Delhi District Court
Varun Maurya vs Sumit Chauhan on 7 October, 2024
IN THE COURT OF Ms. NIRJA BHATIA
DISTRICT JUDGE (COMM.) (DIGITAL-07),
SOUTH-EAST DISTRICT, SAKET COURT, NEW DELHI
CS (Comm) 427/2022
Varun Maurya
S/o Sh. Tara Chand Maurya,
R/o 7001/1, Block No. 14B,
Dev Nagar, Karol Bagh, New Delhi.
..... Plaintiff
Vs.
Sumit Chauhan
S/o Sh. Harish Chauhan
R/o A-58, Amrit Nagar, South Ex. Part-I,
Kotla Mubarakpur, New Delhi.
..... Defendant
Date of Institution: 28.04.2022
Arguments concluded on: 25.09.2024
Date of Judgment: 07.10.2024
JUDGMENT
Brief facts of the case This claim for recovery of Rs. 1,42,34,756/- (Rs. One Crore, Forty-Two lacs, Thirty-Four Thousand, Seven Hundred and Fifty-Six only) is under discussion in this judgment.
2. The suit is instituted by Sh. Varun Maurya S/o Sh. Tara Chand Maurya, R/o 7001/1 Block No. 14 B, Dev Nagar, Karol Bagh, New Delhi- 110005 (hereinafter referred as plaintiff) against Sh. Sumit Chauhan S/o Sh. Harish Chauhan, R/o A-58, NIRJA Amrit Nagar, South Ex. Part - I, Kotla Mubarakpur, New Delhi - BHATIA Digitally signed 110049 (hereinafter referred as defendant). by NIRJA BHATIA Date: 2024.10.07 18:24:56 +0530 Varun Maurya Vs. Sumit Chauhan Page No. 1 of 31
3. The facts enumerated in plaint are:-
(i) Plaintiff is the sole and absolute owner of commercial property bearing shop no. 19, 20, 30, 31, having carpet area measuring 854.86 sq ft and 1350 sq ft of super area on the ground floor, Grandley Cinema Building Complex (now known as Indian Mall), New Friends Colony, New Delhi - 110065 , which property he purchased vide agreement to sell dated 29.10.2021 and is duly registered in the office of sub-registrar V, New Delhi vide registration no. 19544 in book no. Volume No. 10655 from pages 105 to 114.
(ii) The defendant approached the plaintiff and represented himself as holder of L-10 License No. L/10/2010/000010 issued to run and operate retail liquor shop in NCT of Delhi. He was desirous of establishing and operating a retail liquor shop. The plaintiff on aforesaid representation became willing to provide the premises i.e. shop no. 19, 20, 30, 31 to defendant on rent.
(iii) Both the parties entered in an agreement/ lease deed dated 29.10.2010 duly registered in the office of Sub-Registrar V, New Delhi vide registration No. 19544 in Book No.1, Vol. No. 10655 on page 105 to 114, whereby defendant agreed that as he possess the business viability "of leasing he would not seek any claim damages, compensation or any other consideration whatsoever on that account."
(iv) That defendant made independent assessment of "present and future market potential" and agreed that he shall not be using "any change in market circumstance" as the plea for seeking excuse of lease rent or other amounts.
NIRJA (v) Parties agreed that defendant shall not be entitled to claim any BHATIA discount, waiver, suspension, exemption of rent etc for the Digitally signed by NIRJA BHATIA Date: 2024.10.07 18:25:04 +0530 Varun Maurya Vs. Sumit Chauhan Page No. 2 of 31 period he fails to perform his part of the term & conditions of the lease agreement, on account of conditions beyond his control but not limited to war, strikes, unforeseen natural calamity, non- political event fires, floods, Act of God, Government restrictions, Power failure etc.
(vi) Plaintiff states that in pursuance of the agreement parties entered in a registered lease deed dated 05.10.2020 and the premises was leased to defendant for a period of 9 years commencing from 05.10.2020 within irrevocable 'lock in' period of 3 years and monthly rent of Rs. 3 lacs for first three years were to be enhanced by 15% after the end of every three years thereof. On the said monthly rent, it was agreed that GST will be borne by the defendant and defendant shall deduct the TDS from the monthly rent.
(vii) Defendant before entering the lease deed had paid an amount of Rs. 10 lac (Ten lacs) as interest free security deposit vide bank transfers on 07.09.2020 (Rs. 2,50,000/-) and on 03.10.2020 (Rs. 7,50,000/-) by RTGS / NEFT.
(viii) Parties had agreed through the lease deed that if during the 'lock in' period the defendant commits two consecutive defaults of payment of rent or if himself vacates the said premises during the 'lock in' period, the event shall constitute a default/ breach of terms of the lease deed and the lease deed shall stand canceled upon which defendant shall immediately vacate the said premises. In the said event, the interest free security deposit shall stand forfeited and the defendant shall pay the monthly rent for NIRJA the entire period of outstanding 'lock in' period of 36 months. BHATIA
(ix) Plaintiff claims that parties agreed through lease deed that if Digitally signed by NIRJA BHATIA Date: 2024.10.07 despite termination of the lease deed, the defendant fails to hand 18:25:16 +0530 Varun Maurya Vs. Sumit Chauhan Page No. 3 of 31 over the peaceful possession of the property, the occupation of the property by the defendant shall be an illegal occupation and defendant shall be liable for payment of charges of Rs. 20,000/- per day till the peaceful possession is handed over to the plaintiff.
(x) It was further agreed that rights of parties under the lease deed shall not be prejudiced or restricted by any indulgence or forbearance, extended to the other party, and failure of parties to impose at any time or for any period of time, the provisions thereof, shall not be construed waiver of any provision or right, thereafter to enforce the provisions.
(xi) Plaintiff stated that it was agreed that lease deed alone would constitute the entire agreement between the parties and it shall supersedes any or all other agreements, understandings, representations or arrangements whether oral or written touching upon the subject matter of lease deed.
(xii) It is averred that defendant has undertaken to abide by all terms and conditions of the lease deed.
(xiii) Plaintiff states that after taking possession of the premises, the defendant paid rent only for the period of 10.11.2020 to 31.03.2021. The plaintiff had waived off rent for the period 05.10.2020 to 09.11.2020. The defendant stopped paying the rent thereafter. The defendant had made the rental payments through bank transfers (IMPS)/ NEFT against the rent invoices raised by the plaintiff on first of each month.
