ASHISH KHANNA & ANR. vs M/S ROSHNI HOTELS PVT. LTD. & ORS.

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* IN THE HIGH COURT OF DELHI AT NEW DELHI
Date of Decision: 12th December, 2023

+ CS(OS) 226/2019, CCP(O) 60/2023, I.A. 1865/2020, I.A. 4501/2021
ASHISH KHANNA & ANR. ….. Plaintiffs
Through: Mr. Kirti Uppal, Senior Advocate with Mr. Shekhar Kumar, Ms. Riya Gulati, Mr. Arun Malik and
Ms. Aarohi Malik, Advocates.

versus

M/S ROSHNI HOTELS PVT. LTD. & ORS. ….. Defendants
Through: Mr. Mohit Chaudhary, Mr. Kunal Sachdeva, Mr. Karan Suneja and
Ms. Srishti Bajpai, Advocates.

CORAM:
HON’BLE MR. JUSTICE SANJEEV NARULA
JUDGMENT

SANJEEV NARULA, J. (Oral):

1. The present suit [CS(OS) 226/2019] has reached the stage of final disposal. Mr. Ashish Khanna and Mr. Neeraj Khanna [collectively, “the Licensors”] have instituted the present suit against Roshni Hotels Pvt. Ltd. [“Roshni Hotels”]. Concurrently, Roshni Hotels has filed a parallel suit, bearing case number CS(OS) 607/2021, against the Licensors. There is a substantial overlap in the subject matter of both suits. Therefore, while this judgment will specifically address and dispose of CS(OS) 226/2019, it is pertinent to acknowledge the common elements in the two suits in order to understand the context and implications of the decision reached herein.
2. The focal point of both suits [CS(OS) 226/2019 and CS(OS) 607/2021] is a specific parcel of land encompassing an area measuring 12 Bighas and 16 Biswas, located in the revenue estate of Village Kapashera, Tehsil Vasant Vihar, New Delhi. It is delineated in Khata Khatauni No. 49/421 and identified by Mustatil Nos. 14, 16, and 17, along with Killa Nos. 26 (5-4), 26 (3-4), and 26 (4-8) respectively. The Suit Property includes not only the land itself but also a boundary wall, a tube well, an electric connection, and a built-up super-structure. Additionally, it encompasses all trees, shrubs, standing crops, and other installations existing therein [hereinafter, “Suit Property”].
THE FACTUAL BACKDROP AND CRUCIAL PROCEEDINGS THUS FAR
3. By way of a registered licence deed dated 29th August, 2017 [“Licence Deed”], the Licensors granted a licence in respect of the Suit Property to Roshni Hotels. In terms thereof, Roshni Hotels was allowed temporary use of the Suit Property in consideration of payment of a monthly licence fee to the Licensors. Thereafter, on 12th November, 2018, the Licensors terminated this Licence Deed, citing non-payment of the licence fee as the primary reason. Subsequently, the Licensors filed the instant suit seeking recovery of possession, arrears of the licence fee, mesne profits/damages, and a permanent injunction against Roshni Hotels.
4. Roshni Hotels was duly served with summons of the suit, however, they failed to file a written statement, leading to the striking off of their defence. Nonetheless, the Licensors proceeded to prove their case through evidence. They led oral evidence, but their witnesses were not cross-examined by Roshni Hotels. Predictably, in absence of any defence, Roshni Hotels did not lead evidence, which implies absence of a defendable position on their part. Consequently, the instant suit has now advanced to the final stage of adjudication.
5. In the meantime, the cross-suit [CS(OS) 607/2021] was initiated by Roshni Hotels, pertaining to the Suit Property. Therein they contend that, based on a mutual understanding between the parties, Roshni Hotels is entitled to continued use of the Suit Property till at least the fixed date of expiry on 31st October, 2026. In support of this assertion, relying on Section 60(b) of the Indian Easements Act, 1882 [“Easements Act”], Roshni Hotels seeks a declaration to affirm their status as a licensee with an irrevocable right in the Suit Property. Furthermore, they petition for a mandatory injunction against the Licensors, along with a claim for damages, as part of the relief sought in CS(OS) 607/2021.
