1 IN THE HIGH COURT OF JUDICATURE OF BOMBAY IN THE HIGH COURT OF JUDICATURE OF BOMBAY IN THE HIGH COURT OF JUDICATURE OF BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION ORDINARY ORIGINAL CIVIL JURISDICTION ORDINARY ORIGINAL CIVIL JURISDICTION NOTICE OF MOTION NO.3062 OF 2007 IN SUIT NO.2316 OF 2007 Loreal India Pvt.Ltd. ..Plaintiffs. V/s. Global Earth Properties & Developers Pvt.Ltd. & Anr. ..Defendants. Mr.Virag Tulzapurkar, Sr.Advocate a/w. Mr.Janak Dwarkadas a/w. Mr.Darshan Mehta i/b. M/s. Dhruve Liladhar & Co. for Plaintiffs. Mr.D.J.Khambatta a/w.Mr.P.K.Shroff, Ms. Radhika Kalpatri for Defendant. CORAM: A.M.KHANWILKAR,J CORAM: A.M.KHANWILKAR,J CORAM: A.M.KHANWILKAR,J DATE : JANUARY 17, 2008. DATE : JANUARY 17, 2008. DATE : JANUARY 17, 2008. P.C. : P.C. : P.C. : 1. By consent, this order will dispose off Notice of Motion under consideration finally. 2. The Plaintiffs have filed suit for specific performance and injunction. The Plaintiffs have filed this suit for specific performance of Agreement of Leave & License, Amenities Agreement, Agreement for Security Deposit and the Addendum, all dated 21st June, 2004 in respect of the premises bearing Unit Nos.201, 201, 203 and 204 having aggregate carpet area of 19,270.65 sq.feet equivalent to 1290.45 sq. 2 meters and saleable area of 26,454 sq.ft., equivalent to 2457.86 sq.meters. and 27 car parking spaces situated on the second floor in the building known as "Peninsula Tower-I at Peninsula Corporate Park, Ganpatrao Kadam Marg, Off. Senapati Bapat Marg, Lower Parel, Mumbai-400 013. 3. According to the Plaintiffs, the suit premises were owned by the Defendant No.2. That a letter of intent was executed between the Plaintiffs and Defendant No.2 on 18th November, 2003 for giving on Leave and License the above said suit premises. The said document is marked at Exh. GG to the Plaint. The Plaintiffs and Defendant No.2 eventually executed Leave and License Agreement on 21st June, 2004 in relation to the suit premises. Simultaneously, the Plaintiffs and Defendant No.2 executed the other three documents namely Amenities Agreement, Agreement for Security Deposit and the Addendum on the same day i.e. on 21st June, 2004. All these four documents are appended to the Plaint as Exh. A to D respectively. In substance, the case of the Plaintiffs is that although the Leave and License Agreement refers to the term of license period as 33 months commencing from the Effective Date, however, it was agreed between the Plaintiffs 3 and Defendant No.2 that the licence will stand automatically renewed from the expiry date of such term for a further period of 15 months without an exit clause, which period was described as Renewal Term in the Addendum executed between the parties on the same date. The said Addendum further provides that the Plaintiffs will have option to renew Renewal Term for a further period of 18 months from the expiry date of the Renewal Term. Subsequent renewal period is described as Third Term in the Addendum. Needless to observe that the parties agreed to be governed by the terms and conditions, as were applicable to the principal license period, except the increase in license fee by 12 percent over the existing license fee. Addendum also provides that if the Plaintiffs fail to renew the term for a further period of 15 months from the principal license period, would run the risk of forfeiture of Security Deposit of Rs.2,12,69,016/-(Rupees Two Crores Twelve Lacs Sixty Nine Thousand Sixteen only) deposited by the Plaintiffs under the Agreement for Security Deposit, which represented the license fee for a period of 15 months. In ordinary course, first 33 months under the Leave and License Agreement were to expire on 31st May, 2007. However, in view of the understanding recorded in the Addendum, the 4 Plaintiffs’ license period was to be automatically renewed for a further period of 15 months from that date and thereafter for a further period of 18 months, which was an optional renewal available to the Plaintiffs. 4. According to the Plaintiffs, while license period was in operation the Defendant No.2, by a registered sale deed, transferred the suit property in favour of the Defendant No.1 on terms and conditions recorded in the Sale Deed. Suffice it to observe that the Plaintiffs’ case is that the license created in favour of the Plaintiffs by the Defendant No.2 was to enure on the same terms and conditions and the Defendant No.1 under the said Agreement was bound to honour that commitment. Notwithstanding this position, the Defendant No.1 called upon the Plaintiffs by letter dated 13th January, 2007 to hand over possession of the suit premises on 30th May, 2007. The Plaintiffs contested the said claim of the Defendant No.1. The Defendant