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IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 11TH DAY OF NOVEMBER 2019
BEFORE
THE HON’BLE Dr. JUSTICE H.B.PRABHAKARA SASTRY
R.F.A.No.329 OF 2016
BETWEEN:
M/s.Hinduja Fashions, No.70, Mission Road, Bengaluru-560 027. Rep. by its Managing Director.
.. Appellant
( By Sri Jagannath V.C., Advocate )
AND:
M/s.Geekay Kusam Masala & Spice Extracts Pvt. Ltd., No.212, Bellary Road, Sadashivanagar, Bengaluru -560 080, Rep.by its Managing Director C.Purushotham, Now known as Garuda Developers Pvt. Ltd., Rep.by its Managing Director C.Purushotham.
.. Respondent
( By Sri S.V.Giridhar, Advocate For Giridhar & Co., )
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This Regular First Appeal is filed under Section 96 read with Order 41 Rule 1 of CPC against the judgment and decree dated 6.11.2015,passed in O.S.No.9081/2013, on the file of the VII Addl.City Civil & Sessions Judge, Bengaluru (CCH-19), decreeing the suit for recovery of money.
This Regular First Appeal coming on for Hearing, this day, the Court delivered the following:
JUDGMENT
This is the defendant’s appeal. The present respondent, as a plaintiff, had instituted a suit against the present appellant arraigning it as defendant in O.S.No.9081/2013, in the Court of learned VII Addl.City Civil & Sessions Judge, Bengaluru (CCH-19), (hereinafter for brevity referred to as `trial Court’), for recovery of money of a sum of `6,29,249/- with interest thereupon at the rate of 24% p.a.
The summary of the case of the plaintiff in the trial Court was that the defendant was a tenant under the plaintiff with respect to the premises bearing No.76, Industrial Suburb, Yeshwantpur, Bengaluru (suit property), on a monthly rent of `2,66,634/-,
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inclusive of Tax Deducted at Source (TDS). Subsequently, the defendant vacated the suit premises after the period of lease and handed over the vacant possession of the same to the plaintiff. At that point of time, the defendant had also taken back the refundable deposit of `25 lakhs vide the letter of the defendant dated 23.2.2013. At the time of vacating, the defendant was in arrears of rent of a sum of `5,33,264/- for the months of January and February 2013, which was after deducting the TDS amount. However, at the request of the defendant that the said arrears need not be deducted from the refundable amount of `25 lakhs, the plaintiff acceding to its request, refunded the entire amount of `25 lakhs since the defendant has also represented to the plaintiff that the two months arrears of rent would be paid separately by them. It is the case of the plaintiff that the defendant failed to pay the arrears of rent of `5,33,264/-, in which regard, a notice
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was sent to the defendant. The demand made therein was also not met by the defendant, which constrained it to institute the suit. As such, the plaintiff claimed a sum of `5,33,264/- towards the arrears of rent and a sum of `95,985/- as interest at the rate of 24% from February 2013 to November 2013, for nine months, thus in total a sum of `6,29,249/- and interest thereupon.
The defendant in response to the notice served upon it, appeared through its counsel and filed its written statement, wherein, it did not dispute that it was a tenant in the suit premises under the plaintiff with the monthly rent of `2,66,634/- and that it had also paid a sum of `25 lakhs as refundable amount to the plaintiff. However, it denied that it was in arrears of rent, much less, `5,33,264/- after deducting TDS as on the date of it vacating the suit premises and that it is liable to pay the said amount together with interest thereupon to the plaintiff. On the contrary, it took a contention that there
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was no due and the matter was fully and finally settled between the parties.
The defendant filed an additional written statement on 15.7.2015, contending that the suit filed by the plaintiff was by a non-existent Company. It denied that the plaintiff was known as M/s.Garuda Developers Limited.
Based on the pleadings of the parties, the trial Court framed the following issues :
Whether plaintiff company proves that the Defendant Company was due arrears of net rent/hire charges to the tune of Rs.5,33,264/- after deducting the TDS, for the months of Jan. & Feb. 2013 as claimed? 2. Whether the plaintiff company is entitled for current and future interest for as claimed? 3. Whether the plaintiff company proves that the defendant is due Rs.5,33,264/- towards arrears of rent and Rs.95,985/- towards interest, thus Rs.6,29,249/- as on the date of the suit? 4. What order or decree?
