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CASE NO.: Appeal (civil)  1386 of 2005

PETITIONER: Santosh Ajit Sachdeva & Ors

RESPONDENT: Anoopi Shahani

DATE OF JUDGMENT: 21/08/2007

BENCH: A.K.MATHUR & MARKANDEY KATJU

JUDGMENT: J U D G M E N T  

CIVIL APPEAL NO. 1386  OF 2005

A.K. MATHUR, J.

1.              This Appeal is directed against the order passed by the  High Court of Judicature at Bombay in Writ Petition No. 7701 of 2004  on 29th November, 2004 whereby  the learned Single Judge has  upheld the order of the  appellate court under the provisions of   Section 13(1)(e) of the Bombay Rents, Hotel and Lodging Houses  Rates Control Act, 1947.      2.              Brief facts which are necessary  for the disposal of this  appeal  are as under:         The suit was filed by  the plaintiff  Smt. Anoop Shahani  (respondent herein) against the  defendant No. 1 Mrs. Santosh Ajit  Sachdeva (appellant herein) wife of Mr. Ajit Sachdeva since  died  who was the  original tenant of the suit premises   for eviction  on the  ground of subletting of the premises.  The suit premises, i.e., 61,  Anjali, 6th floor, Behind Radio Club, Colaba Bombay 5  was  let out by  the  plaintiff   on the monthly rent of Rs. 1300/-.    It was contended  that the defendant  No. 2 was a proprietory concern of the  defendant  No. 1 known as M/s Pearl Advertisings.   During the pendency of the  suit the  plaint was amended and the defendants Nos 4& 5  joined  as  defendants.  The  joining of defendants Nos. 4 & 5 were   unlawful in  respect of the suit premises.    It is the case of  defendant No. 1  who   unlawfully sublet the  suit premises to defendants Nos. 3, 4 & 5.   The  defendant Nos. 3, 4 & 5  claimed rights through defendant no. 1.    According to  plaintiff, defendant No. 1 has unlawfully sublet the  suit  premises  to defendant No. 3 in the month of September, 1998  and   therefore,  the defendant No. 1  has  lost protection of the  Bombay  Rent Act  and therefore, the defendant No. 1 is liable to be evicted   from the suit premises.    The plaintiff by  giving a notice dated   19.8.1989 through her advocate terminated the tenancy of the   defendant no. 1 in respect of suit premises and called upon  the  defendant No. 1 to  quit, vacate and  deliver  the  quiet and peaceful  possession of the suit premises.  But no reply was given.   Hence, the   suit was filed against the defendants for eviction.   On the basis of  pleadings of the parties,  the learned trial judge framed  three issues  in the suit  on  7.11.1997 : 1.      Does plaintiff prove that defendant nos. 1 & 2 illegally sublet  the suit premises or  unlawfully given on licence to the  Defendant No. 3? 2.      Is plaintiff entitled to decree of possession of the suit  premises? 3.      What order and decree?

