Deccan Retreat vs Maharashtra State Road

Sandeep K. Shinde, J

Heard Mr. Ruchir Tolat, the learned counsel for the applicants and Dr. Milind Sathe, the learned Senior Counsel Shivgan for the respondents.

2 Applicants are the original appellants in the Appeal From Order and also plaintifs in Special Civil Suit No.503 of 2011 fled against the respondents,

which is pending along with the Special Civil Suit No.634 of 2011 (Recovery Suit) in the Court of Civil Judge, Senior Division, Panvel, Raigad ('Suit'

for short).

3 Applicants have taken out this interim application seeking following reliefs ""1 The Applicant/Original Appellant have taken out this Interim

Application for following reliefs:-

(a) That the monthly lease rent of Rs.15,00,000/- (Rupees Fifteen lakhs only) payable by the Appellants to Respondent on or from the month of April

2021 be reduced by the Hon'ble Court to Rs. 3,00,000/- (Rupees Three Lakhs only) per month or such other amounts as the Hon'ble Court may deem

ft and proper and direct the Appellants to make the payment thereof with applicable GST till the restrain order restraining Appellants from carrying on

Restaurant business in vacated by the State of Maharashtra.

(b) That this Hon'ble Court be pleased to direct the Learned Judge of the District Court Panvel to decide the payment of the balance lease amount on

and from the month of April 2021 at the hearing of the suits no. 634 of 2011 and anr.

(c) That as the Appellants on 12 th April, 2021 made the payment of the monthly lease rent for the month of April, 2021 at Rs.15,00,000/- (Rupees

Fifteen Lakhs Only) in the Appellants be permitted to deduct or adjust the excess amount paid by the Appellants from the payment from the

subsequent monthly installment commencing from May 2021 and Respondent be directed to accept the same without raising any disputes.

4 Facts germane for just decision of this application are as follows:

FACTS:

5 The Maharashtra State Road Development Corporation ('Corporation' for short) constructed and developed Mumbai-Pune express way with a view

to provide facilities to travellers. The Corporation decided to provide hotels as well as other ancillary facilities. The Corporation invited tenders and

applicants' bid was declared as highest and most benefcial. The Corporation thus, allotted to the applicants constructed food mall vide lease agreement

dated 14th June, 2002 for a period of four years. Additionally, at the request of the applicants, Corporation allotted to the applicants on lease a

triangular plot adjacent to food mall on lease with efect from 18th October, 2002. Agreement for this triangular plot 'food track lease agreement' was

agreed to be co-terminus with that of food mall and hence, both the agreements were to expire at the same time. As dispute regarding lease of the suit

premises arose, applicants fled Special Civil Suit No.503 of 2011 and Special Civil Suit No.634 of 2011 in the Court of Civil Judge, Senior Division,

Panvel. In the Suit No.503 of 2011, applicants are seeking that they be declared as lessees of suit premises for the period of 30 years and that

Corporation be restrained from terminating lease of the suit premises. Applicants had fled an application in Special Civil Suit No.503 of 2011 seeking

injunction against the termination of the lease agreements by the Corporation and restraining the Corporation from inviting tenders and with respect to

the food mall and food track. The learned Civil.odt Judge vide order dated April 22, 2014 dismissed the said applications. Applicants being aggrieved

by the said order, fled the Appeal From Order No.111 of 2014 before this Court.

6 Pending disposal of the said Appeal From Order, negotiations held between the parties culminated into the Minutes of the Order dated 26th August,

2014. By the said order, the Appeal From Order was disposed of and Undertaking as given by the applicants/appellants in the Minutes of the Order

was accepted, on the basis of which the Court granted interim relief in the said suit. Clause 3 of the said Minutes of the said order provides that

applicants are required to pay and ad-hoc amount of Rs.24 Lakhs with service tax as applicable or any permissible increase thereof to the applicants

every month. Further, in the event of any two defaults in the payment, applicants were required to hand over vacant and peaceful possession of the

suit premises to the Corporation without further Court.odt orders.

1 That since the applicants had failed to pay compensation, the Corporation vide Civil Application No.809 of 2019, sought direction to the applicants to

hand over possession of the food track of food mall in terms of the order dated 26th August, 2014.

