Research › Search › Judgment

Bombay High Court · body

2008 DIGILAW 1743 (BOM)

P. K. Thilakan v. Vitthal N. Shetty

2008-12-12

ROSHAN DALVI

body2008
Judgment : Oral Judgment: 1. The Plaintiff is the owner of the hotel Park View. He is the tenant of the hotel premises at Shop No.5, Room No.4/1, Ground floor, Kantharia Manshion, Plot No.103-C, Govandi Road, Chembur, Bombay- 400 071. 2. The Plaintiff entered into Conducting Agreement with the Defendant dated 16th August 1984 to allow the Defendant to conduct his hotel business for 3 years from the date of the agreement. The suit is filed after the agreement expired by efflux of time for recovery of the premises for which the agreement was entered into. 3. ThePlaintiff has claimed mesne profits of Rs.500/-per day from the expiry of the agreement period i.e., from 16th August 1987. The Plaintiff has also prayed for an injunction to restrain the Defendant from disposing off, alienating, encumbering or creating any 3rd party right in the suit premises. The Plaintiff has also prayed for a declaration that a declaration/affidavit dated 21st September 1984 stated to have been executed by him is void. 4. It has been the case of the Defendant that by a separate declaration/affidavit dated 21st September 1984 the Plaintiff agreed to assign his interest in the suit premises to the Defendant for Rs.6,50,000/- inclusive of the deposit amount of Rs.1,50,000/-given by the Defendant to the Plaintiff at the time of the execution of the agreement dated 16th August 1984. It has been the Plaintiffs case that the Plaintiff has not executed any such declaration/affidavit and the Plaintiff has applied for declaring the said document null and void. 5. It is the Defendants defence that as per the declaration/affidavit of the Plaintiff dated 21st September 1984 agreeing to assign the interest of the Plaintiff in the suit premises for the consideration mentioned therein, the Plaintiff is bound to assign the suit premises to the Defendant. It is his case that he has always been ready and willing to make payment of consideration for the assignment and has offered the same to the Plaintiff. He, therefore, contends that the Plaintiff cannot recover the suit premises from the Defendant upon the expiry of the agreement by efflux of time. 6. The parties have entered into correspondence prior to the suit in which their contentions are the same. 7. He, therefore, contends that the Plaintiff cannot recover the suit premises from the Defendant upon the expiry of the agreement by efflux of time. 6. The parties have entered into correspondence prior to the suit in which their contentions are the same. 7. It would be apt to set out the specific admissions to narrow down the controversy in an otherwise simple action for recovery of possession at the end of the period of the agreement for conducting the Plaintiffs business. The admitted facts are as under:- 1. ThePlaintiff is the owner of the suit business. 2. ThePlaintiff is the tenant of the suit premises. 3. The license in respect of the suit premises stood in the name of the Plaintiff, and continues to stand in his name. A beer license, which was to be obtained, had in fact, been obtained in the name of the Plaintiff though at the expenses of the Defendant after the Conducting Agreement was executed. 4. ThePlaintiff entered into a Conducting Agreement with the Defendant on 16th August 1984. The Plaintiff had initially renovated the suit premises and was conducting a business of running a hotel therein since 13th January 1966. The premises had remained vacant and unused for some time prior to the execution of the Conducting Agreement. 5. Theagreement expired by efflux of time on 15th August 1987. 6. This suit is filed on 10th November 1987. 8. Based upon the pleadings between the parties and considering the aforesaid admissions, the only real dispute between the parties is with regard to the effect of Declaration/affidavit dated 21st September 1984. Hence the following issues are framed and answered as follows:- ISSUES FINDINGS 1. Whether the agreement dated 16th August 1984 was an agreement for conducting simplicitor or, in effect, an agreement for conducting– -cum- agreement for sale of Hotel Park View. As per reasons given 2. Whether the Plaintiff executed the declaration/affidavit dated 21st September 1984 and agreed to assign the hotel premises to the Defendant and on what terms? Yes on payment of the market price. 3. What reliefs, if any, is the Plaintiff is entitled to? As per final order 9. The respective case of both the parties has been consistent. Their case has been based upon the execution of the admitted agreement dated 16th August 1984 and the execution of the declaration/affidavit dated 21st September 1984. Yes on payment of the market price. 