Rup Chand Gupta Vs. Raghuvanshi
Private Limited & ANR [1964] INSC 121 (15 April 1964)
15/04/1964 GUPTA, K.C. DAS GUPTA, K.C. DAS
GAJENDRAGADKAR, P.B. (CJ)
CITATION: 1964 AIR 1889 1964 SCR (7) 760
CITATOR INFO:
APL 1988 SC1470 (12)
ACT:
Decree-Collusion-Ingredients of collusion-A
party who need not be impleaded was not impleaded-Does not constitute
collusion-Two limited companies-All directors common Suit by one-Other does not
defend-Does not make the suit collusive.
HEADNOTE:
Respondent No. 2 is the lessee of Respondent
No. 1 and the appellant is the sub-lessee. Both the respondents Nos. 1 and 2
had the same directors. Respondent No. 1 brought a suit against respondent No.
2 for eviction in which the appellant was not impleaded as a party. By agreement
between the present respondent Nos. 1 and 2 that suit was not defended and
ex-parte decree was obtained in favour of respondent No. 1. By virtue of this
decree the appellant as a sub-lessee of respondent No. 2 became a tress passer
and had no right to remain on the land. To avoid this situation the appellant
filed a suit to set aside the decree on the ground that it was obtained by
collusion. The Trial Judge accepted his contention and gave a direction that
the appellant still remained a tenant and directing the defendants in that suit
from taking any steps in execution of the ex-parte decree. On appeal the trial
Court's decree was set aside on the ground that the present appellant had
failed to prove that the ex-parte decree was obtained collusively.
Before this Court the same contentions as in
the courts below were raised.
Held: (i) The mere fact that the defendant
agreed with the plaintiff that if a suit is brought he would not defend it
would not necessarily prove collusion. It is only if this agreement is done
improperly in the sense that a dishonest purpose was intended to be achieved
that they can be said to have colluded.
Scott v. Scott. 1913 Law Reports (Probate
Division) 52 and Nagubai Ammal & Ors. v. B. Shamma Rao, [1956] S.C.R. 451,
referred to.
(ii) The law allows a landlord to institute a
suit against a lessee for the possession of the land on the basis of a valid
notification without impleading the sub-lessee and the decree in such suit
would bind the sub-lessee and hence the suit instituted by respondent No. 1 in
the present case cannot be said to have constituted an improper act.
(iii) The omission of the respondent No. 2 to
defend the earlier suit was not also an improper act because even if it had a
good defence it was not bound to take it.
(iv) Even if the appellant was a Thika tenant
within the meaning of the Calcutta Thika Tenants Act, 1949, it would have
protected him against eviction by respondent No. 2 but It would not have given
protection against the eviction by respondent No. 1 because the Act was
designed to protect the Thika Tenant from eviction by the landlord only and not
against eviction from any other source.
761 Shamsuddin Ahmad v. Dinanath Mullick,
Appeal from original decree No. 123 of 1957, decided on 13-8-59.
(v) The respondents Nos. 1 and 2 are two
distinct legal entitles and therefore simply because both had the same
directors it cannot be said that the purpose of the suit was dishonest or
sinister.
(vi) The appellate Bench of the High Court
has correctly decided that the present appellant has failed to establish that
the impugned decree was procured collusively.
CIVIL APPELLATE JURISDICTION: Civil Appeal
No. 172 of 1964.
Appeal from the judgment and decree dated
July 6, 1962 of the Calcutta High Court in Appeal from Original Decree No. 213
of 1959.
S. T. Desai, B. Sen and B.P. Maheshwari, for
the appllant.
H. N. Sanyal, Solicitor-General, Ajit KumarSen
and S.N. Mukherjee, for the respondent No. 1.
