Partly allowed

Accudyne Industries India Private Limited v. M/S. R.P. Rajarajan Enterprises

Madras HC14 Mar 2024OSA(CAD)/150/2021

Case brief

AI extract

What is this about?

The High Court disposed of two appeals regarding a built-to-suit lease dispute. It held the lessor's termination of the lease invalid as delays were caused by the lessee. The court awarded the lessee no refund but denied the lessor's claim for base rent, holding the advance amount retained as compensation for construction work to avoid unjust enrichment.

What did the court decide?

The lease termination was upheld as illegal; base rent award set aside; advance money retained as compensation; counter-claim for refund dismissed.

Accudyne Industries India Private Limited Vs M/S. R.P… — Specific Performance | Madras HC (2024)

¶1

2024:MHC:1290

¶2

OSA (CAD) NOS.150 AND 154 OF 2021

¶3

IN THE HIGH COURT OF JUDICATURE AT MADRAS

¶4

JUDGMENT RESERVED ON 24 / 01 / 2024

¶5

JUDGMENT DELIVERED ON 14 / 03 / 2024

¶6

CORAM :

¶7

THE HONOURABLE MR. JUSTICE R.SUBRAMANIAN AND

¶8

THE HONOURABLE MR. JUSTICE R.SAKTHIVEL

¶9

OSA (CAD) NOS.150 AND 154 OF 2021 AND

¶10

CMP NO.21109 OF 2021 IN OSA (CAD) NO.150 OF 2021 AND CMP NO.21249 OF 2021 IN OSA (CAD) NO.154 OF 2021

¶11

Accudyne Industries India Private Limited Represented by its Authorised Signatory Mr.Sridhar Jawahar No.4, Rajarajan Street, Visalakshi Nagar, Ekkaduthangal, Chennai – 600 097. ... Appellant in both OSAs' (Cause title accepted vide order dated 10.11.2021)

¶12

Vs.

¶13

M/s.R.P.Rajarajan Enterprises Represented by its Managing Partner R.Parthiban S/o. K.A.Rishikesavam Having its office at No.39, Habibullah Road, T.Nagar, Chennai – 600 017. ... Respondent in both OSAs'

¶14

https://www.mhc.tn.gov.in/judis 1/42

¶15

1/42

¶16

OSA (CAD) NOS.150 AND 154 OF 2021

¶17

PRAYER IN OSA (CAD) NO.154 OF 2021: Original Side Appeal filed under Order 36 Rule 1 of Original Side Rules read with Section 13 of the Commercial Courts Act, 2015, praying to set aside the Judgment and Decree dated 19.02.2021 passed in C.S.No.692 of 2012 and dismiss the judgment and decree to the extent of directing the appellant to pay a sum of Rs.1,40,14,080/- (Rupees One Crore Forty Lakh Fourteen Thousand and Eighty only) along with intererst at the rate of 12% from 29.10.2008 to the respondent.

¶18

PRAYER IN OSA (CAD) NO.150 OF 2021: Original Side Appeal filed under Order 36 Rule 1 of Original Side Rules read with Section 13 of the Commercial Courts Act, 2015, praying to set aside the Judgment and Decree dated 19.02.2021 passed in C.S.No.692 of 2012 to the extent of dismissal of the counter-claim filed by the appellant, and allow the counter-claim by directing the respondent to pay a sum of Rs.1,18,43,273/(One Crore Eighteen Lakh Forty Three Thousand Two Hundred and Seventy Three only) along with interest at the rate of 24% from 29.11.2007 till the date of payment.

¶19

For Appellant : Mr. P. H. Aravindh Pandian (in both OSAs' ) Senior Counsel for Mr. Thriyambak J. Kannan For Respondent : Mr. V. Anand (in both OSA's)

¶20

https://www.mhc.tn.gov.in/judis 2/42

¶21

2/42

¶22

OSA (CAD) NOS.150 AND 154 OF 2021

¶23

COMMON JUDGMENT

¶24

R.SAKTHIVEL, J.

¶25

By this common Judgment, the following appeals are being

¶26

disposed of :

¶27

(i)OSA (CAD) NOS.154 of 2021 preferred assailing the

¶28

Judgment and Decree dated 19.02.2021 passed in C.S.No.692 of 2012, by

¶29

the defendant therein, praying to set aside the same.

¶30

(ii)OSA (CAD) NOS.150 of 2021 preferred assailing the

¶31

rejection of the counter-claim in Judgment and Decree dated 19.02.2021

¶32

passed in C.S.No.692 of 2012, by the defendant therein, praying to allow

¶33

the counter-claim.

¶34

2.For the sake of convenience, henceforth, the parties will be

¶35

referred to as per their array in the suit i.e., ‘appellant’ and the ‘respondent

¶36

herein’ will be referred to as ‘defendant’ and ‘plaintiff’ respectively.

¶37

3/42

¶38

https://www.mhc.tn.gov.in/judis 3/42

¶39

OSA (CAD) NOS.150 AND 154 OF 2021

¶40

3. Case of the Plaintiff in brief

¶41

3.1.The plaintiff owns lands admeasuring 1.67 Acres in

¶42

S.Nos.60/11C, 60/12, 61/17C, 61/18, 61/19 and 61/20B at Old No.101,

¶43

New No.55, Thandalam Village, Sriperumpudur Taluk. The defendant proposed a built-to-suit lease arrangement. After discussions, a registered Lease Deed was executed on 29.11.2007. It was agreed that the plaintiff as lessor would construct an industrial shed with approximately 30,000 sq.ft of factory space and 7,000 sq.ft of office space and hand it over to the defendant as lessee within six months from the date of execution of the lease deed. As per the agreement, necessary building construction permissions and licenses had to be obtained by the plaintiff and other permissions relating to running the industry had to be obtained by the defendant.

