R.J Mehta And Co., Rep. By Its Partners Javaharia P. Mehta And Others. v. Preetam Singh

1. The unsuccessful landlord before the Appellate Authority in proceedings under the Tamil Nadu Buildings (Lease and Rent Control) Act, 1960, is the petitioner. The petitioner is a partnership company in which there are three partners, Jawaharlal Metha, Rasiklal Metha, and Bhimachandra Metha. It is admitted that this partnership, owns premises No. 79-A and B, Sembudos St., Madras, and they are in occupation of shop No. 12 in the said premises. The petitioner has also another business in the same shop No. 12 in the ground floor, the name and style of which is Bombay Hardware Syndicate. In this partnership the father of the three partners already referred to is also a partner. The claim of the petitioner partnership which we would called the A partnership, sought for possession of shop No. 13, which is adjacent to shop No. 12, in the occupation of the tenant-respondent, on the ground that the partnership business of the Bombay Hardware Syndicate (hereinafter referred to as the B Partnership) was expanding and that therefore, additional space was required by the B partnership. The A partnership therefore, filed the present application under S. 10(3)(c) of the Tamil Nadu Buildings (Lease and Rent Control) Act, 1960 (hereinafter referred to as the Act), for eviction of the respondent—tenant on the ground of requirement of additional accommodation for the business of the B Partnership. This was resisted by the respondent on more than one ground. Firstly. he would say that the petition is not maintainable under S. 10(3)(c) of the Act, as the A partnership is different from the B partnership in the eye of law, since they are two independent entities. The other ground was that, even if the application was maintainable, the hardship which might be caused to the respondent-tenant would outweigh the advantage which the A partnership might gain as a result of the eviction.

2. The Rent Controller found that the A partnership was entitled to an order of eviction and that the eviction of the tenant was for the purpose of accommodating the B partnership. On appeal the appellate Authority held that the A partnership was different from the B partnership and that, as the additional accommodation was required only for the business of the B partnership and not for the A partnership, which was the owner of the premises, the petition was not maintainable under S. 10(3)(c) of the Act, One other contention was raised before the Appellate Authority, namely, that in an earlier proceeding, the A partnership was permitted by this court (in C.R.P No. 1109 of 1973) to take proceedings on the foot that the premises was required for the B partnership and that therefore that decision would operate as res judicata. This was also negatived by the Appellate Authority on the ground that the casual observation made in C.R.P No. 1109 of 1973 would not amount to a decision in favour of the A partnership. In the result, the Appellate Authority allowed the appeal of the respondent and set aside the order of the Rent Controller directing eviction.

3. The same contentions are repeated before this Court. We shall now take up the question whether by reason of certain observations made earlier by Varadarajan, J. in C.R.P No. 1109 of 1973, the plea of the tenant is available to him and whether the A partnership could maintain its petition under S. 10 (3) (c) of the Act. The A partnership filed an earlier petition in the year 1966, H.R.C No. 3280 of 1966 against the same tenant on the ground that the tenant had ceased to occupy the shop No. 13 and that the said shop was required as additional accommodation by the A partnership. Both the Rent Controller and the Appellate Authority did not agree with the case of the A partnership. In the course of the proceedings the A partnership sought for amendment of the petition and claimed that the additional accommodation was required for the purpose of the sister concern, namely, the B partnership. The original authorities dismissed the application for amendment and a revision petition to this court was also dismissed. When a civil revision petition was filed against the final order of rejection by both the Rent Controller and the Appellate Authority, Varadarajan, J. did not find any error in the appreciation of evidence by the tribunals below nor any point of law in the case. While dismissing the petition, however, Varadarajan, J. made the following observation—

‘If so advised, the petitioners may file a separate petition for the requirement of Bombay Hardware Syndicate.”

Based on this observation it is contended that the A partnership has gained an advantage in law and that the present objection as to the maintainability is barred under the principles of res judicata, under S. 19 of the Act. It is very well-known that in the doctrine of res judicata no magic is involved, but it is essentially a pragmatic principle which has to be applied on the facts and circumstances of each case. A decision in an earlier case is res judicata in a later case concerning and relating to the same subject matter, if as between the same parties the issue in question was heard and finally decided as between them. It may also operate as res judicata in a case where such an issue might and ought to have been raised in the earlier proceedings. These two fundamental concepts involved in the doctrine of res judicata do not appear in the instant case. This is so, because Varadarajan, J. casually observed, though it does not appear to have been necessary for the adjudication of the case, that, if the A partnership was so advised, they could file an application under S. 10(3) (c) of the Act for evicting the tenant on the ground that shop No. 12 was required for the B partnership. This was a very casual observation which was not the resultant of adjudication on an issue which arose directly and substantially in the proceedings. It therefore, follows that such an observation made presumably at the request of counsel and that too casually, without an appraisal on the various facts which are relevant for consideration of an application under S. 10 (3) (c), cannot operate as ers judiccta. The Appellate Authority was right in having rejected this objection raised by the A partnership.

