Companies Act vs Global Earth Properties & on 16 March, 2009

Bombay High Court
Companies Act vs Global Earth Properties & on 16 March, 2009
Bench: S.B. Mhase, Prasanna B. Varale
                             -: 1 :-




                                                               
            HIGH COURT OF JUDICATURE AT BOMBAY
           ORDINARY ORIGINAL CIVIL JURISDICTION




                                       
                  APPEAL No. 139 OF 2008
                            IN
             NOTICE OF MOTION No. 3062 OF 2007
                            IN




                                      
                  SUIT No. 2316 OF 2007.

     Loreal India Private Limited,      ]
     A company incorporated under the]




                           
     Companies Act, 1956 having      ]
                 
     its registered office at
     2nd floor, Peninsula Tower,
                                     ]
                                     ]
     Ganpatrao Kadam Marg,           ]
                
     Lower Parel,Mumbai - 400 013.   ]        ..Appellant.

           V E R S U S
      


     1. Global Earth Properties &    ]
   



     Developers Pvt. Ltd., (Formerly ]
     known as Global Insurance       ]
     Products Marketing Ltd.)        ]
     a company incorporated under the]





     provisions of the Companies Act,]
     1956 and having its Corporate   ]
     Office at 102, Arihant Building,]
     15th Road, Khar (West),         ]





     Mumbai - 400052.                ]
                                     ]
     2. Piramal Holdings Ltd.,also   ]
     a Company having its registered ]
     office at Corporate Crossroads, ]
     28, Pt. M.M. Malviya Road,      ]
     Haji Ali, Mumbai 400 034        ]
     and also having its office at   ]
     106, Peninsula Centre,          ]



                                       ::: Downloaded on - 09/06/2013 14:24:55 :::
                              -: 2 :-




                                                               
     Dr. S. S. Rao Road, Parel           ]
     Mumbai - 400 012.                   ]     ..Respondents.




                                       
                        ALONG WITH
                  APPEAL No. 182 OF 2008
                            IN




                                      
             NOTICE OF MOTION No. 3062 OF 2007
                            IN
                  SUIT No. 2316 OF 2007.




                           
     Global Earth Properties &           ]
                 
     Developers Pvt. Ltd., (Formerly
     known as Global Insurance
                                         ]
                                         ]
     Products Marketing Ltd.)            ]
                
     a company incorporated under the    ]
     provisions of the Companies Act,    ]
     1956 and having its Corporate       ]
     Office at 102, Arihant Building,    ]
      


     15th Road, Khar (West),             ]
   



     Mumbai - 400052.                    ]     ..Appellant.

          V E R S U S.





     1. Loreal India Private Limited,]
     A company incorporated under the]
     Companies Act, 1956 having      ]
     its registered office at        ]





     2nd floor, Peninsula Tower,     ]
     Ganpatrao Kadam Marg,           ]
     Lower Parel,Mumbai - 400 013.    ]
     2. Piramal Holdings Ltd.,also    ]
     a Company having its registered ]
     office at Corporate Crossroads, ]
     28, Pt. M.M. Malviya Road,       ]
     Haji Ali, Mumbai 400 034         ]
     and also having its office at    ]



                                       ::: Downloaded on - 09/06/2013 14:24:55 :::
                                    -: 3 :-




                                                                     
     106, Peninsula Centre,                    ]
     Dr. S. S. Rao Road, Parel                 ]
     Mumbai - 400 012.                         ]     ..Respondents.




                                             
                                    -----
     Mr. Pravin Samdani, Sr. Advocate a/w Ms. Soumya Shrikrishna




                                            
     a/w Darshan Mehta i/b M/s. Dhruve Liladhar & Co., for the
     appellants in Appeal No. 139 of 2008 and Respondents in Appeal




                                 
     No. 182 of 2008.


     Mr.
                    
           Darius Khambhatta, Sr. Advocate a/w Chetan Kapadia,
     Parimal Shroff, Subodh Joshi, Sanjay Kotak and Radhika
                   
     Kalpatrai i/b M/s. P. K. Shroff & Co., for the appellants in Appeal
     No. 182 of 2008 and Respondents in Appeal No. 139 of 2008.
                                    ------
      
   



                                   Coram: S. B. MHASE &
                                         PRASANNA B. VARALE, JJ.

Date of reserving judgment : 8th August 2008.

Date of pronouncement of judgment : 16th March, 2009

ORAL JUDGMENT (Per S. B. Mhase, J.)

1. Both these appeals are directed against the

judgment and order passed by the learned Single Judge of

this Court on 17th January 2008 in Notice of Motion No. 3062

::: Downloaded on – 09/06/2013 14:24:55 :::
-: 4 :-

of 2007 in Suit No. 2316 of 2007. Against the said order

original Plaintiff has filed Appeal No. 139 of 2008 wherein

the Respondents are original Defendant nos. 2 & 3

respectively. Appeal No.182 of 2008 has been filed by

original Defendant no.1 wherein the Respondents are

original Plaintiff and original Defendant no.2. It is clarified

that original Defendant no.2 has not filed any appeal and in

both the appeals original Defendant no.2 is the Respondent

No. 2. For the sake of convenience and in order to avoid

ambiguity and confusion, the Appellant in Appeal No. 139 of

2008 and the Respondent No. 1 in Appeal no. 182 of 2008

has been referred to as “the Plaintiff”, while the Appellant in

Appeal No. 182 of 2008 and the Respondent No. 1 in

Appeal No. 139 of 2008 has been referred to as “the

Defendant No. 1”. So also the Respondent No. 2 in both the

appeals has been referred to as “the Defendant No. 2”.