(xiv) The plaintiff claimed that defendant stopped paying rent w.e.f the month of April 2021 onward, despite plaintiff's raising NIRJA the rent invoices for the subsequent periods and having BHATIA forwarded them through email. It is asserted that defendant was Digitally signed by NIRJA BHATIA Date: 2024.10.07 18:25:26 +0530 Varun Maurya Vs. Sumit Chauhan Page No. 4 of 31 reminded to clear dues however, without success. Plaintiff states that in each of the invoice, defendant had duly mentioned the arrears of rent also.
(xv) Plaintiff states that as defendant then stopped picking his phone calls, he then sent an email to defendant on 12.07.2021 enclosing a reminder for timely payment of rent and also requested him to deposit the TDS and pay GST. (xvi) Plaintiff states that the defendant assured through his father for clearing the dues by 10.08.2021, however, the said assurance was also not honoured. The plaintiff then reminded the defendant again vide email dated 26.07.2021 referring to the promise made by him through his father about clearing the dues by 10.08.2021. Plaintiff states that instead of clearing the dues the defendant started dodging the payment of rent and continued to default for 8 months from 01.04.2021 to 30.11.2021.
(xvii) Plaintiff states that defendant then informed him of his intention of vacating the premises after removing his goods from the premises as on 30.11.2024 defendant all of sudden at about 09:18 PM, sent an email declaring the above. (xviii) Plaintiff states that in the email, defendant claimed that the lease was subject to L-10 license which was withdrawn by the NCT of Delhi, rendering him incapable to perform his obligations under the lease deed.
(xix) Plaintiff states that this claim of defendant is contrary to the terms and conditions agreed by parties in the lease deed as there was no clause in the agreement as per which any such plea could be raised. Plaintiff states that the defendant was barred from Digitally raising pleas contrary to lease and/ or taking refuge under the signed by NIRJA NIRJA BHATIA BHATIA Date:
plea of change in the market condition/ or force majeure events 2024.10.07 18:25:33 +0530 Varun Maurya Vs. Sumit Chauhan Page No. 5 of 31 which was contrary to even to his own averments made in the lease deed.
(xx) Plaintiff states that lease deed had clearly visualized in advance the possibility of occurrence of force majeure events and defendant had specifically committed to honour all the terms and conditions of the lease deed even in the face of force majeure events. Plaintiff alleges that the plea of the defendant qua force majeure is nothing but a tactic, just to evade the liability to pay the amounts due.
(xxi) It is averred that on receipt of the email, the plaintiff immediately contacted the defendant through his father and plaintiff's father spoke to defendant's father and informed that it, being late hour of the night, he was not in position to visit the premises and take over the possession and that the same would be done on the next date. He was also informed that lease was not subjected to any L-10 license and all payments as per the agreement are required to be cleared. (xxii) It is averred that defendant vacated the premises on 01.12.2021, and agreed to meet shortly to discuss the mode and timelines for clearing the dues as per the lease deed. Plaintiff states that thereafter various attempts were made to speak to defendant for clearing the dues but without any success as the defendant and his father stopped responding to plaintiff's phone calls.
(xxiii) Plaintiff claims that defendant committed default for payment of rent w.e.f. 11.05.2021 which amounted to breach of terms and hence the lease stood cancelled on 11.05.2021 itself as NIRJA BHATIA per clause 5 A r/w Clause 4 (7) of the deed.
Digitally signed by NIRJA BHATIA Date: 2024.10.07 18:25:39 +0530 Varun Maurya Vs. Sumit Chauhan Page No. 6 of 31(xxiv) It is averred that the lease deed provides for forfeiture of entire interest free security deposit in the event of premature termination of the lease deed during the lock in period and simultaneously mandates the defendant to pay the entire rent amount for balance period of lock in period. It is averred that for the illegal occupation of the premises beyond the date of cancellation, the defendant is liable to pay the charge of Rs. 20,000/- per day until the possession is handed over to the plaintiff and accordingly the plaintiff has forfeited the security deposit of Rs. 10 lakhs paid by the defendant and is entitled to rent for the outstanding lock-in period. Interest @ 18% is also asked on delayed payment and charges @ Rs. 20,000/- per day from 11.05.2021 to 01.12.2021.
(xxv) The plaintiff then has prepared a calculation and has asked for an amount of Rs. 40,80,000/- against the illegal occupation charges as per clause 5 (D) of lease deed from 11.05.2021 to 01.12.2021 for a period of 204 days. Plaintiff has also asked for an amount of Rs. 1,62,000/- towards interest on delayed payment and Rs. 94,72,000/- rent from April 2021 @ Rs. 3 lakhs and GST @ Rs. 54,000/- total Rs. 3,54,000/- from April 2021 to November 2021, the period for which the premises was under
occupation of defendant and consequent thereto from December 2021 to 01.10.2023 in terms of the demand for lock-in period and thus has raised a total claim of Rs. 1,37,14,000/- whereupon interest @ 15% is prayed total claim for Rs. 1,42,34,756/- is filed.
NIRJA BHATIA Digitally signed by NIRJA BHATIA Date: 2024.10.07 18:25:46 +0530 Varun Maurya Vs. Sumit Chauhan Page No. 7 of 31 Note of Proceedings
4. The suit is filed on 28.04.2022. It was initially instituted under Order 37 CPC, however, vide order of my Ld. Predecessor dated 30.11.2022, suit was converted to an ordinary suit. The plaintiff's challenge to the above order, however, met with rejection vide the order of Hon'ble High Court dated 06.07.2023.
Consequent thereto, summons for settlement of issues were sent and defendant was observed to be served vide email and through his mother. However, as the defendant did not cause appearance despite being served through his mother on 11.12.2023, the opportunity to file written statement was closed vide order on 19.01.2024. Matter was then listed for PE. Plaintiff filed his examination affidavit on 27.01.2024 on which date, Counsel Ld. Sh. Punit Parihar appearing for defendant claimed that he has moved an application through e-filing for seeking an extension of time. However, it was observed that no such application had reached the Court. The application under Section 151 CPC alongwith vakalatnama was then filed by defendant on 09.02.2024, which was replied on 01.03.2024 by the plaintiff. Matter was then fixed for hearing and it was observed again that the application of the defendant is not e-filed, whereafter, the defendant's counsel withdrew the application which was allowed subject to cost of Rs. 2,000/-. The cost was then paid on 05.04.2024.
