Karnataka High Court
Capgemini Technology Services vs M/S Millennia Realtors Pvt Ltd on 22 February, 2024
Author: P.S. Dinesh Kumar
Bench: P.S. Dinesh Kumar
RFA No. 1373/2016
C/W RFA No.940/2016
RFA No.941/2016
RFA No.1078/2016
RFA No.1374/2016
1
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 22ND DAY OF FEBRUARY, 2024
PRESENT
THE HON'BLE MR. P.S. DINESH KUMAR, CHIEF JUSTICE
AND
THE HON'BLE MR. JUSTICE T.G. SHIVASHANKARE GOWDA
RFA No.1373 OF 2016 (RES)
C/W
RFA No.940 OF 2016 (RES)
RFA No.941 OF 2016 (RES)
RFA No.1078 OF 2016 (SP)
RFA No.1374 OF 2016 (RES)
IN RFA No.1373 OF 2016
BETWEEN:
MILLENIA REALTORS PVT LTD
A COMPANY INCORPORATED UNDER THE
PROVISIONS OF THE COMPANES ACT, 1956
AND HAVING ITS REGISTERED OFFICE
AT THE MILLENIA TOWER B,
LEVEL 12-14, 1 & 2,
MURPHY ROAD, ULSOOR
BENGALURU-560 008
REPRESENTED BY ITS MANAGING DIRECTOR
AND AUTHORIZED SIGNATORY
MR.RAJ.A.MENDA ...APPELLANT
(BY SHRI. UDAYA HOLLA, SENIOR ADVOCATE;
SHRI. GEORGE JOSEPH, ADVOCATE)
RFA No. 1373/2016
C/W RFA No.940/2016
RFA No.941/2016
RFA No.1078/2016
RFA No.1374/2016
2
AND:
CAPGEMINI TECHNOLOGY SERVICES
INDIA LIMITED, (TRANSFEREE COMPANY
ON AMALGAMATION WITH FLEXTRONICS
SOFTWARE SYSTEMS LIMITED)
A COMPANY INCORPORATED
UNDER THE PROVISIONS OF THE
COMPANIES ACT, 1956, HAVING ITS
REGISTERED OFFICE AT NO.5
JAIN MANDIR MARG (ANNEXE)
CONNAUGHT PLACE
NEW DELHI-110 001
ALSO HAVING OFFICE AT NO.18/1
RMZ ECOZEN, OUTER RING ROAD
PANATHUR POST
BENGALURU-560 087
[AMENDED AS PER COURT ORDER
DATED 26.07.2023] ...RESPONDENT
(BY SHRI. S.S. NAGANAND, SENIOR ADVOCATE FOR
MS. SWETHA G AND
SHRI. N. MANJUNTH, ADVOCATES)
THIS RFA IS FILED UNDER ORDER XLI RULE 1 R/W SEC.96 OF
CPC., AGAINST THE JUDGMENT AND DECREE DATED 13.04.2016
PASSED IN O.S. NO.26660/2010 ON THE FILE OF THE XXVIII ADDL.
CITY CIVIL JUDGE, MAYOHALL UNIT, BANGALORE (CCH-29), PARTLY
DECREEING THE SUIT FOR EVICTION/DAMAGES.
IN RFA No.940 OF 2016
BETWEEN:
CAPGEMINI TECHNOLOGY SERVICES
INDIA LIMITED, (TRANSFEREE COMPANY
ON AMALGAMATION WITH FLEXTRONICS
SOFTWARE SYSTEMS LTD.,)
FORMERLY KNOWN AS HUSHES
SOFTWARE SYSTEM LIMITED
RFA No. 1373/2016
C/W RFA No.940/2016
RFA No.941/2016
RFA No.1078/2016
RFA No.1374/2016
3
A COMPANY INCORPORATED
UNDER THE PROVISIONS OF THE
COMPANIES ACT, 1956, HAVING ITS
REGISTERED OFFICE AT NO.5
JAIN MANDIRMARG (ANNEXE)
CONNAUGHT PLACE
NEW DELHI-110 001
ALSO HAVING OFFICE AT NO.18/1
RMZ ECOZEN, OUTER RING ROAD
PANATHUR POST
BENGALURU-560 087
REPRESENTED BY ITS
AUTHORIZED REPRESENTATIVE
MR. DAVID ANILKUMAR
S/O K.K. GEORGE
AGED ABOUT 46 YEARS
[AMENDED AS PER COURT ORDER
DATED 21.07.2023] ... APPELLANT
(BY SHRI. S.S. NAGANAND, SENIOR ADVOCATE;
MS. G. SWETHA AND
SRI. N. MANJUNATH ADVOCATES)
AND:
M/S. MILLENNIA REALTORS PVT. LTD
A COMPANY INCORPORATED UNDER THE
PROVISION OF THE COMPANIES ACT
1956, HAVING ITS REGISTERED OFFICE
AT LEVEL 12-4, TOWER B
THE MILLENNIA
NO.1 & 2, MURPHY ROAD
ULSOOR, BENGALURU-560 008 ...RESPONDENT
(BY SHRI. UDAYA HOLLA, SENIOR ADVOCATE FOR
SHRI. GEORGE JOSEPH, ADVOCATE)
THIS RFA IS FILED UNDER ORDER XLI RULE 1 OF CPC., R/W
SEC.96 OF CPC, AGAINST THE JUDGMENT AND DECREE DATED
13.04.2016 PASSED IN OS.NO.16735/2005 ON THE FILE OF THE
XXVIII ADDL. CITY CIVIL AND SESSIONS JUDGE, MAYOHALL,
RFA No. 1373/2016
C/W RFA No.940/2016
RFA No.941/2016
RFA No.1078/2016
RFA No.1374/2016
4
BENGALURU, PARTLY DECREEING THE SUIT FOR VACANT
POSSESSION.
