Gulab Chand Jain and Another Vs Himalaya Commercial Comp.Pvt.Lt.

Smt. Madhu Jain W/o. Gulabchand Jain, Aged about 40 years, Director, Bhilai Builders Pvt. Ltd. R/o. B2/11, Ravi Bhawan, G.E. Raod, Raipur, Tahsil and District Raipur (CG)

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Appellants/Defendants ………...

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versus

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Himalaya Commercial Complex Pvt. Ltd, Supela, Bhilai, Tahsil and District Durg(CG) through Santosh Golchha, S/o. Late Shri K.C. Golchha, aged about 50 years, R/o. Usha Kiran, Malviya Nagar, Durg , Tahsil and District Durg (CG)

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Respondent/Plaintiff……

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-----------------------------------------------------------------------------------------For Appellant : Mr. Shobhit Koshta, Advocate For Respondent : Mr. Prateek Sharma and Mr. Ravindra Sharma, Advocates

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Digitally signed by SANTOSH SANTOSHKUMAR KUMAR SHARMA SHARMA Date:2025.06.09 16:32:15 +0530

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Hon'ble Shri Justice Narendra Kumar Vyas

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CAV Judgment

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This first appeal under Section 96 CPC has been filed by appellant/defendants assailing the judgment and decree dated 02.03.2009 passed by learned 12^th Additional District and Sessions Judge, (FTC) Durg in Civil Suit No. 67-A of 2007, by which the trial Court has partly allowed the suit filed by the plaintiff and granted declaration that the lease deed dated 13.06.2000 is null and void but rejected the prayer for grant of permanent injunction.

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For the sake of convenience, the parties shall be referred to in terms of Civil Suit No. 67-A/2007.

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Brief facts as mentioned in the plaint are that plaintiff has filed a civil suit before the learned trial Court mainly contending that;

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(a) Defendant No. 1 Gulab Chand Jain was director and shareholder of the company prior to 21.09.2001 and his directorship was terminated on 21.09.2001 by the plaintiff. Defendant No.2 Mrs. Madhu Jain is the wife of defendant No. 1 and director of a company known as Bhilai Builders Pvt. Ltd. The plaintiff’s company is involved in construction of commercial complex, sell or let out on rent of commercial property, as per its business activity it has constructed commercial complex at GE Road, Supela, Bhilai and after construction, the said shops were given on lease/rent for office use to lease holders.

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(b) It is also contended that the plaintiff’s company took loan of Rs.

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29,75,000/- from Bhilai Builders Pvt. Ltd Company on interest for business purpose and gave cheques on different dates of Bank of Baroda which was already mentioned in the balance sheet of the company and all the above cheques were deposited in loan account of plaintiff’s company. It is further contended that shops No. 53, 91, 92, 93, 94 and 95 were constructed in the premises of Himalaya Commercial Complex and Block No. 12 area of 2200 sq. fit was too constructed on the first floor of the said complex, thereafter a registered lease deed of the shops and block were executed in favour of M/s. Bata India Ltd for 20 years on monthly commission of Rs. 14,000/-.

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(c) It is also contended that earlier lease deed was granted in favour of M/s. Bata India Ltd by the plaintiff’s company subsequently, the defendant No.1 by playing fraud had executed registered lease deed in favour of his wife at a low price premium of Rs. 5,00,000/- on 13.06.2000, though the actual premium of the said lease was on higher side. The defendant No. 1 being Director of plaintiff’s company had shown premium payment of lease deed and mentioned three cheques bearing No. 807712 of Rs. 2,00,000/-, 807752 of Rs. 1,00,000/- and 808926 of Rs. 2,00,000/- which were already deposited by the plaintiff’s company in the year 1996-97, as such the said transaction was sham transaction which has necessitated the plaintiff to file a complaint before Judicial Magistrate, First Class under Sections 120B, 417, 418, 420, 423 and 424 IPC for taking appropriate

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criminal action against the defendants.

