Delhi District Court
M/S New India Motors (New Delhi) Pvt. Ltd vs M/S Northern India Iron & Steel Co. Ltd on 12 February, 2021
IN THE COURT OF SH. DINESH KUMAR SHARMA
PRINCIPAL DISTRICT & SESSIONS JUDGE : RENT
CONTROL TRIBUNAL : NEW DELHI
In the matter of :
RCT No. 24/2018
1. M/s New India Motors (New Delhi) Pvt. Ltd.
Through its Director Sh. Pawan S. Jain
10B Scindia House
New Delhi110 001.
2. M/s Belari Travel & Cargo Pvt. Ltd.
Through its Director Sh. Pawan S. Jain
Registered Office:
B4/63, Safdarjung Enclave
New Delhi110029.
Sales Office
C101, Sector2, Noida, UP.
3. M/s Trans Tour & Travels International Pvt. Ltd.
Through its Director Sh. Pawan S. Jain
Registered Office
G5, Pushpanjali, Bijwasan
New Delhi110 061. ..... Appellants
Versus
1. M/s Northern India Iron & Steel Co. Ltd.
Through its Principal Officer
118, Ansal Bhawan, K.G. Marg
New Delhi110 001.
2. M/s East West Agencies
10B, Scindia House
New Delhi110 001. ..... Respondents
RCT No. 24/2018 New India Motors (New Delhi) P. Ltd. Vs. Northern India Iron & Steel Co. Ltd. AND
RCT No. 37/2018 (crossobjection) New India Motors Vs. Northern India Page No. 1 of 82
AND
Cross Objection bearing RCT No. 37/2018
M/s New India Motors (New Delhi) Pvt. Ltd. ..... Appellants
Versus
M/s Northern India Iron & Steel Co. Ltd. .... CrossObjector /
Respondent no.1
Date of filing of appeal (No. 24/18) : 12.07.2018
Date of filing of Cross Objection (No.37/18) : 07.08.2018
Date of arguments : 04.02.2021
Date of judgment : 12.02.2021
INDEX
Sl.No SUBJECT Para Nos.
A. INTRODUCTION 1
B. FACTS 2 to 8
C. FINDINGS OF TRIAL COURT 9 & 10
D. SCOPE OF SECTION 38 DRC ACT 11 to 16
E. LAW ON SUBLETTING 17 to 27
F. ISSUES RAISED IN RCT No.24/2018 28 to 33
G. ISSUES RAISED IN RCT No. 37/2018 34 to 35
H. EVICTION ON GROUND OF BONAFIDE 36
REQUIREMENT
I. ARGUMENTS ON BEHALF OF APPELLANTS 37 to 63
J. ARGUMENTS ON BEHALF OF RESPONDENT 64 to 75
NO.1 / LANDLORD
K. APPRECIATION OF ARGUMENTS AND FINDING 76 to 102
L FINDINGS IN CROSS OBJECTION BEARING 103 to 118
RCT NO. 37/2018
M CONCLUSION 119 to 120
RCT No. 24/2018 New India Motors (New Delhi) P. Ltd. Vs. Northern India Iron & Steel Co. Ltd. AND
RCT No. 37/2018 (crossobjection) New India Motors Vs. Northern India Page No. 2 of 82
JUDGMENT
A. INTRODUCTION
1. Vide this common judgment, I propose to dispose of the appeal bearing no. 24/2018 filed under Section 38 of Delhi Rent Control Act, 1958 (in short "DRC Act), challenging the impugned order dated 08.06.2018 whereby the Ld. Addl. Rent Controller passed the eviction order under Section 14(1)(b) of DRC Act, against the respondent no. 1 / M/s New India Motors (New Delhi) Pvt. Ltd. (appellant no.1 herein) in respect of property i.e. bearing no. 10B, Scindia House (Bearing Municipal No. 13), Connaught Place, New Delhi (in short "premises in question"). Vide this judgment, I shall also dispose of the cross objection registered as RCT No. 37/2018 under Order 41 Rule 22 CPC read with Section 38 of DRC Act, challenging the finding arrived at by the Ld. ARC qua the petition being hit by and barred by res judicata against respondent no.2.
B. FACTS
2. The facts in brief are that the petitioner M/s Northern India Iron & Steel Co. Ltd. is the owner and landlord of the tenanted premises having purchased the same vide Sale Deed RCT No. 24/2018 New India Motors (New Delhi) P. Ltd. Vs. Northern India Iron & Steel Co. Ltd. AND RCT No. 37/2018 (crossobjection) New India Motors Vs. Northern India Page No. 3 of 82 dated 31.05.1986 from its erstwhile owners namely M/s Atma Ram Properties Pvt. Ltd. The respondent no.1 i.e. M/s New India Motors (New Delhi) Pvt. Ltd. was already a tenant, inducted by the previous landlord viz. S.Kushwant Singh and Brig. Gurbux Singh vide lease deed dated 24.02.1971. The petitioner has filed an eviction petition under Section 14(1)(b) of DRC Act against the tenants / respondents i.e. M/s New India Motors (New Delhi) Pvt. Ltd., alleging therein that respondent no.1, without the written consent of the landlord after 09.02.1952, had sublet, assigned and parted with the possession of the suit premises to respondent nos. 2 to 4 after dividing the same into two parts illegally and by erecting a partition wall. The respondent nos. 2 to 4 are in physical possession of the tenanted premises and are running their business of travel Agencies/cargo etc. from the suit premises.
3. Respondent no. 1 filed the written statement and denied the factum of subletting and the averments made in the petition. In the Written Statement, it was stated that the petition is not maintainable and is barred under the provision of law as the Ld. Rent Control Tribunal in RCA No. 220/1976 vide judgment dated 04.08.1979 dismissed the eviction petition filed on the RCT No. 24/2018 New India Motors (New Delhi) P. Ltd. Vs. Northern India Iron & Steel Co. Ltd. AND RCT No. 37/2018 (crossobjection) New India Motors Vs. Northern India Page No. 4 of 82 ground of subletting to M/s East West Agencies. Therefore, the eviction petition again on the same ground of subletting is not permissible in law and is barred. It was further averred that there was no subletting, assigning or otherwise parting with the possession of the tenanted premises by the tenant to any body. It is stated that vide the registered lease deed dated 24.02.1971, the erstwhile owner/landlord M/s Khushwant Singh & Brig. Gurbax Singh had permitted in clause 3(a) that the "lessee will be at liberty to carry on business as dealers or in any other capacity or any other business which the lessee may choose. Further, the lessors will have no objection to the lessee authorizing Shri K.C. Jain and Sons to carry on their business in the premises". Admittedly, the petitioner is not the original landlord and the alleged sublettees have been using the premises before purchase of the property by the petitioner on 05.09.1980. The petitioner had been accepting the rent since then and was fully aware of the factual position and therefore, the petition is liable to be dismissed on the ground of estoppel and waiver.
4. Respondent no. 2 & 3 filed their written statements and denied all the averments made in the petition. In the Written Statement, it was stated that the petition is bad of rejoinder of RCT No. 24/2018 New India Motors (New Delhi) P. Ltd. Vs. Northern India Iron & Steel Co. Ltd. AND RCT No. 37/2018 (crossobjection) New India Motors Vs. Northern India Page No. 5 of 82 parties as respondent no. 2 & 3 are neither tenant nor subtenant and that there has been no subletting, assigning or parting of possession of the tenanted premises. It was stated that the petition was barred by estoppal and waiver as respondent no. 2&3 are using the premises and carrying on business, because the original landlord/owner of the premises M/s Kushwant Singh and Brig. Gurbax Singh had given permission that Sh. K.C. Jain & Sons can carry their business in the tenanted premises and the landlord will have no objection to the same.
5. Respondent no. 4 filed the written statement and stated that there was partition wall in the premises in question and half of the premises was occupied by him on the monthly rent of Rs.3,000/ per month. It is further stated that respondent no.1 was not in occupation of any portion of the premises.
6. In the rejoinder, the petitioner reiterated the averments made in the petition and denied the contentions taken by the respondents in their written statements.
7. On behalf of petitioner, Sh. B.L. Gupta/PW1 tendered his evidence way of an affidavit Ex. PWA on 24.03.2008. However, it is pertinent to mention here that this witness could not be crossexamined as he had left the service of the petitioner RCT No. 24/2018 New India Motors (New Delhi) P. Ltd. Vs. Northern India Iron & Steel Co. Ltd. AND RCT No. 37/2018 (crossobjection) New India Motors Vs. Northern India Page No. 6 of 82 company. Vide order dated 09.01.2011, the Ld. Trial Court allowed the petitioner's application under Order 7 Rule 14 read with Section 151 CPC and permitted the petitioner to place on record certain documents. Thereafter, affidavit of another witness i.e. Sh. V.M. Gupta, General Manager, was filed on 03.12.2010, who tendered his evidence by way of affidavit Ex.P1.
8. On behalf of respondent nos. 1 to 3, Sh. Pawan Sagar Jain appeared as RW1 and tendered his evidence by way of affidavit Ex. RW1/A. RW1 admitted in his crossexamination that the premises which was let out to them was not partitioned in any manner rather was a big hall. Respondents have also examined Sh. Naveen Record Keeper from the department of Delhi Archives, who produced the original of the certified copy of lease deed dated 02.04.1971 Ex. RW2/1.
C. FINDINGS OF TRIAL COURT
9. Ld. Addl. Rent Controller after taking into account the factual matrix on record, the evidence as well as the submissions of the parties, allowed the petition under Section 14(1)(b) of DRC Act and held that the tenanted premises was sublet, assigned or parted with possession by the respondent no. 1 to RCT No. 24/2018 New India Motors (New Delhi) P. Ltd. Vs. Northern India Iron & Steel Co. Ltd. AND RCT No. 37/2018 (crossobjection) New India Motors Vs. Northern India Page No. 7 of 82 respondent nos. 2 &3.
10. In regard to respondent no.4, the Ld. ARC vide the impugned order inter alia held that the judgment passed by the Hon'ble Mr. Justice P.K. Bahri, the then Ld. Rent Control Tribunal, operates as res judicata qua the ground of subletting with respect to respondent no.4 i.e. M/s East West Agencies and not with respect to respondent no.2&3 as the claim qua them is based on separate cause of action which was not directly and substantially in issue in judgment Ex.RW1/1.
D. SCOPE OF SECTION 38 DRC ACT
11. Before proceeding further, it is relevant to look at Section 38 of the DRC Act in order to examine the jurisdiction of this Court while deciding the appeal under Delhi Rent Control Act.
12. Section 38(1) of Delhi Rent Control Act provides as under : "An appeal shall lie from every order of the Controller made under this Act (only on questions of law) to the Rent Control Tribunal (hereinafter referred to as the Tribunal) consisting of one person only to be appointed by the Central Government by notification in RCT No. 24/2018 New India Motors (New Delhi) P. Ltd. Vs. Northern India Iron & Steel Co. Ltd. AND RCT No. 37/2018 (crossobjection) New India Motors Vs. Northern India Page No. 8 of 82 the Official Gazette :
(Provided that no appeal shall lie from an order of the Controller made under Section 21)."
13. It is pertinent to mention here that Section 38 of the DRC Act was amended with effect from 01.12.1988. Perusal of amended provision would indicate that an appeal shall lie from every order of the Controller made under this Act and the Rent Control Tribunal shall examine only the question of law. The Legislature in its wisdom excluded the jurisdiction of the Rent Control Tribunal to examine the cases on the facts. The amendment has possibly been made to curtail the delay. The effect of this amendment is that the Rent Controller has been adjudged the forum to return final findings on the facts. Therefore, this Tribunal is required to see that whether the Ld. ARC has committed any illegality on the point of law while deciding the question of subletting. Thus, in order to succeed in the appeal, the appellant has to put forward the legal infirmities or incorrectness having been committed by the Ld. Trial Court.
14. In view of the scope of jurisdiction, as laid down under Section 38 of the DRC Act and the judgment delivered in Kulwant Singh & Another Vs Arjun Singh, CM(Main) RCT No. 24/2018 New India Motors (New Delhi) P. Ltd. Vs. Northern India Iron & Steel Co. Ltd. AND RCT No. 37/2018 (crossobjection) New India Motors Vs. Northern India Page No. 9 of 82 No.1063/2004 decided on 15.11.2006, Hon'ble Delhi High Court interalia held that u/S 38 DRC Act, the RCT is to act as an appellate court only on a question of law. Similarly, in Dr. Mrs. Sushil Puri And Ors. Vs Sh. Jai Gopal And Ors.,Cav. No.120/06 decided on 10.11.2006, Hon'ble Delhi High Court interalia held as under: "An important aspect which cannot be lost sight of is that the legislature in its wisdom has amended the said Act whereby the appeal to the Tribunal under Section 38 of the said Act has been confined to only a question of law and second appeal to this Court has been abolished...."
15. In Smt. Kiran Sajjan And Ors. Vs Smt. Swarnkanta Mahajan decided on 25.08.2006, Hon'ble Delhi High Court interalia held as under : "It cannot lost sight under the provisions of the said Act that the appeal lies to the Tribunal under Section 38 of the said Act only on a question of law. This was in terms of the legislative intent as a conscious decision was taken to amend the said provision in December 1988 prior whereto the appeal was both on a question of law and on a question of fact. Thus the scope of scrutiny itself by the Tribunal was said to be restrictive and the Additional Rent Controller was construed to be a final Court for appreciation of evidence....."
16. Thus, a bare reading of the legislative provision and the judgments on the point, makes it clear that the court of RCT is required to restrict itself to the question of law. However, it is RCT No. 24/2018 New India Motors (New Delhi) P. Ltd. Vs. Northern India Iron & Steel Co. Ltd. AND RCT No. 37/2018 (crossobjection) New India Motors Vs. Northern India Page No. 10 of 82 pertinent to mention here that while deciding the question of law, it has also to be seen whether the evidence and the material on record has been appreciated correctly by the Ld. Trial Court in accordance with law.
