Bombay High Court
Wework India Management Private ... vs M/S. Kga Investments on 22 December, 2023
Author: Sharmila U. Deshmukh
Bench: Sharmila U. Deshmukh
2023:BHC-AS:39295
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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CIVIL APPELLATE JURISDICTION
WRIT PETITION NO.840 OF 2022
Wework India Management Private Limited ]
a company incorporated under the provisions ]
of the Companies Act, 2013, ]
having its registered office at 1st Floor, ]
Embassy Point, 150 Infantry Road, ]
Bengaluru- 560001 and also having, ]
its office address at Raheja Plantinum, ]
Sag Baug Road, Off. Andheri-Kurla Road, ]
Andheri (East), Mumbai - 400059. ] ...Petitioner.
Versus
M/s. KGA Investments ]
a partnership firm, ]
having its registered office at 601, ]
Commerce House, 140, Nagindas ]
Master Road, Fort, Mumbai - 400001. ] ... Respondents.
WITH
INTERIM APPLICATION NO.824 OF 2023
IN
WRIT PETITION NO.840 OF 2022
M/s. KGA Investments ... Applicant.
V/s.
Wework India Management Private Limited ... Respondent.
Mr. Rohaan Cama and Ms. S. Laskari i/b Phoenix Legal for the Petitioner in
Writ Petition No.840/2022 and for Respondent in IA No.824/2023.
Mr. Vineet Naik, Senior Advocate and Mr. Prateek Seksaria, Senior Advocate
along with Mr. Siddharth Mehta, Mr. A. S. Pal, Ms. Emram Quraishi, Ms.
Vaidehi Bhatt i/b Mehta and Padamsey for Respondent in WP No.840/2022
and for Applicant in IA No.824/2023.
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Coram : Sharmila U. Deshmukh, J.
Reserved On : November 8, 2023.
Pronounced On : December 22, 2023.
JUDGMENT :
1. Rule. Rule made returnable forthwith and heard finally with
consent of the parties.
2. By this petition filed under Article 227 of Constitution of
India, the challenge is to the order dated 3 rd January 2022 passed by
the Appellate Bench of the Small Causes Court, Mumbai in Revision
Application No. 40 of 2021 setting aside the order of the Trial Court
rejecting the application for interim relief. For the sake of
convenience, parties are referred to by their status before the trial
Court.
Facts :
3. L. E. & Suit No.29/2020 was instituted seeking the
following substantial reliefs:
"a) this Hon'ble Court be pleased to declare that the Leave and
License Agreement dated 17 May 2019 and Deed of Rectification
dated 30 September 2019 are valid and subsisting;
b) this Hon'ble Court be pleased to declare that the proposed
surrender of 8th and 7th floors of Chomium Building being 56,030
sq. feet. by the Defendant No.1 in its e-mail dated 22 July 2020 is
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bad in law;
c) this Hon'ble Court be pleased to pass suitable order and
decree directing the Defendant No.1 to specifically perform the
Leave and License Agreement dated 17 May 2019 read with Deed
of Rectification dated 30 September 2019;
d) this Hon'ble Court be pleased to pass suitable order and
decree directing the Defendant No.1 to pay to the Plaintiff the
arrears of License Fees and other charges for the months of April
2020, May 2020, 1 June 2020 to 7 June 2020, July 2020 and
residue license fee for the month of August 2020 as per Exhibits
"G-1", "N-2", "R-2", "V-2" , "Z-2" annexed hereto along with
interest at the rate of 18% per annum from the due date of the
respective month till actual payment and/or realisation, as per
Particulars of claim being Exhibit "AA', annexed hereto;
e) this Hon'ble Court be pleased to pass suitable order and
decree directing the Defendant No.1 to pay to the Plaintiff the
arrears of License Fees and other charges for the succeeding
months from August 2020 under the Leave and License
Agreement dated 17 May 2019;
f) this Hon'ble Court be pleased to pass suitable order and
decree directing the Defendant No.1 to pay to the Plaintiff
contractual rate of interest of 18% p.a. on the arrears of License
Fees and other charges for the succeeding months from August
2020, from due date of payment of license fee of each month till
payment and/or realization;"
4. Vide leave and license agreement dated 17th May 2019 read
with Deed of Rectification dated 30th September 2019, license was
granted by the plaintiffs for use and occupation by Defendant No.1
of the building known as "Chromium Building" from ground floor to
8th floor for a period of 10 years with lock-in-period of 60 months.
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As regards the 9th floor of the building, the agreement was that
license in respect of the 9th floor will be granted upon receipt of full
occupation certificate. The license free period was 10 months and
thereafter monthly compensation was agreed to be paid @ Rs.105/-
per square feet from 11th month to 36th month with escalation @
12% p.a. after expiry of every three years. In the month of February-
March 2020 there was an outbreak of Covid 2019 pandemic. Vide
order dated 20th March 2020, MCGM directed the commercial
establishments such as Defendant No 1's establishment to close
their facility.
5. On 21st March 2020, notice was issued by Defendant No 1
to the plaintiff in terms of Clause 22.1 and 22.4 of the leave and
license agreement (for short "the agreement") invoking the force
majeure clause seeking recusal from the performance of obligations
including obligation to make payment of the rent and other charges
payable under the agreement w.e.f 21 st March 2020. On 23rd March
2020, lockdown was declared in the State whereby except essential
services in the State, all private establishments were ordered to
remain shut. On 28th March 2020, the plaintiff responded to the
communication dated 21st March 2020 stating that no situation has
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occurred which interferes with the Defendant's obligation to make
payment to the plaintiff as electronic banking services remained
available. By the said communication, Defendant No.1 was put to
notice that any non performance in payment of the license fees and
other charges under the agreement will trigger provision of
breach and indemnity under the agreement if resorted to, apart
from non payment being in breach of the agreement. On 2 nd April
2020, further correspondence ensued seeking to enforce the force
majeure clause to seek waiver of the license fees and other charges.
On 8th April 2020, the Plaintiff wrote to Defendant No 1 stating that
Clause 22.4 of the agreement provides for abatement of license
fees obligation of Defendant No. 1 only with respect to the
affected portion and there has been no damage to the premises as
is required to make such a claim. On 7th May 2020, Defendant No.1
sent a proposal recommending settlement payout of the arrears of
license fees in view of the lockdown which was rejected by the
Plaintiff vide communication dated 14th May 2020.
6. On 2nd June 2020, the second settlement proposal was sent
by Defendant No.1 proposing for deferment of April and May
compensation to be paid in equal installments from September,
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2020 onwards over 18 months and reducing the escalation due in
April, 2022. The proposal was rejected by the Plaintiff vide
communication dated 3rd June, 2020 putting Defendant No 1 to
notice that they will be forced to terminate the agreement if
payment is not made. On 22 nd July 2020 Defendant No.1
communicated to the plaintiff that they need their support in
working together on the surrender of the 7 th and 8th floor from
August 2020. On 22nd July 2020, the plaintiff called upon the
Defendant to release the payment of the invoice for the month of
July 2020 along with interest. In the said communication there is no
reference as regards surrender of 7th and 8th floors.
7. On 12th August 2020, suit was filed by the plaintiff before
the Small Causes Court interalia seeking the arrears of license fees
and other charges for the months from April 2020 to 7 th June, 2020,
July 2020 and residue license fees for the month of August 2020 as
per the particulars of claim annexed thereto. Interim Applications
below Exhibit-"10" was filed by the plaintiff seeking a direction to
Defendant No.1 to pay arrears of license fees from 1 st April 2020
along with interest and to continue to pay the license fees under
Clause 5 of the leave and license agreement dated 17 th May 2019,
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which was opposed by Defendant No.1 by its affidavit-in-reply dated
28th October 2020. By order dated 5 th February 2021, the trial Court
rejected the application as against which the plaintiff filed Revision
Application No. 40 of 2021. The Appellate Court by the impugned
order allowed the Revision and invoking provisions of Order 39 Rule
10 read with section 151 of CPC ordered Defendant No.1 to deposit
the arrears due as per agreement dated 17th May 2019 till the date
of the order and to regularly deposit the said amount from month
to month. The Revisional Court further permitted the plaintiff to
withdraw the amount deposited in the Court.
