Rajasthan High Court - Jodhpur
Rational Handloom Corp. Pvt. Ltd vs M/S Kewal Chand Bhanwar Lal & Anr on 21 February, 2018
Author: Arun Bhansali
Bench: Arun Bhansali
HIGH COURT OF JUDICATURE FOR RAJASTHAN AT
JODHPUR
S.B. Civil Revision No. 28 / 2017
Rational Handloom Corporation Pvt Ltd a Company Registered
Under the Companys Act Having Its Registration Number 11-
106981 Through Its Authorized Signatory Mr. Jitendra Singh Bhati
S/o Shri Mohhabat Singh Ji Bhati, By Caste Rajput, R/o 3 Maharaj
Harisingh Ji Nagar Jodhpur.
----Petitioner
Versus
1. M/s Kewal Chand Bhanwar Lal Surana, Partnership Firm 172
Ummaid Bhawan Road, in Front of Circuit House, Jodhpur Through
Its Partners-
(i) Prakashchand Surana S/o. Sh. Bhanwar Lal Surana
(ii) Abhishek Surana S/o Prakashchand Surana
(iii) Gaurav Surana S/o Prakashchand Surana,
All R/o Kewal Kuteer Plot No. 172 Ummaid Bhawan Road, in
Front of Circuit House, Jodhpur At Present Residing At C/o
Prakashchand Surana, Shrimadh Ashwarya, Office Number B-
1013, Lokhandwala Complex, in Front of Hyland Park, Andheri
West Mumbai-400053.
Respondents
2. The Rent Tribunal Jodhpur.
Proforma Respondent
_____________________________________________________
For Petitioner(s) : Mr. H.R.Soni.
For Respondent(s) : Mr. O.P.Mehta.
_____________________________________________________
HON'BLE MR. JUSTICE ARUN BHANSALI
Order REPORTABLE 21/02/2018 This revision petition is directed against the order dated 28/11/2016 passed by the Rent Tribunal, Jodhpur Metropolitan, whereby, the application filed by the petitioner under Order VII (2 of 11) [CR-28/2017] Rule 11 CPC read with Section 151 CPC has been rejected.
The respondent landlord filed a petition for eviction of the petitioner from the suit premises inter alia with the averments that the paid-up share capital of the petitioner company is Rs.19,36,79,200/- and, therefore, Chapter II and III of the Rent Control Act, 2001 ('the Act') were not applicable as under the provisions of Section 3 (x) any premises let to a private limited company having a share capital of Rs.1 crore or more, the provisions of Chapter II and III of the Act do not apply. It was indicated that though the lease period had already expired, on 25/1/2016 a notice terminating the tenancy was issued and when despite termination of tenancy the possession was not handed over, the petition is being filed seeking possession and arrears of rent and mesne profit.
On notice being issued, the petitioner put in appearance and filed an application under Order VII Rule 11 CPC inter alia with the averments that the petition has been filed indicating exemption from provisions of Chapter II and III of the Act under the provisions of Transfer of Property Act, which is not maintainable inasmuch as in terms or Section 3 (x) of the Act, the paid-up share capital of the private limited company must be Rs. 1 crore or more on the date when the premises were let out, however, there is no averment in the application that the paid-up share capital of the petitioner company was Rs.1 crore or more at the time of letting out the premises. It was also submitted that the paid-up share capital of the petitioner company was Rs.23,53,100/- during the period 16/1/2006 to 31/3/2006 and, (3 of 11) [CR-28/2017] therefore, the petition for eviction was liable to be rejected under the provisions of Order VII Rule 11 CPC.
The application was contested by the respondent landlord. The Rent Tribunal after hearing the parties, came to the conclusion that the provisions of the Act provide that if the paid- up share capital of the company to which the premises has been let out is Rs.1 crore or more, the provisions of Chapter II and III do not apply and it is nowhere indicated therein that the paid-up share capital must be Rs.1 crore or more when the premises was let out. Whereafter, placing reliance on the judgment in Nopany Investments (P) Ltd vs. Santokh Singh (HUF) : AIR 2008 SC 673, the application was rejected.
