Delhi High Court
Friends Motel Pvt. Ltd. Through Its ... vs Supertrack Hotels Pvt. Ltd Through Its ... on 29 April, 2016
Author: Manmohan Singh
Bench: Manmohan Singh
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Judgment pronounced on: 29th April, 2016
+ O.M.P. (I) No.643/2015
FRIENDS MOTEL PVT. LTD. THROUGH ITS DIRECTOR
MR. ARUN DIWEDI ..... Petitioner
Through Mr.Sandeep Sethi, Sr. Adv. with
Mr.Sahid Anwar, Mr.S.P. Sinha &
Mr.Rakesh Mishra, Adv.
versus
SUPERTRACK HOTELS PVT. LTD THROUGH ITS
DIRECTOR MR. SUNIL GUPTA ..... Respondent
Through Mr.Satish Kumar, Adv with
Mr.Sunil Gupta, Adv.
CORAM:
HON'BLE MR.JUSTICE MANMOHAN SINGH
MANMOHAN SINGH, J.
1. The petitioner Friends Motel Pvt. Ltd. has filed the present petition under Section 9 of the Arbitration and Conciliation Act, 1996 who is, inter alia, seeking many interim reliefs.
2. One of the reliefs sought is to issue direction to the respondent to pay the outstanding rents for the last seven months, i.e. from 15th March, 2015 to 15th October, 2015 being due and payable to the petitioner amounting to Rs.1,30,44,960/- and a sum of Rs.1,00,00,000/- from 16th October, 2015 the date of termination of lease period i.e. from 16th October, 2015 to 4th December, 2015 being due and payable to the petitioner at the rate of Rs. 2,00,000/- per /day along with interest as a O.M.P. (I) No.643/2015 Page 1 of 15 result a total outstanding against the respondent is of Rs.2,30,44,960/- along with interest.
2.1 The petitioner has apprehension that the respondent can fled away at any time by taking the huge amount. Thus, in other relief direction is sought against the respondent to deposit the outstanding amount of Rs. 2,30,44,960/- along with interest with the Registrar General of this court to be maintained in a fixed deposit pending arbitration and award or by way of giving direction to the respondents to provide a bank guarantee in favour of the petitioner for an amount of Rs.2,30,44,960/- to secure the amounts as the petitioner is entitled to under the lease agreement pending arbitration and award.
2.2 In other relief, the petitioner is seeking the interim direction for the vacation of the premises as the petitioner is having apprehension of damages of the furniture and fixture and the whole infrastructure which were given on rent to the respondent for the purpose of running hotel.
3. Before considering any prayer, it is necessary to refer certain facts:
a) The petitioner executed a nine years lease deed of the Plot No.104 Babar Road, New Delhi 110001 a residential premises approximately 18,000 square feet (hereinafter refer as "said premises), in the favor of the respondent on the date 1st April 2014, in which respondent agrees to pay monthly rent of Rs 18,00,000/- payable on or before the 15th day of each calendar month in advance to the petitioner and also both the parties agreed to abide all the terms and conditions mentioned in the lease deed.
b) The petitioner leased out the premises to the respondent along with the fixtures as described in the lease for running the business of guest O.M.P. (I) No.643/2015 Page 2 of 15 house by the respondent. Subject to obtaining all necessary permissions and certificate from various authorities, namely NDMC, police, traffic, fire etc. The respondent obtained the necessary permissions and has been successfully operating from the suit premises. It is informed by the respondent to the petitioner that all necessary permission/license have been obtained by law full means, which are valid till 31st March, 2016 the respondent have been uninterruptedly operating business in the name and style of Friend's Motel Pvt. Ltd. and earning huge profit.
c) As per the lease deed clause 11.2 (Termination Clause), it is clearly mentioned that lease may be terminated by the petitioner if any kind of Material Breach of Lease done by the respondent, after providing a 15 days curative period by way of "Lessee Material Breach Notice". If in given period respondent fail to cure the material breach of the lease by the operation of the said clause the lease shall be terminated.
d) Clause 11.2 of the Lease is reproduced for the ready reference of the Court:
"a) Material Breach of Lessee: this lease may be terminated by the Lessor in case of Material Breach by the lessee. Upon the issue of a notice by the Lessor of Material Breach by the Lessee ("lessee material breach notice), the lessee shall be provided with a curative period of 15 days, where such material breach is capable of being cured and within which the Lessee would be required to cure such material breach as claimed by the Lessor within ( the "cure period"), and in the event that Lessee fails to remedy the material breach within the cure period, the Lessor would be entitled to forthwith terminate this Lease Deed.