E. LAW ON SUBLETTING
17. In Woodfall on 'Landlord and Tenant' 27th Edition Volume 1 page 523, it is said:
"A covenant against parting with possession in the demised premises is not broken so long as the lessee retains legal possession by allowing other person to use the premises, either under a licence or under a declaration of trust." And again "a lessee cannot be said to part with the possession of any part of the premises unless his agreement with his licensee wholly ousts him from the legal possession of that part."
18. In Bharat Sales Ltd. Vs LIC, (1998) 3 SCC 1, it was held that subtenancy or subletting comes into existence when a tenant gives up the possession of the tenanted premises wholly or in part and puts another person in exclusive possession thereof in such process. In Delhi Stationers and Printers Vs. Rajendra Kumar,(1990) 2 SCC 331, the term "subletting" was explained to mean transfer of an exclusive right to enjoy the property in lieu of payment of some compensation or rent. It was observed that RCT No. 24/2018 New India Motors (New Delhi) P. Ltd. Vs. Northern India Iron & Steel Co. Ltd. AND RCT No. 37/2018 (crossobjection) New India Motors Vs. Northern India Page No. 11 of 82 "parting with legal possession" mean parting with possession with the right to include and to exclude others and mere occupation is not sufficient to infer either subtenancy or parting with possession.
19. In Parvinder Singh Vs Renu Gautam, AIR(2004) SCC 799, the three Judge Bench of the Apex Court devised the test as under:
"If the tenant is actively associated with the partnership business and retains the use and control over the tenancy premises with him, may be along with the partners, the tenant may not be said to have parted with possession. However, if the user and control of the tenancy premises has been parted with and deed of partnership has been drawn up as an indirect method of collecting the consideration for creation of subtenancy or for proving a cloak or cover to conceal the transaction not permitted by law. The Court is not estopped from tearing the veil of partnership and finding out the real nature of transaction entered into between the tenant and the alleged subtenant."
20. In Joginder Singh Sodhi Vs Amar Kaur, (2005) 1 SCC 31, the Hon'ble Supreme Court noted that as far as subletting is concerned, the two ingredients namely parting with possession and monetary consideration therefore have to be established. In Seth Narainbhai Ichharam Kurmi and Anr. Vs Barbada Prasad Sheosahai Pande, AIR 1941 Nag.357, it was observed that possession includes legal possession and unless the legal possession is parted with ejectment cannot be ordered. Bare RCT No. 24/2018 New India Motors (New Delhi) P. Ltd. Vs. Northern India Iron & Steel Co. Ltd. AND RCT No. 37/2018 (crossobjection) New India Motors Vs. Northern India Page No. 12 of 82 occupation and possession are two different concepts. Possession as it is understood in legal terminology is complex one which need not include actual occupation. It comprises rather the right to possession and right and control coupled with mental element namely the animus possidendi, that is to say knowledge of these rights and the desire and intention of exercising them, if need be.
21. In G.D.Chaudhary Vs Anand Sarup, 1966 DLT 28, it was held that so long as lessee retains legal possession of whole of the premises, he does not commit a breach of law against parting with the possession by allowing other person to use the same.
22. In Gurdial Singh Vs Brij Kishore & Ors, 1970 DLT 592, it was observed that simply because the tenant has allowed another person to use or share a premises, it does not amount to breach of covenant not to part with the possession of the premises. It was further explained in this case that it is not the law that no sooner does any person other than the lessee occupies a premises, it must be held that the tenant has parted with possession of the demised premises. What has to be seen in such a case is whether the tenant has totally effaced himself and whether the possession of the third person is exclusively in his RCT No. 24/2018 New India Motors (New Delhi) P. Ltd. Vs. Northern India Iron & Steel Co. Ltd. AND RCT No. 37/2018 (crossobjection) New India Motors Vs. Northern India Page No. 13 of 82 own right and to the ouster of the lessee.
23. Section 14(1)(b) of DRC Act provides as under:
"that the tenant has, on or after the 9 th day of 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"
24. In this regard, it is also necessary to reproduce Section 14(4) of DRC Act, which read as under :
"14. Protection of tenant against eviction (4) For the purpose of clause (b) of the proviso to subsection (1), any premises which have been let for being used for the purpose of business or profession shall be deemed to have been sublet by the tenant, if the Controller is satisfied that the tenant without obtaining the consent in writing of the landlord has, after the 16 th day of August, 1958, allowed any person is a partner of the tenant in the business or profession but really for the purpose of sub letting such premises to the person.
25. In the cases of subletting, Section 16 and 17 of the DRC Act, are also relevant, which are also being reproduced as under :
RCT No. 24/2018 New India Motors (New Delhi) P. Ltd. Vs. Northern India Iron & Steel Co. Ltd. AND RCT No. 37/2018 (crossobjection) New India Motors Vs. Northern India Page No. 14 of 82 "16. Restrictions on subletting. (1) Where at any time before the 9th day of June, 1952, a tenant has sublet the whole or any part of the premises and the subtenant is, at the commencement of this Act, in occupation of such premises, then notwithstanding that the consent of the landlord was not obtained for such subletting, the premises shall be deemed to have been lawfully sublet.
(2) No premises which have been sublet either in whole or in part on or after the 9th day of June, 1952,without obtaining the consent in writing of the landlord, shall be deemed to have been lawfully sublet.
(3) After the commencement of this Act, no tenant shall, without the previous consent in writing of the landlord,
(a) Sublet the whole or any part of the premises held by him as a tenant; or
(b) transfer or assign his rights in the tenancy or in any part thereof.
(4) No landlord shall claim or receive the payment of any sum as premium or pugree or claim or receive any consideration whatsoever in cash or in kind for giving his consent to the sub letting of the whole or any part of the premises held be the tenant.
17. Notice of creation and termination of subtenancy. (1) Whoever, after the commencement of this Act, any premises are sublet either in whole or in part by the tenant with the previous consent in writing of the landlord, the tenant or the subtenant to RCT No. 24/2018 New India Motors (New Delhi) P. Ltd. Vs. Northern India Iron & Steel Co. Ltd. AND RCT No. 37/2018 (crossobjection) New India Motors Vs. Northern India Page No. 15 of 82 whom the promises are sublet may, in the prescribed manner, give notice to the landlord of the creation of the subtenancy within one month of the date of such subletting and notify the termination of such subtenancy within one month of such termination.
(2) XXX (3) XXX
26. The sum and substance of law on subletting is that if the tenant continues to retain the legal possession of the demised premises and has merely allowed another person to use the demised premises, it will not amount to subletting. The basic test is whether the tenant continues to be in the legal and physical possession of the premises. The another test can be that it is necessary that the tenant remains in the legal possession and the tenant must have a right to oust another person from the demised premises. The Delhi Rent Control Act is piece of welfare legislation and has been enacted to afford protection to the landlord and tenant. The eviction order can be passed only if there exists any of the grounds as mentioned in Section 14(1) of DRC Act. The general scheme of the Act is that subletting is prohibited. However, the exception is that after enactment of the Act, the subletting is permissible, if it has been done with the RCT No. 24/2018 New India Motors (New Delhi) P. Ltd. Vs. Northern India Iron & Steel Co. Ltd. AND RCT No. 37/2018 (crossobjection) New India Motors Vs. Northern India Page No. 16 of 82 prior written permission of the landlord. It has also been held in catena of judgments that such permission has to be specific. Section 17 of the DRC Act requires that the tenant and the sub tenant are required to give notice in writing to the landlord of the creation of the subtenancy within one month of the date of such subletting. The scheme of the entire Act would suggest that intention of the Legislature is that premises which has been let out to the tenant must be enjoyed by the tenant himself. The tenant cannot sublet, assign or part with the possession of the premises to anybody without prior permission in writing of the landlord. To my mind, this is being done in order to protect the interest of the landlord and to maintain the sanctity of the contract between landlord and tenant. However, there can be instances where the tenant after he has taken the premises on rent enters into partnership deed with another person and thus, does not surrender the legal possession of the premises in question. The litmus test in such partnership cases would be that, whether the tenant to whom the demised premises was let out continues to have control over the demised premises to the exclusion of the other newly inducted partners.
27. In the cases of subletting, it is very difficult to get direct evidence and the courts have to look into the attendant RCT No. 24/2018 New India Motors (New Delhi) P. Ltd. Vs. Northern India Iron & Steel Co. Ltd. AND RCT No. 37/2018 (crossobjection) New India Motors Vs. Northern India Page No. 17 of 82 circumstances to reach to any conclusion. In the present case, the relationship of landlordtenant has not been disputed.
F. ISSUES RAISED IN RCT No.24/2018
28. The appellant/tenant has challenged the impugned order on the ground that the same is based on mere conjectures and surmises and contrary to the pleadings, material and evidence on record.
29. The appellant has submitted that the onus was on the landlord to prove the subletting and this onus is not discharged merely by showing that first tenant was one firm and the premises was under occupation of another firm as mere possession by somebody other than a tenant would not necessarily prove that the premises had been sublet. The landlord is required to prove that the tenant has effaced himself or has lost control and right to the premises. Appellant has also submitted that though the tenant company is a juristic person but the Ld. Trial Court was required to see whether the possession has been parted with and as to whether there is ouster of the tenant. It has been submitted that appellant no.2&3 are the corporate reflection of K.C. Jain & Sons. It has further been submitted that Sh.
RCT No. 24/2018 New India Motors (New Delhi) P. Ltd. Vs. Northern India Iron & Steel Co. Ltd. AND RCT No. 37/2018 (crossobjection) New India Motors Vs. Northern India Page No. 18 of 82 Pawan S. Jain, being the Managing Director, majority shareholder, son of Sh. K.C. Jain and also the member of K.C. Jain & Sons, is controlling appellant nos. 2&3 and therefore, it cannot be said that there was ouster of the tenant or that the tenant had lost control or right to the premises. It has been submitted that the Ld. Trial Court has erroneously shifted the negative onus on the tenant without any positive averment/evidence, to even suggest that the alleged sub tenants were in exclusive possession of the premises or were holding or have right to enjoy or that the tenant had given up or lost the right of the premises. The appellant has further submitted that Sh. Vijay Gupta, who is stated to have visited the premises on 28.05.2001 and learnt about the alleged subletting, was not even examined by the petitioner. The appellant has submitted that M/s New India Motors (New Delhi) Pvt. Ltd. (tenant) is not a defunct company and has always been executing business of marketing and sales promotion of travel and other products. It has been further submitted that appellant nos.2&3 are fully owned by K.C. Jain & Sons and Sh. Pawan S. Jain is the Director and majority shareholder in all the three appellant companies and have control on all the three companies. Appellant has submitted that in fact Sh. Pawan S. Jain has been operating the business and affairs of RCT No. 24/2018 New India Motors (New Delhi) P. Ltd. Vs. Northern India Iron & Steel Co. Ltd. AND RCT No. 37/2018 (crossobjection) New India Motors Vs. Northern India Page No. 19 of 82 appellant nos.1 to 3. The plea of the appellant is that appellant no.1 is the agent of appellant nos.2&3 and the businesses of appellant nos. 1 to 3 is being conducted by Sh. Pawan S. Jain and appellant no.1/tenant from the premises in dispute. The portion from where the business is being conducted by appellant no.1 always remained under the lock and key of the tenant Sh. Pawan S. Jain. It has further been submitted that there was a written consent by the original landlord whereby K.C. Jain & Sons could carry on their business in the premises and any business by the appellant no.1/ tenant can be carried on as Dealer or in any other capacity, business of travel Agencies or any other Agencies. The reliance has been placed upon the clause 3(a) of the lease deed dated 24.02.1971 Ex. RW1/2, which provided as under :
"Lessee will be at liberty to carry on as Dealers or in any other capacity or any other business which the lessee may choose. Further, the Lessors will have no objection to the Lessee authorizing Sh. K.C. Jain & Sons to carry on their business in the premises."
30. It has further been submitted that Sh. Pawan S. Jain in his testimony has stated that he is the Director & majority shareholder in all the three companies i.e. respondents no.1 to 3 and has been operating the business and affairs of the respondents no.1 to 3. Sh. Pawan S. Jain also specifically stated RCT No. 24/2018 New India Motors (New Delhi) P. Ltd. Vs. Northern India Iron & Steel Co. Ltd. AND RCT No. 37/2018 (crossobjection) New India Motors Vs. Northern India Page No. 20 of 82 that the portion from where the business of respondents no.1 to 3 are being carried on, always remains under the lock and key of the respondent no1 and he has the keys of the said portion and remains in his possession and he opens the same in the morning and closes the same after the working hours. It has further been submitted that this part of the testimony of the witness has remained unrebutted and unchallenged in the entire cross examination.
31. It has further been submitted that the Ld. Trial Court has wrongly observed that appellant no.1/tenant did not produce the invoice or any documentary evidence to show that appellant no.1 was also acting as agent of appellant nos.2&3 despite the accounts of the appellants being audited from time to time. In this regard, the Ld. Trial Court has ignored the material and evidence on record in the form of Annual Returns of appellant nos.1 to 3, audited reports along with Balance Sheet, Profit & Loss Account of appellant no.1, since prior to the filing of the eviction petition i.e. w.e.f. 01.04.1999 till the period ending 31.03.2014 i.e. Ex.RW1/P4. It has further been submitted that these documents proved that the appellant no.1 was in possession and in control of the premises, running its profitable business, drawing incomes from commission, handling and service charges RCT No. 24/2018 New India Motors (New Delhi) P. Ltd. Vs. Northern India Iron & Steel Co. Ltd. AND RCT No. 37/2018 (crossobjection) New India Motors Vs. Northern India Page No. 21 of 82 from appellant nos.2&3. It has further been submitted that these documents were produced on notice under Order 12 Rule 8 CPC as sought by the petitioner.
