Karnataka High Court
Millenia Realtors Pvt Ltd vs Capgemini Technology Services on 22 February, 2024
Author: P.S. Dinesh Kumar
Bench: P.S. Dinesh Kumar
RFA No. 1373/2016
C/W RFA No.940/2016
RFA No.941/2016
RFA No.1078/2016
RFA No.1374/2016
1
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 22ND DAY OF FEBRUARY, 2024
PRESENT
THE HON'BLE MR. P.S. DINESH KUMAR, CHIEF JUSTICE
AND
THE HON'BLE MR. JUSTICE T.G. SHIVASHANKARE GOWDA
RFA No.1373 OF 2016 (RES)
C/W
RFA No.940 OF 2016 (RES)
RFA No.941 OF 2016 (RES)
RFA No.1078 OF 2016 (SP)
RFA No.1374 OF 2016 (RES)
IN RFA No.1373 OF 2016
BETWEEN:
MILLENIA REALTORS PVT LTD
A COMPANY INCORPORATED UNDER THE
PROVISIONS OF THE COMPANES ACT, 1956
AND HAVING ITS REGISTERED OFFICE
AT THE MILLENIA TOWER B,
LEVEL 12-14, 1 & 2,
MURPHY ROAD, ULSOOR
BENGALURU-560 008
REPRESENTED BY ITS MANAGING DIRECTOR
AND AUTHORIZED SIGNATORY
MR.RAJ.A.MENDA ...APPELLANT
(BY SHRI. UDAYA HOLLA, SENIOR ADVOCATE;
SHRI. GEORGE JOSEPH, ADVOCATE)
RFA No. 1373/2016
C/W RFA No.940/2016
RFA No.941/2016
RFA No.1078/2016
RFA No.1374/2016
2
AND:
CAPGEMINI TECHNOLOGY SERVICES
INDIA LIMITED, (TRANSFEREE COMPANY
ON AMALGAMATION WITH FLEXTRONICS
SOFTWARE SYSTEMS LIMITED)
A COMPANY INCORPORATED
UNDER THE PROVISIONS OF THE
COMPANIES ACT, 1956, HAVING ITS
REGISTERED OFFICE AT NO.5
JAIN MANDIR MARG (ANNEXE)
CONNAUGHT PLACE
NEW DELHI-110 001
ALSO HAVING OFFICE AT NO.18/1
RMZ ECOZEN, OUTER RING ROAD
PANATHUR POST
BENGALURU-560 087
[AMENDED AS PER COURT ORDER
DATED 26.07.2023] ...RESPONDENT
(BY SHRI. S.S. NAGANAND, SENIOR ADVOCATE FOR
MS. SWETHA G AND
SHRI. N. MANJUNTH, ADVOCATES)
THIS RFA IS FILED UNDER ORDER XLI RULE 1 R/W SEC.96 OF
CPC., AGAINST THE JUDGMENT AND DECREE DATED 13.04.2016
PASSED IN O.S. NO.26660/2010 ON THE FILE OF THE XXVIII ADDL.
CITY CIVIL JUDGE, MAYOHALL UNIT, BANGALORE (CCH-29), PARTLY
DECREEING THE SUIT FOR EVICTION/DAMAGES.
IN RFA No.940 OF 2016
BETWEEN:
CAPGEMINI TECHNOLOGY SERVICES
INDIA LIMITED, (TRANSFEREE COMPANY
ON AMALGAMATION WITH FLEXTRONICS
SOFTWARE SYSTEMS LTD.,)
FORMERLY KNOWN AS HUSHES
SOFTWARE SYSTEM LIMITED
RFA No. 1373/2016
C/W RFA No.940/2016
RFA No.941/2016
RFA No.1078/2016
RFA No.1374/2016
3
A COMPANY INCORPORATED
UNDER THE PROVISIONS OF THE
COMPANIES ACT, 1956, HAVING ITS
REGISTERED OFFICE AT NO.5
JAIN MANDIRMARG (ANNEXE)
CONNAUGHT PLACE
NEW DELHI-110 001
ALSO HAVING OFFICE AT NO.18/1
RMZ ECOZEN, OUTER RING ROAD
PANATHUR POST
BENGALURU-560 087
REPRESENTED BY ITS
AUTHORIZED REPRESENTATIVE
MR. DAVID ANILKUMAR
S/O K.K. GEORGE
AGED ABOUT 46 YEARS
[AMENDED AS PER COURT ORDER
DATED 21.07.2023] ... APPELLANT
(BY SHRI. S.S. NAGANAND, SENIOR ADVOCATE;
MS. G. SWETHA AND
SRI. N. MANJUNATH ADVOCATES)
AND:
M/S. MILLENNIA REALTORS PVT. LTD
A COMPANY INCORPORATED UNDER THE
PROVISION OF THE COMPANIES ACT
1956, HAVING ITS REGISTERED OFFICE
AT LEVEL 12-4, TOWER B
THE MILLENNIA
NO.1 & 2, MURPHY ROAD
ULSOOR, BENGALURU-560 008 ...RESPONDENT
(BY SHRI. UDAYA HOLLA, SENIOR ADVOCATE FOR
SHRI. GEORGE JOSEPH, ADVOCATE)
THIS RFA IS FILED UNDER ORDER XLI RULE 1 OF CPC., R/W
SEC.96 OF CPC, AGAINST THE JUDGMENT AND DECREE DATED
13.04.2016 PASSED IN OS.NO.16735/2005 ON THE FILE OF THE
XXVIII ADDL. CITY CIVIL AND SESSIONS JUDGE, MAYOHALL,
RFA No. 1373/2016
C/W RFA No.940/2016
RFA No.941/2016
RFA No.1078/2016
RFA No.1374/2016
4
BENGALURU, PARTLY DECREEING THE SUIT FOR VACANT
POSSESSION.
