Decided on October 03,2007

L.I.C. Respondents


S.RAVINDRA BHAT, J. - (1.) Rule. Mr. Mahinder Singh accepts notice. With the consent of the counsel for the parties the matter was heard for disposal.
(2.) The short question arises for consideration in this writ proceeding is the legality of the view which found favour with the Additional District Judge (hereafter called the "Appellate Authority") i.e that the corporate veil of the Petitioner ought to have been lifted and whether eviction on the ground of sub- letting of the premises, is legal and justified.
(3.) The facts which are largely undisputed are that M/s Iyer and Son (P) Ltd. were given a commercial license in 1949 in the United India Life Building in the Connaught Place, New Delhi. The place is about 1118 sq.ft.; the original rent was Rs.160/- per month. On 6.3.1985 existing management of the Petitioner Company entered into an agreement with Mr. Vijay Kumar Gupta and Shri Anil Kumar Gupta. The object of the agreement was to handover management of the Company as a running concern. The agreement is part of the record. Its relevant stipulations are as follows :- "AND WHEREAS the outgoing Directors have offered to resign and handover the running business as such to the Incoming Directors for a total consideration of Rs.4,00,000/- on the following terms and conditions hereinafter recorded below :- 1.That the Outgoing Directors shall handover the business in the running condition as on 6th March, 1985. 2.That Shri R.S. Sethi, Managing Director of the Company will transfer his shares and procure the shares standing in the name of his wife, the shares standing in the names of his three daughters and of Shri K.S. Bhody to the Income Directors or their nominees. 3.It is clearly understood that Shri R.S. Sethi will settle the previous liabilities as recorded in the books of account of the Company till 6th March, 1985 to the advantagous of the Company with the consultation of the Incoming Directors and the Incoming Directors will pay the required liabilities. 4.Hence forth all the Outgoing Directors except Shri R.S. Sethi will continue to be the Directors of the Company. Shri R.S. Sethi will continue to be the Director till such time as to facilitate complete transfer of company to the Incoming Directors. He will exercise such power only to facilitate the working of the Company. The Incoming Directors will be taken on the Board as the Additional Directors. 5.That in consideration of transfer from the Outgoing Director to the Incoming Directors, a total consideration of Rs.400,00 (including the value of shares) has been agreed to. The share to the Outgoing Directors have been agreed to be transferred @ Rs.4,000 per share. 6.That Shri R.S. Sethi will get the approval of the I.A.T.A for the new Management. 7.It has been assured by Shri R.S. Sethi (i) That the tenancy rights of the premises where the business is being carried on at United India Life Building, 'F' Block, Con. Place, New Delhi are in the name of Iyer and Son (Pvt.) Ltd. and no other person has any right or title in these tenancy rights. (i) No other business is being carried in the said premises occupied by the Company. 8.The total consideration will be paid as under:- Rs.2,50,000/- within a week from the writing of this agreement, Rs.1,50,000/- will be paid at the time when all the formalities for ` complete take over have taken place. Shri R.S. Sethi will assist in smooth take over of the Company by the Incoming Directors and he will be paid working allowance @ Rs.5,000/- per month for a maximum period of six month or till such date the complete take over is completed, is earliest." Life Insurance Corporation of India, i.e the owner of the premises (hereafter referred to as "LIC) that the transfer amounted to a sub letting. By a notice issued on 29.4.1986 it alleged that since no prior permission or intimation was given to it before the change of Management, the occupation of the Company would be defeated as unauthorized and that suitable proceedings under the Public Premises (Eviction of Unauthorized Occupants) Act, 1971 (hereafter referred to as the "Act") would be initiated.;

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