Delhi District Court
M/S Maharani Guest House Pvt. Ltd vs Engineers India Limited on 14 January, 2020
IN THE COURT OF MS. RAVINDER BEDI :
ADDL. DISTRICT JUDGE04: PATIALA HOUSE COURTS :
NEW DELHI.
CS No: 58914 of 2016
M/s Maharani Guest House Pvt. Ltd.
Regd. Offie at
J16, Hauz Khas
New Delhi.
.........Plaintiff.
Versus
Engineers India Limited
Through
Chairman/Managing Director
Regd Office at
Engineers India Bhawan
1, Bhikaji Cama Bhawan,
New Delhi.
........Defendants
Date of Institution of Suit : 18.09.2002
Date of transfer from Delhi
High Court : 25.05.2016
Date of Final Arguments : 21.12.2019
Date of Judgment : 14.01.2020.
Counsel for parties : Adv. Sh. Deepak Khadaria for plaintiff.
: Sr.Adv. Sh. Pradeep Deewan and Adv.Ms. Anupam
Dhingra for defendant.
CS NO. 58914 of 2016
M/s Maharani Guest House Pvt. Ltd. vs. Engineers India Limited Page no. 1 of 39
JUDGMENT
1. The instant suit is filed by the Plaintiff for recovery of Rs. 20,59,358/ with interest pendentelite and future @ 24% per annum against the Defendant.
2. The facts as set out in the plaint are as follows :
a) Plaintiff a registered company (hereinafter as 'Plaintiff') is engaged in the business of operating guest houses including the one under the name and style of Maharani Guest House at J16, Hauz Khas, New Delhi. In January 1995, Defendant a registered company (hereinafter as 'Defendant') approached Plaintiff for taking on license Maharani Guest House for its exclusive use as "EIL Guest House". The premises was taken on license by Defendant initially for a term of three years commencing on 15.01.1995 and expiring on 14.01.1998 under License Agreement dated 14.01.1995. The license Agreement was renewed for another term of three years from 15.01.1998 to 14.01.2001 by Deed dated 22.04.1998 with an Addendum of an even date added thereto. The license for the third time was renewed vide another License Deed dated 08.01.2001 for a term of three years from 15.01.2001 to 14.01.2004.
b) As per clause 3 of the First License Agreement, defendant paid an interest free security of Rs.2,97,900/ to the Plaintiff which was "to be adjusted against outstanding payments due from EIL on account of license fee, F & B supplies, electricity/water bills or any other dues". The words "any other dues" were meant to include any dues outstanding towards the taxes etc. which the competent authority may impose during CS NO. 58914 of 2016 M/s Maharani Guest House Pvt. Ltd. vs. Engineers India Limited Page no. 2 of 39 the subsistence of License Agreement. In other words, defendant was liable to pay all other tax (es)as may become payable or imposed by the Government from time to time.
c) By one Notification dated 30.10.1996, The Delhi Tax on Luxuries Act, 1996 (hereinafter as 'the Act') came into being and became effective from 01.11.1996, as per which all persons engaged in the business of providing residential accommodation as a guest house became liable to collect and deposit luxury tax. Consequently, Plaintiff's guest house was covered under the 'Act' and Plaintiff became liable to collect and deposit the said tax under the Act.
d) Plaintiff by letter dated 30.01.1997 informed the Defendant of leviability and collection of such tax on all bills issued by Defendant w.r.t room rents, water and electricity, telephones etc and was requested to include and pay such tax in monthly payments to Plaintiff but no such payment was made by the Defendant.
e) The letter dated 30.01.1997 was followed by the letters dated 13.06.1997 and 21.08.1997. The Defendant by its letter dated 08.09.1997 disputed and questioned the applicability of the Act upon the Plaintiff and tried to avoid its payment.
f) A second License Deed dated 22.04.1998 effective from 15.01.1998 was executed between the parties. To avoid any confusion or doubts in respect of the tax liability, parties also executed an Addendum to the second License Agreement stating therein "EIL shall be liable to pay Luxury Tax in case Maharani Guest House falls in the scope and ambit of Delhi Tax on Luxuries Act, 1996". It was also agreed that "EIL CS NO. 58914 of 2016 M/s Maharani Guest House Pvt. Ltd. vs. Engineers India Limited Page no. 3 of 39 shall also be liable to pay all other taxes as may become payable or may be imposed by the Government from time to time".
g) Despite the Addendum, the Defendant failed and neglected to pay the same when demand for it was raised by the Government. Plaintiff sent various letters i.e. dated 24.01.2000 and 27.03.2000 reminding the Defendant of its tax liability but without any result.
h) In May 2000, Plaintiff received a Notice of Tax assessment for the year 199798 from the Luxury Tax Department requiring them to meet the concerned officer on 07.06.2000. Again, by letter dated 12.05.2000, Plaintiff requested Defendant to release the payment on account of tax so that the same could be deposited before 07.06.2000 to avoid any interest/ penalty for delayed payment. By letters dated 09.06.2000, 18.08.2000 and 28.08.2000, Plaintiff kept requesting and reminding the Defendant to pay such arrears of tax under the first License Agreement, the second License Agreement and the Addendum, but the Defendant failed to make such payments.
i) In assessment proceedings before Tax Department, Plaintiff replied that since the Maharani Guest House was under occupation of Defendant, which had not released the payment towards tax, the Plaintiff was unable to comply with the provisions of the Act. However, on 23.10.2000, the Luxury Tax Officer passed three Assessment Orders directing the plaintiff to pay Rs. 1,81,097 ( for November 1996 to March 1997), Rs.3,23,215/( For 01.04.1997 to 14.01.1998) and Rs. 1,48,345/ ( for 15.01.1998 to 31.03.1998), including penalties and interest on delayed payment.
CS NO. 58914 of 2016 M/s Maharani Guest House Pvt. Ltd. vs. Engineers India Limited Page no. 4 of 39
j) Plaintiff by letter dated 23.10.2000 informed the Defendant about such assessment orders and the amount due to be deposited by 28.11.2000. However, Defendant paid no heed to the request of Plaintiff.
k) Due to nonpayment by the Defendant, Plaintiff had no option but to deposit Tax. As a result, on 06.11.2000 and 13.11.2000, Plaintiff was compelled to pay Rs. 3,29,442/ and Rs. 3,23,215/ respectively amounting to Rs. 6,52,657/ which is as under:
Period Luxury Tax Interest Penalties Total
(in Rs.) (in Rs.) (in Rs.) (in Rs.)
