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2013 DIGILAW 257 (AP)

Tanmai Jewels Pvt. Ltd. v. Sreesaila Kumari

2013-04-03

K.G.SHANKAR, L.NARASIMHA REDDY

body2013
JUDGMENT L. Narasimha Reddy, J. The appeal and the revision are between the same parties and the subject-matter is common. Hence, they are disposed of through a common judgment. The 1st respondent is the owner of a commercial premises, bearing No.15-24-216 of KPHB Colony, Kukatpally, Hyderabad-72, comprising of ground and first floors. The 1st appellant is a Private Limited Company and the 2nd appellant is its Managing Director. The 1st respondent gave the premises on lease to the appellants. A lease deed, dated 12.06.2010, was executed and registered. Salient among the terms are that the lease would be in force for a period of 9 years, and the rent would be Rs.3,41,500/-, per month, with periodical variation. The lease commenced and the appellants are said to have established a Jewellery shop, with necessary infrastructure. The 1st respondent filed O.S.No.428 of 2011 in the Court of Principal District Judge, Ranga Reddy District, at L.B.Nagar, Hyderabad, with a prayer to direct the appellants to vacate the premises and to handover the possession thereof, to her. It was pleaded that the appellants committed default in payment of rent, and on account of non-payment, she was finding it difficult to repay the loan of Rs.1,53,61,500/-, obtained by her from Indiabulls Housing Finance Limited. It was also mentioned that the 1st respondent intends to start her own business in the premises. In the paragraph relating to cause of 1st action, mention was made to “termination notice, dated 06.04.2011”. The respondent has also field I.A.No.2204 of 2011 under Section 151 C.P.C. with a payer to direct the appellants to deposit the rents. The appellants filed caveat in the trial Court. Hence, they got notice of filing of the suit and the I.A. They filed counter in I.A.No.2204 of 2011. Even while I.A.No.2204 of 2011 was pending, the 1st respondent filed I.A.No.3778 of 2011 under Order XV-A of C.P.C., in its application to the State of Andhra Pradesh, with a prayer to direct the appellants to deposit the arrears of rent and forfeit defence, in default. The trial Court passed an order dated 04.01.2012 in I.A.No.3778 of 2011 directing the appellants to deposit the arrears of rent from 16.08.2010 to 31.12.2012 on or before 31.01.2012. It was also mentioned that in default of payment of amount as directed, the defence shall stand struck off. The suit was taken up on 02.02.2012. The trial Court passed an order dated 04.01.2012 in I.A.No.3778 of 2011 directing the appellants to deposit the arrears of rent from 16.08.2010 to 31.12.2012 on or before 31.01.2012. It was also mentioned that in default of payment of amount as directed, the defence shall stand struck off. The suit was taken up on 02.02.2012. The trial Court has set the appellants ex parte on that day, stating that they were absent when called. The suit was decreed ex parte on the same day stipulating 30 days time for eviction. A.S.No.198 of 2012 is filed against the judgment and decree in the suit. Based upon the decree, the 1st respondent filed E.P.No.56 of 2012 on 13.03.2012. The Executing Court issued a warrant of delivery on 26.03.2012. C.R.P.No.1765 of 2012 is filed against the same. Sri C.V.Mohan Reddy, learned Senior Counsel for the appellants, submits that the trial Court committed serious errors, almost at every stage, and orders were passed contrary to the specific provisions, and settled principles of law. He contends that, in the lease deed, there is a specific clause providing for arbitration, in the event of there being any disputes between the parties, and still, the suit was entertained without any demur. Learned Senior Counsel submits that though notices were exchanged between the parties, the 1st respondent maintained silence in the plaint as to the reply given by the appellants. According to the learned Senior Counsel, the brother of the 1st respondent, by name – Mahesh Naidu, dealt with the entire matter and by the time the suit was filed, Rs.27,30,000/-, was paid, to the 1st respondent, in various forms. Learned Senior Counsel further submits that Order XV-A C.P.C., places specific obligation upon the Court to record a finding, as to existence of arrears, after giving opportunity to both the parties, and in the instant case, an order, which can virtually be treated as an ex parte one, was passed. He submits that the manner in which the suit was disposed of shocks the conscious of anyone. Learned Senior Counsel submits that for the first time, the appellants were set ex parte in the suit on 02.02.2012, and straight away the decree was passed, ignoring the fact that the appellants were before the Court from the beginning by filing caveat. He submits that the manner in which the suit was disposed of shocks the conscious of anyone. Learned Senior Counsel submits that for the first time, the appellants were set ex parte in the suit on 02.02.2012, and straight away the decree