Case: M/S Speedline Agencies Vs. M/S T.Stanes &amp; Co.Ltd

The appellant took the suit premises in TS No. 1357 (bearing Old No. 6/499 and New No.8/499) on Trichy Road, Coimbatore comprising an area of 1.4 acres, i.e., 61,872 sq. ft. with a building having built up area of 5,274 sq. ft. on lease under lease deed dated 17.11.1965 for use as residence-cum-office from M/s United Coffee Supply Co. Ltd., for a period of five years on a monthly rental of Rs.400/-. On the expiry of the period, the lease was further renewed for a period of five years under lease deed dated 01.10.1970. On failure to renew the lease from 01.10.1975, the appellant instituted a suit in O.S. No. 209 of 1976 for specific performance of the renewal clause in the lease agreement dated 1.10.1970. In the said suit, a settlement dated 12.04.1978 was arrived at whereby the appellant agreed to pay fair rent of Rs.1200/- w.e.f. 1.10.1975.(b) In the meantime, Government of Tamil Nadu brought into force the Tamil Nadu Urban Land (Ceiling and Regulation) Act, 1978 (hereinafter referred to as "the Ceiling Act") on 17.05.1978. Under the provisions of the said Act, ceiling was fixed regarding extent of vacant land which may be owned by a person and Government had the right to take possession of the excess land over the ceiling limit. On 13.09.1978, the erstwhile landlord-company applied for exemption from acquisition of excess vacant lands. On 04.11.1981, the erstwhile landlord company was granted partial exemption from acquisition of vacant lands under Section 21(1)(a) of the Ceiling Act on the ground of public interest by way of G.O. Ms. No. 2900. On 25.06.1986, by way of G.O. (Rt) No. 852 issued by the Revenue Department, the partial exemption earlier granted was reviewed and extended to the entire extent of the suit premises under Section 21(1)(a) of the Ceiling Act, i.e. on the ground of public interest.(c) In 1984, the landlord-company filed RCOP No. 397 of 1984 claiming monthly rental of Rs. 9500/- retrospectively from 01.10.1980. However, the Rent Controller, by order dated 18.10.1994, fixed the fair rent as Rs.6465/- from 1.10.1980. The appellant filed R.C.A. No. 171 of 1994 whereunder the rent was fixed as Rs.7852/- on 19.12.2001 which is currently being paid. On 15.09.1985, the name of the landlord-company, M/s United Coffee Supply Co. Ltd. was changed to Stanes Tea and Coffee Ltd.(d) Stanes Tea and Coffee Ltd. filed RCOP No. 105 of 1987 on 03.04.1987 under Sections 10(3)(a)(i) and (iii) of the Tamil Nadu Buildings (Lease and Rent Control) Act, 1960 (hereinafter referred to as the `Act) on the ground that it required the building and premises for their own use and occupation and for providing residential accommodation to its employees and that vacant areas were required for agency, warehouses and research and development building, office quarters and amenities for staff such as garage, cycle stand, staff recreation club, community hall etc. The Rent Controller, by its order, dated 09.04.1992 allowed the petition and directed eviction of the appellant. Aggrieved by the said order, the appellant filed an appeal being RCA No. 42 of 1992 before the Appellate Authority and IInd Additional Subordinate Judge of Coimbatore and the same was dismissed on 10.04.2003. Against the said order, the appellant filed C.R.P. No. 1729 of 2003 before the High Court. During the pendency of the said C.R.P. before the High Court, by a Scheme of Amalgamation, M/s Stanes Tea and Coffee Limited was transferred to M/s T. Stanes & Company Ltd., with effect from 01.04.2005 under Sections 391 to 394 of the Companies Act, 1956 and this was duly approved by the High Court. Thereafter, an application for amendment of the cause title was filed which was also duly allowed by the High Court by order dated 10.07.2009. On 05.08.2009, the High Court dismissed the revision filed by the appellant herein. Aggrieved by the said order, the appellant has preferred the above appeal before this Court by way of special leave petition.

Court's reasoning:
18) We agree with Mr. Parasaran that, in normal circumstances, after passing of the decree by the trial Court, the landlord would have obtained possession of the premises, but for the tenant continuing in occupation of the premises only on account of stay order from the appellate court. In such circumstances, the well known principle that "an act of the court shall prejudice no man" shall come into operation. Therefore, the heirs of the landlord will be fully entitled to defend the appeal preferred by the tenant. When a company stands dissolved (with or without winding up) due to amalgamation, its rights under the decree for eviction devolves on the amalgamatedIn the present case, subsequent event of amalgamation of a company took place during the pendency of the revision in the High Court. Though, subsequent events which have occurred during the pendency of a revision petition in the High Court or the matter was pending before this Court, have been taken into consideration by this Court in some cases, the question as to the difference between the exercise of jurisdiction in appeal and revision was not argued or decided in those cases.25) In a revision under Section 25 of the Act, the Court is exercising a restricted jurisdiction and not wide powers of the appellateMr. Parasaran reiterated that the High Court having only the power of limited jurisdiction and not powers of appellate court, the subsequent event which occurred during the pendency of the revision petition is not to be taken into account, the High Court will decide only as to the legality of the order under revision.27) Coming to the expression "for its own use/occupation", it has to be construed widely and given wide and liberal meaning. When a company wants to expand its business and amalgamates with another company, this would also be a case of "for its own use". If a landlord which is a company cannot advance its interest in the business by amalgamating with another company by putting to use its own property, it would be unjust, unfair and unreasonable. Further, the provisions of Rent Control Act should not be so construed as to frustrate and defeat the legislation. If in a case of landlord requiring the premises for its own use, to amalgamate with another company and expands its business, the rent control legislation may clash with the provisions of the Companies Act. The Companies Act and the Rent Control Act have to be harmoniously interpreted and not to be so interpreted as to result in the one Act destroying a right under the other Act.28) As stated earlier, death of a landlord after passing the order of eviction does not ipso facto destroy the accrued right under the decree. The cases which have taken into account the subsequent event in favour of the tenant are cases where