Uco Bank vs Vyas Aqua Products Pvt. Ltd. And ...
2006 Latest Caselaw 1785 Del

JUDGMENT

T.S. Thakur, J.

1. In this Regular First Appeal, the appellant calls in question the correctness of a judgment and decree dated 2nd May, 2005 passed by the Additional District Judge, Delhi whereby the suit filed by the plaintiff-respondent for arrears of rent and compensation for unauthorized use and occupation has been decreed with costs @ Rs. 50,000/- per month as against Rs. 1 lakh per month claimed in the suit.

2. The defendant-appellant herein was in occupation of a premises comprising the basement and ground floor of property No. 8357/2 (new), Model Basti, Filmistan Cinema, Shiddipura, Delhi in terms of a registered lease deed dated 8th April, 1971. The tenancy was extended for a period of 15 years w.e.f. 7.5.1981 on a monthly rental of Rs. 9,000/- for the first five years, Rs. 10,800/- for the next five years and Rs. 12,960/- for the remaining period of five years. Since, according to the plaintiff, who had acquired the property from the erstwhile landlord, there was no further extension of the lease in favor of the defendant-appellant, its tenancy was terminated in terms of a notice dated 26th April, 1996. A suit for possession of the demised premises and for damages for unauthorized use and occupation thereof @ Rs. 1 lakh per month w.e.f. 15th February, 1996 till the date of handing over of the possession was accordingly filed by the plaintiff. A decree for arrears of rent at the agreed rate from 1st February, 1996 to 14th February, 1996 was also prayed for.

3. The suit was contested by the defendant-appellant on several grounds including the ground that the lease stood extended up to 14th February, 1996 and that the defendant was not obliged to pay any damages for its occupation. An application under Order XII Rule 6 of the CPC was then filed by the plaintiff for a judgment on admissions. In the course of hearing of the said application, the Court was informed that the appellant had already handed over the possession of the demised premises to the plaintiff and all that remained to be considered was the claim for mesne profits/compensation for use and occupation of the premises. The Court accordingly framed the following three issues in that regard:

1. To what amount the plaintiff is entitled on account of rent from 1.2.1996 to 14.2.1996?

2. Whether the plaintiff is entitled to damages for use and occupation of the property, if so at what rate and for what period?

3. Relief.

4. In support of its claim, the plaintiff filed the affidavits of PWs Kamal Kumar and Ashok Kumar. The defendant's evidence was closed on the 6th April, 2005 on a statement made to that effect by its counsel.

5. By the judgment under appeal, the trial court found Issue No. 1 in favor of the plaintiff and held it entitled to an amount of Rs. 6480/- towards rent for the period between 1.2.96 to 14.2.96. As regards Issue No. 2, the trial court held that the lease deed stood validly terminated in terms of notice dated 25th January, 1996 sent by the plaintiff entitling it to claim damages for use and occupation of the premises beyond the date of termination of the tenancy. The Court also held that there was no evidence to substantiate the plaintiff's claim that the market rent of the premises was Rs. 1 lakh per month during the relevant period. The Court noticed a copy of the lease deed relating to the adjoining property showing payment of rent @ Rs. 14.61 per sq.ft. effective from 1.1.2003. The Court observed that although the rent in the year 1996 would have been less than what it was in the year 2003, yet in the absence of any evidence regarding market rent for the year 1996 it could be inferred that the rent in 1996 was approximately similar to that in the year 2003. We may usefully extract the passage in which the Court below has made those observations:

The copy of lease deed of adjoining property shows rent of Rs. 59,500/- calculated @ Rs. 14.61 per sq.ft. The said rent is effective from 1.1.2003. The rent in 1996 would have been less than that but since there is no evidence of market rent for the year 1996, it can be inferred that rent in 1996 were approximately similar to those in year 2003.

