Denny Francis Eluvathinkal v Navami Properties & Investments Pvt. Ltd.

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT:** **THE HONOURABLE MR.JUSTICE K.HARILAL & THE HONOURABLE MR. JUSTICE A.M.BABU** **THURSDAY, THE 21ST DAY OF DECEMBER 2017/30TH AGRAHAYANA, 1939** **RCRev..No. 34 of 2013 () ------------------------RCA 62/2004 of I ADDL.RENT CONTROL APPELLATE AUTHORITY, THRISSUR** **RCP 14/2001 OF THE RENT CONTROL COURT, WADAKKANCHERRY** **REVISION PETITIONER(S)/RESPONDENT/RESPONDENT: --------------------------------------------** **DENNY FRANCIS ELUVATHINKAL, MANAMKADU DESOM, VILVATTOM VILLAGE, THRISSUR TALUK.** **BY ADV. SRI. A.BALAGOPALAN** **RESPONDENT(S)/APPELLANT/PETITIONER: -----------------------------------** **NAVAMI PROPERTIES & INVESTMENTS PVT. LTD. REP. BY ITS MANAGING DIRECTOR ASHALATHA, VATTAPPARAMBIL HOUSE, WADAKANCHERRY VILLAGE, THALAPPILY TALUK-680 623.** **BY ADV. SRI.G.SREEKUMAR (CHELUR) BY ADV. SRI.ARUN CHANDRAN** **THIS RENT CONTROL REVISION HAVING BEEN FINALLY HEARD ON 21-12-2017, ALONG WITH RCR. 39/2013, RCR. 54/2013, RCR. 55/2013, RCR. 64/2013, RCR. 70/2013, RCR. 71/2013, RCR. 72/2013, RCR. 266/2013, RCR. 271/2013, THE COURT ON THE SAME DAY PASSED THE FOLLOWING:** **scl.** ## **K.HARILAL & A.M.BABU, JJ.** **-------------------------------------** R.C.R. Nos. 34, 39, 54, 55, 64, 70, 71, 72, 266 & 271 of 2013 -------------------------------------Dated this the 18[th] day of December, 2017 ## **ORDER** ## **K.Harilal, J** _**.**_ All these revision petitions are directed against the common judgment passed by the Rent Control Appellate Authority, Thrissur in RCA Nos.54 to 60 and 62 to 65 of 2004, reversing the order dismissing the rent control petitions, and allowing the Appeal. So, all these revision petitions are heard together and disposed of accordingly. 2. The petitioner, a Company registered under the Companies Act, represented by its Managing Director, filed 12 rent control petitions seeking an order of eviction under Section 11 (3) of the Kerala Buildings (Lease and Rent Control) Act (“the Act” for short). According to the petitioner Company, as per the Articles of Association of the Company, the Managing Director is competent to file the legal proceedings. The Company was formed for conducting real estate business and also for the manufacturing and selling of building materials. The Company so formed is not in a position to conduct its business without RCR.34/13 & connections **:2:** having an office. The Company has no other landed properties for keeping the building materials including marbles etc. and the Company is sound enough to start the business of its own. So the plaint schedule shop rooms in the instant cases with appurtenant lands measuring 17 cents purchased by the petitioner company for the said purpose as per the assignment deed No.3218/1999 of SRO Wadakkanchery. Thus, the Company _bona fide_ requires the petition schedule building for the purpose of constructing its office and to utilize the remaining land for the purpose of doing business in sale of building materials. Hence, the tenants in all the rent control petitions are required to be evicted under Section 11 (3) of the Act. 3. The respondents admitted the title of the petitioner and the landlord - tenant relationship thereunder. But they denied the _bona fide_ need contending that a Company is formed only for the purpose of evicting the tenants and the assignment of the property to the Company is a sham and nominal document created only for the purpose of evicting the tenants. So also, all the respondents claimed protection under the 2[nd] proviso to Section 11 (3) of the Act. RCR.34/13 & connections **:3:** 4. On the aforesaid rival contentions, all the parties adduced evidence and the rent control petitions went on to joint trial. The evidence consists of the oral testimony of PW1 and RW1 to RW7 and documentary evidences Exts. A1 to A21 and B1 to B3, Exts.X1 to X4 and Exts. C1 to C1(c). On appreciation of the aforesaid evidence, the Rent Control Court dismissed the rent control petitions on a finding that the need projected in the petition is not _bona fide, a_ s the Company is a bogus company and there are circumstances to lead a strong inference that Sale Deed No.3218/1999 is a sham document executed by Asalatha in favour of the petitioner company, in which, she was the Managing Director. But, in the appeal preferred by the petitioner, the appellate authority re-appreciated the evidence on record in view of the findings of the Rent Control Court and reversed the aforesaid finding and arrived at a finding that the petitioner Company is not a bogus company and Ext.A18 assignment deed is a valid and proper conveyance executed by the earlier landlord in favour of the present landlord. On the basis of the aforesaid finding, the appellate authority further found that the need projected in the petition is _bona fide_ and RCR.34/13 & connections **:4:** granted an order of eviction under Section 11 (3) of the Act. Thus, the legality and propriety of the divergent finding under Section 11 (3) of the Act have com up before us in these revisions. 