April 15, 1964. The judgment of the Court was
delivered by DAs GUPTA, J.-The subject-matter of this litigation is a piece of
land in the heart of the business centre of the city of Calcutta. This was part
of a block of 52 cottahs of land taken on lease on January 21, 1950 from the
Official Trustee, West Bengal, by a private limited company, Raghuvanshi
Private Ltd. The lease was a building lease for a period of 75 years commencing
from January 21, 1950. The lessee was required to complete the construction of
a three or four storeyed building on the land within 1O years. In September
1960, Raghuvanshi Private Limited in its turn leased 10 1/2 cottahs out of the
52 cottahs to a public limited company, Land and Bricks Ltd. This lease by
Raghuvanshi Private Ltd., (hereinafter referred to as "Raghuvanshi")
in favour of Land & Bricks Ltd., (hereinafter referred to as "Land
& Bricks") created a monthly tenancy commencing from the 1st October
1950. Land and Bricks in its turn sub-let the entire 10 1/2 cottahs to the
present appellant, Rupchand Gupta in his business name of Hind Airways. The
lease was on the terms as settled by two letters dated August 19, 1950 and
September 5, 1950 between Hind Airways and Land and Bricks. By the terms of the
sublease, the sub-lessee undertook not to sub-let the land to anybody, to
vacate the land as soon as it was required by Land and Bricks for any purpose
and not to construct anything on the land but only to use the open land for
"garage purpose for motor vehicles". Inspite of this undertaking
however the appellant constructed a pacca structure on the land. Land and
Bricks protested unsuccessfully and then started proceedings under the Calcutta
762 Municipality Act for demolition of the structures. Those proceedings were
also unsuccessful. Land and Bricks, it appears, also served on the appellant in
February 1953 a notice to quit. This was not followed up by any suit in court.
But a suit for arrears of rent was instituted by Land and Bricks against the
appellant in September 1955 and another in 1957. Consent decrees were passed in
both of these suits. It appears ,that in about May or June 1954, Raghuvanshi
was desirous of getting possession of the land it has leased to Land and
Bricks. The difficulty was that Land and Bricks having sublet to the appellant
was not in a position to deliver possession to its lessor Raghuvanshi until and
unless possession was obtained from the appellant.
It was in these circumstances that
Raghuvanshi determined its lease in favour of Land and Bricks by a notice to
quit dated the 11th April 1955. Raghuvanshi then instituted a suit No. 3283 of
1955 in the High Court of Calcutta against Land and Bricks for possession of
the land. The appellant was not impleaded in the suit and Land and Bricks did
not contest it. An ex parte decree was made by the Court in favour of
Raghuvanshi on the 11th May 1956.
The necessary legal consequences of that
decree is that the plaintiff as the sub-lessee of Land and Bricks has no right
to stay on the land and has become a trespasser. It is to avoid the consequence
of that decree, that the present suit was brought by Rupchand Gupta. His case
is that the decree had been obtained "by fraud and collusion between the
defendants in order to injure the plaintiff and to evict the plaintiff from the
said premises without any decree being passed against the plaintiffs" Both
Land and Bricks and Raghuvanshi have been impleaded in the suit-Land and Bricks
as the first defendant, and Raghuvanshi as the second defendant. Both of them
denied the allegations of fraud and collusion.
The case that the decree was obtained by
fraud was given up at the hearing and only the allegation that it was a
collusive suit was pressed.
The Trial Judge held that there was collusion
between defendant No. 1 and defendant No. 2 in the matter of obtaining an
ex-parte decree in suit No. 3283 of 1955 and that the plaintiff was not bound
by that decree. He gave a declaration that the plaintiff was still a tenant
under defendant No. 1 and was not liable to be ejected under the ex-parte
decree. He also ordered the issue of an injunction restraining the defendants
from taking any steps in execution of the ex-parte decree.
On appeal by the defendant No. 2,
Raghuvanshi, the decree made by the Trial Judge was set aside. The learned
Judges, who heard the appeal, came to the conclusion that 763 the plaintiff had
failed to prove that the decree in suit No. 3283 of 1955 had been procured
collusively. So, they held that the plaintiff was bound by the decree in that
suit.
It is against this decree of the appellate
Bench of the High Court that the present appeal has been filed by the plaintiff
Rupchand Gupta.
