Karnataka High Court
Kaizan Leather Industries (Pvt) Ltd vs Karnataka Leather Industries on 4 July, 2024
Author: Mohammad Nawaz
Bench: Mohammad Nawaz
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NC: 2024:KHC-D:9139-DB
RFA No. 100014 of 2018
IN THE HIGH COURT OF KARNATAKA, DHARWAD BENCH
DATED THIS THE 4TH DAY OF JULY, 2024
PRESENT
THE HON'BLE MR JUSTICE MOHAMMAD NAWAZ
AND
THE HON'BLE MR JUSTICE T. G. SHIVASHANKARE GOWDA
REGULAR FIRST APPEAL NO.100014 OF 2018 (POS)
BETWEEN:
KAIZAN LEATHER INDUSTRIES (PVT) LTD.,
HAVING ITS REGISTERED OFFICE AT
HOUSE NO.1268, NORTH KASABA,
SOLAPUR-413007
REPRESENTED BY EX-DIRECTOR,
SHRI NITIN VASANT APTE,
AGE: 53 YEARS, OCC: BUSINESS,
R/O: PUNE. .. APPELLANT
(BY SRI. SANTOSH B. MALAGOUDAR, ADVOCATE)
Digitally
signed by
AND:
GIRIJA A
BYAHATTI
Location:
HIGH 1. KARNATAKA LEATHER INDUSTRIES,
COURT OF
KARNATAKA DEVELOPMENT CORPORATION LIMITED,
A COMPANY INCORPORATED
UNDER THE COMPANIES ACT,
1956 (A GOVERNMENT OF KARNATAKA ENTERPRISE) HAVING
ITS REGISTERED OFFICE AT NO.
17/5, 2ND FLOOR, OBLONG BLOCK,
UNITY BUILDING, J.C. ROAD, BENGALURU-560002.
REPRESENTED BY ITS MANAGING DIRECTOR,
SHRI. CHIKKAIAH,
AGE: 62 YEARS, OCC: SERVICE,
R/O: NO.17/5, 2ND FLOOR, OBLONG BLOCK,
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RFA No. 100014 of 2018
UNITY BUILDING, J.C. ROAD,
BENGALURU-560002.
2. MRS. AKHATAR BEGUM LQUBAI KAZI,
AGE: 64 YEARS, OCC: BUSINESS,
R/O: H.NO.6, GANGADHAR SOCIETY,
HOTAGI ROAD, SOLAPUR-413003.
MAHARASHTRA STATE.
3. ARAVIND SAKARAM JOSHI,
AGE: YEARS, OCC: BUSINESS,
R/O: SOLAPUR-413003.
MAHARASHTRA STATE. .. RESPONDENTS
( SRI. ROHIT L. SHEELVANT, ADVOCATE FOR R1)
THIS REGULAR FIRST APPEAL FILED UNDER SECTION 96
READ WITH ORDER XLI RULE 1 OF CODE OF CIVIL
PROCEDURE, PRAYING TO SET ASIDE THE JUDGMENT AND
DECREE DATED 22.09.2017 PASSED BY THE I ADDITIONAL
SENIOR CIVIL JUDGE AND CJM, DHARWAD IN
O.S.NO.22/2008.
THIS APPEAL HAVING BEEN HEARD AND RESERVED FOR
JUDGMENT ON 01-07-2024 AND COMING ON FOR
'PRONOUNCEMENT OF JUDGMENT', THIS DAY,
T.G.SHIVASHANKARE GOWDA J., PRONOUNCED THE
FOLLOWING:
JUDGMENT
Though the matter is listed for admission, with
consent of learned counsel appearing on both sides, taken
up for final disposal.
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In this appeal, one of the Ex-Directors of
defendant/Company viz., M/s.Kaizan Leather Industries
(Pvt.) Limited, has challenged the judgment and decree
dated 22.09.2017 in O.S.No.22/2008 on the file of I
Additional Senior Civil Judge and C.J.M., Dharwad (for
brevity 'the Trial Court').
2. The appellant was the Ex-Director of
defendant/Company. Respondent No.1 was the plaintiff
and respondent Nos.2 and 3 are the Directors of the
defendant/Company before the Trial Court. For the sake
of convenience, parties shall be referred to as per their
status before the Trial Court.
