1. This second appeal is filed aggrieved against the Judgment and decree dated 01.12.2023 in A.S.No.67 of 2023 on the file of the III Additional District Judge, Kakinada, confirming the Judgment and decree dated 08.02.2023 in O.S.No.396 of 2018 on the file of the II Additional Senior Civil Judge Court, Kakinada.
2. The appellant herein is the plaintiff and the respondent herein is the defendant in O.S.No.396 of 2018 on the file of the II Additional Senior Civil Judge Court, Kakinada.
3. The plaintiff initiated action in O.S.No.396 of 2018 on the file of the II Additional Senior Civil Judge, Kakinada, seeking specific performance of a lease deed, dated 02.09.2002, directing the defendant to renew the lease period for a further period of 15 years by executing a fresh lease deed in respect of the schedule property in favour of the plaintiff-company or his order; if the plaintiff-company fails to do so, the Court may execute a lease deed in favour of the plaintiff-company; for a permanent injunction restraining the defendant from creating any encumbrances over the suit schedule property and for costs.
4. The learned II Additional Senior Civil Judge, Kakinada, dismissed the suit without costs. Felt aggrieved of the same, the unsuccessful plaintiff in the above said suit filed the aforesaid appeal before the first appellate Court. The learned III Additional District Judge, Kakinada, dismissed the first appeal by confirming the judgment and decree passed by the trial Court. Aggrieved thereby, the unsuccessful plaintiff/appellant approached this Court by way of second appeal.
5. For the sake of convenience, both parties in the appeal will be referred to as they are arrayed in the original suit.
6. The case of the plaintiff, in brief, as set out in the plaint averments in O.S.No.396 of 2018, is as follows:
The plaintiff is a Company incorporated under the Companies Act and the defendant entered into a lease agreement with the plaintiff’s Company Limited/ M/s. IBP Company Limited, incorporated under the Companies Act, for the schedule property for a period of 15 years for the purpose of running a filling station at a monthly rent of Rs.30,000/- per month with an escalation of 15% every 5 years. While so, on 02.05.2007, M/s. IBP Company Limited was amalgamated with the plaintiff-company, i.e., Indian Oil Corporation Limited, and after the amalgamation, the plaintiff company gave a notice to the defendant, and the monthly rent, as agreed in the lease deed dated 02.09.2002, was paid by the plaintiff company. The plaintiff pleaded that as per the lease agreement, there is an express provision for renewal of the lease deed for a period of another 15 years at the option of the lessee that “if the lessee shall be desirous of renewing this present lease and or such desire shall have been given to the lessor not less than three months notice prior to the expiration hereof, and shall have duly observed and performed all the terms and conditions hereof, the lessor shall grant to the lessee a renewed lease of the said premises for a further period of fifteen years on mutual terms and conditions, by way of executing and registering a fresh lease deed”.
The plaintiff further pleaded that on 18.05.2017, the defendant addressed a letter to the officials of the plaintiff-company expressing his interest in renewing the lease for a period of 20 years from the date of expiry of the lease agreement dated 02.09.2002 for Rs.2,00,000/- as rent with an escalation of 10% for every three (03) years. The plaintiff further pleaded that in response to the said letter, a note was prepared to nominate the committee for conducting the rental negotiation with the defendant and accordingly, negotiations were conducted with the defendant for the renewal of the lease period by the officials of the plaintiff-company in the month of September, 2017 and they requested the defendant to renew the lease agreement for a further period of 15 years as per the renewal clause by executing a fresh lease deed. The plaintiff pleaded that after due negotiations with the defendant, the plaintiff-company continued its business in the schedule premises in good faith that the defendant would renew the lease for further period of 15 years by executing a fresh lease deed and thereafter, the defendant addressed a letter dated 30.01.2018, stating that he was not interested in renewing the lease period and that he intended to dispose of the schedule property by way of sale or gift. The plaintiff further pleaded that the plaintiff-company had always shown interest in the renewal of the lease period as per the renewal clause and if the lease period is not extended for a further fifteen years, the plaintiff-company will suffer irreparable loss. Hence, the present suit is filed.