01.11.1996 94,861.00 81,236.00 5,000.00 1,81,097.00
To
31.03.1997
01.04.1997 1,86,000.00 1,31,853.00 5,000.00 3,23,215.00
To
14.01.1998
15.01.1998 89,965.00 53,380.00 5,000.00 1,48,345.00
To
31.03.1998
Grand Total 6,52,657.00
l) By letter dated 07.11.2000 and 14.11.2000, Plaintiff
requested the Defendant to reimburse the said amount of Rs. 6,52,657/ but on 28.12.2000, Defendant only reimbursed the Plaintiff with Rs. 89,965/ towards such Tax and for the period 15.01.1998 to 31.01.1998, without paying an interest and penalty on the said amount due to delay caused by the Defendant.
m) The Tax Department made another tax assessment for the period 01.04.1998 to 31.03.1999 amounting to Rs.4,00,924/ along with an interest of Rs.1,90,918/ and penalty of Rs.10,000/. Despite being informed, Defendant paid only the tax of Rs.4,00,924/ without paying any interest and penalty levied due to delayed payment.
CS NO. 58914 of 2016 M/s Maharani Guest House Pvt. Ltd. vs. Engineers India Limited Page no. 5 of 39
n) Defendant again approached Plaintiff for renewal of the License Agreement as second License Agreement had expired on 14.01.2001. Plaintiff agreed to renew the same on the assurances from Defendant that all amounts outstanding would be cleared by the Defendant. As such, a third License Agreement was executed between the parties w. e. f. 15.01.2001. Once again to avoid any doubts in respect of liability of tax payments, vide clause 1 and 7(i) of third License Agreement, Defendant agreed to pay the taxes but failed to pay the same for the period 01.08.2001 to 14.01.2002 which was of Rs. 2,71,049/ .
o) Plaintiff was compelled to pay all such taxes under duress, since any nonpayment would have led to serious consequences including but not limited to the prosecution and penalties under the Act, thus preventing Plaintiff to function in its business causing it an enormous loss of business and reputation.
p). At the time of execution of the third License Agreement, Defendant requested Plaintiff for upgradation/renovation of Maharani Guest House and made it a precondition for execution of agreement. Defendant assured the Plaintiff that the latter would occupy the Maharani Guest House for the full term of third License Agreement and also agreed to pay Rs 10.00 Lakhs for the said upgradation. Defendant immediately paid Rs. 5.00 Lakhs with balance of Rs. 5.00 Lakhs to be paid on the presentation of the bills as the work progressed. Based on Defendant's representations and assurances, Plaintiff agreed to provide the said upgradation/renovation within 6 months of the execution of the third License Agreement. However, on completion of work when bills were presented to the Defendant, the Defendant failed to reimburse/ pay the CS NO. 58914 of 2016 M/s Maharani Guest House Pvt. Ltd. vs. Engineers India Limited Page no. 6 of 39 balance Rs. 5.00 Lakhs. Defendant by letter dated 12.10.2001 served upon the Plaintiff Notice of Termination that from 14.01.2002, the Licence agreement would be terminated. Since Defendant failed to clear its outstanding dues in terms of clause 10(e) of third License Agreement, it is liable to pay an amount of Rs.20,59,358.00 as detailed herein below:
Financial Outstanding Interest Interest ( in Year ( in Rs.) Period Rs.)
(i) 199697 1,81,097.00 (06.11.2000 74,438.00 01.08.2002)
(ii) 199798 3,23,215.00 (13.11.2000 1,29,286.00 01.08.2002) 58,380.00 (06.11.2000 23,352.00 01.08.2002)
(iii) 199899 2,00,918.00 (01.10.2001 32,146.00 01.08.2002)
(iv) 20012002 2,71,049.00 (06.09.2002 40,613.00 01.08.2002)
(v) Outstanding 5,00,000.00 towards upgradation of the Maharani Guest House
(vi) Electricity 1,02,588.00 Charges
(vii) Generator 5,500.00 Charges
(viii) Catering 94,702.00 Charges
(ix) Telephone 22,074.00 Charges 17,59,523.00 2,99,835.80 Grand total 20,59,358.00 CS NO. 58914 of 2016 M/s Maharani Guest House Pvt. Ltd. vs. Engineers India Limited Page no. 7 of 39
q). Defendant on 01.02.2002 reimbursed a sum of Rs.
4,42,612/ and Rs.3,50,276/ against the Tax for the financial year 1999 2000 and 20002001. However, it defaulted in reimbursing for the balance period of time for which penalty and interest was attracted from department.
r). Plaintiff sent a legal notice dated 24.04.2002 upon the defendant calling upon the latter to pay Rs. 18,84,523/ to plaintiff along interest @ 24% per annum. In its reply dated 30.05.2002, Defendant admitted its liability to pay an amount of Rs.4,95,913/ towards electricity/ water charges, generator charges, catering charges, telephone charges as well as the Tax for the period 01.08.2001 to 14.01.2002. Since as per the provisions of the Act, it was the Defendant's liability/ responsibility to pay the Tax as and when levied and demanded by the department, which the defendant neglected. Hence Plaintiff was constrained to file the present suit.
3. The Defendant contested the suit and filed its written statement with separate counter claim wherein it took certain preliminary objections interalia the suit was barred by limitation; that Plaintiff had no cause of action to recover the Luxury Tax for the period, it was not registered under the Delhi Tax on Luxury Act, 1996; that defendant was not liable till Plaintiff had delivered the receipts to Defendant of having paid such Tax to the authorities; that Plaintiff was withholding a sum of Rs. 3.00 Lakhs as a security deposited with it along with a sum of Rs. 5.00 Lakhs received by it as refundable finance for upgradation of facilities at Guest House and which the Plaintiff was liable to refund within 15 days of the CS NO. 58914 of 2016 M/s Maharani Guest House Pvt. Ltd. vs. Engineers India Limited Page no. 8 of 39 termination of the license as per terms and conditions of 3 rd Licence Agreement. A separate counter claim was filed for recovery of the amount due from Plaintiff after adjusting/setoff an amount of Rs.4,95,913/ out of sum of Rs. 8.00 lakhs; that the claim of the Plaintiff towards Luxury Tax for the period it was not registered under the provisions of the Act was barred under Section 27 of the said Act.
4. On merits, it was denied that the Plaintiff was a company registered under the Companies Act or the plaint was signed by an authorized person. It was contended that :
(a) Plaintiff had not applied for the registration of Maharani Guest House till may 2000 and was allegedly granted the Registration Certificate under the Act only with effect from 15.01.1998.
(b) By First License Deed, the entire Guest house was taken on license on payment of monthly license fee liable to be enhanced after every 12 months besides payment of electricity/telephone charges, local calls and rental. Defendant made an interest free security deposit of Rs. 2,97,900/ to the Plaintiff, which was refundable on termination of license.
