REPORTED IN THE HIGH COURT OF DELHI AT NEW DELHI CS(OS) 2130/2003 & IA 3947/2008 # Mrs.Pushpa Kakkar & Another ....... Plaintiffs ! Through: Mr.Sanjeev Anand, Advocate VERSUS $ The New India Assurance Co. Limited ...... Defendant ^ Through: Mr.H.L.Tikku and Mr.R.K.Tripathi, Advocates RESERVED ON: December 4, 2008 % D ATE OF DECISION: APRIL 08, 2009 CORAM: * HON'BLE MS. JUSTICE REVA KHETRAPAL 1. Whether reporters of local papers may be allowed to see the judgment? 2. To be referred to the Reporter or not? 3. Whether judgment should be reported in Digest? : REVA KHETRAPAL, J. The plaintiffs have filed the present suit for possession and recovery of office premises bearing Flat No.202, Second Floor, E-9, Connaught House, Connaught Place, New Delhi, admeasuring approximately 2,388 sq. ft., more particularly, described in red in the site plan annexed with the plaint. 2. The suit property was originally owned by Mr.Triloki Nath Khanna HUF, who executed a registered deed dated 23.09.1996, letting out the suit CS(OS) 2130/2003 Page 1 of 27 property to the defendant w.e.f. 01.04.1996 for a period of three years, i.e., from 01.04.1996 to 31.03.1999, on a monthly rent of Rs.14,925/- exclusive of electricity, maintenance charges, water taxes and surcharge. The lease deed provided for an option for the renewal of the lease for the period beginning from 01.04.1999 to 31.03.2002 at a rent of Rs.8.10 per sq. ft., for which a fresh lease deed was to be executed. Clause 4(II) of the said lease deed also provided for the renewal of the lease beyond 31.03.2002 if the defendant desired and gave three months' notice in writing to the owner before the expiry of the term, on rent as mutually agreed and subject to the same covenants as contained in the earlier lease deed, except the clause for renewal. Both the lessor and the lessee were entitled to mutually agree and terminate the lease by giving three months' notice to the other party. 3. It is averred in the plaint that in terms of the clause 4(II) of the lease deed dated 23.09.1996, a fresh lease was executed between Mr.Triloki Nath Khanna and the defendant on 26.04.1999, whereunder the suit property was leased to the defendant for a further period of three years from 01.04.1999 till 31.03.2002 at Rs.19,343/- with an option for renewal. The said lease was duly registered with the Office of the Sub Registrar, Assurances. As per clause 4(IV) of the Lease Deed dated 26.04.1999, in case the previous owner sold/cancelled his rights in the suit property, it was provided that the defendant CS(OS) 2130/2003 Page 2 of 27 shall attorn to such transferors on the same terms and conditions, as contained in the said lease deed. 4. It is further averred in the plaint that the defendant by its letter dated 19.10.2001 notified the owner/lessor that it wanted the renewal of the present lease deed for a further period w.e.f. 01.04.2002 on terms to be mutually agreed between the lessor and the lessee. Pursuant to the defendant's aforesaid notice dated 19.10.2001, there was some correspondence and meetings also took place between the parties. On 06.03.2002, a meeting was held between the representative of the lessor Mr.Triloki Nath Khanna and the officials of the defendant as to the renewal terms of the lease and the following terms were mutually agreed, subject to the final approval of the same from the Head Office of the defendant Company:- “(a) The Lease Deed will be renewed for the period from 1.04.2002 to 31.03.2005 @ Rs.32.50 per sq.ft. (b) There will be provision of two further renewals of 3 years term each. At the time of each renewal, rent will be increased by 20% over the rent last paid. (c) The owner will be given security deposits equivalent to 6 months rent as on 1st April, 2002. This security will be refundable at the time of termination of Lease Agreement and will not bear any interest. (d) Other terms and conditions of the Lease will remain unchanged. (e) The Stamp Duty for registration will be shared on 50-50 CS(OS) 2130/2003 Page 3 of 27 basis between The New India & the owners. Lease Deed for every term of 3 years will be registered separately.” 5. However, before the renewal of the lease deed could take place, the lessor Mr.Triloki Nath Khanna by two separate registered sale deeds dated 13.05.2002 sold the suit property to the plaintiff Nos.1 and 2 in equal shares, and by two separate letters dated 04.06.2002, one of which was sent by the previous owner and the other by the plaintiffs, the defendant was informed of the said transfer and requested to deal directly with the plaintiffs. The plaintiffs by the aforesaid letter suggested to the defendant that a meeting be held to discuss the renewal terms at the earliest. 