Bangalore District Court
Dr Girish K Nashi vs Sri Syed Irfan on 19 December, 2024
Digitally signed
by SUDINDRA
SUDINDRA NATH S
KABC170019562022 NATH S Date:
2024.12.23
17:35:27 +0530
IN THE COURT OF LXXXIII ADDL. CITY CIVIL & SESSIONS JUDGE,
COMMERCIAL COURT, BENGALURU (CCH-84)
Present: Sri S. Sudindranath, LL.M., M.B.L.,
LXXXIII ADDL. CITY CIVIL & SESSIONS JUDGE
BENGALURU.
COM.OS.No.1043/2022
Dated on this 19th day of December 2024
Plaintiff/s 1. Dr.Girish K.Nashi,
S/o Late K.G.Nashi,
Aged about 64 years,
2. R.Sharmila,
W/o Girish K.Nasi,
Aged about 55 years,
3. Amaresh G Nashi,
S/o Girish K.Nasi,
Aged about 32 years,
4. Adesh G Nashi
S/o Girish K.Nasi,
Aged about 28 years,
All are residents of
No.76, N.N.Farm Road,
Sanjaynagar,
Bangalore - 560094.
(By Sri.K.N.Mahabaleshwara Rao,
Sri.T.R.Ananda Murthy,
Sri.Manjunath Murtugudde Advocates)
// versus //
Defendant/s Sri.Syed Irfan,
S/o Syed Suleman,
2
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Aged 56 years,
No.78, D'Costa Square
Near Masjid, Cocks Town,
Bangalore North
Bangalore - 560084.
And
Shop No.16, Ground Floor,
'KRUPASHRI'
Old No.14,
Quadrant road, New No.23,
Thyagi Doreswamy Road,
PID No.79-23-23,
Ward No.79, Shivajinagar,
Bangalore - 560 051.
2. The Authorised Officer
Sir M.Visveswaraya Co-operative
Bank Limited,
No.109, Corporate Office,
Shankarapuram,
Bangalore - 560004.
(By Sri.M.A.Rajendra, Advocate)
Date of Institution of suit : 22/07/2022
Nature of the suit : Agreements relating to
immovable property in
trade or commerce
Date of commencement of :
recording of the evidence 14/03/2024
Date on which the : 19/12/2024
Judgment was pronounced.
: Year/s Month/s Day/s
Total duration
02 04 27
3
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JUDGMENT
This is a suit filed by Plaintiff Nos. 1 to 4 initially against Defendant No. 1, and subsequently, Defendant No. 2 has been impleaded on the basis of an application filed by Defendant No. 1. The suit is for relief of ejectment, arrears of rent, maintenance charges along with interest, and for mesne profits. All these reliefs are claimed only against Defendant No. 1.
2. The plaint averments in brief are that the plaintiffs have taken the composite property, which is a commercial building known as Krupashri, old No. 14 Quadrant Road, new No. 23, Tyagi-Doreswamy Road, Shivaji Nagar, Bangalore, totally measuring 8232 sq. ft., on lease from the original owners, namely TBR Boranna and others, under the registered lease deed dated 31-05- 2012. After taking the said property on lease, the 4 CT 1390_Com.OS.1043-2022_Judgment.doc KABC170019562022 plaintiffs demolished the old building and constructed a new commercial complex, leasing out various shops in the new commercial complex to various tenants/sub- lessees.
3. Defendant No. 1 is one such sub-lessee under the plaintiffs in respect of Shop Nos. 16 and 17, which is the suit schedule premises, under a rent agreement dated 01-02-2014. Under this agreement, Defendant No. 1 has paid a security deposit amount of Rs. 8 lakhs and agreed to pay rent of Rs. 25,000 per month and maintenance charges of Rs. 1,000 per month. The rent was to be enhanced every year as stated in the rent agreement at 5% of the previous rent. Although the rent agreement was for a period of 5 years, Defendant No. 1 continued as a sub-lessee under the plaintiffs even after the expiration of the term of agreement.
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4. It is the case of the plaintiffs that although the rent was to be enhanced every year as per the rent agreement by 5% on the previous rent, Defendant No. 1 has not paid the enhanced rent and was paying only the initially agreed rent [basic rent] of Rs. 25,000 per month. Furthermore, this rent was paid only up to April 2021. From April 2021 onwards, Defendant No. 1 has not paid even the basic rent.
5. The plaintiffs also allege that from the inception of the tenancy, Defendant No. 1 has not paid the monthly maintenance of Rs. 1,000 as agreed under the rent agreement. Since Defendant No. 1 defaulted in paying both the rent and maintenance charges from 01-04- 2021, the plaintiffs issued a quit notice dated 29-12- 2021, terminating the tenancy with effect from 01-02- 2022 and calling upon Defendant No. 1 to pay the arrears of rent, maintenance charges and interest. 6
CT 1390_Com.OS.1043-2022_Judgment.doc KABC170019562022 However, Defendant No. 1 has neither complied with the same nor vacated the premises.
6. The plaintiffs claim that the arrears of rent i.e. the arrears in payment of enhanced rent, from the date of inception of tenancy up to 31-03-2021, plus the entire rent from 01-04-2021 to 01-02-2022 [date of termination of tenancy] along with maintenance charges and interest, total Rs. 8,90,836. After adjusting the security deposit of Rs. 8 lakhs, the amount payable by Defendant No. 1 towards arrears of rent, maintenance charges and interest as on date of termination of tenancy on 01-02- 2022 comes to Rs. 90,836. Additionally, Defendant No. 1 is liable to pay damages/mesne profits at the rate of Rs. 40,000 per month from the date of termination of tenancy, i.e., 01-02-2022, onwards.
7. With these pleadings, the plaintiffs have filed the present suit seeking ejectment of Defendant No. 1 from 7 CT 1390_Com.OS.1043-2022_Judgment.doc KABC170019562022 the suit schedule premises, recovery of arrears of rent, maintenance charges and interest totaling Rs. 90,836, and damages/mesne profits at Rs. 40,000 per month from the date of termination of tenancy till the handing over of vacant possession.
