Smt. Prem Lata Gupta And Anr. vs Dunlop India Limited
2003 Latest Caselaw 102 Del

JUDGMENT

Vikramajit Sen, J.

 1. This suit has been filed praying  for the passing  of    a  decree for ejectment of the Defendant from 8/3, Asaf Ali Road, New Delhi; for  a   decree in the sum of Rs.2,40,000/- being arrears of   rent  with effect   from  1,3,1998 to 23.9.198 and damages with  effect   from  24.9.1998 to 31.12.1998; and  for   a   decree for the payment of  future  damages  at the   rate of  24,000/- per month. 
 

 2. On a  perusal of the plaint it will be  evident, inter alia,  that the  parties  had entered into a Lease Deed dated 11th July, 1991.  The allegation is that  the Defendant failed and neglected to pay   the  rent at the rate of Rs.24,000/-  per month from March 1998 onwards. In paragraph  6  of the plaint it has  been stated that  in compliance with Clause 4(a) of the Lease Deed a  legal Notice dated 8.7.1998 was   served   on the Defendant by means of  Registered A.D. post as well as  by  Courier calling upon  the Defendant  to pay the  arrears of rent for the months of March 1998 to June 1998 within  sixty days  of the  receipt of the  said Notice.  In this  paragraph it is specifically  averred that the notice was  duly served upon the Defendant Company on 23.7.1998.  Thereafter in paragraph 10 it has again been reiterated  that the   cause of  action arose on 23.9.1998 when the  tenancy of the Defendant Company stood expressly  terminated by the Plaintiff on the  expiry of  sixty days of the  receipt of the  Notice  dated 8.7.1998, by the Defendant.  The  defense, in essence, is that  "the plaintiff have not  served legal notice  dated 8.7.1998 on the defendant  in accordance    with  Clause 4(a) of the Lease Deed."  Since  pleadings of the  parties would have to be appreciated paragraphs 6 and 10 are  reproduced in juxtaposition: 
   

 "6. That accordingly, the Plaintiffs  served a  legal notice dated 08.07.1998, on the  defendant company, 
 

 "6. The contents of para 6 of the plaint  are  wrong and   denied. The Plaintiffs have not served the legal notice dated  8.7.1998 on
by  means  of Registered A.D. post as well as by Courier.  The Plaintiffs  vide the   said  legal notice called upon  the defendant   company to pay the  arrears of rent for the months of March, 1998 to June, 1998 (which  was due at  that point of time) within 60 days of the receipt of the  said notice failing which it  was notified that the  lease would  seize to be operative and  the plaintiffs would have the  right to re-enter the said property. The  said  notice  was duly served upon the  defendant company on 23.07.98." 
 

the defendant in accordance with clause 4 (a) of the lease deed. Without prejudice to the above, the defendant states that vide order dated 22.6.1998, the defendant was declared a sick company by BIFR and, therefore, the provisions of Section 22 of SICA shall immediately apply to the defendant. As the said Section 22 has a over-riding effect on the clauses of the lease deed, the defendant could not pay the arrears of rent from March to June 1998, as the defendant could not make payments to its creditors without the permission of BIFR. Clause 4(a) therefore cannot be complied with by the defendant in view of the supervening circumstances and it cannot, therefore, be construed as default on the part of defendant to enable the plaintiffs to re-enter the demised premises and determine the lease."

"10. That the cause of action for instituting the present suit arose in favor of the plaintiff and against the defendant company in March, 1998 and every month thereafter when the defendant defaulted in making payment of the monthly rents. The cause of action again arose on 8.7.1998 when the plaintiffs sent notice of termination of tenancy on the defendant. The cause of action again arose on 23rd of September, 1998, when the tenancy of the defendant company stood expressly terminated by the plaintiffs on the expiry of 60 days of the receipt of notice dated 8.7.98, despite which the defendant company failed and neglected to pay the arrears of rent and also thereafter failed to hand over the peaceful and vacant possession of the said property to the plaintiffs."

"10. the contents of para 10 of the plaint are wrong and denied. No cause of action in the present suit arises in favor of plaintiffs and against the defendant. As mentioned earlier, no suit can be filed against the defendant which is a sick company under SICA. It is denied that any default has been committed in making the payment of monthly rent by the defendant. It is further denied that the notice of termination of tenancy has been sent in accordance with the terms of the lease deed and it is further denied that the tenancy of the defendant stood expressly terminated by the plaintiffs on the expiry of 60 days of the receipt of notice dated 8.7.1998. As the defendant has not sought the permission of BIFR before filing the present suit, the suit is liable to be dismissed."

3. I cannot arrive at any conclusion other than that the Defendant admits the receipt of the notice, but disputes its legal efficacy.