IN RFA No.941 OF 2016
BETWEEN:
CAPGEMINI TECHNOLOGY SERVICES
INDIA LIMITED, (TRANSFEREE COMPANY
ON AMALGAMATION WITH FLEXTRONICS
SOFTWARE SYSTEMS LTD.,)
A COMPANY INCORPORATED
UNDER THE PROVISIONS OF THE
COMPANIES ACT, 1956, HAVING ITS
REGISTERED OFFICE AT NO.5
JAIN MANDIRMARG (ANNEXE)
CONNAUGHT PLACE
NEW DELHI-110 001
ALSO HAVING OFFICE AT NO.18/1
RMZ ECOZEN, OUTER RING ROAD
PANATHUR POST
BENGALURU-560 087
REPRESENTED BY ITS
AUTHORIZED REPRESENTATIVE
MR. DAVID ANILKUMAR
S/O MR. K.K. GEORGE
AGED ABOUT 46 YEARS
[AMENDED AS PER COURT ORDER
DATED 21.07.2023] ... APPELLANT
(BY SHRI. S.S. NAGANAND, SENIOR ADVOCATE;
MS. G. SWETHA AND
SRI. N. MANJUNATH ADVOCATES)
AND:
M/S. MILLENNIA REALTORS PVT. LTD
A COMPANY INCORPORATED UNDER THE
RFA No. 1373/2016
C/W RFA No.940/2016
RFA No.941/2016
RFA No.1078/2016
RFA No.1374/2016
5
PROVISION OF THE COMPANIES ACT
1956, HAVING ITS REGISTERED OFFICE
AT LEVEL 12-4, TOWER B
THE MILLENNIA
NO.1 & 2, MURPHY ROAD
ULSOOR, BENGALURU-560 008
REPRESENTED BY ITS DIRECTOR
AND AUTHORIZED SIGNATORY
MR. RAJ A. MENDA ...RESPONDENT
(BY SHRI. UDAYA HOLLA, SENIOR ADVOCATE FOR
SHRI. GEORGE JOSEPH, ADVOCATE)
THIS RFA IS FILED UNDER ORDER XLI RULE 1 OF CPC., R/W
SEC.96 OF CPC, AGAINST THE JUDGMENT AND DECREE DATED
13.04.2016 PASSED IN OS.NO.26660/2010 ON THE FILE OF THE
XXVIII ADDL. CITY CIVIL JUDGE, MAYOHALL UNIT, BENGALURU,
PARTLY DECREEING THE SUIT FOR EVICTION AND DAMAGES.
IN RFA No.1078 OF 2016
BETWEEN:
CAPGEMINI TECHNOLOGY SERVICES
INDIA LIMITED, (FORMERLY KNOWN AS
HUGHES SOFTWARE SYSTEMS LIMITED).
