Delhi District Court
Mayank Gupta vs M/S Delco India Pvt. Ltd on 29 May, 2025
IN THE COURT OF SH. LOKESH KUMAR SHARMA
DISTRICT JUDGE (COMMERCIAL COURTS)-05,
SOUTH DISTRICT, SAKET COURTS, NEW DELHI
In the matter of
CS (COMM) 100/24
CNR No. DLST01-001754-2024
Mayank Gupta
(Director of M/s Greenorama Foods Private Limited)
B-399, First Floor,
New Friends Colony, New Delhi-110025 .... Plaintiff
Versus
M/S. Delco India Private Limited
Through its Directors/Managing Director
A-22, Green Park (Main),
New Delhi-110016 ...Defendant
Institution of the Suit : 01.03.2024
Arguments concluded on : 15.05.2025
Judgment pronounced on : 29.05.2025
JUDGEMENT
1. The present suit for recovery of Rs. 6,11,321/- (Rs. Six Lakhs Eleven Thousand Three Hundred Twenty One only), along with pendente lite and future interest, has been filed by the plaintiff against the defendant.
2. Brief Facts: The plaintiff, who claims to be a peace- loving and law-abiding citizen of India and a permanent resident of B-399, First Floor, New Friends Colony, New Delhi-110025, was stated to have set up a company with the name of M/s Greenorama Foods Private Limited.
CS (COMM) 100/2024 Mayank Gupta. Vs. M/s Del Co India Pvt. Ltd. Page 1 of 19It was stated that the Plaintiff, with the intention of entering into the packaging business related to food and other allied services, was in search of a commercial property, and the Defendant, through its Director Mr. Anirudh Gupta and its authorized representative Mr. Sumit Singh, had offered on rent its property bearing no. E-21, B-1 Extension, Mohan Industrial Estate, Mathura Road, New Delhi, to the Plaintiff, hereinafter referred to as the 'demised premises'.
3. It was stated that the Defendant had represented to the Plaintiff that the abovesaid premises was of a commercial nature and that all necessary permissions and approvals were in place to use the demised premises for commercial purposes. It was further stated that the Plaintiff, believing the said representation made by the Defendant to be true, had agreed to accept the demised premises on rent.
4. It was stated that the Plaintiff had agreed to enter into a lease deed with the Defendant on behalf of his company. It was further stated that the Defendant had assured the Plaintiff that the demised premises was free from all sorts of encumbrances, and that the Defendant had obtained all necessary approvals and had duly paid all fees to the concerned authorities for carrying out commercial activities in the demised premises.
5. It was further stated that when the Plaintiff requested the Defendant to hand over the relevant documents to CS (COMM) 100/2024 Mayank Gupta. Vs. M/s Del Co India Pvt. Ltd. Page 2 of 19 obtain the necessary licenses from the concerned authority, the Defendant was stated to have ignored the Plaintiff's request and did not provide any such documents.
6. It was also averred that the lease deed was never acted upon and was stated to have remained unexecuted between the parties because the Defendant had failed to provide the necessary documents, including the NOC from the fire department/competent authorities, and failed to install the fire safety systems in the demised premises. Therefore, the Plaintiff had claimed a refund of the amounts paid to the Defendant as an advance towards the security deposit.
7. It was stated that, as per the said proposed lease deed, it was agreed that the Plaintiff would pay a sum of Rs. 2,85,000/- per month as initial rent to the Defendant for the period from 01.10.2023 to 30.09.2026. It was further stated that the Plaintiff would pay a sum of Rs. 8,55,000/- to the Defendant towards the security deposit.
8. It was stated that, out of the total security amount of Rs. 8,55,000/-, the Plaintiff had paid/handed over a sum of Rs. 5,70,000/- as part of the security amount to the Defendant, which the Defendant was stated to have neglected to refund despite the lease deed remaining unexecuted; therefore, the Defendant could not have retained the said amount on any pretext. It was further stated that the said amount was paid by the Plaintiff through his parents' personal accounts only upon the insistence of the CS (COMM) 100/2024 Mayank Gupta. Vs. M/s Del Co India Pvt. Ltd. Page 3 of 19 Defendant. The Plaintiff was stated to have made a payment of Rs. 2,85,000/- through his father's account to the Defendant's bank account on 10.10.2023 by way of RTGS, and another payment of Rs. 2,85,000/- through his mother's account to the Defendant on 11.09.2023 through RTGS.
