CS(OS) No.1560/2001 Page No.1 * IN THE HIGH COURT OF DELHI AT NEW DELHI + CS(OS) NO. 1560 OF 2001 % Date of Decision : January 9th , 2009. PARSONS BRINCKERHOFF INTERNATIONAL INC. .... Plaintiff. Through Mr. Sandip Sethi, Sr.Advocate with Mr. Chetan Chopra, advocate. VERSUS MANOJ GULSHAN & ORS. .... Defendants. Through Mr.Raman Kapur, Advocate. CORAM: HON'BLE MR. JUSTICE SANJIV KHANNA 1. Whether Reporters of local papers may be allowed to see the judgment? 2. To be referred to the Reporter or not ? YES 3. Whether the judgment should be reported in the Digest ? YES SANJIV KHANNA, J.: 1. M/s. Parsons Brinkerhoff International Inc., the plaintiff has filed the present Suit for recovery of Rs.7,04,628/- with interest and recovery of specific movable properties consisting of 15 kva diesel generator set, one split 3.0 ton air conditioner and 2 split air CS(OS) No.1560/2001 Page No.2 conditioners of 1.5 ton capacity or in the alternative recovery of Rs.5,04,690/-. 2. There are five defendants to the suit. Mr. Manoj Gulshan, Defendant no.1 is owner of a portion of the property no. A-9/20, Ground Floor, Vasant Vihar, New Delhi (hereinafter referred to as the Property, for short). By an unregistered lease deed dated 27th November, 1998, Exh. No.PW1/1 and D-1, defendant no.1 rented out the Property to the plaintiff on a monthly rent of Rs.18,000/-. In addition, four other agreements were executed between the plaintiff and defendant Nos. 2 to 4 as per details given below :- (i) Hire Agreement dated 27th November, 1998 between the plaintiff and defendant no.2, Mona International, through defendant No.1 for payment of hire charges in respect of bath room fittings, geysers, light fittings, exhaust fans, grills etc. @ Rs.30000/- p.m..(Exh. No. PW1/3 and PW1/D1). (ii) Hire Agreement dated 27th November, 1998 between the plaintiff and defendant no.3, Manoj Gulshan and Sons (HUF) through defendant No.1 for payment of hire charges for wooden wardrobes, showcases, fancy crockery racks etc. @ Rs.30,000/- p.m.( Exh. No. PW1/2 and PW1/D2) CS(OS) No.1560/2001 Page No.3 (iii) Hire Agreement dated 30th November, 1998 between the plaintiff and defendant no.2 Mona International through attorney Ms. Kamayani Suri, defendant No.4 for payment of hire charges in respect of tables, chairs, sofa set beds, microwave, cooking range etc. @ Rs.18,000/- p.m..(Exh. No.PW1/4) (iv) Licence contract dated 27th November, 1998 Exh. No. Pw1/D3 between plaintiff and defendant no.4 for use of car parking space on payment of Rs.12,000/- per month.(Exh. No. PW1/5 and PW1/D3) Thus under the five agreements the total monthly amount payable by the plaintiff was Rs.1,08,000/-. 3. It is an admitted case of the parties that the plaintiff had paid security deposit of Rs.12,96,000/- in respect of the five Agreements to the defendants in the following manner:- (i) Rs.2,16,000/- in respect of Lease deed Exh. No. PW1/1 between plaintiff and defendant no.1. (ii) Rs.3,60,000/- in respect of Hire Agreement Exh. No. PW1/3 between plaintiff and defendant no.2 through defendant No.1. (iii) Rs. 3,60,000/- in respect of Hire Agreement Exh. No. PW1/2 between plaintiff and defendant no.3. CS(OS) No.1560/2001 Page No.4 (iv) Rs.2,16,000/- in respect of Hire Agreement dated 30th November, 1998 Exh. No. PW1/4 between plaintiff and defendant no.2 through Ms. Kamayani Suri. (v) Rs.1,44,000/- in respect of Licence Contract Exh. No. PW1/5 between plaintiff and defendant no.4. 