Case: Tukaram S. Bhat Vs. K.E. Steel Union Limited & Others

ORAL JUDGMENTD.K. DESHMUKH, J.The facts which are material and relevant for deciding this appeal are as follows :2. Flat No.12A on the second floor and the Garage No.1 on the ground floor of New Sagar Darshan Building, situate at 81-82, Bhulabhai Besai Road, Mumbai was owned by one Boman P. Irani. The said flat with the garage was let out by the said owner to M/s Poysha Industrial Co. Ltd. M/s Poysha Industrial Co. Ltd. has admittedly, then sublet the said flat with the garage to one Tukaram Sridhar Bhatt. It appears that Boman P. Irani filed the eviction suit being RAE Suit No.901/2695 of 1990 for eviction against the tenant M/s Poysha Industrial Co. Ltd. as well as the sub-tenant Shri Tukaram Sridhar Bhatt. During the pendency of the said suit Shri Boman P. Irani died and his heirs and legal representatives brought themselves on record in the aforesaid suit. M/s Poysha Industrial Co. Ltd. was ordered to be wound up by this Court by order dated 9 January, 1998. It is not in dispute that Suit No.901/2695 of 1990 filed by late B.P. Irani in the Small Causes Court was withdrawn on 12th July, 2004. In the meanwhile. after M/s Poysha Industrial Co. Ltd. was ordered to be wound up, in the year 1999 the Company Application No.731 of 1999 was made, seeking return of the premises to the owner. The said company application was dismissed by the learned Company Judge on 14th February, 2000. The appeal came to be filed against the said order, which was dismissed on 22nd August, 2000.3. On 20th December, 2000, an application was made by the owner of the property under section 446 of the Companies Act, 1956 for leave to file eviction suit in the Small Causes Court, Mumbai against the Official Liquidator and the subtenant.4. After hearing the parties, leave was granted by the learned Company Judge on 15th February, 2001. Consequently, the owner (landlord) filed the suit being RAE Suit No.228/366 of 2001 before the Small Causes Court, wherein the Official Liquidator of M/s Poysha Industrial Co. Ltd. and the subtenant Tukaram Sridhar Bhatt are party defendants. In that suit, the landlord had prayed for decree against the tenant for vacant possession of the subject premises.5. The present respondent No.3 made Company Application No.45 of 2006 before the learned Company Judge under section 446 of the Companies Act for leave to file eviction suit against the Official Liquidator of the company in liquidation and the subtenant (present appellant). The said company application came to be disposed off by the learned Company Judge on 23rd February, 2006 by the following order :"2. Mr. Thakkar, the learned Senior Counsel appearing on behalf of respondent No.3 states that in the event of the petitioner making an application for amendment of the plaint in RAE Suit No.228/366 of 2001 on the basis of the averments made in the present Judges summons, respondent No.3 will not oppose the same. In view thereof, it is not necessary to grant the present Judges summons.""3. Liberty to the applicants to apply, if necessary. The amendment, if granted will however be subject to the rights and contentions of respondent No.3 on merits."6. The present respondent No.3 then made another company application being Company Application No.720 of 2006, seeking leave of the Court under section 446 of the Companies Act, for filing eviction suit against the Official Liquidator of the company in liquidation. Curiously, in that company application the present appellant (sub-tenant) was not impleaded as party respondent. The learned Company Judge disposed off the said Company Application No.720 of 2006 by the order dated 27th July, 2006. The said order reads thus :1) Heard Mr. Shah appearing for the applicant and the Acting Official Liquidator for the respondent.2) Perused the affidavit in support. Since the applicant has instituted a suit against the company in liquidator, seeking its eviction from the premises more particularly, described in the affidavit in support and the suit/application is pending company application is made absolute in terms of prayer clause (a).3) This order is passed without prejudice to the rights and contentions of the Official Liquidator and it would be open for the Liquidator to raise all such contentions as are permissible in law.7. The present appellant who is in occupation of the subject premises as sub-tenant, then made application being Company Application No.863 of 2006, for setting aside the order dated 27th July, 2006. The said company application was, inter alia, filed on the ground that the prejudicial order of grant of leave came to be passed on 27th July, 2006 at his back and in disregard to Rule 117 of the Companies (Court) Rules, 1959. The learned Company Judge dismissed the said application by order dated 28th September, 2006 giving rise to the present appeal.8. To complete the narration of facts, it needs to be mentioned here that pursuant to the leave granted by the learned Company Judge on 27th July, 2006, the landlord has filed eviction suit in respect of the subject premises against the Official Liquidator of the company in liquidation as well as the sub-tenant.9. Against the order dated 24th September, 2006, Appeal No.779 of 2006 was filed. That appeal was decided by order dated 7th November, 2006. The Division Bench of this Court set aside the orders dated 27th July, 2006 and 24th September, 2006 and Company Application No.720 of 2006 was restored to file. The learned Single Judge was requested to decide that application afresh in accordance with law after