JODHISTIR PRUSTY v. KOSHAL TRANSPORT TRADING AND CO.
1970-11-27
R.N.MISRA
body1970
DigiLaw.ai
JUDGMENT : R.N. Misra, J. - The Defendant is in appeal against a reversing decision of the learned Subordinate Judge, Bolangir in a suit for eviction and arrears of house rent. The Plaintiff which is a Limited Company incorporated under the Companies Act through its Managing Director instituted the suit for eviction and recovery of rent and other ancillary reliefs on the allegation that the Defendant was a tenant in respect of a house belonging to the Company. 2. The defence taken was that the house did not belong to the Plaintiff, but the vacant site of the Company was taken by the Defendant who raised the structure at his own expenses. The alleged lease deed was never acted upon and the Defendant had never paid any rent to the Plaintiff because nothing was due. The maintainability of the suit was also disputed. 3. The learned trial judge came to hold that the Defendant was a monthly tenant under the Plaintiff-Company on payment of rent of Rs. 30/- per month. But he found that Kumar Bhupal Singh was not entitled to represent the Company. Accordingly, the suit was dismissed as not maintainable. The Plaintiff appealed. 4. AS it appears from paragraph 6 of the appellate judgment, the only point which was mooted was about the maintainability of the action. The learned appellate Judge came to find that the Company was verily in existence and Kumar Bhupal Singh continued to be the Managing Director. He accordingly reversed the decree of the trial Court and gave a decree as prayed for. 5. The Defendant is in appeal against this reversing decree. 6. Two questions arise for decision, firstly, it is contended that the provisions of the Orissa House Rent Control Act have now been extended to this area and the disputed property being within the Notified Area Counsel and to that area the new Act having been extended, the decree for eviction cannot be granted by the Civil Court. Relief, if any, is available only from the Controller under that Act. There is no material on record to show that the disputed property is within the territorial limits of the Notified Area Council to which the Orissa House Rent Control Act has been extended. The learned Counsel for both sides ask for the matter to be remanded on that count.
There is no material on record to show that the disputed property is within the territorial limits of the Notified Area Council to which the Orissa House Rent Control Act has been extended. The learned Counsel for both sides ask for the matter to be remanded on that count. I think, the suggestion is absolutely fair and it would be proper to vacate the decree for eviction and can upon the learned trial Judge to decide whether the Orissa House Rent Control Act applies to the disputed house. In case he finds that it does, the deoree for eviction cannot be granted and to that extent the suit is bound to be dismissed. 7. The next question for examination is about the maintainability of the action. The learned appellate Judge had stated that nothing was shown to him that Kumar Bhupal Singh had, ceased to be the Managing Director of the Company and, therefore he came to hold that he must be continuing as the Managing Director even on the date of the suit. This suit was tiled on 6-5-1964. The new Companies Act came into force on 1-4-1956. Mr. Murty learned Counsel for the Appellant relies upon the provisions of Section 317(2) of the Act. It provides: Any individual holding, at the commencement of this Act, the office of Managing Director in a Company shall, unless his term expires earlier, be deemed to have vacated his office immediately on the expiry of five years from the commencement of this Act. This provision, by an amendment, was not made applicable to private Companies unless such Companies were subsidiaries of public Companies. But as it appears from the records, the Company in question is a public Company. Mr. Murty contends that by operation of the aforesaid provision with effect from 1-4-1961, Kumar Bhupal Singh must be held to have ceased to be the Managing Director. He also places reliance on the admission of the Managing Director as a witness for the Plaintiff that under the Articles of Association, Directors were being appointed for the term of one year and were eligible for reappointment. The evidence on record goes to show that the company has not been carrying on any business and seems to have become indeed defunct.
The evidence on record goes to show that the company has not been carrying on any business and seems to have become indeed defunct. But the legal incorporation continues since it has not been liquidated or wound up and its name has not been struck off from the Register of Companies. The alleged Managing Director has also stated that there has not been any fresh appointment so far as be is concerned because he claims to have carried on the administration of the company as authorised, in 1954. 8. There does not seem to be any difficulty to hold that Kumar Bbupal Singh is no more the Managing Director because unless he is reappointed, Section 317(2) of the Act has operated and he has ceased to be Managing Director with effect from 1-4-1961. 9. The suit in this case is by the company which is a legal entity and does exist. The only objection is as to who should represent the Company for the litigation. Reliance in the Courts below has been placed on Order 29, Rule 1 of the Code of Civil Procedure. That provides thus: In suits by or against a corporation, any pleading may be signed and verified on behalf of the corporation by the Secretary or by any director or other principal officer of the corporation who is able to depose to the facts of the case. There is no dispute that a registered Company under the Companies Act is a Corporation and Rule 1 of Order 29, CPC applies. Kumar Bhupal Singh, according to Mr. Murty, does not satisfy any of the categories indicated in Rule 1 and as such was incompetent for subscription and verification of pleadings. 10. Rule 1 of Order 29, CPC is not mandatory. The provisions contained therein seem to be permissive and do not preclude a corporation from taking advantage of Order 3, Rule 1 or Order 6, Rule 14, Code of Civil Procedure. The pleadings can be signed by a duly constituted agent. That view has been adopted by a Division Bench of the Kerala High Court in the case of Kottayam Bank Ltd. Vs. Ahammed Kannu Rawther. It is unfortunate that the Plaintiff-Company has not been managing its affairs properly and does not have an effective Board of Directors of a competent Managing Director to look after its affairs.
That view has been adopted by a Division Bench of the Kerala High Court in the case of Kottayam Bank Ltd. Vs. Ahammed Kannu Rawther. It is unfortunate that the Plaintiff-Company has not been managing its affairs properly and does not have an effective Board of Directors of a competent Managing Director to look after its affairs. But if Kumar Bhupal Singh can show that he is a duly constituted agent, there would be no difficulty for his acting on behalf of the Company. 11. The Defendant also does not seem to be honest in his approach. Though a tenant and liable in law to pay the rent he has been trying to take advantage of the defunct position of the Company. Initially I was inclined to think that this aspect of the dispute should not be permitted to be raised by Mr. Murty and I should not interfere with the decree for rent. But as I find, it might lead to an anomalous position in law. I would accordingly vacate that portion of the decree also and call upon the learned trial Judge to require proof from the Plaintiff-Company that the person who acted on its behalf was a duly constituted agent or was otherwise competent in law to act on behalf of the Company. Parties would he given full liberty to lead evidence on either count and the learned trial Juage would decide the litigation in accordance with law.