6. The Court then referred to a letter marked ExPW1/2 sent by the defendant-appellant offering rent @ Rs. 14.28 w.e.f. 15.2.96 and held that the defendant was bound by the said figure. The court rejected the contention that since the amount mentioned in the letter was tentative and subject to the approval of the Head Office, the same could not be relied upon and held the defendant-appellant herein liable to pay damages for use and occupation of the property @ Rs. 50,000/- per month w.e.f. 15.2.1996 to 30.6.2004. Issue No. 2 was decided accordingly and the suit decreed for a total sum of Rs. 50,31,480/-. The present appeal assails the correctness of the said judgment and decree as noticed earlier.

7. Appearing for the appellant, Mr. Rajesh Rattan, made a two-fold submission before us. In the first place, he submitted that the defendant-appellant had not been given a fair and reasonable opportunity to adduce its evidence on the question of the market rental value of the demised premises during the relevant period. He drew our attention to the interim orders passed by the trial court and the communications sent by the Bank's counsel Atul Sharma & Co., Advocates and Legal Consultants, to show that the bank had been kept in the dark about the true facts that had transpired in the court causing grave miscarriage of justice. He urged that although the rebuttal evidence of the defendant had been closed on 6.4.2005 on the basis of a statement made to that effect by the Bank's counsel, he had in a communication sent on the very same date misinformed the bank that after closure of the plaintiff's evidence, the case had been adjourned for the evidence of the defendants or in the alternative for the arguments on 19th April, 2005. On 19th April, 2005, the date allegedly fixed for defendant's evidence, the counsel again wrote a letter to the bank informing it that the court had closed its evidence as no evidence was required on the short point that arose for consideration. He had also intimated to the bank that the court had finally heard the matter and reserved its judgment.

8. The above letters, argued the counsel, did not depict the true position. They in fact totally distorted the facts and created a false impression as though it was the Court who had closed the evidence of the defendant as in its opinion the short point that fell for its consideration did not call for any evidence in rebuttal. The true position, argued the learned Counsel, however, was that the counsel had himself made a statement on 6th April, 2005 and closed the defendant's evidence without any instructions from the bank to do so and without so much as informing the bank about what he proposed to do. There was in that view, a clear failure of justice, argued the learned Counsel, in as much as the Bank did not have an opportunity to adduce evidence in support of its case. It was submitted that finding fault with the conduct of the counsel, the bank had already removed him from the panel of its lawyers. The impugned judgment was suffered by the appellant only on account of the counsel's neglect which tantamounts to a fraud on the judicial process and is, therefore, unsustainable. Alternatively, it was argued that there was no evidence to support the claim made by the plaintiff for payment of compensation @ Rs. 1 lakh per month or the amount of Rs. 50,000/- per month awarded by the trial court. The Court below had, according to the learned Counsel, fallen in a serious error in treating letter Ex. PW1/2 as an admission on the part of the plaintiff that the rental value of the premises during the relevant period was Rs. 50,000/- per month.

9. On behalf of the plaintiff-respondent, it was, on the other hand, argued by Mr. Hemant Malhotra, that the respondent was in no way responsible for the closure of the defendant's evidence. It was, according to him, a matter between the bank and its counsel which had nothing to do with the plaintiff or his entitlement to the amount claimed. The allegations of collusion and fraud were unfounded, according to the learned Counsel. It was, further argued that the court below was justified in placing reliance upon the letter which the defendant had written to the plaintiff offering a sum of Rs. 50,000/- per month by way of rent w.e.f. 15th February, 1996. The said letter, it was contended, reflected the true rental value of the property during the relevant period which the appellant-defendant could not be allowed to dispute.