A COMPANY INCORPORATED UNDER
THE COMPANIES ACT, 1956 AND HAVING
ITS REGISTERED OFFICE AT NO.5
JAIN MANDIR MARG, (ANNEXE)
CONNAUGHT PLACE
NEW DELHI-110 001
NOTE: THE PRESENT NAME AND
ADDRESS OF THE APPELLANT IS
AS FOLLOWS: M/S. ARICENT TECHNOLOGIES
(HOLDING) LTD, (TRANSFEREE COMPANY
ON AMALGAMATION WITH FLEXTRONICS
SOFTWARE SYSTEMS LTD) A COMPANY
INCORPORATED UNDER THE PROVISIONS
OF THE COMPAINES ACT, 1956, HAVING ITS
REGISTERED OFFICE AT NO.05
JAIN MANDIR MARG (ANNEXE)
RFA No. 1373/2016
C/W RFA No.940/2016
RFA No.941/2016
RFA No.1078/2016
RFA No.1374/2016
6
CONNAUGHT PLACE, NEW DELHI- 110 001
ALSO HAVING OFFICE AT NO.18/1
RMZ ECOZEN, OUTER RING ROAD
PANATHUR POST, BENGALURU-560 087
[AMENDED AS PER COURT ORDER
DATED 21.07.2023] ... APPELLANT
(BY SHRI. S.S. NAGANAND, SENIOR ADVOCATE;
MS. G. SWETHA AND
SRI. N. MANJUNATH ADVOCATES)
AND:
1. M/S. MILLENNIA REALTORS PVT LTD
A COMPANY INCORPORATED UNDER
THE PROVISION OF THE COMPANIES
ACT, 1956 HAVING ITS REGISTERED
OFFICE AT LEVEL 12-4, TOWER B
THE MILLENNIA, NO.01 AND 2
MURPHY ORAD, ULSOOR
BENGALURU-560 008
2. M/S. RANI RASAMANI
CONSTRUCTIONS PVT. LTD
A COMPANY INCORPORATED
UNDER THE PROVISIONS OF THE
COMPANIES ACT, 1956, HAVING
ITS REGISTERED OFFICE AT
FLAT NO. S 001, PRESTIGE
LE PROMENADE, NO.37
PROMENADE ROAD, FRASER TOWN
(NEAR THOMAS BAKERY)
BENGALURU-560 005 ...RESPONDENTS
(BY SHRI. UDAYA HOLLA, SENIOR ADVOCATE FOR
SHRI. GEORGE JOSEPH, ADVOCATE FOR R1;
R2- SERVED AND UNREPRESENTED)
THIS RFA IS FILED UNDER ORDER XLI RULE 1 OF CPC AGAINST
THE JUDGMENT AND DECREE DATED 13.04.2016 PASSED IN
OS.NO.25312/2007 ON THE FILE OF THE XXVIII ADDL. CITY CIVIL AND
RFA No. 1373/2016
C/W RFA No.940/2016
RFA No.941/2016
RFA No.1078/2016
RFA No.1374/2016
7
SESSIONS JUDGE, MAYOHALL UNIT, BENGALURU, DISMISSING THE
SUIT FOR SPECIFIC PERFORMANCE.
IN RFA No.1374 OF 2016
BETWEEN:
MILLENIA REALTORS PVT. LTD
A COMPANY INCORPORATED UNDER THE
PROVISION OF THE COMPANIES ACT
1956 AND HAVING ITS REGISTERED OFFICE
AT THE MILLENIA
NO.1 & 2, MURPHY ROAD
ULSOOR, BENGALURU-560 008
REPRESENTED BY ITS MANAGING DIRECTOR
AND AUTHORIZED SIGNATORY
MR. RAJ A. MENDA ... APPELLANT
(BY SHRI. UDAYA HOLLA, SENIOR ADVOCATE FOR
SHRI. GEORGE JOSEPH, ADVOCATE)
AND:
CAPGEMINI TECHNOLOGY SERVICES
INDIA LIMITED, (TRANSFEREE COMPANY
ON AMALGAMATION WITH FLEXTRONICS
SOFTWARE SYSTEMS LIMITED AND
FORMERLY KNOWN AS HUGHES SOFTWARE
SYSTEMS LIMITED).
A COMPANY INCORPORATED UNDER
THE PROVISIONS OF THE COMPANIES ACT
1956 AND HAVING ITS REGISTERED
OFFICE AT NO.5, JAIN MANDIR ,,MARG, (ANNEXE)
CONNAUGHT PLACE
NEW DELHI-110 001 ...RESPONDENT
(BY SHRI. S.S. NAGANAND, SENIOR ADVOCATE;
MS. G. SWETHA AND
SRI. N. MANJUNATH ADVOCATES)
RFA No. 1373/2016
C/W RFA No.940/2016
RFA No.941/2016
RFA No.1078/2016
RFA No.1374/2016
8
THIS RFA IS FILED UNDER ORDER XLI RULE 1 READ WITH
SECTION 96 OF CPC AGAINST THE JUDGMENT AND DECREE DATED
13.04.2016 PASSED IN OS.NO.16735/2005 ON THE FILE OF THE
XXVIII ADDL. CITY CIVIL JUDGE, MAYOHALL UNIT, BENGALURU,
PARTLY DECREEING THE SUIT FOR VACANT POSSESSION.
