Delhi District Court
Sach Services Pvt. Ltd vs Aluplast India Pvt. Ltd on 27 January, 2025
IN THE COURT OF MS SAVITA RAO, DISTRICT JUDGE
COMMERCIAL COURT-01, SOUTH ,
SAKET COURTS, DELHI
CS (Comm) No. 2/2022
DLST010000382022
&
CS (Comm) No. 392/2022 (Counter Claim)
DLST010057532022
In the matter of :
Sach Services Pvt. Ltd.
Through its Authorized Representative
Having its Registered Office At :
S-220, First Floor, Greater Kailash-2
New Dlhi - 110048
............................. Plaintiff
Versus
Aluplast India Pvt. Ltd.
Through its Director
Having its Registered office At:
Unit no. 29 & 30, Ground Floor,
Rectangle -1, D-4 District Centre
Saket, New Delhi - 110017
................. Defendant/Counter Claimant
Date of Institution of Suit : 03.01.2022
Date of Institution of Counter Claim: : 04.07.2022
CS (Comm) No. : 02/2022 & 392/2022 1/81
Date of Arguments : 29.08.2024, 15.10.2024
22.10.2024,07.11.2024,
12.12.2024, 10.01.2025
22.01.2025 & 24.01.2025
Date of Judgment : 27.01.2025
JUDGMENT
1. This judgment shall dispose off suit bearing CS (Comm) No. 2/2022 filed by plaintiff as well as counter claim bearing CS (Comm) No. 392/2022 filed by defendant/counter claimant.
2. Plaintiff has filed the suit for recovery in sum of Rs. 25,44,420/- (Rs. Twenty Five Lacs Forty Four Thousand Four Hundred and Twenty Only) against the defendant on the facts that plaintiff is absolute and lawful owner of property bearing no. C-44, DDA Shed, Okhla Industrial Area, Phase-1, New Delhi- 110020. Defendant was inducted as tenant vide lease agreement dated 01.03.2019 for ground floor and first floor of the said property on monthly rent of Rs. 1,82,658/- per month exclusive of water and electricity charges. Parties mutually decided not to register the said lease agreement as the parties were having good cordial business relations with each other and defendant had assured plaintiff with respect to absolute and full compliance of terms of lease agreement. Tenancy period was for two years commencing from 01.03.2019 with lock-in period of two years i.e. 24 months and in case defendant vacates the premises or terminates the said lease before expiry of the lock-in period of 24 months, defendant was required to pay rent for the entire six months. Interest Fee Security Deposit equivalent to two months rent amounting to Rs. 3,65,316/- was also deposited by the defendant.
3. Plaintiff, during entire period of said tenancy, raised monthly bills/invoices for the monthly rent and same were CS (Comm) No. : 02/2022 & 392/2022 2/81 supplied to defendant through emails and also by hand. Defendant did not pay rent for the month of January and February 2021 despite raising of invoices by the plaintiff. Plaintiff visited the leased premises in second week of February 2021 to inspect the leased premises and to collect the rent, when it was revealed that defendant had vacated the leased premises before the lock-in period of 24 months, without giving any advance notice or intimation of the same to the plaintiff or its employees. Subsequently keys of the premises were also handed over to the plaintiff's Director. However, outstanding rent for the months of January and February 2021 was not cleared and plaintiff was asked to deduct the same from Security Deposit to which plaintiff refused. It was also revealed to plaintiff that defendant had caused considerable and extensive damages to the leased premises which required thorough and extensive repairs and restoration work. Plaintiff undertook the restoration and repair work for which he incurred cost of Rs. 10 lacs.
4. Legal notice dated 22.02.2021 was issued to the defendant which was replied by defendant vide reply dated 15.03.2021, followed by issuance of two other legal notices upon the plaintiff as well as filing of police complaint against the plaintiff's Director namely Mr. Arun Sharma. Payment of outstanding amount was not made by defendant despite repeated requests made by plaintiff.
5. Plaintiff initiated "Pre-Institution Mediation" proceedings and filed an application for Mediation before the competent authority under Rule 2 (c) of The Commercial Courts (Pre- Institution) Mediation and Settlement Rules, 2018 wherein Non- Starter Report was issued by the concerned authority and the plaintiff was constrained to file the instant suit.
CS (Comm) No. : 02/2022 & 392/2022 3/816. After filing of the suit, written statement as well as counter claim bearing CS No. 392/2022 was filed by defendant. Relationship of lessor and lessee between the parties was admitted by defendant. However, it was stated that the present suit for money decree is not maintainable as it is based on an unregistered document which is compulsorily registrable under law, besides being insufficiently stamped, therefore, not admissible in evidence. It was stated that the document, which is a lease agreement and which does not contemplate any other collateral transaction, cannot be received as evidence of any transaction affecting the property to which it relates to. The money decree sought in the suit is based entirely on alleged terms and condition of this document which cannot be received in evidence and the suit fails on this ground alone. Besides that, the lease agreement is insufficiently stamped as per requirement of law. As a consequence, as per section 35 of Indian Stamp Act, the lease agreement is inadmissible in evidence for placing any reliance or seeking enforcement of any of the terms contained therein.
7. It was further stated that without prejudice to submission of admissibility of lease agreement, even if the lease agreement was to be received in evidence, the claims of the plaintiff were not maintainable. As submitted, as regards the claim for unpaid rent for January and February 2021, the lease agreement explicitly provided for adjustment of arrears from the security deposit at or after the stage of handing back peaceful possession to the plaintiff (lessor) and the plaintiff's assertions to the contrary are in the teeth of the explicit language of the agreement. It was further stated that defendant during its stay at the premises, had spent Rs. 12,19,540/- for the windows, doors, and shutter of the premises. Further, Director of plaintiff CS (Comm) No. : 02/2022 & 392/2022 4/81 company is the wife of Mr. Arun Sharma, the then Business Head of the defendant. Mr. Sharma based on his relationship with the plaintiff got expensive equipment/items installed at the premises for his personal use at the expense of the defendant, amounting to Rs. 25,00,000/-.
8. In August 2020, defendant decided to not renew the lease agreement and therefore sent an email to the plaintiff informing it of this decision well in advance and also requested plaintiff to adjust the rent for the months of December 2020 to February 2021 from the security deposit. Plaintiff acknowledged defendant's decision to not continue in the premises but denied adjustment of rent from the security deposit. Defendant's request to provide a counter offer for the windows, doors and shutter of the premises costing Rs. 12,19,540/- was also declined by the plaintiff, besides denial for return of the fridge and projector on the ground that they were being used by Mr. Arun Sharma, and defendant should liason with him in this regard.
9. In January 2021, defendant moved few items out of the premises. However, despite agreeing to the defendant's right to move the air conditioner from the premises vide email dated 30.12.2020, defendant's representative was precluded from shifting the air conditioners installed at the premises by one of the Directors of plaintiff company on the ground that defendant could remove its property only upon payment of outstanding rent. Thereafter despite several communications between the parties, defendant was not allowed to remove its belongings from the leased premises. Plaintiff called upon the defendant for handing over of the keys of premises as well as remotes for the window blinds and outstanding rent. Defendant's request to adjust the rent of January and February 2021 from the security deposit was out rightly refused by the plaintiff.
CS (Comm) No. : 02/2022 & 392/2022 5/8110. It was further stated that on 22 February 2021, to the defendant's surprise, even prior to the completion of the peaceful handover of keys and expiry of lease period, plaintiff issued a legal notice to defendant raising baseless allegations and making frivolous claims amounting to Rs. 25,00,000/-. Said legal notice indicated that plaintiff had inspected the premises to calculate cost of Rs. 10,00,000/- for the repair and restoration work, which showed that contrary to the plaintiff's position, plaintiff had already forcibly broken into the premises to illegally take over possession. Later on, it was revealed that plaintiff had proceeded to enter into a new lease agreement dated 22.2.2021, with a third party (Trigon Digital Solutions Pvt. Ltd.) in respect of the first floor of the premises even before the expiry of the Lease Agreement with defendant.
11. Even as on date, items including air conditioner, fridge, and the projector remain installed at the leased premises. These articles were purchased by the defendant, however, the defendant was deprived from removing these items, out of the leased premises. Plaintiff has unjustly enriched itself on the defendant's expense by illegally unjustifiably retaining these articles and providing as part of the package, in the lease to 'Trigon Digital'. On 25 February 2021, defendant sent an email to the plaintiff, informing the defendant's intent to visit the premises at 2:30 p.m. on 26 February 2021 to conclude peaceful handover of the keys with request to sign a letter acknowledging the handover of the same. Plaintiff though did not object to defendant's visit to the premises but raised allegations of foul play and asked the defendant to comply with the legal notice.
12. On 26 February 2021, defendant's representative alongwith their lawyers visited the premises to handover the keys to the plaintiff when it was confirmed that plaintiff had illegally broke CS (Comm) No. : 02/2022 & 392/2022 6/81 open the locks of both the floors and had in fact leased out the first floor to a third party Trigon Digital, in serious violation of law. While the ground floor was locked with new locks installed by the plaintiff, first floor was found open for maintenance work being carried out. It was also noticed that AC ducting and sophisticated remote controlled sunblind system installed by the defendant was still in place on the first floor and these were given to Trigon Digital as part of the lease package. It was also noticed that despite the factual position set out above, the logo of Aluplast continued to remain on the building facade. Further, one Mr. Rahul who represented himself as the ' Regional Manager' of the plaintiff, denied entry to the defendant's representative and lawyers in the building, extended threats and refused to accept the keys or to sign any document. The events that transpired on 26th February 2021, as stated, were captured by the defendant's representative on photograph/video and defendant reserved its right to refer to them at the appropriate stage, if necessary alongwith evidence of eye witness.
13. With regard to claim of plaintiff for six month's rent, it was stated that record enclosed with the suit itself demonstrates that the trigger for payment of such six month's rent i.e. (termination of the lease or the vacation of the lease premises prior to 24 months lock-in period) had not occurred. The defendant was in possession of the property till the expiry of the Lease Agreement. With regard to claim of cost of Rs. 10,00,000/- for allegedly restoring the property to the original position, it was stated that same is nothing more than an arbitrary figure and a bald assertion, unsupported by any documents or evidence whatsoever, contemporaneous or otherwise. Therefore, the suit in itself is nothing more than an attempt to arm-twist the defendant and is entirely baseless.
CS (Comm) No. : 02/2022 & 392/2022 7/8114. In counter claim, defendant sought recovery of Rs. 12,19,078.85 towards the cost of doors, windows and shutters installed by the counter claimant/defendant as well as decree in sum of Rs. 6,69,473/- as the amount equivalent to the cost of air- conditioners, refrigerator and projector installed by defendant. Damages were also sought for unjust and unlawful gains/earnings by the plaintiff at the defendant's expense by utilizing the defendant's items/equipment for its benefit/use and depriving the defendant's possession of its items/equipment with effect from April 2021 till date.
15. In rejoinder/reply to written statement as well as counter claim, contents of written statement/counter claim were denied and those of plaint were reiterated and reaffirmed. It was stated that counter claim is only a counter blast and an after thought to the civil suit filed by the plaintiff against the defendant. Upon the receipt of legal notice dated 22.02.2021, defendant conjured and fabricated a false story of goods and material lying in the leased premises, whereas the defendant in fact, had taken back all his goods and material lying in the leased premises when the defendant vacated the leased/suit premises in February 2021. Prior to filing of the present suit by the plaintiff, defendant did not initiate any legal action against the plaintiff for more than one year after the alleged usurping of the defendant's alleged goods. It was only after having been summoned in the present case that the defendant for the first time has initiated legal action against the plaintiff in respect of goods in question.
16. It was further submitted that defendant is making an attempt at covering his own misgivings of the acts of breaching/violating the lease terms and having failed to clear the outstanding amount due and payable to the plaintiff, having vacated the leased premises before the expiry of lock-in period of CS (Comm) No. : 02/2022 & 392/2022 8/81 24 months, and having failed to pay the monthly rent for the month of January 2021 and February 2021, as well as causing damages to the leased premises.
17. Following issues were framed vide order dated 19.01.2024:
(1) Whether the plaintiff is entitled for recovery of the suit amount, as claimed? OPP (2) Whether the defendant/counter claimant had installed equipments at the suit premises during the continuation of tenancy as detailed in written statement and counter claim and the same were mis-appropriated by the plaintiff? OPD/CC (3) If answer to issue no.2 is in affirmative, whether the counter claimant/defendant is entitled for recovery of amount equivalent to the cost of the equipments/goods installed by the counter claimant/defendant at the suit premises and the quantum of the same? OPD/CC (4) Whether the defendant/counter claimant is entitled for adjustment of two months of rent amount of Rs. 4,48,314/- from the security deposit? OPD/CC (5) Relief
18. Plaintiff examined its AR Sh. Arun, Sharma, in support of its case, as PW1. He filed his evidence by way of affidavits Ex. PW1/A and Ex. PW1/A1 and relied upon following documents:-
1. Photocopy of lease deed dated 01.03.2019 is Ex. P-1.
2. Photocopy of invoices for the rent of January 2021 and February 2021as Ex. P2 (OSR) and Ex. P3 (OSR) respectively.
3. Printouts of emails exchanged between the plaintiff and defendant as Ex. P-4 to Ex. P-21 .
4. Office copy of legal notice dated 22.02.2021 issued by plaintiff to defendant as Ex. P-22.CS (Comm) No. : 02/2022 & 392/2022 9/81
5. Original Postal receipt of legal notice dated 22.02.2021 as Ex. P-23.
6. Original reply dated 15.03.2021 issued by defendant to plaintiff as Ex. P-24.
7. Copy of reply dated 02.03.2021 issued by defendant to the plaintiff as Ex. P-25.
8. Copy of reply dated 26.10.2021 issued by defendant to plaintiff as Ex. P-26.
9. Photocopy of Certificate of Incorporation of plaintiff as Ex. PW1/27 (OSR).
10. Certified copy of resolution passed by plaintiff dated 06.12.2021 as Ex. PW1/28.
11. Copy of bills in respect of the window/door frames and panels glasses as Ex. PW1/29 (colly).
12. Certified copy of Ledger account of defendant maintained by plaintiff as Ex. PW1/30.
13. Printouts of plaintiff's bank statement vide account no.
3908 for the period 01.04.2019 to 31.04.2021 as Ex. PW1/31.
14. Copies of bills incurred for renovation and installation of AC as Ex. PW1/32 (colly) (OSR).
15. Certificates under section 65-B of Indian Evidence Act in respect of electronic records as Ex. PW1/33 and Ex. PW1/34.
19. PW2 is Sh. Ajeet Singh, MTS from Sub-Registrar-V, Mehrauli who brought the summoned record i.e. certified copy of Lease Deed dated 17.02.2021 and exhibited the same as Ex. PW2/1 (OSR).
20. In defence, Sh. Manoj Kumar Ambalal Shah, AR/Head Finance of Defendant company was examined as DW1. He filed CS (Comm) No. : 02/2022 & 392/2022 10/81 his evidence by way of affidavits Ex. DW1/A and Ex. DW1/A1 and relied upon following documents:-
1. Email conversations are Ex. D1 to Ex. D12 and D14 to D17.
2. Legal Notice dated 22.02.2021 is Ex. D13.
3. Reply dated 15.03.2021 to legal notice of plaintiff is Ex.
D18.
4. Pre-institution settlement notice received from South District Legal Services Authority is Ex. D19.
5. Copy of legal notice dated 26.03.2021 is Ex. D20.
6. Copy of Board Resolution passed by defendant company dated 20.04.2022 is Ex. DW1/22.
7. Affidavits/certificates u/s 65 B of Indian Evidence Act is Ex.
DW1/23 and Ex. DW1/25.
8. Copy of Ledger as Ex. DW1/27.
9. Certificate under section 65-B Indian Evidence Act as Ex.
DW1/28.
10. Printouts of emails dated 29.12.2020, 30.12.2020, 02.02.2021, 10.02.2021 and 22.02.2021 as Ex. DW1/29 to Ex. DW1/34 respectively.
11. Copy of reply dated 15.03.2021 to the legal notice dated 22.02.2021 as Ex. DW1/35.
12. Certificate under section 65-B as Ex. DW1/36.
21. Sh. Deepak Singh, Executive Technical Support from the office of defendant was examined as DW2 who filed his evidence by way of affidavit Ex. DW2/A and relied upon following documents:-
1. Copy of Board Resolution of Defenant as Ex. DW2/1.
2. Certificate under section 65-B of Indian Evidence Act as Ex.
DW2/2.
3. Copy of invoices as Mark-A to Mark-K.
4. Copy of Letter dated 20.01.2016 as Mark-L. CS (Comm) No. : 02/2022 & 392/2022 11/81 Issue-wise findings are as under:-
22. Issues No. 1 & 4 :
Admissibility of Lease Deed: Plaintiff claimed that defendant was inducted as a tenant by the plaintiff for the ground floor and the first floor of the said property on a monthly rent of Rs. 1,82,658/- (Rupees One Lakh Eighty Two Thousand Six Hundred Fifty Eight Only), vide lease agreement dated 01.03.2019, Ex. P-1 duly executed between Plaintiff and the Defendant Ex. P-1. Tenancy period as per the lease agreement was for two years commencing from 01.03.2019 with lock-in priod of two years ie. 24 months and the lease agreement provided that in case defendant vacates the premises or terminates the said lease before expiry of the lock-in period of 24 months, defendant was required to pay rent for the entire six months. Defendant also deposited the Interest Fee Security Deposit equivalent to two months rent amounting to Rs. 3,65,316/- .
