2002 (3) TMI 879 - HC - Companies Law

Company's need /= Landlord's need: Court rules on landlord's occupation claim

KM Basheer Versus Lona Chackola

KM Basheer Versus Lona Chackola - [2004] 50 SCL 19 (KER.) Issues Involved:1. Bona fide need for occupation under Section 11(3) of the Kerala Buildings (Lease and Rent Control) Act.2. Whether the need of a company in which the landlord is a director can be considered the landlord's own need for occupation.Detailed Analysis:1. Bona fide need for occupation under Section 11(3) of the Kerala Buildings (Lease and Rent Control) Act:The primary legal question addressed was whether the need for occupation of a registered private company, in which the landlord is a director, qualifies as the bona fide need of the landlord for his own occupation under Section 11(3) of the Kerala Buildings (Lease and Rent Control) Act. Section 11(3) states: 'A landlord may apply to the Rent Control Court for an order directing the tenant to put the landlord in possession of the building if he bona fide needs the building for his own occupation or for the occupation by any member of his family dependent on him.'The respondent landlord argued that the building was required for the office of Chackolas Habitat Pvt. Ltd., a company where he and his family members were directors. The Rent Control Court dismissed the application, stating that the company's need could not be equated with the landlord's personal need. However, the Appellate Court reversed this decision, asserting that the landlord's substantial interest in the company made the claim maintainable under Section 11(3).2. Whether the need of a company in which the landlord is a director can be considered the landlord's own need for occupation:The judgment examined whether the requirement of a company could be considered the landlord's own need. The Supreme Court's decision in D.N. Sanghavi & Sons v. Ambalal Tribhuwan Das was referenced, emphasizing that the phrase 'his own occupation' signifies a need directly and substantially for the landlord's occupation.The court distinguished between a partnership and an incorporated company, noting that a company has a separate legal personality distinct from its shareholders and directors. The case law cited included Bega Begum v. Abdul Ahad Khan, which allowed for the landlord's business needs, and Shantilal Thakordas v. Chimanlal Maganlal, which clarified that a partnership's needs do not equate to the individual partner's needs.The court also referred to Madras Bangalore Transport Co. (West) v. Inder Singh, which dealt with subletting and not with the landlord's bona fide need for occupation. The court concluded that the requirement of the company, even if the landlord is a director, cannot be considered the landlord's own need for the purpose of Section 11(3).The court emphasized that a company, being a separate legal entity, cannot have its need conflated with that of the landlord. The principle of separate legal personality, as established in Aron Saloman v. A. Saloman & Co. Ltd., was upheld. The court rejected the argument that a private limited company is akin to a partnership firm, affirming that the company's need does not translate to the landlord's personal need.Conclusion:The court concluded that the landlord's application for eviction under Section 11(3) was not maintainable because the need of the company cannot be considered the landlord's own need. The decision of the Rent Control Court was affirmed, and the appellate authority's decision was set aside. All the C.R.Ps. were allowed to the extent that the application was deemed not maintainable.