Panna Lal Girdhari Lal vs Uma Devi and Others

Devinder Gupta, A.C.J.

This appeal has been preferred against the order passed on 24.7.1998 by learned Single Judge deciding an important issue about tenancy, which alone appears to be the bone of contention amongst the parties. By the said order, learned Single Judge answered the issue "whether defendant No. 7 is a tenant of one shed, two rooms and a common bath room and lavatory in the suit property" in negative holding that the claim of tenancy by defendant No. 7 has not been proved. While answering the said issue, liberty was reserved to the plaintiff to apply for passing a final decree. Preliminary decree in the suit filed by the plaintiff Uma Devi was passed on 24.8.1980. Before proceeding further in the matter, it will be necessary to give a brief description of the parties to the suit and about their other relations, whose reference came up during course of this hearing. Hari Krishan, Brij Krishan, Gopal Krishan, Chander Krishan and Avtar Krishan are sons of Bal Krishan Das. Uma Devi, Vimla Devi, Jaswanti, Sheela Gupta and Swarna Gupta respectively being wives of the five brothers. Ram Kala Devi is wife of Bal Krishan Dass. Gopal Krishan died on 27.6.1979. His wife Jaswanti Devi pre-deceased him on 13.7.1973 leaving behind two children Balraj Krishan Dass son and Anjali (daughter). Balraj Krishan was born on 27.9.1957.

On 9.7.1959, a suit for partition of property bearing Municipal No. 795-809, Joshi Road, Karol Bagh, New Delhi was filed by Smt. Uma Devi wife of Shri Hari Krishan impleading Vimla Devi, as defendant No. 1 Sheela, as defendant No. 2, Swarna, as defendant No. 3, Ram Kala Devi, as defendant No. 4; Balraj Krishan, as defendant No. 5 and Ms. Anjali as defendant No. 6. M/S Parma Lal Girdhar Lal Pvt. Ltd. a company incorporated with Bal Krishan Das, Managing Director and his four sons Shri B.K. Gupta, Shri Gopal Krishan Gupta, Shri Chander Krishan Gupta and Shri Avtar Krishan Gupta being the directors, all having 250 equity shares, was impleaded as defendant No. 7.

In the suit, it was alleged that the property was joint with 1/5th share each held by plaintiff, defendants 1, 2, 3 and defendants 4 to 6 together. It was also alleged that defendant No. 7 M/S Panna Lal Girdharilal was claiming tenancy rights in the property but had no right, title or interest of any kind. The plaintiff alleged that other co-owners of the property (defendants 1 to 6) were tying to make benefit for themselves in the garb of defendant No. 7 company thereby to deprive the plaintiff of the value of the property. Their object being to undermine the value of the property. Possession of defendants 1 to 6 in the property was only as co-owners and not of defendant No. 7 which was a bogus company, therefore, in the suit for partition, defendant No. 7 was also impleaded as a necessary party or in any case a proper party since the other co-owners, namely, defendant No. 1 to 6 had put forward a claim of tenancy rights in the name of defendant No. 7 company. Consequently, the plaintiff prayed for a decree for partition and also prayed that by partitioning the property, possession of the portion in occupation of the co-owners be taken as vacant.

At this stage, it may be mentioned that the names of Smt. Ram Kala Devi (defendant No. 4) and Anjali (defendant No. 6) were ordered to be deleted on 21.4.1980. There was no dispute as regards ownership of the property. It was admitted that the property was owned in equal shares by Uma Devi, Vimla Devi, Shiela Gupta, Swarna Gupta and Balraj Krishan Gupta. In the written statement filed by defendant No. 1 Smt Vimla Devi, it was pleaded that defendant No. 7 M/S Panna Lal Girdharlal Pvt. Ltd. are the tenants in part of the suit property since 1.8.1973 with one shed, two rooms for office purposes and common bath room and lavatory and had been regularly paying rent to the co-owners. Rest of the portion of the property was in occupation of M/S Victor Cables Corporation, as a tenant. It was also alleged that defendant No. 7 has the tenancy rights in the property in suit and M/S Victor Cables Corporation had also tenancy right in the suit property through M/S Victor Cables Corporation had not been impleaded as a party to the suit.