was passed, ignoring the fact that the appellants were before the Court from the beginning by filing caveat. It is pleaded that even where a defendant remains ex parte or fails to file written statement, duty is cast upon a Court to examine the matter on merits from the point of view of law and facts; as observed by the Hon’ble Supreme Court in Balraj Taneja v. Sunil Madan (1999) 8 SCC 396 and that in the instant case, the suit involving the subject-matter worth several crores of rupees, was dealt with in a casual and summary manner. As regards execution proceedings, Sri P.Keshava Rao, learned Counsel submits that though the E.P. was filed with a prayer to issue warrant for delivery of possession, the warrant issued by the Court has far exceeded the scope of relevant provisions and added to that, the bailiff has resorted to gross misconduct by taking the police help, breaking open the lock and taking custody of jewellery worth several crores of rupees, without there being an order of the Court. He contends that in the entire episode, the legal procedure was put to gross misuse, and unfortunately, the trial Court has permitted itself to be misused by the 1st respondent. Sri G.Nageswara Rao, learned counsel for the 1st respondent, on the other hand, submits that the lease between the appellants and the 1st respondent stood terminated, on account of non-payment of rent, and that the arbitration clause did not come in the way of filing the suit. He contends that on account of non-payment of rent, the 1st respondent was put to serious hardship and the trial Court has passed an order under Order XVA C.P.C., directing payment of rents. Learned counsel submits that it is only when the order was not complied with, that the trial Court has taken up the suit and passed a decree by taking note of the fact that the appellants remained ex parte. He further submits that the decree was executed strictly in accordance with the procedure prescribed by law and after the possession was recovered, the premises were given on lease to the 2nd respondent. He further submits that the decree was executed strictly in accordance with the procedure prescribed by law and after the possession was recovered, the premises were given on lease to the 2nd respondent. The 1st respondent is said to have leased the premises to the 2nd respondent after eviction of the appellants. Learned counsel for the 2nd respondent submits that he entered into lease with the 1st respondent in respect of the premises and that interference of the decree passed by the trial Court would result in serious hardship to his client. The points that arise for consideration in this appeal are, i) “Whether the order passed by the trial Court in an application filed by the 1st respondent under Order XV-A CPC, accords with law? ii) Whether the trial was justified in striking off the defence of the appellants, and decreeing the suit?” In the revision, it needs to be seen as to whether the issuance of delivery warrant by the executing Court, and the steps taken by the bailiff, accord with the prescribed procedure. POINT No.(i) The trial Court decreed the suit only on the basis that the defence of the appellants herein was struck off on account of non-compliance with the order passed in an application filed under Order XV-A C.P.C. No issues were framed and hardly any trial was conducted. The suit schedule premises are in an important commercial locality. The appellants wanted to take the premises on lease for establishment of a jewellery shop. Registered lease deed was executed on 12.06.2010. It has already been mentioned that the period of lease was 9 years and rent was stipulated with periodical revisions. The 1st respondent filed the suit for eviction of the appellants. The fact that there existed a lease deed is admitted. The prayer in the suit is, “to pass a decree to direct the defendant to vacate the suit schedule property by handing over the same to the plaintiff”. In the list of documents appended to the plaint, there is a mention to the legal notice, dated 06.04.2011 and a receipt. However, in the body of the plaint, no mention was made to notice or reply. The notice got issued by the 1st respondent, is brief in its content and it reads: “You are the tenant of the schedule property my client is the owner of the same. However, in the body of the plaint, no mention was made to notice or reply. The notice got issued by the 1st respondent, is brief in its content and it reads: “You are the tenant of the schedule property my client is the owner of the same. You had taken the premises on lease on 12.06.2010 for a period of 9 years only. As the matter stood thus you become a defaulter of rent from December 2010 and did not paid the rent till today. As per the clauses under the head of termination (22) 23, 24 you become a defaulter. Hence, your acts and attitude come under termination of lease. So pay the rent immediately or otherwise my client will constrain to take legal action against you as per legal agreement conditions and terms. My client obtained Bank