Order of Trial Court :
8. The trial Court held that the licensed premises were used
for business purpose and there was nationwide lockdown imposed
by the Government and MCGM Authorities from 23 rd March 2020 to
7th June 2020. Considering the relevant clauses pertaining to force
majeure, the trial court held that definition of "Force Majeure Event"
in Clause 1.1(1) of the agreement included government action and
that the only condition under the agreement was to give prompt
notice to the other party of happening of force majeure event
which Defendant No.1 has complied. The trial Court held that due
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to suspension of business during lockdown period as per MCGM
order, as per the agreement Defendant No.1 is not liable to pay the
license fees. The Trial court held that provisions of Order XV-A of
the C.P.C. are inapplicable as the suit was not for eviction. As
regards the provisions of Order 39 Rule 10 of C.P.C, the trial Court
held that the provisions cannot be invoked as the amount claimed
by the plaintiff is not admitted by Defendant No.1. It held that the
plaintiff failed to show prima facie that Defendant No.1 wrongly
invoked force majeure clause and wrongly withheld the license fees
of the locked down premises. That, the plaintiff failed to show
prima facie that Defendant No.1 can be directed to deposit arrears
of license fees under Order XV-A of CPC or under Order 39 Rule 10
of CPC and that granting of main relief by way of interim relief is
impermissible.
Order of Revisional Court:
9. The Revisional Court held that the plaintiff is not entitled
to invoke Order XV-A of CPC (Bombay amendment) and Order 39
Rule 10 can be invoked by relying on the decisions on this Court in
Suresh Haribhau Admane and Sangeeta Prints. The Revisional Court
observed that the contract is still in lock-in-period and of such a
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nature that it cannot be separated floor-wise as the entire building
with parking facility, security facility, common amenities, lifts etc are
given in possession of the Defendant. The Revisional Court held that
Defendant No.1 had two options either to terminate the contract
partially or wholly and pay the entire liability for 60 months lock-in-
period as debt, which was not done and the second option is that
the Defendant No 1 is liable to make payment of the license fees for
whole of the building till he terminates the contract. That as far as
payment of license fees is concerned, the Defendant No 1 is under
contractual obligation to pay the license fees for the entire building
including the 7th and 8th floors for period of 60 months lock-in-period
and shall continue till the contract is lawfully terminated.
Interpreting Order 39 Rule 10 of CPC it held that the admission
appearing in first part of Order 39 of CPC is applicable to the
holding of money or other things as trustee for another party and
later part is not depending on admission.
10. As regards the liability to pay license fees for the period
between 1st April 2020 and 7th June 2020 on account of force
majeure, the Revisional Court considered the Defendant's nature of
business and held that the business of the Defendant No 1 was
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creating work places and sub licensee was not prohibited due to
Covid-19 restrictions and therefore Covid-19 restrictions is not force
majeure for Defendant. The Revisional Court held that it is the
Defendant No 1 who has chosen his business model and the Plaintiff
is entitled to only license fees, irrespective of business runs into
losses or profit.
11. In the context of Order 39 Rule 10 of the CPC, the
Revisional Court held that the e-mail to the defendant dated 3 rd
June 2020 (wrongly mentioned as 3rd June 2020 instead of 2nd June
2020) admitted the liability. The Revisional Court further held that
Clause 22.4 cannot be invoked to avoid liability for top two floors.
The Revisional Court held that though recovery of arrears is one of
the reliefs in the prayer clause where statute provides a remedy it
cannot be denied merely because it would satisfy one of the main
reliefs in the suit. The Revisional Court held that the only issue is as
regards the interpretation of the contract and the core issue could
be decided even at the stage of Order XV Rule 3 of CPC. The
revision application was held maintainable as substantive right of
the Plaintiff was affected.
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12. Heard Mr. Rohan Cama, learned counsel for the Petitioner
and Mr. Vineet Naik, learned Senior Advocate for the Respondents.
Submissions:
13. Mr. Cama, learned counsel for the Petitioner has taken this
Court minutely through the relevant clauses of the leave and license
agreement dated 17th May 2019. Pointing out to Clause 22 of the
agreement, he would contend that restricting the applicability of
force majeure clause only in the case of physical damage to the
premises would render clause 22.1 of the agreement redundant.
He would contend that vide e-mail 22 nd July 2020, Defendant No 1
effectively surrendered 7th and 8th floors of the building and
continued to pay the license fees for ground plus 6 th floors in
respect of which there is no default. Drawing attention of this
Court to the findings of the Trial Court, he submits that as regards
the provisions of Order 39 Rule 10 of CPC, the trial Court has rightly
observed that there was no admission which was a sine qua non for
applicability of Order 39 Rule 10 of CPC as the liability towards
payment of license fees towards 7th and 8th floors is disputed. He
would further submit that the order of trial Court does not reveal
that any arguments were advanced as regards the surrender of 7 th
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and 8th floors and thus the Revisional Court could not have
adjudicated the issue, and the proper course for the Plaintiff would
be to seek review of the order of Trial Court. He would contend
that the interpretation placed on the provisions of Order 39 Rule 10
of CPC by the Revisional Court would render the provision an
absurdity.
14. Drawing attention to the Bombay amendment of Order XV-
A of CPC, he would contend that the provision is applicable to a suit
between the lessor or licensor against the lessee or licensee for
eviction and only in respect of this class of suits, deposit can be
directed. He would contend that after the amendment to Order XV-
A in the year 1990, there has been a conscious restriction on the
right of licensor/lessor to seek benefit of deposit where the suit is
not for eviction. He submits that a specific provision being available
and inapplicable to the instant case, recourse could not be had to
Order 39 Rule 10 of CPC. He would contend that the principles of
revision under section 115 of CPC are clear and the revision
application was not maintainable.
15. By pointing out the prayers in the plaint, he submits that
final relief has been granted at the interim stage and nothing more
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remains to be adjudicated on merits. He has taken this Court
minutely through the findings of the Revisional Court and would
submit that despite the known position that all establishments were
closed, the Revisional Court has held that the notification was not
applicable to the business of Defendant. He would submit that as
the compensation was payable on per square feet area, the contract
was severable and the surrender of 7th and 8th floors was valid. He
would further submit that non payment of the license fees which is
the core issue in the case pleaded by the Plaintiff is in effect a
breach of the leave and license agreement for which remedy was
one only for damages, which could be determined only at the stage
of final hearing after evidence has been led. He submits that the
Revisional Court has substituted its own view in place of view taken
by the Trial Court. Reliance is placed on the following decisions :
[a] World Crest Advisors LLP vs. Catalyst Trusteeship Limited and
Ors., [2022 SCC Online Bom 1409];
[b] Gangotri Enterprises Limited vs. Union of India [(2016) 11 SCC
720];
[c] B.P.C.L. v. Thakorbhai [2003(3) Mh. L. J. 617];
[d] Union of India vs. Raman Iron Foundry, [(1974) 2 Supreme Court
Cases 231];
[e] Union of India v. D. N. Reveri and Co., [(1976) 4 SCC 147];
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[f] Iron and Hardware (India ) Co. vs. Shamlal and Brothers [(1954)
Indian Law Reporters, 739];
[g] H. M. Kamaluddin Ansari & Co., v. Union of India [(1983) 4 SCC
417];
[h] Daman Singh v. State of Punjab [(1985) 2 SCC 670];
[i] Wander Ltd v. Antox India P. Ltd [1990 (Supp) SCC 727];
[j] Purshottam Vishandas Raheja v. Shrichand Vishandas Raheja
[(2011) 6 SCC 73];
[k] Mohd. Mehtab Khan & Ors vs Khushnuma Ibrahim Khan [(2013)
9 SCC 221];
[l] Navodaya Vidyalay Samiti v. Afshan Khan [(2019) 11 SCC 548];
and
[m] State of U.P. v. Ram Rukhi Devi [(2005) 9 SCC 733].
