Kerala High Court

Saheer Vachal vs Cochin Smart City Properties Pvt.Ltd on 6 March, 2024

         IN THE HIGH COURT OF KERALA AT ERNAKULAM
                         PRESENT
        THE HONOURABLE MR.JUSTICE C. JAYACHANDRAN
 WEDNESDAY, THE 6TH DAY OF MARCH 2024/16TH PHALGUNA, 1945
                  OP(C) NO.340 OF 2021
AS AGAINST THE COMMON JUDGMENT DATED 01.01.2021 IN C.M.A
NOS.25/2020 AND 37/2020 ON THE FILE OF THE ADDITIONAL
DISTRICT COURT-IV, KOZHIKODE; I.A.NO.3397/2019 IN O.S.
NO.401/2019 ON THE FILE OF PRINCIPAL MUNSIFF COURT-I,
KOZHIKODE
PETITIONER/APPELLANT/PLAINTIFF:

         SAHEER VACHAL, AGED 35 YEARS,
         S/O.ABOOBACKER, VACHAL HOUSE, UMMATHOOR,
         PARAKKADAV DESOM, P.O.PARAKKADAV,
         CHEKKYAD VILLAGE, VATAKARA TALUK,
         KOZHIKODE DISTRICT-673509.

         BY ADVS.
         SRI.T.SETHUMADHAVAN (SR.)
         SMT.PREETHI. P.V.
         SRI.M.V.BALAGOPAL
         SMT.DEEPA NARAYANAN


RESPONDENTS/RESPONDENTS/PLAINTIFFS:

    1    COCHIN SMART CITY PROPERTIES PVT.LTD.,
         PEEVEES TRITON, MARINE DRIVE, COCHIN-682031,
         REPRESENTED BY ITS MANAGING DIRECTOR P.O.JOSE.

    2    M/S.TRADERS TOWERS CONSTRUCTION AND PROPERTY
         DEVELOPERS PVT.LTD.,
         REGISTERED OFFICE AT BUILDING NO.5/3410-T15,
         FIRST FLOOR, RP MALL, MAVOOR ROAD, KOZHIKODE,
         REPRESENTED BY ITS MANAGING DIRECTOR
         B.RAVEENDRAN PILLAI, BY P.A.HOLDER
         SRI.A.C.RAVINDRAN, S/O.GOPALA MENON,
         KALLATH MADATHIL, RAJI CHEMBALASSERY PARAMBA,
         NEAR COTTON MILL, P.O.THIRUVANNUR NADA,
         KOZHIKODE-673029.

         BY ADVS.
         SRI.M.GOPIKRISHNAN NAMBIAR
         SRI.K.JOHN MATHAI
         SRI.JOSON MANAVALAN
         SRI.KURYAN THOMAS
 OP(C) No.340 of 2021
                          - 2 -

         SRI.PAULOSE C.ABRAHAM
         SRI.RAJA KANNAN
         HARINDRANATH B.G
         AMITH KRISHNAN H.(K/000666/2015)
         SAIRA PUTHIYAPARAMPATH(K/1557-B/2019)
         GOWRI DEV(K/003380/2023)


     THIS OP (CIVIL) HAVING BEEN HEARD ON 05.01.2024, THE
COURT ON 06.03.2024, DELIVERED THE FOLLOWING:
 OP(C) No.340 of 2021
                                - 3 -

                              JUDGMENT

Dated, this the 6th day of March, 2024

The common order in C.M.A.Nos.25 & 37 of 2020 of

the Addition District Court-VI, Kozhikode is under

challenge in this Original Petition. The plaintiff

in the suit O.S.No.401/2019 of the Principal

Munsiff Court, Kozhikode, who is the appellant in

the C.M.A. second above referred, is the

petitioner herein. Ext.P5 order of interim

injunction granted by the Principal Munsiff -

restraining the respondents from demolishing/

removing the fit-outs, interiors and other

belongings of the petitioner in the petition

scheduled room - was vacated by the learned

District Judge by the impugned Ext.P6 common

order.

2. Heard Sri.T.Sethumadhavan, learned Senior

Counsel, instructed by Adv.Deepa Narayanan, on

behalf of the petitioner and Sri.B.G.Harindranath,

learned counsel for the respondents.

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3. The bare minimum facts required for

adjudication of the instant Original Petition are

as follows:

Ext.P1 Letter of Intent (LOI) was executed by and

between the 1st respondent private limited company

and the petitioner herein, whereunder, the

petitioner was offered a shop room having an area

of 1337 sq. ft. in the first floor of a Mall at

Calicut, under the name and style "Mall of Joy".

Ext.P1 Letter of Intent specifies the type of

agreement as that of a leave and license. The

expected date of commencement of the Mall, as per

Ext.P1, was 01.04.2012; and the expected date for

giving possession for fit-outs was 15.01.2012. The

period of leave and license was prescribed as nine

years, with a lock-in period of three years.

