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Sanjay Gupta v. Krishna Hospitality

Delhi High Court

May 8, 2018

Judgment

Subsequent
References

CaseIQ

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Structured Summary of the Judgment dated 8 May 2018

Factual and Procedural Background

The plaintiff, Sanjay Gupta, instituted CS(COMM) 646/2017 seeking ejectment of the defendants (Krishna Hospitality & Anr) from premises No. 6-A, Anandlok, New Delhi, after determination of tenancy (the tenancy being at a rent in excess of Rs.3,500 per month). The plaintiff also claimed recovery of arrears of rent of Rs.61,00,000 and recovery of mesne profits.

The defendants initially appeared and filed a written statement verified on 24 January 2018. The matter was posted on 6 February 2018, when the defendants did not appear, and an ex parte decree for ejectment and for recovery of Rs.61,00,000 (with interest) and mesne profits was passed for reasons recorded in the order dated 6 February 2018.

The defendants filed IA No.3711/2018 under Order IX Rule 13 CPC seeking to set aside the ex parte decree. The present order is a continuation of the Court's earlier order dated 16 March 2018 and deals with the hearing of IA No.3711/2018 and consequential directions for trial.

Legal Issues Presented

Whether IA No.3711/2018 (application by the defendants to set aside the ex parte decree) should be allowed in respect of the decree for ejectment and/or the monetary decree for Rs.61,00,000.
Whether the defendants have any tenable defence to the claim for ejectment given their admissions in the written statement and reply to the legal notice (including admission of landlord-tenant relationship, admission of rent in excess of Rs.3,500/month and admission of absence of a registered lease deed).
What is the legal effect of the alleged unregistered lease agreement pleaded by the defendants (lease dated 23 November 2015 for three years but not registered) on their entitlement to occupy premises and on admissibility in evidence.
The Court also framed specific issues for trial on the plaintiff's claim for arrears of rent and future mesne profits; these issues (as recorded by the Court) are:
1. Whether the alleged agreement to enhance rent from Rs.5,00,000 to Rs.6,00,000 was subject to finalisation of a deal with the State of Uttarakhand and did not come into effect, such that the rent remained Rs.3,00,000 per month (plaintiff's case to disprove: OPD).
2. At what rate is the plaintiff entitled to mesne profits/damages for use and occupation from institution of the suit until date of ejectment? (OPP)
3. If plaintiff is found entitled to any arrears of rent, whether the plaintiff is entitled to interest thereon and if so at what rate and for what period? (OPP)
4. Relief (generic).

Arguments of the Parties

Defendants' Arguments

The tenancy was terminated by the plaintiff on the ground of non-payment of rent, but in fact the defendants claim to have paid the rent and were not in arrears.
The defendants should be given a proper opportunity to defend the suit and to lead evidence; they should not be deprived of trial simply because of non-appearance once.
All provisions of the Code of Civil Procedure, 1908 (CPC) must be complied with, and defendants cannot be asked at this stage to pre-announce their defence to the ejectment claim.
The defendants should be permitted to place documents in support of their defence; they allege one room containing their documents has been locked by the plaintiff, preventing access.
Although there is no registered lease deed, the parties have an understanding on which they have been acting that the defendants shall continue as tenants "forever" or at least until mutually agreed; the counsel clarified the argument later as being entitlement to remain until mutually agreed between the parties.
Counsel for the defendants asserted that 'due process of law' must be followed.

Plaintiff's Arguments / Positions

The plaintiff, through counsel, indicated that the cheques said to have been paid by the defendants had been encashed "without prejudice to the rights and contentions of the plaintiff".
The plaintiff's counsel stated the plaintiff did not intend to file a replication and agreed that issues could be framed for trial.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Nopany Investments (P) Ltd. Vs. Santokh Singh, (2008) 2 SCC 728	Filing of an eviction suit under general law itself constitutes a notice to quit upon the tenant.	The Court relied on this dictum to hold that a suit for ejectment filed and pending for over fifteen days cannot be defeated on the ground of non-service of prior notice; filing the suit operates as notice.
Shri Ram Pistons and Rings Ltd. Vs. C.B. Agarwal HUF, ILR (2009) III Delhi 249	Followed the principle in Nopany Investments regarding filing of eviction suit being notice to quit.	The Division Bench's application of the Nopany principle was followed to reinforce that lack of separate service of notice does not defeat an ejectment suit once suit remains pending beyond the statutory period.

