TMI Blog2004 (8) TMI 386X X X X Extracts X X X X X X X X Extracts X X X X ..... for eviction. - CIVIL APPEAL NO. 387 OF 2004 AND CIVIL APPEAL NO. 388 OF 2004 - - - Dated:- 13-8-2004 - R.C. LAHOTI, G. P. MATHUR AND C.K. THAKKER, JJ. Anil B. Divan, Ashok Grover, Ashok Kumar Chhabra, Dinesh Kumar, Masant, R. Chandrachud, Ms. Anupama Grover and Ms. Madhu Moolchandani for the Appellant. Dushyant Dave, K. Ramamoorty, Rohit Alex, Sri Ram, J. Thalapathy, L.K. Garg, Ms. S. Nagarajan, G.D. Gupta, P.H. Parekh and Ms. Minakshi Vij for the Respondent. JUDGMENT G. P. Mathur, J. This appeal, by special leave, has been preferred against the judgment and order dated May 25, 2001 of the Delhi High Court whereby the second appeal preferred by the appellant was dismissed and the judgment and order dated April 8, 1996, of the Rent Control Tribunal directing eviction of the appellant from the premises in dispute was affirmed. Shri Atma Ram Chadha, predecessor-in-interest of respondents Nos. 1 to 13 (hereinafter referred to as the "landlord") let out Shop No. 13/14 (Private No. 15) Block "C", Cannaught Place, New Delhi, to M/s. Singer Sewing Machine Company, incorporated under the laws of the State of New Jersey, USA, (hereinafter referred to as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the FERA provided that a company (other than a banking company) which is not incorporated under any law in force in India or any branch of such company, shall not, except with a general or special permission of the Reserve Bank, carry on in India or establish in India a branch, office or other place of business for carrying on any activity of a trading, commercial or industrial nature, other than an activity for the carrying on of which permission of the Reserve Bank had been obtained under section 28. Accordingly, a direction was issued by the Reserve Bank to the American company to reduce its equity capital to 40 per cent. In view of this direction, a company petition was filed under sections 391 and 394 of the Companies Act in the Bombay High Court for sanctioning a scheme of amalgamation which was allowed and the American company got amalgamated with the Indian company. Learned counsel has submitted that it was not a voluntary transfer of undertaking, but the amalgamation of the original lessee, namely, the American company with the Indian company had to be resorted to under compulsion of law with a view to secure compliance of the provisions of the FERA and the directions is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7, wherein it was held that if an individual takes a premises on rent and then converts his sole proprietorship concern into a private limited company in which he has the controlling interest, it would not amount to parting with possession with any one as he continues to be in possession of the premises and as such he does not become liable for eviction under section 14(1)( b ) of the Act. Learned counsel has further submitted that as the company petition for sanctioning the scheme of amalgamation was filed in order to secure compliance with law, namely, to reduce the equity capital of the American company to 40 per cent, and as the "lease, rights of tenancy or occupancy" of the said company got vested with the Indian company in view of the sanction granted by the Bombay High Court, i.e ., under the orders of the court, the principle laid down by this court in Hindustan Petroleum Corporation Ltd. v. Shyam Cooperative Housing Society [1988] 4 SCC 747 will be applicable and no order of eviction can be passed against the appellant. Shri Dushyant Dave, learned senior counsel for the respondent, has submitted that the argument that it was not the voluntary act of the American com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... b ) of the Act, which reads as under : "14. Protection of tenant against eviction. (1) Notwithstanding anything to the contrary contained in any other law or contract, no order or decree for the recovery of possession of any premises shall be made by any court or Controller in favour of the landlord against a tenant: Provided that the Controller may, on an application made to him in the prescribed manner, make an order for the recovery of possession of the premises on one or more of the following grounds only, namely ... ( b ) that the tenant has, on or after the 9th day of June 1952, sub-let, assigned or otherwise parted with the possession of the whole or any part of the premises without obtaining the consent in writing of the landlord..." There is no ambiguity in the section and it clearly says that if, without obtaining the consent in writing of the landlord the tenant has, on or after June 9, 1952, ( i ) sub-let, or ( ii ) assigned, or ( iii ) otherwise parted with the possession of the whole or any part of the premises, he would be liable for eviction. The applicability of the section depends upon occurrence of a factual situation, namely, sub-letting or assignment o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sewing Machine Company Limited, a company incorporated under the Companies Act, 1956 and having its registered office at 207, Dadabhoy Naoroji Road, Bombay, and the "appointed day" means January 1,1982. The relevant part of clause (2) of the scheme, which has a bearing on the controversy, is being reproduced below: "2. With effect from the appointed day, except as hereinafter stated, the whole of the business, property, undertaking, assets, including leases, rights of tenancy or occupancy, instalment receivables under hire-purchase contracts, benefits of licences and quota rights of whatsoever description and