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2009 DIGILAW 332 (DEL)

Hyco Product (P) Ltd. through its Managing Director Sh. S. S. Aggarwal v. Shashi Hasija, Prop. of Paul Traders

2009-03-27

V.B.GUPTA

body2009
JUDGMENT V.B. Gupta, J. 1. The appellant has filed this appeal against the judgment and decree dated 23rd October, 1989 passed by Addl. District Judge, Delhi in Suit No. 584/1988. .2. The brief facts of this case are that respondent herein, filed a suit for recovery of Rs. 59,800/- and for mandatory injunction against the present appellant on the allegations that she is the proprietor of M/s Paul Traders and appellant through its Managing Director Sh. S.S. Aggarwal entered into a collaboration-cum-agency agreement with her on 18th October, 1992 as per terms and conditions mentioned therein. Sh. S.S. Aggarwal admitted the contents of the said agreement as correct and signed the same in the presence of attesting witnesses. Said agreement was for 36 months from 1st October, 1982 ending on 30th September, 1985. Appellant despite the expiry of said period, failed to remove its machinery, parts, etc. from the business place of the respondent despite repeated request and demand made by the respondent. Appellant also failed to pay the commission charges in terms of the said agreement. It is stated that appellant was liable to pay minimum of Rs. 21,200/- per year or 1/10 % commission on the value of the manufactured goods during the year, whichever was higher. From 1st October, 1982 till date, appellant had paid a sum of Rs. 1,11,200/- on that account and now a sum of Rs. 59,800/-on account of the commission for the period ending 31st March, 1988 is due to the respondent. 3. The appellant was also liable to furnish the account for the said year in order to ascertain the commission, if found higher than the minimum commission, then the respondent would be entitled for difference of the commission. Since appellant has failed to pay the aforesaid amount despite repeated demands and has failed to remove the machinery etc., a suit for mandatory injunction and for recovery of Rs. 59,800/- was filed before the trial court. 4. The suit was contested by the appellant. The plea of the appellant was that he is a tenant of the entire premises in question, that is, ground floor with first Mezanine in between the ground and first floor, and first floor consisting of office and second Mezanine etc., since October, 1979 at a monthly rent of Rs. 2,300/-. 4. The suit was contested by the appellant. The plea of the appellant was that he is a tenant of the entire premises in question, that is, ground floor with first Mezanine in between the ground and first floor, and first floor consisting of office and second Mezanine etc., since October, 1979 at a monthly rent of Rs. 2,300/-. Since no rent agreement was possible for the reason that the premises could not be rented out as per Bye-Laws of the Directorate of Industries - the lessor of the premises, as such a Collaboration-cum-Agency Agreement for a period of three years was entered between the parties, as per general practice prevailing in such types of cases. In October, 1982 on the expiry of three years of tenancy, the rent was increased to Rs. 2,600/- per month and agreement was again renewed for another period of three years. The physical and exclusive possession of the entire premises was given by respondent and the same remained with the appellant as such. 5. It is further stated that originally the premises was allotted by the Directorate of Industries in the name of Sh. Sardari Lal, Proprietor of M/s Paul Traders in 1985 who transferred the same in favour of Sh. Gurdeep Singh who in turn transferred to Sh. S.L. Khurana and who in turn transferred the same to respondent. Directorate of Industries vide letter dated 10th December, 1984 cancelled the allotment in favour of M/s Paul Traders and determined the said lease. To get the restoration of allotment of the premises, respondent approached and induced the appellant to issue a certificate mentioning that he (appellant) was in possession of 500 Sq. feet of covered area, though in fact the appellant was in possession of the entire premises. Appellant issued the certificate in good faith in or around early 1985. 6. Thereafter respondent made certain unauthorised construction in the shape of two big rooms and agreed to reduce the rent from Rs. 2,600/- to Rs. 2,300/-, for the facility being granted by the appellant to the respondent for the approach on the said unauthorized constructions to which respondent was not entitled otherwise. This act was done by the respondent to show to the Directorate of Industries, that she was doing the business in suit premises. 7. 2,600/- to Rs. 2,300/-, for the facility being granted by the appellant to the respondent for the approach on the said unauthorized constructions to which respondent was not entitled otherwise. This act was done by the respondent to show to the Directorate of Industries, that she was doing the business in suit premises. 