6. The defendant, in response to the letter dated 04.06.2002 of the plaintiffs', while asking for some documents, informed the plaintiffs that the terms discussed with the previous owner had been sent to their corporate office at Mumbai for their sanction and the same was awaited. On 12.08.2002, a meeting was held between the plaintiffs and the Regional Office Committee of the defendant at the office of the defendant. At the said meeting, the plaintiffs offered to renew the lease on a monthly rent of Rs.50/- per sq. ft. with interest free security deposit equivalent to six months' rent and on other terms and conditions to be mutually discussed and decided. By their letter dated 20.08.2002, the plaintiffs reiterated the said offer. The defendant, however, was not in agreement with the terms offered by the plaintiffs and wanted to CS(OS) 2130/2003 Page 4 of 27 hold fresh negotiations for the rent, which the defendant wanted to be less than Rs.32.50 per sq. ft. By their subsequent letter dated 12.09.2002, the plaintiffs offered to accept monthly rent @ Rs.42.50 per sq. ft. for the renewal of the lease. This not being acceptable to the defendant, on 27.12.2002, another meeting was held between the plaintiffs and the defendant to discuss the terms for the renewal of the lease w.e.f. 01.04.2002. At the said meeting, the revised offer was discussed, which the defendant decided to send to its Competent Authority at Mumbai for approval as follows:- “(a) The lease agreement will be for 3 years effective from 1.04.2002 to 31.03.2005. (b) The rent will be paid at the rate of Rs.42.50 per sq. ft. This will be inclusive of all present and future taxes but exclusive of electricity and water charges which will be paid by the Defendant to the respective authorities as per actual consumption. (c) The present lease agreement is for 3 years. However, the same is renewable for two further terms of 3 years and the Defendant agrees to enhance the rent by 20% at the time of each renewal of lease, other terms and conditions remaining unchanged. Renewal of lease after 31st March, 2011 will be on the terms to be mutually agreed and negotiated between the Defendant and the Plaintiffs at the relevant time. (d) The Plaintiffs will be given security deposit equivalent to 6 months rent refundable at the time of vacating the premises by the Defendant. The security deposit will not bear any interest. (e) The expenses on registration of lease will be shared on CS(OS) 2130/2003 Page 5 of 27 50:50 basis.” 7. By a communication dated 07.07.2003, the plaintiffs after a long wait, were informed by the defendant that their Head Office had agreed to increase the rent to Rs.42.50 per sq. ft., as negotiated, applicable from the current date and not from 01.04.2002. The plaintiffs were requested to accord their approval. By their letter dated 08.07.2003, the plaintiffs informed the defendant that the said offer was not acceptable and the defendant was requested to “convey their final approval to the terms recorded in the minutes of the meeting dated 27th December, 2002 effective from 1st April, 2002 within one month of the receipt of the said letter failing which it will be concluded that the defendant was not interested in the mutual extension of the lease and the plaintiffs would be at liberty to take such action which was in their interest.” 8. No response was received by the plaintiffs to the aforesaid letter sent by the plaintiffs on 08.07.2003. The defendant unilaterally continued to tender the rent at the rate which was not acceptable to the plaintiffs and ultimately, the plaintiffs had no option left except to terminate the lease in favour of the defendant vide their letter dated 25.08.2003 w.e.f. 30.09.2003. By way of abundant caution, a registered notice dated 28.10.2003 was sent to the plaintiffs once again terminating the lease of the defendant w.e.f. 30.11.2003. CS(OS) 2130/2003 Page 6 of 27 By this notice, the defendant was requested to hand over the possession on 01.12.2003 to the plaintiffs and also called upon to pay the market rent that was prevailing from 01.04.2002 onwards upto 30.11.2003. 9. The defendant vide their letter dated 13.11.2003 replied to the aforesaid notice raising objections to the termination of the lease and refusing to hand over the possession of the premises, leading to the filing of the present suit for recovery of possession and mesne profits. 