Dr.P.T.Santhosh Babu vs Jayabharatham Nursing Home(Pvt) ... on 12 September, 2012

[Cites 10, Cited by 2]

Kerala High Court

Dr.P.T.Santhosh Babu vs Jayabharatham Nursing Home(Pvt) ... on 12 September, 2012

The revision petitioner is the tenant. The respondent-landlord has filed R.C.(OP)No.2/1996 before the Rent Control Court, Punalur, under Section 11(2)(b) of the Kerala Buildings (Lease and Rent Control) Act, 1965 (hereinafter referred to as 'the Act') seeking an order to evict the revision petitioner-tenant from the petition schedule building.

2. Going by the averments in the Rent Control Petition, the respondent-landlord is a private Company limited by shares incorporated under the Companies Act, 1956 and is represented by its Managing Director. It is the lawful owner, possessor and landlord of the petition schedule rooms bearing No.PMC-XIII/298 with its furnishings, fittings, fixtures and appurtenances. The revision petitioner-tenant is in occupation of the petition schedule rooms by virtue of Exhibit A1 lease deed executed on 15.1.1993, on a monthly rent of 1,000/-. The tenant intentionally defaulted RCR.NO.29/2013 -2- payment of rent from August, 1993. In spite of repeated demands, the tenant failed to pay the rent due. Therefore, the landlord caused to issue Exhibit A3 lawyer notice on 29.5.1995. Since the tenant failed to clear the rent arrears in respect of the petition schedule rooms, the Rent Control Petition was filed under Section 11(2)(b) of the Act, seeking an order directing the tenant to vacate the said premises and give vacant possession thereof to the landlord.

3. The tenant filed objections to the Rent Control Petition contending that the petition is not maintainable. The allegation that Dr.P.T.Rajan Babu is the owner of the petition schedule rooms is not true and it belongs to a private limited Company by name Jayabharatham Nursing Home Pvt. Ltd. Dr.P.T.Rajan Babu is not the Managing Director of that Company. Thomas Vaidyan, who was the Managing Director of the Company died on 16.8.1991. In the extra-ordinary meeting of the shareholders of the Company convened on 7.11.1991, it was resolved to appoint Shri.P.T.Mohan Babu as the Whole-time Director for managing the affairs of the Company. He colluded with Dr.P.T.Rajan Babu RCR.NO.29/2013 -3- and others to defeat the rights of the shareholders of the Company and also committed default in convening the meeting of the Board of Directors after 12.5.1992. An extra-ordinary meeting of the shareholders convened on 16.1.1995 resolved to appoint Shri.P.T.Chandra Babu as the Managing Director of the Company and Dr.P.T.Rajan Babu, his wife Renny Rajan Babu and Shri.P.T.Mohan Babu were removed from the Directorship of the Company. Shri.P.T.Chandra Babu and his mother Smt.Kunjamma Thomas filed O.S.No.49/1995 before the Sub Court, Kottarakkara, for a declaration that the resolutions adopted in the extra-ordinary general meeting of the shareholders held on 16.1.1995 are valid and also for restraining Dr.P.T.Rajan Babu and others from interfering with the right of Shri.P.T.Chandra Babu to manage the affairs of the Company and the said suit is pending.

4. In paragraph 9 of the objections the tenant contended that, he is in possession of the petition schedule rooms from January, 1993, as permitted by all the Directors of the Company, and he is conducting a dental clinic in those rooms. By a RCR.NO.29/2013 -4- resolution passed in the extra-ordinary general meeting of the shareholders of the Company held on 16.1.1995, it was resolved to permit him to occupy the petition schedule rooms and it was also resolved that the rent will be fixed later. In paragraphs 10 and 11 of the objections the tenant has admitted that, he is a lessee of the Company as regards the petition schedule rooms and he is ready and willing to pay the rent fixed by the Company to the duly appointed Managing Director of the Company. He has not executed any lease deed in favour of Dr.P.T.Rajan Babu and the said Rajan Babu has no right to demand payment of rent for the said rooms. The tenant further contended that the demand for payment of rent at the rate of 1,000/- per month is unsustainable and Dr.P.T.Rajan Babu has no right to demand vacant possession of the petition schedule rooms.

