15 April 1964
Supreme Court


Case number: Appeal (civil) 172 of 1964






DATE OF JUDGMENT: 15/04/1964


CITATION:  1964 AIR 1889            1964 SCR  (7) 760  CITATOR INFO :  APL        1988 SC1470  (12)

ACT: Decree-Collusion-Ingredients  of collusion-A party who  need not  be  impleaded  was not  impleaded-Does  not  constitute collusion-Two limited companies-All directors common Suit by one-Other does not defend-Does not make the suit collusive.

HEADNOTE: Respondent  No. 2 is the lessee of Respondent No. 1 and  the appellant  is the sub-lessee.  Both the respondents  Nos.  1 and  2 had the same directors.  Respondent No. 1  brought  a suit  against  respondent No. 2 for eviction  in  which  the appellant  was  not  impleaded as  a  party.   By  agreement between  the present respondent Nos. 1 and 2 that  suit  was not  defended and ex-parte decree was obtained in favour  of respondent No. 1. By virtue of this decree the appellant  as a  sub-lessee of respondent No. 2 became a  tresspasser  and had no right to remain on the land.  To avoid this situation the  appellant filed a suit to set aside the decree  on  the ground  that it was obtained by collusion.  The Trial  Judge accepted  his  contention  and gave  a  direction  that  the appellant   still  remained  a  tenant  and  directing   the defendants  in that suit from taking any steps in  execution of the ex-parte decree.  On appeal the trial Court’s  decree was  set aside on the ground that the present appellant  had failed  to  prove  that the  ex-parte  decree  was  obtained collusively. Before  this  Court the same contentions as  in  the  courts below were raised. Held:  (i) The mere fact that the defendant agreed with  the plaintiff  that if a suit is brought he would not defend  it would  not necessarily prove collusion.  It is only if  this agreement  is done improperly in the sense that a  dishonest purpose was intended to be achieved that they can be said to have colluded. Scott  v. Scott. 1913 Law Reports (Probate Division) 52  and Nagubai  Ammal & Ors. v. B. Shamma Rao, [1956]  S.C.R.  451, referred  to. (ii) The law allows a landlord to institute a suit against a lessee  for  the possession of the land on the basis of  a valid notification without impleading the sub-lessee and the



decree in such suit would bind the sub-lessee and hence  the suit  instituted  by respondent No. 1 in  the  present  case cannot be said to have constituted an improper act. (iii)     The omission of the respondent No. 2 to defend the earlier suit was not also an improper act because even if it had a good defence it was not bound to take it. (iv) Even  if  the appellant was a Thika tenant  within  the meaning  of the Calcutta Thika Tenants Act, 1949,  it  would have protected him against eviction by respondent No. 2  but It  would not have given protection against the eviction  by respondent No. 1 because the Act was designed to protect the Thika  Tenant  from eviction by the landlord  only  and  not against eviction from any other source. 761 Shamsuddin  Ahmad v. Dinanath Mullick, Appeal from  original decree No. 123 of 1957, decided on 13-8-59. (v)  The  respondents  Nos. 1 and 2 are two  distinct  legal entitles  and  therefore simply because both  had  the  same directors it cannot be said that the purpose of the suit was dishonest or sinister. (vi) The  appellate  Bench of the High Court  has  correctly decided  that the present appellant has failed to  establish that the impugned decree was procured collusively.