¶44

https://www.mhc.tn.gov.in/judis 4/42

¶45

OSA (CAD) NOS.150 AND 154 OF 2021

¶46

3.2.At a subsequent meeting, the said period had been altered

¶47

and the date of commencement was changed to 01.04.2008 owing to the delay primarily attributable to the defendant, who changed the construction specifications frequently, and also owing to the delay on account of rainfall. The construction commenced and proceeded till the roof level under regular supervision of the defendant through its Managing Director and representatives. Further, the defendant was dependent on a Multi National French company for its business. The industrial shed had to be constructed according to the needs of the foreign company and therefore, the specifications kept changing. Though the plaintiff incurred additional expenses, the changes desired by the defendant’s side were carried out duly by the plaintiff.

¶48

3.3.The issue of construction of toilet for the office space

¶49

generated a dispute between the plaintiff and the defendant and this was resolved in a meeting held on 26.08.2008. It was resolved that the

¶50

https://www.mhc.tn.gov.in/judis 5/42

¶51

OSA (CAD) NOS.150 AND 154 OF 2021

¶52

construction of the toilets for the office space would be carried out with no

¶53

additional charges on the defendant. The other specifications regarding

¶54

roof height and flooring level were agreed to be uniform. It was further agreed that the plans from the municipality should be obtained by the plaintiff and only after the defendant approves the drawings and plans, construction should be commenced by the plaintiff; that the revised drawings approved by the municipality should be handed over to the defendant by 30.10.2018; and that the entire construction should be completed on or before 30.12.2008.

¶55

3.4.The agreement arrived at in the aforementioned meeting

¶56

brought about substantial variation in the terms and conditions of the registered Lease Deed dated 29.11.2007. The changes in the construction

¶57

were on account of additional open space of 6698 sq.ft required in addition

¶58

to the originally agreed 6400 sq.ft of open space mentioned in the Lease Deed.

¶59

6/42

¶60

https://www.mhc.tn.gov.in/judis 6/42

¶61

OSA (CAD) NOS.150 AND 154 OF 2021

¶62

3.5.Further, owing to the drop of export potential of the

¶63

defendant in July 2008 and other difficulties faced by the defendant, the

¶64

plaintiff was blamed by the defendant for deviation from the agreed plan and approved drawing by letter dated 02.08.2008. The plaintiff by letter dated 07.08.2008 set out the details of the requirement of the defendant and sought clarification regarding the location of the toilets for resuming

¶65

construction. It had been also stated that the period fixed for completing construction namely 30.12.2008 should be extended further.

¶66

3.6.The defendant had also taken up the issue of additional

¶67

rent for the additional space vide letter dated 02.08.2008 which was refuted

¶68

by the plaintiff by letter dated 07.08.2008. The plaintiff had made clear that many modifications have been sought by the defendant and there were

¶69

also many deviation in the approved plan. The plaintiff claimed they had

¶70

spent more than Rs.1.5 Crores towards construction and that the ground

¶71

level was raised for the entire lease area.

¶72

https://www.mhc.tn.gov.in/judis 7/42

¶73

OSA (CAD) NOS.150 AND 154 OF 2021

¶74

3.7.Further, the defendant by letter dated 29.10.2008

¶75

terminated the lease exercising Clause No.5.2 and Clause No.8.5 of the registered Lease Deed dated 29.11.2007. The defendant alleged that the construction had not been done in accordance with the specifications and the drawings. The plaintiff had issued a reply on 02.11.2008 stating that a huge amount of money had been spent on construction. The plaintiff also

¶76

pointed out that there was no delay on their part in the construction.

¶77

3.8.The defendant then issued a legal notice dated 08.12.2008,

¶78

and for the first time, allegations were raised against the plaintiff. The plaintiff issued a reply through their advocate on 18.12.2008. The plaintiff

¶79

claimed that the amount alleged to have been incurred by the defendant to

¶80

a sum of Rs.1,43,54,324/- was not sustainable. The defendant issued a re-

¶81

joinder to the notice of the plaintiff. The plaintiff replied through their

¶82

counsel on 05.01.2009. The plaintiff claimed that they had spent a sum of

¶83

Rs.3.75 Crores on construction. The rent agreed was Rs.9,73,200/- per

¶84

https://www.mhc.tn.gov.in/judis 8/42

¶85

OSA (CAD) NOS.150 AND 154 OF 2021

¶86

month. They also estimated that they would have realized rent up to

¶87

Rs.8,31,69,504/- for the six-year lock-in period. The plaintiff therefore is

¶88

entitled to a total amount of Rs.12,06,69,504/- which consists of the rent and construction cost. However, the plaintiff claimed the rents payable by the defendant only for three years namely, from 30.12.2008 to 29.12.2011

¶89

while reserving their right to claim rent for the rest of the lock-in period.

¶90

3.9.The plaintiff had therefore filed a Civil Suit for a

¶91

declaration that the termination of the Lease Deed by the Defendant vide

¶92

letter dated 29.10.2008 is illegal; for recovery of a sum of Rs.3,85,89,216/-

¶93

together with interest from the date of termination of the lease i.e., 29.10.2008 till the date of realization; and also for costs, before the Hon’ble Single Judge of this Court.