5. On the side of the landlord, PWs. 1 to 3 were examined and Exhibits A1 to A6 were marked. On the side of the tenant DWs. 1 and 2 were examined and Exhibits B1 to B5 were marked. The Memorandum of Association of the Company was marked as Exhibit X1.

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6. On an appreciation of the facts and circumstances of the case and also the evidence on record, the Rent Control Court came to the conclusion that there is landlord-tenant relationship between the parties and therefore the Rent Control Petition is legally maintainable. The Rent Control Court further held that the tenant defaulted payment of rent with effect from August 1993 without any valid explanation and therefore the landlord is entitled for an order of eviction under Section 11(2)(b) of the Act.

7. Aggrieved by the order of eviction granted by the Rent Control Court, the tenant preferred R.C.A.No.9/2010 before the 1st Additional Rent Control Appellate Authority, Kollam. By judgment dated 12.9.2012, the Appellate Authority concurred with the findings of the Rent Control Court and dismissed the appeal. It is aggrieved by the order and judgment of the authorities below, the revision petitioner-tenant is before us in this Rent Control Revision.

8. Heard the arguments of the learned counsel for the revision petitioner-tenant and the learned counsel appearing for the respondent-landlord. The learned counsel for the revision RCR.NO.29/2013 -6- petitioner-tenant contended that there is no landlord-tenant relationship between the parties as the petition schedule rooms and the entire structure wherein it is located belongs to late Thomas Vaidyan, the father of the tenant. The petitioner before the Rent Control Court is not the landlord and Dr.P.T.Rajan Babu has no authority to represent the Company and he has also no right to demand any rent from the tenant. Therefore, the authorities below ought to have held that the Rent Control Petition is not maintainable. Smt. Kunjamma Thomas, the widow of late Thomas Vaidyan, has filed O.S.No.244/2010 before the Munsiff's Court, Punalur, seeking partition of 33= cents of property with building bearing Nos.PMC-XIII/292 to 298 (which includes the petition schedule rooms) and that suit is pending consideration. Per contra, the learned counsel for the respondent- landlord contended that the finding of the Rent Control Court as well as the Appellate Authority in the order and judgment impugned are perfectly legal and no interference of this Court is warranted. We have considered the rival submissions made at the Bar.

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9. The Rent Control Petition is filed by Jayabharatham Nursing Home Pvt. Ltd., a private Company incorporated under the Companies Act, represented by its Managing Director Dr.P.T.Rajan Babu. Exhibit X1 is the Memorandum and Articles of Association of the said Company. Going by the averments in the Rent Control Petition, the said Company is the lawful owner, possessor and landlord of the petition schedule rooms, which is in occupation of the tenant, by virtue of Exhibit A1 lease deed executed on 15.1.1993, on a monthly rent of 1,000/-. As the tenant defaulted payment of rent from August, 1993, in spite of Exhibit A3 lawyer notice, the Rent Control Petition was filed seeking an order of eviction under Section 11(2)(b) of the Act.

10. In paragraph 2 of the objections filed to the Rent Control Petition, the tenant has admitted that "the building belongs to a private limited Company by name Jayabharatham Nursing Home Pvt. Ltd." Therefore, the fact that the petition schedule rooms are owned by Jayabharatham Nursing Home Pvt. Ltd. is admitted in the objections filed by the tenant. That by itself is sufficient to conclude that Jayabharatham Nursing Home RCR.NO.29/2013 -8- Pvt. Ltd. is the landlord in respect of the petition schedule rooms. In paragraph 10 of the objections, the tenant has admitted that "he is a lessee of the Company as regards the petition schedule rooms and that he is willing to pay the rent fixed by the Company to the duly appointed Managing Director of the Company." Therefore, the landlord-tenant relationship in respect of the petition schedule rooms is admitted in the objections filed by the tenant. Going by Section 58 of the Evidence Act, 1872, facts admitted need not be proved. The admissions made in the objections filed by the tenant to the Rent Control Petition itself is sufficient to draw an irresistible conclusion that there is landlord- tenant relationship between the respondent-landlord and the revision petitioner-tenant in respect of the petition schedule rooms.