JUDGMENT: CIVIL APPELLATE JURISDICTION: Civil Appeal No. 172 of  1964. Appeal  from the judgment and decree dated July 6,  1962  of the  Calcutta High Court in Appeal from Original Decree  No. 213 of 1959. S. T. Desai, B. Sen and B.P. Maheshwari, for the appllant. H.   N. Sanyal, Solicitor-General, Ajit Kumar- Sen and  S.N. Mukherjee, for the respondent No. 1. April 15, 1964.  The judgment of the Court was delivered by DAs  GUPTA,  J.-The subject-matter of this litigation  is  a piece  of  land in the heart of the business centre  of  the city of Calcutta. This   was  part of a block of 52  cottahs of land taken on lease on January 21, 1950 from the Official Trustee,   West  Bengal,  by  a  private  limited   company, Raghuvanshi Private Ltd.  The lease was a building lease for a period of 75 years commencing from January 21, 1950.   The lessee was required to complete the construction of a  three or  four storeyed building on the land within 1O years.   In September  1960,  Raghuvanshi Private Limited  in  its  turn leased  10  1/2 cottahs out of the 52 cottahs  to  a  public limited  company,  Land  and  Bricks  Ltd.   This  lease  by Raghuvanshi  Private  Ltd.,  (hereinafter  referred  to   as "Raghuvanshi") in favour of Land & Bricks Ltd., (hereinafter referred  to as "Land & Bricks") created a  monthly  tenancy commencing  from the 1st October 1950.  Land and  Bricks  in its  turn sub-let the entire 10 1/2 cottahs to  the  present appellant,  Rupchand  Gupta  in his business  name  of  Hind Airways.   The  lease  was on the terms as  settled  by  two letters dated August 19, 1950 and September 5, 1950  between Hind Airways and Land and Bricks.  By the terms of the  sub- lease,  the sub-lessee undertook not to sub-let the land  to anybody,  to vacate the land as soon as it was  required  by Land  and  Bricks  for  any purpose  and  not  to  construct anything  on  the  land but only to use the  open  land  for "garage  purpose  for  motor  vehicles".   Inspite  of  this undertaking  however  the  appellant  constructed  a   pacca structure  on  the  land.  Land  and  Bricks  protested  un- successfully and then started proceedings under the Calcutta 762



Municipality  Act for demolition of the  structures.   Those proceedings  were  also unsuccessful.  Land and  Bricks,  it appears,  also  served on the appellant in February  1953  a notice  to   quit. This was not followed up by any  suit  in court.   But  a suit for arrears of rent was  instituted  by Land and Bricks against the appellant in September 1955  and another  in  1957.  Consent decrees were passed in  both  of these  suits.  It appears ,that in about May or  June  1954, Raghuvanshi  was desirous of getting possession of the  land it  has leased to Land and Bricks.  The difficulty was  that Land and Bricks having sublet to the appellant was not in  a position  to  deliver possession to its  lessor  Raghuvanshi until and unless possession was obtained from the appellant. It  was in these circumstances that  Raghuvanshi  determined its  lease in favour of Land and Bricks by a notice to  quit dated  the 11th April 1955.  Raghuvanshi then  instituted  a suit No. 3283 of 1955 in the High Court of Calcutta  against Land  and Bricks for possession of the land.  The  appellant was not impleaded in the suit and  Land  and Bricks did  not contest  it.   An ex parte decree was made by the  Court  in favour of Raghuvanshi on the 11th May 1956. The necessary legal consequences of that decree is that  the plaintiff as the sub-lessee of Land and Bricks has no  right to  stay on the land and has become a trespasser.  It is  to avoid the consequence of that decree, that the present  suit was brought by Rupchand Gupta.  His case is that the  decree had  been obtained "by fraud and collusion between  the  de- fendants  in order to injure the plaintiff and to evict  the plaintiff  from the said premises without any  decree  being passed  against  the plaintiffs" Both Land  and  Bricks  and Raghuvanshi have been impleaded in the suit-Land and  Bricks as  the  first  defendant, and  Raghuvanshi  as  the  second defendant.  Both of them denied the allegations of fraud and collusion. The case that the decree was obtained by fraud was given  up at  the  hearing  and  only the allegation  that  it  was  a collusive suit was pressed. The  Trial  Judge  held that  there  was  collusion  between defendant No. 1 and defendant No. 2 in the matter of obtain- ing an ex-parte decree in suit No. 3283 of 1955 and that the plaintiff  was  not  bound  by  that  decree.   He  gave   a declaration  that  the plaintiff was still  a  tenant  under defendant  No. 1 and was not liable to be ejected under  the ex-parte decree.  He also ordered the issue of an injunction restraining   the  defendants  from  taking  any  steps   in execution of the ex-parte decree. On  appeal by the defendant No. 2, Raghuvanshi,  the  decree made by the Trial Judge was set aside.  The learned  Judges, who heard the appeal, came to the conclusion that 763 the  plaintiff had failed to prove that the decree  in  suit No.  3283 of 1955 had been procured collusively.   So,  they held  that  the plaintiff was bound by the  decree  in  that suit. It is against this decree of the appellate Bench of the High Court  that  the  present  appeal  has  been  filed  by  the plaintiff Rupchand Gupta. The only question for decision in the appeal is whether  the plaintiff  had established his allegation that the  ex-parte decree  had been obtained as a result of  collusion  between Raghuvanshi and Land and Bricks.  The main circumstances  on which  the  plaintiff relied to prove  collusion  and  which according  to  the learned Judge established his  case  were these:  Raghuvanshi  and  Land and  Bricks  though  distinct entities   had   the  same  persons   as   directors.    The