Plaintiff also received a sum of Rs. 35,75,000/ from the Defendant towards an advance rent for 24 months.
c) It is denied that the words "any other dues"
mentioned in clause 3 of the license deed of first License CS NO. 58914 of 2016 M/s Maharani Guest House Pvt. Ltd. vs. Engineers India Limited Page no. 9 of 39 Agreement were meant or intended to include any dues towards taxes etc. It was never the intention of parties nor the parties were at adidem that Defendant would be liable to pay such taxes as alleged. Thus, the allegation of Plaintiff that the term "any other dues" also included the taxes is false and based on selfarrived conclusion. The said interpretation is also against the terms in contemplation of the parties at the time of entering into the First License Agreement. It is admitted that the luxury came into force w.e.f. 01.11.1996. As per Section 4 of the Act, the liability of paying such Tax to the department was that of a Hotelier (owner).
d) It is admitted that after the expiry of first License Deed, a second License Deed dated 22.04.1998 was executed between the parties for another term of three years retrospectively from 15.01.1998 expiring on 14.01.2001 with identical terms to those contained in the first License Agreement except as to the revision of the license fee with increase of advance amount of 12 months license fee to Rs. 36.00 Lakhs. In addition thereto, an Addendum dated 22.04.1998 was attached providing for payment of luxury tax subject to the condition that the same shall be paid in case Maharani Guest House fell within the scope and ambit of the Act. The applicably of the addendum was confined only to the tenure of the license as stipulated under the second License Agreement. Thus, plaintiff could not claim any Tax under the CS NO. 58914 of 2016 M/s Maharani Guest House Pvt. Ltd. vs. Engineers India Limited Page no. 10 of 39 Act for a period prior to 15.01.1998. Plaintiff had not even applied for registration under Section 4 of the Act till at least 02.05.2000 as is apparent from the Notice of even day served upon plaintiff by the Tax officer. Plaintiff himself was disputing its liability to pay tax with department on the ground that the guest house was not covered under the Act.
(e) For a period prior to 15.01.1998, it was never agreed between the parties that any liability for payment of tax under the Act shall be that of the defendant. Even otherwise, plaintiff was debarred under law from collecting such Tax in terms of Section 27 of the Act since prior to 15.01.1998 as plaintiff failed to get itself registered under Section 8 of the Act.
(f) It is denied that the Addendum to the Second License Deed was attached to avoid any confusion. By adding the said clause, the parties translated into words their agreement that defendant shall during the tenure of the second License Agreement be liable to pay tax under the Act, in case provisions of the Act applied to the Maharani Guest House. By way of Addendum, the liability for payment of any such tax was foisted upon the defendant. The terms of the addendum militate against the plea of the plaintiff that the words "any other dues" as in clause 3 of the first License Agreement contemplated the liability for payment of such tax. The defendant duly paid such Tax for the period from 15.01.1998 CS NO. 58914 of 2016 M/s Maharani Guest House Pvt. Ltd. vs. Engineers India Limited Page no. 11 of 39 onwards till it remained in possession of the guest house in terms of License Deed dated 22.04.1998.
g) In response to 1516 of the plaint, it was stated that as per plaintiff's own assertion for the period 15.01.1998 to 31.03.1998, defendant was liable to pay only a sum of Rs. 89,965/ towards the tax. As per clause 7 (i) of the third License Agreement dated 15.01.2001, the tax was to be paid by the defendant within 10 days of the receipt of claim for reimbursement from the plaintiff supported by the original receipt of payment of tax which receipts were to returned within 10 days by defendant to the plaintiff. The Plaintiff submitted copy of such receipt vide its letter dated 07.11.2000 and accordingly a sum of Rs. 89,965/ vide letter dated 23.11.2000 was paid by the defendant towards tax for the period 15.01.1998 to 31.03.1998. Any imposition of interest or penalty by the department is attributable to the delay caused by plaintiff in deposition of such amount with the department, for which defendant is not liable.
(h) Plaintiff by letter dated 12.11.2000 informed of the deposition of a sum of Rs. 11,93,813/ towards the tax for the period 01.04.1998 to 30.11.2000 as per receipts enclosed and the said amount was reimbursed promptly by the defendant.
CS NO. 58914 of 2016 M/s Maharani Guest House Pvt. Ltd. vs. Engineers India Limited Page no. 12 of 39
(i) In response to para no.18 of the plaint, it is denied that the defendant was in arrears or that the plaintiff agreed to renew the third License Agreement on any alleged assurances of defendant of clearance of any outstanding dues. The defendant never agreed to pay any amount by way of Tax under the Act for a period prior to 15.01.1998 or any interest or penalty thereon. The property of Guest House was not giving a presentable look and required refurbishing and renovation, on request of plaintiff, defendant agreed that in addition to the security amount of Rs. 3.00 Lakhs, the defendant would give an advance of Rs. 10.00 Lakh to plaintiff to enable it to carry out the necessary upgradation/ renovation. This amount was refundable on the expiry/termination of the License Agreement in terms of clause 10(e) thereof. Further an amount of Rs. 10.00 Lakhs was refundable in 24 EMI's. Accordingly, while a sum of Rs. 5.00 Lakhs was paid to the plaintiff towards mobilization of funds as per clause 6, the balance was to be paid as per the progress of work on presentation of copies of bills by plaintiff to the defendant. Plaintiff received a sum of Rs. 5.00 Lakhs which became refundable as per clause 10 (e) within 15 days of termination of Agreement. Despite several demands raised by the defendant by way of notices/letters, plaintiff failed to refund the said amount of Rs. 8.00 Lakhs.
j) The luxury tax for the period 01.08.2001 to 14.01.2002 was not paid by the defendant to the plaintiff for the CS NO. 58914 of 2016 M/s Maharani Guest House Pvt. Ltd. vs. Engineers India Limited Page no. 13 of 39 reason that the plaintiff failed to submit proof of deposition of same with authorities as per terms of Clause 7 (I) of third Licence Agreement and secondly the Tax for the said period i.e. of Rs. 2,71,049/ was adjusted by Defendant against the liability for the said amount with other liabilities, which is as follows :
A Tax under the Luxuries Act for the Rs. 2,71,049.00 period 1.08.2001 to 14.01.2002 B Electricity /water charges Rs. 1,02,588.00 C Generator expenses Rs. 5,500.00 D Telephone charges Rs. 22,074.00 E Catering charges Rs. 94,702.00 Total Rs.4,95,913.00 After deducting an amount of Rs.4,95,913.00 from a sum of Rs. 8.00 lakh repayable by plaintiff as per Clause 10(e) of Agreement dated 08.01.2001, a sum of Rs. 3,04,087/ is payable by the plaintiff to the defendant alongwith interest @ 24 %. Plaintiff failed to pay this amount despite several demands.
k) It is denied that defendant is liable to pay a sum of Rs.
