Sanjay Kishan Kaul, J.

1. The plaintiff herein, which is a public limited company incorporated under the Companies Act, 1956, entered into a Lease Agreement dated 24-04-1996 (Ex D-1) (hereinafter referred to as the "Lease Agreement") with the defendants in respect of an office space at 4th floor, Herald House, 5-A, Bahadur Shah Zafar Marg, New Delhi-110002 (hereinafter referred to as the "Demised Premises") for a period of eight years w.e.f 01.05.1996 subject to earlier determination and to an escalation on the last rent payable at 15% of the rent and service charges paid during the immediately preceding month. According to the provisions of the said Lease Agreement, the plaintiff was required to pay a sum of Rs. 66,75,000/- as security deposit which was equivalent to twelve months rent. This security was an interest free security which was refundable within seven days from the termination/determination of the lease failing which the defendants were liable to pay interest @ 20% from the date of such deposit of security till the date of actual refund. The plaintiff also had to pay an advance rent and service charges for three months amounting to Rs. 16,68,750/- to be adjusted against the monthly rent and service charges of the following twelve months. In accordance with the same, the plaintiff deposited the required security of Rs. 66,75,000/- with the defendants along with Rs. 16,68,750/- as service charges for three months in advance.

2. It appears that after enjoying the tenancy for a few months, the plaintiff desired to vacate the same. It is the case of the plaintiff that there were perennial defaults and breaches on the part of the defendants. It is averred that the defendants failed to take any steps or make necessary repairs in relation to the water leakage and non-effectiveness of the air conditioner in spite of several reminders being given by the plaintiff. The plaintiff also states that the defendants have also breached the provisions of Clause 13 of the lease agreement that required the defendants to make payments to concerned authorities in respect of property tax in relation to the demised premises. Consequently, the plaintiff by its letter dated 18-11-1997 (Ex. D-2) sent a notice of termination of the lease w.e.f. 19.11.1997 in accordance with Clause 21 of the Lease Agreement calling upon the defendants to take possession of the demised premises and to refund the security deposit after deducting the rent of the previous three months along with the stipulated interest. It is also stated that thereafter, several reminders were sent to the defendants regarding the same vide letters dated 17-02-1998, 16-04-1998, 30-04-1998, 20-07-1998 & 05-09-1998.

3. It is averred that on 16-04-1998, the plaintiff communicated to the defendants that it had shifted to a new building and was no longer in possession of the demised premises. In reply, the defendants vide letter dated 18-04-1998 addressed to the plaintiff stated that the delivery of vacant possession of the demised premises was a condition precedent to the refund of the security deposit. It is the case of the plaintiff that constructive possession was handed over to the defendant with the determination of the lease and that actual possession was subject to the reciprocal arrangement on the part of the defendants to refund the amount of security deposit along with the stipulated interest. The defendants failed to refund the aforesaid amount, and thus the plaintiff has filed the present suit for recovery of Rs. 46,72,500/- with pendentilite and future interest @ 20% p.a. from the date of institution of the suit till payment or realization, the details of which are given in para 10 of the plaint and read as under:

Total Security Deposit Rs. 66,75,000/-

Less 3 months rent in lieu of notice Rs. 16,68,750/-

Less rental payment for the period 1st

November 1997 to 18th November 1997

(on a pro-rata basis) Rs. 3,33,750/-

Amount due and payable Rs. 46,72,500/-

Together with interest @ 20% per annum

payable from the date of the deposit of

security viz., 24-4-1996 till 6-11-1998

i.e. the date of filing of the suit: Rs. 70,45,874/-

4. The defendants have not only contested the suit but have also filed a counter claim. The defendants have admitted the letting out of the demised premises in question to the plaintiff. The defendant has also admitted that the plaintiff deposited interest free security deposit of Rs. 66,75,000/- and three months advance rent of Rs. 16,68,750/- adjustable in the first twelve months of lease.

