Dismissed

Dr.Pothineni Ramesh Babu v. The Loyola College Society

Andhra Pradesh HC12 Sept 2023CRP/1028/2020

Case brief

AI extract

What is this about?

The High Court dismissed a civil revision petition challenging an appellate order dismissing a suit for specific performance of a perpetual lease. The court held there was no illegality in setting aside the interim injunction, noting the lease was determinable and the documents sought to vary the registered deed were inadmissible.

What did the court decide?

The civil revision petition was dismissed with no order as to costs.

Dr.Pothineni Ramesh Babu Vs The Loyola College… — Specific Performance | Andhra Pradesh HC (2023)

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THE HON’BLE Ms. JUSTICE B.S.BHANUMATHI

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Civil Revision Petition No.1028 of 2020

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ORDER:

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This revision petition under Article 227 of the Constitution of India against the order dated 23.12.2019 allowing CMA No.12 of 2019 on the file of Addl District Judge, Krishna District at Vijayawada filed against the Order dt.03.06.2019 allowing the petition in I.A.No.92 of 2019 in O.S.No.39 of 2019 on the file of the Court of III Addl Senior Civil Judge, Vijayawada, is filed by the petitioners/three plaintiffs under Order 39 Rules 1 and 2 CPC seeking to grant ad interim injunction restraining the respondent/defendant or anyone claiming through or under it from interfering with their/lessees possession and enjoyment of the leased property pending disposal of the suit.

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The petitioners/three plaintiffs filed the suit in O.S.No.39 of 2019 for specific performance of the lease agreement for execution and registration of separate lease deeds by the lessor/defendant in favour of the 1^st and the 2^nd plaintiffs/lessees for 25 years with effect from 01.02.2019 with regard to property in items 1 and 2 respectively and permanent injunction not to interfere with possession and enjoyment of the property by the lessees. The third plaintiff is the registered hospital. The case pleaded by the plaintiffs is briefly as follows and the same is the case in the petition.

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(a) The 1^st plaintiff is a cardiologist and husband of the 2^nd plaintiff who is a gynaecologist. The 3^rd plaintiff is a registered company.

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(b) The 1^st plaintiff is a renowned senior Cardiologist in Vijayawada and initially established Citi Cardiac Centre, a hospital in 1988, but later on, names changed and it was registered as a company and merged with a research center and from 29.03.2011 it is Dr.Ramesh Cardiac & Multi-specialty Hospital (P) Ltd.

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c) The schedule properties were originally vacant land ignoring dilapidated structures. Adjoining the schedule properties on three (03) sides, there is about 100 acres of land of the defendant. For beneficial appreciation of the property, the defendant offered to lease out the schedule properties. Thus, the defendant agreed with Sri Nimmagadda Lalitha Prasad for development of 6000 Sq.yds in 1990, but Sri N.L.Prasad could not do it.

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d) The 1^st plaintiff is a student of the college of the defendant during 1972-74. The defendant approached the 1^st plaintiff to develop the schedule properties which are part of the property agreed with Sri N.L.Prasad. By then, the 1^st plaintiff agreed to purchase 1500 square yards of S.Ramakrishna in December, 1993. The 1^st plaintiff informed the defendant the same. But, the then, Rector Rev, Father, on behalf of the defendant, requested the 1^st plaintiff to undertake the

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development assuring him of good beneficial prospects, since it adds much value to the adjoining vast property of the defendant.

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e) Since it involves investment of huge amount of crores of rupees, the defendant offered development contract in the form of perpetual lease, initially for 25 years with option to the lessee to seek further extension for 25 years for periodical increase in rent as per market value and depending on the development, for another period of 50 years. So, the 1^st plaintiff has given up the agreement with Sri S.Ramakrishna and forgone the advance amount of Rs.20,000/- paid out of total price of Rs.15 lakhs.

