M/S Orchid Salon Services PVT LTD vs. Pradyuman Kumar Aggarwal & Ors

Held

The Court held that there was no infirmity or illegality in the order passed by the learned Single Judge. The Single Judge had considered all necessary parameters for an application under Order XXXIX Rule 10 CPC. The Court noted that the appellant had raised various pleas requiring consideration post-evidence, and the Single Judge had not precluded the appellant from raising defenses as per the written statement. Regarding the rent, the Court found no document showing rent paid or accepted by the landlord from the sub-tenant. Even the alleged unregistered sub-lease stipulated that rent was to be paid by the sub-tenant to the appellant, not directly to the landlord. The Court emphasized that during the subsistence of the registered lease between the appellant and the landlord, the appellant could not escape its liability to pay rent. The Court reiterated that the liability to pay rent was on the tenant (appellant) and not the sub-tenant. Therefore, in a prima facie view, the tenant could not escape liability. The Court clarified that its observations would not prejudice the Single Judge's decision after evidence was led and that the appellant's defenses and objections were kept open for final arguments. The appeal was dismissed.

Facts

The appellant, M/s Orchid Salon Services Pvt Ltd (tenant), entered into a registered lease deed on June 30, 2015, with respondents No. 1 to 4 (landlord) for a property at a monthly rent of Rs. 7 lacs for nine years. The tenant paid rent until June 8, 2017. The landlord issued legal notices for arrears of rent. A suit was filed in January 2018 for possession, arrears of rent, damages, mesne profits, and recovery of service tax and GST. The tenant filed a written statement. The landlord applied for a decree of possession under Order XII Rule 6 CPC based on admissions and for deposit of arrears of rent under Order XXXIX Rule 10 CPC. The Single Judge directed the tenant to deposit arrears of rent from June 2017 until possession was handed over, and released the arrears to the landlord upon an undertaking to re-deposit if directed. The possession of the premises was handed over by a sub-tenant to the landlord on October 12, 2018. The appeal challenges the order dated September 14, 2018.

Key Issues

1. Whether the learned Single Judge erred in passing an order under Order XXXIX Rule 10 CPC against the appellant, saddling it with the burden of rent, given the subsequent developments including an alleged oral agreement and an unregistered lease with a sub-tenant? 2. Whether the appellant could escape its liability to pay rent to the landlord due to the alleged sub-letting and the landlord's acceptance of the sub-tenant? Petitioner/Appellant's Arguments: The appellant contended that the landlord had knowledge and consent for the appellant to enter into an unregistered lease with a sub-tenant. They argued that the sub-tenant, having occupied and utilized the premises, should be solely responsible for rent. The appellant also claimed that a payment of Rs. 13 lacs via four cheques in September 2017 constituted a full and final settlement with the landlord, not for any specific period but on express understanding. Therefore, no order under Order XXXIX Rule 10 CPC should have been passed against the appellant, and the court should have awaited evidence on disputed facts. Revenue/State's Arguments: The landlord argued that the registered lease deed prohibited sub-letting without express permission, citing Clause 2(5) of the lease. They contended that even under the unregistered lease, the liability to pay rent to the landlord remained with the appellant. The landlord also submitted that the order under Order XXXIX Rule 10 CPC did not preclude the appellant from raising defenses in the written statement, as issues of fact were left open.