Bombay High Court
Om Namay Shivay Logistics ... vs Raycon Infrastructure Pvt Ltd on 6 May, 2025
Author: N.J. Jamadar
Bench: N.J. Jamadar
2025:BHC-AS:20818
Varsha wp-9718-2024.doc
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CIVIL APPELLATE JURISDICTION
WRIT PETITION NO. 9718 OF 2024
Om Namay Shivay Logistics }
International Private Limited, }
through its Managing Director }
Kaushik Joshi, Age: 57 years, Occu: }
Business, having office at 714-716, }
7th floor, Nirmal Corporate Centre, } .....Petitioner
near Nirmal Lifestyles, LBS Marg, } (Orig. plaintiff)
Mulund (W), Mumbai-400 080. }
V/s.
Raycon Infrastructure Private }
Limited. }
VARSHA
DEEPAK Der Deutsche Parkz, Subhash Nagar }
GAIKWAD
Digitally signed by
VARSHA DEEPAK
Road, Next to Classis Marble, bear } ....Respondent
GAIKWAD
Date: 2025.05.07
15:16:50 +0530 Nagur Railway Station, Bhandup } (Orig. Respondent)
(W), Mumbai- 400 078. }
-------------------
Mr. Abhijeet A. Desai with Karan Gajra, Sanchita Sontakke, Vijay
Singh, Mohini Rehpade, Daksha P and Digvijay Kachare, for the
petitioner.
Mr. Shanay Shah, Shoma Maitra with Ms. Samruddhi Mali i/by Wadia
Ghandy and Co. for the respondents.
---------------------
CORAM : N.J. JAMADAR, J.
DATED : 6TH MAY 2025
JUDGMENT:
1. Rule.
2. Rule made returnable forthwith and, with the consent of
the counsel for the parties, heard finally.
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3. The petitioner/plaintiff takes exception to an order passed
by the Commercial Court, Greater Mumbai dated 2 nd December 2023
in Summons for Judgment No. 100039 of 2023 thereby dismissing the
said Summons for Judgment, and granting unconditional leave to the
respondent / defendant to defend the suit.
4. The background facts leading to this petition can be stated
in brief as under:
4.1 For the sake of convenience and clarity the
parties are hereinafter referred to in the capacity in which
they are arrayed before the Trial Court.
4.2 Both the plaintiff and defendant are the
companies incorporated under the provisions of
Companies Act, 1956. The defendant is the owner of an
office premises / Unit No. 33, admeasuring 7615 sq. ft in
the building known as 'Der Deutsche Parkz' situated at
Bhandup, Mumbai (the licenced Premises).
4.3 The defendant agreed to grant the licenced
premises to the plaintiff on leave and licence basis. Thus,
parties entered into a leave and licence agreement dated
27th June 2018.
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4.4 The principal terms of the leave and licence
agreement were that, the term of licence would be 60
months, with a lock-in period of 36 months. The plaintiff
agreed to pay a licence fee of Rs. 5,42,000/- per month for
the initial 36 months, and, thereafter, at the rate of Rs.
6,23,300/- for the next 24 months. The plaintiff has also
agreed to pay security deposit of Rs. 48,78,000/- for the
lock-in period of 36 months and, thereafter, enhance the
security deposit to Rs. 56,09,700/-. Accordingly, the
plaintiff paid the initial security deposit of Rs. 48,78,000/-.
The plaintiff was put in possession of the licenced premises.
4.5 In the wake of Covid-19 Pandemic the
defendant agreed to reduce the licence fee to Rs.
1,00,000/- excluding taxes, for the 3 months i.e. July 2021
to September 2021.
4.6. On 1st September 2021, the plaintiff conveyed
to the defendant that it would vacate the licenced premises
by 30th September 2021. The defendant, the plaintiff
claims, however, suggested that the plaintiff could occupy
the licenced premises for a further term of 3 months i.e. till
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December 2021 at the reduced licence fee of Rs.
1,00,000/-. Though a draft MoU was shared recording the
aforesaid modified terms, it could not be executed. In
response to an e-mail dated 17th November 2021, the
defendant declined to extend the period of concessional
licence fee and indicated that if the plaintiff intended to
vacate the licenced premises, the plaintiff may do so on or
before 1st January 2022.
