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PETITIONER: RASHPAL MALHOTRA

       Vs.

RESPONDENT: MRS. SATYA RAJPUT AND ANOTHER

DATE OF JUDGMENT11/09/1987

BENCH: MUKHARJI, SABYASACHI (J) BENCH: MUKHARJI, SABYASACHI (J) OZA, G.L. (J)

CITATION:  1987 AIR 2235            1988 SCR  (1) 110  1987 SCC  (4) 391        JT 1987 (3)   546  1987 SCALE  (2)516

ACT:      Constitution of India, Article 136: Court acts not only      as ’Court of law’ but also as ’Court of equity’.           East Punjab  Urban Rent Restriction Act, 1949: ss. 2(i)      & 13-C     Eviction-‘Tenant’’ an  entity not a juristic person-      Eviction Suit-Whether maintainable.     HELD:

    The landlady, respondent No. 1, leased out the premises in question in Chandigarh to respondent No. 2, for residence of its  General Manager,  the appellant.  The lease deed was signed on  behalf of  the  lessee  ’for  Haryana  Milk  Food Corporation’ by  R.P.  Malhotra,  the  appellant.  When  the landlady came  to know in the end of 1974 that the appellant had left  the services  of the respondent No. 2, she stopped accepting rent  from him.  She filed an application under s. 13 of  the East  Punjab Urban Rent Restriction Act, 1949 for eviction against  him and  respondent No. 2 in November 1977 on the grounds: (a) non-payment of rent from January 1, 1975 onwards, (b) the subletting of entire premises by respondent No.  2   to  the  appellant,  and  (c)  bona  fide  personal requirement. That application was contested by the appellant and respondent  No. 2 who filed written statement contending that respondent  No. 2 was just a trade name and not a legal entity, nor  it was a partnership firm for, the owner of the said concern  was Kailash  Chemical and  Textile Mills Ltd., that there  could not  have been  any lease with such a non- legal entity,  and that  a suit  against such a body was not maintainable.      Both the  trial court  and the  appellant court ordered ejectment of the appellant and respondent No. 2 holding that respondent No. 2 was the tenant under respondent No. 1, that the appellant had taken the premises on behalf of respondent No. 2,  that they  were in  arrears of  rent, and  that  the premises were bona fide required by respondent No. 1.      The  High  Court  dismissed  the  appellant’s  revision petition. 111      Dismissing the appeal by special leave, ^      HELD:1. It  is apparent from the facts that the tenancy agreement was  not with  the appellant,  and the  lease  was

