Delhi District Court
Sach Services Pvt. Ltd vs Aluplast India Pvt. Ltd on 27 January, 2025
IN THE COURT OF MS SAVITA RAO, DISTRICT JUDGE
COMMERCIAL COURT-01, SOUTH ,
SAKET COURTS, DELHI
CS (Comm) No. 2/2022
DLST010000382022
&
CS (Comm) No. 392/2022 (Counter Claim)
DLST010057532022
In the matter of :
Sach Services Pvt. Ltd.
Through its Authorized Representative
Having its Registered Office At :
S-220, First Floor, Greater Kailash-2
New Dlhi - 110048
............................. Plaintiff
Versus
Aluplast India Pvt. Ltd.
Through its Director
Having its Registered office At:
Unit no. 29 & 30, Ground Floor,
Rectangle -1, D-4 District Centre
Saket, New Delhi - 110017
................. Defendant/Counter Claimant
Date of Institution of Suit : 03.01.2022
Date of Institution of Counter Claim: : 04.07.2022
CS (Comm) No. : 02/2022 & 392/2022 1/81
Date of Arguments : 29.08.2024, 15.10.2024
22.10.2024,07.11.2024,
12.12.2024, 10.01.2025
22.01.2025 & 24.01.2025
Date of Judgment : 27.01.2025
JUDGMENT
1. This judgment shall dispose off suit bearing CS (Comm)
No. 2/2022 filed by plaintiff as well as counter claim bearing CS
(Comm) No. 392/2022 filed by defendant/counter claimant.
2. Plaintiff has filed the suit for recovery in sum of Rs.
25,44,420/- (Rs. Twenty Five Lacs Forty Four Thousand Four
Hundred and Twenty Only) against the defendant on the facts
that plaintiff is absolute and lawful owner of property bearing no.
C-44, DDA Shed, Okhla Industrial Area, Phase-1, New Delhi-
110020. Defendant was inducted as tenant vide lease agreement
dated 01.03.2019 for ground floor and first floor of the said
property on monthly rent of Rs. 1,82,658/- per month exclusive
of water and electricity charges. Parties mutually decided not to
register the said lease agreement as the parties were having good
cordial business relations with each other and defendant had
assured plaintiff with respect to absolute and full compliance of
terms of lease agreement. Tenancy period was for two years
commencing from 01.03.2019 with lock-in period of two years
i.e. 24 months and in case defendant vacates the premises or
terminates the said lease before expiry of the lock-in period of 24
months, defendant was required to pay rent for the entire six
months. Interest Fee Security Deposit equivalent to two months
rent amounting to Rs. 3,65,316/- was also deposited by the
defendant.
3. Plaintiff, during entire period of said tenancy, raised
monthly bills/invoices for the monthly rent and same were
CS (Comm) No. : 02/2022 & 392/2022 2/81
supplied to defendant through emails and also by hand.
Defendant did not pay rent for the month of January and
February 2021 despite raising of invoices by the plaintiff.
Plaintiff visited the leased premises in second week of February
2021 to inspect the leased premises and to collect the rent, when
it was revealed that defendant had vacated the leased premises
before the lock-in period of 24 months, without giving any
advance notice or intimation of the same to the plaintiff or its
employees. Subsequently keys of the premises were also handed
over to the plaintiff’s Director. However, outstanding rent for the
months of January and February 2021 was not cleared and
plaintiff was asked to deduct the same from Security Deposit to
which plaintiff refused. It was also revealed to plaintiff that
defendant had caused considerable and extensive damages to the
leased premises which required thorough and extensive repairs
and restoration work. Plaintiff undertook the restoration and
repair work for which he incurred cost of Rs. 10 lacs.
4. Legal notice dated 22.02.2021 was issued to the defendant
which was replied by defendant vide reply dated 15.03.2021,
followed by issuance of two other legal notices upon the plaintiff
as well as filing of police complaint against the plaintiff’s
Director namely Mr. Arun Sharma. Payment of outstanding
amount was not made by defendant despite repeated requests
made by plaintiff.
5. Plaintiff initiated “Pre-Institution Mediation” proceedings
and filed an application for Mediation before the competent
authority under Rule 2 (c) of The Commercial Courts (Pre-
Institution) Mediation and Settlement Rules, 2018 wherein Non-
Starter Report was issued by the concerned authority and the
plaintiff was constrained to file the instant suit.
CS (Comm) No. : 02/2022 & 392/2022 3/81
6. After filing of the suit, written statement as well as
counter claim bearing CS No. 392/2022 was filed by defendant.
Relationship of lessor and lessee between the parties was
admitted by defendant. However, it was stated that the present
suit for money decree is not maintainable as it is based on an
unregistered document which is compulsorily registrable under
law, besides being insufficiently stamped, therefore, not
admissible in evidence. It was stated that the document, which is
a lease agreement and which does not contemplate any other
collateral transaction, cannot be received as evidence of any
transaction affecting the property to which it relates to. The
money decree sought in the suit is based entirely on alleged terms
and condition of this document which cannot be received in
evidence and the suit fails on this ground alone. Besides that, the
lease agreement is insufficiently stamped as per requirement of
law. As a consequence, as per section 35 of Indian Stamp Act, the
lease agreement is inadmissible in evidence for placing any
reliance or seeking enforcement of any of the terms contained
therein.
7. It was further stated that without prejudice to submission
of admissibility of lease agreement, even if the lease agreement
was to be received in evidence, the claims of the plaintiff were
not maintainable. As submitted, as regards the claim for unpaid
rent for January and February 2021, the lease agreement
explicitly provided for adjustment of arrears from the security
deposit at or after the stage of handing back peaceful possession
to the plaintiff (lessor) and the plaintiff’s assertions to the
contrary are in the teeth of the explicit language of the
agreement. It was further stated that defendant during its stay at
the premises, had spent Rs. 12,19,540/- for the windows, doors,
and shutter of the premises. Further, Director of plaintiff
CS (Comm) No. : 02/2022 & 392/2022 4/81
company is the wife of Mr. Arun Sharma, the then Business Head
of the defendant. Mr. Sharma based on his relationship with the
plaintiff got expensive equipment/items installed at the premises
for his personal use at the expense of the defendant, amounting to
Rs. 25,00,000/-.
8. In August 2020, defendant decided to not renew the lease
agreement and therefore sent an email to the plaintiff informing it
of this decision well in advance and also requested plaintiff to
adjust the rent for the months of December 2020 to February
2021 from the security deposit. Plaintiff acknowledged
defendant’s decision to not continue in the premises but denied
adjustment of rent from the security deposit. Defendant’s request
to provide a counter offer for the windows, doors and shutter of
the premises costing Rs. 12,19,540/- was also declined by the
plaintiff, besides denial for return of the fridge and projector on
the ground that they were being used by Mr. Arun Sharma, and
defendant should liason with him in this regard.
9. In January 2021, defendant moved few items out of the
premises. However, despite agreeing to the defendant’s right to
move the air conditioner from the premises vide email dated
30.12.2020, defendant’s representative was precluded from
shifting the air conditioners installed at the premises by one of
the Directors of plaintiff company on the ground that defendant
could remove its property only upon payment of outstanding
rent. Thereafter despite several communications between the
parties, defendant was not allowed to remove its belongings from
the leased premises. Plaintiff called upon the defendant for
handing over of the keys of premises as well as remotes for the
window blinds and outstanding rent. Defendant’s request to
adjust the rent of January and February 2021 from the security
deposit was out rightly refused by the plaintiff.
CS (Comm) No. : 02/2022 & 392/2022 5/81
10. It was further stated that on 22 February 2021, to the
defendant’s surprise, even prior to the completion of the peaceful
handover of keys and expiry of lease period, plaintiff issued a
legal notice to defendant raising baseless allegations and making
frivolous claims amounting to Rs. 25,00,000/-. Said legal notice
indicated that plaintiff had inspected the premises to calculate
cost of Rs. 10,00,000/- for the repair and restoration work, which
showed that contrary to the plaintiff’s position, plaintiff had
already forcibly broken into the premises to illegally take over
possession. Later on, it was revealed that plaintiff had proceeded
to enter into a new lease agreement dated 22.2.2021, with a third
party (Trigon Digital Solutions Pvt. Ltd.) in respect of the first
floor of the premises even before the expiry of the Lease
Agreement with defendant.
11. Even as on date, items including air conditioner, fridge,
and the projector remain installed at the leased premises. These
articles were purchased by the defendant, however, the defendant
was deprived from removing these items, out of the leased
premises. Plaintiff has unjustly enriched itself on the defendant’s
expense by illegally unjustifiably retaining these articles and
providing as part of the package, in the lease to ‘Trigon Digital’.
On 25 February 2021, defendant sent an email to the plaintiff,
informing the defendant’s intent to visit the premises at 2:30 p.m.
on 26 February 2021 to conclude peaceful handover of the keys
with request to sign a letter acknowledging the handover of the
same. Plaintiff though did not object to defendant’s visit to the
premises but raised allegations of foul play and asked the
defendant to comply with the legal notice.
12. On 26 February 2021, defendant’s representative alongwith
their lawyers visited the premises to handover the keys to the
plaintiff when it was confirmed that plaintiff had illegally broke
CS (Comm) No. : 02/2022 & 392/2022 6/81
open the locks of both the floors and had in fact leased out the
first floor to a third party Trigon Digital, in serious violation of
law. While the ground floor was locked with new locks installed
by the plaintiff, first floor was found open for maintenance work
being carried out. It was also noticed that AC ducting and
sophisticated remote controlled sunblind system installed by the
defendant was still in place on the first floor and these were
given to Trigon Digital as part of the lease package. It was also
noticed that despite the factual position set out above, the logo of
Aluplast continued to remain on the building facade. Further, one
Mr. Rahul who represented himself as the ‘ Regional Manager’ of
the plaintiff, denied entry to the defendant’s representative and
lawyers in the building, extended threats and refused to accept
the keys or to sign any document. The events that transpired on
26th February 2021, as stated, were captured by the defendant’s
representative on photograph/video and defendant reserved its
right to refer to them at the appropriate stage, if necessary
alongwith evidence of eye witness.
13. With regard to claim of plaintiff for six month’s rent, it
was stated that record enclosed with the suit itself demonstrates
that the trigger for payment of such six month’s rent i.e.
(termination of the lease or the vacation of the lease premises
prior to 24 months lock-in period) had not occurred. The
defendant was in possession of the property till the expiry of the
Lease Agreement. With regard to claim of cost of Rs. 10,00,000/-
for allegedly restoring the property to the original position, it was
stated that same is nothing more than an arbitrary figure and a
bald assertion, unsupported by any documents or evidence
whatsoever, contemporaneous or otherwise. Therefore, the suit in
itself is nothing more than an attempt to arm-twist the defendant
and is entirely baseless.
CS (Comm) No. : 02/2022 & 392/2022 7/81
14. In counter claim, defendant sought recovery of Rs.
12,19,078.85 towards the cost of doors, windows and shutters
installed by the counter claimant/defendant as well as decree in
sum of Rs. 6,69,473/- as the amount equivalent to the cost of air-
conditioners, refrigerator and projector installed by defendant.
Damages were also sought for unjust and unlawful
gains/earnings by the plaintiff at the defendant’s expense by
utilizing the defendant’s items/equipment for its benefit/use and
depriving the defendant’s possession of its items/equipment with
effect from April 2021 till date.
15. In rejoinder/reply to written statement as well as counter
claim, contents of written statement/counter claim were denied
and those of plaint were reiterated and reaffirmed. It was stated
that counter claim is only a counter blast and an after thought to
the civil suit filed by the plaintiff against the defendant. Upon the
receipt of legal notice dated 22.02.2021, defendant conjured and
fabricated a false story of goods and material lying in the leased
premises, whereas the defendant in fact, had taken back all his
goods and material lying in the leased premises when the
defendant vacated the leased/suit premises in February 2021.
Prior to filing of the present suit by the plaintiff, defendant did
not initiate any legal action against the plaintiff for more than one
year after the alleged usurping of the defendant’s alleged goods.
It was only after having been summoned in the present case that
the defendant for the first time has initiated legal action against
the plaintiff in respect of goods in question.
16. It was further submitted that defendant is making an
attempt at covering his own misgivings of the acts of
breaching/violating the lease terms and having failed to clear the
outstanding amount due and payable to the plaintiff, having
vacated the leased premises before the expiry of lock-in period of
CS (Comm) No. : 02/2022 & 392/2022 8/81
24 months, and having failed to pay the monthly rent for the
month of January 2021 and February 2021, as well as causing
damages to the leased premises.
17. Following issues were framed vide order dated 19.01.2024:
(1) Whether the plaintiff is entitled for recovery of the suit
amount, as claimed? OPP
(2) Whether the defendant/counter claimant had installed
equipments at the suit premises during the continuation of
tenancy as detailed in written statement and counter claim and
the same were mis-appropriated by the plaintiff? OPD/CC
(3) If answer to issue no.2 is in affirmative, whether the
counter claimant/defendant is entitled for recovery of amount
equivalent to the cost of the equipments/goods installed by the
counter claimant/defendant at the suit premises and the quantum
of the same? OPD/CC
(4) Whether the defendant/counter claimant is entitled for
adjustment of two months of rent amount of Rs. 4,48,314/- from
the security deposit? OPD/CC
(5) Relief
18. Plaintiff examined its AR Sh. Arun, Sharma, in support of its
case, as PW1. He filed his evidence by way of affidavits Ex.
PW1/A and Ex. PW1/A1 and relied upon following documents:-
1. Photocopy of lease deed dated 01.03.2019 is Ex. P-1.
2. Photocopy of invoices for the rent of January 2021 and
February 2021as Ex. P2 (OSR) and Ex. P3 (OSR)
respectively.
3. Printouts of emails exchanged between the plaintiff and
defendant as Ex. P-4 to Ex. P-21 .
4. Office copy of legal notice dated 22.02.2021 issued by
plaintiff to defendant as Ex. P-22.
CS (Comm) No. : 02/2022 & 392/2022 9/81
5. Original Postal receipt of legal notice dated 22.02.2021 as
Ex. P-23.
6. Original reply dated 15.03.2021 issued by defendant to
plaintiff as Ex. P-24.
7. Copy of reply dated 02.03.2021 issued by defendant to the
plaintiff as Ex. P-25.
8. Copy of reply dated 26.10.2021 issued by defendant to
plaintiff as Ex. P-26.
9. Photocopy of Certificate of Incorporation of plaintiff as
Ex. PW1/27 (OSR).
10. Certified copy of resolution passed by plaintiff dated
06.12.2021 as Ex. PW1/28.
11. Copy of bills in respect of the window/door frames and
panels glasses as Ex. PW1/29 (colly).
12. Certified copy of Ledger account of defendant maintained
by plaintiff as Ex. PW1/30.
13. Printouts of plaintiff’s bank statement vide account no.
3908 for the period 01.04.2019 to 31.04.2021 as Ex.
PW1/31.
14. Copies of bills incurred for renovation and installation of
AC as Ex. PW1/32 (colly) (OSR).
15. Certificates under section 65-B of Indian Evidence Act in
respect of electronic records as Ex. PW1/33 and Ex.
PW1/34.
19. PW2 is Sh. Ajeet Singh, MTS from Sub-Registrar-V,
Mehrauli who brought the summoned record i.e. certified copy of
Lease Deed dated 17.02.2021 and exhibited the same as Ex.
PW2/1 (OSR).
20. In defence, Sh. Manoj Kumar Ambalal Shah, AR/Head
Finance of Defendant company was examined as DW1. He filed
CS (Comm) No. : 02/2022 & 392/2022 10/81
his evidence by way of affidavits Ex. DW1/A and Ex. DW1/A1 and
relied upon following documents:-
1. Email conversations are Ex. D1 to Ex. D12 and D14 to D17.
2. Legal Notice dated 22.02.2021 is Ex. D13.
3. Reply dated 15.03.2021 to legal notice of plaintiff is Ex.
D18.
4. Pre-institution settlement notice received from South District
Legal Services Authority is Ex. D19.
5. Copy of legal notice dated 26.03.2021 is Ex. D20.
6. Copy of Board Resolution passed by defendant company
dated 20.04.2022 is Ex. DW1/22.
7. Affidavits/certificates u/s 65 B of Indian Evidence Act is Ex.
DW1/23 and Ex. DW1/25.
8. Copy of Ledger as Ex. DW1/27.
9. Certificate under section 65-B Indian Evidence Act as Ex.
DW1/28.
10. Printouts of emails dated 29.12.2020, 30.12.2020,
02.02.2021, 10.02.2021 and 22.02.2021 as Ex. DW1/29 to
Ex. DW1/34 respectively.
11. Copy of reply dated 15.03.2021 to the legal notice dated
22.02.2021 as Ex. DW1/35.
12. Certificate under section 65-B as Ex. DW1/36.
21. Sh. Deepak Singh, Executive Technical Support from the
office of defendant was examined as DW2 who filed his evidence
by way of affidavit Ex. DW2/A and relied upon following
documents:-
1. Copy of Board Resolution of Defenant as Ex. DW2/1.
2. Certificate under section 65-B of Indian Evidence Act as Ex.
DW2/2.
3. Copy of invoices as Mark-A to Mark-K.
4. Copy of Letter dated 20.01.2016 as Mark-L.
CS (Comm) No. : 02/2022 & 392/2022 11/81
Issue-wise findings are as under:-
22. Issues No. 1 & 4 :
Admissibility of Lease Deed: Plaintiff claimed that
defendant was inducted as a tenant by the plaintiff for the ground
floor and the first floor of the said property on a monthly rent of
Rs. 1,82,658/- (Rupees One Lakh Eighty Two Thousand Six
Hundred Fifty Eight Only), vide lease agreement dated
01.03.2019, Ex. P-1 duly executed between Plaintiff and the
Defendant Ex. P-1. Tenancy period as per the lease agreement
was for two years commencing from 01.03.2019 with lock-in
priod of two years ie. 24 months and the lease agreement
provided that in case defendant vacates the premises or
terminates the said lease before expiry of the lock-in period of 24
months, defendant was required to pay rent for the entire six
months. Defendant also deposited the Interest Fee Security
Deposit equivalent to two months rent amounting to Rs.
