Shanti Prakash Gupta & Ors vs Ebony Retail Holdings Ltd.
2014 Latest Caselaw 5133 Del

*IN THE HIGH COURT OF DELHI AT NEW DELHI

%                 Judgment reserved on: 01 st September, 2014
                  Judgment pronounced on: 14 th October, 2014

+      Co.Pet 478/2012 and Co.Appl.No.568/2013

SHANTI PRAKASH GUPTA & ORS       .....PETITIONERS
            Through: Mr. Peeyush Kalra, Advocate

                              Versus

EBONY RETAIL HOLDINGS LTD.                        ....RESPONDENT

                  Through:     Ms. Ekta Sikri and Mr. Prannoy
                               Dey, Advocates
CORA M:
HON'BLE MR. JUSTICE SANJEEV SACHDEVA

SANJEEV SACHDEVA, J.

Co.Appl.No.568/2013 (Application on behalf of the Respondent for directing the Petitioner to take possession of the Ground Floor

The Present application was filed by the Respondent on 02.04.2013 for directing the Petitioner not to obstruct the Respondent in removing the goods, fittings and furniture at the premises and further to take over the peaceful and vacant possession of the Ground Floor of the premises bearing No. GB - 19, Crown Plaza Mall, Faridabad.

It is an admitted position that since the filing of the

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application, the possession has been taken over by the Petitioner on 26 th April, 2013. The application has thus become infructuous.

The application is accordingly dismissed as infructuous.

Co.Pet 478/2012

1. The Petitioners landlords have filed the present petition seeking winding up of the Respondent company on the failure of the Respondent to pay arrears of rent and other dues.

2. The tenancy premises comprised of two units one on the ground floor and the other on the first floor bearing No. GB - 19 & FB - 15, Crown Plaza Shopping Mall, Crown International, 29 K.M. Stone, Sector 15-A, Main Mathura Road, Faridabad, Haryana admeasuring 14171 square feet (6935 square feet on Ground Floor and 7236 square feet on the first floor) .

3. As per the Petitioners at the time of filing of the petition the Respondents were in arrears of the following:

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(i) Rent alongwith interest on delayed payment

(ii) Service tax

(iii) Maintenance charges

4. As per the Petitioners, the Respondent was inducted as a tenant in the property by M/s Ansal Properties & Industries Limited by a lease deed dated 07.11.2002. The property was thereafter purchased by the Petitioners on 10.05.2003 and the tenancy was attorned in favour of the Petitioners by letter dated 19.08.2003.

5. The lease deed dated 07.11.2002 was for a period of three years. The tenancy was renewed further by lease deed dated 10.01.2006, which was also for a period of three years. Subsequently, the lease deed dated 05.03.2010 was executed between the parties. The lease deed dated 05.03.2010 was duly registered.

6. In terms of Clause 2 of the lease deed dated 05.03.2010, the tenancy in respect of the said premises commenced w.e.f. 10.01.2009 at a monthly rental of Rs.5,93,605/-. The Respondent, in addition, was liable to pay water and electricity charges as per actual. The Respondent was also liable to pay the maintenance charges in respect of the said premises. As per the

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Petitioners, the Respondent was also liable to pay the statutory service tax in respect of the tenanted premises.

7. As per the Petitioners, the Respondent was a habitual defaulter in respect of payment of rent, water and electricity charges and service tax.

8. Notice dated 17.12.2011 was served on the Respondent under Section 106 of the Transfer of Property Act terminating the tenancy of the Respondent and calling upon the Respondent to hand over the peaceful vacant possession of the property. The Respondent failed to comply with the said notice.

9. Statutory notice dated 01.08.2012 under Section 433 and 434 of the Companies Act, 1956 was issued to the Respondent. On the failure of the Respondent to comply with the said notice, the present petition has been filed.

10. As per the Petitioners, the Respondent is in arrears of rent/use & occupation charges since 07.05.2011 @ Rs.5,93,605/- per month till the date the peaceful vacant possession of the said premises was handed over to the Petitioners. It is submitted that the Respondent

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delivered the peaceful vacant possession of the first floor on 31.03.2013 and of the ground floor on 26.04.2013.

11. It is contended by the Petitioners that in terms of Clause 2 of the Lease Deed, the lease was to commence w.e.f. 10.01.2009 and the rent was to be increased by 17.5% after the expiry of three years, on 09.01.2012. The contention of the Petitioners is that w.e.f. 10.01.2012, the Respondent was to pay the rental @ Rs.6,67,327/-. As per the Petitioners, the Respondent is in arrears of rent/use & occupation charges w.e.f. April, 2011 till April, 2013 amounting to Rs.1,59,32,534/-.

