Dismissed

Saheer Vachal v. Cochin Smart City Properties Pvt.Ltd.

Kerala HC6 Mar 2024OP(C)/340/2021

Case brief

AI extract

What is this about?

The High Court dismissed an appeal challenging the vacation of an interim injunction restraining respondents from demolishing the petitioner's fit-outs. The Court held that the Letter of Intent was expressly non-binding and did not constitute a concluded contract. Consequently, no injunction could be maintained against the new owner (respondent 2) with whom the petitioner had no privity of contrac

What the court decided

AI extract

Saheer Vachal Vs Cochin Smart City Properties Pvt.Ltd. — Specific Performance | Kerala HC (2024)

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IN THE HIGH COURT OF KERALA AT ERNAKULAM

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PRESENT

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THE HONOURABLE MR.JUSTICE C. JAYACHANDRAN

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WEDNESDAY, THE 6^TH DAY OF MARCH 2024/16TH PHALGUNA, 1945

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OP(C) NO.340 OF 2021

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AS AGAINST THE COMMON JUDGMENT DATED 01.01.2021 IN C.M.A NOS.25/2020 AND 37/2020 ON THE FILE OF THE ADDITIONAL DISTRICT COURT-IV, KOZHIKODE; I.A.NO.3397/2019 IN O.S. NO.401/2019 ON THE FILE OF PRINCIPAL MUNSIFF COURT-I, KOZHIKODE

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PETITIONER/APPELLANT/PLAINTIFF:

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SAHEER VACHAL, AGED 35 YEARS, S/O.ABOOBACKER, VACHAL HOUSE, UMMATHOOR, PARAKKADAV DESOM, P.O.PARAKKADAV, CHEKKYAD VILLAGE, VATAKARA TALUK, KOZHIKODE DISTRICT-673509.

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BY ADVS. SRI.T.SETHUMADHAVAN (SR.) SMT.PREETHI. P.V. SRI.M.V.BALAGOPAL SMT.DEEPA NARAYANAN

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RESPONDENTS/RESPONDENTS/PLAINTIFFS:

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1 COCHIN SMART CITY PROPERTIES PVT.LTD., PEEVEES TRITON, MARINE DRIVE, COCHIN-682031, REPRESENTED BY ITS MANAGING DIRECTOR P.O.JOSE.

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2 M/S.TRADERS TOWERS CONSTRUCTION AND PROPERTY DEVELOPERS PVT.LTD., REGISTERED OFFICE AT BUILDING NO.5/3410-T15, FIRST FLOOR, RP MALL, MAVOOR ROAD, KOZHIKODE, REPRESENTED BY ITS MANAGING DIRECTOR B.RAVEENDRAN PILLAI, BY P.A.HOLDER SRI.A.C.RAVINDRAN, S/O.GOPALA MENON, KALLATH MADATHIL, RAJI CHEMBALASSERY PARAMBA, NEAR COTTON MILL, P.O.THIRUVANNUR NADA, KOZHIKODE-673029.

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BY ADVS. SRI.M.GOPIKRISHNAN NAMBIAR SRI.K.JOHN MATHAI SRI.JOSON MANAVALAN SRI.KURYAN THOMAS

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OP(C) No.340 of 2021

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SRI.PAULOSE C.ABRAHAM SRI.RAJA KANNAN HARINDRANATH B.G AMITH KRISHNAN H.(K/000666/2015) SAIRA PUTHIYAPARAMPATH(K/1557-B/2019) GOWRI DEV(K/003380/2023)

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THIS OP (CIVIL) HAVING BEEN HEARD ON 05.01.2024, THE COURT ON 06.03.2024, DELIVERED THE FOLLOWING:

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OP(C) No.340 of 2021

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JUDGMENT Dated, this the 6^th day of March, 2024

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The common order in C.M.A.Nos.25 & 37 of 2020 of the Addition District Court-VI, Kozhikode is under challenge in this Original Petition. The plaintiff in the suit O.S.No.401/2019 of the Principal Munsiff Court, Kozhikode, who is the appellant in

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the C.M.A. second above referred, is the petitioner herein. Ext.P5 order of interim injunction granted by the Principal Munsiff - restraining the respondents from demolishing/ removing the fit-outs, interiors and other belongings of the petitioner in the petition scheduled room - was vacated by the learned District Judge by the impugned Ext.P6 common order.

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2. Heard Sri.T.Sethumadhavan, learned Senior

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Counsel, instructed by Adv.Deepa Narayanan, on behalf of the petitioner and Sri.B.G.Harindranath, learned counsel for the respondents.