32. It has further been submitted that appellant nos.2&3 are also the business of K.C. Jain & Sons and are wholly owned and controlled by K.C. Jain & Sons. It has further been submitted that the Ld. Trial Court has wrongly relied upon Section 92 of the Indian Evidence Act as well as the judgment of the Hon'ble Supreme Court in Singer India Ltd. vs. Chander Mohan Chadha & Ors (2004) 7 SCC 1. The appellant has also submitted that following questions of law thus arise from the impugned judgment :m
i) Whether merely because the alleged sub tenant/company is a juristic person, can it be inferred as a necessary corollary that the possession has been parted with and there is an ouster of the tenant despite the fact that the possession is retained by the tenant and has not lost the control thereof?
ii) Whether the Ld. Trial Court has rightly applied the legal test as to whether the tenant has given up or lost the right to the premises?
iii) Whether onus can be shifted upon the tenant without the initial onus being discharged by the landlord to show the alleged sub tenant was in exclusive possession of the premises or was holding or has right to enjoy the premises or that the tenant had lost the RCT No. 24/2018 New India Motors (New Delhi) P. Ltd. Vs. Northern India Iron & Steel Co. Ltd. AND RCT No. 37/2018 (crossobjection) New India Motors Vs. Northern India Page No. 22 of 82 control and possession thereof?
iv) Whether adverse inferences can be drawn against the tenant despite documents having been produced and filed on record?
v) Whether the interpretation of the terms of the Registered Lease Deed by the Ld. Trial Court is erroneous and contrary to law?
vi) Whether despite findings of an earlier judgment and admission of the same status/state of affairs continuing and having not changed being admitted by the petitioner are binding to the effect that the tenant is in physical possession and control of the premises and whether the same could not ignored by the Ld. Trial Court?
33. The appellant has submitted that the impugned order is erroneous and is not based on correct appreciation of evidence and is thus, liable to be set aside.
G. ISSUES RAISED IN RCT No. 37/2018
34. The petitioner/landlord also filed the crossobjection registered as RCT No. 37/2018, challenging the impugned order on the ground that the respondent no.2 in the appeal bearing No. 24/2018 was neither the named party nor was summoned party in the earlier proceedings culminating into the judgment passed by the Ld. RCT on 04.08.1979.
RCT No. 24/2018 New India Motors (New Delhi) P. Ltd. Vs. Northern India Iron & Steel Co. Ltd. AND RCT No. 37/2018 (crossobjection) New India Motors Vs. Northern India Page No. 23 of 82
35. In the crossobjection, it has been submitted that in fact the Ld. RCT vide judgment dated 04.08.1979 held that M/s East West Air Travels, who was the alleged sub tenant, was not found in the demised premises and therefore, the eviction petition was dismissed. However, presently it is not disputed that M/s East West Agencies is in exclusive possession of portion of the demised premises. It has further been submitted that even as per the case set out by the appellant no.1/tenant, the exclusive possession was also given to M/s East West Agencies after passing of the order by the Hon'ble Supreme Court of India on 24.09.1984 and nor prior thereto and this event has admittedly occurred much later to the passing of the earlier judgment dated 04.08.1979 by the Hon'ble Mr. Justice P.K. Bahri, the then Ld. Rent Control Tribunal. It has further been submitted that the Ld. Trial Court has not correctly appreciated the principles of res judicata, as provided under Section 11 CPC. It has further been submitted that for the application of principles of res judicata, it is essential that the matter directly and substantially in issue in a former suit between the parties or between the parties under whom or any of them claim litigating under the same title in a court competent to try said subsequent suit in which issue has been subsequently raised and has been heard and finally decided RCT No. 24/2018 New India Motors (New Delhi) P. Ltd. Vs. Northern India Iron & Steel Co. Ltd. AND RCT No. 37/2018 (crossobjection) New India Motors Vs. Northern India Page No. 24 of 82 by such court. It has further been submitted that this principle of res judicata will not apply as M/s East West Agencies was not a party in the earlier proceedings before the Ld. RCT nor it was claimed in the earlier proceedings that M/s East West Agencies was in possession as sub tenant of any part of the demised premises. It has further been submitted that though there was a similarity in the ground for eviction but the cause of action for filing of the present petition was completely different from the cause of action in the earlier petition. It has been submitted that issue involved in the present case was not directly adjudicated in the earlier proceedings inasmuch as the issue of exclusive possession and M/s East West Agencies being a sub tenant was not involved in the earlier proceedings and that in any case, the exclusive possession was parted with after 24.09.1984 i.e. much later to previous judgment. It has further been submitted that the Ld. Trial Court ignored that subsequent to the passing of the said judgment dated 04.08.1979, the possession of the parties in respect of the demised premises changed and that the exclusive possession to respondent no.2 was granted by the appellant no.1 / tenant under the garb of the orders of Hon'ble Supreme Court. It has further been submitted that in Civil Suit Nos. 323/06/80 and 325/06/80 titled as M/s New India Motors (New Delhi) Pvt. Ltd.
RCT No. 24/2018 New India Motors (New Delhi) P. Ltd. Vs. Northern India Iron & Steel Co. Ltd. AND RCT No. 37/2018 (crossobjection) New India Motors Vs. Northern India Page No. 25 of 82 vs. M/s East West Agencies, the court of Ld. ADJ vide order dated 26.04.2008 categorical held that M/s East West Agencies is a tenant under the plaintiff i.e. appellant no.1 in respect of the premises in dispute and therefore, this finding was binding on the Ld. ARC as the court of Ld. ADJ is a civil court of substantive jurisdiction as provided under law. It has further been submitted that merely because an appeal has been filed against the judgment of the Ld. ADJ, the finding arrived by the court of Ld. ADJ cannot be ignored and brushed aside and particularly, when there is no stay order qua the operation of the judgment. It has further been submitted that admittedly, the M/s East West Agencies is in exclusive possession of half portion of the property under its lock and key with separate water and electricity connection and without any inferences or control of appellant no.1. It has further been submitted that there is a clear case of subletting and Ld. Trial Court has wrongly dismissed the eviction petition on the ground of res judicata.
H. EVICTION ON GROUND OF BONAFIDE
REQUIREMENT.
36. Before proceeding further, it is also relevant to note that petitioner / landlord had also filed an eviction petition under RCT No. 24/2018 New India Motors (New Delhi) P. Ltd. Vs. Northern India Iron & Steel Co. Ltd. AND RCT No. 37/2018 (crossobjection) New India Motors Vs. Northern India Page No. 26 of 82 Section 14(1)(e) of DRC Act against appellant no.1/ M/s New India Motors (New Delhi) Pvt. Ltd. and in the said eviction petition, an eviction order was passed by the Ld. ARC, which was challenged vide Revision No. 490/15. The Hon'ble High Court has been pleased to admit the said revision petition and stayed the operation of the eviction order till further orders.
I. ARGUMENTS ON BEHALF OF APPELLANTS.
37. Sh. A. Sobti, Ld. Counsel for the appellant has submitted that in brief the case of the petitioner is that premises in dispute was let out to M/s New India Motors (New Delhi) Pvt. Ltd. vide registered lease deed dated 24.02.1971, however, now it is defunct company and is not carrying out any business. On 28.05.2001, when one of the Directors of the petitioner namely Sh. Vijay Gupta visited the premises for demanding the rent, he learnt that the tenant had divided the suit premises into two parts, one part had been sublet to appellant no.2&3 and the other part to respondent no.2.
38. It is pertinent to mention here that appellant no.1 is a tenant and appellant nos. 2&3 are the alleged subtenants. Respondent no.1 is the landlord and respondent no.2 is M/s East West Agencies, the alleged subtenant.
RCT No. 24/2018 New India Motors (New Delhi) P. Ltd. Vs. Northern India Iron & Steel Co. Ltd. AND RCT No. 37/2018 (crossobjection) New India Motors Vs. Northern India Page No. 27 of 82
39. The Ld. ARC vide the impugned judgment 08.06.2018 dismissed the eviction petition on the ground of resjudicata. The landlord/petitioner had claimed that appellant no.2&3 are running business of Travel Agencies and respondent no.2 is paying Rs.3,000/ per month to the appellant no.1. The contention of appellant no.1 is that he is in possession and control of the premises and there is no subletting, assignment and parting with the suit premises.
40. Respondent no.2 M/s East West Agencies had taken a plea that petitioner company is under BIFR for the last 15 years and is a Sick company without any production or trading. It was also denied that Sh. Vijay Gupta visited the premises on 28.05.2001. The eviction petition was also challenged on the ground of resjudicata. The plea taken by the appellant no.1/tenant is that there was a Travel Sub Agencies Agreement dated 11.08.1993 executed between appellant no.1 and respondent no.2, which was terminated and the matter is now pending before the Hon'ble High Court of Delhi. It has been submitted that payment of Rs.3,000/ per month is being deposited by respondent no.2 in the Hon'ble High Court of Delhi under the order of Hon'ble Supreme Court of India dated 24.09.1981. It has been submitted that petitioner/landlord was RCT No. 24/2018 New India Motors (New Delhi) P. Ltd. Vs. Northern India Iron & Steel Co. Ltd. AND RCT No. 37/2018 (crossobjection) New India Motors Vs. Northern India Page No. 28 of 82 well aware of the said Travel Sub Agreement dated 11.07.1993.
41. In respect of appellant no.2 & 3, the plea taken by the appellant no.1 is that M/s New India Motors (New Delhi) Pvt. Ltd. is owned, controlled and managed by K.C. Jain & Sons and Mr. Pawan S. Jain, S/o Sh. K.C. Jain is the majority shareholder, Director and controls the said company. The said company is not defunct and has always been executing business of marketing and sales promotion of travel and other products. The appellant has placed reliance upon the following documents namely :
i. Ex. RW1/4 Annual Return of New India Motors (New Delhi) P. Ltd. ii. Ex. RW1/5 Annual Return of Trans Tours and Travels Intl. P. Ltd. iii. Ex. RW1/6 Annual Return of Belair Travel and Cargo P. Ltd. iv. Ex. RW1/P2 Form32 of Belair Travel and Cargo P. Ltd. v. Ex. RW1/P3 Form32 of Trans Tours and Travels Intl. P. Ltd. vi. Ex. RW1/P4 - Auditors report to the members of the company vii. Ex. RW1/P5 - ROC cash counter receipt.
viii. Ex. RW1/P6 Annual Return of Trans Tours & Travels Intl. P. Ltd.
42. It has been further submitted that appellant no.1 is doing the business as Agent of appellant nos.2&3 and appellant nos.2&3 have their separate registered offices.
43. Ld. Counsel has also placed reliance upon Clause 3 of the registered lease deed dated 24.02.1971 whereby K.C. Jain & Sons were permitted to carry on their business in the premises.
RCT No. 24/2018 New India Motors (New Delhi) P. Ltd. Vs. Northern India Iron & Steel Co. Ltd. AND RCT No. 37/2018 (crossobjection) New India Motors Vs. Northern India Page No. 29 of 82 Ld. Counsel has further submitted that appellant nos. 1 to 3 are fully owned by K.C. Jain & Sons and Sh. Pawan S. Jain is the Director and majority shareholder and controls all the three companies. Ld. Counsel further submitted that Sh. Pawan S. Jain has the keys of the said portion and has always remained in the control and exclusive possession of the premises in dispute.
44. Ld. Counsel for the appellant has invited the attention of the court towards the petitioner's evidence and stated that petitioner withhold the best evidence by not examining Sh. Vijay Gupta. It is submitted that the evidence of Sh. B.M. Gupta is merely hearsay and even, he has admitted the exclusive possession and control of the appellant no.1.
45. The attention of the court was also invited to the testimony of RW1 Sh. Pawan S. Jain, who is the majority shareholder, runs and controls all the three companies as member of K.C. Jain Family & Sons.
46. Ld. Counsel has submitted that Ld. ARC has erroneously on the preponderance of probability held that the appellant no.1 parted with the possession of the property in favour of appellant no.2&3.
47. Ld. Counsel has submitted that in para 30 of the impugned judgment, the Ld. ARC has erroneously applied the RCT No. 24/2018 New India Motors (New Delhi) P. Ltd. Vs. Northern India Iron & Steel Co. Ltd. AND RCT No. 37/2018 (crossobjection) New India Motors Vs. Northern India Page No. 30 of 82 judgment in the case of M/s Mahender Saree Emporium vs. G.B. Srinivasa Murthy 2004 (2) RCR 286.
48. Ld. Counsel has submitted that in fact the real test is that whether the tenant had lost control, possession or right to the premises. It was not appreciated that the landlord is required to prove as a fact that there was subletting and he does not prove it merely by showing that his tenant was one firm and the premises in occupation of another firm as mere possession by somebody other than a tenant would not necessarily prove that the premises had been sublet unless the tenant has effaced himself or has lost control and right to the premises which admittedly is not the case in the present proceedings. Ld. Counsel emphasized that appellant no.2&3 were only the corporate reflection of K.C. Jain & Sons. It has been submitted that Ld. Trial Court ignored that Sh. Pawan S. Jain, who is the Managing Director and majority shareholder in the appellant nos.1 to 3 companies. It has further been submitted initial onus was not discharged by the landlord. Ld. Counsel for the appellant, in support of his arguments, has relied upon the following judgments :
1. M/s Madras Bangalore Transport Co. (West) vs. Inder Singh & Ors. MANU/SC/0539/1986;
RCT No. 24/2018 New India Motors (New Delhi) P. Ltd. Vs. Northern India Iron & Steel Co. Ltd. AND RCT No. 37/2018 (crossobjection) New India Motors Vs. Northern India Page No. 31 of 82
3. Vishwa Nath and Ors Vs. Chaman Lal Khanna and Ors MNU/DE/0043/1975;
4. Niranjan Lal Kanodia vs. Harbans Lal MANU/DE/0931/1995 and
5. Dipak Banerjee vs. Lilabati Chakraborty MANU/SC/0752/1987;
49. In the additional written submission, the appellants submitted that the Ld. Trial Court has applied the case laws erroneously out of context and without any reference to the facts of the case. Ld. Counsel reemphasized that in the cross examination, PW1 admitted that door between point L and M in Ex. PW1/4 is being opened by the employees of respondent no1.