10. We have given our careful consideration to the submissions made at the Bar. We may first deal with the alternative submission urged on behalf of the appellant, namely, that there was no evidence on record to support the claim for payment of compensation @ Rs. 1 lakh per month or the lesser amount of Rs. 50,000/- awarded by the trial court. The trial court has referred to the contents of a lease deed produced by the plaintiff in respect of the adjoining property which was let out on a monthly rent of Rs. 14.61 per sq.ft. The court was conscious of the fact that the said lease deed was effective from 1.1.03 whereas the claim made by the plaintiff was for the period from the year 1996 onwards. The court, all the same, drew an inference that since there was no evidence of the market rental value for the year 1996, the rent prevalent in 1996 must be taken to be approximately similar to that prevalent in the year 2003. We find no basis for that observation. Just because the plaintiff who claims compensation for the year 1996 had not adduced any evidence regarding the prevailing rental in that year or years immediately following , was no reason for the court to assume that the rental value of the year 1996 for similar other property was the same as it was in the year 2003. The inference drawn by the trial court betrays its ignorance about matters of common knowledge. In a Metropolis like Delhi where housing, whether residential or commercial, is always in short supply compared to the demand and with the ever rising price index and inflation, one could reasonably assume that like prices of all other goods and services, rentals in the city have also been steadily rising. A property that was rented at a given rate in the year 1996 may not be available seven years later at the same rate. Application of a rate that was seven years removed from the relevant period for which the court was determining the rental value of the demised premises was not, therefore, a legally sound option. The Court had to take judicial notice of the fact that the rentals had been steadily rising over the years. That is what was done by the Supreme Court in D.C. Oswal v. V.K. Subbain and Ors. . The following passage is in this regard apposite.

We allow the appeal and reverse the judgment of the High Court and dismiss the petition for eviction. We would, however, like to add that judicial notice can be taken of the fact that rental has escalated everywhere and appropriate rent in the present case should be raised to Rs. 400 per month from 1.1.1992. The tenant should have a direction to pay the rent in advance from month-to-month as stated by him in the Courts below and it should be by the end of every month. There will be no order as to costs.

Instead of presuming that the rentals had gone up, the court below has presumed that the rentals remained stagnant for a period of nearly seven years. There was no factual or juristic basis for doing so. The inference was, therefore, wholly unsustainable.

11. The lease deed of the adjoining premises apart, the court below has placed reliance upon Ex.PW1/2, which is a communication sent by the Branch Office of the appellant bank to the plaintiff-respondent. Since the judgment to a great extent places reliance upon the said communication, which the Court below has interpreted as an admission by the defendant regarding the rate of rent, it will be useful to extract the same in extenso:

 
 UCO BANK
MB/03/2328                  Model Basti
            New Delhi
Branch
24/02/03

M/s Vyas Aqua Products Pvt. Ltd.
8357/2, Model Basti,
New Delhi
 

Sir,
 

Sub : Rent and Lease Deed for our Branch at your premises
 

Our lease deed was valid up to 15/2/96 and as per clause 4(f) of the lease deed, it is mentioned that we can have the lease of the premises for further period of 10 years with effect from 15.2.96 on mutually agreed rate of rent. The expression of desire for taking new lease on premises is done by two modes:

1) By mode of notice as mentioned in clause 4(F)

(2) By conduct viz. to continue the possession of the premises on lease.

As such we have expressed our desire of new lease of the premises for the further period of ten years by conduct viz. by continuing the possession of this premises, and you should agree for a mutually agreed rent. As has already been informed, we are agreeable to pay Rs. 50,000/- (Rs. Fifty Thousand Only) as monthly rent for the premises occupied by us subject to approval of our head office. You are requested to give your consent on our offer to unable us to see, approval of our head office.

Thanking you,

Yours faithfully, Sr. Manager

12. A few aspects need to be kept in mind while appreciating the above communication. The first is that the bank had been in occupation of the premises ever since 1971. It had by the time the letter was written, already put in nearly 30 years in the premises. A certain amount of goodwill, it is obvious, had been earned by the bank in regard to its business carried on in the demised premises for such a long period. Shifting the establishment to another premises and the resultant hassles including inconvenience to customers could be avoided by the Bank offering an amount higher than the prevailing rental value of similar other premises in the area.

