Bangalore District Court
M S Kids Kemp vs Ms Food Express Stores on 27 May, 2024
KABC170006722024
IN THE COURT OF LXXXIII ADDL. CITY CIVIL & SESSIONS JUDGE,
COMMERCIAL COURT, BENGALURU (CCH-84)
Present: Sri S. Sudindranath, LL.M., M.B.L.,
LXXXIII ADDL. CITY CIVIL & SESSIONS JUDGE
BENGALURU.
COM.OS.No.346/2024 (old O.S No.5549/2013)
Dated on this 27th day of May 2024
Plaintiff M/s.Kids Kemp,
a partnership firm (registered on
29/9/1986, bearing registration
No.405/86/87)
Having its registered office at:
No.18, M.G.Road,
Bengaluru-560001
and Principal Office at No.97,
Airport Road, Bengaluru-560017.
Represented by its Partners.
1)Mr.Ravi V. Melwani,
S/o Mr.Vashi J., Melwani,
aged about 47 years.
2)Mr.Vashi J.Melwani,
S/o Mr.J.H.Melwani,
aged about 74 years,
Both R/at No.60,
Bowring Hospital Road,
Bengaluru-560017.
(By Sri.Ajesh Kumar .S,
Advocate)
// versus //
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CT 1390_Com.O.S.346-2024_Judgment.doc
KABC170006722024
Defendants 1. M/s. Food Express Stores,
(earlier a division of Enpro Oil
Private Limited & now a division
of the Defendant No.2)
having registered office at:
Plot No.IA, Sector 16A,
Institutional Area,
Noida 201 301, U.P and an office
at Suryodai Complex, #7, New No.143
Kodihalli, Old Airport Road,
Bengaluru-560008.
Represented by its
Chief Executive Officer
Mr.Raman Mangalorkar.
2. Jubilant Agri & Consumer Products
Limited (represented by its Retail
Division, M/s.Jubilant Retail)
a company incorporated under the
provisions of the Companies Act,1956
having its registered office at :
Plot No.IA, Sector 16A,
Institutional Area, Noida 201 301,
U.P and an office at:
Suryodai Complex, #7, New No.143,
Kodihalli, Old Airport Road,
Bengaluru-560008.
Represented by its
Chief Executive Officer
Mr.Raman Mangalorkar.
(By Sri.Promod Nair, Advocate)
Date of Institution of suit : 04/03/2024
(30/07/2013)
Nature of the suit : Ejectment
Date of commencement of : 18/09/2021
recording of the evidence
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CT 1390_Com.O.S.346-2024_Judgment.doc
KABC170006722024
Date on which the : 27/05/2024
Judgment was pronounced.
: Year Month/ Day/s
Total duration /s s
00(10) 02(09) 23(27)
JUDGMENT
This is a suit filed by the plaintiff which is a partnership firm against defendant No. 1 and 2 companies for the recovery of possession of suit schedule C property and also for recovery of sum of Rs. 13,22,25,000 plus service tax and Rs. 1,43,75,000 plus service tax per month from June 2013 and damages at the rate of Rs. 1 crore per month from May 2013, till delivery of vacant possession of the suit schedule C property to the plaintiff by the defendants.
2. The plaint averments in brief are that, the plaintiff partnership firm is the absolute owner of the composite suit schedule A property. Out of the said property, the plaintiff has retained one portion which is suit schedule B property and demised remaining portion of the composite property which is more fully described as suit schedule C property in favour of the defendant No. 1. The defendant No. 2 is made a 4 CT 1390_Com.O.S.346-2024_Judgment.doc KABC170006722024 party because earlier defendant No. 1 was retail division of ENPRO Oil Private Limited, but later on, as per the orders of Hon'ble Allahabad High Court in Company Petition Nos. 47 to 49 of 2011 [which came into effect from 1-02-2012], defendant No. 1 has become wholly owned subsidiary of defendant No. 2 and hence defendant No. 2 is also made a party in the suit. It is pleaded that, defendant No. 1 took over the running business of the plaintiff for the period from 10- 12-2007 to 30-04-2013 and for use and occupation of the property for the said period, defendant No. 1 agreed to pay total consideration of Rs. 78,44,13,548. Out of the said sum, defendant has paid Rs. 10,70,00,000 at the time of taking possession and towards remaining amount of Rs. 67,74,13,548/=, the Defendant No. 1 had issued 60 post- dated cheques commencing from May 2008 to April 2013 for the various amounts as stated in the table at paragraph 11 [C] [ii]. It is the specific case of the plaintiff that the consideration was predetermined and it was for the convenience of the Defendants that the payment of consideration was agreed to be made in installments. It is 5 CT 1390_Com.O.S.346-2024_Judgment.doc KABC170006722024 further pleaded that, at the request of defendant No. 1, the suit schedule property was modified as a result of which the total super built area increased and as a result of this, the defendants have agreed to pay additional consideration of Rs. 8,20,80,000 as per the breakup given in paragraph 13 of the Plaint; thereby the total consideration payable for use and occupation of the property for the stipulated period from 10- 12-2007 to 30-04-2013 increased to Rs. 86,64,93,548 i.e. original consideration of Rs. 78,44,13,548 plus additional consideration of Rs. 8,20,80,000. Out of the said sum, the defendants have actually paid only Rs. 76,73,93,548 and therefore they are still due to pay sum of Rs. 9,91,00,000 as on 30-04-2013 which is the date on which the stipulated period ends. It is further pleaded that, in the interregnum, Defendant No. 1 issued legal notice dated 3-8-2011 making untenable claims which was suitably replied by the plaintiff vide reply dated 18-8-2011 for which Defendant No. 1 also issued rejoinder dated 31-8-2011. As a result of such untenable contentions raised in the said legal notice and rejoinder, the Defendant No. 1 failed to honour cheques dated 6 CT 1390_Com.O.S.346-2024_Judgment.doc KABC170006722024 10-8-2011 and 10-9-2011 which were amongst the post- dated cheques issued to the plaintiff towards the consideration payable for use and occupation of the Suit Schedule property for sum of Rs. 1,14,76,187 each. When plaintiff was about to take steps to initiate proceedings for dishonour of the said cheques, the Defendant No. 1 approached the plaintiff for settlement and paid the amount towards the dishonoured cheques and at that stage, the parties entered into a memorandum of understanding styled as Memorandum Recording the Intent of the Parties dated 7- 10-2011 under which the Defendant No. 1 agreed to execute and get registered a formal lease deed between the parties and the rate of rent was also agreed, but Defendant No. 1 failed to adhere to the terms of the memorandum and failed to get executed and registered the formal lease deed. During that time, the Defendant No. 1 requested the Plaintiff to accept an interim sum of Rs. 1 crore per month and Plaintiff in good faith and without prejudice to its rights to recover the entire amount accepted the interim arrangement of receiving Rs. 1 crore per month. It is specifically pleaded that Plaintiff 7 CT 1390_Com.O.S.346-2024_Judgment.doc KABC170006722024 never agreed to reduce the consideration for use and occupation to Rs. 1 crore per month and as such the monthly payment to be paid by Defendant No. 1 for April 2013 was Rs. 1,43,75,000/=. It is contended that in spite of giving sufficient time and opportunity Defendant No. 1 did not make arrangements for executing registered lease deed which constrained Plaintiff to inform the Defendant No. 1 that Plaintiff is no longer ready and willing to receive Rs. 1 crore as interim arrangement and the said memorandum has expired and therefore demanded the Defendant No. 1 to pay the regular charges for occupation of Rs. 1,43,75,000/= as per the original agreement between the parties. It is on this basis that, it is contended that, as per the original understanding between the parties, as already noted Supra, the total consideration payable for the stipulated period was Rs. 86,64,93,548/= out of which Defendant No. 1 has paid only Rs. 76,73,93,548/= and on this basis, the Plaintiff claims that it is entitled to recover from the Defendants a sum of Rs. 9,91,00,000/= as on 30-4-2013. Further it is contended that since the Defendants have not come forward to execute and 8 CT 1390_Com.O.S.346-2024_Judgment.doc KABC170006722024 get registered the formal lease deed between the parties, the Defendants have no right to continue in occupation after the conclusion of stipulated period on 30-4-2013 and on this basis Plaintiff seeks recovery of possession of Suit Schedule Property from Defendants. Further it is contended that for the period of May 2013 the Defendants have paid only Rs. 1 crore and therefore they are due to pay sum of Rs. 43,75,000/= for May 2013 and also liable to pay damages of Rs. 1 crore for May 2013, for unlawful occupation of Suit Schedule Property. Apart from this it is contended that for the month of June and July 2013 the Defendants are not only liable to pay sum of Rs. 1,43,75,000/= but also liable to pay damages at the rate of Rs. 1 crore per month. With these pleadings the Plaintiff is before the Court for recovery of vacant possession of suit Schedule C property and also direction to the Defendants to restore the property in the same condition in which it was delivered or in the alternative to pay to the Plaintiff sum as adjudicated by the Court towards the damages caused to the property by the Defendants. Further relief is sought for recovery of total sum of Rs.13,22,25,000/= 9 CT 1390_Com.O.S.346-2024_Judgment.doc KABC170006722024 i.e. the due amount of Rs. 9,91,00,000/= as on 30-4-2013 and the balance due amount for May 2013 of Rs. 43,75,000/ = and the full amounts due of Rs. 1,43,75,000/= each for June and July 2013. Apart from this recovery is also sought of sum of Rs. 1,43,75,000/= per month from August 2013 and recovery of Rs. 1 crore as damages from May 2013 till delivery of vacant possession of Suit Schedule property.
