Speedline Agencies Vs. M/S T.Stanes & Co.Ltd.  INSC 423 (14 May 2010)
SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL NO. OF 2010
(Arising out of S.L.P. (Civil) No. 29478 of 2009) M/s Speedline Agencies ....
Appellant(s) Versus M/s T. Stanes & Co. Ltd. .... Respondent(s)
1) Leave granted.
appeal is directed against the final judgment and order dated 05.08.2009 passed
by the High Court of Judicature at Madras in Civil Revision Petition (NPD) No.
1729 of 2003 whereby the High Court dismissed the civil revision filed by the appellant
Brief facts in a nutshell are as under:
appellant took the suit premises in TS No. 1357 (bearing Old No. 6/499 and New
No.8/499) on Trichy Road, Coimbatore comprising an area of 1.4 acres, i.e.,
61,872 sq. ft.
building having built up area of 5,274 sq. ft. on lease under lease deed dated
17.11.1965 for use as residence-cum- office from M/s United Coffee Supply Co.
Ltd., for a period of five years on a monthly rental of Rs.400/-. On the expiry
of the period, the lease was further renewed for a period of five years under
lease deed dated 01.10.1970. On failure to renew the lease from 01.10.1975, the
appellant instituted a suit in O.S. No. 209 of 1976 for specific performance of
the renewal clause in the lease agreement dated 1.10.1970. In the said suit, a
settlement dated 12.04.1978 was arrived at whereby the appellant agreed to pay
fair rent of Rs.1200/- w.e.f. 1.10.1975.
the meantime, Government of Tamil Nadu brought into force the Tamil Nadu Urban
Land (Ceiling and Regulation) Act, 1978 (hereinafter referred to as "the
Ceiling Act") on 17.05.1978. Under the provisions of the said Act, ceiling
was 2 fixed regarding extent of vacant land which may be owned by a person and
Government had the right to take possession of the excess land over the ceiling
limit. On 13.09.1978, the erstwhile landlord-company applied for exemption from
acquisition of excess vacant lands. On 04.11.1981, the erstwhile landlord
company was granted partial exemption from acquisition of vacant lands under
Section 21(1)(a) of the Ceiling Act on the ground of public interest by way of
On 25.06.1986, by way of G.O. (Rt) No. 852 issued by the Revenue Department,
the partial exemption earlier granted was reviewed and extended to the entire
extent of the suit premises under Section 21(1)(a) of the Ceiling Act, i.e. on
the ground of public interest.
1984, the landlord-company filed RCOP No. 397 of 1984 claiming monthly rental
of Rs. 9500/- retrospectively from 01.10.1980. However, the Rent Controller, by
order dated 18.10.1994, fixed the fair rent as Rs.6465/- from 1.10.1980.
appellant filed R.C.A. No. 171 of 1994 whereunder the rent was fixed as
Rs.7852/- on 19.12.2001 which is currently being paid. On 15.09.1985, the name
of the landlord- 3 company, M/s United Coffee Supply Co. Ltd. was changed to
Stanes Tea and Coffee Ltd.
Stanes Tea and Coffee Ltd. filed RCOP No. 105 of 1987 on 03.04.1987 under
Sections 10(3)(a)(i) and (iii) of the Tamil Nadu Buildings (Lease and Rent
Control) Act, 1960 (hereinafter referred to as the `Act') on the ground that it
required the building and premises for their own use and occupation and for
providing residential accommodation to its employees and that vacant areas were
required for agency, warehouses and research and development building, office
quarters and amenities for staff such as garage, cycle stand, staff recreation
club, community hall etc. The Rent Controller, by its order, dated 09.04.1992
allowed the petition and directed eviction of the appellant. Aggrieved by the
said order, the appellant filed an appeal being RCA No. 42 of 1992 before the
Appellate Authority and IInd Additional Subordinate Judge of Coimbatore and the
same was dismissed on 10.04.2003.
the said order, the appellant filed C.R.P. No. 1729 of 2003 before the High
Court. During the pendency of the said C.R.P. before the High Court, by a
Scheme of Amalgamation, 4 M/s Stanes Tea and Coffee Limited was transferred to
& Company Ltd., with effect from 01.04.2005 under Sections 391 to 394 of
Act, 1956 and this was duly approved by the High
Court. Thereafter, an application for amendment of the cause title was filed
which was also duly allowed by the High Court by order dated 10.07.2009. On
05.08.2009, the High Court dismissed the revision filed by the appellant
herein. Aggrieved by the said order, the appellant has preferred the above
appeal before this Court by way of special leave petition.
Mr. K.K. Venugopal, learned senior counsel for the appellant-tenant and Mr. K.
Parasaran, learned senior counsel for the respondent-landlord.
Venugopal, learned senior counsel for the appellant- tenant mainly submitted
that upon the amalgamation of the original rent control petitioner with the
respondent herein, the new entity was not entitled to continue the eviction
proceedings under Section 10(3)(a)(i) and (iii) of the Act since the need of
the new entity will be different. In addition to the same, though not seriously
raised before the Courts below, he 5 submitted that other residential and
non-residential buildings owned by the respondent herein disable the new entity
to claim the benefit of order of eviction.
