2015 (9) TMI 240
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....ground floor, first floor and second floor with roof rights. All the sisters/ complainants had appointed one Mr. Vipin Batra as their Attorney by way of a GPA dated 23.06.2008, and through him entered into five lease agreements on 18.07.2008-all marked as Ex. CW-1/DA, with the accused in respect of the undivided share of each of the sisters in the aforesaid premises for a period of nine years, at a total monthly rent of Rs. 5,50,000/- (before TDS deduction). The share of rent of each sister was Rs. 1,10,000/-. The respondents leased the property for the purpose of running a Restaurant under the name & style of „Kabab Factory‟. The first three months, starting from the 1st July, 2008 to 30th September, 2008, was to be the rent free period for the purposes of carrying out the necessary works for the commencement of the restaurant business. The obligation for payment of the rent was to commence from 1st October, 2008 onwards. The period of nine years was divided, for the purposes of computation of monthly rent, into four slabs, as follows: i) Monthly rent for the period 1st July, 2008 to 30th September, 2008 shall be Nil. (This period of 3 months will be treated as free ....
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....ontract, on account of misrepresentation/concealment of material information by the lessor; iv) Lease Agreement having got frustrated; the accused/lessee is absolved from payment of rent; v) The final defence is that the cheques were issued not in discharge of a subsisting liability but as advance/security cheques. 6. He returned findings on the first three issues aforesaid in favour of the appellants/complainants. It was held that the complaint had been filed by the competent authority and that lease agreements were not void ab initio as they were not agreements forbidden by law or against public policy. It was also held that there was no misrepresentation or concealment of material information by the lessor. After holding that the lease agreement entered into were valid and were neither void nor voidable, the learned MM proceeded to consider whether the contract subsequently became void on account of sealing of the premises by the MCD. 7. In this context, the learned MM considered the issue whether the agreement got frustrated on account of sealing and inability of the respondent/accused/lessees to use the leased premises, thereby discharging the respondent/accused of their l....
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....o existing liability...". 9. The learned MM held that, since the cheques in question had been received by the complainants in advance at the time of execution of the lease deeds and the property could not be used for the intended purpose, the dishonour of the cheques in question would not entail an action under Section 138 of the NI Act. 10. Learned counsel for the appellant submits that the impugned judgment is misdirected in law and it is based on erroneous view of law. He submits that the impugned judgment has resulted in grave miscarriage of justice. While the learned MM has returned findings of fact in favour of the appellant/complainant on all the issues, only on account of the fact that the cheques in question had been issued in advance towards payment of rent and the liability for payment of rent arise month to month, the learned MM has concluded that the dishonour of the cheque in question could not be the basis of a complaint under Section 138 of the NI Act. For reaching this conclusion, the learned MM has placed reliance on the judgment of the Supreme Court in Indus Airways (supra). Learned counsel submits that this is on account of a superficial reading of the said ju....
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.... be liable for the same. g) Also it is expressly agreed that in case any proceedings are commenced or liability, if any sort arises on account of any breach of any statutory, mandatory or regulatory provisions, then the Lessee shall be wholly and solely responsible to defend the said proceedings and consequences thereof, whether civil or criminal shall be solely borne by the Lessee. The Lessee shall also indemnify and also keep indemnified the Lessor against any loss or damages that the Lessor suffers or that are undergone by the Lessor due to non-compliance of any statutory, regulatory or mandatory provisions or rules or regulations etc. x x x x x x x x x x i) The Lessee shall not make or permit to be made any structural addition or alteration in the Demised Premises except the addition and installation of lift in the front side of the building as shown bounded red in the site plan annexed as Annexure „B‟, installation of fire security system and exit gate on the back side of the building at his own costs and risks. The Lessee shall not remove the lift, fire security system and gate of back side at the time of handing over the vacant and peaceful possession of the....
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....verage at basement, ground, first floor and addition to second floor. It is submitted that on account of the said illegalities committed by the appellant and the other co-owners, the premises came to be sealed and the respondent could not put the premises to use and, therefore, there was no obligation to make payment of rent for the period that the premises remained sealed. 18. Learned counsel further submits the appellant and the other co-owners did not choose to terminate the lease after the premises was sealed and the cheques were being dishonoured. This shows that there was no breach of the terms and conditions on the part of the respondent. 19. Learned counsel for the respondent has sought to place reliance on the judgment of the Supreme Court in M. S. Narayana Menon @ Mavi Vs. State of Kerala & Another, (2006) 6 SCC 39. 20. Learned counsel for the respondent submits that in the suit filed by the appellant, and the other co-owners, the plaintiffs-including the appellant, had preferred CCP No.111/2012 in C. S. (OS) No.735/2010. The same was dismissed by this Court on 07.02.2014. Consequently, reliance is also placed on the judgment of the Supreme Court in K. Prakashan v. P. ....