7. The defendant filed written statement denying the contents of plaint averments and further contended as follows:
The plaintiff-company is established to make profits but not for public interest, and in fact the lease period has come to an end due to the passage of time. The defendant pleaded that the plaintiff-company addressed a letter to its dealer to vacate the schedule property and deliver possession of the same to the defendant as they do not want to continue as a tenant. The defendant further pleaded that the renewal of the lease period is only an option and not compulsory, and as per the terms of the lease, no committee has to be appointed for the renewal of the lease period, and that the lease was never renewed, as such, the plaintiff-company has no right to continue in possession of the schedule property as a tenant and on 06.02.2018, the plaintiff-company itself wrote a letter to Vamsi Krishna filling station, which is its dealer, stating to vacate the property and deliver possession of the property to the defendant.
The defendant further pleaded that the plaintiff-company had no right to question the right of the defendant to alienate the schedule property, and in fact, the daughters of the defendant are not agreeing to the renewal of the lease since they want to develop their property for their own purposes. The defendant pleaded that he issued a notice terminating the tenancy of the plaintiff-company and the plaintiff-company received the said notice and did not issue any reply notice to claim the loss due to vacating of property and that the plaintiff-company had to pay damages to the defendant at Rs.1,50,000/- for use and occupation of the property after expiry of the lease agreement dated 02.09.2002, as such, requested that there is no cause of action for the suit and hence, the suit is liable to be dismissed.
8. On the basis of above pleadings, the II Additional Senior Civil Judge, Kakinada, framed the following issues for trial:
1) Whether lease is extended by the condition of defendant as prayed by the plaintiff or not?
2) Whether lease deed dated, 02.09.2002 is ended by completion of time as pleaded by defendant or not?
3) Whether the plaintiff is entitled specific pray for renewal of lease period or not?
4) Whether the plaintiff is entitled permanent injunction as prayed for or not? and
5) To what relief?
9. During the course of trial in the trial Court, on behalf of the plaintiff, P.Ws.1 to 3 were examined and Exs.A-1 to A-7 were marked. On behalf of the defendant, D.W.1 was examined and Exs.B-1 and B-2 were marked.
10. The learned II Additional Senior Civil Judge, Kakinada, after conclusion of trial, on hearing the arguments of both sides and on consideration of oral and documentary evidence on record, dismissed the suit without costs. Felt aggrieved thereby, the unsuccessful plaintiff filed the appeal suit in A.S.No.67 of 2023 before the III Additional District Judge, Kakinada, wherein, the following points came up for consideration.
1) Whether there are any irregularities either in appreciating the evidence or giving findings by the trial Court in its judgment in O.S.No.396 of 2018 dated 08.02.2023 and if so, interference of appellate Court is warranted? and
2) What relief?
11. The learned III Additional District Judge, Kakinada, i.e., the first appellate Judge, after hearing the arguments, answered the points, as above, against the plaintiff/appellant and in favour of the defendant/respondent and dismissed the appeal filed by the plaintiff. Felt aggrieved of the same, the unsuccessful plaintiff in O.S.No.396 of 2018 filed the present second appeal before this Court.
12. Heard Ms. A.Priyanka, learned counsel appearing on behalf of Sri Sai Sanjay Suraneni, learned counsel for the appellant/ plaintiff and Sri Marri Venkata Ramana, learned counsel for the respondent/defendant.