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signed by  him on  behalf of  the other  entity  though  not strictly legal  but it  was entered  into by a legal entity, namely, the  Kailash Chemical  and Textile  Mills  Ltd.  The parties knew  that the  appellant  was  not  a  tenant.  The parties were  aware that  the company  was the real owner of respondent No.  2. The  company had  accepted that position. Neither  respondent   No.  2  nor  its  owner  company  was, therefore, prejudiced by holding that the lessee was not the appellant and  they have  not been  prejudiced by  not being made formal  parties. The order of eviction, therefore, does not call for any interference. [116B-C]      Modi  Vanaspati   Manufacturing  Company  and  Anr.  v. Katihar Jute  Mills (Pvt.) Ltd., A.I.R. 1969 Calcutta 496 at page 511; Rajendra Prasad oil Mills, Kanpur and Anr. v. Smt. Chunni Devi  and Ors.,  A.I.R. 1969  Allahabad page  1; M/s. M.K.M. Moosa  Bhai Amin,  Kota v.  Rajasthan Textile  Mills, Bhawanimandi  A.I.R.  1974  Rajasthan  194  and  Educational Supplies  Depot,  Trivandrum  v.  Vithoba  High  School  and others, 1970 Kerala Law Journal reports 43. referred to.      2. The Supreme Court is more than a court of appeal. It exercises power under Article 136 only when there is supreme need. Therefore, even if legal flaws might be electronically detected, the Court cannot interfere save manifest injustice or substantial question of public importance. [116F]      In the instant case, it has been held by the High Court and the  courts below  that no  deposit  had  been  made  in accordance with law. Merely because in the form of the lease the owner was not mentioned and as such was not made a party to the  suit and  the lease was purported to be entered into with an  entity which  was not  a juristic person and a suit was filed  against  such  non-juristic  person,  this  Court should not  interfere with the conclusions arrived at by the appellate authority and the High Court. [116G-H; 117A]      Heavy Engineering  Corporation Ltd.  Ranchi v. K. Singh and Company,  Ranchi, A.l.R.  1977 Supreme  Court  2031  and Baigana and  others v. Deputy Collector of Consolidation and Ors., [1978] 3 S.C.R. 509, referred to.      3. The  Supreme Court  in exercising  its  power  under Article 136 112 acts not  only as Court of law but also as a court of equity and must  subserve ultimately  the cause  of justice. In the instant case,  there was  evidence that  there was some bona fide need of the landlady for her family. After a long lapse of time,  in the  facts and  the circumstances  of the case, therefore, interference  with the findings arrived at by the High Court  and the  courts below  would not  be  justified. [117A-B]      [The Court  directed that in case the landlady lets out the premises  within the  period of  five  years  the  first option should  be given to the appellant, that she would not sell the  premises within a period of five years and in case she does  the first  option should be given to the appellant to purchase  the property, that the decree for eviction will not  be   executed  upto  31st  August,  1988  provided  the appellant files an undertaking in the usual form.] [117C-D]     

JUDGMENT:

    CIVIL APPELLATE  JURISDICTION: Civil  Appeal No. 188 of 1981.      From the  Judgment and  order dated  5.12.1980  of  the Punjab and Haryana High Court in Civil Revision Petition No. 136 of 1980.

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    R.K. Garg for the Appellant.      Rajinder Sachhar and Mukul Mudgal for the Respondents.      The Judgment of the Court was delivered by      SABYASACHI MUKHARJI,  J.  This  is  an  appeal  by  the appellant claiming  to  be  a  tenant  of  the  premises  in question. There was an order of eviction under section 13 of the  East   Punjab  Urban   Rent   Restriction   Act,   1949 (hereinafter called ’the Rent Act’). The respondent-landlady is the  owner of  House  No.  722,  Sector  IIB,  Chandigarh (hereinafter called  ’the suit premises’). The suit premises was let  out  by  a  lease  deed  by  respondent  No.  1  to respondent No.  2 herein,  Haryana Milk Food Corporation for the residence  of its  General Manager  at Chandigarh. It is stated in the said lease deed that the lease was for the use of Shri  R.P. Malhotra  who was  at that  time  the  General Manager of  Haryana Milk  Food Corporation. On behalf of the lessor the  landlady, respondent  herein has  signed and  on behalf of  the lessee, it is signed as follows: "for Haryana Milk Food  Corporation R.P.  Malhotra" who  is the appellant herein. The appellant left the services of Haryana Milk Food Corporation in  the end  of 1974 and thereafter attempted to pay the  rent of  the suit premises by sending it by a bank- draft with  a covering  letter on the letter-head of Haryana Milk Food  Corporation. It  is the  case  of  the  landlady, respondent 113 No. 1  that on  coming to  know  of  the  cessation  of  the appellant’s employment  with Haryana  Milk Food  Corporation the  respondent  No.  1  stopped  accepting  rent  from  the appellant.  On   23rd  of  November,  1977  application  for eviction was  filed by  the respondent  No.  1  against  the appellant  and   respondent  No.   2   Haryana   Milk   Food Corporation, inter  alia, on the following grounds: (a) non- payment of  rent from  1.1.75  onwards;  (b)  subletting  of entire premises  by the Haryana Milk Food Corporation to the appellant and (c) bona fide personal requirement.      It is relevant to mention that the rent application was filed by the respondent making Haryana Milk Food Corporation as the  first defendant  and the  appellant  as  the  second defendant under section 13 of the Rent Act. Respondent No. 2 Haryana Milk  Food Corporation  filed  a  written  statement contending that  Haryana Milk  Food Corporation  was just  a trade name  and not a legal entity, nor it was a partnership firm and  the owner of the said concern was Kailash Chemical and Textile  Mills Ltd.  The same  ground was  taken by  the appellant in  the written  statement filed by the appellant. Respondent No.  2 further  contended that  the appellant had been sending  cheques and  drafts for the payment of rent to the landlady  which she  had never  accepted as  none of the drafts sent  by the  appellant to the landlady had ever been encashed. Respondent  No. 2  further contended  that she had never accepted the appellant as the tenant from whom she had never  accepted  any  rent..  The  landlady  also  filed  an application for  impleading  the  company  as  a  party  but unfortunately  for  unexplained  reason  the  same  was  not proceeded with and withdrawn.      The Trial Court raising issues, inter alia, held so far as relevant  to the  present purpose  that Haryana Milk Food Corporation obtained  the house  for the  appellant and  the said concern was making payment of rent to respondent No. 1. The appellant and respondent No. 2 were liable to be ejected on the  ground of  arrears of rent. It was further held that the suit  premises was  required bona fide by respondent No. 1. In  the premises  on 5th  of May,  1979 the  Trial  Court ordered the  ejectment of the appellant and respondent No. 2

