Madras High Court
Indian Commerce And Industries Pvt. ... vs Swadharma Swarajya Sangha on 3 October, 1994
Equivalent citations: [1998]92COMPCAS719(MAD)
JUDGMENT Govardhan, J.
1. The defendant is the appellant.
2. The averments in the plaint are briefly as follows :
The defendant, a limited company under the Companies Act, is a tenant under the plaintiff in respect of the ground floor of premises No. 29, Broadway, Madras-1, on a monthly rent of Rs. 3,000. The tenancy is as per the English calendar month. The plaintiff is a religious and charitable institution recognised under section 25 of the Companies Act and the provisions of the Tamil Nadu Buildings (Lease and Rent Control) Act are not applicable in respect of the plaint schedule property. The plaintiff terminated the tenancy of the defendant with the expiry of December, 1981, and called upon the defendant to vacate and deliver vacant possession thereof. The defendant has not vacated and handed over vacant possession. Hence, the suit.
3. The defendant in its written statement contends as follows :
The suit filed by Mrs. Lalitha Rathnam, one of the directors of the plaintiff who is not authorised by the board of directors for the plaintiff to institute the suit is not maintainable. The defendant is the tenant occupying the entire building for the last 45 years. The rent has been increased from time to time, and the present rent is Rs. 3,000 per month. The premises bearing No. 29, Broadway were owned by the late Kowtha Surya Narayana Rao. He had leased out to the defendant and he has gifted the same to the plaintiff by his will dated August 11, 1960. The defendant has put up a superstructure on the vacant land belonging to the plaintiff at its own cost and is, therefore, entitled to purchase it from the plaintiff under section 9 of the City Tenants Protection Act. The defendant has filed an application under section 9 of the City Tenants Protection Act. The plaintiff is, therefore, not entitled to the reliefs sought for. The defendant is, therefore, not bound to hand over vacant possession. The suit is, therefore, liable to be dismissed.
4. C.M.A. No. 922 of 1986 : This appeal arises out of the order passed by the learned Third Assistant Judge, City Civil Court, Madras, in I.A. No. 3942 of 1982.
5. The petitioner is the appellant herein.
6. The petitioner-company is a private limited company which had taken premises No. 29, Broadway, on lease in 1937 from the late Kowtha Surya Narayana Rao, the property comprised vacant land of 24,000 square feet and building of 5,742 square feet in the front. The rent was Rs. 1,000 till his death in 1964. From 1937, the petitioner has been the owner of the superstructure over the vacant land. The petitioner has been putting up superstructures up to 1970, i.e., well before the extension of the City Tenants Protection Act. The petitioner received the suit summons on February 5, 1982, in the suit filed by the respondent to vacate the petitioner from the schedule-mentioned property. If the respondent's suit for ejectment is ordered, the petitioner would be put to hardship. The petitioner is entitled to the benefits of the City Tenants Protection Act. The petitioner has, therefore, applied to the court for directing the respondent to sell the property on which the petitioner has put up superstructures for a price to be fixed by the court in accordance with the provisions of the City Tenants Protection Act. The petitioner is ready and willing to pay the same. The superstructure have been put up by the petitioner under the belief that he will not be evicted so long as he pays the fair rent, to the landlord. Hence, the petition.
7. The respondent-plaintiff in its counter contends briefly as follows :
The petitioner became the tenant of the suit property inclusive of the superstructure and not mere vacant land. No part of the superstructure was built up by the petitioner at his cost. The respondent is the owner of the superstructure. The petitioner is not entitled to the benefits under the Tamil Nadu City Tenants Protection Act. The petition is, therefore, liable to be dismissed.
8. On the above pleadings, the learned Third Assistant Judge, City Civil Court, Madras, held a common enquiry and granted a decree in favour of the plaintiff and dismissed the application filed by the defendant under the Tamil Nadu City Tenants Protection Act.
9. Aggrieved by the same, the defendant has preferred the appeal and the civil miscellaneous appeal.
10. The point for consideration in the appeal is : Whether the appellant is not liable to be evicted from the suit property ?
11. The point for consideration in the civil miscellaneous appeal is :
Whether the appellant is entitled to an order under section 9 of the Tamil Nadu City Tenants Protection Act ?
