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2018 DIGILAW 2178 (MAD)

S. Orra Traders Pvt. Ltd. , Rep. by its Director Mr. Sapetendra Behera v. Lawrence Kulandi Nathan

2018-07-19

N.SATHISH KUMAR

body2018
JUDGMENT : The suit has been filed for recovery of compensation of Rs.1,50,90,900/- (Rupees one Crore Fifty Lakhs Ninety Thousand and Nine hundred only) payable by the defendant to the plaintiff along with 18% interest from the date of filing till the date of realization based on the provisions of lock in period by virtue of Registered Lease Agreement Document No. 2300 of 2014 dated 27.05.2014 with costs. 2. The plaintiff's case in nutshell is as follows : 2.(a) The plaintiff was inducted as a tenant under the defendant by a lease deed dated 27.05.2014 for a monthly rent of Rs.4,50,000/-. Ever since the date of lease he is in a possession and enjoyment of the properties subject to the lease. The plaintiff has also paid a sum of Rs.45,00,000/- as advance as well as security deposit under the lease agreement. The lease is for a period of 15 years and the plaintiff has been paying the rent periodically without any default. In the lease agreement itself it is specifically agreed between the parties that within a lock in period of 36 months after the initial rent free period of 90 days, neither of the parties can terminate the lease agreement. If for any reason, other than Force Majure conditions, either party wishes to terminate the lease period, then such party shall simultaneously with such termination, pay the other party compensation aggregating to lease rent for the number of unexpired months on the compulsory lease term of 36 months. When the matter stood thus, the defendant with malafide intention issued legal notice on 18.11.2015. The above notice was properly replied by the plaintiff. The defendant in violation of conditions in the lease deed fraudulently terminated the lease agreement with effect from 30.10.2015. Therefore, he is liable to pay compensation for unexpired months as agreed in the agreement. It is also the case of the plaintiff that since the lease agreement was for a period of 15 years, he invested by way of stock and infrastructural investments in the premises. 2.(b) In the meanwhile, the defendant has also initiated rent control proceedings in R.C.O.P.No.147 of 2016 which was subsequently dismissed on 30.09.2016. The plaintiff is not liable to pay any rent from the date of termination of the lease deed since the possession of the premises is held in the capacity of caretaker by the plaintiff. 2.(b) In the meanwhile, the defendant has also initiated rent control proceedings in R.C.O.P.No.147 of 2016 which was subsequently dismissed on 30.09.2016. The plaintiff is not liable to pay any rent from the date of termination of the lease deed since the possession of the premises is held in the capacity of caretaker by the plaintiff. The plaintiff was allowed to continue business only for 14 months from September 2014 to October 2015. Therefore, he is entitled to claim compensation as per the agreement in the suit. 3. The brief facts contained in the written statement is as follows : 3.(a) The plaintiff has deliberately distorted the facts of the case by suppressing what had transpired before the issuance of the Notice. Admittedly there is a lease deed for a monthly rent of Rs.4,50,000/-. It is the contention of the defendant that the plaintiff has willfully defaulted from the payment of lease amount for the month of August 2015 payable on or before the 10th of August 2015. Despite several reminders sent by the Defendant, the plaintiff has failed to pay the said lease rent. Thereafter, the plaintiff made a part payment of Rs.2,00,000/- on 07-09-2015 and again another payment of Rs.2,00,000/- on 22.09.2015 towards part payment of the rental for the month of August 2015. Since those payments were made through the bank accounts, the defendant immediately informed the plaintiff that part payment was received, which was not in accordance with the lease agreement and did not constitute proper payment. The defendant by his letter dated 11.09.2015 reiterated the above and called upon the plaintiff to comply with the obligations within 15 days. As the plaintiff did not make any payment on or before 30.10.2015 the defendant terminated the tenancy of the plaintiff with immediate effect on 30.10.2015. 3.(b) The plaintiff is a chronic defaulter in payment and as on date a sum of Rs.45,50,000/- is due and payable towards arrears of rent, after adjusting the security deposit, even though the said deposit is only adjustable against the handing over of vacant possession. It is the further contention of the defendant that the lock in period of 36 months agreed upon between the parties would be applicable only if there had been no breach of agreement of lease by the Plaintiff. It is the further contention of the defendant that the lock in period of 36 months agreed upon between the parties would be applicable only if there had been no breach of agreement of lease by the Plaintiff. On the contrary, the plaintiff has committed the breach of Agreement of Lease for non-payment of rent as per the agreement. Hence he prayed for dismissal of the suit. 4. Based on the above, the following issues are framed for consideration : 1. Whether the plaintiff has acted in accordance with the covenants of the Lease Agreement dated 27.05.2014, in payment of rents? 