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from the  suit premises. The judgment of the Appellate Court was passed  on 5th  of November, 1979 affirming the findings of the  Trial Court  holding that  the  appellant  took  the premises on  behalf of Haryana Milk Food Corporation. It was further held  that Haryana  Milk Food  Corporation  was  the tenant under  respondent No. 1. It was further held that the appellant and  respondent No.  2  were  held  liable  to  be ejected on  account of nonpayment of rent and in view of the aforesaid findings eviction was 114      ordered from  the suit  premises. There  was a  further revision to  the High court and the High Court dismissed the appellant’s revision petition affirming the reasoning of the Courts below.      The main  point of  challenge in  this Court  was  that Haryana Milk  Food Corporation  was not a legal entity and a suit against  such a  body  was  not  maintainable.  It  was further contended  that there  could not have been any lease with a  non-legal entity.  The main ground of attack in this appeal was  that the real tenancy was with the appellant and not respondent No. 1. It may be mentioned that an appeal was filed before  the Appellate  Authority by  Haryana Milk Food Corporation  through   its  General   Manager,  and  Kailash Chemical and  Textile Mills  Ltd., through  its Director. It was contended  in the  grounds  of  said  appeal,  that  the relationship of  the landlord  and tenant between respondent No. 1  and the  appellant did  not  stand  proved  from  the material on  record. It  was further contended that the note signed by  the appellant  that the order dated 5th May, 1979 had virtually  held Kailash Chemical and Textile Mills Ltd., as liable.  It had  treated Haryana Milk Food Corporation as synonymous with Kailash Chemical and Textile Mills Ltd., and it was,  therefore, aggrieved by the said order. That appeal had been  filed by Haryana Milk Food Corporation through its General Manager and Kailash Chemical and Textile Mills Ltd., through  its   Director.  Therefore,  Kailash  Chemical  and Textile Mills Ltd., accepted that this was the company which owned Haryana  Milk Food  Corporation and  it  was  a  legal entity.      In support  of this  contention that a non-legal entity like the  Haryana Milk Food Corporation could not enter into a reference  with the  landlady, reliance  was placed on the statement of  Halsbury’s Laws  of England,  Fourth  Edition, volume 7  at page 457, paragraphs 765, 766 and 767, where it was stated  that as  regards litigation  by an  incorporated company, as  a rule  the directors were the persons who have the authority  to act  for the  company. Relying on the said statement of law the Calcutta High Court in the case of Modi Vanaspati Manufacturing  Company and another v. Katihar lute Mills (Pvt.)  Limited, A.I.R.  1969 Calcutta 496 at page 511 in paragraph  42, A.N.  Ray, as the learned Chief Justice of India then  was, observed  that the  provisions contained in order 30,  Rule 10 of the Code were that any person carrying on business  in the  name and  style other than his own name may be  sued in such name or style as if it were a firm name and so  far as the nature of the case would permit all rules under order  30 of  the Code  of Civil  Procedure  would  be applicable. Agreeing  with the  said observations, the other learned Judge, S.K. Mukherjee, J. at para- 115      graph 63  referred to  the Halsbury’s  Laws of England, Third Edition,Volume 6 at page 444, where it was said that a company can  only sue  or be sued in its corporate name. Mr. Garg, learned  counsel for the appellant strongly relying on these observations  submitted that  the suit against Haryana

