Arvind Goenka And Nitin Palan And ... vs Pennzoil Products Company And ...
2003 Latest Caselaw 443 Bom

JUDGMENT

D.G. Karnik, J.

1. Heard the learned counsel.

2. The property known bearing Survey No. 182 of Parel Sewree Division situate Behind Swan Mills at Kokershi Jivraj Road, Sewree, Mumbai-15 more particularly described in Item B of Schedule B to the plaint (hereinafter referred to as the "Sewree property") belongs to Mrs. Premkumar Hansraj Palan and Mr. Nitinkumar Hansraj Palan (hereinafter referred to as "M/s. Palan or the landlords"). The Sewree property was in occupation of Pennzoil India Limited, a company incorporated and registered under the Companies Act, 1956 which is the defendant No. 2 in this suit.

3. The defendant No. 2 company was promoted by Mr. Arvind Goenka, the plaintiff herein, and his family members and his group companies. The plaintiff and his associates held about 91% of equity share capital of defendant No. 2 company and balance was held by the employee. Subsequently, the defendant No. 1 which is a foreign company incorporated and registered in accordance with the laws of the United States of America acquired about 46% of the equity share capital of the defendant No. 2 company from the plaintiff and his associates. Thus, the plaintiff and his associates and defendant No. 1 became equal share holders in the defendant No. 2 company. The plaintiff and his associates subsequently transferred their equity share holding in the defendant No. 2 company in the defendant No. 1 and its nominee viz. the defendant No. 3, a company incorporated and registered in Mauritius, under an agreement dated 16th November, 1995. it is the case of the plaintiff that under the said Agreement of 16th November, 1995 apart from the monetary consideration, the defendant No 2 agreed to assign, and transfer to the plaintiff the properties namely 'Appejay House' described as Item A of Exhibit R to the plaint and the "Sewree property" along with some other properties. It is not clear as to how the "Sewree property" could form the subject matter of an agreement between the share holders of the defendant No. 2. Firstly, the sewree property did not belong to the defendant No. 2. Assuming that tenancy rights in the Sewree property were a valuable asset of the defendant No. 2 company, how could that asset of the defendant No. 2 company be agreed to be transferred by one group of share holders, to another group of share holders by a share holders' agreement as if it were the share holders 'private property'? However, on the basis of the agreement dated 16th November 1995, the plaintiff filed this suit claiming tenancy rights in the Sewree property. M/s. Palan who were the landlords of the Sewree property. M/s. Palan who were the landlords of the Sewree property were not consulted and their consent was not obtained for the alleged agreement in transfer tenancy rights in Sewree property in favour of the plaintiff and/or his associates. In the suit, the plaintiff took out a notice of motion (bearing N.M. No. 1813 of 1997) for appointment of the Court Receiver as the receiver in respect of the properties mentioned in Exhibit B to the plaint including the Sewree property. By an exparte ad interim order dated 25th June, 1997, this court appointed the Court Receiver, High Court, Bombay as the receiver in respect of the properties mentioned in Schedule Exhibit B to the plaint. At this stage, it needs to be mentioned that M/s. Palan who were the landlords of the Sewree property were not joined as parties to the notice of motion or the suit. M/s. Palan, therefore, moved the court in the plaintiff's motion for vacating the order of appointment of the receiver atleast qua the Sewree property. By an order dated 2nd July, 1997 this court declined to vacate the order but, observed:

"Landlords are free to file appropriate suit against Pennzoil company, Landlords are also free to sue the Court Receiver after obtaining leave from this court."

Taking note of the rights of the landlords M/s. Palan, this court permitted them to file a suit against the receiver after obtaining leave of the court.

