Delhi District Court
Mrs. Soni Dave vs M/S Trans Asian Industries Expositions … on 11 April, 2026
IN THE COURT OF SH. POORAN CHAND, DISTRICT
JUDGE-05, SOUTH DISTRICT, SAKET COURTS, NEW
DELHI
IN THE MATTERS OF:-
CS DJ 209346/2016 (OLD NO. 2330/2008)
CNR No. DLST01-006025-2016
MRS. SONI DAVE
....PLAINTIFF
Vs.
M/S TRANS ASIAN INDUSTRIES EXPOSITIONS PVT. LTD.
...DEFENDANT
AND
CS DJ 9347/2016 (OLD NO. 2331/2008)
CNR NO. DLST01-006024-2016
M/S G.S. BERAR AND CO. PVT. LTD. AND ANR.
....PLAINTIFFS
Vs.
M/S TRANS ASIAN INDUSTRIES EXPOSITIONS PVT. LTD.
....DEFENDANT
Date of Institution : 10.11.2008
Date of judgment : 11.04.2026
JUDGMENT
CS DJ No. 9346/16 & 9347/16 Page 1 of 144
1. As the issues involved in both the suits are common,
therefore, I shall dispose of the above mentioned both the suits
vide this common judgment.
2. The two suits being CS DJ 9346/2016 (filed by Ms.
Soni Dave- hereafter called the “Soni Dave” suit) and CS DJ
9347/2016 (filed by M/s. G.S. Berar & Co. (P) Ltd-hereinafter
called the “the Berar” suit).
3. The suit bearing CS DJ 9346/2016 titled as Mrs.
Soni Dave Vs. M/S/ Trans Asian Industries Expositions Pvt. Ltd,
is time bound suit by order of Hon`ble Supreme Court of India
in the SLP (Civil) No. 25390/2025 and Misc. Application No.
1927/2025 vide dated 31.10.2025, by which this Hon’ble
Supreme Court of India pleased to direct this Court as under:-
1. ‘Once the appeal is disposed of by the
High Court, the trial shall thereafter shall
proceed further on the issue of mesne
profits and pass appropriate order in
accordance with law.
(Para 5)
2. The trial Court shall complete the
proceedings within a period of two
months.’
(para 6)
4. Initially, the suits were filed before the Hon’ble High
Court of Delhi in the year 2008, however, due to change in
pecuniary jurisdiction, the suits were transferred to District
Courts. In both the suits, the plaintiffs had sought vacant and
peaceful possession of the suit properties as well as recovery of
mesne profits and damages. Both the suits were decreed by
CS DJ No. 9346/16 & 9347/16 Page 2 of 144
Hon’ble High Court under Order XII rule VI CPC qua relief of
possession with respect to suit property vide two separate orders
dated 05.08.2015. Aggrieved by this order, the defendant filed a
review petition in both the suits before Hon’ble Judge, High
Court of Delhi. The said review petition filed in both the suits
were dismissed with cost of Rs. 5 lac each having been imposed
upon the defendant vide common order dated 13.10.2015.
Thereafter, the defendant challenged the said order by filing a
Regular First Appeal. Vide order dated 18.05.2016, the Hon’ble
High Court of Delhi confirmed the decree passed under order XII
rule 6 CPC vide order dated 05.08.2015 and further modified the
order dated 05.08.2015 qua interim mesne profits and damages.
Aggrieved by the said order dated 18.05.2016 of Hon’ble High
Court of Delhi, the defendant approached the Hon’ble Supreme
Court of India by filing Special Leave Petition Nos. 19429-
19430/2016 which was also dismissed vide order dated
29.07.2016 granting further time to defendant to vacate the suit
premises till 31.10.2016 and thereafter the defendant handed over
the vacant and peaceful possession of the suit properties to the
plaintiff.
Therefore, now the remaining issues involved in
both the suits are mesne profits and damages. Though the
evidences were recorded separately in both suits and further, the
cross examination of DW-6 Mohd. Yasin Mir conducted in Soni
Dave suit was adopted by the defendant in the Berar suit as well.
5. The brief facts, as culled out from the plaints are that
in the Soni Dave suit, recovery of possession, mesne profits and
CS DJ No. 9346/16 & 9347/16 Page 3 of 144
damages with respect to the suit/tenanted premises being front
portion on the ground floor of property bearing No. M-1, Hauz
Khas, New Delhi admeasuring approximately 1200 sq. feet was
sought. In the Berar suit, recovery of suit/tenanted premises
being (a) basement measuring 5250 sq. feet approximately and
(b) a portion of the ground floor behind front flat measuring 1275
sq. feet of M-1, Hauz Khas, New Delhi was sought.
Soni Dave suit :
5. (i) That the plaintiff is the owner of a front portion on
the ground floor of a property located at M-1. Hauz Khas, New
Delhi measuring approximately 1200 sq ft (hereinafter referred to
as the suit premises).
(ii) It is averred that the defendant was a tenant under
the plaintiff and her late mother Late Smt. Raj Kuman Berar) in
respect of the suit premises. Late Smt. Raj Kumari Berar passed
away on 3 June, 2008 leaving behind the plaintiff as her sole
surviving heir. Hence the defendant has attorned the plaintiff in
respect of the share of Late Smt Raj Kuman Berar. The fact of the
passing away of Late Smt. Raj Kumari Berar has been
communicated to the Defendant and the Defendant has also
accepted the plaintiff as her sole surviving hair. Thus the
Defendant has tendered rents to the plaintiff even in respect of
the erstwhile share of Late Smt. Raj Kuman Berar under another
tenancy. The lease was on month to month basis though the
parties had agreed that it would be until the end of June 2008
after which the defendant would vacate the suit premises unless
the parties agreed to an extension. For the period ending June
CS DJ No. 9346/16 & 9347/16 Page 4 of 144
2008 the agreed rent was Rs.1,60,000-00 (Rupees one lakh sixty
thousand only) and the defendant had tendered such rent by way
of post-dated cheques to the plaintiff and her late mother. The last
such cheque for rent was for the month of June 2008 and was
deposited in the month of June 2008. Thus for the period after
30th June 2008 no further payment was tendered by the
defendant in respect of the suit property. The permitted user was
as per law. The rents were paid after deduction of tax at source.
(iii) It is further averred that as stated earlier the
permitted user was as per law. Hence in the event that the
Defendant were to put the suit property to any use that was not
normally permitted under law but could be permitted upon
payment of applicable charges, the Defendant was liable to
tender such charges as applicable in respect thereof including any
penalties, interest etc. thereon. Since the Defendant was using the
suit property as a showroom, the applicable charges were to be
additionally borne by it. Since the plaintiff has not been furnished
with any copy of any such receipt, the plaintiffs do not know if
the Defendant has tendered any amount towards conversion
charges. It has not done so it will be liable to do so and, in the
event that the plaintiff has to do so, she shall be entitled to claim
it from the Defendant at such time. This is being stated here for
the record though the plaintiff is not seeking the recovery of any
such amount by way of the present suit since as of date no such
demand has been made on the plaintiffs.
(iv) It is also averred that the Plaintiff had been asking
the defendant if it wanted to renew the tenancy, and if so, to
discuss the new rents that would apply w.e.f July 2008. However,
CS DJ No. 9346/16 & 9347/16 Page 5 of 144
the Defendant had been avoiding the subject. With effect from
June 2007 as, the Income Tax Act had also imposed a liability for
the payment of service tax on the amount of the rent. This lability
was of the tenant, however, the landlord was to recover the
amount from the tenant and to pay it to the government. Though
the Plaintiff had been asking the Defendant to pay the amount so
that she could deposit it as required by law, ever since June 2007,
the Defendant had not been doing so and had been avoiding it on
one excuse or another. It has not paid the said amount till date.
Since the plaintiff shall be filing a separately suit for the recovery
of the service tax for the period that the said property had been
rented to the Defendant i.e. till 31.6.08, she is not seeking the
amount in the present suit. However, they are seeking the amount
of the service tax on the damages/use / mesne profits for the
period thereafter.) It is also averred that the Defendant had made
an unauthorized construction of a kitchen / pantry in the rear of
the ground floor of the suit property which it refused to remove
despite repeated requests and warnings. This portion was also not
under its tenancy. It had also kept a large electricity generator on
the premises without obtaining the prior permission of the
plaintiff which also it refused to remove despite repeated requests
and warnings. This portion was also not under its tenancy.
Whether it had the necessary permissions under law from the
prescribed authorities for the purpose is not known since it has
not furnished any such document to the plaintiff despite repeated
requests. The defendant is hereby called upon to state the facts in
relation thereto else it shall be presumed that permissions had not
been obtained. The plaintiff further states that in the event that
CS DJ No. 9346/16 & 9347/16 Page 6 of 144
any charges / penalties etc, are applicable for such unauthorized
constriction and / or the electricity generator, the Defendant shall
be liable to pay them. In the event that the plaintiff has to pay any
such sum, she shall he entitled in recover them from the
Defendant.
(v) It is further averred that since the parties could not
come to any understanding about the various misusers and/or the
rent, the defendant was liable to and should have vacated the suit
premises. However, it did not do so. However, in the meanwhile
vide notice dated 5.5.08. The plaintiff, her mother and another
entity (who were owners of the said other portion) had given
notice of termination of another tenancy in the same building to
the same defendant. Thereupon the Defendant held negotiations
with them and, on 21 May 2008 certain terms were agreed to
regarding that portion. The defendant also requested the plaintiff
and her mother to await the finalization of documents relating to
that property and assured them the plaintiff and her mother) that
thereafter this would also be amicably resolved. The plaintiff and
her mother agreed to await the said matter to be so resolved but
made it clear that the tenancy of the suit property had already
come to an end and in the event that there was no agreement
regarding it, the defendant would be liable to vacate the suit
property as and when so called upon and to pay use and
occupation charges at the market rate. The defendant had agreed
thereto. The defendant also agreed to tender the service tax due
for the period June 2007 till end of June 2008 within the next one
week. It is further averred that the defendant did not pay any
amount after June, 2008. It is further averred that the defendant
CS DJ No. 9346/16 & 9347/16 Page 7 of 144
raised disputes with respect to payment of service tax, which was
payable in accordance with law, since June, 2007. Thereafter, the
plaintiff served legal notice upon the defendant on 08.08.2008,
demanding handing over of vacant and peaceful possession of the
suit property. It is further averred that defendant resisted the
demand which led to filing of the present suit. That the cause of
action arose on or about 30th June 2008/1st July 2008 when the
period of tenancy came to an end but the Defendant did not
vacate the suit property. It also arose on 8th August 2008 when
the plaintiff caused notice dated 08.08.2008 to be issued to the
Defendant. It also arose on or about three days thereafter when
the same was served on the defendant. It also arose on
01.07.2006 when the defendant stopped paying any amount. It
also arose on or about 26.08.2008 when the period of the notice
expired. The defendant continues to be in the illegal occupation
of the suit premises.
(vi) In this suit, the plaintiff has sought following reliefs:
“(a) a decree for the eviction of the Defendant
from the suit property and handing over of
possession to the plaintiffs;
(b) pass a money decree for a sum of Rs.
16,00,000/- (Rupees sixteen lakhs only) by way of
damages/mesne profits/use and occupation charges
for the period 1.7.08 till 31.10.08 and interest of Rs.
30,000/- (Rupees thirty thousand only) thereon as of
the date of filing of the suit in favour of the plaintiff
and against the Defendant for the unauthorized
use and occupation of the suit property;
CS DJ No. 9346/16 & 9347/16 Page 8 of 144
(c) pass a money decree for a sum of Rs.
1,48,000/- (Rupees one lakh forty eight thousand
only) and penalty and interest of Rs. 20,000/-
(Rupees twenty thousand only) thereon as of date
by way of service tax on the sum of damages/mesne
profits/use and occupation charges for the period
1.7.08 till 31.10.08 in favour of the plaintiff and
against the Defendant with interest and penalties
thereon as per law;
(d) pendente lite interest @ 18% per annum on
Rs. 16,30,000/- (Rupees sixteen lakhs thirty
thousand only)since the date of filing of the suit till
the date of realisation of the amount in favour of the
plaintiffs and against the Defendant;
(e) pendente lite damages/mesne profits/use and
occupation charges with interest @ 16% per annum
thereon with effect from the respective dates of the
beginning of each month and service tax, interest
and penalty thereon in favour of the plaintiff and
against the Defendant till the date of its
unauthorized use and occupation of the suit
premises;
(f) award exemplary and punitive costs of the
suit in favour of the plaintiff and against the
defendant;”
BERAR SUIT :
6. (i) The plaintiffs have averred that they are the owners of
a) a basement (measuring approximately 5250 sq. ft.) and;
b) a portion on the ground floor behind the front flat
(measuring approximately 1275 sq. ft.),
CS DJ No. 9346/16 & 9347/16 Page 9 of 144
located at property no. M-1, Hauz Khas, New Delhi (hereinafter
referred to as the suit property). It is further averred that as of
date, Plaintiff no.1 owns 5/6th share and plaintiff no.2 owns the
remaining 1 /6th share. The plaint is signed on behalf of Plaintiff
no.1 by Mr. Adit Dave who has been authorized to institute this
suit and to sign all papers including this plaint, affidavit and
vakalatnama in relation thereto.
(ii) It is further averred that the defendant was a tenant under
the plaintiffs and the mother of plaintiff no,2 Late Smt. Raj
Kumari Berar in respect of the suit premises. The lease was on
month to month basis. The permitted user was as per law. The
rents were paid after deduction of tax at source. Late Smt. Raj
Kumari Berar passed away on 3 June, 2008 leaving behind
plaintiff no.2 as her sole surviving heir. Hence the defendant has
attorned to plaintiff no.2 in respect of the share of Late Smt. Raj
Kumari Berar. The fact of the passing away of Late Smt. Raj
Kumari Berar has been communicated to the Defendant and the
Defendant has also accepted plaintiff no.2 as her sole surviving
heir. Thus, the Defendant has tendered rents to plaintiff no.2 even
in respect of the erstwhile share of Late Smt. Raj Kumari Berar.
(iii) That as stated earlier, the permitted user was as per law.
Hence in the event that the Defendant were to put the suit
property to any use that was not normally permitted under law
but could be permitted upon payment of applicable charges, the
Defendant was liable to tender such charges as applicable in
respect thereof including any penalties, interest etc. thereon.
Since the Defendant has been using the suit property as a
CS DJ No. 9346/16 & 9347/16 Page 10 of 144
showroom, the applicable charges were to be additionally borne
by it. Since the plaintiffs have not been furnished with any copy
of any such receipt, the plaintiffs do not know if the Defendant
has tendered any amount towards conversion charges. If it has
not done so it will be liable to do so and, in the event that the
plaintiffs have to do so, they shall be entitled to claim it from the
defendant at such time. This is being stated here for the record
though the plaintiffs are not seeking the recovery of any such
amount by way of the present suit since as of date no such
demand has been made on the plaintiffs.
(iv) It is further averred that the Plaintiffs had been asking for
revision in rent for quite some time but the Defendant had been
avoiding the subject. With effect from June 2007 the Income Tax
Act had also imposed a liability for the payment of service tax on
the amount of the rent. This liability was of the tenant. However,
the landlord was to recover the amount from the tenant and to
pay it to the government. Though the Plaintiffs had been asking
the Defendant to pay this amount so that they could deposit it as
required by law, ever since June 2007 the Defendant had not been
doing so and had been avoiding it on one excuse or another. It
has not paid the said amounts till date. (Since the plaintiffs shall
be filing a separate suit for the recovery of the service tax for the
period that the said property had been rented to the Defendant i.e.
till 31.8.08, they are not seeking the amount in the present suit. It
was also alleged that defendant stopped paying the rent with
effect from February, 2008. Its officers avoided the plaintiffs and
refused to discuss the question of arrears of rent. The parties held
CS DJ No. 9346/16 & 9347/16 Page 11 of 144
negotiations and on 21.05.2008, it was agreed that the rent would
be revised to Rs. 5 lacs per month with effect from 01.06.2008.
The defendant also agreed to tender outstanding and overdue rent
for the period from February 2008 to May, 2008. These payments
were to be made after deduction of tax at source; the parties
further agreed that the permitted use of the property would be in
accordance with the rules and regulations and bye laws
governing it. Furthermore, the defendant agreed to remove and
take apart the unauthorized constructions and other items such as
the electricity generator and or obtain the requisite permission to
keep it. It is further averred that the defendant started tendering
enhanced rental at Rs. 5 lacs per month towards rent after
deducting tax at source with respect to the same property. It is
also averred in the plaint that in all about Rs. 5 lacs after
deduction of tax at source was paid to both the plaintiffs on
10.07.2008, however, the defendant did not tender any service
tax as agreed. It is further averred that despite being called upon
to pay the service tax, the defendant did not pay the service tax
arrears. Therefore, notices dated 22.08.2008 and 26.08.2008 were
issued by the plaintiff, whereby the defendant was asked to
vacate the suit premises and deliver vacant and peaceful
possession thereof within 15 days of the receipt of the notice.
(v) The defendant did not vacate the premises and instead
resisted the legal notice by letter dated 30.08.2008. The
defendant sought to create confusion with respect to the property
and occupation. The defendant was a tenant under the plaintiff
and another entity with respect to basement, rear portion at the
CS DJ No. 9346/16 & 9347/16 Page 12 of 144
ground floor and another front portion at ground floor but under a
separate lease. The second plaintiff had called upon the defendant
to vacate her portion of the suit premises. There are other
allegations made in the plaint as far as the cause of action was
concerned and lastly it is averred that the rent in respect of
comparable premises in the area of similar size would be Rs.7
lacs per month. Service tax in addition would be payable.
Therefore, similar following reliefs, as have been sought in the
Soni Dave suit, are sought in the present suit.
(a) a decree for the eviction of the Defendant
from the suit property and handing over of
possession to the plaintiffs;
(b) pass a money decree for a sum of Rs.
14,00,000/- (Rupees fourteen lakhs only) by way
of damages / mesne profits / use and occupation
charges for the period 1.9.08 till 31.10.08 and
interest of Rs.30,000/- (Rupees thirty thousand
only) thereon as of date of filing suit in favour of
the plaintiffs and against the Defendant for
unauthorized use and occupation of the suit
premises;
(c) pass a money decree: for a sum of
Rs.1,74,000/- (Rupees one lakh seventy four
thousands only) and penalty and interest of
Rs.20,000/- (Rupees twenty thousand only) thereon
as of date by way of service tax on the sum of
damages/mesne profits / use and occupation charges
for the period 1.9.08 till 31.10.08 in favour of the
plaintiffs and against the Defendant with ink rest
and penalties thereon as per law;
(d) pendente lite interest @18% per annum on
CS DJ No. 9346/16 & 9347/16 Page 13 of 144
the sum of Rs. 14,30,000/- (Rupees fourteen lakhs
thirty thousand only) and on the sum of Rs.
1,74,000/- (Rupees one lakh seventy four thousand
only) and interest of Rs.20,000/- (Rupees twenty
thousand only) thereon since the date of filing of
the suit till the d ate of realisation of the amount in
favour of the plaintiffs and against Defendant;
(e) pendente lite damages / mesne profits / use
and occupation charges with interest @18% pa
thereon wef the respective dated of the beginning of
each month and service tax, interest and penalty
thereon in favour of the plaintiffs and against the
Defendant till the date of its unauthorized use and
occupation of the suit premises until paid;
(f) award exemplary and punitive costs of the
suit in favour of the plaintiff and against the
defendant.
WRITTEN STATEMENTS:
7. The defendant filed Written Statements in both the
suits. Though the defendant has filed separate Written Statement
in Soni Dave case but it is mentioned in the Written Statement
that the contentions / issues raised in the amended Written
Statement of Berar Suit be also read in the Soni Dave suit.
Therefore, the relevant portion of the Written Statement of the
defendant in Berar suit is reproduced herein under for better
appreciation:-
1. The Defendant is filing the present Written
Statement in Reply to the Suit filed by the Plaintiffs.
The Defendant states that no allegation, statement,
averment and contention contained in the Suit
should be deemed admitted save and except to those
CS DJ No. 9346/16 & 9347/16 Page 14 of 144
which are specifically admitted by the Defendant to
be true and correct. In the absence of the above, it is
respectfully submitted that such allegation,
statement, averment and/or contention by the
Plaintiffs should be treated as a specific denial by
the Defendant.
2. The Defendant states that for each of the
averments detailed hereunder the plaint is liable to
be dismissed in limine as being misconceived and
devoid of merits.
3. The Plaintiffs have filed the present Suit stating
the wrong and incomplete facts. For assistance of
this Hon’ble Court, the Defendant is setting out
herein below, a brief overview of the factual matrix
(details of which have been provided subsequently
in the Written Statement) between the Parties,
leading up to the filing of the present suit.
3.1 The Plaintiffs and Defendant entered into a
Primary Lease Agreement on 02.12.1989 in respect
of the Suit Property which comprised the basement
measuring upto 5078 sq. ft. and a portion on the
ground floor (behind the front flat) measuring
approximately 1065 sq. ft. and also inclusive of an
area on the Building consisting of a Pantry.
3.2 Some of the salient terms of the Primary Lease
Agreement were as follows:
(i) the term of the lease was three (3) years,
renewable for a further period of three (3) years and
renewable thereafter for a further period, each being
of three (3) years (Clause 2);
(ii) the monthly rental was fixed for the said period
of three (3) years. At the time of renewal, the rental
was subject to an upward revision of fourteen per
cent (14%) for the renewed term (Clause 2);
(iii) the lease was granted for residence, storage,
exhibition of handicraft items (Clause 7);
(iv) it was the responsibility of the Plaintiffs to bear
all taxes/charges to the Municipal Corporation of
Delhi (Clause 10);
CS DJ No. 9346/16 & 9347/16 Page 15 of 144
(v) The Defendant was entitled to install generator
provided that the same does not cause any nuisance
or health hazard to other occupants (Clause 13).
3.3 Before proceeding to explain the evolution of the
Primary Lease Agreement leading upto the present
Suit, the Defendant wishes to bring the following to
the notice of this Hon’ble Court:
(i) the Defendant is the owner of Flat C on the First
Floor of the Building’
(ii) the owners of property in the Building are
entitled to a portion on the ground floor,
proportionate to their ownership in the Building.
(iii) as part of its right as an owner, the Defendant
placed the electricity generator on its entitled part on
the rear of the Building in the suit property.
3.4 The Parties, with mutual consent, based on the
terms and conditions of the Primary Lease
Agreement, kept renewing the lease from time to
time, each time for a period of three (3) years till
January, 2008. However, the upward revision in the
lease rentals to be paid by the Defendant was
approximately twenty five per cent (25%) instead of
the fourteen per cent (14%) as envisaged under the
Primary Lease Agreement. This upward revision of
approximately 25% was done each time with the
consent and the agreement of the parties.
3.5 During the lease period, the Defendant had
made substantial investments of fixed nature in the
Suit Property with the consent of the Plaintiffs,
which gave the Defendant rights in the Suit Property
of permanent character.
3.6 In addition, the Defendant has also added
substantial value to the Suit Property by having the
Suit Property converted for use from residential to
commercial by using its good offices and spending
substantial amounts of money and by making
payment of conversion charges pursuant to the
Public Notice issued by Municipal Corporation of
Delhi which has converted the status of the Suit
Property from residential to commercial.
CS DJ No. 9346/16 & 9347/16 Page 16 of 144
3.7 In January, 2008, the Lease rentals were being
paid by the Defendant at Rs. 1,63,125 (Rupees One
Lac sixty three thousand one hundred and twenty
five only). In the same month, parties had entered
into discussions for revising the rentals. However, no
amount was agreed upon.
3.8 In March, 2008, the Plaintiffs demanded an
increase in the rental from Rs. 1,63,125 (Rupees One
Lac sixty three thousand one hundred and twenty
five only) to Rs. 4,00,000/- (Rupees Four Lacs) for a
term of two (2) years. This constituted an upward
revision of 145%, which was a sharp increase from
the 25% upward revision, being earlier agreed upon.
However, the Defendant in light of huge investments
made in the property agreed to even this upward
revision to Rs. 4,00,000/- (Rupees Four Lacs Only)
on the condition that there will be no further revision
for a long period. The Defendant paid this upward
revision of 145% only to be in peaceful use and
possession of the Suit Property. Since the Plaintiffs
retracted on their commitment and initiated the
present court proceedings, the rent payable to the
Plaintiffs for the period beginning February, 2008 is
Rs. 1,85,962/- (Rupees One Lac, Eighty Five
Thousand, Nine Hundred and Sixty two).
3.9 It is pertinent to note at this point, that these
extensions of the term of Lease and revision of
Lease Rentals were being effected under the aegis of
the Primary Lease Agreement dated 02.12.1989.
3.10 The Defendant attempted to make payments to
the Plaintiffs at the rate of Rs. 4,00,000/- (Rupees
Four Lacs only) per month, but the Plaintiff refused
to accept the payments and started insisting for
further revision in rentals. In view of this conduct,
the Plaintiffs disentitled themselves from receiving
the enhanced rentals. The Plaintiffs are only entitled
to receive use and occupation charges at the rate of
Rs. 1,85,962/- (Rupees One Lac, Eighty Five
Thousand. Nine Hundred and Sixty two) per month.
3.11 On or around, 5.5.2008, 08.05.2008 and
12.05.2008 the Plaintiffs issued notices terminating
the Lease to the Defendant. Issuance of the said
notices (as explained in details at Para 5.83 were
merely a stratagem by the Plaintiffs to exert undue
CS DJ No. 9346/16 & 9347/16 Page 17 of 144
pressure on the Defendant to comply with
unjustified demands for increase in rentals made by
the Plaintiffs.
3.12 On 21.05.2008, the Parties, together with their
respective counsels, met to mutually resolve the
issues arising between the Parties. The discussions
were in terms of the Primary Lease Agreement and it
was agreed, that the following revisions be made:-
(i) the term of the lease would now be for a
period of two (2) years, renewable for two (2)
years thereafter, and subsequently thereafter
for such period on the mutual consent of
Parties;
(ii) rental rates were to be revised annually
(instead of the earlier three (3) years period
under the Primary Lease Agreement). For the
first year, rentals were agreed to be paid at Rs.
5,00,000/- (Rupees Five Lacs only) per month
w.e.f. 01.06.08;
(iii) conversion charges (in the past and future)
were to be borne equally between the parties;
(iv) the Defendant was to bear payment of
service tax w.e.f. 01.06.2008.
Other pertinent points in respect of this Agreement
dated 21.05.08:
(v) Parties also decided to enter into a fresh
lease Agreement, however, this agreement on
21.05.08 was in terms of, and under the
Primary Lease Agreement dated 02.12.1989.
The execution of a fresh lease was not a
condition precedent to this Agreement being
given effect.
(vi) This Agreement dated 21.05.2008, was a
firm and biding Agreement between the parties
and was arrived at, based on mutual consent.
However, the Plaintiffs did not act on this
Agreement. Not only was the lease deed not
executed on the terms agreed on 21.05.2008, but the
Plaintiffs failed to give the Defendant peaceful
CS DJ No. 9346/16 & 9347/16 Page 18 of 144
occupation of the Suit Property, thus eroding the
very basis of the Defendant having agreed to
enhanced rents. The Plaintiffs disentitled themselves
to receipt of any enhancements in the rental
amounts. The Plaintiffs are liable in law to refund all
the excess amounts received by them from the
Defendant. Defendant was liable to pay
enhancements to the Plaintiffs on the last paid rental
of Rs. 1,60,000/- (Rupees One Lakh, Sixty
Thousand).
3.13 It is important to note that during this
meeting 21.05.2008, the Defendant paid the
Plaintiffs rentals for the month of February- May,
2008 at the rate of Rs. 4,00,000/- (Rupees Four Lacs
only) per month. These amounts were duly accepted
and encashed by the Plaintiffs. The amounts paid
towards enhancements of rent are liable to be
refunded to the Defendant since enhanced rent was
only tendered under the clear understanding that the
Plaintiffs will give peaceful possession of the Suit
Property to the Defendant. However, in breach of the
said understanding, the Plaintiffs first issued
termination notices and thereafter initiated the
present suit proceedings, disentitling themselves to
any enhancements in rentals.
