IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE THOMAS P.JOSEPH FRIDAY, THE 2ND SEPTEMBER 2011 / 11TH BHADRA 1933 CRP.No. 1423 of 2002() ---------------------- AGAINST THE ORDER DATED 22/11/2001 IN EP.17/1976 AND EP.136/1986 IN OS.10/1960 of PRINCIPAL SUB COURT, KOZHIKODE .................... REVN. PETITIONER(S): --------------------- MESSRS. PROVIDENT INVESTMENT CO.LTD., REPRESENTED BY ITS GENERAL MANAGER K.D. MENON, AGED 58 YEARS, 22A CUFFE PARADE, COLABA, BOMBAY 5 A COMPANY REGISTERED UNDER THE INDIAN COMPANIES ACT. BY ADV. SRI. SRI.S.VENKATASUBRAMONIA IYER, SENIOR ADVOCATE SRI.M.AJAY RESPONDENT(S): SUPPLEMENTAL RESPONDENTS 2 TO 8: ----------------------------------------------- 1. K.C. EAPEN, SON OF K. EAPEN CHACKO, CHELAVOOR HOUSE, CHELAVOOR, KOZHIKODE. (*) 2. K.C. GEORGE, DO. DO.(DIED. LRS IMPLEADED) 3. K.C. JOHN, DO. DO. (**) 4. K.C. THOMAS, DO. DO.(DIED. LRS IMPLEADED) (***)5. DR.MOLLY ALEXANDER, DO. DO. (DIED. LRS IMPLEADED) 6. MRS. LILLY CHERIAN, DO. DO. 7. MRS. AMMINI MATHEW, DO. DO. (*)ADDL.RESPONDENT 8 TO 11: 8. SMT. SANTHA, W/O.K.C.GEORGE 9. SRI GEORGE JACOB, S/O.K.C.GEORGE 10.SRI DAVID GEORGE, K.C.S/O.GEORGE 11.SMT.SUJU SHAJU, D/O.GEORGE (ALL RESIDING AT “GREENLAND”, CHELAVOOR AMSOM, DESOM, KOZHIKODE) CRP NO.1423/2002 2 (**)ADDL.RESPONDENTS 12 TO 14: 12.SM.TLEELAMMA THOMAS, W/O.K.C.THOMAS 13.SRI JACOB THOMAS, S/O.K.C.THOMAS 14.SRI THOMAS THOMAS, S/O.K.C.THOMAS (ALL RESIDING AT CHELAVOOR HOUSE, CHELAVOOR AMSOM,DESOM,KOZHIKODE) (***)ADDL.RESPONDENT 15: 15.SRI M.A.GEORGE, S/O.DR.MOLLY ALEXANDER, RESIDING AT CHELAVOOR HOUSE, CHELAVOOR AMSOM, DESOM, , KOZHIKODE. ADDL.ESPONDENTS 8 TO 11, 12 TO 14 AND 15 ARE IMPLEADED AS LEGAL REPRESENTATIVES OF THE DECEASED SECOND, FOURTH AND FIFTH RESPONDENTS RESPECTIVELY VIDE ORDER DATED 2.9.2011 IN IA NOS. 2496/2008, 2491/2008 AND 2499/2008 IN CRP NO.1423/2002. ADV. SRI.P.G.PARAMESWARA PANICKER, SENIOR ADVOCATE FOR R1 TO R3 SRI.P.GOPAL FOR R1 TO R3 SRI.K.A.SALIL NARAYANAN FOR ADDL.R8. THIS CIVIL REVISION PETITION HAVING BEEN FINALLY HEARD ON 02/09/2011, THE COURT ON THE SAME DAY PASSED THE FOLLOWING: THOMAS P. JOSEPH, J. -------------------------------------- C.R.P. No.1423 of 2002 -------------------------------------- Dated this the 2nd day of September, 2011. ORDER This litigation has its roots in the early 1960’s when petitioner, claiming to have terminated tenancy of the original tenant/predecessor-in-interest of respondents as per notice dated 05.03.1959 instituted O.S.No.10 of 1960 in the court of learned Principal Sub Judge, Kozhikode on 05.02.1960 praying, inter alia, for recovery of possession of the suit property (550 acres in extent) with damages for alleged devastative waste committed by the original tenant in the said property, rent arrears, etc. The original tenant resisted the suit on various grounds including that he is entitled to fixity of tenure under the Malabar Tenancy Act (for short, “the Tenancy Act”) and the Kerala Land Reforms Act (for short, “the KLR Act”) and claiming value of improvements as per the Kerala Compensation for tenants improvements Act, 1959 (for short, “Act 29 of 1958”). The suit was decreed by judgment dated 25.10.1966 and petitioner was granted permission to recover possession of the suit property, `1,51,030/- by way of damages for waste committed by the original tenant, mesne profit for unlawful use and occupation from 01.01.1962 (date of expiry of period of lease) till the date of decree and thereafter till delivery of possession or for a maximum period of three years from the date of decree whichever is earlier, arrears of rent and other reliefs. The original tenant was found entitled to get `31,738.29 towards value of improvements effected on the premises and buildings. He was CRP No.1423/2002 2 permitted to set off the said amount in the damages payable to the petitioner. The original tenant challenged that judgment and decree in A.S.No.493 of 1966. Petitioner did not challenge value of improvements granted to the original tenant but preferred a cross-objection claiming enhanced damages for waste committed by the original tenant. The appeal was dismissed and the cross-objection was allowed on 17.02.1969 whereby damages payable to the petitioner for waste committed by the original tenant was enhanced to `2,20,394/-. In the meantime, on 02.03.1969 the Receiver took possession of the suit property. The original tenant moved the Supreme Court in Civil Appeal No.1343 of 1969 but that appeal was dismissed by the Supreme Court on 01.11.1976 (reported as Eapen Chacko v. Provident Investment Co. (P) Ltd - 1977 KLT 1). The Supreme Court held that the claim for fixity of tenure under the KLR Act cannot be accepted. The judgment and decree of this Court in A.S.No.493 of 1966 were confirmed. Petitioner filed E.P.No.153 of 1969 and initiated garnishee proceedings