loan basing on your contract. So, it is just and necessary to fulfil your part of duty or otherwise my client will constrained to proceed against you in the court of law for further action and relief.” The effort of the appellants was to get the arrears of rent. In their reply, the appellants stated that they stood as guarantors for repayment of Rs.1,53,61,500/- to M/s. Indiabulls Housing Finance Limited and that the particulars of EMI etc., were not furnished to them in spite of repeated requests. As regards arrears of rent, they pleaded that Mr.Mahesh Naidu, brother of the 1st respondent, who transacted the deal from the initial stage, took the amounts on various occasions representing that it will be adjusted towards rents. At the end, they stated: “Further advise your client to finlaise the account regarding rental payments after adjusting the amount already paid by way of cash to Mr.Mahesh Naidu and acknowledge the same. At the end, they stated: “Further advise your client to finlaise the account regarding rental payments after adjusting the amount already paid by way of cash to Mr.Mahesh Naidu and acknowledge the same. In such circumstances my client is ready to fulfill his responsibilities at any point of time justifiably regarding the monthly rentals.” Along with the suit, the 1st respondent filed I.A.No.2204 of 2011 with the following prayer: “to direct the respondent/tenant to deposit the rents from today till the disposal of the sit in respect of suit schedule property on the file of this Hon’ble Court, and I may be permitted to receive the same, and to pass such orders as the Hon’ble Court may deem fit..” Since the appellants filed a caveat, they took notice in the I.A. and filed counter as early as on 09.08.2011. They explained the details of payment of rents and took the plea that there are no arrears of rent. In addition to that a prayer was made to direct the 1st respondent to deposit the amounts received by her brother. The trial Court adjourned the matter on as many as 20 occasions. Even while I.A.No.2204 of 2011 filed for deposit of rents was pending, the 1st respondent filed I.A.No.3778 of 2011 on 13.12.2011. For all practical purposes, this application was superfluous, since another application was pending almost for the same purpose. Objection ought to have been raised as to the maintainability of the application. Be that as it may, the Court ought to have heard both the I.As., together. However, it passed an order on 04.01.2012, as under: “Heard the learned counsel appearing for the petitioner/plaintiff. Perused the material on record. The respondent/defendant is directed to pay or deposit in the Court the arrears of rent from 16.08.2010 to 31.12.2011, on or before 31.01.2012, failing which defence will be struck off under Order 15A C.P.C.” It was not even observed that there was any default on the part of the appellants herein or they were set ex parte. Even otherwise, the order does not fit into the provisions of Order XV-A CPC. Even otherwise, the order does not fit into the provisions of Order XV-A CPC. Order XVA reads: Striking off defence in a suit by a lessor: (1) In any suit by a lessor or a licensor against a lessee or a licensee, as the case may be, for his eviction with or without the arrears of rent or licence fee and future mesne profits from him, the defendant shall deposit such amount as the Court may direct on account of arrears up to the date of the order (within such time as the Court may fix) and thereafter continue to deposit in each succeeding month the rent or licence fee claimed in the suit as the Court may direct. The defendant shall, unless otherwise directed, continue to deposit such amount till the decision of the suit. (2) In the event of any default in making the deposits, as aforesaid, the Court may subject to the provisions of sub-rule (2) strike off the defence. (3) Before passing an order for striking off the defence, the Court shall serve notice on the defendant or his Advocate to show cause as to why the defence should not be struck off, and the Court shall consider any such cause, if shown in order to decide as to whether the defendant should be relieved from an order striking off the defence. (4) The amount deposited under this rule shall be paid to the plaintiff lessor or licensor or his Advocate and the receipt of such amount shall not have the effect of prejudicing the claim of the plaintiff and it shall not also be treated as a waiver of notice of termination.” A perusal of this provision discloses that the Court shall record a finding as to the existence of arrears that too after hearing both the parties and then pass an order on merits. The version of the 1st respondent on the one hand, and the appellants, on the other, as to the payment of arrears of rents were very much before the Court. Not a word was said in this behalf and straight away the application was ordered. In K.Zakria Shaik v. K.Saleem Basha 2011 (4) ALD 757 , this Court explained the scope of Order XV-A C.P.C. and its application, if there exist, any dispute as to