Delhi High Court
Veena Khanna vs Indian Bank on 1 March, 2018
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ RFA No. 197/2018
% Reserved on: 23rd February, 2018
Pronounced on : 1st March, 2018
VEENA KHANNA ..... Appellant
Through: Ms. Renuka Arora, Advocate
with Ms. Nikita Salwan,
Advocate.
versus
INDIAN BANK ..... Respondent
CORAM:
HON'BLE MR. JUSTICE VALMIKI J.MEHTA
To be referred to the Reporter or not?
VALMIKI J. MEHTA, J
C.M. No.7051/2018 (exemption)
1. Exemption allowed subject to just exceptions.
C.M. stands disposed of.
RFA No.197/2018 and C.M. No.7050/2018 (stay)
2. This Regular First Appeal under Section 96 of the Code
of Civil Procedure, 1908 (CPC) is filed by the defendant in the suit
impugning the judgment of the trial court dated 12.1.2018 by which
trial court has decreed the suit filed by the respondent/plaintiff for a
sum of Rs.11 lacs. Trial court has not granted any interest and costs in
favour of the respondent/plaintiff. Suit has been decreed for the
amount of Rs.11 lacs on account of trial court holding by the
impugned judgment that the appellant/defendant had failed to execute
the lease deed of the premises of the appellant/defendant in favour of
the respondent/plaintiff in spite of an agreement between the parties
and therefore the respondent/plaintiff had to take on lease another
property on a higher rate of rent and hence the difference in the
amount of rent was decreed against the appellant/defendant in terms of
the impugned judgment.
3. The facts of the case are that the appellant/defendant is
the owner of the property bearing no. M-5, South Extension-II, New
Delhi. On account of the respondent/plaintiff having to vacate its
existing premises at South Extension by 31.3.2004, therefore for an
alternative accommodation the respondent/plaintiff had issued an
advertisement in the leading newspapers on 8.6.2003. The
appellant/defendant in response had offered her property on lease to
the respondent/plaintiff in terms of the written proposal dated
9.7.2003. There was further correspondence entered into between the
parties for finalization of various terms of the lease and ultimately the
last set of correspondences are the letter dated 1.1.2004 of the
appellant/defendant to the respondent/plaintiff, response of the
respondent/plaintiff to the appellant/defendant dated 3.3.2004 and
lastly the reply of the appellant/defendant to the respondent/plaintiff of
the same date 3.3.2004. It was the case of the respondent/plaintiff that
a contract was finalized between the parties for the
respondent/plaintiff to be granted lease by the appellant/defendant of
the suit property and since the appellant/defendant failed to execute
the lease deed therefore the respondent/plaintiff had to take a premises
on rent by paying a higher rental amount of Rs.2,35,000/- and
therefore the subject suit was filed claiming the difference @
Rs.35,000/- per month totaling to Rs.21 lacs with an additional
amount being claimed of Rs.1 lakh towards litigation expenses for
facing contempt proceedings in the contempt case filed by the
previous landlord and a further sum of Rs. 2 lacs towards
advertisement costs and arranging of alternative premises.
4. The appellant/defendant contested the suit by filing her
written statement. She pleaded that no contract was ever finalized
between the parties and there were only unsuccessful negotiations for
grant of lease and the negotiations did not fructify. Suit was therefore
prayed to be dismissed.
5. After completion of pleadings, trial court framed the
following issues:-
"1. Whether the plaint is signed and verified and the suit is filed by a
duly authorized person. If so, its effect? OPP
2. Whether there existed a concluded contract between the parties
and the defendant was pursuant thereto obliged to let out the
premises in question to the plaintiff? OPP
3. Whether the defendant is liable to pay damages for breach of
contract. If so, what amount? OPP
Issues on Counter-Claim
1. Whether the plaintiff is liable to pay rent to the defendant for the
period from May, 2003 to March, 2004 @ 2,00,000/- p.m. as
claimed in the Counter-claim and Rs.8,00,000/- as damages along
with interest?"
6. I may note that counter-claim has been decreed in favour
of the appellant/defendant for a sum of Rs.6 lacs and there is no
challenge by the appellant/defendant in this appeal for grant of a
higher amount of Rs.26 lacs as claimed in the counter-claim and this
appeal is therefore confined to the decree of the suit in favour of the
respondent/plaintiff for the rent differential amount.