50. Along with the written synopsis filed on 11.12.2020, Ld. Counsel for the appellant also filed the documents showing that M/s New India Motors (New Delhi) Pvt. Ltd. is not a defunct company, as evident from Ex. RW1/P4 i.e. Auditors reports along with Balance Sheet, P&L Accounts of M/s New India Motors (New Delhi) Pvt. Ltd. with effect from 01.04.1999 till 31.03.2014. The attention of the court was also being invited to the Auditor's report dated 04.09.2000 for audit of Balance Sheet & P&L as on 31.03.2000. It has been submitted that in the Auditor report, there is an entry under Current Assets showing due from Belair Travels & Cargo. It has been submitted that in the said report, there was an income of Rs.7,21,505/ and there RCT No. 24/2018 New India Motors (New Delhi) P. Ltd. Vs. Northern India Iron & Steel Co. Ltd. AND RCT No. 37/2018 (crossobjection) New India Motors Vs. Northern India Page No. 32 of 82 was also expenditure of the firm and profit before tax was Rs.1,16,000/. Similarly, the Auditor report dated 03.09.2001 for audit of Balance Sheet & P&L as on 31.03.2001, shows Rs.5,15,420/ and there was income of Rs.10,00,773/ and after expenditure of Rs. 9,20,000/, there was a profit of Rs.80,000/. It has been submitted that the auditor's reports show that New India Motors is operational and running its business in the premises and is not a defunct company, as alleged.
51. Ld. Counsel for the appellant has also placed on record the details of Directors as on 28.09.2000 of M/s New India Motors (New Delhi) Pvt. Ltd. Similarly, Ld. Counsel has also placed on record the details of Directors as on 31.03.2001, 31.03.2002, 31.03.2020 of M/s New India Motors (New Delhi) Pvt. Ltd. Ld. Counsel has emphasized that as per these details, Sh. Pawan S. Jain has been continuously the Director of the said firm and his shareholding as on 28.09.2000 was 3.7%.
52. The details have also been filed of Directors and shareholding of M/s Belair Travel and Cargo Pvt. Ltd. (appellant no.2) as on 31.03.2001, 31.03.2002, 31.03.2020. As per Directors details, Sh. Pawan S. Jain has also been Director of M/s Belair Travel and Cargo Pvt. Ltd. The details also shows that the shareholding of Sh. Pawan S. Jain in M/s Belair Travel and RCT No. 24/2018 New India Motors (New Delhi) P. Ltd. Vs. Northern India Iron & Steel Co. Ltd. AND RCT No. 37/2018 (crossobjection) New India Motors Vs. Northern India Page No. 33 of 82 Cargo Pvt. Ltd. was that of 33.40%.
53. The Directors details in respect of M/s Trans Tours and Travels Intl. Pvt. Ltd. has also been filed as on 31.03.2000, 31.03.2004 and 31.03.2020, which also reveals that Sh. Pawan S. Jain is Director in M/s Trans Tours and Travels Intl. Pvt. Ltd. and is also shareholder in the said firm.
54. The Annual Returns of M/s New India Motors (New Delhi) Pvt. Ltd., M/s Belair Travel and Cargo Pvt. Ltd. and M/s Trans Tours and Travels Intl. Pvt. Ltd. have also been placed on record.
55. Ld. Counsel for the appellant relied upon the judgment of Vishwa Nath and Ors Vs. Chaman Lal Khanna and Ors MNU/DE/0043/1975, wherein it was held that if an individual took the premises on rent and then converts his sole proprietorship concern into a private limited company in which he has the controlling interest, he cannot said to have sublet, assigned or parted with the possession of the premises.
56. Ld. Counsel has also relied upon the judgment of Reliable Finance Corporation Pvt. Ltd. vs. Clearing House and Agencies Pvt. Ltd. and Ors. MANU/DE/0463/1984, wherein it was held that where private limited company was functioning from the rented premises and the Managing Director of that RCT No. 24/2018 New India Motors (New Delhi) P. Ltd. Vs. Northern India Iron & Steel Co. Ltd. AND RCT No. 37/2018 (crossobjection) New India Motors Vs. Northern India Page No. 34 of 82 company allowed a firm of which he was the partner to function from the same premises, there was no subletting, assignment or parting with possession within the meaning of Section 14(1)(b) of the DRC Act. In this regard, Ld. Counsel has also relied upon MadrasBangalore (supra).
57. The plea of the Ld. Counsel for the appellant was that in such like cases, the court is required to see whether the tenant has deliberately effaced himself and whether the possession of the third person is exclusive in his own right and to the ouster of the lessee. It has been submitted that it is quite possible in law that a man can permit anyone to occupy and at the same time remain in possession. Where the tenant remained in control of each of the companies and the facts shows that he was really and easily carrying on the business of others at his own premises which remained his from first to last, then he cannot be said to have parted with possession. The reliance was placed upon Gurdial Singh vs. Brij Kishore and others 1970 RCJ 1001.
58. Ld. Counsel for the appellant also relied upon Vishwa Nath (supra), wherein it was inter alia held that though it is true that the company is a juristic person but in each case what we have to see is whether possession has been parted with and whether there is an ouster of the tenant. If the company is a RCT No. 24/2018 New India Motors (New Delhi) P. Ltd. Vs. Northern India Iron & Steel Co. Ltd. AND RCT No. 37/2018 (crossobjection) New India Motors Vs. Northern India Page No. 35 of 82 facade concealing the true facts, it may be necessary for the court to pierce the corporate veil.
59. Ld. Counsel for the appellant also relied upon the judgment of Court of Appeal to Jackon vs. Simons (1923) 1 Ch 373 and Peebles vs. Crosthwaite (1897) 13 Tlr 198, to emphasis that if the lessee retained the legal possession of the premises, he did not breach the covenant against parting with possession by allowing other people to use the premises or by sharing the possession with another. Ld. Counsel has submitted that these judgments were followed by the Hon'ble court in C.D. Chaudhary vs. Anand Sarup 1966 Delhi LT 28.
60. It has been submitted that in Vishwa Nath (supra), it was inter alia held as under :
"29. Vishwa Nath is in possession as director having a controlling the company. No doubt he has let the company into possession but parted with the possession so Iona as it is true in fact Nath has not contravened the law. He has not gone out of possession. Possession has been retained by him. If he has allowed the company to use the premises while he himself has remained in possession of them as managing director and chief executive of the company I cannot accede to the argument that he has parted with possession. Be has not assigned nor has he sublet.
30. So long as the lessee retains the legal possession of the whole of the premises he does not commit a breach of law against parting with the possession by allowing other people to use the same. A RCT No. 24/2018 New India Motors (New Delhi) P. Ltd. Vs. Northern India Iron & Steel Co. Ltd. AND RCT No. 37/2018 (crossobjection) New India Motors Vs. Northern India Page No. 36 of 82 tenant cannot be said to part with the possession of any part of the premises unless his agreement with the license wholly ousts him from the legal possession of that part. If there is anything in the nature of a right to concurrent user there is no parting with possession: See Stenina v. Abrahama, (1931) f Ch D 470 and G. D. Chaudhary v. Anand Sarup. 1966 Delhi Lt 28.
41. To sum up: on the facts proved Vishwa Nath was the tenant. He took the premises on rent in November 1962 in his own name. In 1964 he formed a company in which he had a controlling interest and of which he is the chief executive and the managing director. He is in possession of the premises His sons and wife are the other shareholders with him, in my opinion is no subletting or Parting with possession.
61. Ld. Counsel for the appellant has also placed reliance on Niranjan Lal Kanodia vs. Harbans Lal MANU/DE/0931/1995, to emphasis that in the said case, the premises in dispute was let out to Niranjan Lal Kanodia in his individual capacity. The petition for eviction was filed on the ground of subletting. The relevant portion of the judgment of Niranjan Lal (supra) is reproduced herein below :
"(9) From the above evidence which was produced by the landlord himself it is clear that the private limited company is a business controlled and owned for all practical purposes by Niranjan Lal Kanodia. There is no outsider involved in the Company. The husband and the wife are the directors of the company. The husband Niranjan Lal Kanodia is also the Chairman of the RCT No. 24/2018 New India Motors (New Delhi) P. Ltd. Vs. Northern India Iron & Steel Co. Ltd. AND RCT No. 37/2018 (crossobjection) New India Motors Vs. Northern India Page No. 37 of 82 company. 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.
There is no allegation or evidence of payment of any rent by the company to Niranjan Lal Kanodia. The learned counsel for the respondent landlord emphasized that if the company was originally registered at the address of the tenanted premises it could not be said to be a case of subletting, assigning or parting with possession. However, according to the learned counsel, the company was originally registered at the address of Basti Harphool Singh and was subsequently shifted to the address of the tenancy premises. Therefore, the case will fall within the mischief of Clause
(b) of Section 14(1). I fail to understand how the change of the registered office of the company will make any difference on the legal question. The evidence on record reveals that the premises at Basti Harphool Singh was also that of Niranjan Lal Kanodia where Kanodia Hosiery Mills was functioning.
(11). Now coming to the aspect of the functioning of the said company in the premises in suit, it is not in dispute that the company has its address of the premises in dispute. It has also come in evidence that the company's sign board is also displayed on the premises in dispute. The landlord has tried to lead evidence that the shop had a partition separating one portion of the shop from the other. Some of the witnesses have said that it was a wooden partition while others have said it was a glass partition. Further RCT No. 24/2018 New India Motors (New Delhi) P. Ltd. Vs. Northern India Iron & Steel Co. Ltd. AND RCT No. 37/2018 (crossobjection) New India Motors Vs. Northern India Page No. 38 of 82 some witness says that the partition no longer exists and it was there only for a brief period. Be that as it may, whether the partition was there or not, in view of the settled legal position the presence of the limited company cannot lead to the conclusion that there is sub letting, assigning or parting with possession of the tenancy premises in its favor. 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 than 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 at least two directors in a private limited company) is his wife Shanti Devi. In these facts and applying the legal tests as laid down by the Supreme Court a find referred to hereinbefore, can it be said that Niranjan Lal Kanodia 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 Kanodia 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 Kanodia 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. Therefore, display of the sign board of the company or even if the portion of the tenancy premises is partitioned or the company is present in the partitioned portion RCT No. 24/2018 New India Motors (New Delhi) P. Ltd. Vs. Northern India Iron & Steel Co. Ltd. AND RCT No. 37/2018 (crossobjection) New India Motors Vs. Northern India Page No. 39 of 82 does not make any difference so far as the legal consequences of such acts are concerned.
(12) Unfortunately the Rent Control Tribunal did not advert to the legal questions involved in this connection and on the basis of mere presence of the private limited company on the premises in dispute it has been held that it is a case of sub letting. This was a totally erroneous approach."
62. Ld. Counsel has submitted that in the present case also in fact, Mr. Pawan S. Jain is in total and complete control of appellant nos. 13 and therefore, it cannot be held that the premises in dispute or any portion of it has been sublet.
63. Ld. Counsel has also relied upon the judgment of M/s Madras Bangalore Transport Co. (West) vs. Inder Singh & Ors. MANU/SC/0539/1986, to emphasis that the private limited company though a separate legal entity was in fact a creature of the partners of the firm and was the very image of the firm.
J. ARGUMENTS ON BEHALF OF
RESPONDENT No.1/LANDLORD
64. Sh. Rikky Gupta, Ld. Counsel for the respondent has submitted that the Ld. ARC has passed the order dated 08.06.2018 on the basis of credible evidence on the record that RCT No. 24/2018 New India Motors (New Delhi) P. Ltd. Vs. Northern India Iron & Steel Co. Ltd. AND RCT No. 37/2018 (crossobjection) New India Motors Vs. Northern India Page No. 40 of 82 appellant no.1/tenant had sublet the part of the tenanted premises to appellant nos.2&3, without obtaining written consent of the landlord. It has been submitted that the present eviction petition was filed in the year 2001 and the appellant no.1 inducted the appellant nos.2&3 and respondent no.2 as unlawful subtenants without obtaining the written consent from the landlord. It has further been submitted that the defence raised by the appellant no.1/tenant that he is duly appointed agent of appellant nos.2&3 and is conducting business from the tenanted premises, has not been proved by way of evidence. Similarly, the plea of the appellant no. 1 that appellant nos.2&3 are merely assisting it in discharging business of Agencies, has also not been proved. It has further been submitted that appellant no.1/tenant has not placed any material on record to show that appellant no.1 is the agent of appellant nos.2&3. The appellants have not placed any material on record to show that appellant no.1 is the agent of appellant no.2&3. It has been further submitted that though the appellants have relied upon a written consent of erstwhile landlord as contained in lease deed dated 24.02.1971, however, this written consent has no value as it is very general in terms and not specific as required under the law. Even as per this document, K.C. Jain & Sons were permitted to carry on their business in the RCT No. 24/2018 New India Motors (New Delhi) P. Ltd. Vs. Northern India Iron & Steel Co. Ltd. AND RCT No. 37/2018 (crossobjection) New India Motors Vs. Northern India Page No. 41 of 82 tenanted premises. The lease deed never permitted appellant nos. 2&3, which are private limited company and are having separate legal entities, to carry on their business in the tenanted premises. In any case, the appellant no.1 did not obtain any written consent from the landlord. It has been further submitted that appellant no.2&3 cannot claim themselves to be Mr. K.C. Jain & Sons and in absence of any permission for any corporate body to carry out its business and the written consent in lease deed, the appellant nos.2&3 cannot be permitted to carry out their work from the tenanted premises.
65. Sh. Rikky Gupta, Ld. Counsel for the respondent has further submitted that the Ld. Trial Court has rightly relied upon the proposition laid down in Singer India Ltd. vs. Chander Mohan Chadha & Ors (2004) 7 SCC 1, and submitted that it is a good law and squarely applicable to the facts of the present case. Ld. Counsel has submitted that the Ld. ARC has given a categorical finding on the facts of the case and in view of Section 38 of DRC Act, the court cannot go into the finding on the facts of the case arrived on the basis of the evidence on record.
