CM(M) No.1341/2008 Page 1 of 21 * IN THE HIGH COURT OF DELHI AT NEW DELHI Judgment reserved on: 06.08.2009 % Judgment delivered on: 16.09.2009 + CM(M) NO.1341/2008 ANIL SURI & ORS. ..... Petitioner Through: Mr. B. R. Sharma, Advocate. versus VIKRANT KHANNA & ANR. ..... Respondent Through: Mr. K.C. Mittal, Senior Advocate with Ms. Ruchita Mittal and Mr. Sujeet Kumar Singh, Advocates. CORAM: HON’BLE MR. JUSTICE VIPIN SANGHI 1. Whether the Reporters of local papers may be allowed to see the judgment? No 2. To be referred to Reporter or not? Yes 3. Whether the judgment should be reported in the Digest? Yes J U D G M E N T VIPIN SANGHI, J. 1. In challenge in this petition under Article 227 of the Constitution of India is the order dated 26.09.2008 passed by Sh. Virender Bhat, ADJ, Delhi in Suit NO. 260/2008 whereby the petitioner‟s application under Order 12 Rule 6 read with Section 151 CPC, for judgment on admission stated to have been made by the defendants, has been dismissed. CM(M) No.1341/2008 Page 2 of 21 2. The petitioners are the plaintiffs in the aforesaid suit. The respondents are defendants and are husband and wife and they are the sole proprietors of M/s. SaumyeTrading Company and M/s. Saumye Sports respectively. The suit has been filed for recovery of possession, recovery of arrears of license fee, damages/mesne profits for the unauthorized and illegal use and occupation of the suit premises. 3. The admitted position is that the respondents-husband and wife, entered into two separate lease deeds on 27.06.2005 in respect of distinct half portions of lower ground floor/basement admeasuring 1670 Sq. Ft. each of property bearing No. A-4, Vishal Enclave, New Delhi. The first of these lease deeds was executed between Sh. J.P. Suri & Sons (HUF) through its karta Sh. J. P. Suri, and respondent no. 1 Sh. Vikrant Khanna as proprietors of M/s. Saumye Trading Company. The second lease deed was entered into between Mrs. Shanta Suri W/o. Sh. J.P. Suri and respondent no. 2 Mrs. Rachna Khanna W/o. Sh. Vikrant Khanna as proprietor of M/s. Saumye Sports. The terms of both these lease deeds are identical and both have been registered in the office of the Sub-Registrar. The tenure of the lease of these leases was three years commencing from 15.07.2005. The rent fixed in respect of both the leases was Rs. 45,000/- per month for the three year period from 15.07.2005 to 14.07.2008. Both these leases contain a clause for renewal of the lease being Clause no. 5 and the same reads as follows: “5. RENEWAL 5.1 The Lessee shall have the option to renew the lease for further successive periods of three years each after the expiry of initial tenure of the lease on terms and conditions mutually CM(M) No.1341/2008 Page 3 of 21 settled between the parties (3 Years to Extended after expiry of this lease both the parties agreed mutually). 5 .2 The Lessee shall give a notice of three months to the Lessor for renewal of the lease before the expiry of the tenure of this lease. 5.3 A fresh lease deed shall be executed for the renewal term of the lease.” 4. Clause 1.3 of both these lease deeds reads as follows: “1.3 The Lessee/lessor will not withdraw the lease separately. The withdrawal of the lease will be both and not separately (The other part of lease is with the sister concern of this firm.” 5. Consequently both the lease deeds could be terminated simultaneously and not at different points of time by the lessor, or the lessee, as the case may be. The lease deeds in question are admitted documents between the parties. 6. Sh. J.P. Suri, it appears, passed away after the aforesaid lease deed was executed by him as „karta‟ of J.P. Suri & Sons (HUF). It appears that the petitioners issued a legal notice dated 30.09.2007 to the respondents alleging non-payment of rent and breach of the other terms and conditions of the two lease deeds. As a result of the same, a memorandum of understanding was entered into between Sh. J.P. Suri & Sons (HUF) represented through its coparceners Sh. Anil Suri and Sh. Vivek Suri both sons of Lt. Sh. J.P. Suri, and Smt. Shanta Suri w/o. Lt. Sh. J.P. Suri i.e. the lessors of the two premises respectively on the one hand, and Sh. Vikrant Khanna and Smt. Rachna Khanna, the two lessees on the other hand wherein the two lessees acknowledged that they had defaulted in the payment of rent. By the said CM(M) No.1341/2008 Page 4 of 21 memorandum of understanding a compromise was arrived at between the parties whereby the two lessees undertook that they shall pay the amount of lease rent to the respective lessors on or before 15th of every month in advance positively, as per the terms of the lease agreements without any default and that they would pay the electricity bills as and when received regularly without any default and copies of paid bills would be sent to the respective lessors. The two lessees also undertook to furnish TDS certificates of tax deducted at source for payment of the lease rent to the lessors in question. 