It is vehemently submitted by learned counsel for the petitioner with reference to the provisions of Section 3(x) of the Act that the plain reading of the provision reveals that if the premises is let out to a company having paid-up share capital of Rs.1 crore or more, the provisions of Chapter II and III would not apply, which necessarily means that the said condition has to be seen in relation to the date when the premises are let out and not on the date when the application is filed seeking eviction or any other date and as admittedly in the present case when the premises were let out way back on 16/1/2006 and as indicated in the application under Order VII Rule 11 CPC, on the said date the paid-up share capital of the petitioner company was Rs.23,53,100/- only, the eviction petition without making out any ground under Section 9 of the Act was not maintainable and the same was liable to be rejected.
(4 of 11) [CR-28/2017] Reliance was placed on Rajasthan Mahila Parishad vs. Appellate Rent Tribunal & Ors. : 2008 (1) RLW 762 and Rajasthan Rajya Sahakari Upbhokta Sangh (Confed) Ltd. vs. Rent Control Tribunal, Jaipur & Ors. : 2004 (3) DNJ 1128.
Learned counsel for the respondent landlord with equal vehemence opposed the submissions made on behalf of the petitioner. It was submitted that the application filed and the submissions made are mere distortion of the provisions of the Act. It is submitted that plain reading of the provisions reveal that if a premises is let out to a private limited company and at the relevant time the paid-up share capital of the said company is Rs.1 crore or more, the provisions of Chapter II and III would not apply. The said provision has no relation to the point of time when the premises are let out and as admittedly, on the date when the petition was filed by the landlord the paid-up share capital of the petitioner company was Rs.19,36,79,200, the provisions of Chapter II and III would have no application and, therefore, the respondent was justified in filing the petition based on the provisions of Transfer of Property Act seeking eviction of the petitioner and in view thereof, the Rent Tribunal was justified in rejecting the application filed by the petitioner and revision petition also deserves to be dismissed.
Reliance was placed on the judgment in M/s. Nopany Investments (supra).
I have considered the submissions made by learned counsel for the parties and have perused the material available on record.
The provision of Section 3 of the insofar as relevant to the (5 of 11) [CR-28/2017] present case reads as under:
"3. Chapter II and III not to apply to certain premises and tenancies.- Nothing contained in Chapter II and III of this Act shall apply,-
(i) ..........
(ii) ..........
(iii) ..........
(iv) ..........
(v) ..........
(vi) ..........
(vii) ..........
(viii) ..........
(ix) ..........
(x) to any premises let out to banks, or any Public Sector Undertakings or any Corporation established by or under any Central or State Act, or multinational companies, and private limited companies or public limited companies having a paid up share capital of rupees one crore or more;"
A bare reading of the above provision reveals that application of provisions of Chapter II and III of the Act have been excluded to the premises let to banks, private sector undertakings, corporations, multinational companies and private limited companies or public limited companies having a paid-up share capital of Rs.1 crore or more.
Chapter II of the Act deals with 'revision of rent', wherein, Section 6 provides for revision of rent in respect of existing tenancies and Section 7 provides for revision of rent in respect of new tenancies.
Chapter III of the Act deals with 'tenancy', wherein, Section 8 provides for limited period tenancy, Section 9 provides for eviction of tenants and Section 10 provides for right of the landlord to recover immediate possession in certain cases.
The very fact that provisions of Section 3 provides that (6 of 11) [CR-28/2017] nothing contained in Chapter II and III of the Act shall apply to various entities as indicated in sub-sections (i) to (x), a reference to said section and the applicability of the Chapters to a premises would only be required to be examined when any action under or similar to Chapter II and III is required to be initiated inasmuch as Chapter II deals with revision of rent and Chapter III essentially deals with termination of tenancy and eviction of tenants. Once the only relevant point for the purpose of examining the applicability of provisions of Section 3/Chapter II & III is when any action contemplated under or similar to provisions of Chapter II and III is required to be initiated/initiated, the applicability of provisions of the Act would only be required to be examined with reference to either the notice terminating the tenancy, if a notice is required under the applicable statute or the date of filing of the application before the Rent Tribunal. The date when the premises are let out has no relevance at all for the said purpose.
A bare look at the various sub-sections of Section 3 would reveal that, as observed in the case of Rajasthan Mahila Parishad (supra), while certain provisions deal with subject matter, some with period of demise, some with quantum of consideration, others with property in question coupled with parties to the transaction and, therefore, as already noticed hereinbefore the said aspect has to be examined at the point of time when the action under or similar to Chapter II or III is required to be initiated/initiated.
