RFA 78/2014 and CM Nos. 4137/2014 and 15024/2014. Case: New Delhi Municipal Council Vs Prominent Hotels Limited. High Court of Delhi (India)
| Case Number | RFA 78/2014 and CM Nos. 4137/2014 and 15024/2014 |
| Counsel | For Appellant: Sanjay Poddar, Senior Advocate, Rachna Golchha, Govind Kumar, Pavni Poddar, Advocates and Kishore Prashad, Senior Assistant and For Respondents: Amit S. Chadha, Senior Advocate, Vishal Singh, Sahil Mongia and Abhishek Sharma, Advocates |
| Judges | J. R. Midha, J. |
| Issue | Code of Civil Procedure, 1908 (CPC) - Order I Rule 10; Order VI Rule 17; Order VII Rule 11; Order X Rule 10; Order XI Rule 14; Order XXIII Rule XXIII; Order XXVII Rules 5(B), 5(B)(1); Order XXXIX Rules 1, 2; Sections 151, 35, 35A, 35B; Constitution of India - Articles 14, 141, 19(1)(g), 21, 215, 22(1), 226, 227; Contempt of Courts Act, 1971 - ... |
| Judgement Date | September 11, 2015 |
| Court | High Court of Delhi (India) |
Judgment:
J. R. Midha, J.
1. The appellant, NDMC, has challenged the impugned judgment and decree dated 22nd November, 2013 whereby the Trial Court has decreed the respondent's suit for declaration, permanent and mandatory injunction.
2. Factual matrix
2.1. NDMC invited tenders for licence of plot No. 37, Shaheed Bhagat Singh Marg, New Delhi measuring 0.66 acres for the construction and commissioning of a youth hostel to meet the requirement of ASIAD games in 1982.
2.2. M/s. P.S.J. Housing Enterprises Pvt. Ltd. submitted the highest bid, which was accepted by NDMC and a licence deed dated 4th November, 1981 was executed by NDMC in favour of M/s. P.S.J. Housing Enterprises Pvt. Ltd. In terms of clause 22 of the licence deed dated 4th November, 1981, M/s. PSJ Housing Enterprises Pvt. Ltd. incorporated a public company, M/s. Prominent Hotels Ltd. with the object of taking over the youth hostel.
2.3. On 16th July, 1982, NDMC executed a licence deed dated 16th July, 1982 in favour of M/s. Prominent Hotels Ltd. (hereinafter referred to as 'Licensee') for running an international youth hostel for a period of 99 years with effect from 4th November, 1981 subject to increase in licence fee after every 33 years.
2.4. The Licensee constructed a luxurious hotel, instead of a youth hostel, on the licensed plot which was completed in September, 1987.
2.5. In September, 1987, the management of the Licensee changed by the sale of the project by H.R. Sabharwal group to Hari Ram Kakkar, an Afgan national of Indian origin who invested in this project.
2.6. The licence deed provides for a minimum guaranteed licence fee of Rs. 21,08,040/- or 23% of the annual gross turnover of the Licensee, whichever is more, from the date of handing over of the possession, i.e. 4th November, 1981.
2.7. Clause 5 of the licence deed dated 16th July, 1982 requires the Licensee to furnish the annual audited reports to NDMC to enable the NDMC to compute the licence fee. However, the Licensee defaulted in furnishing the annual audited reports for the years 1991-92 to 1993-94 and therefore, NDMC issued a show cause notice dated 15th June, 1994 to the Licensee to show cause why legal action be not initiated for violation/breach of the licence deed in pursuance of which the Licensee furnished the annual reports to NDMC whereupon NDMC computed dues of Rs. 3,05,67,355.20 towards the licence fee and interest upto period ending July 1994.
2.8. Vide show cause notice dated 09th September, 1994, NDMC called upon the Licensee to pay Rs. 3,05,67,355.20 towards the arrears of licence fee and interest upto July, 1994.
2.9. Vide show cause notice dated 23rd December, 1994, NDMC called upon the Licensee to show cause as to why the licence be not cancelled on account of non-payment of Rs. 3,05,67,355.20.
2.10. On 01st February, 1995, NDMC cancelled the licence due to non-payment of Rs. 3,05,67,355.20 and vide letter dated 21st February, 1995, NDMC intimated the cancellation of the licence to the Licensee and notified the Licensee that their occupation, after the cancellation of the licence, was unauthorised and therefore the Licensee should stop the use of the premises.
2.11. NDMC initiated proceedings against the Licensee under Sections 5 and 7 of the Public Premises (Eviction of Unauthorized Occupants) Act, 1971 for eviction of the Licensee and recovery of licence fees and damages before the Estate Officer which are pending.