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Milk Food  Corporation was not maintainable. A contrary view was taken  by the  Full Bench of the Allahabad High Court in Rajendra Prasad oil Mills, Kanpur and another v. Smt. Chunni Devi and  others, A.I.R. 1969 Allahabad page 1, where it was held that  a limited company falls within the meaning of the expression ’person’ as used in Rule 10, order 30 of the Code of Civil Procedure. This would be so even though the limited company might  have been  carrying on  business in a name or style other  than its own without any attempt to conceal its own corporate  name and  this fact  was known  to the  party suing. There, the Court observed that there could not be any controversy that  Rajendra Prasad  oil Mills,  Kanpur was an undertaking owned by N.K. Industries limited. Satish Chandra J. as  the learned  Chief Justice then was, observed that in certain circumstances a limited company carrying on business in an  assumed name by concealment of its own corporate name is a  person within  meaning of order 30 Rule 10 of the Code of Civil  Procedure. Same  is the view of the Rajasthan High Court in  the case  of M/s.  M.K.M. Moosa Bhai Amin, Kota v. Rajasthan Textile Mills, Bhawanimandi, A.I.R. 1974 Rajasthan 194 where  it was  held that where a limited company carried on a business in an assumed name and a suit came to be filed against the  defendant in  that name in respect of price due on sale  of goods  in view  of section  3(42) of the General Clauses Act,  1897 the  expression ’person’  as used  in the Code of  Civil Procedure  order 30 Rule 10 in the suit filed against the  defendant in  the name  assumed by  the limited company was  tenable under  order 30  Rule 10 of the Code of Civil Procedure. The Kerala High Court, however, in the case of Educational  Supplies Depot,  Trivandrum v.  Vithoba High School and others, [1970] Kerala Law Journal Reports 43 held that a decree could not be passed against a school as it was not a  juristic entity  much less a person to hold property. It may  be mentioned  that subsequently the Kailash Chemical and Textile  Mills Ltd.  has changed its name to the Haryana Milk Food  Corporation and  they have  merged formerly,  but that is  subsequent to  the lease and the institution of the suit. It  is manifest  from the  position that  parties knew that Kailash  Chemical and  Textile Mills Ltd. was the owner of the  Haryana Milk  Food Corporation. Kailash Chemical and Textile Mills  Ltd., accepted  that position  as it would be apparent  from   the  grounds  filed  before  the  Appellate Authority. Mr.  Garg, learned  counsel  for  the  appellant, however, tried  to emphasise  that in view of the definition of tenant 116 under section  2(i) of  the Rent  Act the  right of eviction under section 13 in the suit as framed was not maintainable.      It has  been held  by all  the Courts  that the parties knew who were the tenants, it is apparent that the appellant was not  the tenant. It was held by the Rent Controller that one of  the grounds  for eviction  was bona fide need of the landlord. The Appellate Authority and the High Court did not go into  this question.  The parties  were  aware  that  the Kailash Chemical  and Textile Mills Ltd., was the real owner of the  Haryana Milk  Food Corporation. Neither Haryana Milk Food Corporation  nor Kailash Chemical and Textile Mills was prejudiced by  holding that the lessee was not the appellant and they  have not been pre-judiced by not being made formal parties. In  the  aforesaid  view  of  the  matter,  we  are inclined not to interfere with the order of eviction.      It has to be borne in mind that this is an appeal under Article  136  of  the  Constitution.  This  Court  in  Heavy Engineering Corporation Ltd. Ranchi v. K. Singh and Company, Ranchi, A.I.R. 1977 Supreme Court 2031 expressed the opinion