3.14 The Defendant agreed to the further revised
rentals (despite the earlier revision, on,inter alia the
following reasons:-
(i) the Defendant’s sentimental attachment to
the Suit Property as the Defendant had been
occupying the same for over nineteen (19)
years and the Suit Property forms the
Defendant’s principal place of business since
1989;
(ii) the huge investments made by the
Defendant in the suit property;
(iii) agreement by the Plaintiffs to contribute
equally to the payment of conversion charges,
for 2 years and thereafter to be borne by the
Plaintiffs.
However the Plaintiffs are liable to refund all
amounts received by the Plaintiffs towards enhanced
CS DJ No. 9346/16 & 9347/16 Page 19 of 144
rentals in excess of the market rents of the Suit
Property in view of them failing to give peaceful
possession of the Suit Property to the Defendant.
3.15 The Defendant duly paid rentals as per the
revised arrangements i.e. at Rs. 5,00,000/- (Rupees
Five Lacs) per month from 01.06.08 till the period
ending 31.08.08. These amounts were accepted by
the Plaintiffs and encashed. The Plaintiffs are liable
to refund amount paid in excess of the market rentals
by the Defendant.
3.16 In the month of August 2008 and while the
Defendant was paying the agreed rentals of Rs.
5,00,000/- (Rupees Five Lacs) per month, the
Plaintiffs, without just cause or basis, issued several
termination notices to the Defendant. The said
termination notices were issued with malafide intent
(as explained in paras 5.22 to 5.23) and a tactic to
exert further unreasonable demands on the
Defendant and enforce compliance with ancillary
issues. Upon issuance of the said termination
notices, the Plaintiffs disentitled themselves to any
enhancements in rents.
3.17 For the period beginning 01.09.08, the
Defendant made several attempts, through its
officers and even counsel to deposit rentals at the
amount of Rs. 5,00,000/- (Rupees Five Lacs) to the
Plaintiffs and/or their counsel, but the Plaintiffs
and/or their counsel arbitrarily and unjustifiably,
refused to accept the cheques. The Plaintiffs
(without informing this Hon’ble Court of their own
refusal to accept the said cheques) are now
misrepresenting to this Hon’ble Court that the
Defendant has not paid rentals for the said period.
3.18 Continued attempts were made by the
Defendant, through its officers and counsel to
deposit rent but the said attempts were futile.
3.19 On 01.11.2008, the Plaintiffs filed the present
Suit seeking eviction of the Defendant from the Suit
Property and damages.
3.20 The Plaintiffs have thus resiled from the
Agreement reached between the parties on
21.05.2008 under the aegis of the subsisting Primary
Lease Agreement dated 02.12.1989, and have
CS DJ No. 9346/16 & 9347/16 Page 20 of 144
refused to accept payments at the agreed Lease
rentals of Rs. 5,00,000/- (Rupees Five Lacs) per
month. The amount of rent payable for the suit
property, therefore, needs to be fixed and decided as
on date, before the Defendant can tender any
payment towards lease rentals. The Defendant was
only liable to pay the rent of Rs. 1,85,962/- (Rupees
One Lakh, Eighty Five Thousand, Nine Hundred and
Sixty Two) for the period between February, 2008 to
February, 2010.
3.21 However, the Defendant cannot and ought
not be evicted from the suit property since it is a
valid and lawful tenant, deriving its rights from a
fixed term lease whose term is operative at least till
01.06.2010 and further renewable till 01.06.2012
and renewable again at the mutual consent of the
parties. The Defendant has a right to remain in
occupation of the Suit property.
3.22 The Plaintiffs committed a fraud on this
Court and on the Defendant in as much as the
Plaintiffs pursued the present litigation for
possession against the Defendant without just cause.
At the same time, the Defendant without prejudice to
its rights in law, under orders of this Hon’ble Court
tendered enhanced rentals to the Plaintiffs. The
Plaintiffs were never entitled to any enhanced rentals
as the Plaintiffs failed to provide peaceful use and
occupation of the Suit Property to the Defendant.
3.23 The Defendant having enhanced the intrinsic
value of the Suit Property on account of investments
in the Suit Property of fixed nature, are entitled in
law to damages and compensation by the Plaintiffs.
Preliminary Objections:
4. At very outset, the Defendant seeks to raise
inter alia, the following Objections to the present
Suit:
4.1 The Summary above clearly establishes that
the Plaintiffs have not come to this Hon’ble Court
with clean hands and the present Suit is not
maintainable and ought to be dismissed with costs.
The Defendant is a valid and lawful tenant under the
fixed term lease and cannot be dispossessed/evicted
CS DJ No. 9346/16 & 9347/16 Page 21 of 144
from the Suit Property without just cause or reason.
Suit is peppered with contradictory statements and
attempted to mislead the Hon’ble Court on facts
4.2 The Plaintiffs have misrepresented the
material facts. They have made an incorrect
statement pertaining to the area occupied by the
Defendant and in Para 1 of the Plaint, the Plaintiffs
have stated that the basement area measures
approximately 5250 sq. ft. and the portion on the
ground floor behind the front flat measures
approximately 1275 sq. ft. In fact, the Basement area
measures approximately 5078 sq. ft. and the portion
on the ground floor measures to 1065 sq. ft. It is
stated that the areas actually occupied by the
Defendant have been /purposely inflated to enable
the Plaintiffs to seek a much higher rental from the
Defendant.
Suit is based on the frivolous grounds, is an abuse of
the process of this Honb’Ie Court and is not
maintainable
4.3 The Plaintiffs have withheld material facts
from this Hon’ble Court and have approached this
Hon’ble Court with unclean hands. The Plaintiffs are
not deprived of the possession of Property given that
they own and occupy other Properties within the
said Building, namely, the Flat on the First Floor as
well as the Flat on the Barsati Floor. It is evident that
the Suit for Possession filed by the Plaintiffs is an
attempt to extract further and undue monies from
Defendant. The reliefs sought by the Plaintiff, by
way of the present Suit ought not to be granted and
the Suit deserves to be dismissed on this ground
alone.
4.4 Further, the Defendant has always been a good
tenant, who has maintained and in fact, improved
upon the Suit Property. The Defendant has never
defaulted and has made timely payments towards
rent for the past nineteen (19) years.
4.5 Despite the above, the Defendant, who is
presently in occupation of the Suit Property has
made several attempts to meet the Plaintiffs and/or
their authorized representatives to forward the on
CS DJ No. 9346/16 & 9347/16 Page 22 of 144
account without prejudice rental payments for the
period beginning 01.09.2008 till date but the
Plaintiffs and/or their authorized representatives
have refused and rejected the said Payment. The
Defendant contends that the non-acceptance of
payment is a further evidence of abuse by the
Plaintiffs as the Lessor to put the Defendant in a
prejudicial position, in order to rely upon an
“alleged” non-receipt of payment to wrongly impute
before this Hon’ble Court that the Defendant has not
complied with its payment obligations.
4.5 (A) It is relevant to state that during the
pendency of the present litigation, the Plaintiffs
negotiated with the Defendant and vide emails dated
19.01.2010, 20.07.2009 and 18.08.2009, the
Plaintiffs had agreed to a consolidated rental of Rs.
7,50,000/- (Rupees Seven Lakhs Fifty Thousand
only) for the Suit Property as also for the property
forming part of suit bearing number CS(OS)
2330/2008. However, the Plaintiffs kept on
oscillating only in order to extract more monies from
the Defendant and no agreement could be reached
between the Parties. The Plaintiffs misused the
process of the Courts to make unlawful gains and are
liable to refund all amounts received from the
Defendant as are in excess of the market rents.
Conduct of the Plaintiffs’ disentitles it from obtaining any
reliefs from this Hon’ble Court
4.6 The Defendant has placed the electricity
generator on the Suit Property since 1989 and the
Pantry was in existence before the Defendant
became the Lessee of the Suit Property. The
electricity generator in fact has been placed on a
small portion of the Suit Property in the rear of the
Building i.e. which the Defendant is entitled to place
by virtue of its right as an owner of Flat C on the
First Floor of the Building and as also permitted
under the Primary Lease Agreement. The Defendant,
in the interest of renewing the relationship with the
Plaintiffs had agreed to relocate the said electricity
generator and refurbish the Pantry. The Defendant
states that these are ancillary matters and the
Plaintiffs have unnecessarily placed reliance on the
same to seek relief. It is relevant to state that during
the pendency of the present litigation, the Defendant
CS DJ No. 9346/16 & 9347/16 Page 23 of 144
removed the pantry and re-located the electricity
generator as per the wishes of the Plaintiffs. The
Defendant incurred huge costs in carrying out the
same however to no avail. The Plaintiffs continued
to litigate the present matter thereby disentitling
themselves to any enhancements of rent. The
Plaintiffs caused huge loss to the Defendant and are
liable to compensate the Defendant.
4.7 Apart from the above, the Plaintiffs have also
unreasonably relied on the issue of service tax to
seek relief prayed for. The Notification for
imposition of service tax on immovable properties
was announced in 2007 and Section 68 of the
Finance Act, 1994 clearly stipulates that liability to
pay the same falls on the service provider, in the
present case, the Lessors. The Defendant had agreed
to bear the liability of service tax w.e.f. 01.06.2008.
The Plaintiffs’ liability at most is for a minimal
period from June, 2007 to May, 2008. The Plaintiffs
instead of clearing their own dues have unreasonably
and without basis sought to impose this additional
liability on the Defendant and by their conduct,
attempted, threatened and have in fact now refused
to proceed with discussions. In any case, in view of
the failure of the Plaintiffs to give peaceful use and
occupation of the Suit Property to the Defendant and
in view of the fact that the Plaintiffs pursued the
present litigation, in law, no agreement can be said
to have been arrived between the Parties as to
payment of service tax. Liability of payment of
service tax rests solely with the Plaintiffs being
service providers. The Defendant is not liable in law
to make any payments to the Plaintiffs on account of
service tax. In fact, the Plaintiffs are liable to
compensate the Defendant for loss and damage
caused to the business of the Defendant and also
liable to refund the excess rent collected from the
Defendant without letting the Defendant be in
peaceful occupation of the Suit Property.
4.8 A perusal of the table at Para 16 of the
Paragraph wise Reply clearly illustrate the soaring
increase in rent which the Plaintiffs were claiming,
this is particularly obvious in respect of the without
prejudice on account payment towards rentals
claimed from January, 2008 to date.
CS DJ No. 9346/16 & 9347/16 Page 24 of 144
4.9 It is clear and evident from the conduct of the
Plaintiffs that they are raising frivolous issues. This
Suit is clearly an attempt at wrongful extraction of
further monies from the Defendant.
It is the Defendant who has been prejudiced and made to suffer
by the Plaintiffs act of unilaterally terminating the present Lease
4.10 The Plaintiffs are well aware that the Defendant
is emotionally attached to the Suit Property in
question given that it has been the Lessee in the Suit
Property for over nineteen (19) years now and it is
the primary place of the Defendant’s business since
1989. The Plaintiffs are also well aware that the
Defendant has with the Plaintiffs’ consent and
knowledge spent substantial amounts of money in
refurbishing the Property on the understanding that it
was going to be in occupation of the Property for a
long period.
The Suit is simply a stratagem to force and coerce the
Defendant to comply with the demands in respect of the
present Property and evidence of the Plaintiffs abuse of
power as the Landlord/Lessor
4.11 A narrative of the facts pertinent to the
present Suit (as contained in the brief overview
above, and the Preliminary Submissions below) and
the various Objections that the Defendant has to the
present Suit, it is evident that the present Suit is only
a means to an end. The Plaintiffs have undeniably
filed the present Suit to exert unreasonable pressure
and coerce the Defendant to submit to the demands
placed in respect of the present Suit Property, As a
means of further frustrating and pressurising the
Defendant into submission, the Plaintiff No.2 has
also commenced separate proceedings against the
Defendant vide Suit No. 2330, which is also pending
before this Hon’ble Court. It is clear beyond doubt
that the Plaintiffs have clearly abused their power
and superior bargaining position as the
Landlord/Lessor.
4.12 Admittedly, the Plaintiff does not require the
Suit Property for its use and/or occupation. There is
CS DJ No. 9346/16 & 9347/16 Page 25 of 144
no such bonafide requirement expressed even in the
present Suit. Given the fact that the Defendant has in
the past paid, amounts which are well above the
prevalent current market rates The Plaintiffs conduct
is suspicious and reeks of mala fides. The Plaintiffs
are liable to refund all amounts paid by the
Defendant over and above the market rental rate of
the Suit Property.
Facts
Though the Defendant has summarized the facts in
brief that have culminated in the present frivolous
and non maintainable Suit, a detailed narration of
facts relevant to the present suit, are given below:
5.1 Description of Building where Suit property is
situated/Ownership Structure/Rights Associated: The
Building located at M-l Hauz Khas, New Delhi – 110
016, is comprised of nine (9) individual apartments
and one (1) basement. There are four (4) apartments
on the Ground Floor, four (4) apartments on the First
Floor and one (1) apartment on the Barsati Floor.
The entire Plot is approximately 1300 square yards
and the ownership structure of the Suit Property is as
follows:
(a) two (2) Flats on the Ground Floor are
owned by the Plaintiffs (and is leased to the
Defendant under two (2) different leases. One
lease is the subject matter of dispute in the
present Suit);
(b) one (1) Flat on the Ground Floor owned
by Mr, A.D. Aggarwal and Others, which is
also leased to the Defendant;
(c) one (1) Flat on the Ground Floor is owned
and occupied by Mr. Manak Chand Rawat;
(d) one (1) Flat on the First Floor is owned
and occupied by the Plaintiffs;
(d) one (1) Flat of the First Floor is owned
and occupied by Dr. RC Taneja;
(e) one (1) Flat on the First Floor is owned
and occupied by the Defendant;
CS DJ No. 9346/16 & 9347/16 Page 26 of 144
(f) one (1) Flat on the First Floor is owned
and occupied by the Agarwal’s/Rawat family;
(g) one (1) Flat on the Barsati Floor is owned
and occupied by the Plaintiffs;
(h) The Basement owned by the Plaintiffs, is
leased to the Defendant (and is part of the area
in the lease under dispute).
5.1.1 Each Owner of the property in the said
Building is entitled to, as a matter of right, custom
and usage, portion in the land, proportionate to its
share in the Property. A copy of the Plan of the
Building together with industrial markings
identifying the ownership in the Building as well as
their individual entitlements to the portions on the
land is annexed to the List of Documents and may
be referred to at the time of hearing.
5.2 The Defendant is a company incorporated
under the provisions of the Companies Act, 1950
and is engaged in the business of organized retail
with main items of focus being handicrafts.
5.3 As indicated in Para 5.1.1, the Defendant is
also an owner of Flat C on the First Floor of the
same building, which it had purchased pursuant to a
Sale Agreement dated 20.09.1992 with Recondo
India Ltd. The Defendant had then subsequently
executed a Sale Deed on 10.02.2005 with the
Plaintiffs (as the Primary Owners of the Property). A
copy of the Sale Agreement and Sale Deed are
annexed to the List of Documents and may be
referred to at the time of hearing. As explained in
Para 5.1.1 above, all the Owners in the said Building
are entitled to a portion of the land on the ground
floor proportionate to its share in the Building for
their own personal use. In this regard, the Defendant,
as the lawful Owner of Flat C on the First Floor,
used its part of the land to place the electricity
generator. It is further stated that the said electricity
generator was located in an area which would not in
any manner whatsoever, cause problems and/or
disturbance to any of the other individual owners in
the said Building.
CS DJ No. 9346/16 & 9347/16 Page 27 of 144
5.4 The Suit Property comprises the basement
area (measuring approximately 5078 sq. ft.) and a
portion on the ground floor behind the front flat
[(measuring approximately 1065 sq. ft. which
includes a flat and such part of the area (which
consisted a Pantry)], which is leased by the Plaintiffs
to the Defendant (“Suit Property”). Plaintiff No. 1
owns 5/6th share of the Suit Property whilst Plaintiff
No.2 owns 1/6th share of the Suit Property. On the
Plaintiffs demand, the Defendant removed the pantry
during the pendency of the present litigation.
5.5 The Defendant has been in occupation of the
Suit Property since 1989 (more than nineteen years),
since the Lease was first entered into between the
Plaintiffs and the Defendant on 02.12.1989
(“Primary Lease”)
5.6 Details of Primary Lease and Rentals: The
Primary Lease was for a period of three (3) years,
starting from December 1989 to December 1992.
This was in respect of the total area of Suit Property,
which was renewable on the same terms and
conditions every three (3) years and thereafter on the
mutual consent of the Parties. The monthly rental
was for the sum of Rs. 72,369/- (Rupees Seventy
Two Thousand Three Hundred and Sixty Nine)
which was to be increased by fourteen per cent
(14%) for the next three (3) year period. At the time
of execution of the Primary Lease, the Defendant
had already paid the Plaintiffs six (6) months rental
in advance as a deposit amounting to Rs. 4,48,800/-
(Rupees Four Lakhs Forty Eight Thousand Eight
Hundred). This payment was to act as a further
interest fee deposit to the Plaintiffs and was to be
continued for all subsequent renewals of the Lease
Period. The rent was to be paid before the 10 th
calendar date of each month.
5.6.1 The Primary Lease was granted for
residence, storage and exhibition of handicraft items
in the leased out areas (Clause 7 of the Primary
Lease).
5.6.2 Vide Clause 10 of the Primary Lease, the
Plaintiffs agreed to bear all taxes/charges to the
Municipal Corporation of Delhi (MCD). The
CS DJ No. 9346/16 & 9347/16 Page 28 of 144
relevant part of Clause 10 reads as follows “That all
the present rates, taxes ground rent, property tax, and
other charges, outgoings, penalties and assessments
imposed or payable in respect of the tenanted
premises to the M.C.D. Government shall be paid by
the Lessors and Lessor shall keep the Lessee free
and indemnified at all times for the same…. ”
5.6.3 Vide Clause 13 of the Primary Lease, the
Plaintiffs agreed that the Defendant may apply for
additional electricity and that it will not object to the
installation of a generator provided that the same
does not cause any nuisance or health hazard to
other occupants. The said Clause 13 is reproduced
and reads as follows “The Lessee may apply for
additional electricity load at its own cost to which
the Lessors shall have no objection provided that the
same confirms to the byelaws and in no way
endangers the building or other occupants. Any
papers, applications etc that may be required in this
regard shall be signed and executed by the Lessors
as aforesaid. The Lessors shall not object to the
installation of a generator for energising lights and
fans at the premises by the Lessee at its own cost,
provided that the same does not cause any nuisance
or health hazard to other occupants. ”
5.6.4 Details of Security Deposit Agreements: In
addition to the six month advance rental deposited
by the Defendant (as set out in Para 5.6 above)
pursuant to Clause 5 of the Primary Lease, the
Defendant deposited a sum of Rs.4,25,000/- (Rupees
Four Lakhs Twenty Five Thousand Only) as interest
free security deposit. This amount was to be
refunded by the Plaintiffs to the Defendant on the
expiry of the Primary Lease Agreement or on the
earlier determination thereof. In total therefore, the
Defendant had deposited a sum of Rs. 8,73,800.00
(Rupees Eight Lakhs Seventy Three Thousand and
Eight Hundred only) \by way of security deposit
with the Plaintiffs. It is submitted that the said sum
of Rs. 8,73,800.00 (Rupees Eight Lakhs Seventy
Three Thousand and Eight Hundred Only), still
remain with the Plaintiffs till date is liable to be
refunded alongwith appropriate interest with effect
from 01.10.2016. A copy of the Primary Lease
Agreement dated 02.12.1989 is annexed to the List
of Documents and may be referred to at the time of
CS DJ No. 9346/16 & 9347/16 Page 29 of 144
hearing.
5.7 Upon expiry of the initial three (3) year
period, the Primary Lease Agreement was renewed
for a further period of three (3) years, that, is, from
1992 to 1995 on the same terms and conditions but
on the increased rental of Rs, 82,500.00/- (Rupees
Eighty Two Thousand Five Hundred) per month as
set out in Clause 2 of the Primary Lease. The earlier
Security Deposit paid by the Defendant and six (6)
month advance rental continued to remain with the
Plaintiffs.
5.8 Further and upon expiry of this renewed
period of three (3) years, in 1995, the Plaintiffs and
Defendant mutually agreed to renew the Lease and
had in fact, renewed the Lease for four (4) further
separate terms (of three years each) based on the
same terms and conditions as the Primary Lease
Agreement. The rental rates raised for the period
ending January, 2008 was Rs. 1,63,125.00 (Rupees
One Lac Sixty Three Thousand One Hundred and
Twenty Five).
5.8.1 The rental rates from December 1989 to
November 1992 was Rs.72,369/- (Rupees Seventy
Two Thousand Three Hundred and Sixty Nine) and
the rental rates from December 1992 to November,
1995 was Rs. 82,500/- (Rupees Eighty Two
Thousand Five Hundred) which evidences an
increase of 14%. The rental rates from December
1995 to October, 1998 was Rs. 1,03,000/- (Rupees
One Lac Three Thousand) which was an increase of
24.8% from the last agreed rental. Thereafter, from
November, 1998 to April, 2004 the rental rates were
Rs. 1,28,906/- (Rupees One Lac Twenty Eight
Thousand Nine Hundred and Six) which was
increase of 25% from the last agreed rental. The
rental rates from May, 2004 to January, 2008 was
Rs. 1,63,125/- (Rupees One Lac Sixty Three
Thousand One Hundred and Twenty Five) which
was an increase of 25.5% from the last agreed rental.
A perusal of the above illustrates that the rental has
been increasing consistently at about 25% as
opposed to the 14% revision provided for under the
Primary Lease Agreement. Once the revised rental
had been agreed upon, the same remained
frozen/fixed for a period of three (3) years.
CS DJ No. 9346/16 & 9347/16 Page 30 of 144
5.8.2 The pattern of increasing rent, agreed to by
the parties, evident by their conduct, acceptance of
rent, was all of a sudden sought to be departed from
by the plaintiffs. From end of January, 2008 the
plaintiffs demanded rental payments of Rs.
4,00,000/- (Rupees Four Lacs) per month. This was
145.5% increase to the last agreed rental of Rs.
1,63,125/- (Rupees One Lac Sixty Three Thousand
One Hundred and Twenty Five). Consequent to the
several discussions and exchange of e-mails, the
defendant confirmed consolidated rental of Rs.
4,00,000/- (Rupees Four Lacs) per month. However,
the said payment of enhanced rental was under the
unequivocal understanding that the Defendant would
be entitled for peaceful possession of the Suit
Property for a long duration.
5.8.3 On or about May, 2008 the Plaintiffs again
unreasonably and unjustifiably demanded that the
rent be increased to Rs. 5,00,000/- (Rupees Five
Lacs) per month. This further upward revision in
rental was demanded by the Plaintiffs in response to
the termination notices issued by the Plaintiffs on or
about May, 2008. .A copy of the Notices dated
05.05.2008, 08.05.2008 and 12.05.2008 are annexed
to the List of Documents and may be referred to at
the time of the hearing. It can be gathered from the
conduct of the Plaintiffs that this was a pre-mediated
conscious act by the Plaintiffs being well aware of
the Defendant’s sentiment in respect of the Suit
Property. The threat of eviction was employed by the
Plaintiffs as a tactic to pave way for demanding
further increase of rentals. In view of the subsequent
conduct of the Plaintiffs, the Plaintiffs disentitled
themselves from receiving any enhancement in
rentals as was tendered to the Plaintiffs from time to
time by the Defendant.
5.8.4 As has been detailed herein after, in the
parawise reply, this steep increase in lease rentals
demanded by the Plaintiffs, was at complete
variance with the prevalent rental rates in the area
where the Suit Property is situated. All amounts paid
to the Plaintiffs in excess of Rs. 1,85,962/- (Rupees
One Lakh, Eighty Five Thousand, Nine Hundred and
Sixty Two) for the period between February, 2008 to
February, 2010 are liable to be refunded to the
CS DJ No. 9346/16 & 9347/16 Page 31 of 144
Defendant. It is also prayed that this Court may
adjudicate the amounts that ought to have been
tendered for the subsequent periods, keeping in mind
the aforesaid amounts as also the market rent.
5.8.5 The Plaintiffs have also become liable to
refund the security deposit to the Defendant since
the Defendant has handed over the possession of the
Suit Property to the Plaintiff.
5.9 Details of Investment: In 2005 alone, the
Defendant had spent an amount to the tune of
approximately Rs.2,00,00,000/- (Rupees Two
Crores) for internal renovation and refurbishment of
the Suit Property necessitated to meet the
imperatives of the business of the Defendant as the
Suit Property was used as a showroom of high class
and quality. Prior to that, the Defendant had also
expended several crores of rupees towards
refurbishment, external improvements, maintenance
of the Suit Property. The Defendant states that all
such renovation and refurbishment works were
carried out with the prior consent of the Plaintiffs.
The Defendant states that the nature of the said
investment created rights for the Defendant in the
Suit Property, which are of permanent character. The
Defendant further states that it made such
investment on the further understanding and
assurance of the Plaintiffs, that, the Defendant would
be in continued occupation of the Suit Property,
given the good relationship between the Plaintiffs
and the Defendant.
After taking into consideration the appropriate
depreciation in the cost of renovation, refurbishment
and the other value adding improvements, the value
of the existing finishing/furnishing items in the Suit
Property as also in the Property forming part of
CS(OS) 2330 of 2008 was Rs. 65,35,413.17 (Rupees
Sixty Five Lacs, Thirty Five Thousand Four
Hundred Thirteen and Seventeen Paisa) when the
physical possession of the Suit Property was handed
over to the Plaintiffs on 19.10.2017. The Plaintiffs
are liable to compensate the Defendant for the
amount of Rs. 42,48,018.56/- (Rupees Forty Two
Lakhs, Forty Eight Thousand, Eighteen, Fifty Six
Paisa).
CS DJ No. 9346/16 & 9347/16 Page 32 of 144
5.10 Payment of Conversion Charges: Apart from
investment as explained in Para 5.9 above, the
Defendant also invested the sum of Rs. 7,77,946/-
(Rupees Seven Lakhs Seventy Seven Thousand and
Nine Hundred and Forty Six) as conversion and
parking charges for the conversion of the Suit
Property from residential status to commercial. After
handing over possession of the Suit Property, the
Defendant is entitled to the refund of the amount of
Rs. 5,95,591/- (Rupees Five Lakhs Ninety Five
Thousand and Five Hundred and Ninety One) paid
for the Suit Property by the Defendant on behalf of
the Plaintiffs.
5.10.1 The above payments were made by the
Defendant pursuant to Official Notification and
Public Notice issued by Ministry of Urban
Development and MCD which designated certain
areas with residential status to be converted to
commercial status and thereby avail the benefit of
mixed land use. This benefit was only conferred
upon payment of conversion charges. Briefly, the
following must be noted:
(i) the Suit Property did not fall within the
purview of the first notification issued by the
MCD dated 11.09.2006;
(ii) however, upon representations made by
the Defendant to die appropriate authorities
and after much persuasion, the Defendant
convinced the authorities concerned that the
Suit Property also needs to be brought within
the ambit of the notifications;
(iii) in this regard, the 2nd notification dated
14.09.2006 was issued by the MCD and the
Suit Property was included as the designated
areas;
(iv) the Public Notice subsequently issued
specified a cut off date for the payment of
conversion charges. The consequence of
failing to pay the conversion charges within
the said cut off period had the effect that die
Parties would not be able to avail the benefit
of mixed land use and all efforts, made by the
Defendant to facilitate the same would have
CS DJ No. 9346/16 & 9347/16 Page 33 of 144
been futile;
(v) the efforts expended by the Defendant, in
time of time, money and effort resulted in the
adding of value to the Suit Property, benefit of
which accrued exclusively to the Plaintiffs;
(vi) the Defendant paid conversion charges
pursuant to the time line specified in the
Public Notice. The said notifications, Public
Notice together with the Official Receipts
evidencing payment are annexed to the List of
Documents and may be referred to at the time
of hearing.
