Delhi District Court
Hazari Courts vs Smt. Urmila Gupta on 27 July, 2013
//1//
IN THE COURT OF SATISH KUMAR ARORA, ARC-1 (CENTRAL) TIS
HAZARI COURTS, DELHI.
E-500/09/05
27.07.2013
Delhi Stock Exchange Ltd.,
DSE House,
3/1, Asaf Ali Road, New Delhi-110002. ...Petitioner
VERSUS
1. Smt. Urmila Gupta
w/o Sh. Jagdish Prashad Gupta
2. Smt. Brij Bala Gupta
w/o Sh. Adarsh Kumar Gupta
Both at 2nd floor, Delhi Stock Exchange Building,
3 & 4/4B, Asaf Ali Road, New Delhi-110002.
3. M/s Brawn Pharmaceuticals Ltd.
Regd. Office :
W-11, Okhla Industrial Area,
Phase-II, New Delhi-110020.
Corporate Office :
Delhi Stock Exchange Building,
2nd floor, 3 & 4/4B, Asaf Ali Road, New Delhi-02. ...Respondents
Petition u/s 14 (1) (b) of Delhi Rent Control Act
1. Date of institution of the case : 14.09.2005
2. Date of Judgment reserved : 23.07.2013
3. Date of Judgment pronounced : 27.07.2013
JUDGMENT
1. Briefly stated, the facts as narrated by the petitioner in eviction petition are that the petitioner company is the landlord of the premises bearing no. 3 & 4/4B, Delhi Stock Exchange Building, Asaf Ali Road, New Delhi and the respondent no. 1 and 2 are the tenants under it in respect of one big room E-500/09/05 Delhi Stock Exchange Vs. Urmila Gupta & Ors. Page 1 of 24 //2// measuring 1354.03 sq. ft. situated on the second floor of the above said premises, more specifically shown in red in the site plan filed therewith and hereinafter referred to as the suit premises. It is stated that the respondent no. 1 and 2 illegally and unauthorizedly and without the written consent of the petitioner have sublet, assigned or otherwise parted with the possession of the suit premises to respondent no. 3 M/s Brawn Pharmaceuticals Ltd. which is a public limited company and is in possession of the suit premises. The respondent no. 3 company is running its entire office and business from the suit premises. It is further stated that the factum of respondent no. 1 and 2 having sublet, assigned or otherwise parting with the possession of the suit premises to the respondent no. 3 came to the knowledge of the petitioner when the respondent no. 3 sent a letter dated 01.07.2005 written by respondent no. 3 on their letter-head wherein the corporate office of respondent no. 3 is shown to have been maintained at the suit premises. It is further stated that an eviction petition against the respondent no. 1 and 2 on the ground of subletting, assignment or otherwise parting with possession of the premises to M/s Brawn Laboratories Ltd. has been filed and is pending adjudication before the Court of Rent Controller, Delhi being eviction petition no. E-27/2005 (new no. E-501/09/05). It is on the basis of these facts that a prayer has been made for passing of an eviction order in respect of the suit premises in favour of the petitioner and against the respondents.
2. Common written statement was filed on behalf of the respondents wherein it was denied that the respondent no. 1 and 2 have illegally and unauthorizedly sublet, assigned or otherwise parted with the possession of the suit premises to the respondent no. 3 without the written consent of the petitioner. It was further denied that respondent no. 3 is in exclusive E-500/09/05 Delhi Stock Exchange Vs. Urmila Gupta & Ors. Page 2 of 24 //3// possession of the suit premises or that it is running its entire office and business from the suit premises. It was stated that the premises in question was let out by the petitioner to the respondent no. 1 and 2 for commercial purposes vide lease deed dated 23.09.1976 wherein with respect to the respondent no. 1 and 2, the expression 'lessees' therein included their successors and assigns as well. It was further stated that the premises in question is in possession of respondent no. 1 & 2 and that they have not divested their tenancy in favour of any person. It was further stated that by mere user of the premises by the respondent no. 3 it does not amount to parting of the possession. It was further stated that respondent no. 3 is a limited company having the following Directors :- (i) Sh. B.R.Gupta (ii) Sh. A.K.Gupta (iii) Smt. Urmila Gupta (respondent no. 1 herein) (iv) Smt. Brij Bala Gupta (respondent no. 2 herein) (v) Ravi Jain (vi) Dilip Jain and (vii) Basuki Jha. It was further stated that whereas Smt. Brij Bala Gupta (respondent no. 2 herein) is the wife of Sh. A.K.Gupta, Smt. Urmila Gupta (respondent no. 1 herein) is the mother of Sh. B.R.Gupta. It was further stated that Sh. B.R.Gupta and Sh. A.K.Gupta are real brothers and the remaining Directors Sh. Ravi Jain, Sh. Dilip Jain and Sh. Basuiki Jha are independent Directors having no stake in the company. It was further stated that even otherwise vide letter dated 06.04.2004 and 27.10.2004 was sent to the petitioner clearly mentioning therein "from Mrs. Brij Bala Gupta and Mrs. Urmila Gupta" which were duly accepted by the petitioner. However, the filing of the eviction petition bearing no. E-27/05 (new no. E-501/09/05) was admitted. All other averments made in the petition were denied as false and incorrect and a prayer was made to dismiss the eviction petition with costs.
