Delhi High Court

Ram Sharan Das Batra vs Reliance Webstore Limited on 12 May, 2015

Author: Indermeet Kaur

*     IN THE HIGH COURT OF DELHI AT NEW DELHI

%                                    Judgment reserved on :06.05.2015
                                    Judgment delivered on :12.05.2015

+     CS(OS) 1003/2010
      RAM SHARAN DAS BATRA                                  ..... Plaintiff
                               Through   Plaintiff with his counsel Mr. L.S.
                                         Solanki and Ms. Geeta Bhardwaj,
                                         Advs.
                      versus
      RELIANCE WEBSTORE LIMITED                             ..... Defendant
                               Through   Ms Manali Singhal and Ms.
                                         Gursimran Dhillon, Advs.


CORAM:
HON'BLE MS. JUSTICE INDERMEET KAUR

INDERMEET KAUR, J.

1 The present suit has been filed by the plaintiff (Ram Sharan Das

Batra) against defendant (Reliance Webstore Ltd.) seeking recovery of

damages and losses totaling Rs.49,12,125/- besides interest and costs.

2 The case as set up by the plaintiff is that he is the absolute owner

and in possession of the property bearing No.10, Block C-3, Janakpuri,

New Delhi. It had a space of 1900 sq. feet. He had approached Jones

Lang, LaSalle Meghraj, a property broker, to let out this vacant space.

He was assured that he would get a good deal. A letter dated 21.7.2008

had been issued by the broker informing the plaintiff on this count.

3 The defendant was introduced to the plaintiff by the aforenoted

property broker. The officers of defendant no.1 agreed to take the

property on lease but a prior condition was imposed that there must be a

separate entry on the back side for the installation of a D.G. Set. This

condition was agreed to by the plaintiff in terms of his communication

dated 27.8.2008 (annexure P-2).

4 On 16.9.2008 the plaintiff and the defendant executed an

agreement (annexure P-3) in terms of which the defendant had

confirmed and agreed to take the commercial space of plaintiff on lease.

It was also agreed that this lease would be extended by mutual consent

of both the parties even after the initial period of nine years and eleven

months. Submission being that the defendant had described this

document (dated 16.9.2008) as a letter of comfort but the various

clauses show that it was a concluded contract between the parties. In

terms of this contract the plaintiff had carried out repairs and

renovations in his property. The defendant had also agreed to pay one

month security within one month and thereafter the balance two months

security would be deposited by the defendant after the

alternations/modifications have been completed in terms of the said

agreement. The plaintiff had demanded the security but he was put off,

not even a single penny had been paid by the defendant till date. The

plaintiff had spent a sum of Rs.4,01,135/- on the renovation. He is

entitled to the said amount. The defendant had also not taken the

premises on lease in spite of their agreement dated 16.9.2008. Unfair

means were adopted by the defendant to block the property which had

caused a huge financial loss to the plaintiff; the reputation and goodwill

of the property of the plaintiff had also suffered.

5 Plaintiff has accordingly filed the present suit claiming damages

@ 2.5 lacs (agreed rent) w.e.f 17.9.2008 to 17.3.2010 along with the

amount spent by the plaintiff on the alterations/modifications of the suit

property i.e. Rs.4,01,125/-. The cumulative amount has been calculated

at Rs.49,01,125/-. Rs.11,000/- has been claimed as notice charges.

6 Written statement was filed by the defendant refuting all these

claims as contained in the plaint. Submission being that the document

dated 16.9.2008 was only a letter of intent and parties were only

negotiating the terms of agreement which was yet to be completed into a

binding contract. The defence being that the authorization clause of the

aforenoted documents clearly show that it was only a comfort letter

given during the course of negotiations between the parties. No

document has been filed by the plaintiff to substantiate his submission

that he had carried out any work/modification in the suit property. It

was reiterated that the document dated 16.9.2008 was only a comfort

letter and was not a complete contract. Submission being that it was

only a letter expressing an interest in taking the property on lease but it

did not amount to a contract within the meaning of the Indian Contract

Act, which was enforceable in any manner.

7 Replication has been filed denying the averments made in the

written statement and reaffirming the stand in the plaint.

