Delhi High Court

Abaskar Construction Pvt. Ltd. vs Pakistan International Airlines on 9 February, 2011

Author: V. K. Jain

         THE HIGH COURT OF DELHI AT NEW DELHI

%                    Judgment Reserved on: 7.2.2011
                     Judgment Pronounced on: 09.02.2011

+           CS(OS) No. 1128/2006

ABASKAR CONSTRUCTION PVT. LTD.                .....PLAINTIFF

                           - versus -

PAKISTAN INTERNATIONAL AIRLINES             .....DEFENDANT

Advocates who appeared in this case:
For the Plaintiff: Mr. Neeraj Kishan Kaul, Sr. Adv. with Mr.
                   Jasmeet Singh, Mr. Saurabh Tiwari,
                   Mr.Karan Luthra and Mr.K.D.Sengupta, ,
                   Advs.

For the Defendant: Mr. Sanjeev Kapoor, Ms.Shahana Farah
                   and Mr.S.Patra, Advs.

CORAM:-
HON'BLE MR JUSTICE V.K. JAIN

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 Digest?

V.K. JAIN, J

1. This is a suit for mandatory injunction and

recovery of Rs.69,84,900/-. The defendant was a tenant

under the plaintiff in respect of flat No.102, Kailash

Building, 26 Kasturba Gandhi Marg, New Delhi-110001.

The premises to the defendant were let out vide lease deed

dated 31st December, 1996, which was registered on 2 nd

January, 1997. The case of the plaintiff is that under the

terms of the lease deed, particularly Clauses 4(ix) and 5(i)

thereof, the increase, if any, in the house tax was to be

borne by the defendant. On receipt of bills for the

assessment years 1997-98, 1998-99 and 1999-2000 for

Rs.93,936/-, 93,936/- and 1,17,420/- respectively, the

plaintiff demanded the aforesaid amounts from the

defendant . The increase in amount of house tax for the

year 1999-2000 was duly paid by the defendant. However,

the bills for the years 1997-98 and 1998-99 were forwarded

by the defendant to its Head Office. For the year 2000-01,

the plaintiff received a bill for Rs.1,17,400/- and accordingly

it requested the defendant to reimburse the amount of

Rs.46,948/- being increase in house tax payable by the

defendant for the year 2000-01. The defendant made

payment of the increase in house tax for the years 1997-98,

1998-99 and 2000-01 vide its cheque dated 24th January,

2001. The bills for the years 2001-02 and 2002-03 were

also received by the plaintiff and the defendant was asked to

reimburse the amount of Rs.70,416/- to the plaintiff being

the amount of increase in house tax for the years 2001-02

and 2002-03.

2. It is further alleged that the ratable value of the

property was increased to Rs.45,89,400/- with effect from

1st September, 1999 and to Rs.55,53,200/- with effect from

1st September, 2002. Based on the above referred

assessment order, the NDMC issued a bill to the plaintiff

demanding a sum of Rs.60,83,958/- being the difference of

tax for the period from 1st April, 1999 to 31st March, 2004.

Being aggrieved, the plaintiff filed a suit for injunction

against the NDMC and the demand was stayed by this

Court, subject to the plaintiff depositing a sum of

Rs.40,00,000/- with the NDMC. The plaintiff, in

compliance of the order of the Court, deposited the aforesaid

amount with NDMC. The plaintiff also asked the defendant

to pay the amount of Rs.40,93,884/- being the difference in

the amount of house tax for the period from 1 st April, 1999

to 31st March, 2004. The defendant vide its letter dated 18 th

May, 2004 denied its liability to make payment of increase

in house tax.

