Delhi District Court
Classic Motors Private Limited vs Automark Motors Private Limited on 30 April, 2026
IN THE COURT OF DISTRICT JUDGE
(COMMERCIAL COURT-02) :
SOUTH-EAST DISTRICT : SAKET COURTS : NEW DELHI
PRESIDED BY: LALIT KUMAR:
CS (COMM) 579/21
Classic Motors Private Limited.
A Private Company incorporated
under the Companies Act, 1956
Having its registered office at:
101, Competent House,
F-14, Connaught Place,
New Delhi-110001
Rep. by its Chairman & Managing Director
and Authorized Signatory
Mr. Narender Anand
By Board Resolution dated 29.11.2021 ..... Plaintiff
Versus
1. Automark Motors Private Limited
A company incorporated under the Companies Act, 1956
Having its registered office at:
Plot No. 206, Near Sola Flyover,
Next to Gujarat High Court,
Sarkhej-Gandhinagar Highway,
Ahmedabad, Gujarat 382481
Also at:
Rep. by its Managing Director
Ms. Garima Misra
M/s Automark Motors Pvt Ltd.
B-25, Pocket A, Okhla Industrial Estate
Okhla Phase-I,
New Delhi-110020
CS (COMM)-579/2021 Classic Motors Private Limited. Vs. Automark Motors Private Limited & Ors.
Page 1 of 51
2. Ms. Garima Misra
Managing Director
M/s Automark Motors Pvt Ltd.
B-25, Pocket A, Okhla Industrial Estate
Okhla Phase-I,
New Delhi-110020
3. Mr. Manjeet Sawant
Chief Executive Officer (CEO)
M/s Automark Motors Pvt Ltd.
B-25, Pocket A, Okhla Industrial Estate
Okhla Phase-I,
New Delhi-110020 ..... Defendants
Date of Institution: 09.12.2021
Arguments concluded on:27.04.2026
Date of Judgment:30.04.2026
JUDGMENT
1. Vide this judgment, I shall dispose off the present suit filed on behalf of plaintiff for recovery of Rs. 25,25,303/- from the defendants.
Case of the plaintiff 2 (a). Brief facts of the case are that the Plaintiff is the sole and absolute owner of property situated at A-39, Mohan Co-operative Industrial Estate, Mathura Road, New Delhi - 1100044.
(b). Defendant No.1 i s a private limited company involved in the sale, service and dealership of motor vehicles (includes wholesale and retail sale of new and used passenger motor vehicles and lorries, trailers and semi-trailers). Defendant No.2 is CS (COMM)-579/2021 Classic Motors Private Limited. Vs. Automark Motors Private Limited & Ors.
Page 2 of 51the Managing Director and authorised signatory of Defendant No.1. Defendant No.3 is the Chief Executive Officer of Defendant No.1. Defendant Nos. 2 & 3 are involved in the day- to-day business and functioning of Defendant No.1.
(c). The Defendant No. 2 & 3 approached the Plaintiff Company for taking on lease a part of the Plaintiff's property i.e. covered area of about 25,000 sq.ft. on the basement, ground and mezzanine floors at the above-mentioned property i.e. A-39, Mohan Co-operative Industrial Estate, Mathura Road, New Delhi-1100044 for setting up an automobile (Volkswagen) workshop, storage, stock yard and other related activity of the car dealership including service of vehicles. The Lease Deed was registered for a period of 9 years commencing from 01.12.2014 with an increase of 15% on the last rent paid, every three years until 30.11.2023. The Lease Deed was signed and executed by the Managing Director of the Plaintiff Company and the Managing Director of defendant no.1 i.e. Defendant No. 2. The lease rent was fixed as under:
SI.No Period No. of Rent (in Rs.) Due date Water and Months per month of Maintenance payment Charges per of rent month
1. 01.12.14-30.11.17 36 Rs. 12,50,000/- On or Rs. 20,000/-
+ GST before the +GST
(subject to TDS) 7th day of
each
month
2. 01.12.17-30.11.20 36 Rs. 14,37,500/- On or Rs. 23,000/-
(increase@15%) + GST before the +GST
(subject to TDS) 7th day of
CS (COMM)-579/2021 Classic Motors Private Limited. Vs. Automark Motors Private Limited & Ors.Page 3 of 51
each month
3. 01.12.20-30.11.23 36 Rs. 16,53,125/- On or Rs. 26,450/-
(increase @ 15%) + GST before the +GST
(subject to TDS) 7th day of
each
month
At the time of execution of the Lease Deed Defendant No. 2 on behalf of the Defendant No. 1 handed over a cheque of Security Deposit of Rs. 75,00,000/- (Rupees Seventy-Five Lakhs Only) which was equivalent to the Lease Rent of six months. The Defendant No.1 was also required to pay electricity charges as per actual consumption.
(d). During the first term of 36 months of the lease i.e. for the period from 01.12.2014 till 30.11.2017, things went on smoothly and the Defendants adhered to the lease covenants. At the time of beginning of the second term of 36 months i.e. from 01.12.2017 till 30.11.2020, the lease rent along with water maintenance charges for this second term became payable with an increase of 15% on the last rent paid in accordance with the terms and conditions of the lease. Accordingly, the Defendant No.1 was liable to pay lease rent of Rs.14,37,500/- per month plus 18% GST and monthly water and maintenance charges of Rs.23,000/- plus 18% GST with effect from 01.12.2017 to 30.11.2020. The Defendant No.2 on behalf of Defendant No.1 paid the aforesaid amount only for 3 (three) months i.e. from December'17 till February'18. However, since March 2018 onwards the said amount was not paid and many times there were CS (COMM)-579/2021 Classic Motors Private Limited. Vs. Automark Motors Private Limited & Ors.
Page 4 of 51shortfalls in paying the Lease Rent which were duly intimated to the Defendants from time to time. The Defendant No. 2 would sought time on one pretext or the other to settle the dues but never kept her commitment.
(e). That on 23.03.2018, Plaintiff was shocked to receive a Letter on their e-mail from Ms. Garima Misra (Managing Director& Defendant No.2) of the Defendant No.1 Company with a completely unilateral proposal which referred to "discussion dated March 23rd 2018", which never took place. The letter stated:
"On the basis of our discussion dated March 23 rd 2018, we request you to reduce our present rate and charge only Rs. 12,50,000/- pm from the period 1 December 2017 and continue the rent of Rs 12,50,000/- for next two years i.e. up to 30 November 2019. We further request you to refund/adjust increase in rent paid from 1 December 2017 till 28 February 2018 in the rent payable for the month of March 2018. All other terms and conditions will remain same. This letter should be read with the Rent Agreement dated 1 December 2014. Kindly confirm the above arrangement by signing this letter as confirmation for the reduction in rent."
The Defendants when confronted by the Plaintiff Company, then the Defendants requested and pleaded the Plaintiff for a reduction of Lease Rent. Post further requests for reduction in rent and after much deliberation and subsequent approval from the Board of Directors of the Plaintiff Company, the Defendant Company was granted relaxation in monthly rent for a period of 2 (two) years i.e. from 01.04.2018 till 31.03.2020 i.e. the monthly rent payable by the Defendant No.1 for the aforementioned duration was agreed at Rs.12,50,000/- plus taxes and subject to TDS. The Plaintiff by its director's letter dated 18.05.2018 further clarified that water and CS (COMM)-579/2021 Classic Motors Private Limited. Vs. Automark Motors Private Limited & Ors.
Page 5 of 51maintenance charges were payable at Rs.23,000/- per month plus taxes and the Defendant Company was requested to clear the arrears towards this head at the earliest.
(f). That thereafter the Defendant Company paid the reduced monthly rent of Rs.12,50,000/- taxes extra from 01.04.2018 till 30.08.2019 then surprisingly another letter dated 30.08.2019 was received from the Defendant No.2 which provided, "Our team will reach out to you to discuss and modify our rent/lease agreements. During these unprecedented times, considering our long-standing relationship,I am hopeful that you will stand besides us for a stronger and brighter tomorrow."
However, no one from Defendant No. 1's office approached the Plaintiff. Since there was no response or reach out from the Defendant No. 1 company and there was unilateral reduction of Rent, the Plaintiff Company issued a letter dated 09.03.2020 to Defendant No.2 seeking clarity on the monthly lease rent as the Plaintiff stating:
"..depositing GST on monthly Rental of Rs. 12,50,000/- P.M and whereas you are paying us partial rent to the amount of Rs. 11,25,000/-per month, the difference of the two amount is booked in our books as amount receivable towards the Monthly Rental and is being treated as arrears, receivable from your company".
However, no response was received to the aforesaid communication. A Couple of months later a letter was received from the Defendant Company on 05.05.2020 seeking waiver of Lease rent.
(g). That vide letter dated 12.05.2020, the Plaintiff Company CS (COMM)-579/2021 Classic Motors Private Limited. Vs. Automark Motors Private Limited & Ors.
Page 6 of 51through its Managing Director informed the Defendant No. 1 and Defendant No. 2 about their failure in complying to the primary covenants of payment of lease rentals while holding and enjoying the premises. It was brought forward in the said letter that the Defendants are in continuous defaults of releasing the arrears of Lease Rent despite the fact that the Plaintiff Company has been generously accommodating the Defendants by making several relaxations and considerations. That the default in payment of rent for the months of April & May 2020, deficit rent of Rs.1,25,000/- per month from Nov`19 to Mar'20 had become overdue and was completely overlooked by the Defendants.
Also that the Defendant No. 2 was once questioned by the Managing Directors to how and why did she has got a Tin-shed erected at the premises without the permission of the Plaintiff and that the Plaintiff company suffered an action from the SDMC for the reason of such default and the Plaintiff had to pay the penalty for this wrong created by the Defendant No. 2.
(h). That the Defendant No 2 also defaulted the commitment given via an undertaking to Ms Bajaj Finance Ltd. where the Lease Rentals payable by the Defendants stood Hypothecated to them and they were to be punctually deposited to the ESCROW account of Bajaj Finance Ltd. which did not happen. Thus, the Plaintiff suffered penalties and interest on the account of the default by the Defendants for not depositing the Lease Rentals in the Escrow account. The Plaintiff in its reply refuted the contention of the Defendants on Applicability of force majeure vide the Manual for Procurement of CS (COMM)-579/2021 Classic Motors Private Limited. Vs. Automark Motors Private Limited & Ors.