3. In response to the suit summons, the Defendants have entered appearance through counsel and filed detailed written statement and also preferred the counterclaim. The defence of the Defendants essentially is that, the parties have entered into an arrangement which constitutes a lease under the Transfer of Property Act with effect from 10-05-2008 and under the said lease arrangement Defendants have paid security deposit of Rs. 10,70,00,000/= to the plaintiff. It is pleaded that Defendants have paid agreed rent from May 2008 to September 2011. In October 2011 on basis of mutual agreement and understanding the rent was reduced to Rs. 1 crore per month and accordingly, Defendants have paid rent 10 CT 1390_Com.O.S.346-2024_Judgment.doc KABC170006722024 of Rs. 1 crore per month from October 2011 to May 2013 for which Plaintiff has duly issued invoices. It is pleaded that the Defendants have made improvement in the property by spending nearly Rs. 34,34,79,631/= and apart from this, it is the Defendants who have paid BESCOM deposit of Rs. 21,48,700 and these amounts were agreed to be refunded along with the security deposit amount of Rs. 10,70,00,000/= to the Defendants by the plaintiff at the time of vacating the property. It is pleaded that, in fact, it is the Defendants who have terminated the tenancy by notice dated 9-05-2013 and the Defendants are ready to hand over the possession of the property subject to refund of security deposit amount. On this basis, at paragraph 18 of the written Statement, the Defendants contend that the Plaintiff's refusal to refund the security deposit has constrained the Defendants to exercise their right to withhold the possession of the property and to adjust the monthly rent of Rs. 1 crore from the security deposit until the refund of security deposit or until the security deposit is fully set off against the rentals. On this basis, the Defendants have prayed for dismissal of the suit 11 CT 1390_Com.O.S.346-2024_Judgment.doc KABC170006722024 and also raised counterclaim for declaration that the Plaintiff is not entitled to retain any of the furniture, fixtures and fittings installed by the Defendants in the Suit Schedule property without payment of reasonable compensation to the Defendants and to declare that the Plaintiff is obliged to return the security deposit paid by the Defendants to BESCOM at commercially reasonable rate.
4. The Plaintiff has filed rejoinder / Written Statement to the Counter-Claim reiterating the plaint contentions and denying the counterclaim.
5. On the basis of the above rival pleadings, my learned predecessor has framed the following issues;
1) Whether the Defendants prove that they were constrained to remain in possession of the Suit Schedule property since Plaintiff refused to refund the security deposit?
2) Whether the Defendants prove that they are not liable to pay the rent for the continuation of their possession in the suit property?
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3) Whether the Plaintiff proves that Defendants are liable to pay Rs 13,22,25,000 with service tax and interest till July 2013?
4) Whether the Plaintiff is entitled for mesne profits or damages?
5) Whether the Plaintiff is entitled for taking vacant possession of 'C' Schedule property as claimed?
6) To what order or reliefs the parties are entitled to?
6. On perusal of the above issues, it is evident that my learned predecessor has not framed issues in respect of the counter-claim raised by the Defendants. It is to be noted that, both parties have gone to trial being well aware of the counter-claim raised and therefore, in my view, no prejudice would be caused to both sides if, by exercising the power under Order 14, Rule 5 of the CPC, this Court frames the following additional issue at this stage and accordingly the following additional issue is framed;
Whether the Defendants are entitled to the reliefs sought in the counter-claim?
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7. It is to be noted that during the pendency of this suit, the parties filed compromise petition which was accepted by Orders of this Court dated 12-08-2014. Accordingly, this Court ordered that, in terms of compromise petition, suit in respect of Prayer Column A is decreed as prayed and directed the Office to draw the partial decree and refund the proportionate court fee paid on Prayer Column A. In accordance with the said order, partial decree is drawn up and proportionate court fee has already been refunded to the plaintiff. Therefore, the suit has to proceed in respect of the remaining prayers claimed in the plaint other than Prayer A, i.e. other than the prayer for ejectment.
8. In the trial, the partner of the plaintiff firm is examined as PW1 and got marked Ex. P1 to P31. On behalf of the Defendants, the former CEO of Defendant No. 1, who had resigned as on the date of giving evidence, is examined as DW1 and got marked Ex. D1 and D2.
9. After conclusion of the evidence of both sides, the Defendants filed memo to transfer the suit to Commercial 14 CT 1390_Com.O.S.346-2024_Judgment.doc KABC170006722024 Court since the suit involved commercial dispute. Initially, the said memo was rejected by the Court but said orders were challenged by the Defendants in W.P. 4717 of 2024 and Hon'ble High Court of Karnataka by Orders dated 15-02-2024 set aside the orders of the trial court dated 02-02-2024 and directed to transfer the suit to designated Commercial Court and also directed Transferee Court to dispose off the suit within period of 3 months from 4-3-2024. In pursuance of the said orders of Hon'ble High Court of Karnataka, the suit has been transferred to the present Court, viz. designated Commercial Court and reNo.ed as Commercial O.S. 346 of 2024.
10. After the transfer of the suit to this Court, I have heard the arguments of both sides and perused the records of the case.
11. My answer to the issues are as follows;
Issue No. 1 and 2 : As per finding.
Issue No. 3 and 4 : In the negative.
Issue No. 5 : Does not survive in view of the compromise entered into 15 CT 1390_Com.O.S.346-2024_Judgment.doc KABC170006722024 between the parties during the pendency of the suit.
Additional issue : In the negative.
Issue No. 6 : As per final order for the following ;
REASONS Issue No. 5 :-
12. I propose to deal with this issue at the outset, since this issue does not survive in view of the compromise petition filed by the parties during the pendency of the suit. This issue deals with prayer (a) of the plaint, whereby the plaintiff is seeking recovery of possession of the Suit Schedule property from the defendants. During the pendency of the suit, parties have entered into compromise and filed compromise petition. Although compromise petition forms part of the court record, by way of abundant precaution, the documents relating to the compromise are got marked through PW-1 as Ex. P-2 to P-4. Ex. P-2 is the partial decree drawn up in pursuance of compromise petition having been accepted by this court as per orders dated 12-08-2014. Ex. P-3 is the compromise petition. Ex. P-4 is a sketch accompanying the compromise petition. The perusal of the compromise petition at Ex. P-3 16 CT 1390_Com.O.S.346-2024_Judgment.doc KABC170006722024 discloses that under the said compromise petition, the terms of the compromise between the parties are stated at paragraph 4 and under paragraph 4a, defendants have agreed to hand over the possession and the plaintiff has agreed to take over the possession of portion of the Property on 31-03-2014 in as is where is condition. Further, in respect of the remaining property, the parties have agreed to execute fresh lease deed and the draft lease deed is also annexed to the compromise petition. At paragraph 4e, it is stated as follows;
"It is agreed that save and except the foregoing matters settled, the plaintiff shall be entitled to prosecute the present suit for recovery of arrears of rent, interest and damages up to 31-03-2014 and other reliefs in respect of the entire suit schedule property as claimed in the Plaint".
13. In fact, in the order sheet dated 12-08-2014, my Learned predecessor has specifically held that, in view of the said compromise petition entered into between the parties, Plaint Prayer A is decreed and partial decree is also drawn up 17 CT 1390_Com.O.S.346-2024_Judgment.doc KABC170006722024 accordingly. Hence, it is clear that, in respect of portion of the suit schedule property, in terms of the compromise petition, the possession has been handed over to the plaintiff by the defendants on 31-03-2014 and in respect of the remaining extent of the suit schedule property, fresh lease deed is entered into between the parties. Therefore, the prayer for ejectment does not survive and accordingly issue No. 5 is answered.