23. Though the relationship of landlord and tenant between the parties was not disputed on record, however the admissibility of lease deed was disputed on behalf of defendant, same being unregistered document. Ld. counsel for defendant submitted that the lease agreement of 2019 was for a period of 2 years, thus making it a compulsorily registrable instrument as per sec.17(1)
(d) of the Registration Act, 1908 (Registration Act), leading to the non admissibility of such transaction affecting such immovable property. Ld. counsel for defendant submitted:
(i) that, plaintiff has argued that the Lease Agreement is a document acknowledged to be in existence by way of the various emails and invoices on record before this Court and as such can be used for a collateral purpose, "which in the present case is to prove existence of landlord-tenant relationship and existence of CS (Comm) No. : 02/2022 & 392/2022 12/81 terms of lease" . However, correspondence and invoices cannot be used to prove/lead the terms contained in an unregistered lease agreement. It is trite that terms of an unregistered lease deed are not considered collateral transactions/purpose. Therefore, they cannot be relied on, to evidence the creation, declaration, assignment or extinguishment of any right pertaining to the immovable property which the unregistered document was the subject of, which in the present case, is the Leased Premises".
(ii) that, the mandatory legal sequitur of non-registration of a lease agreement is the application and operation of section 106 of Transfer of Property Act, 1882 which states that in the absence of any contract, a lease of immovable property for other than agricultural and manufacturing purposes shall be deemed to be a lease from month to month, terminable by 15 days' notice.
Consequently, no other conditions can be read into such lease and in the present case the Plaintiff cannot seek the "rent of the entire period of 6 months as such a clause is unenforceable .
24. Reliance was placed upon following:
a) K.B. Saha & Sons (P) Ltd. v. Development Consultant Ltd., (2008) 8 SCC 564 :
" 30. In Haran Chandra Chakrvarti Vs. Kaliprasanna Sarkar [AIR 1932 Cal 83(2)], it was held that the terms of a compulsorily registrable instrument are nothing less than a transaction affecting the property comprised in it. It was also held that to use such an instrument for the purpose of proving such a term would not be using it for a collateral purpose and that the question as to who is the tenant and on what terms he has been created a tenant are not collateral facts but they are important terms of the contract of tenancy, which cannot be proved by admission of an unregistered lease-deed into evidence".
" 32. In Bajaj Auto Limited vs. Behari Lal Kohli [AIR 1989 SC 1806] , this Court observed that if a document is inadmissible for non- registration, all its terms are inadmissible including the one dealing with landlord's permission to his tenant to sub-let. It was also held in that decision that if a decree purporting to create a lease is inadmissible in evidence for want of registration, none of the terms of the lease can be admitted in evidence and that to use a document for the purpose of proving an important clause in the lease is not using it as a collateral purpose. Again this court in Rai Chand Jain Vs. Chandra Kanta Khosla [AIR 1991 SC 747] reiterated the above and observed in paragraph 10 as under : -CS (Comm) No. : 02/2022 & 392/2022 13/81
"10.......the lease deed Ex. P1 dated 19th May, 1978 executed both by the appellant and the respondent i.e. the landlady and the tenant, Rai Chand Jain, though unregistered can be considered for collateral purposes and as such the findings of the Appellate Authority to the effect that the said deed cannot be used for collateral purposes namely to show that the purpose was to lease out the demised premises for residential purposes of the tenant only is not at all legally correct. It is well settled that unregistered lease executed by both the parties can be looked into for collateral purposes".
b) Satish Chand v. Govardhan Das, 1984 1 SCC 369 The unregistered draft lease agreement is clearly inadmissible in evidence under Section 49 of the Registration Act, except for the collateral purpose of proving the nature and character of possession of the defendants. The document is admissible under the proviso to Section 49 only for a collateral purpose of showing the nature and character of possession of the defendants. The proviso to Section 49 was however not applicable in the present case inasmuch as the terms of a lease are not a "collateral purpose"
within its meaning. It follows that the unregistered draft lease agreement is inadmissible in evidence to prove the transaction of lease. It is also ineffectual to create a valid lease for a renewed term of nine years for want of registration as required under Section 17(1)(d) of the Registration Act".
c) Amar Chand Talwar and Ors v Export Promotion Council, (1999) 77 DLT 809:
"Section 107 of the Transfer of Property Act postulates that a lease of immovable property from year-to-year, or for any term exceeding one year, or reserving a yearly rent, can be made only by a registered instrument. In the absence of registered instrument, it must be a monthly lease. In view of the said provisions, since the lease was for a period exceeding one year, it could only have been extended by a registered instrument executed by the plaintiffs and the defendant. In the absence of registered instrument, the lease shall be deemed to be "lease from month-to-month". The unregistered lease deed dated 3.6.1986 is clearly inadmissible in evidence under Section 49 of the Registration Act, except for the collateral purpose of proving the nature and character of possession of the defendant. The proviso to Section 49 of the Registration Act is not applicable in the present case inasmuch as the terms of a lease are not a "collateral purpose" within its meaning. (Satish Chand v. Govardhan Das, ). Thus, the lease deed dated 3.6.1986 is inadmissible in evidence to prove the transaction of lease. It was also ineffectual to create a valid lease for a renewed term for want of registration under Section 17 of the Registration Act. Consequently, I find and hold that in the instant case, the lease shall be deemed to be a lease from month-to- month, terminable, on the part of either lessor or lessee by 15 days' notice under Section 106 of the Transfer of Property Act expiring with the end of a month of the tenancy".
d) Ganpat Mal Dhariwal v. Sukhraj, 2001 SCC OnLine Raj "31. The legal position regarding collateral purpose has come out is that this expression does not permit the party to establish by the document in CS (Comm) No. : 02/2022 & 392/2022 14/81 question that it created or declared or assigned or extinguished any right in the immovable property".
e) Sanjiva Row's The Registration Act, 7th Ed. (1982) Law Publishers, Allahabad [Pg 497, 508, 511, 515-517]:
" Page 511:
(18) Terms of instruments: The terms of a compulsorily registrable instrument are nothing less than a transaction affecting the property comprised in it. To use such an instrument for the purpose of proving such a term would not be using it for a collateral purpose. The question as to who is the tenant and important terms of the contract of tenancy are not collateral facts. They are important terms of the contract of tenancy, which cannot be proved by admission of an unregistered lease deed into evidence. Condition of a contract constitute part of the terms of the contract.
Page 515:
(6) Lease- A lease of immovable property, which is compulsorily registrable, if not registered, is void altogether and cannot be received in evidence to prove the transaction affecting the immovable property to which it relates or any of the terms of the transaction. An unregistered document purporting to be a lease of immovable property is not admissible in evidence to prove the rent agreed to be paid. It cannot be admitted in evidence to prove that the property to which it relates was let for a term of years. In a suit for damages based on an indemnity clause contained in a compulsorily registrable but unregistered lease, the lease deed cannot be looked at if the indemnity clause is inseparable from the lease. If a deed of lease is inadmissible in evidence for want of registration, it cannot be received in evidence to prove an obligation contained therein to remove seeds from the lease lands when the obligation was a condition of the tenancy and a condition for fixing the low rent, nor can secondary evidence be adduced to prove the obligations. If an agreement imposes a limitation on the right created in favour of the lessee under a registered lease, in order to make the agreement effective, it is necessary under section 17 (b), Registration Act, that the agreement should be registered . The mere fact that the agreement and the lease form part of the same transaction cannot dispense with the necessity of registration of the agreement and if it is not registered, it is inadmissible in evidence. Thus, a document which embodies a contract for variation of rent payable in respect of a lease is in essence a lease and is compulsorily registrable. If it is not registered in accordance with the law, it is not only admissible in evidence but it does not constitute a valid and operative contract between the parties.
25. Ld. counsel for defendant also submitted that even otherwise the said lease deed was insufficiently stamped document. It was brought on record that vide order dated 18 October 2023, submissions of the defendant was noted that the the lease deed being relied upon by the Plaintiff was CS (Comm) No. : 02/2022 & 392/2022 15/81 insufficiently stamped and the Plaintiff was directed to place the original of the 2019 Lease Agreement on record. Plaintiff had sought time for production of the original lease deed dated 01.03.2019 executed between the parties. It was further submitted by Ld. counsel for defendant that with a view to avoid payment of stamp duty and penalty, plaintiff submitted to this court that original lease deed has been lost by the plaintiff. It was submitted that even if the original copy of lease agreement had been lost, now it is not possible for a copy of 2019 lease agreement to be validated by impounding. Section 17 r/w section 35 of the Stamp Act states that only original instruments may be validated by stamping. Plaintiff cannot rely on a copy of the same to circumvent the requirement laid down therein, in ignorance of law.
26. Reliance was placed upon following:
(a) Avinash Kumar Chauhan v Vijay Krishna Mishra, AIR.
2009 SC 1989 :
" 49. Effect of non-registration of documents required to be registered.-
No document required by section 17 or by any provision of the Transfer of Property Act, 1882 (4 of 1882), to be registered shall--
(a) affect any immovable property comprised therein, or
(b) confer any power to adopt, or
(c) be received as evidence of any transaction affecting such property or conferring such power, unless it has been registered:
Provided that an unregistered document affecting immovable property and required by this Act or the Transfer of Property Act, 1882 (4 of 1882), to be registered may be received as evidence of a contract in a suit for specific performance under Chapter II of the Specific Relief Act, 1877 (3 of 1877) or as evidence of any collateral transaction not required to be effected by registered instrument.
28. In Sanjeeva Reddi v. Johanputra Reddi, [ AIR 1972 A.P. 373 ], it has been held :-CS (Comm) No. : 02/2022 & 392/2022 16/81
"9. While considering the scope of Section 35 of the Indian Stamp Act we cannot bring in the effect of non-registration of a document under Section 49 of the Indian Registration Act. Section 17 of the Indian Registration Act deals with documents, the registration of which is compulsory and Section 49 is concerned only with the effect of such non-registration of the documents which require to be registered by Section 17 or by any provision of the Transfer of Property Act. The effect of non-registration is that such a document shall not affect any immovable property covered by it or confer any power to adopt and it cannot be received as evidence of any transaction affecting such property or conferring such power. But there is no prohibition under Section 49 to receive such a document which requires registration to be used for a collateral purpose i.e. for an entirely different and independent matter. There is a total and absolute bar as to the admission of an unstamped instrument whatever be the nature of the purpose or however foreign or independent the purpose may be for which it is sought to be used, unless there is compliance with the requirements of the provisos to Section 35. In other words if an unstamped instrument is admitted for a collateral purposes. It would amount to receiving such a document in evidence for a purpose which Section 35 prohibits.
(b) T. Bhaskar Rao Vs. T. Gabriel 1981 SCC Online AP4:
"5. Section 35 of the Stamp Act mandates that an instrument chargeable with duty should be stamped so as to make it admissible in evidence. Proviso A to Section 35 of the Stamp Act enables a document to be received in evidence on payment of stamp duty and penalty if the document is chargeable, but not stamped or on payment of deficit duty and penalty, if it is insufficiently stamped. The bar against the admissibility of an instrument which is chargeable with stamp duty and is not stamped is of course absolute whatever be the nature of the purpose, be it for main or collateral purpose, unless the requirements of proviso (A) to Section 35 are complied with. It follows that if the requirements of proviso (A) to Section 35 are satisfied, then the document which is chargeable with duty, but not stamped, can be received in evidence.
7. It is now well settled that there is no prohibition under Section 49 of the Registration Act, to receive an unregistered document in evidence for collateral purpose. But the document so tendered should be duly stamped or should comply with the requirements of Section 35 of the Stamp Act, if not stamp ed, as a document cannot be received in evidence even for collateral purpose unless it is duly stamped or duty and penalty are paid under Section 35 of the Stamp Act".
(c) Vijay Vs. Union of India 2023 SCC Online SC 1585 "37. We may now consider Section 35 of the Stamp Act which forbids the letting of secondary evidence in proof of its contents. The section excludes both the original instrument and secondary evidence of its contents if it needs to be stamped or sufficiently stamped. This bar as to the admissibility of documents is absolute. Where a document cannot be CS (Comm) No. : 02/2022 & 392/2022 17/81 received in evidence on the ground that it is not duly stamped, the secondary evidence thereof is equally inadmissible in evidence.
38. In relation to secondary evidence of unstamped/insufficiently stamped documents, the position has been succinctly explained by this Court in Jupudi Kesava Rao (supra) wherein it dealt with an issue, i.e., 19- Civil Appeal No. 4910 of 2023 whether reception of secondary evidence of a written agreement to grant a lease is barred by the provisions of Sections 35 and 36 of the Stamp Act and answered it in affirmative. It observed:
"12. The Indian Evidence Act, however, does not purport to deal with the admissibility of documents in evidence which require to be stamped under the provisions of the Indian Stamp Act.
13. The first limb of Section 35 clearly shuts out from evidence any instrument chargeable with duty unless it is duly stamped. The second limb of it which relates to acting upon the instrument will obviously shut out any secondary evidence of such instrument, for allowing such evidence to be let in when the original admittedly chargeable with duty was not stamped or insufficiently stamped, would be tantamount to the document being acted upon by the person having by law or authority to receive evidence. Proviso (a) is only applicable when the original instrument is actually before the Court of law and the deficiency in stamp with penalty is paid by the party seeking to rely upon the document. Clearly secondary evidence either by way of oral evidence of the contents of the unstamped document or the copy of it covered by Section 63 of the Indian Evidence Act would not fulfil the requirements of the proviso which enjoins upon the authority to receive nothing in evidence except the instrument itself. Section 25 is not concerned with any copy of an instrument and a party can only be allowed to rely on a document which is an instrument for the purpose of Section 35. "Instrument is defined in Section 2(14) as including every document by which any right or liability is, or purports to be created, transferred, limited, extended, extinguished or recorded. There is no scope for the inclusion of a copy of a document as an instrument for the purpose of the Stamp Act.
If Section 35 only deals with original instruments and not copies, Section 36 cannot be so interpreted as to allow secondary evidence of an instrument to have its benefit."
(Emphasis supplied) 20-Civil Appeal No. 4910 of 2023
39. This Court, in Hariom Agrawal v. Prakash Chand Malviya25, reiterated the principle laid down in Judupi Kesava Rao (supra) and observed that:
"10. It is clear from the decisions of this Court and a plain reading of Sections 33, 35 and 2(14) of the Act that an instrument which is not duly stamped can be impounded and when the required fee and penalty has been paid for such instrument it can be taken in evidence under Section 35 of the Stamp Act. Sections 33 or 35 are not concerned with any copy of the instrument and party can only be allowed to rely on the CS (Comm) No. : 02/2022 & 392/2022 18/81 document which is an instrument within the meaning of Section 2(14). There is no scope for the inclusion of the copy of the document for the purposes of the Stamp Act. Law is now no doubt well settled that copy of the instrument cannot be validated by impounding and this cannot be admitted as secondary evidence under the Stamp Act, 1899."
40. Thus, if a document that is required to be stamped is not sufficiently stamped, then the position of law is well settled that a copy of such document as secondary evidence cannot be adduced".
27. Ld. counsel for defendant also submitted that though the document i.e. lease deed Ex. P-1 had been exhibited during the course of trial, it does not remedy the bar under section 49 of Regitration Act and 35 of the Stamp Act. Reliance was placed upon Paul Rubber Industries Vs. Amit Chand Mitra 2023 SCC Online SC 1216 wherein it was held that " The parties cannot by implied consent confer upon such documents its admissibility" . It was submitted that this document be de-exhibited and reliance be struck off from the said lease agreement.
28. Per contra, it was submitted by Ld. counsel for plaintiff that defendant's primary defence is non-registration and insufficient stamping of the lease deed dated 01.03.2019 (Ex.PI) and hence the same could not be read in evidence. However, it is trite law that insufficient unregistered document/lease deed can be read in evidence for collateral purpose which in the present case is the damage caused to the leased premises and the penalty for vacation before lock-in period. Further, defendant has not disputed the existence of landlord-tenant relationship and has admitted to its liability to pay rent. Ld. counsel for plaintiff further submitted that the case of the Plaintiff is not entirely based upon said lease agreement but also on the invoices and receipt of the invoices raised by the Plaintiff upon the Defendant vide emails (Ex.P2,Ex.P3,Ex.P4 and Ex.P.5 and the Defendant has not denied the liability to pay outstanding rent for 2 months, CS (Comm) No. : 02/2022 & 392/2022 19/81 therefore, the relief in prayer (i) of the suit be granted in favour the Plaintiff.
29. Ld. counsel for plaintiff relied upon Suleman Haji Ahmed Umar Vs. P.N. Patel MANU/MH/0036/1933 and N. Qamar Jahan Begam Vs. Bansi Dhar MANU/OU/0090/1941, wherein interalia it was observed that :
" 3......... As to the lease the defendant cannot be allowed to contend that it is inadmissible for want of registration on his part, and at the same time argue that the plaintiff cannot rely on any oral agreement because the terms have been reduced to writing in the form of a lease to which ho objects".