3. Replication to the written statement was filed wherein the averments E-500/09/05 Delhi Stock Exchange Vs. Urmila Gupta & Ors. Page 3 of 24 //4// made in the eviction petition were reiterated and reaffirmed and those made in the written statement were controverted and denied.
4. Evidence led by the parties In order to prove its case, petitioner got examined its Deputy Manager Sh. C.P.Gupta as PW-1 by way of affidavit Ex. P-1 and one Sh. R.S.Joshi, Inspector Circle 3-1, New Delhi as PW-2. Following documents were relied upon by the petitioner :-
(i) Ex. PW-1/1 is the copy of Certificate of Incorporation.
(ii) Ex. PW-1/2 is the copy of resolution.
(iii) Ex. PW-1/3 is the site plan.
(iv) Ex. PW-1/4 is the copy of lease deed dated 23.09.1976.
(v) Ex. PW-1/5 is the copy of letter dated 01.07.2005 sent by respondent no. 1 and 2 to the petitioner.
(vi) Ex. PW-1/6 is the copy of fresh Certificate of Incorporation consequent upon change of name from The Delhi Stock Exhange Association Ltd. to Delhi Stock Exchange Ltd.
(vii) Ex. PW-2/1 is the copy of the notice u/s 143 (2) of the Income Tax Act, 1961 issued to the respondent no. 3 company at the suit premises address.
(viii) Ex. PW-2/2 is the 20th Annual Report 2004-05 of Brawn Pharmaceuticals Limited.
(ix) Ex. PW-2/3 is the certified true copy of Memorandum and Articles of Association of respondent no. 3 company.
5. Respondents, on the other hand, examined respondent no. 2 Smt. Brij Bala Gupta as RW-1 by way of affidavit Ex. RW-1/1 and one Sh. R.K.Saini, Senior Technical Officer, Office of Registrar of Companies, Nehru Place, New E-500/09/05 Delhi Stock Exchange Vs. Urmila Gupta & Ors. Page 4 of 24 //5// Delhi as RW-2.
Following documents were relied upon by the respondents :-
(i) Ex. RW-2/1 and Ex. RW-2/2 which is the Form for filing of Annual Return of respondent no. 3 company with the Registrar of Companies.
6. Ld. counsel for the petitioner and Ld. counsel for the respondents were heard and the judicial file including the written submissions filed by the parties was carefully perused and considered.
It is pertinent to note here that the petitioner Delhi Stock Exchange Ltd. besides filing the present eviction petition u/s 14(1)(b) of the DRC Act against the respondents on 14.09.2005, preferred another eviction petition bearing no. E-501/09/05 (earlier no. E-27/05) against the same respondents under the same grounds of eviction i.e. u/s 14(1)(b) of the DRC Act with respect to the suit property on 24.01.2005. Even the arguments were advanced by the Ld. counsel for the parties with respect to both the eviction petitions and a consolidated written synopsis was also filed on behalf of the respondents for disposal of both the petitions. Accordingly, with the consent of the parties, in the present eviction petition, the testimonies of the witnesses and the documents placed on record and proved by them in both the petitions (including the present one) would be taken up for the determination of the issue as to whether or not the respondent no. 1 and 2 have sublet the suit property to the respondent no. 3 company. Nonetheless, both the petitions are decided by way of separate judgments as whereas in the present petition petitioner examined two witness, in the other eviction petition no. E-501/09/05, petitioner got examined only one witness.
7. Before taking up the respective contentions of the Ld. counsel for the E-500/09/05 Delhi Stock Exchange Vs. Urmila Gupta & Ors. Page 5 of 24 //6// parties, the testimonies,in brief, of the witnesses examined by the parties can be taken note of. As already noted, petitioner to substantiate its case that there has been subletting of the suit premises by the respondent no. 1 and 2 to respondent no. 3 examined its Deputy Manager, C.P.Gupta as PW-1 by way of affidavit Ex. P-1 and one Sh. R.S.Joshi, Inspector, Income Tax Department as PW-2. PW-1, in his examination in chief made a reiteration of the petitioner's case and also stated that petitioner company came to know about the illegal and unauthorized occupation of respondent no. 3 company in the premises when it received a letter dated 01.07.2005 (identified and proved as Ex. PW-1/5) on the letter head of respondent no. 3. He further stated that respondent no. 1 and 2 have always continued to be the tenants and that no kind of permission/consent was ever given by the petitioner to them to sublet, assigned or otherwise part with the possession of the premises to respondent no. 3. The initial cross examination of PW-1 was with respect to his competency to depose and his knowledge of the facts of the present case. PW-1 denied the suggestions regarding his incompetency to depose and his having no personal knowledge of the facts of the case. In his further cross examination, PW-1 stated that he does not know whether respondent no. 1 and 2 are common Directors of the respondent no. 3. He further stated that it was on 01.07.2005 that they came to know after the receipt of letter from respondent no. 3 that the premises has been sublet by the respondent no. 1 and 2. One important suggestion which was given to PW-1 and was denied by him was that the respondent no. 1 and 2 are carrying their business in terms of the lease deed by forming respondent no.3 company. Another important suggestion which the witness denied was that the legal possession of the suit premises is with the respondent no.1 and 2.
