2015 (5) TMI 370 - HC - Companies Law

Misc. applications under section 446(2)(b) of the Companies Act, 1956 filed by sub-tenants against decree holder Official Liquidator who as landlord let-out the property - Property in issue occupied by several persons claiming to be sub-tenants - Law did not require that a sub-tenant be made a party in an eviction petition by a landlord against his main-tenant - Decree of ejectment against the tenant would be equally binding upon the sub-tenant Held that - No rent receipt evidencing payment of any rent by any of the objectors/resistors as sub-tenants to M/s. Mahesh Metal Works the main tenant was filed, exhibited or relied upon before the Executing Court. No letter from M/s. Mahesh Metal Works to the landlord i.e. the Official Liquidator of Maharaja Kishangarh Mills Ltd. evidencing the induction of sub-tenants in terms of Clause 2 of the letter/agreement to lease dated 7.4.1960 was also adverted to or otherwise brought on record. No evidence was filed to show as to which portion of the property Patni Bhawan and its appurtenant lands were in fact let-out by the Official Liquidator of the company-in-liquidation to M/s. Mahesh Metal Works. A bare look at the letter/agreement to lease dated 7.4.1960 shows that all of Patni Bhawan and its land were not delivered in tenancy on 7.4.1960. Clause 4 of the said letter (7.4.1960) states that the Manager of the Mills is being requested to deliver possession to you at once and rent will commence from the date of delivery of possession to you. Importantly Clause 3 of the letter in issue states that In a few rooms some furniture and other material of the Mills is at present locked. These rooms will be placed at your disposal after the goods lying those rooms is sold out. You shall not claim any reduction in rent for the period those rooms remain locked nor shall we claim any extra rent upon the same being vacated and placed at your disposal. There was nothing on record at the instance of the objectors before the Executing Court as to what portion of Patni Bhawan and appurtenant lands (including garage and tennis court) was indeed handed over by the Official Liquidator to M/s. Mahesh Metal Works and when. Further there was also no evidence to show which portion of Patni Bhawan and appurtenant land was allegedly sub-let to the objectors. The whole case of alleged sub-tenancy set up by the objectors was thus vague, wishy-washy and lacking in certainty otherwise essential for a valid contract of the alleged sub-tenancy purportedly created in their favour by the main-tenant. The Hon'ble Apex Court in M/s. Technicians Studio Private Ltd. 1977 (9) TMI 116 - SUPREME COURT has held that the answer to the question whether a relationship of tenant and landlord exists between the parties is dependent upon the facts and circumstances gathered in a case. On that test, in the case at hand, in the absence of any iota of evidence to make out a tenant-landlord relationship between the main-tenant and the objectors/resistors, it has not been proved that they were the sub-tenants of the main-tenant M/s. Mahesh Metal Works and ever inducted in the suit property in that capacity. The sequitur is that the objectors/resistors had no modicum right to bring their case within the words just cause under Order 21 Rule 98(2) CPC and to resist the execution of the judgment and decree lawfully passed by a Company Court in company application No. 21/1980 under sections 446 and 477 of the Act of 1956 on 5th February 1987 directing eviction of M/s. Mahesh Metal Works- the tenant-inducted under letter/agreement of lease dated 7.4.1960. In the case of Rupchand Gupta 1964 (4) TMI 115 - SUPREME COURT the Hon'ble Apex Court had the occasion to consider a matter in which a landlord brought a suit against his tenant for ejectment without impleading the sub-tenant as a co-defendant. The tenant did not contest the suit, consequent to which an ex parte decree was passed. The sub-tenant then filed a suit against the landlord and the tenant seeking a declaration that the decree against the tenant resulting from collusion between him and the landlord was not binding upon him as a sub-tenant. The Hon'ble Apex Court however repelled the argument and held that the law did not require that a sub-tenant be made a party in an eviction petition by a landlord against his main-tenant and a decree of ejectment against the tenant would be equally binding upon the sub-tenant. In the context of the aforesaid enunciation of law by the Hon'ble Apex Court, it is quite apparent that even in the event of the objectors/resistors having proved their sub-tenancy created by the main tenant M/s. Mahesh Metal Works, the judgment & Decree dated 5.2.1987 passed by the Company Court at the instance of the Official Liquidator against the tenant M/s. Mahesh Metal Works would be binding on them. That is however besides the point as in the case at hand, as detailed here in above no sub-tenancy created in favour of the objectors/resistors by M/s. Mahesh Metal Works was proved before the Executing Court. In my considered opinion in the facts of the case the objectors/resistors have no legal right to resist the Judgment & Decree dated 5.2.1987. I also find no force in the contention of the counsel for the objectors/resistors that the Official Liquidator had no authority to move the application bearing No. 21/1980 under sections 446 and 477 of the Act of 1956 before the Company Court seeking eviction of M/s. Mahesh Metal Works which was inducted as a tenant under the letter/agreement to lease dated 7.4.1960 on the ground that the Company Court itself subsequently vide order dated 15.10.1982 held that Patni Bhawan- an appurtenant land the tenanted premises were the property of Maharaja Kishangarh Somyog Mills Co. Ltd. and not of the company in liquidation i.e. Maharaja Kishangarh Mills Ltd. There is also no force in the submission of counsel for the objection with regard to the Addl. District Judge purportedly lacking in pecuniary jurisdiction for execution of the Judgment & Decree dated 5.2.1987. The Hon'ble Supreme Court has held in Mantoo Sarkar 2008 (12) TMI 719 - SUPREME COURT OF INDIA has held that where the trial court has subject matter jurisdiction, its lack of pecuniary jurisdiction or even territorial jurisdiction, does not vitiate its judgment until prejudice is shown by the appellant. On this test of law, laid down by the Hon'ble Apex Court, the argument of the counsel for the objectors based on purported lack of pecuniary jurisdiction of the Executing Court in passing the order dated 21.4.2014 (when no prejudice has been pleaded, and argued) is liable to be rejected. So it is. In the circumstances obtaining, I find no error, legal or factual in the impugned order dated 21.4.2014 passed by the Executing Court. The conclusions of the Executing Court are based on an objective consideration and evaluation of the material evidence on record before it. There is no force in these misc. applications filed there against. - All the misc. applications dismissed.