2. Suit No. 2316 of 2007 has been filed by the Plaintiff

in the High Court seeking specific performance of the

::: Downloaded on – 09/06/2013 14:24:55 :::
-: 5 :-

agreements at Exhibits -“A” to “D” to the plaint, and prayed

that a decree be passed against the Defendants or such of

them as may be determined by the High Court to sign and

execute all such deeds and documents and writings for

effectively renewing the leave and licence agreement upto

30th November 2012 in terms of Exhibits “A” to “D” and in

particularly, Exhibit-“D”, interalia by, but not limited to signing

requisite leave and licence agreement in terms of

Addendum [Exhibit-“D” hereto] upto the period of 30th

November 2012 and not interfering with the Plaintiff’s

possession in respect of the said premises upto 30th

November 2012. In the alternative, the Plaintiff has prayed

that the defendants and/or such of them as may be

determined by this Court be ordered and declared to pay to

the Plaintiff a sum of Rs. 66,13,87,400/- together with

interest thereon at the rate of 18% per annum from the date

of the filing of the suit till payment and/or realization. The

Plaintiff then has made interim prayer restraining the

defendants from interfering and obstructing the Plaintiff’s

::: Downloaded on – 09/06/2013 14:24:55 :::
-: 6 :-

possession and also prayed for stay of the proceeding

pending in the Small Causes Court bearing Suit No. 133/150

of 2007 filed by the Defendant No. 1.

3. On filing the said suit, the Plaintiff has moved

notice of motion no. 3062 of 2007 thereby making interim

prayers pending suit No. 2316 of 2007. They are as

follows :

“(a) that pending the hearing and final

disposal of the Suit, the defendants by themselves,

their servants and agents be restrained by an order

and injunction of this Hon’ble Court from in any

manner interfering with, obstructing or disturbing

the Plaintiff’s possession in respect of the said

Premises;

(b) that pending the hearing and final

disposal of the Suit, this Hon’ble Court may be

pleased to stay the proceedings in the Hon’ble

Court of Small Causes bearing Suit No. 133/150 of

::: Downloaded on – 09/06/2013 14:24:55 :::
-: 7 :-

2007 and the Defendant no.1 be restrained by this

Hon’ble Court from in any manner proceeding

further with the said Suit No. 133/150 of 2007;”

4. It appears that initially having found that the

Defendant Nos. 1 & 2 are absent in spite of service of

notice, the learned Single Judge has passed ad-interim

orders. [Though there is a dispute raised by the Defendants

that the service was not effected and the ad-interim orders

were obtained without service.]

5. The above referred notice of motion was decided

by the learned Single Judge after hearing both sides on 17th

January 2008. Though the learned Single Judge has found

that the documents annexed to the plaint, viz., Exhibits – “A”

to “D”, may have been executed between the parties, the

same is not enforceable at law since the compensation is a

remedy available to the Plaintiff. Thus, the learned Single

Judge has observed that the contract of leave and licence

::: Downloaded on – 09/06/2013 14:24:55 :::
-: 8 :-

between the Plaintiff and the Defendant for a period of 33

months is irrevocable unless a breach of any of the

conditions of the said contract has been committed, but the

further relief of specific performance, especially extension,

prima facie, cannot be granted because compensation is the

appropriate remedy. The learned Single Judge has also

observed that the claim of extension/renewal is based upon

the document at Exhibit- “D”, namely, the Addendum. The

period of licence as per the agreement of leave and licence

has come to an end and the learned Single Judge observed

that the suit filed by the Defendant No. 1 in the Small

Causes Court, Mumbai bearing No. 133/150/2007 is not

based on breach of conditions of the terms of agreement of

leave and licence, but it is based on the ground that the

period as stated in the said agreement of leave and licence

has been consumed by the Plaintiff, and the said agreement

of leave and licence has come to an end by efflux of time

and thereby beyond a period of 33 months as stated in the

leave and licence agreement, the Plaintiff is not entitled to

::: Downloaded on – 09/06/2013 14:24:55 :::
-: 9 :-

stay in and enjoy the said premises. Thus, the learned

Single Judge observed that the suit in the Small Causes

Court, Mumbai is different than the suit in the High Court,

and thereby having found that the compensation is an

appropriate remedy available to the Plaintiff and that the suit

in the Small Causes Court, Mumbai is distinct and is based

on different cause of action from the cause of action in suit

no. 2362 of 2007 pending in this Court, the learned Single

Judge has refused to grant the reliefs as prayed in Notice of

motion No. 3062 of 2007.

6. Thus, in short Notice of Motion was rejected.

However, while rejecting the said Notice of Motion the

learned Single Judge has observed in paragraph no. 22 that

needless to observe that till such time, the plaintiffs will be

entitled to enjoy all the facilities and amenities associated

with the suit premises which they were otherwise enjoying

under the Leave and License agreement as if the same was

in force. Indeed, the plaintiffs can do so on discharging their

::: Downloaded on – 09/06/2013 14:24:55 :::
-: 10 :-

obligations under the same agreement till the decree of

eviction is passed. This observation however, is not an

expression of opinion on the claim of the Defendant No. 1

for mesne profits if any, against the plaintiffs. While passing

the final order the learned Single Judge in paragraph no. 33

observed and clarified that, however, it is clarified that the

Defendant no.1 shall not take forcible possession of the suit

premises, but will be free to pursue its legal remedy pending

before the Small Causes Court for eviction and possession

of the suit premises against the plaintiffs. In other words,

the Defendant no.1 will be free to evict the plaintiffs by

following due process of law. Till that time, the plaintiffs will

be entitled to enjoy the suit premises and all facilities and

amenities associated thereto in the same way as provided in

the Leave and License agreement, on discharging its

obligations provided under that agreement.

7. Thus, while rejecting the Notice of Motion the

learned Single Judge has allowed the Plaintiff to enjoy the

::: Downloaded on – 09/06/2013 14:24:55 :::
-: 11 :-

suit premises and all facilities and amenities associated

thereto as provided in the leave and licence agreement on

discharging its obligations provided under the said

agreement. Thus, the Plaintiff is aggrieved by the rejection

of the Notice of Motion, and therefore the Plaintiff has

preferred Appeal No. 139 of 2008. So far as the Defendant

No. 1 is concerned, the Defendant No. 1 is aggrieved by an

observation quoted above from paragraph no. 22 and the

direction that till the Defendant No. 1 evicts the Plaintiff by

following the due process of law, the Plaintiff will be entitled

to enjoy the suit premises, facilities and amenities

associated thereto, in the same way as provided in the leave

and licence agreement on discharging the obligations

provided under the said agreement, and thereby has

preferred Appeal No. 182 of 2008. Both these appeals are

heard together for final disposal at the stage admission

since they were arising from the interim application.