License fee, security deposit etc, are prescribed

in Ext.P1. Two months license fee, equivalent to

Rs.2,94,140/-, has to be paid at the time of

signing Ext.P1 letter of intent, which the

petitioner/plaintiff claims to have performed. It

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is the further claim of the petitioner/plaintiff

that he had spend Rupees Forty lakhs

approximately, to carry out the interior works and

fit-outs in the scheduled shop room. The suit was

filed in the year 2019, on the allegation that the

petitioner/plaintiff was prevented by the 2nd

respondent herein, from entering into the building

complex, on the claim that the Mall was sold to it

by the 1st respondent. It is not in dispute that,

the Mall could not be developed in view of several

litigation, which respondents 1 and 2 faced from

various quarters. The disputes were ultimately

referred to arbitration and based on the award,

the complete rights of the building was given to

the 2nd respondent herein.

4. The 2nd respondent would maintain that, there

is no privity of contract between the

petitioner/plaintiff and the 2nd respondent. Even

as per the case of the petitioner/plaintiff,

Ext.P1 was only an offer and the petitioner has

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not become a licensee. Nor was the shop room taken

possession of, by him. Based on Ext.P1, the

petitioner/plaintiff was only permitted to do the

fit-outs in the scheduled shop room. The

petitioner never started any business in the shop

room. It was contended that the remedy, if any,

of the petitioner, is to seek compensation from

the 1st respondent; and the injunction sought for

cannot be sustained.

5. Learned Senior counsel appearing for the

petitioner/plaintiff would contend that, the

effect of a Letter of Intent like Ext.P1 has been

explained by the Hon'ble Supreme Court in Rishi

Kiran Logistics Private Limited vs. Board of

Trustees of Kandla Port Trust and Others[2015 (13)

SCC 233] and Dresser Rand S.A. v. M/s. Bindal Agro

Chem Ltd. & Another [(2006) 1 SCC 751]. On the

strength of the said dicta, learned Senior would

contend that the Letter of Intent is enforceable,

particularly when the petitioner/plaintiff had

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acted upon it. According to the Senior Counsel,

the injunction granted by the learned Munsiff,

ought not have been interfered with by the 1st

appellate court, inasmuch as, it only seeks to

prevent demolition of the fit-outs made by the

petitioner/plaintiff. Such interference was all

the more illegal, in view of the law laid down a

Division Bench of this Court in Pulippinakkadu

Muthukoya and Others v. Muchiyan Mnthukoya and

Others [1988 (1) KLJ 712]. According to the

learned Senior, the order of status quo directed

by the Munsiff, is liable to be restored.

6. Refuting the above contentions, learned

counsel for the 2nd respondent would contend that

the petitioner/plaintiff was not in possession of

the scheduled shop room, is a fact found by both

the trial court and the appellate court, without

which, there arises no question of issuance of any

order of injunction. After the award of the

Arbitrator, it is the 2nd respondent, who is put in

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possession of the building. It was emphasized

that, the 1st respondent who promised a License in

respect of the subject room to the

petitioner/plaintiff, vide Ext.P1, was only a

tenant under the 2nd respondent. On absence of

privity of contract, learned counsel relied upon

two decisions of the Hon'ble Supreme Court, Mod.

Seraiuddin etc v. The State of Orissa [AIR 1975 SC

1564] and Cox and Kings India Limited v. Indian

Railways catering and Tourism Corporation Limited

and Another [2012 (7) SCC 587]. On the scope of a

Letter of Intent, learned counsel relied upon

South Eastern Coalfields Limited and Others v.

S.Kumar's Associates AKM (JV) [2021 (9) SCC 166].

On such premise, learned counsel would contend

that, no interference is warranted to Ext.P6 order

of the appellate court in the C.M.As in question.

7. The law relating to LOI is no more res

integra. Ordinarily, a Letter of Intent merely

indicates a party's intention to enter into a

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contract with another in future. The same is not

intended to bind either party to enter into a

contract ultimately. However, there can be

instances, where an LOI may reflect acceptance of

an offer too, in which case it may have to be

construed as a concluded contract, provided such

acceptance is evident from the terms of the LOI.

[See in this regard i) Dresser Rand(supra);

ii) Rishi Kiran Logistics(supra) ; iii) South

Eastern Coalfields Limited(supra)].

