Delhi District Court
Exclusive Networks Sales India Pvt Ltd vs M.L. Gupta (H.U.F.) on 23 April, 2024
CS SCJ 759/18 Exclusive Networks Sales India Pvt. Ltd. Vs M. L. Gupta (H.U.F.)
In the Court of Ms. Neetu Nagar, Judge Small Causes Court cum
Additional Senior Civil Judge cum Guardian Judge, South East
District, Saket Courts, New Delhi
Civil Suit No. : 759/18
CNR No. : DLSE03-001190-2018
In the matter of:
Exclusive Networks Sales India Pvt. Ltd.
(Formerly Transition Systems Pvt. Ltd.)
Through its Authorized Signatory Mr. Jubair Ahmed,
Registered office at:
Adhitya Business Centre, Sire Mansions,
3rd floor, 621 Anna Salai, Mount Road
Near Gemini Flyover, Chennai-600006
Tamil Nadu ... Plaintiff
VERSUS
M.L. Gupta (H.U.F.)
Through its Karta Shri Mussadi Lal Gupta
House No. 300, Sector-14,
Faridabad, Haryana-121007.
Also at:
804, Ashok Bhawan-93
Nehru Place, New Delhi-110019. .... Defendant
********
Date of Institution : 07.06.2018
Final arguments heard on : 29.02.2024
Judgment pronounced on : 23.04.2024
********
(Neetu Nagar)
JSCC-ASCJ-GJ/South East
Delhi:23.04.2024 Page 1 of 25
CS SCJ 759/18 Exclusive Networks Sales India Pvt. Ltd. Vs M. L. Gupta (H.U.F.)
SUIT FOR RECOVERY OF RS. 2,40,000/- (RUPEES TWO
LAKHS FORTY THOUSAND ONLY) ALONG WITH
PENDENTE LITE AND FUTURE INTEREST
JUDGMENT
1. Vide this judgment, I shall dispose of the present suit filed by the plaintiff seeking recovery of Rs.2,40,000/- alongwith pendente lite and future interest at the rate of 18% per annum.
PLAINT
2. Briefly the case of the plaintiff is that plaintiff is a company incorporated under the Companies Act, 1956 (as amended up to date), having its registered office at the address as mentioned in the memo of parties. The Plaintiff is engaged in the business of providing services in IT solutions, customer service and technical support. Mr. Jubair Ahmed, is the Authorized Representative of the Plaintiff in the present matter vide Board Resolution dated 04.05.2018. The defendant is a Hindu Undivided Family (HUF) represented by its Karta Shri Mussadi Lal Gupta. The defendant is the owner of the Flat bearing no. 804 measuring 1066 square feet situated at Ashok Bhawan-93, Nehru Place, New Delhi - 110019 (hereinafter referred to as the Suit Property).
2.1 It is averred that the Plaintiff and the Defendant executed a Lease Deed dated 08.10.2012 with respect to the suit property for three years time period starting from 08.10.2012 to 09.10.2015. Subsequent to the execution of the lease agreement, the plaintiff, in addition to the monthly rent, had deposited the security amount of Rs. 2,40,000/- (Rupees Two Lakhs Forty Thousand Only) with the defendant, returnable at the time of vacating the said property. Further, the said lease agreement was extended for a period of two years by Addendum dated 09.10.2015 for a period starting (Neetu Nagar) JSCC-ASCJ-GJ/South East Delhi:23.04.2024 Page 2 of 25 CS SCJ 759/18 Exclusive Networks Sales India Pvt. Ltd. Vs M. L. Gupta (H.U.F.) from 09.10.2015 to 09.10.2017. On the expiry of the foregoing term, the plaintiff sought an extension of the lease for 5 months and requested the defendant to execute an Addendum to the original lease agreement to this effect. However, the defendant asked the plaintiff to send this request of extension by email and to continue paying the rent. In this regard, the plaintiff duly communicated the aforesaid request for extension to the defendant vide email dated 26.10.2017. The lease period, and corresponding rental payments are mentioned herein below:
Period Amount of Monthly Rent 09.10.2012 - 08.10.2013 Rs.80,000/- 09.10.2013 - 08.10.2014 Rs. 84,000/- 09.10.2014 - 08.10.2015 Rs. 88,200/- 09.10.2015 - 08.10.2016 Rs. 88,200/- 09.10.2016 - 08.10.2017 Rs. 92,610/- 09.10.2017 - 31.01.2018 Rs.97,280/- 2.2 It is submitted that all the rental payments due and
payable to the defendant were admittedly duly paid. The plaintiff, upon expiry of the lease period, communicated to the defendant that the plaintiff has vacated the suit property and further requested the defendant to take the vacant physical possession thereof on 01.02.2018. However, the defendant, on pretext of his unavailability in India, requested the plaintiff to hand over the physical possession of the premises on 05.02.2018 and assured the plaintiff that he will refund the security deposit amount at the earliest. Subsequently, the keys of the suit property were handed over to the defendant on (Neetu Nagar) JSCC-ASCJ-GJ/South East Delhi:23.04.2024 Page 3 of 25 CS SCJ 759/18 Exclusive Networks Sales India Pvt. Ltd. Vs M. L. Gupta (H.U.F.) 05.02.2018, as per his earlier request. After some time, the plaintiff again requested the defendant to refund the security deposit amount. However, the defendant requested the plaintiff for a time of seven days. On 20.02.2018, the plaintiff again requested the defendant to refund the security deposit amount. However, the Defendant responded by presenting a contrived list of alleged repairs and replacements along with the estimated cost of the alleged work and also raised unjust and unreasonable demand of rent for the month of February 2018 despite the fact that the plaintiff has vacated the said property on time. The contrived list presented by the Defendant, purporting to contain the alleged repairs and replacements allegedly required for the Suit Property, surprisingly contains mention of a new Air Conditioner along with new chairs and inverter batteries as well as the cost of painting the Suit Property. It is submitted that the Plaintiff is not liable to cover the costs of all the said alleged repairs and replacements as the same, even if done and carried out by the defendant, shall fall under the definition of normal wear and tear. It is averred that the defendant never ever raised any issue or objection or his concerns over any alleged damage during the period of lease including its extension and same was only shot when the plaintiff insisted for the refund of his security deposit. 2.3 It is submitted that the plaintiff always kept the suit property well maintained and in good condition in adherence to and compliance of the terms and conditions of the Lease Deed dated 08.10.2012 and was only liable for making payment towards the expenses incurred upon the repair, to the extent that they were caused due to negligence of the plaintiff. Thus, the contrived list presented by the Defendant is clearly malicious, unreasonable and an afterthought, (Neetu Nagar) JSCC-ASCJ-GJ/South East Delhi:23.04.2024 Page 4 of 25 CS SCJ 759/18 Exclusive Networks Sales India Pvt. Ltd. Vs M. L. Gupta (H.U.F.) prepared with the reason, inter alia, to grab the security amount of the plaintiff.
2.4 It is further stated that the plaintiff without prejudice to his rights, offered to pay a consolidated sum to meet the unjustified demands of the defendant so that the remainder of the amount could be refunded to the Plaintiff. However, even after the said proposal was advanced by the Plaintiff, the Defendant was persistent on his unjustified and illegal demand. The Plaintiff, through its Counsel, was compelled to issue a Legal Notice dated 09.04.2018 upon the Defendant demanding the refund of the amount of security deposit amounting to Rs. 2,40,000/- (Rupees Two Lakhs Forty Thousand Only) along with legitimate interest which was delivered to the Defendant on 11.04.2018 but same was not replied. Hence, the instant suit.
SUMMONING OF DEFENDANT AND CHAIN OF SUBSEQUENT EVENTS
3. Upon receipt of the plaint, summons of the suit for settlement of issues were directed to be issued to the defendant vide order dated 07.06.2018. The defendant was duly served with the summons and put his appearance through counsel. However, the defendant failed to file written statement within the prescribed period of limitation. Vide Order dated 22.07.2019, the right of the defendant to file written statement was closed and the matter was fixed for plaintiff evidence straightway.
EVIDENCE OF PLAINTIFF
4. Plaintiff, in support of its case has examined its AR Mr. Jubair Ahmed as PW1 who has placed on record his affidavit in evidence vide Ex.PW1/A and relied upon the following documents:
(Neetu Nagar) JSCC-ASCJ-GJ/South East Delhi:23.04.2024 Page 5 of 25 CS SCJ 759/18 Exclusive Networks Sales India Pvt. Ltd. Vs M. L. Gupta (H.U.F.) Sl. No. Exhibits/Mark Details of Documents
1. Ex. PW-1/1 Board of Resolution dated 04.05.2018
2. Mark A Certificate of Incorporation of plaintiff company
3. Ex.PW1/3 (OSR) Lease deed dated 08.10.2012
4. Ex.PW1/4 (OSR) Addendum dated 09.10.2015
5. Ex.PW-1/5 Print out of email dated 26.10.2017 sent by plaintiff to the defendant
6. Ex.PW-1/6 Print out of email exchanged between the plaintiff and defendant from February 2018 till March 2018
7. Ex.PW-1/7 (colly) Legal notice dated 09.04.2018 alongwith copy of postal receipts and tracking report
8. Ex. PW-1/8 Certificate under section 65-B of Indian Evidence Act
9. Ex. PW-1/9 Print out of email dated 15.09.2017 sent by plaintiff to the defendant 4.1 Thereafter, no witness has been examined on behalf of the plaintiff and evidence on behalf of the plaintiff was closed vide order 12.09.2023.