Defendant No. 7 also filed separate written statement pleading that it was a tenant in apart of the property since 1.8.1973 and was in actual possession of a shed where its machinery and stores were lying and was also in occupation of two rooms for office purposes besides a common bath room and lavatory and was regularly paying rent to the co-owners since 1.8.1973.

On 28.4.1980, a preliminary decree was passed to the effect that the plaintiff and defendants 1 to 3 and 5 have 1/5th share each in the property. Since tenancy rights were under dispute the following issue was framed:-

Whether defendant No. 7 is a tenant of one shed two rooms and a common bath room and lavatory in the suit property.

Onus of the issue was placed on defendant No. 7. Parties were given liberty to file documents. Local Commissioner was also appointed on the same day to determine whether the suit property is partible by metes and bounds and if so, the mode of partition. The Commissioner was also asked to report, assuming that defendant no. 7 is a tenant of the portion, alleged to be in the tenancy of defendant No. 7. On 17.5.1982 learned Single Judge in his order on the application filed under Order 40 rule 1 CPC, noticed that preliminary decree had been passed, local Commissioner had not submitted his report and the controversy in the present case was very limited, the property was open to partition and in case it was not partible, it can be sold; it is only the claim of defendant No. 7 which was affirmed by defendant No. 1 about the tenancy over a small portion which was delaying the final disposal of the suit. Learned Single Judge thus observed that the controversy about tenancy of defendant No. 7 over a small portion should not stand in the way of passing final decree and in case it is found by the Commissioner that the property is otherwise not partible the proper and the only course available would be to sell it and the matter relating to the rights of defendant No. 7 to remain in possession as tenant or otherwise, can be left over to be tackled by the purchaser. It was further observed that in a suit for partition, primarily right of the co-owners, have to be determined and severed from joint ownership. The incidents of tenancies of third persons can be left over for determination to the person, who gets the exclusive ownership of a particular portion or the purchaser who purchases the property.

The above observations were made prima facie on the course of action, which according to learned Single Judge ought to have been adopted. Irrespective of this, the parties went to trial and led full evidence, which was in their possession and power on the said issue, which was framed. Learned Single Judge in the impugned order dealt with the evidence and concluded that creation of existence of tenancy rights at a nominal rent, greatly denudes the value of the property in the hands of owners, therefore, it is difficult to believe that a co-owner would create a tenancy of such a valuable property in favour of a private limited company controlled by another co-owner, without executing a single document. On appreciation of evidence, learned Single Judge concluded that defendant No. 7 had failed to prove creation of tenancy in its favour. Feeling aggrieved defendant No. 7 has preferred this appeal in which the appellant is fully supported by respondent no. 5 Vimala Devi, who was impleaded in the suit as defendant No. 1.

We have fully appreciated the submissions made at the bar and gone through the record. Before proceeding further we may notice certain admitted facts. Firstly, about the ownership of property. On 29.11.1957 by virtue of sale deed Ex. P1 Smt Uma Devi wife of Shri Hari Krishan, Smt Vimla Devi wife of Shri Brij Krishan and Smt Jaswanti wife of Gopal Krishan jointly purchased the property in equal shares. By virtue of subsequent sale deed Ex. P2 dated 28.5.1971 Smt Uma Devi, Smt Vimla and Smt Jaswanti jointly sold, in favour of Smt Sheela Gupta and Swarna Gupta, their undivided share, to the extent of 1/5th out of 1/3rd each. Thus, in a nutshell, by virtue of these two sale deeds the five ladies Uma Devi, Vimla Devi, Jaswanti, Sheela and Swarna, became full owners to the extent of 1/5th share each. On 29.11.1957 when Uma Devi, Vimla Devi and Jaswanti purchased the property, it was occupied by tenants and was yielding a total rent of Rs. 211/- per month. Sale deed Ex. P2 recites that the property was in occupation of 14 tenants at a monthly rental of about Rs. 470/-. Admittedly, there were 13 tenants occupying thirteen shops, who were paying total rent of Rs. 127/- per month. The entire rear portion was under the tenancy of fourteenth tenant, a partnership firm of Bhagwan Dass Babu Ram, who paid the rental of Rs. 340/50 per month. This partnership firm Bhagwan Dass Babu Ram was re-named as Victor Cable Corporation and admittedly in the year 1968 consisted of five partners, namely, Hari Krishan, Brij Krishan, Chander Krishan, Gopal Krishan and Avtar Krishan, five sons of Shri Bal Krishan Dass.

