Vansons Footwear (P) Ltd vs Usp Fashion Weaves (P) Ltd & Ors
2018 Latest Caselaw 508 Del

*       IN THE HIGH COURT OF DELHI AT NEW DELHI

%                              Date of decision: 19th January, 2018
+                          CS(OS) No.36/2017
    VANSONS FOOTWEAR (P) LTD                ..... Plaintiff
                  Through: Mr. Giriraj Subramanium and
                            Mr. Simarpal Singh Sawhney,
                            Advs.
                           Versus
    USP FASHION WEAVES (P) LTD & ORS ..... Defendants
                  Through: Mr. V. Elanchezhiyan & Mr.
                            Jawaid Hussain Khan, Advs. for
                            D-1,2&4.
                            Mr. Govind Rishi, Adv. for D-3.
                            Mr. Jai Kant Prashant, Adv. for
                            applicants.
CORAM:
HON'BLE MR. JUSTICE RAJIV SAHAI ENDLAW

IA No.15364/2017 (of plaintiff u/S 151 CPC)
1.      The order dated 20th December, 2017 is made absolute and the
application is disposed of.
IA No.15365/2017 (of plaintiff u/O XII R-6 CPC)
2.      The plaintiff has instituted this suit, (a) for ejectment of the
defendants from property No.A-II/79 A&B, Lajpat Nagar-II, New
Delhi, after determination of tenancy of the defendant No.1 with
respect thereto; (b) for recovery of arrears of rent in the sum of Rs.50
lakhs with interest; and, (c) for recovery of mesne profits @
Rs.70,000/- per day with effect from the date of institution of the suit
till delivery of possession.


CS(OS) No.36/2017                                            Page 1 of 11
 3.      The suit was entertained and summons thereof ordered to be
issued and the defendants restrained from creating any third party
interest in the property.
4.      Written statement has been filed by the defendant No.1 USP
Fashion Weaves (P) Ltd. No written statement has been filed by the
defendants No.2 to 4 namely Mrs. Summy Lobsang Bhutia, Ms.
Purnima Mittal and Ms. Usha Jain.         Though the counsel for the
defendants No.1,2&4 on 26th October, 2017 stated that an application
had been filed for deletion of the defendants No.2&4 from the array of
defendants but the said application has not come up before this Court
till now.
5.      The counsel for the defendant No.3 states that written statement
has been filed but is not on record.
6.      The plaintiff has filed this application for decree on admissions
and the counsel for the plaintiff contends that the written statement of
the defendant No.1 does not disclose any defence and the plaintiff is
entitled to judgment on admissions forthwith.
7.      The counsel for plaintiff, counsel for the defendants No.1,2&4
and the counsel for the defendant No.3 have been heard.
8.      I may at the outset state that the counsel for the plaintiff, on
enquiry, states that the relationship of landlord and tenant was
between the plaintiff and the defendant No.1 only and the defendants
No.2 to 4 have been impleaded in this suit in their capacity as
Directors of the defendant No.1 and no relief has been claimed against
them personally.


