Delhi High Court
M/S Cottage Arts Emporium vs Indian Tourism Development … on 3 July, 2025
Author: Manoj Kumar Ohri
Bench: Manoj Kumar Ohri
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Reserved on : 02.04.2025
Pronounced on : 03.07.2025
+ W.P.(C) 11163/2019, CM APPL. 45963/2019
M/S COTTAGE ARTS EMPORIUM .....Petitioner
Through: Mr. Amandeep Singh, Mr. Pradeep
Desodiya and Mr. Dilip K. Niranjan, Advocates
versus
INDIAN TOURISM DEVELOPMENT CORPORATION .....Respondent
Through: Mr. Deepak Thakral and Mr. Nikhil
Goyal, Advocates
CORAM:
HON'BLE MR. JUSTICE MANOJ KUMAR OHRI
JUDGMENT
1. By way of the present petition, the petitioner is assailing the
impugned judgment dated 11.12.2018 passed by the Ld. ASJ in PPA
No.189/16.
2. Vide the impugned judgement, while disposing of petitioner‟s appeal
under section 9 of the Public Premises (Eviction of Unauthorized
Occupants) Act, 1971 (hereinafter referred to as the „PP Act‟), the Court
dismissed the petitioner‟s objection that the PP Act proceedings initiated by
the respondent were barred by limitation and the matter was remanded back
to the Estate Officer to decide afresh the quantum of damages and interest
by way of a reasoned order.
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3. The background facts, as gathered from the records, are that the
petitioner was given Shop No. 05, 1st Floor, Ashok Hotel, 50-B,
Chanakyapuri, New Delhi (hereinafter referred to as „The Shop‟) on license
for the period from 15.02.1989 to 31.03.1992 at a license fee of
Rs.4,92,562.50. The said license was subsequently renewed for the period of
01.04.1992 to 31.03.1995. Thereafter, on expiry of the aforesaid license
period, negotiations were held between the parties and the respondent vide
letter dated 07.03.1997, agreed to renew the license for a period of three
years i.e., from 01.04.1995 to 31.03.1998 at the license fee of Rs. 2,88,000
per annum. As per the respondents case in the impugned proceedings, the
last renewal however, could not fructify on account of the non-payment of
the license fee.
4. Consequently, on 25.03.1998 the respondent initiated recovery
proceedings against the petitioner under Section 7 of the PP Act for recovery
of Rs. 3,32,136/- along with interest @ 24% p.a. The petitioner challenged
the said proceedings before this Court in WP(C) 3615/1998 and vide order
dated 08.06.1998, the abovementioned recovery proceedings were stayed.
This writ petition was finally dismissed vide order dated 11.11.2009,
vacating the stay on the recovery proceedings.
Thereafter, the respondent sent a legal notice dated 09.08.2010
demanding damages w.e.f. 01.04.1998, which demand was rejected by the
petitioner vide letter dated 27.10.2010.
5. Subsequently, in the year 2011, the respondent additionally filed two
applications- one under sections 4 & 5 of the PP Act for eviction of the
petitioner from the shop and another under Section 7 of the PP Act seeking
damages from 01.04.1998 onwards.
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6. On 22.08.2013, the Estate Officer, while disposing off the first
recovery application filed under section 7 PP Act, held the petitioner liable
to pay arrears of license fee from 01.04.1995 to 31.03.1997 amounting to Rs
3,32,136/-. The petitioner was further directed to pay interest @ 24% from
01.04.1997 till the final payment.
The petitioner preferred an appeal bearing PPA No.40/2013 only
seeking reduction of interest which was allowed vide judgement dated
19.07.2016, reducing the interest component to 10%. As there was no
further challenge, the judgement attained finality.
7. The respondent‟s application for eviction under Sections 4 & 5 of the
PP Act came to be allowed on 21.01.2014 and the petitioner was declared as
an unauthorised occupant.
The appeal against this order being PPA No. 130/16 was dismissed
vide judgement dated 02.11.2018. There is nothing on record which would
show that the said order was challenged further.
8. The respondent‟s application for recovery of damages from
01.04.1998 onwards came to be allowed on 05.12.2013 and the petitioner
was directed to pay damages w.e.f. 01.04.1998 till 31.12.2010 amounting to
Rs.2,22,93,565/- and damages @Rs.500/- per sq. ft. per month from
01.01.2011 till the vacant and peaceful possession of the shop was handed
over by the petitioner. The order further directed the petitioner to pay
interest on the above-mentioned amount @12% per annum from 01.01.2011
till its final payment.
Against this order, the petitioner preferred an appeal bearing PPA No.