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The plaintiff in its support, got examined one Sri C.Purushotham, its Managing Director as PW-1 and got marked documents at Exs.P-1 to P-12. On behalf of the defendant, one Sri N.J.Diwakaraiah was examined as DW-1 and documents from Exs.D-1 to D-9 were marked. After hearing both side, the trial Court by its impugned judgment and decree dated 6.11.2015, answered issue Nos.1, 2 and 3 in the affirmative and proceeded to decree the suit of the plaintiff, holding that defendant was liable to pay to the plaintiff a sum of `6,29,249/-, along with interest at 18% p.a. from the date of suit till its relalisation. It is against the said judgment and decree, the appellant has preferred this appeal.
Lower Court records were called for and the same are placed before this Court.
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Heard the arguments of the learned counsel from both side and perused the materials placed before this Court, including the memorandum of appeal and the impugned judgment. 7. For the sake of convenience, the parties would be referred to as per their ranks before the trial Court. 8. In view of the above, the points that arise for my consideration are :
(1) Whether the suit instituted by the plaintiff was not maintainable?
(2) Whether the judgment and decree under appeal deserves any interference at the hands of this Court?
The learned counsel for the defendant/appellant in his argument submitted that the undisputed fact remains that the defendant was a tenant under the plaintiff with respect to the suit schedule property on a monthly rent of `2,66,634/-. He also submitted that it is not in dispute that the defendant vacated the suit
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premises after the lease period and handed over vacant possession to the plaintiff and at that time, it also received the refundable amount `25 lakhs from the plaintiff. However, the learned counsel for the appellant submitted that it is denied that there was any arrears of rent by the defendant to the plaintiff since the defendant had settled the matter with the plaintiff while handing over the key, making it clear that the matter was fully and finally settled. The said document which is at Ex.P- 6 and Ex.D-4 was not properly appreciated by the trial Court. Learned counsel further submitted that no prudent person will refund the advance amount keeping the arrears of rent payable to him. As such also, Ex.D-4 requires to be believed. Finally, learned counsel for the appellant submitted that the suit was filed by M/s.Geekay Kusam Masala & Spice Extracts Private Limited, which was a non-existing Company as on the date of institution of the suit. Though during the
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pendency of the suit, the alleged Company – M/s.Garuda Developers Private Limited came on record as a new Company subsequent to the change of name of the old Company, still the description of the old Company in the cause title is defective, as such also, the suit is not maintainable. 10. Learned counsel for the respondent/plaintiff in his argument submitted that when the landlord and tenant relationship, as well the quantum of rent is an undisputed fact, the burden of proving the payment of the rent and no arrears in the rent would be solely upon the tenant, who is the defendant in the instant case. He further submitted that Ex.P-6, the original of which is at Ex.D-4, no where mentions that the plaintiff has accepted the contents of the said letter and that the matter was fully and finally settled between the parties and that there was no good claim by the plaintiff against the defendant. The learned counsel further submitted
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that the said document is a self-serving unilateral document which is not binding the plaintiff in any manner. He also submitted that the defendant has not produced any evidence either oral or documentary regarding the discharge of the arrears of rent by it towards the plaintiff. Finally stating that mere institution of the suit in the old name of the Company ipso facto would not make the suit bad and that the same misdescription was remedied by the plaintiff during the pendency of the suit, learned counsel relied upon a ruling of the Division Bench of Calcutta High Court in Pioneer Protective Glass Fibre P. Ltd., -vs- Fibre Glass Pilkington Ltd., reported in 1984 SCC Online Cal 171,
Admittedly, the parties have not produced the Lease Agreement if that was existed between them in writing. However, the parties have not denied or disputed with respect to the existence of the landlord and tenant relationship between them. Even according
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to the defendant, the agreed rate of rent payable by it to the plaintiff was `2,66,234/- per month. The defendant has also not disputed that it has vacated the suit schedule premises and received the refundable amount of `25 lakhs from the plaintiff. However, its only contention is that there was no arrears of rent since there was full and final settlement between the parties as per Ex.P-6 / Ex.D-4. The evidence of PW-1 and DW-1 are also on the similar lines. Ex.P-6 is the copy of Ex.D-4. Though PW-1 himself has produced Ex.P-6, but, Ex.D-4 was confronted to the said witness, who admitted the said document as a letter written by the defendant to the plaintiff. However, it is noteworthy that it was not suggested to PW-1 in his cross-examination that contents of Ex.P-6/Ex.D-4 was accepted by the plaintiff. Thus, merely a receipt of the document at Ex.P-6/Ex.D-4 prima facie cannot be considered that the addressee of the said letter