Court's Reasoning and Analysis

The Court's reasoning proceeded in stages, based on the parties' pleadings and statutory provisions:

Admissions in pleadings: The defendants had admitted the landlord-tenant relationship and had admitted rent at Rs.3,00,000 per month in their written statement (while disputing the plaintiff's claimed higher rent of Rs.6,00,000). They also admitted there was no registered lease deed.
Legal effect of unregistered lease: The defendants pleaded an unregistered lease dated 23 November 2015 for three years; the Court noted this document was not registered and, invoking Section 49 of the Registration Act 1908, observed it could not be received in evidence for a transaction affecting such property.
Statutory framework: The Court referred to Section 107 of the Transfer of Property Act, 1882 (a lease for any term exceeding one year must be by registered instrument), and Section 106 (in absence of a registered lease deed, for non-agricultural purposes a lease is treated as month-to-month terminable by fifteen days' notice). The Court also noted the effect of the amendment to Section 106 (effective 31 December 2002) which prevents invalidation of a notice merely because the period mentioned is shorter than specified, so long as the suit is filed after the specified period.
Effect of filing suit as notice: The Court relied on Nopany (and Shri Ram, which followed it) to say that filing of an eviction suit itself operates as a notice to quit and therefore a suit pending beyond fifteen days cannot be defeated on non-service of a separate notice; the defendants had admitted service of a notice of determination of tenancy in any event.
On 'due process' and absence of defence to ejectment: The Court reasoned that 'due process of law' does not mean a litigant can force the Court to take every suit through trial when the defendants' pleadings disclose no defence or raise no substantial triable question of law or fact. Where the written statement shows no defence to the ejectment claim, there is no purpose in setting aside an ex parte decree for ejectment.
Distinction between ejectment and monetary claim: While the Court concluded the ex parte decree for ejectment should not be set aside (because defendants disclosed no defence on that point), the monetary decree for Rs.61,00,000 was based on the plaintiff's pleading of rent at Rs.6,00,000/month. The defendants consistently pleaded the rent was Rs.3,00,000/month and further claimed they had paid up to April 2018 by cheques encashed. Given these factual disputes on quantification and payment of rent, the Court found it appropriate to set aside the monetary decree and allow evidence to be led.
Interim condition and procedure for trial: As a condition of allowing the monetary decree to be set aside, the Court ordered that the defendants, without prejudice to parties' rights, continue to pay Rs.3,00,000 per month in advance by the 10th day of each calendar month until further orders. The Court then framed issues for trial on arrears and future mesne profits, directed filing of witness lists and affidavits, and appointed a Court Commissioner to record evidence (fee tentatively fixed at Rs.1,00,000 to be borne initially by the plaintiff).

Holding and Implications

Core ruling: The Court ordered that IA No.3711/2018 is dismissed insofar as setting aside the ex parte decree for ejectment (the ex parte decree for ejectment shall stand), and IA No.3711/2018 is allowed insofar as the ex parte decree for recovery of Rs.61,00,000/- with interest is concerned (that monetary decree is set aside).

Consequences and immediate implications for the parties (as provided in the opinion):

The ejectment decree remains in force; the defendants' plea that they had a substantive defence to ejectment was found insufficient in their pleadings and admissions, so the ejectment part of the ex parte decree will not be reopened.
The monetary decree of Rs.61,00,000 (based on the plaintiff's pleaded rate of rent at Rs.6,00,000 per month) has been set aside. The matter as to arrears of rent and future mesne profits will proceed to trial on issues framed by the Court.
As an interim condition, the defendants are ordered to pay Rs.3,00,000 per month in advance to the plaintiff by the 10th day of each English calendar month until further orders; this is expressly stated to be without prejudice to the rights and contentions of the parties.
The Court directed a structured process for adducing evidence: parties to file witness lists within 15 days and the plaintiff to file affidavits-in-chief for his witnesses within six weeks; evidence to be recorded by an appointed Court Commissioner (Mr. B.B. Chaudhary, Additional District Judge (Retd.)), with a tentative fee and timetable fixed.
The Court did not purport to lay down any new legal precedent; its decision was applied to the facts and pleadings before it (no broader precedent-setting claim is made in the opinion). The immediate effect is factual and procedural: ejectment stands, monetary decree reopened for trial under conditions ordered by the Court.

