Smt Kiran Arya & Anr vs Ambalal Sarabhai Enterprises Ltd. & Ors on 12 August, 2013

[Cites 11, Cited by 0]

Calcutta High Court

Smt Kiran Arya & Anr vs Ambalal Sarabhai Enterprises Ltd. & Ors on 12 August, 2013

Bench: Soumen Sen

IN THE HIGH COURT AT CALCUTTA
Ordinary Original Civil Jurisdiction
ORIGINAL SIDE

BEFORE:

The Hon'ble JUSTICE SOUMEN SEN

CS No. 324 of 1989

SMT KIRAN ARYA & ANR.
Versus
AMBALAL SARABHAI ENTERPRISES LTD. & ORS.

For the Plaintiff : Mr. Moloy Ghosh,
Mr. Anuj Singh,
Ms. Shrayashee Saha,
Mr. Partha Banerjee

For the Defendants : Mr. Shyama Prosad Sarkar, Sr, Adv.,
Mr. Swarnendu Ghosh,
Mr. Deep Nath Roy Chowdury,
Ms. Tannistha Lahiri

Heard on : 24.07.2013, 12.08.2013

Judgment on : 12th August, 2013

Soumen Sen, J. :- The plaintiffs are the owners of an office space on

the first floor at premises no. 24, Park Street, Kolkata, measuring 2625

sq.ft. together with the parking space in the courtyard (hereinafter referred

to as the suit premises). The plaintiffs have instituted the suit against the

defendants for recovery of possession of the suit premises and for mesne

profits from May, 1986 till possession.
2

The plaintiffs purchased the suit premises from its erstwhile owner,

Calcutta Credit Corporation Limited, which had let out the same to one

Standard Pharmaceuticals Limited (hereinafter referred to as the original

tenant). There was an attornment of tenancy in favour of the present

plaintiffs, on 16th May, 1977 prior to the purchase of the suit premises by

the plaintiffs and thereafter, the rents were being paid by the original

tenant to the present plaintiffs. According to the plaintiffs, in or about

November, 1988 the plaintiffs for the first time noticed that the original

tenant has been describing itself as a division of the defendant no.1,

Ambalal Sarabhai Enterprises Limited. The plaintiffs upon enquiry could

discover that pursuant to a scheme of amalgamation the said original

tenant has merged with the defendant no.1 and have thereafter being

dissolved without winding up. Inasmuch as the same amounted to an

assignment of the tenancy of the original tenant without consent of the

landlord, the plaintiffs filed the instant suit seeking, inter alia, eviction of

the defendants from the suit premises as a consequence of amalgamation

of the original defendant with the defendant no.1. The defendants had

come to occupy the said premises on the basis of such order sanctioning

the scheme of amalgamation. The plaintiffs could also ascertain that the

original defendant had merged with the defendant no.1 in or about 1983.

The plaintiff had never consented to transfer of such tenancy in favour of

the defendants. The plaintiffs were advised to file the instant suit for

eviction of the defendant no.1 on the ground of illegal transfer/assignment

of the said premises by the original tenant, the defendant no.1. The
3

plaintiffs prior to obtaining such legal advice were not aware of their right

to initiate the present action against the defendant no.1.

The plaintiffs contended that in the events that have happened the

defendant no.1 is under an obligation to make over the suit premises as

the defendant no.1 is in occupation of the property as a trespasser without

having any semblance of right to occupy the suit premises. The said

transfer/assignment is illegal, as the plaintiffs never had given any consent

to the original tenant within the meaning of Section 14 of the West Bengal

Premises Tenancy Act, 1956. The plaintiffs could further ascertain that the

defendant nos.2, 3 and 4 are also having their offices and are carrying on

their business on the said premises. The plaintiffs, at no point of time, had

ever given any permission or consent to the continuous occupation of the

said defendants or use of the said premises or any portion thereof. The

plaintiffs had duly served on the said defendants two notices dated

February 8, 1989 (Exhibit K) calling upon them to hand over possession of

the suit premises to the plaintiffs. The defendants and each of them

however has refused to make over a vacant possession of the suit premises.

The occupation of the defendant in the suit premises from May, 1986 is

illegal and the plaintiffs are entitled to mesne profits. On these facts, the

suit was filed by the plaintiffs.

The defendants contested the proceeding and have filed the written

statement. The defendants contended that the defendants are protected by

nd
Clause 5 and Clause 11 of the tenancy agreement entered into on 22

January, 1973. Pursuant to a scheme of amalgamation made by and
4

between Standard Pharmaceuticals Limited and the defendant no.1

sanctioned by this Hon'ble Court and the Gujarat High Court by orders

nd th
dated 22 January, 1983 and 7 May, 1983 respectively, all assets,

liabilities, rights and respectively, all assets, liabilities, rights and

obligations including the aforesaid tenancy vested in defendant no.1, the

said Standard Pharmaceuticals Limited stood dissolved without winding up

nd
by an order dated 22 January, 1983 passed by this Court in the

amalgamation proceeding. The said order ultimately attained finality in

September, 1983 after a special leave petition challenging the order of the

Division Bench of Gujarat High Court approving the amalgamation was

dismissed as withdrawn. Pursuant to the aforesaid, all the rights and

obligations contained in and arising out of the said agreement of tenancy

nd
dated 22 January, 1973, in so far as it related to Standard

Pharmaceuticals Limited, vested in the defendant no.1. Standard

Pharmaceuticals Limited duly communicated confirmation and/or sanction

of the said scheme of amalgamation to the plaintiffs whereupon the

plaintiffs by actual acceptance and/or acquiescence recognised the

defendant no.1 as a tenant in respect of the suit premises. Moreover, the

plaintiffs had actual notice of the petition for confirmation of the said

scheme of amalgamation through advertisements published in newspapers.

The plaintiffs actually and by their conduct became bound by the tenancy

agreement and, in fact, had started accepting rents and issued rent

receipts in favour of defendant no 1.
5

In view of the aforesaid a fresh tenancy is created in favour of the

defendant no.1 adapting all the terms and conditions of the said tenancy

nd
agreement dated 22 January, 1973. In view of such recognition of the

defendant no.1 as a tenant under the plaintiff, the defendant no.1 should

necessarily be substituted in place of Standard Pharmaceuticals Limited so

nd
far as the application and interpretation of the said agreement dated 22

January, 1973 is concerned. In view thereof and particularly Clause 11 of

nd
the said tenancy agreement dated 22 January, 1973, the defendant no.1

would be entitled to use the said premises for any company which will be

managed or associated with the defendant no.1 in which its directors have

substantial interest. The parties have also disclosed their documents.

