Full Judgment Text
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ IA No.10279/2010 in CS(OS) 672/2009
SHRI SATISH C. SHARMA & ORS. ..... Plaintiffs
Through: Mr. Neeraj Kishan Kaul, Sr.
Advocate with Mr. Akshay Makhija,
Advocate
versus
M/S S.A.S. LEASING PVT. LTD. & ANR. ..... Defendants
Through: Mr. P.V. Kapur, Sr. Advocate with
Ms. Shraddha Deshmukh, Ms. Pragya
Ohri and Mr. Varun Kumar,
Advocates for defendant No.1.
Mr. L.K. Bhushan and Mr. Kartik
Bajpai, Advocates for defendant
No.2.
% Date of Decision : July 10, 2012
CORAM:
HON'BLE MS. JUSTICE REVA KHETRAPAL
J U D G M E N T
: REVA KHETRAPAL, J.
IA No.10279/2010 (under Order XII Rule 6 CPC filed by the
plaintiffs)
1. This application is filed by the plaintiffs under the provisions of
Order XII Rule 6 Code of Civil Procedure praying for a decree of
possession against the defendants in respect of property bearing Shop
CS(OS) No.672/2009 Page 1 of 43
No.E-2, Connaught Place, New Delhi; more specifically shown and
delineated in the site plan annexed with the suit.
2. The essential facts are not in dispute. The plaintiffs are the
owners/landlords of the suit property – Shop No.E-2, Connaught
Place, New Delhi, admeasuring 2,000 sq. ft. on the ground floor and
1,500 sq. ft. on the mezzanine floor. The defendant No.1 – M/s.
S.A.S. Leasing Pvt. Ltd. is the tenant in respect of the said shop at a
monthly rent of ` 450/- per month. The tenancy of the defendant
No.1 in respect of the suit property commences on the first day of
each calendar month and ends on the last day of the same English
calendar month. The tenancy is from month to month.
3. It is the case of the plaintiffs that on or about October, 2004 the
defendant No.1 has entered into a sub-tenancy agreement with
defendant No.2 and even though the agreement between defendant
No.1 and defendant No.2 has been termed as a Consignment Sales
Agreement, the terms and conditions of the agreement clearly
establish that the said agreement is nothing but a camouflage and that
the agreement is, in fact and in substance, a tenancy agreement.
CS(OS) No.672/2009 Page 2 of 43
4. Both the defendants filed written statements contesting the suit.
The defendant No.1–M/s. S.A.S. Leasing Pvt. Ltd. in the written
statement filed by it denied the fact that the Consignment Sales
Agreement is a tenancy agreement and that there was any camouflage
and stated that it (the defendant No.1) is selling the products of the
defendant No.2–M/s. Wills Lifestyle. It denied that the defendant
No.1 is being paid a monthly rent of ` 26 Lacs as alleged by the
plaintiffs and submitted that the defendant No.1 is in complete control
and possession of the shop in question under the Consignment Sales
nd
Agreement dated 22 January, 2007.
5. The defendant No.2 in the written statement filed by it adopted
the same stance as the defendant No.1 and elaborated that they had
th
entered into a Consignment Sales Agreement dated 11 October,
th
2000 and Supplemental Agreement dated 12 October, 2000,
nd
followed by another Consignment Sales Agreement dated 22
th
January, 2007 and Supplemental Agreement dated 27 January, 2007.
6. The plaintiffs thereupon issued a notice to the defendants dated
th
7 November, 2009 under Order XI Rule 16 CPC requiring the
defendants to produce the aforestated Consignment Agreements and
CS(OS) No.672/2009 Page 3 of 43
Supplemental Agreements. The plaintiffs also filed IA
No.15859/2009 seeking production of the said agreements. The said
th
application was disposed of on 15 April, 2010 in the following
terms:-
“ IA No. 15859/2009
Learned counsel for defendant No.2
states that copies of the documents sought for
will be produced and made available to the
plaintiff, within three weeks. The said
documents shall be furnished to the plaintiffs
and filed in the Court with the affidavit as
required by the Court.”
7. In compliance with the aforesaid order, the defendant No.2
filed the aforesaid documents with the affidavit of the Constituted
st
Attorney of the defendant No.2 on 1 July, 2010. This led to the
rd
institution of the present application on 3 August, 2010 on the
premise that a bare reading of the Consignment Sales Agreement
along with the Supplemental Agreements (which documents,
according to the plaintiffs, the defendants had tried to conceal from
this Court) makes it evident that the so-called commission to be paid
under the Consignment Sales Agreement has been given a complete
go-bye in the Supplemental Agreements and “minimum guarantee”
has been fixed. It is alleged that pertinently the first Consignment
CS(OS) No.672/2009 Page 4 of 43
th
Sales Agreement is dated 11 October, 2000 and the same is followed
by a Supplemental Agreement which is executed one day after the
th
Consignment Sales Agreement, i.e., on 12 October, 2000. Similarly,
nd
Consignment Sales Agreement dated 22 January, 2007 is followed
th
by a Supplemental Agreement five days thereafter, i.e., dated 27
th
January, 2007. The Supplemental Agreement dated 12 October,
2000 fixes a “minimum guarantee” of ` 66 Lacs per annum, while the
th
Supplemental Agreement dated 27 January, 2007 fixes a “minimum
st
guarantee” of ` 2.88 Crores per annum with effect from 1
December, 2006, payable in equal instalments every 45 days. The
said agreement also provides that the said “minimum guarantee” shall
stand enhanced by 20% after every three years. It is, thus, ex-facie
evident that there was never any intention to have a Consignment
Agreement whereunder payment was to be made on the basis of
percentage of sale and the intention all along was to have annual rent
in the shape of a fixed “minimum guarantee”. Thus, the initial
agreement is only a camouflage created with a view to taking the
premises out of the purview of the Delhi Rent Control Act.
CS(OS) No.672/2009 Page 5 of 43
8. It is further alleged in the application that the fact that the
system of commission is not being followed is also evident from the
bank statement of defendant No.1 filed by the defendant No.1 itself,
which clearly shows that the daily sales in its entirety is being
transferred to an account in Kolkata, where the Head Office of the
defendant No.2 is situated. It is submitted that if the Consignment
Sales Agreement was being followed then the amounts remitted to
defendant No.2 would have been remitted after deducting 5% towards
the commission payable to the defendant No.1. It is, thus, ex-facie
evident that the defendant No.1 has sub-let the premises to the
defendant No.2 for an annual rent which is currently ` 3,45,60,000/-.
th
Accordingly, notice of the termination of the tenancy dated 12
February, 2009 was duly served upon the defendants. It is submitted
that the defendants though have denied receipt of the said notice in
their written statement, it is settled law that if the notice is sent by
registered post to the correct address of the defendant and the
acknowledgment card is received back, there is a presumption of
valid service. In the present case also, it is stated, notice has been
served at the correct address, both by registered A.D. post and UPC,
CS(OS) No.672/2009 Page 6 of 43
and the A.D. cards have been received back, the originals whereof
have been placed on the record. Thus, bald denial of service is of no
consequence as held in the case of Jindal Dyechem Industries Pvt.
Ltd. vs. Pahwa International Pvt. Ltd., 2009 VIII AD (DELHI) 535
and Mrs. Rama Ghai vs. U.P. State Handloom Corporation, 2001 IV
AD (DELHI) 471 .
9. Reply to the aforesaid application was filed by the defendant
No.1 as well as by the defendant No.2 praying for dismissal of the
application with exemplary costs, which reply shall be presently
adverted to.
10. The Court has heard the arguments addressed by Mr. Neeraj
Kishan Kaul, Senior Advocate on behalf of the plaintiffs, Mr. P.V.
Kapur, Senior Advocate on behalf of the defendant No.1 and Mr.
L.K. Bhushan, Advocate on behalf of the defendant No.2.
11. The principal contention of Mr. Kaul on behalf of the plaintiffs
is that a bare reading of the Consignment Sales Agreements, the
Supplemental Agreements and their clauses in totality would establish
that the agreements are in effect tenancy agreements and the clauses
with regard to Consignor and Consignee relationship are nothing but
CS(OS) No.672/2009 Page 7 of 43
a camouflage. The detailed commission formula set out in Clause 4
of the agreements has been given a complete go-by in the
Supplemental Agreements, which were executed only a day later/five
days later and which provided for a minimum guarantee payment of
66 Lacs payable in equal installments every 45 days in the year
`
2000, which was enhanced to ` 2.88 Crores payable in equal
st
installments every 45 days with effect from 1 December, 2006.
12. On the strength of the judgments of this Court rendered in P.S.
Jain Company Ltd. vs. Atma Ram Properties (P) Ltd. & Ors., 65
(1997) DLT 308 (DB) and Atma Ram Properties (P) Ltd. vs. Pal
Properties (India) Pvt. Ltd. & Ors., 91 (2001) DLT 438, Mr. Kaul
contended that it is well settled that if a tenant is paying less than `
3,500/- per month to the landlord and sub-lets the tenanted premises
for a rent of ` 3,500/- per month or more, then in that case the tenant
cannot seek protection under the Delhi Rent Control Act. Identical
question had come up for consideration before the Division Bench of
this Court in the case of P.S. Jain Company Ltd. (supra) and
subsequently before a learned Single Judge in Atma Ram Properties
(P) Ltd. (supra) , in both of which cases it came to be held that the
CS(OS) No.672/2009 Page 8 of 43
relevant rent is the one which is paid by the sub-tenant to the tenant
and where such rent is more than ` 3,500/- per month, no protection
under the Delhi Rent Control Act would be available to the
defendants and consequently the suit would not be hit by Section 50
of the Delhi Rent Control Act. It was pointed out that after relying
upon four Supreme Court judgments dealing with purposeful
construction of a statute rather than adopting mechanical approach,
the Division Bench in P.S Jain Company Ltd. (supra) held as
follows:-
“In our view, the intention behind Section 3(c)
is that a premises which fetches a rent of Rs.
