Calcutta High Court
Saraf Agencies Private Limited vs Kanoria Jute And Industries Limited on 30 July, 2010
Author: Sanjib Banerjee
Bench: Sanjib Banerjee
1 GA No. 3383 of 2008 CS No. 288 of 2007 IN THE HIGH COURT AT CALCUTTA ORDINARY ORIGINAL CIVIL JURISDICTION SARAF AGENCIES PRIVATE LIMITED
-Versus-
KANORIA JUTE AND INDUSTRIES LIMITED
For the Plaintiff: Mr Anindya Kumar Mitra, Sr. Adv.,
Mr Abhrajit Mitra, Adv.,
Mr Aniruddha Mitra, Adv.,
Mr Susanta Basu, Adv.
For the Defendant: Mr Surajit Nath Mitra, Sr. Adv.,
Mr Arindam Mukherjee, Adv.,
Mr D.K. Jain, Adv.
Hearing concluded on: July 28, 2010.
BEFORE
The Hon'ble Justice
SANJIB BANERJEE
Date: July 30, 2010.
SANJIB BANERJEE, J. : -
The suit is for eviction, arrears of rent and damages. The tenanted premises measures about 5858 sq.ft. and covers parts of two floors at 4/1, Red Cross Place, just beyond a stone's throw away from this Court. The application that engages immediate attention is for final judgment for eviction and a decree for mesne profits.
In addition to the affidavit-in-opposition and the reply, two sets of supplementary affidavit have been filed by the defendant and one by the plaintiff. There is no written agreement spelling out the terms of tenancy that the parties have relied upon. Since there was no deed of lease in respect of the suit premises, 2 there was no fixed tenure as to occupation that bound the parties. The defendant accepted the plaintiff as a tenant by a letter dated May 8, 2004 addressed to the erstwhile landlord. In the words of such letter, the defendant had already apparently paid "rent, service charges and municipal rates & taxes for the period January, 2004 to March, 2004" to the erstwhile landlord. A copy of the letter was marked to the plaintiff and certain payments were also tendered thereunder to the new landlord.
By a notice dated May 22, 2007 the plaintiff alleged that a sum of Rs.17,51,804.64 remained due from the defendant in respect of the suit premises. The plaintiff also alleged that the defendant had made structural additions and alternations to the suit premises. After narrating such grounds, the plaintiff determined the tenancy and called upon the defendant to deliver vacant and peaceful possession of the premises within a month of the date of such notice. The plaintiff indicated that upon the expiry of the notice period, the defendant would be regarded as a trespasser and the plaintiff would be entitled to claim damages at the rate of Rs.10,000/- per diem. The last paragraph of the notice of May 22, 2007 provided as follows:
"7. Please treat this letter as a notice under Section 106 of the Transfer of Property Act 1882 to be read with the provisions of the West Bengal Premises Tenancy Act 1997 (as amended) which please note."
The plaintiff claims that such notice was received by the defendant on May 29, 2007. A copy of the postal acknowledgement card is appended to the plaint and the application for summary judgment. According to the plaintiff, despite due receipt of such notice, the defendant did not respond thereto or act in accordance therewith. The suit was instituted by or about the first week of December, 2007. In the application for summary judgment the plaintiff has disclosed the following letter dated January 3, 2008 issued by the defendant:
"As per the discussion held with the undersigned with you, we are giving the following proposal to liquidate the entire dues of Rs.1,991,206.82 3 (Nineteen Lacs Ninety One Thousand Two Hundred Six and Paise Eighty Two Only) against outstanding of Rent and other costs up to 31/12/2007 as per details enclosed.
We shall pay 25% of the above mentioned amount immediately after receipt of your confirmation and the remaining outstanding amount shall be paid to you by a Bank Guarantee equivalent to one month Rent and Taxes every month, kindly give the proforma of the Bank Guarantee to enable us to discuss the matter with the bank.
We shall pay the current Rent & Taxes, further we state that if our financial position improves we will liquidate the dues earlier also.
We also submit that we will fulfill the commitments and won't give you opportunity for any complain and keep the good neighborly relation with you.
We solicit your co-operation in this regard and waiting for an early reply."
A summary sheet detailing the admitted dues was appended to such letter by the defendant. It has not been suggested on behalf of the defendant's that the letter embodies any post-notice agreement between the parties.
The plaintiff says that notwithstanding the sundry other matters referred to in its letter of May 22, 2007 since the tenancy was one at will and not for any period specified by any deed of lease, the plaintiff was entitled to determine the tenancy without assigning any reason therefor. The plaintiff contends that the fact that the plaintiff had alleged grounds of non-payment and structural alternation would not detract from the substance of the demand in the notice to vacate the premises.
