1 WP7259-10.doc ndm IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURISDICTION WRIT PETITION NO.7259 OF 2010 New Era Fabrics Limited. ..Petitioner Vs Home Care Retail Marts (P) Ltd. ..Respondent ---- Mr.M.M.Vashi i/b.M/s.M.P.Vashi & Associates, for petitioner. Mr. P.K.Dhakephalkar, Sr. Advocate with Mr.Amol Mhatre and Ms.Ranjana Parikh, for respondent. ---- CORAM : A.S.OKA, J. DATE : 2 nd DECEMBER, 2010. P.C: Submissions of the learned counsel appearing for the parties were heard from time to time. 2] By this writ petition under Article 227 of the Constitution of India, the challenge is to the orders dated 31 st August, 2010 and 13 th July, 2010 passed by the Court of Small Causes. With a view to appreciate the submissions, it will be necessary to make a brief reference to the facts of the case. The present petitioner is the defendant in a suit filed by the respondent. The suit relates to a property known as “New Era Fabric Limited” which is described in paragraph No.2 of the Plaint. The prayer made in the suit filed in the Court of Small Causes at Mumbai is for a declaration that the respondent is lawfully in use, occupation and 2 WP7259-10.doc possession of the suit premises which, according to the respondent, consists of built up area of 51000 sq.ft on the ground floor of the building “New Era House” and open space admeasuring 5339 sq.ft on the ground floor ( hereinafter referred to as “the suit premises”). The Respondent claims to be in possession of the suit premises on the basis of a Leave and License Agreement dated 27 th August, 2005 executed by the Petitioner. The suit was contested by the petitioner by filing a written statement. 3] According to the case of the petitioner, the respondent failed to pay electricity charges and, therefore, the supply of electricity was disconnected. An application for interim relief was made by the respondent in the pending suit. The application made by the Respondent at Exhibit – 7 was made absolute in terms of prayer clause (a) thereof by order dated 3 rd May, 2008. By the said order, the temporary injunction was granted against the petitioner restraining the petitioner from interfering with the use, occupation, possession and enjoyment of the suit premises by the respondent and from stopping, preventing or interfering with the access to the suit premises from the Mogul Lane main gate by the respondent, its servants, staff and customers in any manner whatsoever and from curtailing, stopping or interfering with the amenities as mentioned in the said Agreement dated 27 th August 2005. There was an appeal preferred against the said order before the Court of Small Causes. By judgment and order dated 14 th July, 2008, the appeal was dismissed. A writ petition was preferred by the Petitioner before this Court challenging the order granting interim relief which was confirmed in appeal. Writ petition was heard and decided by the judgment and order dated 16 th July, 2009. This Court 3 WP7259-10.doc allowed the writ petition and the application for temporary injunction filed by the Respondent- plaintiff was rejected. 4] A special leave petition was preferred by the Respondent before the Apex Court. By judgment and order dated 18 th September 2009, the Apex Court reversed the order of this Court in the writ petition. The Apex Court directed that the order of temporary injunction granted by the trial Court will continue till final disposal of the suit on condition that the respondent herein shall go on paying the amount in terms of the leave and license agreement dated 27 th August, 2005. The Apex Court directed that in default of payment or deposit of the said amounts, injunction granted by the trial Court shall stand vacated and order of the High Court in writ petition will stand restored. 5] An application was made by the respondent in the pending suit at Exhibit – 27 for grant of temporary injunction against the Petitioner from obstructing the Respondent from getting an independent electricity supply. By order dated 27 th, 28 th and 29 th January, 2010, the said application was allowed by the trial Court. The trial Court restrained the Petitioner from preventing Respondent from providing suitable cable connection for new meter/ switch panel installed by the BEST at the location marked by alphabets ‘C’ and ‘D’ respectively to the electric cable shown marked ‘X’ and ‘Y’ on the plan annexed to the agreement. A temporary injunction was also granted restraining the Petitioner from objecting to the BEST giving a fresh electricity connection for the hypermarket store of the respondent from the existing substation constructed by the BEST on the property 4 WP7259-10.doc adjoining the suit premises by an electric cable running from the boundary of the suit property to the hypermarket store. The trial Court directed that the said order of injunction shall be operative subject to payment of all arrears of the electricity charges demanded by the Petitioner and subject to payment of all arrears of compensation and amounts payable by the respondent to the petitioner in terms of leave and licence agreement dated 27 th August, 2005. 