3,500/- p.m. should be exempt and that
protection should be restricted to buildings
fetching a rent less than Rs. 3,500/- p.m. In
case a tenant paying less than Rs. 3,500/- p.m.
to his landlord has sublet the very same
premises – may be lawfully – for a rent above
Rs. 3,500/- p.m., then the question naturally
arises whether such a tenant can be said to
belong to weaker sections of society requiring
protection. By sub-letting for a rent above Rs.
3,500/- p.m., the tenant has parted with his
physical possession. He is receiving from his
tenant (i.e. the sub-tenant) more than Rs.
3,500/- p.m. though he is paying less than Rs.
3,500/- p.m. to his landlord. The above contrast
is well illustrated by the facts of the case before
us. The appellants tenant is paying only Rs.
900/- p.m. to the plaintiff, while he has sublet
CS(OS) No.672/2009 Page 9 of 43
the premises in two units, one for Rs. 40,000/-
p.m. and another for Rs. 4,500/- p.m. In regard
to each of these units, the sub-tenants have no
protection of the Rent Act. In our view, the
purpose of Section 3(c) is not to give any
protection to such a tenant.”
13. With respect to the interpretation of the Consignment Sales
Agreement, Mr. Kaul contended that whether the document is a
Consignment Sales Agreement or a sub-tenancy cannot be determined
on the basis of the label of the agreement and the paramount test
would be the intention of the parties which is to be determined by the
Court from the clauses of the agreement itself. He relied upon the
decision of the Supreme Court in the case of Delta International
Limited vs. Shyam Sundar Ganeriwalla & Anr., (1999) 4 SCC 545
and in particular on the following extract of the said judgment:-
“ From the aforesaid discussion what emerges
is:
(1) To find out whether the document creates
lease or license real test is to find out 'the
intention of the parties' ; keeping in mind that
in cases where exclusive possession is given,
the line between a lease and a licence is very
thin.
(2) The intention of the parties is to be gathered
from the document itself. Mainly ,the intention
is to be gathered from the meaning and the
words used in the document except where it is
alleged and proved that document is a
CS(OS) No.672/2009 Page 10 of 43
camouflage . If the terms of the document
evidencing the agreement between the parties
are not clear, the surrounding circumstances
and the conduct of the parties have also to be
borne in mind for ascertaining the real
relationship between the parties.
(3) In the absence of a written document and
when somebody is in exclusive possession with
no special evidence how he got in, the intention
is to be gathered from the other evidence which
may be available on record, and in such cases
exclusive possession of the property would be
the most relevant circumstance to arrive at the
conclusion that the intention of the parties was
to create a lease.
(4) If the dispute arises between the very parties
to the written instrument, the intention is to be
gathered from the document read as a whole.
But in cases where the landlord alleges that
the tenant has sublet the premises and where
the tenant in support of his own defence sets
up the plea of a mere licensee and relies upon
a deed entered into inter se, between himself
and the alleged licensee, the landlord who is
not a party to the deed is not bound by what
emanates from the construction of the deed;
the tenant and the subtenant may jointly set up
the plea of a license against the landlord
which is a camouflage; in such cases, the
mask is to be removed or the veil is to be lifted
and the true intention behind a facade of a
self-serving conveniently drafted instrument is
to be gathered from all the relevant
circumstances. Same would be the position
where the owner of the premises and the person
in need of the premises executes a deed
labelling it as a licence deed to avoid the
operation of rent legislation.
CS(OS) No.672/2009 Page 11 of 43
(5) ………………………………………..
(6) ………………………………………..”
14. Reliance was also placed by Mr. Kaul on the judgment
rendered in the case of R.N. Sachdev vs. Ram Lal Charitable Trust,
1997 III AD (Delhi) 997, wherein, in a case under Order XII Rule 6
CPC, it was held that the collaboration agreement entered into
between the parties was, in fact, a lease agreement. Mr. Kaul sought
to urge on the strength of this judgment that the true intention behind
a document can be gone into under Order XII Rule 6 CPC.
15. Mr. Kaul next contended that a cumulative reading of the
clauses of the agreement in the instant case was clearly indicative of
the fact that the Consignment Sales Agreement was in effect a Rent
Agreement though labeled a Consignment Sales Agreement. He
argued that there were various clauses in the agreement which were
wholly inconsistent with the relationship of landlord and tenant and
mitigated against the theory of the defendant No.1 having an agency
relationship with the defendant No.2. Specific reference was made to
the following clauses:-
(A) Clause 2 relating to consignment and delivery and providing
only for transfer of stocks from the Consignor to the Consignee:-
CS(OS) No.672/2009 Page 12 of 43
“…………………..The goods so consigned by
the Consignor to the Consignee shall not be
deemed to be a sale by the Consignor to the
Consignee but shall only be a transfer of stocks
from the Consignor to the Consignee for the
purpose of sale by the Consignee on behalf of
the Consignor. ………………….. The Consignor
shall always take due and proper care of the
goods so consigned and shall inform the
Consignor in writing in case the Consignee is
storing the Goods in place(s) other than the
Showroom to enable the Consignor to arrange
insurance appropriately. ”
(B) Clause 3(e) relating to providing for positioning a point of sale
and hardware and software in the backroom, and vesting of all
proprietory rights therein with the Consignor:-
“(e) …………………..The Consignor shall
also position hardware and software in the
“backroom” of the showroom and the
Consignor, its auditors and authorized
representatives shall have total access to the
data and complete proprietary rights thereof
shall vest with the Consignor.
…………………..”
(C) Clause 4 relating to commission and payments which according
to the plaintiffs has been given a complete go-by by the Supplemental
Agreement:-
“4(a) During the term of this Agreement, the
Consignee shall be entitled to a commission of
5% per cent on the Basic Sale Price (“BSP”) of
the goods……………………..
CS(OS) No.672/2009 Page 13 of 43
4(b) Upon sale of the Goods, the proceeds
thereof less Consignee‟s commission thereon
shall immediately vest in the Consignor, and
the Consignee shall remit the same to the
Consignor forthwith.
4(c) The Consignee shall remit the sale
proceeds to the Consignor daily, but not later
than the early banking hours of the succeeding
Business day on which banks are open. These
sale proceeds shall be remitted after deducting
commission and taxes payable as set out above
and also discounts as may be approved by the
Consignor by way of an inter-account transfer
from the Consignee‟s bank account to the
Consignors nominated bank account.
…………………….. The Consignee‟s failure to
remit sales proceeds under this clause for a
continuous period of seven working days shall
amount to a material breach entitling the
Consignor to terminate this agreement
forthwith and/or without notice enter the
showroom and the Consignee‟s godown, if any,
and take possession of the Goods and also sue
to recover the dues along with interest, and
compensation for the breach.”
(D) Clause 5(i) providing that the Consignor can carry out all such
changes in the premises as it may deem necessary; and Clause 5(iii)
providing that the Consignee shall carry out all activities in the
manner prescribed by the Consignor:-
“5(i) In order to ensure that the ambience of
the Showroom is of the highest standards in line
with the quality and image of the Goods, the
Consignee consents to the Consignor carrying
CS(OS) No.672/2009 Page 14 of 43
out at the Consignor‟s cost such works
including creation of a “backroom” within the
Showroom if so required by the Consignor, as
per the latter‟s design, to be used for related
activities of the Showroom, modifications and
design changes to the Showroom etc. as the
Consignor deems necessary. The Consignee
shall provide independent access to the
“backroom” in order to ensure that sales
operations are not hampered during stock
receipts. The Consignee has declared that it is
at liberty to carry out the necessary
modifications under the terms of its tenancy of
the Showroom. ………………………..
5(iii) The Consignee shall carry out activities
in the Showroom aimed at promoting the sale of
the Goods when called upon to do so and in a
manner prescribed by the Consignor. The
Consignor will reimburse the costs of such
promotional campaigns.”
(E) Clause 6 relating to the vesting of title in the goods in the
Consignor:-
“ 6. Title
The title in the Goods consigned under
this agreement by the Consignor shall vest at
all times with the Consignor until the Goods
are sold by the Consignee and, until such sale,
the Goods shall remain in the custody of the
Consignee and the Consignee shall be the
custodian of the same. The Consignee shall not
be entitled to claim any lien, charge or any
right or interest whatsoever in or to the goods
kept with it by the Consignor even if any claims
of the Consignee are pending with the
Consignor………………………….”
CS(OS) No.672/2009 Page 15 of 43
(F) Clause 7 providing for insurance of goods by the Consignor
and all fixed assets, interiors and other materials to be also insured by
the Consignor:-
“ 7. Insurance
The Consignor will at its own cost take
an insurance cover, as it deems appropriate for
the Goods held by the Consignee as well as for
the Goods in-transit…………………..
Further, the Consignor will at its own
cost, insure all fixed assets and other material
belonging to them at the Showroom…………..”
(G) Clause 11(v) providing for reimbursement by the Consignor to
the Consignee of the costs of electricity and telephone; and Clause
11(x) enabling the Consignor to place at its sole discretion any fixed
assets in the premises:-
“11(v) The Consignee shall ensure
provision of adequate power for operating the
Showroom as per the Consignor‟s design. The
costs of electricity and generator operations (as
may be mutually agreed between the parties)
and telephones will be reimbursed to the
Consignee at actuals before the seventh day of
the following month on production of necessary
supporting.
11(x) The Consignor at its sole discretion shall
be entitled to place for use in the Showroom
such fixed assets and other materials belonging
to it which, in the opinion of the Consignor are
necessary…………………..”
