Satwinder Singh vs Kanwar Krishan Anand

Shiv Narayan Dhingra, J.—The petitioner is aggrieved by an order of Additional Rent Control Tribunal dated 8th January, 2007 whereby he set aside the judgment of ARC dated 27th May, 2004 and allowed the Eviction petition filed by the respondent u/s 14(1)(b) of Delhi Rent Control Act.

2.The facts relevant for the purpose of deciding this petition are that the petitioner was a tenant in respect of premises No. 13/39, Arya Samaj Road, Karol Bagh. The respondent found that the premises was in occupation of M/s. Letheria (an undertaking of Punjab Government) and the petitioner had sub-let/parted with the possession of premises to M/s. Letheria without obtaining consent in writing of the landlord. A petition u/s 14(1)(b) of Delhi Rent Control Act was preferred. The landlord also got a Local Commissioner appointed for inspection of the property, immediately on filing the Eviction Petition. The Local Commissioner appointed by the Court inspected the premises and filed his report stating that premises was occupied by Sh. Sanjeev Kumar, an employee of Letheria (a Punjab Government undertaking), who informed him that Mr. R.M. Lal was the Area Manager of Punjab State Leather Development Corporation (PSLDC) and incharge of the shop. There were 4 employees of Letheria working with him in the shop.

The petitioner/tenant in the WS denied the allegations regarding sub-letting and took the stand that the petitioner was the agent of Punjab State Leather Development Corporation (PSLDC) for the sale of complete range of leather goods. The company (PSLDC) used to supply goods to him bill-wise on consignment basis and he used to get commission of 10% of the net sale value. The goods left unsold were returned in the same condition to PSLDC.

The petitioner, however, filed no documents in respect of his stand along with WS. The learned ARC after considering the evidence adduced by both the parties came to conclusion that the sub-letting cannot be presumed merely because a third person was in possession of the property. There was an agency agreement between petitioner and M/s. Punjab State Leather Development Corporation (PSLDC).The documents such as sale tax return and income tax return filed by the tenant show that it was an agency agreement and there was no sub-letting. The respondent herein preferred an appeal against the order of the learned ARC and also filed an application under Order 41 Rule 27 CPC for summoning officials of Punjab State Leather Development Corporation (PSLDC) who had though been earlier summoned, but had not brought relevant documents at that time on the ground that the record was not traceable.

The application under Order 41 Rule 27 CPC was allowed by the learned ARCT and additional evidence was taken on record. The learned ARCT after considering the evidence as led in the case came to conclusion that only initial burden was on the landlord/respondent to show that the premises was in occupation of a third party and thereafter burden shifted to the tenant to explain the presence of third party and found that learned ARC had not appreciated the evidence on record and had even not given heed to the contradictions in the testimony of the petitioner/tenant himself. He came to conclusion that it was not a case of agency but was a case of sub-letting.

Aggrieved by this judgment, the petitioner has preferred this petition on the ground that the learned Tribunal failed to appreciate that there was an agency agreement of the petitioner with Punjab State Leather Development Corporation (PSLDC) for sale of their goods as far back as in the year 1985 and the Tribunal erred in not appreciating all the terms and conditions governing the agency agreement executed between the parties and there was no reason to believe that there was sub-letting. The learned ARCT had no reason to doubt the terms and conditions of agency agreement. It is also submitted that the learned ARCT failed to appreciate that though the staff of Punjab State Leather Development Corporation (PSLDC) was present at the rental premises but he ignored the fact that it was a part of the agreement with the petitioner that Punjab State Leather Development Corporation (PSLDC) was to provide professional and technical guidance.

It was also contended that Tribunal allowed application under Order 41 Rule 27 CPC made by the respondent without cogent reasons. The other ground taken is that Tribunal based its findings on the basis of documents filed as Ex.AW4/1 to AW4/17. The said documents were exhibited in the statement of AW-4. The exhibiting of these documents was objected to and the documents were not proved in accordance with law. It was further submitted that Tribunal erred in returning a finding of the possession of the Corporation(PSLDC) on the basis of presence of its employees, obtaining a telephone in their name at the premises or doing communication from the address of the premises. These facts did not constitute exclusive possession.

An agency is a fiduciary relationship created between the principal and the agent by express or implied contract in which agent acts on behalf of the principal and binds the principal by his works or actions. The basic theory of agency device is to enable a person through the services of another to broaden the scope of its activities and receive the product of another�s effort retaining net benefits resulting from the work of the agent. An agent is normally entitled to a fee or a commission.

In the present case, the petitioner had taken a stand in the WS that there was an agency agreement between the petitioner and the Punjab State Leather Development Corporation (PSLDC).Since it was the stand of the petitioner that there was an agency agreement, the onus shifted to petitioner to come forward with all the evidence in respect of functioning of the agency agreement and the petitioner was supposed to file all documents in his possession regarding the agency business. The petitioner did not file documents of the agency business till the end. When the matter was listed for evidence he only filed a photo copy of the agency agreement at that stage.

