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Midtown Leasing Company Ltd vs The Tamil Nadu State Marketing … on 16 November, 2009

Madras High Court
Midtown Leasing Company Ltd vs The Tamil Nadu State Marketing … on 16 November, 2009
       

  

  

 
 
 IN THE HIGH COURT OF JUDICATURE AT MADRAS

Date  :    16-11-2009

Coram:

The Honble Mr. Justice S.TAMILVANAN

C.S.No.564 of 2001

Midtown Leasing Company Ltd.,
Room No.21, First Floor,
19, Pollock Street,
Calcutta  700 002
Rep. by its Mr.Y.Varadarajan 						   Plaintiff

Vs.

The Tamil Nadu State Marketing Corpn., Ltd,
Chennai.
Rep. by its Managing Director. 			        		       Defendant


	Suit filed under Order IV Rule 1 of O.S.Rules read with Order XII Rule 1 of CPC.

		For plaintiff   	   :: Mr.K.K.Muralitharan
					      for M/s.Murari

		For defendant	   :: Mr.Srikanth
					      Additional Government Pleader

J U D G M E N T

The plaintiff has filed the suit, seeking a money decree against the defendant for a sum of Rs.13,73,278.10/- to be paid together with interest at 18% per annum on the principal amount of Rs.10,20,980/- from the date of filing of the suit till the date of realisation with costs.

2. As per the plaint averments, the plaintiff is a registered partnership firm, having its registered office at Calcutta. The defendant was carrying on business in stocking and marketing of various liquor items in the year 1998 taken the premises bearing Door No.52, Nelson Manickan Road, Aminjikarai, Chennai, consisting of godown and space measuring approximately 15,805 sq.ft., on lease from the owner namely M/s. Vikash Solvextracts Ltd., which came to an end on 31.07.1991 by efflux of time. Subsequently, there was negotiation between the plaintiff and the defendant and a lease deed was entered into between the parties on 29.02.1992, whereby the premises consisting of built up area of 1463.85 sq.m equivalent to 15805 sq.ft was leased out by the plaintiff to the defendant for a period of eleven months from 01.08.1991 with an option to renew the same for a further period of eleven months, for which both the parties mutually agreed. For the occupation of the premises, monthly license charge was fixed at Rs.35,561.25/- payable by the defendant and Rs.11,853.75/- was fixed as service charge calculated on the basis of Rs.3 per sq.ft. Per month aggregating to a sum of Rs.47,415/-. The defendant was also requested to pay the plaintiff a sum of Rs.1,42,245/- as security deposit, which was also paid. The lease deed, which was renewed subsequently came to an end on 30.04.1994, after which, the license agreement was entered into between the parties in respect of the said premises.

3. It is further averred that from 01.08.1994 to 31.03.1995, the amount payable was Rs.64,958.55/- at the rate of Rs.4.11 per sq.ft and renewable from 01.04.1995 to 19.02.1996 at the same rate and the agreement, required three months notice to be given by either party desiring to terminate the said agreement.

4. The plaintiff had sent his legal notice dated 06.05.1996 asking the defendant for vacating the premises. According to the plaintiff, the defendant was causing much inconvenience by dis-orderly movement of their trucks and consequently on account of the breaches committed by the defendant. According to the plaintiff, the agreement entered into between the parties on 07.12.1995 was only a license agreement , hence, the defendant was addressed on 28.12.1996 by the plaintiff expressing their willingness to extend the agreement of license, subject to the terms and conditions set out in the said letter, whereby an increase in occupation / license and service charges by 50% and they repeated their offer in and by letter, dated 28.03.1997.

5. According to the plaintiff, the license agreement, Ex.P.5, the occupation / license and service charge were stipulated at Rs.47,415/- from 01.05.1994 up to 31.07.1994 for a period of three months . From 01.08.1994 to 31.03.1995, the amount payable was calculated by Rs.64,958.55/- at the rate of Rs.4.11/- per sq.ft and renewable from 01.04.1995 to 19.02.1996 at the same rate of Rs.4.11/- per sq.ft.