CS(OS) No.672/2009 Page 16 of 43
(H) Clause 13(b) requiring the Consignee to follow all processes of
Consignor:-
“The Consignee shall follow all
processes/controls as per the guidelines
prescribed by the Consignor from time to time
as contemplated in clause 1.”
(I) Clause 16.2 stipulating that the appointment of personnel by
the Consignee is required to be with the prior approval of the
Consignor and further, the Consignor may place its own consultants
and employees in the showroom:-
“16.2 ………………. Both parties agree that
any appointment of personnel made by the
Consignee at the Showroom shall be with prior
consent and approval of the Consignor.
………………. Notwithstanding anything to the
contrary stated herein, both parties agree and
confirm that the Consignor shall be entitled to
place such consultants and employees in the
Showroom as it may desire for the smooth
functioning of the Showroom.”
16. It is argued by Mr. Kaul that even if the case is sent to trial
there is no other evidence which the plaintiffs can lead which will
bring forth material other than what is already before this Court. The
defendants, in any event, are going to deny the suggestion of sub-
letting. Thus, even post-trial this Court would not be in a better
CS(OS) No.672/2009 Page 17 of 43
position qua the interpretation of the Consignment Agreements and
the Supplemental Agreements as there was no likelihood of any
further material emerging on the record during trial. Reference in this
context was made by Mr. Kaul to a recent decision rendered by this
Court in the case of Sarwan Dass Bange vs. Ram Prakash, 2010 IV
AD (DELHI) 252 . In the said case, in a case under the Delhi Rent
Control Act, the Court while deciding the question whether leave to
defend is to be granted or not voiced its thoughts as follows:-
“21. I have also wondered as to what further
can the landlord do, even if compelled to
appear in the witness box. The landlord can at
best again depose of his intent to settle down or
spend considerable time in Delhi in his old age.
The tenant would at best in cross examination
suggest otherwise to the landlord. The position
would be no different than it is today. For this
reason also I find no triable issue to be arising
on this account either.”
17. Mr. Kaul also relied upon the enunciation of the law relating to
the provisions of Order XII Rule 6 of the Code of Civil Procedure in
various decisions which may be catalogued as follows:-
(i) Uttam Singh Duggal and Co. Ltd. vs. United Bank of India &
Ors., 2000 (7) SCC 120 at para 12,
CS(OS) No.672/2009 Page 18 of 43
(ii) Charanjit Lal Mehra & Ors. vs. Kamal Saroj Mahajan &
Anr., 2005 (11) SCC 279 at para 8,
(iii) Karam Kapahi & Ors. vs. Lal Chand Public Charitable Trust
& Anr., 2010 (4) SCC 753 at paras 37 to 46.
(iv) Assocham vs. Y.N.Bhargava, 185 (2011) DLT 296 at paras 7
to 9.
18. Since the law laid down in the aforesaid decisions is oft quoted
and well settled, detailed discussion of the aforesaid judgments is not
being undertaken and it is only noted that the aforesaid judgments
highlight the futility of the Court insisting upon a full blown trial
when there exist on the record admissions of the opposite party to the
pleadings of the plaintiff or where such admissions can be inferred
from the facts and circumstances of the case and fully justify the
passing of a decree without the parties undergoing the rigmarole of
trial.
19. Rebutting the contentions of Mr. Kaul, Mr. P.V. Kapur argued
that the present case is not a case for the grant of any relief under the
provisions of Order XII Rule 6 as there are serious disputed questions
CS(OS) No.672/2009 Page 19 of 43
of fact and law involved in the suit, which are raised by the plaintiffs
themselves. The suit is based on the misconceived notion that there is
a tenancy relationship between the defendant No.1 and the defendant
No.2. The assertion of the plaintiffs that the Consignment Sales
Agreement is nothing but a camouflage and the said agreement is in
fact and in substance a Sub-Tenancy Agreement is categorically
denied by the defendants, and as such it cannot be said that these
assertions are either admitted in the pleadings or they are admitted
otherwise . The plaintiffs’ contention in the present application that
the theory of “commission has been given a go-by in the
Supplemental Agreements and minimum guarantee fixed” is strongly
refuted by the defendants. As such, serious issues of fact and law
arise and there can be no question of the plaintiffs seeking a decree of
possession as claimed or otherwise on the basis of admissions.
20. Mr. Kapur contended that the plaintiffs can only be said to be
entitled to a decree under Order XII Rule 6 CPC if on a plain reading
of the Consignment Sales Agreement and Supplemental Agreements,
it can be conclusively stated that no two opinions are possible and the
agreements conclusively reflect a landlord tenant relationship
CS(OS) No.672/2009 Page 20 of 43
between the defendant Nos.1 and 2. If, however, on a plain reading
of the Consignment Sales Agreement and Supplemental Agreements,
two opinions are possible, then the defendants can by no stretch claim
a decree under Order XII Rule 6 CPC. He pointed out that in the
plaint, there is no assertion at all that possession has been parted with
by the defendant No.1 to the defendant No.2 and it is the defendant
No.2 who is in exclusive possession of the demised premises. On the
other hand, in the written statements filed by the defendant No.1, the
defendant No.1 has made a categorical assertion that it is in exclusive
possession and control of the premises in question.
21. Mr. P.V. Kapur also contended that a Consignment Sales
Agreement is by no means a red herring but is a commercially known
th
and accepted mode of business. In Black‟s Law Dictionary, 6
Edition at page 307, the terms “Consign”, “Consignment” and
“Consignment Contract” are defined as under:-
“Consign
To deliver goods to a carrier to be
transmitted to a designated factor of agent. To
deliver or transfer as a charge or trust. To
commit, intrust, give in trust. To transfer from
oneself to the care of another. To send or
transmit goods to a merchant, factor, or agent
for sale. To deposit with another to be sold,
CS(OS) No.672/2009 Page 21 of 43
disposed of, or called for, whereby title does
not pass until there is action of consignee
indicating sale.”
“Consignment
The act or process of consigning goods;
the transportation of goods consigned; an
article or collection of goods sent to a factor;
goods or property sent, by the aid of a common
carrier, from one person in one place to
another person in another place; something
consigned and shipped. Entrusting of goods to
another to sell for the consignor. A bailment
for sale.
The term “consignment”, used in a
commercial sense, ordinarily implies an agency
and denotes that property is committed to the
consignee for care or sale. Parks v. Atlanta
News Agency, Inc., 115 Ga.App. 842, 156
S.E.2d 137, 140.”
“Consignment contract
Consignment of goods to another
(consignee) for sale under agreement that
consignee will pay consignor for any sold
goods and will return any unsold goods. A
bailment for sale.”
He also relied upon the following definitions of “Consignment
for Sale” and “Consignment for Sale on Commission” in Words and
Phrases, Volume 8A :-
“ Consignment for sale
Ordinarily, under “Consignment for
sale”, title to goods remains in consignor, but
whether “consignee” is to be considered as a
“buyer” or “agent” depends on intention of
CS(OS) No.672/2009 Page 22 of 43
parties and on real nature of transaction,
rather than the language which parties may
have employed. C.V.Hill & Co. vs. Interstate
Electric Co. of Shreveport, La.App., 196 So.
396, 399.”
“ Consignment for sale on commission
A consignment to a commission merchant
of grain to be stored, the intention being that
the consignee shall sell the same when so
instructed by the consignor, is a “consignment
for sale on commission” within the protection
of the commission merchant‟s bond required by
Section 7472. Swisher vs. Fidelity & Casualty
Co. of New York, 204 N.W. 383, 384, 113 Neb.
592.”
22. It was contended by Mr. Kapur that the provision of a
minimum guarantee in a closing sale transaction by no means
conclusively establishes a landlord-tenant relationship between the
Consignor and the Consignee. Even otherwise, as set out in the reply
filed by it, the defendant No.1 has received only the following
commissions from the defendant No.2 for the past three years:-
+ IA No.10279/2010 in CS(OS) 672/2009
SHRI SATISH C. SHARMA & ORS. ..... Plaintiffs
Through: Mr. Neeraj Kishan Kaul, Sr.
Advocate with Mr. Akshay Makhija,
Advocate
versus
M/S S.A.S. LEASING PVT. LTD. & ANR. ..... Defendants
Through: Mr. P.V. Kapur, Sr. Advocate with
Ms. Shraddha Deshmukh, Ms. Pragya
Ohri and Mr. Varun Kumar,
Advocates for defendant No.1.
Mr. L.K. Bhushan and Mr. Kartik
Bajpai, Advocates for defendant
No.2.
% Date of Decision : July 10, 2012
CORAM:
HON'BLE MS. JUSTICE REVA KHETRAPAL
J U D G M E N T
: REVA KHETRAPAL, J.
IA No.10279/2010 (under Order XII Rule 6 CPC filed by the
plaintiffs)
1. This application is filed by the plaintiffs under the provisions of
Order XII Rule 6 Code of Civil Procedure praying for a decree of
possession against the defendants in respect of property bearing Shop
CS(OS) No.672/2009 Page 1 of 43
No.E-2, Connaught Place, New Delhi; more specifically shown and
delineated in the site plan annexed with the suit.
2. The essential facts are not in dispute. The plaintiffs are the
owners/landlords of the suit property – Shop No.E-2, Connaught
Place, New Delhi, admeasuring 2,000 sq. ft. on the ground floor and
1,500 sq. ft. on the mezzanine floor. The defendant No.1 – M/s.
S.A.S. Leasing Pvt. Ltd. is the tenant in respect of the said shop at a
monthly rent of ` 450/- per month. The tenancy of the defendant
No.1 in respect of the suit property commences on the first day of
each calendar month and ends on the last day of the same English
calendar month. The tenancy is from month to month.
