M/S Mazdoor Extractions (P) Ltd. vs M/S Hindustan Vegetable Oils ...
2012 Latest Caselaw 5820 Del

*              IN THE HIGH COURT OF DELHI AT NEW DELHI

+                              CS(OS) No.183/1988

%                                                      27th September, 2012

         M/S MAZDOOR EXTRACTIONS (P) LTD.       ..... Plaintiffs
                 Through: Mr.J.P.Sengh, Sr. Advocate with
                          Mr.Atul Bandhu, Advocate

                      versus


         M/S HINDUSTAN VEGETABLE OILS CORPORATION LTD.
                                                  ..... Defendants
                  Through: Mr.Ashwani K.Matta, Sr. Advocate
                           with Mr.Sonia Arora, Advocate

CORAM:
HON'BLE MR. JUSTICE VALMIKI J.MEHTA

    To be referred to the Reporter or not?


VALMIKI J. MEHTA, J (ORAL)

1.

The subject suit for recovery of Rs.85,74,193/- plus interest of

Rs.21,95,086.50 has been filed by the plaintiff/lessor which leased the

suit premises along with plant and machinery to the defendant/lessee -M/s

Hindustan Vegetable Oils Corporation Limited, a Public Sector

Undertaking. I may, for the sake of completion of narration, state that

defendant-company was originally M/s.Ganesh Flour Mills Company

Limited which was taken over by the present defendant-company.

2. The facts of the case are that parties entered into a lease deed dated

26.3.1984, Ex.P-1, whereby in consideration of a rent of Rs.1,50,000/-,

the plaintiff let out the premises Jaipur Road, Narsingpur Village,

Gurgaon, Haryana (about 3 acres) along with the plant and machinery,

specified in Schedule A to Ex.P-1, to the defendant. The plant and

machinery installed in the premises was for manufacture of refined oil.

In terms of the agreement Ex.P-1, the capacity as existing on the date of

agreement was 50 metric tons per day (50 mt/day) and if the

plaintiff/lessor was able to enhance the capacity to manufacture refined

oil to 100 metric tons per day, then, rent payable would become double

from Rs.1,50,000/- per month to Rs.3,00,000/- per month. The case of

the plaintiff is that the plaintiff did, in fact, increase the capacity to 100

metric tons per day with effect from 1.1.1985, but the defendant failed to

pay double the rent, and continued to only pay the original rent of

Rs.1,50,000/- per month, and therefore, the plaintiff claims this difference

of rent at Rs.1,50,000/- per month from 1.1.1985 till the conclusion of the

lease on 25.3.1986 and in addition thereto rent at the same rate till the

date of filing of the suit on 4.1.1988 inasmuch as the plaintiff claims that

possession was never delivered by the defendant of the premises along

with plant and machinery to the plaintiff. The plaintiff also claims

interest on the amount stated to be due.

3(i) The defendant has contested the suit and denied that it is liable to

pay rental charges at Rs.3,00,000/- per month. It is denied that 100

metric tons per day capacity became operational, inasmuch as the

plaintiff had failed to provide the additional facility (being the enhanced

electricity load) to make the plant operational to the capacity of 100

metric tons per day. This is stated in para 12 of the written statement

which reads as under:

"12. The contents of paragraph 12 are admitted to the extent that the Agreement dated 26.3.1984 provided that with the increase in the actual refining capacity to 100 Metric Tons per Day the monthly rent will be increased proportionately. It is, however, denied that by merely making available all or some of the equipment listed out in Annexure - „B‟ the capacity would actually increase to 100 Metric Tons per Day. To increase the capacity to 100 Metric Tons per Day. Certain additional facilities were also required to be provided by the Plaintiff so as to make the refining capacity of 100 Metric tons per Day actually available. This was well and clearly understood between the parties."

(ii) The defendant further pleaded that the possession of the premises

was handed over back to the plaintiff on the date of termination of the

lease, because the employees of the plaintiff and related persons were

always in the suit premises right from the first day. Though there seem to

be slightly variant stands of the defendant in the written statement

inasmuch as whereas in para 19 of the written statement, it is pleaded that

the question of handing over the possession by the defendant does not

arise because the possession automatically reverted back to the plaintiff

on the expiry of lease period from 25.3.1986, a portion of para 21 states

as under:-

"21. ------- During entire period of the lease, Shri Ranbir and Shri Kirni of the Plaintiff were posted there at the leased premises as representative of the plaintiff. These two person continued to be present in the leased premises even after 25.3.1986. Shri Dang a close relative of Shri Charanjit Grover was also present during the period of the lease and it was the knowledge of all the three persons as also the plaintiff that the leased premises were vacated and handed over to the plaintiff on 25.3.1986. thus there is no question of any claims for rent or damages of the plaintiff being maintainable after 25.3.1986."