3,65,316/- .
23. Though the relationship of landlord and tenant between the
parties was not disputed on record, however the admissibility of
lease deed was disputed on behalf of defendant, same being
unregistered document. Ld. counsel for defendant submitted that
the lease agreement of 2019 was for a period of 2 years, thus
making it a compulsorily registrable instrument as per sec.17(1)
(d) of the Registration Act, 1908 (Registration Act), leading to
the non admissibility of such transaction affecting such
immovable property. Ld. counsel for defendant submitted:
(i) that, plaintiff has argued that the Lease Agreement is a
document acknowledged to be in existence by way of the various
emails and invoices on record before this Court and as such can
be used for a collateral purpose, “which in the present case is to
prove existence of landlord-tenant relationship and existence ofCS (Comm) No. : 02/2022 & 392/2022 12/81
terms of lease” . However, correspondence and invoices cannot
be used to prove/lead the terms contained in an unregistered lease
agreement. It is trite that terms of an unregistered lease deed are
not considered collateral transactions/purpose. Therefore, they
cannot be relied on, to evidence the creation, declaration,
assignment or extinguishment of any right pertaining to the
immovable property which the unregistered document was the
subject of, which in the present case, is the Leased Premises”.
(ii) that, the mandatory legal sequitur of non-registration of
a lease agreement is the application and operation of section 106
of Transfer of Property Act, 1882 which states that in the absence
of any contract, a lease of immovable property for other than
agricultural and manufacturing purposes shall be deemed to be a
lease from month to month, terminable by 15 days’ notice.
Consequently, no other conditions can be read into such lease and
in the present case the Plaintiff cannot seek the “rent of the entire
period of 6 months as such a clause is unenforceable .
24. Reliance was placed upon following:
a) K.B. Saha & Sons (P) Ltd. v. Development Consultant
Ltd., (2008) 8 SCC 564 :
” 30. In Haran Chandra Chakrvarti Vs. Kaliprasanna Sarkar [AIR
1932 Cal 83(2)], it was held that the terms of a compulsorily registrable
instrument are nothing less than a transaction affecting the property
comprised in it. It was also held that to use such an instrument for the
purpose of proving such a term would not be using it for a collateral purpose
and that the question as to who is the tenant and on what terms he has been
created a tenant are not collateral facts but they are important terms of the
contract of tenancy, which cannot be proved by admission of an unregistered
lease-deed into evidence”.
” 32. In Bajaj Auto Limited vs. Behari Lal Kohli [AIR 1989 SC
1806] , this Court observed that if a document is inadmissible for non-
registration, all its terms are inadmissible including the one dealing with
landlord’s permission to his tenant to sub-let. It was also held in that
decision that if a decree purporting to create a lease is inadmissible in
evidence for want of registration, none of the terms of the lease can be
admitted in evidence and that to use a document for the purpose of proving
an important clause in the lease is not using it as a collateral purpose. Again
this court in Rai Chand Jain Vs. Chandra Kanta Khosla [AIR 1991 SC 747]
reiterated the above and observed in paragraph 10 as under : –
CS (Comm) No. : 02/2022 & 392/2022 13/81
“10…….the lease deed Ex. P1 dated 19th May, 1978 executed both by
the appellant and the respondent i.e. the landlady and the tenant, Rai
Chand Jain, though unregistered can be considered for collateral
purposes and as such the findings of the Appellate Authority to the effect
that the said deed cannot be used for collateral purposes namely to show
that the purpose was to lease out the demised premises for residential
purposes of the tenant only is not at all legally correct. It is well settled
that unregistered lease executed by both the parties can be looked into
for collateral purposes”.
b) Satish Chand v. Govardhan Das, 1984 1 SCC 369
The unregistered draft lease agreement is clearly inadmissible in
evidence under Section 49 of the Registration Act, except for the collateral
purpose of proving the nature and character of possession of the defendants.
The document is admissible under the proviso to Section 49 only for a
collateral purpose of showing the nature and character of possession of the
defendants. The proviso to Section 49 was however not applicable in the
present case inasmuch as the terms of a lease are not a “collateral purpose”
within its meaning. It follows that the unregistered draft lease agreement is
inadmissible in evidence to prove the transaction of lease. It is also
ineffectual to create a valid lease for a renewed term of nine years for want
of registration as required under Section 17(1)(d) of the Registration Act”.
c) Amar Chand Talwar and Ors v Export Promotion
Council, (1999) 77 DLT 809:
“Section 107 of the Transfer of Property Act postulates that a lease of
immovable property from year-to-year, or for any term exceeding one year,
or reserving a yearly rent, can be made only by a registered instrument. In
the absence of registered instrument, it must be a monthly lease. In view of
the said provisions, since the lease was for a period exceeding one year, it
could only have been extended by a registered instrument executed by the
plaintiffs and the defendant. In the absence of registered instrument, the
lease shall be deemed to be “lease from month-to-month”. The unregistered
lease deed dated 3.6.1986 is clearly inadmissible in evidence under Section
49 of the Registration Act, except for the collateral purpose of proving the
nature and character of possession of the defendant. The proviso to Section
49 of the Registration Act is not applicable in the present case inasmuch as
the terms of a lease are not a “collateral purpose” within its meaning. (Satish
Chand v. Govardhan Das, ). Thus, the lease deed dated 3.6.1986 is
inadmissible in evidence to prove the transaction of lease. It was also
ineffectual to create a valid lease for a renewed term for want of registration
under Section 17 of the Registration Act. Consequently, I find and hold that
in the instant case, the lease shall be deemed to be a lease from month-to-
month, terminable, on the part of either lessor or lessee by 15 days’ notice
under Section 106 of the Transfer of Property Act expiring with the end of a
month of the tenancy”.
d) Ganpat Mal Dhariwal v. Sukhraj, 2001 SCC OnLine Raj
“31. The legal position regarding collateral purpose has come out is
that this expression does not permit the party to establish by the document in
CS (Comm) No. : 02/2022 & 392/2022 14/81
question that it created or declared or assigned or extinguished any right in
the immovable property”.
e) Sanjiva Row’s The Registration Act, 7th Ed. (1982) Law
Publishers, Allahabad [Pg 497, 508, 511, 515-517]:
” Page 511:
(18) Terms of instruments: The terms of a compulsorily registrable
instrument are nothing less than a transaction affecting the property
comprised in it. To use such an instrument for the purpose of proving such a
term would not be using it for a collateral purpose. The question as to who is
the tenant and important terms of the contract of tenancy are not collateral
facts. They are important terms of the contract of tenancy, which cannot be
proved by admission of an unregistered lease deed into evidence. Condition
of a contract constitute part of the terms of the contract.
Page 515:
(6) Lease- A lease of immovable property, which is compulsorily
registrable, if not registered, is void altogether and cannot be received in
evidence to prove the transaction affecting the immovable property to which
it relates or any of the terms of the transaction. An unregistered document
purporting to be a lease of immovable property is not admissible in evidence
to prove the rent agreed to be paid. It cannot be admitted in evidence to
prove that the property to which it relates was let for a term of years. In a
suit for damages based on an indemnity clause contained in a compulsorily
registrable but unregistered lease, the lease deed cannot be looked at if the
indemnity clause is inseparable from the lease. If a deed of lease is
inadmissible in evidence for want of registration, it cannot be received in
evidence to prove an obligation contained therein to remove seeds from the
lease lands when the obligation was a condition of the tenancy and a
condition for fixing the low rent, nor can secondary evidence be adduced to
prove the obligations. If an agreement imposes a limitation on the right
created in favour of the lessee under a registered lease, in order to make the
agreement effective, it is necessary under section 17 (b), Registration Act,
that the agreement should be registered . The mere fact that the agreement
and the lease form part of the same transaction cannot dispense with the
necessity of registration of the agreement and if it is not registered, it is
inadmissible in evidence. Thus, a document which embodies a contract for
variation of rent payable in respect of a lease is in essence a lease and is
compulsorily registrable. If it is not registered in accordance with the law, it
is not only admissible in evidence but it does not constitute a valid and
operative contract between the parties.
25. Ld. counsel for defendant also submitted that even
otherwise the said lease deed was insufficiently stamped
document. It was brought on record that vide order dated 18
October 2023, submissions of the defendant was noted that the
the lease deed being relied upon by the Plaintiff was
CS (Comm) No. : 02/2022 & 392/2022 15/81
insufficiently stamped and the Plaintiff was directed to place the
original of the 2019 Lease Agreement on record. Plaintiff had
sought time for production of the original lease deed dated
01.03.2019 executed between the parties. It was further
submitted by Ld. counsel for defendant that with a view to avoid
payment of stamp duty and penalty, plaintiff submitted to this
court that original lease deed has been lost by the plaintiff. It was
submitted that even if the original copy of lease agreement had
been lost, now it is not possible for a copy of 2019 lease
agreement to be validated by impounding. Section 17 r/w section
35 of the Stamp Act states that only original instruments may be
validated by stamping. Plaintiff cannot rely on a copy of the same
to circumvent the requirement laid down therein, in ignorance of
law.
26. Reliance was placed upon following:
2009 SC 1989 :
” 49. Effect of non-registration of documents required to be
registered.-
No document required by section 17 or by any provision of the Transfer
of Property Act, 1882 (4 of 1882), to be registered shall–
(a) affect any immovable property comprised therein, or
(b) confer any power to adopt, or
(c) be received as evidence of any transaction affecting such property
or conferring such power, unless it has been registered:
Provided that an unregistered document affecting immovable
property and required by this Act or the Transfer of Property Act,
1882 (4 of 1882), to be registered may be received as evidence of a
contract in a suit for specific performance under Chapter II of the
Specific Relief Act, 1877 (3 of 1877) or as evidence of any collateral
transaction not required to be effected by registered instrument.
28. In Sanjeeva Reddi v. Johanputra Reddi, [ AIR 1972 A.P. 373 ], it has
been held :-
CS (Comm) No. : 02/2022 & 392/2022 16/81
“9. While considering the scope of Section 35 of the Indian
Stamp Act we cannot bring in the effect of non-registration
of a document under Section 49 of the Indian Registration
Act. Section 17 of the Indian Registration Act deals with
documents, the registration of which is compulsory
and Section 49 is concerned only with the effect of such
non-registration of the documents which require to be
registered by Section 17 or by any provision of the Transfer
of Property Act. The effect of non-registration is that such a
document shall not affect any immovable property covered
by it or confer any power to adopt and it cannot be received
as evidence of any transaction affecting such property or
conferring such power. But there is no prohibition
under Section 49 to receive such a document which requires
registration to be used for a collateral purpose i.e. for an
entirely different and independent matter. There is a total
and absolute bar as to the admission of an unstamped
instrument whatever be the nature of the purpose or however
foreign or independent the purpose may be for which it is
sought to be used, unless there is compliance with the
requirements of the provisos to Section 35. In other words if
an unstamped instrument is admitted for a collateral
purposes. It would amount to receiving such a document in
evidence for a purpose which Section 35 prohibits.
(b) T. Bhaskar Rao Vs. T. Gabriel 1981 SCC Online AP4:
“5. Section 35 of the Stamp Act mandates that an instrument
chargeable with duty should be stamped so as to make it admissible in
evidence. Proviso A to Section 35 of the Stamp Act enables a document to
be received in evidence on payment of stamp duty and penalty if the
document is chargeable, but not stamped or on payment of deficit duty and
penalty, if it is insufficiently stamped. The bar against the admissibility of an
instrument which is chargeable with stamp duty and is not stamped is of
course absolute whatever be the nature of the purpose, be it for main or
collateral purpose, unless the requirements of proviso (A) to Section 35 are
complied with. It follows that if the requirements of proviso (A) to Section
35 are satisfied, then the document which is chargeable with duty, but not
stamped, can be received in evidence.
7. It is now well settled that there is no prohibition under Section
49 of the Registration Act, to receive an unregistered document in evidence
for collateral purpose. But the document so tendered should be duly
stamped or should comply with the requirements of Section 35 of the Stamp
Act, if not stamp ed, as a document cannot be received in evidence even for
collateral purpose unless it is duly stamped or duty and penalty are paid
under Section 35 of the Stamp Act”.
(c) Vijay Vs. Union of India 2023 SCC Online SC 1585
“37. We may now consider Section 35 of the Stamp Act which
forbids the letting of secondary evidence in proof of its contents. The
section excludes both the original instrument and secondary evidence of its
contents if it needs to be stamped or sufficiently stamped. This bar as to the
admissibility of documents is absolute. Where a document cannot be
CS (Comm) No. : 02/2022 & 392/2022 17/81
received in evidence on the ground that it is not duly stamped, the secondary
evidence thereof is equally inadmissible in evidence.
38. In relation to secondary evidence of unstamped/insufficiently
stamped documents, the position has been succinctly explained by this
Court in Jupudi Kesava Rao (supra) wherein it dealt with an issue, i.e., 19-
Civil Appeal No. 4910 of 2023 whether reception of secondary evidence of
a written agreement to grant a lease is barred by the provisions of Sections
35 and 36 of the Stamp Act and answered it in affirmative. It observed:
“12. The Indian Evidence Act, however, does not purport to
deal with the admissibility of documents in evidence which
require to be stamped under the provisions of the Indian
Stamp Act.
13. The first limb of Section 35 clearly shuts out from
evidence any instrument chargeable with duty unless it is
duly stamped. The second limb of it which relates to acting
upon the instrument will obviously shut out any secondary
evidence of such instrument, for allowing such evidence to
be let in when the original admittedly chargeable with duty
was not stamped or insufficiently stamped, would be
tantamount to the document being acted upon by the person
having by law or authority to receive evidence. Proviso (a) is
only applicable when the original instrument is actually
before the Court of law and the deficiency in stamp with
penalty is paid by the party seeking to rely upon the
document. Clearly secondary evidence either by way of oral
evidence of the contents of the unstamped document or the
copy of it covered by Section 63 of the Indian Evidence Act
would not fulfil the requirements of the proviso which
enjoins upon the authority to receive nothing in evidence
except the instrument itself. Section 25 is not concerned with
any copy of an instrument and a party can only be allowed to
rely on a document which is an instrument for the purpose
of Section 35. “Instrument is defined in Section 2(14) as
including every document by which any right or liability is,
or purports to be created, transferred, limited, extended,
extinguished or recorded. There is no scope for the inclusion
of a copy of a document as an instrument for the purpose of
the Stamp Act.
If Section 35 only deals with original instruments and not
copies, Section 36 cannot be so interpreted as to allow
secondary evidence of an instrument to have its benefit.”
(Emphasis supplied) 20-Civil Appeal No. 4910 of 2023
39. This Court, in Hariom Agrawal v. Prakash Chand Malviya25,
reiterated the principle laid down in Judupi Kesava Rao (supra) and
observed that:
“10. It is clear from the decisions of this Court and a plain
reading of Sections 33, 35 and 2(14) of the Act that an
instrument which is not duly stamped can be impounded and
when the required fee and penalty has been paid for such
instrument it can be taken in evidence under Section 35 of the
Stamp Act. Sections 33 or 35 are not concerned with any copy
of the instrument and party can only be allowed to rely on theCS (Comm) No. : 02/2022 & 392/2022 18/81
document which is an instrument within the meaning
of Section 2(14). There is no scope for the inclusion of the
copy of the document for the purposes of the Stamp Act. Law
is now no doubt well settled that copy of the instrument
cannot be validated by impounding and this cannot be
admitted as secondary evidence under the Stamp Act, 1899.”
40. Thus, if a document that is required to be stamped is not
sufficiently stamped, then the position of law is well settled that a copy of
such document as secondary evidence cannot be adduced”.
27. Ld. counsel for defendant also submitted that though the
document i.e. lease deed Ex. P-1 had been exhibited during the
course of trial, it does not remedy the bar under section 49 of
Regitration Act and 35 of the Stamp Act. Reliance was placed
upon Paul Rubber Industries Vs. Amit Chand Mitra 2023 SCC
Online SC 1216 wherein it was held that ” The parties cannot by
implied consent confer upon such documents its admissibility” . It was
submitted that this document be de-exhibited and reliance be
struck off from the said lease agreement.
28. Per contra, it was submitted by Ld. counsel for plaintiff
that defendant’s primary defence is non-registration and
insufficient stamping of the lease deed dated 01.03.2019 (Ex.PI)
and hence the same could not be read in evidence. However, it is
trite law that insufficient unregistered document/lease deed can
be read in evidence for collateral purpose which in the present
case is the damage caused to the leased premises and the penalty
for vacation before lock-in period. Further, defendant has not
disputed the existence of landlord-tenant relationship and has
admitted to its liability to pay rent. Ld. counsel for plaintiff
further submitted that the case of the Plaintiff is not entirely
based upon said lease agreement but also on the invoices and
receipt of the invoices raised by the Plaintiff upon the Defendant
vide emails (Ex.P2,Ex.P3,Ex.P4 and Ex.P.5 and the Defendant
has not denied the liability to pay outstanding rent for 2 months,
CS (Comm) No. : 02/2022 & 392/2022 19/81
therefore, the relief in prayer (i) of the suit be granted in favour
the Plaintiff.
29. Ld. counsel for plaintiff relied upon Suleman Haji Ahmed
Umar Vs. P.N. Patel MANU/MH/0036/1933 and N. Qamar Jahan
Begam Vs. Bansi Dhar MANU/OU/0090/1941, wherein interalia
it was observed that :
” 3……… As to the lease the defendant cannot be allowed to contend
that it is inadmissible for want of registration on his part, and at the same
time argue that the plaintiff cannot rely on any oral agreement because the
terms have been reduced to writing in the form of a lease to which ho
objects”.
“6. The lease, in my opinion, is admissible not only as evidence of
part performance of the terms of the agreement contained therein, but also in
order to show that the plaintiff can under Section 53A enforce his right to
claim damages for breach of the agreement as provided by one of its terms.