5.10.2 It is pertinent to note that the Defendant made
payment of conversion charges for the entire areas
leased from the Plaintiffs and this included the area
on the front portion of the ground floor, which is the
subject matter of another Suit, before this Hon’ble
High Court, CS No.2330 of 2008.
5.10.3 It is also pertinent to highlight that whilst
payment of such charges and taxes under Claus 10
of the Primary Lease Agreement were solely the
responsibility of the Plaintiffs, the Defendant, in
good faith had discharged the same, at the outset, on
behalf of the Plaintiffs. The Plaintiffs are liable to
refund the said amounts to the Defendant.
5.11 The Defendant had all material times,
properly discharged it duties and responsibilities as a
tenant, particularly, in respect of timely deposit of
rentals, repairs to the Suit Property, maintenance of
the Suit Property (at the Defendant’s own cost)
without any trouble whatsoever to the Plaintiffs and
in the interest of all occupants of the said Building
including but not limited to the Plaintiffs, providing
security service (by way of provision of security
guards) at the Defendant’s own costs for the entire
Building.
5.12 It goes without saying that the Defendant is
emotionally attached to the Suit Property given that
it has been in a Lessee of the Property for over
nineteen (19) years and the customers of the
Defendant identify the Suit property as the venue for
the business of the Defendant.
CS DJ No. 9346/16 & 9347/16 Page 34 of 144
Events Leading to the present Suit
5.13 The renewal of the Primary Lease Agreement
(after the further three (3) year term provided in the
Primary Lease Agreement) based on upon the same
terms and conditions was carried out four (4) further
terms as described in Pare 4.6 above.
5.14 Upon expiry of this 4th renewal term, that is
on January, 2008, the Plaintiffs and Defendant, in
continuation and in reliance upon the Primary Lease
Agreement entered into further discussions on or
about March 2008 for the renewal of the Lease for
the further period. The Plaintiffs proposed rent of
Rs. 4,00,000/- (Rupees Four Lacs) in continuation of
the Lease Deed of 1989 for two years and also
suggested measures regarding ancillary issues, in
response to which the defendant confirmed
consolidated rental of Rs. 4,00,000/- (Rupees Four
Lacs) per month pursuant to the discussions. A copy
of the email exchanged dated 21.03.2008 between
the parties is annexed to the List of Documents and
may be referred to at the time of hearing. The said
enhanced rent was only confirmed under the
assurance of the Defendant remaining in peaceful
possession of the Suit Property and the Plaintiffs are
liable to refund the said amounts to the Defendant.
5.14 The Plaintiffs and Defendant continued to
discuss the remaining terms for the renewal of the
Lease. As no resolution was achieved between the
Parties, the Parties, together with their lawyers met
at the Defendant’s lawyers office in order to arrive at
an amicable resolution of the outstanding issues. The
meeting took place on 21.05.2008 and the agreement
arrived at came to be incorporated and confirmed by
the Defendant’s lawyers in their e-mail dated
22.05.2008. The renewal of the lease in accordance
with the primary Lease Agreement was confirmed in
the following terms:
(a) Term- the term of the Lease was to be for
a period of two (2) years with the Lessee’s
option to renew for a further period of two (2)
years and thereafter, subject to mutual consent
for such term as may be mutually agreed;
(b) Monthly Rent- the rental for the first year
CS DJ No. 9346/16 & 9347/16 Page 35 of 144
would be Rs. 5 Lacs + service tax; rental for
the second year would be Rs. 5.5 Lacs +
service tax; rental for the third year would be
Rs. 7.5 Lacs + service tax and rental for the
fourth year would be Rs. 8 Lacs 4- service tax.
(c) Conversion charges-conversion charges
were to be borne in equal parts by the
Plaintiffs and Defendant for the duration of the
period.
(d) Security Deposit- the amount for the
security deposit would be revised to Rs.
30,00,000/- (Rupees Thirty Lacs). As the
Plaintiffs continued to hold the previously
deposited amount, i.e. the sum of Rs.
8,73,800.00 (Rupees Eight Lacs Seventy Three
Thousand and Eight Hundred Only). The
Defendant would deposit the balance sum on
the commencement date of the second year of
the Lease, that is on 01.06.2009.
(e) That Defendant had settled the earlier
rental for the period February to May 2008 at
Rs. 4,00,000/- (Rupees Four Lacs) per month
under cover of the letter dated 21.05.2008.
A copy of the Defendant’s lawyers’ e-mail dated
22.05.2008 recording the terms of agreement during
the meeting and the Plaintiffs’ lawyers e-mail dated
23.05.2008, clarifying the equal payment of the
conversion charges are annexed to the List of
Documents and may be referred to at the time of
hearing.
It was also desired by the parties that the agreement
already achieved during the meeting on 21.05.2008
would be incorporated in the formal Lease Deed.
The Defendant say that the exchange of
correspondence, in the facts and circumstances of
the case, the renewal of the Lease period on
enhanced rent for four years and thereafter for
further renewal stood concluded and enforceable in
law. The Plaintiffs also okayed all the terms except
that they wanted that the conversion charges to be
borne by the parties equally throughout the period of
lease and the extended lease. The very basis of the
agreement arrived between the Parties was that the
CS DJ No. 9346/16 & 9347/16 Page 36 of 144
Defendant shall be entitled to peaceful possession of
the Suit Property. The same was the essence of the
Agreement.
5.16 That though the parties agreed to the renewal
of the lease enhancement of rent, security deposit
etc. Plaintiffs’ counsel even after consensus and
agreement on 21.05.2008 reverted with further
demands on behalf of the Plaintiffs which demands
deal with ancillary issues. Some of these demands
were as follows:-
a. the TDS certificates for the past period had
to be given at the time of execution of the
Lease Deed;
b. the service tax arrears for past period must
be cleared.
c. applicable parking charges ought to be paid
as the Plaintiff alleged that the Defendant
parked its busses there;
d. removal and relocation of the generator, air
conditioner and pantry. A copy of the
Plaintiffs’ lawyer’s email dated 25.05.2008
and recording the terms of agreement during
the meeting and the Plaintiffs’ lawyer’s e-mail
dated 25.05.2008 is annexed to the List of
Documents and may be referred to at the time
of hearing.
5.16 A The Plaintiffs having failed to give peaceful
possession of the Suit Property to the Defendant are
not entitled to the enhanced rents as have been
tendered to the Plaintiffs from time to time. The
agreement reached between the Parties on
21.05.2008 stood vitiated and was never accepted by
the Plaintiffs and the Hon’ble Court. The Plaintiffs
cannot place reliance on the said Agreement to claim
rental charges from the Defendant as the essence of
the agreement between the Parties was peaceful
possession of the Suit Property.
5.17 In respect of the electricity generator,
it is important to note the following. First that the
electricity generator was located on such part of the
land where the Defendant was entitled to place the
same by virtue of its ownership in the First floor of
the Property. Secondly, the Plaintiffs had videCS DJ No. 9346/16 & 9347/16 Page 37 of 144
Clause 13 of the Primary Lease agreement consented
to the Defendant installing the same, so long as it
done at the Defendant’s own cost and it does not
cause any nuisance or health hazard to other
occupants. Thirdly, the electricity generator was
installed with the prior permissions, consent and
knowledge of the Plaintiffs. Fourthly, the said
electricity generator is maintained by the Defendant
at its own cost, does not cause any nuisance-
whatsoever and is not a health hazard to any of the
occupants.
However, in the interest of continuing the Lease with
the Plaintiffs the Defendant requested a four (4)
month period to relocate the generator and requested
the Plaintiffs to revert on the available area to place
the same. It must be emphasized that the demand
made by the Plaintiffs seeking relocation of the
generator is unjust and unreasonable given that the
generator is essential feature to the commercial
dependence of the Defendant’s business and more
so, it was located in an area where the Defendant
was entitled to place the same. As for the air
conditioner, the Defendant agreed to relocate one of
the air conditioners on the approval of the plans for
relocation, first being approved by the Plaintiffs. The
Defendant requested this time period but added that
the same was subject to appropriate permissions first
being obtained from the relevant authorities. The
Defendant also requested the Plaintiffs to revert with
the breakdown in respect of the on account
payments post May, 2008. A copy of the Defendant’s
lawyer’s e-mail dated 04.06.2008 to the Plaintiffs’
lawyers is annexed to the List of Documents and
may be referred to at the time of hearing.
5.18 Negotiations as regards ancillary issues
continued to deteriorate as the Plaintiffs continued to
renege their commitments by putting unreasonable
pressure and demand on the Defendant. To begin
with:-
(a) The Plaintiffs demanded removal of the
generator/air conditioner which were in fact, on
areas that were part of the Suit Property and partly
entitled to be used by the Defendant by virtue of its
ownership of Flat C on the First Floor;
The Plaintiffs continued to press their demand for
service tax which it was pointed out to them was the
CS DJ No. 9346/16 & 9347/16 Page 38 of 144
obligation of the Lessor under the Primary Lease
Agreement and also under the law. The relevant
provision in law, Section 68 of the Finance Act,
1994 reads as under “Every person providing taxable
service to any person shall pay service tax at the rate
specified in Section 66 in such manner and within
such period as may be prescribed” The relevant
provision, being Clause 10 under the Primary Lease
Agreement read as under “That all the present rates,
taxes ground rent, property tax, and other charges,
outgoings, penalties and assessments imposed or
payable in respect of the tenanted premises to the
M.C. D. Government shall be paid by the Lessors
and Lessor shall keep the Lessee free and
indemnified at all times for the same… ”
(b) The Plaintiff was specifically informed that the
Defendant had agreed to pay service tax from
01.06.2008 onwards and that the past liability of the
service tax was to be cleared by the plaintiffs. The
Defendant invited the attention of the plaintiffs to
section 68 of the Finance Act 1994, Clause 10 of the
Primary Lease Agreement and also to the case titled
“Retailers’ Association of India and Others V/S
Union of India (2008-TIOL-379-HC-Mum-ST). As
stated hereinabove, the Defendant is not liable to pay
any service tax for the period after 01.06.2008 as
well.
(c) In so far as conversion charges are concerned, the
position in respect thereto is as follows:
(i) In August 2007 & April 2008, the Defendant
made payment of conversion charges to the MCD
amounting to Rs. 7,77,946/- for areas under the
present Suit Property as well as areas leased by the
Defendant from the Plaintiffs under a separate Suit,
which is also the subject matter before this Hon’ble
Court, CS No. 2330 of 2008;
(ii) in May, 2008 when certain issues were
discussed and settled, the Parties agreed that the rent
of Rs. 16,00,000/- (Rupees Sixteen Lacs) (for the
period of February to May 2008, calculated at Rs.
4,00,000/- (Rupees Four Lacs) per month) needs to
be adjusted in the following manner:-
• Plaintiffs would bear 50% of the amount
CS DJ No. 9346/16 & 9347/16 Page 39 of 144
paid by the Defendant as conversion charges
i.e. Rs. 3,88,973/- (Rupees Three Lacs Eighty
Eight ; Thousand Nine Hundred Seventy
Three), leaving the balance of Rs. 12,11,027/-
(Rupees Twelve Lacs Eleven Thousand
Twenty Seven) to be paid;
• the balance was subject to TDS
Deductions;
• Rs.6,25,500/- (Rupees Six Lacs Twenty
Five Thousand Five Hundred) (less TDS) were
paid to the Plaintiffs by cheque and the
balance were paid to the Plaintiffs in cash.
A copy of the payment breakdown is annexed to the
list of Documents and may be referred to ; at the
time of hearing.
(iii) the understanding between the Parties was
that the ‘ Defendant would pay the conversion
charges in advance and will recover an equal part
payment of the same from the Plaintiffs by an
adjustment of the rental payable to the Plaintiffs.
This understanding was consented upon by the
Plaintiffs.
(d) Despite the above , the Defendant had ,post
February ,2008 by way of without prejudice on
account payments(in gross) deposited and paid the
sum of approximately Rs. 30,20,641/- (Rupees
Thirty Lacs Twenty Thousand Six Hundred and
Forty One) to the Plaintiffs. A copy of the
Defendant’s letter dated 21.05.2008, duly
acknowledged (along with copies of the relevant
cheques) and the Defendant’s counsel’s letters dated
07.09.2008 and 18.08.2008.duly acknowledged
(along with copies of the relevant cheques) are
collectively annexed to the List of Documents and
maybe referred to at the time of hearing.
5.19 The agreement had as a consequence of
various communications, understandings concluded
the issue of extension in the period of lease, payment
of rent, service tax, security deposit etc as an
integrated settlement and extended the lease in
CS DJ No. 9346/16 & 9347/16 Page 40 of 144
accordance with Primary Lease Agreement, as the
parties had been doing for last nearly two decades.
The Defendant acted on the settled issues and paid
rent of Rs. 5,00,000/- (Rupees Five Lacs) per month
for the months of July, August and September,2008
through their counsel. The Plaintiffs accepted the
rent encashed the cheques. The Parties have,
therefore acted on the settlement. It is an integrated
settlement. The difference in the ancillary issues
would not affect the settlement. The Plaintiff by
instituting the present Suit, in essence are seeing
invalidation of the settled matter and in that situation
the parties would be relegated to the same position
as it was before January,2008. The Plaintiffs, on the
one hand, in law, cannot say that the rent per month
is the same as agreed to by the parties in their
meeting of 21.05.2008, and on the other hand, refuse
to acknowledge renewal of the lease, period thereof,
which extends beyond initial period of four years
and proceed on the premises as if after January, 2008
the correspondence between the parties, their
agreements, settlements and the payments received
by the Plaintiffs are of no legal consequence. The
Defendant says that the correspondence, conduct of
the parties, understandings, settlements, payments
made by the Defendant to the Plaintiffs and its
acceptance by the Plaintiffs all constitute in law
renewal of the Primary Lease Agreement in the same
manner as it was for previous years and that the
Defendant have acquired enforceable rights in law
for which the Defendant reserve their right to
institute appropriate legal proceedings. The Plaintiffs
are estopped. The Plaintiffs cannot in law be allowed
to approbate and reprobate. The Plaintiffs have to
suffer legal consequence of their own conduct. A
copy of the Certificate from the Defendant’s bank is
annexed to the list of documents and may be referred
to at the time of hearing
5.20 Further discussion ensued between the
Parties, but the Plaintiffs continued to maintain their
unreasonable demand which the Defendant did not
agree to. At this stage, to somehow or the other, to
pressurise the Defendant into agreeing to the
demands, the Plaintiffs issued a letter of termination
with respect to the Lease of Flat on the front portion
on the Ground Floor. This termination is the matter
of another suit before this Hon’ble Court, being C.S.
CS DJ No. 9346/16 & 9347/16 Page 41 of 144
(OS) No. 2330/2008). This was even though it was
clearly agreed between the Parties that this lease
would be renewed on the same terms and condition
as the lease in the present Suit.
5.21 Despite the above, the Defendant, who is in
occupation of the Suit Property , has made several
attempts to meet the Plaintiffs and/or their
authorized representatives to forward the without
prejudice on account payments for the month of
Septemper,2008 till date but the Plaintiffs and/or
their authorized representatives have refused and
rejected the said Payment. The Defendant contends
that the non-acceptance of payment is a further
evidence of abuse by the Plaintiffs as the Lessor to
put the Defendant in a prejudicial position, in order
to rely upon an “alleged” non-receipt of payment to
wrongly impute before this Hon’ble Court that the
Defendant has not complied with its payment
obligations. A copy of the Defendant’s counsel’s e-
mail dated 05.09.2008 to the Defendant informing
the Defendant of the refusal of the Plaintiffs’ counsel
to accept the without prejudice rental payment is
annexed to the List of Documents and may be
referred to at the time of hearing.
5.22 The Defendant says and submits that the
Plaintiffs had issued Notices(through Counsel) dated
22.08.2008, 26.08.2008 and 27.08.2008 to the
Defendant to immediately hand over vacant and
peaceful possession of the premises within fifteen
(15) days without affording time for reply. The
notices were issued within a short span of time at the
Defendant’s registered office in Kashmir knowing
fully well that the Defendant carried on their
business principally from the Suit Property.
5.23 The Plaintiffs have in the present Suit
attempted to create a confusion with respect to the
understanding recorded on 21.05.2008. The
understanding recorded on 21.05.2008 was in
respect of the future, i.e. commencements of the
Lease from 01.06.2008 and not for the past period. It
is the Plaintiffs’ who have sought to renege from this
understanding achieved between the parties leading
to a breakdown in the negotiations. It is further
evident that the Plaintiffs are simple using the
present Suit and the aforementioned notices, and the
CS DJ No. 9346/16 & 9347/16 Page 42 of 144
refusal to accept on account without prejudice
payments towards rentals, as a means of extorting
and extracting further monies from the Defendant. It
is settled law that the Plaintiffs cannot rely upon
their own refusal to accept payment as a means of
alleging nonpayment of the rental by the Defendant.
The Defendant has never refuted and/or denied its
obligation to pay rent. The Defendant has also not
refuted and/or denied its commitment to pay service
tax for the period going forward, i.e. w.e.f.
01.06.2008. The Defendant states that it is and has
always been desirous of continuing the Lease with
the Plaintiffs. The Defendant’s intention is evident if
regard is also had to amount of investment made by
the Defendant in the Suit Property and the fact that it
is the principal place of the Defendant’s business
since 1989.
5.24 The Defendant’s solicitors’ by the letter dated
30.08.2008 had responded to the Plaintiffs’ counsel’s
Notice and sought to place on record the agreed
terms and conditions between the Parties in respect
of the present Suit Property. The Defendant had
never denied the ongoing negotiations between the
Plaintiffs and the Defendant as well as between its
respective counsel in respect to the other Property.
The Defendant only wishes to state that reliance on
the other discussions in the present Suit is
misplaced. The Defendant’s solicitors had issued
two (2) further letters dated 23.09.2008 and
30.09.2008 to the Plaintiffs’ solicitors indicating that
it will revert with instructions from the Defendant.
Further to the issuance of said letters, the
Defendant’s solicitors, pursuant to the Defendant’s
instructions had liaised with the Plaintiffs’ counsel
by way of telephone discussions towards a
resolution of the matter. However, given the
unreasonableness of the demand and the continued
abuse of the Plaintiffs* position as the Landlord to
combine discussions of the Suit Property and other
Property rendered discussions futile.
5.25 That by instituting the suit and thereafter
pursuing it and thus impairing the Defendant’s right
to peaceful use and occupation of the Suit Property,
the Plaintiffs have breached the understanding dated
21.05.2008. The Plaintiffs are not entitled to any of
the following –
CS DJ No. 9346/16 & 9347/16 Page 43 of 144
(a) The Plaintiffs are not entitled to enhanced
rents as were tendered to the Plaintiffs with
effect from February, 2008.
(b) The Plaintiffs are not entitled to claim any
service tax from the Defendant
(c) The Plaintiff is liable to bear all amounts
towards conversion charges, Additional FAR
charges and parking charges
5.26 That on 23.02.2010, the Defendant received
at the Suit Property, a notice dated 13.02.2010 from
the Municipal Corporation of Delhi (“MCD”)
directing deposit of the conversion charges, one time
additional FAR charges and one time parking
charges, in respect of the Suit Property, for the
period upto June, 2009. The Defendant immediately
contacted the Plaintiffs and its counsel and informed
them about the notice. The Plaintiffs were then liable
to tender one half of the conversion charges in terms
of the understanding dated 21.05.2008 and whole of
one time parking charges and additional FAR
charges. As one-time payment attaches to the
property in question and it was the obligation of the
Plaintiffs to make payment of the same within time.
5.27 That since the Plaintiffs avoided payment of its
share of the conversion charges therefore to avoid
the sealing of the entire Suit Property; the Defendant
deposited the entire amount of conversion charges.
The Plaintiffs are liable to reimburse the amount of
Rs. 2,18,617/-(Rupees Two Lacs, Eighteen
Thousand, Six Hundred and Seventeen) being the
amount paid by the Defendant for and on behalf of
the Plaintiffs along with interest thereon.
5.28 That thereafter, during the pendency of the
present suit, the MCD sealed the basement portion
of the Suit Property, on 09.03.2010 till 31.10.2010 in
which the Defendant was carrying on his business,
due to non-payment of one time additional FAR
Charges and Parking charges which the Plaintiffs
were liable to pay. The entire stock and inventories
of the Defendant were sealed in the basement. This
sealing caused huge business losses/damages to the
Defendant. The fact is evidenced by Writ Petition
(Civil) bearing no. 6440/2010 filed by the Plaintiffs
CS DJ No. 9346/16 & 9347/16 Page 44 of 144
against the MCD for de-sealing of the Basement of
the Suit Property. The sole intention of the Plaintiffs
in getting the Suit Property sealed was to pressurize
the Defendant to vacate the Suit Property without
following due process of law.
5.29 That the Defendant is therefore not liable to
pay any rent to the Plaintiffs for the period
09.03.2010 till 31.10.2010.
5.30. That during the period when the basement of
Suit Property was lying sealed, Plaintiffs continued
to recover certain reduced amount of rent, which
ought not have been recovered. Over and above, the
Defendant suffered business loss and recorded a
decline in the turn over during the period March,
2010 to October, 2010, in comparison to March,
2009 to October, 2009 to the tune of Rs.
5,99,54,542/- (Rupees Five Crore, Ninety Nine
Lakh, Fifty Four Thousand and Five Hundred and
Forty Two).
5.31 That even otherwise the amount of loss of
turn over would be much more considering that the
Commonwealth Games were held during the period
of sealing, during which period the Defendant had
expected increase in income. The Commonwealth
Games and the expected rise in revenue during the
period when the said event was being hosted in New
Delhi had been used by the Plaintiffs while
demanding increased rental for the Suit Property.
The sealing of part of the Suit Property during the
Commonwealth Games and that too on account of
the conduct of the Plaintiffs entitles the Defendant to
punitive damages.
5.32 That due to the sealing of the basement of the
Suit Property, the Defendant had to incur a cost of
Rs. 1,98,800/- (Rupees One Lakh, Ninety Nine
Thousand and Eight Hundred) in repair, replacement
as well as paint and polishing to get the Suit
Property back in working condition.
5.33 After de-sealing of the. premises, the
Defendant’s business suffered huge set back since
loyal customers had shifted to other vendors, and
walk-in customers had reduced considerably, for
which the losses/damages are being assessed @ Rs.
2,00,000/- (Rupees Two Lacs) per month till
CS DJ No. 9346/16 & 9347/16 Page 45 of 144
December, 2011. The Defendant’s management
suffered great mental agony and pain during this
period for which the Defendant is entitled to
damages. Thereafter with great hardwork and
determination of the management, the business
slowly started to return to normal from January,
2012 and picked up later during the same year.
5.34 The Defendant is entitled to and has, in fact
set off the above damage against all claims of the
Plaintiff, be it in the nature of rent/damage/mesne
profits.
5.35 The Defendant continued in possession of the
Suit Property. On 1.10.2016, the Defendant called
upon the Plaintiffs to jointly inspect the Suit
Property and to take possession. The Plaintiffs
refused to jointly inspect the Suit Property.
Accordingly, the Defendant had constructively
handed over possession of the Suit Property to the
Plaintiffs on 01.10.2016. In view of the illegal denial
of the Plaintiffs to jointly inspect the Suit Property,
the Defendant filed an application before this
Hon’ble Court on 08.10.2016 after serving the same
on the Plaintiffs through counsel. The Plaintiffs
malafide failed to appear before the Court in Order
to delay the handing over of the possession. Since no
hearing of the applications took place, the Defendant
was constrained to handover the actual and physical
possession of the Suit Property on 19.10.2016 after
video-recording the condition of the said Suit
Property.
5.36 Upon the handing over of the Suit Property, the
Defendant became entitled to refund of security
deposit of sum of Rs. 8,73,800.00 (Rupees Eight
Lakhs Seventy Three Thousand and Eight Hundred
Only) from the Plaintiffs along with interest at the
rate of 18 percent per annum with effect from
1.10.2016.
5.37 That the value adding improvement works,
refurbishment done by the Defendant to the Suit
Property was of permanent nature. The Plaintiffs
accepted the Suit Property along with all the fittings
and fixtures installed by the Defendant. The
Defendant had added great value to the Suit
CS DJ No. 9346/16 & 9347/16 Page 46 of 144
Property. The Defendant got the fittings and fixtures
of fixed nature installed at the Suit Property valued
by a Government approved valuer. After taking into
consideration the appropriate depreciation in the cost
of refurbishment, the value of the existing
finishing/furnishing items in the Suit Property as
also in the Property forming part of CS(OS) 2330 of
2008 was Rs. 65,35,413.17 (Rupees Sixty Five Lacs,
Thirty Five Thousand Four Hundred Thirteen and
Seventeen Paisa) when the physical possession of
the Suit Property was handed over to the Plaintiffs
on 19.10.2017. The Plaintiffs are liable to
compensate the Defendant for the said amount.
5.38 After taking the physical possession of the
Suit Property from the Defendant, Plaintiffs along
with Mr. Aditya Dave started interfering in the
peaceful occupation of the other portions of M-l,
Hauz Khas, New Delhi and the Defendant has
initiated appropriate proceedings against the
Plaintiffs for the same.
5.39 The Defendant has tendered use and
occupation charges to the Plaintiffs way above the
market rent for the Suit Property. As per the
Defendant the market rent for the Suit Property
would be as follows-
Sr. No. Period Market Rent
Ground Floor First Floor Basement Second Floor
(Per Sq. Ft.) (Per Sq. Ft.) (Per Sq. Ft.) (Per Sq. Ft.)
1. 2009 Rs.55-60 Rs.40 – 45 Rs. 35 Rs. 30-35
2. 2010 Rs.55-60 Rs.40-45 Rs. 35 Rs.30-35
3. 2011 Rs.55 Rs.40 Rs.30-35 Rs.35
4. 2012 Rs.60 Rs.45 Rs.35 Rs.35
5. 2013 Rs.60 Rs.45 Rs.35 Rs.35
6. 2014 Rs.70 Rs.55 Rs.35 Rs.40
7. 2015 Rs.70 Rs.55 Rs.35 Rs.40
8. 2016 Rs.70 Rs.55 Rs.35 Rs.40
After the final adjudication of the use and
occupation charges by this Hon’ble Court, the
Defendant shall be entitled to refund of amounts
paid in excess of the market rent.
ISSUES:-
CS DJ No. 9346/16 & 9347/16 Page 47 of 144
8. Considering the pleadings of the parties, vide order
dated 30.10.2017, following issues were framed in both the suits.
“1. Whether the plaintiff is entitled for
mesne profits, if so, at what rate and for
which period? OPP.
2. Whether the plaintiff is entitled for
interest, if so, at what rate and for which
period? OPP.
3. Whether the defendant is entitled to
deduct any amount in respect of removal of
pantry and relocation of electricity generator
from the amount which they are liable to be
paid to the plaintiff, if the issues No.1 & 2
are decided in favour of the plaintiff? OPD
4. Relief.”
9. After framing of issues, both the sides led their
evidences in order to support their claims/contentions.
PLAINTIFF’S EVIDENCE:
IN BERAR SUIT:
10. Plaintiff has examined two witnesses i.e. plaintiff no.
2 Mrs. Soni Dave as PW-1 and Mr. Aditya Dave as PW-2 in the
above suit for proving the case.
10.1 PW-1 Mrs. Soni Dave has proved the documents as
relied by her in her evidence affidavit. She was cross examined at
CS DJ No. 9346/16 & 9347/16 Page 48 of 144
length through question answer format.