7. Thereafter, respondent filed an appeal against the order dated 10th December, 1984 cancelling the allotment of the respondent and proceedings under the Public Premises (unauthorized occupants) Act are pending before the concerned authorities. It was also alleged that the respondent took law in her own hand and resorted to illegal activities with her husband Sh. O.P. Hasija, her brother etc. on 11th February, 1988 and committed criminal trespass by forcibly breaking open the locks of office room on first floor and trespassed on second Mezanine and committed theft of official files, documents etc. 8. The appellant called the local police who locked the entire premises and thereafter, police gave possession of the ground floor portion of the premises including first Mezanine to the appellant and possession of the first and second Mezzanine were kept in abeyance and later on the possession thereof, was taken by respondent in connivance with the local police. The respondent is not entitled to any rent as the possession of the portion of the premises had been taken from the appellant. 9. On the pleadings of the parties, trial court framed seven issues. 10. In support of its case, appellant examined two witnesses, while respondent also examined two witnesses. 11. It has been contended by learned Counsel for the appellant that respondent has chosen not to press her relief for rendition of accounts. In fact, said statement was made by the respondent at the beginning and as such there was no opportunity for the appellant to produce any accounts. The trial court gravely erred in drawing an adverse inference against the appellant due to non-production of accounts. 12. The appellant had already filed an application for additional evidence under Order 47 Rule 27 of Code of Civil Procedure before this Court, seeking permission to lead additional evidence. It is contended that, along with this application, the appellant had annexed photocopies of profit and loss accounts for the period ending 31st March, 1985 and 31st March, 1988. 12. The appellant had already filed an application for additional evidence under Order 47 Rule 27 of Code of Civil Procedure before this Court, seeking permission to lead additional evidence. It is contended that, along with this application, the appellant had annexed photocopies of profit and loss accounts for the period ending 31st March, 1985 and 31st March, 1988. Perusal of these documents which have been duly audited, shows that the appellant had always been showing the payment made to respondent as rent in its books of accounts. .13. It is also contended that the appellant was inducted as a tenant by virtue of the agreement. The agreement of agency was a camoflauge and since fix amount was being paid to the respondent, by no stretch of imagination, it can be said that it was commission payable to the respondent every month. The agreement was in fact an agreement of subletting. Since the allotment in respect of premises in favour of the respondent had already been cancelled, so, the appellant is not liable to make any payment to the respondent. However, the appellant has always been willing to pay pro-rata rent and is still willing to deposit the same as certain portion of the tenanted premises had been forcibly occupied by the respondent. 14. Lastly, it has been contended that counsel for the respondent conceded before the trial court that the suit as framed for recovery of possession or for removal of machinery etc. was not maintainable unless ad velorem court fees calculated on the basis of the market value of the premises in question was paid. The trial court ignored the aforesaid concession and on the contrary recorded that the appellant has made the concession that suit was maintainable. Counsel for appellant has filed an affidavit stating that no such concession was ever made by him and on the contrary the concession was made by the respondent. 15. On the other hand, it has been contended by the learned Counsel for the respondent that there was collaboration agreement between the parties and overall control and possession was with the respondent. After efflux of time, the appellant was asked to vacate the premises which he has failed to do so. The entire control was with the respondent since she had the lock and key of the premises. After efflux of time, the appellant was asked to vacate the premises which he has failed to do so. The entire control was with the respondent since she had the lock and key of the premises. No document has been placed on record by the appellant to show that he was a tenant in the property in question. Thus the trial court has rightly held that the appellant was not a tenant. .16. Issue No. 1 as framed by the trial court read as under; .Whether the suit as framed is not maintainable as alleged? O.P.D. .17. On this issue findings of trial court read as under; .The burden of this issue was upon the defendant. The learned Counsel for the defendant during the course of arguments has not been able to satisfy this Court as to how the suit as framed is not maintainable. He rather conceded on this aspect of the matter that suit as framed is properly maintainable. In these circumstances issue is hereby decided in favour of the plaintiff and against the defendant. 