Bangalore District Court
M/S Toys N Toys Baby Shop vs ) M/S Rage Health And Wellness Centre on 8 April, 2021
1 Com.O.S.No.446/2019
In the Court of LXXXIV Additional City Civil and
Sessions Judge (CCH-85-Commercial Court), Bangalore
Dated this the 8th day of April 2021
Present: Smt.H.R.Radha B.A.L., LL.M.
LXXXIV Addl. City Civil and Sessions Judge,
(CCH-85 - Commercial Court)
Bengaluru
Com.O.S.No.446/2019
PLAINTIFF M/s Toys N Toys Baby Shop, a partnership
firm registered under The Indian Partnership
Act, 1932, Register of firm as No.199/2007-
08 and having its office at No.201 and 202,
7th Cross, CMH Road, Indiranagar I stage,
Bengaluru 0 560 038.
rep by its partners Jemson Leonard Dsouza
(By M/s Holla and Holla, Advocates)
Vs
DEFENDANTS 1) M/s Rage Health and Wellness Centre, LLP,
No.208, 'Dsouza Complex", Double road,
Indiranagar II stage, Bengaluru-560 038.
rep by its partners Ramesh J Pereia and
Shijoy Kupparathil.
2) Ramesh J Pereia, Major, # 36, Shree
lakshmi Yellamma Temple Street,
Doopanahalli, Bangalore-560 008.
also at No.208, "Dsouza Complex", IV floor
Apartment, Double road, Indira Nagar II
Stage, Bengaluru - 560 038.
3) Shijoy Kupprathi, Major, # 102, Cauvery
Comforts, Venkatapura Main road,
Koramangala 1 Block, Bangalore.
st
(D1 by Sri. N.Srinivas, Advocate; Suit
against D2 & 3 dismissed as not
pressed by order dated 16-02-2021)
Digitally signed by RADHA H R
RADHA DN: cn=RADHA H R,ou=HIGH
COURT OF
KARNATAKA,o=GOVERNMEN
T OF
HR KARNATAKA,st=Karnataka,c=I
N
Date: 2021.04.12 11:33:39 IST
2 Com.O.S.No.446/2019
Date of Institution of the 16-01-2019
suit
Nature of the suit Ejectment, arrears of rent and
mesne profits
Date of Commencement
of recording of evidence 18-03-2021
Date on which judgment
pronounced 08-04-2021
Total Duration Year/s Month/s Day/s
02 03 22
LXXXIV Addl. City Civil and Sessions Judge
(C.C.H-85 Commercial Court) Bengaluru
JUDGMENT
This is a suit for a direction to the defendants to quit, vacate and deliver vacant physical possession of the suit property; to pay Rs.20,70,328.38 toward arrears of rent, arrears of GST, 10% interest together with current and future interest at 18% per annum; mesne profits / damages of Rs.16,32,825/- for December 2018 and Rs.8,36,325/- for January 2019 along with 18% interest; for mesne profits at the Rs.8,36,325/- per month from the date of the suit till the date 3 Com.O.S.No.446/2019 of delivery of vacant possession with interest at 18% per annum.
2. Brief facts of the plaintiff's case are that -
(a) It is a partnership firm registered under Indian Partnership Act and absolute owner of the suit property. The first defendant is a limited liability partnership engaged in the business of health care and wellness in Bengaluru; defendants 2 and 3 are the partners. Under lease deed dated 29-12-2017, the suit property was leased in favour of the 1st defendant for a period of 5 years commencing from 10-01-2018 with lock in period of initial three years. The first defendant has paid Rs.67,50,000/- towards interest free refundable security deposit.
(b) The defendants committed default in payment of rents for the month of January, September to November 2018, GST for January, May, September to November 2018 and the TDS dues from January to November 2018. The cheques issued towards payment of rent for September to November 2018 was dishonoured. Therefore it got issued legal notice dated 17-10-2018 calling upon the defendants to pay the dues and also to remove all the illegal structures put up in the set back 4 Com.O.S.No.446/2019 area. The defendants neither rectified the same nor replied the notice. However on 20-11-2018, they paid Rs.6,07,000/- by RTGS without specifying as to for which month's rent, the payment is to be adjusted and also attached TDS receipts for 9 months.
(c) Thereafter it got issued another notice dated 28-11-2018 in terms of Clause 18 of the lease deed terminating the tenancy, as the defendants had failed to pay the TDS dues and rents for October and November 2018, 25% of rent for January 2018 as well as the GST for January, May, September to November 2018.