8 On the pleadings of the parties, on 13.5.2011 the following issues

were framed:-

1. Whether the defendant had agreed to take space measuring about 1900 sq.feet on the ground floor of property No.10, Block C-3, Janakpuri, New Delhi from the plaintiff for the period of 9 years and 11 months at the monthly rent of Rs.2,01,400/-, as alleged in the plaint? OPP

2. Whether the plaintiff incurred expenditure of Rs.4,01,125/- on carrying out modifications/alterations and installations as per the requirement of the defendant, as alleged in the plaint? OPP

3. If issue No.2, is proved, whether the plaintiff is entitled to recover the amount of Rs.4,01,125/- from the defendant? OPP

4. Whether the plaintiff is entitled to recover damages at the rate of 2.5 lakhs per month from the defendant for the period from 17.09.2008 to 17.03.2010, as alleged in the plaint? OPP

5. Relief.

9 Two witnesses had come into the witness box. There was one

witness on behalf of the plaintiff and one witness on behalf of the

defendant.

10 Arguments have been heard and documents perused . 11 Issues nos.1 to 4 are interrelated and shall be disposed of by a

common discussion.

12 PW-1 had tendered his evidence by way of affidavit Ex.PW-1/A

wherein he had reiterated the averments made in the plaint. The

document dated 16.9.2008 was proved as Ex.PW-1/3. This document is

not denied. It has been admitted by the defendant. All other documents,

relied upon by the plaintiff which are Ex.PW-1/1 to Ex. PW-1/10 have

been denied. In his cross-examination PW-1 admitted that he had

contacted the property broker Jones Lang, LaSalle Meghraj and he had

an agreement with them which has been proved as Ex.PW-1/1. This

was a letter addressed to the plaintiff wherein they had informed the

plaintiff that they would look for a potential client for him; professional

fee which they would charge is detailed in that letter. In another part of

his cross-examination PW-1 admitted that he had not paid any

professional fee to his agent/broker nor did he received any notice of

demand from them.

13 Submission of the plaintiff that he had carried out

repairs/modifications in the suit property in terms of the agreement

dated 16.9.2008 was sought to be substantiated through letter dated

27.8.2008 which the plaintiff had written to the defendant. This

document is marked as Ex.PW-1/2. In this document, the plaintiff had

stated that he had no objection to the defendant opening the back door

and having a separate entry for the installation of D.G.Set. In his cross-

examination PW-1 admitted that he did not send this letter by post

which was collected by the defendant. He does not remember the

person who had collected it on behalf of the defendant; it would have

been one person by the name of C.P.Singh who was probably the

architect. He admitted that Ex.PW-1/2 does not bear endorsement of

receipt by the defendant. He denied the suggestion that it was a

fabricated document. The plaintiff had also placed on record certain

photographs to substantiate his averment that he had carried out

repairs/medications in the suit property. These photographs have been

proved as Ex.PW-1/6. They are two photographs and even as per the

plaintiff they depict a part of the bath room and the view from the

service lane. These photographs also depict large holes created in the

roof and the structural wall. In his cross-examination PW1 stated that

he does not remember the name of the architect who had advised him to

carry out modifications. PW-1 further deposed that he probably was a

Sikh gentleman who was an employee of the defendant and a part of his

name was "Raja". Relevant would it be to note that in another part of

his cross-examination PW-1 had referred to the architect C.P.Singh as

PW1 admitted that he did not get any drawing prepared for the said

alteration work which was required. He denied the suggestion

that this stand adopted by him that he had spent money for

alterations/modifications is incorrect. He denied the suggestion that no

such modification was in fact carried out. PW-1, however, admitted that

he filed no bills to substantiate his submission that he has spent more

than Rs.4 lacs in these alterations and modifications.

14 Reliance by the learned counsel for the plaintiff on the document

dated 27.8.2008 (Ex.PW-1/2) to support his argument that this letter also

shows that he was agreeable to the modification and repair being carried

out in the building does not support his case. Besides the fact that this

letter states that the plaintiff has no objection if the defendant wishes to

open a door at the back for the installation of the D.G.Set, the import of

the letter places the obligation upon the defendant to do the needful.