against the Coffee Board to deposit in court all amounts due to the original tenant. That was followed by E.P.No.128 of 1970 where petitioner/decree holder prayed for enforcement of the security bond executed by the original tenant (security was furnished by the original tenant as directed by this Court in A.S.No.493 of 1966). That was followed by petitioner filing E.P.No.17 of 1976 (filed on 09.02.1976) praying for symbolic delivery of the property (taken possession by the Receiver on 02.03.1969). In the said execution petition, petitioner also claimed recovery of CRP No.1423/2002 3 damages after setting off the value of improvements allowed in favour of the original tenant. The original tenant objected to E.P.No.17 of 1976 raising various contentions. He filed E.A.No.648 of 1976 for amendment of his objection to claim value of improvements after the date of the decree. Executing court passed order on 20.12.1976 for reassessment of value of improvements. Original tenant filed E.A.No.652 of 1976 for appointment of an Advocate Commissioner. Executing court also held that petitioner is not entitled to get delivery of possession till payment of value of improvements as claimed by the original tenant and appointed Advocate K.V.Joseph as Commissioner to re- assess the value of improvements. That order gave rise to E.F.A.No.2 of 1977 at the instance of petitioner. In E.F.A.No.2 of 1977, this Court by order dated August 31, 1977 directed the executing court to consider whether original tenant is entitled to claim value of improvements in respect of the reclamation work allegedly done by him in the property by cutting and removal of bamboo clusters in view of the observations and findings contained in the judgment in A.S.No.493 of 1966 and whether in view of the terms of tenancy under Ext.A1 (marked in the suit) the alleged works of reclamation are improvements within the meaning of Sec.2(b) of Act 29 of 1958. Certain other matters were also directed to be decided by the executing court. After disposal of E.F.A.No.2 of 1977 the original tenant filed E.A.No.49 of 1978 to issue commission to assess value of subsequent improvements. The executing court appointed Advocate M.K.Raman Namboothiri as Commissioner. Petitioner filed E.A.No.151 of 1978 CRP No.1423/2002 4 to review the order on E.A.No.49 of 1978. Executing court directed the Advocate Commissioner not to assess age of the trees but, value it based on its girth and height. Later, as per order on E.A.No.1061 of 1979 filed by petitioner, direction was given to the Advocate Commissioner to restrict valuation of the trees as it stood on 02.03.1969 (on which day the Receiver took possession of the property). Advocate Raman Namboothiri submitted his report assessing value of improvements payable to the original tenant as `33,37,584/-. Petitioner filed E.A.No.491 of 1980 to set aside the report of the Advocate Commissioner and issue fresh commission for assessment of value of improvements, if any. That application was disposed of remitting the report to the Advocate Commissioner. Challenging the said order, petitioner filed C.R.P.No.594 of 1981 while the order remitting the report to the Advocate Commissioner was challenged by the original tenant in C.R.P.No.2486 of 1981. Those civil revisions were disposed of as per order dated 06.03.1987. Executing court was asked to decide the questions formulated by this Court in the judgment in E.F.A.No.2 of 1977. Petitioner filed E.A.No.503 of 1998 in the executing court to decide whether the original tenant is entitled to get compensation as directed in the judgment in E.F.A.No.2 of 1977 as a preliminary point. While disposing of C.R.P.Nos.594 and 2486 of 1981 this Court had directed the executing court to decide whether respondent is entitled to get any compensation as directed in the judgment in E.F.A.No.2 of 1977. In that view of the matter, executing court allowed E.A.No.503 of 1998 and raised the question whether original tenant is CRP No.1423/2002 5 entitled to get compensation for improvements as directed in the judgment in E.F.A.No.2 of 1977. Before the executing court, petitioner contended that the suit property is property of the Government (of Madhya Pradesh) and hence Act 29 of 1958 has no application. The further contention was that the trial court had permitted the original tenant to get only `31,738.29 as value of improvements, that was not challenged by the original tenant and that finding became final. Hence a claim for re-assessment is barred by res judicata. A third contention raised before the executing court was that occupation of the original tenant with effect from 20.05.1959 (date of termination of tenancy) is akin to that of trespasser and hence he is not entitled to get compensation for improvements if at all effected. 