Let us consider the terms and conditions of the agency agreement as placed on record by the petitioner and the evidence which has come on record. The following covenants of the agency agreement dated 9th August, 1985 would be relevant:

Whereas the party No. 2 has offered to give the agency for the sale of leather goods foot wears under the brand name of �LEATHERIA'' to the party No. 1 on commission basis.

The terms settled between the parties are as under:

That the party No. 1 has agreed to take the agency of the sale of complete range of Leather goods from party No. 2 under the brand name of ''LETHERIA'' in the premises No. 13/39, Arya Samaj Road, Karol Bagh, New Delhi.

Party No. 1 has undertaken to sell exclusively the goods supplied by the party No. 2 and no other products at the said premises. That party No. 2 has agreed to supply the goods bill wise on consignment basis against receipt in writing to party No. 1 according to his requirement. Party No. 1 also undertakes to follow the guide lines and instructions issued by the Marketing professionals of party No. 2 to achieve best commercial results.

That it has been agreed that party No. 2 will pay a commission @ 10% of the net sale value (excluding sales tax, discount etc.) to party No. 1 up to the annual net sales of Rs. 15 lakhs. For the sale exceeding Rs. 15 lakhs per annum the commission will be paid @ 8% of the net additional accruals.

That party No. 1 further undertakes that the goods received on consignment basis and sold will be fully accounted for and full sales proceeds shall be credited to the bank account of party No. 2 on the following day. The goods which are left unsold will be returned in the same good condition to party No. 2 within three months of their receipt or payment made thereof.

That the goods of party No. 2 will be sold by party No. 1 under the bills and vouchers of party No. 1 only. The collection and timely payment of sales tax or other taxes will be the responsibility of party No. 1.

That the accounts will be inspected and settled at the end of every calender month and the commission will be paid to the agents by 7th of the following month at the latest on the basis of previous months sale.

That the insurance liability for all the stocks/stores supplied to party No. 1 on consignment basis, bill wise will be that of party No. 2.

That the primary responsibility for maintaining the accounts of all transactions annually will be that of party No. 1 and party No. 2 will have no right of interference. However, party No. 1 undertakes to render to party No. 2 true statements of accounts of all the sale transactions of the goods received and sold by the agents. The bill vouchers and other original records of sales/transfers will also be put up periodically, and when required for the examination of the auditors and the Finance Division of the party No. 2 which is a wholly owned State Govt. Undertaking. The periodic physical inspection of the stocks at said premises will also be jointly carried out by the parties to ensure that the stocks tally with the stock registers and the record of consignments supplied to party No. 1.

That the business in the said shop will be run by party No. 1 exclusively and every document of business will continue to be in the name of party No. 1.However, party No. 2 will provide professional and technical guidance of its marketing and sales executives in the best mutual interest of achieving higher sales. Party No. 2 has further agreed to suitably furnish the premises for display and sale of its products and also provide suitable publicity support to promote the sale of its products.

That the goods in the said shop will always remain under the custody of party No. 1, however, party No. 1 will be fully liable to pay their value on sale or return the goods which are unsold as stated above.

The petitioner�s contention is that this agency agreement continued. The work to be performed by the petitioner in terms of above agreement is very clear and can be enumerated as under:

1) The petitioner was to sell the goods of Punjab State Leather Development Corporation (PSLDC) and PSLDC was only to supply the goods on consignment basis against receipt in writing to the petitioner according to petitioner�s requirement.

2) An account was to be maintained by the petitioner of the goods received and sold to all. Sale proceeds of the goods were to be credited by the petitioner to the bank account of PSLDC.

3) The goods were to be sold under the vouchers of the petitioner only.

4) All accounts were to be maintained by the petitioner and were to be inspected and settled every month with PSLDC.

5) The primary responsibility of maintaining accounts and of transactions was that of the petitioner and PSLDC had no right to interfere.

6) The petitioner was to render true accounts of all sale transactions and goods to PSLDC.

7) Bills, vouchers and other original records of sale and transfer were to be maintained by the petitioner and were to be periodically examined by PSLDC.

8) The business in the shop was to be run exclusively by the petitioner and PSLDC was only to provide professional and technical guidance.

9) The goods were always to remain in custody of the petitioner.