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(recipient of the letter/plaintiff) has accepted to the contents of the said letter. A perusal of the said letter at Ex.D-4 would go to show that the defendant has written to the plaintiff confirming the receipt of `25 lakhs by the defendant towards the full and final settlement of the amount due to the defendant. However, in the very same letter, the defendant is also shown to have written that the said letter will be in full and final settlement of all the dues of the defendant and except electricity bill and water bill dues up to 28.2.2013 which the defendant undertook to pay, no further claims against the Company (defendant) would be entertained. The said letter is shown to have been acknowledged by the plaintiff with an endorsement `received keys’ on 23.2.2013. It is solely relying upon the said document, the learned counsel for the defendant/appellant vehemently contended that the plaintiff has acknowledged that the
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matter was fully and finally settled between the parties and that there was no dues from the defendant, as such, the plaintiff now cannot contend that the defendant is in arrears of two months rent. Learned counsel further submitted that the endorsement made by the plaintiff on Ex.D-4 indicate that the plaintiff has acknowledged that there was no dues from the defendant.
A careful reading of Ex.D-4 would no where shows that the plaintiff has expressly acknowledged that there was full and final settlement of the dues of the defendant against the plaintiff. Had there really been no dues, probably the plaintiff would have endorsed as `contents accepted’. Even otherwise, the defendant being a Private Limited Company, would have insisted for a specific endorsement in writing to the effect that the contents of Ex.D-4 (Ex.P-6) were accepted by the plaintiff, whereas, the plaintiff-company has only
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endorsed for the receipt of the key without whispering anything about the alleged full and final settlement of the matter. As such, merely because there is an endorsement in the letter at Ex.D-4 as `received keys’, by that itself, it cannot be inferred that the recipient of the said letter had no objection to the contents of the said letter or it had accepted that the matter was fully and finally settled. As such, the argument of the learned counsel for the appellant that Ex.D-4 would go to show that there was full and final settlement of the matter cannot be accepted. 12. It is to be noticed that, it is not the case of the defendant either in its pleading or even in its evidence that there was waiver of two months rent by the plaintiff. On the contrary, it is throughout the case of the plaintiff that the defendant was in arrears of rent for two months i.e., January and February 2013, amounting to `5,33,264/- after deduction of TDS in it, whereas, the
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contention of the defendant was that there was no arrears and all the dues were cleared. Thus, when the defendant has sought not the waiver, but, the discharge of arrears of rent, then, it was for the defendant, as a tenant under the plaintiff, to produce cogent evidence to substantiate its contention. Admittedly, the defendant has not produced not even a single receipt or any document to show that it has cleared the rent up to the date of vacating the suit schedule premises and handing over the keys to the plaintiff.
On the other hand, in the cross-examination of DW-1, the witness has admitted a suggestion that the defendant was deducting TDS in the rent amount that was being paid to the plaintiff. DW-1 expressed his ignorance about it deducting TDS in the rent alleged to have been paid for the months of January and February 2013. He also admitted as true that though there are
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documents to show that TDS has been deducted for the previous months of rent, that is from 1.10.2012 to 31.12.2012, but, the defendant has not produced any document to show that TDS was deducted for the months of January and February 2013. DW-1 proceeded further to state that he would produce the Canara Bank statement to show that the rent towards January and February 2013 were paid. Thus, even according to DW-1, he had the documents to show that the rents for the months of January and February 2013 were paid and despite undertaking to produce such document, for the reasons best known to it, the defendant did not produce the said document. Similarly, DW-1 in his very same cross-examination has also stated that he does not know whether the payment of the rent for the disputed period has been reflected in the Income-tax returns, however, he said that the defendant-Company might not have reflected the same in their Income-tax return. He
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further stated that he had no objection to produce the Income-tax return for the relevant year. However, defendant did not produce the Income-tax return also. Still, the fact remains that the defendant who claims that it had the material document i.e., the bank statement showing the payment of rent for January and February 2013, has not produced the said document despite undertaking to produce it, which amounts to withholding by a party to the litigation a material evidence which he claims to be available with him. As such, an adverse inference can be drawn that the defendant has no document or fail to show that it had paid the rents for the months of January and February 2013. Needless to say that the defendant admittedly being a tenant under the plaintiff for the said period, it was required for it to show that it had paid the rents for those two months.
