K H K Hospitality Services And Ors vs. S A Developers

Facts

The Petitioners, M/s. K.H.K. Hospitality Services and others, challenged an order dated February 12, 2024, passed by the Appellate Bench of the Small Causes Court. This order allowed a revision application filed by the Respondent, S.A. Developers, and set aside a prior order dated December 22, 2022, by the Small Causes Court. The Small Causes Court had initially rejected the Respondent's application to strike off the Petitioners' defence under Order XV-A Rule 1 of the Code of Civil Procedure. The Appellate Bench, however, allowed the application to strike off the defence due to the Petitioners' non-compliance with an order dated October 28, 2021. This earlier order directed the Petitioners to pay arrears of license fees of Rs. 5,62,100/- per month plus GST from March 2021 onwards, during the pendency of the suit.

Held

The Court held that the Petitioners had deliberately violated the order dated October 28, 2021, which had attained finality. The Court noted three defaults by the Petitioners: (1) paying only Rs. 2,50,000/- plus GST instead of the ordered Rs. 5,62,100/- plus GST from March 2021 to December 2021, (2) claiming no license fees were payable from October 1, 2022, to February 1, 2023, and (3) remaining in arrears of Rs. 62,46,058/- even based on their own reduced calculations. The Court found that the Petitioners' assumption of a reduced payment and their claim of no liability for a specific period were in violation of the clear directive in the October 28, 2021 order. The Court reasoned that the absence of liability for the period October 1, 2022, to February 1, 2023, while potentially a triable issue, could not justify the violation of the existing court order. Consequently, the Court found no serious error in the Appellate Bench's order striking off the defence of the Defendants. The Writ Petition was dismissed as devoid of merits. The Interim Application also stood disposed of.

Key Issues

1. Whether the Petitioners have deliberately violated the order dated October 28, 2021, passed by the Small Causes Court, which directed payment of license fees of Rs. 5,62,100/- per month plus GST from March 2021 onwards. Petitioner's Contention: The Petitioners argued that their defence should not have been struck off. They presented a chart indicating a reduced payment of Rs. 2,50,000/- plus GST for the period March 2021 to December 2021 and claimed no amount was payable from October 1, 2022, to February 1, 2023, due to the hotel being shut down. They contended that even based on these reduced figures, they were in arrears of Rs. 62,46,058/-, and the issue of non-payment for the latter period might be a triable issue. Respondent's Contention: The Respondent contended that the Petitioners had made three defaults in complying with the October 28, 2021 order. Firstly, they paid only Rs. 2,50,000/- plus GST instead of the directed Rs. 5,62,100/- plus GST for March 2021 to December 2021. Secondly, they claimed no license fees were payable for October 1, 2022, to February 1, 2023. Thirdly, even with the reduced amount, they were in arrears of Rs. 62,46,058/-. The Respondent argued that these actions constituted a deliberate violation of the court's order.