8. Defendant No. 2 is a Developer of building known

::: Downloaded on – 09/06/2013 14:24:56 :::
-: 12 :-

as “Peninsula Tower-I” and were the owner of Unit Nos. 201,

202, 203, 204 on second floor in Peninsula Tower-I along

with 27 car parking spaces situated at Peninsula Corporate

Park, Ganapatrao Kadam Marg, off. Senapati Bapat Marg,

Lower Parel, Mumbai – 400 013. [Hereinafter collectively

referred to as “the suit premises.”] In respect of the suit

premises on 18th November 2003 the Plaintiff and the

Defendant No. 2 executed a Letter-of-Intent regarding the

intention of the Defendant No. 2 to grant a licence to the

Plaintiff. Thereafter on 21st June 2004, the Plaintiff and the

Defendant No. 2 executed four documents, namely, (i) the

leave and licence agreement (ii) Amenities agreement, (iii)

Security deposit agreement, and (iv) a Side Letter containing

the provisions for renewal. These four documents are at

Exhibits “A” to “D” to the plaint. By the agreement of leave

and licence, the Defendant No. 2 granted to the Plaintiff

licence to use and occupy the suit premises for a period of

33 months at a consideration and on the terms agreed upon

and recorded in the said leave and licence agreement. As

::: Downloaded on – 09/06/2013 14:24:56 :::
-: 13 :-

per the Amenities agreement, the Defendant No. 2 provided

the amenities as stated in the said agreement in exchange

of consideration recorded therein. Under the agreement for

Security Deposit, the Plaintiff deposited with the Defendant

No. 2 the sum of Rs. 2,12,69,016/- as security deposit. Both

these agreements, namely, amenities agreement and

security deposit agreement, were co-terminus with the leave

and licence agreement.

9. Case of the Plaintiff, in short, is that the leave and

licence agreement is irrevocable licence and as per the

clauses in Addendum or Side-letter, which is at Exhibit -“D”,

Defendant No. 2 has agreed to renew the said leave and

licence agreement for further three terms – the first of which

was for 15 months and was expressed to be automatic (with

lock-in period) and the remaining two further renewals of 18

months and 33 months respectively were the options given

to the Plaintiff which options were to be exercised by the

Plaintiff.

::: Downloaded on – 09/06/2013 14:24:56 :::
-: 14 :-

10. It appears that there was a Letter-of-intent between

the Defendant Nos. 1 & 2 executed on 29th January 2004

recording the intention of the Defendant no.2 to sell the suit

premises to the Defendant No. 1. The Defendant No. 1 was

made aware of the commitments with regard to the licence

period in the Letter-of-Intent dated 18th November 2003

between the Plaintiff and the Defendant No. 2. It is alleged

that the Defendant No. 1 had agreed to be bound as per the

terms and conditions of the said Letter-of-Intent dated 18th

November 2003. It is further alleged that after the execution

of four documents referred to above between the Plaintiff

and the Defendant No. 2, by sale-deed dated 30th November

2004, the Defendant No. 2 sold and transferred the suit

premises to the Defendant No. 1 subject to the rights and

entitlement of the Plaintiff in terms of the aforesaid

agreements (being Exhibits – “A” to “D” to the plaint.). The

Defendant No. 1 only accepts the document at Exhibits – “A”

to “C”. However the document at Exhibit -“D” to the plaint,

::: Downloaded on – 09/06/2013 14:24:56 :::
-: 15 :-

namely, the Side-letter or Addendum is disputed by the

Defendant No. 1. It further appears that by correspondence

dated 2nd December 2004 there was an attornment of the

leave and licence agreement and the plaintiff was directed to

deposit the licence charges with HDFC Bank in the Escrow

Account. However, the dispute started between the parties

round about the time when the period stated in the leave

and licence agreement dated 21st June 2004, namely after

33 months was likely to expire. The said period was to

expire on 31st May 2007 and therefore by a letter dated 9th

April 2007 the defendant no.1 directed that the leave and

licence agreement shall expire by 31st May 2007, and

therefore by 1st June 2007 the Plaintiff shall remove

themselves from the suit premises. By letter dated 19th April

2007 the Plaintiff forwarded a copy of the Addendum dated

21st June 2004 and three drafts of the leave and licence

agreement, the amenities agreement and the agreement for

security deposit and requested to execute them so that the

Plaintiff can remain into possession and enjoyment of the

::: Downloaded on – 09/06/2013 14:24:56 :::
-: 16 :-

said property till 2012. There was exchange of letters

between the parties. However, ultimately the Defendant No.

1 filed suit No. LE-133/150/2007 before the Small Causes

Court, Mumbai on 4th July 2007 claiming that the period of

the leave and licence agreement for 33 months, as agreed

between the Plaintiff and the Defendant No. 2, is over, and

therefore the Plaintiff shall hand over the possession of the

suit premises to the Defendant no.1 Thereafter on 16th

August 2007 the Plaintiff filed suit No. 2316 of 2007 in the

High Court seeking specific performance of the leave and

licence agreement, amenities agreement, agreement for

security deposit and the Addendum, all dated 21st June

2004, in respect of the suit premises. On 17th August 2007,

Notice of Motion No. 3062 of 2007 for interim reliefs was

moved. It was heard and decided by the learned Single

Judge on 17th January 2008 as stated and referred to above

and thereby the Notice of Motion was rejected and while

rejecting the said Notice of Motion certain observations were

made and certain directions were given to the Defendant

::: Downloaded on – 09/06/2013 14:24:56 :::
-: 17 :-

No. 1, and therefore the original Plaintiff and the Defendant

No. 2 respectively, as stated above, have filed the present

appeals.

