Punjab National Bank vs Prem Chand Gupta and another

Jai Singh Sekhon, J.—The premises in dispute located at Timber Market, Ambala Cantt, belonging to Shri Prem Chand Gupta was taken on rent of Rs. 1482/- per month, besides Municipal tax etc, by the Hindustan Commercial Bank, Ltd., Kanpur, on 25th January, 1977. The landlord filed application before the Rent Controller for fixation of fair rent u/s 4 of the Haryana Urban (Control of Rent and Eviction) Act, 1973 (hereinafter called the Act). The learned Rent Controller accepted this application and fixed the fair rent at Rs. 1813-10 NPs. Being aggrieved against the said order, the Hindustan Commercial Bank Ltd. went in appeal u/s 15 of the Act before the Appellate Authority, Ambala During the pendency of this appeal, the Hindustan Commercial Bank was amalgamated with the Punjab National Bank vide Central Government Notification No. 17/2/86-B.O. III (ii), dated 18th December, 1985. The Punjab National Bank then moved an application under the provisions of Rule 10 of Order 22 of the CPC for its substitution as Appellant, contending that by virtue of the notification issued by the Central Government u/s 45 of the Banking Regulation Act, 1949, all the rights and liabilities, including its right to tenancy etc. of the Hindustan Commercial Bank has since been acquired by the Punjab National Bank This application was resisted by the landlord contending that the transfer of these rights of the premises in dispute in favour of the Punjab National Bank by the original tenant Bank amounted to sub letting or transfer of right under the lease and thus under the provisions of Section 13(2)(ii)(a) of the Act, the tenant as well as the sub-tenant are liable to be ejected. It was also contended that the landlord had already filed an application for ejectment on this very ground before the Rent Controller. The learned Appellate Authority vide its order dated 10th March, 1987, dismissed the application of the Punjab National Bank by holding thus the transfer of rights under the lease as also the sub letting of the premises without the written consent of the landlord, would certainly be a good ground for ejectment and that the Punjab National Bank has not become a tenant of the premises in dispute. Reliance in this regard was placed on the decision of this Court in Produce Exchange Corporation Ltd. Hoshiarpur v. Som Nath son of Nanak Chand (1983) 85 P.L.R. 364, Parasram Harnand Rao Vs. Shanti Parsad Narinder Kumar Jain and Another, besides of the Andhra Pradesh High Court in M.A. Khader v. M/s. General Radio Appliances (P) Ltd. AIR 1977 A.P. 115. Thereafter, the appellate Authority disposed of the parent appeal on 21st March, 1987 by hearing the learned Counsel for the Hindustan Commercial Bank and reduced the fair rent to Rs. 1778-90 Paise per month on the basis of some mistake on the part of the Rent Controller in calculating the same.

Feeling aggrieved against the said orders, the Punjab National Bank has come up in this revision petition, which was admitted by D.V. Sehgal, J. mainly against the order of the Appellate Authority dismissing the application of the Punjab National Bank under the provisions of Order 22 Rule 10 of the Code of Civil Procedure.

I have heard Mr. M.L. Sarin, learned Senior Advocate, for the petition and Mr. Ashok Aggarwal, learned Senior Advocate for the Respondent, besides perusing the record.

There is no dispute between the parties that transfer of any right under the lease or sub letting the premises in dispute by the tenant without the written consent of the landlord is a good ground for ejectment under the provisions of Section 13(2)(ii)(a) of the Act. The relevant provisions of the said Act run as under:

Eviction of tenants.--(1)....

(2) A landlord who seeks to evict his tenant shall apply to the Controller, for direction, in that behalf. If the Controller, after giving the tenant a reasonable opportunity of showing cause against the application is satisfied...

(ii) That the tenant has after the commencement of the 1949 Act, without the written consent of the landlord.