6) On the
other hand, Mr. K. Parasaran, learned senior counsel for the
respondent-landlord, by taking us through the Scheme of Amalgamation approved
by the Company Judge and the relevant provisions in the Act, submitted that
after merging of the Company which is the landlord with another Company, there
is no forfeiture of any right of the landlord under the provisions of the Rent
Control Act or the Transfer of Property Act. He also submitted that the
amalgamation of the erstwhile landlord with the respondent herein involved not
merely the transfer of the particular leasehold property but the entire
business of the erstwhile landlord including their requirement of the leasehold
premises for the acquired business. He also submitted that the subsequent events,
namely, the merger had taken place during the pendency of the Revision before
the High Court, are not matters of automatic cognizance by this Court or a
mandate on the Courts below. He elaborately submitted that in the present 6
case, the landlord required the premises for its own business and for
residential purposes of its employees and the requirement continues to exist
also for the transferee company since the entire business of the transferor
company stood transferred to the transferee company.
have considered all the relevant materials and rival contentions.
8) It is
not in dispute that Stanes Tea and Coffee Ltd. has approached the Rent
Controller by filing a petition under Section 10 (3) (a) (i) and (iii) of the
Act for possession and eviction against the tenant with regard to the premises
in question for its own use and occupation for residential and non-residential
purpose. The relevant provisions are extracted hereunder:
Eviction of tenants.- (1) xxx xxxx (2) xxxxx (3) (a) A landlord may, subject to
the provisions of clause (d), apply to the Controller for an order directing
the tenant to put the landlord in possession of the building- (i) in case it is
residential building, if the landlord requires it for his own occupation or for
the occupation of any member of his family and if he or any member of his
family is not occupying a residential building of his own in the city, town or
7 (iii) in case it is any other non-residential building, if the landlord or
any member of his family is not occupying for purposes of a business which he
or any member of his family is carrying on, a non-residential building in the
city, town or village concerned which is own:....."
analyzing the materials the Rent Controller and the Appellate Authority
accepting the case of the landlord concurrently found that there is a bona fide
need and passed an order of eviction against the tenant-appellant herein. It is
relevant to note that the rent control petition was filed on 03.04.1987 and the
Rent Controller ordered eviction on 09.04.1992. The appeal filed by the tenant
came to be dismissed on 10.04.2003 by the Rent Control Appellate Authority.
Thereafter, the tenant filed a civil revision petition under Section 25 of the Act
on 18.08.2003 before the High Court. During the pendency of the above said
civil revision petition before the High Court, the Scheme of Amalgamation was
finalized and by order dated 26.06.2006, the Company Court sanctioned the
Scheme. Thereafter, an application was filed for amendment of the cause title
in the civil revision petition was filed by the tenant and the same was also
8 10) The
Scheme of Amalgamation, filed in the appeal paper- book, contains various
definitions and clauses. Clause 1.1 defines "Transferor Company" and
Clause 1.2 defines "Transferee Company". Among other clauses, we are
concerned with Clauses 1.5 and 6, which read thus:
The "Effective date" shall mean the date on which the certified copy
of the order of the High Court of Madras sanctioning the scheme vesting the
assets, properties, liabilities, rights, duties, obligations and the line of
the Transferor Company in the Transferee Company are filed with Registrar of
Companies of Tamil Nadu after obtaining the consents, approvals, permissions,
resolutions agreements, sanctions and orders necessary thereof."
Legal Proceedings - With effect from the effective date, if any suit, petition,
appeal, revision or other proceedings of whatever nature (hereinafter called
"the proceedings) by or agents the Transferor Company under any statute
whether pending on the Transfer Date or which may be instituted in future
(whether before or after the effective date) in respect of any matter arising
before the effective date and relating to the Transferred undertaking as agreed
between the Transferor Company and the Transferee Company shall not abate be
discontinued or be in any way prejudicially affected by reason of the transfer
of the said assets/liabilities of the Transferor Company or of anything
contained in the scheme but the proceedings may be continued, prosecuted and
enforced by or against the Transferee Company in the same manner and to the
same extent as it would be or might have been continued prosecuted and enforced
by or against the Transferor Company as if the Scheme had not been made."
15 makes it clear that the Transferor Company shall be dissolved without
winding up as and from the effective date or such other date as the High Court
of Madras may direct.
mentioned earlier, after analyzing the Company Petition filed for sanctioning
the Scheme of Amalgamation under Sections 391 to 394 read with Section 79 of
Act, 1956 and after satisfying all aspects, by order
dated 26.06.2006, the High Court sanctioned the Scheme with effect from the
transfer dated 01.04.2005 and allowed the petitions accordingly.
getting the order from the Company Court, the Transferee Company filed a
petition in the pending civil revision petition filed by the tenant for
amendment of the cause title and it is not in dispute that the same was ordered
by the learned single Judge subject to objection by the tenant.
light of the above factual position, let us consider whether after amalgamation
of the original landlord with the Transferee Company, the Transferee Company is
entitled to avail the benefit of the order of eviction granted under 10 Section
10 (3) (a) (i) and (iii) as passed by the Rent Controller, approved by the
Appellate Authority and the High Court.
