Smt. Raka Singhal vs Pushpa Builders Ltd.
2007 Latest Caselaw 1093 Del

JUDGMENT

Hima Kohli, J.

1. The appellant, plaintiff in the suit entered into an Agreement dated 24th December, 1991 with the respondent, (defendant in the suit) for purchase of Flat No. B-02 on the second floor comprising super area of 935.70 sq.ft. in premises bearing No. 13, West Patel Nagar, New Delhi, known as Pushpa Deep Apartments, for a total consideration of Rs. 5,50,000/-. After making all the payments, possession of the flat was handed over to the appellant on 8th June, 1993. Aggrieved by the fact that despite making full payment, the respondent did not complete the works in the flat and it failed to execute the sale deed in favor of the appellant, as also by the fact that the respondent raised an inflated bill of Rs. 4,54,840/- towards maintenance charges on the appellant, the appellant filed a suit for recovery of Rs. 4,35,593/- and for specific performance and injunction. In its written statement, the respondent stated that the appellant had entered into a license agreement with the respondent on 8th June, 1991. Reliance was placed on various clauses, including Clauses 9, 28 and 34 of the said Agreement to contend that the appellant could not raise any claim with regard to the deficiency in the works in the flat after taking over the possession thereof and that the appellant was liable to share the proportionate costs of common services for which the respondent rightly raised a bill towards maintenance charges on her.

2. The trial court framed the following issues on 15th May, 2003:

(1) Whether the agreement dated 24.12.91 entered into between the plaintiff and the defendant was for purchase of flat No. B-02, on second floor with super area of 935.70 sq.ft. in Pushpa Deep Apartments at 13 West Patel Nagar, New Delhi for a total price of Rs. 5,50,000? OPP

(2) Whether the agreement mentioned in issue No. 1 was not for the sale of the said flat and it was merely a license agreement as has been claimed by the defendant in its W/S? OPD

(3) Whether the Flat in question was not complete and devoid of basic requirements and essential facilities when its possession was handed over to the plaintiff by the defendant on 8.6.93? If so what effect? OPP

(4) Whether the defendant wrongfully and dishonestly extracted a total sum of Rs. 4,35,593/- from the plaintiff as has been claimed by the plaintiff in this case? OPP

(5) Whether the plaintiff is entitled to a decree for recovery of Rs. 4,35,593/-? OPP.

(6) Whether the plaintiff is entitled to ask for a decree for execution of the sale deed in respect of the suit flat as specific performance of the agreement dated 24.12.91 referred to in issue No. 1? OPP.

(7) Whether the defendant can be restrained from sending further bills towards maintenance etc. and whether a decree to this effect can be passed in favor of the plaintiff? OPP.

(8) Relief.

3. After the issues were framed, the parties adduced their respective evidence.

4. By the impugned judgment dated 13th December, 2005, the learned Additional District Judge dismissed the suit of the appellant holding that a perusal of Clauses 11, 29 and 33 of the Agreement did not show that the flat was ever agreed to be sold by the respondent to the appellant and that the flat was only licensed to the appellant. It was also held that the appellant had failed to establish that she was given possession of an incomplete flat. By giving the aforesaid findings on issues No. 1 and 2, issue No. 6 was also decided against the appellant. In view of Clause 9 of the Agreement which stipulated that the licensee shall have no claim against the builder with respect to any item of works in the flat after taking possession thereof, issue No. 3 was decided against the appellant.

5. In respect of the issues No. 4, 5 and 7 with regard to wrongful demand made by the respondent for a sum of Rs. 4,35,593/- towards maintenance charges, both the parties relied on Clause 14 of the Agreement dated 24th December, 1991 (Ex. PD-18). Referring to the said clause, the learned Additional District Judge arrived at the conclusion that under the said Agreement, the respondent was entitled to recover the maintenance charges from the appellant and that the appellant failed to show that the amount claimed by the respondent from the appellant was not payable.

6. With the aforesaid findings returned against the appellant on all the issues framed, the trial court dismissed the suit of the appellant. Aggrieved by the impugned judgment and decree dated 13th December, 2005, the appellant preferred the present appeal. Though the respondent was duly served in the appeal, it did not enter appearance and was proceeded against ex-parte.

7. The main plank of the argument of the learned senior counsel for the appellant was that the conclusions arrived at by the trial court in respect of issues No. 1, 2 and 6 are based on a wrong appreciation of the relevant clauses of the Agreement dated 24th December, 1991 (Ex. PD-18). In this regard, reference was made to the recital of the Agreement to state that the conclusions arrived at in the impugned judgment that the appellant was only given a license with respect to the flat, is misconceived for the reason that both the parties had agreed and recorded in the Agreement that the word 'license' used in the Agreement was in place of the term 'sub-lease'. The relevant para of the recitals contained in the Agreement is reproduced herein below:

...A proper agreement for grant of license is being executed now incorporating all the details of application from 8th September, 1991 which is a part and parcel of this agreement. The word license used in the agreement in place of sub-lease.