Both, the letter of February 6, 1924, and the ‘pucca’ lease are admissible and
should be marked as exhibits in the case”.
30. As already noted, relationship of landlord and tenant
between the parties for the relevant period is not disputed fact on
record. Lease deed Ex. P-1 was executed between the parties in
year 2019 and prior thereto in 2016, another lease deed Ex.
DW1/P1 was executed. Parties had entered into relationship of
lessor and lessee by virtue of the lease agreement dated
01.03.2016 which was for the period of 3 years with lock-in
period of 2 years. Subsequent thereto, parties entered into another
agreement vide lease deed dated 01.03.2019 Ex. P-1, for further
period of 2 years with lock-in period of 24 months. In terms of
the lease deed, “if lessee vacates the demised premises or
terminates the lease before the expiry of the lock-in-period of 24
months, then the lessee shall be bound to pay the rent for the
entire period of 6 months”. Based upon the said clause, plaintiff
sought recovery of the unpaid rent for the months of January and
February 2021 and money decree in sum of Rs. 10,95,948/-
being the penalty equivalent to six months rent to be paid by the
defendant.
CS (Comm) No. : 02/2022 & 392/2022 20/81
31. Lease deed of 2016 i.e. Ex. DW1/P1 and the lease deed in
question i.e. Ex. P-1 were admittedly the unregistered
documents. PW1 stated that the cost of the lease registration was
payable by lessee and lessor equally but was never paid by
defendant and since they had cordial relationship with the
defendant for many years, therefore, it was not followed up
seriously. PW1 was put question that it had not paid or deposited
its share of the registration or stamp charges in relation to the
lease deed dated 01.03.2019, to which he answered that bank
statement of plaintiff reflected sufficient balance, having always
been maintained. DW1 was asked whether it ever raised any
objection with the plaintiff regarding non stamping and non
registration of the agreement, to which, he stated that Mr. Arun
Sharma (PW1) was the Director of both the plaintiff and
defendant and it was the mutual decision to not register the same.
Since the Agreement dated 01.03.2016 was not registered, in the
same way, the agreement dated 01.03.2019 was also not
registered. DW1 stated that defendant had not asked the plaintiff
orally or in writing to register and pay the stamp duy for the lease
agreement dated 01.03.2019 as the property in qeustion
belonged to the plaintiff and the plaintiff did not ask the
defendant for registeration of the lease agreement nor did they
ask for payment of stamp duty, hence, there was no question of
payment of stamp duty and registration.
32. Relevant provisions of Transfer of Property Act stipulates
as under:
“105. Lease defined–A lease of immovable property is a
transfer of a right to enjoy such property, made for a certain time,
express or implied, or in perpetuity, in consideration of a price paid
or promised, or of money, a share of crops, service or any other
thing of value, to be rendered periodically or on specified occasionsCS (Comm) No. : 02/2022 & 392/2022 21/81
to the transferor by the transferee, who accepts the transfer on such
terms.
106. Duration of certain leases in absence of written contract
or local usage.–(1) In the absence of a contract or local law or
usage to the contrary, a lease of immovable property for agricultural
or manufacturing purposes shall be deemed to be a lease from year
to year, terminable, on the part of either lessor or lessee, by six
months’ notice; and a lease of immovable property for any other
purpose shall be deemed to be a lease from month to month,
terminable, on the part of either lessor or lessee, by fifteen days’
notice.
(2) Notwithstanding anything contained in any other law for
the time being in force, the period mentioned in sub-section (1)
shall commence from the date of receipt of notice.
(3) A notice under sub-section (1) shall not be deemed to be
invalid merely because the period mentioned therein falls short of
the period specified under that sub-section, where a suit or
proceeding is filed after the expiry of the period mentioned in that
sub-section.
(4) Every notice under sub-section (1) must be in writing,
signed by or on behalf of the person giving it, and either be sent by
post to the party who is intended to be bound by it or be tendered or
delivered personally to such party, or to one of his family or
servants at his residence, or (if such tender or delivery is not
practicable) affixed to a conspicuous part of the property.]
107. Leases how made.–A lease of immovable property
from year to year, or for any term exceeding one year, or reserving
a yearly rent, can be made only by a registered instrument.
(All other leases of immovable property may be made either
by a registered instrument or by oral agreement accompanied by
delivery of possession).
CS (Comm) No. : 02/2022 & 392/2022 22/81
……………………..
33. Further, in section 108 of Transfer of Property Act, rights
and liabilities of lessor and lessee have been defined in absence
of a contract or local usage to the contrary. Further section 49 of
the Registration Act stipulates the effect of non registration of
documents required to be registered according to which, no
document required by section 17 or by any provision of
the Transfer of Property Act, 1882 (4 of 1882), to be registered
shall–
(a) affect any immovable property comprised therein, or
(b) confer any power to adopt, or
(c) be received as evidence of any transaction affecting
such property or conferring such power, unless it has been
registered:
Provided that an unregistered document affecting
immovable property and required by this Act or the Transfer
of Property Act, 1882 (4 of 1882), to be registered may be
received as evidence of a contract in a suit for specific
performance under Chapter II of the Specific Relief Act, 1877
(3 of 1877) or as evidence of any collateral transaction not
required to be effected by registered instrument.
34. From the provisions of Transfer of Property Act,
Registration Act and principles laid down in the judgments of the
Higher Courts, (noted as supra), a document required to be
registered, if unregistered is not admissible into evidence under
Section 49 of the Registration Act. Such unregistered document
though can be used as an evidence of collateral purpose as
provided in the proviso to Section 49 of the Registration Act.
The collateral transaction, nevertheless, must be independent of,
CS (Comm) No. : 02/2022 & 392/2022 23/81
or divisible from, the transaction to the effect for which the law
requires registration.
35. In the instant matter, the lease deed in question i.e. Ex. P-1
remained unregisterd, in which eventuality, the same can be
considered only for the collateral purpose. Tenancy between the
parties shall be considered on month to month basis.
Nevertheless, as the lease deed was also insufficiently stamped,
therefore, the contents of the same cannot be read in evidence,
even for the collateral purpose, in which eventuality, parties
would be governed by the general principles relating to rights
and liabilities of lessor and lessee, as per section 108 of the
Transfer of Property Act. Besides the reliance placed upon the
authorities (supra) as quoted by Ld. Counsel for defendant,
reliance is also placed upon M/s Paul Rubber Industries Private
Vs. Amit Chand Mitra, arising out of Petition for Special Leave to
Appeal (Civil) No. 15774/2022, wherein it was observed that :
” 1. A document required to be registered, if unregistered is not admissible into
evidence under Section 49 of the Registration Act.
2. Such unregistered document can however be used as an evidence of
collateral purpose as provided in the proviso to Section 49 of the Registration
Act.
3. A collateral transaction must be independent of, or divisible from, the
transaction to effect which the law required registration.
4. A collateral transaction must be a transaction not itself required to be
effected by a registered document, that is, a transaction creating, etc. any right,
title or interest in immovable property of the value of one hundred rupees and
upwards.
5. If a document is inadmissible in evidence for want of registration, none of
its terms can be admitted in evidence and that to use a document for the
purpose of proving an important clause would not be using it as a collateral
purpose.”
36. Reliance is further placed upon Bidyut Sarkar Vs. Kanchilal
Pal (Dead) through its Lrs on 28.08.2024, Civil Appeal nos. 10509-
10510 of 2013 , wherein it was observed that :
“30. ……The document, being insufficiently stamped, was rightfully barred
from being admitted as evidence in the absence of the requisite stamp duty and
penalty being paid and certified by the Collector. The High Court, in treatingCS (Comm) No. : 02/2022 & 392/2022 24/81
this document as admissible without resolving the stamp duty deficiency,
overlooked the statutory mandate under the Stamp Act. As the document is
foundational to the suit, the failure to comply with the statutory requirements
renders the entire claim unenforceable. Consequently, the suit must be
dismissed, as it is based on an instrument that is legally inadmissible as
evidence. The plaintiff cannot claim relief on the basis of a document that has
not satisfied the legal requirements for admissibility”.
37. Claim for Six months Rent: Enforceability of stipulation in
the lease deed pertaining to the payment of six months penalty is
not available to plaintiff. Besides the fact that same is not
enforceable in view of the inadmissibility of the lease deed even
for collateral purpose, even otherwise there does not seem to be
violation of the said term by the defendant in vacating the
premises. While also considering that in view of the
inadmissibility of the lease deed between the parties, the tenancy
was on month to month basis, therefore the defendant could have
vacated the premises after giving prior notice in this regard,
albeit the record suggests that the vacation of the property by the
defendant still was upon the expiry of the period of lease i.e. by
28.02.2020.
38. Vide email dated 17.8.2020, Ex. P-6, defendant had
informed the plaintiff that they will vacate the premises by
28.02.2021. Plaintiff rather in response to the said email, vide its
email dated August 18,2020, acknowledged with regard to
intention of the defendant to vacate the rented premises on
28.02.2021 and also clarified that the rent amount was not
adjustable against the security deposit. Above noted was
followed by exchange of subsequent emails between the parties.
Vide email dated 10.02.2021 Ex. P-14, defendant further
informed about their intention to formally handover the
possession of the rented premises to the plaintiff and sought
suitable date and time for the same.
CS (Comm) No. : 02/2022 & 392/2022 25/81
39. It was the contention on behalf of plaintiff that defendant
had physically vacated the leased premises prior to the expiry of
leased period and only a formal handover was intended to be
concluded. Vide email dated 11.02.2021 Ex. P-15, plaintiff
requested for hand over of the keys by the next date. Subsequent
thereto, vide email dated 11.02.2021 Ex. P-16, defendant replied
that one Mr. Manoj Chauhan will hand over the keys, which was
followed by reply dated 11.02.2021 Ex. P-17 requesting for the
keys and the pending rent. According to plaintiff, in the second
week of Feberuary 2021, plaintiff through its Director visited the
leased premises to inspect the leased premises and to seek their
rent, wherein upon inspection, it was revealed that the defendant
had vacated the leased premises before the lock-in period of 24
months, without giving any advance notice.
40. Said assertion of plaintiff is falsified on record in view of
the email exchanged between the parties, whereby defendant had
duly informed and notified plaintiff about its intention to vacate
the leased premises. Plaintiff got issued legal notice dated
22.02.2021 Ex. P-22. In response, defendant vide its email dated
25.02.2021 Ex. P-18 sought time to hand over keys and to
complete the handover. Defendant again sought time vide email
dated 26.02.2021 Ex. P-20 to hand over the keys on the next day
whereas plaintiff vide its email dated 01.03.2021 Ex. P-21
reiterated the events of 27.02.2021 and that defendant had tried
to take forcible possession of the suit premises to show
possession to evade its liability for penalty due to pre-mature
vacation. Ld. counsel for defendant though submitted that
without prejudice to the defendant’s position on the
inadmissibility of the terms of lease agreement Ex. P-1,
defendant did not vacate the leased premises prior to expiry of
the lock-in period of 24 months. Reference was made by Ld.
CS (Comm) No. : 02/2022 & 392/2022 26/81
counsel for defendant to the same set of emails dated
17.08.2020, 18.8.2020, 17.12.2020, 11.02.2021 and 26.02.2021
with submission that defendant had time and again informed to
the plaintiff that the agreement was valid till 28.02.2021.
Defendant had offered to hand over the keys of the leased
premises to the plaintiff also on 26.02.2021.
41. It was submitted by Ld. counsel for plaintiff that the
allegations of the defendant of forceful possession by plaintiff is
demolished by the fact that the Defendant itself had vacated the
leased premises and also moved to its new office at Saket.
Further, the Plaintiff vide its email had iterated that the
Defendant had vacated the leased premises and taken
everything . The vacation of suit premises before the expiry of
lease period is further fortified by the Defendant’s request to
handover keys for formal handover of the possession . Further,
despite visiting the leased premises on 27.02.2021, defendant did
not take any legal action for alleged forceful vacation nor filed
any complaint and also did not make any communication with
the Plaintiff.
42. Ld. counsel for defendant submitted that there are
inconsistencies between the pleadings of the plaintiff and the
statements of PW1 during cross examination in regard to the
alleged date of vacation of the leased premises. It was pointed
out that in the plaint, it was pleaded that the inspection of leased
premises took place after handover of the keys of the leased
premises, however, PW1 states that the Defendant left the keys
of the leased premises thereon itself. Further, PW1 stated that he
personally visited the leased premises on 12 th or 13th February
2021 and discovered it to be lying open. But later, he
contradicted by submitting that he was informed by his other
colleagues that the leased premises was lying open.
CS (Comm) No. : 02/2022 & 392/2022 27/81
43. Contention of Ld. counsel for defendant is sustainable that
moving of goods out of the Leased premises, prior to expiry of
the lease period would not amount to “vacation” which would
make the defendant liable to pay the penalty of 6 months’ rent.
The intent of a ‘liquidated damages’ clause in a lease agreement is
to ensure that lessor is duly compensated if the lease is
prematurely terminated by the lessee, thereby denying the
expected lease rental to the lessor. Ld. counsel for defendant
submitted that without prejudice to the above submission, the
clause in lease agreement Ex. P-1 was in the nature of an
impermissible ‘ penalty’. Business efficacy would demand that ‘
vacation’ of the premises be read to mean ‘ termination of the
lease by the defendant’. This court is in agreement with the
contention of Ld. counsel for defendant that if the plaintiff’s
assertion is taken to be correct, it would mean that a tenant can
only physically vacate the leased premises on the last date of the
lease, which is an absolutely impractical interpretation of such a
clause in a commercial contract. Reliance was placed upon
following :
(a) Satya Jain Vs. Anis Ahmed Rushdie (2013) 8 SCC 131:
” 33. The principle of business efficacy is normally invoked to read a
term in an agreement or contract so as to achieve the result or the
consequence intended by the parties acting as prudent businessmen.
Business efficacy means the power to produce intended results. The classic
test of business efficacy was proposed by Lord Justice Bowen in The
Moorcock[8]. This test requires that a term can only be implied if it is
necessary to give business efficacy to the contract to avoid such a failure of
consideration that the parties cannot as reasonable businessmen have
intended. But only the most limited term should then be implied – the bare
minimum to achieve this goal. If the contract makes business sense without
the term, the courts will not imply the same. The following passage from the
opinion of L.J. Bowen in the Moorcock (supra) sums up the position:
“x x x x x x x x x In business transactions such as this, what the law
desires to effect by the implication is to give such business efficacy to the
transaction as must have been intended at all events by both parties who are
business men; not to impose on one side all the perils of the transaction, or
to emancipate one side from all the chances of failure, but to make eachCS (Comm) No. : 02/2022 & 392/2022 28/81
party promise in law as much, at all events, as it must have been in the
contemplation of both parties that he should be responsible for in respect of
those perils or chances.”
34. Though in an entirely different context, this court in United India
Insurance Company Limited vs. Manubhai Dharamasinhbhai Gajera and
others[9] had considered the circumstances when reading an unexpressed
term in an agreement would be justified on the basis that such a term was
always and obviously intended by and between the parties thereto. Certain
observations in this regard expressed by Courts in some foreign jurisdictions
were noticed by this court in para 51 of the report. As the same may have
application to the present case it would be useful to notice the said
observations:
“51………Prima facie that which in any contract is left to be implied
and need not be expressed is something so obvious that it goes without
saying; so that, if, while the parties were making their bargain, an
officious bystander, were to suggest some express provision for it in
their agreement, they would testily suppress him with a common ‘Oh, of
course! Shirlaw v. Southern Foundries (1926) Ltd. KB P.227“An expressed term can be implied if and only if the court finds that
the parties must have intended that term to form part of their contract: it is
not enough for the court to find that such a term would have been adopted
by the parties as reasonable men if it had been suggested to them: it must
have been a term that went without saying, a term necessary to give
business efficacy to the contract, a term which, although tacit, formed part
of the contract which the parties made for themselves. Trollope and Colls
Ltd. v. North West Metropolitan Regl. Hospital Board (1973) 2 All ER P.268
a-b”.
(b) Nabha Power Ltd. Vs. Punjab SPCL (2018) 11 SCC
508:
“49. We now proceed to apply the aforesaid principles which have
evolved for interpreting the terms of a commercial contract in question.
Parties indulging in commerce act in a commercial sense. It is this ground
rule which is the basis of The Moorcock test of giving ” business efficacy”
to the transaction, as must have been intended at all events by both business
parties. The development of law saw the ” five conditions test” for an
implied condition to be read into the contract including the ” business
efficacy” test. It is also sought to incorporate ” the officious By Stander
Test”(Shirlaw Vs. Souther Foundries (1926) Ltd.). This test has been set out
in B.P. Refinery (Westernport) Proprietory Ltd. Vs. Shire of Hastings
requiring the requisite conditions to be satisfied: (1) reasonable and
equitable; (2) necessary to give business efficacy to the contract; (3) it goes
without saying i.e. the Officious Bystander Test: (4) capable of clear
expression; and (5) must not contradict any express terms of the contract.
The same penta-principles find reference also Investors Compensations
Scheme Ltd. Vs. West Bromwich Buildings Society and Attorney General of
CS (Comm) No. : 02/2022 & 392/2022 29/81
Belize Vs. Belize Telecom Ltd. Needless to say that the application of these
principles would not be able to substitute this court’s own view of the
presumed understanding of commercial terms by the parties if the terms are
explicit in their expression. The explicit terms of a contract are always the
final word with regard to the intention of the parties. The multi-clause
contract inter se the parties has, thus, to be understood and interpreted in a
manner that any view, on a particular clause of the contract, should not do
violence to another part of the contract”.
44. Perusal of record rather reveals that defendant had
communicated in unequivocal terms, of his intention to vacate
the leased premises by 28.02.2021. Defendant has also not
disputed its liability to pay rent for the month of Febraury 2021
as well. Merely because the defendant decided to take out its
goods from the leased premises prior to the last date of the
tenancy, ipso facto cannot be considered the violation of any
terms and conditions of the lease by the defendant or the
premature vacation of the suit premises.