Page 7 of 51Goods, 2017 on commercial contracts, which was absolutely not applicable on the plaintiff.
(i). The Plaintiff infact cited the support package announced by Volkswagen for crisis hit dealer partners which the Defendants had Hidden and not disclosed to us.
The Plaintiff further informed that: "As on date you are in default of Rs. 31,25,000/- (GST+ Othr exp,) against Rentals only"
and further sought clearance of all outstanding amounts ASAP.
(j). That on 10.06.2020, a meeting was scheduled between the officials of both the plaintiff and the Defendants. It was proposed by the Defendant Company that further relaxations in the lease rent may be given to them and in return the Defendant Company will assure that they will clear the pending rentals and other arrears of the Plaintiff Company as per the timeline discussed. The Vice-
President of the Defendant Company Mr. Abhinav Shah further assured he Managing Director of the Plaintiff Company that all pending dues would be cleared before 19.06.2020. And the commitment of clearance of dues will be recorded and sent in a draft Addendum to the Plaintiff.
(k). On 17.06.2020, the Defendants in partial discharge of its admitted liabilities, made a part payment of only an amount of Rs.10,00,000/-. That the Defendants did not keep their commitment of clearing their dues, as per their commitment, Thereafter the Plaintiff issued another letter to the Defendants on 22.06.2020 via e- mail to the Defendant No.2, 1 & others in CC informing that the CS (COMM)-579/2021 Classic Motors Private Limited. Vs. Automark Motors Private Limited & Ors.
Page 8 of 51amount due to the Plaintiff was Rs.50 Lakhs and only a small amount of Rs. 10 Lakhs have been deposited in to the account of the Plaintiff. That immediately thereafter, within 1½ hours of the e-mail sent to the Defendants i.e. on 22.06.2020, an e-mail was received from the Defendant No.1 which enumerated the points which were never discussed in the meeting held on 10.06.2020 and further sought the Plaintiff's confirmation on the same. This was followed by another e-mail from the Defendants on 26.06.2020 which contained some points of certain timelines which were never discussed and thus was nor accepted.
(l). That the Defendants again made part payment of an amount of Rs.10,00,000/- on 26.06.2020. On 03.07.2020, an Addendum was sent on behalf of the Plaintiff Company to the Defendant No. 1 Company for execution since the draft Addendum sent by them did not correctly record the understanding which was discussed in the earlier meeting the same was not accepted however the Plaintiff sent an e-mail on 03.07.2020 to the Defendants carrying the correct discussion as recorded in the Addendum. Subsequently, an e-mail dated 07.07.2020 was sent by the Defendant Company which provided that a bill had been received from the Plaintiff Company for Rs.25,000/- per month instead of Rs.20,000/- per month towards water charges. This was clarified by the Plaintiff's director by letter dated 10.07.2020 which provided that water charges were being paid by the Defendant Company @ Rs.20,000/-+ 18% GST while from 01.12.2017 15% increase should have been applied and paid long with 18% GST, It was further informed that there was a deficit of CS (COMM)-579/2021 Classic Motors Private Limited. Vs. Automark Motors Private Limited & Ors.
Page 9 of 51Rs.1,18,944/- in the payment of water charges by the Defendant Company over a period of 2.8 years, and a rectified bill was enclosed. The Defendant Company was "requested to kindly settle the bill and the outstanding dues ASAP". Hence, the present suit has been filed by plaintiff against the defendants for recovery of Rs. 25,25,303/- which the defendants are jointly and severally liable to pay to the plaintiff.
Case of the Defendant 3 (a). Written Statement has been filed on behalf of defendant. It is submitted by Ld. Counsel for defendant that the present suit is not maintainable as no cause of action has arisen against the Defendants. It is further submitted that the Plaintiff's claims are based on alleged defaults in lease rent payments, which were either made under mutual agreements during financial hardship or are disputed due to the unprecedented COVID-19 pandemic. The Plaintiff has suppressed material facts, including ongoing negotiations and concessions granted, to fabricate a false narrative of default by the Defendants, when the Plaintiff is liable to pay an outstanding of Rs. 7,23,207/- to the Defendants after adjustment of the Defendants' security deposit.
(b). It is further submitted that the Defendants' inability to pay rent during April 2020 and May 2020 was due to the nationwide lockdown and operational shutdown under the COVID-19 pandemic w.e.f. 25.03.2020 onwards, which qualifies as a force majeure event under Clause 9 of the Lease Agreement. Clause 9 CS (COMM)-579/2021 Classic Motors Private Limited. Vs. Automark Motors Private Limited & Ors.
Page 10 of 51of the Lease Agreement has been reproduced below:
"That if during the subsistence of the present Lease the demised premises should become wholly or partially untenantable due to damage caused to the demised premises or the Lessor's installations as a result of fire or violence (not caused by the Lessee, its employees or agents), riot, earthquake, storm, war, air raids, civil commotion or act of God or other irresistible force then and in any such event the Lessee will have the option to determine the present demise forthwith, but, in the event of the Lessee being desirous of continuing in its occupation of the demised premises, then the Lessor will at their cost reinstate or repair the damaged portion and restore or repair the same. It is agreed that no rent due shall be payable for the period the Lessee is unable to use till it is reinstated and ready to use. It is further agreed that if part of the said premises is usable and the Lessee continues to use the said part premises the rent payable shall be proportionate to the use of the said premises. The Lessee shall enter into adequate insurance for immovable, installed or modified in the said premises and movable things in the said premises including but not limited to removable furniture, fixtures, machinery, equipments, attachments and other articles and things brought or provided in or upon the demised premise and/or in the building by the Lessee in pursuance of this presents during the continuance of this Lease against any loss or damage by fire, explosion, storm, food, tempest, earthquake etc. and any money claim received by the Lessee shall be appropriated by the Lessee."
(c). It is further submitted that the Plaintiff's refusal to acknowledge this bona fide invocation of force majeure reflects a deliberate attempt to exploit the pandemic for undue gain. That the Plaintiff has deliberately omitted to account for the refundable security deposit of Rs. 75,00,000/- paid by the Defendants. Upon reconciliation, the net amount of Rs. 7,23,207/- is payable in favour of the Defendants. The present Suit is a plain attempt to unjustly enrich the Plaintiff by withholding the security deposit while claiming inflated dues from the Defendants.
(d). It is further submitted that the Plaintiff's hyper-technical objection to the mode of termination notice (email) is untenable CS (COMM)-579/2021 Classic Motors Private Limited. Vs. Automark Motors Private Limited & Ors.
Page 11 of 51given the exceptional circumstances of the pandemic when the majority of operations, including postal services were temporarily suspended. The Defendants' intent to vacate was communicated clearly and repeatedly, including through legal notices, and most importantly, by providing the requisite 3 month notice as is evidenced from their communication to the Plaintiff dated 27.07.2020. The Plaintiff's insistence on Registered Post A.D. during a lockdown is unreasonable and mala fide. That the Defendants provided written notice on 27.07.2020 about their intent to vacate the premises. However, the Plaintiff has failed to adjust the security deposit amount till date, let alone the date of vacating the premises. The Defendants are not liable to pay rent once the security deposit remains unrefunded as per Clause 5 of the Lease Agreement, which has been reproduced below:
"That on expiry of the lease period, the Lessee will vacate the premine and hand over the vacant possession of the premises to the Lessor on the Lessor will simultaneously return, the security deposit to the Lessee without interest. That any other amount due from the Lessee such an electricity bill / Water charges or arrears in rent etc. to the Lessor will be deducted from this amount of security deposit and the balance amount will be paid simultaneously to the Lessee on receipt of the possession. In the event the Lessor is unable to pay the deposit though the Lessee is willing to handover the possession then the Lessee will have all the right to be in occupation and use the premises without any rent payable till such time the deposit is paid by the Lessor."
(e). It is further submitted that the Plaintiff cannot selectively rely on the lease agreement to assert technical grounds while denying the Defendants the same right. The Defendants are entitled to invoke the terms of the Lease Agreement, including CS (COMM)-579/2021 Classic Motors Private Limited. Vs. Automark Motors Private Limited & Ors.
Page 12 of 51the force majeure clause and the security deposit provisions, to substantiate their defence. That the Plaintiff has misrepresented the Defendants' communications as "unilateral defaults" while suppressing the fact that reduced payments were made under mutual ad-hoc agreements during financial distress. The correspondence annexed by the Plaintiff itself proves ongoing negotiations, which negate the allegation of wilful default. The Plaintiff's claim of Rs. 25,25,303/- is unsustainable and without any legal basis. The claim failed to account for the supervening events of the COVID-19 pandemic, the imposition of the Janta Curfew commencing on 22.03.2020, and the subsequent extensions of governmental lockdown orders. The Defendants, owing to the circumstances of the COVID-19 pandemic which were beyond the control of the parties, were entitled to a waiver of rent the leased premises could not be accessed due to the total lockdown imposed by the Indian Goverment. Further, the Defendants had already paid Rs. 20,00,000/- towards arrears in good faith, which the Plaintiff conveniently ignored in its calculations.
(f). It is further submitted that the Plaintiff cannot take advantage of its own wrong by refusing to accept the termination of the lease and adjust the security deposit. The legal position is unequivocally established in "H.S. Bedi v. NHAI, 2015 8 AD (Delhi) 565", "Onida Finance Ltd. v. Malini Khanna, 2002(3) AD (Delhi) 231" and "A.C. Raman v. Muthaavally Seydali's CS (COMM)-579/2021 Classic Motors Private Limited. Vs. Automark Motors Private Limited & Ors.
Page 13 of 51son Valiyakath Kaithakkal Kunhi Bara Haji, AIR 1953 Mad 996", which hold that a landlord cannot refuse to take possession of the premises upon termination of the lease, irrespective of alleged damages or outstanding dues, as such claims must be pursued separately through legal remedies.
In the present case, the Defendants validly terminated the lease vide notice dated 27.07.2020 and subsequently vacated the premises. The Plaintiffs refusal to accept possession and adjust the security deposit-while simultaneously claiming inflated dues constitutes an abuse of process. The plaintiff's remedy, if any, lies in pursuing damages separately, not in withholding the security deposit or disputing the termination.
Defendant has denied all the parawise averments in the plaint.
