Commissioner of Income tax, vs. M/s. Southern Rocks and Minerals Private Limited

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* IN THE HIGH COURT OF DELHI AT NEW DELHI %

Reserved on: 02nd June, 2022

Pronounced on:15th December, 2022

CS(OS) 597/2013

M/S AMRIT ESTATES (P) LTD.

Registered office at A-3, Kailash Colony, New Delhi through its director Shri Balbir Singh Kohli

.....Plaintiff

Represented by: Mr. Harshvir Singh Kohli, Advocate.

versus

PUNJAB NATIONAL BANK

7, Bhikaji Cama Palace, New Delhi Through its Chairman/Managing Director

.....Defendant

Represented by: Mr. Gagan Mathur, Mr. M.D. Jangra, Mr. Varun Kumar & Mr. Shitanshu, Advocates. CORAM: HON’BLE MS. JUSTICE NEENA BANSAL KRISHNA

J U D G E M E N T

NEENA BANSAL KRISHNA, J.

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defendant to pay the rent at the increased rate of Rs.25,000/- w.e.f. 07th December, 1987. The plaintiff, however, has restricted the arrears of enhanced rent as legally recoverable for the past three years. 6. It is further asserted that no fresh Lease Agreement was executed by the defendant and the lease stood determined by efflux of time and the occupation of the defendant became illegal and unauthorized after 31st March, 1989. The plaintiff served a Notice dated 04th February, 1989 seeking possession and arrears of enhanced rent in response to which an illegal and erroneous reply was given by the defendant. 7. The plaintiff further asserted that the property in question could fetch a rent at the rate of Rs. 16/- per sq. ft. The area of tenanted premises was about 15,000 sq. ft. and thus capable of getting rent of Rs.2,40,000/- per month. 8. Hence commences the chequered journey of litigation. This suit was filed for recovery of possession, damages and mesne profits in the year 1989,before this Court. On account of change of pecuniary jurisdiction, the case got transferred to the District Courts on 26th August, 1993 where the suit remained pending till 05th December, 2012. The issues were framed on 09th May, 1995 by the learned Additional District Judge. While the case was pending, the parties arrived at a Settlement on 31st May, 2001 and the possession of the property in question was delivered to the plaintiff on 31st January, 2002. 9. The plaintiff filed an application for amendment under Order VI Rule 17 of the Code of Civil Procedure, 1908(hereinafter referred to as “CPC, 1908”) dated 21st February, 2012, which was allowed leading to enhancement of the suit valuation. Consequently, vide Order dated 05th Signed By:PRIYANKA ANEJA Signing Date:15.12.2022 18:13:56 Signature Not Verified

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December, 2012, the suit was returned by the District Court under Order VII Rule 10A of CPC, 1908 to be presented in the Court of competent jurisdiction. 10. Thereafter, the present suit for mandatory injunction for realization of the mesne profits/damages was filed before this Court. The prayer in the suit is confined to the claim for a preliminary decree followed by a final decree, for determination of damages/mesne profits at the market rate of Rs.24,30,000/- w.e.f. 01st April, 1989. In addition, the arrears of enhanced rent of Rs.21,600/- along with the interest @ 18% per annum from the date of institution of the suit till the date of realization, is claimed. 11. The defendant in its Written Statement took the preliminary objections that the alleged Termination Notice was illegal and void and the defendant cannot be termed as an unauthorized occupant and the plaintiff is not entitled to recovery of the mesne profits/damages. It was also asserted that since the relationship of landlord and tenant existed between the parties, the suit is barred by the provisions of Delhi Rent Control Act. Moreover, the defendant-bank is a nationalized bank and therefore, the provisions of Public Premises Act are applicable to the suit property. Further, the plaintiff had filed an earlier suit No. 209/1989 titled as Amrit Estates Pvt. Ltd. v. Punjab National Bank for Perpetual Injunction on similar facts and based on the Lease Deed dated 07th December, 1979 but had failed to claim relief of possession and damages and therefore, the present suit is barred under Order II Rule 2 of CPC, 1908. 12. It was further asserted that it has been wrongly alleged that the Managing Director and other senior officials had arrived at a settlement with the plaintiff on 31st May, 2001. It is claimed that the Managing Signed By:PRIYANKA ANEJA Signing Date:15.12.2022 18:13:56 Signature Not Verified

