ORDER
SHEET SHEET NO.1 CS No.99 of 1997 IN THE HIGH COURT AT CALCUTTA Ordinary Original Civil Jurisdiction IN THE MATTER OF: BIDHAN NIRMAN PVT.LTD.Versus DUTT & CO.PVT.LTD.BEFORE: The Hon'ble JUSTICE DEBANGSU BASAK Date : 19th January, 2015.
Appearance: Mr.Promit Kr.
Roy, Sr.Advocate, Mr.Arik Banerjee, Advocate with Mr.Avirup Mondal, Advocate..for the Plaintiff.
Mr.Ratnanko Banerjee, Sr.Advocate, Ms.Lopita Banerjee, Advocate with Ms.Amrita Pandey, Advocate..for the Defendants.
The Court :-The suit is for eviction and recovery of arrears of rent and mesne profit.
By the judgement and decree dated July 11, 2014, I decreed eviction of the defendants from the suit property.
I had also appointed a learned Special Referee for the purpose of quantifying the quantum of mesne profit recoverable.
The learned Special Referee held meeting in accordance with the said judgement and decree.
The learned Special Referee has filed his report dated November 18, 2014.
The judgement and decree dated July 11, 2014 was passed ex parte.
Some of the defendants applied for recalling of the ex parte judgement and decree and such recalling application was dismissed by me on September 24, 2014.
Being recalling aggrieved application by same the of orders the of dismissal defendants of preferred the an appeal.
Such appeal was disposed of by a judgement and order dated December 2, 2014.
The judgement and order dated December 2, 2014 was brought to my notice on January 9, 2015 in spite of a direction contained in the judgement and order dated December 2, 2014 by the Division Bench that the parties must present themselves before me on December 9, 2014.
This direction of the Appeal Court was not brought to my notice till January 9, 2015.
After perusing the judgement and order dated December 2, 2014 and after hearing the respective parties, I framed two issues for trial on January 9, 2015.
Such issues framed by me on January 9, 2015 are as follows:
1) Whether or not the defendant Nos.2, 3, 5 to 9 are liable to pay mesne profit to the plaintiff?.
2) Which of the defendants are liable to pay mesne profit to the plaintiff and if so, at what rate and for which period of time?.
The judgement and order dated December 2, 2014 allowed the parties to adduce fresh evidence before me.
In terms of the judgement and order dated December 2, 2014, both the parties were permitted to adduce further evidence before me.
None of the parties availed of such opportunity.
Since none of the parties had produced any evidence on January 9, 2015, evidence for both the parties was closed.
The parties agreed to rely upon the evidence adduced before the learned Special Referee.
Apart from the evidence before the learned Special Referee, parties choose not to adduce any further evidence.
Therefore, there is no other option than to proceed on the evidence made available by the parties before the learned Special Referee for the purpose of considering the two issues framed by me on January 9, 2015.
Both the issues are taken up together for consideration as they are interlinked and can be conveniently disposed of together.
Learned Counsel appearing for both the parties addressed the two issues jointly.
It is contended on behalf of the plaintiff that, there is no challenge to the report filed by the learned Special Referee and the quantification of the mesne profit made by the learned Special Referee, therefore, remains unchallenged.
It is contended that the plaintiff is a company incorporated under the provisions of the Companies Act, 1956.
A company incorporated under the provisions of the Companies Act, 1956 is a separate and distinct legal entity than that of its shareholdeRs.In support of such proposition, learned Counsel appearing for the plaintiff relies upon AIR1955SC74MRS.Bacha F.
Guzdar, Bombay versus Commissioner of Income Tax, Bombay) and AIR1999SC1734M/S.Electronics Corporation of India, LTD.versus Secretary, Revenue Deptt, Govt.
of Andhra Pradesh & Ors.).Learned counsel for the plaintiff refers to Exhibit-A being the deed of lease.
He submits that the defendants are liable to pay both the owners and the occupiers’ shares of the municipal rates and taxes in respect of the suit premises.
The defendants have paid till the 3rd quarter of 2006.
The defendants are liable to pay for the subsequent period.
The predecessor-in-interest of the plaintiff granted lease in favour of the defendant no.1, Amal Kumar Dutt, since deceased, the predecessor-in-interest of the defendant nos.3 to 9 and Ajit interest of defendants Kumar the Dutt, since defendant continue to deceased no.2.
claim the it is right the predecessor-in- submitted to occupy that the the suit premises till the decree in the suit was passed.