IN RFA No.941 OF 2016
BETWEEN:
CAPGEMINI TECHNOLOGY SERVICES
INDIA LIMITED, (TRANSFEREE COMPANY
ON AMALGAMATION WITH FLEXTRONICS
SOFTWARE SYSTEMS LTD.,)
A COMPANY INCORPORATED
UNDER THE PROVISIONS OF THE
COMPANIES ACT, 1956, HAVING ITS
REGISTERED OFFICE AT NO.5
JAIN MANDIRMARG (ANNEXE)
CONNAUGHT PLACE
NEW DELHI-110 001
ALSO HAVING OFFICE AT NO.18/1
RMZ ECOZEN, OUTER RING ROAD
PANATHUR POST
BENGALURU-560 087
REPRESENTED BY ITS
AUTHORIZED REPRESENTATIVE
MR. DAVID ANILKUMAR
S/O MR. K.K. GEORGE
AGED ABOUT 46 YEARS
[AMENDED AS PER COURT ORDER
DATED 21.07.2023] ... APPELLANT
(BY SHRI. S.S. NAGANAND, SENIOR ADVOCATE;
MS. G. SWETHA AND
SRI. N. MANJUNATH ADVOCATES)
AND:
M/S. MILLENNIA REALTORS PVT. LTD
A COMPANY INCORPORATED UNDER THE
RFA No. 1373/2016
C/W RFA No.940/2016
RFA No.941/2016
RFA No.1078/2016
RFA No.1374/2016
5
PROVISION OF THE COMPANIES ACT
1956, HAVING ITS REGISTERED OFFICE
AT LEVEL 12-4, TOWER B
THE MILLENNIA
NO.1 & 2, MURPHY ROAD
ULSOOR, BENGALURU-560 008
REPRESENTED BY ITS DIRECTOR
AND AUTHORIZED SIGNATORY
MR. RAJ A. MENDA ...RESPONDENT
(BY SHRI. UDAYA HOLLA, SENIOR ADVOCATE FOR
SHRI. GEORGE JOSEPH, ADVOCATE)
THIS RFA IS FILED UNDER ORDER XLI RULE 1 OF CPC., R/W
SEC.96 OF CPC, AGAINST THE JUDGMENT AND DECREE DATED
13.04.2016 PASSED IN OS.NO.26660/2010 ON THE FILE OF THE
XXVIII ADDL. CITY CIVIL JUDGE, MAYOHALL UNIT, BENGALURU,
PARTLY DECREEING THE SUIT FOR EVICTION AND DAMAGES.
IN RFA No.1078 OF 2016
BETWEEN:
CAPGEMINI TECHNOLOGY SERVICES
INDIA LIMITED, (FORMERLY KNOWN AS
HUGHES SOFTWARE SYSTEMS LIMITED).