4. It is an admitted case of the parties that the plaintiffs have paid Rs.1,08,000/- p.m. upto 22nd November, 2000. Thereafter, no amount has been paid. 5. The first dispute between the parties is as to what amount is due and payable by the plaintiff to the defendants for the period from 23rd November, 2000 onwards upto 7th/22nd May,2001. The plaintiff admits liability to Rs. 1,08,000/- per month upto 7th/22nd May,2001 and seeks refund of balance security deposit of Rs.6,85,998/- and return of three air-conditioners and generator set or in alternative recovery of Rs.5,04,690/-. The defendants have filed their counter claim which has been registered as C.C. No.1650/2002 claiming adjustment/set off of the entire security deposit and recovery of an additional amount of Rs.30,30,501/-. The Counter Claim/adjustment is based upon clauses in the five Agreements that on expiry of the said Agreements on 22nd November, 2000 and overstay the plaintiff was liable to pay CS(OS) No.1560/2001 Page No.5 the following amounts, upto 22nd May,2001 when the premises were vacated: (i) Rs.6560/- per day as per Clause 19 of Lease Deed Exh. PW1/1 plus other charges under clause 9, 12 and 14 in all amounting to Rs.15,89,427/-. (ii) Rs.5429/- per day as per Clause 10 of Hire Agreement Exh. PW1/3 with Mona International through defendant no.1 plus other amounts amounting to Rs.10,00,688/-. (iii) Rs.5429/- per day as per Clause 11 of hire Agreement Exh. No. PW1/2 with Manoj Gulshan amd Sons (HUF) plus other amounts in all Rs.10,40,206/-. (iv) Rs.10,933/- per month as per Clause 9 of Hire Agreement Exh. PW1/4 with Mona International dated 30th November, 1998 and other amounts, in all Rs.2,46,334/-. (v) Rs. 96,000/- per month under the Licence Contract Exh. PW1/5 with Kamayani Suri and other amounts equal to Rs.1,46,823/-. CS(OS) No.1560/2001 Page No.6 Some other amounts are also claimed by the defendants towards damage, missing fixtures/fittings/gadgets etc. 6. The second dispute between the parties is as to what happened on 7th May, 2001. It is the contention of the plaintiff that the defendants illegally trespassed into the Property and occupied the same, whereas it is the case of the defendants that the plaintiff had permitted and allowed them to occupy the Property and thereupon the unauthorized occupation of the plaintiff came to an end. It is also the claim of the defendants that one Mr. J.P. Bovis for whose benefit the property was taken on rent and their authorized signatory had executed documents on behalf of the plaintiff confirming and admitting that Rs.23,91,801/- was due and payable as arrears and as damages etc. for the period between 23rd Nov.,2000 and 7th/22nd May,2001. These documents and authority of Mr.J.P. Bovis are disputed by the plaintiff. 7. On the basis of the pleadings between the parties, by Order dated 23rd July, 2004, the following 14 issues were framed:- “(1) Whether the Plaintiff Company is entitled to seek refund of balance security deposits and specific movable properties as prayed for in the Plaint? OPP. CS(OS) No.1560/2001 Page No.7 (2) Whether the Lease in respect of the demised premises stood extended as alleged in para 17 to 20 of the Plaint? OPP. (3) Whether the Plaintiff has defaulted in making payment of utility charges like water, electricity and telephone bills? OPD. (4) Whether the Plaintiff Company is liable to pay damages as per clause 19 of the Lease Deed and clauses 9 to 11 of the three Hire Purchase Agreements and Licence Contract? OPD. (5) Whether the parties arrived at a final settlement as alleged in para 6 of the Written Statement? OPD. (6) Whether the Plaint has been instituted, signed and verified by a duly authorized person? OPP. (7) Whether the Plaintiff is entitled to any interest, if so at what rate and for what period? OPP. (8) Whether the Plaintiff is in default as alleged in para 43 of the Counter Claim making payments as per clauses 2 and 3 of the Lease Deed and clause 3 & 4 of the Hire Purchase Agreement? OPD. (9) Whether the Counter Claim has been instituted signed and verified by a duly authorized person? OPD. (10) Whether the Counter Claimant is entitled to any interest, if so at what rate and for what period? OPD. (11) Whether the Plaintiff is guilty of violating the terms of the five agreements between them? OPD. (12) Whether the Plaintiff company was ever granted extension of time? OPP. (13) Whether the Plaintiff is liable to make good the expenses, bills, loss and damages resulting out of misuse, misappropriation of goods given on hire and other damages arising out of breach of agreements? OPD. CS(OS) No.1560/2001 Page No.8 (14) Relief.” ISSUE NO. 6 and 9 8. Learned counsel for the defendants during the oral submissions did not challenge the authority of Mr. Bishan Basu, to file the present Suit on behalf of the plaintiff Company. In fact, during the course of arguments, it was admitted that Mr. Bishan Basu was working with the plaintiff at the relevant time and was their Principal Officer. Handwritten note of Mr. Bishan Basu (Exhibit DW.1/18) was relied upon by the defendants. Issue no.6 is therefore decided in favour of the plaintiff. 