10. Summons of the suit were issued to the defendant and after the completion of the pleadings, the following issues were framed on 16.05.2005:- (1) Whether Mr.T.N.Khanna (HUF) was the owner of the suit property and had leased the same to the defendant through the registered deed? OPP (2) Whether the said lease came to an end on 31.3.2002 and was not renewed thereafter? OPP (3) Whether the plaintiff is a successor in interest of Mr.T.N.Khanna (HUF) in respect of the suit property? OPP (4) Whether the tenancy of the defendant in the suit property with effect from 1.4.2002, was on month to month basis and had been validly terminated by notice dated 28.10.2003, by the plaintiff? OPP (5) Whether the plaintiffs have no locus standi to file the present suit? OPD (6) Whether the plaintiffs had no right to terminate the lease and the lease is valid and subsisting upto 31.3.2005? OPD CS(OS) 2130/2003 Page 7 of 27 (7) Whether the defendant is not liable to hand over the possession of the suit property to the plaintiffs? OPD (8) Whether the plaintiffs are entitled to claim damages from the defendant and if so, for what period and at what rate? OPP (9) Whether the suit is bad for non-joinder of necessary parties? OPD (10) Whether this Court has no pecuniary jurisdiction to entertain the present suit? OPD (11) Relief 11. After the framing of the above issues, the suit was sent to trial. In the course of the trial, the plaintiff No.1, Mrs.Pushpa Kakkar examined herself as P.W.1. The defendant too examined only one witness, namely, D.W.1, Mr.B.L.Gupta and both the parties closed their respective evidence. 12. It was at this stage that the plaintiff filed an application under Section 151 CPC and Order XII Rule 6 CPC, being I.A. No.3947/2008, praying for judgment and decree on the basis of the admissions of the defendant in the present suit. The defendant filed its reply, in which it submitted that the present application was not maintainable at this belated stage and, in view of the fact that even otherwise it is well settled by this Court that where the admissions are not unequivocal and the defendant raises certain preliminary pleas, which must be decided before the plaintiff can be held entitled to decree, CS(OS) 2130/2003 Page 8 of 27 no decree on the basis of the alleged admissions could be passed (State Bank of India Vs. Mid Land Industries, AIR 1988 Delhi 153). Alternatively, it was submitted by the defendant that the preliminary objections raised by it in the written statement, were required to be examined in detail, and if allowed, would non-suit the plaintiffs. 13. After having gone through the record and having heard Mr.Sanjeev Anand, the learned counsel for the plaintiffs and Mr.H.L.Tikku, the learned counsel for the defendant, it is deemed expedient and more appropriate to deal with the issues framed by this Court rather than to return a finding on the application under Order XII Rule 6 CPC filed by the plaintiffs. While this Court is conscious of the fact that there is no merit in the contention of the defendant that the application has been filed belatedly and, therefore, cannot be entertained at this stage, the nature of case is such as requires it to be decided taking recourse to the evidence adduced by the parties. Thus, though the admissions made by the defendant may obviate the necessity of looking into the evidence of the parties so far as the prayer of the plaintiffs for recovery of the possession is concerned, while considering the preliminary objections raised by the defendant to the maintainability of the suit and the prayer for damages/mesne profits, this Court may have no option (keeping in view the provisions of Order XX Rule 12 CPC, which mandate an inquiry into the CS(OS) 2130/2003 Page 9 of 27 matter), but to look at the result of the said inquiry as it emerges from the evidence of the parties. It is, therefore, proposed to straightaway embark upon adjudication of the issues framed. ISSUE NO.1 14. This issue is wholly covered by the admissions made by the defendant in the pleadings and the evidence. Thus, in para-1 of the Preliminary Submissions to its written statement, the defendants states: “The defendant is tenant of the premises, i.e., Flat No.202, Second Floor, 9-E, Connaught House, Connaught Place, New Delhi, admeasuring 2,388 sq. ft., of which the initial rent as per the lease deed dated 23.09.1996 was Rs.14,925/- for the period from 01.04.1996 to 31.03.1999 @ Rs.6.25 per sq. ft.” 15. In the course of evidence, the original lease deed dated 23.09.1996 executed by Mr.Triloki Nath Khanna HUF in favour of the defendant, and exhibited as Exhibit P-1, was admitted by the defendant and is relied upon in the affidavit by way of evidence filed by D.W.1, Mr.B.L.Bhatia. 