8. Attention of this Court was also drawn particularly to Clauses 11(a), 26 and 33 of the Agreement in support of the contention that all the aforesaid clauses, when read together make it explicitly clear that the Agreement was not for license, but for lease of the flat. The relevant clauses referred to hereinabove, are set out for ready reference:

Clause 11(a) : Upon completion of the building and receipt of the requisite permission of Delhi Development Authority to the grant of License of the Flat to Licensee (and subject to the whole of the consideration money and other dues, if any be received), the Licensor/Builder shall effect the conveyance of the licensed space to the Licensee in such manner as may be permissible. The provision of Clause 33 hereof shall apply to the expenses involved in effecting the said (transfer).

Clause 26 : The Licensee may assign his rights in the licensed space to any individual but only after obtaining prior approval in writing of the Licensor/Builder (and if the proposed limited) Company/Co-operative Society or other body corporate has been formed, of such body) as also of the Delhi Development Authority. The Licensee shall pay to the Licensor/Builder or the said bodies and the DDA such transfer charges as may be prescribed by them from time to time.

Provided that the Licensee shall not let, transfer, convey, mortgage, charge or in any way encumber or deal with or dispose of his flat nor assign, let underlet or part with his interest under or the benefit of this Agreement at any part thereof till all his dues of whatsoever nature owning to the Licensor/Builder payable hereunder, are fully paid up and only if the Licensee has not been guilty of breach of or non-compliance with any of the terms and conditions of this Agreement and until he obtains previous consent in writing of the Licensor/Builder.

Clause 33 : All costs, charge and expenses in connection with the formation of the Cooperative Society Limited Company or any other Corporate Body of Licensees as well as the cost of the preparing engrossing, stamping and registering all the agreements, deeds of assignment, Sale Deeds, Conveyance or any other documents to be executed under these presents by the Licensor/Builder or the Licensee as well as the entire professional costs of the Attorneys of the Licensor/Builder in preparing and approving all such documents shall be borne proportionately by all the Licensees of Licensed space in the said building. The Licensor/Builder shall not be liable to contribute any amount towards such expenses.

9. We are inclined to agree with the submissions of the learned senior counsel. In the first instance, we may record that the document, even as per description, is not a license. The learned trial court went by the expression "license" ignoring the recital which clarifies that word `license' is to be read as 'sub-lease'. That apart, it is settled law that the title of the document is hardly conclusive. It is the substance and not the form which has to be seen. Much importance cannot be attached to the nomenclature of the document and the real intention of the parties is required to be gleaned by perusing the contents thereof. Even if we proceed on the basis that the Agreement in question is styled as one of license, a perusal of the recitals when read in conjunction with the aforesaid clauses, leave no manner of doubt that the document is in fact styled as a deed of conveyance. The intention of the parties as gathered from the Agreement itself, particularly the words and expressions used therein, make it evident that the intention of the respondent was for conveying the flat in question in favor of the appellant for consideration.

10. In this context, reference is made to a Full Bench judgment of this Court in the case of Municipal Corporation of Delhi v. Pradip Oil Corporation and Anr. reported as . The Full Bench while interpreting lease or license drew a distinction between the two by adverting to the provisions of Section 105 of the Transfer of Property Act as just a positioned against Section 52 of the Indian Easement Act, 1982 and relying on the landmark judgment in the case of Associated Hotels of India Ltd. v. R.N. Kapoor reported as as also a judgment in the case of Corporation of Calicut v. K. Sreemnivasan reported as , both of which lay down propositions held to be well established for ascertaining whether a transaction amounts to lease or license, observed as below:

Para 37 : Whether a document will constitute lease or license would inter alia depend upon certain interpreted criteria which are:

(a) to ascertain whether a document creates a license or lease, the substance of the document must be preferred to the form;

(b) that real test is the intention of the parties-whether they intended to create a lease or a license;

(c) if the document creates an interest in the property, it is a lease; but if it only permits another to make use of the property, of which the legal possession continues with the owner, it is a license; and

(d) if under the document a party gets exclusive possession of the property, prima facie, he is considered to be a tenant; but circumstances may be established which negative the intention to create a lease.

Para 38 : Whether any indenture constitutes lease, or license the nomenclature of the document may not be decisive, as it is necessary to consider the substance of the transaction and not its mere form. Particular words and phrases may be used in a document but such usage may be for various purposes. The document having regard to the purport and object of the Act, must thus be construed having regard to the principal object and purport thereof. For the said purpose even the doctrine of purposive construction may be taken recourse to. But once the Court is in a position to ascertain the substance thereof so as to enable it to arrive at a finding as to whether thereby an interest in the land is created or not the same would subserve the purpose.