4. No replication to the WS of defendant has been filed on behalf of plaintiff.
5 (a). The present suit was instituted on 09.12.2021 and defendants were ordered to be served on 05.07.2022 by Ld. Predecessor of this court. However, despite being duly served neither defendants have appeared nor filed their WS within stipulated period. Hence, vide order dated 29.11.2022, the defence of defendants were struck off and they were also proceeded exparte by Ld. Predecessor of this court. Thereafter, CS (COMM)-579/2021 Classic Motors Private Limited. Vs. Automark Motors Private Limited & Ors.
Page 14 of 51matter was listed for exparte evidence. In order to prove the case plaintiff has examined Sh. Surender Kumar Verma as PW-1 who tendered his evidence by way of affidavit Ex. PW1/A. He also relied upon following documents:
1) Master data of plaintiff retrieved from Ministry of Corporate Affairs as Ex PW1/1.
2) Board Resolution dated 05.12.2022 as Ex PW1/2.
3) Master data of defendant no. 1 retrieved from Ministry of Corporate Affairs as Ex PW1/3.
4) Copy of Lease deed dated 02.012.2014 as Ex PW1/4 (OSR).
5) Print out of Email dated 31.08.2018 as Ex PW1/5.
6) Copy of letter dated 18.05.2018 alongwith speed post receipt as Ex PW1/6.
7) Letter dated 30.08.2019 sent by defendant as Ex PW1/7.
8) Copy of letter dated 09.03.2020 alongwith speed post receipt as Ex PW1/8.
9) Copy of letter dated 05.05.20 sent by defendant as Ex PW1/9.
10) Copy of letter dated 12.05.2020 sent to defendants alongwith speed post receipt as Ex PW1/10 (colly).
11) Copy of letter dated 22.06.2020 sent to defendants alongwith speed post receipt as Ex PW1/11 (colly).
12) Print out of Two emails both dated 22.06.2020 as Ex PW1/12 (colly).
13) Print out of Email dated 03.07.2020 as Ex PW1/13.
14) Print out of Email dated 07.07.2020 as Ex PW1/14.
15) Print out of Email dated 10.07.2020 as Ex PW1/15.
16) Print out of Email dated 27.07.2020 as Ex PW1/16.
17) Print out of Email dated 30.07.2020 as Ex PW1/17.
18) Print out of Two emails both dated 06.08.2020 and another Email dated 08.08.2020 as Ex PW1/18 (colly).
19) Print out of Email dated 10.08.2020 as Ex PW1/19.
20) Print out of Two emails both dated 10.08.2020 as Ex PW1/20 (colly).
21) Print out of Email dated 14.08.2020 as Ex PW1/21.
22) Copy of Legal Notice dated 14.08.2020 as Ex PW1/22.
23) Copy of reply to the Legal Notice dated 21.08.2020 alongwith postal receipt as Ex-PW1/23.
24) Print out of Email dated 05.09.2020 as Ex PW1/24.
25) Copy of reply to notice dated 12.09.2020 as Ex PW1/25.
CS (COMM)-579/2021 Classic Motors Private Limited. Vs. Automark Motors Private Limited & Ors.
Page 15 of 5126) Reply dated 26.09.2020 of the reply of notice dated 12.09.2020 along-with postal receipt as Ex PW1/26.
27) Print out of Email dated 10.10.2020 as Ex PW1/27.
28) Print out of Email dated 17.10.2020 as Ex PW1/28.
29) Print out of Two emails both dated 19.10.2020 as Ex PW1/29.
30) Print out of Email dated 19.10.2020 as Ex PW1/30.
31) Print out of Email dated 19.10.2020 as Ex PW1/31.
32) Legal notice dated 16.11.2020 alongwith postal receipt and delivery report as Ex PW1/32.
33) Reply dated 28.11.2020 to the Legal Notice dated 16.11.2020 as Ex PW1/33.
34) Certificate U/s 65B of Indian Evidence Act as Ex PW1/34.
(b). Thereafter, vide order dated 10.02.2023 of Ld. Predecessor, an exparte judgment and decree has been passed in favour of plaintiff. However, on 08.01.2024, applications under order IX Rule 13 CPC for setting aside judgment and decree dated 10.02.2023 and another application under Section 5 of Limitation Act have been moved on behalf of defendants and vide order dated 22.03.2025 of Ld. Predecessor, the said applications were allowed. Thereafter, defendants were directed to file their WS and the same has been filed by defendants on 16.05.2025 and thereafter, following issues were framed by Ld. Predecessor of this court.
1) Whether the plaintiff is entitled to a sum of Rs.25,25,303/- towards the arrears of rentals/damages together with interest @24% per annum? OPP
2) Whether the plaintiff has complied with Section 12A of the Commercial Courts Act? OPP
3) Whether this court has territorial jurisdiction to try and entertain present suit? OPP
4) Whether no cause of action has accrued to the plaintiff for filing CS (COMM)-579/2021 Classic Motors Private Limited. Vs. Automark Motors Private Limited & Ors.
Page 16 of 51of the present suit?OPP
5) Whether the plaintiff is claiming any amount on account of the terms and condition of the lease agreement? OPD
6) Whether the plaintiff has wrongfully withheld to security amount without making due adjustments? OPD.
7) Whether the suit is not maintainable on account of the objections mentioned in the written statement? OPD
8) Relief.
6. Thereafter, matter was fixed for cross examination of PW-1. The said witness was cross examined by Ld. Counsel for defendant. His cross examination is reproduced as under:
"I have been working in the plaintiff company for past 40 years. I have personally read the contents of the evidence affidavit filed by me. I was present in the office during the time of signing of lease deed dated 02.12.2014. I cannot pin point the clause related to monthly maintenance of Rs.23,000/- in the lease deed. (Vol.) However, it is a matter of record. Yes, I reiterate what i have stated in para 12 of my evidence affidavit that there was no response from the defendant and there was unilateral deduction of rent and, therefore, the plaintiff company issued a letter dated 09.03.2020. I do not remember as to the meeting took place between plaintiff and defendant company prior to 09.03.2020. We have not agreed for reduction of rent from the defendant company. I have put all documents in my possession on record. I do not remember whether the negotiations between the parties between September 2019 and March 2020, pertained to any lock in period regarding the lease deed. We have proposed the incorporation of clause pertaining to lock in period. (Vol.) The same was accepted/agreed upon by the defendant.
Q. I put it to you that there were negotiations between the parties and as per the understanding, the defendant have paid rent at the lower rates, which was accepted by the plaintiff. What do you want to say?
Ans. It is incorrect. The same was not accepted by us. We proposed the lock in at the initial stage. It is correct that the specific clause relating to lock in period. (Vol.) Once the defendant completed three years term of tenancy, the vacation could only be pursuant to three months notice in advance. I have seen Ex.PW-1/10.
I say that I do not remember O. M. number F18/4/2020-PPD issued by Government of India, Ministry of Finance procurement policy dated 19.02.2020, issued with respect to force majeure clause. I cannot answer whether the same is mandatory or just advisory. I do not know whether the defendant had claimed it to be binding.
CS (COMM)-579/2021 Classic Motors Private Limited. Vs. Automark Motors Private Limited & Ors.Page 17 of 51
Q. I put it to you that the defendant had never proposed at the said policy/OM was binding and further put it to you that the plaintiff have on its own concocted a narrative that the defendant have relied upon the same. What do you want to say? Ans. Yes, the defendant never said it was binding. I do not remember as to why this document dated 24.01.2020 issued by SDMC is not on record. I can produce the same, subject to availability. I cannot say whether the defendant have been burdened with any charges pertaining to unauthorized construction of tin shed.
I have seen the legal notice, Ex.PW-1/23.
I have seen the details on page no. 4 of the legal notice. It is correct that as per the same, the plaintiff had claimed the house tax relating to tin shed. I do not recall as to whether there was any response from the defendant in relation with Ex.PW-1/10, as is stated in Ex.PW-1/23.
I have seen Ex.PW-1/10.
I am not personally aware of the support package mentioned in Ex.PW-1/10. I do not have any details thereof. I cannot say whether the reference of the package has been wrongfully/incorrectly made by the plaintiff side or that the same does not warrant any reference.
I have seen Ex.PW-1/11.
It is correct that the claim of Rs.50 Lakhs was not made earlier/prior to this letter dated 22.06.2020. (Vol.) The same includes arrears of rent, maintenance etc. It is correct that there is no breakup of Rs.50 Lakhs till the document Ex.PW-1/11.
I have seen Ex.PW-1/13.
I cannot recall whether the addendum mentioned in Ex.PW-1/13 was executed by and between the parties, or not. I cannot say whether the addendum is binding or operative or not. It is correct that I have not placed any copy of the addendum duly signed by both the parties.
I have seen Ex.PW-1/12, copy of the mail dated 26.06.2020. As per my recollection there is only one addendum. It is incorrect to suggest that there is a mention of two separate addendums as per emails dated 26.06.2020 and 03.07.2020 or that the same have been done mischievously by the plaintiff for misleading the court. (At this juncture the plaintiff side submits that email dated 26.06.2020 have been sent by the defendant. Heard. The parties would be at liberty to take this objection during final arguments.) I have seen Ex.PW-1/17.
The addendum mentioned in email dated 03.07.2020 was initially agreed upon by the parties, however, it was not acted upon by the defendant. The conditions precedents prior to execution of addendum was that the pending dues which was mentioned in email dated 03.07.2020 were to be paid but were not complied with by the defendant.
Q. As per Ex.PW-1/17, you say that the lease deed can only be terminated by the executee of the deed, where in the lease deed the same is mentioned?
CS (COMM)-579/2021 Classic Motors Private Limited. Vs. Automark Motors Private Limited & Ors.Page 18 of 51
Ans. There is no such clause. (Vol.) The lease could be terminated with three months notice by anyone authorized by the company. I have seen Ex.PW-1/16.
It is correct that vide the said mail, the defendant had communicated its intentions to vacate the premises. (Vol) The same could only be done with three months advance notice in writing, through registered post. It is correct that there was a Covid lock- down in July 2020. The security deposit made by the defendant with the plaintiff was Rs.75 Lakhs. It is incorrect to suggest that it was agreed by and between the parties that in the event of the plaintiff retaining the security deposit, the defendant would not be liable to pay the rentals. (Vol.) The security could have been adjusted on non payment of the rentals and was returnable on clearance of the dues.