Before commencement of the trial the following issues were settled:

1. Is the suit maintainable ?
2. Is the suit barred by limitation ?
3. Was the transfer/assignment of the tenancy right by virtue of
the amalgamation order to the defendant no.1 illegal within the
meaning of West Bengal Premises Tenancy Act, 1956 as alleged
in paragraph 7 of the plaint?
4. Are the defendants trespassers in respect of the suit premises?
5 .(a) Was any rent paid to the plaintiffs by or on behalf of
defendant no.1 after its amalgamation with the Standard
Pharmaceuticals Limited in 1982?
(b) If so, has the defendant no.1 become a direct tenant under
the plaintiffs?
6. Are the plaintiffs entitled to get decree for possession of the suit
premises as prayed for?"
7. To what other reliefs , if any are the plaintiffs entitled?
6

Mr. Shymaprosad Sarkar, learned Senior Counsel, appearing on

behalf of the defendants submitted that the cause of action in the suit is

based on the ratio of M/s. General Radio and Appliances Company Limited

and Ors versus M. A. Khader (dead by Lrs) reported in 1986(2) Supreme

Court Cases 656, to the effect that since an order of amalgamation was

passed by the Court on the basis of a scheme submitted by the parties, the

transfer of assets and liabilities of the transferor company to the transferee

company happens or occurs at the instance of transferor company; hence,

if its assets including a tenancy right, it must be regarded to have been

transferred to the transferee company by the transferor company and again

if such transfer was without prior consent in writing of the landlord, such

tenancy, being in violation of Section 14 of the West Bengal Premises

Tenancy Act, 1956, such transfer provides the landlord a good ground for

eviction of the tenant under Section 13(1)(a) of the said Act.

It was argued that it is a matter of significance that in the instant

case, the plaintiffs do not seek eviction of the transferor company as tenant

and with it, its transferee company Ambalal Sarabhai Enterprises Limited,

the alleged illegal subtenant.

As a matter of fact, Standard Pharmaceuticals Limited is not even a

party. They seek to evict Ambalal Sarabhai Enterprises Limited and its

other associates as illegal trespassers.

Mr. Sarkar has questioned the legal basis of the claim of the

plaintiffs on various separate and independent grounds.
7

First since transferor company is not a party in the suit as noted in the

preceding paragraph that the ratio of General Radio cannot have any

manner of application.

Second, the tenancy right in respect of the suit premises stands

transferred to Ambalal Sarabhai Limited by operation of law, regardless of

the fact it was brought about at the instance of Standard Pharmaceuticals

Limited, the transferor company the tenant. The fact that such transfer

was effected allegedly without previous consent of the landlords, the

plaintiffs, the transfer per se is not illegal and hence it does not provide an

independent ground beyond provision of West Bengal Premises Tenancy

Act to treat Ambalal Sarabhai, the defendant no.1 the transferee company

as an illegal occupier or a trespasser.

That this is so clear from the following circumstances:

(a) The Hon'ble Supreme Court in their judgment in Radio Engineer clearly

described the transferee there as a tenant: The transferee become a tenant,

by operation of special law, i.e. Companies Act overriding the general law

which contemplates that a tenancy can be created only by an agreement

between parties express or implied.

(b) Even in general law, a transfer of tenancy without previous consent of

landlord, though exposes a tenant to the risk of eviction such transfer itself

is neither illegal nor void.

Thirdly, on factual score, the defendants would contend that by

nd
virtue of Clause 11 of the Tenancy agreement dated 22 January, 1973

the Hon'ble Court should be pleased to hold that consent of landlord
8

permitting the tenant to sublet the tenanted premises to its associate

companies was implicit in the said clause and did not require any fresh or

further consent in writing in terms of Section 14 of the West Bengal

Premises Tenancy Act.

In the alternative, it was argued that by reason of Clause 11 of the

tenancy agreement, the parties have contracted out of the West Bengal

Premises Tenancy Act, 1956 which is permissible. Mr. Sarkar referred to

the evidence of Tapan Nandan Bhattacharya, the defendant's witness, to

establish that Ambalal Sarabhai Limited was an associate of Standard

Pharmaceuticals Limited and the plaintiffs have knowingly received rents

from the transferee company. It was further argued on the basis of Clause

11 and by way of an alternative argument that the defendants following

such amalgamation have become direct tenant under the plaintiffs by

contract.

Mr. Sarkar has relied upon the following decisions to show that a

tenancy can be created by conduct, what is important, is that a

relationship of landlord and tenant is established:

1) AIR 1952 SC 23 (Ram Kumar Das v. Jagdish Chandra Deo,

Dhabal Deb & Anr.);

2) AIR 1955 Cal.502 (Sm. Durgesh Nandini Devi v. Aolad

Shaikh)

It is argued that the plaintiffs have consciously accepted the rent

from Ambala Sarabhai with actual or constructive notice of such
9

amalgamation. It was argued that the order of amalgamation operated in

rent because of wide publicity. The plaintiffs ought to have known or could

have ascertained with reasonable diligence that the original tenant

company has been amalgamated with the defendant no.1. The acceptance

of such rent and retention of the money even after discovery of the fact that

the original tenant stood dissolved are the most telling aspect of the matter

which requires a serious consideration and clearly disproves the claim of

the plaintiffs that the defendant is a trespasser.

Mr.Sarkar has relied on 2012(8) SCC 441 (Avishek Goenka (2) vs.

Union of India & Anr.) (Paragraph 13) and the following unreported

decisions for the proposition that order of amalgamation is operative in

Rem because of wide publicity:

(1) Sanjib Banerjee, J. in CP No. 629 of 2011

(TLP Electricals Pvt. Ltd. & Ors. Dated August 6,2012)

(2) Subhro Kamal Mukherjee J. in CA No.209 of 2006 CA

No.667 of 2006 CA No.96 of 2007

CA No.689 of 2009 CP No.594 of 2002 Castron

Technologies Ltd. & Anr. Vs. Castron MiningLtd. dated

December 2, 2011

Question Nos. 5, 15, 18, 22, 30, 41, 42, 43, 46, 48, 49, 51, 52, 65,

66, and 68 were put to Tapan Nandan Bhattacharyya in examination in

chief, to show that Standard Pharmaceuticals is a subsidiary of Ambalal

Sarabhi Enterprises and the plaintiff had the knowledge of merger. In order
10

to establish that rent used to be collected from Standard Pharmaceuticals,

a Division of Ambalal Sarabhi Enterprises Limited, with knowledge of

amalgamation, question Nos. 12, 13, 18, 20, 23, 24, 25, 44, 48, 49, 54, 55,

56, 57, 58, 59, 60, 61, 65, 66, and 67 were put to Tapan Nandan

Bhattacharyya in examination-in-chief. Mr. Sarkar submitted that it would

appear from the evidence of Tapan Nandan Bhattacharyya that after the

amalgamation, it was Ambalal Sarabhai Enterprises Ltd. who used to issue

cheques in the same manner as Standard Pharmaceuticals Limited used to

issue and the cheques were drawn in the name of Standard

Pharmaceuticals, a division of Ambalal Sarabhai, by their constituted

attorneys, but two attorneys had to sign such cheques. The cheques were

issued with a rubber stamp which used to bear the impression "For

Standard Pharmaceuticals, A Division of Ambalal Sarabhai Enterprises

Ltd., by their constituted attorneys" and Mr. Bhattacharyya used to sign

the cheques as one of the constituted attorneys.

In answer to Q Nos 16 and 17 Mr Bhattacharya deposed that he

worked from the said premises till 1991. In answer given to question Nos.

29 and 30 in examination-in-chief. Mr. Bhattacharyya deposed that a

signboard displaying the name of four companies in which the first name

was Standard Pharmaceuticals, a Division of Ambalal Sarabhai Enterprises

Ltd., the second was OPEC Innovation Limited, the third was Symbiotics

and the forth was Sarabhai International and in the bottom it was written

"24, Park Street, Calcutta - 700 016" was visible.
11

Mr. Sarkar has referred to the evidence of Ramesh Kumar Arya, the

husband of plaintiff no 1 and plaintiffs' witness no. 1 to show that the

landlord used to collect the rent from Standard Pharmaceuticals, a division

of Ambalal Sarabhai Enterprises Limited with knowledge of amalgamation.

