Women of Easy Virtue can also be raped – but in this case accused gets benefit of doubt….SC

Comment : In this logical and well reasoned judgment the SC gave the benefit of a doubt to a person accused of rape on the following premise :-

i) The prosecutrix was the sole witness – her statement u/s 161/164/as well as in Court, not believed – she supressed the genesis of the occurence – by lying on a most crucial point that she did not know the accused – it otherwise transpired on evidence that there were quarrels with her husband over her familiarity with the accused ; 

ii) It belies logic that she was raped next to a main road/crowded road – and claimed to have cried a lot – but nobody heard her cries; 

iii) The Court dispelled claims that she was an unchaste woman who was habituated to sexual intercourse – the court though in general terms negated this and said that even women of easy virtue can be raped, the germane question is whether on that particular ocassion sexual itnercourse was with or without her consent; 

iv) The Medical Report failed to disclose any internal injury – though there were nail marks – which Doctor commented could be self inflicted; 

v) The Bodily fluids found on prosecutrix’s clothes did not match the accused. 

Here is the judgment 

 

Narender Kumar Vs. State (NCT of Delhi)

SUPREME COURT OF INDIA
(DR. B.S. CHAUHAN & DIPAK MISRA, JJ.)

NARENDER KUMAR
Appellant
VERSUS
STATE (NCT OF DELHI)
Respondent

Criminal Appeal Nos.2066-67 of 2009-Decided on 25-05-2012. 

JUDGMENT 

Dr. B.S. Chauhan, J.-These appeals have been preferred against the impugned judgment and
order dated 25.3.2009 passed by the High Court of Delhi at New Delhi in Criminal Appeal No.53
of 2000, by which it has affirmed the judgment and order of the trial Court dated 7.12.1999
passed in Sessions Case No. 77/99, convicting the appellant under Section 376 of Indian Penal
Code, 1860 (hereinafter called ‘IPC’) and awarded the punishment of rigorous imprisonment for a
period of 7 years vide order dated 8.12.1999 and imposed a fine of Rs.2000/- .
2. Facts and circumstances giving rise to this case are that:
(A) Smt. Indira PW.1 (prosecutrix) filed an FIR No.886/98 dated 16.9.1998 to the effect
that when she was going from village Khirki to Chirag Delhi on that day at about 8 p.m.,
the appellant met her near Ganda Nala, he caught hold of her hand and dragged her
towards the bushes on the edge of the road and committed rape on her. She could not
raise the noise due to fear. After commission of the offence, the appellant left her there
and ran away. The prosecutrix went to her husband at his working place and from there
went to the police station alongwith her husband to lodge the FIR.
(B) The prosecutrix was medically examined. Appellant was arrested on 1.11.1998.
Statement of the prosecutrix was recorded under Section 164 of Code of Criminal
Procedure, 1973 (hereinafter called ‘Cr.P.C.’) on 20.11.1998 before the Metropolitan
Magistrate, New Delhi. After completion of investigation, charge sheet was filed against
the appellant under Section 376 IPC on 21.4.1999. Prosecution examined 11 witnesses in
support of its case. The appellant, in addition to his own statement under Section 313
Cr.P.C., also examined 2 witnesses in defence.
(C) On conclusion of the trial, the learned Sessions Court vide judgment and order dated
7/8.12.1999 convicted the appellant for the offences under Section 376 IPC and imposed
the sentence as referred to hereinabove. 
(D) Aggrieved, the appellant preferred Criminal Appeal No.53 of 2000 before the High
Court which has been dismissed vide impugned judgment and order dated 25.3.2009.
Hence, these appeals.
3. Shri Yakesh Anand, learned Amicus Curiae, has submitted that Indira, prosecutrix (PW.1)
cannot be relied upon because there have been material contradictions in her deposition. She had
been confronted on large number of issues/facts with her statement under Section 161 Cr.P.C.
Embellishments/improvements had been of such a large magnitude that her statement itself
became unreliable. The prosecutrix was an unchaste woman, having illicit relationship with many
young persons. The courts below erred in not appreciating properly the evidence of the defence
witnesses examined by the appellant. The medical evidence, in a case like this where the
prosecutrix was married and 25 years of age, is inconsequential. Thus, the appeals deserve to be
allowed.
4. Per contra, Smt. Rekha Pandey, learned counsel appearing for the respondent-State has
opposed the appeal vehemently contending that the appellant has rightly been convicted on the
sole testimony of the prosecutrix and both the courts below have appreciated the facts in correct
perspective. The findings so recorded by the courts below do not warrant any interference. Thus,
the appeals are liable to be dismissed.
5. We have considered the rival submissions made by learned counsel for the parties and perused
the record.
6. The Trial Court as well as the High Court recorded conviction of the appellant merely placing a
very heavy reliance on the deposition of the prosecutrix and considering the deposition of Dr.
Nisha (PW.9). Admittedly, the defence version taken by the appellant in his statement under
Section 313 Cr.P.C. and the deposition of two defence witnesses to the extent that the prosecutrix
had developed intimacy with the appellant and some other young persons and Sahib Rao (PW.3)
her husband, had raised the grievance in this regard, have not even been referred to by either of
the courts below, though the law required the court to appreciate the defence version and decide
its veracity in accordance with law.
7. In order to test the veracity of the deposition of Smt. Indira –Prosecutrix (PW.1), it may be
relevant to make reference to the same. In her examination-in-chief she stated as under:
“The accused was not personally known to me prior to the day of incident, except that he
had teased me prior to the incident and I lodged the complaint with the parents of the
accused and with the police. I have not given any copy of the complaint to the police in
this case. It is incorrect to say that the accused had been living in my house about one
year prior to the day of the incident.”
In cross-examination she could not point out as which part of her Salwar had been torn.
Prosecutrix, when in the dock was confronted on various points with her statement under Section
161 Cr.P.C. and the said contradiction read as under:
(i) I had also told the police in my statement that I had raised alarm at the time of rape.
(ii) The accused was not personally known to me prior to the date of the incident except
that he had teased me prior to the incident and I lodged the complaint with the parents of
the accused and with the police. 

So far as the “injury on her person” is concerned, she deposed as under:
“I did not receive any injury except scratches on my throat and I had told the doctor about
the incident.”
8. Sahib Rao (PW.3), husband of the prosecutrix in his cross- examination admitted that he knew
the appellant very well as both of them had been the residents of the same village. He further
admitted that there used to be quarrel between him and his wife. Sahib Rao (PW.3), was also
confronted with his statement under Section 161 Cr.P.C. on various narrations.
9. Dr. Nisha (PW.9) deposed as under:
“There were nail marks on her breast and from that I say that she might have been raped.
The nail marks which were found on the breast of the victim could have been selfinflicted….On internal examination of the victim, it could not be found that she was
raped except seeing her condition that her clothes were torn and there were nail marks on
her breast.”
(Emphasis added)
10. SI, Lekh Raj (PW.6) who was posted at P.S. Malviya Nagar, New Delhi was examined and he
deposed as under:
“On the night intervening 30.10.1998 and 1.11.1998 , complainant Indira came to the P.S.
at about 11.45 p.m. She told me that the person who had committed rape on her is sitting
on a stop of Khirki. Thereafter, I alongwith complainant and Constable Jagat Singh went
there and accused present in court was arrested on the pointing out of Indira by
me…..The arrest memo of accused Ex.PW.1/F was also prepared…..
…………No public person from the area was called from where the accused was
arrested. I did not prepare the site plan of the place from where the accused was arrested.
The prosecutrix Indira had come to me on that night in the police station alone. The
distance between the house of the prosecutrix and police station is 3 Kms.”
11. R.N. Chowdhary (PW.11), Investigating Officer deposed that there was fencing just near the
road and there was electricity pole installed at the divider of the road and the electricity was on.
The residential houses were at some distance and the road was situated at a distance of about 20
paces from the place of occurrence.
12. The appellant in his statement under Section 313 Cr.P.C. stated as under:
“I was having good relations with family of the prosecutrix and we were staying in the
same village. The prosecutrix desired to keep me in her house, to which I refused and for
that reason, the false case has been planted on me. I am innocent and I have been falsely
implicated in this case by police at the instance of the prosecutrix and her husband as I
did not accept the proposal of the prosecutrix to live in her house. Her husband has also
given severe beatings to the prosecutrix on that account.”
(Emphasis added)
13. Chandan Singh (DW.1) was examined by the appellant in defence who deposed that he knew
Indira (Prosecutrix) and her husband being their neighbour. The prosecutrix was having intimacy
with the appellant for the last 3 years. His house is at a distance of 40 yards from the house of the prosecutrix. There remained quarrel between prosecutrix and her husband. Her husband Sahib
Rao (PW.3) did not like the entry of appellant in his house.
14. Surendra Kumar (DW.2) supported the defence version stating as under:
“I know Sahib Rao and his wife Indira. Sahib Rao had been working in my ration shop
for last 7 years. Sahib Rao used to tell me that one boy whose name I do not know used
to visit the house of Sahib Rao which was not liked by him and for that reason the
husband and wife had been quarreling. The said boy, who is present in the court had
come to my shop also alongwith Indra.”
15. If the evidence on record referred to hereinabove is appreciated, the following picture
emerges:
(i) Prosecutrix and appellant were known to each other for a long time and there had been
some relationship/intimacy between them.
(ii) Sahib Rao (PW.3), husband of the prosecutrix did not like the said relationship.
(iii) There has been some incident two-three days prior to the actual incident on
16.9.1998 as Indira-prosecutrix had lodged some complaint against the appellant in the
police as well as with the parents of the appellant.
(iv) The complaint lodged by the prosecutrix two-three days prior to 16.9.1998 with the
police had never been placed on record.
(v) The alleged incident dated 16.9.1998 had occurred on the side of the main road which
remains busy and had sufficient light and in spite of the fact that the prosecutrix raised
hue and cry, nobody came to help her.
(vi) There are contradictions on the issue as to whether the prosecutrix went to the
working place of her husband and from there she proceeded to police station with him as
evidence on record is also to the contrary i.e she straightaway went to the police station
and one Constable had gone and called her husband.
(vii) Medical evidence does not positively support the case of the prosecution as Dr.
Nisha (PW.9) deposed that seeing her condition and torn clothes it could be said that the
prosecutrix might had been raped.
(viii) Admittedly, there is a most material contradiction in the medical evidence and
ocular evidence. Dr. Nisha (PW.9) had categorically recorded in the report and deposed
in the court that the prosecutrix was having nail marks on her breast though the case of
Indira-prosecutrix had been that she was having nail marks on her throat.
(ix) Deposition of Lekh Raj (PW.6), S.I., about the arrest of the appellant between
intervening night of 30.10.1998 and 1.11.1998 at about 11.45 p.m., seems to be
improbable. According to him, the prosecutrix walked from her house to the police
station at a distance of 3 Kms. at midnight to inform the police that the appellant was
sitting on the stop of Khirki, Press Enclave. The witness reached there with prosecutrix
and police constables. He found the appellant sitting at the said stop and from there he
was arrested. The witness did not prepare the arrest memo with the help of any 
independent witness. If the appellant was sitting at the bus stop at midnight some other
persons could have been also there.
(x) The defence version taken by the appellant and depositions of Chandan Singh (DW.1)
and Surendra Kumar (DW.2) in support thereof, have not only been ignored/brushed
aside by the courts below rather no reference has been made to the same.
(xi) The contradictions referred to hereinabove and particularly in respect of the nail
marks on her body could not be said only to be minor contradictions which did not go to
the root of the matter. Some of the contradictions/embellishments/improvements are of
greater magnitude and had serious impact on the case.
(xii) The F.S.L. report dated 6.5.1999 reveal that the blood stains/semen on the
prosecutrix kurta/ salwar belonged to the AB blood group though the blood group of the
appellant is “O”(+) and thus, the FSL report does not support the case of the prosecution.
16. It is a settled legal proposition that once the statement of prosecutrix inspires confidence and
is accepted by the court as such, conviction can be based only on the solitary evidence of the
prosecutrix and no corroboration would be required unless there are compelling reasons which
necessitate the court for corroboration of her statement. Corroboration of testimony of the
prosecutrix as a condition for judicial reliance is not a requirement of law but a guidance of
prudence under the given facts and circumstances. Minor contradictions or insignificant
discrepancies should not be a ground for throwing out an otherwise reliable prosecution case. A
prosecutrix complaining of having been a victim of the offence of rape is not an accomplice after
the crime. Her testimony has to be appreciated on the principle of probabilities just as the
testimony of any other witness; a high degree of probability having been shown to exist in view
of the subject matter being a criminal charge. However, if the court finds it difficult to accept the
version of the prosecutrix on its face value, it may search for evidence, direct or substantial,
which may lend assurance to her testimony. (Vide: Vimal Suresh Kamble v. Chaluverapinake
Apal S.P. & Anr., AIR 2003 SC 818; and Vishnu v. State of Maharashtra, AIR 2006 SC
508).
17. Where evidence of the prosecutrix is found suffering from serious infirmities and
inconsistencies with other material, prosecutrix making deliberate improvements on material
point with a view to rule out consent on her part and there being no injury on her person even
though her version may be otherwise, no reliance can be placed upon her evidence. (Vide: Suresh
N. Bhusare & Ors. v. State of Maharashtra, (1999) 1 SCC 220)
18. In Jai Krishna Mandal & Anr. v. State of Jharkhand, (2010) 14 SCC 534, this Court
while dealing with the issue held:
“The only evidence of rape was the statement of the prosecutrix herself and when this
evidence was read in its totality, the story projected by the prosecutrix was so improbable
that it could not be believed.”
19. In Rajoo & Ors. v. State of Madhya Pradesh, AIR 2009 SC 858, this Court held that
ordinarily the evidence of a prosecutrix should not be suspected and should be believed, more so
as her statement has to be evaluated on par with that of an injured witness and if the evidence is
reliable, no corroboration is necessary. The court however, further observed: 
“…….It cannot be lost sight of that rape causes the greatest distress and humiliation to
the victim but at the same time a false allegation of rape can cause equal distress,
humiliation and damage to the accused as well. The accused must also be protected
against the possibility of false implication….. there is no presumption or any basis for
assuming that the statement of such a witness is always correct or without any
embellishment or exaggeration.”
20. In Tameezuddin @ Tammu v. State (NCT of Delhi), (2009) 15 SCC 566, this Court held
has under:
“It is true that in a case of rape the evidence of the prosecutrix must be given
predominant consideration, but to hold that this evidence has to be accepted even if the
story is improbable and belies logic, would be doing violence to the very principles
which govern the appreciation of evidence in a criminal matter.”
21. Even in cases where there is some material to show that the victim was habituated to sexual
intercourse, no inference of the victim being a woman of “easy virtues” or a women of “loose
moral character” can be drawn. Such a woman has a right to protect her dignity and cannot be
subjected to rape only for that reason. She has a right to refuse to submit herself to sexual
intercourse to anyone and everyone because she is not a vulnerable object or prey for being
sexually assaulted by anyone and everyone. Merely because a woman is of easy virtue, her
evidence cannot be discarded on that ground alone rather it is to be cautiously appreciated. (Vide:
State of Maharashtra & Anr. v. Madhukar Narayan Mardikar, AIR 1991 SC 207; State of
Punjab v. Gurmit Singh & Ors., AIR 1996 SC 1393; and State of U.P. v. Pappu @ Yunus &
Anr., AIR 2005 SC 1248).
22. In view of the provisions of Sections 53 and 54 of the Evidence Act, 1872, unless the
character of the prosecutrix itself is in issue, her character is not a relevant factor to be taken into
consideration at all.
23. The courts while trying an accused on the charge of rape, must deal with the case with utmost
sensitivity, examining the broader probabilities of a case and not get swayed by minor
contradictions or insignificant discrepancies in the evidence of witnesses which are not of a
substantial character. However, even in a case of rape, the onus is always on the prosecution to
prove, affirmatively each ingredient of the offence it seeks to establish and such onus never shifts.
It is no part of the duty of the defence to explain as to how and why in a rape case the victim and
other witness have falsely implicated the accused. Prosecution case has to stand on its own legs
and cannot take support from the weakness of the case of defence. However great the suspicion
against the accused and however strong the moral belief and conviction of the court, unless the
offence of the accused is established beyond reasonable doubt on the basis of legal evidence and
material on the record, he cannot be convicted for an offence. There is an initial presumption of
innocence of the accused and the prosecution has to bring home the offence against the accused
by reliable evidence. The accused is entitled to the benefit of every reasonable doubt. (Vide:
Tukaram & Anr. v. The State of Maharashtra,, AIR 1979 SC 185; and Uday v. State of
Karnataka, AIR 2003 SC 1639).
24. Prosecution has to prove its case beyond reasonable doubt and cannot take support from the
weakness of the case of defence. There must be proper legal evidence and material on record to
record the conviction of the accused. Conviction can be based on sole testimony of the
prosecutrix provided it lends assurance of her testimony. However, in case the court has reason
not to accept the version of prosecutrix on its face value, it may look for corroboration. 
the evidence is read in its totality and the story projected by the prosecutrix is found to be
improbable, the prosecutrix case becomes liable to be rejected. The court must act with sensitivity
and appreciate the evidence in totality of the background of the entire case and not in the
isolation. Even if the prosecutrix is of easy virtue/unchaste woman that itself cannot be a
determinative factor and the court is required to adjudicate whether the accused committed rape
on the victim on the occasion complained of.
25. The instant case is required to be decided in the light of the aforesaid settled legal
propositions. We have appreciated the evidence on record and reached the conclusions mentioned
hereinabove. Even by any stretch of imagination it cannot be held that the prosecutrix was not
knowing the appellant prior to the incident. The given facts and circumstances, make it crystal
clear that if the evidence of the prosecutrix is read and considered in totality of the circumstances
alongwith the other evidence on record, in which the offence is alleged to have been committed,
we are of the view that her deposition does not inspire confidence. The prosecution has not
disclosed the true genesis of the crime. In such a fact-situation, the appellant becomes entitled to
the benefit of doubt. In view of above, the appeals succeed and are allowed. The judgment and
order dated 25.3.2009 passed by the High Court of Delhi in Criminal Appeal No. 53 of 2000 and
that of the trial court dated 7.12.1999 are hereby set aside. The appellant is on bail, his bail bond
stands discharged. Before parting with the case, we would like to record our appreciation to Mr.
Yakesh Anand, learned Amicus Curiae for rendering commendable assistance to the court. Mr.
Anand shall be entitled to Rs. 7,000/- as his fees payable by the State Government.
——