At this stage, witness is shown document Ex.PW1/18 to which he states that he is aware about the said document and its content. I acknowledge that the defendant were trying to communicate their intent to vacate the premises since 27.07.2020 (Vol. There is a three months notice period applicable for termination). I acknowledge that I had denied providing the draft of the termination notice to the defendants as the same was not our obligation and has to be done in terms of lease deed and the procedure mentioned therein.
The procedure for terminating the lease deed and subsequently vacating the lease premises is by giving a notice through registered post that too with three months notice period before vacating the premises and hand over all the charges to the lessor upon clearing all the dues. I have acknowledged that the defendants communicated their intent to vacate by 27.07.2020. I acknowledge that the defendants if vacated the property by the end of October would have complied with the mandatory notice period. I acknowledge that I have stated that the dues must be cleared before providing the three months mandatory notice irrespective of the actual content of the lease deed.
I am aware of the existence of Mr. Abhinav Goyal from the defendant's side. I am not aware of why I have refused the notice of termination from Mr. Abhinav Goyal as per PW1/18 (colly). I acknowledge that the contents of Ex.PW1/21 pertains to the alleged unpaid arrears by the defendants. The total outstanding rent is set to be more than about 1 Crore by October, 2020 and Rs. 10 lakhs was paid on 17.06.2020 and additional Rs. 10 lakhs were paid on 26.06.2020 by the defendants were set of against that. I recognize after being shown the record specifically Ex.PW1/19, in email from the plaintiff's side dated 08.10.2020 that the total outstanding amount was Rs. 77 lakhs excluding the payments of Rs. 20 lakhs made by the defendant in June 2020.
Attention of the witness has been drawn towards the document Ex.PW1/A to which he states that as per my evidence affidavit I say that the net payable amount due from the defendants was Rs. 25,25,303/-.
I state that the last binding reference between the parties is on 18.05.2018. I state that there was no binding addendum after CS (COMM)-579/2021 Classic Motors Private Limited. Vs. Automark Motors Private Limited & Ors.Page 19 of 51
18.05.2018. (Vol. The addendum was prepared but never executed as the dues were never cleared).
Q: Where in the lease deed is it provided that the party in default must clear its dues before providing notice of termination? A: I am relying upon clause no.4 and 5 of lessor covenant at (page no. 67) of document Ex.PW1/4.
I agree that as per Ex.PW1/23, I state that the plaintiffs had some financial obligation towards Bajaj Finance based on the rent provided by the defendants. It it also correct that there is no binding liability of the defendant towards the Bajaj Finance (Vol. Defendant had to transfer the rental amount to the Bajaj Finance). I state that the defendants allegedly made payments directly to Bajaj Finance but I am unable to locate any reference to the same from the documents on record. I say that there is no necessity of a Board Resolution to provide notice of termination of the lease deed.
It is accurate that by not accepting termination the rental obligations would continue upon the defendant as long as they are in possession of the same. It is correct that until termination of the lease deed the plaintiff would have full rights to hold the security deposit of Rs. 75 lakhs (Vol. After deducting of all the rental dues, maintenance or any arrears and damages, if any, and possession is handed over alongwith all fittings and fixtures only then security amount would be refunded).
I am familiar with the content of reply of legal notice Ex.PW1/26. At this stage, witness is confronted with document Ex.PW1/26. Q: In the legal notice it has been stated by you that "the courts have always adopted a stand that rent/lease cannot be waived during COVID". What is the basis of this statement. A: During COVID period the property has been in possession of the defendant and hence, defendants are liable to pay rent and maintenance.
As per me, an authorized person is one who has signed the lease deed on behalf of the defendant company.
Q: In the agreement/lease deed executed between the parties, communications, emails exchanged between the parties has the term "authorised person" defined anywhere? A: Authorized person is someone who has executed the lease deed or someone who has been authorized by such person who has executed the lease deed.
It is correct that it was communicated on numerous occasions that communications must be through an authorised person. A Chief Executive Officer (CEO) of a company is an authorized person of the company. If the CEO has been appointed by the Directors of the company, he is authorized to hand over the possession of the premises. Any notice for vacation of premises or termination of lease should be given by any party through speed post or registered post.
Q: Why were you insisting that possession cannot be handed over by the defendant company as Mr. Manjeet was in Ahmedabad at the relevant time, even though, the CEO of the company was present in Delhi?
CS (COMM)-579/2021 Classic Motors Private Limited. Vs. Automark Motors Private Limited & Ors.Page 20 of 51
A: The possession can only be handed over after clearing all pending dues including rent, maintenance and after giving three months notice before vacating the premises. At this stage, witness is confronted with Ex.PW1/29. Q: In the email it has been mentioned by you that certain things were missing from premises and damages were caused to the premises including to those items mentioned in annexure D attached with the lease deed. What are those missing and damaged items?
A: I will have to check the same and then only I will be able to tell. Q: It has been stated by you in the email that the defendants are trying to flee the premises, how can you say if the defendants were waiting for your Manager's confirmation?
A: The defendants did not hand over the possession of the premises to us neither did they clear the dues and left the premises. I do not remember if I have placed on record any proof of the damages caused to the items mentioned in annexure D of the lease agreement. It is wrong to suggest that there are no pending dues from the defendants. It is wrong to suggest that the rental amount during COVID period is supposed to be waived off. It is wrong to suggest that I was unwilling to take possession of the premises. It is wrong to suggest that I am deposing falsely".
7 (a). Thereafter, matter was kept for defence evidence. Defendant in order to prove his case has examined Sh. Jaibir Sabender Singh, as DW-1 who has tendered his evidence by way of affidavit Ex.DW1/1. He has relied following documents:
1. Board resolution dated 11.02.2025 authorizing Mr. Jaibir Sabender Singh as AR of defendant no.1, 2 and 3 as Mark-1.
2. Certificate under section 63 of Bharatiya Sakshya Adhiniyam 2023 as Ex.DW1/2.
3. Economic Times Article titled "Vehicle Makers Announce Support Package for Crisis-Hit Dealer Partners" dated 29.03.2020 as Mark-2.
(b). The said witness was cross examined by Ld. Counsel for plaintiff. His cross examination is reproduced as under:
" I am working in the Defendant's company since 23rd January 2015 and currently am holding Position of Vice President, Sales in the Defendant company. I was not CS (COMM)-579/2021 Classic Motors Private Limited. Vs. Automark Motors Private Limited & Ors.Page 21 of 51
personally present when the Lease Deed was executed and I do not know the persons who negotiated the original lease terms. It is correct that I am representing Defendant No.1,2 and 3. It is correct that Board Resolution does not contain signature of Defendant No.2 and 3 (Vol. the Director of the Defendant Company has approved me to represent all the defendants. It is correct that no-where in the Board Resolution it is mentioned that I am representing all the defendants. I have correctly mentioned in my evidence affidavit that 1 am representing Defendant No.1, 2 and 3, however I cannot produce any document showing the authorization of Defendant No. 2 and 3. It is correct that I was not part of communications exchange between the parties between 23.03.2018 to 12.05.2020, however my Senior Mr. Abhinav Goyal (DW-2) was part of the above said communications. I was never part of any communication, transactions happened between the Plaintiff and the Defendants with regard to the present dispute. Q: Is it correct that in Clause 9 in the Lease Deed there is no Government Lock Down?
Ans. It is correct that in Clause 9 of the Lease Deed there is no provision for waiver of rent due to economic hardship or Government Lock Down.
(Vol. in Clause 9 of the Lease Deed it is mentioned that act of God or other irresistible forces riots, earthquake etc.). It is correct that Clause 9 of the Lease Deed says that if during the subsistence of present Lease the demise premises should become wholly or partially untenable due to damage caused to the demise premises as a result of fire act of God or other irresistible forces riots, earthquake etc. We have not used the premises during the Covid period. During the Covid period the property was closed and we have not carried out any repair work during the period 2019 to 2020.
I do not know whether any repair work was carried out prior to 2019. It is correct that the premises was used storage/ stockyard during the Covid period.
(Vol. in the premises we had fixed machineries related to vehicle workshop that were not moveable in nature. It is correct that we have remove all the fixed machineries as mentioned above after vacating the premises. It is correct that as per Clause 9 of the Lease Deed the property was never damaged or remained wholly untenable during the Covid Period. Therefore, Clause 9 was never invoked. (Vol. There was economic hardship and National Lock Down because of which the property was not being used by the Defendant Company).
It is correct that nowhere in the Lease Deed it is mentioned that if we will not use the property then we do not have to pay the rent of the property.
(Vol. however it is mentioned in Clause 9 of the Lease Deed that the Lease Deed is dismissed if the property becomes wholly or partially due to damage caused to the demise premises as a result of fire act of God or other irresistible CS (COMM)-579/2021 Classic Motors Private Limited. Vs. Automark Motors Private Limited & Ors.Page 22 of 51
forces riots, earthquake etc.).
The Plaintiff Company has given concession in rent for the period 01.12.2017 to 30.11.2019.
(Vol. There were several communications between Mr. Abhinav Goyal and Plaintiff Company for extension of this reduced rent after the period 01.12.2017 to 30.11.2019). There are no documents or any communication place on record wherein the plaintiff company has accepted the reduce rent after the period 01.12.2017 to 30.11.2019. (Vol. There was no denial either on part of Plaintiff Company for reduced/revised rent).
I was not involved in the preparation or execution of the Lease Addendum dated 22.06.2020 at this stage witness a shown the Lease Addendum dated 22.06.2020. It is correct that the Lease Addendum does not bear signature of the Plaintiff. The first request for reduction in rent during the Covid period was sent on 25.03.2020 wherein it is mentioned that meeting on 10h March 2020 was held between the Plaintiff and the Defendant and also it is mentioned that another meeting took place two months back at Mathura Road between the Plaintiff and the Defendant.
It is correct that remember a physical meeting took place during the Covid period before March 2020. After March 2020 no physical meeting took place between the parties. I do not remember as to whether we have replied to the letter Ex.PW1/11. I do not know about any communication happened between the parties after the Plaintiff sent the letter Ex.PW1/11 dated 22.06.2020.
I do not remember whether our request for invoking force majeure was accepted by the Plaintiff.
It is correct there is no document to show that the Plaintiff has accepted the request of the Defendant for invoking force majeure.
(Vol. Email Ex.PW1/13 stated that "please find attached the addendum based on discussions. Please execute the same ASAP)".