10.2 As per the report of Ld. Local Commissioner filed in
the Court on 09.09.2022, PW-2 Mr. Aditya Dave was put to cross
examination by Ld. Local Commissioner without recording his
examination-in-chief (i.e. without the affidavit of evidence
tendered in evidence) and certain questions regarding Ex.D-12
i.e. 1989 lease were put to him regarding compulsory registration
as the said Lease was for a period of 03 years.
IN SONI DAVE SUIT:
10.3 Plaintiff has examined two witnesses i.e. plaintiff
Mrs. Soni Dave as PW-1 and Mr. Aditya Dave as PW-2 in the
above suit for proving the case.
10.4 PW-1 Mrs. Soni Dave has proved the documents as
relied by her in her evidence affidavit Ex.PW1/X. She was cross
examined at length.
10.5 PW-2 is Mr. Aditya Dave (husband of plaintiff). He
has proved his evidence affidavit u/s 65B of Indian Evidence Act
as Ex.PW2/A in support of the emails filed by PW-1 in her
evidence affidavit.
DEFENDANT’S EVIDENCE:
11. Defendant(s) has examined 10 witnesses in order to
prove its case.
It is pertinent to mention here that total 10 witnesses
have been examined by the defendant in the Berar suit, however,
CS DJ No. 9346/16 & 9347/16 Page 49 of 144
it is appearing as if 11 witnesses have been examined as the last
witness examined by the defendant is DW-11 but the fact of the
matter is that only 10 witnesses have been examined as
inadvertently, the numbering of the defendant witnesses has been
wrongly made after the examination of DW-7, the next defendant
witness was given DW-9.
Further, all the defendant witnesses examined in
Berar suit have been examined in the Soni Dave suit except
DW-11.
11.1 DW-1 is the witness from Building Department,
MCD, South Zone, New Delhi. He did not bring the requisite
document sought to be proved by the defendant.
11.2 DW-2 is the Advocate from the previous law firm of
the defendant namely Amarchand Mangaldas & Co. He stated
that the required document i.e. an email dated 05.09.2008 is not
available with them.
11.3 DW-3 is the witness from the Department of
Publication, Old Secretariat, Delhi. He has proved the certified
copy of notification dated 07.09.2006 bearing SO 1456(E) issued
by Ministry of Urban Development (Delhi Division) as
Ex.DW3/A.
11.4 DW-4 Dr. S.N. Bansal, is a govt. approved valuer.
He has proved the duplicate Valuation Report dated 14.10.2016
with respect to property M-1, Hauz Khas, New Delhi as
CS DJ No. 9346/16 & 9347/16 Page 50 of 144
Ex.DW4/A.
11.5 DW-5 is the witness from the Raj Digital Photo
studio. The copy of bill No.0053 dated 19.10.2016 in the name of
defendant company by Raj Digital Photo Studio is mark A. The
Mouserbaer DVD is mark B.
11.6 DW-6 is the witness from Building Department
(HQ), Civic Centre, MCD, New Delhi. He has proved the
certified copy of letter dated 23.06.1982 which pertains to
sanction of building plan of Plot M-1, Hauz Khas, New Delhi as
Ex.DW6/1 and certified copy of letter dated 30.06.1984 which is
regarding revalidation of building plan of Plot M-1, Hauz Khas,
New Delhi as Ex.DW6/2. He has also proved sanctioned
building plan of Plot M-1, Hauz Khas, New Delhi as Ex.DW6/3.
11.7 DW-7 is the Planning Surveyor, Town Planning
Department (HQ), Civic Centre, MCD, New Delhi. He has
proved the notifications No. F33/T.P./823/C & C dated
11.09.2006 and No. F33/T.P./827/C & C dated 14.09.2006 as
Ex.DW7/1 and Ex.DW7/2 respectively.
11.8 DW-9 Mohd. Yaseen Mir is the AR of the defendant
company. He has proved the documents of the defendant
company as relied by it in his evidence affidavit. He was put to
lengthy cross examination.
11.9 DW-10 is Sh. Anchit Agarwal. His entire deposition
is reproduced as under:
CS DJ No. 9346/16 & 9347/16 Page 51 of 144
“I am the summoned witness in this case. I
have brought the registered lease deed dated
22.02.2000 executed between Mrs. Rita Agarwal
and Mr. Anchit Agarwal with defendant company
for the period of two years i.e. w.e.f 01.03.2000 to
20.02.2002 with the monthly rent of Rs. 75,000/-.
The same is exhibited as Ex.DW9/1 (running into
12 sheets (24 pages) ) (OSR) (Objected to by Ld.
Counsel for plaintiff since this document has not
been summoned and copy thereof has not been
filed).
I have brought the registered lease deed
dated 01.04.2005 executed between Mrs. Rita
Agarwal and Mr. Anchit Agarwal with defendant
company for the period of three years i.e. w.e.f
01.04.2005 to 31.03.2008 with the monthly rent
of Rs. 60,000/-. The same is exhibited as
Ex.DW9/2 (running into 06 sheets (12 pages)
(OSR) (Objected to by Ld. Counsel for plaintiff
since this document has not been summoned and
copy thereof has not been filed).
I have brought the lease deed dated
28.12.2015 executed between Mrs. Rita Agarwal
and Mr. Anchit Agarwal with defendant company
for the period of 11 months i.e. w.e.f. 01.01.2016
to 30.11.2016 with the monthly rent of Rs.
1,60,000/-. The same is exhibited as Ex.DW9/3
(running into 05 sheets) (OSR) (objected to by
Ld. Counsel for plaintiff as this lease deed on Rs.
100 stamp paper and the balance stamp duty has
not been paid and therefore, this cannot be
CS DJ No. 9346/16 & 9347/16 Page 52 of 144
exhibited or taken in evidence and is liable to be
impounded).
XXXXXXXXX by Sh. Saurabh Prakash, Ld.
Counsel for plaintiff.
It is correct that the suit property is located at the
corner of Aurobindo Marg and Neeli Masjid lane.
It is correct that on Aurobindo Marg there is also a
service lane right in front of M-1, Hauz Khas,
New Delhi. This service lane merges with the
main road further ahead. I do not know how many
plots are there in between. It is correct that there
is a U-turn about 100-200 metres just before said
property if you are coming from the direction of
AIIMS but I am not sure about the distance. It
was constructed recently but I cannot say when. I
cannot say whether there is an opposite U-turn
near AIIMS. Vol. I am not a frequent visitor to
Delhi. It is correct that our flat on the ground floor
is the third flat from the front.
We purchased this property by installments
which started in the year 1984-85. As far as I
recall, the sale deed was registered in the year
1996. Vol. In between the property was also
sealed by the MCD but I do not recall when. After
that, it must have been de-sealed before we were
given possession. We did not have possession of
the property until the sealing lasted. I do not have
any documentary proof of the sealing.
It is correct that Ex.DW9/1 dated 22.02.2000 was
for a monthly rent of Rs. 75,000/- which was
proposed to increase to Rs. 86,250/-after two
years. It is signed by my father and mother.
CS DJ No. 9346/16 & 9347/16 Page 53 of 144
My father has signed as my Power of
Attorney Holder. Prior to the defendant, the
property was rented to another tenant and since
we got a higher lease amount from the defendant,
we leased it to them. It is correct that defendant
was already a tenant in the building and our
portion was just adjoining the portion that the
defendant was having, however, I do not know
who the landlord was. We did not know what rent
the defendant was paying to that landlord.
We leased the property to them in 2005 vide
Ex.DW9/2 at a monthly rent of Rs. 60,000/- but I
cannot say why the rent was reduced because my
father used to look after these affairs. It is signed
by my father. My father has signed as Power of
Attorney Holder for me and my mother. I have
not brought the Power of Attorney from me and
my mother in favour of my father.
We again leased the property to them vide lease
deed dated 01.04.2010 vide mark at a monthly
rent of Rs. 1,25,000/- and bears my signatures.
The original of this document has been misplaced.
It is correct that the said document states
“attorney for lessor” but the same is signed by the
lessor.
I am not aware if my father wanted to sell this flat
to Mr. Aditya Dave and Mrs. Soni Dave. I cannot
admit or deny if my father had asked Mr. Aditya
Dave to buy at a price twice the market rate
because his front flat were adjoining our flat.
Prior to 2010, the defendant had demolished the
wall that was between our flat and flat in front.
CS DJ No. 9346/16 & 9347/16 Page 54 of 144
This was later reconstructed around the year
2015-16 or 2017 but I cannot say when. Again
said, I am confused about the exact year in which
the wall was reconstructed but when I got the
possession of my portion, it was a separate unit.
We did not get any police verification done at any
time during this entire period. We were not aware
if there was any criminal case going on against
the defendant. (objected to by Ld. Counsel for
defendant as the same is irrelevant and not
relating to the issue in controversy between the
parties).
It is correct that the lease deed dated 28.12.2015
Ex.DW9/3 is signed by only one witness. I cannot
say whether this document was not signed on
28.12.2015.
Q. I put it to you that this was not signed on
28.12.2015 because the stamp paper is dated
26.02.2016, what do you have to say?
A. It is correct, however, since the lease was the
continuing one and may be the lease was signed
when my father had travelled to Delhi.
Q. I put it to you that this document has been
created subsequently and you did not give
possession of your property to the defendant at
any time after the 2005 lease expired and only
signed these documents at the request of
defendant. What do you have to say?
A. It is incorrect.
Q. Is it correct that in the summons that you
received you had been asked to bring the lease
deed of 2010 only?
CS DJ No. 9346/16 & 9347/16 Page 55 of 144
A. I received summons 3-4 days before the last
hearing but I have not brought the same with me
but I do not recall whether it required me to bring
only the lease deed of 2010 but the defendant
Counsel had advised me to bring the other
documents also in original and on the last date
also, I had mentioned it to the Court and the Court
had also told me that I could bring whatever
documents I had with in original.
Q. Why did you not register the lease deeds of
2010 and 2015?
A. I cannot say.
Q. I put it to you that they were not registered
because you did not actually give possession to
the defendant under either the lease deed of 2010
or 2015?
A. It is incorrect.
It is incorrect to suggest that I am deposing
falsely. It is incorrect to suggest that I have been
paid by the defendant to make this statement.”
11.10 DW-11 Sh. Rajesh Gupta is the Chartered
Accountant/Auditor. He was auditor for the defendant company
during the year 2009-2010. After seeing the certificate dated
21.05.2011 issued by Rajesh Radhey & Associates, Chartered
Accountant pertaining to decline in the turnover during period
March 2010 to October 2010 of the defendant company, he stated
that this document was not issued by him and that same bears his
forged signatures.
CS DJ No. 9346/16 & 9347/16 Page 56 of 144
PRELIMINARY OBJECTIONS:
12. The defendant have raised some preliminary
objections in their written submissions, though same have not
been made preliminary issues, however, still I am giving my
findings on those issues before going to deal with the issues
framed in the suits.
DEFENDANT’S ARGUMENTS:
13. The defendant have raised following arguments in
support of their contentions.
Argument regarding competency of Mr. Aditya Dave and
Mrs. Soni Dave.
13.1 The defendant has challenged the authority of Mrs.
Soni Dave in Soni Dave suit as well as that of Mr. Aditya Dave in
Berar Suit to file the respective suits and as such, both the suits
have not been filed through duly authorized representatives.
It is argued that Mr. Aditya Dave though named as
PW-2 did not enter into the witness box on behalf of Plaintiff
no.1 and did not depose as he was dropped as a witness on
20.03.2024 on which date the Plaintiff’s evidence was closed. It
is also submitted that Mr. Aditya Dave was not even competent
to file Berar Suit on behalf of Plaintiff no.1 company as no
minutes of the alleged meeting dated 05.06.2008 was filed on
record. Therefore, the authority of Mr. Aditya Dave as the AR of
the Plaintiff No. 1 Company is in dispute. It is evident that Mrs.
Soni Dave had no personal knowledge of the subject matter and
CS DJ No. 9346/16 & 9347/16 Page 57 of 144
her knowledge is derived from her discussion with her husband
Mr. Aditya Dave which clearly shows that her entire knowledge
regarding the subject matter in dispute is merely hearsay in both
Berar suit and Soni Dave suit. Though Mr. Aditya Dave could be
a credible witness for the Plaintiff to depose on the facts as stated
in the plaint but for reasons best known to the Plaintiffs
themselves, he was dropped from the List of Witnesses in Berar
Suit and in Soni Dave suit, his testimony is limited only to the
electronic evidence. Further, in none of the emails exchanged
between the parties regarding the meeting dated 21.05.2008 Mrs.
Soni Dave was marked CC on her email id
[email protected]. Furthermore, her entire testimony is full
of ambiguities and contradictions, which clearly proves the case
of the Defendant that she was not a credible witness as such, it is
pertinent to point out order dated 18.02.2022 passed in CM(M)
162/22 by the Hon’ble High Court of Delhi wherein it is held
unequivocally stated that an adverse inference is to be drawn in
case the Witness refuses to answer certain questions with respect
to the dispute. Pursuant to order of the Delhi High Court, vide
proceeding sheet dated 12.07.2022, the Ld. Local Commissioner
made the following observation:
“During the cross examination of Mrs. Soni Dave she
has refused to answer question Nos. 55, 64, 86, 144,
145, 152, 153, 156, 179, 182, 185, 225, 240, 241,
242, 260, 261, 266 and 308 in terms of the order of
the High court dated 18.02.2022”
CS DJ No. 9346/16 & 9347/16 Page 58 of 144
Given that the questions mentioned above were of utmost
importance and relevant to the dispute at hand, it is imperative
for this Court to draw an adverse inference with regards the
testimony of Mrs. Soni Dave.
Moving on to the questionable testimony of Mrs. Soni Dave in
the following questions she has deposed that her husband is the
best person to answer as she has no knowledge, she does not
recall and have given contradictory statements as to the case
setup by her in the plaint.
(Refer Q.No. 92 to 94, 111 to 117, 126 to 129, 133, 149 to
151, 166, 168 to 170, 184 to 185, 187, 191 to 192, 203 to
216, 219, 225, 233, 235, 240 to 242, 246, 258 to 262, 269,
271 to 273, 275 to 280, 290 to 292, 300 to 301, 303 to 309,
312 of the cross examination of PW1 in CS DJ 9347/16
from Page No. 173 to 236.
13.2 Argument regarding legal right or ownership of of
basement of property M-1, Hauz Khas, New Delhi :
The Defendant argues that the Plaintiffs have no
valid ownership or legal right over the basement of property M-1,
Hauz Khas, New Delhi, and therefore could not have legally
leased it. The alleged lease deed dated 02.12.1989 is claimed to
be void ab initio, as it was executed through fraud and
misrepresentation, violating Section 105 of the Transfer of
Property Act, 1882 and Section 19 of the Indian Contract Act,
1872.
It is further argued that the ownership of the
basement and front lawn is under dispute in suits pending
adjudication i.e. CS DJ 297/2022 Jammu & Kashmir Bank vsCS DJ No. 9346/16 & 9347/16 Page 59 of 144
G.S. Berar Co. Pvt. Ltd. & Ors. and CS DJ 113/2017 (Trans
Asian Industries Expositions Pvt. Ltd. vs Aditya Dave & Ors.). It
is argued that Plaintiffs allegedly only held 1/6th share, not the
entire basement and as such, the basement is a common area,
jointly owned by multiple flat owners as per the Collaboration
Agreement dated 01.11.1984.
It is further argued that no specific demarcation
existed for the Plaintiffs’ share, making leasing impossible. It is
also argued that Plaintiffs falsely represented themselves as
absolute owners/lessors and had concealed material facts about
ownership and common area rights. Further, the sale deeds show
inconsistency as Plaintiffs claimed full ownership earlier but later
admitted limited rights. It is also argued that plaintiffs allegedly
illegally sold common areas (basement, front lawn) to a third
party (Vijay Sales). This was done despite pending litigation and
in violation of Section 52 of TPA (lis pendens). A court order has
restrained further third-party interest. It is further argued that
Collaboration Agreement (1984) is Central document
establishing shared ownership of common areas. Plaintiffs denied
its existence in court despite relying on it in past transactions.
It is further argued that Section 116 of the Evidence
Act (tenant estoppel) does not apply due to fraud and because
possession has already been returned. It is further argued that
Plaintiffs were themselves illegal occupants. Criminal complaints
for fraud, cheating, and breach of trust are pending. Plaintiffs
allegedly misappropriated approximately ₹17.8 crore. The
Property suffered from defects, demolition orders, and sealing,
affecting usability and rental value. Plaintiffs approached theCS DJ No. 9346/16 & 9347/16 Page 60 of 144
court with unclean hands, suppressing material facts.
PLAINTIFF’S ARGUMENTS:
14.1 So far as the argument of the defendant challenging
the authority of Soni Dave as well as Mr. Aditya Dave in both the
suits is concerned, it is submitted that no such defence has ever
been raised in the Written Statement in either matter and no such issue
has been framed. This issue cannot be raised at this late stage.
In para 1 of the plaint it was pleaded that:
“…This plaint is signed on behalf of Plaintiff no.1 by Mr.
Adit Dave who has been authorized to institute this suit and
to sign all papers including this plaint, affidavit and
vakalatnama in relation thereto.”
A copy of the Board resolution was filed with the suit.
Parawise reply thereto is:
“The contents of para 1 of the Plaint are a matter of
record and hence admitted.”
There was thus no need to prove any further capacity.
The resolution passed by the Company in favour of Mr. Aditya Dave
also bears the signatures of Ms. Soni Dave. Being Directors of the
company and hence its principal officers they were both authorised to
sign and depose even without any resolution. Ms. Soni Dave could
also have instead signed the plaint. They do not need any other
authority to depose on behalf of the company. In any case the matter is
essentially based on records and certified copies of documents and
most of the correspondence between the parties is admitted. Further,
she has stated in the affidavit as follows:
“The plaint is signed on behalf of G.S.Berar &
Co. Pvt. Ltd. by Mr. Aditya Dave who has beenCS DJ No. 9346/16 & 9347/16 Page 61 of 144
authorized to institute this suit and to sign all
papers including this plaint, affidavit and
vakalatnama in relation thereto. His
authorisation is at page 52 of the documents
filed by the Plaintiff on 24.10.2008 and is
Exhibit PWl/1. I have signed this authorization.
He has signed the plaint, affidavit and
vakalatnama. I can recognize his signatures
because I have seen him sign in the usual course
of our work. I have also signed the plaint and
vakalatnama. Mr. Aditya Dave is my husband.
He and I discuss all our money/property matters
and take joint decisions about them. Usually my
husband stays in touch with our lawyers over the
phone as well as by personal meetings and he
also receives emails from the lawyers. He then
discusses the matter with me. I have also often
attended such meetings. After we have decided
on the course of action he instructs the lawyers.
I have seen all the emails and documents
referred in this affidavit and I confirm that the
emails that were sent by our lawyers were in my
knowledge at the time and had been issued with
my consent. I have refreshed my memory while
preparing this affidavit. I stand by whatever is
stated in them.”
All the documents filed by the Plaintiffs form part of
the record of the Company.
The evidence on record shows that the parties have
consistently proceeded on the basis that Mr. Aditya Dave is the
person negotiating with the Defendant, receiving and sending the
relevant emails, and dealing with the subject properties, both for
the G.S. Berar (“Berar property”) and the Soni Dave premises.
CS DJ No. 9346/16 & 9347/16 Page 62 of 144
There is no requirement in the law that a witness
who appears on behalf of the Company can only depose if there
is a board resolution in his favour. ( Judgment Pawan Kumar
Dalmia). Further, on the aspect of authority to institute, the
Director is competent to institute the case on behalf of the
Company. (Judgment United Insurance).
The Defendant counsels were aware throughout that
there were 2 separate suits in both of which Ms. Soni Dave was a
Plaintiff. They nevertheless addressed their emails only to the
Plaintiffs’ counsel and to Aditya Dave concerning both the
matters. Consequently, it does not lie in their mouth to now
question whether Ms. Soni Dave was represented and or had
participated in the proceedings as a landlord. Moreover, in law it
is not even necessary for a party to be personally present during
any meeting or to hold discussions directly with the other. It is
well recognized that their counsels or other representatives can
do so on their behalf.
14.2 It is argued on behalf of plaintiff that the Defendant
initially admitted the Plaintiffs’ title and claimed a contractual
right to remain in possession until 2012, on which basis interim
protection was granted. However, even after this period expired,
the Defendant did not vacate and was ultimately evicted through
orders of the Single Judge, Division Bench, and Supreme Court.
Subsequently, the Defendant changed its position, denying both
the contract and the Plaintiffs’ title, raising inconsistent and
untenable pleas.
It is further argued that the principle of res judicata
CS DJ No. 9346/16 & 9347/16 Page 63 of 144
applies, as the issue of title was clearly pleaded by the Plaintiffs
and expressly admitted by the Defendant in Written Statements
(2009 and 2017),and conclusively decided through multiple
judicial orders.
Further, a consent order (2015) and later decisions
under Order 12 Rule 6 CPC confirmed that the Defendant had no
right to remain in possession. These findings were upheld up to
the Supreme Court of India.
The Defendant cannot now dispute title because
admissions in pleadings cannot be withdrawn, and attempts to
amend pleadings were rejected (even if on delay, they would fail
on merits).
It is further argued that the 2022 suit by Jammu &
Kashmir Bank also does not help the Defendant, since the Bank
claims through the Defendant and is therefore bound by the same
title.
It is further argued that even if GS Berar & Co.
lacked title, only Ms. Soni Dave would have the locus to
challenge it. The Defendant’s reliance on a Collaboration
Agreement is contradictory–claiming rights under it while also
denying the Company’s title makes its position legally
inconsistent.
FINDINGS:
15.1 As far as the argument of defendant disputing the
competency of Mr. Aditya Dave to file the present suit, it is seen
that in the Written statement of the defendant, nowhere this issue
was raised througout the proceedings of this case and this issue
CS DJ No. 9346/16 & 9347/16 Page 64 of 144
has been raised for the first time at the fag end of the matter
when the matter is now being adjudicated. The Board Resolution
in his favor has been duly proved on record as Ex.PW1/1 in the
Berar suit. Further, even the defendant has admitted the para 1 of
the plaint which states as under:
This plaint is signed on behalf of
Plaintiff no.1 by Mr. Adit Dave who has
been authorized to institute this suit and
to sign all papers including this plaint,
affidavit and vakalatnama in relation
thereto.”
So far as another argument of defendant challenging
the competency of PW-1 Mrs. Soni Dave is concerned and that
she was evasive in replying to certain questions as mentioned
above, it is seen that the questions which have not been answered
by her are not relevant to the fact in issue and therefore, her
testimony cannot be discarded on this ground alone. Moreover,
Mrs. Dave is one of the Directors of the plaintiff company and as
such, she is competent to depose on behalf of the company as
well as in her own capacity as a Director.
In the case of Pawan Kumar Dalmia Vs. M/s HCL
Infosystems Ltd. & Ors. passed in RFA Nos.180/2004, 235/04 &
239/04, Hon’ble High Court of Delhi has held as under:
“any person who is aware of the facts of the case
and whose evidence would be a relevant evidence
in terms of the Evidence Act, 1872, is competent
to depose. A witness can depose as per facts in
his knowledge or as per records. There is noCS DJ No. 9346/16 & 9347/16 Page 65 of 144
provision in the Companies Act, 1956 or in the
Evidence Act, 1872 which requires that a witness
who appears on behalf of the company can only
depose if there is a resolution of the Board of
Directors of the company permitting him to
depose on behalf of the company.”
Therefore, in view of the above discussion, it is clear
that the argument raised by the defendant is frivolous and have
been raised for the first time when the matter has reached its
final stage. Even in the cross examination, the witness has not
been evasive and has given reply as per her knowledge of the
facts. Furthermore, the defendant has also cross examined PW-2
Mr. Aditya Dave, husband of PW-1 Soni Dave, and as such, they
had ample opportunity to put all the questions to him which
could not be answered by Mrs. Soni Dave herself, and as such,
now this Court has no reason to draw adverse inference against
the testimony of PW-1 Mrs. Soni Dave and to dispute the
competency of both the witnesses and as such, the argument
raised on behalf of defendant is not relevant and accordingly
rejected.
It is pertinent to mention that as per the report of Ld.
Local Commissioner filed in the Court on 09.09.2022, PW-2 Mr.
Aditya Dave was put to cross examination by Ld. Local
Commissioner without recording his examination-in-chief (i.e.
without the evidence affidavit tendered in evidence) and the
defendant was aware of this fact that PW-2 had not tendered any
CS DJ No. 9346/16 & 9347/16 Page 66 of 144
evidence affidavit and was directly cross examined by the
defendant, therefore, now the defendant cannot raise this plea
that PW-2 was dropped by the plaintiffs and as such, the
defendant did not get any opportunity to cross examine PW-2 Mr.
Aditya Dave.
15.2 So far as the arguments of defendant that plaintiffs
have no valid ownership or legal right over the basement of
property M-1, Hauz Khas, New Delhi, and therefore could not
have legally leased it and that the ownership of the basement and
front lawn is under dispute in suits pending adjudication are
concerned, I am in complete agreement with the submissions
raised on behalf of the plaintiff that principle of res judicata
applies once the issue of title as clearly pleaded by the Plaintiffs
and expressly admitted by the Defendant in Written Statements
(2009 and 2017), has been conclusively decided through multiple
judicial orders.
A perusal of the order dated 05.08.2015 vide which a
consent decree under order 12 rule 6 CPC was passed clearly
established the relationship of landlord-tenant between the the
plaintiff and defendant. The said order was challenged by the
defendant, however, the said decree was confirmed by Hon’ble
High Court of Delhi vide order dated 18.05.2016. Aggrieved by
the order dated 18.05.2016 of Hon’ble High Court of Delhi, the
defendant approached Hon’ble the Supreme Court of India by
filing Special Leave Petition Nos. 19429-19430/2016 which was
also dismissed vide order dated 29.07.2016.
CS DJ No. 9346/16 & 9347/16 Page 67 of 144
Therefore, it is clear that once the defendant has
admitted that he was a tenant under the plaintiffs, he cannot be
allowed to agitate or challenge the title of the plaintiffs qua the
suit properties in view of the application of rule of res-judicata
and as such, same cannot be considered again by this Court.
Furthermore, the argument that the other suits i.e.
CS DJ 113/2017 titled as Trans Asian Industries Expositions Pvt.
Ltd. vs Aditya Dave & Ors.) pending in this Court and other suit
bearing No. CS DJ 297/2022 titled as Jammu & Kashmir Bank
vs G.S. Berar Co. Pvt. Ltd. & Ors. is pending in the court of Ld.
DJ-02, South, Saket wherein the defendant and J & K Bank have
challenged the title of the plaintiff qua the suit property in this
Court, it is not within the jurisdiction of this Court and as such,
same cannot be considered at all as it would amount to exceeding
the jurisdiction of this Court. Further, judicial propriety demands
not to give any observation on the issues which are are still sub-
judice in other Courts. It is pertinent to mention that the above
two suits were filed after the decree passed under Order 12 rule 6
CPC and after handing over the vacant possession of the suit
property to the plaintiffs and as such, it is clear that it is an after-
thought of the defendant to file these suits.
16. Now, I shall deal with issues framed in these suits and give
my issue-wise findings.
ISSUE NO.1.
Whether the plaintiff is entitled for mesne profits, if so, at what rate
CS DJ No. 9346/16 & 9347/16 Page 68 of 144
and for which period? OPP.
16.1 In order to adjudicate upon this issue, since both the
sides have disputed the area of the suit premises in both the suits,
therefore, it is imperative for this Court to give its findings on the
area of the suit premises.
In the Berar suit, the plaintiff has mentioned the area
of suit property as under:
(i) area of basement (measuring approximately
5250 sq. feet.) and;
(ii) a portion on the ground floor behind the
front flat at 1275 sq. ft. (approx.).
Thus, the total area, as per the plaintiff in Berar suit
is 6525 sq. feet.
16.2 Similarly in Soni Dave Suit, the Plaintiff has
mentioned that the Plaintiff is the owner of the front portion on
the ground floor of a property located at M-1, Hauz Khas, New
Delhi measuring approximately 1200 sq. ft.