5. Heard the learned counsel for the revision petitioners and the learned counsel for the respondents. 6. The learned counsel for the respondents advanced arguments challenging the findings whereby the appellate authority reversed the findings of the Rent Control Court. The learned counsel mainly canvassed the point is that the appellate authority absolutely went wrong in appreciating the evidence of PW1 in its correct perceptive. The learned counsel invited our attention to the oral testimony of PW1 and contended that the evidence of PW1 would prove that the petitioner Company was a bogus Company and Ext.P18 sale deed was a sham document. Thus, the challenge in these revision petitions is confined to appreciation of evidence only. In short, the argument is that the appellate authority miserably failed to appreciate the evidence on record in its correct perceptive. Whereas, the Rent Control Court has considered the same in its correct perceptive and RCR.34/13 & connections **:5:** arrived at a proper finding. No other legal issue has been raised before us in these revision petitions. 7. Per contra, the learned counsel for the respondent advanced arguments to justify the findings of the appellate authority whereby the appellate authority reversed the findings of the Rent Control Court. According to him, the Rent Control Court failed to appreciate the findings of PW1 in its correct perceptive. But the appellate authority has considered the same in its correct perceptive. That apart, the learned counsel for the respondents invited our attention to Ext.A10 to A15, A19, A20 and A21 and submitted that the documentary evidence produced by the petitioner would prove that the petitioner Company is not a bogus Company and Ext.A18 sale deed is a valid and proper sale deed executed in accordance with law. 8. In view of the rival arguments advanced at the bar, we must remind ourselves the scope and extent of revisional jurisdiction under Section 20 of the Act. The entire argument advanced at the bar was focused on appreciation of evidence only. The scope and extent of the revisional jurisdiction, on appreciation of evidence, under Section 20 of the Act was RCR.34/13 & connections **:6:** considered by the Constitutional Bench of the Supreme Court in ## **Hindustan Petroleum Corporation Limited v. Dilbahar Singh[2014 (9) SC 78]** and held as follows: “However, to satisfy itself to the regularity, correctness legality or propriety of the impugned decision or the order, the High Court shall not exercise its power as an appellate power to re-appreciate or re-assess the evidence for coming to a different finding on facts. Revisional power is not and cannot be equated with the power of reconsideration of all questions of fact as a court of first appeal. Whether the High Court is required to be satisfied that the decision is according to law, it may examine whether the order impugned before it suffers from procedural illegality or irregularity.” 9. In view of the above decision, this Court is not inclined to re-appreciate the entire evidence on record in exercise of the revisional jurisdiction under Section 20 of the Act, unless it is found that the findings of the courts below are perverse. 10. It is a specific case of the petitioner Company that the Company was formed with the objects of conducting real estate business and also for the manufacture and sale of building materials and the Company is not in a position to conduct its business without having an office. Therefore, the plaint schedule RCR.34/13 & connections **:7:** building and the land measuring an extent of 17 cents appurtenant to the petition schedule building is required for the said purpose. On the other hand, the common contention raised by the respondents is that the Company is formed for the purpose of evicting the tenants and the assignment of the property to the Company is a sham and nominal documents created for the purpose of evicting tenants. Therefore, the first point to be considered is whether the appellate authority is justified in finding that the Company was not formed for the purpose of evicting tenants. 