IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 16.12.2009 CORAM THE HONOURABLE MR.JUSTICE N.KIRUBAKARAN W.P.No.5967 of 2003 R.T.Palanivelu ..Petitioner Vs. 1. The Secretary to Government, Tourism Department, Cum Chairman, Tamil Nadu Film Development Corporation, Fort St. George, Chennai - 9. 2. The Managing Director, Tamil Nadu Film Development Corporation Ltd., M.G.R. Film City, Taramani, Chennai - 113. ..Respondents Petition filed under Article 226 of the Constitution of India praying for issue a Writ of Mandamus directing the respondents to refund the entire security deposit paid by the petitioner towards the license granted to run the Children play equipments in M.G.R. Film City to a sum of Rs.4,40,000/- For Petitioner : Mr.V.Bharathidasan For Respondents : Mr.P.Gurunathan Government Advocate, for R1 : Mr.D.Krishnakumar, for R2 ORDER The petitioner was a licensee to run a children play equipments in the M.G.R. Film City in Taramani, Chennai which was to the extent of 8 acres in the said license for a period of five years. The license was issued to him since, he was the successful bidder for a sum of Rs.1,60,000/- . The license fee was fixed at Rs.1,60,000/- per month and the license commenced on 11.08.2000 with effect from https://hcservices.ecourts.gov.in/hcservices/ 16.10.2000 and to expire on 15.10.2005. As the petitioner was successful bidder, he paid Rs.9,60,000/- towards six months deposit and also Rs.50,000/- towards E.M.D. 2. The case of the petitioner is that:- He made developments in Film City spending more than Rs.3 crores for putting up the vehicle like Jumping frog, Rope Car, Twister and Giant Wheel and a lot of equipments for children play and equipments alone cost about Rs.2 Crores and other developments required to nearly Rs.1 crore. The aforesaid investment was made on the assurance that the license was for a period of five years. 3. The petitioner also contends that he made elaborate arrangements for Cabling and erecting Floodlights which took one year for completing the structures and erecting machineries. Even for the period of one year in which the construction activity was going on, the petitioner duly paid the license fee. After one year the petitioner started the business. Even before expiry of license period, the respondents decided to construct a M.G.R. Knowledge City to develop a bio-technology and also software technology by requiring the area for the same. The petitioner alleges that the second respondent compelled the petitioner to hand over the area and further states that he sustained heavy loss because of handing over the possession of the licensed area before the expiry of the license to the respondents and that the respondents assured that at all the problems would be sorted out and suitable compensation would be paid to the petitioner. Based on the assurance given and as per dictation of the respondent, the petitioner handed over a letter dated 15.06.2002 requesting refund of the amount paid by him. It is specifically contented by the petitioner that the said letter was given as per the request of the respondent. 4. Since, the petitioner handed over the possession of the licensed area to the second respondent and through letter dated 29.06.2002 permitted the petitioner to vacate the premises. As the letter dated 29.06.2002 ran contrary to the assurance given by the second respondent, petitioner gave a reply dated 30.08.2002 giving the details of the assurance made by the second respondent and specifically stated that the respondents urgently required the licensed area for development of M.G.R. Knowledge City and otherwise the petitioner would not have surrendered the possession and continued to remain in possession till the expiry of license period. Hence, the petitioner requested for return of the amount paid by the petitioner and also compensation. The said reply was followed by petitioner's another letter dated 29.10.2002. Since the respondents neither responded to the letters nor paid to the amount, the petitioner is before this Court seeking refund of entire security deposit paid by him namely Rs.4,40,000/-. https://hcservices.ecourts.gov.in/hcservices/ 5. The second respondent filed a counter affidavit stating that the license was for a period of five years with a provision of 10% increase in the license fee for every year and the petitioner sub-let the licensed area to a third party and denied the assurance regarding the compensation to be paid to the petitioner. It is also specifically stated that in paragraph 6 of the counter affidavit filed by the second respondent that he never requested the petitioner to give a letter to hand over the possession of the licensed area and it was only based on the petitioner's letter dated 15.06.2002, he was allowed to wind up his business. It is further stated that as per Clause 25 of the License Deed, three months notice was required to be given for termination. However, only 15 days notice was given and therefore the second respondent had to forfeit petitioner's deposit namely 2-1/2 months license fee of Rs.4,40,000/- and that was the reason why the said amount was adjusted for non compliance with Clause 25. Further, the undated letter written by the Chairman of second respondent Corporation Ltd., stated that the Board passed a resolution dated 31.12.2002 rejecting the petitioner's claim and it is also stated that the Corporation was closed by the Government with effect from 30.09.2002. 6. Heard Mr.V.Bharathidasan, learned counsel for the petitioner and the learned counsel for the respondents. It is seen from the Petitioner's letter dated 15.06.2002 (Letter of surrendering possession) that it contains a paragraph which is extracted as follows:- " Now, I express my desire on my own and due to heavy loss incurred in running the children play area, I may be permitted to wind up the business with effect from 30.06.2002 without any prejudice to your rights." The above said para especially underlined portion would prove that petitioner's letter of possession dated 15.06.2002 was prepared and given as per second respondent's dictation. No prudent business man would give such a letter reserving right of the opposite party. Therefore, this Court believes the contention of the petitioner that the aforesaid letter of surrendering possession was given as per the direction/dictation of the second respondent to avoid adverse action by the respondent. 