Judge: Hon'ble Mr. Justice Rajiv Sahai Endlaw. Date of decision: 8 May 2018.

Show all summary ...

* IN THE HIGH COURT OF DELHI AT NEW DELHI

%^thDate of decision: 8 May, 2018

+ CS(COMM) 646/2017 SANJAY GUPTA ..... Plaintiff

Through: Mr. Manish Vashisht, Mr. Sameer Vashisht, Ms. Astha Gupta and Mr. Manashwy Jha, Advs.

versus

KRISHNA HOSPITALITY & ANR ..... Defendants

Through: Ms. Priya Hingorani and Mr. Sarvesh Chowdhry, Advs.

CORAM:

HON'BLE MR. JUSTICE RAJIV SAHAI ENDLAW IA No.3711/2018 (of the defendants u/O IX Rule 13 CPC).

1. This order is in continuation of the earlier order dated 16^th March, 2018.

2. The plaintiff instituted this suit for ejectment of the defendants from property no.6-A, Anandlok, New Delhi after determination of tenancy at a rent in excess of Rs.3,500/- per month of the defendants with respect to the said premises and for recovery of arrears of rent of Rs.61,00,000/- and for recovery of mesne profits.

3. The suit was entertained and summons thereof issued. The defendants appeared in response to the summons and filed a written statement verified on 24^thJanuary, 2018. The suit was thereafter posted before the Court on 6^thFebruary, 2018, when none appeared for the defendants and the defendants were proceeded against ex parte

and for the detailed reasons given in the order dated 6^thFebruary, 2018, an ex parte decree for ejectment of the defendants from the premises and for recovery of Rs.61,00,000/- with interest and for recovery of mesne profits at the same rate as at which the defendants were claimed to be paying rent, was passed in favour of the plaintiff and against the defendants.

4. The defendants filed IA No.3711/2018 for setting aside of the said ex parte decree and which application came up first before this Court on 16^thMarch, 2018, when finding that the defendants in the written statement filed had admitted the relationship of landlord and tenant with the plaintiff and though had disputed the rate of rent to be Rs.6,00,000/- per month but had admitted the rate of rent to be Rs.3,00,000/- per month, it was enquired from the counsel for the defendants/applicants as to what was the defence of the defendants/applicants to the suit insofar as the decree for ejectment was concerned. However, time was given on that date to the counsel for the defendants to prepare on the said aspect and the application posted for further hearing to today.

5. The counsel for the defendants, on the aspect of setting aside of the ex parte decree insofar as for ejectment, has argued (i) that the plaintiff claims to have terminated tenancy for the reason of the defendants having not paid the rent but the defendants in fact have paid the rent and were not in arrears of rent; (ii) that the defendants have to be given a proper opportunity to defend the suit; (iii) that all provisions of the Code of Civil Procedure, 1908 (CPC) have to be

complied with and the defendants cannot be called upon at this stage, to state what their defence is to the claim of decree for ejectment; (iv) that the defendants should be given an opportunity to place documents in support of their defence to the claim of decree for ejectment;

(v) that the plaintiff has locked one of the rooms in the property in which all the documents of the defendants are lying and the defendants are thus unable to access the said room; and, (vi) that though there is no registered Lease Deed between the parties but the understanding of the parties and on which the parties have been acting, is that the defendants shall continue to remain as tenants in the premises forever and the defendants should be given an opportunity to prove the same.

6. The counsel for the defendants at this stage of dictation states that her argument is not that the understanding was of the defendants continuing in tenancy forever but of the defendants being entitled to remain in the premises till mutually agreed between the parties.

