Ram Saroop Gupta vs Major Sp Marwah
2012 Latest Caselaw 2958 Del

*     IN THE HIGH COURT OF DELHI AT NEW DELHI

%                             Date of Judgment:04.05.2012

+     RC.REV. 179/2011 & CM Nos.9763/2011 & 13381/2011


RAM SAROOP GUPTA                                   ..... Petitioner
                            Through    Mr. Sanjeev Narula, Adv.
                   versus

MAJOR SP MARWAH                                     ..... Respondent
                            Through    Mr. Pritesh Kapur, Adv.


      CORAM:
      HON'BLE MS. JUSTICE INDERMEET KAUR


INDERMEET KAUR, J. (Oral)

1 The impugned judgment is dated 17.02.2011; the eviction petition

filed by the landlord Major S.P.Marwah seeking eviction of his tenant

Ram Swarup Gupta from the suit premises i.e. shop bearing No. 56-B,

Khan Market, New Delhi had been decreed. The application filed by the

tenant seeking leave to defend had been declined.

2 Record shows that the present eviction petition has been filed by

the landlord on the ground of bonafide requirement under Section 14

(1)(e) of the Delhi Rent Control Act (DRCA). Premises had been

tenanted out to the tenant; relationship of landlord and tenant has not

been disputed. Grounds of eviction are contained in para 18 (a) wherein

it has specifically been contended that the petitioner is the owner of the

suit shop; premises had been leased out to the tenant; wife of the

petitioner namely Smt. Afsana Marwah is a jewellery designer; the

petitioner and his wife started a jewellery business at 297, Forest Land,

Neb Sarai, New Delhi which is their residential address; they have been

running this business from their residence as they have no other

commercial space available with them to carry out this business of

jewellery; because of this handicap, they have not been able to increase

the volume of their sale and are not able to attract more customers; only

persons known to the petitioner and his wife come to purchase jewellery

from them; the petitioner got a company incorporated in the name of 'A

& T Jewels Pvt. Ltd.' on 13.08.2007 having a registered office at their

residence. In this company, the petitioner, his wife and his son are the

directors and shareholders; the petitioner and his wife are assessed to

income tax in their jewellery business since the last ten years; premises

are required bonafide by the petitioner to carry out their business in

order to augment the sale of jewellery products; present business being

carried out from their residence is not lucrative; honest need to start the

business from the aforenoted commercial premises is accordingly made

out; further contention being that the petitioner and his family members

do not own any other commercial space for running the aforenoted

business.

3 An application seeking leave to defend had been filed by the

tenant. Various contentions have been raised. The arguments urged

before this Court have been confined to three-fold submissions. The

first submission of the learned counsel for the petitioner/tenant is that a

company is a separate legal entity and the plea of the petitioner in his

eviction petition is the need of the aforenoted premises for the company;

company being an independent juristic person, the need of the company

cannot be equated with the need of a natural person; provisions of

Section 14 (1)(e) of the DRCA are thus not applicable. To support this

submissions, reliance has been placed upon (2003) 115 Comp. Cas 127

Kerala Basheer Vs. Lona Chackola; contention being that the company

being an entity different from the individual, the need of the company in

which the petitioner is a director cannot be said to be the need of the

landlord for his 'own' occupation within the terminology of Section 14

(1)(e) of the DRCA.

4 Arguments have been countered. Submission is that this

submission now pleaded does not even find mention in the application

seeking leave to defend. This submission of the learned counsel for the

respondent has force. There is no dispute to the proposition that triable

issues have to be emanate from the pleadings of the parties which

includes the application seeking leave to defend filed by the tenant. The

application seeking leave to defend does not make any mention of this

first argument which has now been urged to which the learned counsel

for the petitioner has fairly conceded but his submission is that this is a

legal proposition and can be taken up at any point. This submission of

the petitioner is mis-directed; no objection having been raised by the

tenant about the petition not being maintainable under Section 14 (1)(e)

of the DRCA for the reason as aforenoted which is to the effect that the

company being a legal person, the need of the company cannot be

equated with the need of the landlord and in the absence of this

objection having been taken up in the application seeking leave to

defend, it is clear that the landlord did not get an opportunity to reply

this in the trial Court and that is why, the impugned judgment has not

noted this submission now propounded before this Court.