8. The suit schedule premises is described as follows:
"All that piece and parcel of immovable shop premises, Shop Nos. 16 and 17, situated on the ground floor of the commercial complex Krupashri, property bearing old No. 14, situated at Quadrant Road, new No. 23, Tyagi-
Doreswamy Road, PID No. 79-23-23, Ward No. 79, Shivaji Nagar, Bangalore - 560051, measuring East to West 17 feet and North to South 8.5 feet, bounded as follows:
East: Quadrant Road West: Other Shop and Passage North: Common Passage 8 CT 1390_Com.OS.1043-2022_Judgment.doc KABC170019562022 South: Shop Nos. 17 and 26
9. Upon issuance of suit summons to Defendant No. 1, the sole defendant at that time, Defendant No. 1 appeared and filed a detailed written statement. Defendant No. 1 contended that the plaintiffs have suppressed the fact that they had availed a loan from M. Vishveshwaraya Bank and defaulted on repayment, leading to the bank initiating action under the SARFAESI Act by issuing a demand notice, possession notice, and obtaining orders under Section 14 of the SARFAESI Act. Due to this action, Defendant No. 1 was constrained to approach the Additional City Civil Court in OS 26486 of 2021.
10. It was further alleged that the plaintiffs, despite being aware of the said suit, have suppressed the same while filing the present suit for ejectment. Defendant No. 1 also claimed that the plaintiffs failed to pay corporation 9 CT 1390_Com.OS.1043-2022_Judgment.doc KABC170019562022 tax, resulting in BBMP issuing a warrant for attachment of the suit schedule premises. Additionally, Defendant No. 1 alleged that the plaintiffs failed to maintain the building properly, leading to a fire incident due to poor electrical wiring, causing significant losses to Defendant No. 1.
11. Furthermore, Defendant No. 1 alleged that the plaintiffs collected goodwill in cash, not reflected in the rental agreement, and that the building was not constructed according to the sanctioned plan. With these pleadings, the Defendant No. 1 has prayed for dismissal of the suit.
12. Based on these pleadings, the following issues were framed:
1) Whether the plaintiffs prove that the tenancy of Defendant of the suit schedule premises is validly 10 CT 1390_Com.OS.1043-2022_Judgment.doc KABC170019562022 terminated by the quit notice dated 06-04-2021 [sic : 29-12-2021]?
2) Whether the plaintiffs prove that after deducting arrears of rent and maintenance charges and interest thereon from the security deposit amount, still there is arrears of Rs.
90,836 payable by Defendant with interest to the Plaintiff?
3) Whether Defendant is liable to pay mesne profits at Rs. 40,000 per month from the date of termination of tenancy till handing over of the suit premises to the plaintiffs?
4) Whether the suit is not maintainable?
5) Whether the plaintiffs are entitled to the reliefs prayed for in the suit?
6) What decree or order?11
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13. During the pendency of the suit, Defendant No. 1 filed IA No. 11 to implead Sir. M Vishveshwaraya Co- operative Bank as an additional defendant in the suit. On issuance of notice of the said IA to the proposed defendant bank, the said bank entered appearance through counsel but did not file objections to the IA for impleadment. The plaintiff submitted no objections to the said IA. This court, considering the contention of Defendant No. 1 that the bank is a proper party since the suit schedule premises is the subject matter of SARFAESI action at the hands of the bank, allowed the IA for impleadment, and consequently, Vishweshraya Cooperative Bank is impleaded as Defendant No. 2 in the present suit. However, be it noted that the plaintiff is not seeking any relief against the bank, and it is at the instance of Defendant No. 1 that Defendant No. 2 has been impleaded. After impleadment, Defendant No. 2 did not file any written statement, has not contested the suit 12 CT 1390_Com.OS.1043-2022_Judgment.doc KABC170019562022 by cross-examining PW1, and has not taken any further role in the suit.
14. Further, it is to be noted that by orders dated 5-1- 2024, this court directed Defendant No. 1, who was the sole defendant at that point of time, to deposit Rs. 14,60,911 and to continue to deposit Rs. 35,180 per month towards rent and Rs. 1,000 towards monthly maintenance. Defendant No. 1 failed to comply with the said order for deposit of arrears of rent. In WP 17607 of 2024, the Hon'ble High Court, by orders dated 24-07- 2024, noted the submission of Learned Counsel for Defendant No. 1 herein that Defendant No. 1 does not intend to comply with the said orders. In this background, Hon'ble High Court of Karnataka directed this court to proceed further and pass appropriate orders. In view of the non-compliance with the orders dated 5-1-2024, the plaintiffs filed IA No. 8 for striking off the defense of Defendant No. 1. By orders dated 21-10- 13 CT 1390_Com.OS.1043-2022_Judgment.doc KABC170019562022 2024, this court struck off the defense of Defendant No. 1 for non-compliance with the orders dated 5-1-2024.
15. In the trial, Plaintiff No. 1 examined himself as PW1 and got marked Ex. P1-P10. Although the defense of Defendant No. 1 was struck off, Defendant No. 1 was permitted to cross PW1 only to the extent of disputing the affidavit averments but without the opportunity to put forth his defense. This limited right of cross-examination was afforded to Defendant No. 1, although the defense was struck off, in view of the law laid down by the Hon'ble High Court of Karnataka in Muniyappa v. Nanjappa reported in 2010 SCC Online Karnataka 4792, wherein it was held that even where a defendant has not filed written statement, the defendant will have a restricted right of cross-examination only for the purpose of denying the plaintiff's case without having the right to put forth his defense. Accordingly, PW1 has been cross- examined by Learned Counsel for Defendant No. 1. 14
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16. Since the defense of Defendant No. 1 was struck off and since Defendant No. 2 never filed a written statement, there is no rebuttal evidence.
17. Thereafter, I have heard the arguments of both sides and perused the records of the case.
18. My answers to the issues are as follows:
Issue No. 1: In the affirmative.
