vil Appeal No 10030 of 1983
From the Judgment and Order dated 691983 of the Madhya Pradesh High Court in SA No 475 of 1977
AB Rohtagi and SK Gambhir for the Appellant
VM Tarkunde and SV Deshpandey for the Respondents
The Judgment of the Court was delivered by SHARMA J
This appeal is directed against the decree of the Madhya Pradesh High Court for eviction of the appellant from a house after holding him to be the respondents  ten ant
The appellant denied the title of the plaintiffs and their case that he has been in possession of the property as their tenant
The trial court accepted the plaintiffs  case and passed a decree in their favour which was set aside on appeal by the first appellate court
The decision was re versed by the High Court in second appeal by the impugned judgment
Admittedly the house which was in possession of the defendant s father Misri Lal as a tenant belonged to one Smt
Raj Rani who sold the same on 1181952 to the plain tiffs  predecessor ininterest Navinchand Dalchand
In 1959 a suit for his eviction was filed by Navinchand which was resisted on the ground that Smt
Raj Rani had earlier trans ferred the house to a trust and she therefore could not later convey any title to Navinchand
The trial court re jected the defence and passed a decree against which Misri Lal filed an appeal
During the pendency of the appeal the parties resolved their dispute amicably
Misri Lal accepted the title of Navinchand and a deed Ext
P 20 creating a fresh lease in favour of Misri Lal under Navinchand as lessor was executed with effect from 1121962
The appeal was disposed of by recording this fact and stating further that the arrears of rent had been paid off
The compromise petition and the decree have been marked in the present suit as Ext
P 21 and Ext
Misri Lal continued to occupy the house till he died in 1972 leaving behind his son the present appellant as his heir and legal representative
Navinchand sold the suit property to the plaintiffs respond ents on 411973 who sent a notice to the appellant on 1431973
Since the 538 appellant refused to recognise them as owners of the house another notice terminating the tenancy was served in January 1976 and the present suit was filed in June of the same year
The appellant resisted the claim in the plaint on the same old plea which his father Misri Lal had unsuccessfully taken in the earlier suit namely that Smt
Raj Rani having transferred the disputed house to a trust in 1936 was not competent to re transfer it to Navinchand Dalchand the vendor of the plaintiffs respondents
The trial court disbe lieved the defence version holding that although Smt
Raj Rani had executed a trust deed in 1936 but the same was not acted upon and the trust does not appear to have come into existence
On appeal the first appellate court reversed the finding and further held that the defendant could not be estopped from challenging the title of the plaintiffs
It has been the case of the appellant that the con sent of Misri Lal to the compromise in the earlier suit was obtained by force but the plea was not substantiated by any evidence and it has been pointed out by the High Court that the appellant admitted in his deposition that to his knowl edge no force had been used against Misri Lal
The High Court further rightly rejected the argument that the decree Ext
P 22 would not bind the parties since it was founded on a compromise and not on an adjudication by the court on the question of title
The court also observed that the statements made in the compromise petition Ext
P 21 in the earlier suit support the case of the plaintiffs inde pendently of the compromise decree and further the defence plea has to be rejected in view of the deed Ext
P 20 creating a fresh lease
These findings were sufficient for the disposal of the appeal but the High Court proceeded to consider the question whether Smt
Raj Rani had in fact transferred the suit house in favour of a trust and decided the issue against the appellant
The grievance of Mr Rohatagi the learned counsel for the appellant that in view of the limited scope of a second appeal under section 100 of the Code of Civil Procedure the High Court was not justified in setting aside the find ing of the first appellate court on the question as to whether the property had been alienated in 1936 in favour of the trust or not is well founded
After the court reached a conclusion against the defendant on the basis of the lease deed Ext
P 20 the compromise petition Ext
P 21 and the compromise decree Ext
P 22 it should not have pro ceeded to decide the dispute relating to title on merits on the basis of the evidence
However this error cannot help 539 the appellant unless he is able to successfully meet the effect of Ext
P 20 Ext
P 21 and Ext
P 22
It has been strenuously contended by Mr Rohatagi that the principle that a tenant is estopped from challeng ing the title of his landlord is not available to the land lord s transferee in absence of attornment by the tenant
Reliance was placed on Kumar Krishna Prosad Lal Singha Deo vs Baraboni Coal Concern Ltd and Others AIR 1937 PC 252 Mangat Ram and Another vs Sardar Meharban Singh and Others  D Satyanarayana vs P Jagdish   and Tej Bhan Madan vs 11 Addl
District Judge and Others   and a passage from Halsbury s Laws of England 4th Edn
16 Paragraph 1628
The learned counsel strenuously contended that the appellant tenant cannot be estopped from challenging the derivative title of the plaintiffs as he was not inducted into the house by them