5 That apart the legal submission that an eviction petition u/s 14

(1)(e) of the DRCA is not maintainable by a company is no longer res-

integra and a bench of this Court in 158 (2009) DLT 62 Satnam Kaur &

Others Vs. Ashlar Stores P. Ltd. has hled that a private limited company

can also filed an eviction petition u/s 14 (1)(e) of the DRCA. Grounds

pleaded in the eviction petition even otherwise show the bonafide need

is the need of the petitioner who had initially started this business of

jewellery with his wife Smt. Afsana Marwah which was on a small scale

from their residence; this was about ten years ago i.e. ten years prior to

the incorporation of their company which was incorporated only on

13.08.2007 and this has specifically been pleaded in the eviction petition

to which there has been no dispute. It is not the case of the tenant that no

such business was being run by the husband and wife from their

residence; the company incorporated was a company of the husband,

wife and their son. Memorandum of Articles of Association of the

company filed by the landlord in the trial Court show that the

shareholding of the company is of 10,000 shares which is distributed

inter-se between the husband-wife and son and the son has 1,900 shares;

balance 8100 shares are of the husband and wife. Eviction petition

clearly discloses that the need of these premises is for the business of the

petitioner and his family members who have no other alternate suitable

accommodation; it is an admitted fact that this duo i.e. husband and wife

had up to ten years carried out the business in their individuals names

incorporating the company only on 13.08.2007 in which they had

inducted their son also. This company is a private limited company; it is

the family concern of the petitioner. The submission of the tenant that a

company is a distinct legal entity and the need of the landlord who is a

natural person cannot be equated with the need of the company is again

a mis-conceived submission. Although there is no dispute to the legal

proposition that a company is a distinct legal entity separate from its

shareholders; however the principle of piercing the veil of the corporate

personality in order to reveal the 'true identity of the company' is also

recognized doctrine. The Apex Court in Kapila Hingorani Vs. State of

Bihar III (2003) SLT 673 had noted that the principle behind the

doctrine is a changing concept and it is expanding its horizon. In 128

(2006) DLT 24 Prem Lata Bhatia Vs. Union of India, a Division Bench

of this Court while dealing with the rights of the parties where a

partnership had converted itself into a private limited company had

inter-alia noted as under:-

"In such cases, the doctrine of piercing the veil of corporate personality should be utilized. For instance, when a partnership firm converts itself into a private limited company with the partners in the firm becoming the shareholders and directors in the company it will not be a case of transfer of the property of the firm to the company, otherwise a huge amount of stamp paper and registration charges for the transfer of the property of the firm to that of the company will have to be paid, capital gains tax will have to be paid,, etc. In fact, it is well settled there is no transfer in such cases because in substance the owner remains the same though technically it becomes a different legal entity.

In such cases, the principle of piercing the veil of corporate personality should be utilized not to prevent somebody from doing any wrong, but merely in order to recognize the reality of the situation."

6 In the instant case, there is no dispute to the factum that 'A & T

Jewels Pvt. Ltd' is a private limited company comprising of the

petitioner, his wife and his son; contention of the petitioner that the

business which was earlier being run by the petitioner and his wife on a

small scale from their residence could not be expanded and outside and

unknown customers could not come to purchase their jewellery as they

were running it on a small scale from the residence and this was because

of the compulsion that they did not have any other commercial

establishment to carry out this business; in these circumstance, it can, in

no manner, be said that the need of the petitioner cannot be considered

as his personal and bonafide need for the premises. Even assuming that

the need of the company (which is a company of no other persons but

the petitioner, his wife and his son), the doctrine of the lifting of

corporate veil in relation to this company would be fully applicable to

reveal the true identity of the company; by lifting the corporate veil, it is

an undisputed factum that the company is no other person than the

petitioner, his wife and his son; the registered office of the company is

also the residence of the parties from where they had initially started

this business i.e. 297, Forest Land, Neb Sarai, New Delhi; their

bonafide need for requiring a working space i.e. commercial

establishment to run the aforenoted business has been established.