The only question for decision in the appeal
is whether the plaintiff had established his allegation that the ex-parte
decree had been obtained as a result of collusion between Raghuvanshi and Land
and Bricks. The main circumstances on which the plaintiff relied to prove
collusion and which according to the learned Judge established his case were
these: Raghuvanshi and Land and Bricks though distinct entities had the same
persons as directors. The construction of building in terms of indenture of
lease with Official Trustee was necessarily in the interests of shareholders of
Raghuvanshi and so this was in the interest of Land and Bricks also as the main
shareholders were the same. The Calcutta Thika Tenancy Act, 1949 was a serious
impediment in the way of the plaintiff's eviction in any suit by Land and
Bricks. So, Land and Bricks attempted to get possession of the land by
obtaining an order of demolition of structures by proceedings under the
Calcutta Municipality Act. When these failed and it was apprehended that a suit
for ejectment by Land and Bricks might not succeed against the plaintiff that
this device of having a suit by Raghuvanshi against Land and Bricks was decided
upon by agreement between Raghuvanshi and Land and Bricks. By arrangement
between the two, Land and Bricks did not contest the suit and to avoid any risk
of any defence being raised by the plaintiff he was not impleaded in the suit
at all.
All the circumstances taken together justify,
it was urged by the appellant, the conclusion that the defendant No. 2 colluded
with defendant No. 1 to procure the exports decree for the purpose of executing
that decree against the plaintiff.
One of the simplest definitions of collusion
was given by Mr. Justice Bucknill in Scott v. Scott(1). "Collusion may be
defined", said the learned Judge, "as an improper act done or an
improper refraining from doing an act, for a dishonest purpose".
Substantially the same idea is expressed in the definition given by Whatron's
Law Lexicon, 14th Edition, p. 212. viz., "Collusion in judicial
proceedings is a secret arrangement between two persons that the one should
institute a suit against the other in order to obtain the decision (1) [1913]
Law Reports (Probate Division) 52.
764 of a judicial tribunal for some sinister
purpose". This definition of collusion was approved by the Court in
Nagubai Ammal & ors., v. B. Shamma Rao and ors.(1).
Thus the mere fact that the defendant agrees
with the plaintiff that if a suit is brought he would not defend it, would not
necessarily prove collusion. It is only if this agreement is done improperly in
the sense that It dishonest purpose is intended to be achieved that they can be
said to have colluded.
There is little doubt that in the present
case Land and Bricks agreed with Raghuvanshi that the suit for ejectment would
not be contested. When the suit was instituted Land and Bricks did not contest
and the ex-parte decree was passed. Raghuvanshi did not implead this appellant
in that suit. Can any of these acts, viz., Land and Bricks agreeing with
Raghuvanshi that it would not contest the suit, the actual refraining by Land
and Bricks from contesting the suit or the act of Raghuvanshi in not impleading
the appellant, be an improper act or improper refraining from an act? We do not
see how any of these things can be said +to be improper.
Taking the last action first, viz.,
Raghuvanshi's omission to implead the appellant, it is quite clear that the law
does not require that the sub-lessee need be made a party.
It has been rightly pointed out by the High
Court that in all cases possession of the laid on the basis of a valid notice
to quit served on the lessee and does not implead the sub-lessee as a party to
the suit, the object, of the landlord is to eject the sub-lessee from the land
in execution of the decree and such an object is quite legitimate. The decree
in such a suit would bind the sublessee. This may act harshly on the
sub-lessee; but this is a position well understood by him when he took the
subleases The law allows this and so the omission cannot be said to be an
improper act.
