05.2005 IN THE MA TIER OF : MIS NEHRU PLACE HOTELS LIMITED & Ors. v. Madhorao & Ors.

(c) The Space Buyer would be liable to pay annually the sinking fund for the replacement of capital goods like air-conditioning plant, generators, machinery, transformers, . electrical equipments, cables dueling, pumping-sets, fire fighting equipment, water-mains, toilets, escalators, equipments, etc. etc. the rate/s of sinking fund as payable would be worked out separately for air-conditioned areas and non air-conditioned areas. ventilation lifts, (d) That the rate/s of general Maintenance charges for common setvices, insurance and sinking fund for replacement of capital goods for the calendar year 1997 have been fixed on the basis of Living Index Points as issued by Delhi Administration in December, 1996. The above charges will be subject to annual increase in proportion to the rate of inflation to cover the increased cost of maintenance/materials expenses etc. The annual inflation/increase will be assessed on the basis of the increase in points of Living Index as regularly issued by the Delhi Administration from time to time. · The percentage of increase will be percentage of increase in the points of Living Index. Minimum increase annually would be 9 percent on the the same as CP Nos. 40 &41 of 2004 Page No. 5 of 45 last paid charges. The charges will be revised in the month of July every year on the basis of Living Index as issued by Delhi Administration 31st December of previous year and would normally be applicable for one year. (e) The payments towards the sinking fund would be payable annually maintenance of the common seJVices and for ·Air conditioning plant (wherever applicable) would be payable within six monthly in advance. in advance and charges • ... ./ (f) The company at no point of time has to render any account to the Space Buyer for the actual expenses incurred by the Company. "

The Agreement also provides that all dues and charges are to be paid within .15 days of their becoming due and in case of non-payment of the "recurring charges" within stipulated time, interest at the rate of 24 per cent per annum with quarterly rates would be payable.

Some disputes arose between the parties regarding payment of these recurring charges. The company filed suit against the petitioner being Suit No.163911994. The petitioner also filed Suit No.151311995 against the company. Both these suits were filed in this court.

During the pendency of these suits, the parties arrived at a settlement in terms of compromise deed dated 17h December, 1997. By CP Nos. 40 &41 of 2004 Page No. 6 of 45 this compromise, the petitioner withdrew its action of cancellation of the Lease Agreement. It was also recorded that the petitioner had received full consideration of Rs.1.68 crores as sale consideration for flats/spaces in question. In respect of recurring charges/maintenance charges, following clauses were incorporated in the compromise deed: "7. At the time of recording of this Compromise Agreement in Court BIL shall pay to NPHL a sum of Rs.22,47,302/- (Rupees twenty two lakhs fourty seven thousand three hundred and two only) in full and final settlement of NPHL's claim for maintenance charges, car parking charges, electricity and water charges in respect of the Apartments for the period prior to 30.6. 97 and advance for the period 1.7.97 to 31.12.97.

With effect from 1 it July, 1997 BIL shall be liable to pay to NPHL maintenance charges for the Apartments at the rate of Rs.29.03 (Rupees Twenty Nine and paise Three only) per square foot i.e. Rs.1,16,120/- (Rupees one lac sixteen thousand one hundred and twenty only) per month.

On every 1 it July commencing 1 sr July, 1998 the rate of Rs.29.03 per square foot shall be revised upwards according to the living index as on that date subject, however, to a minimum increase of 9% each year.

With effect from the date of recording of this Compromise Agreement in Court, NPHL shall be bound and obliged to supply back-up power (one kilowatt per one hundred square feet) to BIL. BIL shall be liable to CP Nos. 40 &41 of 2004 Page No. 7 of 45 pay to NPHL @ Rs.8 (rupees Eight only) per unit. The reading of units supplied by NPHL and consumed by BIL will be recorded in sub-meter which will be installed by NPHL at the Apartments for that purpose.

On every 1 sr July commencing 1 sr July, 1998 the rate of Rs.8 per unit shall be revised upwards according to the living index as on that date subject, however, to a minimum increase of 9% each year. ..