It is correct that the termination notice was sent by the Defendant Company over email. I do not remember the date. However I will check it from the records and will produce on the next date.
It is correct that was not a part of Email or Communications or lease deed exchanged between the parties and my whole evidence is based on hear say and secondary information. (Vol. I have not directly or personally sent any Email to Plaintiff however I was part of and had knowledge of every communication happened between the parties). I was part of every internal discussion with regard to this matter.
It is correct I have no personal knowledge of the Lease Execution or the original terms of the Lease Deed. (Vol. At the time of Execution of the present Lease Deed, the Defendant company had not started its workshop and the CS (COMM)-579/2021 Classic Motors Private Limited. Vs. Automark Motors Private Limited & Ors.
Page 23 of 51employees including myself were hired later in the Plaintiff Company).
Q.1 Whether it is correct that you have sent termination notice on Email wherein you have given three months Notice however the Lease Deed requires a notice of minimum 6 month and the termination Notice should be given in hard copy and therefore the termination notice is invalid?
Ans. It is correct that we have given a Notice by Email for a period of 3 months.
(Vol. We were trying to communicate with the Plaintiff Company since past 6 months for negotiation of rent and therefore, I was not having time to give the notice of termination for 6 months).
No reply of our termination notice was given by Plaintiff Company.
At this stage witnesses is shown PW1/18 (Colly). It is correct that reply of our termination notice was duly given by the Plaintiff Company and further communications also happened between the Plaintiff and Defendant Company.
It is correct that in the reply dated 12.09.2020 Ex. PW1/25, the Clause 9 of the Lease Deed was fever invoked or even mentioned in the reply.
(Vol. It is mentioned about Covid situation in the reply dated 12.09.2020).
At the time of handover of the property Lockdown was not in force and therefore we physically went to the property and handed it over to Plaintiff Company physically. I do not recall as to when was the lock down in forced in the country.
Q. I put it to you that the Lock down was lifted in June 2020 despite that you have sent the termination notice via Email contrary to the terms and conditions of the Lease Deed. Ans. At the time of sending termination notice dated 27.07.2020 Post Offices were not open and only essential services were allowed.
At this stage witness is confronted with Ex.PW1/11 wherein a notice dated 22.06.2020 was sent to the Defendant Company by Plaintiff through Speed Post.
It is correct that on 22.06.2020 Speed Post Offices were open. It is correct that the Defendant Company has not given any reply to Email dated 19.10.2020 Ex.PW1/29 and PW1/30. (Vol. This Email dated 19.10.2020 is a reply to the Defendant's Termination Notice and therefore no reply was needed). It is wrong to suggest that I do not have any valid authority to represent Defendant No.2 and 3. It is wrong to suggest that my evidence is based on hearsay and Secondary Information. It is wrong to suggest that Clause 9 of the Lease Deed was never invoked.
It is wrong to suggest that the premises never became untenable.
It is wrong to suggest that the plaintiff has never accepted any rent reduction after March 2020.
CS (COMM)-579/2021 Classic Motors Private Limited. Vs. Automark Motors Private Limited & Ors.
Page 24 of 51It is wrong to suggest that the termination notice is invalid. It is wrong to suggest that the addendum was never executed. It is wrong to suggest that the Defendant have suppressed any facts. It is wrong to suggest that the present suit is maintainable. It is wrong to suggest that after adjustment of Security deposit any amount is payable to the Plaintiff by the Defendant. It is wrong to suggest that the Defendant is deposing falsely."
8 (a). Defendant has examined Mr. Abhinav Goyal, (erstwhile Vice President of defendant company), as DW-2 who has tendered his evidence by way of affidavit Ex.DW2/A. He has relied following documents:
1. Copy of revised rental proposal dated 26.09.2019 is now de- exhibited and marked as Mark A.
2. Copy of email dated 25.03.2020 is now Ex.DW2/2.
3. Certificate under section 63 of BSA is now Ex.DW2/3.
4. Copy of unexecuted lease addendum dated 22.06.2020 is now de-
exhibited and marked as Mark B.
(b). The said witness was cross examined by Ld. Counsel for plaintiff. His cross examination is reproduced as under:
"I joined defendant company in 2018 and left the same in the Mid of 2020. I was handling sales and after sales business. After leaving the defendant company, I had joined Benchmark Motors and continued there till August, 2021. Presently, I am working with Landmark Lifestyle Cars Pvt Ltd. as CEO. All these companies are sister concerns of Group Landmark.It is correct that I am not the Director of the defendant company. I have a board resolution/authority passed in my favour for these proceedings.
At this stage, witness is confronted with court record to which he states he is unable to trace any authority letter/board resolution in court record. It is correct to suggest that I was not present during the time the lease was executed in 2014. I cannot identify those individuals who are responsible for the execution of the lease during 2014 or the day to day negotiation. (Vol. The period is to be specified and only then, I can confirm the name). In 2014, I was not there. It was only CS (COMM)-579/2021 Classic Motors Private Limited. Vs. Automark Motors Private Limited & Ors.Page 25 of 51
2018-20, I was part of the defendant company. Q: During the time 2018-20, when you were engaged with the defendant company who was the authorized/concerned person dealing with the plaintiff company with respect to the lease? A: Mr. Jaibeer Chauhan and myself in discussion with the management of plaintiff company.
Q: Can you please identify any authority given to you by the defendant company in writing with respect to such discussion on its behalf with the plaintiff company?
A: As per my understanding Ex.PW1/7 (letter dated 30.08.2019 is the relevant authority given to me to deal with the plaintiff company as per my designation of Vice President for the defendant company.
It is correct I was not present when the lease deed was executed on 02.12.2014.I cannot identify the persons who negotiated the original lease terms. During the period mid of year 2018 till 2020 I was engaged in day today business including the lease or rent payment matter. Before or after the above said period. I was not involved into any transaction her related to rent payment matters or lease matters. Q. Have you filed Board Resolution authorizing you to depose on financial or lease matters?
Ans. I have not filed any Board resolution authorizing me to depose in the present matter or financial or lease matter pertaining to the present case.
Q. In para no. 23 of the evidence affidavit Ex.DW-2/A you have mentioned that at the time of entering into the lease agreement Defendant no. 2 & 3 approached the plaintiff for taking on lease part of the plaintiff property for setting up an Automobile work shop storage stockyard and other related activities however in the above paragraph you have clearly mentioned "I was not present when the lease deed was executed on 02.12.2014. I cannot identify the persons who negotiated the original lease terms. During the period mid of year 2018 till 2020 I was engaged in day today business including the lease or rent payment matter. Before or after the above said period I was not involved into any transaction her related to rent payment matters or lease matters" please explain.
Ans. I was in the company when we have tiled this case But 1 was not physically available at the time of execution of lease agreement and hence 1 was aware who executed the lease agreement in 2014.
Whether Ex.PW-1/7 letter dated 30.08.2019 when sent by you to the plaintiff, whether any reply or any acceptance was done by the plaintiff to this letter Ex.PW-1/7?
Ans. This letter was sent to the plaintiff and the records have to be seen in regard to this letter. (At this stage records are shown to the DW-2). Ex.PW-1/10 mentioned at paragraph no. 3 mentions the acceptance of receiving of letter dated 30.08.2019.
It is correct that further period 01.12.2014 to 30.11.2017 there CS (COMM)-579/2021 Classic Motors Private Limited. Vs. Automark Motors Private Limited & Ors.Page 26 of 51
were no issues with respect to lease rent.
Q. You have filed only revised rental proposal dated 26.09.2019, email by defendant dated 25.03.2020, unexecuted lease addendum. Is it correct that none of these documents bears the plaintiff signature or acceptance? Ans. At this stage the witness draws attention to Ex.PW-1/13 which states that "please find attached the addendum based on our discussions please execute the same ASAP".
It is correct that the unexecuted lease addendum was not signed by the plaintiff.
(Vol. As this revised lease agreement was accepted by a mail as Per Ex.PW-1/13 it self notified that plaintiff was in agreement with further revised rental. And since it was COVID period and hence there was a delay in physical execution of the lease agreement due to Lockdown).
I have executed the revised lease addendum via email. It is correct that physical execution of the lease addendum could not be done because of the Lockdown.
It is correct that is Ex. PW-1/13 the plaintiff is requesting to execute the lease addendum.
Q. The only concession ever granted by the plaintiff was vide letter dated 18.05.2018 Ex.PW-1/3 other than that no other concession was granted by plaintiff to the defendant. Can you show/have you filed any document contrary to the above state? Ans. The Ex.PW-1/13 shows that concessions other than Ex.PW-1/3 were given by plaintiff to defendant. Can You show or produce any document wherein the plaintiff ever agreed in writing to accept Rs.11,25,000/- or any lower amount after March, 2020?
Ans. PW-1/13 show the acceptance of the revised rental between the parties.
Nonetheless, Ex.PW-1/12 (Colly) Point no.2 clarify the balance payment which was in discussion of the plaintiff. Whether can you show acceptance of email dated 22.06.2020 at 16:38 Ex.PW-1/12 by the plaintiff?
Ex.PW-1/13 shows the acceptance of email dated 22.06.2020 at 16:38 Ex.PW-1/12 by the plaintiff.
I do not know as to whether any repair work were ever carried out by the defendant under clause 9 of the lease deed during the Covid Lockdown period or after mid 2020.
We had requested plaintiff for invoking force majeure for the period of April & May, 2020 however we continue to make full revised payments for April & May 2020 as plaintiff has never accepted are request for invocation of force majeure clause of the lease agreement. I have not filed any case with regard to recovery of money against the plaintiff or I have not sent any notice with regard to recovery of money from the plaintiff. It is wrong to suggest that I had any personal knowledge of entire lease history or authority to bind the defendants. It is wrong to suggest that any of the documents marked by me constitute a binding agreement with the plaintiff. It is wrong to suggest that the defendants had any valid force majeure CS (COMM)-579/2021 Classic Motors Private Limited. Vs. Automark Motors Private Limited & Ors.
Page 27 of 51defence or that the termination notice was in accordance with the lease deed.
It is wrong to suggest that after adjustment of security deposit any amount is payable by the defendant to the plaintiff. It is wrong to suggest that I am deposing falsely".