Venugopal, learned senior counsel submitted that the eviction was ordered on
the ground of personal requirement and such requirement must continue to exist
till final determination of the case. In view of the same, according to him,
the Appellate/Revisional Court must take cognizance of subsequent events taking
into account that the requirement of the landlord is still continuing. In
support of the above proposition, he relied on the following three judgments:-
(i) In Hasmat Rai & Anr. vs. Raghunath Prasad (1981) 3 SCC 103, this Court
held:- "14........If a landlord bona fide requires possession of a
premises let for residential purpose for his own use, he can sue and obtain
possession. He is equally entitled to obtain possession of the premises let for
non-residential purposes if he wants to continue or start his business. If he
commences the proceedings for eviction on the ground of personal requirement he
must be able to allege and show the requirement on the date of initiation of
action in the court which would be his cause of action. But that is not sufficient.
This requirement must continue throughout the progress of the litigation and
must exist on the date of the decree and when we say decree we mean the decree
of the final court. Any other view would defeat the beneficial provisions of a
welfare legislation like the Rent Restriction Act. If the landlord is able to
show his requirement when the action is commenced and the requirement continued
till the date of the decree of the trial court and thereafter during the
pendency of the appeal by the tenant if the landlord comes in possession of the
premises sufficient to satisfy his 11 requirement, on the view taken by the
High Court, the tenant should be able to show that the subsequent events
disentitled the plaintiff, on the only ground that here is tenant against whom
a decree or order for eviction has been passed and no additional evidence was
admissible to take note of subsequent events. When a statutory right of appeal
is conferred against the decree or the order and once in exercise of the right
an appeal is preferred the decree or order ceases to be final. What the
definition of "tenant"
from its operation is the person against whom the decree or order for eviction
is made and the decree or order has become final in the sense that it is not
open to further adjudication by a court or hierarchy of courts. An appeal is a
continuation of suit. Therefore a tenant against whom a decree for eviction is
passed by trial court does not lose protection if he files the appeal because
if appeal is allowed the umbrella of statutory protection shields him.
Therefore it is indisputable that the decree or order for eviction referred to
in the definition of tenant must mean final decree or final order of eviction.
Once an appeal against decree or order of eviction is preferred, the appeal
being a continuation of suit, the landlord's need must be shown to continue to
exist at appellate stage. If the tenant is in a position to show that the need
or requirement no more exists because of subsequent events, it would be open to
him to point out such events and the court including the appellate court has to
examine, evaluate and adjudicate the same. Otherwise the landlord would derive
an unfair advantage. An illustration would clarify what we want to convey. A
landlord was in a position to show that he needed possession of demised
premises on the date of the suit as well as on the date of the decree of the
trial court. When the matter was pending in appeal at the instance of the
tenant, the landlord built a house or bungalow which would fully satisfy his
requirement. If this subsequent event is taken into consideration, the landlord
would have to be non-suited. Can the court shut its eyes and evict the tenant?
Such is neither the spirit nor intendment of Rent Restriction Act which was
enacted to fetter the unfettered right of re-entry. Therefore when an action is
brought by the landlord under Rent Restriction Act for eviction on the ground
of personal requirement, his need must not only be shown to exist at the date
of the suit, but must exist on the date of the appellate decree, or the date
when a higher court deals with the matter. During the progress and passage of
proceeding from court to court if subsequent events occur which if noticed
would non-suit the plaintiff, the court has to examine and evaluate the same
and mould the decree accordingly. This position is no more in controversy in
view of a decision of this Court in 12 Pasupuleti Venkateswarlu where Justice
Krishna Iyer speaking for the court observed as under: (SCC p. 772, para 4) We
affirm the proposition that for making the right or remedy claimed by the party
just and meaningful as also legally and factually in accord with the current
realities, the court can, and in many cases must, take cautious cognizance of
events and developments subsequent to the institution of the proceeding
provided the Rules of fairness to both sides are scrupulously obeyed.........
it is now incontrovertible that where possession is sought for personal
requirement it would be correct to say that the requirement pleaded by the
landlord must not only exist on the date of the action but must subsist till
the final decree or an order for eviction is made. If in the meantime events
have cropped up which would show that the landlord's requirement is wholly
satisfied then in that case his action must fail and in such a situation it is
incorrect to say that as decree or order for eviction is passed against the
tenant he cannot invite the court to take into consideration subsequent events.