8. This compromise deed was filed in the aforesaid suits along with a joint application under Order XXIII Rule 3 read with Section 151 of the Code of Civil Procedure (CPC) for passing a decree in terms of the compromise. Statement of learned counsel for the parties was recorded on 1 ~ December, 19CJ7 and after recording following statement order was passed in the suit: the parties and .. In view of the above statement made by the learned counsel for the contents of the documents (Ex. C-I, C-ll, C-lll), compromise arrived at between is hereby accepted. The present suit filed by the plaintiff is decreed in terms of compromise arrived at between the parties and as reflected in documents (Ex.C-1, C-II and C-lll) that form part of the decree sheet. the parties, which lawful, Decree sheet be drawn up accordingly. "

9. After recording to the aforesaid agreement, the company made CP Nos. 40 &41 of 2004 Page No. 8 of 45 payment in accordance therewith~ towards maintenance charges for car parking till 31st December, 2002 and recurring charges were paid till 30th June~ 2003. However~ thereafter the company stopped payment.

10. The case of the petitioner is that this payment is due to it. Various reminders and call notices were sent to the company to make the payments. Invoices were also raised. Outstanding amount against these payments is Rs. 30,78,3711-, details whereof are as under: " Particulars Maintenance Charges Amount (Rs.) 24,26?160.00 Maintenance charges for car parking Ground Rent Building Insurance 41,047.00 57,600.00 10~960.00 Sinking Fund 1,75,200.00 Interest (up to 10rh November2003) 3,67,404.00 30,78,371.00 ,

11. However, this payment was not made by the company in spite CP Nos. 40 &41 of 2004 Page No.9 of45 of statutory notice of demand dated 18th November, 2003 served upon the company under Sections 433 & 434 of the Companies Act, Instead the company, through its counsel, replied the said statutory notice on 3m February, 2004 rejecting the claim and disputing the demands. According to the petitioner, the liability is disputed on flimsy and frivolous grounds. Therefore, present petition is filed seeking winding up of the company on the ground that it be deemed that the company is unable to pay the admitted debt.

The demand is refuted by the company on the ground that the same is against the provision of the Delhi Apartment Ownership Act, 1986 (hereinafter referred to as 'the Act') which is applicable on all multi-storeyed buildings in Dellii, including the apartment in question and, therefore, provisions of this Act are binding on all apartment owners in view of Section 24 of the Act which specifically provides as under. " 24. Act to be binding on apartment owners, tenants etc.-( 1) The provisions of this Act shall have effect notwithstanding anything inconsistent therewith in any other law for the time being in force or in any contract, undertaking or other instrument and all apartment owners, tenants of owners, employees of owners and tenants, or any other person, who may, in any manner, CP Nos. 40 &41 of 2004 Page No. 10 of 45 use the property or any part thereof to which this Act applies, shall be subject to the provisions of Act and the bye-laws and the rules made thereunder: Provided that nothing contained in this sub-section shall affect the right, title or interest acquired by an allottee or other person in common areas and facilities from any promoter on or before the 28th day of February, 1986. (2) All apartments, divisions and determinations lawfully made by the Association of Apartments, Owners in accordance with the provisions of this Act and the bye-laws shall be deemed to be binding on all apartment owners. "

According to the company, the demand raised by the petitioner is illegal and contrary to the provisions of the Act. It is stated that the present petitions have been filed to coerce the company to pay staggering amount of Rs. 61,56,742/- which is not otherwise the liability of the company. Between 19rrl to 2003 the company has already paid more than Rs.2.25 crores towards maintenance. However, the petitioner has not been rendering the true accounts for maintenance although it would not have spent more than Rs.40 lacs towards maintenance. Therefore, there is already a recovery of Rs.1.80 crores in excess. The rates fixed for such maintenance are unfair and arbitrary which would be clear from the CP Nos. 40 &41 of 2004 Page No. 11 of 45 fact that maintenance charges payable in the year July, 19CJ7 were Rs.

29.03 per sq. ft and by addition of 8% I 9% every year, it has gone to Rs.48.37 per sq.ft. by 2002 and the company is now claiming maintenance charges and sinking fund at the rate of Rs.58 per sq. ft. per month. According to the company, the petitioner can claim maintenance charges on actual basis and cannot claim these charges by adding undue profits. It is also mentioned that the present petition is motivated and has been filed after the company had given legal notice dated 3rd February, 2004 calling upon the petitioner to execute sale deed in respect of the flats which had already been sold to the company by the petitioner. It is also the case of the company that the petitioner is harassing the company inasmuch as the company is not allowed to install dish antenna on the portion of the roof of F Block of the building although the company is 'y· specifically permitted to do so under clause 39 of the Agreement. It is further claimed that rates of maintenance in all other multi-storeyed buildings are ranging from Rs.5/- to Rs.15/- per sq. ft. depending upon AC and non-AC building.