Upon the exercise of the right of termination by the lessor for a material breach by the Lessee, the Lessee would O.M.P. (I) No.643/2015 Page 3 of 15 as a full and final settlement of all of the amounts payable by it to the Lessor, (i) be required to pay the Lessor the amounts owed to it by way of monthly rent and other charges, if any, up to the date of termination; and/or (ii) be required to pay the Lessor all (reasonable) costs to be incurred in connection with repair and restoration of the Said Premises, to its agreed condition, subject to normal wear and tear, except where the need of such repair and restoration has arisen due to any act attributable to the Lessor or due to Force Majeure events;/ or (iii) all statutory levy, fines and duties imposed on the Lessor and/or Lessee as a consequence of the Lessee's gross negligence or willfulmisconduct. The Lessor shall be entitled to deduct such amounts, if any, from the Security Deposit, and if there is a remainder, return such amounts to the Jessee no later than 7 days from the date of termination. However, if the amounts required to be paid by the Lessee hereunder exceeds the Security Deposit; the Lessee shall make the payment of the excess amounts forthwith and no later than 7 days;"
4. It is evident from the lease deed that the material breach means and include "(i) non-payment of two consecutive months rent or during suspension of operations as detailed under clause 10 herein (ii) making structural changes not permitted under the lease deed, (iii) being found guilty by a court of competent jurisdiction for conducting illegal activities on the said premises, arising out of the gross negligence or willful misconduct of the Lessee."
5. It is the case of the petitioner that despite of repeated reminders made by petitioner from time to time over telephonic calls, SMS etc, respondent defaulted in payment of rent @ Rs.18,00,000/- only per month which is payable on or before 15th day of each calendar month in respect O.M.P. (I) No.643/2015 Page 4 of 15 of the aforesaid premises with effect from 16th March, 2015 to till date. Apart from the above mentioned admitted defaults, the respondent has also defaulted in making payment towards electricity bill and statutory dues like TDS and service tax. Thus, the respondent has committed material breach due to non-payment of rent for the period with effect from 15th March, 2015 till date in respect of the aforesaid premises in question. Non- Payment of rent for two consecutive months amounts to material breach in relation to a default as stated in Para No. 1 of the Lease Deed. It is also stated by the petitioner that the respondent had committed another material breach of lease by making such structural changes which are not permitted under the lease deed. The same are the changes in the size of rooms on the ground floor has been effected by respondent without any authority from petitioner. The said changes caused damages to the said premises due to respondent's misconduct, and the aforesaid changes are threaten to the structure of the building and are in violation of lease deed. It is not denied by the petitioner that the respondent has made an interest free security deposit of Rs. 90 lacs, but it is explained that the said security deposit is refundable after the expiry of lease period or earlier termination of lease deed, subject to deduction of amount required to be spent for curing the defects/damages caused to the structure, fixtures, fitments and furniture and etc.
6. As per clause 4.1(a) of the lease deed the rent for said premises - Rs. 18,00,000 per month payable on or before the 15th day of each Calendar month to the Lessor in advance ('Monthly Rent').
7. As per petitioner, the outstanding rents for the last seven months i.e. from 15th March, 2015 to 15th October, 2015 being due and payable to the O.M.P. (I) No.643/2015 Page 5 of 15 petitioner amounting to Rs.1,30,44,960/- and a sum of Rs.1,00,00,000/- from 16th October, 2015 the date of termination of lease period i.e. from 16th October, 2015 to 4th December, 2015 being due and payable to the petitioner at the rate of Rs. 2,00,000/- per day along with interest as a result a total outstanding against the respondent is of Rs. 2,30,44,960/- along with interest.
8. That petitioner has given details of payments due against the respondents in the form of following table:
Month Rent in Rs. Service Tax TDS in Rs. Net Dues in
in Rs. Rs.
