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High Court Of Calcutta
Sanjib Banerjee, J.
Itc Limited : Appellant
Versus
Oberoi Mall Pvt. Ltd. : Respondent
CP. No 199 of 2009
Decided On : Apr 21, 2010
LEASE - Lock-in Period - Enforceability of Clause - Interpretation of Contractual Provisions - Winding-up Petition - Claim in Damages - Maintainability - Consideration of Legal Principles and Equitable Considerations.
Fact of the Case:
The petitioner, the lessor, filed a winding-up petition against the company, the lessee, seeking payment of rent and amenity fees under two agreements for the unexpired duration of a lock-in period. The company surrendered possession of the leased premises before the expiry of the lock-in period and claimed that the agreements were given a go-by pursuant to an understanding between the parties.
Finding of the Court:
1. The clauses in both agreements providing for a lock-in period and the ascertained amount of payment for the unexpired period were not disputed. 2. The company's defense of an understanding to give a go-by to the agreements was not supported by evidence and was considered to be illusory or sham. 3. The court acknowledged the principle that a claim in damages may not be entertained in a winding-up petition but recognized that there is no statutory bar to it. 4. The court considered the equitable consideration of unjust enrichment if the petitioner were to receive rent and amenity fees while simultaneously inducting another tenant for the unexpired period.
Issues: 1. Whether the clauses providing for a lock-in period and the ascertained amount of payment were enforceable. 2. Whether the company's defense of an understanding to give a go-by to the agreements was valid. 3. Whether a claim in damages could be maintained in a winding-up petition. 4. Whether equitable considerations, such as unjust enrichment, were relevant in determining the enforceability of the lock-in period clause.
Ratio Decidendi: 1. The court held that the clauses providing for a lock-in period and the ascertained amount of payment were enforceable as the foundation of the claim was established and the quantum was agreed upon. 2. The court found the company's defense of an understanding to give a go-by to the agreements to be illusory or sham, as there was no evidence to support it and the company's conduct was not without blemish. 3. The court acknowledged that a claim in damages may not be entertained in a winding-up petition but recognized that there is no statutory bar to it, especially when the foundation of the claim is established and the quantum has been agreed upon. 4. The court considered the equitable consideration of unjust enrichment and found that it raised a substantial legal issue, particularly in relation to the amenities agreement.
Final Decision: The court permanently stayed the winding-up petition but directed the company to pay costs to the petitioner for its showing in its affidavit. The court advised the petitioner to pursue the claim in the arbitral proceedings already commenced or in a suit that the petitioner may institute in accordance with law.
Sanjib Banerjee
1. THE claim of the petitioning creditor is on account of sums payable by the company under two several agreements executed in February, 2008. THE first of the two agreements is a deed of lease and the second is described as the amenities agreement. THE company had taken on lease an area of about 763 sq. ft on the first floor of the Oberoi Mall at Goregaon (East) in Mumbai.
2. THE petitioner says that both agreements contemplated a lock-in period which implied that the company had to honour its commitments for a period of 60 months there under regardless of the company using the facility. In other words, the petitioner suggests that the company was obiliged under the two contracts to pay the monthly amounts contemplated thereby for the period of 60 months whether or not the company occupied the premises or surrendered the same to the petitioner.
The petitioner submits that for reasons undisclosed the company abandoned the premises and by an ante-dated letter issued on January 17, 2009 claimed that it had delivered possession to the petitioner. The petitioner says that though it is now not in dispute that the company's goods and fixtures and fittings have been removed from the shop - notwithstanding the petitioner initially seeking to exercise a lien thereon - the company is liable to make payment of the amounts due under the two agreements. The petitioner admits that an amount deposited by the company by way of security has been retained by the petitioner, but that would not cover the amount due from the company. There is an arbitration reference on the same subject matter that has been initiated at the behest of the petitioner, though the parties cannot specify whether the reference was made before or after this petition was instituted.
3. THE petitioner refers to clause 2.2 of the deed of lease. THE petitioner says, and it is not disputed by the company, that there is a clause of similar import in the amenities agreement. Clause 2.2 of the deed of lease provides as follows:
"2.2 This Demise, which shall subsist for the Contractual Term shall be 'Lock-in-Period'. In the event the Lessor permits the Lessee in writing to determine this Lease prior to the expiry of the Contractual Term or in the event the Lessor terminates these presents on account of any Event of Default on the part of the Lessee in accordance with the provisions of clause 19 hereunder, then in that event, the Lessee shall be liable (without prejudice to the right of Lessor for claim of damages, loss etc. in the event of termination or pre determination of these presents by the Lessor as aforesaid), to pay an amount equivalent to the Rent for the unexpired Contractual Term."
4. THE petitioner refers to clause 4 of the deed of lease that stipulates Che quantum of payment. THEre is an almost identical clause in the amenities agreement. THE two agreements contemplated payment at a lower rate for the first 33 months and at a slightly higher rate for the next 27 months. Clause 4 of the deed of lease provides as follows:
"4. Rent 4.1. THE Lessee covenants and agrees that it shall during the Contractual Term pay to the Lessor by way of Rent the following amounts for the following periods: 4.1.1 Rent due and payable during the First Period is Rs. 1,06,057/- (Rupees One Lakh Six Thousand and Fifty Seven Only) for each month. 4.1.2 Rent due and payable during the Second Period shall be Rs. 1,21,966/- (Rupees One Lakh Twenty One Thousand Nine Hundred and Sixty Six Only) for each month."
The primary defence set up by the company is that the petitioner's claim is in damages, which is generally not entertained in this jurisdiction. The company also suggests that disputed questions arise and such disputes would be evident from the correspondence exchanged between the parties prior to the issuance of the statutory notice. The company asserts that the relevant clauses requiring the lessee to make payment at the contractual rate for the entire currency of th
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