45. Ld. counsel for defendant further submitted that:
” the clause requiring payment of six month’s rent is in the
form of a penalty imposed upon the defendant. It is settled law
that in the case where damages in the case of breach of a
stipulation of a contract is by way of penalty, only ” reasonable
compensation not exceeding the penalty stipulated” must be
awarded by the court. This compensation, however, can only be
awarded to ” make good loss or damage which naturally arose in
the usual course of things”.
“if the plaintiff’s assertion is taken to be correct, then “the
rent for the entire period of 6 months” would be payable
regardless of the date of breach. Even if the Defendant had
terminated the lease on 27 February 2021 (one day before the
Lease Agreement expired), the liability for payment of 6 months’
rent would have been attracted by virtue of the aforesaid term.
The Plaintiff would then (i) receive rent for a period not evenCS (Comm) No. : 02/2022 & 392/2022 30/81
contemplated under the Lease Agreement, and (ii) receive rents
vastly in excess of what was contemplated under the Agreement.
This clause would not be providing “reasonable compensation”
or “make good loss or damage which naturally arose in the usual
course of things” for the loss of rent for a day, but rather results
in the plaintiff unjustly enriching itself. Therefore, as the term of
the lease agreement is in the form of a penalty, plaintiff was
under the obligation to also prove losses suffered by it due to the
alleged breach, which it has not done”.
46. Reliance was placed upon Fateh Chand Vs. Balkishan
Dass, 1963 SCC Online 49, wherein it was observed that:
8. The claim made by the plaintiff to forfeit the amount of Rs 24,000
may be adjusted in the light of Section 74 of the Indian Contract Act, which
in its material part provides:
“When a contract has been broken, if a sum is named in the contract
as the amount to be paid in case of such breach, or if the contract contains
any other stipulation by way of penalty, the party complaining of the breach
is entitled, whether or not actual damage or loss is proved to have been
caused thereby, to receive from the party who has broken the contract
reasonable compensation not exceeding the amount so named or as the case
may be, the penalty stipulated for.”
The section is clearly an attempt to eliminate the sometime elaborate
refinements made under the English common law in distinguishing between
stipulations providing for payment of liquidated damages and stipulations in
the nature of penalty. Under the common law a genuine pre-estimate of
damages by mutual agreement is regarded as a stipulation naming liquidated
damages and binding between the parties : a stipulation in a contract in
terrorem is a penalty and the Court refuses to enforce it, awarding to the
aggrieved party only reasonable compensation. The Indian Legislature has
sought to cut across the web of rules and presumptions under the English
common law, by enacting a uniform principle applicable to all stipulations
naming amounts to be paid in case of breach, and stipulations by way of
penalty.
10. Section 74 of the Indian Contract Act deals with the measure of
damages in two classes of cases (i) where the contract names a sum to be
paid in case of breach and (ii) where the contract contains any other
stipulation by way of penalty. We are in the present case not concerned to
decide whether a contract containing a covenant of forfeiture of deposit for
due performance of a contract falls within the first class. The measure of
damages in the case of breach of a stipulation by way of penalty is by
Section 74 reasonable compensation not exceeding the penalty stipulated
for. In assessing damages the Court has, subject to the limit of the penalty
stipulated, jurisdiction to award such compensation as it deems reasonable
having regard to all the circumstances of the case. Jurisdiction of the Court
CS (Comm) No. : 02/2022 & 392/2022 31/81
to award compensation in case of breach of contract is unqualified except as
to the maximum stipulated; but compensation has to be reasonable, and that
imposes upon the Court duty to award compensation according to settled
principles. The section undoubtedly says that the aggrieved party is entitled
to receive compensation from the party who has broken the contract,
whether or not actual damage or loss is proved to have been caused by the
breach. Thereby it merely dispenses with proof of “actual loss or damage”;
it does not justify the award of compensation when in consequence of the
breach no legal injury at all has resulted, because compensation for breach
of contract can be awarded to make good loss or damage which naturally
arose in the usual course of things, or which the parties knew when they
made the contract, to be likely to result from the breach.”
47. Ld. counsel for defendant further submitted that in the
present case, the loss resulting from the early vacation of a lease
deed must be proved by showing proof of loss of rent and the
same cannot merely be pleaded in order to obtain any relief in the
form of compensation. Reliance was further placed upon Deepak
Chopra Vs. FLAKT (India) (P) Ltd. 2020 SCC Online Del 103,
wherein it was observed that:
” 11. The position with respect to rent of lock-in period is akin to
that of earnest money/security and qua which the Supreme Court in Kailash
Nath Associates v. Delhi Development Authority, (2015) 4 SCC 136,
followed by me in Speed Track Cargo v. State Bank of Patiala, 2016 SCC
OnLine Del 919, Palm Art Apparels Pvt. Ltd. v. Enkay Builders Pvt. Ltd.,
2017 SCC OnLine Del 12776, Mera Baba Pvt. Ltd. v. Ram Lubhaya Puri,
2018 SCC OnLine Del 9502, Klintoz Pharmaceuticals Pvt. Ltd. v. Ravinder
Shankar Mathur, 2018 SCC OnLine Del 11954, Satish Verma v. Garment
Craft (India) Pvt. Ltd., 2018 SCC OnLine Del 6829 and Mahendera Verma
v. Suresh T. Kilachand, 2019 SCC OnLine Del 9333, held that mere
entitlement in the agreement to forfeit is not enough and loss/damages from
breach of contract has to be proved. In fact, the matter is no longer res
integra. The Division Bench of this Court in Tower Vision India Pvt. Ltd. v.
Procall Pvt. Ltd., 2012 SCC OnLine Del 4396 (DB) has held that rent of the
lock-in period in a Lease Deed cannot be claimed without pleading loss
from vacation by the tenant of the property prior to the expiry of the term of
lease. I have also, following the said dicta of the Division Bench, in order
dated 2nd December, 2019 in CS (COMM) 1438/2016 titled L.R. Builders
Pvt. v. Goldenera Leisure & Entertainment Pvt. Ltd. and order dated 18th
December, 2019 in CS (OS) 1789/2006 titled Sunita Rekhi v. Y.D. Puri
taken the same view. “
48. It was stated that it is an admitted position by the plaintiff
that after 28 February 2021, the leased premises was given on
rent to third party from 1 March 2021 itself i.e. from the very
CS (Comm) No. : 02/2022 & 392/2022 32/81
next date after the conclusion of the lease period. Therefore, no
loss of rent was suffered by the plaintiff after 28th February 2021
at all.
49. Plaintiff cannot be said to be entitled for payment against
six months rent in terms of the penalty clause in lease deed for
the reasons, firstly that the lease deed in question is inadmissible
document, being unregistered and insufficiently stamped.
Secondly, six months rent was payable only upon defendant
vacating the premises prior to expiry of lock-in period of 24
months. Even on that aspect, merely for moving out the
defendant’s good prior to expiry of the period of lease, it cannot
be termed that defendant had prematurely vacated the leased
premises , more particularly when the defendant has not disputed
its liability to pay the rent for the month of February 2021 as
well. It is also admitted fact on record that premises in question
was rented out to Trigon Digital w.e.f. 01.03.2021, thereby, as
rightly submitted by Ld. counsel for defendant, no loss of rent
was suffered by the plaintiff after 28.02.2021. Hence, on all the
aspects i.e. with regard to inadmissibility of the lease deed and
also that even otherwise defendant had not vacated the suit
property prior to expiry of lock-in period and further plaintiff had
not suffered any loss, case of plaintiff is not made out for
recovery of rent for the period of six months.
50. Claim for adjustment against the security deposit: It is
admitted fact on record that the security deposit in sum of Rs.
3,65,316/-, equivalent to two months rent, as interest free
security deposit was made to the plaintiff, refundable on the
expiry of the lease period or at the time of handing over of the
actual vacant physical possession of the leased premises to the
plaintiff after deducting the dues, arrears and cost of damages, if
any, as recited in the lease deed.
CS (Comm) No. : 02/2022 & 392/2022 33/81
51. Ld. counsel for defendant without prejudice to the
admissibility of the terms of lease agreement Ex. P-1 submitted
that plaintiff was in possession of the security deposit in sum of
Rs. 3,65,316/- which was paid by the defendant. It was
acknowledged on behalf of defendant in the written submissions
that the rent (alongwith increase) for the period of January and
February 2021, amounting to Rs. 4,48,314/- could not be fully set
off against the security deposit of Rs. 3,65,316/-. Therefore,
defendant was willing to either make the payment of Rs. 82,998/-
to the plaintiff or if court grants any amount to the defendant
under its counter claim, same may be set off. Ld.counsel for
defendant further submitted that as the Lease Agreement is now a
lease with month-to-month tenancy, the security deposit of Rs.
3,65,316 must be seen as a mere advance payment made to the
Plaintiff which can be set off/adjusted against the rent of January
and February 2021. As further submitted, there is no clause in the
Lease Agreement which forbids the Defendant to adjust the
outstanding rent against the security deposit. In fact, the lease
agreement states that the security deposit shall be refunded ” after
deducting the dues, arrears.” Thus, the outstanding rent of Rs.
4,48,314/- can be adjusted against the security deposit.
52. Ld. counsel for plaintiff, per contra, submitted that
“defendant has not claimed set off qua the security deposit but
claimed set off qua its claims for the alleged goods as raised in its
counter claim. Defendant has failed to claim set off and
mentioned its particulars in terms of Order 8 Rule 6 CPC. Further
no such document or terms/stipulations were made between the
parties to adjust the security deposit with the rent nor the said
security deposit was to be considered as advance monthly rental,
while plaintiff also refused to adjust the rent with security
deposit”.
CS (Comm) No. : 02/2022 & 392/2022 34/81
53. DW1 in cross examination had admitted the payment of
Rs. 3,65,356/- for two months rent. Although DW1 negated that
there was any condition that the security deposit made in the
lease deed dated 01.03.2019 would be adjusted against the rent of
the last two months of the lease, however proceeded to state that
since the agreement was not registered, they did not consider the
same as valid agreement, hence they had adjusted the rent with
the security deposit. He also negated that defendant ever
communicated to the plaintiff that security deposit would be
adjusted with the rent at the time of payment of security deposit
and reiterated the earlier understanding that the subject rent
agreement was not registered and they had communicated it on
17.08.2020 that they would adjust the rent with the security
deposit. He acknowledged that the plaintiff did not agree to
adjust the rent against the security deposit subsequent to the
communication made by defendant in this regard. DW1 further
reiterated that it was against two months advance rental and the
agreement was not registered. He stated that they were not
considering that the security deposit was made for the damages
but it was for the advance rental. He acknowledged that there
was condition in respect of refund of the security deposit in the
unregistered agreement.
54. According to DW1, defendant had made the monthly
payments for each month. Lease was to expire on 28.02.2021
and they did not want to extend the lease period and wanted to
adjust the advance rent deposit of two months against the month
of January and February 2021. Further according to him, advance
rent deposit means that rent already deposited for two months in
advance shall be adjusted at the time of expiry of agreement in its
last two months.
CS (Comm) No. : 02/2022 & 392/2022 35/81
55. Apparently, this witness was conscious of the fact that in
terms of the lease deed, security amount deposited, which was
equivalent to two months rent, was not to be adjusted or to be
considered as advance rental or the adjustment for the payment
of last two months but was against the damages, dues, arrears etc.
Nevertheless, he sought to derive the benefit of the lease deed
being inadmissible document for want of its registration and
insufficiency of stamps. Earlier vide email dated 17.8.2020 Ex.
P-6 , defendant had sought adjustment of three months of rent but
later on probably realising that the security deposit was only
equivalent to two months rent amended the said stipulation and
sought adjustment of the rent for the months of January and
February 2021, out of the security deposit.
56. The purpose of security deposit is to provide security and
protection to both the landlord and tenant. The deposit acts as
financial security to cover the cost of repair, any damage to the
property, caused by the tenant beyond normal wear and tear. If
the tenant fails to pay rent or any other dues, the security deposit
can be used to cover the outstanding amount . It provides a
safeguard in case the tenant breaches the terms of the agreement
or vacates the property without notice. As per general practice,
the deposit is refundable at the end of the lease term if the tenant
fulfills all obligations and the property is returned in good
condition. Therefore, security deposit cannot be considered as
advance rental amount as sought to be projected by defendant’s
witnesses.
57. Rent for two months was tendered as security deposit at
the inception of lease with annual increase in terms of the
contents of lease deed (though inadmissible). Defendant has not
disputed the amount of rental for the months of January and
February 2021 at Rs. 4,48,314/-. In terms of the own statement of
CS (Comm) No. : 02/2022 & 392/2022 36/81
DW1 in cross examination, the electricity bill for the month of
February 2021 had not been paid and plaintiff was yet to
calculate for the purpose of claim of damages from the defendant
prior to which defendant had sought adjustment of rent from the
security deposit which was not even the exact amount payable to
the plaintiff against the two months rent i.e. for the months of
Jannuary 2021 and February 2021. Defendant did not wait for
settlement of dues with plaintiff prior to seeking adjustment of
two months rent from security deposit. Defendant, in these
circumstances, is liable to make payment of rent for the months
of January and February 2021.
58. Claim of plaintiff for damages of Rs. 10 lacs: Plaintiff has
further claimed amount of Rs. 10 lacs for the damages caused to
the leased premises by defendant. The unregistered lease deed
contained the stipulation that the defendant shall restore the lease
premises to its original position and condition at the time of
handing over the vacant actual physical possession of the leased
premises to the plaintiff. As submitted by Ld. counsel for
plaintiff, defendant was fully aware of the damages caused to the
leased premises. Upon inspection of the leased premises, it was
revealed to the Plaintiff that the Defendant has caused
considerable and extensive damages to the leased premises and
failed to restore and handover the possession of leased premises
in its original position. Further, it was revealed to the Plaintiff
that the damages caused by the Defendant required thorough and
extensive repair and restoration work. Thereafter upon taking
cost estimation for the said work, the same was assessed and
quantified at Rs. 10,00,000/- (Rupees Ten Lakhs Only)
approximately, whereas some maintenance was carried out by the
Plaintiff, however other work required considerable monetary
CS (Comm) No. : 02/2022 & 392/2022 37/81
resources including removal of logo which the Plaintiff only
assessed and sought money from the Defendant.
59. Ld. counsel for defendant, per contra, submitted that
without prejudice to the defendant’s arguments on the
inadmissibility of the 2019 lease deed, plaintiff has failed to
prove on record the damages. Attention of this court was drawn
to the following points:
(a) That, plaintiff in its Legal Notice dated 22 February
2021, stated that it allegedly discovered damages in the Leased
Premises in the second week of February, and “upon taking cost
estimations for the said work, the same was quantified at Rs.
10,00,000/- . Thereafter, in its Plaint, plaintiff asserted that “The
Plaintiff undertook the restoration and repair work and the same
amounted and costed Rs. 10,00,000/- to the plaintiff”.
(b) That, despite claiming in its plaint that it had spent Rs.
10 lacs for ” the restoration and repair work”, the plaintiff has
failed to plead the details of the damages suffered by it in the
plaint and also place any invoices etc. on record to prove its
damages. As the plaintiff has admitted that the quantification of
its claim for damages being Rs. 10 lacs is based on the
restoration work already undertaken by it, it is clear that at the
time of filing its plaint, plaintiff was aware of all documents it
needed to file to prove its damages. Reliance was placed upon
following:
a) Kailash Nath Associates v. DDA, (2015) 4 SCC 136:
33. Section 74 occurs in Chapter 6 of the Indian Contract Act,
1872 which reads “Of the consequences of breach of contract”. It is in fact
sandwiched between Sections 73 and 75 which deal with compensation for
loss or damage caused by breach of contract and compensation for damage
which a party may sustain through non-fulfillment of a contract after such
party rightfully rescinds such contract. It is important to note that
like Sections 73 and 75, compensation is payable for breach of contract
under Section 74 only where damage or loss is caused by such breach.