Issue No. 1 to 4 :-
14. These issues require common discussion and hence considered together.
15. The case of the plaintiff in brief is that, the plaintiff partnership firm is the absolute owner of the composite suit schedule A property. Out of the said property, the plaintiff has retained one portion which is suit schedule B property and demised remaining portion of the composite property which is more fully described as suit schedule C property in favour of the defendant No. 1. The defendant No. 2 is made a party because earlier defendant No. 1 was retail division of 18 CT 1390_Com.O.S.346-2024_Judgment.doc KABC170006722024 ENPRO Oil Private Limited, but later on, as per the orders of Hon'ble Allahabad High Court in Company Petition Nos. 47 to 49 of 2011 [which came into effect from 1-02-2012], defendant No. 1 has become wholly owned subsidiary of defendant No. 2 and hence defendant No. 2 is also made a party in the suit. It is pleaded that, defendant No. 1 took over the running business of the plaintiff for the period from 10- 12-2007 to 30-04-2013 and for use and occupation of the property for the said period, defendant No. 1 agreed to pay total consideration of Rs. 78,44,13,548. Out of the said sum, defendant has paid Rs. 10,70,00,000 at the time of taking possession and towards remaining amount of Rs. 67,74,13,548/=, the Defendant No. 1 had issued 60 post- dated cheques commencing from May 2008 to April 2013 for the various amounts as stated in the table at paragraph 11 [C] [ii]. It is the specific case of the plaintiff that the consideration was predetermined and it was for the convenience of the Defendants that the payment of consideration was agreed to be made in installments. It is further pleaded that, at the request of defendant No. 1, the 19 CT 1390_Com.O.S.346-2024_Judgment.doc KABC170006722024 suit schedule property was modified as a result of which the total super built area increased and as a result of this, the defendants have agreed to pay additional consideration of Rs. 8,20,80,000 as per the breakup given in paragraph 13 of the Plaint; thereby the total consideration payable for use and occupation of the property for the stipulated period from 10- 12-2007 to 30-04-2013 increased to Rs. 86,64,93,548 i.e. original consideration of Rs. 78,44,13,548 plus additional consideration of Rs. 8,20,80,000. Out of the said sum, the defendants have actually paid only Rs. 76,73,93,548 and therefore they are still due to pay sum of Rs. 9,91,00,000 as on 30-04-2013 which is the date on which the stipulated period ends. It is further pleaded that, in the interregnum, Defendant No. 1 issued legal notice dated 3-8-2011 making untenable claims which was suitably replied by the plaintiff vide reply dated 18-8-2011 for which Defendant No. 1 also issued rejoinder dated 31-8-2011. As a result of such untenable contentions raised in the said legal notice and rejoinder, the Defendant No. 1 failed to honour cheques dated 10-8-2011 and 10-9-2011 which were amongst the post- 20
CT 1390_Com.O.S.346-2024_Judgment.doc KABC170006722024 dated cheques issued to the plaintiff towards the consideration payable for use and occupation of the Suit Schedule property for sum of Rs. 1,14,76,187 each. When plaintiff was about to take steps to initiate proceedings for dishonour of the said cheques, the Defendant No. 1 approached the plaintiff for settlement and paid the amount towards the dishonoured cheques and at that stage, the parties entered into a memorandum of understanding styled as Memorandum Recording the Intent of the Parties dated 7- 10-2011 under which the Defendant No. 1 agreed to execute and get registered a formal lease deed between the parties and the rate of rent was also agreed, but Defendant No. 1 failed to adhere to the terms of the memorandum and failed to get executed and registered the formal lease deed. During that time, the Defendant No. 1 requested the Plaintiff to accept an interim sum of Rs. 1 crore per month and Plaintiff in good faith and without prejudice to its rights to recover the entire amount accepted the interim arrangement of receiving Rs. 1 crore per month. It is specifically pleaded that Plaintiff never agreed to reduce the consideration for use and 21 CT 1390_Com.O.S.346-2024_Judgment.doc KABC170006722024 occupation to Rs. 1 crore per month and as such the monthly payment to be paid by Defendant No. 1 for April 2013 was Rs. 1,43,75,000/=. It is contended that in spite of giving sufficient time and opportunity Defendant No. 1 did not make arrangements for executing registered lease deed which constrained Plaintiff to inform the Defendant No. 1 that Plaintiff is no longer ready and willing to receive Rs. 1 crore as interim arrangement and the said memorandum has expired and therefore demanded the Defendant No. 1 to pay the regular charges for occupation of Rs. 1,43,75,000/= as per the original agreement between the parties. It is on this basis that, it is contended that, as per the original understanding between the parties, as already noted Supra, the total consideration payable for the stipulated period was Rs. 86,64,93,548/= out of which Defendant No. 1 has paid only Rs. 76,73,93,548/= and on this basis, the Plaintiff claims that it is entitled to recover from the Defendants a sum of Rs. 9,91,00,000/= as on 30-4-2013. Further it is contended that for the period of May 2013 the Defendants have paid only Rs. 1 crore and therefore they are due to pay sum of Rs. 22
CT 1390_Com.O.S.346-2024_Judgment.doc KABC170006722024 43,75,000/= for May 2013 and also liable to pay damages of Rs. 1 crore for May 2013, for unlawful occupation of Suit Schedule Property. Apart from this it is contended that for the month of June and July 2013 the Defendants are not only liable to pay sum of Rs. 1,43,75,000/= but also liable to pay damages at the rate of Rs. 1 crore per month. With these pleadings the Plaintiff is before the Court for recovery of total sum of Rs. 13,22,25,000/= i.e. the due amount of Rs. 9,91,00,000/= as on 30-4-2013 and the balance due amount for May 2013 of Rs. 43,75,000/= and the full amounts due of Rs. 1,43,75,000/= each for June and July 2013. Apart from this recovery is also sought of sum of Rs. 1,43,75,000/= per month from August 2013 and recovery of Rs. 1 crore as damages from May 2013 till delivery of vacant possession of Suit Schedule property.
16. In support of its case, the plaintiff firm has examined one of its partners as PW1 and got marked Ex. P-1 to P-31. Ex. P-1 is the partnership deed of plaintiff dated 20-12-1990. Ex. P-2 is the partial decree. Ex. P-3 is the compromise 23 CT 1390_Com.O.S.346-2024_Judgment.doc KABC170006722024 petition on the basis of which partial decree was passed in the present suit and Ex. P-4 is the sketch accompanying the compromise petition and these documents are already discussed while answering issue No. 5. Ex. P-5 is certificate of the chartered accountant of plaintiff. Ex. P-6 are photographs of suit schedule property. Ex. P-7 is letter dated 16-01-2008 under which plaintiff has handed over the possession of the suit schedule property to the defendants. Ex. P-8-11 are letters written by the defendant No. 1 to the plaintiff and Ex. P-8 is dated 15-12-2007 stating that the defendant No. 1 is enclosing 60 cheques for the monthly rent for the lock-in period from 10-05-2008 to 30-04-2013 and the details of the cheques are given which are the same as those mentioned in paragraph 11 [c] [ii] of the Plaint. Under Ex. P-9 dated 16-04- 2008, defendant No. 1 has confirmed taking possession of the suit schedule property. Under Ex. P-10 dated 12-08-2008, defendant No. 1 has made certain representations regarding additional structural changes which will be discussed infra, while answering additional issue regarding the counterclaim. Under Ex. P-11 dated 30-1-2009, defendant No. 1 has given 24 CT 1390_Com.O.S.346-2024_Judgment.doc KABC170006722024 certain cheques which is towards additional rent for additional area.
17. Ex. P-12 are 62 invoices raised by the plaintiff in respect of rent paid by defendant No. 1. These invoices are important piece of evidence since these invoices are relied upon by the defendants on the ground that, in the invoice No. 47 onwards which is for the month of October 2011 till invoice for April 2013, the rent is stated as Rs 1 crore and these invoices are relied upon by the defendants to contend that admittedly the rent was reduced to Rs 1 crore. Anyhow, this point is discussed infra while analysing the evidence. Ex. P-13 is the bank account statement of the plaintiff's bank account in Union Bank of India. Ex. P-14 is legal notice dated 3-8-2011 issued by defendant No. 1 to the plaintiff. Ex. P-15 is memorandum recording intent of the parties which is a crucial piece of evidence in this case since it is an undisputed document and the contents of this document are analysed in detail infra, while analysing the evidence. Ex. P-16 and P-17 are legal notice dated 9-5-2013 issued by defendant to the 25 CT 1390_Com.O.S.346-2024_Judgment.doc KABC170006722024 plaintiff along with the postal envelope. Ex. P-18 to P-20 are three invoices raised by the plaintiff for the months of May to July 2013. Ex. P-21 is the legal notice issued by the defendant to the plaintiff dated 30-5-2013 and Ex. P-22 is its postal cover. Ex. P-23 and P-24 are original cheque and cheque return memo and the said cheque is the cheque issued by defendants for the month of April 2013 for Rs 1,14,76,187 which is returned for the reason "account closed". Ex. P-25 to P-28 are again legal notices issued by the defendant to the plaintiff along with the postal envelopes. Ex. P-29 are print out of emails exchanged between the parties, soon after entering into the memorandum at Ex. P-15 and the emails are in respect of entering into lease deed contemplated under the MOU which never took place. Ex. P-30 is 65B certificate. Ex. P-31 is the authorisation letter authorising PW-1 to represent the plaintiff partnership firm.