construction of building in terms of indenture of lease with Official  Trustee  was  necessarily  in  the  interests   of shareholders of Raghuvanshi and so this was in the  interest of  Land and Bricks also as the main shareholders  were  the same.   The Calcutta Thika Tenancy Act, 1949 was  a  serious impediment  in  the way of the plaintiff’s eviction  in  any suit  by Land and Bricks.  So, Land and Bricks attempted  to get  possession  of  the  land  by  obtaining  an  order  of demolition  of structures by proceedings under the  Calcutta Municipality Act.  When these failed and it was  apprehended that  a  suit  for ejectment by Land and  Bricks  might  not succeed  against the plaintiff that this device of having  a suit by Raghuvanshi against Land and Bricks was decided upon by  agreement between Raghuvanshi and Land and  Bricks.   By arrangement between the two, Land and Bricks did not contest the  suit and to avoid any risk of any defence being  raised by the plaintiff he was not impleaded in the suit at all. All  the circumstances taken together justify, it was  urged by  the appellant, the conclusion that the defendant  No.  2 colluded with defendant No. 1 to procure the exports  decree for  the  purpose  of  executing  that  decree  against  the plaintiff. One  of the simplest definitions of collusion was  given  by Mr.  Justice Bucknill in Scott v. Scott(1).  "Collusion  may be  defined",  said the learned Judge, "as an  improper  act done  or  an improper refraining from doing an  act,  for  a dishonest   purpose".   Substantially  the  same   idea   is expressed in the definition given by Whatron’s Law  Lexicon, 14th   Edition,  p.  212.  viz.,  "Collusion   in   judicial proceedings is a secret arrangement between two persons that the  one should institute a suit against the other in  order to obtain the decision (1)  [1913] Law Rerports (Probate Division) 52. 764 of  a  judicial tribunal for some sinister  purpose".   This definition of collusion was approved by the Court in Nagubai Ammal & ors., v. B. Shamma Rao and ors.(1). Thus  the  mere  fact that the  defendant  agrees  with  the plaintiff that if a suit is brought he would not defend  it, would  not necessarily prove collusion.  It is only if  this agreement is done improperly in the sense that It  dishonest purpose is intended to be achieved that they can be said  to have colluded. There  is  little doubt that in the present  case  Land  and Bricks  agreed with Raghuvanshi that the suit for  ejectment would  not be contested.  When the suit was instituted  Land and  Bricks  did  not contest and the  ex-parte  decree  was passed.  Raghuvanshi did not implead this appellant in  that suit.  Can any of these acts, viz., Land and Bricks agreeing with  Raghuvanshi  that it would not contest the  suit,  the actual  refraining  by Land and Bricks from  contesting  the suit  or  the  act  of Raghuvanshi  in  not  impleading  the appellant, be an improper act or improper refraining from an act?  We do not see how any of these things can be said  +to be improper. Taking  the last action first, viz., Raghuvanshi’s  omission to  implead  the appellant, it is quite clear that  the  law does  not require that the sub-lessee need be made a  party. It  has been rightly pointed out by the High Court  that  in all  cases  possession of the laid on the basis of  a  valid notice to quit served on the lessee and does not implead the sub-lessee as a party to the   suit,  the  object,  of   the landlord  is  to  eject  the sub-lessee  from  the  land  in execution  of  the  decree  and  such  an  object  is  quite legitimate.   The decree in such a suit would bind the  sub-