6. As per the agreement, three months notice to be given by either party desiring to terminate the agreement. The plaintiff, by notice, dated 06.05.1996 asked the defendant to vacate and hand over the possession of the premises. The defendant failed to comply with the said demand, hence, legal notice was issued by the plaintiff to the defendant and then the suit was filed. With the above pleadings, the plaintiff has filed this suit, seeking the aforesaid relief sought for.

7. In the written statement, the defendant has stated that the plaintiff was not the owner of the suit property, however, the lease deed was entered into between the plaintiff and the defendant by virtue of the fact that the owner of the premises in Door No.52, Nelson Manickan Road, Aminjikarai, Chennai, was functioning from 1998. The defendant has further stated that the lease was for a period of eleven months from 01.08.1991. The rent was calculated at the rate of Rs.3 per sq.ft per month and fixed at Rs.47,415 for 15805 sq.ft., and the defendant paid a sum of Rs.1,42,245 as advance to the plaintiff. According to him, after the expiry of the lease period on 01.07.1992, it was extended from 01.07.1992 to 31.05.1993 and then from 01.06.1993 to 30.04.1994, though there was no privity of contract between the parties. As per the written statement, the lease was not extended for a further period of eleven months from 01.05.1994. Based on the decision of Board of TASMAC, it was decided to enhance the rent from Rs.3 per sq.ft to Rs.4.11 per sq.ft with effect from 01.08.1994.

8. According to the defendant, the plaintiff has no locus standi to complain about the breach of agreement, and further stated that the suit premises was leased out to the defendant by the plaintiff, only after knowing the fact that the defendant was carrying on the wholesale business of IMFS/Beer which involves frequent truck movements. As the lease period expired on 28.02.1996, under the agreement, dated 07.12.1995, the defendant was entitled to seek extension of lease for a period of eleven months from 28.02.1996. The defendant requested the plaintiff to renew the lease for a period of three months from 01.06.1996 vide their communication made in Lr.No.A8/Accounts/96, dated 04.11.1996.

9. The defendant has further stated that the plaintiff had expressed willingness to extend the term of agreement, subject to the condition of increasing the rent by 50% with effect from 01.06.1996 and therefore, their intention was to enhance the rent and not against movement of trucks in the premises by the defendant. The defendant, being a State Government undertaking, cannot give such enhancement on its own accord, without following the guidelines stipulated for the rent enhancement. It was informed that the effect of enhancement of rent can be given only from 01.08.1997. The plaintiff by his letter, dated 29.04.1997 demanded that if the rent enhancement was given effect from 01.08.1997, the rent should have been increased by 100% with effect from 01.04.1998. According to the defendant, the same clearly establishes that the plaintiff decision is arbitrary, unilateral and according to the plaintiff’s whims and fancies. It is further stated in the written statement that the defendant never agreed to enhance the rent by 50% at any point of time. The contention of the plaintiff that both the parties had agreed to abide by rent reasonable certificate provided by the Public Works Department is not correct. On receipt of the rent reasonable certificate from the Public Works Department, this subject was placed before the defendant Board to take decision on the reasonable rent certificate for Rs.1,31,330/- per month furnished by the Public Works Department. The Board of TASMAC in its 83rd Board Meeting held on 25.08.1999 requested the Managing Director, TASMAC, the defendant herein to check the correctness of the reasonable rent fixed by the Public Works Department and place the details before the Board for taking a decision, accordingly, the PWD was requested to furnish the basis for arriving the reasonable rent at Rs.1,31,330/- per month, vide letter, dated 26.10.1999.