E-500/09/05 Delhi Stock Exchange Vs. Urmila Gupta & Ors. Page 6 of 24//7// Through the testimony of PW-2 Sh. R.S.Joshi, petitioner made an effort to establish that respondent no. 3 company was functioning from the suit premises. Copy of the notice issued by the Income Tax Department to the respondent no. 3 was proved as Ex. PW-2/1, the 20 th Annual Report as already noted as Ex. PW-2/2 with the Memorandum and Articles of Association of the respondent no. 3 company furnished with the department as Ex. PW-2/3 respectively.
Coming on to the respondents' evidence, as already noted respondent no. 2 Smt. Brij Bala Gupta examined herself as RW-1 by way of affidavit Ex. RW-1/1. Besides reiterating the averments of the written statement, RW-1 stated that since the business of the respondent no. 1 and 2 is related to medicine, drugs and pharmaceutical goods, hence in the year 1985 respondent no. 3 (written as respondent no. 1, a typographical mistake) was formed to promote the said business and the directors and shareholders of the said company were none else than the family members of both the respondents which is also evident from the Memorandum and Articles of Association (already identified and proved as Ex. PW-2/3) of the respondent no. 3 company . In her affidavit, RW-1 further stated that respondent no. 3 company was formed by the following persons - namely Shri Adarsh Kr. Gupta (who is none else than the husband of respondent no. 2), B.R.Gupta (who is none else than the son of respondent no. 1) and the respondent no. 2 herself. She further stated that the fact remains that respondent no. 1 and 2 have always retained their legal and even physical possession of the demised premises with them and that they have never transferred the legal or physical possession of the said premises in favour of respondent no. 3. She further stated that infact, no creation of transfer of right or interest qua the suit E-500/09/05 Delhi Stock Exchange Vs. Urmila Gupta & Ors. Page 7 of 24 //8// property has ever been made in favour of respondent no. 3. She further stated that as a matter of fact, the suit premises is under the lock and key of respondent no. 1 and 2. In her cross examination, RW-1 admitted that the tenants in the suit premises are herself and respondent no. 1 Smt. Urmila Gupta. She further stated that respondent no. 1 remains ill and does not come to the suit shop. RW-1 further stated that the drug and medicine license is not in their personal names but is in the name of the respondent no. 3 company. She further stated that she does not understand the meaning of Public Limited Company and has also no knowledge as to how many lakhs equity shares of the respondent no. 3 company. RW-1 admitted that the registered and corporate office of the respondent no. 3 company is in the suit premises. She further stated that it has 7-8 employees, however, she cannot tell the name of the employees. She also admitted that the salary of the employees is paid by the respondent no. 3 and that there is a board of respondent no. 3 which is hanging on the suit premises. She also admitted that the premises is opened and locked only by the respondent no. 3, however denied the suggestion that they (respondent no. 1 and 2) do not visit the suit premises. RW-1 further stated that she has no document with her to show that she is doing any work in the suit premises. She further stated that no permission in writing was taken from the petitioner company before opening the respondent no. 3 company and starting its business from the suit premises. She further stated that she cannot tell what are the profits and losses of the respondent no. 3 company for the last year and earlier thereto. Instead, she stated that it is her husband who knows about this. She further stated that they (respondent no. 1 and 2) do not sign any register or document of the respondent no. 3 company. RW-1 in her further cross examination admitted that she is one of the directors of the E-500/09/05 Delhi Stock Exchange Vs. Urmila Gupta & Ors. Page 8 of 24 //9// respondent no. 3 company having ten equity shares and that she has not taken any permission from the petitioner for making other members of her family as directors of respondent no. 3 company.
As to RW-2, R.K.Saini who is the Senior Technical Officer in the Office of the Registrar of Companies, Delhi, he produced the record pertaining to the Form-20 B which is the form filled by the respondent no. 3 company showing the Annual Returns for the year 2005-06. The form 20-B and the other necessary particulars as submitted by the respondent no. 3 company were proved as Ex. RW-2/1 (colly., page no. 1 to 15) and Ex. RW-2/2 (colly., page no. 1 to 13) respectively.
8. As the present eviction petition is on the grounds of subletting, it becomes necessary to make a reference to the relevant provision which is clause (b) to proviso to sub section (1) of section 14 of the Delhi Rent Control Act, 1958. Section 14(1)(b) lays down that the Controller may, on an application made to him in the prescribed manner, make an order for the recovery of possession of the premises on the ground that the tenant has, on or before 9 th June, 1952, sublet, assigned or otherwise parted with the possession of the whole or any part of the premises without obtaining the consent in writing of the landlord. Section 14 (1) (b) of the Act uses three expressions namely, "subletting", "assigning" and "parting with possession". As has been held by our Hon'ble High Court in Sohal Lal Vs. Sri Pal and others, 48 (1992) DLT 65 that "these three expressions deal with different concepts and apply to different circumstances. In subletting, there should exist the relationship of landlord and tenant as between the tenant and his subtenant and the instance of letting of the tenancy must be found namely the transfer of an interest in the estate, demand of rent and the right to possession against the tenant in respect of the premises sublet. In assignment the tenant has to divest himself of all the rights that he has as a tenant. The expression parting with E-500/09/05 Delhi Stock Exchange Vs. Urmila Gupta & Ors. Page 9 of 24 //10// possession undoubtedly postulates parting with legal possession. Parting with possession means giving possession to persons other than those to whom possession has been assigned by the lease and the parting with possession must have been by the tenant. The divestment or abandonment of right to possession is necessary in order to invoke the clause of parting with possession".