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that although  the powers  of this  Court  were  wide  under Article 136  it could  not be  urged that  because leave had been granted  the Court  must always in every case deal with the merits  even though  it was  satisfied that  the ends of justice did not justify its interference in a given case. It is not  as if,  in an  appeal with  leave under Article 136, this Court  was bound  to decide the question if on facts at the later  hearing the  Court felt  that the ends of justice did not  make it necessary to decide the point. Similarly in Baigana and  others v. Deputy Collector of Consolidation and others, [  1978] 3  S.C.R. 509 this Court expressed the view that this  Court  was  more  than  a  Court  of  appeal.  It exercises power  only when  there is supreme need. It is not the fifth court of appeal but the final court of the nation. Therefore, even  if  legal  flaws  might  be  electronically detected, we  cannot interfere  save manifest  injustice  or substantial question  of public  importance. In this case it is apparent  from the  facts placed  before us  and the High Court and  the courts  below that there is a genuine need of the landlady  for the  premises in  question.  It  has  been established clearly  that the tenancy agreement was not with the appellant  and the  lease was signed by the appellant on behalf of  other entity though not strictly legal but it was entered by  a legal  entitly, namely  Kailash  Chemical  and Textile Mills Ltd. It has been held that no deposit had been made in  accodance with  law by three Courts. Merely because in the  form of the lease Kailash Chemical and Textile Mills Ltd., was  not mentioned and as such was not made a party to the suit  and the  lease was purported to be entered with an entity which is not a 117 juristic person  and a  suit was  filed  against  such  non- juristic person,  this Court  should not  interfere with the conclusions arrived  at by  the learned  Appellate Authority and the  High Court.  It has  to be  borne in mind that this Court in  exercising its  power under  Article  136  of  the Constitution acts  not only  as a court of law but also as a court of  equity and  must subserve  ultimately the cause of justice. In  this case, there is evidence that there is some bona fide  need of the landlady for her family. After a long lapse of  time, in  the facts  and the circumstances of this case we decline to interfere with the findings arrived at by the High Court and the Courts below.      We, therefore,  dismiss this appeal, but we direct that in case  the landlady,  respondent No. 1 herein lets out the premises within  a period  of five  years the  first  option should be  given to  the appellant.  We further  direct  and record the  undertaking of  the landlady  that she would not sell the premises within a period of five years, and in case she does  the first  option should be given to the appellant to purchase  the property. We further direct that the decree for eviction  will not be executed upto 31st of August, 1988 provided the appellant files an undertaking to this Court in the usual  form within  four weeks  from this  date. We also direct that the occupation charges or mesne profits from 1st of August,  1987 should  be paid  to the respondent No. 1 at the rate  of Rs.800  per month and the first of such payment should  be  made  on  the  30th  September,  1987  and  each subsequent payment should be made on 15th of each subsequent month. In  default of  filing the  undertaking or not making the payment  as hereinbefore indicated the order of eviction will become executable forthwith.      The  appeal,  therefore,  fails  and  it  is  dismissed subject to  the conditions  indicated hereinbefore.  In  the facts and  circumstances  of  this  case,  the  parties  are

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directed to pay and bear their own costs. P.S.S.                                     Appeal dismissed. 118