In order to run agency business of respondent in above terms it would have been necessary for the petitioner to employ Accountant, Sales Boys and Manager of the shop. Surprisingly enough, the petitioner had not examined any of the employees employed by him. He has not placed before the learned ARC any record regarding any of the business transactions of the agency. He did not place before the learned ARC, the bank accounts where he was depositing the sale proceeds. He did not place before the learned ARC daily sale proceeds charts or monthly sale proceeds charts or monthly turnover of the shop showing how much was his commission. In fact he placed no record whatsoever before ARC in respect of agency business allegedly being run by him. During evidence when he was asked to produce the record he took a plea that records got burnt. Even if record had got burned he would have disclosed at least bank accounts where he was depositing the sale proceeds, his bank accounts where he was receiving the commission. In fact the entire attitude of the petitioner had been not to produce any evidence in the Court. In respect of alleged agency business he produced before the Court only sales tax return and his income tax return, that also without any supporting corresponding record. Believing that he had allowed use of his sales tax number to PSLDC, does not mean that he was running an agency business. His own testimony was also shaky and totally bereft of credibility. In his testimony he had stated that his monthly commission was varying between Rs. 13,000/- to 15,000/-. However, when he was asked about the quantum of the sales he stated that sale per day was Rs. 1,000/- approximately. If the per day sale of the shop was Rs. 1,000/-, the total monthly sale would have been Rs. 26,000/- his commission @ 10% would have been Rs. 2600/- per month. While his statement was that his commission was Rs. 13,000/- to Rs. 15,000/- per month. Not only this, the learned ARCT also observed that the petitioner took a stand that his accounts books etc. were destroyed in fire in 1998 but there was no explanation as to why he did not file all documents and books in the Court along with the written statement. He also did not produce a witness who could prove that the fire took place in which account books were destroyed. No FIR was lodged about breaking out of the fire and destruction of the record. Neither such evidence was led in the Court. ARCT also observed that in any event even if the stand of the petitioner regarding breaking out of fire is believed on the face of it petitioner could have certainly proved his bank statements and bank accounts to show that he was doing transactions but he did not even do that.

On the other hand, it was found that when Local Commissioner visited the premises there was no employee of the petitioner on the shop and all employees were of Punjab State Leather Development Corporation (PSLDC). The Local Commissioner noted their names. An objection has been raised against the admissibility of the report of the Local Commissioner. However, the report of Local Commissioner per say has not been admitted or considered by the ARCT. The report of Local Commissioner was proved by Mr. Manish Sharma DW-2 who appeared in the witness box and he testified the facts which he observed and in his testimony he deposed that Sh. Sanjeev Kumar, Sh. D.R. Sharma, Sh. Balbir Singh and Sh. Mathura Dass were person present at the time of inspection and they were all employees of PSLDC. This fact has not been denied by the petitioner neither any suggestion was given that they were not employees of the PSLDC. Testimony of AW-4 who produced documents regarding the showroom, ''Letheria'' also shows that Punjab State Leather Development Corporation (PSLDC) had submitted the names of these employees with ESI and other authorities. The record of PSLDC also shows that the shop was being used as an exclusive showroom of PSLDC. Though, the objection has been raised on the exhibiting of documents AW-4/1 and AW-1/12 of the witness, but all these documents come from the official record of the PSLDC and the witness examined had no personal axe to grind. There was no reason to disbelieve the testimony of this witness or to disbelieve the documents.

It is settled law that the efforts of the Court has to dig out the truth and not to act only as an umpire in a bout of two litigants. The Court can allow an application for additional evidence if Court considers that the recording of additional evidence is necessary to come at a proper decision in the case. Objection of the petitioner regarding allowing of an application under Order 41 Rule 27 CPC was therefore baseless and the witness examined as a result of this and the documents exhibited cannot be doubted. The official record produced before the ARCT showed that Punjab State Leather Development Corporation was initially paying rent of Rs. 22,000/- to the petitioner as rent and the petitioner had demanded an increase in the rent to Rs. 33,000/-. PSLDC finding that it was not possible to run the showroom with the increased rent had thought it better to terminate the tenancy. The plea of the petitioner that PSLDC had become defunct and therefore left the premises has not been established by examining any official from the PSLDC nor this fact has been testified by any other witness examined by the PSLDC. The internal noting of the PSLDC proved on record, also showed that the shop was on rent with PSLDC @ Rs. 22,000/- per month.

It is settled law that in case of civil disputes or disputes under Rent Control Act the Court has to come to conclusion only by weighing evidence on scale of probabilities and see what was more probable. It is a case where the petitioner, to circumvent the law and in order to keep the premises under Delhi Rent Control Act had entered into a paper agreement regarding agency but actually the shop was given on the rent to PSLDC and the entire shop was being run by PSLDC. All employees at the shop were of PSLDC , all accounts were being maintained by PSLDC and only rent cheques were being given to the petitioner. Had petitioner come forward with his bank account where this so-called commission was being deposited, the cat would have been out of bag and it would have been revealed that a fix rent amount was going into the account of the petitioner. The petitioner''s non-production of his bank statement where money was coming from PSLDC and withholding all other evidence on the ground that a fire broke out, appears malafide.

The learned ARCT rightly arrived at conclusion that it was a case of sub-letting and not a case of agency. I find no ground to interfere in the order of the learned ARCT. The petition is hereby dismissed.