S. Tech Info. Pvt. Ltd. vs Lord Krishna Bank Ltd. (Now Hdfc ...
2017 Latest Caselaw 2040 Del

*      IN THE HIGH COURT OF DELHI AT NEW DELHI

%                                          Date of Decision: 26th April, 2017.

+                    CS(COMM) 313/2016 & CC No.191/2008

       S. TECH INFO. PVT. LTD.    ..... Plaintiff/Counter-Defendant
                      Through: Mr. Rajesh Gupta, Mr. Harpreet
                               Singh and Mr. Pranjal Saran, Advs.

                                        Versus

    LORD KRISHNA BANK LTD.
    (NOW HDFC BANK LTD.)     ..... Defendant/Counter-Claimant
                  Through: Mr. Ajay Monga and Mr. Amol
                           Sharma, Advs.
CORAM:
HON'BLE MR. JUSTICE RAJIV SAHAI ENDLAW

1.

The plaintiff, on 2nd April, 2008 instituted this suit for recovery of Rs.1,00,00,000/- with interest, pendente lite and future, pleading (i) the plaintiff is the owner of Industrial Plot No.A-25, Mohan Co-operative Industrial Estate, Mathura Road, New Delhi - 110 044 ad measuring 10254 sq. yds. and a building comprising of basement, ground, first and second floor constructed thereon; (ii) that the defendant Bank intended to take a portion of the said building on lease for opening Information Technology (IT) Department of their Bank and pursuant to the proposal by letter dated 8th February, 2005 of the plaintiff, a formal Memorandum of Understanding (MoU) dated 18th February, 2005 as under was executed between the parties:-

"MEMORANDUM OF UNDERSTANDING This Memorandum of Understanding is arrived at New Delhi on this day of 18th February 2005.

BY AND BETWEEN This Memorandum of Understanding is signed between M/s S. Tech Info Private Limited having their registered office at A-25 Mohan Co- operative Industrial Estate, Mathura Road, New Delhi 110044 through its Director Shri Harpreet Sigh Batra, duly authorized vide Board Resolution No...... Dtd. 17-2-2005 passed by the Company. AND Lord Krishna Bank Ltd., a Banking Company registered under Companies Act 1956 and having its registered and Administration Office at New India Express Building, Kaloor, Kochi 682017 through its authorized signatory Shri R.K. Anand, Asst. General Manager - LAW, Regional Office, New Delhi of the other Part.

WHEREAS M/s S. Tech Info Private Limited is the absolute owner and in possession of First Floor, A-25 Mohan Co-operative Industrial Estate, Main Mathura Road, New Delhi - 110044 measuring to 29,750 sq. feet (carpet area) (subject to actual measurement). M/s S. Tech Info Private Limited is the absolute owner and seized and possessed of or otherwise well and sufficient entitled to the Property as Owner of the said property more particularly described by way of their offer as Annexure I.

1. M/s S. Tech Info Private Ltd represents that they have duly and fully fulfilled, performed and discharged all their obligations towards the concerned local authorities and to every body else concerned pertaining to the said premises and every part thereof including the payment thereof and discharge of the dues of the authorities and that there are no impediments, prohibitions of restriction from the Authorities or from anybody else in the matter of creation of the lease and M/s S. Tech Info Private Ltd. have good right, full power and absolute authority to create the lease later on.

2. Lord Krishna Bank Ltd is desirous of opening Bank's Regional Office at First Floor, A-25 Mohan Co-operative Industrial Estate, Main Mathura Road, new Delhi - 110044 measuring to 35,000 sq. ft. (covered area) and 29,750 sq. feet Carpet area (subject to actual measurement) and has agreed to take on lease admeasuring to 35,000 Sq. feet (covered area) and 29,750 Sq. Feet Carpet area (subject to actual measurement and as earmarked earlier) and in the circumstances after negotiations between the parties hereto, M/s S. Tech Info Private Ltd. have offered, unto the Lord Krishna Bank Ltd. the demise of the aforesaid premises and Lord Krishna Bank Ltd. have agreed to take the said demised premises broadly on the terms and conditions hereinafter appearing.

NOW THIS INDENTURE WITNESSETH AND IT IS HEREBY AGREED BY AND BETWEEN THE PARTIES HERETO AS FOLLOW:

In consideration of fair market rent as specified and in the further consideration of the Covenants herewith contained on the part hereby accepts the demised premises together with all the rights easements and appurtenances agreed by M/s S. Tech Info Private Ltd., hereunder commencing from the date to be agreed upon initially for a period five years which is to be extended in the like manner - maximum two times i.e. for a period of 5+5+5 years (with lock-in-period of First Five Years) i.e., 180 calendar months provided that the rent shall be enhanced 15% after the expiry of five years and further 15% after the expiry of ten years provided it is the fair market rent prevailing at the time. No such revision shall be made for the first five years of the lease period.