12. It is well settled that, a Company incorporated under the provisions of the Companies Act is a separate legal entity distinct from its individual shareholders or Directors. A Company is a juristic person and has an existence independent from that of the shareholders and it is the Company which owns its assets and RCR.NO.29/2013 -9- not the shareholders. There is nothing in the Companies Act to warrant the assumption that a shareholder who buys shares buys any interest in the property of the Company, which is a juristic person entirely distinct from the shareholders. On buying shares a shareholder becomes entitled to participate in the profits of the Company in which he holds the shares, if and when the Company declares that profits or any portion thereof should be distributed by way of dividend among the shareholders. The shareholders have a further right to participate in the surplus assets of the Company which would be left over after distribution among creditors, on winding up of the said Company. Therefore, Jayabharatham Nursing Home Pvt. Ltd., the landlord is a juristic person entirely distinct from its shareholders or Directors. Merely for the reason that late Thomas Vaidyan and members of his family alone are the shareholders and Directors of the said Company, it cannot contend that the incorporation of that Company was only a family arrangement among the family members and that the petition schedule rooms and the entire structure wherein it is located belongs to late Thomas Vaidyan. RCR.NO.29/2013 -10-

13. Section 2(3) of the Act defines 'landlord', which includes the person who is receiving or entitled to receive the rent of a building, whether on his account or on behalf of another or on behalf of himself and others or as an agent, trustee, executor, administrator, receiver or guardian or who would so receive the rent or be entitled to receive the rent, if the building were let to a tenant. The Second Proviso to Section 11(1) of the Act, comes into play in two circumstances, (i) where the tenant denies the title of the landlord or (ii) when the tenant claims permanent tenancy. Then the Rent Control Court shall decide whether the denial of title or claim of permanent tenancy is bona fide and if it records a finding that such denial or claim is bona fide, the landlord shall be entitled to sue for eviction of the tenant in a civil court and such court may pass a decree for eviction on any of the grounds mentioned in Section 11 of the Act, notwithstanding that the court finds that such denial does not involve forfeiture of the lease or that the claim is unfounded.

14. In this case, the tenant has admitted in his objections to the Rent Control Petition that, the petition schedule rooms RCR.NO.29/2013 -11- belongs Jayabharatham Nursing Home Pvt. Ltd. and that he is a lessee of that Company as regards those rooms. The tenant has further admitted that, he is willing to pay the rent fixed by the Company to its duly appointed Managing Director. The admissions so made by the tenant are sufficient to draw an irresistible conclusion that Jayabharatham Nursing Home Pvt. Ltd., the petitioner in the Rent Control Petition, would fall under the definition of 'landlord' in Section 2(3) of the Act. As the petitioner in the Rent Control Petition is Jayabharatham Nursing Home Pvt. Ltd., and not Dr.P.T.Rajan Babu, the principles laid down in the judgment of the Apex Court in M.M.Quasim v. Manohar Lal Sharma and Others (1981 (3) SCC 36) and in the judgment of this Court in Parameswaran Nair v. Chellappan (1983 KLT 1029) relied on by the learned counsel for the tenant do not, in any manner, support the case of the tenant. Moreover, the contention of the tenant that, Dr.P.T.Rajan Babu who represented the Company in the rent control proceedings is not the Managing Director of that Company or the further contention that he has no right either to demand payment RCR.NO.29/2013 -12- of rent or vacant possession of the petitions schedule rooms, would not amount to 'denial of title' of the landlord, in order to attract the Second Proviso to Section 11(1) of the Act. Therefore, we find absolutely no merit in the contention raised by the learned counsel for the tenant that, the Rent Control Court ought to have decided the question of maintainability under Section 11 (1) of the Act.

