Delhi District Court
Ms. Indra Arora vs . M/S M'Dumon Power & Infrastructure on 31 July, 2023
IN THE COURT OF SH. AKASH JAIN
ADDITIONAL DISTRICT JUDGE-01
SOUTH-EAST DISTRICT, SAKET COURTS: NEW DELHI
CS DJ No. 690/20
Ms. Indra Arora vs. M/s M'DuMon Power & Infrastructure
Pvt. Ltd. & Anr.
Ms. Indra Arora
W/o Late Sh. Amar Nath Arora
Through her Daughter & SPA holder
Ms. Anshoo Khera
W/o Sh. Sundeep Khera
R/o S-433, Second Floor
Greater Kailash-II, Delhi-110048
....... Plaintiff
Versus
1. M/s M'DuMon Power & Infrastructure Pvt. Ltd.
Having its registered office at
S-339, First Floor, Greater Kailash-II
Delhi-110048
Through its Managing Director
Sh. Abhay Chandra
2. Mr. Abhay Chandra
S/o Sh. Chandrika Prasad
R/o S-433, First Floor
Greater Kailash-II, Delhi-110048
...... Defendants
Date of Institution : 15.12.2020
Date of Reserving Judgment : 27.07.2023
Date of Decision : 31.07.2023
Final Decision : Decreed
JUDGMENT
Suit for Possession, Recovery of Arrears of Rent and Damages/Mesne Profits
1. The present suit was filed by Smt. Anshoo Khera CS DJ No. 690/20 Ms. Indra Arora vs. M/s M'DuMon Power & Infrastructure Pvt. Ltd. & Anr. Page No. 1 of 13 being the Special Power of Attorney Holder of Smt. Indra Arora (hereinafter referred to as 'the plaintiff') against M/s M'DuMon Power & Infrastructure Pvt. Ltd. and Mr. Abhay Chandra (hereinafter referred to as 'defendant no. 1' and 'defendant no. 2' respectively) in respect of premises i.e. First Floor of property bearing no. S-433, Greater Kailash-II, New Delhi-110048 along with one servant room and use of common toilet on the terrace (hereinafter, referred to as 'suit property').
2. Succinctly stated, the case of plaintiff is that she is the absolute and rightful owner of the entire property bearing no. S-433, Greater Kailash-II, Delhi-110048 excluding the Second Floor, which is owned by her daughter and son-in-law. Owing to health issues and old age, plaintiff has restricted mobility and as such, she appointed her daughter Ms. Anshoo Khera as her attorney vide SPA dated 06.10.2020 to file and prosecute the present suit. It is averred that suit property was initially let out by the plaintiff to defendant no.1 by virtue of unregistered lease agreement dated 10.08.2016, for the exclusive use of defendant no.2 for residential purpose only for a period of 24 months @ Rs.51,000/- per month exclusive of electricity charges. The said lease agreement dated 10.08.2016 was thereafter, followed by a registered lease agreement dated 25.05.2017 in favor of defendant no. 2 on identical terms and conditions as contained in the lease agreement dated 10.08.2016, except that the rent mentioned in the aforesaid lease deed was Rs.30,000/- whereas the actual rent being paid to the plaintiff was Rs.51,000/- only.