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Director/Chairman never agreed for enhancement of rent as is wrongly alleged by the plaintiff. It has been explained that even if the proposal was received from the plaintiff, it was required to be looked at different levels of the functionaries of the bank. Nothing final was agreed nor any settlement for payment of rent/damages in the alleged meeting held on 31stMay, 2001 was finalized. Moreover, no individual officer of the bank, irrespective of status, is empowered to arrive at a settlement until it is approved by the Board of the Bank, which alone is competent to agree for a settlement. However, the defendant-bank admittedly handed over the vacant possession of the tenanted premises on 31st January, 2002. It is asserted that since the possession has already been handed over and the entire rent has also been paid by the plaintiff-Company, the suit is without any cause of action and is liable to be dismissed. 13. Moreover, the claim of the plaintiff for damages/mesne profits w.e.f. 01st April, 1989 is barred by time and the plaint has not been filed and verified in accordance with the rules and laws. The original plaint along with the record, including documents exhibited/unexhibited and the evidence has not been filed on record even though it was returned by the District Court. 14. On merits, the defendant-bank has admitted having been inducted as a tenant vide Lease Agreement dated 07th December, 1979 and the initial rent being fixed at Rs.19,000/- per month, in addition to Rs.6,000/- for fittings and fixtures. It is, however, denied that the tenancy got determined by efflux of time or by Notice making them liable for payment of damages/mesne profits. 15. An application bearing I.A. No. 10254/2013 under Order VII Rule 11 of CPC, 1908 was filed on behalf of the defendant for rejection of the plaint Signed By:PRIYANKA ANEJA Signing Date:15.12.2022 18:13:56 Signature Not Verified

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on the ground that the relief claimed in the present suit was barred by limitation. It was asserted that the present suit was filed on 27th February, 2013, while the rent damages and mesne profits were being sought from 01st April, 1989 to 31st January, 2002. However, vide Order dated 18th May, 2017, this Court dismissed the application by observing that the learned Trial Court vide Order dated 05th December, 2012 passed in Suit No. 58/02/12 had returned the Civil Suit No. 58/02/12 „on account of pecuniary jurisdiction‟ along with the court fee to be filed afresh before the competent court of law having pecuniary jurisdiction. It was observed that on the return, the present plaint had only been re-filed in this Court, which had the competent jurisdiction. It was held the present suit had not been filed on 27th February, 2013, but was continuation of the earlier suit (filed in the year 1989) which was within limitation and thus the present suit is also within limitation. The application under Order VII Rule 11 of CPC, 1908 was accordingly dismissed. 16. It is evident from this Order dated 18th May, 2017 that though the plaint had been returned on 05th December, 2012, the present suit bearing No. CS (OS) 597/2013, which had been filed afresh on return of the suit by Civil Judge, was treated as continuation of the proceedings and the trial was undertaken from the stage where it was pending before the Civil Judge, District Court. 17. In this context reference may be made to the judgment of this Court in Janak Datwani vs. CAN Exports Pvt. Ltd. & Ors., TR.P.(C.)57/2019 delivered on 25th July, 2019, wherein it was observed that normally if a Court ceases to have jurisdiction to entertain a suit, the correct course is to return the plaint to enable the party to present the same in a Court of Signed By:PRIYANKA ANEJA Signing Date:15.12.2022 18:13:56 Signature Not Verified

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competent jurisdiction as provided under Order VII Rule 10 of the CPC. However, in cases where the suit is to be presented to the Court where it was initially filed on account of amendment in the valuation of the suit and the suit was initially transferred on account of change of pecuniary jurisdiction, in such a scenario, the procedure to be followed by the District Court ceasing to have jurisdiction is to have the matter placed before this Court. In such cases, this Court is not denuded of its powers under Section 24 of the CPC notwithstanding the fact that a direction has been issued to return the plaint. 18. Therefore, though the plaint had been returned under Order VII Rule 10 CPC but it was in effect a transfer and the plaint was re-instituted and re- numbered vide C.S.(OS) 597/2013 is nothing but continuation of the earlier Suit No.20/2003 and the proceedings conducted therein shall be read in the present suit. 19. Issues were framed vide Order dated 09th May, 1995, which are as under: “1. Whether the plaint has been signed and verified by a duly authorized person on behalf of plaintiff? OPD. 2. Whether the suit is barred by the provisions of the Delhi Rent Control Act, 1958? OPD. 3. Whether the suit premises are governed by the provisions of Public Premises Act as contended by the defendant? OPD. 4. Whether the suit is barred under Order II Rule 2? OPD. 5. Whether the tenancy of the defendant stood terminated by efflux of time? OPP. 6. Whether the notice of termination of tenancy is illegal, null and void? OPD. 7. Whether the defendant is unauthorized occupant of the suit premises and liable to pay any damages/mesne profits for use and occupation of the premises if so, at what rate and for what period? OPP. Signed By:PRIYANKA ANEJA Signing Date:15.12.2022 18:13:56 Signature Not Verified