He criticized the evidence of Ramesh Kumar Arya (question no 195 in

cross-examination) when the witness says that at the end of 1988, or early

1989, he came to know that cheques were being paid by Ambalal Sarabhai

Enterprises instead of Standard Pharmaceuticals Ltd. According to Mr.

Sarkar, the evidence of Mr Ramesh Arya with regard to the discovery of the

defendants in the suit premises and feigning ignorance of their existence

earlier to the filing of the suit should be disbelieved.

It was argued that the evidence would show that at the top of the

receipt, the name of "Standard Pharmaceuticals" is prominently mentioned

and accordingly there could not be any doubt in the mind of either of the

Aryas as to the real identity and existence of the original tenant.

Mr. Malay Ghosh, learned counsel appearing on behalf of the

plaintiffs submitted that the order sanctioning the scheme of amalgamation

has resulted in merger of Standard Pharmaceuticals with the defendant

and subsequently the said company was dissolved without winding up,

which goes to show that the entry of the defendant No.1 in the suit

premises is illegal. Inasmuch as the said order sanctioning the scheme of

amalgamation amounted to assignment of tenancy of Standard

Pharmaceuticals Ltd. without the consent of the landlord, the plaintiffs

filed the instant suit seeking inter alia eviction of the defendants from the
12

suit premises as, consequent on amalgamation of the said Standard

Pharmaceuticals Ltd. with the defendant No.1, the defendants have come

to occupy the suit premises. No notice terminating the tenancy of Standard

Pharmaceuticals Ltd. could be served and no suit for eviction of Standard

Pharmaceuticals Ltd. could be filed as, upon being amalgamated with the

defendant No.1, Standard Pharmaceuticals Ltd. had dissolved without

winding up and thus ceased to exist. This fact is not denied by the

defendants in their written statement.

In fact, in paragraph 4(e) of the written statement, the defendants

have admitted the said position. In the circumstances, as the defendant

No.1 or the other defendants could not have acquired and did not acquire

any right to occupy the suit premises, the plaintiffs have filed the suit for

eviction of the defendants as trespassers occupying the same without

having the authority to do so. Mr. Ghosh has referred to Exihibit K being

th
the two notices to quit both dated 8 February 1989 issued on behalf of

the plaintiffs to the defendants calling upon the said defendants to hand

over possession of the suit premises to the plaintiffs. Mr. Ghosh, relying

upon General Radio (supra), submitted that in the said decision the

Hon'ble Supreme Court held that a transfer of tenancy consequent on

amalgamation of a company with another amounted to a transfer without

the written permission or consent of the landlord and as such the

transferee in possession of the tenanted premises cannot be deemed or

considered to be a tenant in respect of the same. It is submitted that

following the case of General Radio (supra), in the case of Cox & Kings
13

Ltd. vs. Chander Malhotra reported in (1997) 2 SCC 687, the Hon'ble

Supreme Court held that where by reason of operation of FERA a foreign

company had wound up its business and had assigned its leasehold

interest to an Indian Company to carry on the same business in the

tenanted premises, the same amounted to subletting without the written

consent of the landlord.

Thereafter in the case of Singer India Ltd. -Vs.- Chander Mohan

Chadda reported in (2004) 7 SCC 2 the Hon'ble Supreme Court held that

in an amalgamation even if there is an order of a court sanctioning the

scheme of amalgamation under Sections 391 and 394 of the Companies

Act, whereunder lease, rights of tenancy or occupancy of the transferor

company got vested and become the property of the transferee company,

the same amount to subletting or assignment or otherwise parting with

possession of the premises by the tenant (Paragraphs 6, 7, 8 & 11).

Mr. Ghosh argued that in the written statement the defendants have

essentially contended that Standard Pharmaceuticals Limited came to

occupy the suit premises under and in terms of the agreement dated 22nd

January 1973, clauses 5 and 11 whereof provide as follows:

"5. The tenant shall not sublet any portion of the premises to anyone
without the prior consent in writing of the landlord except as specified
in Clause 11 of this letter, but the tenant shall continue to be liable to
the landlord for the rent for the portion so sublet.

11. The tenant will however have the right to use the said premises for
any company which may be managed or associated with Standard
Pharmaceuticals Ltd. in which its Directors have substantial interest."
14

Mr Ghosh refers to the answers given by Ramesh Arya to Q Nos 75

and 76 in examination -in-chief on 9th August, 2002 to show that the

agreement dated 22nd January, 1973 between Calcutta Credit Corporation

Limited and Standard Pharmaceuticals Limited has not been tendered as

an Exihibit in the present suit and the copy of the same has been marked

as 'X' for identification.

Mr Ghosh further submits that the defendants should not be allowed

to rely on any of the clauses of the said agreement dated 22nd January ,

1973 which has not been tendered as an exhibit in the present suit. Mr

Ghosh points out that the submissions made by him in answer to the

contentions raised on behalf of the plaintiffs in respect of Clause 5 and

Clause 11 of the agreement dated 22nd January, 1973 are without

prejudice to the contentions that the defendants should not be allowed to

rely on any of the clauses of the said agreement dated 22nd January, 1973,

which has not been tendered in evidence as an Exihibit in the present suit.

He has referred to paragraphs 4(l), 4(m), 4(f), 4(g), 4(h) and 4(k) of the

written statement and submitted that each of the grounds taken in defence

of continued occupation of the suit premises is untenable in law and in

fact.

It was submitted that the transfer of the suit premises to the

defendant No.1 by virtue of the scheme of amalgamation amalgamating

Standard Pharmaceuticals Ltd. with the said defendant amounted to

assignment or subletting of the suit premises without the consent of the

landlord in writing and as such could not and did not create any interest in
15

the suit premises in favour of the defendant No.1 is now settled law in view

of the decision of the Hon'ble Supreme Court in the matter of General

Radio (supra) and other decisions following the same namely Cox & Kings

Limited And Another vs. Chandar Malhotra; 1997 (2) SCC 687 and

Singer India Limited vs. Chander Mohan Chadha & Anr.; 2004 (7)

SCC 1.

It was submitted that the claim made in paragraph 4(m) of the

written statement that the defendants are group companies is completely

false. The falsity of such allegations would be evident from the admissions

made by the defendants in paragraph 4 (e) of the written statement that by

an order dated 22nd January 1983 passed in the amalgamation

proceedings , Standard Pharmaceuticals Ltd was dissolved without winding

up. Although in answer to question no.65 put to Tapan Nandan

Bhattacharyya the said witness stated that standard Pharmaceuticals Ltd

was a subsidiary of the defendant No.1, the court should not take note of

the same as the said contention is de hors the pleadings in the written

statement. In any event, on harmonious reading of Clause 5 and Clause 11

nd
of the agreement dated 22 January 1973, it is evident that the said

clauses only permitted subletting by Standard Pharmaceuticals Ltd. to a

company managed by or associated with Standard Pharmaceuticals Ltd. or

to a company in which the directors of Standard Pharmaceuticals Ltd. were

substantially interested. In this context, it is relevant to note that Clause 5

expressly provided that notwithstanding such subletting, Standard

Pharmaceuticals Ltd. would continue to be liable to the landlord for rent of
16

the portion sublet. This clearly contemplates that the right of Standard

Pharmaceuticals to sublet the suit premises would survive only so long as

Standard Pharmaceuticals itself remained in existence. In the instant case,

the admitted position is that Standard Pharmaceuticals Ltd. has ceased to

exist. Furthermore, the transfer of the suit premises by virtue of scheme of

amalgamation did not amount to subletting but a virtual assignment which

attempted to establish a new privity between the defendant no.1 and the

plaintiffs. Such an assignment in any event is bad inasmuch as it is now

settled law that even when the rights under an agreement may be assigned,

the obligations under the same may not be assigned, except with the

consent of the person with which the assignor has privity.

