Masyc Projects Private Ltd vs Rajiv Rai Sachdev & Another
2008 Latest Caselaw 1676 Del

*       IN THE HIGH COURT OF DELHI AT NEW DELHI



+       IA.No. 3231/2008(u/O 7 R. 11 CPC) in CS(OS) 1052/2007
        & IA.No. 3228/2008 (u/O 7 R 11 CPC)in CS(OS)1054/2007


%                                       Date of decision : 18.09.2008


MASYC PROJECTS PRIVATE LTD               ....... Plaintiff
                 Through: Mr. Tarun Sharma, Advocate

                                           Versus

RAJIV RAI SACHDEV & ANOTHER              ....... Defendants
                 Through : Mr. S Azad, Advocates.


CORAM :-
HON'BLE MR. JUSTICE RAJIV SAHAI ENDLAW

     1.

Whether reporters of Local papers may be allowed to see the judgment? YES

2. To be referred to the reporter or not? YES

3. Whether the judgment should be reported YES in the Digest?

RAJIV SAHAI ENDLAW, J

1. The defendants have applied for rejection of the plaint in these

two suits by the same plaintiff against the same defendants for

recovery of Rs 25 lacs in each case towards damages for breach by

the defendants of a contract of permanent tenancy in favour of the

plaintiff of the two separate premises in property No. 20 Community

Centre, Mayapuri, New Delhi. The question which falls for

consideration is, if the tenant cannot protect his possession of the

premises, for the reason of alleged contract of permanent tenancy

being unregistered, can the tenant maintain a suit for damages for

breach of such contract.

IA.No. 3231/2008(u/O 7 R. 11 CPC) in CS(OS) 1052/2007 & Page no. 1 of 7 IA.No. 3228/2008 (u/O 7 R 11 CPC) In CS(OS) 1054/2007

2. The plaintiff has instituted the suit on the pleas :

a. that it is engaged in the business of manufacturing and marketing of all types of conveyors, material handling systems etc;

b. that the predecessor of the defendants being closely associated with the Managing Director of the plaintiff had offered to the plaintiff for the purposes of being used as a registered office the two premises i.e., the first floor and second floor of the said property for an indefinite period to be used as a "permanent tenant";

c. "that the transferors had fixed the permanent tenancy of the plaintiff against payment of a monthly rent. In this way the transferors had envisaged an oral lease for the enjoyment of the permanent tenancy rights in favour of the plaintiff company for an indefinite period against payment of a monthly rent";

d. that the plaintiff on 1st April, 1997 was handed over the possession of the two premises;

e. that the plaintiff after coming into possession of the premises had developed a modern office therein incurring a huge expense;

f. that the defendants had sought termination of the said permanent tenancy and filed a suit for possession, recovery of mesne profits/damages for use and occupation against the plaintiff and which suit is pending adjudication in the court of the Additional District Judge, Delhi;

g. that the eviction of the plaintiff from the premises shall result in damages to the established office and the plaintiff had thus become entitled to claim the loss

IA.No. 3231/2008(u/O 7 R. 11 CPC) in CS(OS) 1052/2007 & Page no. 2 of 7 IA.No. 3228/2008 (u/O 7 R 11 CPC) In CS(OS) 1054/2007 suffered to the tune of Rs 10 lacs from the defendants for loss of furniture, office equipment and accessories in the demise premises;

h. that the suit for possession and mesne profits filed by the defendants was not maintainable as the same was based on an alleged unregistered lease deed. The said document was not executed in accordance with law and had not been registered as per the provisions of the Registration Act and therefore was not receivable in evidence. Reliance was pleaded on Section 49 of the Registration Act and Sections 105 and 107 of the Transfer of Property Act;

i. that the defendants in an illegal manner were claiming to be the legal heirs of the transferors and had no authority from the other legal heirs and no probate or letter of administration or declaration of ownership had been sought by the defendants;

j. that the plaintiff had incurred several other expenses on the premise of being a permanent tenant in the premises and all of which will be wasted;

k that the plaintiff was also entitled to the benefit of Section 53A of the Transfer of Property Act;

l. "that the plaintiff company is entitled to recover from the defendants an amount of Rs 25 lacs in the form of damages as an alternate relief. The said damages are being claimed by the plaintiff company from the defendants on account of illegal termination of the permanent tenancy of the transferee plaintiff company. The said damages have been claimed and quantified in accordance with common business practice prevalent in the business market";