CS (Comm) No. : 02/2022 & 392/2022 38/81
34. In Fateh Chand v. Balkishan Das, 1964 SCR (1) 515, this Court
held:
“The section is clearly an attempt to eliminate the somewhat elaborate
refinements made under the English common law in distinguishing
between stipulations providing for payment of liquidated damages and
stipulations in the nature of penalty. Under the common law a genuine
pre-estimate of damages by mutual agreement is regarded as a
stipulation naming liquidated damages and binding between the parties:
a stipulation in a contract in terrorem is a penalty and the Court refuses
to enforce it, awarding to the aggrieved party only reasonable
compensation. The Indian Legislature has sought to cut across the web
of rules and presumptions under the English common law, by enacting a
uniform principle applicable to all stipulations naming amounts to be
paid in case of breach, and stipulations by way of penalty.”
b) Punj Lloyd Ltd. v. IOT Infrastructure and Energy
Services Ltd., 2018 SCC OnLine Bom 19741:
” 13. The cases, which are discussed above, indicate an established
policy of law so far as India is concerned of only reasonable damages to be
awarded in case of breach of contract. In the first place, it important to note
that damages are awarded by Indian courts as a compensatory measure and
never as a punitive measure. The rationale behind such award is that the
party who suffers from a breach of contract must be put in the same position
that it would have been in had the contract not been broken. This is
universally accepted in India both as a correct rationale and measure of
damages. Section 73 of the Contract Act contains a general principle for
award of such damages, and Section 74 is merely an extension of it, to be
applied, as we have seen above, to particular cases where either a sum is
mentioned in the contract as payable in case of a breach or a penalty is
stipulated. Section 74, as we have seen above, has to be read along with
Section 73. It does not confer any special benefit upon any party; it merely
provides for award of reasonable compensation not exceeding the amount of
liquidated damages or penalty stipulated in the contract, whether or not
actual damage or loss is proved to have been caused by breach of contract. It
does not follow that because it so provides, it dispenses with loss or damage
by itself. Obviously, when no loss is suffered, it cannot be said that the
amount stipulated as liquidated damages should still be awarded. The very
clause of liquidated damages operates when loss is suffered. As the Supreme
Court has reiterated in Kailash Nath Associates (supra), damage or loss
caused is a sine qua non for the applicability of Section 74. What the
expression “whether or not actual damage or loss is proved to have been
caused thereby” means is that where it is possible to prove actual damage or
loss, it is only such damage or loss that may be compensated for as
reasonable damages; and in cases where such damage or loss is difficult or
impossible to prove, then the liquidated amount named in the contract, if a
genuine pre-estimate of damage or loss, may be awarded. That merely
reflects on the court’s discretion in the matter and its exercise. The
liquidated sum named in the contract, in other words, is to be taken into
account for ascertaining reasonableness of compensation and not as a
dispensation of proof of loss or damage. In sum, even in a case the contract
provides for liquidated damages and the court is of the view that what isCS (Comm) No. : 02/2022 & 392/2022 39/81
provided for is in fact a genuine pre-estimate of damages, it is imperative
for the party who has suffered breach of contract to plead and make out a
case of having suffered a loss. There may be cases where the factum of such
loss may be obvious, but its actual measure may not be capable of proof or
may be difficult to prove. In that case, if the court finds that the liquidated
amount named in the contract is a genuine pre-estimate of damage or loss
contractually made by the parties, the court may award such amount as
reasonable damage in its discretion. The statement of law to be found in
paragraph 43.1 of Kailash Nath Associates in this behalf only means that it
will be legitimate for the court to award the liquidated sum named in the
contract as reasonable compensation wherever such sum is a genuine pre-
estimate of damages fixed by both parties and found to be such by the court;
it does not imply that in all cases when it is so, the court is bound to award
such liquidated sum. The award of such liquidated sum, or any
compensation for that matter, is within the discretion of the court and such
discretion must be exercised on sound principles applicable under Section
73 with particular reference to the injury or loss resulting from the breach of
contract complained of. Wherever it is possible to prove actual damage or
loss, the party complaining of breach must tender its proof. If such proof is
impossible or difficult to produce, the aggrieved party must make out such
case and thereafter, call upon the court to award the liquidated amount
named in the contract as reasonable damages, and the court may do so in
exercise of its discretion.”
(c) That, plaintiff has also filed a Statement of Truth with
its plaint that ” all documents in the power, possession, control or
custody of the plaintiff pertaining to the facts and circumstnces of
the proceedings have been disclosed”. However, it has failed to
place on record any invoices etc. towards the alleged damages.
(d) That, despite the defendant categorically pointing this
out in its written statement, plaintiff did not enclose any
document alongwith its rejoinder and rather stated ” it is denied
that the plaintiff has not filed any document or evidence in
respect of damages claimed by the plaintiff. It is submitted that
the plaintiff also reserves the right to produce additional evidence
to support its claim for damages to the lease premises and
restoration of the same”. It is, therefore, clear that the plaintiff
had not exercised any due diligence to file the necessary
documentary evidence with its pleadings, though the invoices
were in its possession during this time.
CS (Comm) No. : 02/2022 & 392/2022 40/81
(e) That, it is settled law that due to special nature of
Commercial Suits, the provisions of the CPC (amended by the
Commercial Courts Act, 2015) must be construed strictly, and the
Court cannot ignore the fact that the Plaintiff willingly chose to
forego filing the requisite documents to make out its case for
damages along with its pleadings. It is also settled under Order
XI Rule 1(5) of the CPC (amended by the Commercial Court’s
Act, 2015), that to justify a belated filing of additional documents
not otherwise filed along with its pleadings, a party must show
“reasonable cause” justifying such a belated filing, and must also
seek leave of the Court to file it thereafter.
(f) That, Plaintiff has placed on record only one invoice
allegedly raised on it by “Nishahat Ali Painting Contractor” for
Rs. 22,000, in support of its contention that the repair work that
allegedly amounted to 10 Lakhs, which was not annexed to the
Plaint or its Rejoinder and was brought on record for the first
time before this Court alongwith the report of the Local
Commissioner dated 4 August 2023, but no liberty was permitted
to plaintiff to file additional documents to prove its case for
damages.
(g) As the plantiff failed to establish a reasonable cause for
the delay of more than one year in filing its invoices, and has also
failed to seek leave of the Court to file its invoices through the
Report of the Local Commissioner, the invoice by “Nishahat Ali
Painting Contractor” amounting to 22,000 is liable to be struck
off the record, as the same is inadmissible as per law.
60. Reliance was placed upon following:
1) TTK Prestige Lala Baghla Sanitaryware Pvt Ltd & Ora,
CS (COMM) 281 of 2021 :
17. Order XI Rule 1(1) of CPC, as applicable to commercial suits, gives the
first opportunity to a plaintiff to file documents on which they choose to rely
upon at the time of filing of the suit. Such filing is done along with aCS (Comm) No. : 02/2022 & 392/2022 41/81
declaration that all documents in the power, possession, control or custody
of the plaintiff, pertaining to facts and circumstances of the proceedings
initiated, have been disclosed and copies have been annexed with the plaint.
Order XI Rule 1(3) CPC in fact furthers includes as part of the declaration
that “the plaintiff does not have any other documents in its power,
possession, control or custody”. Thereafter, Order XI Rule 1(5) CPC
follows, which precludes the plaintiff from relying on documents which
were in their power, possession, control or custody but not disclosed with
the plaint, save and except with the leave of the Court. What is underscored
here is that the provision necessitates that such leave by the Court shall be
granted only upon the plaintiff establishing reasonable cause for non-
disclosure along with the plaint. Thus, the plaintiff has the option of
disclosing documents which they choose to rely upon and if not disclosed,
the same cannot be allowed unless reasonable cause is established.
2) CEC-CICLJVv Oriental Insurance Co. Lat. 2024 SCC
OnLine Del 3766:
“16. Further, Order XI Rule 1 (c) (ii) read with Order XI Rule 5 of
CPC under the Commercial Courts Act, 2015, mandates that the plaintiffs
shall file a list of all the documents in its power, possession, control and
custody along with the Plaint thereof. Further, Order XI Rule 1(4), CPC,
permits additional documents to be filed by the plaintiff within 30 days of
filing of the Suit, subject to the grounds of leave of the Court.”
61. While the plaintiff had pleaded that it undertook
restoration and repair work but in cross examination PW1 stated
that the defendant displayed many windows for their exhibition
purpose which were grounded on the floor. Defendant installed a
logo on the third floor Façade and nearby 11 KW BSEB wires
were passing by. So the defendant knew about the damages
related to its removals. Also they had installed some external
blinds, which were removed abruptly making lot of damage there
and they had taken remotes of installed glass integrated blinds.
PW1 admitted that “it was not communicated in written to the
defendant that they had displayed many windows for their
exhibition purpose which were grounded on the floor”. He
further stated that “as per the agreement, it was understood that
the defendant will hand over the possession of the leased
premises in its original position at the end of the lease deed”.
PW1 failed to point out from the plaint, replication or his
CS (Comm) No. : 02/2022 & 392/2022 42/81
evidence affidavit where had he mentioned that the defendant
had installed windows for exhibition, grounded to the floor.
62. DW2, nevertheless himself, admitted that the lease
premises had structure affixed to its floor, to display frames, to
prospective customers. Though he sought to clarify that the
ground floor was being used as a display center but the structure
was temporary, while also acknowledging that the structure was
fixed through the wooden cavity. They had made holes in the
floor to fix the wooden cavity for easy removal and defendant
removed the said fixtures from the leased premises. In answer to
the question whether they had filled the holes made for fixing the
structures at the leased premises, he answered in affirmative
stating that they had covered the same. He was put question
whether they had taken permission from the plaintiff for making
such holes, to which he explained that as Mr. Arun Sharma was
the Director in both the plaintiff and the defendant company and
he was present at the time of making these holes and the same
was not objected by him, hence, there was no need for taking
permission from the plaintiff for making such holes.
63. With regard to the basis on which plaintiff has calculated
the damages @ Rs. 10 lacs, PW1 answered that it was based
upon the estimation taken from the stake holders who were
mason, plumber, painter, contractor and the persons dealing with
insulated scaffoldings which were approximately at height of 20
to 25 meters. This estimate was taken from these various stake
holders in the second week of February 2021 as stated by PW1.
In answer to the question whether the alleged estimation and the
actual cost of repair work on the leased premises both were for
exactly Rs. 10 lacs, he stated that they had not done the complete
repair work in the leased premises as the cost to be incurred on
the removal of logo and damage caused to the outer portion of
CS (Comm) No. : 02/2022 & 392/2022 43/81
the leased premises was still pending to be repaired. Hence, the
complete estimate and actual cost of repair work was still
pending to be estimated and was not clear to them.
64. With regard to the allegations of the plaintiff regarding the
defendant taking the remote of the blinds façade, PW1 stated that
he had personal knowledge of the same. To the question whether
he had seen the defendant takng the remote of the blinds façade,
he stated that he had not seen from his eyes who had taken away
the remote by putting in its pocket as it is a small remote. After
12/13 February 2021 as they wanted to lease out the same leased
premises to the other prospective tenants it was discovered that
they were unable to operate the blind as the remote was missing.
65. Ld. counsel for defendant submitted that it was during the
stage of cross examination of plaintiff that he raised a new
ground that the defendant had allegedly taken away the remote
controls of the Blind facades upon their alleged inspection of the
Leased Premises. Plaintiff nevertheless has not pleaded that the
damages for Rs. 10 lacs includes any loss of remote controls of
the Blind facades, neither led any evidence regarding the same
nor established on record, defendant taking away remotes.
66. With regard to the logo of the defendant which was present
on the third floor of the building where the Leased Premises was
situated (“Okhla Premises”), PW-1 stated that the logo had not
been removed from the Leased Premises at the time of institution
of the suit and further stated that it was likely to cause damage
whenever the logo would be removed.
67. There is no substantiation to the claim of plaintiff with
regard to the damages caused to the premises or the
quantification of the same at Rs. 10 lacs. It is also correct that
invoice from Nishahat Ali Painting Contractor was not placed on
record earlier but was put before Ld. LC upon appointment of
CS (Comm) No. : 02/2022 & 392/2022 44/81
LC to take photographs of the goods/articles/fixtures at the suit
premises and to report about ownership of the said articles by
matching the said articles with the invoices filed on record with
the counter claim or those which may be produced by the
defendant before Ld. LC at the time of inspection. Even
otherwise, the invoice in sum of Rs. 22,000/- is pertaining to
Paint and Repairing for ground floor and first floor dated
04.03.20, by which time, the first floor of the premises has
already been rented out in favour of M/s Trigon Digital. Plaintiff
has not even explained the extent of alleged damage caused to
the property by defendant. No estimate obtained from expert, nor
statement of expenditure incurred by plaintiff for repair of such
damages has been placed on record. Besides that, no statement
pertaining to any expenses incurred or payment made to repair
the damages, if any, caused by defendant have been filed during
the course of proceedings spanning over a period of three years.
Plaintiff had let out first floor of the premises to another entity
namely Trigon w.e.f. 01.03.2021 itself. However, plaitniff has
claimed damages for repairs based solely on the estimates rather
than actual repair costs except for the handwritten bill raised by
Nishahat Ali Ex. PW1/32 (colly) dated 4 th March (year is not
clearly legible), for which also, it is not explained whether the
same pertained to normal wear and tear or due to the damage
caused by the defendant. There is also no explanation as to how
the premises was let out while the alleged repair work was still
pending. This raises questions regarding the necessacity, extent
and execution of the claimed repair work, weakning the
plaintiff’s claim for damages based on speculative estimates
rather than concerete evidence of expenses incurred.
68. Logo: Plaintiff has claimed that defendant installed a logo
on the third floor Façade and nearby 11 KW BSEB wires were
CS (Comm) No. : 02/2022 & 392/2022 45/81
passing by. So the defendant knew about the damages related to
its removal . PW-1 stated that the logo had not been removed
from the Leased Premises at the time of institution of the suit and
further stated that it was likely to cause damage whenever the
logo would be removed. In answer to the question whether the
alleged estimation and the actual cost of repair work on the
leased premises both were exactly Rs. 10 lacs, he stated that they
had not done the complete repair work in the leased premises as
the cost to be incurred on the removal of logo and damage caused
to the outer portion of the leased premises was still pending to be
repaired. Hence, the complete estimate and actual cost of repair
work was still pending to be estimated and was not clear to them.
However, DW1 stated that removal of the logo was discussed
telephonically with the plaintiff, but the same was stopped, due to
the condition that defendant shall pay security cheque for any
damage caused to the property due to removal of the said logo.
69. Fact remains that logo of the defendant is still installed in
the property of the plaintiff. So much so, defendant got legal
notice issued upon the plaintiff dated 26.10.2021 Ex. D-20 for
infringement of trademark of the defendant on the ground of
unauthorized user of the trademark of defendant on the premises
of plaintiff. It was submitted by Ld. counsel for defendant that
“as on date, there is no damage caused to the Leased Premises
due to the logo installed at the Okhla Premises.Plaintiff has failed
to prove any damages allegedly suffered by it. It is trite that any
party seeking compensation must prove the loss caused to it”.
70. Nevertheless, as brought on record, defendant was and is
willing to remove the logo, if so permitted by the plaintiff.
Plaintiff itself did not remove the same prior to or during the
pendency of the suit. It neither sought permission from the court
or direction to the defendant for removal of the same nor brought
CS (Comm) No. : 02/2022 & 392/2022 46/81
on record the estimate of expenditure for removal of the same.
Speculative amount of Rs. 5,00,000/- out of the claim of damages
of Rs. 10 lacs, therefore, is not warranted to be awarded.
Nevertheless, in these circumstances, considering that the logo of
the defendant, as on date is still occupying the place on the
outside facade of the plaintiff, in the interest of justice, it is
directed that defendant shall remove the logo from the premises
of the plaintiff within a period of two weeks, with prior
intimation to plaintiff. Defendant shall ensure that no damage is
caused to the property of plaintiff during the process of removal
of the logo. Plaintiff shall permit ingress of defendant for the said
purpose . Issues no. 1 & 4 stand decided in above terms.
Issues no. 2 & 3:
71. Defendant had claimed that it had installed various
items/equipments at its own expenses in the leased premises. The
decision of entering into the lease agreement was also taken by
the Director of defendant Mr. Arun Sharma who was also the
Director of the plaintiff at the time of entering into the lease
agreement of 2016. In furtherance of his decision as Director of
the plaintiff, defendant and its employees were given access to
the leased premises even prior to entering into the 2016 lease
agreement. At the time of entering into 2016 lease,the leased
premises was still under construction and certain movable goods
and equipments were ordered by the defendant to be installed
during such construction. Leased premises was formally
inaugurated on 01.9.2016 after which various team members of
the defendant started working from the leased premises.
72. At the time of vacation of the suit premises defendant
discussed with regard to removal of the furnitures and fixtures in
the leased premises and sought negotiation on the payment for
the windows, doors, shutters and ACs installed by defendant.
CS (Comm) No. : 02/2022 & 392/2022 47/81
According to defendant, defendant was informed that it can
remove furniture and other small items from the leased premises.
Vide email dated 29.12.2020 defendant listed out the items which
were allegedly the property of the defendant and conveyed its
intentions to move those items, however, vide reply of plaintiff
dated 30.12.2020, plaintiff did not acknowledge installation of
windows and shutter by the defendant. It is submitted that it was
always the understanding between the parties that windows and
shutter would be retained by the plaintiff whenever defendant
would exit the leased premises.
73. On the failure of the plaintiff to give the offer for purchase
of the same, defendant sought cooperation from the plaintiff for
removal of the AC, door, windows and other items which were
installed by the defendant in the leased premises. Subsequent
thereto, plaintiff did not wait for handing over of the keys of the
premises to the plaintiff and prior thereto broke into the leased
premises. It was submitted that plaintiff was enjoying the benefits
of the items installed by the defendant, which were brought by
defendant to improve the usability of the leased premises for its
business. These goods which were lawfully owned by the
defendant, as stated, have been misappropriated by the plaintiff,
hence defendant sought return of the goods intalled in the leased
premises by the defendant or in the alternative sought amount of
Rs. 12,19078/-. Further, defendant claimed to have installed two
‘Carrier 5.0 TR Ductable’ Air Conditioners as well as Projector
and Screen and also raised claim for Refrigertor. According to
defendant, these goods were owned by the defendant which had
been misappropriated by the plaintiff who continued to
unlawfully gained from its use.
74. In support of the said assertion i.e. pertaining to
installation of door, windows and shutter, defendant/counter
CS (Comm) No. : 02/2022 & 392/2022 48/81
claimant relied upon the invoices Mark A to Mark L . Defendant
did not have the originals of the invoices because its erstwhile
Director Mr. Arun Sharma (who is also the Director of the
plaintiff) had the originals in his possession. Defendant got notice
dated 28.06.2022 issued upon the plaintiff for production of the
original documents.
75. Per contra, plaintiff’s stand was that all the fixed windows,
doors etc. were installed by the plaintiff and did not belong to
the defendant which was also informed to the defendant vide
email dated 30.12.2020. However, defendant did not respond to
the contents of the plaintiff’s email and after a period of 2 monhs
vide email dated 02.02.2021, though sought to remove the air
conditioners but did not mention any other items as mentioned
inthe previous email dated 29.12.2020. Plaintiff immediately
responded that defendant was free to remove their ACs and also
informed defendant that they had already taken along everything
essentially while vacating the leased premises. The said
communication of the plaintiff was never responded to by the
defendant. After receipt of legal notice dated 22.2.2021 only,
defendant sought time for formal handing over of the keys and to
complete the handover. But instead of replying to the legal
notice, itself got issued legal notic Ex. P-25 to Mr. Arun Sharma
wherein also there was no mention regarding goods allegedly
usurped by the plaintiff or its directors. Further, instead of
pursuing legal recourse for its alleged usurped goods, defendant
filed a police complaint against the plaintiff’s Director Mr Arun
Sharma.