15. The facts, as borne out from the pleadings and the evidence on record, are that after the death of Thomas Vaidyan who was originally the Managing Director of Jayabharatham Nursing Home Pvt. Ltd., there was scramble among his children for taking control of the Company. O.S.No.49/1995 on the file of the Subordinate Judge's Court, Kottarakkara, was an off-shoot of such fight between two factions. Exhibit B1 is certified copy of the plaint in O.S.No.49/1995 and Exhibit A6 is the certified copy of the judgment in that suit. The said suit was filed by P.T.Chandra Babu and Kunjamma Thomas against Dr.P.T.Rajan Babu, P.T.Mohan Babu and Renny Rajan Babu, seeking a declaration that the extra-ordinary meeting of the share holders of the RCR.NO.29/2013 -13- Company held on 16.1.1995 was legal and proper, and for other consequential reliefs. They also sought for a declaration that the resolution adopted in that meeting for removing the defendants from the Directorship of the Company are valid and binding on the Company and also sought a mandatory injunction to the defendants to handover the records, registers and all effects and assets of the Company to the plaintiffs.

16. A perusal of Exhibit A6 judgment would show that, on an appreciation of the facts of the case and the evidence on record, the Sub Court concluded that, the first defendant (Dr.P.T.Rajan Babu) was validly appointed as the Managing Director of the Company; the meeting alleged to be held on 16.1.1995 is illegal; the plaintiffs are not entitled for the injunction as prayed for as the Company is managed by the first defendant (Dr.P.T.Rajan Babu) as duly elected Managing Director and the second defendant (P.T.Mohan Babu) as the Whole-time Director; etc. But, the suit was dismissed as not maintainable. Though the tenant, who was examined as DW1 before the Rent Control Court, has deposed that an appeal has been preferred RCR.NO.29/2013 -14- against the judgment and decree in O.S.No.49/1995 he has not chosen to produce any documents in support of such contention.

17. Though the tenant is not a party to O.S.No.49/1995, the pleadings in Exhibit B1 plaint (which was marked through the tenant) and the findings in Exhibit A6 judgment can be looked into for the limited purpose to find out whether the denial of title raised by the tenant is a bona fide one. The first plaintiff in O.S.No.49/1995 is P.T.Chandra Babu. The stand taken by the tenant in his objections filed to the Rent Control Petition is that, P.T.Chandra Babu was appointed as the Managing Director of the Company in the extra-ordinary meeting of the shareholders of the Company held on 16.1.1995 and that in the very same meeting it was resolved to permit the tenant to occupy the petition schedule rooms as a lessee, on condition that the rent will be fixed later. Though in the suit filed on 21.2.1995, a mandatory injunction was sought for against the defendants to handover the records, registers and all effects and assets of the Company to the plaintiffs, that relief was declined in Exhibit A6 judgment on a finding that the Company is managed by RCR.NO.29/2013 -15- Dr.P.T.Rajan Babu as duly elected Managing Director and P.T.Mohan Babu as the Whole-time Director. The pleading in Exhibit B1 plaint itself is sufficient to draw an irresistible conclusion that even at the time of filing of O.S.No.49/1995 Dr.P.T.Rajan Babu was continuing as the Managing Director of the Company. In Exhibit A6 judgment it was further held that, the extra-ordinary meeting of the shareholders of the Company alleged to have held on 16.1.1995 is illegal. Therefore, the contention of the tenant, relying on Exhibits B2 to B5, that in the said extra-ordinary meeting of the shareholders DW2 was appointed as the Managing Director of the Company is only to be rejected. In such circumstances, we find absolutely no merit or bona fides in the contention raised by the tenant that, at the time of filing the Rent Control Petition Dr.P.T.Rajan Babu had no authority to represent the Company.

18. The learned counsel for the tenant contended that, Smt. Kunjamma Thomas, the widow of late Thomas Vaidyan, has filed O.S.No.244/2010 before the Munsiff's Court, Punalur, seeking partition of 33= cents of property with building bearing RCR.NO.29/2013 -16- Nos.PMC-XIII/292 to 298 (which includes the petition schedule rooms) and that suit is pending consideration. Mere pendency of the suit for partition filed by the widow of late Thomas Vaidyan would not prevent the the landlord from seeking an eviction of the tenant from the petition schedule rooms under Section 11(2)

(b) of the Act. Therefore, the said contention of the learned counsel for the tenant is also to be rejected.