hearing both the sides. On remand, the Company Application No.720 of 2006 has been decided by the learned Single Judge of this Court by order dated 5th March, 2007. The learned Single Judge by that order granted the leave subject to the condition that in the event of decree being passed, the same shall not be executed against the company in liquidation without the leave of the Court. It is common ground that the net result of the order of the learned Single Judge is that the respondent No.3 is now free to prosecute his suit filed pursuant to the leave granted by order dated 27th July, 2006. The sub-tenant has filed this appeal challenging the order granting leave to institute the suit for decree of eviction.10. The learned counsel appearing for appellant submits that company application No.45 of 2006 was filed by the respondent No.3 seeking leave of the Court under section 446 of the Companies Act. 1956 to file eviction suit against the Official Liquidator of the company under liquidation and the appellant. The respondent No.3 was seeking leave of the Company Court to institute suit against the Official Liquidator for a decree of eviction after terminating the tenancy on the ground that the company holding paid up share capital in excess of Rs.1/- crore is not entitled to protection under the Maharashtra Rent Control Act by virtue of section 3(1)(b) of the said Act. That application was disposed off and not granted by order dated 23rd February, 2006, in view of the statement made on behalf of the appellant that in case the respondent No.3 makes an application for amendment of his pending suit in the Small Causes Court on the basis of the averment made in the affidavit filed in support of Company Application No.45 of 2006, it will not be opposed by the appellant. It was submitted that without making that application and when the order dated 23rd February, 2006 remains in force, a fresh application seeking the same relief is not maintainable. The learned counsel relied on the observations of the Supreme Court in its judgment in the case of Arjun Singh vs. Mohindra Kumar and others, reported in AIR 1964 SC 993 . He submits that successive application seeking the same relief on the same set of facts cannot be entertained. The learned counsel further submitted that TE Suit No.111/127 of 2006 i.e. Second suit was instituted pursuant to leave granted by the Company Judge by order dated 27th July, 2006. That leave was revoked by order of the Division Bench in appeal and therefore, the learned Single Judge could not have granted leave to continue the second suit. The learned counsel further submits that the learned Single Judge committed an error in holding that second application for the same reliefs could have been made by the respondent No.3 because of liberty to apply granted by the learned Single Judge by order dated 23rd February, 2006. It was contended that when the learned Single Judge granted liberty to apply, it was only for the purpose of seeking clarification of the order and fresh application seeking the same relief could not have been made. The learned counsel relies on the judgment of the Supreme Court in the case of Kewal Chand Mimani vs. S.K. Sen and others, reported in (2001) 6 SCC 512. The learned counsel appearing for respondent No.3 who is the contesting party firstly submits that in the order dated 23rd February, 2006 only statement made on behalf of the appellant has been recorded. That statement has not been accepted by the respondent No.3 and the respondent No.3 has not stated that he will make an application for amendment in the first suit. The learned counsel therefore submits that the order dated 23rd February, 2006 does not prevent the respondent No.3 from making a fresh application for leave. It is submitted that considering the purpose for which leave is to be sought, considering that the appellant is occupying the premises as a subtenant, this Court should not interfere with the order of the learned Single Judge granting leave. It was also submitted that the principles analogus to res judicata will not apply to the company application. The learned counsel further submitted that section 446 of the said Act does not contemplate prior leave or previous leave of the Court for instituting the suit, therefore if leave is subsequently granted, the defect in institution of the suit can be cured and therefore, no fault can be found with the learned Single Judge granting leave to continue the second suit.11. Admittedly, in Company Application No.45 of 2006, the respondent No.3 had sought leave of the Court under section 446 of the said Act to institute a suit against the company and the appellant for a decree of eviction against them on the ground that the tenancy of the company has been terminated and as the paid up share capital of the company is more than Rs. 1/- crore, the company is not entitled to protection of the Maharashtra Rent Control Act by virtue of section 3(1)(b) of the said Act. On that application, an order was made by the learned Single Judge of this Court dated 23rd February, 2006 which we have quoted above. The learned Single Judge recorded a statement made on behalf of the appellant that if an amendment is sought in the first suit which was pending in the Small Causes Court and for institution of which leave was granted by the Court for seeking a decree of eviction against the appellant on the ground which is mentioned in the affidavit filed in support of the Company Application No.45 of 2006, that application will not be opposed by the appellant. The learned Single Judge