12. Point in the appeal : The plaintiff which is a trust registered under section 25 of the Companies Act, has filed the suit for recovery of possession of the suit property contending that the suit property is exempted from the provisions of the Tamil Nadu Buildings (Lease and Rent Control) Act and contending that the plaintiff had issued a notice under section 106 of the Transfer of Property Act terminating the tenancy of the defendant. The defendant in their written statement, has contended that the suit has been filed by one of the directors of the plaintiff trust without any authorisation from the board of directors and as such it is not maintainable under section 21 of the Civil Procedure Code. The defendant has also filed an application in I.A. No. 3942 of 1982, under section 9 of the City Tenants Protection Act praying for an order to direct the plaintiff to sell the property in its favour for a price to be fixed by the court. Before the trial court, three witnesses have been examined on behalf of the defendant in the interlocutory application and on the basis of their evidence and the documents filed, the trial court has decreed the suit for possession and dismissed the application filed under section 9 of the City Tenants Protection Act. Aggrieved over the said common judgment, the defendant has preferred this appeal and the civil miscellaneous appeal. It is conceded by learned counsel appearing for the appellant, that if the court holds that the suit is not maintainable and dismisses the same, the application filed by the defendant under section 9 of the City Tenants Protection Act will have to be dismissed and the civil miscellaneous appeal will also have to be dismissed. Learned counsel appearing for the respondent would argue that the provisions of the Tamil Nadu City Tenants Protection Act do not apply to the case on hand since what was leased is a two storeyed building and an appurtenant land and it is a single tenancy and the building is owned by the plaintiff-respondent in the appeal and therefore, the provisions of the Tamil Nadu City Tenants Protection Act are not applicable since under section 3 of the said Act, only if the lease in favour of a tenant is in respect of a land where the tenant has put up a superstructure, the tenant is entitled to the City Tenants Protection Act. It is also contended on behalf of the respondent that even though the defendant has raised a plea to the effect that the suit is not maintainable by one of the directors and an issue has also been framed to that effect, it was given up in the trial court and, therefore, the defendant-appellant is not entitled to raise that plea which has been given up in the trial court in the appellate stage. Since the question of maintainability of the suit goes to the root of the dispute between the parties both in respect of the reliefs prayed for by the plaintiff as well as the defendant, I am of opinion that it is expedient to consider the same at the first instance.
13. In the written statement, the defendant has stated that the suit is not maintainable in law since one Mrs. Lalitha Rathnam, one of the directors of the plaintiff, is not authorised by the board of directors of the plaintiff to institute the above suit. An issue has also been framed in issue No. 1 to the effect whether the suit is maintainable. In paragraph 29 of the judgment, the trial court has observed that the petitioner is a trust and the suit property was let out to the defendant, that the plaintiff issued proper notice of termination in exhibit "R-4" on May 4, 1981, terminating the tenancy ending with December 31, 1981, and this fact is not disputed and hence proper valid notice of termination has been issued by the plaintiff to the defendant and that no argument was adduced to show how the suit is not maintainable, and therefore, the said issue is answered in the affirmative. The trial court has proceeded on issue No. 1 as if the defendant has raised the question of maintainability of the suit contending that there is no valid notice of termination and has given a finding that there is a proper and valid notice of termination. Nothing has been stated in the judgment with regard to the filing of the suit by Mrs. Lalitha Rathnam as a director of the plaintiff. Learned counsel appearing for the appellant would, therefore, argue that the plea raised by the defendant is a legal plea and it can be canvassed even in the appellate stage. Learned counsel appearing for the respondent would argue that even though it is a legal plea, it is based on evidence and, therefore, it cannot be raised at the appellate stage. In support of his arguments, learned counsel appearing for the respondent relies upon the decisions in Velayudhan Gopala Panickan v. Velumpi Kunji, [FB]; Firm Raw Sohay Mall Rameshwar Dayal v. Bishwanath Prasad, ; Mohammed Seraj v. Adibar Rahaman Sheikh, and Clara Auroro De Branganca v. Sylvia Angela Alvares, .