Cancellation of Transaction on account of Frustration !

Comment : In this case a person sold X (leasehold warehouse) to his friend. Later he cried misrepresentation and sought to steer clear of the transaction. Later at the stage of second appeal he took the plea of frustration as he himself was a lessee of the land and could not have sold – the court did not accept the same – because it was recognised in the agreement itslef that seller was a lessee and any penalty on account of unearned increase would be paid by the buyer. Hence there was no impossibility – legal, physical or practical. 

Delhi High Court

Shri Ramesh Kumar & Ors vs Shri Satya Dev on 20 April, 2011

* IN THE HIGH COURT OF DELHI AT NEW DELHI % Judgment delivered on: 20.04.2011 + RSA No.20/2004

SHRI RAMESH KUMAR & ORS.

……..Appellants

Through: Mr. Sanjeev Sachdeva and Mr. Preet Pal Singh, Advocates.

Versus

SHRI SATYA DEV

…….Respondent

Through: Mr. Ashish Malhotra, Advocate.

CORAM:

HON’BLE MS. JUSTICE INDERMEET KAUR

1. Whether the 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

INDERMEET KAUR, J. Oral

1. This appeal has impugned the judgment and decree dated 31.07.2003 which had endorsed the findings of the trial Judge dated 04.02.1989 whereby the suit filed by the plaintiff Harikesh seeking a declaration to the effect that the agreement to sell dated 28.05.1980 executed between himself and the defendant be declared null and void had been dismissed. Relief seeking decree of permanent injunction had also been declined.

2. The plaintiff is stated to be the allottee and lessee of shop No. 217, Block Z, Naraina Ware Housring Scheme, Naraina, New Delhi (hereinafter referred to as the „suit shop‟). Sale deed or lease deed of the said shop had not been executed or registered in his favour. Defendant No.1 was the partner of the plaintiff. In good RSA No.20/2004 Page 1 of 5 faith, defendant No.1 got executed certain documents from the plaintiff. The plaintiff was an illiterate man. The aforenoted documents comprised of an agreement to sell dated 28.05.1980 and a receipt and Will of the same date; two special power of attorneys dated 28.05.1980 had also been got executed by the plaintiff. In terms of the aforenoted agreement, the plaintiff had agreed to sell this shop to the defendant for a consideration of Rs.1,50,000/- but in the agreement to sell dated 28.05.1980, the consideration was wrongly mentioned as Rs.11,500/-. In fact, it had been agreed between the parties that the suit shop would be sold by the plaintiff to the defendant for a total amount of Rs.1,50,000/- and Rs.11,500/- was paid only as an earnest money. Plaintiff was under the bonafide impression that the agreed price of the shop was Rs.1,50,000/- and not Rs.11,500/-. He came to know about this fraud having been played upon him when the present suit was filed.

3 The defendant has contested the suit. Contention was that the agreement to sell had been entered into between the parties with open eyes; it had been agreed that the sale consideration would be Rs.11,500/- and the entire sale consideration has since been paid to the plaintiff; defendant had also been given possession of the suit shop, he could not be dispossessed. 4 On the pleadings of the parties, 13 issues were framed. Oral and documentary evidence was led. The trial Judge examined the entire oral and documentary evidence; the suit of the plaintiff stood dismissed. While disposing of issue No. 3, the trial Judge was of the view that the plaintiff has no saleable title in the suit property. Suit RSA No.20/2004 Page 2 of 5 shop has not been registered in his name; yet since the plaintiff had admitted that he has executed the aforenoted documents including the agreement to sell dated 28.05.1980; his defence that he being an uneducated man did not know the contents of the said documents was disbelieved. The Court was of the view that the plaintiff has failed to prove that the aforenoted document had been got executed by misrepresentation; he was not entitled to cancellation of the said documents.

5 This was endorsed in the first appeal. 6 This is a second appeal. It is still at its admission stage. On behalf of the appellant, it has been urged that the plaintiff not having any saleable title in the suit property could not have entered into an agreement to sell; such an action was in fact a void transaction and this has raised a substantial question of law. He has relied upon the provisions of Section 56 of the Indian Contract Act, 1872.

7 Arguments have been refuted. It is pointed out that this is a second appellate court and no substantial question of law has arisen; there are two concurrent findings of fact against the appellant.

8 Perusal of the record shows that the appellant/defendant has nowhere denied that he had not entered into the aforenoted documents of which he now seeks cancellation. His contention was that these documents had been got executed by him through misrepresentation. Issues No. 6 & 7 had been specifically framed on this count. The impugned judgment has reaffirmed the findings of the trial Judge on the aforenoted issues. Both the two courts RSA No.20/2004 Page 3 of 5 below were of the view that the defendant had signed these documents voluntarily and there was no duress or fear upon him at that time; question of misrepresentation did not arise. These fact findings do not call for any interference. There is no perversity on this count. This plea of the appellant is without any merit. 9 The question of applicability of Section 56 of the Contract Act also does not arise. This provision reads as under:- “56. Agreement to do impossible act.- An agreement to do an act impossible in itself is void.

Contract to do act afterwards becoming impossible or unlawful.- A contract to do an act which, after the conract is made, becomes impossible, or, by reason of some event which the promisor could not prevent, unlawful, becomes void when the act becomes impossible or unlawful. Compensation for loss through non-performance of act known to be impossible or unlawful.- Where one person has promised to something which he knew, or, with reasonable diligence, might have know, and which the promisee did not know, to be impossible or unlawful, such promisor must make compensation to such promise for any loss which such promise sustains through the non-performance of the promise.”

10 Essential idea upon which the doctrine of frustration is based is that of impossibility of performance of a contract. The changed circumstances make the performance of the contract impossible and the parties are absolved from the further performance of it as they did not promise to perform an impossibility. This doctrine of frustration is really an aspect or part of the law of discharge of contract by reason of a supervening impossibility or illegality of the act agreed to be done. In the instant case, there has been no such intervening event or changed circumstances for the applicability of this principle. The agreement to sell dated 28.05.1980 in fact clearly shows that the first party who is the appellant/plaintiff was fully aware that this property has been leased out to him by the RSA No.20/2004 Page 4 of 5 DDA; reference has been made to the effect that the unearned increment/any penalty, if any, imposed will be borne by the second party. The plea of the doctrine of „frustration‟ as sought to be set up by the appellant is not available to him. 11 Substantial questions of law have been embodied on page 2 of the body of the appeal. No such substantial question of law has arisen. There is no merit in this appeal. Dismissed. (INDERMEET KAUR)

JUDGE

APRIL 20, 2011

Specific Performance – and rising real estate prices !

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Delhi High Court
Nehru Place Hotels Ltd vs Smt. Kanta Aggarwal on 11 March, 2011

* IN THE HIGH COURT OF DELHI AT NEW DELHI + RFA No.95/1998

% 11th March, 2011 NEHRU PLACE HOTELS LTD. …… Appellant Through: Mr. Harish Malhotra, Senior Advocate

with Mr. R.K.Modi, Advocate.

VERSUS

SMT. KANTA AGGARWAL …… Respondent Through: Mr. R.S. Suri, Senior Advocate with Ms.

Nusrat Khan, Advocate.

CORAM:

HON’BLE MR. JUSTICE VALMIKI J.MEHTA

1. Whether the 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 VALMIKI J. MEHTA, J (ORAL)

1. The challenge by means of this Regular First Appeal under Section 96 of the Code of Civil Procedure, 1908 (CPC) is to the impugned judgment and decree dated 27.11.1997 whereby the suit of the respondent/plaintiff for specific performance with respect to showroom/space no.20, on upper Ground Floor, Block E, in the building known as International RFA No.95/1998 Page 1 of 35 Trade Tower, Nehru Place, New Delhi was decreed on payment of escalation and related charges by the respondent/plaintiff to the appellant/defendant.

2. The facts of the case are that the respondent/plaintiff as a buyer and the appellant/defendant as the seller/builder entered into an Agreement on 6.10.1976 for sale of leasehold rights of covered area of 403 square ft., being portion no. 24, on ground floor in block A of the building which was to be constructed by the appellant/defendant at a hotel plot, in Nehru Place, Kalkaji, New Delhi. On the hotel plot, the appellant/defendant was to construct a multi-storey building, which was to include a hotel, shopping arcade, showrooms, commercial spaces, etc. in accordance with the lease executed in favour of the appellant/defendant by the superior lessor, the Delhi Development Authority.