6] An application was made by the Respondent at Exhibit – 103 seeking police help for implementation of the order passed below Exhibit – 27 granting temporary injunction by order dated 12 th / 13 th July, 2010. Similar prayer was made in the said application for implementation of the order passed below application at Exhibit 7 as regards the access to the respondent from the Mogul lane gate. The said application was allowed by the trial Court and the Senior Inspector of Police, Mahim Police Station was ordered to give police protection for laying of cable connection in compliance with the aforesaid order dated 29 th January 2010 passed below the application at Exhibit 27. The Senior Inspector of Police was also directed to see that there is no obstruction by the petitioner on the Mogul lane gate for the entry of the respondent, its staff members, workers, customers in the suit premises. An appeal was preferred against the said order by the petitioner before appeal bench of the Court of Small Causes, which has been dismissed. These two orders are subject matter of challenge in this writ petition under article 227 of the Constitution of India. Thus, the effect of the order passed below exhibit 103 is that for enforcing the orders passed below applications exhibit 27 and exhibit 7, the 5 WP7259-10.doc police help was granted to the respondent plaintiff. 7] Learned counsel for the petitioner invited my attention to the order of the Apex Court by which the order passed below exhibit 7 was restored and the order of this Court in Writ Petition was quashed and set aside. He pointed out paragraph no.6 of the judgment of the Apex court, which provides that the respondent has to pay the amount which is due and payable in terms of the Leave and License agreement dated 27 th August, 2005. He submitted that apart from the fact that the license fee for September, 2005 is not paid by the respondent, the liability of payment of service tax has not been discharged by the respondent-plaintiff. He submitted that apart from the payment of the service tax, the respondent was liable to pay the interest on outstanding amount. He also invited attention of the Court to the subsequent order of temporary injunction passed below application exhibit 27 and pointed out that the injunction was to remain in operation subject to the payment of arrears of electricity charges and subject to the payment of all arrears of compensation and amounts payable by the respondent to the petitioner under the leave and licence agreement. He submitted that when the Apex Court has held that the respondent is liable to pay the compensation in terms of the Leave and License agreement dated 28 th August, 2005, it is implicit that the respondent is liable to pay the service tax. He submitted that even as per the order below exhibit 27, injunction will operate provided the respondent has discharged the liability of payment of all the amounts including taxes payable under the agreement of Leave and License. He submitted that as the service tax become payable only after the execution of Leave and 6 WP7259-10.doc License agreement, the agreement does not specifically refer to the liability of payment of service tax. The liability of the respondent plaintiff to pay the same is implicit as the respondent plaintiff is claiming to be licensee under the said agreement. Inviting attention of the Court to another finding recorded in paragraph 11 of the order of the Appellate Bench, he submitted that an erroneous finding has been recorded on the basis of letter dated 15 th September, 2005 and the alleged endorsement made thereon that the issue regarding non payment of license fee of September, 2005 and interest thereon has been settled. He submitted that there is no evidence to show that the endorsement on the said letter is made by the petitioner which has the effect of waiver of right to receive the compensation of September, 2005 and interest thereon. He submitted that the said finding has no basis and, on plain reading of the said letter and endorsement, it is impossible to come to the conclusion that there was any settlement. He submitted that though the Agreement dated 27 th August 2005 may not refer to service tax, as the licensee in possession of the suit premises the respondent was liable to discharge the said liability. He submitted that the liability to pay service tax came into existence in July 2007 and in fact the respondent started regularly paying service tax. He pointed out that the respondent stopped paying service tax from February 2009 and did not resume the payment notwithstanding the provisions of the Finance Act, 2010. He submitted that as the liability under the agreement is not discharged by the respondent, both the orders of temporary injunction were not operative and were not enfoceable. 