April 18,00,000/- 2,22,480/- 1,80,000/- 18,42,480/-
May 18,00,000/- 2,22,480/- 1,80,000/- 18,42,480/-
June 18,00,000/- 2,52,480/- 1,80,000/- 18,72,000/-
July 18,00,000/- 2,52,480/- 1,80,000/- 18,72,000/-
August 18,00,000/- 2,52,480/- 1,80,000/- 18,72,000/-
September 18,00,000/- 2,52,480/- 1,80,000/- 18,72,000/-
October 18,00,000/- 2,52,480/- 1,80,000/- 18,72,000/-
Total 1,30,44,960
16.10.2015 Damages at 100,00,000/-
to 4.12.2015 Rs.200,000/-
per day
Total 2,30,44,960/-
O.M.P. (I) No.643/2015 Page 6 of 15
9. The respondent submits that the said premises are residential premises and no commercial activities could be done at the said premises. It is the respondent who after taking the possession had spent a sum of Rs.83,00,000/-. All the bills in respect of the electric connections were paid by the respondent.
10. It is alleged by the respondent that it was agreed that the respondent shall pay monthly rent of Rs.18,00,000/- for the first 3 years from 1st April, 2014 to 31st March, 2017. However, as per clause 4.1.b, the respondent had paid an amount of Rs.54,00,000/- towards the rent for the first 9 months starting from 1st April, 2014 till 31st December, 2014 and it was agreed that no further amount was payable for the said period of nine months. The respondent had paid a sum of Rs.1,08,00,000/- in addition to Rs.54,00,000/- that was the actual rent for the period of nine months from 1st April, 2014 till 1st December, 2015 at the specific request of the petitioner who on the pretext that they had to pay the loan installment. The additional amount of Rs.1,08,00,000/- even though the respondent was not running the hotel at the aforesaid premises till 17th October, 2014.
11. As the hotel could not be run till 17th October, 2014 and further it was not in running condition therefore, the petitioner sometime in the month of June, 2015 had agreed to reduce the rent from Rs.18,00,000/- to Rs.14,00,000/- during season period from November till March and Rs.10,00,000/- during off season from April till October every year. Accordingly the payments were made by respondent to the petitioner. In support of this contentions respondent refer the contents at page 10 of the rejoinder of the petitioner in response to the reply filed by the respondent, it is alleged that in the rejoinder, the petitioner had stated that they are in O.M.P. (I) No.643/2015 Page 7 of 15 receipt four cheques of Rs.10,00,000/- each for the month of July, August, September, October and a cheque of Rs.14,00,000/- for the month of November, 2015 from the respondent towards the monthly rent. The cheques were not to be presented to the bank for encashment as the same were given as security. Admittedly the cheque for the month of July and August were never presented by the petitioner for encashment as the petitioner had taken cash against those cheques but again the petitioner had presented the cheques for the month of September, October and November, 2015 without the knowledge and consent of the respondent consequently the cheques were dishonored and the petitioner had filed a case under Section 138 of Negotiable Instrument Act before the Court, MM, Saket, New Delhi. The said fact has not been disclosed by the petitioner in the petition.
12. It is alleged that the respondent is only to pay a sum of Rs.24,00,000/- on account of rent of Rs.14,00,000/- for the month of March and Rs.10,00,000/- for the month of April. In case if the rent is calculated at the rate of Rs.18,00,000/- per month from 1st April, 2014 till date and after the adjustment of the actual expenses incurred by the respondent without adjusting the interest free security of Rs.90,00,000/-, the amounts come to Rs.91,00,000/- till 31st March, 2016, which the respondent is willing to pay in installment along with the present agreed rent to the petitioner within 6 month. However as per the calculation of the petitioner the rent comes to Rs.1,74,00,000/- without adjusting the actual expense of Rs.83,00,000/- for which the respondent is unable to pay at this stage.
O.M.P. (I) No.643/2015 Page 8 of 15It is submitted that the petitioner despite of having amicable settlement earlier on the agreed terms and conditions between the parties has filed the present petition under Section 9 of the Arbitration and Conciliation Act on the false ground.
13. Most of the arguments addressed on behalf of the counsel for the respondent are on the basis of oral agreement or promises made by the petitioner as alleged by the respondent. The oral agreement cannot be given effect if for the same dispute there is a written agreement.
14. It is a rule of law of evidence, which is also known as the "best evidence rule" that in case a written document is available, no oral evidence can be led in that regard. In the present case, in the face of a document in writing, the pleas of the defendant cannot be permitted to be taken and are barred by the provision of Section 92 of the Evidence Act. In M/s. Kusum Enterprises and Ors v. Vimal Kochhar and Anr., 207(2014) DLT 172, it was observed as follows:
"(c) Section 91 of the Indian Evidence Act, 1872 provides that where the terms of a contract have been reduced in the form of a document and where the matter is required by law to be reduced in the form of a document, no evidence shall be given in proof of the terms of such contract except the document itself; Section 92 of the Evidence Act provides that where the terms of the contract required by law to be reduced in the form of a document have been proved according to Section 91, no evidence of any oral agreement between the parties for the purpose of contradicting, varying, adding to, or subtracting from its terms shall be admitted; though there are exceptions to both the said provisions but the same have not been invoked by the respondents/plaintiffs or their counsel and the case is not found to be falling in any of the exceptions..."
