1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURISDICTION CIVIL APPLICATION NO. 2514 OF 2008 IN WRIT PETITION NO. 7205 OF 2008 Sunil Chhabria ... Applicant vs 1. Enron India Pvt. Ltd. & 3 ors. ... Respondents ALONGWITH WRIT PETITION NO. 534 OF 2009 Shakuntala S. Chhabria. ....Petitioner vs 1. Enron India Pvt. Ltd. & ors. ....Respondents Mr. Niranjan Pandit i/b Joy Legal Consultants for the Applicants in C.A. No.2514 of 2008 and Petitioner in Writ Petition No.7205 of 2008. Mr. V.V. Tulzapurkar, senior counsel with Mr. Farhan Dubash i/b M/s. Wadia Ghandy & Co. for the Petitioners in Writ Petition No.534 of 2009. Mr. S.M. Gorwadkar i/b Mr.Vikas Mahangare for the Respondent No.2. Mr. A.I. Patel, AGP, for the Respondent Nos.3 and 4. CORAM : S.J. VAZIFDAR, J. DATE : 11TH FEBRUARY, 2010. 2 P.C. :- 1. Although the Petitioners in both the Writ Petitions, who have taken out the Civil Applications, have made out more than just a strong prima facie case, I am not inclined to grant them relief without protecting the alleged interest of the Respondent No.2 to the full extent claimed by them. The only alleged claim of Respondent No.2 is to remain in possession of two flats under two leave and licence agreements till the security deposit of Rs.43,75,000/- is paid by the Petitioners with interest aggregating to about Rs.1,20,00,000/-. There is no other claim of Respondent No.2 in respect of the flats. I have, by this order, protected this claim to the extent of over Rs.5,00,00,000/-, while directing him to release the flats. 2. I must, in fairness to the Petitioners, state that I have done so for no better reason than the fact that the impugned order is in favour of Respondent No.2 and there is always a possibility of the Petitions being dismissed for whatever reason. I have, by this order, protected the alleged interest of the Respondent No.2 to the entire extent of his claim. I have, however, not granted any protection to the Petitioners as they do not hold any security in respect of their claim against Respondent Nos.1 3 and 2 even if they were to succeed. 3. The Petitioners entered into separate leave and licence agreements with Respondent No.1, each dated 17th July, 1998. There is no dispute that the period of the licences expired on 31st July, 2002. The leave and licence agreement in Writ Petition No.534 of 2009 fixed the licence fee at Rs.27,291/- per month. Respondent No.1, the licensor, had deposited a sum of Rs.43,75,000/- as security deposit. The licence fee of the leave and licence agreement in Writ Petition No.7205 of 2008 was Rs.54,500/- per month. There was no security deposit in this leave and licence agreement. The other terms and conditions in the two agreements were the same. 4. According to the Petitioners, Respondent Nos.1 and 2 failed and neglected to hand over possession of the flats, despite the agreements having come to an end and that they were, therefore, entitled to double the amount of the licence fee under each agreement. The amounts under each agreement are far in excess of the security deposit. Further, according to the Petitioners, each agreement is independent of the other. Thus, even assuming that there was a failure as alleged by Respondent No.2 on the part of the Petitioner in Writ Petition No.534 of 2009 to return the security deposit, the same did not 4 justify refusal to hand over the flat under the leave and licence agreement in Writ Petition No.7205 of 200 5. According to Respondent No.2, Respondent No.1 had assigned its right to recover the security deposit of Rs.43,75,000/- from the Petitioners and that the Petitioners having failed and neglected to refund the same, he was entitled to retain possession of the two flats without paying any compensation for the same till the security deposit was returned with interest thereon at 21 per cent per annum. This contention is based on the terms of the agreement. Clause 21 of the leave and licence agreements read as under :- “21. The license is personal to the Licensee and the Licensee shall not assign the same or transfer the benefit of this Agreement to any other person or party. 6. I will, for the purpose of this order, assume as alleged by Respondent No.2 that it was orally agreed that the security deposit was in respect of both the agreements, although the agreements do not so state. This is an alleged oral arrangement pleaded by Respondent No.2 contrary to the leave and licence agreements. 