2.12. Licensee's suit for declaration, permanent and mandatory injunction
On 28th February, 1995, the Licensee instituted the suit for declaration, permanent and mandatory injunction. The Licensee pleaded inter alia that the Licensee completed the construction of a building on the licensed plot in 1987. During the course of construction, the Licensee found that the project was economically unviable as the Licensee was obliged to pay licence fee at the rate of 23% of the gross turnover with a minimum guaranteed amount of Rs. 21,08,040/-, which was grossly excessive whereas the NDMC was charging 15% of the gross turnover from the other hotel chains. The project was also unviable as the licence deed provides FAR(Floor Area Ratio) of 100 whereas the other hotels have been granted FAR of 250. The Licensee pleaded having made a representation to the Lt. Governor on 28th August, 1987 for reduction of licence fee. The Licensee further pleaded having made representations to NDMC on 22nd February, 1988; 20th April, 1988; 10th February, 1992; 24th July, 1992 and 29th April, 1994. The Licensee admitted the change of management by sale of project by H.R. Sabharwal Group to Hari Ram Kakkar in September, 1987. The Licensee sought the following prayers in the plaint: -
(i) Pass a decree of declaration declaring that the term and condition in the License Deed dated 16.07.1982 'that the plaintiff company is liable to pay annual license fee for plot numbered as 37-Shaheed Bhagat Singh Marg, New Delhi at the rate of 23% on the annual gross turnover of the business' is unlawful and is null and void ab initio.
(ii) Pass a decree of mandatory injunction directing the NDMC to grant to the plaintiff company for the plot of land referred to in para (I) above, a Floor Area Ratio at the rate of 250.
(iii) Pass a decree of Permanent injunction restraining the defendant NDMC from in any manner interfering, obstructing and otherwise affecting the supply of water, electricity and other amenities provided to the plaintiff's premises at 37, Shaheed Bhagat Singh Marg, New Delhi.
(iv) Pass a decree of permanent injunction restraining the defendant NDMC from in any manner re-entering into the plaintiff's premises at 37, Shaheed Bhagat Singh Marg, New Delhi or taking any action pursuant to order of cancellation dated 21.2.1995 of License Deed dated 16.07.1982.
2.13. Defence of NDMC in the Suit.
2.13.1. The suit is barred by Public Premises (Eviction of Unauthorised Occupants) Act, 1971 as the Licensee is an unauthorised occupant after the cancellation of the allotment. NDMC has already initiated proceedings for eviction against the Licensee under Sections 5 and 7 of the Public Premises (Eviction of Unauthorised Occupants) Act, 1971 before the Estate Officer.
2.13.2. The contractual obligations of the licence deed executed between the parties are binding on both the parties and the Licensee cannot wriggle out of the same.
2.13.3. The Licensee is estopped from challenging the licence deed executed between the parties after understanding and without any force or coercion.
2.13.4. The Licensee is under contractual obligation to pay the licence fee and use the premises as per the licence deed in accordance with the agreed terms and conditions of the licence deed.
2.13.5. The Licensee never raised any objection to validity of the licence deed till 1994. The Licensee was in use, occupation, possession and enjoyment of licensed premises since 1981. The challenge to the clauses of the licence deed after 13 years of the allotment is misconceived and untenable.
2.13.6. The Licensee has become unauthorised occupant after the cancellation/termination of the licence and cannot be permitted to challenge the terms of the licence deed that too when the Licensee has derived the benefit from the allotment of the licensed premises for such a long time.
2.13.7. The Licensee's grievance of lower FAR is misconceived as the licence deed clearly provides mechanism for increase of FAR upon payment of enhanced licence fee to be decided by NDMC.
2.13.8. No representation or concrete proposal for permission of increase of FAR has been made by the Licensee in terms of the licence deed.
2.13.9. The suit has not been valued properly for the purpose of Court fees and jurisdiction as admittedly a sum of Rs. 3,40,97,015/- was due towards the licence fee for the period 1987 to 1995.
2.13.10. The suit has not been signed, instituted and verified by a duly authorised and competent person.
2.13.11. The Licensee's suit in respect of the prayer for declaration is not maintainable as the Licensee has not served a mandatory notice under Section 385 of NDMC Act, 1984.
2.13.12. The use of licensed premises by the Licensee for a hotel is in clear cut violation of the licence deed between the parties. The Licensee was never granted a licence for running a hotel. In fact, the licence was given for running a hostel.
2.13.13. The conversion of youth hostel into a 4/5 star hotel was never approved by NDMC. The approval of Ministry of Tourism does not create any right or interest in favour of the Licensee to convert the youth hostel into a hotel in utter disregard and violation of the terms of the licence deed.
2.13.14. The Licensee has misused the allotted premises for hotel purposes as the plot in question was allotted for a youth hostel.
2.13.15. The Licensee has raised a false plea of keeping minimal tariff. A bare perusal of tariff rates of the Licensee's hotel shows that it is equivalent to that of 4/5 star category hotels.
2.13.16. The Licensee has violated the terms of the licence deed by unauthorisedly selling the licensed property admitted by them in para 13 of the plaint. As per the licence deed, the Licensee cannot part with possession of the licensed premises without the written permission of the NDMC.
2.14. Issues
The following issues were framed on 2nd November, 1999:--
(1) Whether the present suit for declaration, permanent and mandatory injunction as claimed is maintainable without serving notice under section 385 of NDMC Act, 1994? OPP
(2) Whether the jurisdiction of this court is barred in view of the provisions of section 15 of the Public Premises (Eviction of Unauthorized Occupants) Act, 1971 after the termination of the license deed vide letter dated 21st February, 1995? OPP
(3) Whether the suit has been signed, verified and instituted by a duly authorised and competent person.
(4) Whether the suit is correctly valued for the purposes of Court Fee and Jurisdiction? OPP
(5) Whether...
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