In this context, Mr. Ghosh relied on Section 108(j) of the Transfer of

Property Act, 1882 and the following decisions:-

a) Khardah Company Ltd. -Vs.- Raymon & Co., reported in AIR

1962 SC 1810 (Para 19);

b) ICICI Bank Limited -Vs.- APS Star Industries Limited,

reported in 1020 (10) SCC 1 (Para 47, 49 and 51).

Mr. Ghosh submitted that the true effect and character of

amalgamation has been considered in Saraswati Industrial Syndicate

Ltd. -Vs.- Commissioner of Income Tax reported in 1990 (Supp.) SCC

675 in which in paragraph 6, the Hon'ble Supreme Court has stated that:-

"The true effect and character of the amalgamation largely
depends on the terms of the scheme of merger. But undoubtedly when
17

two companies amalgamate and merge into one the corporate entity of
the transferor company loses its entity from the date of amalgamation
as it ceases to have its business. However, their respective rights or
liabilities are determined under the scheme of amalgamation."

Mr. Ghosh submitted that the defendants, by reason of the aforesaid,

became trespassers and in this regard he has referred to the decision

reported in (2011) 1 SCC 356 [Laxmi Ram Pawar Vs. Sitabai Balu

Dhotre & Anr.] (Paragraphs 12 to 16).

Mr. Ghosh has also relied upon the decision reported in (2010) 3

SCC 385 (Sadashiv Shyama Sawant Through Lrs. & Ors. Vs. Anita

Anant Sawant) (Paragraphs 18, 19, 20, 21 and 22) to show that the

suit in absence of Standard Pharmaceuticals Ltd. could be maintainable

since the plaintiffs always retain possession in law over the suit property

and the defendants even if unable to protect their interest in the suit

property and is dispossessed by a third party, the plaintiff always have a

right to file a suit for eviction of the party who has entered the suit

premises illegally.

Mr. Ghosh has also relied on an unreported judgement delivered by

me in C.S. 297 of 1989 (In re: Rajiv Daga vs. Ambalal Sarbhai enterprises

Limited & Ors ) and he submits that on similar facts the defendants raised

identical defence on question of law, which has been considered and

rejected in the said case.

Mr. Ghosh accordingly submitted that the defendants should be

directed to be evicted from the suit premises and should be made liable to
18

pay mesne profits to the plaintiffs from the date of amalgamation of

Standard Pharmaceuticals Ltd. with the defendant No.1 at such rates as

may be decided by this Court. On the basis of the evidence adduced by

Sundarlal Mitra , a chartered valuation surveyor and plaintiff's witness no

2. He relies on the answers given by Mr Mitra the Q nos 1,2,3,5 to 15, 20,

24-35,37 to 42. Mr Ghosh submits that in cross examination (Q no 48 to

118) . Mr Mitra has explained the basis of his report (Exihibit L) Mr Ghosh

submits that it is recorded in the valuatiuon report dated 16th December,

2002 of Mr Mitra that he could not enter the suit premises as it was under

lock and key. Mr ghosh further submits that in the terms of the order

dated 22nd November, 1996 passed by the Hon'ble J Barin Ghosh in suit no

CS 323 of 1989 (Premlata Arya -vs - Ambalal Sarabhai enterprises Ltd &

Ors. The Receiver has put a padlock on the door of the suit premises of

both suit no CS 323 of 1989 and the present suit.Mr Ghosh further

submits that a decree for mesne profits may be passed on the basis of the

said valuation report dated 16th December, 2002.

Mr. Sarkar, in reply to the argument advanced by Mr. Ghosh,

submitted that the decision of General Radio (supra) is grossly

misunderstood and according to him that case established two distinct and

clear principles as follows:

(I) First, since amalgamation of two companies is brought about at
the instance of the transferor company (the appellant no.1 in
that case) by which all properties including tenancy right of the
transferor company are transferred to the transferee company
and such transfer of tenancy right is made without the consent
19

of the landlord and the transferor (tenant) is liable to be evicted
being in violation of the relevant provisions of the Premises
Tenancy Act (in the instant case sections 14 and 13(1) of the
West Bengal Premises Tenancy Act).
(II) Second, the transferee company (the appellant no.2 in the case)
is "now the tenant".

According to Mr. Sarkar, the first principle is clearly inapplicable to

the instant case. In that case, the tenant (appellant no.1) was made a party

and it was liable to be evicted and as a consequence the sub-tenant

(appellant no.2) was liable to be automatically evicted. Incidentally, it was

not even necessary to make the sub-tenant a party. In the instant case, the

tenant (transferor company) Standard Pharmaceuticals Ltd. has not been

made party and hence the question of evicting the defendant no.1 cannot

arise.

Mr. Sarkar also finds fallacy in the argument made by Mr. Ghosh

with regard to the effect of the order of dissolution of the Standard

Pharmaceutical's case on amalgamation. It was argued that the argument

that the transferor company, Standard Pharmaceuticals, was dissolved on

amalgamation and as such it could not be made a party, is neither correct

nor relevant.

As a matter of law, the transferor company does not automatically

dissolve on passing of amalgamation order for following such order; the

official liquidator has to file a report on the transferor company and

forward the same to the Registrar of Companies. Only then the name of the
20

company can be struck off the Register. Until then a transferor company is

available to be made a party. That there is invariably a time gap between

the order of dissolution and the fact of dissolution is apparent from

General Radio's case itself where the amalgamation order was passed on

th th
27 March, 1978 and the company stood dissolved from 16 April 1968.

Here there is no evidence that the Standard Pharmaceuticals Ltd.

stood finally dissolved when the suit was filed. The onus was clearly on the

plaintiff to establish such fact but it failed to do so. In any event, if the

tenant cannot be made a party for having been dissolved, such special

statutory remedy simply cannot be availed of. The sins of the tenant cannot

be vested on the sub-tenant. In such a situation the only option open to a

plaintiff is to establish that such transferee is a trespasser.

The second principle of General Radio that a transferee company on

amalgamation becomes a tenant, makes it quite clear that defendants here

cannot be regarded as trespassers. Mr. Ghosh contends that without

landlord's consent a tenant cannot be thrust on him willy nilly. A tenancy

agreement, Mr. Ghosh says, can arise in either of two ways. Either two

parties must themselves agree or a party to an existing agreement assigns

such agreement in favour of a third party. Again, in case of assignment,

Mr. Ghosh rightly says, that as a rule of ordinary law the benefits of a

contract can be assigned but not its liabilities. But there are exceptions to

this general rule. The most prominent of those is an order passed under

the sections 391 and 394 application. The effect of such order override

ordinary law. That rights and obligations of a contract can dissolve on a
21

transferee company or on a new company emerging by virtue of an

amalgamation order, is also recognized in sections 15(g) and 19(d) of the

Specific Relief Act, 1963.