"6. The lease, in my opinion, is admissible not only as evidence of part performance of the terms of the agreement contained therein, but also in order to show that the plaintiff can under Section 53A enforce his right to claim damages for breach of the agreement as provided by one of its terms. Both, the letter of February 6, 1924, and the 'pucca' lease are admissible and should be marked as exhibits in the case".
30. As already noted, relationship of landlord and tenant between the parties for the relevant period is not disputed fact on record. Lease deed Ex. P-1 was executed between the parties in year 2019 and prior thereto in 2016, another lease deed Ex. DW1/P1 was executed. Parties had entered into relationship of lessor and lessee by virtue of the lease agreement dated 01.03.2016 which was for the period of 3 years with lock-in period of 2 years. Subsequent thereto, parties entered into another agreement vide lease deed dated 01.03.2019 Ex. P-1, for further period of 2 years with lock-in period of 24 months. In terms of the lease deed, "if lessee vacates the demised premises or terminates the lease before the expiry of the lock-in-period of 24 months, then the lessee shall be bound to pay the rent for the entire period of 6 months". Based upon the said clause, plaintiff sought recovery of the unpaid rent for the months of January and February 2021 and money decree in sum of Rs. 10,95,948/- being the penalty equivalent to six months rent to be paid by the defendant.
CS (Comm) No. : 02/2022 & 392/2022 20/8131. Lease deed of 2016 i.e. Ex. DW1/P1 and the lease deed in question i.e. Ex. P-1 were admittedly the unregistered documents. PW1 stated that the cost of the lease registration was payable by lessee and lessor equally but was never paid by defendant and since they had cordial relationship with the defendant for many years, therefore, it was not followed up seriously. PW1 was put question that it had not paid or deposited its share of the registration or stamp charges in relation to the lease deed dated 01.03.2019, to which he answered that bank statement of plaintiff reflected sufficient balance, having always been maintained. DW1 was asked whether it ever raised any objection with the plaintiff regarding non stamping and non registration of the agreement, to which, he stated that Mr. Arun Sharma (PW1) was the Director of both the plaintiff and defendant and it was the mutual decision to not register the same. Since the Agreement dated 01.03.2016 was not registered, in the same way, the agreement dated 01.03.2019 was also not registered. DW1 stated that defendant had not asked the plaintiff orally or in writing to register and pay the stamp duy for the lease agreement dated 01.03.2019 as the property in qeustion belonged to the plaintiff and the plaintiff did not ask the defendant for registeration of the lease agreement nor did they ask for payment of stamp duty, hence, there was no question of payment of stamp duty and registration.
32. Relevant provisions of Transfer of Property Act stipulates as under:
"105. Lease defined--A lease of immovable property is a transfer of a right to enjoy such property, made for a certain time, express or implied, or in perpetuity, in consideration of a price paid or promised, or of money, a share of crops, service or any other thing of value, to be rendered periodically or on specified occasions CS (Comm) No. : 02/2022 & 392/2022 21/81 to the transferor by the transferee, who accepts the transfer on such terms.
106. Duration of certain leases in absence of written contract or local usage.--(1) In the absence of a contract or local law or usage to the contrary, a lease of immovable property for agricultural or manufacturing purposes shall be deemed to be a lease from year to year, terminable, on the part of either lessor or lessee, by six months' notice; and a lease of immovable property for any other purpose shall be deemed to be a lease from month to month, terminable, on the part of either lessor or lessee, by fifteen days' notice.
(2) Notwithstanding anything contained in any other law for the time being in force, the period mentioned in sub-section (1) shall commence from the date of receipt of notice.
(3) A notice under sub-section (1) shall not be deemed to be invalid merely because the period mentioned therein falls short of the period specified under that sub-section, where a suit or proceeding is filed after the expiry of the period mentioned in that sub-section.
(4) Every notice under sub-section (1) must be in writing, signed by or on behalf of the person giving it, and either be sent by post to the party who is intended to be bound by it or be tendered or delivered personally to such party, or to one of his family or servants at his residence, or (if such tender or delivery is not practicable) affixed to a conspicuous part of the property.]
107. Leases how made.--A lease of immovable property from year to year, or for any term exceeding one year, or reserving a yearly rent, can be made only by a registered instrument.
(All other leases of immovable property may be made either by a registered instrument or by oral agreement accompanied by delivery of possession).
CS (Comm) No. : 02/2022 & 392/2022 22/81..........................
33. Further, in section 108 of Transfer of Property Act, rights and liabilities of lessor and lessee have been defined in absence of a contract or local usage to the contrary. Further section 49 of the Registration Act stipulates the effect of non registration of documents required to be registered according to which, no document required by section 17 or by any provision of the Transfer of Property Act, 1882 (4 of 1882), to be registered shall--
(a) affect any immovable property comprised therein, or
(b) confer any power to adopt, or
(c) be received as evidence of any transaction affecting such property or conferring such power, unless it has been registered:
Provided that an unregistered document affecting immovable property and required by this Act or the Transfer of Property Act, 1882 (4 of 1882), to be registered may be received as evidence of a contract in a suit for specific performance under Chapter II of the Specific Relief Act, 1877 (3 of 1877) or as evidence of any collateral transaction not required to be effected by registered instrument.
34. From the provisions of Transfer of Property Act, Registration Act and principles laid down in the judgments of the Higher Courts, (noted as supra), a document required to be registered, if unregistered is not admissible into evidence under Section 49 of the Registration Act. Such unregistered document though can be used as an evidence of collateral purpose as provided in the proviso to Section 49 of the Registration Act. The collateral transaction, nevertheless, must be independent of, CS (Comm) No. : 02/2022 & 392/2022 23/81 or divisible from, the transaction to the effect for which the law requires registration.
35. In the instant matter, the lease deed in question i.e. Ex. P-1 remained unregisterd, in which eventuality, the same can be considered only for the collateral purpose. Tenancy between the parties shall be considered on month to month basis. Nevertheless, as the lease deed was also insufficiently stamped, therefore, the contents of the same cannot be read in evidence, even for the collateral purpose, in which eventuality, parties would be governed by the general principles relating to rights and liabilities of lessor and lessee, as per section 108 of the Transfer of Property Act. Besides the reliance placed upon the authorities (supra) as quoted by Ld. Counsel for defendant, reliance is also placed upon M/s Paul Rubber Industries Private Vs. Amit Chand Mitra, arising out of Petition for Special Leave to Appeal (Civil) No. 15774/2022, wherein it was observed that :
" 1. A document required to be registered, if unregistered is not admissible into evidence under Section 49 of the Registration Act.
2. Such unregistered document can however be used as an evidence of collateral purpose as provided in the proviso to Section 49 of the Registration Act.
3. A collateral transaction must be independent of, or divisible from, the transaction to effect which the law required registration.
4. A collateral transaction must be a transaction not itself required to be effected by a registered document, that is, a transaction creating, etc. any right, title or interest in immovable property of the value of one hundred rupees and upwards.
5. If a document is inadmissible in evidence for want of registration, none of its terms can be admitted in evidence and that to use a document for the purpose of proving an important clause would not be using it as a collateral purpose."
36. Reliance is further placed upon Bidyut Sarkar Vs. Kanchilal Pal (Dead) through its Lrs on 28.08.2024, Civil Appeal nos. 10509- 10510 of 2013 , wherein it was observed that :
"30. ......The document, being insufficiently stamped, was rightfully barred from being admitted as evidence in the absence of the requisite stamp duty and penalty being paid and certified by the Collector. The High Court, in treating CS (Comm) No. : 02/2022 & 392/2022 24/81 this document as admissible without resolving the stamp duty deficiency, overlooked the statutory mandate under the Stamp Act. As the document is foundational to the suit, the failure to comply with the statutory requirements renders the entire claim unenforceable. Consequently, the suit must be dismissed, as it is based on an instrument that is legally inadmissible as evidence. The plaintiff cannot claim relief on the basis of a document that has not satisfied the legal requirements for admissibility".
37. Claim for Six months Rent: Enforceability of stipulation in the lease deed pertaining to the payment of six months penalty is not available to plaintiff. Besides the fact that same is not enforceable in view of the inadmissibility of the lease deed even for collateral purpose, even otherwise there does not seem to be violation of the said term by the defendant in vacating the premises. While also considering that in view of the inadmissibility of the lease deed between the parties, the tenancy was on month to month basis, therefore the defendant could have vacated the premises after giving prior notice in this regard, albeit the record suggests that the vacation of the property by the defendant still was upon the expiry of the period of lease i.e. by 28.02.2020.
38. Vide email dated 17.8.2020, Ex. P-6, defendant had informed the plaintiff that they will vacate the premises by 28.02.2021. Plaintiff rather in response to the said email, vide its email dated August 18,2020, acknowledged with regard to intention of the defendant to vacate the rented premises on 28.02.2021 and also clarified that the rent amount was not adjustable against the security deposit. Above noted was followed by exchange of subsequent emails between the parties. Vide email dated 10.02.2021 Ex. P-14, defendant further informed about their intention to formally handover the possession of the rented premises to the plaintiff and sought suitable date and time for the same.
CS (Comm) No. : 02/2022 & 392/2022 25/8139. It was the contention on behalf of plaintiff that defendant had physically vacated the leased premises prior to the expiry of leased period and only a formal handover was intended to be concluded. Vide email dated 11.02.2021 Ex. P-15, plaintiff requested for hand over of the keys by the next date. Subsequent thereto, vide email dated 11.02.2021 Ex. P-16, defendant replied that one Mr. Manoj Chauhan will hand over the keys, which was followed by reply dated 11.02.2021 Ex. P-17 requesting for the keys and the pending rent. According to plaintiff, in the second week of Feberuary 2021, plaintiff through its Director visited the leased premises to inspect the leased premises and to seek their rent, wherein upon inspection, it was revealed that the defendant had vacated the leased premises before the lock-in period of 24 months, without giving any advance notice.
40. Said assertion of plaintiff is falsified on record in view of the email exchanged between the parties, whereby defendant had duly informed and notified plaintiff about its intention to vacate the leased premises. Plaintiff got issued legal notice dated 22.02.2021 Ex. P-22. In response, defendant vide its email dated 25.02.2021 Ex. P-18 sought time to hand over keys and to complete the handover. Defendant again sought time vide email dated 26.02.2021 Ex. P-20 to hand over the keys on the next day whereas plaintiff vide its email dated 01.03.2021 Ex. P-21 reiterated the events of 27.02.2021 and that defendant had tried to take forcible possession of the suit premises to show possession to evade its liability for penalty due to pre-mature vacation. Ld. counsel for defendant though submitted that without prejudice to the defendant's position on the inadmissibility of the terms of lease agreement Ex. P-1, defendant did not vacate the leased premises prior to expiry of the lock-in period of 24 months. Reference was made by Ld. CS (Comm) No. : 02/2022 & 392/2022 26/81 counsel for defendant to the same set of emails dated 17.08.2020, 18.8.2020, 17.12.2020, 11.02.2021 and 26.02.2021 with submission that defendant had time and again informed to the plaintiff that the agreement was valid till 28.02.2021. Defendant had offered to hand over the keys of the leased premises to the plaintiff also on 26.02.2021.
41. It was submitted by Ld. counsel for plaintiff that the allegations of the defendant of forceful possession by plaintiff is demolished by the fact that the Defendant itself had vacated the leased premises and also moved to its new office at Saket. Further, the Plaintiff vide its email had iterated that the Defendant had vacated the leased premises and taken everything . The vacation of suit premises before the expiry of lease period is further fortified by the Defendant's request to handover keys for formal handover of the possession . Further, despite visiting the leased premises on 27.02.2021, defendant did not take any legal action for alleged forceful vacation nor filed any complaint and also did not make any communication with the Plaintiff.
42. Ld. counsel for defendant submitted that there are inconsistencies between the pleadings of the plaintiff and the statements of PW1 during cross examination in regard to the alleged date of vacation of the leased premises. It was pointed out that in the plaint, it was pleaded that the inspection of leased premises took place after handover of the keys of the leased premises, however, PW1 states that the Defendant left the keys of the leased premises thereon itself. Further, PW1 stated that he personally visited the leased premises on 12 th or 13th February 2021 and discovered it to be lying open. But later, he contradicted by submitting that he was informed by his other colleagues that the leased premises was lying open.
CS (Comm) No. : 02/2022 & 392/2022 27/8143. Contention of Ld. counsel for defendant is sustainable that moving of goods out of the Leased premises, prior to expiry of the lease period would not amount to "vacation" which would make the defendant liable to pay the penalty of 6 months' rent. The intent of a 'liquidated damages' clause in a lease agreement is to ensure that lessor is duly compensated if the lease is prematurely terminated by the lessee, thereby denying the expected lease rental to the lessor. Ld. counsel for defendant submitted that without prejudice to the above submission, the clause in lease agreement Ex. P-1 was in the nature of an impermissible ' penalty'. Business efficacy would demand that ' vacation' of the premises be read to mean ' termination of the lease by the defendant'. This court is in agreement with the contention of Ld. counsel for defendant that if the plaintiff's assertion is taken to be correct, it would mean that a tenant can only physically vacate the leased premises on the last date of the lease, which is an absolutely impractical interpretation of such a clause in a commercial contract. Reliance was placed upon following :
(a) Satya Jain Vs. Anis Ahmed Rushdie (2013) 8 SCC 131:
" 33. The principle of business efficacy is normally invoked to read a term in an agreement or contract so as to achieve the result or the consequence intended by the parties acting as prudent businessmen. Business efficacy means the power to produce intended results. The classic test of business efficacy was proposed by Lord Justice Bowen in The Moorcock[8]. This test requires that a term can only be implied if it is necessary to give business efficacy to the contract to avoid such a failure of consideration that the parties cannot as reasonable businessmen have intended. But only the most limited term should then be implied - the bare minimum to achieve this goal. If the contract makes business sense without the term, the courts will not imply the same. The following passage from the opinion of L.J. Bowen in the Moorcock (supra) sums up the position:
"x x x x x x x x x In business transactions such as this, what the law desires to effect by the implication is to give such business efficacy to the transaction as must have been intended at all events by both parties who are business men; not to impose on one side all the perils of the transaction, or to emancipate one side from all the chances of failure, but to make each CS (Comm) No. : 02/2022 & 392/2022 28/81 party promise in law as much, at all events, as it must have been in the contemplation of both parties that he should be responsible for in respect of those perils or chances."
34. Though in an entirely different context, this court in United India Insurance Company Limited vs. Manubhai Dharamasinhbhai Gajera and others[9] had considered the circumstances when reading an unexpressed term in an agreement would be justified on the basis that such a term was always and obviously intended by and between the parties thereto. Certain observations in this regard expressed by Courts in some foreign jurisdictions were noticed by this court in para 51 of the report. As the same may have application to the present case it would be useful to notice the said observations:
"51.........Prima facie that which in any contract is left to be implied and need not be expressed is something so obvious that it goes without saying; so that, if, while the parties were making their bargain, an officious bystander, were to suggest some express provision for it in their agreement, they would testily suppress him with a common 'Oh, of course! Shirlaw v. Southern Foundries (1926) Ltd. KB P.227 "An expressed term can be implied if and only if the court finds that the parties must have intended that term to form part of their contract: it is not enough for the court to find that such a term would have been adopted by the parties as reasonable men if it had been suggested to them: it must have been a term that went without saying, a term necessary to give business efficacy to the contract, a term which, although tacit, formed part of the contract which the parties made for themselves. Trollope and Colls Ltd. v. North West Metropolitan Regl. Hospital Board (1973) 2 All ER P.268 a-b".
(b) Nabha Power Ltd. Vs. Punjab SPCL (2018) 11 SCC 508:
"49. We now proceed to apply the aforesaid principles which have evolved for interpreting the terms of a commercial contract in question. Parties indulging in commerce act in a commercial sense. It is this ground rule which is the basis of The Moorcock test of giving " business efficacy"
to the transaction, as must have been intended at all events by both business parties. The development of law saw the " five conditions test" for an implied condition to be read into the contract including the " business efficacy" test. It is also sought to incorporate " the officious By Stander Test"(Shirlaw Vs. Souther Foundries (1926) Ltd.). This test has been set out in B.P. Refinery (Westernport) Proprietory Ltd. Vs. Shire of Hastings requiring the requisite conditions to be satisfied: (1) reasonable and equitable; (2) necessary to give business efficacy to the contract; (3) it goes without saying i.e. the Officious Bystander Test: (4) capable of clear expression; and (5) must not contradict any express terms of the contract. The same penta-principles find reference also Investors Compensations Scheme Ltd. Vs. West Bromwich Buildings Society and Attorney General of CS (Comm) No. : 02/2022 & 392/2022 29/81 Belize Vs. Belize Telecom Ltd. Needless to say that the application of these principles would not be able to substitute this court's own view of the presumed understanding of commercial terms by the parties if the terms are explicit in their expression. The explicit terms of a contract are always the final word with regard to the intention of the parties. The multi-clause contract inter se the parties has, thus, to be understood and interpreted in a manner that any view, on a particular clause of the contract, should not do violence to another part of the contract".
