Calcutta High Court
Sundeep Bhutoria & Ors vs Wigan & Leigh College (India) Ltd on 5 October, 2023
IN THE HIGH COURT AT CALCUTTA
(Ordinary Original Civil Jurisdiction)
COMMERCIAL DIVISION
Present:
The Hon'ble Justice Krishna Rao
CS 12 of 2014
Sundeep Bhutoria & Ors.
Versus
Wigan & Leigh College (India) Ltd.
Mr. Sarvapriya Mukherjee
Mr. Ayan Dutta
Mr. Dwip Raj Basu
... for the plaintiffs.
Hearing Concluded On : 12.09.2023
Judgment on : 05.10.2023
Krishna Rao, J.:
1.
The plaintiffs have filed the instant suit against the defendant, praying
for a decree of sum of Rs. 51,82,700/- along with an interest upon
judgment at the rate of 24% per annum.
2. The plaintiffs nos. 1 and 2 are both Trustees of Prabha Khaitan
Foundation, a Trust under the Indian Trust Act, 1882, and they are
also the owners of the 2nd and 3rd Floors of premises No. 10C,
Hungerford Street, Kolkata - 700017.
3. The plaintiffs nos. 3 and 4, are, engaged in the business of rendering
maintenance service on the 3rd and 2nd Floors respectively of the
premises No. 10C, Hungerford Street, Kolkata - 700017.
4. The defendant is a company incorporated under the Companies Act,
1956 and carries on business, inter-alia, of running an educational
institution.
CASE OF THE PLAINTFF :
5. The defendant was in need of around 6,000 sq. ft. of vacant space, for
running a college. Accordingly, the defendant had approached the
plaintiffs for letting out the vacant space and after negotiation between
the parties, the plaintiff nos. 3 and 4 had entered into an agreement
with the defendant on 17th June, 2004 with respect of the 2nd and 3rd
Floors of No. 10C, Hungerford Street, Kolkata - 700017.
6. On 17th June, 2004, the plaintiffs nos. 3 and 4 entered into a separate
agreement with the defendant, to render service to the defendant in
respect of the 3rd and 2nd Floors of the said premises. On the same day
of 17th June, 2004, separate tripartite agreements were entered into
between the plaintiffs nos. 1 and 2, plaintiffs nos. 3 and 4 and the
defendant.
7. In terms of the said two agreements, both dated 17th June, 2004, the
defendant was granted lease in respect of the 2nd and 3rd Floors of the
premises No. 10C, Hungerford Street, Kolkata - 700017 by the plaintiff
trust for a term of 9 years commencing from 1st August, 2004. The
monthly rent for the first three years (01.08.2004 to 31.07.2007) was
fixed at Rs. 31,800/- and then 15% increase after three years i.e.
(01.08.2007 to 31.07.2010) i.e. Rs. 36,570/- and for the last three
years i.e. (01.08.2010 to 31.07.2013 ) i.e. Rs. 42055/-.
8. During the period of June' 2004 to August' 2012, the defendant had
made payment of rent and maintenance charges as stated in the
Agreements.
9. The defendant had defaulted in making payment of rent and
maintenance charges to the plaintiffs on and from September, 2013 till
August, 2013, total amounting to Rs. 20,18,640. The defendant has
also defaulted in making payment of electricity bill due on and from
November, 2012 amounting to Rs. 54,540/- and accordingly the
plaintiff has paid the said amount to CESC on behalf of the defendant.
The defendant also failed to make payment of service tax amounting
to Rs. 16,75,644/, as applicable under the Finance Act, 1994 and the
said amount was also paid by the plaintiffs on 1st July, 2013.
10. In the month of August' 2013, the defendant had left the premises
unlocked by removing all its belongings. On 5th August, 2013, the
plaintiffs have intimated to the concern Police Authorities and the
police has submitted report on 20th August, 2013.
11. Thereafter, upon taking possession of the said premises by the
plaintiffs, the plaintiffs discovered that the said premises had been
ruined by the defendant. The plaintiffs have incurred expenditure to the
extent of Rs. 9,78,000/- for repair of the said premises.
CASE OF THE DEFENDANT:
12. The defendant had entered appearance in the suit and had filed their
Written Statement along with counter claim. The defendant has
admitted with regard to the agreements entered between the parties
and made out the following case in the written statement:
a. The defendant had deposited with the Trust/Lessor a sum of Rs.
1,90,800/- interest free security deposit for each of the said two
lease agreements in respect of the said tenanted premises
comprising of 2nd and 3rd floors of the said premises, totalling to a
sum of Rs. 3,81,600/-, which was refundable by the Trust on
account of security deposit to the defendant/Lessee on the expiry
or soon at the determination of the said lease and immediately on
vacating and handing over the peaceful and Khas possession of
the said demised premises to the said lessor after deduction
therefrom (i) all cost of repair in the demised premises of damaged
by the Lessee except normal wear and tear; (ii) any unpaid
amounts payable in respect of demised office block.
b. As per clause 4(ii) of the said agreements the Lessor/Trust shall
provide the Lessee with 15 KVA Power prior to commencement of
the Lease and to bear costs for wiring from the ground floor to the
demised premises.