A COMPANY INCORPORATED UNDER
THE COMPANIES ACT, 1956 AND HAVING
ITS REGISTERED OFFICE AT NO.5
JAIN MANDIR MARG, (ANNEXE)
CONNAUGHT PLACE
NEW DELHI-110 001
NOTE: THE PRESENT NAME AND
ADDRESS OF THE APPELLANT IS
AS FOLLOWS: M/S. ARICENT TECHNOLOGIES
(HOLDING) LTD, (TRANSFEREE COMPANY
ON AMALGAMATION WITH FLEXTRONICS
SOFTWARE SYSTEMS LTD) A COMPANY
INCORPORATED UNDER THE PROVISIONS
OF THE COMPAINES ACT, 1956, HAVING ITS
REGISTERED OFFICE AT NO.05
JAIN MANDIR MARG (ANNEXE)
RFA No. 1373/2016
C/W RFA No.940/2016
RFA No.941/2016
RFA No.1078/2016
RFA No.1374/2016
6
CONNAUGHT PLACE, NEW DELHI- 110 001
ALSO HAVING OFFICE AT NO.18/1
RMZ ECOZEN, OUTER RING ROAD
PANATHUR POST, BENGALURU-560 087
[AMENDED AS PER COURT ORDER
DATED 21.07.2023] ... APPELLANT
(BY SHRI. S.S. NAGANAND, SENIOR ADVOCATE;
MS. G. SWETHA AND
SRI. N. MANJUNATH ADVOCATES)
AND:
1. M/S. MILLENNIA REALTORS PVT LTD
A COMPANY INCORPORATED UNDER
THE PROVISION OF THE COMPANIES
ACT, 1956 HAVING ITS REGISTERED
OFFICE AT LEVEL 12-4, TOWER B
THE MILLENNIA, NO.01 AND 2
MURPHY ORAD, ULSOOR
BENGALURU-560 008
2. M/S. RANI RASAMANI
CONSTRUCTIONS PVT. LTD
A COMPANY INCORPORATED
UNDER THE PROVISIONS OF THE
COMPANIES ACT, 1956, HAVING
ITS REGISTERED OFFICE AT
FLAT NO. S 001, PRESTIGE
LE PROMENADE, NO.37
PROMENADE ROAD, FRASER TOWN
(NEAR THOMAS BAKERY)
BENGALURU-560 005 ...RESPONDENTS
(BY SHRI. UDAYA HOLLA, SENIOR ADVOCATE FOR
SHRI. GEORGE JOSEPH, ADVOCATE FOR R1;
R2- SERVED AND UNREPRESENTED)
THIS RFA IS FILED UNDER ORDER XLI RULE 1 OF CPC AGAINST
THE JUDGMENT AND DECREE DATED 13.04.2016 PASSED IN
OS.NO.25312/2007 ON THE FILE OF THE XXVIII ADDL. CITY CIVIL AND
RFA No. 1373/2016
C/W RFA No.940/2016
RFA No.941/2016
RFA No.1078/2016
RFA No.1374/2016
7
SESSIONS JUDGE, MAYOHALL UNIT, BENGALURU, DISMISSING THE
SUIT FOR SPECIFIC PERFORMANCE.
IN RFA No.1374 OF 2016
BETWEEN:
MILLENIA REALTORS PVT. LTD
A COMPANY INCORPORATED UNDER THE
PROVISION OF THE COMPANIES ACT
1956 AND HAVING ITS REGISTERED OFFICE
AT THE MILLENIA
NO.1 & 2, MURPHY ROAD
ULSOOR, BENGALURU-560 008
REPRESENTED BY ITS MANAGING DIRECTOR
AND AUTHORIZED SIGNATORY
MR. RAJ A. MENDA ... APPELLANT
(BY SHRI. UDAYA HOLLA, SENIOR ADVOCATE FOR
SHRI. GEORGE JOSEPH, ADVOCATE)
AND:
CAPGEMINI TECHNOLOGY SERVICES
INDIA LIMITED, (TRANSFEREE COMPANY
ON AMALGAMATION WITH FLEXTRONICS
SOFTWARE SYSTEMS LIMITED AND
FORMERLY KNOWN AS HUGHES SOFTWARE
SYSTEMS LIMITED).
A COMPANY INCORPORATED UNDER
THE PROVISIONS OF THE COMPANIES ACT
1956 AND HAVING ITS REGISTERED
OFFICE AT NO.5, JAIN MANDIR ,,MARG, (ANNEXE)
CONNAUGHT PLACE
NEW DELHI-110 001 ...RESPONDENT
(BY SHRI. S.S. NAGANAND, SENIOR ADVOCATE;
MS. G. SWETHA AND
SRI. N. MANJUNATH ADVOCATES)
RFA No. 1373/2016
C/W RFA No.940/2016
RFA No.941/2016
RFA No.1078/2016
RFA No.1374/2016
8
THIS RFA IS FILED UNDER ORDER XLI RULE 1 READ WITH
SECTION 96 OF CPC AGAINST THE JUDGMENT AND DECREE DATED
13.04.2016 PASSED IN OS.NO.16735/2005 ON THE FILE OF THE
XXVIII ADDL. CITY CIVIL JUDGE, MAYOHALL UNIT, BENGALURU,
PARTLY DECREEING THE SUIT FOR VACANT POSSESSION.
THESE RFAs, HAVING BEEN HEARD AND RESERVED FOR
JUDGMENT ON 14.02.2024 COMING ON FOR PRONOUNCEMENT OF
JUDGMENT THIS DAY, CHIEF JUSTICE, PRONOUNCED THE
FOLLOWING:-
JUDGMENT
These five appeals arise out of judgment and decree dated April 13, 2016 in O.S No. 26660/2010, O.S No. 25312/2007 and O.S.No. 16735/2005. Since all the five appeals involve same subject-matter and parties, they are heard simultaneously and disposed of by this common order.
2. We have heard Shri. S.S. Naganand, learned Senior Advocate for the appellant in R.F.A. No 940/2016, R.F.A.No. 941/2016 and R.F.A.No. 1078/2016 and respondent in R.F.A. No.1373/2016 and R.F.A.No. 1374/2016 and Shri. Uday Holla, learned Senior Advocate for appellant in R.F.A. No.1373/2016 and RFA No. 1373/2016 C/W RFA No.940/2016 RFA No.941/2016 RFA No.1078/2016 RFA No.1374/2016 9 R.F.A. No. 1374/2016 and respondent in R.F.A. No 940/2016, R.F.A.No. 941/2016 and R.F.A.No. 1078/2016.
