SINGER INDIA LTD. versus CHANDER MOHAN CHADHA AND ORS.

Citation: [2004] SUPP. 3 S.C.R. 535 · Decided: 13-08-2004 · Supreme Court of India · Bench: R.C. LAHOTI · Disposal: Dismissed

Judgment (excerpt)

SINGER INDIA LTD. 
A 
v. 
CHANDER MOHAN CHADHA AND ORS. 
AUGUST 13, 2004 
[R.C. LAHOTI, CJ., G.P. MATHUR AND C.K. THAKKER,.JJ.] 
B 
Rent Control and Eviction: 
Delhi Rent Control Act, 1958: 
c 
Section l 4(l)(b)-Subletting, assignment or parting with possession-
Without written consent from landlord-Suit premises let out to an 
American company-RBI directed reduction of equity capital of the said 
American company in order to comply with S. 29 FERA, 1973-Therefore, 
pursuant to an amalgamation scheme approved by High Court the said D 
American company merged into an Indian company which came in 
possession of the suit premises- Landlord filed eviction petition on the 
ground of subletting-High Court allowed the petition-Correctness of-
Held: S 14(1)(b) is attracted upon occurrence of a factual situation of 
subletting, assignment or otherwise parting with possession, whether by a 
voluntary act or otherwise-The reasons for doing so are wholly i"elevant- E 
Hence, such amalgamation attracted S.14(1)/bl-PJea to lift the corporate 
veil to see that the directors and shareholders of the transferee-company 
were the same as those of the transferor-company and, therefore, there was 
no subletting, rejected-Companies Act; 1956, Ss. 391 and 394. 
Constitution of India, JY50: 
Article 136-special Leave Petition-High Court, in second appeal, 
affirmed the order of Rent Control Tribunal-A party, which did not file 
such a second appeal, filed SLP against High Court's order-Maintainability 
of-Held: Not maintainable. 
F 
The predecessor-in-interest of the respondents let out the. suit 
premises to an American company under a registered lease deed. The 
said landlord filed an eviction petition under Section 14(1)(b) of the 
Delhi Rent Control Act, 1958 on the ground that the American H 
535 
536 
SUPREME COURT REPORTS (2004] SUPP. 3 S.C.R. 
A company, without obtaining any written consent from the landlord, 
had parted with the possession of the suit premises in favour of the 
appellant-Indian company. 
The appellant contested the eviction petition on the ground that 
B a direction was issued to the American company to reduce its share 
capital to 40% in order to carry on business in India in view of Section 
29 of the Foreign Exchange Regulation Act, 1973. Accordingly, a 
Company Petition was filed by the appellant-Indian company before 
the High Court under Sections 391 and 394 of the Companies Act, 
C 1956, which was allowed and a scheme of amalgamation was sanctioned 
whereby the undertaking in India of the American company was 
amalgamated with the appellant-Indian company. It was also contended 
that the appellant-Indian company was no other entity except the legal 
substitute of the American company and in substance there was no case 
D of sub-tenancy. 
E 
The Rent Control Tribunal allowed the eviction petition. The 
High Court dismissed the second appeal filed by the appellant. The 
American company, which did not file the second appeal, and the 
appellant-Indian company have filed the present appeals. 
On behalf of the appellant, it was contended that the present 
transfer was not a voluntary transfer of undertaking but had to be 
resorted to under compulsion oflaw with a view to securing compliance 
of the provisions of FERA and the directions issued by the RBI and, 
F therefore, Section 14(l)(b) of the Act would not be attracted; that in 
the peculiar facts of the present case, Section 14(l)(b) of the Act should 
not be literally construed but a purposive construction should be given; 
that on amalgamation the transferor-company merged into the 
transferee-company shedding its corporate shell, but for all practical 
G purposes remaining alive and thriving as a part of the larger whole; 
and that the corporate veil should be lifted to see who were the 
directors and shareholders of the Indian company and who were in 
control of the affairs of the said company and if it was done it would 
be evident that there had been no subletting or parting with possession 
H by the American company. 
SINGER INDIA LTD. v. C.M. CHADHA 
537 
On behalf of the respondents, it was contended that the RBI A 
direction to reduce the equity capital of the American company to 40% 
could be achieved by various modes permissible in law; that no 
direction had been issued by RBI to the American company for getting 
itself amalgamated with an Indian company; that the American 
company voluntarily submitted to a scheme of amalgamation with the B 
In

Excerpt shown. Read the full judgment & AI analysis in Lexace.