c. In Clause 4 (iii) of the said Agreement, the said Lessor/Trust fail to
provide the lessee i.e. the defendant herein with regular and
adequate power i.e. 15 KVA within stipulated period. Under clause
4 (iv) of the agreements it is provided that the said Trust/Lessor is
unable to provide either the regular connection specified in clause
4 (ii) or to provide generator as mentioned in clause 4 (iii) as stated
in the said agreements, that the defendant shall suspend the
payment of monthly rent without any notice and shall resume the
same only after required power supply is satisfactorily installed at
the Cost/charges or expenses of the Lessor.
d. In clause 2.2 of the service provider agreement, it is mentioned
that the liability of the Defendant/Lessee for payment of municipal
taxes in respect of the said demised portion (office block) allotted
to the defendant has taken over by the service provider in
accordance to the agreement and the defendant shall not be liable
to pay such taxes.
e. The plaintiffs by a letter dated 11th January, 2008, purportedly
demanded service taxes leviable on lease rent as proposed in the
Financial Bill, 2007 and called upon the defendant by the said
notice to pay the same as applicable from 1st November, 2007, to
which the defendant had made it clear to the Trust that the service
tax leviable as provided in the Finance Bill, 2007 was a 'new tax'
and the imposition of new tax was to be borne by the plaintiffs
under the service provider agreement.
f. The plaintiffs continued to raise bills on account of service tax from
November, 2007 onwards and wrongly issued a demand letter for
service tax. The defendant by their letter dated 21st June, 2009
refused to pay such sum as purportedly demanded by the
plaintiffs.
g. As per agreements 15 KVA load was to be provided by the plaintiff
on each demised floor of the said premises but actually only a total
of 17.6 KVA was being provided by the plaintiffs for the said two
floors and therefore such activity of the plaintiffs was in violation
of clause 4 of the lease agreements. The defendant had also vide
letters dated 30th May, 2009 and 04th June, 2009, requested the
plaintiffs to increase the electric supply, as otherwise in pursuance
of clause 4 the defendant is entitled to suspend payment of
monthly rent.
h. The plaintiffs failed and/or neglected to comply with their obligation
to provide necessary essential services and by reasons of their
fault and/or laches there accrued power disconnection
intermittently and on various occasions which was affecting the
Defendant's business for running a college.
i. Since no attempt was made by the plaintiffs to ensure uninterrupted
supply of power in violation of the terms of the agreements, the
defendant did not make any payment of rent and service charges
from September, 2012, in pursuance to the terms of the Rent and
Service provider agreements which provides the defendant to
deduct rent and service provider agreements which provides the
defendant to deduct rent and service charges on prorate basis if
uninterrupted supply of power is not resumed after 48 hours from
interruption in power supply.
ISSUES:
13. Both the parties had filed their suggested issues. On consideration of
pleadings of both parties and the suggested issues filed by the parties,
following issues are framed:
"(i) Is the suit maintainable in its present form and in
law?
(ii) Is the suit bad for non-joinder of parties or mis-joinder
of causes of action?
(iii) Has the defendant defaulted in paying rent and
maintenance charges from September 2012 to August
2013 and thereby liable to pay Rs. 20,18,640/- to the
plaintiff?
(iv) Has the defendant defaulted in paying the electricity
charges and thereby the plaintiff is entitled to claim
Rs.54,540/- on account of reimbursement of the
electricity charges from the defendant?
(v) Is the defendant bound to pay service tax to the
plaintiff and thereby the plaintiff is entitled to claim
reimbursement of Rs.16,75,644/- from the defendant
towards unpaid service tax?
(vi) Is the defendant bound to pay for causing damage to
the suit premises and thereby the plaintiff in entitled
to claim Rs.9,78,000/- from the defendant as
compensation?
(vii) Is the defendant entitled to claim Rs.2,25,33,480/-
from the plaintiff for alleged violation of the terms of
the agreement?
(viii) Is the plaintiff entitled to get the decree as prayed for?
(ix) Is the plaintiff entitled to get any other relief?
EVIDENCE OF PLAINTIFF:
14. The plaintiffs has examined one witness namely Mr. Sachindra Nath
Jha. The plaintiffs had adduced a total number of 42 Exhibits, from
Exhibit 'A' to Exhibit 'PP'.
I. 'Exhibit-A': Lease Agreement, executed by and between
Prabha Khaitan Foundation and Wigan and Leigh College
(India) Limited, on 17th June, 2004, for the 2nd Floor of 10C,
Hungerford Street, Kolkata-700017.
II. 'Exhibit-B': Lease Agreement, executed by and between
Prabha Khaitan Foundation and Wigan and Leigh College
(India) Limited, on 17th June, 2004, for the 3rd Floor of 10C,
Hungerford Street, Kolkata-700017.
III. 'Exhibit-C': Documents under serial no. 5 and 6 are both a
tripartite agreement, executed by and between Prabha
Khaitan Foundation and Wigan and Leigh College (India)
Limited.
IV. 'Exhibit-D': An agreement made on 17.06.2004 between Ess
Bee Network Pvt. Ltd. and Wigan and Leigh College (India)
Ltd, for providing services, for the premises No.10C,
Hungerford Street, Kolkata-700017, of 2nd and 3rd Floor.
