R.J. Mehta and Co. vs Prootam Singh

T. Ramaprasada Rao, C.J.—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, Mawaharlal

Mehta, Rasiklal Mehta, and Bhismachandra Mehta. It is admitted that this partnership, owns premises No. 79/A and B, Sambudoss Street,

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 call 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 u/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 u/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.

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 u/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 R.J. Mehta & Co., represented by its partners v. Narayana Singh Protham

Singh C.R.P. No. 1109 of 1979, to take proceedings on the fact 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 R.J.

Mehta & Co., represented by its partners v. Narayana Singh Protham Singh C.R.P. No. 1109 of 1979, 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.

The same contentions are repeated be fore this Court. We shall now take up the question whether by reason of certain observations made

earlier by Varadarajan, J., in R.J. Mehta & Co. represented by its partners v. Narayana Singh Protham Singh C.R.P. No. 1109 of 1979, the plea

of the tenant is not available to him and whether the A partnership could maintain its petition u/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 has ceased to occupy 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 partner ship. 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 o� 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, u/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 proceeding. Those 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 doesnot appear to have been necessary for the adjudication of the case, that if the A

partnership was so advised, they could file an application u/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 u/s 10(3)(c), cannot operate as res judicata. The

Appellate Authority was right in having rejected this objection raised by the A partnership.

The other contention of the tenant is that the application is not maintainable u/s 10(3)(c) 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 collusion 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) the contention is that, though

physically and legally the A partnership and the B partnership are 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.

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 the partnership relation. The Supreme

Court in Dulichand Lakshminarayan Vs. The Commissioner of Income Tax, Nagpur, , observed:

In our opinion, the word ''persons '' in Section 4 of the Indian Partnership Act, which has replaced Section 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.

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 partnership is the father of the other three persons who constitute 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 identify 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 u/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. Section 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 Section 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.

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. No. 1100 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 the aspects

and adjudicated upon the real issue 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 u/s 10(3)(c) 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 u/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 sustainable in law.

The Civil Revision Petition therefore fails and is accordingly dismissed. There will be no order as to costs.