3. Again on 01.05.2019, a fresh lease deed was executed CS DJ No. 690/20 Ms. Indra Arora vs. M/s M'DuMon Power & Infrastructure Pvt. Ltd. & Anr. Page No. 2 of 13 between plaintiff and defendant no. 2 for a period of 11 months in favour of defendant no. 1 and same was expired by efflux of time on 31.03.2020 and thereafter, due to covid-19 pandemic, no fresh lease agreement was executed. It is averred that defendant no. 2 paid a sum of Rs.20,000/- by way of cash and Rs. 31,000/- by way of cheque towards the rent for the month of April, 2020 and also handed over a cheque for a sum of Rs.51,000/- towards rent for the month of May, 2020. However, said cheques got dis-honored on 16.05.2020 and when said fact was conveyed to defendant no. 2, he again issued two new cheques on 07.07.2020, which were again dis-honored on 12.08.2020 and 18.09.2020. It is averred that a new lease agreement based on the agreements of 2016 and 2017 was drafted for a period w.e.f. 01.04.2020 to 30.11.2020, however, the said agreement was neither signed by defendant no. 2 nor he paid arrears of rent for the months of April, 2020 and May, 2020. Since, defendants failed to clear the arrears of rent and pay regular monthly rent qua suit property, plaintiff was constrained to issue a legal notice dated 10.10.2020 which was duly received by defendant no. 2. However, despite receipt of legal demand notice, the defendants neither vacated the suit property nor paid arrears of rent due upon them. Hence, the present suit is filed by the plaintiff against defendants seeking following reliefs:-
(a) pass a decree for recovery of possession, in favour of the plaintiff and against the defendants, with respect to the suit/ tenanted premises i.e. first floor of property bearing no. S-433, Greater Kailash-II, New Delhi along with one servant room and use of common toilet on the terrace of the aforesaid property; and
(b) pass a decree for recovery of arrears of rent amounting to Rs. 82,000/- along with interest @ 12% per annum; and CS DJ No. 690/20 Ms. Indra Arora vs. M/s M'DuMon Power & Infrastructure Pvt. Ltd. & Anr. Page No. 3 of 13
(c) grant damages/mesne profits @ Rs. 2,000/- per day for use and occupation of the suit property/tenanted premises in addition to the rent @ Rs. 51,000/- per month during the pendency of the suit and till the time vacant physical possession of the suit property is handed over to the plaintiff along with future and pendentelite interest @ 15% per annum; and
(d) grant cost of the present suit in favour of the plaintiff and against the defendants; and
(e) pass such other or further order (s) as this Court may deem fit and property in the facts and circumstances of the case.
4. Summons of suit were sent to the defendants and both of them got duly served. Written statement was filed on behalf of both the defendants wherein the relationship of landlady and tenant between the parties qua suit property was duly admitted. The rate of rent of suit property was also not disputed. It was though averred that defendants paid rent of the suit property till November, 2020 and are not liable to pay any damages. Vide order dated 30.04.2022, defendants were directed to pay rent of suit property @ Rs. 51,000/- per month to plaintiff w.e.f. December, 2020 till 31.05.2022, while noting that if defendants failed to vacate the suit property by said date, they would continue to pay rental amount @ Rs.51,000/- per month on 7th day of each calender month thereafter. However, defendants failed to pay any rent to the plaintiff, as such, by way of order dated 24.11.2022, defence of defendants was struck off in lieu of Order XV-A CPC and thereafter, no formal issues were framed and the case was listed for plaintiff's evidence.
5. SPA holder of plaintiff examined herself as PW-1 and tendered her evidence by way of affidavit vide Ex. PW-1/A on CS DJ No. 690/20 Ms. Indra Arora vs. M/s M'DuMon Power & Infrastructure Pvt. Ltd. & Anr. Page No. 4 of 13 26.05.2023 and relied upon the following documents :-
(i) Ex. PW 1/1 (OSR) : Copy of SPA dated 06.10.2020;
(ii) Ex. PW 1/2 (OSR) : Copy of unregistered lease agreement dated 10.08.2016;
(iii) Mark-A : Copy of registered lease
agreement dated 25.05.2017;
(iv) Ex. PW 1/4 (OSR) : Copy of lease agreement dated
10.09.2018;
(v) Ex. PW 1/5 (OSR) : Copy of lease agreement dated
01.05.2019;
(vi) Mark-B : Copy of cheque bearing no.
010173 dated 07.07.2020;
(vii) Mark-C : Copy of cheque bearing no.
010172 dated 07.07.2020;
(viii) Mark-D : Copy of return memo dated
18.09.2020 of cheque bearing no.
010173 dated 07.07.2020;
(ix) Mark-E : Copy of return memo dated
18.09.2020 of cheque bearing no.
010172 dated 07.07.2020;
(x) Ex. PW 1/10 : Copy of legal notice dated
10.10.2020;
(xi) Mark-F : Copy of registered post service
report;
(xii) Mark-G : Copy of acknowledgment card;
(xiii) Mark-H : Copy of legal notice dated
10.10.2020 under Section 138 of
NI Act;
(xiv) Mark-I : Copy of registered post service
report;
(xv) Mark-J : Photo of returned envelope of
notice sent to defendant no. 1 at
its registered address dated
20.10.2020;
(xvi) Mark-K : Copy of reply dated 02.11.2020.