10. According to the defendant, it was ascertained that one M/s. Wardex Pharmaceuticals Limited, an occupant of a portion of the godown in the same premises in which the defendant’s depot was also located has paid the rent at the rate of Rs.650/- per sq.ft. per month up to 31.03.1999. All the details were placed before the Board of TASMAC and the Board, in its meeting held on 28.12.1999 authorised the Managing Director, TASMAC Limited to pay Rs.7.67 lakhs for the period from 01.08.1997 to 09.04.1999 as rent arrears to the owner of the godown, where the erstwhile Aminjikarai Depot of TASMAC was functioning by increasing the rate of rent from Rs.4.11 per sq.ft to Rs.6.50 per sq.ft per month taking into account of the rent paid by M/s. Wardex Pharamaceuticals Ltd., which was also an occupant of a portion of the godown in the same premises and not the rent at the rate of Rs.7.50/- per sq.ft fixed by the PWD. Accordingly, an amount of Rs.4,54,955/- was paid to the plaintiff, after adjusting the advance rent, tax deduction etc., The decision of enhancement of rent at the rate of Rs.6.50 was arrived at only after considering the basis of the reasonable rent reported by the Public Works Department.

11. The plaintiff in their letter, dated 25.07.1997 had accepted to the enhancement of rent at 50% with effect from 01.08.1997. According to the defendant, the contention of the plaintiff that the rent has to be fixed at Rs.1,31,330/- per month is untenable. The defendant had paid centage of Rs.1,31,330/- as service charges to the PWD for furnishing rent reasonable certificate and payment of service charges at Rs.1,31,330/- does not confer any right to the plaintiff that the same amount has to be paid as rent per month. Further the PWD authorities fixed the rent of the premises in question at Rs.7.50/- per sq.ft and arrived at monthly rent of Rs.1,31,330/-, by adopting the area of the premises as 17511 sq.ft., but the actual area of the premises is only 15805 sq.ft, the rent should be Rs.1,18,555.50/-, if the rent reasonable certificate is accepted as it is. Hence, the contention that the defendant is under obligation to accept the rent reasonable certificate in toto is untenable. In response to the notice, dated 21.08.2000 issued on behalf of the plaintiff demanding the defendant to pay the differential rent in terms of the rent reasonable certificate issued by the PWD, the defendant had categorically replied that as per the direction of the Board of TASMAC, they had checked the correctness of the reasonable rent, suggested by the PWD.

12. The contention of the plaintiff that the defendant is liable to pay a sum of Rs.3,93,990/- towards three months rent, since the defendant had failed to give three months notice is also untenable, since there was no subsisting legally enforceable agreement between the defendant and the plaintiff to give three months notice before vacating the premises. On the above grounds, according to the defendant, there is no legal cause of action to maintain the suit, hence, the defendant has prayed to dismiss the suit with costs.

13. Based on the pleadings of both the parties, the following issues were framed in the suit :

“1. Is the plaintiff right in contending that the increase of the rent in the agreement of lease amounts to extension of lease ?

2. Does the defendant / lessee as lessee having right to be in occupation of the suit property ?

3. Whether the plaintiff and the defendant agreed to abide by the rent and reasonable rent fixed by the Public Works Department, payable by the Defendant in respect of the demised premises being in occupation of the defendant ?

4. Is the defendant is liable to pay to the plaintiff monthly rent of Rs.1,31,330/- since the defendant /TASMAC paid Rs.1,31,330/- to Public Works Department as service charges ?