16. Per contra, Mr. Naik, learned Senior Advocate appearing for
the Respondents submits that the leave and license agreement was
a structured commercial contract and the entire building was taken
on license. Pointing out the clauses in the agreement, he submits
that the licensed premises is defined in two parts as in respect of 9 th
floor occupation certificate has not been obtained. Countering the
submissions of Mr. Cama as regards the severability of contract, he
would submit that the agreement will have to be looked into as a
whole and the same would demonstrate that what was licensed
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was the entire premises and there was lock-in-period for 5 years
even in respect of 7th and 8th floors. He pointed out that the
principle obligation of the Petitioner was payment of the license
fees and force majeure clause related to obligation to pay and not
right to use. He submits that the obligation to pay was not affected
as the banking services were not frozen. According to him, the
contract is clear inasmuch the Petitioner had the right to terminate
the contract for a period if the entire premises were not used for
the period in excess of 45 days due to force majeure event and
having chosen not to do so, the liability for payment of license fees
for the entire period rests upon Defendant No.1.
17. He would submit that the communication dated 2 nd June
2020 does not mention that the same is without prejudice and in
fact the letter sets out the proposal for payment and as such the
right if any under the force majeure event was given up. He would
submit that there cannot be unilateral surrender of 7 th and 8th floors.
Pointing out to the order of trial Court, he would submit that the
suit was filed for arrears of the license fees for the entire building
and as such issue as regards the 7th and 8th floors was also under
consideration of trial Court and as such there was no discussion
about surrender of tenancy of 7th and 8th floors in the order of trial
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Court.
18. On the issue of applicability of Order 39 Rule 10 of CPC,
relying on judicial pronouncements, he would submit that the
Courts are within their right to direct the deposit of the amount. On
the issue of final relief being granted at interim stage, he submits
that the said proposition will not apply to the suits filed between
the landlord and tenant/licensor and licensee. Considering the
provisions of Order XV-A of CPC, he would submit that the
legislative mandate is not to deprive the landlord of his right to
recover the money. Pointing out to the decisions in the case of
Colaba Central Co-op. Consumer Wholesale and Retails Stores Ltd vs.
Kusumben Kantilal Shah [2003 SCC Online Bom 875] which has been
subsequently followed in various decisions, he submits that the
justice is not on the side of Petitioner. He would submit that apart
from the claim for unilateral surrender of the 7th and 8th floors, the
Petitioner now refuses to pay the license fees for the 9 th floor also
despite the occupation certificate being received and the Petitioner
being duly notified about the same.
19. As regards the maintainability of revision application, he
relies upon the decision in the case of Bhartiben Shah vs. Gracy
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Thomas [2013 (1) CTC 833] and submits that Full Bench of this Court
has held that the revision lies if substantive rights and interest of
the parties are affected. He submits that the decision in the case of
Gangotri Enterprises Limited vs. Union of India [(2016) 11 SCC 720]
has been held to be per incuriam in State of Gujarat Vs Amber
Builders [(2020) 2 SCC 540]. He relies upon the following decisions :
[a] State of Gujarat Vs Amber Builders [(2020) 2 SCC 540];
[b] Cipla Ltd v. Competent Authority and the Dist. Dy. Registrar
[2021 SCC OnLine Bom 622];
[c] Bhartiben Shah vs. Gracy Thomas [2013 (1) CTC 833];
[d] The State of Bombay v. Morarji Cooverji [1958 SCC OnLine Bom
188];
[e] Yespal v. Union of India [2016(2) Mh.L.J. 827];
[f] P. K. Palanisamy v. N. Arumugham [(2009) 9 SCC 173];
[g] Ramanand v. Dr. Girish Soni [2020 SCC OnLine Del 635];
[h] Uma Sharma v. Miniso Life Style Pvt. Ltd [2020 SCC OnLine Del
979];
[i] Sangeeta Prints Vs. Hemal Prints [AIR 1986 Bom 423];
[j] Chandrakant Shankarrao Deshmukh v. Haribhau Tukaramji
Kathane [1983 Mah. L. J. 88];
[k] Shantaram Janu Raut vs. Claradas Lourds [1998 (1) ALL MR
672];
[l] Rambhau Bapurao Deshmukh vs. Narayan Sitaramji Ukande
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[1995 (4) Bom C.R. 611];
[m] Bhimrao Laxmanrao Nihare vs. Natwarlal Ratansi Thakkar,
[2004 Vol. 106 (2) Bom. L. R. 816];
[n] Jamnadas Motimal Vs. Ishwarbai Tejandas Alwani [AIR 1981
Bombay 314];
[o] B.P.C.L. v. Thakorbhai [2003(3) Mh. L. J. 617];
[p] Suneesh K. S. vs. Travancore Devaswom Board [2022 SCC
OnLine 611];
[q] Har Shankar v. Dy. Excise and Taxation Commr [(1975) 1 SCC
737];
[r] State Bank of Haryana v. Jage Ram [(1980) 3 SCC 599];
[s] Colaba Central Co-op. Consumer Wholesale and Retails Stores
Ltd vs. Kusumben Kantilal Shah [2003 SCC Online Bom 875];
[t] Anantbhushan v. Vikas s/o Kashinath [2005(4) Mh.L.J. 583];
[u] TCI Telenet Solutions Pvt. Ltd v. Milliennium Motors Pvt. Ltd
[2013 SCC OnLIne Bom 1757];
[v] Jaihind Vidyalaya, Nagpur v. Ghanshyam Girharilal Khinchi
[1987 SCC OnLine Bom 85]; and
[w] Indo Nippon Chemical Company Ltd v. Indu Nissan OXO
Chemical Industries Ltd [Order dtd. 11 th Jan. 2005 in Bom. H.C.
Civil W.P. 7434 of 2004].
Analysis and Conclusions:
20. The issues to be considered by this Court can be broadly
summarised as under :
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(a) Whether by reason of the the legislative amendment of the
year 1990 to the provisions of Order XV-A of CPC there has
been conscious restriction on the rights of lessor or licensor
to seek benefit of deposit only where the lessor or licensor
sues for eviction as a consequence whereof in suits
between lessor or licensor against lessee or licensee
seeking reliefs other than eviction, Order XV-A being
inapplicable, recourse could not be had to provisions of
Order 39 Rule 10 to seek deposit.
(b) Whether in the facts of present case, on prima facie
consideration of clauses of the agreement, the force
majeure clause could be invoked and as such there was
waiver of monthly license fees during the subsistence of
the force majeure event.
(c ) Whether the contract was severable and upon the
surrender of 7th and 8th floors, the liability to pay license
fees ceased.
(d) Whether there is an admission of liability by the Petitioner
so as to direct deposit under Order 39 Rule 10 of CPC in
respect of arrears of licence fees for 7th and 8th floors.
(e) Whether the demand for the license fees in respect of the
7th and 8th floors amounts to damages and as such could not
have been directed to be deposited.
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(f) Whether in the facts of the present case, direction of
deposit amounts to grant of final relief.
(g) Whether the revision application was maintainable.
(h) Whether by the impugned order, the Revisional Court
substituted its own view for that of the Trial Court and is
thus unsustainable.
21. Determination of the above issues will involve
consideration of the relevant clauses of the agreement and for ease
of reference, the relevant clauses are reproduced hereinafter:
Clause 1 Definitions and Interpretations :
1.1 (l) Force Majeure means any event such as acts of God
or such other events including Government action, orders,
terrorist activities, lightening, earthquake, tempest,
cyclone, flood, volcanic eruption, fire, landslide, war, trade
embargo which prevents the affected party from
performing its obligations under this Agreement which act
or event is beyond the reasonable control and not arising
out of the fault or negligence of the affected party and
which affected party has been unable to overcome by the
exercise of due diligence and reasonable efforts, skill and /
or care, including through expenditure of reasonable sums
of money.