 

3. The respondent/plaintiff after making the initial payment of Rs.24,000/- on 6.9.1976, paid further additional amounts as per the schedule of payment, and out of the total sale consideration of Rs.1,70,500/-, a total sum of Rs.1,62,000/- was paid to the appellant/seller. Thus a balance of only Rs.8,500/-, remained payable, subject, of course, to the rights of the appellant/defendant to claim, inter-alia, amounts towards escalation charges in terms of Clause 18 of the Agreement dated 6.10.1976, Ex.PW1/1.

4. The original agreed space being portion no.24 in the property situated on the ground floor, was substituted by an Agreement between the parties dated 14.9.1985, and the parties mutually agreed to change the RFA No.95/1998 Page 2 of 35 original space/portion no. 24 to space No.20 on upper ground floor of Block E, the area remaining the same at 403 square ft. It may be noted that by the time, the subsequent Agreement dated 14.9.1985 was entered into for change of the space, the final plans had already been sanctioned for construction on the plot in the year 1983 by the local municipal authority. At this stage, I may note that as per Clause 3 of the Agreement dated 6.10.1976, the rate per square feet agreed was the rate per sq. feet of covered area which meant and included area under the peripheral walls and half the area under common walls between two shops/showrooms/spaces.

5. The appellant/defendant sent a notice dated 10.4.1991, Ex.PW1/4 to the respondent/plaintiff seeking a total amount of Rs.1,21,933.96 on account of escalation and also certain recurring charges towards general maintenance, ground rent, sinking fund, building insurance and so on. By this letter, Ex.PW1/4 dated 10.4.1991, the appellant/defendant while asking for escalation amount and other recurring charges, to the prejudice of the respondent/plaintiff, suo moto changed not only the allocated space/portion from its prime location on the upper ground floor to the lower ground floor, but also, reduced the area from 403 square ft. to 372 square ft. The new portion/space which was sought to be allotted by the appellant/defendant, instead of the old portion situated on the upper ground floor, was the showroom no.2 on the lower ground floor. The lower ground floor is euphemistically so-called because in the construction industry what is a lower ground floor is actually the area below the normal ground RFA No.95/1998 Page 3 of 35 floor, an area definitely less valuable than the similar area on the upper ground floor which would in fact fall within the main hotel complex. Though, no reply was sent by the respondent/plaintiff in writing to Ex.PW1/4 dated 10.4.1991 but, the respondent/plaintiff claimed that she met the concerned persons of the appellant/defendant and raised a grievance with respect to the higher cost claimed as also the change of the allocation of the portion, and the reduction in the area. The appellant/defendant thereafter sent its notice dated 29.6.1991, PW1/5, terminating the Agreement on account of failure of the respondent/plaintiff to comply with the notice, Ex.PW1/4 dated 10.4.1991. The respondent/plaintiff responded to the termination notice, Ex.PW1/5 by her letter dated 2.8.1991, Ex.PW1/6, wherein, she disputed the enhanced charges which were claimed besides, challenging the arbitrary change of the space from showroom no. 20 on the upper ground floor to showroom no. 2 on the lower ground floor. In this letter, the respondent/plaintiff seems to have mentioned the area as agreed to be 403 square ft. of carpet area, however, I have already noted that in the Agreement, what is agreed to be sold is covered area and not carpet area. The appellant/defendant replied to letter dated 2.8.1991, Ex.PW1/6 by its letter dated 12.8.1991, Ex.PW1/8 reconfirming the termination of the Agreement on the ground of non-payment of the charges. Curiously, however, there was no dispute raised in Ex. PW1/8 that the area agreed was not carpet area, but only super area as subsequently claimed in the written statement. Of course, this issue of the area being sold is carpet area or RFA No.95/1998 Page 4 of 35 covered area is really irrelevant in view of Clause 3 of the Agreement which categorically and specifically describes the area to be sold as covered area. I am mentioning these facts in the narration because this was an issue urged during the course of arguments.

 

6. The respondent/plaintiff thereafter filed the subject suit for specific performance and claiming only the relief of specific performance. There was no alternative relief prayed for damages.

 

7. Before the Trial Court, the basic issue which was canvassed was as to who was guilty of breach of contract i.e. breach was on the part of the appellant/seller or the respondent/buyer.

The Trial court after the pleadings were complete, framed the following issues:

“1. Whether the plaintiff has performed all the allegations of the agreement between the parties? OPP

2. Whether the plaintiff is still ready and willing to perform her part of agreement? OPP

3. Whether the completion certificate has been obtained by the defendant from the concerned authorities? OPD

4. Whether the escalation price demanded by the defendant is justified and legal? OPD

5. Whether termination/cancellation/rescission of the contract dt. 29.6.91 is legal and justified? OPD

6. Whether the decree for specific performance if granted, would operate as undue hardship upon the defendant, if so its effect? OPD

RFA No.95/1998 Page 5 of 35

7. Whether the suit in the present form is not maintainable without claiming relief of declaration of the fact that the termination of the contract is not legal? OPD

8. Whether the plaintiff is entitled to a decree of mandatory injunction? OPP

9. Whether the plaintiff is entitled to a decree for specific performance of the agreement against the defendant? OPP

10. Relief.”

8. Issue no.5 was treated by the Trial Court as the core issue, and which issue was with regard to the entitlement of cancellation of the contract by the appellant/defendant. While dealing with this issue, the Trial Court has referred to Clauses 5 and 6 of the Agreement, Ex.PW1/1 and held that merely because there was an entitlement of the appellant/defendant to change the space, the said eventuality could not be exercised merely at the whim and fancy of the appellant/defendant. I note that Clause nos. 5 and 6 would have to be read together and at the end of Clause 6, the parties had agreed that the alternative space would be accepted by the allottee if it only becomes necessary where the company is unable to allot a particular space due to a change in the plan. There is no change in the sanctioned plan which was alleged or proved by the appellant/defendant to provide the basis that it was entitled to change the portion agreed to be sold to the respondent/plaintiff. The Trial Court has further noted that there could not be a unilateral change of allocation from the agreed showroom/space no. 20 on the upper ground floor to a showroom no. 2 on the lower ground floor, especially keeping in view the fact that when there was an earlier change from space no. 24 to space no. 20, the parties had duly entered into a RFA No.95/1998 Page 6 of 35 written agreement in that behalf dated 14.9.1985. The Trial Court has then arrived at a finding of fact that even the area was illegally altered from the agreed area of 403 square feet to 372 square feet vide the notice dated 10.4.1991, Ex. PW1/4 sent on behalf of the appellant/defendant.

9. While dealing with issue nos. 1, 2 and 4 simultaneously, and which pertain to the entitlement of the claim of the respondent/plaintiff to specific performance, the Trial Court held that the respondent/plaintiff was liable to pay escalation charges under the Agreement, i.e Clause 18 of the Agreement, but however, the appellant/defendant cannot whimsically demand the cost of the escalation. The Trial Court has also noted that the appellant’s/defendant’s witness Sh. D. M. Behl deposed in his cross- examination that escalation in cost was demanded according to a formula however which formula had not been disclosed including before the Trial Court. The Trial Court has also arrived at a finding of fact that the respondent/plaintiff in her cross-examination in any case admitted that she would pay all the charges as required in law towards escalation, however, she deposed in terms of her pleading that the issue of escalation was secondary because the primary issue (because of which the charges claimed in Ex. PW1/4 dated 10.4.1991 were not paid) was the change of the space from the upper ground floor to the lower ground floor and also reduction in the area from 403 square ft. to 372 square ft. The Trial Court has ultimately held that the appellant/defendant would be entitled to escalation because the trial Court felt it had no option but to accept the calculation of the RFA No.95/1998 Page 7 of 35 appellant/defendant simply because there was no contrary evidence led on behalf of the respondent/plaintiff. The Trial Court while dealing with issue nos. 8, 9 and 10 held that the appellant/defendant is entitled to price for the space no. 20 agreed to be sold to the respondent/plaintiff at Rs.423/- per square ft. The Trial Court then arrived at a finding of fact while dealing with issue no. 6 that it was the appellant/defendant itself who was using the agreed space as its own office and which it had agreed to sell to the respondent/plaintiff. The suit for specific performance was therefore decreed with respect to 403 square ft. of the covered area being space no.20 on the upper ground floor, subject to payment of the escalation and other charges.

10. Mr. Harish Malhotra, Learned Senior Counsel for the appellant/defendant argued the appeal under two broad heads. The first argument was that it was the respondent/plaintiff who was guilty of breach of contract in failing to pay the charges as demanded by the notice dated 10.4.1991, Ex.PW1/4. It was therefore contended that the agreement was validly terminated by the notice dated 29.6.1991, Ex.PW1/5. Reliance was placed upon Clause 18 of the Agreement which according to him bound the respondent/plaintiff to pay the escalation charges. Under this argument of breach of the contract by the respondent/plaintiff, the learned senior counsel for the appellant/defendant also argued that what was agreed to be sold was only super area and not covered area. It was urged that the respondent/plaintiff was liable to pay charges even for the common areas and due to which the covered area should be reduced and the area agreed RFA No.95/1998 Page 8 of 35 to be sold should be taken as only super area and for which argument Clause 17 of the Agreement between the parties was relied upon. The second head of argument was that the Court ought not to have granted the relief of specific performance but only ought to have granted the alternative relief of damages because there was rise in the value of the property and increased cost of construction. Reliance, in this regard, was placed upon Para 3 of the preliminary objections of the written statement filed on behalf of the appellant/defendant in the Trial Court.

 

11. The first issue therefore which arises for consideration is whether the respondent/plaintiff was guilty of breach of contract thereby entitling the appellant/defendant to terminate the agreement vide notice dated 29.6.1991, Ex.PW1/5, the breach being the failure by the respondent/plaintiff to pay the charges as claimed by the appellant/defendant vide Ex.PW1/4 dated 10.4.1991. Before proceeding further, it is necessary to reproduce some of the relevant Clauses of the Agreement dated 6.10.1976, Ex.PW1/1, entered into between the parties and these Clauses read as under:- “1. The company has reserved for the allottee showroom/space of an approximate area of 403 sq. ft. No.24 on ground floor in Block No.A in the said building to be construed on the plot mentioned above.

3. The rate per sq. ft. is for the covered area. Covered area means and includes the area under periphery walls and half the area under common walls between two shops/show-rooms or the said space.

5. The allottee has understood that the reservation of the space is provisional on the basis of the drawings displayed in the office of RFA No.95/1998 Page 9 of 35 the company, which are subject to the approval of the sanctioning authority and are also subject to change during the course of approval or construction or any time thereafter without any rights or claims or interference of the allottee.

6. The allotted has also understood and agreed with the company that if for any reason any changes are required to be made by the sanctioning authorities or by the Architect or by the company before or after the sanction of any plans, resulting in the reduction or increase in the area agreed to be allotted or any change in its shape or its location, the allottee shall have no rights to raise any claims, monetary or otherwise, except that the price will be calculated on the changed area at the rate per sq. ft. as agreed above. The allottee has further agreed with the company to accept alternate space if it becomes necessary in the event the company is unable to allot the particular space mentioned in this agreement due to change in the plan displayed in the office of the company.

17. For the space allotted to the allottee as well as for common spaces the allottee would be liable to pay to the company all charges such as for Electric consumption for the A.C. Plants, the repairs and maintenance and running costs of the A.C. plant including Administrative and management charges falling to his share. The allottee would also pay his share for the lighting of the common spaces, including its repairs, replacements, etc. etc. The allottee will also contribute on monthly basis for creating a sinking fund/replacement fund for the A.C. Plant, equipment, machinery, ducting etc. etc. All the above amounts will be fixed by the company at the time of handing over the possession keeping in view at that time the rates and costs of Electricity, articles, wages etc. etc. which would be subject to revision according to the relative increase in the inputs.

18. The charges mentioned in the foregoing paragraphs have been fixed keeping in view the existing rates of the materials as well as the wages of the workers, employees, etc, etc. The charges will stand increased proportionately according to the increase in the rates of Electricity, wages, ground rent, etc, etc. The decision of the company in this respect shall be final and binding on the allottee.” (underlining added)

RFA No.95/1998 Page 10 of 35 12(i). In my opinion, the argument as raised by the appellant/defendant that the respondent/plaintiff was guilty of breach of contract and therefore the contract was validly terminated is an argument without substance and therefore deserves rejection. There were three parts of the notice dated 10.4.1991, Ex.PW1/4 issued by the appellant/defendant to the respondent/plaintiff. The first part pertains to the claim of escalation charges, the second part pertains to the claim of various charges under the head of recurring charges (such as general maintenance, ground rent, sinking fund, etc.) and the third part was the change not only in the location from the upper ground floor to the lower ground floor but also in the area from 403 square ft. to 372 square ft. The Trial Court has held that the respondent/plaintiff was entitled to put the issue of the charges on the back- burner till the issue with regard to change of allocation of space both of the location and the area was first thrashed out. I agree. No doubt, a buyer is entitled to pay all the charges as per the Agreement, however, whenever a unilateral amendment is sought to be made by a seller/builder with respect to the allocation of the space both in terms of its original prime location and also a reduction in the area takes place, a buyer is definitely entitled to first get the issue with regard to location and area sorted out because the buyer pays the price for a particular property and a particular area. Till there is certainty and finalization there cannot be liability for payment of charges. A buyer cannot be put in a position that he should part with the moneys RFA No.95/1998 Page 11 of 35 although the seller is not agreeable to sell the agreed property, and more so when the buyer’s bonafides are clear from the fact that almost the entire basic price stood paid. A buyer is also not bound to accept an ipse dixit as to escalated cost claimed by a builder and the buyer is entitled to seek explanation/justification for the additional moneys he is asked to part with. (ii) The respondent/plaintiff has so deposed in her cross-examination in accordance with the pleading that the basic reason for non-payment was firstly to do with the change of the location and of the area and the issue of cost was secondary thereafter. It is in this context that the respondent admitted in cross-examination that she is otherwise ready to pay all necessary charges in terms of the agreement whether under the head of escalation or otherwise.

