Full Text
HIGH COURT OF DELHI
Date of Decision: 20th May, 2021.
GRAND AUTO CAPITAL & ORS. ..... Appellants
Through: Mr.Firoz Iqbal Khan and Mr.Mohammad Faizan, Advs.
Through: Mr.Karan Singh, Adv.
HON'BLE MR. JUSTICE AMIT BANSAL [VIA VIDEO CONFERENCING]
RAJIV SAHAI ENDLAW, J.
JUDGMENT
1. This appeal was filed, impugning the order (dated 26th October, 2020 of the Commercial Court, North West District, Delhi, in Misc. D.J NO. 223/2020 in CS (COMM) No. 77/2019) of dismissal of an application of the appellants/defendants under Order IX Rule 13 of the Code of Civil Procedure, 1908 (CPC) for setting aside of the ex parte decree dated 19th February, 2020 of ejectment of the appellants/defendants from immovable property (earlier in the tenancy of the appellants/defendants under the respondent/plaintiff on the terms and conditions contained in the registered 2021:DHC:1659-DB lease deed between the parties) and for recovery from the appellants/defendants, of arrears of rent and mesne profits.
2. It was the case of the appellants/defendants, that they learnt of the exparte decree, only on receiving notice of the petition filed for execution thereof and were never served with the summons of the suit.
3. Notice of this appeal was ordered to be issued. However, finding (i) that none appeared for the appellants/defendants on 27th January, 2021 and on 1st February, 2021 and, (ii) that the appellants/defendants, when appeared, were not resisting delivery of possession and that the mesne profits decreed were only marginally above the agreed rent, when none appeared for the appellants/defendants on 9th February, 2021 also, the appeal was dismissed in default.
4. The appellants/defendants filed CM 11388/2021 for restoration of the appeal. The said application came up before us on 22nd March, 2021 but on which date the counsel for the appellants/defendants, when asked to argue on the appeal itself, sought adjournment. On 22nd March, 2021, inter alia the following order was passed:- “5. We have already recorded our observations in the order dated 9th February, 2021, though dismissing the appeal in default.
6. On enquiry, the counsel for the respondent states that possession has not been delivered, as yet.
7. We have enquired from the counsel for the appellants, whether has any objection to delivery of possession of the premises to the respondent.
8. The counsel for the appellants states that the appellants are not in possession. On enquiry, who else is in possession, the counsel has no answer. On further enquiry, whether there is any document of handing over of possession to the respondent, the counsel for the appellants states that though there is no such document, but there is an email.
9. The counsel for the respondent states that premises where the appellants were earlier running a Skoda showroom, are lying locked and the Executing Court has issued warrants of possession, giving opportunity to the appellants to remove their goods inside the premises, by 25th March, 2021.
10. The counsel for the appellants has no objection to the respondent breaking open the locks and doors on its own without waiting for the same to be done in execution and to enter into possession.
11. The respondent may accordingly so enter into vacant, peaceful and physical possession of the premises today itself and would be deemed to have been put in possession of the premises today, without prejudice to the rights and contentions of the parties.
12. Now, the counsel for the appellants states that the plant and machinery of the appellants are lying inside the premises and time be given to remove them.
13. The same exposes the falsity of the claim earlier being made by the appellants of not being in possession of the premises. Had the appellants been not in possession, there would have been no question of the plant and machinery of the appellants lying inside the premises.
14. Now the counsel for the appellants again changes his stand and states that the respondent may take possession and do whatsoever it likes with whatever is found inside therein and the appellants would have no claim in that regard.
15. The respondent may break open lock and door of premises and take possession of the same together with whatsoever may be lying therein, free from any claim of the appellants.
16. List on 5th May, 2021.”
5. On 5th May, 2021, there was a request for adjournment on behalf of the appellants/defendants; the counsel for the respondent/plaintiff, on enquiry on that date, stated that the respondent/plaintiff had recovered possession of the premises in pursuance to the decree.
6. Today, the counsel for the appellants/defendants states that he has yesterday filed three applications in this Court.
7. Needless to state, the same are not on record.
8. On enquiry, it is stated that the said applications have been filed, for placing additional documents forming part of the record of the Commercial Court, on record, for giving an inventory of the investments made by the appellants/defendants in the premises and for seeking review of para 15 of the order dated 22nd
9. Considering the nature of the applications, need to adjourn the hearing is not felt and the counsel for the appellants/defendants is requested to email to us the applications filed yesterday and we have perused the said applications before finalizing this judgment otherwise dictated in open Court. The Registry to number the applications.