Issue Nos. 2 and 3: As per finding.
Issue No. 4: Suit is maintainable.
Issue No. 5: As per finding.
Issue No. 6: As per the final order, for the following ;
REASONS.
Issue No. 4 :-15
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19. This issue is taken up at the outset since it deals with the maintainability of the suit. This issue is framed in view of the specific plea raised by Defendant No. 1 in the written statement that the suit is not maintainable due to suppression of the earlier suit filed by Defendant No. 1 against the plaintiffs for bare injunction in OS 26486 of 2021 and also on the ground that the suit is not maintainable since proceedings under the SARFAESI Act have been initiated by Defendant No. 2 Bank against the plaintiffs and the composite commercial complex, including the suit schedule premises, due to default in repayment of the loan to Defendant No. 2 Bank.
20. Although the defense of Defendant No. 1 has been struck off, it is still necessary for this court to consider this issue on merits because it deals with questions of law regarding the maintainability of this suit. 16
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21. Insofar as the first contention that the suit is not maintainable due to suppression of OS 26486 of 2021 is concerned, it is to be noted that admittedly, the said suit was filed by Defendant No. 1 herein against the plaintiffs herein, who are his landlords and others [original owners and bank], for bare injunction. Admittedly, as per the plaint in the said suit, which is marked by PW1 himself as Ex. P6, the said suit was filed for bare injunction to restrain the defendants of the said suit from interfering with the possession and enjoyment of Defendant No. 1 herein in respect of the suit premises. The perusal of the plaint in the said suit reveals that in the said suit, Defendant No. 1 herein admits that he is the sub-lessee under the plaintiffs herein and contends that due to the default of the plaintiffs herein in repaying the loan to the bank, the bank has initiated proceedings under the SARFAESI Act and hence seeks the protection of his possession of the suit premises.
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22. Therefore, it is clear that the said suit is filed only to restrain the defendants of the said suit from dispossessing Defendant No. 1 herein, otherwise than in accordance with law. The filing of the said suit will not in any way prevent the landlords from filing an ejectment suit. Therefore, there was, in fact, no need for the plaintiffs to plead specifically regarding the filing of the said suit in the present plaint. And even otherwise, during the trial, the plaintiffs themselves produced the plaint in the said suit and got it marked. Hence, I am of the view that on this ground, it cannot be said that the suit is not maintainable.
23. In respect of the other ground taken, that SARFAESI Act proceedings having been initiated against the suit schedule premises by Defendant No. 2 Bank, the present suit for ejectment is not maintainable and it is for the Bank to take action, if any, against the tenants, it is to be noted that under Section 13 of the SARFAESI 18 CT 1390_Com.OS.1043-2022_Judgment.doc KABC170019562022 Act, which deals with the enforcement of security interest, after issuing notice to the borrower as contemplated under Section 13 [2] of the Act, and after considering the representation or objection, if any, issued by the borrower, the secured creditor or bank is entitled under Section 13 [4] to take possession of the secured assets in case the borrower fails to discharge the liability.
24. The bank is also entitled to require any person to pay to the secured creditor so much of the money as is sufficient to discharge the secured debt instead of paying the same to the borrower.
25. Based on these provisions, it was argued by Learned Counsel for Defendant No. 1 that, in view of the initiation of SARFAESI Act proceedings against the suit schedule premises, it is the right of the bank to seek ejectment of the tenant and to seek arrears of rent and mesne profits, etc., and that the plaintiffs have lost the 19 CT 1390_Com.OS.1043-2022_Judgment.doc KABC170019562022 right to seek reliefs in respect of the suit schedule premises, and therefore, the present suit is not maintainable.
26. I am unable to accept this submission because a plain reading of Section 13 [4] of the SARFAESI Act makes it clear that the secured creditor may take recourse to one or more of the measures as stated in the said subsection for recovery of the secured debt. In other words, it is the option of the secured creditor / bank to either take those measures for recovery of the debt or not to take those measures.
27. In the case on hand, although Defendant No. 2 Bank is impleaded as a party, Defendant No. 2 has not filed any written statement taking up the stand that Defendant No. 2 has already taken over possession of the suit schedule premises or that Defendant No. 2 has called upon the tenant in possession thereof, namely 20 CT 1390_Com.OS.1043-2022_Judgment.doc KABC170019562022 Defendant No. 1, to pay the arrears of rent and mesne profits to the bank towards recovery of the secured debt. Therefore, when the bank itself has not pleaded that it has taken recourse to any of the measures under Section 13 [4] of SARFAESI Act viz. taking over possession of the suit schedule premises or demanding arrears of rent and mesne profits in respect thereof, it does not lie in the mouth of Defendant No. 1 to take up the said stand.
28. When the bank has not taken up such a plea, it means that the bank has not taken recourse to any such measures under Section 13 [4] of the Act. And until such recourse is taken by the bank, the right remains with the plaintiffs as the landlords of Defendant No. 1 to eject Defendant No. 1, subject to proving valid termination of tenancy, and to seek arrears of rent and mesne profits, subject to proof of same. Therefore, even on this ground, the suit cannot be rejected as not maintainable. 21
CT 1390_Com.OS.1043-2022_Judgment.doc KABC170019562022 Accordingly, I answer Issue No. 4 holding that present suit is maintainable.