CS(OS) No.36/2017                                             Page 2 of 11
 9.       It is the case of the plaintiff (i) that a registered Lease Deed
dated 8th September, 2015 was executed between the plaintiff and the
defendant No.1, whereunder the plaintiff let out the property aforesaid
to the defendant No.1 for an initial period of three years, from 27 th
November, 2015 to 26th November, 2018, extendable as provided
therein; (ii) that the agreed monthly rent was Rs.10 lakhs, besides
utility charges; (iii) that the defendants deposited a sum of Rs.40 lakhs
with the plaintiff as refundable security deposit; (iv) that the rent was
agreed to be paid on the 7th day of every english calendar month and
25 post dated cheques were handed over; (v) that the defendants failed
to pay the rent for five months, of July to November, 2016 and were in
breach of the Lease Deed; (vi) that the post dated cheques handed over
by the defendants to the plaintiff were returned dishonoured; (vii) that
the defendants have thus become liable to be evicted under Clauses
8.2 and 8.4 of the registered Lease Deed dated 8th September, 2015 as
under:
         "8.2 That if the lessee defaults in payment of rent for
         two consecutive months, notwithstanding the terms of
         clause 8.1, the lessor will have a right to terminate the
         lease forthwith. Further, in the event the lessee is in
         breach of performance of terms and conditions of this
         lease deed and if such breach is not remedied within
         fifteen days of written notice, or the business is wound up
         or taken over by the government or any authority or
         company so as to imply or cause a change in the
         ownership or management of the lessee, without previous
         written consent of the lessor, the lessors shall be entitled
         to terminate this lease deed by given thirty days notice of
         the same to the lessee, after which period the lessee shall
CS(OS) No.36/2017                                               Page 3 of 11
         be liable to pay damages/mesne profits as enumerated in
        clause 8.4.
        If any cheque towards the payment of rent is dishonoured,
        the lessors will have a right to terminate the lease
        forthwith.
        .....

8.4 In the event the lessee fails to handover the vacant possession of the demised premises at the expiry of lease period or on expiry of extended period as per clause 1.1, the lessee shall liable to pay damages/Mesne Profits to the lessors at the rate of Rs.70,000/- (Rupees Seventy Thousand Only) per day, which amount shall proportionately be increased on the renewal, per day of default from the date of expiry of this Lease Deed or its earlier termination as enumerated above, till handing over of the vacant and peaceful possession of the demised premises to the lessors, besides all the other amounts payable to the lessors as set out hereinabove. The lessee expressly agrees that this clause is reasonable and is fully consented to by the lessee freely and voluntarily and may be given full effect to by the lessor.";

(viii) that the plaintiff served a notice dated 16 th November, 2016 on the defendants of demand of arrears of rent and of termination of tenancy.

10. The defendant No.1, in its written statement, has pleaded (a) that the plaintiff, at the time of letting of the premises to the defendant No.1, had represented itself to be the owner of the property but had not provided to the defendant No.1 any documents of title of the property in favour of the plaintiff; (b) that the plaintiff, by making false representations to the defendant No.1, made the defendant No.1

agree to exorbitant rent of Rs.10 lakhs per month which is double the prevalent market rent; (c) that the plaintiff had represented to the defendant No.1 that the property was legally constructed and having all the requisite approvals for commercial use; (d) that the defendant No.1, acting on the said representations of the plaintiff, made investments of Rs.2 crores in developing a market in the property and started allotting small units/shops to small shopkeepers; (e) that the defendant No.1 received a notice dated 19th April, 2016 from South Delhi Municipal Corporation, with respect to illegal construction in the property and subsequently a demolition order dated 13th May, 2016 was also passed with respect to the property and against which the defendant No.1 preferred an appeal to the Appellate Tribunal, Municipal Corporation of Delhi; (f) that the defendant No.1 later learnt that the basement and second floor of the property is unauthorised; (g) that the plaintiff is aware that small units/shops made by the defendant No.1 in the property have been allotted by the defendant No.1 to various shopkeepers and the said shopkeepers are in physical possession of the property and are necessary parties to the present suit and which fact has been suppressed by the plaintiff; (h) that the registered Lease Deed is void, being based on misrepresentations of the plaintiff qua its ownership and legality of the property; (i) that owing to the acts aforesaid of the plaintiff, the defendant No.1 is on the verge of insolvency; (j) that the defendants No.2&4 have resigned from the Board of Directors of the defendant No.1; (k) that the plaintiff is not entitled to mesne profits @ Rs.70,000/- per day.

11. As would be obvious from the above, the defendant No.1, in its written statement, has not controverted non-payment of rent for the period alleged.

12. The counsel for the defendant No.1 has today also drawn attention to Clause 7.3 of the registered Lease Deed as under:

"7.3 Sub-letting of the demised premises.