2. Was there any willful default on the part of the plaintiff during eh tenancy period which ended on 30.10.2015 caused by the registered letter of the defendant dated 30.10.2015? 3. Whether the termination effected by the defendant is within the scope and terms of the lease Agreement dated 27.05.2014? 4. Can the defendant claim the compensation by unilateral termination of tenancy of his own accord under legal notice dated 18.11.2015? 5. To what relief both the parties entitled to? 5. On the side of the plaintiff P.W.1 Mr. Saptendra Beher was examined and Exs.P.1 to P.19 were marked. On the side of the defendant no witness was examined, however, during the cross examination of P.W.1 Exs.D.1 to D.5 were marked. 6. The learned counsel for the plaintiff submitted that the defendant entered into a lease agreement with the plaintiff on the basis of the registered lease deed dated 27.05.2014 on a monthly rent of Rs.4,50,000/-. The rent agreed to be paid on 10th of every month. It is also agreed between the parties that there will be a lock in period for 36 months and the lock in period will commence after the initial rent free period of 90 days. As per the terms agreed between the parties neither the plaintiff nor the defendant can terminate the lease, if for any reason other than force Majure conditions, neither party can terminate the lease agreement within the lock in period, then such party shall simultaneously with such termination, pay the other party compensation aggregating to lease rent for the number of unexpired months on the compulsory lease term of 36 months. Having agreed to the specific condition, the defendant has terminated the lease by issuing notice with effect from 30.10.2015. 7. Having agreed to the specific condition, the defendant has terminated the lease by issuing notice with effect from 30.10.2015. 7. It is the further contention of the learned counsel for the plaintiff that at the time of lease agreement the plaintiff has paid a sum of Rs.45,00,000/- to the defendant as security deposit. In view of the termination of the lease the plaintiff has suffered severe damages in his business and he could not carry out the business. Therefore, the defendant, as per the agreement, is liable to pay the compensation. It is the further contention of the learned counsel for the plaintiff that the defendant has also initiated eviction proceedings in R.C.O.P.No.147 of 2016 and the same was dismissed on the ground that the defendant held the advance more than one month's rent. All the rent control proceedings between the parties would also clearly show that the defendant is making attempt to evict the plaintiff from the suit property. It is the contention of the learned counsel for the plaintiff that as the defendant violated the very terms of contract and committed the breach, is liable to pay compensation. 8. The learned counsel appearing for the defendant submitted that though the lease was entered in the year 2014 the plaintiff is a chronic defaulter and not paid the rent as agreed. Therefore, he has terminated the lease by issuing notice, with effect from 30.10.2015. It is the further submission of the learned counsel for the defendant that every right comes with an obligation. Though there is a lock in period agreed between the parties, such clause can be enforced only when the plaintiff performed his obligation without committing any breach of conditions. The condition of lock in period is agreed between the parties is subject to the obligation. Hence, submitted that the plaintiff being the chronic defaulter, he committed breach of contract, he is not entitled for any compensation. It is his further contention that the plaintiff filed the suit on the basis of Clause 6 of the Agreement of Lease dated 27-05-2014 which is a clause for a "Lock-in period" of 36 months. But this clause would only be applicable if there had been no breach of the Agreement of Lease by the plaintiff. It is his further contention that the plaintiff filed the suit on the basis of Clause 6 of the Agreement of Lease dated 27-05-2014 which is a clause for a "Lock-in period" of 36 months. But this clause would only be applicable if there had been no breach of the Agreement of Lease by the plaintiff. On the contrary it has been admitted by the plaintiff as if he committed default in payment of rent, the Defendant terminated the tenancy of the plaintiff as contemplated in Clause 14 of the agreement of Lease. Hence the claims for interest and further damages under Clause 6 of the agreement of lease are not maintainable and the Plaint should be dismissed in limini with exemplary costs. 