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"(n) "Gross Licensable Area" shall mean the total
area of the Premises in respect of which License Fee has
been calculated as set out in Schedule B";
"(p) "Licensed Area 1 " shall mean the area comprised of
ground to the 8th floor of the Building admeasuring
2,66,846 (Two Lakh Sixty-six Thousand Eight Hundred And
Forty-six) square feet of Gross Licensable Area, more fully
described in Schedule B:"
"(q) "Licensed Area 2" shall mean area comprised of 9 th
floor of the Building along with the terrace of the Building
admeasuring 18,467 (Eighteen Thousand Four Hundred and
Sixty Seven) square feet of Gross Licensable Area, more
fully described in Schedule B."
"5.1. The monthly consideration payable by Licensee to
the Licensor with respect to the Premises shall be Rs.105/-
(Rupees One Hundred and Five) per square feet of Gross
Licensable Area (per month) of the Premises ("License Fee")
as specified in Annexure 3 hereto"
"8.1. (i) Subject to the Licensee paying the License Fee
on the due dates in the manner herein provided and
observing and performing the covenants, conditions and
stipulations herein contained, the Licensee shall, at all time
during the License Period, be permitted unimpeded use and
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peaceful and quiet occupation of the Premises during the
License Period, without any let, obstructions, eviction,
interruption and/or disturbance, claim and demand
whatsoever by the licensor or any person or persons
lawfully or equitably claiming by, from, under or in trust for
the Licensor and the Licensor will take all necessary action
to ensure the same.
(j) The Licensee shall have unlimited access and right to
use and operate the premises 24 (twenty four) hours a day,
all days of the week with infrastructure and facilities as
specified in this Agreement and as permitted by Applicable
Law."
"20. Lock in and Termination:
20.1 The Licensee shall not be entitled to terminate the
license for a period of 60 (sixty) months commencing from
the License Commencement Date ("Licensee Lock-in
Period").
20.2 Except as otherwise provided in this Agreement, the
Licensor shall not have any right to terminate this
Agreement during the License period (Licensor Lock-in
Period)
20.3 After the expiry of the Licensee Lock-in Period, the
license of the premises may be terminated by the Licensee
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by providing the Licensor with 6 (six) months written
advance notice.
20.4 There being no default attributable to the Licensor,
the Licensor shall have the right to terminate this
Agreement during the license Period, including the Licensee
lock in period, in any of the following circumstances ("Event
of Default")
(a) .....
(b) .....
(c) .....
(d) .....
(e) .....
(f) .....
(g) Without prejudice to Clause 20.4 (i), any default,
breach of or non-compliance by the licensee of any
of the terms, conditions, covenants of this
Agreement which default is not cured within 15
(fifteen) days from the date of delivery of notice of
such default.
20.5. Upon the occurrence of an Event of Default, the
provisions in relation to the licensor's lock-in period shall
stand forthwith terminated and the licensor shall be
entitled to terminate this Agreement with immediate
effect. If any Event of Default occurs during the Licensee
Lock -in Period, the Licensor will be entitled to terminate
the license and to collect the license fee for the remaining
Patil-SR 23 of 59
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portion of the licensee Lock- in period."
22.1 If the performance by the affected party of any of
its obligations under this Agreement is prevented,
restricted or interfered with by reason of a Force Majeure
event, then the affected party shall be excused from such
performance to the extent of such prevention, restriction or
interference; provided however, that the affected party
shall give prompt notice to the other party of occurrence of
the Force Majeure event, including a description, in
reasonable specificity, of the cause of the Force Majeure
and the reasons for the event preventing the affected
Party from, or delaying that party in performing its
obligations under this Agreement. Provided further that
such affected Party shall use reasonable efforts to
mitigate, avoid or remove the effects of the event of Force
Majeure upon its or their performance hereunder and to
fulfill its obligations under this Agreement.
22.2 The licensor/licensee shall not hold the other
responsible for any structural damage to the Building due
to a Force Majeure event provided such event is not
attributable to any act, neglect or default on the part of
the other party. In the event such damage occurs, the
licensor shall be obligated to repair such damages in
accordance with its obligations as provided under Clause
14.
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22.3 Notwithstanding anything to the contrary herein, if
a Force Majeure event renders the Licensee unable to
conduct its Business from any part of the premises
("Affected Portion") in substantially the same manner as
prior to such Force Majeure event the licensor shall, upon
expiry of such Force Majeure, make reasonable efforts, to
carry out repairs in order to restore the Affected Portion as
it was then existing prior to the occurrence of the event of
Force Majeure, reasonable wear and tear excepted.
22.4. The Licensee's payment obligations under this
Agreement shall abate only with respect to the affected
portion during the continuance of any Force Majeure and
shall resume once the licensor completes its obligations to
carry out structural repairs in respect of such Affected
portion. The licensee may thereafter carry out such fit outs
and other repairs at its sole cost and expense before it
begin to conduct its business from the Affected portion;
however, the licensee's obligation to make payment of the
license Fees and other amounts in respect of such affected
portion shall only abate from the date of occurring of the
Force Majeure event until the date of the licensor
completing the structural changes as necessary.
22.5 In the event a Force Majeure renders the licensee
unable to use the entire premises for a period in excess of
45 (forty five ) days, either party shall be entitled to
terminate this Agreement upon written notice to the other
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party without liability on the licensee to pay license fee for
the balance of the licensee lock in period.
22.6 An event of Force Majeure does not relieve a party
from liability for an obligation which arose before the
occurrence of that event, nor does that event affect the
obligation to pay money in a timely manner which matured
prior to the occurrence of that event."
Issue (a):
22. The instant suit has been filed under Section 41 of
Presidency Small Causes Court Act, 1882 (for short "the PSCC Act")
which was enacted to consolidate and amend the law relating to the
Courts of Small Causes established in the Presidency towns.
Section 9 of the PSCC Act provides that the High Court may from
time to time by Rules having the force of law prescribe the
procedure to be followed and practice to be observed by the Small
Causes Court. Section 41 of the PSCC Act falls under Chapter VII
dealing with recovery of possession of certain immovable property
and certain license fees and rent and gives jurisdiction to Small
Causes Court to entertain the suit filed by landlord or licensor
relating to recovery of possession of any immovable property or
relating to recovery of license fee or charges or rent therefor.
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23. Pertinently, Section 43 of the PSCC Act which falls in
Chapter VII provides that in all Suits, Appeals and Proceedings under
this Chapter the Small Causes Court shall as far as possible and
except as herein otherwise provided follow the procedure
prescribed by the Code of Civil Procedure, 1908. The provisions of
CPC are therefore made applicable by Section 43 of PSCC Act to the
suits filed under Section 41 of PSCC Act.
24. The provisions of Order XV-A of CPC as applicable to the
State of Maharashtra was introduced on the statute book with
effect from 1st October, 1983. Prior to the introduction of Order
XV-A, Division Bench of this Court in the case of Chandrakant
Deshmukh (supra) had the occasion to deal with the issue as to
whether at the interim stage in a suit by landlord against the tenant
for recovery of possession, arrears of rent and mesne profits, the
tenant can be called upon to deposit or pay the rent due or
becoming due to him by the landlord. The Division Bench held that
in a suit by landlord against the tenant the subject matter of the suit
where he sues for delivery of possession and there are claims
relating to use and occupation of the property the subject matter
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would be money as also the property itself. That, it cannot be
disputed that where the Defendant admits he is a tenant, he
impliedly admits that the property belongs to the plaintiff and
money for the use and occupation thereof is due to him and he may
dispute the quantum but not the principle of liability and the Court
has the power to decide and direct the extent of quantum which
may be ordered to be deposited. Applying the principles underlying
the provisions of Order 12 Rule 6 of CPC and the provisions made
for passing interlocutory orders under Order 39 Rule 10 of CPC, the
Division Bench held that the Court can pass orders for deposit of
money pending decision of a suit.
25. The decision in Chandrakant Deshmukh (supra) was
delivered on 1st July, 1982. Subsequently, in exercise of the rule
making power conferred by the provisions of Section 122 of the
CPC, Bombay amendment came into effect from 1 st October, 1983
by which Order XV-A of CPC was introduced which read thus:
"(1) In any suit by a lessor for eviction of a lessee or for
the recovery of rent and future mesne profits from him,
the defendant shall deposit such amount as the Court may
direct on account of arrears up to the date of the Order
(within such time as the Court may fix) and thereafter
continue to deposit in each succeeding month the rent
claimed in the suit as the Court may direct. The defendant
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shall, unless otherwise directed, continue to deposit such
amount till the decision of the suit.