16. Then again, the registered lease deed dated 26.04.1999 between Mr.Triloki Nath Khanna HUF through its Karta, Mr.Triloki Nath Khanna and the defendant Company, whereunder the demised premises were leased for a further period of three years from 01.04.1999 to 31.03.2002, has been specifically admitted by the defendant in para-3 of its written statement, CS(OS) 2130/2003 Page 10 of 27 wherein, it is specifically stated that a fresh lease dated 26.04.1999 was executed by the landlord in favour of the defendant and registered in the Office of the Sub-Registrar, New Delhi as Document No.7090 in Additional Book No.1 Volume 75 at pages-69 to 81. The said lease deed (Exhibit P-3) has also been specifically admitted by the defendant in evidence. 17. Even otherwise, it is trite to say that a tenant in a legal proceeding is estopped from questioning the title of the landlord under Section 116 of the Evidence Act. Reference in this connection may be made to the three Judge Bench decision of the Hon'ble Supreme Court in Sri Ram Pasricha Vs. Jagannath and Others reported in AIR 1976 SC 2335 wherein it is held :- “..... The tenant cannot deny that the landlord had title to the premises at the commencement of the tenancy. Under the general law in a suit between landlord and tenant the question of title to the leased property is irrelevant...” 18. In view of the aforesaid, in my view, the plaintiffs must be held to have discharged the onus placed upon them of proving that Mr.Triloki Nath Khanna HUF was the owner of the suit property and had leased the same to the defendant through the aforesaid registered lease deeds. 19. Issue No.1 is accordingly answered in the affirmative in favour of the plaintiffs. CS(OS) 2130/2003 Page 11 of 27 ISSUE NOS.2 AND 6 20. Since issue Nos.2 and 6 are inter-connected and deal with the controversy as to whether the lease came to an end on 31.03.2002 or continued to subsist till 31.03.2005, they are being dealt with together. 21. With reference to the aforesaid issues, the learned counsel for the plaintiffs relies upon the letter dated 19.10.2001 sent through registered A.D. post by the Senior Divisional Manager of the defendant Insurance Company to Mr.Triloki Nath Khanna captioned: “Renewal of lease deed in respect of premises Flat No.202, E-9, 2nd Floor, Connaught House, Connaught Place, New Delhi belonging to you expiring on 31st March, 2002.” The relevant portion of the aforesaid letter reads as under:- “As per Lease executed in respect of this premises vide Lease Deed dt.26.4.1999, the lease deed is expiring on 31.3.2002. Now, we wish to inform you that we want to renew the present Lease Deed for the further period w.e.f. 1.4.2002 on terms to be mutually agreed between you and our company. You are requested to make it convenient to finalise the renewal of Lease Deed.” 22. The aforesaid letter was admitted by the defendant in its written statement as well as in the course of admission/denial of documents and is, therefore, exhibited as Exhibit P-6. This was followed by a letter dated CS(OS) 2130/2003 Page 12 of 27 15.12.2001 from Triloki Nath Khanna HUF to the defendant offering to renew the lease deed on a monthly rent of Rs.62/- per sq. ft. with interest free security deposit equivalent to six months' rent. This letter too is admitted by the defendant and exhibited as Exhibit P-7. 23. Next, there appears on record the minutes of the meeting dated 06.03.2002, which are admitted by the defendant and exhibited as Exhibit P-8, whereby it was agreed between the parties, subject to the final approval of the same from the Head Office of the defendant that the lease deed would be renewed for the period from 01.04.2002 to 31.03.2005 @ Rs.32.50 per sq. ft. However, the defendant has not disputed that the said minutes did not fructify in the execution of the lease deed and in the meanwhile, by two separate sale deeds, the previous lessor Triloki Nath Khanna HUF sold the demised premises to the plaintiffs. It is also not in dispute that no lease deed was ever executed between the plaintiffs and the defendant and thus it must be held that the lease dated 26.04.1999 came to an end on 31.03.2002 and was not renewed thereafter. 24. Issue No.2 is accordingly decided in favour of the plaintiffs and, issue No.6 must be decided against the defendant, and is decided accordingly by holding that there was no valid or subsisting lease upto 31.03.2005. CS(OS) 2130/2003 Page 13 of 27 ISSUE NOS.3 AND 5 25. Both the aforesaid issues are intricately connected with each other as Issue No.3 deals with the aspect of the plaintiffs being successors in interest of Triloki Nath Khanna in respect of the suit property and Issue No.5 deals with the locus standi of the plaintiffs to file the present suit. 26. In the context of the aforesaid issues, the learned counsel for the plaintiffs, Mr.Sanjeev Anand relied upon two admitted documents, being Exhibits P-9 and P-10, both