Husseinbhai Ebrahim Bohri v. The Navayug Chitrapat Co., Ltd.

Nain, J.:— This is a revision application under the provisions of s. 115 of the Code of Civil Procedure against an order dated October 7, 1963, of a Judge of the Small Cause Court at Poona, rejecting the petitioners' application for amendment of the plaint in a suit filed by them against their tenants for eviction.

2. The facts leading to this matter are that the petitioners have filed a suit for possession of certain premises consisting of three plots, included in premises at 38, Shankar Shet Road, Poona. The petitioners claim to be the owners of this property and they let it out to the respondents on August 22, 1946, for a period of 20 years under a registered lease deed and that the standard rent of the premises is Rs. 500 per mensem. The petitioners allege that the respondents are in arrears of rent and have not complied with a notice under s. 12(2) of the Bombay Rent Act. The claim of the petitioners has been opposed by the respondents on various grounds. On July 3, 1963, the petitioners made an application to the trial Court for amendment of the plaint by adding two grounds of ejectment, namely, that the respondents had not been using the suit property for a period exceeding six months for the purpose for which it was let and they also wanted to include permitted increases in their money claim. This application was rejected on October 7, 1963. Thereafter the petitioners filed a revision application under s. 29(3) of the Bombay Rent Act in the District Court at Poona. Curiously, this revision application was returned to them on June 9, 1963, for presentation to the proper Court. Under s. 29(3) of the Bombay Rent Act, it is the District Court which is the proper Court. Instead of pursuing that revision application further, on June 15, 1964, the petitioners filed the present revision application in this Court. As in any event this Court had the power to call for the record and proceedings of the lower Court and to examine whether the lower Court had failed to exercise jurisdiction vested in it by law, I condoned the delay in making the application and I have heard the application on merits.

3. The respondents raised several objections to the amendment application. The learned trial Judge considered the said objections such as delay in making the application, whether the nature of the suit would be changed by the amendment, whether any prejudice would be caused to the respondents by introduction of a new ground of ejectment which constituted a new cause of action, and came to the conclusion that the amendment application should not be rejected on these grounds. Having come to that conclusion, he, however, refused to allow the application on the ground that leave of the winding up Court was not taken for filing the amendment application under s. 446(1) of the Companies Act, 1956, as such leave had been taken in respect of the suit itself, the suit against the respondents having been instituted after they had been ordered to be wound up.

4. Section 446(1) of the Companies Act, I of 1956, reads as under:

“446. (1) When a winding up order has been made or the Official Liquidator has been appointed as provisional liquidator, no suit or other legal proceeding shall be commenced, or if pending at the date of the winding up order, shall be proceeded with, against the company, except by leave of the Court and subject to such terms as the Court may impose.”

5. Section 537(1) of the said Act reads as under:

“537. (1) Where any company is being wound up by or subject to the supervision of the Court—

(a) any attachment, distress or execution put in force without leave of the Court, against the estate or effects of the Company, after the commencement of the winding up; or

(b) any sale held, without leave of the Court, of any of the properties or effects of the company after such commencement;

shall be void.”

6. I might here mention that s. 171 of the Indian Companies Act, 1913, corresponds to the present s. 446, and s. 232 of the old Act corresponds to s. 537 of the present Act.

7. In considering whether proceedings under s. 46 of the Indian Income-tax Act, 1922 were “other legal proceedings” within the meaning of ss. 171 and 232 of the Indian Companies Act, 1913, in the case of G.-G. in Council v. S.S Mills . [1946] A.I.R P.C 16., Spens C.J observed as under (p. 21):

“…In our judgment, it need not, and therefore should not, be confined to ‘original proceedings in a Court of first instance, analogous to a suit, initiated by means of a petition similar to a plaint’. Section 171 must, in our judgment, be construed with reference to other sections of the Act and the general scheme of administration of the assets of a company in liquidation laid down by the Act. In particular, we would refer to S. 232. Section 232 appears to us to be supplementary to S. 171 by providing that any creditor (other than Government) who goes ahead, notwithstanding a winding up order or in ignorance of it, with any attachment, distress, execution or sale, without the previous leave of the Court, will find that such steps are void. The reference to ‘distress’ indicates that leave of the Court is required for more than the initiation of original proceedings in the nature of a suit in an ordinary Court of law. Moreover, the scheme of the application of the company's property in the pari passu satisfaction of its liabilities, envisaged in s. 211 and other sections of the Act, cannot be made to work in co-ordination, unless all creditors (except such secured creditors as are ‘outside the winding up’ in the sense indicated by Lord Wrenbury in his speech in Food Controller v. Cork1a, are subjected as to their actions against the property of the company to the control of the Court. Accordingly, in our judgment, no narrow construction should be placed upon the words ‘or other legal proceeding’ in S. 171. In our judgment, the words can and should be held to cover distress and execution proceedings in the ordinary Courts. In our view, such proceedings are other legal proceedings against the company, as contrasted with ordinary suits against the company.”