However there is not a too great divergence and in sum and

substance what is pleaded is that possession reverted to the plaintiff at the

end of the lease period. Learned senior counsel for the defendant,

however, during the course of arguments conceded that some amount of

stock (and some personnel were, in fact, posted at the suit premises) was

stored even after expiry of lease agreement on 25.6.1983, however, the

storage was hardly for a few days inasmuch as the electricity in the suit

premises was disconnected on 17.4.1986, as per the statement of DW2,

Mr.Rishi Prakash Sharma, an employee of Haryana State Electricity

Board (=HSEB).

4. On the pleadings of the parties, the following issues were framed

on 12.12.1988:-

" 1. Whether the suit has been filed and plaint signed and verified by a duly authorized person?

2. Whether the additional equipment and machinery had not been installed in its entirety? If so, its effect?

3. Whether the defendant is not liable to pay rent at the enhanced rate of Rs.3 lakhs per month with effect from 1st January, 1985?

4. Whether the defendant has delivered the possession of plant and machinery to the plaintiff? If so, when?

5. Whether the plaintiff is entitled to interest? If so, at what rate; on what amount and for what period?

6. To what amount the plaintiff is entitled.

7. Relief."

Issue No.4 was recast vide order dated 18.7.1989, which reads as

under:-

"4. Whether defendant had delivered possession of the demised premises, plant & machinery to the plaintiff? If so, when?"

ISSUE NO.1

5. Learned senior counsel for the defendant does not press issue No.1.

This issue is, therefore, decided in favour of the plaintiff and it is held

that the suit has been duly signed, verified and filed.

6. These three issues can be dealt with together inasmuch as they deal

with the claim of the plaintiff for the enhanced rent @ Rs.3 lacs per

month till the defendant occupied the suit premises and the corresponding

defence of the defendant of disentitlement of the plaintiff to claim

enhancement and that the plaintiff was not entitled to the rental charges

for the period till filing of the suit on 4.1.1988.

7. The first aspect is whether the plaintiff did, in fact, increase the

capacity from 50 Metric Tons/Day to 100 Metric Tons/Day. It could not

be seriously disputed on behalf of the defendant that the capacity was in

fact increased to 100 Metric Tons/Day by installing of the machinery

inasmuch as not only witnesses of the defendant have admitted this fact

specifically, but also, there is a report dated 14.10.85 of the consultant

appointed by the defendant, namely, M/s Mectech Process Engineers

Private Limited, Ex.P-6, which shows that the capacity was increased to

100 Metric Tons/Day . What is however very vehemently and strongly

argued on behalf of the defendant is that the increased capacity was of no

effect unless there was corresponding increase in power to run the

capacity of 100 Metric Tons/Day.

8. In order to appreciate this defence of enhancement of capacity

being of no effect without increase in electricity load it is necessary at

this stage, to refer to two entries contained in Annexures A and B

respectively of the agreement Ex.P1 dated 26.3.1984. The first entry is at

serial No.2 of Annexure „A‟ which states that the sanctioned electricity

load existing at the time of entering into the agreement on 26.3.84 is 66

KVA. The second entry is at serial No.8 of Annexure „B‟ of Ex.P-1,

which specifically provides that extra load of at least 75 KVA is required

to make operational 100 Metric Tons/Day. I may, at this stage, state that

it is not disputed on behalf of the defendant that actually the load in the

leased premises was 78 KVA and not 66 KVA. It is argued that since the

sanctioned load from the local electricity body, namely HSEB, is

admittedly not enhanced by 75 KVA, therefore, even if there was

machinery fixed with capacity of 100 Metric Tons/Day, the same was of

no use because the plant could not have been run without total sanctioned

electricity load of 66 KVA + 75 KVA viz 141 KVA.