existence of arrears of rent. Not a word was said in this behalf and straight away the application was ordered. In K.Zakria Shaik v. K.Saleem Basha 2011 (4) ALD 757 , this Court explained the scope of Order XV-A C.P.C. and its application, if there exist, any dispute as to existence of arrears of rent. It was held: “..The purpose of underlying the provision is to ensure that the owner of the premises leased to the defendant in a suit pays the rents regularly, together with arrears, if any. The word “undisputed” occurring before the word “arrears”, assumes significance. If there is a dispute as to the quantum, the Court has to decide the same, duly taking into account, the versions put forward by the parties. In this regard, slightly different approach is needed in respect of a suit in which recovery of arrears is prayed for, as one of the reliefs on the one hand and a suit for eviction simplicitor on the other hand. If the defendant opposes the claim in the suit, as to arrears, the adjudication thereof must take place after trial. An application under Order 15-A of C.P.C. is not the proper mechanism to recover the suit amount, if seriously disputed by the defendant. Under the garb of seeking relief under that provision, plaintiff in a suit cannot pray for recovery of the entire amount, which incidentally is claimed in the suit itself. In such an event, the suit comes to be virtually decreed to that extent without trial, but through an order under Order 15-A of C.P.C. If the arrears existed from the date of filing of the suit, a direction can certainly be issued for deposit thereof in an application filed under Rule 15-A of C.P.C. Any direction for deposit of arrears prior to the date of filing of the suit can be issued, only when there is no dispute. If there is divergence of opinion between the parties as to the quantum or liability, the determination thereof has to be relegated to a subsequent stage and a finding has to be given after trial. An exercise contemplated under Order 15-A of CPC is totally inadequate and unsuited for final determination of the arrears of rent for the period anterior to the date of filing of the suit.” The order passed by the trial Court does not accord with this. An exercise contemplated under Order 15-A of CPC is totally inadequate and unsuited for final determination of the arrears of rent for the period anterior to the date of filing of the suit.” The order passed by the trial Court does not accord with this. Hence, the point is answered in the negative and in favour of the appellants. POINT No.(ii): Promptly on expiry of one month, the trial Court took up the suit on 02.02.2012. Except that PW.1 filed his affidavit in lieu of chief-examination, no other steps were taken. No effort was made to verify as to whether the appellants were aware of the order passed in I.A.No.3778 of 2011 or whether the order has been complied with. The following order was passed: “I.A.No.3778 of 2011 is allowed. Defence of defendant is struck off. Defendant is called absent. He is set ex parte. PW.1 is examined and Exs.A.1 to A.3 marked. Suit claim is proved. Hence, O.S. is decreed as prayed for with costs. Time for eviction is 30 days.” This Court is not at all satisfied with the manner in which a suit of such a magnitude was handled by the trial Court. The lease between the parties was governed by a registered lease deed. Specific reference was made to in the plaint and it was mentioned in the list of documents also. The lease deed contained a clause for resolution of disputes. It reads: “If any dispute or question whatsoever shall arise between the parties hereto relating to interpretation of any clause of this deed or the rights, duties or liabilities of either party under this lease or otherwise in connection with these presents, the matter in difference shall be determined by a arbitration in accordance with the Arbitration & Conciliation Act, 1986 or any statutory enactment in that behalf for the time being in force. The arbitral tribunal shall consist of a sole arbitrator agreed by all parties. If the parties cannot agree on a sole arbitrator within 15 days then Lessee and Lessor shall appoint one arbitrator each and the arbitrators shall appoint the third arbitrator jointly. The place of Arbitration shall be Hyderabad, A.P., India and the language of Arbitration shall be English.” A perusal of this Clause would have persuaded the Court not to entertain the suit. The place of Arbitration shall be Hyderabad, A.P., India and the language of Arbitration shall be English.” A perusal of this Clause would have persuaded the Court not to entertain the suit. When the Parliament amended Section 89 of the C.P.C., making it obligatory on the part of the civil Courts to explore the possibility of resolution of the disputes through arbitration and mediation, even where there is no agreement in that behalf; a specific clause providing for arbitration and which almost bars a suit, was lost sight of. Adequate attention was not paid at the time of numbering the suit. At least when the appellants