18. Per Contra, the case of the defendants is that, the parties have entered into an arrangement which constitutes a lease under the Transfer of Property Act with effect from 10- 26 CT 1390_Com.O.S.346-2024_Judgment.doc KABC170006722024 05-2008 and under the said lease arrangement Defendants have paid security deposit of Rs. 10,70,00,000/= to the plaintiff. It is pleaded that Defendants have paid agreed rent from May 2008 to September 2011. In October 2011 on basis of mutual agreement and understanding the rent was reduced to Rs. 1 crore per month and accordingly, Defendants have paid rent of Rs. 1 crore per month from October 2011 to May 2013 for which Plaintiff has duly issued invoices. It is pleaded that the Defendants have made improvement in the property by spending nearly Rs. 34,34,79,631/= and apart from this, it is the Defendants who have paid BESCOM deposit of Rs. 21,48,700 and these amounts were agreed to be refunded along with the security deposit amount of Rs. 10,70,00,000/= to the Defendants by the plaintiff at the time of vacating the property. It is pleaded that, in fact, it is the Defendants who have terminated the tenancy by notice dated 9-05-2013 and the Defendants are ready to hand over the possession of the property subject to refund of security deposit amount. On this basis, at paragraph 18 of the written Statement, the Defendants 27 CT 1390_Com.O.S.346-2024_Judgment.doc KABC170006722024 contend that the Plaintiff's refusal to refund the security deposit has constrained the Defendants to exercise their right to withhold the possession of the property and to adjust the monthly rent of Rs. 1 crore from the security deposit until the refund of security deposit or until the security deposit is fully set off against the rentals. On this basis, the Defendants have prayed for dismissal of the suit and also raised counterclaim for declaration that the Plaintiff is not entitled to retain any of the furniture, fixtures and fittings installed by the Defendants in the Suit Schedule property without payment of reasonable compensation to the Defendants and to declare that the Plaintiff is obliged to return the security deposit paid by the Defendants to BESCOM at commercially reasonable rate.
19. In support of their case, the defendants have examined former CEO of Defendant No.1 as DW-1 and through him got marked Ex. D-1 and D-2. Ex. D-1 is print out of TDS. Ex. D-2 is 65B certificate.
20. Having considered the rival cases of both sides and the oral and documentary evidence on record, it becomes 28 CT 1390_Com.O.S.346-2024_Judgment.doc KABC170006722024 clear that there is absolutely no dispute that the plaintiff is the absolute owner of the composite Suit Schedule A property of which the demised Suit Schedule C property is a portion. Defendant No.1 is subsidiary of Defendant No.2 and therefore Defendant No.2 is also made a party in the suit. In the plaint, the plaintiff does not state that the Suit Schedule C property was leased out to the Defendant No.1. On the other hand, the case of the plaintiff is that Suit Schedule C property was "demised" in favour of Defendant No.1 by the plaintiff for the period from 10-12-2007 to 30-04-2013 in consideration of payment of occupational charges of Rs. 78,44,13,548 which was later increased by Rs. 8,20,80,000 in view of creation of additional area and therefore, according to the plaintiff, the property was demised in favour of Defendant No.1 for above stipulated period in consideration of payment of occupational charges of Rs. 86,64,93,548 and further, it is the specific case of the plaintiff that the said consideration was predetermined and it was for the convenience of the defendants that payment of the consideration was made in installment mode; thereby, in the plaint the plaintiff specifically makes out the 29 CT 1390_Com.O.S.346-2024_Judgment.doc KABC170006722024 case that, the consideration although paid by way of 60 cheques was not rent for respective months, but it was actually "charges for use and occupation" which was a lump sum amount stipulated for the entire stipulated period and only for the convenience of the defendants, it was paid in installments.
21. The specific case of the plaintiff can be culled out from the following plaint averments. At paragraph 7 of the plaint, it is stated that suit schedule C property was demised by the plaintiff to defendant No. 1 for use and occupation from 10- 12-2007 to 30-04-2013. At paragraph 10 of the plaint, the relationship between defendant No. 1 and defendant No. 2 is explained in that, as per orders of Hon'ble Allahabad High Court in Company Petition No. 47-49 of 2011, [with effect from 1-12-2012, as stated in the written statement], the defendant No. 1 has become a wholly owned subsidiary of defendant No. 2. At paragraph 11 of the plaint, the terms under which the suit schedule C property was demised in favour of the defendant No. 1 is explained and it is stated that 30 CT 1390_Com.O.S.346-2024_Judgment.doc KABC170006722024 total consideration payable for the stipulated period for use and occupation of the property was Rs. 78,44,13,548. At paragraph 13, it is stated that due to creation of additional area, the consideration was further enhanced by Rs. 8,20,80,000 and thereby, at paragraph 15 of the plaint, it is stated that total consideration payable to the plaintiff by defendant No. 1 for use and occupation of the property from 10-12-2007 to 30-4-2013 was Rs. 86,64,93,548. At paragraph 17 of the plaint, it is stated that out of the said amount, the total amount paid by defendants up to April 2013 is only Rs. 76,73,93,548 and thereby, the amount due as on 30-4-2013 is Rs. 9,91,00,000. It is this amount apart from certain other amounts payable for May-2013 onwards which is the subject matter of the present suit.
22. Per contra, the defence of the defendant is that a sum of Rs. 10,70,00,000 which is admittedly paid as admitted in paragraph 11 [c] [i] of the plaint was paid as security deposit amount and is to be refunded. Further defence is that there is no dues payable because from October 2011 onwards, it was 31 CT 1390_Com.O.S.346-2024_Judgment.doc KABC170006722024 agreed between the parties that the rent is reduced to Rs. 1 crore per month and accordingly, amounts are paid from October 2011 and invoices are raised by the plaintiff and therefore, there is no due payable as on 30-4-2013. In so far as the period after April 2013, it is the case of the defendants that, in so far as May 2013 is concerned, Rs. 1 crore amount is paid which is forthcoming from the fact that plaintiff has raised invoice as per Ex. P-18 for a balance rent of Rs. 43,75,000 which means that in so far as May 2013 is concerned, plaintiff admits having received Rs. 1 crore. Therefore, defendants contend that no amount is due for May 2013. For the period after May 2013, it is the case of the defendant that the amount payable be adjusted towards the security deposit amount lying with the plaintiff.
23. As already noted Supra, as per the Compromise Petition, possession of Property was handed over to the plaintiff on 31-03-2014 which means that after May 2013, the defendants have been in possession for a further period of 10 months. Therefore, it is the case of the defendants that the 32 CT 1390_Com.O.S.346-2024_Judgment.doc KABC170006722024 agreed rent being Rs. 1 crore per month, the rent for 10 months should come to Rs. 10 crores and if the same is adjusted against security deposit lying in the hands of the plaintiff, then in fact it is the plaintiff which is liable to refund Rs. 70 lakhs to the defendants. Thereby, the defendants deny any liability to pay any amount to the plaintiff.
24. On the other hand, the case of the plaintiff is that while acknowledging that the plaintiff has received Rs. 1 crore per month from October 2011 onwards, it is the case of the plaintiff that this was only as an interim arrangement in view of the settlement proposed which was recorded in the MOU at Ex. P-15. But since the settlement as envisaged in the MOU did not fructify, the parties are governed by the original agreement and hence the plaintiff contends that it is entitled to claim the original rent from October 2011 onwards up to date and hence lays claim for arrears of Rs. 9.91 crore as on 30-4-2013 and for additional sum of Rs. 43,75,000 for May 2013 and for sum of Rs. 1,43,75,000 from June 2013 till date of handing over of possession i.e. up to 31-03-2014 and 33 CT 1390_Com.O.S.346-2024_Judgment.doc KABC170006722024 damages of Rs. 1 crore from May 2013 to 31-03-2014. In this regard, the pleading of the plaintiff denying any arrangement for receiving reduced rent at the rate of Rs. 1 crore per month is found at paragraph 24 and 25 of the plaint as follows;
"It is submitted that First Defendant kept on requesting time to arrange for payment towards stamp duty and registration fees and therefore kept on adjourning the meetings and requested the plaintiff to accept in the interim a sum of Rs. 1 crore per month without prejudice to any of the plaintiff's rights as stated in the replies, notices, etc. The plaintiff in good faith and believing the words of the First Defendant and in the hope of reaching an amicable resolution as contemplated under the aforestated memorandum and without prejudice to their rights, accepted in the interim a sum of Rs. 1 crore. The plaintiff never ever agreed to reduce the consideration for the use and occupation of the Suit Schedule property and as such the monthly payment to be paid by First Defendant for April 2013 was Rs. 1,43,75,000.