¶94

https://www.mhc.tn.gov.in/judis 9/42

¶95

9/42

¶96

OSA (CAD) NOS.150 AND 154 OF 2021

¶97

4. Case of the defendant in brief and counter claim

¶98

4.1.The defendant filed their written statement, in which they

¶99

claimed that the suit is barred by law of limitation as the period of limitation expired on 29.10.2011. The defendant also questioned the authority of the person who verified the plaint. The defendant also stated

¶100

that the plaintiff was not a registered partnership firm and hence, the suit

¶101

was not maintainable.

¶102

4.2.Further stated that, the plaintiff was to start construction

¶103

on 20.03.2008 and to complete the same within a period of six months;

¶104

that the plaintiff was required to develop, construct, and lease to the defendant, the office and factory building at the said place; that the defendant had paid to the plaintiff a total sum of Rs.1,17,02,840/-; and that,

¶105

however, the plaintiff deviated, did not carry out the construction as per the

¶106

terms agreed, failed to complete the construction and handover the

¶107

https://www.mhc.tn.gov.in/judis 10/42

¶108

OSA (CAD) NOS.150 AND 154 OF 2021

¶109

possession within six months from 29.11.2007. Therefore, the defendant

¶110

terminated the Lease Deed dated 29.11.2007 on 29.10.2008 and sought

¶111

return of Rs.1,17,02,840/- which had been paid by the defendant to the plaintiff as advance in terms of the registered Lease Deed dated 29.11.2007 together with interest at 24% per annum from the date of payment i.e., 29.11.2007 till the date of filing counter-claim and further claimed subsequent interests on counter-claim. The defendant therefore

¶112

prayed to dismiss the suit with costs and allow the counter-claim.

¶113

5.A reply statement was filed by the plaintiff denying the

¶114

averments stated in the written statement including the counter-claim and

¶115

reiterating a few plaint averments.

¶116

6.Based on the above pleadings, the Hon'ble Single Judge

¶117

framed the following issues:

¶118

“1.Whether the plaint has been validly signed and verified?

¶119

11/42

¶120

https://www.mhc.tn.gov.in/judis 11/42

¶121

OSA (CAD) NOS.150 AND 154 OF 2021

¶122

2.Whether the present suit is maintainable on account of

¶123

the plaintiff being an unregistered partnership?

¶124

3.Is the suit barred by limitation?

¶125

4.Is the Shed subject matter of the lease was delayed in

¶126

construction due to the variations required by the defendant?

¶127

5.Whether the termination of the lease by the defendant through letter dated 29.10.2008 is valid?

¶128

6.Is the plaintiff entitled to recover money from the defendant for the entire term of the lease under the lease deed dated 29.11.2007, including the lock-in period?

¶129

7.To what relief the plaintiff is entitled?”

¶130

6.1.On 28.08.2019, the following additional issues were

¶131

framed:

¶132

“1.Whether the plaintiff is in breach of its obligations as contained in the agreement dated 29.11.2007 entered into with the defendant?

¶133

2.Whether the construction was completed, and possession was delivered to the defendant by the plaintiff within the period mutually agreed on by the parties?.

¶134

3.Whether the defendant is entitled to receive from the plaintiff a sum of Rs.1,18,43,274/- including an interest of Rs.1,40,434/- on the principal amount of Rs.1,17,02,840/- paid

¶135

as advance in terms of the lease deed dated 29.11.2007?”

¶136

https://www.mhc.tn.gov.in/judis 12/42

¶137

OSA (CAD) NOS.150 AND 154 OF 2021

¶138

6.2.To prove the case, Mr. R. Parthiban, Managing Partner of

¶139

the plaintiff firm was examined as P.W.1 and Ex-P.1 to Ex-P.12 were

¶140

marked on the plaintiff's side. On the defendant side, J. Sridhar, Finance Controller of the defendant company, was examined as D.W.1, and Ex-D.1 to Ex-D.11 were marked. Notably, the defendant side marked Ex-D.1 through cross-examination of P.W.1.

¶141

6.3.After considering the rival submissions and the evidence

¶142

on record, the Hon’ble Single Judge held that the plaint has been duly

¶143

verified by the Managing Partner of the plaintiff firm; that the plaintiff is a registered firm; that the plaint was presented on 28.10.2011 which is well

¶144

within the period of limitation; and that therefore, the suit is maintainable. Accordingly, the Hon’ble Single Judge answered Issue Nos. 1, 2 and 3 in favour of the plaintiff.

¶145

6.4.With regard to Issue 4 and Additional Issue No.1, the

¶146

Hon’ble Single Judge held that the construction was delayed due to the

¶147

https://www.mhc.tn.gov.in/judis 13/42

¶148

OSA (CAD) NOS.150 AND 154 OF 2021

¶149

changes sought by the defendant, and the plaintiff was not in breach of Ex-

¶150

P.2 – Lease Deed dated 29.11.2007.

¶151

6.5.With regard to Issue No.5, the Hon’ble Single Judge held

¶152

that the termination is invalid as it is premature. With regard to Additional

¶153

Issue No.2, Hon’ble Single Judge held that, as a consequence of the

¶154

decision on Issue No.5, the Additional Issue No.2 pales into insignificance.

¶155

6.6.With regard to Issue 6, the Hon’ble Single Judge held that

¶156

the plaintiff is entitled only to the base rent for a period of three years at

¶157

the rate of 3,89,280 per month and accordingly, directed the defendant to

¶158

pay a sum of Rs.1,40,14,080/-.

¶159

6.7.With regard to Additional Issue No.3, the Hon’ble Single

¶160

Judge held that, since the termination was held invalid, the defendant is not

¶161

entitled to the counter-claim raised.