6. PW-1 was duly cross-examined on behalf of defendants. During cross-examination, PW-1 admitted that CS DJ No. 690/20 Ms. Indra Arora vs. M/s M'DuMon Power & Infrastructure Pvt. Ltd. & Anr. Page No. 5 of 13 defendant no. 2 paid rent of suit property from August 2016 to March 2020. She further admitted that no lease agreement was executed between the parties after 31.03.2020. PW1 clarified that security deposit of Rs.1,02,000/- submitted by defendant at the time of execution of Lease Agreement Ex.PW1/2 had already been adjusted by the plaintiff. No other witness was examined by the plaintiff. Accordingly, plaintiff's evidence was closed vide order dated 26.05.2023.
7. Since, defence of defendants had already been struck off, no opportunity was granted to them to lead defence evidence.
The matter, thus, straightaway proceeded for final arguments. Final arguments were heard on behalf of both the parties and the material on record is perused carefully.
Decision & Legal Reasoning
8. Suffice it to say, the tenanted premises/suit property had admittedly been vacated by defendants on 24.07.2022. Thus, prayer (a) of the plaint seeking recovery of possession of suit property already stands infructuous. The plaintiff has further sought arrears of rent to the tune of Rs.82,000/- along with interest vide prayer (b) of the plaint. However, no evidence was led on behalf of plaintiff to claim such arrears. PW-1 in her evidence by way of affidavit rather deposed that defendants are liable to pay arrears of rent to the plaintiff only w.e.f. December 2020 till the date of vacation of suit property. Therefore, prayer (b) of the plaint also does not warrant any discussion and the same stands infructuous.
CS DJ No. 690/20 Ms. Indra Arora vs. M/s M'DuMon Power & Infrastructure Pvt. Ltd. & Anr. Page No. 6 of 13
9. Now, the only aspect which remains to be adjudicated is grant of damages/mesne profits for use and occupation of suit property/tenanted premises by defendants from the date of institution of the suit till the time it was vacated. It is admitted position of facts that suit property was let out by the plaintiff to defendant no.1 company for residential use of defendant no.2 since 10.08.2016 vide different Lease Agreements dated 10.08.2016 (Ex.PW1/2), 25.05.2017 (Mark A), 10.09.2018 (Ex.PW1/4) and 01.05.2019 (Ex.PW1/5). It is further admitted position of facts that the last Lease Agreement was executed between the parties on 01.05.2019 (Ex. PW1/5) for 11 months which expired on 31.03.2020 and no fresh lease agreement was executed between the parties thereafter. It is also admitted position of facts that rent of the suit property was Rs.51,000/- per month inclusive of water charges and exclusive of electricity charges.
10. Now, it is deposed by PW-1 that defendants defaulted in payment of regular monthly rent and are in arrears of rent qua the suit property since December 2020 till 24.07.2022 i.e. the date of vacation of suit property. Defence of defendants has already been struck off for failure to comply with order dated 30.04.2022 and nothing substantial could be brought forth by defendants during cross-examination of PW-1 to suggest otherwise. Thus, the testimony of PW1 to the effect that defendants have failed to pay rent of the suit property to the plaintiff @ Rs. 51,000/- per month since December 2020 till 24.07.2022 remains unrebutted and uncontroverted. No evidence was though led on behalf of plaintiff to justify damages/mesne profits @ Rs. 2,000/- per day as claimed. Therefore, plaintiff is held entitled to mesne profits/damages @ CS DJ No. 690/20 Ms. Indra Arora vs. M/s M'DuMon Power & Infrastructure Pvt. Ltd. & Anr. Page No. 7 of 13 actual rent of suit property i.e. Rs.51,000/- per month since December 2020 till 24.07.2022.
11. Although defence of defendants had already been struck off, Ld. Counsel for defendants took certain legal objections to the claim of plaintiff which are dealt as under:-
11.1 (i) SPA dated 06.10.2020 is defective.