6. It is pertinent to note that in the instant suit, Roshni Hotels filed an application [I.A. 15905/2021] contending that the subject matter and issues arising in the two suits are common (refer to Paragraph No. 7 of I.A. No. 15905/2021). Roshni Hotels expressed concern that separate trials for these suits could lead to contradictory judgments on these overlapping issues. Consequently, to ensure a consistent adjudication process for the interconnected nature of the disputes, they requested transfer of this case to the Bench adjudicating CS(OS) 607/2021. The two suits were subsequently listed together.
7. In CS(OS) 226/2019, due to non-filing of written statement by Roshni Hotels, the Licensors sought a decree under Order VIII Rule 10 of the Code of Civil Procedure, 1908 (CPC). This application [I.A. 15947/2019] was adjudicated along with another application [I.A. 3965/2022], wherein Licensors requested for a court directive requiring Roshni Hotels to deposit the arrears of the licence fee. Accordingly, on 24th February, 2023, while I.A. 3965/2022 was disposed of with directions for Roshni Hotels to pay the arrears of licence fees, I.A. 15947/2019 under Order VIII Rule 10 was decided against the Licensors. This dismissal has been challenged by the Licensors, and the appeal [FAO(OS) 40/2023] is pending consideration before the Division Bench.
8. The Licensors have now filed an application [I.A. 10349/2023] in CS(OS) 607/2021, specifically invoking Section 10 of CPC to seek a stay of the suit in light of the ongoing proceedings in CS(OS) 226/2019. This request is founded in the acknowledgment by both Roshni Hotels and their counsel, Mr. Mohit Chaudhary, that subject matter of the two suits is indeed identical, a fact also admitted during their submissions. However, in the Court’s opinion, staying the trial of CS(OS) 607/2021 would be necessary only if instant suit was still in the trial phase. As the suit has progressed to the final stage, the Court opines that it is more judicious to decide the same, rather than imposing a stay on CS(OS) 607/2021.
9. In view of the above, the Court has proceeded to hear final arguments of Mr. Kirti Uppal, Senior Counsel representing the Licensors, and Mr. Chaudhary, representing Roshni Hotels.
ANALYSIS AND FINDINGS
10. The Court has previously detailed the subject matter of the suit in the opening paragraphs. At this stage, it is essential to articulate the cause of action prompting the Licensors to seek legal redress from this Court. Under the terms of the Licence Deed, Roshni Hotels was obligated to pay a licence fee to the Licensors. In addition, the Licence Deed stipulated that Roshni Hotels was to provide the Licensors with an interest-free refundable security deposit, pay two months’ advance fee, and issue post-dated cheques for each subsequent month, all made payable to the Licensors. It is incumbent upon this Court to assess whether these terms were adhered to by Roshni Hotels and determine the consequent legal implications of any non-compliance.
11. For a comprehensive understanding of the legal obligations and rights conferred by the Licence Deed, it is imperative to scrutinize its critical clauses which form the bedrock of the dispute. For the sake of convenience, the same are reproduced below:
“1) That this Deed shall never be construed as any tenancy agreement or lease agreement nor otherwise creating any right or interest in the Licensed Premises in favour of the LICENSEE, which is not at all the interntion of the parties but on the contrary merely a temporary arrangement simply to allow the LICENSEE to use the Licensed Premises for party lawns/ banquet halls in the manner permissible under law, under the control etc. of the LICENSORS. The LICENSEE hereby undertakes to keep the LICENSORS fully indemnified against all such losses and demands, if any, suffered by the LICENSORS, regarding any mis-use or any act or omission of the LICENSEE.