18. As per the above findings, the learned Counsel for the appellant during the course of arguments was not able to satisfy as to how the suit as framed was not maintainable. Rather he conceded that suit as framed was properly maintainable. 19. Now in the appeal it does not lie in the mouth of appellant to say that his counsel did not make such concession and affidavit to this effect filed by his counsel should be looked into. .20. If the appellant had any grievance to the above findings of the trial court, he should have first moved the trial court along with the affidavit of his counsel to this effect that no such concession was made and this fact has been wrongly recorded. Since, no application to this effect was moved before the trial court nor affidavit of counsel to this effect was filed before the trial court, the appellant cannot be permitted to raise such plea, in the appeal. 21. As far as application for additional evidence is concerned, the appellant has filed Annexure X which is Profit and Loss Account for the year ending on 31st March, 1985. In this account, a sum of Rs. 39,600/- has been shown as rent. 22. 21. As far as application for additional evidence is concerned, the appellant has filed Annexure X which is Profit and Loss Account for the year ending on 31st March, 1985. In this account, a sum of Rs. 39,600/- has been shown as rent. 22. According to appellants own case, in October, 1982 on the expiry of three years of tenancy, the rent was increased to Rs. 2,600/- per month and the agreement was again renewed for another three years. Thus after increase in rent to Rs. 2,600/- per month, total rent payable for year 1985 would come to Rs. 2,600x12=Rs.31,200/-. However, as per Annexure X, the figure for rent has been shown as "Rs.39,600". Moreover, in the statement of accounts, no description of property has been mentioned for which this rent is being paid. So, under these circumstances, application under Order 41 Rule 27 Code of Civil Procedure is not maintainable. 23. Before delving with Ex.PW1/1, which is the Collaboration-cum-Agency Agreement, to ascertain the intention of the parties, it is necessary to bring out the effect of the law that has been laid down in this regard. .24. Section 105 of the Transfer of Property Act, 1882 defines Lease as under: .A lease of immovable property is a transfer of a right to enjoy such property, made for a certain time, express or implied, or in perpetuity, in consideration of a price paid or promised, or of money, a share of crops, service or any other thing of value, to be rendered periodically or on specified occasions to the transferor by the transferee, who accepts the transfer on such terms. 25. The essential elements of a lease can be summarized as follows: i. The parties, ii. The subject matter, or immovable property, iii. The demise, or partial transfer, .iv. The term, or period, .v. The consideration, or rent. 26. Licence is defined in Section 52 of the Easements Act, 1882, as under: "Where one person grants to another, or to a definite number of other persons, a right to do or continue to do, in or upon the immovable property of the grantor, something which would, in the absence of such right, be unlawful and such right does not amount to an easement, or an interest in the property, the right is called a licence." 27. A licence confers a right to do or continue to do something in or upon immovable property of grantor which but for the grant of the right may be unlawful, but it creates no estate or interest in the immovable property of the grantor. A lease on the other hand creates an interest in the property demised. 28. Whether a particular transaction creates a lease or a licence, is a question of intention of the parties which is to be inferred from the circumstances of each case. For the purpose of deciding whether a particular grant of right amounts to a lease or a licence, it is essential, therefore, to look to the substance and essence of the agreement and not to its form. 29. Supreme Court in Board of Revenue and Ors. v. A.M. Ansari and Ors. : [1976] 3 SCR 661 , laid down that: The following propositions may, therefore, be taken as well-established : (1) To ascertain whether a document creates a licence or lease, the substance of the document must be preferred to the form; (2) the real test is the intention of the parties whether they intended to create a lease or a licence; (3) if the document creates an interest in the property, it is a lease; but, if it only permits another to make use of the property, of which the legal possession continues with the owner, it is a licence; and (4) if under the document a party gets exclusive possession of the property, prima facie, he is considered to be a tenant; but circumstances may be established which negative the intention to create a lease. 30. Thus it is clear that the intention of the parties is the paramount consideration and the fact of exclusive possession together with the payment of rent is of foremost importance, but the circumstances in which exclusive possession has been given and the character in which money paid as rent has been received, are also matters to be duly considered. 31. As per the terms of the agreement Ex.PW1/1 executed between the parties, the intention of the parties has to be inferred. 