Possession of the suit premises was made over to the plaintiff on December 2, 2014.
It is submitted on behalf of the plaintiff that, since the defendants continued to claim right to occupy the suit premises till the decree was passed in the suit and till making over possession of the suit premises to the plaintiff, the defendants are liable to pay the occupation charges in respect thereof as also the municipal rates and taxes in terms of the deed of lease being Exhibit-A.
It is also submitted that, the fact that the defendants had sublet a portion of the demised premises to the shareholders of the plaintiff is of no relevance in view of the fact that the defendants had continued to claim rights in respect of the suit premises till the date of the decree.
It is pointed out that, a portion of the suit premises has not been given in sub-lease.
The lease deed contains a permission to sub-lease.
So far as the so called improvements in the premises is concerned, reference is made to the various clauses of Exhibit-A and it is submitted that, the defendants were entitled to make addition and alteration and improvement on the property concerned and that on the termination of the lease deed they were required either to remove the improvements and on their failure to do so, such improvements would become the property of the plaintiff.
On behalf of the appearing defendants, it is contended that since the appearing defendants had put some of the shareholders of the plaintiff into possession as sub-tenants in respect of a portion of the suit premises, mesne profits cannot be claimed from the appearing defendants.
Reference is made to the definition of mesne profits in Section 2(12) of the Code of Civil Procedure,1908.
It is pointed out that the Exhibit-A demonstrates that there are three lessees.
One of such lessees is the defendant no.1.
The defendant nos.2,3,5 to 9 are not the original lessees.
They are the heirs of Amal Kumar Dutt and Ajit Kumar Dutt, since deceased the two other lessors of Exhibit - A.
It is contended on behalf of the appearing defendants that, the definition of mesne profits in Section 2(12) of the Code of Civil Procedure,1908 contains two portions.
Since the appearing defendants are not persons in wrongful possession of the suit property, the appearing defendants are not liable to pay the mesne profits.
The learned counsel for the appearing defendants points out that there have been improvement in the suit property as would appear from the schedule in Exhibit-A and the evidence given before the learned Special Referee.
He submits that the appearing defendants cannot be asked to pay mesne profits in respect of the improvement made at the suit property.
He refers to various questions and answers given by the witness before the Special Referee.
On the quantum of the mesne profits fixed by the learned Special Referee, defendants submits the learned that, the counsel rent for payable the by the appearing appearing defendants contains the component of municipal rates and taxes.
A separate claim on account of municipal rates and taxes is not sustainable as against the appearing defendants.
So far as calculation of mesne profits from 2007 onwards is concerned, it is submitted on behalf of the appearing defendants that, the plaintiff has not proved its case with regard to the quantum.
The plaintiff has not brought any evidence to show the rent applicable at the relevant point of time in respect of the adjoining premises.
Reliance on the rate of rent of 2007 and the formula calculation as pointed out before the of the plaintiff is without any of onward and backward Special Referee on behalf basis.
The witness of the plaintiff is not an expert to give such evidence.
The learned counsel for the appearing defendants submits that the plaintiff having failed to prove the quantum of mesne profit is not entitled to any relief thereon.
According to him, none of the ingredients of the definition of mesne profit given in Section 2(12) of the Code of Civil Procedure,1908 has been satisfied in the facts and circumstances of the instant case and, therefore the plaintiff is not entitled to any relief on account of mesne profit.
Apart from the quantification of the mesne profit, the learned counsel for the appearing defendants submits that, the plaintiff is in possession of the suit premises through its shareholdeRs.He submits that it is unjust and inequitable to fasten liability on the appearing defendants for the payment of mesne profit, in as much as the appearing defendants had made over possession of a large portion of the suit premises to the shareholders of the plaintiff.
He submits that, in the facts and circumstances of the case, the corporate veil of the plaintiff should be lifted.
In support of the proposition that corporate veil of a company can be lifted in given circumstances, he relies upon (1995) 1 SCC478(New Horizons Limited and Anr.
Vs.Union of India and Ors.) and (1996) 4 SCC622(Delhi Development Authority versus Skipper Construction Company Private Limited and Anr.) I have considered the rival contentions of the parties and the material made available on record.
As will appear from the judgment and order dated December 2, 2014 who has to pay rents damages in the form of mean profit is the dispute between the parties.
The appearing defendants denied their liability to pay mesne profits on various grounds.
