R.T.Palanivelu v. Tamil Nadu Film Development Corporation & Ors.

IN THE HIGH COURT OF JUDICATURE AT MADRASDATED : 16.12.2009CORAMTHE HONOURABLE MR.JUSTICE N.KIRUBAKARANW.P.No.5967 of 2003R.T.Palanivelu ..PetitionerVs.1. The Secretary to Government, Tourism Department, Cum Chairman, Tamil Nadu Film Development Corporation, Fort St. George, Chennai - 9.2. The Managing Director, Tamil Nadu Film Development Corporation Ltd., M.G.R. Film City, Taramani, Chennai - 113. ..RespondentsPetition filed under Article 226 of the Constitution of Indiapraying for issue a Writ of Mandamus directing the respondents torefund the entire security deposit paid by the petitioner towards thelicense granted to run the Children play equipments in M.G.R. FilmCity to a sum of Rs.4,40,000/- For Petitioner : Mr.V.Bharathidasan For Respondents: Mr.P.Gurunathan Government Advocate, for R1 : Mr.D.Krishnakumar, for R2 ORDER The petitioner was a licensee to run a children play equipmentsin the M.G.R. Film City in Taramani, Chennai which was to the extentof 8 acres in the said license for a period of five years. Thelicense was issued to him since, he was the successful bidder for asum of Rs.1,60,000/- . The license fee was fixed at Rs.1,60,000/-per month and the license commenced on 11.08.2000 with effect from https://hcservices.ecourts.gov.in/hcservices/

16.10.2000 and to expire on 15.10.2005. As the petitioner wassuccessful bidder, he paid Rs.9,60,000/- towards six months depositand also Rs.50,000/- towards E.M.D. 2. The case of the petitioner is that:-He made developments in Film City spending more than Rs.3crores for putting up the vehicle like Jumping frog, Rope Car,Twister and Giant Wheel and a lot of equipments for children play andequipments alone cost about Rs.2 Crores and other developmentsrequired to nearly Rs.1 crore. The aforesaid investment was made onthe assurance that the license was for a period of five years.3. The petitioner also contends that he made elaboratearrangements for Cabling and erecting Floodlights which took one yearfor completing the structures and erecting machineries. Even forthe period of one year in which the construction activity was goingon, the petitioner duly paid the license fee. After one year thepetitioner started the business. Even before expiry of licenseperiod, the respondents decided to construct a M.G.R. Knowledge Cityto develop a bio-technology and also software technology by requiringthe area for the same. The petitioner alleges that the secondrespondent compelled the petitioner to hand over the area and furtherstates that he sustained heavy loss because of handing over thepossession of the licensed area before the expiry of the license tothe respondents and that the respondents assured that at all theproblems would be sorted out and suitable compensation would be paidto the petitioner. Based on the assurance given and as perdictation of the respondent, the petitioner handed over a letterdated 15.06.2002 requesting refund of the amount paid by him. It isspecifically contented by the petitioner that the said letter wasgiven as per the request of the respondent.4. Since, the petitioner handed over the possession of thelicensed area to the second respondent and through letter dated29.06.2002 permitted the petitioner to vacate the premises. As theletter dated 29.06.2002 ran contrary to the assurance given by thesecond respondent, petitioner gave a reply dated 30.08.2002 givingthe details of the assurance made by the second respondent andspecifically stated that the respondents urgently required thelicensed area for development of M.G.R. Knowledge City and otherwisethe petitioner would not have surrendered the possession andcontinued to remain in possession till the expiry of license period.Hence, the petitioner requested for return of the amount paid by thepetitioner and also compensation. The said reply was followed bypetitioner's another letter dated 29.10.2002. Since the respondentsneither responded to the letters nor paid to the amount, thepetitioner is before this Court seeking refund of entire securitydeposit paid by him namely Rs.4,40,000/-. https://hcservices.ecourts.gov.in/hcservices/

5. The second respondent filed a counter affidavit stating thatthe license was for a period of five years with a provision of 10%increase in the license fee for every year and the petitioner sub-letthe licensed area to a third party and denied the assurance regardingthe compensation to be paid to the petitioner. It is alsospecifically stated that in paragraph 6 of the counter affidavitfiled by the second respondent that he never requested the petitionerto give a letter to hand over the possession of the licensed area andit was only based on the petitioner's letter dated 15.06.2002, he wasallowed to wind up his business. It is further stated that as perClause 25 of the License Deed, three months notice was required to begiven for termination. However, only 15 days notice was given andtherefore the second respondent had to forfeit petitioner's depositnamely 2-1/2 months license fee of Rs.4,40,000/- and that was thereason why the said amount was adjusted for non compliance withClause 25. Further, the undated letter written by the Chairman ofsecond respondent Corporation Ltd., stated that the Board passed aresolution dated 31.12.2002 rejecting the petitioner's claim and itis also stated that the Corporation was closed by the Government witheffect from 30.09.2002.6. Heard Mr.V.Bharathidasan, learned counsel for the petitionerand the learned counsel for the respondents. It is seen from thePetitioner's letter dated 15.06.2002 (Letter of surrenderingpossession) that it contains a paragraph which is extracted asfollows:-" Now, I express my desire on my own and due toheavy loss incurred in running the children play area,I may be permitted to wind up the business with effectfrom 30.06.2002 without any prejudice to your rights."The above said para especially underlined portion would prove thatpetitioner's letter of possession dated 15.06.2002 was prepared andgiven as per second respondent's dictation. No prudent business manwould give such a letter reserving right of the opposite party.Therefore, this Court believes the contention of the petitioner thatthe aforesaid letter of surrendering possession was given as per thedirection/dictation of the second respondent to avoid adverse actionby the respondent. 7. It is not the case of the second respondent that non-issuanceof three months notice for cancellation caused loss or prejudice tothe second respondent. In the absence of any plea of prejudice orloss, this Court finds that non-issuance of three months notice wouldnot able to second respondent to forfeit the petitioner's EMD. https://hcservices.ecourts.gov.in/hcservices/