V. 'Exhibit-E' and 'Exhibit-E/1': Letter dated 17th March,
2005, issued by Prabha Khaitan Foundation, wherein it was
informed to the Wigan and Leigh College (India) Ltd., that
new electric meter was installed in our property for their
service and CESC had directly sent a bill to the Wigan and
Leigh College (India) Ltd. for their payment. and the letter
was stamped by the Wigan and Leigh College (India) Ltd., as
they have duly received the document.
VI. 'Exhibit-F' and 'Exhibit-F/1': Letter dated 6th April, 2005,
to the administrator of Wigan and Leigh College (India) Ltd.
informing the administrator that the plaintiffs had paid the
electricity bill for the month of March,2005, and the same
was duly stamped and received by the Wigan and Leigh
College (India) Ltd.
VII. 'Exhibit-G': Letter issued by Wigan and Leigh College (India)
Ltd. to the trustees of the Prabha Khaitan Foundation, on
3rd March, 2006 and informed us that electricity bill is
coming late and they have crossed the due date. Also it was
informed by the defendant that all payment is directly
processed from the headquarter.
VIII. 'Exhibit-H' and 'Exhibit-H/1': Letter dated 4th March,
2006, issued by Kalidas Chatterjee, trustee of Prabha
Khaitan Foundation, to the Subhasis Chakraborty of Wigan
and Leigh College (India) Ltd, stating that the electricity bill
is directly going to the defendant's premises and the
plaintiffs are not in position to help. This letter was duly
received and stamped by the Wigan and Leigh College (India)
Ltd.
IX. 'Exhibit-I' and 'Exhibit-I/1': Letter dated 11th January,
2008, issued by Ess Bee Network Pvt. Ltd., to Wigan and
Leigh College (India) Ltd., informing them that a new finance
bill has been introduced by the Government of Indin in the
year 2007 and service tax imposed @12.36% payable was
payable by them, and it was duly received and stamped by
the defendant.
X. 'Exhibit-J': A copy of a letter dated 1st January, 2009,
which was issued by Prabha Khaitan Foundation to the
Wigan and Leigh College (India) Ltd., asking them to pay
service taxes dues on and from 1st February, 2008 to 1st
December, 2008, amounting to Rs. 1,26,560/-
XI. 'Exhibit-K' and 'Exhibit-K/1': Reply to a letter dated 30th
May, 2009, sent by Wigan and Leigh College (India) Ltd., on
3rd June, 2009, by the plaintiffs.
XII. 'Exhibit-L': Letter dated 14th February, 2012, sent by the
plaintiffs to the defendant along with its postal receipts.
XIII. 'Exhibit-M': Letter dated 21st August, 2012, sent by the
plaintiffs to the defendant.
XIV. 'Exhibit-N' and 'Exhibit-N/1': Letter dated 8th June, 2013,
sent by the plaintiffs to the administrator of Wigan and
Leigh College (India) Ltd., along with its acknowledgment
due card and postal receipts wherein it shows that the
defendant had refused to receive the same.
XV. 'Exhibit-O': Letter dated 8th June, 2013, issued by the
Plaintiffs to the administrator of Wigan and Leigh College
(India) Ltd.
XVI. 'Exhibit-P' and 'Exhibit-P/1': Letter dated 18th June, 2013,
issued by the plaintiff to the administrator of the Wigan and
Leigh College (India) Ltd., along with its postal endorsement,
wherein it is mentioned that the letter was refused by the
defendant.
XVII. 'Exhibit-Q': Letter dated 8th June, 2013, issued by the
Plaintiffs to the administrator of Wigan and Leigh College
(India) Ltd.
XVIII. 'Exhibit-R' and 'Exhibit-R/1': : Letter dated 18th June,
2013, issued by the plaintiff to the administrator of the
Wigan and Leigh College (India) Ltd., along with its postal
endorsement, wherein it is mentioned that the letter was
refused by the defendant.
XIX. 'Exhibit-S' and 'Exhibit-S/1': a copy of Letter dated 8th
June, 2013, issued by the Plaintiffs to the administrator of
Wigan and Leigh College (India) Ltd., along with its postal
endorsement, wherein it is mentioned that the letter was
refused by the defendant.
XX. 'Exhibit-T' and 'Exhibit-T/1': a copy of Letter dated 8th
June, 2013, issued by the Ess Bee Networks Private Limited
to the administrator of Wigan and Leigh College (India) Ltd.,
along with its postal endorsement, wherein it is mentioned
that the letter was refused by the defendant.
XXI. 'Exhibit-U': A calculation of maintenance charge, rent
charges, electricity payment receivable form the Wigan and
Leigh College (India) Ltd, prepared by the plaintiffs and
plaintiff's accountant.
XXII. 'Exhibit-V': Service Tax Receipts, paid by the Prabha
Khaitan Foundation and Ess Bee Networks and Prabha
Associates Private Limited, on 4th July, 2013.
XXIII. 'Exhibit-W': Calculation of Service Tax receivable from the
Wigan and Leigh College (India) Ltd.
XXIV. 'Exhibit-X': copies of electricity bill issued by the Calcutta
Electricity Supply Corporation to Prabha Khaitan
Foundation for the month of January, 2013 showing net
amount of Rs. 36,730/- and also showing the dues of
December, 2012 of Rs. 13,580/- and for the month of
November, 2012 of Rs. 20,297.51 paise.