66. It has been further submitted that the appellants being corporate entities are bound to maintain necessary financial records as well as statutory records but they failed to produce any RCT No. 24/2018 New India Motors (New Delhi) P. Ltd. Vs. Northern India Iron & Steel Co. Ltd. AND RCT No. 37/2018 (crossobjection) New India Motors Vs. Northern India Page No. 42 of 82 record to prove the existence of any such relationship. Ld. Counsel invited the attention of the court to the testimony of RW1 wherein he claimed himself to be Director of appellant nos.1 to 3 and admitted that as on the date of filing of the petition on the ground of subletting and seven years prior thereto, he and his family members did not have majority shareholding in appellant no.3. It has further been submitted that the possession and existence of appellant no.3 in the tenanted premises during that period is not disputed and is in fact admitted. It has further been submitted that RW1 was even unable to prove by production of official records that he or his family members were even directors of the appellant no.3 during the relevant period. It has further been submitted that respondent did not prove the entire documents as required by the notice under Order 11 Rule 12 CPC. In response to the said notice, a vague affidavit was filed and the records were deliberately not produced which led the court to draw adverse inference against the appellants. It has further been submitted that appellant no.1 admitted that appellant nos. 2&3 are working out at the tenanted premises and have employed a number of employees. In support of his case, Ld. Counsel for the respondent has relied upon the following judgments :
RCT No. 24/2018 New India Motors (New Delhi) P. Ltd. Vs. Northern India Iron & Steel Co. Ltd. AND RCT No. 37/2018 (crossobjection) New India Motors Vs. Northern India Page No. 43 of 82
1. Prem Prakash Vs Santosh Kumar Jain (HUF) 2018) 12 SCC 637;
2. Singer India Ltd. Vs. Chander Mohan Chadha Ors (2004) 7 SCC 1;
3. Cox & Kings Ltd. vs. Chander Malhotra (1997) 2 SCC 687;
4. Parasram Harnand Rao vs. Shanti Parsad Narinder Kumar Jain (1980) 3 SCC 565;
5. Narain Singh Vs Shanti Devi 2010 (6) AD (Delhi) 170;
6. Parvinder Singh vs. Renu Gautm (2004) 4 SCC 794;
7. Nihal Chand Rameshwar Das Vs Vinod Rastogi (1994) 4 SCC 325;
8. Prakash Kau Chadha vs. Sudesh Mehta 2015(1) RLR 214;
9. Pulin Behari Lal vs. Mahadeb Dutta (1993) 1 SCC 629 and
10. Abhilash Jain vs. Surender Kumar Kalra 2012(190) DLT 260.
67. In the additional written synopsis, Ld. Counsel for the respondent has submitted that the Ld. Trial Court has rightly held that by virtue of Clause 3(a) of lease deed Ex. RW1/2, the original landlord only permitted the respondent no.1 to allow Sh.
K.C. Jain & Sons to carry on their business from suit premises and therefore, no other meaning or import can be attached or given to the said clause in the lease deed so as to infer intention of the maker to permit any person or body corporate to conduct its business from the suit premises.
68. It has further been submitted that appellant no.1/tenant is a corporate entity i.e. M/s New India Motors (New Delhi) Pvt. Ltd. and not Mr. Pawan Jain. Similarly, appellant nos. 2&3 are also separate corporate entities being Private Limited Companies.
RCT No. 24/2018 New India Motors (New Delhi) P. Ltd. Vs. Northern India Iron & Steel Co. Ltd. AND RCT No. 37/2018 (crossobjection) New India Motors Vs. Northern India Page No. 44 of 82
69. It has further been submitted that the lease deed has not permitted Mr. Pawan Jain to operate from the suit premises and therefore, his claim that he is in control of the three companies has no legal sanctity. It has further been submitted that even otherwise, the terms of the lease are enforceable only during the lifetime of the lease, which was executed for five years and therefore, even for the sake of arguments, if the permission was granted, that expired after five years of the execution of the lease. It has been submitted that appellant nos.2&3 were found after 1976 and therefore, in no manner, the permission to them could have been granted.
70. Ld. Counsel has further submitted that RW1 in his crossexamination admitted that the majority shareholding of M/s Belair Travel and Cargo Pvt. Ltd. was not with him at least till 31.03.2001 and further, he was not the director of this company at least till 31.03.2001. Ld. Counsel submitted that thus, Mr. Pawan S. Jain was not having any power or in control over M/s Belair Travel and Cargo Pvt. Ltd. till 31.03.2000. It has further been submitted that records were manufactured later on to demonstrate that Mr. Pawan S. Jain was in power and control of M/s Belair Travel and Cargo Pvt. Ltd.
RCT No. 24/2018 New India Motors (New Delhi) P. Ltd. Vs. Northern India Iron & Steel Co. Ltd. AND RCT No. 37/2018 (crossobjection) New India Motors Vs. Northern India Page No. 45 of 82
71. Ld. Counsel submitted that Ex.RW1/P2, which is Form 32 of M/s Belair Travel and Cargo Pvt. Ltd., though has been exhibited, but the same has not been proved in accordance with law as neither the record was called from the Registrar of Companies nor the certified copies were filed. It has been submitted that even as per the photocopy of receipt of Form 32, the requisite charges have been deposited on 24.07.2001.
72. Ld. Counsel for the respondent has further submitted that if appointment of Sh. Pawan S. Jain as Director was made on 28.03.2001, the same would have reflected in the Annual Return for the year ending on 31.03.2001 and the audited annual return, which are filed after Annual General Meeting, which held in last week of September of the following year. It has been further submitted that respondent did not file the requisite documents instead of service of notice under Order 12 Rule 8 CPC by the petitioner. Even the Minutes Book of appellant nos. 1 to 3 were not placed before the court. Similarly, the Register of Members of the companies, which are statutorily required to be maintained, were also not produced. It has further been submitted that had these records being produced, it would have shown that Mr. Pawan S. Jain was not in control of appellant no.2. It has been submitted that the documents filed by the appellant along with RCT No. 24/2018 New India Motors (New Delhi) P. Ltd. Vs. Northern India Iron & Steel Co. Ltd. AND RCT No. 37/2018 (crossobjection) New India Motors Vs. Northern India Page No. 46 of 82 the additional arguments filed on 14.12.2020, cannot be looked into as the same have not been proved in accordance with the law.
73. In respect of appellant no.3 i.e. M/s Trans Tours and Travels Intl. Pvt. Ltd., it has been submitted that the appellants have themselves admitted that as on date, said entity was not functioning but this does not imply that the said entity is not in existence or has been struck off as a Company. The appellant no.3 has been kept alive and therefore, the character and ownership of this company assumes importance. It has further been submitted that as per Ex.RW1/P6, which is Annual Return of M/s Trans Tours and Travels Intl. Pvt. Ltd., placed in the Annual General Meeting dated 29.09.2014 reflects that 59.8% of the shareholdings of the company are with the Body Corporate and 40% are with the directors/relatives of directors. It has been submitted that even Memorandum of Association and Articles of Association of this company has not been proved. Ld. Counsel submitted that appellant no. 1 M/s New India Motors (New Delhi) Pvt. Ltd. is actually not doing any business and is functional only on papers. It has further been submitted that for these reasons, the appellant no.1 did not produce the documents in response to the notice under Order 12 Rule 8 CPC and though RCT No. 24/2018 New India Motors (New Delhi) P. Ltd. Vs. Northern India Iron & Steel Co. Ltd. AND RCT No. 37/2018 (crossobjection) New India Motors Vs. Northern India Page No. 47 of 82 admitted the existence and availability of the records, but were not produced before the Ld. Trial Court. The attention has also been drawn towards the crossexamination of RW1 recorded on 22.01.2016 wherein it was admitted that appellant nos.1 to 3 have bank accounts, but have not been brought. It was also pointed out that no record or document has been placed on any Agencies Agreement between appellant no.1 on one hand and appellant nos. 2&3 on the other hand. Respondent has also admitted that business of appellant no.1 is assisted by the staff of appellant no.3 and 15 employees of respondent no.3 are assisting appellant no.1 in Scindia House, New Delhi. Respondent failed to produce any record regarding payment of salary to the employees of appellant no.1. It has further been submitted that though, the appellant has relied upon the Annual Returns Ex.RW/P4 and Ex.RW/P5, however, the same have not been proved in accordance with the law and were merely exhibited as these were filed in reply to the notice. Ld. Counsel has further submitted that even the perusal of these Annual Returns would show that appellant no.1 was receiving a fixed sum as licence fees of Rs.2,19,000/ per annum as one of its income up to the year ending on 31.03.2001, which was discontinued from 31.03.2002 i.e. after filing of the eviction petition in the year 2001. It has RCT No. 24/2018 New India Motors (New Delhi) P. Ltd. Vs. Northern India Iron & Steel Co. Ltd. AND RCT No. 37/2018 (crossobjection) New India Motors Vs. Northern India Page No. 48 of 82 further been submitted that if appellant no.1 is an agent of appellant nos.2&3, there is no possibility of appellant nos.2&3 paying licence fees to appellant no.1. It has further been submitted that the complete record of the preceding years have not been filed as it could have shown that only licence fees was the sole source of income for appellant no.1. It has further been submitted that in respect of Handling & Services charges, the appellant did not produce any document as to prove the nature of these transactions. Ld. Counsel has invited the attention of the court towards the Fixed Assets of the respondent. It has been submitted that in the year 2000, the Fixed Assets of the appellant no.1 was Rs.1,829/, which in the year 2011 dropped to Rs.237/. It has been submitted that during these years, there was no addition in the Fixed Assets and only in March 2012, Rs.4,500/ were spent towards purchase of furniture and a computer was added for a sum of Rs.8,500/ in the year 2011. It has been submitted that it is beyond comprehension that with such minuscule infrastructure, the appellant no.1 could have run the business of Travel Agencies.
74. In respect of income from Handling & Service charges, it has been submitted that the perusal of the annual returns of appellant of the financial year ending on 31.03.2012, 31.03.2013 RCT No. 24/2018 New India Motors (New Delhi) P. Ltd. Vs. Northern India Iron & Steel Co. Ltd. AND RCT No. 37/2018 (crossobjection) New India Motors Vs. Northern India Page No. 49 of 82 and 31.03.2014, would indicate that appellant no.1 is entitled to receive Handling charges from appellant no.2. It has been submitted that if the appellant no.1 is agent of appellant no.2, then it ought to be liable for the appellant no.2 and not visa versa. It has been submitted that there is a reverse flow of money which leads to conclusion that this is rent though named as Handling & Service charges.
75. In regard to the Crossobjection, Sh. Rikky Gupta, Ld. Counsel for the crossobjector/petitioner has submitted that the finding arrived at by the Ld. ARC is not correct. It has been submitted that in the first petition, the respondent no.2 i.e. M/s East West Agencies was not a party. It has further been submitted that earlier the revision petition was dismissed by the Ld. RCT based on the premise that the alleged subtenant was not found in possession. However, now admittedly, one part of the tenanted premises is still in possession of M/s East West Agencies and is under their lock and key. Admittedly, appellant no.1 has no control over the said premises nor has an access to the same. It has been further submitted that in one of the litigation between appellant no.1 and M/s East West Agencies concerning the control and nature of the possession of respondent no.2 over the part of the tenanted premises, a categorical finding RCT No. 24/2018 New India Motors (New Delhi) P. Ltd. Vs. Northern India Iron & Steel Co. Ltd. AND RCT No. 37/2018 (crossobjection) New India Motors Vs. Northern India Page No. 50 of 82 of the court of Ld. ADJ was delivered vide judgment dated 26.04.2008 wherein it has been submitted that relationship between the appellant no.1 and respondent no2 herein is that of tenant and subtenant. It has further been submitted that finding of the civil court is binding on Ld. ARC inasmuch as the proceeding under the DRC Act are summary in nature, while the proceedings in a civil court are expansive and are based upon cogent evidence with due consideration of all the legal positions and after fullfledged trial. It has further been submitted that the court of Ld. ADJ is a superior court in terms of hierarchy and therefore, its finding is binding upon the Ld. ARC. It has further been submitted that merely by filing an appeal, the finding arrived at by the court of Ld. ADJ cannot be ignored. Ld. Counsel for the CrossObjector has also relied upon the Dunlop India Ltd. vs. A.A. Rahana & Anr. (2011) 5 SCC 778, wherein the Hon'ble Supreme Court while dealing with the issue of res judicata inter alia held that eviction petition, though passed on same cause but pertaining to different period of time, are not barred by res judicata. It has been submitted that the present case is for a year around 2001 and does not pertain to the period prior to 1979 and therefore, the eviction petition against the respondent no.2 is not hit by res judicata and therefore, the crossobjections RCT No. 24/2018 New India Motors (New Delhi) P. Ltd. Vs. Northern India Iron & Steel Co. Ltd. AND RCT No. 37/2018 (crossobjection) New India Motors Vs. Northern India Page No. 51 of 82 are to be allowed in terms thereof.
K. APPRECIATION OF ARGUMENTS AND FINDING
76. The perusal of the impugned judgment indicates that the Ld. Trial Court on the point of written consent, as contained in the lease deed dated 24.02.1971, inter alia held that the lease deed permitted the lessee to authorise Sh. K.C. Jain & Sons to carry on their business in the premises and there was no written authority to permit any other body corporate or person to carry out its business in the suit property. Ld. ARC further inter alia held that respondent no.2&3 are private limited companies and therefore, being juristic person, they are separate entities. The arguments of the respondent that since K.C. Jain and his sons are Managing Director/Directors of respondent no.2, therefore, it should be held that the permission to use the premises was implicitly given to respondent no.2&3, was rejected in view of the judgment of Singer India vs. Chander Mohan Chaddhaa (2004) 7 SCC. In order to counter this, Ld. Counsel for the appellant has submitted that this finding of the Ld. Trial Court is totally erroneous. The plea of the Ld. Counsel for the appellant was that judgment of Singer India (supra) is not applicable to the facts and circumstances of the present case and has been referred RCT No. 24/2018 New India Motors (New Delhi) P. Ltd. Vs. Northern India Iron & Steel Co. Ltd. AND RCT No. 37/2018 (crossobjection) New India Motors Vs. Northern India Page No. 52 of 82 to by the Ld. Trial Court out of the context.
