Full Text
HIGH COURT OF DELHI
XXXIX Rules 1 & 2 read with Section 151 CPC for interim relief)
APNAGHAR BUILDERS PVT. LTD .... Plaintiff
Through: Mr. Ravi Gupta, Sr. Advocate with Mr. Ankit Jain, Ms. Devika Mohan, Mr. Abhay Pratap Singh &
Ms. Mohina Anand, Advocates
Through: Mr. Ritesh Agrawal and Mr. Teejas Bhatia, Advocates
I.A. Nos. 5310/2020 (by the plaintiff under Order XV-A read with
Order XXXIX Rule 10 and Section 151 CPC for interim relief) &
1612/2021 (by the defendant under Order VII Rule 11 read with
Section 151 CPC for rejection of the present suit)
JUDGMENT
1. The two applications, one being I.A. No.5310/2020 filed by the plaintiff under Order XV-A read with Order XXXIX Rule 10 and Section 151 CPC for interim relief, and another being I.A. No.1612/2021 filed by the defendant under Order VII Rule 11 read with Section 151 CPC for rejection of the present suit, will be disposed of by this common order. 2021:DHC:2588
2. The suit has been filed by the plaintiff/Apnaghar Builders Pvt. Ltd seeking possession, damages/mesne profit and permanent injunction against the defendant/Intense Fitness and Spa Pvt. Ltd. in respect of property bearing No.C-2/10, Safdarjung Development Area, New Delhi-
110016.
3. The defendant by means of the application under Order VII Rule 11 CPC has sought the rejection of the plaint on the ground that the suit could not have been instituted as an ordinary suit. Mr. Ritesh Agrawal, learned counsel for the defendant, submitted that the plaintiff was relying on a Lease Deed dated 4th January, 2016, alleging that the property was commercial in nature. As per the said Lease Deed, the premises were leased out to the defendant for running a Gym, Spa, Restaurant and other ancillary business, which were commercial in nature. Thus, under Section 2(1)(c)(vii) of the Commercial Courts Act, 2015 (“the Act” in short), the dispute falls within the definition of a commercial dispute. Attention of this Court has also been drawn to the definition in Section 2(1)(c)(vii) and
(xviii) of the Act. Thus, the suit filed as an ordinary civil suit was not maintainable.
4. Learned counsel has further argued that once the dispute was commercial in nature, without adherence to the mandatory requirement of Section 12A of the Act, i.e., pre-litigation mediation, this suit could not have been instituted. Thus, it was also barred under law.
5. In response, Mr. Ravi Gupta, learned senior counsel for the plaintiff has submitted that the defendant had filed a suit being CS(OS) 667/2019, seeking damages as an ordinary civil suit. Learned senior counsel also pointed out that in this suit itself, in response to the application moved by the plaintiff for payment of rent/user charges under Order XV-A CPC, the defendant claimed that the premises were residential in nature, and therefore, he was not under any obligation to pay rent at commercial rates. Therefore, the defendant could not be allowed to approbate and reprobate at the same time.
6. Relying on the judgment of this Court in Soni Dave v. Trans Asian Industries Expositions Pvt. Ltd., 2016 SCC OnLine Del 4282, it was further submitted that it was the nature of the property that was relevant in determining whether a dispute in respect of that property would be commercial or not. It was submitted by learned senior counsel that the suit property was located on a road where commercial use was also permitted and therefore, the premises could not be described as being exclusively and wholly used for commercial purposes only.
7. It was also submitted that merely because a matter could be described as a commercial dispute and the suit was filed as an ordinary suit, could not form a ground for rejection of the plaint. Reliance has been placed on the decision of this Court in Rachit Malhotra v. One97 Communications Limited, 2018 SCC OnLine Del 12410 to submit that, the issue was only one of nomenclature, and this Court could, in the event it concluded that the dispute was commercial in nature, direct the Registry to renumber the suit accordingly.
