Eagle Copters Ltd. vs Azal Azerbaijan Aviation Ltd. And ...
2002 Latest Caselaw 254 Bom

ORDER

Pratibha Upasani, J.

1. This notice of motion is taken out by the plaintiff Eagle Copters Ltd. praying that pending the hearing and final disposal of the suit, the defendants be ordered and directed to allow the plaintiff and/or its representative(s)/ surveyor(s) to inspect the helicopter which is leased out by the plaintiff to the defendant No. 1 under the lease agreement between them and which has been in turn sublet by defendant No. 1, Azal Azerbaijan Aviation Ltd. to defendant No. 2 Azal India Pvt. Ltd.

It is also prayed that defendants be ordered to handover possession of the said helicopter to the plaintiff along with manuals and technical records and grant all necessary co-operation and assistance as may be necessary for ferrying the helicopter back to Singapore.

It is also prayed that during the pendency of the suit, the defendants be injuncted from in any manner dealing with, disposing of alienating, encumbering, parting with possession and/or plying the helicopter except with written consent of instructions of the plaintiff.

2. The suit is filed by the plaintiffs against both the defendants praying inter alia the-same reliefs namely redelivery and repossession of the said helicopter which was leased by the plaintiff to the defendant No. 1 under the lease agreement between them dated 2-3-1999 for a period of five years (unless terminated earlier) in consideration for a payment of monthly rent of U.S.S. 39.407/ - and which was sublet by defendant No. 1 (which was a permitted sub-lease to defendant No.2 by defendant No. 1. It is prayed that the said helicopter be ferried back to Singapore and it is also prayed that during the pendency of the suit, the defendants be restrained to part with possession of, alienate the said helicopter without the written permission of the plaintiff or their agents.

3. Few facts which are required to be stated are as follows :

The plaintiffs, Eagle Copter Limited are the registered owner of a model 412 Bell helicopter bearing serial No. 33126 bearing registration mark N412 PK VT/AZF under category A. By a written agreement between the plaintiff and the 1st defendant namely Azal Azerbaijan Aviation Limited dated 2-3-1999, the plaintiff agreed to lease the said helicopter to the 1st defendant for a period of five years (unless terminated by agreement) in consideration for payment of monthly rent of U.S. S 39,407. Exh. B annexed to the plaint is a copy of the said lease agreement between the plaintiff and defendant No. 1.

4. The said lease agreement dated 2-3-1999 contained various clauses with respect to delivery and acceptance of the said helicopter, permitted sub-lease, default, default rate, guarantors, payment of rent, maintenance reserve, late payment, insurance payment, operation, maintenance and related matters, replacement of parts, reports and inspection, return of helicopter, lessee, indemnity, events of default waiver, governing law and jurisdiction etc. All the clauses of this lease agreement were important inasmuch as they governed the contract between the parties. For the purpose of deciding this notice of motion, the most important clauses would be inter alia the clauses relating to governing law and jurisdiction which are events of default, sub-lease, reports and inspection, rent and maintenance so also clause with respect to late payment.

5. The case of the plaintiff is that in pursuance of the above mentioned lease agreement dated 2-3-1999 the helicopter was leadsed to defendant No. 1 but as per the permitted sub-lease clause sublet the same to defendant No. 2. The said helicopter has been and continues to be operating since May, 1999 by the 2nd defendant. It is placed at Juhu Airport in Mumbai and the 2nd defendant at present is using the said helicopter on a contract between the 2nd defendant and Oil and Natural Gas Corporation (O.N.G.C.).

6. The grievance of the plaintiff is that the 1st defendant has failed to pay maintenance reserve for the duration of lease which is a particularly serious breach of the lease. It has to be explained that maintenance reserve payment constituted a fund from which the costs of maintaining the helicopter were paid. Under the terms of lease, the amount of maintenance reserve payable, depends, on the number of hours the hell-copter is flown each month. The said clause is incorporated in Clause 4.2 which can be reproduced below :

"42. Maintenance Reserves. On the delivery Date the lessee shall pay the lessor a maintenance reserve deposit in the amount of U.S. $ 25,000. Thereafter, on 15th day of each month, the lessee shall pay to the lessor, in arrears :

(a) a maintenance reserve payment in the amount of US $ 300.00 per light hours flown by the Helicopter during the prior calender month if the aggregate amount of the Maintenance Reserve is less than or equal to U.S. $ 300.000; or

(b) a maintenance reserve permit in the amount of US $ 150.00 flight hours flown by the helicopter during the prior calender month if the aggregate amount of the Maintenance Reserve is greater than U.S. $ 300,000.