¶162

https://www.mhc.tn.gov.in/judis 14/42

¶163

14/42

¶164

OSA (CAD) NOS.150 AND 154 OF 2021

¶165

6.8.With regard to Issue No.7, the Hon’ble Single Judge held

¶166

as extracted hereunder:

¶167

“115.The suit is partly decreed.

¶168

(a).The termination of the lease deed by the defendant

¶169

by letter dated 29.10.2008 is declared as illegal.

¶170

(b).The defendant is directed to pay a sum of Rs.1,40,14,080/- together with interest at 12% per annum from 29.10.2008 till date of realisation.

¶171

(c).The counter claim of the defendant is dismissed.

¶172

(d).The plaintiff is entitled for costs of the suit.”

¶173

7.Feeling aggrieved with the Judgement and Decree dated

¶174

19.02.202 and the rejection of the counter-claim, the defendant has

¶175

preferred these two appeals.

¶176

8. Arguments

¶177

8.1.Mr.P.H.Aravindh Pandian, the learned Senior Counsel

¶178

appearing for the appellant / defendant would argue that the defendant was

¶179

ready and willing to perform their part of the contract. In accordance with https://www.mhc.tn.gov.in/judis 15/42

¶180

OSA (CAD) NOS.150 AND 154 OF 2021

¶181

Ex-P.2 – Lease Deed, the defendant obtained the necessary permissions

¶182

from the Tamil Nadu Pollution Control Board to establish the industry and the same was communicated to the plaintiff on 08.01.2008 vide Ex-D.1. Thereafter, the defendant required open space of 6698 sq.ft in addition to the open space indicated in Ex-P.1 and the same was communicated to the plaintiff on 20.03.2008 vide Ex-P.12 / Ex-D.4. In Ex-P.12 / Ex-D.4, both parties have agreed in writing that the date of commencement of construction shall be 01.04.2008 and both parties have also signed therein. This would imply that the plaintiff had to complete the construction by 30.09.2008. The plaintiff raised some issues regarding the construction cost of toilets which was already included and specified in the original contract. In the meeting held on 26.08.2008, the issue regarding toilets was resolved and further, the plaintiff agreed to provide facility to the defendant for fit-outs by 15.11.2008. However, the plaintiff failed to perform their part of the contract. Hence, on 29.11.2008, the defendant

¶183

terminated the contract by exercising Clause No.5.2 and Clause No.8.5 of

¶184

https://www.mhc.tn.gov.in/judis 16/42

¶185

OSA (CAD) NOS.150 AND 154 OF 2021

¶186

Ex-P.2 - Lease Deed and sought for refund of the advance amount of

¶187

Rs.1,17,02,284/- along with 24% interest from 29.11.2007 till the date of

¶188

filing counter-claim, along with subsequent interest. Thereafter, after

¶189

exchange of notices, the plaintiff filed the aforementioned Civil Suit.

¶190

8.2.The learned Senior Counsel would further argue that, the

¶191

Hon’ble Single Judge without properly appreciating the evidence on

¶192

record, partly decreed the Suit and dismissed the counter-claim of the

¶193

defendant. The defendant filed a complaint before consumer forum and the

¶194

same was dismissed as not maintainable. However, the defendant’s counter-claim is maintainable in law. The Hon’ble Single Judge failed to

¶195

consider the fact that the entire construction was executed out of the

¶196

advance money paid by the defendant and the plaintiff failed to execute the

¶197

construction as required by the defendant. Further, the plaintiff did not

¶198

deliver possession of the industrial area within the stipulated time. Hence,

¶199

awarding base rent to the plaintiff would amount to unjust enrichment. He

¶200

https://www.mhc.tn.gov.in/judis 17/42

¶201

OSA (CAD) NOS.150 AND 154 OF 2021

¶202

accordingly prayed to allow these appeals, set aside the Judgement and

¶203

Decree passed by the Hon’ble Single Judge and allow the counter-claim of

¶204

the defendant.

¶205

9.Per contra, Mr.V.Anand, the learned counsel for the plaintiff

¶206

would argue that the plaintiff was ready and willing to perform their part of

¶207

the contract. The defendant had not fulfilled their part of the contract in accordance with Ex-P.2- Lease Deed. Ex-P.12 / Ex-D.4 document would

¶208

show that the construction was to commence only from 01.04.2008 and the

¶209

delay in commencement is primarily attributable to the defendant. The defendant in the month of July 2008 asked the plaintiff to hold on the construction until further notice. There was a delay of 13 days on account of rainfall. Then, since the defendant did not confirm the location of the

¶210

toilets in the factory and office area, there occurred a delay. The construction was completed up to the roof level under the supervision of

¶211

the defendant. The defendant was frequently changing the specifications

¶212

https://www.mhc.tn.gov.in/judis 18/42

¶213

OSA (CAD) NOS.150 AND 154 OF 2021

¶214

for construction. The plaintiff carried out the desired changes of the

¶215

defendant duly. In the meeting held on 26.08.2008, the issue of

¶216

construction of toilet was resolved and both parties orally agreed to extend the construction deadline till 30.12.2008 considering the 13 days rain period and the delay caused by the defendant. As the export potential of the defendant dropped in July 2008, the defendant wanted to wriggle out of