14. In the decision in Velayudhan Gopala Panickan v. Velumpi Kunji, , it has been held by the Full Bench of the Kerala High Court that the party cannot be allowed to take up a contention which was consciously and willingly given up in the trial court. There is no observation by the learned trial judge that the defendant who has taken up the question of maintainability of the suit filed by one of the directors has consciously and willingly given up that defence. The trial court has proceeded as if the maintainability is questioned for want of a proper notice under section 106 of the Transfer of Property Act and has observed that no arguments were adduced as to how the suit is not maintainable. Therefore, it cannot be stated that the defendant has consciously and willingly given up its stand with regard to the maintainability of the suit to disallow the appellant stage (sic). In Firm Ram Sahay Mall Rameshwar Dayal v. Bishwanath Prasad, , it has been held that when a plea that the court had no jurisdiction, is taken up in the written statement and an issue is raised but the issue is given up before hearing, the defendant/appellant cannot raise the plea in the appeal in view of section 21 of the Code of Civil Procedure. In Mohammed Seraj v. Adibar Rahaman Sheikh, , also, it has been held that an issue not pressed in the trial court cannot be agitated in appeal. In the decision in Clara Auroro De Branganca v. Sylvia Angela Alvares, , it has been held that where in the suit challenging a partition deed, the defendant raised the preliminary objection that the suit was liable to be dismissed as the plaint was signed and verified by a person who was incompetent to do so but did not press it and gave it up in the trial court, it is not open to him to agitate it in the appeal. All these decisions relied on by learned counsel appearing for the respondent indicate that if the defendant has raised a plea with regard to the maintainability of the suit and later did not press it or gave it up, he cannot raise the same in the appellate stage. As I have already observed, there is no indication in the judgment of the learned Third Assistant Judge, City Civil Court, Madras, that the defendant who has raised the plea of maintainability of the suit, has given it up or not pressed it. The trial court has proceeded on a wrong assumption that the question of maintainability was raised on the ground of want of a proper notice of termination and has simply observed that no arguments were adduced on the maintainability of the suit indicating that the defendant has not argued as to how the suit is not maintainable when there is valid and proper notice of termination. Therefore, I am of opinion that the contention of the respondent that the question of maintainability of the suit having been given up in the trial court, it cannot be raised at the appellate stage is not a tenable one since it cannot be stated that this question has been actively given up by the defendant in the trial court. Even assuming that the defendant has not pressed it at the trial stage, it would not amount to giving it up. In this connection, I wish to reply upon the decision in Dippala Suri Dora v. V. V. Giri, AIR 1958 AP 724, wherein it has been held that it is no doubt true that on a question of law, there cannot be any question of estoppel the appellant can raise this as a ground of objection in the appeal, but when the appellant as a matter of fact had given up a point, he cannot be allowed to agitate the same. In the absence of any material to show that the appellant herein had given up the point with regard to the maintainability of the suit, I am of opinion that the question of maintainability of the suit can be raised by the appellant at the appellate stage.
15. Learned counsel appearing for the appellant would argue that the suit has been filed by one of the directors of the plaintiff trust without any authorisation by the board of directors enabling the plaintiff to file the suit and, therefore, the suit is not maintainable under Order 29, rule 1 of the Civil Procedure Code. Order 29, rule 1 of the Civil Procedure Code, provides that in suits by or against a corporation, any pleading may be signed and verified on behalf of the corporation by the secretary or by any director or other principal officer of the corporation, who is able to depose to the facts of the case. According to learned counsel appearing for the appellant, as per Order 29, rule 1 of the Civil Procedure Code, pleadings may be signed and verified by a director of a corporation but it would not enlarge his right to file a suit without any resolution for the same. According to learned counsel appearing for the appellant, a suit by a secretary having general power of attorney is maintainable notwithstanding the provision in the articles of association requiring the consent of a director as per the decision in Turner Morrison and Co. Ltd. v. Hungerford Investment Trust Ltd., , and in the present case, there is neither a power of attorney in favour of Mrs. Lalitha Rathnam to file the suit nor any subsequent resolution passed by the board of directors ratifying the filing of the suit and according to learned counsel, the suit is, therefore, not maintainable under Order 29, rule 1 of the Civil Procedure Code. Learned counsel appearing for the respondent would on the other hand argue that the defendant is in arrears of rent and the trust has chosen to file a suit for its eviction on the ground of default committed by the respondent that after issuing a valid notice to quit as required under section 106 of the Transfer of Property Act and it is an indoor management of the trust and the appellant who is a tenant in arrears cannot question the same. Learned counsel relies upon the decision in Freeman and Lockyer (A firm) v. Buckhurst Park Properties (Mangal) Ltd. [1964] 34 Comp Cas 405; [1964] 2 WLR 618 (CA), in support of his above contention that the director in the company where there is no managing director, appoints an architect through the resolution of the board of directors and it has been approved, the conduct of the director cannot be questioned. But, this decision cannot be pressed into service by learned counsel appearing for the respondent in support of his above contention on the ground that the conduct of the managing director appointing an architect is within the ordinary ambit of authority of the managing director and there is no necessity to enquire whether the appointment was authorised. Appointment of the auditor is an administrative function. It has to be distinguished from filing a suit for which special provision has been provided in Order 29, rule 1 of the Civil Procedure Code. Therefore, I am of opinion that where there is no resolution authorising Mrs. Lalitha Rathnam to file the suit, the defendant's claim that the suit is not maintainable is to be held a valid defence in the suit for ejectment against them.