COVENANTS - LORD KRISHNA LTD

a) Fair Market rent has been agreed between both the parties at Rs.47.50 per sq. ft. on 35,000 sq. ft. covered area and 29,750 sq. ft. carpet area amounting to Rs.16,62,500/- per month of the First Floor fully furnished as per layout/design provided by the Bank and as mentioned herein above.

b) Premises will be use to open the proposed Regional Office at First Floor, A-25 Mohan Co-operative Industrial Estate, Main Mathura Road, New Delhi - 110044 by Lord Krishna Bank Ltd.

c) Shall give three (3) months interest free rent (Two (2) months as advance rent at the time of execution of MoU and one month advance rent at the time of possession) To be refunded at the time of vacating the premises.

COVENANTS - OWNER

a) Shall obtain necessary permission from appropriate authorities for opening the Bank Regional Office in the demised premises and is ready and willing to make payment of any fees/charges/levies that may be levied / governed by the concerned authorities also assures the Lord Krishna Bank Ltd. to obtain any other consent, permission and approvals as may be necessary in law or otherwise for purpose of opening Regional Office of bank thereof.

b) Landlord to provide full furnished premises as per layout / design provided by the bank and to remove on their own cost the non - load bearing walls of the said premises and possible structural changes as per requirement of bank and shall also carry out the required, additions or alterations in order to make the premises fit for purpose herein mentioned.

c) Shall arrange for necessary repairs in respect of any structural damages, water supply lines, sanitary pipes, electrical installations and communications and other facilities that may be required for purpose mentioned herein.

d) Municipal Taxes, rates, charges and outgoing in respect of the said premises that would be determinate / fixed varied from time to time by the Municipal Corporation / Municipality or any other local authority shall be paid by M/s S. Tech Info Private Ltd.

e) Shall allow and provide adequate space on roof / terrace or any suitable place for installation of V-SAT Dish Antenna and other allied equipments committed herewith.

f) Shall provide the Bank with 100% power back up facility which is included in the rent above.

g) Shall provide with adequate electricity load. However, any legal charges / any other charges to be paid to the concerned authorities by the Bank.

h) shall allow and provide to affix / display its name board, signage, advertisement material banners etc. across the breadth and length of the said premises.

i) Shall provide the bank with 100% air-conditioned facility which is included in the rent, however running charges (Diesel) of Rs.5.50 per Sq. per month for 66 hours in a week will be borne by the Bank. Anything over and above 66 hours will be charged @ Rs.1100/- per hour which will be application for Sunday also.

j) Shall provide the Bank with 40 reserved car parking space inside the building complex at no extra cost.

k) To provide necessary NOC / permission from DDA / MCD any other local authorities for sub-letting space to our Bank at the said premises.

l) Periodical maintenance will be done by the landlord however common maintenance charges payable by the tenants to be paid by the Bank directly to maintenance society as applicable to other occupants of the building.

m) Landlord shall hand over the fully furnished premises complete in all respect by 31st March, 2005 as per approved layout plan prepared and forwarded by the Bank.

STAMP DUTY AND REGISTRATION CHARGES Stamp Duty and registration charges and expenses incidental to the execution of lease agreement shall be borne shared by both the parties equally (i.e. 50% - 50%).

JURISDICTION In the event of any dispute between both the parties for the said demised premises, the same shall be subject to jurisdiction of Delhi Courts. IN WITNESS WHEREOF THE PARTIES HERETO HAVE SIGNED THIS MEMORANDUM OF UNDERSTANDING ON THIS DAY OF

18th FEBRUARY 2005 IN THE PRESENCE OF THE FOLLOWING WITNESSES

LORD KRISHNA BANK LTD. OWNERS M/s S. Tech Info Private Ltd.

Through their Director Shri Harpreet Singh Batra"

(emphasis supplied)

(iii) "initially tentative covered area of 35000 square feet was mentioned in the MoU, but finally on actual measurement taken on 21.02.2005 jointly between the parties, it was found that the area actually measured 29,635 square feet of covered area and 25,698 square feet of carpet area. The defendant accepted the said actual area to take on lease and gave its consent. The parties agree to the measurements, and as their respective acceptance thereto endorsed their signatures on the site plan prepared at the site" (iv) even though the plaintiff‟s offer was for taking the premises on lease for "opening IT Department of the Bank" and talks had progressed on that premise but inadvertently in clause "a" under Covenants in the MoU, the words "opening the Banks regional office" were used; (v) on noting this inadvertent slip, the plaintiff addressed a letter dated 18th February, 2005 to the defendant Bank and the defendant Bank accepted the same and addressed a letter dated 23rd February, 2005 to the Delhi Development Authority (DDA) clarifying the same; (vi) "the said MoU was acted upon by the parties in as much as, after execution of the said MoU the property was measured and a gross covered area of 29653 sq. ft. (sic for 29,635 sq. ft.) was found available for lease. The defendant Bank accordingly paid Rs.28,15,325/- on 23.02.2005 as interest free security equivalent to the two