Issue No. 1 :-
29. The case of the plaintiffs in brief is that, the plaintiffs have taken the composite property, which is a commercial building known as Krupashri, old No. 14 Quadrant Road, new No. 23, Tyagi-Doreswamy Road, Shivaji Nagar, Bangalore, totally measuring 8232 sq. ft., on lease from the original owners, namely TBR Boranna and others, under the registered lease deed dated 31-05- 2012. After taking the said property on lease, the plaintiffs demolished the old building and constructed a new commercial complex, leasing out various shops in the new commercial complex to various tenants/sub- lessees. Defendant No. 1 is one such sub-lessee under the plaintiffs in respect of Shop Nos. 16 and 17, which is the suit schedule premises, under a rent agreement 22 CT 1390_Com.OS.1043-2022_Judgment.doc KABC170019562022 dated 01-02-2014. Under this agreement, Defendant No. 1 has paid a security deposit amount of Rs. 8 lakhs and agreed to pay rent of Rs. 25,000 per month and maintenance charges of Rs. 1,000 per month. The rent was to be enhanced every year as stated in the rent agreement at 5% of the previous rent. Although the rent agreement was for a period of 5 years, Defendant No. 1 continued as a sub-lessee under the plaintiffs even after the expiration of the term of agreement. It is the case of the plaintiffs that although the rent was to be enhanced every year as per the rent agreement by 5% on the previous rent, Defendant No. 1 has not paid the enhanced rent and was paying only the initially agreed rent [basic rent] of Rs. 25,000 per month. Furthermore, this rent was paid only up to April 2021. From April 2021 onwards, Defendant No. 1 has not paid even the basic rent. The plaintiffs also allege that from the inception of the tenancy, Defendant No. 1 has not paid the monthly maintenance of Rs. 1,000 as agreed under the rent 23 CT 1390_Com.OS.1043-2022_Judgment.doc KABC170019562022 agreement. Since Defendant No. 1 defaulted in paying both the rent and maintenance charges from 01-04- 2021, the plaintiffs issued a quit notice dated 29-12- 2021, terminating the tenancy with effect from 01-02- 2022 and calling upon Defendant No. 1 to pay the arrears of rent, maintenance charges and interest. However, Defendant No. 1 has neither complied with the same nor vacated the premises. The plaintiffs claim that the arrears of rent i.e. the arrears in payment of enhanced rent, from the date of inception of tenancy up to 31-03-2021, plus the entire rent from 01-04-2021 to 01-02-2022 [date of termination of tenancy] along with maintenance charges and interest, total Rs. 8,90,836. After adjusting the security deposit of Rs. 8 lakhs, the amount payable by Defendant No. 1 towards arrears of rent, maintenance charges and interest as on date of termination of tenancy on 01-02-2022 comes to Rs. 90,836. Additionally, Defendant No. 1 is liable to pay damages/mesne profits at the rate of Rs. 40,000 per 24 CT 1390_Com.OS.1043-2022_Judgment.doc KABC170019562022 month from the date of termination of tenancy, i.e., 01- 02-2022, onwards. With these pleadings, the plaintiffs have filed the present suit seeking ejectment of Defendant No. 1 from the suit schedule premises, recovery of arrears of rent, maintenance charges and interest totaling Rs. 90,836, and damages/mesne profits at Rs. 40,000 per month from the date of termination of tenancy till the handing over of vacant possession.
30. In support of their case, Plaintiff No. 1 is examined as PW1 and has got marked Ex. P1 to P10.
31. Ex. P1 is the certified copy of the registered lease deed dated 31-05-2012 under which the plaintiffs have taken on lease the composite property, in which the suit schedule premises is situated, from the original owners, namely TBR Boranna and others, for a period of 29 years. Since the said lease was executed in 2012, it is valid at least up to the year 2040.
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32. Ex. P2 is the photocopy of the rental agreement dated 01-02-2014 under which the suit schedule premises has been rented out to Defendant No. 1. It is an unregistered document. The photocopy of this document is permitted to be marked as secondary evidence in view of the fact that the plaintiffs laid the foundation for leading secondary evidence in the plaint itself at paragraph 5 by pleading that the original of the said document is in the custody of Defendant No. 1. The plaintiffs filed IA No. 6 calling upon Defendant No. 1 to produce the original document. IA No. 6 was allowed by orders dated 05-01-2024, and the plaintiffs were permitted to issue a notice for the production of the document to Defendant No. 1. But despite this, Defendant No. 1 has not produced the document, and therefore the plaintiffs were permitted to adduce secondary evidence in the form of a photocopy. 26
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33. Ex. P3 is a letter styled as a reminder letter dated 11-11-2021 issued by the plaintiffs to Defendant No. 1 for payment of arrears of rent of ₹6,44,310. Ex. P4 is the bank account statement of Plaintiff No. 1. Ex. P5 is the legal notice dated 29-12-2021 terminating the tenancy of Defendant No. 1. Ex. P6 to P8 are the certified copy of records in OS 26486 of 2021 filed by Defendant No. 1 against the plaintiffs for bare injunction. Ex. P9 is the Khata Certificate of the composite property showing that it stands in the name of the original owners, TBR Boranna. Ex. P10 is the 65B Certificate.
34. Per contra, the defense raised by Defendant No. 1 is that, the Plaintiffs had availed a loan from M. Vishveshwaraya Bank and defaulted on repayment, leading to the bank initiating action under the SARFAESI Act by issuing a demand notice, possession notice, and obtaining orders under Section 14 of the SARFAESI Act. Due to this action, Defendant No. 1 was constrained to 27 CT 1390_Com.OS.1043-2022_Judgment.doc KABC170019562022 approach the Additional City Civil Court in OS 26486 of 2021. Defendant No. 1 also contended that the plaintiffs failed to pay corporation tax, resulting in BBMP issuing a warrant for attachment of the suit schedule premises. Additionally, Defendant No. 1 contended that the plaintiffs failed to maintain the building properly, leading to a fire incident due to poor electrical wiring, causing significant losses to Defendant No. 1. Furthermore, Defendant No. 1 contended that the plaintiffs collected goodwill in cash, not reflected in the rental agreement, and that the building was not constructed according to the sanctioned plan. With these pleadings, Defendant No. 1 prayed for dismissal of the suit.
35. However, as already noted supra, the defense of Defendant No. 1 is struck off, and therefore Defendant No. 1 has not adduced any evidence. Defendant No. 2 Bank did not file written statement and therefore, Defendant No. 2 also did not adduce evidence. 28
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36. Having considered the rival contentions of both sides and the oral and documentary evidence on record, at the outset, since this is a suit for ejectment, the court has to determine whether the plaintiffs have proved the relationship of landlord and tenant between the plaintiffs and Defendant No. 1.