20,59,358/. Since defendant has already adjusted an amount of Rs. Rs.4,95,913.00 as stated above, plaintiff is liable to pay the defendant an amount of Rs. 3,04,087/ to the defendant by way of counter claim.
CS NO. 58914 of 2016 M/s Maharani Guest House Pvt. Ltd. vs. Engineers India Limited Page no. 14 of 39
5. Plaintiff filed replication cum Written Statement to counter claim of Defendant controverting the allegations therein while reiterating the facts in the plaint. Plaintiff also filed separate Written Statement to the counter claim on 07.08.2003 contending that the set of counter claim filed by the defendant was an attempt to deny the legitimate dues of the plaintiff; that no outstanding amount existed from the plaintiff which could be set up against an amount of Rs. 20,59,358/; that the counter claimant had willfully suppressed certain facts from the court and thus the counter claim deserved dismissal.
6. After completion of the pleadings, by order dated 24.01.2006 the following issues were settled for by Hon'ble Delhi High court for adjudication:
1. Whether the suit of the plaintiff is barred by limitation? OPP.
2. Whether the plaintiff has paid the proper court fee on the plaint? OPP
3.Whether the plaint has been signed and verified by competent person? OPP.
4.Whether the defendant is liable to pay luxury tax for the period the plaintiff was not registered under the Delhi Tax on Luxury Act, 1996? OPP CS NO. 58914 of 2016 M/s Maharani Guest House Pvt. Ltd. vs. Engineers India Limited Page no. 15 of 39
5.Whether the defendant was liable to pay luxury tax prior to 15.01.1998? OPP
6.Whether the defendant is liable to pay interest and penalties imposed by department attributed to delay in depositing the tax amount with the authorities by the plaintiff?
7.Whether the plaintiff is entitled to recover the suit amount with interest? If so, at what rate and for what period ? OPP
8.Whether the plaintiff is not liable to refund to the defendant of the security amount of Rs. 3.00 Lakhs and Rs.5.00 Lakhs as amount towards the refurbishment and renovation of Guest House admittedly received by it from the defendant? OPP
9. Whether the defendant is entitled to the decree of set off for a sum of Rs.4,95,193/ against the demand of the plaintiff? OPD
7. Plaintiff examined Sh. Surender Pal Arora as PW1 who deposed by way of an affidavit on 24.11.2010 and proved the documents as Ex. PW1/1 to Ex. PW1/22. The evidence of plaintiff was closed on 17.12.2012. The defendant examined Sh. B.C. Pant as DW1 who proved CS NO. 58914 of 2016 M/s Maharani Guest House Pvt. Ltd. vs. Engineers India Limited Page no. 16 of 39 the documents as Ex. DW1/1 to DW1/10 in his affidavit Ex. DW1/A. By order dated 16.07.2014, evidence of Defendant stood closed.
8. I have heard rival contentions of ld. Counsel for parties, perused the testimony of witnesses and the relevant documents in the light of the judgments relied upon by parties and my issueswise findings are as follows:
ISSUE NO.1 Whether the suit of the plaintiff is barred by limitation? OPP.
9. The issue was framed on the basis of preliminary objections raised by the defendant, wherein it contended that suit of plaintiff was barred by law of limitation. Ld. Counsel for defendant argued that the cause of action to recover the luxury tax would arise on the day when the same had became due and payable by the plaintiff to the Department. Ld. Counsel argued that the plaintiff would have the right to seek reimbursement of luxury tax from the defendant immediately after it was deposited by the plaintiff with Department. The luxury tax was payable by the plaintiff on the turnover of receipts and as per the Act, the liability was that of the Hotelier. Ld. Counsel argued that the present suit was filed in July 2002. The plaintiff deposited the luxury tax belatedly as could be seen from the receipts which are towards tax deposited for the period from November 1996 to March 1997 and further from 01.04.1997 to 14.01.1998 respectively. Ld. Counsel argued that cause of action thus CS NO. 58914 of 2016 M/s Maharani Guest House Pvt. Ltd. vs. Engineers India Limited Page no. 17 of 39 accrued in the year 1996 and failure of Plaintiff to deposit the tax, when it became legally due, would in no event postpone the period of limitation to seek such reimbursement. Ld. Counsel argued that the suit had to be filed within three years from the date the luxury tax had become due and payable by the plaintiff and same was barred by limitation.
10. Per contra, Ld. Counsel for plaintiff argued that as per Article 113 of the Limitation Act, 1963, the present suit for recovery was well within limitation i.e. from the date when the right to sue accrued. Ld. Counsel submits that the cause of action arose when the right to sue accrued i.e. when Plaintiff's right was infringed for the first time. It is argued that a specific denial for the first time came only on 30.05.2002 from defendant when it refused to pay the arrears of the tax. Ld. Counsel submits that prior to that, there was no denial on behalf of defendant of such payment. Rather part payments were made by defendant till 23.11.2000 to the plaintiff, which are not disputed. Ld. Counsel in support of his submissions has placed reliance on the following judgments :
Decor India P Ltd. Vs. Delhi Stock Exchange Association Ltd.
2013(1) AD (Delhi) 456.
Balasaria Construction (P) Ltd. v. Hanuman Seva Trust and ors (2006) 5 SCC 658 Mt. Bolo Vs. Mt. Koldan and ors. AIR 1930 Privy Council 270 Mst. Rukhmabai Vs. Laxminarayan and ors. AIR 1960 Supreme court 335 (V 47 C 57) CS NO. 58914 of 2016 M/s Maharani Guest House Pvt. Ltd. vs. Engineers India Limited Page no. 18 of 39 11 I have gone through the ratio of the judgments and the settled law as per which there can be no right to sue until there is an accrual of such right and its infringement or atleast clear and unequivocal threat to infringe that right by the other side. Defendant has not come up with any evidence in support of the fact as to how the suit was barred by limitation. At the same time, the record however would demonstrate that plaintiff kept raising demands upon the defendant of pending dues from 30.11.1997 through various letters. There was never a specific denial on behalf of defendant. The defendant even made part payment of Rs.
89,965 on 23.11.2001. Further, Defendant on 01.02.2002 reimbursed/paid to the plaintiff a sum of Rs. 4,42,612/ and Rs. 3,50,276/ against such tax for the financial year 19992000 and 20002001 respectively. Also perusal of the averments of the plaint suggests that right to sue again accrued on 24.04.2002 when plaintiff sent a legal notice asking defendant to reimburse such tax. It further accrued on 30.05.2002 when defendant refused to pay the tax. Therefore it can not be said that the present suit is barred by law of limitation. Thus, the issue stands answered in favour of plaintiff and against the defendant.