found that the statement made on behalf of the appellant serves the purpose of the respondent No.3 and therefore the Court recorded its satisfaction that it is not necessary to grant Company Application No.45 of 2006 and thus that application was rejected. If for any reason, in the opinion of the respondent No.3, the remedy of making application for amendment in the first suit pending in the Small Causes Court was not available, it was for the respondent No.3 to raise objection before the leaned Single Judge and contend that merely on the basis of the statement of the lawyer for the appellant, his application for grant of leave to institute a fresh suit cannot be disposed off but such an objection was not raised before the Company Judge. The learned Company Judge rejected the application filed by the respondent No.3 for leave to file a fresh suit. In our opinion, having secured this order, either an application could have been made before the Small Causes Court for amendment in the suit or if according to the respondent No.3 it was not possible to make such an application or if according to him, such an application was not maintainable before the Small Causes Court, he could have made an application for review of the order on such grounds as may be available to him in law. But while the order dated 23rd February, 2006 remains intact, rejecting his application for grant of leave to institute a suit, a fresh application could not have been made. In our opinion, the learned counsel appearing for appellant rightly relied on the following observations from the judgment of the Supreme Court in the case of Arjun Singh referred to above :Even if the rule of res judicata does not apply, it would not follow that on every subsequent day on which the suit stands adjourned for further hearing, the petition could be repeated and fresh orders sought on the basis of identical facts. The principle that repeated applications based on the same facts and seeking the same reliefs might be disallowed by the Court does not however necessarily rest on the principle of res judicata. Thus, if an application for the adjournment of a suit is rejected, a subsequent application for the same purpose even if based on the same facts, it not barred on the application of any rule of res judicata, but would be rejected for the same grounds on which the original application was refused. The principle underlying the distinction between the rule of res judicata and a rejection on the ground that no new facts have been adduced to justify a different order is vital. If the principle of res judicata is applicable to the decision on a particular issue of fact, even if fresh facts were placed before the Court, the bar would continue to operate and preclude a fresh investigation of the issues, whereas in the other case, on proof of fresh facts, the Court would be competent, may would be bound to take those into account and make an order conformably to the facts freshly brought before the Court.It is common ground that when the second application for leave was made, there was no change in the circumstances. In the absence of any change in the circumstances, in our opinion, second application for leave was not maintainable in view of the law laid down by the Supreme Court in its judgment referred to above. The learned Single Judge, in our opinion, was not at all justified in holding that because there is no adjudication on merits in the order dated 23rd February, 2006, second application for leave on the same ground and when there was no change in the circumstances was maintainable. In our opinion, the remedy of making a fresh application was not available to the respondent No.3. His remedy was either to file an application for review of the order dated 23rd February. 2006 or to file an appeal against that order. Unless and until that order remained in field. a fresh application could not have been filed in the absence of any change in the circumstances.12. So far as the finding recorded by the learned Single Judge that because the learned Single Judge who passed the order dated 23rd February, 2006 granted liberty to the respondent No.3 to make, if necessary, a fresh application seeking the same relief was maintainable, in our opinion, also cannot be sustained. The learned Single Judge, after disposing of the company application granted liberty to apply so that the parties could seek further directions pursuant to this order. The liberty granted by the learned Single Judge cannot be used to seek from the learned Single Judge orders which are contrary to his principal order rejecting the company application for grant of leave. In our opinion, the learned counsel appearing for appellant rightly relied on the observations of the Supreme Court in this regard in its judgment in the case of Kewal Chand Mimani referred to above. In our opinion, following observations found in paragraph 19 are important, they read as under:-"19. Another aspect of some importance ought also to be delved into at this stage, to wit, the effect of the liberty granted to mention the matter after the judgment was delivered. It is on this score that Mr. Gupta very strongly contended that the question of reopening the issue by reason of the liberty would not arise. As a matter of fact, it has been contended that by the aforesaid first judgment, the High Court came to a definite finding that the property should immediately be restored back to the possession of the owner of the property and/or the occupier, which cannot but mean the Mimanis, as the case may be this direction as contained in