37. In this regard, admittedly, the plaintiffs are not the owners of the suit schedule premises, but they are the lessees from the original owners under the registered lease deed dated 31-05-2012 (Ex. P1). The term of the lease created under Ex. P1 is for 29 years, and therefore it is clear that, the plaintiffs are the lessees under the original owners. Ex. P2 discloses that as lessees of the composite commercial complex, the plaintiffs have inducted Defendant No. 1 as the sub-lessee in respect of the suit schedule premises.
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38. It is to be noted that in the cross-examination of PW1, Ex. P2 is not disputed, and therefore it is an undisputed document. Hence, based on Ex. P2, it is clear that there is jural relationship of landlord and tenant between the plaintiffs and Defendant No. 1, since under Ex. P2, the plaintiffs have inducted Defendant No. 1 as the sub-lessee under them in respect of the suit schedule premises.
39. Even otherwise, from the certified copy of the plaint marked as Ex. P6, it is clear that, in the suit for bare injunction filed by Defendant No. 1 herein against the plaintiffs herein and others, Defendant No. 1 has clearly admitted that he is a tenant under the plaintiffs in respect of the suit schedule premises under the rental agreement dated 01-02-2014, as pleaded at paragraph 10 of Ex. P6 by Defendant No. 1 himself.
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40. Therefore, in the face of this material, I hold that it is an admitted fact that Defendant No. 1 is the sub-lessee under the plaintiffs in respect of the suit schedule premises, and therefore the plaintiffs have proved the jural relationship of landlord and tenant between the plaintiffs and Defendant No. 1.
41. The next question is whether the plaintiffs have validly terminated the tenancy of Defendant No. 1. In this regard, it is to be noted that although as Ex. P2 [rental agreement] it is stated that, the tenancy is for a period of five years [paragraph 5 of Ex. P2], since it is an unregistered document, it cannot create a tenancy for more than 11 months.
42. In this regard, reference may be made to the law laid down by the Hon'ble High Court of Karnataka in the case of G. Kusuma Devi v. Gowramma, 2006 SCC OnLine Kar 456 : AIR 2006 Kar 295 : (2006) 6 Kant 31 CT 1390_Com.OS.1043-2022_Judgment.doc KABC170019562022 LJ 120 : (2006) 5 AIR Kant R 478 : (2007) 2 ICC 516 :
(2007) 1 All LJ (NOC 94) 30 : 2006 AIHC 3499 : (2007) 1 CCC 28 at page 300, as follows;
17. The Apex Court, in the case of Burmah Shell Oil Distributing now known as Bharat Petroleum Corporation Ltd. v. Khaja Midhat Noor reported in AIR 1988 SC 1470 has held as under:
"In view of the paragraph 1 of Section 107 of the Act, since the lease was for a period exceeding one year, it could only have been extended by a registered instrument executed by both the lessor and the lessee. In the absence of registered instrument, the lease shall be deemed to be "lease from month to month". It is clear from the very language of Section 107 of the Act which postulates that a lease of immoveable property from year to year or for any term exceeding one year, or reserving a yearly rent, can be made only a registered instrument. In the absence of registered instrument, it must be a monthly lease. The lessee and the sub-lessee in the facts of this case continued to remain in rent as a tenant from month to month. The High Court so found. We are of the opinion that the High Court was right."
It is clear from the aforesaid dictum that in the absence of registered lease deed, the lease shall be deemed to be lease from month to month, as contemplated 32 CT 1390_Com.OS.1043-2022_Judgment.doc KABC170019562022 under the provision of Section 107 of the Transfer of Property Act which reads thus:
"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.
Where a lease of immovable property is made by a registered instrument, such instrument or, where there are more instruments than one, each such instrument shall be executed by both the lessor and the lessee:
Provided that the State Government may, from time to time, by notifying in the Official Gazette, direct that leases of immovable property, other than leases from year to year, or for any term exceeding one year, or reserving a yearly rent, or any class of such leases, may be made by unregistered instrument or by oral agreement without delivery of possession."
18. It is clear from plain language of Section 107 of the Transfer of Property Act that the lease of immovable property for any term exceeding one year can be made only by registered instrument. In the absence of registered instrument, the lease must be a monthly lease and not yearly lease or a lease beyond one year. In this case also, as the lease is for a period beyond one year and as the same is created by unregistered instrument, it shall have to be construed only as monthly lease and 33 CT 1390_Com.OS.1043-2022_Judgment.doc KABC170019562022 not yearly lease or a lease beyond one year and therefore, the termination of lease would be only by giving 15 days quit notice under S. 106 of the T.P. Act. It is not in dispute that quit notice is issued under S. 106 of the T.P. Act by the plaintiffs calling upon the defendant-lessee to quit and vacate the premises, in this matter.
In the case of Satish Chand Makhan v. Govardhan Das Byas reported in (1984) 1 SCC 369 : (AIR 1984 SC 143) it is held as under:
"The Unregistered Draft Lease Agreement Ex. B-2 was clearly inadmissible in evidence under S. 49 of the Registration Act, except for the collateral purpose of proving the nature and character of possession of the defendants. The document Ex. B-2 was 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 leass agreement Ex. B-2 was inadmissible in evidence to prove the transaction of lease. It was 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."
(Emphasis Supplied) 34 CT 1390_Com.OS.1043-2022_Judgment.doc KABC170019562022
43. In light of the above law, it is crystal clear that a rent agreement that is unregistered cannot create a tenancy of more than 11 months. Therefore, after 11 months from 01-02-2014, the tenancy of Defendant No. 1 under the plaintiffs in respect of the suit schedule premises became a monthly tenancy, which is terminable by 15 days' notice as provided under Section 106 of the Transfer of Property Act.