8] Lastly, learned counsel for the petitioner submitted that the petition 7 WP7259-10.doc was heard in October, 2010 and was adjourned to enable the respondent to pay the license fee for September, 2005 along with interest, but the respondent did not pay the said amount and the amount had been belatedly paid on 11 th November, 2010 which again does not cover the entire interest payable. He, therefore, submitted that the orders of injunction are not operating and, therefore, the police help cannot be granted to enforce the said orders. 9] Learned counsel for the respondent supported the impugned orders and submitted that the appellate Court was right in holding that the issue regarding alleged arrears of license fee of September, 2005 was settled. He pointed out that on 11 th November, 2010 a total amount of Rs. 18,05,163/- was paid by the respondent to the petitioner which includes interest of Rs.6,86,029. He has tendered on record correspondence made by the advocate on record for the respondent. He submitted that no interference is called for in the impugned orders. 10] I have given careful consideration to the submissions. By order dated 3 rd May, 2008, application at exhibit 7 was made absolute in terms of prayer clause (a) which reads thus:- (a) Pending the hearing and final disposal of the Suit the Defendant, its servants, agents and officers be restrained by an order and injunction of this Hon’ble Court from obstructing or interfering with the Plaintiff it’s use, occupation possession and enjoyment of the suit premises and from stopping, preventing or interfering with the access to suit premises from the main gate Mogul Lane by the Plaintiff, its servants and staff and customers in any manner whatsoever 8 WP7259-10.doc and from curtailing, stopping or interfering with the amenities as mentioned in the Leave & License Agreement dated 27 th August, 2005 and from failing to comply with its obligations under the Leave & License Agreement;” As pointed out earlier, the said order of temporary injunction was set aside by this Court. However, the same was restored by the Apex Court in a Special Leave Petition. Paragraph No.6 of the judgment of the Apex Court reads thus:- “6. However, it is needless to say that the order of injunction granted by the courts below shall continue till the final disposal of the suit on condition that the appellant shall go on paying the amount that it is liable to pay in terms of the Leave and Licence Agreement dated 27 th of August, 2005. In default of payment or deposit of the said amount, the injunction granted by the courts below shall stand vacated and the order of the High Court shall stand restored.” (emphasis added) The effect of the order of the Apex Court is that the order of injunction passed by the trial Court will continue to operate subject to respondent paying amounts in terms of Leave and License agreement dated 27 th August, 2005 and, in default of payment or deposit of the said amounts, the temporary injunction granted by order passed below Exhibit 7 will stand vacated. The subsequent order of the trial Court below application at Exhibit 27 grants temporary injunction relating to supply of electricity to the suit premises. The trial Court after passing order of temporary injunction 9 WP7259-10.doc below the application at Exhibit 27 directed that "The above said injunction shall be operative subject to payment of all electricity charges as demanded by the defendant and subject to payment of all arrears of compensation and amounts payable by the plaintiff to the defendant in terms of the leave and license agreement dt.27.8.2005.” 11] In the reply to the application at Exhibit 103, the petitioner pointed out that the respondent was paying the service tax from July 2007 over and above the license fees without raising any dispute. It is pointed out that the respondents stopped the payment of service tax from February 2009 on the ground that the Delhi High Court has struck down the relevant provisions. It is pointed out that by the Finance Act, 2010, the provision relating to service tax was amended and the renting of commercial premises was treated as ‘declared service’ with retrospective effect from June 2007. Therefore, it was submitted that the respondent was liable to pay service tax. It must be noted that even according to the case of the petitioner, the Leave and License agreement does not make any specific reference to service tax. The agreement of Leave and License provides that the license fee includes municipal taxes