3. It is also alleged that for the year 2004-05, the

plaintiff received a bill for Rs.15,15,960/- from the NDMC

and paid that amount on 21st November, 2004. The

plaintiff, thereafter, asked the defendant to reimburse the

amount of Rs.14,45,508/- along with earlier demanded sum

of Rs.40,93,884/-. For the year 2005-06 also, the plaintiff

received a bill for Rs.15,15,960/- and paid that amount to

the NDMC. The increase in house tax which, according to

the plaintiff, was payable by the defendant in terms of lease

deed is claimed to be Rs.14,45,508/-. The plaintiff has now

claimed the aforesaid three sums making a total sum of

Rs.69,84,900/-.

4. The defendant has contested the suit. It has taken

preliminary objection that the suit is barred by limitation. It

is also alleged that the claim of the plaintiff for the amount

of Rs.40,00,000/- deposited in compliance of the order

passed by this Court in CS(OS) No.387/2004 having not

attained finality, it cannot recover the aforesaid amount

from the plaintiff and to this extent the suit is premature.

On merits, referring to Clause 4(ix) of the lease deed, it has

been stated that the aforesaid clause applies only in case of

increase in levies or rates other than the rates of house tax

and ground rent. It is also stated by the defendant that

since what has been increased is ratable value and not the

rate of house tax, no liability in respect of house tax can be

imposed it. As regards payment of Rs.46,948/- to the

plaintiff with respect to increase in house tax for the year

1999-2000, it has been claimed that the letter dated 22 nd

February, 2000 enclosing cheque for the aforesaid amount

was written under a bona fide mistake and

misunderstanding. Similar stand has been taken by the

defendant with respect to payment of Rs.93,916/- for the

years 1997-98, 1998-99 and 2000-01.

5. The following issues were framed on the pleadings

of the parties:-

(i) Whether the suit is within limitation? OPP.

(ii) Whether the increased house tax was to be borne by the defendant? OPP.

(iii) Whether the plaintiff is entitled to interest? If so, at what rate and to what amount? OPP.

     (iv)    Relief.

ISSUE NO.(i)

6. It is not in dispute that amount of Rs.40,00,000/-,

which the plaintiff deposited in compliance with the interim

order passed by this Court in CS(OS) No.387/2004 was

deposited with NDMC vide cheque dated 26th April, 2004.

The plaintiff had absolutely no cause of action to claim this

amount from the defendant without first paying it to NDMC.

Computed from 26th April, 2004, the suit, having been filed

on 23rd May, 2006, is well within time. The payment of

Rs.15,15,960/- for the year 2004-05 was made by the

plaintiff on 20th November, 2004 whereas payment for the

year 2005-06 was made on 13 th January, 2006. The suit

with respect to both these payments is also well within time.

The issue is, accordingly, decided against the defendant and

in favour of the plaintiff.

ISSUE NO.(ii)

7. There is no dispute between the parties with

respect to facts and the parties agreed not to lead evidence.

The lease deed executed between the parties is exhibit D-1

and is an admitted document. Clause 2, 4(ix) and 5(i) of the

lease deed to which the parties have referred during

arguments read as under:-

" 2. The aforementioned monthly rental of Rs.338200.00 and of Rs.13000.00 totaling Rs.351200.00 is, inclusive of house tax, ground rent and other levies, taxes, rates, cesses, out goings etc. whatsoever imposed by the Government or any authority or local body whatsoever, subject to the terms and conditions contained in Clause 4(ix)

hereinafter.

4(ix) To pay to the Lessor for increase in the existing levies, rates, cesses that may be affected by the Government or any statutory authority including all out goings that a Lessee is liable to pay proportionate to the area of the Building „Kailash‟ in occupation of the Lessee subject to the Lessee being satisfied about the payment of the same by the Lessor.

5(i) To pay all house-taxes, ground rents and other municipal levies, cesses and taxes, out goings whatsoever etc., imposed from time to time by the Government, local authority or any other statutory body, including the Municipal Authority, Land and Development Officer, Delhi Development Authority as well as any increase therein imposed in respect of the building „Kailash‟ or the demised premises, subject to the provisions of Clause (ix) of Para 4 herein before, it being further agreed that in case of reduction in any existing levies, rates cesses referred to in Clause (ix) of para 4 herein before which the Lessee is liable to pay, the Lessee shall have the benefit thereof proportionate to the area of the building „Kailash‟ in occupation of the Lessee."