44. The plaintiffs have issued the legal notice at Ex. P5 dated 29-12-2021, wherein it is clearly stated that the monthly tenancy shall stand terminated upon the expiry of 15 days from the date of receipt of the legal notice. The receipt of the said legal notice is not disputed in the cross-examination of PW1. Even otherwise, the service of the said legal notice is duly proved by the postal acknowledgments at Ex.s P5(a) and P5(b). 35
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45. Therefore, it follows that on expiry of 15 days from date of service of the said legal notice at Ex.P 5, the tenancy of the Defendant No. 1 stands terminated. As per the plaint, the termination of tenancy is with effect from 1-2-2022, which is more than 15 days from date of service of the said legal notice terminating the tenancy. Therefore, I hold that, since the tenancy of Defendant No. 1 is under an unregistered document, after 11 months from the date of Ex. P2, the said tenancy of Defendant No. 1 has become monthly tenancy, terminable by 15 days' notice, which is duly terminated by service of quit notice marked as Ex. P5. Accordingly, I hold that the tenancy of the defendant No. 1 is duly terminated and therefore after 1-2-2022 the defendant No. 1 has no right to continue in possession of Suit Schedule premises.
46. Hence I hold that plaintiffs are entitled to ejectment of Defendant No. 1 from Suit Schedule 36 CT 1390_Com.OS.1043-2022_Judgment.doc KABC170019562022 premises and accordingly I answer issue No. 1 in the affirmative.
Issue No. 2, 3 and 5 :-
47. These issues require common discussion and hence considered together.
48. As already noted supra, Ex. P2 which is the rental agreement between the plaintiffs and defendant No. 1 is an undisputed document in the present suit. The perusal of the said document indicates that under the said rental agreement, the plaintiffs have received a security deposit amount of Rs. 8 lakhs which is refundable without interest at the time of Defendant No. 1 vacating the Suit Schedule Premises. Further, under the said rental agreement, the rent payable for the first year from 1-04- 2014 to 31-3-2015 is Rs. 25,000 per month and thereafter the rent is increased by 5% every year on the previous rent. Therefore according to the plaint 37 CT 1390_Com.OS.1043-2022_Judgment.doc KABC170019562022 averments the rent payable for the year 2021-22 when the tenancy was terminated was Rs. 35,180. However, at paragraph 7 of the Plaint, there is a candid admission that, even after the first year of tenancy, the defendant No. 1 continued to pay only the basic rate of Rs. 25,000 and Defendant No. 1 was only paying the said basic rent upto April 2021 [i.e. till 31-03-2021] and thereafter, stopped paying the rents completely. Even in cross examination of PW1 at paragraph 2, he says that Defendant No. 1 is in arrears of rent from April 2021. The tenor of cross-examination of PW1 discloses that this part of the plaintiff's case is not disputed by the contesting Defendant No. 1 and instead the contention raised by Defendant No. 1 is that the Defendant No. 1 was constrained to stop paying the rent because the Defendant No. 2 bank initiated action under the SARFAESI Act in respect of the suit schedule premises. As already noted Supra, while answering issue No. 4, the contention of Defendant No. 1 that once SARFAESI Act 38 CT 1390_Com.OS.1043-2022_Judgment.doc KABC170019562022 proceedings are initiated, it is only the bank which can exercise the rights of owner in respect of the Suit Schedule premises cannot be accepted because the remedies available to the secured creditor / bank under section 13 [4] of the Act are discretionary and the bank may seek to enforce such remedies to take over the possession of the Suit Schedule premises at its option and the bank may also opt not to take recourse to any of the reliefs available under Section 13 of the SARFAESI Act. In the case on hand, when the bank itself has not taken up any contention by filing written statement that bank has taken over the possession of Suit Schedule Premises, it follows that the bank has not taken recourse to any of the measures under Section 13 [4] of the SARFAESI Act and therefore, it is the plaintiffs who are entitled to enforce their rights as the landlords against the defendant. Therefore, the plaintiffs are entitled to recover the arrears of rent up to the date of termination of tenancy and mesne profits from the date of 39 CT 1390_Com.OS.1043-2022_Judgment.doc KABC170019562022 termination of tenancy, that is 1-02-2022 till date of handing over of vacant possession by the Defendant No.1.
49. The plaintiffs are claiming the arrears of rent as per the enhanced rent as stated in rental agreement at Ex. P2. However as noted supra Ex. P2 is an unregistered document and therefore it cannot have force for more than one year and in this regard the ruling of Hon'ble High Court of Karnataka has already been extracted supra. Therefore it means that being an unregistered document Ex. P2 cannot fix the rent between the parties for period beyond 11 months. Therefore the rate of enhanced rent for the second year and successive years fixed under Ex. P2 is not enforceable between the parties. Even otherwise, as admitted in the plaint at paragraph 7, it was only the basic rent of Rs 25,000 that was being paid by Defendant No. 1 up to 31-03-2021. The plaintiffs have accepted such basic rent, without demur all the 40 CT 1390_Com.OS.1043-2022_Judgment.doc KABC170019562022 years and for the first time by the reminder letter at Ex.P 3, which is subsequent to the date on which the defendant No. 1 stopped paying the rent viz. reminder letter dated 11-11-2021 the plaintiffs have sought for arrears at rate of enhanced rent. Therefore it means that, firstly, the enhanced rate of rent as stated in Ex. P2 is not enforceable because Ex. P2 is an unregistered document and therefore will have no effect after first 11 months and even otherwise the plaintiffs admit in the plaint that they have received the basic rent without demur up to 31-3-2021. Therefore, I am of the view that the plaintiffs cannot seek arrears of rent at the enhanced rate of rent as stated in Ex. P2 and the plaintiffs are only entitled to claim the last paid admitted rent of Rs. 25,000.
50. As already noted Supra, there is no dispute that after 31-3-2021, Defendant No. 1 has not paid the rent. Therefore, I hold that from 1-4-2021 up to 1-2-2022, 41 CT 1390_Com.OS.1043-2022_Judgment.doc KABC170019562022 when the tenancy was terminated, that is for a period of 10 months, the plaintiffs are entitled to arrears of rent at the rate of Rs. 25,000 per month, which works out to Rs. 2,50,000.
