled to deduct those
arrears while refunding the security deposit to the plaintiff.
The next question which comes up for consideration in this
regard as to whether the amounts, claimed by defendant No.
1, were actually due to it or not.
As noted earlier, both the parties have produced
one witness each. In his affidavit Mr Rajesh Dutta of Nidas
Estates Private Limited, which is defendant No. 1 in Suit No.
1661/2003, has stated that the plaintiff had worked out the
accounts and a sum of Rs 1,17,425/- was due to it towards
license fee for September, 1995 and Rs 1,37,250/- was
payable to it towards arrears, in addition to license fee for
the period from June to August, 2001. It is an admitted case
that the plaintiff in Suit No. 1661/2003 did not pay license
fee from June to August, 2001. Defendant No. 1 in this
case, therefore, could definitely have adjusted the aforesaid
amount from the security deposit, along with interest for the
delayed payment in terms of the license agreement. There is
no material on record to suggest that the plaintiff at any
CS(OS) 1661/2003 & CS(OS) 2108/2011 Page 23 of 51
point of time disputed its liability to pay license fee for those
four months. As regards license fee for September, 1995, Mr
Sanjay Bhanot, in his affidavit by way of evidence, did not
claim that this amount was not due to defendant No. 1-
company or that the whole of the license fee for September,
1995 had been paid by the plaintiff-company. Once there
was a claim for recovery of this amount, the onus was on
the tenant/licensee to prove that it had paid rent/license fee
for the month of September, 1995. No evidence having been
led by the plaintiff in Suit No. 1661/2003 to prove payment
of rent/license fee for September, 1995, I see no reason to
disbelieve the deposition of Mr Rajesh Dutta in this regard.
Another important aspect in this regard is that even in the
correspondence subsequent to the meeting held on 05th
October, 2001, the plaintiff in Suit No. 1661/2003 did not
claim that it had paid license fee for September, 1995. In its
notice dated 27th December, 2001, defendant No. 1 claimed
rent for September, 1995. In the reply sent on 22nd
January, 2002, through its counsel, the plaintiff did not say
that it had paid rent/license fee for September, 1995.
Rather, it was claimed that the plaintiff was willing to settle
and adjust the dues of defendant No. 1 on reconciliation of
CS(OS) 1661/2003 & CS(OS) 2108/2011 Page 24 of 51
the accounts between the plaintiff and defendant No. 1. As
noted earlier in the meeting held on 05th October, 2001, the
plaintiff-company had agreed to reconcile its account and
revert back to defendant No. 1 by 09th October, 2001. But,
there is no evidence of the plaintiff having written to
defendant No. 1, disputing its liability to pay the arrears of
rent/license fee for September, 1995. I, therefore, have no
hesitation in holding that the rent/license fee for
September, 1995 having not been paid, defendant No. 1 was
entitled to adjust the aforesaid amount while refunding the
security deposit.
15. Coming to arrears, amounting to Rs 1,37,250/-,
the case of defendant No. 1 in Suit No. 1661/2003, if
examined with the help of the Annexure-II to the letter
dated 1st February, 2001, appears to be that a sum of Rs
4,71,225/- was due to it as arrears up to March 1999, out
of which only Rs 3,33,975/- were received in May, 1998,
leaving balance arrears of Rs 1,37,250/-. However, there is
no averment to this effect in the plaint of Suit No.
100/2005/02 of District Court filed by licensor Nidas
Estates Private Limited or in Suit CS (OS) No. 1661/2003.