Hon'ble Supreme Court in the case of Nopany Investments (supra) while dealing with a case of exemption from the Delhi (7 of 11) [CR-28/2017] Rent Control Act, 1958, based on the quantum of rent of the premises, as the revised rent of the premises crossed the threshold limit, it was held that the protection of the tenant under the Act automatically ceased to exist as the increase of rent agreed upon between the appellant landlord and the tenant brought the suit premises out of the purview of the Act. In the said case, though admittedly, at the time of letting out the premises the protection was available, on account of revision of rent the protection ceased to exist as the said aspect was only required to be examined at the time of filing of the application.
However, the judgment of Hon'ble Supreme Court in Carona Ltd. vs. Parvathy Swaminathan & sons : (2007) 8 SCC 559 is a case which is most relevant to the facts of the present case. The Maharashtra Rent Control Act, 1999 exempted from operation of Rent Act any premises let or sub-let to a public limited company having a paid-up share capital of Rs. 1 crore or more. The appellant before the Hon'ble Supreme Court was a public limited company and a tenant, its paid-up share capital was more than Rs.1 crore when the landlord instituted ejectment proceedings, with a view to seek protection under the Rent Act, the appellant sought to reduce its paid-up share capital below Rs.1 crore and on the basis of said reduction sought coverage under the Rent Act.
The submissions made by the parties and the law laid down by Hon'ble Supreme Court read as under:-
"26. The learned counsel for the appellant Company submitted that the fact as to "paid up share capital" of Rs. one crore or more of a Company is a 'jurisdictional fact' and in absence of such fact, the Court has no jurisdiction (8 of 11) [CR-28/2017] to proceed on the basis that the Rent Act is not applicable. The learned counsel is right. The fact as to "paid up share capital" of a Company can be said to be a "preliminary" or "jurisdictional fact" and said fact would confer jurisdiction on the Court to consider the question whether the provisions of the Rent Act were applicable. The question, however, is whether in the present case, the learned counsel for the appellant tenant is right in submitting that the "jurisdictional fact" did not exist and the Rent Act was, therefore, applicable.
27. Stated simply, the fact or facts upon which the jurisdiction of a Court, a Tribunal or an Authority depends can be said to be a "jurisdictional fact". If the jurisdictional fact exists, a Court, Tribunal or Authority has jurisdiction to decide other issues. If such fact does not exist, a Court, Tribunal or Authority cannot act. It is also well settled that a Court or a Tribunal cannot wrongly assume existence of jurisdictional fact and proceed to decide a matter. The underlying principle is that by erroneously assuming existence of a jurisdictional fact, a subordinate Court or an inferior Tribunal cannot confer upon itself jurisdiction which it otherwise does not posses.
37. As already seen earlier, in the case on hand, the appellant Company was having "paid up share capital" of more than Rs. one crore, not only when the notice was issued and tenancy was determined but also when the suit for possession was instituted. What was stated was that a resolution was passed by the Board of Directors to reduce "paid up share capital" from Rs.8.20 crores to Rs.41 lakhs (less than Rs.1 crore). But it was not approved by BIFR. The Small Cause Court considered this aspect and stated:
"The reasons are that the above suit is filed on 4.4.2001. Whereas undisputed document Ex.B. annual report of the defendant Company shows that on 30.9.1999 the paid up share capital of the defendant Company was more than Rs.1 crore. If the defendants have moved BIFR by reference of 1997, by that time the defendant ought to have received favourable orders reducing the paid-up capital of the defendants to less than Rs. one crore. But no such evidence is produced by the defendants to rebut the annual report, Ex.B of the Defendants showing paid up capital of more than Rs.8 crores as on 30.9.1999. There is nothing before the court to show that the paid up share capital of the defendants is brought down to Rs.41 lacs as per para 1.3(1) of the revised rehabilitation proposal in BIFR case No.74/1999 (Ex.4). The advocate for defendants has not pointed out any order to show that the said proposal is accepted. In the absence of such order of the appropriate court or authority accepting the proposal Ex.1 to reduce share capital to less than 1 crore rupees, I am unable to accept the case of the defendants that the said share capital of the defendant Company is reduced to less than Rs.1 crore".