10. Subject to the counsel for the appellants/defendants arguing the admissibility of the appeal today itself, CM No. 11388/2021 for setting aside the order dated 9th February, 2021 of dismissal of the appeal in default, is allowed and the appeal restored to its original position.
11. The counsel for the appellants/defendants has argued, (i) that the appeal impugns the order of dismissal of an application under Order IX Rule 13 of the CPC; (ii) that the Commercial Court has wrongly dismissed the said application; (iii) that the respondent/plaintiff had three addresses of the appellants/defendants available with it i.e, of the demised premises, of the office of the appellant/defendant no. 1, a partnership firm, at Delhi and of the permanent address of the partners of the appellant at Chhattisgarh; (iv) however the respondent/plaintiff, knowing fully well that the demised premises were lying locked and the appellants/defendants were not in use thereof, in the suit from which this appeal arises, gave the address of the demised premises only and did not give the other two addresses of the appellants/defendants; (v) that the respondent/plaintiff also had available with it, the telephone numbers as well as the email address of the appellants/defendants but the same were also not disclosed; and (vi) all this was done to prevent the appellants/defendants from contesting the suit. It is thus argued that the appellants/defendants, before the Commercial Court had made out a good case for setting aside of the ex-parte decree and the Commercial Court erred in dismissing the application and in not setting aside the ex-parte decree.
12. We have however enquired from the counsel for the appellants/defendants, what purpose would be served in setting aside the exparte decree inasmuch as the decree which is sought to be set aside is of ejectment of the appellants/defendants from the premises earlier in the tenancy of the appellants/defendants and of recovery of mesne profits and when the counsel for the appellants/defendants today also confirms that the appellants/defendants are not impugning the decree insofar as for ejectment (and in pursuance to which possession of the premises has already been delivered in pursuance to the order dated 22nd March, 2021) and when the mesne profits, if decreed at a rate higher than the agreed rent, without there being any evidence therefor, relief in that regard can be given in this appeal itself, though not against the decree.
13. We may record that the impugned order itself, in paragraph 27 thereof records (i) that under the registered lease deed between the parties, the rent agreed to be paid from 1.12.2018 to 30.11.2021 was @ Rs.7,18,750/- per month i.e, Rs.23,958/- per day; and, (ii) that the decree for mesne profits had been passed for payment @ Rs.30,000/- per day, from January, 2019 and till the vacation of the property.
14. The counsel for the appellants/defendants, on enquiry states that the appellants/defendants have paid rent till 6th October, 2018 and have thereafter paid a sum of Rs.[6] lakhs, on account, towards rent.
15. It is obvious that the decree for mesne profits is not for any period for which the appellants/defendants have paid rent, for the need to set aside the ex-parte decree for this reason to arise.
16. The counsel for the appellants/defendants then states that the appellants/defendants, under the registered lease deed also paid interest free security deposit of Rs.25 lakhs to the respondent/plaintiff and the need for setting aside the ex-parte decree arises, to enable the appellants/defendants to seek adjustment/recovery thereof.
17. Though the said lease deed has not been filed along with the appeal but the counsel for the appellants/defendants states that lease deed has been filed along with the applications aforesaid stated to have been filed yesterday and has read out to us the concerned clause in the lease deed qua security deposit. We have, while correcting this judgment, also perused the lease deed, in which the appellant/defendant no. 1 is described as the ‘Lessee’ and the respondent/plaintiff as the ‘Lessor’. Clause 2(d) of the lease deed is as under:- “(d) The Lessee has paid a security deposit of Rs.25 lacs through RTGS vide online transfer transaction no. CORPR- 92015110301570010 dated 3-11-2015 to the Lessor and the Lessee agrees to maintain the Security Deposit for the complete tenure of the Lease Agreement. This Security Deposit will be returned by the Lessor to the Lessee on the expiry of the Lease subject to the Lessee first handing over the peaceful vacant physical possession of the property at that time. The Lessor will first adjust any outstanding due from the Lessee in respect of rent, Service Tax, Electricity/ Water Bills or amounts ascertained by the Lessor.”
18. The possession of the premises, as aforesaid, has been delivered only on 23rd March, 2021. The claim of the appellants/defendants for refund of security deposit, in accordance with the aforesaid clause, would arise on the said date only and at no time prior thereto and there is thus no need to set aside the ex-parte decree for the said reason. The appellants/defendants are free to make a claim on the respondent/plaintiff for refund of security deposit and which, if not paid or disputed, has to be subject matter of separate legal proceedings by the appellants/defendants against the respondent/plaintiff, for recovery thereof. Merely because a defendant, who has been proceeded against ex-parte and against whom ex-parte decree has been passed, has a counter claim against the plaintiff, is no reason to set aside the ex-parte decree.