11. So far as the execution and existence of the

agreement to leave and licence, the amenities agreement

and the agreement in respect of the Security deposit is

concerned, there is no dispute between the Plaintiff and the

Defendant No. 1. The Defendant No. 1 respects these three

agreements. The claim of the Defendant No. 1 is that the

Letter-of-Intent dated 18th November 2003 has been

ultimately relegated, after negotiations, to document of

agreement of licence, amenities agreement and the Security

Deposit Agreement, and therefore, it is the case of the

Defendant No. 1 that though the Letter-of-Intent dated 18th

November 2003 provided that the licence period was 66

months with initial 48 months commencing from the date of

possession being lock-in period, is ultimately the leave and

licence agreement which was executed between the Plaintiff

::: Downloaded on – 09/06/2013 14:24:56 :::
-: 18 :-

and the Defendant No. 2 on 21st June 2006 was for a period

of 33 months, and therefore the period of the leave and

licence agreement between the Plaintiff and the Defendant

No. 2 was only for 33 months. It is further case of the

Defendant No. 1 that the Side-Letter or the Addendum which

provides for automatic extension for a period of 15 months

and further two renewals of 18 months and 33 months was

never disclosed by the Defendant No. 2 and/or by the

Plaintiff to the Defendant No. 1 and therefore the said Side

Letter is not binding on the Defendant No. 1. Thereby, the

simple case of the Defendant No. 1 is that the plaintiff was

entitled to remain in possession and enjoyment of the suit

premises on the basis of leave and licence agreement for 33

months coupled with the Amenities agreement and Security

Deposit Agreement and on the expiry of the said period of

33 months, the Plaintiff shall vacate the suit premises and

that the Addendum letter dated 21st June 2004 issued by the

Defendant No. 2 to Plaintiff is not binding upon the

Defendant No. 1, and therefore simplicitor on the basis of

::: Downloaded on – 09/06/2013 14:24:56 :::
-: 19 :-

expiry of the period of 33 months, as provided in the leave

and licence agreement dated 21st June 2004, by efflux of

time the Defendant No. 1 has filed a suit in the Small

Causes Court, Mumbai bearing No. LE-133/150/2007. At

the initial stage what we find is that, that the said suit is not

based on breach of conditions of the leave and licence

agreement dated 21st June 2004 thereby entitling the

Defendant No. 1 to get possession of the suit premises on

termination of the leave and licence agreement. The period

of 33 months is over as per the Defendant No. 1, and

therefore the Defendant No. 1 is claiming possession of the

suit premises. In short, the suit is based on efflux of time of

the leave and licence agreement and thereby the entitlement

of the Defendant No. 1 for possession of the suit premises.

As against this, the Plaintiff’s suit is for specific performance

of the agreements annexed to the plaint as Exhibits “A” to

“D”, more specifically of the performance of an agreement

called Addendum which provides for an automatic renewal

for a period of 15 months and thereafter the renewal of the

::: Downloaded on – 09/06/2013 14:24:56 :::
-: 20 :-

leave and licence agreement for 18 months and 33 months

at the option of the Plaintiff. In any circumstance, for the

extended period, fresh agreement of the leave and licence

coupled with the amenities and security deposit agreement

is necessary for being valid and legal possession, and

therefore on 19th April 2007, the Plaintiff has forwarded the

documents for further renewals as provided in the

Addendum dated 21st June 2004. However, the same was

not signed by the Defendant No. 1 and instead the

Defendant No. 1 proceeded in the Small Causes Court,

Mumbai for getting the possession of suit premises. In the

suit which is filed by the Plaintiff, therefore, the question is

whether to direct the Defendant No. 1, its servants and

agents to execute the documents extending the renewal of

the leave and licence agreement initially for a period of 15

months and thereafter for a period of 18 months and 33

months as per the letter addressed on 19th April 2007.

Thereby on plain reading of the relief and the case of the

Plaintiff it is crystal clear that the relief claimed in the suit for

::: Downloaded on – 09/06/2013 14:24:56 :::
-: 21 :-

specific performance filed in the High Court is quite a distinct

relief which has nothing to do with the relief claimed in the

suit filed in the Small Causes Court, Mumbai. That means

even if the decree is passed in the suit filed in the Small

Causes Court, Mumbai on efflux of time of the leave and

licence agreement dated 21st June 2004, and that if the

decree is passed in a suit for specific performance the said

decree cannot be enforced, since the Plaintiff will be entitled

to get renewal of the leave and licence agreement and

amenities agreement and security deposit agreement by

way of specific performance. If the suit is dismissed the said

decree can very well be executed and therefore what we

find is that, that the learned Single Judge was right after

considering the submissions on both sides to hold that the

suit in the Small Causes Court, Mumbai can proceed

independently and that it is not necessary to stay the said

suit pending for specific performance of the agreement.

One thing is very much clear that even if the suit for specific

performance is dismissed, yet in order to get possession of

::: Downloaded on – 09/06/2013 14:24:56 :::
-: 22 :-

the property the Defendant No. 1 will have to approach to

the Small Causes Court, and the dismissal of the suit itself

will not entitle the Defendant No.1 to directly enter into

possession of the suit premises, and therefore on proper

analysis we find that the suit in the Small Causes Court,

Mumbai filed by the Defendant No. 1 can independently

proceed and it is not necessary for this Court either to stay

the suit in the Small Causes Court or transfer that suit to

this Court invoking the powers under Section 24 of the Code

of Civil Procedure, 1908. We are aware that the suit from

the Small Causes Court can be transferred to this Court and

this Court can dispose it of as the Small Causes Court, but

as a result of that the remedies available against the said

judgment will be prejudiced. Because this Court being the

highest Court, once deals with the matter, the further

remedies available against the judgment and order of the

Small Causes Court will not be available to the parties.

12. Apart from that, since we find that it has a distinct

::: Downloaded on – 09/06/2013 14:24:56 :::
-: 23 :-

cause of action, which has nothing to do with the cause of

action in the suit for specific performance of the agreement,

we find that the decision taken by the learned Single Judge

allowing the Defendant No. 1 to prosecute the suit in the

Small Causes Court independently, was justified and

thereby the decision rejecting the prayer clause (b) of the

Notice of Motion is just and valid and we approve the same.