5. PW-1 was examined and cross-examined. PE then was closed. Matter came up for final arguments. During arguments, clarifications were asked from the plaintiff as it was observed NIRJA that the plaintiff had asked for recovery of rent w.e.f April 2021 BHATIA Digitally signed till November 2021 and had also asked for release of Rs. 20,000/-
by NIRJA BHATIA Date: 2024.10.07 18:25:53 +0530 Varun Maurya Vs. Sumit Chauhan Page No. 8 of 31towards penalty/ damages w.e.f June 2021 till November 2021. Whereafter, the plaintiff made a request for grant of more time for clarification and thereafter, an application under Order 23 Rule 1 CPC, abandoning the above part of the claim was filed. The application was disposed of vide order dated 16.07.2024 by which plaintiff abandoned his relief of damages/ means profit amounting to Rs. 40,80,000/- claimed towards the charges @ Rs. 20,000/- per day for illegal occupation w.e.f 11.05.2021 to 01.12.2021 alongwith amount of Rs. 1,54,928/- being claimed as interest @ 18% to the amount w.e.f 01.12.2022 to 15.02.2022 (77 days). Hence, an amount of Rs. 42,34,928/- rounded to nearest figure of Rs. 42,34,930/- was abandoned from the total claim.
6. During the submissions, Ld. Counsel for plaintiff filed his written submissions after e-filing them. Ld. Counsel for the defendant made his oral submissions and no rebuttal submissions to the written submissions is received.
7. Ld. Counsel for the plaintiff has also filed case law as below:
(1) Fateh Chand Vs. Balkishan Das, 1963 SCC OnLine SC 49; (2) Maula Bux Vs. Union of India, (1969) 2 SCC 554; (3) ONGC Ltd. Vs. Saw Pipes Ltd., (2003) 5 SCC 705; (4) Kailash Nath Associates Vs. Delhi Development Authority and anr., (2015) 4 SCC 136.
8. I have heard the submissions and have carefully perused the written submissions and documents filed on record.
9. Before adverting further, it is requisite to take note of the examination and cross-examination of PW-1. Digitally signed by NIRJA NIRJA BHATIA BHATIA Date:
2024.10.07 18:25:59 +0530 Varun Maurya Vs. Sumit Chauhan Page No. 9 of 31 Gist of plaintiff's evidence
10. PW-1 Sh. Varun Maurya, plaintiff himself, tendered his evidence by way of an affidavit and exhibited the documents as below:
(1) Copy of the agreement dated 29.10.2010 as Ex. PW-1/1. (2) Copy of lease deed dated 05.10.2020 as Ex. PW-1/2. (3) Copy of bank statement of plaintiff's account bearing No. 913010011475806 as Ex. PW-1/3.
(4) Copy of five emails dated 11.11.2020, 01.12.2020, 01.01.2021, 01.02.2021, 01.03.2021 as Ex. PW-1/4 (colly). (5) Copy of seven emails dated 02.04.2021, 01.05.2021, 01.06.2021, 01.07.2021, 03.08.2021, 01.09.2021, 01.10.2021 as Ex. PW-1/5 (colly).
(6) Copy of email dated 12.07.2021 as Ex. PW-1/6. (7) Copy of email dated 26.07.2021 as Ex. PW-1/7. (8) Copy of email dated 30.11.2021 as Ex. PW-1/8. (9) Copy of the letter of handing over and taking over the peaceful possession the said premises as Ex. PW-1/9. (10) Copy of the said legal notice sent through speed post as Ex. PW-1/10.
(11) Tracking report as mark A. (12) Copy of the email dated 06.01.2022 as Ex. PW-1/12. (13) Copy of the pre-institution mediation application dated 12.02.2022 as Mark B. (14) Non-Starter Report as Ex. PW-1/14.
(15) Email dated 31.01.2023 alongwith scanned copy of LOI as Ex. PW-1/15.
Digitally (16) Copy of email dated 28.04.2022 as Ex. PW-1/16. signed by NIRJA NIRJA BHATIA BHATIA Date:
2024.10.07 18:26:05 +0530 Varun Maurya Vs. Sumit Chauhan Page No. 10 of 31 (17) Copy of the registered lease deed dated 21.12.2022 as Ex.
PW-1/17.
Gist of cross-examination
11. During cross-examination, plaintif denied that the lease deed was contingent to excise licence for getting retail liquor vend issued by NCT of Delhi in favour of defendant, though he admitted that defendant had informed him that the lease of the premises was needed for running the liquor shop as defendant had received the licence. He admitted that the liquor licence was recalled by the excise department. He denied that after liquor licence was recalled, defendant approached the plaintiff for using the premises for some other job and purpose which he refused. Though he admitted that lease deed does not allow the premises to be used for any other purpose except for the purpose it was leased out. He denied that he had asked the defendant to hand over the possession at the stage when he approached the plaintiff for using the premises for any other purpose. He denied that he requested the defendant to send him an email for handing over the possession to him. He admitted that on 30.11.2021, defendant sent an email to him requesting for handing over the possession. He admitted that he did not reply to the email and volunteered that since the email was received late in night, they both conversed through phone and he informed the plaintiff that since it was late in night, possession may be handed over the next day. He denied that defendant had asked him for review of term of lock-in period as his business was not being run properly. He claimed to have asked for rent for lock-in period at the time of NIRJA BHATIAreceiving the possession. It was denied that that the settlement Digitally signed by NIRJA BHATIA Varun Maurya Vs. Sumit Chauhan Page No. 11 of 31 Date: 2024.10.07 18:26:11 +0530 was arrived at between the parties for waiver of arrears of rent due to which no rent was asked.
Reasons for decision below:
12. As the submissions have been heard and I have perused the record, it is now requisited to take note of the entitlement of the plaintiff qua his claim based on pleas raised and evidence tendered, with support of law applicable.