2) That the LICENSEE in consideration of such use of the Licensed Premises, as hereunder provided, shall pay to the LICENSORS a LICENCE fee of Rs. 13,34,000/- (Rupees Thirteen Lakhs Thirty Four Thousand Only), per month, (subject to deduction of Income Tax at. Source), in advance, on or before the 7th day of each English calendar month during the LICENCE Period. The LICENCE Fee shall be payable by the LICENSEE to the LICENSORS w.e.f. 01.11.2017. That besides the payment of the LICENCE fee reserved herein, the LICENSEE shall also be liable to pay GST or any other statutory taxes of whatsoever nature, if applicable, alongwith the monthly LICENCE see in advance regularly without any default.

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4) That the LICENSEE shall not cause any damage nor shall effect any additions or alterations in the Licensed Premises (except to make Temporary Pandals, Structures) and shall have right to install furniture, fixtures, which will be removed by the LICENSEE at its own cost and expenses before the expiry date of this LICENCE. Further it is the sole liability of the LICENSEE to restore the Licensed Premises in its original condition at its own costs and expenses, failing which, the LICENSORS shall not be responsible for payment of any amount on account of any improvements, if any, made or done by the LICENSEE.

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16) That it is further agreed that the present LICENCE is for a fixed period of 9 (Nine) Years only w.e.f. 01.11.2017. That after the expiry of LICENCE period of Nine Years, or earlier termination thereof, the LICENSEE shall hand over the vacant, physical possession of the Licensed Premises to the LICENSORS in the same condition and as is now, subject to normal wear and tear excepted.

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18) That it is hereby clearly agreed and understood between the parties hereto that nothing in these presents shall be construed to confer any legal rights of possession, tenancy, sub-tenancy, lease, sub-lease etc. on the LICENSEE and that the LICENSEE can enjoy the use of the Licensed Premises temporarily only at the pleasure and Will of the LICENSORS.

19) That if the LICENCE fee hereby reserved be in arrears and not paid for 15 days, whether legally demanded or not, or, in the event of any breach of (including omission or negligence to perform or observe) the terms and conditions to be observed or performed by the LICENSEE and such breach remains un-cured beyond 10 days front the date of such breach, then in such event the LICENSORS shall be at liberty to revoke this LICENCE at its sole discretion without any reference to the LICENSEE, and the LICENSEE shall thereupon forfeit all its rights hereunder and shall not be entitled to any compensation by reason of such forfeiture. Further, the LICENSEE shall have no right to object to such forfeiture.

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22) That the LICENSEE has deposited a sum of Rs. 22,00,000/- with the LICENSOR, as interest free refundable Security deposit, which shall be refunded by the LICENSOR to the LICENSEE at the time of handing over the actual physical vacant possession of the Licensed Premises by the LICENSOR to the LICENSEE.

23) That the Licensee has also paid a sum of Rs. 26,68,000/- to the Licensors, as Two months advance fee, which shall be adjusted in the first two month of the license period.

24) That after the expiry of the licensed period or earlier termination thereof, as the case may be, the LICENSEE shall hand over the vacant, physical possession of the Licensed Premises to the LICENSORS, subject to normal wear and tear excepted. The LICENSEE shall have no right and authority to assign, sublet, underlet, transfer or grant further license to use the Licensed authority or part thereof without the previous written consent of the LICENSORS.

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26) The Licensee has also handed over 12 Post Dated Cheques of the monthly fee of initial One year, encashable on each and every month. The Licensee ensures that the said Cheques shall be duly honoured on the due date and shall not make any attempt to stop payment under the said cheques. After the expiry of one year, 12 post dated Cheques for the Second Year shall be payable in advance and so on.