31. As per the terms of the agreement Ex.PW1/1 executed between the parties, the intention of the parties has to be inferred. The deed must be read as a whole in order to ascertain the true meaning of its clauses, and the words of each clause should be so interpreted as to bring them into harmony with the other provisions of the deed, if that interpretation does no violence to the meaning of which they are naturally susceptible. 32. The recitals says: THIS COLLABORATION AND AGENCY DEED OF AGEEMENT made at New Delhi on this 18th day of October, 1982 BETWEEN M/s Paul Traders, 79, Okhala Industrial Estate, New Delhi-20, through its sole Prop. Smt. Shashi Hasija wife of Shri Om Parkash Hasija, resident of E-173, Greater Kailash, New Delhi (including her legal heirs, successors and representatives and assignees of the first part, hereinafter called the Manufacturing Agents and M/s HYCO PRODUCTS (P) LTD., 30/22, Shakti Nagar, Delhi-110007 through its Managing Director Shri S.S. Agarwal (including their legal heirs, successors, representatives and assignees) of the Second part hereinafter called the Principals and Collaborators. 33. The relevant clauses read as: 3. That the Agent shall personally or through their representative supervise the end product of the Principals, but same shall be done entirely under the guidance and directions of the Principals. 4. That the Manufacturing Agent shall give all the help like technical, skilled guidance, assistance and knowhow to the Principal collaborators. 5. That the Manufacturing cost including the wages of the labour, skilled and unskilled etc. shall be borne by the Principals. The Manufacturing Agent shall be entitled to the commission only as mentioned herein under in para No. 7. 6. That the factory premises or part thereof mentioned above as well as the attached privileges like power, electricity etc. mentioned above are and shall remain exclusive property of the Manufacturing Agents and the Principals shall be having no lien lock, charge, interest or title whatsoever over the same. The hire purchase lease over the said factory or its part thereof shall remain the sole property of the manufacturing agents and shall be liable to pay the lease/hire purchase money or other charges to the concerned authorities. 7. That the manufacturing agents shall be entitled to a minimum commission of Rs. The hire purchase lease over the said factory or its part thereof shall remain the sole property of the manufacturing agents and shall be liable to pay the lease/hire purchase money or other charges to the concerned authorities. 7. That the manufacturing agents shall be entitled to a minimum commission of Rs. 31,200/- (Rupees thirty one thousand and two hundred only) per year or 1/10% commission on the value of their manufacturing goods during the year, whichever is higher in consideration of the above agency. That payment of the said commission shall be accounted for and paid monthly in advance on 1st of English Calender month. 34. Findings of the trial court with regard to agreement Ex.PW1/1 read as under; From the aforesaid evidence led on record by the parties it is an admitted fact on record that ex.PW1/1, the collaboration agreement has been executed by the defendant. The execution of the said document is not disputed either in the written statement or in the statement of DW1. Rather DW1 as aforesaid has admitted and has stated that he had signed the same after reading and understanding the contents thereof as correct. DW1 is an educated man and is B.Com. from Agra University in the year 1954. In view of the said fact when this document has been signed by the defendant after reading and understanding the contents and when the defendant is admittedly an educated man it cannot be believed that the agreement in question is only a camaflauge to overcome the bye-laws of Directorate of Industries. If we consider the version of the defendant from another angle that the defendant took the said premises on rent and not on commission as stated by it, then the entries regarding the payment of rent by the defendant must be finding mention in the account books of the defendant to be maintained by it being the business concern a limited company. The said account books must be containing the entries of payment of amount in the ledger account under the head rent which for the reasons best known to the defendant have not been proved or produced before the court which were the best evidence to show and prove about the tenancy of the defendant if any in the suit premises. The said account books must be containing the entries of payment of amount in the ledger account under the head rent which for the reasons best known to the defendant have not been proved or produced before the court which were the best evidence to show and prove about the tenancy of the defendant if any in the suit premises. In these circumstances, relying upon the law as laid down in : AIR 1988 Delhi 332 I have no hesitation to draw an adverse inference against the defendant to the effect that said account books do not contain entries of the payment of rent to the plaintiff and contain the entries of the payment of the commission fee to the plaintiff and so from this angle also if cannot be said that defendant has been a tenant in the suit premises. .35. Further, the trial court held; .Moreover, if the defendant was a tenant under the suit premises as stated by it, and if the plaintiff was not issuing any receipt of the payment of rent by it to the plaintiff, the defendant could have approached the court of Rent Controller, Delhi under Section 26 of the Act for deposit of rent by it. No such attempt appears to have been taken by the defendant as no such document have been filed on record and no such statement has been given by DW1 or DW2 in his evidence before the court. In these circumstances, I am of the considered view that the defendant is not a tenant in the suit premises. 