He relied upon the comments of Sarkar on section 116 in his book on the  7
It is true that the doctrine of estoppel ordinarily applies where the tenant has been let into possession by the plaintiff
Where the landlord has not himself inducted the tenant in the disputed property and his right are founded on a derivative title for example as an assignee donee vendee heir etc the position is a little different
A tenant already in possession can challenge the plaintiff s claim of derivative title showing that the real owner is somebody else but this is subject to the rule enunciated by section 116 of the Evidence Act
The section does not permit the tenant during the continuance of the tenancy to deny that his landlord had at the beginning of the tenancy a title to the property
The rule is not confined in its application to cases where the original landlord brings an action for eviction
A transferee from such a landlord also can claim the benefit but that will be limited to the question of the title of the original landlord at the time when the tenant was let in
So far claim of having derived a good title from the original landlord is concerned the same does not come under the protection of the doctrine of estoppel and is vulnerable to a challenge
The tenant is entitled to show that the plaintiff has not as a matter of fact secured a transfer from the original landlord or that the alleged transfer is ineffective for some other valid reason which renders the transfer to be non existent in the eye of law
By way of an illustration one may refer to a case where the original landlord had the fight of possession and was therefore entitled to induct a tenant in the property but did not have any power of disposition
the tenant in such a case can attack the derivative title of the transferee plaintiff but not on 540 the ground that the transferor landlord who had initially inducted him in possession did not have the right to do so
Further since the impediment in the way of a tenant to challenge the right of the landlord is confined to the stage when the tenancy commenced he is forbidden to plead that subsequently the landlord lost this right
These exceptions however do not relieve the tenant of his duty to respect the title of the original landlord at the time of the begin ning of the tenancy
Coming to the facts of the present case it may be recalled that fresh tenancy had been created in favour of Misri Lal father of the present appellant under Navinchand by deed Ext
P 20 and this fact was fully established by the decree Ext
P 22
The appellant in the shoes of his father is as much bound by these documents as Misri Lal was and he cannot be allowed to deny the relationship of landlord and tenant between Navinchand and himself
It has not been the case of the appellant that Navinchand later lost the title or that he had transferred the same to anoth er person nor does the appellant say that there has been any defect in the sale deed executed in favour of the present plaintiffs
In other words the acquisition of title by the plaintiffs from Navinchand if he be presumed to be the rightful owner is not impugned that is the derivative title of the plaintiffs is not under challenge
What the appellant wants is to deny their title by challenging the title of their vendor Navinchand which is not entitled to do
None of the decisions relied upon by Mr Rohtagi assists him
On the other hand the judgments in Kumar Krishna Prosad Lal Singha Deo vs Baraboni Coal Concern Ltd and Others AIR 1937 PC 25 1 and Tej Bhan Madan vs Addl
District Judge and Others   demonstrate that the plea of estoppel of the plaintiffs is well founded
The Privy Council Case arose out of a suit for realisation of royalties due on Coal raised by the lessee defendant company
The original lease was granted by the father of the plaintiff the Raja of Panchkote in favour of one Radha Ballav Mukherjee
The defendant was sued as assignee
The original lease contained a clause giving the lessor a charge for royalties upon the collieries and its plant which was sought to be enforced
Since there was some dispute about the ownership of the colliery the defendant company by way of abundant caution obtained a second assignment from anoth er source being the Official Assignee
The plaintiff s claim was denied by the company on the grounds that i his father the Raja was not the owner of the colliery and the company was in possession of the colliery as a lessee on the strength of the other assignment from the Official Assignee 541 and ii the company being merely a transferee from the original lessee Radha Ballav Mukherjee and not being itself the original lessee could not be estopped from challenging the Raja s or his son s title
While rejecting the defend ant s stand the Privy Council observed thus What all such persons are precluded from denying is that the lessor had a title at the date of the lease and there is no exception even for the case where the lease itself dis closes the defect of title
The principle does not apply to disentitle a tenant to dispute the derivative title of one who claims to have since become entitled to the reversion though in such cases there may be other grounds of estoppel eg by attornment acceptance of rent etc
In this sense it is true enough that the principle only applies to the title of the landlord who let the tenant in as distinct from any other person claiming to be reversioner