He can be precluded from so contending when the decree or order for eviction
has become final. In view of the decision in Pasupuleti case the decision of
the Madhya Pradesh High Court in Taramal case must be taken to have been
overruled and it could not be distinguished only on the ground that the
definition of "tenant" in the Madhya Pradesh Act is different from
the one in Andhra Pradesh Act. Therefore, the High Court was in error in
declining to take this subsequent event which was admittedly put forth in the
plaint itself into consideration...
present case, Clause 6 (Legal proceedings) of the Scheme of Amalgamation makes
it clear that with effect from the effective date i.e. 01.04.2005 all
proceedings in which Transferor Company was a party be continued, prosecuted
and enforced by or against the Transferee Company in the same manner and to the
same extent as it would be or might 13 have been continued, prosecuted and
enforced by or against the Transferor Company as if the Scheme had not been
of the above specific clause coupled with other clauses of the Scheme and
taking note of the fact that the Transferor Company in its entirety merged with
the Transferee Company, the above decision is not directly applicable to the case
next decision relied on by him is Saraswati Industrial Syndicate Ltd. vs.
C.I.T. 1990 (Supp) SCC 675.
case, the question was whether on the amalgamation of the Indian Sugar Company
with the appellant-Company i.e. Saraswati Industrial Syndicate Ltd., the Indian
Sugar Company continued to have its entity and was alive for the purposes of
Section 41 (1) of Income Tax Act, 1961. This Court held as under:- "5.
Generally, where only one company is involved in change and the rights of the
shareholders and creditors are varied, it amounts to reconstruction or
reorganisation of scheme of arrangement. In amalgamation two or more companies
are fused into one by merger or by taking over by another.
or `amalgamation' has no precise legal meaning. The amalgamation is a blending
of two or more existing undertakings into one undertaking, the shareholders of
each blending company become substantially the shareholders in the company
which is to carry on the blended undertakings. There may be amalgamation either
by the transfer of two or more 14 undertakings to a new company, or by the
transfer of one or more undertakings to an existing company. Strictly
`amalgamation' does not cover the mere acquisition by a company of the share capital
of other company which remains in existence and continues its undertaking but
the context in which the term is used may show that it is intended to include
such an acquisition. See: Halsbury's Laws of England (4th edition volume 7 para
1539). Two companies may join to form a new company, but there may be
absorption or blending of one by the other, both amount to amalgamation. When
two companies are merged and are so joined, as to form a third company or one
is absorbed into one or blended with another, the amalgamating company loses
General Radio and Appliances Co. Ltd. v. M.A. Khader the effect of amalgamation
of two companies was considered.
General Radio and Appliances Co. Ltd. was tenant of a premises under an
agreement providing that the tenant shall not sub-let the premises or any
portion thereof to anyone without the consent of the landlord. M/s General
Radio and Appliances Co. Ltd. was amalgamated with M/s National Ekco Radio and
Engineering Co. Ltd. under a scheme of amalgamation and order of the High Court
under Sections 391 and 394 of Companies Act, 1956. Under the
amalgamation scheme, the transferee company, namely, M/s National Ekco Radio
and Engineering Company had acquired all the interest, rights including
leasehold and tenancy rights of the transferor company and the same vested in
the transferee company. Pursuant to the amalgamation scheme the transferee
company continued to occupy the premises which had been let out to the
transferor company. The landlord initiated proceedings for the eviction on the
ground of unauthorised sub-letting of the premises by the transferor company.
The transferee company set up a defence that by amalgamation of the two
companies under the order of the Bombay High Court all interest, rights
including leasehold and tenancy rights held by the transferor company blended
with the transferee company, therefore the transferee company was legal tenant
and there was no question of any sub-letting. The Rent Controller and the High
Court both decreed the landlord's suit. This Court in appeal held that under
the order of amalgamation made on the basis of the High Court's order, the
transferor company ceased to be in existence in the eye of law and it effaced
itself for all practical purposes. This decision lays down that after the
amalgamation of the two companies the transferor company ceased to have any
entity and the amalgamated company acquired a new status and it was not possible
to 15 treat the two companies as partners or jointly liable in respect of their
liabilities and assets. .......
true effect and character of the amalgamation largely depends on the terms of
the scheme of merger. But there cannot be any doubt that when two companies
amalgamate and merge into one the transferor company loses its entity as it
ceases to have its business. However, their respective rights or liabilities
are determined under the scheme of amalgamation but the corporate entity of the
transferor company ceases to exist with effect from the date the amalgamation
is made effective."
deals with reference to liability to pay income tax by Transferor Company after
amalgamation and hence not applicable to the case on hand.
third decision heavily relied on by Mr. Venugopal is Hindustan Lever & Anr.
vs. State of Maharashtra & Anr. (2004) 9 SCC 438. In that case, Tata Oil
Mills Co. Ltd.