Applying the principle as laid down to the facts of the present case, it is an admitted fact that the respondent no. 1 and 2 were inducted as tenants in the suit premises by the petitioner vide lease deed Ex. PW-1/4. It is again an admitted fact that pursuant to the summons issued to the respondents (including the respondent no. 3) of the present eviction petition, respondents entered their appearance and a common written statement on behalf of respondent no. 1 and 2 and respondent no. 3 company was filed. It is also an admitted fact that the respondent no. 1 and 2 while denying that there has been subletting by them to the respondent no. 3 company, took a stand that the suit premises is under the use and occupation of the respondent no. 3 company. These admitted facts which have come on record answers the first contention of the Ld. counsel for the respondents in the negative. It was argued by the Ld. counsel for the respondents that the petitioner in its claim that there has been a case of subletting of the suit premises by the respondent no. 1 and 2 in favour of the respondent no. 3, stated that it was on the basis of a letter dated 01.07.2005 which was on the letter head of respondent no. 3 that the petitioner came to know of the alleged subletting. Ld. counsel for the respondents further argued that PW-1 in his cross examination also admitted that on 01.07.2005, they came to know that the respondent no. 1 and 2 have sublet the premises in question to the respondent no. 3. Ld. counsel for the respondent then contended that E-500/09/05 Delhi Stock Exchange Vs. Urmila Gupta & Ors. Page 10 of 24 //11// thus the landlord/petitioner has presumed subletting/parting with possession/assignment merely from the alleged letter and signboard which evidence is not at all sufficient to file or conclude a case u/s 14 (1)(b) of DRC Act. As already noted hereinabove, one of the admitted facts in the present case is that it is the respondent no. 3 which is in use and occupation of the suit premises. Once there is an admission on the part of the respondents that it is the respondent no. 3 company which is in occupation of the suit premises, the onus to prove that respondent no. 3 is not a subtenant in the suit premises shifts upon the respondents/tenants. Reference herein can also be made to the judgment of Hon'ble Supreme Court in Joginder Singh Sodhi Vs. Amar Kaur,(2005) 1 SCC 31 wherein the Hon'ble Court quoted with approval its earlier decision cited as Kala Vs. Madho Parshad Vaidya, (1998) 6 SCC 573 wherein it was observed that "the burden of proof of subletting is on the landlord but once he establishes parting of possession by the tenant to a third party, the onus would shift on the tenant to explain his possession. If he is unable to discharge that onus, it is permissible for the Court to raise an inference that such possession was for monetary consideration". It was also observed therein that "proof of monetary consideration by the subtenant to the tenant is not a sine qua non to establish subletting" . As is to be seen, in the present case, respondent no. 1 and 2 have admitted that it is the respondent no. 3 company which is in possession of the suit premises. Even RW-1 (respondent no. 2) admitted that the registered and corporate office of the respondent no. 3 company is in the suit premises. Thus, the onus was upon the respondents to prove that despite the respondent no. 3 having possession of the suit premises, it does not fall under any of the three expressions namely 'subletting', 'assignment' or 'parting with possession' as employed and used u/s 14(1)(b) of DRC Act.
E-500/09/05 Delhi Stock Exchange Vs. Urmila Gupta & Ors. Page 11 of 24//12//
9. With respect to the issue of subletting, Ld. counsel for the petitioner argued that respondent no. 2/RW-1 Smt. B.B.Gupta in her cross examination admitted that respondent no. 1 Smt. Urmila Gupta remains ill and does not visit her shop (suit premises). It was further submitted that in her further cross examination RW-1 stated that the drug and medicine license are not in their personal names but is in the name of the respondent no. 3 company. Ld. counsel for the petitioner further argued that RW-1 was also ignorant not only of the nature and meaning of a public limited company but was also unaware as to how many lakhs of equity shares are there in the respondent no. 3 company. It was further argued that RW-1 also admitted that the premises is opened and locked by respondent no. 3 and that all the cheques and other transactions are also issued by the respondent no. 3 only. Ld. counsel for the petitioner then argued that the onus to show that the respondent no. 3 company was in control of the respondent no. 1 and 2 was upon them and they fail to place any document on record despite claiming that the documents are in their possession. It was submitted that in terms of section 105 of Evidence Act, adverse inference is to be drawn against them as it was for the respondents to place on record the best evidence available with them. It was further submitted that except the Memorandum of Association, respondents failed to file any other document on record to show that it was the respondent no. 1 and 2 who were in control of the business. While so arguing, Ld. counsel for the petitioner relied upon the following two citations - (i) Chic International Pvt. Ltd. & Ors. Vs. Naintara Sharma & Anr., 53 (1994) DLT 590 and (ii) Roop Chand Vs. Gopi Chand Thelia, AIR 1989 SC 1416. Ld. counsel for the petitioner submitted that in Roop Chand's case (supra), it was observed with respect to section 13 (1)(e) of the Rajasthan Premises (Control of Rent and E-500/09/05 Delhi Stock Exchange Vs. Urmila Gupta & Ors. Page 12 of 24 //13// Eviction) Act, 1950 (which is pari materia to section 14(1)(b) of the DRC Act) that a tenant will render himself liable for eviction if he has assigned, sublet or otherwise parted with the possession of the whole or any part of the premises without the permission of landlord. Consequently, even if a tenant parts with possession of the whole or any part of the premises without assigning or subletting the premises, he would still be liable to be evicted from the premises under the Act. In Chic International's case (supra) while referring to Roop Chand's case (supra), it was observed that once it was admitted that persons other than tenant had been in the house, the onus of explaining their presence was that on the tenant. A landlord is almost always a stranger to agreements of subletting between his tenant and sub-lessee and he has generally to rely on attending circumstances to establish subletting by necessary inference. It must be very rarely that direct evidence of subletting without the landlords' consent, whether in the form of a lease deed or of testimony of witnesses in whose presence the sub-lease is created, can come to the hands of the landlord. Ld. counsel for the petitioner thus submitted that once the respondent no. 1 and 2 having admitted the possession of respondent no. 3 company in the suit premises and thereafter failing to prove that it is they who are in control of the said company, the necessary conclusion to be drawn therefrom is that it is a case of parting of possession of the suit premises by the respondent no. 1 and 2 to the respondent no. 3.