8. It would be seen from a perusal of Clause 2 above

that the monthly rent of Rs.3,51,200/- agreed between the

parties was inclusive of house tax and ground rent besides

other levies, taxes etc. and out goings, to the extent they

were imposed by the Government or any local body, which

in this case would be NDMC. This, of course, has been

made subject to Clause 4(ix) of the lease deed. A lease deed,

in which it is specifically stated that the agreed rent was

inclusive of house tax, would be different from the lease

deed, which provides that it will be the responsibility of the

lessor. In the former case, it becomes the contractual

liability of the lessee, whereas in the later case it does not

form part of the rent and therefore does not become a

component of his contractual obligation to the lessor.

Though in its letter dated 18th May, 2004, which is Exhibit

P-6, the defendant claimed that to expect a lessee to

contribute towards payment of house tax on the same being

enhanced in future would be an unconscionable and illegal

term of agreement, not enforceable in a Court of law, my

attention has not been drawn to any legal provision, which

would render such an agreement illegal or unenforceable in

law. There is no illegality in the tenant agreeing to bear

increase in house tax of the premises taken by him on rent.

Section 23 of the Indian Contract Act, 1872, to the extent it

is relevant, provides that the consideration or object of an

agreement is lawful, unless (a) it is forbidden by law; or (b)

is of such a nature that, if permitted, it would defeat the

provisions of any law; or (c) is fraudulent; or (d) involves or

implies, injury to the person or property of another; or (e)

the Court regards it as immoral, or opposed to public policy.

None of the above referred elements are present in an

agreement by a tenant to agree to pay increase in the

amount of house tax, so long as he is in occupation of the

tenanted premises. Since, none of the clauses contained in

Section 23 of the Indian Contract Act, 1872 are attracted to

such an agreement, the agreement is perfectly legal and

binding on the parties.

9. The next contention of the learned counsel for the

defendant was that the defendant can be made liable only if

there is an increase in the rate on which the house tax is

levied and will not be liable in case there has been increase

in the ratable value, without any change in the rate of tax.

This was also the stand taken by the defendant in its letter

dated 18th May, 2004. I, however, find no merit in the

contention. There can be no logic behind agreeing to pay

increase in the amount of house tax as a result of increase

in rate at which tax is levied on the ratable value and not

paying in case the increase is due to enhancement of ratable

value. What is material to the parties is the net outgo

towards house tax, irrespective of whether it

increases/decreases due to revision of ratable value or due

to revision of rates. It is important to note in this regard

that the words used in Clause 4(ix) of the lease deed refer

not only to rates but also to „all out goings‟, which the lessee

(defendant) was liable to pay, proportionate to the area of

the building „Kailash‟ which it had taken on rent and the

outgoing would be the amount of house tax, irrespective of

the ratable value or the rate on which it is calculated.

Clause 2 of the lease deed is quite clear in this regard and

there can be no dispute that the amount of Rs.3,51,200/-

per month, which the defendant had agreed to pay as

monthly rent was inclusive of house tax meaning thereby

that house tax was a contractual liability of the defendant in

terms of Clause 2 of lease deed though it was included in

the monthly rent agreed between the parties. In fact, there

would be „outgoings‟ agreed to be paid by the defendant, if

house tax and ground rent are kept out of its ambit and,

therefore, would form part of the „outgoings‟, which the

defendant was liable to pay. In fact the word „out goings‟,

which has been used not only in Clause 2 but also in

Clause 4(ix), leaves no scope for any dispute in this regard.

Hence, the amount of house tax irrespective of ratable value

fixed by the NDMC or the rate of tax decided by it for a

particular, which the plaintiff was required to pay the

NDMC would be covered under the expression out goings

used in Clause 4(ix) of the lease deed.