(2) ......
26. Provisions of Sections 9 and 43 of the PSCC Act were
noted by the learned Single Judge of this Court in the case of
Sangeeta Prints (supra) and it will be necessary to consider the said
judgment is some detail. In that case, suit was filed under Section
41 of the PSCC Act for recovery of possession and arrears of royalty
and mesne profits wherein directions were sought for deposit of
arrears of royalty as interim measure. The Small Causes Court held
that since the suit is filed under Section 41 of the PSCC Act, there is
no specific provision under the PSCC Act to pass order of deposit
which came up in challenge to this Court. Learned Single Judge of
this Court observed that under Chapter VII, separate provisions are
made relating to suit and proceedings filed under Section 41 of the
PSCC Act and the procedure prescribed for trial of such suits is also
separately provided for in Section 43 of the PSCC Act which applies
the procedure prescribed by CPC except as provided in the said Act.
The learned Single Judge noted that the provisions of Section 43 of
PSCC Act are in contradistinction to the provisions of Section 9 of
PSCC Act as regards the procedure to be followed by Small Causes
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Court in respect of various matters over which Presidency Small
Causes Court exercises jurisdiction specified in Chapter IV. Learned
Single Judge considered that the unamended provisions of Order
XV-A of CPC did not cover the suit filed by licensor against the
licensee. Noting the observations of the Division Bench in
Chandrakant Deshmukh (supra), the learned Single Judge held that
by parity of reasoning in cases between licensor and licensee also
similar order can be passed. The learned Single Judge held that
licensee can be directed to deposit certain amounts in respect of
license fees or mesne profits under Order 39 Rule 10 of CPC in view
of decision in the case of Chandrakant Deshmukh (supra).
27. The decision in Sangeeta Prints (supra) was delivered
when the unamended Order XV-A of CPC was on the statute book.
It is clear from the enunciation of law in the case of Sangeeta Prints
(supra) that as Section 43 of the PSCC Act applied the provisions of
CPC to suits filed under Section 41 of PSCC Act, the provisions of
Order 39 Rule 10 were held applicable to direct the licensee to
deposit certain amounts in respect of license fees or mesne profits
and support was drawn from the decision in the case of
Chandrakant Deshmukh (supra). Despite the existence of Order
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XV-A of CPC, which restricted the applicability of Order XV-A only to
suit by lessor for eviction or recovery of arrears of rent and future
mense profits, in Sangeeta Prints (supra) recourse was taken to
Order 39 Rule 10 of CPC.
28. The decision in Sangeeta Prints (supra) was delivered
on 3rd May, 1985. In 1990 there was amendment to Order XV-A of
CPC in its application to the State of Maharashtra, which reads thus:
"STRIKING OFF DEFENCE IN A SUIT BY A LESSOR
(1) In any suit by a lessor or a licensor against a
lessee or a licence, as the case may be, for his eviction
with or without the arrears of rent or licence fee and
future mesne profits from him, the defendant shall
deposit such amount as the Court may direct on account
of arrears up to the date of the Order (within such time
as the Court may fix) and thereafter continue to deposit
in each succeeding month the rent or licence fee claimed
in the suit as the Court may direct. The defendant shall,
unless otherwise directed, continue to deposit such
amount till the decision of the suit. In the event of any
default in making the deposits, as aforesaid, the Court
may subject to the provisions of sub-rule (2) strike off the
defence.
(2) Before passing an Order for striking off the
defence, the Court shall serve notice on the defendant or
his Advocate to show cause as to why the defence should
not be struck off, and the Court shall consider any such
cause, if shown in Order to decide as to whether the
defendant should be relieved from an Order striking off
the defence.
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(3) The amount deposited under this rule shall be
paid to the plaintiff lessor or licensor or his Advocate and
the receipt of such amount shall not have the effect or
prejudicing the claim of the plaintiff and it shall not also
be treated as a waiver of notice of termination.
29. According to Mr. Cama, upon a comparative analysis of
the unamended and amended provisions of Order XV-A of CPC, the
legislature by subsequent amendment in the year 1990 consciously
restricted the application of Order XV-A of CPC only to suits for
eviction filed by lessor or licensor against lessee or licensee and, as
such, recourse could not be had to Order 39 Rule 10 of CPC. For
proper appreciation of the submission advanced by Mr. Cama, it will
be relevant to consider the pre and post amendment position qua
Order XV-A of CPC and the decisions prevailing at the relevant time.
After the decision in Chandrakant Deshmukh (supra), was delivered
on 1st July, 1982, with effect from 5 th September, 1983, Order XV-A
of CPC was introduced which was applicable to suit by lessor for
eviction of a lessee or for recovery of rent and future mesne profits.
The provisions of Order XV-A was thus restricted in its applicability
only to the suits filed by lessor either for eviction or for recovery of
rent and future mesne profits. Subsequently on 3 rd May, 1985 by
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decision in Sangeeta Prints (supra), this Court applied the analogy
of Order XV-A of CPC to the suits filed by licensor against the
licensee. In that case, the suit was filed by the licensor for eviction
as well as arrears of royalty. Thereafter, the amendment to Order
XV-A of CPC was brought into effect from 1 st November, 1990 which
applied Order XV-A of CPC to suits by lessor or licensor for eviction
of the lessee or licensee with or without arrears of rent or license
fees and mesne profits.
30. The decision in Chandrakant Deshmukh (supra)
highlighted the situation that usually cases take inordinately long
time to come up for trial and during all these times the landlord has
to keep on paying taxes and other outgoings on the property,
maintain it in good condition and repair it so that its life does not
shorten. The Division Bench considered the plight of the landlord
that in many cases the landlord depend for their livelihood upon the
income from the properties and it would be a hardship in the
circumstances if the landlord has the misfortune of having to file
suits against his tenants who cannot be ordered to pay any amount
on account of their use and occupation of their premises while the
landlord is required to meet his responsibilities and liabilities. The
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salutary object behind the introduction of Order XV-A in the year
1983 after the decision in Chandrakant Deshmukh (supra), was to
obviate the financial sufferings of the landlord during the pendency
of trial. The decision in Sangeeta Prints (supra) extended the same
reasoning to the suits between licensor and licensee. Subsequent
to the decision in Sangeeta Prints (supra), the amendment of the
year 1990 was brought in with effect from 1st November, 1990.
31. The object behind the introduction of Order XV-A was
to mitigate, to some extent, the hardship faced by landlord by
reason of delay in the adjudication of the proceedings between
landlord and tenant. The amendment of 1990 to Order XV-A was
brought in after the decision in Sangeeta Prints (supra). The
unamended provision applied to the suits by lessor for eviction of
lessee or for recovery of rent and future mesne profits from him.
By the 1990 amendment, Order XV-A of CPC was amended in its
applicability to any suit by a lessor or licensor against a lessee or
licensee, for his eviction with or without arrears of rent or license
fee and future mesne profits. The purpose of the amendment was
to bring Order XV-A of CPC in tune with the decision in the case of
Sangeeta Prints (supra) and to extend the applicability thereof
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even to the suits filed by licensor against licensee so as to bring
parity between the lessor and licensor. By the amendment of 1990,
the object was to broaden the applicability of Order XV-A and not to
restrict the same.
32. In my view, the approach has to be object oriented and
the amended Order XV-A of CPC cannot be construed in narrow and
pedantic manner as suggested by Mr. Cama to denude the lessor or
licensor of the benefit of deposit by taking recourse to Order 39
Rule 10 of CPC, where he chooses to sue only for the recovery of
arrears of license fees. There is no rationale to exclude the category
of suits seeking only recovery of arrears of rent or license fees from
the benefit of provisions of Order 39 Rule 10. The intention of the
legislature while amending Order XV-A in the year 1990 was to bring
within its fold the suits filed by the licensor against the licensee.