¶217

the contract. All of a sudden, before the deadline, the defendant terminated

¶218

Ex-P.2 – Lease Deed which is illegal and arbitrary. The plaintiff spent

¶219

about 3.75 Crores on the construction. The rent agreed per month was Rs.9,73,200/-. The plaintiff would have realized rent up to Rs.8,31,69,504/- for the six-year lock-in period. However, the plaintiff claimed the rents payable by the defendant only for three years namely, from 30.12.2008 to 29.12.2011 while reserving their right to claim rent for the rest of the lock-in period. The Hon’ble Single Judge awarded only base rent for three years to a tune of Rs. 1,44,14,080/- along with interest at the rate of 12% per annum from 29.10.2008 till the date of realization. He

¶220

https://www.mhc.tn.gov.in/judis 19/42

¶221

OSA (CAD) NOS.150 AND 154 OF 2021

¶222

would further argue that the Hon’ble Single Judge dismissed the counter-

¶223

claim of the defendant for refund of the advance amount after considering

¶224

the fact that the plaintiff incurred huge expenditure on construction. There

¶225

is no warrant to interfere with the same. Accordingly, he prayed to dismiss

¶226

the appeals.

¶227

10. Points for determination

¶228

10.1.This Court has carefully considered the rival submissions

¶229

and the evidence on record. The following points arise for determination.

¶230

1. Whether the delay in construction is attributable to the plaintiff or

¶231

the defendant?

¶232

1. Whether the termination of Ex-P.2 - Lease Deed by the defendant

¶233

vide letter dated 29.10.2008 valid in the eyes of law?

¶234

Whether the plaintiff is entitled to the base rent?

¶235

https://www.mhc.tn.gov.in/judis 20/42

¶236

OSA (CAD) NOS.150 AND 154 OF 2021

¶237

Whether the defendant is entitled to the counter-claim?

¶238

Is there any warrant to interfere with the Judgement and Decree

¶239

dated 19.02.2021 of the Hon’ble Single Judge?

¶240

11. Decision and Discussion

¶241

11.1.At this juncture, this Court deems fit to state that, the

¶242

defendant sent Ex-D.7 - Notice dated 29.10.2008 terminating the Lease

¶243

Deed between the parties and therefore, the cause of action arose on

¶244

29.10.2008. The plaintiff presented the plaint before this Court on

¶245

28.10.2011, which is well within the period of limitation. Further, the

¶246

plaintiff filed Ex-P.1 – Acknowledgement of Registration of Firm dated 02.03.2005 issued by the Registrar of Firms, Chennai (Central) which

¶247

shows that the plaintiff firm is duly registered under the Indian Partnership

¶248

Act, 1932. Notably, the partnership deed also forms part of Ex-P.1. Thus,

¶249

the plaintiff firm is a registered firm. Furthermore, in Ex-P.1, partners of

¶250

https://www.mhc.tn.gov.in/judis 21/42

¶251

OSA (CAD) NOS.150 AND 154 OF 2021

¶252

the plaintiff firm have authorized Mr. R. Parthiban, Managing Partner, to

¶253

execute lease deeds and other documents on behalf of the firm. This Court

¶254

perused the Original Plaint and noticed that the plaint has been duly verified by the said Mr. R. Parthiban. Therefore, the suit is maintainable. The appellant has not agitated the decision of the Hon’ble Single Judge pertaining to Issue Nos.1,2 and 3 of the Civil Suit in this Appeal. Therefore, this Court upholds the findings of the Hon’ble Single Judge in respect of Issue Nos.1,2 and 3 therein.

¶255

12. Point Nos.1 and 2

¶256

12.1.As per Ex-P.2 - Lease Deed dated 29.11.2007, the

¶257

plaintiff as lessor had to construct an industrial area with approximately 30,000 sq.ft of factory space and 7,000 sq.ft of office space on 51,200 sq.ft

¶258

of land and hand it over to the defendant as lessee within six months from

¶259

the date of execution of the lease deed i.e., by 28.05.2008. Relevant clause thereof (Clause D) reads thus.

¶260

https://www.mhc.tn.gov.in/judis 22/42

¶261

22/42

¶262

OSA (CAD) NOS.150 AND 154 OF 2021

¶263

“D.The LESSOR understands that the payment of rent and other outgoings by the LESSEE shall be subject to the LESSOR putting the LESSEE into exclusive possession of the factory building, within a period of six (6) months from the date of execution of this Lease Deed (except as may otherwise be provided for herein);”

¶264

12.2.However, in Ex-P.12 / Ex-D.4 both parties have agreed

¶265

in writing that the date of commencement of construction shall be 01.04.2008 and both parties have also signed therein. Relevant portion of Ex-P.12 / Ex-D.4 is reproduced hereunder :

¶266

https://www.mhc.tn.gov.in/judis 23/42

¶267

OSA (CAD) NOS.150 AND 154 OF 2021

¶268

https://www.mhc.tn.gov.in/judis 24/42

¶269

OSA (CAD) NOS.150 AND 154 OF 2021

¶270

12.3.In view of Clause 8.4 and 8.5 alluded to infra , Ex-P.2-

¶271

Lease Deed can be modified by any changes agreed upon in writing and

¶272

signed by both parties. Thus, the date of commencement of construction in Ex-P.2 – Lease Deed was modified to 01.04.2008 vide Ex-P.12 / Ex-D.4

¶273

by both parties. This is not a case of novation as pleaded by the plaintiff as

¶274

there is no new contract involving the parties. Notably, the plaintiff's counsel did not press on the plea of novation in this appeal. For reference,

¶275

Clause 8.4 and 8.5 of Ex-P.2 is extracted hereunder :

“8. Miscellaneous:

8.1. . . .

8.2. . . .