11. Before considering the said question, it is pertinent to note that none of the tenants have raised a contention disputing the title of the petitioner or the landlord - tenant relationship thereunder falling under the proviso to Section 11 (1) of the Act. In the absence of such a contention, challenging the maintainability of the rent control petitions, neither the Rent Control Court nor the appellate authority had considered those issues falling under the proviso to Section 11 (1) of the Act. So also, in the appeal, none of the tenants have a case that the Rent Control Court had failed to consider the denial of title or RCR.34/13 & connections **:8:** denial of landlord- tenant relationship, even in these revision petitions also petitioners have no such case. Therefore, we find that the title of the petitioner Company and the landlord - tenant relationship thereunder stands undisputed. Therefore, the issue which actually arose before the Court was that whether the Company was formed for the purpose of evicting the tenants from the respective petition shop rooms only. 12. Admittedly, the Company was formed and registered under the Companies Act as per A19 Memorandum of Association on 20.8.1998 and the chief promoters of the Company were two in numbers; one Venugopal and other is Radhakrishnan. The vendor, of Ext.P18 assignment deed, Asalatha, was not a chief promoter or director of the Company at the time of formation and registration of the company. Going by the Articles of Association, the objects of the Company are seen described generally and there is nothing with reference to the property covered under Ext.A18. It is not in dispute that Asalatha and her sister, the then co-owners of the petition schedule property sold away the petition schedule property and the land appurtenant to it to the petitioner company by virtue of RCR.34/13 & connections **:9:** Ext.A18 sale deed on 20.9.1999; that is, one year and 9 months after the registration of the Company. Going by Ext.A18 as rightly observed by the appellate authority, the assignment deed was executed for a consideration of Rs.7,00,000/- and paid Rs.70,000/- as stamp duty. At the time of said purchase, the said Asalatha was the Managing Director of the Company also, even though she was not a shareholder. It has come out in evidence that the Company has total 7000 shares, out of which she is having 2750 shares and she purchased shares in the year 2000 only and the Company has 11 shareholders. A Company may be formed with several objects and some of the objects may be hidden objects with oblige motives. Therefore, unless and until it is convincingly proved that the petitioner Company was formed with the sole object of evicting the tenants from the tenanted premises, it cannot be held that the object of the Company was for the purpose of evicting tenant from the tenanted premises. 13. It has come out in the evidence that at the time of the formation of the Company, the aforesaid Asalatha had no kind of connection with the formation of the Company and the RCR.34/13 & connections **:10:** respondent failed to bring out any circumstance or material to prove otherwise. Therefore, on analysis of Ext.A18 and A19 and the admitted case of both parties, we are of the view that the respondent failed to prove any circumstance or contention which would give rise to an inferernce that the Company was formed with an object of evicting the respondents from their respective shoprooms. The log lapse of one year and nine months to purchase the property after the formation of the company would fortify the above view. 14. Then, the question to be considered is, can Ext.A18 be considered as a sham document. Going by paragraph 14 of the impugned judgment passed by the appellate authority, we find that the appellate authority has meticulously considered Ext.A18 assignment deed in its correct perceptive. The appellate authority rightly observed that it is not likely that for evicting the tenants, such a huge investment is made to create a false document. Here arises another question; was there any bar against PW1 Ashalatha for initiating eviction proceedings against the tenants independently, without executing any such document like Ext.A18? Absolutely there is no such bar against RCR.34/13 & connections **:11:** PW1 to initiate eviction proceedings against the tenants independently under her personal capacity. There arises one more question; whether the Kerala Buildings (Lease and Rent Control) Act has given any special advantage or privilege to a company registered under the Companies Act for getting an order of eviction under section 11 of the Act. On an analysis of the different grounds envisaged under section 11 of the Act, we do not find any special privilege or advantage to a company for getting an order of eviction. If that be so, what was the oblique motive for creating such a company spending huge amount and losing her own valuable property forever. This question remains unanswered in the order dismissing the Rent Control Petitions, passed by the Rent Control Court. The tenants also have no answer to this question. In this context, it is to be borne in mind that the company is a juristic person having rights and liabilities