3. It is the case of the plaintiffs that on or about October, 2004 the
defendant No.1 has entered into a sub-tenancy agreement with
defendant No.2 and even though the agreement between defendant
No.1 and defendant No.2 has been termed as a Consignment Sales
Agreement, the terms and conditions of the agreement clearly
establish that the said agreement is nothing but a camouflage and that
the agreement is, in fact and in substance, a tenancy agreement.
CS(OS) No.672/2009 Page 2 of 43
4. Both the defendants filed written statements contesting the suit.
The defendant No.1–M/s. S.A.S. Leasing Pvt. Ltd. in the written
statement filed by it denied the fact that the Consignment Sales
Agreement is a tenancy agreement and that there was any camouflage
and stated that it (the defendant No.1) is selling the products of the
defendant No.2–M/s. Wills Lifestyle. It denied that the defendant
No.1 is being paid a monthly rent of ` 26 Lacs as alleged by the
plaintiffs and submitted that the defendant No.1 is in complete control
and possession of the shop in question under the Consignment Sales
nd
Agreement dated 22 January, 2007.
5. The defendant No.2 in the written statement filed by it adopted
the same stance as the defendant No.1 and elaborated that they had
th
entered into a Consignment Sales Agreement dated 11 October,
th
2000 and Supplemental Agreement dated 12 October, 2000,
nd
followed by another Consignment Sales Agreement dated 22
th
January, 2007 and Supplemental Agreement dated 27 January, 2007.
6. The plaintiffs thereupon issued a notice to the defendants dated
th
7 November, 2009 under Order XI Rule 16 CPC requiring the
defendants to produce the aforestated Consignment Agreements and
CS(OS) No.672/2009 Page 3 of 43
Supplemental Agreements. The plaintiffs also filed IA
No.15859/2009 seeking production of the said agreements. The said
th
application was disposed of on 15 April, 2010 in the following
terms:-
“ IA No. 15859/2009
Learned counsel for defendant No.2
states that copies of the documents sought for
will be produced and made available to the
plaintiff, within three weeks. The said
documents shall be furnished to the plaintiffs
and filed in the Court with the affidavit as
required by the Court.”
7. In compliance with the aforesaid order, the defendant No.2
filed the aforesaid documents with the affidavit of the Constituted
st
Attorney of the defendant No.2 on 1 July, 2010. This led to the
rd
institution of the present application on 3 August, 2010 on the
premise that a bare reading of the Consignment Sales Agreement
along with the Supplemental Agreements (which documents,
according to the plaintiffs, the defendants had tried to conceal from
this Court) makes it evident that the so-called commission to be paid
under the Consignment Sales Agreement has been given a complete
go-bye in the Supplemental Agreements and “minimum guarantee”
has been fixed. It is alleged that pertinently the first Consignment
CS(OS) No.672/2009 Page 4 of 43
th
Sales Agreement is dated 11 October, 2000 and the same is followed
by a Supplemental Agreement which is executed one day after the
th
Consignment Sales Agreement, i.e., on 12 October, 2000. Similarly,
nd
Consignment Sales Agreement dated 22 January, 2007 is followed
th
by a Supplemental Agreement five days thereafter, i.e., dated 27
th
January, 2007. The Supplemental Agreement dated 12 October,
2000 fixes a “minimum guarantee” of ` 66 Lacs per annum, while the
th
Supplemental Agreement dated 27 January, 2007 fixes a “minimum
st
guarantee” of ` 2.88 Crores per annum with effect from 1
December, 2006, payable in equal instalments every 45 days. The
said agreement also provides that the said “minimum guarantee” shall
stand enhanced by 20% after every three years. It is, thus, ex-facie
evident that there was never any intention to have a Consignment
Agreement whereunder payment was to be made on the basis of
percentage of sale and the intention all along was to have annual rent
in the shape of a fixed “minimum guarantee”. Thus, the initial
agreement is only a camouflage created with a view to taking the
premises out of the purview of the Delhi Rent Control Act.
CS(OS) No.672/2009 Page 5 of 43
8. It is further alleged in the application that the fact that the
system of commission is not being followed is also evident from the
bank statement of defendant No.1 filed by the defendant No.1 itself,
which clearly shows that the daily sales in its entirety is being
transferred to an account in Kolkata, where the Head Office of the
defendant No.2 is situated. It is submitted that if the Consignment
Sales Agreement was being followed then the amounts remitted to
defendant No.2 would have been remitted after deducting 5% towards
the commission payable to the defendant No.1. It is, thus, ex-facie
evident that the defendant No.1 has sub-let the premises to the
defendant No.2 for an annual rent which is currently ` 3,45,60,000/-.
th
Accordingly, notice of the termination of the tenancy dated 12
February, 2009 was duly served upon the defendants. It is submitted
that the defendants though have denied receipt of the said notice in
their written statement, it is settled law that if the notice is sent by
registered post to the correct address of the defendant and the
acknowledgment card is received back, there is a presumption of
valid service. In the present case also, it is stated, notice has been
served at the correct address, both by registered A.D. post and UPC,
CS(OS) No.672/2009 Page 6 of 43
and the A.D. cards have been received back, the originals whereof
have been placed on the record. Thus, bald denial of service is of no
consequence as held in the case of Jindal Dyechem Industries Pvt.
Ltd. vs. Pahwa International Pvt. Ltd., 2009 VIII AD (DELHI) 535
and Mrs. Rama Ghai vs. U.P. State Handloom Corporation, 2001 IV
AD (DELHI) 471 .
9. Reply to the aforesaid application was filed by the defendant
No.1 as well as by the defendant No.2 praying for dismissal of the
application with exemplary costs, which reply shall be presently
adverted to.
10. The Court has heard the arguments addressed by Mr. Neeraj
Kishan Kaul, Senior Advocate on behalf of the plaintiffs, Mr. P.V.
Kapur, Senior Advocate on behalf of the defendant No.1 and Mr.
L.K. Bhushan, Advocate on behalf of the defendant No.2.
11. The principal contention of Mr. Kaul on behalf of the plaintiffs
is that a bare reading of the Consignment Sales Agreements, the
Supplemental Agreements and their clauses in totality would establish
that the agreements are in effect tenancy agreements and the clauses
with regard to Consignor and Consignee relationship are nothing but
CS(OS) No.672/2009 Page 7 of 43
a camouflage. The detailed commission formula set out in Clause 4
of the agreements has been given a complete go-by in the
Supplemental Agreements, which were executed only a day later/five
days later and which provided for a minimum guarantee payment of
66 Lacs payable in equal installments every 45 days in the year
`
2000, which was enhanced to ` 2.88 Crores payable in equal
st
installments every 45 days with effect from 1 December, 2006.
12. On the strength of the judgments of this Court rendered in P.S.
Jain Company Ltd. vs. Atma Ram Properties (P) Ltd. & Ors., 65
(1997) DLT 308 (DB) and Atma Ram Properties (P) Ltd. vs. Pal
Properties (India) Pvt. Ltd. & Ors., 91 (2001) DLT 438, Mr. Kaul
contended that it is well settled that if a tenant is paying less than `
3,500/- per month to the landlord and sub-lets the tenanted premises
for a rent of ` 3,500/- per month or more, then in that case the tenant
cannot seek protection under the Delhi Rent Control Act. Identical
question had come up for consideration before the Division Bench of
this Court in the case of P.S. Jain Company Ltd. (supra) and
subsequently before a learned Single Judge in Atma Ram Properties
(P) Ltd. (supra) , in both of which cases it came to be held that the
CS(OS) No.672/2009 Page 8 of 43
relevant rent is the one which is paid by the sub-tenant to the tenant
and where such rent is more than ` 3,500/- per month, no protection
under the Delhi Rent Control Act would be available to the
defendants and consequently the suit would not be hit by Section 50
of the Delhi Rent Control Act. It was pointed out that after relying
upon four Supreme Court judgments dealing with purposeful
construction of a statute rather than adopting mechanical approach,
the Division Bench in P.S Jain Company Ltd. (supra) held as
follows:-
“In our view, the intention behind Section 3(c)
is that a premises which fetches a rent of Rs.
3,500/- p.m. should be exempt and that
protection should be restricted to buildings
fetching a rent less than Rs. 3,500/- p.m. In
case a tenant paying less than Rs. 3,500/- p.m.
to his landlord has sublet the very same
premises – may be lawfully – for a rent above
Rs. 3,500/- p.m., then the question naturally
arises whether such a tenant can be said to
belong to weaker sections of society requiring
protection. By sub-letting for a rent above Rs.
3,500/- p.m., the tenant has parted with his
physical possession. He is receiving from his
tenant (i.e. the sub-tenant) more than Rs.
3,500/- p.m. though he is paying less than Rs.
3,500/- p.m. to his landlord. The above contrast
is well illustrated by the facts of the case before
us. The appellants tenant is paying only Rs.
900/- p.m. to the plaintiff, while he has sublet
CS(OS) No.672/2009 Page 9 of 43
the premises in two units, one for Rs. 40,000/-
p.m. and another for Rs. 4,500/- p.m. In regard
to each of these units, the sub-tenants have no
protection of the Rent Act. In our view, the
purpose of Section 3(c) is not to give any
protection to such a tenant.”
13. With respect to the interpretation of the Consignment Sales
Agreement, Mr. Kaul contended that whether the document is a
Consignment Sales Agreement or a sub-tenancy cannot be determined
on the basis of the label of the agreement and the paramount test
would be the intention of the parties which is to be determined by the
Court from the clauses of the agreement itself. He relied upon the
decision of the Supreme Court in the case of Delta International
Limited vs. Shyam Sundar Ganeriwalla & Anr., (1999) 4 SCC 545
and in particular on the following extract of the said judgment:-
“ From the aforesaid discussion what emerges
is:
(1) To find out whether the document creates
lease or license real test is to find out 'the
intention of the parties' ; keeping in mind that
in cases where exclusive possession is given,
the line between a lease and a licence is very
thin.