DEFENDANT EVIDENCE
5. No evidence was led on behalf of the defendant as the right to file written statement was closed by court order.
(Neetu Nagar) JSCC-ASCJ-GJ/South East Delhi:23.04.2024 Page 6 of 25 CS SCJ 759/18 Exclusive Networks Sales India Pvt. Ltd. Vs M. L. Gupta (H.U.F.) ARGUMENTS
6. Learned counsel for the plaintiff argued that the defendant has taken a false defence in order to grab the security deposit of the plaintiff. The defendant has admitted receiving of Rs. 2,40,000/ as security deposit from the plaintiff. The plaintiff has also proved the said fact by bringing on record the statement of account. The defendant has made a false estimate of expenses in order to forfeit the security amount and the premises were never left by the plaintiff in poor condition. No evidence has been led by the defendant to prove those contentions. It was urged that no photographs as well as the quotations for repairing of the premises has been placed on record. It was averred that the defendant has not led any evidence to prove the damage if any to the premises or any expenditure incurred in repairing work in the premises. It was vehemently argued that there is no evidence of any payment, if any, made by the defendant for repairing. It was contended that the plaintiff vacated the premises on 05.02.2018 as per request of the defendant. It was next submitted by learned counsel for the plaintiff that the proviso appended to section 49 of the Registration Act makes it abundantly clear that the unregistered document can be received in evidence for proving any collateral transaction not required to be effected by way of a registered document. He highlighted clause no.16 of the lease deed which pertains to deposit of an interest free security deposit which clause further stipulates that upon the termination of the lease, the defendant shall refund the security deposit to the plaintiff after clearing dues/bills/repairs if any. Thus all such covenants which pertains to the deposit, refund etc. of the security deposit are not fundamental to or in any way concerned with constituting a valid and enforceable lease and the terms constituting such lease. As further argued that being so, it (Neetu Nagar) JSCC-ASCJ-GJ/South East Delhi:23.04.2024 Page 7 of 25 CS SCJ 759/18 Exclusive Networks Sales India Pvt. Ltd. Vs M. L. Gupta (H.U.F.) can be read in evidence since the same are only collateral in nature and are not required to be registered under the provisions of the Registration Act. Thus, it was argued that terms of clause 16 of the lease deed dated 08.10.2012 can be read in evidence. It was next argued that the defendant is liable to refund the security amount along with interest. Hence, it is prayed that the suit of the plaintiff may be decreed.
7. Learned Counsel for the defendant, on the other hand, argued that the security deposit made by the plaintiff was interest free security which was meant to protect the defendant's interest in case of any damage to the suit property. It was urged that the plaintiff was legally obligated to pay the rent not only for the month of February 2018 but also rent for two months in lieu of notice as per clause 12 of the lease deed. Further, it was argued that the plaintiff had vacated the suit premises leaving it in very bad condition. It was averred that the defendant asked the plaintiff to have the suit property returned to its original state at the time of taking the premises on rent in view of clause 13 of the lease deed however, the plaintiff failed to do so. It was next argued that the defendant never entered into any lease deed with the present plaintiff but with M/s. Transition Systems Pvt. Ltd. It was contended that the defendant requested the plaintiff several times to get the repair done or to check the suit premises regarding the damage but the plaintiff never bothered to do the same and instead filed the present suit in a malafide manner. Further, it was argued that it has been admitted on behalf of the plaintiff in the Email chats regarding the reasonable wear and tear expenses as well as rent for 5 days in the month of February,2018.Therefore, defendant is not liable to make any payment to the plaintiff as the cost of repairs exceeds the security amount. Further, it was argued that the plaintiff failed to (Neetu Nagar) JSCC-ASCJ-GJ/South East Delhi:23.04.2024 Page 8 of 25 CS SCJ 759/18 Exclusive Networks Sales India Pvt. Ltd. Vs M. L. Gupta (H.U.F.) prove the change in the name of plaintiff from M/s. Transition Systems Pvt. Ltd. to Exclusive Networks Sales India Pvt. Ltd. It was prayed for dismissal of the present suit.
ANALYSIS AND FINDING
8. I have heard the submission of learned Counsel for both the parties and carefully perused the material available on record.
9. Though no issues were framed in the present case as the right of the defendant to file written statement was closed by court order. Nevertheless, the initial onus to prove its case was on the plaintiff. The plaintiff has claimed that it had deposited security deposit of Rs. 2,40,000/ with the defendant. It is amply clear from a perusal of the record that the plaint discloses cause of action. In the present case, it is an admitted fact that the plaintiff had taken the suit property on rent from the defendant. The said fact has been admitted by the defendant in email chats Ex.PW1/5, Ex. PW1/6 and Ex.PW1/8 between son of behalf of the defendant namely Mr. Apoorva and Mr. Divakar, Head -Finance and Accounts of the plaintiff company. It has also transpired from the said email chats that the security deposit has not been refunded to the plaintiff by the defendant. Hence, the controversy in the present suit revolves around the issue whether the plaintiff is entitled to recovery of the security amount or the defendant can adjust the security deposit towards the expenses stated to be incurred/incurred by the defendant in the repair of the suit property.
10. It is settled position of law that any lease agreement of immovable property from year to year or for any term exceeding one year, or reserving yearly rent is compulsorily registrable as provided under Section 17 of the Registration Act, 1908. Further, section 107 (Neetu Nagar) JSCC-ASCJ-GJ/South East Delhi:23.04.2024 Page 9 of 25 CS SCJ 759/18 Exclusive Networks Sales India Pvt. Ltd. Vs M. L. Gupta (H.U.F.) of the Transfer of Property Act 1882 also provides that a lease agreement of an immovable property from year to year, or for any term exceeding one year or reserving a yearly rent can be made only by a registered instrument.