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31) That this License can be terminated by the LICENSEE by giving Three Month’s notice in writing to the LICENSORS or shall pay three months LICENCE fee in lieu of the said notice, after the expiry of the lock-in-period.”
[sic.]
12. The Licensors allege that Roshni Hotels violated the terms of the Licence Deed by failing to pay the outstanding licence fee. This breach of contract is underscored by incidents where cheques issued by Roshni Hotels were dishonoured upon presentation for want of sufficient funds, leading to them being returned unpaid. Such non-compliance compelled the Licensors to initiate legal proceedings against Roshni Hotels under Section 138 of the Negotiable Instruments Act, 1881.
13. Following this, the Licensors, through their legal counsel, issued a legal notice on 12th November, 2018, and terminated the Licence Deed. They demanded that Roshni Hotels vacate the Suit Property and hand over possession to the Licensors. However, Roshni Hotels did not comply with this demand, leading to the Licensors filing the instant suit.
14. To substantiate their claims, the Licensors introduced evidence through witness testimony. Mr. Ashish Khanna, representing the Licensors, provided his deposition in the witness box and proved the facts and documents on record, including, specifically, the Licence Deed dated 29th August, 2017 [Exhibit PW-1/2 (OSR)] and the notice of termination dated 12th November, 2018 [Exhibit PW-1/10 (colly)]. In addition to Ashish Khanna’s testimony, the Licensors presented four other witnesses to further corroborate their case. Roshni Hotels opted-out of cross-examining the Licensors’ witnesses. Therefore, the testimonies of Licensors’ witnesses went unchallenged, effectively rendering their statements unrebutted. On 16th April 2021, the plaintiffs’ evidence was concluded.
15. We must acknowledge that numerous applications were filed by both parties throughout the course of this litigation, many of which have already been adjudicated. Of particular note is the Licensors’ application under Order VIII Rule 10 of CPC, which was ultimately decided against them. Roshni Hotels has sought to leverage certain observations made in the said order of dismissal dated 24th February, 2023, to argue that this Court should defer its decision until the Licensors’ appeal in FAO(OS) 40/2023 is decided and the cross-suit is adjudicated. However, this Court opines that the decision on the aforementioned application does not impede this Court’s ability to finally adjudicate the instant suit.
16. Given that the suit has reached its final stage, it is incumbent upon the Court to hear and decide on the basis of material produced by the parties. Order VIII Rule 10 affords the Court discretion to pass a judgment in the absence of a defence. On the said date, the Court did not consider the evidence and documents on record. Therefore, the observations made at that time were confined to the scope of Order VIII Rule 10, CPC, and do not limit this Court’s jurisdiction to render a final judgment in the present suit. At this juncture, the Court is thoroughly considering the oral and documentary evidence presented by both sides. Consequently, the observations made by this Court on 24th February, 2023, while deciding the Order VIII Rule 10 application, are not relevant at this stage.
17. The Court finds that the Licensors have successfully proved their case. The evidence presented by the Plaintiff, which remains unrebutted. The Licence Deed dated 29th August, 2017, forming the foundation of this dispute, is an admitted document. In fact, Mr. Chaudhary, counsel for Roshni Hotels, has relied upon this same document to assert that their licence in respect of the Suit Property is irrevocable. Furthermore, the Court notes that the termination of the Licence Deed by the Licensors is conclusively evidenced by the notice of demand dated 12th November, 2018 – a fact that stands unchallenged. Given these uncontroverted facts, the Licensors are entitled to a decree in their favour.
18. Nevertheless, the Court must address Mr. Chaudhary’s submission regarding Roshni Hotels’ entitlement to occupy the premises perpetually or, at least, until the expiration of the terms specified in the licence deed on 31st October, 2026. Mr. Chaudhary’s submission is premised on Section 60(b) of the Easements Act, which precludes the revocation of a licence in such cases wherein a licensee, acting upon the licence, has executed work of a permanent character and incurred expenses in the execution. However, we must note that the Suit Property was licenced to Roshni Hotels for setting up pandals and structures for weddings and other functions. Thus, it is in terms of the Licence Deed that Roshni Hotels has constructed a permanent structure (banquet hall) on the Suit Property, with the expectation of utilising the same till at least expiration of the Licence Deed.