76. Both the parties relied upon the invoices with regard to
purchase of the installations in the leased premises. Defendant
had filed on record the copies of the invoices, oringals of which
were alleged to be in possessionof Mr. Arun Sharma who was the
CS (Comm) No. : 02/2022 & 392/2022 49/81
then Director of the defendant. In cross examination, PW1 was
asked to confirm whether he was Director of defendant during
the period of tenancy i.e. February 2016 to October 2016 to
which he answered in affirmative. It was also acknowledged by
PW 1 that he was the Director in Defendant company which was
operating from Lajpat Nagar, New Delhi. He also admitted that
the property in question belonged to him and his wife. However,
he denied that since he was the Director of both the plaintiff and
defendant company he unilaterally made the decision pertaining
to the leased premises without reducing them in writing.
77. Invoices pertaining to the disputed items were also placed
on record by the plaintiff. PW1 was asked on which basis, he had
access to the original invoices which were exhibited on record, to
which he answered that he had parted with the defendant
company in August-September 2019 as whole time director and
after his resignation from defendant company, he got the access
of all the original invoices from plaintiff company. However, he
denied that he had access to the original invoices of the defendant
company when he was the Managing Director of the defendant
company or that he continued to have access to those original
invoices. He stated that in the beginning of company formation,
he was the only incharge of day to day management and later
couple of more managers were engaged. In answer, with regard
to the possession of the original invoices of the defendant
company till March 2019, he stated that from 2008, till 2014, the
accounts were maintained in Delhi and later were shifted to
Baroja, Gujarat. Although he admitted that he had access to the
invoices during the said period but stated that the invoices were
not directly in his possession as the Director of the defendant
company as he used to travel a lot. PW 1 acknowledged that
there was communication between the parties wherein defendant
CS (Comm) No. : 02/2022 & 392/2022 50/81
had allegedly said that they had made some expenditure for
building the showroom and they wanted plaintiff to make a
counter offer for the alleged items if the plaintiff was interested.
He did not remember whether the plaintiff had objected to the
installation of these items, equipments fixtures for display on the
ground floor of the leased premises, in view of his earlier answer
that after taking the leased premises with effect taken from
01.03.2016, the defendant stated installing/putting all items,
equipments, fixtures for display after taking over of the leased
premises, however he further stated that defendant had already
taken everything much prior to 28.02.2021 which was not
objected by the plaintiff.
78. Pertaining to the alleged requirement/necessitity for the
defendant to install its own equipments, fixtures etc., PW1 was
asked the date by which the leased premises was ready for
occupation, to which he answered that it was ready for
occupation by February 2016 in sealed and locked condition .
According to him, however, after taking the leased premises on
lease from 01.03.2016, defendant started installing/putting all
items, equipments, fixtures for display after taking over the
leased premises. He denied that defendant was never given ‘ready
to move’ premises and only after installation of windows and
doors by the defendant, the leased premises was ready for
occupation and was inaugurated.
79. While relying upon Ex. DW2/3 to Ex. DW2/15, DW2
stated that he was present at the leased premises as an employee
of the defendant/counter claimant from March 2016 onwards
when it was in process of being constructed and the defendant
had placed order for the frames and windows for the leased
premises. These frames and windows were made to order i.e.
specific to the dimensions in the leased premises and stated that
CS (Comm) No. : 02/2022 & 392/2022 51/81
generally such frames and windows cannot be translocated and
installed from one place to another unless the destination location
has the identical dimensions. Therefore, defendant placed orders
for the frames and windows while the construction of the leased
premises was ongoing. He further deposed that defendant placed
orders for window frames from the vendor Green Future
Windows Pvt.Ltd. which delivered the window frames to the site
of the leased premises as reflected in invoices dated 01.03.2016,
10.03.2016, 17.03.2017, 28.03.2016 and 05.05.2016 Ex. DW2/3
to Ex. DW2/7. He stated that he had installed the window frames
himself in the leased premises.
80. With regard to the Air Conditioners,defendant claimed that
they purchased two Air Conditioners from R.V.Enterprises of the
brand ‘Carrier’ which were delivered at the leased premises and
were installed. Invoices for the same were tendered in evidence
as Ex. DW2/8. According to DW2, the original copies of the
invoices were with the defendant which were tendered in
evidence as Ex. DW2/3 to Ex. DW2/8, contrary to assertion of
defendant that all the original invoices were in possession of
Director of Plaintiff Mr. Arun Sharma, who was earlier Director
of defendant as well.
81. Defendant also claimed amount for purchase of accessories
for installation of the air conditioners, vide invoice Ex. DW2/9
and the installation, testing and commissioning charges vide
invoice Ex. DW2/10. According to DW2, Mr. Arun Sharma had a
cabin on the third floor of the leased premises and a projector
and one motorised screen was purchased by defendant which was
installed in Arun Sharma’s cabin, delivered at leased premises
vide invoice Ex. DW2/11. Original copies of the same
nevertheless was stated to be in possession of the plaintiff and
CS (Comm) No. : 02/2022 & 392/2022 52/81
plaintiff had been called upon to produce the original of the same
vide notice dated 28.6.2022.
82. For purchase of entrance door and one fixed window
installed at the least premises ,original copy of the invoice dated
09.06.2016, as stated by DW2 was available with the defendant
and tendered in evidence as Ex. DW2/12. Defendant further
claimed purchase of six pieces of decorative glass, clear glass
from the vendor Art-N Glass Inc. vide invoice Ex. DW2/13,
delivered at leased premises and further purchase of outdoor
shutters installed at leased premises vide invoice dated
20.01.2016 Ex. DW2/15.Original copies of Ex. DW2/13 and Ex.
DW2/15 were also stated to be with the plaintiff. However, while
the evidence was being recorded , all the exhibits DW2/3 to Ex.
DW2/15 were de-exhibited and were marked as Mark A to Mark
L by Ld. Court Commissioner upon objection of Ld. Counsel for
plaintiff.
83. Ld. Counsel for defendant stated that defendant has issued
notice dated 28.06.2022 to plaintiff to produce the orginals of the
invoices, earlier exhibited as Ex. DW2/3 to Ex. DW2/15 now
marked A to L which had not been produced by the plaintiff,
therefore, defendant/counter claimant had brought original
counter parts of the said invoices which according to Ld. counsel
for defendant was primary evidence in terms of section 62 of
Indian Evidence Act.
84. Vide order dated 26.07.2023 on the application of the
counter claimant/defendant uder Order 11 Rule 4 CPC and on the
submission of Ld. counsel for defendant that the goods/articles
belonging to the defendant regarding which the invoices had
been placed on record, were lying at the suit premises i.e. at the
ground floor and first floor of suit premises which included Air
Conditioners etc. and that the plaintiff had unauthorizedly
CS (Comm) No. : 02/2022 & 392/2022 53/81
retained the said articles while the first floor of the premises has
been let out to third party namely Trigon Pvt. Ltd. alongwith the
said articles. Request was made for appointment of LC for
inspection of the premises. Ld. counsel for plaintiff while
submitted that the defendant had taken away all its belongings
from the leased premises and the air conditioners and fixtures
installed in the premises belonged to the plaintiff and plaintiff
was in possession of the invoices. In order to elucidate the matter
in dispute and to ascertain the ownership of the articles/goods
being claimed by defendant/counter claimant lying at ground and
first floor of the property, LC was appointed with directions to
report about ownership of those articles by comparing the said
articles with invoices filed on record by the counter claimant or
those which may be produced by the plaintiff at the time of
inspection.
85. Ld. counsel for plaintiff made the following submissions:
(a) That, defendant had filed copies of bills in its counter
claim in respect of subject goods (MARK A- MARK H), and
stated in its counter claim that the original were in possession of
the director of the Plaintiff Sh. Arun Sharma. Further, the
Defendant claimed that it had served a copy of notice under order
12 Rule 8 CPC to the Plaintiff. However, neither the Plaintiff nor
its director admitted or mentioned, having possession of original
bills. Further, the said notice was never served on the Plaintiff, its
director or counsel. No proof of receipt had been filed in the said
counter claim. Said notice was allegedly served on the same day
i.e. the date of counter claim. The said notice is also not
maintainable since no “admission” or “knowledge qua the bills
was made by the Plaintiff or its director.
(b) That, in order to circumvent the said situation of filing
copy of bills, defendant under the garb of submitting bills to local
CS (Comm) No. : 02/2022 & 392/2022 54/81
commissioner placed on record alleged vendor copies of the bills,
whereas vide its order dated 26.07.2023, court had directed the
Local commissioner to match the goods with invoices filed by
the counter-claimant and not the fresh copies of the bills. In fact,
only the Respondent/Plaintiff was directed to file the copies of
the bills.
(c) That, neither the Defendant nor its counsel informed
the Local commissioner that they were filing alleged vendor
copies of the bills.
(d) That, thereafter, defendant neither moved an
application for leading secondary evidence nor led evidence to
prove the bills by summoning the vendors/makers of the bills nor
filed original of the said bills. Hence, only relied on the copies of
the bills as already filed with the counter claim, and therefore the
same were not exhibited but marked at the time of defendant’s
evidence.
(e) That, defendant has not sought permission of the court
to lead secondary evidence while it was also not able to prove the
possession and chain of custody of documents with the Plaintiff,
and having failed to prove receipt of notice under order 12 rule 8
or its maintainability, cannot be permitted to rely on the said copy
of bills without producing the original or proving its existence
through makers/vendors of the bills, and hence the same cannot
be read in evidence. Reliance was placed upon following:
(a) Ram Naresh Mudgal Vs. Munesh Chand Gupta
(2010/DHC/3995),
” 3. Section 65 of the Indian Evidence Act provides that the
secondary evidence can be given of the existence of contents of the
document in following cases:
(a) When the original is shown or appears to be in the possession or
power of the person against whom the document is sought to be proved,
or of any person out of reach of, or not subject to, the process of the
Court, or of any person legally bound to produce it, and when, after the
notice mentioned in Section 66, such person does not produce it;
CS (Comm) No. : 02/2022 & 392/2022 55/81
(b) When the existence, condition or contents of the original have been
proved to be admitted in writing by the person against whom it is
proved or by his representative in interest;
(c) When the original has been destroyed or lost, or when the party
offering evidence of its contents cannot, for any other reason not arising
from his own default or neglect, produce it in reasonable time;
(d) When the original is of such a nature as not to be easily movable;
(e) When the original is a public document within the
meaning of Section 74;
(f) When the original is a document of which a certified copy is
permitted by this Act, or by any other law in force in India to be given in
evidence;
(g) When the originals consist of numerous accounts or other documents
which cannot conveniently be examined in Court, and the fact to be
proved is the general result of the whole collections.
4. It is thus, mandatory that the person who seeks to prove secondary
evidence has to show the existence of the documents and how documents
came in possession of the opposite party. It cannot be believed that a person
who is paying money shall not retain the receipt of payment of money or
who is purchasing property on the basis of agreement to sell shall not retain
the original agreement to sell with him and give it to opposite party.”
(b) Ashok Dhulichand vs Madhavlal Dube & Ors
(MANU/SC/0287/1975,
“According to clause (a) of section 65 of the Indian Evidence Act,
secondary evidence may be given of the existence, condition or contents of
a document when the original is shown or appears to be in the possession or
power of the person against whom the document is sought to be proved, or
of any person out of reach of, or not subject to, the process of the Court, or
of any person legally bound to produce it, and when, after the notice
mentioned in section 66, such person does not produce it. Clauses (b) to (g)
of section 65 specify some other contingencies wherein secondary evidence
relating to a document may be given”
(c) Rakesh Mohindra vs Anita Beri (MANU/SC/1293/2015
“17. The pre-conditions for leading secondary evidence are that
such original documents could not be produced by the party relied upon
such documents in spite of best efforts, unable to produce the same which is
beyond their control. The party sought to produce secondary evidence must
establish for the non-production of primary evidence. Unless, it is
established that the original documents is lost or destroyed or is being
deliberately withheld by the party in respect of that document sought to be
used, secondary evidence in respect of that document cannot accepted.
CS (Comm) No. : 02/2022 & 392/2022 56/81
22. It is well settled that if a party wishes to lead secondary evidence,
the Court is obliged to examine the probative value of the document
produced in the Court or their contents and decide the question of
admissibility of a document in secondary evidence. At the same time, the
party has to lay down the factual foundation to establish the right to give
secondary evidence where the original document cannot be produced. It is
equally well settled that neither mere admission of a document in evidence
amounts to its proof nor mere making of an exhibit of a document dispense
with its proof, which is otherwise required to be done in accordance with
law”.
(d) J. Yashoda Vs. K. Shobha Rani
(MANU/SC/7314/2007):
” 7. Secondary evidence, as a general rule is admissible only in the
absence of primary evidence. If the original itself is found to be
inadmissible through failure of the party, who files it to prove it to be valid,
the same party is not entitled to introduce secondary evidence of its
contents. Essentially, secondary evidence is an evidence which may be
given in the absence of that better evidence which law requires to be given
first, when a proper explanation of its absence is given. The definition
in Section 63 is exhaustive as the Section declares that secondary evidence
“means and includes” and then follow the five kinds of secondary evidence.
8. The rule which is the most universal, namely that the best
evidence the nature of the case will admit shall be produced, decides this
objection that rule only means that, so long as the higher or superior
evidence is within your possession or may be reached by you, you shall give
no inferior proof in relation to it. Section 65 deals with the proof of the
contents of the documents tendered in evidence. In order to enable a party to
produce secondary evidence it is necessary for the party to prove existence
and execution of the original document. Under Section 64, documents are to
be provided by primary evidence. Section 65, however permits secondary
evidence to be given of the existence, condition or contents of documents
under the circumstances mentioned. The conditions laid down in the said
Section must be fulfilled before secondary evidence can be admitted.
Secondary evidence of the contents of a document cannot be admitted
without non-production of the original being first accounted for in such a
manner as to bring it within one or other of the cases provided for in the
Section.”
(f) That, defendant alleged that the goods belonging to
defendant were given by the Plaintiff to M/s Trigon Digital
Solution as part of the lease, and further alleged that Plaintiff was
benefitted from the same by getting higher rent. However, the
Defendant fails to show that the same were given to Trigon
Digital Solutions. In fact, it was the Plaintiff which led evidence
by summoning witness from registrar office (PW-2) to place on
record that no such package was made as alleged in the lease
CS (Comm) No. : 02/2022 & 392/2022 57/81
deed with M/s Trigon Digital Solutions (Ex.PW-2/1), and the
same demolishes the allegations of the Defendant.
(g) That, in terms of section 101 and 102 of the Indian
Evidence Act, 1872, the burden of proof was on the Defendant to
prove the existence of alleged goods, and their installation and
current presence at the leased premises. Defendant has failed to
show purchase, installation of the said goods, and its presence at
the leased premises. In fact, defendant has neither filed the
original bills nor led evidence to show that the subject goods
were purchased and installed by defendant. Further, the
Defendant has deliberately attempted to shift the burden of proof
upon the Plaintiff, and continued making attempts to shift burden
of proof on the plaintiff which was also recorded by this Court
vide order dated 19.01.2024 while rejecting the application of the
defendant under order 11, CPC, 1908. Further, the Defendant has
repeatedly alleged that the goods are present at the leased
premises without showing the proof of the same. Reliance was
placed upon Rangammal Vs. Kuppuswami &
Ors.(MANU/SC/0620/2011), wherein it was observed that :
” 14. Section 101 of the Indian Evidence Act, 1872 defines `burden
of proof’ which clearly lays down that whosoever desires any court to give
judgment as to any legal right or law dependent on the existence of facts
which he asserts, must prove that those facts exist. When a person is bound
to prove the existence of any fact it is said that the burden of proof lies on
that person. Thus, the Evidence Act has clearly laid down that the burden of
proving fact always lies upon the person who asserts.Until such burden is
discharged, the other party is not required to be called upon to prove his
case. The court has to examine as to whether the person upon whom burden
lies has been able to discharge his burden. Until he arrives at such
conclusion, he cannot proceed on the basis of weakness of the other party.”
(h) That, plaintiff had produced the documents/bills before
the Ld. local commissioner to show that installations at the leased
premises were purchased by the Plaintiff. Even otherwise, if a
person is having possession of goods, presumption is drawn in its
favour that the same person is the owner of the said goods, and
CS (Comm) No. : 02/2022 & 392/2022 58/81
that presumption can only be rebutted by leading cogent
evidence. Reliance was placed upon section 110 of Indian
Evidence Act, 1872 and judgment of Hon’ble Supreme court in
“Chuharmal Vs Commissioner of Income Tax
(MANU/SC/0074/1988“, wherein it was observed that:
” 6. The High Court in its order noted that the raiding party by virtue
of the search entered into the bed-room of the assessee on 12th May, 1973
and seized the watches. A Panchnama was prepared. The Department found
that the assessee was the owner. Section 110 of the Evidence Act is material
in this respect and the High Court relied on the same which stipulates that
when the question is whether any person is owner of anything of which he is
shown to be in possession, the onus of proving that he is not the owner, is on
the person who affirms that he is not the owner. In other words, it follows
from well settled principle of law that normally, unless contrary is
established, title always follows possession. In the facts of this case,
indubitably, possession of the wrist-watches was found with the petitioner.
The petitioner did not adduce any evidence, far less discharged the onus of
proving that the wrist-watches in question did not belong to the petitioner.
Hence, the High Court held, and in our opinion rightly, that the value of the
wrist-watches is the income of the assessee. In this connection reference
may be made to the views expressed by Justice Tulzapurkar as his Lordship
then was, of the Bombay High Court in the case of J.S. Parkar v. V.B.
Palekar, MANU/MH/0005/1973.
(i) That, defendant has also claimed refrigerator in its
alleged goods however, no bill in respect of the refrigerator has
been filed and the same was also not found at the premises.
(j) That, Local Commissioner in its report had also
reported that no shutter, projector and screen were found on the
leased premises, despite the Defendant’s allegations of the
availability of same at the leased premises.