36. I fully agree with the findings of the trial court. According to Clause 3 of collaboration agreement Ex.PW1/1, the agent (i.e. respondent), had to personally or through their representative, supervise the product of Principals (i.e. of the appellant). Similarly as per Clause 6, power, electricity etc. were to remain exclusive property of the manufacturing agent (i.e. respondent) and Principals (i.e. appellant) had no lien lock charge, interest or title whatsoever over the same. .37. So, reading of these clauses shows, that the exclusive possession as well as control of the premises in question, was with the respondent and thus there was .no relationship of landlord and tenant between the parties. As per Collaboration cum Agency Agreement Ex PW1/1 the relationship between the parties was that of licensor and licensee only. .37. So, reading of these clauses shows, that the exclusive possession as well as control of the premises in question, was with the respondent and thus there was .no relationship of landlord and tenant between the parties. As per Collaboration cum Agency Agreement Ex PW1/1 the relationship between the parties was that of licensor and licensee only. Once the agreement Ex PW1/1 had come to an end by the efflux of time, the appellant being the licensee was bound to vacate the premises in question and also had to remove his machinery, etc. 38. In view of the above discussion, I hold that there is no merit in the present appeal and the same is liable to be dismissed with costs, throughout. 39. At the time of the filing of this appeal, the court on 30th November, 1989, directed the appellant to deposit Rs. 30,000/- in the trial court within a fortnight. In compliance, the appellant deposited that amount. The respondent was given liberty to withdraw the said amount. 40. On 19th December, 1989, this Court also directed that for the balance of the amount due @ Rs. 2,600/- per month towards the use and occupation of the premises from 1st May, 1988 till 31st December, 1989, the appellant shall give a bank guarantee to the satisfaction of the Registrar of this Court. 41. For the future payment, the appellant was directed to make payment @ Rs. 2,600/- per month, with effect from 1st January, 1990 before the 10th of the each month regularly, subject to the final adjustment, if any, to be decided at the time of disposal of the appeal. 42. In view of the above orders, the appellant is directed to deposit the decretal amount of Rs. 59,800/- within one month from today with the trial/executing court. The appellant shall however, get adjustment of the amount deposited if any, in terms of orders dated 30th November, 1989 and 19th December, 1989 passed by this Court. 43. The appellant is also directed to remove its machinery and other goods etc. from the business premises of the respondent situated at 79, Okhla Industrial Estate, New Delhi within one month from today. In case, appellant fails to remove the same, he shall be liable to pay damages @ 5,000 per month to the respondent, till the time he removes his machinery and goods. 44. from the business premises of the respondent situated at 79, Okhla Industrial Estate, New Delhi within one month from today. In case, appellant fails to remove the same, he shall be liable to pay damages @ 5,000 per month to the respondent, till the time he removes his machinery and goods. 44. It is well settled that when a litigation has been needlessly protracted by an unsuccessful litigant, he should be burdened with heavy costs. The general rule is that the successful party is entitled to costs, unless he is guilty of misconduct, negligence or omission. 45. In the present case, the agreement between the parties came to an end in the year 1988, and since then the appellant had been fighting this litigation having no legal rights at all and had dragged the respondent up to this Court. It had taken over twenty years to conclude this matter. .46. Under the circumstances, appellant is directed to pay Rs. 25,000/- as costs to .the respondent. The costs shall be paid to the respondent or deposited in the trial court/executing court within one month from today. 47. In case, appellant fails to comply with the above directions, the executing court shall execute the decree and for that purpose it shall provide necessary police aid to the respondent. 48. The appeal stands dismissed accordingly. 49. Trial court record be sent back forthwith. Appeal dismissed.