9. It was stated that the proposed lease deed was not finally executed or acted upon due to the Defendant's non- compliance with and non-adherence to the terms as intended and agreed upon at the time of discussion, negotiations, and drafting of the lease deed.
10. It was stated that the Plaintiff was left with no alternative but to approach the DLSA-South for pre-litigation mediation on 30.11.2023 before filing the present suit. However, despite the issuance of notices, neither the Defendant appeared nor was any intimation received from its side regarding the mediation; hence, a non-starter report dated 27.01.2024 was issued by DLSA-South.
11. It was averred that the Defendant had intentionally and mala fidely, with the intent to cheat the Plaintiff, lured him into executing the lease deed on the pretext that the demised premises was of a commercial category and that all requisite approvals required by the Plaintiff to run his business were in place. Hence, the Defendant was stated to have pressured the Plaintiff to pay the security deposit and accordingly received a sum of Rs. 5,70,000.
CS (COMM) 100/2024 Mayank Gupta. Vs. M/s Del Co India Pvt. Ltd. Page 4 of 1912. It was stated that the Defendant had misused and abused its superior position. The Defendant was stated to have intentionally kept the Plaintiff in the dark and deliberately misled him to believe that the Defendant was well within its rights to lease out the demised premises for commercial purposes and intended to perform its obligations as per the agreed terms. However, it was later found that the demised premises did not fall under the commercial category.
13. That the Defendant, in terms of Clause 2(iv) of the proposed lease deed, had failed to comply with the installation of the fire safety system as well as to provide the FIRE NOC. The relevant extract of Clause 2(iv) of the proposed lease deed was as follows:
"iv) That the Lessor will instal the fire safety system as per rules and regulations of the fire department at their own costs and further provide the FIRE NOC."
14. It was stated that due to the Defendant's non- performance of its obligations, the Plaintiff was left in a dilemma and had no option but to look for another premises to start its business. Accordingly, the Plaintiff searched for another premises on lease and executed a lease deed with another party. The delay caused in starting the business ultimately resulted into prejudice and financial losses to the Plaintiff. It was further stated that the Plaintiff had reserved his right to file an appropriate suit seeking CS (COMM) 100/2024 Mayank Gupta. Vs. M/s Del Co India Pvt. Ltd. Page 5 of 19 damages from the Defendant in that regard, and the present suit was restricted to the refund/recovery of the amount paid by the Plaintiff to the Defendant as a security deposit.
15. The cause of action was stated to have arisen firstly in September 2023, when the parties had intended to execute the lease deed. The cause of action was stated to have arisen again when the Defendant had failed to provide the Plaintiff with the necessary documents required to obtain the licenses for running his business. The cause of action had arisen again when the Defendant had failed to obtain the NOC from the concerned department. The cause of action had further arisen on 11.09.2023 and 10.10.2023, when the Plaintiff had paid a sum of Rs. 5,70,000 to the Defendant towards the security deposit, and again when the Defendant had failed to refund the said amount despite the Plaintiff's repeated requests. The cause of action had also arisen when, despite receiving the notice from the DLSA for pre- institution mediation, the Defendant had deliberately ignored participating in the said proceedings. The cause of action was stated to be continuing, as the Defendant had failed to pay/refund the amount due despite service of the legal notice.
16. Since the registered office of the defendant was situated within territorial jurisdiction of this court. Hence, it was stated that this Court had territorial jurisdiction to try and decide the present suit.
CS (COMM) 100/2024 Mayank Gupta. Vs. M/s Del Co India Pvt. Ltd. Page 6 of 1917. It was further stated that the present suit had fallen under the category of commercial suit defined under Section 2(1)
(c)(vii) of the Commercial Courts Act as the demised premises was intended to be used solely and exclusively for the purpose of trade and commerce.