Learned counsel for the company in support of the aforesaid CP Nos. 40 &41 of 2004 Page No. 12 of 45 plea that no such charges were payable in view of the provisions of the Act, took me through various provisions of the Act.

Learned counsel submitted that a conjoint reading of the aforesaid provisions would clearly reveal that absolute ownership of the apartment was vested in the person who is allotted, sold or. otherwise transferred the apartment and such a person is not only entitled to exclusive ownership and possession of the apartment but also entitled to such percentage of undivided interest in common areas and facilities as may be specified in the the Deed of Apartment which shall have permanent character. For maintenance of these common areas and facilities, the legislature intended that there should be an association of the apartment owners and the Administrator of the Union Territory of Delhi, namely, Lt. Governor is also under obligation to frame bye-laws in accordance with which the property is to be administered by the association of apartment owners. These bye-laws provided for various things including maintenance, repair and replacement of common areas and facilities and payment therefor as well as manner of collecting from the apartment owners or any other occupant of apartments, share of the CP Nos. 40 &41 of 2004 Page No. 13 of 45 common expenses. His submission was that it is only this association which can demand the monies from the apartment owners. The association is further under obligation to keep proper accounts of the monies so received, expenses incurred on the maintenance and render those accounts. Whatever is surplus is to be distributed among the apartment owners as 'common profits•. Thus not only such an association is required to maintain proper accounts, the underlying idea is to collect the expenses on actual basis and it is for this reason even surplus is to be refunded to the apartment owners. These were, submitted the counsel, the mandatory provisions as would be clear from non obstante clause appearing in .Section 24 of the Act already reproduced above.

In this backdrop, learned counsel submitted that not only the petitioner had no right to make any such collections, in the absence of an association and till such association is fonne~ but even if it is presumed that the petitioner had right to colleet the amounts, the petitioner was also bound by the provisions of the Act as per which it could collect the common expenses on actual basis. However, submitted the learned counsel, the Agreement provided for increase at the rate of 8% I 9% eve.ry CP Nos. 40 &41 of 2004 Page No. 14 of 45 year whether it was required or not Furthermore, the petitioner had never submitted any accounts to the apartment owners about the was not common expenses and common profits, if at all. In the process, the petitioner was charging much more than what was even the range of the area and had paid the entire.sale consideration. In spite of purchasing the apartment the effect of the clause in the agreement asking the apartment owners to pay such charges was to treat him as even worse than tenant forcing him to cough out much more than the prevalent market rent.

He further submitted that once the decree was nullity, it was open for the company to take such a plea in any co-ordinate proceedings, including in the present proceedings.

Mr.Bhushan, learned senior counsel for the petitioner, on the other hand, argued that the claim of the petitioner was based on the decree which was passed on the basis of consent agreement entered into between the parties. Therefore, it was not open for the company to argue that the terms contained therein were onerous. A demand based on the CP Nos. 40 &41 of 2004 Page No. 16 of 45 decree constituted the 'debt'. This decree was even acted uoon bv the ., J. parties inasmuch as the company paid the parking charges till December, 2002 and recurring charges till June, 2003. His further submission was that the remedy, if any, for the company was in the proceedings in suit wherein decree was passed and so long as this decree was existing, it was binding on the parties. Referring to various provisions of the Lease Agreement as well as the Agreement, he argued that maintenance and recurring charges were pre-estimated charges which were approximate to the actual expenses and were integral part of the sale consideration. His submission was that while fixing the sale consideration "recurring cost'' was kept in mind which were clear from clauses (14) and (21) of the Agreement. It was also made clear to the flat buyer that the payment of recurring charges was essence of the contract and the petitioner was not ... supposed to render any accounts therefor. In support of this submission, he relied upon the following clauses of the Lease Agreement: " 5 (e) The payment of recurring charges as detailed above is the essence of the contract. The lessor at no point of time has to render any account to the lessee for the actual expenses incurred by the lessor. CP Nos. 40 &41 of 2004 Page No. 17 of 45 9 (a) The lessee is fully aware of the fact that the building in which the lessee is going to have the space is ultra modern, prestigious building and is a part of 5 Star Hotel Complex and therefore in the common interest of all the occupants of the building and to maintain a higher standard of cleanliness beauty and esthetic value and better outlook of the building certain controls and discipline shall have to be strictly obseJVed by the lessee, his servants and occupiers.

