The Supreme Court has, on facts of the case, upheld the decision of Madras High Court that from the scheme of amalgamation becoming effective, proceedings in which the transferor company was a party be continued and enforced by or against the transferee company in the same manner and to the same extent as it could be or might have been continued and enforced by or against the transferor company as if the scheme had not been made. In other words, when a transferor company stands dissolved (with or without winding up) due to amalgamation, its right under the decree for eviction devolves on the transferee company.
Speed line Agencies Vs. T Stanes & Co. Ltd [2010] 160 Comp Cas 33 (SC)- Supreme Court
_____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.
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 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- 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, 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 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 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
(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.
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.”
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 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 requirement, on the view taken by the High Court, the tenant should be able to show that the subsequent eventsdisentitled 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 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… ….”