19. Regarding tenancy, the specific averments made in the Rent Control Petition are that, the tenant is in occupation of the petition schedule rooms by virtue of Exhibit A1 lease deed executed on 15.1.1993, on a monthly rent of 1,000/-. The tenant paid rent only till July, 1993 and intentionally defaulted payment of rent from August, 1993. In spite of repeated demands, the tenant has not paid the rent due. The landlord caused to issue Exhibit A3 lawyer notice to the tenant and thereafter filed the Rent Control Petition under Section 11(2)(b) of the Act seeking an order of eviction. Along with the Rent Control Petition, the landlord produced Exhibit A1 lease deed dated 15.1.1993; Exhibit A2 receipt dated 1.8.1993 for payment RCR.NO.29/2013 -17- of 7,000/- towards rent for seven months from January, 1993 to July, 1993; Exhibit A3 lawyer notice dated 29.5.1995; etc. In the objections filed to the Rent Control Petition, the tenant has no case that Exhibit A1 lease deed executed between the landlord and the tenant is a concocted document. His only case in paragraph 11 of the objections is that, he has not executed any lease deed in favour of Dr.P.T.Rajan Babu. The tenant has also not disputed the specific averment in the Rent Control Petition regarding payment of rent till July, 1993, which is supported by Exhibit A2 receipt. In the objections, the tenant has admitted that he is in possession of the petition schedule rooms from January, 1993 as permitted by all the Directors of the Company. Later, by a resolution passed in the extra-ordinary general meeting of the Company held on 16.1.1995 it was resolved to permit him to occupy the said rooms as a lessee and it was further decided that the rent will be fixed later. Admittedly, the petition schedule rooms belong to the landlord, which is a Company incorporated under the provisions of the Companies Act. In Exhibit A6 judgment, the Sub Court found that the RCR.NO.29/2013 -18- meeting alleged to be held on 16.1.1995 is illegal. In such circumstances, the contention of the tenant that he is in possession of the petition schedule rooms from January, 1993 as permitted by all the Directors of the Company and later, by a resolution passed in the extra-ordinary general meeting of the Company held on 16.1.1995, is only to be rejected.

20. In paragraph 10 of the objections filed to the Rent Control Petition, the tenant has stated that he is ready and willing to pay the rent fixed by the Company to the duly appointed Managing Director of the Company. The circumstances as borne out from the pleadings and the documents on record, corroborate the fact that the landlord was duly represented by Dr.P.T.Rajan Babu at the time when Exhibit A1 lease deed was executed. Though, DW1 disputed his signature in Exhibit A1, the Rent Control Court found that the signature of the tenant in Exhibit A1 is similar to his admitted signature found on other records. The Rent Control Court further found that the positive evidence let in by PW1 and PW3 regarding the execution of Exhibit A1 could not be discredited by the tenant. PW3 is a witness to Exhibit A1, who RCR.NO.29/2013 -19- testified in support of due execution of the said lease deed. The Rent Control Court has also relied on Exhibit A2 receipt showing receipt of rent for a period of 7 months from the date of execution of Exhibit A1 lease deed, i.e., till July, 1993. The evidence of PW1 shows that the rent in respect of the petition schedule rooms are in arrears from August, 1993 and that in spite of the demand made in Exhibit A3 lawyer notice, the tenant failed to pay the same. The evidence already on record itself is sufficient to draw an irresistible conclusion that, the tenant has defaulted payment of rent from August, 1993 in respect of the petition schedule rooms, without any sufficient reasons.

21. On the basis of evidence on record, the Rent Control Court and the Appellate Authority concluded that the landlord has succeeded in making out a case for ordering eviction under Section 11(2)(b) of the Act. Such finding of the authorities below cannot be said to be erroneous or perverse, warranting interference of this Court under Section 20 of the Act. We find absolutely no illegality, irregularity or impropriety in the finding to that effect in the impugned order and judgment. RCR.NO.29/2013 -20-

In the result, the Rent Control Revision is dismissed. No order as to costs.

Sd/-

K.T.SANKARAN, JUDGE Sd/-

ANIL K.NARENDRAN, JUDGE dsn

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