4.7 It is the claim of the plaintiff that the plaintiff
offered to vacate the licenced premises on 1 st January 2022
and called upon the defendant to refund the security
deposit. There was an exchange of correspondence
between the parties regarding the condition of the premises
and the liability of the plaintiff to hand over the premises in
the same condition in which it was delivered to the
plaintiff, cost of repairs and recovery of the licence fee, at
the agreed rate.
5. Eventually, the defendant did not refund the security
deposit. Hence, the plaintiff was constrained to institute the suit for
recovery of the unpaid security deposit along with interest thereon @
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21% p.a.
6. The defendant appeared. The plaintiff took out the
Summons for Judgment. The defendant sought an unconditional leave
to defend the suit contending, inter alia, that the plaintiff had
committed breach of the terms of the leave and licence agreement. The
plaintiff had not given the mandatory pre-termination 3 months notice
in accordance with clause 11.5 of the agreement nor paid 3 months
licence fee. Thus, the plaintiff was liable to pay 3 months licence fee.
The plaintiff had also not furnished the accounts statement to show
that it had suffered loss, and, therefore, for the period October 2021 to
December 2021, the plaintiff was liable to pay the licence fee at the
agreed rate. The plaintiff had also caused damage to the licenced
premises and defendant was required to incur expenses towards the
repairs. Contending that there were substantial and triable issues, the
defendant sought an unconditional leave to defend the suit.
7. By the impugned order, the learned Judge, Commercial
Court, was persuaded to grant an unconditional leave to defend the
suit opining, inter alia, that the plaintiff had not terminated the leave
and licence agreement in conformity with clause 11.5 of the
agreement, which required the licencee to either give 3 months notice
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or pay 3 months licence fee. E-mail dated 24 th December 2021 whereby
the plaintiff offered to vacate the licenced premises was not in
conformity with the said clause. As triable issues as regards the
interpretation of the terms of the leave and licence agreement and the
rights and liabilities of the parties thereto arose for determination, the
defendant deserved an unconditional leave to defend the suit.
8. Being aggrieved, the plaintiff has invoked the writ
jurisdiction.
9. Mr. Abhijeet Desai, learned counsel for the petitioner,
would urge that, the learned Judge, City Civil Court, committed an
error in granting unconditional leave to defend the suit without
appreciating the correspondence that had been exchanged between
the parties. Though the learned Judge, City Civil Court referred to the
communication dated 24th December 2021, to hold that the said
communication was not in conformity with the clause 11.5 of the
agreement, yet, a prior communication dated 16 th November 2021,
whereby the defendant indicated that the plaintiff, if he wished to,
could vacate the licenced premises on or before 1 st January 2022, was
ignored. Thus, the stipulation in clause 11.5 of the leave and licence
agreement was expressly waived by the defendant.
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10. Moreover, the defendant had acknowledged the liability to
pay part of the security deposit after deducting the amount which
defendant claimed the plaintiff owed to the defendant. In the
communication in reply to the communication dated 17 th March 2022,
the defendant had stated that the defendant had kept ready a cheque
towards the refund of security deposit of Rs. 18,08,604/- after
deduction of Rs. 30,69,396/- therefrom. Likewise, in the
communication dated 27th April 2022, though addressed without
prejudice, the defendant had claimed that net of the deduction security
deposit repayment would be of Rs. 37,22,151/- In the face of such
clear acknowledgment of the liability to refund a part of the security
deposit, the learned Judge could not have granted an unconditional
leave to defend the suit, urged Mr. Desai.
11. To this end, Mr. Desai placed a strong reliance on the
judgment of learned Single Judge of this Court in the case of ' Play
Games 24x7 Pvt.Ltd Vs. Loran Leasing and Infotech Pvt. Ltd.1.
12. As against this, Mr Shah, learned counsel for the
respondent / defendant, supported the impugned order. It was
submitted that the plaintiff had not approached the Court with clean
hands. The defendant had permitted the plaintiff to occupy the
1 IA No. 655 of 2023 in Commercial Summary Suit No 75 of 2021
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licenced premises at the concessional rate of Rs. 1,00,000/- per month
during July to September 2021, in the backdrop of the representations
that on account of Covid - 19 Pandemic the plaintiff had suffered huge
losses. However, for the next trimester i.e. October to December 2021,
it was incumbent upon the plaintiff to show that he had suffered the
losses. Therefore, in the absence of any contract to the contrary, the
plaintiff was liable to pay the licence fee at the agreed rate.