XXV. 'Exhibit-Y': calculation of electricity bill dues from
Novemebr, 2012 to March, 2013 and, which were paid by
the plaintiff by bank draft of Federal Bank Limited.
XXVI. 'Exhibit-Z': Copies of letters issued by Prabha Khaitan
Foundation, to the Officer-In-Charge, Shakespeare Sarani
Police Station, dated 08.04.2013; 03.01.203; and
09.05.2013.
XXVII. 'Exhibit-AA': Copies of Letters dated 11.06.2013, issued by
the Prabha Khaitan Foundation to the Administrator of
Wigan and Leigh College (India) Limited, regarding non-
payment of electricity bills.
XXVIII. 'Exhibit-BB': Letter dated 08.02.2013, prepared and sent by
Radhika Singh & Co., advocate to Sourabh Chowdhury,
Advocate, upon instructions of the plaintiffs.
XXIX. 'Exhibit-CC' and 'Exhibit-CC/1': Letter dated 5th August,
2013, to the Officer-in-charge, Shakespeare Sarani Police
Station, issued by the Prabha Khaitan Foundation, and they
have duly stamped and received the letter.
XXX. 'Exhibit-DD': Letter dated 20th August, 2013, issued by the
Prabha Khaitan Foundation to the Wigan and Leigh College
(India) Ltd.
XXXI. 'Exhibit-EE' and 'Exhibit-EE/1': Letter dated 12th
December, 2013, issued by the Plaintiffs to the
administrator of Wigan and Leigh College (India) Ltd., along
with its postal endorsement, wherein it is mentioned that
the letter was refused by the defendant.
XXXII. 'Exhibit-FF': Photographs of the premises No.10C,
Hungerford Street, Kolkata-700017, which shows that the
defendant had left it in ruined condition and the electricity
and walls were destroyed.
XXXIII. 'Exhibit-GG': copy of an email dated 31st December, 2012,
sent by Colonel Pushkar Prasad, COO, of Wigan and Leigh
College (India) Limited, which was sent to Sandip Mitra, who
was the Campus Director of Wigan and Leigh College (India)
Limited and then it was forwarded to the Plaintiffs.
XXXIV. 'Exhibit-HH': copy of an email dated 07th August, 2013,
sent by Sumanta Kumar, the accountant of Wigan and Leigh
College (India) Ltd.
XXXV. 'Exhibit-II': A letter issued by the Wigan and Leigh College
(India) Limited to the Prabha Khaitan Foundation,
purportedly, the letter was issued on 15th October, 2013 but
the premises was abandoned by the Wigan and Leigh College
(India) Limited on 3rd August, 2013.
XXXVI. 'Exhibit-JJ': a copy of a letter dated 30th August, 2013,
issued by the defendant, whereas the defendant had left the
premises on 3rd August, 2013.
XXXVII. 'Exhibit-KK': Bill for the security deposit issued by CESC to
the Prabha Khaitan Foundation, premises no. 10C,
Hungerford Street, Kolkata-700017, for the new load of 15
KW of Rs. 67,150/-.
XXXVIII. 'Exhibit-LL': It is a letter issued by CESC informing the
plaintiffs that they have adjusted the security deposit
against the dues paid by defendant college.
XXXIX. 'Exhibit-MM' and 'Exhibit-MM/1': It is a consolidated bill
issued by CESC to Prabha Khaitan Foundation for further
security deposit of Rs.66,530/-, that the plaintiffs had paid.
XL. 'Exhibit-NN': Demand draft issued by Federal Bank Limited
in favour of CESC of Rs.66,530/-.
XLI. 'Exhibit-OO': General Power of Attorney dated 16th
December,2013.
XLII. 'Exhibit-PP': Extract minutes of proceedings of the meeting
of the trustees of Prabha Khaitan Foundation held on 12th
September, 2013 at 1.00PM.
EVIDENCE OF DEFENDANT:
15. The defendant had also examined one witness, namely Mrs. Malabika
Sengupta, Chief Executive Officer of the Company but the cross
examination of the defendant witness No. 1 was deferred on 17th
December 2019 since thereafter, the defendant has not produced the
defendant witness no.1 for further cross examination in spite of several
notices issued by the counsel for the plaintiff to the defendant and
accordingly by an order dated 3rd May 2023 the evidence of the
defendant was closed. It is found from record that since 6th April 2022
none appears on behalf of the defendant. During the argument of the
matter, this Court found that the matter is connected with commercial
dispute and by an order dated 11th August 2023 this Court had
transferred the matter to this Court (Commercial Division). After
transfer of the case, the plaintiff had also issued notice to the Advocate
on record of the defendant but inspite of receipt of notice none appears
on behalf of the defendant. The defendant had adduced total number of
24 documents being 'Exhibit-1 to Exhibit-24', which are as follows :
a. 'Exhibit-1': One agreement between the defendant and the
service provider for the 5th Floor of 10C, Hungerford Street,
Kolkata - 700017, and the other agreement is a tripartite
agreement for the same 5th Floor of 10C, Hungerford Street.
b. 'Exhibit-2': Signatures of signatories of the agreements, the
signatories are Mrs. Indu Saraf, Mr, Vijay Pasricha and Mr.