Thus, the total area, as per the plaintiff in Soni Dave
suit is 1200 sq. feet.
However, in the written statement filed in Berar suit,
the defendant has mentioned the Basement area as 5078 sq. ft.
(approx.) and the portion on the ground floor measures to 1065
sq. ft. (approx.) in Soni Dave Suit as 1040 sq. ft. thereby
disputing the areas in both the suits.
16.3 It is an admitted fact between the parties that both
the plaintiff and defendant, with the mutual consent, based on the
CS DJ No. 9346/16 & 9347/16 Page 69 of 144
terms and conditions, entered into a Lease Agreement dated
02.12.1989 Ex.D-12 which the defendant treated as Primary
Lease Agreement. The said Lease Agreement, kept renewing the
lease from time to time till January, 2008.
16.4 It is also pertinent to mention that the dispute
between the parties arose in the year 2008 on the issue of service
tax and thereafter, both of them could not arrive at any settlement
on the issue of service tax and the plaintiffs terminated the
tenancy in the same year i.e. 2008.
16.5 It is also very important to note that in the para-wise
reply and the defendant has categorically admitted in para no.1
in both the suits i.e. Berar suit and Soni Dave suit which are
reproduced as under:
BERAR SUIT PLAINT:
1. That the plaintiffs are the owners of
(a) basement (measuring approximately 5250 sq. ft.) and
(b) portion on the ground floor behind the front flat (measuring
approximately 1275 sq. ft.) located at property no. M-1, Hauz Khas,
New Delhi (hereinafter referred to as the suit property).
Soni Dave Suit plaint:-
1. The content of para 1 of the plaint are a
matter of record and hence admitted.
16.6 Thus, it is clear that defendant has very specifically
admitted the area of the suit premises in both the suits.
16.7 Further, the defendant amended its written statement
CS DJ No. 9346/16 & 9347/16 Page 70 of 144
in the year 2017 in both the suits i.e. when the lease was
terminated and quite conveniently taken the objection qua the
area of the suit properties in both the Suits. Since this is an
admitted position that from the year 1989 till the year 2008, both
the parties were having landlord-tenant relationship for 19 long
years and during this period, the defendant/tenant never raised
any issue qua the area of the suit properties. Thereafter, at later
stage i.e. after the tenancy was terminated, the defendant cannot
be allowed to dispute the same. Moreover, it is also the matter of
fact that defendant has placed a large electricity generator in
driveway and had constructed pantry and a toilet in the driveway
on the ground floor and if this area is also included, the total area
of the Berar suit would easily exceed the area of 6525 sq. feet.
16.8 Further in Primary Lease Agreement dated
02.12.1989, admittedly the column of area is blank and it
mention the rate of rent, ₹11/- per sq. ft. As per WS filed by
defendant, the initial rent of suit property in Berar suit was
₹72,369/- p. m. If, ₹72,369/ is divided by 11, the area comes to
6579 sq. ft. It is very strange that for a period of about 19 years,
defendant was paying excess rent to the Plaintiff and now all of a
sudden in amended Written Statement (which was filed on
06.03.2017 alongwith an application under Order 6 Rule 17 of
CPC for amendment of the Written Statement and the said
application was allowed and amended Written Statement was
taken on record on 06.07.2017.), very conveniently objected the
area in both the suits, which is not allowed.
16.9 Thus, in view of the above discussion and clear
CS DJ No. 9346/16 & 9347/16 Page 71 of 144
admission by the defendant in its written statement, I hold that
the area of 6525 sq. feet in Berar suit and 1200 sq. feet in Soni
Dave suit would be used for the computation of mesne profits
besides other factors viz. service tax, conversion charges, parking
charges etc. as have been agitated by both the parties.
ISSUE OF SERVICE TAX:
17. The main dispute which led to the termination of
tenancy and filing of the present suits is the service tax liability.
Therefore, I shall now deal with the issue of service tax liability.
17.1 It is argued on behalf of plaintiffs that the Defendant
did not tender service tax for June, July and August 2008 despite
the express understanding of 21 May 2008, thereby compelling
the Plaintiffs to terminate the tenancy.
It is further argued that though Defendant has argued
that it is not liable to pay service tax due to some alleged
exemption and the Plaintiffs do not dispute that the Defendant
may be exempt from service tax on its export services, however,
the Defendant has not explained how that would exempt it from
tax on rental payments made to a third party. Service tax is a tax
on the service provider, here the landlord, and therefore the
question of taxability would have to be determined with
reference to the landlord.
17.2 In support of above contentions, the plaintiffs have
relied upon the following judgment.
CS (OS) 1016/2008 & I.A. No. 6532/2008 & CS (OS) 1018/2008
& I.A. No. 6537/2008 titled as ‘Pearey Lal Bhawan Association
Vs. M/S. Satya Developers Pvt. Ltd.’ Delhi High Court:
CS DJ No. 9346/16 & 9347/16 Page 72 of 144
“14. It is true, that the contracts entered into between the
parties in this case, spoke of the plaintiff lessor’s liability
to pay municipal, local and other taxes, in at least two
places. The Court, however, is not unmindful of the
circumstance that service tax is a species of levy which
the parties clearly did not envision, while entering into
their arrangement. It is not denied that leasing, and
renting premises was included as a “service” and made
exigible to service tax, by an amendment; the rate of tax
to be collected, is not denied. If the overall objective of
the levy – as explained by the Supreme Court, were to be
taken into consideration, it is the service which is taxed,
and the levy is an indirect one, which necessarily means
that the user has to bear it. The rationale why this logic
has to be accepted is that the ultimate consumer has
contact with the user; it is from them that the levy would
eventually be realized, by including the amount of tax in
the cost of the service (or goods).
15. It would be noteworthy to recollect Section 64-A of
the Sale of Goods Act, 1930, which visualizes and
provides for situations where levies of tax are imposed
after the contract (for sale of goods) is entered into. The
provision prescribes that:
“64-A. In contracts of sale, amount of increased or
decreased taxes to be added or deducted. – (1)
Unless a different intention appears from the terms
of the contract, in the event of any tax of the nature
described in sub-section (2) being imposed,
increased, decreased or remitted in respect of any
goods after the making of any contract for the
sale or purchase of such goods without stipulation
as to the payment of tax where tax was
not chargeable at the time of the making of the
contract, or for the sale or purchase of
such goods tax-paid where tax was chargeable at
that time, –
(a) if such imposition or increase so takes effect
that the tax or increased tax, as the case may be, or
any part of such tax is paid or is payable, the seller
may add so much to the contract price as will be
equivalent to the amount paid or payable in respect
of such tax or increase of tax, and he shall be
entitled to be paid and to sue for and recover such
addition; and
(b) if such decrease or remission so takes effect
that the decreased tax only, or no tax, as the case
may be, is paid or is payable, the buyer mayCS DJ No. 9346/16 & 9347/16 Page 73 of 144
deduct so much from the contract price as will be
equivalent to the decrease of tax or remitted tax,
and he shall not be liable to pay, or be sued for, or
in respect of, such deduction.
(2) The provisions of sub-section (1) apply to the
following taxes, namely; –
(a) any duty of customs or excise on goods;
(b) any tax on the sale or purchase of goods.”
The above provision also clearly says that unless a
different intention appears from the terms of the
contract, in case of the imposition or increase in
the tax after the making of a contract, the party
shall be entitled to be paid such tax or such
increase. Although there is no explicit provision to
that effect, enabling lessors such as the plaintiff, to
the service tax component, this Court is of the
view that there is sufficient internal indication in
the Act, through Section 83 read with Section 12-
A and Section 12-B suggesting that the levy is an
indirect tax, which can be collected from the user
(in this case, the lessee). This issue, is therefore,
answered in the plaintiff’s favour, and against the
defendant.”
17.3 On the other hand, the defendant has argued that the
plaintiffs under the garb of Mesne Profit, in both the suits, have
also erroneously and with malafide intentions tried to slip in an
egregious amount of service tax, which they have purportedly
paid and have tried to slide on the liability of the same towards
the defendant. Plaintiffs aver that they duly paid service tax
during the impugned period of 2008 – 2016, and this incorrect
and fallacious contention again points to the ill-intention and
conduct of the Plaintiffs.
17.4 It is pertinent to mention here that the when the
Division Bench of Delhi High Court vide judgment dated
18.05.2016 in RFA(OS) 106/15 and RFA (OS) 107/15 had set the
CS DJ No. 9346/16 & 9347/16 Page 74 of 144
interim Use/Occupation Charges, there was no mention of
service tax. While in the order dated 05.08.2015 of the Single
Bench of Delhi High Court in both the suits, the Service Tax was
to be added. Since the order of the Single Judge was modified by
the Division Bench hence the interim Use/Occupation Charges
were inclusive of Service Tax and was not separate for the reason
that the single bench while passing the order dated 05.08.2015
disposed of IA No. 536/2012 in CS DJ 9347/16 and IA No.
6038/2010 in CS DJ 9346/16 which was relating to the payment
of service tax with interest and penalty filed by the Plaintiffs. In
any case, with regards to the case laid out by the Plaintiff, service
tax is not payable by the defendant for 2 primary reasons:
17.5 Firstly, No bills/ invoices/challans were ever raised
by the Plaintiffs to the defendant in lieu of use and occupation
charges, for which the service tax was purportedly paid by the
Plaintiffs. It is pertinent to refer to the erstwhile Service Tax
Rules, 1994 to look into the statute surrounding this contention.
Rule 4A categorically states that the statutory period to raise a
bill by a person providing service shall raise a bill with respect to
the same not later than 30 days from the date of completion of
such taxable service, and the bill shall be in the form of a challan,
shall be serially numbered and shall also spell out the specifics
person who is providing service and to whom it is being
provided. It is unequivocally stated that no such bill was ever
raised and no input credit was ever taken by the Defendant.
17.6 Secondly, and more surprisingly, the Plaintiffs have
annexed a table of purported payments in its evidence by way of
CS DJ No. 9346/16 & 9347/16 Page 75 of 144
affidavit which are bereft of logic and the service tax amounts
paid are fictitious as these do not correspond to any use and
occupation charges that the Hon’ble Delhi High Court had fixed.
No justification has ever been given and no evidence has been
led to show that these purported payments were made, let alone
the rationale behind the amounts being paid. In such
circumstances, it is imperative for this Hon’ble Court to
categorically reject this contention, especially since the erstwhile
Service Tax was a Tax to be paid to the Government and it seems
that under the cloak of Mesne Profits, the Plaintiffs are trying to
siphon off funds due to the Government. Even assuming without
admitting that the Plaintiffs paid Service Tax in the impugned
period, they should’ve paid at the rate determined by the Hon’ble
High Court and not their own numbers. Furthermore, as has the
case been on multiple different points, Plaintiffs have led NO
evidence to prove their contention and only rely on bald
averments.
17.7 In support of its contentions, the defendant has relied
on following judgment:
In case titled as Bai Mamubai Trust & Ors. V.
Suchitra, MANU/MH/2567/2019, Hon’ble High Court of
Bombay has held as under:
26 (v). Relying on the decision of this Court
in Humayun Dhanrajgir vs. Ezra Aboody 3,
Mr. Jagtiani submitted that the true nature of
the payments made by one party to another /
the Court Receiver for use and occupation of
property is to be decided by the Court
looking to the circumstances of the case andCS DJ No. 9346/16 & 9347/16 Page 76 of 144
evidence on record. If, upon ascertaining the
true nature of the payment the Court is of
the view that the transaction or activity is a
supply, GST is payable. For example, during
the tenure of permissive use of a property,
what is paid by the occupier to the right
owner is the contractual consideration. If
such permissive use or occupation is
terminated or comes to an end and the
occupation becomes unlawful, the nature of
payment to be paid to the right owner
changes from contractual consideration to
damages or mesne profits for unauthorized
use and occupation of the property. GST is
payable on the former contractual
consideration, but not on damages payable
for unauthorized use and occupation of the
property. The fact that the measure of
damages is to be based on market rent
should not conflate the nature of the
payment being made i.e. a payment to
compensate the right owner for violation of
his legal right.
(vi) In the facts of the present Suit, where
royalty is to be paid by the Defendant as
‘compensation’ for prima facie unauthorised
occupation of the Suit Premises, the royalty
is in the nature of compensation for
violation of the Plaintiff’s legal right and not
towards payment of contractual
consideration which is agreed to be paid but
is otherwise not paid / refused to be paid.
68. In Humayun Dhanrajgir vs. Ezra
Aboody (supra) this Court held as follows:
” CONCEPTS OF ROYALTY:
17. In the case of (Kamakshya Narain v. I.T.
Commissioner)1, A.I.R. 1943 P.C. 153, the
Privy Council observed that the royalty is
“in substance a rent; it is the compensation
which the occupier pays the landlord for that
species of occupation which the contract
between them allows.” Thus, royalty in
substance is rent. It appears that the concept
of royalty is to compensate a right owner of
the property who permits or allows others to
use his rights from his property. ThisCS DJ No. 9346/16 & 9347/16 Page 77 of 144
concept is also understood as ‘Mesne proft’
in legal parlance. Strictly speaking during
the tenure of contractual tenancy what is
paid by the tenant to his landlord is the
contractual rent. After quit notice from the
date of termination of tenancy, the
characteristics of the subject matter is
changed to damages for use and occupation
of the premises and after fling of the suit for
eviction till the possession is handed over, if
the decree of possession is passed in favour
of the landlord, the characteristic is changed
to mesne profits. To what extent the
quantum changes with the change of such
characteristics is for the Courts to decide
which the Courts do mould according to the
facts and circumstances of the case to do
justice between the parties.
18. One may use different words like
compensation, licence, royalty and mesne
profits, all in one form or another are diverse
forms of rents in generic sense and what is
the true colour of the payments made by one
party to another for use and occupation of
the property is to be decided by the Court
looking to the circumstances of the case and
evidence on record. Rent in English Law is
said to be a profit from the property
demised. It may assume the form of rent
service or rent charge. It is described in
generic sense as compensation for use and
occupation and in legal sense, it is
recompense paid by the tenant to his
landlord for exclusive possession of the
premises enjoyed by him. However, rent
flows by virtue of the contract express or
implied and after the contract of tenancy is
terminated it will be damages or
compensation. After the suit for possession
is fled, monetary payments for use and
occupation against the wish of the landlord
assume the format of ‘mesne profits’.
CONCEPTS OF MESNE PROFITS: 19.
The term ‘mesne profit’ is used for damages
for trespass, a wrongful act relating to
immovable property and the said wrongful
act forms one of the torts affecting realty i.e.
CS DJ No. 9346/16 & 9347/16 Page 78 of 144
immovable property. The enlarged scope of
this term is meant to claim proft from one
whose possession did not originate in
trespass but is nevertheless wrong, as for
example when the tenant or occupier of a
property is dispossessed legally and decree
of possession has been passed in favour of
the landlord, still the tenant/occupier holds
over the property for a specified period
before handing over the possession to the
rightful owner. Though the tenant had a
rightful possession when he entered the
immovable property but it is the decree of
possession which makes his possession
wrongful.
22. The dissection of the aforesaid definition
reveals that wrongful possession of the
person is the very essence for the claim for
mesne profits”. (Emphasis supplied herein)
69. The judgment in Humayun Dhanrajgir
vs. Ezra Aboody (supra) clearly states that
the true colour of the payment depends on
the facts and circumstances of the case. For
example, it acknowledges that on
termination of contractual occupation, the
right holder is entitled to damages if the
occupant continues to remain in what is now
an unauthorised or illegal occupation of the
property. In fact, in Paragraph 19, the Court
says that the term ‘Mesne Profits’ is ‘used for
damages for trespass, a wrongful act relating
to immovable property and the said
wrongful act forms one of the torts affecting
realty i.e. immovable property. The enlarged
scope of this term is meant to claim profit
from one whose possession did not originate
in trespass but is nevertheless wrong, as for
example when the tenant or occupier of a
property is dispossessed legally and decree
of possession has been passed in favour of
the landlord, still the tenant/occupier holds
over the property for a specified period
before handing over the possession to the
rightful owner. Though the tenant had a
rightful possession when he entered the
immovable property but it is the decree of
possession which makes his possession
wrongful.’. The decision supports the
CS DJ No. 9346/16 & 9347/16 Page 79 of 144
submissions of the Learned Amicus Curiae
and Mr. Jagtiani.
70. This view is also supported from the
decision of the Supreme Court passed in
Senairam Doongarmall vs. Commissioner of
Income Tax (supra) cited by the Learned
Amicus Curiae. As a matter of illustration,
the Amicus Curiae submits that in a cause of
action of trespass or illegal occupation, the
computation of damages will involve the
determination of rental income payable in
surrounding areas to determine mesne
profits. The Amicus Curiae submits that as
held in Senairam Doongarmall vs.
Commissioner of Income Tax (supra) it is
the quality of the payment and not the
method used to determine its measure that
determines its character namely whether it is
‘consideration’ or damages. The method of
computation is not material.
72. I am of the view that although the
measure for quantifying a payment of
royalty to the Court Receiver may be
determined by looking at consideration
payable under a contract or arising out of a
business relationship, the royalty may still
be in the nature of payments towards a
potential award of damages or Mesne
Profits, and therefore not liable to attract
GST for reasons separately stated.
74. I am also unable to accept the State of
Maharashtra’s submission that the
Defendant’s occupation of the Suit Premises
is a ‘supply’ since it falls within the
definition of ‘renting in relation to
immovable property’ i.e. Item No. 5(a) of
Schedule II to the CGST Act. The State of
Maharashtra has relied upon the definition
of ‘renting in relation to immovable
property’ found in Clause 2(zz) of
Notification No. 12/2017-State Tax (Rate)
Mumbai, dated 29th June 2017 in support of
this submission. Clause 2(zz) provides that:
“(zz) “renting in relation to immovable
property” means allowing, permitting or
granting access, entry, occupation, use orCS DJ No. 9346/16 & 9347/16 Page 80 of 144
any such facility, wholly or partly, in an
immovable property, with or without the
transfer of property and includes letting,
leasing, licensing or other similar
arrangements in respect of immovable
property;”
I find that the definition relied upon by the
State uses the terms ‘allowing, permitting or
granting access, entry, occupation, use’
which connotes that there must be a positive
act by the property or right owner to permit
the occupier to use the property in question.
As discussed above, an act of illegal
occupation, which may be compensated in
damages by mesne profits, does not amount
to a voluntary act of allowing, permitting, or
granting access, entry, occupation or use of
the property. The submission made by the
State of Maharashtra as well as the Union of
India that the Order of the Court permitting
the Defendant to occupy the Suit Premises is
notionally a contract between the Court
Receiver and the Defendant overlooks the
nature and meaning of a contract and
ignores the character of damages and the
circumstances necessitating the same to be
paid under a decree of the Court.”
17.8 I have carefully gone through the submissions made
on behalf of both the sides and considered the judgments relied
by both the sides on the issue of service tax.
17.9 In this regard, it is very significant to read the
communications post meeting dated 21.05.2008.
17.10 The defendant has expressly admitted the liability of
service tax alongwith the rent. The draft lease deed contains all
the recitals including this fact that the defendant shall pay rent @
Rs. 5 lacs + service tax.
17.11 Further, the liability of paying service tax is of the
CS DJ No. 9346/16 & 9347/16 Page 81 of 144
landlord towards the government. It is also the fact that whatever
terms agreed between the landlord and the tenant qua the
inclusion of service tax in the rentals, the liability of paying
service tax remains with the landlord.
17.12 The defendant has argued that since no service was
being provided to it, it was not liable to pay service tax.
17.13 It is an admitted fact that the defendant was running
an exhibition from the suit properties and was enjoying this
business from the suit premises since 1989 till 2008 when the
service tax liability came to haunt the defendant and which led to
dispute between the parties.
17.14 So far as the period from June, 2008 till termination
of tenancy in August, 2008 is concerned, the defendant has
admitted that liability of service tax alongwith the rentals. The
defendant in para no. 3.12 has admitted the liability of paying
service tax. The said para is reproduced hereunder:
“On 21.05.2008, the Parties, together
with their respective counsels, met to
mutually resolve the issues arising between
the Parties. The discussions were in terms of
the Primary Lease Agreement and it was
agreed, that the following revisions be
made;-
(a) the term of the lease would now be
for a period of two (2) years, renewable for
two (2) years thereafter, and subsequently
thereafter for such period on the mutual
consent of Parties;
CS DJ No. 9346/16 & 9347/16 Page 82 of 144
(b)rental rates were to be revised
annually (instead of the earlier three (3)
years period under the Primary Lease
Agreement). For the first year, rentals were
agreed to be paid at Rs. 5,00,000/- (Rupees
Five Lacs only) per month w.e.f. 01.06.08;
(c) conversion charges (in the past and
future) were to be borne equally between the
parties;
(d) the Defendant was to bear payment
of service tax w.e.f. 01.06.2008.”
17.15 Therefore, it is clear that defendant has in its written
statement, has categorically admitted that liability of service tax
w.e.f 1st June, 2008 and as such, the liability of the defendant to
pay service tax is limited to the period when the lease was
terminated i.e. till August, 2008.
17.16 Further, beyond the period of termination of Lease
Agreement, this Court cannot adjudicate as to the liability of
service tax because post termination of lease agreement, only the
question of mesne profits remains and the service tax cannot be
adjudicated by this Court as it is not a Tax Adjudicating Court.
Court has to decide the mesne profit on the basis of settled
principles of law and evidence at the same rate at which the
landlord would have able the let out the premises in present and
earn the profit -if tenant would have vacated the premises.
CS DJ No. 9346/16 & 9347/16 Page 83 of 144
CONVERSION CHARGES:
18. Now, coming to the other component which both the
parties have agitated is the Conversion Charges. Though, this is
not the issue framed in both the suits, however, still I am dealing
with it for the appreciation of the matter.
18.1 The plaintiff has argued that defendant in its Written
Statement in para No. 5.15 has mentioned the agreed terms of
lease :
“…The renewal of the lease in accordance with
the primary Lease Agreement was confirmed in
the following terms:
2. Term- ……
3. Monthly Rent-……
4. Conversion charges-conversion charges were
to be borne in equal parts by the Plaintiffs and
Defendant for the duration of the period.
5. Security Deposit-
6. ………”
18.2 It is also argued that vide e-mail dated 22.05.2008,
the defendant’s lawyers has confirmed that conversion charges
are to be borne in equal parts by the Lessors and the Lessee
during the 1st and 2nd year of the lease and by the Lessors (in its
entirety) during the 3rd and 4th year of the lease.
18.3 Therefore, it is quite clear that the conversion
charges were to be borne in equal parts by the Lessor and the
Lessee.
CS DJ No. 9346/16 & 9347/16 Page 84 of 144
18.4 It is argued on behalf of defendant that the
responsibility of bearing conversion charges is of the lessor as the
conversion charges are paid towards the enhancement of the
property, which gives long-term benefit to the landlords. Hence,
the tenants are not liable to bear the conversion charges. The
admitted lease of 1989 i.e. Ex. D-12 specifically contains a
clause, i.e. Clause 10 that all rates, taxes, ground rent, property
tax and other charges, outgoings, penalties, and assessments
imposed or payable in respect of the tenanted premises to the
MCD Government shall be paid by the Lessors and Lessor shall
keep the Lessee free and indemnified at all times for the same.
18.5 It is further argued that there is no misuse of the suit
properties as claimed by the Plaintiffs in their suits. The suit
property in Berar Suit as is evident from the Clause 7 of the lease
of 1989, was given for residence storage, and exhibition of
handicraft items. Exhibition is a commercial activity. Therefore,
now for the Plaintiffs to say that they were not aware that the
Defendant were doing commercial activity without their
permission cannot be believed. From 1989 till 2006 when the
Hauz Khas road was notified as mixed land the Plaintiffs have
permitted the Defendant to carry on their retail activity from the
suit properties and has been taking rent for the same without any
dispute. So much so that the Plaintiffs were so happy with the
Defendant as tenants that on 01.06.2005 they gave another
portion in the building i.e. suit property in Soni Dave suit to the
Defendant for commercial purposes as is admitted by the PW-1
in her cross examination dated 14.10.2025 wherein she admits
CS DJ No. 9346/16 & 9347/16 Page 85 of 144
that the suit property was prior to giving on rent to the Defendant
was being used by a company named “Good Earth” for
commercial purpose. Hence, to say that the Defendant misused
the suit properties by using the same for commercial purposes is
fatal to the Plaintiffs’ own case.
18.6 It is also argued that the meeting dated 21.05.2008
wherein the Defendant agreed to bear 50% of conversion charges
was only for the reason that the peaceful use and occupation of
the suit properties will be given to the Defendant as the
Defendant has been the Plaintiffs’ tenant since the year 1989 and
has made huge investments in the suit properties for its
renovation and refurbishment by taking huge amount of loan
facilities from the bank. As submissions made in the aforesaid
paragraphs as to the meeting dated 21.05.2008, it is once again
reiterated that no concluded contract was executed between the
parties. Hence, the reliance placed by the Plaintiffs on the said
meeting dated 21.05.2008 is of no consequences and deserves no
consideration. In fact, the Plaintiffs under the garb of meeting
dated 21.05.2008, the Plaintiffs got interim use and occupation
charges fixed from the Hon’ble High Court which are not final.
The conversion charges of Rs.7,77,946/- so paid by the
Defendant are to be refunded by the Plaintiffs as the Defendant is
not liable to pay the same. Since, the benefit of conversion
charges was conferred upon the Plaintiffs being landlords and
which charges are towards the enhancement of suit properties.
18.7 It is also argued that the lease deed of M-3, Hauz
Khas and M-5, Hauz Khas relied upon by the Plaintiffs for fixing
CS DJ No. 9346/16 & 9347/16 Page 86 of 144
of mesne profits also contains the clauses where the conversion
charges, commercial charges, property tax, service tax, GST etc.
are payable by the lessors and not the lessee. Hence, the Plaintiffs
have no case for asking payment towards conversion charges
from the Defendant rather, the Plaintiffs have to return Rs.
7,77,946/- to the Defendant paid by them on behalf of Plaintiffs.
FINDINGS:
18.8 I have considered rival submissions on the issue of
conversion charges.
18.9 The notification (dated 13/14.03.2008) Mark E for
mixed land use came in the year 2006. The defendant has stated
that the conversion charges of Rs.7,77,946/- were paid by it i.e.
₹5,95,591/- vide receipt no. Ex.P-23 (in G.S. Berar suit) and
₹1,82,355/- vide Mark F (colly) in Soni Dave Suit. While
perusing the documents, only a receipt Ex.P-23 is seen which
shows the payment of Rs.5,95,591/- having been made towards
conversion charges in respect of basement of M-1, Hauz Khas by
the defendant Mohd. Yasin Mir, however, there is no clarity
regarding payment of remaining amount of conversion charges.
Only a receipt Mark F shows the payment of Rs.1,82,355/-,
however, from this receipt, it is not clear whether the said amount
was made in respect of which of the property to the MCD as it is
the fact that defendant is owning a flat C in M-1 Hauz Khas,
New Delhi besides being a tenant in the suit property. The
plaintiffs have no where denied this payment of conversion
charges by defendant in their replication.
18.10 I have also carefully perused the Primary Lease
CS DJ No. 9346/16 & 9347/16 Page 87 of 144
Agreement heavily relied upon by the defendant in support of its
contentions that the admitted lease of 1989 i.e. Ex. D-12
specifically contains a clause, i.e. Clause 10 that all rates, taxes,
ground rent, property tax and other charges, outgoings, penalties,
and assessments imposed or payable in respect of the tenanted
premises to the MCD Government shall be paid by the Lessors
and Lessor shall keep the Lessee free and indemnified at all times
for the same.