13. It has to be kept in mind that the right of appeal is neither a natural nor an inherent right attached to the litigation. It is regulated in accordance with law. A second appeal preferred under Section 100 of CPC could be admitted only when the appellant satisfies this Court that the substantial question of law between the parties arise in this case. A proper test for determining whether a question of law raised in the case is substantial would be or whether it directly and substantially affects the rights of the parties and if so, whether it is either an open question in the sense that it is not finally settled by the superior Courts or is not free from difficulty or cause for discussion of alternative views. In a case of Boodireddy Chandraiah v. Arigela Laxmi((2007) 8 SCC 155), the Apex Court held that it is not within the domain of the High Court to investigate the grounds on which the findings were arrived at by the last Court of fact namely, the first appellate Court. In a case where from a given set of circumstances two inferences of facts are possible, one drawn by the lower appellate Court will not be interfered by the High Court in a second appeal. Adopting any other approach is not permissible. Where, the facts required for a point of law have not been pleaded, a litigant should not be allowed to raise that question as a substantial question of law in second appeal. The mere appreciation of facts, the documentary evidence and the contents of the documents cannot be held to be raising a substantial question of law.
14. The plaintiff having chosen to invoke the jurisdiction of this Court under Section 100 of Civil Procedure Code, it is for him to meet the above principles and satisfy the Court whether there exists any substantial question of law.
15. This second appeal is filed against the concurrent findings arrived by both the Courts below, therefore the grounds urged in the second appeal are to be scrutinized to find out whether the appellant has shown any substantial question of law. The contention of the appellant is that the judgment and decree of the trial Court as well as the first appellate Court are contrary to law and that the second appeal may be allowed by setting aside the judgment and decree passed by both the Courts below i.e. the trial Court and the first appellate Court.
16. The undisputed facts are that the defendant executed a registered lease deed dated 02.09.2002, in respect of suit schedule property for fifteen years in favour of the M/s. IBP Company Ltd., which was amalgamated as the present plaintiff’s company, i.e., the Indian Oil Corporation Ltd. The appellant also admitted in his evidence that he initially entered into an agreement with Indo Burma Petrol Limited, which is now amalgamated as Indian Oil Corporation Limited and the defendant received an amount of Rs.20,00,000/- as an advance on 04.02.2009, from Vamsi Krishna Filling Station, under Ex.A-5 receipt and he has to return the advance amount at the end of the lease agreement from the schedule site. The terms of Ex.A-1 registered lease deed are also undisputed by either of the parties.
17. The appellant/plaintiff in the suit is claiming relief of specific performance of renewal of lease in Ex.A-1 lease deed. The relief sought by the plaintiff is to direct the defendant to renew the lease deed for a further period of fifteen (15) years by executing a fresh lease deed in respect of schedule property in favour of the plaintiff’s company or his order in favour of the plaintiff.
18. The recitals in the Clause No.4 of Ex.A-1 registered lease deed is as follows:-
“If the lessee shall be desirous of renewing this present lease and or such desire shall have given to the lessors not less than three months notice prior to the expiration hereof and shall have duly observed and performed all the terms and conditions herein the lessor shall grant to the lessee a renewed lease of the said premises for further period of Fifteen Years on mutual terms and conditions, by way of exciting and Tregenting a fresh lease deed.”
19. According to Ex.A-1 terms of lease, the lease period ended on 01.09.2017, a lessee shall express its desire to continue in the premises not less than three (03) months’ prior notice to the expiration thereof and the lessor shall grant to the lessee, a renewed lease of the said premises for a further period of fifteen years “on mutual terms and conditions” by executing a fresh lease deed. Therefore, as per Clause No.4 of Ex.A-1 registered lease deed-(1) a lessee has to issue three months prior notice to the lessor to express its desire to continue in the premises before expiry of lease, which is a mandatory requirement. The recitals in Clause No.4 of Ex.A- 1 further reveal that after receipt of notice or desire letter from the lessee, the lease period has to be extended for a further period of fifteen years on “mutual terms and conditions only”, which is also another “mandatory requirement” to execute a fresh lease deed for a further period of fifteen years.
20. The plaintiff further pleaded that they have addressed a letter to the defendant on 01.09.2017, i.e., three (03) months prior to 01.09.2017 to express its desire to continue in the premises for a further period of fifteen years. But, he failed to produce the said letter before the trial Court or before the First Appellate Court and also failed to exhibit the said letter to prove its readiness and willingness to extend the lease for a further period of fifteen years.
