Case: M/S. Cox &amp; Kings Ltd. &amp; Anr Vs. Smt.Chander Malhotra

of Section 14 which was not obtained. Therefore, it is a clear case of sub letting. Even otherwise, it would be an assignment, as admittedly agreed in the agreement referred to hereinbefore between the Foreign Company and the Indian Company. In P.H. Rao v. S.P.N.K. Jain & Anr., (1980) 3 SCR 444 , the landlord had executed a lease in respect of the demised premises in favour of the Laxmi Bank on 1.4.1942; the Bank went into liquidation. The liquidator sold leasehold right to the respondent and the Court confirmed the same. An application for eviction came to be filed and it was contended that it being an involuntary transfer it was not a case of sub letting under Section 14(1)(b) of the Act. This Court had negatived the contention holding thus: “ As regards point No. 3, the High Court relying on a decision of Calcutta High Court in Krishna Das Nandyv. Bidhan Chandra Roy,AIR 1959 Cal. 181 has found that as the transfer in favour of respondent No.1 by the Official Liquidator was confirmed by the Court, the status of the tenant by respondent No. 1 was acquired by operation of law and, therefore, the transfer was an involuntary transfer and the provisions of Rent Control Act would not be attracted. After careful perusal of Calcutta case, in the first place it appears that the section concerned has not been extracted and we are not in a position to know what was the actual language of the section of the Bengal Act. Secondly, in our opinion, the Official Liquidator had merely stepped into the shoes of Laxmi Bank which was the original tenant and even if the Official Liquidator had transferred the tenancy interest to respondent No. 2 under the orders of the Court, it was on behalf of the original tenant. It was undoubtedly a voluntary, sale which clearly fell within the mischief of Section 14(1)(b) of the Delhi Rent Control Act. Assuming that the sale by the Official Liquidator was an involuntary sale, then it undoubtedly became an assignment as provided for by Sec. 14(b) of Delhi Rent Control Act, Section 14(b) runs thus:‘14(b).––that the tenant has, on or after the 9th day of June, 1952, sublet, assigned or otherwise parted with the possession of the whole or any part of the premises without obtaining the consent in writing of the landlord.’The language of Section 14(b) is wide enough not only to include any sub-lease but even an assignment or any other mode by which possession of the tenanted premises is parted. In view of the wide amplitude of Section 14(b) we are clearly of the opinion that it does not exclude even an involuntary sale. For these reasons, therefore, we are unable to agree with the view taken by the High Court. The appeal is accordingly allowed, the judgment and decree of the High Court are set aside and the plaintiffs application under Section 25 of the Delhi Rent Control Act is dismissed,” premises without obtaining the cons. 7. The above ratio is clearly on the point in issue involved in the present case. In Venkatarma Iyer v. Renters Ltd.,(1951 II MLJ 57, K. Subba Rao, J., as he then was, had to consider a similar question under the Madras Buildings (Lease and. Rent) Control Act. There was an assignment between the two companies and considering the effect thereof it was held that if a company doing business in a particular premises taken on lease, transfers its business as a going concern to another company and also the net assets for consideration and thereafter the transferee company takes over the business and carries on business in the premises let out to the former company, it cannot be said that there was no transfer of the right of the former company under the lease to the latter company. On such transfer, the tenant is liable to be evicted as a sub-tenant. The above judgment is clearly on the point in issue before us. In General Radio & Appliances Co. Ltd. v. M.A. Khader (dead) by LRs., [(1986) 2 SCR 607 at 620] a three-Judge Bench had approved the above ratio. Two Companies having been amalgamated, eviction against the amalgamated company came to be filed. On consideration of all the decisions referred to above hereinbefore, the irresistible conclusion followed that there had been a transfer of the tenancy interest of appellant No. 1 in respect of the premises in question to the appellant No. 2, subsequently, renamed appellant No. 3, M/s. National Radio Electronics Co. Ltd. Accordingly, their eviction was upheld under Section 10(ii)(a) of the Andhra Pradesh Buildings (Lease, Rent and Eviction) Control Act, 1960. The facts in Madras Bangalore Transport Co. (West) v. Inder Singh & Ors.,[(1986) 3 SCC 62] relied upon by Shri R.F. Nariman, are clearly distinguishable. In that case, a partnership firm was divided between the partners and two separate firms came to be formed with a distinct area of operation and one of the companies was to retain possession of the tenanted premises. After 10 years, application for eviction came to be filed on the ground of sub-letting of the premises. Considering the constitution of the companies, its operation and the nature of the incidence that flowed therefrom, this Court had held that the limited company and the partnership firm were two only on paper but were one for practical purposes. There was substantial identity between the limited company and the partnership firm. On the basis of those findings, it was held that there was no sub-letting. The ratio has no application to the facts in this case.8. In view of the findings recorded above, viz., there was a clear assignment between the Foreign Company and the Indian Company of the demised premises without any written consent of the respondent-landlord, it is a case of “sub-letting” within the meaning of Section 14(1)(b) of the Act. The Courts below, therefore, have not committed any illegality in reaching those findings warranting interference. 9.