14. In consideration of the rent herein agreed and all payments as payable to the lessor being paid by the lessee regularly and other terms and conditions and covenants being obseJVed and performed by the lessor the lessee shall peacefully enjoy the leased premises during the said term without any interruption by the lessor.

15. As the premises is part of a 5 Star Hotel Complex, the lessor will have the complete right to keep control and supremacy at all times to come for the general management of the building and maintenance of the seJVices as detailed in para 5 above. The lessor will have the rights to carry on the said seiVices itself or give to any other time any contracts party/agency or premises whatsoever and the lessee shall have no objection to appoint any other agency or carrying out the said services. 21 (a) The lessor reserves its rights to alter, the plans, elevation specifications, the height, width, number of floors, finishing of the building of the star catego.ry of the hotel at any time in any manner it thinks fit and proper. CP Nos. 40 &41 of 2004 Page No. 18 of 45 (b) That without affecting the leased floor~ the lessor shall always have the rights to add, demolisht construct further storeys or any structures or make any additions.t alterations to the building or any portion thereof at any. time before or after the completion of construction or as may be found necessary and expedient by the lessor/'

He also relied upon the following clauses of the Agreement: "L. AND WHEREAS this plot obtained by the Company from Delhi Development Authority on perpetual lease is of a peculiar type as distinguished from ordinary/normal commercial plots in commercial centre in as much as the outstanding special features in the entire complex is a prestigious 5 Star Hotel , including its appurtenances, basement areas open/and/or covered parking areas, exclusive common utility areas and common facilities, plant, machinery etc.which are for the exclusive use of the Hotel including part of the Complex ancillary to the Hotel and for the use of the Hotel staff, Hotel residents and other guests etc. M. AND WHEREAS it is absolutely necessary to develop and maintain and to ensure the maintenance of the special features and facade and environments of the 5 Star Hotel. AND WHEREAS even U. independent of the considerations mentioned in the immediately preceding paragraph, the Space Buyer has expressly agreed that the management, upkeep, replacement, maintenance etc.of the entire complex including all the common areas & facilities therein (past, present or future) shall vest absolutely and irrevocably in the Company as one of the matters of the essence of this agreement CP Nos.

21. That the price of the Apartment as settled and paid in terms of this Agreement has been agreed between the company and the Space Buyer taking into consideration the rates, quantum and manner of payment of various Recurring and other charges which are to be paid by the Space Buyer as detailed in the body of this Agreement and Annexure "B" to this Agreement and also the proper discharge of the obligations cast on the buyer in terms of this Agreement. CP Nos. 40 &41 of 2004 Page No. 21 of 45 If at any time the Space Buyer exercises its option to bring an end to the same or have the same reduced, or the quantum of the same is reduced due to any reason whatsoever the Space Buyer would be liable to pay to the Company immediately in lump-sum as additional price an amount which would be equal to fifteen times of the amount by which the annual future liability of the Space Buyer is reduced. "

Justifying the rates at which such maintenance and recurring charges were fixedt he submitted that by the very nature of the construction and the facilities provided which were no less than maintaining a five star hotel, the fixation of these charges was very reasonable. His further submission was that keeping in view the fact that infrastructural cost goes up every year in the form of wages/salary to the workmen/staff meant for up-keeping of the premisest increase in the cost of raw materialt increase in the rates of electricity and other such items and general increase in the cost of living index, stipulation that these charges shall be enhanced every year by 8% /9% was not at all excessive or oppressive but it was a reasonable increase provided in the Agreement. He also referred to the judgment of this Court in the case of M/s Virmani. Roy & Kutty Vs. M/s Ansal Properties & Industries Limited & Anr.

He further submitted that there was no association formed of the apartment owners in the building in question till date and in the absence of such association, it was for the petitioner to maintain the building and at the same time, it was the right of the petitioner to collect such maintenance and recurring charges as provided in the Agreement. He further submitted that there was no mandate of the Act that such an association has to be formed and work of maintenance could be given to third party as well. Section 15 was also silent as to who is to form this CP Nos. 40 &41 of 2004 Page No. 24 of 45 association. He also submitted that Section 24 of the Act would neither override the decree of a competent court of law nor this Act preclude the owners to maintain the buildings, particularly in special cases as maintenance of such a state of the art building was not possible for any such association contemplated under Section 15 of the Act.