months rent"; (vii) the plaintiff had commenced renovation work of the premises prior to execution of MoU and simultaneously with the plaintiff‟s offer and the renovation work was commenced as per the liking and instructions of the defendant Bank and the defendant Bank monitored the renovation to suit its purpose; (viii) the plaintiff also applied for necessary permission and deposited Rs.2,40,000/- with the DDA; the permission was granted vide letter dated 17th March, 2005; (ix) the premises were ready in the second week of March, 2005 and the defendant Bank after inspection approved the premises and sought time for execution of lease, to complete their in-house formalities, taking final permission from the head office and the like; (x) the defendant Bank however kept on delaying execution of the lease deed for some reason or the other; (xi) the defendant Bank approved the final plans on 16th March, 2005 and submitted 14 such plans in respect of entire layout, interior fittings, furnishing, sitting arrangement and the like;

(xii) the plaintiff expedited the said work and completed it within the agreed time and offered the defendant Bank to take possession in the second week of April, 2005; (xiii) the plaintiff spent around Rs.80,00,000/- in renovating the premises and interior designing, office furniture / furnishing, electrical fittings and the allied works as per desirability of the defendant Bank; (xiv) however the defendant Bank became dishonest and unscrupulously refused to take possession of the premises on the evasive and dishonest plea that requisite permission had not been obtained; (xv) the plaintiff was constrained to forfeit a sum of Rs.28,15,325/- that was paid pursuant to MoU as interest fee security deposit equivalent to two months rent; (xvi) the defendant Bank vide letter dated 6th May, 2005 sought refund of the security amount on the ground that the plaintiff had failed to adhere to perform its

obligations under the MoU; (xvii) the defendant Bank filed a Company Petition for winding up of the plaintiff which was registered as C.P. No.258/2006 of this Court and which was pending consideration; (xviii) the defendant Bank‟s abrupt refusal to take delivery of possession of the premises on 31st March, 2005 in terms of MoU is unjustified and deliberate and has put the plaintiff in financial loss and damage solely attributable to the defendant Bank; and, (xix) not only has the plaintiff spent Rs.80,00,000/- in making the premises ready as per the taste and liking of the defendant Bank but has also deposited Rs.2,40,000/- with the DDA and has suffered loss of rent from April, 2005 to October, 2005 and after deducting the amount of Rs.28,15,325/-, the defendant Bank is liable to compensate damages in the sum of Rs.1,00,00,000/- to the plaintiff.

2. The suit was entertained. On 20th August, 2008 it was informed that the defendant Bank Lord Krishna Bank Ltd. had been amalgamated with the Centurion Bank Limited and subsequently with the Housing Development Finance Corporation (HDFC) Bank Ltd.

3. The defendant Bank contested the suit by filing a written statement along with Counter Claim, pleading (i) that the plaintiff requested the defendant Bank to send a letter to DDA and elaborate the functions of the proposed office which the defendant Bank intended to set-up and also requested to give a written assurance that there would be no public dealing in the suit property; the plaintiff represented that such letter was required to assist the plaintiff in obtaining the requisite permissions for sub-letting the property; the defendant Bank being unaware of the mala fide intentions of the plaintiff, issued a letter dated 23rd February, 2005 to the Commissioner

(Lands), DDA on request of the plaintiff informing that it intended to open its Operation Sub Unit at the premises which consists of "handling complete data base of all branches, setting up of computer planning and policy department and will be a totally IT enabled office" and assuring that "there will not be any public dealing"; (ii) the said letter was not in accordance with the MoU and the factum of the plaintiff taking such letter from the defendant Bank itself shows that the plaintiff was unable to perform any of its obligations under the MoU; (iii) that since there was a breach of the MoU on the part of the plaintiff, the defendant Bank issued letter dated 6th May, 2005 for refund of Rs.28,15,325; (iv) that on non-payment by the plaintiff of the aforesaid amount the defendant Bank applied for winding up of the plaintiff; during the hearing of Company Petition no.258/2006 the plaintiff agreed to deposit the amount of Rs.28,15,000/- in this Court and the winding up petition was dismissed; (v) denying that the defendant Bank intended to take the said building on lease for its IT operations and pleading that the defendant intended to open its Bank‟s regional office in the property and further denying that there was any mistake in clause „a‟ of the Covenants in the MoU; (vi) denying the receipt of the letter dated 18 th February, 2005 from the plaintiff and pleading that the same has been fabricated by the plaintiff; (vii) the letter dated 23rd February, 2005 was written on the representation of the plaintiff and not in modification of the MoU; (viii) denying that any renovation work was commenced by the plaintiff or that the defendant Bank was monitoring the same; (ix) the defendant Bank was to take the property on lease subject to certain conditions to be fulfilled by the plaintiff and one of which was to take the necessary permission from the appropriate authority (DDA) for opening the Bank‟s regional office and