11. It is also expedient to reproduce Section 49 of the Registration Act, 1908 which provides as under :
"49. Effect of non registration of documents required to be registered. No document required by Section 17 or by any provision of the Transfer of Property Act 1882 (4 of 1882), to be registered shall--
(a) affect any immovable property comprised therein, or
(b) confer any power to adopt, or
(c) be received as evidence of any transaction affecting such property or conferring such power, unless it has been registered: Provided that an unregistered document affecting immovable property and required by this Act or the Transfer of Property Act 1882 (4 of 1882), to be registered may be received as evidence of a contract in a suit for specific performance under Chapter II of the Specific Relief Act, 1877 (3 of 1877) or as evidence of any collateral transaction not required to be effected by registered instrument."
12. Thus, any lease agreement of immovable property for a term exceeding one year, if unregistered, cannot be considered in evidence for the terms mentioned therein. It can be used only for collateral purpose. Reliance can be placed on case titled as M/s K.B. Saha and Sons Pvt. Ltd versus M/s Development Consultant Ltd.
(Neetu Nagar) JSCC-ASCJ-GJ/South East Delhi:23.04.2024 Page 10 of 25 CS SCJ 759/18 Exclusive Networks Sales India Pvt. Ltd. Vs M. L. Gupta (H.U.F.) (2008) 8 SCC 564 in which Hon'ble Supreme Court discussed the effect of non registration of a lease deed which was required by law to be registered. It has held as under :
"19. In the case of Bajaj Auto Limited vs. Behari Lal Kohli [AIR 1989 SC 1806] , this Court observed that if a document is inadmissible for nonregistration, all its terms are inadmissible including the one dealing with landlord's permission to his tenant to sublet. It was also held in that decision that if a decree purporting to create a lease is inadmissible in evidence for want of registration, none of the terms of the lease can be admitted in evidence and that to use a document for the purpose of proving an important clause in the lease is not using it as a collateral purpose. Again this court in Rai Chand Jain Vs. Chandra Kanta Khosla [AIR 1991 SC 747] reiterated the above and observed in paragraph 10 as under : "........the lease deed Ex. P1 dated 19th May, 1978 executed both by the appellant and the respondent i.e. the landlady and the tenant, Rai Chand Jain, though unregistered can be considered for collateral purposes and as such the findings of the Appellate Authority to the effect that the said deed cannot be used for collateral purposes namely to show that the purpose was to lease out the demised premises for residential purposes of the tenant only is not at all legally correct. It is well settled that unregistered lease executed by both the parties can be looked into for collateral purposes. In the instant case (Neetu Nagar) JSCC-ASCJ-GJ/South East Delhi:23.04.2024 Page 11 of 25 CS SCJ 759/18 Exclusive Networks Sales India Pvt. Ltd. Vs M. L. Gupta (H.U.F.) the purpose of the lease is evident from the deed itself which is as follows: "The lessor hereby demises House No. 382, Sector 30A, Chandigarh, to lessee for residential purposes only".
This clearly evinces that the property in question was let out to the tenant for his residence only...."
"20. In the case of Rana Vidya Bhushan Singh Vs. Ratiram [1969 (1) UJ 86 (SC)], the following has been laid down:
"A document required by law to be registered, if unregistered, is inadmissible as evidence of a transaction affecting immovable property, but it may be admitted as evidence of collateral facts, or for any collateral purpose, that is for any purpose other than that of creating, declaring, assigning, limiting or extinguishing a right to immovable property. As stated by Mulla in his Indian Registration Act, 7th En., at p. 189 :
"The High Courts of Calcutta, Bombay, Allahabad, Madras, Patna, Lahore, Assam, Nagpur, Pepsu, Rajasthan, Orissa, Rangoon and Jammu & Kashmir; the former Chief Court of Oudh; the Judicial Commissioner's Court of Peshawar, Ajmer and Himachal Pradesh and the Supreme Court have held that a document which requires registration under Section 17 and which is not admissible for want of registration to prove a gift or mortgage or (Neetu Nagar) JSCC-ASCJ-GJ/South East Delhi:23.04.2024 Page 12 of 25 CS SCJ 759/18 Exclusive Networks Sales India Pvt. Ltd. Vs M. L. Gupta (H.U.F.) sale or lease is nevertheless admissible to prove the character of the possession of the person who holds under it."
"21. From the principles laid down in the various decisions of this Court and the High Courts, as referred to hereinabove, it is evident that :
"1. A document required to be registered is not admissible into evidence under Section 49 of the Registration Act.
"2. Such unregistered document can however be used as an evidence of collateral purpose as provided in the Proviso to Section 49 of the Registration Act.
"3. A collateral transaction must be independent of, or divisible from, the transaction to effect which the law required registration.
"4. A collateral transaction must be a transaction not itself required to be effected by a registered document, that is, a transaction creating, etc. any right, title or interest in immoveable property of the value of one hundred rupees and upwards.
