HON'BLE SRI JUSTICE C.V.NAGARJUNA REDDY CIVIL REVISION PETITION Nos.1480 & 1991 of 2014 Date:04.09.2014
CIVIL REVISION PETITION No.1480 of 2014
Between:
M.Uma Maheswara Rao, S/o Late M.Ankamma . Petitioner And:
M/s Shah Electronics and Home Appliances Pvt Ltd., Hyderabad, Reptd by its Authorized signatory- Sri Nishith Shah . Respondent Counsel for the petitioner: Sri K.Koteswara Rao Counsel for the respondent: Sri B.Shanker
AND
CIVIL REVISION PETITION No.1991 of 2014
Between:
M/s Shah Electronics and Home Appliances Pvt Ltd., Hyderabad, Reptd by its Authorized Signatory- Sri Nishith Shah . Petitioner And:
M.Uma Maheswara Rao, S/o Late M.Ankamma . Respondent Counsel for the petitioner: Sri B.Shanker Counsel for the respondent: Sri K.Koteswara Rao For Sri I.Gopal Reddy The Court made the following:
COMMON ORDER:
These Civil Revision Petitions arise out of the orders passed in a common suit. Hence, they are heard and being disposed of together.
For convenience, the parties are referred as arrayed in Civil Revision Petition No.1991 of 2014.
The petitioner filed the above-mentioned suit for permanent injunction restraining the respondent from interfering with its right to vacate the suit schedule properties. Along with the suit, the petitioner has also filed I.A.No.182 of 2014 seeking mandatory injunction restraining the respondent from interfering with its right to vacate the schedule premises.
It is the case of the petitioner that it is carrying on the business of distributor of electronic goods; that it has ten electronic showrooms in the twin cities; that it has established an electronic showroom in the demised premises belonging to the respondent on payment of monthly rent of Rs.1,95,000/- to him; and that as per the terms of the lease deed, dated 06.06.2011, the lock-in period is 2 ½ years. The petitioner further pleaded that on expiry of the lock-in period, it has caused a three months’ notice on the respondent for vacating the premises and that the respondent has started creating obstructions to the petitioner on vacating the premises by stating that the lock-in period expires on 25.02.2014 and not on 05.12.2013, as claimed by the petitioner. The petitioner was, therefore, constrained to file the above- mentioned suit and the I.A.
The respondent filed Cross-Objections in the suit and also filed I.A.No.297 of 2014 under Order XXXVIII Rule 5 read with Section 151 of the Code of Civil Procedure for attachment before judgment in respect of the petition schedule property till recovery of Rs.8,82,620/- towards Service tax, Rs.5 lakhs towards damages caused to all the four floors of the premises, Rs.5 lakhs towards the difficulty caused to the respondent and 10% enhanced rent of Rs.19,500/- for seven months, which comes to Rs.1,17,000/-. The lower Court passed separate orders on 14.03.2014, whereby it has allowed I.A.No.182 of 2014 with a direction to the petitioner to deposit a sum of Rs.10 lakhs towards security for the alleged damages claimed by the respondent, which shall abide by the result of the suit and dismissed I.A.No.297 of 2014 filed by the respondent by observing that the petitioner being an established electronic distributor in the twin cities, there is no need to attach the properties before judgment. Feeling aggrieved by order in I.A.No.182 of 2014, the petitioner filed Civil Revision Petition No.1991 of 2014. Assailing order in I.A.No.297 of 2014, the respondent filed Civil Revision Petition No.1480 of 2014.
A perusal of the pleadings of the parties would show that the dispute mainly centers around three aspects, viz., (1) the liability of the petitioner to pay Service tax, (2) the duration of the lock-in period and (3) the entitlement of the respondent for the damages.
With respect to the Service tax, I have perused the lease deed between the parties.
Clause-3 of the lease deed reads as under: “The LESSEE shall pay Rs.1,95,000/- (Rupees One Lakh ninety five thousand only) towards rent per month plus service tax and any other taxes as levied by the Government for the schedule property from time to time. All payments shall be made by the LESSEE after deducting the required Tax at Source (TDS), the certificates for the same shall be issued by the lessee to the LESSOR at the end of financial year.”
Sri B.Shanker, learned counsel for the petitioner, placed heavy reliance on Clause-8 of the lease deed and submitted that under the said Clause, it is the respondent who is liable to pay the Service tax. Therefore, it is necessary to consider Clause-8 of the lease deed also which is as follows:-
“The LESSOR shall bear and pay all the Municipal Taxes relating to the property like property tax, etc along with any taxes levied by the Government on the LESSOR/schedule property.”
A careful perusal of Clause-3 of the lease deed would prima facie reveal that it deals with Service tax and other taxes. Under this Clause, the petitioner is liable to pay Service tax in addition to the rent of Rs.1,95,000/-. The petitioner shall also pay other taxes payable to the Government and deduct such payments from the rents payable to the respondent by way of TDS. Clause-8 deals with the Municipal taxes (property tax along with any other taxes levied by the Government). In fact, this Clause is wholly unnecessary as Clause-3 covers not only Service tax but other taxes also. However, for clarity, Clause-8 appeared to have been incorporated. The harmonious way of understanding both these Clauses is that while the petitioner is liable to bear Service tax liability, the respondent has to pay all other taxes excluding Service tax which will also be paid by the petitioner and deducted from the rents payable to the respondent.
I am, therefore, of the opinion that it is the responsibility of the petitioner to pay the Service tax. Unfortunately, the lower Court has not specifically dealt with these aspects and instead of directing he petitioner to deposit the sum equivalent to Service tax, it has directed him to deposit Rs.10 lakhs, towards damages allegedly caused by it, as security in the event, the respondent succeeds in his plea.
The further question on this aspect pertains to quantum of the Service tax payable by the petitioner. In his counter-affidavit, the respondent has categorically averred that the petitioner is liable to pay Rs.8,82,620/- towards Service tax. A statement is stated to have been filed along with the counter-affidavit in support of this averment. No specific denial has been made by the petitioner on the quantum claimed by the respondent. Therefore, I have no reason to doubt the correctness of the claim of the respondent with regard to the quantum of Service tax.
As regards the claim of the respondent that the lock-in period expires only on 25.02.2014 and not on 05.12.2013, if the date of the agreement is reckoned, it will expire on 05.12.2013. However, this aspect needs to be adjudicated in the suit. Hence, this Court does not intend to render any finding on this aspect.
The alleged claim of damages suffered by the respondent also needs to be adjudicated by the lower Court in the suit. Therefore, it is too premature for this Court to render any finding thereon.
On a holistic consideration of the pleadings of both parties and the material available on record, I am of the opinion that interests of justice would be met if the petitioner deposits a sum of Rs.10 lakhs as security for due payment of Service tax and other claims, if any, of the respondent, in the event of the latter’s success in the suit. The petitioner shall deposit the said sum to the credit of the suit in the lower Court within a period of one month from the date of receipt of a copy of this order. The deposit so made shall be put in an interest yielding fixed deposit in any nationalised bank by the lower Court till the disposal of the suit. The deposit of the amount by the petitioner shall await the result of the suit.
On the analysis as above, both the Civil Revision Petitions stand disposed of. It is made clear that the observations made and findings, rendered in this order shall not influence the lower Court while disposing of the suit.
As a sequel to disposal of the Civil Revision Petitions, CRPMP.Nos.2082 and 2785 of 2014 are dismissed as infructuous.
04thSeptember, 2014 DR
JUSTICE C.V.NAGARJUNA
REDDY