CS NO. 58914 of 2016 M/s Maharani Guest House Pvt. Ltd. vs. Engineers India Limited Page no. 19 of 39 Issue no. 2 and 3.
Whether the plaintiff has paid the proper court fee on the plaint? OPP Whether the plaint has been signed and verified by competent person? OPP.
12. Since the issues were not pressed upon by parties, the same do not require any findings as such and are disposed off accordingly.
Issue no. 4 and 5.
Whether the defendant is liable to pay luxury tax for the period the plaintiff was not registered under the Delhi Tax on Luxury Act, 1996? OPP and Whether the defendant was liable to pay luxury tax prior to 15.01.1998? OPP
13. Both these issues being interconnected and intertwined, are hereby taken up together. Ld. Counsel for the plaintiff submitted that The Delhi Tax on Luxuries Act (hereinafter referred to as 'Act') came into effect on 01.11.1996 and as per the Section 3(g) of the Act, the same was made applicable upon the Hoteliers i.e. owners of hotels. Ld. Counsel drew attention of the court towards Section 8 of the Act to CS NO. 58914 of 2016 M/s Maharani Guest House Pvt. Ltd. vs. Engineers India Limited Page no. 20 of 39 contend that plaintiff had already applied for Registration under the Act much prior to 15.01.1998, however, the same was granted by the Department w.e.f. 15.01.1998. Ld. Counsel submits that this would not mean that plaintiff was not liable to pay such tax from the date of invocation of the Act i.e. from 01.11.1996. Ld. Counsel states that de hors date of registration, the hotelier (plaintiff herein) was liable to pay the luxury tax w.e.f. 01.11.1996. Ld. Counsel has referred to the Assessment Order passed under Section 13(7) of the Act and argued that plaintiff was liable to pay the tax w.e.f. 01.11.1996. Ld. Counsel submits that defendant was duly informed of deposition of tax by the plaintiff by various letters i.e. dated 30.01.1997, 13.07.1997 and 21.08.1997 which included the total bills raised from 01.11.1996 to 30.01.1997. Ld. Counsel submitted that the deposition of PW1 and the documents proved by him would show the payments due from defendant on account of Luxury Tax deposited by the plaintiff for the period November, 96 to 14.01.1998, from 01.04.1998 to 31.03.1999 and from August, 2001 to 14.01.2002.
14. Per contra, Ld. Counsel for defendant while referring to Section 8 of the Act argued that the plaintiff was not permitted under law to recover from its customers, the tax for the period for which it had not even applied for registration under the Act. Ld. Counsel further referred to the prohibition contained under Section 27(2) of the Act to contend that Plaintiff was not liable to collect tax from the Defendant for the period for which Plaintiff was not registered. Ld. Counsel argued that plaintiff failed to prove as to when it had applied for the registration. Ld. CS NO. 58914 of 2016 M/s Maharani Guest House Pvt. Ltd. vs. Engineers India Limited Page no. 21 of 39 Counsel referring to the Certificate of Registration dated 12.08.1998 (Ex. P2/69) contended that the said Registration was granted w.e.f. 15.01.1998 and which would be the date from which Registration must have been applied for. Ld. Counsel referred to the Addendum and argued that the plaintiff knew that the defendant was not liable to pay the luxury tax for the period prior to 15.01.1998, that is why the said addendum with 2 nd Licence Agreement was added.
15. Ld. Counsel for Defendant further submits that even if the defendant had disputed the applicability of the Luxury Tax, it was for the plaintiff to pay such tax with Government well within time. It is argued that the Act provided that the tax was to be paid by the Hotelier on turnover basis and plaintiff thus, was bound to deposit the tax with authorities and seek its reimbursement, if at all the same was permissible under law. It is argued that plaintiff had first to deposit the tax and then seek its reimbursement from defendant by showing original receipts of deposit. Ld. Counsel has also referred to the cross examination on 12.01.2012 of PW1 and submits that PW1 has falsely deposed that defendant had told plaintiff not to pay tax till demand was made by Department.
16. Ld. Counsel for plaintiff, however, submitted that the defendant by its letter dated 08.09.1997 denied its liability to pay tax only on the ground that the tax premises was being utilized as Training Centre cum Transit Flat for its own employees and the rental per day basis was far less than Rs. 500/. Ld. Counsel submitted that liability to pay tax was not refuted by Defendant under the terms of Licence CS NO. 58914 of 2016 M/s Maharani Guest House Pvt. Ltd. vs. Engineers India Limited Page no. 22 of 39 Deed/Agreement. It is argued that the denial of the liability was on the issue of rental of the room and not because defendant was not liable under terms of the Licence Deed. Ld. Counsel submitted that the objections of the defendant of its nonliability were just an afterthought. In support of his arguments, Ld. Counsel relied upon :
Amrit Pal Ahuja and ors Vs. MTNL 194(2012) DLT 332 MCD Vs. Shashank Steel Industries (P) Ltd 100(2002) DLT 66 Raghubir Saran Charitable Trust Vs. Puma Sports India Pvt. Ltd. 191 (2012) DLT 183.
Branch Manager, Magma Leasing and Finance Limited Vs. Potluri Madhavilata, (2009) 10 SCC 103, Kaushal Singh Vs. State (NCT of Delhi) 194(2012) DLT 342 (DB)
17. Ld. Counsel for plaintiff submits that as per terms of Clause (3) of first License Deed (Ex. P1), the words "any other dues" also included the statutory taxes which included luxury tax. It is argued that words "any other dues" were added in first License Deed only after mutual agreement between parties that in case any such amount was leviable, the same was payable by Defendant. It is argued that the parties were at consensus ad idem at the time of execution of first License Deed. It is argued that by virtue of principle of "ejusdum generis", reading of Clause 3 would make it clear that the words any other dues included any amount in the form of statutory taxes imposed by Government on account of Licence fee, electricity, water bills etc. It is argued that the luxury tax leviable on Plaintiff by Government was only CS NO. 58914 of 2016 M/s Maharani Guest House Pvt. Ltd. vs. Engineers India Limited Page no. 23 of 39 on these services provided by hotelier to the Defendant and could not mean the same was foreign to the term "any other dues" in clause (3).