unless such permission was taken / obtained, the defendant Bank could not have taken the property on lease and there was no occasion for the plaintiff to start the renovation of the suit property; (x) denying that the requisite permission was granted by the DDA and pleading that the permission granted vide letter dated 17th March, 2005 is in terms of the MoU; (xi) denying that the defendant Bank inspected the property or approved the renovation or approved any plans: (xii) since the requisite permissions in terms of MoU were not obtained, the question of the defendant Bank taking the premises on rent did not arise; (xiii) denying that a sum of Rs.80,00,000/- was spent by the plaintiff in renovating the premises; (xiv) denying that the plaintiff was entitled to forfeit the amount of Rs.28,15,325/- ; (xv) denying that the plaintiff has suffered any loss attributable to the defendant Bank; (xvi) the plaintiff having not fulfilled the terms of the MoU, the defendant Bank is entitled to refund of Rs.28,15,325/- with interest at 18% per annum; (xvii) the plaintiff has filed the suit with mala fide design to avoid refund of Rs.28,15,325/-; (xviii) that the winding up petition earlier filed by the defendant Bank was dismissed after directing the plaintiff to deposit Rs.28,15,000/- in this Court and in view of the fact that there is a disputed question for which the present suit had been filed; and, (xix) seeking recovery of Rs.46,31,207/- with future interest at 18% per annum.

4. The plaintiff has filed replication to the written statement and written statement to the counterclaim and the defendant Bank has filed replication to the written statement to the counterclaim but since neither counsel has referred thereto during the hearing, need to refer thereto is not felt.

5. Inspite of completion of pleadings, the suit has languished.

6. The Counter Claim of the defendant Bank was accompanied with IA No.12944/2008 under Section 14 of the Limitation Act, 1963 and vide order dated 14th August, 2013 the said application was allowed, reasoning that both parties having proceeded on the basis that the Company Petition as well as the suit pertained to the same matter and issue, the plaintiff is not justified in resisting the prayer of the defendant Bank for condonation of delay in filing the Counter Claim and that the Counter Claim could have been filed only at the time of filing of the written statement and admittedly the written statement was within time and the defendant Bank had been diligently pursuing its remedy for recovery of the monies claimed by it to be due from the plaintiff.

7. The plaintiff has preferred FAO(OS) No.475/2013 against the aforesaid order dated 14th August, 2013 allowing the application of the defendant Bank under Section 14 of the Limitation Act.

8. The suit, though ripe for framing of issues, was adjourned from time to time on the request of the counsel for the plaintiff on the ground of the pendency of the appeal aforesaid.

9. The suit, originally numbered CS(OS) No.608/2008, on coming into force of the Commercial Courts, Commercial Division and Commercial Appellate Division of the High Courts Act, 2015, was found to be arising out of a commercial dispute and accordingly renumbered as a commercial suit.

10. On 18th October, 2016, again request was made for adjournment. However it was enquired, whether there was any stay of proceedings in this suit. The reply was in the negative. Observing that the suit being a

commercial suit and being of the year 2008 could not be so kept pending, the matter was posted to 10th April, 2017 for framing of issues.

11. On 10th April, 2017 the counsels handed over proposed issues but on reading of pleadings in the suit and in the Counter Claim it appeared that no trial is necessary in the present suit and the suit can be decided on the basis of documents.

12. I have already hereinabove re-produced the MoU between the parties. I re-produce hereinbelow the letter dated 17th March, 2005 of the DDA to the plaintiff and which, according to the plaintiff grants the permission in terms of MoU and according to the defendant Bank does not grant the permission in accordance with the MoU:-

"M/s. S. Tech. Info. Pvt. Ltd., A-25, MCIE, Mathura Road, New Delhi-44.

Sub:- Regarding plot No.A-25, Mohan Co-operative Indl.

Estate, Mathura Road, New Delhi (Sub-letting permission).

D/Sir, With reference to you letter dt.21.02.05 and 28.02.05 respectively on the above noted subject, I am directed to inform you that your request for permission to sublet an area of 18500 sq. ft. to M/s E. Serve International Ltd., and M/s Lord Krishna Bank for an area 20000 sq. ft. for a period of 12 months for carrying the use for Information Technology exclusively has been acceded to subject to the following conditions.

1. The trade to be run by the tenant will be the same as per sub-leas deed executed on 18.12.71.

2. No sub division for the plot is allowed in any manner.

3. Sub-letting charges @ Rs.1/- (Rs. one only) per sq. ft. per month is payable in advance on annual basis for a period

of 12 months only from the date of issue of this letter.

4. No Banking Services shall be allowed in the premises in the name & style of M/s Lord Krishna Bank.

Yours faithfully,

Dy. Director (Indl.)"

13. It was on 10th April, 2017 enquired from the counsel for the plaintiff, whether not the claim of the plaintiff for damages is dependent upon the interpretation of the MoU and the letter dated 17 th March, 2005 and if on interpretation thereof it is held that the requisite permission envisaged was not obtained, the question of the plaintiff being entitled to any amount by way of damages would not arise and ipso facto the plaintiff would be liable to refund the security deposit. Accordingly need for evidence was enquired from the counsel for the plaintiff.