5. Is the defendant liable to pay the suit claim?

6. To what relief, the parties are entitled ?”

14. Issue Nos.1 and 2 : In the plaint, the plaintiff has stated that the defendant, who are carrying on business in stocking and marketing of various liquor items in the year 1998 had taken the premises bearing Door No.52, Nelson Manickam Road, Aminjikarai, Chennai, consisting of godown space measuring approximately 15805 sq.ft., on lease from the owner thereof, namely M/s. Vikash Solvextracts Ltd., and the lease was subsequently extended from 01.07.1992 to 31.05.1993 and from 01.06.1993 to 30.04.1994 and thereafter, an agreement a license was entered into between the plaintiff and the defendant on 07.12.1995 with effect from 01.05.1994 referring to the earlier lease deed. In the proof affidavit also, the plaintiff has stated that there was license agreement between the parties in respect of the premises and the license agreement was marked as Ex.P.5. The occupation / license charges and service charges were Rs.47,415/- from 01.05.1994 up to 31.07.1994 for a period of 3 months, from 01.08.1994 to 31.03.1995, the amount payable was Rs.64,958.55/- at the rate of Rs.4.11 per sq.ft., and from 01.04.1995 to 29.02.1996, the same was payable at the same rate of Rs.4.11/- per sq.ft.

15. In the written statement, the defendant has not disputed the fact that there was an agreement of license between the plaintiff and the defendant, though originally, it had been a lease agreement. In the proof affidavit filed by the defendant, the defendant has admitted that a lease deed was entered into between the defendant and M/s. Midtown Leasing Company Ltd., the plaintiff herein. The lease period was for a period of 11 months from 01.08.1991 and rent was calculated at the rate of Rs.3/- per sq.ft for 15805 sq.ft. The lease period expired on 28.02.1996, subsequently, as per the agreement, dated 07.12.1995, the defendant was entitled to seek extension of lease for a further period from 28.02.1996 and accordingly, the defendant requested the plaintiff to renew the license for a period of 3 years with effect from 01.06.1996 vide communication made by letter, dated 04.11.1996. As per Ex.P.3, dated 29.02.1992 the agreement entered into between the plaintiff and the defendant is stated as a lease agreement, however, as per Ex.P.5, dated 07.12.1995 and agreement of license was entered into between the plaintiff and the defendant and therefore, this Court is of the view that as per the admitted document, Ex.P.5, subsequently, it was only a license agreement between the plaintiff and the defendant. Hence, there was increase of the license amount, as per the agreement and there could be no extension of lease, since the same cannot be construed as lease agreement, under Ex.P.5. Accordingly, there was no extension of lease for the relevant period and the defendant had no legal right to be in occupation of the suit property, after the expiry of the license period. Issues 1 and 2 are answered accordingly.

16. Issue Nos.3, 4 and 5 : According to the plaintiff, the defendant had agreed to pay the rent in terms of the PWD certificate. Though the plaintiff has stated that the amount due and payable as rent, the agreement between the plaintiff and the defendant was only a license, as stated in the later part of the plaint. The plaintiff has further stated that on 07.12.195, license agreements were entered into between the parties and on 04.11.1996, 13.06.1997 and 29.04.1997 and the plaintiff finally sought an increase in rent of 100% and on 05.05.1997, the defendant had agreed only for a partial increase, on 26.11.1997, the defendant called upon the PWD to issue rent reasonableness certificate and on 08.06.1999, such certificate was issued. Therefore, though the plaintiff has stated that it was subsequently a license between the plaintiff and the defendant, instead of claiming license fee, enhanced rent has been claimed. According to the plaintiff, the defendant had effected payment at the rate of Rs.6.50/- per sq.ft from 01.08.1997 to 28.04.1999, which works out to a sum of Rs.1,02,932/- per month against the PWD rate of Rs.1,31,330/- per month and further giving credit to a sum of Rs.7,66,811/- paid by the defendant and therefore, the defendant is liable to pay the plaintiff the balance amount of Rs.6,26,990/- being the differential rent for the period from 01.08.1997 to 28.04.1999. In addition to the same, the plaintiff has claimed Rs.3,93,990/- towards three months rent in lieu of notice not given before vacating the premises and a total sum of Rs.10,20,980/- claimed. For the said amount, the plaintiff has calculated 18% interest from 01.05.1999 to 31.03.2001 at the rate of Rs.3,52,238.10/- and accordingly, claimed Rs.13,73,278.10/-.