13. Mr. Shah would further urge that, at any rate, the exchange
of correspondence relied upon by the plaintiff would amount to
novation of contract. The plaintiff would be required to prove at the
trial that the terms of the leave and licence agreement were novated.
Therefore, the learned Judge, City Civil Court, was justified in granting
an unconditional leave to defend.
14. Mr. Shah would urge that the plaintiff cannot be permitted
to draw any mileage on account of the fact that the defendant had
addressed without prejudice communication. The said communication
cannot be construed as the acknowledgment of the liability. Therefore,
the learned Judge, City Civil Court, correctly exercised the discretion to
grant unconditional leave to defend the suit. No inference is warranted
in exercise of supervisory jurisdiction, urged Mr. Shah. To buttress this
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submission, Mr. Shah placed reliance on the decision of the Supreme
Court in the case of 'Raj Duggal Vs. Ramesh Kumar Bansal2.
15. The legal position as regards the grant of leave to defend a
summary suit is well crystallised. If the defendant raises a substantial
defence, leave to defend is required to be granted unconditionally.
Where the defendant raises a triable issue in the sense that the defence
is fair and reasonable, ordinarily, the defendant is entitled to
unconditional leave to defend the suit. However, where the defendant
raises a triable issue, but, the Court entertains doubt about the bonafie
of the said defence or such defence though plausible, yet, appears to be
improbable to the Court, conditional leave to defend the suit can be
granted. The conditions may relate to time or mode of trial or an order
for deposit of the amount or security for the claim amount. It is only in
those cases where Courts finds that defence raised by the defendant is
sham and bogus, the Court can decline to grant leave to defend the
suit.
16. In the case of Raj Duggal (supra), on which reliance was
placed by Mr. Shah, the law was succinctly enunciated as under:
"3. Leave is declined where the court is of the opinion
that the grant of leave would merely enable the defendant
2 1991 Supp (1) SCC 191
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to prolong the litigation by raising untenable and frivolous
defences. The test is to see whether the defence raises a real
issue and not a sham one, in the sense that if the facts
alleged by the defendant are established there would be a
good or even a plausible defence on those facts. If the court
is satisfied about that leave must be given. If there is a
triable issue in the sense that there is a fair dispute to be
tried as to the meaning of a document on which the claim is
based or uncertainty as to the amount actually due or where
the alleged facts are of such a nature as to entitle the
defendant to interrogate the plaintiff or to cross- examine
his witnesses leave should not be denied. Where also, the
defendant shows that even on a fair probability he was a
bona fide defence, he ought to have leave. Summary
judgments under Order 37 should not be granted where
serious conflict as to matter of fact or where any difficulty
on issues as to law arises. The court should not reject the
defence of the defendant merely because of its inherent
implausibility or its inconsistency."
17. In the case of 'IDBI Trusteeship Services Limited Vs.
Hubtown Limited3,, the Supreme Court culled out the propositions
which govern the exercise of discretion as under:-
17. Accordingly, the principles stated in paragraph 8 of
Mechelec's case will now stand superseded, given the
amendment of O.XXXVII R.3, and the binding decision of four
judges in Milkhiram's case, as follows:
17.1 If the defendant satisfies the Court that he has a
substantial defence, that is, a defence that is likely to
succeed, the plaintiff is not entitled to leave to sign
judgment, and the defendant is entitled to unconditional
leave to defend the suit.
3 (2017) 1 SCC 568
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17.2 If the defendant raises triable issues indicating that
he has a fair or reasonable defence, although not a
positively good defence, the plaintiff is not entitled to sign
judgment, and the defendant is ordinarily entitled to
unconditional leave to defend.
17.3 Even if the defendant raises triable issues, if a
doubt is left with the trial judge about the defendant's
good faith, or the genuineness of the triable issues, the
trial judge may impose conditions both as to time or mode
of trial, as well as payment into court or furnishing
security. Care must be taken to see that the object of the
provisions to assist expeditious disposal of commercial
causes is not defeated. Care must also be taken to see that
such triable issues are not shut out by unduly severe
orders as to deposit or security.