(2) The intention of the parties is to be gathered
from the document itself. Mainly ,the intention
is to be gathered from the meaning and the
words used in the document except where it is
alleged and proved that document is a
CS(OS) No.672/2009 Page 10 of 43
camouflage . If the terms of the document
evidencing the agreement between the parties
are not clear, the surrounding circumstances
and the conduct of the parties have also to be
borne in mind for ascertaining the real
relationship between the parties.
(3) In the absence of a written document and
when somebody is in exclusive possession with
no special evidence how he got in, the intention
is to be gathered from the other evidence which
may be available on record, and in such cases
exclusive possession of the property would be
the most relevant circumstance to arrive at the
conclusion that the intention of the parties was
to create a lease.
(4) If the dispute arises between the very parties
to the written instrument, the intention is to be
gathered from the document read as a whole.
But in cases where the landlord alleges that
the tenant has sublet the premises and where
the tenant in support of his own defence sets
up the plea of a mere licensee and relies upon
a deed entered into inter se, between himself
and the alleged licensee, the landlord who is
not a party to the deed is not bound by what
emanates from the construction of the deed;
the tenant and the subtenant may jointly set up
the plea of a license against the landlord
which is a camouflage; in such cases, the
mask is to be removed or the veil is to be lifted
and the true intention behind a facade of a
self-serving conveniently drafted instrument is
to be gathered from all the relevant
circumstances. Same would be the position
where the owner of the premises and the person
in need of the premises executes a deed
labelling it as a licence deed to avoid the
operation of rent legislation.
CS(OS) No.672/2009 Page 11 of 43
(5) ………………………………………..
(6) ………………………………………..”
14. Reliance was also placed by Mr. Kaul on the judgment
rendered in the case of R.N. Sachdev vs. Ram Lal Charitable Trust,
1997 III AD (Delhi) 997, wherein, in a case under Order XII Rule 6
CPC, it was held that the collaboration agreement entered into
between the parties was, in fact, a lease agreement. Mr. Kaul sought
to urge on the strength of this judgment that the true intention behind
a document can be gone into under Order XII Rule 6 CPC.
15. Mr. Kaul next contended that a cumulative reading of the
clauses of the agreement in the instant case was clearly indicative of
the fact that the Consignment Sales Agreement was in effect a Rent
Agreement though labeled a Consignment Sales Agreement. He
argued that there were various clauses in the agreement which were
wholly inconsistent with the relationship of landlord and tenant and
mitigated against the theory of the defendant No.1 having an agency
relationship with the defendant No.2. Specific reference was made to
the following clauses:-
(A) Clause 2 relating to consignment and delivery and providing
only for transfer of stocks from the Consignor to the Consignee:-
CS(OS) No.672/2009 Page 12 of 43
“…………………..The goods so consigned by
the Consignor to the Consignee shall not be
deemed to be a sale by the Consignor to the
Consignee but shall only be a transfer of stocks
from the Consignor to the Consignee for the
purpose of sale by the Consignee on behalf of
the Consignor. ………………….. The Consignor
shall always take due and proper care of the
goods so consigned and shall inform the
Consignor in writing in case the Consignee is
storing the Goods in place(s) other than the
Showroom to enable the Consignor to arrange
insurance appropriately. ”
(B) Clause 3(e) relating to providing for positioning a point of sale
and hardware and software in the backroom, and vesting of all
proprietory rights therein with the Consignor:-
“(e) …………………..The Consignor shall
also position hardware and software in the
“backroom” of the showroom and the
Consignor, its auditors and authorized
representatives shall have total access to the
data and complete proprietary rights thereof
shall vest with the Consignor.
…………………..”
(C) Clause 4 relating to commission and payments which according
to the plaintiffs has been given a complete go-by by the Supplemental
Agreement:-
“4(a) During the term of this Agreement, the
Consignee shall be entitled to a commission of
5% per cent on the Basic Sale Price (“BSP”) of
the goods……………………..
CS(OS) No.672/2009 Page 13 of 43
4(b) Upon sale of the Goods, the proceeds
thereof less Consignee‟s commission thereon
shall immediately vest in the Consignor, and
the Consignee shall remit the same to the
Consignor forthwith.
4(c) The Consignee shall remit the sale
proceeds to the Consignor daily, but not later
than the early banking hours of the succeeding
Business day on which banks are open. These
sale proceeds shall be remitted after deducting
commission and taxes payable as set out above
and also discounts as may be approved by the
Consignor by way of an inter-account transfer
from the Consignee‟s bank account to the
Consignors nominated bank account.
…………………….. The Consignee‟s failure to
remit sales proceeds under this clause for a
continuous period of seven working days shall
amount to a material breach entitling the
Consignor to terminate this agreement
forthwith and/or without notice enter the
showroom and the Consignee‟s godown, if any,
and take possession of the Goods and also sue
to recover the dues along with interest, and
compensation for the breach.”
(D) Clause 5(i) providing that the Consignor can carry out all such
changes in the premises as it may deem necessary; and Clause 5(iii)
providing that the Consignee shall carry out all activities in the
manner prescribed by the Consignor:-
“5(i) In order to ensure that the ambience of
the Showroom is of the highest standards in line
with the quality and image of the Goods, the
Consignee consents to the Consignor carrying
CS(OS) No.672/2009 Page 14 of 43
out at the Consignor‟s cost such works
including creation of a “backroom” within the
Showroom if so required by the Consignor, as
per the latter‟s design, to be used for related
activities of the Showroom, modifications and
design changes to the Showroom etc. as the
Consignor deems necessary. The Consignee
shall provide independent access to the
“backroom” in order to ensure that sales
operations are not hampered during stock
receipts. The Consignee has declared that it is
at liberty to carry out the necessary
modifications under the terms of its tenancy of
the Showroom. ………………………..
5(iii) The Consignee shall carry out activities
in the Showroom aimed at promoting the sale of
the Goods when called upon to do so and in a
manner prescribed by the Consignor. The
Consignor will reimburse the costs of such
promotional campaigns.”
(E) Clause 6 relating to the vesting of title in the goods in the
Consignor:-
“ 6. Title
The title in the Goods consigned under
this agreement by the Consignor shall vest at
all times with the Consignor until the Goods
are sold by the Consignee and, until such sale,
the Goods shall remain in the custody of the
Consignee and the Consignee shall be the
custodian of the same. The Consignee shall not
be entitled to claim any lien, charge or any
right or interest whatsoever in or to the goods
kept with it by the Consignor even if any claims
of the Consignee are pending with the
Consignor………………………….”
CS(OS) No.672/2009 Page 15 of 43
(F) Clause 7 providing for insurance of goods by the Consignor
and all fixed assets, interiors and other materials to be also insured by
the Consignor:-
“ 7. Insurance
The Consignor will at its own cost take
an insurance cover, as it deems appropriate for
the Goods held by the Consignee as well as for
the Goods in-transit…………………..
Further, the Consignor will at its own
cost, insure all fixed assets and other material
belonging to them at the Showroom…………..”
(G) Clause 11(v) providing for reimbursement by the Consignor to
the Consignee of the costs of electricity and telephone; and Clause
11(x) enabling the Consignor to place at its sole discretion any fixed
assets in the premises:-
“11(v) The Consignee shall ensure
provision of adequate power for operating the
Showroom as per the Consignor‟s design. The
costs of electricity and generator operations (as
may be mutually agreed between the parties)
and telephones will be reimbursed to the
Consignee at actuals before the seventh day of
the following month on production of necessary
supporting.
11(x) The Consignor at its sole discretion shall
be entitled to place for use in the Showroom
such fixed assets and other materials belonging
to it which, in the opinion of the Consignor are
necessary…………………..”
CS(OS) No.672/2009 Page 16 of 43
(H) Clause 13(b) requiring the Consignee to follow all processes of
Consignor:-
“The Consignee shall follow all
processes/controls as per the guidelines
prescribed by the Consignor from time to time
as contemplated in clause 1.”
(I) Clause 16.2 stipulating that the appointment of personnel by
the Consignee is required to be with the prior approval of the
Consignor and further, the Consignor may place its own consultants
and employees in the showroom:-
“16.2 ………………. Both parties agree that
any appointment of personnel made by the
Consignee at the Showroom shall be with prior
consent and approval of the Consignor.
………………. Notwithstanding anything to the
contrary stated herein, both parties agree and
confirm that the Consignor shall be entitled to
place such consultants and employees in the
Showroom as it may desire for the smooth
functioning of the Showroom.”
16. It is argued by Mr. Kaul that even if the case is sent to trial
there is no other evidence which the plaintiffs can lead which will
bring forth material other than what is already before this Court. The
defendants, in any event, are going to deny the suggestion of sub-
letting. Thus, even post-trial this Court would not be in a better
CS(OS) No.672/2009 Page 17 of 43
position qua the interpretation of the Consignment Agreements and
the Supplemental Agreements as there was no likelihood of any
further material emerging on the record during trial. Reference in this
context was made by Mr. Kaul to a recent decision rendered by this
Court in the case of Sarwan Dass Bange vs. Ram Prakash, 2010 IV
AD (DELHI) 252 . In the said case, in a case under the Delhi Rent
Control Act, the Court while deciding the question whether leave to
defend is to be granted or not voiced its thoughts as follows:-
“21. I have also wondered as to what further
can the landlord do, even if compelled to
appear in the witness box. The landlord can at
best again depose of his intent to settle down or
spend considerable time in Delhi in his old age.
The tenant would at best in cross examination
suggest otherwise to the landlord. The position
would be no different than it is today. For this
reason also I find no triable issue to be arising
on this account either.”
