Delhi High Court
Surinder Singh Arora vs Rajeev Dhingra & Ors. on 18 January, 2017
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Date of Decision: January 18, 2017
+ FAO(OS) (COMM) 13/2017
SURINDER SINGH ARORA ..... Appellant
Represented by: Dr.Sarbjit Sharma, Advocate
with Ms.Archana Maharaj,
Ms.Devika Bhagat, Advocates
versus
RAJEEV DHINGRA & ORS ..... Respondents
Represented by: Ms.Mani Gupta, Advocate with
Mr.Rohit Mehra,
Ms.Aishwarya Nabh, Mr.Rajat
Kumar, Advocates
CORAM:
HON'BLE MR. JUSTICE PRADEEP NANDRAJOG
HON'BLE MR. JUSTICE YOGESH KHANNA
PRADEEP NANDRAJOG, J.
1. We note the admitted facts and then the controversial ones projected
by the appellant.
2. The admitted facts are that respondents No.1 and 2, Rajiv Dhingra
and Atul Dhingra are brothers and are owners of the first, second and third
floor of property bearing municipal No.G-3, Pushkar Enclave, Paschim
Vihar, New Delhi, which they let out to M/s Mind & Soul Fitness Pvt.Ltd.
by a registered lease-deed dated September 29, 2014 for a period of nine
years. Rent for first three years is `2.7 lacs per month. Service tax has to be
borne by the lessee.
3. Clauses 2.2 and 6.16 of the registered lease-deed read as under:-
"2.2 The Lease Rentals shall become due and
payable by LESSEE to LESSORS after the expiry of
the Lease Rentals free time period i.e. 120 (one
hundred twenty) days from the date of execution of
this Lease Deed or commencement of business by
the LESSEE, whichever is earlier. Further the
Lease Rentals would become due and payable only
after the conditions laid down in Clause 5 have been
completed. The Lease Rentals free time period
would be granted by the LESSORS to the LESSEE
for carrying out the fit outs at the premises."
"6.16 LESSORS have assured that a lift shall be
installed at the Property and shall be made
operational by the date of commencement of full
operations by LESSEE or 120 days of signing of this
lease deed whichever is later. First time lift/elevator
is to be provided by LESSORS. The periodic/annual
maintenance of lift for first year shall be free. After
first year annual/other maintenance charges shall
be borne by LESSEE. It is agreed to by the Parties
that 20% of lift maintenance cost shall be borne by
the LESSORS/lessee of upper ground floor from the
date of commencement of commercial operation by
such upper ground floor lessee. However, in case
lessee of upper ground floor agrees to non-usage of
lift than entire lift maintenance will be borne by the
LESSEE."
4. Both parties agree that the premises became fit for use and were put to
use in February, 2015. That only four months' rent has been paid. Service
tax has not been paid at all.
5. The controversial facts are that the appellant and other shareholders of
the lessee company are in litigation with each other regarding who holds
majority shares. As per the appellant Mr.Dipak Goyal a shareholder and a
director agreed to transfer ownership of the lessee to him and wrote to
respondents No.1 and 2 that henceforth the appellant shall pay the rent.
Mr.Dipak Goyal agreed to pay `55 lacs to the appellant because he claimed
that `50 lacs was spent to renovate the leased premises. The obligation to
refund membership fee in sum of `35 lacs had to be also factored in. As per
the appellant later on Mr.Dipak Goyal turned dishonest and filed a suit
against him. As per the appellant he had incurred expenditure in sum of
`1.25 crores in installing machinery in the Gym. He claims that liability
towards loan taken from financial institutions has to be met by the lessee
company. Due to water logging at the entrance of the building the Gym
could not be put to use.
6. Vide impugned order dated January 02, 2017 the learned Single
Judge has directed the lessee company to hand over vacant physical
possession of the leased premises because outstanding rent for over one
year is payable.
7. Though not stated in the impugned order as per clause 10.2 of the
registered lease in case of two months consecutive default the lease is liable
to be terminated. The lessors have terminated the lease.
8. Notwithstanding appellant not being a party to the proceedings before
the learned Single Judge, we find no legal infirmity in the directions given
by the learned Single Judge that whosoever is the human face of the
company and is in actual physical possession would be liable to discharge
the obligation/liability of the company to hand over possession.
9. Averments made in paras 8 to 10 of the appeal relate to inter-se
dispute between the shareholders of the company and thus have no concern
with the directions issued by the learned Single Judge. Similarly the
averments in para 19 are irrelevant, for whatever may be the money spent in
making the Gym functional would be irrelevant for liability to pay rent.
Learned counsel for the appellant argued, with reference to pleadings in para
21 of the appeal that on account of cheap material used to construct the
building the member of the club declined would not in our opinion entitled
the lessee not to pay the rent. It is not the case of the appellant that the
building is totally unfit to be put to any use and would entitle the lessee to
suspension of rent. At best, that would give the right to the lessee to proceed
under clause (f) of Section 108 of the Transfer of Properties Act, 1882.
Neither the lessee company nor the appellant has proceeded to be so. The
direction issued by the learned Single Judge as an interim measure to hand
over possession of the property cannot be faulted. When respondents No.1
and 2 filed the petition under Section 9 of the Arbitration and Conciliation
Act outstanding rent was `32,22,127/-. Service tax is also payable. As of
now, the outstanding rent exceeds `50 lacs. At best, would be the obligation
of the lessee company whose possession is unauthorised because the lease-
deed envisages determination of the lease if there is default of payment of
rent for two consecutive months. The default has occurred.
10. That the financial condition of the lessee company is poor and if the
Gym is closed the appellant would be ruined because the machinery
purchased by him would be rendered useless is neither here nor there
because liability to pay rent is not linked with profit or loss made by the
lessee. If a business venture fails, the lessee cannot claim a right to continue
to occupy the leased premises without paying the rent. That there is a
dispute between the appellant who is a shareholder of the company and
Mr.Dipak Goyal who is also a shareholder concerning the affairs of the
lessee company is also irrelevant to adjudicate the right between the lessor
and the lessee.
11. The argument that no rent is payable for a period of 240 days because
clause 2.2 and clause 6.16 each defer payment of rent by 120 days, is prima-
facie incorrect for the reason both clauses envisage grant of said benefit to
enable the lessee to make the lease premises fit for use as a Gym and within
said time a lift had to be made operative by the lessor. In fact it is clause
2.2 which defers payment of rent for period of 120 days or when business
commences, whichever is earlier. Clause 6.16 obliges the lessor to make a
lift operational in the building.
12. The appeal is accordingly dismissed with costs in sum of `25,000/-
against the appellant and in favour of respondents No.1 and 2.
(PRADEEP NANDRAJOG)
JUDGE
(YOGESH KHANNA)
JUDGE
JANUARY 18, 2017
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