(a) transferred his right under the lease or sublet the entire building or rented land or any portion thereof:

Obviously, such transfer of right and subletting pertains to the volitional and voluntary act of the tenant and does not cover those contigencies whereby operation of any law or statute such transfer of right or subletting of the leased property takes place. This view is supported from the findings of a Single Bench of this Court in Shrimati Brij Rani v. Punjab Handloom Weaver Apex Co-operative Society Ltd. 1976 Rent C.J. 322 wherein it was held that the transfer of the rented premises by the Punjab Handloom Weavers Apex Co-operative Society Ltd., in favour of the Haryana Handloom Weavers Apex Co-operative Society Ltd., without the written consent of the landlord would not amount to subletting or transfer of any lease rights and entail the ejectment of a tenant as such transfer was the result of the provisions of the Punjab Reorganisation Act (31 of 1966) creating some areas of Punjab as Haryana State. The relevant observations of the Court run as under:

Held that under Sub-clause (a) of Clause (ii) of Sub-section (2) of Section 13 of the East Punjab Urban Rent Restriction Act, 1949, a tenant is liable to ejectment if after the commencement of the Act, he transfers his right under the lease or sub-lets the buildings rented out to him without the consent of the landlord. The transfer envisaged by the sub clause is thus a voluntary transfer and not a transfer which takes place by operation of law and without any act of volition on his part. The transfer of tenancy rights in the shop in question in favour of the Haryana Society took place by reason of a scheme prepared under the provisions of Section 5-D of the Multi-Unit Co-operative Societies Act, 1942, which was added thereto by Section 70 of the Punjab Re-organisation Act, 1966. It is true that the scheme was not approved under Sub-section (2) of Section 5-D and had to be referred to Tuli, J. of the Punjab and Haryana High Court by the Central Registrar under Sub-section (3) of that section and was approved subject to various financial adjustments by Tuli, J., on the 19th of April, 1971, long before which date transfer of the tenancy rights in favour of the Haryana Society had taken place but that circumstance does not stand in the way of the scheme being operative right from the 1st day of November, 1966. Sub-section (1) Section 5D of Multi-Unit Co-operative Societies Act, clearly lays down that notwithstanding any thing contained in Sub-sections (2), (3) and (4) of Section 5-A of that Act or any other law for the time being in force, a scheme prepared by the Board of Directors and certified by the State Government shall be binding on all Societies affected by it. It further states that no such scheme shall be given effect to before the 1st day of November, 1966. The result is that any scheme prepared and certified before that date becomes operative as from that date even though it is approved neither under Sub-section (2) nor under Sub-section (3). The only requirement of a scheme in order that it may become operative is that it shall be prepared by the Board of Directors and certified by the State Government before the 1st day of November, 1966. That the scheme with which the High Court is concerned was so prepared and certified is common ground between the parties. There was, therefore, no impediment in the way of its becoming operative as from that date. The only limitation on its operation was that it was to be subject to such financial adjustments as might be directed in that behalf under Sub-section (3). Such adjustments are a matter with which the transfer of the tenancy rights has no concern. Further the contention that the word ''depot'' used in the scheme does not include the tenancy rights in the premises in which the depot was being run, cannot be agreed to In the context in which it is used the word ''depot'' was intended to have the widest meaning so that it would include not only the goods being in the premises of the depot but also all its assets and liabilites. The rights of tenancy in the shop were rights in immovable property and formed one of the valuable assets of the Punjab Society and would, therefore, be transferable to the Haryana Society under the scheme. Petition fails and is dismissed.

Thus, in the above-referred authority, A.D. Koshal, J. (as he then was) had not only taken the view that the transfer of lease rights by operation of law and without the written consent of the landlord would not entail the ejectment of the tenant under the provisions of Section 13(2)(ii)(a) of the Act, as also in those cases where such act of transfer was not volitional on the part of the tenant.