18. In light of the aforesaid facts and circumstances, the plaintiff had prayed for the passing of a decree of Rs. 6,11,321/- along with costs, pendente lite and future interest @18% p.a. until its actual realization, in favour of the Plaintiff and against the Defendant.
19. Summons of the suit were sent to the defendant by dasti summon thereafter the defendant had appeared and contested the suit.
The defendant had filed its written statement on record, wherein it had raised a preliminary objection, alleging that the plaintiff had concealed material facts and failed to approach the court with clean hands. The defendant had further contended that no cause of action had ever arisen in favour of the plaintiff against the defendant.
20. On merits, it was stated that the present suit had been filed by the Plaintiff in his individual capacity, whereas the lease deed/agreement was to be executed between the Plaintiff's company and the Defendant company. It was further stated that the Plaintiff had intended to take the demised premises on rent only on the condition that certain major structural changes were CS (COMM) 100/2024 Mayank Gupta. Vs. M/s Del Co India Pvt. Ltd. Page 7 of 19 required to be made in the premises, which the Defendant had duly complied with. However, the Plaintiff did not come forward to execute or initiate the lease deed, despite the Defendant having incurred a substantial amount in modifying the premises as per the Plaintiff's requirements. It was averred that it had been agreed upon by and between the parties that the amount received by the Defendant was non-refundable, as the same would be spent on the structural changes to the demised premises. Except for the paragraphs specifically admitted or those constituting matters of record, all other averments were denied by the Defendant as incorrect and misconceived.
21. To this written statement of the defendant, the plaintiff had also filed his replication, wherein all the preliminary objections taken by the defendant were denied by it and the contents of plaint were reiterated on merits.
22. On the pleading of the parties, this court vide its order dated 07.08.2024, had framed following issues:
1. Whether the Plaintiff is entitled to recovery of suit amount, as prayed? OPP.
2. Whether the Plaintiff is entitled to claim the interest on suit amount, if so, at what rate? OPP.
3. Whether the Plaintiff is guilty of concealment and suppression of material facts? OPD.
4. Whether the suit of the Plaintiff as filed in its present form is not maintainable? OPD.CS (COMM) 100/2024 Mayank Gupta. Vs. M/s Del Co India Pvt. Ltd. Page 8 of 19
5. Relief.
23. In order to prove its case by preponderance of probabilities, plaintiff had examined himself as PW1 and had placed on record, affidavit PW1/A in his examination-in-chief, wherein he had reiterated the factual averments of plaint on solemn affirmation. Besides this, he had also placed on record the following documents:-
i) Ex. PW1/1 - True Copy of the master data concerning Defendant's Company named M/s Delco India Pvt. Limited.(wrongly mentioned as Plaintiff's Company i.e. M/s Greenorama Foods Pvt. Ltd. )
ii) Ex. PW1/2- True copy of the proposed lease deed draft sent by the defendant to the plaintiff through WhatsApp message.
iii) Ex. PW1/3- True copy of the WhatsApp conversation between the Defendant's representative and Plaintiff.
iv) Ex. PW1/4 (Colly)- True Copy of the RTGS Settlement Reports dated 11.09.2023 and 10.10.2023 in respect of the cumulative payment of Rs. 5,70,000/- made by the Plaintiff to the Defendant.
v) Ex. PW1/5- True copy of the Non-Starter Report dated 27.01.2024 issued by the DLSA.
CS (COMM) 100/2024 Mayank Gupta. Vs. M/s Del Co India Pvt. Ltd. Page 9 of 19vi) Ex. PW1/6 - True copy of the lease deed dated 14.12.2023 executed by the Plaintiff for his business purposes.
vii) Ex. PW1/7 - Certificate under Section 65B of the Indian Evidence Act, 1872.