(iii) I therefore reject the argument urged on behalf of the appellant/defendant that the respondent/plaintiff was guilty of breach of contract by not paying the charges as demanded vide Ex.PW1/4 dated 10.4.1991 inasmuch as this argument very conveniently overlooks the fact that there was a more important, vital and a relevant issue which required thrashing out i.e. with regard to unilateral change of prime location from upper ground floor to the lower ground floor and also the reduction in area from 403 Sq. feet to 372 sq. feet.

I also reject the argument on behalf of the appellant/defendant that what was agreed to be sold was the super area and not covered area. RFA No.95/1998 Page 12 of 35 In clause 3 it is quite clear that what is agreed to be sold is covered area. Reliance, in this regard, placed upon Clause 17 by the learned senior counsel is misconceived when it is argued on that basis that as a result of this Clause 17 the covered area in Clause 3 would become super area. A reference to Clause 17 shows that the said clause basically pertains to various day to day maintenance charges and other related charges, and which are always payable with respect to a multi-storeyed building and which would be payable in terms of the same, however, this cannot be an excuse to reduce the area, which has been actually agreed to be sold to a buyer. Claim for payment of charges in terms of Clause 17 only entitles payment in respect thereof, but, I fail to understand as to how the claim for charges in terms of Clause 17 can reduce the actual available area of a showroom/space/portion which is otherwise agreed to be sold under the Agreement dated 6.10.1976 and which agreement in so many words as per Clause 3 states that what is sold is covered area. Clearly, therefore the charges which were payable with respect to the common space are the charges which are independent of the price which is payable with respect to the area which is agreed to be sold and there can be no cavil once we look at Clause 3 of the agreement between the parties which clearly states that what is agreed to be sold is the covered area and not the super area.

 

13. At this stage, it would be profitable to refer to some of the important findings and conclusions of the trial Court and which read as under:-

RFA No.95/1998 Page 13 of 35 “8. It can be seen that the reservation of the

particular space being nok.24 on ground floor of block A was not a mere formality. The stipulation of possibility of change is given in clause no.5 and 6 reproduced above. The change could be made “if for any reason any

changes are required to be made by the sanctioning

authorities or by the architect or by the company before and after sanction of any plans resulting in reduction or increase in the area agreed to be allotted or any change in its shape or its location.” If only in the actual execution of the plan the area agreed to be allotted was reduced or increased or if there was any change in its shape or location the allottees i.e. the plaintiff could raise no objection. It does not mean that the change could be done at whims and fancy of the company i.e. The defendant. In the present case the change was

actually effected with the agreement of the parties vide document Ex.PW1/3 dt. 14.9.85. The plans were

sanctioned sometime in Dec.1983 of the construction

commenced in January, 1984. Accordingly by 14.9.85

the lay out of the annual construction could be

visualised. The defendant and the plaintiff discussed the space to be reserved for the plaintiff discussed the space to be reserved for the plaintiff and the plaintiff accepted the show room space no.20 of upper ground

floor no.24 rather space no.24 on ground floor block A mentioned in the agreement Ex.PW1/1. Ex.PW1/1 is a

simple letter which can be reproduced below with profit: September, 14, 1985

Mrs. Kanta Aggarwal

W/o Sh. S.P. Aggarwal

A-11, Maharani Bagh,

New Delhi.

Subject: Allotment of alternate space in the

Hotel-cum-commercial Complex

Nehru Place, New Delhi.

Ref: Agreement dated 6.10.76

Dear Madam/Sir,

We refer to our letter dated 5.4.84 and our

subsequent discussion with you concerning

allotment of alternate space. This is to confirm that alternate showroom space no.20 on upper ground

RFA No.95/1998 Page 14 of 35 level in Block ‘E’ measuring approximately the

same area as agreed before has been allotted to

you in the International Trade Tower in the Hotel-

cum-Commercial Complex, Nehru Place, construction of which has already been started.

Thanking you,

Yours faithfully,

FOR NEHRU PLACE HOTELS LTD..

Agreed & Confirmed Sd/-

Sd/-

(MRS. KANTA AGGARWAL)

As is clear from this letter the plaintiff agreed to an alternative show room space measuring approximately the same area and the change was

recorded under signature of both the parties.

9. What gave rise to the cause of action however, is the letter of the defendant dt. 10.4.91 Ex.PW1/4

enclosing therewith the final statement of account. The letter itself does not mention that there has been any change in the location of the space to be allotted to the plaintiff excepting that the revised area of the plaintiff’s shop will be 372 sq. feet. It is only in the annexure-A which is further exhibited as Ex.DW1/3 that the

defendant described the allotted area as show room no. 20 in level ground level in Block E. The third para-graph of the letter Ex.PW1/4 the defendant state:

“As you are aware the areas allotted

at the time of booking were tentative and

subject to change during the cause of

construction. Now that the Shops have been

completed and we has ascertained actual

areas which in certain cases differ from

original areas allotted. The revised area of

your shop is 372 sq. feet.”

The letter does not at all mention that after the original booking there was a mutual agreement to change the

area to be allotted. The letter merely mentions that revised area of the shop was 372 sq. feet without

mentioning that the defendant in fact is offering entirely different space than what had been allotted to the

plaintiff. In the final statement of account Annexure A alone the defendant mentions the space to be allotted RFA No.95/1998 Page 15 of 35 alongwith the cost of construction initially stipulated, the escalation and upgradation charges etc.

10. Obviously the agreement, clause 5 and 6

stipulates that the change in the space allotted could be made in certain circumstances. The letter Ex.PW1/4 or the final statement of account do not at all show the existence of any of these conditions requiring the

change of space from no 20 on the ground floor to no.2 to lower ground floor level SI, Block E. This was an entirely unilateral change without any discussion with the plaintiff and without looking for acceptance of the plaintiff. It is further important to mention that

defendant did not even care to enclose a copy of the lay out plan or even a hand sketch to identifying the space mentioned in the final statement of account which fall to the lot of the plaintiff. It was as if the defendants were entirely the masters of the area and location of the space to be handed over to the plaintiff without any reference to the original contract or of the sanctioned plan. Such arbitrary and unilateral change of the space to be allotted was not within the contract.

11. The plaintiff who did not agree to the change of the space i.e. either the location of the space or its area could not be expected to meet the demands for any

payment for the area and space to be allotted by the defendant to the plaintiff. It cannot be said that it was the plaintiff who violated the agreement. Rather it was the defendants who failed to fulfill their part of the contract. The letter produced on record Ex.PW1/5 dt. 29.6.91 simply says that since the plaintiff had not deposited the amount despite demand vide letter dt.

10.4.91 Ex.PW1/4 and inspite of the reminders, the

defdts terminated the contract and forfeited the earnest money of Rs.60,000/-. The plaintiff in her letter Ex.PW1/6 dt. 2.8.91 the clearly identifies all objections to the allotment of show room no.2 on L.G.level No.S-1 Block E instead of show room no.20 an upper ground

floor level, Block E measuring 403 sq. feet covered area and also to the demand of upgrading and escalation

charges which she considered unjustifiable and

arbitrary. Further she points out that the possession cannot be passed on to her until completion certificate and electricity connection are obtained by the

defendants.

RFA No.95/1998 Page 16 of 35

15. The defendant wants to justify the change in the space as well as in the area by simply saying that the original allotment was provisional. As explained above such a explanation is not correct. Further even if the change could be made it cannot be expected that the

change could be made by the defendant unilaterally.

Ex.PW1/3 indicates the mode of change of the allotted space. Perhaps the defendant could have again

adopted the same mode for changing the space that is by prior discussion. The manner in which the defendant has done the change is entirely against any concept of law of contract. Thus it was the defendant who

committed the breach of contract and not the plaintiff. The defendant having failed to fulfill the contract and having offered the space which was not agreed upon by the parties was not entitled to cancel the contract on the excuse that the plaintiff had not paid the additional amount demanded by the defendant, vide Ex.PW1/4,

hence issue no.5 is decided against the defendant.

ISSUES NO.1,2 and 4:

The next question to be decided is whether the

plaintiff has performed her part of the contract and whether she is ready and willing to perform her part of contract. The question is whether the plaintiff has

complied with the requirements of the procedural law requiring the plaintiff to plead that she is ready and willing to perform her part of the contract. The plaintiff paid all the amount due as per terms of the agreement till the additional amount was demanded vide document Ex.PW1/4. It was at that point of time that the difference arose between the parties. The defendant

offered a space for which there is no agreement. The plaintiff, therefore, was inno obligation to make

payment for this new space. Had the defendant demanded additional amount for the same space for

which they had entered into a contract the pltff. was under an obligation to pay the same provided, however, the additional amounts were justified. The mere fact that the plaintiff did not comply with the additional demand raised in Ex.PW1/4 does not necessarily lead to the presumption that the plaintiff did not fulfill her part of the contract or that she is not willing to fulfill her part of the contract. The plaintiff has pleaded that she is ready and willing to pay the balance amount due under RFA No.95/1998 Page 17 of 35 the contract being no.8540/- payable within 15 days of the intimation of the completion of the building and offering the space to the allottees. So far as the

escalation and upgradation charges are concerned and same were not specifically provided in the contract

Ex.PW1/1. True, escalation in the cost of construction is accepted position of fact in the present day of rising prices of building material, cost of labour and other expanses required to build a house. The plaintiff under law as well as under the agreement is liable to pay the cost of escalation. Nonetheless the builder or the defendant cannot be whimsical in demanding any

amount by way of cost of escalation. The question that arises is how much the defendant is entitled to claim towards escalation.”

I do not find any illegality or perversity in the aforesaid findings and conclusions in the impugned judgment and decree when it holds that the respondent/plaintiff was not guilty of breach of contract and that the appellant/defendant was not entitled to terminate the agreement between the parties.

14(i). The related issue, then, is that what should be charges which should be payable by the respondent/plaintiff to the appellant/defendant. The trial Court has already been liberal towards the appellant/defendant on this aspect. A reference to the trial Court record shows that except the ipse dixit with respect to claim of a particular amount, no proof of the details alongwith the justifiable formula was given by the appellant as to how the escalation charges and other charges were calculated so as to be payable. Of course, the escalation is a reality and cost of construction does increase when delays takes place in the project and such escalation and other related RFA No.95/1998 Page 18 of 35 charges are payable in terms of the agreement between the parties, however, such charges have to be properly quantified because after all it is a question of imposition of monetary liability upon a buyer and which has necessarily thus to have valid justification. The trial Court has also noted that the escalation and related charges as claimed by the appellant/defendant have been granted only because the respondent/plaintiff had not given any figure towards the escalation and as a result of which the Court had no option but to accept the figure of the appellant/defendant. Therefore, the entire amount claimed by the appellant/defendant towards escalation and other related charges has already been awarded to the appellant/defendant.

(ii) At this stage, I must deal with the argument raised on behalf of the appellant/defendant that since the respondent/plaintiff agreed to pay the escalation charges as per the proceedings in the trial Court, it should be held that she was liable to pay escalation charges in terms of the notice Ex.PW1/4 dated 10.4.1991 and therefore by non-payment of which it was the respondent/plaintiff who committed the breach of the contract. I have already dealt with this aspect above that there were various aspects contained in the notice dated 10.4.1991 Ex.PW1/4, and the respondent/plaintiff was justified in first calling upon the appellant to meet the more crucial aspect of change of location and reduction of area, a stand which was taken in the pleading and also so deposed in the cross- RFA No.95/1998 Page 19 of 35 examination of the respondent/plaintiff in the evidence of the respondent/plaintiff.