At paragraph 14 of the plaint it has been averred that the monthly rent was Rs.22,150/- and the defendant was liable to pay arrears of Rs.10,32,100/- on account of outstanding rent, Rs.6,21,204.08 on account of commercial surcharge upto the quarter of June, 2007 and electricity charges of Rs.96,506.56. The total amount claimed of Rs.17,51,804.64 in paragraph 14 of the plaint is the basis for the valuation of the suit as indicated in paragraph 16 thereof. At paragraph 13 of the plaint there is a claim for mesne profits at the rate of Rs.10,000/- per day 4 which has been ridiculously computed to be Rs.13,800/- for the defendant's occupation of the suit premises after the notice period. Though the sum of Rs.13,800/- appears to be a mistake as the corresponding relief indicated in the prayers is for Rs.13,80,000/-, the claim on account of mesne profits has not been included in the basis for the valuation of the suit.
The defendant has urged five grounds to indicate that there are triable issues that ought to await a more protracted adjudication than possible on affidavit evidence in an application for summary judgment. The defendant says that it was impermissible for the plaintiff to join the assorted other claims in a suit for recovery of immovable property. The defendant cites Order II Rule 4 of the Code of Civil Procedure for such purpose and says that no leave of the court has been obtained to join the other alleged causes of action. The second line of defence of the defendant is that the notice under Section 106 of the Transfer of Property Act was allegedly not received by it. The third ground urged is that the suit has been improperly valued and carried to this Court. It is the defendant's submission that a demonstrably false claim in excess of Rs.10 lakh has been made on account of arrears rent. It is the defendant's case, and as has been admitted by the plaintiff, that the rent due is continuously from October, 2005 to May, 2007 at Rs.22,150/- per month. The defendant says that since the claim on account of electricity and corporation rates and taxes cannot be included as components of rent, the monetary claim relevant for the purpose of valuation is well below the pecuniary floor-limit for receiving a suit in this Court. The fourth ground asserted by the defendant is that in view of an order dated August 27, 2008 passed on the defendant's application for entering appearance and filing written statement, the plaintiff was precluded from invoking the provisions of Chapter XIIIA of the Rules on the Original Side of this Court. The final contention of the defendant is that upon the plaintiff forwarding rent bills for the months of July and August, 2007, which was after the notice period, the plaintiff is deemed to have waived the notice issued under Section 106 of the Transfer of Property Act.
5The failure of a plaintiff to obtain leave under Order II Rule 4 of the Code in respect of other causes of action, at the time of institution of a suit for recovery of immovable property, does not render the additional claims bad. Leave under Order II Rule 4 of the Code may be obtained subsequent to the institution of the suit just as leave under clause 14 of the Letters Patent may be sought and obtained at a later stage. The relevant clause in Order II Rule 4 is "unless with the leave of the court" and the leave is not qualified by any word implying previous leave or leave at the inception of the suit. The position is different, for instance, under clause 12 of the Letters Patent where the leave of the court is required to "have been first obtained."
In any event, the first ground of defence is of no merit since leave of court even under Order II Rule 4 of the Code is not necessary to join a claim for mesne profits or arrears of rent in respect of the property claimed. Though mesne profits have been claimed in the suit, such head of claim has not been made the basis for the valuation. There is, however, a claim for arrears of rent in excess of Rs.10 lakh which has not been shown to be without basis. The payment on account of municipal rates and taxes and electricity charges are ordinarily clubbed as part of rent. If the entirety of the plaintiff's claim, which has been made the basis for valuation of the suit, is taken into consideration, the threshold of above Rs.10 lakh is crossed. Accepting for the moment that the claim on account of municipal rates and taxes and electricity would not be part of the claim on account of rent, it appears from the defendant's admission in its letter of January 3, 2008 that the amount due on account of arrears is in excess of Rs.13 lakh. The chart appended to the defendant's letter of January 3, 2008 admitted that a sum of Rs.9,65,098/- was due on account of "old outstanding rent and taxes" and a further sum of Rs.4,43,000/- was due on account of unpaid rent "from October 2005 to May 2007 at the rate of Rs.22,150.00 p.m."