Summary

Issues Involved:
1. Validity of the Executing Court's common order on multiple objections.
2. Pecuniary jurisdiction of the Executing Court.
3. Legal rights of the sub-tenants.
4. Authority of the Official Liquidator to seek eviction.
5. Admissibility of evidence and documentation.
6. Jurisdiction of the Company Court based on ownership of the property.
7. Execution of the decree against sub-tenants.

Detailed Analysis:

1. Validity of the Executing Court's Common Order on Multiple Objections:
The appellant argued that the impugned order dated 21.4.2014 was vitiated because the Executing Court decided by a common order on multiple objections filed by different objectors against the final Judgment and Decree dated 5.2.1987. However, the court found no error in the common order, stating that all objections were duly considered and dismissed based on an objective evaluation of the material evidence on record.

2. Pecuniary Jurisdiction of the Executing Court:
The appellant contended that the Addl. District Judge did not have the pecuniary jurisdiction to execute the judgment and decree dated 5.2.1987. The court dismissed this argument, citing the Supreme Court's ruling in Mantoo Sarkar v. Oriental Insurance Co. Ltd. [2009] 2 SCC 244, which held that lack of pecuniary jurisdiction does not vitiate a judgment unless prejudice is shown. Since no prejudice was pleaded or argued, the objection was rejected.

3. Legal Rights of the Sub-Tenants:
The objectors claimed they were lawful sub-tenants under Clause 2 of the letter/agreement to lease dated 7.4.1960 and thus not bound by the decree obtained by the Official Liquidator without impleading them. The court found that the objectors failed to produce any documentary evidence, such as rent receipts or letters, to substantiate their claim of being sub-tenants. Consequently, their status was deemed that of rank trespassers, and they had no "just cause" to resist the execution of the decree.

4. Authority of the Official Liquidator to Seek Eviction:
The objectors argued that the Official Liquidator had no authority to seek eviction as the Company Court had previously held that the property was not in the ownership of the company in liquidation but of Maharaja Kishangarh Somyog Mills Co. Ltd. The court dismissed this argument, stating that the Official Liquidator, having inducted the tenant and received rent, was the landlord within the meaning of section 3(iii) of the Rajasthan Premises (Control of Rent & Eviction) Act, 1950. Therefore, the eviction application was maintainable.

5. Admissibility of Evidence and Documentation:
The court noted that the objectors did not produce any credible evidence to support their claim of sub-tenancy. No documents or rent receipts were filed, exhibited, or relied upon before the Executing Court. The court found the whole case of alleged sub-tenancy to be vague and lacking in certainty, essential for a valid contract of sub-tenancy.

6. Jurisdiction of the Company Court Based on Ownership of the Property:
The objectors contended that the Company Court had no jurisdiction as the property was not owned by the company in liquidation. The court found this issue was not raised in the objections before the Executing Court and cited the Supreme Court's ruling in Venkatappa @ Moode (dead) by LRs v. M. Abdul Jabbar and others, (2006) 9 SCC 235, which held that no new case can be set up in an appeal. Additionally, the court stated that ownership is irrelevant in an eviction petition dependent on the landlord-tenant relationship.

7. Execution of the Decree Against Sub-Tenants:
The court referenced multiple Supreme Court rulings, including Suresh Chand Jain v. IIIrd Addl. District Judge, Mathura, [2001] 10 SCC 508, which held that a decree of eviction against a tenant is binding on sub-tenants even if they were not parties to the eviction proceedings. The court concluded that the objectors, having failed to prove their sub-tenancy, had no legal right to resist the execution of the judgment and decree dated 5.2.1987.

Conclusion:
The court found no legal or factual error in the impugned order dated 21.4.2014 passed by the Executing Court. The objections raised by the appellants were dismissed, and the execution of the decree was upheld.