3. Briefly stated the facts of the case are, Millenia1 and RRC2 are the owners of the premises in question. They had leased out bare shell to Aricent3. Aricent was orignially known as Hughes. It changed it names as Flextronics and later as Aricent.
4. Owner's case is, Milleia and RRC had entered into a Development Agreement in respect of the suit property. As per of the agreement , Millenia and RRC were sharing the land and development in the ratio 73:27. Later, Millenia purchased RRC's 27% also. In effect, Millenia is the owner and Aricent is the tenant.
1 Millenia Realtors Private Ltd.
2Rani Rasmani Constructions 3 Aricent Technologies Ltd.
RFA No. 1373/2016C/W RFA No.940/2016 RFA No.941/2016 RFA No.1078/2016 RFA No.1374/2016 10
5. Millenia issued a notice to Aricent to vacate and handover the premises. Aricent did not acceed to Millenia's demand. Therefore, Millenia filed O.S.No. 16735/2005 for eviction and damages in respect of 73% of the suit property and O.S.No. 26660/2010 for eviction and damages in respect of 27% of the suit property.
6. Tenant-Aricent's case is, the lease was to commence only after the completion of Phase I development after obtaining occupancy certificate. As per the agreement, Aricent had right to purchase the property and it has filed O.S.No.25312/2007 seeking specific performance of the Agreement dated 19.05.2003.
7. In O.S No. 16735/2007 filed by Millenia, the Trial Court has framed the following issues:
"1. Whether the defendant proves that the tenancy is a contractual tenancy for a period of five years and that the tenancy has not been validly terminated by notice dt.10.01.2005?RFA No. 1373/2016 C/W RFA No.940/2016 RFA No.941/2016 RFA No.1078/2016 RFA No.1374/2016 11
2. Whether the plaintiff proves that the defendant is due and liable to pay arrears of rent and damages as claimed in the plaint?
3. Whether the plaintiff proves that the defendant is liable to pay interest on the delayed payments as claimed in the plaint?
4. Whether the plaintiff proves that it has terminated tenancy in respect of the schedule C property and whether it is entitled to a decree of vacant possession of the suit schedule C property?
5. Whether the plaintiff is entitled to the suit claim?
6. What order or decree?"
8. On behalf of Millenia, one witness was examined as P.W.1 and Ex. P1 to P29 marked. On behalf of Aricent, one witness was examined as D.W.1 and Ex.D1 to D23 marked. The Trial Court, answering issue No. 1 in the negative, issues No. 2 and 4 in the affirmative and issues No. 3 and 5 partly in the affirmative, has decreed the suit in part inter alia directing the tenant to vacate the premises. RFA No. 1373/2016 C/W RFA No.940/2016 RFA No.941/2016 RFA No.1078/2016 RFA No.1374/2016 12
9. In O.S No. 26660/2010 filed by Millenia, the Trial Court has framed the following issues:
"1. Whether the plaintiff proves that the defendant was tenant under him in respect of C schedule property whose tenancy was validly terminated?
2. Whether the defendant is liable to deliver the vacant possession?
3. Whether the defendant is liable to pay damages of Rs.57,63,700/- and Rs.30/- per sq.ft per month as damages, Rs.10/- per sq.ft for service area of C schedule property with interest at 24%?
4. What order or decree?"
10. On behalf of Millenia, one witness was examined as P.W.1 and Ex. P1 to P15 marked. On behalf of Aricent, one witness was examined as D.W.1 and Ex.D1 to D23 marked. The Trial Court, answering issue No. 1 and 2 in the affirmative and issue No. 3 partly in the affirmative has decreed the suit in part inter alia directing eviction. RFA No. 1373/2016 C/W RFA No.940/2016 RFA No.941/2016 RFA No.1078/2016 RFA No.1374/2016 13
11. In O.S No. 25312/2007 filed by Aricent seeking specific performance, the Trial Court has framed the following issues:
"1. Whether the plaintiff proves that defendant No.2 entered into an agreement of development of land construction of building and subsequent lease with purchaser option to the lessee (plaintiff) and executed an agreement on 19.5.2003?
2. Whether the plaintiff proves that he had an option and right to purchase A schedule properties as per the price agreed to in the suits?
3. Whether the plaintiff further proves that D.1 & 2 agreed to sell the A schedule property for the land at the rate of Rs.27/- per square feet with increase at 12% р.а., Rs.1627- 50 per sq.ft. for buildings, Rs.542.50ps per sq.ft. for service area?
