Vipul Ganda is an Independent Litigation Counsel with over 14 years of experience and a proven track record in Litigation and Dispute Resolution.
Aspen Buildtech Ltd. Versus Epicuria Gallery Pvt. Ltd.
Court / Forum : Delhi High Court Citation : C.R.P. No. 57/2019 Coram : Justice Sanjeev Sachdeva Subject : Order 23 Rule 1 (3) of Code of Civil Procedure, 1908 (“CPC”) Date of Decision : 2020-05-08
A license agreement was entered into between the Petitioner and Respondent on September 19, 2015, whereby Petitioner had agreed to license part of its premises in commercial complex known as “Worldmark 1” located at Asset Area 11, situated at Hospitality District, Indira Gandhi International Airport, New Delhi. The license was entered into for a period of 15 years for the purposes of running of multi-tenanted Food & Beverage concepts under the brand and style of Epicuria.
The Respondent contended that Petitioner had committed breach of the license agreement; inter-alia changing the layout of the access roads, ramps leading to changed orientation of the property requiring complete rework and re-planning, and therefore, the Respondent stopped paying the license fee. Consequently, the Petitioner terminated the license agreement.
The Respondent then filed a suit for declaration, permanent and mandatory injunction seeking a declaration that the termination was illegal and sought a restraint against the Petition from handing over possession of the tenanted portion to third party and further sought a restraint from interfering in the commencement of the operations by the Respondent.
The Petitioner raised the objection in the written statement that the contract was terminable and as such the remedy available to the Respondent Plaintiff was not enforcement of the agreement but damages; if termination was held to be illegal.
Respondent had also filed an application under Order 39 Rules 1 & 2 of CPC seeking an ad interim injunction. The said application was dismissed vide order dated January 12, 2018 by the Trial Court declining the injunction and holding that the damages were an adequate remedy.
After dismissal of the application under Order 39 Rules 1 & 2 of CPC, the Respondent filed the application under Order 23 Rule 1 (1) and 1(3) of CPC seeking permission to withdraw the suit with liberty to file a fresh suit for damages on the same cause of action.
The Petitioner argued that since Respondent had specifically filed an application under Order 2 Rule 2 of CPC and reserved the right to claim damages that may accrue in the future, Respondent could not withdraw the suit with liberty to file a fresh Suit for damages for breach of contract.
The trial court rejected the objection of the Petitioner holding that the fact that a separate application under Order 2 Rule 2 of CPC was filed by the Respondent showed the intention of the Respondent to claim damages and there was no reason for the court to presume that Respondent would forego the right to claim damages, if any, which had arisen till the date of filing of the suit and would only press for future damages. Further, trial court, while holding that the suit was not maintainable allowed the application for withdrawal of the suit with liberty to institute a fresh suit for damages on the same cause of action.
Aggrieved by the said order, the Petitioner approached the Hon'ble High Court.
Whether the impugned order satisfied the conditions under Order 23 Rule 1 (3) of CPC for granting liberty to institute a fresh suit or not?
The Hon'ble High Court held that under order 23 rule 1 (3) of CPC, where the court is satisfied that a suit must fail by reason of some formal defect or that there are sufficient grounds for allowing the Plaintiff to institute a fresh suit for the subject-matter of a suit or part of a claim, it may grant permission to withdraw with liberty to institute a fresh Suit. The impugned order permitting withdrawal with liberty is not sustainable since it does not satisfy the requirement of Order 23 Rule 1 (3) of CPC for grant of liberty to file a fresh suit on the same cause of action.
The court also observed that it is not permissible for the trial court to allow withdrawal of the suit but refuse grant of permission. When an application is filed under Order 23 rule 1 (1) & (3) CPC, the court must either allow the withdrawal with liberty or dismiss the application.
The consequence of the same would be that the suit would continue to remain on the board of the Trial Court.
The further effect of the same is that Respondent would be entitled to move an application in terms of proviso to Section 21 of Specific Relief Act, 1963 and seek amendment of the plaint to incorporate the relief of damages in addition or in substitution to the claim for specific performance of the agreement.
Accordingly, the Hon'ble High Court allowed the petition and impugned order dated January 28, 2019 permitting the withdrawal of the suit with liberty to file a fresh suit for damages was set aside.
Vipul Ganda is a Delhi based Advocate practicing largely at the Delhi High Court. His practice focus is Dispute Resolution and Litigation and his practice areas include Arbitration, Commercial, Civil, Constitutional, Corporate and Criminal Litigation.