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....uture liability not in existence as on the date of cheque would not attract prosecution under Section 138 of the NI Act. Learned counsel also relies on Indus Airways (supra) for this proposition. 23. In his rejoinder, learned counsel for the appellant has referred to the reply dated 23.05.2009 (Ex. DW-2/C3) sent by the respondents to the appellants letter dated 05.05.2009. In this reply, the respondents, inter alia, stated that "We have all the intentions to clear the cheques, which have got dishonoured due to our tight financial position. You are duly apprised of this fact. You were also requested not to present the cheques". 24. Learned counsel for the appellant further submits that the respondents, in fact, made payment of rent for some period even after the first sealing of the premises in question on 13.04.2009. In this regard, reference is made to the cross examination of DW-2, Sh. Vinod Kumar undertaken on 15.03.2013, where he, inter alia, stated: "It is correct that three demand drafts dated 18.04.09 were delivered by us to the complainant. The same were given towards advance rent. The aforesaid three demand drafts were not in addition to 60 cheques earlier given towards....
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.... Court would scrutinize the impugned judgment in the context of Ghurey Lal (supra). 26. Section 108 of the Transfer of Property Act deals with the aspect of rights and liabilities of lessor and lessee. The rights and liabilities of the lessee are enumerated from clause (d) onwards upto clause (q). Clause (e) of Section 108 reads: "(e) if by fire, tempest or flood, or violence of an army or of a mob, or other irresistible force, any material part of the property be wholly destroyed or rendered substantially and permanently unfit for the purposes for which it was let, the lease shall, at the option of the lessee, be void: Provided that, if the injury be occasioned by the wrongful act or default of the lessee, he shall not be entitled to avail himself of the benefit of this provision;" (Emphasis supplied) 27. Thus, if the leased premises is rendered substantially and permanently unfit for the purpose for which it was let, the lessee has the option to avoid the lease. Unless the lessee so avoids the lease, he cannot avoid his obligation contained in clause (l) of Section 108, which states that "the lessee is bound to pay or tender, at the proper time and place, the premium or re....
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.... continues but he will not pay the rent. If the lessee does not exercise the option to treat the lease to be void, he will remain liable to pay the rent. (See Sidick Haji Hossin v. Bruel and Co., (1910) 8 IC 1049. In Gandavalla Munuswamy v. Marugn Muniramiah, AIR1965AP167 it was observed:- "Under S.108(e), T. P. Act a lease is not automatically determined on the destruction by fire or irresistible force of a substantial portion of the property leased. It is a matter of option with the lessee to get rid of the lease or not. He could treat it as void if he so desired. But the law does not compel him to do so. This aspect of the matter makes it all the more necessary that an unambiguous declaration of the lessee's intention to treat the lease as void must be communicated to the Lesser. The Lesser would not otherwise be able to take appropriate steps on the footing that the lease has come to an end and he is Therefore at liberty to deal with the property as he chooses. What is even more important is that a mere declaration of intention to treat the lease as void is not sufficient. The lessee must also yield up possession of the property to the Lesser as required by the provisions....
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....ng as the lease has not been voided, the defendant bank is liable to pay the rent. (4) MR. J. K. Seth relies on the case reported as 1973 Rajdhani Law Reporter (Note) 68, being S. A. O. No.30 of 1969 (Chamber of Colour and Chemical Pvt. Ltd. v. Trilok Chand ) , where it was held by this Court that a tenant cannot treat a lease as subsisting and suspend payment of rent. I am in respectful agreement. (5) The defendant bank has not voided the leas we in question. It continues to regard itself as tenant. As a tenant it has to pay the agreed rent. I, Therefore, direct the defendant to deposit the rent of Rs. 1,02,600/ -per month, which has admittedly not been paid since 31.10.1990, in Court within ten days, as it is said by the defendant's counsel that there is no difficulty in paying the rent. (6) The sealing of the premises by the New Delhi Municipal Committee has no bearing on the matter, as the defendant bank has chosen not to void the lease. Case be listed before the Joint Registrar on 04.08.1994." [emphasis supplied] 31. Thus, the fact that the leased premises was sealed on two occasions - firstly on 13.04.2009 (when a portion of the basement & third floor were sealed)....