18.11 For better understanding, it is imperative to
reproduce the relevant portion i.e. clause 10 of the Primary Lease
Agreement Ex.D-12 which deals with this issue of conversion
charges. Same is as under:
10. That all the present rates, taxes,
ground rent, property tax and other charges,
outgoings, penalties, and assessments imposed
or payable in respect of the tenanted premises
to the MCD Government shall be paid by the
Lessors and Lessor shall keep the Lessee free
and indemnified at all times for the same.
Water and electricity charges shall be borne by
the Lessee as shown in the submeters to be
installed for the tenanted premises by the
Lessee. All penalties and 50% of enhanced
taxes for misuse of the premises shall be borne
by the Lessee.”
18.12 From a perusal of clause 10 of the Lease Deed, it is
clear that the Lessee shall be indemnified by the Lessor in respect
of all rates, taxes, ground rent, property tax and other charges,
outgoings, penalties, and assessments imposed or payable in
respect of the tenanted premises to the MCD Government.
CS DJ No. 9346/16 & 9347/16 Page 88 of 144
Further, I am in agreement with the submissions of defendant that
as per the clause of Lease Deed, it was categorically mentioned
that the suit premises will be used for storage, exhibition of
handicrafts. In other words, the suit premises would be used for
commercial activity, therefore, the plaintiff cannot claim that the
defendant was using the suit premises for commercial property
and hence would be liable to pay the conversion charges.
18.13 It is also the admitted fact that prior to the defendant
being inducted as a tenant, the company Good Earth was a tenant
and was also using the suit premises for commercial activity.
18.14 Therefore, in view of the above, the defendant
would be entitled to claim the conversion charges to the extent of
Rs 5,95,591/- and I would deal with this under the head “set-off”.
SEALING PERIOD:-
19. Now, I shall deal with another ancillary issue which
both the parties have disputed i.e. sealing period.
19.1 The issue before this Court is whether defendant was
liable to pay use and occupation charges during the sealing
period.
19.2 It is argued on behalf of defendant that since the
property remained sealed for the period w.e.f 01.03.2010 till
31.10.2010 and as such, he was unable to use it, therefore, he is
not liable to pay any use and occupation charges for the said
sealing period.
19.3 On the other hand, the plaintiff has argued that
defendant was in occupation of the suit property even during the
CS DJ No. 9346/16 & 9347/16 Page 89 of 144
sealing period. If the defendant did not want to use the suit
property, the lease of which was already terminated, he could
have walked out from the suit property, however, he did not
chose to do so and remained in the suit property and hence,
defendant is liable to pay the use and occupation charges for the
sealing period as well. In support of his contentions, the plaintiff
has relied upon the judgment passed by Hon’ble High Court of
Delhi in case titled as Chander Mohan Jain And Others Vs. State
Bank of Patiala And Another, Interim Application No. 6869 of
1993 and 3162 of 1994 and Suit No. 252 of 1993 Decided on :
03-05-1994. In the said case, it was held as under:
“(3) It is in the reply that a part of the roof had
collapsed on 13.10.1990, and the building was
sealed by the New Delhi Municipal Committee on
05.10.1990, by declaring it to be unsafe. Section
108(e) of the Transfer of Property Act, 1882, has
remained unchanged since 1882. If the defendant/
tenant was so minded, it had the option of voiding
the lease. It has not done so. So long as the lease has
not been voided, the defendant bank is liable to pay
the rent.
(4) MR.J.K. Seth relies on the case reported as 1973
Rajdhani Law Reporter (Note) 68, being S.A.O.
No.30 of 1969 (Chamber of colour and Chemical
Pvt. Ltd. v. Trilok Chand), where it was held by this
Court that a tenant cannot treat a lease as subsisting
and suspend payment of rent. I am in respectful
agreement.
(5) The defendant bank has not voided the lease in
question. It continues to regard itself as tenant. As a
tenant it has to pay the agreed rent. I, therefore,
direct the defendant to deposit the rent of
Rs.1,02,600/- per month, which has admittedly not
been paid since 31.10.1990, in Court within ten
days, as it is said by the defendant’s counsel that
there is no difficulty in paying the rent.
(6) The sealing of the premises by the New Delhi
CS DJ No. 9346/16 & 9347/16 Page 90 of 144
Municipal Committee has no bearing on the matter,
as the defendant bank has chosen not to void the
lease. Case be listed before the joint Registrar on
04.08.1994.”
FINDINGS:
19.4 I have considered rival arguments advanced from
both the sides and have perused the judgment relied upon by the
plaintiff.
19.5 In the present case, it is the admitted fact that the
tenancy of the suit premises was terminated in the month of
August, 2008. The suit property in Berar suit was sealed by the
order of MCD on 01.03.2010 and it was de-dealed on 01.11.2010
by the orders of Hon’ble High Court dated 02.11.2010 in Writ
Petition No. 6440/2010 filed by the plaintiff.
19.6 It is the fact that since the lease of the suit property
in Berar suit stood terminated in the month of August, 2008,
however, the defendant did not vacate the suit property and
hence, he was still using the suit property as an unauthorized
user. Therefore, it is the admitted position that during the sealing
period, the suit property in question was under the use and
occupation of the defendant.
19.7 In the case Chander Mohan Jain (supra), it is held by
Hon’ble High Court of Delhi that since the defendant bank did
not chose to void the tenancy, it was liable to pay the agreed rent.
Similarly, in the case at hand, the defendant had the option to
vacate the suit property, however, he chose not to do so and
continued to use the suit property even during the sealing period
CS DJ No. 9346/16 & 9347/16 Page 91 of 144
and thereafter also.
19.8 Therefore, in view of the case Chander Mohan Jain
(supra) and above discussion, I hold that defendant is liable to
pay use and occupation charges for the sealing period i.e. w.e.f
01.03.2010 till 31.10.2010 to the plaintiffs.
ISSUE OF REFUND OF SECURITY DEPOSIT OF RS.
8,73,800/- IN CS DJ 9347/16 AND Rs. 10,00,000/- IN CS DJ
9346/16 BY PLAINTIFFS TO THE DEFENDANT WITH
INTEREST:
20.1 It is submitted by Ld. counsel for Plaintiff that
Plaintiffs had already adjusted this security amount in their dues
in 2016. However, while tendering payments of occupation
charges in 2017 pursuant to a Court order, the Defendant
deducted these amounts, and as such, defendant was ordered to
be paid vide order dated 31.05.2023 in Execution Petitions 3081-
3082/2016. These orders have been challenged before the
Hon’ble High Court (in CM Main 1098-1099/2023). The
Hon’ble High Court has directed the defendant to deposit the said
amount of security and said amount is now lying deposited
before the Registry of Hon’ble High Court. Hence, this issue has
already been decided and is still pending before Hon’ble High
Court and cannot be adjudicated again.
20.2 On the other hand, it is submitted on behalf of
defendant that it had paid a sum of Rs.8,73,800/- in CS DJ
9347/16 in December 1989 and Rs.10,00,000/- in CS DJ 9346/16
CS DJ No. 9346/16 & 9347/16 Page 92 of 144
on 01.06.2005 as security deposit in both the suits refundable by
the Plaintiffs at the time of vacation of the suit properties by the
defendant. It is also submitted that on 01.10.2016, the Defendant
called upon the Plaintiffs to jointly inspect the suit properties and
take possession, however, the Plaintiffs refused to jointly inspect
the suit properties accordingly, the Defendant handed over the
constructive possession of the suit properties in CS DJ 9347/16
and CS DJ 9346/16 on 01.10.2016. In view of the illegal denial
of the Plaintiffs to jointly inspect the suit properties, the
Defendant filed an application before Hon’ble High Court on
08.10.2016 after serving the Plaintiffs through counsel but the
Plaintiffs with mala fide intent did not appear in the court in
order to delay the handing over of the possession and earn extra
use and occupation charges. The Plaintiffs took the physical
possession of the suit properties on 19.10.2016 after video
recording of the condition of the suit properties in compliance of
order dated 29.07.2016 passed by the Hon’ble Supreme Court of
India in SLP(C) 19429-19430/2016. However, the Plaintiffs have
not refunded the sum of Rs. 18,73,800/- of security deposit till
date to the Defendant and in fact, has unilaterally and wrongly
adjusted the said amount of Rs. 18,73,800/- towards unauthorized
construction of staircase, conversion charges, service tax, interest
on account of late payment and damages as set out in the letter
dated 16.12.2016 sent by the Plaintiffs’ counsel to the Defendant.
20.3 It is further submitted that the Hon’ble High Court
vide order dated 18.07.2023 passed in CM(M) 1098/2023 and
CM(M) 1099/2023 has observed that the Court has not
CS DJ No. 9346/16 & 9347/16 Page 93 of 144
adjudicated upon the validity of the unilateral adjustment made
by the Plaintiffs of the security deposit during the pendency of
both the suits.
20.4 It is also submitted that in the CM(M) 577/2021
Defendant filed review petition bearing no. 66/2024 in CM(M)
577/2021 and by order dated 23.02.2024 passed by Hon’ble High
Court, this Court is to adjudicate the unilateral adjustments made
by the Plaintiffs in both the suits.
20.5 It is further submitted that in the letter dated
16.12.2016, the Plaintiff has calculated ₹20,70,548/- towards
unauthorized construction of staircase, conversion charges,
service tax, interest on account of late payment and damages for
deduction from the security deposit mentioned in the said letter,
however, the said facts have not been proved by the Plaintiffs in
both the suits as no evidence has been placed on record to
substantiate the said deductions except the letter dated
16.12.2016.
20.6 It is further submitted that the Plaintiffs have
wrongly deducted the security deposit of Rs. 18,73,800/- vide
letter dated 16.12.2016 towards the different charges as
mentioned in the said letter. It is further submitted that Plaintiffs
have not filed or led any evidence to show that they were unable
to find new tenant. Even PW-1 hilariously responds during her
cross-examination in Soni Dave Suit admitted that no
advertisement was given to re-let the suit property. PW-1 has also
admitted that no written communication issued to the defendant
regarding structural changes in the suit property. PW-1 has also
CS DJ No. 9346/16 & 9347/16 Page 94 of 144
denied of any knowledge regarding filing of any document on
record approving that ₹2,50,000/- was incurred for restoration of
staircase. PW-1 has also admitted during cross-examination that
the suit properties in both the suits were sold to Vijay Sales India
Pvt. Ltd. on 16.09.2021 alongwith the staircase.
20.7 It is further argued that the contention of the Plaintiff
that the adjudication regarding the letter dated 16.12.2016 is
pending in CM(M) 1098/2023 and CM(M) 1099/2023 filed by
the Defendant therefore, this Hon’ble Court should not deal with
the said issue as the Hon’ble High Court is seized of both the
petitions, is perverse.
20.8 It is further submitted that Plaintiffs have failed to
prove the deductions made vide letter dated 16.12.2016 in both
the suits, hence, Plaintiffs are required to refund the security
deposit of Rs.18,73,800/- to the defendant in both the suits with
interest from 01.10.2016 as despite handing over of the
possession of the suit properties, the security deposit is held as
hostage.
FINDINGS:
20.9 I have perused the order dated 01.09.2021 passed by
Hon’ble High Court of Delhi in CM (M) 576/2021 and CM (M)
577/2021 as well as order dated 23.02.2024 passed in the CM
(M) 577/2021 on the review petition of the defendant seeking
review of order dated 01.09.2021 in the said petition as well as
order dated 18.07.2023 passed in CM (M) 1098/2023 and
1099/2023 in both the suits. Ld. counsel for defendant has
submitted that this Court has to adjudicate that the issue of wrongCS DJ No. 9346/16 & 9347/16 Page 95 of 144
adjustment of security amount of ₹18,73,800/- in view of the
order of Hon’ble High Court dated 01.09.2021. Perusal of record
also shows that vide order dated 18.07.2023 passed in both the
petitions i.e. CM (M) 1098/2023 and 1099/2023, Hon’ble High
Court has stayed the order dated 21.05.2023 and 07.07.2023
passed by Ld. Predecessor of this Court in the execution petition,
subject to the petitioner/defendant depositing the security
amounts of ₹8,73,800 and ₹10,00,000/- respectively and given
the liberty to the respondent/ plaintiff to place on record the
documents which are already forming part of the executing court
or trial court within a period of 4 weeks and adjourned both the
petitions for 04.12.2023.
20.10 Both the petitions are still pending before Hon’ble
High Court of Delhi. The only issue in both the petition agitated
by the petitioner / defendant is regarding adjudicating the letter
dated 16.12.2016 qua unilateral adjustment of the security
deposit by the Plaintiff.
20.11 It is pertinent to mention that vide order dated
30.10.2017, only 3 issues were framed in both the suits as
follows:-
“1. Whether the plaintiff is entitled for mesne
profits, if so, at what rate and for which period?
OPP.
2. Whether the plaintiff is entitled for interest,
if so, at what rate and for which period? OPP.
3. Whether the defendant is entitled to deduct
any amount in respect of removal of pantry and
relocation of electricity generator from the amountCS DJ No. 9346/16 & 9347/16 Page 96 of 144
which they are liable to be paid to the plaintiff, if
the issues No.1 & 2 are decided in favour of the
plaintiff? OPD”
20.12 Since no issue is framed regarding unilateral
adjustment of the refundable security deposit of the defendant
and Court has to give its findings only on the issue framed in
both the suits, therefore, this Court cannot give any findings qua
unilateral adjustment of the security deposit. Even in order dated
18.07.2023 passed in both the petitions, there is no such direction
to decide about the letter dated 16.12.2016. This Court is
conscious of the fact that since the issue of unilateral adjustment
of security amount is pending before Hon’ble High Court, the
judicial propriety demands that this Court should not give any
findings on the said issue.
HANDING OVER OF POSSESSION OF SUIT
PROPERTIES:
21. It is argued on behalf of Plaintiffs that pursuant to
orders dated 29.07.2016 passed by Hon’ble Supreme Court of
India in SLP (C) 19429-19430, Defendant vacated the suit
property and handed over the possession to the Plaintiffs on 19 th
October 2016. It is further submitted that though the Defendant
had offered possession on 1st October 2016, but the same was
conditional one and since the Plaintiffs did not accept the said
conditions, the defendant did not thereafter, offer possession until
19th October 2016. It is further argued that on 01.10.2016, the
premises was not vacant and this fact is duly proved from the
testimony of defendant witness DW-4 Dr. S.N. Bansal, who in hisCS DJ No. 9346/16 & 9347/16 Page 97 of 144
cross-examination, has admitted that on 14.10.2016 (when he
claimed to have conducted a site survey at the request of the
defendant to make an estimate of the value of the movable assets
therein), the premises were not vacant, and some kind of work was
still going on, though he could not tell whether the defendant were
preparing to enter the premises on a fresh lease or to leave them.
It is further argued that even the premises were not ready for
delivery of possession even as of 14.10.2016 and the Defendant
had merely made a bogus offer to avoid having to pay the use and
occupation charges for the period up to 19.10.2016 knowing fully
well that the Plaintiffs would refuse to take such conditional
possession. It is also argued that defendant has made a fictitious
claim for a sum of ₹65,00,000/- even before the movable items
had been valued by the surveyor. Hence, it is argued on behalf of
Plaintiff that the use and occupation charges should be decreed till
19.10.2016.
21.1 It is argued on behalf of defendant that defendant
had handed over the constructive possession of the suit properties
in CS DJ 9347/16 and CS DJ 9346/16 on 01.10.2016. It is further
argued that in view of the illegal denial of the Plaintiffs to jointly
inspect the suit properties, the Defendant had to filed an
application before the Court on 08.10.2016 after serving the
Plaintiffs through counsel, but the Plaintiffs with mala-fide intent
did not appear in the court in order to delay the handing over of
the possession and to earn extra use and occupation charges. It is
further argued that Plaintiffs took the physical possession in both
the suits on 19.10.2016 after video recording of the condition of
CS DJ No. 9346/16 & 9347/16 Page 98 of 144
the suit properties.
21.2 It is further argued that though the constructive
possession of the suit property was handed over to the plaintiff on
01.10.2016, however, defendant has not come forward for the joint
inspection and thereafter with the order of Court, physical
possession was handed over on 19.10.2016 pursuant to the order
dated 29.07.2016 of Hon’ble Supreme Court of India in SLP(C)
19429-19430/2016.
FINDINGS:
21.3 I am in agreement with the submissions made on
behalf of Plaintiffs that it is evident from the evidence of DW-4
Dr. S.N. Bansal who had conducted the survey of the suit premises
to make an estimate value of movable assets on 14.10.2016, how
could Plaintiffs took the possession on 01.10.2016, when the suit
property was not vacant. Even on 14.10.2016, suit property was
not vacant in view of the testimony of DW-4. Even otherwise,
defendant has not filed any evidence to show that the constructive
possession was handed over to the Plaintiffs on 01.10.2016.
Hence, this Court is of the view that the possession of the suit
properties was handed over to the Plaintiffs by the defendant on
19.10.2016.
SET OFF CLAIMED BY DEFENDANT:
22.1 In its Written Statement, Defendant has claimed
different amounts under the head of ‘set off’ in both the suits
which are as under:
CS DJ No. 9346/16 & 9347/16 Page 99 of 144
(i) Defendant has claimed refund of
₹65,35,413.17/- i.e. ₹42,48,018.56/- (in G.S.
Berar suit) and ₹22,87,394.61/- (in Soni Dave
suit), deprecated value of ₹2 crores which was
invested in 2005 for internal renovation re-
refurbishment of the suit property necessitated to
meet the imperative of business of defendant as
suit property was used for high class and
quality.
(ii) Defendant has also claimed refund of
₹7,77,946/- i.e. ₹5,95,591/- vide receipt no.
Ex.P-23 (in G.S. Berar suit) and ₹1,82,355/- vide
Mark F (colly) in Soni Dave Suit, invested in
payment of conversion and parking charges of
the suit property from residential status to
commercial.
(iii) Defendant has also claimed
₹1,98,800/- invested in repair/ replacement as
well as paint and policing to get the suit property
back in working condition after de-sealing of the
suit property.
(iv) Defendant has also claimed refund
towards business loss suffered during and after
sealing period as walking customer has been
reduced considerably, for which the losses/
damages are assessed @ ₹2,00,000/- per month
till December 2011.
CS DJ No. 9346/16 & 9347/16 Page 100 of 144
22.2 It is argued on behalf of defendant that pursuant to
the amendment application dated 06.03.2017, the Defendant was
permitted to amend its written statement vide order dated
06.07.2017 in both the suits and Written Statement were same
taken on record on the same date. It is further argued that in the
amended Written Statement defendant has claimed / refund of
above mentioned amount under the head of ‘Set Off’ against all
claims of the Plaintiffs be it in the nature of rents/ damages/ mesne
profits.
22.3 It is further argued that though no evidence has been
led by the Defendant on the above said amount but it is evident
from the record and the submissions made by way of written
submissions filed on record, the sealing of the basement from
March 2010 to Oct 2010 is an admitted fact and it is quite obvious
that the customers tend to shift for their requirements to other
vendors when the work of any vendor is stopped due to force
majeure circumstances. It is further argued that the Defendant left
the said claim at the wisdom of this Hon’ble Court to grant just
compensation/ damage for the mental pain and agony suffered by
the Defendant during the said period.
22.4 It is further argued that defendant has not led any
evidence for seeking his claim claim towards removal of pantry
and relocation of electricity generator set to prove issue no.3. It is
further submitted that the electricity generator was kept in the
common area and part of lease of 1989 and Plaintiff has admitted
that they never objected to the electricity generator which is
evident from the testimony of PW1. Even no evidence has been
CS DJ No. 9346/16 & 9347/16 Page 101 of 144
placed on record by the Plaintiff that the generator was the source
of nuisance to them and other occupant of the building. Therefore,
it is argued that the above said amount be refund or adjusted
against all claims of Plaintiff of any nature in both the suits.
22.5 Per contra, it is argued on behalf of Plaintiff that the
claim of Set Off by the defendant are bogus and liable to be
dismissed on various ground as under:-
(i) Firstly, it is argued that no such issue qua the claim
of set off by the defendant is framed in both the suits and
secondly no such counter-claim / set-off was permitted by the
Court. The only Set-off / claim that it was permitted to claim
the charges towards the alleged removal of pantry and
relocation of electricity generator. Thus, issue number 3 was
framed as under:
“Whether the defendant is entitled to deduct any
amount in respect of removal of pantry and
relocation of electricity generated from the
amount which they are liable to be paid to the
plaintiff, if the issues No.1 & 2 are decided in
favour of the plaintiff? OPD”
(ii) It is further argued that the Defendant claims to
have spent Rs. 2 crores on refurbishment since 2005, but no
proof of such alleged expenditure has been filed and there
is no explanation as to how the value of this alleged
expenditure stood at Rs.65 lakhs in 2016. Principles of
depreciation make it fully depreciable after 10 years.
Hence, it was zero in 2015. It is further argued despite the
onus to prove the expenses towards removal of pantry and
relocation of electricity generator had been placed upon the
Defendant, but no such proof was forthcoming, simply
CS DJ No. 9346/16 & 9347/16 Page 102 of 144
because it had done no such thing.
(iii) It is further argued that in March 2017 the
Defendant filed an application seeking amendment of its
Written Statement thereby seeking to introduce a counter-
claim/ set-off, however, while arguing it, Defendant only
pressed its counter-claim. Even this was disallowed. It is
further argued that once the counter-claim, is disallowed
how can a set-off be now claimed.
(iv) It is further argued that the Defendant later also
filed an application seeking amendment of issues, virtually
seeking to introduce the very same claims as issues. The
same was also dismissed vide order dated 18.08.2020.
(v) At the strength of law laid down by the Division
Bench of Hon’ble Karnataka High Court in case titled as
The State Trading Corporation Of India Vs Vanivilas Co-
Operative Sugar 2001 (5) KarLJ 570, it is argued that
Hon’ble High Court has clearly held that a set-off can be
claimed of sums that have been quantified by the date of
the filing of the suit, while a counterclaim must be of
amounts due by the date of the Written Statement. It is
argued that none of these claims were due on such dates. It
is also argued that a plea of set-off requires payment of
Court fee as per law. Since Defendant has not filed any
Court Fees on any of the claims claiming under the head of
‘Set Off’, it is not entitled for any relief and its claim of
Set Off / refund be dismissed.
22.6 Before proceeding further, the relevant paras of the
State Trading Corporation case (supra) are reproduce as under:-
CS DJ No. 9346/16 & 9347/16 Page 103 of 144
“13. Before examining these points we may refer to
the legal position relating to ‘payment’, ‘adjustment’,
‘set-off and ‘counter-claim’ with reference to Order 8,
Rules 6 and 6-A of the Code of Civil Procedure
(‘CPC‘, for short) and Sections 8, 14 and Article 1 of
Schedule I of the Karnataka Court Fees and Suits
Valuation Act, 1958 (‘KCF Act’, for short).
15.2 An ‘adjustment’ is an act of a party by which he
seeks to extinguish a debt or part thereof by an act of
appropriation and adjustment. But a claim to set-off
is a request or prayer to the Court for adjustment by
the Court. A plea of ‘adjustment’ does not require
payment of Court fee. A plea of set-off requires
payment of Court fee. The need for such payment of
Court fee is obvious. So long as the matter is one
governed by a contract or acts of parties, a party can
adjust an amount due by him to the other party
towards an amount due by the other party to him,
and there is no intervention of Court. But, once the
other party (plaintiff) files a suit for recovery of the
amount due to him, such claim of the other party is
seized by the Court and therefore, the party
(defendant) who wants to adjust the amount due by
him towards the amount due by the other party
(plaintiff) has to seek the leave of the Court.
15.3 It is also well-settled that what can be adjusted,
either before filing of a suit by way of adjustment, or
after filing of a suit by claiming a set-off, is only an
amount due by him to the other towards an
ascertained amount due by the other to him. Thus, if
the amount claimed by him (defendant) as due by
the other (plaintiff) is not an ascertained or admitted
sum due, but is merely a claim for damages by him
(defendant) against the plaintiff, then the plaintiff is
not really due any amount, until a Court of law
determines the liability and the quantum of damages.
Where the amount claimed by defendant is damages,
defendant cannot say that the plaintiff is ‘due’ in any
ascertained sum due which could be adjusted
towards the amount due by the defendant to the
plaintiff. Where the claim of defendant is for
damages, he cannot seek set-off, but will have to
make a counter-claim.
15.5 What could be set-off against the suit claim and
CS DJ No. 9346/16 & 9347/16 Page 104 of 144
in what circumstances, set-off can be claimed, is
contained in Order 8, Rule 6 of the Code of Civil
Procedure. Sub-rule (1), which is relevant, is
extracted below:
“Rule 6. Particulars of set-off to be given in written
statement.–(1) Where in a suit for the recovery of
money the defendant claims to set-off against the
plaintiffs demand any ascertained sum of money
legally recoverable by him from the plaintiff, not
exceeding the pecuniary limits of the jurisdiction of
the Court, and both parties fill the same character as
they fill in the plaintiffs suit, the defendant may, at
the first hearing of the suit, but not afterwards unless
permitted by the Court, present a written statement
containing the particulars of the debt sought to be
set-off’.
It is clear from Order 8, Rule 6 of the CPC that set-
off can be claimed by defendant, only if the
following conditions are fulfilled:
(a)the suit by the plaintiff must be for recovery of
money;
(b)the defendant’s claim against the defendant which
is sought to be set-off must be an ascertained sum of
money, which is legally recoverable from the
Plaintiff;
(c)both the parties to the claim for set-off should fill
the same character as they fill in the suit of the
Plaintiff;
(d)the amount claimed by way of set-off should not
exceed the pecuniary jurisdiction of the Court;
(e)the amount must be recoverable by defendant
from the plaintiff or all the plaintiffs;
…
…
18. We may now conveniently note the points of
difference between set- off and counter-claim as
follows:
Set off Counter claim
1. Amount claimed should be an ascertained sum of
money.
1. Claim can be for an ascertained sum or for
damages.
2. Can be claimed only in a suit for recovery of
money.
CS DJ No. 9346/16 & 9347/16 Page 105 of 144
2. The claim can be in any suit.
3. Is a ground of defence.
3. Is a weapon of offence enabling the defendant to
enforce the claim as effectually as an independent
action.
4. Both parties should fill the same character, as they
fill in the plaintiff’s suit.
4. Character of parties in regard to plaint and
counter-claim need not be same.
5. The amount claimed must be recoverable by
defendant from plaintiff on the date of suit by
plaintiff.
5. The amount must be recoverable on the date of
written statement. A cause of action accruing after
the date of suit by plaintiff can also be the subject-
matter of the counter-claim.
6. Court is bound to adjudicate upon the claim for
set-off.
6. The Court may on its discretion exclude counter-
claim from consideration in the suit and direct
defendant to file a separate suit.
7. The defendant admits the whole or part of the suit
claim and then seeks to extinguish it by way of
adjustment.
7. The defendant need not admit any part of the suit
claim.
By making provision both for set-off and counter-
claim in the CPC, the need to differentiate between a
set-off and counter-claim has now practically
disappeared. If a claim is not one falling under Order
8, Rule 6 dealing with set-off, it will fall under Order
8, Rule 6-A dealing with counter-claims. Insofar as
procedure is concerned, there is virtually no
difference between set-off and counter-claim. Both
are in the nature of cross suits and both attract the
same Court fee and are covered by Section 8 and
Article 1 of Schedule I of the Karnataka Court Fees
and Suits Valuation Act, 1958. In both, the written
statement setting up a claim for set-off or a counter-
claim, is treated as a plaint in a cross-suit and the
plaintiff is given an opportunity to file written
statement in answer to the claim for set-off or
counter-claim. In both, Court fee is chargeable in the
same manner as a plaint and should be paid when
the claim is made and not when claim is adjudicated.
18……. “In both, the written statement setting up a
CS DJ No. 9346/16 & 9347/16 Page 106 of 144
claim for set-off or a counter-claim, is treated as a
plaint in a cross-suit and the plaintiff is given an
opportunity to file written statement in answer to the
claim for set-off or counter-claim. In both, Court fee
is chargeable in the same manner as a plaint and
should be paid when the claim is made and not when
claim is adjudicated”,
19.6 ……..”If the Court fee is not paid by the
defendant on the set-off or counter-claim and the
plaintiff is not given an opportunity to file his
written statement to the claim of defendant, it is not
permissible to the Court to consider or grant the set-
off or counter-claim, as it would amount to granting
a decree against plaintiff without giving him due
opportunity to meet the claim against him.”
