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IN THE HIGH COURT AT CALCUTTA
Krishna Rao, J.
Himadri Speciality Chemical Limited – Plaintiff
Versus
Balaji Hydro Carbons Private Limited – Respondent
CS-COM 642 of 2024 (Old No. CS 154 of 2017)
Decided On : 29-04-2024
Lease - Plaintiff's Claim - Companies Act, 1956 - Sections Not Specified - The court interpreted the lease agreement and the obligations of the parties, emphasizing the necessity of possession transfer and the implications of non-compliance, leading to the plaintiff's entitlement to refunds and interest.
Fact of the Case:
The plaintiff, a manufacturing company, entered into a lease agreement with the defendant for a factory in West Bengal, paying a security deposit and monthly rent. The defendant failed to hand over possession despite receiving payments, prompting the plaintiff to seek a refund and interest.
Finding of the Court:
The court found that the defendant accepted payments without handing over possession and failed to return the amounts despite requests, establishing the plaintiff's right to recover the security deposit and rent paid.
Issues: Whether the plaintiff is entitled to recover the security deposit and rent paid due to the defendant's failure to fulfill the lease agreement.
Ratio Decidendi: The court held that the defendant's acceptance of payments without fulfilling the lease obligations constituted a breach, entitling the plaintiff to recover the amounts paid along with interest.
Result: The defendant is directed to pay Rs. 80,00,000/- and Rs. 1,59,15,000/- with interest and costs to the plaintiff.
JUDGMENT :
Krishna Rao, J.
1. The present suit is filed by the plaintiff for a decree of a sum of Rs.2,11,43,293/-along with interim interest and interest upon judgment at 18% per annum.
2. The Plaintiff is a company incorporated under the Companies Act, 1956, it is engaged in the business of manufacturing carbon-based chemicals and has been continuing the same business for over 30 years all over India and has several manufacturing units spread out all over India.
3. The defendant is a company incorporated under the Companies Act, 1956.
4. In the year 2015, the plaintiff company was in search of an area of land situated within the State of West Bengal for setting up another manufacturing unit.
5. In the month of May, 2015, Mr. Arijit De and Mr. Anil Kumar De, representing to be the directors of the defendant company had approached the plaintiff and offered to give on lease a running factory in Purulia, set up over a land measuring approximately 7 Bighas, situated at Village – Gopalpur, P.O. Narayanpur, District – Purulia, West Bengal.
6. The representatives of the defendant, called upon the plaintiff company to take the land along with the factory on lease to use the said unit as the manufacturing unit to fulfil its requirements of setting up another manufacturing unit for its business.
7. The terms of consideration was to be that the possession of the said unit would be handed over within 7 (seven) days of proper execution of lease and the plaintiff had to pay a sum of Rs.80,00,000/-as a refundable security deposit and the lease rental amount would be a sum of Rs.6.50 lakh per month.
8. As per the representation of the defendant, the lease would become effective on and from 15th June, 2015 and would be valid till 14th June, 2017 and thereafter could be extended from time to time.
9. The plaintiff company had agreed to such aforesaid terms and had executed a lease deed dated 15th June, 2015, with the defendant.
10. Pursuant to the execution of the lease deed dated 15th June, 2015, an account payee cheque bearing No. ‘034601’ dated 15th June, 2015, was issued by the plaintiff company in favour of Balaji Hydrocarbons Private Limited, for a sum of Rs.80,00,000/-as the refundable security deposit.
11. The said cheque, for a sum of Rs.80,00,000/-was encashed by the defendant on 17th June, 2015. Though the defendant had received the security deposit of Rs.80,00,000/-but had not handed over the property to the plaintiff and the defendant has also not taken any steps to register the lease deed.
12. Thereafter, from time to time in its usual and normal course of business, the plaintiff kept making payments to the defendant, starting from 17th July, 2015 upto 9th July, 2016 and the plaintiff has made payment of a total sum of Rs.1,59,15,000/-.
13. The defendant company had accepted all such payments aggregating to Rs.1,59,15,000/-without any demur, protest or objection and inspite of such receipts the defendant company did not hand over the possession of the property to the plaintiff.
14. On 31st May, 2016, the plaintiff issued a letter expressing that the document dated 15th June, 2015, had extinguished and not to give effect to the same and to refund the interest free security deposit of Rs.80,00,000/-immediately within seven working days.
15. Upon receipt of the letter dated 31st May, 2016, the Director of defendant company sent a letter dated 4th June, 2016 and informed that he had met Mr. Anurag Chaudhury being the CEO of the plaintiff company on 3rd June, 2016 and subject to the discussion with Mr. Anurag Chaudhury, the letter dated 31st May, 2016 was being treated to be kept on hold.
16. The plaintiff submits that Mr. Anurag Chaudhury, the Director of the plaintiff company neither had accepted the letter nor had he met any agent of the defendant, as alleged.
17. Thereafter, the plaintiff by a telephonic call had requested the defendant company to immediately take steps for refund of the entire amount made over to the defendant.
18. On 16th December
Admissions made by a party can serve as substantive evidence, allowing the court to grant a decree in the absence of a defense.
The judgment highlights the legal principles governing the plea of set-off in a suit for recovery of money, emphasizing the specific conditions that must be met for a valid set-off claim.
A judgment on admission under Order 12, Rule 6 of the CPC requires a clear and unequivocal admission by the defendant, which was not present in this case.
A cause of action is established when the plaintiff proves necessary facts for relief, as demonstrated by the acknowledgment of a loan and dishonor of a cheque.
A registered letter returned with the endorsement “Not Claimed” is tantamount to good service and is valid service upon the addressee.
Tender – Remittance made being accepted in itself cannot be taken as an act to condone delay caused by appellant in complying with terms of LOI so as to alter terms of contract.
The main legal point established in the judgment is that admissions by the parties and the authenticity of documents play a crucial role in determining liability for loan repayment.
Non-compliance with lease payment obligations allows the court to strike off the defense under Order 15 Rule 5 CPC.
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