5. The stand of the defendants in the written statement and counter claim is that the demand of termination of the lease agreement was not in accordance with the terms of the agreement since the plaintiff was in possession of the said demised premises and that without giving the possession of the said premises, the notice stood withdrawn/waived and hence no claim for refund of balance security amount after adjusting the rent payable was made out. It is the case of the defendants that they came in possession of the demised premises upon the plaintiffs delivering of the keys only on 07-12-1998 and that the last monthly rent paid by the plaintiff was for the month of October, 1997 (01.10.1997 to 31-10-1997). Hence, it is stated that the defendants are entitled to rents for the period thereafter till the delivery of the possession of the demised premises. Thus, the defendants case is that the plaintiff is not entitled to any amount and rather it owes a sum of Rs. 12, 85,383.06/- to the defendants which is set up as a counter claim.

6. On the basis of the pleadings of the parties, the following issues were framed on 16-08-2004 and 12-12-2005:

1. Whether the suit is misconceived for misguide of parties OPP

2. Whether the security deposit amount of plaintiff came to be exhausted by adjusting the monthly rental dues OPD

3. Whether the issue of notice of termination/determination discharged the plaintiff in payment of monthly rent for the period they remained in possession/occupation OPP

4. Whether the plaintiff is entitled to the suit amount OPP

5. Whether the plaintiff is entitled to any interest If so, from which date and at what rate OPP

6. Whether the defendants are entitled to any claim or not OPD

7. Relief

7. In support of its case, the plaintiff has produced one Shri Vijay Wadhwa (P.W. 1), who is working as General Manager-Finance & Company Secretary in the plaintiff company as a witness and the defendants have produced one Shri Ashok Gupta (D.W. 1), working as an Accounts officer with the defendant company, as a witness to depose in support of the claim.

8. I have gone through the pleadings, documents as well as the oral evidence. After analyzing the same, my findings in respect of issues is as under:

Issue No. 1 : Whether the suit is misconceived for misguide of parties

9. The plaintiff with reference to issue No. 1 has stated that Defendant No. 2 is the chairman of the Defendant No. 1 Company and Defendant Nos. 3 to 7 are directors of the Defendant no.1 Company making them directly responsible for the conduct of the business of the Defendant No. 1 Company. Thus the act of not refunding the said security deposit after the determination of the lease deed is directly attributed to the mind, consent and sanction of Defendant Nos. 2 to 7, making them jointly and severally liable to suffer a decree as prayed for in the present suit.

10. Learned Counsel for the defendants on the other hand contended that Defendants imp leaded in the present suit other than the Defendant Company are wrongfully joined as parties as Defendant Nos. 2 to 7 are directors who in their individual capacity are not liable.

11. It is a well settled principle of law that a Company and the directors of the Company are different and separate legal personalities. The said lease agreement was made between the plaintiff company and the defendant company and the rights, liabilities, obligations, if any, are enforceable by the respective body corporate against each other only and not against the members Constituting the board.

12. The plaintiff can seek relief only against defendant No. 1 and not against the other defendants. The issue is answered accordingly.

Issue No. 2 : Whether the security deposit amount of plaintiff came to be exhausted by adjusting the monthly rental dues

Issue No. 3 : Whether the issue of notice of termination/determination discharged the plaintiff in payment of monthly rent for the period they remained in possession/occupation

13. Issue No. 2 & 3 are interconnected and Therefore, taken up together. The correspondence exchanged between the parties in relation to termination and surrender of the premises is effectively admitted by both the parties.

14. The plaintiff vide its notice dated 18.11.1997 (Ex. PW-1/1) terminated the tenancy and agreed to pay three months rent in lieu of three months notice as per Clause 21 of the lease agreement. The said clause of the Lease reads as under:

Notwithstanding anything contained herein, the lessee before the expiry of the present terms or extension thereof by giving the Lesser or their authorized agent three months notice in writing or three months rent in lieu thereof.

15. Further, through this notice the plaintiff requested the defendants to refund the security deposit amount after adjusting the three months rent within seven days i.e. 26-11-1997 and arrange to take over the vacant possession of the demised premises in terms of Clause 4 and 8 of the said Agreement, the relevant portion of which are reproduced hereunder:

4. The security deposit of Rs. 66,75,000/- (Rupees Sixty six lakhs seventy five thousand only) shall be refunded by the Lesser to the Lessee upon termination/determination of this lease and if the Lesser fails and neglects to refund the said security deposit within 7 days from the date of termination/determination of the lease, the Lesser shall be liable to pay interest @ 20% from the date of such deposit till the date of actual refund.

