VALI PATTABHIRAMA RAO Vs. RAMANUJA GINNING AND RICE FACTORY P LIMITED

JUDGEMENT

(1.) Among numerous questions of law two interesting Company Law problems are raised in this Civil Appeal by Sri T. Veerabhadraiah, the learned counsel for the appellants. (1) Whether a conveyance in necessary to vest the property of the firm when the same was converted into a company? (2) Similarly whether such conveyance is necessary to claim title by the company in respect of the property acquired by the promoter before its incorporation? A considerable time and lengthy debate had taken place and hence we are impelled to state this in the forefront. Now we shall state the facts.

(2.) The plaintiffs in O. S. No. 36 of 1969 on the file of the Subordinate Judge's Court, Vijayawada are the appellants in this appeal. The suit is laid for eviction of the defendants from the plaint schedule site after declaring the suit lease as duly terminated, removing the structures and deliver vacant possession of the same. The plaintiffs are grandsons of one Vali Subbarayudu and it is averred that the said Subbarayudu granted a lease to one Nidumukkala Subbarayulu the suit land for the purpose of constructing and running a Ginning and Rice and Oil Factory under a lease deed dated 10-7-1903 and the said lease though called a permanent lease was a tenancy at will and the said lease will enure to the life of the original lessee only and the original lessee constituted the 1st defendant firm with himself and other sharers and erected the factory of the 1st defendant and the 1st defendant paid the rents due till 1-1-1969 and committed default in payment of half yearly rents and the 1st defendant also committed breach of covenants of the aforesaid lease described kin paragraph 7 in detail and the lease aforesaid offends the rule of propertuities and consequently void. It was further alleged that handing over of the leased premises by the original lessee to the 1st defendant is unauthorised and hence the 1st defendant cannot claim to continue to be in possession and hence the plaintiffs terminated the tenancy in respect of the plaint schedule properties and hence the defendants should deliver possession of the property and that the 2nd defendant inaliciously set up the claim to a portion of the plaint schedule site and the 1st defendant failed to set off the rents due against the decretal dues in O. S. No. 1 of 1966 and hence the suit.

(3.) The 1st defendant, a private limited company registered under the India Companies Act, 1913 filed a written statement contending that the lease dated 10-7-1903 was a permanent lease in favour of Nidumukkala Subbarayudu and the said property is continuously under the possession and enjoyment of the lessee and his successor-in-interest and is being used for the purposes contemplated in the original lease and there is no default in payment of rent and the allegation of breach of covenants of the lease deed is incorrect. The original lessor, his son and the present plaintiffs know that the 1st defendant is running the factory and acquiesced in the manner of enjoyment by the 1st defendant and hence they are estopped from questioning the rights by the 1st defendant and the plaintiffs have taken considerable amounts by way of advance from the 1st defendant and having committed default in payment of those amounts the 1st defendant obtained a decree in O. S. 1/1966 on the file of Principal Subordinate Judge's Court, Vijayawada against the plaintiffs and the same is being executed and the plaintiffs suit for the adjacent land on the basis of trespass passed in O. S. No. 79/69 is frivolous and vexatious and the 2nd defendant has no rights in the property and is not a necessary party and the same is liable to be dismissed.