In fact, even the term „levies‟, in the context the

word has been used in Clause 4(ix) of the lease deed when

read with Clause 2 thereof would also include the house

tax, payable to NDMC. The term „levy‟ as defined in Shorter

Oxford English Dictionary includes the collection of an

assessment, duty or tax and since house tax is collected on

assessment and is also a tax, there is no scope for disputing

that the term „levy‟ would include the amount of house tax,

payable to a local/statutory body such as NDMC, which

imposes this levy in exercise of the statutory powers

conferred on it by the NDMC Act.

10. Clause 5 of the lease deed, to the extent it is

relevant, to my mind, means that the plaintiff was required

to pay, to the concerned Statutory Authority, the house tax

imposed from time to time as well as any increase thereon,

in respect of the tenanted premises and subjecting it to the

provisions of Clause 4(ix) of the lease deed mean that the

increase in house tax, once paid by the plaintiff, was to be

borne by the defendant, to the extent it pertained to the

premises let out to the defendant. Another noteworthy

feature of Clause 5(i) of the lease deed is that any reduction

in the existing levies/rates, which to my mind would include

house tax and which the defendant had agreed to pay to the

plaintiff, was to be passed on by the plaintiff to the

defendant. Moreover, the contention that the increase in

house tax, irrespective of whether it was on account of

revision of retable value or revision of rates was not to be

reimbursed by the defendant to the plaintiff, runs contract

to the stand taken by the defendant in its letter dated 18 th

May, 2004.

11. It was also the contention of the learned counsel

for the defendant that the terms of the lease deed do not

indicate that increase in the house tax was to be

reimbursed by the defendant. In this regard, his submission

was that omission of house tax and ground rent in Clause

4(ix) and the later part of Clause 5(i) of the lease deed

cannot be lost sight of and that had the parties agreed for

reimbursement of increase in house tax by the defendant to

the plaintiff, there could be no reason for them to omit the

words „house tax and ground rent‟, particularly from Clause

4(ix) of the lease deed. I, however, do not find myself in

agreement with the learned counsel for the defendant, for

three reasons. Firstly, the term „all out goings‟, which has

been used in Clause 4(ix) of the lease deed, would include

the liability towards house tax, which under Clause 2(i) of

the lease deed was a part of the rent agreed between the

parties and was an out go from the pocket of the plaintiff.

There could have been no reason for the parties to use a

general expression such as „out goings‟, which is a word of

wide amplitude, if the intention was to exclude house tax

and ground rent from the scope of the sub-clause.

Secondly, as I have said earlier, the term „levy‟ would

include the house tax, which NDMC can recover in exercise

of statutory powers conferred upon it by NDMC Act and this

expression has been used in Clause 4(ix) as also in the later

part of Clause 5(i) of the lease deed. Thirdly, my attention

has not been drawn to any other levy or cess imposed by a

statutory authority on a commercial building. When the

parties agreed vide clause 4(ix) that any increase in the

existing levies will be paid by the lessee to the lessor, in

proportionate to the area building Kailash in occupation of

the lessee and further agreed vide later part of clause 5(i)

that in case of reduction in any existing levies referred to

clause 4(ix), the lessee shall have the benefit thereof,

proportionate to the aforesaid area, there must have been

some levy existing at the time the lease deed was executed.

Use of the expression „existing‟ in clause 4(ix) and later part

of clause 5(i) cannot be meaningless and, therefore, this

expression could have been intended only in respect of

house tax. It is difficult to accept that the defendant agreed

to pay increase in „existing‟ levies, imposed by the

Government or statutory authority without there being any

existing at that time. Since no existing levy other than

house tax has been brought to my notice, the obvious

inference is that the parties, while referring to increase or

decrees in existing levies, had the house tax payable in

respect of the tenancy premises, in their mind.