13. Then we have to consider the legality of the

judgment and order of the learned Single Judge insofar as

rejecting the prayer clause (a) in the Notice of Motion is

concerned, wherein the learned Single Judge has observed

that since the compensation is appropriate remedy available

to the Plaintiff, specific performance of the agreement

cannot be granted. Prayer clause (a) of the Notice of

Motion, namely, the injunction or prohibition as against the

Defendant No. 1 to the extent that the Defendant No. 1 shall

not obstruct the peaceful possession of the Plaintiff in the

suit premises, is concerned, this requires satisfaction of

::: Downloaded on – 09/06/2013 14:24:56 :::
-: 24 :-

three important ingredients under Order-39 of the Code of

Civil Procedure, 1908, namely, that the Plaintiff should make

out a prima facie case in his favour; secondly, the loss which

the Plaintiff will suffer as a result of the non grant of the

interim relief will be an irreparable loss; and thirdly the

balance of convenience lies in favour of the Plaintiff and we

will have to scrutinize the case of the plaintiff on the above

referred three touchstones for granting temporary injunction.

14. No doubt, that the Plaintiff has been inducted in the

suit premises as a result of the agreement of leave and

licence coupled with the amenities agreement and the

security deposit agreement, all dated 21st June 2004.

Therefore the entry of the Plaintiff in the suit premises is

lawful entry. It is also a fact established on record that the

period of 33 months, as contemplated under the leave and

licence agreement dated 21st June 2004 has come to an

end by 31st May 2007, and 30 days prior to that date there

should have been a renewal or extension of the leave and

::: Downloaded on – 09/06/2013 14:24:56 :::
-: 25 :-

licence agreement period. As per the case of the Plaintiff

the same has not taken place, and therefore the Plaintiff has

approached to this Court for specific performance of those

agreements and thereby he is claiming a decree of renewal

of the leave and licence agreement period as stated in the

agreement of Addendum. So on plain analysis of facts,

undisputedly the Plaintiff is entitled to remain in possession

of the suit premised till 31st May 2007, and accordingly he

has remained. The question which requires to be

scrutinized is – what is the nature of the possession of the

Plaintiff in the suit premises after 31st May 2007, i.e., during

the pendency of the suit for specific performance of the

agreement. For this purpose it will be better to refer to the

terms and conditions of the leave and licence agreement

dated 21st June 2004. The following terms are relevant.

“2(a). The term of the License shall be

for a period of 33 (thirty three) months (the License

period) commencing from the Effective date (as

defined hereunder). Neither party shall be entitled

::: Downloaded on – 09/06/2013 14:24:56 :::
-: 26 :-

to terminate this Agreement and/or the License

hereby granted during the period of 33 (thirty three)

months, except as specifically provided herein.

2(c). On the expiry or earlier

determination of this License (in terms hereof), the

Licensee shall without recourse to the Court of Law

remove itself, its servants and agents and their

belongings from the said Licensed Premises and

hand over the same to the Licensor in good

condition, wear and tear excepted, provided that the

Licensor simultaneously refunds the Security

deposit to the Licensee as provided hereinafter.

6(h). On expiry or sooner

determination of this Agreement, remove itself

alongwith its staff, employees and belongings and

handover the said Licensed premises to the

Licensor in good condition, save and except

::: Downloaded on – 09/06/2013 14:24:56 :::
-: 27 :-

reasonable wear and tear caused by the removal of

the furniture, fittings and fixtures. The Licensee

may at its own discretion not dismental the fixtures

got fixed by it, viz., floor tiles, plastering, electrical

wiring/fittings, plumbing, drainage, ducting etc..

18. Except as otherwise provided in

this Agreement and subject to the Licensor

complying with all its obligations towards the

Licensee as contained in these presents on the

expiry or sooner determination of this Agreement

the Licensee shall leave the said Licensed

Premises by removing itself, its Affiliates / Group

companies, its officers, employees and servants as

also all its or their belongings chattles articles or

things from the said Licensed Premises and hand

over vacant and peaceful possession thereof and

on such expiry or termination the Licensee and/or

other persons occupying the said Licensed

::: Downloaded on – 09/06/2013 14:24:56 :::
-: 28 :-

Premises shall be trespasser thereon and the

Licensor, its Affiliates/ Group companies and/or its

servants and agents or any other person or persons

authorised by the Licensor in that behalf shall be

entitled to prevent the Licensee, its employees,

servants and agents from entering into the said

Licensed premises or any part thereof and it is

hereby expressly agreed and understood that if

after the expiry or sooner determination of the

license hereby granted the Licensor is unable for

any reason whatsoever to remove the Licensee its

Affiliates / Group companies or its officers,

employees and servants occupying the said

Licensed Premises or if any time is given by the

Licensor to the Licensee for vacating the said

Licensed premises the same shall not be deemed

or taken to be any concession given by the Licensor

to the Licensee nor shall it amount to renewal of

this Agreement for a further period and the

::: Downloaded on – 09/06/2013 14:24:56 :::
-: 29 :-

Licensee shall nevertheless be deemed to continue

to use or occupy the said Licensed Premises

unauthorisedly after the expiry or sooner

determination of this Agreement as aforesaid and

the Licensee shall so long as it fails to vacate the

said Licensed Premises be liable to pay to the

Licensor a sum of Rs.1,18,160/- per day as and by

way of agreed amount of liquidated quantified

damages for continuing to illegally and

unauthorisedly occupying the said Licensed

premises.”

15. Thus, on going through the leave and licence

agreement dated 21st June 2004, what is noticed is that,

that the said leave and licence agreement was to remain

operative for a period of 33 months. It can be terminated as

provided in clause 17. But we have not mentioned clause-

17 because there is nobody’s case that the leave and

licence agreement was terminated under clause-17. The

::: Downloaded on – 09/06/2013 14:24:56 :::
-: 30 :-

case is that the licence period is over and what is the nature

of the possession of the licensee under the said agreement.

On reading the above referred clauses, namely, clauses 2

(c) 6(h) and 18, it will be clear that on expiry of the licence

period, the Plaintiff is under obligation to remove itself from

the suit premises along with its affiliates/group companies,

its officers and employees and servants and also their

belongings and hand over the vacant and peaceful

possession thereof. What is important to be noted is that,

that the occupation of the suit premises by the Plaintiff after

the expiry of the licence period is that of the trespasser and

the Plaintiff is under obligation to pay Rs.1,18,160/- per day

by way of agreed amount of liquidated damages for

continuing illegally and unauthorisedly occupying the suit

premises. Therefore, the nature of Plaintiff’s possession

after the expiry of the period of leave and licence is that of

the trespasser and/or unauthorized occupation for which the

liquidated damages as stated in clause-18, the Plaintiff is

liable to pay and the Defendant No. 1 is entitled to recover.