O.M.P. (I) No.643/2015 Page 9 of 1515. Let me now discuss the matter on the basis of written documents and admitted position in the matter.
16. Lease deed dated 27th March, 2014 was executed between the petitioner and the respondent. Clause 3 of the lease deed refers to the "term" and Clause 4 refers to the "consideration" which is Rs. 18,00,000/- per month. Clause 4(b) refers to the three months advance monthly rent i.e. Rs. 54,00,000/- which was to be adjusted against the monthly rental to be paid over 09 calendar months. The last line of the said clause which records "in other words the lessee shall not pay any amount as monthly rent to the lessor for the period 1st April, 2014 to 31st December, 2014" is a mathematical error, because otherwise, Clauses 4.4 to 4.6 of the lease deed are clear.
17. Clause 5 of the lease deed refers to the security deposit of Rs.90,00,000/- which was to be refunded by the petitioner at the time of handing over possession of the suit premises on various conditions. Clause 6(e) refers to penalty of Rs. 2,00,000/- per day during the date of termination of lease and till the premises is handed over to the petitioner. Clause 8(d) records that the respondent can carry out modification of the said premises at its own cost. Clause 8(f) refers to the agreement between the parties vide which the petitioner was entitled to obtain a financial facility by creating encumbrance over the said premises. Clause 11.2 refers to "termination for cause". Clause 12 refers to licenses and approvals which clearly mention that it was the duty of the respondent to get the requisite license. Clause 18 refers to the "entire agreement"
wherein it has categorically been mentioned that the written agreement supersedes all previous discussions/correspondence etc. and the lease deed O.M.P. (I) No.643/2015 Page 10 of 15 shall not be changed except by written amendment duly agreed by the parties. Clause 20 refers to the dispute resolution.
18. Admittedly, a tripartite agreement dated 18th June, 2014 was entered into between the Bank of India, the petitioner and the respondent. In this regard, Clause 8(f) of the lease deed dated 27th March, 2014 perused indicates that the petitioner to obtain financial facility.
19. The perusal of the tripartite agreement dated 18th June, 2014 would show that the Bank agreed to disburse loan of Rs.4 Crores to the petitioner on the undertaking of the respondent that monthly rent as payable under the lease deed dated 27th March, 2014 shall be directly paid to the referred ESCROW Account.
The consequence of non-payment of the EMI by the petitioner is also mentioned there.
20. The petitioner has filed on record the account statement as well as the supporting documents as Annexure-P/11 (Colly) which is annexed with the rejoinder affidavit. The account statement shows that the respondent paid Rs.12,42,480/- (Rs.18,42,480 - Rs.6,00,000/-) after deducting Rs.6,00,000/- per month from the monthly rent (statutory dues incorporated) during 1st April, 2014 to 31st December, 2014. The breach/default on behalf of the respondent in making payment is reflected in the account statement.
21. The breach notice dated 16th September, 2015 was issued to the respondent who was granted 15 days time (cure period) as per the lease O.M.P. (I) No.643/2015 Page 11 of 15 deed dated 27th March, 2014 for payment of the arrears of the rent. The same was not complied.
22. The lease deed stood terminated on 1st October, 2015.
23. On 16th October, 2015 the petitioner had issued the notice with regard to the disputes having arisen between the parties.
24. The respondent by letter dated 16th November, 2015 suggested the petitioner to settle the dispute, failing which he named its Arbitrator.
25. By letter dated 21st November, 2015, the petitioner asked the respondent to give particulars of its named Arbitrator so that the proceedings may go ahead.
26. In the meantime, the respondent on 3rd December, 2015 had issued certain cheques as part payment of arrears of rent, however, on presentation they bounced due to reason "insufficient funds". Accordingly legal notice dated 3rd December, 2015 was issued by the petitioner.
27. The named arbitrator of the respondent was not acceptable to the petitioner and intimation in this regard was given on 11th December, 2015.