Ashok Kumar Saraf.
c. 'Exhibit-3': A copy of police complaint, which was lodged by the
defendant, in order to put on record that there was a lease
agreement of the 5th Floor and all the third agreement of the 4th
Floor, the original of the three agreements of the 4th Floor has
been misplaced during shifting of office of the defendant.
d. 'Exhibit-4' and 'Exhibit-4/1' and 'Exhibit-4/2': Ledger
Account of CESC, bearing Consumer No. 22009026012.
e. 'Exhibit-5': A copy of a Bank Statement of Kotak Mahindra
Bank for the period of September 2012 to November 2012, it
shows all the bank transactions made during the period by the
college at the Kolkata campus including the electricity payment
made for the month of October, 2012.
f. 'Exhibit-5/1': Encircled portion of the bank statement which
shows payment for October 2012 towards CESC.
g. 'Exhibits-6' : a copy of the complaint that the college lodged at
the local police station as the trust took no action against the
electricity disruption and CESC officials were also unable to
help as the meter box was under lock and key and the trust
authorities were not helping to sort out the matter.
h. 'Exhibit-7': A letter given by the Defendant's advocate named
Mr. Sourav Chowdhuri to the trust for the sudden disconnection
of the electricity at the second and the third floor of the building.
i. 'Exhibit-8': A forwarding letter of WLCI dated 20th November,
2012 along with four cheques being Nos. 001278, 001277,
001276, 001279, dated 17th November, 2012.
j. 'Exhibit-9': Downloaded copy of a letter of WLCI, dated 14th
December, 2012.
k. 'Exhibit-10': A forwarding letter of WLCI dated 28th December,
2012 along with four cheques bearing Nos. 000851, 000852,
000850 and 000853 dated 22nd December, 2012 respectively.
l. 'Exhibit-11': Downloaded copy of a letter dated of Pushkar
Prasad dated 31st December, 2012.
m. 'Exhibit-12': Downloaded copy of a letter dated of WLCI, dated
02nd January, 2013.
n. 'Exhibit-13': Downloaded copy of a letter dated 03rd January,
2013, of Pushkar Prasad.
o. 'Exhibit-14': Bills of hiring generator sets from January to July,
2013.
p. 'Exhibit-15': Cash Memos issued by Bharat Petrolium retail
outlet and the are for the month of January till July' 2013.
q. 'Exhibit-16': Monthly bills of security solutions and manpower
services Security agency of Noida for supplying security guards
to the defendant college's Kolkata and Noida branch and the
bills are for the month of January till July' 2013.
r. 'Exhibit-17': Ledge account for the expenses incurred towards
hiring of generator because of disruption of main power at the
campus in Calcutta. Ledger account for purchase of diesel to the
tune of Rs.1,90,982/- for running the generator sets at the
campus.
s. 'Exhibit-17/1': details of ex-students who dropped out and
discontinued their courses. The fee that was received by the
college till date i.e. January, 2013 and the balance that was to
be received by the college from the students, which amounted to
Rs.36,26,126/- and that is the incurred loss by the defendant.
t. 'Exhibit-18': A copy of a Fees Payment Schedule of one student
which mentioned the total fees.
u. 'Exhibit-19': Copies of some registration forms.
v. 'Exhibit-20': A letter account of the expenses incurred towards
cable and networking due to disruption of electricity, mentioned
to payment made to Sukanya Electrical.
w. 'Exhibit-21': Certificate issued by the defendant's auditor K.S.
Bawa & Associates which mentions the year wise application
forms i.e. 2011,2012,2013 and till May, 2014, sold and also
mentions admission of students. Thereafter it also mentions
revenue received by the college. Continuation of the previous
details wherein it mentions the percentage of conversion from
application form to admission. [Annexed collectively].
x. 'Exhibit-22': A letter written by the defendant's director of the
campus to the Prabha Khaitan Foundation mentioning the
problems that the defendant was facing because of electricity
disruption on the 2nd and 3rd Floor of the premises.
y. 'Exhibit-23': A letter written by Mr. Sandip Mitra to Prabha
Khaitan Foundation mentioning about the financial loss due to
disconnection of electricity on the 2nd and 3rd Floor.
z. 'Exhibit-24': copy of an email sent by the defendant's
accountant to the office of the foundation along with a copy of
the hand over certificate, dated 7th August, 2013.
aa. 'Exhibit-25': Board resolution of the directors of the company
M/s. WLC College India Limited which authorises the witness to
represent the company for this case.
DECISION WITH REASONS:
Issues no.1 and 2 taken up together:
"(i) Is the suit maintainable in its present form and in
law?
(ii) Is the suit bad for non-joinder of parties or mis-
joinder of causes of action?
The plaintiff has filed the suit for recovery of rent and other
charges against the defendant. On 24.12.2013, this Court granted leave
to accept the Court fees and after acceptance of Court fees by an order
dated 13.01.2014 leave was granted under Clause 12 of Letters Patent
and subsequently the plaintiff has taken appropriate steps. At the time
of hearing of the suit, it was found that the suit is of commercial in
nature and the suit was filed prior to promulgation of the Commercial
Courts Act, 2015, accordingly, the suit was transferred to this Court
and even after transfer, a notice was issued to the Advocate-on-record
of the defendant but even after receipt of notice none appeared on
behalf of the defendant, thus the suit is maintainable in its present
form and law. Accordingly issue no. (i) is decided in favour of plaintiff
and against the defrendant.