The grounds urged by the defendant under Order II Rule 4 and on account of the valuation of the suit not meeting the pecuniary jurisdiction of this Court 6 are without merit. There were two other ancillary points which had been made. The defendant had initially suggested that since it was a sick industrial company within the meaning of Sick Industrial Companies (Special Provisions) Act, 1985 and a reference relating to the defendant was pending before the Board for Industrial and Financial Reconstruction (BIFR) as at the time of the institution of the suit, the plaintiff could not have made the monetary claim on account of arrears rent or other charges in view of Section 22(1) of the 1985 Act and, consequently, it had to restrict its claim for eviction on the basis of 12 months' rent only. The point has subsequently been abandoned by the defendant since, at the time of institution of the suit, the defendant had been recommended to be wound up by the BIFR under Section 20(3) of the 1985 Act and notwithstanding a temporary stay of such order passed on a writ petition, none of the grounds for the bar under Section 22(1) of the 1985 Act to operate existed as on the date of the filing of the suit. The other incidental point taken was that the claim for mesne profits of Rs.10,000/- per day was absurd. In support of such contention both parties have referred to a judgment reported at (1987) 3 SCC 705 (Nandita Bose v. Ratanlal Nahata). However, since the claim of mesne profits has not been included for the purpose of valuation of the suit, such aspect is not necessary to be considered; particularly as the claim for arrears rent - discarding even the amounts sought on account of electricity charges and municipal rates and taxes
- meets the pecuniary qualification for carrying the action to this Court.
The order dated August 27, 2008 allowed the defendant's prayers for leave to enter appearance in the suit and for extension of the time to file its written statement. The order provided for the usual directions for discovery of documents and inspection preparatory to the trial of the suit. The defendant's suggestion that the very fact that the order dated August 27, 2008 envisaged that the matter would go to trial prohibited the plaintiff's invocation of Chapter XIIIA of the Rules of the Original Side of this Court, is utterly fallacious. To begin with, the order did not expressly forbid the plaintiff from bringing an application for summary judgment. Secondly, it was an order made on the defendant's application where the defendant's default was condoned and the consequential directions given to 7 expedite the suit could not have prejudiced the plaintiff when nothing appears from the order that it intended to take away the plaintiff's valuable right to apply for summary judgment. Thirdly, an application for summary judgment in respect of the matters covered by the relevant chapter may be brought even after the written statement is filed, but subject to the time schedule indicated in the rules therein. It is not the defendant's case that the plaintiff filed the application beyond the permissible time.
Though it has been submitted on behalf of the defendant that it did not receive the notice under Section 106 of the Act, its affidavit does not make out such case. It is necessary to refer to the passages from the affidavit-in-opposition that have been relied upon by the defendant to assess whether the averments amount to an assertion that the defendant did not receive the notice:
"13. With reference to paragraph 12 of the said application, it is denied that the plaintiff by any purported Notice dated 22nd May, 2007 has terminated or could terminate the monthly tenancy of the defendant either with effect from the expiry of one month from the date of receipt of the said Notice by the defendant as alleged or at all. The defendant denies and disputes the legality, validity, correctness and existence of the purported notice a copy whereof has been annexed to the said application, marked with the letter "F". It is further denied that the purported Notice was duly or otherwise served upon the defendant by registered post on 22nd May, 2007 or on any other date as alleged or at all. It is still further denied that the coy (sic, copy) of the purported acknowledgement due card does or can show the receipt of the purported Notice by the defendant on 29th May, 2007 as alleged or at all. The defendant denies and disputes the legality, validity and correctness of the purported acknowledgement due card a copy whereof has been annexed to the said application, marked with the letter "G". It is also denied that in the purported Notice the plaintiff could claim mesne profit at the rate of Rs. 10,000/- per diem or at any other rate from the defendant or there was or could be any question of the defendant vacating the suit premises either on expiry of the period mentioned in the purported Notice as alleged or at all. Without prejudice to the aforesaid and on the contrary strongly relying thereof, the defendant states that after issuance of the purported Notice dated 22nd May, 2007, the plaintiff has raised bills on the defendant for the monthly rent for the months of July and August, 2007 and the defendant has accepted such bills. In views (sic, view) of such issuance and acceptance of rent bills as aforesaid, the purported Notice dated 22nd May, 2007 was waived by consent of the 8 parties. In this connection, copies of such bills for the monthly rent of July and August, 2007 raised by the plaintiff on the defendant are annexed hereto and collectively marked with the letter "C".
"14. With reference to paragraph 13 of the said application, it is denied that any purported notice was served on the defendant on 29th May, 2007 or the alleged period of one month did or could expire on 29th June, 2007 as alleged. It is further denied that the defendant has remained in wrongful possession of the suit premise(s) as a trespasser since 29th June, 2007 as alleged."