It is argued by Ld. Counsel for plaintiff that SPA dated 06.10.2020 Ex.PW1/1, vide which AR Ms. Anshoo Khera was authorized by plaintiff to pursue the present case on her behalf, is defective as Ex.PW1/1 nowhere envisages giving evidence by AR on behalf of plaintiff in the Court. This argument though does not inspire confidence as clause (4) of Ex.PW1/1 clearly empowers AR to give statements on behalf of plaintiff in the court. The same is reproduced hereunder for reference:
".... 4. To give any notice, sign, verify, institute and execute all kinds of suits, plaints, complaints, appeals, review, revisions, statements, agreements, affidavits, applications, forms etc. against the tenant in the proper court of law and offices to proceed in all the proceedings, to compromise and compound the cases and also to withdraw the same under her own signatures...."
Thus, AR was duly authorized to depose/give statement on behalf of the plaintiff and SPA Ex. PW 1/1 does not suffer from any legal infirmity.
11.2 (ii) Lease Agreement dated 01.05.2019 was not registered.
It is argued by Ld. Counsel for defendants that Lease Agreement dated 01.05.2019 Ex. PW 1/5 purported to be CS DJ No. 690/20 Ms. Indra Arora vs. M/s M'DuMon Power & Infrastructure Pvt. Ltd. & Anr. Page No. 8 of 13 executed between the parties qua suit property from 01.05.2019 to 31.03.2020, cannot be relied upon being an unregistered document. This argument though also lacks merit as the said agreement was reportedly executed for a period of 11 months which is not compulsorily registerable as per law. Even otherwise, the relationship of landlady and tenant between the parties is not in dispute and fact that the defendants continue to occupy the suit property even after expiry of this agreement on 31.03.2020 is also not in dispute. Thus, the present objection raised on behalf of defendants is of no consequence.
11.3 (iii) Defendant no.2 is not personally liable qua debts of defendant no. 1 company, if any.
It is finally argued by Ld. Counsel for defendants that admittedly the suit property had been let out by the plaintiff to defendant no.1 company which is a separate legal entity. Therefore, defendant no.2 cannot be held personally liable for the outstanding debts of defendant no. 1 company, being a director. While relying upon the judgments of Tristar Consultants v. V customer Services India Pvt., AIR 2007 Delhi 157, 2007 and Sanuj Bathla & Anr. v. Manu Maheshwari & Anr., CRP No. 166/2018, it is argued that in the absence of any allegations of fraud or misrepresentation, directors cannot be held personally liable for acts of a company.
11.3.1 It is well settled that a company is a juristic person who has to act through a living human being and a director of a CS DJ No. 690/20 Ms. Indra Arora vs. M/s M'DuMon Power & Infrastructure Pvt. Ltd. & Anr. Page No. 9 of 13 company owes no fiduciary or contractual duty or any duty of care to third parties who deal with the company. Moreover, Section 230 of Indian Contract Act, 1872 provides:-
Section 230: Agent cannot personally enforce, nor be bound by, contracts, on behalf of principal:-
In the absence of any contract to that effect, an agent cannot personally enforce contracts entered into by him on behalf of his principal, nor is he personally bound by them.
11.3.2. While relying upon Section 230 of Indian Contract Act, 1872, it was held by Hon'ble Delhi High Court in the case of Tristar Consultants v. V customer Services India Pvt., AIR 2007 Delhi 157, 2007 that Directors of a company can be described as agents/trustees/representatives of a company and they owe no fiduciary or contractual duty to third parties who deal with the company. As such, any contract concluded by Directors/Agents on behalf of a company with third parties would only bind company to the third party. The relevant excerpts from the judgment are reproduced as under:
"... 19. It is settled law that a company is a juristic person. Therefore, a company has to act through a living human being. Collectively, decisions on behalf of the company, are taken by the board of directors of a company. An individual director has no power to act on behalf of a company of which he is a director unless there is a specific resolution of the board of directors of the company giving specific power to him/her, or, where the articles of company confer such an power.
20. Directors of companies have been described as agents, trustees or representatives of the company because of the fact vis-a-vis the company they act in a fiduciary capacity. They perform acts and duties for the benefit of the company. Thus, directors are agents of the company to the extent they have CS DJ No. 690/20 Ms. Indra Arora vs. M/s M'DuMon Power & Infrastructure Pvt. Ltd. & Anr. Page No. 10 of 13 been authorized to perform certain acts on behalf of the company.