17.4 If the Defendant raises a defence which is plausible
but improbable, the trial Judge may impose conditions as
to time or mode of trial, as well as payment into court, or
furnishing security. As such a defence does not raise
triable issues, conditions as to deposit or security or both
can extend to the entire principal sum together with such
interest as the court feels the justice of the case requires.
17.5 If the Defendant has no substantial defence and/or
raises no genuine triable issues, and the court finds such
defence to be frivolous or vexatious, then leave to defend
the suit shall be refused, and the plaintiff is entitled to
judgment forthwith.
17.6 If any part of the amount claimed by the plaintiff is
admitted by the defendant to be due from him, leave to
defend the suit, (even if triable issues or a substantial
defence is raised), shall not be granted unless the amount
so admitted to be due is deposited by the defendant in
court."
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18. The aforesaid tests formulated by Supreme Court were
reiterated by the Supreme Court in the case of ' B.L. Kashyap and Sons
Limited vs. JMS Steels and Power Corporation and Another4, as under:
33.1 As noticed, if the defendant satisfies the Court
that he has substantial defence, i.e., a defence which is
likely to succeed, he is entitled to unconditional leave to
defend. In the second eventuality, where the defendant
raises triable issues indicating a fair or bonafide or
reasonable defence, albeit not a positively good defence,
he would be ordinarily entitled to unconditional leave to
defend. In the third eventuality, where the defendant
raises triable issues, but it remains doubtful if the
defendant is raising the same in good faith or about
genuineness of the issues, the Trial Court is expected to
balance the requirements of expeditious disposal of
commercial causes on one hand and of not shutting out
triable issues by unduly severe orders on the other.
Therefore, the Trial Court may impose conditions both as
to time or mode of trial as well as payment into the Court
or furnishing security. In the fourth eventuality, where the
proposed defence appear to be plausible but improbable,
heightened conditions may be imposed as to the time or
mode of trial as also of payment into the Court or
furnishing security or both, which may extend to the
entire principal sum together with just and requisite
interest.
33.2 Thus, it could be seen that in the case of
substantial defence, the defendant is entitled to
unconditional leave; and even in the case of a triable issue
on a fair and reasonable defence, the defendant is
ordinarily entitled to unconditional leave to defend. In
case of doubts about the intent of the defendant or
genuineness of the triable issues as also the probability of
4 (2022) 3 SCC 294
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defence, the leave could yet be granted but while
imposing conditions as to the time or mode of trial or
payment or furnishing security. Thus, even in such cases
of doubts or reservations, denial of leave to defend is not
the rule; but appropriate conditions may be imposed
while granting the leave. It is only in the case where the
defendant is found to be having no substantial defence
and/or raising no genuine triable issues coupled with the
Court's view that the defence is frivolous or vexatious that
the leave to defend is to be refused and the plaintiff is
entitled to judgment forthwith. Of course, in the case
where any part of the amount claimed by the plaintiff is
admitted by the defendant, leave to defend is not to be
granted unless the amount so admitted is deposited by the
defendant in the Court.
33.3 Therefore, while dealing with an application
seeking leave to defend, it would not be a correct
approach to proceed as if denying the leave is the rule or
that the leave to defend is to be granted only in
exceptional cases or only in cases where the defence
would appear to be a meritorious one. Even in the case of
raising of triable issues, with the defendant indicating his
having a fair or reasonable defence, he is ordinarily
entitled to unconditional leave to defend unless there be
any strong reason to deny the leave. It gets perforce
reiterated that even if there remains a reasonable doubt
about the probability of defence, sterner or higher
conditions as stated above could be imposed while
granting leave but, denying the leave would be ordinarily
countenanced only in such cases where the defendant
fails to show any genuine triable issue and the Court finds
the defence to be frivolous or vexatious".
19. On the aforesaid touchstone reverting to the facts of the
case, it is imperative to note that there is not much controversy over
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the essential term of the leave and licence agreement, namely, the
initial term and lock-in period, a licence fee for the initial term of the
lock-in period, the deposit of the security amount of Rs. 48,78,000/- by
the plaintiff with the defendant, or for that matter, the parties are not
at issue over the fact that the leave and licence agreement came to be
terminated effectively from 1st January 2022.