With the first maintenance reserve payment being due and payable on March 15, 1999 for the prior calender month. On each maintenance reserve payment date, the Lessee shall also provide the Lessor with a report certifying the information required by Section 16.6(a). The Maintenance Reserve may be applied by the Lessee towards normal overhaul costs on Major Parts required pursuant to the Lessee's Maintenance Programme or the premature failure of Major Parts not covered by a warranty; provided that any Insurance and Warranty proceeds received for such repairs shall be deposited in the Maintenance Reserve account. To the extent the Maintenance Reserve is not sufficient to pay for the repairs to the Major Parts, the Lessee shall pay for all such repairs and other costs. The lessee shall be reimbursed for such costs once there is a sufficient amount re-accumulated in the Maintenance Reserve to pay for all such costs incurred by the Lessee. The Lessee's obligation to pay the Maintenance Reserve shall not be reduced by any circumstance Including the obligation to pay for such repairs, and the Lessee shall not have any right of set-off."

7. The intention of inserting this clause as per the plaintiffs case was to keep a check and monitor the flying hours of the helicopter and to have an over all check over the maintenance programme. The grievance of the plaintiff is that right from the beginning defendant No. 1 kept on committing breach of this clause with respect to maintenance reserve. The rent also though paid was not as per the agreed time schedule. It is also the grievance of the plaintiff that though there is a clause, namely Clause 4.7, with respect to late payment which says that if there is any rent or any other amount due and payable then on demand, the lessee has to pay interest thereon calculated daily and compounded monthly from the due date thereof until the same has been paid in full at the default rate, no interest has been paid by the defendant No. 1. The case of the plaintiffs is that they repeatedly wrote to defendant No. 1 but there was no reply from their side. It is also the grievance of the plaintiff that maintenance report and inspection also was not given to the plaintiffs as per the terms of the lease agreement and there was breach of these terms and conditions also. In view of this, ultimately the plaintiffs by their letter dated 7-9-2001 terminated the lease agreement dated 2-3-1999, recording therein the breaches committed by the defendant No. 1 and requested defendant No. 1 to redeliver the helicopter to the plaintiffs at S.T. Aerospace Engineering Pte. Limited's hanger at Seletar Airport in Singapore in the condition required by the lease on termination of the term. Thereafter the present suit came to the filed by the plaintiffs in this Court for the above mentioned reliefs on 9-1-2002.

8. Defendant No. 1 have filed their detailed affidavit in reply wherein they have categorically denied all the allegations made by the plaintiffs against them. At the outset, defendant No. 1 has submitted that as per the terms of the lease agreement, the parties are governed by Canadian Law but what the Canadian Law is has not been pleaded in the plaint which actually has to be pleaded as a matter of fact, Canadian law being a foreign law. It is submitted that since what the Canadian Law is has not pleaded, one does not know whether there is indeed any breach of any of the terms and conditions of the lease agreement at all under that law. It is further submitted that though there was a Clause 4.2 in the lease agreement with respect to maintenance reserve which had to be maintained by defendant No. 1, subsequently there was a variation of the term with respect to maintenance reserve and that it was orally agreed/understood between defendant No. 1's Chief Executive Officer, Mr. Omer Levivi and Mr. Mike O Relly on behalf of the plaintiffs that. Instead of creation of maintenance reserve as contemplated by the lease agreement, payment towards maintenance of the helicopter would be made directly by defendant No. 1. It is further averred by the defendant No. 1 that pursuant to the said oral agreement/ understanding the defendant No. 1 spent a total sum of US $ 668.645.80 on maintaining the helicopter which exceeded the amount of US $ 510.000 which would have been payable under the lease agreement towards maintenance of the helicopter by a sum of US $ 150,645.80. It is also averred by the defendant No. 1 that as a result, there is reimburse due to defendant No. 1. It is also averred that the helicopter has been duly maintained by Bell Helicopter Pratt and Witney, S.I. Aerospace Engineering Pvt. Ltd. It is averred that the said helicopter is always maintained in good condition.

9. It is further averred by the defendant No. 1 that the said helicopter is sublet to defendant No. 2 under the lease agreement and that to the knowledge of the plaintiffs, the said helicopter is in operation and is being used for transporting O.N.G.C. personnel under defendant No. 2's contract with O.N.G.C.

10. It is also contended by defendant No. 1 that all along, talks have been going on between the plaintiffs and defendant No. 1 for purchase of the said helicopter by defendant No. 1 from the plaintiffs and that filing of the present suit is nothing but presurrising tactics from the plaintiff's side to compel defendant No. 1 to purchase the said helicopter at a price as commanded by the plaintiffs.