(k) That, the bill of roller shutter do not mention any
address of the Defendant(MARK-L). Local commissioner in its
report had reported that model No. of the AC duct could not be
found and no model No. was found in the outdoor unit. Whereas
the bill of the Defendant mentions model No. but the same is not
reflected at the AC .
(L) That, defendant vide email dated 02.02.2021 (Ex P-11)
sought to remove the air conditioner and The PlaintiffCS (Comm) No. : 02/2022 & 392/2022 59/81
immediately responded vide email dated 03.02.2021 (Ex.P-12)
informing that the defendant was free to remove their AC.
Further, defendant has not filed any document/proof to show that
Defendant’s employee Mr. Manoj visisted lease premises and was
precluded from removing the AC.
(m) That, defendant produced the alleged vendor copies
(inadmissible copies) before the local commissioner, and has not
produced the originals of the copies filed in the counter claim.
The Plaintiff also filed and produced the bills before the local
commissioner. Ld. Local commissioner reported that the invoices
produced by the Plaintiff had the mark “SKTUFF and the same
was also mentioned on the glasses of the windows.
(n) That, during the construction of the suit property(year
2014-16), the registered address of the Plaintiff was at Lajpat
Nagar, and therefore, the bills reflected the said address. Initially
defendant had claimed ownership of windows and doors in the
“showroom”. In fact, the Defendant being in business of UPVC
doors and windows had display centre at its ground floor of the
leased premises to display such windows and doors. However,
during the course of the trial of the present case, the Defendant
started claiming windows and doors at the façade/outside of the
building but the claim is falsified by the email of the Plaintiff
dated 30.12.2020 (Ex.P10) and the Defendant did not respond to
the contents of the plaintiff’s email dated 30.12.2020.
86. With regard to ownership of Windows installed in the
leased premises, defendant relied upon invoices mark A to mark
H which according to defendant had been purchased and installed
in the leased premises after it had taken possession of the same. It
may be noted that defendant filed on record the original copies of
the invoices which were different from the copies placed on
record alongwith the counter claim. While in affidavit of
CS (Comm) No. : 02/2022 & 392/2022 60/81
evidence, DW2 claimed the original copies in possession of
defendant pertaining to mark A to Mark L , however later on
stated about all the original invoices being in possession of
Director of plaintiff who was the then Director of defendant as
well.
87. It was sought to be clarified by Ld. counsel for defendant
that the original copies of invoices lateron produced before Ld.
Local Commissioner had been obtained by the defendant from
the vendor. It was submitted by Ld. counsel for defendant that
though plaintiff has argued that the signatures on the invoices
filed alongwith the Counter Claim and those submitted to the
Local Commissioner are different. However, invoices submitted
to the Local Commissioner were procured directly from the
vendor with same particulars as mentioned in the invoices filed
alongwith the counter claim. Since it was a sequitur that these
being vendor copies of the invoices, they will also bear the
vendor’s signatures. Although, in all material respects, the
invoices were identical with mere difference of signatures of the
vendor on the different counterparts of the same document,
therefore, cannot be taken to mean that they are not counter parts
to the originals.
88. Ld. counsel for defendant further made following
submissions:
(a) That, defendant in support of its claim for Shutters,
relies on invoice Mark-L raised on it by M/s Falcon Contracts Pvt
Ltd for an amount of Rs. 3,75,007. Plaintiff does not present a
rival claim with respect to the Shutters. However, it has
specifically pleaded that “the Plaintiff has no knowledge of the
goods allegedly purchased by the Defendant” However, the same
is contradicted by the fact that the invoice for the Shutters was
specifically issued in care of PW-1.
CS (Comm) No. : 02/2022 & 392/2022 61/81
(b) That, with respect to the Shutter, the Plaintiff is also
unable to prove that before the expiry of the 2019 Lease
Agreement, the “Defendant took all their goods” as pleaded by it.
The Defendant has continuously asked for their goods, and the
Plaintiff has not provided the Defendant an opportunity to take
back their goods. Therefore, the Defendant submits that the
Shutters are still present with the Plaintiffs.
(c) That, defendant, at the time of filing its Counter-claim
placed on record the copies of the invoices of the
items/equipment installed in the Leased Premises. [Mark A-
Mark-L]. Defendant did not have the originals of the invoices
because its erstwhile Director, Mr Arun Sharma (who is also the
Director of the Plaintiff) had the originals in his possession. In
this respect, the Defendant was constrained to send a Notice to
Produce to the Plaintiff dated 28 June 2022 along with its
Counter-Claim.
(d) That, Plaintiff never replied to the Notice issued by the
Defendant. While the Plaintiff has argued that it was not served
with the Notice, a bare perusal of the same will show that it was
served along with the Counter Claim. In this regard, the Plaintiffs
arguments regarding non-service of the Notice to produce is
contrary to the record. In fact, PW-1 himself admits that he had
access to the invoices which he alleges to not be in possession of,
as he was the Managing Director of the Defendant.
(e) That, as per sec. 62 of the Evidence Act, 1872, the
primary evidence of a document is when the document itself is
produced for inspection and where a document is executed in
several parts each part is primary evidence of the document.
Despite the clear wordings of the Act, the Court Commissioner
while recording evidence, has de-exhibited the invoices which
CS (Comm) No. : 02/2022 & 392/2022 62/81
were originals of the invoices executed in counterpart and
obtained from the vendors.
(f) That, merely because invoices were de-exhibited is not
conclusive of their being disproved. It is settled law that the
marking of a document is not synonymous with its proof, and
therefore, in the present case, it is still open for judicial
application of mind.
Reliance was placed upon Sudir Engineering Co. v. Nitco
Roadways Ltd., 1995 SCC OnLine Del 251, wherein it was
observed that:
” 8) I am firmly of the opinion that mere admission of document in
evidence does not amount to its proof.
8.1 Admission in evidence of a party’s document may in specified
cases exclude the right of opposite party to challenge its
admissibility. The most prominent examples are when secondary evidence
of a document within the meaning of Sections 63-65 of the Evidence Act is
adduced without laying foundation for its admissibility or where a document
not properly stamped is admitted in evidence attracting applicability of
Section 36 of Stamp Act.
8.2 But the right of a party disputing the document to argue that the
document was not proved will not he taken away merely because it had not
objected to the admissibility of the document. The most instructive example
is of a Will. It is a document required by law to he attested and its execution
has to he proved in the manner contemplated by Section 68 of the Evidence
Act read with Section 63 of the Succession Act. The party challenging the
Will shall not be excluded from demonstrating at the final hearing that the
execution of the Will, though exhibited,
was not proved is statutorily required.
(9) The law laid down by the Supreme Court in Sait Taraji
Khimechand VS. Yelamarti Satvam (AIR 1971 SC 1865) is :- ‘The mere
marking of an exhibit does not dispense with the proof of docments.”
(g) That, invoices raised on the Defendant by M/s Green
Futures Windows Pvt Ltd were issued in accordance with Rule
11 of the Central Excise Rules, 2002. The same states that “the
invoice shall be prepared in triplicate”, where the original copy
shall be “marked as ORIGINAL FOR BUYER” and a triplicate
copy shall be “marked as TRIPLICATE FOR ASSESSEE”. In
fact, the details of the two sets of invoices submitted by the
Defendant are exactly the same (such as GST Number, cost
CS (Comm) No. : 02/2022 & 392/2022 63/81
break-ups, TIN Number, invoice Number etc.). Accordingly, the
invoices submitted by the Defendant must be taken to be as
originals.
(h) That, it is settled law with respect to sec. 62 of the
Indian Contract Act 1872, that a document executed in several
parts are to be treated as primary evidence of each other. Reliance
was placed on Navas v. Abdul Lathief. 2018 SCC OnLine Ker
23383, wherein it was observed that:.
” 7. The first part of Explanation 1 to Section 62 refers to what is
known as duplicate, triplicate or the like. The expressions “executed in
parts” refer to the method in which documents are executed. It is convenient
sometimes that each party to a transaction should have a complete document
in his own possession. To effect this, the document is written as many times
as there are parties and each document is executed, signed or sealed by all
the parties. Then any one of them may be produced as primary evidence of
the contents of the document. When an instrument is executed in duplicate
or triplicate or the like and each party keeps one, each instrument is treated
as original and hence each is primary evidence of all the others”.
89. It is correct that invoices which were filed alongwith the
counter claim and the invoices which were produced before Ld.
LC pertained to the same material with only difference in one of
the invoices ‘Mark-G’ dated 30.07.2016, Retail Invoice/Cash
Memo of which bears Invoice No. : 1444, whereas Typed Copy
of same was bearing Invoice No. : 1443. Invoices relied upon by
defendant are for the period w.e.f. January/March 2016 to August
2017, whereas plaintiff has relied upon invoices Ex. PW1/29
(colly), which are dated ranging from 10.09.2014 to 16.05.2016
all of which were produced before Ld. LC.
90. Ld. counsel for defendant submitted that all the
equipments mentioned in the invoices filed on record by the
defendant were delivered at the leased premises to be installed
therein and were delivered after the defendant had taken
possession of the leased premises. Whereas, notwithstanding the
plaintiff’s lack of pleadings in regard to the ownership of the
CS (Comm) No. : 02/2022 & 392/2022 64/81
Windows, plaintiff relied upon several invoices submitted by it to
the Local Commissioner allegedly raised on it by M/s Green
Future Windows Pvt Ltd and M/s Mehr Image Pvt Ltd. (Ex
PW-1/29 (Colly), however, these invoices cannot be held to be
the true invoices for the goods installed in the Leased Premises as
the alleged invoices raised by M/s Green Future Window Pvt Ltd
are dated prior to the Plaintiff’s purchase of the Okhla Premises
in which the Leased Premises is situated. Moreover, no evidence
has been placed to show that the same were delivered to the
leased premises.
91. Contention of Ld. counsel for defendant is found correct
on record to the said extent that all the invoices raised by M/s
Green Future Windows Pvt. Ltd. upon plaintiff were bearing
different addresses than that of the leased premises. PW1 though
denied that the goods mentioned in invoices (part of Ex. PW1/29)
were delivered at the addresses as mentioned in the respecitve
invoices. He reiterated that with regard to invoices Ex. PW1/29,
items were delivered at C-44, Okhla, while admitting that the
delivery address of C-44 was not mentined in the invoices and
sought to explain that it was their address mentioned with the
sale tax department. Though, he did not remember if there was
any record that the goods mentioned in invoices (part of Ex.
PW1/29) were delivered at the leased premises while
acknowleding that it was not part of record. He reiterated that the
door frames had been installed by the plantiff before 01.03.2016
and sought to clarify that, in the beginning, they had installed the
temporary/kaccha glass which later were replaced by the
permanent glass with integrated glass blinds. According to him,
the permanent integrated glass was purchased from M/s Mehar
Image & S.K. Glass vide invoice no. 727 and 806 which were
installed, in between end of May and in beginning of June 2016.
CS (Comm) No. : 02/2022 & 392/2022 65/81
He denied the suggestion that the goods mentioned in invoices
no. 727 and invoice no. 806 were installed at G.K. which was the
address given in the invoices. He acknowledged that the
defendant had the possession of the leased premises during the
period of May-June 2016 and plaintiff did not have the keys to
the locks of the suit premises during the said period and had
taken permission of the defendant to enter the premises, as per
verbal discussion. This witness though did not remember when
the measurements for the window frames and doors in the leased
premises were taken by the plaintiff’s employees.
92. Ld. counsel for defendant submitted that PW1 had stated
that the installation of the windows in the leased premises took
place after the construction of the same was completed i.e. after
1.03.2016 with reference to the cross examination of PW1 from
questions 78 to 80. However, in response to the question no. 78
to 80 in cross examination of PW1, he did not state about the
installation of the windows in the leased premises after the
construction of the same was completed. To the contrary, his
response was that the leased premises was ready for occupation
in February 2016 in sealed and locked condition and the
equipments and fixtures were put /installed in the leased premises
for display by the defendant.
93. DW1 on the other hand in cross examination, stated that
when they entered into agreement on 1.3.2016, leased premises
was still under construction and was formally inaugutrated on
1.9.2016. As per his knowledge, doors and windows were
pending under construction as on the date of entering into the
lease deed dated 1.3.2016. He acknowledged that no such
document was filed on record in support of the said assertion,
while submitting that it was mentioned in his evidence affidavit.
After having gone through the evidence affidavit, he
CS (Comm) No. : 02/2022 & 392/2022 66/81
acknowledged that he had not mentioned in evidence affidavit
about filing of any such document and conceded that they had
not filed such document on record. This witness was put the
question whether plaintiff had insisted defendant for installation
of the window, doors and frames in the leased premises to which
he answered that as Sarla Sharma and Arun Sharma were the
Directors of the plaintiff companyand Mr. Arun Sharma was also
director of defendant company, so it was mutually decided that
defendant shall install the windows and doors in the leased
premises. He acknowledged that there was no term in the lease
agreement dated 01.03.2016 regarding the installation of
windows, doors and frames in the leased premises by the
defendant. He also admitted that as per the lease agreement,
defendant company was required to take prior permission before
making any installation/alteration in the leased premises.
However, submitted that since the Director of the plaintiff
company and defendant was same, so it was mutually agreed. He
also admitted that they had not filed any document on record to
show that the leased premises was formally inaugurated on
01.09.2016.
94. This witness admitted that in the written statement, they
had not mentioned that the leased premises was incomplete,
though insisted that it was in his knowledge and the record that
the premises was incomplete and frames were ordered by the
defendant to be installed during the course of such construction.
He stated that he was aware that windows and doors installed on
the other floors of the subject property were installed in 2016. He
stated that he had visited the third floor of the premises to meet
Mr. Arun Sharma but was not able to confirm that the doors and
windows installed at the leased premises and other floors of the
subject property were identical and further denied that they were
CS (Comm) No. : 02/2022 & 392/2022 67/81
structurally identical or that he was aware of the said fact. He
was put question as to who had paid charges for purchase and
installation of the windows and doors installed on the other floors
of the subject property to which he stated that he could answer
after checking the invoices and later on, he stated that he had
checked the record but could not understand , therefore, was not
in position to tell.
95. Defendant had also filed criminal complaint against the
Director of the plaintiff. DW1 was put question whether such
complaint was filed in respect of the goods/items owned by the
defendant installed in the leased premises which was denied by
DW1. He also denied the suggestion that it was not mentioned in
the criminal complaint since the same was an after thought stand
of the defendant. This witness nevertheless admitted that the
leased premises was being used as display centre by the
defendant for the products such as windows and doors.
96. DW2 claimed to have been involved in the process of
installation of doors and windows at the leased premises during
the relevant period. In cross examination, he reiterated that he
was aware of all the invoices alongwith the material purchased
for the leased premises. According to him, installation of AC ,
UPVC doors, Windows and shutter was pending at the leased
premises at the time of inception of lease deed i.e. in March
2016. He did not know whether defendant also installed AC,
UPVC, Windows and Shutters on the other floors of the property
and also did not know whether the construction of the other
floors of the subject property was simultaneous with the leased
property by submitting that he was working only on the first and
ground floor of the subject property, while also admitting that he
was visiting third floor of the subject property as and when called
by the earstwhile Director Mr. Arun Sharma in his office, located
CS (Comm) No. : 02/2022 & 392/2022 68/81
at the third floor of the property. Further, some customers who
used to visit the leased premises were also taken to the third floor
sometimes by him, yet this witness had shown his unawareness
about the construction of the other floors during the relevant
period. He nevertheless was prompt in denying that all the
goods/equipments/items installed in the leased premises and
other floor were installed by the plaintiff simultaneously, while
insisting that the installation of UPVC doors and windows in the
leased premises started only on 01.03.2016 and before that there
were no other installed doors and windows. He denied that
outside facade of the building was identical for all the floors but
did not know whether UPVC doors and Windows were installed
at the third floor of the subject property despite his earlier claim
with regard to his regular visits to the third floor, as and when
called by the then Managing Director of Defendant. He was
consistent in his denial to the question that construction of all the
floors of the subject property including the leased premises was
completed prior to 01.03.2016 and further stated that on
01.03.2016 they had started taking measurements of windows
after the flooring was complete in the leased premises. According
to him, since the construction was ongoing, no equipment/goods
were installed prior to 01.03.2016 and further that the defendant
and its employees were visiting the leased premises prior to
01.03.2016. According to him, after taking the measurements, he
had informed about the measurements to his seniors. He was not
aware when was the order placed but stated that sometimes in the
month of March 2016 purchases were made. He, though did not
know the dates or mode of payments.
97. In evidence affidavit of DW2, he stated that the possession
of the original invoices in respect of Ex. DW2/3 to Ex. DW2/10
(later marked A-H) was with defendant. Contrary to such
CS (Comm) No. : 02/2022 & 392/2022 69/81
assertion, in cross examination, he stated that the possession of
the original bills was with Mr. Arun Sharma i.e. PW1. He also
stated that therefore they had to collect the bills from the vendor
which were counter parts of the original bills. This fact was also
informed to the LC by them. To the question as to how many
window frames were purchased by the defendant to be installed
in the leased premises, he did not remember exactly but
according to him, it might be approximately 15-20. Similar was
his answer for window frames and according to him 1-3 doors
frames were installed at the leased premises. Witness sought to
correct himself by stating that only one door was installed. In
answer to the question that the defendant had purchased windows
and doors frames for display in the leased premises from Green
Future Windows Pvt. Ltd. , he did not know about the purchases
of the same but stated that fitting was done by him.
98. Ld. counsel for defendant further submitted that the
invoices bearing no. 27 and No. 806 raised by Mehr Image, part
of Ex. PW1/29 (colly) show that the glass panes were delivered
to an address in Greater Kailash, though PW-1 had asserted that
the glasses were installed in the Okhla Premises but no evidence
has been placed on record by the Plaintiff to prove that the above
goods were transported from Greater Kailash to Okhla. Further,
PW-I also admitted that during the period when the “Plain glass
panes” were installed in the Leased Premises in May 2016,
plaintiff was not in possession of the Leased Premises and he was
unable to show that the Plaintiff was given permission by the
Defendant to carry out this installation.
