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IN THE HIGH COURT OF JUDICATURE AT MADRAS
N. SATHISH KUMAR, J.
M/s. S. Orra Traders Pvt. Ltd., Rep. by its Director Mr. Sapetendra Behera - Plaintiff
Vs.
Mr. Lawrence Kulandi Nathan - Defendant
C.S. No. 987 of 2016
Decided On : 19-07-2018
Lease Agreement - Termination - Lock-in period, Breach and Termination clauses - [LEASE AGREEMENT] - [CLAUSE 6, CLAUSE 14] - The court discussed the provisions of the lease agreement, specifically Clause 6 (Lock-in period) and Clause 14 (Breach and Termination), and their interplay with the obligations of the parties. The court emphasized that the lock-in period for termination of the lease is subject to the parties' compliance with their obligations, particularly the regular payment of rent. The plaintiff's failure to pay rent regularly constituted a breach of contract, disentitling the plaintiff from claiming compensation under the lock-in period clause. The court also highlighted the principle that a party cannot take advantage of its own breach of contract to claim compensation.
Fact of the Case:
The plaintiff sought compensation for the termination of a lease agreement by the defendant, alleging violation of the lock-in period clause. The defendant contended that the plaintiff had defaulted on rent payments, justifying the termination of the lease.
Finding of the Court:
The court found that the plaintiff had failed to pay rent regularly, constituting a breach of contract. The plaintiff's claim for compensation under the lock-in period clause was dismissed, emphasizing that a party cannot claim compensation for its own breach of contract.
Issues: 1. Whether the plaintiff acted in accordance with the covenants of the Lease Agreement in payment of rents? 2. Was there any willful default on the part of the plaintiff during the tenancy period? 3. Whether the termination effected by the defendant is within the scope and terms of the lease Agreement? 4. Can the defendant claim compensation by unilateral termination of tenancy under the legal notice? 5. To what relief both the parties entitled to?
Ratio Decidendi: The lock-in period for termination of the lease is subject to the parties' compliance with their obligations, particularly the regular payment of rent. A party cannot claim compensation under the lock-in period clause if it has breached the contract by failing to fulfill its obligations.
Final Decision: The Civil Suit was dismissed with costs, and the plaintiff was entitled to no relief.
The suit has been filed for recovery of compensation of Rs.1,50,90,900/- (Rupees one Crore Fifty Lakhs Ninety Thousand and Nine hundred only) payable by the defendant to the plaintiff along with 18% interest from the date of filing till the date of realization based on the provisions of lock in period by virtue of Registered Lease Agreement Document No. 2300 of 2014 dated 27.05.2014 with costs.
2. The plaintiff's case in nutshell is as follows :
2.(a) The plaintiff was inducted as a tenant under the defendant by a lease deed dated 27.05.2014 for a monthly rent of Rs.4,50,000/-. Ever since the date of lease he is in a possession and enjoyment of the properties subject to the lease. The plaintiff has also paid a sum of Rs.45,00,000/- as advance as well as security deposit under the lease agreement. The lease is for a period of 15 years and the plaintiff has been paying the rent periodically without any default. In the lease agreement itself it is specifically agreed between the parties that within a lock in period of 36 months after the initial rent free period of 90 days, neither of the parties can terminate the lease agreement. If for any reason, other than Force Majure conditions, either party wishes to terminate the lease period, then such party shall simultaneously with such termination, pay the other party compensation aggregating to lease rent for the number of unexpired months on the compulsory lease term of 36 months. When the matter stood thus, the defendant with malafide intention issued legal notice on 18.11.2015. The above notice was properly replied by the plaintiff. The defendant in violation of conditions in the lease deed fraudulently terminated the lease agreement with effect from 30.10.2015. Therefore, he is liable to pay compensation for unexpired months as agreed in the agreement. It is also the case of the plaintiff that since the lease agreement was for a period of 15 years, he invested by way of stock and infrastructural investments in the premises.
2.(b) In the meanwhile, the defendant has also initiated rent control proceedings in R.C.O.P.No.147 of 2016 which was subsequently dismissed on 30.09.2016. The plaintiff is not liable to pay any rent from the date of termination of the lease deed since the possession of the premises is held in the capacity of caretaker by the plaintiff. The plaintiff was allowed to continue business only for 14 months from September 2014 to October 2015. Therefore, he is entitled to claim compensation as per the agreement in the suit.
3. The brief facts contained in the written statement is as follows :
3.(a) The plaintiff has deliberately distorted the facts of the case by suppressing what had transpired before the issuance of the Notice. Admittedly there is a lease deed for a monthly rent of Rs.4,50,000/-. It is the contention of the defendant that the plaintiff has willfully defaulted from the payment of lease amount for the month of August 2015 payable on or before the 10th of August 2015. Despite several reminders sent by the Defendant, the plaintiff has failed to pay the said lease rent. Thereafter, the plaintiff made a part payment of Rs.2,00,000/- on 07-09-2015 and again another payment of Rs.2,00,000/- on 22.09.2015 towards part payment of the rental for the month of August 2015. Since those payments were made through the bank accounts, the defendant immediately informed the plaintiff that part payment was received, which was not in accordance with the lease agreement and did not constitute proper payment. The defendant by his letter dated 11.09.2015 reiterated the above and called upon the plaintiff to comply with the obligations within 15 days. As the plaintiff did not make any payment on or before 30.10.2015 the defendant terminated the tenancy of the plaintiff with immediate effect on 30.10.2015.
3.(b) The plaintiff is a chronic defaulter in payment and as on date a sum of Rs.45,50,000/- is due and payable towards arrears of rent, after adjusting the security
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