Nor does the principle apply to prevent a tenant from pleading that the title of the original lessor has since come to an end
 The expression derivative title was referrable to the plaintiff and the Privy Council concluded by observing that the case did not raise any difficulty as there was no dispute as to the plaintiff s derivative title
While rejecting the argument on the basis that the company was not the original lessee and being merely an assignee was free to challenge the lessor s title it was said that the tenancy under section 116 does not begin afresh every time the interest of the tenant or of the landlord devolves upon a new indi vidual by succession or assignment
 The circumstances in the case before us are similar
The appellant does not contend that Navinchand had subsequently lost his title or that there is any defect in the derivative title of the plaintiffs
His defence is that Navinchand did not own the property at all at any point of time and this he cannot be allowed to do
He cannot be permitted to question his title at the time of the commencement of the tenancy created by Ext
P 20 10
In Tej Bhan Madan vs 11 Addl
District Judge and Others   the question was whether there was a disclaimer of the landlord s title on the part of the appellant tenant so as to incur forfeiture of the tenancy
The premises in question originally belonged to one Shamb hoolal Jain who died leaving behind his wife two sons and a daughter by the name of Mainawati
The property was sold in execution of a money decree and was purchased by Maina wati in 1956
Mainawati conveyed the property to one Gopi nath Agarwal and the 542 appellant who was in possession as tenant attorned the tenancy in his favour
Subsequently Gopinath sold the same in favour of the third respondent Chhaya Gupta and both Gopinath and Chhaya Gupta asked the appellant to attorn the tenancy in favour of Chhaya Gupta
The appellant declined to do so and challenged not only the title of Chhaya Gupta but also the validity of the sale in favour of Gopinath
This led to the filing of the case for his eviction on the ground of disclaimer
It is significant to note that the foundation of the proceeding for ejectment was the appellant s denial of the title of Gopinath in whose favour he had earlier attorned the tenancy and not the challenge of the deriva tive title of the third respondent
Overruling the objec tions of the appellant a decree for eviction was passed against him and his writ petition before the High Court was dismissed
In this background he came to this Court and made an argument similar to the one pressed in the case before us
Rejecting the appellant s point this Court observed thus The stance of the appellant against the third respondent s title was not on the ground of any infirmity or defect in the flow of title from Gopinath but on the ground that the latter s vendor Mainawati herself had no title
The derivative title of the third respondent is not denied on any ground other than the one that the vendor Gopinath to whom appellant had attorned had himself no title the implication of which is that if appellant could not have denied Gopinath s title by virtue of the inhibitions of the attornment he could not question third re spondent s title either
Appellant did himself no service by this stand
 The case is clearly against the appellant
The above passage as also the last sentence in paragraph 4 of the judgment which is mentioned below also indicates as to what can be termed as a derivative title which a tenant may be free to challenge But the appellant tenant declined to do so and assailed not only the derivative title of the third respondent to the property but also the validity of the sale in favour of Gopinath himself
In D Satyanarayana vs P Jagdish   the Court was dealing with one of the exceptions to the rule of estoppel which permitted a sub tenent 543 to show that since the date of the tenancy the title of the landlord came to an end or that he was evicted by a paramount title holder or that even though there was no actual eviction or dispossession from the property under a threat of eviction he had attorned to the paramount title holder
The facts were that the appellant was a sub tenant of the tenantrespondent and the landlord served a notice on him terminating the tenancy of the tenant respondent on the ground of unlawful subletting
The appellant thereupon attorned in favour of the paramount title holder and started paying the rent directly to him
The tenantrespondent thereafter commenced the eviction proceeding and a decree was passed which was challenged before this Court by the appellant tenant
After enunciating the general rule of estoppel under section 116 of the Evidence Act the Court pointed out the exception where a tenant is evicted by the paramount title holder and is thereafter reinducted by him under a fresh lease
Extending this exception to the tenant s ap peal it was held that the rule applied where the tenant can show That even though there was no actual eviction or dispossession from the property under a threat of eviction he had attorned to the paramount title holder
 The decision is patently not applicable to the case before us
In Mangat Ram and Another vs Sardar Meharban Singh and Others  the principle decided was stated in the following words The estoppel contemplated by section 116 is re stricted to the denial of title at the com mencement of the tenancy and by implication it follows that a tenant is not estopped from contending that the title to the lessor had since come to an end