CS(OS) 1661/2003 & CS(OS) 2108/2011 Page 25 of 51
In para 22 of the plaint, Nidas Estates Private Limited
claimed that it had worked out the accounts and a sum of
Rs 9,58,448/- was payable to it, which figure had been
arrived at by debiting the amount of Rs 1,37,250/- to the
licensee Silicon Graphics Systems India Private Limited
towards license fee arrears. But, it did not say to which
period these arrears pertained and how they had been
worked out. Thus, there is no specific averment to the effect
that a sum of Rs 4,71,225/- was due as arrears to the
plaintiff in the suit by March, 1999 and the defendant in the
suit had paid a sum of Rs 3,33,975/- in May, 1998, leaving
a balance of Rs 1,37,250/-. In his affidavit by way of
evidence, Mr Rajesh Dutta, Director of Nidas Estates Private
Limited, simply lifted and reproduced the averment made in
para 22 of the plaint and claimed that the plaintiff had
worked out the accounts by debiting Rs 1,37,250/- towards
licence fee arrears. He did not say that a sum of Rs
4,71,225/- was due to Nidas Estates Private Limited by
March, 1999 and since only a sum of Rs 3,33,975/- was
paid to it in May, 1998, the amount of Rs 1,37,250/-
represented unpaid amount of the arrears. He did not tell
the Court to which period the alleged arrears of
CS(OS) 1661/2003 & CS(OS) 2108/2011 Page 26 of 51
Rs.4,71,225/- pertained and how they had been worked
out. In my view, the annexure of the letter dated 1 st
October, 2001 is not sufficient to prove that a sum of Rs
1,37,250/- remained unpaid to Nidas Estates Private
Limited, towards unpaid arrears up to March, 1999. The
plaintiff in Suit No. 1661/203 was required to produce
positive evidence during trial, to prove its claim with respect
to arrears, amounting to Rs 1,37,250/-. It was required to
lead positive evidence to prove how much was the total
amount payable by Silicon Graphics Systems India to it
towards rent/license fee, how much amount was deducted
towards tax and how much was the total payment received
from Silicon. Only then, the arrears could have been verified
by the Court during trial. The annexure to the letter dated
1st October, 2001, in my view, cannot be a substitute for the
positive evidence which Nidas Estates Private Limited was
required to prove in this regard. It is settled proposition of
law that mere production or even proof of a document does
not amount to proof of its contents. The truthfulness or
otherwise of the contents of a document can be proved only
by legally admissible evidence, i.e., the evidence of a person
who is in a position to vouchsafe for the truthfulness of
CS(OS) 1661/2003 & CS(OS) 2108/2011 Page 27 of 51
those contents.
In Judah v. Isolyne Bose, AIR 1945 PC174, the
issue before the Court was whether the testatrix was as
seriously ill as would result in impairment of her
testamentary capacity. To substantiate the degree of illness,
a letter and two telegrams written by a nurse were tendered
in evidence. The question was whether in the absence of any
independent evidence about the testamentary capacity of
the testatrix the contents of the letter could be utilized to
prove want of testamentary capacity. In these
circumstances, the Privy Council observed that the fact that
a letter and two telegrams were sent by itself would not
prove the truth of the contents of the letter and, therefore,
the contents of the letter bearing on the question of lack of
testamentary capacity would not be substantive evidence. It
was held that the contents of the letter and telegram were
not the evidence of the facts therein and mere proof of
handwriting of a document would not tantamount to proof
of all the contents or the facts stated in the document
therein.
In Malay Kumar Ganguly v. Dr. Sukumar
Mukherjee (2009) 9 SCC 221, Supreme Court observed that
CS(OS) 1661/2003 & CS(OS) 2108/2011 Page 28 of 51
a document does not become admissible in evidence unless
its author is examined and that the contents of a document
cannot be said to have been proved unless he is examined
and subjected to cross-examination in a Court of law.
In Narbada Devi Gupta v. Birendra Kumar
Jaiswal (2003)8 SCC 745, Supreme Court, inter alia,
observed as under:
"The legal position is not in dispute that
mere production and marking of a
document as exhibit by the court cannot
be held, to be a due proof of its contents.
Its execution has to be proved by
admissible evidence that is by the
evidence of those persons who can
vouchsafe for the truth of the facts in
issue."
16. Therefore, it was obligatory for the Nidas Estates
Private Limited to lead positive evidence to prove the case
setup by it in this regard. Consequently, I hold that Nidas
Estates Private Limited could not have adjusted the amount
of Rs 1,37,250/- while offering the refund of the security
deposit.