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of rent was Rs. 25/- per sq. ft. since 1998 and prior to that, the rate of rent was Rs. 13/- per sq. ft. 23. The defendant in support of its case examined DW-1 Umesh Gaur, who tendered his affidavit of evidence as Ex. DW-1/8 reaffirming their assertions made in the Written Statement. 24. The detailed evidence of the parties shall be considered subsequently. 25. The Written Submissions have been filed by the plaintiff as well as the defendant. 26. Learned counsel for the plaintiff has argued that the testimony of the plaintiff along with that of PWs-2 and 3 clearly establishes the prevailing rate of rent in the vicinity. It is further submitted that a meeting took place on 31st May, 2001 between Shri Balbir Singh Kohli, Authorized Representative of the plaintiff-Company with the higher officials of the defendant, wherein it was agreed that the defendant would pay damages for use and occupation of the suit premises as follows: (i) from 01st October, 1992 to 30th September, 1995 at the rate of Rs.85,000/- per month; (ii) from 01st October, 1995 to 30th September, 2000 at the rate of Rs.1,02,000/- per month (increase of 20%); (iii) from 01st October, 2000 at the rate of Rs.1,22,400/- till the date of vacating of premises. The defendant despite having entered into a settlement has failed to abide by it and pay the damages. It is asserted that the plaintiff is, therefore, entitled to damages as claimed by it. Signed By:PRIYANKA ANEJA Signing Date:15.12.2022 18:13:56 Signature Not Verified

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examination of PW1 in regard to his authorization to sign, verify and institute the present Suit. 31. The defendant in support of its case has examined DW1 Umesh Gaur, but his testimony is absolutely silent in regard to the proper institution of the Suit under the signatures of Mr. Balbir Singh Kohli. The onus of proving this Issue was on the defendant who has failed to produce any evidence or to challenge the Board of Resolution or the Minutes of Meeting as proved by PW1 Balbir Singh Kohli. 32. It is thus held that the Suit has been signed and instituted by a duly authorized person. The Issue is decided against the defendant.

ISSUE NO.2 2. Whether the suit is barred by the provisions of the Delhi Rent Control Act, 1958? OPD.

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premises having rent of more than Rs.3,500/- per month was excluded from the jurisdiction of Delhi Rent Control Act, 1958. 35. The present Suit is, therefore, not barred under Section 50 of the Delhi Rent Control Act, 1958 and is maintainable in this Court. 36. This Issue is decided against the defendant and in favour of the plaintiff.

ISSUE NO.3 3. Whether the suit premises are governed by the provisions of Public Premises Act as contended by the defendant? OPD. 37. A preliminary objection has been taken on behalf of the defendant that the Suit Property is governed by Public Premises Act and the Suit is not maintainable in this Court. The Public Premises Act is applicable to the Government Premises which are rented out by the Government to a private person. In the present case, the Suit Property which is the personal property of the plaintiff, had been taken on rent by the defendant which happens to be a Public Sector Undertaking. The present Suit which is for recovery and possession of mesne profits has been filed by an individual in respect of his personal property and the Public Premises Act is not attracted to the present Suit. 38. The Suit is maintainable before the Civil Court. This Issue is decided against the defendant and in favour of the plaintiff.

ISSUE NO. 4 Signed By:PRIYANKA ANEJA Signing Date:15.12.2022 18:13:56 Signature Not Verified

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ISSUE NOS. 5 and 6 5. Whether the tenancy of the defendant stood terminated by efflux of time? OPP. 6. Whether the notice of termination of tenancy is illegal, null and void? OPD.

Signed By:PRIYANKA ANEJA Signing Date:15.12.2022 18:13:56 Signature Not Verified

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Clause 4– That after expiry of the said tenancy period, the lessor wishes to continue the tenancy, then in that case an enhancement of 10% in rent shall be made after every three years and a fresh lease deed will be executed for each extension of period which shall never be less than three years.