"5. If a document is inadmissible in evidence for want of registration, none of its terms can be admitted in evidence and that to use a document for the purpose of proving an important clause would not be using it as a collateral purpose." (emphasis supplied).
(Neetu Nagar) JSCC-ASCJ-GJ/South East Delhi:23.04.2024 Page 13 of 25 CS SCJ 759/18 Exclusive Networks Sales India Pvt. Ltd. Vs M. L. Gupta (H.U.F.)
13. Similarly, it was observed in Jiwan Industries (P) Ltd. Vs. Kamlesh Rani Budhiraja, 208 (2014) DLT 589 as follows:-
"9. It is settled law that unregistered lease deed can be looked only for collateral purpose and collateral purpose cannot be interpreted to include therein the terms and conditions by which parties are related to each other as landlord and tenant. Collateral purpose basically is to show nature of possession i.e. tenant has not illegally entered into possession but has legally entered into possession. All other terms and conditions between the landlord and tenant as stated in the unregistered lease deed whether it be for the period of lease, or the rate of rent, or area of tenancy or other terms and conditions, the same cannot be looked into in view of the specific bar of section 49 of Registration Act". (emphasis supplied)
14. In Bharat Lal Maurya Vs. Godrej & Boyce Mfg. Co. Ltd., 208 (2014) DLT 680 it was observed that:
"14. A document that is compulsorily required to be registered and is not registered is inadmissible in evidence and cannot be used as evidence except for any collateral purpose. A collateral transaction must be independent of and divisible from the transaction to effect which the law requires registration. A collateral transaction must be a transaction not itself required to be effected by a registered transaction. Some examples of collateral transaction is transactions pertaining to land lord and tenant would be the relationship between the parties, nature of premises, (Neetu Nagar) JSCC-ASCJ-GJ/South East Delhi:23.04.2024 Page 14 of 25 CS SCJ 759/18 Exclusive Networks Sales India Pvt. Ltd. Vs M. L. Gupta (H.U.F.) purpose of letting, rate of rent etc. An unregistered lease deed can be looked into for the purposes of ascertaining any of the above collateral purposes but not for enforcing a terms of the lease.
15. A clause in lease deed fixing or stipulating a term of the lease or a fixed term of lock in periods is not a collateral purpose which would be one of the main clauses of the lease which in absence of registration would be inadmissible in evidence and unenforceable in law." (emphasis supplied)
15. In order to substantiate its case, the plaintiff has relied upon lease deed 08.10.2012 Ex. PW1/3 and addendum dated 09.10.2015 Ex. PW1/4. Learned counsel on behalf of the plaintiff relied upon clause 16 of unregistered lease deed 08.10.2012 and Whereas, learned counsel on behalf of defendant relied upon clause 8, 12,13 and 16thereof which are being reproduced below:
"8. The Lessee agrees to keep the interior of the said property in good repairs, order and condition (reasonable wear and tear and damage because of fire, earthquake and tempest exempted due to natural calamities).
XXX
12. The Lessee hereby agrees that there shall be a lock-in-period of 24 (Twenty Four) months from the commencement of this Lease excluding two month notice period and that the Lessee shall neither determine / terminate this Lease deed nor vacate the Said Property during the said lock-in-period. It is (Neetu Nagar) JSCC-ASCJ-GJ/South East Delhi:23.04.2024 Page 15 of 25 CS SCJ 759/18 Exclusive Networks Sales India Pvt. Ltd. Vs M. L. Gupta (H.U.F.) further agreed between the parties hereto in case the Lessee is desirous of vacating the Said Property during the Lock-in-period, the Lessee shall pay to the Lessor rent for the period remaining till the expiry of the Lock-in-period plus two months rent equal to the notice period. However, if the Lessee desire to vacate the said property after the Lock-in-period he shall give to the Lessor two months notice or rent in lieu of.
13. The parties hereto agree that this lease shall be for a period of three years i.e. commencing from 09.10.2012 to 08.10.2015. After expiry of 3 (three) years i.e. 08.10.2015 the Lessee agrees to and undertakes to handover the vacant physical possession of the property to the Lessor to its original state and condition as taken over by the Lessee. XXX
16. That the Lessee has paid an interest fee security deposit equivalent to 3 (three) months rent amounting to Rs.2,40,000/- (Rupees Two Lacs Forty Thousand only) to the Lessor which shall be refunded by the Lessor at the time of termination of the Lease deed after clearing dues/ bills/ repairs if any."