44. Perusal of record rather reveals that defendant had communicated in unequivocal terms, of his intention to vacate the leased premises by 28.02.2021. Defendant has also not disputed its liability to pay rent for the month of Febraury 2021 as well. Merely because the defendant decided to take out its goods from the leased premises prior to the last date of the tenancy, ipso facto cannot be considered the violation of any terms and conditions of the lease by the defendant or the premature vacation of the suit premises.
45. Ld. counsel for defendant further submitted that:
" the clause requiring payment of six month's rent is in the form of a penalty imposed upon the defendant. It is settled law that in the case where damages in the case of breach of a stipulation of a contract is by way of penalty, only " reasonable compensation not exceeding the penalty stipulated" must be awarded by the court. This compensation, however, can only be awarded to " make good loss or damage which naturally arose in the usual course of things".
"if the plaintiff's assertion is taken to be correct, then "the rent for the entire period of 6 months" would be payable regardless of the date of breach. Even if the Defendant had terminated the lease on 27 February 2021 (one day before the Lease Agreement expired), the liability for payment of 6 months' rent would have been attracted by virtue of the aforesaid term. The Plaintiff would then (i) receive rent for a period not even CS (Comm) No. : 02/2022 & 392/2022 30/81 contemplated under the Lease Agreement, and (ii) receive rents vastly in excess of what was contemplated under the Agreement. This clause would not be providing "reasonable compensation"
or "make good loss or damage which naturally arose in the usual course of things" for the loss of rent for a day, but rather results in the plaintiff unjustly enriching itself. Therefore, as the term of the lease agreement is in the form of a penalty, plaintiff was under the obligation to also prove losses suffered by it due to the alleged breach, which it has not done".
46. Reliance was placed upon Fateh Chand Vs. Balkishan Dass, 1963 SCC Online 49, wherein it was observed that:
8. The claim made by the plaintiff to forfeit the amount of Rs 24,000 may be adjusted in the light of Section 74 of the Indian Contract Act, which in its material part provides:
"When a contract has been broken, if a sum is named in the contract as the amount to be paid in case of such breach, or if the contract contains any other stipulation by way of penalty, the party complaining of the breach is entitled, whether or not actual damage or loss is proved to have been caused thereby, to receive from the party who has broken the contract reasonable compensation not exceeding the amount so named or as the case may be, the penalty stipulated for."
The section is clearly an attempt to eliminate the sometime elaborate refinements made under the English common law in distinguishing between stipulations providing for payment of liquidated damages and stipulations in the nature of penalty. Under the common law a genuine pre-estimate of damages by mutual agreement is regarded as a stipulation naming liquidated damages and binding between the parties : a stipulation in a contract in terrorem is a penalty and the Court refuses to enforce it, awarding to the aggrieved party only reasonable compensation. The Indian Legislature has sought to cut across the web of rules and presumptions under the English common law, by enacting a uniform principle applicable to all stipulations naming amounts to be paid in case of breach, and stipulations by way of penalty.
10. Section 74 of the Indian Contract Act deals with the measure of damages in two classes of cases (i) where the contract names a sum to be paid in case of breach and (ii) where the contract contains any other stipulation by way of penalty. We are in the present case not concerned to decide whether a contract containing a covenant of forfeiture of deposit for due performance of a contract falls within the first class. The measure of damages in the case of breach of a stipulation by way of penalty is by Section 74 reasonable compensation not exceeding the penalty stipulated for. In assessing damages the Court has, subject to the limit of the penalty stipulated, jurisdiction to award such compensation as it deems reasonable having regard to all the circumstances of the case. Jurisdiction of the Court CS (Comm) No. : 02/2022 & 392/2022 31/81 to award compensation in case of breach of contract is unqualified except as to the maximum stipulated; but compensation has to be reasonable, and that imposes upon the Court duty to award compensation according to settled principles. The section undoubtedly says that the aggrieved party is entitled to receive compensation from the party who has broken the contract, whether or not actual damage or loss is proved to have been caused by the breach. Thereby it merely dispenses with proof of "actual loss or damage"; it does not justify the award of compensation when in consequence of the breach no legal injury at all has resulted, because compensation for breach of contract can be awarded to make good loss or damage which naturally arose in the usual course of things, or which the parties knew when they made the contract, to be likely to result from the breach."
47. Ld. counsel for defendant further submitted that in the present case, the loss resulting from the early vacation of a lease deed must be proved by showing proof of loss of rent and the same cannot merely be pleaded in order to obtain any relief in the form of compensation. Reliance was further placed upon Deepak Chopra Vs. FLAKT (India) (P) Ltd. 2020 SCC Online Del 103, wherein it was observed that:
" 11. The position with respect to rent of lock-in period is akin to that of earnest money/security and qua which the Supreme Court in Kailash Nath Associates v. Delhi Development Authority, (2015) 4 SCC 136, followed by me in Speed Track Cargo v. State Bank of Patiala, 2016 SCC OnLine Del 919, Palm Art Apparels Pvt. Ltd. v. Enkay Builders Pvt. Ltd., 2017 SCC OnLine Del 12776, Mera Baba Pvt. Ltd. v. Ram Lubhaya Puri, 2018 SCC OnLine Del 9502, Klintoz Pharmaceuticals Pvt. Ltd. v. Ravinder Shankar Mathur, 2018 SCC OnLine Del 11954, Satish Verma v. Garment Craft (India) Pvt. Ltd., 2018 SCC OnLine Del 6829 and Mahendera Verma v. Suresh T. Kilachand, 2019 SCC OnLine Del 9333, held that mere entitlement in the agreement to forfeit is not enough and loss/damages from breach of contract has to be proved. In fact, the matter is no longer res integra. The Division Bench of this Court in Tower Vision India Pvt. Ltd. v. Procall Pvt. Ltd., 2012 SCC OnLine Del 4396 (DB) has held that rent of the lock-in period in a Lease Deed cannot be claimed without pleading loss from vacation by the tenant of the property prior to the expiry of the term of lease. I have also, following the said dicta of the Division Bench, in order dated 2nd December, 2019 in CS (COMM) 1438/2016 titled L.R. Builders Pvt. v. Goldenera Leisure & Entertainment Pvt. Ltd. and order dated 18th December, 2019 in CS (OS) 1789/2006 titled Sunita Rekhi v. Y.D. Puri taken the same view. "
48. It was stated that it is an admitted position by the plaintiff that after 28 February 2021, the leased premises was given on rent to third party from 1 March 2021 itself i.e. from the very CS (Comm) No. : 02/2022 & 392/2022 32/81 next date after the conclusion of the lease period. Therefore, no loss of rent was suffered by the plaintiff after 28th February 2021 at all.
49. Plaintiff cannot be said to be entitled for payment against six months rent in terms of the penalty clause in lease deed for the reasons, firstly that the lease deed in question is inadmissible document, being unregistered and insufficiently stamped. Secondly, six months rent was payable only upon defendant vacating the premises prior to expiry of lock-in period of 24 months. Even on that aspect, merely for moving out the defendant's good prior to expiry of the period of lease, it cannot be termed that defendant had prematurely vacated the leased premises , more particularly when the defendant has not disputed its liability to pay the rent for the month of February 2021 as well. It is also admitted fact on record that premises in question was rented out to Trigon Digital w.e.f. 01.03.2021, thereby, as rightly submitted by Ld. counsel for defendant, no loss of rent was suffered by the plaintiff after 28.02.2021. Hence, on all the aspects i.e. with regard to inadmissibility of the lease deed and also that even otherwise defendant had not vacated the suit property prior to expiry of lock-in period and further plaintiff had not suffered any loss, case of plaintiff is not made out for recovery of rent for the period of six months.
50. Claim for adjustment against the security deposit: It is admitted fact on record that the security deposit in sum of Rs. 3,65,316/-, equivalent to two months rent, as interest free security deposit was made to the plaintiff, refundable on the expiry of the lease period or at the time of handing over of the actual vacant physical possession of the leased premises to the plaintiff after deducting the dues, arrears and cost of damages, if any, as recited in the lease deed.
CS (Comm) No. : 02/2022 & 392/2022 33/8151. Ld. counsel for defendant without prejudice to the admissibility of the terms of lease agreement Ex. P-1 submitted that plaintiff was in possession of the security deposit in sum of Rs. 3,65,316/- which was paid by the defendant. It was acknowledged on behalf of defendant in the written submissions that the rent (alongwith increase) for the period of January and February 2021, amounting to Rs. 4,48,314/- could not be fully set off against the security deposit of Rs. 3,65,316/-. Therefore, defendant was willing to either make the payment of Rs. 82,998/- to the plaintiff or if court grants any amount to the defendant under its counter claim, same may be set off. Ld.counsel for defendant further submitted that as the Lease Agreement is now a lease with month-to-month tenancy, the security deposit of Rs. 3,65,316 must be seen as a mere advance payment made to the Plaintiff which can be set off/adjusted against the rent of January and February 2021. As further submitted, there is no clause in the Lease Agreement which forbids the Defendant to adjust the outstanding rent against the security deposit. In fact, the lease agreement states that the security deposit shall be refunded " after deducting the dues, arrears." Thus, the outstanding rent of Rs. 4,48,314/- can be adjusted against the security deposit.
52. Ld. counsel for plaintiff, per contra, submitted that "defendant has not claimed set off qua the security deposit but claimed set off qua its claims for the alleged goods as raised in its counter claim. Defendant has failed to claim set off and mentioned its particulars in terms of Order 8 Rule 6 CPC. Further no such document or terms/stipulations were made between the parties to adjust the security deposit with the rent nor the said security deposit was to be considered as advance monthly rental, while plaintiff also refused to adjust the rent with security deposit".
CS (Comm) No. : 02/2022 & 392/2022 34/8153. DW1 in cross examination had admitted the payment of Rs. 3,65,356/- for two months rent. Although DW1 negated that there was any condition that the security deposit made in the lease deed dated 01.03.2019 would be adjusted against the rent of the last two months of the lease, however proceeded to state that since the agreement was not registered, they did not consider the same as valid agreement, hence they had adjusted the rent with the security deposit. He also negated that defendant ever communicated to the plaintiff that security deposit would be adjusted with the rent at the time of payment of security deposit and reiterated the earlier understanding that the subject rent agreement was not registered and they had communicated it on 17.08.2020 that they would adjust the rent with the security deposit. He acknowledged that the plaintiff did not agree to adjust the rent against the security deposit subsequent to the communication made by defendant in this regard. DW1 further reiterated that it was against two months advance rental and the agreement was not registered. He stated that they were not considering that the security deposit was made for the damages but it was for the advance rental. He acknowledged that there was condition in respect of refund of the security deposit in the unregistered agreement.
54. According to DW1, defendant had made the monthly payments for each month. Lease was to expire on 28.02.2021 and they did not want to extend the lease period and wanted to adjust the advance rent deposit of two months against the month of January and February 2021. Further according to him, advance rent deposit means that rent already deposited for two months in advance shall be adjusted at the time of expiry of agreement in its last two months.
CS (Comm) No. : 02/2022 & 392/2022 35/8155. Apparently, this witness was conscious of the fact that in terms of the lease deed, security amount deposited, which was equivalent to two months rent, was not to be adjusted or to be considered as advance rental or the adjustment for the payment of last two months but was against the damages, dues, arrears etc. Nevertheless, he sought to derive the benefit of the lease deed being inadmissible document for want of its registration and insufficiency of stamps. Earlier vide email dated 17.8.2020 Ex. P-6 , defendant had sought adjustment of three months of rent but later on probably realising that the security deposit was only equivalent to two months rent amended the said stipulation and sought adjustment of the rent for the months of January and February 2021, out of the security deposit.
56. The purpose of security deposit is to provide security and protection to both the landlord and tenant. The deposit acts as financial security to cover the cost of repair, any damage to the property, caused by the tenant beyond normal wear and tear. If the tenant fails to pay rent or any other dues, the security deposit can be used to cover the outstanding amount . It provides a safeguard in case the tenant breaches the terms of the agreement or vacates the property without notice. As per general practice, the deposit is refundable at the end of the lease term if the tenant fulfills all obligations and the property is returned in good condition. Therefore, security deposit cannot be considered as advance rental amount as sought to be projected by defendant's witnesses.
57. Rent for two months was tendered as security deposit at the inception of lease with annual increase in terms of the contents of lease deed (though inadmissible). Defendant has not disputed the amount of rental for the months of January and February 2021 at Rs. 4,48,314/-. In terms of the own statement of CS (Comm) No. : 02/2022 & 392/2022 36/81 DW1 in cross examination, the electricity bill for the month of February 2021 had not been paid and plaintiff was yet to calculate for the purpose of claim of damages from the defendant prior to which defendant had sought adjustment of rent from the security deposit which was not even the exact amount payable to the plaintiff against the two months rent i.e. for the months of Jannuary 2021 and February 2021. Defendant did not wait for settlement of dues with plaintiff prior to seeking adjustment of two months rent from security deposit. Defendant, in these circumstances, is liable to make payment of rent for the months of January and February 2021.
58. Claim of plaintiff for damages of Rs. 10 lacs: Plaintiff has further claimed amount of Rs. 10 lacs for the damages caused to the leased premises by defendant. The unregistered lease deed contained the stipulation that the defendant shall restore the lease premises to its original position and condition at the time of handing over the vacant actual physical possession of the leased premises to the plaintiff. As submitted by Ld. counsel for plaintiff, defendant was fully aware of the damages caused to the leased premises. Upon inspection of the leased premises, it was revealed to the Plaintiff that the Defendant has caused considerable and extensive damages to the leased premises and failed to restore and handover the possession of leased premises in its original position. Further, it was revealed to the Plaintiff that the damages caused by the Defendant required thorough and extensive repair and restoration work. Thereafter upon taking cost estimation for the said work, the same was assessed and quantified at Rs. 10,00,000/- (Rupees Ten Lakhs Only) approximately, whereas some maintenance was carried out by the Plaintiff, however other work required considerable monetary CS (Comm) No. : 02/2022 & 392/2022 37/81 resources including removal of logo which the Plaintiff only assessed and sought money from the Defendant.
59. Ld. counsel for defendant, per contra, submitted that without prejudice to the defendant's arguments on the inadmissibility of the 2019 lease deed, plaintiff has failed to prove on record the damages. Attention of this court was drawn to the following points:
(a) That, plaintiff in its Legal Notice dated 22 February 2021, stated that it allegedly discovered damages in the Leased Premises in the second week of February, and "upon taking cost estimations for the said work, the same was quantified at Rs.
10,00,000/- . Thereafter, in its Plaint, plaintiff asserted that "The Plaintiff undertook the restoration and repair work and the same amounted and costed Rs. 10,00,000/- to the plaintiff".
(b) That, despite claiming in its plaint that it had spent Rs. 10 lacs for " the restoration and repair work", the plaintiff has failed to plead the details of the damages suffered by it in the plaint and also place any invoices etc. on record to prove its damages. As the plaintiff has admitted that the quantification of its claim for damages being Rs. 10 lacs is based on the restoration work already undertaken by it, it is clear that at the time of filing its plaint, plaintiff was aware of all documents it needed to file to prove its damages. Reliance was placed upon following:
a) Kailash Nath Associates v. DDA, (2015) 4 SCC 136:
33. Section 74 occurs in Chapter 6 of the Indian Contract Act, 1872 which reads "Of the consequences of breach of contract". It is in fact sandwiched between Sections 73 and 75 which deal with compensation for loss or damage caused by breach of contract and compensation for damage which a party may sustain through non-fulfillment of a contract after such party rightfully rescinds such contract. It is important to note that like Sections 73 and 75, compensation is payable for breach of contract under Section 74 only where damage or loss is caused by such breach.CS (Comm) No. : 02/2022 & 392/2022 38/81
34. In Fateh Chand v. Balkishan Das, 1964 SCR (1) 515, this Court held:
"The section is clearly an attempt to eliminate the somewhat elaborate refinements made under the English common law in distinguishing between stipulations providing for payment of liquidated damages and stipulations in the nature of penalty. Under the common law a genuine pre-estimate of damages by mutual agreement is regarded as a stipulation naming liquidated damages and binding between the parties:
a stipulation in a contract in terrorem is a penalty and the Court refuses to enforce it, awarding to the aggrieved party only reasonable compensation. The Indian Legislature has sought to cut across the web of rules and presumptions under the English common law, by enacting a uniform principle applicable to all stipulations naming amounts to be paid in case of breach, and stipulations by way of penalty."
b) Punj Lloyd Ltd. v. IOT Infrastructure and Energy Services Ltd., 2018 SCC OnLine Bom 19741:
" 13. The cases, which are discussed above, indicate an established policy of law so far as India is concerned of only reasonable damages to be awarded in case of breach of contract. In the first place, it important to note that damages are awarded by Indian courts as a compensatory measure and never as a punitive measure. The rationale behind such award is that the party who suffers from a breach of contract must be put in the same position that it would have been in had the contract not been broken. This is universally accepted in India both as a correct rationale and measure of damages. Section 73 of the Contract Act contains a general principle for award of such damages, and Section 74 is merely an extension of it, to be applied, as we have seen above, to particular cases where either a sum is mentioned in the contract as payable in case of a breach or a penalty is stipulated. Section 74, as we have seen above, has to be read along with Section 73. It does not confer any special benefit upon any party; it merely provides for award of reasonable compensation not exceeding the amount of liquidated damages or penalty stipulated in the contract, whether or not actual damage or loss is proved to have been caused by breach of contract. It does not follow that because it so provides, it dispenses with loss or damage by itself. Obviously, when no loss is suffered, it cannot be said that the amount stipulated as liquidated damages should still be awarded. The very clause of liquidated damages operates when loss is suffered. As the Supreme Court has reiterated in Kailash Nath Associates (supra), damage or loss caused is a sine qua non for the applicability of Section 74. What the expression "whether or not actual damage or loss is proved to have been caused thereby" means is that where it is possible to prove actual damage or loss, it is only such damage or loss that may be compensated for as reasonable damages; and in cases where such damage or loss is difficult or impossible to prove, then the liquidated amount named in the contract, if a genuine pre-estimate of damage or loss, may be awarded. That merely reflects on the court's discretion in the matter and its exercise. The liquidated sum named in the contract, in other words, is to be taken into account for ascertaining reasonableness of compensation and not as a dispensation of proof of loss or damage. In sum, even in a case the contract provides for liquidated damages and the court is of the view that what is CS (Comm) No. : 02/2022 & 392/2022 39/81 provided for is in fact a genuine pre-estimate of damages, it is imperative for the party who has suffered breach of contract to plead and make out a case of having suffered a loss. There may be cases where the factum of such loss may be obvious, but its actual measure may not be capable of proof or may be difficult to prove. In that case, if the court finds that the liquidated amount named in the contract is a genuine pre-estimate of damage or loss contractually made by the parties, the court may award such amount as reasonable damage in its discretion. The statement of law to be found in paragraph 43.1 of Kailash Nath Associates in this behalf only means that it will be legitimate for the court to award the liquidated sum named in the contract as reasonable compensation wherever such sum is a genuine pre- estimate of damages fixed by both parties and found to be such by the court; it does not imply that in all cases when it is so, the court is bound to award such liquidated sum. The award of such liquidated sum, or any compensation for that matter, is within the discretion of the court and such discretion must be exercised on sound principles applicable under Section 73 with particular reference to the injury or loss resulting from the breach of contract complained of. Wherever it is possible to prove actual damage or loss, the party complaining of breach must tender its proof. If such proof is impossible or difficult to produce, the aggrieved party must make out such case and thereafter, call upon the court to award the liquidated amount named in the contract as reasonable damages, and the court may do so in exercise of its discretion."