8. It is true that the words “other legal proceeding” in s. 446 of the Companies Act, 1956 are not to be confined to original proceedings in the Court of first instance analogous to a suit initiated by means of a petition similar to a plaint. But once the winding up Court has granted leave to commence or proceed with the suit or other legal proceeding against the Company, it cannot be that leave of the winding up Court must be obtained to commence or proceed with every application in the progress of the suit, such as an application for striking out or adding other parties, serving summons by registered post, obtaining further and better particulars of pleadings, amending pleadings, setting aside ex-parte orders or decree, getting discovery or inspection, summoning witnesses, issuing commissions, applying for adjournments or ex-tension of time for complying with the orders of the Court. In my opinion, once leave of the winding up Court is obtained to commence or proceed with the suit or other legal proceedings, no application in the progress of that suit or legal proceeding will require fresh leave of the winding up Court, and were it otherwise, it would lead to absurd results. An application for leave to amend the plaint is one such application and I hold that it does not require fresh leave of the winding up Court. The learned trial Judge has on this ground wrongly failed to exercise jurisdiction to allow amendment of the plaint which, but for this ground, he was willing to allow.

9. It has been contended on behalf of the respondents that a ground stated in the plaint for eviction of a tenant is a part of the cause of action of the suit. To add to the grounds for eviction is to add another cause of action and this changes the nature of the suit or legal proceeding and requires fresh leave of the winding up Court and, therefore, without such leave the Court has no jurisdiction to allow the amendment. Mr. Dalvi on behalf of the respondents has invited my attention to the judgment of Mr. Justice Gajendragadkar in the case of Baroda O.C Traders v. Parshottam . 1954 56 Bom. L.R 575. as to what is cause of action under s. 20(c) of the Code of Civil Procedure. A passage at page 578 reads:

“It is, however, important to bear in mind that the bundle of facts which constitute the cause of action in a civil suit does not and is not intended to comprise every fact which may be proved in evidence. It is only material facts which must be proved by the plaintiff before he can obtain a decree that constitute the cause of action. Facts which the plaintiff may allege incidentally and facts which may be brought in evidence as res gestae would not necessarily constitute a part of the cause of action. The distinction between facts which are relevant and material and those that are incidental and immaterial is sometimes not easy to be drawn; but the said distinction is nevertheless important for the purpose of deciding which facts constitute the cause of action and which are not included in it. The position under s. 20(c) is very clear. If it is shown by the plaintiff that the cause of action has arisen wholly or in part within the local limits of the jurisdiction of the trial Court, the trial Court would be entitled to deal with the suit.”

10. Mr. Dalvi has also relied on Mussummat Chand Kour v. Partab Singh . 1888 L.R 15 I.A 156.. A passage at pages 157–158 reads:

“…Now the cause of action has no relation whatever to the defence which may be set up by the Defendant, nor does it depend upon the character of the relief prayed for by the Plaintiff. It refers entirely to the grounds set forth in the plaint as the cause of action, or, in other words, to the media upon which the Plaintiff asks the Court to arrive at a conclusion in his favour.”

11. It is true that “cause of action” means every material fact which, if traversed, it would be necessary for the plaintiff to prove in order to support his right to judgment. In a suit for eviction filed by a landlord against a tenant the right to sue and to get judgment arises from the determination of the tenancy by efflux of time, expiration of notice to quit or otherwise as provided in s. 111 of the Transfer of Property Act. It is then that the landlord becomes entitled to evict or to recover possession from the tenant. Section 12 of the Bombay Rent Act provides that no ejectment shall ordinarily be made if the tenant pays or is ready and willing to pay standard rent and permitted increases. It provides a protection for the tenant against eviction after determination of tenancy. It creates an impediment in the way of the landlord recovering possession. Section 13 of the Bombay Rent Act provides certain conditions under which the protection of the tenant is taken away and the impediment in the way of the landlord recovering possession is removed. These conditions are termed “as grounds of ejectment”. It is not necessary for a landlord to set out these grounds in the notice to quit as they are not a part of the cause of action of the landlord. The landlord sets out these grounds in the plaint, not because they constitute his cause of action, but in anticipation of the tenant claiming the protection provided in s. 12, to show that conditions have arisen which have taken away the protection of the tenant and removed the impediment in the way of the landlord recovering possession. In my opinion, grounds of ejectment are not a part of the cause of action in such suit.

12. A judgment of my learned brother Bal J. in Vaishnoo Ditti v. Avtar Singh . 1967 Special Civil Application No. 112 of 1967, decided by Bal J., on June 28/29, 1967 Unrep. has just been brought to my notice. I will reproduce two passages in the said judgment showing that Bal J. also took the same view that I am taking in this matter:

“…Secondly the Appellate Court was in error in holding that the landlady had no cause of action for filing the suit unless her reasonable and bona fide requirement actually existed at the date of the notice and at the date of the filing of the suit. The cause of action for a suit for eviction of a tenant is the termination of his tenancy…

It will thus be seen that section 12(1) of the Act creates an obstacle in the way of the landlord in obtaining possession but the obstacle becomes ineffective if the requirements of one of the clauses of section 13(1) are fulfilled. The fulfilment of the requirements of any of these clauses does not create a new ‘cause of action’. The cause of action is already there. The effect of the fulfilment of the requirements of one or more of the clauses is to remove the obstacle and make it possible for the landlord to recover possession.”

13. I must also state that the leave of the winding up Court is granted to the commencement or continuation of a suit or a legal proceeding.

14. The suit in this case continues to be one for recovery of possession. The nature of the suit is not changed. Fresh grounds for ejectment do not necessitate any fresh leave under s. 446(1) of the Companies Act, 1956. For the same reasons, there is no impediment to the grant of the application under the provisions of O. VI, r. 17 of the Code of Civil Procedure.

15. In my opinion, the trial Court has failed to exercise jurisdiction vested in it by law. I set aside the order of the trial Court dated October 7, 1963 and allow the application dated July 3, 1963, for amendment. Costs to be costs in the suit. Rule made absolute.

16. Application allowed.