8.4 No amendment or modification of this agreement is

¶280

to be valid or binding on any party unless it is made in writing, refers expressly to this agreement and is signed by or on behalf of all parties

¶281

8.5. Any notice or other communication given or made in accordance with this agreement must be -

¶282

a. in writing, may, in addition to any other effective mode of service, be sent by registered or recorded delivery post, b. and must be addressed to the and served on the Parties at

¶283

https://www.mhc.tn.gov.in/judis 25/42

¶284

OSA (CAD) NOS.150 AND 154 OF 2021

¶285

their addresses shown on the first page of this agreement or any other address that each may notify the other from time to time in writing as being its address for service for the purposes of this agreement.”

¶286

13.This Court deems fit to extract Clause 5 of Ex-P.2-Lease

¶287

Deed for ready reference :

¶288

“Clause 5

¶289

“5.TENURE & TERMINATION OF LEASE DEED:

¶290

5.1.The Term of the Lease Deed shall be six (6) years

¶291

commencing on the Rent Commencement Date (the “Lock in Period). The LESSEE shall have the option to renew the Lease Deed for one (1) additional three (3) years period upon the terms and conditions set forth herein and upon mutual agreement of the rental payments for such additional three (3) years period (the “Renewal Period”).

¶292

5.2.The LESSOR agrees to complete construction of the Premises and satisfy the conditions of item 4.2(a) and (b) hereof within six (6) months from the date of execution of this Lease Deed (the Outside Completion Date”). Notwithstanding anything to the contrary contained herein, if the LESSOR does not deliver the Industrial Building in accordance with the specifications set forth herein (as may be modified upon mutual

¶293

https://www.mhc.tn.gov.in/judis 26/42

¶294

26/42

¶295

OSA (CAD) NOS.150 AND 154 OF 2021

¶296

agreement between the LESSOR and the LESSEE) and the LESSOR has not obtained the unconditional and unqualified plan sanction approval permitting the occupation and use of the Premises for undertaking the industrial activity by the LESSEE, with twelve (12) months from the date of execution of the Lease Deed, the LESSEE shall have the option to terminate the Lease Deed and the Token Advance and any Security Deposits (together with any interest accrued thereon) shall be immediately returned to the LESSEE together with all interest accrued thereon. Additionally, the LESSOR shall reimburse the LESSEE for all amounts paid by the LESSEE with respect to (i) Stamp Duty paid by LESSEE in connection with this Lease Deed. (ii) all fees incurred by LESSEE in connection with LESSEE'S environmental due diligence conducted at the Lease Deed Premises and (iii) all fees incurred by LESSEE in connection with LESSEE'S title search conducted for the Lease Deed Premises.

¶297

5.3.LESSEE's Right to terminate: The LESSEE's has the right to terminate this Lease Deed, without being imposed with any penalty, for any of the following grounds:

¶298

a.The Rent Commencement Date not becoming effective;

¶299

b.The LESSOR not delivering the Premises to the LESSEE free, clear, unencumbered with for its use and

¶300

https://www.mhc.tn.gov.in/judis 27/42

¶301

OSA (CAD) NOS.150 AND 154 OF 2021

¶302

occupation by the LESSEE within twelve (12) months of the date the Lease Deed is executed by the Parties;

¶303

c.The LESSOR not delivering the Premise to the LESSEE arising out of non-receipt of approval of the plan sanction papers or rejection of the plan sanction papers within twelve (12) months o the date the Lease Deed is executed by the Parties;

¶304

5.4. In the event of termination of the Lease Deed by the LESSEE for any or all of the reasons as set forth herein, the LESSOR shall immediately upon receipt of the written notice from the LESSEE notifying the termination of the Lease Deed, return to the LESSEE all monies paid by the LESSEE whether as by way of Token Advance, Security Deposits or by whatever name called without any deductions whatsoever (unless otherwise specifically set forth herein) “

¶305

No need to offer explanation for the above extract as it’s self-explanatory.

¶306

14.Perusal of Ex-P.12 / Ex-D.4 further reveals that both

¶307

parties were uncertain about various aspects and specifications of the

¶308

construction. The plaintiff has pleaded that this being a large-scale built-to-

¶309

https://www.mhc.tn.gov.in/judis 28/42

¶310

OSA (CAD) NOS.150 AND 154 OF 2021

¶311

suit arrangement, the construction progressed under the regular supervision

¶312

of the defendant and their representatives, who frequently kept changing

¶313

their requirements; that the defendant company was dependent on a French Multinational Company and the construction had to be done according to the needs of the foreign company; that, therefore, drawings and specifications kept changing; that this led to delay in construction; and that

¶314

the defendant is trying to wriggle out of the contract due to a drop in the defendant’s export potential. This is further supported by letters to the defendant on various dates. Further, P.W.1 has deposed about the frequent

¶315

changes demanded by the defendant. On the other hand, though the defendant in its written statement denied that the commencement date of construction was agreed to be 01.04.2008, they admitted the same at the time of trial. As stated supra , both parties have signed in Ex-P.12 / Ex-D.4.

¶316

The written statement of the defendant, excluding the counter-claim, is nothing more than an evasive denial of the plaint averments. The defendant side has not examined any of their people directly connected

¶317

https://www.mhc.tn.gov.in/judis 29/42

¶318

OSA (CAD) NOS.150 AND 154 OF 2021

¶319

with the Ex-P.2 - Lease Deed. As a matter of fact, D.W.1 has himself

¶320

admitted that he is deposing only based on records and that he joined the

¶321

defendant company only in November, 2012. Further, he has deposed that he did not receive any oral instruction from the persons directly connected with Ex-P.2 - Lease Deed. The defendant has not produced anything to show that it was ready and willing to perform its part of the contract. In essence, the plaintiff has pleaded and proved that the shift in the date of commencement from 29.11.2007 to 01.04.2008 is due to the delay on the

¶322

side of the defendant.