12. As per the Petitioners, in terms of Clause 4 of the Lease Deed, the Respondent is liable to pay arrears of rent/use & occupation charges with interest @ 18% per annum. The Petitioners contend that the interest @ 18% per annum on the arrears of rent/use & occupation charges of Rs.1,59,32,534/- up till 26.04.2013 come to Rs.38,25,565/- on the consolidated amount. The interest @ 18% from 26. 04.2013 to 08.08.2014 comes to Rs.45,69,805/-. Thus, as per the Petitioners a sum of

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Rs.2,43,27,904/- is outstanding towards arrears of rent/use & occupation charges and interest.

13. The Petitioners further contend that the Respondent had paid service tax w.e.f. September 2007 till 02.07.2009 and thereafter the Respondent has not paid any service tax. As per the Petitioners, a sum of Rs.31,37,376/- is due and payable by the Respondent towards outstanding service tax. It is submitted that in case of default in deposit of service tax, the same is liable to be deposited along with interest @ 13% per annum. It is contended that the interest for the period April, 2009 till 26.4.2013 calculated @ 13% per annum comes to Rs.7,33,854/-.

14. The Petitioners have further contended that when the petition was filed the Respondent was in arrears of maintenance charges also. However, the same have been paid during the pendency of the present petition.

15. The Petitioners have admitted that there was a security deposit deposited by the Respondent in the sum of Rs.17,57,200/-.

16. Respondent, in the reply to the petition, has denied that any debt is due from the Respondent to the Petitioners.

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It is contended that nothing is due and payable. It is further contended by the Respondent that there are complicated questions of law and disputed questions of facts involved, which have to be adjudicated in a full - fledged trial, and the claim of the parties can only be adjudicated upon trial. It is contended that the claim of the Petitioners requires elaborate and voluminous evidence and the same can only be decided in a Civil Suit.

17. In the reply on merits, it is denied that the Respondent is in arrears of rent/use & occupation charges , it is contended that there were several meetings and communications between the parties and the Respondent vacated the first floor of the tenanted premises in March, 2012, which were recorded in the Minutes of Meeting dated 21.01.2012 (sic, 21 st January, 2013). The Minutes of Meeting dated 21.01.2012 have been annexed by the Respondent.

18. The Minutes record that the Respondent would clear the unpaid rent upto March, 2012 in installments by April, 2012. It is recorded that service tax shall be paid according to law. It is stipulated that the Respondent would vacate the first floor by March, 2012. Fresh

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lease deed would be signed for the ground floor with Ebony Homes (sister concern of the Respondent) w.e.f. 01.04.2012.

19. Learned counsel for the Respondent has submitted that in terms of the Minutes of the Meeting dated 21.01.2012, the Respondent has vacated the first floor in March, 2012.

20. Learned counsel for the Respondent has further submitted that the maintenance agency till September, 2011 was raising a consolidated bill for the ground floor and the first floor but w.e.f. January, 2012 it started raising separate bills for the ground floor and the first floor and after March, 2012 no bill was raised for the first floor of the said premises. It is, thus, submitted that the raising of the bills in the above manner by the maintenance agency is evidence of the fact that the first floor was vacated in March, 2012.

21. Learned counsel for the Respondent submitted that the Petitioners by issuance of the notice under Section 106 of the Transfer of Property Act had terminated the tenancy of the Respondent and thus the Petitioners cannot thereafter enforce the clauses of the lease and

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claim any arrears of rent, interest, service charge from the Respondent or claim enhanced rent in terms of Clause 2.

22. Learned counsel for the Respondent further contended that Clause 4 of the lease deed relied upon by the Respondent to claim interest @ 18% per annum would have no applicability to the facts of t he present case as the clause stipulated that in case of default the landlord instead of terminating the lease could claim interest @ 18% p.a. for the delayed payment and since the lease was terminated, the Petitioners could not claim interest @ 18% p.a. on the delayed payment.

23. Learned counsel for the Respondent further contended that the service tax was not part of the lease deed and the same could not be claimed by the Petitioners. It is further submitted that no bills were raised by the Petitioners and as such, there was no question of payment of any service tax. Learned counsel further relied on Clause 12 of the lease deed to contend that the Petitioners lessor had the liability to pay the property/house tax or any other tax connected with the said commercial demised premises including

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enhancement thereof. It is, thus, submitted that the Respondent is not liable to pay the service tax.

24. Learned counsel for the Respondent has, thus, contended that since there are disputed questions of facts that require detailed examination, the Petitioners have to prove their claim in a regularly instituted Civil Suit and the summary procedure of winding up cannot be resorted to in the facts of the present case.

25. The law with regard to win ding up is no longer resintegra. It is settled that where the defence raised is substantial and requires the parties to lead evidence to prove their case then the summary procedure of winding up cannot be resorted to and the Petitioner is to be relegated to a Civil Court to prove his case but where the defence raised is dishonest, moonshine or non - substantial then the Court can exercise the powers and direct winding up of the Respondent company.