Subsequently, an almost similar controversy came under the observations of D.S. Tewatia, J, (as he then was) in Produce Exchange and Another v. Som Nath (1983) PL.R. 364. That case related to the ejectment of the tenant on the ground of subraetting by M/s. Produce Exchange Corporation Limited to M/s. Karam Chand Thapar and Brothers Ltd., as the original tenant company was amalgamated with M/s. Karam Chand Thapar and Brothers under the orders of the Calcutta High Court. After placing reliance on the findings of the Supreme Court in Parasram Harnand Rao Vs. Shanti Parsad Narinder Kumar Jain and Another, it was held that even involuntary subletting or transfer of lease rights by the tenant to the transferee would amount to sub-letting or transfer of rights under the lease and thus would entail the ejectment of the tenant on the ground of sub-letting under the provisions of Section 13(2)(ii)(a) of the Act, which specifically prohibts the transfer of any right under the lease as also subletting of the premises without the written consent of the landlord. It is noteworthy that the observations of A.D. Koshal, J. in Shrimati Brij Rani''s case (supra) were not brought to the notice of D.S. Tewatia, J.

In M/s. Parasram Harnand Rao''s case (supra), the controversy related to the interpretation of the provisions of Section 14(b) of the Delhi Rent Control Act and the facts were whether the transfer of lease rights of the original tenant Laxmi Bank by the Official Liquidator under the orders of the Court through auction sale in favour of another person would amount to subletting or assignment of rights. After elaborate discussion it was held that it was a voluntary sale as the Official Liquidator had merely stepped into the shoes of Laxmi Bank which was the original tenant and had transferred the tenancy rights to Respondent No. 1 under the order of the Court. In the alternative, it was held that even if it is taken to be a case of involuntary sale then it is undoubtedly became an assignment as provided u/s 14(1)(b) of the Delhi Rent Control Act. Their Lordships of the Supreme Court in this case distinguished the findings of the Calcutta High Court in Krishna Das Nandy Vs. Bidhan Chandra Roy, to the effect that where tenant company was ordered to be compulsarily wound up and the tenancy rights sold by public auction by Liquidator, the transfer of such rights being by operation of law, would not amount to subletting within the mischief of Section 12(1) of the West Bengal Premises Rent Control (Temporary Provisions) Act (17 of 1950), by holding that as the retevant provisions of the West Bengal Rent Control Act were not extracted in the above referred authority by the Calcutta High Court, the import of the same cannot be interpreted. Secondly, it was held that in the case before the Supreme Court, the Official Liquidator was merely acting on behalf of the Laxmi Bank, the original tenant while selling the tenancy rights. Thus, it can be well said that their Lord-ships of the Supreme Court in the above referred authority had given the findings regarding the involuntary sale of the tenancy rights specifically regarding the provisions of Section 14(1)(b) of the Delhi Rent Control Act by holding that its wording was quite wide to cover an assignment even if it is taken to be a case of involuntary sale of such rights.

The view of the Andhra Pradesh High Court in M.A. Khader v. M/s General Radio Appliances (P) Ltd. AIR 1977 A.P. 115 is of no help for settling the present controversy as the amalgamation of the company in that case took place at the instance and with the consent of the shareholders.

In the case in hand, the amalgamation of the Hindustan Commercial Bank with the Punjab National Bank took place with the sanction of the Central Government vide above referred notification under the provisions of Section 45(7) of the Banking Regulation Act, 1949 on the basis of a Scheme prepared by the Reserve Bank of India under the provisions of Sub-section (4) of Section 45 of the said Act. The relevant provisions of Section 45 of the Banking Regulation Act, 1949, empowering the Reserve Bank of India to prepare a Scheme for amalgamation of the Banking company run as under:

45(1) Notwithstanding anything contained in the foregoing provisions of this part or any other law or any agreement or other instrument, for the time being in force, where it appears to the Reserve Bank that there is good reason so to do, the Reserve Bank may apply to the Central Government for an order of moratorium in respect of a banking company.

(4) During the period of moratorium, if the Reserve Bank is satisfied that:

....

(ii) for the amalgamation of the banking company with any other banking institution in this section referred to as ''the transferee bank''.