As the entire case hinges on the effect of the Delhi Apartment Ownership Act, 1986, it would be apposite to address that aspect of the matter first. A preamble of the Act would highlight the purpose and objective for which the Act was enacted, namely: " An Act to provide for the ownership of an individual apartment in a multi-storeyed building and of ·an undivided interest in the common areas and facilities to make such appurtenant to such apartment and apartment and interest heritable and transferable and for matters connected therewith or incidental thereto.!' (

As per Section 2 of the Act, the provisions of the Act are applicable to every apartment in a multi-storeyed building which was constructed mainly for residential or commercial or such other purposes as may be prescribed. Thus, Act would clearly be applicable to the building in question. After the purchase of the space in question, the CP Nos. 40 &41 of2004 Page No. 25 of 45 company became the 'apartment owner' as defined in Section 3(e) and had right to enjoy common areas and facilities as well. Legislature has defined limited common areas and facilities and Section 3 ( q) to mean: "Section 3(q) : limited common areas and facilities means those common areas and facilities which are designated allotment, sale or other transfer of any apartment as reserved for use of certain apartment or apartments to the exclusion of the other other apartments. " in writing by the promoter before

Such ownership rights in the space in the apartment were specifically conferred by virtue of Section 4 of the Act as per which not only the company became exclusive owner and entitled to the possession of the apartment sold to it, also had right to such percentage of undivided interest in the common areas and facilities which are specified in the Agreement. Sub-Section (3) of Section 4 of the Act is as under: " Subwsection (3) of Section 4: Every person who becomes entitled the exclusive ownership and possession of an apartment under sub-section (1) of sub- section (2) shall be entitled to such percentage of undivided interest in the common areas and facilities as may be specified in the Deed of Apartment and such percentage shall be computed by taking, as a basis, the value of the apartment in relation to the value of the property.,, CP Nos. 40 &41 of 2004 Page No. 26 of 45

Sub-sections (4) and (6) of Section 4 stipulate nature of undivided interest of each apartment owner in the common areas which are as under: " 4. Ownership of apartments- (4) (a) The percentage of the undivided interest of each apartment owner in the common areas and facilities shall have a permanent character~ and shall not be altered without the written consent of all the apartment owners; (b) the percentage of the undivided interest in the common areas and facilities shall not be separated from the apartment to which it appertains and shall be deemed apartment, even though such interest is not expressly mentioned in the conveyance or other instrument. to be conveyed or encumbered with (6) Each apartment owner may use the common areas and facilities in accordance with the purposes for which they are intended without hindering or encroaching upon the lawful rights of the other apartment owners. "

Whatever may be the terms of agreement, the field admittedly covered by the statutory provisions. Indisputably, apartment in question is covered by the provisions of the Act. Therefore, statutory provisions contained in that Act, wherever applicable, shall override the contractual terms stipulated in the Agreement signed between the parties. It is trite law .that 'contracting out• is not permissible in a CP Nos. 40 &41 of 2004 Page No. 27 of 45 manner which would offend and breach the statutory provisions, To put it simply, there cannot be a clause in the Agreement between the parties which infringes statutory provision and such a clause would clearly be void even if the parties had agreed to the specific terms. We are concerned here with the maintenance charges. The Agreement between the parties contains clauses as per which maintenance charges are payable. However, it is to be borne in mind that the Act also _deals with the subject of maintenance of these apartments.

'Common areas and facilities• are defined in Section 3(j) of the Act which includes land on which such building is located as well as parking areas, elevators, tanks, pumps and all other parts of property necessary or convenient to its existence, maintenance and safety, or normally in common use. Learned counsel further submitted that even the Deed of Compromise (which is given nomenclature of the Agreement in the instant case) had to contain the contents as specified in Section 13. The Act further provides for forming an association of apartment owners for the administration of the affairs in relation to the apartments and the property appertaining thereto and for the management of common areas CP Nos. 40 &41 of 2004 Page No. 28 of 45 and facilities, Section 15 of the Act, which was a mandatory provision for forming such an association, stipulates as under: thereto- "15. Association of Apartment Owners and byea ( 1) There shall be an Jaws re]ating Association administration of the affairs apartments and the property appertaining thereto and for the management of common areas and facilities: of Apartment Owners relation Provided that where any area has been demarcated for the construction of multi-storeyed buildings, whether such area is called a block or pocket or by any other name, there shall be a single Association of Apartment Owners in such demarcated areas. (2) The Administrator may, by notification in the Official Gazette, frame model bye-laws in accordance with which the property referred to in sub-section (1) shall be administered by the Association of Apartment Owners and every such Association shall, at its first meeting, make its bye-laws in accordance with the model bye-laws so framed, and in making its bye-laws the Association of Apartment Owners shall not make any departure from, variation of, addition to, or omission from, the model bye-laws aforesaid except with the prior approval of the Administrator and no such approval shall be given if, in the opinion of the Administrator, such departure, variation, addition or omission will have the effect of altering the basic structure of the model bye-laws framed by him.~'