18. On the other hand, Ld. Counsel for Defendant submitted that the principle of "ejusdum generis", meant that later words would derive their meaning from the former part i.e. these were to be read as comprehending only things of same kind as those designated by the earlier ones. It is argued that the words any other dues thus would have the same meaning, preceded by words relating to adjustment of outstanding dues on account of licence fee, F&B services, electricity and water bills. In support of his submissions, Ld. counsel relied upon :
Mayawanti Vs. Kaushalya Devi (1990) 3 SCC 1. Sobhag Narain Mathur Vs. Pragya Agrawal and ors. 227 (2016) DLT 511 Nirma Industries Ltd. and anr Vs. Securities and Exhcange Board of India (2013) 8 SCC 20 Dwarkadas and Co. Vs. Daluram Goganmull AIR (38) 1951 Calcutta 10 Abdul Gafoor Vs. Abdul Rahman AIR 1951 All (FB)
19. Ld. Counsel for plaintiff states that the judgment of Mayawanti (supra) was not applicable since the question involved therein was that of specific performance of a contract in respect of immovable property where the parties had to be on consensus ad idem. Ld. Counsel submits that in present case, there was no ambiguity of any kind as to the fact that the defendant was liable to pay statutory taxes on CS NO. 58914 of 2016 M/s Maharani Guest House Pvt. Ltd. vs. Engineers India Limited Page no. 24 of 39 which there was consensus ad idem at the time of execution of first License Deed, thus the authority in the matter of Sobhag Narain Mathur (supra) is also not attracted. Ld. Counsel argued that the general words appearing before the words "any other dues" were license fee, F&B supplies, electricitywater bills and by principle of ejusdum generis, also included statutory taxes imposable upon these services provided by the plaintiff.
20. Ld. Counsel for parties also adverted to the cross examination of DW1 and the suggestions given to him. Ld. Counsel for Plaintiff argued that due to typographical error, the words it is wrong to suggest got added, while putting suggestions to the witness and it got written as "The registration under Luxury Tax was effective from 15.01.1998. The defendant is not liable to pay any luxury Tax prior to 15.01.1998. It is wrong to suggest that defendant is not liable to pay any luxury tax after 15.01.1998 alongwith penalty and interest". Ld. Counsel for plaintiff contended that the abovesaid suggestion was a clerical error and its correction was sought by filing an application under Section 151 CPC on 25.07.2014 in IA no. 13545/2014. The same was dismissed by Ld. Joint Registrar by order dated 15.09.2014. An appeal was filed against the Order of Ld. Joint Registrar and the same was disposed off by Hon'ble Delhi High Court giving liberty to plaintiff to urge such plea at the time of final stage. Ld. Counsel also relied upon judgments to buttress his submissions.
CS NO. 58914 of 2016 M/s Maharani Guest House Pvt. Ltd. vs. Engineers India Limited Page no. 25 of 39
21. Ld. Counsel for the plaintiff argues that the examination of the witnessPW1 has to be read in its entirety and going through the same, PW1's stand is consistent and coherent on the fact that it was defendant which was liable to pay the tax prior to 15.01.1998. On the other hand, Ld. Counsel for the defendant has placed reliance upon the judgment of State of Maharashtra Vs. Ram Dass Shrinivas Nayak (1982) 2 SCC 463 to contend that the plaintiff could not be allowed to withdraw his admission, once recorded during evidence. After having heard submissions of parties, I find that the application for correction of suggestion in testimony of PW1 dated 17.12.2012 was filed after a prolonged delay of more than one year and seven months. The reason for such delay has remained inexplicable. Secondly, even if the said admission of PW1 is eschewed from record, there is ample evidence to hold that it was not the liability of the defendant to pay any tax prior to the date of registration of plaintiff under the Act.
22. Undisputedly, at the time of execution of first License Deed, i.e. on 14.01.1995, the Delhi Tax on Luxuries Act, 1996 had not come into being. The Act came into operation only on 01.11.1996. Thus parties while executing first License Deed for a period 15.01.1995 to 14.01.1998 could not have stipulated for payment of any such levy imposed by Government upon Hoteliers. The question is whether "any other dues"
contained in Clause 3 of the first License Deed and Clause (4) of the 2 nd License deed would include the statutory taxes also.
CS NO. 58914 of 2016 M/s Maharani Guest House Pvt. Ltd. vs. Engineers India Limited Page no. 26 of 39 It would be apposite to refer to Clause 3 of first License Deed which reads as:
"3. That the aforesaid interest free deposit of Rs. 2,97,900/ (Rupees two lakhs ninety seven thousand nine hundred only) shall in the first instance be adjusted against outstanding payments due from Engineers India Ltd on account of Licence fee, F&B supplies, Electricity/Water bills or any other dues and the residual balance if any, shall be refunded by the Licensor to the Licensee on expiry/termination of the Licence Deed."
Similarly Clause (4) of 2nd License Deed between parties reads as under :
"4. That the aforesaid interest free deposit of Rs. 2,97,900/ (Rupees Two Lakhs ninety seven thousand nine hundred only) shall in the first instance be adjusted against outstanding payments due from Engineers India Limited on account of licence fee, F&B supplies, Electricity/water bills or any other dues and the residual balance if any, shall be refunded by the Licensor to the Licencee on Expiry/termination of the Licence Deed. "
23. The contention of Plaintiff is that the words " any other dues" occurring in aforementioned clauses would include the statutory CS NO. 58914 of 2016 M/s Maharani Guest House Pvt. Ltd. vs. Engineers India Limited Page no. 27 of 39 taxes imposed by Government since such tax was only on account of licence fee, electricity and water bills etc. The other contention of Plaintiff is that parties were at consensus ad idem on this at the time of execution of first License Deed. In Nirma Industries Ltd. and Anr Vs. Securities and Exchange Board of India (2013) 8 SCC 20 Hon'ble Apex Court held as :
"...45. Earlier also a Constitution Bench of this Court in Kavalappara Kottarathil Kochuni vs. State of Madras[10] construed the principle of ejusdem generis wherein it was observed as follows : " ........ The rule is that when general words follow particular and specific words of the same nature, the general words must be confined to the things of the same kind as those specified. But it is clearly laid down by decided cases that the specific words must form a distinct genus or category. It is not an inviolable rule of law, but is only permissible inference in the absence of an indication to the contrary."
46. Again this Court in another Constitution Bench decision in the case of Amar Chandra Chakraborty Vs. Collector of Excise[11] observed as follows :
". ... The ejusdem generis rule strives to reconcile the incompatibility between specific and general words. This doctrine applies when (i) the statute contains an enumeration of specific words; (ii) the subjects of the enumeration constitute a class or CS NO. 58914 of 2016 M/s Maharani Guest House Pvt. Ltd. vs. Engineers India Limited Page no. 28 of 39 category; (iii) that class or category is not exhausted by the enumeration; (iv) the general term follows the enumeration; and (v) there is no indication of a different legislative intent."
24. The principle ''ejusdem generis' above is a Latin expression which means 'of the same kind or nature'. It means when general words in a statutory text are flanked by restricted words, the meaning of the general words are taken to be restricted by implication with the meaning of the restricted words. Applying the said principle to the factual matrix in hand, I hold that the words in Clause 3 of First License Deed i.e. "any other dues" cannot be stretched to include statutory taxes as contended by Plaintiff. The term any other dues could not have included statutory taxes imposable by Government. The same can be inferred from the Addendum added with the second License Deed which reads as "It is further agreed that EIL shall also be liable to pay all other tax(es) as may become payable or may be imposed by the Government from time to time.".