14. It was further observed on 10th April, 2017 that only if the defendant Bank was held to be in breach would the question of putting the suit to evidence for plaintiff to lead evidence of the damages suffered would arise.

15. The counsel for the plaintiff stated, that after the receipt of the letter dated 17th March, 2005, the defendant Bank agreed to the terms thereof and made the plaintiff continue with the work of preparation of the premises for the defendant Bank. However the counsel for plaintiff, on being asked to show the plea to this effect, invited attention to paras 11 and 12 of the plaint which are as under:-

"11. Regarding obligation to take permission, the plaintiff had applied to the DDA for necessary permission for which purpose the plaintiff had deposited

Rs.2,40,000/- with DDA. The permission was granted by its letter dated 17th March, 2005.

12. The premises were ready as per tentative layout plan by second week of March, 2005. The defendant inspected the premises and approved the renovation done in terms of layout plan submitted on 21.02.2005. For purpose of execution of lease defendant sought time to complete their in-house formalities, taking final permission from head office and the like. However, the defendant kept on delaying and avoided it on one pretext or the other citing varied reasons viz., staff is to be deployed, permission is awaited, sanction from head office, and the like. Thought the premises were ready in all respects but was only awaiting approval of detailed final layout plans. The plaintiff delayed such plans and finally held detailed discussion with plaintiff that resulted in its preparation with concurrence of defendant's representatives. The defendant finally approved the said final plans on 16.03.2005 and submitted 14 of such plans in respect of entire layout, interior fitting, furnishing, sitting arrangement and the like".

16. It was in the order dated 10th April, 2017 observed that the aforesaid paragraphs of the plaint do not support what was orally contended by the counsel for the plaintiff and that even otherwise, the defendant, a banking organisation having acted in writing through an MoU, could not be accepted to have, without writing, agreed to terms at variance with what was recorded in the MoU. It was further observed that the plaintiff had not even pleaded as to with which officer of the defendant Bank and on which date was the said understanding reached or even that the letter dated 17 th March, 2005 of the DDA which is addressed to the plaintiff was handed over to the defendant Bank.

17. It was further observed in the order dated 10th April, 2017 that without a registered document, no lease for any definite period and for breach whereof damages can be claimed, can be said to have been arrived at between the parties.

18. The counsel for the plaintiff then drew attention to the letter dated 18th February, 2005 of the plaintiff to the defendant Bank requesting for some changes to be made in the MoU and to the letter dated 23 rd February, 2005 written by the defendant Bank to the DDA and stated that owing thereto, issues be framed and the matter be listed for evidence.

19. The counsel for the defendant Bank on enquiry stated that the defendant Bank disputed the receipt of letter dated 18th February, 2005 but admits the letter dated 23rd February, 2005 to have been written by the defendant Bank.

20. It was however observed in the order dated 10th April, 2017 that even if it were to be believed that the permission granted by DDA for sub-letting to the defendant Bank for information technology use and without any banking services is in terms of the agreement between the parties, according to the plaintiff also there is no change in the MoU insofar as for the area of the premises to be let out and the period for which the premises were to be let out and on that account alone it cannot be said that the permission granted by DDA was in terms of MoU.

21. On request on 10th April, 2017 of the counsel for the plaintiff, the matter was adjourned to today. Today the counsel for the plaintiff has first argued that the MoU aforesaid is infact a lease. However upon being put to the counsel for the plaintiff that if it is a lease, it being unstamped and

unregistered, cannot be looked into at all, he states that it is not his argument that it is a lease. To avoid any confusion, it is deemed appropriate to record verbatim the argument:

"This document is a complete meeting of minds as to the intention of the parties to enter into and execute a lease. All covenants and necessary aspects have been arrived at and agreed under this MoU and this document was sufficient for registration and was a final execution after the permission had been obtained".

22. The counsel for the plaintiff, upon being asked to clarify, whether his contention aforesaid amounts to the MoU being an Agreement to enter into a lease or a lease, states:

"It would not be an Agreement to Lease because it is nowhere so recorded that a lease would be executed. This document itself had to be registered as a lease after the permission had been obtained".

23. The counsel for the plaintiff has referred to Kollipara Sriramulu Vs. T. Aswathanarayana AIR 1968 SC 1968 laying down that a mere reference to a future formal contract will not prevent a binding bargain between the parties.