16. In the present case, both the plaintiff as well as the defendant during arguments relied upon various clauses of the said unregistered rent agreement as detailed above. The above mentioned rent deed is clearly unregistered and thus cannot be considered in evidence for its terms. In other words, neither the plaintiff nor the defendant can rely upon the clauses of the said lease deed citing (Neetu Nagar) JSCC-ASCJ-GJ/South East Delhi:23.04.2024 Page 16 of 25 CS SCJ 759/18 Exclusive Networks Sales India Pvt. Ltd. Vs M. L. Gupta (H.U.F.) breach of one or other term thereof. Clearly, both the plaintiff and defendant are taking mutually destructive pleas and want to rely on the clause of the unregistered lease deed which is favorable to them. However, the said lease deed cannot be relied upon by either party to enforce the term favorable to it being an unregistered document. The Court cannot consider those terms in evidence as using the document for the purpose of proving important clauses would not be using it as a collateral purpose. Surprisingly, it has been mentioned in clause 26 of the lease deed that the lease deed shall be registered within 30 days of signing of the said agreement however neither lessor nor the lessee made any efforts for registration and are now trying to rely upon the terms thereof which cannot be allowed. Hence, the submission of the defendant that the plaintiff was liable to pay two months rent in lieu of notice and that the security deposit was interest free can not be looked into on the basis of unregistered agreement. Similarly, the plaintiff has tried to reply upon the security clause (16) for the same reason.
17. It is now to seen what exactly is the purpose of 'security deposit'. In case titled as H.S. Bedi V. National Highway Authority of India decided on 14 May 2015, the Hon'ble Supreme court observed with regard to security deposit as follows:
"...The security is paid to the landlord for the purpose of guarantee that no damage is done by the tenant nor any fixtures and fittings are removed and every landlord is entitled to use the security for repairing the damages done by the tenant. Though the security cannot be adjusted towards arrears of rent but in case the tenant hands over possession of the premises without any damage, the landlord has no right to retain the security. In such an event the landlord can be liable to pay the (Neetu Nagar) JSCC-ASCJ-GJ/South East Delhi:23.04.2024 Page 17 of 25 CS SCJ 759/18 Exclusive Networks Sales India Pvt. Ltd. Vs M. L. Gupta (H.U.F.) interest as any amount retained by the landlord unauthorizedly by way of security incurs liability of interest.
XXX Remedy of landlord in the event of non-restoration by the tenant - In the event of non-restoration of the tenanted premises to their original condition, the remedy of the landlord is to adjust the damages in the security deposit or sue the tenant for damages after taking over of the possession."
18. Hence, clause related to security deposit, lock-in-period clause and the other clauses relied upon by both the parties cannot be considered as collateral facts and thus, cannot be enforced on the basis of unregistered lease deed. Hence, the argument of both the counsel that the said document can be seen for the above collateral facts is meritless. Further, the tenancy between the parties is to be considered as month to month basis in view of the legal position in case titled as Deluxe Dentelles Pvt. Ltd. Vs. Ishpinder Kochar, 218 (2015) DLT 645, wherein it was held that tenancy of immovable property for any purpose other than agricultural or manufacturing created by an unregistered instrument would be deemed to be 'month to month tenancy even when the tenant has paid annual / yearly rent to the landlord. However, the party intending to prove the contents of the unregistered document, may do so by leading other evidence or may need not do so if the same are otherwise admitted by the other party. An admission can be contained in any document of the parties and in the instant case, the admissions are found in clear terms in the (Neetu Nagar) JSCC-ASCJ-GJ/South East Delhi:23.04.2024 Page 18 of 25 CS SCJ 759/18 Exclusive Networks Sales India Pvt. Ltd. Vs M. L. Gupta (H.U.F.) email chats Ex.PW1/5 to Ex. PW1/6 and Ex. PW1/9 duly coupled with Certificate under section 65-B of Evidence Act wherein against the demand of the plaintiff for security deposit, the defendant has sent estimates towards repairs exceeding the security amount.
19. It was argued on behalf of the defendant that the plaintiff is not entitled to recover any amount from the defendant as the lease deed was executed between the defendant and Transition System Private Limited and not with the present plaintiff. However, there is no merit in the argument of learned counsel on behalf of the defendant. Although the plaintiff has placed on record certificate of incorporation Mark A in order to show change of name wherein it has been categorically mentioned that the name of the plaintiff company has been changed from Transition System Private Limited to Exclusive Sales India Private Limited with effect from the date of the said certificate. However, no certificate under section 65B of Indian Evidence Act has been proved on behalf of the plaintiff. Hence, the said document cannot be taken into consideration. However, perusal of the Email chats which has taken place between the son of the defendant Mr. Apoorva and Mr. Diwakar Rao Head of Finance and Accounts of the plaintiff company, it is very much clear that regular communications has taken place with the present plaintiff only. The email chats are not only undisputed but relied upon by learned counsel of the defendant during course of arguments. Hence, it has become amply clear that it has never been denied in any of the chats on behalf of the defendant that the present plaintiff is not entitled to recover any amount from the defendant due to change of name and it seems that the said submission has been made only to wriggle out of the liability of the defendant.
(Neetu Nagar) JSCC-ASCJ-GJ/South East Delhi:23.04.2024 Page 19 of 25 CS SCJ 759/18 Exclusive Networks Sales India Pvt. Ltd. Vs M. L. Gupta (H.U.F.)