9. Final arguments heard. Record perused carefully. I have gone through the testimony of the plaintiff's witness and on the basis of documents, pleadings and testimony of witnesses, my issue wise findings are as follows:
Issuewise Findings of the Court:
Issue No.1:Whether the plaintiff is entitled to recovery of Rs. 25,25,303/- alongwith interest? (OPP) Issue No.5:Whether the plaintiff is claiming any amount on account of terms and conditions of lease agreement? (OPD) Issue No.6:Whether the plaintiff has wrongfully withheld the security deposit without adjustment? (OPD)
10. All three issues are intrinsically interwoven as they arise from the same transaction, i.e. the Lease Deed dated 02.12.2014 Ex.PW1/4, the obligations thereunder, alleged defaults, adjustment of security deposit, and determination of liability. Hence, they are taken up together for adjudication. Onus to prove the issues lies upon the parties, respectively. However, once execution of contract and admitted relationship of lessor-lessee is established, the burden shifts on the defendant to justify non-payment and adjustment claims.
From the pleadings, documents and evidence on record, the following facts stand either admitted or proved beyond controversy:
CS (COMM)-579/2021 Classic Motors Private Limited. Vs. Automark Motors Private Limited & Ors.Page 28 of 51
(i) The plaintiff is the owner/lessor of premises situated at A-39, Mohan Cooperative Industrial Estate, New Delhi.
(ii) The parties entered into a registered Lease Deed dated 02.12.2014 for a period of nine years with structured rent escalation.
(iii) The defendants paid a security deposit of Rs. 75,00,000/-.
(iv) The defendants remained in possession and continued to carry on commercial activities from the demised premises.
(v) There were admitted part-payments made by the defendants, particularly in June 2020.
The controversy thus narrows down to whether there was default in payment of rent, whether termination was valid, whether the defendants were entitled to set-off/adjustment of security deposit and whether the plaintiff is entitled to the suit amount with interest.
11. It is a settled canon of commercial jurisprudence that contracts voluntarily entered into must be enforced with strict fidelity. The Court cannot rewrite contractual terms under the guise of equity. In "Energy Watchdog v. CERC, (2017) 14 SCC 80", the Hon'ble Supreme Court authoritatively held that force majeure clauses are to be narrowly construed... A mere rise in cost or commercial difficulty does not excuse performance. Likewise, in "Alopi Parshad & Sons Ltd. v. Union of India, AIR 1960 SC 588" it was held that the courts cannot absolve a party from CS (COMM)-579/2021 Classic Motors Private Limited. Vs. Automark Motors Private Limited & Ors.
Page 29 of 51performance merely because the contract has become onerous.
To prove the case, plaintiff has examined PW-1 Sh. Surender Kumar Verma, AR who filed his affidavit, Exb. PW1/A in examination in chief and has deposed that plaintiff is owner/lessor of premises at A-39, Mohan Cooperative Industrial Estate and lease terms of lease deed Ex. PW1/4, clearly stipulated rent escalation, monthly payment obligation, maintenance and GST liabilities. PW1 further deposed that defendants defaulted from March 2018 onwards intermittently, and substantially from 2019-2020, numerous emails, letters, reminders (Ex. PW1/5 to PW1/33) establish continuous demand, defendants ought concessions, made partial payments and acknowledged liability. He further deposed that defendant made illegal termination via email dated 27.07.2020 without complying with 3 months written notice clause. and vacated without clearing dues and caused damage.
The testimony is fortified by contemporaneous documentary evidence, including lease deed Ex. PW1/4, email communications evidencing admissions Ex. PW1/12 to PW1/31, legal notices and replies Ex. PW1/22, PW1/32, PW1/33 and demand letters and calculation sheets.
These documents, read cumulatively, establish a continuous chain of demand, acknowledgment and default.
The documentary trail (Ex. PW1/4 to PW1/33) establishes admission of liability, requests for concession, acknowledgment of CS (COMM)-579/2021 Classic Motors Private Limited. Vs. Automark Motors Private Limited & Ors.
Page 30 of 51arrears and failure to discharge dues. The evidentiary value of such admissions is unequivocal. In "Narayan Bhagwantrao Gosavi v. Gopal Vinayak Gosavi, AIR 1960 SC 100" it was held that admissions, if true and clear, are the best evidence against the party making them.
The cross-examination of PW-1 does not elicit any material contradiction or infirmity. Crucially execution of lease deed is not disputed, liability to pay rent is not denied, correspondence is not discredited and no alternative computation of dues is established.
It is settled that unchallenged testimony stands admitted. The Supreme Court in "Vidhyadhar v. Manikrao, (1999) 3 SCC 573" observed that there a party fails to effectively cross-examine a witness, the testimony remains unrebutted and must be accepted.
12. The defendants have premised its case upon defences namely (i) clause 9 of lease deed Exb.PW1/4 , force majeure due to COVID-19 pandemic, (ii) ongoing negotiations and rent concessions, (iii) valid termination via email dated 27.07.2020,
(iv) adjustment of security deposit and (v) allegation of inflated and arbitrary claim.
Defendants examined, Mr Jaibir Sabender Singh as DW-1 and Mr Abhinav Goyal as DW-2, tendered their affidavits in evidence Exbs. DW1/ 1 and DW 2/A respectively on similar lines as that of written statement.
During cross examination of DW1, he admitted that there CS (COMM)-579/2021 Classic Motors Private Limited. Vs. Automark Motors Private Limited & Ors.
Page 31 of 51are no documents or any communication placed on record, which shows that the plaintive company had accepted and reduced rent after the period 01.12.2017 to 30.11.2019. He also deposed that he was not the part of any communication regarding lease/rent and his evidence is based on hearsay and secondary information. The cross-examination of DW-1 reveals significant admissions (i) Lease deed and tenancy admitted, (ii) Continued possession admitted, (iii) Partial payments admitted and (iv) No proof of service of mandatory 3 months' written notice.
DW2 in cross-examination, admitted that none of the document relied upon by the defendants i.e. exhibit DW2/2, MarkA & Mark B, unexecuted addendum, beers, the signature of the plaintiff or any acceptance. DW2 further admitted that exhibit PW1/13 is merely the plaintiff requesting execution of the addendum and does not constitute acceptance.
The defence of the defendant suffers from internal inconsistencies and is self-destructive as it can be seen that on the one hand, the defendants admit tenancy but on the other hand, they disputes liability, the defendants claim termination yet continues negotiation with the plaintiff. Further defendants assert hardship yet retains possession of the tenanted premises. Such mutually destructive pleas erode the credibility of the defence.
It may be seen that DW1 in his cross-examination has admitted that enclose nine of the lease deed Exb. PW1 /4 for there is no provision for waiver of rent due to economic hardship or CS (COMM)-579/2021 Classic Motors Private Limited. Vs. Automark Motors Private Limited & Ors.
Page 32 of 51government lockdown DW1 further admitted that the premises was used as a storage/ stockyard during the Covid period. DW-1 further admitted that the premises was never damaged or remained wholly untenable during Covid period. Further, DW-2 in his cross- examination admitted that no repair were carried out and the defendants continued making revised payment.
The defendants' principal defence rests upon clause 9 of lease deed Exb.PW1/4, force majeure due to COVID-19 which is wholly misconceived and legally untenable. In "Raja Dhruv Dev Chand v. Harmohinder Singh, AIR 1968 SC 1024", the Supreme Court held that section 56 of the Contract Act does not apply to completed transfers such as leases.
Moreover, in "Halliburton Offshore Services v. Vedanta Ltd., (Delhi High Court, 2020)" the pandemic does not automatically absolve contractual obligations unless performance is rendered impossible.
13. In the present case the premises remained available, possession was retained and commercial hardship does not extinguish contractual liability. The plea of force majeure is accordingly rejected.
Clause 7 of the lease deed Ex.PW1/4 mandates three months' written notice. The alleged termination via email dated 27.07.2020 which has been admitted by the DW1 in his cross examination and the same does not satisfy contractual stipulation CS (COMM)-579/2021 Classic Motors Private Limited. Vs. Automark Motors Private Limited & Ors.
Page 33 of 51in lease deed Exb. PW1/4. It is trite that where a contract prescribes a mode of performance, it must be strictly adhered to. In "Naihati Jute Mills v. Khyaliram Jagannath, AIR 1968 SC 522"
it was held that where a contract prescribes a particular mode of performance, it must be performed in that manner alone.
The purported termination is therefore invalid and legally inconsequential.
The defendants contend that the security deposit ought to have been adjusted and the Plaintiff has failed to adjust the security deposit amount and the defendants are not liable to pay rent once the security deposit remains unrefunded as per Clause 5 of the Lease Agreement Exb.PW1/4. This contention is untenable for the reasons that (i) no contractual provision permitting unilateral adjustment, (ii) and adjustment is contingent upon final settlement and (iii) outstanding dues exceed partial payments. The security deposit is in the nature of a performance guarantee and cannot be appropriated at the unilateral discretion of the tenant and also the security deposit is not an automatic set-off but a conditional safeguard. In "Kailash Nath Associates v. DDA, (2015) 4 SCC 136", the Supreme Court held that a party cannot appropriate amounts without establishing entitlement in accordance with contract.
In absence of lawful adjustment and final settlement, the plea fails. The plaintiff's claim is based on documentary evidence and contemporaneous records. But the defendants have failed to CS (COMM)-579/2021 Classic Motors Private Limited. Vs. Automark Motors Private Limited & Ors.
Page 34 of 51produce any contrary calculation , any audited statement or any rebuttal evidence. Mere bald denial cannot displace documentary proof. The defendants' own correspondence reveals acknowledgment of arrears, requests for time and part-payments made thereon and such conduct constitutes binding admission upon the defendants. The law is settled that conduct speaks louder than pleadings.
The evidence led by the plaintiff inspires confidence and satisfies the standard of preponderance of probabilities.
14. Findings on issues no. 1, 5 & 6 ISSUE NO.1: The plaintiff has established default, quantified dues, and contractual entitlement. Accordingly,issue no.1 is decided in favour of the plaintiff.
ISSUE NO.5: The defendants have failed to prove the issue and the claim arises directly from lease terms. Hence, issue no.5 is decided against the defendant and in favour of the plaintiff. ISSUE NO. 6: The defendants have failed to prove wrongful withholding or entitlement to adjustment. Hence issue no.6 is decided against the defendants.
Since, the defendants, having enjoyed the leased premises and having repeatedly acknowledged their liability, cannot evade contractual obligations on untenable pleas of hardship and technicalities.