11. It is also contended by defendant No. 1 that granting relief of repossession of the helicopter to the plaintiff at this inter- locutory stage will amount to granting final relief in the suit because once this relief is granted nothing will remain in the suit as the foreign plaintiffs would go away with the helicopter, and the defendant No. 1 would be deprived of putting up its case/defence. Pointing out these factors, the defendant No.1 has prayed that the plaintiffs notice of motion is a throughly dishonest move just to pressurise defendant No. 1 to purchase the helicopter at the price at which they want to sell it. It is also pointed out that there is suppression of various facts, which have not been placed before this Court. It is also pointed out that Court-fee is paid by the plaintiffs dishonestly only on the estimated costs of obtaining necessary permission in ferrying back the helicopter to Singapore. It is, therefore, prayed that this notice of motion be dismissed with costs.

12. Defendant No. 2 who are the permitted sub-lessee of defendant No. 1 have taken out chamber summons being Chamber Summons No. 162 of 2002 in which they have come out with the case that the plaint does not disclose any cause of action against them and therefore, the plaint be rejected under Order 7. Rule 11 of the Civil Procedure Code 1908. They have also pointed out that in the suit no relief is claimed against defendant No. 2.

13. As far as notice of motion taken out by the plaintiff is concerned, defendant No.2 have denied the allegations made by the plaintiffs in the plaint and in the affidavit In support of the motion. They have submitted that the left-hand engine which was originally fitted in the helicopter required over hauling and was removed from the helicopter to facilitate the same. It is further averred that the left-hand engine was temporarily replaced with rental engine until such time the original engine was overhauled. It is further submitted that the rental engine was thereafter removed from the helicopter and the original left-hand engine was reinstalled and that the plaintiffs at all times were fully aware that the rental engine was temporarily installeld pending completion of over-haulting of original engine. It is further averred that in fact the over-hauled engine has approximately 2430 more hours of flying time as of date then it did at the time when it was leased to defendant No. 1 and that number of hours of flying time of the said overhauled left-hand engine was reflected in the maintenance report dated 6-2-2002 in respect of the helicopter.

14. It is further averred that amount spent by the defendants on maintaining the helicopter had Increased from US S 668,645.80 to US $ 826,980.90 after taking into account the costs of overhauling the left hand engine of the helicopter and therefore, in fact defendant No. 1 was required to be reimbursed. Giving these facts and figures, the defendant No. 2 also has prayed that the notice of motion taken out by the plaintiff be dismissed.

15. I have heard Mr. M.S. Rathod for the plaintiff and Mr. I.M. Chagla for defendant No. 1 and Mr. Mustufa Doctor for defendant No.2. I have also gone through the entire pleadings so also the case law cited by the respective advocates and in my opinion the notice of motion taken out by the plaintiff so also the chamber summons taken out by defendant No. 2 praying that the plaint does not disclose any cause of action against defendant No. 2 and hence the suit itself be dismissed as per the provisions of Order 7, Rule 11. C.P.C. both have to be dismissed for reasons given below.

16. The plaintiffs case simply put is that there was a lease agreement with respect to the helicopter between the plaintiffs and defendant No. 1, that there was a breach committed by defendant No. 1 with respect to certain terms and conditions incorporated in the said lease agreement as a consequence of which the plaintiffs are now entitled to claim redelivery and repossession of the helicopter along with other consequential reliefs.

The 1st defendants case however is that there was no such breach and if at all there was any such breach it was purely a technical breach and as per the oral agreement between the plaintiffs representatives and defendant No. 1's representatives named in the affidavit in reply of defendant No. 1, a slightly different but more reasonable and rational mode with respect to Clause 4.2 with respect to maintenance reserve was adopted obviously with the consent of the parties. The 1st defendant's case is that the suit is filed by the plaintiff with the sole intention of pressurising defendant No. 1 to make them purchase the helicopter at a price for which the plaintiffs want to sell it. Mr. Chagla appearing for defendant No. 1 submitted that there were regular meetings between plaintiffs and defendant No. 1 and that this mode was found to be more rational and reasonable for maintaining the helicopter than the one which was agreed upon. Mr. Chagla further pointed out that it was Inconceivable that though the alleged breach with respect to maintenance reserve and delayed payment was committed long back, no active steps were taken by the plaintiffs and that they simply kept on writing letters just to create a record. Mr. Chagla submitted that the date of lease agreement is 2-3-1999 and as per the grievance of the plaintiffs there was default on the part of defendant No. 1 right from the beginning but the letter of termination of lease was sent only on 7-9-2001 and the suit came to be filed only on 9-1-2002 and that this itself shows that the plaintiff had not taken the alleged default seriously but they were only interested in selling their helicopter to defendant No. 1.