17. As noted earlier, vide letter dated 1st October,
2001, defendant No. 1 in Suit No. 1661/203 had informed
the plaintiff in this suit that its representative would contact
CS(OS) 1661/2003 & CS(OS) 2108/2011 Page 29 of 51
them on 05th October, 2001 to take possession of the
premises and refund the security deposit after adjusting
outstanding dues against the premises, including cost of
restoration and rent arrears in accordance with the
statement, annexed to the letter. A perusal of the
statement, annexed to the letter, would show that in
addition to arrears of rent/license fee, defendant No. 1 in
Suit No. 1661/2003 was also seeking to deduct a sum of Rs
2,23,276/- towards additional rent in lieu of one month's
notice. The license agreement between the parties expired
on 31st August, 2001. Since the license expired by efflux of
time on 31st August, 2001, there could be no question of the
licensee paying an amount equivalent to one month's
license fee in lieu of notice to the licensor. The licensee
would have been required to give notice only if it were to
terminate the license before expiry of its term, but, once the
license had expired by efflux of time, there was no question
of its premature termination and consequently no occasion
for giving of any notice or any amount in lieu of notice to the
licensor. Therefore, Nidas Estates Private Limited was
wholly unjustified in seeking to deduct the aforesaid
amount of Rs 2,23,276/- while offering the refund of the
CS(OS) 1661/2003 & CS(OS) 2108/2011 Page 30 of 51
security deposit. The licensor could have adjusted from
security deposit only the license fee arrears or any amount
payable to it under the provisions of the license deed, which
could also have deducted a reasonable amount for any
damage, caused to the premises. This was not the case of
Nidas Estates Private Limited either in its notice dated 1st
October, 2001 or during the meeting held on 05 th October,
2001 that the licensee Silicon Graphics Systems India
Private Limited had caused any damage to the premises and
it was seeking to recover any particular amount towards
compensation for such damage. In fact, no particular
amount was indicated in the letter dated 1st October, 2001
even for restoration of the premises to its original condition.
Even during the meeting held on 05th October, 2001, Nidas
Estates Private Limited did not claim that it was entitled to
make some deduction from the security deposit on account
of damage caused by the licensee to the premises
licensed/let out to it. The impression I get from the minutes
of the meeting on 05 th October, 2001 is that the false ceiling
air condition ducting with pipes, fire protection pipes,
electrical control panel were offered by Silicon Graphics
Systems India Private Limited to Nidas Estates Private
CS(OS) 1661/2003 & CS(OS) 2108/2011 Page 31 of 51
Limited against payment. It is also quite clear from the
minutes that Nidas Estates Private Limited was not
unwilling to accept these fittings and fixtures against
payment though, of course, it would have accepted them
only on such payment which it was ready to pay for them.
Therefore, it cannot be said that false ceiling air condition
ducting with pipes, fire protection pipes, electrical control
panel construed by Nidas Estates Private Limited, caused
damage to the premises for which it could have deducted a
reasonable amount from the security deposit. Before
making any deduction from the security deposit on account
of the damage, if any, caused to the premises, the licensor
was required not only to specify the damage caused to the
premises, but was also required to specify a particular
amount in this regard and that amount was also had to be a
reasonable amount. An ambiguous offer was made to refund
the security deposit, after deduction of the cost of
restoration of the premises of its original condition, without
claiming that the fittings and fixtures provided by the
tenant/licensee in the premises had damaged the premises
and without specifying a particular amount sought to be
deducted in this regard. Hence, the offer to refund the
CS(OS) 1661/2003 & CS(OS) 2108/2011 Page 32 of 51
security deposit made vide letter dated 1st October, 2001,
does not amount to an appropriate offer to refund the
security deposit.
18. In my view, Nidas Estates Private Limited could not
have sought to deduct the amount of Rs 1,37,250/- or the
amount of Rs 2,23,276/-, towards additional license fee in
lieu of its or any amount for restoration of the premises to
its original condition, while offering the security deposit to
Silicon Graphics Systems India Private Limited. There would
have been nothing wrong in Nidas Estates Private Limited
paying/offering the balance amount of security deposit to
Silicon Graphics Systems India Private Limited after
adjusting the amount of Rs 1,17,425/- towards rent for
September, 1995 and taking possession of the premises on
or before 05th October, 2001 but no such offer was ever
made by Nidas Estates Private Limited to Silicon Graphics
Systems India Private Limited. No doubt, Silicon Graphics
Systems India Private Limited could not have compelled
Nidas Estates Private Limited to accept the fittings and
fixtures which it had provided in the premises, but, its
failure to remove those fittings and fixtures did not come in
CS(OS) 1661/2003 & CS(OS) 2108/2011 Page 33 of 51
the way of Nidas Estates Private Limited taking possession
of the premises from it on or before 05th October, 2001.