21. Learned counsel for the appellant would contend that D.W.1 himself admitted that Ex.A-2 letter dated 18.05.2017 was issued by him to the plaintiff- company as a reply to the letter of the Indian Oil Corporation. But, to prove the recitals in the alleged letter addressed to the defendant by the plaintiff, no evidence is produced or the alleged letter said to have been addressed to the plaintiff is not yet filed by the appellant. In fact, the plaintiff-company did not file such letter before the Court to prove that they had given three (03) months prior notice to the defendant in order to determine the intention of the plaintiff-company to renew the lease period for a further period of fifteen years. Furthermore, the evidence on record clearly goes to show that an Ex.A-2 letter dated 18.05.2017 was addressed by the defendant to the plaintiff by informing his interest to renew the lease period for twenty years, subject to accepting rent Rs.2,00,000/- at 10% increase for every three (03) years. It is also evident that only after receipt of Ex.A-2 notice, the plaintiff-company issued Ex.A-6 notice to the defendant stating that they expressed desire to renew the lease period for a further period of twenty years on mutually agreed terms and conditions as per Clause No.4 of Ex.A-1 lease agreement and the plaintiff further contended that they did not accept the rent as demanded by the defendant under Ex.A-2 notice dated 18.05.2017. Therefore, the aforesaid circumstances clearly reveal that there is no mutual understanding in between both the parties for renewal of lease period for a further period of fifteen years.
22. The admissions of the plaintiff witnesses itself goes to show that negotiations in between the parties were failed and there is no such mutual understanding in between both the parties and further, there is no renewal of lease from 02.09.2017 onwards and the plaintiff is continuing in the premises and approached the civil Court after a lapse of ten (10) months i.e. on 17.07.2018, to grant a relief of specific performance of lease deed dated 02.09.2002 to renew the lease period for fifteen years from 02.09.2017. Admittedly, the plaintiff filed the present suit after a lapse of ten (10) months of lease period and the plaintiff continued in the possession of the schedule property without extension of further lease period and later they have filed the suit for specific performance of lease deed dated 02.09.2002, to renew the lease period for a further period of fifteen years. Moreover, the defendant/landlord filed a suit for eviction before the same Court and the said suit was decreed by evicting the plaintiff herein from out of the plaint schedule premises. Aggrieved by the said judgment, the appellant preferred a first appeal and the said first appeal was also dismissed by the learned First Appellate Judge.
23. Section 16(c) of the Specific Relief Act, 1963, bars the relief of specific performance in favour of a person, who fails to aver and prove his readiness and willingness to perform his part of the contract. In a case of K.S. Vidyanadam and Ors. vs Vairavan(1997 (3) SCC 1), the Apex Court held that the relief of grant of specific performance is discretionary and the Court is not bound to grant it. Though it is pleaded that the plaintiff addressed a letter dated 18.05.2017, to express its desire to continue in the premises for a further period of fifteen years, but admittedly the plaintiff failed to produce the said letter either before the trial Court or before the First Appellate Court. It was contended by the learned counsel for the appellant that Ex.A-2 letter addressed by the defendant is a reply to the said letter given by the plaintiff. Admittedly, the alleged letter addressed to the defendant by the plaintiff is not produced by the plaintiff for the reasons best known to the plaintiff and the contents of the letter have to be looked into. Therefore, in the absence of the alleged letter dated 18.05.2017, it is unsafe to come to conclusion that the plaintiff addressed a letter to the defendant on 18.05.2017. Moreover, even if assumed that the plaintiff addressed a letter on 18.05.2017, to the defendant, the present suit is filed after expiry of more than one (01) year from the date of alleged letter and the plaintiff filed the suit on 17.07.2018, till such time, the plaintiff remained silent.