Company) was incorporated on 10.12.1917 under the Companies Act, 1913. Hindustan
Lever Ltd. (transferee Company) was incorporated under the same Act on
17.10.1933. The scheme of amalgamation of the transferor Company with the
transferee Company was formulated and approved by the Board of Directors of the
respective companies on 19.03.1993. On 03.03.1994 the scheme of amalgamation of
the transferor Company with the transferee 16 Company was sanctioned with
certain modifications by a learned single Judge of the High Court. Appeal filed
against the judgment and order of the learned single Judge was rejected by the
Division Bench on 18.05.1994. The special leave petition against the above
judgment of the Division Bench was dismissed by this Court on 24.10.1994. The
drawn-up order of amalgamation of the transferor Company with the transferee
Company was approved by the High Court on 24.11.1994. On presentation of the
certified copy of the Court's order, the Registrar of Companies, Maharashtra
issued a certificate amalgamating the two companies. In view of the stamp duty
sought to be levied on the order of amalgamation passed under Section 394 of
Act, 1956 the appellant-Hindustan Lever filed writ
petition in the Bombay High Court challenging the constitutional validity of
the provisions of Section 2 (g)(iv) of the Bombay Stamp Act, 1958.
Division Bench upheld the validity and dismissed the writ petition. This
decision mainly deals with payment of stamp duty levied on the order of
amalgamation and not helpful to the case on hand.
With reference to the submissions made by Mr. Venugopal and the above mentioned
decisions relied on, amalgamation of a company with another company under
Sections 391 to 394 of the Companies Act has different
legal consequences on the rights of the Company in a case where it is a tenant
of a building entitled to the benefits of the Act and in a case where company
which amalgamates with another company is a landlord of the building. When a
company which is a tenant amalgamates with another company, the amalgamating
company (Transferor Company) loses its identity. It would, in law, amount to
the amalgamating company inter alia transferring its right under the lease even
if it be considered as an involuntary transfer. Such amalgamation would fall
within the mischief of Section 10(2)(ii)(a) of the Act when it is without the
written consent of the landlord and would result in forfeiture of the tenancy
[vide General Radio and Appliances Co. Ltd. & Ors. vs. M.A. Khader (dead)
by LRs. (1986) 2 SCC 656 and Singer India Ltd. vs. Chander Mohan Chadha and
Ors. (2004) 7 SCC 1.] As in the present case, the company which is the landlord
merges with another company, there is 18 no forfeiture of any right of the
landlord under the provisions of the Act or under the Transfer of Property Act.
15) In a
case where a company is a tenant, amalgamation is the cause of action for the
landlord to sue the tenant company for eviction on the ground of subletting
without the consent of the landlord. In the present case, the petition by the
landlord for eviction of the tenant was filed on 03.04.1987. The cause of
action has no relation to amalgamation, irrespective of whether it is prior or subsequent
to filing of the application for eviction. The Rent Controller ordered eviction
appeal of the tenant was disposed of by the Appellate Authority on 10.04.2003.
The rights of the landlord are to be determined as on the date of the
application for eviction. The order of eviction crystallized the rights of the
landlord. The tenant had filed the revision in the High Court on 18.08.2003.
the pendency of the revision petition, the order for amalgamation under the Companies Act passed by the High Court was made on 26.02.2006 which is a
Petition was disposed of by the High Court on 05.08.2009. As rightly pointed
out by Mr. Parasaran, learned 19 senior counsel, had the revision petition been
disposed of before 26.02.2006, this contention would not have arisen at all.
The delay in the disposal of the revision petition should not prejudice the
vested rights of the landlord under the decree of the Rent Controller confirmed
by the Appellate Authority.
Further, the amalgamation of the erstwhile landlord with the respondent herein
involved not merely the transfer of the particular leasehold property but the
entire business of the erstwhile landlord including the requirement of the
leasehold premises for the acquired business. In view of the factual details
including various clauses in the Scheme of Amalgamation which was approved by
the High Court, while there is no quarrel about the proposition in the decision
relied on by Mr. Venugopal, they are not applicable to the case on hand.
far as the appellant's prayer before this Court to take note of the subsequent
event of amalgamation, it is at the outset submitted that subsequent events are
not matters of automatic cognizance by this Court or a mandate on the 20 courts
below. A subsequent event is one which may be taken into account in certain
circumstances and deserves to be eschewed and kept out of the purview of
judicial consideration in certain other cases. Mr. Parasaran, learned senior
counsel pointed out that in cases under Rent Acts there are two lines of cases.