entered appearance, and raised the plea, the trial Court was under obligation to consider it as a preliminary issue. The appellants filed caveat, participated in the proceedings and filed their counter in I.A.No.2204 of 2011 under Order XV-A CPC. The trial Court has set them ex parte on 04.02.2012. It is not as if the suit was pending for years together. If the 1st respondent pleaded that the arrears of rent were not paid as directed in the I.A., it was fundamental duty of the Court to ascertain that from the appellants. In a given case, time could have been extended, if the order became final. Everything proceeded in a jet speed, even while I.A.No.2204 of 2011, in which counter was filed, was kept pending and the trial Court simply accepted the contention of the 1st respondent and decided to pass a decree for eviction. The striking off of defence as a consequence of non-compliance of the order passed under Order XV-A C.P.C., by itself, did not relieve the Court of its obligation to examine the merits of the suit. It has already been mentioned that the very entertaining of the suit was untenable, in view of the existence of an arbitration clause. The further questions such as whether the suit could have been filed for eviction, even while the lease is in force till 8 more years and whether the suit for eviction could have been filed without seeking the relief of declaration as to the termination of the lease, were required to be examined. The trial Court did not take any of these important aspects into account and proceeded to decree the suit ex parte without issues or findings. The trial Court did not take any of these important aspects into account and proceeded to decree the suit ex parte without issues or findings. In Balraj Taneja’s case (1 supra), the Hon’ble Supreme Court held as under: “Whether it is a case which is contested by the defendants by filing a written statement, or a case which proceeds ex parte and is ultimately decided as an ex parte case, or is a case in which the written statement is not filed and the case is decided under Order 8 Rule 10, the court has to write a judgment which must be in conformity with the provisions of the Code or at least set out the reasoning by which the controversy is resolved.” Disregarding this principle, the suit was decreed. In its haste the trial Court did not even verify as to whether it was passing an order or judgment. The office of the trial Court was so indifferent and callous that it did not even mention the preamble of the application or the prayer, in the copy of the order. The text of a cryptic nature was just typed by mentioning the number of the I.A. One of the contentions advanced by the 1st respondent is that the appellants did not choose to challenge the order passed in the application filed Under Order XV-A CPC and once that has given rise to striking off of the defence and an ex parte decree, the appeal is untenable. In other words, they contend that the appellants cannot challenge the legality of the order passed in that application. His contention cannot be accepted. In Balraj Taneja’s case (1 supra), the Hon’ble Supreme Court held that the legality of an interlocutory order can certainly be challenged in an appeal filed against the order passed or judgment rendered in the main proceedings, unless it is barred under Section 105(2) CPC. This point is also answered in the negative and in favour of the appellants. Now about the execution of the decree. There was voluminous material before the trial Court to disclose that the premises involved were a jewellery shop. When E.P. is filed with jet speed for recovery of possession on the basis of an ex parte decree, adequate care ought to have been exhibited. Here again, the Court fell to the machination of the 1st respondent. There was voluminous material before the trial Court to disclose that the premises involved were a jewellery shop. When E.P. is filed with jet speed for recovery of possession on the basis of an ex parte decree, adequate care ought to have been exhibited. Here again, the Court fell to the machination of the 1st respondent. Though the prayer in the E.P. was just to issue a warrant, for delivery of possession, the one prepared by the office far exceeded the scope of the petition as well as the relevant provision of law. The warrant reads: “Whereas the under mentioned schedule property in the occupancy of Judgment Debtors has been decreed in favour of the Decree Holders, and you are hereby directed to put the Ch.Sreesaila Kumari, W/o. Ch. Sree Hari in possession of the same, and you are hereby authorized to remove any person bound by the decree who may refuse to vacate the same.” The Executing Court ought to have verified whether there was any prayer for removal of obstruction. It is only when an application filed under Rule 97 of Order XXI C.P.C., and an order is passed in accordance with law, that such a clause could have been incorporated. Taking the clue from the maneuvering of the 1st respondent, the bailiff did something which straight away warrants initiation