Thus the submission of the plaintiff that in terms of Ex.PW-1/2 he had

carried out modifications/repairs is wholly contradictory. In terms of

Ex. PW-1/2 he had given authority to the defendant to do the needful

and had not created any obligation upon himself. That apart, PW-1 has

admitted that he has no bills for the works having been carried out by

him. He had employed no architect to get the drawings prepared. In

fact there is not a single document to support this averment of the

plaintiff that he had carried out any repairs pursuant to the agreement

dated 16.9.2008.

15 DW-1 was the witness who had appeared on behalf of the

defendant. He reiterated the averments in his written statement. His

deposition was to the effect that the document dated 16.9.2008 was only

a letter wherein the defendant had agreed to take that property on lease.

It was only at the stage of negotiations.

16 It had been vehemently argued by learned counsel for the

defendant that thus it was only a letter of intent and was not a concluded

contract. In this context DW-1 in his cross-examination has not shifted

his stand. He denied the suggestion that the plaintiff had suffered any

losses pursuant to the execution of the document dated 16.9.2008. The

possession of the suit property had never been taken over by the

defendant. No alteration or modification was required to be carried out

by the plaintiff.

17 A preliminary objection taken by the learned counsel for the

plaintiff was that DW-1 had no authority to depose on behalf of

defendant company. This was answered by the defendant in terms of

the power of attorney which has been executed by the Secretarial

department of the defendant company (mark X-1) giving him authority

to depose on behalf of the company in court cases. This document has

been perused. It is a general authority given by the company to its

various employees including DW-1 which authorized them to depose in

Court and pursue litigation in courts on behalf of the defendant

company. This document (mark X-1) suffers from no infirmity. DW-1

did have the authority to depose on behalf of the defendant.

18 The whole crux of the case of the defendant is that the document

dated 16.9.2008 was only a letter of intent. The submission of the

plaintiff on this count being that this was a concluded contract.

19 The case of the parties thus borders upon this document. It would

be relevant to extract this document. It reads as under:-

"Dear Mr R S Batra
New Delhi                                     Dated -16/06/08

Sub: Property at Plot No.10 Block C 3, Janakpuri, New Delhi to be taken on lease.

We refer to our recent discussions with you on the afore-mentioned subject and hereby confirm our interest in taking the afore-mentioned property on lease for a period of 9 years 11 months.

Our final decision will, however, depend upon the advice of our Solicitors after they have examined ownership and other relevant papers

and on our obtaining a clear "Search Report" of the property in question.

Further, we confirm and agree to the Commercial Terms as attached. Also, we agree that the lease can be extended by mutual consent of both parties.

You will carry out necessary improvements to the property as agreed upon, once we are in a position to execute the Agreement. As agreed upon, you have to provide an Electricity load of 71 KW to carry out our operation smoothly within 45 days from the LOI date and 20 KW required to initiate the project with in 15 days from LOI date.

This letter is a "Letter of Comfort" from our side and is being issued on "Best Interest" basis but cannot be construed as binding on us to take the property on lease if there is a contravention of the terms and conditions mentioned above or in case of events which are beyond our control.

In case you decide to lease this property to any other party, it is explicitly understood and agreed that we shall have the first right of refusal. You are requested to sign a copy of this letter along with the Commercial Terms as a token of acceptance.

Regards.

For RWSL

Authorised Signatory"

20 As is evident from the document, there are six paragraphs in the

document. The first paragraph evidences the "interest" of the company

in taking the said property on lease for a period of 9 years and 11

months. The second paragraph clearly enunciates that the final decision

will depend upon the advice of the solicitor of the defendant company

and after the ownership papers of the plaintiff have been examined and a

search report in this context has been submitted. This paragraph itself

shows that the final decision was not taken in this document, dated

16.9.2008. The commercial terms attached along with this document

which were certain activities to be executed and the targeted date of

completion as also understanding of the commercial terms, were also

appended. The fourth paragraph of this document further clarifies that

necessary improvements agreed upon in the property would be carried

out only after the parties are in position to execute the agreement. It is

thus clear that the agreement was yet to be executed. The next

paragraph states that this document is a "Letter of Comfort" being

issued on "best Interest" basis and cannot be binding upon the defendant

to take the property on lease if there is a contravention of the terms and

conditions aforenoted. The last paragraph of the document states that in

case the plaintiff decides to lease out this property to any other person

the defendant would have the first right of refusal. This paragraph also

clarifies that it is not as if the rights of plaintiff stand forclosed and he is

not in a position to invite any other person to take the property on lease.