One has taken into account subsequent events and moulded the relief and the
other refused to take into account subsequent events. According to him, the
present case falls within the line of cases where subsequent event was not
taken into account. In the present case, he submitted that the subsequent
events do not have a fundamental impact on the order of eviction based on the
requirement of the landlord for its own occupation and/or for purpose of its
to him, the subsequent event is therefore not to be taken into account. In
Shakuntala Bai and Ors. vs. Narayan Das & Ors. (2004) 5 SCC 772, it was
held that with regard to the category of cases where a decree for eviction is
passed and the landlord died during the pendency of the appeal, the estate is
entitled to the benefit which, under a decree, has accrued in favour of the
landlord and the legal 21 representatives are entitled to defend further
proceedings like an appeal which is challenged to the benefit under the decree.
agree with Mr. Parasaran that, in normal circumstances, after passing of the
decree by the trial Court, the landlord would have obtained possession of the
premises, but for the tenant continuing in occupation of the premises only on
account of stay order from the appellate court. In such circumstances, the well
known principle that "an act of the court shall prejudice no man"
shall come into operation.
the heirs of the landlord will be fully entitled to defend the appeal preferred
by the tenant. When a company stands dissolved (with or without winding up) due
to amalgamation, its rights under the decree for eviction devolves on the
Further in Usha P. Kuvelkar & Ors. vs. Ravindra Subrai Dalvi, (2008) 1 SCC
330, this Court clearly brought out the distinction between the cases where
death occurred after the decree and death occurring during the decree. It was
held in para 14 that:- 22 "......In the same decision a contrary note
expressed by this Court in P.V. Papanna v. K. Padmanabhaiah was held to be in
the nature of an obiter. This Court in Shakuntala Bai referred to the decision
in Shantilal Thakordas v. Chimanlal Maganlal Telwala and specifically observed
that the view expressed in Shantilal Thakordas case did not, in any manner,
affect the view expressed in Phool Rani v. Naubat Rai Ahluwalia to the effect
that where the death of landlord occurs after the decree for possession has
been passed in his favour, his legal heirs are entitled to defend the further
proceedings like an appeal and the benefit accrued to them under the decree.
Here in this case also it is obvious that the original landlord, Prabhakar
Govind Sinai Kuvelkar had expired only after the eviction order passed by the
Additional Rent Controller. This is apart from the fact that the landlord had
sought the possession not only for himself but also for his family members. There
is a clear reference in Section 23(1)(a)(i) of the Act regarding occupation of
the family members of the landlord. In that view the contention raised by the
learned counsel for the respondent must be rejected."
20) As to
subsequent events, this Court in Gaya Prasad vs. Pradeep Srivastava (2001) 2
SCC 604 at 609 para 10 observed as under:
We have no doubt that the crucial date for deciding as to the bona fides of the
requirement of the landlord is the date of his application for eviction. The
antecedent days may perhaps have utility for him to reach the said crucial date
of consideration. If every subsequent development during the post-petition
period is to be taken into account for judging the bona fides of the
requirement pleaded by the landlord there would perhaps be no end so long as
the unfortunate situation in our litigative slow-process system subsists.
years, after the landlord moved for eviction on the ground that his son needed
the building, neither the landlord nor his son is expected to remain idle
without doing any work, lest, joining any new assignment or starting any new
work would be at the peril of forfeiting his requirement to occupy the
building. It is a stark reality that the longer is the life of the litigation
the more would be the number of developments sprouting up during the long
interregnum. If a young entrepreneur decides to launch a new enterprise and 23
on that ground he or his father seeks eviction of a tenant from the building,
the proposed enterprise would not get faded out by subsequent developments
during the traditional lengthy longevity of the litigation. His need may get
dusted, patina might stick on its surface, nonetheless the need would remain
intact. All that is needed is to erase the patina and see the gloss. It is
pernicious, and we may say, unjust to shut the door before an applicant just on
the eve of his reaching the finale, after passing through all the previous
levels of the litigation, merely on the ground that certain developments
occurred pendente lite, because the opposite party succeeded in prolonging the
matter for such unduly long period."
further held in para 15 that:- "15. The judicial tardiness, for which
unfortunately our system has acquired notoriety, causes the lis to creep through
the line for long years from the start to the ultimate termini, is a malady
afflicting the system. During this long interval many events are bound to take
place which might happen in relation to the parties as well as the
subject-matter of the lis. If the cause of action is to be submerged in such
subsequent events on account of the malady of the system it shatters the
confidence of the litigant, despite the impairment already caused."
inflict great injustice in many cases if subsequent events are taken into
account when long years have passed unless there are very compelling
circumstances to take into account the subsequent events.
Smt. Phool Rani & Ors. vs. Shri Naubat Rai Ahuluwalia, (1973) 1 SCC 688, at
page 693, this Court, after discussing the issue in paras 9, 10, 11 and 12 held
in para 13 and 14 as under:- 24 "13. Several decisions were cited before
us but those falling within the following categories are to be distinguished--
(i) cases in which the death of the plaintiff occurred after a decree for
possession was passed in his favour; say, during the pendency of an appeal
filed by the unsuccessful tenant;
cases in which the death of the decree-holder landlord was pleaded as a defence
in execution proceedings; and (iii) cases in which, not the plaintiff but the
defendant -- tenant died during the pendency of the proceedings and the
tenant's heirs took the plea that the ejectment proceedings cannot be continued
of the first category are distinguishable because the decisions therein are
explicable on the basis, though not always so expressed, that the estate is
entitled to the benefit which, under a decree, has accrued in favour of the
plaintiff and therefore the legal representatives are entitled to defend
further proceedings, like an appeal which constitute a challenge to that
Particularly in matters governed by the Rent Acts to take into account
subsequent events would inflict hardship to landlords, in a case like the
present one. In this context, it was held in para 9 of Joginder Pal vs. Naval
Kishore Behal (2002) 5 SCC 397 that:- "9. The rent control legislations
are heavily loaded in favour of the tenants treating them as weaker sections of
the society requiring legislative protection against exploitation and
unscrupulous devices of greedy landlords. The legislative intent has to be
respected by the courts while interpreting the laws. But it is being
uncharitable to legislatures if they are attributed with an intention that they
lean only in favour of the tenants and while being fair to the tenants, go to
the extent of being unfair to the landlords. The legislature is fair to the
tenants and to the landlords -- both......"