9. Learned senior counsel for the plaintiff in response argued that the

plaintiff had provided the electricity load to run the capacity of 100

Metric Tons/Day inasmuch as the defendant admits that there was a load

of 78 KVA and since the plaintiff had provided a diesel generator set of

125 KVA, total of 125 KVA + 78 KVA, i.e. 203 KVA was available, and

therefore, the same was sufficient to run the plant of 100 Metric

Tons/Day i.e as per EX.P-1, at best a load of 141 KVA was required,

whereas the plaintiff had provided a load of 203 KVA.

10. I am unable to agree with the argument as urged on behalf of the

plaintiff. By pure mathematics it can be said that a load of 125 KVA of

the diesel generator set and 78 KVA from Haryana State Electricity

Board totals to 203 KVA, however, what is important to note is that at

one point of time the one point source of supply must cause and bring

about a load of 141 KVA, because by laws of science two separate

sources of electricity can never be joined to produce a total electricity

load inasmuch as supply of electricity is not like adding various sacks

containing kilograms of cereals to make total kilograms of cereals by

adding the weight of the sacks. It is not the case of the plaintiff (and nor

can it be case of the plaintiff), that at the point from where electricity is

being supplied as per sanctioned load of 78 KVA, at that point, since

from the diesel generator set of 125 KVA there is an input, there results a

total supply load of electricity to be 203 KVA from a single source of

supply. As already stated, of course it is another matter that even if this

was so alleged by the plaintiff, it would be of no use because on the

principles of physics and science it is not possible that simply by having

an additional source of supply there results a total existing load of

electricity. An example will make this clear. Suppose there is a very big

pipe in which the water flows. If the said pipe has additional capacity to

take additional water, then, by adding further flow of water the total

capacity/cusecs of water supply through the pipe will be the total water

which is in the pipe, however, in electricity supply, it is not as if by

adding the source of supply there results a total increased load, because

this is impossible in terms of science.

Further, it is not the case of the plaintiff that there are separate

phases of the factory premises, i.e one part of the factory is run with the

sanctioned load from Haryana State Electricity Board of 78 KVA and

another part of the factory which is run only on the diesel generator set of

125 KVA, and therefore, the net effect is that the total factory is capable

of running with a capacity of 100 Metric Tons/Day.

11. In view of the aforesaid discussion, I hold that the plaintiff has

miserably failed to prove its case that the 100 Metric Tons/Day plant was

able to run inasmuch as there was no electric supply at one point source

so that there could be available 203 KVA or even 141 KVA for running

of the plant of 100 Metric Tons/Day. Once there is no power supply to

run the capacity of 100 Metric Tons/Day, there does arise any issue of

payment to the plaintiff of Rs.3,00,000/- per month. I may, at this stage,

clarify that though learned senior counsel for the plaintiff has sought to

place reliance upon Ex.P-16 which are minutes of meetings of the

defendant company, as also Ex.P-6 dated 14.10.1985 (the inspection

report of M/s Mectech Process Engineers Private Limited) to argue that

the plant of 100 Metric Tons/Day was complete, however, this argument

of the learned senior counsel of the plaintiff ignores the position that issue

is not only of increasing of the capacity, but whether additional capacity

can run in the absence of total electric supply of at least 141 KVA.

Learned senior counsel has failed to prove that there was total supply of

electricity of 141 KVA. The claim of the plaintiff therefore for enhanced

lease rental of Rs.3,00,000/- per month is rejected.

12. A related issue is that even if the defendant is liable to pay only

Rs.1,50,000/- per month, till when is this amount payable? Is the amount

payable till the date of filing of the suit i.e 4.1.1988 because the plaintiff

alleges that the possession of the premises was not handed over to the

plaintiff along with plant and machinery.

13. To understand this aspect, I have already reproduced above a

portion of para 21 of written statement filed by the defendant which

shows that the issue of formally handing over and taking over of

possession did not arise because three personnel of the plaintiff

Sh.Ranbir, Sh.Kirni and Sh.Dang (a closed relative of Charanjit Singh)

were always present at the suit premises till the period of the lease. The

plaintiff in its replication had ample opportunity to specifically deny this

fact, however, when we look at para 21 of the replication on merits we

find that there is no specific denial with respect to the averments made of

the three personnel of the plaintiff existing in the factory premises. Para

21 of the replication reads as under:-

" 21. It is denied that the defendant surrendered and delivered the demised premises to the Plaintiff. By the letter of 13.8.1985, the defendant informed the Plaintiff, that the said lease shall come to an end on the 25 th March, 1986. The defendant advised the Plaintiff to make arrangements to take back possession of the premises on due date. The plaintiff informed the defendant by a letter dated 21.8.1985 to hand over the possession on due date of the demised premises together with all plant and machinery as detailed in the Lease Deed and that had been installed by the Plaintiff in December 1984. The defendant did not physically surrender or deliver possession to the Plaintiff and continued to be in possession after 25.3.1986. The defendant has not surrendered possession to Plaintiff till to-day. The Plaintiff is ready and willing to accept surrender of possession according to Law even now provided physical possession of premises, plant and machinery after spot verification is handed over to the Plaintiff against receipt."