77. The case of the appellant is that appellant nos. 2&3 are only corporate reflection of K.C. Jain & Sons and in the light of the fact that it is Sh. Pawan S. Jain, who is the majority shareholder, son of K.C. Jain and member of K.C. Jain & Sons, being the Managing Director and majority shareholder is in control of appellant no.2&3, it cannot be held that there is an ouster of the tenant from the premises in dispute.
78. It is also pertinent to note that Ld. Counsel for the appellant submitted that the judgments cited by the Ld. Counsel for the respondent/petitioner/landlord are distinguishable and are not applicable to the facts and circumstances of the present case.
79. In the present case, admittedly the premises in dispute was let out to M/s New India Motors (New Delhi) Pvt. Ltd. in 1971. It is also a matter of record that vide clause 3(a) of the lease deed, it was provided that the lessors will have no objection to the lessee authorising Sh. K.C. Jain and Sons to carry on their business in the premises. As per the documents placed on record i.e. Directors details of M/s New India Motors (New Delhi) Pvt. Ltd. as on 28.09.2000, Mr. Kailash Chand Jain, Mrs. Shrikanta Jain, Mr. Pawan Sagar Jain and Mr. Vijay Sagar Jain were the Directors of the company. Mr. K.C. Jain had 21.9% share in RCT No. 24/2018 New India Motors (New Delhi) P. Ltd. Vs. Northern India Iron & Steel Co. Ltd. AND RCT No. 37/2018 (crossobjection) New India Motors Vs. Northern India Page No. 53 of 82 addition of 44.08% share in the said company along with Mr. Pawan S. Jain. Besides that, Mr. Pawan S. Jain had also 3.7% shares. The constitution of the firm changed in March 2001 as Mrs. Shrikanta Jain joined in place of Mr. K.C. Jain, however, Mr. K.C. Jain continued to hold the similar shares. The position of the directors and shareholders almost remained the same in 2002. As per Directors details as on 31.03.2020, there were three directors in M/s New India Motors (New Delhi) Pvt. Ltd. namely Mr. Pawan Sagar Jain, Mrs. Sieglinde Jain and Mr. Michael Jain and at that time, Mr. Pawan Sagar Jain had 83.98% shares. It is also pertinent to note that in 2020, M/s Belair Travel and Cargo Pvt. Ltd. and M/s Trans Tours and Travels Intl. Pvt. Ltd. had 2.43% shares each. It is a matter of record that the premises was let out to M/s New India Motors (New Delhi) Pvt. Ltd. and not to Mr. K.C. Jain. It is also a matter of record that as per lease deed, the lessee were given a liberty to carry on their business as dealer or in other capacity or any other business in the demised premises and Sh. K.C. Jain & Sons were also authorise to carry on their business in the premises. It is also a matter of record that M/s Trans Tours and Travels Intl. Pvt. Ltd. and M/s Belair Travel and Cargo Pvt. Ltd., who were initially arrayed as respondent no.2 & 3 respectively, are the private limited company. It is also RCT No. 24/2018 New India Motors (New Delhi) P. Ltd. Vs. Northern India Iron & Steel Co. Ltd. AND RCT No. 37/2018 (crossobjection) New India Motors Vs. Northern India Page No. 54 of 82 necessary to bear in mind that petition was filed in June 2001 and therefore, the constitution or the character of these companies are to be seen at the time of filing of the petition or immediately prior thereto. If there is a change in the constitution of the company or in character of the firm after the filing of the petition that may be in order to covering up the case by the appellant/tenant. In this regard, it is necessary to see the constitution and character of M/s Belair Travel and Cargo Pvt. Ltd. and M/s Trans Tours and Travels Intl. Pvt. Ltd.
80. As per the documents filed by the appellant no.1 itself as on 31.03.2001, M/s Belair Travel and Cargo Pvt. Ltd. had four directors namely Mr. Pawan Sagar Jain, Mrs. Seiglinde Jain, Mrs. Bina Jain and Mr. Gurbir Singh. Mr. Pawan Sagar Jain had 29.02% shares in the firm. The other shareholders also seems to be the family members of Mr. K.C. Jain. Similarly, as on March 2002, the Directors details in the M/s Belair Travel and Cargo Pvt. Ltd. remained the same. The shareholdings also remained the same in the year 2020 and there were three directors namely Mr. Pawan Sagar Jain, Mrs. Sieglinde Jain and Mr. Michael Jain. However, in the year 2020, the shareholding of Mr. Pawan Sagar Jain was 81.82% shares. Similarly, M/s Trans Tours and Travels Intl. Pvt. Ltd. had two directors i.e. Mr. Pawan Sagar Jain and RCT No. 24/2018 New India Motors (New Delhi) P. Ltd. Vs. Northern India Iron & Steel Co. Ltd. AND RCT No. 37/2018 (crossobjection) New India Motors Vs. Northern India Page No. 55 of 82 Mrs. Shrikanta Jain. Mr. Pawan Sagar Jain was also the ChairmancumManaging Director of the company. List of shareholders also includes Mr. Pawan Sagar Jain, Mrs. Shrikanta Jain, Mr. Vijay Sagar Jain, M/s Janair Travels Pvt. Ltd. and M/s Kay Cee Plastics. Similarly, in 2004, M/s Trans Tours and Travels Intl. Pvt. Ltd. had all three same directors and the list of shareholders also remained the same. The shareholding have not been given in the record.
81. In 2020, the directors and shareholders remain the same. Thus, broadly M/s New India Motors (New Delhi) Pvt. Ltd., M/s Trans Tours and Travels Intl. Pvt. Ltd. and M/s Belair Travel and Cargo Pvt. Ltd. have same directors or shareholders belonging to the same family. Now the question is that if a premises has been let out to one private limited company, which is a separate legal entity, can the other companies, which have separate legal entities, be inducted in the same premises by the tenant and take a plea that the tenant continues to retain the premises and that they are merely the corporate reflection of the original tenant.
82. In this regard, the judgments cited by the Ld. Counsel for the appellant are relevant to see that whether they are applicable to the facts of the case or not.
RCT No. 24/2018 New India Motors (New Delhi) P. Ltd. Vs. Northern India Iron & Steel Co. Ltd. AND RCT No. 37/2018 (crossobjection) New India Motors Vs. Northern India Page No. 56 of 82
83. In Reliable Finance (supra), a private limited company was functioning from the rented premises and the Managing Director of that firm of which he was a partner, allowed the firm to function from the same premises, it was held that there was no subletting or assignment or parted with the possession.
84. Similarly, in MadrasBangalore Transport (supra), the tenant remained in possession and never effaced itself and simply allowed another company, which is a separate legal entity, to function from the same premises. It was inter alia held that there was there was substantial identity between the limited company and the partnership firm.
85. In other judgments also, the basic touchstone is whether the original tenant has effaced itself or parted with the possession of the premises in dispute to its exclusion or not. The test is whether the tenant retains the legal position of the premises with himself. If the legal possession remains with the tenant, mere user of the premises by any person or party does not amount to subletting. The mere presence of another company in the tenanted premises would not perse amounts to subletting. Thus, it has to be seen that whether the appellant no.1 M/s New India Motors (New Delhi) Pvt. Ltd. continues to retain the legal position and has merely permitted appellant nos.2&3 to function RCT No. 24/2018 New India Motors (New Delhi) P. Ltd. Vs. Northern India Iron & Steel Co. Ltd. AND RCT No. 37/2018 (crossobjection) New India Motors Vs. Northern India Page No. 57 of 82 from the same premises or effaced himself from the premises in dispute and parted with the possession of the same to the appellant nos.2&3.
86. As discussed above, in view of Section 38 of the DRC Act, the Tribunal is not competent to reassess the evidence afresh which were adduced before the Ld. ARC. The evidence can be reexamined only if there is an error on law in arriving at the finding or that the finding was based on no evidence or that it was arbitrary, unreasonable or perverse. Even at the cost of repetition, it may be reiterated that the premises in dispute was let out to a company and the company was merely permitted to authorise Mr. K.C. Jain and Sons to carry on their business in the premises. It is a settled preposition that permission to sublet has also to be very specific and cannot be general. If Mr. K.C. Jain and Sons were permitted to be inducted as a subtenant, it would not go beyond to interpret that the other companies having separate legal entities consisting of directors, which may be from the same family, was permitted to be inducted as a tenant.
87. It is also pertinent to mention here that even as per Section 17(1) of DRC Act, if a premises is sublet either in whole or in part by the tenant with the previous consent in writing of the landlord, the tenant or the subtenant to whom the RCT No. 24/2018 New India Motors (New Delhi) P. Ltd. Vs. Northern India Iron & Steel Co. Ltd. AND RCT No. 37/2018 (crossobjection) New India Motors Vs. Northern India Page No. 58 of 82 premises are sublet may, in the prescribed manner, give notice to the landlord of the creation of the subtenancy within one month of the date of such subletting.
88. In the present case, admittedly, no such notice has been served upon the landlord after respondent nos. 2&3 were inducted. The Ld. ARC in the detailed order has given a categorical finding on the facts of the case.
89. In regard to the plea taken by the appellant that appellant no.1 was the agent of appellant nos. 2&3, Ld. ARC has specifically noted that the crossexamination of RW1 Sh. Pawan S. Jain recorded on 12.08.2015 that he has not placed any document on record of such Agencies with respondent no.2&3. Ld. ARC also noted that respondent no.1 did not produce any invoice issued by it relating to services provided by it to respondent no.2&3 or even to any other person. Ld. ARC noted that respondent nos.1 to 3 did not lead any documentary evidence to show that such relation of principal and agent existed between appellant no.1 to 3.
90. It is also pertinent to mention here that even the annual returns Ex.RW1/4 and Ex.RW1/6 do not indicate that appellant no.1 was appointed as an agent by appellant nos.2&3.
91. I consider that the findings recorded by the Ld. ARC RCT No. 24/2018 New India Motors (New Delhi) P. Ltd. Vs. Northern India Iron & Steel Co. Ltd. AND RCT No. 37/2018 (crossobjection) New India Motors Vs. Northern India Page No. 59 of 82 are based on the evidence and cannot be termed arbitrary, unreasonable and perverse.
92. It is also advantageous to refer to the judgment of Singer India (supra) which has been relied upon by the Ld. Trial Court. I consider that Ld. Trial Court has rightly relied upon the said judgment. In Singer India (supra), the premises was let out to an American Company and in 1982, an eviction petition under Section 14(1)(b) of DRC Act was filed on the ground that American Company had, without the landlord's written consent, parted with the possession of the said premises in favour of another company. The eviction petition was opposed on the ground that Reserve Bank of India had issued a direction to the American Company to reduce its share capital to 40% in order to carry on business in India in view of Section 29 of Foreign Exchange Regulation Act, 1973, and therefore, the Indian Company filed before the Bombay High Court a company petition under Sections 391 & 394 of the Companies Act and pursuant thereto, a Scheme of Amalgamation was sanctioned whereby the undertaking in India of the American Company was amalgamated with the Indian Company. It was contended that merely the legal substitute of the American Company and in substance there was no case of subtenancy. It was also RCT No. 24/2018 New India Motors (New Delhi) P. Ltd. Vs. Northern India Iron & Steel Co. Ltd. AND RCT No. 37/2018 (crossobjection) New India Motors Vs. Northern India Page No. 60 of 82 contended that it was not the voluntary transfer of undertaking but one of the amalgamation resorted to under compulsion of law. The plea was taken that lifting of the corporate veil and an identification of the directors and shareholders of the transferee company and those in real control of the affairs of the said company would show that there was no subletting or parting with the possession by the American Company.
93. Per contra, it was contended that pursuant to the amalgamation, American Company lost its identity and the Indian Company came into possession of the demised premises and therefore, Section 14(1)(b) of DRC Act was clearly attracted. The Hon'ble Supreme Court in this case inter alia held that there is no ambiguity in Section 14(1)(b) of DRC Act and the applicability thereof depends upon occurrence of a factual situation, namely, subletting or assignment or otherwise parting with possession of the whole or any part of the premises by the tenant. Whether it is a voluntary act of the tenant or otherwise and also the reasons for doing so are wholly irrelevant and can have no bearing. The Hon'ble Supreme Court further held that it is not open to the company to ask for unveiling its own cloak and examining as to who are the directors and shareholders and who are in reality controlling the affairs of the company. In the present RCT No. 24/2018 New India Motors (New Delhi) P. Ltd. Vs. Northern India Iron & Steel Co. Ltd. AND RCT No. 37/2018 (crossobjection) New India Motors Vs. Northern India Page No. 61 of 82 case also the premises in dispute was let out to a specific company. It is an admitted case that the other companies are operating from the same. Now, the original tenant company cannot say that you lift the veil and then see that actually only Sh. Pawan S. Jain is controlling the affairs of all the companies.
