TMI Blog1991 (4) TMI 458X X X X Extracts X X X X X X X X Extracts X X X X ..... ted by the defendant subject to the finalisation of the lease deed as per its terms and conditions. It was alleged that thereafter further negotiations took place between the parties in course of which the plaintiff discovered that the representation made by the defendant was untrue and in that there were serious and material defects in the title of the defendant to the premises inasmuch as it was found that the defendant was not the owner of the premises and had no right or authority whatsoever to grant or demise the premises on, lease as such and the defendant had not obtained and did not hold and could not furnish to the plaintiff Completion Certificate or Occupation Certificate and other certificates necessary and required under the law and the prevailing practices and usages of the Delhi Development Authority (for short DDA) for occupying, possessing and using the premises. So, it was averred that the plaintiff discovered that the defendant was wholly incompetent and incapable of granting or demising the premises on lease to the plaintiff and in the circumstances, no agreement of lease or lease deed in respect of the premises could be arrived at or executed between the parties ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its letter dated August 25, 1983, also informed the plaintiff that the premises were complete in all respects and ready for possession and the plaintiff should take possession of the said premises on September 1, 1983, after executing the lease agreement. It was controverter that various negotiations took place between the parties and it was asserted by the defendant that a firm agreement was entered into between the parties and the plaintiff was supposed to take possession of the premises but the plaintiff did not occupy the premises and the same remained vacant till December 15, 1983, subjecting the defendant to a loss of ₹ 78,000/- per month with effect from September 1, 1983 and the defendant claimed ₹ 1,93,760/- from the plaintiff as counterclaim after adjusting ₹ 1,00,000/- already received. Defendant denied that ₹ 1,00,000/- was received as token money and pleaded that in fact, the same was received as advance to be adjusted in rent. Defendants further pleaded that the premises were ready for occupation as all necessary sanitary and electrical works had been completed and necessary forms C D issued by the concerned authorities were duly inspect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4. Whether there was any misrepresentation by the defendant to the plaintiff? If so, to what effect? 5. Whether there were serious and material defects in the title of the defendant to the premises. If so, to, what effect? 6. Whether the plaintiff is entitled to interest? If so, at what rate? 7. Whether the defendant is entitled to damages from the plaintiff? If so, at what rate? 8. Whether the appropriation of ₹ 1 lakh by the defendant is valid and legal? 9. Whether the defendant on the counter-claim has paid proper court fee? 10. Whether the defendant is entitled to claim any interest? If so, at what rate? 11. Relief. 6. plaintiff examined PW I Shri. J. R. C. Bhandari, who has signed and verified the plaint and instituted the suit and PW 2 Shri N. Ahuja, who is stated to have negotiated the deal with the defendant and the defendant, examined DWI A. K. Puri, one of the directors of the defendant. No evidence in rebuttal was led by the plaintiff. Issue No. 1 7. PW I has brought the original power of attorney and also the original minutes book of the plaintiff and proved on the record the resolution dated December 30, 1981, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; 78,000/ - (Rupees Seventy-eight Thousand Only) per month. We will advance you nine months rent, which will be adjusted in the monthly rent in 30 months. 2. We will also give you security deposit equivalent to four months rent which will be adjusted in the rent for last four months of the lease period. 3. The lease period will be initially for three years with an option to renew the lease two times for a period of three years each subject to an increase of 15% of rent after every three years. The rent will start with effect from 1st September 1983. We are enclosing herewith a cheque for ₹ 1 lakh (Rupees* One Lakh Only) as a token money of our having agreed to take your premises 011 hire which will be adjusted against the total advance to be given to you as mentioned above after the lease agreement has been executed. Please sign the duplicate copy of this letter and return the same to us in token of your acceptance. 9. It appears that a duplicate copy after signatures was given back to the plaintiff. A cheque in the sum of ₹ 1 lakh was also given and on August 6, 1983, the receipt in that respect was given by the defendant which recited that thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the condition is unfulfilled or because the law does not recognize a contract to enter into a contract. In the latter case there is binding contract and the reference to the more formal document may be ignored. 