17. Learned counsel appearing for the plaintiff drew the attention of this Court to Ex.P.4, letter sent by the Manager, IMFS Depot (Central) of the defendant to the plaintiff, dated 25.05.1995, wherein the defendant has informed that necessary instructions have been issued by the Managing Director, TASMAC Ltd., Chennai, regarding enhancement of rental advance and for enhancement of rent. In the xerox copy, which is attached to the said letter, xerox copy of the letter sent by TASMAC Ltd., Chennai- 2, dated 06.02.1995 to the Senior Regional Manager, TASMAC Ltd., Chennai is also available, wherein it reads as follows :

“According to the Government Orders in force and the guidelines formulated by the TASMAC Board, the fixation of rent to the private buildings occupied by the TASMAC is to be regulated as follows :

The rent reasonable certificate is to be obtained only from the Public Works Department in cases where the building owner is agreeable to receive the rent as fixed by the Public Works Department. In such cases, the Managing Director on the basis of the rent reasonable certificate issued by the Public Works Department can sanction the rent straight away.”

18. In the letter, dated 27.03.1995, the Senior Regional Manager, TASMAC Ltd., has informed that the corporation had taken a decision not to allow additional rental advance as and when the monthly regular rents are enhanced after the expiry of the lease period. As per Ex.P.5, dated 07.12.1995, the license amount / rent has not been enhanced as claimed by the plaintiff. Exs.P.6 and P.7 are the copies of the letters sent by the plaintiff to the defendant, dated 06.05.1996 and 27.07.1996 respectively, whereby the plaintiff asked the defendant herein to vacate and hand over the vacant possession of the property to the plaintiff. Under Ex.P.8, dated 04.11.1996, the defendant asked the plaintiff to renew the agreement for a further period of 3 years, since the second period expired on May 1996. As per another letter, dated 27.11.1996 marked as Ex.P.9, the defendant intimated that they are searching for suitable accommodation and requested to take necessary steps to renew the agreement for a further period, as requested. Ex.P.10, dated 11.12.1996 is the letter from the defendant to the plaintiff with a request of renewal of license for a further period of 3 years. Ex.P.11 is the copy of the letter sent by the plaintiff to the defendant, wherein the plaintiff has stated that the plaintiff is increasing the monthly occupation / license charge as well as service charge to the extent of 50% from the first day of June 1996. According to the learned counsel appearing for the defendant, it is only a unilateral decision by the plaintiff, that will not bind the defendant and the defendant had not accepted the proposal / offer.

19. By Ex.P.12, letter, dated 16.01.2007, it was informed, with reference to the letter, dated 28.12.1996 of the defendant, for a fresh agreement of license, in respect of the godown. Ex.P.13 is the letter,dated 28.03.2007, wherein the plaintiff had reiterated that for an increase of monthly occupation / license charges as well as service charges, to the extent of 50% from 01.06.1996. Ex.P.14 is the letter, dated 07.04.1997, whereby the Tamil Nadu Marketing Corporation Ltd., the defendant herein informed that the demand of the plaintiff, seeking 50% increase in the monthly occupation / license charge as well as service charge from 01.07.1996 has been intimated. Under Ex.P.15, dated 25.04.1997, the plaintiff has stated in the letter that in the circumstances they had requested for an increase by 50% and the reasonable increment would be 100%, that is Rs.8.22/- per sq.ft. Under Ex.P.16, three months notice was given as provided under agreement, dated 07.12.1995, which is marked as Ex.P.5. The claim of the plaintiff that as per Ex.P.17, xerox copy of the certificate issued by the Superintending Engineer, P.W.D, the monthly rent fixed for the property was Rs.1,31,330/-. It is seen that the original or certified copy of the same has not been marked by the plaintiff. Further, in the said xerox copy, the details, as to how the amount was fixed by the Public Works Department is also not available.