(5) The scheme aforesaid may contain provisions for all or any of the following matters, namely

(a).... (b) in the case of amalgamation of the banking company, the transfer to the transferee bank of the business, properties, assets and liabilities of the banking company on such terms and conditions as may be specified in the scheme:

(6) (a) A copy of the scheme prepared by the Reserve Bank shall be sent in draft to the banking company and also to the transferee bank and any other banking company concerned in the amalgamation, for suggestions and objections, if any, within such period as the Reserve Bank may specify for this purpose.

(7) The scheme shall thereafter be placed before the Central Government for its sanction and the Central Government may sanction the scheme without any modifications or with such modifications as it may consider necessary; and the scheme as sanctioned by the Central Government shall come into force on such date as the Central Government may specify in this behalf.

The bare perusal of the above referred provisions leaves no doubt that the Reserve Bank had full power to recommend to the Central Government for an order of moratorium in respect of working of a Banking company and during the period of such moratorium in the interest of the public or in the interest of the depositors or in order to secure the proper management of the Banking-company or in the interest of the Banking system in the country as a whole, the Reserve Bank is authorised to prepare a Scheme for the amalgamation of the Banking-company with any other Institution of Banking. Of course such draft scheme prepared shall be sent to the Banking company and to the transferee Bank simply for suggestions and objections regarding the assets etc. Under Clause (b) to this sub-section the Reserve Bank may make some modification in view of such suggestions. The opening words of Section 45 clearly give overriding effect to its provisions over the other provisions of this part or any other law for the time being in force. In view of this, the provisions of Section 36-IB of the Banking Regulation Act, 1949, relating to further powers and functions of the Reserve Bank about assisting the amalgamation of such companies on the request of the company concerned, are not applicable to the scheme of amalgation of such companies where the Reserve Bank is satisfied that the Banking company is not carrying on its business of Banking properly or not safe guarding the interest of the public According to Section of 45-A of the said Act, the provisions of Part III of this Act shall have overriding effect on the inconsistent provisions of the Company''s Act or the CPC or the Code of Criminal Procedure or any other law for the time being in force. The above referred Section 45 figures in part III of the Act.

Under these circumstances the transfer of tenancy rights in the present case by the Hindustan Commercial Bank in favour of the Punjab National Bank cannot be said to be a case of volitional or voluntary transfer under the operation of law.

However, in view of the conflicting judgments delivered by Single Benches of this Court in Shrimati Brij Rani''s case (supra) and in M/s. Produce Exchange Corporation''s case (supra) whether the involuntary transfer of right in the lease or involuntary subletting by the original tenant would entail the ejectment of tenant u/s 13(2)(ii)(a) of the Act, it is a fit case for recommending to Hon''ble the Chief Justice for forming a larger Bench in order to finally settle the controversy relating to a question of vital importance. It is ordered accordingly,

JUDGMENT

I.S. Tiwana, J.

The matter is before us on a reference from brother Sekhon, J., to settle the question "whether the involuntary transfer of sight in the lease or involuntary subetting by the original tenant would entail the ejectment of tenant u/s 13(2)(ii)(a) of the Act?". The following facts furnish the necessary backdrop of the case.

On January 25, 1977, the premises in question, i.e., No. 3592, Timber Market, Ambala Cantt, were leased out by Prem Chand Gupta, Respondent, to the Hindustan Commercial Bank Ltd. (hereinafter referred to as the Bank) at a monthly rent of Rs. 1482/- Later the landlord filed an application u/s 4 of the Haryana Urban (Control of Rent and Eviction) Act, 1973 (for short, the Act) for fixation of the fair rent of these premises. The Rent Controller vide his order dated June 5, 1986, fixed it at Rs. 1813.10 per month The Bank preferred an appeal against this order. During the pendency of the same, the Government of India issued a notification (dated December 18, 1986) u/s 45(7) of the Banking Regulation Act, 1949, saying that the Punjab National Bank has assumed all rights and powers, claims, demands, interest, authorities, privileges, benefits, assets and properties of the bank, movable and immovable, including premises subject to all incidents of tenure and to the rents and other sums of money and covenants, reserved by or contained in the leases or agreements, plant, apparaus, etc. and all the liabilities, assets, obligations of the bank become the liabilities, assets and obligations of the Punjab National Bank. In the light of this notification the Punjab National Bank made an application under Order 22, Rule 10 of the CPC before the Appellate Authority for being substituted in place of the Bank. This application was, however, dismissed by the Appellate Authority vide its order dated March 10, 1987 holding that the transfer of rights under the lease of as also the subletting of the premises without the written consent of the landlord, was certainly a good ground for ejectment and that the Punjab National Bank had not become a tenant of the premises in dispute. Thereafter the Appellate Authority while dismissing the appeal of the Bank on March 21, 1987, modified the order of the Rent Controller in the light of a factual mistake committed by the latter in calculating the amount of fair rent as Rs. 1813.10 instead of Rs. 1778.90. These two orders, i.e., dated March 10, 1987 and March 21, 1987 are now impugned by the Punjab National Bank through this civil revision.