Silicon Graphics Systems India Private Limited had done
whatever it was expected to do in this regard by offering
vacant possession of the premises to Nidas Estates Private
Limited against payment of security deposit, vide its letter
dated 28th September, 2001, it was Nidas Estates Private
Limited, which failed to take possession of the premises on
05th October, 2001. Since Nidas Estates Private Limited did
not offer the balance security deposit after deduction of Rs
1,17,425/- to Silicon Graphics Systems India Private
Limited and consequently, Silicon Graphics Systems India
Private Limited did not handover physical possession of the
premises to it, it cannot be said that Silicon Graphics
Systems India Private Limited continued to be liable to pay
license fee/damages for use and occupation till the time
physical possession of the premises was actually taken by
Nidas Estates Private Limited on 14th February, 2002. The
provisions of the license deed provided for payment of the
security deposit simultaneously with handing over of the
possession of the premises by the licensee to the licensor. It
did not provide for refund of the security deposit
CS(OS) 1661/2003 & CS(OS) 2108/2011 Page 34 of 51
subsequent to the licensor taking vacant possession of the
premises from the licensee/tenant. Had the agreement
between the parties been for refund of the security deposit
after receipt of vacant possession by the licensor, Nidas
Estates Private Limited would have justified in claiming
license fee/additional license fee from Silicon Graphics
Systems India Private Limited in terms of the provisions
contained in the license deed because in that case, Silicon
Graphics Systems India Private Limited would have been
under an obligation to handover the vacant possession of
the premises to the licensor even before receipt of the
security deposit from it and in the event of failure of the
licensor to refund the security deposit, the remedy available
to it, would have been to sue the licensor for refund of the
security deposit. But, since the license deed provided for
refund of the security deposit simultaneously with the
receipt of vacant possession by the licensor, the licensee
was entitled to hold back the physical possession, in case
the licensor was not tendering the security deposit, after
permissible adjustments, to it while receiving possession
from it.
CS(OS) 1661/2003 & CS(OS) 2108/2011 Page 35 of 51
19. In my view, on receipt of letter dated 28th
September, 2001 from the plaintiff in Suit No. 1661/2003,
defendant No. 1 in the suit should have paid/offered the
security deposit to the plaintiff in the suit after adjusting
the amount of Rs 1,17,425/-. Assuming that the claim of
Nidas Estates Private Limited for Rs 1,37,250/- was a
genuine claim, it could, at best, have adjusted the aforesaid
amount along with Rs 1,17,425/- and offered the balance
amount to Silicon Graphics Systems India Private Limited
when its representative approached them on 05th October,
2001. That, however, was not done and the letter dated 1 st
October, 2001 would show that Nidas Estates Private
Limited was seeking to deduct not only the aforesaid two
amounts, but also the amount of Rs 2,23,276/- towards
license fee in lieu of notice and an unspecified amount
towards cost of restoration of the premises to its original
condition, which it was not entitled to do in terms of the
license deed. Even in its letter dated 18th October, 2001,
receipt of which has been denied by Silicon Graphics
Systems India Private Limited, Nidas Estates Private Limited
was insisting on one month's license fee in lieu of notice. As
regards removal of fittings and fixtures which Silicon
CS(OS) 1661/2003 & CS(OS) 2108/2011 Page 36 of 51
Graphics Systems India Private Limited had installed in the
premises, if Nidas Estates Private Limited did not want
them, it ought to have said so during the meeting held on
05th October, 2001 and in case it was willing to have those
fittings, on a price acceptable to it and was not getting any
quote from Silicon Graphics Systems India Private Limited
for them, it ought to have been deputed its representative to
accept possession of the premises in as is where is condition
against refund of security deposit after making adjustments
which were permissible in terms of the license deed.
