M/S Narendra Implex Limited vs Iipm
2009 Latest Caselaw 2336 Del

*            IN THE HIGH COURT OF DELHI AT NEW DELHI


                                                     Date of Reserve: May 25, 2009
                                                        Date of Order: May 29, 2009

+OMP 231/2009
%                                                         29.05.2009
    M/s Narendra Implex Limited                    ...Petitioner
    Through : Mr. A.S. Chandhoik, Sr. Adv. with Mr. P. Banerjee & Ms.
    Manmeet Arora, Advocates

       Versus

       Indian Institute of Planning & Management ...Respondent
       Through: Mr. Rajiv Nayar, Sr. Adv. with Mr. Raman Kapur, Mr. Arvind
       Kumar, Mr. Amit Sharma, Mr. Manoj Ohri and Mr. Neeraj Kumar,
       Advocates


       JUSTICE SHIV NARAYAN DHINGRA

1.     Whether reporters of local papers may be allowed to see the judgment?

2.     To be referred to the reporter or not?

3.     Whether judgment should be reported in Digest?


       JUDGMENT

1. By this petition under Section 9 of Arbitration & Conciliation Act, 1996

(for short, "the Act"), the petitioner seeks a relief that this Court should give

directions to respondent not to breach the lease deed dated 3rdr March 2008

as notified by agreement dated 16th April 2008 and the respondent should

continue to pay quarterly rentals of Rs.6,55,66,377/- to Punjab National Bank

or the respondent be directed to deposit a sum of Rs.65,5663,770/-.

Directions are also sought against respondent for deposit of Rs.13,11,32,754/-

with 24% interest and to furnish security for payment on account of rentals of

unexpired lock-in-period.

2. Brief facts necessary for disposal of this petition are that the petitioner

sought to purchase the premises in question from NBCC through a public

OMP 231/2009 M/s Narendra Implex Limited v Indian Institute of Planning & Management Page 1 Of 1 auction. After entering into agreement to purchase the said premises, the

petitioner obtained „No Objection Letter‟ from NBCC authorizing the petitioner

to lease out the premises to respondent and the petitioner then executed a

lease deed dated 3rd March 2008 with the respondent letting the premises for

the purpose of running an educational institute and related activities. It is

submitted by the petitioner that the respondent had satisfied itself with

respect to petitioner‟s right and title in the said property. The lease entered

into between the parties provides for a lock-in-period of three years and was

renewable after every three years subject to enhancement of rent. The

respondent‟s rent started from 1st May, 2005 though occupation of the

premises was given in March, 2005 but the period of 60 days was given to

respondent to furnish and equip the property for running the institute. It is

submitted that respondent was not entitled to terminate the lease for the

period of first 33 months commencing from the effective date and respondent

was entitled to terminate the lease only thereafter by giving a notice of three

months showing its intention to vacate the premises with expiry of lock-in-

period of 36 months. The respondent had deposited security of

Rs.15,09,20,000/- on account of six months rental which was to be refunded

on expiry of lease deed. Respondent had issued PDCs for rent falling due from

May, 2008 to July 2008.

3. It is apparent from the averments in the petition that the respondent

did not continue with the lease for 36 months and terminated the same by

giving a notice to the petitioner alleging therein violation of the terms of lease

on the part of petitioner. The respondent stopped paying rent and vacated

the premises during pendency of this petition on 30th April 2009. The

petitioner‟s contention is that despite respondent‟s vacating the premises,

the respondent was liable to pay quarterly rent as mentioned in the lease

OMP 231/2009 M/s Narendra Implex Limited v Indian Institute of Planning & Management Page 2 Of 1 deed for the lock-in-period because respondent could not have terminated

the lease by an unilateral act before expiry of lock-in-period of 36 months.

4. A perusal of notice issued by respondent to the petitioner terminating

the lease deed would show that the respondent had taken the stand that the

petitioner failed to provide the completion certificate/ occupation certificate

from MCD which the petitioner was supposed to provide in terms of the lease

deed. The petitioner had undertaken that the owner of the property namely

NBCC will create no interference for the use of the property by respondent in

peaceful manner but NBCC had cut the electricity of the aforesaid premises

on various occasions due to the fact that there was no completion certificate/

occupancy certificate provided by the petitioner to NBCC. MCD contacted the

respondent and informed that it would seal the premises. The grounds of

terminating lease by respondent are as under;

(i) it was being used/occupied without completion certificate;

(ii) that the petitioner created hindrance in enjoyment of the

premises by sending certain persons to the premises who

illegally and forcibly entered into the premises and threatened

the students on 17-18th February 2009;

(iii) that the petitioner issued a legal notice dated 24 th February 2009

threatening legal action against respondent on unjustified

reasons;

5. The respondent called upon the petitioner to refund the security

deposit of Rs.15 crore and collect keys of the premises on 30 th April 2009, the

date on which the respondent was to vacate the premises.

6. It is submitted by counsel for respondent that when the premises was

OMP 231/2009 M/s Narendra Implex Limited v Indian Institute of Planning & Management Page 3 Of 1 let out by the petitioner, the petitioner vide Clause 13 of the lease deed had

taken responsibility that the completion certificate/occupation certificate will

be provided by the petitioner to the respondent on or before 1st May 2008 or

such extendable time as may be mutually agreed. It was also provided that in

the event of completion certificate not having been obtained, misuse charges

or other related charges relating to misuse, imposed by the municipal

authorities shall be borne by the lessor. Counsel for respondent pointed out to

the show cause notice dated 23rd March 2009 received by respondent from

MCD whereby MCD has notified to respondent that the building was occupied

without permission/ without obtaining occupancy certificate in violation of

provisions of Section 346 of DMC Act. He also pointed out to the order of

learned ADJ showing that the electricity of the premises was disconnected by

NBCC without any notice resulting into immense hardships to respondent and

the respondent had to move the Court.