of disciplinary proceedings against him. Whenever an E.P. is filed for recovery of possession of an immovable property, notice is required to be served on both the parties and if there is no obstruction, delivery of possession can be effected. If there is obstruction by any parties, the matter has to be reported to the Court and specific orders in this regard are to be obtained. If the premises are locked, an order for breaking open the lock must be obtained from the Executing Court. If, at the time of execution of the decree, any law and order problem has been created, or noticed, the matter has to be reported to the Court by the bailiff, so that, adequate protection can be given after considering the issue in detail. If, at the time of execution of the decree, any law and order problem has been created, or noticed, the matter has to be reported to the Court by the bailiff, so that, adequate protection can be given after considering the issue in detail. However, in the instant case, just on the basis of a delivery warrant, not followed by any applications, or report of bailiff, be it, removal of obstruction, breaking open of lock, or granting police protection, much less an order of the Court in that behalf, this is what the bailiff did in his maiden attempt. “Report I B.S.N. Murthy FA, District Court, R.R.District, solemnly state on oath that I went to the given rooms on 29.03.2012 to execute the warrant. The D.Hr. present and he identified the schedule of property. The J.Dr. was not present. I informed to the J.Dr. about the said warrant by phone. But he did not come to the schedule of property. Then, I broke open the shop lock 1.15 p.m. in the presence of panchas and entered into the shop along with D.Hr. The shop is not running for the last few months. Hence, there is no valuable jewellery. Then I made inventory in the presence of panchas and make a list. All the articles which are found in inventory as given to D.Hr. custody in the same premises building cellar and obtained undertaking. One Godrej Chest found at ground flour which was locked. Then I sealed the chest. The articles which are kept in room also see and keys handed over in Nazarath. The entire inventory is done in the presence of panchas, D.Hr. and Bando Bastu police, Kukatpally, Police and the police endorsed in the warrant. Hence, delivery of possession warrant executed and vacant possession of schedule of property handed over to D.Hr.” Even from the report of the bailiff he took inventory of the articles in jewellery shop after breaking open the lock. He has even handed over the chest to the decree-holder. On seeing the report, the Court ought to have set at naught the entire thing, and taken exception to the high handed action of the bailiff. The report was accepted. Further, the manner, in which, the subsequent steps have taken place, despite the interim orders passed by this Court in the C.R.P., cannot at all be sustained in law. On seeing the report, the Court ought to have set at naught the entire thing, and taken exception to the high handed action of the bailiff. The report was accepted. Further, the manner, in which, the subsequent steps have taken place, despite the interim orders passed by this Court in the C.R.P., cannot at all be sustained in law. If the 1st respondent wanted to act as though there is no legal system, there would not have been much concern for the Court. Unfortunately, she derived support for every act of her, from the trial Court. As though the ingenuinity and maneuvering is not sufficient, she has gone to the extent of inducting the 2nd respondent into possession, almost as a measure of browbeating the High Court. Though the 2nd respondent is said to have been inducted into possession, the same was subject to the outcome of the appeal, and he cannot derive any independent rights. If he has chosen to take the promise on lease, even while several proceedings are pending, he has run the risk and cannot plead for sympathy. The principle underlying Section 144 C.P.C., applies to the facts of the case. It becomes the duty of a Court to set at naught the injustice and wrong caused to a party on account of an order or decree which is found to be untenable. Further, when the very delivery of possession was illegal and contrary to the procedure prescribed under C.P.C., and the warrant is set aside by this Court, the necessity to file an application under Section 144 C.P.C., does not arise. Hence, the appeal is allowed with costs throughout and the decree passed by the trial Court is set aside. The C.R.P. is allowed and the delivery warrant issued by the trial Court on 26.03.2012, and all other consequential proceedings, are set aside. Respondents 1 and 2 shall put the appellants in possession of the suit schedule property within 30 days from today. It shall be open to the appellants to work out their remedies vis-à-vis the 1st respondent as regards the loss or damages if any suffered by them in the process. The miscellaneous petitions filed in this appeal and revision petition shall stand disposed of.