Nothing prevented Nidas Estates Private Limited from
removing those fittings and fixtures after taking possession
of the premises and even recovering the cost of removal of
those fittings from Silicon Graphics Systems India Private
Limited at a later date, but it could not have insisted on
removal of those fittings and fixtures, nor could it have
waited for a quote from Silicon Graphics Systems India
Private Limited for them before taking possession of the
premises. Admittedly, even on 15th February, 2001, Nidas
Estates Private Limited took possession of the tenancy
premises of its own, without receiving it from Silicon
Graphics Systems India Private Limited. This would show
CS(OS) 1661/2003 & CS(OS) 2108/2011 Page 37 of 51
that there was no genuine difficulty in Nidas Estates Private
Limited accepting possession of the premises from Silicon
Graphics Systems India Private Limited on 05th October,
2001. Since one set of keys was always in possession of
Nidas Estates Private Limited in terms of the license deed,
the only thing which it was required to do was to take a
formal possession from Silicon Graphics Systems India
Private Limited, along with the other set of keys.
20. In ICRA Ltd. v. Associated Journals Limited and
Another, 2007 (98) DRJ 638, the lessee by its letter dated
18th November, 1997 sent a notice of termination with effect
from 19th November, 1997 calling upon the
landlords/defendants to take possession of the tenanted
premises and refund the security deposit after deducting the
rent of previous three months along with stipulated interest.
Vide reply dated 22nd November, 1997, the defendants
requested the plaintiff for a rethinking in the matter. This
letter was followed by several reminders. On 16 th April,
1998, the lessee communicated to the lessor that it had
shifted to new building and was no longer in possession of
the tenanted premises. In reply, the landlord claimed that
CS(OS) 1661/2003 & CS(OS) 2108/2011 Page 38 of 51
delivery of vacant possession of the tenanted premises was a
condition precedent to the refund of the security deposit.
The case of the plaintiff, however, was that constructive
possession was handed over by them to the defendants with
the determination of the lease and actual possession was
subject to reciprocal arrangement on the part of the
defendants to refund the amount of the security deposit
along with stipulated interest. As per the agreement
between the parties, the security was interest free and was
refundable on determination/termination of the lease.
Since the defendants/landlords failed to refund the security
amount, the plaintiff/tenant filed a suit seeking recovery of
the amount of security along with interest, after adjustment
of rent payable by them. The defendants filed a counter
claim claiming that determination of the lease was not in
accordance with the agreement since the plaintiff continued
to be in possession of the demised premises and without
giving possession, the notice stood withdrawn/waived and
hence no claim for refund of balance security amount was
made out. This was also the case of the defendants that
they had come into possession of the tenanted premises
only on plaintiff's delivering the keys to them on 7 th
CS(OS) 1661/2003 & CS(OS) 2108/2011 Page 39 of 51
December, 1998. On receipt of letter dated 18 th April, 1998
from the defendants, the plaintiff reiterated its willingness
to give actual possession on receipt of the refund of the
security deposit. The factual position which emerged from
the correspondence between the parties was that the
plaintiff/tenant had terminated the lease, and had called
upon the defendants/landlords to take possession of the
tenanted premises and refund the balance security.
Accepting the plea taken by the plaintiff/tenant, this Court
held that the offer to vacant possession of the demised
premises having been made by the plaintiff company, it was
the duty of the defendants thereafter to act on the same and
take possession after notice of termination of the lease.
Regarding handing over of possession of the tenanted
premises, this Court held that constructive possession was
handed over to the defendants by the plaintiff by making an
offer to take over actual possession on payment of the
balance security deposit, which was sufficient to fulfill the
requirement of the lease agreement between the parties.
Decreeing the suit filed by the tenant, this Court, inter alia,
held as under:-
CS(OS) 1661/2003 & CS(OS) 2108/2011 Page 40 of 51
21. Taking into consideration the
aforesaid, I am of the view that when
possession of the tenanted premises is
offered upon termination of the lease, the
landlord/Lessor must act upon the same
and cannot refuse to take the possession.