13. At the outset it be observed that plaintiff initially in the suit filed claimed for the reliefs as narrated below:
(a) The arrears of rent up to 30.11.2021 @ Rs. 24 lacs;
(b) Arrears of GST @ Rs. 4,32,000/-;
(c) Rent for balance lock-in period @ Rs. 66,40,000/-;
(d) Interest @ 18% on delayed rent @ Rs. 1,62,000/-;
(e) Charges @ Rs. 20,000/- per day for illegal occupation @ Rs. 40,80,000/-
(f) Total of (a) to (e) @ Rs. 1,37,14,000/-;
(g) interest @ 18% p.a. on Rs. 1,37,14,000/- from 01.12.2022 up to 15.02.2022 @ Rs. 5,20,756/-; and
(h) Total of Rs. 1,42,34,756/-.
14. It is worthwhile to take note that the plaintiff relinquished his right to claim Rs. 42,34,930/- and hence, the Court is to restrict its finding to rest of the claims raised and thus, the suit needs to be probed qua rest of the claims taken note above.
(I) Unpaid Rent since April till November 2021
15. Plaintiff has asked for payment/ recovery of the rent of Rs. 24 lacs unpaid, since 01.04.2021 till 30.11.2021. During above NIRJA BHATIA period the property was occupied by the defendant. The right of Digitally signed by NIRJA BHATIA Date: 2024.10.07 18:26:18 +0530 Varun Maurya Vs. Sumit Chauhan Page No. 12 of 31 defendant to file the written statement was closed. However, even during the cross-examination, there is no plea disputing the fact that defendant did not retain the possession of premises in question up till 30.11.2021. If the intent of the cross-examination is observed, rather the Ld. Counsel for the defendant had put the questions of such nature as "It is incorrect that I had requested the defendant to send me an email for handing over the possession to me. It is correct that on 30.11.2021, defendant had sent an email to me requesting for handing over the possession "
wherefrom it is evident that the possession was returned to the plaintiff on 01.12.2021 and till then it was under the control of the defendant. In circumstances as above, since the contract between the parties i.e. lease agreement stipulating a lease rent @ Rs. 3 lacs per month for occupation of the premises is an undisputed fact, the plaintiff has proved his entitlement to claim the same and accordingly an amount of Rs. 3 lacs w.e.f 01.04.2021 till 30.11.2021 towards unrealised, unpaid amount lease rent for occupying the property of plaintiff in preponderance of probabilities is to be awarded.
II. Payment of GST against Unpaid Rent
16. The plaintiff has also claimed arrears of GST @ Rs. 4,32,000/-, stating that defendant agreed to deposit applicable GST to be paid over and above the rent. The plea that is raised is that the GST was part of rent, which plaintiff claims is payable and recoverable in same territory as arrears of rent. Before adverting to the merit of this plea, it is useful to put the clause covering the GST in agreement to reference and hence clause 8 is NIRJA BHATIA Digitally signed by NIRJA BHATIA Date: 2024.10.07 18:26:24 +0530 Varun Maurya Vs. Sumit Chauhan Page No. 13 of 31 required to be reproduced in order to extract the clear intent of obligations arrived by the parties:
"VIII. LESSEE STATUTORY TAX
OBLIGATION
a. Goods and Service Tax on the Lease Rent, as applicable, shall be borne by Lessee in addition to lease rent payable as defined in Clause VII. In order to claim the same, the Lessor must be registered with GST Authority and needs to submit the rent cum tax invoice, every month before the payment due date. In case GST is not deposited by Lessor or Return of GST is not filed by Lessor whether or not it results in loss of set off available to Lessee, the amount of GST paid by Lessee to Lessor shall be refunded by Lessor to Lessee without any dispute.
b. It is further agreed that the Lessee shall be entitled to deduct from the monthly Rent as and by way of Tax Deducted at Source (TDS) such amounts as are prescribed in the Income Tax Act 1961 as amended up to date and deposit the said deducted amounts in the Government Treasury within the time frame prescribed there-for in the Income Tax Act and duly provide from time to time to the Lessor the necessary TDS Certificates for his Income Tax purpose."
17. The stipulation kept in above clause are observed mentioning "in addition to lease rent payable as defined in clause 7", which is admittedly kept at the rate of Rs. 3 lacs per month. Had no more been stated, the normal analysis of the clause would have left it safe to arrive at a conclusion that GST applicable upon rent is portion of agreed rent, putting a burden of deposit also upon lessee. However, while clubbing the GST with other statutory liability of deducting tax, it is shown that lessor admitted that GST and tax which was deductable at source were NIRJA BHATIA not part of rent but were statutory levies and entitlements of the Digitally signed by NIRJA BHATIA Date: 2024.10.07 18:26:31 +0530 Varun Maurya Vs. Sumit Chauhan Page No. 14 of 31 concerned department to which the deposits were to be made. Thus, the agreement only shifted this burden of deposit on defendant. Once the said is drawn, it becomes requisite for plaintiff to prove his entitlement to force the defendant to pay the amounts due towards GST to him, as recovery of rent, otherwise the plaintiff in such case could have proved his entitlement to recover these statutory levies only upon showing that in the event of non-deposit by defendant, he after raising the invoices Ex. PW-1/4 has made payment of GST to the department concerned directly which would have given him a right to recover it, from defendant.
18. The plaintiff who reflects that he held a GST account, did not make any effort to either file his GST return or audited accounts record to reflect upon the same. As the plaintiff did not bring any record of payment of GST, his entitlement to recover it on behalf of GST department must have been specifically stated. While the defendant may have defaulted in payment of statutory dues of GST, as per agreed terms, the entitlement of its recovery is with GST department and not with plaintiff as is shown from the rest of the reading which states "In case GST is not deposited by Lessor or return of GST is not filed by the Lessor, the amount of GST paid by Lessee shall be refunded by Lessor without any dispute". Hence, strengthening the finding that unless plaintiff has satisfied the said liability on behalf of defendant for which neither any plea is raised nor any proof is attached, the defendant is not to be burdened with the said liability through this suit as a mode of plaintiff's entitlement.
19. While taking note of intent reflected through above clause, NIRJA BHATIAit is also pertinent to take note of the merits of document filed.
