Allowed

Sushil Kumar Dhaner v. M.P.Laghu Udyog Nigam and Ors.

Chhattisgarh HC2 Sept 2014WP/1958/2002

Case brief

AI extract

What is this about?

The High Court held that transferring tenanted premises from a successor of one State to a newly created entity of another State constitutes a new tenancy. The Court quashed the authority's order for violating procedural mandates and directed the corporate tenant to vacate or enter a fresh lease with the owner.

What did the court decide?

Impugned order dated 7/13/2002 quashed; respondent to hand over shop or vacate within three months.

Sushil Kumar Dhaner Vs M.P.Laghu… — Constitutional and Fundamental Rights | Chhattisgarh HC (2014)

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HIGH COURT^{OFCHHATTISGARH} : BILASPUR Single Bench:^{Hon’bleShriManindraMohanShrivastava,J.}

W.P. No. 1958/02

Petitioner

Sushil Kumar^Dhaner

Versus

Resgondents

M.P.Laghu^{UdyogNigamLtd.andors.}

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(Writ^{PetitionunderArticle226/227oftheConstitutionofIndia)} . 4"

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. 4"

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Present:^- Shri Vivek^{Chopra,counselforthepetitioner/s.} Shri Vivek^{Verma,counselforrespondentNo.1.} Shri S. Majid Ali, counsel on behalf of Shri Ayaz Naved, counsel^{forrespondentNo.2.} Shri Adil Minhaj, Panel Lawyer for the State / respondent No.3.

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ORAL ORDER

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(Passed^{on2“dorSeptember,2014)}

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This petition, under Article 226/227 of the Constitution of lndia is 1 I directed^{againstorderdated07/130502passedbytheRentControlling} Authority, Raipur, by which, an amendment in the earlier order dated 04/07/88 has been carried out to substitute the name of Managing Director, C.G. State Industrial Development Corporation Ltd, Raipur in place^{ofManagingDirector,MP.LaghuUdyogNigamLtd.,Bhopal.}

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l2. The petitioner is the owner of the tenanted premises. Accommodation^was lying vacant^{andavailableforrentpurposes.} In the

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1988, M.P.Laghu Udyog Nigam Maryadit, a corporation, an year required^{anaccommodationon} undertaking of the then^{MadhyaPradesh} under Section 39 of the C.G. rent. ln exercise of powers 'conferred Accommodation Control^Act, 1961 (^forshort ‘the Act of 1961’), the Rent vide order^{dated08.07488,} allotted petitioner’s^shOp Controlling^Authority, on rent^{toMP.LaghuUdyogNigamMaryadit.} 3. The State^{ofMP.wasreorganizedandsuccessorStateo¥"'l\7ladhya} Pradesh and Chhattisgarh were created under^MP. reorganization Act, 2000. MP. Laghu Udyog Nigam started functioning in the State of Chhattisgarh. The assets and liabilities of MP. Laghu Udyog were apportioned^{betweentheStateofChhattisgarhandMadhyaPradesh.} The State of^{ChhattisgarhdidnotcreateseparateLaghuUdyogNigamforthe} State of Chhattisgarh. The assets and liabilities of MP. Laghu Udyog in favour^{ofStateofChhattisgarhwere} in Nigam^{whichwereapportioned} turn transferred by State of Chhattisgarh to CG. State lndustrial : ‘ Development^{CorporationLtd.(CSIDC)}

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: I ‘ ‘

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A dispute arose between the petitioner^and respondents 2 and 3 reorganization^of when on^{accounFofaforesaidevents,consequentupon} the State, the order^bywhich rented accommodation earlier provided to substituting in place^ofMP. MP.^{LaghuUdyogNigamWasmodifiedand} Laghu^{UdyogNigam,thenewlycreatedCorporationnamelyCSIDC.}

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Learned counsel for the petitioner contented that the effect of amendment in earlier order dated O4/O8.07.88 is that a new tenancy has been created. According to him, accommodation was earlier allotted to MP. Laghu Udyog Nigam which is a company and juristic entity and instrumentality of the erstwhile State of Madhya Pradesh. Upon reorganization, part of assets and liabilities of the Nigam situated within the territory of Chhattisgarh were transferred to the State of C.G. The State of .é’i‘y Chhattisgarh transferred those assets to a newly created co%pany i.e. CSIDC. Therefore, the MP. Laghu Udyog Nigam and CSIDC are two different and separate juristic entities. Thus, aiiotment of accommodation would amount to creation of tenancy in favour of a new company. Therefore, the order is clear violation of the procedure prescribed under Section 39 (2) of the Act of 1961.

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On the other hand, common submission of learned counsel for the respective respondents is that consequent upon reorganization of the State of M.P., assets and liabilities of MP. Laghu Udyog Nigam were apportioned between tWo successor states, i.e. Madhya Pradesh and Chhattisgarh and the shop in dispute of which MP. Laghu Udyog Nigam was the tenant, was assigned upon transfer of assets and liabilities to CSIDC. Therefore, there is no change of tenancy.