 

15. The second main argument raised by the learned senior counsel for the appellant/defendant was that the trial Court ought to have granted the respondent/plaintiff the alternative relief of damages and not the relief of specific performance. This argument was based upon para 3 of the preliminary objections in the written statement and which reads as under:- “3. That even otherwise it is the case where the Hon’ble Court should exercise the discretion not to decree the specific performance as the performance of the contract would involve undue hardship to the defendant, as the defendant did not foresee at the time of the agreement dated 6.10.76, as it could not be foreseen that the building plan would be sanctioned by the DDA only after the delay of seven years that too after a long drawn litigation in December, 1983 and the construction would commence in January, 1984. It is submitted that the plans were sanctioned in December, 1983 and the construction commenced in January, 1984, during which period prices of building materials have gone very high and it became very difficult to complete the construction at the estimated cost of Rs.70/- per sq. ft. and another Rs.25/- sq. ft. for mind while selling the shop to the plaintiff at the rate of Rs.423/- per sq. ft. whereas as a matter of fact the defendant had to spend over Rs.600/- per sft. on the cost of construction along in which the value of the land is not included. Therefore, it became practically impossible for the defendant due to no fault on the part of the defendant to deliver the premises at the rate of Rs.423/- per sq. ft. and as such if this court decrees the specific performance, then it would cause undue hardship upon the defendant, whereas non performance would not cause any such hardship on the plaintiff and this court may be pleased to exercise discretion in not decreeing the performance. Even otherwise the suit for specific performance of the contract is not maintainable as the contract dated 6.10.76 has been validly and legally terminated vide termination letter dated 29.6.1991 because of the faults on the part of the plaintiff. It is submitted that the said termination has been done much prior to the filing of the present suit against the defendant and as such the cause if RFA No.95/1998 Page 20 of 35 any has become infructuous. It is further submitted that the ownership and possession of the shop in question i.e. shop No.2 on lower ground floor (i.e. S.I. LEVEL) of the International Trade Tower, Nehru Place, New Delhi has already been transferred and sold to M/s. Traders India (India) F 89/8 Okhla Industrial Phase-I New Delhi on 19/8/91 after legally and validly terminating the contract of the plaintiff and as such the defendant is no more the owner in possession of the shop in question and, therefore, no decree of specific performance of the contract regarding the shop in question can be passed.”

It was contended that on this defence issue No.6 was framed by the trial Court as to whether the grant of specific performance would cause undue hardship to the appellant/defendant. I must, however, straightaway note that what was really argued before this Court for claiming that the alternative relief of damages must be granted and not specific performance was that there has been an increase in the value of the property and therefore it would be inequitable to grant specific performance and which is not a defence found in the entire record of the Trial Court. Also, in this regard, it is necessary to reproduce the related finding of the trial Court with respect to issue No.6 and which finding will be relevant for dealing with the argument of the disentitlement for specific performance on the ground of rise in the prices. The said discussion on issue no.6 reads as under:- “ISSUE No.6

The onus of this issue was on the defendant. There is nothing on record to show that granting of the relief prayed for would cause any undue hardship to the defendant. True, specific performance of a contract is a equitable relief and equity of both the sides has to be weighed. The defendant has been using the space no.20 of the upper ground floor level as its own office. The defendant has put that space to profitable use all these years. Since the plaintiff is rightfully entitled to get the space as per the agreement between the parties, the defendant must part with it in favour of RFA No.95/1998 Page 21 of 35 the plaintiff. Issue No.6 is decided in favour of the plaintiff.” (underlining added)

A reading of the preliminary objection No.3 in the written statement shows that it was pleaded that the cost of construction had gone upto Rs.600/- per sq. feet and therefore the appellant/defendant cannot sell the subject premises at Rs.423/- per sq. feet. This para also contains the pleading that it was the respondent/plaintiff who was guilty of breach of contract and hence not entitled to specific performance. Finally, in this paragraph, it is stated that the shop No.2 on the lower ground floor has already been transferred to one M/s. Traders India and hence the suit for specific performance ought not to have been decreed. 16(i). In my opinion, the argument as raised by the learned senior counsel for the appellant/defendant that instead of specific performance only the relief of damages ought to have been granted deserves rejection for the various reasons stated herein after. What has been argued before this Court is that there has been considerable rise in the price of the property and therefore specific performance should not be granted. Reliance for this proposition was placed on behalf of the appellant/defendant, on the judgments of the Supreme Court reported as Kanshi Ram Vs. Om Prakash Jawal and Others (1996) 4 SCC 593, M. Meenakashi and Others Vs. Metadin Agarwal (dead) by LRS. (2006) 7 SCC 470, Nirmala Anand Vs. Advent Corporation (P) Ltd. AIR 2002 SC 3396 and Jai Narain RFA No.95/1998 Page 22 of 35 Parasrampuria (dead) and Others Vs. Pushpa Devi Saraf and Others (2006) 7 SCC 756.

(ii) This argument so raised deserves rejection firstly, because this stand is not contained in the pleadings of the appellant/defendant before the trial Court nor the case was so argued before the trial Court on this basis. Had such a case been argued, the impugned judgment which is a detailed and exhaustive one would have surely dealt with this aspect, however because no argument would have been raised by the appellant/defendant for denial of the claim of specific performance on the ground of increase of the price before the trial Court, therefore, the trial Court in the impugned judgment did not deal with the same. A totally new argument therefore cannot be allowed to be set up in appeal when there is complete absence of any pleading whatsoever in this regard. If the case of the appellant was that such an argument was raised which was not dealt with by the trial Court, the appellant/defendant would have in terms of the decision of the Supreme Court in the case of State of Maharashtra Vs. Ramdas Srinivas Naik AIR (1982) 2 SCC 463 immediately after the impugned judgment was passed, moved the trial Court that the argument as raised has not been dealt with. However, this was admittedly not done and therefore a totally new argument cannot be allowed to be raised in the appeal. In fact even in the grounds of appeal no ground is found where it is pleaded that specific performance should be denied on the ground of increase in prices. Learned senior counsel for the appellant in response to the argument that even in the RFA No.95/1998 Page 23 of 35 grounds of appeal no plea with respect to disentitlement to specific performance and the grant of alternative relief of damages on the ground of increase prices was raised, has referred to ground (s) of the appeal. A reference to ground (s) shows that it has not been pleaded that specific performance should be refused on the ground of increase of prices and what has only been pleaded in this ground is that the showroom in question was not available with the appellant/defendant and therefore the relief of specific performance should not be granted.

(iii) Not only there is absence of pleadings, the trial Court while dealing with issue No.6 has held that the appellant has failed to lead any evidence with respect to the plea of undue hardship for denying the relief of specific performance. To succeed in this plea of undue hardship, the appellant/defendant was bound to lead evidence to substantiate the aspects that prices had increased and also that it was forced to sell at Rs.423/- per sq. feet whereas the cost was Rs.600/- per sq. feet, however, no such evidence has been led and therefore the trial Court has given finding of fact that since there is no evidence on record in terms of what was pleaded in para 3 of the preliminary objection, there is no case of undue hardship that can be held in favour of the appellant/defendant. Therefore, in the absence of pleadings and evidence, the trial Court has rightly held that there is no case of undue hardship for refusing specific performance on the alleged ground that cost of construction had increased to beyond what was asked for from the respondent/plaintiff. This aforesaid conclusion will also equally RFA No.95/1998 Page 24 of 35 apply to the argument for denying specific performance on the ground of increase in prices because there is no evidence led in the Trial Court as to the increase of prices, what is the rate of increase, what is the quantification thereof, how does the increased price stand when compared to the agreed price, how would a seller/builder be prejudiced and in what manner etc. etc. In fact, in my opinion, the part of the argument that increased cost should disentitle specific performance is indeed a very specious one, inasmuch as, after all, for the escalated cost of construction, the appellant/defendant is getting duly compensated in terms of actual escalation which it was entitled to in terms of Clause 18 of the agreement. Additionally, besides the escalated cost of construction, the appellant/defendant was also entitled to charges in terms of Clause 17 of the agreement. Both these charges under Clauses 17 and 18 have been granted to the appellant/defendant by the trial Court. One therefore fails to understand as to how it can be argued either in fact or in law that specific performance ought not to be granted because the performance will cause undue hardship to the appellant/defendant inasmuch it has incurred more cost of construction and it is taking a lesser cost from the buyer. So far as the argument of increase of prices, in addition to what is already stated above, in law, the same is only one of the factors which the Courts see alongwith a host of other factors in order to balance the equities so as to decide whether the relief of specific performance should or should not be granted. In the present case, to allow the appellant to take up such a plea would be to put a premium upon its lack of bona fides in altering the RFA No.95/1998 Page 25 of 35 prime location of the shop as also reducing the area agreed to be sold. Respondent/plaintiff had paid almost the entire basic price and the disputes came into existence because of the mala fide attitude of the appellant in changing the location and area of the shop. It is also not a case that the respondent/plaintiff had paid only a very insignificant part or a very small part of the consideration and therefore should not be held entitled to benefit of the increase in the price of the property. In fact, I am dealing with this argument of rise in prices only in deference to the oral arguments raised by the learned senior counsel for the appellant inasmuch as I have already referred to the fact that there is neither a pleading nor any evidence to this effect in the trial Court and no argument under this head was raised before the trial Court and hence not dealt with in the impugned judgment. (iv) Another reason for rejecting the argument for denying specific performance is that the respondent/plaintiff in her suit only claimed for specific performance and did not ask for the alternative relief of damages. Surely, the respondent/plaintiff cannot be forced to claim a particular relief in her plaint. The suit was only for specific performance and which suit either would have been dismissed for specific performance or granted for specific performance, however, I am very much doubtful as to how the alternative relief of damages can be imposed upon the respondent/plaintiff, when the plaintiff herself has not prayed for the same.

RFA No.95/1998 Page 26 of 35 (v) The stand in the written statement and grounds of appeal that specific performance should be refused because of the fact that the shop No.2 on the lower ground floor has been transferred to some other person deserves rejection because the specific performance is prayed not with respect to the shop No.2 on the ground floor but with respect to shop/premises/portion being No.20 on the upper ground floor. In my opinion, ground (s) only further accentuates the mala fides of the appellant/defendant in seeking to deny the benefit of specific performance to the respondent/plaintiff, and even if the shop No.2 on the ground floor has been transferred by the appellant/defendant then the same is immaterial inasmuch as specific performance is not being asked with respect to the shop No.2 on the lower ground floor but with respect to shop No.20 on the upper ground floor.

17(i). Let me now assume that a ground was raised in the written statement and in the grounds of appeal that instead of specific performance alternative relief of damages should be granted and deal with the same. Let us also assume that this has also been proved in evidence, though it has not been so proved and as noted in para 16(iii) above. There is no quarrel to this proposition that a Court can and does in the facts and circumstances of a particular case use its discretion, which is a judicial discretion, so as to deny the relief of specific performance and grant only the relief of damages. A reference to the decision of Kanshi Ram (supra) cited by the learned senior counsel for the appellant/defendant shows that the said decision is in RFA No.95/1998 Page 27 of 35 the nature of an order and there is no discussion in the same as to what were the facts and circumstances due to which the Supreme Court granted the alternative relief of damages instead of specific performance. This becomes clear from para 5 of the said judgment which is relied upon by the learned counsel for the appellant/defendant and which reads as under:- “5. Having regard to the facts of this case and the arguments addressed by the learned counsel, the question that arises for consideration is: whether it would be just, fair and equitable to grant the decree for specific performance? It is true that the rise in prices of the property during the pendency of the suit may not be the sole consideration for refusing to decree the suit for specific performance. But it is equally settled law that granting decree for specific performance of a contract of immovable property is not automatic. It is one of discretion to be exercised on sound principles. When the court gets into equity jurisdiction, it would be guided by justice, equity, good conscience and fairness to both the parties. Considered from this perspective, in view of the fact that the respondent himself had claimed alternative relief for damages, we think that the courts would have been well justified in granting alternative decree for damages, instead of ordering specific performance which would be unrealistic and unfair. Under these circumstances, we hold that the decree for specific performance is inequitable and unjust to the appellant.”

The decisions in the cases of M. Meenakashi and Others (supra) and Jai Narain Parasrampuria (dead) and Others (supra) lay down the same ratio and holds that in certain cases once there is increase in prices during the pendency of the litigation or some increase in cost, instead of specific performance, the relief of damages can be granted. Reliance is also similarly placed on the decision of Nirmala Anand (supra) and para 6 whereof reads as under:-

RFA No.95/1998 Page 28 of 35 “6. It is true that grant of decree of specific performance lies in the discretion of the Court and it is also well settled that it is not always necessary to grant specific performance simply for the reason that it is legal to do so. It is further well settled that the Court in its discretion can impose any reasonable condition including payment of an additional amount by one party to the other while granting or refusing decree of specific performance. Whether the purchaser shall be directed to pay an additional amount to the seller or converse would depend upon the facts and circumstances of a case. Ordinarily, the plaintiff is not to be denied the relief of specific performance only on account of the phenomenal increase of price during the pendency of litigation. That may be in a given case, one of the considerations besides many others to be taken into

consideration for refusing the decree of specific performance. As a general rule, it cannot be held that ordinarily the plaintiff cannot be allowed to have, for her alone, the entire benefit of phenomenal increase of the value of the property during the pendency of the litigation. While balancing the equities, one of the consideration to be kept in view is as to who is the defaulting party. It is also to be borne in mind whether a party is trying to take undue advantage over the other as also the hardship that may be caused to the defendant by directing the specific performance. There may be other circumstances on which parties may not have any control. The totality of the circumstances is required to be seen.”