7. I have enquired from the counsel for the defendants that the defendants having admitted the relationship of landlord and tenant between the parties and the rent to be in excess of Rs.3,500/- per month and having also admitted non-existence of any registered Lease Deed whereunder the defendants can have any right to continue in the premises, what purpose will be served in giving opportunity to the defendants to lead evidence to prove the plea of 'understanding between the parties' when such plea has no basis in law.

8. The counsel for the defendants states that the 'due process of law' has to be followed.

9. The due process of law does not entitle a litigant to force the Court to blindly put all suits through the process of trial when the defendants in their pleading have been unable to disclose any defence. A suit in which the defendants in the written statement have not disclosed any defence or raised any substantial question of law or fact which if decided in favour of the defendants, can defeat the suit claim, does not require any issues to be framed and the suit has to be decreed forthwith. In the name of 'opportunity', 'compliance of provisions of CPC' and 'observing due process of law', the time of the Court is not to be wasted.

10. I reiterate that in view of the admissions already existing in the written statement of the defendants and in the reply of the defendants to the legal notice, the defendants have not disclosed any defence to the claim, insofar as for ejectment and ex parte decree for ejectment is not to be set aside when no purpose would be served by setting aside thereof and when the fate, even after hearing the counsel for the defendants and for which also opportunity has been given today, has to be the same.

11. Per Section 107 of the Transfer of Property Act, 1882, a lease of immovable property for any term exceeding one year can be made only by a registered instrument and all other leases may be made either by registered instrument executed by the lessor and lessee or by oral agreement accompanied with delivery of possession. The

defendants in their written statement have pleaded lease agreement dated 23^rdNovember, 2015, for a period of three years, executed by plaintiff and defendants and whereunder claim to be entitled to occupy premises till 31^stOctober, 2018. The same is not registered and is admitted to be not registered. The same thus, under Section 49 of Registration Act 1908, cannot be received in evidence of any transaction effecting such property. Per Section 106 of Transfer of Property Act, in the absence of registered lease deed, a lease of immovable property for any purpose other than agricultural or marketing, is deemed to be a lease from month to month, terminable by a fifteen days' notice. Supreme Court in Nopany Investments (P) Ltd. Vs. Santokh Singh (2008) 2 SCC 728 held that filing of an eviction suit under general law itself is notice to quit upon tenant. The said dicta was followed by Division Bench of this Court in Shri Ram Pistons and Rings Ltd. Vs. C.B. Agarwal HUF ILR (2009) III Delhi

249. Thus, even if suit for ejectment is filed without notice determining lease, after the same has remained pending for over fifteen days, it cannot be defeated on ground of non service of notice. Moreover, the defendants herein have in their written statement admitted service of notice of determination of tenancy. Upon amendment of Section 106 of Transfer of Property Act with effect from 31^stDecember, 2002, a notice of determination of tenancy shall not be invalid merely because the period mentioned falls short of period specified thereunder, as long as the suit has been filed after specified period.

12. However, as far as the claim of the defendants for setting aside of the decree insofar as for recovery of Rs.61,00,000/- is concerned, the said claim of Rs.61,00,000/- has been made on the basis of the rate of rent being of Rs.6,00,000/- per month. The defendants, in the reply to the legal notice preceding the suit and even in the written statement, have disputed the rate of rent to be Rs.6,00,000/- per month and claimed rate of rent to be Rs.3,00,000/- per month and have further pleaded that up-to-date rent has been paid.

13. The counsel for the defendants, on enquiry states that rent has been paid till the month of April, 2018 @ Rs.3,00,000/- per month and has been paid by cheques which have been encashed.

14. The counsel for the plaintiff states that the cheque has been encashed without prejudice to the rights and contentions of the plaintiff.

15. In this view of the matter, insofar as the decree for recovery of monies is concerned, it is deemed appropriate to set aside the same for the reasons stated for non-appearance on 6^thFebruary, 2018.

16. Accordingly IA No.3711/2018 for setting aside of the ex parte decree, though is dismissed insofar as to the extent of setting aside of the ex parte decree for ejectment, which shall stand, but is allowed insofar as the decree for recovery of Rs.61,00,000/- with interest is concerned.

17. On the condition that the defendants, till further orders, without prejudice to the rights and contentions of the parties, continue to pay

Rs.3,00,000/- per month to the plaintiff, in advance for each month by the 10^thday of the English calendar month, IA No.3711/2018 is disposed of.

