Kerala

Idukki

CC/37/2019

john Thomas - Complainant(s)

Versus

Eastern mattress Pvt Ltd - Opp.Party(s)

29 Nov 2019

ORDER

DATE OF FILING : 12.2.2019

IN THE CONSUMER DISPUTES REDRESSAL FORUM, IDUKKI

Dated this the 29^th day of November, 2019

Present :

SRI. S. GOPAKUMAR PRESIDENT

SMT. ASAMOL. P MEMBER

CC NO.37/2019

Between

Complainant : John Thomas,

Kandirickal House,

Puthuppariyaram P.O.,

Chittoor, Thodupuzha.

(By Adv: K.M. Sanu)

And

Opposite Parties : 1. The Proprietor / Managing Director,

Eastern Mattresses Pvt. Ltd.,

Puthuppariyaram P.O.,

Thodupuzha, Idukki.

2. The Manager,

Eastern Mattresses Pvt. Ltd.,

Edappally, Kochi.

(Both by Adv: V.K. Shaji)

 

O R D E R

 

SRI. S. GOPAKUMAR, PRESIDENT

 

On the basis of an advertisement published by the opposite parties searching for a godown having an extend of 10000 sq. feet, complainant contacted the opposite party and agreed their terms and conditions. As agreed by both the parties, the complainant and opposite parties executed a Memorandum of understanding on 21 September, 2015. As per the memorandum of understanding, opposite party demanded a godown having an extend of 9500 sq.ft and the opposite party further agreed that if the complainant construct such a godown as specified by the opposite party in the MOU, they further agreed that they are ready to pay rent for the godown at the rate of Rs.9.5/- per sq.ft which can be enhanced at the rate of 10% every year over the then existing rate of rent. In this MOU, opposite party further agreed to give an amount equal to the four months rent as a security deposit at the time of occupying the demised premises. In the MOU, opposite party agreed that the lease shall be for a period of 60 months, that is, till December 2020. As per the conditions agreed and signed by both the parties in the MOU, complainant

(cont....2)

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constructed a godown with the specification and conditions as demanded by the opposite party in the MOU by spending an amount of Rs.60 lakhs. For the purpose of constructing this godown, opposite party has to cut down all the fruit yielding trees of his more than 75 cents of landed properties in more than 75 cents. This was done on the firm belief that opposite party will held the building till December 2020, that is, 60 months as agreed by them in the MOU.

 

As per this MOU, complainant handed over the first shed to the opposite party on 5^th January, 2016 and the second shed on 5^th March, 2016, on the firm belief that the opposite parties will act as per the MOU.

 

While so, when the opposite parties continuing the possession of the above sheds, in the middle of 2018, the opposite parties intimated the complainant that they are trying to vacate the building and failed to remit rent for some months. On getting information about this, the complainant demanded to comply the conditions in the MOU and hence the opposite parties cleared the rent dues and renewed the rental agreement.

 

Complainant further averred that, the complainant happened to construct the building only based on the attractive offers of the opposite parties by investing a huge amount and that is also for the specification of the opposite parties alone. Now the opposite parties are withdrawing from their offers as well as the conditions of the MOU. This godown is not fit for other purposes because it is constructed as per the need of opposite party's business. Due to the construction of such a building, complainant had to invest a huge amount, by falling down so many fruit yielding trees. Moreover, this godown is situated in a remote area and there is remote chances to hire it by some others. Moreover, complainant is remitting an amount of Rs.86000/- by way of building tax to the local grama panchayath.

 

Complainant further averred that this building is constructed only for the purpose of smooth functioning of the business of opposite party and withdrawing from the MOU and by withdrawing from the offers are gross deficiency and unfair trade practice on the part of the opposite parties.

 

Hence opposite parties are liable to compensate the complainant by paying the rent of the godown till December 2020 as agreed in the memorandum of understanding or the opposite parties are liable to occupy the building till the building is heired by some other people. Alleging deficiency in service and unfair trade

(cont....3)

- 3 -

practice against the opposite party, complainant filed this petition seeking relief such as to direct the opposite party to perform their part as per the conditions of the MOU and further direct them to pay compensation and cost.

 

Upon notice, opposite parties entered appearance and filed detailed reply version resisting the complainant's averments. In their version, opposite party contended that the conditions are specifically stated in the rental agreement. The complainant constructed the godown in their barren land. Complainant constructed the building by utilising the money given by the opposite parties. The parties extended rental agreement each year after creating the memorandum of understanding. The terms and termination of the agreement is specifically stated in the rental agreement. When the rental agreement came into existence, the MOU will be valueless. Moreover, the complainant given written promises.