8. The Lessee, however, agrees that at the time of termination of the lease and handing over the vacant possession of the premises on the expiry of this lease it will restore the portion in its original condition as was in existence when let out.

Thus, by this notice the plaintiff not only terminated the tenancy but also called upon the defendants to take possession of the tenanted premises. To this the defendant company gave a reply vide its letter dated 22-11-1997 (Ex. D-3) requesting for a rethink on the part of the plaintiff.

16. By another communication dated 18-04-1998 (Ex. D. 4), the defendants stated that under the cover of the notice of termination, without handing over vacant possession of the premises to the defendants, the plaintiff was not entitled to the refund of the balance security amount and further that the plaintiff was liable to pay the rent of the demises premises until vacated. The plaintiff replied to this through a letter dated 30-04-1998 (Ex-D 5) wherein the plaintiff reiterated its repeated willingness to give the actual possession on the receipt of the refund of the security deposit rejecting the claim of the defendants in relation to payment of rent.

17. On 30-7-1998, the defendants through a letter (Ex. D-7) restated their claim of payment of rent by the plaintiff for continued possession of the demised premises and that handing over the vacant possession of the demised premises was a condition precedent to the refund of the balance security amount. A reply was sent vide letter dated 05-09-1998 (Ex. D-8) by the plaintiff rejecting the claim of the defendants regarding rent accrued, detailing the various occasions at which possession of the demised premises was offered to the defendants and calling upon the defendants to make payment of Rs. 46,72,500 together with interest @ 20% from 24-04-1996 till payment thereof.

18. Subsequent to this letter, the defendants vide letter dated 12-09-1998 refuted the averments made in that letter and reiterated its stand consequent to which the present suit was filed on 06-11-1998 by the plaintiff.

19. From the aforesaid correspondence between the plaintiff and the defendant, the admitted position that emerges is that the plaintiff terminated the lease there upon calling the defendants to take possession of the demised premises and refund the balance security amount. The offer to vacant possession of the demised premises was always there from the side of the plaintiff company and it was the duty of the defendant thereafter to act on the same and take possession after notice of termination of the lease. It is the Therefore defendant company who has failed to comply with the same. It may also be seen that during this period the plaintiff even communicated to the defendants about their shifting to another premises which the defendants did not take note of. Thus as far as handing over of the possession of the demised premises is concerned, it may be said that constructive possession was handed over to the defendants by the plaintiff upon termination of the lease with an offer to take over actual possession upon payment of the balance security deposit, which was sufficient to fulfill the requirement of Clause 8 of the lease agreement. Following circumstances would lend support to inferences/findings:

It is the plaintiff who terminated the tenancy by notice dated 18-11-1997 w.e.f. 19-11-1997 and offered the possession to the defendants.

The defendants reaction to that was that the plaintiff could not terminate the tenancy on the grounds which were as alleged vague and baseless and wanted to negotiate and settle the matter. Therefore, the unwilling party to take possession on termination of the lease was the defendant company and not the plaintiff company.

A perusal of the documents filed and the deposition of Mr. Vijay Wadhwa (PW-1) shows that several reminders were given to the defendants vide letters dated 17-02-1998, 16-04-1998, 30-04-1998, 20-07-1998, 05-09-1998 to take possession of the demised premises but it is the defendants who did not act on the same.

The letter dated 05-09-1998 shows that through a letter dated 16-04-1998 the plaintiff also indicated to the defendants that they had shifted to a new premises and that the demised premises was no more being used by them. The plaintiff had nothing to gain by retaining the premises but by not taking the possession the defendants could definitely make a claim for rent against the plaintiff which has been done in the present case. The plaintiff while determining the lease did not demand possession forthwith but demanded possession in terms of Clause 4. The defendant failed to take possession within seven days and thereafter refund of security became due. The application of the defendant to repay the security amount thus came into force on 27.11.1997 and if the defendant did not take possession till that date or thereafter, it does not absolve the defendant of the liability to refund the amount.

After the notice of termination dated 18-11-1997 by the plaintiff and its reply thereon dated 22-11-1997 by the defendants, it has been the plaintiff who wrote a letter dated 17-02-1998 of reminder to the defendant stating to refund the security amount along with interest and take the possession of the demised premises.