::: Downloaded on – 09/06/2013 14:24:56 :::
-: 31 :-

Therefore, if the Plaintiff’s possession on the basis of an

agreement, the Plaintiff himself claims, is found to be

unauthorized or of trespasser’s possession after the expiry

of the licence period, it will not be possible for this Court to

issue an order of temporary injunction against the

Defendants. Because, prima facie, we find that the Plaintiff’s

possession is of the trespasser’s possession on the basis of

the documents which he claims the possession, namely, the

leave and licence agreement dated 21st June 2004 and the

above referred to clauses from the said document.

Therefore, even assuming that the agreement of leave and

licence during the period of leave and licence is irrevocable,

after the expiry of the licence period, the possession of the

Plaintiff turns out to be the trespasser’s and/or unauthorised

possession. What is interesting to be noted is that, that the

leave and licence agreement, Security deposit agreement

and amenities agreement, reading themselves do not

provide for an extension or renewal of agreement between

the parties. Therefore, analyzing the case of the Plaintiff on

::: Downloaded on – 09/06/2013 14:24:56 :::
-: 32 :-

the basis of these three documents it is crystal clear that on

the expiry of the period of licence the possession of the

Plaintiff in the suit premises will be that of the trespasser or

unauthorised occupant.

16. We are aware that and even it is the contention of

the Plaintiff that prior to the expiry of the licence period the

Plaintiff had a right to get the licence period renewed

including the agreement of Addendum dated 21st June 2004

and therefore the Plaintiff relies upon Clauses (9) & (10) of

the leave and licence agreement dated 21st June 2004.

They are as follows.

“9. The Licensor shall always be entitled
to sell, mortgage, transfer, surrender or

otherwise dispose of the said Licensed
Premises or any part thereof to any person,
firm, company during the continuance of this
Agreement provided that such sale, mortgage,
transfer, surrender or otherwise disposal of the
said Licensed Premises. Shall not affect in any

::: Downloaded on – 09/06/2013 14:24:56 :::
-: 33 :-

way whatsoever the rights of the Licensee
and/or obligations of the Licensor under this

Agreement.

10. The rights of the Licensor to sell,
mortgage, transfer, surrender or otherwise
dispose of the said Licensed Premises to any

person shall not affect in any way whatsoever

the rights of the Licensee pursuant to this
Agreement. The Licensor shall bring this

Agreement and any amendment or addendum
thereto to the attention of any prospective

purchaser or mortgagee or assignee and shall
include in any such agreement to transfer the

Licensor’s interest in the said Licensed
Premises, a clause whereby the intending

Transferee / Mortgagee confirms the terms of
this Agreement including any amendment or
addendum thereto and agrees to abide by and

comply with the obligations of the Licensor
under this Agreement.”

17. Thus, by making a reference to these clauses the

learned counsel for the Plaintiff submits that the Defendant

::: Downloaded on – 09/06/2013 14:24:56 :::
-: 34 :-

No. 1 who is the purchaser has purchased the suit premises

subject to the leave and licence agreement, amenities

agreement, security deposit agreement and more

specifically the amendment and/or the Addendum. He

submits that the licensor is under obligation to bring these

agreements and the amendments and/or Addendums

thereto to the attention of the prospective purchaser or

mortgagee or assignee and shall include in such agreement

to transfer, the licensor’s interest in the said licensed

premises, a clause whereby the intending transferor,

mortgagee confirms the terms of this agreement including

any amendment and/or Addendum thereto. Thereby it is the

contention that it was licensor’s responsibility to bring to the

notice of the prospective purchaser the rights of the Plaintiff

under the leave and license agreement and other

documents coupled with the amendment or Addendum

thereto. In short, the learned counsel for the Plaintiff

submitted that the Addendum of which the Defendant No.1

is claiming an ignorance is binding on Defendant No. 1.

::: Downloaded on – 09/06/2013 14:24:56 :::
-: 35 :-

What is interesting to be noted is that, that the sale

agreement which is executed by the Defendant No. 2 in

favour of the Defendant No. 1 though makes a reference to

the agreement of leave and licence, amenities agreement

and security deposit agreement, all dated 21st June 2004,

but it does not make a reference to the Addendum or side-

letter which provides for extension of the period of leave and

licence being dated 21st June 2004. Under these

circumstances the dispute as to whether the said letter is

binding on Defendant No. 1 or not, is a question to be dealt

with in the trial of the suit. No doubt, at a prima facie stage

the learned Single Judge has observed that all the four

documents will have to be considered which were executed

between the Plaintiff and the Defendant No. 1 on 21st June

2004, and therefore the intention of the parties, namely,

what type of agreement they wanted in between them can

be constructed only on the basis of the transaction between

them.

::: Downloaded on – 09/06/2013 14:24:56 :::
-: 36 :-

18. However, what is to be noted is that, that the so

called Side-letter or Addendum is by way of a letter which

has been signed by the Defendant No. 2 and addressed to

the Plaintiff. The letter itself makes a reference that we have

already executed today the leave and licence agreement,

the amenities agreement and the agreement for security

deposit, collectively the agreements, and thereafter the said

letter has been written. Therefore, whether the said letter is

to be treated as executed simultaneously with the other

three agreements or it is a subsequently written agreement

is a matter to be scrutinized in the evidence. If it is found

that this letter is binding as against the Defendant No. 1,

then the specific performance of this letter can be enforced

as against the Defendant No. 1. But for whatsoever reason

in final analysis after evidence if the Court finds that this

letter is not binding as against the Defendant No. 1, the

specific performance of the agreement cannot be granted.

This depends upon the binding nature of the clauses from

the leave and license agreement referred to above.