9. Counter claim by the defendants has been filed by Mr. Manoj Gulshan. He has admitted his signatures. It is not disputed that the plaintiff was corresponding Mr. Manoj Gulshan in respect of the property. Mr. Manoj Gulshan is Karta of Mr. Manoj Gulshan and Sons, HUF and authorized signatory of M/s. Mona International. In the plaint itself he is described as authorized signatory of Mona International (India). Authorization of Mr. Manoj Gulshan to file the present suit on behalf of himself, Mona International (India) and the HUF is accepted. Issue No. 9 is accordingly decided in favour of the defendants. CS(OS) No.1560/2001 Page No.9 ISSUE NOS. 1, 2, 3, 4, 8, 11 AND 13 10. These issues are interconnected and are based upon the five agreements mentioned above, whether there was any breach of the said agreements and whether upon breach thereof, the plaintiff is liable to pay the amounts specified in the agreements for the period w.e.f. 23rd November, 2000 till 7/22nd May, 2001 i.e. (i) Rs.6560/- per day as per Clause 19 of Lease DeedExh.PW1/1 plus other amounts under Clauses 9, 12 and 14. (ii) Rs.5429/- per day as per Clause 11 of Hire Agreement with Mona International dated 27th November,1998 Exh.PW1/3. (iii) Rs.10,933/- p.m. as per Clause 9 of Hire Agreement with Mona International dated 30th November, 1998 Exh.PW1/4(iv) Rs.5429/- per day as per Clause 11 of hire Agreement with Manoj Gulshan and Sons (HUF) Exh.PW1/2 and (v) Rs. 96,000/- per month under Licence Contract with Kamayani Suri Exh.PW1/5. 11. The four agreements dated 27th November,1998 Exh. Nos. PW1/1 to 1/3 and 1/5 are unregistered and in view of Section 107 of the Transfer of Property Act, 1882 and Sections 17 and 49 of the Registration Act, 1908 cannot be relied upon and referred to except for collateral purposes. Only month to month tenancy rights were created. There was no expiry date or a lease for a fixed period. The defendants cannot rely upon the clauses in the said agreements and CS(OS) No.1560/2001 Page No.10 claim damages for firstly, as the lease period was not fixed but monthly and thus there is no question of payment of damages due to expiry of the lease period and secondly, clauses fixing damages cannot be read and relied upon. It was not urged that the clauses for payment of damages, are collateral clauses and therefore can be relied upon for the purpose of the present Suit. 12. Learned counsel for defendants had urged that the hire purchase agreements and the Licence agreement Exh. Nos. PW1/2 to 5, are not lease deeds and therefore were not required to be registered. The said contention has no merit. Four agreements Exh. Nos. PW1/1 to 3 and 5 were executed simultaneously on 27th November,1998 and it is a case in which rent was bifurcated by the defendants for tax purposes. The primary and main purpose and object of the agreements was to rent out the Property to the plaintiff- Company. While examining the documents, the intention and purport of the documents has to be also taken into consideration and not the heading or nomenclature given to the document. Lease rent fixed was only Rs.18,000/- , whereas alleged hire amount/license fee fixed in the other three agreements Exh Nos. PW1/2, PW1/3 and PW1/5, were much higher i.e. Rs.30,000/- each in Exh. PW1/2 and PW1/3 and Rs.12,000/- for parking of car in the drive way in PW1/5. Nature of items/mentioned in the two hire agreements dated 27th Nov.,1998 CS(OS) No.1560/2001 Page No.11 Exh. PW1/2 and PW1/3 indicates that