Case: M/S. Sait Nagjee Purushotham &amp; Co. Ltd Vs. Vimalabai Prabhulal

2. Brief facts which are necessary for disposal of this appeal are that the building in question was owned by a joint Hindu family of which Nagjee Amarsee was the senior most member. He had a younger brother, Purushotham Amarsee. Nagjee Amarsee had a son, Jayananthan Amarsee. Purushotham Amarsee had three sons, one of whom died at the age of 20. He had two surviving sons namely, Naranjee and Makeklal. There was a partnership firm consisting of the members of the joint family. The building in question was let out to the firm. The firm was the tenant and later on it was converted into a private limited company. In a partition, the major portion of the building was allotted to the group represented by the landlords. Gradually, the interest of the landlords in the company was taken over by the members of the family representing the tenants group. The property scheduled to the rent control petition was a major portion of the building which was admittedly set apart to the share of the branch of the family represented by the landlords. The landlords filed a suit for eviction on the ground that the respondent Nos.5, 6 & 9 (herein) had completed their education and were sitting idle and they wanted to start business of their own in the scheduled building and they needed the scheduled building for their own occupation at Calicut. Therefore, they claimed eviction of the tenant under Section 11(3) of the Act. They also pleaded the ground of sub-letting to a tailor who was impleaded as a party in the rent control proceedings. It was pleaded that sub-letting was unauthorized and without the consent of the landlords. Hence, the landlords were entitled for eviction under Section 11 (4) (i) of the Act. They also alleged material alteration in building and sought a decree under Section 11 (4) (ii) of the Act. The tenant resisted the eviction petition and pleaded that he was perpetual lessee and could not be evicted by the landlords. He also denied the bona fide need of plaintiffs and denied alteration in the premises in question. It was also pleaded that the tenancy has commenced prior to 1940. As such, the tenant could not be evicted on the ground of bona fide need by virtue of Section 11(17) of the Act. The tenant contested that the landlords were not entitled to an order of eviction. The parties led evidence before the Rent Controller. The Rent Control Court held that the landlords were not entitled to an order of eviction either under Section 11(3) of the Act or under Section 11(4)(i) of the Act. The landlords preferred an appeal before the appellate authority. The appellate authority on re-appraisal of the relevant evidence came to the conclusion that the landlords had made out a claim for eviction under Section 11(3) of the Act on the ground of bona fide need for their own occupation but they could not substantiate their claim for eviction under Sections 11(4) (i) & 11(4) (ii) of the Act. Thus, the appellate authority partly allowed the appeal filed by the landlords and granted a decree of eviction on the ground of bona fide need under Section 11(3) of the Act while the plea of sub-letting and material change in premises under Sections 11(4) (i) & 11(4) (ii) of the Act was declined. Both the landlords and the tenant filed revision petitions i.e. the landlords revision petition was for decree of eviction on the ground of sub-letting and alteration in premises under Sections 11(4) (i) & 11(4) (ii) of the Act and the tenant filed the revision petition against the eviction on the ground of bona fide need of the landlords under Section 11(3) of the Act. Hence, both the revision petitions were clubbed together and were disposed of by the Division Bench of the High Court by its order dated 9.11.2001. Hence, the present appeal against the aforesaid order passed by the High Court.