7(A). Under the leave and licence agreements, the security deposit 5 had to be refunded to Respondent No.1 and not to any other party. By their letters dated 30th July, 2002, the Petitioners inter alia stated that they were ready and willing to refund the security deposit in accordance with clause 6 of the agreement and called upon Respondent No.1 to hand over possession of the said flats. Respondent No.1 was put to notice that in the event of it failing to do so, it would be liable to pay liquidated damages at Rs.12,500/- per day, which would be adjusted against the security deposit. (B). Respondent No.1, however, failed and neglected to respond to the said letters. 8. There is no doubt that as against Respondent No.1, the Petitioners would be entitled to succeed for the asking. Respondent No. 1 has not even appeared before me. The only question is whether Respondent No.2 is entitled to retain possession of the said flat until and unless the security deposit along with interest thereon is repaid. According to Respondent No.2, an amount of about Rs.1,20,00,000/- is due and payable in this respect on account of the Petitioners having allegedly refused to refund the security deposit of Rs.43,75,000/-. 9(A). According to Respondent No.2, there was a tripartite 6 agreement dated 4th January, 2002, by which he was entitled to receive the security deposit of Rs.43,75,000/- directly from the Petitioners. It is important to note however that by a letter dated 4th January, 2002, Respondent No.1 calls upon the Petitioners to confirm an agreement to this effect by signing and returning the letter in token of their acceptance. It is further important to note that the Petitioners did not accept the same. (B) In any event, the letter merely permitted Respondent No.2 to collect the security deposit. The letter did not assign the rights of Respondent No.1 under the leave and licence agreements. The letter does not even indicate an assignment of the right of Respondent No.1 under the leave and licence agreement in favour of the Respondent No. 2. Respondent No.2 is, therefore, not entitled to retain possession of the premises. (C) Respondent No.1, in view of clause 21 of the leave and licence agreement set out above, could not have assigned its rights to Respondent No.2. Even assuming there was any such assignment, the same would, therefore, not be binding on the Petitioners. 10. Respondent No.2 then relied upon a document filed before 7 the Debts Recovery Tribunal (DRT) in proceedings adopted by the HSBC. The Petitioners were not a party to these proceedings. Nor were they parties to the order passed by the DRT. It appears that Respondent No.2 had a large claim against Respondent No.1 towards his dues in respect of his employment. These dues were also the subject matter of the proceedings before the DRT. Respondent No.1, in these proceedings, admitted an amount of Rs.83,25,600/- to be due by it to Respondent No.2. The order in terms of this alleged agreement between Respondent Nos.1 and 2 also does not, by any stretch of imagination, assign the benefit of the leave and licence agreement in favour of Respondent No.2. For the reasons stated above, Respondent No.1 could not have done so in any event. 11. On 27th March, 2002, the DRT appointed a Receiver, inter alia, of the movable properties of Respondent No.1. By a letter dated 3rd July, 2002, addressed to the Petitioners, the Receiver stated that he had been directed to take steps to receive the receivables of the Respondent No.1 and, therefore, called upon the Petitioners to refund the same as stated therein. The Petitioners, therefore, can never be faulted in any event from not having paid the amounts to Respondent Nos.1 and 2. This is apart from the fact that the Petitioners had offered to refund the amount against possession of the flats. The demand by Respondent No. 8 2 by his letter dated 27th July, 2002, to the Petitioners, based on the alleged assignment of 4th January, 2002, was, prima facie at least, not justified. 12. I repeatedly asked Mr. Gorwadkar, learned counsel appearing on behalf of the Respondent No. 2 as to the basis of the claim of Respondent No.2 in respect of the said flat under the leave and licence agreements. He stated that it was on the basis of the order of the DRT. The order of the DRT, by no stretch of imagination, creates any right, title or interest of any nature whatsoever in favour of Respondent No.2 in respect of the suit flat. At the highest, it creates a right in Respondent No.2 to receive the security deposit. It is doubtful whether the Petitioners were bound in law even in view thereof to pay the said amount to Respondent No.2. The Petitioners were bound and liable to pay the said amount only to Respondent No.1 or the Court Receiver. 