wheresoever of the transferor company shall without further act or deed, be transferred to and vested in the transferee company so as to become from the appointed day, the business, property, undertaking assets, including leases, rights of tenancy or occupancy, instalment receivable under hire-purchase contracts, benefits of licences and quota rights of the 'transferee company' for all the estate and interest of the transferor company therein, provided that 13,445 equity shares of..." The effect of this clause is that with effect from January 1, 1982, "leases, rights of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court has also been considered in two decisions of this court. In General Radio Appliances Co. Ltd v. M . A. Khader [1986] 60 Comp. Cas. 1013 (SC), which is a decision by a Bench of three learned judges, the premises had been let out to M/s. General Radio and Appliances Co. Ltd. On account of a scheme of amalgamation sanctioned by the High Court under sections 391 and 394 of the Companies Act, all property, rights and powers of every description including tenancy right, held by M/s. General Radio and Appliances Co. Ltd. had been blended with M/s. National Ekco Radio and Engineering Co. Ltd. Thereafter, the landlord instituted proceedings for eviction on the ground of unauthorized sub-letting. It was urged on behalf of the original tenant that the amalgamation of M/s. General Radio and Appliances Co. Ltd. (appellant No. 1) with M/s. National Ekco Radio and Engineering Co. Ltd. (appellant No. 2) was an involuntary one which had been brought into being on the basis of the order passed by the High Court under sections 391 and 394 of the Companies Act and that appellant No. 1-company had not been wound up and/or liquidated, but had been merely blended with appellant No. 2 on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt, shares, but on refusal of permission had only 40 per cent, of shares in the business to which approval was given by the Reserve Bank of India. Thereafter, the Indian company carried on business in the same premises. It was urged that as the transfer of leasehold interest from the foreign company to the Indian company was by compulsion, it was an involuntary one and, therefore, it was not a case of sub-letting within the meaning of section 14(1)( b ) of the Act. It was held that under the FERA, there was no compulsion that the premises demised to the foreign company should be continued or given to the Indian company. On the other hand, under the agreement executed between the Foreign company and the Indian company, incidental to the assignment of the business as a growing concern, the foreign company also assigned the monthly and other tenancies and all rented premises of the assignor in India to the Indian company. The court, accordingly, concluded that though by operation of the FERA the foreign company had wound up its business, but under the agreement it had assigned the leasehold interest in the demised premises to the Indian company which was carrying on the same business ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny right of tenancy, the Central Government shall, on and from the appointed day be deemed to have become the lessee or tenant, as the case may be, in respect of such property as if the lease or tenancy in relation to such property had been granted to the Central Government, and thereupon all the rights under such lease or tenancy shall be deemed to have been transferred to and vested in the Central Government. In view of this statutory provision, the Central Government, by operation of law, became the tenant of all such properties which were being held by Esso under any lease or any right of tenancy. There is no statutory enactment here which may give any kind of protection to the appellant. Shri Divan has next contended that on amalgamation Singer Sewing Machine Company (American company) merged into Indian Sewing Machine Company (Indian company) shedding its corporate shell, but for all practical purposes remained alive and thriving as part of the larger whole. He has submitted that this court should lift the corporate veil and see who are the directors and shareholders of the transferee company and who are in real control of the affairs of the said company and if it is done i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er Page 379 of 89 Comp. Cas. : Para. 24. "Lifting the corporate veil: In Aron Salomon v. A. Salomon and Company, Limited [1897] AC 22,51, the House of Lords had observed, 'the company is at law a different person altogether from the subscribers ; and, though it may be that after incorporation the business is precisely the same as it was before, and the same persons are managers and the same hands received the profits, the company is not in law the agent of the subscribers or trustee for them. Nor are the subscribers as members liable, in any shape or form, except to the extent and in the manner provided by the Act'. Since then, however, the courts have come to recognize several exceptions to the said rule. While it is not necessary to refer to all of them, the one relevant to us is 'when the corporate personality is being blatantly used as a cloak for fraud or improper conduct (Gower : Principles of Modern Company Law 4th Edn. (1979) at page 137). Penningtons Company Law 5th Edn. 1985 at page 53) also states that 'where the protection of public interests is of paramount importance or where the company has been formed to evade obligations imposed by the law, the court wi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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