3. What reliefs, if any, is the Plaintiff is entitled to? As per final order 9. The respective case of both the parties has been consistent. Their case has been based upon the execution of the admitted agreement dated 16th August 1984 and the execution of the declaration/affidavit dated 21st September 1984. Since the agreement dated 16th August 1984 is admittedly executed, all the oral evidence with regard to the said agreement becomes irrelevant and in fact stands excluded by the agreement itself under the provisions of Section 91 of the Indian Evidence Act subject only to Section 92 thereof. Nevertheless the parties have led extensive, verbose and irrelevant evidence in that behalf which need not be looked into. 10. The only material oral evidence is with regard to the execution of the declaration/affidavit dated 21st September 1984 since the Defendant contends that the affidavit has been executed by the Plaintiff and the Plaintiff has denied its execution altogether. It may be mentioned that in the Plaintiffs cross examination the Plaintiff has admitted his signature on the declaration/affidavit dated 21st September 1984. Though the Plaintiff has sought to deny various other circumstances under which and the persons before whom the declaration/affidavit came to be signed by him in his cross examination, he document would have to be considered as despite the Plaintiffs case his signature on the document is admitted. 11. The Plaintiff has sought to contend, through his other witnesses, one being a Doctor and the other being his son, that he suffers from Dementia. A lot of evidence has gone into this aspect. Whatever be the Plaintiffs physical or mental condition, the evidence given by the Plaintiff would have to be appreciated with regard to the disputed document along with his evidence with regard to the admitted document and the parties conduct thereupon. In view of the Dementia suffered by the Plaintiff this appreciation of evidence would be required to be made upon the premise that some aspects of the Plaintiffs personal as well as professional life could have been forgotten by him. It would therefore be apt to consider only the oral evidence which the Plaintiff has specifically stated in his examination-in- chief and his answers in the cross examination. The evidence for consideration would essentially be only with regard to the execution of the disputed document. 12. It would therefore be apt to consider only the oral evidence which the Plaintiff has specifically stated in his examination-in- chief and his answers in the cross examination. The evidence for consideration would essentially be only with regard to the execution of the disputed document. 12. The consequence of the execution of such a document would then be required to be seen. The valuation of the premises upon capitalisation, as has been sought to be done by the parties, upon the execution of the disputed document being proved has to be considered. Both the parties would be bound by such valuation. The reliefs applied for by the Plaintiff will have to be granted in that light. 13. Since the execution of the Conducting Agreement is admitted, the parties are bound by its contents. The relevant terms and conditions in the agreement will therefore, have to be considered, to the exclusion of any other oral evidence with regard thereto, by reading the agreement as a whole. a) Under clause 3 of the agreement the Defendant as the Conductor could apply for the license at his expense but in the name of the Plaintiff. b) Under clause 4 of the agreement the Defendant was to pay the electricity and water charges during the conducting period but Plaintiff was to continue to pay the rent to the landlord. c) Under clause 5 of the agreement the Defendant was to pay the municipal, Government and revenue charges during the conducting period. d) The Defendant paid the deposit of Rs.1,50,000/- which was refundable on the expiration of the agreement under clause 6. e) The Defendant was to pay Rs.1500/- as the monthly compensation under Clause 7. g) Under clause 8 upon the expiration of the agreement or as soon as practicable the Plaintiff was to assign his lawful interest together with the goodwill of his business in the name of the Conductor upon the terms and conditions mutually agreed upon. h) Under clause 9 of the agreement the Plaintiff agreed not to revoke the agreement during its subsistence period and to assign and to “assign the feasibility of assigning his interest therein in terms of the declaration separately executed by the owner” (Plaintiff). i) Under clause 13 the Defendant was to pay liquidated damages of Rs.500/- per day if he does not handover the possession of the premises to the Plaintiff on 15th August 1987. i) Under clause 13 the Defendant was to pay liquidated damages of Rs.500/- per day if he does not handover the possession of the premises to the Plaintiff on 15th August 1987. j) Clause 14 provided for the contingency of the Defendant handing over possession earlier than the conducting period to the Plaintiff. 14. It can be seen from a reading of the agreement as a whole that the Plaintiff who earlier carried on business in the suit premises and had goodwill of the business sought to appoint the Defendant only as his Conductor. The Plaintiff would be earning income upon such premises each month. The Plaintiff also took a deposit of Rs.1,50,000/-. Though the usual clauses of such Conducting Agreement form a part of the suit agreement also, under clause 8 and 9 the parties intended to create an assignment of tenantable interest of the Plaintiff in favour of the Defendant. The parties had not decided what was the consideration to pass for such an interest. However the assignment was contemplated by the parties. This assignment was to be upon the expiration of the agreement or even before. It could be as soon as practicable between the parties. It therefore, shows that the parties intended to create an assignment at that time, but it had remained to be. Clause 9 further shows that this assignment was to be in terms of a declaration which would be separately executed by the Plaintiff. Hence it can be seen though the parties had intended to assign the premises to the Defendant, the assignment value was not agreed upon and a declaration in that behalf was to be executed by the Plaintiff. 