::: Downloaded on – 09/06/2013 14:24:56 :::
-: 37 :-

Because the above referred clauses place an obligation on

the Defendant No. 2 to disclose the agreements between

the Plaintiff and the Defendant No. 2 to the prospective

purchasers. But the question remains if the Defendant No. 2

has not discharged the said obligation then in that

circumstance whether those clauses will be binding as

against the prospective purchaser. The Defendant No. 1

has raised a dispute in this respect and at this stage it will be

inappropriate to reach any prima facie conclusion. Because

the finding in this respect is to be recorded after a full

fledged trial and the evidence for that purpose is not before

this Court and the necessary facts to infer either way, i.e., in

favour of the Plaintiff or the Defendant No. 1, are not on

record. At this stage, we can only say that it appears that

there was a Side letter or Addendum which was executed by

the Defendant No. 2 and was addressed to the Plaintiff

which provided for a right to renew the leave and licence

agreement and other agreements, initially for a period of 15

months and thereafter for a period of 18 months and 33

::: Downloaded on – 09/06/2013 14:24:56 :::
-: 38 :-

months as provided in the said letter. Therefore, at the

most, at this stage we can say prima facie that there was an

agreement in between the Plaintiff and the Defendant No. 2

to renew the leave and licence agreement and other

documents. But whether the said document is binding on

the Defendant No. 1 is a question to be scrutinized on

evidence between the parties, and this is because the said

document or the transfer document in favour of the

Defendant No. 1 does not make a reference to the

Addendum. Not only that but the resolutions which have

been passed by the Defendant No. 2 authorizing to execute

the documents of leave and licence, etc., make reference

only to the leave and licence agreement for the period of 33

months and there is no reference to the Side-letter or the

Addendum to be signed by any authorized person. We

cannot forget that the Defendant No. 2 is a limited Company,

and therefore unless there is authorization on behalf of the

Company the agreement cannot be said to be operative as

against the said Company. Presently we do not find on

::: Downloaded on – 09/06/2013 14:24:56 :::
-: 39 :-

record any authorization in favour of any person who has

signed the said Side letter or Addendum issued by the

Company. No doubt, we have noted that on the said letter

the Plaintiff’s Managing Director has agreed and confirmed

the terms. But all these disputed facts so far as the Plaintiff

and the Defendant No. 1 are concerned are required to be

scrutinized in evidence. We are aware that the learned

Single Judge has observed that all these agreements will

have to be read together and they are valid. However, that

is a prima facie finding of the learned Single Judge. We

cannot forget at this stage the controversy and triable issues

which have been raised by the parties to which we have

made a reference. Therefore, what we find is that, that the

approach of the learned Single Judge holding that these

documents are to be read together and are valid in law, can

be equally accepted at this stage. But what is interesting to

note is that the learned Single Judge has observed that

these documents cannot be said to be enforceable at law,

because compensation is the appropriate remedy.

::: Downloaded on – 09/06/2013 14:24:56 :::
-: 40 :-

Therefore, we also find that, even if we assume for a

moment that these documents are binding as against the

Defendant No. 1 as submitted by the learned counsel for the

Plaintiff, yet we also agree with the learned Single Judge

that compensation is an adequate remedy in case there is

breach of the agreement. Therefore the specific

performance of the agreement cannot be granted. This is a

prima facie view of the learned Single Judge and we endorse

the same. Thus, what we find that even tough we find that

there are triable issues as referred in between the Plaintiff

and the Defendant No. 1, but assuming for a moment and

agreeing with the learned Single Judge, we also endorse the

view of the learned Single Judge. Because in a suit for

specific performance it is always a question to be placed

before the Court that even though the agreement has been

established whether the specific performance has to be

granted or not. Because it is always a discretionary relief

and therefore only because the Plaintiff has established an

agreement that does not mean that the Plaintiff has to get a

::: Downloaded on – 09/06/2013 14:24:56 :::
-: 41 :-

decree for specific performance of the agreement. There

are factors to be considered under Section 20 of the Specific

Reliefs Act, and thereby whether to grant a decree or not to

grant a decree is a discretion of the trial Court. It is well

settled principle of law that when a decree for compensation

can be granted as an alternative, the specific performance

shall not be granted. In an agreement of leave and licence

wherein the period of the leave and licence agreement is

over and the renewal is subject to the decree likely to be

passed in the suit, the right to specific performance which is

being claimed cannot be said to be a right in the property,

but it is a right to obtain another covenant, namely, the

renewal of the leave and licence agreement. Therefore, the

right which is being sought to be executed is not a right in

the property but is a right to get a conveyance in respect of

the suit premises, here, namely the leave and licence

agreement. It is to be noted that leave and licence generally

does not create a right in the property or interest in the

property. It is only a right to enjoy the property for a

::: Downloaded on – 09/06/2013 14:24:56 :::
-: 42 :-

specified period without creating any interest in the property

and the covenant in respect of this is being asked for by a

suit for specific performance. Therefore, it is a matter to be

considered under Section 20 of the Specific Relief Act and is

completely within the discretion of the Court. The argument

that there is an irrevocable licence and therefore the specific

performance will have to be granted does not persuade us.

Because as the the learned Single Judge has observed and

we have also endorsed the said view the the leave and

licence agreement is irrevocable during the period of

licence. That period is now over. We are considering the

renewal of the licence after completion of the initial period of

33 months, and therefore whether the Plaintiff is entitled to

the renewal in view of the clause in the Addendum, and

whether the same is binding as against the Defendant No. 1

so as to pass a decree is the question which the learned

Single Judge has to consider. If the suit is decreed and the

renewal documents are executed, the further period of

licence will commence on the basis of the said would be

::: Downloaded on – 09/06/2013 14:24:56 :::
-: 43 :-

decree and on execution of those documents. However, that

stage is yet to come. Presently, all the issues and questions

are triable issues before the trial Court. Therefore on the

basis of an established document, i.e., the leave and licence

agreement dated 21st June 2004, the possession of the

Plaintiff will have to be treated as unauthorised and that of

the trespasser in view of the above referred clauses of the

leave and licence agreement. We have to respectfully note

that this aspect and these clauses have not been considered

by the learned Single Judge in the proper perspective.