The rent paid beyond 10th of the month, carries interest at 10% per annum as penalty. For delay in payment of GST beyond 20 th of the month, the defendants are liable to pay interest at 18% per annum. Thus the interest payable by the defendants works out to Rs.95,953.38. On 10-12-2018 they have sent two TDS receipts amounting Rs.1,35,000/- without paying rentals for October and November 2018. Inspite of termination of tenancy, the defendants are illegally occupying the premises and therefore are liable to pay arrears of rent as well as mesne profits and the suit property is a commercial property situated in the prime locality of Bengaluru.
5 Com.O.S.No.446/2019
3. The first defendant, on service of summons has appeared through its counsel, but failed to file the written statement.
4. The plaintiff has got dismissed the suit against the defendants 2 and 3 as not pressed, by filing memo dated 16-02-2021.
5. The first defendant on service of summons appeared through the counsel filed application U/Sec.8 of Arbitration and Conciliation Act invoking the Arbitration clause deed dated 29-12-2017 but the same was rejected by order dated 10-12-2019, by IX Addl. City Civil and Sessions Judge, Bengaluru. The first defendant sought for the review of the said order in view of the subsequent decision of the Hon'ble Apex court holding that the dispute between the landlord and tenant are arbitrable in the case of Vidya Dulia and Anr Vs Durga Trading Corporation (Civil Appeal No.2402/19 dated 14- 12-2020). At this stage, the case came to be transferred to Commercial Court. Subsequent change in the position of law could not come to the aid of the defendant to seek review of the order dated 10-12-2019 and therefore, the application for the review was rejected by this court on 18-03-2021. The first 6 Com.O.S.No.446/2019 defendant has failed to file the written statement. Despite granting sufficient opportunities.
6. The Managing partner of the plaintiff has filed affidavit in lieu of examination in chief, examined himself as Pw1 and got marked Ex.P1 to Ex.P23. The first defendant has not cross examined Pw1.
7. The plaintiff has filed the written arguments and relied upon the following judgments in support of the argument that the arbitration clause in the agreement does not oust the civil court's jurisdiction to decide the dispute in a case where parties to the arbitration agreement did not take appropriate steps U/Sec.8 of the Arbitration and Conciliation Act. Mere inclusion of an arbitration clause in the agreement does not ipso facto or automatically cause ouster of the jurisdiction of civil court and t exclusion of civil Court's jurisdiction shall not be readily inferred under Sec.8 of the Arbitration and Conciliation Act.
1) State of Uttarpradesh & Anr. Vs M/s Janki Saran Kailash Chandra & Anr reported in (1973) 2 SCC 96.
2) Sukanya Holding (P) Ltd Vs Jayesh H Pandya 7 Com.O.S.No.446/2019 & Anr reported in (2003) 5 SCC 531.
3) Shree Cement Limited vs Trehan Farms Pvt. Ltd & Ors reported in MANU/DE/1781/2016 [231(2016) DLT90].
4) The Rubber Board Vs Rosin Constructions reported in MANU/KE/0249/204 [2014(2) KLT95].
5) Shankar Reddy & Anr Vs Amara Ramakoteshwara Rao & 3 Ors reported in 2017 SCC online Hyd 426.
8. The points that arise for my consideration are:
1) Whether the plaintiff is entitled for the relief sought in the suit?
2) What order?
9. My findings on the above points are-
Point No.1: Partly in the affirmative Point No.2: As per the final order for the following REASONS
10. This suit was initially assigned to CCH5 by order dated 17-02-2019. The first defendant appeared through its advocate on 05-02-2019 and filed an application U/Sec.8 of the Arbitration and Conciliation Act. The said application was 8 Com.O.S.No.446/2019 rejected by the court by order dated 10-12-2019 relying on the judgment in Himagni Enterprises Vs Kamaljeet Singh Ahluwalia & Ors reported in (2017)10 SCC 706.
11. The first defendant filed I.A U/Sec.114 CPC and Order XLVII rule 1 CPC seeking review of the above order on the ground that Clause 19 of the Registered lease deed provides for resolution of dispute through Arbitration and the dispute between landlord and tenant is held to be arbitrable by the Hon'ble Supreme Court in a subsequent decision, in the case of Vidya Drolia & Ors Vs. Durga Trading Corporation.
12. At the stage of consideration of the IA for review, the case was transferred to CCH83 - Commercial Court by notification dated 17-08-2020 and then to this newly established commercial court by a subsequent notification dated 22-12-2020. The defendants 2 and 3 were yet to be served and the plaintiff filed memo on 16-02-2021 for dismissal of the suit against those defendants as not pressed and it was accordingly dismissed. I.A5 for review of order dated 10-12-2019 passed on I.A U/Sec.8 of Arbitration and Conciliation Act as well as I.A-7 U/O VII rule 11 (a) CPC for rejection of plaint, were rejected by order dated 18-03-2021. 9 Com.O.S.No.446/2019
13. Point No.1: Pw1 has filed affidavit reiterating the plaint averments with regard to the default committed by the first defendant in payment of rent resulting in issuance of legal notice calling upon for rectification within one month and on failure to do so, issuing second notice terminating of the lease as provided under Clause 18 of the lease deed and the amounts due by the first defendant towards arrears of rent, arrears of GST, amount towards interest at 10% on delayed payment etc. Ex.P1 to Ex.P23 are relied upon in support of the same.