Nor is it possible, in our opinion, to say
that the omission of Land and Bricks to contest the ejectment suit was an improper
act. It has not been suggested that Land and Bricks had a good defence against
the claim for ejectment but did not take it for the mere purpose of helping
Raghuvanshi to get possession of the land. Even if it had a good defence, we do
not think it was bound to take it. It may be that if Land and Bricks had a
defence and the defence was such which if brought to the notice of the court
would have stood in the way of any decree being passed in favour of Raghuvanshi
there would be reason to say that the omission to implead the sub-lessee was
actuated by a dishonest purpose and consequently was improper. It is not
necessary for (1) [1956] S.C.R. 451 765 us however to consider the matter
further as neither in the courts below nor before us was any suggestion made on
behalf of the appellant sub-lessee that Land and Bricks had even a plausible
defence against Raghuvanshi's claim for ejectment.
We have already mentioned the fact that one
of the circumstances which the plaintiff claimed showed collusion was that the
Calcutta Thika Tenancy Act stood in the way of the plaintiff's eviction of Land
and Bricks. It is unnecessary for us to decide whether or not the appellant was
a Thika tenant within the meaning of the Calcutta Thika Tenancy Act, 1949. If
he was, that Act would undoubtedly have protected him against eviction by Land
and Bricks.
That Act could however have no operation in a
suit brought by Raghuvanshi against Land and Bricks. It has been held by the
High Court of Calcutta that the Thika Tenancy Act was designed to protect the
Thika tenant from eviction by his landlord only and not against eviction from
any source.
Shamsuddin Ahmed v. Dinanath Mullick &
ors., Appeal from Original Decree No. 123 of 1957, decided on August 13, 1959).
The correctness of this view has not been challenged before us. Nor is it the
appellant's case that Land and Bricks was a Thika tenant of Raghuvanshi.
Obviously, this could not be suggested, because Land and Bricks never erected
any structure at all. (See the definition of a Thika tenant in s. 2, cl. 5 of
the Calcutta Thika Tenancy Act, 1949). On the materials on the record we are
satisfied that there was no defence that Land and Bricks could have raised for
resisting Raghuvanshi's claim for ejectment.
The crux of the matter is: Was this attempt
by Raghuvanshi to get possession of the land a dishonest or sinister purpose?
We are asked by Mr. Desai to spell dishonesty out 'of the fact that the
directors of Raghuvanshi and Land and Bricks were common and so the persons who
were interested in Land. and Bricks were also interested in seeing that Raghuvanshi
had not to suffer for forfeiture of his lease for failure to comply with the
covenant to construct a building by 1960. All this may be taken to be true.
But, we are unable to see how this would make Raghuvanshi's attempt to get
possession of the land dishonest or sinister. It is not as if Raghuvanshi did
not actually want to get possession of the land but wanted to help Land and
Bricks to get possession. It has also to be remembered that the identity of the
directors and the identity of the main shareholders do not in any way affect
the position that in law and in fact Raghuvanshi and Land and Bricks were
distinct and separate entities. It is not even remotely suggested that Raghuvanshi
and Land and Bricks were really one and the same person with two names.
766 If that had been so, there might have
been good reason for thinking that it was in an attempt to surmount the
obstacle represented by the Calcutta Thika Tenancy Act, 1949, that this mode of
Raghuvanshi suing Land and Bricks for ejectment was resorted to. Indeed, if
Raghuvanshi and Land and Bricks were one and the same person possession of Land
and Bricks would be possession of Raghuvanshi and a suit by Raghuvanshi to eject
Land and Bricks would be meaningless. But, that is not the appellant's case. It
appears from the High Court's judgment that the plaintiff's counsel made it
plain before the court that it was not his client's case that the plaintiff's
real lessor was Raghuvanshi Private Ltd., and not Land and Bricks Ltd. In the
present appeal before us also Mr. Desai argued on the basis that Land and
Bricks and Raghuvanshi were distinct entities and that the lease of Land and
Bricks under Raghuvanshi was a real subsisting lease at the time of Suit No.
3283 of 1955.
In our judgment, the appellate Bench of the
High Court has rightly come to the conclusion that the plaintiff has failed to
establish that the decree in Suit No. 3283 of 1955 was procured collusively.
The suit was therefore rightly dismissed.
The appeal is accordingly dismissed with
costs.
Appeal dismissed.
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