In referring to clause 11 of the tenancy agreement, it was argued that

the first thing to be noticed in the tenancy agreement is that the expression

'tenant', meaning thereby Standard Pharmaceuticals Ltd., includes the

successor and assigns. There cannot be any question that after

amalgamation, Ambalal Sarabhai Enterprises has become a successor or

assign of the transferor tenant. On that footing and by express term in the

said tenancy agreement, the defendant no.1 as a lawful successor or assign

of Standard Pharmaceuticals Ltd. has become a tenant without requiring

any further approval of or a fresh agreement with the landlord-plaintiff.

Secondly, on a true construction of the provisions of clause 11 of the

agreement, it is clear that the said provision embodies a built in consent to

sub-let. The contention that the tenant shall continue to be liable to the

landlord for the rent for the portion so sub-let as mentioned in clause 5, is

misplaced. Such obligation is clearly meant to operate either as an

indemnity clause or a guarantee clause and not as a provision for splitting

of obligations of the tenancy agreement. The question whether the

transferee company is managed by or associated with the transferor

company is of course a question of fact. Such question would have to be

examined at the point of transfer, i.e. the date of amalgamation and not at

any later stage.
22

Mr. T.N. Bhattacharjee's evidence dwell on situation obtaining at a

later stage and therefore not particularly pertinent. The order of

amalgamation in its narrative part however makes the inter relationship of

the transferor, the transferee and the other associated companies within

the group quite clear.

It was further argued that the details of correspondence exchanged

between the parties have been mutually misdescribed. The fact that the

rent receipts and payments of cheques drawn and received apparently with

equal indifference could not be disregarded. These events clearly justify the

acceptance of the defendants by the plaintiffs as tenants.

Those apart, there has been meeting between the plaintiffs and the

defendants in 1984, i.e after passing of the amalgamation order on 7th May

1983 for enhancement of rent. The plaintiffs husband, Ramesh Kumar

Arya, the principal witness, admittedly visited the suit premises after

amalgamation more than once; yet, to say he did not notice the sign board

displaying the names of all the defendants is incredible. It is difficult to

believe that in none of the circumstances and situations, the presence of a

new entity, Ambalal Sarabhai Enterprises has dawned on him.

Bearing in mind that the said state of affairs in their various facets

continued for a period of six years (1983 to 1989), the question is whether

even allowing for some benefit of doubt, this Hon'ble Court would believe

the plaintiffs' assertion that they were not aware of the amalgamation order

and its consequence. Significantly, no offer has been made by them to

return the rents received by them since 1983.
23

Taking all the circumstances into consideration and on an objective

view of the matter, it was submitted that this Hon'ble Court would be

pleased to accept the defendants' case that a new tenancy agreement has

come into existence by conduct.

Duality of existence and/or the real identity of the defendant no.1 is

the decisive factor in this proceeding. Although elaborate arguments have

been advanced by the parties but the moot point appears to be the entry of

the defenadant no.1 in the suit premises. The written statement filed on

behalf of the defendants clearly shows that the entry of the defendant no.1

in the suit premises is by virtue of the order sanctioning the scheme of

amalgamation. By virtue of the said order of amalgamation, the original

tenant company stood dissolved as it merged with the defendant no.1. This

Hon'ble Court by sanctioning of the scheme, only considered the agreement

entered into between the parties and the rights and liabilities inter se that

may form part of the scheme sanctioned by the court cannot bind the third

party, namely the landlord.

In General Radio (supra), the Hon'ble Supreme Court has dealt with

this aspect and held that this act of amalgamation by reason whereof the

interest, rights of the transferor company in all its properties including

leasehold interest, tenancy rights and possession were transferred and

vested in the transferee company voluntarily and the transferor company

was dissolved and it ceased to exist for all practical purposes in the eye of

law would amount to sub-letting. Even in case of an involuntary transfer or

transfer for tenancy right by virtue of a scheme of amalgamation
24

sanctioned by the court by its order under sections 391 and 394 of the

Companies Act, 1956, such transferor would come within the mischief of

parting with possession without consent of the landlord. The order of

amalgamation shows that Standard Pharmaceuticals Ltd. has transferred

all its assets and liabilities including the tenancy right in favour of the

transferee company, namely the defendant no.1. The landlord is not a

party to the said proceeding. No right of tenancy could be created in favour

of any third party dehors the agreement of tenancy subsisting between the

plaintiffs and the original tenant.

The defendant no.1 is attempting to justify its continuation in the

suit premises on the basis that in the absence of the original tenant, the

case of sub-tenancy based on section 14 of the West Bengal Premises

tenancy Act cannot survive. The original tenant is lost in the horizon and

completely invisible and untraceable. It had ceased to exist It would appear

from the written statement that Standard Pharmaceuticals Ltd., after its

merger with the defendant no.1, was thereafter dissolved without winding

up. This dissolution is a civil death to the said original tenant company.

The consequence of such dissolution and civil death is surrender of

tenancy in favour of the plaintiffs and repossession by the plaintiffs.

The tenancy comes to an end. The plaintiffs cannot be asked to sue

a nonexistent company. The plaintiffs can only sue the person who claims

a right under the original tenant. The entry of such person or entity, if not

lawful, is that of a trespasser since inception. The concept of 'trespass' has
25

been elaborately discussed in Laxmi Ram Pawar (supra) in paragraphs 12

to 16, which are reproduced hereinbelow:-

12. A 'trespass' is an unlawful interference with one's person, property or
rights. With reference to property, it is a wrongful invasion of another's
possession. In Words and Phrases, Permanent Edn. (West Publishing
Company), pp. 108, 109 and 115, in general, a 'trespasser' is described,
inter alia, as follows:
"A 'trespasser' is a person who enters or remains upon land in the
possession of another without a privilege to do so created by the
possessor's consent or otherwise. (Wimmer's Estate, In re, P2d at
121.}"
A 'trespasser' is one entering or remaining on land in another's
possession without a privilege to do so created by the possessor's
consent, express or implied, or by law(Keesedker vs G.M Mckelvey co.
NE at 226 ,227
* * *
* * * A 'trespass' is a transgression or wrongful act, and in its most
extensive signification includes every description of wrong, and a
'trespasser' is one who does an unlawful act, or a lawful act in an
unlawful manner, to the injury of the person or property of another.
(Carter v. Haynes, Tex., SW at 220.)"