24. There is no merit in the above contentions and I am unable to comprehend the reason for which this judgment aforesaid is cited. Of course there is a binding bargain between the plaintiff and the defendant Bank to let out of the premises. However that letting was contingent upon the plaintiff obtaining necessary permissions from DDA for opening of the defendant Bank‟s Regional Office in the premises and to obtain any other consent, permission, approvals as may be necessary in law or otherwise for purpose

of opening Regional Office of Bank in the premises on the terms agreed between the parties and recorded in the MoU. The MoU also provided for execution of lease. The plaintiff itself has filed before this Court its letter dated 18th February, 2005 to the defendant Bank, in clause 5 of which the plaintiff has requested the defendant Bank to enter into Lease Agreement latest by 7th March, 2005 so as to enable the defendant Bank to complete all formalities including legal bindings. It is obvious that the arguments of the counsels are being taken to get out of a sticky situation. The defendant Bank was admittedly not put in possession of the premises. The MoU remained „an agreement to give on lease‟ on the part of the plaintiff and an „agreement to take on lease‟ on the part of the defendant Bank on the terms contained in the MoU and contingent upon the parties fulfilling the obligations they were required to fulfil prior to the actual letting. If defendant Bank had failed to take the premises on lease on the terms contained in MoU inspite of plaintiff fulfilling its obligations, certainly the plaintiff would be entitled to damages caused thereby.

25. With respect to the query made on 10th April, 2017 as to how the permission contained in the letter dated 17th March, 2005 of the DDA for letting out of an area of 20000 sq. ft. and for a period of twelve months only is in terms of MoU where the plaintiff had agreed to let covered area of 35,000 sq. ft. (carpet area 29,750 sq. ft.) subject to measurement, for a period of 5+5+5 years, the counsel for the plaintiff contends that no area was specified in the proposal dated 8th February, 2005 made by the plaintiff to the defendant Bank for letting; the defendant Bank was looking for renting a complete floor.

26. Not only is the aforesaid contention of the counsel for the plaintiff contrary to clause 2 of the recitals and clause „a‟ of the Covenants of the defendant Bank in the MoU and to the proposal dated 8th February, 2005 filed by the plaintiff itself which mentions the covered area and carpet area offered for letting as 35,000 sq. ft. and 29,750 sq. ft. respectively but also to the pleadings re-produced hereinabove of the plaintiff wherein the plaintiff has pleaded that initially tentative covered area of 35000 sq. ft. was mentioned in MoU but finally, on measurement taken on 21st February, 2005 jointly between the parties, it was found that the area actually measured 29635 sq. ft. (covered area) and 25698 sq. ft. (carpet area) and that accordingly the amount of Rs.28,15,325/- was computed and paid by the defendant Bank to the plaintiff on 23rd February, 2005.

27. The counsel for the plaintiff then draws attention to clause 2 of the recitals of the MoU wherein it is mentioned that the areas mentioned of 35000 sq. ft. (covered area) and 29750 sq. ft. (carpet area) were subject to measurement.

28. I do not agree. The MoU records that rent was to be paid on per square feet per month basis. At the time of MoU, the defendant Bank had not verified the exact area which as per the plaintiff was to be 35,000 sq. ft. (covered area) and 29,750 sq. ft. (carpet area). The MoU provides for actual measurements to be done jointly by the plaintiff and the defendant Bank. It is the plaintiff‟s own plea that it was so measured and accordingly exact rent per month and the security deposit payable in terms of clause (a) of the MoU computed.

29. The counsel for the plaintiff then draws attention to the letter dated 6 th

May, 2005 of the defendant Bank to the plaintiff refusing to take the premises on rent and states that it was not stated therein that the defendant Bank was not taking the premises on rent for the reason of the permission by the DDA being only for letting of 20,000 sq. ft. of area for a period of 12 months only and it only mentioned the reason of the permission for opening the regional office having not been given.

30. The letter dated 6th May, 2005 is of an officer of the Bank and is not by a legal person. Though the same mentions the ground of permission to open the regional office having not been given and the plaintiff having failed to give possession on or before 31st March, 2005 but also, generally mentions that the plaintiff had failed to perform the obligations on its part as per the MoU. For failure to specifically mention in the said letter the reason of permission having not been granted for letting of 29,750 sq. ft., it cannot be deemed that the defendant Bank has waived the said condition, especially when the defendant Bank had also paid security deposit on the basis of the actual measurements carried out and the premises to be let out to it to be having the carpet area of 29,750 sq. ft. intended to waive.

31. Supreme Court recently in Galada Power and Telecommunication Limited Vs. United India Insurance Company Limited (2016) 14 SCC 161 reiterated that waiver cannot always and in every case be inferred merely from the failure of the party to take the objection and that waiver can be inferred only if and after it is shown that the party knew about the relevant facts and was aware of his rights to take the objection in question. It was further held that waiver presupposes that the person to be bound is fully cognizant of his rights, and that being so, he neglects to enforce them, or

chooses one benefit instead of another. Waiver was held to be an intentional relinquishment/conscious abandonment of an existing legal right, advantage, benefit, claim or privilege which except for such a waiver, a party could have enjoyed. Waiver was held to be an agreement not to assert a right and thus there can be no waiver unless the person who is said to have waived, is fully informed as to his rights and with full knowledge of the same, intentionally abandons the same.