19. The counsel for the appellants/defendants then states that it is also the case of the appellants/defendants, that the respondent/plaintiff deprived the appellants/defendants of access to the tenanted premises, w.e.f February, 2019 and the respondent/plaintiff is not entitled to any rent/mesne profits for any period thereafter.
20. On enquiry, whether any grievance was made in this regard, it is stated that an email in this regard was sent on 24th July, 2019 and print out whereof also has been filed along with the application filed yesterday. The said email is as under: “Dear Mr.Manoj, Greetings! With reference to our discussion for the Balance Rental Payment against our property which has been taken on lease for Grand Auto Capital, Car Workshop. We had invested close to about 200 lacs in the premises invested in fix & Equipments. Not only this I have spare parts, Accessories & Oil stock worth of Rs.85 lacs averagely kept/stored in your premises. It is to be noted due to unavoidable circumstances we had to close our operations in November 2018 & since the the Workshop is closed & without any operations. Further our all staffs were released in January & hence we had no manpower since February 2019. As the Automobile market is facing a turmoil & we had to shut operations & we could not pay the rent since November 2018. But however we had deposited a Refundable security deposit of Rs.25 lacs (Aprox. 4.[5] Months rental). However since February we were not allowed to do any operations or to take any material outside the premises to sell our spare parts stock or any equipment etc. However keeping & seeing our long term relationship we had in 3 years approx we would like to close the lease & deal in a most amicable & humble manner. Hence seeing all the above situations we shall be clearing all payable accounts through us Till March 2019. We shall be clearing all the Dues payable towards the Premises:
1. Rental Accounts till March’19, 2. TDS till March’19. Hence we request to kindly accept this for mutual & amicable settlement. Also once you agree we shall try to clear the dues within 5-7 working days and to take back our material. Further as we have lot of investment done we have been approached by few parties of the same workshop trade to take the premises & our Equipments as it is which will be beneficial to both of us for mutual cooperation. Hence look forward to you positive revert & cooperation. ….. Thanks regards Abhinav Rishi”
21. In the aforesaid email, even if accepted, there is no grievance by the appellants/defendants of the respondent/plaintiff having prevented the appellants/defendants from using the tenanted premises. The appellants/defendants, though in the aforesaid email stated that they were not allowed to do any operation or to take any material outside the premises or to sell spare parts and equipments lying in the premises, have shied from attributing all this to the respondent/plaintiff. Rather, a reading of the whole email indicates that the reasons were attributable to other causes and for which the respondent/plaintiff cannot be denied rent/mesne profits. On the contrary, the appellants/defendants in the said email referred to the good relations with the respondent/plaintiff and which would not have been stated had the respondent/plaintiff obstructed the use of the premises by the appellants/defendants. The said email is also conspicuously quiet about delivery of possession. There is no offer therein to the respondent/plaintiff to take back possession of the premises; rather, from admission in the said email of the goods of the appellants/defendants till then lying in the premises, it is evident that the appellants/defendants were in possession of the premises and continued in possession of the premises as evident also from the contradictory stands taken by the counsel for the appellants/defendants before this Court during the hearing on 22nd March, 2021, order of which date is reproduced above. The respondent/plaintiff, in law and under the lease deed, is entitled to rent/mesne profits till the date of delivery of possession and which possession as aforesaid was delivered now on 23rd
22. We may at this stage also deal with the application of the appellants/defendants for review of the order dated 22nd March, 2021. In the said application, the appellants/defendants have not controverted that the order records what transpired during the hearing before the Court. Once it is so, no ground for review is made out. What the appellants/defendants have stated in the application is “that to the best knowledge of the plant and machineries and other articles are to the worth to Rs.3.04 crores approximately and which were lying in the suit premises when the respondent forcefully took possession of the suit premises from the appellant and the appellants have not given up the claims over the P&M lying in the suit premises”. However this is contrary to what transpired before the Court and as recorded above. The appellants/defendants, to suit themselves, took shifting stands. When asked to pay, they said that they were not liable because were not in possession. However on respondent/plaintiff being permitted to break open locks to take possession, they said their goods were lying in the premises. If the goods of the appellants/defendants were lying in the premises, it is the appellants/defendants who were in possession and the respondent/plaintiff could not have used the premises for any purpose whatsoever and the respondent/plaintiff would thus remain entitled to mesne profits.