Nowhere in paragraph 13 or 14 of the defendant's affidavit has the defendant claimed that it did not receive the notice under Section 106 of the Transfer of Property Act. In the first sentence of paragraph 13, the defendant has denied that by any notice dated May 22, 2007 its tenancy has or could have been terminated. In the second sentence the legality, validity, correctness and existence of the notice have been questioned. In the third sentence the defendant has said that the said notice was not "duly or otherwise" served on the defendant "by registered post" on May 22, 2007 or on any other date. The denial amounts to a denial of service by registered post and not a denial of receipt of the notice. In the fourth sentence the defendant claims that the plaintiff has not been able to demonstrate the receipt of the notice by the defendant, but there is still no denial that the defendant received the notice. In the fifth sentence the correctness of the acknowledgement due card has been challenged. Later in paragraph 13, the defendant says that "after issuance of the purported notice ... the plaintiff has raised bills ... for the monthly rent for the months of July and August, 2007 ..." Though such statement is without prejudice to the earlier statements in the paragraph, since the actual issuance of the notice by the plaintiff and the receipt thereof by the defendant have not been denied, it implies that the defendant had received the subsequent rent bills after the receipt of the notice under Section 106 of the Transfer of Property Act. This sentence may have a bearing on the defence of waiver urged by the defendant. In paragraph 14 of its affidavit, the defendant has denied receipt of the notice on May 29, 2007, but has not denied receipt of the notice altogether.
9Since the suit is for eviction in a case governed by the Transfer of Property Act (the admitted rate of rent for commercial purpose takes the matter beyond the pale of the Premises Tenancy Act), it is the notice under Section 106 of the Act which is the single most important factor. If the defendant had, indeed, not received the notice which is a jurisdictional fact for the plaintiff to bring the suit, all that the defendant was required to say was that it did not receive any notice from the plaintiff under Section 106 of the Transfer of Property Act. Instead, the defendant has denied that its tenancy has or could have been terminated; it has questioned the legality of the notice; it has denied service of notice under registered post; and, has questioned the veracity of the postal acknowledgement card. It has not made the simple averment that it did not receive the notice. The penultimate ground of defence of alleged non-receipt of the notice is found to be unmeritorious in the absence of a categorical assertion by the plaintiff that it had not received the notice.
The only count of defence of any substance that has been put forth by the defendant is the ground of waiver. The case of waiver in the present case is of a notice of quit and not of forfeiture. Section 111 of the Transfer of Property Act provides that a lease of an immovable property would stand determined by forfeiture if any of the three conditions enumerated in clause (g) thereof is fulfilled and the lessor gives notice in writing to the lessee of his intention to determine the lease. Though, clearly, this is not a case of forfeiture of lease, it is necessary to refer to the case of forfeiture since it is possible for the lessor in such case to unilaterally waive forfeiture, but the law requires an element of mutuality for a notice to quit to be waived by a landlord. Section 113 of the Transfer of Property Act, provides:
"113. Waiver of notice to quit. -A notice given under section 111, clause
(h), is waived, with the express or implied consent of the person to whom it is given, by any act on the part of the person giving it showing an intention to treat the lease as subsisting.10
Illustrations
(a) A, the lessor, gives B, the lessee, notice to quit the property leased. The notice expires. B tenders and A accepts, rent which has become due in respect of the property since the expiration of the notice. The notice is waived.
(b) A, the lessor, gives B, the lessee, notice to quit the property leased. The notice expires, and B remains in possession. A gives to B as lessee a second notice to quit. The first notice is waived."
A tenancy at will is put an end to by the agreement of the parties. In case of a forfeiture of lease, the lease is voidable at the choice of the lessor. In a tenancy at will, the consent of the tenant, whether express or implied, is indispensable for there to be a waiver of the notice to quit. The plaintiff has appropriately asserted that Section 113 seems to regard waiver as an agreement to restore the old tenancy.
The defendant has relied on a judgment reported at (1970) 1 SCC 46 (Tayabali Jaferbhai Tankiwala v. Asha & Co.) to demonstrate the circumstances that would lead to an inescapable inference of waiver under Section 113 of the Transfer of Property Act. The landlord in such case issued a notice to quit on several grounds including on account of arrears of rent. A second notice was issued more than a year later for an additional ground that the premises was required for the personal use and occupation of the landlord. Prior to the issuance of the second notice, the landlord was paid the arrears which were said to be due in the first notice. The trial court held that upon the second notice being issued, the first notice stood waived. The claim for eviction on the ground of personal requirement was rejected on merits. In the appeal, the landlord abandoned the case of personal necessity of the suit premises. The appellate court found that there was no waiver of the first notice but the demand for arrears of rent made therein was excessive and illegal which rendered the first notice invalid. When the matter ultimately reached the Supreme Court, the 11 landlord failed only by virtue of the matter being covered by the second illustration in Section 113 of the Transfer of Property Act.