If the Lessor/landlord refuses to take the
possession or act upon the offer being
made, the lease would not continue and
therefore the contention of the defendant
that the plaintiff had been in continued
possession of the demised premises
making him liable to pay the rent for the
same would not stand. In such a case,
the plaintiff who has done the needful on
this part is left with no other option but
to remain in possession of the said
premises."
In Onida Finance Ltd. v. Mrs. Malini Khanna,
2002 III AD (Delhi) 231, the security deposit, which was
equivalent to six months' rent, was refundable to tenant on
expiry or termination of the lease. The plaintiff terminated
the lease vide notice dated 18 th January, 1997, with effect
from 14th February, 1997 and called upon the defendant to
return the security amount as also the amount of advance
rent. The landlord was also intimated that the tenanted
premises would remain vacant at her risk and the plaintiff
shall not be liable to pay any rent from the date the tenancy
stood terminated. The contention of the defendant before
the Court was that mere offer to surrender possession was
CS(OS) 1661/2003 & CS(OS) 2108/2011 Page 41 of 51
of no consequence unless actual physical possession was
delivered to her. Rejecting the contention, this Court, inter
alia, held as under:-
"28. It is trite that when the lease is
terminated by notice and the possession
is offered, the landlord cannot refuse to
take the possession. If the landlord
refuses to take the possession, the lease
would not continue. Therefore, even if the
contention of the defendant herein was
that the tenancy was for a period three
years, she could take possession and
thereafter sued the plaintiff for rent. She
did not do so. She took calculate risk by
challenging the action of the plaintiff in
terminating the tenancy and avoided to
take possession."
The view taken by me is in consonance with the
view taken in the above-referred cases.
21. It was contended by the learned counsel for Nidas
Estates Private Limited that the licensor was forced to take
physical possession on 15th February, 2002 only because
Silicon Graphics Systems India Private Limited failed to
deliver possession to it, despite repeated requests. Be that
as it may, nothing prevented Nidas Estates Private Limited
from taking possession on 05th October, 2001 after
tendering the security deposit to Silicon Graphics Systems
India Private Limited after making the permissible
CS(OS) 1661/2003 & CS(OS) 2108/2011 Page 42 of 51
adjustments.
For the reasons given in the preceding paragraphs,
I am of the view that Nidas Estates Private Limited is
entitled to recover license fee only up to 04th October, 2001.
22. Admittedly, license fee for the period from June to
August, 2001, amounting to Rs 6,69,828/- has not been
paid to Nidas Estates Private Limited. That amount has
been to be adjusted from the security deposit along with
interest on that amount @ 18% per annum, in terms of the
provisions of the license. It is also entitled to adjust the
license fee of September, 1995, amounting to Rs 1,17,425/-,
along with interest on that amount @ 18% per annum w.e.f
7th September, 1995, when it was payable to the licensor.
In terms of the license agreement, Silicon Graphics Systems
India Private Limited is liable to pay a sum of Rs 3,73,276/-
towards license fee and additional license fee for September,
2001 along with interest on that amount @ 18% per annum
up to 05th October, 2001 when the security deposit became
refundable to it. Silicon Graphics Systems India Private
Limited is also liable to pay a sum of Rs 52,981/- towards
licence fee/additional licence fee for the period from 1 st
CS(OS) 1661/2003 & CS(OS) 2108/2011 Page 43 of 51
October, 2001 to 04th October, 2001.
23. Balance amount of security deposit which Nidas
Estates Private Limited had to refund to Silicon Graphics
Systems India Private Limited on 5th October, 2011 comes to
Rs. 13,74,835/- in the following manner:
Amount of Security Deposit : Rs.27,45,000/-
(i) license fee for September, 1995: Rs 1,17,425/-;
(ii) Interest on the sum of Rs 1,17,425/- @ 18% per
annum up to 05th October, 2001: Rs.1,28,410/
(iii) license fee for June, 2001: Rs.2,23,276/-
(iv) Interest on license fee of June, 2001 up to 05th
October, 2001: Rs. 13,306/-
(v) license fee for July, 2001: Rs.2,23,276/-
(vi) Interest on the license fee of July, 2001 up to 05th
October, 2001: Rs.9,939/-
(vii) License fee of August, 2001 : Rs.2,23,276/-
(viii) Interest on license fee of August, 2001 up to 05 th
October, 2001: Rs.6,590/-
(ix) License fee and additional license fee for
September, 2001: Rs 3,73,276/-.