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(d) It is contended that the defendants without paying single penny to the plaintiff’s company had executed lease of shops No. 53, 91, 92, 93, 94, 95 and block No. 12 in the name of Bhilai Builders Pvt. Ltd. Subsequently, this fact came to knowledge of Chairman of Himalaya Commercial Pvt Ltd, then he obtained a certified copy of the said lease agreement from the Sub Registrar's Office, Durg on 24.08.2002 then only it is revealed to the plaintiff regarding the alleged fraud committed by defendant No.1, when the plaintiff sought explanation from defendant No.1, neither satisfactory answer was given by the defendant No.1 nor he has cancelled the lease agreement.

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(e) On 18.10.2002, legal notice was sent to defendants through their advocate. But they did not reply to the said notice and thereafter, a reminder was sent on 27.03.2003 which was replied by the defendants denying the contents of notice, therefore, plaintiff company filed a civil suit before the Court for declaration that lease dated 13.06.2000 be declared as null and void and the defendant be also restrained from interfering in the peaceful possession of the shop M/s. Bata India Limited.

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The defendants have filed their written statement denying the allegation made in the plaint mainly contending that ;

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(a) The plaintiff’s company took loan on interest of Rs. 31,14,000/from M/s. Bhilai Builders Pvt. Ltd. and when they demanded their money then the Director of the company refused them to return the

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money. It has also been contended that he took money on interest from Life Insurance Commercial Housing Finance Limited at 21% of annual interest and gave the same to plaintiff company but due to criminal act of plaintiff, the defendants suffered loss. It has been further contended that to resolve the issue they have appointed mediators wherein it was decided by the mediators that to settle the dispute finally the plaintiff will pay Rs 27, 00,000/- to defendants which has not been paid till today. It is also contended that Santosh Golchha by manipulating in the document, fraudulently engaged his wife Mrs. Jaya Golaka as director of Himalaya Commercial Complex and issued 2,000 shares of the company in her name and 3,000 shares were issued in his own name. All these actions were done by him behind the back of the defendants and Kishore Jain. It is also contended that a general notice was published in Nav Bharat daily news paper by Santosh Golchha on 21.08.2002 in which removal of Gulabchand Jain and Kishore Jain from directorship of company was published which was rebutted by the defendants by publication of notice in the news paper on 24.08.2002.

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(b) It is contended that Santosh Golchha with intent to usurp the loan amount committed fraud with defendant No. 1. It is denied by the defendant No. 1 that the shop mentioned in the plaint was given to defendant No. 2 on lease by the defendant No.1 in fact with the consent of the director sub lease was issued in favour of defendant No.2. The defendants have also raised objection regarding

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maintainability of the suit contending that there is no post of chairman as per article of association of the company, as such plaintiff has no authority to file the suit against the director of the company and would pray for dismissal of the suit.

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On the pleading of the parties, learned trial court has framed following issues.

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(i) D;k izfroknh Øekad 1 }kjk oknxzLr lEifRr ds laca/k esa izfroknh Øekad 2 ds i{k esa fu"ikfnr gLrkUrfjr vfHkys[k ¼iV~Vk½ fnukad 13@6@2000 voS/k ,oa 'kwU; gS ? (ii) D;k oknh }kjk okn dk mfpr ewY;kadu dj U;k;’kqYd pLik fd;k x;k gS ? (iii) D;k oknh okafNr vuqrks"k ds ik= gS