8. Further there was no intention to avoid pre-litigation mediation, as alleged. It was also pointed out that the plaintiff had approached the National Company Law Tribunal (‘NCLT’) for recovery of the dues, but that petition was vehemently opposed by the defendant and reliance was also placed on the notice issued by the defendant dated 29th October, 2018, on the basis of which, the NCLT concluded that there was a preexisting dispute. Accordingly, it dismissed the application filed before it by the present plaintiff. Thus, when the mind of the defendant was clearly exposed in those proceedings, there was no occasion for initiation of mediation before filing the instant suit.
9. In respect of the application under Order XV-A CPC, as applicable to Delhi, the learned senior counsel for the plaintiff submitted that since November, 2018, the defendant had not paid a single rupee towards rent and occupation charges. The Lease Deed dated 4th January, 2016, records that the premises could be used as commercial against payment of prescribed charges to the MCD towards which the lessor had already deposited the charges as onetime fee. Documents in respect of these charges and permissions were also seen by the defendant. It is thereafter that the premises were taken on lease for commercial purposes of running a Gym, Spa, Cafeteria etc. The defendant after having issued the notice dated 29th October, 2018, had also sent a cheque as rent for the month of October, 2018. Thereafter, the other cheques were all dishonoured. Thus, the defendant could not run away from paying the rent, which according to the learned senior counsel, as on date had increased from the original agreed amount to about Rs.22 lakhs per month. Learned senior counsel further submitted that as per Article 1.3(i) of the Lease Deed, the initial three years were treated as a lock-in period. If the defendant had any issue in continuing in the premises, it had the option of vacating the premises after giving a three-month notice. However, the defendant did not do so. According to learned senior counsel, the defendant was still continuing to use the premises as a gym but was refusing to handover the possession or make payments that were due. Hence, the directions were sought to the defendant to pay rent/user charges.
10. In reply, the learned counsel for the defendant has submitted that the premises had, no doubt, been taken for running a gym but the business of the defendant suffered immensely when the MCD issued a notice on 19th January, 2018, that the premises were residential in nature and threatening to seal the premises. Therefore, the defendant had sent a notice dated 29th October, 2018 to the plaintiff that the rent had to be suspended till the matter was resolved. Learned counsel for the defendant further submitted that the Appellate Tribunal MCD (ATMCD) vide order dated 24th December, 2018 had specifically held, after detailed discussion, that the premises in question were residential and commercial activities could not be carried out therein. In these circumstances, the defendant had filed its suit claiming damages as it had spent a lot of money in the premises for use as a gym. Further it was unable to get any license for Cafeteria and Spa, and thus, its business was impacted. Further the business had also started facing losses because of the action taken by the South Delhi Municipal Corporation (SDMC).
11. Learned counsel for the defendant further argued that since the defendant’s suit was only for damages and was not based on any commercial agreement, therefore, that suit had to be filed as an ordinary suit, whereas, the present suit was based on the Lease Deed, through which, the premises had been leased exclusively for commercial purposes, and thus should have been filed as a commercial suit. In any case, since the defendant was unable to profitably run the business, it was entitled to waiver of rent. The investment made by it to utilize the premises as a gym had also gone waste and therefore, the defendant had no obligation to pay rent. Moreover, once the learned ATMCD had concluded that the premises in question were residential in nature, the plaintiff cannot demand rent at commercial rates. The present suit therefore was not maintainable at the very first instance and thus, no order under Order XV-A CPC could also be passed in this case. Learned counsel prayed that the suit and the application be dismissed.
12. The reason for taking both the applications under Order VII Rule 11CPC and under Order XV-A CPC together is now clear, as the defendant had very apparently raised pleas of convenience. While in its application under Order VII Rule 11 CPC, it insists that the property is commercial in nature and the use of the premises were exclusively for commercial purposes, in response to the application under Order XV-A CPC, the plea taken is that since the property had been declared to be residential in nature by the ATMCD, therefore, the rent at the commercial rates could not be demanded by the plaintiff. Obviously, such contrary pleas taken for convenience ought to be and are rejected straightaway.