15. It may be mentioned that such an assignment can only be upon adequate consideration. Adequate consideration would only be the then market value of the suit premises. Such market value would be the value at which such premises would be assigned in the given locality at the relevant time. It could be ascertained from other similar transactions. A reasonable market value could be decided also from the ready reckoner issued by the Stamp Duty Office of the Government (though in 1984 when the agreement was executed, such Ready Reckoners were not published). 16. It could be ascertained from other similar transactions. A reasonable market value could be decided also from the ready reckoner issued by the Stamp Duty Office of the Government (though in 1984 when the agreement was executed, such Ready Reckoners were not published). 16. Though the Plaintiff has denied execution, the Defendant has produced and relied upon the declaration/affidavit made by the Plaintiff in terms of clauses 8 and 9 of the suit agreement. This declaration is made on 21st September 1984. That was “as soon as may be practicable”. The Declaration shows essentially that the Plaintiff has committed to assign the lawful interest in the suit hotel premises within a period of 3 years ending 16th August 1987 which is in terms of clauses 8 and 9 of the admitted agreement. The assignment, as always, is to be made on receipt of consideration. The consideration is mentioned in the declaration/affidavit. The Plaintiff agreed to assign suit premises on receipt of Rs.6,50,000/- inclusive of the amount of security deposit of Rs.1,50,000/-from the Defendant . Interestingly the clause of assignment in the declaration/affidavit dated 21st September 1984 shows that date having been left blank, which is filled in pen. It also shows certain corrections made in ink upon cancellation of the type-written material in that clause. The document further shows similar corrections in pen in the clause relating to the payment of stamp duty, legal expenses and expenses for getting the rent receipt transferred to the name of the Defendant. 17. In view of the denial of execution of the declaration/affidavit dated 21st September 1984, oral evidence of the parties to show the real nature of the transaction under the admitted agreement will have to be considered. See A.I.R. 1977 A.P. 53 Habib Khan Vs . Valasula Devi. 18. The most important aspect is the admission of the Plaintiff himself of his signatures on the said declaration/affidavit in the cross examination, in certain, specific words “this affidavit Exhibit-D bears my signature ” 19. A reading of the document shows that the corrections in the document are initialed by the Plaintiff also. 20. It is seen that the receipt of consideration of Rs.6,50,000/- was initially shown to be after adjusting the amount of security deposit of Rs.1,50,000/-. It is corrected to read inclusive of the amount of security deposit of Rs.1,50,000/-. A reading of the document shows that the corrections in the document are initialed by the Plaintiff also. 20. It is seen that the receipt of consideration of Rs.6,50,000/- was initially shown to be after adjusting the amount of security deposit of Rs.1,50,000/-. It is corrected to read inclusive of the amount of security deposit of Rs.1,50,000/-. Hence it is seen that the parties were very meticulous, clear and specific that the security deposit already paid in the sum of Rs.1,50,000/- would be taken into account , adjusted in and be included in a final price for assignment of the suit premises. 21. The agreement shows that the Plaintiff was identified by his Advocate Mr. T.V. Ganesh. The cross examination of the Plaintiff has shown that he knew that Advocate and could repose confidence in him. The affidavit is signed before a Notary. The duplicate copy Exhibit- D on which the Plaintiffs original signature is identified by the Plaintiff in the cross examination shows the number of the document put by the Notary being No.1035 of 1984 by the side of the notarial seal. The declaration/affidavit is executed in about a months time after the Conducting Agreement was admittedly executed. The extent of the consideration for assignment of the premises in Chembur in 1984 is seen to be the usual consideration prevailing at the relevant time, at least approximately. A reading of clauses 8 and 9 of the agreement dated 16th August 1984 and the affidavit of the Plaintiff signed on 21st September 1984 show that the parties may not have agreed upon the precise value of the suit premises or the parties may not have had the required consideration in August 1984 but had always intended essentially to assign the premises and not only to have a relationship of an owner and conductor. 