23. We have even otherwise enquired from the counsel for the appellants/defendants, under which law are the appellants/defendants entitled to suspend or withhold payment of rent/mesne profits, even if the respondent/plaintiff landlord prevents access of the appellants/defendants to the premises.
24. The counsel for the appellants/defendants states that there is no right to suspend the payment of rent.
25. Once it is so, the aforesaid claim of the counsel for the appellants/defendants, even though contrary to the email dated 24th July, 2019, also forms a separate cause of action for the appellants/defendants to agitate their claim, if any, against the respondent/plaintiff. Rather it is found that the appellants/defendants, though in November, 2018, had shut down the operations of the Skoda showroom for which the premises of the respondent/plaintiff were taken on rent and though all the employees of the appellants/defendants in the said showroom had also left employment of the appellants/defendants in February, 2019, held on to the premises of the respondent/plaintiff, compelling the respondent/plaintiff to institute the suit from which this appeal arises.
26. Once it is found that the appellants/defendants, as per their lease deed, have no defence to the claim which has been decreed ex-parte, this Court would not mechanically set aside the decree. An ex-parte decree is to be set aside only if grounds therefor are made out and if such setting aside is necessary to enable the defendant to contest the claim. However if the defendant has no defence, the ex-parte decree is not to be set aside to keep the Courts and the Advocates busy.
27. Though the counsel for the respondent/plaintiff has no instructions to agree to reduction in the rate at which mesne profits had been decreed and seeks time therefor, but the need to keep the matter pending therefor, is not felt. A perusal of the ex-parte judgment and decree shows that there was no material and evidence before the Commercial Court for awarding mesne profits at a rate higher than the agreed rate of rent and the same has been done merely on the basis of ex-parte evidence of the respondent/plaintiff and on the basis of clause in the registered lease deed whereunder the appellants/defendants had agreed to pay mesne profits @ Rs.50,000/- per day. It is felt that the interest of justice would be served, if the ex-parte decree is modified, by reducing the rate of mesne profits from that awarded of Rs.30,000/- per day to that of Rs.7,18,750/- per month which the appellants/defendants had agreed to pay under the registered lease deed.
28. We are conscious that the ex-parte decree is not in appeal before us and it is only the dismissal of the application for setting aside the ex-parte decree which is in appeal in these proceedings; however the whole purport of enacting the Commercial Courts Act, 2015 was to enable the Courts to decide the commercial disputes expeditiously, without being slave to the procedure and it is felt that if the aforesaid course is not followed in this appeal, it will do immense disservice to the change brought about by the Legislature. Reference in this regard can be made to Ambalal Sarabhai Enterprises Limited Vs. K.S. Infraspace LLP (2020) 15 SCC 585, Government of Maharashtra (Water Resources Department) Vs. Borse Brothers Engineers & Contractors Pvt. Ltd. 2021 SCC OnLine SC 233 and Kandla Export Corporation Vs. OCI Corporation (2018) 14 SCC 715.
29. Before parting with this judgment, we may also deal with the other two applications filed yesterday. The documents filed with one of the applications have already been considered above and the application therefor is thus allowed. The third application is for bringing on record the list of inventories enclosed therewith. It is stated that the items in the said inventory are lying in the premises. Though it is not clear, what purpose, bringing on record the said inventory would serve but if it is the purport of the appellants/defendants, that the appellants/defendants are entitled to recover the value thereof from the respondent/plaintiff, then we are afraid, the appellants/defendants on 22nd March, 2021 have already given up right with respect thereto.
30. Accordingly, though this appeal is dismissed but the ex-parte judgment and decree dated 19th February, 2020 is directed to be modified, by reducing the rate of mesne profits, from Rs.30,000/- per day to that of Rs.7,18,750/- per month, w.e.f. January, 2019 till delivery of possession on 23rd March, 2021. Liberty is also granted to the appellants/defendants to, if entitled thereto, make a claim for security deposit and for the respondent/plaintiff having prevented ingress and egress of the appellants/defendants to the tenancy premises, in accordance with law and if any such claim is made, the respondent/plaintiff would be entitled to contest the same on all pleas available in law.
31. The Commercial Court is directed to make the requisite modification in the decree under execution. The parties are left to bear their own costs.
RAJIV SAHAI ENDLAW, J. AMIT BANSAL, J. MAY 20, 2021 SU