20. It was next argued on behalf of the defendant that the said change of name has occurred in the year 2012 whereas the plaintiff has placed on record ledger account from 10.09.2012 in the name of the present plaintiff when the same was not even in existence. There seems to be some merit in the argument of learned counsel on behalf the defendant but since the said document is not accompanied with any certificate under section 65B of Indian Evidence Act, the same cannot be read in evidence of the plaintiff. The Hon'ble Supreme Court of India in case titled Arjun Pandit Rao Khotkar Vs. Kailash Kushanrao Gorantyal (2020) 7 SCC 1, while approving the judgment of the Hon'ble Supreme Court of India in Anvar P.V. Vs. P.K. Basheer 2014 (10) SCC 470 has held that certificate under Section 65B (4) of the Evidence Act is a condition precedent for admissibility of electronic evidence. In the present case, the plaintiff has not filed any such certificate to make the said ledger account admissible in evidence. In the absence of the certificate under Section 65B Indian Evidence Act, the same is inadmissible. However, payment of security deposit is not denied by the defendant and same stands proved by email chats and the from the fact that the defendant failed to reply to the legal notice of the plaintiff.
21. It has been next argued that the suit has not been filed by competent person and that the board resolution has not been proved as per law. Perusal of the record would show that PW1 Sh.Jubair Ahmed during his examination had tendered in evidence the copy of board resolution dated 04.05.2018 which is Ex. PW1/1. No objection regarding the exhibition of said document has been taken by the defendant when the document was tendered in evidence. Even during cross -examination of the said witness, no suggestion was given that the board resolution was forged and fabricated document. Hence, I am (Neetu Nagar) JSCC-ASCJ-GJ/South East Delhi:23.04.2024 Page 20 of 25 CS SCJ 759/18 Exclusive Networks Sales India Pvt. Ltd. Vs M. L. Gupta (H.U.F.) of the considered opinion that the board resolution has been proved as per law. Thus, it is shown that the suit has been filed by a duly authorized person.
22. The learned counsel of defendant has vehemently contended that the plaintiff had left the premises in poor condition. It is the claim of the defendant that the cost of repair is required to be deducted from the security deposit as the damage was out of line with normal wear and tear. On the other hand, the plaintiff has denied all these allegations. Therefore, the burden was on the defendant to prove that the plaintiff had left the premises in poor condition and that the defendant had to spent/spent huge amount in repairing of the suit premises. Learned counsel of the defendant has highlighted the estimates sent by the defendant to the plaintiff to the tune of Rs. 252327.3/- for repair and replacement by way of Email.
23. At this stage, it is important to highlight the sections pertaining to burden of proof. Section 101 of the Indian Evidence Act provides that whoever desires any Court to give a judgment as to any legal right or liability dependent on the existence of the facts which he asserts, he must prove that those facts exists. The Section also provides that in such case the burden to prove such a fact lies on that person. Section 102 of the Indian Evidence Act provides that the burden of proof in a suit or proceedings lies on that person who would fail if no evidence at all were given on either side. Section 103 of the Indian Evidence Act provides that the burden of proof as to any particular fact lies on that person who wishes the Court to believe in its existence, unless it is provided by any law that the proof of that fact shall lie on any particular person. Section 104 of the Indian Evidence Act states that the burden of proof is on the person giving the evidence (Neetu Nagar) JSCC-ASCJ-GJ/South East Delhi:23.04.2024 Page 21 of 25 CS SCJ 759/18 Exclusive Networks Sales India Pvt. Ltd. Vs M. L. Gupta (H.U.F.) to prove the facts that must be shown in order for the evidence to be admissible. Hence, in the present case also, the defendant had to prove all the averments as stated in the email chat regarding the extreme damage to the suit property i.e. that the plaintiff had left the premises in damaged condition and that amount on repair / renovation of the suit premises was more than the security deposit. However, no evidence was led by the defendant in this regard. The defendant also failed to challenge the order dated 22.07.2019 vide which right to file written statement was closed by court order before higher forum. It is not even the case of the defendant that it had repaired the premises once the plaintiff failed to do so. No photograph of the demised premises which was left by the plaintiff in utmost damaged condition causing severe depreciation and damage to the external as well as internal outlook of the suit property which were allegedly sent by the defendant to the plaintiff in the Emails were placed. To my mind, there is no merit in the argument of learned counsel of the defendant that the plaintiff was called upon to visit the suit property to assess the damage and on failure, the plaintiff becomes duty bound to pay the cost of repair. It is not even the case of the defendant that any quotation from any contractor against charges for repairs of the premises including material expenses was ever sent to the plaintiff. No such suggestion has been put to PW1. No suggestion has been given to PW1 if the defendant spent any amount on repairing of the suit premises and therefore, the security deposit stood adjusted and nothing remained to be paid to the plaintiff.
24. Be that as it may, there is nothing on record to prove that the defendant had spent any amount on repairing of the suit property. Hence, I hold that the defendant has failed to prove, that he had spent any amount on repairing of the suit property. Merely sending the (Neetu Nagar) JSCC-ASCJ-GJ/South East Delhi:23.04.2024 Page 22 of 25 CS SCJ 759/18 Exclusive Networks Sales India Pvt. Ltd. Vs M. L. Gupta (H.U.F.) estimates is not enough. Once, the defendant has failed to prove that the premises were left by the plaintiff in damaged condition and that it had spent the amount of the security deposit on repairing of the suit property, the defendant is not entitled to adjust the security deposit made by the plaintiff.