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]We find it difficult to give acceptance to the contention.It is not in dispute that such an application came to be made and the Reserve Bank had passed an order directing the Foreign Company to wind up its business. Subsequently, an application was made for permission to incorporate Indian Company with 100% share held by the Foreign Company which was refused. Thereafter, Indian Company came to be incorporated in which the Foreign Company claimed to have 40% share in the business. Thus, the Indian Company was incorporated under the Indian Companies Act, 1956 and was doing business under FERA with the permission of Reserveis seen that under FERA, there is no compulsion that the premises demised to the Foreign Company should be continued or given to Indian Company.Thus, it could be seen that under the consequence of agreement between the Foreign Company and the Indian Company, the Indian Company became the assignee with all rights and liabilities and subject to observance of the terms and conditions of all the tenancy rights contained in the leases or agreements for lease under which the same are being held by the Foreign Company. It would, thus, be clear that it is a case of assignment of the lease hold right, had from the respondent in favour of Indian Company, subject to the observance of the leasehold covenants contained in the lease held by the Foreignis seen that Sub-section (b) of Section 14, in clear terms envisages that the tenant shall not, after June 9, 1952, sub-let, assign, or otherwise part with the possession of the whole or any part of the premises, without obtaining the written consent of the landlord. It is seen that though by operation of FERA the Foreign Company had wound up its business, it assigned, under the agreement, the leasehold interest in the demised premises to the Indian Company which is carrying on the same business in the tenanted premises without obtaining the written consent of the landlord.6. The respondent-landlord is not bound by such assignment, induction of the appellant-Company against her wishes. Her written consent is a pre-condition, as envisaged under Sub-section (1)(b) of Section 14 which was not obtained. Therefore, it is a clear case of sub letting. Even otherwise, it would be an assignment, as admittedly agreed in the agreement referred to hereinbefore between the Foreign Company and the Indian Company.The above ratio is clearly on the point in issue involved in the present case. In Venkatarma Iyer v. Renters Ltd.,(1951 II MLJ 57, K. Subba Rao, J., as he then was, had to consider a similar question under the Madras Buildings (Lease and. Rent) Control Act. There was an assignment between the two companies and considering the effect thereof it was held that if a company doing business in a particular premises taken on lease, transfers its business as a going concern to another company and also the net assets for consideration and thereafter the transferee company takes over the business and carries on business in the premises let out to the former company, it cannot be said that there was no transfer of the right of the former company under the lease to the latter company. On such transfer, the tenant is liable to be evicted as a sub-tenant. The above judgment is clearly on the point in issue before us. In General Radio & Appliances Co. Ltd. v. M.A. Khader (dead) by LRs., [(1986) 2 SCR 607 at 620] a three-Judge Bench had approved the above ratio. Two Companies having been amalgamated, eviction against the amalgamated company came to be filed. On consideration of all the decisions referred to above hereinbefore, the irresistible conclusion followed that there had been a transfer of the tenancy interest of appellant No. 1 in respect of the premises in question to the appellant No. 2, subsequently, renamed appellant No. 3, M/s. National Radio Electronics Co. Ltd. Accordingly, their eviction was upheld under Section 10(ii)(a) ofthe Andhra Pradesh Buildings (Lease, Rent and Eviction) Control Act, 1960. The facts in Madras Bangalore Transport Co. (West) v. Inder Singh & Ors.,[(1986) 3 SCC 62] relied upon by Shri R.F. Nariman, are clearly distinguishable. In that case, a partnership firm was divided between the partners and two separate firms came to be formed with a distinct area of operation and one of the companies was to retain possession of the tenanted premises. After 10 years, application for eviction came to be filed on the ground of sub-letting of the premises. Considering the constitution of the companies, its operation and the nature of the incidence that flowed therefrom, this Court had held that the limited company and the partnership firm were two only on paper but were one for practical purposes. There was substantial identity between the limited company and the partnership firm. On the basis of those findings, it was held that there was no sub-letting. The ratio has no application to the facts in this case.8. In view of the findings recorded above, viz., there was a clear assignment between the Foreign Company and the Indian Company of the demised premises without any written consent of the respondent-landlord, it is a case ofwithin the meaning of Section 14(1)(b) of the Act. The Courts below, therefore, have not committed any illegality in reaching those findings warranting interference.