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3.      Both the parties examined themselves with necessary witness  and  produced the documents.    The trial court after considering the  matter held  that the plaintiff was  not entitled to the decree for  eviction.   It is relevant to mention that Mr. Sachdeva expired  and  defendant No. 1 Smt. Santosh  Ajit Sachdeva wife of Mr. Sachdeva  became the tenant of plaintiff in respect of suit premises.  As already  mentioned above that M/s  Pearl Advertisings is a proprietory concern  of  Shri Ajit Sachdeva.  The defendant No. 3 M/s Impression  Advertising Pvt. Ltd is  the unlawful  occupant  in respect of suit  premises.  The case of the defendant was that her husband  Ajit  Sachdeva and  she herself registered the Private Limited Company  and were the Directors of the  said company.     During the life time of  late Shri Sachdeva he also  carried out the business  in the name of  M/s Impression Advertising and Marketing.    Mr. Sachdeva died on   26th September, 1984 and thereafter defendant No. 1 was accepted  as  tenant by the plaintiff and the rent was being paid by the   defendant No. 2 to the extent of Rs. 300/- and  by M/s Impression  Advertising and Marketing at  Rs. 1000/- per month.      4.      It was also contended that defendant No. 3 M/s Impression  Advertising Co. did not commence the business owing to the  illness  of the Director late Shri Sachdeva.   However in July, 1988 defendant  No. 1 decided that the said company should conduct the business   which was being carried out in the name of M/s Impression  Advertising and  Marketing.   After the commencement of the  business the defendant was remitting the rent  to the plaintiff on  behalf of the defendant no.1.    Therefore, the  defendant no. 1  denied that the defendant no. 3  was the unlawful occupant as  alleged.  It was also contended that the  business of the defendant   No. 3  was run by the defendant no. 1 as the Managing Director.  Therefore,   the allegation that defendant had unlawfully  sub-let or  given on leave and on licence  basis to the defendant No. 3 was not  proved.    it was urged that defendant No. 1 carried on the business in  the name of the defendant No. 2 and the premises continued to  remain in her custody and control and defendant No. 3 did not claim   any right or   claim in  the suit premises.    5.     However, the trial court after examining the necessary evidence  dismissed the suit.  Hence, the respondent approached the appellate   authority against the judgment and order passed by the  trial court on  22.12.1998.   The appellate authority  examined the factual  controversy and after reviewing  all the oral & documentary evidence  of the defendant No. 1 did not feel persuaded that she was controlling  the whole business as Director of the company in the suit premises.   The trial court after referring to the  Annual Returns  from 1988 to  1994 found that   defendant No. 1 the appellant owns  1400 shares  out of 2000 shares  of the said company and one   Shri  Shivdutt  Sharma owns 240 shares and Shri Gautam Sachdeva owns 250  shares of the said company.   It was further held that Ms. Shibani  Sachdeva and M/s Nikki Sachdeva own 60  & 50 shares respectively   whereas S/Shri Charles D Souza  & Bhooshan Prabhu were holding  90 shares & 50 shares respectively and on that basis the trial court   found that the defendant (appellant herein) was found to be  controlling the whole business.   However, this finding was reversed   by the appellate court.   The appellate court found that simple  shareholding of the appellant in the  company  is not enough &  there  is no factual foundation in respect of actual control over the business  of the company in suit premises.   Mere statement that  the appellant    holds  1400 shares or  production of balance sheet is not sufficient to  prove her actual control.  The appellate  court found that  except this  documentary evidence there is no evidence to show that the day to  day activity is being controlled  by the defendant No.1. On this  evidence, the appellate  court reversed the finding and held that   merely she  was having a majority  share-holding by that it cannot be  concluded that she was in actual control of the business of the  

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company in suit premises.  Aggrieved against the order of the   appellate court,  the writ was filed before the High Court and the  High  Court after reviewing the evidence affirmed the  finding recorded by  the first appellate court that there is no sufficient material from which  it can be concluded  that  actually  the  defendant - appellant is   looking after the business of the company in the suit premises.   Accordingly, the High Court dismissed the writ petition and affirmed  the order of the appellate court.   Aggrieved  against  this order,  the  present appeal was filed.

6.      We have heard learned counsel for the parties & perused the  record.

7.      Mr. Dwivedi, learned senior counsel strenuously urged before   us that the principal of lifting the corporate  veil has been  accepted  and, therefore, if the corporate veil is lifted then it appears that the  appellant who holds the major share is looking after the  day to day  functioning  of the company and learned counsel accordingly placed  reliance on the decision of this Court in the case of   Madras  Bangalore  Transport Co. (West)  v.  Inder Singh  reported in  (1986)  3 SCC 62 and also placed reliance in a number of other judgments.   The decision of Madras Bangalore Transport Co. (West) (Supra)   came up for consideration before this Court in a subsequent  judgment in the case of  Sait Nagjee Purushotham & Co. Ltd.  V.  Vimalabai Prabhulal reported in (2005)8 SCC 252  wherein the case  of Madras Bangalore Transport Co. (West) (Supra)  was considered  alongwith all other cases cited by learned  counsel and it was   specifically recorded with regard to Madras Bangalore Transport Co.  (West) (Supra) .         " This case has been decided purely  on facts peculiar to it and  no principle of law has been laid down."

8.      All other cases referred by learned counsel were  also  examined and we do not feel any need to refer any  more of them.   The theory of lifting the corporate veil has been accepted in certain  circumstances which have already been  referred by this Court in  a  series of  decisions.   However,   so far as this case is concerned,     as per the finding of fact recorded by the appellate court as well as by  the  High Court  that the  appellant-defendant has not been able to  successfully prove  that she is controlling the  company,   it was  held  by the appellate court that merely  by holding a large number of  shares  is not sufficient but something more is required to  prove  that  she is actually controlling  and managing the business herself.  That  finding of the Appellate  Court has been upheld by the High Court.    Hence, in view of the concurrent finding of  both the courts below,  there is no reason for us to take a different view of the matter.  Hence  we  do not find any merit in this appeal  and accordingly  the appeal  stands dismissed.  No order as to costs.