THESE RFAs, HAVING BEEN HEARD AND RESERVED FOR
JUDGMENT ON 14.02.2024 COMING ON FOR PRONOUNCEMENT OF
JUDGMENT THIS DAY, CHIEF JUSTICE, PRONOUNCED THE
FOLLOWING:-
JUDGMENT
These five appeals arise out of judgment and decree
dated April 13, 2016 in O.S No. 26660/2010, O.S No.
25312/2007 and O.S.No. 16735/2005. Since all the five
appeals involve same subject-matter and parties, they are
heard simultaneously and disposed of by this common order.
2. We have heard Shri. S.S. Naganand, learned
Senior Advocate for the appellant in R.F.A. No 940/2016,
R.F.A.No. 941/2016 and R.F.A.No. 1078/2016 and
respondent in R.F.A. No.1373/2016 and
R.F.A.No. 1374/2016 and Shri. Uday Holla, learned Senior
Advocate for appellant in R.F.A. No.1373/2016 and
R.F.A. No. 1374/2016 and respondent in R.F.A. No
940/2016, R.F.A.No. 941/2016 and R.F.A.No. 1078/2016.
3. Briefly stated the facts of the case are, Millenia1
and RRC2 are the owners of the premises in question. They
had leased out bare shell to Aricent3. Aricent was orignially
known as Hughes. It changed it names as Flextronics and
later as Aricent.
4. Owner's case is, Milleia and RRC had entered into
a Development Agreement in respect of the suit property.
As per of the agreement , Millenia and RRC were sharing
the land and development in the ratio 73:27. Later, Millenia
purchased RRC's 27% also. In effect, Millenia is the owner
and Aricent is the tenant.
Millenia Realtors Private Ltd.
Rani Rasmani Constructions
Aricent Technologies Ltd.
5. Millenia issued a notice to Aricent to vacate and
handover the premises. Aricent did not acceed to Millenia's
demand. Therefore, Millenia filed O.S.No. 16735/2005 for
eviction and damages in respect of 73% of the suit property
and O.S.No. 26660/2010 for eviction and damages in
respect of 27% of the suit property.
6. Tenant-Aricent's case is, the lease was to
commence only after the completion of Phase I development
after obtaining occupancy certificate. As per the agreement,
Aricent had right to purchase the property and it has filed
O.S.No.25312/2007 seeking specific performance of the
Agreement dated 19.05.2003.
7. In O.S No. 16735/2007 filed by Millenia, the Trial
Court has framed the following issues:
"1. Whether the defendant proves that the tenancy is a
contractual tenancy for a period of five years and that
the tenancy has not been validly terminated by notice
dt.10.01.2005?
2. Whether the plaintiff proves that the defendant is
due and liable to pay arrears of rent and damages as
claimed in the plaint?
3. Whether the plaintiff proves that the defendant is
liable to pay interest on the delayed payments as
claimed in the plaint?
4. Whether the plaintiff proves that it has terminated
tenancy in respect of the schedule C property and
whether it is entitled to a decree of vacant possession of
the suit schedule C property?
5. Whether the plaintiff is entitled to the suit claim?
6. What order or decree?"
8. On behalf of Millenia, one witness was examined
as P.W.1 and Ex. P1 to P29 marked. On behalf of Aricent,
one witness was examined as D.W.1 and Ex.D1 to D23
marked. The Trial Court, answering issue No. 1 in the
negative, issues No. 2 and 4 in the affirmative and issues
No. 3 and 5 partly in the affirmative, has decreed the suit in
part inter alia directing the tenant to vacate the premises.
9. In O.S No. 26660/2010 filed by Millenia, the Trial
Court has framed the following issues:
"1. Whether the plaintiff proves that the defendant was
tenant under him in respect of C schedule property whose
tenancy was validly terminated?
2. Whether the defendant is liable to deliver the vacant
possession?
3. Whether the defendant is liable to pay damages of
Rs.57,63,700/- and Rs.30/- per sq.ft per month as
damages, Rs.10/- per sq.ft for service area of C schedule
property with interest at 24%?
4. What order or decree?"
10. On behalf of Millenia, one witness was examined
as P.W.1 and Ex. P1 to P15 marked. On behalf of Aricent,
one witness was examined as D.W.1 and Ex.D1 to D23
marked. The Trial Court, answering issue No. 1 and 2 in the
affirmative and issue No. 3 partly in the affirmative has
decreed the suit in part inter alia directing eviction.