The conduct of the defendants reflects a conscious attempt CS (COMM)-579/2021 Classic Motors Private Limited. Vs. Automark Motors Private Limited & Ors.
Page 35 of 51to avoid payment despite subsisting liability, which this Court cannot countenance in a commercial dispute governed by strict contractual discipline.
In view of the foregoing analysis, this court holds that the plaintiff has successfully established its entitlement to the suit amount.
15. Now this Court will touch upon the entitlement of interest by the plaintiff i.e pendente-lite and future interest. The grant of pendente lite and future interest is governed by Section 34 of the Code of Civil Procedure, 1908. In cases arising out of commercial transactions, the proviso to Section 34 assumes significance. The proviso to Section 34 of CPC stipulates that where the liability arises out of a commercial transaction, the rate of future interest may exceed 6% per annum, having regard to contractual rate, if any or the rate at which moneys are lent by nationalised banks in relation to commercial transactions.
It is settled that the grant of interest is a matter of judicial discretion, to be exercised on sound legal principles. The Hon'ble "Supreme Court in Central Bank of India v. Ravindra, (2002) 1 SCC 367", authoritatively held that the award of interest under Section 34 CPC is discretionary, but such discretion has to be exercised reasonably, judiciously and for reasons. Further, in "State of Rajasthan v. Ferro Concrete Construction Pvt. Ltd. (2009) 12 SCC 1", the Court observed that the rate of interest CS (COMM)-579/2021 Classic Motors Private Limited. Vs. Automark Motors Private Limited & Ors.
Page 36 of 51must be reasonable and in consonance with prevailing commercial rates.
The present transaction is admittedly commercial in nature, involving supply of goods in the course of business, as reflected from the record. Therefore, the proviso to Section 34 CPC squarely applies. The Hon'ble Supreme Court in "Hyder Consulting (UK) Ltd. v. State of Orissa, (2015) 2 SCC 189", held that in commercial transactions, the Court is empowered to grant interest at a rate higher than the ordinary rate, depending upon the facts and circumstances of the case."
Though the plaintiff has claimed interest @ 24% per annum, such rate appears excessive and penal in nature, in the absence of a specific contractual stipulation proved on record. It is a settled proposition that Courts must moderate excessive claims of interest. The Hon'ble Supreme Court in "Karnataka Power Corporation Ltd. v. K. Thangappan, (2006) 4 SCC 322", held that even where a higher rate is claimed, the Court must award reasonable interest, keeping in view the facts and circumstances.
Similarly, in "Rajendra Construction Co. v. Maharashtra Housing & Area Development Authority, (2005) 6 SCC 678", it was observed that the Court has the power to reduce the rate of interest if it is found to be excessive or unconscionable.
In the absence of a proved contractual rate, the Court must take into account prevailing lending rates of nationalised banks, nature of transaction, conduct of parties and overall equities. The CS (COMM)-579/2021 Classic Motors Private Limited. Vs. Automark Motors Private Limited & Ors.
Page 37 of 51Hon'ble Supreme Court in "Punjab & Sind Bank v. Allied Beverage Company Pvt. Ltd., (2010) 10 SCC 640", held that nterest awarded must be realistic and aligned with commercial banking rates.
Presently, commercial lending rates broadly range between 8% to 12% per annum.
16. In the facts of the present case the transaction is commercial, the defendants have withheld payment without justification, the plaintiff has been deprived of legitimate dues, however, plaintiff has claimed rate of interest @ 24% but no contractual rate of 24% has been proved on record. Therefore, a balanced and reasonable approach is warranted. This Court is of the considered view that interest @ 9% per annum meets the ends of justice, being fair to the plaintiff, non-punitive to the defendants and consistent with prevailing commercial rates. Accordingly, it is hereby held that the plaintiff is entitled to pendente lite and future interest @ 9% per annum on the principal sum adjudged, from the date of filing of the suit till realisation. This rate is awarded in exercise of discretion under Section 34 CPC, having regard to the commercial nature of the transaction and the settled principles laid down by the Hon'ble Supreme Court. The award of interest @ 9% per annum strikes a judicious balance between compensating the plaintiff for deprivation of money and ensuring that the rate remains reasonable and not punitive. The same is in consonance CS (COMM)-579/2021 Classic Motors Private Limited. Vs. Automark Motors Private Limited & Ors.
Page 38 of 51with the settled doctrine that interest is compensatory and not penal in nature. This meets the ends of justice and balances equity.
Issue No.2:Whether the plaintiff has complied with Section 12A of the Commercial Courts Act?(OPP)
17. The onus to prove this issue rests upon the plaintiff. Section 12A of the Commercial Courts Act, 2015 mandates pre- institution mediation in suits not contemplating urgent interim relief. The provision is couched in mandatory terms. The Hon'ble Supreme Court in "Patil Automation Pvt. Ltd. v. Rakheja Engineers Pvt. Ltd., (2022) 10 SCC 1", has authoritatively held that section 12A is mandatory and non-compliance would entail rejection of the plaint under Order VII Rule 11 CPC.
The plaintiff has examined PW-1, who in his affidavit Ex. PW1/A, has specifically deposed that the plaintiff invoked pre- institution mediation under Section 12A, the matter was referred to the appropriate authority and the mediation proceedings failed due to non-participation of the defendants.
This assertion is supported by documentary record forming part of the plaint, including mediation application and non- starter/failure report. The plaint itself contains a specific averment under the heading "Declaration (Mediation)" confirming compliance.
The record demonstrates that plaintiff initiated mediation on 24.12.2020 but defendants failed to participate and a failure CS (COMM)-579/2021 Classic Motors Private Limited. Vs. Automark Motors Private Limited & Ors.
Page 39 of 51report dated 02.09.2021 was issued by the mediation authority.
These documents constitute primary evidence within the meaning of the Bharatiya Sakshya Adhiniyam, and remain uncontroverted.
The cross-examination of PW-1 does not dislodge the plaintiff's case on this aspect. Notably no suggestion was put that mediation was not initiated, no challenge to authenticity of mediation record and no contradiction elicited regarding the failure report.
18. It is settled that where a material fact is not challenged in cross-examination, it is deemed admitted. In "Vidhyadhar v. Manikrao (Supra)", the Supreme Court held that where the opponent has declined to avail himself of the opportunity to put his essential and material case in cross-examination, it must follow that he believed that the testimony given could not be disputed.
The defendants have raised a preliminary objection alleging non-compliance of Section 12A. It may be seen that during the cross-examination of DW-1, he reveals crucial admissions that he has no personal knowledge regarding mediation proceedings, no document produced to show absence of mediation, no denial of receipt of mediation notice and no evidence has been placed on record to show o participation despite notice.
The defence is thus based on bald pleading without CS (COMM)-579/2021 Classic Motors Private Limited. Vs. Automark Motors Private Limited & Ors.
Page 40 of 51evidentiary foundation.
The contention is devoid of merit for the for the reasons that (i) plaintiff has placed on record the mediation initiation and failure report, (ii) the defendants failed to participate in mediation and (iii) non-participation cannot be used as a defence to defeat the suit. The Supreme Court in Patil Automation (supra) clarified that where mediation is initiated but the opposite party does not participate, the requirement of Section 12A stands satisfied.
The defendants cannot approbate and reprobate having abstained from mediation they cannot subsequently allege non- compliance. Such conduct is contrary to settled principles of estoppel.
Section 12A of commercial court act requires institution of mediation and not necessarily successful conclusion. Non- compliance would attract Order VII Rule 11 CPC only when mediation is not attempted at all.
The objection raised by the defendants is not only legally untenable but also contrary to the record. The plaintiff has scrupulously adhered to the statutory mandate under Section 12A, and the defendants cannot take advantage of their own failure to participate in the mediation process. Documentary evidence produced by the plaintiff remains unrebutted and hence stands proved.
In view of the uncontroverted testimony of PW-1, the documentary evidence on record, and absence of any rebuttal by CS (COMM)-579/2021 Classic Motors Private Limited. Vs. Automark Motors Private Limited & Ors.
Page 41 of 51the defendants, this Court holds that the plaintiff duly complied with Section 12A of the Commercial Courts Act, the mediation process was initiated in accordance with law and the proceedings failed due to non-participation of the defendants.
Accordingly, Issue No. 2 is decided in favour of the plaintiff.
Issue No. 3: Whether this Court lacks territorial and/or pecuniary jurisdiction to entertain the present suit? (OPD)
19. The onus to establish lack of jurisdiction lies upon the defendants. It is trite that a plea of jurisdiction must not only be specifically pleaded but must also be substantiated by cogent evidence. In "Hakam Singh v. Gammon (India) Ltd., (1971) 1 SCC 286", the Hon'ble Supreme Court held that where two courts have jurisdiction, parties may agree to vest jurisdiction in one; but where no jurisdiction exists, none can be conferred by consent.
PW-1, in his affidavit Ex. PW1/A, has deposed in clear and categorical terms that (i) the suit property is situated at A-39, Mohan Cooperative Industrial Estate, New Delhi, (ii) the lease deed dated 02.12.2014 was executed in Delhi, (iii) the defendants carried on business and operated from the said premises and (iv) the contractual obligations were to be performed in Delhi. The above facts are fortified by the documentary record, particularly lease deed (Ex. PW1/4) reflecting situs of the property in South-
CS (COMM)-579/2021 Classic Motors Private Limited. Vs. Automark Motors Private Limited & Ors.
Page 42 of 51East Delhi, correspondence exchanged at the Delhi address and legal notices issued and responded to within Delhi.
The cross-examination of PW-1 is conspicuously silent on any challenge to jurisdictional facts, no suggestion disputing location of property, no challenge to execution of lease in Delhi and no denial of business operations within Delhi.
20. The absence of any material challenge is significant. In "Vidhyadhar v. Manikrao (Supra)", it was held that where a party fails to cross-examine on a material aspect, the testimony must be accepted as correct."
Moreover, DW-1 in his cross-examination has made admissions which go to the root of the matter, he deposed that (i) the premises in question is located in Delhi, (ii) the defendants operated their business from the said premises and (iii) the lease pertains to the said Delhi property. Crucially, DW-1 has failed to produce any document indicating exclusive jurisdiction of another court or any contractual clause ousting jurisdiction of Delhi courts. These admissions are substantive evidence under the law of evidence and bind the defendants. In "Narayan Bhagwantrao Gosavi v. Gopal Vinayak Gosavi, AIR 1960 SC 100" it was held that admissions are the best evidence that an opposite party can rely upon.