¶323

15.Then, the defendant sent a letter dated 02.08.2008 (Ex-P.4 /

¶324

Ex-D.5) to the plaintiff wherein they stated that they had provided the plaintiff with all the necessary drawings duly signed for the purpose of construction of the office and factory buildings to be undertaken by the plaintiff. Further stated that the construction has already commenced from

¶325

01.04.2008 and that the plaintiff has to complete the construction by

¶326

https://www.mhc.tn.gov.in/judis 30/42

¶327

OSA (CAD) NOS.150 AND 154 OF 2021

¶328

30.09.2008. The plaintiff has replied to the same vide letter dated

¶329

07.08.2008 (Ex-P.3) wherein he has stated that the defendant instructed the plaintiff to stop the construction work until further notice in a meeting held on 02.07.2008; that toilet locations are yet to be confirmed; that 13 days delay due to rain had to be adjusted as per the terms; and that the period for which the work was stopped on defendant’s instruction should be adjusted with the deadline for construction. Notably, in view of Clause 4.3, for each day of delay caused by any natural disturbance, the Outside Completion Date shall be extended by one day. Consequently, to resolve the issues, a meeting was held on 26.08.2008. In Ex-P.5 – minutes of the said meeting, interalia it is stated that the deadline was extended till 30.12.2008 and the plaintiff was to provide the facility for fit-outs by 15.11.2008. Notably, the defendant had signed in Ex-P.5 – minutes of the said meeting, but, the plaintiff had refused to sign therein. The plaintiff, though denied the other contents of Ex-P.5, has admitted in his evidence that in the said meeting, both parties agreed to the extension of the

¶330

https://www.mhc.tn.gov.in/judis 31/42

¶331

OSA (CAD) NOS.150 AND 154 OF 2021

¶332

deadline till 30.12.2008 keeping in mind the delay caused on the side of

¶333

the defendant and also the delay on account of rainfall. The defendant does

¶334

not dispute the contents of Ex-P.5 and the same is prepared by their company and duly signed by their Managing Director - Mr.Chetan Desai. Ex-P.5 states that the extension of deadline till 30.12.2008 is owing to the

¶335

two months of stalled construction and on account of rainfall. This would

¶336

show that both parties have orally agreed to the extension of time for performance of contract, but, one of the party i.e., the plaintiff has not

¶337

signed the minutes of the meeting for certain apprehensions.

¶338

15.1.The learned counsel for the plaintiff cited the Judgement

¶339

of the Hon’ble Supreme Court in Keshavlal Lallubhai Patel and Ors. Vs. Lalbhai Trikumlal Mills Ltd., reported in AIR 1958 SUPREME COURT

¶340

512 to support his argument that oral agreements on extension of time for

¶341

performance of contract are valid. However, the same is not applicable to

¶342

the case on hand as Clause 8.4 of Ex-P.2 provides that such modifications

¶343

https://www.mhc.tn.gov.in/judis 32/42

¶344

OSA (CAD) NOS.150 AND 154 OF 2021

¶345

can be effected only in writing duly signed by both parties. The underlying

¶346

principle therein would not be applicable when there is an express

¶347

agreement to the contrary. Since the oral agreement on extension of time for performance is not reduced into writing and duly signed by both

¶348

parties, it does not modify or alter Ex-P.2 in view of Clause 8.4 and 8.5 alluded to supra.

¶349

15.2.However, the oral agreement coupled with Ex-P.3 and

¶350

Ex-P.5 would show that the 2 months stall in construction is attributable

¶351

primarily to the defendant. In Ex-P.3, the plaintiff claims that the defendant instructed the plaintiff to stop the construction work until further

¶352

notice in a meeting held on 02.07.2008. The defendant has not disputed the same.

¶353

16.According to the defendant, vide Ex-D.6, they sent an

¶354

e-mail to the architect of the plaintiff pointing out the corrections in the

¶355

existing drawings and requesting to rectify the same, despite which, the

¶356

https://www.mhc.tn.gov.in/judis 33/42

¶357

OSA (CAD) NOS.150 AND 154 OF 2021

¶358

plaintiff did not fulfil their part of the contract. The learned senior counsel

¶359

for the appellant / defendant has submitted that the e-mail is a document as

¶360

per Section 3 of the Evidence Act, 1872; that D.W.1 who is the Finance Controller of the defendant firm, in his chief examination by way of affidavit has complied with the substantial requirement of Section 65B of

¶361

the Evidence Act; and that, therefore, Ex-D.6 would be admissible in law.

¶362

16.1.In support of the above argument, he relied on Super

¶363

Cassettes Industries Ltd. Vs. Shreya Broadcasting Pvt. Ltd., reported in

¶364

2019 SCC Online Del 7314 . Essential facts of the case are: The plaintiff

¶365

therein is a copy right holder for various literary, music and other works. In

¶366

random monitoring, the plaintiff therein came to know that the defendant

¶367

therein has been broadcasting plaintiff therein’s copyright work without

¶368

their permission / licence. P.W.2 recorded the programmes wherein

¶369

copyrighted work of the plaintiff therein were broadcasted. In the pursuant

¶370

Suit, P.W.2 marked the CDs / DVDs containing those recordings. The

¶371

https://www.mhc.tn.gov.in/judis 34/42

¶372

OSA (CAD) NOS.150 AND 154 OF 2021

¶373

defendant therein raised objection that 65B Certificate has not been

¶374

produced and hence, the same is inadmissible in view of Anwar P.V. Vs.