32. Applying the aforesaid principle, merely from the factum of the defendant Bank in the letter dated 6th May, 2005 not mentioning the grounds of DDA having not granted permission for letting out of covered area of 29,635 sq. ft. (carpet area 25,698 sq. ft.) or for letting out by the plaintiff to the defendant Bank of the premises for 5+5+5 years, it cannot be said that the defendant Bank had waived its rights under the MoU to take on lease the premises on the said terms or had agreed to take an area of 20,000 sq. ft. only for a period of 12 months only. It is not even the plea of the plaintiff in the plaint that the defendant Bank had waived its rights under the MoU or had in supersession of the MoU agreed to take an area of 20,000 sq. ft. only for a period of 12 months. In the absence of pleadings, it is not open to the counsel for the plaintiff to even contend so.

33. The counsel for the plaintiff next argues that even if the plaintiff had not fulfilled the conditions of the MoU, it would still be entitled to damages because the defendant Bank made the plaintiff carry out the works in the premises.

34. I am unable to agree with the aforesaid contention.

35. The MoU has to be read in its entirety. Under the MoU the defendant

Bank had agreed to take on rent the premises of the plaintiff "commencing from the date to be agreed upon...." "and in the further consideration of the covenants" contained in the MoU. One of the covenants was that the plaintiff shall obtain necessary permission from the appropriate authority and the other covenant was that the plaintiff shall provide full furnished premises as per layout design provided by the Bank. Taking of the premises by the defendant Bank was thus dependent on all the covenants which the plaintiff was to fulfil and the plaintiff cannot in law compel the defendant Bank to take on rent or to allege that the defendant Bank has wrongly refused to take on rent by fulfilling some of the said covenants only and not fulfilling all the covenants.

36. Reference can be made to an old judgment of the Division Bench of the High Court of Madras in Simson Vs. Virayya MANU/TN/0126/1886. The contract between the parties therein was for sale of 5,000 bags of white gingelly seed; 2/3rd of the entire price was paid in advance and the bags were to be delivered in five instalments of 1,000 bags each with the purchaser agreeing to pay 1/3rd balance price of each instalment at the time of delivery. The seller however delivered only 3,000 bags and did not deliver the remaining 2,000 bags. The purchaser sued for damages. The defence of the seller was that since the purchaser did not pay the balance 1/3 rd price of 3,000 bags delivered, he was justified in not delivering the balance 2,000 bags. The question for decision before the Division Bench was, whether the seller was justified in refusing to deliver 2,000 bags for non-payment of the balance 1/3rd price of 3,000 bags delivered. It was held that the contract was for delivery of entire 5,000 bags, as the advance paid of 2/3 rd of the price

was of all 5,000 bags and it was not the term that the delivery of successive instalments of 1,000 bags each was dependent upon the payment of balance 1/3rd price of the earlier instalment. It was further held that the contract was not capable of being divided into as many independent contracts as are the instalments to be delivered and that such a division would be at variance with the primary intention of the contracting parties.

37. Similarly here, the defendant Bank had agreed to take the entire 29,635 sq. ft. covered area (25,698 sq. ft. carpet area) for a period of 5+5+5 years and could not be compelled to take 20,000 sq. ft. there out of or for a period of 12 months only and cannot be held liable for damages for not taking the premises on rent. Judicial notice can be taken of the fact that for none, except may be for students or persons on short assignments, taking a premises, whether for residence or for business, for a short term of 12 months, makes sense. Commercial organisations and more so Banks, are known to take premises for a long term as commercial goodwill of their business gets attached and/or is relatable to the premises. The agreement on the part of the plaintiff to let out and the agreement on the part of the defendant Bank to take on rent the premises for 5+5+5 years and which owing to the land underneath the premises having been granted to the plaintiff on leasehold basis by DDA was possible only after receipt of permission and which permission was granted for a period of 12 months only, was thus an essential pre-requisite for the defendant Bank to take the premises on rent and the failure of the plaintiff to get such permission from DDA goes to the root of the matter entitling the defendant Bank to refuse to take the premises on rent and to seek refund of the security deposit.

38. The High Court of Patna, comparatively recently in M/s Suraj Kana

Pharmaceutical Vs. Bihar State Financial Corporation AIR 2009 Pat 91, has held that under the laws of contract, there is a principle known as fundamental breach i.e. a breach by either party of a term which was fundamental to the contract and once the said fundamental basis is breached, the contracting parties are relieved of their obligations which are reciprocal, and that a party who has committed the fundamental breach, cannot enforce and ask the other party to perform his part of the obligation without fulfilling his own obligations.

39. A promisee is not bound to accept part performance of a contract. Reference in this regard can be made to the old judgments of the Division Bench of Lahore High Court in The Firm Shamas Din-Mehr Bakhsh and Company Vs. Agha Muhammad Khalil Shirazi MANU/LA/0227/1920 and Mathra Das Vs. Secy. of State AIR 1930 Lah 979.

