Is every claim for a license fee for the remainder of a lock-in period in a leave and license agreement considered a claim for damages?

 (e) Every claim for license fee for the remainder of a lock-in period in a leave and license agreement is not per se a claim for damages, liquidated or unliquidated. In a given case, it may be in the nature of either, or in the nature of a penalty, or it may simply be a component of the contractual consideration and therefore a debt properly so-called when the contingency in contemplation comes to pass. This will depend on an interpretation of the contract in question and an assessment of the conduct of the parties.

 IN THE HIGH COURT OF BOMBAY

Company Petition No. 496 of 2013

Decided On: 28.02.2014

 Indiabulls Properties Pvt. Ltd.  Vs. Treasure World Developers Pvt. Ltd.

Hon'ble Judges/Coram:

G.S. Patel, J.

Citation: MANU/MH/0249/2014,2014 SCCOnLine Bom 4768.

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Is a contractual provision for a lock-in period in a leave and license agreement illegal?

The result of this discussion, in summary, is that for the purposes of Section 433 of the Companies Act, 1956:

(a) The liability of the respondent-company must be certain. Where the liability is to be adjudged, i.e., where it remains to be decided by a court whether or not the respondent-company is liable in the first place, there can be no 'debt' within the meaning of the section. The liability of a company is its obligation to pay. The debt is the amount that it is liable to pay.

(b) The debt must an ascertained, or definitely ascertainable, amount, not one that requires adjudication. 13 A claim in damages is no debt. 14

(c) The debt must be a debt now due at the time of presentation of the petition. Any contingency contemplated must be one that has come to pass; it cannot be one yet to occur. 15 It is on the happening of a contingency that a company can be said to be 'indebted'. Should the contingency never happen, there can be no debt .24

(d) A contractual provision in a leave and license agreement for a lock-in period is not per se illegal, unlawful, void or even voidable.

(e) Every claim for license fee for the remainder of a lock-in period in a leave and license agreement is not per se a claim for damages, liquidated or unliquidated. In a given case, it may be in the nature of either, or in the nature of a penalty, or it may simply be a component of the contractual consideration and therefore a debt properly so-called when the contingency in contemplation comes to pass. This will depend on an interpretation of the contract in question and an assessment of the conduct of the parties. {Para 64}

 IN THE HIGH COURT OF BOMBAY

Company Petition No. 496 of 2013

Decided On: 28.02.2014

 Indiabulls Properties Pvt. Ltd.  Vs. Treasure World Developers Pvt. Ltd.

Hon'ble Judges/Coram:

G.S. Patel, J.

Citation: MANU/MH/0249/2014,2014 SCCOnLine Bom 4768.

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Whether landlord can claim rent towards lock-in period without pleading that he has sustained loss due to premature vacation of premises?

The reason why I state that the suit as per averments in the plaint itself was not maintainable and should not have been entertained is, that the plaintiff, though pleading breach of contract i.e. Lease Deed and the Maintenance Agreement by the defendant and without pleading any loss from such breach, is seeking relief in the nature of specific performance and which is not permissible in law. The Lease Deed was not specifically enforceable at the instance of the plaintiff as the landlord and on breach of the Lease Deed by the defendant as tenant, by vacating the premises before expiry of the term thereof, the plaintiff was entitled to only damages for breach of contract and the measure of which damages was the loss if any suffered by the plaintiff. However, the plaintiff was required to plead such loss and no loss has been pleaded.

11. The position with respect to rent of lock-in period is akin to that of earnest money/security and qua which the Supreme Court in Kailash Nath Associates Vs. Delhi Development Authority MANU/SC/0019/2015 : (2015) 4 SCC 136, followed by me in Speed Track Cargo Vs. State Bank of Patiala MANU/DE/0359/2016, Palm Art Apparels Pvt. Ltd. Vs. Enkay Builders Pvt. Ltd. MANU/DE/3533/2017, Mera Baba Pvt. Ltd. Vs. Ram Lubhaya Puri MANU/DE/2199/2018, Klintoz Pharmaceuticals Pvt. Ltd. Vs. Ravinder Shankar Mathur MANU/DE/3733/2018, Satish Verma Vs. Garment Craft (India) Pvt. Ltd. MANU/DE/7859/2017 and Mahendera Verma Vs. Suresh T. Kilachand MANU/DE/2352/2019, held that mere entitlement in the agreement to forfeit is not enough and loss/damages from breach of contract has to be proved. In fact, the matter is no longer res integra. The Division Bench of this Court in Tower Vision India Pvt. Ltd. Vs. Procall Pvt. Ltd. MANU/DE/4958/2012 has held that rent of the lock-in period in a Lease Deed cannot be claimed without pleading loss from vacation by the tenant of the property prior to the expiry of the term of lease. 

IN THE HIGH COURT OF DELHI

CS (OS) 3032/2014

Decided On: 06.01.2020

 Deepak Chopra  Vs.  Flakt (India) Pvt. Ltd.

Hon'ble Judges/Coram:

Rajiv Sahai Endlaw, J.

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