and the company can own the property and PW1 has lost her title to the scheduled property by the execution of Ext.A18 sale deed. 15. The above view is further supported by Exts.A12 to A16. Exts.A12 to A16 are the files consisting of the true copies RCR.34/13 & connections **:12:** of Profit and Loss Account of fixed assets and Balance Sheet attached to schedule, Auditor's Report till 31/3/2003 from 31/3/1998 onwards of the petitioner Company. Though the Rent Control Court has failed to consider any of the aforesaid documents, the Appellate Authority meticulously considered the entries in the Balance Sheet of each year up to 2003 and found that the income from the petition schedule shop rooms as rent was accounted in Ext.A15 Balance Sheet till 31/3/2000. More clearly, Rs.15,225/- was accounted as income of the Company from rent. It is pertinent to note that the said Balance Sheet was for the year before the filing of the Rent Control Petitions. Merely for the reason that the rent was collected by the father of Asalatha, it cannot be held that the Asalatha was the owner of the property, particularly when the rent was found accounted in the balance sheets of the Company. 16. We have meticulously analysed the order dismissing the Rent Control Petitions passed by the Rent Control Court. We are of the opinion that the Rent Control Court has gone beyond the jurisdiction by conducting an enquiry which was not actually raised by the respondents in their pleadings. In their pleadings RCR.34/13 & connections **:13:** they have no case that the company was not in existence and they have admitted the company as their landlord and they have not challenged the title of the company over the petition schedule building. The Rent Control Court has not raised any issue with respect to whether the company was in existence or whether the company was a bogus company or not. Without framing an issue, and without rightly understanding the contentions raised by the respondents, the Rent Control Court conducted an enquiry under the issue whether the petitioner is entitled to get an order of eviction under section 11(3) of the Act. We are of the opinion that no enquiry could have been conducted as to whether the company was a bogus company or not, particularly when the respondents have no such case and they themselves have admitted the existence of the company, title of the company and the landlord-tenant relationship thereunder. Their only case is that the company was formed with the object of evicting the tenants from the petition schedule property and Ext.A18 sale deed was a sham document. The Rent Control Court went wrong and conducted an enquiry on the basis of the oral testimony of PW1 only. The Rent Control Court RCR.34/13 & connections **:14:** has failed to consider Exts.A12 to A16 and A18, A19, A20 and A21 in its correct perspective. But the Appellate Authority meticulously considered the aforesaid documentary evidence and arrived at proper finding, by reversing the findings of the Rent Control Court. We do not find any kind of illegality or impropriety in any of the findings of the Appellate Authority whereby the Appellate Authority has arrived at a finding that the respondents have failed to prove that the first petitioner company was formed with an object of evicting the tenants from the respective tenanted premises and Ext.A18 sale deed was a sham document. In the above analysis, all the revisions stand dismissed. 17. At last, the learned counsel for the tenants sought for one year time to surrender the petition schedule shop rooms. The learned counsel for the landlord opposed the said request. But, this Court is of the view that a reasonable time can be given to the tenants to surrender the petition schedule shop rooms, on terms. The tenants shall surrender the petition schedule shop rooms on or before 31/7/2018, provided that they could comply the conditions given below within the specified time. RCR.34/13 & connections **:15:** - i) The tenants shall file separate affidavits before the Execution Court expressing an unconditional undertaking to surrender the petition schedule shop rooms on or before 31/7/2018 and the said affidavits must be filed on or before 20/1/2018. - ii) They shall also undertake in the very same affidavits that no further time will be sought under any circumstance. - iii) The tenants shall pay entire arrears of rent to the landlord or deposit the same before the Execution Court within two weeks from the date of receipt of a copy of this order and they shall continue to pay rent without default. - iv) In the event of failure, the time granted to vacate the petition schedule shop rooms would stand automatically vacated and the landlord will be at liberty to proceed with the execution. **K.HARILAL JUDGE** ## **A.M.BABU** ## **JUDGE** scl/okb/20.12