13. There is no dispute about the principles enunciated in the aforesaid judgment. It will depend on the peculiar facts of particular case whether parties have entered into a contract and the execution of a document was only a formality and was not a condition precedent for coming into existence the contract between the parties. He has then referred to Jaifiarain Ram Lundia v. Surajmull Sagarmull, MANU/FE/0018/1949, which lays down that if after a contract is concluded and its terms settled, further negotiations are started with regard to the new matters, that would not prevent full effect being given to the contract already existing, unless it is established as a fact that the contract was rescinded or varied with the consent of both the parties or that both parties treated it as incomplete and inconclusive. There is no dispute that if court is to come to the conclusion in the present case on perusing the aforesaid documents that a concluded contract has come into ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich arose for decision, was whether lease could not come into existence on June 22, 1962, when the agreement was made or came into existence in May 1964? The question posed before the court was: If the agreement dated June 22, 1962, were to be held to be a conditional contract within the meaning of Para (3) of schedule 9 of the Finance Act, 1962, then date of acquisition would be the said date of the contract and in case the contract was not a conditional (one) then the date of acquisition by A would be the date when the lease was granted. It was held that though the grant of lease depended on the fulfillment of certain obligations on the part of the lessee, the contract was not a conditional contract. The construction of the building within two years was not a condition precedent to the grant of the lease. The case is based on totally different facts. Here, what we have to see is whether there came about a concluded contract between the parties or not with regard to the agreement to take on lease the premises in question. 15. The learned counsel for the plaintiff, on the other hand, has cited H. G. Krishna Reddy Co. v. M. M. Thimmiah, AIR 1983 Mad 169, wherein it was held ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; 1 lakh has not been received according to the terms mentioned in Ex. P2. The words indicate that the lease deed was to be executed as per terms and conditions of the defendant. There is no agreement made by the plaintiff that lease deed is to be executed on the terms of the defendant. It would mean that negotiations were still continuing between the parties and no concluded contract has come into existence by issuance of letter Ex. P 2 and by acceptance of the token money by the defendant. It is evident that the defendant was insisting of execution of a lease deed in order to bring about a concluded contract between the parties. The terms and conditions as indicated in Ex. P19 were not mentioned as the terms and conditions contained in Ex. P2. 17. The learned counsel for the defendant, on the other hand, has contended while referring to the provisions of Ss. 105 and 108 of the Transfer of Property Act that in order to bring about the contract between the parties to take the premises on lease what was required was settlement of the premises and the rate of rent to be paid and, capacity of the landlord to hand over vacant possession of the premises to the lessee. He has argued t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se deed was to be executed between the parties. Issue is decided accordingly against the defendant. 20. On August 27, 1983, Ex.P 3 letter was issued by the defendant to the plaintiff requiring the plaintiff to take possession of the premises on September 1, 1983, after execution of the lease deed. It was also indicated in this letter that the rent of the building will start from September 1, 1983. The plaintiff admits receipt of this letter but no reply was sent to this letter. Letter Ex. P4 dated September 8,1983, was issued by M/s. Pawan Builders Private Limited, the owner of the building to the plaintiff wherein it was mentioned that the owner has submitted the original lease papers to the DDA and has also applied for completion certificate. It appears that as yet no lease deed had been executed by the DDA in favor of M/s. Pawan Builders Pvt. Ltd. and no occupancy certificate/ completion certificate had been obtained. M/s. Pawan Builders Pvt. Ltd. also wrote letter Ex.P5 to the plaintiff mentioning that all relevant papers as required by the plaintiff have been submitted and it was mentioned as to why delay was taking place in executing the lease deed and it was mentioned tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... investigation and approval, it cannot be said that there has been a final and concluded agreement between them, although most other material terms may have been agreed upon by them. In such a case the lessee is free to back out of the contract if he is not satisfied about the Lesser s title, and so long as one party is left free to back out of a contract at his choice, it cannot be said that any binding contract has been arrived at between the parties. These observations squarely apply to the facts of, the present case. 22. Ex.P 11 is dated September 29, 1983, issued by the defendant to the plaintiff. It was mentioned therein that C D forms have been already submitted and the building was fit for occupation and it was clarified that the lease would be executed by the defendant as M/s. Pawan Builders Pvt. Ltd. had given complete authority to execute the, lease deed. Again, it was not clarified whether the defendant was to give a sub-lease or execute the lease deed as an agent of the owner. Vide letter Ex. P12 dated October 27, 1983, the plaintiff required the defendant to return the token money given as no concluded contract had come into existence between the parties. Ex.P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hand over the vacant possession of the premises to the tenant in order to bring about a relationship of landlord and tenant between the parties. However, in the present case what has to be seen is whether there had taken place any misrepresentation to the plaintiff by the defendant so as to invalidate the agreement to take the premises on lease between the parties. It was, in my opinion, the duty of the defendant to have disclosed its authority to let out the, premises to the plaintiff when the defendant had sent the initial offer. At any rate, before accepting the token money from the plaintiff the defendant ought to have disclosed the facts as to the authority of the defendant to let out the premises in question to the plaintiff. 