The suit was filed in the year' 2014 claiming rent, maintenamce
charges, electric charges, service charges, repair charges and interest
with respect of the suit premises. The plaintiffs have let out the
premises to the defendant for the purpose of running college. For letting
out the premises, two agreements were entered between the plaintiff no.
3 and defendant. A tripartite agreement was executed between the
plaintiffs and the defendant. Another agreement between the plaintiff
no. 4 and the defendant was entered on the same day and all the
parties to the agreements are parties to the suit and thus issue no (ii) is
decided in favour of the plaintiffs and against the defendant.
ISSUES NO. (iii) to (ix) are taken up together:
(iii) Has the defendant defaulted in paying rent and
maintenance charges from September 2012 to
August 2013 and thereby liable to pay Rs.
20,18,640/- to the plaintiff?
(iv) Has the defendant defaulted in paying the electricity
charges and thereby the plaintiff is entitled to claim
Rs.54,540/- on account of reimbursement of the
electricity charges from the defendant?
(v) Is the defendant bound to pay service tax to the
plaintiff and thereby the plaintiff is entitled to claim
reimbursement of Rs.16,75,644/- from the
defendant towards unpaid service tax?
(vi) Is the defendant bound to pay for causing damage to
the suit premises and thereby the plaintiff in entitled
to claim Rs.9,78,000/- from the defendant as
compensation?
(vii) Is the defendant entitled to claim Rs.2,25,33,480/-
from the plaintiff for alleged violation of the terms of
the agreement?
(viii) Is the plaintiff entitled to get the decree as prayed
for?
(ix) Is the plaintiff entitled to get any other relief?
16. On 17th June, 2004, two agreement were entered between the plaintiff
no. 3 and the defendant with respect of 2nd floor and 3rd floor of the
eight storied building at premises No. 10C, Picasso Bithi (Formely No.
10C, Hungerford Street), Kolkata. Both agreements were marked as
Exhibits A and B. On the same day tripartite agreement was executed
between plaintiff no. 3, the defendant and the plaintiff no. 4 and the
said tripartite agreement is marked as Exhibit 'C'. On the same day,
another agreement was entered between plaintiff no. 4, defendant and
the said agreement is marked as Exhibit 'D'. As per Exhibits A and B,
the lease period of both the floors is for 9 (Nine) years with effect from
1st August, 2004 and the monthly rent for the first three years
(01.08.2004 to 31.07.2007) was fixed at Rs. 31,800/- and then 15%
increase after three years i.e. (01.08.2007 to 31.07.2010 ) i.e. Rs.
36,570/- and for the last three years i.e. (01.08.2010 to 31.07.2013 )
i.e. Rs. 42055/. The defendant has deposited an amount of Rs.
1,90,800/- each of the premises with the plaintiffs as interest free
security deposit.
17. As per the agreement, the defendant has occupied the premises and
started paying the maintenance charges and monthly rent to the
plaintiff. The defendant has paid monthly rent and maintenance
charges till the month of August' 2012 and since thereafter i.e from the
month of September' 2012 till the month of August' 2013, the
defendant defaulted in paying the same total amounting to Rs.
20,18,640/-. In the tenanted premises, CESC Limited has also provided
Electricity Meter No. 4272908 being Consumer No. 22009026012 and
as per the agreement entered between the parties, the defendant is
liable to pay the electrical consumption charges of the tenanted
premises. The defendant has paid the electricity charges uptill October'
2012 and since the month of November' 2012, the defendant failed to
pay the said charges and accordingly the plaintiff has paid an amount
of Rs. 54,540/- to the CESC on behalf of the defendant. Exhibits E, F,
G, H, X, Y, LL, MM and NN are proved that the plaintiff has provided
electric connection in the suit premises by depositing security deposit
and non-payment of the consumption charges, the CESC has adjusted
the dues from security deposit. The defense recorded by the defendant
that the plaintiff has not provided 15 KVA load on said premises and
only provided 17.6 KVA has not proved by the defendant by any cogent
evidence.
18. On introduction of new finance bill by the Government of India in the
year' 2007 and imposition of service tax at the rate of 12.36%, the
plaintiff has informed the defendant by a letter dated 1st January,
2009, for payment of service tax total amounting to Rs. 1,26,560/-
with effect from 1st January, 2008 which is marked as Exhibit 'J'.
Thereafter also, the plaintiff had sent several reminders to the
defendant for payment of service tax but the defendant has not paid the
said tax. The tax paid by the plaintiff is marked as Exhibit 'V'
collectively. The plaintiff has proved the payment of service tax being
Exhibits I, J, K, M, V and GG. Clause 2.2 (i) of the agreement dated
17th June, 2004, entered between plaintiff no. 3 and defendant being
Exhibit 'C' reads as follows :
"2.2 The Service Provider has also agreed to take over
the liability of the Lessee for payment of the
following outgoings in respect of the said Office
Block:
(i) Liability for payment of only the municipal
rates and taxes in respect of the said Office
Block during the term reserved under the
said Lease Agreement and the Lessee shall
not be made liable therefor in any manner
whatsoever, notwithstanding anything to the
contrary agreed by and between the said
Lessor and the Lessee under the said Lease.