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f) At the relevant times, since it was learnt that lease for longer period of ten (10) years was not entertained by the department of registration, consequent to the aforesaid agreement, the registered lease deed for nine (09) years eleven (11) months with option for renewal of the lease given to the 1^st plaintiff was executed on 24.01.1994 for lease to commence on 01.02.1994.

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g) Similar agreement is with the 2^nd plaintiff, for 1300 square yards adjoining the schedule property of 1700 square yards on 30.04.1994.

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h) Under the lease deed, the lessees can sublet and they were obligated to construct RCC building with basement, ground and four (04) floors without deviating sanctioned plan, except for interiors and permissible deviations, and any deviation shall be rectified by the

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lessee and the construction shall be made as per the ISI standards and under the supervision of the lessor (or authorized person), by submitting the certificate of a registered architect about the life of the building etc. The lease deed specified the activities which shall not be carried in the property.

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i) On the advice of the well wishers of the lessees, as the lease could not be registered for lease period of 50 years, they asked the lessor for a written commitment. Accordingly, the lessor addressed a letter dt.01.05.1994, separately to the lessees that they can seek renewal of the lease after lapse of initial 25 years as assured earlier. But, an unnoticed typo occurred by referring to lease agreement dt.31.07.1990 which is with Sri N.L.Prasad. The typo was brought to the notice of the plaintiff and it was mutually ignored.

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j) Based on the aforesaid letters, the lessees floated their business entity investing crores of rupees and started running the hospital extending its health service applauded nationally and internationally.

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k) In furtherance of the aforesaid agreement for perpetual lease, for the sake of documentation, two separate (registered) lease agreements, one between the lessor and the 1^st plaintiff and the other between the lessor and the 2^nd plaintiff were executed on 21.09.2004 for further period of 15 years, yet again due to impediment in the registration. The lease deed format is not given much significance by trust and was

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signed casually. Under these deeds dt.21.09.2004, the lease period was extended from 01.01.2004. It shows the insignificance of the formatted content in the light of the agreed intent to hold the lease in perpetuity. An inadvertent unnoticed mistake occurred in these lease deeds in mentioning the lease renewal option of the lessor instead of the lessee which mistake is evident from the lease agreements executed on 24.01.1994 and 30.04.1994 wherein the renewal option was given to the lessees and indisputably the initial lease period agreed is for 25 years. A few days later, when the mistake was noticed by the lessees, it was brought to the notice of the lessor which assured and convinced the lessees to ignore it and proceed further. So the lessees trusted the same and acted upon. Dr.M.C.Das, the then faculty member of commerce department of the lessor is instrumental and witness to it. The lessees placed blind faith on the lessor.

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(l) In accordance with the lease deeds dt.24.01.1994 and 21.09.2004, the lessees sublet to M/s.Citi Cardiac Research Centre Ltd., to establish high standard multi-specialty hospital on 18.02.2006 to the knowledge of the lessor which appreciated the move.

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(m) The lessees regularly paid the lessor the rental amount with gradual increase in the quantum as agreed @ 15% on monthly rental value for every five years.

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(n) The lessor, referring to perpetual lease and also stating that the contractual association brought the lessees good fortune, asked the lessees money contribution to its college. Thus, they paid Rs.7,00,000/- cash and sponsored Rs.8,90,300/- between 2014 to 2019.

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(o) The lessees built the hospital with built up area of 25,000 sq. feet spending Rs.79.03 lakhs during 1994-95 and another building with built up area of 40,000 sq.ft during 2005-09 spending Rs.4.51 crores by availing loans from banks. Father in the lessor attended the inauguration of the new block on 23.12.2006 and blessed the lessees. They spent Rs.3,055.62 lakhs on buildings, plant &machinery, medical equipment, computers, furniture & fixtures, vehicles, and intangibles.