13. The second aspect that needs to be kept in mind is that the rental was offered in consideration of a long lease of ten years. The terms and conditions under which a rental is offered being as much material in determining the market rental value as the rent itself.

14. The third and equally significant aspect is that the offer was not unconditional and firm. It was subject to approval of the same by the Head Office which could go back on the offer as being excessive.

15. Suffice it to say that while the letter in question may have given an indication of what could be the possible rental it could not be taken as an unequivocal admission on the part of the defendant to call for a decree passed entirely on the basis of the same. The letter may have probabilised the rate of rent offered therein if there was some other evidence to show that what was offered was indeed the prevailing rent in that area. No evidence independent of the letter was, however, adduced by the plaintiff in regard to the period 1996 to 2003. Such being the case, it was not open to the Court to treat the letter as conclusive of the rate of rent prevailing in the area.

16. There is merit even in the other contention urged on behalf of the appellant. The evidence of the plaintiff was closed on 6th April, 2005 but before the case could be posted for evidence in rebuttal, learned Counsel for the defendant made a statement closing the rebuttal evidence. There was nothing wrong with any such statement even if the same is made without consulting an institutional client like the appellant bank. What is, however, intriguing is the presentation of the facts by the counsel for the bank to his client. Having made a statement that it does not wish to lead any evidence in rebuttal, the counsel by a letter, which he shoots the very same day, informs his client that the case had been adjourned for the rebuttal evidence of the bank or for arguments in the alternative. That was a clear distortion. The order passed by the Court on 6th April, 2005 reads as under:

06.04.2005

Present : Sh. Hemant Malhotra, Adv. Counsel for the plaintiff

Affidavits of Shri Kamal Kumar and Shri Ashok Kumar supplied. The said witnesses are examined as PW1 and PW2 and discharged. PE closed.

The counsel for Def. No. 1 also closes his evidence.

Put up on 19.4.2005 for final arg.

Sd/-

ADJ

17. It is evident from the above that there was no question of producing evidence on 19th April, 2005 to which date the case was adjourned but for arguments and not for evidence of the defendant as was intimated to the Bank. The relevant portion of the letter addressed to the Bank, however, reads as under:

The Hon'ble Court has now listed the case for defendant's evidence if any or in the alternative for final arguments on 19.4.2005. It is, therefore, requested to kindly intimate the name and details of the witnesses to be produced on behalf of the bank at the rearliest because the Hon'ble Court may not grant further opportunity to produce witness in the wake of bank's letter dated 24.2.2003 sent by the bank to the plaintiff. The proceedings in the case shall be kept informed.

Thanking you, Yours faithfully, For Atul Sharma & Co.

Sd/-

18. We have failed to understand how the counsel could so grossly mislead or misinterpret the order passed by the court on 6.4.2005 which proceeded entirely on the statement made by him. Again on 19th April, 2005, the court has passed the following order:

19.4.2005

Present : Shri Rishi Lakhanpal, Adv. Counsel for the plaintiff

Counsel for Def. No. 1, Shri Atul Sharma, Adv.

Arguments heard. Put up on 2.5.05 for orders.

Sd/-

ADJ

19. A letter written by the appellant's counsel on 19th April, 2005 itself once again distorts the entire position. It reads:

Dear Sir,

The abovenoted case came up today before the Addl. District & Sessions Judge Shri O.P. Gupta for recording the Defendant's evidence on the point of quantum of damages as allegedly claimed by the plaintiff. After hearing the submissions of the counsel for the parties, the Hon'ble Court however was of the opinion that on this short point no evidence is required and therefore closed the defendant's evidence. Further the Hon'ble Court heard final arguments in the case and reserved its judgment and listed the case for orders on 2.5.05. The proceedings in the case shall be kept informed.

Thanking you, Yours faithfully, For Atul Sharma & Co.