51. Apart from this, the plaintiffs are also seeking the relief of recovery of maintenance charges at the rate of Rs. 1000 per month. In this regard, if the rental agreement did Ex. P2, which as already noted supra is an admitted document is looked into, it is noted that at paragraph 21 it specifically provides that the tenant shall pay monthly maintenance charges of the building common facilities and common areas at the rate of Rs. 1000 along with the monthly rent. According to the case of the plaintiffs, right from the inception of tenancy, the defendant No. 1 has not paid the monthly maintenance charges. This is not seriously disputed in the cross examination of PW1 and on the other hand the only contention raised by defendant No. 1 in cross- 42
CT 1390_Com.OS.1043-2022_Judgment.doc KABC170019562022 examination is that the maintenance services such as lift facility etc are not being provided and therefore since no proper maintenance is being provided defendant No. 1 is not liable to pay the monthly maintenance charges.
52. However, the payment of monthly maintenance charges at the rate of Rs. 1000 per month is a contractual term between the parties and therefore Defendant No. 1 is bound to pay the same. In case, it is the grievance of Defendant No. 1 that the plaintiffs are not providing adequate maintenance services to the building, it was for Defendant No. 1 to issue notice at relevant point of time during the subsistence of the tenancy calling upon the landlords to provide proper maintenance. Admittedly, during the entire subsistence of the tenancy, the Defendant No. 1 has not issued any notice to the plaintiffs in respect of deficiency in maintenance services. Therefore, it is not open to the defendant No. 1 to raise the contention after termination 43 CT 1390_Com.OS.1043-2022_Judgment.doc KABC170019562022 of tenancy that the defendant No. 1 is not liable to pay the monthly maintenance on the ground of any deficiency in maintenance services. Therefore, when it is not the case of defendant No. 1 that, the defendant No. 1 has paid the monthly maintenance at any point of time, it follows that the plaintiffs are entitled to recover the monthly maintenance from Defendant No. 1. However, it is to be noted that, the plaintiffs cannot seek to recover the monthly maintenance right from the date of inception of tenancy because any amounts payable more than three years earlier to the filing of the suit would be barred by limitation. Therefore, I am of the view that, the plaintiffs can claim monthly maintenance at the rate of Rs. 1000 per month only for three years prior to institution of the suit. Accordingly, I hold that under the head of arrears of monthly maintenance prior to institution of the suit, the plaintiffs can claim Rs. 1000 for 36 months, that is, totally Rs. 36,000. 44
CT 1390_Com.OS.1043-2022_Judgment.doc KABC170019562022
53. Now turning to the mesne profits, one of the contentions raised by Defendant No. 1 against the awarding of mesne profits is that since proceedings under the SARFAESI Act have been initiated by Defendant No. 2 Bank, it is the Defendant No. 2 Bank which is entitled to mesne profits and not the plaintiffs. This contention has already been rejected supra by holding that, taking over of the possession of the secured asset and calling upon the tenants to pay rent and mesne profits to the bank is one of the reliefs to which the bank is entitled to enforce under section 13(4) of the SARFAESI Act, but it is at the option of the bank whether to enforce the said relief or not. In the case on hand, the defendant No. 2 bank has not filed Written Statement taking up the plea that, the Defendant No. 2 Bank has taken over the possession of Suit Schedule Premises. Therefore, it is the plaintiffs who are entitled to recovery of mesne profits / damages from the Defendant 45 CT 1390_Com.OS.1043-2022_Judgment.doc KABC170019562022 No. 1 from the date of termination of the tenancy, viz. from 1-2-2022.
54. In the case on hand, the plaintiffs are seeking mesne profits at the rate of Rs. 40,000 per month. This rate of mesne profits is not disputed by Defendant No. 1 in cross-examination of PW-1. Even otherwise, from Ex. P2, the Rental Agreement entered into between the parties, it is forthcoming that the rent fixed for the Suit Schedule premises in the year 2014 was Rs. 25,000, and therefore the claim of mesne profits at the rate of Rs. 40,000 per month in the year 2022 is reasonable and deserves to be awarded. It is to be noted that, it is not necessary that, in every case for possession and recovery of mesne profits the court should order for inquiry, but if in the facts and circumstances of the case there is sufficient material to quantify the rate of mesne profits, the relief of mesne profits can be awarded along with the 46 CT 1390_Com.OS.1043-2022_Judgment.doc KABC170019562022 preliminary decree itself, and there is no need to order for separate inquiry under Order 20 Rule 12 of the CPC.
55. In this regard, reference may be made to the law laid down by Hon'ble High Court of Karnataka in the case of P.R. Chikka Subba Rao v. Nama Ramaswami Setty, AIR 1954 Mys 42 at page 44, as follows;
16. There is apparently nothing in O. 20, R. 12 which requires that the determination of such an issue must be left to proceedings after a preliminary decree for possession and past mesne profits are passed or bars a finding being made in the suit itself, the word used being 'may' in that rule. In -- 'Vellaveeran Chetty v. V. Veeran Chetty', AIR 1938 Mad 727 at p. 729 (D), it has been held that it is perfectly competent to a court without directing an enquiry to pass a decree finally determining the amount of profits payable subsequent to the institution of the suit, if it is made out that it is not necessary to make such an enquiry and that it cannot be said that such a decree is not final or is incapable of execution nor would it be in contravention of the provisions of O. 20, R. 12, Civil P.C. A preliminary decree becomes necessary where the exact amount is to be ascertained after the examination of fresh evidence; see -- 'Bagchi, A.P. v. Mrs. F. Morgan', AIR 1937 All 36 (E).
47
CT 1390_Com.OS.1043-2022_Judgment.doc KABC170019562022 (Emphasis supplied)
56. In light of above law, it is clear that, it is not necessary that, in every case, the relief of future mesne profits has to be only after separate enquiry, under Order 20 Rule 12 CPC. If there is undisputed material which can be the basis for ascertaining the quantum of mesne profits, there is no embargo for the court to directly grant the mesne profits, instead of postponing the same to separate enquiry.