 

Opposite party further contended that they vacated the premises by legally having prior notice and there is no rent dues also. When the opposite party demanded the security amount of Rs.5 lakhs at the time of vacating the premises, complainant raised objections and approached the Forum by concealing the actual facts, in order to evade from the payment of security amount. Only due to business loss, opposite party decided to vacate the premises and opposite party is liable to find out another party for using the godown as stated in the complaint. Opposite party further contended that the complainant constructed the building in a barren land and no question arises regarding the loss of income from the land. At the same time, opposite party is not a consumer of the complainant and hence the complaint is not maintainable against the opposite parties and it is liable to be dismissed with the cost of the opposite parties.

 

Complainant and opposite parties adduced evidence by way of documents. No oral evidence adduced.

 

The document such as copy of memorandum of understanding dated 21.9.2015, rent agreement copy dated 5.1.2017, letter dated 15.9.2018, copy of rent agreement dated 26.7.2018 produced by the complainant and are marked as Exts.P1 to P4 respectively.

 

The documents such as copy of rent agreement dated 5.1.2016, 5.3.2016, 5.1.2017, 26.7.2018 and letter copy dated 15.9.2018 are produced by the opposite parties and marked as Exts.R1 to R5 respectively.

(cont....4)

- 4 -

Heard both sides.

 

The point that arose for consideration is whether there is any deficiency in service from the part of opposite parties and if so, for what relief the complainant is entitled to ?

 

The POINT :- We have heard the counsels for both parties and have gone through the documents. The learned counsel for the complainant vehemently pointed out that they constructed the building only on the basis of the conditions of the Ext.P1 memorandum of understanding executed by both the parties on 21.9.2015 and the opposite parties are bound to comply the conditions of the MOU. Opposite party shall duty bound to occupy the building for 60 months, that is, till December 2020 as agreed in the MOU as sub clause (8) of conditions IV. The learned counsel further argued that they constructed the building as per the requirement of opposite parties business by clearing his 75 cents of land by felling down most valuable and fruit earning trees. This caused much financial loss to the complainant. All these things are done on the firm belief that opposite party will perform their part as per the terms and conditions of the memorandum of understanding. The learned counsel further agreed that opposite parties are legally bound to continue to occupy the premises till December 2020, by paying rent as stated as per sub clause (e) of the clause IV of Ext.P1 MOU.

 

On the other hand, the learned counsel for the opposite parties resisted the arguments of the complainant on the basis of Exts.R1 to R4 rental agreements. The learned counsel by pointing out the above rent agreement argued that for occupying the godown they executed the Exts.R1 to R4 rent agreement as per condition No.13 of the rental agreement, they can terminate the agreement at any time during the period of agreement by either party by giving one month notice in writing to the other.

 

The learned counsel further argued that when the rent agreements are came into existence, the memorandum of understanding became value less or ceases its entity. The learned counsel further stated that opposite parties can withdraw the rental agreement at any time and they legally issued Ext.R5 notice to the complainant and demanded the security amount. For evading from the payment of security amount, the complainant is playing all these tricks and there is no question of any deficiency in service since there is no consumer relationship with the complainant. On going through the evidence and the points of argument in this case, it is very clear that the complainant constructed

(cont....5)

- 5 -

the subject matter godown as per the requirements of the opposite party, in the nature of their business.

 

On going through Ext.P1 memorandum of understanding clause III, it is specifically admitted that, “where as the second part (the opposite party herein) has now approached the first party (complainant herein) to construct and let out a new building and the first party has agreed to construct, let out and hand over the new factory building in the scheduled property having 9500 sq.ft as per the requirements of the 2^nd party, within a period of three months from the date of signing the MOU. On perusing the wording of the clause, it is unambigous that the factory building is constructed as per the requirements of the 2^nd party in the MOU, that is, the opposite party herein.

 

The clause IV of the Ext.P1 specifically describes the requirements which is needed to the opposite parties in the building and opposite party has not a case that the complainant failed to comply any of their demands.

 

In sub clause 'e' of clause IV clearly stated that “the 2^nd party agreed to pay a monthly rent of Rs.9.50 per sq.ft to 1^st party for the first 12 months, subject to an enhancement of 10% every year over the then existing rate of rent.

