Ajit Sachdeva & Ors Vs. Anoopi Shahani  Insc 847 (21 August 2007)
& Markandey Katju
APPEAL NO. 1386 OF 2005 A.K. MATHUR, J.
This Appeal is directed against the order passed by the High Court of
Judicature at Bombay in Writ Petition No. 7701 of 2004 on 29th November, 2004
whereby the learned Single Judge has upheld the order of the appellate court
under the provisions of Section 13(1)(e) of the Bombay Rents, Hotel and Lodging
Houses Rates Control Act, 1947.
Brief facts which are necessary for the disposal of this appeal are as under:
suit was filed by the plaintiff Smt. Anoop Shahani (respondent herein) against
the defendant No. 1 Mrs. Santosh Ajit Sachdeva (appellant herein) wife of Mr. Ajit
Sachdeva since died who was the original tenant of the suit premises for
eviction on the ground of subletting of the premises. The suit premises, i.e.,
61, Anjali, 6th floor, Behind Radio Club, Colaba Bombay 5 was let out by the
plaintiff on the monthly rent of Rs. 1300/-. It was contended that the
defendant No. 2 was a proprietory concern of the defendant No. 1 known as M/s
Pearl Advertisings. During the pendency of the suit the plaint was amended and
the defendants Nos 4& 5 joined as defendants. The joining of defendants
Nos. 4 & 5 were unlawful in respect of the suit premises. It is the case of
defendant No. 1 who unlawfully sublet the suit premises to defendants Nos. 3, 4
& 5. The defendant Nos. 3, 4 & 5 claimed rights through defendant no.
to plaintiff, defendant No. 1 has unlawfully sublet the suit premises to
defendant No. 3 in the month of September, 1998 and therefore, the defendant
No. 1 has lost protection of the Bombay Rent Act and therefore, the defendant
No. 1 is liable to be evicted from the suit premises. The plaintiff by giving a
notice dated 19.8.1989 through her advocate terminated the tenancy of the
defendant no. 1 in respect of suit premises and called upon the defendant No. 1
to quit, vacate and deliver the quiet and peaceful possession of the suit
premises. But no reply was given. Hence, the suit was filed against the
defendants for eviction. On the basis of pleadings of the parties, the learned
trial judge framed three issues in the suit on 7.11.1997 :
Does plaintiff prove that defendant nos. 1 & 2 illegally sublet the suit
premises or unlawfully given on licence to the Defendant No. 3?
plaintiff entitled to decree of possession of the suit premises?
What order and decree?
Both the parties examined themselves with necessary witness and produced the
documents. The trial court after considering the matter held that the plaintiff
was not entitled to the decree for eviction. It is relevant to mention that Mr.
Sachdeva expired and defendant No. 1 Smt. Santosh Ajit Sachdeva wife of Mr. Sachdeva
became the tenant of plaintiff in respect of suit premises. As already
mentioned above that M/s Pearl Advertisings is a proprietory concern of Shri Ajit
Sachdeva. The defendant No. 3 M/s Impression Advertising Pvt. Ltd is the
unlawful occupant in respect of suit premises. The case of the defendant was
that her husband Ajit Sachdeva and she herself registered the Private Limited
Company and were the Directors of the said company. During the life time of
late Shri Sachdeva he also carried out the business in the name of M/s
Impression Advertising and Marketing. Mr. Sachdeva died on 26th September, 1984
and thereafter defendant No. 1 was accepted as tenant by the plaintiff and the
rent was being paid by the defendant No. 2 to the extent of Rs. 300/- and by
M/s Impression Advertising and Marketing at Rs. 1000/- per month.
was also contended that defendant No. 3 M/s Impression Advertising Co. did not
commence the business owing to the illness of the Director late Shri Sachdeva.
However in July, 1988 defendant No. 1 decided that the said company should
conduct the business which was being carried out in the name of M/s Impression
Advertising and Marketing. After the commencement of the business the defendant
was remitting the rent to the plaintiff on behalf of the defendant no.1.