(ii) The proposition of law that relief of specific performance is a discretionary relief is in fact statutorily provided in Section 20 of The Specific Relief Act, 1963 which contains various instances where specific performance is not granted but only damages are granted. Section 20 has been expounded upon by the Supreme Court in various decisions, including in the decisions which have been cited by the learned senior counsel for the appellant/defendant. However, a reference to each of these cases shows that the discretion is a judicial discretion which is exercised in the facts of each case and increase in price (or cost) is only one of the factor which has to be considered in the totality of the facts of each case. For example, a RFA No.95/1998 Page 29 of 35 buyer may have paid only a very nominal consideration of about 5% to 10% of the total price and in which circumstances, the Court may feel that instead of specific performance alternative relief of damages is to be granted. This is to be contrasted with the case where a buyer has paid most of the price or after paying the price has received actual possession of the property and in which cases the relief of specific performance is granted and not the alternative relief of damages. Further, there are many cases and circumstances where there is caused undue hardship or inequity on account of specific performance therefore instead of specific relief only the relief of damages is granted. In the present case, I do find it a very strained logic of the appellant/defendant to argue that as a builder since his property became more valuable, (inasmuch as the price has increased), instead of specific performance, damages should be granted. The argument in fact is totally without substance because if this argument is accepted every builder whose project is delayed, whether for genuine reasons or not, will come and say that now contemporary prices during the litigation are much higher and therefore instead of specific performance only damages must be granted. In fact, I may note that the decision of Nirmala Anand (supra) in fact goes against the appellant/defendant because what is held in that judgment is that ordinarily specific performance ought to be granted and only very rarely the relief of specific performance is to be denied. In the present case it is the appellant who is the defaulting party and who in any case is getting the requisite escalated cost. I have also in the subsequent part of this judgment RFA No.95/1998 Page 30 of 35 not only granted interest (which was not granted by the Trial Court) to the appellant/defendant but a very high one. I therefore reject this argument of the learned counsel for the appellant/defendant that only damages should have been granted and not specific performance. In fact, I have already noted above if there is any equity the same is towards the respondent because almost the entire basic price was paid and the dispute for the balance and additional payment became inextricably linked with the illegal and unreasonable action of the appellant/defendant in changing the prime location and also reducing the area which had been agreed to be sold. Further it is the appellant/defendant itself who started using the space which was constructed for being allotted to the respondent/plaintiff, as its own office, and as so noted by the trial Court in the impugned judgment. The injustice/prejudice/undue hardship will thus be to the respondent/plaintiff if specific performance is not granted.

 

18. There is finally one aspect which I need to address in favour of the appellant/defendant, though no argument was raised before me, being grant of interest on the charges which have been held to be payable by the trial Court in favour of the appellant/defendant and against the respondent/plaintiff. I note that the trial Court has not granted any interest to the appellant/defendant for the monies which are required to be paid by the respondent/plaintiff to the appellant/defendant. No doubt, it is because of the appellant/defendant that the situation came to the present pass inasmuch as the appellant/defendant wrongly changed the allocation of RFA No.95/1998 Page 31 of 35 space from the prime location of upper ground floor to the lower ground floor and also reduced the area from 403 Sq. feet to 372 sq. feet, however, the respondent has used these monies which are held payable by her to the appellant/defendant. However, while dealing with this aspect I must hasten to add that so far as the portion of charges relating to maintenance etc. under Clause 17, the respondent/plaintiff has not received the benefit of possession which would have been received by her on payment of these charges and the escalation charges, and also that the appellant/defendant itself has been using this allocated space as its own office space. Therefore, balancing the equities, though interest should be awarded to the appellant/defendant on the escalated cost portion of the price payable, the issue really would be of the rate of interest which ought to be awarded in favour of the appellant/defendant and against the respondent/plaintiff with respect to the escalation charges which are payable to the appellant/defendant as per the impugned judgment and whether interest should be payable on the charges other than the escalation charges. Nowadays the Supreme Court has been directing that the rates of interest which should be awarded by the Courts should be at a lower side in view of the changed economic scenario, liberalization of the economy and the consistent fall in the rates of interest. The recent judgments of the Supreme Court, in this regard, are Rajendra Construction Co. v. Maharashtra Housing & Area Development Authority and others, 2005 (6) SCC 678, McDermott International Inc. v. Burn Standard Co. Ltd. and RFA No.95/1998 Page 32 of 35 others, 2006 (11) SCC 181, Rajasthan State Road Transport Corporation v. Indag Rubber Ltd., (2006) 7 SCC 700 & Krishna Bhagya Jala Nigam Ltd. v. G.Harischandra, 2007 (2) SCC 720 and State of Rajasthan Vs. Ferro Concrete Construction Pvt. Ltd (2009) 3 Arb. LR 140 (SC). The Supreme Court has granted rates of interest varying between @ 6% to 9%. per annum simple.

In the facts of the present case, however, I find that instead of a lower rate of interest, the appellant/defendant should get a higher rate of interest considering that the transaction pertains to an immovable property and benefit of which will go to the respondent/plaintiff. Therefore, I hold the appellant/defendant entitled to pendente lite and future interest @ 21% per annum simple on the amount of escalation charges as decreed by the trial Court. For the other charges which are payable by the respondent/plaintiff to the appellant/defendant which have been granted by the trial Court, the same however would be without payment of any interest because the said charges are towards maintenance and other related charges with respect to the property and the respondent has not enjoyed the property during all this period which in fact the appellant/defendant has used.

19. In view of the above, so far as the merits of the case are concerned as regards the grant of the relief of specific performance, I do not find any illegality or perversity in the findings and conclusions in the impugned judgment calling for any interference by this Court. This Court is RFA No.95/1998 Page 33 of 35 not entitled to interfere with the findings and conclusions of the trial Court merely because out of two views, one plausible and possible view has been taken by the trial Court. I also do not find that there is any injustice/prejudice which has been caused to the appellant/defendant requiring interference with the impugned judgment and decree. In fact, if there is any injustice/prejudice, the same has been caused to the respondent/plaintiff.

 

20. In view of the above, the appeal being devoid of merits is dismissed, so far as the challenge to the impugned judgment by which specific performance has been granted. The appellant/defendant however will be entitled to interest of 21% per annum simple on the escalation charges which are payable by the respondent/plaintiff to the appellant/defendant pendente lite and future till realization. No interest will be payable on the other charges which have to be paid to the appellant/defendant as per the impugned judgment. It is decreed and directed that the appellant/defendant will specifically perform the agreements dated 6.10.1976 and 14.9.1985 between the parties with respect to space No.20 on the upper ground floor in block E measuring 403 Sq. feet in the building known as International Trade Tower, Nehru Place, New Delhi by executing the conveyance deed or any other document so required in law in favour of the respondent/plaintiff. The appellant will raise a demand upon the respondent/plaintiff in accordance with this judgment within a period of 45 days from today and the respondent/plaintiff will pay RFA No.95/1998 Page 34 of 35 the said amount to the appellant within 45 days thereafter and whereupon the respondent/plaintiff will be entitled to execution in her favour of the appropriate title document. Decree sheet be prepared. Interim orders are vacated. Trial Court record be sent back.

MARCH 11, 2011 VALMIKI J. MEHTA, J. Ne

RFA No.95/1998 Page 35 of 35

Eviction of tenant under DRC/Bona Fide Requirement – SUmmary Procedure – Leave to Defend when to be granted ?

IN THE HIGH COURT OF DELHI AT NEW DELHI
SUBJECT : DELHI RENT CONTROL ACT
Date of Judgment: 16.3.2012
RC.REV. No.141/2011 & CM No.8661/2011
HAJI YUSUF SIDDIQUI ….. Petitioner
Through: Mr.Mohd. Rashid, Adv.
versus
MOHD WASEEM & ANR ….. Respondents
Through: Mr.S.H.Nizami, Adv.
CORAM:
HON’BLE MS. JUSTICE INDERMEET KAUR
INDERMEET KAUR, J. (Oral)
1. Impugned judgment is dated 14.2.2009; application filed by the tenant
seeking leave to defend had been dismissed; eviction petition filed the
landlord under Section 14(1)(e) of the Delhi Rent Control (hereinafter
referred to as the DRCA) had been decreed.
2. Record shows that the present eviction petition has been filed by the
landlord on the ground of bonafide requirement; he has claimed himself to
the owner of the suit premises; the aforenoted suit premises are property
no.85/1, Gali No.2, Jaffrabad, Delhi. The petitioners have become the
owners by virtue of a oral gift deed dated 1.6.1988 bequeathed to them by
their grandmother Laiq-un-nissa; pursuant to this oral gift deed which had
bequeathed the disputed property to them an Award dated 19.11.1988 had
followed which was made a Rule of the Court on 23.01.1989; the petitioner
claimed the status of owner/landlord in respect of the aforenoted premises; contention was that that his family consists of himself; he is a bachelor;
petitioner no.2 is also of a marriageable age; the mother of the petitioners
no.1 and 2 is also dependent upon them who live with them. Petitioner no.1
wants to start a new business from the suit premises; presently he is doing
business of embroidery from the only room which is in their occupation;
suit premises are accordingly required by him as there is an acute paucity of
accommodation. They are in occupation of only one room; it has no kitchen,
bathroom; they have no dining/ drawing room or place of worship. The
tenant himself has a large house i.e. House No.64/2, Gali No.3, Jafrabad,
Delhi which include a big hall and two rooms on the ground floor, three
rooms, kitchen bathroom, courtyard on first floor and one room and open
courtyard on the second floor. Eviction petition on the ground of bonafide
requirement had accordingly been filed.
3. Leave to defend was filed. Three main grounds have been raised;
contention is that the gift deed was only an oral bequeath; it does not confer
any valid legal title upon the petitioners. It is, however, not disputed that the
property was originally owned by the grandmother of the petitioners and
after the oral gift deed dated 01.6.1988 an Award dated 19.11.1983 was
passed which was made into a Rule of Court on 23.1.1989; contention of the
tenant being that this does not give ownership right to the petitioners.
4. This submission of the petitioner is wholly bereft of merit. The
concept of ownership as envisaged in Section 14(1)(e) of the DRCA is not
the same as enjoined in proceedings in a title suit. There is no dispute to the
fact that the disputed premises were originally owned by grandmother of the
petitioners. The oral gift deed had been created in favour of the
grandchildren and on the basis of this oral gift deed an Award had been
passed which had become the Rule of Court; this was made into a Rule of
Court by a competent court of law. This decree has attained a finality; it has
not been the subject matter of challenge before any court. This was thus a
valid bequeath of rights in the property by the grandmother Laiq-un-nissa in
favour of her grandchildren i.e. the present petitioners. It is also not the case
of the tenant that he recognizes any other person as his landlord.
5. In this context, the Apex Court in the case of (1987) 4 SCC 193
Smt.Shanti Sharma & Others Vs. Smt. Ved Prabha & Others had an
occasion to examine the concept of ‘owner’ as envisaged under Section 14
(1)(e) of the DRCA. The Apex Court has noted that the word ‘owner’ has not been defined anywhere in the DRCA; the following extract of the
judgment of the Apex Court is relevant:-
“The word ‘owner’ is not used in Section 14 (1) proviso (e) of Delhi Rent
Control Act in the sense of absolute owner; where the person builds up his
property and lets out to the tenant and subsequently needs it for his own use,
he should be entitled to an order or decree for eviction, the only thing
necessary for him to prove being bona fide requirement and he is the owner
thereof. In this context the meaning of ‘owner’ is vis-à-vis the tenant i.e. the
owner should be something more than the tenant. In most of the modern
townships in India the properties stand on plots of land leased out either by
the Government or the Development Authorities and therefore it was not
contemplated that for all such properties the landlord or the owner of all
such properties the landlord or the owner of the property used in common
parlance will not be entitled to eviction on the ground of bonafide
requirement and it is in this context that we have to examine this contention.
It could not be doubted that the term ‘owner’ has to be understood in the
modern context and background of the scheme of the Act.”
6. This argument of the petitioner is thus without any merit; it does not
in any manner raise any triable issue.
7. The second submission made by the learned counsel for the petitioner
is to the effect that the grandmother namely Laiq-un-nissa during her life
time validly terminated the tenancy of the tenant by a notice dated
17.7.1985; contention is that even as per the case of the petitioners they have
become owners of this property by virtue of an Award which had been made
a Rule of Court on 20.3.1989; the present petition filed under Section
14(1)(e) of the DRCA is beyond the period of limitation as Article 67 of the
Indian Limitation Act prescribes a period of 12 years for a landlord to
initiate eviction proceedings against the tenant. This submission vehemently
argued before this Court does not find mention in the averments made in the
application for leave to defend. The ground of limitation has not been
pleaded. Learned counsel for the petitioner on this score submits that under
Section 3 of Limitation Act there is a mandate upon the court to examine
the issue of limitation even it has not been raised. There is no doubt to this
proposition that this court even suo moto take up the point of limitation if it
is simplicitor a legal issue. However, there is no dispute to the proposition
that a triable issue has to emanate from the pleadings of the parties which
would be the affidavit filed by the tenant accompanying his application
seeking leave to defend. There is no objection raised by the tenant about limitation; the necessary corollary is that the landlord had not got any
opportunity to answer this plea which has now been urged for the first time
before this court; it also does not appear to have been taken up as an
objection before the trial court as the impugned order has not dealt with the
same; this has also been fairly conceded by the learned counsel for the
petitioner. Counsel for the petitioner to substantiate his submission has
placed reliance upon a judgment of Supreme Court reported in AIR 1987
SC 1823 Smt. Shakuntala S. Tiwari Vs. Hem Chand to support a
submission that Article 67 of the Limitation Act would be applicable even to
proceedings under the Rent Act. Article 67 of the Limitation Act enunciates
that the time would begin to run which would be 12 years from the date
when the tenancy was determined. In the application for leave to defend the
tenant had stated that the original landlady i.e. Laiq-un-nissa had determined
the tenancy vide a legal notice dated 17.7.1985 to which there was a
categorical denial in the reply filed by the landlord. That apart the question
of limitation to be counted from the termination of the tenancy was never
raised as a tribable issue in the application for leave to defend and naturally
no answer could have been given by the landlord on this point. The landlord
cannot now be taken by surprise; as noted supra, it is only from the
averments made in the application for leave to defend that triable issues
emanate; this objection urged does not emanate from the pleadings in the
leave to defend. This objection is accordingly rejected. No triable issue has
arisen on this court.
8. Last submission of the petitioner in his application for leave to defend
is to the effect that the landlord has two other vacant shops which are lying
locked for a long period of time which can be used by him; as such it cannot
be said that he has no other alternate accommodation. Corresponding para
of the reply has been perused. It is contended that these shops are in highly
dilapidated condition and require or huge amount of money for repairs and
the petitioners are very poor persons and would not be able to afford this
repair; petitioner no.2 is a girl aged 23 years and is not doing any work;
petitioner no.1 is doing work of embroidery and earning only Rs.2000/- per
month and has to bear the expenses of entire house hold. It is reiterated that
the aforenoted disputed premises which are with the tenant are thus urgently
required by the petitioners for their residential purpose as also for the job
work of the petitioner no.1 who is doing work of embroidery from the only
room in their occupation where they are living and petitioner No.1 is also
carrying out his embroidery work. There is no rebuttal to this submission.
No triable issue has arisen on this court either. 9. The Courts time and again have held that unless and until a triable
issue arises leave to defend should not be granted in a routine or in a
mechanical manner.
10. In Nem Chand Daga Vs. Inder Mohan Singh Rana 94 (2001) DLT
683, a Bench of this Court had noted as under:-
“That before leave to defend is granted, the respondent must show that some
triable issues which disentitle the applicant from getting the order of eviction
against the respondent and at the same time entitled the respondent to leave
to defend existed. The onus is prima facie on the respondent and if he fails,
the eviction follows.”
11. In (1982) 3 SCC 270 Precision Steel & Engineering Works & another
Vs. Prem Devi Niranjan Deva Tayal the Apex Court has held as follows:
“Prayer for leave to contest should be granted to the tenant only where a
prima-facie case has been disclosed by him. In the absence of the tenant
having disclosed a prima-facie case i.e. such facts as to what disentitles the
landlord from obtaining an order of eviction, the Court should not
mechanically and in routine manner grant leave to defend.”
No such issue has arisen. The landlord has been able to establish that
he requires the dispute premises for the needs of both the petitioners i.e.
petitioner no.1 and petitioner no.2; accommodation presently available with
them is only one room without any kitchen or bathroom; the tenant is in
occupation of one room, toilet and a bathroom on the ground floor.
Bonafide need of the landlord is established.
12. In this background eviction petition having been decreed and leave to
defend having been dismissed suffers from no infirmity. Petition is without
any merit. Dismissed.
Sd/-
INDERMEET KAUR, J
MARCH 16, 2012