9. In the light of the above, the Court has to proceed to decide the issues. Out of four issues, Issue Nos.1 to 3 are interconnected with each other. Hence, I am inclined to proceed with issues 1 to 3 together. Issue Nos. 1 to 3 10. The entire case revolves around the registered Lease Agreement dated 27.05.2014 entered into between the plaintiff and the defendant. The case of the plaintiff is that the defendant, despite the lock in period agreed in the agreement, has terminated the tenancy within that period. Therefore, he is liable to pay the compensation. It is an admitted fact that the plaintiff was inducted as a tenant under the defendant by lease deed dated 27.05.2014. It is also not in dispute that at the time of lease deed, the plaintiff has paid a sum of Rs.45,00,000/- and the rent shall be paid before 10th of same month itself, these facts are the undisputed facts. In the above background, the lease deed Ex.P.3 certified copy, when perused, the parties have entered into agreement of lease for a period of 15 years with lock in period for initial period of 36 months from the date of commencement of execution of the lease deed. The entire cause of action alleged in the suit based on the specific clause contained in the agreement with regard to the lock in period. It is relevant to extract Clause 6 of the agreement:- "6. LOCK-IN-PERIOD The lock-in-period will be fore the4 lease is 36 months. The lock in period will commence after the initial rent free period of 90 days. It is relevant to extract Clause 6 of the agreement:- "6. LOCK-IN-PERIOD The lock-in-period will be fore the4 lease is 36 months. The lock in period will commence after the initial rent free period of 90 days. The lock in period means the period during which both parties are bound by the condition that the lease will be absolute and neither of the party can terminate of the lease agreement. If for any reason, other than Force Majure conditions, either party wishes to terminate this lease agreement within the lock-in-period, then such party shall simultaneously with such termination, pay the other party compensation aggregating to lease rent for the number of unexpired months on the compulsory lease term of 36 months, this clause shall not apply to termination of this lease agreement on account of any Force Majure conditions and also where both parties mutually agree to an alternate tenant of similar standing." 11. The bare reading of the above terms would show that during the continuance of the locking period neither the plaintiff nor the defendant has any right to terminate the lease agreement. It is also relevant to note that Clause 14 is with regard to Breach and Termination, wherein also the parties have specifically agreed under which circumstances either party can exercise the right of termination. Clause 14 is extracted as below:- "14. BREACH AND TERMINATION a. Both parties agree that the LESSOR shall not terminate this agreement under whatever circumstances as long as the LESSEE is discharging its liabilities under the agreement without any default except as provided in the agreement herein. If the LESSEE wishes to terminate this lease before its expiration of the lock in period, then it shall be taken that the lease agreement has been breached. The LESSEE shall forthwith pay to LESSOR the sum equal to the rent for the whole of the unexpired period of the said term as agreed. If the LESSEE wishes to terminate this lease before its expiration of the lock in period, then it shall be taken that the lease agreement has been breached. The LESSEE shall forthwith pay to LESSOR the sum equal to the rent for the whole of the unexpired period of the said term as agreed. b. Subject to the LESSOR complying with the provisions of the agreement and in the case of any breach of the provisions of this agreement relating to the failure of payment of the lease rent or any other sum due under this agreement, for a period greater than 1 month, the LESSOR may issue a notice seeking rectification of the said breach within a period of 15 days and even then such breach is not rectified by the LESSEE, than the LESSOR may terminate the lease without notice and resume possession of the said DEMISED PREMISES after inspection by public officials or personnel with similar authority. The loss that has been accrued or assessed to have occurred to the Lessor on the breach of the condition will be adjusted from the security deposit. c. If the LESSEE shall become bankrupt or enter into any composition with its creditors or suffer any distress or attachment or execution to be levied against its goods or if the LESSEE shall go into liquidation (except for the purpose of reconstruction or amalgamation) then and in any of such cases, it shall be lawful for the LESSOR at any time thereafter, without the breach complained of being remedied, the deposit shall be absolutely forfeited to the LESSOR and the LESSOR shall be at liberty to re-enter upon the demised premises or any part thereof in the name of the whole and thereupon this tenancy shall be absolutely determined but without prejudice to the right of action of the LESSOR." 