It is also an admitted fact and has also come in evidence that Hari Krishan was not taking any effective part in this partnership with effect from the year 1972 and there is evidence on record that he was almost ousted from the partnership. He had in fact later on filed suit for dissolution of partnership and by a decree passed with consent on 3.12.1975 he retired from the partnership.

We have already noticed the constitution of defendant No. 7 that it is a private limited company comprised of five partners of which four brothers Brij Krishan, Gopal Krishan, Chander Krishan and Avtar Krishan are the directors with Shri Bal Krishan Dass, their father as the Managing Director.

The question for determination is that whether or not any tenancy was created in favour of defendant No. 7. The case of defendant No. 7 (appellant) and of defendant No. 1 (respondent No. 5) had been that the tenancy was created with effect from 1.8.1973. What has been tried to be projected in the evidence is that in the year 1968 Victor Cables Corporation had surrendered a portion of the premises which earlier was in its tenancy, in favour of the landlords/co-owners. According to the appellant and respondent No. 5, the said portion continued to be with the co-owners having been surrendered in 1968. It was let out with effect from 1.8.1973 in favour of the appellant, in order to find an answer to the question firstly it will be necessary to find out whether there has at all been surrender or not. For this we have to make reference to the evidence but before coming to evidence, we will note down the case, which was argued on behalf of the appellant before us.

The appellant urged that it has been in occupation of the tenanted premises since August, 1973 and has been paying rent regularly to the co-owners which used to be collected by Mathura Pershad against receipts. Rent so received was regularly divided between the co-owners and was duly entered in the appellant''s books of account year after year; balance sheets were drawn and were duly signed by all the directors including the father of respondents 2, 3, 4 and 5. The balance sheets reflect the rent paid by the appellant to the owners of the property. For the convenience the rent was paid in cash as there was no joint bank account, therefore, the same finds mention only in the cash book. From time to time the cash along with cash receipts, from the other tenants, was also collected and deposited by Mathura Pershad in the cash books of M/S Victor Cables Corporation, where an account of Joshi Road property was being maintained. It was submitted that husband of respondent No. 1 Shri Hari Krishan has been withdrawing amounts for his personal needs from the said cash being deposited by Mathura Pershad from time to time.

It was also urged that the reason for filing suit and claiming separate possession appears to be that in 1975 there arose disputes between the partners of Victor Cables Corporation. Shri Hari Krishan filed suit for dissolution of partnership and ultimately the suit was compromised on 3.12.1975. Hari Krishan retired from the partnership. During 1978-79 Shri Balraj Krishan, husband of respondent No. 5 detected various serious financial irregularities in the factory of Victor Cables Corporation for which Chander Krishan, husband of respondent No. 2 was questioned, who was unable to explain the cause which led to further disputes between the partners of Victor Cables Corporation. In the meanwhile, Gopal Krishan fell ill and was taken to U.S.A. for treatment. Unfortunately, he died on his return on 27.6.1979. Chander Krishan, who had by that time been exposed, found an opportunity on the death of Gopal Krishan to settle the disputes with the husband of respondent No. 5. He took sides with Hari Krishan, the husband of respondent No. 1 and filed Company Petition No. 60/79 against the appellant and its directors and also filed suit for dissolution of Victor Cables Corporation. Victor Cables Corporation was sold by orders of the Court on 1.4.1980. C.P. No. 60/79 was decided on 6.11.1981 against C.P. Gupta and his subordinate director A.K. Gupta. Company Court ordered that shares of these persons be purchased by B.K. Gupta and his son Balraj Gupta against share value fixed by the Court, which included the value of all the assets and liabilities. During pendency of the said C.P. No. 60/79; it was brought to the notice of Company Court that respondent No. 2, 3 and 4 in collusion with respondent No. 1 were trying to prevail upon the Court nominee to surrender the tenancy rights of the premises taken on record. The Company Court immediately injuncted the appellant and the court nominee from surrendering the tenancy. After the Company Court had injuncted the appellant and the court nominee Shri Bal Krishan Gupta not to surrender the tenancy of the property, respondent No. 1, 2, 3 and 4 forced the Court nominee to sign an affidavit on 15.10.1980 to the effect that there was no tenancy. Thus, it was urged that the affidavit is null and void, in view of the order of the Court dated 15.9.1980, which was made absolute on 24.10.1980.