It is submitted that after having given a sufficient long rope to the First Defendant to either sign a fresh lease deed as per Annexure 'T' supra and to arrange payment for stamp duty and registration fees, finally, when the First Defendant failed and neglected to take any action in this regard, the plaintiff informed the First Defendant that they are no longer ready and willing to receive a sum of Rs. 1 crore being the interim arrangement and that as the aforesaid memorandum has expired, the plaintiff requested the First Defendant to pay a sum of Rs. 1,43,75,000 per month plus service tax for the use and occupation of the Suit Schedule property as per the agreement and 34 CT 1390_Com.O.S.346-2024_Judgment.doc KABC170006722024 understanding between them and called upon them to either sign the fresh lease deed or to vacate the Suit Schedule property."
25. In this background, the crucial question to be decided is whether the rent payable from October 2011 onwards was the original rent as envisaged in the original agreement between the parties which is the case of the plaintiff or it is the reduced rent at the rate of Rs. 1 crore per month as contended by the defendants. In this regard, the Learned counsel for the plaintiff vehemently argued that, absolutely no document is produced by the defendants to show any reduction of rent and it is highly far-fetched and unacceptable that any landlord would reduce the rent when the trend all over is for increase in the rent. Per contra, Learned Senior Counsel for defendants laid emphasis on the invoices collectively marked as Ex. P-12 to contend that invoice no. 47 onwards deals with the month of October 2011 onwards and they are raised stating the rent of respective months as Rs. 1 crore. He submitted that the words Interim Rent or Interim Arrangement are conspicuous by their absence in the invoices. He submitted that in case the rent payable was the 35 CT 1390_Com.O.S.346-2024_Judgment.doc KABC170006722024 rent of Rs. 1,43,75,000/= as contended by the plaintiff, the same should have been mentioned in the invoices and plaintiff should have paid the tax on full rent of Rs. 1,43,75,000/= irrespective of actual receipt of the entire amount because the tax is payable on the amount payable and not on amount actually received. Thereby, he argued that, this clearly shows that, the arrangement between the parties was to treat Rs. 1 crore as the full and the entire rent payable from October 2011 onwards and therefore there is no question of plaintiff going back at this stage and claiming excess rent for the said periods after having already received Rs. 1 crore in full and final settlement as the rent towards the said months and having raised invoices only for the sum of Rs. 1 crore.
26. Having considered the rival contentions in this regard it is to be noted that, as already noted supra, in the entire Plaint, the case of the plaintiff is that the understanding between the parties was not for payment of monthly rent but for payment of cumulative amount as use 36 CT 1390_Com.O.S.346-2024_Judgment.doc KABC170006722024 and occupation charges for the stipulated period. As already noted supra, in this regard, towards the end of paragraph 17 of the Plaint, it specifically pleaded that, the aforesaid consideration was predetermined and it was for the convenience of the defendants that the payment of the consideration was made in installment mode. This becomes relevant because if the agreement and understanding between the parties was for payment of one lumpsum cumulative amount as use and occupation charges for the entire stipulated period from 10-12-2007 to 30-4-2013 there would be no question of reducing the rent midway from October 2011. Therefore, in order to appreciate this contention of the parties and to decide the question whether there was agreement between the parties to reduce the rent midway from October 2011 onwards, it is first necessary to ascertain whether the understanding between the parties was to pay monthly rent or whether the understanding was to pay one cumulative amount payable in installments. In this regard, the case of the plaintiff that the understanding was to pay one lump sum cumulative amount and only for the sake of 37 CT 1390_Com.O.S.346-2024_Judgment.doc KABC170006722024 convenience it was agreed to be paid by way of installments is diluted in the Plaint itself, to a certain extent, by pleading at paragraph 13 that, in view of increase in the area it was agreed to pay additional charges. No doubt in the Plaint, it is consciously stated that, what was agreed to be paid was "additional charges" and not "additional rent". But as per the table at paragraph 13 of the Plaint, the additional amount is shown payable for respective months from July 2009 to April 2013. This clearly shows that, the understanding was that, the charges is payable on month to month basis and it was not lump sum or cumulative amount. Apart from this, it is to be noted that at paragraph 9 of the rejoinder / written statement to the counterclaim, the plaintiff has pleaded as follows;
"As to paragraph 12 - It is submitted that pursuant to the notice issued by the defendants on 3-8-2011 which was suitably responded by the plaintiff as per the reply dated 18-8-2011 and in order to reach an amicable settlement the parties had entered into a memorandum recording the intent of the parties on 7-10-2011. For the sake of brevity and in order to avoid repetition of facts the undisputed memorandum and its terms therein may be read in extenso here 38 CT 1390_Com.O.S.346-2024_Judgment.doc KABC170006722024 to. In view of the fact that said memorandum was entered into and the defendants agreed to deliver vacant possession of the ground floor and first floor on or before 1-12-2011 and agreed to register the lease deed for the remaining premises in the suit schedule property for a sum as stated in the document within the calendar date of 30-11-2011 and the plaintiff conceding to the request of the defendants to receive part rent payment in the interim during the period of the aforesaid memorandum. In view of the parties not having executed the lease date in the manner contemplated in the memorandum being entirely due to the default of the defendants, the defendants are bound to pay the entire rents and there is no agreement by the plaintiff to reduce it. In this regard, the invoices for the period from May 2013 to November 2013 have been raised by the plaintiff on the defendants and the defendants have not paid the same. The defendants are put to strict proof to show that parties have agreed for the reduced rent in the manner claimed by the defendants."
27. By taking up the above contention, two things become clear. Firstly, plaintiff pleads that in view of the memorandum dated 7-10-2011, plaintiff conceded to the request of defendants to receive part rent payment as interim arrangement during the period of the memorandum. Therefore, plaintiff categorically admits that the occupation charges or by whatever term the consideration may be referred to was payable for month to month and it was not a 39 CT 1390_Com.O.S.346-2024_Judgment.doc KABC170006722024 lump sum or cumulative payment. Secondly, in the above paragraph, the plaintiff specifically pleads that due to not acting upon the memorandum, the defendants are bound to pay the entire rent. By taking up the said plea, plaintiff admits that what was payable by the defendants is rent and it is not a cumulative occupation charge for the entire stipulated period. More importantly, the plaintiff has produced and got marked the invoices collectively as Ex. P-
12. Perusal of the invoices discloses that invoices are raised for rent payable for specific months. Therefore, having raised the invoices for rent payable for specific months from May 2008 to April 2013, now the plaintiff cannot turn around and contend that the consideration agreed between the parties was not rent payable for specific months, but was a cumulative lump sum payment payable by way of installments.
28. Having disposed off the above preliminary point, let me now focus my attention on the principal question as to whether there was understanding between the parties to 40 CT 1390_Com.O.S.346-2024_Judgment.doc KABC170006722024 reduce the rent to Rs 1 crore per month from October 2011 onwards. In this regard, the first point to be noted is that, neither side has chosen to produce the original lease deed or original document under which the defendant No. 1 was put into possession of Suit Schedule property. At this stage, it is to be noted that, the MOU styled as Memorandum recording the intent of the parties dated 07-10-2011 which is marked as Ex. P-15 is an admitted and undisputed document between the parties. This is because both the parties have referred to this MOU in their respective pleadings. The said MOU at paragraph 1 refers to lease deed dated 10-12-2007 and addendum dated 7-4-2009. But in the trial, neither party has produced these documents which would have thrown light on the agreement and arrangement reached between the parties, at the inception of the transaction. The plaintiff contends that the original of the said document is with the defendant No. 1. The defendant No. 1 contends that no such agreement was entered into between the parties. Anyhow, it is admitted in the cross-examination of PW-1 that the lease deed stated by him to be with the defendant No. 1 is an 41 CT 1390_Com.O.S.346-2024_Judgment.doc KABC170006722024 unregistered document. Therefore, being an unregistered document, it would be effective only for 11 months and would not have any effect beyond 11 months from 10-12-2007 and therefore, even if such a written lease deed was entered into between the parties, it would have expired by October 2011 which is the date in question on which according to the defendants the rent was reduced. In the absence of the lease deed being on record, the court has to look into surrounding circumstances to ascertain what was the rent agreed between the parties. In this regard, the letter at Ex. P-8 throws light on the said question. Ex. P-8 is letter dated 15-12-2007 issued by defendant No. 1 to the plaintiff. At paragraph 1 of said letter, it is stated as follows;
"As per the terms agreed, we are enclosing herewith 60 cheques for the monthly rent payable during the lock-in period from 10-5- 2008 to 30-4-2013 as listed in Annexure B to the lease deed."