FINDINGS:-
22.7 Hon’ble High Court in State Trading Corporation
case (supra) has held that if the Court fee is not paid by the
defendant on the set-off or counter-claim and the plaintiff has not
been given an opportunity to file written statement to the claim of
defendant, it is not permissible to the Court to consider or grant
the set-off or counter-claim, as it would amount to granting a
decree against plaintiffs without giving due opportunity to meet
the claims made against the plaintiffs.
22.8 Admittedly, as mandated by law, Defendant has not
paid any Court Fee on any amount claimed as set off. Record also
speaks that no such issue towards claim of set off is framed in both
the suits. Record also speaks that as mandated by law in case State
Trading Corporation case (supra), no opportunity to file Written
Statement to rebut the claim of defendant as Set off was afforded
to the Plaintiff.
22.9 Therefore, this Court is of the view that as no issue
CS DJ No. 9346/16 & 9347/16 Page 107 of 144
has been framed, no Court Fee paid by the defendant against set
off claimed, Defendant is not entitled for any relief under this head.
Hence, claim of set off by defendant is dismissed in view of the
aforesaid reasons.
ADMISSIBILITY/ EVIDENTIARY VALUE OF LEASE
DEEDS RELIED BY THE PARTIES:-
23 Now, I shall proceed to decide whether the lease of
M-3 and M-5 properties relied by the plaintiff and 04 Lease Deeds
of Anchit Aggarwal relied by the defendant can be considered
while deciding the mesne profits of the suit property.
23.1 It is argued on behalf of plaintiff that the lease deeds
of M-3 and M-5, Hauz Khas being properties similar to suit
property may be considered for comparison in arriving at the
prevalent market rate.
23.2 It is further argued that the suit property is a corner
property and the defendant was given the front portion on the
ground floor with the entire facade as also the front lawn.
23.3 It is also argued that the property that comes closest
to comparison with the suit property is M-3 not only because it is
the closest but also in view of the fact that just like the suit
properties, it also comprises both the ground floor and the
basement thereby making the comparison easier.
23.4 It is further argued that though defendant states that
these Lease Deeds of Anchit Aggarwal have been proven and evenCS DJ No. 9346/16 & 9347/16 Page 108 of 144
accepted by the Plaintiffs as showing a higher rate than their own
property and should be adopted, however, what has been admitted
are the lease deeds of the years 2000 and 2005 which are registered
deeds. The later lease deeds have not been proved.
23.5 Section 35 of the Stamp Act requires that even by
consent of parties an improperly stamped document may not be
received in evidence. This causes a loss to revenue and parties are
not free to agree thereto. This is why the first provision allows such
documents to be admitted in evidence in certain circumstance:
“(a) any such instrument shall be admitted in
evidence on payment of the duty with which the
same is chargeable, or, in the case of any instrument
insufficiently stamped, of the amount required to
make up such duty, together with a penalty of five
rupees, or, when ten times the amount of the proper
duty or deficient portion thereof exceeds five rupees,
of a sum equal to ten times such duty or portion;
Hence, the defendant should have paid the stamp duty
thereon, with penalty. It is only then that under Section 36 it can be
admitted in evidence.
23.6 It is further argued that the 2010 Lease Deed is
unregistered. Even the original was not produced. It is also not
witnessed by 2 people. The witness also did not identify the
signatures of anyone thereon. Since these were not certified copies
of registered documents or even registered documents, Section 67
of the Indian Evidence Act required the Defendant to prove the
signatures of the executants. For all these reasons it was not
exhibited. How can Defendant rely upon this document? It cannot
be read in evidence.
CS DJ No. 9346/16 & 9347/16 Page 109 of 144
23.7 It is further argued that the later deed is dated
28.12.2015, which is marked as Mark J and proved as Ex.DW10/3
by DW10 Anchit Agarwal. This stamp paper of this deed is
purchased on 26.02.2016, and on the very same page of stamp
paper, the deed states that it is executed on 28.12.2015. Further,
proper stamp duty is also not paid on this deed. The witness also
did not identify the signatures of anyone on this document either.
The Defendant counsel showed a note in the Bare Act and
submitted that it proved his contention that since it was not
impounded, it can be relied upon. However, the judgment in
Jupudi Kesava Rao Vs Pulavarthi Venkata Subbarao And Others
1971 AIR 1070 clearly states otherwise and disproves the
contentions of the defendant.
23.8 The Plaintiffs had taken an objection to this lease
deed on 12.01.2026 as stamp duty had not been paid . Later, on
14.01.2026, Plaintiff did not press for impounding, but that only
meant that if the Defendant paid the applicable stamp, it could be
received in evidence. The Defendant did not pay anything. This
deed is also not witnessed by 2 people.
23.9 Therefore, the defendant cannot rely upon the lease
deeds of Anchit Aggarwal as stated above.
23.10 Further, so far as M-3 and M-5 Lease are concerned,
the plaintiffs have relied upon the judgment passed by Hon’ble
Supreme Court of India in Appaiya V. Andimuthu@Thangapadi &
Ors. in Civil Appeal No. 14630 of 2015 (@ SLP (C) No.10013.
23.11 On the other hand, the defendant has relied upon the
04 Lease Deeds by Mr. Anchit Agarwal and Mrs. Rita Agarwal i.e.
CS DJ No. 9346/16 & 9347/16 Page 110 of 144
of the years 2000, 2005, 2010 and 2015 as the property was in the
SAME building, ie, M1, Hauz Khas and faces the same threat as
the suit properties and enjoys the same benefit as well, it would be
of no consequence for this Court to consider any other Lease apart
from the one prevalent in the same property itself, let out for the
same use, ie, residential cum office (1989 lease was let out for
residential storage cum exhibition). Even otherwise, the Plaintiffs
have categorically stated in their written submissions that the
rental earned by Mr. Anchit Agarwal and Mrs. Rita Agarwal was
better and the Plaintiffs were ignorant and not vigilant.
23.12 Further, the Lease for Mr. Anchit Agarwal and Mrs.
Rita Agarwal pertains to the Ground Floor and is a like for like
comparison with the portion in Soni Dave suit on the Ground Floor
and the Ground Floor portion of Berar Suit. With regards to
basement portion in Berar suit, the same rent cannot be taken for
computation of Mesne Profits for the reason that the Basement of
a property fetches much lesser rent than the upper floors, as due to
restrictions in the Building Bye-Laws for the basement, many
activities are non-conforming in the Basement and hence, they
cannot be treated in the same way as the upper floors, which face
no such restriction. Hence, by taking market analytics, a factor of
70% has been applied on the rental of the Basement viz-a-viz the
Ground Floor.
23.13 It is argued on behalf of defendant that the certified
true copies of M-3, Hauz Khas and M-5, Hauz Khas relied upon
by the plaintiffs to claim Mesne Profits are forged and fabricated.
That despite a specific question put to the Plaintiffs witness during
CS DJ No. 9346/16 & 9347/16 Page 111 of 144
her cross-examination in both the suits, she has admitted that she
has not called any witness to prove the correctness of the contents
of the said certified copies.
23.14 It is further argued that plaintiffs entire case is based
on purported Certified True Copies of two Lease Deeds, namely
M3, Hauz Khas and M5, Hauz Khas to fix the value of Mesne
Profits of the period 2008-2016. It is further argued that only the
Certified copies of these two Lease Deeds have been presented as
evidence, and the original of the said documents were not
produced, neither any oral testimony of any witness is led by the
Plaintiffs to ascertain the veracity of the contents of the documents.
This clearly puts a cloud on the same. It has been held in a catena
of judgments that the Certified copy of a document can be
admitted as a secondary evidence, however, the truth of the
contents of certified copies of public documents needs to be
established by leading oral evidence to prove the correctness of the
contents/facts stated in the said Certified copy. In support of these
contentions, reliance is placed upon the judgment titled as N.
Divakaran v. David Livingston, 2024 SCC OnLine Ker 4015 of the
High Court of Kerala.
23.15 The defendant has also placed reliance on the
judgment of the Patna High Court in Seema Afzal v. Ekbal Khan,
in Civil Misc. Jurisdiction No. 1588/2019 and the judgment of the
High Court of Andhra Pradesh in Gonepalli Rajamallaiah v.
Ratnashree Jain, MANU/AP/0166/2017 to substantiate this
assertion.
23.16 It is, therefore, argued that certified copies of the
CS DJ No. 9346/16 & 9347/16 Page 112 of 144
leases of M5, Hauz Khas and M3, Hauz Khas are devoid of any
secondary evidence to prove the contents of the documents and
cannot be read by this Court to ascertain the value of mesne profits
during the period 2008 – 2016 for the suit properties.
23.17 It is further argued that the Lease of M3, Hauz Khas
cannot be considered in any case as it was never brought on the
record and no application to bring it on the record of the Hon’ble
Court was ever moved by the Plaintiffs. There is no formal order
passed by this Hon’ble Court for taking on record the Lease of
M-3, Hauz Khas. The Plaintiffs filed an application dated
24.01.2018 for placing on record additional document in Berar
suit. From a bare perusal of the said additional document
application, it can be seen that lease of M-3, Hauz Khas was not
sought to be placed on record. The said documents filed with the
application dated 24.01.2018 were taken on record vide order
dated 14.03.2018 passed by this Hon’ble Court subject to cost of
Rs. 1000 to be deposited with the DLSA (South). The judicial
record reflects that the said cost of Rs. 1000 was only paid on
07.09.2022 as reflected in order dated 13.10.2022 passed in CS DJ
9347/16 on an objection raised by the Defendant during the
recording of the Plaintiffs evidence. The defendant, during the
recording of Examination-in-chief of PW1 on 01.10.2021, has
raised objection as to the exhibition of the Certified copy of M-3,
Hauz Khas and as such, the said lease is not on record vide a
judicial order and hence, cannot be read by this Hon’ble Court.
Even otherwise, the suit properties cannot be compared with the
Lease of M3, Hauz Khas as suit properties suffer from major
CS DJ No. 9346/16 & 9347/16 Page 113 of 144
inherent defects.
23.18 The submissions of the Plaintiffs that the lease deeds
filed by Mr. Anchit Agarwal are forged/fictitious has no merit and
deserves no consideration as it is proved beyond doubt that the
Defendant was tenant of Mr. Anchit Agarwal and Mrs. Rita
Agarwal for the portion measuring 1,238 sq. ft. on the Ground
Floor of M1, Hauz Khas, New Delhi from 22.02.2000 till
23.11.2018.
FINDINGS:
23.19 I have considered rival submissions and have also
considered judgment relied by both the sides.
23.20 So far as the Lease deeds of M-3, Hauz Khas are
concerned, the argument of defendant is that the said lease was not
sought to be taken on record and on an application of the plaintiff
for filing additional documents including Lease of M-3, the same
was ordered to be taken on record subject to depositing of cost of
Rs. 1000/- vide order dated 14.3.2018, however, the cost was paid
only on 07.09.2022 and therefore, same cannot be read into
evidence is not tenable. It is clear from the judicial record that
plaintiff have paid the cost on 07.09.2022 and hence, the Lease of
M-3 was duly taken on judicial record and same was proved by
PW-1 Mrs. Soni Dave in her examination-in-chief, therefore, this
document M-3 Lease can be read into evidence.
23.21 So far as the contentions of the defendant that Lease
of M-5 and M-3 cannot be read into evidence being certified
copies, the judgment of Hon’ble Supreme Court of India in caseCS DJ No. 9346/16 & 9347/16 Page 114 of 144
Appaiya V. Andimuthu@Thangapadi & Ors. in Civil Appeal No.
14630 of 2015 (@ SLP (C) No.10013 is very relevant.
The relevant paras of said judgment are as under:
“19. We will consider whether the High Court was
legally correct in holding that owing to the non
production of any document by the plaintiff (the
appellant) evincing as to how the sons of Vellaiya
Thevar obtained the suit property in a partition
Exhibit A1, being a registration copy (secondary
evidence), could not be admitted in evidence as proof
of the contents of its original. At the outset, it is to be
stated that while holding thus the High Court has
failed to consider the relevant provisions under the
Evidence Act and also the Registration Act, 1908
appropriately. If the relevant provisions under the said
enactments were properly applied to the facts of the
case, the High Court would not have placed reliance
on R. Nainar Pillai’s case (supra) to hold that since
Exhibit A1 being a registration copy, the presumption
of due execution of the original under Section 90 of
the Evidence Act, particularly in the absence of
independent witness would not be available. We say
so because proper consideration of the provisions
under Sections 61, 63, 65, 74, 76, 77 and Section 79
of the Evidence Act would have definitely brought
out that it was absolutely unessential to consider the
applicability of Section 90 as also Section 110 of the
Evidence Act. Needless to say, that in such
circumstances there would not have been any
necessity to seek proof through an independent
witness, as well.
….
….
21. Section 74 deals with documents which are public
documents. Sub-section (2) thereof makes public
records kept [in any State] of private documents
within the purview of “public document” under
Section 74. Going by Section 76, certified copies of
public documents shall be given, on demand, by the
public officer having the custody of public document,
together with a certificate written at the foot of such
copy that it is a true copy of such document or part
thereof, as the case may be, and such certificate shall
be dated and subscribed by such officer with his nameCS DJ No. 9346/16 & 9347/16 Page 115 of 144
and his official title. Such copies so certified shall be
called certified copies in terms of Section 76.
22. It is to be noted that in the case on hand, a certified
copy of Exhibit A1 sale deed dated 27.08.1928 was
produced by the appellant. As noted earlier, the
Courts below found that it is registered with the Sub-
Registrar’s Office. The contention of respondent(s) is
that it is only a certified copy and not the original
document. In the light of the aforementioned
provisions under the Evidence Act there can be no
doubt with respect to the permissibility for the
production of such a certified copy as secondary
evidence in law, in regard to the existence, condition
or contents of a document. As per Section 77 of the
Evidence Act such certified copies may be produced
in proof of the contents of the public document
concerned. Section 79 deals with presumption as to
genuineness of certified copies. Section 77 and 79 of
the Evidence Act reads thus:-
“77. Proof of documents by production of
certified copies. — Such certified copies may
be produced in proof of the contents of the
public documents or parts of the public
documents of which they purport to be copies.
79. Presumption as to genuineness of certified
copies. – The Court shall presume [to be
genuine] every document purporting to be a
certificate, certified copy or other document,
which is by Law declared to be admissible as
evidence of any particular fact, and which
purports to be duly certified by any officer [of
the Central Government or of a State
Government, or by any officer [in the State of
Jammu and Kashmir] who is duly authorized
thereto by the Central Government]: Provided
that such document is substantially in the form
and purports to be executed in the manner
directed by law in that behalf. The Court shall
also presume that any officer by whom any such
document purports to be signed or certified,
held, when he signed it, the official character
which he claims in such paper.”
23. In view of the provision under Section 79 of the
Evidence Act, Section 57 (5) of the Registration Act
CS DJ No. 9346/16 & 9347/16 Page 116 of 144
assumes relevance in the context of the case and it
reads thus: “57. Registering officers to allow
inspection of certain books and indexes, and to give
certified copies of entries.
(1)..
(2)..
(3)..
(4)
(5) All copies given under this section shall be signed
and sealed by the registering officer, and shall be
admissible for the purpose of proving the contents of
the original documents.”
(Underline supplied)
29. Having regard to all the aforesaid circumstances
and in the light of the various provisions of the
Evidence Act mentioned hereinbefore we will firstly
consider the question whether the appellant/plaintiff
had succeeded in proving the contents of Ext.A1.
Going by Section 65(e) when the original of a
document is a public document within the meaning of
Section 74, secondary evidence relating its original
viz., as to its existence, condition or contents may be
given by producing its certified copy. Ext.A1,
indisputably is the certified copy of sale deed No.
1209/1928 dated 27.08.1928 of SRO Andipatti. In
terms of Section 74(2) of the Evidence Act, its
original falls within the definition of public document
and there is no case that it is not certified in the
manner provided under the Evidence Act. As noticed
hereinbefore, the sole objection is that what was
produced as Ext.A1 is only a certified copy of the sale
deed and its original was not produced in evidence.
The hollowness and unsustainability of the said
objection would be revealed on application of the
relevant provisions under the Evidence Act and the
Registration Act, 1908. It is in this regard that Section
77 and 79 of the Evidence Act, as extracted earlier,
assume relevance. Section 77 provides for the
production of certified copy of a public document as
secondary evidence in proof of contents of its
original. Section 79 is the provision for presumption
as to the genuineness of certified copies provided the
existence of a law declaring certified copy of a
document of such nature to be admissible as evidence.
When that be the position under the aforesaid
provisions, taking note of the fact that the document
in question is a registered sale deed, falling within the
CS DJ No. 9346/16 & 9347/16 Page 117 of 144
definition of a public document, the question is
whether there exists any law declaring such certified
copy of a document as admissible in evidence for the
purpose of proving the contents of its original
document. Subsection (5) of Section 57 of the
Registration Act is the relevant provision that
provides that certified copy given under Section 57 of
the Registration Act shall be admissible for the
purpose of proving the contents of its original
document. In this context it is to be noted that
certified copy issued thereunder is not a copy of the
original document, but is a copy of the registration
entry which is itself a copy of the original and is a
public document under Section 74(2) of the Evidence
Act and Sub-section (5) thereof, makes it admissible
in evidence for proving the contents of its original.
There is no case that foundation for letting in
secondary evidence was not laid and as noted earlier,
both the trial Court and the First Appellate Court
found it admissible in evidence. Thus, the cumulative
effect of the aforementioned sections of the Evidence
Act and Section 57(5) of the Registration Act would
make the certified copy of the sale deed No.
1209/1928 dated 27.08.1928 of SRO Andipatti,
produced as Ext.A1 admissible in evidence for the
purpose of proving the contents of the said original
document. When this be the position in the light of
the specific provisions referred hereinbefore under
the Evidence Act and the Registration Act, we have
no hesitation to hold that the finding of the High Court
that the certified copy of Ext.A1 owing to the failure
in production of the original and proving through an
independent witness is inadmissible in evidence, is
legally unsustainable. In the other words, the
acceptance of the admissibility of Ext.A1 found in
favour of the appellant/plaintiff by the trial Court and
confirmed by the First Appellate Court was perfectly
in tune with the provisions referred hereinbefore and
the High Court had committed an error in reversing
the finding regarding the admissibility of Ext.A1.
30. When the execution of Ext.A1 was not disputed
by the respondent (in fact in the circumstances it was
indisputable) and when the contents of the original
sale deed bearing No. 1209/1928 dated 27.08.1928 of
SRO Andipatti was proved by production of the
certified copy there was absolutely no reason to look
for the application of Section 90 or 110 of the
CS DJ No. 9346/16 & 9347/16 Page 118 of 144
Evidence Act, in the instant case. For the purpose of
proving the admissibility and evidentiary value of
Ext.A1 or Ext.A5 in the circumstances involved in the
instant case, there was absolutely no requirement to
look into Section 90 or Section 110 of the Evidence
Act. In this context it is relevant to note that once the
title of plaintiff’s vendor Puliyankaladi acquired
under Ext.A1 sale deed is established and purchase of
the same property by the plaintiff, of course his father
on his behalf, under Ext.A5 registered sale deed is
upheld by the High Court there was no reason or
justification to interfere with the concurrent
judgments of the Courts below. Before dealing with
this question further, in the fitness of things we will
refer to another aspect. A bare perusal of the
impugned judgment of the High Court would reveal
that virtually, the High Court also, in troth, agreed
with the admissibility of Exts.A1 and A5. The High
Court held that 96 cents were purchased under Ext.A5
by the appellant/plaintiff. In paragraph 14 of the
impugned judgment the High Court held:-
“However, even though the first appellant
property/plaintiff has prayed for declaration to the
entire suit property as admitted by the appellant/
defendant that the title of the plaintiff Puliyankaladi
purchased the property from Velaiya Thevar and his
property is only entitled to 96 cents and as said the
first respondent/ plaintiff has titled over the 96 cents
as per sale deed Ex.A.5 and not grant that and
accordingly, he is entitled to the title as well as the
possession.”
23.22 The judgment Appaiya (supra) relied by the plaintiff
clearly provides that a certified copy is admissible in evidence,
even if the original of the same is not produced in the Court and as
such, the lease of M-3 and M-5 are admissible and can be read in
evidence.
23.23 As regards the Lease Deeds by Mr. Anchit Agarwal
and Mrs. Rita Agarwal of the years 2000, 2005, 2010 and 2015
relied by defendant are concerned, it is seen that the plaintiffs have
CS DJ No. 9346/16 & 9347/16 Page 119 of 144
admitted the lease of years 2000 and 2005 and also the same are
registered and as such, same are admissible in evidence.
23.24 So far as Lease of 2010 and 2015 are concerned, my
findings are as under:
LEASE OF 2010:
23.25 It is unregistered, the original was not produced, and
it lacks proper attestation. Further, no witness identified the
signatures. Under Section 67 of the Indian Evidence Act, the
defendant failed to prove execution of the document, so it was
rightly not exhibited and cannot be relied upon and is inadmissible
in evidence.
LEASE OF 2015:
23.26 It contains inconsistencies, as the stamp paper was
purchased after the stated execution date. Proper stamp duty was
not paid, and no witness identified the signatures. The Defendant’s
argument that it can be relied upon without impounding is
contradicted by the judgment in Jupudi Kesava Rao v. Pulavarthi
Venkata Subbarao (1971). Further, although the Plaintiff initially
objected and later did not press for impounding, this only allowed
admission upon payment of proper stamp duty which the
Defendant failed to do and as such, even this Lease Deed is not
admissible in evidence.
23.27 Therefore, in view of my above discussion, I hold
that the Lease of M-3 and M-5 relied by plaintiff and the Lease of
Anchit Aggarwal of the years 2000 and 2005 are admissible in
evidence.
CS DJ No. 9346/16 & 9347/16 Page 120 of 144
Now, I shall proceed to deal with the main issue of
Mesne profits.
24.1 It is important to mention here that the Hon’ble
Supreme Court of India and the Hon’ble High Court of Delhi in
their orders have directed that this Court should not be influenced
by the orders passed by them. This Court is conscious of this fact
and will be determining the issues without being influenced by any
such orders.
24.2 As already stated above, the defendant handed over
the vacant and peaceful possession of the suit properties to the
plaintiff on 19.10.2016. It is also the admitted fact that the tenancy
in both the suits was terminated in the month of August, 2008.
Therefore, it is clear that the suit properties in both the suits were
under the use and occupation of defendant till 19.10.2016 and as
such, the plaintiff is entitled to mesne profits.
24.3 It is the admitted position that in Soni Dave suit, the
last rentals paid by the defendant were till June, 2008 and in Berar
suit till August, 2008. Therefore, the period for computation of
mesne profits is as under:
In Soni Dave suit – 01.07.2008 till 19.10.2016
In Berar suit – 01.09.2008 till 19.10.2016
Now, the next thing to be determined is the rate for
use and occupation charges of the suit properties for the period as
stated above.
24.4 Firstly, I shall determine as to which of the Lease
CS DJ No. 9346/16 & 9347/16 Page 121 of 144
deeds can be considered for determination of the rate for
computation of mesne profits towards use and occupation
charges of the suit premises by the defendant.
LEASE OF 2000 AND 2005 OF ANCHIT
AGGARWAL:
24.5 So far as the Lease of Anchit Aggarwal for the years
2000 and 2005 are concerned, it is seen that Service Tax Act on
renting of immovable property for commercial purpose came into
force by the Finance Act, 2007 whereas both the lease are for the
period when there was no liability towards service tax as the
service tax was to apply on rent on immovable property used for
any commercial purpose from May, 2007. Moreover, as per the
Written Statement, vide second notification dated 14.09.2006
issued by MCD, the Suit property was converted from residential
status to commercial. Therefore, in view of the fact that the lease
of 2000 is much prior to the period when Service Tax became
applicable as also the conversion of property from residential to
commercial. As far as lease of 2005 is concerned, this lease
commenced from 01.04.2005, when neither the suit property was
converted as commercial nor service tax was to apply on rent on
immovable property in existence. Therefore, in view of the
foregoing reasons, both the Lease deeds cannot be considered for
determination of mesne profits.
LEASE OF 1989:
24.6 The plaintiff has argued that the Lease of 1989
cannot be considered as this was an unregistered lease deed andCS DJ No. 9346/16 & 9347/16 Page 122 of 144
had also expired by efflux of time and hence its clauses could not
be read. It is further argued that the 1989 Lease gave the
defendant only one right of renewal which was exercised.
24.7 On the other hand, the defendant has argued that the
1989 Lease can be considered for computation of the rentals
starting from 1989 with an increment of 14% after every 3 years.
24.8 I have considered rival submissions.
24.9 As regards the 1989 Lease, it cannot be considered
for the simple reason that it was unregistered and also it had
expired and it will not be appropriate for taking this Lease for
computation of mesne profits.
DEFECTIVE TITLE:
25.1 It is argued that the Plaintiffs are not entitled to
mesne profits as they have failed to establish either valid title or
wrongful possession of the Defendant. The ownership of the
basement is itself under dispute in pending civil suits, thereby
rendering any claim for mesne profits untenable.
25.2 It is further argued that the Plaintiffs never had
ownership rights over the entire basement and, at best, held only
an undivided 1/6th share. Under Section 105 of the Transfer of
Property Act, 1882, a lease requires transfer of a lawful right to
enjoy property. Since the Plaintiffs had no such transferable right,
the lease deed dated 02.12.1989 is void ab initio.
25.3 Also, the lease was obtained by fraud and
misrepresentation, as the Plaintiffs falsely projected themselves
as absolute owners while concealing that the basement formed
CS DJ No. 9346/16 & 9347/16 Page 123 of 144
part of common areas belonging to all flat owners under the
Collaboration Agreement dated 01.11.1984. Such a contract is
void under Section 19 of the Indian Contract Act, 1872.
25.4 It is further argued that the doctrine of estoppel
under Section 116 of the Indian Evidence Act, 1872 does not
apply, as the tenancy itself was induced by fraud and possession
has already been handed back. The Plaintiffs cannot benefit from
their own misrepresentation.
25.5 It is also argued that the Plaintiffs have themselves
admitted defects in title through subsequent sale deeds and have
acted in violation of Section 52 of the Transfer of Property Act
by creating third-party interests during pendency of litigation.
25.6 In view of the above, the Plaintiffs lack locus, the
lease is void, and the Defendant’s possession cannot be termed
wrongful. Accordingly, the claim for mesne profits is liable to be
dismissed.
25.7 On the other hand, the plaintiff has argued that the
argument regarding defective title is not part of the pleadings and
hence, cannot be raised at this stage. However, it is submitted
that in 2007, the Defendant obtained loans from the Jammu and
Kashmir Bank mortgaging inter alia their own flat and the
leasehold rights in the suit properties. The property documents
were submitted to the Bank on 06.04.2009. On 16.03.2011,
further credit facilities were sanctioned by the Bank extending
charge over the same mortgaged properties. Hence, on three
separate occasions the Bank had occasion to check the papers to
satisfy that the property was in order. It is presumed that it did so.
CS DJ No. 9346/16 & 9347/16 Page 124 of 144
25.8 After that on 01.04.2011, all the Directors of the
Defendant filed a joint affidavit with the Bank and same was
filed in suit bearing No. CS DJ 297/2022 Jammu & Kashmir
Bank vs G.S. Berar Co. Pvt. Ltd. & Ors. pending in another court
swearing inter alia that “6.That the above said immovable
properties which stands/to the Bank are free from all sorts of
encumbrances, charges and liens whatsoever except the one
created/to be created in favour of the Bank, and the said
Immovable Properties have been constructed in compliance with
the sanctioned plan and all building bye laws and is not located
in any unauthorized colony”. This, therefore, proves that on that
date the entire building was found to be properly constructed.
