M/S Kalakankar Investment (P) ... vs M/S Menlo Consultant India Pvt. ...
2013 Latest Caselaw 4795 Del

*        IN THE HIGH COURT OF DELHI AT NEW DELHI

%                                 Judgment Pronounced on: 21.10.2013

+        R.A.No.182/2012, I.A. No.5383/2012 and I.A. No.5385/2012
         in CS(OS) 1726/2009

         M/S KALAKANKAR INVESTMENT (P) LTD. & ORS
                                                ..... Plaintiffs
                       Through Mr.Navin Chawla, Adv. with
                               Mr.Nitesh Rana, Adv.
                  Versus

         M/S MENLO CONSULTANT INDIA PVT. LTD. & ORS
                                                  ..... Defendants
                      Through  Mr.Rajeev Sharma, Adv. with
                               Mr.Uddyam Mukherjee &
                               Mr.Sahil Bhalaik, Advs. for
                               Review Petitioners/D-2 & 3.
         CORAM:
         HON'BLE MR. JUSTICE MANMOHAN SINGH

MANMOHAN SINGH, J.

1. The plaintiffs filed the suit for recovery of possession for premises bearing No.403 & 408, 4th Floor, Mercantile House, 15, Kasturba Gandhi Marg, New Delhi, and recovery of arrears of rent with mesne profits and damages etc.

2. No written statement was filed by the defendants who had also failed to cross-examine the witness of the plaintiff. After hearing, the suit of the plaintiff was decreed in terms of para 23 of the judgment which reads as under:

"23. The suit of the plaintiff is accordingly decreed to the following effect:

a. That the defendants shall pay arrears of rent from the date of 23.02.2009 till March 2011 @ Rs.5,73,780/- per month along with interest which is payable @12% per annum from the date of amount due till the date of realization of the amount.

b. The defendants shall pay all the electricity and water charges as well as TDS.

c. The defendants shall also pay the penalty if it is likely to be imposed upon the plaintiffs by the Income Tax Department for delay in payment of TDS.

d. As far as damages/compensation for causing damage to the suit property are concerned, the plaintiffs have not been able to prove the said claim. Therefore, the said claim is declined."

3. As far as the possession of the suit property is concerned, the same was handed over to the plaintiff through Local Commissioner on 14th February, 2011.

4. The admitted facts in the suit are that by virtue of two lease deeds dated 27th December, 2007 executed the premises was let out for a period of three years to the defendant No.1. Lease deeds were signed by the defendant No.3 on behalf of defendant No.1. Tenancy was terminated by a notice dated 22nd July, 2008 in terms of Clause 8(b) of the same.

5. The plaintiffs, thereafter filed a petition under Section 9 of the Arbitration and Conciliation Act, 1996 and also filed CS (OS) No.410/2008 in view of non-compliance of terms of lease deeds.

6. The disputes between the parties were later on settled vide agreement dated 13th February, 2009 and in view of the said settlement, the plaintiffs withdrew all litigations already initiated against the defendants. The terms

of the said settlement agreement are mentioned in paras 10 to 11 of the plaint. Since the terms of the said settlement were not complied with by the defendants, the present suit was filed by the plaintiffs for enforcement of the said terms of the settlement i.e. for recovery of the possession and recovery of arrears of rent with mesne profits and damages etc.

7. After leading the evidence by the plaintiffs, the suit was decreed by judgment and decree dated 31st October, 2011.

8. Thereafter on 20th March, 2012 the defendants No.2 and 3 i.e. Mr.Sunil Suri and Smt.Veena Suri (who are the husband and wife) and directors of the company, inter alia filed two main applications i.e. one Review Application, being 182/2012, and second application for condonation of delay, being I.A.No.5385/2012.

9. Notice of the above said applications was issued. The prayer made in both applications were strongly opposed by the plaintiffs. Reply was also filed by the plaintiffs.

10. The reasons in the delay in application for late filing of review application given by the applicants/defendants No.2 and 3 are that they are Canadian and American citizens residing in United States of America. They could not pursue the matter properly. Further, the defendant No.2 was seriously ill in the year 2011 and by taking the advantage of the illness and absence of defendants No.2 and 3, the decree was obtained by the plaintiffs against all the three defendants. Since there is an error apparent on the face of the record of the judgment and the plaintiffs had obtained the decree by way of playing fraud upon this Court, the delay of 109 days in filing the review application be condoned.