4. Whether plaintiff was ever ready and willing to perform his part of contract?
5. Whether the defendants prove that the agreement dt.19.5.2003 is frustrated and terminated?
6. Whether the defendant No.1 proves that the plaintiff is estopped from invoking the purchaser options in view of breach committed in non payment of holding costs every month?RFA No. 1373/2016 C/W RFA No.940/2016 RFA No.941/2016 RFA No.1078/2016 RFA No.1374/2016 14
7. Whether suit is time barred?
8. What order or decree?"
12. On behalf of Aricent, one witness was examined as P.W.1 and Ex.P1 to P34 marked. On behalf of Millenia, one witness was examined as D.W.1 and Ex. D1 to D20 marked The Trial Court, answering issues No. 1 to 3 and 5 to 7 in the affirmative and issues No. 4 and 7 in the negative has dismissed the suit.
13. Millenia has filed R.F.A.No. 1373/2016 challenging the quantum of compensation and damages in O.S No. 16735/2007.
14. Millenia has filed R.F.A.No. 1374/2016 challenging the quantum of compensation and damages in O.S No. 26660/2010
15. Aricent has filed R.F.A.No. 940/2016 challenging order of eviction in O.S No. 16735/2007. RFA No. 1373/2016 C/W RFA No.940/2016 RFA No.941/2016 RFA No.1078/2016 RFA No.1374/2016 15
16. Aricent has filed R.F.A.No.941/2016 challenging order of eviction in O.S No. 26660/2010.
17. Aricent has filed R.F.A.No. 1078/2016 challenging order of dismissal of suit of specific performance in O.S No.25312/2007.
18. Shri. Naganand, for the Aricent, submitted that:
transaction between Aricent and Millenia was never intended to be solely a lease transaction, and parties had always intended for the transaction to fructify into the sale of the suit property;
the Triparte Agreement dated 21.05.2003 contains several reciprocal promises. Aricent has complied with its conditions, but Millenia has failed to do so;RFA No. 1373/2016 C/W RFA No.940/2016 RFA No.941/2016 RFA No.1078/2016 RFA No.1374/2016 16
the termination of tenancy amounted to splitting of tenancy and such termination is bad in law;
Aricent has invested Rs. 25 Crore towards development of the suit property;
Millenia delayed the process of execution of sale deed;
the Trial Court has erred in holding that Aricent had failed to establish its readiness and willingness to perform the agreement.
19. Shri. Uday Holla, for Millenia, submitted that :
since the lease deed is not registered, the tenancy is month to month;
the specific performance is based on the very same tenacy agreement and it is not valid in law as it is not registered. Aricent is seeking specific performance under the RFA No. 1373/2016 C/W RFA No.940/2016 RFA No.941/2016 RFA No.1078/2016 RFA No.1374/2016 17 same tenancy agreement. Hence, it is uneforceable;
Aricent to not entitled to retain possession based on the claim that it invested for the improvement;
the Trial Court has not granted adequate damages.
20. We have carefully considered the rival contentions and perused the records. The points that arise for our consideration are:
i) Whether Millenia is entitled for decree of eviction and damages in respect of the suit property?
ii) Whether Aricent is entitled for decree of specific performance of agreement dated 19.05.2003?
iii) Whether Millenia is entitled for damages at Rs.30/-
per sq.ft per month as damages, Rs.10/- per sq.ft for service area?
iv) Whether the orders of the Trial Court call for interference?
RFA No. 1373/2016C/W RFA No.940/2016 RFA No.941/2016 RFA No.1078/2016 RFA No.1374/2016 18 Re. point No. (i):
21. Undisputed facts of the case are, Millenia and RRC entered into a Development Agreement in respect of the suit property in the ratio of 73:27. Millenia, RRC and Aricent entered into a Tripartiate in 19.05.2003. Broad terms of the agreement are, owners who handover a building in form of a bare shell to Aricent. Aricent would pay a sum of Rs. 30,00,000/- towards security deposit. A proper agreement has neither been executed or registered.
22. In substance, there is no valid contract between Millenia and Aricent. According to Millenia, it has purchased RRC holding and become full owner of the suit property.
23. The term of lease agreed in the agreement is 6 years. Admittedly, it is not registered. Clause 12 of the agreement dated 19.05.2003 reads thus: RFA No. 1373/2016 C/W RFA No.940/2016 RFA No.941/2016 RFA No.1078/2016 RFA No.1374/2016 19
"12. MRPL and RRRE and Hughes agree, upon completion of Phase Development to execute and register at the cost of Hughes, a Deed of Lease in favour of Hughes, in the form attached hereto as Annexure VI and on the terms and conditions act out therein. The terms and set out conditions in the Lease Deed format shall not be altered or modified except by mutual consent."
24. Shri. Naganand's contention is that Aricent was willing to execute the lease deed, but Millenia was delaying the process. In support of this contention, he relied upon the cross-examination of PW1 and urged that RRC and Millenia had not signed the lease deed sent by Aricent. In the cross- examination, it is admitted thus:
".... ರಸಮ ಮ ಪ ಯವ ಕ ಟ ೕ ೕ ಪತ ಸ ಪ ಪ ಲ ಎಂದ ಜ...."
25. What is admitted in the above cross-examination is that Millenia had not signed and returned the agreement sent by Aricent.