Although the amendment Order XV-A of CPC restricted the
applicability to the suits filed for eviction, the benefit of deposit was
extended irrespective of whether relief of arrears of rent or license
fees was sought or not, which is indicative that the legislature was
conscious of the necessity of requiring the tenant or licensee to
deposit amount towards arrears payable for his occupation and to
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protect the interest of landlord. In my opinion, the amendment of
1990 cannot be construed as conscious legislative intent to place an
embargo on the power of the Court to resort to Order 39 Rule 10 of
CPC in suits filed by lessor or licensor for reliefs other than eviction
or that by doing so, the 1990 amendment would be rendered
otiose.
33. In Selvel Publicity Consultants (supra), learned Single
Judge of this Court was considering the issue as to the applicability
of Order XV-A of CPC in suit filed for declaration and permanent
injunction in the context of hoardings. In that case, the Plaintiff
sought arrears of hoarding charges which was directed to be
deposited. The learned Single Judge held that the provisions of
Order XV-A of CPC were inapplicable as the suit was not filed by the
lessor for eviction and held that the direction for deposit could be
maintained in view of the powers available under Order 39 Rule 10
of CPC by relying upon decision in the case of Chandrakant
Deshmukh (supra).
Issue (b):
34. The invocation of force majeure clause by which the
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liability of Defendant No.1 to pay the license fees for the period
from 1st April, 2020 until 7th June, 2020 stood waived is disputed by
the licensor by contending that the force majeure clause covers only
the eventuality of structural damage to the licensed premises.
35. The literal meaning of force majeure is "vis major i.e. Act
of God" or "superior force". In the case of Dhanrajamal Gobindram
v. Shamji Kalidas & Company [(1961) 3 SCR 1020], the Apex Court
noted the account given by McCardie, J. in the case of Lebeaupin v.
Crispin on the principle of force majeure as under :
"The expression "force majeure" is not a mere French
version of the Latin expression "vis major". It is
undoubtedly a term of wider import. Difficulties have
arisen in the past as to what could legitimately be
included in "force majeure". Judges have agreed that
strikes, breakdown of machinery, which, though
normally not included in "vis major" are included in
"force majeure". An analysis of rulings on the subject
into which it is not necessary in this case to go, shows
that where reference is made to "force majeure", the
intention is to save the performing party from the
consequences of anything over which he has no control.
This is the widest meaning that can be given to "force
majeure", and even if this be the meaning, it is obvious
that the condition about "force majeure" in the
agreement was not vague. The use of the word "usual"
makes all the difference, and the meaning of the
condition may be made certain by evidence about a
force majeure clause, which was in contemplation of
parties."
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36. The contention of Mr. Cama is that due to the lockdown
imposed by the government during Covid-19 pandemic, the
defendant was excused from its obligation for payment of license
fees during the subsistence of restriction. On the other hand, the
contention of Mr. Naik was that the clause of force majeure could
not have been invoked as the Defendant No.1 was not prevented
from making payment of the license fees as electronic banking
transfer were operational. Clauses 22.2 to 22.4 of the agreement
deals with situation where there is any structural damage to the
building caused due to force majeure event. Clause 22.1 applies
where by reason of force majeure event the performance by the
affected party of any of its obligations is prevented in which case it
shall be excused from such performance, the caveat being prompt
notice being given.
37. Plain reading of Clause 22.1 of the agreement prima
facie indicates that the clause is general in nature with the intention
to cover all situations rendering the performing party incapable of
performing its obligations. As noted by Apex Court in Dhanrajamal
Gobindram (supra), where there is reference to force majeure
clause, the intention is to protect the performing party from the
Patil-SR 38 of 59
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consequences of anything over which he has no control. By virtue of
the force majeure event rendering the licensed premises
inaccessible for business, the consequences which arose is inability
to pay the license fees during the restriction. The obligation to pay
is linked with the right to use the licensed premises. Although the
use was not impeded by any act on the part of licensor, by reason of
government action, the licensee was prevented from using the
premises which constitutes force majeure event. Mr. Cama is right
in his submission that Clause 22.1 which refers to both parties as
potentially affected parties indicates that it is a general overarching
clause. The intention of the parties can be made certain after
evidence has been led, however, considering that the deposit has
been directed by invoking Order 39 Rule 10, prima facie it appears
that the licensee was excused from its obligations to pay the license
fees during the period April, 2020 to 7 th June, 2020. The Plaintiff
has failed to prima facie establish that the force majeure clause was
wrongly invoked by the Defendant No 1.
Issues (c), (d) And (e):
38. The issues (c), (d) and (e) are linked to the surrender of
the 7th and 8th floors and, as such, are considered together. As the
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relief of deposit is sought as an interim measure, it will be profitable
to have a look at the relevant statutory provisions. Section 94(e) of
CPC empowers the Court to make such interlocutory orders as may
appear to the Court to be just and convenient to prevent the ends
of justice from being defeated. The sections of CPC have been
elaborated by Orders and Rules made in the First Schedule. As far
as interlocutory orders are concerned, Order 39 of CPC govern the
issuance of temporary injunctions and interlocutory orders. Rule 10
of Order 39 of CPC provides that where the subject matter of suit is
money or some other thing capable of delivery and any party
thereto admits that he holds such money or other thing as a trustee
for another party, or that it belongs or is due to another party, the
Court may order the same to be deposited in Court or delivered to
such last named party with or without security, subject to further
direction of the Court. In the present case, the suit is for recovery of
arrears of license fees and, as such, the subject matter of suit is
money.
39. Order 39 Rule 10 of CPC refers to admission of the
party that the money belongs or is due to another party. In
Chandrakant Deshmukh (supra), the Division Bench of this Court
Patil-SR 40 of 59
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clearly held that where a defendant admits that he is a tenant he
impliedly admits that the property belongs to the plaintiff and
money for the use and occupation thereof is due to him. The
contention of Mr. Cama is that the decision of Chandrakant
Deshmukh (supra) is inapplicable as it notes that right to claim is on
account of continued occupation and use of the premises and in the
instant case, the 7th and 8th floors have been surrendered.
40. On 22nd July 2020, a communication was issued by the
Defendant No.1 to the Plaintiff that they need their support in
working together the surrender of 7th and 8th floors. Admittedly,
there was no response to this proposal and vide further
communication, Defendant No.1 was put to notice that they will be
forced to terminate the contract if payment is not made. As such, it
will have to be considered as to whether prima facie Defendant No.
1 was entitled to unilaterally surrender 7th and 8th floors.
41. The term of the license was for the period of 10 years
and the licensed area comprised of licensed area one and licensed
area two. Licensed area one meant the area comprising of ground
to eighth floor admeasuring 2,66,846 sq. ft. of gross licensable area
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and the licensed area two comprised of the ninth floor of the
building along with terrace of the building admeasuring 18,467
square feet of gross licensable area. The reason for bifurcation of
the licensed area was that occupation certificate for 9 th floor was
not received at the time of execution of the agreement. The
monthly compensation agreed upon between the parties was at the
rate of Rs.105/- per square feet of gross licensable area. The
argument is that the agreement is severable inasmuch as the
compensation was payable per square feet and, as such, in respect
of 7th and 8th floors, defendant No.1 was entitled to handover the
possession.
42. The parties to the agreement are legal entities and it
can be presumed that after exercise of due diligence, parties have
entered into the agreement. By the agreement, license was given
to occupy the premises which has been defined in clause 1.1.(dd) as
a collective reference to two stilt floors, parking spaces and
licensed area 1 and 2. Licensed area 1 and 2 collectively refers to
the area from the ground to 8 th floor and 9th floor and the terrace of
the building. The compensation was agreed on the basis of per
square feet of area which is a common method of computation of
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monthly compensation where huge premises are given on leave and
license basis. Admittedly, in the present case there is no other
licensee in the entire building except Defendant No.1. The
photograph tendered across the bar for the perusal of this Court
would indicate that the entire building was made available to the
Defendant No.1 for the purpose of carrying on his business.
Conjoint reading of the agreement would prima facie indicate that
the parties were ad-idem that the license was being granted in
respect of the entire building and not in respect of any particular
portion thereof. The definition of building in Clause 1.1.(e) would
justify this interpretation that what was agreed to be handed over
was the entire building.