13. Nevertheless, the controversy may be considered in the light of the provisions of the Act, as well as the decisions of this court in determining the question whether a dispute relating to immovable property would be a commercial dispute or not. To begin with, it would be useful to reproduce the definition of “commercial dispute”, particularly, in respect of immovable property:
(vii) agreements relating to immovable property used exclusively in trade or commerce;
(xviii) agreements for sale of goods or provision of services;”
14. The learned counsel for the defendant has submitted that the premises i.e., the immovable property was used exclusively in trade and commerce, as gymnasium services were being provided from the property in question. This court in various judgments has explained what would be meant by “immovable property used exclusively in trade or commerce”. In Jagmohan Behl v. State Bank of Indore, 2017 SCC OnLine Del 10706 relied upon by learned counsel for the defendant, this Court opined as below:
15. In Soni Dave(supra), this Court explained, what is meant by exclusive use, in the following words: “ 14. As per Section 2(1)(c)(vii) supra, only a dispute arising out of agreements relating to immovable property used exclusively in trade or commerce qualifies as commercial dispute. It is nowhere the plea in the plaint that the property with respect to which the suit is filed is used exclusively in trade or commerce. The plea of the plaintiff in this regard is that “the property user was as per law” and that “in the event that the defendant were to put the suit property to any use that was not normally permitted under law but could be permitted upon payment of applicable charges, the defendant was liable to tender such charges as applicable in respect thereof including any penalties, interest etc. thereon. Since the defendant has been using the suit property as the show room, the applicable charges were to be additionally borne by it”. Therefrom it appears that the property No. M-1 is situated in the residential colony of Hauz Khas and not in the Hauz Khas market. I may notice that it is the plea of the defendant in its written statement that the letting out of the property as per the lease deed between the parties was “for storage, exhibition of handicraft items and residence”.
16. It was further observed in the said judgment that where the prescribed user as per law i.e., the Master Plan and the municipal law was residential, even if, it was let out for use exclusively in trade or commerce or was being illegally used for such trade or commerce, the same would not be treated as trade or commerce within the meaning of Section 2(1)(c)
(vii) of the Act.
17. In the facts of the present case, it is apparent from the Lease Deed that the property was a freehold built up property located at Safdarjung Development Area on Aurobindo Marg and the Main Aurobindo Marg was permitted to be used as commercial against payment of prescribed charges to the MCD. In other words, the property which was located in a residential area was permitted to be used for commercial purposes, and therefore, it cannot be said that the immovable property was in the nature of commercial property, as it had to be put exclusively for commercial use. The Lease Deed itself refers to the payment of relevant charges and the documentation in respect of permission sought for commercial use.
18. In these circumstances, following the decision of this court in Soni Dave (supra), this Court concludes that the dispute is not covered under Section 2(1)(c)(vii) of the Act, as the dispute is not arising out of a property that is exclusively to be used for trade and commerce and it is not in the nature of a commercial property such as one that would be located in a market area, commercial area or an institutional area. Therefore, the application under Order VII Rule 11 CPC merits dismissal.
19. There is another reason why the said application is to be dismissed. As observed by this court in Rachit Malhotra(supra), ultimately it is only a case of nomenclature and, even if, this suit was to have been found to be a commercial suit, it could always be registered as a commercial suit by directions of this Court. Such a mis-description of the suit cannot entail its rejection. When a suit is re-numbered, as a commercial suit, obviously, Section 12A of the Act, would not and cannot come into play. Of course, the discretion of the court still remains under Section 89 of the CPC, to refer the parties to mediation, to work out an amicable settlement between the parties before embarking on the trial, subject of course, to the timeframe provided under the Act.