Clause 18– That the Bank shall have the right to vacate the premises by giving 30 days’ notice in writing of its intention to do so irrespective of the period fixed.” 45. The Clause 3 of the Lease Agreement reflects that it was the defendant which had the option to renew it after the expiry of the initial period of three years from the commencement of tenancy. Clause 4 provided Signed By:PRIYANKA ANEJA Signing Date:15.12.2022 18:13:56 Signature Not Verified

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that in case of the Lessee intending to continue with the tenancy, the rent shall be enhanced by 10% in every three years and a fresh Lease Deed shall be executed for such extension. Clause 18 of the Lease Deed gave the right to the Bank for vacating the premises at any time irrespective of the Rent Agreement by giving a 30 day Notice. 46. The Lease Deed, therefore, provided for unilateral extension of the tenancy on the will of the defendant Bank with the only condition being that the rent shall be enhanced by 10% in every three years. 47. There is no dispute or challenge that after the expiry of initial three years, the tenancy was renewed for a further period of three years and the rent was enhanced by 10%. 48. The defendant-Bank admittedly enhanced the rent in terms of Lease Deed by 10% from Rs.19,000/- to Rs.20,900/- per month being the 10% of the previous rent. A challenge has been raised by the plaintiff that the defendant had failed to enhance the Hire charges in the sum of Rs.6,000/- per month by 10%, despite the Agreement between the parties. 49. It has been rightly asserted on behalf of the defendant that while the Lease Agreement Ex.PW1/4 specifically provided for enhancement of rent by 10% on its renewal, but the fittings and fixtures Agreement Ex.PW1/5 did not contain any such Clause of an automatic enhancement by 10% in every three years. There was no consensus between the parties in regard to the enhancement of the hire Charges in the Agreement and the same could not have been claimed by the plaintiff unilaterally on the basis of clause existing in the Lease Agreement Ex.PW1/4. 50. PW1 has admitted in his cross-examination that the Income Tax Department had attached the rent being paid by the defendant towards the Signed By:PRIYANKA ANEJA Signing Date:15.12.2022 18:13:56 Signature Not Verified

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outstanding dues of the plaintiff towards income tax. The defendant Bank in terms of the Attachment Order, was admittedly regularly paying the rent to the Income Tax Department. It is further admitted that since the Appeals were pending, the rent up to 1988-89 was paid to the Income Tax Department under the Attachment Order of Income Tax Authorities. 51. PW1 Balbir Singh Kohli has deposed that the tenancy of the defendant was terminated w.e.f. 31st March, 1989 vide Legal Notice dated 04th February, 1989 Ex.PW1/16. The defendant in its Written Statement had not denied the service of Legal Notice Ex.PW1/16, but had only asserted that the plaintiff had no right to terminate the tenancy and the Legal Notice was null and void as it was in lawful occupation of the Suit Property in the capacity of a tenant, and the rent was being paid without default by the defendant Bank. 52. The defendant may have been induced as a tenant, but no evidence has been led on behalf of the defendant that after the renewal of the Lease Agreement since 1982 till 1985 it ever exercised its right for renewal of the tenancy, but had continued to pay the rent to the Income Tax Department @ Rs.21,100/- and Rs.6,000/- for the fittings and fixtures as it had been paying earlier pursuant to the Attachment Order of the Income Tax Department orders. 53. In terms of Clauses 3 and 4 of the Lease Deed, the defendant had a right for extension of the Lease Deed, subject to enhancement of rent by 10% which has not been done. There is no evidence produced by the defendant to show that there was any renewal of the tenancy after its expiry in 1985. Signed By:PRIYANKA ANEJA Signing Date:15.12.2022 18:13:56 Signature Not Verified

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ISSUE NO. 7 7. Whether the defendant is unauthorized occupant of the suit premises and liable to pay any damages/mesne profits for use and occupation of the premises if so, at what rate and for what period? OPP.

