2003 (10) TMI 673 - HC - Companies Law

Summary

Issues Involved:
1. Whether the petitioner, a licensee, permitted the premises to be used by another person.
2. Whether a company formed by the petitioner qualifies as "any other person" under the license terms.
3. Validity of the eviction order and cancellation of the license.
4. Judicial review of the cancellation of the license.
5. Conduct of the petitioner in relation to equity principles.

Detailed Analysis:

Issue 1: Permission of Premises Usage by Another Person
The petitioner was inducted as a licensee under a License Deed dated 19.8.1975 for Shop No. 10, Asia House Market, New Delhi. Clause 8 of the License Deed explicitly prohibits the licensee from permitting the premises to be used by any other person without prior written consent from the government. The petitioner, along with her husband, incorporated a company, Romica World Travel (Pvt.) Ltd., and allowed the company to operate from the premises without obtaining the necessary written consent. This was a clear breach of Clause 8, thereby justifying the eviction order.

Issue 2: Company as "Any Other Person"
The petitioner argued that the company, being almost entirely owned and managed by her, should not be considered as "any other person." The court, however, emphasized that a company is a separate legal entity distinct from its shareholders, as established in Salomon v. Salomon & Co. Ltd. The court rejected the idea of piercing the corporate veil to equate the petitioner with the company, stating that lifting the veil is typically done to prevent fraud or injustice, not to allow an individual to escape liability.

Issue 3: Validity of Eviction Order and License Cancellation
The eviction order was based on the violation of Clause 8 of the License Deed. The petitioner failed to comply with the terms by allowing the company to use the premises without written consent. The court upheld the cancellation of the license and the subsequent eviction order as being in accordance with the terms of the License Deed.

Issue 4: Judicial Review of License Cancellation
The respondents contended that once the license was canceled, it was not open to judicial review. The court clarified that while the reasons for cancellation are not typically subject to judicial scrutiny, the validity of the cancellation itself can be reviewed. However, in this case, the cancellation was upheld as valid due to the clear breach of the license terms.

Issue 5: Conduct of the Petitioner and Equity Principles
The respondents argued that the petitioner's conduct, particularly breaking the seals on the premises after obtaining an interim stay order, was inequitable. The court noted that equitable relief requires the petitioner to act equitably. However, since the primary issues were resolved against the petitioner on legal grounds, the court did not delve deeply into the conduct aspect.

Conclusion:
The court dismissed the writ petition, upholding the cancellation of the license and the eviction order. The petitioner's arguments regarding the company not being "any other person" and the invalidity of the eviction order were rejected. The court maintained that the license terms were clear and the petitioner's actions constituted a breach, justifying the cancellation and eviction. The principles of judicial review and equity did not alter the outcome in favor of the petitioner.