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(p) The lessees addressed the lessor a written letter dated 03.07.2018, asking renewal of the lease which was going to expire 31.01.2019, intimating their willingness for terms and conditions which the lessor wishes for renewal, by mutual discussion. E-mail communication was also sent to the lessor. On 03.10.2018 also emails were sent asking for an opportunity to discuss for renewal of lease. However, surprisingly a notice dated 17.12.2018 sent by the advocates of the lessor seeking vacation of the premises were received by the lessees. The lessor stated that the premises is required for its educational

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institutions. It is only concocted to defeat rights of the lessees for the perpetual lease. The lessor has many other buildings for such uses, if it wishes. The lessees sent emails again on 28.12.2018 and 08.01.2019 expressing the willingness to renew the lease as aforesaid. But, on 11.01.2019, the lessor gave e-mail reply that it abides by its legal notice dated 17.12.2018. To avoid litigation, the lessees sent another letter on 19.01.2019 to the lessor for renewal of the lease. The lessor is bound to renew the lease for further period of 25 years. The lessees are entitled to hold the developed property with permanent structures till the said property lasts.

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q) The hospital has 160 beds, 107 qualified doctors, 306 medical staff, 81 paramedical staff and 572 administrative non-medical staff and workers permanently working. On an average, about 5000 out patients (and 915 in patients) are treated monthly. Thus, the lessees have been in long peaceful and settled possession and enjoyment of the property since 1994 and paying property tax.

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r) Thus, the petitioners have prima facie case and balance of convenience in their favour. The lessees learnt that the lessor is backed up by some screened irresistible influential mighty persons eyed at the suit schedule properties.

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The lessor/defendant filed the written statement as well as counter with the similar contentions denying the legality of the reliefs

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sought in the suit and the petition and further denying certain facts, expressing ignorance of certain facts, stating that some others are not relevant and putting the lessees to prove certain other facts and averments made by the lessees. All of them are not stated here for the sake of brevity. It is further contended that the third petitioner is an unnecessary party as it is not a lessee. The relevant and important contentions are that the letter dt.01.05.1994 issued by the Vice President and Procurator of the lessor does not confer any right whatsoever to the petitioners inasmuch as the said letter primarily indicates that it was in connection with the lease agreement that was entered into between the parties on 30.04.1994and categorically indicates that only an option is given for seeking further extension of 25 years as is mutually agreed upon by both the parties to the contingent lease deed that might be entered into, subject to the terms and conditions. It is further stated that after the determination of the lease period of 15 years in the lease deeds dt. 24.01.1994 and 30.04.1994, two registered lease deeds dt.21.09.2004 came into existence on mutually and voluntarily agreed terms with clear and categorical covenants being expressly mentioned in the lease deeds again for 15 years only, which period was determined on 31.01.2019 and the lessees are aware that the lease is renewable at the absolute option of the lessor only and by exercising such option, it informed the lessees to vacate the property as the lease would not be renewed and

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further the lessees are aware that as per the covenant No.11 of the agreement dt.21.09.2004, they shall hand over the lessor the property in ‘as is’ condition, but the lessees are transgressing such terms. Since the lessees consciously entered into a determinable contract, cannot enforce the same and there is no prima facie case to file the suit. It is also mentioned that the lessor filed two suits in OS Nos.420 and 421 of 2019 on the file of the court of the principal Junior Civil Judge, Vijayawada against the 1^st and the 2^nd petitioners/ plaintiffs respectively, for eviction.

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On behalf of the petitioners, documents Exs.P1-P30 were marked and no document was filed on behalf of the respondent. The trial court allowed the petition on 03.06.2019. Then, CMA No.12 of 2019 was filed by the lessor. The appeal was allowed on 23.12.2019 and the order granting interim injunction was set aside. Aggrieved by the order in the appeal, this revision petition was filed by the plaintiffs.

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The revision petitioners contended that the appellate Court erroneously and hastily concluded that the lease period is determined by afflux of time and by issue of the notice under Section 106 of the Transfer of Property Act and passed the order ignoring the relevant pleadings and the nature of the relief and giving such finality has influential effect on the disposal of the suits. It is further contended

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that the observation of the appellate court that mere apprehension of interference in possession is not a ground to seek temporary injunction is not correct and court should have seen whether there is a possibility of the threat becoming reality, though the possibility of the same not becoming the reality and it is a mixed question of fact and law subject to the trial.