In the above background, it was urged that the present suit was filed by respondent No. 1 after four years since her husband retired from the business of Victor Cables Corporation. Several other suits had been filed by the husband of respondent No. 1, who knew about the tenancy but they were waiting for an opportunity to take up a dispute. Chander Krishan, who had been exposed, joined hands with the husband of respondent No. 1, who is the head of the family, started filing several cases including suit for partition of the suit property and for winding up of business of Victor Cables Corporation. It was urged that a valid tenancy was created. Rent was being realised by the co-owners and appeal deserves to be allowed.

On behalf of the respondents common arguments were addressed that in order to succeed it was necessary for the appellant to have led cogent and reliable evidence about surrender of part of the tenancy by Victor Cables Corporation in favour of the co-owners and then of creation of tenancy on 1.8.1973 by the co-owners in favour of the appellant. It is urged that none of these have been proved, rather the circumstances lead to only one inference that it is a fake tenancy, which has been set up only to deprive the plaintiff of valuable rights in the property. It is a matter of common knowledge that property with tenants would not fetch same amount as compared to a property without tenants or in case it is self occupied.

On behalf of defendant No. 7/appellant, Brij Krishan Gupta, appeared in witness box as DW 7 and stated that M/S Panna Lal Girdhar Lal Pvt. Ltd was incorporated in August, 1973. Property in suit was purchased in 1959. A portion of the same was already with M/S Bhagwan Dass Babu Ram and there were 13 more tenants in the property. Later on, the name of the partnership (M/S Bhagwan Dass Babu Ram) was changed to M/S Victor Cables Corporation in 1961, which was having a shed constructed where its factory was functioning. In 1968 the factory was shifted to Sahibabad, U.P. The tenancy was surrendered. Till that date entire area was in possession of Victor Cables Corporation barring those 13 tenants. When factory of Victor Cables Corporation was shifted to Sahibabad a portion of the suit property was handed over to the owners. In 1973 the said portion, which had been handed over to the owners was let out by the owners at the rental of Rs. 100/- per month to defendant No. 7/appellant company (M/S Panna Lal Girdhari Lal Pvt. Ltd. He made reference to plan Ex. D7W3/1 reflecting the portion, which was given to the appellant company and assigned reason that why the premises were taken on rent by the appellant company saying that factory of the company was located in Turkman Gate in March, 1973. In the partition between his father and uncles the property at Turkman Gate was divided into two parts. Factory came to the share of his father and enough space was not available for storing the machinery, therefore, it became necessary to have other premises. For that reason the premises was taken on rent by the company. DW 7 further stated that Mathura Pershad on behalf of the owners was recovering rent from the company and also from the other 13 tenants. Receipts issued by Mathura Pershad were proved by him as Ex. D7W3/2 to Ex. D7W3/7 saying that he was familiar with the signatures of Mathura Pershad, an employee in the firm M/S Victor Cables Corporation for a number of years. Rent collected by Mathura Pershad used to be reflected in the books of account of Victor Cables Corporation. An account was opened in the books of account of the said partnership firm under the heading Joshi Road Property Account. Books of accounts of partnership firm for the subsequent period were in possession of Chander Krishan. The books of accounts for earlier period were not traceable.