12. It is settled rule of interpretation of document that

the intention of the parties has to be gathered by reading

the document as a whole and as far as possible, the Court,

while construing the terms and conditions contained in an

document, should try to construe them in such a manner so

as to give effect to all of them and not to make any of them

nugatory or superfluous.

In DDA vs. Durga Chand Kaushish, AIR 1973 (2)

SCC 825, the Supreme Court reiterated the following

propositions of law laid down by it in Radha Sunder Dutta

vs. Mohd. Jahadur Rahim and Ors. AIR 1959 SC 24

"Now, it is a settled rule of interpretation that if there be admissible two constructions of a document, one of which will give effect to all the clauses therein while the other will render one or more of them nugatory, it is the former that should be adopted on the principle expressed in the maxim „ut res magis valeat quam pereat‟".

It was observed by a Division Bench of this Court

in Sharda Nath vs. Delhi Administration and Ors. 149

(2008) DLT 1 that where two clauses of a document disclose

some conflict and contradiction, but the clauses can be

reconciled, one should give effect to all the clauses rather

than render one or more of them as nugatory.

If the interpretation given by learned counsel for

the defendant is accepted, Clause 4(ix) of the lease deed

would be rendered superfluous since no levy other than

house tax or ground rent was either applicable or even in

contemplation of parties, at the time when the lease deed

was executed.

13. The admitted facts also clearly show that the

defendant had understood the terms and conditions of the

lease deed to mean that any increase in the quantum of

house tax was to be paid by it to the plaintiff to the extent

the increase pertained to the premises let out to it in

Kailash building. Admittedly, the defendant paid increase in

house tax in the year 1997-98 to 2000-01. Had the

intention of the parties been to the contrary, the defendant

would not have reimbursed the increase in house tax for the

aforesaid years to the plaintiff.

It was contended by the learned counsel for the

defendant that these payments were made under a mistake.

However, the written statement does not specify how and in

what circumstances the alleged mistake came to be

committed by the defendant. In the absence of any such

explanation, the plea taken by the defendant in this regard,

cannot be considered to be a genuine plea and needs to be

out rightly rejected.

14. It was also contended by the learned counsel for

the defendant that the suit is premature since the demand

of house tax has been challenged by the plaintiff in a civil

suit and in the event of the suit being decided in its father,

the amount deposited by the plaintiff with NDMC would be

refunded to it. In my view, the contention is misconceived.

NDMC has already raised demand on the plaintiff. The

demand was stayed by this Court subject to deposit of Rs

40 lakhs with NDMC. Therefore, the money has gone out of

the pocket of the plaintiff to the pocket of NDMC. Once the

plaintiff has made payment to NDMC, whether of its own or

under an order of the Court, it is entitled to recover the

increase in house tax to the extent it pertains to the

premises which was let out to the defendant from the

defendant. Of course, in the event of the Court deciding in

favour of the plaintiff and directing NDMC to either refund

or adjust the whole or part of the amount of Rs 40 lakhs

deposited by it with NDMC, the defendant would be entitled

to immediate refund of that amount from the plaintiff. In the

event of NDMC paying any interest to the plaintiff on the

aforesaid amount, the defendant will also be entitled to

payment of that amount from the plaintiff. As far as

demands for the years 2004-2005, 2005-2006 is concerned,

the plaintiff having already deposited the same with the

NDMC is entitled to recover that amount from the

defendant. The issue is decided against the defendant and

in favour of the plaintiff.

15. The plaintiff has not claimed any interest for the

pre-suit period. The pendente lite and future interest,

however, it is in the discretion of the Court, as provided in

Section 34 of the Code of Civil Procedure. The issue is

decided accordingly.

