Erach Boman Khavar vs Tukaram Sridhar Bhat & Ors

3. The broad essential facts giving rise to the present appeal are that on 17.6.1975 the father of the appellant entered into an agreement of leave and licence with respondent No. 2 – Company, namely M/s. Poysha Industrial Co. Ltd. in respect of a flat owned by him. As put forth by the appellant, the licence expired by efflux of time but the respondent No. 2 continued to pay the licence fee and the same was accepted by the father of the appellant without prejudice. In the year 1990 a suit for eviction was instituted by the predecessor-in- interest of the appellant against respondent No. 2 and the sub-tenant under the Bombay Rent Act, 1947. On 4.3.1997 the sub-tenant, the first respondent herein, filed an application for impleading himself as a party in the suit contending that he was the sub-tenant. It is apt to note here that he was the Managing Director of the respondent No. 2 - company. On 17.6.1997 the Small Causes Court allowed the application and impleaded the respondent No. 1 as a defendant. While the suit was in progress, on 9.1.1998 in a separate proceeding the learned Company Judge passed a winding up order against the respondent No. 2 – Company. At that stage, the landlord filed CA No. 731 of 1999 before the High Court seeking possession of the flat. On 14.2.2000, the learned single Judge rejected the application opining that before the premises could be returned, the rights of the person to occupy the premises are required to be determined. It was observed that it was only in the clear case where there is no valid or legal subsisting tenancy or sub-tenancy that the premises could be returned to the landlord. The said order was assailed before the Division Bench which by order dated 22.8.2000 accepted the reasoning ascribed by the learned single Judge and dismissed the appeal.

4. As the factual matrix would further undrape, the father of the appellant filed an application for amendment of the plaint in the suit for incorporation of the certain other grounds including the unlawful subletting by the respondent-company to the first respondent and the said amendment was sought to be made in terms of Section 3(1)(b) of the Bombay Rent Act, 1947. Eventually, by order dated 9.11.2000 the said application for amendment was rejected on the ground that the Bombay Rent Act had been repealed on 31.3.2000. Thereafter, Suit No. 226/336 of 2001 was instituted in the Small Causes Court for eviction on the ground of illegal subletting. As set forth, the said suit was filed after obtaining leave from the Companies Court under Section 446 of the Companies Act, 1956 (for short “the 1956 Act”). On 2.1.2002 as the original plaintiff, the father of the present appellant expired, an application for substitution was filed and thereafter the legal representatives including the appellant were brought on record vide order dated 28.3.2002. As the factual matrix would unveil, the said suit was withdrawn on 12.7.2004.

8. The said order came to be assailed in appeal No. 779 of 2006 before the Division Bench which by order dated 7.11.2006, upon adumbration of all the facts and delineation of the impugned orders, set aside the orders dated 27.7.2006 and 28.9.2006 as the learned Company Judge had not kept himself alive to Rule 117 of the Companies (Court) Rules, 1959 which envisages that an application under Section 446(1) for leave of the Court to commence or continue in suit or proceedings against the company shall be made upon notice to the official liquidator and the parties to the suit or proceedings sought to be commenced or continued and, accordingly, remitted the matter to the learned Company Judge to hear and decide the application afresh in accordance with law after affording opportunity to the sub-tenant also.

10. The legal substantiality of the aforesaid order was challenged in Appeal no. 262 of 2007 and before the Division Bench it was contended that the application for grant of leave had already been disposed by refusing it vide order dated 23.2.2006 and granting permission to file an application for amendment in the plaint in the Small Causes Court and the concession given by the appellant not to oppose the same was not availed of and hence, a second application seeking grant of the same relief was not maintainable. It was further urged that TER Suit No. 111/127 of 2006, the second suit, was instituted pursuant to leave granted by the learned Company Judge vide order dated 27.7.2006 which was revoked by order of the Division Bench in appeal and, therefore, the learned Company Judge could not have granted leave to continue the said suit. The grant of leave by the learned Company Judge was criticized further on the ground that the earlier order dated 23.3.2006 was only for the limited purpose for seeking clarification of the order and not for filing a fresh application seeking grant of leave. The aforesaid submissions were resisted by the present appellant on many a score including the interpretation of the earlier order and how it would not operate as res judicata.

11. The Division Bench placed reliance on Arjun Singh v. Mohindra Kumar and others[1] and came to hold that when the second application for leave was filed, there was no change in the circumstances and in the absence of any changed circumstances, the second application for leave was not maintainable as it was barred by principles of res judicata being a successive application in the same court on self-same facts. It was further opined that it is open to the appellant to file an application for review or to file an appeal against the said order and as long as the said order remained alive, a fresh application could not have been entertained by the learned Company Judge. To interpret the term “grant of liberty” the Division Bench held that on the basis of the grant of liberty the case could not have been reopened. For the said conclusion reliance was placed on Kewal Chand Mimani v. S.K. Sen and others[2]. The Division Bench, however, clarified that the respondent No. 3 therein would be entitled to make an application for grant of leave for instituting a fresh suit after taking recourse to such remedy for annulment of the order dated 23.2.2006 passed in Company Application No. 45 of 2006.

(iii) that the liberty granted by the learned single Judge could not be used to seek from him any relief which is contrary to the main order.

39. In view of the aforesaid analysis, we allow the appeal, set aside the order passed by the Division Bench and restore that of the learned Company Judge. The first respondent is directed to pay Rs.50,000/- to the appellant towards costs of the appeal.

December 12, 2013.

Petition(s) for Special Leave to Appeal (Civil) No(s).25369/2010 (From the judgement and order dated 23/06/2010 in CP No.201/1994,CA No.720/2006,AN No.262/2007 of The HIGH COURT OF BOMBAY) ERACH BOMAN KHAVAR Petitioner(s) VERSUS TUKARAM SRIDHAR BHAT & ORS. Respondent(s) Date: 12/12/2013 This Petition was called on for Judgment today.

Hon'ble Mr. Justice Dipak Misra pronounced the Judgment of the Bench comprising Hon'ble Mr. Justice Anil R. Dave and His Lordship.

Leave granted.

The Civil Appeal is allowed.

(Signed reportable Judgment is placed on the file)