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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, ]
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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 ]
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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.
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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,
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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.
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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
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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 orotherwise 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 thisAgreement.
10. The rights of the Licensor to sell,
mortgage, transfer, surrender or otherwise
dispose of the said Licensed Premises to anyperson shall not affect in any way whatsoever
the rights of the Licensee pursuant to this
Agreement. The Licensor shall bring thisAgreement and any amendment or addendum
thereto to the attention of any prospectivepurchaser or mortgagee or assignee and shall
include in any such agreement to transfer theLicensor’s interest in the said Licensed
Premises, a clause whereby the intendingTransferee / Mortgagee confirms the terms of
this Agreement including any amendment or
addendum thereto and agrees to abide by andcomply 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
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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.
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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.
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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.
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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
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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
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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.
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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
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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
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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
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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
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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,
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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
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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
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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
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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
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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
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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.)
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