25 23) It
is pointed out by Mr. Parasaran, learned senior counsel that the tenant, in the
present case, is an affluent company and is not a tenant falling under the
category of weaker sections of tenants of small properties. He further
submitted that the principle of taking into consideration subsequent event is
to be confined only to appeals on the principle that an appeal is a
continuation of the proceedings and the appellate court exercises all the
powers of the trial Court. [Vide Lachmeshwar Prasad Shukul and Ors. vs. Keshwar
Lal Chaudhuri & Ors. AIR 1941 F.C. 5 at page 13.] 24) In the present case,
subsequent event of amalgamation of a company took place during the pendency of
the revision in the High Court. Though, subsequent events which have occurred
during the pendency of a revision petition in the High Court or the matter was
pending before this Court, have been taken into consideration by this Court in
some cases, the question as to the difference between the exercise of
jurisdiction in appeal and revision was not argued or decided in those cases.
26 25) In
a revision under Section 25 of the Act, the Court is exercising a restricted
jurisdiction and not wide powers of the appellate court. In M/s Sri Raja
Lakshmi Dyeing Works and Ors. vs. Rangaswamy Chettiar (1980) 4 SCC 259 at page
262 it was held:- "......Therefore, despite the wide language employed in
Section 25, the High Court quite obviously should not interfere with findings
of fact merely because it does not agree with the finding of the subordinate
authority. The power conferred on the High Court under Section 25 of the Tamil
Nadu Buildings (Lease and Rent Control) Act may not be as narrow as the
revisional power of the High Court under Section 115 of the Code of Civil
Procedure but in the words of Untwalia, J., in Dattonpant Gopalvarao Devakate
v. Vithalrao Maruthirao Janagaval1; "it is not wide enough to make the
High Court a second Court of first appeal".
Parasaran reiterated that the High Court having only the power of limited
jurisdiction and not powers of appellate court, the subsequent event which
occurred during the pendency of the revision petition is not to be taken into
account, the High Court will decide only as to the legality of the order under
Coming to the expression "for its own use/occupation", it has to be
construed widely and given wide and liberal meaning. When a company wants to
expand its business and 27 amalgamates with another company, this would also be
a case of "for its own use". If a landlord which is a company cannot
advance its interest in the business by amalgamating with another company by
putting to use its own property, it would be unjust, unfair and unreasonable.
Further, the provisions of Rent Control Act should not be so construed as to
frustrate and defeat the legislation. If in a case of landlord requiring the
premises for its own use, to amalgamate with another company and expands its
business, the rent control legislation may clash with the provisions of the Companies Act. The Companies
Act and the Rent Control Act have to be harmoniously
interpreted and not to be so interpreted as to result in the one Act destroying
a right under the other Act.
stated earlier, death of a landlord after passing the order of eviction does
not ipso facto destroy the accrued right under the decree. The cases which have
taken into account the subsequent event in favour of the tenant are cases where
during the pendency of the appeal or revision, the requirement of the landlord
had been fully satisfied and met or ceased to exist. In the case on hand, the
landlord required it for its own 28 business and for residential purposes of
its employees. That requirement continues to exist also for the transferee
company since the entire business of the transferor company stood transferred
to the transferee company. The requirement of the company has neither been
satisfied nor extinguished. The right to evict has already crystallized into a
decree to which the company after amalgamation has succeeded by involuntary
assignment. As the decree for eviction was under stay, the decree could not be
executed. Once the stay is vacated or dissolved, the respondent would be
entitled to execute the decree. In the present case, the amalgamation order has
also preserved the said right. As per Clause 1.7 of the Scheme, all assets vest
in the transferee company. As per Clause 6, any suit, petition, appeal or other
proceedings in respect of any matter shall not abate or be discontinued and
shall not be prejudicially affected by reason of the transfer of the said
assets/liabilities of the Transferor Company or of anything contained in the
scheme but the proceedings may be continued, prosecuted and enforced by or
against the transferee company in the same manner and to the same 29 extent as
it would be or might have been continued prosecuted and enforced by or against
the Transferor company as if the scheme has not been made. In view of the same,
by virtue of the provisions in the Scheme of Amalgamation and operation of
Order 21 rule 16 of C.P.C., the decree holder is deemed to execute the decree.