43. There is no provision in the agreement which provides
for surrender of a part of premises. The only provision as regards
the termination is found in Clause 20 of the agreement which
provides for the termination of license by the licensee after the
expiry of licensed lock-in-period. Even in the said clause there is no
right given to the licensee to terminate the license in respect of part
of the licensed premises. Upon prima facie consideration of the
clauses of the agreement, in my view, the Plaintiff has made out
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prima facie case that the Defendant No 1 was not entitled to
surrender 7th and 8th floor. I am, thus, not inclined to accept the
submission of Mr. Cama that the contract was severable and upon
surrender there was no liability to pay the license fees for the 7 th
and 8th floors.
44. The contract provided for the rights and obligations of
the respective parties and the obligation of the licensor was to
permit uninterrupted use and occupation of the premises during the
licensed period subject to the licensee paying the license fees and
the licensee's obligation was to make the payment to the licensor as
contemplated in the agreement in regular and timely manner. By
this clause, the licensee accepted the liability to pay the license fees
as contemplated. As indicated above, upon prima facie reading of
clauses of agreement, it appears that Defendant No.1 had no right
to unilaterally surrender part of the premises. It can be inferred
that in the absence of any right given to Defendant no.1 under the
agreement to surrender part of the premises, the license subsists
and there is an implied admission that the license fees is due to the
Plaintiff and, as such, the provisions of Order 39 Rule 10 could be
invoked for directing deposit of the license fees in respect of 7 th and
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8th floors.
45. Mr. Cama relies upon B.P.C.L. (supra) to buttress his
submission that if there is specific provision in the CPC, recourse
could not be had to other provision to direct deposit. In case of
B.P.C.L. (supra), the learned Single Judge was considering the issue
whether the direction to deposit damages could be sustained and in
that context considered the provisions of Order XV-A and Order 39
Rule 10 of CPC. In that case, the suit was for recovery of possession
along with recovery of damages. Learned Single Judge observed
that in suits between lessor and lessee or licensor and licensee
specific provision is made under Order XV-A of CPC to ensure
recovery of amount of arrears as well as amount arising during the
pendency of the proceedings and, as such, the Courts are expected
to take resort of those provisions of law and not to exercise their
jurisdiction under some other provision of law. In the instant case,
as the suit is money suit and not suit for recovery of possession, the
provisions of Order XV-A of CPC are inapplicable and, as such,
recourse could be taken of Order 39 Rule 10 of CPC to direct
deposit of arrears of license fees. Pertinently, in Sangeeta Prints
(supra), learned Single Judge of this Court applied the reasoning
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given in the case of Chandrakant Deshmukh (supra) to the suit
between licensor and licensee and directed deposit under Order 39
Rule 10 of CPC.
46. The next submission of Mr. Cama is that non payment of
the license fees for 7th and 8th floors amounts to breach of contract
for which the remedy was for damages and the claim for damages is
not debt due and payable and could not be directed to be deposited
under Order 39 Rule 10. The agreement provides for lock-in-period
of 60 months during which the licensee was not entitled to
terminate the license. The contract does not provide for partial
termination of agreement. Upon prima facie reading of the clauses
of agreement, in the absence of any right to unilaterally surrender
the 7th and 8th floors, the license is deemed to be subsisting. In the
instant case, the claim of Plaintiff is for deposit of arrears of license
fees in respect of 7th and 8th floors. There is no pleading that the
claim is for damages for breach of contract for non payment of the
license fees. The case of the Plaintiff is specific that there cannot be
unilateral surrender of 7th and 8th floors and as the contract is not
terminated, the Defendant No 1 is liable to deposit the arrears of
license fees. The stand of Defendant No.1 is that there is partial
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termination vis-a-vis 7th and 8th floors. In that event, as the
termination is during the lock-in-period, the Plaintiff becomes
entitled to the remainder of license fees for the lock-in-period.
Defendant No.1 incurs an immediate liability to pay for the
remainder of the lock-in-period and is a debt payable instantly and
cannot be construed as damages requiring evidence to be led.
Defendant No.1 claims that it is entitled to surrender 7 th and 8th
floors as the contract is severable and has denied in its written
statement that the surrender of 7th and 8th floors is in breach of the
contract. On the contrary, the case of Defendant No.1 is that the
agreement permits it to surrender 7th and 8th floors.
47. In support of his submission that the damages cannot be
granted at the interim stage, Mr. Cama relies upon the decisions in
the case Union of India v. Raman Iron Foundary (supra), Iron and
Hardware (India) Co., v. Shamlal and Brothers (supra), Gangotri
Enterprises Ltd (supra) and B.P.C.L. (supra).
48. In the case of UoI v. Raman Iron Foundary (supra) the issue
before the Apex Court was relating to the interpretation of clause
18 of the general conditions of contract and in that case a dispute
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had arisen between the parties whereby each party claimed that the
other party has committed a breach of contract and therefore was
liable to pay the respondent damages. In that case the claim was for
damages and in that context the provisions of section 74 of the
Indian Contract Act, 1872 were considered.
49. In the case of Iron and Hardware (India) Company (supra),
the applications were made by the creditors for damages for breach
of contract. The Court held that the breach of contract does not
give rise to any debt and does not result in any existing obligation
on the part of the person who commits the breach.
50. In the case of Gangotri Enterprises Ltd (supra) the Apex
Court noted the decisions in Raman Iron Foundary (supra) and Iron
and Hardware (India) Co., (supra) which held that the Court must
decide that the defendant is liable and then proceed to assess what
that liability is and that a claim for damages for breach of contract is
not a claim for a sum presently due and payable.
51. There is no quarrel with the proposition of law that has
been laid down that in case of claim for damages for breach of
contract is not a claim for sum presently due and payable and it
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becomes debt by fiat of the Court. However, as noted above, the
claim of the plaintiff is for arrears of the licence fees and not for
damages. Pertinently, the submission that the non payment of
license fees amounts to breach of contract for which damages are
payable is raised for the first time before this Court.
52. As regards the decision in the case of Union of India v. D. N.
Reveri and Co., [(1976) 4 SCC 147], the Apex Court had held that
the contract in a commercial document and it must be interpreted in
such a manner so as to give efficacy to the contract rather than to
invalidate it. In the present case, upon prima facie reading of the
clauses of the agreement, by way of interim measure the deposit is
ordered by the Court, which clauses will be made certain only after
evidence is led.
Issue (f) :
53. By pointing out the reliefs in the plaint, it is submitted that
by the interim relief what has been granted is the specific
performance which was sought in the plaint and as such there is no
need for any further adjudication. In my view, suit between the
landlord and tenant falls on a different footing and the same has
been recognized by the legislative mandate of Order XV-A and
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Order 39 Rule 10 of CPC. The provisions of Order 39 Rule 10 of CPC
are an extension of the provisions of Order 12 Rule 6 of CPC dealing
with the judgments on admission. In view of the specific statutory
provision providing for a direction of deposit, it cannot be said that
the direction of deposit amounts to grant of final relief. It needs to
be noted that the issue as to whether leave and licence agreement
is valid and subsisting is required to be adjudicated and by the
interim relief what has been directed is the deposit of arrears of
licence fees and other charges as regards the use and occupation of
the premises by the tenant.
Issue (g):
54. As regards the maintainability of revision application,
Full Bench of this Court in the case of Bharatiben Shah vs Gracy
Thomas (supra) in answer to the reference to determine the scope
of the power of revision under Section 34(4) of the Maharashtra
Rent Control Act, 1999 (for short "the Rent Act") and whether the
procedural order under CPC would be amenable to the revision
under Section 34(4) of the Rent Act in suit arising out of the Rent
Act held that the revision under Section 34 (4) the Rent Act is not
maintainable in respect of procedural order passed under Code of
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Civil Procedure in a suit arising out of Maharashtra Rent Control Act,
1999, if such order does not affect the substantive rights and
liabilities of the parties under the Rent Act or any other substantive
law. In the present case, the trial Court has rejected the application
for deposit of arrears of license fees. The relief of deposit sought
by the landlord amounts to securing the arrears of rent or license,
which according to him, had become due and payable due to
continuous use and occupation of the licensee of the licensed
premises. By refusing the relief, substantive right of the landlord
has been affected and the same cannot be termed as a procedural
order. In my view, the rejection of application seeking deposit of
arrears affected the substantive rights and, as such, revision is
maintainable against the said order.