26. The claim of the Petitioners is under three heads. One for arrears of rent/use & occupation charges , second for payment of interest and the third for payment of service tax.

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27. As regards the claim for arrears of rent/use & occupation charges is concerned, it is not disputed that the relationship between the parties was that of landlord and tenant. It is also not in dispute that the rate of rent agreed upon was Rs. Rs.5,93,605/ - per month for both the ground floor and first floor. It is also not in dispute that the Lease Deed dated 05.03.2010 was executed and registered. It is also not in dispute that no rent has been paid after 07.05.2011 for either of the floors.

28. Admittedly, the vacant possession of the first floor was delivered to the Petitioners by the Respondent on 19.03.2013 and that of the ground floor on 26.04.2013. The possession was delivered under orders of this Court. The contention of the Respondent that the Court recorded that the possession was delivered without prejudice does not help the case of the Respondent.

29. The plea raised by the Respondent, that the parties had agreed in the meeting held on 21.01.2012 that the Respondent would vacate the first floor in March 2012 and thereafter the Respondent vacated in March 2012 and as such is not liable to pay any rental thereafter, is not sustainable.

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30. The contention of the Respondent is that the Respondent vacated the first floor in March 2012 and as such the Respondent is not liable to pay any rent for the first floor after March 2012. Reliance is placed on the bills raised by the maintenance agency, which agency it is contented raised consolidated bills till December 2011 for ground floor and first floor and thereafter separate bills till March 2012 and thereafter only bill for ground floor was raised.

31. This plea is not sustainable. The respondent has relied upon Minutes dated 21.01.2012. The said Minutes do not record that the first floor has been vacated, it only records that in March the same would be vacated. Reliance cannot be placed on a document of January to show that the premise were vacated in the following March. The Respondent has merely averred that it had vacated the first floor in March 2012. It is not stated that after the alleged vacation the possession was ever handed over to the Petitioners or that the possession was even offered to the Petitioners. Even the date of vacation is not stated. The reply only mentions that the Respondent vacated the first floor in March, 2012, the reply is silent as to the factum of offer of vacant

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possession to the Petitioners. No document is either produced or relied upon by the Respondent evidencing the fact that the first floor was actually vacated in March, 2012 and the possession thereof offered to the Petitioner.

32. The counsel for the Respondent fairly conceded that there was no document or material on record to show that the vacant possession was ever offered to the Petitioners. It was not even submitted that the possession was even handed over or offered.

33. The reliance placed by the Respondent on the manner of raising bills by the maintenance agency does not further the case of the Respondent in as much as the Petitioners are in no manner connected with the maintenance agency which is a third party and a stranger to the transaction between the Petitioner and the Respondent. The Petitioners are merely owner of the said area in the shopping mall and have no connection in the management of the maintenance agency. Even if it were to be presumed that the bills were raised in the manner as submitted by the Respondent, it would not bind the Petitioners. Raising of bills by a third party, the maintenance agency, w ould

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not be a relevant factor for determining the date of delivery of possession when admittedly the possession was neither handed over nor offered to the Petitioners.

34. The possession was admittedly delivered under orders of this Court of the first floor on 31.03.2013 in terms of order dated 19.3.2013 and of the ground floor on 26.4.2013 in terms of order dated 16.4.2013.

35. The Respondent has admittedly not paid any rent from 07.05.2011. The liability of the Respondent to pay the rent is clear and unambiguous till the date of handing over of possession. The defence of the Respondent that there is no liability to pay rent till the vacation of the premises is clearly moonshine.

36. The rent initially agreed upon was Rs.5,93,605/ - per month, which in terms of Clause 2 of the Lease Deed was to increase by 17.5% after the expiry of three years i.e. w.e.f. 10.01.2012. The contention is that since the Petitioners had terminated the lease by issuance of notice dated 17.12.2011 under Section 106 of the Transfer of Property Act, the Petitioners cannot claim any enhanced rental in terms of the clause of the lease deed.

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37. Even if this plea were to be considered as plausible, then the defence is only with regard to the enhancement in rental for the period w.e.f. 10.01.2012, but with regard to the payment of rent/use and occupation charges at the agreed rate of rental of Rs. Rs.5,93,605/ - w.e.f. 07.05.2011 till the date of handing over of vacant possession i.e. till 31.03.2013 for the first floor and till 26.4.2013 for the ground floor, there is no plausible defence raised.

38. With regard to the claim for interest on the arrears of rent/use & occupation charges is concerned the contention of the Petitioners is that the Respondent deprived the Petitioners of use of his money that was due and payable under the Lease Deed and thus the Respondent is liable to compensate the Petitioners by way of interest. Reliance is placed on Clause 4 of the Lease Deed.