In sub-section (3) of Section 15, it is provided that the model CP Nos. 40 &41 of 2004 Page No. 29 of 45 bye-laws framed under sub-Section 2 shall contain specifically the matters stipulated therein and includes: "(m) Maintenance, repair and replacement of the common areas and facilities and payment therefor; (n) manner of collecting from the apartment owners or any other occupant of apartments, share of the common expenses; "

The expenses which are to be borne for maintenance of these common areas and facilities are described as 'common expenses' and defined in Section 3(k) which reads as under: "Common expenses means- (i) all sums lawfully assessed against the apartment owners by the Association of Apartment Owners for meeting the expenses of administration, maintenance repair of replacement of the common areas and facilities; (ii) expenses declared· as common expenses by the provisions of this Act or by the bye-laws, or agreed upon by the Association of Apartment Owners.

Any surplus left from the monies collected from the apartment owners, after spending at common expenses is termed as 'common profits' which is defined in Section 3 (1) in the following manner: CP Nos. 40 &41 of 2004 Page No. 30 of 45 " 3(1) Common profits means the balance of all income~ rents, profits and revenues from the common areas and facilities remaining after the deduction of the common expenses. "

These common profits are to be distributed among apartment owners as mandated by Section 19 of the Act which makes the following reading: " 19. Common profits, common expenses and other matters.-(1) The common profits of the property shall be distributed among, and the common expenses shall be charged to, the apartment owners according to the percentage of the undivided interest of the apartment owners in the common areas and facilities. (2) Where the apartment owner is not in the occupation of th apartment owned by him, the common expenses payable by such apartment owner may be recovered from the person in the occupation of the apartment. "

As already seen above, as per Section 24 of the Act provisions the Act are binding on all apartment owners, tenants etc. notwithstanding anything inconsistent therewith contained in any other law for the time being in force or in any contract, undertaking or other instrument etc.

Even if it is assumed that in the absence of any association CP Nos. 40 &41 of 2004 Page No. 31 of 45 having been formed, the petitioner has right to maintain the apartments and collect maintenance charges, what cannot be disputed is that in such circumstance the petitioner can be loosely described as the association maintaining these apartments and in any case would be bound by the aforesaid provisions including Sections 15 and 19 of the Act. Thus it would be the obligation of the petitioner to keep proper accounts of the monies so received, expenses incurred on the maintenance and render those accounts. Since there is an obligation to distribute the surplus that remains with the association/body maintaining these apartments to the apartment owners as 'common profits', necessary corollruy would be to maintain the premises on 'no profit no loss' basis. As a consequence, the association, and in this case the petitioner since it is maintaining the apartments, can charge only actual maintenance charges and cannot enrich itself in the process by charging over and above the expenses actually t incurred. From this it will also flow, as a matter of course, that the petitioner is bound to render accounts of the monies realized from the apartment owners towards maintenance of these apartments.