RFA No. 1373/2016C/W RFA No.940/2016 RFA No.941/2016 RFA No.1078/2016 RFA No.1374/2016 20
26. It was argued by Shri. Holla that there is not valid and enforceable lease agreement between the landlord and the tenant. He relied upon the cross-examination of Manoj Kumar Vaish, the Vice President of Aricent in O.S. No. 25312/2007, which reads thus:
"......In the month of September 2004 we sought for modification of the some of the terms of the draft lease deed"
27. Section 107 of the Transfer of Property Act, 1882 reads as follows "A lease of immovable property from year to year, or for term exceeding one year, or reserving a yearly rent, can be made only by a registered instrument."
28. It is well settled that a lease agreement for a term more than one year requires to be registered. In absence of a valid contract, the tenancy shall be construed as month to month lease. Though both the parties have strenuously contended that the other party failed to execute the lease deed, the fact remains that there is no lease RFA No. 1373/2016 C/W RFA No.940/2016 RFA No.941/2016 RFA No.1078/2016 RFA No.1374/2016 21 agreement. In the absence of a valid lease agreement, the tenancy shall be month to month.
29. Shri. Holla has urged that by notices dated 10.01.2005 and 20.07.2010, the lease with Aricent has been terminated. Shri. Naganand contended that only Aricent had the right to terminate the lease agreement. He placed reliance on Clause 5 of the agreement which reads thus:
"5. If the lease of Phase I Development does not commence on October 30th 2003 on account of failure of MRPL to complete Phase I Development and/or to obtain the Occupancy Certificate on or before that date, Hughes may at its sole and exclusive option terminate this Agreement by notice in writing and on such termination MRPL shall refund to Hughes all moneys received under this Agreement together with interest thereon at the rate of 24 percent per annum and a further sum equivalent to the amount received by MRPL under this Agreement as liquidated damages without prejudice to any of its other rights or remedies hereunder.
30. We may record that any amount of ascertion by Aricent will not lead its case any further because it is undisputed that Aricent is depending upon an unregistered RFA No. 1373/2016 C/W RFA No.940/2016 RFA No.941/2016 RFA No.1078/2016 RFA No.1374/2016 22 lease agreement which is not valid in law. The resultant position is that it is a month to month tenancy and Millenia has sought eviction precisely on this specific premise Section 106 of the Transfer of Property Act, 1882 reads as follows:
"In the absence of a contract or local law or usage to the contrary, a lease of immovable property for agricultural or manufacturing purposes shall be deemed to be a lease from year to year, terminable, on the part of either lessor or lessee, by six months' notice; and a lease of immovable property for any other purpose shall be deemed to be a lease from month to month, terminable, on the part of either lessor or lessee, by fifteen days' notice."
31. Shri. Naganand urged that the pre-conditions mentioned in the lease agreement has not been fulfilled by Millenia. Aricent was liable to pay the rents only after the lease commences. The relevant clause reads thus:
"17. Subject to the survival clause 18 below, unless terminated earlier by Hughes, this Agreement shall remain in force from the date of its execution until
(i) construction of Phase 1 Development is completed;
(ii) possession of Phase I is handed over to Hughes as per the terms of this Agreement;RFA No. 1373/2016 C/W RFA No.940/2016 RFA No.941/2016 RFA No.1078/2016 RFA No.1374/2016 23
(iii) the commencement of the lease and the execution and registration of the Lease Deed; and
(iv) If Hughes issues a written notice of termination, until return to Hughes of the funds pursuant to clause 5 hereinabove."
32. If according to Shri. Naganand, the term of lease must commence only after the above conditions are satisfied, then Aricent ought have taken the possession of the suit property after all the conditions were fulfilled. But, it is not in dispute that Aricent has taken possession of the property with effect from 15.11.2003.
33. It was argued by Shri. Naganand that Aricent has also spent Rs.25 Crores. Refuting the same, Shri. Holla contended that if Aricent has spent any money it is for its convenience such as partition wall, interiors, furniture, fittings etc., that investment does not enure to Millenia's benefit in any way.
34. It was next contended by Shri. Naganand that Millenia has failed to establish clear title over the suit RFA No. 1373/2016 C/W RFA No.940/2016 RFA No.941/2016 RFA No.1078/2016 RFA No.1374/2016 24 4 property. That KIADB had acquired portion of suit property vide notification dated 07.09.2004. The said notification was challenged in W.P.No. 9040/2005. The writ petition was disposed of with a direction to Millenia to approach the Special Acquisition Officer. In the light of the pending proceedings, Aricent is not obligated to pay the rents and holding charges.
35. This contention is noted only to be rejected because, admittedly, Aricent is a tenant in possession of the building. We have already held that there is no valid agreement and the tenancy is month to month. Acquistion of a portion of vacant land and filing a writ petition by Millinea is wholly irrelevant so far as Aricent's rights as tenant is concerned.
