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Bhawani Investments Pvt. Ltd. v. Shree Properties

Delhi High Court

May 27, 1987

Judgment

CaseIQ

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Factual and Procedural Background

The plaintiff filed a suit seeking perpetual and mandatory injunctions against the defendants, who were constructing a building on plot No. 7, Masjid Moth Community Centre, New Delhi. According to the plaint, the plaintiff and defendants entered into a registered lease agreement dated 22.4.1985, whereby the plaintiff agreed to lease the entire first floor of the building, measuring 200 sq. meters, at a monthly rent of Rs. 5,000. The defendants were obligated to complete construction and obtain an occupancy certificate by 30.7.1985, handing over possession with all utilities connected.

The defendants failed to complete the building by the stipulated date, seeking an extension until 15.9.1985 due to unavoidable circumstances and labor problems, which the plaintiff accepted without prejudice. Despite a notice from the plaintiff to complete the premises by 15.9.1985, the defendants did not comply. The plaintiff then took possession on 16.9.1985 under the agreement’s clause allowing possession if the defendants failed to complete the premises.

The plaintiff alleged that the defendants deliberately refrained from completing the premises and obtaining the occupancy certificate. The defendants terminated the agreement by letter dated 16.9.1985, returning the initial Rs. 50,000 payment, citing anticipated delays. The plaintiff contended that this termination was illegal and malafide and feared forcible dispossession.

Alongside the suit, the plaintiff filed an application under Order 39 Rules 1 and 2 read with Section 151 CPC to restrain the defendants from dispossessing the plaintiff during the suit’s pendency. The defendants contested the suit and application, filing written statements.

Legal Issues Presented

Whether the plaintiff is in lawful possession of the premises under the lease agreement despite incomplete construction and absence of an occupancy certificate.
Whether the defendants are entitled to terminate the lease agreement and dispossess the plaintiff on grounds of delay and incomplete construction.
Whether the court should grant an injunction restraining the defendants from dispossessing the plaintiff during the pendency of the suit.

Arguments of the Parties

Plaintiff's Arguments

The defendants failed to complete the building and obtain the occupancy certificate by the agreed date and the extended deadline.
Under the lease agreement, the plaintiff had the right to take possession if the defendants failed to complete construction and hand over possession.
The defendants’ termination of the agreement was illegal, unlawful, and made in bad faith.
The plaintiff took possession on 16.9.1985 and requested completion of outstanding works to make the premises usable.
The plaintiff fears forcible dispossession by the defendants.

Defendants' Arguments

The plaintiff is not in physical possession of the premises or any part thereof.
The lease agreement required completion of the building and issuance of occupancy certificate before the plaintiff could take possession.
Time was not of the essence; possession was conditional on completion and legal formalities, which were delayed due to labor problems, shortage of cement, and heavy rains beyond the defendants’ control.
The plaintiff paid only Rs. 50,000 initially, with the balance of Rs. 2,50,000 payable on possession, which was not paid.
The termination of the agreement was justified given the circumstances and plaintiff’s breach of terms.
The premises were in possession of third parties (Jyoti Theatres Pvt. Ltd. and Maya Builders), not the plaintiff.

Table of Precedents Cited

No precedents were cited in the provided opinion.

Court's Reasoning and Analysis

The court focused on the preliminary issue of whether the plaintiff was in possession of any portion of the premises at the time of the application. The plaintiff submitted a letter to the local police station stating possession as of 16.9.1985, a notary public’s certificate confirming the premises’ near completion except for some minor works, and a security service certificate evidencing engagement of guards at the premises from 16.9.1985 onward.

The defendants disputed the plaintiff’s possession, claiming possession by third parties and emphasizing the lease terms requiring completion and issuance of occupancy certificates before possession could be granted.

Prima facie, the court found that the plaintiff was in possession of the premises. Considering the risk of irreparable injury and substantial loss to the plaintiff if forcibly dispossessed, and the balance of convenience favoring maintaining the status quo, the court allowed the application. The court also conditioned the order on the plaintiff depositing Rs. 2,50,000 in court by 15.7.1987.

Holding and Implications

The court allowed the application restraining the defendants from dispossessing the plaintiff from the premises until the suit is decided, subject to the plaintiff depositing Rs. 2,50,000 in court.

This decision preserves the status quo and protects the plaintiff’s possession rights pending final adjudication. No new precedent was established; the ruling is procedural ensuring interim relief based on prima facie possession and balance of convenience.

Show all summary ...