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Merely because the plaintiff is said to have refunded the entire amount of `25 lakhs, which was said to be refundable amount to the defendant, by that itself, it cannot be inferred that there was no arrears of rent. Plaintiff has explained both in its plaint, as well in the evidence of PW-1 as to under what circumstances and based upon which oral promise of the defendant, it was made to refund the entire amount of `25 lakhs. Even otherwise, as already observed and at the cost of repetition, it is repeated that the defendant being tenant, who is expected to produce rent receipt, since has not produced the same and nor even produced the bank statement, possession of which document it claims to have in its custody, cannot contend that mere refund of the entire refundable amount of `25 lakhs would infer that there was no arrears of rent. Thus, it has to inferred that the plaintiff has established that the defendant was in arrears of rent for the months of
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January and February 2013, which in total amounted to `5,33,264/- after deduction of TDS.
The last point of argument of the learned counsel for the defendant/appellant that the suit filed by the plaintiff with its description is not maintainable is concerned, it has to be noticed that no such contention was taken up at the earliest point of time by the defendant in its written statement. The suit was originally filed by the plaintiff with the name M/s.Geekay Kusam Masala & Spice Extracts Private Limited, represented by its Managing Director. However, during the pendency of the suit, by virtue of the order dated 1.7.2015, the Court allowed the amendment to be carried out in the cause title of the plaintiff in the plaint, wherein, it allowed the addition of the words “Now known as Garuda Developers Private Limited”. Forwarding this aspect vehemently before this
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Court, learned counsel for the appellant/defendant in his argument submitted that as on the date of the institution of the suit, the Company M/s.Geekay Kusam Masala & Spice Extracts Private Limited was not in existence. Further, even though an amendment was made at a later stage, still, the changed name of the Company was not placed at the top, rather, the erstwhile name itself continued to be in the top, bringing the changed name, though it was the current name of the Company, in the bottom of the cause title of the plaint. The learned counsel further submitted that though the amendment was not challenged by the defendant, but, the same would not preclude it from taking such a contention and challenge the same in the appeal under Section 105 of Code of Civil Procedure, 1908, (hereinafter for brevity referred to as `CPC’). In his support, he relied upon an unreported judgment of a Co-ordinate Bench of this Court in Writ Petition
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Nos.47040-47041/2017, Sri P.Shanthakumar & others –vs- Smt.Deviramma, disposed of on 19.06.2019, wherein the learned Judge was pleased to observe that the order allowing amendment of the pleadings apparently before the trial of suit began and the order allowing the impleadment of petitioner Nos.2 and 3 of the suit can be a subject matter of challenge by the petitioners if and when they suffer a decree at the hands of the trial Court, as rightly contended by the learned counsel for the respondent.
Section 105 of CPC reads as below : “105 : other orders
(1) Save as otherwise expressly provided, no appeal shall lie from any order made by a court in the exercise of its original or appellate jurisdiction; but, where a decree is appealed from, any error, defect or irregularity in any order, affecting the decision of the case,
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may be set forth as a ground of objection in the memorandum of appeal.
(2) Notwithstanding anything contained in sub-section (1), where any party aggrieved by an order of remand from which an appeal lies does not appeal therefrom, he shall thereafter be precluded from disputing its correctness.
A reading of the above Section makes it very clear that a party who has not challenged any irregularity, defect or error in an order affecting the decision of the case during the pendency of the suit may set forth such an error, defect or irregularity in any order as a ground of objection in the memorandum of appeal. Thus, the appellant at the most can only set forth the alleged irregularity only as a ground in its appeal.
Learned counsel for the respondent/plaintiff relying upon Pioneer Protective Glass Fibre P. Ltd. (supra) submitted that a Division Bench of Calcutta
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High Court in a similar set of circumstances has clearly held that a Company instituting a suit in its earlier name would not by itself make the Company non-existent and the suit not maintainable.
