Companies Act Case Law M/s Speedline Agencies Vs M/s T. Stanes Co.Ltd.

Companies Act Case Law

M/s Speedline Agencies Vs M/s T. Stanes Co.Ltd.

 

REPORTABLE

IN THE 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)
JUDGMENT

P. Sathasivam, J.

1) Leave granted.

2) This 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 herein.
1
3) Brief facts in a nutshell are as under:

(a) The 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.

with a 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.

(b) In 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 G.O. Ms.

No. 2900. 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.

(c) In 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.

The 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.

(d) 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.

Against 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 M/s T.

Stanes & Company Ltd., with effect from 01.04.2005 under

Sections 391 to 394 of the Companies 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.

4) Heard Mr. K.K. Venugopal, learned senior counsel for the

appellant-tenant and Mr. K. Parasaran, learned senior counsel

for the respondent-landlord.

5) Mr. 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.

7) We 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:
“10. 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 village concerned;
(ii) xxxx
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:…..”
9) After 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

allowed.
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:

“1.5 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.”

“6. 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.”
9
Clause 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.

11) As mentioned earlier, after analyzing the Company

Petition filed for sanctioning the Scheme of Amalgamation

under Sections 391 to 394 read with Section 79 of the

Companies 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.

12) After 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.

In the 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.

13) Mr. 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”
excludes 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………
…….Therefore, 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…
….”
In the 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 made.

In view 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 on

hand.

(ii) The next decision relied on by him is Saraswati

Industrial Syndicate Ltd. vs. C.I.T. 1990 (Supp) SCC 675.

In that 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.
Reconstruction 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 its entity.
6. In General Radio and Appliances Co. Ltd. v. M.A. Khader
the effect of amalgamation of two companies was considered.
M/s 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. …….

……The 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.”

 

This case deals with reference to liability to pay income tax by

Transferor Company after amalgamation and hence not

applicable to the case on hand.

(iii) The 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.

(transferor 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 the Companies 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.

The 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.

 

14) 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

 

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 on 09.04.1992.

The 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.

During 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 subsequent event.

Revision Petition was disposed of by the High Court on

05.08.2009. As rightly pointed out by Mr. Parasaran, learned

 

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.

16) 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.

17) As 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

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 business.

According 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

representatives are entitled to defend further proceedings like

an appeal which is challenged to the benefit under the decree.

18) We 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.

Therefore, 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 amalgamated company.

19) 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:-

“……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:

“10. 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.
During 23 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

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.”

It was 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 long years from the start to the
ultimate termini, is a malady afflicting the system. During
this long interval many 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.”

It would 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.

21) In 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:-

“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;
(ii) 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 against them.
14. Cases 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 benefit.”

22) 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……”

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.

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”.
26) Mr. 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 revision.

27) 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

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.

28) As 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

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

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 eviction.

29) The 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

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.

The 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.

The Rent 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.

30) The 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.

If the amalgamated company is deprived of the said benefit, it

will frustrate the very purpose of amalgamation and defeat the

order of amalgamation passed by the High Court exercising

jurisdiction under the Companies Act.

31) 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.

The 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.

1177 of 1992 which was dismissed by the Division Bench of

the High Court by order dated 12.07.1993.

32) 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 registered.”

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.

Even 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.

 

33) 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.

34) The 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

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)
NEW DELHI;
MAY 14, 2010.

 

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