11. The plaintiffs opposed the application for delay mainly on the reason

that the review application is barred by limitation. The reasons given in the application are totally false and frivolous in order to delay further proceedings in the execution. It is stated that the defendants were never interested in prosecuting the matter. Even no written statement was filed by the defendants despite of various opportunities by the Court. When the decree has been passed, the application for condonation of delay filed by the applicants is an afterthought and is not maintainable.

12. The learned counsel for the applicants in support of his submissions has referred to the decision in the case of Collector, Land Acquisition, Anantnag & Anr. vs. Mst. Katiji & Ors., (1987) 2 SCC 107. Para 3 of the said judgment reads as under:

"3. The legislature has conferred the power to condone delay by enacting Section 51 of the Indian Limitation Act of 1963 in order to enable the Courts to do substantial justice to parties by disposing of matters on 'merits'. The expression "sufficient cause" employed by the legislature is adequately elastic to enable the courts to apply the law in a meaningful manner which subserves the ends of justice--that being the life-purpose for the existence of the institution of Courts. It is common knowledge that this Court has been making a justifiably liberal approach in matters instituted in this Court. But the message does not appear to have percolated down to all the other Courts in the hierarchy. And such a liberal approach is adopted on principle as it is realized that:-

1. Ordinarily a litigant does not stand to benefit by lodging an appeal late.

2. Refusing to condone delay can result in a meritorious matter being thrown out at the very threshold and cause of justice being defeated. As against this when delay is condoned the highest that can happen is that a cause would be decided on merits after hearing the parties.

3. "Every day's delay must be explained" does not mean that a pedantic approach should be made. Why not every hour's delay, every second's delay? The doctrine must be applied in a rational common sense pragmatic manner.

4. When substantial justice and technical considerations are pitted against each other, cause of substantial justice deserves to be preferred for the other side cannot claim to have vested right in injustice being done because of a non-deliberate delay.

5. There is no presumption that delay is occasioned deliberately, or on account of culpable negligence, or on account of mala fides. A litigant does not stand to benefit by resorting to delay. In fact he runs a serious risk.

6. It must be grasped that judiciary is respected not on account of its power to legalize injustice on technical grounds but because it is capable of removing injustice and is expected to do so.

Making a justice-oriented approach from this perspective, there was sufficient cause for condoning the delay in the institution of the appeal. The fact that it was the 'State' which was seeking condonation and not a private party was altogether irrelevant. The doctrine of equality before law demands that all litigants, including the State as a litigant, are accorded the same treatment and the law is administered in an even handed manner. There is no warrant for according a step-motherly treatment when the 'State' is the applicant praying for condonation of delay. In fact experience shows that on account of an impersonal machinery (no one in charge of the matter is directly hit or hurt by the judgment sought to be subjected to appeal) and the inherited bureaucratic methodology imbued with the note-making, file pushing, and passing-on-the-buck ethos, delay on its part is less difficult to understand though more difficult to approve. In any event, the State which represents the collective cause of the community, does not deserve a litigant-non-grata status. The Courts therefore have to

be informed with the spirit and philosophy of the provision in the course of the interpretation of the expression "sufficient cause". So also the same approach has to be evidenced in its application to matters at hand with the end in view to do even- handed justice on merits in preference to the approach which scuttles a decision on merits. Turning to the facts of the matter giving rise to the present appeal, we are satisfied that sufficient cause exists for the delay. The order of the High Court dismissing the appeal before it as time barred, is therefore. set aside. Delay is condoned. And the matter is remitted to the High Court. The High Court will now dispose of the appeal on merits after affording reasonable opportunity of hearing to both the sides."

13. In view of above decision and after considering the overall facts and circumstances of the matter, the delay in filing the review application is condoned as this court be inclined to decide the application for review on merit.