11. In O.S No. 25312/2007 filed by Aricent seeking
specific performance, the Trial Court has framed the
following issues:
"1. Whether the plaintiff proves that defendant No.2
entered into an agreement of development of land
construction of building and subsequent lease with
purchaser option to the lessee (plaintiff) and executed an
agreement on 19.5.2003?
2. Whether the plaintiff proves that he had an option and
right to purchase A schedule properties as per the price
agreed to in the suits?
3. Whether the plaintiff further proves that D.1 & 2 agreed
to sell the A schedule property for the land at the rate of
Rs.27/- per square feet with increase at 12% р.а., Rs.1627-
50 per sq.ft. for buildings, Rs.542.50ps per sq.ft. for service
area?
4. Whether plaintiff was ever ready and willing to perform
his part of contract?
5. Whether the defendants prove that the agreement
dt.19.5.2003 is frustrated and terminated?
6. Whether the defendant No.1 proves that the plaintiff is
estopped from invoking the purchaser options in view of
breach committed in non payment of holding costs every
month?
7. Whether suit is time barred?
8. What order or decree?"
12. On behalf of Aricent, one witness was examined
as P.W.1 and Ex.P1 to P34 marked. On behalf of Millenia,
one witness was examined as D.W.1 and Ex. D1 to D20
marked The Trial Court, answering issues No. 1 to 3 and 5
to 7 in the affirmative and issues No. 4 and 7 in the negative
has dismissed the suit.
13. Millenia has filed R.F.A.No. 1373/2016
challenging the quantum of compensation and damages in
O.S No. 16735/2007.
14. Millenia has filed R.F.A.No. 1374/2016
challenging the quantum of compensation and damages in
15. Aricent has filed R.F.A.No. 940/2016 challenging
order of eviction in O.S No. 16735/2007.
16. Aricent has filed R.F.A.No.941/2016 challenging
order of eviction in O.S No. 26660/2010.
17. Aricent has filed R.F.A.No. 1078/2016 challenging
order of dismissal of suit of specific performance in O.S
No.25312/2007.
18. Shri. Naganand, for the Aricent, submitted that:
transaction between Aricent and Millenia was
never intended to be solely a lease
transaction, and parties had always intended
for the transaction to fructify into the sale of
the suit property;
the Triparte Agreement dated 21.05.2003
contains several reciprocal promises. Aricent
has complied with its conditions, but Millenia
has failed to do so;
the termination of tenancy amounted to
splitting of tenancy and such termination is
bad in law;
Aricent has invested Rs. 25 Crore towards
development of the suit property;
Millenia delayed the process of execution of
sale deed;
the Trial Court has erred in holding that
Aricent had failed to establish its readiness
and willingness to perform the agreement.
19. Shri. Uday Holla, for Millenia, submitted that :
since the lease deed is not registered, the
tenancy is month to month;
the specific performance is based on the
very same tenacy agreement and it is not
valid in law as it is not registered. Aricent is
seeking specific performance under the
same tenancy agreement. Hence, it is
uneforceable;
Aricent to not entitled to retain possession
based on the claim that it invested for the
improvement;
the Trial Court has not granted adequate
damages.
20. We have carefully considered the rival
contentions and perused the records. The points that arise
for our consideration are:
i) Whether Millenia is entitled for decree of eviction
and damages in respect of the suit property?
ii) Whether Aricent is entitled for decree of specific
performance of agreement dated 19.05.2003?
iii) Whether Millenia is entitled for damages at Rs.30/-
per sq.ft per month as damages, Rs.10/- per sq.ft
for service area?
iv) Whether the orders of the Trial Court call for
interference?
Re. point No. (i):
21. Undisputed facts of the case are, Millenia and
RRC entered into a Development Agreement in respect of
the suit property in the ratio of 73:27. Millenia, RRC and
Aricent entered into a Tripartiate in 19.05.2003. Broad
terms of the agreement are, owners who handover a
building in form of a bare shell to Aricent. Aricent would pay
a sum of Rs. 30,00,000/- towards security deposit. A proper
agreement has neither been executed or registered.
22. In substance, there is no valid contract between
Millenia and Aricent. According to Millenia, it has purchased
RRC holding and become full owner of the suit property.
23. The term of lease agreed in the agreement is 6
years. Admittedly, it is not registered. Clause 12 of the
agreement dated 19.05.2003 reads thus:
"12. MRPL and RRRE and Hughes agree, upon completion
of Phase Development to execute and register at the cost of
Hughes, a Deed of Lease in favour of Hughes, in the form
attached hereto as Annexure VI and on the terms and
conditions act out therein. The terms and set out conditions
in the Lease Deed format shall not be altered or modified
except by mutual consent."