9.22. It can further be seen that though the evidence of the Plaintiff is that he did not understand what was mentioned in the affidavit in English, he had his son present at the relevant time to explain him such contents and he was represented by his Advocate Mr. T.V. Ganesh before the Notary. 9.22. It can further be seen that though the evidence of the Plaintiff is that he did not understand what was mentioned in the affidavit in English, he had his son present at the relevant time to explain him such contents and he was represented by his Advocate Mr. T.V. Ganesh before the Notary. The actual execution by the Plaintiff by putting his signature on the said affidavit in the presence of his Advocate as also his son shows that the Plaintiff knew and was explained, and as a businessman in his own right would not have been defrauded into signing the affidavit without understanding the contents. The most important and the only relevant aspect is the consideration for the assignment. 10.23. In view of the admission of execution upon being shown the signature on the document all the other long and verbose evidence becomes redundant. 124. Nevertheless the Plaintiff has tried to put belittle his own evidence on the footing that he suffers from Dementia. It may be accepted that the Plaintiff suffers from such medical condition at the time of the evidence, did not suffer such condition at the time of the execution of the document. The Plaintiff may forget what could have transpired at the time of the incident due to such a condition. But the Plaintiffs identification of his signature, as aforesaid, cannot be ignored due to such a condition. 125. Be that as it may, the Plaintiffs son has also lead evidence in paragraph 8 of his examination-in-chief he has inter alia stated that his father agreed that upon the expiration of the agreement or as soon as practicable he was to assign his lawful interest to the Defendant on terms and conditions mutually agreed upon. This aspect in a part of the original agreement dated 16th August 1984 itself contained in clauses 8 and 9. Despite that he has also refuted the execution of the declaration/affidavit dated 21st September 1984. His cross examination shows his presence at the time of the execution of the agreement. It also shows that he was attending to the business of his father whilst he was a College student after College hours. That was prior to the agreement of 1984 before the business was temporarily suspended and thereafter the Conducting Agreement was entered into. 126. The evidence lead by the father and son is identical. It also shows that he was attending to the business of his father whilst he was a College student after College hours. That was prior to the agreement of 1984 before the business was temporarily suspended and thereafter the Conducting Agreement was entered into. 126. The evidence lead by the father and son is identical. Only the interpretation of the agreement containing the specific clause showing an intention to assign must be read and appreciated along with the actual assignment for consideration. There can be no doubt that the declaration / affidavit dated 21st September 1984 was executed between the parties. 127. The Defendant claims rights under Section 53 A of the Transfer of Property Act to claim to be in possession of the Suit premises in terms of the declaration dated 21st September 1984 upon showing that he is ready and willing to pay the price stated therein. He has relied upon 1. A.I.R. 1973 Calcutta – Piru Charan Pal and Anr. Vs. Minor Sunilmoy Nemo.(pg.1) 2.M.L.J 1983 Madras – The Authorised Officer Vs. M. Ramaswamy Gounder & Ors.(pg.264) 3. A.I.R 1983 P & H – Chaman Lal Vs. Smt. Surinder Kumari.(pg.324) 4. Mh.L.J. 2006(2) Sakharam Laxman Mathane Vs. Laxman Bahiru Dige. (pg.646) 28. What must be appreciated is that to fall under the umbrella of Section 53A the Defendant must show not only readiness and willingness to pay the consideration amount mentioned in the declaration at a later stage, now as late as 21 years, but he should have either actually paid consideration agreed upon at the time of such agreement and before the prices escalated to insist upon assignment of the premises in his possession, or be ready and willing to pay the current market price. What must also be considered is that the Defendant was not put in possession in part performance of the agreement of the parties to assign the premises to him as stated in the declaration/affidavit of 21st September 1984, but was only in the suit premises as Conductor of the Plaintiffs business. That is not juridical possession of the Defendant. Hence Section 53A could not apply to this case. See A.I.R. 1989 Gauhati 39 Sunil Sarkar Vs. Aghar Basu. 29. That is not juridical possession of the Defendant. Hence Section 53A could not apply to this case. See A.I.R. 1989 Gauhati 39 Sunil Sarkar Vs. Aghar Basu. 29. Though the execution of the agreement as well as the affidavit are seen to be proved by the interpretation of the agreement read as a whole seen along with the Plaintiffs cross examination of acceptance of his signature on the affidavit when shown to him, the Defendant would