How can the Defendant later be permitted to deny it when
convenient? Even a Public Sector Bank has accepted this
position.
FINDINGS:
25.9 As far as the plea of defective title raised on behalf
of defendant is concerned, I am in agreement with the
submissions made on behalf of plaintiff. It is seen that nowhere
in the Written Statements, this plea of defective title was raised.
25.10 It is the admitted fact that the tenancy in both the
suit premises were terminated in August, 2008 and the defendant
vacated the suit property on 19.10.2016. Both the suits were filed
in the year 2008. It is pertinent to mention here that defendant
filed two suits bearing No. CS DJ 297/2022 Jammu & Kashmir
Bank vs G.S. Berar Co. Pvt. Ltd. & Ors. pending in another court
and CS DJ 113/2017 (Trans Asian Industries Expositions Pvt.
CS DJ No. 9346/16 & 9347/16 Page 125 of 144
Ltd. vs Aditya Dave & Ors.) pending in this Court challenging
the title and ownership of the plaintiffs, which are still pending
adjudication. It is interesting to note that no issue of defective
title was raised by the defendant in their Written Statements filed
in both suits under consideration and for the first time, this plea
of defective title was raised in the above mentioned in the present
case the above mentioned suits after the defendant had vacated
the suit premises and as such, it is clear that this issue has been
raised as an after-thought.
25.11 It is also pertinent to note that plaintiff has filed the
copy of affidavit of defendant submitted while obtaining loans
from the Jammu and Kashmir Bank mortgaging inter alia their
own flat and the leasehold rights in the suit properties. In the said
affidavit, it is stated that the suit properties are free from all
encumbrances. Though, the defendant has objected to filing of
these documents and that same cannot be considered, however, it
is also the admitted fact that defendant themselves have filed a
copy of plaint of the suit bearing CS DJ 297/2022 Jammu &
Kashmir Bank vs G.S. Berar Co. Pvt. Ltd. & Ors., pending in
another court before this Court while moving the application for
stay of the proceedings of both the above suits as well as moving
another application before Ld. Principal District & Sessions
Judge, South, Saket seeking consolidation of all the suits pending
between the parties. Therefore, since the defendant has also
relied upon the documents pertaining to the suit bearing CS DJ
297/2022 Jammu & Kashmir Bank vs G.S. Berar Co. Pvt. Ltd. &
Ors., this Court can take judicial notice of the same and as such,
CS DJ No. 9346/16 & 9347/16 Page 126 of 144
the defendant cannot be allowed to take both the arguments of
defective title and at the same time, taking loan against the said
properties. This observation is made in order to show the conduct
of the defendant.
25.12 Since the issue of defective title of the suit premises
is not part of the pleadings in both the suits, hence, same cannot
be adjudicated at all. Moreover, the judicial propriety demands
that the issue of defective title ought not to be considered as it
would amount to exceeding the jurisdiction of this Court and as
such, this Court cannot give any observation on the issues which
are still sub-judice.
OTHER FACTORS:
26.1 It is argued on behalf of defendant that the basis of
determination of Mesne Profit depends on facts and
circumstances of each case, with factors including location of
premises, nature of premises (commercial or residential), etc. He
has relied on judgment titled as Martin & Harris (P) Ltd. v.
Rajendra Mehta, (2022) 8 SCC 527 wherein the Supreme Court
held as under:
“19. The basis of determination of the amount of
mesne profits, in our view, depends on the facts
and circumstances of each case considering the
place where the property is situated i.e. village or
city or metropolitan city, location, nature of
premises i.e. commercial or residential area and
the rate of rent precedent on which premises can
be let out are the guiding factor in the facts of
individual case.”
CS DJ No. 9346/16 & 9347/16 Page 127 of 144
26.2 It is argued that the suit property had inherent
defects. The suit properties were not built as per sanction plan of
the MCD and even the suit properties had not received any
occupation and completion certificates by the competent
authorities. Because of these inherent defects, the suit properties
were sealed by the MCD. Also, because of these inherent defects,
the suit properties were not able to fetch good rentals and even
after the same were vacated by the defendant in the year 2016,
same could not be leased further till the time the same were sold
to Vijay Sales in the year 2021. Therefore, it is clear that for 05
years, the plaintiffs could not find any tenant for giving the suit
properties on lease which makes it amply clear that suit
properties could not have fetched rentals as being claimed by the
plaintiffs.
26.3 It is also stated that the steep increase in rent is a
complete paradox when compared to the prevailing market rental
rates of comparable properties in the Hauz Khas Area which
continued to decrease with the fall in the real estate market and
construction of metro right in front of the Suit Property, The
construction of metro continued in front of the Suit Property
thereby making it nearly impossible to access the Suit Property.
The Plaintiffs were, in fact, not entitled to any monies for the
period for which the Metro construction continued and all monies
paid for the said period are liable to be refunded to the
Defendant. The Defendant has procured valuation certificates
from reputed property agents in respect to rentals of comparable
properties in the Hauz Khas area.
26.4 On the other hand, it is argued on behalf of plaintiffs
CS DJ No. 9346/16 & 9347/16 Page 128 of 144
that assuming that M-1, Hauz Khas, New Delhi was not built
according to sanctioned building plan, SDMC order dated
12.10.2021 clearly holds that by virtue of the NCT of Delhi Act,
2007, it was all protected. Hence, it could have been leased in
2008 as protected construction. It is also a fact that such
protection has lasted for the entire period that the defendant
continued to occupy the premises till the time the suit properties
were vacated on 19.10.2016. It is argued that since what needs to
be determined is mesne profits and not rent and as such, what one
must examine is what happened during that period while looking
back. If the possession of the Defendant was not disturbed on this
account, then they cannot complain.
26.5 I have considered rival submissions on this point.
26.6 I am in agreement with the submissions made on
behalf of plaintiff. The defendant continued to use and occupy
the suit premises despite the termination of tenancy and was
running his business of exhibition of handicrafts.
26.7 It is also significant to note that plaintiff has filed the
copy of affidavit of defendant submitted at the time of increasing
credit facilities from the Jammu and Kashmir Bank mortgaging
inter alia their own flat and the leasehold rights in the suit
properties. In the said affidavit dated 01.04.2011, it is stated that
the suit properties are free from all encumbrances and that the
said immovable properties have been constructed in compliance
with the sanctioned plan and all building bye laws and is not
located in any unauthorized colony. Therefore, it is clear from
this affidavit that defendant themselves have admitted that the
suit premises have been built as per sanctioned plan and now, it
CS DJ No. 9346/16 & 9347/16 Page 129 of 144
cannot retract from this admission. Hence, I hold that the suit
premises were having minor deviations as per the MCD but were
used optimally by the defendant while running his business of
exhibition of handicrafts and as such, the defendant cannot be
allowed to take this plea to deny the claim of mesne profits to the
plaintiffs.
26.8 As regards the argument of defendant that due to
construction work of Hauz Khas metro station, the real estate
value of the area had gone down as the area was difficult to
access, it is seen that the construction work of Hauz Khas metro
station started in the year 2007-2008 and it became operational
from the year 2010. In the meeting dated 21.05.2008, both the
sides agreed to increase the rentals as per their mutual agreement
as is mentioned in the written statement of the defendant.
Pursuant to the said agreement dated 21.05.2008, the defendant
had even tendered rental @ Rs. 4,00,000/- per month to the
plaintiffs for the months of February – May, 2008. It is
incomprehensible to understand that if the defendant was finding
it very difficult to run its business because of the construction
work of Hauz Khas metro, why it acted upon the agreement
21.05.2008 and even paid rent @ Rs. 4 lacs per month for four
months. Therefore, this argument of defendant is an after-thought
and has been made in order to deprive the plaintiff of its rightful
mesne profits and running away from its obligations.
27 Now, I shall determine whether M-3 and M-5 Lease
can be considered for determination of the mesne profits in
respect of the suit properties.
CS DJ No. 9346/16 & 9347/16 Page 130 of 144
27.1 It is argued on behalf of plaintiffs that Lease of M-3
and M-5 are like properties and can be considered for
determining the mesne profits. It is further argued that the
covenants in both these Lease are also identical and hence, can
be considered. The plaintiff has also given the calculation of rent
amount as well as security deposit and interest which could have
accrued thereon, on the basis of both these Lease for arriving at
the mesne profits for the suit properties.
27.2 Per contra, the defendant has argued that both the
Lease of M-3 and M-5 cannot be considered. With respect to the
lease of property bearing number M5, Hauz Khas, which was
leased out to one Gym., two separate purported leases have been
exhibited by the Plaintiffs, one pertaining to the basement and
ground floor of M5, Hauz Khas and the other with respect to the
1st floor of M5, Hauz Khas. This Lease too is at a much higher
pedestal than the suit properties, for the number of services it
offers, and the inherent nature of the land itself. It is well known
that rent of Basement is much lower than all the upper floors.
Applying the same rate of rent of upper floors to an area which is
prominently of the basement and derives much lesser rent than
upper floors clearly shows the ill-intention of the Plaintiff.
Hence, this again is not an apple to apple comparison.
27.3 It is further argued that the properties in both the
Lease were completely commercial and secondly, it provided
many benefits like right for parking at frontage for clients with
minimum of 2 cars, area to install water tank, commercial load of
80KV, 400sq ft. area on the roof for solar plant, none of which
were given with the suit properties.
CS DJ No. 9346/16 & 9347/16 Page 131 of 144
27.4 It is also argued that plaintiffs have calculated the
service tax @ 20% whereas the service tax in the year 2008-2009
was only 12.36% which is considerably lower then what is
sought to have been claimed by the plaintiff.
27.5 Therefore, it is argued that none of the properties i.e.
M-3 and M-5 can be compared with the suit properties and
hence, their rentals cannot be considered for calculation of mesne
profits. The defendant have also given different calculations for
computation of mesne profits.
27.6 I have carefully perused the record and considered
rival submissions.
27.7 It is argued on behalf of defendant that the lease
deeds of M-3, Hauz Khas and M-5, Hauz Khas relied upon by
the Plaintiffs for fixing of mesne profits also contains the clauses
where the conversion charges, commercial charges, property tax,
service tax, GST etc. are payable by the lessors and not the
lessee.
27.8 It is also argued that the lease of M-3, Hauz Khas at
Article 3C itself records that the Lessor is bound to pay all the
taxes including but not limited to commercial charges, Municipal
taxes and other charges qua the lease property. The Plaintiffs
vehemently relies upon the M-3, Hauz Khas lease, then the claim
of the Plaintiffs upon the Defendant to pay conversion charges,
FAR charges and One-time parking charges for the suit properties
itself fails. The said Clause 3C, in fact, supports the case of the
Defendant that the charges such as FAR charges and one-time
parking charges are always borne by a Lessor as the said charges
are towards the enhancement of his/her property and only he/she
CS DJ No. 9346/16 & 9347/16 Page 132 of 144
will bear the fruits of such enhancement. Hence, the Defendant,
being the Lessee, is not responsible and liable to pay such
charges so as claimed by the Plaintiffs as damages in both the
suits.
27.9 It is further argued that plaintiff though mentioned
about Article 3(iv) but have not mentioned contradiction in
Article 3C, wherein it unequivocally stated that all taxes and
charges are payable by the Lessor. Since no evidence was ever
led, it cannot be assumed which interpretation of the 2 clauses is
correct and hence, the question of payment of Service Tax by the
Lessee in the M3 Lease is left unanswered. Reliance on the
judgments of Ramkishore Lal v. Kamal Narain, (1963) AIR (SC)
890 and Radha Sundar Dutta v. Mohd. Jahadur Rahim and
Others, (1959) AIR (SC) 24 by the Plaintiffs to contend that in
the event of conflict in the clauses of a document, the earlier
clause should prevail and the latter should be disregarded, is
misplaced for the reason that in Clause 3A(iv), it is specifically
mentioned that the Lessor has to raise an invoice upon the Lessee
and in default on the part of the Lessor, he is bound to pay in
terms of Clause 3C the Service Tax. Admittedly, in the present
suits, the Plaintiffs have not raised any invoice/challans to the
Defendant for the Service Tax.
27.10 On the other hand, it is argued on behalf of plaintiff
that the submission of defendant that under Clause C of the M3
lease, the liability for service tax was of the landlord is false.
Clause 3a(iv) expressly says that “The Service Tax, if applicable
on the monthly rent shall be borne and payable by the LESSEE
upon receipt of invoice from the LESSOR”. The rule regarding
CS DJ No. 9346/16 & 9347/16 Page 133 of 144
interpretation of contracts / documents is that a subsequent clause
cannot override a previous one. The Plaintiffs rely on Radha
Sundar Dutta v. Mohd. Jahadur Rahim AIR 1959 SC 24 1959
SCR 1309 where there is conflict between the earlier clause and
the later clauses and it is not possible to give effect to all of them,
then the rule of construction is well established that it is the
earlier clause that must override the later clauses and not vice
versa] and Ramkishorelal vs Kamalnarayan AIR 1963 SC 890 =
1963 Supp (2) SCR 417 [In a disposition of properties, if there is
a clear conflict between what is said in one part of the document
and in another where in an earlier part of the document some
property is given absolutely to one person but later on, other
directions about the same property are given which conflict with
and take away from the absolute title given in the earlier portion,
the earlier disposition of absolute title should prevail and the later
directions of disposition should be disregarded.]
27.11 A similar contention was advanced in respect of M5
lease based on Clause 2.1 which does not mention service tax.
However, Clause 2.4 of the M5 lease deed also expressly states
that “However the service tax or any hoarding charge, if and
when levied shall be borne by the Lessee”. This seems to have
been so prescribed because on 04.07.2009 when this lease was
being entered into the incidence of service tax had been struck
down by the Hon’ble Delhi High Court. Of course, if service tax
had finally not been levied, neither would the said tenant have
had to pay it, nor would the Plaintiffs have claimed it. But it has
been upheld.
27.12 I have considered rival submissions.
CS DJ No. 9346/16 & 9347/16 Page 134 of 144
27.13 The argument advanced on behalf of defendant that
service tax liability was of the lessor does not inspire confidence
as in view of judgment Ramkishorelal and Radha Sunder Dutta
(supra), it is clear that the liability to pay service tax is of the
lessee in view of the overriding effect of the earlier clause
provided in Article 3 A (iv) and the interpretation proposed by the
defendant is misconceived.
27.14 So far as the argument of defendant that the
plaintiffs did not raise service tax invoice on the interim use and
occupation charges received till the vacation of the suit property,
it is seen that this argument is not tenable as the plaintiff was not
in a position to raise invoice of service tax as the use and
occupation charges were interim and not final. Further, there was
no direction from any superior court to raise invoice as has been
alleged by the defendant.
27.15 So far as the submissions of the defendant’s counsel
with respect to service tax is concerned, I am in agreement with
his submissions. Vide amendment in the Finance Act, 2007, the
rate of service tax was fixed at 12.36% per annum on rent
amounts falling under the sub-clause (90a) under the category of
(zzzz).
27.16 Therefore, the service tax calculated by the plaintiff
@ 20% is not as per law.
27.17 As far as Lease of M-3 and M-5 properties are
concerned, both the properties were being used for commercial
purposes. Both the properties are in the vicinity and hence, are
more suitable for the purposes of comparison. Further, their
comparison with the suit properties will give a realistic idea
CS DJ No. 9346/16 & 9347/16 Page 135 of 144
about the prevalent market rate and thus, will enable this Court to
determine the market rent of the suit properties which was
prevalent at that time.
27.18 Further, the superior courts in catena of judgments
have held that the calculation of mesne profits is not limited to
the original contractual rent, it should reflect what the landlord
could have earned in the open market, what the wrongful
occupant actually received, during the period of unauthorized
possession.
27.19 Therefore, I now proceed to compare the Lease of
M-3 and M-5 with the suit properties.
27.20 In order to arrive at the rate of rent per month, the
comparison between the properties of M-3 and M-5 is being
made as hereunder:
27.21 LEASE OF M-5
1ST LEASE:
Basement & Ground floor- Area 5220 sq. feet.
Rent Rs.800,000 + service tax @12.36% which comes to Rs.
97,000/- + interest free security deposit @ 7% p.a. on the
Security deposit of Rs. 48 lacs ( 8 lacs x 6 months) which comes
to Rs. 28,000/- per month.
2ND LEASE:
First Floor – Area 1800 sq. feet
Rent Rs.3,00,000 + service tax @12.36% which comes to Rs.
37,086/- + interest on interest free security deposit @ 7% p.a. on
the Security deposit amount of Rs. 18 lacs (3 lacs x 6 months)CS DJ No. 9346/16 & 9347/16 Page 136 of 144
which comes to Rs. 10,500/- per month.
TOTAL OF BOTH THE LEASE OF M-5:
Area (5220 +1800) = 7020 sq. feet.
Total Rent (8 +3 lacs) =11,00,000 + Service Tax (97,000 +
37,086) = Rs. 1,34,086 + Interest on interest free security deposit
(28,000 + 10,500) = Rs. 38,500/-, the grand total of these comes
to Rs. 12,72,586/-
Now, for computing the rate of rent per square feet,
the total rental of Rs. 12,72,586 is divided by the area of 7020.
The rate per square feet comes to 181 per square feet.
Applying this rate of 181 per sq. feet to the area of
7725 gives the following figures:
Area 7725 x 181 per sq. feet = Rs. 13,36,425/- rent
per month (inclusive of service tax) in the year 2009.
Now, coming to the Lease of M-3.
27.22 LEASE OF M-3:
Basement (front portion)- 1834 sq. feet
Ground floor ( front portion)-1877 sq. feet
Total area – 3711 sq. feet
Rent Rs.11,25,000 + service tax @12.36% which comes to Rs.
1,39,050/- + interest free security deposit @ 7% p.a. on the
Security deposit of Rs. 67,50,000/- ( 11.25 lacs x 6 months)
which comes to Rs. 39,375/- per month.
Therefore, the total rent comes to Rs. 13,03,425/-
Now, for computing the rate of rent per square feet,
the total rental of Rs. 13,03,425/- is divided by the area of 3711.
CS DJ No. 9346/16 & 9347/16 Page 137 of 144
The rate per square feet comes to 351 per square feet.
This lease had commenced in the year 2013 whereas
the rate of rent which we are determining is for the year 2008.
It is also pertinent to note that this lease is for three
years extendable by another three years and the rentals are to be
revised by 15% per annum every three years.
Therefore, for arriving at the rentals in the year
2008, the rent amount of Rs. 13,03,425/- must be reduced by
25% of it ( minus Rs. 3,25,856/-) which comes to Rs. 9,77,569.
This rent of Rs. 9,77,569/- is divided by the area of
3711- Rs. 263 per square feet in the year 2008.
Applying this rate of 263 to the area 7725 sq. feet in
the present two suits, the following rate of rent arrives.
Area 7725 x 263 per sq. feet = Rs. 20,31,675/- per
month (inclusive of service tax) in the year 2008.
27.23 Now, that we have arrived at the estimated market
rate of rentals of the properties located in the Hauz Khas on the
basis of Lease of M-3 and M-5. We have got two different rates
of these two separate lease of M-3 and M-5 which are the
properties in the vicinity of suit properties.
27.24 It is pertinent to note that the mesne profits which
we are trying to determine for the suit properties is for a long
period of 08 years w.e.f June, 2008 till 19.10.2016 in Soni Dave
suit and in respect of Berar suit, w.e.f September, 2008 till
19.10.2016.
27.25 Therefore, in order to arrive at the prevalent market
rate for 08 years, I deem it appropriate that the combined rate ofCS DJ No. 9346/16 & 9347/16 Page 138 of 144
M-3 and M-5 would give a fair market rate for determination of
mesne profits. Hence, I now proceed to calculate the combined
rate of lease of M-3 and M-5.
27.26 COMBINED RATE OF M-3 AND M-5 LEASE:
In view of the above calculations, we have two
different rates:
Rs. 263 per sq. feet (on the basis of M-3)
Rs. 181 (on the basis of M-5 Lease).
For arriving at the average of these two rates, both
these rates are being added and then divided by 2 to arrive at the
average rate.
Average of both the rates- 263+181=222 per sq.feet.
Therefore, the rate of Rs. 222/- per square feet
would be just and fair market rental value of the suit properties.
27.27 Hence, since the mesne profits are to be computed
from June, 2008 till 19.10.2016, I deem it appropriate to refer to
the decision passed by Hon’ble High Court of Delhi in Sneh
Vaish & Anr. Vs. State Bank of Patiala & Ors. relied by the
plaintiff wherein it is held:
“That is however not the end of the
matter, inasmuch as, Courts have been taking
judicial notice of increases in the rent in urban
areas such as Delhi. A Division Bench
judgment of this Court taking judicial notice
of increase in rents is the judgment in the case
of S.Kumar vs. G.R.Kathpalia, 1999 RLR
114. I have also had an occasion to consider
this aspect in the judgment in the case of M.C.
Agrawal HUF vs. M/s.Sahara India & Ors.,CS DJ No. 9346/16 & 9347/16 Page 139 of 144
183 (2011) DLT 105, wherein I have held that
the Courts can take judicial notice of 15%
annual increase in rent. In this case, the last
rate of rent which was paid before the tenancy
was terminated was `40,472/-. I therefore hold
that the appellants/plaintiffs/landladies are
entitled to increased rent of 15% over
`40,472/- with effect from 24.10.1998 to
23.10.1999. However, with effect from
24.10.1999 the mesne profits payable would
be 15% more than what were payable on
23.10.1999. Every year there will be a
cumulative increase of 15% over the last rate
payable for mesne profits till the vacation of
the premises on 31.12.2002.
27.28 Therefore, in view of the judgment Sneh Vaish
(supra), the plaintiffs shall be entitled to annual increase of 15%
on the mesne profits. Further, every year, there will be a
cumulative increase of 15% over the last rate payable for mesne
profits till the vacation of the suit premises on 16.10.2016.
ISSUE NO. 1
28. In view of my above discussion, this issue is decided
in favour of the plaintiffs and against the defendant. The
plaintiffs shall be entitled to mesne profits at the rate of Rs. 222/-
per square feet and from the date of filing of the suit till
realization of the amount, from the end of the month for which
the mesne profits fell due till the date of payment.
Now, I shall proceed to decide Issue No.2.
CS DJ No. 9346/16 & 9347/16 Page 140 of 144
RATE OF INTEREST:
29.1 The plaintiffs have sought pendente lite interest @
18% per annum.
29.2 The defendant has objected to this rate of interest.
29.3 I have perused the entire record. In para 80 of
evidence affidavit of defendant Mohd. Yasin Mir examined as
DW-9, has claimed refund of security deposit from the plaintiff
alongwith interest at the rate of 18% per annum.
29.4 On the one side, defendant is claiming interest @
18% per annum on his security deposit and on the other side, he
is rejecting the claim of plaintiff of pendente lite interest @ 18
per annum. The Plaintiffs have relied on the decision of the
Hon’ble Delhi High Court dated 13th May, 2014 in FAO(OS)
579/2013 titled “Smt. Santosh Arora & Ors Vs Sh. M.L. Arora“,
and on the judgment of the Hon’ble Supreme Court in BPL
Limited Vs. Morgan Securities and Credits Private Limited 2025
INSC 1380 whereby it was held that a rate of interest of 36% pa
is not unconscionable or against public policy, especially in
commercial transactions between parties of equal bargaining
power.
29.5 Similarly, in RFA 249/2021, CM Nos. 15993/2021 &
15995/2021 titled as Pawan Kumar Gupta And Gurucharan
Gupta versus Veena Dhingra And Another, High Court Of Delhi,
dated December 08, 2021 has held as under:
24. Taking note of the aforementioned facts,
insofar as the interest is concerned, the
justification given by the learned Trial Court
while granting interest @ 18% per annum is that
the tenancy being commercial. Such a
conclusion is reasonable in the facts of this case.
CS DJ No. 9346/16 & 9347/16 Page 141 of 144
29.6 Therefore, in view of the judgments cited above, the
plaintiff is entitled to pendente lite interest @ 18% per annum
from the date of filing of the suit till the realization of the
amount.
ISSUE NO. 2:
29.7 In view of my above discussion, this issue is decided
in favour of the plaintiffs and against the defendant. The
plaintiffs are entitled to interest at the rate of 18% per annum on
mesne profits from the date of filing of the suit till realization of
the amount.
ISSUE NO.3:
Whether the defendant is entitled to deduct
any amount in respect of removal of pantry
and relocation of electricity generator from
the amount which they are liable to be paid
to the plaintiff, if the issues No.1 & 2 are
decided in favour of the plaintiff? OPD
30. The onus of proving this issue is upon the defendant,
however, defendant did not lead any evidence and as such, this
issue is decided against the defendant and in favour of the
plaintiffs.
RELIEFS:
31. For the convenience, this Court has taken the date of
awarding of mesne period from 01.09.2008 in Soni Dave Suit as
tenancy was terminated vide notice dated 08.08.2008. Similarly,CS DJ No. 9346/16 & 9347/16 Page 142 of 144
in Berar suit, this Court has taken the date of awarding of mesne
period from 01.10.2008 as tenancy was terminated vide notices
dated 22.08.2008 and 26.08.2008. Therefore, the Plaintiffs shall
be entitled for the mesne profits/ damages/ use and occupation
charges as per table given hereunder:-
IN SONI DAVE SUIT :
Mesne Profits/ Damages
From To Amount
01.09.2008 31.08.2009 Rs. 2,66,400/- per month
01.09.2009 31.08.2010 Rs. 3,06,360/- per month
01.09.2010 31.08.2011 Rs. 3,52,314/- per month
01.09.2011 31.08.2012 Rs. 4,05,161/- per month
01.09.2012 31.08.2013 Rs. 4,65,935/- per month
01.09.2013 31.08.2014 Rs. 5,35,825/- per month
01.09.2014 31.08.2015 Rs. 6,16,199/- per month
01.09.2015 31.08.2016 Rs. 7,08,629/- per month
01.09.2016 18.10.2016 Rs. 8,14,923/- per monthIN BERAR SUIT :
Mesne Profits/ Damages
From To Amount
01.10.2008 30.09.2009 Rs. 14,48,550/- per month
01.10.2009 30.09.2010 Rs. 16,65,832/- per month
01.10.2010 30.09.2011 Rs. 19,15,707/- per month
01.10.2011 30.09.2012 Rs. 22,03,063/- per month
01.10.2012 30.09.2013 Rs. 25,33,522/- per month
01.10.2013 30.09.2014 Rs. 29,13,550/- per month
01.10.2014 30.09.2015 Rs. 33,50,583/- per month
01.10.2015 30.09.2016 Rs. 38,53,170/- per month
01.10.2016 18.10.2016 Rs. 44,31,146/- per month31.1 The amount already paid by the defendant to the
plaintiff towards mesne profits/damages in terms of order datedCS DJ No. 9346/16 & 9347/16 Page 143 of 144
18.05.2016 of Delhi High Court shall be adjusted against the
total of the mesne profits/ damages awarded hereinabove in both
the suits.
31.2 The defendant is directed to pay to the plaintiff
interest @ 18% per annum simple from the end of the month for
which the mesne profits are payable on the differential balance
amount of the mesne profits/ damages till the actual realisation.
31.3 Costs of the suit is also awarded to the plaintiffs.
32. The plaintiff shall furnish the deficient court fee on
the mesne profits/ damages awarded. The decree shall be
executed after the deficient court fee is furnished.
33. Decree sheet be prepared accordingly. A copy of this
common judgment duly signed is placed in both the above
mentioned suits.
34. File be consigned to record room.
Digitally signed
Pronounced in the open court Pooran by Pooran
chand
on 11.04.2026
chand Date:
2026.04.11
16:49:59 +0530
(POORAN CHAND)
DISTRICT JUDGE-05, SOUTH,
SAKET COURTS, NEW DELHICS DJ No. 9346/16 & 9347/16 Page 144 of 144