24. Shri. Naganand's contention is that Aricent was
willing to execute the lease deed, but Millenia was delaying
the process. In support of this contention, he relied upon the
cross-examination of PW1 and urged that RRC and Millenia
had not signed the lease deed sent by Aricent. In the cross-
examination, it is admitted thus:
".... ರಸಮ ಮ ಪ ಯವ ಕ ಟ ೕ ೕ
ಪತ ಸ ಪ ಪ ಲ ಎಂದ ಜ...."
25. What is admitted in the above cross-examination
is that Millenia had not signed and returned the agreement
sent by Aricent.
26. It was argued by Shri. Holla that there is not
valid and enforceable lease agreement between the landlord
and the tenant. He relied upon the cross-examination of
Manoj Kumar Vaish, the Vice President of Aricent in O.S. No.
25312/2007, which reads thus:
"......In the month of September 2004 we sought for
modification of the some of the terms of the draft lease
deed"
27. Section 107 of the Transfer of Property Act, 1882
reads as follows
"A lease of immovable property from year to year, or for
term exceeding one year, or reserving a yearly rent, can be
made only by a registered instrument."
28. It is well settled that a lease agreement for a
term more than one year requires to be registered. In
absence of a valid contract, the tenancy shall be construed
as month to month lease. Though both the parties have
strenuously contended that the other party failed to execute
the lease deed, the fact remains that there is no lease
agreement. In the absence of a valid lease agreement, the
tenancy shall be month to month.
29. Shri. Holla has urged that by notices dated
10.01.2005 and 20.07.2010, the lease with Aricent has been
terminated. Shri. Naganand contended that only Aricent had
the right to terminate the lease agreement. He placed
reliance on Clause 5 of the agreement which reads thus:
"5. If the lease of Phase I Development does not
commence on October 30th 2003 on account of failure of MRPL
to complete Phase I Development and/or to obtain the
Occupancy Certificate on or before that date, Hughes may at its
sole and exclusive option terminate this Agreement by notice in
writing and on such termination MRPL shall refund to Hughes all
moneys received under this Agreement together with interest
thereon at the rate of 24 percent per annum and a further sum
equivalent to the amount received by MRPL under this
Agreement as liquidated damages without prejudice to any of
its other rights or remedies hereunder.
30. We may record that any amount of ascertion by
Aricent will not lead its case any further because it is
undisputed that Aricent is depending upon an unregistered
lease agreement which is not valid in law. The resultant
position is that it is a month to month tenancy and Millenia
has sought eviction precisely on this specific premise Section
106 of the Transfer of Property Act, 1882 reads as follows:
"In the absence of a contract or local law or usage to the
contrary, a lease of immovable property for agricultural or
manufacturing purposes shall be deemed to be a lease
from year to year, terminable, on the part of either lessor
or lessee, by six months' notice; and a lease of immovable
property for any other purpose shall be deemed to be a
lease from month to month, terminable, on the part of
either lessor or lessee, by fifteen days' notice."
31. Shri. Naganand urged that the pre-conditions
mentioned in the lease agreement has not been fulfilled by
Millenia. Aricent was liable to pay the rents only after the
lease commences. The relevant clause reads thus:
"17. Subject to the survival clause 18 below, unless
terminated earlier by Hughes, this Agreement shall remain in
force from the date of its execution until
(i) construction of Phase 1 Development is completed;
(ii) possession of Phase I is handed over to Hughes as per the
terms of this Agreement;
(iii) the commencement of the lease and the execution and
registration of the Lease Deed; and
(iv) If Hughes issues a written notice of termination, until return
to Hughes of the funds pursuant to clause 5 hereinabove."
32. If according to Shri. Naganand, the term of lease
must commence only after the above conditions are
satisfied, then Aricent ought have taken the possession of
the suit property after all the conditions were fulfilled. But, it
is not in dispute that Aricent has taken possession of the
property with effect from 15.11.2003.
33. It was argued by Shri. Naganand that Aricent has
also spent Rs.25 Crores. Refuting the same, Shri. Holla
contended that if Aricent has spent any money it is for its
convenience such as partition wall, interiors, furniture,
fittings etc., that investment does not enure to Millenia's
benefit in any way.
34. It was next contended by Shri. Naganand that
Millenia has failed to establish clear title over the suit
property. That KIADB had acquired portion of suit property
vide notification dated 07.09.2004. The said notification was
challenged in W.P.No. 9040/2005. The writ petition was
disposed of with a direction to Millenia to approach the
Special Acquisition Officer. In the light of the pending
proceedings, Aricent is not obligated to pay the rents and
holding charges.