8 In the meantime, applicants surrendered the possession of the, 'food mall' to the Corporation through the Court Receiver.. In so far as the, 'food

track' is concerned, vide order dated 19th July, 2019, this Court after perusing the report of the Court Receiver, held Rs.15 lakhs plus applicable GST

per month would be reasonable compensation to be paid by the applicants to the Corporation till the decision of the suit. Further, vide order dated 31st

July, 2019, the Court Receiver was directed to take symbolic possession of the 'Food-track' premises.

9 It appears, the applicants had paid monthly compensation regularly from July, 2019 upto March, 2020 @ 15 Lakhs per month. However, from April,

2020, applicants failed and neglected to pay any amount. In the circumstances, the Corporation, had moved an application no.01 of 2020 seeking

directions to the Court Receiver, High Court, Mumbai to take physical possession of the property of 'food track' and hand over the same to the

Corporation and direct applicants to deposit rent/compensation due for the months from April, 2020 to June, 2020 @ Rs.1.50 Lakhs per month along

with the interest thereon @ 18%. 10 Application was resisted on the following grounds:

(i) That the default was not willful, but had occasioned on account of pandemic driven lock-down. Resultantly, food track was forced to close, for the

time being.

(ii) That due to lock-down, vehicular trafc had reduced signifcantly and thus, business had come to stand and still.

. Thus, it was urged that amount of compensation be, 'waived' till the lock-down is ceases. As such, the applicant had claimed 'waiver' of

compensation. . It was, therefore, urged that applicants were not avoiding the payment, but their inability to pay arose from the closure of the business

and as a result, force majeure conditions.

11 The question that arose for consideration was, whether the , 'waiver' was justifed on account of temporary closure of the business driven by lock-

down imposed by the State Government.

. The learned Single Judge, held that applicants being not contractual lessees, but continued to occupy the property as agent of the Court Receiver, it

would not be possible to waive or reduce the rent/compensation. Submission, that force majeure conditions have afected its ability was thus, not found

favour with applicants. In the result, applicants were directed to pay arrears in terms of the order dated 31st July, 2019 @ Rs.15 Lakhs per month and

further directed to pay monthly compensation at the same rate from 1st October, 2020 without default. Thus, held, that in the event of default, in

payment on the due dates, agency agreement would stand terminated and the Court Receiver shall take physical possession of the, food track within a

week after the default. 12 This order was carried before the Apex Court. That on 19th November, 2020, the Hon'ble Apex Court passed the following

order:

We have been apprised that from the month of October, 2020, the petitioner has been making payment of rent @ Rs.15,00,000/- (Rupees Fifteen

Lakhs Only) alongwith GST leviable thereon and that the arrears for the period from April 2020 to September 2020 come to Rs.90,00,000/- (Rupees

Ninety Lakhs Only).

Considering the peculiar facts and circumstances on record, we direct as under:

a) The petitioner, at this stage, shall pay 50% of the arrears to the concerned respondents (i.e. Rs.45,00,000/- alongwith appropriate component of

GST in respect of the period as aforesaid, on or before 31.12.2020;

b) The matter concerning the liability in respect of the rest of the amount shall be considered by the Trial Court; and

c) All the other issues are left open to be agitated before the Trial Court.

We shall not be taken to have expressed any opinion on merits of the matter which shall be gone into independently by the Trial Court."" 13 In the

instant application, it is applicants' case that since March, 2021, COVID-19 pandemic situation had revived and as a result, the State of Maharashtra

through the Collector, Raigad, Alibag vide its order dated 5 th April, 2021 imposed curfew and also restrained carrying on restaurant/food track

business except take-away. Thus, it is the case of the applicants that as result of orders passed by the State, applicants are unable to make use of the

food track premises for running of the business, and thus, unable to generate income therefrom. Under these circumstances, applicants would urge,

that from April, 2021, amount of monthly rent of Rs.15 Lakhs be reduced to Rs.3 Lakhs or such other amount as this Court may deem ft and proper

till restraint order passed by the State of Maharashtra is vacated. Additionally, the applicants are seeking directions for adjustment of amount paid by

them for the month of April, 2021 and May, 2021 against the payment of compensation for the subsequent months till the restraint orders are vacated

by the State.