No.1 eventually sent advocate’s notice on 25th April, 2007 calling upon the Plaintiffs to hand over the suit premises on or before 30th May, 2007, on which date the principal license period provided under the Leave and License Agreement dated 21st June, 2004 was to expire. As 5 the Plaintiffs did not act upon the demand of the Defendant No.1, Defendant No.1 proceeded to file suit for eviction before the Small Causes Court being Suit No.133/150 of 2007 on the assertion that the license period has already expired and the Plaintiffs were unauthorizedly occupying the suit premises even beyond the license period. Accordingly, the Defendant No.1 prayed for relief of eviction of the Plaintiffs and for possession of the suit premises. The Plaintiffs have then rushed to this Court by way of present suit filed on 16th August, 2007 praying for following reliefs. "(a) that it be declared that the said Agreements (Exhibits "A" to "D" above ) are valid, subsisting and binding between the parties hereto; (b) that the Defendants or such of them as may be determined by this Hon’ble Court, be ordered and decreed to specifically perform the said Agreements (Exhibits "A" to "D" to the Plaint); (c) that for the purposes aforesaid, the Defendants or such of them as may be determined by this Hon’ble Court, be ordered and decreed to sign and execute all such deeds, documents and writings for effectively renewing thee Leave & License Agreement upto 30th November 2012 in terms of Exhibits "A" to "D" and in particular, Exhibit "D", interalia by, but not limited to, signing requisite Leave & License Agreement in terms of Addendum (Exhibit "D" hereto) upto the period of 30th November, 2012 and not interfering with the Plaintiffs’ possession in respect of the said Premises upto 30th November, 2012; 6 (d) in the alternative to prayers (a) to (c) above, the Defendants or such of them as may be determined by this Hon’ble Court, be ordered and decreed to pay to the Plaintiffs the said sum of Rs.66,13,87,400/- together with interest thereon @ 18% per annum from the date of filing of the Suit till payment and/or realization; (e) that pending the hearing and final disposal of the Suit, the Defendants by themselves, their servants and agents be restrained by an order and injunction of this Hon’ble Court from in any manner interfering with, obstructing or disturbing the Plaintiffs’ possession in respect of the said Premises; (f) that pending the hearing and final disposal of the Suit, this Hon’ble Court may be pleased to stay the proceedings in the Hon’ble Court of Small Causes bearing Suit No.133/150 of 2007 and the Defendant No.1 be restrained by this Hon’ble Court from in any manner proceeding further with the said Suit No.133/150 of 2007; (g) for interim and ad-interim reliefs in terms of prayers (e) and (f) above; (h) for costs; (i) for such other and further reliefs as the nature and circumstances of the case may required." During the pendency of this suit, the Plaintiffs have claimed for following interim reliefs by taking out Notice of Motion under consideration. "(a) that pending the hearing and final disposal of the Suit, the Defendants by themselves, their servants and agents be 7 restrained by an order and injunction of this Hon’ble Court from in any manner interfering with, obstructing or disturbing the Plaintiffs’ possession in respect of the said Premises; (b) that pending the hearing and final disposal of the Suit, this Hon’ble Court may be pleased to stay the proceedings in the Hon’ble Court may be pleased to stay the proceedings in the Hon’ble Court of Small Causes bearing Suit No.133/150 of 2007 and the Defendant No.1 be restrained by this Hon’ble Court from in any manner proceeding further with the said Suit No.133/150 of 2007; (c) for interim and ad-interim reliefs in terms of prayers (a) and (b) above; (d) that the Defendants be ordered and decred to pay to the Plaintiffs the cost of this Notice of Motion; and; (e) for such other and further reliefs as the nature and circumstances of the case may require." 5. Notice of Motion was moved for urgent ad-interim relief on 17th August, 2007. The real contest is between Defendant No.1 and the Plaintiffs. After giving notice to the Defendants, inspite of the notice as none appeared for the Defendants, I had passed ad-interim order, so as to protect the Plaintiffs and preserve the property. The said ad-interim order came to be continued on 22nd August, 2007 with some modifications. The reliefs claimed in the Notice of Motion are contested essentially by Defendant No.1. The Defendant No.1 on entering 8 appearance has filed reply affidavit. 