2006 (11) TMI 341 - HC - Companies Law

Summary

Issues involved: Possession and damages/mesne profits after termination of tenancy, authority of managing director to file suit on behalf of company, request for reasonable time for vacating premises.

Issue 1: Possession and damages/mesne profits after termination of tenancy

The respondent/plaintiff filed a suit against the appellant-tenants for possession and damages/mesne profits after terminating the tenancy u/s 106 of the Transfer of Property Act. The Trial Court granted a decree for the tenants to vacate, deliver possession, and pay damages at a rate varying between Rs. 5 to Rs. 8 per square foot from the date of termination. Interest at 12% was also awarded on damages, with enhanced interest at 18% for default.

Issue 2: Authority of managing director to file suit on behalf of company

The appellant argued that the managing director lacked proper authorization from the board to file the suit. Citing Order 29 of the Civil Procedure Code, it was contended that the managing director, as per the provisions of the Companies Act, had the authority to file the suit on behalf of the company. The appellant relied on a Calcutta High Court ruling, but the court found that in this case, there was no evidence of disagreement among directors regarding the suit filing, and the managing director's actions were within the scope of "substantial powers of management" as defined in the Companies Act.

Issue 3: Request for reasonable time for vacating premises

The appellant requested for a reasonable time to vacate the premises due to difficulty in finding immediate alternate accommodation. The court confirmed the eviction order but granted the tenants time until the end of March, 2008, to vacate. Damages for use and occupation were fixed at Rs. 5 per square foot, payable from the date of the suit till delivery of possession. Non-payment of damages within five months would result in forfeiture of the granted time for vacation and immediate executability of the eviction order.