¶375

P.K. Basheer, reported in (2014) 10 SCC 473 . The Hon’ble Delhi High

¶376

Court rejected the objection of the defendant therein by observing that the

¶377

affidavit of P.W.2 satisfies the requirement laid down under Section 65B of

¶378

the Indian Evidence Act and also the law laid in Anvar P.V’s case (supra) .

¶379

16.2.Notably, the Hon’ble Supreme Court in Arjun Panditrao

¶380

Khotkar v. Kailash Kushanrao Gorantyal., reported in (2020) 7 SCC 1

¶381

has held that certificate under sub-section (4) of section 65B is mandatory

¶382

and a condition precedent to admit any electronic record as secondary

¶383

evidence. There is no prescribed form for a certificate under Section 65B. In this case, Ex-D.6 was produced by D.W.1 on the date of filing his chief

¶384

affidavit. D.W.1 qua Financial Controller of the defendant company qua a

¶385

responsible official with authorization to use the relevant devices/network,

¶386

has duly complied with all the substantial requirements of a certificate

¶387

35/42

¶388

https://www.mhc.tn.gov.in/judis 35/42

¶389

OSA (CAD) NOS.150 AND 154 OF 2021

¶390

under Section 65B in his chief affidavit. Therefore, keeping in mind the

¶391

aforementioned case laws, this Court is of the view that Ex-D.6 is admissible as per law. No doubt that mere admission of a document does not amount to proof. In this case, D.W.1 was not working with the defendant at the time of sending of the alleged e-mail. Further, neither the sender nor the recipients of the email were examined. Further, there is no sufficient proof that the said e-mail was actually sent to and received by the recipients. Therefore, this Court is of the considered view that, Ex-D.6 is not proved by the defendant. Even assuming that Ex-D.6 is proved, Clause 8.5 alluded to supra requires any communication to be in writing and sent via post in addition to any other mode of communication. Consequently, the defendant fails in its pursuit to establish that the plaintiff has not performed his part of contract by not producing the drawings and plan duly approved and that the delay is caused by the plaintiff.

¶392

https://www.mhc.tn.gov.in/judis 36/42

¶393

OSA (CAD) NOS.150 AND 154 OF 2021

¶394

17.In essence, the plaintiff has proved that the initial delay of

¶395

6 months in commencement of construction and the subsequent delay of 2

¶396

months is primarily attributable to the defendant. The defendant has failed

¶397

to prove that there was delay on part of the plaintiff. In such circumstances, the defendant terminating Ex-P.2-Lease Deed vide letter dated 29.10.2008 exercising Clause No.5.2 and Clause No.8 ( supra )

¶398

claiming that the plaintiff failed to hand over the industrial area is not justifiable as the delay is primarily attributable to them. Therefore, the

¶399

same is invalid. Point Nos.1 and 2 are answered accordingly in favour

¶400

of the plaintiff and against the defendant.

¶401

Point Nos. 3, 4 and 5

¶402

18.The plaintiff never handed over possession of the property

¶403

to the defendant as per the terms and requirements of Ex-P.2 – Lease Deed.

¶404

D.W.1 in his cross-examination has deposed that the construction was

¶405

almost over as on 30.09.2008. The Plaintiff has pleaded that it received

¶406

https://www.mhc.tn.gov.in/judis 37/42

¶407

OSA (CAD) NOS.150 AND 154 OF 2021

¶408

Rs.1,03,75,008/- from the defendant under Ex-P.2 as an advance. To the

¶409

contrary, the defendant has mentioned in its counter-claim that Rs.1,17,02,840/- was given to the plaintiff as advance. Notably, the plaintiff has not disputed the same. Further, plaintiff has pleaded that they

¶410

incurred Rs.3.75 Crores on Construction. However, they have not

¶411

substantiated the same. In such circumstances, this Court is of the view that, the plaintiff carried out the construction out of the advance money

¶412

paid by the defendant only. In view of the decision in Point Nos.1 and 2, the defendant is not entitled to refund of the advance money of Rs.1,17,02,840/-. The plaintiff is entitled to retain the same as compensation towards the construction cost incurred by it.

¶413

19.Further, the plaintiff has not adduced any evidence to show

¶414

that the building was idle and could not be rented out after the

¶415

construction. Now that the plaintiff is enriched with the superstructure

¶416

constructed on their land out of the advance money given by the defendant,

¶417

https://www.mhc.tn.gov.in/judis 38/42

¶418

OSA (CAD) NOS.150 AND 154 OF 2021

¶419

granting it base rent would amount to enriching it at the cost of the

¶420

defendant in an unjust manner, which is not permissible under law.

¶421

Therefore, this Court decides that the plaintiff is entitled to retain the advance money of Rs.1,17,02,840/- as compensation, however, is not entitled to base rent. Point No.3 is answered accordingly in favour of the

¶422

defendant and against the plaintiff. Point No.4 is answered accordingly in favour of the plaintiff and against the defendant. The Hon’ble Single Judge is not justified in awarding base rent. Therefore, the Judgement and Decree dated 19.02.2021 is liable to be interfered to the aforementioned extent. Point No.5 is answered accordinngly.

¶423

20.Resultantly,

¶424

(i)OSA (CAD) No.154 of 2021 is partly allowed without costs

¶425

in the following manner :

¶426