20. There is a clear distortion in the above communication of what transpired on 19th April, 2005 according to the interim order recorded by the trial court on that date. The counsel has given the impression as though the evidence of the defendant was closed because "in the opinion of the Court" no evidence was required on the short point involved in the case. It is difficult to appreciate the presentation of the facts as set out in the letter which is wholly opposed to the proceedings that took place on 19th April, 2005 before the trial court.

21. The net result of the above was that the defendant did not have any opportunity of adducing its evidence in rebuttal. It is true that the responsibility of a litigant does not end with the engagement of a counsel on its behalf. The client ought to constantly associate with the conduct of the trial, give instructions to the counsel and remain at all times diligent in the prosecution of its case. At the same time, we cannot forget that the counsel owes a professional duty to the client to protect his interest and to advise him at every stage of the proceeding. Once the plaintiff's evidence was closed it was as much the duty of the counsel as it was the duty of the client to consult each other as to what possible evidence in rebuttal could be adduced and to take the necessary steps accordingly. Instead of doing so, the counsel made an unequivocal statement that he did not wish to lead any evidence in rebuttal. The communication sent by the counsel to the Bank does not suggest that any statement regarding closure of evidence in rebuttal has been made by him leave alone that the same had been made on the instructions of the Bank. We are, therefore, left with no option but to assume that the counsel's statement was without instructions and not entirely in the interest of his client, as subsequent events have revealed.

22. Fairness of the trial is one of the concomitants of a just decision. A fair opportunity to prove the cases set up by the parties is the very essence of such fairness. Once the court is satisfied that a party has been shut out unreasonably or in a hasty manner wholly unjustified in the circumstances of the case, it would not hesitate in setting aside the verdict based on any such hasty or unfair procedure.

23. We may, at this stage, refer to an application (CM No. 11019/2005) filed by the appellant Bank under Order XLI Rule 27 of the CPC seeking permission to adduce additional evidence. A reading of the said application shows that the defendant- appellant proposes to adduce evidence based on lease deeds executed during the relevant period in respect of similar other premises in the neighborhood to prove that the rental value of the demised premises was much less than Rs. 50,000/- awarded by the trial court. Copies of these lease deeds have been enclosed with the application, a reading whereof summarises the position regarding rental payable in respect of each one of them as under:

       Bank                     Rent            Area      Period
(a)  State Bank of Patiala    Rs.  8144/-     4072      16.8.85 to 15.8.90
(b)  State Bank of Patiala    Rs.  9365/-     4072      16.8.90 to 15.8.95
(c)  State Bank of Patiala    Rs. 10586/-     4072      16.8.96 to 15.8.00
(d)  State Bank of Patiala    Rs. 15000/-     4072      16.8.00 to 31.12.02
(e)  State Bank of Patiala    Rs. 59500/-     4072      1.1.03  to 1.1.08
     (@ Rs.14.61 per sq.ft)          
     Bank                     Rent            Area      Period
(a)  State Bank of India      Rs.  9000/-     2250      1992-1997
(b)  State Bank of India      Rs. 10500/-     2250      1997-2002
(c)  State Bank of India      Rs. 30500/-     2250      Feb. 2002

 

24. Since the impugned judgment and decree suffers from infirmities pointed out by us above, we are not inclined to embark upon the exercise of recording additional evidence.
 

25. We accordingly set aside the impugned judgment and the decree and remand the matter back to the trial court with the direction that it shall give to the plaintiff one more opportunity to adduce any further evidence which it may like to adduce in support of its claim. The defendant Bank shall thereafter be given an opportunity to adduce evidence in rebuttal. To avoid procrastination of the matter, we further direct that the defendant- appellant shall within six weeks from today file before the trial court a list of witnesses which it proposes to examine in terms of Order XVI Rule 1 of the CPC and deposit the diet money and the process fee of the witnesses in case he wishes to have them summoned through the Court. It may also produce certified copies of the documents which it proposes to prove through such witnesses.

26. The parties are directed to appear before the trial court for further directions on 20th November, 2006.

27. No costs.