3. The brief facts of the case are, the suit schedule
property is an industrial unit; the plaintiff is a Company
incorporated under the Companies Act, 1956, which is the
owner of the suit schedule property. Defendant was
inducted as a tenant to the suit schedule property vide
lease agreement dated 28.04.1995 on a monthly rent of
Rs.32,500/- with an option for enhancement of rent at
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10% commencing from 4th year; 15% commencing from
6th year and 20% commencing from 7th year and the
period of lease was ten years. Soon after the lease
agreement, the defendant/Company has not paid the rent
as agreed; became chronic defaulter; as on the date of
filing of the suit, the rent due was Rs.40,27,194/-; as the
defendant/Company became defaulter and did not pay the
rents, tenancy was terminated by causing a notice. By
virtue of termination of lease, the defendant became the
tenant holding over. Hence, the plaintiff has filed the suit
seeking recovery of arrears of rent and also seeking
possession of the suit schedule property.
4. Defendant is a Private Limited Company and it is
represented by three Directors whereas, the appeal being
filed by the Director viz., Mr.Nitin Vasant Apte claiming
that he is not a Director of the said Company any more
and he had resigned from his designated post.
5. Before the Trial Court on behalf of the defendant,
first and second Directors have filed their written
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statement. It is averred by the first Director viz., Mr.Nitin
Vasant Apte that he has resigned from the post of Director
w.e.f. 07.05.2000. The plaintiff presuming that he is also
one of the Directors got served the summons on him,
which is untenable in the eye of law. His resignation was
intimated to the Registrar of Companies, which was
accepted and he is in no way concerned with the
defendant/Company. The defendant/Company is now
being represented by its acting Directors i.e., Director
Nos.2 and 3.
6. It is contended that, after taking the suit premises
on lease, it was noticed that most of the machineries
under the unit were not in working condition, it was not
generating any income. Hence, they made a
representation to the plaintiff to reduce the monthly rent
from Rs.32,500/- to Rs.10,000/-, but same was not
considered. There is a clause in the Lease Agreement that
any dispute has to be resolved by arbitration; without
resorting to arbitration, the plaintiff has filed the suit and
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it is barred in the eye of law. It is also contended that the
termination of tenancy is improper, no three months' prior
notice was caused, office of the plaintiff is at Bengaluru
and the defendant/Company is situated at Solapur and the
Court has no territorial jurisdiction to entertain the suit
and sought for dismissal of the suit.
7. The second Director viz., Mrs.Akhatar Begum
Iqubai Kazi has also filed her identical written statement
contending similar lines.
8. The Trial Court considering the above pleadings of
the parties framed the following issues:
1) Whether plaintiff proves that the defendant
company is due a sum of Rs.40,27,194/- towards
rent of the suit property?
2) Whether the plaintiff proves that the defendant
company is in possession of the suit property as a
tenant holding over?
3) Whether the plaintiff proves that tenancy is
terminated in accordance with law?
4) Whether the plaintiff is entitled to the relief sought
for?
5) Whether the defendant company proves that the
suit is barred by limitation?
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6) Whether the defendant company proves that suit
is not maintainable in view of Sec.8 of Arbitration
and Conciliation Act and arbitration clause of the
agreement?
7) Whether the defendant company proves that suit
is not maintainable in view of Sec.10 of the
Companies Act 1956?
8) Whether the defendant company proves that this
court has no territorial jurisdiction?
9) What order and decree?
9. Before the Trial Court, on behalf of the plaintiff,
Power of Attorney Holder/Officer is examined as PW-1 and
marked three documents as per Exs.P1 to P3. After filing
the written statements, the Directors of the
defendant/Company did not choose to contest the suit; no
evidence was let in on behalf of the defendant. After
hearing the learned counsel for the plaintiff, the Trial Court
has answered issue Nos.1 to 4 in the affirmative and issue
Nos.5 to 8 in the negative; while answering issue No.9
decreed the suit directing the defendants to quit and
handover vacant possession of the suit schedule property
within sixty days and to pay Rs.40,27,194/- with interest
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@ 18% per annum from the date of suit till its realization.
The request of the plaintiff for holding enquiry for
ascertaining the mesne profits stands rejected.
10. Mr.Nitin Vasant Apte, the first Director as
described in the plaint, who is now claiming that he is the
Ex-Director of the defendant/Company, has filed this
appeal on various grounds.