Premises Closed/Not to be found – held to be valid service.

THE HIGH COURT OF DELHI AT NEW DELHI

% Judgment Reserved on: 30.11.2010 
Judgment Pronounced on: 03.12.2010

+ CS(OS) No. 241/2010

AJAY AHUJA & ANR. ..…Plaintiff
- versus -
M/S SUBHIKSHA TRADING SERVICES LTD.
…..Defendant

Advocates who appeared in this case:
For the Plaintiff: Mr. Rajesh Yadav 
For the Defendant: None. 
CORAM:-
HON’BLE MR JUSTICE V.K. JAIN
1. Whether Reporters of local papers may 
be allowed to see the judgment? Yes 
2. To be referred to the Reporter or not? Yes 
3. Whether the judgment should be reported Yes 
in Digest?
V.K. JAIN, J
1. This is a suit for recovery of possession, arrears of 
rent and mesne profit/damages for use and occupation. The 
plaintiffs are the owners of plot No. 71 comprised in Khasra 
No. 53 in Lal Dora of Village Nangli Puna, Delhi, which has 
a constructed area of 125 sq. feet and office area of 1000 sq. 
feet. The defendant was inducted as a tenant in respect of CS(OS)No.241/2010 Page 2 of 22
the aforesaid property, vide an unregistered lease agreement 
dated 20th October, 2005 at the rent of Rs 89,000/- p.m. 
The month of tenancy commenced from the 15th day of the 
month and ended on the 14th day of the succeeding month. 
The rent was to increase by 15% after three years. A 
supplementary lease agreement was also executed between 
the parties on 1st October, 2007, whereby an additional rent 
of Rs 13,000/- was agreed w.e.f. 1.02.2008 till 14th
November, 2008 which was the last day of the lease. This 
was to increase to Rs 14950/- p.m. after three years. The 
total rent, thereby became Rs 1,02,000/- per month. The 
defendant also agreed to pay a sum of Rs 3,56,000/- as 
interest free security deposit, which was to be refunded at 
the time of vacating the premises, subject to the all 
adjustments. The rent was payable on or before the 10th day 
of each month. The defendant, however, did not pay or 
tender the rent w.e.f. October, 2008. It has been alleged in 
the plaint that though the tenancy expired with afflux of 
time on 14th November, 2008, the plaintiff as a matter of 
abundant precaution terminated the tenancy of the 
defendant by giving 15 day notice dated 11th November, 
2009 w.e.f the midnight of 14th December, 2009. The notice CS(OS)No.241/2010 Page 3 of 22
sent by courier was received back with the remarks 
“shifted”, whereas the notice sent by registered post at the 
suit premises was received back with the remarks “on 
repeated visits, premises found locked”. The notice sent at 
the registered office of defendant company was also received 
back with the remarks “left without instructions”. The 
notice dated 11.11.2009, according to the plaintiff thus 
stood served upon the defendant. Since the defendant has 
neither vacated the suit premises, nor paid arrears of rent 
w.e.f. October, 2008, the plaintiffs have now claimed 
possession of the suit premises besides arrears of rent, 
amounting to Rs 16,42,200/- at the rate of Rs 117300/- per 
month. The plaintiffs have also claimed damages for use 
and occupation at the rate of 10,000/- per day from the 
date of the filing of the suit till the possession of the suit 
premises is handed over to them. 
2. The defendant was proceeded ex parte vide order 
dated 26th October, 2010, as no one appeared for it, despite 
service by publication and affixation in terms of the order 
dated 13th July, 2010.
3. The plaintiffs have filed affidavit of plaintiff No. 1 
Ajay Ahuja by way of ex parte evidence. In his affidavit Mr. CS(OS)No.241/2010 Page 4 of 22
A. Ahuja has supported, on oath, the case set up in the 
plaint. He has identified his own signatures as well as the 
signatures of the plaintiff No. 2 on the lease deed Ex.PW-
1/2. He has also identified the signature of Mr. Parag 
Chaturvedi, representative of defendant company at point 
„C‟ on this document. He has also identified the signature of 
the plaintiffs as well as the signature of Mr G. Udayan David 
authorized Representative of the defendant on the 
supplementary lease agreement Ex. PW-1/3. The notice 
dated 11th November, 2009 sent by the plaintiffs to the 
defendant through their counsel Mr Rajesh Yadav is Ex. 
PW-1/14. Ex. PW-1/15 is the certificate of posting under 
which this notice was sent, whereas Ex.PW-1/16 and PW-
1/17 are the postal receipts, whereby the notice was sent by 
registered post. Ex. PW-1/18 and PW-1/19 are the courier 
receipts, whereby this notice was sent. The returned
envelopes are Exs. PW-1/20 to PW-1/23. According to PW-
1, the defendant neither handed over the possession to 
them nor has it paid arrears of rent w.e.f October, 2008 at 
the rate of Rs 1,17,300/- pm. He has also stated that the 
prevailing market rate of rent for the suit premises would 
not be less than Rs 3 lakhs per month on account of a CS(OS)No.241/2010 Page 5 of 22
sharp price in the rentals and property prices in last 2-3 
years. 
4. A perusal of the lease agreement Ex.PW-1/2 which 
is an unregistered document would show that the suit 
premises was let out by the plaintiffs to the defendant at the 
rate of Rs 89,000/- per month. The premises were let out 
initially for a period of three years. Thereafter, for next three 
years, the rent was to be increased by 15 % and thereby 
become Rs 102350 per month. The rent was payable in 
advance before the 10th day of each month. The total lease 
period was fixed at 9 years and the rent was to become Rs 
117702.50 per month on expiry of 6 years from the date of 
commencement of tenancy. This document also provided
that the lessor would be entities to terminate the agreement 
after giving three months written notice only in the events 
specified in clause 9. One of the grounds on which the 
lease could be terminated by giving three months notice was 
default in payment of lease amount for more than two 
months. It also provided that if the lessee fails to deliver the 
vacant peaceful possession of the premises to the lessor, it 
shall pay damages to the tune of Rs 10,000 /- per day to the 
lessor till the date of handing over the vacant possession. CS(OS)No.241/2010 Page 6 of 22
5. The supplementary lease agreement Ex. PW-1/3 
provides for payment of additional rent of Rs 13,000/- per 
month w.e.f 1st February, 2008 till 14th November, 2008 
and, thereafter, at the rate of Rs 1,4950/- per months for 
next three years, which was to further increase to Rs 
17,192.50 after three years from the date of the first 
increase. Thus, the total rent payable by the defendant 
became Rs 1,02,000/- w.e.f. 1st February, 2008 to 14th
November, 2008 and Rs 1,17,300/- w.e.f 15th November, 
2008. 
6. A perusal of the notice Ex.PW-1/14 would show 
that vide this notice, the tenancy of the defendant was 
terminated w.e.f. the midnight of 14th December, 2009. It 
was further stated in the notice that if the defendant felt
that the tenancy did not commence on the date stated in the 
notice, the tenancy would stand terminated, on expiry of 
month of tenancy, as understood by the defendant, which 
would expire next after 15 days from the service of the 
notice. 
7. Section 107 of Transfer of Property Act, to the 
extent it is relevant, provides that a lease of immoveable 
property from year to year, or for any term exceeding one CS(OS)No.241/2010 Page 7 of 22
year or reserving a yearly rent, can be made only by a 
registered instrument, whereas all other leases of 
immoveable property may be made either by a registered 
instrument or by oral agreement accompanied by delivery of 
possession
8. Neither lease agreement Ex.PW-1/2 nor the 
supplementary deed of lease agreement Ex.PW-1/3 is a 
registered document, though they purport to create lease for 
more than one year and, therefore, were required to be 
compulsorily registered. 
9. Section 17(1)(b) of Registration Act provides that 
non-testamentary instruments which purport or operate to 
create, declare, assign, limit or extinguish, whether in 
present or in future, any right, title or interest, whether 
vested or contingent, of the value of one hundred rupees 
and upwards, to or in immovable property shall be 
compulsorily registered. Section 49 of Registration Act, to 
the extent it is relevant, provides that no document required 
by Section 17 or by any provision of the Transfer of Property 
Act, 1882 to be registered shall affect any immovable 
property comprised therein, unless it has been registered. 
Thus, since the lease deeds executed between the plaintiffs CS(OS)No.241/2010 Page 8 of 22
and the defendant being for more than one year were
required to be compulsorily registered and has not been got 
registered, it does not confer any right on the defendant to 
continue to be a tenant for the term stipulated in these 
deeds. As a result, the tenancy of the defendant in respect 
of the suit premises became a month to month tenancy,
which could be terminated by giving notice to the defendant 
under Section 106 of Transfer of Property Act, which to the 
extent it is relevant provides that in the absence of a 
contract or local law or usage to the contrary, a lease of 
immovable property, for any purpose other than agricultural 
or manufacturing purposes, shall be deemed to be a lease 
from month to month, terminable on the part of either 
lessor or lessee by 15 days notice. The above-referred 
provision of Section 106 of Transfer of Property Act would 
apply only if there is no contract to the contrary between the 
parties. The question which comes up for consideration is 
as to whether the term of tenancy stipulated in the lease 
deed Ex.PW-1/2 and supplementary deed Ex.PW-1/3 can 
be looked into, despite the fact that these documents, 
though compulsorily registrable, were not got registered.
10. The proviso to Section 49 of Registration Act CS(OS)No.241/2010 Page 9 of 22
provides that an unregistered document affecting 
immovable property and required by that Act or the Transfer 
of Property Act to be registered may be received as evidence 
of any collateral transaction not required to be effected by 
registered instrument. The next question which therefore 
comes up for consideration is as to whether the term of 
tenancy stipulated in the lease deed Ex.PW-1/2 and 
supplementary deed Ex.PW-1/3 can be said to be a 
collateral transaction not required to be compulsorily
registered or what is generally termed as a collateral
purpose. 
11. The collateral transaction referred in the proviso to 
Section 49 of Registration Act must necessarily be 
independent of or divisional from the transaction, to effect 
which the law required registration and such collateral 
transaction must be a transaction which by itself is not 
required to be effected by a registered document, meaning 
thereby that it should not be a transaction creating any 
third right, title or interest in immovable property of the 
value of Rs 100/- and more. If a document is inadmissible 
in evidence for want of registration, it cannot be used for the 
purpose of proving an important clause contained in the CS(OS)No.241/2010 Page 10 of 22
document. This proposition of law is well-settled and was 
approved by Supreme Court in State of Punjab Vs. 
Raninder Singh and Anr. 2008 (8) SCC 564. 
12. The requirement of registration stipulated in 
Section 106 of Transfer of Property Act for registration is 
related to (i) the term of the lease and (ii) the yearly rent, if 
any, reserved in the lease. Therefore, the term of tenancy is 
one of the most important component of a lease. If the term 
is up to one year, the lease is not required to be 
compulsorily registered, unless it reserves of yearly rent, 
whereas, if the term of the lease exceeds one year, it has to 
be compulsorily registered irrespective of whether a yearly
rent is reserved or not. The notice of termination of tenancy 
has a direct bearing on the right of the tenant to continue to 
be in possession of the tenancy premises. If the notice, 
wherever required is not issued or is not valid, the tenant 
continues to be entitled to retain the tenancy premises in 
his right as its lawful tenant. If it is valid and is properly 
issued, the tenant thereafter becomes a trespasser, unless 
he becomes a statutory tenant on account of the protection 
provided to him by a rent control legislation. Therefore, it 
can hardly be disputed that the period of a notice for CS(OS)No.241/2010 Page 11 of 22
termination of tenancy, being an important and essential 
component of the lease deed, cannot be said to be a 
collateral transaction or a collateral purpose in a 
transaction for leasing out an immovable property.
13. This issue also came up for consideration before 
this Court in Jagatjit Industries Ltd. Vs. Sh. Rajiv Gupta
18 (1980) DLT 434, where this Court, disagreeing with the
view taken by the Allahabad High Court in Lala Fateh 
Chand v. Mst. Radha Rani and Ors., 1956 Allahabad Law 
Journal, 625 held that the term of the lease cannot be 
looked at to find out the period of notice to quit to determine 
the tenancy. It was held that the term regarding notice of 
eviction is a term which affects immovable property and, 
therefore, cannot be said to be a collateral transaction. 
During the course of judgment, it was observed that the 
main purpose of the term regarding notice of eviction is as 
to when the tenant can be required to deliver the possession 
of the tenancy premises. In that case, one of the terms of 