th
13. In Black's Law Dictionary (6 Edn.), 1990, p. 1504, the term
"trespasser" is explained as follows: "Trespasser. - One who has committed
trespass. One who intentionally and without consent or privilege enters
another's property. One who enters upon property of another without any
right, lawful authority, or express or implied invitation, permission, or licence,
not in performance of any duties to owner, but merely for his purpose,
pleasure or convenience."
26

th
14. In Halsbury's Laws of England, Vol. 45 (4 Edn.), pp. 631-32, the
following statement is made under the title "What Constitutes Trespass to
Land": "1384. Unlawful entry.- Every unlawful entry by one person on land
in the possession of another is a trespass for which an action lies, even
though no actual damage is done. A person trespasses upon land if he
wrongfully sets foot on it, rides or drives over it or takes possession of it, or
expels the person in possession, pulls down or destroys anything
permanently fixed to it, or wrongfully takes minerals from it, or places or
fixes anything on it or in it, or if he erects or suffers to continue on his own
land anything which invades the airspace of another, or if he discharges
water upon another's land, or sends filth or any injurious substance which
has been collected by him on his own land onto another's land." In the same
volume at p. 634, under the title "Trespass ab initio", the legal position is
stated thus : "1389. Trespass ab initio.- If a person enters on the land of
another under an authority given him by law, and, while there, abuses the
authority by an act which amounts to a trespass, he becomes a trespasser
ab initio, and may be sued as if his original entry were unlawful.Instances of
an entry under the authority of the law are the entry of a customer into a
common inn, of a reversioner to see if waste has been done, or of a
commoner to see his cattle.
To make a person a trespasser ab initio there must be a wrongful act
committed; a mere nonfeasance is not enough." The aforesaid statement
takes into consideration Six Carpenters' case wherein the general rule given
is this, "when an entry, authority, or licence, is given to any one by the law,
and he doth abuse it, he shall be a trespasser ab initio"

15. In Law Lexicon, the encyclopaedic law dictionary by P. Ramanatha
nd
Aiyar, 2 Edn., Reprint 2000 p. 1917, the word "trespass" is explained by
relying upon Tomlin's Dictionary of Law Terms as follows : "Trespass,. In its
largest and most extensive sense, signifies any transgression or offence
against the law of nature, of society, or the country in which we live; whether
27

it relates to a man's person or his property. Therefore beating another is a
trespass; for which an action of trespass in assault and battery will lie.
Taking or detaining a man's goods are respectively trespasses, for which
action of trespass on the case in trover and conversion, is given by the law;
so, also non-performance of promises or undertakings is a trespass, upon
which an action of trespass on the case in assumesit is grounded: and, in
general, any misfeasance, or act of one man, whereby another is injuriously
affected or demnified, is a transgression, or trespass, in its largest sense; for
which an action will lie."
th
16. In Salmond on the Law of Torts, 17 Edn. by R.F.V. Heuston, 1977, p.
41, the expression, "trespass by remaining on land' is explained in the
following manner: "Even a person who has lawfully entered on land in the
possession of another commits a trespass if he remains there after his right
of entry has ceased. To refuse or omit to leave the plaintiff's land or vehicle
is as much a trespass as to enter originally without right. Thus, any person
who is present by the leave and licence of the occupier may, as a general
rule, when the licence has been properly terminated, be sued or ejected as a
trespasser, if after request and after the lapse of a reasonable time he fails
to leave the premises."

Under the title "Continuing trespasses"' at p. 42, it is stated :
"That trespass by way of personal entry is a continuing injury, lasting
as long as the personal presence of the wrongdoer, and giving rise to actions
de die in diem so long as it lasts, is sufficiently obvious. It is well settled,
however, that the same characteristic belongs in law even to those
trespasses which consist in placing things upon the plaintiff's land. Such a
trespass continues until it has been abated by the removal of the thing which
is thus trespassing; successive actions will lie from day to day unit it is so
removed; and in each action damages (unless awarded in lieu of an
injunction) are assessed only up to the date of the action. whether this
28

doctrine is either logical or convenient may be a question, but it has been
repeatedly decided to be the law."

Although there may be various situations on the basis of which a

person and/or entity could be regarded and held as a trespasser, but it is

not necessary to go into the details of all such situations but confine only

to the enquiry as to the status of the defendants.

Clauses 5 and 11 of the said agreement, on true, proper and

meaningful interpretation, would only mean that the original tenant,

without prior consent in writing by the landlord except as specified in

clause 11, shall not sub-let any portion of the premises without prior

consent in writing of the landlord and irrespective of such sub-letting, the

original tenant would be liable to the landlord for the rent for the portion so

sub-let. Clause 11 is a permissive clause by reason whereof the tenant

could permit the use of the said premises for any company which may be

associated with Standard Pharmaceuticals or its directors having

substantial interest.

The witness on behalf of the defendants in his evidence made an

attempt to justify that the original tenant was an associate company of the

defendant no.1 or they are group companies. However, there is no evidence

on record to show that the defendants and the original tenant are group

companies. Even if the argument based on clause 11 is accepted but that

by itself would not justify the claim of the defendants to continue its

occupation after the original tenant ceased to exist. They have no right to

be in possession. These clauses 5 and 11 would continue so long the
29

tenancy subsists. A person entering the premises on the basis of such a

permissive clause cannot elevate his status to a contractual or statutory

tenant. The agreement itself comes to an end with the dissolution of the

original tenant. Moreover it is clear from clause 5 of the tenancy agreement

that Standard Pharmaceuticals Ltd. should not sub-let any portion of the

premises without prior consent in writing or the landlord. The entry of the

defendant no.1 is attempted to be justified on the basis of the order of

amalgamation which amounts to sub-letting and contraventions of section

14 of the West Bengal Premises Tenancy Act as well as the terms and

conditions of the tenancy agreement.

Mr. Sarkar argued that in the absence of Standard Pharmaceuticals

Ltd., the plea based on sub-letting cannot subsist. He further argued that

even if the original tenant ceased to exist but the defendant no.1 cannot be

recorded as a trespasser because his entry to the suit premises is on the

basis of the order of amalgamation and by operation of law it has become

the tenant. Mr. Sarkar had strongly relied on paragraph 10 of the General

Radio (supra) vis a vis the observation made in the said judgment that the

appellant no.2 company is now the tenant in respect of the suit premises.

The Hon'ble Supreme Court in General Radio (supra) ultimately held

that there has been a transfer of the tenancy in respect of the premises in

question to the appellant no.2 in utter contravention of the provisions of

the Andhra Pradesh Building (Lease rent and Eviction) Control Act, 1960

and the terms and conditions of clause 4 of the agreement dated January

12, 1959 executed by the appellant no.1 in favour of the respondent
30

landlord and upheld the judgment of the Andhra Pradesh High Court

whereby the Andhra Pradesh High Court upheld the eviction of the

appellant no.2 from the suit premises.

In General Radio (supra), the question that arose before the Hon'ble

Supreme Court for consideration was whether voluntary amalgamation of

the first and the second appellant companies amounts to a transfer of the

first appellant's right under the lease within the meaning of section 10(ii)(a)

of the Andhra Pradesh Act of 1960.

Similar arguments were made with regard to the operation of the

said order of amalgamation as a judgment in rem and binding on all

parties including the landlord even though the landlord was not a party to

the said proceeding. Such arguments were negatived by the Hon'ble

Supreme Court.

The order sanctioning the scheme of amalgamation, whereby

transferring the leasehold interest to the transferee was held to be sub-

letting in General Radio (supra) and the appellant no.2 became the tenant

of the respondent landlord by reason of sanctioning of the scheme of

amalgamation. The only distinction that is sought to be made by Mr.

Ghosh is the absence of Standard Pharmaceuticals Ltd. in the instant case.

If a company brought about its own death and ceased to exist, any person

claiming through him has to establish that the said company is entitled in

law to continue in occupation although the landlord may not recognise him

as its tenant. A tenancy is created by agreement or conduct. However, such

relationship has to be established.
31

There is no dispute that Standard Pharmaceuticals Ltd. was a tenant

in respect of the suit premises. On the death of Standard Pharmaceuticals

Ltd., could the defendant no.1 enter the premises and claim tenancy right

on the basis of the order sanctioning the scheme of amalgamation. In my

considered opinion, it cannot, irrespective of the fact whether Standard

Pharmaceuticals Ltd. is on record or not. Standard Pharmaceuticals could

not have been on record by reason of the fact the said company had died

its natural death. The pleadings of the defendant no.1 clearly show that it

is claiming through Standard and it has been categorically stated in the

written statement that Standard should be substituted by the defendants.