That the Lessee shall not transfer, assign, license, sublet or otherwise part with the possession of the whole or/and part of the demised premises to any third party, including its subsidiaries, nor shall the Lessee create any third party interest, in the demised premises in any way whatsoever. Any breach of this condition shall invite immediate termination of the lease.

However, the following Subsidiaries of the Lessee may operate out of the same premises, subject to Clause 7.3.1 detailed below:

1. Red Realty Infratech (P) Ltd.

2. USP Fashion Weaves (P) Ltd.

3. USP Supreme Agro Foods (P) ltd.

7.3.1 The Lessee understands and undertakes that the term "third party" includes the subsidiaries listed no.1-3 in this clause. The Lessee further undertakes that the Lessor shall not be liable for any claims or disputes arising out of such operations of the said Subsidiary complanies of the Lessee. Further, the Lessee shall be liable for ensuring peaceful possession of the premises and adherence of the present agreement by the subsidiaries of the Lessee."

13. I am however unable to understand the relevance thereof to the matter in controversy.

14. The counsel for the defendant No.1 has also argued that this suit has been filed by the plaintiff in collusion with the defendant No.3 and has drawn attention to Sections 18&19 of the Indian Evidence Act, 1872 but the relevance whereto also to the controversy at hand is not understood.

15. Mr. Jai Kant Prashant, Advocate present in Court states that he has filed three separate applications for impleadment in this suit, on behalf of three persons who have been permitted by the defendant No.1 to run their businesses from the premises but the said applications have not been listed as yet.

16. The aforesaid also does not come in the way of decision on this application. The persons, if any inducted by the defendant No.1 in the premises have no privity with the plaintiff and would neither be necessary nor proper party and in any case cannot object to a decree for ejectment and recovery against defendant No.1, if the plaintiff is found entitled thereto, being passed on admissions.

17. The counsel for the defendants No.1,2&4 interjects at this stage and states that the persons on whose behalf applications for impleadment have been filed have been inducted into the premises by Red Realty Infratech (P) Ltd. referred to in Clause 7.3 of the registered Lease Deed supra.

18. Clause 7.3 supra of the Lease Deed contains an agreement between the plaintiff and the defendant No.1 that the defendant No.1 will not transfer, assign, license, sublet or otherwise part with the

possession of the whole or/and part of the demised premises to any third party, including its subsidiaries and only permits Red Realty Infratech (P) Ltd. to operate out of the property. However, the same does not create any right in favour of Red Realty Infratech (P) Ltd. and Red Realty Infratech (P) Ltd. or its assignees shall also be liable to be ejected under the order of ejectment, if any passed in favour of the plaintiff and against the defendant No.1. Neither Red Realty Infratech (P) Ltd. nor any other person inducted has any independent right to the premises.

19. On the aforesaid pleadings, there is no challenge by the defendant No.1 to default having been committed in payment of rent within the meaning of Clause 8.2 supra of the registered Lease Deed and which entitles the plaintiff to determine Lease Deed even prior to the period for which the premises were let out. As per the dicta of the Supreme Court in Nopany Investments (P) Ltd. Vs. Santokh Singh (2008) 2 SCC 278, even if notice of termination is not given, the same would not effect the suit inasmuch as the suit has now admittedly been pending for over 30 days, of which notice was agreed to be given.

20. As far as the other pleas taken by the defendant No.1 in its written statement, of ownership and of misrepresentations on the part of the plaintiff are concerned, I may only state that in a suit by a landlord for ejectment of a tenant, ownership is not relevant (see Sri Ram Pasricha Vs. Jagannnath (1976) 4 SCC 184, State of Andhra Pradesh Vs. D. Raghukul Pershad (Dead) by LRs (2012) 8 SCC 584, Jai Sujanti Vs. Sudarshan Chadha 2013 SCC OnLine Del 2860, Sanjay Singh Vs. Corporate Warranties Pvt. Ltd. (2013) 204 DLT 12

and Ram Kumar Vs. S.K. Gulati (2013) 203 DLT 588) and the misrepresentations, if any only entitled the defendant No.1 to sue the plaintiff for compensation and no more. Thus, insofar as the relief claimed of ejectment and recovery of arrears of rent is concerned, the written statement of the defendant No.1 does not disclose any defence.

