Court: District judge (commercial court)-01 south district, Saket courts: New Delhi
Introduction
The Plaintiff, who owned commercial property, filed a suit against the Defendants, tenants, for the recovery of possession, mesne profits, and damages for the default on the payment of monthly rent and electricity charges, following the determination of the lease contracts whereby the Defendant (Lessee) occupied the premises without paying the dues or vacating the premises. Initially, the third party (sub lessee) in occupancy was also impleaded, but later struck off for the absence of privity of contract, followed by the restoration of possession to the Plaintiff. While the lessee has admitted the default of non-payment in their written statement, however tried to take shelter by linking their default of non-payment with the sub-lessee. As the case proceeded on merits the Plaintiff filed an application under Order XII Rule 6 CPC. Aggrieved by the unambiguous admissions in the pleadings, the court passed the decree U/O XII Rule 6 CPC, including the award for mesne profits with interest, to effect the speedy determination of the dispute where material controversies have rendered the dispute frivolous.
Background of the case
The Plaintiff are the owners of a commercial property who entered into lease agreements with the Defendant to lease out its ground and mezzanine floors at a monthly rental amount. After defaulting on both rent and electricity charges from 2021 onward, the Defendant received a Notice of Termination to their leases by the Plaintiff; however, the Defendant did not vacate the leased premises nor settle their outstanding amounts due to the Plaintiff. In the background, at some point, the Defendant had sub-leased their leased premises to a third Party; however, the Third Party had since been removed as a Defendant, due to the fact there was no privity of contract between the Third Party and the Plaintiff. In their written statements, the Defendant admit they have not paid any Rent since 2021, however, they assert they were unable to pay because they had not received payment from the Third Party. The court rejected this defence based on the fact that such a condition was not included in the Lease Agreement with the Plaintiff. During proceedings between the Plaintiff and the Defendant, the Plaintiff regained possession of the leased premises. The premiers were ordered to apply their earliest accrued arrears of rent to the security deposit. The Court then found that there were clear admissions of liability from the Defendant and granted the Plaintiff application under Order XII Rule 6 of the Code of Civil Procedure and passed a decree against the Defendant for the amount of mesne profits (for the period from May 2022 to the date of vacation of the premises) and interest from the date of vacation until the date the amount is paid, together with the cost. The Defendant were ordered to pay the amount jointly and severally.
Issues raised by the Court
- Whether the principal Defendant is liable to pay the arrear rent/mesne profits from the adjusted period to vacation in terms of the leases.
- Whether the admissions in the written statement with regard to non-payment, lease terms, and date of vacation, along with the failure to file a response to the application for judgment under Order XII Rule 6 CPC, are sufficient unambiguous admissions for judgment without trial.
- Whether the plaintiff is entitled to the decree for the claimed Mesne Profits, Interest at reasonable rate per Annum from Vacation till realization, and Costs.
Legal Provisions
The Commercial Courts Act provides the statutory framework for suits that involve commercial disputes, and has introduced an expedited process through its introduction into India.
-The Commercial Courts Act
-Order XII Rule 6 of the Code of Civil Procedure, 1908
The primary purpose of Order XII Rule 6, is to provide an expedited path to the completion of the litigation where there exists a clear case of liability, or where it is established by the evidence that the Defendant is liable to the plaintiff for a specified sum of money, and where the Defendant has no valid defenses against the action brought against him. Further, Order XII Rule 6 makes it possible for either party in a commercial dispute to obtain an expeditious judgment based on the admissions made, if the admissions are unambiguous, unequivocal and free from any valid defenses against the actions brought against him.
Analysis of the case
The primary defendant in the lawsuit was held liable based solely on the categorical admissions made in their written statements: that they executed lease agreements, agreed on the rental rate, failed to pay during the period of default and had a set date for vacating the premises. According to the court, the defendant defense that payment was always contingent upon receiving receipts from the third party i.e. the sub-lessee (who had been deleted from the case) because there was no privity between the Sub- Leasee and the Plaintiff. The Plaintiff had filed an Order XII Rule 6 application seeking a judgment based upon these categorical admissions for mesne profits (less the consideration of security deposit adjustments back to the date of vacation, prorated for partial months at an increased rate) and reasonable interest from the date of vacation to the time of payment was made. Thus, the court found that all categories of admission were categorical while all defenses were vague and unsupported. As a result, the court issued a decree awarding Judgment based upon the plaintiff’ Order XII Rule 6 and in accordance with the intention of Order XII Rule 6 as well as earlier decided cases allowing Judgment under such circumstances, especially since the Plaintiff had been restored to possession of the property and only the amount owing remained an issue.
Conclusion
The Plaintiff strategically invoked the sword of Order XII Rule 6 of the Code of Civil Procedure, 1908, seeking a judgment on admissions, and successfully secured dismissal of the suit solely on the basis of clear and unequivocal admissions made by the Defendant in its own Written Statement. The admissions were neither conditional nor qualified, leaving no triable issue for adjudication.
Consequently, while the suit stood dismissed upon the Defendant vacating the premises, the Court directed the Defendant to pay the balance mesne profits, along with interest calculated from the date of vacation of the premises, as well as costs of the proceedings, thereby giving full effect to the admissions already on record. The order reflects the settled position of law that admissions, once made, bind the maker and can form the sole basis for a decree, and that Order XII Rule 6 CPC is intended to prevent abuse of the judicial process by avoiding unnecessary trials where facts are undisputed.
The Recovery Suit on behalf Plaintiff was presented and argued by Mr. Himanshu Sachdeva, Senior Associate, Mr. Shantanu Garg, Senior Associate and Mr. Mahima Rathore, Associate.