lessee.  This may act harshly on the sub-lessee; but this is a position well understood by him when he took the subleases The law allows this and so the omission cannot be said to be an improper act. Nor is it possible, in our opinion, to say that the omission of  Land  and Bricks to contest the ejectment  suit  was  an improper  act.   It  has not been suggested  that  Land  and Bricks  had a good defence against the claim  for  ejectment but  did not take it for the mere purpose of helping  Raghu- vanshi to get possession of the land.  Even if it had a good defence, we do not think it was bound to take it.  It may be that  if Land and Bricks had a defence and the  defence  was such which if brought to the notice of the court would  have stood  in  the way of any decree being passed in  favour  of Raghuvanshi  there would be reason to say that the  omission to  implead the sub-lessee was actuated by a dishonest  pur- pose and consequently was improper.  It is not necessary for (1) [1956] S.C.R. 451 765 us however to consider the matter further as neither in  the courts below nor before us was any suggestion made on behalf of the appellant sub-lessee that Land and Bricks had even  a plausible defence against Raghuvanshi’s claim for ejectment. We  have  already  mentioned  the  fact  that  one  of   the circumstances  which the plaintiff claimed showed  collusion was that the Calcutta Thika Tenancy Act stood in the way  of the plaintiff’s eviction of Land and Bricks.  It is unneces- sary  for  us to decide whether or not the appellant  was  a Thika  tenant  within  the meaning  of  the  Calcutta  Thika Tenancy  Act, 1949.  If he was, that Act  would  undoubtedly have  protected  him against eviction by  Land  and  Bricks. That  Act could however have no operation in a suit  brought by Raghuvanshi against Land and Bricks.  It has been held by the  High Court of Calcutta that the Thika Tenancy  Act  was designed  to protect the Thika tenant from eviction  by  his landlord  only  and not against eviction  from  any  source. Shamsuddin  Ahmed  v. Dinanath Mullick & ors.,  Appeal  from Original  Decree  No.  123 of 1957, decided  on  August  13, 1959).  The correctness of this view has not been challenged before  us.   Nor is it the appellant’s case that  Land  and Bricks  was a Thika tenant of Raghuvanshi.  Obviously,  this could  not  be  suggested, because  Land  and  Bricks  never erected any structure at all. (See the definition of a Thika tenant  in  s. 2, cl. 5 of the Calcutta Thika  Tenancy  Act, 1949).  On the materials on the record we are satisfied that there was no defence that Land and Bricks could have  raised for resisting Raghuvanshi’s claim for ejectment. The  crux of the matter is: Was this attempt by  Raghuvanshi to  get  possession  of the land  a  dishonest  or  sinister purpose?  We are asked by Mr. Desai to spell dishonesty  out ’of the fact that the directors of Raghuvanshi and Land  and Bricks were common and so the persons who were interested in Land. and Bricks were also interested in seeing that  Raghu- vanshi  had  not to suffer for forfeiture of his  lease  for failure to comply with the covenant to construct a  building by  1960.   All this may be taken to be true.  But,  we  are unable  to see how this would make Raghuvanshi’s attempt  to get possession of the land dishonest or sinister.  It is not as if Raghuvanshi did not actually want to get possession of the  land  but  wanted  to  help  Land  and  Bricks  to  get possession.  It has also to be remembered that the  identity of  the directors and the identity of the main  shareholders do  not  in any way affect the position that in law  and  in fact  Raghuvanshi  and  Land and Bricks  were  distinct  and separate  entities.  It is not even remotely suggested  that



Raghuvanshi and Land and Bricks were really one and the same person with two names. 766 If  that had been so, there might have been good reason  for thinking that it was in an attempt to surmount the  obstacle represented  by the Calcutta Thika Tenancy Act,  1949,  that this mode of Raghuvanshi suing Land and Bricks for ejectment was resorted to.  Indeed, if Raghuvanshi and Land and Bricks were  one and the same person possession of Land and  Bricks would be possession of Raghuvanshi and a suit by Raghuvanshi to eject Land and Bricks would be meaningless.  But, that is not the appellant’s case.  It appears from the High  Court’s judgment  that the plaintiff’s counsel made it plain  before the court that it was not his client’s case that the  plain- tiff’s  real  lessor was Raghuvanshi Private Ltd.,  and  not Land  and Bricks Ltd.  In the present appeal before us  also Mr.  Desai  argued  on the basis that Land  and  Bricks  and Raghuvanshi  were  distinct entities and that the  lease  of Land  and  Bricks under Raghuvanshi was  a  real  subsisting lease at the time of Suit No. 3283 of 1955. In  our judgment, the appellate Bench of the High Court  has rightly come to the conclusion that the plaintiff has failed to  establish that the decree in Suit No. 3283 of  1955  was procured  collusively.  The suit was therefore rightly  dis- missed. The appeal is accordingly dismissed with costs. Appeal dismissed. 767