14. As far as review application is concerned, the same is filed under Order XLVII Rule 1 CPC read with Section 151 CPC.

15. The averments made in the said application are that there is an error apparent on the face of the record in the judgment dated 31st October, 2011in as much as the decree has been passed on the erroneous assumption that defendants were lessees in the afore mentioned premises when in fact it is only defendant No. 1, a company incorporated under the Companies Act, 1956 which was the lessee of the said premises.

16. The applicants i.e. defendant Nos.2 and 3 submit that the Court failed to appreciate that along with the plaint the plaintiffs filed two registered lease deeds dated 27th December, 2007 which specifically recorded that the aforesaid premises were let out to defendant No.1 which is a private limited

company. The defendant Nos.2 and 3 submit that this court failed to appreciate that in the lease deeds it was specifically recorded that the tenanted premises was let out by the plaintiff only to defendant No. 1who is a company incorporated under the Companies Act,1956.

17. The defendant Nos.2 and 3 submit that there is an error apparent on the face of record in judgment dated 31st October, 2011 in as much as it is well settled that a company is a distinct person having an identity distinct and apart from its shareholders, the liabilities of the company cannot be passed on to its shareholders, directors therefore the alleged liability of defendant No.1 as a lessee could not have been fastened on defendants No.2 & 3.

18. The defendant Nos.2 and 3 also submit that the cause title of the plaint makes it clear that they were not sued in their individual capacities but were sued as directors of the company. In fact for this reason itself a decree ought not to have been passed against them. The defendants submit that this court erred in passing a decree much beyond the frame of the suit as while passing of a decree of Rs. 1,37,707,20 along with the interest was granted @12% per annum from the date of amount due till date of realization of the amount prayer of which was not made by the plaintiffs in the plaint as the case was set up by the plaintiffs on the basis of the registered lease deeds as the suit was for a decree for a sum of Rs. 4017160/- towards rent for the period commencing March 2009 to September 2009 but the decree was passed for the period commencing 23rd February, 2009 till March 2011 even while the suit was based on the two registered lease deeds which record that defendant No. 1 was the lessee in respect of the suit property but a decree was passed against them though they were not lessees of the suit property.

19. Reply to the review application was filed by the plaintiffs. The averments made in the reply are that the grounds stated in the present review application are not tenable as the said grounds are in the nature of appeal. Thus, the said grounds do not satisfy the provision of review set out in Order 47 of CPC. The Apex Court in several decisions has held that review petition has limited purpose, it cannot be allowed to be an appeal in disguise. It is stated that the defendants have raised the ground in the review application which is to be raised in the written statements during the pendency of the suit but they deliberately chose not to file the written statements and vide order dated 23rd March, 2011 the defense was struck off by this Court therefore now at this stage they can not be allowed to raise the issue of written statements by raising the defence on merit in the review petition. The plaintiffs submit that the defendants never filed the petition for setting aside the ex-parte orders or judgments and this Court vide its order dated 15th October, 2009 directed them to pay the agreed rent till disposal of the suit. They filed FAO bearing No. 85/ 2010 where the Division Bench of this court vide its order dated 01.02.2010 directed the defendants that "the defendants shall immediately file an application before the learned Single Judge for setting aside of the order proceeding ex-parte against it and the said application shall be considered by the learned Single Judge subject to the defendants paying to the plaintiffs the amount as directed by the learned Single Judge with arrears till date being paid within 30 days and further amounts being paid as directed."

20. Learned counsel for the defendant Nos.2 and 3 in support of his review application has referred to the following judgments:

i) Bacha F. Guzdar, Bombay vs. Commissioner of Income Tax,

Bombay, AIR 1955 SC 74.

ii) Kundan Singh vs. Moga Transport Co. (P.) Ltd. and Ors., Vol. 62 Company Cases 600.

iii) V.K. Uppal vs. M/s. Akshay International Pvt. Ltd., Ex.App.

No.516/2009 in Ex.P.No.295/2013, dated 9th February, 2010.

iv) Tristar Consultants vs. M/s. Customer Services India Pvt. Ltd.

& Anr., AIR 2007 Delhi 157.