99. Contention of counsel for defendant that all the invoices
placed on record by the plaintiff, did not bear address of the
leased premises, was found correct, though PW1 sought to clarify
that the address mentioned in the invoices was their address with
CS (Comm) No. : 02/2022 & 392/2022 70/81
the sale tax department. It was submitted by Ld. counsel for
plaintiff that all the invoices except for the Glasses raised by
Mehr Image were raised prior to 2016 substantiating the
contention of PW1 that the construction of the premises was
complete prior to year 2016.
100. In terms of LC report, no outdoor shutter of the premises
could be located in the premises. Upon the main door of the
premises, Ld. LC found sticker of defendant, however, it is not
the case that defendant had manufactured the door. Further, Ld.
LC found 10 window frames on the gound floor and six frames
on the first floor. While DW1 claimed that 15-20 window frames
were instlled in the premises, the invoices placed on record were
pertaining to 23 window frames. Ld. LC found that the glasses
were toughened and the same was got toughened by SKTUFF
which was clear with the stamp of SKTUFF on the glass and the
invoices produced by the plaintiff also showed the mark of
SKTUFF. Invoices for the same as per record had been raised by
M/s Mehr Image and are dated 23.05.2016.
101. PW1 sought to clarify during the course of cross
examination that the glasses initially installed were Kaccha
glasses, and were replaced with Pakka glasses with integrated
glass blinds later in May-June 2016 which was substantiated
with the observation of Ld. LC.
102. It is not improbable that during the construction phase and
prior to completion thereof, plaintiff may have placed orders for
purchase/installation of windows, door, frames etc. As explained
by PW1 that the registered address of his business was provided
for sales tax purposes. Though the delivery address was not
mentioned in the invoices but this omission does not necessarily
undermine the assertion of the plaintiff, considering that the
CS (Comm) No. : 02/2022 & 392/2022 71/81
permanent fixtures are typically installed by the lessor/owner,
unless explicitly agreed otherwise.
103. Since most of the invoices relied upon by the plaintiff
pertain to the year 2014, it was submitted by Ld. counsel for
defendant that plaintiff had purchased the property on
13.05.2016. It was submitted that ” without prejudice to the
defendant/counter claimant’s submission that the lease agreement
dated 01.03.2019 is an inadmissible document, a bare perusal of
the agreement reveals that the plaintiff registered the sale deed
pertaining to leased premises on 13.05.2016. Section 23 of the
Registration Act 1908 stipulates that a document must be
presented to the concerned officer within four months of
execution. Since the sale deed was executed on 13 May 2015,
plaintiff would have purchased the leased premises only after 13
January 2015″.
104. PW1 had testified having received possession of the land
in 2014. Ld. counsel for defendant, thereby, submitted that it is
thus established that the plaintiff’s assertion that the leased
premises was purchased sometimes in 2014 is meritless and
ought to be discarded at the threshold.
105. There appears to be no legal prohibition against obtaining
physical possession of a property prior to the execution of a sale
deed if mutually agreed upon by the parties. Under Transfer of
Property Act, sale of immovable property can only be completed
by a registered sale deed. Delivery of possession without a
registered sale deed does not constitute a legal transfer of
ownership. Nevertheless, if the parties executed an agreement to
sell before delivering possession, and later a sale deed is
executed, the agreement is enforceable subject to compliance
with legal requirements. Delivery of prior possession therefore
may not affect the legality of the registered sale deed. PW1
CS (Comm) No. : 02/2022 & 392/2022 72/81
specifically mentioned the receipt of possession of the property
but was not questioned further to clarify whether possession was
obtained prior to the execution of the sale deed. This lack of
clarification leaves the testimony uncontested in this regard.
106. This fact also cannot be lost sight that the defendant itself
had taken the leased premises for show room as display centre of
UPVC doors and windows. Defendant’s witnesses had
acknowledged that they had their display centre at the ground
floor of the leased premises for display of such windows and
doors, therefore, it is not unlikely that defendant had placed
orders for window frames and doors for its own business of
UPVC and doors to be displayed at the leased premises.
107. Although, the lease deed executed between the parties is
inadmissible due to non-registration and insufficient stamping,
nevertheless if the defendant had incurred/invested so much of
the amount in installation of windows, doors, shutter etc. at the
leased premises, same ought to have been mentioned in the lease
deed or to be reduced in writing. The lease deed did not contain
any clause or stipulation regarding the defendant bearing the cost
of installations or any reimbursement/refund from the plaintiff. It
is improbable that the lessee would agree to pay rent from the
inception of lease if the premises was not even ready for the use.
This raises question about the defendant’s claim of investing in
installations at the leased property. While the defendant claimed
that Director of plaintiff and the then Managing Director of
defendant company namely Mr. Arun Sharma were the same
person, but by the year 2019, said Mr. Arun Sharma, had resigned
from the Defendant company. Subsequent to which, a criminal
complaint had also been filed against him. Nevertheless, as also
admitted by defendant’s witnesses, there was no mention of mis-
appropriation of such funds or resources of the defendant by the
CS (Comm) No. : 02/2022 & 392/2022 73/81
said Director. There was no whisper regarding the installation of
windows, doors etc. at the cost of defendant even thereafter till
the defendant sought vacation of the premises.
108. Vide email dated 30.12.2020, plaintiff had informed
defendant that:
” Kindly note Sach Services never asked aluplast to install anything
on the structure or in the area used by aluplast during the renting period and
if any structural change/installation has been made by aluplast for their own
commercial benefit or display, ideally aluplast should have taken our written
permission as per the contract obligation.
If anything requested by Sach Services and billed to Sach Services,
we are liable to pay, please let us know.
All the fixed windows installed on the facade of the building with
integrated glass blinds are part of structure and were brought by us from M/s
Green Future and Alcove Infratech and all paid and we have all the bills in
our record”.
109. In view of the controversy and the disputed facts, in
absence of any other written stipulation or agreement, defendant
was required to provide account books or other records to
substantiate the expenditure on the installation of material at the
plaintiff’s property as permanent fixtures. It was for the
defendant to establish on record that the installation of windows,
door, shutter etc. as purchased and brought to the leased premises
during the existence/initiation of the lease was for the installation
at the plaintiff’s property and not for the own display of the
defendant which was dealing in UPVC doors, Windows, Door
Frames, Shutter etc. Besides the fact that window frames, doors,
shutter etc. are considered permanent fixtures which become part
of the propety and are not removed after the termination of the
lease.
110. Ld. counsel for defendant further submitted that
window/doors as per invoices were purchased from Green Future
Windows Pvt. Ltd. for installation in the plaintiff’s property.
Since defendant itself is manufacturer of UPVC doors, windows
etc., therefore there was no reason for it to make purhcases from
CS (Comm) No. : 02/2022 & 392/2022 74/81
Green Future Windows Pvt. Ltd for its own display. On query,
put to Ld. counsel for defendant that if defendant itself was
manufacturer, therefore, it was also not required to purchase from
another vendor for installation in the leased premises and
defendant could/should have installed its own product. Ld.
Counsel for defendant conceded that he was unable to assist in
this regard and had no explanation for the same, while
unsuccessfully submitting that the products might have been
purchased from the same vendor to maintain uniformity as the
plaintiff had also installed products from the same source. This
justification even otherwise would not be available to the
defendant. In terms of invoices placed on record by defendant,
the purchase of the window frames was for more than 23 in
number, whereas the installation, in terms of report of LC, was
for 16 window frames on both the floors and DW1 himself had
claimed about installation of 15-20 window frames in the leased
premises. There was no requirement for purchase of more
number of window frames than to be installed in the leased
premises, if the purpose was not for display.
111. In the absence of any agreement regarding installation
expenses or the responsibility of the lessee to carry out the
installations, the necessary corollary would favour the plaintiff,
having undertaken the installation on the leased floors,
particuarly since they had already done so on other floors of the
property. Having discussed as above, counter claim of the
defendant pertaining to installation of windows, frames, doors,
shutter is not made out.
112. AC and Projector: Defendant also claimed about the
purchase and installation of Air Conditioners in the leased
premises and also the Projector, Screen and Refrigerator . Vide
email dated 29.12.2020, plaintiff was informed that the defendant
CS (Comm) No. : 02/2022 & 392/2022 75/81
would be moving items as detailed in the email from show room
which included Air Conditioners Carrier 5.0 TR Ductable,
Projector, Projector Screen and Refrigerator.
113. Vide email dated 30.12.2020 Ex. P-10, defendant was
informed that they were free to take all theses items or dispose
off as per their wish except for the Refrigerator and Projector
which were being used by Mr. Arun Sharma and defendant was
informed to settle the same with Mr. Arun Sharma. Said request
was reiterated by the defendant and similarly answered by the
plaintiff, stating that they had already confirmed the defendant
for removal of AC. PW1 though had earlier claimed that the AC
had already been installed in the leased premises, however, later
during the course of cross examination, he admitted that AC
installed in the leased premises was purchased and installed by
the counter claimant/defendant.
114. Plaintiff placed on record the invoice issued by Nishahat
Ali Painting Contractor dated March 10.03.2021 Ex. PW1/32
(colly). Plaintiff had furnished before Ld. LC, handwritten
receipt, issued by said Nishahat Ali Painting Contractor for
Ductable Carrier AC (old), Quantity-2, priced at Rs. 40,000/-
dated 10.3.2021 which was subsequent to the vacation of the
leased premises by the defendant. Defendant, per contra, had
relied upon invoices issued by R.V. Enterprises Mark ‘F’ for
supply of Carrier Ductable Split AC with twin Compressor in
sum of Rs. 2,47,500/- alongwith two invoices for installation and
commissioning of two Ductable Split Units and its accessories,
both dated 30.07.2016 in sum of Rs. 3,55,973/- (Mark-G) and Rs.
23,000/- (Mark-H) respectively, delivered at the address of leased
premises. With regard to claim of purchase of Projector and
Projector-Secreen, defendant has placed on record invoice dated
05.08.2017 Mark-I issued by Insat Equipment India Private
CS (Comm) No. : 02/2022 & 392/2022 76/81
Limited in favour of defendant in sum of Rs. 43,000/- delivered
at the address of the leased premises.
115. With regard to Projector and Projector-Screen also, it is not
disputed on record that the same were being used by the Director
of the plaintiff company and had not been returned to the
defendant while defendant had vacated the leased premises.
116. Ld. Counsel for defendant submitted that defendant has
placed on record invoices Mark-H raised on it by M/s R V
Enterprises dated 30 July 2016. Contrary to own
acknowledgment, in the evidence affidavit for PW-1, it has been
pleaded that “Plaintiff had installed all air conditioner unit which
are currently on the Leased Premises/suit property”. In support of
his contention, he relies on the inadmissible invoice allegedly
raised on the Plaintiff by one “Nishahat Ali Painting Contractor”
amounting to ₹40,000. Ld. Counsel for defendant further made
following submissions:
a) The invoice raised on the Plaintiff by one “Nishahat Ali
Painting contractor” is dated for March 2021, which is well over
5 years after the date when the Plaintiff claims to have installed
the AC in the Leased Premises. In this respect, the rival claim of
the Plaintiff of its supposed ownership of the AC remains
unproved.
b) The report of the Local Commissioner states that the AC
installed in the Leased Premises “was of the brand “CARRIER”,
which is the same brand of AC as installed by the Defendant as
demonstrated in its invoice.
c) In fact, the Defendant has placed on record the invoice
Mark H amounting to Rs. 3,55,973 for the ducting of the AC
installed in the Leased Premises. The cost of 2 AC’s installed by
the Defendant was Rs. 2,47,500 [Mark F]. The Plaintiff on the
other hand has belatedly placed on record one invoice by a
CS (Comm) No. : 02/2022 & 392/2022 77/81
“Painting contractor” for “Ductable Carrier Ac With Installation
(old)” for only Rs. 40,000. It is highly improbable that 2 AC’s
along with the entire ducting unit can cost Rs. 40,000 even if it is
second-hand.
(d) In light of the Plaintiff’s admission that the ACs are
owned by the Defendant, PW-1’s contrary submissions in this
regard must be struck off. Considering the confirmation that AC
is still lying in the leased premises by the local commissioner,
defendant is entitled to the return of the AC, or in the alternative,
to be compensated for a sum of Rs. 6,26,473/- and adequate
compensatory costs for the plaintiff’s unjust enrichment of the
AC.
(e) That, defendant in support of its ownership over the
purchase and installation of Projector, has placed an invoice
Mark-I raised on it by M/s Insat Equipment Pvt. Ltd. amounting
to Rs. 43,000/-. It is an admitted fact by the plaintiff that this
projector had been installed on the third floor of the Okhla
premises. Though , Local Commissioner stated that the
projector’s presence could not be confirmed in the leased
premises. However, same was admittedly installed on the third
floor of Okhla premises. Since the Local Commissioner did not
visit the Okhla Premises during her inspection, the Report of the
Local Commissioner cannot be taken to be proof of the Plaintiff’s
assertion that the Projector is not present with the Plaintiff.
(f) That, PW-1 contradicted the admission of the Plaintiff
and stated that the Projector was installed by the Plaintiff itself.
It is pertinent to note that the Plaintiff has not placed any invoice
on record to assert its ownership over the Projector. In this
respect, the rival claim conjured up by PW-1 of the Plaintiff’s
alleged ownership of the Projector is unsupported by any
CS (Comm) No. : 02/2022 & 392/2022 78/81
evidence on record. In this respect, the Plaintiff’s claim over the
Projector remains unproved.
(g) That, plaintiff has admitted that the Projector is owned
by the Defendant, and PW-1 has failed to show that the same was
taken away by the Defendant. Additionally, the Plaintiff has
failed to adequately plead its case with respect to the ownership
of the Projector and has not placed any evidence on record to
show the same. In this respect, the Defendant submits that it is
entitled to the return of the Projector, or in the alternative, to be
compensated for a sum of Rs. 43,000 along with adequate
compensatory costs for the Plaintiff’s unjust enrichment of the
Projector.
117. While the plaintiff failed to establish on record that the
second hand AC for which the invoice was issued by said
Nishahat Ali was the same ductable AC unit found/installed at
the leased premises. Plaintiff also failed to demonstrate the
payment made to said Nishahat Ali against the invoices. It is also
evident from the record that the defendant was though permitted
by plaintiff vide email dated 30.12.2020 to remove the material
lying at the leased premises including the Air Conditioners 5.0
TR Ductable, Projector, Projector-Screen and Refrigerator,
however upon perusal of subsequent communication between the
parties, it is also clear that thereafter defendant was unable to
remove the Air conditioner unit or the Projector, Screen and
Refrigerator, due to the plaintiff having put its own locks.
Consequently, defendant was prevented from retrieving its
belongings, in which eventuality, defendant is entitled for refund
of the cost of the material left at the leased premises.
118. Ld. Counsel for defendant had been put query as it had
claimed valuation for Air Conditioners, Refrigerator and
Projector at Rs. 6,69,473/- which is the invoiced amount. Ld.
CS (Comm) No. : 02/2022 & 392/2022 79/81
Counsel for defendant conceded that the depreciation has not
been accounted for, while filing the claim and sought time to file
on record the depreciated statement. Defendant filed on record
revised valuation of counter claim . Against the valuation of Rs.
6,69,473/- for Air Conditioners, Refrigerator and Projector, the
depreciated value as on 28.02.2021, as mentioned by
defendant/counter claimant is Rs. 1,26,608/- As explained, the
method of calculation adopted by the defendant was ” Written
Down Value” method in the books of accounts. Reference of
useable life, as submitted, had been drawn from Schedule II,
Companies Act, 2013. Accordingly, defendant is held entitled for
claim of Rs. 1,26,608/- against the depreciated value of Air
Conditioners, Refrigerator and Projector.
119. Relief:
(a) Claim of plaintiff for money decree in sum of Rs.
4,48,314/- against payment of two months rent i.e. for January
and February 2021 is allowed .
(b) Claim of plaintiff for money decree of Rs.
10,95,948/- being the penalty equivalent to six months rent is
dismissed.
(c) Claim of plaintiff for money decree of Rs. 10 lacs as
compensation for the damages is dismissed.
(d) Counter Claim against cost of Air Conditioner,
Refrigerator and Projector is allowed at the depreciated value of
Rs. 1,26,608/-.
(e) Counter claim pertaining to doors, windows and shutter
in sum of Rs. 12,19,078.85 is dismissed.
(f) Since the security amount of Rs. 3,65,316/- is still lying
deposited with the plaintiff, resultantly with adjustment of the
same from the rental amount payable to plaintiff, defendant is
required to pay sum of Rs. 82,998/- which also stands adjusted
CS (Comm) No. : 02/2022 & 392/2022 80/81
against the amount receivable by counter claimant, leaving the
amount of Rs. 43,610/- (Rs. Forty Three Thousand Six Hundred
Ten only) as decreed in favour of counter claimant/defendant
after the set off.
(g) Defendant shall remove the logo from the premises
of the plaintiff within a period of two weeks, with prior
intimation to plaintiff. Defendant shall ensure that no damage is
caused to the property of plaintiff during the process of removal
of the logo. Plaintiff shall permit ingress of defendant for the said
purpose. On failure of the defendant to remove logo within the
time period, plaintiff shall be at liberty to remove the same at the
cost and consequence of the defendant. Videography be made by
the parties concerned during the process of removal of Logo.
120. In the facts and circumstances of the case, parties are left
to bear their own cost.
121. Decree sheet be prepared accordingly. File be consigned to
record room.
Digitally signed savita by savita rao Date: rao 2025.01.27 17:29:31 +0530 Announced in the open (SAVITA RAO) court on this 27th Day DISTRICT JUDGE of January 2025 (COMMERCIAL COURT)-01 SOUTH, SAKET COURTS, DELHI CS (Comm) No. : 02/2022 & 392/2022 81/81