10. Ld. counsel for the respondents, on the other hand, argued that the contention of Ld. counsel for the petitioner that as the respondent no. 3 which is in possession of the suit premises is a body incorporate, therefore, it is a case of subletting by the respondent no. 1 and 2 is misconceived and misplaced. Further, the citations Chic International (supra) and Roop Chand E-500/09/05 Delhi Stock Exchange Vs. Urmila Gupta & Ors. Page 13 of 24 //14// Vs. Gopi Chand (supra) as relied upon are not applicable to the facts in hand. It was further argued that it has been the consistent stand of the respondents that since the business of the respondent no.1 and 2 was related to medicine,drugs and pharmaceutical goods, therefore, in the year 1985 respondent no. 3 company was formed of which the Directors and shareholders were none else then the family members of both the respondents. Ld. counsel for the respondents further argued that it is also evident from the Memorandum and Articles of Association Ex. PW-2/3 that the said company was formed by Sh. A.K.Gupta (who is none else then the husband of respondent no. 2), Sh. B.R.Gupta (who is the son of respondent no. 1) and Smt. Brij Bala Gupta, respondent no. 2 herein. It was further argued that the fact remains that the tenant i.e. respondent no. 1 and 2 have always retained the legal and even the physical possession of the demised premises with them and that they have never transferred the legal or physical possession of the suit premises in favour of respondent no. 3 or any one else. Ld. counsel for the respondents further submitted that the facts of Chic International case (supra) were entirely different. In the said case, the eviction order was passed because the tenant failed to prove that M/s Kesha Sales Pvt. Ltd. was occupying the suit premises as a sister concern of the tenant M/s Chic International Pvt. Ltd. Further, it was also established on record that the intention of the tenant in inducting M/s Kesha Sales into the premises was to make monetary gains. As to the facts of the Roop Chand's case (supra), it was submitted that again they are at complete variance with the facts of the present case. In Roop Chand's case, tenant inducted a company which had nothing to do with the tenant and his business. Further, the tenant could not explain as to what the stranger (sub-tenant company) had to do with the E-500/09/05 Delhi Stock Exchange Vs. Urmila Gupta & Ors. Page 14 of 24 //15// tenant or his business. Even the use of the suit premises by the company could not be connected with the business of the tenant in any manner whatsoever. Ld. counsel for the respondents than referred to the citation Niranjan Lal Kanodia Vs. Harbans Lal , 1995 (34) DRJ wherein it was held that "the law on the question of subletting is fairly well settled. Mere user of a premises by any person or party does not amount to subletting, assigning or parting with possession so long as the tenant retains legal possession of the premises with himself. The test to be applied is :- has the tenant given up or lost the right to possess the premises? If he retains the right to possess the premises, it will not be a case of subletting". While so holding, the court also relied upon the judgment of Hon'ble Supreme Court in Jagdish Prasad Vs. Angoori Devi, AIR 1984 SC 177 wherein it was observed "that the Act does not require the Court to assume a sub- tenancy merely from the fact of presence of an outsider" . In Jagannath Vs. Chander Bhan, AIR 1988 SC 1362 wherein it was held "it is well settled that parting with possession meant giving possession to persons other than those to whom possession had been given by the lease and the parting with possession must have been by the tenant. User by the other person is not parting with possession so long as the tenant retains the legal possession himself, or in other words there must be vesting of possession by the tenant in another person by divesting himself not only of physical possession but also of the right to possession. So long as the tenant retains the right to possession there is no parting with possession in terms of clause (b) of section 14 (1) of the Act". Ld. counsel for the respondents submitted that facts of the Niranjan Lal's case and those of the present case are more or less similar. In the said case, Niranjan Lal who was the sole tenant of the premises in his individual capacity was the sole proprietor of M/s Kanodia Hosiery Mills and Kanodia Company. Further, he was also the Chairman and Director of Modern Straw Board Mills Pvt. Ltd. and with respect to M/s S.D & Company, he was a E-500/09/05 Delhi Stock Exchange Vs. Urmila Gupta & Ors. Page 15 of 24 //16// partner alongwith his wife and son. Ld. counsel for the respondents than made a reference to the observation of the Hon'ble High Court made in the said case wherein it was observed that "though in law the company has a separate entity yet Niranjan Lal Kanodia is practically the only man behind the said company. Therefore, it cannot be said that Niranjan Lal Kanodia has divested himself of the right to possession of the tenanted premises by allowing the company's presence in the premises. It was further observed that mere presence of the company cannot lead to the conclusion that there is subletting, assigning or parting with possession of the tenancy premises in its favour. The company may be carrying on its business from the premises in suit but the question remains who is the company? In reality, the company is none else then Niranjan Lal Kanodia. He is