24. During his cross-examination conducted by the learned counsel for the defendant, PW-1 had stated that there were three directors in the company and he was one of the directors in the said company. He had stated that he was B. Tech in computer science and met the defendant in September, 2023 through property agent. He had admitted that that no rent agreement was executed between him and the defendant and the defendant had not given him any document describing the nature of property. He could not tell if the property was of commercial nature fit for trade and commerce or not. He had denied the suggestion that the property was to be leased out on the condition that the defendant would carry out the renovation as per the desire of the plaintiff and that the cost of renovation was to be borne by the plaintiff. He had also denied the suggestion that after the completion of renovation, the plaintiff had never turned up to take possession of the suit property.
He had stated that Mr. Sanjay Gupta and Mrs. Neelam Gupta were also directors of his company. The money was transferred into the account of the defendant by them as directors in the company. He had stated that, except for the draft lease deed CS (COMM) 100/2024 Mayank Gupta. Vs. M/s Del Co India Pvt. Ltd. Page 10 of 19 carrying stipulations to that effect, he had no other document to show that the defendant was supposed to obtain all necessary clearances from the concerned departments before leasing out the property. He had denied the suggestion that at the same point of time, he was looking for other properties as well. He had stated that another property was taken on lease at a monthly rent of Rs. 2.1 lacs excluding GST. The amount was transferred by Mr. Sanjay Gupta and Mrs. Neelam Gupta, which was stated to be paid by them as their own contributions and not as any loan to him. He had stated that the amount was not paid by his company to the defendant. He had read the plaint before signing it. He had denied the suggestion that the defendant had incurred huge costs on renovation work as was agreed between the defendant and his company. He had stated that he could not precisely say about the 11th, but he had paid Rs. 2.85 lacs from the account of his mother in September 2023. He had denied the suggestion that in the same month, he had asked the defendant to refund the said amount as the defendant had failed to fulfil its promise. He had stated that he had paid another amount of Rs. 2.85 lacs to the defendant in October 2023 from his father's account. He had denied the suggestion that he was getting another property at a lower rate, hence, he had deliberately executed the lease deed with the defendant. He had denied the suggestion that the defendant was not liable to make any payments to the plaintiff as it had already spent the said amount in carrying out the renovations as per his wishes and desires. He had denied the suggestion that the present suit was filed to extort money. Formal suggestions were denied by him as wrong and incorrect.
CS (COMM) 100/2024 Mayank Gupta. Vs. M/s Del Co India Pvt. Ltd. Page 11 of 1925. Thereafter the Plaintiff's evidence was closed.
26. In rebuttal, the defendant, in its evidence, had examined its director, Sh. Aniruddh Gupta, S/o Sh. Umesh Gupta, aged about 42 years, residing at R/o 45/6-B, Mall Road, Delhi-110054. He appeared in the witness box as DW-1 and filed his examination-in-chief by way of affidavit Ex. DW1/A, wherein he had reiterated the contents of the written statement on solemn affirmation.
During his cross-examination conducted by Ld. Counsel for the plaintiff, he had deposed that he had been authorized by the directors of the defendant company to depose on their behalf. He had denied the suggestion that he was not authorized by the defendant company and that's why no authorization was placed on record by him. He had denied the suggestion that the plaintiff had given a security of Rs. 5.7 lakhs to the defendant for executing the lease deed in his favour. He had stated that he had received an approximate amount of Rs. 5.7 lakhs in his account by way of bank transfer from the accounts of Sh. Sanjay Gupta and Ms. Neelam Gupta, as mentioned in para 3 of his affidavit Ex. DW1/A. He had stated that he thought they (Sh. Sanjay Gupta and Ms. Neelam Gupta) were the directors in the company, who were supposed to sign the agreement with his company. Though he could not remember the name of the plaintiff's company but it was related to the food industry. He had stated that only Sanjay Gupta had approached him for the CS (COMM) 100/2024 Mayank Gupta. Vs. M/s Del Co India Pvt. Ltd. Page 12 of 19 purpose of execution of the lease deed. He had denied the suggestion that he was not approached by Sanjay Gupta and that only the plaintiff, Mayank Gupta, had approached him. He had stated that he did not know if the company with whom the lease deed was to be executed had come into existence or not. Ex. PW1/2 was stated to be the proposed lease deed. He had stated that the property to be leased out was commercial. He had admitted that a NOC was required to be obtained from the fire department before leasing out a commercial property. He had denied the suggestion that he had not obtained any fire NOC in respect of the suit property. He had denied the suggestion that no fire safety equipment was kept or installed in the property. He had denied the suggestion that the plaintiff had not asked for any structural changes in the property, and further volunteered that the payment was made only for carrying out the structural changes. He had denied the suggestion that the payment was made towards security and not for carrying out the structural changes. He had denied the suggestion that the security deposit was wrongly forfeited by him, which he was otherwise liable to refund to the plaintiff. He had stated that he did not know the meaning of locus standi. He had denied the suggestion that he was illegally detaining the money of the plaintiff.