7. It is contended by counsel for the petitioner that non-obtaining of

completion certificate was no ground available to the respondent for

termination of lease deed. The building can be occupied without obtaining

proper completion certificate. He relied upon MCD v Piyush Traders Pvt. Ltd.

ILR (1988) 1 Delhi 577 wherein this Court held that there was no requirement

of law that unless and until a completion certificate was issued, a building

cannot be considered fit for occupation and there was no legal bar placed by

any statute prohibiting letting out of land till the completion certificate was

obtained. He submitted that in view of this judgment, the plea of the

petitioner taken for cancellation of lease deed was not maintainable and the

petitioner was bound by the terms of the contract.

OMP 231/2009 M/s Narendra Implex Limited v Indian Institute of Planning & Management Page 4 Of 1

8. Another plea raised by respondent is that the letting out of the building

to respondent was contrary to the building bye-laws and approved site plan

by MCD of NBCC Plaza. Counsel for respondent submitted that the building

sanction plan of the NBCC Plaza shows that the area was not meant for an

educational institution but it was meant for ninety shops. The petitioner let

out the premises to the respondent for educational institute representing that

the petitioner had obtained permission from MCD for letting out the area for

educational institution. However, no such permission was obtained. He

submitted that in view of the fact that user of the premises was contrary to

the building bye-laws and the approved/ sanctioned site plan, there was

every possibility of the premises being sealed.

9. A perusal of site plan of NBCC Complex would show that the site in

question was to consist of 90 shops. The site plan also shows different shops

earmarked in it and instead of letting out the proposed shops to different

persons, the petitioner had let out the entire area to respondent for running

an educational institute.

10. Counsel for petitioner contended that the petitioner had obtained

permissions from MCD for letting out the same to an educational institution.

Petitioner had written a letter to Dy. Commissioner of MCD seeking

clarification whether the area of 78350 sq yards taken by the petitioner from

NBCC on ground floor and first floor can be leased out to IIPM. MCD vide a

letter informed the petitioner that the Master Plan 2021 (MPD-2021) which

defines used of community center contained following:

"Table 5.1: Five-Tier System of commercial areas

OMP 231/2009 M/s Narendra Implex Limited v Indian Institute of Planning & Management Page 5 Of 1 (MPD-2021).

Retail shopping, stockists and dealers of medicines and drugs, commercial and offices of local bodies, PSUs, cinema, Cineplex, hotels, service apptts., restaurants, halls, guesthouse, nursing home, dispensary, clinical lab, clinic and poly clinic, coaching centres/ training institutes, police post, post office, petrol pump/CNG station, repair/services, bank ATM, informal trade, multilevel parking."

11. The petitioner was informed that petitioner can carry out the activities

as set out in the Master Plan. The petitioner has construed this letter of MCD

as a permission of MCD of leasing out the premises to respondent. The letter

on the face of it shows that MCD had not given any permission to the

petitioner to lease out the premises to an educational institution but has

simply drawn attention of the petitioner to the provisions of Master Plan.

12. I consider that both the parties have raised questions about

interpretation of the agreement and a dispute whether the respondent was

within its rights to terminate the lease or not arise in this case. This Court

cannot give a finding either in favour of the petitioner or respondent on the

issues whether the lease was rightly terminated by the respondent or the

respondent was liable to pay the rent as reserved in the lease deed despite

its terminating the lease and vacating the premises. This question has to be

left open to the arbitrator who shall adjudicate the disputes between the

parties and shall decide the issues as may be raised before him by the

parties.

13. Counsel for petitioner submitted that the respondent was bound by the

OMP 231/2009 M/s Narendra Implex Limited v Indian Institute of Planning & Management Page 6 Of 1 tripartite agreement dated 16th April 2008 entered upon between petitioner,

respondent and Punjab National Bank, the respondent had agreed to

hypothecate all future lease rentals payable by the lessee to the bank. I

consider that this tripartite agreement would not stand in the way of

respondent in terminating the lease if it could otherwise do so. In case the

respondent was lawfully entitled to terminate the lease, the respondent would

have no liability to pay the rentals of the premises to PNB after termination of

lease. This tripartite agreement is valid so long as the lease between the

petitioner and respondent is valid and continuous. The tripartite agreement

can be considered as a part of the lease deed. The tripartite agreement is

only an arrangement which was entered into between the petitioner,

respondent and the bank after premises was let out to respondent as to how

rental is to be paid. The rental was to be paid directly to the bank because of

the fact that the petitioner had taken huge loans from the bank, offering this

property as security.

14. I consider that looking into all facts and circumstances, it is not the

case where the court should give directions to respondent to continue to pay

rental despite respondent having vacated the premises on 30 th April 2009

after termination of the lease deed vide a notice. The issue whether this

termination of lease deed was a valid termination or not, cannot be gone into

by the Court at this stage and has to be gone into by the arbitrator. I,

therefore, find no force in this petition. The petition is hereby dismissed. No

orders as to costs.

May 29, 2009                                           SHIV NARAYAN DHINGRA J.
rd

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