35. This contention is noted only to be rejected
because, admittedly, Aricent is a tenant in possession of the
building. We have already held that there is no valid
agreement and the tenancy is month to month. Acquistion of
a portion of vacant land and filing a writ petition by Millinea
is wholly irrelevant so far as Aricent's rights as tenant is
concerned.
36. With regard to the arrears of rent, Shri. Naganand
contended that Millenia never choose to file an application to
stop further proceedings. This would mean that since the
The Karnataka Industrial Areas Development Board
landlord has not filed any application to stop legal
proceedings non-payment of rents by Aricent shall have no
consequences. A tenant is duty bound to pay the rents.
Therefore, the contention urged on behalf of Aricent is
wholly unreasonable and liable to be rejected.
37. Shri. Naganand next submitted that the
termination of tenancy amounted to splitting of tenancy and
such termination is bad in law. It is undisputed that two
termination notices were issued by Millenia. The first notice
seeking eviction of 73% of suit property and the second
notice in respect of 27%.
38. Schedule B of the Agreement clearly sets out the
demarcation. Aricent's witness has also deposed that:
".... As per Ex.P-3 separate area of plaintiff and RREE are
earmark is in correct. After reading the schedule in Ex.P-3
witness admitted that they have been separately earmark."
39. Thus, at the time of Agreement, Aricent had
agreed to the demarcation of rent, hence, it is estopped
from urging the said plea.
40. In sum and substance, Aricent has come in
possession of the building but without having a valid lease
agreement. It has not paid rents and taken untenale and
arrogant stand that Millenia had not sought for stopping of
proceedings. As there is no valid lease agreement, the
tenancy is month to month and a tenant is duty bound to
vacate and handover the premise. Accordingly, point no.(i)
is answered in the affirmative in favour of Millinea.
Re.point No.(ii):
41. Aricent has instituted O.S.No. 25312/2007
seeking specific performance of the agreement. Clause 15 of
the agreement reads thus:
"15. Without prejudice to the lease arrangements
referred to above and in consideration of Hughes agreeing to
take Phase I Development on lease, Hughes shall also have the
option and right to purchase Schedule A Property with the
Building and Improvements free and clear of all liens, charges
and encumbrances at the price agreed herein. This sole and
exclusive option to purchase shall remain valid and exercisable
on and from the second anniversary of the lease up to and
inclusive of the sixth anniversary day thereof.
15.4 In consideration of the purchase option to Hughes,
Hughes shall pay each month to RRRE a holding cost at
Rs.2,16,000/- [Rupees Two Lakhs Sixteen Thousand Only] per
month until Hughes exercises the purchase option or until the
expiry of six years, whichever is earlier, unless before the
expiry of six years, Hughes shall have decided not to exercise
the purchase option in which event the obligation to pay the
holding cost shall cease from such date as Hughes shall
communicate in writing to MRPL and RRRE its decision not to
exercise the purchase option. In the event Hughes exercising
the purchase option, the holding cost paid by Hughes to MRPL
and RRRE until the exercise of the purchase option shall be set
off towards a part of the sale price. In the event of Hughes not
exercising the purchase option, ARPL and RRRE shall, after the
expiry of the aforesaid period of 6 years, be entitled to deal
with and develop the remaining land in such manner as they
may deem ft and MRPL and RRRE shall be entitled to retain the
entire amount received by them towards holding coat, till then
and shall be under no obligation to refund any portion of the
same to Hughes."
42. Aricent is seeking to enforce the above Clauses in
agrement dated 19.05.2003. We have held that the said
agreement is not valid in law. In addition, Aricent was
required to pay holding charges. Admittedly, holding charges
are not paid. It was urged by Shri.Naganad that Aricent has
invested Rs.25 Crores which proves that it was alaways
ready and williing to purchase the property. We are not
pursuaded to accept this argument for more than one
reason.
43. Firstly because, the agreement is not valid in law.
44. Secondly because, the relevant depostions of
One Manoj Kumar Vaish, the Vice President of Aricent has
been recorded below:
".... ಂ ಎಂದ ೕ ಂದ ಭ ಂ
ಗ ఆ ಸ ವ ಣ ಜ ನನ .
ಅ ಕಟ ಡ ೕ ಪ ಗ ಕ
ಮ ಫ ಚ ಕಚ ವ ರ from
Bare Shell to Warm Shell ವವ ನ ಣ ಜ
ನನ ...."
"We took the possession of the suit schedule property as a
bare shell on 15.11.2003. I also agree that it should be given
as a bare shell. I agree that we were suppose to fit out the
premises to make it useable..."
"Bare shell means where the building is given with four walls
with entrance and electric connection including lifts.
Warm shell means it has apart from bare shell power backup,
air conditioning, fire fighting system."