and outgoings in respect of the premises. It is not disputed by the petitioner that the said Agreement does not provide for payment of service tax. As far as the amounts expressly payable under the agreement are concerned, except the license fee for September, 2005, there is no dispute that the respondent has made compliance by paying the amounts as provided in the said agreement. Learned counsel for the petitioner wants the Court to read liability of service tax in paragraph 6 of the order of the Apex Court. The said 10 WP7259-10.doc paragraph provides for “.. paying the amount that it is liable to pay in terms of the Leave and Licence Agreement dated 27 th of August, 2005”. On plain reading of the order of the Apex Court, the same does not provide for payment of service tax. Moreover, it is for the petitioner to approach the Apex Court as far as the liability to pay service tax is concerned. The order passed below exhibit 27 grants temporary injunction “subject to payment of all arrears of compensation and amounts payable by the plaintiff to the defendant in terms of the leave and license agreement dt. 27.8.2005”. The amounts provided in the Leave and Licenses agreement do not include service tax. The relevant clause in the agreement includes only the property tax and outgoings in respect of licensed premises apart from the license fee. It is pertinent to note that the petitioner has not sought any modification or clarification as regards the said order below application at Exhibit 27. It must be stated here that as far as the liability regarding payment of service tax is concerned, while passing the impugned order, the Appellate Court has observed that the issue whether the respondent is liable to pay the said amount, will have to be decided after adducing evidence. 12] As stated earlier, there is a finding recorded on the basis of letter dated 15 th September, 2005 and endorsement made thereon that the issue regarding the payment of license fee for September, 2005 has been settled. The Appellate Court observed that the endorsement appearing on the aforesaid letter was of the petitioner which shows that license fee was received in settlement of debit note dated 8 th September 2005 for September 2005 for 11 days only as full and final settlement. This again is 11 WP7259-10.doc a matter of evidence. It is not in dispute that along with letter dated 11 th November, 2010, pay orders were forwarded by the advocate for respondent to the advocate for the petitioner totally amounting to Rs. 18,05,163/- which includes arrears of license fee for September, 2005 in the sum of Rs.11,19,134/- and interest of Rs.6,86,029/- for a period of sixty one months and nine days. One aspect which is to be noted is that in the letter dated 11 th November, 2010, the advocate for respondent has made a factually incorrect statement that this Court had directed the respondent to pay the said amount. In the order dated 29 th October, 2010, this Court has specifically noted that the learned senior counsel for the respondent had made a statement that the arrears of license fee along with interest will be paid . In fact this Court has recorded that in view of the said statement made on the earlier date, the petition was not disposed of and was adjourned to 28 th October 2010. Therefore, the last statement made in the said letter dated 11 th November, 2010 is totally incorrect and such statement ought not have been incorporated in the said letter. 13] However, it must be stated that prima facie finding recorded by the Appellate Court is that the respondent was not in arrears of license fee for the month of September 2005. But, in any event, in view of the aforesaid payment made during the pendency of this petition, it can be said that there is a substantial compliance made by the respondent plaintiff by paying amounts payable under the Leave and License agreement and, therefore, the Courts below were right in holding that the orders of temporary injunction was operating and the same will have to be implemented the help of police. The order of the Apex Court binds the 12 WP7259-10.doc parties till it is modified. As of today, the order of temporary injunction passed below application at Exhibit 27 is subsisting. The effect of the impugned orders is that the said orders of temporary injunction will be implemented. Hence, subject to what is observed above, no interference can be made in the writ jurisdiction with the impugned judgments and orders. 14] Writ Petition is rejected with no order as to the costs. 15] Learned Counsel for the petitioner seeks continuation of ad-interim relief for a period six weeks. The said request is opposed by learned counsel for the respondent. The ad-interim relief granted on 13 th September, 2010 will continue to operate for six weeks from today. [ A.S.OKA, J ]