21. Mr. Rajeev Sharma, learned counsel for the defendant Nos.2 and 3 argues that it is a well settled law that a company is a juristic person. Therefore, a company has to act through a living human being. An individual director has no power to act on behalf of a company of which he is a director, unless there is a specific resolution of the Board of Directors of the company giving special power to him/her or where the articles of company confer such a power. The directors of a company owe no fiduciary or contractual duties or any duty of case to any third party who deals with the company.

22. Mr.Sharma states that the decree in the present matter has been passed beyond the frame of the suit which was filed on the basis of two lease deeds which were executed where the defendant No.1 was the lessee in respect of the suit property. He argues that the decree has been passed against the defendants No.2 and 3 though they were not the lessee of the suit property. As it was passed under erroneous assumption that defendants No.2 and 3 were lessees in respect of the suit property when in fact it is only the defendant No. 1, a company incorporated under the Companies Act, 1956 which was the lessee of the suit property to whom the suit property was let out. Thus, there is an error apparent on the face of the record in the

judgment and decree dated 31 st October, 2011. The review petition under these circumstances is to be allowed.

23. As far as the proposition of law is concerned, no different opinion can be arrived at by this Court, however situation in the present case is distinct. The defendant No.1 is a private limited company. The defendants No.2 and 3 are husband and wife who are the directors of defendant No.1. No third party is involved as stated by the plaintiffs. The suit was filed for recovery of possession, damages, mense profits etc. on the basis of the settlement agreement dated 13th February, 2009 (Ex.PW-1/5) which was executed between the parties in order to settle all litigations already pending which were withdrawn by the plaintiff in view of the said settlement agreement. As the terms and conditions were not complied by the defendants, the plaintiffs filed the suit claiming various reliefs on the basis of settlement. In the preamble of the settlement agreement, it was mentioned "that in order to bring an end the civil dispute the parties have between themselves resolved all disputes and claims". The said compromise settlement was signed by the defendant No.3 who is the wife of defendant No.2. It appears from the pleadings of the plaintiffs that actually defendant No.1 is an inhouse private company owned by the defendant Nos.2 and 3 who were fully aware about the pendency of the suit filed by the plaintiffs for recovery of amount. On the basis of settlement, yet no written statement was filed by the defendant Nos.2 and 3 who have also not disclosed as to whether any specific resolution of board director was passed giving special power in favour of defendant Nos.2 and 3 to take their liabilities of the defendant No.1 to pay the rent of the suit property to the plaintiffs or not.

24. The entire case of the plaintiffs remained unrebutted. The defendant

Nos.2 and 3 have also not taken any steps to recall the orders with regard to striking off the defence in the absence of written statement despite of various opportunities were granted to them. Thus, the grounds mentioned in the review filed by the applicants/defendants No.2 and 3 cannot be decided now on merit in the present review petition. The facts in the present case are materially different in the decisions referred by Mr. Sharma, these decisions therefore, do not help the case of defendant Nos.2 and 3 in the present case. Counsel for the plaintiffs has alleged that as defendants have failed to file an appeal in the matter, they in order to harass the plaintiffs and stall the execution proceedings, have filed the review petition.

25. If there is an error apparent on the face of record then power of review is available but power of review is not an appellate power. Thus the aggrieved party would be entitled to have the decree set aside by filing of an appeal against the judgment and decree if it is decided wrongly. Re-appreciation of points of arguments or question of law are excluded from the scrutiny of the court in exercise of review jurisdiction.

26. After having considered the facts and circumstances of the case, I find force in the submissions of the learned counsel for the plaintiffs as in the present case, the suit filed by the plaintiffs was not contested. Both the lease deeds were signed by Smt.Veena Suri, who is the Director of defendant No.1 and one of the witnesses was Robin P. Kumar who at point of time was a Director of the company. The settlement agreement is also signed by Smt. Veena Suri defendant No.3. Thus, this Court is not inclined to review/recall the judgment and decree dated 31 st October, 2011 passed by this Court. The

review application is accordingly dismissed.

27. In view of dismissal of review application, the stay application, being I.A.No.5383/2012, has become infructuous. The same is disposed of as such.

28. No costs.

(MANMOHAN SINGH) JUDGE OCTOBER 21, 2013