(c) That, plaintiff has also filed a Statement of Truth with its plaint that " all documents in the power, possession, control or custody of the plaintiff pertaining to the facts and circumstnces of the proceedings have been disclosed". However, it has failed to place on record any invoices etc. towards the alleged damages.
(d) That, despite the defendant categorically pointing this out in its written statement, plaintiff did not enclose any document alongwith its rejoinder and rather stated " it is denied that the plaintiff has not filed any document or evidence in respect of damages claimed by the plaintiff. It is submitted that the plaintiff also reserves the right to produce additional evidence to support its claim for damages to the lease premises and restoration of the same". It is, therefore, clear that the plaintiff had not exercised any due diligence to file the necessary documentary evidence with its pleadings, though the invoices were in its possession during this time.
CS (Comm) No. : 02/2022 & 392/2022 40/81(e) That, it is settled law that due to special nature of Commercial Suits, the provisions of the CPC (amended by the Commercial Courts Act, 2015) must be construed strictly, and the Court cannot ignore the fact that the Plaintiff willingly chose to forego filing the requisite documents to make out its case for damages along with its pleadings. It is also settled under Order XI Rule 1(5) of the CPC (amended by the Commercial Court's Act, 2015), that to justify a belated filing of additional documents not otherwise filed along with its pleadings, a party must show "reasonable cause" justifying such a belated filing, and must also seek leave of the Court to file it thereafter.
(f) That, Plaintiff has placed on record only one invoice allegedly raised on it by "Nishahat Ali Painting Contractor" for Rs. 22,000, in support of its contention that the repair work that allegedly amounted to 10 Lakhs, which was not annexed to the Plaint or its Rejoinder and was brought on record for the first time before this Court alongwith the report of the Local Commissioner dated 4 August 2023, but no liberty was permitted to plaintiff to file additional documents to prove its case for damages.
(g) As the plantiff failed to establish a reasonable cause for the delay of more than one year in filing its invoices, and has also failed to seek leave of the Court to file its invoices through the Report of the Local Commissioner, the invoice by "Nishahat Ali Painting Contractor" amounting to 22,000 is liable to be struck off the record, as the same is inadmissible as per law.
60. Reliance was placed upon following:
1) TTK Prestige Lala Baghla Sanitaryware Pvt Ltd & Ora, CS (COMM) 281 of 2021 :
17. Order XI Rule 1(1) of CPC, as applicable to commercial suits, gives the first opportunity to a plaintiff to file documents on which they choose to rely upon at the time of filing of the suit. Such filing is done along with a CS (Comm) No. : 02/2022 & 392/2022 41/81 declaration that all documents in the power, possession, control or custody of the plaintiff, pertaining to facts and circumstances of the proceedings initiated, have been disclosed and copies have been annexed with the plaint.
Order XI Rule 1(3) CPC in fact furthers includes as part of the declaration that "the plaintiff does not have any other documents in its power, possession, control or custody". Thereafter, Order XI Rule 1(5) CPC follows, which precludes the plaintiff from relying on documents which were in their power, possession, control or custody but not disclosed with the plaint, save and except with the leave of the Court. What is underscored here is that the provision necessitates that such leave by the Court shall be granted only upon the plaintiff establishing reasonable cause for non- disclosure along with the plaint. Thus, the plaintiff has the option of disclosing documents which they choose to rely upon and if not disclosed, the same cannot be allowed unless reasonable cause is established.
2) CEC-CICLJVv Oriental Insurance Co. Lat. 2024 SCC OnLine Del 3766:
"16. Further, Order XI Rule 1 (c) (ii) read with Order XI Rule 5 of CPC under the Commercial Courts Act, 2015, mandates that the plaintiffs shall file a list of all the documents in its power, possession, control and custody along with the Plaint thereof. Further, Order XI Rule 1(4), CPC, permits additional documents to be filed by the plaintiff within 30 days of filing of the Suit, subject to the grounds of leave of the Court."
61. While the plaintiff had pleaded that it undertook restoration and repair work but in cross examination PW1 stated that the defendant displayed many windows for their exhibition purpose which were grounded on the floor. Defendant installed a logo on the third floor Façade and nearby 11 KW BSEB wires were passing by. So the defendant knew about the damages related to its removals. Also they had installed some external blinds, which were removed abruptly making lot of damage there and they had taken remotes of installed glass integrated blinds. PW1 admitted that "it was not communicated in written to the defendant that they had displayed many windows for their exhibition purpose which were grounded on the floor". He further stated that "as per the agreement, it was understood that the defendant will hand over the possession of the leased premises in its original position at the end of the lease deed". PW1 failed to point out from the plaint, replication or his CS (Comm) No. : 02/2022 & 392/2022 42/81 evidence affidavit where had he mentioned that the defendant had installed windows for exhibition, grounded to the floor.
62. DW2, nevertheless himself, admitted that the lease premises had structure affixed to its floor, to display frames, to prospective customers. Though he sought to clarify that the ground floor was being used as a display center but the structure was temporary, while also acknowledging that the structure was fixed through the wooden cavity. They had made holes in the floor to fix the wooden cavity for easy removal and defendant removed the said fixtures from the leased premises. In answer to the question whether they had filled the holes made for fixing the structures at the leased premises, he answered in affirmative stating that they had covered the same. He was put question whether they had taken permission from the plaintiff for making such holes, to which he explained that as Mr. Arun Sharma was the Director in both the plaintiff and the defendant company and he was present at the time of making these holes and the same was not objected by him, hence, there was no need for taking permission from the plaintiff for making such holes.
63. With regard to the basis on which plaintiff has calculated the damages @ Rs. 10 lacs, PW1 answered that it was based upon the estimation taken from the stake holders who were mason, plumber, painter, contractor and the persons dealing with insulated scaffoldings which were approximately at height of 20 to 25 meters. This estimate was taken from these various stake holders in the second week of February 2021 as stated by PW1. In answer to the question whether the alleged estimation and the actual cost of repair work on the leased premises both were for exactly Rs. 10 lacs, he stated that they had not done the complete repair work in the leased premises as the cost to be incurred on the removal of logo and damage caused to the outer portion of CS (Comm) No. : 02/2022 & 392/2022 43/81 the leased premises was still pending to be repaired. Hence, the complete estimate and actual cost of repair work was still pending to be estimated and was not clear to them.
64. With regard to the allegations of the plaintiff regarding the defendant taking the remote of the blinds façade, PW1 stated that he had personal knowledge of the same. To the question whether he had seen the defendant takng the remote of the blinds façade, he stated that he had not seen from his eyes who had taken away the remote by putting in its pocket as it is a small remote. After 12/13 February 2021 as they wanted to lease out the same leased premises to the other prospective tenants it was discovered that they were unable to operate the blind as the remote was missing.
65. Ld. counsel for defendant submitted that it was during the stage of cross examination of plaintiff that he raised a new ground that the defendant had allegedly taken away the remote controls of the Blind facades upon their alleged inspection of the Leased Premises. Plaintiff nevertheless has not pleaded that the damages for Rs. 10 lacs includes any loss of remote controls of the Blind facades, neither led any evidence regarding the same nor established on record, defendant taking away remotes.
66. With regard to the logo of the defendant which was present on the third floor of the building where the Leased Premises was situated ("Okhla Premises"), PW-1 stated that the logo had not been removed from the Leased Premises at the time of institution of the suit and further stated that it was likely to cause damage whenever the logo would be removed.
67. There is no substantiation to the claim of plaintiff with regard to the damages caused to the premises or the quantification of the same at Rs. 10 lacs. It is also correct that invoice from Nishahat Ali Painting Contractor was not placed on record earlier but was put before Ld. LC upon appointment of CS (Comm) No. : 02/2022 & 392/2022 44/81 LC to take photographs of the goods/articles/fixtures at the suit premises and to report about ownership of the said articles by matching the said articles with the invoices filed on record with the counter claim or those which may be produced by the defendant before Ld. LC at the time of inspection. Even otherwise, the invoice in sum of Rs. 22,000/- is pertaining to Paint and Repairing for ground floor and first floor dated 04.03.20, by which time, the first floor of the premises has already been rented out in favour of M/s Trigon Digital. Plaintiff has not even explained the extent of alleged damage caused to the property by defendant. No estimate obtained from expert, nor statement of expenditure incurred by plaintiff for repair of such damages has been placed on record. Besides that, no statement pertaining to any expenses incurred or payment made to repair the damages, if any, caused by defendant have been filed during the course of proceedings spanning over a period of three years. Plaintiff had let out first floor of the premises to another entity namely Trigon w.e.f. 01.03.2021 itself. However, plaitniff has claimed damages for repairs based solely on the estimates rather than actual repair costs except for the handwritten bill raised by Nishahat Ali Ex. PW1/32 (colly) dated 4 th March (year is not clearly legible), for which also, it is not explained whether the same pertained to normal wear and tear or due to the damage caused by the defendant. There is also no explanation as to how the premises was let out while the alleged repair work was still pending. This raises questions regarding the necessacity, extent and execution of the claimed repair work, weakning the plaintiff's claim for damages based on speculative estimates rather than concerete evidence of expenses incurred.
68. Logo: Plaintiff has claimed that defendant installed a logo on the third floor Façade and nearby 11 KW BSEB wires were CS (Comm) No. : 02/2022 & 392/2022 45/81 passing by. So the defendant knew about the damages related to its removal . PW-1 stated that the logo had not been removed from the Leased Premises at the time of institution of the suit and further stated that it was likely to cause damage whenever the logo would be removed. In answer to the question whether the alleged estimation and the actual cost of repair work on the leased premises both were exactly Rs. 10 lacs, he stated that they had not done the complete repair work in the leased premises as the cost to be incurred on the removal of logo and damage caused to the outer portion of the leased premises was still pending to be repaired. Hence, the complete estimate and actual cost of repair work was still pending to be estimated and was not clear to them. However, DW1 stated that removal of the logo was discussed telephonically with the plaintiff, but the same was stopped, due to the condition that defendant shall pay security cheque for any damage caused to the property due to removal of the said logo.
69. Fact remains that logo of the defendant is still installed in the property of the plaintiff. So much so, defendant got legal notice issued upon the plaintiff dated 26.10.2021 Ex. D-20 for infringement of trademark of the defendant on the ground of unauthorized user of the trademark of defendant on the premises of plaintiff. It was submitted by Ld. counsel for defendant that "as on date, there is no damage caused to the Leased Premises due to the logo installed at the Okhla Premises.Plaintiff has failed to prove any damages allegedly suffered by it. It is trite that any party seeking compensation must prove the loss caused to it".
70. Nevertheless, as brought on record, defendant was and is willing to remove the logo, if so permitted by the plaintiff. Plaintiff itself did not remove the same prior to or during the pendency of the suit. It neither sought permission from the court or direction to the defendant for removal of the same nor brought CS (Comm) No. : 02/2022 & 392/2022 46/81 on record the estimate of expenditure for removal of the same. Speculative amount of Rs. 5,00,000/- out of the claim of damages of Rs. 10 lacs, therefore, is not warranted to be awarded. Nevertheless, in these circumstances, considering that the logo of the defendant, as on date is still occupying the place on the outside facade of the plaintiff, in the interest of justice, it is directed that defendant shall remove the logo from the premises of the plaintiff within a period of two weeks, with prior intimation to plaintiff. Defendant shall ensure that no damage is caused to the property of plaintiff during the process of removal of the logo. Plaintiff shall permit ingress of defendant for the said purpose . Issues no. 1 & 4 stand decided in above terms.
Issues no. 2 & 3:
71. Defendant had claimed that it had installed various items/equipments at its own expenses in the leased premises. The decision of entering into the lease agreement was also taken by the Director of defendant Mr. Arun Sharma who was also the Director of the plaintiff at the time of entering into the lease agreement of 2016. In furtherance of his decision as Director of the plaintiff, defendant and its employees were given access to the leased premises even prior to entering into the 2016 lease agreement. At the time of entering into 2016 lease,the leased premises was still under construction and certain movable goods and equipments were ordered by the defendant to be installed during such construction. Leased premises was formally inaugurated on 01.9.2016 after which various team members of the defendant started working from the leased premises.
72. At the time of vacation of the suit premises defendant discussed with regard to removal of the furnitures and fixtures in the leased premises and sought negotiation on the payment for the windows, doors, shutters and ACs installed by defendant.
CS (Comm) No. : 02/2022 & 392/2022 47/81According to defendant, defendant was informed that it can remove furniture and other small items from the leased premises. Vide email dated 29.12.2020 defendant listed out the items which were allegedly the property of the defendant and conveyed its intentions to move those items, however, vide reply of plaintiff dated 30.12.2020, plaintiff did not acknowledge installation of windows and shutter by the defendant. It is submitted that it was always the understanding between the parties that windows and shutter would be retained by the plaintiff whenever defendant would exit the leased premises.
73. On the failure of the plaintiff to give the offer for purchase of the same, defendant sought cooperation from the plaintiff for removal of the AC, door, windows and other items which were installed by the defendant in the leased premises. Subsequent thereto, plaintiff did not wait for handing over of the keys of the premises to the plaintiff and prior thereto broke into the leased premises. It was submitted that plaintiff was enjoying the benefits of the items installed by the defendant, which were brought by defendant to improve the usability of the leased premises for its business. These goods which were lawfully owned by the defendant, as stated, have been misappropriated by the plaintiff, hence defendant sought return of the goods intalled in the leased premises by the defendant or in the alternative sought amount of Rs. 12,19078/-. Further, defendant claimed to have installed two 'Carrier 5.0 TR Ductable' Air Conditioners as well as Projector and Screen and also raised claim for Refrigertor. According to defendant, these goods were owned by the defendant which had been misappropriated by the plaintiff who continued to unlawfully gained from its use.
74. In support of the said assertion i.e. pertaining to installation of door, windows and shutter, defendant/counter CS (Comm) No. : 02/2022 & 392/2022 48/81 claimant relied upon the invoices Mark A to Mark L . Defendant did not have the originals of the invoices because its erstwhile Director Mr. Arun Sharma (who is also the Director of the plaintiff) had the originals in his possession. Defendant got notice dated 28.06.2022 issued upon the plaintiff for production of the original documents.
75. Per contra, plaintiff's stand was that all the fixed windows, doors etc. were installed by the plaintiff and did not belong to the defendant which was also informed to the defendant vide email dated 30.12.2020. However, defendant did not respond to the contents of the plaintiff's email and after a period of 2 monhs vide email dated 02.02.2021, though sought to remove the air conditioners but did not mention any other items as mentioned inthe previous email dated 29.12.2020. Plaintiff immediately responded that defendant was free to remove their ACs and also informed defendant that they had already taken along everything essentially while vacating the leased premises. The said communication of the plaintiff was never responded to by the defendant. After receipt of legal notice dated 22.2.2021 only, defendant sought time for formal handing over of the keys and to complete the handover. But instead of replying to the legal notice, itself got issued legal notic Ex. P-25 to Mr. Arun Sharma wherein also there was no mention regarding goods allegedly usurped by the plaintiff or its directors. Further, instead of pursuing legal recourse for its alleged usurped goods, defendant filed a police complaint against the plaintiff's Director Mr Arun Sharma.