dated 04.06.2002. The document, Exhibit P-9, as noticed above, is a letter written by Mr.Triloki Nath Khanna, Karta of Triloki Nath Khanna HUF to the defendant Company, informing the defendant Company of the two registered sale deeds dated 13.05.2002 executed by him for the sale of the demised property to the plaintiff No.1 and the plaintiff No.2 in equal shares. It categorically states that pursuant to and in terms of the said sale deeds, the plaintiffs were the new owners/landladies of the suit property. It is also requested in the said letter that the defendant henceforth directly deal with them in respect of the lease deed and also pay the rent directly to them. It further clarifies as follows:- “As you are aware the lease of the premises in your favour has already come to an end on 31.3.2002. You may discuss the matter directly with them for the terms and conditions at which the lease has to be renewed.” 27. The second document, which too is an admitted document, exhibited as CS(OS) 2130/2003 Page 14 of 27 Exhibit P-10, is a similar communication jointly sent by the plaintiffs Nos.1 and 2 to the defendant Company, informing the defendant Company as under:- “This is to inform you that we have purchased the property No.2nd Floor, E-9, Con.House, Con.Place, New Delhi vide two separate registered Sale Deeds dated 13.5.2002 executed in our favour and as such you have attorned to us as the tenants of the said premises..... Even after the expiry of the lease on 31.3.2002, we have been informed that you have been sending the rent at the same rate as agreed under the lease deed dated 26.04.1999, which have not been accepted by Mr.T.N.Khanna and are not acceptable to us (sic.). We would like to discuss with you the terms and conditons at which the lease can be renewed in your favour and suggest a meeting be held for this purpose at the earliest at a mutually convenient date and time.” 28. In response to both the letters dated 04.06.2002, the defendant by its communication dated 24.06.2002 (admitted and exhibited as Exhibit P-11), after acknowledging receipt of the letter dated 04.06.2002, wrote to the plaintiffs that they had noted that the plaintiffs had purchased the property. Significantly also, the defendant by the same communication sought to inform the plaintiffs that: “...........................the lease deed in respect of the property had expired on 31.03.2002 and the same was due for renewal w.e.f. 01.04.2002. Mr.T.N.Khanna (HUF) the previous owner of the property had negotiated the terms for renewal of lease deed w.e.f. 01.04.2002 with the Company. These proposals have already been sent to our CS(OS) 2130/2003 Page 15 of 27 Corporate Office at Mumbai for their sanction and we are awaiting their reply very shortly. After negotiations on the renewal terms, it was verbally agreed by the previous owner that the increased rent will be paid immediately after our getting the approval from our Head Office.” 29. Reference was also made by Mr.Anand to clause 4 (IV) of the lease deed dated 26.04.1999, to submit that the aforesaid letter is a candid admission on the part of the defendant of having attorned to the plaintiffs and entered into negotiations with them for the renewal of the terms and conditions of the lease deed. Thus, it cannot be said that the plaintiffs had no locus standi to file the present suit. 30. Issue Nos.3 and 5 are accordingly decided in favour of the plaintiffs and against the defendant. ISSUE NO.4 31. The learned counsel for the plaintiffs contended that the tenancy of the defendant in the suit property w.e.f. 01.04.2002 was on month-to-month basis and had been validly terminated by notice dated 28.10.2003 (Exhibit P-24), which was duly served, as borne out by the postal receipts (Exhibit P-25) and registered acknowledgment due cards (Exhibit P-26) placed on record. The learned counsel further contended that the defendant had at no point of time raised any objection as to the validity or sufficiency of the said notice, and the CS(OS) 2130/2003 Page 16 of 27 only contention raised by it was that it was not a three months' notice in terms of Clause 4 (III) of the lease deed and thus cannot amount to legal or valid termination of the lease. This objection, learned counsel stated, is to be noted in order to be rejected, for, a bare glance at Clause-4 (III) makes it evident that the said clause was to operate only during the subsistence of the lease deed. The said clause reads as follows:- “That the lessor and the lessee may mutually agree to terminate this lease on giving three months' notice, therefore, to the other part.” 32. I find merit in the contention of Mr.Anand, the learned counsel for the plaintiffs and