Section 20 of CPC permits institution of a suit where, (a) The defendant resides or carries on business or (b) The cause of CS (COMM)-579/2021 Classic Motors Private Limited. Vs. Automark Motors Private Limited & Ors.
Page 43 of 51action wholly or in part arises. In the present case defendants carried on business in Delhi, the lease property is situated in Delhi and the entire cause of action arose in Delhi. Thus, the requirements of Section 20 of CPC stand fully satisfied.
The dispute arises out of a lease of immovable property. In "Harshad Chiman Lal Modi v. DLF Universal Ltd., (2005) 7 SCC 791", it was held that a suit relating to immovable property must be instituted where the property is situate.
The situs of the property being within South-East Delhi, this Court is vested with jurisdiction.
The dispute is a commercial dispute within the meaning of section 2(1)(c) of the commercial courts act. The pecuniary value of the suit falls within the notified jurisdiction of this commercial court. Even assuming a jurisdiction clause (though none is proved excluding Delhi), the settled law is that parties may choose one among multiple competent courts and they cannot exclude jurisdiction of a court where cause of action arises unless expressly done. In "A.B.C. Laminart Pvt. Ltd. v. A.P. Agencies, (1989) 2 SCC 163" the court held that where part of cause of action arises within a jurisdiction, that court will have jurisdiction unless excluded by clear words.
No such exclusion is proved in the present case. The plea is vague, general, and unsupported by evidence. No factual matrix or documentary basis has been laid.
The defendants have failed to discharge the burden to prove CS (COMM)-579/2021 Classic Motors Private Limited. Vs. Automark Motors Private Limited & Ors.
Page 44 of 51absence of cause of action in Delhi, establish jurisdiction of any other court or produce any contractual ouster clause. The burden cast upon them remains undischarged. The admissions of DW-1 conclusively negate the defence.
Under the Bharatiya Sakshya Adhiniyam(BSA) admissions are substantive evidence, documentary evidence prevails over oral denial and unchallenged testimony is deemed admitted. The defendants have failed to rebut the plaintiff's documentary case.
In view of the forgoing discussion, this court holds that the suit property is situated within the territorial jurisdiction of this Court. The defendants carried on business within this jurisdiction. The entire cause of action arose within Delhi. The suit satisfies pecuniary thresholds under the commercial courts act.
The objection to jurisdiction is devoid of merit, contrary to the admitted factual matrix, and unsupported by any legal or evidentiary foundation. The same is accordingly rejected. This Court is fully competent, both territorially and pecuniarily, to adjudicate the present commercial dispute.
Accordingly, issue No. 3 is decided against the defendant and in favour of the plaintiff.
Issue No.4: Whether there is no cause of action has accrued to the plaintiff for filing of the present suit ?" (OPP)
21. The existence of a cause of action is foundational to the maintainability of a civil action. The present issue requires this CS (COMM)-579/2021 Classic Motors Private Limited. Vs. Automark Motors Private Limited & Ors.
Page 45 of 51court to examine whether the plaint, read as a whole and supported by evidence, discloses a bundle of facts giving rise to an enforceable right against the defendants.
It is well settled that "cause of action" comprises every fact which the plaintiff must prove to succeed. In "A.B.C. Laminart Pvt. Ltd. v. A.P. Agencies, (1989) 2 SCC 163", the Hon'ble Supreme Court held that cause of action means every fact which, if traversed, it would be necessary for the plaintiff to prove in order to support his right to a judgment. Similarly, in "Bloom Dekor Ltd. v. Subhash Himatlal Desai, (1994) 6 SCC 322", the court held that cause of action is a bundle of essential facts which the plaintiff must prove.
At the stage of adjudication (as opposed to Order VII Rule 11 CPC), the Court must assess not merely pleadings but also evidence on record.
The plaintiff's case, as pleaded and proved, is: (i) execution of lease deed dated 02.12.2014 Exb.PW1/4, (ii) induction of defendants into possession, (iii) obligation to pay rent and charges by the defendants, (iv) persistent defaults by defendants, (v) repeated demands by the plaintiff and acknowledgments by the defendants and (vi) failure to clear dues despite notice. These facts cumulatively constitute a complete cause of action.
PW-1 in his evidence has deposed in a consistent and cogent manner that the defendants defaulted in payment of rent, multiple communications were issued to the defendants by the CS (COMM)-579/2021 Classic Motors Private Limited. Vs. Automark Motors Private Limited & Ors.
Page 46 of 51plaintiff, liability was repeatedly acknowledged by the defendants and despite demands by the plaintiff, dues remained unpaid by the defendants. The testimony is corroborated by documentary evidence (I) lease deed (Ex. PW1/4), email correspondence (Ex. PW1/12-PW1/31) and legal notices (Ex. PW1/22, PW1/32). These documents establish a continuous chain of events giving rise to cause of action.
22. The cross-examination of PW-1 is of critical importance as no suggestion that no cause of action arose to the plaintiff, no challenge to default in payment, no denial of correspondence and no alternative narrative established.
The defence failed to shake the credibility of PW-1. In "Vidhyadhar v. Manikrao (Supra)" the court held that where a witness is not effectively cross-examined, his testimony remains unchallenged and must be accepted.
The defendants have contended that the suit lacks cause of action, there were negotiations and concessions and liability is disputed by the defendants. DW-1, in cross-examination has made material admissions and admitted (i) existence of lease relationship, (ii) occupation of premises, (iii) payment obligations and (iv) part-payments made by the defendants. Crucially, DW-1 failed to deny receipt of notices and email correspondence acknowledging liability. These admissions directly establish the factual basis of the cause of action.
CS (COMM)-579/2021 Classic Motors Private Limited. Vs. Automark Motors Private Limited & Ors.
Page 47 of 51The documentary record relied upon by the plaintiff demonstrates accrual of liability, repeated breaches by the defendants and demand by the plaintiff and refusal by the defendants. Under the Bharatiya Sakshya Adhiniyam (BSA), documentary evidence prevails unless rebutted. The defendants have not produced any cogent documentary evidence to negate the plaintiff's case.
Alleged plea of absence of cause of action is misconceived. The plaint discloses contractual relationship between the parties, breach of obligation by the defendants and demand by plaintiff and non-payment by the defendants. These are classic ingredients of a cause of action in a recovery suit.
Mere negotiations do not extinguish cause of action. In "Union of India v. Raman Iron Foundry, (1974) 2 SCC 231"
the court held that a claim does not cease to exist merely because parties enter into negotiations.
A disputed liability does not negate cause of action. Cause of action arises from breach, not admission.
Order VII Rule 11 CPC applies only where no cause of action is disclosed on the face of plaint. In the present case, evidence overwhelmingly establishes cause of action.
The defendants have relied upon judgments relating to rejection of plaint under Order VII Rule 11 CPC. The said authorities are distinguishable as (i) those cases deal with absence of cause of action on pleadings alone, (ii) the present case is after CS (COMM)-579/2021 Classic Motors Private Limited. Vs. Automark Motors Private Limited & Ors.Page 48 of 51
full trial with evidence and (iii) here, cause of action stands proved, not merely pleaded. Hence, the reliance is misplaced.
The objection of absence of cause of action is wholly untenable, contrary to the record, and devoid of legal merit. The plaintiff has not only pleaded but has also conclusively proved the existence of a valid cause of action.
In view of the forgoing discussion, this court finds that (i) A valid and subsisting cause of action arose in favour of the plaintiff,
(ii) The cause of action is continuous and recurring, (iii) The defendants' breach triggered the right to sue. According, issue No. 4 is decided in favour of the plaintiff.
Issue No.7: Whether the suit is not maintainable on account of the objections mentioned in the written statement? (OPD)
23. The onus to establish non-maintainability lies upon the defendants. The objection is omnibus in nature, encompassing various pleas taken in the written statement, including alleged absence of cause of action, jurisdictional objections, non- compliance of statutory requirements, and other technical defences.
It is settled law that a plea of non-maintainability must be specific, legally tenable, and supported by cogent evidence. A vague or composite objection cannot defeat a substantive commercial claim.
CS (COMM)-579/2021 Classic Motors Private Limited. Vs. Automark Motors Private Limited & Ors.
Page 49 of 51It is pertinent to mention that the objection of absence of Cause of Action has already been dealt with under Issue No. 4. Further objection: with regard to jurisdiction of this court stands concluded as issue no.3 in favour of the plaintiff. Objection of non-compliance of section 12A of commercial court act has also been decided as issue no. 2. Further objection with regard to Force Majeure, the defence of COVID-19 and security deposit adjustment have already been dealt with and decided as issues nos.1, 5 & 7.
A suit is maintainable unless barred by statute, lack of jurisdiction and absence of cause of action. None of which is established.
The defendants have raised a bouquet of objections in an attempt to defeat a legitimate commercial claim; however, none withstands judicial scrutiny. The objections are either legally untenable, factually unsupported, or already concluded against the defendants. The suit is fully maintainable both in law and on facts.
Therefore, in view of the forgoing discussion, it is held that the suit is legally maintainable, no statutory or contractual bar exists and the objections raised are meritless and unsupported.
Accordingly, issue No. 7 is decided against the defendant and in favour of the plaintiff.
Issue No.8:Relief CS (COMM)-579/2021 Classic Motors Private Limited. Vs. Automark Motors Private Limited & Ors.
Page 50 of 5124. In view of the findings on the aforementioned issues, the suit of the plaintiff is decreed in favour of the plaintiff and against the defendants and the defendants are jointly and severally liable to pay a sum of Rs. 25,25,303/- (Rupees Twenty Five Lakhs Twenty Five Thousand Three Hundred and Three only). The plaintiff shall further be entitled to interest @ 9% per annum from the date of institution of the suit and till its realisation.
The plaintiff shall also be entitled to costs of the suit. Decree sheet be drawn accordingly.
File be consigned to Record Room. Digitally signed lalit by lalit kumar Date:
kumar 2026.04.30 17:19:16 +0530 Announced & dictated in the (LALIT KUMAR) open Court on this District Judge 30th April, 2026 (Commercial Court-02) South-East, Saket Courts, ND 30.04.2026 CS (COMM)-579/2021 Classic Motors Private Limited. Vs. Automark Motors Private Limited & Ors.Page 51 of 51