17. Mr. Kaul also relied upon the enunciation of the law relating to
the provisions of Order XII Rule 6 of the Code of Civil Procedure in
various decisions which may be catalogued as follows:-
(i) Uttam Singh Duggal and Co. Ltd. vs. United Bank of India &
Ors., 2000 (7) SCC 120 at para 12,
CS(OS) No.672/2009 Page 18 of 43
(ii) Charanjit Lal Mehra & Ors. vs. Kamal Saroj Mahajan &
Anr., 2005 (11) SCC 279 at para 8,
(iii) Karam Kapahi & Ors. vs. Lal Chand Public Charitable Trust
& Anr., 2010 (4) SCC 753 at paras 37 to 46.
(iv) Assocham vs. Y.N.Bhargava, 185 (2011) DLT 296 at paras 7
to 9.
18. Since the law laid down in the aforesaid decisions is oft quoted
and well settled, detailed discussion of the aforesaid judgments is not
being undertaken and it is only noted that the aforesaid judgments
highlight the futility of the Court insisting upon a full blown trial
when there exist on the record admissions of the opposite party to the
pleadings of the plaintiff or where such admissions can be inferred
from the facts and circumstances of the case and fully justify the
passing of a decree without the parties undergoing the rigmarole of
trial.
19. Rebutting the contentions of Mr. Kaul, Mr. P.V. Kapur argued
that the present case is not a case for the grant of any relief under the
provisions of Order XII Rule 6 as there are serious disputed questions
CS(OS) No.672/2009 Page 19 of 43
of fact and law involved in the suit, which are raised by the plaintiffs
themselves. The suit is based on the misconceived notion that there is
a tenancy relationship between the defendant No.1 and the defendant
No.2. The assertion of the plaintiffs that the Consignment Sales
Agreement is nothing but a camouflage and the said agreement is in
fact and in substance a Sub-Tenancy Agreement is categorically
denied by the defendants, and as such it cannot be said that these
assertions are either admitted in the pleadings or they are admitted
otherwise . The plaintiffs’ contention in the present application that
the theory of “commission has been given a go-by in the
Supplemental Agreements and minimum guarantee fixed” is strongly
refuted by the defendants. As such, serious issues of fact and law
arise and there can be no question of the plaintiffs seeking a decree of
possession as claimed or otherwise on the basis of admissions.
20. Mr. Kapur contended that the plaintiffs can only be said to be
entitled to a decree under Order XII Rule 6 CPC if on a plain reading
of the Consignment Sales Agreement and Supplemental Agreements,
it can be conclusively stated that no two opinions are possible and the
agreements conclusively reflect a landlord tenant relationship
CS(OS) No.672/2009 Page 20 of 43
between the defendant Nos.1 and 2. If, however, on a plain reading
of the Consignment Sales Agreement and Supplemental Agreements,
two opinions are possible, then the defendants can by no stretch claim
a decree under Order XII Rule 6 CPC. He pointed out that in the
plaint, there is no assertion at all that possession has been parted with
by the defendant No.1 to the defendant No.2 and it is the defendant
No.2 who is in exclusive possession of the demised premises. On the
other hand, in the written statements filed by the defendant No.1, the
defendant No.1 has made a categorical assertion that it is in exclusive
possession and control of the premises in question.
21. Mr. P.V. Kapur also contended that a Consignment Sales
Agreement is by no means a red herring but is a commercially known
th
and accepted mode of business. In Black‟s Law Dictionary, 6
Edition at page 307, the terms “Consign”, “Consignment” and
“Consignment Contract” are defined as under:-
“Consign
To deliver goods to a carrier to be
transmitted to a designated factor of agent. To
deliver or transfer as a charge or trust. To
commit, intrust, give in trust. To transfer from
oneself to the care of another. To send or
transmit goods to a merchant, factor, or agent
for sale. To deposit with another to be sold,
CS(OS) No.672/2009 Page 21 of 43
disposed of, or called for, whereby title does
not pass until there is action of consignee
indicating sale.”
“Consignment
The act or process of consigning goods;
the transportation of goods consigned; an
article or collection of goods sent to a factor;
goods or property sent, by the aid of a common
carrier, from one person in one place to
another person in another place; something
consigned and shipped. Entrusting of goods to
another to sell for the consignor. A bailment
for sale.
The term “consignment”, used in a
commercial sense, ordinarily implies an agency
and denotes that property is committed to the
consignee for care or sale. Parks v. Atlanta
News Agency, Inc., 115 Ga.App. 842, 156
S.E.2d 137, 140.”
“Consignment contract
Consignment of goods to another
(consignee) for sale under agreement that
consignee will pay consignor for any sold
goods and will return any unsold goods. A
bailment for sale.”
He also relied upon the following definitions of “Consignment
for Sale” and “Consignment for Sale on Commission” in Words and
Phrases, Volume 8A :-
“ Consignment for sale
Ordinarily, under “Consignment for
sale”, title to goods remains in consignor, but
whether “consignee” is to be considered as a
“buyer” or “agent” depends on intention of
CS(OS) No.672/2009 Page 22 of 43
parties and on real nature of transaction,
rather than the language which parties may
have employed. C.V.Hill & Co. vs. Interstate
Electric Co. of Shreveport, La.App., 196 So.
396, 399.”
“ Consignment for sale on commission
A consignment to a commission merchant
of grain to be stored, the intention being that
the consignee shall sell the same when so
instructed by the consignor, is a “consignment
for sale on commission” within the protection
of the commission merchant‟s bond required by
Section 7472. Swisher vs. Fidelity & Casualty
Co. of New York, 204 N.W. 383, 384, 113 Neb.
592.”
22. It was contended by Mr. Kapur that the provision of a
minimum guarantee in a closing sale transaction by no means
conclusively establishes a landlord-tenant relationship between the
Consignor and the Consignee. Even otherwise, as set out in the reply
filed by it, the defendant No.1 has received only the following
commissions from the defendant No.2 for the past three years:-
| Period | Commission Received |
|---|---|
| 2007-2008 | 2,88,00,000 |
| 2008-2009 | 2,64,00,000 |
| 2009-2010 | 1,71,00,000 |
No.1 had received less than the minimum guaranteed amount, and
only the commission on sales was being given.
CS(OS) No.672/2009 Page 23 of 43
23. The learned senior counsel for the defendant No.1 also pointed
out that the clauses in the Consignment Sales Agreement were clearly
inconsistent with the relationship of Lessor and Lessee and on a
holistic reading of the clauses in the Consignment Sales Agreement
read with the Supplemental Agreement, it cannot be said that any sub-
lease has been created by the defendant No.1 in favour of the
defendant No.2. Reference in particular was made by him to Clause 3
of the Agreement, which reads as follows:-
“3. The Consignee declares that it is in
lawful possession and will continue to be in
lawful possession as monthly tenant, of a
showroom (hereinafter referred to as the
„Showroom‟) at E-2, Connaught Place, New
Delhi 110 001 (more fully described in the
ground plan attached hereto and marked
Annexure “A”).
24. Referring to Clause 2 of the Agreement relating to
Consignment and Delivery , Mr. Kapur contended that the provision
in the said clause that the goods so consigned by the Consignor shall
not be deemed to be a sale by the Consignor to the Consignee but
shall only be a transfer of stocks from the Consignor to the
Consignee is the very essence of a Consignment Sales Agreement.
The fact that the Consignor was arranging for the insurance of the
CS(OS) No.672/2009 Page 24 of 43
goods in the showroom also does not detract from the case of the
defendants that the defendant No.1 agreed to sell the branded goods
and apparel of the defendant No.2. Clause 4 of the Agreement clearly
provided for the entitlement of the defendant No.1 to commission of
5% on the basic sale price of the goods sold and laid down the
manner in which such calculation was to be made. It further provided
that upon sale of the goods the proceeds thereof less Consignee’s
commission would vest in the Consignor, and the Consignee would
remit the same to the Consignor forthwith/daily. The Consignee was
to open a separate bank account for the aforesaid purpose in the same
bank and branch in which the Consignor maintained its bank account
in order to facilitate instant intra-branch account transfer. That the
title in the goods was to vest in the Consignor is also reflective of the
fact that the agreement between the parties was for consignment sales.
25. Mr. Kapur further contended that under Clause 10 of the
Agreement, the Consignee was to furnish to the Consignor within
three weeks of the agreement, security in the form of an irrevocable
bank guarantee of ` 20 Lacs. Had it been a sub-tenancy, there was no
question of the landlord furnishing security to the tenant. He pointed
CS(OS) No.672/2009 Page 25 of 43
out that Clause 11 of the Agreement also enumerates the
responsibilities of the Consignee and is not at all consistent with the
theory of landlord-tenant relationship between the defendant No.1 and
the defendant No.2. Sub-clause (xii) of Clause 11 is significant
which reads as under:-
“(xii) The Consignee shall forward “Form F”
to the Consignor for all Goods received under
the terms of this agreement, whenever required
under the sales tax laws.”
26. Mr. Kapur strongly contended that the fact that “Form F” was
to be filed by the Consignee/defendant No.1 conclusively shows and
establishes that the Consignment Sales Agreement was not a
camouflage for a sub-tenancy. He buttressed his contention by
drawing the attention of this Court to Section 6A of the Central Sales
Tax Act, 1956 and Sub-rule (5) of Rule 12 of the Central Sales Tax
(Registration and Turnover) Rules, 1957. The said provisions for the
sake of ready reference are reproduced hereunder:-
Section 6A of the Central Sales Tax Act, 1956
“ 6A. Burden of proof, etc., in case of transfer
of goods claimed otherwise than by way of sale
– (1) Where any dealer claims that he is not
liable to pay tax under this Act, in respect of
any goods, on the ground that the movement of
such goods from one State to another was
CS(OS) No.672/2009 Page 26 of 43
occasioned by reason of transfer of such goods
by him to any other place of his business or to
his agent or principal, as the case may be, and
not by reason of sale, the burden of proving
that the movement of those goods was so
occasioned shall be on that dealer and for this
purpose he may furnish to the assessing
authority, within the prescribed time or within
such further time as that authority may, for
sufficient cause, permit, a declaration, duly
filled and signed by the principal officer of the
other place of business, or his agent or
principal, as the case may be, containing the
prescribed particulars in the prescribed form
obtained from the prescribed authority, along
with the evidence of despatch of such goods and
if the dealer fails to furnish such declaration,
then, the movement of such goods shall be
deemed for all purposes of this Act to have been
occasioned as a result of sale.