the man behind the company. The only other Director (which is there in order to meet the statutory requirement that there should be atleast two Directors in a Pvt. Ltd. Company) is his wife Smt. Shanti Devi. In these facts and applying the legal tests as laid down by the Supreme Court, can it be said that Niranjan Lal has effaced himself from the tenancy premises or a part of the tenancy premises? Further, in these facts can it be said that Niranjan Lal has divested himself of the right to possess the premises and the right to possess has vested in the company which is a third party. The answer to all these questions on the basis of the facts on record is only one and that is that none of these tests are satisfied. Niranjan Lal retains the right to possess the premises. He has not divested himself of the right to possess the premises. Mere presence of the company on the premises and the mere fact that it is functioning from the premises does not amount to subletting, assigning or parting with possession" . While so holding, Hon'ble Court placed reliance upon the judgment of Hon'ble Supreme Court in M/s Madras Bangalore Transport Company (West) Vs. Inder Singh & Ors., AIR 1986 SC 1564. In the said case, a partnership firm which was occupying the premises as a tenant founded a limited company with its partners as Directors. The firm allowed the company to operate from the tenanted premises alongwith it. Both the company and the firm had their E-500/09/05 Delhi Stock Exchange Vs. Urmila Gupta & Ors. Page 16 of 24 //17// signboards at the premises and were also having their offices at the tenancy premises. The owner/landlord filed a suit for eviction alleging subletting. It was held that "there was no subletting, assigning or parting with possession of the premises by the firm to the Limited Company. The firm continued in possession of the premises even after the Private Limited Company came in. The firm never effaced themselves from the premises. The Private Limited Company though a separate legal entity was infact a creature of the partners of the firm and was the very image of the firm. The company and the firm were two only in name but one for practical purposes. There was substantial identity between the Limited Company and the partnership firm. As such even though the firm and the company were distinct legal entities there was no subletting or assignment".
Ld. counsel for the respondents to further substantiate his side of argument referred to the judgment of Hon'ble High Court of Delhi in Vishwa Nath & Anr. Vs. Chaman Lal Khanna & Ors., SAO No. 128 of 1974 decided on 19.03.1975. It was held therein that "if an individual takes the premises on rent and then converts his sole proprietorship concern into a Pvt. Ltd. Company in which he has the controlling interest he cannot be evicted from the premises". Ld. counsel for the respondents, thus, argued that in the present case as well, respondent no. 3 company is nothing but another face of the respondent no. 1 and 2 and has no separate identity of its own as distinguishable from that of the two tenants. The only distinction is that in the eyes of law it is a separate legal entity but for the purposes of section 14 (1)
(b) of the DRC Act, that distinction does not make any difference.
11. Now, the question to be answered is as to whether respondent no. 3 company despite being a body incorporate and a separate legal entity has no distinct identity from the respondent no. 1 and 2 insofar as the applicability of section 14 (1)(b) of the DRC Act is concerned. It is an admitted case between E-500/09/05 Delhi Stock Exchange Vs. Urmila Gupta & Ors. Page 17 of 24 //18// the parties that respondent no. 1 Smt. Urmila Gupta w/o Sh. J.P.Gupta and respondent no. 2 Smt. Brij Bala Gupta w/o Sh. Adarsh Kumar Gupta were inducted as tenants in the suit property vide lease deed Ex. PW-1/4. It is also an admitted case that as on the date of filing of the present eviction petition and the other eviction petition no. E-501/09/05, it was the respondent no. 3 company M/s Brawn Pharmaceuticals Ltd. which was in use and possession of the suit property. What was submitted by the Ld. counsel for the petitioner was that presence and possession of respondent no. 3 company in the suit premises amounts to subletting, assignment or parting with possession as provided u/s 14(1)(b) of the DRC Act. Per contra, as per Ld. counsel for the respondents mere user/possession of the suit property does not amount to subletting u/s 14(1)(b) of the DRC Act by the respondent no. 1 and 2 as the respondent no. 3 company is none else but another face of the respondent no. 1 and 2 and that the respondent no. 1 and 2 have never divested the right to possess the suit premises to anyone or any third party including the respondent no. 3 company. It was also submitted that there is a substantial identity between the respondent no. 3 company and the respondent no. 1 and 2. To appreciate the respective contentions of the Ld. counsel for the parties, the incorporation of the respondent no. 3 company by way of its Memorandum and Articles of Association and the Annual Report thereof filed on record and proved by the parties is to be looked into as it is only through these documents that the picture would become clear as to whether or not the respondent no. 1 and 2 and the respondent no. 3 company are one and the same and that they have substantial identity amongst themselves. The relevant documents of the respondent no. 3 company as proved on record by the petitioner in the present eviction