8. Coming to the instant facts, the Letter of

Intent, produced as Ext.P1, contemplates a leave

and licence arrangement between the petitioner and

1st respondent herein. Ext.P1 provides the expected

date of commencement of the Mall as 01.04.2012 and

expected date on which possession is given for

fit-outs is 15.01.2012. It provides for a period

free of licence fee, whereafter, the licensee

(petitioner herein) is under an obligation to pay

the license fees, amenities charges etc. The free

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period is stipulated to be 45 days from the date

of handing over for fit-outs and interiors, or the

date of commencement of the Mall, whichever is

later. It is specifically provided that the

licensee shall not carry on any business in their

respective premises before the commencement of the

Mall. Ext.P1 contains a clear caveat, which throws

light into the intention of the parties, which is

extracted here below:

"This is a mere Letter of Intent and reflects only the Commercial understanding of the parties and is not a legally binding contract. This Letter of Intent is subject to the Terms & conditions of the Agreement. If for any reason parties are not able to agree to the terms & conditions of the Leave & License/Lease agreement, then this Letter of Intent shall stand cancelled and the Licensor will refund 50% of the advance made by the Licensee towards interest free security deposit."

9. It is therefore, axiomatic that Ext.P1 does

not reflect a completed/concluded contract.

Instead, it only speaks of the intention of the

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parties to enter into a contract upon commencement

of the Mall, wherein the licenser agrees to give a

shop room having an approximate area of

1337 sq.ft. to the licensee under a leave and

licence agreement. All what transpires

simultaneous with the execution of Ext.P1 is the

payment of an interest fee security deposit by the

licensee to the licenser and handing over

possession for carrying out fit outs and interior

works, on and with effect from 15.01.2012. The

rest of the matters in Ext.P1 is merely a

contemplation, which is to take effect on the

commencement of the Mall. As already indicated,

there is no dispute that the Mall had not

commenced at all. In the circumstances, this Court

may conclude that there is nothing available in

the terms of Ext.P1 to take a deviation from the

ordinary legal concept of an LOI, so as to treat

and construe Ext.P1 as a concluded contract.

10. Having found so, the solitary claim which the

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petitioner/plaintiff can make appears to be one

for return of the advance paid and value of

improvements, if any, subject to proof. This Court

notice that the suit was filed in the year 2019

and the same is only for injunction simpliciter.

Going by Ext.P1, the stipulated period of the

licence arrangement is 9 years. Even assuming that

the remedy for injunction could be maintained in

the initial phase - so long as the so claimed

improvements are there in the premises - the

question is how long can the petitioner cling on

to the said remedy, especially when the total

period stipulated in Ext.P1 had already expired,

by now. No claim for money has been made so far,

either by amending the suit or otherwise. This

Court is also bound to take into account the

change of circumstances, whereby the 2nd respondent

has become the owner of the premises by virtue of

an arbitral award. As against the 2 nd respondent,

the petitioner has no privity of contract, much

less any concluded contract.

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11. This Court finds no reason to interfere with

the judgment impugned of the learned District

Judge, which refused injunction. As held by the

Honourable Supreme Court in Wander Limited and

Others v. Antox India Private Limited [1990 Supp

(1) SCC 727], an appellate court is not expected

to interfere with an interim order of injunction

granted by the trial court, unless the discretion

has been exercised arbitrarily.

This Original Petition fails and the same will

stand dismissed.

Sd/-

C.JAYACHANDRAN, JUDGE

TR/ww

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APPENDIX OF OP(C) 340/2021

PETITIONER'S EXHIBITS:

EXHIBIT P1 TRUE COPY OF THE LETTER OF INTENT EXECUTED BETWEEN THE PETITIONER AND THE 1ST RESPONDENT DATED 06.01.2012.

EXHIBIT P2 TRUE COPY OF I.A.NO.3397/2019 IN O.S. NO.401/2019 DATED 25.09.2019.


EXHIBIT P3         TRUE COPY OF    THE COUNTER STATEMENT
                   FILED BY THE     1ST RESPONDENT DATED
                   26.11.2019.

EXHIBIT P4         TRUE COPY OF    THE COUNTER STATEMENT
                   FILED BY THE     2ND RESPONDENT DATED
                   29.10.2019.

EXHIBIT P5         TRUE COPY OF THE ORDER OF THE LEARNED

MUNSIFF IN I.A.NO.3397/2019 IN O.S. NO.401/2019 DATED 20.03.2020.

EXHIBIT P6 TRUE COPY OF THE COMMON JUDGMENT IN C.M.A.NO.25/2020 AND C.M.A.NO.37/2020 DATED 01.01.2021.

EXHIBIT P7 TRUE COPY OF THE COMMISSIONER'S REPORT DATED 30.10.2019.

RESPONDENTS' EXHIBITS:

EXHIBIT R2(A) A TRUE COPY OF THE PROCEEDINGS DATED 16.11.2018 OF THE ARBITRATOR IN THE MATTER OF DISPUTE BETWEEN THE 2ND RESPONDENT HEREIN AND THE PETITIONER HEREIN.