2. On the first contention, that the property belonged to the Government and hence Act 29 of 1958 has no application, the executing court held that in view of the decision of the trial court as confirmed by this Court in A.S.No.493 of 1966 and the Supreme Court (Eapen Chacko v. Provident Investment Co.(P) Ltd - supra) where it was held that the provisions of Chapter-II of the KLR Act has no application since the property belonged to a company owned by the Government, the plea of petitioner that Act 29 of 1958 has no application cannot be accepted. Executing court also held that the award of value of improvements under Sec.4(1) of Act 29 of 1958 was not challenged by petitioner either in the appeal or in the Supreme Court and that award having CRP No.1423/2002 6 become final, original tenant is entitled to a re-assessment of value of improvements under Sec.5 of Act 29 of 1958. It was further held that the mere fact that original tenant committed waste does not dis-entitle him to get a revision of value of improvements in view of Act 29 of 1958. The order to that extent is under challenge in this civil revision at the instance of petitioner. 3. Learned counsel for petitioner has contended that though the suit property was taken on lease by the original tenant from a private limited company owned by the Government (of the Madhya Pradesh), the property is held under that Government, it is not necessary that the property must be 'of the Government' and in the circumstances, Act 29 of 1958 has no application. It is also contended by the learned counsel that finding of the executing court that the trial court assessed compensation for value of improvements under Sec.4 (1) of Act 29 of 1958 cannot be sustained – it is only that the original tenant was given cost of construction and other work he had done in the property even as conceded by the petitioner in the trial court. According to the learned counsel, compensation payable under Sec.4 of Act 29 of 1958 has to be assessed in accordance with Sec.7 to 16 of said Act and unless such assessment is made, there is no basis for re-assessment of compensation. Reliance is placed on the decisions in Bank of India v. Stalin (1988 (1) KLT 759) and Radhamma Vijayamma v. Chandrasekharan Nair (1998 (2) KLT 159). A further argument learned counsel has advanced is that a CRP No.1423/2002 7 reassessment of compensation under Sec.5 of Act 29 of 1958 is contemplated only when compensation as awarded by the decree is 'due' to the tenant, in the present case the decree itself extinguished claim of original tenant for value of improvements in that, the original tenant was allowed to set off the sum of `31,738.29 in the compensation of `1,51,030/- he was made liable to pay to the petitioner – thus by set off, liability of petitioner to pay value of improvements to the original tenant stood extinguished, no amount was due to the original tenant by way of value of improvements even on the date of decree and, hence the original tenant could not have clung on to possession of the property and claim re-assessment of value of improvements. It is submitted by learned counsel that the scheme of Secs.4 and 5 of Act 29 of 1958 is only to enable a tenant or other person who is found entitled to get value of improvements to remain in possession of the property until the value of improvements 'due' to him is paid. In this case, no amount was due even as on date of the decree and hence original tenant continuing in possession of the property to get value of improvements did not arise. Learned counsel has placed reliance on the decisions in Varkey Paily v. Kurian Augusthy (1967 KLT 189), Shama Bhatt v. T.Ramakrishna Bhatt (AIR 1987 SC 1348), Parameswaran Govindan v. Krishnan Bhaskaran (AIR 1992 SC 1135) and Radhamma Vijayamma v. Chandrasekharan Nair (1998 (2) KLT 159). CRP No.1423/2002 8 4. In response, it is contended by learned counsel for respondents – legal representatives of the original tenant that issue No.5 framed by learned Sub Judge on the trial side was whether the original tenant is entitled to get value of improvements, a reading of the averments in the plaint and written statement would show that parties went to trial bearing in mind that the claim made by the original tenant was for value of improvements under Act 29 of 1958, the claim made by the original tenant was not merely for construction activities done in the suit property but also for improvements otherwise effected though, for want of evidence those claims were disallowed by the trial court. According to the learned counsel the finding of learned Sub Judge on issue No.5 in the suit that original tenant is entitled to get value of improvements was not challenged by petitioner in the appeal even while it preferred a cross objection claiming enhanced damages. Therefore, that issue does not