76. Both the parties relied upon the invoices with regard to purchase of the installations in the leased premises. Defendant had filed on record the copies of the invoices, oringals of which were alleged to be in possessionof Mr. Arun Sharma who was the CS (Comm) No. : 02/2022 & 392/2022 49/81 then Director of the defendant. In cross examination, PW1 was asked to confirm whether he was Director of defendant during the period of tenancy i.e. February 2016 to October 2016 to which he answered in affirmative. It was also acknowledged by PW 1 that he was the Director in Defendant company which was operating from Lajpat Nagar, New Delhi. He also admitted that the property in question belonged to him and his wife. However, he denied that since he was the Director of both the plaintiff and defendant company he unilaterally made the decision pertaining to the leased premises without reducing them in writing.
77. Invoices pertaining to the disputed items were also placed on record by the plaintiff. PW1 was asked on which basis, he had access to the original invoices which were exhibited on record, to which he answered that he had parted with the defendant company in August-September 2019 as whole time director and after his resignation from defendant company, he got the access of all the original invoices from plaintiff company. However, he denied that he had access to the original invoices of the defendant company when he was the Managing Director of the defendant company or that he continued to have access to those original invoices. He stated that in the beginning of company formation, he was the only incharge of day to day management and later couple of more managers were engaged. In answer, with regard to the possession of the original invoices of the defendant company till March 2019, he stated that from 2008, till 2014, the accounts were maintained in Delhi and later were shifted to Baroja, Gujarat. Although he admitted that he had access to the invoices during the said period but stated that the invoices were not directly in his possession as the Director of the defendant company as he used to travel a lot. PW 1 acknowledged that there was communication between the parties wherein defendant CS (Comm) No. : 02/2022 & 392/2022 50/81 had allegedly said that they had made some expenditure for building the showroom and they wanted plaintiff to make a counter offer for the alleged items if the plaintiff was interested. He did not remember whether the plaintiff had objected to the installation of these items, equipments fixtures for display on the ground floor of the leased premises, in view of his earlier answer that after taking the leased premises with effect taken from 01.03.2016, the defendant stated installing/putting all items, equipments, fixtures for display after taking over of the leased premises, however he further stated that defendant had already taken everything much prior to 28.02.2021 which was not objected by the plaintiff.
78. Pertaining to the alleged requirement/necessitity for the defendant to install its own equipments, fixtures etc., PW1 was asked the date by which the leased premises was ready for occupation, to which he answered that it was ready for occupation by February 2016 in sealed and locked condition . According to him, however, after taking the leased premises on lease from 01.03.2016, defendant started installing/putting all items, equipments, fixtures for display after taking over the leased premises. He denied that defendant was never given 'ready to move' premises and only after installation of windows and doors by the defendant, the leased premises was ready for occupation and was inaugurated.
79. While relying upon Ex. DW2/3 to Ex. DW2/15, DW2 stated that he was present at the leased premises as an employee of the defendant/counter claimant from March 2016 onwards when it was in process of being constructed and the defendant had placed order for the frames and windows for the leased premises. These frames and windows were made to order i.e. specific to the dimensions in the leased premises and stated that CS (Comm) No. : 02/2022 & 392/2022 51/81 generally such frames and windows cannot be translocated and installed from one place to another unless the destination location has the identical dimensions. Therefore, defendant placed orders for the frames and windows while the construction of the leased premises was ongoing. He further deposed that defendant placed orders for window frames from the vendor Green Future Windows Pvt.Ltd. which delivered the window frames to the site of the leased premises as reflected in invoices dated 01.03.2016, 10.03.2016, 17.03.2017, 28.03.2016 and 05.05.2016 Ex. DW2/3 to Ex. DW2/7. He stated that he had installed the window frames himself in the leased premises.
80. With regard to the Air Conditioners,defendant claimed that they purchased two Air Conditioners from R.V.Enterprises of the brand 'Carrier' which were delivered at the leased premises and were installed. Invoices for the same were tendered in evidence as Ex. DW2/8. According to DW2, the original copies of the invoices were with the defendant which were tendered in evidence as Ex. DW2/3 to Ex. DW2/8, contrary to assertion of defendant that all the original invoices were in possession of Director of Plaintiff Mr. Arun Sharma, who was earlier Director of defendant as well.
81. Defendant also claimed amount for purchase of accessories for installation of the air conditioners, vide invoice Ex. DW2/9 and the installation, testing and commissioning charges vide invoice Ex. DW2/10. According to DW2, Mr. Arun Sharma had a cabin on the third floor of the leased premises and a projector and one motorised screen was purchased by defendant which was installed in Arun Sharma's cabin, delivered at leased premises vide invoice Ex. DW2/11. Original copies of the same nevertheless was stated to be in possession of the plaintiff and CS (Comm) No. : 02/2022 & 392/2022 52/81 plaintiff had been called upon to produce the original of the same vide notice dated 28.6.2022.
82. For purchase of entrance door and one fixed window installed at the least premises ,original copy of the invoice dated 09.06.2016, as stated by DW2 was available with the defendant and tendered in evidence as Ex. DW2/12. Defendant further claimed purchase of six pieces of decorative glass, clear glass from the vendor Art-N Glass Inc. vide invoice Ex. DW2/13, delivered at leased premises and further purchase of outdoor shutters installed at leased premises vide invoice dated 20.01.2016 Ex. DW2/15.Original copies of Ex. DW2/13 and Ex. DW2/15 were also stated to be with the plaintiff. However, while the evidence was being recorded , all the exhibits DW2/3 to Ex. DW2/15 were de-exhibited and were marked as Mark A to Mark L by Ld. Court Commissioner upon objection of Ld. Counsel for plaintiff.
83. Ld. Counsel for defendant stated that defendant has issued notice dated 28.06.2022 to plaintiff to produce the orginals of the invoices, earlier exhibited as Ex. DW2/3 to Ex. DW2/15 now marked A to L which had not been produced by the plaintiff, therefore, defendant/counter claimant had brought original counter parts of the said invoices which according to Ld. counsel for defendant was primary evidence in terms of section 62 of Indian Evidence Act.
84. Vide order dated 26.07.2023 on the application of the counter claimant/defendant uder Order 11 Rule 4 CPC and on the submission of Ld. counsel for defendant that the goods/articles belonging to the defendant regarding which the invoices had been placed on record, were lying at the suit premises i.e. at the ground floor and first floor of suit premises which included Air Conditioners etc. and that the plaintiff had unauthorizedly CS (Comm) No. : 02/2022 & 392/2022 53/81 retained the said articles while the first floor of the premises has been let out to third party namely Trigon Pvt. Ltd. alongwith the said articles. Request was made for appointment of LC for inspection of the premises. Ld. counsel for plaintiff while submitted that the defendant had taken away all its belongings from the leased premises and the air conditioners and fixtures installed in the premises belonged to the plaintiff and plaintiff was in possession of the invoices. In order to elucidate the matter in dispute and to ascertain the ownership of the articles/goods being claimed by defendant/counter claimant lying at ground and first floor of the property, LC was appointed with directions to report about ownership of those articles by comparing the said articles with invoices filed on record by the counter claimant or those which may be produced by the plaintiff at the time of inspection.
85. Ld. counsel for plaintiff made the following submissions:
(a) That, defendant had filed copies of bills in its counter claim in respect of subject goods (MARK A- MARK H), and stated in its counter claim that the original were in possession of the director of the Plaintiff Sh. Arun Sharma. Further, the Defendant claimed that it had served a copy of notice under order 12 Rule 8 CPC to the Plaintiff. However, neither the Plaintiff nor its director admitted or mentioned, having possession of original bills. Further, the said notice was never served on the Plaintiff, its director or counsel. No proof of receipt had been filed in the said counter claim. Said notice was allegedly served on the same day i.e. the date of counter claim. The said notice is also not maintainable since no "admission" or "knowledge qua the bills was made by the Plaintiff or its director.
(b) That, in order to circumvent the said situation of filing copy of bills, defendant under the garb of submitting bills to local CS (Comm) No. : 02/2022 & 392/2022 54/81 commissioner placed on record alleged vendor copies of the bills, whereas vide its order dated 26.07.2023, court had directed the Local commissioner to match the goods with invoices filed by the counter-claimant and not the fresh copies of the bills. In fact, only the Respondent/Plaintiff was directed to file the copies of the bills.
(c) That, neither the Defendant nor its counsel informed the Local commissioner that they were filing alleged vendor copies of the bills.
(d) That, thereafter, defendant neither moved an application for leading secondary evidence nor led evidence to prove the bills by summoning the vendors/makers of the bills nor filed original of the said bills. Hence, only relied on the copies of the bills as already filed with the counter claim, and therefore the same were not exhibited but marked at the time of defendant's evidence.
(e) That, defendant has not sought permission of the court to lead secondary evidence while it was also not able to prove the possession and chain of custody of documents with the Plaintiff, and having failed to prove receipt of notice under order 12 rule 8 or its maintainability, cannot be permitted to rely on the said copy of bills without producing the original or proving its existence through makers/vendors of the bills, and hence the same cannot be read in evidence. Reliance was placed upon following:
(a) Ram Naresh Mudgal Vs. Munesh Chand Gupta (2010/DHC/3995), " 3. Section 65 of the Indian Evidence Act provides that the secondary evidence can be given of the existence of contents of the document in following cases:
(a) When the original is shown or appears to be in the possession or power of the person against whom the document is sought to be proved, or of any person out of reach of, or not subject to, the process of the Court, or of any person legally bound to produce it, and when, after the notice mentioned in Section 66, such person does not produce it;CS (Comm) No. : 02/2022 & 392/2022 55/81
(b) When the existence, condition or contents of the original have been proved to be admitted in writing by the person against whom it is proved or by his representative in interest;
(c) When the original has been destroyed or lost, or when the party offering evidence of its contents cannot, for any other reason not arising from his own default or neglect, produce it in reasonable time;
(d) When the original is of such a nature as not to be easily movable;
(e) When the original is a public document within the meaning of Section 74;
(f) When the original is a document of which a certified copy is permitted by this Act, or by any other law in force in India to be given in evidence;
(g) When the originals consist of numerous accounts or other documents which cannot conveniently be examined in Court, and the fact to be proved is the general result of the whole collections.
4. It is thus, mandatory that the person who seeks to prove secondary evidence has to show the existence of the documents and how documents came in possession of the opposite party. It cannot be believed that a person who is paying money shall not retain the receipt of payment of money or who is purchasing property on the basis of agreement to sell shall not retain the original agreement to sell with him and give it to opposite party."
(b) Ashok Dhulichand vs Madhavlal Dube & Ors (MANU/SC/0287/1975, "According to clause (a) of section 65 of the Indian Evidence Act, secondary evidence may be given of the existence, condition or contents of a document when the original is shown or appears to be in the possession or power of the person against whom the document is sought to be proved, or of any person out of reach of, or not subject to, the process of the Court, or of any person legally bound to produce it, and when, after the notice mentioned in section 66, such person does not produce it. Clauses (b) to (g) of section 65 specify some other contingencies wherein secondary evidence relating to a document may be given"
(c) Rakesh Mohindra vs Anita Beri (MANU/SC/1293/2015 "17. The pre-conditions for leading secondary evidence are that such original documents could not be produced by the party relied upon such documents in spite of best efforts, unable to produce the same which is beyond their control. The party sought to produce secondary evidence must establish for the non-production of primary evidence. Unless, it is established that the original documents is lost or destroyed or is being deliberately withheld by the party in respect of that document sought to be used, secondary evidence in respect of that document cannot accepted.CS (Comm) No. : 02/2022 & 392/2022 56/81
22. It is well settled that if a party wishes to lead secondary evidence, the Court is obliged to examine the probative value of the document produced in the Court or their contents and decide the question of admissibility of a document in secondary evidence. At the same time, the party has to lay down the factual foundation to establish the right to give secondary evidence where the original document cannot be produced. It is equally well settled that neither mere admission of a document in evidence amounts to its proof nor mere making of an exhibit of a document dispense with its proof, which is otherwise required to be done in accordance with law".
(d) J. Yashoda Vs. K. Shobha Rani
(MANU/SC/7314/2007):
" 7. Secondary evidence, as a general rule is admissible only in the absence of primary evidence. If the original itself is found to be inadmissible through failure of the party, who files it to prove it to be valid, the same party is not entitled to introduce secondary evidence of its contents. Essentially, secondary evidence is an evidence which may be given in the absence of that better evidence which law requires to be given first, when a proper explanation of its absence is given. The definition in Section 63 is exhaustive as the Section declares that secondary evidence "means and includes" and then follow the five kinds of secondary evidence.
8. The rule which is the most universal, namely that the best evidence the nature of the case will admit shall be produced, decides this objection that rule only means that, so long as the higher or superior evidence is within your possession or may be reached by you, you shall give no inferior proof in relation to it. Section 65 deals with the proof of the contents of the documents tendered in evidence. In order to enable a party to produce secondary evidence it is necessary for the party to prove existence and execution of the original document. Under Section 64, documents are to be provided by primary evidence. Section 65, however permits secondary evidence to be given of the existence, condition or contents of documents under the circumstances mentioned. The conditions laid down in the said Section must be fulfilled before secondary evidence can be admitted. Secondary evidence of the contents of a document cannot be admitted without non-production of the original being first accounted for in such a manner as to bring it within one or other of the cases provided for in the Section."
(f) That, defendant alleged that the goods belonging to defendant were given by the Plaintiff to M/s Trigon Digital Solution as part of the lease, and further alleged that Plaintiff was benefitted from the same by getting higher rent. However, the Defendant fails to show that the same were given to Trigon Digital Solutions. In fact, it was the Plaintiff which led evidence by summoning witness from registrar office (PW-2) to place on record that no such package was made as alleged in the lease CS (Comm) No. : 02/2022 & 392/2022 57/81 deed with M/s Trigon Digital Solutions (Ex.PW-2/1), and the same demolishes the allegations of the Defendant.
(g) That, in terms of section 101 and 102 of the Indian Evidence Act, 1872, the burden of proof was on the Defendant to prove the existence of alleged goods, and their installation and current presence at the leased premises. Defendant has failed to show purchase, installation of the said goods, and its presence at the leased premises. In fact, defendant has neither filed the original bills nor led evidence to show that the subject goods were purchased and installed by defendant. Further, the Defendant has deliberately attempted to shift the burden of proof upon the Plaintiff, and continued making attempts to shift burden of proof on the plaintiff which was also recorded by this Court vide order dated 19.01.2024 while rejecting the application of the defendant under order 11, CPC, 1908. Further, the Defendant has repeatedly alleged that the goods are present at the leased premises without showing the proof of the same. Reliance was placed upon Rangammal Vs. Kuppuswami & Ors.(MANU/SC/0620/2011), wherein it was observed that :
" 14. Section 101 of the Indian Evidence Act, 1872 defines `burden of proof' which clearly lays down that whosoever desires any court to give judgment as to any legal right or law dependent on the existence of facts which he asserts, must prove that those facts exist. When a person is bound to prove the existence of any fact it is said that the burden of proof lies on that person. Thus, the Evidence Act has clearly laid down that the burden of proving fact always lies upon the person who asserts.Until such burden is discharged, the other party is not required to be called upon to prove his case. The court has to examine as to whether the person upon whom burden lies has been able to discharge his burden. Until he arrives at such conclusion, he cannot proceed on the basis of weakness of the other party."
(h) That, plaintiff had produced the documents/bills before the Ld. local commissioner to show that installations at the leased premises were purchased by the Plaintiff. Even otherwise, if a person is having possession of goods, presumption is drawn in its favour that the same person is the owner of the said goods, and CS (Comm) No. : 02/2022 & 392/2022 58/81 that presumption can only be rebutted by leading cogent evidence. Reliance was placed upon section 110 of Indian Evidence Act, 1872 and judgment of Hon'ble Supreme court in "Chuharmal Vs Commissioner of Income Tax (MANU/SC/0074/1988", wherein it was observed that:
" 6. The High Court in its order noted that the raiding party by virtue of the search entered into the bed-room of the assessee on 12th May, 1973 and seized the watches. A Panchnama was prepared. The Department found that the assessee was the owner. Section 110 of the Evidence Act is material in this respect and the High Court relied on the same which stipulates that when the question is whether any person is owner of anything of which he is shown to be in possession, the onus of proving that he is not the owner, is on the person who affirms that he is not the owner. In other words, it follows from well settled principle of law that normally, unless contrary is established, title always follows possession. In the facts of this case, indubitably, possession of the wrist-watches was found with the petitioner. The petitioner did not adduce any evidence, far less discharged the onus of proving that the wrist-watches in question did not belong to the petitioner. Hence, the High Court held, and in our opinion rightly, that the value of the wrist-watches is the income of the assessee. In this connection reference may be made to the views expressed by Justice Tulzapurkar as his Lordship then was, of the Bombay High Court in the case of J.S. Parkar v. V.B. Palekar, MANU/MH/0005/1973.
(i) That, defendant has also claimed refrigerator in its alleged goods however, no bill in respect of the refrigerator has been filed and the same was also not found at the premises.