 The Lahore case is also clearly distinguishable
After the death of the lessor her daughters claimed rent from the tenants
The tenants disputed their derivative title and the court held that though the tenants would not dispute the title of the mother at the commencement of the lease they were entitled to challenge the derivative title of the plaintiffs and that the daughters had to prove that the property was Sridhan of their mother which they inherited under the Hindu Law
The principle was correctly enunciated there but that does not help 544 the appellant at all
To the same effect are the following observations in Halsbury s Laws of England 4th Edn Vol
16 paragraph 1628 relied upon by Mr Rohatgi Thus although an assignee of the lessor is to all intents and purposes in the same situation as the lessor and takes the benefit of and is bound by a lease by estoppel the lessee is not estopped from showing that the lessor had no such title as he could pass to the assign ee or that the person claiming to be the assignee is not in fact the true assignee emphasis supplied The significance of the words which have been underlined above has to be appreciated for correctly understanding the principle enunciated
For the reasons mentioned above we hold that the appeal has no merit and is accordingly dismissed with costs
NVK Appeal dis missed


Summary:
The appellant No 1 is a private limited Company incor porated under the Indian Companies Act
The Company had at all relevant times 7 share holders and the total number of shares subscribed and paid up was 2010 shares
The appellant No 2 is a shareholder and a whole time Director of the Company
Consequent upon the death of one share holder Mr SK Desor who had controlling interest in the Company his legal representatives wife and children respondents herein
filed a petition under Section 397 and 398 of the Act and in the alternative prayed for winding up of the company
A preliminary objection was raised on behalf of Mrs Amrit K Singh appellant No 2 regarding the maintainability of the petition on the ground that the respondents were not members of the company as their names had not been recorded in the register of members and as such they had no locus standi to file the petition in question
A further objection was also taken that a composite petition under Sections 397 and 398 of the Act with an alternative prayer for winding up of the company was not maintainable
A company Judge of the High Court before whom the peti tion came up for hearing held that the respondents who were the wife and children of the deceased share holder and who having obtained Reserve Bank s permission and letters of administration according to law should be treated as members for the purpose of maintaining a petition under Sections 397 and 398 of the Act
The company Judge also held that a composite petition was maintainable
Appellant No 2 preferred an appeal against the order of the Company Judge
The appellants also moved this Court under Article 136 of the Constitution against the order of the Company Judge
This court by its order dated 18th Janu ary 1989 stayed the further proceedings before the Single Judge and directed expeditious disposal of the appeal
The Division Bench dismissed the appeal holding that the peti tion under 546 Sections 397 and 398 was maintainable
Hence this appeal
The same two questions as stated above arose for deter mination by this Court Dismissing the appeal this Court HELD Succession is not kept in abeyance and the proper ty of the deceased member vests in the legal representatives on the death of the deceased and they should be permitted to act for the deceased member for the purpose of transfer of shares under Section 109 of the Act
558D In some situations and contingencies the member  may be different from a holder 
A member  may be a holder  of shares but a holder  may not be a member 
558E To hold that the legal representatives of a deceased shareholder could not be given the same right of a member under Sections 397 and 398 of the Act would be taking a hyper technical view which does not advance the cause of enquiry or justice
558B In the instant case the legal representatives have been more than anxious to get their names put on the register of members in place of deceased member who was the Managing Director and Chairman of the company and had the controlling interest
It would
therefore be wrong to insist that their names must be first put on the register before they can move an application under Sections 397 and 398 of the Act
This would frustrate the very purpose of the necessity of action
558F G The decision of the English courts are not binding on the courts in India
But the observations or the reasoning are of persuasive value
555C Re Jermyn Street Turkish Baths Ltd 1970 3 All ER 37 Re Bayswater Trading Co Ltd  James vs Quena Venture Nitrate Grounds Syndicate Ltd 1896 1 Chancery Division 456 Re Dlewellyn vs Kasintoe Rubber Estate Ltd  New Zealand Gold Extraction Company Newberyvautin Process Ltd vs Peocock  Re Meyer Dougals Pty Ltd 1965 VR 638 Kedar Nath Agarwal vs Jay Engg
Works Ltd and Ors
  Rajahmundry Electric Supply Corpn
Ltd vs A Nageshwara Rao and Ors
   Life Insurance Corporation of India vs
Escorts Ltd and Ors AIR 1986 SC 547 1370 at p 1412 Shanti Prasad Jain vs Kalinga Tubes and Bilasrai Joharmal and Ors
vs Akola Electric Supply Co Pvt Ltd  re ferred to