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The plaintiff to substantiate his case has examined himself as (PW-1), Mohan Sethi (PW-2) and exhibited documents namely memorandum and articles of association of Himalaya Commercial Complex (Ex.P-1), offer letter dated 24^th September 1993 (Ex.P-2), agreement dated 13.06.2000 (Ex.P-3), paper notice (Ex.P-4), notice (Ex.P-5 and 6), receipt (Ex.P-7), Reminder letter (Ex.P-8), acknowledgment (Ex.P-9), notice (Ex.P-10), postal receipt (Ex.P-11, 12,13), Reply dated 27.03.2003 (Ex.P-14), receipt (Ex.P-15), reply of notice (Ex.P-16 & 17), ledger account (Ex.P-18), certificate issued by Chartered accountant (Ex.P-19), auditors report (Ex.P-20), Balance sheet (Ex.P-21), Profit and loss account of Himalaya Commercial (Ex.P-22 & 23), balance sheet abstract and companies general profile (Ex.P-24), Form No. 3CA (Ex.P-25), Auditors report (Ex.P-26), Balance sheet (Ex.P-27), Profit and Loss Account (Ex.P-28 and 29), Auditors report (Ex.P-30), Balance sheet (Ex.P-31), Profit and loss account (Ex.P-32 & 33), Balance

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sheet abstract (Ex.P-34), Audit report (Ex.P-35), Auditors report (Ex.P36), Balance sheet (Ex.P-37), Profit and loss account (Ex.P-38 & 39), Auditors report (Ex.P-40), Balance sheet (Ex.P-41), Profit and loss A/c (Ex.P-42 & 43), Balance sheet abstract (Ex.P-44), Auditors report (Ex.P-45), Balance sheet (Ex.P-46), Profit and loss A/c. (Ex.P-47), Balance sheet (Ex.P-48 & 49), Auditor report (Ex.P-50), Balance sheet (Ex.P-51), Profit and loss A/c (Ex.P-52), Profit and Loss (Ex.P-53), Balance Sheet (Ex.P-54).

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The defendants examined himself as DW-1 and exhibited documents namely agreement dated 26.01.1999 (Ex.D-1), letter dated 17.02.2024 (Ex.D-2), Letter dated 07.01.2024 (Ex.D-3), search report (Ex.D-4) consent dated 26.01.1999 (Ex.D-5), Registration of firm (Ex.D-6, Ex.D7 and Ex.D-8) certificate (Ex.D-9), newspaper (Ex.D-10).

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Mohan Sethiya (PW-2) in his examination-in-chief by way of affidavit as provided under Order 18 Rule 4 CPC has stated that he has prepared audit report of Himalaya Commercial Complex Pvt. Ltd since inception of the company and Santosh Golchha was the Managing Director of the company, the plaintiff’s company took loan of Rs. 29,75,000/- through cheques on different dates in the loan account of company and all the details are mentioned in the balance sheet of the company. He has stated that Himalaya Company entered into an agreement with Bata India Ltd wherein some shops of plaintiff company were given for showroom on fixed commission. He has stated that as per lease agreement dated 13.06.2000 some shops of plaintiff’s

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company were transferred by Shri Gulabchand on lease to Smt. Madhu Jain, Director, Bhilai Builders Pvt. Ltd. As per the said agreement, Rs. 5,00,000/- has been shown for transfer of lease and all cheques are accepted by the plaintiff company. In the cross examination, he has stated that he has not submitted any document regarding change of the company. He has also admitted that in the balance sheet of the year 1996-97 Gulabchand Jain and Santosh Jain have put their signatures as Directors. He has also admitted that in the balance sheet at least signature of two directors is necessary.

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Santosh Golchha (PW-1) in his examination-in-chief by way of an affidavit as provided under Order 18 Rule 4 CPC has reiterated the stand taken in the plaint. He was extensively cross examined by the defendant wherein he has stated that if anyone is removed from the directorship then its information is given to the Registrar of companies and there is no provision under the law to send notice through registered post, as such it has not been given through registered mode but they have been informed telepathically. He has further stated that still they have not turned up in the meeting which was conducted for their removal. He has also stated that there is no provision in the bylaws regarding information, it is governed by company law. He has also admitted that as per Article 36 of the memorandum Ex.P-1 defendant No.1 was permanent director and he cannot be retired by rotation and volenterily stated that if he will not work in accordance with the law then he may be removed. The witness has also admitted in the

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memorandum of article Ex.P-1 that there is no provision if permanent director will not work in accordance with the law then he can be removed. He has stated that if any director works against the interest of the company then he can be removed. He has also stated that the defendant was charged for using cheque number which has been issued in the name of the company. He has also stated that after removal of the defendant No.1 he has made his wife as director of the company.