Thereafter, also it is the plaintiff who has filed the present suit for recovery on 6-11-1998 along with an application seeking directions to the effect that the defendants take the possession of the demised premises and offered keys along therewith which were given to the defendants in the court itself on 07-12-1998.

20. Learned Counsel for the plaintiff has relied upon the judgment of Onida Finance limited v. Mrs. Malini Khanna 2002 III AD (Del) 231 wherein it was held that although the plaintiff had taken appropriate steps by offering the possession of the premises to the defendant, it is the defendant who did not take possession. The plaintiff Therefore discharged its obligation under law. Hence, if the defendant avoided to take possession, the defendant cannot be permitted to take advantage of its own wrong. This position has been reiterated in the case of Raja Laxman Singh v. State of Rajasthan AIR 1998 Raj 44.

21. Taking into consideration the aforesaid, I am of the view that when possession of the tenanted premises is offered upon termination of the lease, the landlord/Lesser must act upon the same and cannot refuse to take the possession. If the Lesser/landlord refuses to take the possession or act upon the offer being made, the lease would not continue and Therefore the contention of the defendant that the plaintiff had been in continued possession of the demised premises making him liable to pay the rent for the same would not stand. In such a case, the plaintiff who has done the needful on this part is left with no other option but to remain in possession of the said premises. D.W. 1 in fact admitted in his cross examination that he was aware that the plaintiff had shifted their operational work to different offices at Kailash Building, Kasturba Gandhi Marg. The defendant has tried to take advantage of a letter dated 28.05.1998 sent on behalf of the plaintiff asking the air conditioning services to be restored. The said letter cannot be of much assistance since the plaintiff was compelled to remain in the premises for security reasons and had deputed a person and naturally the air conditioning should be functioning for the same.

22. Issues No. 2 & 3 are accordingly decided in favor of the plaintiff and against the defendant. It is held that the plaintiff had offered to surrender the actual vacant possession of the demised premises and it is the defendant who did not take the possession offered by the plaintiff. Therefore there is no question of payment of rent as the said lease stood terminated upon which the defendants became liable to refund the balance security amount.

Issue No. 4 : Whether the plaintiff is entitled to the suit amount

Issue No. 6 : Whether the defendants are entitled to any claim or not

23. In view of the aforesaid, the plaintiff is not liable to pay any rent after the month of October 1997 i.e. 31-10-1997. Therefore, the defendants are not entitled to any amount claimed by them in the counter-claims. Issue No. 6 is answered accordingly in favor of the plaintiff and against the defendants. In so far as the plaintiff is concerned, it would become entitled to the refund of the security deposit i.e. a sum of Rs. 46, 72,500/-. The issue is accordingly answered.

Issue No. 5 : Whether the plaintiff is entitled to any interest If so, from which date and at what rate

24. It is an admitted case that the amount deposited by the plaintiff with the defendant as a security deposit was an interest free security which was refundable within seven days from the termination/determination of the lease failing which the defendants were liable to pay interest @ 20% from the date of such deposit of security till the date of actual refund as per Clause 4 of the Lease Agreement. This means that the security deposited would not be refunded until termination/determination of the Lease. Further that such amount had to be refunded within seven days from termination/determination of the lease, i.e. till 26-11-1997, which the defendants failed to do, as a consequence of which the defendants would become liable to pay interest @ 20% from the date of such deposit of security till the date of actual payment on such security deposit to the plaintiff. Therefore, the plaintiff is entitled to interest on this amount w.e.f. 27-11-1997. However, keeping in view the prevailing rate of interest, I am of the view that it would be reasonable to award interest at the rate of 9 per cent simple interest per annum. The plaintiff is Therefore held entitled to interest at the rate of 9 per cent simple interest per annum on the suit amount w.e.f. 27-11-1997 till payment thereof. This issue is accordingly decided in favor of the plaintiff and against the defendants.

Issue No. 7 : Relief

25. In view of the findings recorded in the aforesaid issues, this suit is decreed in favor of the plaintiff and against the defendants for a total sum of Rs. 46,72,500/- along with interest at the rate of 9 per cent simple interest per annum w.e.f. 27-11-1997 till payment thereof to be paid to the plaintiff by the defendants. The plaintiff shall also be entitled to costs. The counter-claim of the defendants is dismissed. Decree sheet be drawn accordingly.