16. Learned counsel appearing for the appellant relies upon the decision in Nibro Ltd. v. National Insurance Co. Ltd. [1991] 70 Comp Cas 388 (Delhi) and K. N. Sankaranarayanan v. Shree Construction and Services Pvt. Ltd. [1994] 80 Comp Cas 558 (Mad) in support of his contention that the suit filed by Mrs. Lalitha Rathnam without a proper resolution by the other directors is not maintainable. In the present case, the suit has been filed by Swadharma Swarajya Sangha represented by its director, Mrs. Lalitha Rathnam, as the plaintiff. From the cause title, it is seen that the suit has been filed by the plaintiff by one of its directors, viz., Mrs. Lalitha Rathnam. But in the plaint, there is no averment that she has been duly authorised to file the same. In spite of the matter being raised in the written statement, no re-joinder has been filed by the plaintiff to make a positive averment that she possessed the requisite authority to file the suit. Therefore, it cannot be stated that the suit has been validly instituted. In the decision relied by learned counsel appearing for the appellant, viz., Nibro Ltd. v. National Insurance Co. Ltd. [1991] 70 Comp Cas 388, it has been held by the Delhi High Court, as follows (headnote) :
"Individual directors have such powers only as are vested in them by the memorandum of article. It is true that ordinarily the court will not non-suit a person on account of technicalities. However, the question of authority to institute a suit on behalf of a company is not a technical matter, it has far-reaching effects. Order 29, rule 1 of the Code of Civil Procedure, does not authorise persons mentioned therein to institute suits on behalf of a corporation-it only authorises them to sign and verify the pleadings on behalf of the corporation. Thus, unless a power to institute a suit is specifically conferred on a particular director, he has no authority to institute a suit on behalf of the company. Such power can be conferred by the board of directors only by passing a resolution in that regard."
17. From the above decision, we are led to the conclusion that in the absence of a resolution by the directors, the filing of the suit for ejectment by Mrs. Lalitha Rathnam is not maintainable. Hence, it is an irregularity going to the root of the matter. It is not an internal management of the company in which courts cannot interfere as contended by learned counsel appearing for the respondent. The filing of the suit is an initial infirmity with regard to the maintainability of the suit which is incurable. It cannot be equated with an administrative act like the appointment of an architect as in the case of Freeman and Lockyer (A firm) v. Buckhurst Park Properties (Mangal) Ltd. [1964] 34 Comp Cas 405 (CA); [1964] 2 WLR 618 as relied on by learned counsel appearing for the respondent. The decision relied on by learned counsel appearing for the appellant in K. N. Sankaranarayanan v. Shree Consultations and Services Pvt. Ltd. [1994] 80 Comp Cas 558 (Mad) also lays down the same principle that there must be specific conferment of power on the director for instituting a petition on behalf of the company and instituting a petition on behalf of the company without proof of authorisation is an invalidity which cannot be cured and the petition is not maintainable on that ground. Thus, it is seen that the contention of learned counsel appearing for the appellant, that as per the decision in Nibro Ltd. v. National Insurance Co. Ltd. [1991] 70 Comp Cas 388 (Delhi) and K. N. Sankaranarayanan v. Shree Consultations and Services Pvt. Ltd. [1994] 80 Comp Cas 558 (Mad) the suit is not maintainable for want of a valid resolution by the board of directors authorising Mrs. Lalitha Rathnam to file the suit against the defendant and in the absence of such a resolution, the suit has to fail as not maintainable is well founded and the judgment and the decree of the trial court has to be reversed on this question. It is more so when this plea has been raised as one of the grounds of appeal also and it is a legal plea, which can be raised at any stage. Considering these aspects, I hold on the point in the appeal that the appellant is not liable to be evicted from the suit property.