20. The controversy between the parties revolves around the
question as to whether the leave and licence agreement was
terminated in conformity with the provisions of the said agreement,
and the liability of the plaintiff to pay the licence fee at the agreed rate
21. Clause 11 of the leave and licence agreement under the
caption 'termination' bears upon the determination of the controversy
at hand. Clause 11.5, 11.08 and 11.10 are material and, hence,
extracted below:
"11.5 In addition to any other termination rights
set forth in this Agreement, the licencee shall have an
option to terminate this Agreement effective at any time,
including during the licencee Lock in Period, by paying
the licence Fee for the balance period of the licencee's
Lock-in Period (if the termination is before the licencee's
Lock-in Period) or by paying the licence Fee for 3 (three)
months, in the termination by the licencee is after the
licencee's Lock-in Period. In such event, the licencee shall
have no further obligations, under this Agreement as of
the effective date of such termination.
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11.6 ......
11.7 ......
11.8 a) The licencee shall be entitled to
terminate this Agreement after the licencee's Lock-in
Period by giving 3 (three) months advance notice to the
Licensor. Upon the termination by the licencee licencee
under this clause, the licence granted hereunder shall
come to an end after the expiry of the notice period of 3
(three) months as aforesaid.
b) The Licensor shall be entitled to terminate this
Agreement after the Licensor's Lock-in Period by giving 3
(three) months advance notice to the licencee. Upon the
termination shall --- to an end after the expiry of the
notice period of 3 (three) months as aforesaid.
11.9 ....
11.10 Notwithstanding anything to the contrary
contained in this Agreement, if the licencee commits a
non-monetary breach of this Agreement, the Licensor
shall give the licencee notice in writing to remedy the
breach complained of within thirty (30) days or, if the
breach is of a nature that it cannot be remedied within
thrifty (30) days, to begin within such period to take
reasonable steps to remedy the breach, and on the
failure of the licencee to remedy the breach or
commence to remedy the breach within such period, the
Licensor at its option shall remedy the breach
complained of and shall be entitled to recover the actual
costs therefore from the licencee including from the
Security Deposit. However, it is hereby clarified that in
the event that there is no written intimation specifying
the breach then in that event it shall be construed that
there has been no breach committed under this
agreement".
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22. Evidently, the parties had agreed that after the expiry of the
lock-in period, the licensee had an option to terminate the leave and
licence agreement either by paying licence fee for 3 months or by
giving 3 months advance notice to the licensor. The plaintiff
terminated the licence beyond the lock-in period. It also appears to be
incontrovertible that plaintiff offered to vacate the licenced premises
on 31st December 2021 by a communication dated 24th December
2021. The said e-mail dated 24th December 2021, according to the
defendant, was in breach of the aforesaid term.
23. The aforesaid factor principally weighed with the learned
Judge, City Civil Court. This Court is of the view that, the aforesaid
communication ought to have been read in conjunction with the
communication which preceded the said communication dated 24th
December 2024.
24. From the perusal of the said communications, in a
sequential manner, the following position emerges: in the wake of
Covid-19 pandemic, the parties executed an MoU to reduce the licence
fee to Rs.1,00,000/- per month, excluding the taxes, instead of the
agreed licence fee, for a period of 3 months i.e. July, August and
September 2021. It was the claim of the plaintiff that the said
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dispensation was extended for a further term of 3 months i.e. October
to December, 2021. In that context, vide an e-mail dated 16 th
November 2021, with reference to the meeting the parties had, it was
conveyed on behalf of the plaintiff that the plaintiff was ready to
vacate the premises by 30th September 2021 but was persuaded to
occupy the licenced premises for a further term of 3 months i.e.
October to December 2021, at the concessional licence fee of Rs.
1,00,000/- p.m. excluding the taxes. A draft of the MoU was shared.
However, there was no response from the defendant.
