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Judgment
S.S. Nijjar, J.—This petition seeks winding up of the company on the ground that the company has failed to refund the security deposit in the sum of Rs. 1,60,00,000, which was paid by the petitioner to the company in consideration of the leave and licence agreement, which was entered into between the petitioner and the company on June 22, 1995.
Mr. Kadam pointed out various clauses of the leave and licence agreement to indicate that the document contains only the formal covenants which are provided for in the usual leave and licence agreement, initially the period of licence was 60 months commencing from July 15, 1995. Under the various clauses of this agreement, it is categorically stated that the occupation of the premises by the petitioner would not be tantamount to a tenancy and will not create any tenancy or other similar rights. It is also emphatically clarified that the occupation of the premises will not amount to any title to the said premises in the petitioner. In fact, it is provided that even though the petitioner is in physical occupation of the premises, the petitioner will not claim to be in possession of the same. An option is given under this leave and licence agreement for extension of the licence by another period of 60 months. The licence fee for the occupation of the premises is fixed at Rs. 22,500 per month. This amount is so fixed because the company would be earning an interest of Rs. 2,40,000 per annum. The licence period would be extended by another five years, if a clear three months'' notice is given by the petitioner to the company prior to the expiry of the first licence period. There are two further agreements dated July 1, 1995. In one of the agreements, it is agreed between the parties that the company shall not exercise the right to terminate the agreement as provided in clauses 9 and 12 of the earlier agreement. It is also provided that the petitioner shall be entitled to carry out at its own expense any alterations in the licensed premises, subject to obtaining requisite permission/approval from the Bombay Municipal" Corporation. In the other agreement dated July 1, 1995, the petitioner is given an option to purchase the premises. The consideration of the premises in the case of purchase by the petitioner is fixed at Rs. 1,75,00,000. The option is to be exercised by the petitioner, at any time during the last three months of the licensed period, i.e., from April 15, 1999, to July 14, 1999. The option is to be exercised in writing. In the case of exercise of option for purchase, the agreement is subject to the necessary no-objection certificate from the Appropriate Authority under the Income Tax Act, 1961. It is provided that for which the parties shall immediately after the execution of the agreement, file Form No. 37-I to the Authority for obtaining the no-objection certificate. It is, however, provided that if the petitioner fails or neglects to exercise the option strictly within the period of three months, the option shall automatically lapse and thereafter it will not be available to the petitioner. On June 12, 1999, the petitioner sought to terminate the leave and licence agreement by a written notice. As no reply was received, another reminder was given on August 12, 1999. The company was requested to refund the security deposit. Ultimately a reply was given to these two letters by the advocates of the company on August 31, 1999. In this letter, it is categorically stated that in 1995, there had been discussions and negotiations between the parties in the course of which two alternatives were considered : (i) an outright purchase of the premises at Rs. 175 lakhs and (ii) initial taking of the premises on leave and licence (with a deposit substantially equivalent to the purchase price) with intent to purchase subsequently. It is also stated that within a few days of execution of the licence agreement one Mr. Cawas Patel represented and promised to the company that the petitioner had decided that on the termination of the licence period, the petitioner would not claim refund of the deposit, but would purchase the premises against Rs. 1,60,00,000 and payment of a further sum of Rs. 15 lakhs. Thus, the two agreements dated July 1, 1995, came to be executed. It is put on record that the society had asked for payment of non-occupancy charges. The society was informed that the premises had actually been sold to the petitioner, but as there was no conveyance, the petitioner was in possession as a proposed unit purchaser and therefore, the society should not treat the petitioner different from the other proposed unit purchasers. Relying on the aforesaid Mr. Kadam has submitted that the defence put forward is sham and bogus. The company is now wanting to compel the petitioner to purchase the premises only because there has been a fall in the property prices. The leave and licence agreement made it abundantly clear that no property rights have been operated in favour of the petitioner. He also submitted that the option did not create any legal obligation on the petitioner to purchase the premises. In any event, the option agreement would be void in view of Section 269UC of the Income Tax Act.