Digitally signedby NIRJA BHATIA Varun Maurya Vs. Sumit Chauhan Page No. 15 of 31 Date: 2024.10.07 18:26:37 +0530 The plaintiff appended Ex. PW-1/5 (colly) as emails suggesting that it raised the invoices and forwarded the same to defendant. While the invoices are claimed as part of emails and marked exhibit, the emails themselves are not proved duly. The plaintiff neither filed any certificate under Section 65-B of Indian Evidence Act nor proved his affidavit of Order 11 Rule 6(3) CPC applicable to the Commercial Courts Act. The requisites of establishing the control, possession of the digital documents as beyond manipulation and having been printed beyond any intervention and engagement likely to create doubt to their safe keeping and printing were neither stated nor proved. In which case, the attempt to mark the emails has not yielded any desired result.
20. Moreover, the veracity of invoices could have been established through the accounts/ returns of the plaintiff. At the cost of repetition, it needs to be observed that plaintiff did not make any effort in the said direction to prove the veracity of the contents of the invoices, by showing any further no proof of deposit to GST is matched on the record to lend credence and corroboration to the piece of statements. In which case, reliance on above to seek corroboration of entitlement fell way short of the requisite. While this Court is conscious of the proceedings being majorly uncontested for defendant's failure to file written statement, however, for this above reason alone, the plaintiff cannot be absolved of the burden of proof as per Sections 101 and 102 of Indian Evidence Act, which puts the plaintiff under duty as plaintiff would fail if the burden of his entitlement is undischarged as is held in Anil Rishi Vs. Gurbaksh Singh, (2006) NIRJA BHATIA 5 SCC 558.
Digitally signed by NIRJA BHATIADate: 2024.10.07 Varun Maurya Vs. Sumit Chauhan Page No. 16 of 31 18:26:43 +0530 III. Unpaid rent @ Rs. 66 lacs against lock-in period
21. The plaintiff has then claimed Rs. 66 lacs towards the unpaid rent of lock-in period. Assertions have been made in the plaint based on terms of the lease deed, recapitulated below, for claiming the unpaid rent for the lock-in period of 05.10.2020 till 04.09.2023:
"III. Term of the Lease Deed a. The term of the Lease Deed granted here-under shall be for a fixed period of 09 (Nine) years (hereinafter called the "Term");
b. The "Term" of this Lease shall commence on 05th October 2020 ("Lease Commencement Date") and shall end on the expiration of the Lease term of Nine Years on 04th September 2029 ("Lease Expiry Date"), unless sooner terminated as per any provisions of clause-IV, clause-V and clause-VI of this lease deed;
c. It is mutually agreed that this Lease is irrevocable for the lock in period of first thirty-six months commencing from 05th October 2020 and ending on 04th September 2023;
d. After the expiry of the leased term, as stated herein-above clause-III(a) and clause-III(b), this Lease deed stand expired.
e. Both the parties may enter in further lease for such further terms and conditions as the Parties may mutually agree upon by way of new and fresh lease agreement."
22. Ld. Counsel for the plaintiff in order to resist the submission of defendant wherein it has been averred that lease was subject to the continuation of L-10 licence for running the liquor vend has claimed that there had been no restriction on the defendant towards the usage of the demised premises for any NIRJA other purpose as well. Though the plaintiff has affirmed that, at BHATIA Digitally signed by NIRJA BHATIA Date: 2024.10.07 Varun Maurya Vs. Sumit Chauhan Page No. 17 of 31 18:26:48 +0530 the stage when the plaintiff was approached for taking the premises on lease, the plaintiff was told that the premises shall be used to run and operate a retail liquor shop, consequent to the defendant holding L-10 licence issued by NCT of Delhi. The said fact is finding mention specifically in clause D of the lease agreement and is excerpted below:
"D. That the Lessee hereby represents to the Lessor that Lessee is an approved/ registered Licence holder who is holding the L-10 licence no. L10/2010/000010 issued by the Competent Authority to run and operate the retail liquor shop in National Capital of Delhi."
23. The plaintiff has affirmed the clauses and pertinent of them is clause E of the lease agreement which is reproduced herein below for reference:
"E. That the Lessee is desirous of establishing, operating and running a retail liquor shop and Lessor is willing to provide the Lessee with the Demised Premises, as per the plan indicated in Exhibit-C attached hereto on lease basis, as per the terms and conditions mentioned hereinafter."
24. While the plaintiff claims that there had been no restriction on defendant to run any other business from the demised premises, the said clause is not specified anywhere in the lease agreement. The argument raised above is further contradicted in PE when plaintiff affirmed "Lease deed does not allow it to be used for any other purpose for which it was leased".
25. However, plaintiff has merit in claiming that the revocation of the L-10 licence cannot be treated as a force majeure, entitling NIRJA the defendant to rescend the contractual obligations. More so, BHATIA when the plea of such nature has not come on record as no Digitally signed by NIRJA BHATIA Date: 2024.10.07 18:26:54 +0530 Varun Maurya Vs. Sumit Chauhan Page No. 18 of 31 written statement was filed nor the opportunity of cross- examination of plaintiff is effectively utilized, in which wake, the contention of the plaintiff that the defendant cannot seek to avoid its liability under a force majeure clause gains pertinence and in which context, it is redundant to discuss as to whether defendant could have carried any other business from the demised premises as no such plea at any stage has been raised for defendant to resist or answer except by way of a feeble suggestion in cross- examination which also is denied by plaintiff.
26. However, from the above, various other questions emerge, the answers to which are to be probed from the lease deed dated 29.10.2010 and some relevant clauses of which are excerpted as below for reference, to seek assistance in assessment of claim raised by plaintiff towards the amounts against the liability of rent of lock-in period:
"Clause 3.
c. It is mutually agreed that this Lease is irrevocable for the lock in period of first thirty-six months commencing from 05th October 2020 and ending on 04th September 2023."