7. It is not the case of the second respondent that non-issuance of three months notice for cancellation caused loss or prejudice to the second respondent. In the absence of any plea of prejudice or loss, this Court finds that non-issuance of three months notice would not able to second respondent to forfeit the petitioner's EMD. https://hcservices.ecourts.gov.in/hcservices/ 8. Clause 19 of the agreement reads as follows:- "19.In the event of non-fulfillment of non-observance of the above or any others condition, that may be prescribed, the Licensee is liable to pay a penalty equal to 50% of the value of the annual contract or the amount equal to the loss incurred during the license period whichever is higher." The above said clause would definitely prove that the agreement was one sided agreement and the petitioner was not in a position of bargaining before the mighty Government namely the respondents. Clause 19 only speaks about the liability of licensee only and not licensor and therefore there cannot be a hesitation to hold that the said agreement is one sided and the said Clause 19 is unconscionable. Even if the agreement is found to be valid, there is no penal Clause for not giving three months notice to cancel the license. 9. A perusal of the G.O.Ms.No.127 dated 23.06.2000 passed by the Government to grant license to the petitioner would go to show that there was no provision with regard to forfeiture of 50% as stated in the counter affidavit. When the Government Order did not speak about the forfeiture, the same cannot be incorporated in the agreement. Even if it was stated in the agreement, there was no penal consequences for cancelling the agreement without giving three months notice. Admittedly, 15 days notice was given by the petitioner in the absence of any penal Clause, it would not automatically lead to forfeiture to 50% of the deposit. Therefore, the forfeiture of Rs.4,40,000/- on the ground that the petitioner did not terminate the license giving three months time is not valid. Therefore, the respondents are liable to return of the forfeited amount. 10. The petitioner specifically stated in the notices 30.08.2002 and 29.10.2002 that based on assurance given by the respondents alone the petitioner gave a letter dated 15.06.2002 requesting refund of amount and there was no reply by the respondents to the said letters. In the absence of any reply, it is deemed that the petitioner's contention as stated in the notices was accepted by the respondents. If really there was a contrary version it would have been revealed by way of reply. The silence on the part of the respondents from 2002 till counter affidavit filed in the Writ Petition on 07.03.2003, would be deemed to be admission on the part of the respondent. 11. Mr.Bharathidasan, learned counsel for the petitioner pointed out from the letter dated 29.06.2002 written by the second respondent permitting the petitioner to close down the business did mention about any condition with regard to forfeiture of the deposit amount. By relying upon the said letter, Mr.Bharathidasan argued that the forfeiture of the amount is only on after thought on the part of the second respondent to deny Rs.4,40,000/- which the petitioner is https://hcservices.ecourts.gov.in/hcservices/ legally entitled to. When permission was granted to hand over possession taking in to consideration of all the circumstances by the second respondent, the second respondent definitely would have incorporated the condition with regard to forfeiture in the respondent's letter dated 29.06.2002. 12. The Minutes of the Board meetings of the second respondent held on various dates would reveal that the second respondent was running in loss and the total liability of the Corporation as on 31.03.2002 was Rs.16.26 Crores and all the properties of the second respondent were decided to be disposed and the decision was taken at the earliest. When the resolution of the Board meetings of the second respondent would reveal that the second respondent was running on loss and the decision was taken to dispose of the entire property of the second respondent, it is not open to the second respondent Corporation to contend before this Court that failure on the part of the petitioner to give three months notice made them to forfeit the said amount for non compliance of three months notice. 13. One another important aspect to be considered by this Court is that the petitioner's case is that based on the respondent's Corporation request only the petitioner vacated the premises, by giving a letter dated 15.06.2002. On their own admission, it is proved that the second respondent Corporation was closed on 30.09.2002 itself and that itself would proved that based on the request of the second respondent Corporation only, the petitioner gave notice to vacate the premises as the second respondent already decided to wind up and it was finally closed down on 30.09.2002. 14. The totality of the circumstances would lead to irresistible conclusion by this Court that the petitioner's amount was highhandedly and illegally forfeited and the petitioner was denied the amount without any valid reason and to cover up their default the respondent found a false ground of lack of three months notice to vacate. 15. Therefore, the respondents are directed to return Rs.4,40,000/- from 01.08.2002 till date of payment. The rate of interest payable by the respondents is 9% perannum. The amount along with interest has to be paid within four weeks from the date of receipt of a copy of this order. Accordingly, this Writ Petition is allowed. There will be no order as to costs. Sd/ Asst.Registrar /true copy/ Sub Asst.Registrar smn https://hcservices.ecourts.gov.in/hcservices/ To 1. The Secretary to Government, Tourism Department, Cum Chairman, Tamil Nadu Film Development Corporation, Fort St. George, Chennai - 9. 2. The Managing Director, Tamil Nadu Film Development Corporation Ltd., M.G.R. Film City, Taramani, Chennai - 113. + 1 c.c. to Mr. D. Krishnakumar, Advocate. S.R.No.69628. + 1 c.c. to Mr. V. Bharathidasan, Advocate. S.R.No.69199. W.P.No.5967 of 2003 RJ (CO) GSK 29.03.2010. https://hcservices.ecourts.gov.in/hcservices/