It is made clear that any increase in rate of
taxes in respect of owner's and occupier's
share and commercial surcharge and all
other impositions, levies, charges and fees or
imposition if new taxes shall be borne by the
Lessor and the Lessee shall only be liable to
make payment as stated in clause (3)
provided hereunder."
As per said Clause, the defendant is liable to pay the service tax
from November' 2007 to August' 2013 amounting to Rs. 16,75,644/-
which the plaintiff has paid being Exhibit V colletivelly.
19. The defendant has not paid the maintenance amount of the suit
premises from September' 2012 to August' 2013. As per agreement
dated 17th June, 2004, being Exhibit 'C' and Exhibit 'D', the defendant
is required to pay Rs. 42055/- per month of each premises total
amounting to Rs. 20,18,640/-. The plaintiff has requested the
defendant to clear the due but inspite of receipt of the said request, the
defendant has not paid the dues of maintenance charges. Exhibits 'T'
and 'U' proved that the plaintiff has made request to the defendant but
the defendant has not paid the same and on 3rd August, 2013, the
defendant has left the premises unlocked by removing all its belonging
and without any intimation to the plaintiff and without clearing the
dues of the plaintiff.
20. The defendant has claimed that the plaintiff failed and/or neglected to
comply with their obligation to provide necessary essential services and
by reasons of their fault and/or laches there accrued power
disconnection intermittently and on various occasions which was
affecting the Defendant's business for running a college. Since no
attempt was made by the plaintiff to ensure uninterrupted supply of
power in violation of the terms of the agreements, the defendant did not
make any payment of rent and service charges from September' 2012,
in pursuance to the terms of the Rent and Service provider agreements
which provides the defendant to deduct rent and service provider
agreements which provides the defendant to deduct rent and service
charges on prorate basis if uninterrupted supply of power is not
resumed after 48 hours from interruption in power supply.
21. The defendant has also made their counter claim but the defendant has
not proved the counter claim and the defence set out by the defendant
in the written statement. The defendant has cross-examined the
plaintiff's witness but the defendant failed to bring his witness i.e.
D.W.1 to complete the cross examination. The Counsel for the plaintiff
has partly cross-examined the D.W.1 but subsequently, the defendant
has not produced the said witness to complete the cross-examination of
the D.W.1. None on behalf of the defendant has argued the matter also.
22. In the case reported in 1998 SCC OnLine AP 305 (The A.P. Tobacco
Growers Co-op. Union Ltd. -vs- Shri Anjaneya Tobacco Co.,
Tangutur & Ors.), it is held that :
"8. So, it is clear that D.W. 1 did not turn up
on 16-3-1995 for cross-examination, although the
matter was adjourned after chief-examination on
10-3-1995, to that date by an order of the Court.
There was also no request made on behalf of
defendants to re-call him for cross-examination,
though the matter was posted for arguments as a
next step by an order dated 16-3-1995. Therefore,
the evidence of D.W. 1 in chief-examination
without affording an opportunity to the plaintiff to
cross-examine him cannot be used as evidence in
this case. We are therefore left with the evidence
of P.W. 1 and Exs. A-1 to A-18."
In the case reported in 2002 Supp (1) ALD 600 (Somagutta
Sivasankara Reddy and Ors. -vs- Palapandla Chinna Gangappa
and Ors.), it is held that evidence would be inadmissible, if cross
examination was avoided or deliberately prevented.
In the case reported in 1949 SCC OnLine Cal 11 (Phani
Bhusan Ghosh and Another -vs- Sibakali Basu), the Hon'ble Court
held that :
"Unless examination of a witness is
complete, that is to say, unless he has been cross-
examined and re-examined or unless his cross
examination or re-examination has been declined,
his evidence cannot be considered except in the
circumstances mentioned in Section 33 of the
Indian Evidence Act. There is nothing to show that
these persons are dead or incapable of giving
evidence or that they cannot be found or that they
have been kept out of the way by the complainant;
nor is there any evidence that their presence
cannot be obtained without an amount of delay or
expense which in the circumstances of the case the
court considers unreasonable. In the absence of
these circumstances such incomplete evidence
cannot be accepted."
In the case reported in 2010 SCC OnLine Del 3660 (Pearey
Lal Bhawan Association -vs- M/s. Satya Developers Pvt. Limited),
the Hon'ble Court held that:
"12. The controversy requiring decision by the
Court is narrow and limited. It is whether the burden
of service tax, levied on the service or facility of
leasing (of the suit premises) should be borne by the
lessor (i.e. the service provider) or the lessee (i.e. the
defendant, user). There is no dispute that the parties
did not visualize that this kind of a levy would be
made in respect of lease, or rental of commercial
properties; it is also undisputed that the levy was
made effective in 2007, after the parties had entered
into the agreement. The defendant denies liability to
pay, submitting that the conditions in the contract
clearly stipulate that all taxes, etc. are to be borne by
the plaintiff landlord. It relies on principles of
interpretation of contract, to submit that when
parties visualize situations and provision for them, it
is not open to either of them to ??? outside the
express terms, and try to discover obligations when
none exist.