27. Ld. Counsel for the plaintiff himself has relied upon the law laid down in Fateh Chand Vs. Balkishan Das, 1963 SCC OnLine SC 49, during his written submissions. He very aptly recorded his reliance on Kailash Nath Vs. DDA (supra), which both case laws are exploratory and explanatory to the domain of provisions of Sections 73 & 74 of Contracts Act. Before adverting any further, reference to the dicta is made herein below:
NIRJA "7. The Attorney-General appearing on behalf of BHATIA the defendant has not challenged the plaintiff's Digitally signed by NIRJA BHATIA right to forfeit Rs 1,000 which were expressly Date: 2024.10.07 18:27:01 +0530 Varun Maurya Vs. Sumit Chauhan Page No. 19 of 31 named and paid as earnest money. He has, however, contended that the covenant which gave to the plaintiff the right to forfeit Rs 24,000 out of the amount paid by the defendant was a stipulation in the nature of penalty, and the plaintiff can retain that amount or part thereof only if he establishes that in consequence of the breach by the defendant, he suffered loss, and in the view of the Court the amount or part thereof is reasonable compensation for that loss. We agree with the Attorney-General that the amount of Rs 24,000 was not of the nature of earnest money. The agreement expressly provided for payment of Rs 1,000 as earnest money, and that amount was paid by the defendant. The amount of Rs 24,000 was to be paid when vacant possession of the land and building was delivered, and it was expressly referred to as "out of the sale price". If this amount was also to be regarded as earnest money, there was no reason why the parties would not have so named it in the agreement of sale. We are unable to agree with the High Court that this amount was paid as security for due performance of the contract. No such case appears to have been made out in the plaint and the finding of the High Court on that point is based on no evidence. It cannot be assumed that because there is a stipulation for forfeiture the amount paid must bear the character of a deposit for due performance of the contract.
8. The claim made by the plaintiff to forfeit the amount of Rs 24,000 may be adjusted in the light of Section 74 of the Indian Contract Act, which in its material part provides:
"When a contract has been broken, if a sum is named in the contract as the amount to be paid in case of such breach, or if the contract contains any other stipulation by way of penalty, the party complaining of the breach is entitled, whether or NIRJA not actual damage or loss is proved to have been BHATIA caused thereby, to receive from the party who has Digitally signed by broken the contract reasonable compensation not NIRJA BHATIA Date: 2024.10.07 18:27:12 +0530 Varun Maurya Vs. Sumit Chauhan Page No. 20 of 31 exceeding the amount so named or as the case may be, the penalty stipulated for."
The section is clearly an attempt to eliminate the sometime elaborate refinements made under the English common law in distinguishing between stipulations providing for payment of liquidated damages and stipulations in the nature of penalty. Under the common law a genuine pre-estimate of damages by mutual agreement is regarded as a stipulation naming liquidated damages and binding between the parties : a stipulation in a contract in terrorem is a penalty and the Court refuses to enforce it, awarding to the aggrieved party only reasonable compensation. The Indian Legislature has sought to cut across the web of rules and presumptions under the English common law, by enacting a uniform principle applicable to all stipulations naming amounts to be paid in case of breach, and stipulations by way of penalty.
9. The second clause of the contract provides that if for any reason the vendee fails to get the sale- deed registered by the date stipulated, the amount of Rs 25,000 (Rs 1000 paid as earnest money and Rs 24,000 paid out of the price, on delivery of possession) shall stand forfeited and the agreement shall be deemed cancelled. The covenant for forfeiture of Rs 24,000 is manifestly a stipulation by way of penalty.
10. Section 74 of the Indian Contract Act deals with the measure of damages in two classes of cases (i) where the contract names a sum to be paid in case of breach and (ii) where the contract contains any other stipulation by way of penalty. We are in the present case not concerned to decide whether a contract containing a covenant of forfeiture of deposit for due performance of a contract falls within the first class. The measure of NIRJA BHATIA damages in the case of breach of a stipulation by way of penalty is by Section 74 reasonable by NIRJA BHATIA compensation not exceeding the penalty stipulated Digitally signed 18:27:19 +0530 for. In assessing damages the Court has, subject to Date: 2024.10.07 Varun Maurya Vs. Sumit Chauhan Page No. 21 of 31 the limit of the penalty stipulated, jurisdiction to award such compensation as it deems reasonable having regard to all the circumstances of the case. Jurisdiction of the Court to award compensation in case of breach of contract is unqualified except as to the maximum stipulated; but compensation has to be reasonable, and that imposes upon the Court duty to award compensation according to settled principles. The section undoubtedly says that the aggrieved party is entitled to receive compensation from the party who has broken the contract, whether or not actual damage or loss is proved to have been caused by the breach. Thereby it merely dispenses with proof of "actual loss or damage"; it does not justify the award of compensation when in consequence of the breach no legal injury at all has resulted, because compensation for breach of contract can be awarded to make good loss or damage which naturally arose in the usual course of things, or which the parties knew when they made the contract, to be likely to result from the breach.
11. Before turning to the question about the compensation which may be awarded to the plaintiff, it is necessary to consider whether Section 74 applies to stipulations for forfeiture of amounts deposited or paid under the contract. It was urged that the section deals in terms with the right to receive from the party who has broken the contract reasonable compensation and not the right to forfeit what has already been received by the party aggrieved. There is however, no warrant for the assumption made by some of the High Courts in India, that Section 74 applies only to cases where the, aggrieved party is seeking to receive some amount on breach of contract and not to cases where upon breach of contract an amount NIRJA received under the contract is sought to be BHATIA forfeited. In our judgment the expression "the contract contains any other stipulation by way of Digitally signed by NIRJA BHATIA penalty" comprehensively applies to every Date: 2024.10.07 18:27:25 +0530 covenant involving a penalty whether it is for Varun Maurya Vs. Sumit Chauhan Page No. 22 of 31 payment on breach of contract of money or delivery of property in future, or for forfeiture of right to money or other property already delivered. Duty not to enforce the penalty clause but only to award reasonable compensation is statutorily imposed upon courts by Section 74. In all cases, therefore, where there is a stipulation in the nature of penalty for forfeiture of an amount deposited pursuant to the terms of contract which expressly provides for forfeiture, the court has jurisdiction to award such sum only as it considers reasonable, but not exceeding the amount specified in the contract as liable to forfeiture."
