Case: Singer India Ltd Vs. Chander Mohan Chadha

1. This appeal by Special Leave, has been preferred against the judgment and order dated 25.5.2001 of Delhi High Court whereby the Second Appeal preferred by the appellant was dismissed and the judgment and order dated 8.4.1996 of the Rent Control Tribunal directing eviction of the appellant from the premises in dispute was affirmed2. Shri Atma Ram Chadha, predecessor-in-interest of respondent Nos. 1 to 13 (hereinafter referred to as the landlord) let out Shop No. 13/14 (Private No. 15) Block C, Cannaught Place, New Delhi to M/s. Singer Sewing Machine Company, incorporated under the laws of the State of New Jersey, USA, (hereinafter referred to as American Company), at a rental of Rs. 1200/- per month vide a registered lease deed dated 11.7.1966. In the year 1982, the landlord filed an eviction petition on the ground, inter alia, that the American Company, without obtaining any written consent from the landlord, had parted with the possession of the premises in dispute in favour of Indian Sewing Machine Company Limited, incorporated under the Indian Companies Act (hereinafter referred to as Indian Company), and it was the said company which was in exclusive possession of the premises and thereby it was liable for eviction in view of Section 14(1)(b) of the Delhi Rent Control Act (hereinafter referred to as the Act). The eviction petition was contested by the appellant on the ground, inter alia, that a direction was issued to the American Company to reduce its share capital to 40 per cent in order to carry on business in India in view of Section 29 of Foreign Exchange Regulation Act, 1973 (hereinafter referred to as FERA). Accordingly, Company Petition bearing No. 66 of 1981 was filed by the Indian Company before the Bombay High Court under Sections 391 and 394 of the Companies Act which was allowed on 31.12.1981, and a scheme of amalgamation was sanctioned whereby the undertaking in India of the American Company was amalgamated with the Indian Company. Under the scheme of amalgamation the whole of the business, property, undertaking, assets, including leases, rights of tenancy, occupancy etc stood transferred to and vested in the Indian Sewing Machine Company, namely, the Indian Company. It was submitted that the Indian Company is no other entity except the legal substitute of the American Company and in substance there is no case of sub-tenancy. The Additional Rent Controller, Delhi dismissed the eviction petition by the judgment and order dated 6.2.1995, but this was reversed by the Rent Control Tribunal in the appeal preferred by the landlord and eviction petition was allowed. The Second Appeal preferred by the appellant was dismissed by the High Court on 25.5.2001. During the pendency of the appeal before the Rent Control Tribunal, the name of M/s. Indian Sewing Machine Company was changed as Singer India Limited which is the appellant herein.

Reasoning:
11. These cases clearly hold that even if there is an order of a Court sanctioning the scheme of amalgamation under Sections 391 and 394 of the Companies Act whereunder the leases, rights of tenancy or occupancy of the Transferor Company get vested in and become the property of the Transferee Company, it would make no difference in so far as the applicability of Section 14(1)(b) is concerned, as the Act does not make any exception in favour of a lessee who may have adopted such a course of action in order to secure compliance of law16. However, it has nowhere been held that such a course of action is open to the company itself. It is not open to the Company to ask for unveiling its own cloak and examine as to who are the directors and shareholders and who are in reality controlling the affairs of the Company. This is not the case of the appellant nor could it possibly be that the corporate character is employed for the purpose of committing illegality or defrauding others. It is not open to the appellant to contend that for the purpose of FERA, the American Company has effaced itself and has ceased to exist but for the purpose of Delhi Rent Control Act, it is still in existence. Therefore, it is not possible to hold that it is the American Company which is still in existence and is in possession of the premises in question. On the contrary, the inescapable conclusion is that it is the Indian Company which is in occupation and is carrying on business in the premises in question rendering the appellant liable for eviction