petition through the testimony of PW-2 E-500/09/05 Delhi Stock Exchange Vs. Urmila Gupta & Ors. Page 18 of 24 //19// Sh. R.S.Joshi are the Memorandum and Articles of Association which is Ex. PW-2/3, the 20th Annual Report 2004-05 of the respondent no. 3 company which is Ex. PW-2/2 and the Form-20 B proved by the respondents through the testimony of RW-2 as Ex. RW-2/1 (colly., page no. 1 to 15) and Ex. RW-2/2 (colly., page no. 1 to 13). In the other eviction petition bearing no. E-501/09/05, the relevant documents of the respondent no. 3 company as proved on record by the respondents through the testimony of RW-1 Smt. Brij Bala Gupta and RW-2 Sh. R.K.Saini are again the Memorandum and Articles of Association which is Ex. RW-1/1 and the Form -20 B (form for filing of annual return by a company having a share capital with the Registrar of Companies) which is Ex. RW-2/1 (colly., page no. 1 to 19). In the Memorandum and Articles of Association Ex. RW-1/1, it has been shown that the respondent no. 3 company was incorporated under the Companies Act, 1956 on 27.03.1990. On the last page/page no. 25 thereof, the name, address, description and occupation of its subscribers has been given and one amongst them is respondent no. 2 Smt. Brij Bala Gupta. As to the respondent no. 1 Smt. Urmila Gupta, there is no mention of her name therein. In the Form 20-B Ex. RW-2/1 (colly.), again the name of respondent no. 1 Smt. Urmila Gupta is missing from the list of Directors of the respondent no. 3 company as given to the Registrar of Companies. As to respondent no. 2 Smt. Brij Bala Gupta, her name has been shown as one of the Directors at Sl. No. 3 with the date of appointment as 03.10.2003. Further, Ex. RW-2/1 has an Annexure-II which gives the details of shares held at the date of AGM held on 30.09.2005 of the respondent no. 3 company. Perusal thereof would reveal that respondent no. 1 Smt. Urmila Gupta w/o Sh. J.P.Gupta is not a E-500/09/05 Delhi Stock Exchange Vs. Urmila Gupta & Ors. Page 19 of 24 //20// shareholder of the respondent no. 3 company. As to respondent no. 2 Smt. Brij Bala Gupta, her shareholding in the respondent no. 3 company has been shown at folio no. 6 as having 21,875 equity shares which amounts to 2.1984% of the entire shareholding. This shareholding of the respondent no. 2 which is only 2.1984% cannot by any stretch of imagination be said to have given controlling interest in the business of the respondent no. 3 company to the respondent no. 2 herein. Now, coming on to the documents of the respondent no. 3 company as proved on record in the present eviction petition one amongst them is Ex. PW-2/3 which is the Memorandum and Articles of Association of the respondent no. 3 company. It shows that originally the respondent no. 3 company was incorporated as a Private Limited Company by the name of M/s Brawn Pharmaceuticals Pvt. Ltd. on 07.11.1985. Subsequently, it was changed to M/s Brawn Pharmaceuticals Ltd. vide necessary special resolution of 06.09.1993. Again, in the list of the names and description of its subscribers, the name of respondent no. 1 Smt. Urmila Gupta is missing. The other names are that of the respondent no. 2 Smt. Brij Bala Gupta, her husband Sh. Adarsh. K.Gupta and one Sh. B.R.Gupta, son of the respondent no. 1 herein. Another document which is the 20th Annual Report 2004-05 of the respondent no. 3 company identified as Ex. PW-2/2 reflects in item no. 6 and 7 on page no. 4 thereof that whereas Smt. Urmila Gupta (respondent no. 1 herein) was appointed as an Additional Director of the respondent no. 3 company on 24.11.2004, Smt. Brij Bala Gupta (respondent no. 2 herein) was also appointed as an Additional Director again on 24.11.2004. It is also mentioned in the said items that they will hold the office as Directors only upto the date of the Annual General Meeting on 30.09.2005. Ex.RW-2/1 in the present eviction petition, which is part of the E-500/09/05 Delhi Stock Exchange Vs. Urmila Gupta & Ors. Page 20 of 24 //21// Form of Annual Return of the respondent no. 3 company inter alia makes a mention of the list of Directors (past and present). In the said list, again the date of appointment of the respondent no. 1 and 2 has been shown as 24.11.2004 respectively. Ex. RW-2/2 again in the present eviction petition which is a part of Form 20-B gives the list of the Directors of the respondent no. 3 company wherein again respondent no. 1 and 2 have been shown as Directors w.e.f 24.11.2004 respectively. The only two Directors shown in the said list having been appointed on 25.11.1985 (the date of incorporation of the respondent no. 3 company as a Pvt. Ltd. Company) are Sh. Ravi Jain and Sh. Adarsh Kumar Gupta. The entire evidence of the respondents in both the petitions has been silent as to their relations with Sh. Ravi Jain. As to Sh. Adarsh.K.Gupta, he has been shown as the husband of respondent no. 2 Smt. Brij Bala Gupta. These documents of the respondent no. 3 company establishes on record that respondent no. 1 and 2 cannot be said to be the creators of the respondent no. 3 company or that they cannot be said to have substantial identity with respondent no. 3 company or having controlling interest therein. Now, coming on to the citations relied upon by the Ld. counsel for the parties, the gist thereof insofar as the interpretation of section 14(1)(b) of DRC Act is concerned is that the mere user of a premises by any person or a party other than the tenant does not amount to subletting, assigning or parting with possession so long as the tenant retains legal