13. It appears that Respondent No.2 is really seeking to enforce his claim against Respondent No.1 by unjustly raising claims against the Petitioners. 14. The position, therefore, today is this. The Petitioners have a 9 strong prima facie case to recover the possession of the said flats. Even assuming that the Respondent No.2 establishes his entire case, he would, at the highest, be entitled to recover the security deposit together with interest which, according to him, is about Rs.1,20,00,000/- today. Thus, if this amount is secured, Respondent No.1 can have no grievance whatsoever against the Petitioners being handed over possession of the said flats. Respondent No.2 has not even claimed any right in respect of the flats except the right to retain possession thereof, allegedly acquired through Respondent No.1, till the security deposit is paid alongwith interest. 15. However, as the Respondent No.2 has succeeded before the trial Court, I intend protecting the claim of Respondent No.2 to the maximum extent. 16. The flats admittedly admeasure about 1300 sq. ft. each. There is no dispute that the value of each flat is far in excess of the claim of Respondent No.2 with interest thereon at 21 per cent per annum. Each flat would be worth, at a conservative estimate, at least Rs.5,00,00,000/-. 17. There is no justification whatsoever for Respondent No.2 to 10 retain possession of these flats, the aggregate value of which is over Rs. 10,00,00,000/-, for an alleged claim of Rs.1,20,00,000/-. The balance of convenience is, without any doubt, in favour of the Petitioners. Admittedly, Respondent No.2 has only a monetary claim in the sum of about Rs.1,20,00,000/-. Thus, even if he were to succeed, he would, at the highest, be entitled to a sum of Rs.1,20,00,000/- with further interest at 21 per cent per annum on the principal sum of Rs.43,75,000/-. He is not entitled to any other relief, except to retain possession of the flats till the said amount is paid. This claim can be fully secured by an injunction against the Petitioners in respect of one flat alone for the value of the flat is over Rs.5,00,00,000/-. On the other hand, the Petitioners would be deprived the benefit of the use of the flats during the pendency of these Writ Petitions. They have already been deprived the use of these flats for almost eight years. In the event of Respondent No.2 failing in these Petitions, he would be liable to the Petitioners to the extent of a sum of over Rs.7,00,00,000/-. This amount would keep increasing during the pendency of this Petition. The Petitioners have no security whatsoever to ensure payment of the said amount. In these circumstances, an order directing Respondent No.2 to hand over possession of the flats while protecting his entire claim is to his benefit also. 11 18. In the circumstances, the following order :- (a) Respondent No.1 and/or 2 shall on or before 31st March, 2010, hand over possession of the said flats to the Petitioners. (b) The Petitioner in Writ Petition No.534 of 2009 shall not, during the pendency of the Writ Petition, sell, encumber, part with possession of, or create any third party right, title and/or interest in respect of the said flat without the leave of this court. However, the Petitioner in Writ Petition No.534 of 2008 shall be entitled to give the flat out on leave and licence basis for a period not exceeding three years at a time. The leave and licence agreement shall contain a clause disclosing the present proceedings, this order and the licencee’s undertaking to abide by the orders of this court in this Writ Petition, unconditionally. The undertaking shall be deemed to have been given to th court as well. A copy of the leave and licence agreement shall forthwith be furnished to the advocates of the Respondent No.2 and deposited in this court. 12 (c) The above condition shall apply only in respect of the flat in Writ Petition No.534 of 2009 and not in respect of the flat in Writ Petition No.7205 of 2008. (d) Civil Application No.2154 of 2008 and the application for interim relief in Writ Petition No.7205 of 2008 are, accordingly, disposed of.