C.L Chaudhry, J.—The plaintiff has filed this suit for the reliefs of perpetual injunction and mandatory injunction. The allegations disclosed in the plaint are that the defendants were constructing a building on plot No. 7, Masjid Moth Community Centre, New Delhi, which was under progress. By an agreement of lease dated 22.4.1985 the plaintiff agreed to take on lease the entire first floor of the building No. 7, Masjid Moth Community Centre, New Delhi on the terms and conditions incorporation in the agreement. The agreement was subsequently got registered. The relevant terms of the agreement are that the defendants would lease out the entire first floor of the said building comprising of an area of 200 sq. mtrs, to the plaintiff and that the defendants would obtain occupancy certificate on or before 30.7.1985 to enable the plaintiff to take possession of the premises. The lease money was agreed at Rs. 5,000/- per month and the possession of the premises was to be handed over by the defendant to the plaintiff with complete electrical and water connections and complete in all respects on or before 30.7.1985 It was further provided in the agreement that the defendants would allow the plaintiff to work for the interior decoration, partition etc. and in the event the defendants failed to complete the construction in all respects and hand over the possession of the premises to the plaintiff on or before 30.7.1985 the plaintiff would have the option to take possession of the said premises and/or sue the defendants for damages, if the plaintiff so desires. It is further stated that on 2.7.1985 the plaintiff approached the defendant No. 1 and visited the said premises to ascertain the progress of the construction, and it was found that the progress of the construction was not satisfactory. The defendant failed to complete the building by July 30, 1985 as provided in the agreement. The defendant sought time upto 15.9.1985 to complete the premises and hand over its possession to the plaintiff. The reason expressed for extension of time was due to certain unavoidable circumstances and labour problems. The plaintiff agreed to this extension of time without prejudice to its rights. Thereafter a notice was given on behalf of the plaintiff on 3.9.1985 calling upon the defendants to complete the said premises by 15.9.1985 It is stated that the defendant failed to complete the building premises by 15.9.1985 It is claimed that the plaintiff in exercise of its right under the agreement and particularly clause (16) took possession of the said premises on 16.9.1985, and thereafter called upon the defendant to complete the said premises in all respects to make it usable. The short-comings have been mentioned in para No. 11 of the petition. Those are to the effect “the grinding and polishing of the floors, electrical wiring to be laid, window frames and panes to be installed, sanitary fittings to be installed. It is stated that the defendants did not deliberately complete the premises and did not obtain the occupancy certificate. By a registered notice the defendants were called upon to complete the premises. It is stated that by letter dated 16.9.1985 the defendant terminated the agreement on the grounds that the construction was likely to be delayed considerably and the defendants forwarded the draft of Rs. 50,000/- given by the plaintiff to the defendants. The plaintiff alleges that the termination of the agreement by the defendant is illegal, unlawful and malafide and the plaintiff apprehends and has reason to believe that the defendant No. 1 would try to forcibly dispossess the plaintiff from the said premises.

2. Alongwith the suit an application, which is under disposal, has been filed under order 39 rules 1&2 read with section 151 cpc seeking to restrain the defendants from dispossessing the plaintiff during the pendency of the suit. The defendant are contesting the claim of the plaintiff. The written statement and reply to this application has been filed.

3. It is stated in the written statement that the plaintiff is not in physicalpossession of the premises or any part thereof; that the plaintiff has not come to this court with clean hands. On the merits the agreement to lease has not been denied. It is stated that as per terms of the agreement otherwise agreed between the parties the possession for limited purpose of the lease was to be given by the defendant No. 1 to the plaintiff only after the building had been completed in all respects and the relevant certificate for using the occupation of the said commercial building had been issued by the Competent Authorities including Municipal Corporation of Delhi and Delhi Development Authority. It is further stated that in accordance with the terms and conditions • of the lease in favour of the defendant No. 1, the said plot and the building constructed thereupon could not be put to any use or occupation till the legal formalities had been completed, which could not be completed for the reasons beyond the control of defendant No. 1. The time was not the essence of the contract and without completion of the building the plaintiff could not take recourse to any of the terms of the agreement. It is further stated that a sum of Rs. 50,000/- was paid upon the signing of the agreement and the balance of Rs. 2,50,000/- was to be paid at the time of possession of the property to the property to the plaintiff. The plaintiff has not paid any amount after the initial payment of Rs. 50,000/- and also committed the breach of the terms of the agreement. It is further stated that the difficulty for not completing the building was related to labour problems, shortage of cement and also heavy rains. The termination of the agreement is justified.

4. I have heard the learned counsel for the parties and have given my thoughtful consideration to the matter involved.

5. For the purpose of this application the only thing that is to be seen at the present moment is whether the plaintiff is in possession of any portion of the premises and if so by what. In order to substantiate the plea of possession the plaintiff has placed or record a copy of the letter written to the Station House Officer, Kalkaji, Police Station, dated 16.9.1985 herein it is stated that the plaintiffs have taken possession of the entire first floor of plot No. 7 in Masjid Moth Community Centre, New Delhi, which was leased out to them. Then there is a certificate by the Notary Public dated 21.9.1985 On the request of the plaintiff he visited the first floor of premises No. 7, Masjid Moth Community Centre, New Delhi and found that the building was complete in all respects excepting the window frames and glass panes were to be fixed and no furniture of course was there. There is one certificate from ‘SENTINELS’ dated 18.9.1985 by which it has been certified that they have been retained by the plaintiff since 16.9.1985 to provide security guards at their premises—First Floor, building No. 7, Masjid Moth Community Centre, New Delhi on a round the clock duty.

6. The defendants are contesting the claim of the plaintiff regarding possession. According to the defendants the premises are not in physical possession of the plaintiff but they are in possession of ‘Jyoti Theatres Pvt. Ltd. and Maya Builders. The agreement of lease does provide that in the event of the defendants failing to complete the construction in all respects and hand over the possession of the premises to the plaintiff on or before 30.7.1985 the plaintiff would have the option to take possession of the premises and/or sue the defendants for damages, if the plaintiff so desires. By virtue of this clause the plaintiff is empowered to enter into possession but the plaintiff is required under Clause 4 of the agreement to pay Rs. 2,50,000/- to the defendant at the time of taking over the possession.

7. Prima facie, it appears that the plaintiff is in possession of the premises. If the plaintiff is forcibly dispossessed, he is likely to suffer irreparable injury and substantial loss. The balance of convenience is also in favour of the plaintiff and maintaining the status quo. Consequently, the application is allowed. The order dated 27.9.1985 is confirmed and the defendants are restrained from dispossessing the plaintiff except in due course of law till the decision of the suit. However, this order is subject to the condition that the plaintiff would deposit Rs. 2,50,000/- in the Court upto 15.7.1987 LA. is disposed of.

Application allowed.