7. Trial court has held that as a result of the last two letters,
one dated 1.1.2004 of the appellant/defendant to the
respondent/plaintiff and the second dated 3.3.2004 of the
respondent/plaintiff to the appellant/defendant there resulted a
concluded contract between the parties. In this regard, trial court has
made the following correct observations:-
"9. The crucial question is whether a concluded contract was formed
in the instant case as per the provisions of the Indian Contract Act, 1872
so as to create an obligation on the defaulting party to pay
damages/compensation for breach of its items, or not. The Section 2(a)
(b), (e) and (h) of the Indian Contract Act, 1872 are relevant for a better
understanding and they are reproduced as under:
(a) When one person signifies to another his willingness to do or to
abstain from doing anything, with a view to obtaining the assent of
that other to such act or abstinence, he is said to make a proposal:
(b) When the person to whom the proposal is made signifies his assent
thereto, the proposal is said to be accepted. A proposal, when
accepted, becomes a promise;
(e) Every promise and every set of promises, forming the
consideration for each other, is an agreement:
(h) An agreement enforceable by law is a contract:
10. At the outset, Ld. Counsel for the plaintiff argued that there were
two "concluded contracts" which took place in the present case firstly on
10.11.2003 and secondly on 03.03.2004. On the other hand, the Ld.
Counsel for the defendant argued that there was no acceptance of the
proposal from the side of the defendant to any of the offers of the plaintiff
and rather there were offers/counter-offers from the side of the defendant
and the entire dealings between the parties were at the stage of
negotiations only and no contract ever took place.
11. In the instant case, various communications took place between the
parties and the significant points of the respective documents can be
extracted as under:
Date By Whom Nature of Document Remarks
08.06.2003 Published Advertisement inviting
by Bank bids/offers from
general public for
leasing their property
to the bank
09.07.2003 Given by Written proposal letter Fulfilling the
defendant submitted to the bank columns of
standard terms and
conditions
28.10.2003 Letter of Communication of Prescribing some
plaintiff decision of new conditions i.e-
sent to Management of the -Security deposit
defendant plaintiff to the for 3 months
defendant -Removal of Wall
between two
adjoining portions.
-Strong room door
to be affixed by the
bank
-Engineer's
fees/expense to be
borne by the
owner.
-In this letter, the
bank requested to
give acceptance for
the said conditions
10.11.2003 Receiving Of the letter dated
of 28.10.2003
defendant
27.11.2003 Sent by the Not proved
bank
17.12.2003 Reminder Seeking execution of
sent by lease deed
bank to
defendant
01.01.2004 Letter sent Defendant is agreeable
by to let out subject to
defendant some more conditions
to bank e.g. rent on super area
03.03.2004 Letter sent Confirming everything
by bank to
defendant
03.03.2004 Letter sent Intimating property is
by no longer available to
defendant be given on lease
to the bank
12. From the aforesaid various communications/letters between the
parties, it is clear that various terms and conditions of the ensuing contract
kept on adding /modifying from the one side of the other. Besides, the
aforesaid written communications, the parties also had oral discussions
which is reflected from the initial operating parts of some of the letters.
Thus, it shows that there was no final contract in legal sense while
making offers and counter-offers till the time the last letter was
communicated. The last letter of the bank dated 03.03.2004 provides that
the bank has accepted and sanctioned the proposal on the following
modifications i.e.
1. Monthly rent of Rs.2,00,000/-.
2. Rent advance of 6 months
3. Deletion of sub-clause.
13. In the said letter itself, the bank had also requested the defendant to
execute the lease deed. Accordingly, the said letter communicated the
final acceptance of the proposal after having accepted the final agreed
terms and conditions of the contract. In this regard, reliance can be placed
on Section 2(a) of the Indian Contract Act which provides that "When
one person signifies to another his willingness to do or to abstain from
doing anything, with a view to obtaining the assent of the other to
such act or abstinence, he is said to make a proposal." Thus, it was a
complete contract from the side of the bank when the said letter was
communicated. As regards the conclusion of the contract from the side of
the defendant, the Section 4 of the Indian Contract Act, 1872 is
important and the same is reproduced below for a better understanding:
"Section 4. Communication when complete.- The communication of a
proposal is complete when it comes to the knowledge of the person to
whom it is made.
The communication of an acceptance is complete,
-As against the proposer, when it is put in a course of transmission to
him so as to be out of the power of the acceptor; as against the
acceptor, when it comes to the knowledge of the proposer.