(x) Interest on license fee and addl. License fee for
September 2001: Rs.5,226/-
CS(OS) 1661/2003 & CS(OS) 2108/2011 Page 44 of 51
(xi) license fee and additional license fee from 1st
October, 2001 up to 04th October, 2001:
Rs.46,165/-
Interest on the amount of Rs. 13,74,835/- from 05th
October, 2001 till the date of filing of CS(OS) No. 1661/2003
i.e. 22nd August, 2003 @ 18% per annum comes to Rs.
4,65,004/- The plaintiff in suit CS(OS) No. 1661/2003 is
entitled to recover the aforesaid amount of Rs.18,39,839/-
from defendant No.1 in the suit towards balance security
deposit and pre-suit interest on it.
24. The Plaintiff in Suit No. 1661/2003 has also
claimed a sum of Rs 2,02,100/- being the security deposit
by it with Karnataka Electricity Board through and on
behalf of defendant No. 1 along with interest on that
amount @ 18% per annum. A perusal of the minutes of the
meeting held on 05 th October, 2001 would show that Nidas
Estates Private Limited had requested Silicon Graphics
Systems India Private Limited not to surrender the
additional electricity load which it had obtained from
Karnataka Electricity Board since it wanted to retain the
same. It was also agreed that the deposit paid by Silicon
Graphics Systems India Private Limited would be refunded
CS(OS) 1661/2003 & CS(OS) 2108/2011 Page 45 of 51
to it by Nidas Estates Private Limited. There is no dispute
with respect to the deposit of Rs 2,02,100/- by Silicon
Graphics Systems India Private Limited with Karnataka
Electricity Board. In view of the agreement dated 05 th
October, 2001, Nidas Estates Private Limited is liable to pay
the aforesaid amount to Silicon Graphics Systems India
Private Limited. However, there is no agreement between
the parties for payment of interest on the aforesaid amount.
Hence, Silicon Graphics Systems India Private Limited is not
entitled to any amount towards interest on this deposit.
25. Silicon Graphics Systems India Private Limited has
also claimed Rs 6,25,000/- which it had deposited with
defendants No. 2 and 3 for the genset and common
maintenance services. Though the case of the Silicon
Graphics Systems India Private Limited is that the deposit
was made on behalf of Nidas Estates Private Limited, there
is absolutely no evidence to prove that the deposit was made
on behalf of Nidas Estates Private Limited. There is no
document which would indicate that Nidas Estates Private
Limited had agreed to pay this amount to Silicon Graphics
Systems India Private Limited. The minutes of the meeting
CS(OS) 1661/2003 & CS(OS) 2108/2011 Page 46 of 51
held on 05th October, 2001 indicate that though the deposit
was acknowledged by Nidas Estates Private Limited, it was
yet to be decided whether this amount would be paid by
Nidas Estates Private Limited or by Embassy Group with
which the amount was deposited. Since there is no proof of
the amount having been deposited on behalf of Nidas
Estates Private Limited and it had never agreed to pay this
amount to Silicon Graphics Systems India Private Limited,
this amount cannot be recovered by Silicon Graphics
Systems India Private Limited from Nidas Estates Private
Limited. It would be pertinent to note here that a decree for
recovery of the aforesaid amount has already been passed
by this Court against defendants No. 2 and 3 in Suit No.
1661/2003. It is open to Silicon Graphics Systems India
Private Limited to recover this amount from them. Thus,
the total amount payable by Nidas Estates Private Limited
to Silicon Graphics Systems India Private Limited comes to
Rs. 2,041,439/-. The issues are decided accordingly.