IA.No. 3231/2008(u/O 7 R. 11 CPC) in CS(OS) 1052/2007 & Page no. 3 of 7 IA.No. 3228/2008 (u/O 7 R 11 CPC) In CS(OS) 1054/2007

3. The suit for possession and mesne profits filed by the

defendants against the plaintiff is still pending. The correctness or

not of the plaintiff's case of being a permanent tenant in the

premises is still to be determined in the suit for ejectment filed by

the defendants against the plaintiff. If the plea of the plaintiff of

being a permanent tenant or of the defendants being not the

owner/landlord or not being the only landlords or of Section 53A of

the Transfer of Property Act, is to be believed and upheld the

question of ejectment does not arise on mere termination. The

question of breach of contract by the defendants and resultant

damages to the plaintiff shall arise only when the plaintiff is ejected

from the premises. I find the suit to be premature and liable to be

dismissed on this ground. It is not as if the plaintiff has

unequivocally admitted that it is liable to be ejected. The plaintiff is

contesting the claim of the defendants for its ejectment. The cause

of action, if any, to the plaintiff would accrue only when the plaintiff

is ejected from the premise and not prior thereto. If the defence of

the plaintiff herein, in the suit for ejectment succeeds and the suit

for ejecment is dismissed, the question of plaintiff suffering any

damages as claimed in this suit does not arise. The plaintiff herein

would then only be entitled to costs from the defendants herein and

that too by judgment/order in that suit and not by this suit. I

therefore find the plaint to be not disclosing any cause of action and

liable to be rejected on this ground alone.

4. If the court in the suit for ejectment is to hold that there cannot

be a contract of tenancy without a registered document, as the

IA.No. 3231/2008(u/O 7 R. 11 CPC) in CS(OS) 1052/2007 & Page no. 4 of 7 IA.No. 3228/2008 (u/O 7 R 11 CPC) In CS(OS) 1054/2007 plaintiff in the present case itself pleaded in the plaint, then the

question of a breach of such a contract which is not recognized in

ejectment proceedings, in a proceedings for recovery of damages

does not arise. There can be no two tests/criteria of a contract of

permanent tenancy, one for the purposes of ejectment and other for

the purposes of damages.

5. Section 107 of the Transfer of Property Act prescribes that a

lease of immovable property from year to year, or for any term

exceeding one year, can be made only by a registered instrument.

Leases other than lease from year to year, or for any term exceeding

one year can be made either by a registered instrument or by oral

agreement accompanied by delivery of possession. The plaintiff

itself states that there is no registered instrument. In the absence of

a registered instrument, there can be no permanent lease of

immovable property; such permanent lease being necessarily for a

term exceeding one year. In the absence of a registered instrument,

the inference is that the parties intended to make a lease from month

to month. The law in this regard was eloquent by summarized in

Jagat Taran Berry V Sardar Sant Singh AIR 1980 Delhi 7 as

under:

"Under Section 107, the parties have an option. They can negotiate a lease of a duration mentioned in the first paragraph viz yearly lease. If they decide upon such a lease, they must execute a registered instrument. Alternatively, they can decide to have a lease for a shorter period. In that event, they can create the lease with or without executing a registered instrument.