4. The other contention of the tenant is that the application is not maintainable under S. 10 (3) (a) of the Act. There is considerable force in this contention. When the petition came up earlier before this court, an opportunity was given to the A partnership to produce the relevant accounts and the assessment orders made by the Income-tax Department to show that there is a collation of interest as between the A partnership and the B partnership in the sense that the profit and loss of one firm were taken as the profit or loss of the other firm. The landlord has produced three statements of accounts. On the basis of such accounts produced (copies of which were served on the other side) thecontention is that, though physically and legally the A partnership and the B partnership were not the same, yet practically they are one. In order to sustain this contention, it is stated that the B partnership has advanced a sum of Rs. 2,63,286 without interest to the A partnership for the purchase of this property and that therefore, there is such an identity of interest between the two partnerships.

5. A partnership is a relationship, though springing from a contract and the result of an agreement between persons, who are competent to contract and consent inter se to become partners. Our legislature has defined partnership as a relation between persons to share the profits of a business carried on by all or any of them acting for all. Thus, in order to constitute a valid partnership under the Indian partnership Act, essentially there should be an agreement between the persons who so associate themselves and that agreement should be to share the profits or losses of that business and that business must be carried on by all or any of the other persons concerned, acting for all. Such an essential community of interest in the capital employed, in the general administration of the concern and in the sharing of profits is the basis of a partnership relation. The Supreme Court in Dulichand v. Commissioner of Income-tax . A.I.R 1956 S.C 354. observed:—

‘'In our opinion, the word ‘persons’ in S. 4 of Indian Partnership Act, which has replaced S. 239 of the Indian Contract Act, contemplates only natural or artificial i.e, legal persons, and, for the reasons stated above, a firm is not a ‘person’ and as such is not entitled to enter into a partnership with another firm or Hindu undivided family or individual.” This does not mean that if a firm enters into a partnership with another firm, the compendious partnership is unlawful on that ground. It can only be explained thus, that all the persons in the joining firm will become partners in the amalgamated firm in their individual capacity.

6. This being the legal position, though the A partnership consists of three partners and the B partnership consists of four partners of whom three are those of the A partnership, an identity of interest as between the A partnership and the B partnership cannot be culled out, even though the fourth additional partner in the B partnership is the father of the other three persons who constituted the A partnership. Such an independent existence of the two partnerships has to be recognised and implemented, and therefore, any policy decision by the A partnership can only be with reference to its own firm and cannot have an impact on the other firm and vice versa. If such an identity of interest and legal existence has to be maintained, then the A partnership, which is a separate and distinct entity, cannot seek for possession of the property under S. 10 (3)(c) of the Act for the benefit of the B partnership, which has an existence of its own, governed by a contract of its own and worked on the terms and conditions agreed upon by the partners of the B partnership. S. 10 (3) (c) is intended to apply to a person, who seeks additional accommodation for his own purposes. Even if the word ‘person’ appearing in S. 10 (3) (c) of the Act can be equated to an artificial or legal person like a partnership, the additional accommodation asked for by that partnership should be for its own purpose and for its benefit and not for a different entity which is distinct in the eye of law and which has functions separate from those of the firm asking for such additional accommodation.

7. Factually also in the instant case, the income-tax returns filed before this court do not show such an identity of interest or exchange of profits and losses of one firm with the other. The mere fact that the B partnership has advanced a large sum to the A partnership for the purchase of the property would only make the B partnership a creditor of the A partnership. The additional factor that interest is not charged by the B partnership would not submerge it in the legal entity of the A partnership. No doubt in C.R.P 1109 of 1973, an observation, presumably at the request of counsel, was made by this Court to the effect that the A partnership might take proceedings for the eviction of the respondent on the foot that the demised premises were required for the B partnership. It cannot be understood that Varadarajan J, examined the position from all aspects and adjudicated upon the real issues under consideration, when he said—

‘If so advised, the petitioners may file a separate petition for the requirement of Bombay Hardware Syndicate.”

In fact, this Court did not say that an application for the above purpose could be made by the A partnership under S. 10 (3) (a) of the Act. Having regard to the distinct nature of the two firms, which existed by themselves and on their own, the order of the Appellate Authority has to be sustained. The application under S. 10 (3) (c) of the Act, made by the petitioner A partnership, that the demised premises were required for the B partnership, which is independent in itself, is not sustainnable in law.

8. The civil revision petition, therefore fails, and is accordingly dismissed. There will be no order as to costs.

VCS