(9 of 11) [CR-28/2017]
38. The High Court also dealt with this aspect and concluded:
"It is not in dispute between the parties that the tenancy of the petitioners was terminated with effect from 31.3.2001 and on that day the paid up share capital of the petitioner Company was more than Rupees one crore; no fault can be found with trial Court taking cognizance of the eviction proceedings initiated against the petitioners, as the trial Court definitely had jurisdiction to entertain such proceedings, considering the provisions of law comprised under Section 3(1)(b) of the said Act, as rightly submitted by the learned advocate for the respondents. The clause (b) of Section 3(1) of the said Act clearly provides that "the said Act shall not apply to any premises let or sub-let to banks, or any Public Sector Undertaking or any Corporation established by or under any Central or State Act, or foreign missions, international agencies, multinational companies, and private limited companies and public limited companies having a paid up share capital of rupees one crore or more". Undisputedly, the petitionerCompany is a Public Limited Company having share capital of more than Rupees one crore".
39. All the Courts were, therefore, in our considered opinion, right in holding that the provisions of the Rent Act were not applicable to the present case.
42. In our judgment, the law is fairly settled. The basic rule is that the rights of the parties should be determined on the basis of the date of institution of the suit. Thus, if the plaintiff has no cause of action on the date of the filing of the suit, ordinarily, he will not be allowed to take advantage of the cause of action arising subsequent to the filing of the suit. Conversely, no relief will normally be denied to the plaintiff by reason of any subsequent event if at the date of the institution of the suit, he has a substantive right to claim such relief.
43. In the instant case, in our opinion, the courts below were right in holding that the date on which tenancy was determined, the right in favour of the landlord got accrued. Such right could not have been set at naught by the tenant by unilateral act by passing a resolution to reduce "paid up share capital" of the Company.
50. In our opinion, the ratio laid down in the above cases applies to the present case as well. Admittedly, on the date the tenancy was terminated, the tenant (Public Limited Company) was having a paid up share capital of rupees more than one crore. Under clause (b) of Section 3(1) of the Act, therefore, the provisions of the Act were not applicable to the suit premises. It is true that a resolution was passed by the Company to reduce the paid up share capital to less than rupees one crore, but the said resolution was never approved by BIFR. But even otherwise, once it is proved that the tenancy was legally (10 of 11) [CR-28/2017] terminated and the Act would not apply to such premises, a unilateral act of tenant would not take away the accrued right in favour of the landlord. Unless compelled, a Court of Law would not interpret a provision which would frustrate the legislative intent and primary object underlying such provision. We, therefore, see no infirmity in the conclusions arrived at by the courts below." The Hon'ble Supreme Court noticed with regard to almost identical provisions of the Act that not only when the notice was issued and tenancy was terminated but also when the suit for possession was instituted the paid-up share capital of the company was more than Rs. 1 crore and that the basic rule is that the rights of the parties should be determined on the basis of date of institution of the suit and that date on which the tenancy was determined, right in favour of the landlord got accrued and such right could not have been set at naught by the tenant by reducing the paid-up share capital and as such the provisions of the Act were not applicable to the suit premises. The exhaustive discussion and principles laid down squarely applies to the case in hand.
In the present case, admittedly, when the tenancy was determined and the petition was instituted, the paid-up share capital of the petitioner was more than Rs.1 crore and as such the provisions of Chapter II and III have no application and the plea sought to be raised by the petitioner that the provision has to be examined on the date when the premises is let out has no substance.
So far as the judgment in the case of Rajasthan Mahila Parishad (supra) is concerned, the petitioner therein sought exclusion of provisions of Chapter II and III based on the fact that (11 of 11) [CR-28/2017] it was a registered society, a registered public trust and a Government aided institution and it was found by the Court that provisions of the Act had no application as the exclusion was to the premises 'belonging to and let out' by such institutions and not 'let out' to such institutions. The Court though elaborately dealt with the provisions of Section 3, the judgment did not deal with the point of time about the applicability of provisions of Section 3.
Similarly, in the case of Rajasthan Rajya Sahakari Upbhokta Sangh (supra) as the petitioner therein was a cooperative society, it was held that the provisions of the Act were not applicable to it in terms of Section 3(x) of the Act. The said judgment also did not deal with the issue in hand and as such the judgments cited has no application to the facts of the present case.
In view of the above discussion, the order passed by the Rent Tribunal cannot be faulted, there is no substance in the revision petition filed by the petitioner and the same is, therefore dismissed.
No order as to costs.
(ARUN BHANSALI)J. Baweja-225