the fixture and fittings mentioned in the annexure were fixed and connected with enjoyment and use of the immovable property. It is not the case of the defendants that the agreements could be enforced and continued separately and were not interrelated. Four agreements including lease deed were executed on the same date and cannot be read in isolation. Termination was coterminous The term „rent‟ as defined in Section 105 of the Transfer of Property Act,1882 means all payments which have to be paid by the tenant to the landlord. After referring to several judgments it has been observed in Annick Chaymotty Vs. Prem Mohini Mehra ILR (2001) 2 Del 277 that the term „rent‟ will include payments which are to be made towards fixtures, fittings and hire charges. 13. The fifth agreement dated 30th Nov,1998 between the plaintiff and Mona Inlt. through attorney holder Ms.Kamayani Suri Exh. No. PW1/4 is in respect of specific electrical and electronic gadgets, furniture items like tables, chairs etc.. This agreement may not have required registration but clause 8 of the said agreement stipulates that the agreement was for a minimum period of 2 years and therefore impliedly extendable. Further clause 9 reduces the monthly hire charge to 145 Pounds (or about Rs. 10,000/- per month) after 2 years from 782 Pounds per quarter (or Rs.18,000/- per month) for the CS(OS) No.1560/2001 Page No.12 period after Nov,2000. Reduction in hire charges after expiry of the agreement Exh.PW1/4 goes in favour of the plaintiff and is against the defendants. 14. Even otherwise damages specified in the Clauses in the lease agreement, hire purchase and licence agreement all dated 27th Nov.,1998 Exh. PW1/1 to 1/3 and 1/5 are not liquidated damages but penalty amounts under Section 73/74 of the Contract Act,1872. There is a huge difference between the total monthly amount of Rs.1,08,000/- which was payable by the plaintiff to the defendants upto 22nd November, 2000 and the amount payable under the five agreements w.e.f. 23rd November, 2000 at the rate Rs.5,45,000/- p.m. The amount being claimed as liquidated damages is nearly five times the amount payable before the date of the alleged breach i.e. 22nd November, 2000. The amount stipulated in the Agreements is a penalty amount and not liquidated damages. Rs.5,45,000/- per month cannot be regarded as a genuine pre-estimate of loss that the defendants would have suffered on the breach of the agreements due to over stay. It is an amount payable in terrorem. It is not an estimate of actual damages anticipated from breach due to over stay beyond the period of the lease. Mere description in the agreements that the amounts fixed is liquidated damages, does not bar and prevent courts from examining the true nature and purport of the clause and the CS(OS) No.1560/2001 Page No.13 intention of the parties. Use of expression “liquidated damages” etc. is a relevant consideration but not decisive and conclusive. Literal language can be disregarded if it does not represent the real nature of the transaction. The amounts specified are clearly extravagant and unconscionable. They are penalty amounts. The amounts stipulated in the four agreements are not liquidated damages or a pre- ascertained amount of damage which the defendants would have incurred in case the plaintiff had overstayed beyond and utilized the property beyond 23rd November, 2000. Mr. Manoj Gulshan is in affidavit has not tried to justify the amounts fixed. The defendants‟ claims on the basis of the agreements and damages stipulated therein are therefore liable to be rejected. 