Formal suggestions were also denied by him as wrong and incorrect.
27. Thereafter DE was also closed.
CS (COMM) 100/2024 Mayank Gupta. Vs. M/s Del Co India Pvt. Ltd. Page 13 of 1928. I have heard Sh. Achin Goel and Sh. Rahul Sharma, Ld. counsels for Plaintiff at length and have gone through the written submissions filed on behalf of the parties. The Plaintiff, in his written submissions, argued that the Defendant's denial of liability was evasive and unsupported by any documentary evidence. Furthermore, the contentions that the payments were made towards constructional changes carried out by the Defendant at the Plaintiff's behest, or that the same were voluntary or non-refundable, were stated to be untenable, particularly in light of the fact that the proposed lease deed was never executed due to the Defendant's default. Consequently, it was contended that the Defendant's conduct amounted to a breach of representations, entitling the Plaintiff to a refund under Section 65 of the Indian Contract Act, 1872, along with restitution.
Per contra, the Defendant, in his written submissions, contended that the suit filed by the Plaintiff was not maintainable and was liable to be dismissed. It was argued that the Plaintiff had instituted the present suit in his individual capacity, whereas the proposed lease agreement, which formed the subject matter of the suit, was intended to be executed between the Plaintiff's company and the Defendant company. It was therefore asserted that the Plaintiff, in his individual capacity, had no locus standi to institute the present suit. The Defendant further reiterated the averments made in the written statement filed on record, emphasizing that the suit was misconceived and devoid of merit.
CS (COMM) 100/2024 Mayank Gupta. Vs. M/s Del Co India Pvt. Ltd. Page 14 of 1929. In view of the aforesaid arguments and counter submissions of the parties as well as evidence appearing on record, my issue wise findings are as under:
1. Whether the Plaintiff is entitled to recovery of suit amount, as prayed? OPP.
The onus to prove this issue was upon the plaintiff. The plaintiff's claim rests on the refund of Rs. 5,70,000/- paid as an advance towards the security deposit under a proposed lease agreement for commercial premises. The plaintiff has established through a documentary evidence (EX. PW1/4) and oral testimony that the amount was transferred to the Defendant's account as was also admitted by DW1 during his cross-examination.
It is undisputed that no formal lease deed was executed between the Plaintiff's company and the Defendant, nor did the Defendant provide the requisite approvals (such as the Fire NOC) for commercial use of the premises, as stipulated in the draft lease deed (Ex. PW1/2).
So far as the contention of the Defendant that the payments made by the Plaintiff were non-refundable and were utilised towards renovation costs and structural changes was concerned, the same was not supported by any cogent evidence. No written agreement or document in support of this plea has been placed on record by the Defendant. The Defendant has failed to produce any invoices, accounts, or evidence showing CS (COMM) 100/2024 Mayank Gupta. Vs. M/s Del Co India Pvt. Ltd. Page 15 of 19 expenses incurred specifically for the Plaintiff's requested modifications as well as the nature thereof. The Defendant's argument that the Plaintiff was seeking other properties simultaneously does not negate the fact that the payments were made for the specific purpose of leasing the Defendant's premises, and the agreement did not materialize due to the Defendant's failure to provide the necessary approvals.