In the said case, the respondent-Company M/s.Fibre Glass Pilkington Ltd., which was a Company incorporated under the Companies Act, 1956, in a proper course of law, got its name changed to F.G.P. Ltd., with effect from 15.4.1982. Thereafter, on 22.11.1982, the said Company instituted a suit against the appellant Company (Pioneer Protective Glass Fibre P. Ltd.,) for recovery of the money. However, the said suit was instituted not in the changed name of the plaintiff Company i.e., F.G.P. Ltd., but, it was in its previous name viz., Fibre Glass Pilkington Ltd.,
The maintainability of the said suit was challenged by the defendant therein contending that when the Company
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with the old name was not in existence, the suit was not maintainable at all.
After hearing both side on the point and relying upon some of the case laws, the Court opined that mere change in the name of the Company would not put an end to the Company’s life and there will no birth of a new Company, however, the very same Company continues, but, with a new name. It further observed that, change in the name of the Company would not result in dissolving of the old Company and creation of new Company like the reconstitution of the Partnership Firm. It also observed that, if any legal proceeding is commenced or instituted by a Company in its old name, it would be a case of mere misdescription and not a case of initiation of a proceeding by a person not in existence. It also referred to a Division Bench judgment of the same Court in Economic Investment Corporation
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Ltd., -vs- CIT, {1970} 75 ITR 233 (Cal) and extracted a finding given by the Court in the said case, which is reproduced here below : “ It is clear from sub-section (3) that by the change of name, the constitution of the old company is not changed. The only thing that is changed is its name and all the rights and obligations under the law of the old company pass to the new company. It is not similar to the reconstitution of a partnership, which, in law, means the creation of a new legal entity altogether.”
While concluding Court said that the decision of the Hon’ble Apex Court in Purushopttam Umedbhai and Co. –vs- Manilal and Sons, reported in AIR 1961 SC 325, though not directly on the point, but, supports the view that a suit filed in the wrong name would be a case of misdescription and not a suit by non-existing person and which was also the view of two other Division Benches of Calcutta High Court.
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In view of the above, I am of the opinion that the said analysis made in Fibre Glass Pilkington Ltd., case (supra), which is in the similar circumstances of case on hand, clearly applies in the case on hand also and in view of the fact that the present Company’s name was subsequently included in the cause title of the plaint, merely because the suit was instituted in the old name of the existing Company, by that itself, it cannot be held that the said Company ceased to be in existence the moment it got its name changed. On the other hand, as observed above, the same Company continues to be in existence, however, with its new name. Therefore, when Section 23 (3) of the Company Act, 1956, clearly mentions that the change of name shall not affect any rights or obligations of the Company, or render defective any legal proceedings by or against it; and any legal proceedings which might have been continued or commenced by or against the Company by
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its former name and the same may be continued by or against the Company by its new name, it don’t consider that merely non-showing of the new name which was present as on the date of the institution of the suit, but, showing its erstwhile name, that too, which was prevailing just about fifteen days prior to the institution of the suit, would not take away the validity of the institution of the suit by the plaintiff-Company. Further, merely because the Company’s new name was shown in the later half of the cause title though appears to be procedurally not a correct form of depicting the plaintiff’s current description in the cause title of the suit, but, it would not eradicate in any manner the value of the plaint. Therefore, the last leg of the argument of the learned counsel for the appellant that suit itself was not maintainable in view of suing the defendant by a company which does not possess the
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name shown in the plaint as on the date of filing of the suit, is not acceptable. 18. Barring these, the appellant has not put forward any other grounds worth considering. Since the trial Court after considering all the materials and evidence placed before it in its proper perspective, has arrived at a proper conclusion holding that the plaintiff has proved the arrears of rent payable by the defendant to it and also reduced the rate of interest and confining it to only at 18% than the rate at which the plaintiff has claimed, I am of the view that the said finding of the trial Court cannot be considered as erroneous warranting any interference at the hands of this Court. As such, I do not find any reason to interfere in the judgment and decree passed by the trial Court.
Accordingly, I proceed to pass the following order:
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ORDER The Appeal is dismissed. The judgment and decree dated 6.11.2015, passed by the learned VII Addl.City Civil & Sessions Judge, Bengaluru (CCH-19), in O.S.No.9081/2013, is confirmed.
The Registry is directed to transmit a copy of this judgment along with lower Court records to the lower Court without delay.
Sd/-
JUDGE
bk/