(j) That, Local Commissioner in its report had also reported that no shutter, projector and screen were found on the leased premises, despite the Defendant's allegations of the availability of same at the leased premises.
(k) That, the bill of roller shutter do not mention any address of the Defendant(MARK-L). Local commissioner in its report had reported that model No. of the AC duct could not be found and no model No. was found in the outdoor unit. Whereas the bill of the Defendant mentions model No. but the same is not reflected at the AC .
(L) That, defendant vide email dated 02.02.2021 (Ex P-11) sought to remove the air conditioner and The Plaintiff CS (Comm) No. : 02/2022 & 392/2022 59/81 immediately responded vide email dated 03.02.2021 (Ex.P-12) informing that the defendant was free to remove their AC.
Further, defendant has not filed any document/proof to show that Defendant's employee Mr. Manoj visisted lease premises and was precluded from removing the AC.
(m) That, defendant produced the alleged vendor copies (inadmissible copies) before the local commissioner, and has not produced the originals of the copies filed in the counter claim. The Plaintiff also filed and produced the bills before the local commissioner. Ld. Local commissioner reported that the invoices produced by the Plaintiff had the mark "SKTUFF and the same was also mentioned on the glasses of the windows.
(n) That, during the construction of the suit property(year 2014-16), the registered address of the Plaintiff was at Lajpat Nagar, and therefore, the bills reflected the said address. Initially defendant had claimed ownership of windows and doors in the "showroom". In fact, the Defendant being in business of UPVC doors and windows had display centre at its ground floor of the leased premises to display such windows and doors. However, during the course of the trial of the present case, the Defendant started claiming windows and doors at the façade/outside of the building but the claim is falsified by the email of the Plaintiff dated 30.12.2020 (Ex.P10) and the Defendant did not respond to the contents of the plaintiff's email dated 30.12.2020.
86. With regard to ownership of Windows installed in the leased premises, defendant relied upon invoices mark A to mark H which according to defendant had been purchased and installed in the leased premises after it had taken possession of the same. It may be noted that defendant filed on record the original copies of the invoices which were different from the copies placed on record alongwith the counter claim. While in affidavit of CS (Comm) No. : 02/2022 & 392/2022 60/81 evidence, DW2 claimed the original copies in possession of defendant pertaining to mark A to Mark L , however later on stated about all the original invoices being in possession of Director of plaintiff who was the then Director of defendant as well.
87. It was sought to be clarified by Ld. counsel for defendant that the original copies of invoices lateron produced before Ld. Local Commissioner had been obtained by the defendant from the vendor. It was submitted by Ld. counsel for defendant that though plaintiff has argued that the signatures on the invoices filed alongwith the Counter Claim and those submitted to the Local Commissioner are different. However, invoices submitted to the Local Commissioner were procured directly from the vendor with same particulars as mentioned in the invoices filed alongwith the counter claim. Since it was a sequitur that these being vendor copies of the invoices, they will also bear the vendor's signatures. Although, in all material respects, the invoices were identical with mere difference of signatures of the vendor on the different counterparts of the same document, therefore, cannot be taken to mean that they are not counter parts to the originals.
88. Ld. counsel for defendant further made following submissions:
(a) That, defendant in support of its claim for Shutters, relies on invoice Mark-L raised on it by M/s Falcon Contracts Pvt Ltd for an amount of Rs. 3,75,007. Plaintiff does not present a rival claim with respect to the Shutters. However, it has specifically pleaded that "the Plaintiff has no knowledge of the goods allegedly purchased by the Defendant" However, the same is contradicted by the fact that the invoice for the Shutters was specifically issued in care of PW-1.CS (Comm) No. : 02/2022 & 392/2022 61/81
(b) That, with respect to the Shutter, the Plaintiff is also unable to prove that before the expiry of the 2019 Lease Agreement, the "Defendant took all their goods" as pleaded by it.
The Defendant has continuously asked for their goods, and the Plaintiff has not provided the Defendant an opportunity to take back their goods. Therefore, the Defendant submits that the Shutters are still present with the Plaintiffs.
(c) That, defendant, at the time of filing its Counter-claim placed on record the copies of the invoices of the items/equipment installed in the Leased Premises. [Mark A- Mark-L]. Defendant did not have the originals of the invoices because its erstwhile Director, Mr Arun Sharma (who is also the Director of the Plaintiff) had the originals in his possession. In this respect, the Defendant was constrained to send a Notice to Produce to the Plaintiff dated 28 June 2022 along with its Counter-Claim.
(d) That, Plaintiff never replied to the Notice issued by the Defendant. While the Plaintiff has argued that it was not served with the Notice, a bare perusal of the same will show that it was served along with the Counter Claim. In this regard, the Plaintiffs arguments regarding non-service of the Notice to produce is contrary to the record. In fact, PW-1 himself admits that he had access to the invoices which he alleges to not be in possession of, as he was the Managing Director of the Defendant.
(e) That, as per sec. 62 of the Evidence Act, 1872, the primary evidence of a document is when the document itself is produced for inspection and where a document is executed in several parts each part is primary evidence of the document. Despite the clear wordings of the Act, the Court Commissioner while recording evidence, has de-exhibited the invoices which CS (Comm) No. : 02/2022 & 392/2022 62/81 were originals of the invoices executed in counterpart and obtained from the vendors.
(f) That, merely because invoices were de-exhibited is not conclusive of their being disproved. It is settled law that the marking of a document is not synonymous with its proof, and therefore, in the present case, it is still open for judicial application of mind.
Reliance was placed upon Sudir Engineering Co. v. Nitco Roadways Ltd., 1995 SCC OnLine Del 251, wherein it was observed that:
" 8) I am firmly of the opinion that mere admission of document in evidence does not amount to its proof.
8.1 Admission in evidence of a party's document may in specified cases exclude the right of opposite party to challenge its admissibility. The most prominent examples are when secondary evidence of a document within the meaning of Sections 63-65 of the Evidence Act is adduced without laying foundation for its admissibility or where a document not properly stamped is admitted in evidence attracting applicability of Section 36 of Stamp Act.
8.2 But the right of a party disputing the document to argue that the document was not proved will not he taken away merely because it had not objected to the admissibility of the document. The most instructive example is of a Will. It is a document required by law to he attested and its execution has to he proved in the manner contemplated by Section 68 of the Evidence Act read with Section 63 of the Succession Act. The party challenging the Will shall not be excluded from demonstrating at the final hearing that the execution of the Will, though exhibited, was not proved is statutorily required.
(9) The law laid down by the Supreme Court in Sait Taraji Khimechand VS. Yelamarti Satvam (AIR 1971 SC 1865) is :- 'The mere marking of an exhibit does not dispense with the proof of docments."
(g) That, invoices raised on the Defendant by M/s Green Futures Windows Pvt Ltd were issued in accordance with Rule 11 of the Central Excise Rules, 2002. The same states that "the invoice shall be prepared in triplicate", where the original copy shall be "marked as ORIGINAL FOR BUYER" and a triplicate copy shall be "marked as TRIPLICATE FOR ASSESSEE". In fact, the details of the two sets of invoices submitted by the Defendant are exactly the same (such as GST Number, cost CS (Comm) No. : 02/2022 & 392/2022 63/81 break-ups, TIN Number, invoice Number etc.). Accordingly, the invoices submitted by the Defendant must be taken to be as originals.
(h) That, it is settled law with respect to sec. 62 of the Indian Contract Act 1872, that a document executed in several parts are to be treated as primary evidence of each other. Reliance was placed on Navas v. Abdul Lathief. 2018 SCC OnLine Ker 23383, wherein it was observed that:.
" 7. The first part of Explanation 1 to Section 62 refers to what is known as duplicate, triplicate or the like. The expressions "executed in parts" refer to the method in which documents are executed. It is convenient sometimes that each party to a transaction should have a complete document in his own possession. To effect this, the document is written as many times as there are parties and each document is executed, signed or sealed by all the parties. Then any one of them may be produced as primary evidence of the contents of the document. When an instrument is executed in duplicate or triplicate or the like and each party keeps one, each instrument is treated as original and hence each is primary evidence of all the others".
89. It is correct that invoices which were filed alongwith the counter claim and the invoices which were produced before Ld. LC pertained to the same material with only difference in one of the invoices 'Mark-G' dated 30.07.2016, Retail Invoice/Cash Memo of which bears Invoice No. : 1444, whereas Typed Copy of same was bearing Invoice No. : 1443. Invoices relied upon by defendant are for the period w.e.f. January/March 2016 to August 2017, whereas plaintiff has relied upon invoices Ex. PW1/29 (colly), which are dated ranging from 10.09.2014 to 16.05.2016 all of which were produced before Ld. LC.
90. Ld. counsel for defendant submitted that all the equipments mentioned in the invoices filed on record by the defendant were delivered at the leased premises to be installed therein and were delivered after the defendant had taken possession of the leased premises. Whereas, notwithstanding the plaintiff's lack of pleadings in regard to the ownership of the CS (Comm) No. : 02/2022 & 392/2022 64/81 Windows, plaintiff relied upon several invoices submitted by it to the Local Commissioner allegedly raised on it by M/s Green Future Windows Pvt Ltd and M/s Mehr Image Pvt Ltd. (Ex PW-1/29 (Colly), however, these invoices cannot be held to be the true invoices for the goods installed in the Leased Premises as the alleged invoices raised by M/s Green Future Window Pvt Ltd are dated prior to the Plaintiff's purchase of the Okhla Premises in which the Leased Premises is situated. Moreover, no evidence has been placed to show that the same were delivered to the leased premises.
91. Contention of Ld. counsel for defendant is found correct on record to the said extent that all the invoices raised by M/s Green Future Windows Pvt. Ltd. upon plaintiff were bearing different addresses than that of the leased premises. PW1 though denied that the goods mentioned in invoices (part of Ex. PW1/29) were delivered at the addresses as mentioned in the respecitve invoices. He reiterated that with regard to invoices Ex. PW1/29, items were delivered at C-44, Okhla, while admitting that the delivery address of C-44 was not mentined in the invoices and sought to explain that it was their address mentioned with the sale tax department. Though, he did not remember if there was any record that the goods mentioned in invoices (part of Ex. PW1/29) were delivered at the leased premises while acknowleding that it was not part of record. He reiterated that the door frames had been installed by the plantiff before 01.03.2016 and sought to clarify that, in the beginning, they had installed the temporary/kaccha glass which later were replaced by the permanent glass with integrated glass blinds. According to him, the permanent integrated glass was purchased from M/s Mehar Image & S.K. Glass vide invoice no. 727 and 806 which were installed, in between end of May and in beginning of June 2016.
CS (Comm) No. : 02/2022 & 392/2022 65/81He denied the suggestion that the goods mentioned in invoices no. 727 and invoice no. 806 were installed at G.K. which was the address given in the invoices. He acknowledged that the defendant had the possession of the leased premises during the period of May-June 2016 and plaintiff did not have the keys to the locks of the suit premises during the said period and had taken permission of the defendant to enter the premises, as per verbal discussion. This witness though did not remember when the measurements for the window frames and doors in the leased premises were taken by the plaintiff's employees.
92. Ld. counsel for defendant submitted that PW1 had stated that the installation of the windows in the leased premises took place after the construction of the same was completed i.e. after 1.03.2016 with reference to the cross examination of PW1 from questions 78 to 80. However, in response to the question no. 78 to 80 in cross examination of PW1, he did not state about the installation of the windows in the leased premises after the construction of the same was completed. To the contrary, his response was that the leased premises was ready for occupation in February 2016 in sealed and locked condition and the equipments and fixtures were put /installed in the leased premises for display by the defendant.
93. DW1 on the other hand in cross examination, stated that when they entered into agreement on 1.3.2016, leased premises was still under construction and was formally inaugutrated on 1.9.2016. As per his knowledge, doors and windows were pending under construction as on the date of entering into the lease deed dated 1.3.2016. He acknowledged that no such document was filed on record in support of the said assertion, while submitting that it was mentioned in his evidence affidavit. After having gone through the evidence affidavit, he CS (Comm) No. : 02/2022 & 392/2022 66/81 acknowledged that he had not mentioned in evidence affidavit about filing of any such document and conceded that they had not filed such document on record. This witness was put the question whether plaintiff had insisted defendant for installation of the window, doors and frames in the leased premises to which he answered that as Sarla Sharma and Arun Sharma were the Directors of the plaintiff companyand Mr. Arun Sharma was also director of defendant company, so it was mutually decided that defendant shall install the windows and doors in the leased premises. He acknowledged that there was no term in the lease agreement dated 01.03.2016 regarding the installation of windows, doors and frames in the leased premises by the defendant. He also admitted that as per the lease agreement, defendant company was required to take prior permission before making any installation/alteration in the leased premises. However, submitted that since the Director of the plaintiff company and defendant was same, so it was mutually agreed. He also admitted that they had not filed any document on record to show that the leased premises was formally inaugurated on 01.09.2016.
94. This witness admitted that in the written statement, they had not mentioned that the leased premises was incomplete, though insisted that it was in his knowledge and the record that the premises was incomplete and frames were ordered by the defendant to be installed during the course of such construction. He stated that he was aware that windows and doors installed on the other floors of the subject property were installed in 2016. He stated that he had visited the third floor of the premises to meet Mr. Arun Sharma but was not able to confirm that the doors and windows installed at the leased premises and other floors of the subject property were identical and further denied that they were CS (Comm) No. : 02/2022 & 392/2022 67/81 structurally identical or that he was aware of the said fact. He was put question as to who had paid charges for purchase and installation of the windows and doors installed on the other floors of the subject property to which he stated that he could answer after checking the invoices and later on, he stated that he had checked the record but could not understand , therefore, was not in position to tell.
95. Defendant had also filed criminal complaint against the Director of the plaintiff. DW1 was put question whether such complaint was filed in respect of the goods/items owned by the defendant installed in the leased premises which was denied by DW1. He also denied the suggestion that it was not mentioned in the criminal complaint since the same was an after thought stand of the defendant. This witness nevertheless admitted that the leased premises was being used as display centre by the defendant for the products such as windows and doors.
96. DW2 claimed to have been involved in the process of installation of doors and windows at the leased premises during the relevant period. In cross examination, he reiterated that he was aware of all the invoices alongwith the material purchased for the leased premises. According to him, installation of AC , UPVC doors, Windows and shutter was pending at the leased premises at the time of inception of lease deed i.e. in March 2016. He did not know whether defendant also installed AC, UPVC, Windows and Shutters on the other floors of the property and also did not know whether the construction of the other floors of the subject property was simultaneous with the leased property by submitting that he was working only on the first and ground floor of the subject property, while also admitting that he was visiting third floor of the subject property as and when called by the earstwhile Director Mr. Arun Sharma in his office, located CS (Comm) No. : 02/2022 & 392/2022 68/81 at the third floor of the property. Further, some customers who used to visit the leased premises were also taken to the third floor sometimes by him, yet this witness had shown his unawareness about the construction of the other floors during the relevant period. He nevertheless was prompt in denying that all the goods/equipments/items installed in the leased premises and other floor were installed by the plaintiff simultaneously, while insisting that the installation of UPVC doors and windows in the leased premises started only on 01.03.2016 and before that there were no other installed doors and windows. He denied that outside facade of the building was identical for all the floors but did not know whether UPVC doors and Windows were installed at the third floor of the subject property despite his earlier claim with regard to his regular visits to the third floor, as and when called by the then Managing Director of Defendant. He was consistent in his denial to the question that construction of all the floors of the subject property including the leased premises was completed prior to 01.03.2016 and further stated that on 01.03.2016 they had started taking measurements of windows after the flooring was complete in the leased premises. According to him, since the construction was ongoing, no equipment/goods were installed prior to 01.03.2016 and further that the defendant and its employees were visiting the leased premises prior to 01.03.2016. According to him, after taking the measurements, he had informed about the measurements to his seniors. He was not aware when was the order placed but stated that sometimes in the month of March 2016 purchases were made. He, though did not know the dates or mode of payments.
97. In evidence affidavit of DW2, he stated that the possession of the original invoices in respect of Ex. DW2/3 to Ex. DW2/10 (later marked A-H) was with defendant. Contrary to such CS (Comm) No. : 02/2022 & 392/2022 69/81 assertion, in cross examination, he stated that the possession of the original bills was with Mr. Arun Sharma i.e. PW1. He also stated that therefore they had to collect the bills from the vendor which were counter parts of the original bills. This fact was also informed to the LC by them. To the question as to how many window frames were purchased by the defendant to be installed in the leased premises, he did not remember exactly but according to him, it might be approximately 15-20. Similar was his answer for window frames and according to him 1-3 doors frames were installed at the leased premises. Witness sought to correct himself by stating that only one door was installed. In answer to the question that the defendant had purchased windows and doors frames for display in the leased premises from Green Future Windows Pvt. Ltd. , he did not know about the purchases of the same but stated that fitting was done by him.
98. Ld. counsel for defendant further submitted that the invoices bearing no. 27 and No. 806 raised by Mehr Image, part of Ex. PW1/29 (colly) show that the glass panes were delivered to an address in Greater Kailash, though PW-1 had asserted that the glasses were installed in the Okhla Premises but no evidence has been placed on record by the Plaintiff to prove that the above goods were transported from Greater Kailash to Okhla. Further, PW-I also admitted that during the period when the "Plain glass panes" were installed in the Leased Premises in May 2016, plaintiff was not in possession of the Leased Premises and he was unable to show that the Plaintiff was given permission by the Defendant to carry out this installation.