8. Clause 19 of the agreement reads as follows:-"19.In the event of non-fulfillment of non-observanceof the above or any others condition, that may beprescribed, the Licensee is liable to pay a penaltyequal to 50% of the value of the annual contract or theamount equal to the loss incurred during the licenseperiod whichever is higher."The above said clause would definitely prove that the agreement wasone sided agreement and the petitioner was not in a position ofbargaining before the mighty Government namely the respondents.Clause 19 only speaks about the liability of licensee only and notlicensor and therefore there cannot be a hesitation to hold that thesaid agreement is one sided and the said Clause 19 is unconscionable.Even if the agreement is found to be valid, there is no penal Clausefor not giving three months notice to cancel the license. 9. A perusal of the G.O.Ms.No.127 dated 23.06.2000 passed by theGovernment to grant license to the petitioner would go to show thatthere was no provision with regard to forfeiture of 50% as stated inthe counter affidavit. When the Government Order did not speak aboutthe forfeiture, the same cannot be incorporated in the agreement.Even if it was stated in the agreement, there was no penalconsequences for cancelling the agreement without giving three monthsnotice. Admittedly, 15 days notice was given by the petitioner inthe absence of any penal Clause, it would not automatically lead toforfeiture to 50% of the deposit. Therefore, the forfeiture ofRs.4,40,000/- on the ground that the petitioner did not terminate thelicense giving three months time is not valid. Therefore, therespondents are liable to return of the forfeited amount.10. The petitioner specifically stated in the notices 30.08.2002and 29.10.2002 that based on assurance given by the respondents alonethe petitioner gave a letter dated 15.06.2002 requesting refund ofamount and there was no reply by the respondents to the said letters.In the absence of any reply, it is deemed that the petitioner'scontention as stated in the notices was accepted by the respondents.If really there was a contrary version it would have been revealed byway of reply. The silence on the part of the respondents from 2002till counter affidavit filed in the Writ Petition on 07.03.2003,would be deemed to be admission on the part of the respondent.11. Mr.Bharathidasan, learned counsel for the petitioner pointedout from the letter dated 29.06.2002 written by the second respondentpermitting the petitioner to close down the business did mentionabout any condition with regard to forfeiture of the deposit amount.By relying upon the said letter, Mr.Bharathidasan argued that theforfeiture of the amount is only on after thought on the part of thesecond respondent to deny Rs.4,40,000/- which the petitioner is https://hcservices.ecourts.gov.in/hcservices/ legally entitled to. When permission was granted to hand overpossession taking in to consideration of all the circumstances by thesecond respondent, the second respondent definitely would haveincorporated the condition with regard to forfeiture in therespondent's letter dated 29.06.2002.12. The Minutes of the Board meetings of the second respondentheld on various dates would reveal that the second respondent wasrunning in loss and the total liability of the Corporation as on31.03.2002 was Rs.16.26 Crores and all the properties of the secondrespondent were decided to be disposed and the decision was taken atthe earliest. When the resolution of the Board meetings of thesecond respondent would reveal that the second respondent was runningon loss and the decision was taken to dispose of the entire propertyof the second respondent, it is not open to the second respondentCorporation to contend before this Court that failure on the part ofthe petitioner to give three months notice made them to forfeit thesaid amount for non compliance of three months notice. 13. One another important aspect to be considered by this Courtis that the petitioner's case is that based on the respondent'sCorporation request only the petitioner vacated the premises, bygiving a letter dated 15.06.2002. On their own admission, it isproved that the second respondent Corporation was closed on30.09.2002 itself and that itself would proved that based on therequest of the second respondent Corporation only, the petitionergave notice to vacate the premises as the second respondent alreadydecided to wind up and it was finally closed down on 30.09.2002.14. The totality of the circumstances would lead to irresistibleconclusion by this Court that the petitioner's amount washighhandedly and illegally forfeited and the petitioner was deniedthe amount without any valid reason and to cover up their default therespondent found a false ground of lack of three months notice tovacate.15. Therefore, the respondents are directed to returnRs.4,40,000/- from 01.08.2002 till date of payment. The rate ofinterest payable by the respondents is 9% perannum. The amount alongwith interest has to be paid within four weeks from the date ofreceipt of a copy of this order. Accordingly, this Writ Petition is allowed. There will be noorder as to costs. Sd/Asst.Registrar/true copy/Sub Asst.Registrar smn https://hcservices.ecourts.gov.in/hcservices/ To1. The Secretary to Government, Tourism Department, Cum Chairman, Tamil Nadu Film Development Corporation, Fort St. George, Chennai - 9.2. The Managing Director, Tamil Nadu Film Development Corporation Ltd., M.G.R. Film City, Taramani, Chennai - 113.+ 1 c.c. to Mr. D. Krishnakumar, Advocate. S.R.No.69628.+ 1 c.c. to Mr. V. Bharathidasan, Advocate. S.R.No.69199.W.P.No.5967 of 2003RJ (CO)GSK 29.03.2010.