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OP(C) No.340 of 2021

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3. The bare minimum facts required for adjudication of the instant Original Petition are as follows:

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Ext.P1 Letter of Intent (LOI) was executed by and between the 1^st respondent private limited company

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and the petitioner herein, whereunder, the petitioner was offered a shop room having an area of 1337 sq. ft. in the first floor of a Mall at

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Calicut, under the name and style “Mall of Joy”. Ext.P1 Letter of Intent specifies the type of agreement as that of a leave and license. The expected date of commencement of the Mall, as per Ext.P1, was 01.04.2012; and the expected date for giving possession for fit-outs was 15.01.2012. The period of leave and license was prescribed as nine

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years, with a lock-in period of three years. License fee, security deposit etc, are prescribed in Ext.P1. Two months license fee, equivalent to Rs.2,94,140/-, has to be paid at the time of signing Ext.P1 letter of intent, which the petitioner/plaintiff claims to have performed. It

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is the further claim of the petitioner/plaintiff

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that he had spend Rupees Forty lakhs approximately, to carry out the interior works and fit-outs in the scheduled shop room. The suit was filed in the year 2019, on the allegation that the petitioner/plaintiff was prevented by the 2^nd respondent herein, from entering into the building complex, on the claim that the Mall was sold to it

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by the 1^st respondent. It is not in dispute that, the Mall could not be developed in view of several litigation, which respondents 1 and 2 faced from various quarters. The disputes were ultimately referred to arbitration and based on the award, the complete rights of the building was given to the 2^nd respondent herein.

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4. The 2^nd respondent would maintain that, there

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is no privity o f contract between the petitioner/plaintiff and the 2^nd respondent. Even as per the case of the petitioner/plaintiff, Ext.P1 was only an offer and the petitioner has

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OP(C) No.340 of 2021

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not become a licensee. Nor was the shop room taken possession of, by him. Based on Ext.P1, the petitioner/plaintiff was only permitted to do the fit-outs in the scheduled shop room. The petitioner never started any business in the shop room. It was contended that the remedy, if any, of the petitioner, is to seek compensation from the 1^st respondent; and the injunction sought for

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cannot be sustained.

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5. Learned Senior counsel appearing for the petitioner/plaintiff would contend that, the effect of a Letter of Intent like Ext.P1 has been explained by the Hon'ble Supreme Court in Rishi Kiran Logistics Private Limited vs. Board of

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Trustees of Kandla Port Trust and Others [2015 (13) SCC 233] and Dresser Rand S.A. v. M/s. Bindal Agro Chem Ltd. & Another [(2006) 1 SCC 751]. On the strength of the said dicta, learned Senior would contend that the Letter of Intent is enforceable, particularly when the petitioner/plaintiff had

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acted upon it. According to the Senior Counsel, the injunction granted by the learned Munsiff, ought not have been interfered with by the 1^st appellate court, inasmuch as, it only seeks to prevent demolition of the fit-outs made by the petitioner/plaintiff. Such interference was all the more illegal, in view of the law laid down a Division Bench of this Court in Pulippinakkadu

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Muthukoya and Others v. Muchiyan Mnthukoya and Others [1988 (1) KLJ 712] . According to the learned Senior, the order of status quo directed by the Munsiff, is liable to be restored.

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6. Refuting the above contentions, learned counsel for the 2^nd respondent would contend that the petitioner/plaintiff was not in possession of the scheduled shop room, is a fact found by both the trial court and the appellate court, without which, there arises no question of issuance of any order of injunction. After the award of the Arbitrator, it is the 2^nd respondent, who is put in

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OP(C) No.340 of 2021

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possession of the building. It was emphasized that, the 1^st respondent who promised a License in respect of the subject room to the petitioner/plaintiff, vide Ext.P1, was only a tenant under the 2^nd respondent. On absence of privity of contract, learned counsel relied upon two decisions of the Hon'ble Supreme Court, Mod. Seraiuddin etc v. The State of Orissa [AIR 1975 SC 1564] and Cox and Kings India Limited v. Indian Railways catering and Tourism Corporation Limited and Another [2012 (7) SCC 587]. On the scope of a Letter of Intent, learned counsel relied upon South Eastern Coalfields Limited and Others v. S.Kumar's Associates AKM (JV) [2021 (9) SCC 166]. On such premise, learned counsel would contend that, no interference is warranted to Ext.P6 order of the appellate court in the C.M.As in question.

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7. The law relating to LOI is no more res

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integra . Ordinarily, a Letter of Intent merely indicates a party's intention to enter into a

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OP(C) No.340 of 2021

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contract with another in future. The same is not intended to bind either party to enter into a contract ultimately. However, there can be instances, where an LOI may reflect acceptance of

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an offer too, in which case it may have to be construed as a concluded contract, provided such acceptance is evident from the terms of the LOI. [See in this regard i) Dresser Rand (supra); ii) Rishi Kiran Logistics (supra) ; iii) South Eastern Coalfields Limited (supra)].