I find substance in the submissions of Mr. Chagla. It is not denied any where, any, it is an admitted position that negotiations were continuously going on between the plaintiff and defendant No. 1 for purchase of the said helicopter by defendant No. 1 and the bone of contention was the price and the parties were not arriving at a price acceptable to both of them.

17. I also find substance in the submission of Mr. Chagla that if possession of the helicopter is given to the plaintiffs at this interlocutory stage, the plaintiff who are based in Canada would not be available for the hearing of the suit because repossesion and redelivery of the helicopter is the main relief which has been prayed for by the plaintiffs. Mr. Chagla argued that if that relief is granted now at this stage, the defendant No. 1 will be deprived of showing by way of evidence that such an oral evidence was in fact there with respect to the maintenance reserve of the helicopter. He also submitted that even though Section 92 of the Evidence Act excludes oral evidence when there is a written agreement, one does not know whether in the Canadian Law which is applicable to the lease agreement any such similar provision exists because the Canadian Law being a foreign law ought to have pleaded as a question of fact which has not been done by the plaintiff.

18. Mr. M.S. Rathod, appearing for the plaintiff vehemently argued that the clause in respect of maintenance reserve was included with an intention to have a dual control over the operation, flying hours and maintenance of the helicopter and also pointed out that no reply was ever given by defendant No. 1 to any of the letters written by the plaintiffs. He also pointed out that the plea of oral agreement came for the first time in the affidavit in reply. On the point of jurisdiction Mr. Rathod argued that since the helicopter is placed in Bombay he has approached this Court and has taken leave under Order 2, Rule 2, C.P.C. so that the plaintiff can go to Canada for getting redressal of their other grievances against the defendant No. 1.

Much case law has been cited by both the parties, However, in my opinion it is not necessary to discuss the case law as I find substance in the submission of Mr. Chagla that granting relief of redelivery of the helicopter at this interlocutory stage would amount to granting final relief to the plaintiff which cannot be done and that by doing so the defendant No. 1 would be deprived to show that there was in fact a change in the arrangement as far as clause with respect to maintenance reserve was concerned. Indeed the final relief claimed in the suit and the notice of motion is same which is redelivery and repossession of the helicopter. It is not that Courts are powerless to grant such a relief at the interlocutory stage. In an appropriate case, the courts may in their discretion, on being satisfied, grant such a relief. However, in my opinion, that is not a fit case where this Court should grant such a relief. I, therefore, reject the contention of Mr. Rathod, appearing for the plaintiffs. In fact that attitude of the plaintiff in dilly dallying to approach the Court of law and simply writing letters after letters while not denying that the negotiations for selling the helicopter to defendant No. 1 were going on makes one suspicion about the real intention of the plaintiffs to file this suit so belatedly. The chronology of dates and events on this aspect is very telling and speak for Itself. Inadequacy of Court-fees by the plaintiffs also is improper and they must do correct valuation and pay court-fees accordingly.

19. As far as Chamber Summons taken out by defendant No. 2 for rejection of plaint under Order 7, Rule 11, of CPC is concerned, it has to be said that from the pleadings it is evident that plaintiffs do have a cause of action against defendant No. 2 also and the averments make it clear. The possession of helicopter is with the defendant No. 2 and there are averments in the plaint which explicitly make it clear that not only the plaintiffs have cause of action against defendant No. 2 but that the cause of action is also disclosed in the plaint. Defendant No. 2 are, therefore, not only proper but are necessary party. Probably, inadvertently the plaintiffs have not claimed any relief against defendant No. 2 but the entire tenor of the suit discloses the cause of action against them and the lapse appears to be Inadvertent which can be rectified as per the provisions of law by way of amendment. In fact the lapse of not claiming relief against defendant No. 2 appears to be really inadvertent inasmuch as the averments in the plaint otherwise would be inconsistent with the relief and nature of claim made by the plaintiffs against the defendant No. 1. Therefore, I see no substance in the chamber summons taken out by defendant No. 2 for rejection of the plaint under Order 7, Rule 11, C.P.C. 1908. In view of the aforesaid discussions, following order is passed.

Notice of Motion No. 85 of 2002 is dismissed. Chamber Summons No. 162 of 2002 is also dismissed.