4. Clause 4 (a) of the Lease Deed dated 11.7.1991 reads as under:

"(a) If the Company makes any default in payment of the monthly rents and/or commits any violation of its obligations herein contained then the Lease shall cease to be operative and the Lesser shall have the right to reenter the demised premises and determine this lease without prejudice to any of their rights for any antecedent breach of the terms hereof PROVIDED THAT the Lesser shall not be entitled to determine this Lease and exercise the right of re-entry as herein mentioned unless the Lessers have served before hand a written notice to the company requiring them to make good the defects or breaches complained or within the period of sixty days to be mentioned in such notice and after the company has complied with such requests or requisitions within the aforesaid period."

5. It is in this background that Mr. P.D. Gupta, learned counsel for the Plaintiff has contended that the relief of possession should be granted forthwith. This is countered by Shri J.K. Seth, learned Senior counsel for the Defendant, that since the Defendant is a sick company, as envisaged in Section 21 of the Sick Industrial Companies (Special Provisions) Act (hereinafter referred to as `the SICA'), an ejectment order ought not to be passed. Secondly, it is contended by Shri Seth that the ejectment order ought not be passed at this stage, without the reception of evidence, since friable issues have been raised.

6. As regards the first contention of the learned counsel for the Defendant, the matter stands fully settled by the decision of the Hon'ble Supreme Court in M/s. Shree Chamundi Mopeds Ltd. v. Church of south India Trust Association, Madras, . In that case the Respondent had let out premises to the petitioner, which admittedly thereafter became a sick company. The facts of the case are on all fours with those that have been pleaded in the present suit. In rejecting a similar argument as that raised by Shri Seth, the Apex Court observed as under:

"12. Eviction proceedings initiated by a landlord against a tenant company would not fall in categories (1) and (3) referred to above. The question is whether they fall in category (2). It has been urged by the learned counsel for the appellant company that such proceedings fall in category (2) since thy are proceedings against the property of the sick industrial company. The submission is that the leasehold right of the appellant-company in the premises leased out to it is property and since the eviction proceedings would result in the appellant-company being deprived of the said property, the said proceedings would b covered by category (2). We are unable to agree. The second category contemplates proceedings for execution distress or the like against any other properties of the industrial company. The words `or the like' have to be construed with reference to the preceding words, namely, `for execution, distress' which means that the proceedings which are contemplated in this category are proceedings whereby recovery of dues is sough to be made by way of execution, distress or similar process against the property of the company. Proceedings for eviction instituted by a landlord against a tenant who happens to be a sick industrial company, cannot in our opinion, be regarded as falling in this category. We may, in this context, point out that, as indicated n the Preamble, the Act has been enacted to make special provisions with a view to securing the timely detection of sick and potentially sick companies owning industrial undertakings, the speedy determination by a Board of Experts of the preventive, ameliorative, remedial and other measures which need to be taken with respect to such companies and the expeditious enforcement of the measures so determined. The provision regarding suspension of legal proceedings contained in Section 22(1) seeks to advance the object of the Act by ensuring that a proceeding having an effect on the working or the finances of a sick industrial company shall not be instituted or continued during the period the matter is under consideration before the Board or the Appellate Authority or a sanctioned scheme is under implementation without the consent of the Board or the Appellate Authority. It could not be the intention of Parliament in enacting the said provision to aggravate the financial difficulties of a sick industrial company while the said matters were pending before the Board of the Appellate authority by enabling a sick industrial company to continue to incur further liabilities during this period. This would be the consequence if sub-section (1) of S. 22 is construed to bring about suspension of proceedings for eviction instituted by landlord against a sick industrial company which has ceased to enjoy the protection of the relevant rent law on account of default in payment of rent. It would also mean that the landlord of such a company must continue to suffer a loss by permitting the tenant (sick industrial company) to occupy the premises even though it is not in a position to pay the rent. Such an intention cannot be imputed to Parliament. We are, therefore, of the view that Section 22(1) does not cover a proceeding instituted by a landlord of a sick industrial company for the eviction of the company premises let out to it."

7. The decision of the Apex Court in Deputy Commercial Tax Officers v. Corromandal Pharmaceuticals, 1997 III AD S.C. 713, although in somewhat different vein, is also instructive. In that it was clarified that the embargo of Section 22 would not operate on future transactions. The moment a sick company continues in possession of demised premises, it renders itself liable for payment of rent for such period/s. These dues would be recoverable despite registration under SICA and it would thus be arguable that the Court would be obliged to restrict an increase in the liability. Indubitably, an action for ejectment be maintainable as falling beyond the sweep of the SICA moratorium. The reading of following passage from the judgment would be of advantage:

"Any step for execution, distress or the like against the properties of the industrial company other of similar as steps should not be pursued which will cause delay or impediment in the implementation of the sanctioned scheme. In order to safeguard such state of affairs, an embargo or bar is placed under Section 22 of the Act against any step for execution, distress or the like or other similar proceedings against the company without the consent of the Board or, as the case may be, the appellate authority. The language of Section 22 of the Act is certainly wide. But, in the totality of the circumstances, the safeguard is only against the impediment, that is likely to be caused in the implementation of the scheme. If that be so, only the liability or amounts covered by the scheme will be taken in, by Section 22 of the Act. So, we are of the view that though the language of Section 22 of the Act is of wide import regarding suspension of legal proceedings from the moment an inquiry is started, till after the implementation of the scheme or the disposal of an appeal under Section 25 of the Act, it will be reasonable to hold that the bar or embargo envisaged in Section 22(1) of the Act can apply only to such of those dues reckoned or included in the sanctioned scheme. Such amounts like sales tax, etc, which the sick industrial company is enabled to collect after the date of the sanctioned scheme legitimately belonging to the Revenue, cannot be and could not have been intended to be covered within Section 22 of the Act. Any other construction will be unreasonable and unfair and will lead to a state of affairs enabling the sick industrial unit to collect amounts due to the Revenue and withhold it indefinitely and unreasonably. Such a construction which is unfair, unreasonable and against spirit of the statute in a business sense, should be avoided.

11. The situation which has arisen in this case seems to be rather exceptional. The issue that has arisen in this appeal did not arise for consideration in the two cases decided by this Court in Gram Panchayat and another v. Shree Vallabh Glass Works Ltd. and others and Maharashtra Tubes Ltd. v. State Industries & Investment Corproation of Maharashtra Ltd. and another . It does not appear from the above two decisions of this Court nor from the decisions of the various High Courts brought to our notice, that in any one of them, the liability of the sick company dealt with therein itself arose, for the first time after the date of sanctioned scheme. Any ate, in none of those cases, a situation arose whereby the sick industrial unit was enabled to collect tax due to the Revenue from the customers after the "sanctioned scheme" but the sick unit simply folded its hands and declined to pay it over to the Revenue, for which proceedings for recovery, had to be taken. The two decisions of this Court as also the decisions of High Courts brought to our notice are, therefore, distinguishable. They will not apply to a situation as has arisen in this case. We are, therefore, of the opinion that Section 22(1) should be read down or understood as contended by the Revenue. The decision to the contrary by the High Court is unreasonable and unsustainable. We set aside the judgment of the High Court and allow this appeal. There shall be no order as to cost."

The first contention of learned counsel for the Defendant is accordingly rejected.

8. In support of the second contention Mr. Seth has relied on the decision in Balraj Taneja & Anr. v. Sunil Madan & Anr., JT 1999 (6) SC 473. In that suit the prayer was for the specific performance of a contract. Despite several opportunities a Written Statement was not filed, and consequently a decree was passed. The Hon'ble Supreme Court held that despite the provisions of Order VIII Rule 5, CPC the Court can insist on evidence being led even in circumstances where a deemed admission can legitimately be drawn. The Apex Court relied on the observations in Razia Begum v. Sahebzadi Anwar Begum & Ors, . The pronouncements in Balraj Taneja's case (supra) do not inexorably lead to the conclusion that Court must, in all cases, insist on evidence being taken even if it arrives at a considered opinion that no evidence is required for deciding a particular issue. There is no specific denial that the notice contemplated by Clause 4(a) of the Lease Deed had been received. From the reading of the averments in the Written Statement what can be properly gathered is that while service of the notice was not denied, its legal efficacy was challenged. In view of the specific allegation in the plaint pertaining to the date on which the notice was served, as also the availability of the postal receipt and the acknowledgement card, it was imperative for the Defendant to specifically and meaningfully traverse the averments in the plaint. The least that could have been averred in the Written Statement was that the notice was not served on the date mentioned in the plaint or on any other date, either by ordinary process or through registered post, acknowledgement due. What the Court should assume at this stage is that the notice was served, and thereupon investigate whether the notice complied with the terms of Clause 4(a) of the Lease Deed. Learned counsel for the Defendant has not put forward any argument assailing the legal propriety of the Notice as per the contemplation of Clause 4(a) of the Lease Deed. The Defendant's argument is, therefore, devoid of merit. The second contention of the Defendant is also rejected.