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....e does not entitle the respondent/lessees to suspend the payment of rent. 35. There is no merit in the submission of Mr. Wadhwa that the appellant and the other co-owners choose not to terminate the lease despite non-payment of rent and, therefore, the non-payment of rent could not be considered to be a breach of the terms of the lease. The appellant and the other co-owners were entitled to enforce the lease, and they were not obliged to terminate the same on account of non-payment of rent. 36. There is no merit in the submission of Mr. Wadhwa that the object of the lease agreement was illegal and that the same was void. The learned MM has comprehensively discussed the aforesaid aspect under issue no.2 and I agree with the said reasoning as well as conclusion of the learned MM. Moreover, Ld. Counsel for the respondents has advanced no argument to claim that the lease agreement was void ab-initio, or to show that the finding of the Ld. MM on the said aspect in erroneous. Consequently, no reliance can be placed on the decision of this Court in Virender Singh (supra). 37. The decisions of the Supreme Court in Sanwat Singh (supra) and K. Prakashan (supra) are of no avail in the fact....
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....hly rent, which is an ascertained and crystallized liability. It is equally pertinent to note that the respondents admitted their liability in their reply dated 23.05.2009 (Ex. DW-2/C3) and conveyed their intention to clear the cheques and stated that they were dishonoured due to their tight financial position. 40. Reliance placed by Mr. Wadhwa on the judgment of the Supreme Court in M. S. Narayana Menon (supra) is of no avail. This Court had the occasion to consider the judgment in M. S. Narayana Menon (supra) in a recently delivered judgment in Suresh Chandra Goyal Vs. Amit Singhal, Crl. Appeal Nos.601/2015 decided on 14.05.2015. I consider it appropriate to extract herein below the relevant discussion relating to M. S. Narayana Menon (supra). The same reads as follows: "32. The accused has placed reliance on M. S. Narayana Menon (supra). In this case, the cheque had been issued by the appellant - who was transacting shares with the share broker/second respondent/complainant. The appellant/accused disputed the statement of account relied upon by the complainant, on the basis whereof it was claimed that the cheque amount was due and outstanding. The Supreme Court examined the na....
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....dgment, and not every observation made in the context of the facts of a particular case under consideration of the court, which constitutes a binding precedent. The Supreme Court in P. S. Sathappan v. Andhra Bank Ltd., AIR 2004 SC 5152 has held as follows: "138. While analyzing different decisions rendered by this Court, an attempt has been made to read the judgments as should be read under the rule of precedents. A decision, it is trite, should not be read as a statute. 139. A decision is an authority for the questions of law determined by it. While applying the ratio, the court may not pick out a word or a sentence from the judgment divorced from the context in which the said question arose for consideration. A judgment as is well-known, must be read in its entirety and the observations made therein should receive consideration in the light of the questions raised before it. (See Haryana Financial Corporation and Anr. v. Jagdamba Oil Mills and Anr., [2002]1SCR621 , Union of India and Ors. v. Dhanwanti Devi and Ors. , (1996) 6 SCC 44 , Dr. Nalini Mahajan v. Director of Income Tax (Investigation) and Ors., [2002] 257 ITR 123(Delhi) , State of UP and Anr. v. Synthetics and Chemic....
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....by holding that the accused had been able to discharge his initial burden of raising a probable defence, and that the complainant had failed to establish that the cheques in question have been issued in discharge of a legal debt or other liability. 39. Thus, the decision in Narayana Menon (supra) is of no avail, as it cannot be said to have laid down any general proposition that a complaint under Section 138 NI Act would not be maintainable in respect of a security cheque or a cheque given as a security to assure the performance of another obligation." 41. M. S. Narayana Menon (supra) is a case like Shreyas Agro (supra), where the extent of the outstanding debt/liability was under serious dispute. It was in this background that the Supreme Court had held that the accused had been able to raise a probable defence, as the liability of the accused/debtor was not ascertained and crystallized. The same cannot be said about the present case in view of the aforesaid discussion. The decision in M. S. Narayana Menon (supra), therefore, has no application to the facts of the present case. 42. Reliance placed on the order dated 07.04.2014 in CCP No.111/2012 in C. S. (OS) No.735/2010 is of ....
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....er liability existing relatable to the cheque, since the contracts stood terminated on the date of presentation of the cheque. At best, only a civil liability existed in damages. 22. However, in the present case, the liability or debt is claimed to have arisen under the contract in respect of which the dishonoured cheque was issued. The cheque was issued precisely to secure the debt/ liability that may arise under the contract on account of the accused undertaking the share sale/purchase transactions on credit basis through the appellant broker. Thus, the decision in Indus Airways (supra) cannot be mechanically applied in the present case. 23. In Indus Airways (supra), the earlier decision in Beena Shabeer (supra) was not brought to the notice of the Supreme Court and was, therefore, not considered. Both Indus Airways (supra) and Beena Shabeer (supra) are decisions of co-equal benches. In Beena Shabeer (supra), the Supreme Court did not approve the decision in Shreenivasan (supra) wherein the High Court had held that when a cheque is issued as a security, no complaint will lie under Section 138 of the NI Act. Thus, if the observations made by the Supreme Court in Indus Airways (s....