15. The defendants in view of sections 73/74 of the Contract Act are entitled to actual damage/mesne profit subject to the maximum penalty amount stipulated in the relevant clauses. The defendants to succeed are required to prove and establish the actual loss, due to increase in rent or hire charges between the period when the premises was taken on rent and the hire purchase agreements/Licence agreement were executed and on and after 23rd November, 2000 till 7th May, 2001.No evidence and material has been placed on record to show increase in rents or hire charges between Nov.,1998 and May, 2001. CS(OS) No.1560/2001 Page No.14 16. On termination of tenancy a landlord/owner is entitled to mesne profit i.e. the actual market rent as damages and nothing more. The defendant has not proved that the actual market rent of the property during the period 23rd November, 2000 to 7th May, 2001. In fact the defendant has not placed on record the subsequent lease deed under which the property was rented out. In these circumstances, when there is no indication or evidence to show increase in market rent, the defendants are entitled to the existing rent being paid as damages (refer Hari Singh, deceased through LR’s Vs. S.S.Jogi and Others, 2002 VI AD (DELLHI) 725). It may be also noticed here that period involved is only six months and during period 2000-2001, when the real estate market was facing stagnation, if not a slump. 17. Defendants have not placed on record water and electricity bills issued by Jal Board or the electricity supplying company. In the letters written and the notices issued also no such claim towards water, electricity charges has been raised. Defendants has not placed on record bank statement to show any payment to the Jal board or electricity distribution company. Long after issue have been framed, along with list of documents dated 17.05.2005 on undated receipt executed by Shayam Prabha Anand has been filed for payment of common water and electricity charges. Shayam Prabha Anand has CS(OS) No.1560/2001 Page No.15 not been produced as a witness. Mode and manner of payment of the said amount is not stated. The claim is therefore disallowed. 18. These issues are therefore decided against the defendants and in favour of the plaintiff. ISSUE NO.12 19. In view of the above findings, holding that the hire purchase agreements and licence agreement being an unregistered document cannot be looked into except for collateral purposes, the question whether there was any agreement to extend the lease becomes entirely irrelevant. The lease between the parties was month to month and not lease for a fixed period or lease which could be extended after the fixed period. 20. The plaintiff has relied upon Fax dated 25th September, 2000, Ex.PW1/20 and reply dated 27th September, 2000, Ex.PW1/21, by Mona International signed by Mona Gulshan. The defendants have denied the two documents and Ms. Mona Gulshan has also filed an affidavit that she had not sent any such letter dated 27th September, 2000. These letters are inconsequential and not relevant as the original lease deed is an unregistered document and no fixed period of tenancy was created and only month to month tenancy was created. These two documents do not matter. CS(OS) No.1560/2001 Page No.16 The issue is accordingly answered. ISSUE NOS. 5, 9 AND 10 21. It is an admitted case of the parties that the plaintiff Company had taken the property on rent for residence of Mr.J.P. Bovis and he was residing there. It is also an admitted case that Mr.J.P.Bovis left India on or about 10/11th May, 2001 and has not returned back. He has not been examined by the plaintiff. PW-1, Mr.Virendra Dwivedi is the only witness examined by the plaintiff and he had joined the plaintiff Company in 2004. He has no personal knowledge about the facts in the present case. He has deposed only on the basis of official records. PW-1 therefore has not deposed and has not been able to state what exactly happened on or about 7th May, 2001 except on facts which were documented in records of the plaintiff. This is also subject to the condition that the facts recorded are accepted or in case of dispute, the court is otherwise satisfied about their truthfulness. 22. The defendants have produced Mr. Manoj Gulshan, DW-1, his wife Ms.Mona Gulshan DW-2, Mr. Rakesh Kumar Aggarwal, property broker DW-3 and Mr. Hatinder Singh DW-4. Mrs. Mona Gulshan, DW-2 was not present in the Property and has no personal CS(OS) No.1560/2001 Page No.17 knowledge of what transpired on 7th May, 2001. Her evidence is therefore irrelevant. 