7. The petitioners filed the above mentioned suit against the respondents on or about 12.02.2008. The petitioners pleaded that despite the said memorandum of understanding, the two lessees/respondents had again defaulted in payments of rent. The petitioners pleaded that they jointly issued a legal notice dated 10.01.2008 for termination of the two leases to both the tenants whereby the two leases were terminated and the defendants were called upon to vacate the tenanted premises. Since the respondents did not vacate the premises under their respective occupation as lessees, the plaintiffs/petitioners sought, inter alia, recovery of the suit premises from both the tenants. With regard to the failure of the two respondents to make payment of the rents respectively due from them, the averment made in the plaint in para 25 reads as follows: “25. That in spite of the said Memorandum of Understanding, the defendants again defaulted in the payment of the lease rent as agreed upon. Their cheques No.88065, 880634 dated 3.1.2008 drawn on Indian Bank, Tilak Nagar, Delhi for Rs.38115/- each for the lease rent for CM(M) No.1341/2008 Page 5 of 21 the months of October and November, 2007 were returned unpaid with the reason “Fund Insufficient”. Further, a cheque No.612706 dated 3.1.2008 for Rs.38115/- in favour of the plaintiff No.3 for the lease rent for the month of November, 2007 for her portion was also returned unpaid with the reason “Funds Insufficient “. Not only this, you have not tendered the lease rent for the month of December, 2007 and January, 2008 and February by now.” 8. The defendants, upon being summoned, filed their common written statement and in response to para 25 of the plaint the defendants stated as follows: “25. Para 25 of the suit as stated is wrong and denied. It is denied that the said Memorandum of Understanding, the defendants again defaulted in the payment of the lease rent as agreed upon. It is submitted that in lieu of cheque no. 880635, 880634 & 612706 pay order nos. 11069, dated 31.01.08, 111070 dated 31.01.08 and 111066 respectively all of ICICI Bank has been paid to the plaintiffs.” 9. Along with the written statement the defendants filed, as Annexures 2 and 3, the details of cheque payments allegedly made to Smt. Shanta Devi and the details of cheque payment allegedly made to Sh. J.P. Suri and Sons (HUF). The payment details, of payments made prior to 03.11.2007 (which is the date of memorandum of understanding entered into between the parties) are not relevant. However, the payment details of payments made after the date of the MOU, being relevant, are extracted from Annexures 2 & 3 and are produced herein below: CM(M) No.1341/2008 Page 6 of 21 DETAILS OF CHEQUES PAYMENT TO SHANTA SURI (Extract from Annexure 2) SR. NO DATE MONTHS OF RENT CH. RETURN CH. NO. AMOUNT BANK RENT PAID UPTO MONTHS 29 NOV.07 31.01.08 612706/ 03.01.08 111066 38,115.00 ICICI BANK NOV.07 14 DEC 07 30 DEC.07 31.01.08 111067 38,115.00 ICICI BANK DEC.07 14 JAN 08 31 JAN 08 31.01.08 111068 38,115.00 ICICI BANK JAN 08 14 FEB 08 FEB 08 FEB 08 14 MARCH 08 TOTAL 1,181,679.00 DETAILS OF CHEQUES PAYMENT TO J.P.SURI & SONS (HUF) (Extract from Annexure 3) SR. NO DATE MONTHS OF RENT CH. RETURN CH.NO. AMOUNT BANK RENT PAID UP TO MONTHS 25 JULY 07 29.11.07 880499/ 27.11.07 144938 38,115.00 ICICI BANK JULY 07 14 AUG 07 26 AUG 07 04.12.07 880765/ 03.12.07 880478 38,115.00 INDIAN BANK AUG 07 14 SEPT 07 27 SEPT 07 04.12.07 880775 38,115.00 ICICI BANK SEPT 07 14 SEPT 07 28 OCT 07 31.01.08 880635/ 03.01.08 111069 38,115.00 ICICI BANK OCT 07 14 NOV 07 29 NOV 07 31.01.08 880634/ 03.01.08 111070 38,115.00 ICICI BANK NOV 14 DEC 07 DEC.07 DEC 07 14 JAN 08 JAN 08 JAN 08 14 FEB 08 FEB.08 FEB 08 14 MAR 08 TOTAL 1,105,533.00 CM(M) No.1341/2008 Page 7 of 21 10. By relying upon the aforesaid tabulation filed by the respondents/defendants, the petitioners/plaintiffs filed their application under Order 12 Rule 6 CPC to seek a decree for recovery of possession which has been rejected by the impugned order. 