6. In the first place, it is asserted that the Plaintiffs have not approached this Court with clean hands. Inasmuch as, the Plaintiffs persuaded this Court to pass exparte order against the Defendants, especially when the Defendant No.1 was not even served by the Plaintiffs before 17th August, 2007. Besides, the Plaintiffs have suppressed the Resolution passed by the Board of Directors in the meeting held on 3rd June, 2004 which would belie the claim of the Plaintiffs. It is then stated that the Plaintiffs have not disclosed the copy of the letter dated 30th November, 2004 addressed by the Defendant No.1 to the Plaintiffs, in which it is clearly recorded that the suit premise have been given to the Plaintiffs for a period of 33 months as per the Leave and License Agreement executed between the Plaintiffs and Defendant No.2. In so far as merits, it is asserted that the Suit filed by the Defendant No.1 is in earlier point of time, which was filed on 4th July, 2007 whereas the present Suit has been filed by the Plaintiffs on 16th August, 2007. It is the case of the Defendant No.1 that the reliefs claimed by the Defendant No.1 in that suit can be exclusively granted by the Small Causes Court. It is asserted 9 that the Plaintiffs cannot seek stay of the proceedings instituted before the Small Causes Court during the pendency of the present suit. It is then asserted that the relief of specific performance claimed by the Plaintiffs was on the basis of the terms in the Addendum dated 21st June, 2004 exchanged between the Defendant No.2 and the Plaintiffs, of which the Defendant No.1 had no notice. In any case, that cannot be the basis for grant of any relief of specific performance to the Plaintiffs. On the other hand, the license period has been specified in the Leave and License Agreement. Moreso, the Plaintiffs have confirmed that the license period was only for 33 months, which is the only term agreed between the Plaintiffs, Defendant No.2 and Defendant No.1. It is the case of the Defendant No.1 that it is not bound by the terms mentioned in the Addendum exchanged between the Plaintiffs and Defendant No.2. On the other hand, the confirmation given by the Plaintiffs on the Letter of Intent that the license period was only 33 months in terms of the Leave and License Agreement dated 21st June, 2004. That would constitute the contract between the Plaintiffs and Defendant No.1 and the Plaintiffs cannot plead or claim any contract contrary thereto. It is also asserted by the Defendant No.1 that the Plaintiffs 10 have expressly waived or given up their claim in relation to the terms referred to in the Addendum and the Plaintiffs are estopped from asking for enforcement of the said Addendum. According to the Defendant No.1, the Plaintiffs have founded their case with reference to the letter of intent. However, no reliefs of specific performance of the terms of Letter of Intent have been sought. According to the Defendant No.1 it is not open to the Plaintiffs to ask for any relief on the basis of the terms referred to in the Letter of Intent, which was worked out on execution of the Leave and License Agreement dated 21st June, 2004. That position is reinforced from the terms of Letter of Intent dated 18th November, 2003 itself, amongst other the penultimate clause thereto. In so far as Addendum is concerned, the Defendant No.1 asserts that the same is not binding on the Defendant No.1 as the Defendant No.1 has not accepted or confirmed the sale at any stage nor it was made a subject matter of the Agreement for Sale dated 30th November, 2004 executed by the Defendant No.2 in favour of the Defendant No.1. On the above basis, the Defendant No.1 claimed that no interim relief be granted in favour of the Plaintiffs. 11 7. The Plaintiffs on the other hand, filed rejoinder affidavit and has more or less reiterated the stand taken in the plaint while denying the assertions of the Defendant No.1 stated in the reply affidavit. 8. After having considered the rival submissions, the first question that needs to be addressed is: what were the terms of the Agreement between the Plaintiffs and Defendant No.2/the original owner of the suit premises. Indeed, the Letter of Intent was executed between the Plaintiffs and the Defendant No.2 on 18th November, 2003. The clause-3 of the said document specifies the type of agreement that would be executed between the parties. It mentions that the parties agree to execute Leave and License Agreement, Amenities Agreements and Security Deposit Agreement or any other type of Agreement, as may be mutually agreed in accordance with the terms and conditions recorded in the said Letter of Intent. Clause 3(c) thereof provides that the Agreements shall be executed for a lock-in period of 33 months. Clause 3(d) provided that on expiry of the said lock-in period of 33 months, the Agreements shall be renewable for a