4. The landlords M/s. Palan after obtaining leave of the court filed a suit bearing T.E. & R. Suit No. 138/170 of 2000 in the Small Causes Court at Mumbai for possession against the defendant No. 2, by joining the Court Receiver as a party to the suit. It is not disputed that defendant No. 2 has a share capital in excess of Rs. 1 crores. In view of the repeal of the Bombay Rents and Lodging House Rates Control Act, 1947 (for short the Bombay Rent Act) and enactment of the Maharashtra Rent Control Act, 2000 (for short the Maharashtra Rent Act), the defendant No. 2 has no protection under the Bombay Rent Act or the Maharashtra Rent Act. After hearing the parties, the Small Causes Court at Mumbai decreed the landlords' suit but, directed delivery of the vacant possession of the Sewree property to M/s. Palan subject to the decision of the Hon'ble High Court in Suit No. 2009 of 1997. Being aggrieved by this direction, the landlords M/s. Palan filed an appeal bearing No. 372 of 2002 before the Division Bench of the Small Causes Court, Mumbai. The Appellate Bench modified this direction and said that the delivery of the vacant possession of the Sewree property would be subject to the decision of the Honourable High Court in Suit No. 2009 of 1997 or subject to any further direction from the Honourable High Court. The condition put initially by the trial court and subsequently modified in part by the first appellate court of the delivery of the vacant possession being subject to the decision of this court in suit No. 2009 of 1997 or any further directions was inserted by way of caution in view of the pendency of the suit in this court to which the Small Causes Court, Mumbai is subordiante.

5. The landlords M/s. Palan then moved the receiver for obtaining the directions of this court for handing over the possession of the suit premises. Thereupon, the court receiver has filed the present report. Mr. Zaiwala, learned counsel for the plaintiff objected to the hearing being given to the landlords on the ground that the landlords are not partes to the suit. He invited my attention to the order of the Division Bench of this court in Appeal No. 1064 of 1998 in Chamber Summons No. 1192 of 1997 wherein the order passed by the learned Chamber Judge in Chamber Summons No. 1192 of 1997 joining the landlords as parties to the suit was stayed. He therefore, contended that since the landlords are not parties to the suit, they were entitled to be heard on the receiver's report. I see no merit in this objection. The Court Receiver has submitted her report on the application made by the landlords. The landlords have been issued notice of hearing of the report by the Court Receiver. By an order dated 2nd July, 1997 referred to above, the learned Single Judge of this court had granted permission to the landlords to file an appropriate suit against defendant No. 2 and join the receiver as party to the suit. This order of the learned Single Judge was confirmed by the Division Bench of this court on 31st July, 1997 in Appeal (Lodging) No. 633 of 1997 in which the Division Bench has specifically observed:

"This order is without prejudice to the rights and contentions of the plaintiff, defendants or third party landlords. It would be open to the landlords to take proper action against the tenants permissible under the law."

(Underlining supplied)

Thus, the landlords were specifically permitted by the Division Bench to take appropriate action against the tenants. The landlords took action against the tenants for possession by filing a suit and the decree is confirmed by the appellate court. The landlords have now moved the Court Receiver to obey the decree and hand over the possession. It is true that request of joining the landlords as party to Suit No. 2009 of 1997 pending in this court is stayed. But, it is equally true that the landlords were permitted to file an independent suit establishing their rights against the tenants and that order was confirmed by the Division Bench. Not to hear the landlords on the Court Receiver's Report made on their own application would be to gag their mouth and frustrate the order of the Division Bench permitting them to take action against the tenant as permitted under the law. Hence, the objection raised by Mr. Zaiwala is rejected.

6. Whatever be the dispute between the present share holders and the former share holders of defendant No. 2 company, the cannot prevent the landlords from enforcing their rights against defendant No. 2. If I were to hold that the plaintiff cannot be granted possession of the Sewree property on account of the ongoing disputes between the share holders (past or present) or the defendant No. 2 company which is the tenant, then a dishonest corporate tenant may always arrange to raise some inter se dispute between its own share holders and prevent the landlord from taking possession of the property on the ground of pendency of a collusive disputes between the share holders. The dispute, if any, between the share holders of a corporate tenant cannot prejudice or affect the right of landlords to take and receive possession of the property in respect of which they lawfully obtained a decree and that too after obtaining leave of the court to sue the Court Receiver.

7. In the circumstances, prayers (a) to (c) of the Court Receiver's Report are granted. At the request of learned counsel for the plaintiff, operation of this order is stayed for a period of four weeks.

All concerned to act on a copy of this order authenticated by the Associate.