Whenever, a lease is created without a registered instrument, the inevitable conclusion must be that the parties have, so to speak, opted out of the first paragraph. They have negatived any intention of creating a lease of the duration therein mentioned. It is

IA.No. 3231/2008(u/O 7 R. 11 CPC) in CS(OS) 1052/2007 & Page no. 5 of 7 IA.No. 3228/2008 (u/O 7 R 11 CPC) In CS(OS) 1054/2007 therefore indicative of a contract between them. Or to put it in positive form, they have agreed upon a lease of a duration coming within the second paragraph. This is, or must be deemed to be a conscious decision on their part. It is, therefore, indicative of a contract between them. That contract is that the lease will not be of a duration mentioned in the first paragraph of Section

107. Such a contract will always be a "contract to the contrary" envisaged by the opening words of Section

106. So, from the single fact that a registered instrument is not executed, one can, and should immediately deduce a contract to create a lease of the kind that can be created without such an instrument viz lease from month to month......... If there is no registered instrument, that fact itself is conclusive to establish a "contract to the contrary". Considering that it was always open to the parties to execute a registered document but they chose not to do so, this inference accords with their intention, whether actual or ascribed."

6. It follows, that in law, there can be no contract of permanent

tenancy without a registered instrument. When there cannot be held

a contract of permanent tenancy, the question of plaintiff suffering

or being entitled to any damages for breach thereof does not arise.

In these circumstances, the parties ought not to be put through

ordeal of trial on other issues framed on 7th May, 2008. It has been

held in Liverpool and London S.P. and I Asson. Ltd v M.V. Sea

Success I and Anr (2004) 9 SCC 512 that the idea underlying Order

7 Rule 11 is that when no cause of action is disclosed, the courts will

not unnecessarily protract the hearing of a suit. The Apex Court

further held that having regard to the changes in the legislative

policy, the Courts would interpret the provisions of CPC in such a

manner so as to save expenses, achieve expedition, avoid the court's

resources being used up on cases which will serve no useful purpose.

A litigation which in the opinion of the court is doomed to fail would

not further be allowed to be used as a device to harass a litigant.

IA.No. 3231/2008(u/O 7 R. 11 CPC) in CS(OS) 1052/2007 & Page no. 6 of 7 IA.No. 3228/2008 (u/O 7 R 11 CPC) In CS(OS) 1054/2007 Similarly, in Shipping Corporation of India Ltd. v. Machado

Brothers and Ors. AIR 2004 SC 2093 it was laid down that if the

litigation irrespective of the result will benefit neither of the parties

to litigation, should not be flogged like a dead horse. This court in

Maha Singh v. Shri Anand Singh Mann 116(2005) DLT 378 held

that court is not an idle, docile and mindless spectator which is

powerless to bring frivolous litigation to an early end and that the

court is not a slave of proceeding.

7. The plaintiff appears to have filed the present suit for recovery

of damages as a counter blast to the defendants' action of suing the

plaintiff for possession and mesne profits and in an attempt to harass

and coerce the defendants herein to give up their claim for

possession and mesne profits under fear of a decree for Rs 25 lacs in

each of the cases against them. However, the plaintiff forgot that

the arguments propounded by it to urge that the document of

tenancy claimed by the defendants cannot be read in evidence also

cuts against his own argument of a permanent tenancy. Thus, even

though issues were framed in this suit on 7th May, 2008 and the

plaintiff has filed affidavit of its witness by way of examination in

chief, I feel that the plaint does not disclose any cause of action and

the relief claimed is barred by law is liable to be rejected. Having

held the plaintiff to have instituted the suits with motives aforesaid,

the plaintiff is also burdened with costs of Rs 30,000/- in each of the

cases.

                                                          RAJIV SAHAI ENDLAW
September 18, 2008/M                                           (JUDGE)


IA.No. 3231/2008(u/O 7 R. 11 CPC) in CS(OS) 1052/2007 &               Page no. 7 of 7

IA.No. 3228/2008 (u/O 7 R 11 CPC) In CS(OS) 1054/2007