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1996 Supreme(Del) 529
High Court Of Delhi
DOMIER LUFTFAHRT GMBH - Appellant
Versus
K.C.V.AIRWAYS - Respondent
Decided On : 07/01/1996
A lessor is entitled to an interim mandatory direction for return of an Aircraft leased to the defendant, where the defendant is in breach of the fundamental term of the lease agreement regarding payment of rent, has not complied with the terms of the agreement for maintenance, warranty, replacement of parts, and return of Aircraft, and the balance of convenience is in favor of the plaintiff.
Headnote:
SPECIFIC RELIEF ACT - SECTION 7(III) - LEASE AGREEMENT - INTERIM MANDATORY DIRECTION FOR RETURN OF AIRCRAFT - COURT FEE - SECURITY FOR RESTITUTION.
Fact of the Case:
Plaintiff leased a Dornier 228-202 Aircraft to the defendant under a lease agreement. Defendant failed to pay rent and other charges, leading to termination of the agreement and a suit for possession, permanent and mandatory injunction under the Specific Relief Act. Plaintiff sought an ex parte interim mandatory direction for return of the Aircraft.
Finding of the Court:
The Court found that the defendant was in persistent and continuous default of its obligations under the lease agreement, had not paid any rent, and was using the Aircraft for commercial purposes without paying the agreed charges. The Court also found that the plaintiff had a strong prima facie case for trial, that irreparable injury would be caused to the plaintiff if the Aircraft was not returned, and that the balance of convenience was in favor of the plaintiff.
Issues: 1. Whether the plaintiff was entitled to an interim mandatory direction for return of the Aircraft. 2. Whether the plaintiff had to pay Court fee on the market value of the Aircraft.
Ratio Decidendi: 1. The Court held that the plaintiff was entitled to an interim mandatory direction for return of the Aircraft because: (a) the defendant was in breach of the fundamental term of the lease agreement regarding payment of rent; (b) the defendant had not complied with the terms of the agreement for maintenance, warranty, replacement of parts, and return of Aircraft; (c) the plaintiff had given the defendant sufficient latitude to make payment but the defendant had neglected to pay any of the amounts admittedly due; (d) the defendant was using the Aircraft for commercial purposes to its exclusive gain and advantage; (e) the plaintiff was entitled to repossess the Aircraft; and (f) the balance of convenience was in favor of the plaintiff. 2. The Court held that the plaintiff had to pay Court fee on the market value of the Aircraft because the suit was essentially one of repossession of movable property, which fell within Section 7(iii) of the Court Fees Act.
Final Decision: The Court granted an interim mandatory direction for return of the Aircraft to the plaintiff, subject to the plaintiff furnishing security of Rs. 75 lakhs to secure the restitution of the Aircraft in the event that the plaintiff either did not prosecute the suit or ultimately failed in the suit. The Court also directed the plaintiff to pay Court fee on the market value of the Aircraft as on the date of institution of the suit.
( 1 ) BY this order, I would be disposing of an application No. 1199/96 moved by the plaintiff seeking inter alia ex parte interim mandatory direction for return of the Dornier 228-202 Aircraft leased to the defendant in terms of the lease agreement dated 23-7-1994.
( 2 ) THE above application has been filed in a suit for possession, permanent and mandatory injunction under the Specific Relief Act. The above suit was instituted by the plaintiff on 3-2- 1996. The suit had come up before the Court on 5- 2-1996, when plaintiff was directed to produce proof of service of the notice of termination of the agreement and place on record documents and the correspondence, relied on in suit. On 7-2- 1996, on the apprehension of the plaintiff that the defendant would cannibalize the Aircraft and remove and/or replace valuable parts, the Court restrained the carrying out of annual maintenance by the defendant on 7-2-1996. After hearing both the parties, vide order dated 8-2-1996 and on defendant s "no objection", a nominee of Director General of Civil Aviation was appointed as Receiver for taking possession of the Aircraft. The pleadings were thereafter completed and arguments on the application commenced on 22-4-1996.
( 3 ) COUNSEL for both the parties were heard and the matter was adjourned from time to time to enable the counsels to complete their submissions. During the course of arguments on 22-5-1996, plaintiff placed on record a copy of the power of attorney authorizing the institution of the suit by Sh. Ashok Marwaha and his affidavit in support thereof was also filed. Thereafter, the plaintiff on 24-5-1996, moved an amendment application to add an averment to the effect that Sh. Ashok Marwaha was authorized to sign, verify and institute the plaint. The orders were reserved on 24-5-1996 in I. A. I 199 of 1996.
( 4 ) LET me set out the plaintiff s case in brief. The plaintiff vide a lease agreement dated 23-7-1994, leased one used Dornier 228-202 Aircraft to the defendant. The lease is for a period of 60 months, having a rental of US $20,000 payable on the first of the month. In addition to rental and other charges, the defendant was to pay US $ 160 per hour as flying charges. The lease contract was entered into pursuant to the open sky policy of the Government of India, by which private air taxi carriers were granted licences and permitted to purchase and/or take on lease Aircrafts and operate them on specified routes. The approval of the Reserve Bank of India was obtained vide letter dated 10-2-1995 for the lease agreement and payment of rental and ther charges. The Aircraft was delivered on 25-2-1995 to the defendant company, who confirmed that it was in complete conformity with specifications. The first flight was carried out by the defendant on 24-3-1995.
( 5 ) THE lease agreement dated 23-7-1994 entered into is a comprehensive agreement. The lease provides for numerous contingencies, apart from the rental and other charges payable, the terms for maintenance, warranty, replacement of parts, return of Aircraft etc are set out in detail.
( 6 ) THE plaintiff s case in brief is that the defendant has been in persistent and continuous default of its obligations under the agreement. It has failed to comply with the fundamental term, regarding payment of rental. It is averred that a sum of US $ 291792. 33 towards lease rental is due from the defendant. The plaintiff has given sufficient latitude to the defendant to make payment. Revised payment schedule was discussed and agreed to, but the defendant has neglected to pay any of the amounts admittedly due. Not a single payment has been made. Yet the defendant continues to use the Aircraft for commercial purposes to its exclusive gain and advantage. In these circumstances, the defendant was declared to be in default and the agreement was terminated vide a notice of 18-1-1996, served on the Managing Director of defendant on 2-2-1996. In terms of Clauses 17. 01 and 17.
