M/S. Khk Hospitality Services And Ors vs. S A Developers

Held

The Court held that the direction to pay Rs. 25,000/- per day, being in the nature of liquidated damages, was impermissible under Order XV-A of the CPC, a concession made by the Respondent. However, the Court found no infirmity in the orders of the Trial Court and Appellate Court directing the payment of arrears of license fees amounting to Rs. 5,62,100/- along with GST, as this was an admitted monthly compensation agreed upon in the leave and license agreement dated May 5, 2017, and had not been paid since March 2021. The Court reasoned that the power under Order XV-A is clear and empowers the Court to direct payment of arrears of license fees as an interim measure. The Petitioner's submission regarding adjustments was deemed a matter for trial and would be considered after evidence. The Court concluded that the petition had no merit. The operative direction was the dismissal of the petition, with the specific direction regarding Rs. 25,000/- per day being set aside due to the Respondent's concession.

Facts

The Petitioners, M/s. KHK Hospitality Services and Ors., challenged an order dated July 28, 2022, passed by the Appellate Court, which upheld a Trial Court order dated October 28, 2021. The Trial Court had allowed an application under Order XV-A of the Code of Civil Procedure, 1908. This directed the defendant (Petitioner) to pay Rs. 5,62,100/- per month plus applicable GST from March 2021 as compensation for the use of premises. It also directed payment of Rs. 25,000/- per day from February 17, 2022, as per Clause 29 of an Agreement dated May 5, 2017. The Petitioners disputed the quantum of arrears and sought adjustments. The Respondent is S.A. Developers.

Key Issues

1. Whether the Court, in exercise of its powers under Order XV-A of the Code of Civil Procedure, 1908, can direct payment of liquidated damages in the nature of Rs. 25,000/- per day. - Petitioner: Argued that the Rs. 25,000/- per day amount, being liquidated damages, cannot be directed for payment under Order XV-A. - Respondent: Conceded that the Rs. 25,000/- per day amount, being in the nature of liquidated damages, cannot be directed to be paid under Order XV-A. 2. Whether the Trial Court and Appellate Court erred in directing the payment of arrears of license fees along with GST, considering the Petitioner's claim for adjustments. - Petitioner: Contended that the arrears were not Rs. 1,32,45,220/- but Rs. 66,00,000/- due to adjustments, and that they had expended Rs. 4 Crores on the premises. - Respondent: Argued that the monthly compensation of Rs. 5,62,100/- plus GST was agreed upon and not paid since March 2021, and that the issue of adjustments is a matter for trial.