 

On verifying the documents in record, it is seen that on existing the MOU, opposite parties created separate rent deeds, which are marked as Exts.R1 to R4, from the 5^th January 2016.

 

From the records, it is seen that complainant handed over two godown having a total sq.ft of 9500. The first godown was handed over to the opposite parties on 5^th January 2016 and the other godown was on 5^th March 2016. From that day onwards, they were possessing their two godowns having a total area of 1000 sq.ft. The fact also not decided by the opposite party.

 

eventhough there is an MOU, opposite parties are sticking on the clause 13 of the rent deed. This agreement may be terminated at any time during the period of agreement by either party by giving one month notice in writing to the others.

 

On the basis of the terms and conditions, opposite party issued Ext.R5 notice to the complainant expressing their willingness to shift the business from the premises of the complainant. This notice was issued to the complainant by the opposite party on 15.9.2018. At the same time, the sub clause 'g' of clause

(cont....6)

- 6 -

IV of the MOU specifically stated that, “it is understood by both parties that, the lease shall be for a period of 60 months, that is, till December 2020.”

 

At this juncture, it is very pertinent to note that there is no specific condition in the MOU, that the parties shall agree to create yearly rent deeds and if the rent deeds came into existence, the MOU will be automatically cancelled.

 

Moreover, it is very clear that the Ext.P1 document is not only a mere memorandum of understanding but also a lease deed for 5 years (60 months) and it is in effect till December 2020. That means the conditions of the document shall binding on the execution of this document till December 2020 or the document shall be in force till December 2020.

 

Since there is specific conditions regarding the execution of yearly rent deed, the conditions of the MOU will prevail and the opposite party has no authority to withdraw from the terms and conditions of the MOU, in the light of the conditions in the Exts.R1 to R4 rent deeds.

 

On an overall evaluation of the evidence on record, the Forum is of a considered view that the terms and conditions of the Ext.P1, MOU will binding on both the parties till December 2020 and both the parties are not legally entitled to go back or withdrawn any of the conditions in the Ext.P1 MOU till December, 2020.

 

As agreed by both the parties, the opposite parties legally bound to pay rent at the rate of Rs.9.50/- per sq.ft for a total area of 9500 sq.ft, subject to an annual enhancement of 10% over the then existing rate of rent.

 

Hence the issuance of Ext.R5 notice for withdrawing the rent agreement by breaking the conditions of Ext.P1 MOU is a gross deficiency and unfair trade practice on the part of opposite parties. Hence as per the terms and conditions of the MOU, opposite parties are legally bound to pay rent as agreed, till December 2020.

 

On calculating, the yearly rent of the 1^st year is Rs.90,250/-. In the next year rent is enhanced to 10% of existing rate, that is as per record, the rent of 2017-18 will be 90250 + 9025, that is, 990275/- and the rent of the next year will be 990275 + 10% and so on. Hence as per the conditions of the MOU, opposite party is liable to pay the existing rent with the enhanced rate of 10% from 15^th October 2018 till December 2020. (cont....8)

- 8 -

On the basis of above discussion, the Forum found deficiency in service and unfair trade practice on the part of opposite parties and hence the complaint allowed. Opposite parties are directed to pay rent to the complainant as agreed in the MOU till December, 2020. At the time of payment of the rent dues, complainant shall repay the security amount to the opposite party.

 

Pronounced in the Open Forum on this the 29^th day of November, 2019

 

 

Sd/-

SRI. S. GOPAKUMAR, PRESIDENT

Sd/-

SMT. ASAMOL. P, MEMBER

 

 

 

 

APPENDIX

Depositions :

Nil.

Exhibits :

On the side of the Complainant :

Ext.P1 - copy of memorandum of understanding dated 21.9.2015,.

Ext.P2 - rent agreement copy dated 5.1.2017.

Ext.P3 - letter dated 15.9.2018.

Ext.P4 - copy of rent agreement dated 26.7.2018

On the side of the Opposite Party :

Ext.R1 - copy of rent agreement dated 5.1.2016.

Ext.R2 - copy of rent agreement dated 5.3.2016.

Ext.R3 - copy of rent agreement dated 5.1.2017.

Ext.R4 - copy of rent agreement dated 26.7.2018.

Ext.R5 - letter copy dated 15.9.2018

 

 

Forwarded by Order,

 

 

SENIOR SUPERINTENDENT