Issue (h) :
55. Mr. Cama contends that the Revisional Court has
substituted its own view for that of the Trial Court. He relies upon
the decisions in the case of Wander Ltd vs Antox India P Ltd
(supra), Purshottam Vishandas Raheja vs Shrichand Vishandas
Raheja (supra), Mohd. Mehtab Khan vs Khushnuma Ibrahim Khan
(supra), World Crest Advisors LLP vs. Catalyst Trusteeship
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Limited (supra). There can be no quarrel with the proposition of
law laid down in these judgments.
56. The decision in Wander Ltd v. Antox India P. Ltd
(supra) which is a landmark decision, enunciates the scope of
interference by the Revisional Court in the exercise of discretion by
the Court of first instance that the Revisional Court will not
substitute its own discretion except where the discretion has been
shown to have been exercised arbitrarily, where the Court has
ignored the settled principles of law regulating the grant or refusal
of interlocutory injunction. The Apex Court has held that if the view
taken by the Court below was reasonably possible on the material,
the Revisional Court will not re-assess the material and seek to
reach a conclusion different from the one reached by the Court
below. The decision in Purshottam Vishandas Raheja (supra),
Mohd. Mehtab Khan (supra) and World Crest Advisors LLP (supra)
follow this enunciation of law laid down by the Apex Court in the
case of Wander Ltd (supa).
57. The trial Court interpreted the provisions of contract
regarding force majeure event, which finding was reversed by the
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Revisional Court. The Trial Court ignored various decisions of this
Court on the provisions of Order 39 Rule 10 of CPC and held that as
defendant no.1 has not admitted the liability, the provisions of
Order 39 Rule 10 of CPC will not be applicable. The Revisional Court
observed that findings of the Trial Court on facts as well as on law
was palpably perverse. It cannot be said that the view taken by the
trial Court was a possible view on the interpretation of Order 39
Rule 10 of CPC. On the contrary, trial Court did not appreciate
various decisions of this Court and declined to apply the provisions
of Order 39 Rule 10 of CPC warranting interference by the
Revisional Court.
58. While on this issue, it will be necessary to consider the
interpretation placed by the Revisional Court on the provisions of
Order 39 Rule 10 of CPC. Order 39 Rule 10 of CPC reads thus:
"Where the subject matter of a suit is money or some other
thing capable of delivery and any party thereto admits that
he holds such money or other thing as a trustee for another
party, or that it belongs or is due to another party, the
Court may order the same to be deposited in Court or
delivered to such last named party, with or without
security, subject to the further directions of the Court."
59. The Revisional Court interpreted the provision and held
that the provision consists of two parts which are separated by use
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of "comma" and the admission is required only for the first part and
in the later part where the money belongs to other party is due to
other party no admission is required. The interpretation of Order 39
Rule 10 by the Revisional Court, if accepted, will restrict the
admission only to the case where the money is held as trustee for
another party. Plain reading of the provision will indicate that the
provision applies where the party admits that the money is held as a
trustee as well as in case where the party admits that it belongs to
or is due to another party. The interpretation of the Revisional
Court on the provision of Order 39 Rule 10 is unsustainable. Even
though I have held that the interpretation placed on order 39 Rule
10 by the Revisional Court is unsustainable, it cannot be said that by
doing so, the Revisional Court has interfered with the discretion
exercised by the trial Court.
60. In the facts of the present case, the grant of interim relief
necessitated interpretation of the relevant provisions of CPC. The
Revisional Court has interpreted the provisions, which according to
the Revisional Court was the correct interpretation of the same, and
the same cannot be said to be an interference in the exercise of
discretion by the trial Court.
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61. As regards the contention that the issue as regards 7 th and
8th floors was not raised before the trial Court and as such the
Revisional Court could not have considered the same, it needs to be
noted that the application of plaintiff sought the relief of payment
of arrears and other charges from 1 st April 2020 and, as such, the
entire issue as regards the force majeure event as well as the
surrender of 7th and 8th floors was under consideration of the trial
Court. Perusal of the order of trial Court would indicate that the
trial Court had noted the submissions of petitioner and the
respondent as regards 7th and 8th floors and had thereafter rejected
the application apart from the ground of force majeure by taking
into consideration the provisions of Order 39 Rule 10 of CPC which
as per the Trial Court in the facts of the case was not admitted.
62. Before summarizing the findings on the issues enumerated
above, it needs to be noted that Defendant No.1, who is a corporate
entity, had executed the agreement being fully aware of its rights
and obligations subject to which license to occupy has been granted.
The agreement permits Defendant No.1 to terminate the contract in
event the force majeure event renders the licensee unable to use
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the entire premises for a period in excess of 45 days without any
liability on the licensee to pay the license fees for the remainder of
the licensee lock-in-period. The Defendant No.1 could have easily
opted for termination in which case there was no liability to pay for
the remainder of lock-in-period. Here is a licensee who does not
elect to terminate the contract and discharge its liability but
continues with the contract and enforces its right to use the
premises while disputing the corresponding liability to pay the
arrears of license fees. Having opted to continue with the
agreement, Defendant No.1 is liable to pay the license fees for 7 th
and 8th floors as per the agreement and the Appellate Court has
rightly ordered the deposit.
63. In the light of above discussion, the issues raised for
consideration are answered as under :
(a) By the legislative amendment of the year 1990 to
Order XV-A of CPC in its application to the State of
Maharashtra the legislature did not intend to restrict the
right of lessor or licensor to seek benefit of deposit by
resorting to Order-39 Rule-10 of CPC in suits filed other
than for eviction.
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(b) Prima facie, the force majeure clause in Clause No.
22.1 of the agreement excused the Petitioner from its
obligation to pay the license fees during the subsistence of
the force majeure event for the period from April, 2020 to
7th June, 2020.
(c) The contract was not severable and there could not
be unilateral surrender of 7th and 8th floor.
(d) The subsistence of the license implies an admission of
liability of payment of license fees in respect of the 7 th and
8th floors excluding the period from April 2020 to 7th June
2020 for the purpose of Order 39 Rule 10 of CPC.
(e) The demand for the arrears of license fees for the 7 th
and 8th floors cannot be construed as damages.
(f) The statutory provisions of Order XV-A and Order 39
Rule 10 of CPC permit order of deposit and it cannot be
said that final relief has been granted at interim stage.
(g) Revision is maintainable as substantive rights of the
parties are affected.
(h) It was permissible for the Revisional Court to
interfere with the order of the Trial Court as the findings of
the Trial Court were palpably perverse.
64. Having regard to the above, the impugned order remains
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undisturbed except Clause 3 of the impugned order of Revisional
Court, which is modified to read as under :
"3. The Defendant No.1 is hereby ordered in exercise of
CPC to deposit the arrears of license fees in respect of the 7 th
and 8th floors from July, 2020 till date as per the Leave and
License Agreement dated 17th May, 2019 read with Deed of
Rectification dated 30th September, 2019 within a period of
three months from today and to continue to regularly deposit
the license fees in respect of 7th and 8th floors every month as
and when it falls due. "
65. Resultantly, Petition is partly allowed in above terms. Rule
is made absolute accordingly. Interim application does not survive
and is disposed of.
66. In view of the disposal of writ petition, nothing survives for
consideration in Interim Application No. 824 of 2023 and the same is
accordingly disposed of.
[Sharmila U. Deshmukh, J.]
67. At this stage, a request is made for continuing the
interim order, which is in operation since 27 th January 2022, for a
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period of six weeks. Interim order to continue for a period of six
weeks from the date of uploading of the present judgment.
[Sharmila U. Deshmukh, J.]
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Signed by: Sachin R. Patil
Designation: PS To Honourable Judge
Date: 22/12/2023 18:48:46