Therefore, the defendant no. 1 denied that the defendant no. 3 was the unlawful
occupant as alleged. It was also contended that the business of the defendant
No. 3 was run by the defendant no. 1 as the Managing Director.
the allegation that defendant had unlawfully sub-let or given on leave and on licence
basis to the defendant No. 3 was not proved. it was urged that defendant No. 1
carried on the business in the name of the defendant No. 2 and the premises
continued to remain in her custody and control and defendant No. 3 did not
claim any right or claim in the suit premises.
However, the trial court after examining the necessary evidence dismissed the
suit. Hence, the respondent approached the appellate authority against the
judgment and order passed by the trial court on 22.12.1998. The appellate
authority examined the factual controversy and after reviewing all the oral
& documentary evidence of the defendant No. 1 did not feel persuaded that
she was controlling the whole business as Director of the company in the suit
trial court after referring to the Annual Returns from 1988 to 1994 found that
defendant No. 1 the appellant owns 1400 shares out of 2000 shares of the said
company and one Shri Shivdutt Sharma owns 240 shares and Shri Gautam Sachdeva
owns 250 shares of the said company. It was further held that Ms. Shibani Sachdeva
and M/s Nikki Sachdeva own 60 & 50 shares respectively whereas S/Shri
Charles D Souza & Bhooshan Prabhu were holding 90 shares & 50 shares
respectively and on that basis the trial court found that the defendant
(appellant herein) was found to be controlling the whole business. However,
this finding was reversed by the appellate court. The appellate court found that
simple shareholding of the appellant in the company is not enough & there
is no factual foundation in respect of actual control over the business of the
company in suit premises. Mere statement that the appellant holds 1400 shares
or production of balance sheet is not sufficient to prove her actual control.
The appellate court found that except this documentary evidence there is no
evidence to show that the day to day activity is being controlled by the
defendant No.1. On this evidence, the appellate court reversed the finding and
held that merely she was having a majority share-holding by that it cannot be
concluded that she was in actual control of the business of the company in suit
premises. Aggrieved against the order of the appellate court, the writ was filed
before the High Court and the High Court after reviewing the evidence affirmed
the finding recorded by the first appellate court that there is no sufficient
material from which it can be concluded that actually the defendant - appellant
is looking after the business of the company in the suit premises.
the High Court dismissed the writ petition and affirmed the order of the
appellate court. Aggrieved against this order, the present appeal was filed.
have heard learned counsel for the parties & perused the record.
Dwivedi, learned senior counsel strenuously urged before us that the principal
of lifting the corporate veil has been accepted and, therefore, if the
corporate veil is lifted then it appears that the appellant who holds the major
share is looking after the day to day functioning of the company and learned
counsel accordingly placed reliance on the decision of this Court in the case
of Madras Bangalore Transport Co. (West) v. Inder Singh reported in (1986) 3
SCC 62 and also placed reliance in a number of other judgments.
decision of Madras Bangalore Transport Co. (West) (Supra) came up for
consideration before this Court in a subsequent judgment in the case of Sait Nagjee
Purushotham & Co. Ltd. V.
Prabhulal reported in (2005)8 SCC 252 wherein the case of Madras Bangalore
Transport Co. (West) (Supra) was considered alongwith all other cases cited by
learned counsel and it was specifically recorded with regard to Madras
Bangalore Transport Co. (West) (Supra) .
case has been decided purely on facts peculiar to it and no principle of law
has been laid down."
other cases referred by learned counsel were also examined and we do not feel
any need to refer any more of them.
theory of lifting the corporate veil has been accepted in certain circumstances
which have already been referred by this Court in a series of decisions.
However, so far as this case is concerned, as per the finding of fact recorded
by the appellate court as well as by the High Court that the
appellant-defendant has not been able to successfully prove that she is
controlling the company, it was held by the appellate court that merely by
holding a large number of shares is not sufficient but something more is
required to prove that she is actually controlling and managing the business
herself. That finding of the Appellate Court has been upheld by the High Court.
in view of the concurrent finding of both the courts below, there is no reason
for us to take a different view of the matter. Hence we do not find any merit
in this appeal and accordingly the appeal stands dismissed. No order as to