Section 18 of the Act provides that the order of eviction shall be executed by
the Controller as if such order is an order of a civil court and for this
purpose, the Controller shall have all the powers of the civil court. For the
purpose of execution of the order, all the powers of civil court have been
invested in the Rent Controller. Therefore, the principle of Order 21 Rule 16
of the C.P.C. will apply. In any event, as rightly pointed out by learned
senior counsel for the respondent that the C.P.C. provisions to the extent
advance public interest or ensure a just, fair and reasonable procedure and
does not conflict with the Act will apply to execution of the order of
landlord's entitlement to evict the tenant had merged with the decree. Further,
the amalgamation took place long after the decree for eviction and rights had
crystallized under 30 the decree for eviction and merged into it. The tenant
has been in possession of vast extent of property which comprises of a big
building with built up area of 5,274 sq. ft. together with appurtenant space
i.e. vacant land total measuring 61,872 sq. ft. from the year 1965 for a period
of over 45 years.
appellant was initially paying rent of Rs. 400/- for the building and Rs. 300/-
for the furniture and fixtures which was raised to Rs. 400/- and Rs. 475/-
respectively in 1970's.
Controller fixed the fair rent as Rs. 6,465/- by order dated 18.10.1994 which
was enhanced by the appellate authority in an appeal filed by the appellants to
Rs. 7,852/- by order dated 19.12.2001.
assets of the erstwhile company had vested in the amalgamated company. A decree
constitutes an asset. The said asset of erstwhile company has devolved on the
amalgamated company. The eviction was on the ground of its own requirement of
the erstwhile company. The said business will be continued to be carried by the
amalgamated company is deprived of the said benefit, it will frustrate the very
purpose of amalgamation and defeat the 31 order of amalgamation passed by the High
Court exercising jurisdiction under the Companies Act.
Further, the vacant land which was leased along with the building is the
subject matter of the proceedings under the Ceiling Act. The landlord has
obtained an order of exemption under Section 21 of the Act vide G.O. Rt. No.
2900 dated 04.11.1981 and the order G.O. Rt. No. 852 dated 25.06.1986.
exemption was expressly for the extension of the industry which is a public
purpose. It is relevant to mention that under Section 21, only when the
requirement of public interest is satisfied, the Government has power to grant
exemption. It is also pointed out the conduct of the tenant when the landlord
obtained an order of exemption under Section 21 of the Ceiling Act, the tenant
moved the Government for cancellation of exemption and to assign the land in its
favour. It also challenged the order of exemption before the High Court in Writ
Petition No. 6434 of 1987 which was dismissed by the High Court by order dated
18.04.1991 and Writ Appeal No.
1992 which was dismissed by the Division Bench of the High Court by order dated
The reliance placed on behalf of the tenant, Section 10, sub-clause 3, first
proviso, is a new plea. The said proviso reads as under:- "Provided that a
person who becomes a landlord after the commencement of the tenancy by an
instrument inter vivos shall not be entitled to apply under this clause before
the expiry of three months from the date on which the instrument was
It has no
application to pending revisions. On the other hand, it applies only to an
application made before the Rent Controller. The proviso enjoins that the
landlord "is not occupying" the building. Even if the landlord owns
other properties but is not in occupation thereof, the proviso will not be
attracted. The Rent Act does not deal with the ownership or title, but only
with regard to the entitlement to occupation.
otherwise, this Court will not permit this new plea to be raised for the first
time. In any event, it is pointed out that the plea taken in the application
for permission to place on record additional facts and documents that the
amalgamated company owns other land, it is not pleaded that it is in occupation
of such land, therefore, the proviso to Section 10(3)(iii) is not attracted.
The object of the Act is to prevent unreasonable eviction of the tenant in
occupation and to control rents. Similarly, when landlord wants the property
for its own purpose, it takes into account the fact of the landlord's
occupation of other properties and not its ownership of other properties which
does not in occupation. The Act permits eviction on reasonable grounds as
provided for in the Act. It may be that there may be cases where it would be
reasonable to evict the tenant, but that requirement may not strictly fall in
any one of the provisions of Section 10 of the Act to entitle the landlord to
evict the tenant. Section 29 of the Act therefore, enables the Government to
grant exemption of the building in such cases so that the landlord may be
entitled to evict the tenant under the ordinary remedy of suit.
present case being one where the order of eviction is eminently just, fair and
equitable as ordered by two authorities and confirmed by the High Court, we do
not find any valid ground for interference, on the other hand, we are in
agreement with the conclusion arrived at by the authorities as well as the High
Court. Taking into consideration the 34 appellant-tenant is continuing in the
premises for more than four decades, we grant time for handing over possession
till 31.12.2010 on usual condition of filing an undertaking within a period of
four weeks. With the above observation, the appeal fails and the same is
dismissed. No order as to costs.
..........................................J. (P. SATHASIVAM)
..........................................J. (J.M. PANCHAL)
MAY 14, 2010.