16. It was contended by the learned counsel for the

defendant that since no registered sale deed was executed

after the lease deed dated 31st December, 1996 expired by

afflux of time, the terms and conditions contained in clause

4(ix) of the lease deed are not binding on the defendant and

consequently, the house tax for the period after expiry of the

agreed term of the lease cannot be recovered from the

defendant. In this regard, he placed reliance on Section 49

of Registration Act, which provides that no document,

required by Section 17 or by any provisions of Transfer of

Property Act, 1982 to be registered shall affect any

immovable property comprised therein, or be received as

evidence of any transaction affecting such property unless it

has been registered. I, however, find no merit in this

contention. The reliance on Section 49 of Registration Act,

in my view, is wholly misplaced for the simple reason that

the lease deed dated 31st December, 1996 was duly

registered on 02nd January, 1997 and, therefore, the

disability attached to a document, which is required to be

compulsorily registered and is not registered, is not

attracted to this document.

The relevant statutory provision in this regard

would be Section 116 of Transfer of Property Act which, to

the extent it is relevant, provides that if a lessee remains in

possession of the tenancy premises after the determination

of the lease granted to him, and the lessor or his legal

representative accepts rent from the lessee, or otherwise

assents to his continuing in possession, the lease is, in the

absence of an agreement to the contrary, renewed from year

to year, or from month to month, according to the purpose

for which the property is leased, as specified in Section 106.

Section 106 of Transfer of Property Act, to the extent it is

relevant, provides that in the absence of a contract or local

law or usage to the contrary, a lease of immoveable property

for other than agricultural or manufacturing purposes shall

be deemed to be a lease from month to month, terminable,

on the part of either lessor or lessee, by fifteen days' notice.

Therefore, since the plaintiff allowed the defendant to

continue in possession of the tenancy premises and also

accepted rent from it, even after the term of the lease had

expired by afflux of time, the lease came to be renewed from

month to month being a lease for commercial purpose. The

use of the expression „renewed‟ in Section 116 of Transfer of

Property Act clearly implies that the parties in the event of a

tenant holding over the property on determination of the

lease, would be governed by the terms and conditions of the

lease which stands determined, unless they enter into a

fresh agreement contrary to the terms and conditions of the

lease which stand determined.

This was the view taken by the Division Bench of

Calcutta High Court in Krishna Char an Sukladas vs.

Nitya Sundari Devi AIR 1926 Calcutta 1239 as well as by a

Division Bench of Allahabad High Court in Zahoor Ahmad

Abdul Sattar vs. State of Uttar Pradesh and Anr. AIR

1965, Allahabad 326 and by Madras High Court in K.

Gnanadesikam Pillai and Ors. vs. Antony Benathu

Boopalarayar AIR 1934 Madras 458. The decision of the

Allahabad High Court in the case of Zahoor Ahmad (supra)

was affirmed by Supreme Court in The State of U.P. vs.

Zahoor Ahmad and Anr. AIR 1973 SC 2520. This was also

the view of the Federal Court in Kai Khushroo Bezonjee

Capadia vs. Bai Jerbai Hirjibhoy Warden and Anr. AIR

1949 FC 124, where the Court agreed with the following

statement contained in Woodfall‟s "Law of Landlord and

Tenant"

"Where a tenant for a term of years holds over after the expiration of his lease he becomes a tenant on sufferance, but when he pays or expressly agrees to pay any subsequent rent at the previous rate a new tenancy from year to year is thereby created upon the same terms and conditions as those contained in the expired lease so far as the same are applicable to and not inconsistent with an yearly tenancy."

I, therefore, hold that even on expiry of the terms

of the lease, the terms and conditions contained in the lease

deed continued to bind the parties, so long as the defendant

was holding over the tenancy premises.

17. In view of my findings on the issues 1 to 3, the

plaintiff is entitled to a decree for Rs.69,84,900/- against

the defendant.

ORDER

In view of my findings on the issue, a decree for

Rs.69,84,900/- with costs and pendente lite and future

interest at the rate of 6% per annum is hereby passed in

favour of the plaintiff and against the defendant, subject to