The Plaintiff is entitled to restitution under equitable principles, but not under Section 65 of the Indian Contract Act, 1872, as no agreement or contract was ever executed between the parties. It is well settled that Section 65 applies to situations where an agreement is discovered to be void, or where a contract becomes void; however, in the present case, the proposed lease deed was never executed, and no agreement ever came into existence. Accordingly, the provision of Section 65 is inapplicable to the facts of the present case. Nevertheless, it is a settled principle of law that no party can unjustly enrich itself at the expense of another. The Defendant, having received payments from the Plaintiff in anticipation of the execution of the lease deed, but having failed to execute the same, cannot be permitted to retain such amounts. Therefore, the Plaintiff is entitled to be restituted under the general principles of equity and the doctrine of unjust enrichment, and the Defendant is bound to refund the amounts received from the Plaintiff.
Hence, the Plaintiff is entitled to recovery of ₹5,70,000/- from the Defendant. The issue is accordingly CS (COMM) 100/2024 Mayank Gupta. Vs. M/s Del Co India Pvt. Ltd. Page 16 of 19 answered in affirmative and decided in favour of Plaintiff and against the Defendant.
2. Whether the Plaintiff is entitled to claim the interest on suit amount, if so, at what rate? OPP.
The onus to prove this issue was also upon the plaintiff and in view of my findings to the issue no. 1 above, I hereby hold that plaintiff is entitled to claim pendente lite and future interest at the rate of 8 per cent per annum on the decretal amount, which is the prevailing rate of interest offered by many nationalized banks on the FDRs. Accordingly, this issue is also answered in affirmative and decided in favour of the plaintiff and against the defendant.
3. Whether the Plaintiff is guilty of concealment and suppression of material facts? OPD.
The onus to prove this issue was upon the Defendant. The Defendant had miserably failed to establish that the Plaintiff had concealed any material facts. The Plaintiff had disclosed all relevant details, including the fact that the payments were made from the accounts of his parents, which is not fatal to the Plaintiff's case. There is no material concealment that would disentitle the Plaintiff from relief. Hence, this issue is answered in negative and decided in favour of the Plaintiff and against the defendant.
CS (COMM) 100/2024 Mayank Gupta. Vs. M/s Del Co India Pvt. Ltd. Page 17 of 194. Whether the suit of the Plaintiff as filed in its present form is not maintainable? OPD.
The onus to prove this issue was upon the Defendant. It is pertinent to note that at the time of the proposed lease agreement, the Plaintiff's company, M/s Greenorama Foods Pvt. Ltd., had not yet been incorporated as none of the documents concerning its incorporation has been placed on record. As such, the company had no legal existence or capacity to enter into any contract, including the proposed lease agreement with the Defendant. It is a well-settled principle of law that a company comes into existence only upon its incorporation under the Companies Act, and prior to such incorporation, it has no locus to enter into binding agreements. Therefore, the payment made towards the proposed lease was advanced by the Plaintiff from his parents' personal accounts was so advanced in his individual capacity and not on behalf of any company. In light of the above, the Plaintiff is the proper party to claim the refund of the said amount, and the Defendant cannot escape its liability on the ground that the payment was intended for a non-existent company. Hence, the Plaintiff's suit is maintainable and issue is answered in negative and decided in favour of Plaintiff and against the defendant.
5. Relief.
In view of my finding given to issues above, a decree for an amount of Rs. 6,11,321/- is passed in favour of the plaintiff CS (COMM) 100/2024 Mayank Gupta. Vs. M/s Del Co India Pvt. Ltd. Page 18 of 19 and against the defendant with costs along with interest @ 8 percent per annum on the decreetal amount towards pendente lite and future interest from the date of institution of the suit till its actual realization. Decree sheet be drawn accordingly.
30. File be consigned to record room after completion of necessary legal formalities in this regard.
Digitally
signed by
LOKESH
ANNOUNCED IN THE OPEN COURT LOKESH KUMAR
DATED: 29.05.2025 KUMAR SHARMA
Date:
SHARMA 2025.05.29
15:09:38
+0530
(Lokesh Kumar Sharma)
District Judge (Commercial Court)-05
South/Saket/New Delhi
CS (COMM) 100/2024 Mayank Gupta. Vs. M/s Del Co India Pvt. Ltd. Page 19 of 19