11. In para 26 of the plaint the plaintiffs pleaded the issuance of the legal notice dated 10.01.2008 terminating the two leases. In the corresponding para of the written statement, the defendants did not deny the receipt of the notice but stated that the notice was based on wrong and concocted facts. It was denied that the defendants had not cleared arrears of the lease rents or that they are legally bound to deliver peaceful and vacant possession of the suit premises to the plaintiffs. 12. From the above narration it is clear that the relationship of landlord and tenant between petitioner no. 1 and 2 on the one hand and respondent no. 1 on the other hand, and similarly, between petitioner no. 3 and respondent no. 2 is admitted. The rate of rent which was Rs. 45,000/- per month in respect of both the tenanted premises, is also not in dispute. Consequently, the two tenancies of the two respondents are governed by the Transfer of Property Act. The factum of issuance and receipt of termination notice dated 10.01.2008 is also not disputed, though the defendants have disputed the correctness of the said legal notice. Therefore, the only question that needs determination is the aspect of legality of the legal notice dated 10.01.2008. If the allegation contained therein with regard to default in the payment of rent by the two respondents is found to be correct and CM(M) No.1341/2008 Page 8 of 21 the said defaults entitles the petitioners to determine the two lease deeds, the respective leases would stand determined upon the issuance of the notice of termination and the continued occupation of the lease premises by them would be unauthorized and illegal. 13. What, therefore, needs to be firstly examined is whether there is any admission of breach of the lease deeds made by the defendants in their written statement and the Annexures above referred to, which was made the ground for termination of the lease deeds by the plaintiffs. If, on a scrutiny of the written statement and the Annexures filed therewith admissions of the defendants are discernible of their being in breach of their respective obligation to pay the rents, no question of trial would arise on the issue regarding the breach of the two lease deeds by the respondents. 14. The averments made in para 25 of the plaint as extracted above are the same as that made in para 5 of the notice dated 10.01.2008. Paras 5 and 6 of the said notice dated 10.01.2008 read as follows: “5. It is a matter of record that the cheques No.880635, 880634 dated 3-1-2008 drawn on Indian Bank, Tilak Nagar, Delhi for Rs.38115/- in Favour of J.P.Suri & sons (H.U.F.) were the payment of the lease rent for the months of October, 2007 and November, 2007 and thereafter till date no cheque for the lease rent for the months of December, 2007 and January, 2008 has given to my above named clients. Further, another cheque No.612706 dated 3-1-2008 for Rs.38115/- in favour of Mrs. Shanta Suri, drawn on Indian Bank, Tilak Nagar, New Delhi was the payment of the lease rent for the month of November, 2007 and no cheque for the lease rent for the month of December, 2007 and January, 2008 has given CM(M) No.1341/2008 Page 9 of 21 to my above named clients. It is made clear that no lease rent has been paid by you from December, 2007 to till date which is default as per the terms and conditions of the lease agreement as well as violation of the MOU. 6. That further, the cheque nos. 880635, 880634 and 612706 as stated above has been returned unpaid with the reason “Fund Insufficient”. Thus, you have made further default and as such you have no respect to the terms & conditions of the lease agreement as well as to the MOU.” 15. The case of the plaintiff pleaded in para 5 of the legal notice and in para 25 of the plaint was that cheque nos. 880635 and 880634 dated 03.01.2008 for Rs. 38115/- favouring Sh. J.P. Suri & Sons (HUF), were given towards rent for the months of October, 2007 and November, 2007. It was their positive case that no cheque had been issued towards payment of rent for the month of December, 2007 and January, 2008 in favour of M/s. J.P. Suri & Sons (HUF). Similarly, it was claimed by the plaintiffs that cheque no. 612706 dated 03.01.2008 for Rs. 38115/- drawn in favour of Mrs. Shanta Suri was tendered towards payment of lease rent for the month of November, 2007. It was further pleaded that no cheque towards payment of rent for the months of December, 2007 and January, 2008 had been delivered to Mrs. Shanta Suri. 16. It was, therefore, pleaded by the petitioners that from December, 2007 lease rent had not been paid by the two defendants to the plaintiffs in respect of their respective tenancies. It was further pleaded that even the three above mentioned cheques bearing nos. 880635, 880634 and 612706 all dated 03.01.2008, had been CM(M) No.1341/2008 Page 10 of 21 dishonoured on presentation on account of insufficiency of funds. To these averments, the reply of the defendants in para 25 of the written statement is merely to say that in lieu of the aforesaid three cheques, pay order nos. 11069 and 111070 dated 31.01.2008, and 111066 respectively, all of ICICI Bank, had been given to the plaintiffs. 