24. The law is well settled that “every suit for specific performance need not be decreed merely because it is filed within the period of limitation and the Courts will also frown upon suits which are not filed immediately after breach/refusal. The fact that the limitation is three (03) years does not mean that the plaintiff has to wait till the last date of limitation”. The material on record reveals that after receipt of three (03) letters under Ex.A-2 to Ex.A-4 from the defendant, the plaintiff addressed a letter on 15.06.2017, i.e., before expiry of period of lease it cannot be considered as three (03) months prior notice. Furthermore, the appellant did not accepted the rent of Rs.2,00,000/- as demanded by the defendant in Ex.A-2 letter dated 18.05.2017. Therefore, it is evident that the plaintiff has not issued any three (03) months prior notice by demanding the defendant to renew the lease period for further period of fifteen years. Having waited for a long period, the plaintiff herein filed the present suit on 17.07.2018, seeking specific performance of renewal of lease for a further period of fifteen years.
25. Learned counsel for the appellant placed reliance on a judgment in Chandrabhan (Deceased) Through Legal Representatives and Others Vs. Saraswati and Others((2017) 5 Supreme Court Cases 178), wherein the Apex Court held as follows:
“32. The principles relating to Section 100 of the CPC relevant for this case may be summarised thus:
32.1. An inference of fact from the recitals or contents of a document is a question of fact. But the legal effect of the terms of a document is a question of law. Construction of a document involving the application of any principle of law, is also a question of law. Therefore, when there is misconstruction of a document or wrong application of a principle of law in construing a document, it gives rise to a question of law.
32.2. The High Court should be satisfied that the case involves a substantial question of law, and not a mere question of law. A question of law having a material bearing on the decision of the case (that is, a question, answer to which affects the rights of parties to the suit) will be a substantial question of law, if it is not covered by any specific provisions of law or settled legal principle emerging from binding precedents and involves a debatable legal issue. A substantial question of law will also arise in a contrary situation, where the legal position is clear, either on account of express provisions of law or binding precedents, but the court below has decided the matter, either ignoring or acting contrary to such legal principle. In the second type of cases, the substantial question of law arises not because the law is still debatable, but because the decision rendered on a material question, violates the settled position of law.
32.3 The general rule is that the High Court will not interfere with findings of facts arrived at by the courts below. But it is not an absolute rule. Some of the well-recognised exceptions are where (i) the courts below have ignored material evidence or acted on no evidence; (ii) the courts have drawn wrong inferences from proved facts by applying the law erroneously; or (iii) the courts have wrongly cast the burden of proof. When we refer to "decision based on no evidence", it not only refers to cases where there is a total dearth of evidence, but also refers to any case, where the evidence, taken as a whole, is not reasonably capable of supporting the finding.”
In the case at hand, admittedly the plaintiff has not addressed any letter to the defendant three (03) months prior to the expiry of the lease period, which is a mandatory requirement, though the plaintiff pleaded that they issued a letter prior to Ex.A-2 dated 18.05.2017 to the defendant, but the plaintiff failed to produce the said letter before the Court below or before the First Appellate Court. In the absence of any such letter before this Court, it is unsafe to come to conclusion that the plaintiff addressed a letter to the defendant, three (03) months prior to the expiry of the registered lease deed.
Furthermore, the material on record reveals that the defendant addressed a letter to the plaintiff to express his desire to extend twenty years of lease period on a condition that the rent has to be enhanced to Rs.2,00,000/-, but the quantum of rent as demanded by the defendant is not accepted by the plaintiff and the plaintiff addressed a letter to the dealer of the petrol bunk to vacate the suit schedule premises. Therefore, there is no mutual understanding in between both the parties and the plaintiff failed to comply the mandatory requirements which are required under Clause No.4 of Ex.A-1 registered lease deed. In the absence of any mutual understanding between both the parties, lease cannot be extended, in view of the Clause No.4 of Ex.A-1 lease deed.