57. In the case on hand, as already noted supra, the rate of mesne profits at Rs. 40,000 per month is not disputed in the cross-examination of PW-1 and even otherwise it is a reasonable rate of mesne profits, keeping in mind the fact that under Ex. P2, nearly 8 years back, in the year 2014, the rent was fixed at Rs. 25,000 per month. Therefore, I am of the view that from 1-2-2022, which is the date of termination of tenancy, the plaintiffs 48 CT 1390_Com.OS.1043-2022_Judgment.doc KABC170019562022 are entitled to recover damages/mesne profits from Defendant No. 1 at the rate of Rs. 40,000 per month.
58. However, in the interest of justice, it is necessary that the advance amount admittedly received by the plaintiffs should be deducted while calculating the balance amount payable by Defendant No. 1 towards the arrears of rent and mesne profits.
59. In this regard, in the plaint, and also from Ex. P2, it is forthcoming that the plaintiffs have admittedly received an advance amount of Rs. 8 lakhs, which is repayable to the tenant at the time of the tenant vacating the suit schedule premises.
60. No doubt, the contention raised by Defendant No. 1 is that an even bigger amount was received as goodwill by way of cash. In this regard, there is no material and therefore, I am of the view that the contention regarding payment of goodwill by way of cash is unacceptable. 49
CT 1390_Com.OS.1043-2022_Judgment.doc KABC170019562022 Therefore, from the total amount payable by the defendant No. 1 to the plaintiffs, as arrears of rent, maintenance, and mesne profits, it is necessary to deduct the advance amount of Rs. 8 lakhs.
61. Accordingly, I answer Issue No. 2, 3, and 5. Issue No. 6:
62. Having answered Issue No. 1 to 5 as above, I proceed to pass the following :-
ORDER.
The suit is partly decreed, with cost. It is held that plaintiff is entitled to decree of ejectment against the defendant No. 1 in respect of suit schedule premises and consequently the defendant No. 1 is directed to vacate and hand over vacant possession of suit schedule premises to the plaintiff, within two months from today.
The prayer for recovery of arrears of rent, interest and maintenance amount of Rs.50
CT 1390_Com.OS.1043-2022_Judgment.doc KABC170019562022 90,836/= after adjusting the advance amount of Rs. 8 lakhs is partly allowed by holding that, plaintiff is entitled to recover from the Defendant No. 1, arrears of rent at the rate of Rs. 25,000 per month from April 2021 to January 2022 [10 months] which comes to Rs. 2,50,000 and Plaintiff is entitled to recover arrears of maintenance at the rate of Rs. 1000 per month only for the period of 3 years prior to institution of the suit, i.e. Rs. 36000 and the total sum comes to Rs. 2,86,000.
It is further held that the Plaintiff is entitled to recover from the Defendant No. 1, damages /mesne profits at the rate of Rs. 40,000 per month from date of termination of tenancy i.e. 1-2-2022 till date of handing order of vacant possession of suit schedule premises and the said accumulated damages up to the date of passing of this judgment [February 2022 to December 2024 viz. 35 months] is calculated at Rs. 14 Lakhs.
The plaintiff is directed to pay the court fee on the accumulated damages up to the date of passing of this judgment of Rs. 14 51 CT 1390_Com.OS.1043-2022_Judgment.doc KABC170019562022 Lakhs under Section 42 [1] of the Karnataka Court Fees and Suit Valuation Act.
It is further held that since the plaintiff has admittedly received advance amount of Rs. 8 lakhs from the defendant No. 1, from the above arrears of rent and maintenance and mesne profits awarded, the said advance amount of Rs. 8 lakhs shall be deducted and plaintiff shall be entitled to recover the balance sum from the defendant No. 1.
Office to draw decree accordingly, after collecting the court fee on sum of Rs. 14 Lakhs under Section 42 [1] of KCF&SV Act as ordered above.
Office to issue soft copy of this judgment to both sides by email if furnished.
[Dictated using Dragon Professional Speech Recognition Software Version 15.3, transcript revised, corrected, signed and then pronounced by me in open court on this the 19th day of December, 2024] (Sri. S. Sudindranath) LXXXIII ADDL.CITY CIVIL AND SESSIONS JUDGE, COMMERCIAL COURT; BANGALORE.
52CT 1390_Com.OS.1043-2022_Judgment.doc KABC170019562022 ANNEXURE
1. List of witnesses examined on behalf of Plaintiff:
PW1 : Girish K.Nashi
2. List of witnesses examined on behalf of Defendants:
NIL
3. List of documents marked on behalf of Plaintiff:
Ex.P1 : Digital certified copy of registered lease deed dated 31.05.2012 Ex.P2 : Copy of rental agreement dated 01.02.2014 (witness says that original of this document is with the opposite side and same has not been produced by other side inspite of issuance of notice as per orders dated 5.1.2024 and in view of the said explanation for non production of original of this document is permitted to be got marked.
However, this document is marked keeping open question stamp duty which shall be decided by separate order) Ex.P3 : Office copy of reminder letter dated Ex.P3(a) 11.11.2021 along with 2 RPAD &3(b) acknowledgment cards Ex.P4 : Digital copy of bank account statement (subject to objections for non production of 65B Certificate) (page No.27 to 39) Ex.P5 : Office copy of legal notice dated 29.12.2021 Ex.P5(a)& along with 2 RPAD acknowledgment cards 5(b) Ex.P6 : Certified copy of plaint in O.S.No.26486/2021 Ex.P7 : Certified copy of affidavit of defendant in O.S.No.26486/2021 Ex.P8 : Certified copy of I.A.No.2/2021 in O.S.No.26486/2021 Ex.P9 : Katha Extract 53 CT 1390_Com.OS.1043-2022_Judgment.doc KABC170019562022 Ex.P10 : Certificate under section 65B of Indian Evidence Act.
4. List of documents marked on behalf of Defendants:
NIL (Sri. S. Sudindranath) LXXXIII ADDL.CITY CIVIL AND SESSIONS JUDGE, COMMERCIAL COURT; BANGALORE.