the judgment by itself connotes final disposal and denotes specifically the determination of the issue raised in the matter. The High Court, Mr. Gupta contended, recorded that though many other points were argued and several case laws were cited, but there was felt no necessity for deciding those points as the appeal succeeded on the point of order of requisition not been continued on the basis of a lapsed statute; no doubt, a very convincing reason that when the entire appeal stands disposed off there exists no scope of reopening the issue on the basis of the liberty granted to mention the matter doubt, there is none; liberty to mention cannot be used as a means to achieve an advantage which is not otherwise available in law a question which stands finally decided cannot be reopened, neither has the Court any further jurisdiction upon the signature been appended on the judgment by oral mention. The issue stands concluded as soon as the judgment is pronounced and the same is signed.""Be it noted, however, that the words liberty to mention have been as a matter of fact a phraseology which did come through judicial process without any definite legal sanction for the purpose of clarification if needed, but not otherwise. It is a legal process which has been evolved for convenience and for shortening the litigation so that the parties are not dragged into further and further course of litigation, and it is in this context that the submissions of Mr. Gupta. that the Court has no jurisdiction to reopen the issue on the ground of availability of the legal phraseology of liberty to mention cannot be brushed aside. As noticed hereinabove, the insertion of the above noted legal phraseology is to obliterate any confusion or any difficulty being experienced in the matter it does not give the right anew to the party to agitate the matter further or does it confer jurisdiction on the Court itself to further probe the correctness of the decision arrived at; review of a judgment cannot be had on the basis of this liberty. The circumstances under which review can be had are provided under Order 47 of the Code of Civil Procedure. In any event, law is well settled on this score that the power to review is not any inherent power and it must be conferred by law either specifically or by necessary implication. In this context, reference may be made to the decision in Patel Narshi Thakershi vs. Pradyumnasinghji Arjhunsinghji."; (emphasis supplied).In view of the law laid down by the Supreme Court that normally this practice of granting liberty is adopted by the Court to obliterate any confusion or any difficulty being experienced in the matter, fresh application for the same relief could not have been filed. The Supreme Court in categorical terms has said that grant of such liberty does not give right to the party to agitate the matter further nor does it confer jurisdiction on the Court to further probe the correctness of the decision arrived at or review of the judgment and review of the judgment cannot be had on the basis of such liberty.13. So far as the submission of the learned counsel appearing for appellant that the learned Single Judge Could not have granted leave to continue the second suit because that suit was instituted after obtaining leave from the learned Single Judge which was revoked by the Division Bench of this Court, in our opinion, the submission has no substance. Section 446 of the said Act does not contemplate obtaining of prior leave. If there is a requirement of obtaining prior leave, then before instituting the suit, leave has to be obtained and obtaining of subsequent leave will not validate the institution of the suit. But what is contemplated is merely obtaining of leave. therefore, post facto leave is, also capable of being granted. A suit instituted without obtaining leave will not be per se not maintainable against all the parties to the suit. It will not be maintainable against the company till leave is secured but if leave is applied for and is not granted, the institution of the suit as against the company would be bad. However, as we have held now that the learned Single Judge was not justified in granting leave, obviously the suit cannot be continued. Taking overall view of the matter therefore, following order would meet the ends of justice.

Decision:
0[ds]13. So far as the submission of the learned counsel appearing for appellant that the learned Single Judge Could not have granted leave to continue the second suit because that suit was instituted after obtaining leave from the learned Single Judge which was revoked by the Division Bench of this Court, in our opinion, the submission has no substance. Section 446 of the said Act does not contemplate obtaining of prior leave. If there is a requirement of obtaining prior leave, then before instituting the suit, leave has to be obtained and obtaining of subsequent leave will not validate the institution of the suit. But what is contemplated is merely obtaining of leave. therefore, post facto leave is, also capable of being granted. A suit instituted without obtaining leave will not be per se not maintainable against all the parties to the suit. It will not be maintainable against the company till leave is secured but if leave is applied for and is not granted, the institution of the suit as against the company would be bad. However, as we have held now that the learned Single Judge was not justified in granting leave, obviously the suit cannot be continued. Taking overall view of the matter therefore, following order would meet the ends of justice.