Mr. Savant appearing for the company, however, submitted that a perusal of the various correspondence carried on by the company with the co-operative society and with the petitioner would clearly show that there was an agreement to purchase. He also submitted that unless there was an agreement to purchase, the petitioner would not have made such a hefty deposit which was almost equal to the market price for the sale of the premises. He also submitted that during the stay of the petitioner in the premises, the petitioner had paid all the society outgoings and did not make payment of non-occupancy charges. If the petitioner had treated this as a mere licence, then the non-occupancy charges would have been paid either by the petitioner or by the company. He further submitted that the formal conveyance could not be executed as there is a balance of Rs. 15 lakhs which is to be paid by the petitioner. The company was well aware of the agreement to purchase as is evident from the letters-annexure 1, 2 and 3 to the affidavit in reply. He also submitted like Mr. Kadam that the petitioner is trying to wriggle out of the agreement to purchase, in view of the fall in the prices of the property in Mumbai. Learned counsel also submitted that these are all matters which would have to be adjudicated upon after the evidence is led by both the parties. These defences cannot be rejected summarily at this stage.
I have considered the submissions made by learned counsel. At this, prima facie, stage, one has to see the documents which are presented before the court. What has been presented before the court is a leave and licence agreement dated June 22, 1995. Under this agreement, all rights of the ownership have been reserved with the company. It has been time and again clarified that the possession of the petitioner is not to be treated as giving any tenancy rights to the petitioner. Even if the tenancy rights are excluded, it is a little difficult to accept that the ownership rights have been given to the petitioner in the same document. Even if one reads the leave and licence agreement dated June 22, 1995, together with the two agreements dated July 1, 1995, it does not change the legal situation. All that has been done by the agreement dated July 1, 1995, is that the petitioner had been permitted to make structural changes. In the earlier agreement Clause 5 merely prohibited the making of any structural changes by the licensee without the prior written consent of the licensor. Thus, nothing substantially new has been granted to the licencee in the agreement dated July 1, 1995. Clauses 9 and 12 merely provided that the petitioner shall not remain in the premises after the termination of the leave and licence. In my view, nothing really has been added by the agreement not to terminate the leave and licence agreement. The option agreement merely gives an option to the petitioner to purchase the premises. The option has to be exercised in a particular manner. I am of the considered opinion that an option cannot be equated with a legal right in favour of the company. If anything, it was an option given to the petitioner to take a decision as to whether or not to purchase the premises. The company cannot compel the petitioner to exercise an option to purchase the premises. Furthermore the agreement which is sought to be set up is on the basis of oral representation given by one Cawas Patel. In the reply given by the advocates, it is stated that a few days after the execution of the first agreement, a representation was made by Mr. Patel that the petitioner has agreed to purchase the premises. However, in the affidavit in reply, the plea taken is that even the initial agreement was executed on the understanding that the agreement is actually an agreement for purchase and is not a leave and licence agreement.
I am unable to accept the submissions of Mr. Savant. Even if such an oral agreement existed in derogation of the agreement in writing, the evidence of such an oral agreement would not be permitted u/s 92 of the Indian Evidence Act, 1872. If specific performance of any agreement was to be sought by the company, it would have to be sought only of an oral agreement. The written agreements talk either of leave and licence and the rights of the parties under the leave and licence agreement or an option which is given to the petitioner to purchase the premises. Any other agreement would have to be founded upon certain oral representations which are said to have been made by Mr. Cawas Patel.
In view of the above, I find that the defences put up by the company are not such as to bring them within the domain of bona fide and substantial defences. In view of the above, the petition is admitted and fixed for hearing on June 6, 2000.
The petition to be advertised in Free Press Journal, Janmabhoomi and the Maharashtra Government Gazette. The petitioner to deposit a sum of Rs. 2,000 with the Prothonotary and Senior Master within a period of four weeks from today.
On the request of learned counsel for the company, the advertisement is stayed for a period of six weeks.
Parties to act on the copy of the order duly authenticated by the Company Registrar of this court.