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8. Coming to the instant facts, the Letter of Intent, produced as Ext.P1, contemplates a leave and licence arrangement between the petitioner and 1^st respondent herein. Ext.P1 provides the expected date of commencement of the Mall as 01.04.2012 and expected date on which possession is given for fit-outs is 15.01.2012. It provides for a period free of licence fee, whereafter, the licensee (petitioner herein) is under an obligation to pay the license fees, amenities charges etc. The free

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OP(C) No.340 of 2021

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period is stipulated to be 45 days from the date of handing over for fit-outs and interiors, or the date of commencement of the Mall, whichever is later. It is specifically provided that the licensee shall not carry on any business in their respective premises before the commencement of the Mall. Ext.P1 contains a clear caveat, which throws light into the intention of the parties, which is extracted here below:

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“This is a mere Letter of Intent and reflects only the Commercial understanding of the parties and is not a legally binding contract. This Letter of Intent is subject to the Terms & conditions of the Agreement. If for any reason parties are not able to agree to the terms & conditions of the Leave & License/Lease agreement, then this Letter of Intent shall stand cancelled and the Licensor will refund 50% of the advance made by the Licensee towards interest free security deposit.”

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9. It is therefore, axiomatic that Ext.P1 does not reflect a completed/concluded contract. Instead, it only speaks of the intention of the

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parties to enter into a contract upon commencement

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of the Mall, wherein the licenser agrees to give a shop room having an approximate area of 1337 sq.ft. to the licensee under a leave and licence agreement. All what transpires simultaneous with the execution of Ext.P1 is the payment of an interest fee security deposit by the licensee to the licenser and handing over possession for carrying out fit outs and interior works, on and with effect from 15.01.2012. The rest of the matters in Ext.P1 is merely a contemplation, which is to take effect on the commencement of the Mall. As already indicated, there is no dispute that the Mall had not commenced at all. In the circumstances, this Court may conclude that there is nothing available in the terms of Ext.P1 to take a deviation from the ordinary legal concept of an LOI, so as to treat and construe Ext.P1 as a concluded contract.

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10. Having found so, the solitary claim which the

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petitioner/plaintiff can make appears to be one for return of the advance paid and value of improvements, if any, subject to proof. This Court notice that the suit was filed in the year 2019 and the same is only for injunction simpliciter. Going by Ext.P1, the stipulated period of the licence arrangement is 9 years. Even assuming that the remedy for injunction could be maintained in the initial phase - so long as the so claimed improvements are there in the premises - the question is how long can the petitioner cling on to the said remedy, especially when the total period stipulated in Ext.P1 had already expired, by now. No claim for money has been made so far, either by amending the suit or otherwise. This Court is also bound to take into account the change of circumstances, whereby the 2^nd respondent has become the owner of the premises by virtue of an arbitral award. As against the 2^nd respondent, the petitioner has no privity of contract, much less any concluded contract.

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11. This Court finds no reason to interfere with the judgment impugned of the learned District Judge, which refused injunction. As held by the Honourable Supreme Court in Wander Limited and Others v. Antox India Private Limited [1990 Supp (1) SCC 727], an appellate court is not expected to interfere with an interim order of injunction granted by the trial court, unless the discretion has been exercised arbitrarily.

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This Original Petition fails and the same will stand dismissed.

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Sd/-

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C.JAYACHANDRAN, JUDGE

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TR/ww

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OP(C) No.340 of 2021

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APPENDIX OF OP(C) 340/2021

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PETITIONER'S EXHIBITS:

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EXHIBIT P1 TRUE COPY OF THE LETTER OF INTENT EXECUTED BETWEEN THE PETITIONER AND THE 1ST RESPONDENT DATED 06.01.2012.

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EXHIBIT P2 TRUE COPY OF I.A.NO.3397/2019 IN O.S. NO.401/2019 DATED 25.09.2019.

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EXHIBIT P3 TRUE COPY OF THE COUNTER STATEMENT FILED BY THE 1ST RESPONDENT DATED 26.11.2019.

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EXHIBIT P4 TRUE COPY OF THE COUNTER STATEMENT FILED BY THE 2ND RESPONDENT DATED 29.10.2019.

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EXHIBIT P5 TRUE COPY OF THE ORDER OF THE LEARNED MUNSIFF IN I.A.NO.3397/2019 IN O.S. NO.401/2019 DATED 20.03.2020.

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EXHIBIT P6 TRUE COPY OF THE COMMON JUDGMENT IN C.M.A.NO.25/2020 AND C.M.A.NO.37/2020 DATED 01.01.2021.

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EXHIBIT P7 TRUE COPY OF THE COMMISSIONER'S REPORT DATED 30.10.2019.

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RESPONDENTS' EXHIBITS:

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EXHIBIT R2(A) A TRUE COPY OF THE PROCEEDINGS DATED 16.11.2018 OF THE ARBITRATOR IN THE MATTER OF DISPUTE BETWEEN THE 2ND RESPONDENT HEREIN AND THE PETITIONER HEREIN. EXHIBIT R2(B) A TRUE COPY OF THE PLAINT IN O.S. NO. 401 OF 2019, DATED 28.09.2019.

Saheer Vachal v. Cochin Smart City Properties Pvt.Ltd.

Case brief

What is this about?

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Saheer Vachal v. Cochin Smart City Properties Pvt.Ltd.

Case brief

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