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Gulabchand Jain (DW-1) in his examination-in-chief by way of an affidavit as provided under Order 18 Rule 4 CPC has reiterated the stand taken in the written statement. He has admitted that he is the director of Bhila Builders Pvt Ltd and also admitted that Ex.P-3 has been executed by him. He has also admitted that he or his wife has not submitted any account of balance sheet of Bhilai Builders.

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Learned trial Court after appreciating the oral and documentary evidence found that the plaintiff has proved that no premium/consideration amount was paid by the defendants while executing the lease deed and has held that the lease deed (EX.P-30) is illegal due to non payment of premium and partly allowed the suit of the plaintiff. Being aggrieved by the judgment and decree passed by the trial court on 29.08.2019, the defendants have preferred First Appeal under Section 96 CPC before this Court.

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12. Learned counsel for the appellants/defendants would submit that the finding recorded by the trial Court is perverse, contrary to the record as

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the trial Court has held that the suit was maintainable ignoring the facts that the dispute was purely under the Companies Act as such the suit is not maintainable. He would further submit that the trial court ought to have seen the dispute between the Directors of the company regarding funds, finance and possession of the property of the company is to be adjudicated by filing a Company petition before the competent Court of law, as such the suit was not maintainable and on this count alone the judgment and decree passed by the trial is liable to be dismissed. He would further submit that duly registered lease deed cannot be declared to be null and void on account of non payment of lease rent. He would further submit that the trial Court has committed illegality in relying upon the books of account, balance sheet of the plaintiff company to record such finding that lease premium has not been paid. Learned counsel for the appellants would further submit that it is duty of the plaintiffs to prove their case by their own evidence and they cannot be benefited from the weakness of the appellants/defendants and would pray for setting aside the judgment and decree passed by the trial Court. To substantiate his submission he has relied upon the judgments of Hon’ble Supreme Court in the cases of Vishwanath Bapurao Sabale vs. Shalinibai Nagappa Sahale and others 2009 AIR SCW 3592, Banatwala and Company vs. LIC of India and another, AIR 2011 SC 3619, Dahiben v. Arvindbhai Kalyanji Bhansusali, AIR 2020 SC 3310, Rajau Ram and Another vs Rajaram and others in SA No. 510 of 2003, Chandradhar Goswami

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and Ors. vs. The Gauhati Bank Ltd, AIR 1967 SC 1058, Petlad Turkey Red Dye Works Ltd. v. Dyes and Chemical Workers, 1960 AIR 1006, North Eastern Railway Administration v. Bhagwan Das (D) by Lrs AIR 2008 SC 2139 and ITC Limited vs. State of UP and Ors, AIR 2021 SC 1820.

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On the other hand, learned counsel for the respondent would submit that the finding recorded by the trial Court is legal, just and proper which does not call for interference by this Court. He would further submit that the transaction mentioned in the lease deed (Ex.P-3) is sham transaction and he is entitled to get relief of declaration as the lease deed dated 13.06.2000 is null and void. He would further submit that the trial Court has held that the defendants have failed to prove that lease deed was executed in view of the resolution passed by the directors of the company and the premium has been paid for execution of the lease, as such there is no perversity or illegality in the impugned judgment which warrants interference by this Court and would pray for dismissal of the appeal.

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I have heard learned counsel for the parties and perused the record of the Court below with utmost satisfaction.

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From the above submission made by the parties and the point emerged for determination by this Court is whether the finding recorded by the learned trial Court that from the evidence adduced by the plaintiff there is no term mentioning about adjustment of premium is legal, justified and the trial Court was justified to declare the lease as

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null and void on account of non payment of premium?.