28. However, the interpretation that is intended to be extracted from case law does not appear to be the exact to its intention. What needs to be gathered from above discussion is that where no stipulation is suggested for breach in the contract, the question of compensation would be dominated through the provisions of Section 73 of the Contracts Act. However, not all contracts may be silent of eventualities which are causing or committing the breach would encounter and may find insertions of stipulations which may even be specific towards the quantum. The stipulations may be specific in certain cases and may quote amounts/ figures of such compensation. In such cases, the Court while respecting such stipulations have to assess whether the stipulations either proposed to be performed by pre-delivery of earnest, or unpaid, are indicating to a fair and objective pre- assessment and if so, then the party asserting may be dispensed with its proof. However, in above/ such like cases, the Courts still hold jurisdiction to award compensation only up till the highest NIRJA BHATIA limit of stipulation and no enhancement in excess can be made.
Digitally signed byNIRJA BHATIA However, where the stipulation of compensation in place of Date: 2024.10.07 18:27:31 +0530 Varun Maurya Vs. Sumit Chauhan Page No. 23 of 31 dominating upon a reasonable, fair and objective pre-assessment scales upon the boundary and touch the domain of penalty the exception or dispensation of proof of quantum of damage, for levy of such penalty is withdrawn and party claiming such punitive damages is burdened to adequately prove the quantum of loss and damage justifying the claim.
29. Ld. Sh. T. V. Shivakumar, while rightly relying upon the case law which is settled for grant of liquidated damages has agreed that the context of this case presents itself for a decision under the domain of Section 74 i.e. a relief claimed for liquidated damages. However, while agreeing upon the above, it was required to be reflected that the damages asked through the claim are reasonable pre-assessment of damages dispensing the proof. However, Ld. Counsel in his attempt though has sought to bring the claim arguing it as a pre-assessment of loss and objectively so, forgot to show any such plea having been raised under the pleadings in first place. It is to be taken note that while the law permits dispensation of proof of a plea, it does not accommodate any absence of a plea setting out such claim.
30. More over, the bare perusal of the agreement and the intent reflected from covenant excerpted above does not support the arguments and rather contradicts the same. It is apparent that insertion of payment of rent for lock-in period as long as 36 months is 'punitive' in nature since is about a commercial space at prime location of 'Grandley Mall' and in heart of Delhi, which would capture the attention of those in trade and commerce with not much difficulty and effort. There is no reflection of any NIRJA BHATIA objective of keeping the defendant bound to liability of rent for Digitally signed by NIRJA 36 months at a stretch, which indicates that the purpose was more BHATIA Date: 2024.10.07 18:27:38 +0530 Varun Maurya Vs. Sumit Chauhan Page No. 24 of 31 towards creating a deterrent for defendant to avoid the entering in fresh lease with a stranger than to ensure the continuity of payment of rent. The fact that it was rented at a price higher than it could command even two years later is visible from the written arguments where Ld. Counsel admitted that premises were leased out @ Rs. 2,60,000/- per month with GST.
31. As the intention of the agreement is revealed to be punitive in nature, the plaintiff's advantage of claiming waiver from proof of damage, is to be recalled. In which case, while raising a plea, of such nature for "unpaid rent of rest of period" as stated in lease deed Ex. PW-1/2. Plaintiff must have brought evidence in support of such a claim. However, at the cost of repeating, it is observed that no effort to raise any plea or evidence is made.
32. Pertinent at this stage is to note the conduct of plaintiff who is his written submissions admitted having leased the property w.e.f 22.12.2022 at a rate of rent of Rs. 2.6 lacs, which fact till the conclusion of trial is not informed to the Court. It is comprehendible that plea of such nature was not raised while instituting the plaint in April 2022. However, no explicable reason is detailed for not amending the plaint later as the period during which new lease is introduced to premises was within 36 months as is observed in earlier paras where plaintiff demanded unpaid rent against lock-in period from December 2021 to October 2023 i.e. for entire period. It is again worthwhile to note that suit is instituted even prior to lapse of lock-in period creating doubts towards the same which did not accrue even at that time.
33. Moreover, the suit is made over to the Court under NIRJA statutory provisions, however, is based on common law principle BHATIA of equity and fairness. The plaintiff hence has breached the above Digitally signed by NIRJA BHATIA Date: 2024.10.07 18:27:43 +0530 Varun Maurya Vs. Sumit Chauhan Page No. 25 of 31 boundary himself, pushing himself to called out for a conduct disentitling of a relief.
34. Further the new pleas raised in arguments being beyond pleadings also do no favour but damage as they being not part of pleadings can neither be read nor relied (Reliance: Siddik Mahomed Vs. Mt. Saran and others, AIR 1930 PC 57; Purna Theatre Vs. State of West Bengal and ors., 1997 LAB IC 997; Shri Lachman Das Vs. M/s Indian Express Newpapers (Bombay) Pvt. Ltd., 1977 LAB IC 823).
35. It is hence, to be understood that even though Ld. Counsel during oral arguments after filing written submissions (which are part of record in terms of amendment in Commercial Courts Act sought the differential in rent against damages. This plea could not have been treated at par with pleadings as the Court could not have read and relied upon it in view of it being beyond pleadings as held in cases supra. As is also held in Kailash Nath Vs. DDA (supra) (specifically in para 36 which is excerpted in discussions below under the head of forfeiture of earnest money).
36. In such circumstance, the plaintiff has navigated the Court deliberately under a blindfold till the date of completion of trial and has not revealed the actual circumstance till the date of filing of the written submissions. The conduct of the plaintiff in the context of the suit which is filed for an equitable relief is juxtaposed to the nature of the claim. A party seeking equity must also do equity. It is well settled that a party approaching the Court with concealment of fact is not entitled to any relief and in such circumstance, the plaintiff has otherwise disentitled himself NIRJA BHATIA from claiming any equitable relief of damages.
Digitally signed by NIRJA BHATIA Date: 2024.10.07 18:27:49 +0530 Varun Maurya Vs. Sumit Chauhan Page No. 26 of 3137. Moreover, at this stage, it is also to be observed that despite having opportunity, the plaintiff has not brought on record any evidence to show any actual loss. While stating so, the plaintiff was requisited to prove all efforts made by him for gaining another tenant. The plaintiff has not brought any material of having made such effort by either putting any advertisement for letting the premises and/ or by contacting the property agent and/ or any other means within his reach to have the property occupied as the defendant vacated and handed over the vacant possession to the satisfaction of plaintiff on 01.12.2021 shifting the control and dominion of the property with him. Whereafter, it was for him to take timely requisite efforts for minimizing the loss against the rent by induction of a new tenant, as is also made clear in National Radio and Electronics Company Vs. Motion Pictures Association, 122(2005) DLT 629.