26. Learned counsel for the appellant placed reliance on a judgment in State of U.P. and Others Vs. Lalji Tandon (Dead) Through Lrs.( (2017) 5 Supreme Court Cases 178), wherein the Apex Court held as follows:
“13. In India, a lease may be in perpetuity. Neither the Transfer of Property Act nor the general law abhors a lease in perpetuity. (Mulla on The Transfer of Property Act, Ninth Edition, 1999, p.1011). Where a covenant for renewal exists, its exercise is, of course, a unilateral act of the lessee, and the consent of the lessor is unnecessary. (Baker v. Merckel (1960) 1 All ER 668, also Mulla, ibid, p.1204). Where the principal lease executed between the parties containing a covenant for renewal, is renewed in accordance with the said covenant, whether the renewed lease shall also contain similar clause for renewal depends on the facts and circumstances of each case regard being had to the intention of the parties as displayed in the original covenant for renewal and the surrounding circumstances. There is a difference between an extension of lease in accordance with the covenant in that regard contained in the principal lease and renewal of lease, again in accordance with the covenant for renewal contained in the original lease. In the case of extension it is not necessary to have a fresh deed of lease executed; as the extension of lease for the term agreed upon shall be a necessary consequence of the clause for extension. However, option for renewal consistently with the covenant for renewal has to be exercised consistently with the terms thereof and, if exercised, a fresh deed of lease shall have to be executed between the parties. Failing the execution of a fresh deed of lease, another lease for a fixed term shall not come into existence though the principal lease in spite of the expiry of the term thereof may continue by holding over for year by year or month by month, as the case may be.
14. The issue - whether a right to a new lease consequent upon the option for renewal having been successfully exercised should again contain the covenant for renewal, is not free from difficulty and has been the subject matter of much debate both in England and in India. It would all depend on the wordings of the covenant for renewal contained in the principal lease, the intention of the parties as reflected therein and as determinable in the light of the surrounding relevant circumstances.”
In the case at hand, there is no mutual understanding in between both the parties to renew the lease for a further period of fifteen years.
27. There is no evidence on record to show that the plaintiff complied with the conditions under Clause No.4 of Ex.A-1 registered lease deed and there is no mutual understanding in between both the parties to extend the lease period for a further period of fifteen years, which is a mandatory requirement under Clause No.4 of Ex.A-1. Even as per the own admissions of the plaintiff, the plaintiff has not accepted the demand of payment of rent of Rs.2,00,000/- per month made by the defendant, moreover, Ex.B-1 letter dated 08.02.2018, was addressed by the plaintiff to the dealer, asked the dealer to vacate the suit schedule premises. For the aforesaid reasons, the plaintiff is not entitled to the relief of specific performance of lease directing the defendant to execute a fresh lease for a further period of fifteen years from the date of termination of lease. Therefore, the plaintiff approached the Court with unclean hands and the plaintiff squatted over the property for a period of ten (10) months after expiry of the period of lease without obtaining a registered lease deed for a further period of fifteen years.
28. Having regard to the reasons assigned, this Court is satisfied that the concurrent findings of fact recorded by both the Courts below on all the issues/points in favour of the defendant and against the plaintiff do not brook interference and that both the Courts below are justified in dismissing the suit of the plaintiff. The findings of fact recorded by both the Courts below were based on proper appreciation of evidence and the material on record and there was neither illegality nor irregularity in those findings and therefore, the findings do not require to be upset. Further, the existence of a substantial question of law is a sine qua non for the exercise of jurisdiction by this Court as per Section 100 of Code of Civil Procedure. The questions raised, strictly speaking, are not even pure questions of law, let alone substantial questions of law.
29. Viewed thus, this Court finds that none of the questions raised are substantial questions and there is no subsistence in the questions raised and that therefore, the second appeal is devoid of merits and is liable for dismissal at the stage of admission. The law is well settled that a second appeal shall not be admitted if no substantial question of law arises for consideration and when no substantial question of law is involved. The view of this Court is reinforced by the ratio laid down by the Apex Court in the case of Gurdev Kaur v. Kaki(AIR 2006 SC 1975). In the case on hand, as stated supra, this Court finds after careful examination of the pleadings, evidence and contentions that no substantial question of law is involved, this second appeal is liable for dismissal at the stage of admission, in view of narrow compass of Section 100 of Civil Procedure Code.
30. In the result, the second appeal is dismissed at the stage of admission, confirming the judgment and decree of both the Courts below. Pending applications, if any, shall stand closed. No costs.
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