21. But directors of a company owe no fiduciary or contractual duties or any duty of care to third parties who deal with the company....
.... 24. As conventionally understood, a person acts as an agent for a principal and represents the principal before third parties. Such contracts which are concluded by the agent on behalf of his principal with third parties would bind the principal to the third party.
25. Section 230 of the Indian Contract Act 1872 reads as under:
230 Agent cannot personally enforce, nor be bound by, contracts on behalf of principal - In the absence of any contract to that effect an agent cannot personally enforce contracts entered into by him on behalf of his principal, nor is he personally bound by them.
26. A perusal of Section 230 of the Indian Contract Act 1872 shows that unless an agent personally binds himself, an agent is not personally liable for contracts entered into by him on behalf of his Principal..."
11.3.3. It is contended on behalf of defendant no. 2 that in the present case, plaintiff herself averred that suit property was in fact let out by her to defendant no. 1 company and there is no personal covenant between plaintiff and defendant no. 2 whatsoever where defendant no. 2 had assured the plaintiff to indemnify arrears of rent on behalf of defendant no. 1 company. Thus, defendant no. 2 should not be held accountable for outstanding debts of defendant no. 1 company.
11.3.4. In response to this argument, it is contended by Ld. Counsel for plaintiff that defendant no. 1 company had already been struck off from the Company Master Data CS DJ No. 690/20 Ms. Indra Arora vs. M/s M'DuMon Power & Infrastructure Pvt. Ltd. & Anr. Page No. 11 of 13 even prior to institution of this suit, as such, defendant no. 1 company was not in existence at all at the time of institution of the suit and therefore, defendant no. 2 being the director of the company as well as occupier of the tenanted premises is personally liable to pay arrears of rent as well as damages to the plaintiff. In support of this argument, Ld. Counsel for plaintiff relied upon one internet generated print out of master data of defendant no. 1 company showing that the company had been strike off.
11.3.5. The above contention though does not form part of the pleadings or evidence. Moreover, the fact that defendant no. 1 company had been struck off has not been proved on record by the plaintiff during entire trial. No suitable justification could be afforded on behalf of plaintiff as to why defendant no. 1 company was impleaded in the array of parties, when it ceased to exist even prior to institution of the suit. The print out of company master data can also not be relied upon, being an internet generated copy which was not supported with certificate under Section 65-B of Evidence Act. Even otherwise, a careful perusal of the said document shows that status of defendant no. 1 company is "strike off" only for the purpose of "e-filing". This document does not prove that the defendant no. 1 company actually ceased to exist as claimed by Ld. Counsel for plaintiff. In these circumstances, the contention raised on behalf of defendant no. 2 that he cannot be held personally liable for the outstanding debts of defendant no. 1 company holds merit.
CS DJ No. 690/20 Ms. Indra Arora vs. M/s M'DuMon Power & Infrastructure Pvt. Ltd. & Anr. Page No. 12 of 13 Relief
12. Keeping in view the totality of facts, circumstances and aforesaid findings, plaintiff is held entitled to decree of mesne profits / damages @ Rs.51,000/- per month w.e.f. December, 2020 till 24.07.2022 against defendant no. 1 company along with simple interest @ 9% p.a. from the date of filing of the suit till its realization. Cost of the suit is also allowed in favour of the plaintiff and against defendant no. 1.
13. Decree sheet be prepared accordingly. Deficient court fees be filed by the plaintiff as per rules before execution proceedings.
14. Original documents be returned to the parties after obtaining certified copies thereof against due receipt.
15. File be consigned to record room after due compliance.
ANNOUNCED IN OPEN (AKASH JAIN)
COURT ON 31.07.2023 ADJ-01, SOUTH-EAST
SAKET, NEW DELHI
This judgment contains 13 pages and each paper is signed by me.
(AKASH JAIN) ADJ-01, SOUTH-EAST SAKET, NEW DELHI CS DJ No. 690/20 Ms. Indra Arora vs. M/s M'DuMon Power & Infrastructure Pvt. Ltd. & Anr. Page No. 13 of 13