9. The facts of the case in hand are, in essence, similar to M/s. Deenar Builders Pvt. Limited v. M/s. Khodey Distilleries Limited, , in which I had granted the relief of possession and had directed that an enquiry into the manse profits to be conducted by the Deputy Registrar (Original). I had observed therein as follows:

"The claims of the Plaintiff have been disputed/denied by the Defendant in its Written Statement in the context of the service charges since the demised premises are stated to have been waterlogged due to lack of maintenance; electricity dues stated to have been paid till July 1992 where after the connection was discontinued; and that the Lease Deed fastened liability for payment of House Tax on the Plaintiff. Thereafter there is a bald averment that all rents have been paid till the date of the Written Statement; it has been admitted that some defaults did occur, which were due to financial difficulties of the Defendant. The receipt of the notices dated 15.5.1992 and 26.11.1992 have not been denied, but its validity has been cryptically assailed, presumably for the reason that there was no occasion to justify its issuance. There is only an evasive denial of the service of the notice dated 18.3.1993, and of the date on which the cause of action arose, which in my opinion, is not sufficient to give rise to an 'issue' on these points.

In this backdrop, the Plaintiff has filed an application under Order XII Rule 6 of the Code of Civil Procedure for the passing of a decree of possession of the suit premises, on the basis of 'admissions' contained in the Written Statement. In its reply to this application, the Defendant has contested it, inter alia, on the submission that the Plaintiff has failed to maintain the premises as a consequence of which it got flooded and goods worth about Rs.15 lakhs were lost; electric supply was discontinued, that the suit was in effect to preempt the Defendant filing a claim for damages; that the Plaintiff cannot get a decree without proving the averment in the Plaint. It has been pleaded that "the notice of termination sent by the Plaintiff is not a valid notice under Section 106 of the Transfer of Property Act," which obviously contains an admission that it had been received.

In the extant statutory regime, tenancies are governed either by the Delhi Rent Control Act or the Transfer of Property Act. Where the monthly rental, at the time of the filing of the action is not above Rs.3500/-, it is the former Act which applies with all its attendant rigorous for obtaining eviction of the Tenant. After the decision in D.C. Bhatia Vs. U.O.I. J.T.1993 (7) SC 114, it is irrelevant when the tenancy commenced and at what initial rent. In the category of cases governed by the Transfer of Property Act, the tenant must be able to disclose that its tenure is protected by the covenants in a legally referable/readable Lease Deed. The fulcrum of the tenants' defense remains this document alone. If the Lease Deed pertains to a tenancy tenure exceeding eleven months, and it has not been registered, it cannot be read in evidence and the tenant is relegated to position of continuing in possession at the will sufferance of the landlord, from month to month. This is of great significance where renewals have allegedly been carried out, since such renewals are required to be evidenced in strict adherence to statutory stipulations. Where the renewal is to take effect for a period in excess of eleven months it ought to be through a registered document, unless it is predicated on the renewal clause of the Lease Deed, which renewal is not capable of controversy. The compulsion of registration is not an empty punctilio. It obviates the adoption of a stand that an oral agreement took place, which agreement would perforce require the reception of testimony from both adversaries, a testimony which is intrinsically self-serving and therefore pregnant with undependibility. The formality for reducing agreed terms to writing, and excluding oral evidence to controvert written terms has its genesis in the medieval Statute of Frauds. It is incumbent on the Court that frivolous defenses should be sternly dealt with, and that the observations of the Supreme Court that litigation should not be allowed to linger on for no purpose, and should be put to an end at its earliest. In T. Arivandandam v. T.V. Satyapal & Anr., , Justice Krishna Iyer had directed that if on a reading of the plaint it is manifestly vexatious and meritless in the sense of not disclosing a clear right to sue, the Court should exercise its power under Order VII of the Code. In that case the plaint was rejected by the Apex Court. These provisions were also resorted to in the case of I.T.C. Limited v. Debts Recovery Appellate Tribunal & Ors., .

10. In these circumstances I am satisfied, on a due consideration of the pleadings of the parties, that a decree for the ejectment of the Defendant, its employees, representatives, servants, agents, nominees and or anyone put in possession by the defendant company or claiming through them from the property No. 8/3, Asaf Ali Road, New Delhi, as shown in the plan filed with the plaint and handover possession thereof to the Plaintiffs calls to be passed forthwith. It is so ordered.

11. The prayer for passing a decree for possession has already been granted. The claim for future damages/mesne profits remains to be adjudicated. I direct the Deputy Registrar (Original) to conduct an enquiry in respect of prayer (c ) of the plaint.

12. List before Deputy Registrar (O) on 17.2.2003.

13. For consideration of the Report, the suit be listed before the Court on 19.5.2003.

IA No. 4816/01

14. In respect of the relief of recovery of the sum of Rs.2,40,000/- being arrears of rent, the grant of this relief presently appears to be barred under Section 22 of the Sick Industrial Companies (Special Provisions) Act as is envisaged in Order XX Rule 18. It would have to be seen whether the liability has been disclosed by the Defendant in the scheme pending consideration by the BIFR.

Renotify for further arguments on 10.3.2003.