17. Consequently, it cannot be accepted (as contended by the plaintiffs) that there is an admission by the defendants that payment of rents for the months of October and November, 2007 in respect of the two tenancies has been defaulted with. It would have to be established at the trial whether rents for the months of October and November, 2007 in respect of the two tenancies have been paid or not. 18. However, from the written statement of the defendants, it is clear that they are completely silent with regard to the plaintiffs clear and categorical averment made (both in the legal notice as well as in the plaint) that rents for the months of December and January, 2008 (and for February, 2008 as pleaded in the plaint) have not been made. The silence of the defendants in this regard cannot but be taken as admission on their part of the fact that rents for the months of December, 2007 and January and February, 2008 have not been paid by the defendants in respect of their tenancies. 19. The pleading of the defendants in para 25 of the written statement does not match with the Annexures 2 and 3 extracted above. While it is stated in para 25 of the written statement that payment in lieu of the cheque nos. 880635, 880634 (which were issued to M/s. J.P. Suri & Sons (HUF)) towards rent for the months of CM(M) No.1341/2008 Page 11 of 21 October and November, 2007, and cheque no. 612706 issued in favour of M/s. Shanta Suri towards rent for the month of November, 2007, was made vide pay order nos. 11069, 111070, 111066 dated 31.01.2008 respectively, a perusal of the first tabulation above shows that the defendants claim to have issued the instrument bearing no. 111066 towards payment of rent for the month of November, 2007 in favour of Shanta Suri. Similarly, from the second tabulation, it appears, that the defendant‟s claim to have given pay order nos. 111069 and 111070 towards rent in favour of M/s. J.P. Suri & Sons (HUF) for the months of October and November, 2007. For the months of December, 2007 and January, 2008, while it is claimed as per the statement in Annexure 2 that rent has been paid on 31.01.2008 vide instrument nos. 111067 and 111068, no pleading is found in the written statement to this effect. Pertinently, in so far as the lease granted by J.P. Suri & Sons (HUF) is concerned, even according to the statement in Annexure 3, no payment of rent is shown to have been made for the months of December, 2007, January, 2008 and even February, 2008. 20. It is, therefore, abundantly clear that for the months of December, 2007, January, 2008 and February, 2008, there is no definite averment of the defendants that they have made payment of the rent to the plaintiffs. Consequently, the basis on which the notice of termination dated 10.01.2008 was issued by the plaintiffs against the defendants stands established. Under the lease agreements in question, the lease rentals were to be paid each month, by the 15th day of every month in advance. The rent for the tenancy month 15th CM(M) No.1341/2008 Page 12 of 21 December, 2007 to 14th January, 2008 was payable by 30th December, 2007 and the rent for the tenancy month 15th January, 2008 to 14th February, 2008 was payable by 30th January, 2008. At the time when the notice dated 10.01.2008 was issued, rent for the tenancy months 15th December, 2007 to 14th January, 2008 was already due and in arrears. 21. Under Section 108 (e) of the Transfer of Property Act, the lessee is bound to pay or tender at the appropriate time and place the premium or rent to the lessor or his agent in this behalf. This is also one of the covenants/undertakings/warranties given by the respondents in clause 12.1 of the two lease deeds which reads “The lessee shall regularly pay the lease rental hereby reserved at the time and in the manner aforesaid.” The breach of the aforesaid condition entitles the lessor to terminate the lease, as the lessor is “deemed to contract with the lessee that, if the latter pays the rent reserved by the lease and performs the contracts binding on the lessee, he may hold the property during the time limited by the lease without interruption” (see Section 108 (c)). This is also specifically provided in clause 13.6 of the two lease deeds. This clause reads as follows: “13.6 That on the conditions that the lessee continue to pay the rent hereby reserved and observe and perform several convenience on their part herein contained, the lessee shall peacefully and quietly hold enjoy the premises during lease period(s) without any interruption of disturbances by lessor or any other person lawfully claiming under or in trust for his/her or any other person whatsoever.” (emphasis supplied). CM(M) No.1341/2008 Page 13 of 21 22. The sequitor of this covenant is that if the lessee does not pay the rent reserved regularly, the lessor is not obliged to let the lessee enjoy the leased premises without interruption. This, in my view, is an express condition which provides that on breach of Clause 12.1 of the lease deeds, the lessor may re-enter the lease. The use of the expression “if” in clause (c) of Section 108 shows that the obligation of the tenant to pay the rent reserved by the lease and to perform the contracts binding upon the lessee is a precondition to the obligation of the lessor to let the lessee hold the property during the time limited by the lease without interruption. If the lessee breaches the precondition of, inter alia, payment of rent under the lease, the lessor is liberated from the obligation to let the lessee enjoy the lease uninterruptedly, and the lessor would be entitled to interrupt the lease by determining the same under Section 111(h) of the Transfer of Property Act. This is the only reasonable and meaningful interpretation of clauses 12.1 and 13.6 of the two lease deeds. If interpreted otherwise, (to mean that the lessor only has a right to recover the rent through a legal process, but that he has no right to determine the lease because the lease does not provide by any other clause for forfeiture of the lease on default in payment of rent), it would lead to absurd consequences. It could leave the lessor practically remediless against a lessee who is a willful defaulter and who camouflages his assets, or against a lessee who may have become financially incapacitated/sick from making payment of rent regularly. Obviously, the lessor is not expected to take the law in his own hands and physically interrupt the enjoyment of the lease by CM(M) No.1341/2008 Page 14 of 21 the lessee in such a situation. This only means that the lessor would, in the event of breach of a condition analogous to the one contained in Section 108 (c) of the Transfer of Property Act (which in the present case is contained in Clause 12.1 of the lease deeds), by virtue of the condition analogous to that contained in Section 108 (e) of the said Act (which in the present case is contained in clause 13.6 of the lease deeds), be entitled to terminate the lease deeds. I may refer to the decision of the Supreme Court in Raghuram Rao v. Eric P. Mathias AIR 2002 SC 797 where the Supreme Court held in para 27 as follows: “27. …………….. If there is breach of contract, that is to say, express condition of lease, then it gives option to the lessor to determine the lease and re-enter the properties let out………………….” 23. The lease was determinable by resort to the procedure prescribed in Section 106 of the Transfer of Property Act which, admittedly, has been resorted to by the petitioners by issuing the notice dated 10.01.2008. On the expiration of the notice period requiring the defendants to quit the leased premises, the lease of each of the respondent stood determined (see Section 111 (h) of the Transfer of Property Act). 24. Consequently, it is evident that the two leases of each of the respondents stood duly determined by the notice dated 10.01.2008 issued by the petitioners. The petitioners, therefore, became entitled to seek the ejectment of the respondents from their respective lease premises. Pertinently, it is not the respondent‟s case that they acted in accordance with the provision contained in Section 114 of the CM(M) No.1341/2008 Page 15 of 21 Transfer of Property Act by paying the arrears of rent along with interest and full costs, or by giving security to the satisfaction of the Court. 25. Unfortunately, the trial Court appears to have completely misdirected itself in law while passing the impugned order in failing to appreciate the above position. The trial court while dismissing the application appears to have been influenced by the fact that the respondents have raised objections with regard to the existence of arbitration clauses in the two lease deeds; the fact the that the suit had been filed by