It is the positive case of the defendants that they are to be substituted in

place and stead of the original tenant by virtue of the order of

amalgamation. The said defendants are harbouring, no doubt, as to their

status in the suit premises and they want to justify their continuation in

the suit premises on the basis of the order sanctioning the scheme of

amalgamation in which the tenancy rights have been assigned to the

defendant no.1. Unfortunately this creation of rights by a party is dehors

the provisions of the tenancy laws and in breach of the tenancy agreements

and cannot bind the plaintiffs/landlords.

If the entry of the defendants is not lawful, the only inevitable

conclusion is that they are rank trespassers. An argument is made on

behalf of defendants that a legal relationship of landlord and tenant would

be discernible from the conduct of the parties. This is just to remind that if

a party is under a duty to disclose facts material to the issue, non-
32

disclosure would visit such party with same consequences. In such

situation, the inevitable inference would be that the said party is trying to

conceal and hide something from the other party. The exchange of letters

and documents would clearly show that the said plaintiffs have all

throughout regarded Standard Pharmaceuticals Ltd. to be the actual

tenant. In fact late Mathuranath Bhattacharyya, a member of the Bar, who

was the special officer in respect of the suit premises also used to address

letters in connection with the suit premises to Standard Pharmaceuticals

Ltd. and such letters were received and relied on by the defendants without

any protest.

In order to establish that a tenancy is created by conduct, mere

acceptance of rent is not enough, more particularly in a situation where

such rent is accepted on a mistaken identity. A conscious mind

accompanied by conduct - a total synchronization of the mind and the

action - in accepting the rent may give rise to a strong presumption of a

landlord-tenant relationship. The evidence of Ramesh Kumar Arya on

behalf of the plaintiffs would establish that such acceptance of rent or

enhancement of rent was on a complete mistaken identity of the present

defendants.

The plaintiffs were all throughout unaware of the change of the

identity and character of the defendants. Any and every unmindful act or

conduct cannot constitute estoppel. It has to be a relinquishment of a

known right. If the identity of the defendants are unknown to the

plaintiffs, any such acceptance of rent or enhanced rent cannot create a
33

relationship of landlord and tenant. The principle of holding over would

also not apply. (R.S. Iron Industries Pvt. Ltd. Vs. Calcutta Pinkjrapole

Society reported in AIR 2013 Cal 94) There is no assent of the plaintiffs

to the defendants' continuing in possession after change of character and

identity of the original tenant. The onus is on the defendants to establish

that a fresh relationship of landlord and tenant is created after such

amalgamation and the plaintiff had due notice of it. The plaintiff thereafter

had knowingly accepted such rent or enhanced rent. It remained

unexplained as to why the said defendants maintained a stoic silence,

remained mute and maintained secrecy in not informing the plaintiffs

about such change of character and identity of the defendants. It would

have been different if the plaintiffs with such notice and knowledge

accepted the rent and assent the defendants' continuing in possession.

Halsbury defining 'estoppel' writes:-

"There is said to be an estoppel where a party is not allowed to

say that a certain statement of fact is untrue. Whether in reality it is

true or nor. (Halsbury's Laws of England, 4th Ed. Vol 16, Page

1023, Paragraph 1501) Estoppel, or "conclusion" as it was

frequently called by the older authorities, may, therefore, be defined

as a disability where by a party is precluded (In the older

phraseology, "concluded) from alleging or proving in legal

proceedings that a fact is otherwise than it has been made to appeal

by the matter giving rise to that disability. Estoppel is often

described as a rule of evidence, but the whole concept is more
34

correctly viewed as a substantive rule of law (Halsbury's Laws of

England, 4th ed. Vol. 16 Page 1023 Paragraph 1501)".

According to Phipson:-

"An estoppel is a rule whereby a party is precluded from

denying the existence of some state of facts which he was previously

asserted. It was formerly said to be only a rule of evidence because

at common law (so the argument ran) an action could not be founded

thereon (Phipson On Evidence, 14th Edi., Page 96, Paragraph 6-

01); both at law and in equity, not only a defence but also an action

may indeed be founded on an estoppel. (Phipson On Evidence, 14th

Edi., Page 96, Paragraph 6-01) Similarly, estoppels must be

pleaded, whereas it is improper to plead evidence. It is not the

admission of evidence, which is directly prohibited by an estoppel. It

is simply the conclusion, which is to be reached on the basis of the

evidence. It therefore appears that true or legal estoppels are

essentially substantive in effect, and the courts now recognize this".

(Phipson On Evidence, 14th Edi., Page 96, Paragraph 6-01)

Cross writes:-

"When an estoppel binds a party to litigation he is prevented from

placing reliance on or denying the existence of certain facts. This justifies

the treatment of estoppel as an exclusionary rule of evidence. So regarded,

it is lessrigorous than the rules governing the exclusion of evidence on the

ground of public policy because estoppels only operate if they are pleaded,

but, like the exclusion of evidence on that ground, and unlike the exclusion
35

of evidence under the rule relating to similar facts, estoppels operate

without reference to the purpose of which reliance is placed on a particular

fact. From the point of view of the party in whose favour they operate,

estoppels could be regarded as something which renders proof of certain

facts unnecessary; also it is possible to argue that estoppel is better

regarded as a matter of pleading or substantive law, rather than a rule of

evidence." (Cross ON EVIDENCE, 6th Ed. Page 72)

In order establish that the plaintiffs are estopped by conduct in

denying the relationship of landlord and tenant, it has to be established

that the plaintiff having knowledge of such amalgamation have conducted

themselves in such a manner which induced a belief in the mind of the

defendants that the plaintiffs have accepted the defendants as tenants.

Estoppel by conduct means a party is prevented from relying on true

facts on account of his conduct or language. (AIR 1918 PC 125 (129);

Durga Prasad Singh Vs. Tata Iron and Steel Co., Ld.). If a man, either

by words or by conduct, has intimated that he consents to an act which

has been done, and that he will offer no opposition to it, although it could

not have been lawfully done without his consent, and he thereby induces

others to do that from which they otherwise might have abstained, he

cannot question the legality of the act he had so sanctioned to the

prejudice of thosewho have so given faith to his words, or to the fair

inference to be drawn from his conduct. (AIR 1958 Cal 415 (420) (DB);

Union of India Vs. K.P. Mandal) The principle of estoppel by conduct has

been succinctly put by Phipson when he writes:-
36

"Estoppels by conduct. - Estoppels by conduct, or, as they are still

sometimes called, estoppels by matter in pais, were anciently acts of

notoriety not less solemn and formal than the execution of a deed,

such as livery of seisin, entry, acceptance of an estate and the like;

and whether a party had or had not concurred in an act of this sort

was deemed a matter which there could be no difficulty in

ascertaining, and then the legal consequences followed. (Phipson On

Evidence, 14th Edi., Page 103, Paragraphs 6-12) The doctrine has,

however, in modern times, been extended so as to embrace

practically any act or statement by a party which it would be

unconscionable to permit him to deny. The rule has been

authoritatively stated as follows: "Where one by his words or conduct

wilfully causes another to believe the existence of a certain state of

things and induces him to act on that belief so as to alter his own

previous position, the former is concluded from averring against the

latter a different state of things as existing at the same time."