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The main contention of the lessor is that when the contract of lease is determinable and by virtue of afflux of time the lease got terminated, no interim injunction can be granted. It is further contended that the tenants may take advantage of the pendency of the suit and seek relief of injunction to avoid eviction, but the same cannot be granted so as to defeat the right of the owner, since it is an equitable relief. It is also submitted that when the main suit for specific performance of a determinable contract is not maintainable, there is no prima facie case, there cannot be justification to grant temporary injunction. The learned counsel for the lessor submitted that in this revision petition, the scope of the enquiry is limited and like an appellate Court, this court cannot re-appreciate everything.

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Believing that there is a triable case i.e., prima facie case between the parties due to the rival contentions regarding the renewable lease in the light of the documents marked as Ex P 27 and P 28 viz., letters dt.01.05.1994 in favour of the lessees, as against the

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registered lease deeds containing the contrary terms stipulating the period of expiry of the lease, the trial court granted the interim relief rejecting to consider at this stage the contention that no specific performance can be granted in respect of a determinable contract in view of section 14 of the Specific Performance Act. The appellate court accepted the contention of the lessor in this regard. It further observed that there is no threat of dispossession as the lessor is taking legal steps to evict by due procedure of law. Now it is argued by the lessees that even a tenant holding over is entitled to protect the possession.

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The main thrust of the petitioners is on the assurance under Exs.P27 and P28 letters and the investment of huge amount basing on such assurance to claim lease in perpetuity. The principle of estoppel is also argued to state that the lessor cannot eject the lessees having induced them to invest huge money. The clauses in the contract of lease to construct multi floor building as per the superior control of the lessor is said be indicative of the interest of the lessees over the schedule properties, but they in fact indicate the intention of the lessor to hold the property as its owner and that it was made clear to the lessees to handover the properties in ‘as is’ condition to the lessor after the term of lease expires and not to retain it without the lease being extended at the option of the lessor. At one point the lessees claim that the lease is perpetual and rest on the presumption

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due to construction of building on the let out land citing the decision of the High Court of Allahabad in Kanhaiya Lal and another Vs Abdullah¹ , and at another point they say that the lease is for 50 years and sought specific performance for 25 years i.e., the period left after the initial 25 years already gone. The lease for the period as claimed by the lessees is dependant on the legally tenable evidence. However, long the possession of a tenant may be, so long as it is as per the terms of the lease for any specified period, the tenant can be evicted by due process of law. The lessor also initiated the legal process for eviction by filing O.S.Nos. 420 and 421 of 2019 as stated by the lessees in the arguments. It further shows that there is no threat of dispossession without following due procedure under law.

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The lessees are vehemently contending about the huge money spent on the construction, but the quantum of the rent would be fixed at such rate as would be equitable keeping in view of the value of the building at the end of the lease period. It is an untenable contention that the hospital is providing services to a number of patients and Section 14 of the Specific Relief Act is not attracted.

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1 AIR 1936 All 385

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10. The lessees referred to the decision of the Division Bench of this

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High Court in Chadalavada Krishna Murty and Anr Vs., Vinod Baid

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and Ors² , to state what is prima facie case. It is held as follows:

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“For seeking an injunction, a prima facie case is liable to be made out, and strong proof of the possible mischief should be brought out. At the stage of consideration of an injunction application, maintainability of the suit itself may or may not be gone into depending upon the facts and circumstances of the case. When there is no absolute bar under any statute, the Civil Court would not be assuming at an interlocutory stage, generally, that it would be lacking any jurisdiction to entertain the lis. Further, the issues involved in a case would not be examined in depth, at interlocutory stages, normally. Further, lack of jurisdiction in a Civil Court is a mixed question of law and fact and hence collection of evidence is required.”