The communication of a revocation is complete,
-as against the person who makes it, when it is put into a course of
transmission to the person to whom it is made, so as to be out of the
power of the person who makes it; as against the person to whom it is
made, when it comes to his knowledge".
14. Keeping in mind the aforesaid basic provisions of the Indian
Contract Act, 1872 (in short, the "Act"), I am of the considered opinion
that whatever may be the mode of communication, (be it oral or written),
and whosoever may be the initiator of negotiations (be it bank or
defendant), the person who lastly gives some offer or proposes some
modification of conditions or invites deletion of some conditions, becomes
the "Proposer" within the definition of Section 2(a) of the Act. In the
instant case, it was the defendant only who lastly communicated to the
bank all her intent and terms conditions, which were ultimately accepted
by the bank and consequently the bank communicated the said assent by
dispatching the letter dated 03.03.2004 to the defendant.
Illustrations to Section 4
(a) A proposes, by letter, to sell a house to B at a certain price. The
communication of the proposal is complete when B receives the
letter.
(b) B accepts A's proposal by a letter sent by post.
The communication of the acceptance is complete,
- as against A when the letter is posted;
- as against B, when the letter is received by A.
15. The aforesaid illustrations appended to Section 4 of the Act are
squarely applicable to the facts of the present case. In the instant case, if
A is treated as the plaintiff/bank and B is treated as defendant, then
everything is easily comprehensible. When the final letter dated
03.03.2004 was sent by the bank to the defendant, as per Section 4 of the
Act, the acceptance was complete from the side of bank as soon as the
bank dispatched the said letter. From the said of defendant, it was
complete when the said letter came to the notice of defendant. The
subsequent letter (dated 03.03.2004) of the defendant communicating that
the suit property was no longer available for giving on rent, cannot revoke
the said contract. The Illustration (c) of the Section 4 of the Act can be
relied in this regard which is an under:
Illustration (c): A revokes his proposal by telegram.
The revocation is complete as against A when the telegram is
dispatched. It is complete as against B when B receives it.
B revokes his acceptance by telegram. B's revocation is complete as
against B when the telegram is dispatched, and as against A when it
reaches him.
16. In the light of aforesaid facts, I hold that there was a concluded
contract in the eyes of law after communication of letter dated 03.03.2004
by the bank to the defendant. So far as the obligation of the defendant to
pay damages/compensation is concerned, the matter would be examined
further in the next issue. Thus, this issue is decided in favour of plaintiff
and against the defendant."
8. For the sake of convenience, the letter of the
appellant/defendant to the respondent/plaintiff dated 1.1.2004, letter in
response of the respondent/plaintiff to the appellant/defendant dated
3.3.2004, and the letter of the appellant/defendant to the
respondent/plaintiff of the same date 3.3.2004 are reproduced as
under:-
"Letter dated 1.1.2004
The Chief Manger, Dated: 1st January, 04
Indian Bank,
South Extension-1,
New Delhi
Reference: M-5, First Floor, South Extension-11, New Delhi-49.
Dear Sir,
As per earlier discussion I am agreed to let out the above mentioned
premises for the use of your bank branch. In the terms and conditions as
follows:-
1. The area finally as per the plan measured 2900 sq.ft. Carpet area/
Plinth Area 3240 sq.ft./ Super Area 4000 Sq. ft. (plan attached).
2. Monthly rent of per sq.ft. is Rs.60/- for the area as per clause No. 1.
3. Whitewash shall be done after period of initial lease or every
renewal of the lease.
4. After the first renewal of the lease second renewal of the lease will
be discussed as mutually agreed.
5. Interest free security deposit of six month rent will be refunded at
the time of vacation of premises at the time expiry of lease deed.
6. All the internal fixtures and fittings shall be done by the bank.
7. There is no subletting rights to any other person except any
subsidiary company of your financial institution.
8. The notification of the use of premises for banking use has also
been provided to you whereas incase of any charges/levy to use for
baking purpose shall be paid by the bank. I will apply for the NOC
for the same purpose as and when required. I undertake to pay the
House Tax etc. to the MCD.
9. I am also entitled to construct the above floors as per Building By
Laws without disturbing the First Floor premises.
10. I undertake to remove the center wall of the front portion as
advisable by the structural engineer and to construct the Strong
Room as per specification and also provide the grills in the
windows and gleze by the glass area.
11. Incase you are agreed to pay us the rent on super area or on area
then we undertake to pay the charges/levy to use the premises for
banking purpose.
We hope your early decision to give the consent.
Thanking you,
Yours truly.