(Phipson On Evidence, 14th Edi., Page 103, Paragraphs 6-12) And

whatever a man's real intention may be, he is deemed to act wilfully

"If he so conducts himself that a reasonable man would take the

representation to be true and believe that it was meant that he

should act upon it." (Phipson On Evidence, 14th Edi., Page 103,

Paragraphs 6-12)

"Where the conduct is negligent or consists wholly of omission,

there must be a duty to the person misled. (Phipson On Evidence,
37

14th Edi., Page 103, Paragraphs 6-12) This principle sits oddly with

the rest of the law of estoppel, but it appears to have been reaffirmed,

at least by implication, by the House of Lords comparatively recently.

(Moorgate Mercantile Co. Ltd. v. Twitchings; 1977 A.C. 890

(H.L.) The explanation is no doubt that this aspect of estoppel is

properly to be considered a part of the law relating to negligent

representations, rather than estoppel properly so-called. If two

people with the same source of information assert the same truth or

agree to assert the same falsehood the same time, neither can be

estopped as against the other from asserting differently at another

time." (Phipson On Evidence, 14th Edi., Page 103, Paragraphs 6-

12)

The estoppel by conduct can only be said to be available in the event

of there being a precise and unambiguous representation and on that

unequivocal assurance the other party has altered his position of status.

(AIR 2002 SC 2322; Chandra Prakash Tiwari & Ors. Vs. Shakuntala

Shukla & Ors.)

The evidence of the witness is that at the end of 1988 or early 1989

he came to know that the cheques are being paid by Ambalal Sarabhai

Enterprises Ltd instead of Standard Pharmaceuticals Ltd. and he was

informed by Mr Daga who said that an amalgamation has taken place and

the Standard Pharmaceuticals Ltd has lost its identity and he relied on the

enquiries made by Mr Daga regarding the amalgamation (Q NOs 195-207of

cross examination of Ramesh Arya).
38

That no communication of the amalgamation was ever made by

Standard Pharmaceuticals Limited or by the Defendant No.1 to the Plaintiff

is evident from the deposition in the suit (Qs. 66, 67, 68, 69, 70, 73, 74,

75, 76, and 77 Qs. 43, 51, 52, 53, 61, and 63 of Tapan Nandan

Bhattacharya). Although it has been contended by the Defendants that the

name plates of the Defendant companies wee displayed at the entrance of

the suit premises and as such the Plaintiffs were aware that the suit

premises was being occupied by the Defendants, it is clear from the cross

examination of the Defendants' witness Mr. Tapan Nandan Bhattacharjee

that no name plate of any of the Defendant companies were in fact

displayed at the entrance of the suit premises (Qs. 66, 67, 69 and 70 of

Tapan Nandan Bhattacharjee).

It would appear from all the documents exihibited that all the letters

(Exbt. E) have been addressed by the plaintiffs only in the name of

Standard Pharmaceutical Limited. All the bills and rent receipts have also

been raised by the plaintiffs in the name of Standard Pharmaceutical

Limited .

It is pertinent to mention that the defendant no .1 never raised any

objection to the rent bill dated 26th October, 1980 and 25th August , 1984

(Exbt. C) being raised by the plaintiffs in the name of the Standard

Pharmaceuticals Limited. The original plaintiff and the present plaintiffs

have all through out regarded Standard Pharmaceuticals Limited as actual

tenant.
39

It is also pertinent to mention here that in addition to the fact that

no objection was ever raised by the defendant No.1 to the letters which

were addressed, bills which were raised and rent receipts which were

issued by the plaintiffs only in the name of Standard Pharmaceuticals Ltd.,

the defendant No.1 had also acted upon such letters and also made

payments to such bills and rent receipts. Had the intention on the part of

the defendant No.1 been to represent itself as a direct tenant of the

plaintiffs, there would have been no need whatsoever on its part to use the

name standard Pharmaceuticals either in the letters addressed to the

plaintiffs or in the cheques issued to the plaintiffs. The very fact that the

defendant No.1 has written letters on behalf of Standard Pharmaceuticals

through their constituted attorneys and have issued cheques for Standard

Pharmaceuticals, a Division of Ambalal Sarabhai Enterprises Ltd. in itself

clearly manifests an intention on the part of the defendant No.1 to

clandestinely pass itself off as Standard Pharmaceuticals Ltd. or an

associated company of Standard Pharmaceuticals Ltd. The said defendants

have never informed the plaintiffs that Standard Pharmaceuticals Ltd. has

ceased to exist and no explanation has come forth from the said

defendants for not intimating the plaintiffs and the Special Officer about

the order sanctioning the scheme of amalgamation. The dissolution of

Standard Pharmaceuticals Ltd. is within the special knowledge of the

defendants. Wittingly or unwittingly, whatever might have been the reason,

this communication was not made and, on the contrary, the plaintiffs and

the Special Officer considered the defendant no.1 as Standard
40

Pharmaceuticals Ltd. That the order sanctioning the scheme would operate

as a judgment in rem is of no consequence. The fact remains that by such

voluntary agreement, such tenancy right is sought to be assigned to the

defendant no.1 and the law on this aspect has already been settled in

General Radio (supra). Moreover, tenancy is not an asset of the company

and is not transferable [(1983) 1 CHN 153; Krishna Gopal Saha Vs.

Nityananda Saha & Ors., (paragraphs 4 and 5)]. These are the matters

which raise serious credibility about the defence raised by the defendants

with regard to its status as a tenant or that fresh tenancy is created by

reason of acceptance of the rent by the landlords-plaintiffs as made out in

the written statement.

In such circumstances, in my view, it cannot be contended that the

plaintiffs either accepted the defendant No.1 as direct tenant or assented to

the continuance of the defendant No.1 as a direct tenant in the suit

premises or otherwise waived their right to object to the continuance of the

said defendant as a tenant in the suit premises and if any reference is

required, the following decisions are referred to:-

1) (2006) 4 CHN 7 (Shila Roy Choudhury & Ors. Vs. Nimai

Charan Rakshit);

2) (1978) 4 SCC 1 (Firm Sardarilal Vishwanath & Ors. Vs.

Pritam Singh);

3) (1976) ILR 2 Cal 247 (Radha Gobinda Chandra Vs. Nritya

Gopal Karmakar)

41 In view thereof, the plaintiffs are entitled to a decree for eviction from the suit premises. There shall accordingly be a decree for recovery of khas possession of the suit premises as more fully described in Schedule A to the plaint.

Since the defendants are in wrongful occupation of the suit premises since 1986, the plaintiffs shall be entitled to mesne profits from May 1986 till recovery of possession. In a connected suit being C.S. No.297 of 1989 (Rajeev Daga & Anr. Vs. Ambalal Sarabhai Enterprises Ltd. & Ors.) Mr. Samrat Sen, a member of the bar, was appointed as special officer to compute the mesne profits and submit the report before this Court. The suit shall appear on 23rd September, 2013 for determination of mesne profits.

Mr. Sarkar, learned counsel for defendants, prayed for stay of operation of the judgment and decree. The same is considered and rejected.

(SOUMEN SEN, J.)

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Calcutta High Court