7 The Supreme Court in (2002) 5 SCC 397 Joginder Pal Vs. Naval

Kishore Bhel had an occasion to consider the expression 'for his own

use' as occurring in Section (3)(a)(ii) of the East Punjab Urban Rent

Restriction Act, 1949 had noted that this express cannot be narrowly

construed; in this context, the following observations of the Apex Court

are relevant:-

"We are of the opinion that the expression "for his own use" as occurring in Section 13(3)(a)(ii) of the Act cannot be narrowly construed The expression must be assigned a wider, liberal and practical meaning. The requirement is not the requirement of the landlord alone in the sense that the landlord must for himself require the accommodation and to fulfill the requirement he must himself physically occupy the premises. The requirement of a member of the family or of a person on whom the landlord is dependent or who is dependent on the landlord can be considered to be the requirement of the landlord for his own use. In the several decided cases referred to hereinabove, we have found the para material provisions being interpreted so as to include the requirement of the wife, husband, sister, children including son, daughter, a widowed daughter and her son, nephew, coparceners, members of family and dependants and kith and kin in the requirement of landlord as "his" or "his own" requirement and user. Keeping in view the social or socio-religious milieu and practices prevalent in particular section of society or a particular region, to which the landlord particular section of society or a particular region, to which the landlord belongs, it may be the obligation of the landlord to settle a person closely connected with him to make him economically independent so as to support himself and/or the landlord. To discharge such obligation the landlord may require the tenancy premises and such requirement would be the requirement of the landlord. If the requirement is of actual user of the premises by a person other than the landlord himself the court shall with circumspection inquire:

(i) whether the requirement of such person can be considered to be the requirement of the landlord, and (ii) whether there is a close interrelation or identity nexus between such person and the landlord so as to satisfy the requirement of the first query. Applying the above said tests to the facts of the present case it is clear that the tenancy premises are required for the office of the landlord's son who is a chartered accountant. It is the moral obligation of the landlord to settle his son well in his life and to contribute his best to see him economically independent. The landlord is not going to let out the premises to his son and though the son would run

his office in the premises the possession would continue with the landlord and in a sense the actual occupation by the son would be the occupation by the landlord himself. It is the landlord who requires the premises for his son and in substance the user would be by the landlord for his son's office. The case squarely falls within the scope of Section 13(3)(a)(ii) of the Act".

8 The expression 'for occupation as a residence for himself or for

any member of his family dependent upon him' occurring in Section 14

(1)(e) of the DRCA are much more liberally worded.

9 Eviction petition has clearly specified in the grounds [para 18 (a)]

that the premises are required bonafide for running the aforenoted

business which is the business of the petitioner and his family members

who do not own any commercial accommodation for running the

aforenoted business. Thus on all counts, it can safely be said that the

need of the petitioner for the aforenoted disputed premises is a need for

himself, his wife and his son (who has now joined the business) and is a

need for his own occupation within the terminology of Section 14 (1)(e)

of the DRCA. Thus the first objection raised by the tenant has no merit.

It is accordingly rejected.

10 The whole thrust of the arguments of the learned counsel for the

tenant is in fact the forceful submission made on the first objection

which as noted supra does not in any manner raise a triable issue.

11 The second submission of the learned counsel for the tenant is

that the documentary evidence filed by the landlord is in two sets which

evidence that the company is not doing any business. These documents

are part of the trial court record; apart from the certificate of

incorporation and Memorandum of Articles of Association, other

documents have also been filed to show the worth of the company.