14. It is true, that the contracts entered into
between the parties in this case, spoke of the
plaintiff lessor's liability to pay municipal, local and
other taxes, in at least two places. The Court,
however, is not unmindful of the circumstance that
service tax is a species of levy which the parties
clearly did not envision while entering into their
arrangement. It is not denied that leasing, and
renting premises was included as a "service" and
made exigible to service tax, by an amendment; the
rate of tax to be collected, is not denied, if the overall
objective of the levy - as explained by the Supreme
Court, were to be taken into consideration, it is the
service which is taxed, and the levy is an indirect
one, which necessarily means that the user has to
bear it. The rationale why this logic has to be
accepted is that the ultimate consumer has contact
with the user; it is from them that the levy would
eventually be ??? by including the amount of tax in
the cost of the service (or goods)."
"15. It would be noteworthy to recollect Section
64-A of the Sale of Goods Act, 1930, which visualizes
and provides for situations where levies of tax are
imposed after the contract (for sale of goods) is
entered into. The provision prescribes that:
"64-A. In contracts of sale, amount of
increased or decreased taxes to be added or
deducted.- (1) Unless a different intention
appears from the terms of the contract, in the
event of any tax of the nature described in sub-
section (2) being imposed, increased decreased or
remitted in respect of any goods after the making
of any contract for the sale or purchase of such
goods without stipulation as to the payment of tax
where tax was not chargeable at the time of the
making of the contract, or for the sale or purchase
of such goods tax-paid where tax was chargeable
at that time,
(a) if such imposition or increase so takes
effect that the tax or increased tax, as the
case may be, or any part of such tax is paid
or is payable, the seller may add so much
to the contract price as will be equivalent to
the amount paid or payable in respect of
such tax or ??? of tax, and he shall be
entitled to be paid and to sue for and
recover such addition; and
(b) if such decrease or remission so takes
effect that the decreased tax only, or no
tax, as the case may be, is paid or is
payable, the buyer may deduct so much
from the contract price as will be equivalent
to the decrease of tax or remitted tax, and
he shall not be liable to pay, or be sued for,
or in respect of, such deduction.
(2) The provisions of sub-section (1) apply to
the following taxes, namely:
(a) any duty of customs or excise on goods;
(b) any tax on the sale or purchase of goods."
The above provision also clearly says that unless a
different intention appears from the terms of the
contract, in case of the imposition or increase in the
tax after the making of a contract, the party shall be
entitled to be paid such tax or such increase.
Although there is no explicit provision to that effect,
enabling lessors such as the plaintiff, to the service
tax component, this Court is of the view that there is
sufficient internal indication in the Act, through
Section 83 read with Section 12-A and Section 12-B
suggesting that the levy is an indirect tax, which can
be collected from the user (in this case, the lessee).
This issue, is therefore, answered in the plaintiff's
favour, and against the defendant."
23. The plaintiff has claimed damages of Rs. 9,78,000/- being the cost of
repair of the suit premises. The defendant has left the suit premises
unlocked and on inspection it was found that the defendant has caused
damage in the suit premises and has taken photographs Exhibit "FF".
The plaintiff has reported the matter to the concerned police station
and the police has also submitted report being Exhibit 'DD' which is
proved that electrical wiring, doors, furniture, ACs, interior fittings etc.,
were removed. In clause 2(ii) of the Exhibit A and B is recorded that:
"ii) The Lessee shall deposit with the Lessor during the
term of this agreement Rs. 190800/- as interest
free security deposit. The said sum to remain
deposited with the Lessor during the period of this
agreement shall be deposited by the Lessee with
the Lessor simultaneously with the execution
hereof (the receipt whereof the Lessor both hereby
as also by the receipt and memo hereunder written
admit and acknowledge), notwithstanding the fact
that the lease shall commence on and from 1st
August, 2004).
The said security deposit shall always be
maintained during the term of this agreement and
in case there be any shortfall due to reason of any
amount being deducted by the Lessor therefrom in
terms hereof or otherwise then the lessee shall
replenish the same to the quantum hereinabove
sated. The said security deposit shall be refunded
to the Lessee on the expiry of the lease or sooner
determination thereof and the Lessee vacating and
handing over the complete peaceful vacant and
khas possession of the said Office Block to the
Lessor after deduction therefrom of (i) any unpaid
rent or other charges payable by the Lessee to the
Lessor and/or any other unpaid amounts payable
in respect of the said Office Block to any other
person or persons claiming through under or in
trust for the Lessor and (ii) all costs of repairs to
the said Office Block, if damage by the Lessee
except normal wear and tear."
Considering the report being Exhibit 'DD' and as per Clause 2(ii)
of Exhibits A and B, the security deposit of the defendant should be
treated as forfeited being the cost of repair charges.
24. Issues Nos. (iii) to (ix) except Issue No. (vi) are decided in favour of the
plaintiffs and against the defendants. Issue No. (vi) decided in favour of
the plaintiff in part and against the defendant.
25. In view of the above, the plaintiff is entitled to get decree of Rs.
3,748,824/- being the monthly rent and maintenance from the month
of September' 2012 to August' 2013, electric charges of Rs. 54,540/-
and service charge of Rs. 16,75,644/. The plaintiff is also entitled to get
interest on Rs. 3,748,824/- at the rate of 15% per annum from the date
of filing of the suit till realisation of the said amount. The counter claim
filed by the defendant is dismissed.
26. C.S No. 12 of 2014 is disposed of. Decree be drawn accordingly.
(Krishna Rao, J.)