The defendant has also brought a judgment reported at (1963) 1 All ER 500 (Segal Securities, Ltd. v. Thoseby). The case is one of forfeiture on account of breach of a covenant where the court held that the acceptance of the rent for a subsequent period, despite being without prejudice, amounted to a waiver in law. Neither case cited by the defendant can buttress its argument on waiver. There was no second notice issued in this case and the Tayabali Jaferbhai Tankiwala judgment is only an authority for the proposition that a second notice issued in a case covered by Section 113 of the Transfer of Property Act would amount to waiver of the first notice. The English judgment is clearly inapplicable as it relates to waiver of forfeiture, which is a situation covered by Section 112 of the Transfer of Property Act and admits of the unilateral conduct of the lessor, and not a case of waiver of a notice to quit.
In the present case there was no overt mutual act of waiver. The defendant has alleged that upon the plaintiff raising the two rent bills subsequent to the notice period, "the defendant has accepted such bills." The "acceptance of the bills" in this case was nothing more than passive receipt of the bills. Even though implied consent will not require an overt act that has to accompany an express consent, the mere receipt of a notice cannot be said to be implied consent. Consent in such a case cannot be involuntary. The illustrations to Section 113 may not cover all possible situations of implied consent of the noticee, but the mere receipt of a subsequent letter without reacting thereto in any manner would not pass for implied consent. The addressee of a letter will generally have no control of the receipt of even the wildest and uncalled for letter from an addressor. There may have been an implied consent if the tenant in this case had even tendered the rent for a period subsequent to the notice period. But the placid receipt of the two notices would not, by itself, amount to implied consent of the tenant for the old tenancy that stood determined by virtue of the notice to 12 quit to be restored. There is a further aspect. Implicit in the submission at the hearing that the defendant did not receive the notice to quit is the impossibility of the defendant having consented to the waiver. An argument of non-receipt of notice is destructive of a case of consent of waiver since such consent could not be given without knowledge of determination of the tenancy. However, since it has been found on facts that the defendant has not asserted that it did not receive the notice to quit, the reference to such aspect is to emphasise only on the quality of the defence rather than to reject the contention as to waiver on such ground.
In the plaintiff having instituted the suit for eviction on the basis of the notice to quit, it is evident that the plaintiff did not understand that the notice to quit stood waived. The defendant's letter of January 3, 2008, albeit being issued without possible knowledge of the institution of the eviction proceedings, did not refer to the notice to quit having been waived. Since there is no assertion in its affidavit that the defendant did not receive the notice to quit, the letter of January 3, 2008 must be regarded as one with knowledge of the notice to quit remaining outstanding. The defendant did not affirm in such letter that the notice had been waived by consent of parties or even that it was the defendant's contemporaneous understanding that the notice to quit stood withdrawn. The case of implied consent by the mere receipt of the rent bills of July and August, 2007 is of no merit.
A high test has to be met by a plaintiff seeking summary judgment. If the defendant indicates that it has a fair or bona fide or reasonable defence, although not a positively good defence, the plaintiff is not entitled to sign judgment and the defendant is entitled to unconditional leave to defend. If the defendant does not positively and immediately make it clear that it has a defence, yet, discloses such state of facts as leads to the inference that at the trial of the action it may be able to establish a defence, the plaintiff is not entitled to judgment and the defendant is entitled to leave to defend, subject to conditions as to time or mode of trial that 13 may be imposed by court. If the defence is illusory or sham then the plaintiff is ordinarily entitled to judgment and the defendant is not entitled to leave to defend. If the defendant has to defence or the defence is illusory or sham, the court may show mercy to the defendant and grant it leave to defend subject to security or other conditions.
No arguable case has been made out by the defendant for the claim of eviction to be sent to trial. There are, however, murmurs of a counter-claim in damages in the defendant's affidavit; though the apparently unequivocal admission in the defendant's letter of January 3, 2008 would indicate otherwise. The counter-claim or set off, whatever may be its worth, would not stand in the way of final judgment for eviction being passed, but would require the other claims of the plaintiff to be carried to the trial. Accordingly, GA No. 3383 of 2008 is allowed in terms of prayer (a) of the master's summons dated September 26, 2008. The plaintiff will also be entitled to costs of the application assessed at 6000 GM. The balance claim in the suit will stand trial.
Urgent certified photocopies of this judgment, if applied for, be supplied to the parties subject to compliance with all requisite formalities.
(Sanjib Banerjee, J.) Later:
The defendant seeks a stay of the operation of the order which is declined.
(Sanjib Banerjee, J.) 14