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11. Another decision of this High Court in P. Narsing Rao & others

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Vs. K. Lalitha & others³ , is referred about what prima facie case is.

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It reads as here:

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“13. What is meant by the prima facie case is covered by the expression of the Apex Court referred in the order of the lower Court of Kashi Math Samsthan v. Srimad Sudhindra Thirtha Swamy , AIR 2010 SC 296. It is settled law that the prima facie case means not the ultimate chance of success, but something more than the bona fide contention or tribal issue and as held in Kashi Math's case (supra 1) it must be shown of existence of prima facie case between the parties for the plaintiff to go for trial. The balance of convenience is in computing the pros and cons from the contentions of the parties to decide as to in whose favour the scale tilts and the irreparable injury need not always be not capable of compensation in money, but injury to the existing right itself is suffice.”

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2 2016(5) ALD 338 (DB)

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3 2018 (3) ALD 616

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Thus, it is argued that the prima facie case is not a final adjudication, but is bundle of facts constituting cause of action at issue for trial and in the present case there is a strong prima facie case as stated above. According to the lessees, the option of the lessor to renew the lease is a typo. Even to consider prima facie case, there must be legally tenable pleading and evidence. The documents mainly relied on to establish the intention to create perpetual lease are not legally acceptable evidence as they are not registered and whereas the registered lease deeds contain terms stipulating a limited period of lease and no oral evidence is permissible to explain or show contrary intention of the express terms in the registered deeds of lease. The lessees rely on the decision of the Supreme Court in S. Chattanatha

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Kurayalar vs Central Bank of India Ltd and Ors⁴ , wherein it was held that if the transaction is contained in more than one document between the same parties they must be read and interpreted together and have the same legal effect for all purposes as if they are one document. So the contend that Exs P27 and P28 shall be read with the registered lease deeds. But, the contents of a document which requires registration and registered can be altered by another

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4 AIR 1965 SC 1856

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registered document only as held in Raval & Co vs K. C.

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Ramachandran & Ors ,⁵ .

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“... The learned Judges of the Division Bench on the other hand held that the agreement of the year 1949 between the landlord and the tenant by which the rent was increased was one in variation of a written contract and therefore evidence of it is barred under section 92 of the Evidence Act. Clearly any variation of rent reserved by a registered lease deed must be made by another registered instrument. …”

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In case of several documents forming the same transaction, they can be read together only if they are admissible in evidence.

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Further, no oral evidence can be permitted to be given to explain the contents of a written document except when permitted. Section 91 of the Evidence Act lays down that when the terms of a contract or of any other disposition of property have been reduced to the form of a document, no evidence shall be given in proof of the terms of such contract or other disposition of property, except the document itself. Section 92 of the Evidence Act further lays down that when the terms of any such contract or other disposition of property have been proved according to the last Section, no evidence of any oral agreement or statement shall be admitted as between the parties to any such instrument for the purpose of contradicting, varying, adding to or subtracting therefrom.

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5 AIR 1974 SC 818

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The legal enforceability of a determinable contract is not answered and on the other hand it is contended that it can be decided after the trial. In this back drop of the case, there is no illegality found in the order of the appellate court.

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While examining the existence of the prima facie case, it is required to make some observations regarding the merit in the contentions. It cannot be equated with making observations touching the merits in the main case. Since the relief of interim injunction is an equitable and discretionary relief, there is need to examine the tenability of the pleas in the light of law on the subject. This court does not find any reason to interfere with the order impugned in the revision.

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In the result, the revision petition is dismissed. There shall be no order as to costs.

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Miscellaneous Petitions, if any pending, in this Civil Revision petition, shall stand closed.

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______________________ B.S.BHANUMATHI, J

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Dt.12.09.2023

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PNV

Dr.Pothineni Ramesh Babu v. The Loyola College Society

Case brief

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Dr.Pothineni Ramesh Babu v. The Loyola College Society

Case brief

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