20. Under Ex.P.20, dated 18.01.2000, TASMAC Ltd., Chennai has issued its proceedings, fixing the rent of Rs.6.50/- per sq.ft., wherein the valuation of the P.W.D., at Rs.7.50/- per sq.ft., is also stated. The marketing corporation has decided the rent, as per the 85th Board Meeting held on 28.12.1999 authorising the Managing Director, TASMAC to pay a sum of Rs.7.67 lakhs for the period from 01.08.1997 to 09.04.1999 as rent arrears to the owners of the godown in which the erstwhile Aminjikarai Depot of TASMAC was functioning by increasing the rate of rent from Rs.4.11 per sq.ft to Rs.6.50 per sq.ft per month. The total area is stated as 15805 sq.ft. Under Ex.P.21, copy of the letter, the plaintiff had asked the defendant to pay Rs.1,31,330/- per month as per the rate fixed by the P.W.D, but it is not disputed that the calculation is not correct.

21. It is seen that Ex.P.22 is the legal notice sent by the plaintiff to the defendant. The reply sent by the defendant has been marked as Ex.P.23, wherein the defendant has stated that the Board was not inclined to accept the rate as suggested by the plaintiff, based on enquiry, to check the correctness on ascertaining the prevailing rent for the other portion of the premises. The Board has decided on 28.12.1999 for increasing the rate of rent from Rs.4.11/- per sq.ft to Rs.6.50/- per sq.ft., per month, accordingly, the rent was fixed for the period from 01.08.1997 to 09.04.1999.

22. As per the earlier letters sent by the plaintiff, only 50% increase was asked by the plaintiff and for earlier, rent was Rs.4.11/- per sq.ft., if 50% increase is given, subsequent rent would be not more than Rs.6.50/- per sq.ft. It is not in dispute that the defendant had vacated and handed over the possession of the premises. Even if Rs.7.50/- per sq.ft is fixed, the rent would not be Rs.13,93,801/-, therefore, the alleged Public Works Department rate by the plaintiff is not sustainable.

23. If there is a concluded contract for claiming license charge / rent at Rs.7.50/- per sq.ft., between the plaintiff and the defendant, as a matter of right, the plaintiff is entitled to claim damages at the said rate. In the instant case, there is no concluded contract for paying license charge / rent, either at Rs.7.50/- per sq.ft., or at a flat rate of RS.1,31,330/- per month. As per Ex.P.15, letter, dated 29.04.1997, the plaintiff has asked only 50% increase in the earlier rate, which could not be more than Rs.6.50/- per sq.ft.

24. On the aforesaid circumstances, I am of the view that the plaintiff is entitled to claim, the occupation charge / license charge as well as service charge as per the terms of the agreement entered into between the parties. As discussed, the plaintiff had asked only 50% more than the earlier license charge / rent. At no point of time, the defendant had agreed to pay Rs.1,31,330/- per month. Even in the rent reasonable certificate, the P.W.D has not specifically stated as to what basis, the amount was arrived and in fact, no other details are available in Ex.P.17. Based on the xerox copy of the document, marked as Ex.P.17 by the plaintiff, the rent cannot be decided at Rs.1,31,330/- per month, since the plaintiff has asked only 50% more than the earlier occupation charge / license charge payable and further, the claim of the plaintiff that a sum of Rs.3,39,900/- towards 3 months rent in lieu of notice is also legally not sustainable, since as per Ex.P.5, the period of license was already expired and the plaintiff had issued notice to the defendant to vacate and hand over the vacant possession. Hence, further 3 months notice by the defendant to vacate the premises is not at all required. The interest claimed by the plaintiff is also legally not sustainable and hence, the defendant is not liable to pay the suit claim as prayed for. On the aforesaid facts and circumstances, the issues 3, 4 and 5 are answered against the plaintiff and in favour of the defendant.

25. Issue No.6 : In view of the findings given for issues 1 to 5, this Court is of the view that the plaintiff is not entitled to the suit claim, accordingly, the suit if liable to be dismissed.

26. In the result, the suit is dismissed without costs.

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