189/16, contending that respondent‟s application under Section 7 of the PP
Act was barred by limitation. It was in these proceedings that the impugned
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order came to be passed, holding that the Limitation Act has no applicability
to recovery of damages under Section 7(2) PP Act. It was further held that
no reason has been assigned by the Estate Officer for arriving at the
conclusion of awarding of damages @Rs.500/- per sq. ft. p.m. or awarding
interest @12% per annum and the matter was remanded back for fresh
consideration on this limited aspect.
9. Learned counsel for the petitioner has primarily challenged the
impugned award on the ground that claim for recovery of damages was time
barred. It is submitted that though the damage claimed pertains to the period
w.e.f. 01.04.1998 to 31.12.2010, i.e. for 12 years and 9 months, the
application for recovery of damages before the Estate Officer was filed only
in February 2011 and thus, the same was barred by limitation. It is submitted
that the limitation act is applicable to proceedings under Section 7 of the PP
Act. Reliance in this regard is placed upon the decisions in G.R. Gupta
versus Lok Sabha Secretariat1, New Delhi Municipal Committee versus
Kalu Ram & Ors.2 and Union of India versus Rajinder Singh.3
8. Learned counsel for the respondent, on the other hand, submits that
the license of the shop in question had expired on 31.03.1998, and since
thereafter, the petitioner had not vacated the property and therefore became
an unauthorized occupant. It is submitted that the first application for
recovery of rent from 01.04.1995 to 31.03.1998 was filed under Section 7(1)
of the PP Act while the second application was under filed Section 7(2) for
damages from 01.04.1998 to 31.12.2010. It is further submitted that the
Limitation Act does not have applicability over the recovery for damages
1
MANU/DE/4392/2013
2
MANU/SC/0017/1976
3
WP (C) 4918 of 2014 decided on 08.08.2014
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proceedings instituted under Section 7(2) of the PP Act, and therefore, there
is no infirmity in the impugned order. In the alternative, even if Limitation
Act is held to be applicable, in view of Article 112 of the Schedule to the
Act, the limitation period applicable would be 30 years and hence, the
respondent‟s claim for damages were not time-barred. It has also been
argued that the pendency of the writ petition WP(C) 3615/1998 filed by the
petitioner and the interim stay granted therein would itself extend the period
of limitation since the stay on recovery proceedings was only vacated on the
dismissal of the petition on 11.11.2009. Reliance is placed on decision of
this Court in Ram Sarup v. Raj Dulari.4
9. In rejoinder, petitioner contended that the interim order passed in
WP(C) 3615/1998 was restricted to proceedings for recovery of limited rent
from 01.04.1995 to 31.03.1997 and did not stop the respondent from filing
proceedings for damages thereafter. Furthermore, the Estate Officer rejected
the said contention without assigning any reasons and awarded the amount
of Rs.500/- per sq. feet per month as damages. Also, the decision in Ram
Sarup (Supra) is sought to be distinguished by submitting that the same is
inapplicable, having been passed in the context of Delhi Rent Control Act. It
is submitted in the said case, contractual rent had been suspended and
standard rent fixed in an application, upon whose dismissal, the contractual
rent had become payable. It is submitted that the facts are entirely
distinguishable from the present case.
10. I have heard learned counsel for the parties and gone through the
record.
11. The solitary issue which needs to be adjudicated in the present case is
4
1972 SCC OnLine Del 236.
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whether Limitation Act would be applicable to the proceedings under the PP
Act or not, and if yes, whether the respondents‟ claims for damages were
time-barred.
12. Fortunately, the law on this aspect is no longer Res integra, with the
decision of Supreme Court in Kalu Ram (Supra) holding the field. The
Supreme Court has held that Section 7 of the PP Act merely creates a
specialized procedure for realizing the arrears of rent and does not bar the
applicability of Limitation Act. It held as follow: –
2…As would appear from the terms of the section, it provides a summary
procedure for the recovery of arrears of rent. It was argued that since
Section 7 did not put a time-limit for taking steps under that section and as
the limitation prescribed for a suit to recover the amount did not apply to
a proceeding under this section, the High Court was in error in upholding
the respondent’s objection…
…It is not questioned that a creditor whose suit is barred by limitation, if
he has any other legal remedy permitting him to enforce his claim, would
be free to avail of it. But the question in every such case is whether the
particular statute permits such a course. Does Section 7 of the Public
Premises (Eviction of Unauthorised Occupants) Act, 1958 create a right to
realise arrears of rent without any limitation of time?..
…Section 7 only provides a special procedure for the realisation of rent
in arrears and does not constitute a source or foundation of a right to
claim a debt otherwise time barred..