99. Contention of counsel for defendant that all the invoices placed on record by the plaintiff, did not bear address of the leased premises, was found correct, though PW1 sought to clarify that the address mentioned in the invoices was their address with CS (Comm) No. : 02/2022 & 392/2022 70/81 the sale tax department. It was submitted by Ld. counsel for plaintiff that all the invoices except for the Glasses raised by Mehr Image were raised prior to 2016 substantiating the contention of PW1 that the construction of the premises was complete prior to year 2016.
100. In terms of LC report, no outdoor shutter of the premises could be located in the premises. Upon the main door of the premises, Ld. LC found sticker of defendant, however, it is not the case that defendant had manufactured the door. Further, Ld. LC found 10 window frames on the gound floor and six frames on the first floor. While DW1 claimed that 15-20 window frames were instlled in the premises, the invoices placed on record were pertaining to 23 window frames. Ld. LC found that the glasses were toughened and the same was got toughened by SKTUFF which was clear with the stamp of SKTUFF on the glass and the invoices produced by the plaintiff also showed the mark of SKTUFF. Invoices for the same as per record had been raised by M/s Mehr Image and are dated 23.05.2016.
101. PW1 sought to clarify during the course of cross examination that the glasses initially installed were Kaccha glasses, and were replaced with Pakka glasses with integrated glass blinds later in May-June 2016 which was substantiated with the observation of Ld. LC.
102. It is not improbable that during the construction phase and prior to completion thereof, plaintiff may have placed orders for purchase/installation of windows, door, frames etc. As explained by PW1 that the registered address of his business was provided for sales tax purposes. Though the delivery address was not mentioned in the invoices but this omission does not necessarily undermine the assertion of the plaintiff, considering that the CS (Comm) No. : 02/2022 & 392/2022 71/81 permanent fixtures are typically installed by the lessor/owner, unless explicitly agreed otherwise.
103. Since most of the invoices relied upon by the plaintiff pertain to the year 2014, it was submitted by Ld. counsel for defendant that plaintiff had purchased the property on 13.05.2016. It was submitted that " without prejudice to the defendant/counter claimant's submission that the lease agreement dated 01.03.2019 is an inadmissible document, a bare perusal of the agreement reveals that the plaintiff registered the sale deed pertaining to leased premises on 13.05.2016. Section 23 of the Registration Act 1908 stipulates that a document must be presented to the concerned officer within four months of execution. Since the sale deed was executed on 13 May 2015, plaintiff would have purchased the leased premises only after 13 January 2015".
104. PW1 had testified having received possession of the land in 2014. Ld. counsel for defendant, thereby, submitted that it is thus established that the plaintiff's assertion that the leased premises was purchased sometimes in 2014 is meritless and ought to be discarded at the threshold.
105. There appears to be no legal prohibition against obtaining physical possession of a property prior to the execution of a sale deed if mutually agreed upon by the parties. Under Transfer of Property Act, sale of immovable property can only be completed by a registered sale deed. Delivery of possession without a registered sale deed does not constitute a legal transfer of ownership. Nevertheless, if the parties executed an agreement to sell before delivering possession, and later a sale deed is executed, the agreement is enforceable subject to compliance with legal requirements. Delivery of prior possession therefore may not affect the legality of the registered sale deed. PW1 CS (Comm) No. : 02/2022 & 392/2022 72/81 specifically mentioned the receipt of possession of the property but was not questioned further to clarify whether possession was obtained prior to the execution of the sale deed. This lack of clarification leaves the testimony uncontested in this regard.
106. This fact also cannot be lost sight that the defendant itself had taken the leased premises for show room as display centre of UPVC doors and windows. Defendant's witnesses had acknowledged that they had their display centre at the ground floor of the leased premises for display of such windows and doors, therefore, it is not unlikely that defendant had placed orders for window frames and doors for its own business of UPVC and doors to be displayed at the leased premises.
107. Although, the lease deed executed between the parties is inadmissible due to non-registration and insufficient stamping, nevertheless if the defendant had incurred/invested so much of the amount in installation of windows, doors, shutter etc. at the leased premises, same ought to have been mentioned in the lease deed or to be reduced in writing. The lease deed did not contain any clause or stipulation regarding the defendant bearing the cost of installations or any reimbursement/refund from the plaintiff. It is improbable that the lessee would agree to pay rent from the inception of lease if the premises was not even ready for the use. This raises question about the defendant's claim of investing in installations at the leased property. While the defendant claimed that Director of plaintiff and the then Managing Director of defendant company namely Mr. Arun Sharma were the same person, but by the year 2019, said Mr. Arun Sharma, had resigned from the Defendant company. Subsequent to which, a criminal complaint had also been filed against him. Nevertheless, as also admitted by defendant's witnesses, there was no mention of mis- appropriation of such funds or resources of the defendant by the CS (Comm) No. : 02/2022 & 392/2022 73/81 said Director. There was no whisper regarding the installation of windows, doors etc. at the cost of defendant even thereafter till the defendant sought vacation of the premises.
108. Vide email dated 30.12.2020, plaintiff had informed defendant that:
" Kindly note Sach Services never asked aluplast to install anything on the structure or in the area used by aluplast during the renting period and if any structural change/installation has been made by aluplast for their own commercial benefit or display, ideally aluplast should have taken our written permission as per the contract obligation.
If anything requested by Sach Services and billed to Sach Services, we are liable to pay, please let us know.
All the fixed windows installed on the facade of the building with integrated glass blinds are part of structure and were brought by us from M/s Green Future and Alcove Infratech and all paid and we have all the bills in our record".
109. In view of the controversy and the disputed facts, in absence of any other written stipulation or agreement, defendant was required to provide account books or other records to substantiate the expenditure on the installation of material at the plaintiff's property as permanent fixtures. It was for the defendant to establish on record that the installation of windows, door, shutter etc. as purchased and brought to the leased premises during the existence/initiation of the lease was for the installation at the plaintiff's property and not for the own display of the defendant which was dealing in UPVC doors, Windows, Door Frames, Shutter etc. Besides the fact that window frames, doors, shutter etc. are considered permanent fixtures which become part of the propety and are not removed after the termination of the lease.
110. Ld. counsel for defendant further submitted that window/doors as per invoices were purchased from Green Future Windows Pvt. Ltd. for installation in the plaintiff's property. Since defendant itself is manufacturer of UPVC doors, windows etc., therefore there was no reason for it to make purhcases from CS (Comm) No. : 02/2022 & 392/2022 74/81 Green Future Windows Pvt. Ltd for its own display. On query, put to Ld. counsel for defendant that if defendant itself was manufacturer, therefore, it was also not required to purchase from another vendor for installation in the leased premises and defendant could/should have installed its own product. Ld. Counsel for defendant conceded that he was unable to assist in this regard and had no explanation for the same, while unsuccessfully submitting that the products might have been purchased from the same vendor to maintain uniformity as the plaintiff had also installed products from the same source. This justification even otherwise would not be available to the defendant. In terms of invoices placed on record by defendant, the purchase of the window frames was for more than 23 in number, whereas the installation, in terms of report of LC, was for 16 window frames on both the floors and DW1 himself had claimed about installation of 15-20 window frames in the leased premises. There was no requirement for purchase of more number of window frames than to be installed in the leased premises, if the purpose was not for display.
111. In the absence of any agreement regarding installation expenses or the responsibility of the lessee to carry out the installations, the necessary corollary would favour the plaintiff, having undertaken the installation on the leased floors, particuarly since they had already done so on other floors of the property. Having discussed as above, counter claim of the defendant pertaining to installation of windows, frames, doors, shutter is not made out.
112. AC and Projector: Defendant also claimed about the purchase and installation of Air Conditioners in the leased premises and also the Projector, Screen and Refrigerator . Vide email dated 29.12.2020, plaintiff was informed that the defendant CS (Comm) No. : 02/2022 & 392/2022 75/81 would be moving items as detailed in the email from show room which included Air Conditioners Carrier 5.0 TR Ductable, Projector, Projector Screen and Refrigerator.
113. Vide email dated 30.12.2020 Ex. P-10, defendant was informed that they were free to take all theses items or dispose off as per their wish except for the Refrigerator and Projector which were being used by Mr. Arun Sharma and defendant was informed to settle the same with Mr. Arun Sharma. Said request was reiterated by the defendant and similarly answered by the plaintiff, stating that they had already confirmed the defendant for removal of AC. PW1 though had earlier claimed that the AC had already been installed in the leased premises, however, later during the course of cross examination, he admitted that AC installed in the leased premises was purchased and installed by the counter claimant/defendant.
114. Plaintiff placed on record the invoice issued by Nishahat Ali Painting Contractor dated March 10.03.2021 Ex. PW1/32 (colly). Plaintiff had furnished before Ld. LC, handwritten receipt, issued by said Nishahat Ali Painting Contractor for Ductable Carrier AC (old), Quantity-2, priced at Rs. 40,000/- dated 10.3.2021 which was subsequent to the vacation of the leased premises by the defendant. Defendant, per contra, had relied upon invoices issued by R.V. Enterprises Mark 'F' for supply of Carrier Ductable Split AC with twin Compressor in sum of Rs. 2,47,500/- alongwith two invoices for installation and commissioning of two Ductable Split Units and its accessories, both dated 30.07.2016 in sum of Rs. 3,55,973/- (Mark-G) and Rs. 23,000/- (Mark-H) respectively, delivered at the address of leased premises. With regard to claim of purchase of Projector and Projector-Secreen, defendant has placed on record invoice dated 05.08.2017 Mark-I issued by Insat Equipment India Private CS (Comm) No. : 02/2022 & 392/2022 76/81 Limited in favour of defendant in sum of Rs. 43,000/- delivered at the address of the leased premises.
115. With regard to Projector and Projector-Screen also, it is not disputed on record that the same were being used by the Director of the plaintiff company and had not been returned to the defendant while defendant had vacated the leased premises.
116. Ld. Counsel for defendant submitted that defendant has placed on record invoices Mark-H raised on it by M/s R V Enterprises dated 30 July 2016. Contrary to own acknowledgment, in the evidence affidavit for PW-1, it has been pleaded that "Plaintiff had installed all air conditioner unit which are currently on the Leased Premises/suit property". In support of his contention, he relies on the inadmissible invoice allegedly raised on the Plaintiff by one "Nishahat Ali Painting Contractor"
amounting to ₹40,000. Ld. Counsel for defendant further made following submissions:
a) The invoice raised on the Plaintiff by one "Nishahat Ali Painting contractor" is dated for March 2021, which is well over 5 years after the date when the Plaintiff claims to have installed the AC in the Leased Premises. In this respect, the rival claim of the Plaintiff of its supposed ownership of the AC remains unproved.
b) The report of the Local Commissioner states that the AC installed in the Leased Premises "was of the brand "CARRIER", which is the same brand of AC as installed by the Defendant as demonstrated in its invoice.
c) In fact, the Defendant has placed on record the invoice Mark H amounting to Rs. 3,55,973 for the ducting of the AC installed in the Leased Premises. The cost of 2 AC's installed by the Defendant was Rs. 2,47,500 [Mark F]. The Plaintiff on the other hand has belatedly placed on record one invoice by a CS (Comm) No. : 02/2022 & 392/2022 77/81 "Painting contractor" for "Ductable Carrier Ac With Installation (old)" for only Rs. 40,000. It is highly improbable that 2 AC's along with the entire ducting unit can cost Rs. 40,000 even if it is second-hand.
(d) In light of the Plaintiff's admission that the ACs are owned by the Defendant, PW-1's contrary submissions in this regard must be struck off. Considering the confirmation that AC is still lying in the leased premises by the local commissioner, defendant is entitled to the return of the AC, or in the alternative, to be compensated for a sum of Rs. 6,26,473/- and adequate compensatory costs for the plaintiff's unjust enrichment of the AC.
(e) That, defendant in support of its ownership over the purchase and installation of Projector, has placed an invoice Mark-I raised on it by M/s Insat Equipment Pvt. Ltd. amounting to Rs. 43,000/-. It is an admitted fact by the plaintiff that this projector had been installed on the third floor of the Okhla premises. Though , Local Commissioner stated that the projector's presence could not be confirmed in the leased premises. However, same was admittedly installed on the third floor of Okhla premises. Since the Local Commissioner did not visit the Okhla Premises during her inspection, the Report of the Local Commissioner cannot be taken to be proof of the Plaintiff's assertion that the Projector is not present with the Plaintiff.
(f) That, PW-1 contradicted the admission of the Plaintiff and stated that the Projector was installed by the Plaintiff itself. It is pertinent to note that the Plaintiff has not placed any invoice on record to assert its ownership over the Projector. In this respect, the rival claim conjured up by PW-1 of the Plaintiff's alleged ownership of the Projector is unsupported by any CS (Comm) No. : 02/2022 & 392/2022 78/81 evidence on record. In this respect, the Plaintiff's claim over the Projector remains unproved.
(g) That, plaintiff has admitted that the Projector is owned by the Defendant, and PW-1 has failed to show that the same was taken away by the Defendant. Additionally, the Plaintiff has failed to adequately plead its case with respect to the ownership of the Projector and has not placed any evidence on record to show the same. In this respect, the Defendant submits that it is entitled to the return of the Projector, or in the alternative, to be compensated for a sum of Rs. 43,000 along with adequate compensatory costs for the Plaintiff's unjust enrichment of the Projector.
117. While the plaintiff failed to establish on record that the second hand AC for which the invoice was issued by said Nishahat Ali was the same ductable AC unit found/installed at the leased premises. Plaintiff also failed to demonstrate the payment made to said Nishahat Ali against the invoices. It is also evident from the record that the defendant was though permitted by plaintiff vide email dated 30.12.2020 to remove the material lying at the leased premises including the Air Conditioners 5.0 TR Ductable, Projector, Projector-Screen and Refrigerator, however upon perusal of subsequent communication between the parties, it is also clear that thereafter defendant was unable to remove the Air conditioner unit or the Projector, Screen and Refrigerator, due to the plaintiff having put its own locks. Consequently, defendant was prevented from retrieving its belongings, in which eventuality, defendant is entitled for refund of the cost of the material left at the leased premises.
118. Ld. Counsel for defendant had been put query as it had claimed valuation for Air Conditioners, Refrigerator and Projector at Rs. 6,69,473/- which is the invoiced amount. Ld. CS (Comm) No. : 02/2022 & 392/2022 79/81 Counsel for defendant conceded that the depreciation has not been accounted for, while filing the claim and sought time to file on record the depreciated statement. Defendant filed on record revised valuation of counter claim . Against the valuation of Rs. 6,69,473/- for Air Conditioners, Refrigerator and Projector, the depreciated value as on 28.02.2021, as mentioned by defendant/counter claimant is Rs. 1,26,608/- As explained, the method of calculation adopted by the defendant was " Written Down Value" method in the books of accounts. Reference of useable life, as submitted, had been drawn from Schedule II, Companies Act, 2013. Accordingly, defendant is held entitled for claim of Rs. 1,26,608/- against the depreciated value of Air Conditioners, Refrigerator and Projector.
119. Relief:
(a) Claim of plaintiff for money decree in sum of Rs.
4,48,314/- against payment of two months rent i.e. for January and February 2021 is allowed .
(b) Claim of plaintiff for money decree of Rs.
10,95,948/- being the penalty equivalent to six months rent is dismissed.
(c) Claim of plaintiff for money decree of Rs. 10 lacs as compensation for the damages is dismissed.
(d) Counter Claim against cost of Air Conditioner, Refrigerator and Projector is allowed at the depreciated value of Rs. 1,26,608/-.
(e) Counter claim pertaining to doors, windows and shutter in sum of Rs. 12,19,078.85 is dismissed.
(f) Since the security amount of Rs. 3,65,316/- is still lying deposited with the plaintiff, resultantly with adjustment of the same from the rental amount payable to plaintiff, defendant is required to pay sum of Rs. 82,998/- which also stands adjusted CS (Comm) No. : 02/2022 & 392/2022 80/81 against the amount receivable by counter claimant, leaving the amount of Rs. 43,610/- (Rs. Forty Three Thousand Six Hundred Ten only) as decreed in favour of counter claimant/defendant after the set off.
(g) Defendant shall remove the logo from the premises of the plaintiff within a period of two weeks, with prior intimation to plaintiff. Defendant shall ensure that no damage is caused to the property of plaintiff during the process of removal of the logo. Plaintiff shall permit ingress of defendant for the said purpose. On failure of the defendant to remove logo within the time period, plaintiff shall be at liberty to remove the same at the cost and consequence of the defendant. Videography be made by the parties concerned during the process of removal of Logo.
120. In the facts and circumstances of the case, parties are left to bear their own cost.
121. Decree sheet be prepared accordingly. File be consigned to record room.
Digitally signed savita by savita rao Date: rao 2025.01.27 17:29:31 +0530 Announced in the open (SAVITA RAO) court on this 27th Day DISTRICT JUDGE of January 2025 (COMMERCIAL COURT)-01 SOUTH, SAKET COURTS, DELHI CS (Comm) No. : 02/2022 & 392/2022 81/81