18. Point in the C.M.A. No. 922 of 1986 : I have already observed that learned counsel appearing for the appellant has argued that when once it is held that the suit is not maintainable and the suit is dismissed, the interlocutory application filed under section 9 of the Tamil Nadu City Tenants Protection Act and the consequent civil miscellaneous appeal are also to be dismissed. Now that we have held that the suit is not maintainable the civil miscellaneous appeal can be dismissed without going into the merits on the threshold itself. But for completion sake, I am of opinion that it is expedient to consider the civil miscellaneous appeal also on its merits. Three witnesses have been examined on behalf of the petitioner in I.A. Nos. 3942 of 1982, before the trial court. PW-1 has stated that they have taken the property in Door No. 29, Broadway, on lease and it consists of a building in the front facing 511 square feet out of total area of 3,615 square feet. During cross-examination, he has stated that he does not know personally when each and every shed in the vacant land has been put up and that he has no records for the construction of each and every shed. PW-1 admits that the entire property of 14 grounds was leased and it is a single tenancy of the entire 29, Broadway, and that the defendant is not paying separate rent for the main building and separate rent for the land. It is also admitted by him that they have to enter through the main building from Broadway to go into the rear vacant space. At a later stage of the cross-examination, he had stated that the property and the sheds are in the name of the plaintiff. He also states that the seven sheds do not find place in exhibit "P-1" and exhibit "P-2" reports. He has firmly stated that defendant did not take the land alone separately for lease. The evidence of PW-2 does not throw light on any contention of the petitioner. PW-3 would say that they have not obtained sanction for putting up a shed in the vacant site; he cannot say how many sheds there are, he has not obtained permission when sheds were put up. During cross-examination he would say that there are records to show purchase of the sheds in 1938 from the late Kowtha Surya Narayana Rao. K. S. Rao was originally the owner of the defendant-business when it was a proprietary concern and he has incorporated it as a private limited company subsequently. Therefore, there is no necessity for a separate sale deed or any other conveyance in favour of the defendant when the property has been given by way of will in favour of the plaintiff as per the decision in Weavers Mills Ltd. v. Balkis Ammal . The evidence of PWs. Nos. 1 and 3 which I have extracted above would show that actually the demised property is a large extent of land over which there was a small superstructure and the entire property has been conveyed in favour of the defendant by a single tenancy. The Tamil Nadu City Tenants Protection Act is applicable only to tenancies of land, as per section 1(3) of the Act. The emphasis is on the word "only", and if the lease comprises something other than a land, the Act will not be applicable. It is the view taken by the Supreme Court in Salam Md. Sait v. J.M.S. Charity [1969] 1 MLJ 16, and also in the decision in Subramania Pillai v. Pennington Committee 100 LW 218. When we consider the evidence of PWs. 1 and 3 in the light of the above decisions, it leads us to the inference that what has been leased in favour of the defendant by the predecessor-in-interest of the plaintiff, viz., Kowtha Suryanarayana Rao is not the land alone to enable the defendant to file an application under section 9 of the Tamil Nadu City Tenants Protection Act. Therefore, even assuming that the plaintiff is entitled to file the suit, if we consider the claim of the defendant in the interlocutory application filed under section 9 of the Tamil Nadu City Tenants Protection Act, we are driven to the conclusion that the petitioner in the interlocutory application, viz., the appellant in the C.M.A. No. 922 of 1986, is not entitled to the benefits under the Tamil Nadu City Tenants Protection Act and, therefore, he is not entitled to an order under section 9 of the Act and I hold on the point accordingly.
19. In the result, the appeal is allowed setting aside the judgment and decree of the trial court and dismissing the suit O.S. No. 491 of 1982. C.M.A. No. 922 of 1986 is dismissed. Parties are directed to bear their own costs.