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There is a preliminary objection of the maintainabiiity of the petition on the ground that the petitioner has alternative remedy of filing appeai / revision against the order passed by the Rent Controlling Authority.

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Even there is an alternative remedy under the Act, it will be tenacity of justice if the petitioner is relegated to the alternative forum after the matter has remained pending before this Court for the last four years. In view of the extra ordinary circumstances, l am inclined to over rule the ..¢^{¢ /~} preliminary^objection. 8. From the order dated 08/07/88 (Annexure P/1), it is clear that in the year^{1988,accommodationwasallotted} by the Rent Controlling Authority in favour of MP. Laghu Udyog Nigam which is a company incorporated under the Companies Act and instrumentality of the State of Madhya Pradesh.

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f9. Re—organisation of the erstwhile State of Madhya Pradesh took J i jplace^underMP. Re-organisation Act, 2000 giving rise to two successor lStates i.e. Madhya Pradesh and Chhattisgarh. Amongst various provisions relating to apportionment of assets and liabilities of existing State of Madhya lfiradesh to successor States of Madhya Pradesh and Chhattisgarh, Section 60 of the Act of 2000 makes provision with regard to ,certain^{companiesspecified} in 7th Schedule appended to the Act. Under l t jSection 6O of the Act of 2000, it has been provided that on and from the

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appointed day and until otherwise provided for in any law, or in any agreement among the successor States, or inany direction issued by the Central Government, each of the companies specified in the 7m Scheduie shall continue to function in the areas, in which it was functioning immediately before the appointed date. Section 6O (2)^{oftheActof2000} clearly provides for issuance of direction by the Central Government in respect of such company including direction regarding division of the .t’.^z interests and shares and it may also require reconstitution of thg Board of Directors of the company. The Central Government, thus; has been conferred power to issue direction from time to time in relation to such functions; after consultation with Governments of the successor States. 10. However, the return filed by the respondents goes to show that the State of Chhattisgarh did not create a corresponding company in the State of Chhattisgarh but the assets and liabilities of MP. Laghu Udyog Nigam ‘ which were apportioned and transferred to the State of Chhattisgarh were a ssigned to a newly created corporation in the State of Chhattisgarh, j^{namelytheCSIDC.} This COrporation was created only upon reorganization ofthe State and is an instrumentality of the State of Chhattisgarh.

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it is, therefore, clear that the MP. Laghu Udyog Nigam, a company under the Companies Act and an instrumentality 0f the dncorporated isuccessor State of Madhya Pradesh is distinct and separate juristic entity

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., y__ ,..

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than CSIDC^which is another^{companycreateduhdertheCompaniesAct} upon reorganization and instrumentality of the successor State of Chhattisgarh. Thus, the two companies are distinct and separate and cannot be^{treatedasoneandthesameeitherinfactorinlaw.} Mere fact that upon apportionment of assets and liabilities of MP. Laghu Udyog Nigam between the successor States of Madhya Pradesh and Chhattisgarh,^theassetsand liabiiities faliing to the share^oftheStateof ls: Chhattisgarh^{wereinturn,assignedtoCSIDCbytheStateofC@} would not result in CSIDC being part^and parcel of M.P. Laghu Udyog Nigam. Both are^{differentcompanieswithdifferentjuristicentityandstatus.} 12. Irresistible^{conclusionoftheaforesaiddiscussion} is that^MP.Laghu Udyog Nigam^{andCSIDCarenotoneandthesamebutdifferententities.} Therefore, if any accommodation, earlier allotted^{toM.P.LaghuUdyog,} is , allotted to^CSIDC, in the eye^oflaw, it amounts^{tocreatinganewtenancy} l upon abolition of earlier tenancy. That being the legal position, it was g ‘ incumbent upon the Rent Controlling Authority to comply with the ‘ in Section³⁹ (2)^{oftheActof1961whichadmittedly} provisions^contained has not been^followed in this case before carrying out amendment^vide impugned^{orderdated7/13.05.02(AnnexureP/2).}

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ln the result, .the petition is allowed. The impugned order dated 7/13.05.02 (Annexure^P/2)is quashed.

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F^i/WW

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z r /

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As the C.G. Accommodation Control Act has been repealed by C.G. Legislation Act, 2011, the respondent / CSIDC shall hand over the shop to the petitioner. it is, however, made clear that this order shali not come in the way of the petitioner giving the accommodation on rent to CSIDC under‘any fresh agreement. Considering that CSIDC is presently occupying the premises, it would be fair and proper to grant CSIDC, three months time to vacate the premises, unless in the meantime, ttgevpetitioner rents out the same premises to CSIDC under a fresh agreement. Though the petitioner has prayed for compensation, in the circumstances of the case, l am not inclined to direct any compensation to be ordered. It is, however, made clear that if there is any rent standing in arrears to be paid by the CSIDC to the petitioner, the said amount shall be paid^tothe petitioner^withina period^{ofthreemonths.}

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W.A .

Sushil Kumar Dhaner v. M.P.Laghu Udyog Nigam and Ors.

Case brief

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Sushil Kumar Dhaner v. M.P.Laghu Udyog Nigam and Ors.

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