Saturday, May 29, 2010

Firm can evict tenant even after amalgamation: SC

Firm can evict tenant even after amalgamation: court

J. VENKATESAN

When a company, which is a landlord, stands dissolved owing to its amalgamation with another company, its rights under the decree for eviction of a tenant under the rent control legislation devolves on the amalgamated company, and it can enforce the decree, the Supreme Court has held.

A Bench of Justices P.Sathasivam and J.M. Panchal delivered the verdict, putting an end to a three-decade-old legal battle.

The Bench pointed out that normally, after the trial court's decree, the landlord would have obtained possession of the premises, but for the tenant continuing in occupation only on account of the stay order by the appellate court.

In such circumstances, it said, "the well-known principle that 'an act of the court shall prejudice no man' shall come into operation. When a company stands dissolved (with or without winding up) due to amalgamation, its rights under the decree for eviction devolves on the amalgamated company."

"Unjust and unfair"

Writing the judgment, Justice Sathasivam said: "If a landlord, which is a company, cannot advance its interest in the business by amalgamating with another company by putting to use its own property, it would be unjust, unfair and unreasonable. Further, the provisions of the Rent Control Act should not be so construed as to frustrate and defeat the legislation."

The Bench said: "If in a case of landlord requiring the premises for its own use amalgamates with another company and expands its business, the rent control legislation may clash with the provisions of the Companies Act. The Companies Act and the Rent Control Act have to be harmoniously interpreted and not to be so interpreted as to result in the one Act destroying a right under the other Act."

Appellant M/s Speedline Agencies occupied a premises in November 1965 belonging to the respondent, M/s T. Stanes and Co LTD. (after amalgamation) on rent on Tiruchy Road, Coimbatore. In 1975, when the lease was not renewed, the tenant first filed a suit.

Even as the case was pending, the landlord company's name was changed from United Coffee Supply co. Ltd as Stanes Tea and Coffee Ltd. and it filed an application for eviction of the tenant on the ground that it required the building and premises for own use and occupation. The Rent Controller ordered eviction of the appellant. The appellate authority and Second Additional Subordinate Judge, Coimbatore, dismissed an appeal against this order.

The appellant filed a revision petition in the Madras High Court and during its pendency, the landlord company amalgamated with T. Stanes and Co. and an amendment was made in the cause title of the revision petition. The court dismissed the appellant's plea.

The present appeal is directed against this judgment.

Dismissing the appeal, the Bench said: "The landlord's entitlement to evict the tenant had merged with the decree. A decree constitutes an asset. The said asset of the erstwhile company has devolved on the amalgamated company. If the amalgamated company is deprived of the benefit, it will frustrate the very purpose of amalgamation and defeat the order of amalgamation passed by the High Court."

"The present case being one where the order of eviction is eminently just, fair and equitable as ordered by two authorities and confirmed by the High Court, we do not find any valid ground for interference," the Bench said.

It granted time to the appellant for handing over possession of the premises till December 31, 2010.

Courtesy_

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