CS(COMM) 646/2017.

17. The counsel for the plaintiff, on enquiry states that the plaintiff does not want to file replication to the written statement and issues can be framed.

18. Needless to state, the ex parte decree for recovery of future mesne profits having been set aside, the plaintiff though had on 6^th February, 2018 confined the relief for mesne profits @ Rs.6,00,000/- per month, shall be entitled to mesne profits at a higher rate if proved in law.

19. On the pleadings of the parties, the following issues are framed qua the claim of the plaintiff for recovery of arrears of rent and for future mesne profits.

(i) Whether the Agreement of the defendants with the plaintiff of enhancement of rent of the property from Rs.5,00,000/- per month to Rs.6,00,000/- per month was subject to finalisation of the deal between the defendants and the State of Uttarakhand / Uttaranchal and did not come into effect and remained at Rs.3,00,000/- per month only? OPD

(ii) To mesne profits/damages for use and occupation at what rate, with effect from the date of institution of suit till the

date of ejectment, is the plaintiff entitled to from the defendants? OPP

(iii) If the plaintiff is found entitled to any arrears of rent, whether the plaintiff is entitled to any interest thereon and if so, at what rate and for what period? OPP

(iv) Relief.

20. No other issue arises or is pressed.

21. The parties to file their list of witnesses within 15 days.

22. The counsel for the defendants has at this stage contended that an issue be also framed as to 'whether the plaintiff has paid appropriate court fees on the plaint'. It is stated that the plaintiff has pleaded the value of the property of over Rs.50 crores but paid court fees on the annual rent only for the relief of ejectment.

23. I have enquired from the counsel for the defendants, the provision of the Court Fees Act, 1870, which governs the court fees of a suit for ejectment.

24. The counsel for the defendants seeks adjournment to show.

25. Attention of the counsel for the defendants is invited to Section 7 (xi) (cc) of the Court Fees Act which provides that on a suit between landlord and tenant including by a landlord against a tenant holding over after determination of tenancy, the court fees is to be on the value of the annual rent payable for the year next after the determination of

the tenancy. The plaintiff is thus found to have valued the suit for the relief of ejectment in accordance with the Court Fees Act. As per Section 8 of the Suits Valuation Act, 1887, the valuation for the purposes of jurisdiction has to be the same as for the purpose of court fees.

26. The counsel for the defendants has also contended that the suit has to be sent to the District Court on the basis of the valuation as per the annual rent.

27. The plaintiff, besides valuing the suit at Rs.72,00,000/- for the purposes of ejectment has also valued the suit for the purposes of recovery of arrears of rent of Rs.61,00,000/- and the total valuation is in excess of Rs.1,00,00,000/- and the suit being a commercial suit has been filed in this Court. Thus, there is no merit in the said contention also.

28. The plaintiff to file affidavits by way of examination-in-chief of all his witnesses qua the issues, burden of which is on the plaintiff, within six weeks.

29. Option of having the evidence recorded before the Court Commissioner has been accepted by the counsel for the plaintiff but not by the counsel for the defendants.

30. The counsel for the plaintiff states that the plaintiff will bear the entire costs of commission subject to final order as to costs.

31. Accordingly, Mr. B.B. Chaudhary, Additional District Judge (Retd.) (Ph. No. 9910384611) is appointed as the Court Commissioner to record evidence in the suit.

32. The fee of the Court Commissioner, besides out of pocket expenses is tentatively fixed at Rs.1,00,000/-, to be borne initially by the plaintiff subject to final order as to costs in the suit.

33. The Court Commissioner is requested to record the evidence within the Court Complex and to complete the same within one year of the date of first appearance of the parties before him. He is granted liberty to have the matter placed before the Court if any of the parties are found delaying recording of the evidence.

34. The Registry is directed to send the file of the suit at the place and time fixed by the Court Commissioner for recording of evidence.

35. The parties to, with prior appointment, appear before the Court Commissioner within eight weeks for commencing recording evidence.

36. List after the recording of evidence is completed.

RAJIV SAHAI ENDLAW, J.

MAY 08, 2018

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