arise for a decision at this stage. It is contended by the learned counsel that compensation payable to the original tenant was adjudged under Sec.4(1) of Act 29 of 1958, the original tenant was entitled to remain in possession until he is paid value of improvements and that the contention that the decree sets off liability of petitioner to the original tenant in the matter of value of improvements cannot be accepted. According to the learned counsel, until eviction in execution of the decree original tenant was entitled to remain in possession of the property. It is also pointed out by learned counsel that even a trespasser if he is bonafide in possession of the property is entitled to claim value of CRP No.1423/2002 9 improvements and in that situation a person holding over property based on the agreement of lease though it was terminated cannot be denied benefit of Sec.5 (1) of Act 29 of 1958. Learned counsel has placed reliance on the decisions in Cherian Mathai v. Narayana Pillai (1960 KLT 1192) and Raman v. Janardhana Pai (1967 KLT 560). It is also contended by the learned counsel that the claim of petitioner that Act 29 of 1958 has no application since the property was held by the original tenant under the Government cannot stand. For, it has been consistently held at various stages of the case that property belonged to a private limited company though the Government owned majority of shares in it. It was on that premise that the trial court, appellate court and the Supreme Court declined to grant fixity of tenure to the original tenant. In that view of the matter the contention that Act 29 of 1958 has no application cannot be sustained, it is contended. 5. I shall first refer to the contention that Act 29 of 1958 has no application to the facts of the case. The second proviso to Sec.4(1) of Act 29 of 1958 says that Sec.4 shall not apply to tenants 'holdings lands under the Government'. The question is whether the original tenant was holding land under the Government so that he was disentitled to claim value of improvements under Act 29 of 1958. In Bank of India v. Stalin (supra) certain employees of the Bank of India and other nationalized banks were removed from the service and that was under challenge. The Supreme Court considered the CRP No.1423/2002 10 application of the Kerala Shops and Commercial Establishments Act, 1960 and its counter part legislation in the States of Tamil Nadu and Andra Pradesh. In those cases a preliminary objection was raised that the provisions of the said Acts are not applicable to employees of nationalized banks involved in those cases since the said Acts exempted establishments under the Central Government from the purview of the Acts. The Appellate Authority directed that the preliminary objection will be decided along with the appeals. The banks filed writ petitions in the High Court to direct the Appellate Authority to dispose of the preliminary objection. The petitions were allowed by the High Courts. The said orders were challenged in the Supreme Court. The common question raised before the Supreme Court was whether nationalized banks and State bank of India are establishments under the Central Government within the meaning of the relevant exemption clauses in the above said Acts. The Supreme Court considered the question, what does the word 'under' (the Central Government) occurring in the relevant Sections of the said Acts meant. The Supreme Court referred to the dictionary meaning of the word 'under' and held in paragraph 8 of the decision, referring to the Reserve Bank of India Act and the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 that the banks are of the Central Government and hence contention of the employees cannot stand. It was held in paragraph 10 of the decision that the meaning of the term 'under' left no manner of doubt that the State Bank of India and other nationalized banks are establishments under the Central Government. In CRP No.1423/2002 11 paragraph 11, it was held that the contention of the counsel for employees that the word 'under' will have to be substituted by the word 'of' in the relevant Sub- section could not be upheld. It was also stated referring to Article 12 of the Constitution that the task of the Government multiplied with the advent of the welfare State, it began to be increasingly felt that the framework of civil service was not sufficient to handle the new tasks which were often specialized and highly technical in character and which called for flexibility of approach and quick decision making. The inadequacy of the civil service to deal with these new problems came to be realised and it became necessary to forge a new instrumentality or administrative device for handling such new problems and it was in such circumstances and with a view to supplying the administrative need that the corporation came into being as the third arm of the Government and over the years it has been increasingly utilised by the Government. 