".... As per EX.P-3 we had in option to take out all the fit outs
with us if lease is terminated...."
45. Aricent had admittedly taken Bare Shell as
agreed between the parties. Thus, whatever investment of
Rs. 25 Crores has been made, it is for its convenience to run
business. It has no connection with performance of the
agreement. Once, the lease is terminated, Aricent can
remove all the additional fixtures made leaving behind the
Bare Shell. Since, there is no lease deed executed, and that
we have held that, the lease is that of month- to month
tenancy, the purchase option available cannot be enforced.
46. The learned Trial Judge in para 21 has rightly
recorded thus:
"21 Admittedly no lease deed is executed till this date. Therefore,
it is clear that lease of 5 yrs is not yet commenced as per terms of
suit agreement. The exercise of defendant's option to purchase the
suit A schedule property is subject to taking the suit B schedule
property on lease for the periods as mentioned in the suit agreement
subject to strict compliance of Clause 15.4 of the suit agreement and
payment of admitted rent amount to the plaintiff and RRCL every
month. As stated supra, it is admitted by the P.W.1 during his cross-
examination that payment of holding cost is not a condition
precedent to exercise defendant's option to purchase suit A schedule
property. But, Clause 15.4 mandates that the defendant shall pay
holding cost of Rs.2,16,000/- per month until the defendant
exercises its option to purchase the suit A schedule property or until
expiry of six years which ever is earlier or unless before the expiry of
six years till the day when the defendant shall communicate in
writing its decision not to exercise its purchase option. This fact is
not disputed by the defendant. Admittedly, the defendant has paid
only Rs.30,00,000/- to the plaintiff and RRCL on 19.5.2003 towards
part payment of security deposit. The said amount is not paid
towards part sale consideration amount or towards holding cost. It is
not a disputed fact that the plaintiff has filed this suit during the year
2005 for eviction of the defendant from the suit B schedule property
alleging that the he has not been paid/paying admitted rent amount
every month to the plaintiff. Admittedly, the defendant has not paid
rent dues amount and balance security deposit amount to the
plaintiff from 15.11.2003 till 2.11.2006, 2.1.2007, 15.1.2007 and
19.10.2006. The cheques sent to the plaintiff on the aforesaid dates
have been returned to the defendant. The defendant has not
deposited the sale consideration amount of Rs.23,25,29,598/- in
spite of its obtaining permission of this Court to deposit the same
before this Court. Admittedly, the plaintiff has not paid the holding
cost amount of Rs.2,16, 000/- every month from 15.11.2003 till
2.11.2006, 2.1.2007, 15.1.2007 and 19.10.2006 i.e., before
exercise of its purchase option. It may be true that the plaintiff has
invested more than 25 crores of rupees to have suitable
infrastructure for its convenience to run a software company.
Admittedly, the plaintiff agreed to take bare-shell building only on
lease. Therefore, expenditure of 25 crores of rupees and
construction canteen cannot be accepted that the plaintiff has done
something in part performance of the suit agreement."
(Emphasis Supplied)
47. The learned Trial Judge has the above recorded
sound reasons and we are at one with the said reasons and
Accordingly, point no.(ii) is answered in the negative and in
favour of Millenia.
Re.point No.(iii):
48. Shri. Holla submitted that the Trial Court has
erred in granting damages at Rs.6 per sq ft. per month and
instead should have ordered Rs.30 per sq ft per month on
the premise that Millenia is entitled to recover the admitted
rent and damages commensurate with the rentals existing in
the locality. This requires determination in an enquiry under
Order XX Rule 12 of the Code of Civil Procedure, 1908.
Re. point No.(iv):
49. In view of the above discussion, the appeals filed
by Aricent do not merit any consideration. No relief can be
granted to Millenia, in their appeals directly in this appeal
without an enquiry under Order XX Rule 12 of the Code of
Civil Procedure, 1908.
50. In the result, the following:
ORDER
a) R.F.A. No 940/2016, R.F.A.No. 941/2016 and
R.F.A. No. 1078/2016 are dismissed.
b) R.F.A.No. 1373/2016 and R.F.A.No. 1374/2016 are
disposed of.
c) There shall be an enquiry under Order XX Rule 12 of
the Code of Civil Procedure, with regard to the
damages claimed by Millenia and that examine shall
be completed as expeditiously as possible.
No Costs.
Before parting with this judgment, this Court places on record its
deep appreciation for the research and assistance rendered by its
official Research Assistants-cum-Law Clerks, Ms. Preksha R.
Lalwani and Ms. Pooja Umashankar.
Sd/-
CHIEF JUSTICE
Sd/-
JUDGE
SPS