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second floor, lift room etc. for the period of three years from 16th January, 1996 to 15th January, 1999. Earlier also a similar Lease Agreement was executed on 15th January, 1990, wherein the same premises had been let out @ Rs.8.50 per sq. ft. per month for a period of six years w.e.f. 16th January, 1990. This witness in his cross-examination has admitted that the original Agreement dated 15th January, 1990 was not registered. Interestingly, though the witness had deposed about the Lease Deed, but the copy of the same was never placed on record. In the absence of the Lease Deed, it is difficult to ascertain the nature of construction, its location and vicinity to draw parity of rent. 61. The plaintiff had also examined PW3 Prem Narain Gupta Clerk, working with Iqbal Properties on 16th March, 2001 to prove the prevailing rate of rent during the relevant period. He deposed that he had brought the original Lease Deed dated 18th September, 1987 but the copy of the same was never placed on record, nor was Lease Deed exhibited. He deposed that the rent was initially Rs.13/- per sq. ft. in respect of Premises No. 6, Jamrudpur, New Delhi, while the present rate of rent was Rs. 25 per sq. ft. since 1998. The witness in the cross-examination stated that he was not aware of the measurement of the plot in question. 62. What emerges significantly is that PW-2 and PW-3 though had deposed on the basis of Lease Deeds, but neither were the Lease Deeds placed on record, nor were they exhibited. In the absence of the Lease Deed, it is difficult to ascertain the nature of construction, its location and vicinity to draw parity of rent. The testimony of PW-2 & PW-3 therefore is of little assistance to prove the prevailing rate of rent in the locality. Signed By:PRIYANKA ANEJA Signing Date:15.12.2022 18:13:56 Signature Not Verified

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S.No. Period Rate of rent (per month) Remarks, if any 1. 01st October, 1990 to 30th September, 1995 Rs. 85,000/-

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wherein the Bank had expressed its willingness, pursuant to the meeting held with the plaintiff, to accept the rent in principal @ Rs.75,000/- per month w.e.f. 01st October, 1990 and hire charges Rs.20,000/- per month w.e.f. 01st October, 1990. The increase in rate of rent was agreed in principal, subject to the conditions that the pending Suit shall be withdrawn; a fresh Lease Deed shall be executed and repairs/replacement of all fixtures/fittings shall be undertaken. There was a reiteration of these terms in the subsequent Letter dated 14th October, 1992 Ex.P2, admittedly written by the defendant-Bank to the plaintiff. The third Letter dated 15th February, 1995 Ex. P3 addressed by the defendant-Bank to the plaintiff, had indicated the verbal acceptance for the extension of the Lease Deed by the plaintiff for a period of three years upto 30th September, 1999 with an increase in rent and hire charges @ 20% from October, 1996 which had been verbally accepted. 70. The defendant further conveyed its proposal of accepting the enhanced rate of rent with the only condition that the hire charges @ Rs. 20,000/- per month shall be payable only after the replacement of permanent fixtures/fittings, electrical items and the works agreed to be executed by the plaintiff. All other items as contained in the earlier two Letters Ex.P1 and P2, were reiterated. 71. The defendant-Bank thereafter addressed another Letter dated 24thMarch, 1995, again making a reference to the earlier Letters dated 22nd January, 1992 Ex. P1 and 14th October, 1992 Ex.P3 reaffirming its proposal as given by Letter dated 15th February, 1995 Ex. P3 and sought confirmation from the plaintiff. The possession of the Suit Property was handed over vide Letter 31st January, 2002 Ex.P5. Signed By:PRIYANKA ANEJA Signing Date:15.12.2022 18:13:56 Signature Not Verified

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ISSUE NO. 8 8. Whether the Plaintiff is entitled to the recovery of the possessions of the suit premises? OPP.

RELIEF: 79. In view of the findings on the Issues, the Suit of the plaintiff for mesne profits and for use and occupation charges is hereby decreed and the defendant is directed to pay the same at the rate as determined in Issue no.7 subject to adjustment of any amounts which have been paid by the defendant during this period, as follows:

Signed By:PRIYANKA ANEJA Signing Date:15.12.2022 18:13:56 Signature Not Verified

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(i) from 01st October, 1992 to 30th September, 1995 at the rate of Rs. 85,000/- per month; (ii) from 01st October, 1995 to 30th September, 2000 at the rate of Rs. 1,02,000/- per month; (iii) from 01st October, 2000 at the rate of Rs. 1,22,400/- till the date of vacating of premise. 31.01.2002.

(NEENA BANSAL KRISHNA)

JUDGE

DECEMBER 15, 2022 S.Sharma

Signed By:PRIYANKA ANEJA Signing Date:15.12.2022 18:13:56 Signature Not Verified