28. On 15th December, 2015, the Court issued notice in the instant matter and restrained the respondent from creating third party interest in the said premises and directed the parties to produce the statement of account. Accordingly the petitioner filed the statement of account along with the rejoinder affidavit.
29. The respondent sent its reply dated 21st December, 2015 (Annexure- P/12) to the above referred notice dated 3rd December, 2015 (Annexure-
O.M.P. (I) No.643/2015 Page 12 of 15P/9). The reply would show that the respondent was saying that the said cheques were security cheques; admitted that it is suffering because of excessive rent and amicable resolution of the dispute is required.
30. Later on, on 8th January, 2016, the respondent filed its counter affidavit in the instant matter. The contents therein are contrary to the contents of the lease deed dated 27th March, 2014. Curiously it stated that for the first nine months i.e. during 1st April, 2014 to 31st December, 2014 it was not supposed to pay any money. The hotel was not in a running condition and it had to obtain licenses. In para 10, it is stated that the petitioner voluntarily agreed to reduce the monthly rent from Rs.18,00,000/- to Rs.14,00,000/- during season period from November till March and Rs.10,00,000/- during off season period from April till October. The said oral agreement alleged by the respondent is contrary to clause 18 of the lease deed dated 27th March, 2014.
31. Apprehending action, the petitioner made a representation dated 15th January, 2016 and undertook to pay the monthly EMI even though the respondent defaulted in payment of the monthly rent.
32. The matter was heard for some time. The respondent made a submission before this Court during hearing on 15th March, 2016 that it shall seek instructions about payment of the entire arrears of admitted rent and make submission regarding other reliefs on the next date. Sh.Sunil Gupta, Director of the respondent was present in the Court on the said date. The matter was adjourned to 21st March, 2016.
O.M.P. (I) No.643/2015 Page 13 of 1533. On 21st March, 2016 the respondent made a statement and undertook that it shall vacate the suit property by 1st April, 2016 and make submissions regarding arrears of rent on the next date, i.e. 7th April, 2016.
34. When the matter was taken up on 7th April, 2016, it was informed to the Court that the respondent did not comply with the above referred undertaking, rather the respondent moved I.A. No.4183/2016 in which it sought modification of the order dated 21st March, 2016 blaming the learned senior counsel who appeared for him for making such statement for which there was no instructions. Admittedly, Sh.Sunil Gupta, Director of the respondent was present in the Court even on 21 st March, 2016 as well as on 7th April, 2016 when the statement was made that it made a submission that it shall handover the vacant physical possession of the suit property subject to no dues certificate and full and final receipt issued by the petitioner and withdrawal of 138 matters (NI Act case). In fact, the statement was made because an impression was given during hearing that the hotel is not running well and Sunil Gupta is unable to pay the amount as per the lease deed.
35. Learned Senior counsel appearing on behalf of the petitioner submits that the arrears of rent till 1st October, 2015 i.e. the date of termination of lease deed is approximately Rs.2 Crores and together with the other dues/penalty the liability of the respondent towards the petitioner as on date is approximately Rs.5 Crores. Even today the situation is that the respondent is enjoying the property of the petitioner without paying for it and the petitioner is paying the Bank of India the regular EMI for the O.M.P. (I) No.643/2015 Page 14 of 15 loan it took against the suit property in which even the respondent is a signatory.
36. Therefore, for the aforementioned reasons, the present petition is disposed of with the direction that the respondent is directed to pay a sum of Rs.13,04,490/- outstanding amount of agreed rent as per lease deed from November, 2015 till 30th April, 2016, within two weeks from today to the petitioner, with an undertaking to be filed by way of affidavit within the same period of time that it would continue to pay the agreed rent regularly without any failure. In failure to comply the said direction, the respondent shall hand over the vacant possession to the petitioner after the expiry of two weeks.
37. As far as the other claims of the petitioner, i.e. damages at Rs.2 lac per day are concerned, the same dispute may be raised before the Arbitral Tribunal. Similarly, the respondent is also allowed to raise its claim as alleged in the reply including the amount spent by him on the premises, the said claims of the parties shall be decided as per its own merits by the Arbitral Tribunal.
38. The present petition is accordingly disposed of.
39. No costs.
40. Copy of the order be given dasti under the signatures of Private Secretary to both parties.
(MANMOHAN SINGH) JUDGE APRIL 29, 2016 O.M.P. (I) No.643/2015 Page 15 of 15