further lock-in period of 15 months. The other relevant clause is clause-9. It 12 provided for the license period. Clause 9(a) stipulated that the license period shall be for a lock-in period of 48 months commencing from the date of possession mentioned in Clause (19) with option to the Licensee to renew the same for a further period of 18 months. It further provided that the licensee shall not be entitled to exit the premises during the aforesaid lock-in period of 48 months. The clause 9(b) provided that the licensee shall at least 3 months prior to the expiry of the period of 48 months intimate the licensor of its intent to either exit the premises on expiry of the lock-in period of 48 months or renew the license period for a further term of 18 months. It is not necessary to elaborate on other clauses for the time being. The other relevant clause of the said document (Letter of Intent) is clause 20. The said clause 20 provided that the Licensor shall be entitled to sell, transfer, assign or otherwise create third party rights in respect of the premises, provided such sale, transfer, or agreement does not affect the rights of the Licensee under the Agreements. The penultimate clause in this document postulates that the said Letter of Intent does not create any right, title or interest in the premises and is subject to the execution of the formal Leave and License Agreement. This document 13 reflects the terms of agreement to be entered into recorded between the Plaintiffs and the Defendant No.2/the original owner of the suit premises. 9. Eventually, however, the Plaintiffs and the Defendant No.2 executed four formal documents-cum- Agreement on 21st June, 2004, more or less on the same lines, on which the parties had recorded their intention in the Letter of Intent. The first such document is Leave and License Agreement. Clause No.2 of the Agreement provides for the term of license period. It is mentioned that the term of the license shall be for a period of 33 months commencing from the effective date. It is further specified that neither party shall be entitled to terminate this Agreement and/or License thereby granted during the said period of 33 months except as specifically provided in the said Agreement. Notably, the Defendant No.1 has not proceeded against the Plaintiffs on the assertion that the agreement has been terminated as such, but has instituted Suit for eviction and possession of the suit premises on the assertion that the license period of 33 months has already expired. 10. Be that as it may, clause 2(b) of this 14 Agreement further provides that the license period shall commence on the expiry of 90 days from 1st June, 2004 or on expiry of seven days from receipt of intimation alongwith the copy of Occupation Certificate by the Licensee from the Licensor that the Licensor has obtained the Occupation Certificate for the said licensed premises, whichever is later. Clause 2(c) of the Agreement provides that on expiry or earlier determination of the License, Licensee shall without recourse to the Court of Law remove itself, its servants and agents and their belongings from the said licensed premises and hand over the same to the licensor in good condition, wear and tear excepted, provided that the Licensor simultaneously refunds the Security Deposit to the Licensee, as provided in the agreement. It is not in dispute that on execution of the said agreement, the Plaintiffs have been put in possession of the suit premises. Another relevant clause of the agreement which needs to be adverted to is clause-9. It provides that Licensor shall always be entitled to sell, mortgage, transfer, surrender or otherwise dispose of the said licensed premises or any part thereof to any person, firm company during the continuance of this Agreement provided that such sale, mortgage, transfer, surrender or otherwise disposal of the said licensed 15 premises shall not affect in any way whatsoever the rights of the Licensee and/or obligations of the Licensor. 11. Clause-10 of the agreement is of some significance. The same reads thus: "10. The rights of the Licensor to sell, mortgage, transfer, surrender or otherwise dispose of the said Licensed Premises to any person shall not affect in any way whatsoever the rights of the Licensee pursuant to this Agreement. The Licensor shall bring this Agreement and any amendment or addendum thereto to the attention of any prospective purchaser or mortgagee or assignee and shall include in any such agreement to transfer the Licensor’s interest in the said Licensed Premises, a clause whereby the the Intending Transferee/Mortgagee confirms the terms of this Agreement including any amendment or addendum thereto and agrees to abide by and comply with the obligations of the Licensor under this Agreement." 