21. The counsel for the defendant No.3, on enquiry, states that the defendant No.3 is not claiming any rights in the property.

22. Since the counsel for the plaintiff has made a statement that the plaintiff is not claiming any relief personally against the defendants No.2 to 4, in any case, there is no need to await their written statement.

23. The counsel for the defendant No.1 has also contended that there is no admission for Order XII Rule 6 of the Code of Civil Procedure, 1908 (CPC) to be availed of.

24. There is no need to elaborate the law in this respect which is sufficiently clear and reference may be made to (Ashoka Estate Pvt. Ltd. Vs. Dewan Chand Builders Pvt. Ltd. 2009 (113) DRJ 193, P.S. Jain Co. Ltd. Vs. Atma Ram Properties (P) Ltd. (2013) 205 DLT 302, Precision Steels Vs. Reeta Salwan (2013) 205 DLT 695, Sikka Promoters Pvt. Ltd. Vs. National Agricultural Cooperative Marketing Federation of India (2013) 202 DLT 49 [RFA(OS) No.110/2013 preferred whereagainst was dismissed on 2nd August, 2016], Sandeep Kohli Vs. Vinod Kohli 2016 SCC OnLine Del 6533, Uttam Singh Duggal Vs. United Bank of India (2000) 7 SCC 120 and Vijay Myne Vs. Satya Bhushan Kaura (2007) 142 DLT 483) and in some of which reliance is also placed on Order XV of the CPC

which entitles the Court to, if finds no material plea of law or fact arising for adjudication for grant of relief claimed, grant the relief forthwith. In the present case, the written statement of the defendant No.1 does not disclose any defence in law to the relief claimed of ejectment and recovery of arrears of rent and as aforesaid, the questions of ownership and misrepresentations are not relevant for adjudication of the matter in controversy. S.M. Asif Vs. Virender Kumar Bajaj (2015) 9 SCC 287 cited by counsel for defendants no.1,2 and 4 merely holds that a judgment on admissions is not a matter of right. Judgment in that case was denied even though there were admissions of relationship of landlord - tenant because the plea of advance amount paid required adjudication.

25. That leaves the question of mesne profits. Though the plaintiff has claimed mesne profits @ Rs.70,000/- per day as provided in Clause 8.4 of the registered Lease Deed but the counsel for the plaintiff, for the sake of expediency, confines the relief of mesne profits to the rate of the last paid rent i.e. Rs.10 lakhs per month only.

26. Accordingly, the application is allowed and disposed of. CS(OS) No.36/2017 & IAs No.1069/2017 (u/O XXXIX R-1&2 CPC), 2162/2017 (u/O XXXIX R-2A CPC) & 12609/2017 (of D-1 for condonation of 38 days delay in filing WS)

27. In terms of above, a decree is passed in favour of the plaintiff and against the defendant no.1

a) of ejectment of the defendants from property No.A-II/79 A&B, Lajpat Nagar-II, New Delhi;

b) of recovery of arrears of rent/mesne profits @ Rs.10 lakhs per month with effect from the month of July, 2016 till the month of delivery of possession;

c) the plaintiff shall also be entitled to interest @ 8% per annum on the arrears of rent from the date of institution of the suit till realisation and on the mesne profits with effect from the end of the month for which the mesne profits are due and till the date of realisation; and,

d) the plaintiff shall also be entitled to costs of the suit.

28. Decree sheet be drawn up.

29. The counsel for the defendant No.1,2&4 at this stage states that his submission of collusion between the plaintiff and the defendant No.3 may be recorded.

30. It is so recorded. The same has no bearing on the outcome of the suit.

RAJIV SAHAI ENDLAW, J.

JANUARY 19, 2018 'gsr/bs'..

[Corrected & released on 6th February, 2018]