12. The above clause makes it very clear that the terms agreed above, Clause 6 viz., Lock in period is subject to the obligation of the parties as agreed between them in respect of the payment of rent and other obligations etc., Clause 14 agreed between the parties makes it obligatory to tenant to pay the rent without any default regularly. Subsequent Clause stipulates the obligations of both lessor and lessee. Subsequent Clause stipulates the obligations of both lessor and lessee. Only when the lessor or lessee wants to exercise their right on the basis of the terms of the contract, their rights are always subject to their obligation. Therefore, I am of the view that though the lock in period of 36 months agreed, the period not to terminate the lease, such clause will be subject to the parties complying the obligations as agreed in the contract in subsequent Clause 14. On such obligation, the payment of rent ought to have been paid regularly without any default. Now, in the above back ground it has to be seen that whether the termination notice issued by the defendant on 18.11.2015 is valid or amounts to breach of contract. 13. To find out whether the plaintiff was not a defaulter or much less than a willful defaulter, this court has to look for materials. In this regard, though Exs.P.1 to P.19 were marked, except Exs.P.1 to P.3, other correspondences between the parties and also the proceedings before the rent controller have no relevance in deciding this present suit for damages and also for compensation. 14. The evidence of P.W.1 when carefully analysed in entirety, in the cross examination it is categorically admitted that the rent should be paid before the 10th of each month and not on subsequent month. The further admission proves the fact that after August 2015, he has not paid the rent regularly. So, from September 2015 he has not paid any rent. He has admitted the same. Similarly, he has also admitted that he has not paid rent even after the receipt of letter dated 11.09.2015. Further it is also agreed between the parties in Clause 14 of the breach and termination of lease agreement. Further in the cross examination, the plaintiff has admitted that the defendant has issued letter before the termination of lease deed requesting payment of rent. All these facts clearly indicate that having entered into the lease agreement in the year 2014, after August 2015, the plaintiff has not paid the rent. His own admission clearly established that from September 2015 onwards he has not paid any amount towards the arrears of rent. All these facts clearly indicate that having entered into the lease agreement in the year 2014, after August 2015, the plaintiff has not paid the rent. His own admission clearly established that from September 2015 onwards he has not paid any amount towards the arrears of rent. Therefore, I am of the view that merely because there is an agreement between the parties not to terminate contract within a stipulated period, one of such parties cannot take advantage of that clause by committing default of rent and contend that he is entitled for compensation as per the agreement. 15. As already discussed, the obligation of tenant is to pay rents regularly. When the rent is not paid regularly, plaintiff cannot press into service the specific clause with regard to lock in period in the agreement. Such clause is always subject to right and obligations of the parties. If anyone of the parties to the document commits breach in payment of rent such breach is not an ordinary breach, it is an essential one and the party having committed breach of contract is not entitled for compensation. From own admission of the plaintiff, this court could see that he is not only a chronic defaulter in payment of rent but squatting on the property even without making any payment towards arrears of rent. One cannot take advantage of his own wrong. The property is located in an important place in Chennai. The rent as per lease agreement between the parties is Rs.4,50,000/- per month. Till date arrears of rent has not been paid. Whereas having committed the breach, the plaintiff has come forward claiming more than Rupees One Crore for compensation. Such claim is not all maintainable in view of his own breach of conditions agreed specifically. 