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To appreciate this point it is expedient for this court to examine the provisions of Sections 105 and 107 of the Transfer of Property Act which are as under:-

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Section 105. Lease .—A lease of immoveable property is a transfer of a right to enjoy such property, made for a certain time, express or implied, or in perpetuity, in consideration of a price paid or promised, or of money, a share of crops, service or any other thing of value, to be rendered periodically or on specified occasions to the transferor by the transferee, who accepts the transfer on such terms.

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Lessor, lessee, premium and rent defined .—The transferor is called the lessor, the transferee is called the lessee, the price is called the premium, and the money, share, service or other thing to be so rendered is called the rent. Section 107. Leases how made. - A lease of immovable property for any term exceeding one year, and reserving a yearly rent, exceeding rupees fifty can be made only by a registered instrument. All other leases of immoveable property may be made either by a registered instrument or by oral agreement accompanied by delivery of possession Provided that [Government] [In section 107 word 'Government' substituted 'for His Highness' ibid.] may, from time to time, by notification in the Jammu and Kashmir Government Gazette, direct that leases of immoveable property, other than leases for any term exceeding one year, and reserving a yearly rent, exceeding rupees fifty or any class of such leases, may be made by unregistered instrument or by oral agreement without delivery of possession.

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From bare perusal of Section 105 of the Transfer of Property Act it is quite vivid that price paid or promised or offer money, a share of crop, service rent or any other thing of value is a price which is basic fabric for valid lease. The Hon’ble Supreme Court in the case of Anthony vs Kc Ittoop And Sons And Others reported in 2000(6) SCC 394 has

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examined the essential ingredients of lease and has held as under:-

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12. But the above finding does not exhaust the scope of the issue whether appellant is a lessee of the building. A lease of

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immovable property is defined in Section 105 of the TP Act. A transfer of a right to enjoy a property in consideration of a price paid or promised to be rendered periodically or on specified occasions is the basic fabric for a valid lease. The provision says that such a transfer can be made expressly or by implication. Once there is such a transfer of right to enjoy the property a lease stands created. What is mentioned in the three paragraphs of the first part of Section 107 of the TP Act are only the different modes of how leases are created. The first paragraph has been extracted above and it deals with the mode of creating the particular kinds of leases mentioned therein. The third paragraph can be read along with the above as it contains a condition to be complied with if the parties choose to create a lease as per a registered instrument mentioned therein. All other leases, if created, necessarily fall within the ambit of the second paragraph. Thus, dehors the instrument parties can create a lease as envisaged in the second paragraph of Section 107 which reads thus: All other leases of immovable property may be made either by a registered instrument or by oral agreement accompanied by delivery of possession.

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Thus it is quite vivid that payment of price or premium is essential

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ingredient for valid lease. In absence of price or premium it cannot be considered as legally constituted lease.

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Further issue that from the evidence adduced by the plaintiff that there is no term mentioning about adjustment of premium is legal, justified is being considered.

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To appreciate this point, it is expedient for this Court to go through the lease deed (Ex.P-3) dated 13.06.2000 wherein it has been mentioned that the tenant has been given premium of Rs. 5,00,000/- through various cheques and the same was encashed by the Oriental Bank of Commerce Bhilai and from condition No.1 wherein it has been mentioned that after payment of entire premium shop No. 91,92,93,94,95, 53 and office No. 12 B will be possessed by the tenant, as such it is incumbent upon the tenant M/s. Bhiali Builders to pay the

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amount of premium to the plaintiff which is essential ingredient of lease. Even the terms of lease do not reflect that there is any provision of any adjustment of alleged loan given by the defendants to the plaintiff. Even other wise, it is well settled legal position of law that the lease will be governed by the terms and condtion enumerated in the registered lease. In absence any such clause it cannot be held that there was provision for adjustment from the loan account.