It deserves to be noticed here that during the pendency of the above noted proceedings u/s 4 of the Act, the Respondent landlord also initiated proceedings u/s 13(2)(ii)(a) of the Act for the eviction of the Bank on the ground that it had sublet the demised premises in favour of the Punjab National Bank and the said proceedings are still pending in the Court of the Rent Controller.

Mr. Sarin, learned Counsel for the Petitioner, while conceding that he does not want to assail the order of the Appellate Authority dated March 21, 1987, fixing the fair rent of the premises in question, makes a grouse of the other order dated March 10, 1987, wherein certain observations have been made by the Appellate Authority that the Punjab National Bank, i.e. the Petitioner is a sub-lessee of the Bank. In the light of this stand of the learned Counsel we are of the opinion that it is wholly unnecessary to resolve the controversy that has been posed in the reference, i.e. whether by virtue of notification dated December 18, 1986 the Petitioner Bank can at all he held to be a subtenant of the Hindustan Commercial Bank Ltd.? This question, as pointed out earlier, is directly involved in the proceedings which are pending inter-partes in the Court of the Rent Controller. It has, therefore, to be settled in those proceedings. The present proceedings u/s 4 of the Act only relate to the fixation of the fair rent and as noticed earlier, the Petitioner has no grouse about the conclusion of the Appellate Authority recorded in this regard. we, therefore, uphold the order of the Appellate Authority dated March 21, 1987 and set aside the one dated March 10, 1987. It is so for the reason that Order 22, Rule 10 of the Code of Civil Procedure. is only an enabling provision and is based on the principle that the trial of a suit may not be arrested merely by reason of a devolution of the interest of a party in the subject-matter of the suit. The person acquiring the interest may continue the proceedings with the leave of the Court, but if he does not choose to do so or is not allowed to do so, the suit may be continued by the original party and the person acquiring the interest will be bound by the decision in the suit. In a nut shell, the rule only envisages substitution and not addition of a party. Therefore, there can be no abatement of the suit under this rule. While considering the question of substitution of the party under this rule all that has to be seen at that stage is as to whether the applicant had acquired any right in the subject-matter of the suit by assignment, creation or devolution, and if that be so. the applicant normally be allowed to be substituted in place of the original party. The question, therefore, to be seen at that stage was as to whether the notification dated December 18, 1986, issued by the Union of India had created any right in the Petitioner qua the subject-matter of dispute and the question as to whether the Petitioner bank had become the tenant qua the premises in question was not at all relevant at that stage. This question could only be decided after the Petitioner had been substituted as an Appellant in place of the bank. Anyhow, the application of the Punjab National Bank having been dismissed, the Bank could rightfully continue the appeal before the lower authority and the same, as conceded by the learned Counsel, has been disposed of rightly.

For clarity''s sake, it may be mentioned here that the authorities under the Act would not be influenced by the observations made by us in this order or by the Appellate Authority in its order dated March 10, 1987, while deciding the application of the landlord filed u/s 13 of the Act now pending before the Rent Controller. The net result is that the fair rent of the demised premises stands fixed at Rs. 1778-90 as has been done by the Appellate Authority vide its order dated March 21, 1987.

This petition is stands disposed of as indicated above.