19. Further, it is imperative to note that Clause 1 of the Licence Deed categorically distinguishes the said document from a lease agreement. This clearly indicates that there was no transfer of any rights in the Suit Property in favour of Roshni Hotels.
20. Having noted this crucial distinction, Mr. Chaudhary’s invocation of Section 60(b) of the Easements Act is untenable. It is noted that the expenditure incurred by Roshni Hotels for the utilization of the Suit Property was done with full awareness of the terms of the Licence Deed, as outlined earlier. The clauses of the Licence Deed, as extracted above, explicitly indicate that Roshni Hotels was cognizant of the obligation to restore the Suit Property to its original condition upon the expiration of the licence term. Accordingly, they cannot claim at this stage that their construction of a banquet hall on the Suit Property, irrespective of the expenditure incurred in doing so, would vest with them any rights of perpetual occupation. Consequently, Section 60(b) of the Easements Act would not be attracted in the present case and cannot be relied upon to establish a right to perpetual occupation of the Suit Property by Roshni Hotels by arguing that the Licence Deed is irrevocable.
21. The Court also does not find merit in Mr. Chaudhary’s contention with regards to the Licence Deed not being terminable. As per Clause 19 of the Licence Deed, which has been reproduced above, the Licensor possesses the mandate to unilaterally revoke the Licence Deed in case there arises any breach of the agreed upon terms which remains un-cured beyond ten days from the date of said breach. Thus, the parties have categorically allowed revocation of the licence, prior to expiry of its term, in the event of non-payment of the licence fee. In light of the above, the termination given effect to by the Licensors is in accordance with the terms of the Licence Deed. The terminable nature of the Licence Deed is also evidenced by Clause 31, which also vests this right of termination with the licensee. Moreover, even if we were to assume that premature termination was not envisaged, it does not imply an entitlement for Roshni Hotels to ‘perpetually occupy’ the Suit Property. At most, it could give rise to a claim for damages but nothing more.
CONCLUSION AND DIRECTIONS
22. For the foregoing reasons, a decree is passed in favour of the Licensors (Plaintiffs) and against Roshni Hotels (Defendant), with the following directions:
22.1. Decree of possession is granted in favour of Plaintiffs and against the Defendant in respect of the Suit Property, in terms of the area delineated in ‘red colour’ in the site plan annexed along with the plaint.
22.2. Defendant is directed to pay and clear all the dues of electricity and water charges, and also to obtain a ‘No Dues Certificate’ from the concerned electricity and water departments in this regard, with respect to the Suit Property. Defendant shall handover the No Dues Certificate/ receipts thereof to the Plaintiffs.
22.3. Defendant shall not create any third-party interest, or part with possession of the ‘Suit Property’, as described in this judgement.
22.4. As regards the claim for mesne profits, the Court appoints Mr. L.K. Gaur, Additional District Judge (Retd.), [Contact No:- +91 8800881765] to inquire into the claims of the Plaintiff in terms of Order XX Rule 12 of the CPC, from the date of institution of the suit [CS(OS) 226/2019] till date of delivery of possession to the Plaintiffs. Fee shall be fixed at INR 5 lakhs, to be borne by the Plaintiffs, while shall be recoverable under the bill of costs from the Defendant. Upon conducting such an inquiry, let a report be submitted to the Court. The final decree towards mesne profits shall be passed thereafter.
22.5. Plaintiffs have also incurred costs in pursuing the present litigation, and deposited court fees. In terms of the Delhi High Court (Original Side) Rules, 2018, Plaintiff is entitled to actual costs, recoverable from the Defendant. Plaintiffs shall file their bill of costs in terms of Rule 5 of Chapter XXIII of the Delhi High Court (Original Side) Rules, 2018, within three weeks from the date this judgement is uploaded. As-and-when the same is filed, the matter will be listed before the Taxing Officer for computation of costs.
23. With the above directions, the present suit is disposed of, along with pending applications.

SANJEEV NARULA, J
DECEMBER 12, 2023
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(Corrected and released on 23rd December, 2023)

CS(OS) 226/2019 Page 2 of 2