6. To decide the question whether the said decision applies to the present case, I must refer to the facts of this case. Petitioner, as described in the plaint is a company incorporated under the Indian Companies Act, 1913 having its registered office at Bombay. It is stated in the plaint that petitioner is a ‘Government company’ within the meaning of the Companies Act, 1956. It is also pleaded that the company was formed in the year, 1926 at Bombay the majority of shares being held by the former Gwalior State. Later, the State of Gwalior merged with the State of Madhya Bharath which under the State Re- CRP No.1423/2002 12 organization of 1956 was incorporated with the State of Madhya Pradesh. The State of Madhya Pradesh claimed to have 98% of the shares in the said company and the rest belong to the Maharaja of Gwalior, Governor of Madhya Pradesh, etc. The expression 'Government company' is defined in Sec.617 of the Companies Act. It is stated that “For the purpose of (this Act) Government company means any company in which not less than fiftyone percent (of the paid up share capital) is held by the Central Government, or by any State Government or Governments or partly by the Central Government and partly by one or more State Governments (and includes a company which is a subsidiary of a Government company as thus defined).” 7. A company has a separate legal entity from its share holders. Various decisions on the point say that the court is entitled to pierce the corporate veil of the company to find out the real nature of transaction being dealt with the company or when there are allegations of fraud. The company when incorporated under the Act has an entity of its own, distinguished from its share holders. Even when the shares are owned by the President of India and some Officials, it does not make the company an agent of the Central Government (see – Heavy Engineering Mazdoor Union v. State of Bihar and others - AIR 1970 SC 82). The Calcutta High Court in Sunil Kumar Debnath and others v. Mining & Allied Machinery Corporation Ltd. (AIR 1968 Calcutta 322) has held that a Government CRP No.1423/2002 13 company could not but be considered as an 'individual'(not amenable to the writ jurisdiction). The Supreme Court in Praga Tools Corporation v. C.V.Imanual and others (AIR 1969 SC 1306) says, concerning a Government company that merely because the Central and State Governments hold large number of shares along with private individuals, a company registered under the Companies Act cannot be said to be either a Government, Corporation or an industry run by or under the authority of the Union Government. Thus going by the averments in the plaint, whatever be the extent of shares the Government of Madhya Pradesh owns, petitioner is a Government company as defined in Sec.617 of the Companies Act and it has its own separate legal entity from the Government which owns majority of shares. Therefore, petitioner - company cannot be equated to the Government (of Madhya Pradesh). I must also bear in mind that as per the second proviso to Sec.4(1) of Act 29 of 1958, the Section is not to apply to 'tenants holding lands under the Government'. Here, it is not disputed that the lease was between the original tenant and petitioner - company. The original tenant was holding the land not under the Government but, under a company in which the Government was having a major share, may be to the extent of 98% but, along with other individuals as well. I must also bear in mind that the trial court, this Court and the Supreme Court declined to accept the plea of fixity of tenure under the KLR Act pleaded by the original tenant because the property is owned by a company though, the Government (of Madhya Pradesh) owns the majority of shares. In CRP No.1423/2002 14 that view of the matter the contention that the property was held under the Government though necessarily not of the Government and hence Act 29 of 1958 has no application, cannot be accepted. 8. Learned counsel for petitioner has placed reliance on the decisions in Shama Bhatt v. Ramakrishna Bhatt and Parameswaran Govindan v. Krishnan Bhaskaran to contend that even on the facts of the case Sec.4(1) of Act 29 of 1958 has no application. In the former case the basis of claim made by the person in possession for value of improvements was not stated anywhere and there was also no averment of the facts necessary to attract either Sec.51 of the Transfer of Property Act or Sec.4 of Act 29 of 1958. Hence, the claim for value of improvements was found to be not coming under the purview of Sec.4(1) of Act 29 of 1958. 9. It is appropriate to refer to the averments in