11. The Supreme Court in the case of Kokilambal and Ors. v. N. Raman reported as AIR 2005 SC 2468, while dealing with the issue of intention of the settlor as contained in the recitals of a settlement deed, observed as below:

Para 7 : ...Our attention was also invited to a decision of this Court in the case of Namburi Basava Subramanyam v. Alapati Hymavathi and Ors. . In this case also the question was whether the document is a will or settlement. Their Lordships held that the nomenclature of the document is not conclusive one. It was observed as follows:

The nomenclature of the document is not conclusive. The recitals in the document as a whole and the intention of the executant and acknowledgment thereof by the parties are conclusive. The Court has to find whether the document confers any interest in the property in praesenti so as to take effect intra vivos and whether in irrevocable interest thereby, is created in favor of the recipient under the document, or whether the executant intended to transfer the interest in the property only on the demise of the settlor. Those could be gathered from the recitals in the document as a whole.

12. On perusing the recitals contained in the Agreement, read with the relevant clauses thereof and by applying the tests as laid down in the case of Pradip Oil Corporation (supra), there is no manner of doubt that the intention of the respondent while executing the Agreement was to convey the title of the flat in favor of the appellant. The finding given in the impugned judgment in respect of issue No. 1 is based on an erroneous reading of the Agreement and cannot be sustained. It is, therefore, held that issue No. 1 ought to have been and is decided in favor of the appellant. As a consequence thereto, issues No. 2 and 6 are also decided in favor of the appellant and against the respondent.

13. The only other argument raised by the learned senior counsel for the appellant in the present appeal is with regard to the question of quantum of maintenance charges payable. Clause 14(a) of the Agreement which deals with the common service charges etc. states as below:

Clause 14(a) : ...The prescribed common maintenance and service charges for the time being shall be Rs. 100/- per month for the Flat area and the same shall be paid by the Licensee. Further a sum of Rs. 15/- per month per 100 sft. of licensed space area shall be charged from the Licensee towards a sinking fund, to be established for replacement of capital goods like, pumping sets, water mains, electric cables, fire fighting equipments etc. The prescribed charges may be increased or decreased, as may be required by circumstances....

14. A perusal of the aforesaid clause shows that the prescribed common maintenance and service charges in respect of the flat is Rs. 100/- per month for the entire flat area and over and above the said amount, a further sum of Rs. 15/- per month per 100 sq.ft. is liable to be paid by the appellant on the basis of the flat area towards a sinking fund for replacement of capital goods. However, while raising the bill for common maintenance service charges and sinking fund, the respondent raised the same at a flat rate of Rs. 115/- per sq.ft. per month. While deciding issue No. 4, the learned Additional District Judge on a mis appreciation of Clause 14 of the Agreement observed that the appellant failed to show that the respondent had made any claim beyond the Agreement and held that the respondent was entitled to recover the maintenance charges from the appellant, as demanded.

15. Perusal of the records reflects that both the parties relied on the same clause for the purpose of deciding issue No. 4. Thus there is no dispute with regard to the fact that the said clause governs the parties for making/claiming payment towards common service charges etc. The only question that arises is that once the clause specifies the common maintenance charges as being Rs. 100/- per month for the entire flat area and an additional sum of Rs. 15/- per month per 100 sq.ft. of the flat area towards sinking fund, can the method of clubbing Rs. 100/- with Rs. 15/- be permitted to be adopted to arrive at a flat rate of Rs. 115/- per sq.ft. per month as done by the respondent while raising a demand towards the maintenance and service charges along with sinking fund on the appellant and as is also apparent on a perusal of the maintenance bill dated 30th March, 2001 on the record.

16. The terms and conditions of Clause 14(a) of the Agreement are explicit and unambiguous. It leaves no scope for any interpretation or doubt. The same comprises of two components, one in respect of the prescribed common maintenance and service charges and the other in respect of a sinking fund, each one being independent of the other. Hence there is no question of clubbing the two charges, levied on two different heads and at different rates to arrive at a single figure. Both the heads ought to be bifurcated for raising a demand on the appellant.

17. For the reasons stated above, Clause 14(a) of the Agreement does not permit the respondent to demand/claim a sum of Rs. 4,35,593/- from the appellant towards service and maintenance charges. The said demand is contrary to and not in consonance with the terms and conditions of the Agreement. Thus issues No. 4, 5 and 7 are decided in favor of the appellant. The demand raised on the appellant is quashed. The respondent is however entitled to raise bills towards maintenance and service charges along with sinking fund only in terms of Clause 14 of the Agreement in the manner explained above, namely, Rs. 100/- per month for the entire flat area towards the common service and maintenance charges and not Rs. 115/- per month per sq.ft. as claimed and Rs. 15/- per month per 100 sq.ft of the flat area towards the sinking fund, separately.

18. For the reasons stated above, the appeal is allowed and the impugned judgment and decree dated 13th December, 2005 is set aside to the aforesaid extent. Parties are left to bear their own costs.