(2) If the assessing authority is satisfied after
making such inquiry as he may deem necessary
that the particulars contained in the declaration
furnished by a dealer under sub-section (1) are
true he may, at the time of, or at any time
before, the assessment of the tax payable by the
dealer under this Act, make an order to that
effect and thereupon the movement of goods to
which the declaration related shall be deemed
for the purpose of this Act to have been
occasioned otherwise than as a result of sale.”
Rule 12(5) of Central Sales Tax (Registration and
Turnover) Rules, 1957
“(5) The declaration referred to in sub-
section (1) of Section -6A shall be in Form
„F‟.”
CS(OS) No.672/2009 Page 27 of 43
27. Mr. Kapur contended that thus the law of Sales Tax in India
clearly provided for filing of “Form F” where any dealer claims that
he is not liable to pay tax under the Act in respect of any goods on the
ground that the movement of such goods was occasioned by reason of
transfer of such goods to his agent or principal as the case may be,
and not by reason of sale. In the present case, the defendant No.1 was
to furnish “Form F” in terms of the aforesaid provision by way of a
declaration and the furnishing of “Form F” by the defendant No.1 to
the statutory authorities is wholly inconsistent and demolishes the
theory of sub-tenancy evolved by the plaintiffs.
28. He submitted that the remaining clauses of the Agreement were
also in tandem with a Consignor-Consignee relationship inter se the
defendant Nos.1 and 2. Clause 16 provided that all the personnel
employed in the showroom would be the employees of the
Consignee, and the Consignee would be wholly responsible for filing
all statutory returns in respect of its employees and for making all
payments to such employees. Clause 16.7.1 clearly provided that
nothing contained in the agreement would be construed as creating
any interest in the immovable property of the showroom, while
CS(OS) No.672/2009 Page 28 of 43
Clause 16.11 provided that the Consignee shall at all times be in
exclusive legal and physical possession of the premises and the
premises shall always be under the lock and key of the Consignee
who shall open the premises in the morning and close it in the
evening and his right to the premises as a Lessee shall not be
disturbed or interfered by the Consignor in any manner.
29. Mr. Kapur contended that the reliance placed by the plaintiffs
upon the decisions rendered in Uttam Singh Duggal (supra), Karam
Kapahi (supra) and Charanjit Lal Mehra (supra) is wholly
misplaced. He particularly relied upon the following extract from the
case of Charanjit Lal Mehra (supra) to urge that no admission can
be inferred in the present case relying upon the aforesaid judgment,
wherein it is held that the admission inferred should be “without any
dispute” and there should be “no two opinions” in the matter:-
“In fact, Order 12 Rule 6, C.P.C. is enacted for
the purpose of and in order to expedite the
trials it there is any admission on behalf of the
defendants or an admission can be interred
from the facts and circumstances of the case
without any dispute; then, in such a case in
order to expedite and dispose of the matter such
admission can be acted upon. In the present
case, looking at the terms of lease deed, there
can be no two opinions that the tenancy was
CS(OS) No.672/2009 Page 29 of 43
joint/composite and not an individual
one …………………………………… Therefore,
in the present case, as appearing to us, there is
a clear admission on behalf of the defendants
that there existed a relationship of landlord and
tenants, the rent is more than Rs. 3500/-and the
tenancy is a joint and composite one. As such,
on these admitted facts, there are no two
opinions in the matter and the view taken by
the learned Single Judge of the High Court
appears to be correct and there is no ground to
interfere in this Special Leave Petition and the
same is dismissed.”
30. He submitted that the judgment in the case of R.N. Sachdeva
(supra) relied upon by the plaintiffs is not an authority for the
proposition that payment of minimum guarantee would amount to
creation of a tenancy. The said case was in fact clearly
distinguishable on facts, in that the Collaboration Agreement between
the parties which was relied upon by the plaintiffs nowhere stated that
the possession of the premises would remain or remained with the
plaintiffs or the plaintiffs had any right or control over the affairs of
the nursing home set up by the defendants in the premises. The
Court, therefore, arrived at the conclusion that none of the terms and
conditions agreed to in the said Agreement were inconsistent to the
relationship of landlord and tenant and accordingly proceeded to pass
CS(OS) No.672/2009 Page 30 of 43
a decree of possession under Order XII Rule 6 CPC on the ground
that the notice of termination of tenancy stood proved and no further
proof was required. In direct contrast, in the present case it is the
defendant No.1 who is in exclusive possession of the premises as per
the agreement between the parties and the defendant No.2 has no
right or control over the premises. The clauses in the agreement are
also wholly inconsistent with the theory of sub-tenancy.
31. Mr. Kapur further contended that in any event under the
provisions of Order XII Rule 6 CPC, an interpretative exercise cannot
be undertaken by the Court. In this context, he relied upon the
Division Bench decision of this Court rendered in the case of Raj
Kumar Chawla vs. Lucas Indian Services, 129 (2006) DLT 755
(DB) . While dealing with the provisions of Order XII Rule 6 CPC,
the Court in the said case made the following apposite observations:-
“5. ……………….. Admission has to be
unambiguous, clear and unconditional and the
law would not permit admission by inference
as it is a matter of fact. Admission of a fact
has to be clear from the record itself and
cannot be left to the interpretative
determination by the Court, unless there was a
complete trial and such finding could be on
the basis of cogent and appropriate evidence
on record. ”
CS(OS) No.672/2009 Page 31 of 43
32. By way of analogy, reliance was placed by learned senior
counsel for the defendant No.1 on the decision of the Supreme Court
rendered in Mrs. Raj Duggal vs. Ramesh Kumar Bansal, AIR 1990
SC 2218 . In the said case, while dealing with an application for leave
to defend in a suit under Order XXXVII of the Code the Court made
the following pertinent observations:-
“If there is a triable issue in the sense that
there is a fair dispute to be tried as to the
meaning of a document on which the claim is
based or uncertainty as to the amount actually
due or where the alleged facts are of such a
nature as to entitle the defendant to interrogate
the plaintiff or to cross-examine his witnesses
leave should not be denied.”
33. Mr. Kapur contended that on a parity of reasoning in the
present case it would not be appropriate for the Court to decree the
suit at this preliminary stage without the parties going to trial. He
also relied upon the judgment rendered by this Court in Manisha
Commercial Ltd. vs. N.R. Dongre and Anr., AIR 2000 DELHI 176 ,
and in particular relied upon the following extract from the said
judgment to contend that where there is a serious dispute regarding
the interpretation to be given to a legal document/legal regime, the
CS(OS) No.672/2009 Page 32 of 43
only option for the Court is to frame issues and allow the parties to
proceed to trial, though the Court in an appropriate case may possibly
dispense with the trial and proceed directly to the stage of final
arguments:-
“6. ……………………The Apex Court has
enjoined the trial Court to meaningfully fulfill
this judicial exercise. Order XII, Rule 6 in fact
prescribes this duty shall be a suo motu
exercise. This Rule however, predictably invests
discretion with the Court that is even if there is
an unequivocal admission by a party but the
passing of a judgment would work injustice on
it, judgment could be declined. In the case at
hand, even though counsel for the defendants
have not denied that there is no controversy
concerning the factual matrix, there is a serious
dispute regarding the interpretation to be given
to the legal regime (found in the Indian Trusts
Act). A conjoint reading of this Rule with
Order XV Rule 1 renders the position free from
doubt. Could it be reasonably argued that the
parties are not at issue with each other in the
present case. I think not. Even on the admitted
facts it is highly debatable whether the
judgment should be delivered as pleaded for in
the plaint. The only option for the Court is to
frame issues, and since facts are not in contest,
possibly dispense with the „Trial‟ and proceed
directly to the stage of „Final Arguments‟. But
it would be wholly inappropriate to permit any
party to employ Order XII, Rule 6 in those
instances where vexed and complicated
questions or issues of law have
arisen……………………”
CS(OS) No.672/2009 Page 33 of 43
34. The learned senior counsel next contended that parting of
possession of premises by the tenant and exclusive possession of sub-
tenant were the essential ingredients to be proved in the present case
and the burden of proving them was squarely upon the plaintiffs. The
present case was, therefore, not a fit case for the Court to exercise its
discretion under Order XII Rule 6 CPC. In other words, the exclusive
possession of the premises being the first criteria for establishing sub-
letting and the same not being established, the plaintiffs cannot be
allowed to press into service the provisions of Rule 6 of Order XII
CPC, more so, when no admissions had been made by the defendants
in this regard.
35. On the same aspect, Mr. Kapur referred to the judgment in
Celina Coelho Pereira (Ms) and Ors. vs. Ulhas Mahabaleshwar
Kholkar and Ors., (2010) 1 SCC 217 , wherein the Supreme Court
after reviewing the entire gamut of case law on the aspect of sub-
letting summarized the legal position as follows:-
“25. The legal position that emerges from the
aforesaid decisions can be summarised thus:
(i) In order to prove mischief of subletting as a
ground for eviction under rent control laws,
two ingredients have to be established, (one)
CS(OS) No.672/2009 Page 34 of 43
parting with possession of tenancy or part of it
by tenant in favour of a third party with
exclusive right of possession and (two) that
such parting with possession has been done
without the consent of the landlord and in lieu
of compensation or rent.