Documents filed on record in fact show that this company 'A & T

Jewels Pvt. Ltd.' was incorporated on 13.08.2007; this is a private

limited company comprising of three directors i.e. the petitioner, his

wife and his son; registered office of the company is the residence of the

parties. The income tax returns of Ms. Afsana for the year 2008-2009

show that retail business of jewellery and ladies suits was made to the

tune of Rs.7,58,820/- upon which a profit of 30% has been gained; the

income tax return of the petitioner S.P. Marwah for the year 2008-2009

had assessed the total income of the petitioner as Rs.1,72,684/-; income

tax returns for the previous years i.e. from the period 2004-2008

substantiating the submission of the petitioner that the business of

jewellery was in fact being carried out by the petitioner and his wife

much prior to the incorporation of the company have also been filed on

record to advance this submission. This documentary evidence in fact

shows that the business of jewellery was started by the petitioner and his

wife from their residence which was earlier a small time affair; this has

grown and expanded; eviction petition has been filed in October, 2008

which was just after one year after the incorporation which is probably

the reason why the income tax returns of the company have not been

filed but of the individual directors. Submission on this count also in no

manner raises any triable issue.

12 The last submission of the learned counsel for the

petitioner/tenant is that a self-deprivation of the property has been

created by the landlord himself as admittedly even as per the case of the

landlord he had sold the adjoining property i.e. shop No. 59-B to another

old tenant; this was on 27.08.2007 and the eviction petition has been

filed in October, 2008 only to build up a ground of bonafide need,

actually it is malafide. This submission of the tenant is also bereft of all

force. Admittedly an agreement to sell had been entered into by the

landlord for the aforenoted property i.e. 59-B Khan Market, New Delhi

with its earlier tenant and this was on 08.03.2006 which sale had finally

culminated in 27.08.2007. The contention of the landlord is that by this

period of time, judgment of Satyawati Sharma Vs. Union of India AIR

2008 SC 3148 had not been delivered which was delivered on

16.04.2008 and as such the landlord had no ground to get his tenant

evicted from commercial premises up to 16.04.2008 when finally the

legislation of Section 14 (1)(e) of the DRCA was made applicable to

commercial tenancies as well. His submission is that the shop No. 59-B

had been sold to the old tenant in terms of an agreement to sell in 2006

for the aforenoted reason is a submission which carries force. That apart

this agreement to sell had been entered into two years prior to the date of

filing of this eviction petition which was filed in October, 2008.

Bonafide need is also a changing need; it is not a static. This submission

is also without any force.

13 The landlord has been able to establish that his need for the

aforenoted premises was his genuine requirement to start his business

from the commercial establishment located in a highly viable

commercial area of Khan Market which is probably one of the highest

rated markets not only in India but in entire Asia establishing his

submission that his business venture would be much more profitable

from the aforenoted location.

14 Legislative intent of the incorporating the summary procedure

contained under Section 25-B of the DRCA is for the expeditious

disposal for a special class of landlords requiring the premises for their

own use; it is a summary procedure. In (1982) 3 SCC 270 Precision

Steel & Engineering Works & another Vs. Prem Devi Niranjan Deva

Tayal the Apex Court has held that the prayer for leave to contest should

be granted to the tenant only where a prima-facie case has been

disclosed by him. In the absence of the tenant having disclosed a prima-

facie case i.e. such facts as to what disentitles the landlord from

obtaining an order of eviction, the Court should not mechanically and in

routine manner grant leave to defend.

15 The landlord is the best judge of her requirement; it is not for the

tenant or the court to dictate terms as to how and in what manner he has

to meet his needs for an accommodation. In Prativa Devi (Smt.) Vs.

T.V. Krishnan reported in (1996)5SCC353 it was noted:-

"The landlord is the best judge of his residential requirement. He has a complete freedom in the matter. It is no concern of the courts to dictate to the landlord how, and in what manner, he should live or to prescribe for him a residential standard of their own."

16 The landlord thus requires this shop for the purpose of running his

business as he has no other alternate suitable accommodation; shop No.

7783 has been vacated in favour of his brother and co-owner Bal

Mukund; godown in shop No. 7780 is even as per the case of the tenant

under the tenancy of Nitin Goel.

17 There being no other reasonable suitable accommodation and all

the ingredients of Section 14 (1)(e) of the DRCA having been complied

with, the impugned order dismissing the application seeking leave to

defend and decreeing the eviction petition in favour of the landlord

suffers from no infirmity.

18    Petition is without any merit; it is dismissed.



                                              INDERMEET KAUR, J
MAY       04, 2012
A