20. The application under Order VII Rule 11 CPC is accordingly dismissed.
21. Coming to the application under Order XV-A CPC, the provision has been introduced in order to protect the interest of the landlord where the tenant/unauthorized occupant continues to remain in occupation without paying rent or user charges. A Division Bench of this court in Raghubir Rai v. Prem Lata, 2014 SCC OnLine Del 3045, while dealing with similar matter, held as below:
22. In the present case, the plea taken by the defendant for not paying the rent from November 2018 is that the notice of the SDMC threatening sealing of the property had impacted his business. But there is weight in the contention of the learned senior counsel for the plaintiff that had it been so, the defendant would have taken advantage of the opportunity presented to it, under Article 1.3(ii) of the Lease Deed, that after the lockin period of 3 years, it could have vacated the premises. But admittedly, the defendant is still in possession. Interestingly, in the letter dated 29th October 2018, the defendant, while claiming that it was both “just and equitable” with a view to set off their losses and damages, that the monthly rent reserved for the premises amounting to Rs.17 lakhs per month “be withheld till final adjudication and disposal” of the MCD case by the ATMCD, it has not made any offer for an interim payment clearly with the malafide intention of depriving the landlord of its just use.
23. The learned senior counsel for the plaintiff has also pointed out to the order dated 30th January, 2018 of the ATMCD, where a statement was made by the authorized representative of the defendant that the defendant had no objection in case the appeal against the notice issued by the SDMC was pursued by the appellant, who is the plaintiff herein, and further stated before the learned ATMCD that it would abide by the decision of the ATMCD. Thus, the defendant was fully aware of the proceedings as also the fact that the plaintiff was bonafidely pursuing the matter, to protect not only the interest of the plaintiff, but also the defendant.
24. No doubt, the learned ATMCD vide its judgment dated 24th December, 2018, came to the conclusion that the premises were residential in nature and allowed the SDMC to take action for sealing the premises. However, it cannot also be overlooked that the appeal against this order is still pending and the premises have been protected. Thus, the premises are in the use and occupation of the defendant. The loss occurring in the business carried out by a tenant in the premises cannot be offset against the rent payable to the landlord. A Lease Deed is not an agreement to share profit and losses. In these circumstances, there is no force in the contention of the defendant that as it was running in losses, it could not be made to pay the rent.
25. Equally, since the Lease Deed was with effect from 4th January 2016, and till the sealing order dated 19th January, 2018, the defendant had been using the premises for running the gym and provide other commercial services and pay the rent in terms of the Lease Deed dated 4th January 2016, it cannot be allowed to wriggle out of the liability to pay the rent/user charges for its continued possession and use of the tenanted premises. The premises were taken on rent for the purposes of Gym, Salon, Spa, Restaurant, and ancillary businesses. As per Article 3, the rates of rent specified is @ Rs.17 lakhs from the period 1st March, 2016 to 28th February 2019; at the rate of Rs.19,55,000/- from 1st March, 2019 to 28th February, 2022; whereafter from 1st March 2022 to 28th February 2025, the rent would have been payable @ Rs.22,48,250/- per month.
26. The question as to whether the defendant would be entitled to damages, as claimed for by it, in its suit CS(OS) 667/2019 is still to be determined. In vacuum, no set off can be claimed or granted at this stage.
27. However, in the light of the fact that since 2020, the Covid-19 pandemic has impacted all businesses, this Court directs the defendant to pay the rent/user charges not at the agreed rate of rent as reproduced herein-above, but at the rate of Rs.17 lakhs per month w.e.f. 1st November, 2018, till date and to continue to pay rent/user charges at the said rate of Rs.17 lakhs per month till the disposal of this suit. The arrears of rent from November, 2018, till date be deposited in this Court within a period of two months without prejudice to the rights and contentions of the parties.
28. With aforesaid directions the application under Order XV-A of CPC is accordingly disposed of. CS (OS) 164/2020 & I.A. No. 5309/2020 (by the plaintiff under Order XXXIX Rules 1 & 2 read with Section 151 CPC for interim relief)
29. List on 9th September, 2021 before the Joint Registrar for completion of pleadings in the suit.
30. The order be uploaded on the website forthwith.
JUDGE AUGUST 24, 2021/ck/pkb