36. With regard to the arrears of rent, Shri. Naganand contended that Millenia never choose to file an application to stop further proceedings. This would mean that since the 4 The Karnataka Industrial Areas Development Board RFA No. 1373/2016 C/W RFA No.940/2016 RFA No.941/2016 RFA No.1078/2016 RFA No.1374/2016 25 landlord has not filed any application to stop legal proceedings non-payment of rents by Aricent shall have no consequences. A tenant is duty bound to pay the rents. Therefore, the contention urged on behalf of Aricent is wholly unreasonable and liable to be rejected.
37. Shri. Naganand next submitted that the termination of tenancy amounted to splitting of tenancy and such termination is bad in law. It is undisputed that two termination notices were issued by Millenia. The first notice seeking eviction of 73% of suit property and the second notice in respect of 27%.
38. Schedule B of the Agreement clearly sets out the demarcation. Aricent's witness has also deposed that:
".... As per Ex.P-3 separate area of plaintiff and RREE are earmark is in correct. After reading the schedule in Ex.P-3 witness admitted that they have been separately earmark."RFA No. 1373/2016 C/W RFA No.940/2016 RFA No.941/2016 RFA No.1078/2016 RFA No.1374/2016 26
39. Thus, at the time of Agreement, Aricent had agreed to the demarcation of rent, hence, it is estopped from urging the said plea.
40. In sum and substance, Aricent has come in possession of the building but without having a valid lease agreement. It has not paid rents and taken untenale and arrogant stand that Millenia had not sought for stopping of proceedings. As there is no valid lease agreement, the tenancy is month to month and a tenant is duty bound to vacate and handover the premise. Accordingly, point no.(i) is answered in the affirmative in favour of Millinea. Re.point No.(ii):
41. Aricent has instituted O.S.No. 25312/2007 seeking specific performance of the agreement. Clause 15 of the agreement reads thus:
"15. Without prejudice to the lease arrangements referred to above and in consideration of Hughes agreeing to take Phase I Development on lease, Hughes shall also have the RFA No. 1373/2016 C/W RFA No.940/2016 RFA No.941/2016 RFA No.1078/2016 RFA No.1374/2016 27 option and right to purchase Schedule A Property with the Building and Improvements free and clear of all liens, charges and encumbrances at the price agreed herein. This sole and exclusive option to purchase shall remain valid and exercisable on and from the second anniversary of the lease up to and inclusive of the sixth anniversary day thereof.
15.4 In consideration of the purchase option to Hughes, Hughes shall pay each month to RRRE a holding cost at Rs.2,16,000/- [Rupees Two Lakhs Sixteen Thousand Only] per month until Hughes exercises the purchase option or until the expiry of six years, whichever is earlier, unless before the expiry of six years, Hughes shall have decided not to exercise the purchase option in which event the obligation to pay the holding cost shall cease from such date as Hughes shall communicate in writing to MRPL and RRRE its decision not to exercise the purchase option. In the event Hughes exercising the purchase option, the holding cost paid by Hughes to MRPL and RRRE until the exercise of the purchase option shall be set off towards a part of the sale price. In the event of Hughes not exercising the purchase option, ARPL and RRRE shall, after the expiry of the aforesaid period of 6 years, be entitled to deal with and develop the remaining land in such manner as they may deem ft and MRPL and RRRE shall be entitled to retain the entire amount received by them towards holding coat, till then and shall be under no obligation to refund any portion of the same to Hughes."RFA No. 1373/2016 C/W RFA No.940/2016 RFA No.941/2016 RFA No.1078/2016 RFA No.1374/2016 28
42. Aricent is seeking to enforce the above Clauses in agrement dated 19.05.2003. We have held that the said agreement is not valid in law. In addition, Aricent was required to pay holding charges. Admittedly, holding charges are not paid. It was urged by Shri.Naganad that Aricent has invested Rs.25 Crores which proves that it was alaways ready and williing to purchase the property. We are not pursuaded to accept this argument for more than one reason.
43. Firstly because, the agreement is not valid in law.
44. Secondly because, the relevant depostions of One Manoj Kumar Vaish, the Vice President of Aricent has been recorded below:
".... ಂ ಎಂದ ೕ ಂದ ಭ ಂ
ಗ ఆ ಸ ವ ಣ ಜ ನನ .
ಅ ಕಟ ಡ ೕ ಪ ಗ ಕ
ಮ ಫ ಚ ಕಚ ವ ರ from
RFA No. 1373/2016
C/W RFA No.940/2016
RFA No.941/2016
RFA No.1078/2016
RFA No.1374/2016
29
Bare Shell to Warm Shell ವವ ನ ಣ ಜ
ನನ ...."
"We took the possession of the suit schedule property as a bare shell on 15.11.2003. I also agree that it should be given as a bare shell. I agree that we were suppose to fit out the premises to make it useable..."
"Bare shell means where the building is given with four walls with entrance and electric connection including lifts.
Warm shell means it has apart from bare shell power backup, air conditioning, fire fighting system."
".... As per EX.P-3 we had in option to take out all the fit outs with us if lease is terminated...."