24. Counsel for the defendant has argued that as soon as the copy of the resolution of M/s. Pawan Builders Private Limited was furnished to the plaintiff, the defendant had made it clear as to in what capacity the defendant was letting out the premises to the plaintiff. Admittedly, the copy of such a resolution was given to the plaintiff after the defendant had received Ex. P2 and the defendant had also received the token money. At any rate, even the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 246 of the Delhi Municipal Corporation Act, there is a provision not to occupy the building till the permission is obtained. S. 351 read with Schedule 12 of the Delhi Municipal Corporation Act lays down certain fine to be imposed if their takes place any violation of provisions of S. 346(2) of the said Act. However, this Court held that mere fact that certain penalties are to be imposed for occupying the building in absence of occupancy certificate it vitiate the contract of lease. 25. The learned counsel for the plaintiff, on the other hand, has cited Devinder K. Wadhwa v. Desu, 1987 Raj LR 542 AIR 1988 Delhi 236 . One of the requirements of the Rules of the Desu before grant of electric connection is that occupancy certificate has to be submitted. A single Judge of this Court held that Municipal Corporation Act clearly prohibits the occupation of a building, which is newly constructed unless permission for occupying the same has been obtained from the Corporation, either by the grant of such permission or by the grant of a completion certificate., It is difficult to imagine that where no such permission to occupy is granted the Corporation is nevertheless under an obligati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , possession of the premises could be delivered by the defendant to the plaintiff even in absence of occupancy certificate, may be the plaintiff could not have used the premises meaning thereby occupied the premises, in view of the fact that no occupancy certificate had been obtained in respect of the building in question. It is not possible to hold that any misrepresentation had been made by the defendant in respect of the obtaining or no obtaining of occupancy certificate in respect of the building in question. plaintiff is bound to know the bye-laws and could have easily confirmed before entering into contract for lease whether any occupancy certificate had been obtained or not by the defendant. So, on this score it cannot be held that the contract between the parties if had come into existence stands vitiated. However, in view of my finding that there has been misrepresentation by the defendant as to the capacity in which defendant was to let out the premises to the plaintiff the contract, if had come into existence between the parties, stood vitiated. I decide these issues accordingly in favor of the plaintiff. Issue No. 6 - 27. plaintiff under the Interest Act is en ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... soon as the plaintiff required the defendant to refund the same by serving a legal notice. Issue is decided against the defendant. Issue No. 9 - 30. It appears that in the counter-claim the defendant has paid the court fee on the balance amount of the damages after adjusting ₹ 1 lakh in the damages. The total counter-claim is said to be ₹ 2,73,000 - and after adjusting ₹ 1 lakh the counter-claim is to the tune of ₹ 1,73,000/ - and the court fee has been paid on the counter claim plus interest. The case of the plaintiff is that the court fee ought to have been paid on ₹ 2,73,000/- and not on ₹ 1,93,760/-. 31. In Munshi Ram v. Radha Kishan (deceased) , it was observed that pleas which are open to the defendant to defeat the relief sought by a plaintiff may be of adjustment, set off and counter-claim, the pleas of adjustment and set off being primarily of defense and while no court fee is required on a plea of adjustment court fee is payable on -pleas of set off and -counter claim. It was held that whereas set off is a statutory defense which would afford an answer to the plaintiff s claim wholly or property, a counter-claim which i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t itself had come into existence between the parties. So, it cannot be said I that ₹ 1 lakh had been paid as advance rent. The defendant claims damages occurring to the defendant with effect from September 1, 1983, when the plaintiff did not take the premises on rent. So, ₹ 1 lakh which was given to the defendant was being set off qua the claim of damages arisen in favor of the defendant from September 1, 1985. Hence, it cannot be said that ₹ 1 lakh could be adjusted in any claim towards any rent. The defendant was, in my opinion, bound to pay the court fee on the said amount of ₹ 1 lakh also. I hold accordingly. Let the court fee be furnished by the defendant within two weeks. Issue No. 10- 33. As I have already held that the defendant is not entitled to recover any damages, so the defendant is not entitled to claim any interest also. Issue is decided against the defendant. Relief:- 34. plaintiff is entitled to recover ₹ 1 lakh with interest @ 12% per annum from September 20, 1983, when the notice Ex.P6, was served on the defendant till realisation. 35. 1 decree the suit for recovery of ₹ 1 lakh with interest @ 12% per an ..... X X X X Extracts X X X X X X X X Extracts X X X X
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