14. From the first defendant's application U/Sec. 8 of Arbitration and Conciliation Act seeking reference to arbitration relying clause 19 of the lease deed, it can be safely inferred that there is no dispute with regard to the plaintiff being owner of suit property and the first defendant occupying the same as a tenant to run health care and wellness center under Ex.P1 starting from 10-01-2018.
15. Clause 2 of Ex.P1 provides that the lessee shall pay rent of Rs.6,75,000/- per month subject to TDS deduction + GST at 18% and the same shall be payable on or before the 10 th of each English Calendar month in advance for that month by 10 Com.O.S.No.446/2019 NEFT to the lessor's current account with HDFC bank limited and any delay in payment of lease rent beyond 10th of any month shall attract penal interest at 10% per annum which shall be paid along with rent of the subsequent month. The lessee should pay GST along with the rent each month and provide lessor with TDS challen within a week of payment of monthly rent.
16. Clause 4 of Ex.P1 provides for enhancement of rent by 5% every year from the date of commencement of the lease rent. The plaintiff has stated that the first defendant has paid interest free refundable security deposit of Rs.67,50,000/-. Clause 5 of Ex.P1 sets out the different dates and the manner in which the same was paid to the plaintiff. Under Clause 13 of Ex.P1 the lessee had agreed to pay the rent on or before the due date regularly along with applicable GST subject to tax deduction at source and issue appropriate TDS certificates.
17. Clause 18 of Ex.P1 provides that the lessor shall have the right to terminate the lease if the agreed rent remains unpaid for two consecutive months after becoming payable and if the lessee fails to perform any of the covenants in the lease deed. This court be done by the lessor by giving one month notice 11 Com.O.S.No.446/2019 for paying the rent and /or for rectifying the breach. If the lessee failed to pay the rent or rectify the breach even thereafter, the lessor to terminate the lease by second notification of termination.
18. Clause 20 of Ex.P1 provides that the parties shall communicate with each other in writing and any notice required to be served upon the lessee shall be sufficiently served and given if delivered to it by registered AD post at the registered office and duly acknowledged by the lessee. Ex.P2 dated 17-10-2018 is the first notice issued by the plaintiff informing the defendants that 25% rent for January 2018 amounting Rs.1,51,875/- had remained unpaid, they were irregular in payment of rent and the cheques issued towards rent for September and October 2018 were dishonoured; that they failed to pay GST for January, May, September and October 2018 in addition to not remitting TDS to the Income Tax department, even though the same was deducted from the rent etc.,.
19. Ex.P3 to Ex.P6 go to show that notice at Ex.P2 was sent through RPAD to the address of defendants 1 to 3 as mentioned in Ex.P1. Ex.P7 and Ex.P8 speak to the effect that 12 Com.O.S.No.446/2019 the notice was duly served on the first defendant and one of its partners, the 2nd defendant on 23-10-2018. However, one sent to the residential address of defendants 2 and 3, has returned unserved, as seen from postal covers at Ex.P9 and Ex.P10.
20. Ex.P11 was issued on 28-11-2018, a month after the first notice to the defendants calling upon them to pay the arrears of rents, GST dues etc., and intimating that through e-mail the defendant had attached receipts of TDS paid to income tax department for 9 months and paid Rs.6,07,500/- through RTGS without specifying as to for which month's rent the same has to be adjusted and calling upon the defendants to pay rents for October, November 2018, 25% of rent for January 2018, GST for January, May, September to November 2018 and TDS dues for October and November 2018 with 10% penal interest, to vacate and hand over the vacant possession of the suit property in favour of the plaintiff and to pay interest at 18% per annum.
21. Ex.P12 to Ex.P15 evidence the fact that the 2 nd notice was sent through RPAD to the defendants 1 to 3. As seen from Ex.P16, it was duly served on first defendant. Ex.P17 and 13 Com.O.S.No.446/2019 Ex.P18 are unserved postal covers addressed to the residence of defendants 2 and 3 with acknowledgement due. Ex.P19 is the statement of accounts extract of the plaintiff's current account with HDFC bank. Ex.P20 to Ex.P22 are copies of three TDS certificates for the period from January 2018 to 31 st March 2018, 1st April 2018 to 30th June 2018 and 31st July 2018 to 30th September 2018. Ex.P23 is the certificate U/Sec.65B(4) of the Indian Evidence Act filed in support of the TDS certificate to say that the plaintiff has downloaded the same from his e- mail.
