1994 (10) TMI 316 - HC - Indian Laws

Summary

Issues Involved:
1. Maintainability of the suit filed by one of the directors of the plaintiff without board authorization.
2. Applicability of the Tamil Nadu City Tenants Protection Act to the defendant's tenancy.
3. Entitlement of the defendant to an order under section 9 of the Tamil Nadu City Tenants Protection Act.

Detailed Analysis:

1. Maintainability of the Suit:
The defendant contended that the suit was not maintainable as it was filed by one of the directors of the plaintiff without proper authorization from the board of directors. The trial court had not addressed this issue correctly, assuming the maintainability was questioned due to a lack of proper notice of termination. The High Court emphasized that the filing of the suit by Mrs. Lalitha Rathnam without a resolution from the board of directors was a significant legal defect. The court cited several precedents, including Nibro Ltd. v. National Insurance Co. Ltd. [1991] 70 Comp Cas 388 (Delhi) and K. N. Sankaranarayanan v. Shree Consultations and Services Pvt. Ltd. [1994] 80 Comp Cas 558 (Mad), which established that a director needs explicit authorization to file a suit. Consequently, the High Court held that the suit was not maintainable and reversed the trial court's judgment and decree.

2. Applicability of the Tamil Nadu City Tenants Protection Act:
The plaintiff argued that the Tamil Nadu City Tenants Protection Act did not apply as the lease involved a two-storeyed building and appurtenant land, which constituted a single tenancy. The Act applies only if the lease is solely for land where the tenant has put up a superstructure. The High Court reviewed the evidence, including the testimonies of witnesses and concluded that the leased property included both land and a building. This meant the defendant was not entitled to the benefits under the Tamil Nadu City Tenants Protection Act, as the lease was not exclusively for land.

3. Entitlement under Section 9 of the Tamil Nadu City Tenants Protection Act:
The defendant had filed an application under section 9 of the Tamil Nadu City Tenants Protection Act, seeking an order to direct the plaintiff to sell the property on which the defendant had constructed superstructures. The High Court, considering the evidence, noted that the lease was for a property comprising both land and a building, not just land. The court referred to the Supreme Court's decisions in Salam Md. Sait v. J.M.S. Charity [1969] 1 MLJ 16 and Subramania Pillai v. Pennington Committee 100 LW 218, which clarified that the Act applies only to tenancies of land. Therefore, the defendant was not entitled to an order under section 9 of the Act.

Conclusion:
The High Court allowed the appeal, setting aside the trial court's judgment and decree, and dismissed the suit O.S. No. 491 of 1982. The civil miscellaneous appeal (C.M.A. No. 922 of 1986) was also dismissed. Each party was directed to bear its own costs.