25. The adding of addendum itself shows that parties were not consensus ad idem at the time of execution of first License Deed. The Addendum was added later because any other dues in first License Deed were not inclusive of the statutory taxes. It was by this Addendum in the 2nd License Deed that the defendant was specifically made liable to pay such taxes. This also had reference in the 3 rd License Deed between parties under Clause 7 (i) therein. The testimony of PW1 in cross examination that the point A to A1 of the Addendum was applicable to CS NO. 58914 of 2016 M/s Maharani Guest House Pvt. Ltd. vs. Engineers India Limited Page no. 29 of 39 the first License Agreement does not hold ground since every License Deed entered into by the parties was an independent and not an interdependent Contract. The 2nd License Deed could not have operated retrospectively unless agreed expressly, which is not the case of the parties. As a sequel to this, there was no retrospectivity in respect of the Addendum attached to 2nd License Deed so as to read it as part of first License Deed.
26. Section 8 of the Act reads as under :
"8. Registration (1) No hotelier liable to pay the tax under this Act shall conduct or cause to be conducted business, unless he possesses a valid certificate of registration as provided by this Act;
Provided that, it shall be lawful for the hotelier to conduct or cause to conduct business, if the hotelier has applied for registration as provided by this Act."
Section 27(2)of the Act which reads as :
"27. Prohibition against collection of tax in certain cases : (1) No person shall collect any sum by way of tax in respect of his business to the extent that he is not liable to pay it under the Act.
(2) No person, who is not a registered hotelier and liable to pay tax in respect of luxury provided in any hotel, shall collect any sum by way of tax from CS NO. 58914 of 2016 M/s Maharani Guest House Pvt. Ltd. vs. Engineers India Limited Page no. 30 of 39 any other person and no registered hotelier shall collect any amount by way of tax in excess of the amount of tax payable by him under the provisions of this Act :
Provided that, this subsection shall not apply where a person is required to collect such amount of the tax separately in order to comply with the conditions and restrictions imposed on him under the provisions of any law for the time being in force."
Reading above provisions of the Act would make it clear that the a person cannot collect any sum by way of tax unless he is registered under the Act. There is nothing on record brought by plaintiff to bring out the fact as to when the plaintiff/owner of Guest House applied for the Registration under the Act. The plaintiff in support of this has filed only Certificate of Registration Ex. P2/69. Regard can be had to letters dated 02.05.2000 and dated 24.08.2000 sent by Luxury Tax Officer to the plaintiff, which show that plaintiff had uptill then failed to apply for registration.
27. The same is evident from another Notice of Assessment of Tax dated 23.10.2000 (at page no. 123) issued by the Luxury Tax Officer to the Hotelier /Maharani Guest House. This letter shows plaintiff's CS NO. 58914 of 2016 M/s Maharani Guest House Pvt. Ltd. vs. Engineers India Limited Page no. 31 of 39 reasons for nonpayment of luxury tax and nonfiling of return as follows :
".................The tenant (Engineers India Ltd) of the Hotelier Company has always disputed the applicability of the Act in this case and has also not so for release the payment of tax. This difference in opinion resulted in utter confusion. Thus, causing undue delay in the process of compliance of law on their part.
The Managing Director of the Hotelier company Mr. M.P.Khanna is in his advance age of 83 years and to deteriorating state of health could not persue the matter with the tenant vigorously and was unable to collect the tax from the tenant and subsequently no returns could be filed.
The Managing Director of the Hotelier company who alone is responsible for management of affairs of the company besides his own ill heath has also been in the mental agony since last three years attending to her ailing wife, who after a prolonged illness died recently in February 2000.
28. The above letter shows that plaintiff was imposed a penalty of Rs. 5000/ for not getting its registration within time under Section 16(1)(a) of the Act. The same establishes that it was the plaintiff which had not got itself registered within time under the Act. As a consequence, CS NO. 58914 of 2016 M/s Maharani Guest House Pvt. Ltd. vs. Engineers India Limited Page no. 32 of 39 Plaintiff was not entitled to recover the amount from the Defendant prior to the period of registration as per Section 27(2) of the Act.
29. Plaintiff might have been compelled by authorities to deposit tax for the period for which it was not registered, but this would not entitle them to recover such tax from their customer i.e. the Defendant in view of bar under Section 27(2) of the Act.
30. Therefore, in view of my observations, I hold that "any other dues" in first License Deed did not include any statutory taxes and the parties were never ad idem to the same. The necessary conclusion is that the Defendant under the first License Deed was not liable to pay luxury tax for the period the plaintiff was not registered under the Delhi Tax on Luxury Act, 1996. The defendant thus was not liable to pay any such tax prior to 15.01.1998.
Issue no. 6 and 7.
Whether the defendant is liable to pay interest and penalties imposed by department attributed to delay in depositing the tax amount with the authorities by the plaintiff ?
and CS NO. 58914 of 2016 M/s Maharani Guest House Pvt. Ltd. vs. Engineers India Limited Page no. 33 of 39 Whether the plaintiff is entitled to recover the suit amount with interest? If so, at what rate and for what period ? OPP
31. Ld. Counsel for defendant referring to the Table in para no.15 of plaint submitted that plaintiff demanded a sum of Rs. 6,52,657/ inclusive of interest and penalties on the amount of luxury tax for the period w.e.f. 01.11.1996 till 31.03.1998. Ld. Counsel submitted that delay was entirely attributable to the plaintiff, who was bound to deposit such tax with Government within time before it could seek reimbursement. Ld. Counsel for the plaintiff however contends that despite having sent various letters and reminder to the defendant, defendant did not pay the tax. Ld. Counsel referred to the cross examination of PW1 recorded on 24.11.2010, 05.05.2011, 06.03.2012, 01.08.2012 and lastly on 17.12.2012 and the documents proved by PW1 to demonstrate the delay caused by defendant.
32. At the outset, the record establishes that on each occasion, there was a delay on plaintiff's part in deposition of luxury tax, leading to imposition of penalty and interest. From the License Deeds, the Addendum, the documents on record and the date of payments of Luxury Tax deposited by plaintiff with Authorities, it stands established that the plaintiff delayed in making payment of luxury tax for which it incurred interest and penalty from Luxury Tax Department. The defendant as such could not claim from plaintiff any such interest/penalty on late deposition CS NO. 58914 of 2016 M/s Maharani Guest House Pvt. Ltd. vs. Engineers India Limited Page no. 34 of 39 of tax. Even otherwise, in view of my observations in Issue no.4 and 5, the plaintiff was not entitled for reimbursement for any such amount prior to 15.01.1998 and in such a situation, plaintiff could also not claim any interest or penalty imposed by the Department for the said period for delay ascribable solely to plaintiff in such deposition with Authorities.