29. Page 2 of Ex. P-8 gives a table showing the details of the said 60 cheques issued. The said particulars are in consonance with the particulars stated in the table at 42 CT 1390_Com.O.S.346-2024_Judgment.doc KABC170006722024 paragraph 11 [C] [ii] of the plaint. Therefore, this letter at Ex. P-8 issued by defendant No. 1 shows that for October 2011, the rent payable was Rs. 1,23,05,000. However, to this, has to be added the additional rent which was agreed to be paid for the additional area as per the table at paragraph 13 of the plaint. In fact, invoice No. 46 of Ex. P-12 discloses that for September 2011, the rent paid was Rs. 1,33,40,000 and including service tax and other cess the total amount comes to Rs. 1,46,44,730. There is no dispute that this rent as stated in the invoice was actually paid by the defendant No. 1 to the plaintiff for September 2011. Therefore, from the above material on record, it becomes clear that, up to September 2011, the agreed rent between the parties was Rs. 1,46,44,730 [including service tax and cess]. Admittedly, from October 2011, the plaintiff has started accepting rent of Rs. 1 crore per month. According to the defendants, this was in view of agreement between the parties to reduce the rent whereas according to the plaintiff, as already noted supra, this was only interim arrangement to facilitate settlement 43 CT 1390_Com.O.S.346-2024_Judgment.doc KABC170006722024 between the parties in view of entering into MOU as per Ex.P-15.
30. Therefore, at this stage, it is appropriate to look into Ex. P-15 which is an undisputed document to see whether the recitals of Ex. P-15 will throw light on this vexed question before the court. Ex. P-15 begins by reciting that, as a sign of confidence and as a confidence building measure, the Defendant No. 1 has paid the full amount of the cheque for August and September 2011 which had earlier been dishonoured. This is the reason why the invoice shows the payment of full amount of rent for September 2011. Then, the MOU states that, the parties have contemplated to enter into a fresh lease deed on or before 30 November 2011. The terms of the said lease deed are mentioned in some detail. Paragraph 8 of the MOU is crucial and states as follows;
"In the event of non-execution and registration of the fresh lease deed as per clause 1 supra and the termination agreement as per clause 2 supra within the time stipulated therein, this Memorandum shall be null and void upon which circumstance the rights of the parties shall be only as per the original lease deed."44
CT 1390_Com.O.S.346-2024_Judgment.doc KABC170006722024
31. It is crucial to note that, as per the MOU, the fresh lease deed had to be executed on or before 30-11-2011. Therefore, if the case of the plaintiff was true and the sum of Rs 1 crore was agreed to be accepted only as an interim measure without prejudice to the right of the plaintiff to claim the entire rent, then immediately after 30-11-2011 when it became clear that the fresh lease deed will not be executed within the time stipulated under the MOU, the plaintiff should have insisted for full rent from defendants. However, plaintiff has continued to accept Rs 1 crore without demur till April 2013. Absolutely no document is produced by the plaintiff to show that at any time after 30-11-2011 and before April 2013, the plaintiff called upon the defendants to pay the remaining amount towards rent. In the plaint, at paragraph 25, while pleading that, after giving sufficiently long rope to defendant No. 1, when defendant No. 1 failed and neglected to take action as per the MOU, plaintiff informed defendant No. 1 that they are no longer ready and willing to receive sum of Rs 1 crore and requested defendant No. 1 to pay the full rent 45 CT 1390_Com.O.S.346-2024_Judgment.doc KABC170006722024 of Rs. 1,43,75,000/=, it is crucial to note that in paragraph 25, the date on which the plaintiff called upon defendants to pay the full rent is conspicuous by its absence. The plaintiff has not produced a single document to show that immediately after 30-11-2011, the plaintiff issued any letter or notice calling upon the defendant No. 1 to pay the entire rent. Instead, the plaintiff has kept quiet and only after the issuance of Ex. P-16 legal notice dated 9-05-2013 by defendant No. 1 to the plaintiff, calling upon the plaintiff to refund the security deposit amount of Rs. 10,70,00,000/=, for the first time, the plaintiff has raised the plea that it is entitled to the balance rent for the months from October 2011 onwards. Therefore, it is difficult to accept the contention of the plaintiff that acceptance of Rs 1 crore per month from October 2011 was only an interim arrangement. Further, from the invoices produced by the plaintiff itself collectively marked as Ex. P-12 from invoice No. 47 onwards, which is for the months of October 2011 to April 2014, it is clear that invoice is raised showing the rent as Rs 1 crore and there is no whisper that it is only partial payment of rent. At least, 46 CT 1390_Com.O.S.346-2024_Judgment.doc KABC170006722024 after 30-11-2011 when the period contemplated under the MOU for executing fresh lease deed came to an end, the plaintiff should have raised invoice clearly showing what is the total rent payable and showing that Rs 1 crore is accepted only as partial rent or interim rent. Having not done so and having not called upon the defendants to pay the balance rent during the lease period and waiting till the defendants issued legal notice terminating the tenancy and asking for refund of security deposit amount for the first time to raise the claim for balance rent, it shows that the amount of Rs 1 crore received from October 2011 was received in full and final settlement of the rent for the respective months and the contention that it was received without prejudice to claim the entire rent for the said months is clearly an afterthought and unacceptable.
32. Apart from this, it is to be noted that admittedly 60 post dated cheques were handed over to the plaintiff by Defendant No. 1 as per the letter at Ex. P8 and this is also admitted in the Plaint. The arrangement between the parties was that, on 47 CT 1390_Com.O.S.346-2024_Judgment.doc KABC170006722024 the amount of rent for the respective month being paid, the respective post dated cheque of said month would be returned to the Defendant No. 1. It appears by receiving Rs 1 crore per month from October 2011 onwards, the post dated cheques for the said months from October 2011 to March 2013 have been returned by the plaintiff to the defendants. That is the reason why the only cheque produced by the plaintiff in the present case is the 60th cheque for April 2013 which is produced at Ex. P23. No explanation is put forth by the plaintiff for non-production of the other cheques issued for the months of October 2011 onwards. Therefore, the inference is that the plaintiff does not have the said original cheques and the plaintiff has returned the original cheques for the months of October 2011 to March 2013 to the defendants on receipt of Rs 1 crore for the said months. If really the said amount of Rs 1 crore was received only as interim rent without prejudice to claim the full rent, the said original cheques which were given as security for rent for the said months would not have been returned by the plaintiff to the defendants. The fact that the plaintiff has returned the 48 CT 1390_Com.O.S.346-2024_Judgment.doc KABC170006722024 security cheques to the defendants makes it abundantly clear that the amount of Rs 1 crore was received by the plaintiff in full and final settlement of the rent payable from October 2011 onwards and therefore, at this stage, after the lease period is over, the plaintiff cannot lay claim for balance rent towards the said months. In view of the above discussion, I hold that the plaintiff is not entitled to the sum of Rs. 9,91,00,000/= which is claimed to be the arrears payable by the defendants to the plaintiff as on 30-4-2013.
33. Before parting with this point, one ancillary point requires to be considered. There is a dispute between the parties as to the date of commencement of the lease. According to the plaintiff, the lease commenced on 10-12- 2007 which is the date of the lease deed as stated in memorandum at Ex. P-15. On the other hand, according to the defendants, they took possession only in May 2008 and it is for this reason that the rents are paid from May 2008 onwards. In my view, this point is not relevant for the purpose of the present suit because even if it is considered 49 CT 1390_Com.O.S.346-2024_Judgment.doc KABC170006722024 that the lease commenced and defendants took possession from December 2007 onwards, there is no question of plaintiff claiming the rent from December 2007 up to May 2008 because as on the date of filing of the suit in 2013, the claim for rent for said months would be time barred. Even otherwise, from Ex. P-8, it is clear that the rent cheques were issued only from 10-5-2008 which discloses that, irrespective of date of commencement of the lease or the date on which defendants took possession, it was the agreement between the parties that the rents are payable only from 10-5-2008 onwards.
34. In view of the above detailed discussion, I hold that the plaintiff is not entitled to claim any amount for period up to 30-4-2013.
35. Insofar as the claim of the plaintiff for subsequent months i.e. from May 2013 is concerned, it is to be noted that, the plaintiff admits having received Rs 1 crore towards rent for May 2013. That is the reason why at paragraph 40 [ii] of the plaint, the plaintiff claims sum of Rs 43,75,000 being 50 CT 1390_Com.O.S.346-2024_Judgment.doc KABC170006722024 the remainder sum payable for May 2013 and for subsequent months the plaintiff claims sum of Rs 1,43,75,000 for use and occupation and apart from this plaintiff also claims damages at Rs 1 crore per month for overstaying in the Suit Schedule property by the defendants from the month of May 2013. As already noted Supra, there is no dispute that, as per the compromise petition filed during the pendency of the suit, the defendants have vacated the premises on 31-3-2014. Therefore, the claim in the present suit is confined from May 2013 to March 2014. Therefore, apart from the sum of Rs. 9,91,00,000/= claimed as due up to 30-4-2013 which is already decided Supra against the plaintiff, the plaintiff is also claiming amount for use and occupation and damages from May 2013 to March 2014 which is for a period of 11 months.