be entitled to enforce the assignment as agreed between the parties under the declaration / affidavit dated 21st September 1984 only upon payment of consideration. That would have to be at the market value of the suit property at the relevant time. The Defendant has shown that he was always ready and willing to pay the consideration. He has also shown meetings between the parties to that end contended that time for payment was extended to enable the Plaintiff to obtain the consent of the landlord of the Plaintiff. However the Defendant has not shown actual payment of consideration by tender of a cheque issued in favour of the Plaintiff prior to the termination of the period of the agreement as required of him. The Defendant continued in possession after the agreement came to an end. The Defendant continued carrying on his business even after the declaration / affidavit was executed. The Defendant was required to insist upon the assignment. That could have been only upon offer of the consideration. 30. It is argued on behalf of the Defendant that the Plaintiff failed to get the tenancy transferred in the name of the Defendant and hence the Defendant could not pay the consideration agreed to be paid since the premises was not assigned in his name. 31. It is common knowledge and judicial notice is required to be taken of the fact that an immovable premises in the city of Mumbai always appreciates with passage of time. Consequently to be assigned the premises the Defendant must pay the market price upon such escalation, failing which the Defendant having continued in possession he would be governed by clause 13 of the agreement dated 16th August 1984. The Defendant would then be required to pay liquidated damaged at the agreed rate of Rs.500/- per day for over-staying in the suit premises. The Defendant would then be required to pay liquidated damaged at the agreed rate of Rs.500/- per day for over-staying in the suit premises. The Defendant must, therefore, elect as to whether he wants to continue in the suit premises in the absence of assignment of tenancy rights by the Plaintiff upon payment of liquidated damages of Rs.500/-per day or whether he performs his part of the agreement to assign by tender of the consideration agreed between the parties to call upon the Plaintiff to assign his lawful interest to him. 4.32. It is seen that the Defendant has continued in the suit premises. He has continued to carry on the same business. He has not handed over possession of the suit premises to the Plaintiff upon expiry of the agreement of conducting dated i.e. 16th August 1984. he has not paid liquidated damages as agreed between the parties for continuing in the suit premises after the agreement expired by efflux of time. He has sought to have the premises assigned to him. He would be entitled to have the premises assigned upon payment of consideration of the suit premises at the time of such assignment. The Defendants case that time to assign was extended without requirement of payment of further consideration when the market value escalated cannot be accepted. Businessmen cannot be expected to agree to such extention without further consideration. The Defendant, therefore, cannot be given the advantage of continuing in the suit premises without payment at least offering to the agreed consideration for assignment. He however, must be assigned the suit premises by the Court, if the Plaintiff fails to assign the suit premises to him as per the declaration/affidavit dated 21st September 1984. Issue Nos.1 and 2 are answered accordingly. 5.33. Issue No.3:- ORDER 1. The Defendant shall hand over possession of the suit premises together with furniture and fixtures mentioned in the list annexed to the Agreement dated 16th August 1984 to the Plaintiff failing which the Defendant shall deposit the present market value of the suit premises in this Court. Upon such deposit the Plaintiff shall have his tenancy rights assigned to the Defendant. 2. Upon such deposit the Plaintiff shall have his tenancy rights assigned to the Defendant. 2. The Plaintiff shall be entitled to withdraw the amount of the market value deposited by the Defendant so soon as he obtains assignment of the tenancy rights in the name of the Defendant by way of a rent receipt issued by the landlord in the Defendants name. 3. The Defendant shall pay liquidated damages at the agreed rate of Rs.500/- per day until he hands over possession of the suit premises to the Plaintiff or deposits the amount representing the market value of the suit premises in this Court. 4. The Commissioner for taking account s shall determine the market value of the suit premises taking into account similar transactions in the locality as also the prices shown in the ready reckoner of 2008 issued by the Government in the absence of an agreement as to the market value between the parties. 5. The Defendant shall not create any 3rd party rights or otherwise sell, encumber, transfer or dispose off the suit premises until he hands over possession or deposits the amount representing the market value of the suit premises as directed above. 6. There shall be no order as to costs. 7. Both the parties shall be entitled to the return of the original document s produced by them.