During cross examination, DW 7 deposed that the appellant company i.e. defendant No. 7 was incorporated on 3.8.1973 vide R, O, C, No. 6749 under the Companies Act, 1956. Rent receipt Ex. D7W2/1 was the first rent receipt issued by Mathura Pershad for the period from 1.4.1974 to 30.6.1974, which rent is stated to have been received in cash by Mathura Pershad for and on behalf of the owners including Smt. Jaswanti Gupta. Receipt is dated 29.6.74. He was asked a question as to whether Smt Jaswanti Devi was alive on the date of the receipt to which he replied that Jaswanti Devi died in the year 1973. He stated that the tenancy came into being from August, 1973 but he does not remember the exact date or the place where tenancy was created. He was also unable to state that who were present at the time the tenancy was created. He stated that no security was given to the co-owners and that the company paid rent in cash to Mathura Pershad who was authorised by five co-owners to receive rent. He also admitted that Jaswanti had died in the year 1973 i.e. prior to 1.8.1973, the date when the tenancy was created and her son Balraj was minor on 1.8.1973 his date of birth being 27.9.1957.

Mathura Pershad appeared as D7W2 and stated that he was an employee of Victor Cables Corporation from 1956 to 1980. The partners of Victor Cables Corporation had appointed him to collect rent in respect of Joshi Road Property. He used to collect the rent and issue receipts. He proved receipts Ex. D7W2/1 to D7W2/d8 pertaining to M/S Panna Lal Girdhari Lal Pvt. Ltd, defendant No. 7. He stated that the receipts are not signed by the owners of the property rather he executed the receipts on behalf of the owners. He also admitted that in 1972 and onwards Hari Krishan rarely used to come to the premises of Victor Cables Corporation and admitted that no authority was given to him by Smt. Uma Devi entitling or enabling him to issue any receipt for the property in question. He also admitted that he never paid the rent, received by him, to the owners. He stated that the rent collected by him vide the receipts was paid by him to the partners of M/S Victor Cables Corporation. The manner and method in which the amount was paid by him is not stated.

Brij Krishan during his statement admitted that the rent, which was being paid by Victor Cables Corporation at Rs. 340/- per month continued to remain so till the year 1980 when this Corporation was sold out. There was no change in the rent. Even according to him when the portion of the property was surrendered, there was no reduction in the rent. One shed and two rooms which were surplus for the requirement of Victor Cables Corporation, due to shifting of its factory were surrendered to the co-owners, who were also family members. This very shed and two bed rooms were given in the month of August, 1973 on rent to defendant No. 7 company at the rate of Rs. 100/- per month inclusive of water and electricity charges.

In the light of this evidence, which was adduced, we have to answer the question before us. One important aspect which can be noticed is that in receipts Ex. D7W2/1 to D7W2/8 and Ex. D7W3/2 to D7W3/6 the rent is stated to have been realized by Mathura Pershad, who admittedly signed the receipts in token of having received the rent for and on behalf of Smt Uma Devi, Vimla Gupta and Jaswanti Gupta. All receipts, as we have noticed above, are for the period from 1.4.1974 onwards till the year 1978. On top of the receipts a rubber stamp has been affixed except for one receipt. This rubber stamp includes the names of Uma Devi, Vimla and Jaswanti Gupta. Witness Mathura Pershad admitted that he was not given any authority, oral or otherwise, by the owners. He was in fact appointed or nominated by Victor Cables Corporation to collect rent for and on behalf of the owners. Victor Cables Corporation was not the owner of the property. It was an occupant in the property as a tenant. Receipts are shown to have been issued in the name of Jaswanti Gupta also, who had already expired much prior to the alleged creation of the alleged tenancy on 1.8.1983. She expired as per the death certificate Ex. D5/2 on 13.7.1973. Her son was born on 27.9.1957, as per certificate Ex. D5/1. He was minor on the date of the alleged creation of tenancy. There was no authorization on his behalf. No authorization on behalf of others has also been proved on record. There is no payment directly made to the owners. What was pointed out was that the rent was being collected in cash and was being deposited in one of the accounts maintained with Victor Cables Corporation by the name of Joshi Road property. From that account some cash amount was also being withdrawn by the husband of the plaintiff. There is also no evidence on record to suggest that such withdrawal of the amount by the husband of the plaintiff was to the knowledge of the plaintiff or that it was being paid as rent or that the appellant was paying rent. There is no convicting oral evidence of any surrender having been made. Facts brought on record nowhere prove that there was surrender at all since Victor Cables Corporation continued to pay for subsequent period same amount of rent which was being paid even prior to 1968. Receipts, as we have already noticed were unauthorisedly issued by Mathura Pershad. Authenticity and genuineness of the same is highly disputed. All the receipts appear to have been prepared at one point of time. Death of Jaswanti Devi was known even to Mathura Pershad as per his statement. In case Jaswanti Devi had expired there was no occasion for him to have included in his own hand the name of Jaswanti Gupta and issued receipts in her name. Smt. Jaswanti was succeeded by her minor son. He even failed to prove any authority on behalf of the owners. It has thus to be held that there was no surrender. In case there was no surrender, the entire case of creation of tenancy in favour of defendant No. 7/appellant on 1.8.1973 or any other date must fail.