25. In response to the aforesaid communication, on 27th
November 2021, the defendant conveyed to the plaintiff that no
further concession would be granted and that the plaintiff would be
liable to pay the licence fee and the increased car parking charges as
stipulated under the licence agreement dated 27 th June 2018, with
effect from 1st January 2022 and the sum of Rs. 7,31,700/- towards the
enhanced security deposit. What follows is of significance. The
defendant contended that if the plaintiff wished to vacate the premises,
the plaintiff might do so on or before 1st January 2022.
26. Undoubtedly, whether the aforesaid correspondence would
amount to novation of the contract between the parties or dispensing
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with the condition of 3 months notice or payment of 3 months licence
fee, before the termination of the contract, would be matters for
adjudication at the trial. However, there are two further
communications, which the defendant had addressed to the plaintiff
indicating the nature and quantum of its claim and entitlement to
deduct the said amount from the security deposit.
27. First, the communication (Exhibit-O) records that the
defendant had computed the deductions at Rs. 30,69,396/- and
informed the plaintiff that a cheque of Rs. 18,08,604/- was ready. In
the said communication, the defendant had furnished the details of the
deduction i.e. Rs. 19,13,547/- towards arrears of licence fee for the
period October 2021 to December 2021, Rs.7,55,849/- towards the
notice period and Rs.4,00,000/- towards repairs. The aforesaid
communication, if properly construed, constitutes the entirety of the
claim of the defendant towards the permissible deductions from the
security deposit under the leave and licence agreement.
28. It is true that the second communication dated 27 th April
2022, whereby the defendant had acknowledged that the net of
deductions security deposit repayment would be Rs. 37,22,151/-, was
addressed without prejudice. Even if, this communication dated 27 th
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April 2022 is eschewed from consideration, yet, the fact remains that,
under the terms of the agreement the defandent was liable to refund
the security deposit and could lay claim to deduct the amount
therefrom under the specified heads only. Even if the stipulations in
clause 11.10 of leave and licence agreement, extracted above, are
construed rather generously, and it is considered that the defendant
could deduct the amount towards agreed licence fee, even for the
months of October to December 2021, yet, of the own showing by the
defendant a sum of Rs. 18,08,604/- was due and payable to the
plaintiff.
29. Thus, I find substance in the submission of Mr. Desai that
learned Judge, City Civil Court ought to have taken into account the
entire correspondence exchanged between the parties. If so considered,
the acknowledgment of liability to refund a part of the security deposit
becomes abundantly clear. In view of pronouncement of the Supreme
Court in the case of IDBI Trusteeship Services Limited (supra), where
the defendant acknowledges a part of the liability, even if the triable
issue has been raised, leave cannot be granted without deposit of the
said amount.
30. It is trite law that, at the hearing of the Summons for
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Judgment, it is open for the Court to grant conditional leave to defend
in respect of the part of a claim and an unconditional leave to defend
for the balance.
31. A useful reference in this context can be made to a Full
Bench judgment of this Court in the case of ' Sicom Ltd. vs Prashant S.
Tanna And Ors5 , wherein following proposition of law was
enunciated :
4) At the hearing of the summons for judgment, it is
open to the Court to grant conditional leave to defend in
respect of a part of the claim and unconditional leave to
defend for the remaining part of the claim. In such an order
it would follow that in the event of the defendant failing to
comply with the condition, he would suffer the
consequences mentioned in Order XXXVII qua only that part
of the claim for which conditional leave to defend has been
granted and not in respect of that part of the claim for
which unconditional leave has been granted.
32. In the instant case such a severance of claim can be
legitimately made as the defendant has acknowledged the liability in
respect of a part of the claim.
33. In the totality of the circumstances, I am inclined to follow
the aforesaid pronouncement and grant conditional leave to defend the
suit in respect of that part of the claim, which has been clearly
acknowledged by the defendant. To this extent, the impugned order
5 AIR 2004 BOMBAY 186 dated 4/03/2004
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deserves to be interfered with. Hence, the following order:
ORDER
i) The petition stands partly allowed.
ii) The impugned order stands modified as under:
a) Leave to defend is granted to the defendant upon
deposit of a sum of Rs. 18,08,604/- before the Commercial
Court within a period of six weeks from today.
b) The defendant shall be at liberty to file written
statement within thirty days of the deposit of the aforesaid
amount.
iii) Rule made absolute to the aforesaid extent.
No costs.
(N.J. JAMADAR, J)
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