In the instant case, the company has stated that it has already CP Nos. 40 &41 of 2004 Page No. 32 of 45 paid a sum of Rs.2.25 crores towards maintenance between 1997 to 2003, The maintenance charges were fixed, as per the Agreement entered into in July, 1997 Rs.29.03 per sq. ft. (The submission of learned counsel for the petitioner was that by the very nature of ultra-modern construction and state of art facilities provided which are in no way less than maintaining five star hotel the fixation of these charges was very reasonable). Even if it is presumed that that was a pre-estimation of expenses which was required to be incurred on the maintenance (although this presumption may also be questionable but it it is not necessary to record any definite finding on this aspect in these proceedings), the Agreement provides enhancement of these maintenance charges by 8% /9%every year. It is the consequence of this clause that by the year 2002 the maintenance charges had gone up to Rs.48.37 per sq.ft.and in the year 2004 the figure touched Rs.58 per sq.ft.which appears to be abnormally high. With this clause in operation and given effect to within few years maintenance charges may touch Rs.IOO per sq.ft.. The owner in his apartment for which he has paid consideration is made to pay mind boggling figure of .. maintenance charges" which would make him worse than a tenant as CP Nos. 40 &41 of 2004 Page No. 33 of 45 .J. possibly this may not even by the rent per month of the area in question, I may hasten to add that these are the tentative observations. What is highlighted is that questioning by the respondent of such maintenance charges claimed by the petitioner cannot be treated as arbitrary or without basis. It may require evidence to justify such charges claimed by the petitioner, more particularly when the company has backing of statutory provisions which cast obligation on the petitioner to render the accounts and to charge only actuals and when no such accounts are rendered and further when the charges claimed today prima facie appear to be excessive, I am afraid, that claiming charges at this rate may not be justified and, therefore, the same cannot be treated as 'debt' payable by the company to the petitioner. There are genuine disputes raised by the company which need adjudication and it would not be appropriate to exercise discretionary jwisdiction.

Normally, when such a petition is filed on the basis of a decree, the decree would constitute a 'debt' and the Company Court can proceed on that basis. It is also trite law that the decree holder can file winding up petition without seeking execution of such a decree. [See CP Nos. 40 &41 of 2004 Page No. 34 of 45 Silver Shield Construction & Trading Ltd, Vs, Recondo Ltd, reported as (1994) 15 Corporate Law Adv!ser 92 (Bombay) and Tube Investment Of India Ltd. and another Vs.Bverest Cycles Ltd. reported as (1984) 56 Comp Cases 165.]

However~ it does not follow that as a matter of routine the Company Court is to act upon such a decree treating it as a debt and also '71 presume that the company against which a petition for winding up is filed on the basis of such a decree is unable to pay the debt since the payment as per the decree is not made. It is open for the court to examine further question as to whether, in a given case, the debt is bona fide disputed and notwithstanding the said decree there are valid reasons available to the respondent not to pay the amount under a decree and validity of the decree is questioned. Indepth consideration is given to this aspect by the Calcutta High Court in the case of Bairangbali Engineering Co.Ltd. Vs. Amar Nath Sircar and others reported as (83) 1995 Comp Cases 435 as would be clear from the following discussion in the said judgment: " Mr.P.K.Das, appearing for the company appellant while challenging the order of admission of the winding CP Nos.

I had occasion to consider this aspect in the case of EX SUD CP Nos. 40 &41 of 2004 Page No. 37 of 45 LIMITED VS. INDIAN ALUMINIUM CABLES LIMITED in CP No. 216/1993 wherein judgment was rendered on 28th February~ 2005. Timt was a case where the winding up petition was filed on the basis of a foreign decree. After referring to the aforesaid judgment of the Calcutta High Court and some other judgments, I brushed aside the arguments of the petitioner in the said case that this comt could not go into the question about the validity of the decree with reference to Section 13 of the Code of Civil Procedme and summed up the legal position in this manner: "Assaying questions formulated above can be answered as under: the aforesaid perspective~ Winding up petition filed on the basis of a foreign decree would be maintainable. It is not necessary for a decree holder, in possession of a foreign decree, to first execute the decree by filing execution and get the validity of such a decree determined on the touchstone of Section 13 of the CPC. However, it is not to say that when such a petition is filed, the court is precluded from making any assumption that the debt is payable on the basis of the said decree.

In the instant case, when the consent decree was passed it was only on the basis of Agreement between the parties.

However, the moot question would be as to what is the binding nature of a consent decree passed in ignorance of the statutory provisions.· Direct on the point is the judgment of the Supreme court, namely, Smt. CP Nos. 40 &41 of 2004 Page No. 39 of 45 Kaushalaya Devi (supra). That was a case where a petition under Section 13 of the Delhi and Ajmer Rent Control Act, 1952 was filed for ejectment of the tenant. A decree was passed by the court, in those proceedings, in terms of compromise but without satisfying itself if the grounds of eviction ex is ted. This decree was held to be in contravention of Section 13 of the Act and termed as nullity which could not be executed. Sikri, J (as his Lordship then was) speaking for the court, obsetved as under: " 5. The High Court, on revision, held that the decree was a nullity as the Order passed on the basis of the compromise did not indicate that any of the statutory grounds mentioned in Section 13 of the Act existed. In Bahadur Singh's case, Civil Appeals Nos.2464 and 2468 of 1966, D/-16-10-1968= (reported in (1969) 1 SCWR 51) this Court held that the decree passed on the basis of an award was in contravention of Section 13(1) of the Act because the Court had passed the decree in terms of the award without satisfying itself that the ground of eviction existed. Bachawat, J., speaking for the Court, the plain wording of Section 13(1) observed that "on the Court was forbidden· to pass the decree. The decree is a nullity and cannot be enforced in execution. " This Court, accordingly, declared inter alia that "the decree in so far as it directs delivery of possession of the premises to the landlord is nullity and cannot be executed. "