12. Besides the Leave and License Agreement, the Plaintiffs and Defendant No.2 also executed Amenities Agreement on 21st June, 2004 as well as Agreement for Security Deposit dated 21st June, 2004. They also executed separate Addendum on the same day i.e. 21st June, 2004. As the Plaintiffs’ claim is dependent on the term of the Addendum that there ought to be automatic renewal of the license after the expiry of principal term of 33 months under the Agreement dated 16 21st June, 2004 for further period of 15 months in the first instance and again for a further period of 18 months thereafter, which would be however, optional can be better appreciated if the relevant portion of the said Addendum is reproduced. The same reads thus: 1. We have today executed (i) Leave and License Agreement (ii) Amenities Agreement and (iii) Agreement for Security Deposit (collectively "the Agreements") in respect of Unit Nos. 201, 202, 203,203 and 204 all on the Second Floor of Peninsula Tower 1 at Peninsula Corporate Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai 400 013 (hereinafter referred to as "the Licensed Premises"). 2. Under the said Leave and License Agreement, we have granted you license for the Licensed Premises for a term of 33 months without an exit clause(Term). (Term). (Term). It has been agreed by and between us that the Amenities Agreement and the Agreement for Security Deposit shall be co-terminus with the said Leave and License Agreement and shall run concurrently with the same. 3. You agree that the Term shall be automatically renewed for a further period of 15(fifteen) months without an exit clause from the expiry date of the Term (Renewal Term) on the same terms and conditions as are presently contained in the Leave and License Agreement, Amenities Agreement and the Agreement for Security Deposit, except that (a) the License fee under the Leave and License Agreement, (b) the compensation/charges payable under the Amenities Agreement and (c) the quantified damages payable under Clause (18) of the Leave and License Agreement will be increased by 12% over the existing License fee, the said compensation/charges and the quantified 17 damages for the Renewal Term. You agree that the License Fee and compensation for the Renewal Term shall be payable for entire period of 15(fifteen) months. 4. In the event you do not renew the Term for a further period of 15 months we shall be entitled to forfeit from the Security Deposit of Rs.2,12,69,016/-(Rupees Two Crores Twelve Lacs Sixty Nine Thousand Sixteen Only) deposited by you under the Agreement for Security Deposit, all amounts payable by you for the period of 15 months. 5. On your exercise of the above option to renew the Term of the Leave and License Agreement, Amenities Agreement and the Agreement for Security Deposit, the provisions set out in paragraph (3) of this letter shall apply to the Renewal Term, and the Amenities Agreement and the Agreement for Security Deposit shall continue to run concurrently with the Leave and License Agreement. You agree to execute the Agreements in respect of the Renewal Term atleast 30 days prior to the expiry of the Term. 6. We further agree that you have the option to renew the Renewal Term for a further period of 18(eighteen) months from the expiry date of the Renewal Term(Third Term) on the same terms and conditions as applicable to the Renewal term. You agree to inform us at least 03(three) months prior to the expiry of the Renewal Term of your intention either to exit the Licensed Premises on expiry of the Renewal Term or to exercise your option to renew in respect of the Third Term. On your exercise of this Third Term option, the terms of the Renewal Term shall apply to the Third Term. You agree that they License Fee and compensation for the Renewal Term shall be payable for entire period of 18(eighteen) months. 7. You agree to execute the Agreements in respect of the Third Term atleast 30 days prior to the expiry of the Renewal Term and the Amenities Agreement and the Agreement for Security Deposit shall continue to run 18 concurrently with the Leave and License Agreement. We agree that you may terminate the Third Term at any time after giving us atleast 06(six) months prior written notice to that effect. 8. We further agree that you have the option to renew the Third Term for a further period of 33(thirty three) months from the expiry date of the Third Term (Fourth Term) on the same terms and conditions as apply to the Third Term except that (a) the License fee under the Leave and License Agreement, (b) the compensation/charges payable under the Amenities Agreement and (c) the quantified damages payable under Clause (18) of the Leave and License Agreement will be