40. The question, whether the permission granted by the DDA vide letter dated 17th March, 2005 for letting of the premises to the defendant Bank for carrying the use for IT exclusively with no banking services in the name and style of the defendant Bank, is in accordance with the change agreed to by the defendant Bank in its letter dated 23rd February, 2005 to the DDA is a disputed question of fact which will have to be put to evidence. It is however not disputed that even the said permission was for an area of 20000 sq. ft. and for a period of 12 months only, instead of for covered area of 29,635 sq. ft. (carpet area 25,698 sq. ft.) agreed to be taken on rent in the MoU for a period of 5+5+5 years. The plaintiff, for this reason alone, has not fulfilled its part of the Agreement.

41. The plaintiff having been unable to obtain the permission from DDA

for letting out of covered area of 29,635 sq. ft. (carpet area 25,698 sq. ft.) of its premises for a period of 5+5+5 years, cannot possibly blame the defendant Bank of breach for not taking the premises on rent in terms of the MoU and claim damages therefor and the suit of the plaintiff is misconceived.

42. With respect to the Counter Claim of the defendant Bank, the counsel for the plaintiff contended that it is beyond time. It was argued that the defendant Bank refused to take the premises on 6th May, 2005, and the present Counter Claim filed on 15th October, 2008 i.e. more than three years therefrom is barred by time.

43. However the said aspect has already been adjudicated by this bench while allowing the application of the defendant Bank under Section 14 of the Limitation Act and the plaintiff, at least before this bench, is not entitled to re-agitate the same.

44. Though the plaintiff in the plaint has referred to payment of Rs.28,15,325/- as interest free security but the nomenclature thereof in the MoU is "interest free advance rent to be refunded at the time of vacating the premises".

45. The counsel for the plaintiff has also argued that even if the plaintiff has not fulfilled its obligations under the MoU, it is still entitled to forfeit the amount owing to having spent the monies on the works carried out in the premises as desired by the defendant Bank.

46. I am unable to understand the basis of the said argument. I have already hereinabove held that even if the plaintiff has performed one part of its obligation under the MoU, of having carried out works in the premises as

desired by the defendant Bank, for the reason of the plaintiff having not fulfilled its other obligations under the MoU, it cannot compel the defendant Bank to take the premises on rent and cannot claim any damages from the defendant Bank for breach of agreement or cannot seek to recover from the defendant Bank the monies spent by it on partly performing its obligations under the MoU. Once that is so, the question of the plaintiff being entitled to withhold the interest free advance rent, which by its very nature was refundable to the plaintiff at the time of vacating the premises, does not arise.

47. The plaintiff also in fact in the plaint has not forfeited the said sum of Rs.28,15,325/-, as has been argued. The plaintiff on the contrary has adjusted the said amount in the damages claimed to have been suffered. Once the plaintiff is not found to be entitled to any damages or costs if incurred by plaintiff in making the premises ready, the plaintiff is liable to refund the said amount.

48. The only other contention of the counsel for the plaintiff in defence to the claim of the defendant Bank for recovery of Rs.28,15,325/- with interest is, that there is no provision for refund thereof. It is contended that the said payment by the defendant Bank was in the nature of guarantee and which the plaintiff is entitled to forfeit.

49. The defendant Bank as aforesaid was never put in possession of the premises. The plaintiff having not fulfilled its obligation did not have a right to call upon the defendant Bank to occupy the premises as a tenant and thus the plaintiff was liable to immediately return the advance rent received from the defendant Bank. Even if the plaintiff has spent any monies on making the premises ready for the defendant Bank in the hope that the plaintiff

would be able to fulfil its other obligations under the MoU, it was the risk taken by the plaintiff and which risk neither had the defendant Bank agreed to ensure nor is the plaintiff entitled in law to cover itself from the refundable advances received from the defendant Bank.

50. As far as the claim of the defendant Bank / counter-claimant for interest is concerned, I am of the view that in the facts and circumstances, the claim of the defendant Bank / counterclaimant for interest at the rate of 18% per annum w.e.f. 23rd February, 2005 is unjustified and justice would be served if the defendant Bank / counterclaimant is awarded interest @ 10% per annum w.e.f. 1st June, 2005 (because the defendant Bank / counterclaimant for the first time called upon the plaintiff to refund the money on 6th May, 2005) till the date of deposit by the plaintiff in this Court of the sum of Rs.28,15,000/-, whereafter the defendant Bank / counterclaimant shall be entitled to interest as accrued on the said amount while deposited in this Court.

51. The defendant Bank / counterclaimant shall also be entitled to costs of the counterclaim from the plaintiff.

52. Decree sheet be prepared.

53. The amount lying deposited in this Court together with interest accrued thereon be released to the defendant Bank.

RAJIV SAHAI ENDLAW, J.

APRIL 26, 2017 „pp/bs‟ (corrected & released on 15th May, 2017)