Calcutta High Court
Smt Premlata Arya & Anr vs Ambalal Sarabhai Enterprises Ltd. & Ors on 12 August, 2013
Author: Soumen Sen
Bench: Soumen Sen
1
IN THE HIGH COURT AT CALCUTTA
Ordinary Original Civil Jurisdiction
ORIGINAL SIDE
BEFORE:
The Hon'ble JUSTICE SOUMEN SEN
CS No. 323 of 1989
SMT PREMLATA 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 owners of an office space on the
first floor at premises no. 24, Park Street, Kolkata, measuring 1978 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
defendents fort 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, 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 plaintiffs prior to obtaining
3
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 both dated
February 8, 1989 (Ext. "F") 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 defendents contested the proceeding and have filed the written
statement. The defendants contended that the defendants are protected by
Clause 5 and Clause 11 of the tenancy agreement entered into on 22nd
January, 1973. Pursuant to a scheme of amalgamation made by and
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between Standard Pharmaceuticals Limited and the defendant no.1
sanctioned by this Hon'ble Court and the Gujarat High Court by orders
dated 22nd January, 1983 and 7th May, 1983 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 by an order dated 22nd 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 dated 22nd 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 recognized 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.
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
5
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
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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 the West Bengal Premises Tenancy Act, 1956 as
alleged in paragraph 7 of the plaint?
4. Are the defendants trespasser in respect of the suit premises?
5. (a) Was any rent paid to the plaintiffs by or on behalf of
defendant no. 1 after 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 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
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.
8
Thirdly, on factual score, the defendants would contend that by virtue
nd
of Clause 11 of the Tenancy agreement dated 22 January, 1973 the
Hon'ble Court should be pleased to hold that consent of landlord 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. Ghosh referred to the
evidence of Tapan Nandan Bhattacharya, the defendants' 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)
9
It is argued that the plaintiffs have consciously accepted the rent
from Ambala arabhai with actual or constructive notice of such
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. inCA 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, 29, 30, 41, 42, 43, 46, 48, 49, 51, 52, 65, 66,
and 68 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 to
10
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. Ghosh 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,
husband of the plaintiff no. 1 and the plaintiffs' witness no. 1 to show that
the landlord used to collect the rent from Standard Pharmaceuticals, a
division of Ambalal Sarabhi 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
Ambala Sarabhai Enterprises instead of Standard Pharmaceuticals Ltd.
According to Mr. Sarkar, the evidence of Mr. 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
Dagas 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 suit premises as,
12
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 Exhibit "F" 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 Ltd. -vs.- Chander
13
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
the suit premises in favour of the defendant No.1 is now settled law in view
15
of the decision of the Hon'ble Supreme Court in the matter of 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 allegation would be evident from the admissions made by the
defendants in paragraph 4(e) of the written statement that by an order dated
nd
22 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 of the agreement dated
nd
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 the portion
sublet. This clearly contemplates that the right of Standard Pharmaceuticals
to sublet the suit premises would survive only so long as Standard
16
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 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."
17
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 also relied on an unreported judgment delivered by me in
C.S. No. 297 of 1989 (In re: Rajiv Daga Vs Ambalal Sarabhai Enterprise
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
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 the plaintiffs' witness no.
2. He relies on the answer given by Sundarlal Mitra to question nos. 1, 2, 3,
18
5 to 11, 12, 13, 14, 15, 20, 24- 35, 37 to 42. Mr. Ghosh submits that in
cross examination (Q. 48 to 11) Mr. Mitra has explained the basis of his
valuation report (Exhibit "I"). Mr. Ghosh submits that it is recorded in the
valuation report dated 10th December, 2002 (Exb I) of Sundarlal Mitra that
he could not enter suit premise as the same was under lock and key. Mr.
Ghosh further submits that in terms of the order dated 22nd November,
1996 passed by Hon'ble Justice Barin Ghosh in respect to this suit the
receiver has put padlock on the door of this suit premise. Mr. Ghosh further
submits that a decree for mense profit 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
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).
19
(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 applicable 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 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
20
th
itself where the amalgamation order was passed on 27 March, 1978 and
th
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 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.
21
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.
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
22
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 has been mutually misdescriebed. 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 enforcement of rent. The plaintiffs husband, Ramash 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
belief that in none of the circumstances and situations, the presence of a
new entity, Amballal 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.
Taking all the circumstances into consideration and on an objective
view of the matter, it was submitted that this Hon'ble Court would be
23
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 defendant 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 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
24
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 trasnferee 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
been elaborately discussed in Laxmi Ram Pawar (supra) in paragraphs 12
to 16, which are reproduced hereinbelow:-
25
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."
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
26
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.
nd
Ramanatha 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 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.
27
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 doctrine is either logical or
28
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 tenancy
subsists. A person entering the premises on the basis of such a permissive
29
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 landlord
and upheld the judgment of the Andhra Pradesh High Court whereby the 30 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 recognize him as its tenant. A tenancy is created by agreement or conduct. However, such relationship has to be established.
There is no dispute that Standard Pharmaceuticals Ltd. was a tenant in respect of the suit premises. On the death of Standard Pharmaceuticals 31 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- disclosure would visit such party with same consequences. In such situation, the inevitable inference would be that the said party is trying to 32 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 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 33 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 correctly viewed as a substantive rule of law (Halsbury's Laws of England, 4th ed. Vol. 16 Page 1023 Paragraph 1501)".34
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 of evidence under the rule relating to similar facts, estoppels operate without reference to the purpose of which reliance is placed on a particular 35 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., Ltd.). 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 those who 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:-
"Estoppels by conduct. - Estoppels by conduct, or, as they are still sometimes called, estoppels by matter in pais, were anciently acts of 36 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, 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. 37
(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 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. It would appear from question nos. 102, 108, 109, 149, 162, 203 and 204 answered by Ramesh Kumar Arya that it was only in the end of 1988 or early 1989 when the plaintiff came to know through Mr. Rajeev Daga about the merger of Standard Pharmaceuticals Limited with the defendant No.1.
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). 38 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 (Ex. 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 (EXT 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.
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, 39 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 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., (paras 4 and 5)]. These are the matters which raise serious 40 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).
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. 41 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.)