Infrastructure Leasing & Financial Services Ltd v. Sun Earth Ceramics Ltd

The principal defence to this Notice of motion on behalf of the defendants is that because of the provisions of Section 4(1)(a)(iv) of the Bombay Relief Undertakings (Special Provisions) Act, the proceedings in the suit cannot go on and therefore, this Court cannot decide this notice of motion. The learned Counsel for plaintiffs submits that it is clear from the documents produced on record that the equipment is owned by the plaintiffs and it was given on lease to the defendants and that the period of lease was till 31st March,2005. The learned Counsel submits that though the plaintiffs had terminated the lease on 15th May,2002, the plaintiffs for the purpose of seeking a decree of possession of the equipment do not rely on the termination, but the plaintiffs claim decree of possession on the ground that the plaintiffs admittedly are the owners of the equipment and that because the period of lease expired on 31st March,2005, the defendants are not entitled to retain possession of the equipment.

On behalf of the defendants on the other hand it is submitted that the plaintiffs had terminated the lease on 15th May,2002 and the present suit has been filed for a decree of possession of the equipment on the basis of alleged termination and as the right on the basis of 3 which decree of possession is claimed, accrued before the notification was issued under the Act and as the suit has been filed before the notification was issued, and therefore, in terms of provisions under Section 4(1)(a)(iv) the Act, the proceedings cannot go on. It is further submitted that the plaintiffs are not right in stating that the period of lease expired on 31st March,2005, because as the lease was terminated on 15th May,2002 the lease came to an end on that date itself and therefore, there is no question of lease expiring on 31st March,2005. The suit of the plaintiffs is therefore, based on the termination of the lease which event occurred before the notification was issued and therefore, the present proceedings cannot go on.

It is further submitted that even if it is assumed that the suit has been filed for a decree of possession on the ground that the plaintiffs are titleholders of the equipment and therefore in its capacity as titleholders the plaintiffs are entitled to a decree of possession, then also according to the defendants, as the plaintiffs became titleholders before the notification was issued, the right of the plaintiffs as titleholders cannot be enforced in view of the above referred provision.

It is further clear that if a right on the basis of which the plaintiffs are making a claim has accrued to the plaintiffs after the declaration was made, then remedy for enforcement of that right is not suspended. In so far as the present case is concerned, no doubt, the plaintiffs had terminated the agreement of lease and filed the suit for a decree of possession. The termination of the agreement was 5 the act of the plaintiffs which resulted in creating certain rights in the plaintiffs and therefore, in my opinion, the plaintiffs are entitled to abandon the rights by abandoning the notice of termination and can claim a decree of possession on the ground that now the lease period is over and the plaintiffs are entitled to possession of the equipment. It is further to be seen here that though the plaintiffs became titleholders in relation to the equipment before the notification was issued, because plaintiffs have entered into a lease agreement and the plaintiffs have delivered the possession of the equipment to the defendants, the plaintiffs did not have right to be in possession of the equipment.

When the plaintiffs claim a decree of possession what the plaintiffs are enforcing is their right to be in possession. That right to be in possession accrues to the plaintiffs when the lease period got over and that event occurred after the notification was issued, and therefore, in my opinion, the plaintiffs' suit is maintainable and this notice of motion can be heard by the Court. It is further to be seen here that though there is an option in the lease agreement given to the defendants for renewing the lease and though the renewal clause does not specifically state that the option to renew can be exercised only after the payment of lease, in my opinion, it is implied condition for renewal clause that on the date of exercising the option of renewal, the lessee has paid up-to- date lease money. A lessee cannot remain in arrears of lease money and exercise option of renewal of lease. If the contention advanced on behalf of the defendants is accepted, it would mean that though according to the defendants the lease of equipment in their favour is validly terminated, they will continue 6 to be in possession in defiance of their obligation to deliver the possession of the equipment and that though they continued to be in possession even though the lease is no more in existence, they will also not pay anything to the owner of the equipment.

In my opinion, this cannot be said to be the intention of the legislature in enacting section 4(1)(a)(iv) of the Act. The intention of the legislature is to prevent enforcement of liabilities against the relief undertaking which have accrued before the notification is issued and if the liability to give possession accrued after the notification is issued then there is no protection extended.