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Learned trial Court after appreciating the evidence and material on record has recorded its finding in paragraph 14 that no premium has been paid for execution of lease. This finding cannot be held to suffer from perversity or illegality which warrants interference by this Court.

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The defendants have examined Gulabchand Jain DW-1 who has nowhere stated that in the lease there is provision of adjustment of loan amount given by him. He has also admitted that he has signed the lease executed with M/s. Bhilai Builders as director of plaintiff company, as such the finding recorded by the learned trial Court that the lease was executed without payment of premium and without consent of the plaintiff cannot be held to suffer from perversity or illegality.

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Further submission of learned counsel for the appellants that the registered document cannot be declared as null and void, as such the judgment and decree of the trial Court is illegal, is being considered. Learned counsel for the appellants to substantiate his submission has referred to the judgment of Hon’ble Supreme Court in the case of Vishwanath (supra) so far as preposition of law laid down by the

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Hon’ble Supreme Court is not in dispute, but the Hon’ble Supreme Court has held that the presumption of valid constituted document exists, but can be rebutted by adducing cogent evidence. In the present case also the plaintiff has produced cogent evidence to prove that the lease deed has been executed without payment of premium. Similarly, the judgment of Hon’ble Supreme Court in the case of Dahiben (supra) is distinguishable on the facts.

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Further submission made by the learned counsel for the appellant is that the trial Court has committed illegality in passing the judgment and decree on the basis of books of account maintained by the plaintiff and to substantiate his submission, he has referred to the judgment of Hon’ble Supreme Court in the case of Chandradhar Goswami (supra) and also referred to Section 34 of the Evidence Act, to substantiate on the basis of books of account suit cannot be decreed, is being considered. This submission deserves to be rejected as the terms of lease has to be considered for examining the legally valid lease. The condition enumerated in the lease does not deal with the situation that the amount which has been given towards loan can be adjusted and the trial Court has not passed decree mainly on the basis of books of account but has also taken into consideration the terms of lease also, therefore, the submission that on the basis of books of account the trial Court has committed the illegality deserves to be rejected. Accordingly, it is rejected.

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Further submission of the learned counsel for the appellants is that the

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suit is not maintainable and the plaintiff has only filed the suit for declaration of lease dated 13.06.2000 to be null and void, however, he has nowhere stated that he is in possession of the suit land. This submission deserves to be rejected as from bare perusal of the plaint, it is quite vivid, that the plaintiff has specifically mentioned that the defendants may be restrained from interfering in the possession of the suit property i.e. shop no. 53,91,92,93,94,95 and block No. 12 are in possession of M/s. Bata India Limited which has been granted through valid agreement. This clearly demonstrates that the suit property is in possession of the plaintiff who has already given on rent to other person, as such it is not incumbent upon the plaintiff to claim decree also. Thus the submission made by learned counsel for the defendants that the suit is not maintainable deserves to be rejected. Accordingly, it is rejected.

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During pendency of the appeal, the defendants have filed the application (I.A. No. 2 of 2021 under Order 41 Rule 27 CPC) for taking books of accounts of the year from 1996 to 2001 on record wherein it has been mentioned that these documents are necessary for just and proper adjudication of the case. This submission was opposed by learned counsel for the plaintiff and would submit that the balance sheet is not relevant for deciding the appeal and would pray for rejection of the application.

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Considering the submission on both sides of this application, this Court is of the view that the documents sought to be taken on record are not

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relevant to decide the controversy between the parties. As the controversy moves around the terms of lease only wherein there is no provision for adjustment of the alleged loan amount given by the defendants, therefore, application filed under Order 41 Rule 27 CPC deserves to be rejected and it is rejected. Accordingly, the instant first appeal is liable to be dismissed and it is hereby dismissed.

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Sd/-

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(Narendra Kumar Vyas) Judge

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Santosh

Gulab Chand Jain and Another v. Himalaya Commercial Comp.Pvt.Lt.

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Gulab Chand Jain and Another v. Himalaya Commercial Comp.Pvt.Lt.

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