A reference to the aforesaid para 21 of the replication shows that

there is no specific denial of the presence of the three personnel of the

plaintiff as stated in para 21 of the written statement, and therefore, the

contents in this regard of this written statement are deemed to be

admitted.

14. In my opinion, there is another reason to hold that defendant is not

liable to pay charges of Rs.1,50,000/- per month till the suit was filed on

4.1.1988 inasmuch as the defendant has led evidence of DW2 Mr.Rishi

Prakash Sharma, an employee of Haryana State Electricity Board, who

has deposed to the effect that the electricity supply in the premises was

disconnected on 17.4.1984 and till the date of recording of evidence by

this witness on 17.2.1994, the electricity stood disconnected. The

plaintiff, therefore, in my opinion, is clearly not entitled to any charges of

Rs.1,50,000/- per month till the date the suit was filed on 4.1.1988.

15. In my opinion, however, since learned senior counsel for the

defendant was fair enough to admit that some amount of stock (and

personnel) of the defendant did remain for some weeks in the suit

premises after expiry of the lease, I would grant the plaintiff charges of

Rs.1,50,000/- per month being the charges from 1.4.1986 till 31.7.1986

inasmuch as some sort of evidence is on record that personnel of the

defendant-company were, in fact, present till 11.7.1986. There is no

objection of the defendant to this aspect of the claim.

16. There is another reason for me to decline the claim of rental

charges post 25.3.1986 inasmuch as an admitted fact has come on record

and which is that the sister concern of the plaintiff, i.e one M/s.

G.T.Management Services, a division of M/s. Grover Tankers Pvt. Ltd.,

provided the labour services for carrying out production in the demised

premises. The contract with M/s G.T. Management Services was a back

to back contract for the same period for which lease was granted of the

suit premises to the defendant, and the contract with M/s.

G.T.Management Services stood terminated on 15.3.1986. This is

specifically stated in para 21 of the written statement filed by the

defendant and once again in the replication there is no denial to these

facts which were stated in the written statement. I have already

reproduced para 21 of the replication above. An additional fact to be

noted is that it is also not disputed that the managing director of the

plaintiff company is Mr.Charanjit Singh who is also the Managing

Director of the labour supply company M/s. Grover Tanker Pvt. Ltd.

Once the labour contract stood terminated, the defendant could not have

utilized the premises for production of the refined oil and thus there is a

clear indication that no production was carried out after the expiry of the

lease period on 25.3.1986.

17. Issue nos.2 to 4 are accordingly decided against the plaintiff by

holding that plaintiff will only be entitled to an amount of Rs.1,50,000/-

per month from 1.4.1986 to 31.7.1986.

ISSUE NO.5

18. Since issues 2 to 4 are decided against the plaintiff, there is no

question of granting any interest. Therefore, this issue is also decided

against the plaintiff and in favour of the defendant.

19. Before giving the operational part of this judgment, I must state

that earnest efforts were made by the defendant to see resolution of the

disputes in a very fair manner, however, inspite of best efforts of the

defendant, and which almost succeeded , the plaintiff failed to respond to

the fair offer of the defendant and it was insisted that plaintiff wants

nothing less than Rs.3,00,000/- per month, and that too till the filing of

the suit, and therefore, the compromise talks broke down.

20. Accordingly, the suit of the plaintiff for recovery of Rs.85,74,193/-

plus interest of Rs.21,95,086.50 as prayed for, is dismissed, however, a

decree is granted in favour of the plaintiff against the defendant for a sum

of Rs.6,00,000/- alongwith pendente lite and future interest @ 12% per

annum simple till payment is made by the defendant to the plaintiff.

Parties are left to bear their own costs. Decree sheet be prepared

accordingly.

VALMIKI J. MEHTA, J SEPTEMBER 27, 2012 sv