Reference at this stage may also be made to the decision of Supreme Court in Pusibai Rathi (Smt) Vs. Sri Raghavendra Rice Depot and Another, in which it was held:-

One other important finding based on evidence is that it has not been proved that Gaddam Subba Rao surrendered the possession of the schedule premises to the landlady and that then it was let out to Gaddam Raghavendra Rao. Admittedly there is no documentary evidence to show that there was such surrender and no delivery receipt is produced. On the basis of all these materials the Rent Controller held that Gaddam Subba Rao has taken a false plea of surrender and that both father and son were in collusion in order to play fraud on the landlady.

In the instant case, there is an additional factor which deserves to be noticed. Ex. P2 is a sale deed executed on 28.5.71. By this deed Uma Devi, Vimla Devi and Jaswanti Gupta jointly parted with portion of their share in favour of Sheela Gupta and Smt Swarna Gupta. It is recited in the sale deed that there were 14 tenants in the property. Sale deed is witnessed by Mathura Pershad, who is none other than the one who proved receipts aforementioned. Admittedly, there were 13 tenants in front portions occupying shops, 14th tenant being Victor Cables Corporation. Had there been any surrender on that date, this fact ought to have been mentioned in the deed. Such fact is not mentioned in the sale deed. Entire property is shown to be in occupation of the tenants. No portion of the property is shown to be self occupied by the co-owners. This is contrary to the case set up by defendant No. 7.

Tenancy is created by contract either express or implied or by statute. Tenancy cannot be created by an unilateral act. There must be, like any other contract, an offer by one party and its acceptance by the other party. The contract must be expressed or implied but tenancy is always created by an agreement between the two parties one being the lessor and the other being the lessee.

In the light of the oral and documentary evidence produced on record, it nowhere stands established that with effect from 1.8.1973 any tenancy was created in favour of defendant No. 1 by the co-owners. Admittedly, one of the co-owners was not alive on that day. She had been succeeded by her minor son on that day. There is no material on record that there was an agreement entered into with regard to the suit property or any part thereof or there was any offer to take any part of the property on lease. The mere fact that some amount is shown to have been deposited in the accounts of M/s. Victor Cables Corporation or that from that account some amount is shown to have been paid to the husbands of the five ladies will not make any difference or amount to creation of tenancy in favour of respondent No.

There was also no occasion for having creating any tenancy. Circumstances brought on record point out otherwise that M/s. Victor Cables Corporation continued to pay same amount of rent even after the alleged surrender or creation of tenancy though the said portion was in occupation of M/s. Victor Cables Corporation, which is stated to have been surrendered. Having come to the aforementioned conclusion, we find no infirmity in the impugned judgment of learned Single Judge and find no force in the appeal, which is hereby dismissed with costs.