Therefore, even though he prima facie found that the

compensation is an appropriate remedy and thereby found

that there is no prima facie case to grant the specific

performance of the agreement and thereby rejected the

prayer clause (a) of the Notice of Motion, yet he has ignored

to take into consideration that the prayer clause (a) can also

be rejected on the ground that the possession of the Plaintiff

in the suit premises after the completion of 33 months

period, i.e., licence period, is that of the trespasser and

::: Downloaded on – 09/06/2013 14:24:56 :::
-: 44 :-

unauthorised occupant as per the terms in the leave and

licence agreement, which entitles the Defendant No.1 to

recover the damages on per day basis, as provided in the

above referred to clauses. Therefore, what we find is that,

that it appears that the learned Single Judge was

overwhelmed with the fact that the entry of the Plaintiff is

lawful entry in the suit premises, and therefore the said entry

continues to be lawful under the said agreement till the

Plaintiff is not lawfully evicted from the suit premises. What

we find is that, that the observation made by the learned

Single Judge in paragraph no. 22 and in the operative part

of the impugned order, that till the Plaintiff is removed from

the possession of the property the Plaintiff shall continue to

enjoy the said property on the same terms and conditions as

provided in the leave and licence agreement, security

deposit agreement and amenities agreement, is not a

correct finding and correct direction. Because, the learned

Single Judge has ignored the clauses which provide for a

per day basis compensation referred to above. Therefore,

::: Downloaded on – 09/06/2013 14:24:56 :::
-: 45 :-

what we find is that, that the observations made by the

learned Single Judge in paragraph no. 22 and the last

operative part deserves to be set aside and as a result

Appeal No. 182 of 2008 deserves to be allowed.

19. So far as the irreparable loss is concerned, that

agreement between the parties is leave and licence which

only gives a right to enjoy the property without creating any

right and/or interest in the property. The so-called period of

irrevocable licence is also over and since we do not find that

there is any right in favour of the Plaintiff except that the

Plaintiff may have a right to get executed another leave and

licence agreement from the Defendant if the suit is decreed

in favour of the Plaintiff. That right to get another

conveyance is not a right in the property. Therefore,

ultimately we find that there is no right in favour of the

Plaintiff which the Plaintiff has in the suit property.

Therefore, if the injunction is not granted there will not be

any irreparable loss. On the contrary the right which the

::: Downloaded on – 09/06/2013 14:24:56 :::
-: 46 :-

Plaintiff is claiming can be compensated in terms of money

by providing liquidated damages. Not only that but the

Plaintiff himself has made an alternative prayer in the suit

claiming damages in case the decree for specific

performance is not granted. Thereby, the Plaintiff himself is

aware that the claim which he has made in respect of the

suit premises can be compensated in terms of money also.

The same is the view taken by the learned Single Judge,

and since we find that the Plaintiff has no right in the suit

property and whatever right the Plaintiff claims can be

compensated in terms of money, we find that it is not a case

of irreparable loss by which the plaintiff is entitled to interim

relief. So far as the balance of convenience is concerned,

we do not find that the balance of convenience is in favour of

the Plaintiff at this stage. However, we agree with the

learned Single Judge that the Defendant No. 1 cannot take

the law in hand and the Plaintiff though is in unlawful

possession or a trespasser as per the document of leave

and licence, yet the Defendant will have to take possession

::: Downloaded on – 09/06/2013 14:24:56 :::
-: 47 :-

of the property by following the due process of law. It is a

well settled principle that even the trespasser cannot be

removed by taking the law in hand and the person entitled to

possession of the property shall obtain the possession of the

property by following the due process of law and that is the

method of getting the possession of the property in a

civilized Society. Therefore we at this stage only record our

finding that the decision of the learned Single Judge to reject

the Notice of Motion is just and proper and does not require

any interference at the hands of this Court. The findings

recorded by the learned Single Judge in addition to the

reasons which we have given are endorsed by us. The legal

cases which have been referred to and relied upon by the

learned Single Judge are approved by us and we agree with

the learned Single Judge to that effect. We find that the

order passed by the learned Single Judge is perfectly

correct except paragraph no. 22 and the last direction which

is given against the Defendant No. 1, namely, that the

Plaintiff shall continue in possession of the property till he is

::: Downloaded on – 09/06/2013 14:24:56 :::
-: 48 :-

evicted from the suit premises by following the due process

of law on the basis of the leave and licence agreement,

security deposit agreement and amenities agreement.

Therefore, we set aside the said observations in paragraph

no.22 and the last direction given by the learned Single

Judge in the impugned order which is referred to above.

Because, as a result of those observations the right of the

Defendant No.1 to claim the per day damages as provided

in the leave and licence agreement after the licence period

is over is prejudiced. That cannot be done by us. It is for

the parties to follow the appropriate course for execution of

those rights. In short, Appeal No. 182 of 2008 filed by the

original Defendant no.1 is allowed to the extent of setting

aside the observations made by the learned Single Judge in

paragraph no. 22 and the last direction given in the

impugned order that the Plaintiff shall continue to enjoy the

suit property on the basis of the leave and licence

agreement, amenities agreement, security deposit

agreement till the Plaintiff is evicted from the suit property by

::: Downloaded on – 09/06/2013 14:24:56 :::
-: 49 :-

following the due process of law, is quashed and set aside

and to that extent Appeal No. 182 of 2008 is allowed. So far

as Appeal No. 139 of 2008 which has been filed by the

Plaintiff is concerned it is dismissed.

                    Sd/-                                  Sd/-
           (Prasanna B. Varale,J.)
                      ig                            (S. B. Mhase,J.)
                    
      
   





20. At this stage, Mr. Pravin Samdani, the learned

senior counsel for the appellants in Appeal No. 139 of 2008

and for the respondents in Appeal No.182 of 2008 prayed

for continuation of the interim order which was granted by

the appeal Court. Mr. Darius Khambatta, learned senior

counsel for the appellants in Appeal No.182 of 2008 and for

::: Downloaded on – 09/06/2013 14:24:56 :::
-: 50 :-

the respondents in Appeal No.139 of 2008 vehemently

opposed grant of such continuation of the interim order.

However, for the sake of justice and in order to enable the

appellants/respondents to follow the appropriate remedy as

against the order which we have passed, the interim order is

continued for a period of eight (8) weeks.

Sd/-

(S.B. Mhase, J.)

::: Downloaded on – 09/06/2013 14:24:56 :::

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes:

<a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>

* Copy This Password *

* Type Or Paste Password Here *