The plaintiff is held disentitled to recover any interest or penalties imposed by department since such delay in tax deposition was attributable entirely to plaintiff. The Issues stand answered in favour of defendant and against the plaintiff.
Issue no. 8, 9, 10 and 11 Whether the plaintiff is not liable to refund to the defendant of the security amount of Rs. 3.00 Lakhs and Rs.5.00 Lakhs as amount towards the refurbishment and renovation of Guest House admittedly received by it from the defendant?
OPP and Whether the defendant is entitled to the decree of set off for a sum of Rs.4,95,913/ against the demand of the plaintiff? OPD and CS NO. 58914 of 2016 M/s Maharani Guest House Pvt. Ltd. vs. Engineers India Limited Page no. 35 of 39 Whether the defendant by way of counter claim is entitled to a decree of Rs. 3,65,587/ ? OPD and Whether the defendant is entitled for interest on the amount claimed by it ? If so, on what amount and at what rate ? OPD.
33. The issues pertain to the entitlement of the defendant to claim a set off for a sum of Rs. 4,95,913/ in its counter claim. Ld. Counsel for plaintiff argued that the interest free security was deposited by defendant with plaintiff and was to be adjusted towards the dues /arrears accruing against the defendant. Ld. Counsel submits that the deposition of Rs.5 lakh by the defendant with plaintiff was in terms of Clause 6 of 3rd License Deed towards upgradation of facilities at the guest house. Ld. Counsel submits that the defendant at the best is entitled only to the amount deposited as interest free security i.e. Rs. 3 lakh. Ld. Counsel submits that however, plaintiff is not liable to refund a sum of Rs. 5 lakh as claimed, which was spent toward refurbishing. It is submitted that the defendant is not entitled for the amount as claimed after adjusting/setting off an amount of Rs. 495,913 i.e. a sum of Rs. 3,04,087/ as alleged.
34. Conversely, the stand of defendant is that a sum of Rs. 5 lakh paid to plaintiff for upgradation was not a gratuitous payment and which the plaintiff was liable to return to the defendant. The version of CS NO. 58914 of 2016 M/s Maharani Guest House Pvt. Ltd. vs. Engineers India Limited Page no. 36 of 39 defendant is that on termination of license w.e.f 14.01.2002, plaintiff was liable to refund a sum of Rs.8,00,000/ within 15 days but despite several demands, the same was not returned which constrained the defendant to file a separate counter claim. It is stated the version of defendant is that after claiming a set of for an amount of Rs. 4,95,913/, out of Rs.8 lakhs, defendant is entitled for a sum of Rs.3,04,087/ alongwith interest @ 24% on the same.
35. The 3rd License Deed and its recitals are admitted between parties and any evidence contrary to the said terms is barred under Section 91 and 92 of the Indian Evidence Act. Clause 6 of 3 rd License Deed clearly stipulates a sum not exceeding Rs. 10 lakh, free of interest and refundable by the plaintiff to the defendant. It further states a sum of Rs 5 lakh, agreed to be paid as mobilization fund, which admittedly was paid by defendant. The balance amount was to be paid as per the work in progress on presentation of the bills by the plaintiff to defendant. The bills placed on record on behalf of plaintiff in this respect though exhibited, cannot be termed as proved as per the provisions of the Indian Evidence Act. Moreover, plaintiff did not produce any cash book, ledgers, Account book or other such documents showing the alleged expenditure having incurred. It is not in dispute that the 3 rd License Deed was terminated by defendant by Notice dated 12.10.2001 w.e.f.14.01.2002 and in such case, it was under no obligation to pay any further sum for refurbishment. There is also nothing in support of the plaintiff's allegation that defendant had assured to stay in the premises throughout the term of 3rd License Deed, in the event when Clause 10(d) CS NO. 58914 of 2016 M/s Maharani Guest House Pvt. Ltd. vs. Engineers India Limited Page no. 37 of 39 allows either of the parties to terminate the Deed by giving three months notice. In such circumstances, the plaintiff's claim for balance amount of Rs. 5 lakh for refurbishment is sans any merit and baseless.
36. So far the security amount of Rs. 3 lakh paid by the defendant concerns, Clause 10(e) of the 3rd License Deed clearly provides for return of all outstanding credits as reduced by outstanding due on whatsoever account within 15 days of termination of License. Ld. Counsel for defendant states that after adjusting the tax paid for a period 1.8.2001 to 14.01.2002 which is Rs. 2,71,049/ and other charges all amounting to Rs. 4,95,913/, a sum of Rs. 3,65,586/ is liable to be paid by plaintiff. No evidence or plausible explanation has been put forth in entire pleadings by the plaintiff for withholding the said amount. The defendant in such circumstances is held entitled for an amount of Rs. 3,04,087/ to plaintiff/counter claimant (after deduction of Rs.2,71,049/ as luxury tax for 01.08.2001 till 14.01.2002, electricity/water charges of Rs.1,02,588/, generator expenses of Rs.5,500/, telephone charges of Rs.22,074/ and catering of Rs.94,702/). The issue no. 8 accordingly stands decided against the plaintiff and in favour of defendant.
37. Having observed as above, defendant is entitled for setting off a sum of Rs. 4,95,913/ against sum of Rs. 8 lakh ( lying with plaintiff towards refurbishing and security advance) alongwith interest. The defendant is thus entitled to recover balance amount of Rs.3,04,087/ i.e. amount claimed in counter claim against the plaintiff alongwith interest.
CS NO. 58914 of 2016 M/s Maharani Guest House Pvt. Ltd. vs. Engineers India Limited Page no. 38 of 39 RELIEF
38. In view of my findings in the Issue number 4 to 7, the suit of the plaintiff stands dismissed. Considering the observations in above issues as well as in issue no. 8,9 and 10, the counter claim of the defendant stands decreed.
39. Defendant is entitled for a sum of Rs.3,04,087/ from plaintiff. The transaction being commercial in nature, the amount shall carry an interest @ Rs. 12 % per annum from the date of institution of the suit till its realization. No order as to cost.
40. Decree sheet be prepared in terms as referred hereinabove and File be consigned to record room after due compliance, as per rules.
Announced in the open court. (RAVINDER BEDI)
Additional District Judge04
Judge Code : DL 0253
PHC/New Delhi 14.01.2020
CS NO. 58914 of 2016
M/s Maharani Guest House Pvt. Ltd. vs. Engineers India Limited Page no. 39 of 39