94. The DRC Act is a piece of beneficial legislation with an intention to protect the interest of the tenant but at the same time, it also gives right to a landlord by providing grounds of eviction in his favour. If the interpretation suggested by the appellant is accepted, then if the premises is let out to a company, that company would keep on forming other companies and then allow those companies to operate from the suit premises by effacing itself. Now the objection can be that whether the appellant no.1 has effaced itself or actually it is working. The plea of the appellant is that actually M/s New India Motors (New Delhi) Pvt. Ltd. is a defunct company and is not functioning. Whereas, the plea of the appellant no. 1 M/s New India Motors (New Delhi) Pvt. Ltd. that is a functional company. Let us examine this from looking at the records of the Auditor's Report of the company. The profit of the company, as indicated from the Auditor's Report filed by the company of the year 2000 & 2001, are as follows :
RCT No. 24/2018 New India Motors (New Delhi) P. Ltd. Vs. Northern India Iron & Steel Co. Ltd. AND RCT No. 37/2018 (crossobjection) New India Motors Vs. Northern India Page No. 62 of 82 "2000 Profit & Loss Account showing income of Rs.7,21,505/ and Profit during the year as Rs.1,10,851/ 2001 Profit & Loss Account showing income of Rs.10,00,773/ and Profit during the year as Rs.76,135/"
95. Similarly, the Fixed Assets of the companies from the year 2000 onwards are as follows :
Extracts from Auditors Report 31.03.2000 Furniture & Fixture Rs.1,406/ (@ page 18) Type writer Rs. 423/ Total Rs.1,829/ Car Rs.2,648/ 31.03.2001 Furniture & Fixture Rs.1,1152/ (@ page 25) Type writer Rs. 365/ Total Rs.1,517/ Car Rs.1,926/ 31.03.2002 Furniture & Fixture Rs.943/ (@ page 32) Type writer Rs. 314/ Total Rs.1,217/ Car Rs.0.0/ 31.03.2003 Furniture & Fixture Rs.772/ (@ page 38) Type writer Rs.270/ Total Rs.1,042/ 31.03.2004 Furniture & Fixture Rs.632/ (@ page 45) Type writer Rs.232/ Total Rs.864/ RCT No. 24/2018 New India Motors (New Delhi) P. Ltd. Vs. Northern India Iron & Steel Co. Ltd. AND RCT No. 37/2018 (crossobjection) New India Motors Vs. Northern India Page No. 63 of 82 31.03.2005 Furniture & Fixture Rs.517/ (@ page 56) Type writer Rs.200/ Total Rs.717/ 31.03.2006 Furniture & Fixture Rs.423/ (@ page 50) Type writer Rs.173/ Total Rs.596/ 31.03.2007 Furniture & Fixture Rs.346/ (@ page 62) Type writer Rs.149/ Total Rs.495/ 31.03.2008 Furniture & Fixture Rs.283/ (@ page 69) Type writer Rs.127/ Total Rs.410/ 31.03.2009 Furniture & Fixture Rs.232/ (@ page 77) Type writer Rs.109/ Total Rs.341/ 31.03.2010 Furniture & Fixture Rs.190/ (@ page 89) Type writer Rs.94/ Total Rs.284/ 31.03.2011 Furniture & Fixture Rs.156/ (@ page 95) Type writer Rs.81/ Total Rs.237/
96. It is beyond comprehension that company at the heart of Connaught Place, will be functional only with an asset of RCT No. 24/2018 New India Motors (New Delhi) P. Ltd. Vs. Northern India Iron & Steel Co. Ltd. AND RCT No. 37/2018 (crossobjection) New India Motors Vs. Northern India Page No. 64 of 82 Rs.2,000/ or Rs.3,000/. Even the turnover of the company is also very insignificant.
97. It is pertinent to mention here that in Singer India (supra), the Hon'ble Supreme Court has distinguished the Madras Bangalore Transport Co. (West) Vs. Inder Singh and Ors MANU/SC/0539/1986, as the Madras Bangalore (supra) was decided purely on facts peculiar to it and no principle of law has been laid down. In Madras Bangalore (supra), it was found that as a fact that the company was only an "alter ego" or a "corporate reflection" of the tenant firm and the two were for all practical purposes having substantial identity and, consequently, there was no subletting, assignment or parting with possession of the premises by the firm to the company so as to attract Section 14(1)
(b) of the Act.
98. In the present case, the evidence on the record does not suggest so. In fact, the original tenant M/s New India Motors (New Delhi) Pvt. Ltd. seems to be totally dysfunctional and seems to have effaced itself from the premises in dispute. Therefore, the appellant nos.2&3 cannot be termed as "alter ego"
or "corporate reflection".
99. In respect of burden of proof, in Prem Prakash Vs. Santosh Kumar Jain & Sons (HUF) (2018) 12 SCC 637, it was RCT No. 24/2018 New India Motors (New Delhi) P. Ltd. Vs. Northern India Iron & Steel Co. Ltd. AND RCT No. 37/2018 (crossobjection) New India Motors Vs. Northern India Page No. 65 of 82 inter alia held that :
"17. Undoubtedly, the initial burden to prove that the subtenant is in exclusive possession of the property is on the owner, however, the onus to prove the exclusive possession of the sub tenant is that of preponderance of probability only and he has to prove the same prima facie only and if he succeeds then the burden to rebut the same lies on the tenant.
21. Subtenancy or subletting comes into existence when the tenant gives up possession of the tenanted accommodation, wholly or in part, and puts another person in exclusive possession thereof. This arrangement comes about obviously under a mutual agreement or understanding between the tenant and the person to whom the possession is so delivered. In this process, the landlord is kept out of the scene. Rather, the scene is enacted behind the back of the landlord, concealing the overt acts and transferring possession clandestinely to a person who is an utter stranger to the landlord, in the sense that the landlord had not let out the premises to that person nor had he allowed or consented to his entering into possession of that person, instead of the tenant, which ultimately reveals to the landlord that the tenant to whom the property was let out has put some other person in possession of that property. In such a situation, it would be difficult for the landlord to prove, by direct evidence, the contract or agreement or understanding between the tenant and the subtenant. It would also be difficult for the landlord to prove, by direct evidence, that the person to whom the property had been sublet had paid monetary consideration to the tenant. Payment of rent, undoubtedly, is an essential element of lease or sublease. It may be paid in cash or in kind or may have been paid or promised to be paid. It may have been paid in lump sum in advance covering the period for which the premises is let out or sublet or it may have been paid or promised to be paid periodically. Since payment of rent or monetary consideration may RCT No. 24/2018 New India Motors (New Delhi) P. Ltd. Vs. Northern India Iron & Steel Co. Ltd. AND RCT No. 37/2018 (crossobjection) New India Motors Vs. Northern India Page No. 66 of 82 have been made secretly, the law does not require such payment to be proved by affirmative evidence and the court is permitted to draw its own inference upon the facts of the case."
100. In the present case also, the petitioner has proved on record that the appellant nos.2&3 are in possession of the premises in dispute and therefore, it was for the tenant to prove that he still retains the legal possession. Appellant nos.2&3 have merely been permitted to use the premises in dispute. In the present case, appellant no.1 has failed to prove any kind of legal relationship between appellant no.1 on one hand and appellant nos.2&3 on the other hand and therefore, the only inference can be that the premises has been sublet. It is relevant to note that though the burden of proof may also remain open upon the landlord to prove the subletting but evidential burden shifts upon the tenant to disprove the subletting once the landlord has placed on record credible evidence on the record that the person other than the tenant are in exclusive possession of the premises in dispute. Since, appellant no.1 has not produced any document on record to prove that some business has been carried in the premises in dispute, the only inference can be drawn that it is a defunct company and no business is being held therein by appellant no.1.
RCT No. 24/2018 New India Motors (New Delhi) P. Ltd. Vs. Northern India Iron & Steel Co. Ltd. AND RCT No. 37/2018 (crossobjection) New India Motors Vs. Northern India Page No. 67 of 82
101. The appellant no.1 has admittedly relied upon the annual returns duly adopted in respect of appellant nos.2&3. It is different to file the annual return and to function and conduct the business. It is a general trend that company keep on filing the annual returns and produces that copy for various purposes. The filing of annual return does not perse mean that the company is functional and conducting the business.
102. It has also come during the earlier part of this judgment that the plea taken by the appellant no.1 that it is an agent of appellant nos.2&3 is not supported by any cogent evidence. I consider that in view of the documents on record, appellant no.1 is actually defunct company and has effaced itself. The evidence of the parties speaks at volume on this point. It has been admitted by the respondent in the crossexamination that their business affairs are handled by the employees of respondent no.3. In the circumstances, I consider that it has been proved on the record that the premises has been sublet, assigned and parted with the possession of the suit premises by appellant no.1 in favour of appellant nos.2&3 and I do not find any reason to interfere with the order of the Ld. Trial Court. Hence, the appeal bearing RCT No. 24/2018 is dismissed accordingly.
RCT No. 24/2018 New India Motors (New Delhi) P. Ltd. Vs. Northern India Iron & Steel Co. Ltd. AND RCT No. 37/2018 (crossobjection) New India Motors Vs. Northern India Page No. 68 of 82 L. FINDINGS IN CROSS OBJECTION BEARING RCT NO. 37/2018
103. The landlord/petitioner has filed the crossobjection challenging the order of the Ld. ARC vide which the eviction petition qua M/s East West Agencies was dismissed being barred by res judicata by virtue of earlier judgment dated 04.08.1979 passed by Hon'ble Mr. Justice P.K. Bahri, the then Ld. Rent Control Tribunal.
104. Before proceeding further, it is necessary to look at the relevant portion of the judgment of Hon'ble Mr. Justice P.K. Bahri, the then Ld. Rent Control Tribunal, which is as under :
"3. In replication the landlord for the first time came to take the plea that a portion shown in red colour in the map has been sublet to M/s East West Air Travels. A Local Commissioner was appointed who inspected the spot in presence of both the parties and gave his report Ex.AW1/1. Sh. S.D. Sharma who was the Local Commissioner proved his report which shows that in front portion of the demises premises, a sign board stood displayed as follows :
"EAST WEST AGENCIES CAMP DELHI 19B, SCINDIA HOUSE, NEW DELHI. Branches Chandigarh : Head Office : Jullundur Sub Agents:New Delhi Motors (New Delhi) (P) Ltd."
It was found that a portion has been carved out in the front room which has been given a separate door which is fitted with iron shutter in the RCT No. 24/2018 New India Motors (New Delhi) P. Ltd. Vs. Northern India Iron & Steel Co. Ltd. AND RCT No. 37/2018 (crossobjection) New India Motors Vs. Northern India Page No. 69 of 82 front and another door was found to be opening inside other portion of the remaining demised premises. He further found that one Pawan S. Jain was working as subagent and he is also a director of the appellant. He also found Ajit Pathak about other employees of tenant Company also looking after the business of East West Agencies. This particular report of the Local Commissioner did not help the case of the respondent in proving that any particular portion of the demised premises has been given in exclusive legal and physical possession of East West Agencies. It must be highlighted at this stage that in replication, the name of alleged subtenant mentioned is M/s East West Air Travels while the Local Commissioner did not find any sign or East West Air Travels working in any portion of the demised premises. It is not the case of the respondent landlord that any portion of the demised premises has been sublet, assigned or otherwise parted with possession to East West Agencies, Camp Delhi. The respondent cannot be allowed to set up a new case at the stage of trial that on the basis of report of the Local Commissioner, it should be held that a portion of the demised premises stood sublet or otherwise parted with possession to East West Agencies, Camp Delhi, It is significant to mention AW.2 Dalip Singh, Manager of the respondent who looks after the management of the property in dispute and AW.3 Himmat Singh, an accountant of respondent did n not say on oath that any East West Agencies are in possession of any portion of the demised premises. They have reiterated as has been mentioned in the replication that the portion of the demised premises stands sublet to East West Air Travel Agency. They did not say on oath that any portion of the demised premises stands sublet to East West Agency. The counsel for the respondent has argued that mere fact that there is some confusion about the name of the alleged subtenant should not make the case of the landlord weak. However, I do not think that this confusion is unimportant to the decision of the present case because the report of the RCT No. 24/2018 New India Motors (New Delhi) P. Ltd. Vs. Northern India Iron & Steel Co. Ltd. AND RCT No. 37/2018 (crossobjection) New India Motors Vs. Northern India Page No. 70 of 82 Local Commissioner which is being relied upon by the respondent does not support the case of the respondent as he had found the employees of the appellant tenant running the business of East West Agencies as well as and it was also found that one door at the back of the portion which was being utilised for the business of East West Agencies opened inside the remaining portion of the demised premises and it was found that one of the directors of appellant was looking after the business of East West Agencies. The fact as mentioned in the report of the Local Commissioner do not support the case of respondent at all. As respondent himself is relying on the report of the Local Commissioner so that said report has to be accepted as correct. The appellant was not supposed to lead any evidence to show that report of the Local Commissioner is correct because the said report has been proved on record as piece of evidence by the respondent himself. So in view of the above discussion I hold that it is not proved that appellant has sublet, assigned or otherwise parted with possession of any portion of the demised premises in favour of anyone. I may mention that vide letter R.I. dt. 9th July, 1973, the respondent had permitted the appellant to make additions and alterations for putting up showrooms for purposes of travel or any other agency or subagency business. So on the basis of the evidence appearing on the record, the finding of the Addl. Controller that there has been subletting or parting with possession of a portion of demised premises in favour of East West Agencies cannot be sustained. "
105. Thus, perusal of the order of Ld. RCT indicates that on the basis of the report of the Local Commissioner, it was found that there has been no subletting or parting with possession of the demised premises in favour of M/s East West Agencies. Now, RCT No. 24/2018 New India Motors (New Delhi) P. Ltd. Vs. Northern India Iron & Steel Co. Ltd. AND RCT No. 37/2018 (crossobjection) New India Motors Vs. Northern India Page No. 71 of 82 we have to look at the facts subsequent thereto. It is an admitted case that in the year 1980, M/s New India Motors (New Delhi) Pvt. Ltd. filed two suits bearing nos. 323/80 and 325/80 against M/s East West Agencies for Mandatory Injunction for possession as well as for damages and rendition of accounts. It is relevant to note that these suits were filed after the order of the Ld. RCT. In suit bearing no. 323/06/80, M/s New India Motors (New Delhi) Pvt. Ltd. (hereinafter referred to as the tenant) has taken a plea that in the year 1973, M/s East West Agencies (hereinafter referred to as the subtenant) agreed to represent them and to conduct Air Travel and Fright etc. business as SubAgents of the defendant. Further, thereafter differences started arising between the two. The tenant stopped the entry of alleged sub tenants on 05.03.1980 in any part of the premises in question and the matter was informed to the police. The suit for Mandatory Injunction was filed with a prayer of stopping the alleged sub tenants from using or occupying the portion in the demised premises. Another suit bearing No. 325/06/80 was filed for rendition of accounts, which is not related to the present case. In the Written Statement, besides taking other objections, the defence was taken that the tenant had let out half portion of 10B, Scindia House, New Delhi, towards Gwalior Pottery side, in July 1973 on a monthly RCT No. 24/2018 New India Motors (New Delhi) P. Ltd. Vs. Northern India Iron & Steel Co. Ltd. AND RCT No. 37/2018 (crossobjection) New India Motors Vs. Northern India Page No. 72 of 82 rent of Rs.2,000/, besides two travel tickets to be given for the destination in Europe or elsewhere where the Airlines, of which the defendants are agents, are operating. Ld. Court besides framing other issues, also framed the following issue as under :
"Whether the defendant is in possession of the premises in dispute as a tenant under the plaintiff and the documents executed by him are sham documents? OPD"
106. It is pertinent to mention here that Sh. Pawan S. Jain appeared as witness in that case and the defendant i.e. alleged sub tenant also examined 10 witnesses. Ld. Court of ADJ after appreciating the evidence on the record, besides returning finding on other issues, inter alia held as under :
"44. ...... Moreover, the fact of filing of eviction petition by the owner of the premises itself reveals that the plaintiff had the apprehension in his mind that original owner would evict him as such agreement was nomenclatured as sub Agencies agreement. Rent Controller or as the appellate authority under the Delhi Rent Controller Act has the limited jurisdiction to decide the issue of eviction. The reliance placed upon by the plaintiff on document Ex.PW1/8 i.e. judgment of Sh. P.K. Bahri, Addl. Rent Controller Tribunal, Delhi allowing his appeal not found good because the defendant was not the party to that suit.