11. We have heard the arguments of Sri.Santosh
B.Malagoudar, learned counsel for the Ex-Director of
defendant/Company and Sri.Rohit U.Sheelvant, learned
counsel for the plaintiff.
12. It is the contention of the learned counsel for the
appellant that the appellant has resigned from the post of
Director of defendant/Company, his resignation has been
intimated to the Registrar of Companies, his resignation
has been accepted and at present, respondent Nos.2 and 3
are the Acting Directors of the defendant/Company.
Plaintiff has to go against the Acting Directors and not
against the Ex-Director of the defendant/Company.
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Inspite of this, the plaintiff has put the decree under
execution and the Executing Court is proceeding against
him, as if he is one of the Directors of the
defendant/Company. Hence, he sought for interference of
this Court.
13. Per contra, learned counsel for the plaintiff has
contended that if the plaintiff has to address the first
Director of the defendant/Company as 'resigned Director',
then he has no locus standi to represent the
defendant/Company, but the appeal is filed by the
defendant mentioning that it is represented by its Ex-
Director Shri Nitin Vasant Apte, the present appellant. In
what capacity he is representing the defendant is not
explained. No resolution of the defendant/Company or
any authorization is placed before the Court to assail the
impugned judgment. The defendant/Company has not
filed any appeal, but it is 'Shri Nitin Vasant Apte' who has
filed this appeal as Ex-Director, for which he lacks locus
standi and he sought for dismissal of the appeal.
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14. We have given our anxious consideration to the
arguments advanced on behalf of both parties and perused
the materials on record.
15. Now the point that arises for our consideration is:
(i) Whether Shri Nitin Vasant Apte as an Ex-
Director has legal right to represent the
defendant/Company?
16. The suit is filed by the plaintiff against the
defendant. In the cause title, defendant is described as:
"Kaizan Leather Industries (Pvt.) Ltd.,
Having its registered office at House No.1268,
North Kasaba, Solapur 413007,
R/by its Directors.
1. Nitin S/o. Vasant Apte,
Age: 43 years, Occ: Business,
R/o: Pune.
2. Mrs. Akhatar Begum Iqubai Kazi,
Age: Major, Occ: Business,
R/o: H.No.6, Gangadhar Society,
Hotagi Road, Sholapur-3.
3. Arvind S/o. Sakaram Joshi,
Age: Major, Occ: Business,
R/o: Sholapur."
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The second and third Directors of the said Company are
mentioned as respondent Nos.2 and 3 in this appeal in
their individual capacity wherein the cause title of the suit
explains that they are representing the
defendant/Company along with Shri Nitin Vasant Apte as
one of the Directors and in the individual capacity. The
defendant/Company is not arrayed as respondent in this
appeal. If the contention of the appellant is to accept that
he is the 'Ex-Director resigned from the post of Director
w.e.f. 07.05.2000', in what capacity he is representing the
defendant in this appeal is not explained. The appeal is
not filed by Shri Nitin Vasant Apte in his individual
capacity, but it is the defendant/Company represented by
him as Ex-Director, which has filed this appeal. When Shri
Nitin Vasant Apte is no more a Director of the
defendant/Company, he has not explained his legal right
to represent the defendant and to impugn the judgment
and decree. Even respondent Nos.2 and 3 are made as
parties in their individual capacity and not as 'Acting
Directors of the defendant/Company'. The defendant is
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not made as respondent in the appeal. The other two
Directors or acting Directors including the defendant are
not assailing the judgment and decree. Hence, the appeal
itself lacks bonafides on the part of Shri Nitin Vasant Apte
in representing the defendant. If Shri Nitin Vasant Apte is
having any individual right to defend the judgment and
decree passed against the defendant/Company, he may
challenge the same in his individual capacity and not
representing as a Ex-Director of the defendant/Company.
Hence, Shri Nitin Vasant Apte has no legal sanction to
represent the defendant/Company as its Ex-Director.
Therefore, the appeal filed by Ex-Director representing the
defendant is not maintainable. In the result, the
following;
ORDER
Appeal is dismissed.
However, liberty is reserved to Shri Nitin Vasant Apte
to work out his remedy in his individual capacity, if
available, in accordance with law.
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In view of disposal of the appeal, I.A.No.3/2024 does
not survive for consideration. Hence, it stands disposed
of.
Sd/-
JUDGE
Sd/-
JUDGE
KNM