possession of the premises with himself. Further, with respect to an individual tenant forming a company, the law has been settled as that even if an individual converts his sole proprietorship concern into a Pvt. Ltd. Company in which he has the controlling interest he cannot be evicted from the premises. Even with respect to a tenant being a partnership firm forming a company E-500/09/05 Delhi Stock Exchange Vs. Urmila Gupta & Ors. Page 21 of 24 //22// having the partners as its Directors, it was held by Hon'ble Supreme Court in M/s Madras Bangalore Transport Co.'s Case that there was no subletting, assigning or parting with possession of the suit premises by the partnership firm to the limited company as the Private Limited Company even though a separate legal entity was infact a creature of the partners of the firm and was the very image of the firm. There was substantial identity between the Limited Company and the Partnership Firm. As such even though the tenant firm and the company were distinct legal entities there was no subletting or assignment. As is to be seen from the law as laid down, the stress has been on the words, 'controlling interest' and 'substantial identity'. In the judgment of Niranjan Lal's case, after appreciating the evidence which came on record, the Hon'ble Court reached the conclusion that the petitioner Niranjan Lal despite forming a company being a separate entity was practically the only man behind the said company and therefore, cannot be said to have divested himself of the right to possession of tenanted premises by allowing the company's presence in the premises. In the present case, none of the respondent no. 1 and 2 who are the tenants of the petitioner with respect to the suit property were the original Directors/Promoters/Subscribers of the respondent no. 3 company as on the date of its incorporation on 25.11.1985. As has also been seen, both the respondent no. 1 and 2 were appointed as Addl. Directors in the respondent no. 3 company on 24.11.2004 and that too till 30.09.2005, the date of the Annual General Meeting of the respondent no. 3 company. Further, from the list of the shareholders of the respondent no. 3 company, whereas respondent no. 1 Urmila Gupta has no shareholding, respondent no. 2 holds shares but only with a minority shareholding. Furthermore, testimony of RW-1 as already noted reflects that the drug and E-500/09/05 Delhi Stock Exchange Vs. Urmila Gupta & Ors. Page 22 of 24 //23// medicine license was exclusively in the name of the respondent no. 3 company. Her further cross examination as already noted also reveals that she failed to show that it was she who was/is having the controlling interest in the respondent no. 3 company. She was not even aware of the number of employees of the company or their names. She also failed to bring on record any document to show that it was she or the respondent no. 1 or both who was/were doing the work in the suit premises by running the respondent no. 3 company. The onus was upon the respondents to establish on record that respondent no. 3 in itself has no distinct identity except being a Public Limited Company and that the respondent no. 1 and 2 were controlling its affairs. As already noted from the documents of the respondent no. 3 company, respondent no. 1 and 2 have failed to discharge the onus placed upon them. The facts of the present case are clearly distinguishable from those of the Niranjan Lal's case as in the said case, petitioner Niranjan Lal was the man behind the Private Limited Company operating from the tenanted premises. The said company was having only two Directors, one the petitioner Niranjan Lal himself and the other his wife Smt. Shanti Devi. Furthermore, it was the petitioner alone who being the Chairman and the Managing Director of the Private Limited Company was looking after its day to day affairs and business. Admittedly, in the present case, it has been observed that respondent no. 1 and 2 were not looking after the day to day affairs of the respondent no. 3 company and were rather appointed as Addl. Directors on 24.11.2004 only till 30.09.2005. Notwithstanding the fact that family members or other relatives of the two respondents may be having some stake in the Public Limited Company/respondent no. 3, still it makes no difference as the lease or the tenancy rights vested exclusively with the respondent no. 1 and 2 and not with E-500/09/05 Delhi Stock Exchange Vs. Urmila Gupta & Ors. Page 23 of 24 //24// their family members. Thus, it cannot be said that respondent no. 3 company is a creature of the two tenants or that there is substantial identity between the company and the two respondents. Thus, petitioner succeeds in establishing that respondent no. 1 and 2 have parted with the possession of the suit premises in favour of the respondent no. 3 company and therefore are liable to be evicted u/s 14(1)(b) of the DRC Act.
12. In view of the foregoing, petition u/s 14 (1)(b) of the DRC Act is allowed and an eviction order in respect of the suit premises i.e one big room measuring 1354.03 sq. ft. situated on the second floor of the premises bearing no. 3 & 4/4B, Delhi Stock Exchange Building, Asaf Ali Road, New Delhi, more specifically shown in red in the site plan Ex. PW-1/3 is hereby passed in favour of the petitioner and against the respondents. No orders as to costs.
File be consigned to record room.
(Announced in the open court
on 27.07.13) (Satish Kumar Arora)
ARC-1/Central/THC/Delhi
E-500/09/05 Delhi Stock Exchange Vs. Urmila Gupta & Ors. Page 24 of 24