39. The defence raised by the Respondent to payment of interest is two fold. Firstly, that there is no stipulation in the lease deed for payment of interest after termination and secondly since the tenancy has been terminated the Petitioners are not entitled to claim any interest under the lease. It is submitted that Clause 4

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with regard to payment of interest comes into play only in case the Petitioners chose not to terminate the lease and claim interest.

40. The liability to pay interest is disput ed. The rate of interest is also disputed. In my view, this would require a deeper consideration and would require interpretation of the clauses of the lease between the parties. The parties would be required to lead evidence on the disputed questions. This cannot be done in a summary manner and as such the claim of the Petitioners with regard to payment of interest on delayed payment would be required to be adjudicated in a properly instituted Civil Suit.

41. With regard to the claim of the Petitioners for arrears of service tax and interest on the service tax paid to the authorities is concerned, the defence raised by the Respondent is twofold. It is contended that in terms of Clause 12 of the Lease Deed the Petitioners/lessors were liable to pay the property/house tax or any other tax connected with the said commercial demised premises including enhancement thereof and further that no bills were raised by the Petitioners and as such there was no question of payment of any service tax.

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42. In view of the defence raised by the Respondent, the Petitioners would be required to prove their claim before a Civil Court, apart from the parties being required to prove their respective pleas the Petitioners would also be required to lead evidence to show as to how much service tax has been actually deposited with the authorities and also as to the rate of interest at which the arrears, if any, are to be paid by the Respondent. This clearly cannot be adjudicated in a summary manner.

43. The judgment relied upon by the counsel for the Respondent is of the Supreme Court of India in RAJ U J HURANI VERSUS GERMINDA PRIVATE L IM ITED 2012 (8) SCC 563, to contend that a landlord cannot file a petition for winding up in respect of arrears of rent , is not applicable in the facts of the case.

44. In RAJ U J HURANI'S CASE (SUPRA ), the premises in respect of which the proceedings had been initiated were protected under the West Bengal Premises Tenancy Act, 1956 and further the petition for eviction was decreed on the ground of defaul t without recording any finding as to the period of default. The winding up petition based on the arrears of rent was held by the

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Company Court to be barred on the principles of Order 2 Rule 2 C.P.C. The contention raised on behalf of the Company (Respondent therein) was that there were many different criteria involved in ascertaining the amount due and/or payable by the Respondent/tenant to the appellant landlord. The Supreme Court in the facts of the said case held that there were various stages involved in deciding the amount of rents payable and the periods of default and also the amount to be calculated on account of such default. The Supreme Court held that the relief of the appellant landlord, if any, in that case, would not lie in a winding-up petition, but in a suit filed for the said purpose, particularly when the said relief was not available under the rent laws which only dealt with the protection of tenants from eviction and the right of the landlords to recover the tenanted premises on the grounds specified therein. The said judgment was passed in the facts of the said case and does not lay dow n a general principle of law that a landlord cannot file a petition seeking winding up of a company for arrear of rent . The said judgment is thus not applicable in the facts of the present case.

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45. To sum up, the defence raised by the Respondent with regards to the arrears of rent/use & occupation charges at the agreed rate of Rs.5,93,605/- with effect from 07.05.2011 till the date of handing ove r of vacant possession i.e. till 31.03.2013 for the first floor and till 26.4.2013 for the ground floor is concerned, is clearly moonshine. The claim of the Petitioners in respect of interest on the arrears of rent/use & occupation charges @ 18% per annum and for the payment of service tax with interest involves disputed questions of fact and law and as such the same cannot be adjudicated upon in a summary manner in a winding up petition and the Petitioners would be required to prove their claim in a duly instituted Civil Suit.

46. In view of the clear debt owed by the Respondent, in respect of the arrears of rent/use & occupation charges at the agreed rate of rental of Rs. 5,93,605/- w.e.f. 07.05.2011 till the date of handing over of vacant possession i.e. till 31.03.2013 for the first floor and till 26.4.2013 for the ground floor, and the Respondent having failed to pay the same without any plausible reason, the petition is admitted.

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47. Further orders, with regard to appointment of Provisional Liquidator and publication of citation, are deferred, to enable the Respondent to settle the dues of the Petitioners in respect of the arrears of rent/use & occupation charges. The Respondent would be entitled to the adjustment of the security deposit in accordance with the terms and condition so the Lease Deed dated 05.03.2010.

48. Nothing stated herein shall amount to as an expression of opinion on the merits of the claim of the Petitioners or the defence of the Respondent in respect of the claim of interest on the arrears of rent/use & occupation charges and for the payment of service tax with interest which shall be considered in accordance with law by the Civil Court before which a Suit, if any, is filed by the Petitioners. The Petitioners shall be entitled to the benefit of Section 14 of the Limitation Act for the time spent in prosecuting the present Petition till date.

49. Renotify for directions on 16 th December, 2014.

SANJEEV SACHDEVA, J.

October 14, 2014 sv

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