..We are clear that the word “payable” in Section 7, in the context in
which it occurs, means “legally recoverable”. Admittedly a suit to recover
the arrears instituted on the day the order under Section 7 was made
would have been barred by limitation. The amount in question was
therefore irrecoverable. This being the position, the appeal fails and is
dismissed with costs.
13. While dealing with the aspect of limitation, the impugned order
makes a distinction between Section 7(1) and 7(2) of the PP Act, holding
that the decision in Kalu Ram (Supra) would govern only to Section 7(1)
and that Limitation Act would not have any application to Section 7(2) and
thus, respondents claim was not barred by limitation. The Court had relied
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on several co-ordinate bench decisions of this Court as well as that of the
Madhya Pradesh High Court in L.S. Nair v. Hindustan Steel Ltd., Bhilai &
Ors.5
14. However, the ruling of the Division Bench of this Court in G.R.
Gupta (Supra) does not support this line of reasoning. On the contrary, it
demolishes this distinction which is sought to be created between Section
7(1) and 7(2) of the PP Act. The Division Bench has held that in view of the
authoritative pronouncement of Supreme Court in Kalu Ram (Supra), the
same being binding by virtue of Article 143, it could not have been held that
Limitation Act ceases to apply to application for recovery of damages under
Section 7(2) of the Act. The relevant portion is reproduced here under: –
23. However, we are of the opinion that the law of limitation applies to
proceedings initiated before the Estate Officer under the PP Act, 1971.
The Supreme Court in New Delhi Municipal Committee Vs. Kalu Ram and
Another (supra) has held as under:-…
24. In view of the aforesaid authoritative pronouncement by the Supreme
Court, this Court is of the opinion that the distinction sought to be drawn
by the respondent between proceedings under Sections 7(1) and 7(2) of the
PP Act, 1971, is untenable in law. The reliance of the respondent on the
judgment of the Madhya Pradesh High Court in L.S. Nair vs. Hindustan
Steel Ltd., Bhilai and Ors. (supra) is also misplaced as the same did not
deal with or refer to the aforesaid Supreme Court’s judgment in New Delhi
Municipal Committee Vs. Kalu Ram and Another (supra). In fact, in L.S.
Nair vs. Hindustan Steel Ltd., Bhilai and Ors. (supra), the Madhya
Pradesh High Court has dealt with the judgment of the Punjab High Court
in Kalu Ram v. New Delhi Municipal Committee MANU/PH/0503/1965:
(1965) 67 Pun LR 1190 and not the Supreme Court’s judgment.
25. It is settled law that a judgment of one High Court is not binding on
the other, but in view of Article 141 of the Constitution of India, the
Supreme Court judgment is binding on all High Courts. Consequently, the
finding of the learned Single Judge that the limitation prescribed under
the Act, 1963 has no application to recovery of damages under Section
7(2) of the PP Act, 1971, is not correct.
5
MANU/MP/0021/1980
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15. The extract reproduced above would further show that the Division
Bench was of the opinion that the decision of MP High Court in L.S. Nair
(Supra) did not consider the Supreme Court decision in Kalu Ram (Supra),
rather dealing with the Punjab High Court decision. A perusal of the
impugned order would show that it places heavy reliance on the decision in
L.S. Nair (Supra). Notably, though the decision in G.R. Gupta (Supra) was
challenged before the Supreme Court in G.R. Gupta v. Lok Sabha,6, the
challenge was however dismissed. The view of the Division Bench renders
the reasoning employed in the impugned order faulty. Thus, Limitation Act
will be applicable in proceedings for recovery of damages under Section
7(2) of the PP Act as well.
16. Now, the consequent question which arises is what limitation period
would be applicable on the respondent and whether the claims are time-
barred.
17. The respondent claiming itself to be a Government Company sought
shelter under Article 112 of the Schedule to Limitation Act to claim
enhanced period of limitation.
18. The contention is fallacious and is rejected. Admittedly, the
respondent is a Government Company incorporated under the Companies
Act. Though such an entity falls in the definition of “State” under Article 12
of the Constitution of India, the same would not entitle it to claim
applicability of Article 112 of the Limitation Act. It is settled law that
merely by nature of one being a Government Company, it cannot be
construed as the Central or State Government. The reason being that the
company is an independent and separate legal entity. The benefit of extended
6
decided on 18.08.2021 in Civil Appeal No. 6829 of 2014.