45. Aricent had admittedly taken Bare Shell as agreed between the parties. Thus, whatever investment of Rs. 25 Crores has been made, it is for its convenience to run business. It has no connection with performance of the agreement. Once, the lease is terminated, Aricent can remove all the additional fixtures made leaving behind the Bare Shell. Since, there is no lease deed executed, and that RFA No. 1373/2016 C/W RFA No.940/2016 RFA No.941/2016 RFA No.1078/2016 RFA No.1374/2016 30 we have held that, the lease is that of month- to month tenancy, the purchase option available cannot be enforced.
46. The learned Trial Judge in para 21 has rightly recorded thus:
"21 Admittedly no lease deed is executed till this date. Therefore, it is clear that lease of 5 yrs is not yet commenced as per terms of suit agreement. The exercise of defendant's option to purchase the suit A schedule property is subject to taking the suit B schedule property on lease for the periods as mentioned in the suit agreement subject to strict compliance of Clause 15.4 of the suit agreement and payment of admitted rent amount to the plaintiff and RRCL every month. As stated supra, it is admitted by the P.W.1 during his cross- examination that payment of holding cost is not a condition precedent to exercise defendant's option to purchase suit A schedule property. But, Clause 15.4 mandates that the defendant shall pay holding cost of Rs.2,16,000/- per month until the defendant exercises its option to purchase the suit A schedule property or until expiry of six years which ever is earlier or unless before the expiry of six years till the day when the defendant shall communicate in writing its decision not to exercise its purchase option. This fact is not disputed by the defendant. Admittedly, the defendant has paid only Rs.30,00,000/- to the plaintiff and RRCL on 19.5.2003 towards part payment of security deposit. The said amount is not paid towards part sale consideration amount or towards holding cost. It is not a disputed fact that the plaintiff has filed this suit during the year 2005 for eviction of the defendant from the suit B schedule property alleging that the he has not been paid/paying admitted rent amount RFA No. 1373/2016 C/W RFA No.940/2016 RFA No.941/2016 RFA No.1078/2016 RFA No.1374/2016 31 every month to the plaintiff. Admittedly, the defendant has not paid rent dues amount and balance security deposit amount to the plaintiff from 15.11.2003 till 2.11.2006, 2.1.2007, 15.1.2007 and 19.10.2006. The cheques sent to the plaintiff on the aforesaid dates have been returned to the defendant. The defendant has not deposited the sale consideration amount of Rs.23,25,29,598/- in spite of its obtaining permission of this Court to deposit the same before this Court. Admittedly, the plaintiff has not paid the holding cost amount of Rs.2,16, 000/- every month from 15.11.2003 till 2.11.2006, 2.1.2007, 15.1.2007 and 19.10.2006 i.e., before exercise of its purchase option. It may be true that the plaintiff has invested more than 25 crores of rupees to have suitable infrastructure for its convenience to run a software company. Admittedly, the plaintiff agreed to take bare-shell building only on lease. Therefore, expenditure of 25 crores of rupees and construction canteen cannot be accepted that the plaintiff has done something in part performance of the suit agreement."
(Emphasis Supplied)
47. The learned Trial Judge has the above recorded sound reasons and we are at one with the said reasons and Accordingly, point no.(ii) is answered in the negative and in favour of Millenia.
RFA No. 1373/2016C/W RFA No.940/2016 RFA No.941/2016 RFA No.1078/2016 RFA No.1374/2016 32 Re.point No.(iii):
48. Shri. Holla submitted that the Trial Court has erred in granting damages at Rs.6 per sq ft. per month and instead should have ordered Rs.30 per sq ft per month on the premise that Millenia is entitled to recover the admitted rent and damages commensurate with the rentals existing in the locality. This requires determination in an enquiry under Order XX Rule 12 of the Code of Civil Procedure, 1908. Re. point No.(iv):
49. In view of the above discussion, the appeals filed by Aricent do not merit any consideration. No relief can be granted to Millenia, in their appeals directly in this appeal without an enquiry under Order XX Rule 12 of the Code of Civil Procedure, 1908.
RFA No. 1373/2016C/W RFA No.940/2016 RFA No.941/2016 RFA No.1078/2016 RFA No.1374/2016 33
50. In the result, the following:
ORDER
a) R.F.A. No 940/2016, R.F.A.No. 941/2016 and R.F.A. No. 1078/2016 are dismissed.
b) R.F.A.No. 1373/2016 and R.F.A.No. 1374/2016 are disposed of.
c) There shall be an enquiry under Order XX Rule 12 of the Code of Civil Procedure, with regard to the damages claimed by Millenia and that examine shall be completed as expeditiously as possible.
No Costs.
Before parting with this judgment, this Court places on record its deep appreciation for the research and assistance rendered by its official Research Assistants-cum-Law Clerks, Ms. Preksha R. Lalwani and Ms. Pooja Umashankar.
Sd/-
CHIEF JUSTICE Sd/-
JUDGE SPS