36. In so far as this claim is concerned, the defence of the defendants is that for May 2013, admittedly Rs 1 crore rent has already been paid and as per the notice issued by the defendants to the plaintiff dated 9-5-2013 at Ex. P-16, the 51 CT 1390_Com.O.S.346-2024_Judgment.doc KABC170006722024 defendants had already intimated their intention to vacate the premises but did not do so since the plaintiff did not refund the security deposit of Rs 10 crore 70 lakhs. In this regard, the contention of the plaintiff is total denial of having received sum of Rs 10 crore 70 lakhs as security deposit. Instead, at paragraph 11 [C] [i] of the Plaint, it is contended that said amount of Rs 10 crore 70 lakhs was paid while taking possession of the suit schedule property which was part payment towards the total consideration payable for use and occupation of the premises. In so far as this question whether the said sum of Rs 10 crore 70 lakhs which was admittedly paid by Defendant No. 1 to the Plaintiff was paid towards security deposit which was to be returned at the time of defendants vacating the premises or whether it was paid as part of the consideration for use and occupation, the recitals of Ex. P-15, Memorandum Entered into Between the Parties, which is an undisputed document, are decisive. In Ex. P-15, at paragraph 2.1, it is stated as follows;
"Out of the sum of Rs 10.70 crores paid by the lessee under the principal lease deed, a sum of Rs 4 crores 40 lakhs shall be adjusted as 52 CT 1390_Com.O.S.346-2024_Judgment.doc KABC170006722024 refundable security deposit for the fresh lease deed supra and a sum of approximately Rs 6 crores 30 lakhs shall be adjusted as advance rent for the period December 2011 to April 2013 under the fresh lease deed. In this manner, the sum of Rs 10 crores 70 lakhs paid under the principal lease deed gets adjusted. On signing the fresh lease deed on 1-12-2011, the lessee shall pay Rs 1 crore 18 lakhs for the balance rent till 30-4-2013."
37. Therefore, from the above recitals in Ex. P-15, which is an admitted document, it follows that, there is no dispute that the said sum of Rs 10 crores 70 lakhs was paid as security deposit amount. Under the said memorandum at Ex. P-15, it was agreed that the said security deposit amount shall be adjusted by treating part of the said sum of Rs 4 crores 40 lakhs as fresh security deposit for the fresh lease deed and the remaining sum of Rs 6 crores 30 lakhs shall be adjusted as advance rent for the period from December 2011 to April 2013. Admittedly, the settlement as envisaged in the said memorandum never fructified and no fresh lease deed was entered into and instead of adjusting the said amount as advance rent for the period from December 2011 to April 2013, admittedly, the defendants have paid Rs 1 crore per 53 CT 1390_Com.O.S.346-2024_Judgment.doc KABC170006722024 month for the said period from December 2011 to April 2013. Therefore, it follows that the said security deposit amount of Rs 10 crores 70 lakhs was still lying with the plaintiff in April 2013 and therefore plaintiff was liable to refund the same to the defendants. When the plaintiff categorically refused to do so, the defendants were justified in holding on to the premises till the security deposit amount was adjusted towards the rents payable. As already noted Supra, the reduced rent as per the agreement between the parties as on April 2013 was Rs 1 crore per month. Admittedly, for May 2013, plaintiff received Rs 1 crore. Since the security deposit amount of Rs 10 crores 70 lakhs was lying with the plaintiff, the defendants were entitled to retain the possession of the premises for further period beyond May 2013 till the security deposit amount got exhausted. Since the rate of rent was Rs 1 crore per month, the defendants were entitled to retain the possession of the premises for a further period of 10.7 months [i.e. approximately 10 months and 21 days]. However, the defendants have admittedly retained the possession only for a period of 10 months, i.e., for the period from June 2013 54 CT 1390_Com.O.S.346-2024_Judgment.doc KABC170006722024 to March 2014 and admittedly handed over the possession on 1-4-2014. Therefore, the amount payable by the defendants for use and occupation from June 2013 up to March 2014 gets adjusted towards the security deposit, which was lying with the plaintiff, of Rs 10 crores 70 lakhs. Therefore, I hold that even for the said period up to the date of handing over of the possession by the defendants to the plaintiff, the plaintiff is not entitled to claim any amount from the defendants.
38. Before parting, it is necessary to take note of certain arguments of Learned Counsel for the Plaintiff. It was argued that DW1 has admitted that certain amount was due and liable to be paid by the defendants to the plaintiff as on 30-4- 2013 and in this regard, portion of cross-examination of DW1 at page 7 was highlighted, wherein he has answered as follows;
"I do not know the exact amount due by the defendants to the plaintiff on 30-4-2013."
39. The law is settled that admission should be direct and a vague admission cannot be the basis for decreeing the suit. 55
CT 1390_Com.O.S.346-2024_Judgment.doc KABC170006722024 In this regard, reference may be made to law laid down by Hon'ble Apex Court in the case of Chikkam Koreswara Rao v. Chikkam Subba Rao, (1970) 1 SCC 558 at page 560, as follows;
3. It is clear from the judgment of the High Court that but for the aforementioned statement of the appellant, the High Court would not have disturbed the finding of the trial court as regards the properties covered by Exh. B-6. Before the right of a party can be considered to have been defeated on the basis of an alleged admission by him, the implication of the statement made by him must be clear and conclusive. There should be no doubt or ambiguity about the alleged admission.
There is no difference in the nature of the acquisitions made under Exhs. B-2 to B-5 and B- 7 and that made under Exh. B-6. They were all made during the life time of Reddinaidu.
(Emphasis Supplied)
40. Further, for reasons noted in detail above, the plaintiff has failed to prove that the plaintiff is entitled to recover Rs 9 crores 91 lakhs from the defendants as on 30-4-2013. Therefore, on the basis of the above vague statement professing ignorance and keeping in mind the fact that admittedly as on the date of examination of DW1 he was no 56 CT 1390_Com.O.S.346-2024_Judgment.doc KABC170006722024 more the CEO of defendant No. 1 company and had resigned long back, the above statement cannot be treated as admission of liability of defendants to pay any amount as on 30-4-2013.
41. At this stage, reference may also be made to the rulings relied upon by the Learned Counsel for Plaintiff. First reliance is placed upon MTNL v. Tata Communications Ltd. reported in (2019) 5 S.C.C. 341 and Mulam Chand v. State of Madhya Pradesh reported in 1968 S.C.C. Online S.C. 21 in respect of Section 70 of the Contract Act regarding Quantum Meruit and it is contended for the plaintiff that premises having not been given for free, on the basis of Quantum Meruit under Section 70 of the Indian Contract Act, defendant is bound to pay compensation equal to the rent. This ruling is inapplicable because, on facts, I have already held that upto April 2013 plaintiff has admittedly received the agreed reduced rent of Rs.1 crore per month and so also for May 2013 and from June 2013 to March 2014 the agreed reduced rent of Rs.1 crore comes to Rs.10 crore which has to 57 CT 1390_Com.O.S.346-2024_Judgment.doc KABC170006722024 be adjusted against the advance amount of Rs.10 crore 70 lakhs admittedly lying with the plaintiff. Therefore these citations are inapplicable to the facts on hand. Reliance is also placed upon Alopi Prasad and Sons Ltd. v. Union of India reported in 1960 S.C.C. Online S.C. 13 which is regarding awarding compensation as Quantum Meruit and for the reasons already noted supra in respect of the first two citations, this citation is also inapplicable.
42. Next, reliance is placed upon Kailashnath Associates Vs. DDA, reported in (2015) 4 SCC 136, but the said ruling is in respect of compensation for breach of contract and on facts, I have already held that the defendants have duly paid the reduced rent at the agreed rate of Rs.1 crore per month from October 2011 to May 2013. Therefore, the said ruling is inapplicable. The other rulings relied upon are Vidyadhar Vs. Manikrao, reported in (1999) 3 SCC 573, Iswar Bhai C. Patel Vs. Harihar Behera, reported in (1999) 3 SCC 457, Armugam Vs. Shakuntala, reported in 2014 SCC ONLINE, Karnataka 10118, and Janki Vasudeo Bojwani Vs. Indus 58 CT 1390_Com.O.S.346-2024_Judgment.doc KABC170006722024 Ind Bank Ltd., reported in (2005) 2 SCC 217. These rulings are relied upon mainly in respect of the proposition of law laid down regarding consequence of party failing to enter into witness box, which renders an inference that contentions taken in the pleadings of said party are false, and also as to when a power of attorney can depose on behalf of the principal, holding that, it is only where the power of attorney holder has personal knowledge that he can depose on behalf of the principal. All these rulings are relied upon since it is contended that, when DW1 deposed in the case, he was no longer the CEO of Defendant No.1 company and had quit the company long back. In his cross-examination, it is elicited that, he was the CEO of the Defendant No. 1 company from 2011 to 2015. Therefore, by relying upon the aforestated rulings, it is contended that, firstly, since there is no separate authorization produced by DW1 authorizing him to depose on behalf of the defendants, his evidence is without authority, and secondly, since he became the CEO of Defendant No.1 company only in 2011, he is not personally aware of what transpired earlier thereto from 2007 onwards. However, it is 59 CT 1390_Com.O.S.346-2024_Judgment.doc KABC170006722024 to be noted that, in the discussion made supra by me, I have principally held that, plaintiff has failed to prove its case. This finding is reached by me relying upon the documents produced by PW 1 himself and not based on any documents produced by DW1. In fact, in one breath, plaintiff relies upon certain alleged admissions made by DW1, which are already referred to supra, and in another breath, plaintiff seeks to discredit the evidence of DW1 on the ground that he was not authorized and had no personal knowledge. Anyhow, when the plaintiff has failed to prove its case, the case of the plaintiff has to fail on its own weight, irrespective of whether the defendant has adduced evidence or not. Therefore, even for the sake of argument, if it is considered that evidence of DW1 has to be eschewed from consideration, even then the plaintiff's case has to fail for the detailed reasons already noted supra. Hence, none of these rulings will help the plaintiff in this case.
