Reliance Securities Ltd vs Jag Mohan Chhabra & Ors
2010 Latest Caselaw 2224 Del

                                                   UNREPORTABLE


*      IN THE HIGH COURT OF DELHI AT NEW DELHI


                             FAO No.64/2010


                                    Date of Decision: April 27, 2010


       RELIANCE SECURITIES LTD                 ..... Appellant
                    through Mr. Joydip Bhattacharya, Advocate

                    versus


       JAG MOHAN CHHABRA & ORS              ..... Respondents
                    through Mr. Vibhu Shankar, Advocate with
                    Mr. R. Vishal Dass, Advocate

       CORAM:
       HON'BLE MISS JUSTICE REKHA SHARMA

1.     Whether the reporters of local papers may be allowed to see the
       judgment? No
2.     To be referred to the reporter or not? No
3.     Whether the judgment should be reported in the „Digest‟? No

REKHA SHARMA, J. (ORAL)

This appeal has been preferred against the order of Additional

District Judge, Shri N.P.Kaushik dated February 15, 2010 directing

the appellant herein to hand over possession of the suit premises to

the respondents on February 20, 2010 in the presence of Shri Vinod

Kumar Sachdeva, Advocate who has been appointed as local

commissioner in the case. By the same order, the respondents have

been directed to deposit security amount as per lease deed on or

before February 19, 2010 and show the receipt thereof to the local

commissioner before the possession is handed over before him.

It is not in dispute that the lease deed between the parties has

come to an end and the premises in question are lying locked since

April 30, 2009. The appellant is refusing to hand over the possession

of the premises to the respondents on the ground that the

respondents are liable to refund security of the appellant amounting

to Rs.9,00,000/-. In this regard, reference has been made by learned

counsel for the appellant to clause I(4) of the lease agreement dated

May 01, 2006 which runs as under:-

"4. In the event, the Lessors fail to refund the Security Deposit specified above as per the terms of this lease agreement on termination of the lease by efflux of time or upon its early termination, the Lessors shall pay interest at the rate of 18% p.a. compounded monthly for the delayed period and the Lessee shall be entitled to retain the possession of the premises till the amount is refunded by the Lessors. The Lessors shall not have any claim on the rent when the Lessee is in possession of the premises for non-refund of Security Deposit, duly affirmed by the Lessors. This shall be without prejudice to the rights of the Lessee to seek appropriate remedy in law or otherwise for repayment of the Security Deposit."

On the strength of the aforementioned clause, it is contended

that the appellant is well within its right in not handing over the

possession to the respondents.

On the other hand, it is submitted by learned counsel for the

respondents that the appellant had agreed to pay Service Tax to the

respondents, which comes to about Rs.10 lacs and despite having so

agreed, the appellant has not paid the Service Tax and hence, the

respondents have withheld the security payable to the appellant. It is

also the case of the respondents that as per clause III(3) of the lease

agreement, if after the determination of the lease the appellant fails to

hand over the peaceful and vacant possession to the lessors, the

lessee shall be liable to pay an amount of Rs.20,000/- per day to the

lessors, from the date of the expiry of the lease agreement. It is

submitted that in view of this clause, the respondents are entitled to

claim Rs.20,000/- per day as damages from the date of determination

of the lease agreement. This, according to the respondents, is an

additional reason why the security amount has not been refunded.

It is not in dispute between the parties that the lease agreement

contains an arbitration clause and it provides that in case of a dispute

between the lessors and lessee, the same shall be referred to the

arbitration by a panel of three arbitrators, one each to be appointed

by the parties and the third arbitrator to be appointed by the prior

two appointed arbitrators.

From what has been noticed above, it is clear that the disputes

have arisen between the parties. Whereas, according to the

appellant, it can retain the possession of the premises even after the

determination of the lease agreement if the security amount is not

refunded to it, as per the respondents the appellant having not paid

the Service Tax, the security amount is liable to be adjusted towards

any claim which they have against the appellant towards the Service

Tax and also towards the damages in terms of the clause III(3) of the

lease deed.

I am informed that the parties have already invoked the

arbitration clause and two out of three arbitrators have been

appointed and the third will be appointed in terms of the arbitration

clause.

In so far as the impugned order passed by the learned

Additional District Judge is concerned, I feel that in the facts and

circumstances of the case, the order so passed is just and proper.

There is no point in keeping the premises vacant and not allowing the

respondents to take possession of the same when admittedly the lease

agreement has come to an end. In so far as other claims of the parties

against each other are concerned, they shall be adjudicated upon by

the arbitrators and the parties shall be governed by the outcome of

the same.

The appeal has no merit. The same is accordingly dismissed.

It is stated that the respondents have already deposited the

security amount with the trial Court. The appellant is directed to

hand over the possession of the premises to the respondents within

15 days from the date of the present order in the presence of the local

commissioner. The appellant is also directed to pay the fee of the

local commissioner.

Dasti.

REKHA SHARMA, J.

APRIL 27, 2010 ka