(VEENA KHANNA)
Letter dated 3.3.2004 (letter of respondent to the appellant)
Mrs. Veena Khanna, Dated:03-03-2004
D-199, Defence Colony,
New Delhi,
Madam,
Sub: Premises at M-5, NDSE-II offered to the Bank
With reference to your offer dated 04-05-2003 offering us the premises at
M-5, NDSE-II, New Delhi, The Bank communicated you the sanction
vide our letter dated 28-10-2003. The sanction letter duly received and
accepted by you on 10-11-2003 was sent to us.
However you had vide your letter dated 01-01-2004 submitted certain
modifications in your proposal as such we submitted the revisions in the
proposal to our Head office, Chennai.
We are pleased to inform you that the Bank has sanctioned the premises at
M-5, NDSE-II, New Delhi with the following modifications:
a) Monthly rent of Rs.2,00,000
b) b)Rent advance of 6 months
c) deletion of sub ,lease clause from the lease deed
Kindly execute the lease deed at the earliest.
Yours faithfully,
Sd/-
Branch Manager
Letter dated 3.3.2004 (letter of appellant to the respondent)
March 3, 2004.
THE BRANCH MANAGER
Indian Bank
G-6, N.D.S.E.-I
New Delhi-110049.
Sub: M-5, N.D.S.E.-II.
Dear Sir,
With reference to your letter dated March 3, 2004, I regret to inform you
that the above mentioned real-estate is no longer available for rent.
Sincerely
VEENA KHANNA
BHAWANI HOUSE
Proprietor" (underlining added)
9. It is seen that after the earlier correspondence entered into
between the parties, and at the stage of appellant/defendant writing her
letter dated 1.1.2004, there remained three disagreements; firstly with
respect to deletion of the right of the respondent/plaintiff of its claim
to entitlement to sub-lease the premises, secondly of entitlement of the
appellant/defendant to advance rent of six months and thirdly of rate
of rent. I have put it to the counsel for the appellant/defendant that
what was the subject matter which remained which was not agreed
upon after the letters dated 1.1.2004 and 3.3.2004, but the counsel for
the appellant/defendant could not point out to me any point of
disagreement which remained. Obviously no point of disagreement
remained because respondent/plaintiff deleted its claim for it being
entitled to sub-lease the premises, it also accepted the claim of the
appellant/defendant for six months advance rent and also that there
was no dispute that rate of rent of Rs.2 lacs would be in accordance
with the paras 1 and 2 of the letter dated 1.1.2004 by the
appellant/defendant to the respondent/plaintiff. It is extremely relevant
and important to note that appellant/defendant in her letter dated
3.3.2004 in reply to the letter dated 3.3.2004 sent by the
respondent/plaintiff to the appellant/defendant, did not mention in her
letter dated 3.3.2004 as to what point of disagreement remained
because this letter dated 3.3.2004 of the appellant/defendant to the
respondent/plaintiff does not talk of any clauses which have yet to be
agreed upon and this letter only states that the premises of the
appellant/defendant was no longer available for being leased to the
respondent/plaintiff. Even in pleadings of the appellant/defendant filed
in the trial court it is only generally stated that no concluded contract
was arrived at without pleading which was the term on which there
was no agreement. So for rent figure of Rs. 2lacs it is not pleaded or
shown as to how this figure of rent is not in accordance with paras 1
and 2 of the letter dated 1.1.2004 of the appellant/defendant to
respondent/plaintiff. I therefore hold that the trial court has not
committed any illegality in holding that there was a concluded
contract between the parties as in terms of the final correspondences
between the parties dated 1.1.2004 and 3.3.2004 there remained no
other points on which and at the end of which there remained
disagreement or lack of consensus ad idem.
10. I may for the sake of completion of narration note that the
respondent/plaintiff has been held entitled by the impugned judgment
to differential rent totaling to an amount of Rs.17 lacs for the four
years lease period of the new premises. To this amount decreed in
favour of the respondent/plaintiff there is adjustment granted to the
appellant/defendant with respect to its counter-claim decreed for a
sum of Rs.6 lacs resulting in a decree being passed for the net amount
of Rs.11 lacs in favour of the respondent/plaintiff and against the
appellant/defendant. As already stated above no interest or costs have
been awarded in favour of the respondent/plaintiff.
11. In view of the aforesaid discussion, I do not find any
merit in the appeal. Dismissed.
01 MARCH, 2018/ Ne VALMIKI J. MEHTA, J