43. Apart from this, Learned Counsel for Plaintiff has also relied upon certain other rulings produced along with 60 CT 1390_Com.O.S.346-2024_Judgment.doc KABC170006722024 additional memo of citations dated 19-04-2024. In this regard, reliance is placed upon Food Corporation of India v. Abhijit Paul reported in 2022 SCC Online SC 1605, Adani Power (Mundra) Ltd v. Gujarat Electricity Regulatory Commission reported in (2019) 19 SCC 9, Madem Shetty v. G. Yellogi Rao reported in 1965 (2) SCR 221 and Prabhakaran v. Azhagiri reported in (2006) 4 SCC 484. These rulings are all regarding interpretation of the contract and how mere acceptance of lesser amount does not amount to waiver of right to claim the full amount under the contract. Since I have already held that, plaintiff has failed to prove its case on facts, these rulings will not help the plaintiff in any manner. Accordingly, none of the rulings relied upon by Learned Counsel for Plaintiff are applicable to the facts on hand.
44. For the detailed reasons noted supra, I answer Issue No. 1 to 4 holding that, the case of the plaintiff has to fail and plaintiff is not entitled to any of the reliefs sought for in the present suit.
61
CT 1390_Com.O.S.346-2024_Judgment.doc KABC170006722024 Additional Issue :-
45. This additional issue is framed by me at this stage by exercising power under Order 14, Rule 5 of the CPC since my Learned predecessor has omitted to frame any issues regarding the counter claim raised by the defendants. No doubt, it appears, my Learned Predecessor omitted to frame the issues in this regard, presumably on the ground that, the counter claim does not survive in view of the compromise entered into between the parties. But as already noted supra, as per the orders of this Court dated 12-08-2014, it is only Prayer column A of the Plaint which is decreed in terms of the compromise petition and the partial decree is also passed accordingly. No decree is passed disposing off the counter claim and therefore, it is incumbent on this Court when the counter claim is raised to consider the same on merits. In these circumstances, considering that the parties have gone to trial, being fully aware of the respective rival pleadings and being fully aware of the counter claim raised by the defendants and hence no prejudice would be caused by 62 CT 1390_Com.O.S.346-2024_Judgment.doc KABC170006722024 considering the counter claim on merits, I have framed the additional issue at this stage.
46. The counter claim raised by the defendants is, Firstly, for declaration that plaintiff is not entitled to retain any of the furniture, fixtures and fittings installed by the defendants at the Suit Schedule property without payment of reasonable compensation to the defendants and Secondly, for declaration that plaintiff is obliged to return the security deposit paid by defendants on behalf of the plaintiff to BESCOM at commercially reasonable rate.
47. Insofar as the first relief is concerned, for declaration that plaintiff is not entitled to retain any furniture, fixtures and fittings installed by the defendants at the Suit Schedule property without payment of reasonable compensation to the defendants, in support of this relief, in the schedule to the written statement, valuation is made of the various improvements made in the suit schedule property by the defendants, which is valued at Rs. 34,34,79,613. However, to show the said improvements made by the defendants in suit 63 CT 1390_Com.O.S.346-2024_Judgment.doc KABC170006722024 schedule property, no documents are produced. As already noted Supra, the only documents produced through DW-1 are the TDS details and 65B certificate. Therefore, no reliable material is produced to show that the defendants have made improvements to suit schedule property of the value of Rs. 34 crores and odd. Secondly, the plaintiff has rightly relied upon a letter written by Defendant No. 1 to the plaintiff, which is marked as Ex. P10. It is a letter dated 12-08-2008, addressed by CEO of Defendant No. 1 to the plaintiff. At paragraph 3 of the said letter, it is stated as follows;
"As all the CAPEX done for the structural changes is done by us, we have mutually agreed not to pay additional deposits. However, it is agreed that all additional structures that are being added to the building will not be removed at the time of vacating the premises."
(Emphasis Supplied)
48. Therefore, this letter supports the case of the plaintiff that it was agreed that all improvements done by the defendants to the suit schedule property would be left as it is for the benefit of the plaintiff at the time of defendants vacating the suit schedule property. Therefore, now at this 64 CT 1390_Com.O.S.346-2024_Judgment.doc KABC170006722024 stage, the defendants cannot claim compensation in respect to the said improvements done by them. For these reasons, I hold that, the defendants are not entitled to the first relief sought for in the counterclaim.
49. Insofar as the second relief sought for declaration that the plaintiff is liable to return the security deposit paid by the defendants to BESCOM with reasonable rate of interest is concerned, no document is produced to show that the defendants have paid any deposit to BESCOM. Secondly, no document is produced to show that there was understanding between the parties that such deposit, if any, paid by the defendants to BESCOM would be refunded by the plaintiff at the time of defendants vacating the premises. For these reasons, the second relief sought in the counterclaim also deserves to be rejected. Accordingly, I answer additional issue in the negative.
Issue No. 6:-
50. Having answered Issue No. 1 to 5 and additional issue as above, I proceed to pass the following :- 65
CT 1390_Com.O.S.346-2024_Judgment.doc KABC170006722024 ORDER The suit is dismissed, with cost.
The counterclaim sought by the defendants is also dismissed, with cost.
Office to draw decree accordingly.
Office to issue soft copy of this judgment to both sides, by email, if furnished. [Dictated using Dragon Professional Speech Recognition Software Version 15.3, transcript revised, corrected, signed and then pronounced by me in open court on this the 27th day of May, 2024] (Sri. S. Sudindranath) LXXXIII ADDL.CITY CIVIL AND SESSIONS JUDGE, COMMERCIAL COURT; BANGALORE.
ANNEXURE
1. List of witnesses examined on behalf of Plaintiff:
PW.1 : Ravi V. Melwani
2. List of witnesses examined on behalf of Defendants:
DW.1 : Raman Mangalorkar
3. List of documents marked on behalf of Plaintiff:
Ex.P.1 : Deed of Partnership.
Ex.P.2 : Compromise Decree
Ex.P.3 : C.C of compromise application
Ex.P.4 : C.C of sketch.
Ex.P.5 : C.C of letter issued by Chartered
Accountant pertaining to company
business.
Ex.P.6 : CD
66
CT 1390_Com.O.S.346-2024_Judgment.doc KABC170006722024 Ex.P.7 : Document relating to possession handed over to plaintiff.
Ex.P.8to11: Letters dated 15/12/2007, 16/4/2008 & 12/8/2008 issued by defendants.
Ex.P.12 : 62 Invoices.
Ex.P.13 : Ledger Extract.
Ex.P.14 : Notice dated 3/8/2011 issued by
defendants
Ex.P.15 : Contract agreement dt.7/10/2011.
Ex.P.16 : Notice dated 9/5/2013 issued by
defendants.
Ex.P.17 : Postal Cover.
Ex.P.18to20: 3 Invoices.
Ex.P.21 : Notice issued by 2nd defendant.
Ex.P.22 : Postal cover.
Ex.P.23 : One Axis Bank cheque.
Ex.P.24 : Endorsement.
Ex.P.25 : Notice dated 28/6/2023 issued by
defendant No.2.
Ex.P.26 : Notice dated 3/7/2013 issued by
defendant No.2.
Ex.P.27&28: 2 Postal covers.
Ex.P.29 : Copy of email communications between
plaintiff and defendants.
Ex.P.30 : Certificate U/S.65B of the Indian Evidence
Act.
Ex.P.31 : Authorization Letter.
4. List of documents marked on behalf of Defendants:
Ex.D.1 : Copy of TDS certificate taken from the Traces Website.
Ex.D.2 : Certificate U/S.65B of the Indian Evidence Act.
(Sri. S. Sudindranath) LXXXIII ADDL.CITY CIVIL AND SESSIONS JUDGE, COMMERCIAL COURT; BANGALORE.67
CT 1390_Com.O.S.346-2024_Judgment.doc KABC170006722024