(ii) Inducting a partner or partners in the
business or profession by a tenant by itself does
not amount to sub-letting. However, if the
purpose of such partnership is ostensible and a
deed of partnership is drawn to conceal the real
transaction of sub-letting, the court may tear
the veil of partnership to find out the real
nature of transaction entered into by the tenant.
(iii) The existence of deed of partnership
between tenant and alleged sub-tenant or
ostensible transaction in any other form would
not preclude the landlord from bringing on
record material and circumstances, by
adducing evidence or by means of cross-
examination, making out a case of sub-letting
or parting with possession in tenancy premises
by the tenant in favour of a third person.
(iv) If the tenant is actively associated with the
partnership business and retains the control
over the tenancy premises with him, may be
along with partners, the tenant may not be said
to have parted with possession.
(v) Initial burden of proving subletting is on the
landlord but once he is able to establish that a
third party is in exclusive possession of the
premises and that tenant has no legal
possession of the tenanted premises, the onus
shifts to tenant to prove the nature of
occupation of such third party and that he
(tenant) continues to hold legal possession in
tenancy premises.
CS(OS) No.672/2009 Page 35 of 43
(vi) In other words, initial burden lying on
landlord would stand discharged by adducing
prima facie proof of the fact that a party other
than tenant was in exclusive possession of the
premises. A presumption of sub-letting may
then be raised and would amount to proof
unless rebutted.”
36. On the strength of the aforesaid judgments, Mr. Kapur
contended that there was not even an averment in the plaint or even in
the application under Order XII Rule 6 CPC that the defendant No.1
had parted with possession of the premises to the defendant No.2 and
thus no admission could be inferred by this Court.
37. Reliance was also placed by Mr. Kapur on the judgment
rendered by the Supreme Court in the case of Balraj Taneja and Anr.
vs. Sunil Madan and Anr., (1999) 8 SCC 396 to contend that it is a
matter of the Court’s satisfaction and only on being satisfied that
there is no fact which needs to be proved on account of the deemed
admission, the Court can pass a judgment against the defendant who
has not filed the written statement; but if the plaint itself indicated
that there were disputed questions of fact involved in the case
regarding which two different versions are set out in the plaint itself
and the Court had to choose between two different versions put forth
before it, it would not be safe for the Court to pass a judgment
CS(OS) No.672/2009 Page 36 of 43
without requiring the plaintiff to prove the facts so as to settle the
factual controversy.
38. Mr. N.K. Kaul, the learned senior counsel for the plaintiffs
rejoined to the aforesaid contentions raised on behalf of the
defendants by submitting that though the “minimum guarantee” by
itself may not be conclusive; however, the fact that it finds mention in
a separate document executed a day after the Consignment
Agreement ex-facie demonstrates that the Consignment Agreement
was a camouflage and the commission formula was never meant to be
implemented. As regards the contention of the defendants that in the
years 2008, 2009 and 2010, the defendant No.1 had received less than
the “minimum guarantee” amount, Mr. Kaul countered the same by
stating that the said figures which are mentioned in the reply under
Order XII Rule 6 CPC could easily have been manipulated by the
st
defendants in collusion with each other, since the suit was filed on 1
April, 2009 and the aforesaid figures could have been tabulated post
st
31 March, 2009.
39. Mr. Kaul submitted that the reliance of the defendant No.1 on
the judgment of Mrs. Raj Duggal (supra) was misplaced as the said
CS(OS) No.672/2009 Page 37 of 43
decision was rendered by the Court while dealing with the provisions
of Order XXXVII of the CPC. He, in turn, relied upon the judgment
in P. Chandrasekharan and Ors. vs. S. Kanakarajan and Ors.,
(2007) 5 SCC 669 to contend that as held by the Supreme Court in the
said case the interpretation of a document which goes to the root of
the title of a party gives rise to a substantial question of law.
40. Having heard the learned senior counsel for the parties at
length, in my considered opinion, this is not a fit case for exercise of
discretionary power vested in the Court by Rule 6 of Order XII CPC.
I say so for the reason that it cannot be said that there is any
admission either of fact or law in the present case which can be
inferred or gleaned from the pleadings or the documents filed by the
defendant No.1 or the defendant No.2. There is no dispute as to the
fact that the defendant No.1 has not parted with the possession of the
premises to the defendant No.2 which is a sine qua non for the
creation of a sub-tenancy. There is not even an assertion in the plaint
or in the application under Order XII Rule 6 CPC that the premises
are in the possession of the defendant No.2. A holistic reading of the
Consignment Sales Agreements with the Supplemental Agreements
CS(OS) No.672/2009 Page 38 of 43
also do not point to the creation of a sub-lease, notwithstanding the
provision for “minimum guarantee” in the Supplemental Agreements.
The plaintiffs have nowhere disputed the fact that the defendants are
carrying on the sale of the branded goods/apparel of the defendant
No.2, M/s. Wills Lifestyle. The question which arises is why would a
landlord sell the goods of his tenant? A doubt is also created as to
why personnel will be employed by the landlord for the benefit of his
tenant taking on the statutory responsibilities consequent thereto.
Then again, why would the defendant No.1 file “Form F” mandated
by the Central Sales Tax Act, if not for the purpose of consignment
sales.
41. The defendants have also placed on record their statements of
account to show that they were incurring various expenses from time
to time in order to comply with the provisions of the agreement.
Although the plaintiffs’ counsel sought to pick holes in the said
account by submitting that Bank Account No.00030420000243 with
HDFC Bank clearly shows that the entire amount deposited in
defendant No.1’s account was being transferred to two different
accounts ending with Nos.0237 and 0250 and the balance in the
CS(OS) No.672/2009 Page 39 of 43
account of the defendant No.1 keeps coming to zero, I find from the
record that the defendant No.1 thereafter filed two other bank
statements pertaining to Bank Account Nos. 00030420000250 and
00030420000243 both with HDFC Bank and bank account ending
with No.0234 with HDFC Bank (pages 55 to 242 of Part-III file) to
clarify the matter. The defendants’ counsel then submitted that
neither of these accounts shows any expenses being incurred by the
defendant No.1 and in fact these amounts only reflect transfer
between the defendant No.1 and defendant No.2 as well as payment
received from credit card companies. Be that as it may, in the opinion
of this Court, the accounts further reflect that the matter needs to be
gone into and cannot be summarily disposed of at this stage by
passing a decree as prayed for by the plaintiffs.
42. Most importantly, a categorical assertion has been made by the
defendant No.1 that possession has not been parted with by the
defendant No.1 to the defendant No.2. The defendant No.2 has
reinforced the said statement by stating that the defendant No.1 is
only selling the products of the defendant No.2 from its showroom
and under its own supervision and control and that the defendant No.1
CS(OS) No.672/2009 Page 40 of 43
is in lawful possession of the showroom. The plaintiffs have not been
able to refute the aforesaid assertion made by the defendant No.1 that
it is in exclusive possession of the showroom. It cannot be lost sight
of that the premises in question are of a commercial nature eminently
suitable for running a showroom. Why then should the defendant
No.1 be precluded from running a showroom of M/s. Wills Lifestyle
in the premises. The record shows that the defendant No.1 has been
running its agency business since the year 2000 and the present suit
has been filed in April, 2009, i.e., more than nine years after the
defendant No.1 commenced its aforesaid business. The plaintiffs,
however, allege that they came to know of the same “very recently”
without specifying the date. In such circumstances, a legitimate
doubt arises as to why the plaintiffs who reside in Delhi did not
protest any sooner and came to file the present suit nine years after
the defendant No.1 commenced running its showroom of M/s. Wills
Lifestyle in the tenanted premises.
43. As regards the interpretation of the Consignment Sales
Agreement, I am of the opinion that the meaning and interpretation of
a document raises a triable issue. It is not a legal exercise simplicitor,
CS(OS) No.672/2009 Page 41 of 43
as is sought to be made out by the learned senior counsel for the
plaintiffs. The intention of the parties is of paramount importance
and such intention, in my opinion, must be gathered from the
surrounding facts and circumstances. The Court must determine from
the evidence on record the pith and substance of the transaction
between the parties, irrespective of the labelling of the document
under which the parties have transacted. A mere reading of the
clauses may not sufficiently indicate the nature of the transaction
which the parties intended to chronicle. Indubitably, the intention of
the parties has ultimately to be inferred by the Court but there must be
a foundation for the Court to infer the intention of the parties and such
foundation must necessarily be laid by the parties through trial. It is
only upon gleaning the evidence adduced that the Court may be able
to decipher whether the document is a camouflage and whether it
masks a sham transaction or a transaction which the law does not
countenance. To say that because there is a “minimum guarantee”
amount provided for in the present case the same must be interpreted
to mean “rent” would be to oversimplify the matter. The question for
all intents and purposes is a vexed one and no precise mathematical
CS(OS) No.672/2009 Page 42 of 43
test or litmus test can be applied to determine the intent of the parties
nor it is possible or indeed proper for the Court to conjecture or
surmise the intent of the parties at this stage.
44. For all the aforesaid reasons, in my opinion, the present case is
a fit case which must proceed to trial. I am unable to glean or gather
any admission(s) which may enable me to adopt the easier course of
passing a decree forthwith. It is, therefore, inevitable that the
plaintiffs must go through the rigors of a trial to prove and establish
their case. The present application is accordingly dismissed and the
case directed to be listed for admission/denial before the Joint
th
Registrar on 13 August, 2012.
45. IA No.10279/2010 stands disposed of in the above terms.
REVA KHETRAPAL
JUDGE
July 10, 2012
km
CS(OS) No.672/2009 Page 43 of 43