during the pendency of the appeal or revision, the requirement of the landlord had been fully satisfied and met or ceased to exist. In the case on hand, the landlord required it for its own business and for residential purposes of its employees. That requirement continues to exist also for the transferee company since the entire business of the transferor company stood transferred to the transferee company. The requirement of the company has neither been satisfied nor extinguished. The right to evict has already crystallized into a decree to which the company after amalgamation has succeeded by involuntary assignment. As the decree for eviction was under stay, the decree could not be executed. Once the stay is vacated or dissolved, the respondent would be entitled to execute the decree. In the present case, the amalgamation order has also preserved the said right. As per Clause 1.7 of the Scheme, all assets vest in the transferee company. As per Clause 6, any suit, petition, appeal or other proceedings in respect of any matter shall not abate or be discontinued and shall not be prejudicially affected by reason of the transfer of the said assets/liabilities of the Transferor Company or of anything contained in the scheme but the proceedings may be continued, prosecuted and enforced by or against the transferee company in the same manner and to the same extent as it would be or might have been continued prosecuted and enforced by or against the Transferor company as if the scheme has not been made. In view of the same, by virtue of the provisions in the Scheme of Amalgamation and operation of Order 21 rule 16 of C.P.C., the decree holder is deemed to execute the decree. Section 18 of the Act provides that the order of eviction shall be executed by the Controller as if such order is an order of a civil court and for this purpose, the Controller shall have all the powers of the civil court. For the purpose of execution of the order, all the powers of civil court have been invested in the Rent Controller. Therefore, the principle of Order 21 Rule 16 of the C.P.C. will apply. In any event, as rightly pointed out by learned senior counsel for the respondent that the C.P.C. provisions to the extent advance public interest or ensure a just, fair and reasonable procedure and does not conflict with the Act will apply to execution of the order of eviction.29) The landlords entitlement to evict the tenant had merged with the decree. Further, the amalgamation took place long after the decree for eviction and rights had crystallized under the decree for eviction and merged into it. The tenant has been in possession of vast extent of property which comprises of a big building with built up area of 5,274 sq. ft. together with appurtenant space i.e. vacant land total measuring 61,872 sq. ft. from the year 1965 for a period of over 45 years. The appellant was initially paying rent of Rs. 400/for the building and Rs. 300/for the furniture and fixtures which was raised to Rs. 400/and Rs. 475/respectively in 1970s. The Rent Controller fixed the fair rent as Rs. 6,465/by order dated 18.10.1994 which was enhanced by the appellate authority in an appeal filed by the appellants to Rs. 7,852/by order dated 19.12.2001.30) The assets of the erstwhile company had vested in the amalgamated company. A decree constitutes an asset. The said asset of erstwhile company has devolved on the amalgamated company. The eviction was on the ground of its own requirement of the erstwhile company. The said business will be continued to be carried by the amalgamated company. If the amalgamated company is deprived of the said benefit, it will frustrate the very purpose of amalgamation and defeat the order of amalgamation passed by the High Court exercising jurisdiction under the Companies Act.31) Further, the vacant land which was leased along with the building is the subject matter of the proceedings under the Ceiling Act. The landlord has obtained an order of exemption under Section 21 of the Act vide G.O. Rt. No. 2900 dated 04.11.1981 and the order G.O. Rt. No. 852 dated 25.06.1986. The exemption was expressly for the extension of the industry which is a public purpose. It is relevant to mention that under Section 21, only when the requirement of public interest is satisfied, the Government has power to grant exemption. It is also pointed out the conduct of the tenant when the landlord obtained an order of exemption under Section 21 of the Ceiling Act, the tenant moved the Government for cancellation of exemption and to assign the land in its favour. It also challenged the order of exemption before the High Court in Writ Petition No. 6434 of 1987 which was dismissed by the High Court by order dated 18.04.1991 and Writ Appeal No. 1177 of 1992 which was dismissed by the Division Bench of the High Court by order dated 12.07.1993.32) The reliance placed on behalf of the tenant, Section 10,3, first proviso, is a new plea. The said proviso reads asthat a person who becomes a landlord after the commencement of the tenancy by an instrument inter vivos shall not be entitled to apply under this clause before the expiry of three months from the date on which the instrument washas no application to pending revisions. On the other hand, it applies only to an application made before the Rent Controller. The proviso enjoins that the landlord "is not occupying" the building. Even if the landlord owns other properties but is not in occupation thereof, the proviso will not be attracted. The Rent Act does not deal with the ownership or title, but only with regard to the entitlement to occupation. Even otherwise, this Court will not permit this new plea to be raised for the first time. In any event, it is pointed out that the plea taken in the application for permission to place on record additional facts and documents that the amalgamated company owns other land, it is not pleaded that it is in occupation of such land, therefore, the proviso to Section 10(3)(iii) is notThe object of the Act is to prevent unreasonable eviction of the tenant in occupation and to control rents. Similarly, when landlord wants the property for its own purpose, it takes into account the fact of the landlords occupation of other properties and not its ownership of other properties which does not in occupation. The Act permits eviction on reasonable grounds as provided for in the Act. It may be that there may be cases where it would be reasonable to evict the tenant, but that requirement may not strictly fall in any one of the provisions of Section 10 of the Act to entitle the landlord to evict the tenant. Section 29 of the Act therefore, enables the Government to grant exemption of the building in such cases so that the landlord may be entitled to evict the tenant under the ordinary remedy of suit.