16. It is the contention of the plaintiff that in view of the termination notice, he lost his business, he kept the property idle and holding the property as care taker. Such contention is strange in view of this Court. Mere sending the notice terminating the tenancy one cannot contend that because of such notice he has suffered a huge loss in the business. Such contention has been made only to make unlawful enrichment of the plaintiff itself. Such contention cannot be given importance in deciding the suit filed by him claiming huge compensation. Mere sending the notice terminating the tenancy one cannot contend that because of such notice he has suffered a huge loss in the business. Such contention has been made only to make unlawful enrichment of the plaintiff itself. Such contention cannot be given importance in deciding the suit filed by him claiming huge compensation. It is well settled that when a person seek compensation on the basis of breach of contract, he must first establish that the party against whom the compensation is claimed, has committed the breach. Then he has to establish that he had suffered loss in view of such breach. On the contrary, in this case, the plaintiff has come before this Court on the basis of breach of conditions in the Agreement, though he is a chronic defaulter within one year of the contract and took advantage of one of the conditions of the agreement and squatting over the property. Such attitude itself in fact shows that the plaintiff has not come to this Court with clean hands. During the submission before this Court it is also submitted that the rent control proceedings initiated by the defendant for eviction was failed and now appeal is pending. Prior to that the plaintiff moved before the VIII Assistant Court, Chennai for permanent injunction to restrain the defendant from interfering or disturbing the peaceful possession of the premises except under due process of law. All these proceedings and the nature of the suit filed before this Court clearly gives an inference that the plaintiff wants to take advantage of the lease deed to squat over the property without any rent all these years. 17. Further it is another contention of the plaintiff that he has already paid security deposit of Rs.45 lakhs at the time of entering into the lease agreement. Since the above amount is more than one month rent, it cannot be said that it is willful default on the part of the plaintiff. It is to be noted that the amount of Rs.45,00,000/- has paid only as security deposit and not as an advance. Normally security deposit is paid or received only for the purpose to set right any damages or loss by the person who is in occupation of the property. Therefore, I am of the view that such contention has also no force at all. Normally security deposit is paid or received only for the purpose to set right any damages or loss by the person who is in occupation of the property. Therefore, I am of the view that such contention has also no force at all. Hence I am of the view that the plaintiff is not entitled to any relief particularly for claiming compensation. 18. Admittedly, the plaintiff has not paid any rent till date and squatting over the property. That being the position, it is also agreed between the parties in the agreement, apart from other aspects the security deposit is also liable to be adjusted towards arrears of rent. When such being the position, the claim of the plaintiff to refund that amount along with compensation for the unexpired period of months cannot be countenanced and the same has to fail. From the conduct of the plaintiff the manner in which several proceedings between them, this Court is of the view that the plaintiff being a chronic defaulter, despite the proceedings initiated against him for eviction and after filing the petition under Section 11(1) and (4) of Tamil Nadu Buildings (Lease and Rent Control) Act, he has not preferred to pay the arrears of rent. It is submitted by the learned counsel for the defendant that before the rent controller the plaintiff was dodging the proceedings under the pretext of pendency of this suit before this Court. All these facts clearly indicate that the intention of the plaintiff is only to enjoy the possession of the property without any rent. When there is breach of obligation and breach of contract lead to terminate the contract by issuing notice to the defendant, the plaintiff cannot take his own wrong and make himself unlawful enrichment and is bound to be evicted the possession of the property. Though this Court cannot direct the same in this proceedings, as the proceedings already initiated in some other proceedings, it is for the defendant to take recourse of law to evict the plaintiff from the premises. With the above observations, issues Nos.1 to 3 are answered. Issue No. 4 19. In view of this court it is unnecessary as the defendant has not claimed any compensation by paying necessary court fee nor filed any counter claim. Hence issue No.4 is unnecessary and the same is struck of. Issue No. 5 20. With the above observations, issues Nos.1 to 3 are answered. Issue No. 4 19. In view of this court it is unnecessary as the defendant has not claimed any compensation by paying necessary court fee nor filed any counter claim. Hence issue No.4 is unnecessary and the same is struck of. Issue No. 5 20. In view of the foregoing discussions, the plaintiff is entitled for no relief. 21. In the result the Civil Suit is dismissed with costs.