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limitation under Article 112 is available only to the Central and State
Governments and the same has not been extended to its Agencies or
Instrumentalities. The Division Bench of this Court in G.R. Gupta (Supra)
had clarified that the Limitation Act, under Article 112 of the Schedule,
grants extended limitation of 30 years only to Central and State
Governments and not to other statutory authorities such as NDMC. It held as
follow: –
“28. It is pertinent to mention that the Act, 1963 grants extended limitation
of 30 years only to Central and State Governments and not to statutory
authorities like NDMC and Calcutta Port Trust. In any event, in none of
the judgments cited before us the import and significance of Article 112 of
the Act, 1963 has been considered.”
19. Pertinently, the Supreme Court while rejecting a challenge to the
aforenoted decision of Division Bench, held that the period of limitation
would be such as would be applicable in case a civil suit for recovery is
filed. The Supreme Court also distinguished the decision in Kalu Ram
(Supra) by stating that the said case pertained to a municipal corporation
which was a State for the purpose of Article 12 only, while the respondent in
G.R. Gupta (Supra) being Lok Sabha Secretariate was held to be one
wherein Article 112 of the Schedule to the Limitation Act would apply. The
relevant extract is reproduced below: –
A perusal of the aforesaid extract from the judgment would show that the
period of limitation would be such which would be applicable if a civil suit
for recovery is to be filed. That was a case of recovery of arrears of rent
by a Municipal Corporation, which is a State for the purpose of Article 12
of the Constitution only. The reference be made to the judgments of this
Court reported as Mohd. Hadi Raja v. State of Bihar & Anr.,(1998) 5 SCC
91 and Central Warehousing Corporation v. Muncipal Corporation,
(1994) Supp 3 SCC 316. The expression State includes three pillars falling
within Part V of the Constitution such as Executive, Legislature and
Judiciary…
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20. Due reference in this regard may be made to the Decision of the
Supreme Court in BSNL v. Pawan Kumar Gupta7 , wherein it was held as
follow: –
“11. …The expression “Central Government” under the General Clauses
Act is clearly defined, which relevant provision is extracted in the afore-
stated portion of this judgment. By a reading of the afore-stated definition,
by no stretch of imagination it can be construed that the appellant
Company which is registered under the Companies Act, though the share
capital of the Company owned in the name of the President is 100%, it
cannot be construed as the Central Government for the reason that the
appellant Company by registration under the Companies Act, no doubt it
is under the control of the Central Government as it is financed and its
administration is under the absolute control of the Central Government,
nonetheless, it shall not be construed as the Central Government for the
reason that the appellant Company is a separate legal entity. It also
cannot claim that it is entitled to the benefit under Article 112 of the
Limitation Act on the ground that a debt recoverable from the subscriber
is an actionable claim in terms of Section 3 of the TP Act, even if the same
has been transferred under Section 130 of the TP Act by execution of the
Office Memorandum, referred to supra, thereby vesting in it the rights and
the remedies vis-à-vis the same…
12….By a careful reading of the aforesaid Article, it makes abundantly
clear, that a suit can be instituted by or on behalf of the Central
Government. It is not the case of the appellant herein that it has filed the
suit on behalf of the Central Government. This is for the reason that the
appellant Company has instituted the suit on the basis of the instrument
of Office Memorandum wherein DoT has transferred its assets and
actionable claims. It cannot be said that it has filed the suit on behalf of
the Central Government because the appellant-plaintiff is a company, a
distinctly independent and separate entity. Therefore, the reliance placed
upon the aforesaid Article 112 of the Limitation Act to claim that there
would be thirty years of limitation period as the asset transferred is an
actionable claim due to DoT is wholly misconceived in law.
13. The other argument advanced by the learned Senior Counsel on
behalf of the appellant Company that it is an agency or instrumentality
under the Central Government which falls within the inclusive definition
as defined under Section 3(8) of the General Clauses Act is wholly
misconceived for the reason that Article 112 of the Limitation Act speaks
of the Central Government or the State Government. Its agencies or
instrumentalities are not incorporated under Article 112 of the
Limitation Act. Such an argument is contrary to the Constitution Bench
judgment of this Court in Padma Sundara Rao v. State of T.N. [(2002) 37
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SCC 533] In para 14 of the said judgment it is categorically stated that the
legislative casus omissus cannot be supplied by judicial interpretative
process and the Court cannot do the legislative functions…”
21. In the present case, the application under Section 7 of the PP Act
seeking damages from 01.04.1998 onwards came to be filed by the
respondent on 11.02.2011. Since Article 112 would not be applicable to the
respondent, the limitation period which would apply is three years. It is thus
clear that claims of the respondent are time-barred and the impugned order,
in so far as it holds that Limitation Act would not apply to the proceedings
under Section 7(2) of the PP Act, is set aside.
22. Consequently, the present petition is allowed.
MANOJ KUMAR OHRI
(JUDGE)
JULY 03 , 2025
ry/na
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