One of such ground is that the appearing defendants have not enjoyed the suit property and had let out the same to the sub-tenants which such sub-tenants are also the shareholders of the plaintiff and, therefore, in effect the plaintiff being in possession of the suit property over all these period of time, it would be unjust and inequitable to fasten the appearing defendants with the liability to pay mesne profits.
The plaintiff is a company incorporated under the provisions of Companies Act, 1956.
Bacha F Guzdar (supra) is of the view that a shareholder of a company does not have a right in the property of the company.
A company is a separate juristic entity distinct from its shareholdeRs.This view is reiterated in Electronics Corporation of India Ltd.(supra).In such decision, the Supreme Court has held that “ a clear distinction must be drawn between a company and its shareholder, even though that shareholder may be only one and that the Central or a State Government.
In the eye of law, a company registered under the Companies Act is a distinct legal entity other than that of the legal entity or entities that hold its shares.” Without disputing that, a company is a legal entity distinguished from his membeRs.it has been held that, in given circumstances such corporate veil can be lifted.
Such position has been recognised in a New Horizon Limited (Supra).In such case, Supreme Court notices various authorities of different countries and finds that by lifting the veil, the law either goes behind the corporate personality to individual members or ignores the separate personality of each company in favour of the economic entity constituted by a group of associated companies.
This couRs.is adopted when it is found that the principle of Corporate personality is too flagrantly opposed to justice, convenience or the interest of the Revenue.
This proposition of law has been reiterated in Skipper Construction (Supra) where the Supreme Court is of the view that, the concept of corporate entity was evolved to encourage and promote trade and commerce but not to commit illegalities or to defraud people.
The Supreme Court is also of the view that, where a corporate character is employed for the purpose of committing illegality or for defrauding otheRs.the Court would ignore the corporate character and will look at the reality behind the corporate veil so as to enable it to passe appropriate orders to do justice between the parties concerned.
Although the plaintiff is a corporate entity a Court can lift the veil and look at the composition of the plaintiff, if in the opinion of the Court the coroporate entity is employed for the purpose of committing illegalities or for defrauding others or the corporate personality is too flagrantly opposed to justice, convenience or the interest of the Revenue.
In the instant case, interest of the Revenue is not involved.
The corporate entity of the plaintiff is not opposed to justice or convenience.
Refusal of the defendants to pay the mesne profits on the ground of the corporate entity of the plaintiff being opposed to justice or conveninece cannot be a ground to lift the corporate employing veil.
It is to be seen whether the plaintiff its corporate entity for the purpose of is committing any illegality or defrauding the appearing defendants.
The facts of the case would show that the plaintiff had to file this suit for eviction and mesne profits on the ground of refusal of the appearing defendants to vacate the suit premises consequent to the lease existing between the parties coming to an end by efflux of time.
The appearing defendants did not vacate the suit premises on the expiry of the period of lease.
On the contrary, they held on to the suit premises and claimed rights to continue therein.
If at all any person that has been trying to commit any illegality or defraud others or has acted in a manner which is opposed to justice, convenience and the appearing defendants.
They contested the suit was seeking to set up a right contrary to the claim of the plaintiff to receive possession.
Till such time the decree of eviction was passed by me, the appearing defendants continued to claim rights in respect of the suit premises.
The appearing defendants claimed the right to continue to remain in possession in the suit premises till the date of the decree.
The appearing defendants claim such right to occupy in consideration of the occupation charges be payable by them.
The contract between the parties allowing the appearing defendants to remain in possession of the suit premises came to end by the efflux of time on the last date of July, 1994.
Subsequent thereto, the quantum of money payable by the appearing defendants to continue to remain at the suit premises law, is required to be if at all entitled to do so in determined as there is no contract between the parties to such effect.
It is this determination of mesne profit that was referred to learned Special Referee.
None of the ingredients laid down by the Supreme Court in New Horizon (Supra) or Skipper Construction (Supra) being satisfied I do not think it appropriate to lift the corporate veil to seek the personnel in control and management of the plaintiff.
Pursuant to my judgement and decree dated July 11, 2014, the learned Special Referee has undertaken the exercise of quantification of the mesne profits.
Both the plaintiff as well as the appearing defendants had appeared before the learned Special Referee.
Evidence disclosed before him was considered by the Special Referee.
The Special Referee upon consideration of the evidence before him is of the view that the plaintiff is entitled to a sum of Rs.47,64,251/- on account of occupation charges of the period of August 1, 1992, till August 14, 2014 being the date of