- (1.) The plaintiff owns a shop-room measuring about 1077 sq.ft. on the ground floor of one of the units at the Astral building complex on up-market Gurusaday Road. The plaintiff purchased the shop from the proforma defendant. The proforma defendant executed a lease on August 26, 2008 in favour of the first defendant. The proforma defendant also entered into a second agreement to provide certain facilities to the first defendant. The plaintiff claims to be entitled to the proforma defendant's rights under the agreements following the plaintiff having acquired the shop.
(2.) The lease provides for a lock-in period of three years from the date of commencement of the lease. It stipulates that if the first defendant was desirous of surrendering the lease during the lock-in period, it would be liable to pay the monthly rent payable for the remaining lock-in period. The lessor was similarly locked in for three years without being entitled to terminate the lease during such period unless the lessee breached the covenants thereof. The following three clauses in the agreement are of some significance: "4.3. Lock-in: There shall be a lock-in period of the term of 3 (three) years from the date of commencement of this lease and neither party shall be entitled to terminate the lease during such lock in period, except in case of breach by the other party. After expiry of two years and 6 months, the Lessee shall have the option to terminate the lease by giving a six months written notice in advance to the Lessor." "4.5.4. Notwithstanding the other provisions hereof it is expressly agreed that if the Lessor terminates the lease during the said lock-in period of this lease mentioned in clause 4.3 above, due to non payment of any amounts or any breach of any covenants term and conditions hereof by the Lessee or in case the Lessee is desirous of surrendering or otherwise giving up the lease during the Lock-in period, the Lessee will be liable to pay the monthly rent payable by it for the entire remaining Lock-in period of this lease. Lock-in period shall also include the notice period as mentioned in clause 4.3 above." "4.8. Stamp Duty etc.: The Stamp Duty and Registration Charges in respect of this Deed shall be borne by the Lessee. Subject as aforesaid, each party shall be liable to bear its own costs for the preparation and execution of this Deed." The letter of atornment issued in favour of the plaintiff by the proforma defendant was accepted without reservation by the first defendant. The plaintiff has raised bills on the first defendant on account of the monthly lease rents and complains that no payment in respect thereof has been made. The plaintiff refers to a letter of July 15, 2009 issued by the first defendant seeking to terminate the agreement with effect from July 31, 2009. The third, fourth, fifth and sixth paragraphs of the letter have been emphasised by the plaintiff: "3. That, as per Clause 4.3 of the Agreement, the period of 3 years was the lock in period on the Lessee. That however in the light of the current economic slowdown and global recession, the Lessee has been incurring huge losses in its business from the premises. Due to the enormous liabilities and bad future prospects the Lessee will be unable to operate its business from the Premises and is not in any position to pay the rent/amenities charges for the Premises. "4. Consequently, we are unable to continue the business from the Premises except at a loss, which is impermissible in sound business practice. On the one hand the visitors to the Complex appear to have reduced, and on the other hand the conversion of "customer per visitor" ratio has drastically reduced. One main reason for our taking up a store in your Complex was an implied assurance of business, which unfortunately has now fizzled out. No special measures seem to have been adopted by you to promote the Complex, and to help the business therein. "5. That the Lessee vide this letter is exercising its right to terminate the Agreement w.e.f from July 31, 2009 by serving upon you this notice of termination. "6. Though in terms of clause 4.3 the Agreement is subject to lock in condition, the financial slowdown amounts to a Force Majeure circumstance coupled with your failure to act in taking any measures to promote the Complex. The lock in condition is consequently inapplicable under the present Force Majeure circumstances."
(3.) The plaintiff says that the parties agreed to liquidated damages to the extent of the unpaid lease rent for the balance lock-in period which was a genuine pre-estimate of the damages suffered or likely to be suffered by the lessor consequent upon the earlier determination of the lease by the first defendant. The plaintiff asserts that the first defendant is impecunious and unless the lease rent for the balance lock-in period is secured, the plaintiff may not be able to realise such sum after obtaining the decree that is certain to be made in its favour. The plaintiff contends that to allow the first defendant the luxury of waiting till the trial would amount to putting a premium on dishonesty and encouraging the breach of an express covenant. The first defendant says that there is no case for attachment before judgment which has been made out and it would be unjustified to secure a claim in damages and to elevate such a claimant to the status of a secured creditor. The first defendant suggests that whatever may have been the agreement between the parties, it is inconceivable that the shop would remain idle for the remainder of the lock-in period if the plaintiff were diligent. The first defendant says that the shop is capable of fetching substantial rent, albeit at a lower rate, and it would be unfair to keep the first defendant's money blocked without requiring the plaintiff to mitigate the damages.;