26. During the course of arguments, it was contended
by the learned counsel for Nidas Estates Private Limited
that Silicon Graphics Systems India Private Limited had
CS(OS) 1661/2003 & CS(OS) 2108/2011 Page 47 of 51
failed to prove that the plaint has been signed, verified and
instituted by a competent person. No issue was framed by
the Court in this regard. In find that in para 2 of the plaint
of Suit No. 1661/2003, it has been specifically alleged that
the suit has been signed, verified and instituted by Mr
Sanjay Bhanot, who was working as Financial Controller
and Companies Secretary with the plaintiff and who had
been duly authorized by the Board of Directors of the
Company by a duly passed resolution. There is no specific
denial of this averment in the written statement of Nidas
Estates Private Limited. In reply to para 2 of the written
statement, Nidas Estates Private Limited simply stated that
para 2 was denied for want of knowledge. Denial for want of
knowledge is not a specific denial and amounts to
admission of the averments which have not been specifically
denied.
Order VIII Rule 3 of the Code of Civil Procedure, to
the extent it is relevant provides that it shall not be
sufficient for a defendant in his written statement to deny
generally the ground alleged by the plaintiff, but the
defendant must deal specifically with each allegation of fact
CS(OS) 1661/2003 & CS(OS) 2108/2011 Page 48 of 51
of which he does not admit the truth, except damages. Rule
4 of the aforesaid Order, to the extent it is relevant, provides
that where a defendant denies an allegation of fact in the
plaint, he must not do so evasively, but answer the point of
substance.
Therefore, by denying the contents of para 2 of the
plaint for want of knowledge, defendant No. 1 in Suit No.
1661/2003 is deemed to have admitted the averment with
respect to competence of Shri Sanjay Bhanot to sign and
verify the pleadings and institute the suit on behalf of the
Silicon Graphics Systems India Private Limited.
The learned counsel for the defendant No. 1 has
relied on State Bank of Travancore vs Kingston
Computers (I) P. Ltd. 2011 (3) SCALE 33, Lucas Indian
Services Ltd. vs. Sanjay Kumar Agarwal 173 (2010) DLT
438, Food Corporation of India vs. Sardarni Baldev Kaur
& Ors., AIR 1981 Punjab and Haryana 113, Birla Dlw Ltd.
vs. Prem Engineering Works 77 (1999) DLT 171,
Manoranjan Paul and two Ors. vs. Narendra Kumar Paul
and Ors., AIR 1994 Gau 64 and Nedunuri Kameswaramma
vs. Sampati Subba Rao AIR 1963 Supreme Court 884.
CS(OS) 1661/2003 & CS(OS) 2108/2011 Page 49 of 51
However, none of these judgments are of help to defendant
No. 1 in Suit No. 1661/2003 for the simple reason that
neither the authority of Shri Sanjay Bhanot to sign and
verity the plaint and institute the suit on behalf of the
plaintiff-company was specifically denied in the written
statement nor the Court has framed any issue on this
aspect of the matter. In the absence of there being any issue
on this aspect, there was no necessity for the plaintiff to
prove the resolution in favour of Shri Sanjay Bhanot. It
would be unfair to return a finding against Silicon Graphics
Systems India Private Limited on this aspect of the case
without framing an issue and, thereby giving an opportunity
to the plaintiff in this suit to lead evidence in this regard.
Issue No. 5 in CS(OS) No. 1661/2003 and Issue No. 2 in
Suit No. 100/2005/02 of District Court
27. In view of my findings on the aforesaid issues,
CS(OS) No. 2108/2011 (Suit No. 100/2005/02 of District
Court) is liable to be dismissed, whereas Suit No.
1661/2003 is liable to be decreed only for recovery of Rs.
20,41,939/-.
ORDER
CS(OS) 1661/2003 & CS(OS) 2108/2011 Page 50 of 51
CS(OS) No. 2108/2011 (Suit No. 100/2005/02 of District Court) is hereby dismissed with costs. In Suit No.1661/2003, a decree for Rs.20,41,939/- with proportionate cost and pendente lite and future interest @ 6% per annum is passed in favour of the plaintiff and against defendant No. 1.
Decree sheet be drawn accordingly.
(V.K. JAIN) JUDGE AUGUST 30, 2011 sn/vn/bg CS(OS) 1661/2003 & CS(OS) 2108/2011 Page 51 of 51