38. Moreover, even at the stage when the peaceful vacant possession of the property is received by the plaintiff, there is no note in writing and no evidence whatsoever to show that the possession was received without prejudice to claim the rent against the lock-in period. The plaintiff has agreed to keep the provision of forfeiture of the security deposit and has linked to the termination of the lease deed on account of two consecutive defaults as is excerpted from the lease deed (sub-clause d of Clause V).
39. The above discussion hence does not support the claim of plaintiff for recovering the amount of Rs. 66 lacs of unpaid rent.
Digitally signed by NIRJA NIRJA BHATIA BHATIA Date:
2024.10.07 18:27:55 +0530 Varun Maurya Vs. Sumit Chauhan Page No. 27 of 31 Forfeiture of Security Amount
40. Plaintiff has admitted to have recovered the amount of Rs. 10 lacs as security to the lease deed. However, while presenting the claim and asserting the pleas of breach of covenants under agreement providing for forfeiture, it made no assertion in the plaint to have made a forfeiture of the security deposit in first place. The prayer claimed in para 7 of the plaint capitulating the domains of reliefs and quantum of damages/ recoveries asked does not set out a plea of forfeiture of security deposit at all. In which case, the ground of entitlement of forfeiture carried more from the assumptions of plaintiff than the pleadings set forth in the suit. Reliance is placed on Kailash Nath (supra) wherein in para 36 it was held as below:
"36......................................................... ............................................................. The learned Attorney General very strongly urged that the pleas covered by the second contention of the appellant had never been raised in the pleadings nor in the contentions urged before the High Court. The question of the quantum of earnest deposit which was forfeited being unreasonable or the forfeiture being by way of penalty, were never raised by the appellants. The Attorney General also pointed out that as noted by the High Court the appellants led no evidence at all and, after abandoning the various pleas taken in the plaint, the only question pressed before the High Court was that the deposit was not by way of earnest and hence the amount could not be forfeited. Unless the appellants had pleaded and established that there was unreasonableness NIRJA attached to the amount required to be deposited BHATIA under the contract or that the clause regarding Digitally signed forfeiture amounted to a stipulation by way of a by NIRJA BHATIA Date: 2024.10.07 penalty, the respondents had no opportunity to 18:28:03 +0530 Varun Maurya Vs. Sumit Chauhan Page No. 28 of 31 satisfy the Court that no question of unreasonableness or the stipulation being by way of penalty arises. He further urged that the question of unreasonableness or otherwise regarding earnest money does not at all arise when it is forfeited according to the terms of the contract.
In our opinion the learned Attorney General is well founded in his contention that the appellants raised no such contentions covered by the second point, noted above. It is therefore unnecessary for us to go into the question as to whether the amount deposited by the appellants, in this case, by way of earnest and forfeited as such, can be considered to be reasonable or not. We express no opinion on the question as to whether the element of unreasonableness can ever be considered regarding the forfeiture of an amount deposited by way of earnest and if so what are the necessary factors to be taken into account in considering the reasonableness or otherwise of the amount deposited by way of earnest. If the appellants were contesting the claim on any such grounds, they should have laid the foundation for the same by raising appropriate pleas and also led proper evidence regarding the same, so that the respondents would have had an opportunity of meeting such a claim."
41. Additionally, while assuming towards the entitlement of forfeiture of security deposit the plaintiff was as per law discussed above and again is taken note in M. C. Aggarwal (HUF) Vs. Sahara India, 2011 SCC OnLine Del 3715, the security deposit is to be treated as earnest which is against subject to proof of loss as is held in Kailash Nath (supra), relevant para of which is reproduced herein below:
NIRJA 42. In the present case, forfeiture of earnest money BHATIA took place long after an agreement had been Digitally signed by NIRJA BHATIA reached. It is obvious that the amount sought to be Date: 2024.10.07 18:28:09 +0530 Varun Maurya Vs. Sumit Chauhan Page No. 29 of 31 forfeited on the facts of the present case is sought to be forfeited without any loss being shown. In fact it has been shown that far from suffering any loss, DDA has received a much higher amount on re-auction of the same plot of land."
42. Additionally the plea of forfeiture is raised in context of default or breach of two months consecutively. It is claimed that in the said case, the lease would be determined and premise be surrendered to plaintiff which will also make plaintiff entitled to relief of means profit while the plea of means profit was abandoned by plaintiff, the relief of forfeiture could not established to be disjuncted to the eventuality of termination of lease on two successive defaults. This is, more so, when plaintiff did not terminate the lease at any stage nor asked for surrender of demised premise. Rather by asking to pay and sending reminders, it showed a contrary intention in which case no premise for forfeiture of security deposit demonstrated.
43. As plaintiff has not made any attempt to plead or prove and loss against breach, the plaintiff is not qualified to ask for its recompense and hence, no relief towards its entitlement is available.
Interest
44. Plaintiff has not brought any evidence to show loss of interest under depreciation @ 18%, in which case plaintiff is only entitled to interest towards devaluation at the bank rate and having regard to recourse available to the Court under Section 34 NIRJA of CPC, interest @ 9% is accorded in favour of the plaintiff from BHATIA the date of entitlement till realization.
Digitally signed by NIRJA BHATIA Date: 2024.10.07 18:28:15 +0530 Varun Maurya Vs. Sumit Chauhan Page No. 30 of 3145. Hence, plaintiff is entitled to the relief of rent @ Rs. 24 lacs, after adjusting security deposit of Rs. 10 lacs , alongwith interest @ 9% p.a. from the date of entitlement till realization. Plaintiff is also held entitled towards the relief of cost on account of Court fee @ 1,41,300/-. As counsel's fee certificate is not filed, an amount of Rs. 15,000/- is awarded towards the same.
46. Decree sheet be drawn and file be consigned to Record Room after completion of necessary formalities.
Digitally signed by NIRJA NIRJA BHATIA BHATIA Date:
2024.10.07 18:28:21 +0530 Announced in open Court (Nirja Bhatia) today on 07th October, 2024 District Judge (Comm. Court) (Digital-07) South-East, Saket Court, New Delhi Varun Maurya Vs. Sumit Chauhan Page No. 31 of 31