22. The plaintiff has given detailed calculation of the amounts due, in the plaint. The first defendant has failed to dispute or deny the same by filing written statement within the time prescribed. Nor has the first defendant has chosen to cross examine Pw1 to deny the evidence with regard to non payment of rent, GST in time and the due service of the two notices Ex.P2 and Ex.P11 and the calculation shown in the plaint or the claim that on 10-12-2018 the defendants sent two TDS receipt through e-mail for having remitted Rs.1,35,000/- to the income tax department towards TDS for October and November 2018, without paying the rent for the said period. Therefore, I have no reason to disbelieve the case 14 Com.O.S.No.446/2019 of the plaintiff.
23. On service of notice at Ex.P2 and failure of the first defendant to the comply with the demand made therein within 30 days, the plaintiff was compelled to issue 2nd notice at Ex.P11 terminating the tenancy. From the date of its service, the first defendant becomes a tenant at sufferance, by continuing in possession of the suit property wrongfully. The plaintiff has sought for 18% interest on the suit claim. However, there is no agreement between the parties to that effect and therefore, I am of the opinion that the plaintiff is not entitled for pende lite and future interest at that rate.
24. For the forgoing reasons, the point for consideration is answered in favour of the plaintiff holding that the defendant is liable to vacate and handover the vacant possession of the suit property within one month from this day and also pay the following amounts to the plaintiff failing which it shall carry interest at 10% per annum.
Sl.No. Claim including GST at 18% per annum Amount in Rupees
1. Arrears of rent, arrears of GST and 10% penal 20,70,328.38 interest
2. Damages for December 2018 7,96,500.00 Total 28,66,828.38 15 Com.O.S.No.446/2019
25. As per the terms of lease the rent for the month is payable in advance by the 10th of that month. The plaintiff has sought for damages at the rate of Rs.8,36,325/- for the month January 2019. The suit was filed on 16-01-2019 and since this court is of the opinion that the first defendant is liable to pay damages at the rate of Rs.8,36,325/- per month from the date of suit till the date of delivery of vacant possession of the suit property, I am of the opinion that the plaintiff claim for damages for January 2018 is covered under the same. The plaintiff is entitled to deduct the amounts due i.e. Rs.28,66,828/- from the interest free security amount deposited by the first defendant. The plaintiff is also entitled for the two notice charges of Rs.50,000/- each.
26. Point No.2: In the result, I pass the following ORDER Suit of the plaintiff is decreed in part with cost.
The plaintiff is entitled to recover Rs.28,66,828/- from the first defendant with notice charges of Rs.1,00,000/- in all.
The plaintiff is also entitled for 16 Com.O.S.No.446/2019 damages from the first defendant at the rate of Rs.8,36,325/- per month from the date of suit till the date of delivery of vacant possession of the suit property and to deduct the amount due from the interest free deposit of Rs.67,50,000/- Further the first defendant shall quit and deliver the vacant possession of the suit property in favour of the plaintiff within a month from this day, failing which the amount remaining due after adjusting interest free deposit, shall carry interest at 10% per annum.
Draw decree accordingly.
Issue copy of the judgment to the parties to the dispute through e-mail as provided U/o XX Rule 1 of CPC, if mail ID is furnished.
(Dictated to the stenographer, transcribed and typed by her, corrected and then pronounced by me in the open court on this the 8th day of April, 2021) (H.R.Radha) LXXXIV Addl.City Civil and Sessions Judge, (CCH-85 Commercial Court) Bengaluru ANNEXURE List of witnesses examined on behalf of Plaintiff:
Pw1 Jemson Leonard Dsouza 17 Com.O.S.No.446/2019 List of Exhibits marked on behalf of plaintiff:
Ex.P1 The original lease deed 29.12.2017 Ex.P2 Legal notice dated 17.10.2018 Ex.P3 to P6 Four postal receipts Ex.P7 & P8 Two postal acknowledgements Ex.P9 & P10 Two unserved postal covers Ex.P11 Original termination dated 28.11.2018 Ex.P12 to P15 Four postal receipts Ex.P16 One postal acknowledgement Ex.P17 & P18 Two unserved postal cover Ex.P19 Bank statement Ex.P20 to P22 Three TDS certificates Ex.P23 Certificates U/s 65 B of the Evidence Act List of witnesses examined for the Defendant: NIL List of Documents marked for the defendant: Nil (H.R.Radha) [[[ LXXXIV Addl.City Civil and Sessions Judge, (CCH-85 Commercial Court) Bengaluru 18 Com.O.S.No.446/2019