the lease deed provided that the lease was for a period of 11 
months with two years option with the lessee and could be 
terminated or extended by giving two months‟ notice by 
either side after expiry of lease or option period if exercised. CS(OS)No.241/2010 Page 12 of 22
The contention before the Court was that the lease could be 
terminated by giving two months‟ notice by either side in 
terms of the aforesaid clause and for this purpose the 
aforesaid term in the lease deed could be looked into. This 
contention was expressly rejected by this Court. I see no 
good reason to take a contrary view and, therefore, hold that 
the irrespective of the requirement of 3 months‟ notice 
stipulated in the unregistered lease deed, the tenancy of the 
defendant could be terminated by giving notice envisaged in 
Section 106 of Transfer of Property Act. 
14. The next question which comes up for 
consideration in this case is as to whether the notice, 
whereby the tenancy of the defendant was sought to be 
terminated by the plaintiffs, can be said to have been duly 
issued to/served on them. Admittedly, the notice was not
actually received by the defendant-company either at its 
corporate office or at the suit premises. The notice sent by 
courier was received back with the remarks “shifted”, 
whereas the notice sent by registered post at the suit 
premises was received back with the remarks “on repeated 
visits premises found locked”. As noted earlier, the notice 
sent at the registered office of defendant-company was also CS(OS)No.241/2010 Page 13 of 22
sent with the remarks “left without instructions”.
15. The contention of the learned counsel for the 
plaintiff is that the plaintiffs did whatever they could 
possibly have done to serve the notice upon the defendants 
and if the defendants chose to lock the suit premises and 
either shift its registered office or altogether stop its 
functioning and close down its operations and its registered 
office, without any intimation to the plaintiffs, that would 
amount to deliberate avoidance to receive the notice and 
consequently constitute a valid service. 
16. In M/s. Madan and Co. Vs. Wazir Jaivir Chand 
AIR 1989, SC 630, the notice sent by the landlord to the 
tenant by registered post was received back with the 
endorsement “left without address returned to sender”. The 
relevant statutory provision which in the case before 
Supreme Court was Section 12 of J&K Houses and Shops 
Rent Control Act, 1966 provided for receipt of a notice of 
demand of rent by the tenant. The question which came up 
for consideration before the Court was as to whether the 
notice sent by registered post could be said to have been 
served and the tenant could be said to have received it. It 
was observed by the Court all that a landlord can do to CS(OS)No.241/2010 Page 14 of 22
comply with the requirement of sending notice is to post a 
pre-paid registered letter, containing the tenant‟s correct 
address, and once he does this and the letter is delivered to 
the post office, he has no control over it. It is then 
presumed to have been delivered to the addressee under 
Section 27 of General Clauses Act. It was further observed 
that a tenant can so many manipulate the matters that the 
notice gets returned to the sender with vague endorsement 
such as “not found” “not in station”, “addressee has left”
and so on. It was contended before the Court that a 
landlord knowing that the tenant is away from the station 
for some reasons, could go through the motions of posting a 
letter to him which he knows will be served. Recognizing
such a possibility, the Court was of the view that if a 
registered letter, addressed to a person at his residential 
address does not get served in the normal course and is 
returned, it can only be attributed to the addressee‟s own 
conduct and that if he is compelled to be away for some 
time, all that he has to do is leave necessary instructions 
with the postal authorities either to detain the letters 
addressed to him for some times until he returns or to 
forward them to the address where has gone or to deliver CS(OS)No.241/2010 Page 15 of 22
them to some other person authorized by him.
17. In K. Bhaskaran Vs. Sankaran Vaidhyan Balan 
and Another, (1999) 7 SCC 510, the notice sent under 
Section 138 of Negotiable Instruments Act, was returned 
with the endorsement “addressee absent” and “intimation 
served on addressee‟s house”. Observing that giving of 
notice is distinguished from receiving of notice, it was 
observed by Supreme Court that a person gives notice to 
another by taking such steps as may be reasonably required 
to inform the other in the ordinary course, whether or not 
such other actually comes to know of it. It was further 
observed that if a strict interpretation is given that the 
drawer should have actually received the notice, for the 
period of 15 days to start running, no matter that the payee 
sent the notice on the correct address, a trickster cheque 
drawer would get the premium to avoid receiving the notice 
by different strategies and he could escape from the legal 
consequences of Section 138 of the Act. It was held that
when a notice is returned by the sender as unclaimed such 
date would be the commencing date for reckoning the period 
of 15 days contemplated in Clause (c) to the proviso of 
Section 138 of the Act. Of course such reckoning would be CS(OS)No.241/2010 Page 16 of 22
without prejudice to the right of the drawer of the cheque to 
show that he had no knowledge that the notice was brought 
to his address.
In the case before this Court the defendant has not 
come forward to contest the suit and to claim that it had no 
knowledge of the notice sent by the plaintiffs and was not in 
any manner responsible for its non-service. 
18. In D. Vinod Shivappa Vs. Nanda Belliappa (2006)
6 SCC 456, Supreme Court while dealing with a notice 
issued under Section 138 of Negotiable Instruments Act and 
sent by registered post inter alia observed as under: 
“This leaves us with the third situation 
where the notice could not be served on 
the addressee for one or the other reason, 
such as his non availability at the time of 
delivery, or premises remaining locked on 
account of his having gone elsewhere etc. 
etc. If in each such case the law is 
understood to mean that there has been 
no service of notice, it would completely 
defeat the very purpose of the Act. It 
would then be very easy for an 
unscrupulous and dishonest drawer of a 
cheque to make himself scarce for 
sometime after issuing the cheque so that 
the requisite statutory notice can never 
be served upon him and consequently he 
can never be prosecuted.”
In V. Raja Kumari Vs. P. Subbarama Naidu and 
Anr 2004 8 SCC 774, dealing with a case where the notice CS(OS)No.241/2010 Page 17 of 22
could not b served on account of the fact that the door of 
the house of the drawer was found locked, Supreme Court 
held that the principle incorporated in Section 27 of General 
Clauses Act will apply to a notice sent by post and it would 
be for the drawer to prove that it was not really served and 
he was not responsible for such non-service. 
In State of M.P. Vs. Hiralal and Ors 1996 (7) SCC 
523, the respondent managed to have the notice returned 
with postal remarks “not available in the house”, “house 
locked” and “ shot closed”. It was held that the notices had 
been served on the respondents. 
In C.C. Alavi Haji Vs. Palapetty Muhammed and 
Anr. 2007 6 SCC 555, a Three-Judges Bench of Supreme 
Court was called upon to re-consider an earlier decision of 
Two-Judges Bench in the case of D. Vinod (supra), Supreme 
Court reiterated that where the payee despatches the notice 
by registered post with correct address of the drawer of 
cheque, the principle incorporated in Section 27 of General 
Clauses Act would be attracted. During the course of the 
judgment, the Court, inter alia, observed as under:-
“Section 27 gives rise to a presumption 
that service of notice has been effected 
when it is sent to the correct address by CS(OS)No.241/2010 Page 18 of 22
registered post. In view of the said 
presumption, when stating that a notice 
has been sent by registered post to the 
address of the drawer, it is unnecessary 
to further aver in the complaint that in 
spite of the return of the notice unserved, 
it is deemed to have been served or that 
the addressee is deemed to have 
knowledge of the notice. Unless and until 
the contrary is proved by the addressee, 
service of notice is deemed to have been 
effected at the time at which the letter 
would have been delivered in the ordinary 
course of business.”
19. In the case before this Court also, it was for the 
defendant-company, if it decided to lock the suit premises 
which it had been taken on rent from the plaintiffs, to make 
necessary arrangements for service of the letters, etc that 
could be sent to it, either by instructing the postal 
authorities to re-direct those letters to another address or to 
make some other arrangement for receipt of letters, etc. on 
its behalf. Same would be the position with respect to the 
registered office of the defendant-company, if it had decided 
to change its registered office or to altogether close down its 
operations as well as its registered office, without shifting 
the same to another place, (though as long as a company 
exists, it must have a registered office), it ought to have 
either provided an alternative address to the postal CS(OS)No.241/2010 Page 19 of 22
authorities for re-directing its letter to that address or 
should have made some alternative arrangement for receipt 
of letters, etc. sent to its registered office. Another option 
available to the defendant-company was to give public 
notice communicating its new address to the public at large 
and/or to all those with whom it had transected any 
business, including its debtors and creditors as well as the 
landlords of the premises which it had taken on rent. If the 
defendant-company decided not to adopt any of these 
courses available to it, the plaintiffs cannot be blamed for 
non-receipt of the notice by the defendant-company. The 
plaintiffs did the best they could have done by sending 
notice by registered post not only at the suit premises, but 
also at the registered office of the defendant-company and in 
these circumstances, the statutory presumption under 
Section 27 of General Clauses Act with respect to service of 
notice sent by registered post cannot be denied to the 
plaintiffs.
20. I, therefore, have no hesitation in holding that by 
sending the notice dated 11th November, 2009 which was 
returned back with the remarks “shirted” “on repeated visits 
premises found locked” and “left without instructions” the CS(OS)No.241/2010 Page 20 of 22
plaintiffs have duly complied with the requirement of 
Section 106 of Transfer of Property Act. 
21. Since the tenancy of the defendant stands validly 
terminated, the plaintiff is entitled to a decree for possession 
of the suit premises. The evidence produced by the plaintiff 
also proves that in view of the lease agreement Ex.PW-1/2 
read with supplementary agreement Ex.PW-1/3, the rent 
payable by the defendant was Rs 1,02,000/- per month with 
effect from 1st February, 2008 and stood increased to Rs 
1,17,300/- w.e.f 15 November, 2008. The evidence 
produced by the plaintiff also proves that the arrears of rent 
payable by the defendant to the plaintiff come to Rs 
16,42,200/-. The plaintiffs are entitled to recover that 
amount from the defendant. 
22. The plaintiff has also claimed mesne 
profit/damages at the rate of Rs 10,000/- per day from the 
date of filing of the suit. It has come in the affidavit of 
plaintiff No.1 Shri Ajay Ahuja that the prevalent market rate 
of rent of the suit premises would not be less than Rs 3 lac 
per month, since there has been a sharp increase in the 
rental and property prices in last 2-3 years. No property
dealer has been produced by the plaintiffs to prove the CS(OS)No.241/2010 Page 21 of 22
market rent of the suit premises, with effect from the date 
the tenancy of the defendant was terminated. No lease deed 
of any property in the locality or any oral evidence any has 
been produced by the plaintiffs to prove the current market 
rent of such properties. As noted earlier, the total rent 
payable by the defendant was Rs 1,17,300/- w.e.f. 15th
November, 2008 and this rent was not to increase for three 
years from the date of increase. Had the defendant 
continued to pay rent regularly, the plaintiff would have 
received Rs 1,17,300/- p.m. and not Rs 3,00,000/-, from it. 
In these circumstances, I hold that the plaintiff is entitled to 
damages for use and occupation of the suit premises, at the 
rate of Rs 1,17,300/- per month w.e.f. the date of the filing 
of the suit till the possession of the suit premises is 
delivered to the plaintiffs. 
ORDER
The suit is hereby decreed for recovery of 
possession of the suit premises and recovery of Rs. 
16,42,200/- towards arrears of rent, with costs. The 
plaintiffs will also be entitled to recover mesne 
profits/damages for use and occupation of the suit 
premises, at the rate of Rs. 117300/- p.m. from the date of CS(OS)No.241/2010 Page 22 of 22
filing of this suit till they recover possession of the suit 
premises from the defendant.
(V.K. JAIN)
JUDGE
DECEMBER 03, 2010
BG