14 Mr. Tolat, learned counsel for the applicants in support of the claim, would submit that the Hon'ble Apex Court while afording concession to the

applicants to pay the arrears was pleased to take into consideration ""Peculiar facts and circumstances"". Mr. Tolat would, therefore, submit that the

Hon'ble Apex Court had taken into consideration the circumstances under which the applicants were unable to pay the compensation and aforded the

concession to clear the arrears of the compensation. It is submitted that similar circumstances are prevailing in second lock-down i.e., from April, 2021

and, therefore, applicants were justifed in seeking reduction in the compensation amount.

15 Dr. Sathe, the learned Senior Counsel for the Corporation would submit that the Hon'ble Apex Court did not interfere with the order dated 2nd

September, 2020 passed by this Court in Interim Application No.01 of 2020 but, simply, permitted applicants to pay 50% of the arrears on or before

31st December, 20202 and the liability in respect of rest of the amount was left for consideration by the Trial Court. Dr. Sathe would, submit that the

reasons and the fndings recorded in the order dated 2nd September, 2020 have not been questioned or set aside by the Hon'ble Apex Court. Dr.

Sathe, would submit that plaintifs have no legal right to seek reduction in the amount of compensation in-as-much as in the instant case property is,

custodia-legis and in that back-ground, applicants cannot claim or justify their inability to pay the compensation due to force majeure conditions. Dr.

Sathe would, therefore, submit that if the applicants are unable to pay compensation in terms of the order dated 31st July, 2019, applicants should

surrender possession whereby they would reduce the liability and mitigate its losses.

16 Herein the applicants are not contractual lessees. The lease having expired, applicants continued to use and occupy property, i.e., food track, as

agent of the Court Receiver. Thus, the property is custodia-legis. The Court vide order dated 2nd September, 2020 declined applicants' claim for

'waiver' of compensation, sought on the ground of cessation of business due to imposition of lock-down. This Court held thus;

The question is whether the act by itself would entitle the Appellant to waiver the amount payable. The situation is not be viewed from the

contractual perspective since in the instant case the property is custodia legis and the amount payable has been paid without demur or protest as

something that the Appellant had found favourable as otherwise it would not have agreed to continue on payment of the aforesaid amounts. It is a

commercial decision taken by the Appellant and during a period when the property continues to be custodial legis.

It may be stated that the Hon'ble Apex Court vide order dated 19th November, 2020 has not in substance modifed the order and/or set aside the order

dated 2 nd September, 2020. As it appears, the Hon'ble Apex Court simply aforded the concession, to the applicant in paying arrears of compensation.

Thus, to be stated, compensation payable @ Rs.15 Lakhs per month has not been scaled down. In fact applicants have not established their legal right

to seek reduction in amount of compensation. For the reasons stated above, I am not inclined to reduce the compensation amount as sought by the

applicants. However, in view of the fact that, applicants have been directed by the State to shut down food track outlet, I pass the following order:

(i) Prayer clause (a) is rejected.

(ii) Applicants at this stage, are permitted to pay 50% of the amount of compensation, i.e., Rs.1,50,000/- on or before 15th day of a month along with

appropriate component of GST, for and from month of June, 2021 till the order of lock-down is fully withdrawn by the State.

(ii) Once, lock-down order is fully withdrawn, applicants shall pay balance of compensation amount, i.e., Rs.1.50 Lakhs, in fve monthly equated

installments commencing from a month after a date on which order of lock-down is withdrawn;

(iii) Installments of balance compensation shall be paid on or before 30th day of each month in addition to monthly compensation in terms of the order

dated 19th July, 2019;

(iv) That since applicants have paid compensation of Rs.15 Lakhs for May, 2021, they are not required to pay Rs.1,50,000/- as directed for the month

of June, 2021;

 (v) Compensation paid for April, 2021 is excluded from adjustment, since in March, 2021, food track was fully operational;

(vi) In the event of any default of payment in any of the aforesaid amounts on their due dates, agency agreement shall stand terminated and the Court

Receiver shall take physical possession of the food track within one week after default.

18 Interim application is disposed of in the above terms with no order as to costs.