xxxxxxx
51. In view of the fact above discussed, I am of the view that the RCT No. 24/2018 New India Motors (New Delhi) P. Ltd. Vs. Northern India Iron & Steel Co. Ltd. AND RCT No. 37/2018 (crossobjection) New India Motors Vs. Northern India Page No. 73 of 82 defendant is able to prove in suit bearing No. 323/06 that he is in possession of the premises in dispute as a tenant under the plaintiff and the documents Ex.PW1/1 executed by him is a sham document and in suit bearing no. 325/06 he has been able to prove that there was a relationship between him and the plaintiff as one of the tenant and landlord. Accordingly, this issue goes against the plaintiff and in favour of the defendant."
107. The plea of the appellant no.1 is that since the appeal against this order has been filed and is pending before the Hon'ble High Court, therefore, the findings recorded by the Ld. ADJ cannot be taken into account.
108. Before proceeding further, it is also pertinent to mention here that a temporary partition wall in the premises in dispute was raised by virtue of order of the Hon'ble Supreme Court dated 24.09.1984 in civil suit no. 38/1984. However, the fact of raising partition wall pursuant to the order of Hon'ble Supreme Court is taken as not prejudicial to either of the parties, as the judicial order does not prejudice anyone. This gains importance as by the virtue of wall, the tenanted premises has been divided into portions.
109. It is also pertinent to mention here that in the present proceeding, M/s East West Agencies has admitted that he is RCT No. 24/2018 New India Motors (New Delhi) P. Ltd. Vs. Northern India Iron & Steel Co. Ltd. AND RCT No. 37/2018 (crossobjection) New India Motors Vs. Northern India Page No. 74 of 82 tenant of respondent no.1 M/s New India Motors (New Delhi) Pvt. Ltd. and has also pleaded that M/s New India Motors (New Delhi) Pvt. Ltd. is not in possession of any part of the premises. The question is that whether the order of Ld. RCT dated 04.08.1979 will operate as res judicata on the ground of subletting for time indefinite. The principles of res judicata has been defined in Section 11 of CPC, which reads as under :
"Section 11 - Res judicata No Court shall try any suit or issue in which the matter directly and substantially in issue has been directly and substantially in issue in a former suit between the same parties, or between parties under whom they or any of them claim, litigating under the same title, in a Court competent to try such subsequent suit or the suit in which such issue has been subsequently raised, and has been heard and finally decided by such Court.
Explanation I. The expression former suit shall denote a suit which has been decided prior to a suit in question whether or not it was instituted prior thereto.
Explanation II. For the purposes of this section, the competence of a Court shall be determined irrespective of any provisions as to a right of appeal from the decision of such Court. Explanation III.The matter above referred to must in the former suit have been alleged by one party and either denied or admitted, expressly or impliedly, by the other.
Explanation IV. Any matter which might and ought to have been made ground of defence or attack in such former suit shall be RCT No. 24/2018 New India Motors (New Delhi) P. Ltd. Vs. Northern India Iron & Steel Co. Ltd. AND RCT No. 37/2018 (crossobjection) New India Motors Vs. Northern India Page No. 75 of 82 deemed to have been a matter directly and substantially in issue in such suit.
Explanation V. Any relief claimed in the plaint, which is not expressly granted by the decree, shall for the purposes of this section, be deemed to have been refused.
Explanation VI. Where persons litigate bona fide in respect of a public right or of a private right claimed in common for themselves and others, all persons interested in such right shall, for the purposes of this section, be deemed to claim under the persons so litigating .
[Explanation VII. The provisions of this section shall apply to a proceeding for the execution of a decree and references in this section to any suit, issue or former suit shall be construed as references, respectively, to a proceeding for the execution of the decree, question arising in such proceeding and a former proceeding for the execution of that decree. Explanation VIII. An issue heard and finally decided by a Court of limited jurisdiction, competent to decide such issue, shall operate as res judicata in a subsequent suit, notwithstanding that such Court of limited jurisdiction was not competent to try such subsequent suit or the suit in which such issue has been subsequently raised.]
110. The rule of Res judicata is intended not only to prevent a new decision but also to prevent a new lis, so that the same person may not be harassed again and again in various RCT No. 24/2018 New India Motors (New Delhi) P. Ltd. Vs. Northern India Iron & Steel Co. Ltd. AND RCT No. 37/2018 (crossobjection) New India Motors Vs. Northern India Page No. 76 of 82 proceedings upon the same question. The rule of res judicata is based on two important grounds namely:
i) The hardship to an individual, who could otherwise be vexed twice for the same cause, and
ii) Public policy, which requires that there should be an end to litigation.
111. The plea of res judicata questions the jurisdiction of the court to try the proceedings. However, the doctrine of res judicata will apply only if the requirements of Section 11 are fulfilled. To avail the plea and constitute a matter as res judicata under Section 11, the following conditions must be satisfied:
1. The matter directly and substantially is in issue in the subsequent suit or issue must be the same matter which was directly and substantially in issue either actually or constructively in the former suit;
2. The former suit must have been a suit between the same parties or between the parties under whom they or any of them claim.
3. Such parties must have been litigating under the same title in the former suit.
4. The court which decided the former suit must be a court competent to try the subsequent suit or the suit in which such issue is subsequently raised;
5. The matter directly and substantially in issue in the subsequent suit must have been heard and finally decided by the court in the former suit.
RCT No. 24/2018 New India Motors (New Delhi) P. Ltd. Vs. Northern India Iron & Steel Co. Ltd. AND RCT No. 37/2018 (crossobjection) New India Motors Vs. Northern India Page No. 77 of 82
112. In V. Kandasamy vs. C. Kandasamy 2005 SCC Online Mad 460, the Hon'ble Madras High Court inter alia held as under:
"7. Section 11 CPC contains the Rule of conclusiveness of the judgment which is based partly on the maxim "interest reipublicae at sit finis litum" (it concerns the state that there be an end to law suits) and partly on the maxim "Nemo debet bis vexari pro una at eadem cause (no man should be vexed twice over for the same cause).
8. The doctrine of resjudicata is principals of equity, good conscience and justice. It would neither be equitable nor fair nor in accordance with the principles of natural justice that the issue concluded earlier ought to be permitted to be raised later in a different proceedings.
9. The principles of resjudicata is intended not only to prevent a new decision, but is also to prevent a new investigation so that the same person cannot be harassed again and again in various proceedings upon the same question of law.
10. The general principles of resjudicata has been incorporated in Section 10, 11, 47, Order II Rule 2 and Order XXIII of the Code of Civil Procedure, which has been made applicable in different situations. However, none of the aforesaid provisions are applicable to debar a person from getting his claim adjudicated on merits.
11. The principles of resjudicata is based on the need of giving finality to judicial decision. Section 11 of CPC is not an exhaustive, it's underlying doctrine is that none should be vexed RCT No. 24/2018 New India Motors (New Delhi) P. Ltd. Vs. Northern India Iron & Steel Co. Ltd. AND RCT No. 37/2018 (crossobjection) New India Motors Vs. Northern India Page No. 78 of 82 twice on the same subject matter. Where Section 11 does not in terms apply, general principles of resjudicata can be applied.
12. Resjudicata prevents coming into existence of two inconsistent beginnings."
113. It is settled proposition that in order to operate as res judicata, the previous decision must have given after the matter was heard and finally decided on merits. It is also necessary that the parties in both the suit must be litigating in the same title. It means and refers to the capacity and interest of a party. It is also a settled proposition that a decision on issue of law will operate as res judicata in a subsequent pleading between the same parties, if the cause of action of the subsequent proceeding be the same as in the previous proceeding. The previous decision will not attract as res judicata if the cause of action is different nor the res judicata will be attracted if the law has changed since earlier decision by a competent authority.
114. In Mathura Prasad Sarjoo Jiswal and others vs. Dossibai N.B. Jeejeebhoy AIR 1971 SC 2355, it was inter alia held that a question relating to the jurisdiction of a court cannot be deemed to have been finally determined by an erroneous decision of the court. It was further held that if by an erroneous interpretation of the statute the court holds that it has no RCT No. 24/2018 New India Motors (New Delhi) P. Ltd. Vs. Northern India Iron & Steel Co. Ltd. AND RCT No. 37/2018 (crossobjection) New India Motors Vs. Northern India Page No. 79 of 82 jurisdiction, the question would not operate as res judicata.
115. It is also a settled proposition that the court of Ld. ARC is a court of limited jurisdiction and it's owes it's existence to a specific statute, whereas under Section 9 of CPC, a civil court has very wide jurisdiction. It is also relevant to note that the procedure adopted by the court of Ld. Rent Controller is a summary procedure.
116. It is also pertinent to mention here that in earlier eviction proceedings, M/s East West Agencies was not party. Thus, it did not have any opportunity to assert his right of being a tenant under appellant no.1.
117. I consider that in the present case, the present eviction petition has been filed on a separate cause of action and the eviction petition could not have been dismissed on the ground of res judicata. Ld. RCT had rejected the eviction petition in 1979 on the factual position on that time that M/s East West Agencies was not in possession and it was M/s New India Motors (New Delhi) Pvt. Ltd. who was in the possession of the premises. However, thereafter the situation has changed. Now admittedly, M/s East West Agencies is in possession of the premises in dispute. The tenant himself filed the civil suit, thus, admitting M/s East West Agencies in possession of the premises in dispute. RCT No. 24/2018 New India Motors (New Delhi) P. Ltd. Vs. Northern India Iron & Steel Co. Ltd. AND RCT No. 37/2018 (crossobjection) New India Motors Vs. Northern India Page No. 80 of 82 It is also relevant to note that in that suit also, M/s East West Agencies had taken a plea that M/s New India Motors (New Delhi) Pvt. Ltd. is not in possession of the premises in dispute. Ld. Civil court on the basis of the material on record has given a categorical finding that the premises in dispute has been let out by M/s New India Motors (New Delhi) Pvt. Ltd. to M/s East West Agencies. It is also pertinent to mention that the plea of res judicata was also raised before the civil court and the same was not accepted. Thus, on the face of it, now there is a finding of a competent civil court holding that the premises in dispute has been let out by the appellant no.1 to respondent no.2. Thus, I consider that petition under Section 14(b) of DRC Act qua M/s East West Agencies could not have been rejected merely on the basis of res judicata.
118. I consider that taking into the totality of the facts and circumstances of the case, the Ld. Trial Court should not have dismissed the petition on the ground of res judicata and ought to have returned the finding on merits and therefore, matter is required to be remanded back. However, since the issue of relationship between the parties is subjudiced before the Hon'ble High Court in RFA No. 319/2008 titled as M/s New India Motros (New Delhi) Pvt. Ltd.vs. M/s East West Agencies, it would be in RCT No. 24/2018 New India Motors (New Delhi) P. Ltd. Vs. Northern India Iron & Steel Co. Ltd. AND RCT No. 37/2018 (crossobjection) New India Motors Vs. Northern India Page No. 81 of 82 the judicial propriety if this matter is set out at rest presently. Thus, the cross objection of respondent no.1 bearing RCT No. 37/2018 is adjourned sinedie. The appeal shall be restored and appropriate directions shall be passed in pursuant to the order of Hon'ble High Court in RFA No. 319/2008.
M. CONCLUSION
119. In view of the above, the appeal bearing RCT no. 24/2018 is dismissed and eviction order under Section 14(1)(b) of DRC Act passed against appellant nos. 1 to 3 in respect of the demised premises is upheld and the crossobjection bearing RCT no. 37/2018 is adjourned sinedie to be restored pursuant to the judgment of the Hon'ble High Court in RFA No. 319/2008.
120. Trial Court record along with copy of the judgment be sent back to the Ld. Trial Court and thereafter the aforesaid files be consigned to Record Room. DINESH Digitally signed by DINESH KUMAR KUMAR SHARMA Date: 2021.02.12 SHARMA 16:53:17 +0530 Announced through (DINESH KUMAR SHARMA) Electronic mode Principal District & Sessions Judge/ on 12.02.2021. Rent Control Tribunal New Delhi RCT No. 24/2018 New India Motors (New Delhi) P. Ltd. Vs. Northern India Iron & Steel Co. Ltd. AND RCT No. 37/2018 (crossobjection) New India Motors Vs. Northern India Page No. 82 of 82