In fact he could lease out the property to a third party but subject to the

condition that the defendant would have the first right of refusal.

21 This document thus construed as a whole, clearly shows that it

was only a letter of intent / letter of comfort which has been sent by the

defendant to the plaintiff wherein they had spelt out the terms of the

lease which were yet to be entered into between the parties. It clearly

stipulated that this document by itself would not bind the defendant; the

agreement was yet to be entered into. The ownership status of the

plaintiff was also yet to be verified; this would in terms of a search

report to be submitted by the solicitors of the defendant. The defendant

also had a right to lease out the property to a third party but the

defendant would retain the right of first refusal. The necessary

improvements to be carried out in the suit property would also be done

after the parties had executed the agreement thereby finally setting to

rest all submissions and counter submissions and making it clear that

this document was not a final agreement between the parties.

22 This document can thus only be termed only as a letter of intent or

a letter of comfort. Reliance by learned counsel for the plaintiff on the

provision of Section 8 of the Contract Act to support his submission that

performance of the terms of the contract by itself amounts to its

acceptance and was a binding contract is inapplicable in the factual

matrix of this case. The submission of the plaintiff that he had carried

out the repairs after 16.9.2008 is not substantiated. The document dated

27.8.2008 relied upon by the learned counsel for the plaintiff is ante

dated i.e. prior to the letter dated 16.9.2008 and would not in any

manner advance the submission of the plaintiff that this document shows

that he had carried out repairs in the suit property pursuant to any

consensus with the defendant. Moreover, at the cost of repetition, the

document dated 27.8.2008 had cast an obligation upon the defendant to

carry out repairs after the parties had executed the final agreement, and

not upon the plaintiff. The plaintiff in these circumstances was not

obliged to carry out any repairs.

23 There was also no documentary evidence to show that any repair/

renovation had been carried out in the suit property pursuant to the letter

dated 16.9.2008. At the cost of repetition, PW-1 has candidly stated that

he had not asked any architect to prepare drawing of repairs. He had

filed no bills to show that he has incurred any expenses for repairs/

modifications to the suit property. Annexures appended to document

dated 16.9.2008 was the understanding of the commercial terms on the

basis of which the lease was yet to be executed between the parties.

24 Reliance by the learned counsel for the plaintiff on the judgment

of (2008) 13 SCC 597 Bharat Sanchar Nigam Ltd. and Anr. Vs. BPL

Mobile Cellular Limited is misplaced. Section 8 of the Contract Act

has no application to the facts of the instant case.

25 In (2009) 1 SCC 475 Speech and Software Technologies (India)

Private Limited Vs. Neos Interactive Limited the Supreme Court while

considering a letter of intent and the language used in that document had

noted herein as under:

"23. It is not the case of the respondent that any agreement was executed between the parties on or before 15-9-2006. The respondent has not stated in its counter-reply that the agreement, which was to be executed by 15.9.2006, was in fact executed. During the course of hearing of the instant application it was fairly conceded by the learned counsel for the respondent that no such agreement was executed between the parties at all. Hence, as the agreement contemplated by the letter of intent was never executed, it cannot be said that the agreement contemplated by the said letter of intent had novated, rescinded or superseded the Tripartite Share Purchase Agreement."

26 Similarly in (2013) 12 SCC 776 Hansa V Gandhi Vs. Deep

Shankar Roy and Ors. the Supreme Court had reiterated that a letter of

intent cannot be said to be an agreement for simple reason that

according to Section 8 of the Contract Act, only after certain obligations

were performed by one party, could they be said to have accepted the

proposal.

27 The Apex Court in (2006) 1 SCC 751 Dresser Rand S.A. Vs.

Bindal Agro Chem Ltd. had reiterated that whether a letter of intent is

merely an expression of an intention to place an order in future or

whether it is a final acceptance of the order is a matter which has to be

decided with reference to the terms of the letter. In this context the

observations of the Supreme Court are useful and would in fact clinch