25. In these circumstances, I hold on the preponderance of probabilities, that the plaintiff is entitled to recover from the defendant an amount of Rs.2,40,000/- being the security deposit given by it to the defendant. However, it is clear from the email dated 7 March 2018 that proposal was made on behalf of the plaintiff to deduct proportionate rent for five days in the month of February 2018 to the tune of Rs.16,215/- and towards repairs to the tune Rs. 50,000/-i.e. total deduction to the tune of Rs. 66,215/-. Further, proposal was made on 1st March 2018 wherein the amount towards repair has been shown to be Rs.25,000/- and the total deduction has been shown to be Rs.41215/-. It could not be understood why the amount has been reduced towards the repair from Rs. 50,000/- to Rs. 25,000/-. To my mind, the amount which has been proposed by the plaintiff cannot be taken as mere offer unless the plaintiff itself considered it be the cost of repair towards reasonable wear and tear. Be that as it may, it is the duty of a tenant to maintain the premises and to handover the possession of the premises, at the time of vacating the premises, to the landlord in the same condition in which it was at the time of taking the possession as per the provision under section 108 (m) of Transfer of Property Act. Since, the plaintiff itself assessed the cost towards repair, to my mind ,to do complete justice to both the parties, it would be expedient that the total deduction which has been proposed by the plaintiff to the tune of Rs. 66, 215/-be deducted as reasonable wear (Neetu Nagar) JSCC-ASCJ-GJ/South East Delhi:23.04.2024 Page 23 of 25 CS SCJ 759/18 Exclusive Networks Sales India Pvt. Ltd. Vs M. L. Gupta (H.U.F.) and tear from the security deposit. Hence, the plaintiff is entitled to recovery of amount of Rs.1,73,785/-.
26. Learned counsel on behalf of the defendant also submitted that rent for the month of February 2018 is outstanding against the plaintiff. However, during the course of arguments, learned counsel of the defendant admitted that the suit property was vacated on 05.02.2018 by the plaintiff. Section 111 of the Transfer of Property Act deals with the modes of determination of the lease and vide clause
(e) thereof provides that a lease can be determined by express surrender and vide clause (f) by an implied surrender. Clause (h) deals with the notice of intention to determine the lease. It is true that as per clause (q) of Section 108 of the Transfer of Property Act, the lessee is bound to put the lessor in possession of the property leased. In the present case, the defendant has accepted the possession of the suit property. Vacation of a leased property by the lessee together with a notice to the lessor to take delivery of the possession would sufficiently discharge the lessee of any further obligation to pay the rent. It shall be deemed for all purposes that as soon as the property was vacated and possession offered, constructive possession would be with the lessor. Hence, to my mind the defendant is not entitled to the rent for the entire month of February 2018 when the suit premises was vacated on 05.02.2018 but only for five days which has been included in the proposal made by the plaintiff to the defendant in the email as discussed above.
27. Next, it is to be decided whether the plaintiff is entitled to claim interest on the amount found due against the defendant, and if so, at what rate? The plaintiff has claimed interest @18% p.a. There is nothing on record to show that it is an agreed rate of interest. Be that (Neetu Nagar) JSCC-ASCJ-GJ/South East Delhi:23.04.2024 Page 24 of 25 CS SCJ 759/18 Exclusive Networks Sales India Pvt. Ltd. Vs M. L. Gupta (H.U.F.) as it may, it is discretion of the Court to award interest pendente lite and future interest dehors the contract between the parties. Reference in this regard can be placed upon judgment passed by Hon'ble Supreme Court of India in case titled Central Bank of India Vs. Ravindra & Ors. SLP (C) 2421/1993 decided on 18.10.2001.
28. In the present case, the interest claimed by the plaintiff is very high. In the facts and circumstances of the case and taking judicial notice about the rate of interest charged by nationalized banks, I hold that the plaintiff is entitled to interest @9% p.a. from the date of filing of the suit till preparation of decree. As the transaction in question is commercial in nature, the plaintiff is also entitled to interest at the same rate from the date of decree till realization of the amount.
RELIEF
29. In the light of discussion hereinabove, the suit of the plaintiff is decreed. The plaintiff is entitled to a decree of recovery of Rs. 1,73,785/-.The plaintiff is also entitled to interest @ 9% p.a. from the date of filing of the suit i.e. 07.06.2018 till realization of the amount. The plaintiff is also entitled to cost of the suit.
30. Decree sheet be drawn accordingly.
31. File be consigned to record room after due compliance.
Announced in the open court today i.e. 23.04.2024 (This judgment contains 25 pages signed by the undersigned) (Neetu Nagar) JSCC-ASCJ-GJ/South East Saket Courts: New Delhi (Neetu Nagar) JSCC-ASCJ-GJ/South East Delhi:23.04.2024 Page 25 of 25