Indubitably when a decree is passed by a court which lacked inherent jurisdiction, such a decree is nullity and its invalidity can be set up whenever it is sought to be enforced or is acted upon as a foundation for the right even at the stage of execution or in any collateral proceedings.[See Sushil Kumar Mehta Vs. Gobind Ram Bohra. (1990) 1 SCC 193 and Sabitri Dei and others Vs. Sarat Chandra Rout and others. (1996) 3 SCC 301]. In the present case although it cannot be said that the court lacked inherent jurisdiction when a consent decree was passed between the parties. However, admittedly the provisions of that Act were not brought to the notice of the court and such a decree, even if it is a consent decree, might not have been passed in view of the provisions of the said Act, as already noted above. In the case of Dhurandhar Prasad Singh (supra). the Supreme Court has gone to the extent of holding that if a decree is passed in ignorance of provision of law, such a decree would CP Nos. 40 &41 of 2004 Page No. 41 of 45 _).. be inexecutable. No doubt, a distinction is to be maintained between a 'void' decree and an 'illegal, incorrect or irregular • decree. Where a court lacks inherent jurisdiction in passing a decree or making an order_, a decree or order passed by such court would be without jurisdiction, non est and void ab initio. A defect of jurisdiction of the court goes to the root of the matter and strikes at the very authority of the court to pass a decree or make an order. Such defect has always been treated as basic and fundamental and a decree or order passed by a court or an authority having no jurisdiction is a nullity. However, a mere wrong exercise of jurisdiction does not result in nullity. It would be merely an illegal order/decree not passed in accordance with the procedure laid down by law. In case it is illegal, incorrect of irregular decree, the only remedy is to get it set aside. [See: Rafique Bibi (Dead) by Lrs. Vs. Sayed Waliuddin (Dead) By Lrs. And others. (2004) 1 SCC 287 and Balvant N.Viswamitra and others Vs. Yadav Sadashiv Mule (Dead) through Lrs. and others, (2004) s sec 706.]

Therefore, I am of the opinion the facts and CP Nos. 40 &41 of 2004 Page No. 42 of 45 circumstances of the present cases, the petitioner be not allowed to file winding up petition on the basis of decree passed and consent terms inasmuch as while approving the consent terms and passing decree thereon, this court was not informed, nor was there any occasion for the court to consider the provisions of the Act. Thus while holding that it is not a case where discretionary juriSdiction be exercised, at the same time, to balance the equities it would be proper to give certain directions to the company inasmuch the company cannot be allowed to create a situation where it does not pay any maintenance charges at all. No doubt the petitioner is to render the accounts as well.

These petitions are, therefore, disposed of with the following directions: ,( \ (i) The company shall pay maintenance charges at the rate of Rs.29.03 per sq.ft. which were the charges agreed to in July, 1997. I am conscious of the fact that the company even thereafter paid increased maintenance charges after adding 8% /9% every year till 2003, still I am restricting the payments, for time being, at Rs.29.03 per sq.ft. as the company claims that it has already paid huge amount in excess and the CP Nos. 40 &41 of 2004 Page No. 43 of 45 r accounts are to be rendered by the petitioner, (ii) The petitioner, if ~endition of accounts, is able to show that 6"-\v amount payable is more than Rs.29.03 per sq.ft.it would be entitled to make claim of further maintenance charges for the period in question. (iii) Both the parties would be at liberty to seek their civil remedies, namely, the petitioner for claiming the maintenance charges at enhanced rate, if justified on actual basis and the company for claiming rendition of accounts.

The parties shall bear their own costs. May LJ , 2005. /f&\>;'rl- (A.K. SIKRI) JUDGE f>(IP~ /-J· Certified that the corrected copy of the judgment has been transmitted in the main server. CP Nos. 40 &41 of 2004 Page No. 44 of 45