23. Mr.Manoj Gulshan, DW-1 in his affidavit by way of evidence has stated that he had written letter dated 5th May, 2001 to the plaintiff company with copy to Mr. J.P. Bovis which is marked Exhibit DW.1/16. The original of the said letter was filed with list of documents dated 18th October, 2002 has also been given Exhibit PW.1/D5. Exhibit DW.1/16 is a photocopy of the said letter dated 5th May,2001 filed along with affidavit by way of examination in chief. There is one difference between the original letter PW.1/D5 and DW.1/16. The words “original receipt” mentioned after “Copy to Mr. J.P.Bovis: with a request to kindly get this issue resolved/settled on priority” in Exhbit PW.1/D5, are missing in Exhibit DW.1/16. It was admitted during the course of arguments that the words “original receipt” are in the handwriting of Mr. Manoj Gulshan DW.1. These words have been added afterwords by Mr. Manoj Gulshan. There is no evidence or material on record to show that this letter was received by the plaintiffs on 5th May, 2001 or before 7th May, 2001. On the top left corner of the letter there is an endorsement “received for information only” with alleged signatures of Mr.J.P. Bovis and the date 7th May, 2001. This letter it can be safely held was received by Mr.J.P. Bovis on 7th May, 2001 and as recorded by him “received for CS(OS) No.1560/2001 Page No.18 information only”. In this letter, the defendant no.1 had raised various claims and had claimed an amount of Rs.24,17,951.88 on various accounts on the basis of the penalty clauses under the five agreements. This document is only a claim and not an admission. 24. In para 40 of the affidavit filed by Mr.Manoj Gulshan, DW-1 it is mentioned that on 7th May, 2001 in the morning he had visited the Property for taking over possession, assessment of damage to hired items and recording shortages. At that time, he noticed that various hired items were missing, misappropriated or damaged and he assessed the damage at Rs.1,95,850/- in the presence of “common witnesses”. Who are these “common witnesses” is not stated. 25. In paragraphs 41 and 42 it is stated that diesel generator set and three air conditioners were available in the property and their value/consolidated price was quantified at Rs.2,22,000/- and these were sold to the defendants by Mr.J.P. Bovis/authorized representative of the plaintiff. 26. In paragraph 43, it is stated that a final settlement/document was prepared and signed by Mr.J.P.Bovis on 7th May, 2001 agreeing to pay Rs.23,91,801/- after accounting for the sale price towards generator set, air conditioners, security deposit as well as damage to equipments and missing items of Rs.1,95,850/-. These documents CS(OS) No.1560/2001 Page No.19 have been collectively marked Exhibits DW.1/19 to DW.1/21 in the affidavit by way of evidence. The defendants dispute and deny signatures of Mr.J.P.Bovis on the said documents. Exhibit DW.1/19 is a photocopy with the heading “Final Settlement of Account”. Photocopy of similar document being Exhibit PW.1/D6 with attestation by notary public was filed along with list of documents dated 18th October, 2002. Exhibit DW.1/20 is another notary attested photocopy of the document-Exhibit DW.1/19. Original of this document has not been placed on record. 27. Exhibit DW.1/21 is again identical photocopy of the “Final Settlement of Accounts” i.e., Exhibit nos. DW.1/19 and DW.1/20 but with two differences. Firstly, it is not notarized and secondly on the top right handside of the said document, the word “received” with alleged signatures of Mr.J.P.Bovis in blue ink with date 7th May, 2001 are present. It may be noted that Exhibit DW.1/21 with the word “received” and alleged signatures of Mr.J.P.Bovis with date 7th May, 2001 was not filed by the defendants at or before settlement of issues or even thereafter. The said document saw light of the day for the first time only with the affidavit by