Court's reasoning:
4. First of all we shall take up the question of bona fide need of the landlords. So far as the partition of the property and the present premises coming to the share of the landlords are concerned, there is no dispute that the portion of the building has come to the share of the landlords and they are the owners as a result of the partition of the family properties. But the question is whether the landlords who are the owners of the portion of the building have substantiated the allegation with regard to the bona fide need or not. We have gone through the findings of the trial court as well as that of the appellate authority and the High Court and after closely scrutinizing the same, we do not think that the finding recorded by appellate court and the High Court can be interfered by this Court on the ground of being perverse or without any basisWe fail to appreciate that when two sons are there and if they want to expand their business at Calicut then it cannot be said that the need is a sham one. It is not possible for the landlords and their sons to wait till the disposal of the case. They have to do something in life and they cannot wait till the appellant is evicted from the premises in question. It is common experience that landlord tenant disputes in our country take long time and one cannot wait indefinitely for resolution of such litigation. If they want to expand their business, then it cannot be said that the need is not bona fide. It is alleged that one of the sons of the landlords has settled in the U.S.A.. That does not detract from the fact that the other sons of landlords want to expand their business at Calicut. Indian economy is going global and it is not unlikely that prodigal sons can return back to mother land. He can always come back and start his business at Calicut. On this ground we cannot deny the eviction to the landlords9. So far as the finding of the first appellate court and that of the High Court with regard to the eviction of the tenant on the ground of sub-letting & material change in premises under Section 11(4)(I ) & (ii) is concerned, that has been held against the landlords and there is no cross-appeal before us. Therefore, we need not go into merits of the findings of the courts belowThe appellant did not lead any categorical evidence to show that the same firm which was there in 1918 was later on converted into a private limited company with the same Directors. Therefore, the evidence in the present case is totally lacking. We insisted learned counsel for the appellant to satisfy us that the old firm which was there prior to 1948, converted into a private limited company with the same directors but learned counsel for the appellant failed to satisfy us. In fact, this question seems to have not been seriously raised either before the trial court, or the appellate court or before the High Court. It was observed by the trial court with regard to the protection under Section 11(17) of the Act that in order to prove that the firm is continuing in the tenanted building from 1940, it is admitted by the tenant that prior to the formation of the tenant- company the business was conducted by the partnership firm. It is apparent from Ext.B-6 that the tenant company came into existence in 1948 and memorandum and article of association clearly shows that the company was incorporated on 6.2.1948. Therefore, it was held that it is a separate legal entity from the date of incorporation. It was held by the trial court that the tenant company could not claim any tenancy right of partnership because the newly constituted separate legal entity had come into existence on 6.2.1948. Therefore, it was observed by the trial court that the very important ingredient of Section 11(17) is lacking in this case. Similarly, the appellate court in paragraph 25 of its order also held that the tenant company has not produced any document to show that it was in possession of the building as such before 1940. In fact, the private limited company came into existence in 1948. Therefore, the first appellate court also affirmed the finding of the trial court. Likewise, the High Court affirmed the findings of the courts below and observed that both the Rent Control Court and the Appellate Authority rightly held that tenancy commenced only in the year 1948 and hence the tenant cannot claim the protection of Section 11(17) of the Act. In view of this concurrent finding by all the Courts below there was hardly any scope to pierce the corporate veilWe cannot consider the facts pleaded in another case with regard to the firm but in order to substantiate that the same firm was occupying the premises on 1.4.1940, the tenant has to lead specific evidence so as to claim protection under Section 11(17) of the Act in this suit. We have ourselves gone through the evidence adduced in this case to find out whether any evidence has been led by the tenant to show that the same partnership firm continued when it was converted into the private limited company registered under the Companies Act with the same Board of Directors. But we regret to say that there is none in this case. This is a civil suit and party has to plead and prove in this case. We cannot look into the facts appearing in other case pertaining to this case19. On review of all these cases it clearly transpires that the appellant- tenant has failed to substantiate that the private limited company which was formed in the year 1948 carried the same partners on the Board of Directors as were there prior to 194820. In view of the ratio laid down by this Court in the aforesaid decisions, various tests were laid down obtaining in the facts of each case. But the common ratio which runs in all these cases is that if there is voluntary transfer by the company to a newly incorporated company then in that case one has to plead and prove that all the members of the old firm continued in the new firm and it is essentially the same. The only exception which has been made is that the transfer of the old company to a new one is under the statute or law. Therefore, in the present case after verifying the records of the case, we have found that all the three courts have consistently observed that the benefit of Section 11(17) of the Act cannot be extended to the appellant in this case and we are of opinion that the view taken by the courts below is correct and there is no ground to interfere in this appeal.