# RUP CHAND GUPTA v. RAGHUVANSHI PRIVATE LIMITED & ANR

- **Citation:** [1964] 7 S.C.R. 760
- **Court:** Supreme Court of India
- **Decided:** 1962-07-06
- **Case number:** Civil Appeal No. 172 of 1964
- **Bench:** P.9b. GAJENDRAGADKAR, K. C. Das Gupta
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/rup-chand-gupta-v-raghuvanshi-private-limited-anr-3117
- **Pages:** 7

## Headnote

Decree-Collusion-Ingredients of collusimt-A . party who
need not be impleaded was not impleaded-Does not constitute
collusi<>'l-Two limited companies-All directors commonSuit by one-Other does not defend-Does not make the suit
collusive.
Respondent No. 2 is the lessee of Respondent No. 1 and the
appellant is the sub-lessee. Both the respondents Nos. 1 and 2
had the same directors. Respondent No. 1 brought a suit against
respondent No. 2 for eviction in which the appellant was not
impleaded as a party. By agreement between the pr£sent respondent Nos. 1 and 2 that suit ·was not defended and ex-parte
decree was obtained in favour of respondent No. 1. By virtue
of this decree the appellant as a sub-lessee of respondent No. 2
became a tresspasser and had no right to remain on the land.
To avoid this situation the appellant filed a suit to set aside
the decree on the ground that it was obtained by collusion.
The Trial Judge accepted his contention and gave a direction
that the appellant still remained a tenant and directing the
tlefendants in that suit from taking any steps in execution of
the ex-parte decree. On appeal the trial Court's decree was set
aside on the ground that the present appellant had failed to
prove that the ex-parte decree was obtain~d collusively.
Before this Court the same contentions as in the courts
below were raised.
Held: (i) The mere fact that the defendant agreed with the
plaintiff that if a suit is brought he would not defend it would
not necessarily prove coJ.lusion. It is only if this agreement is
done improperly in the sense that a dishonest purpose was
intended to be achieved that they can be said to have colluded.
Scott v. Scott. 1913 Law Reports (Probate Division) 52 and
Nagubai Ammaz & Ors. v. B. Shamma Rao, [1956) S.C.R 451,
referred to.
(ii) The law allows a landlord to institute a suit against
a lessee for the possession of the land on the basis of a valid
notification without impleading the sub-lessee and the decree
in such suit would bind the sub-lessee and hence the suit instituted by respondent No. 1 in the present case cannot be said
to have constituted an improper act.
(iii) The omission of the respondent No. 2 to defend the
earlier suit was not also an improper act because even if it
had a good defence it was not bound to take it.
(iv) Even if the appellant was a Thika tenant within the
meaning of the Calcutta Thika Tenants Act, 1949, it would
have protected him against eviction by respondent No. 2 but
It would not have given protection against the evictim1 by respondent No. 1 because the Act was designed to protect the
Thika Tenant from eviction by the landlord only and not
against eviction from any other source.
,
7 S.C.R.
SUPREME COURT REPORTS
761
Shamsuddin Ahmad v. Dinanath l\fa!iick, Appeal from
1964
original decree No. 123 of 1957, decided on 13-8-59.
Bup Chand Guplal
. (v) The respondents Nos. 1 and 2 are two distinct legal Baghvra:.hi Pri .. ie
entitles and therefore simply because both had the same d:recLtd. "' Anolhu
tors it cannot be said that the purpose of the suit was dishonest
·
or sinlster.
(vi) The appellate Bench of the High Court has correctly
decided that the present appellant has failed to establish that
the impugned decree was procured collusively.

## Text

1964
April 15
71)0
SUPREME COURT REPORTS
[19.64)
RUP CHAND GUPTA
v.
RAGHUVANSHI PRIVATE LIMITED & ANR.
(P.9b. GAJENDRAGADKAR, C. J. AND K. C. DAS GUPTA, J.)
Decree-Collusion-Ingredients of collusimt-A . party who
need not be impleaded was not impleaded-Does not constitute
collusi<>'l-Two limited companies-All directors commonSuit by one-Other does not defend-Does not make the suit
collusive.
Respondent No. 2 is the lessee of Respondent No. 1 and the
appellant is the sub-lessee. Both the respondents Nos. 1 and 2
had the same directors. Respondent No. 1 brought a suit against
respondent No. 2 for eviction in which the appellant was not
impleaded as a party. By agreement between the pr£sent respondent Nos. 1 and 2 that suit ·was not defended and ex-parte
decree was obtained in favour of respondent No. 1. By virtue
of this decree the appellant as a sub-lessee of respondent No. 2
became a tresspasser and had no right to remain on the land.
To avoid this situation the appellant filed a suit to set aside
the decree on the ground that it was obtained by collusion.
The Trial Judge accepted his contention and gave a direction
that the appellant still remained a tenant and directing the
tlefendants in that suit from taking any steps in execution of
the ex-parte decree. On appeal the trial Court's decree was set
aside on the ground that the present appellant had failed to
prove that the ex-parte decree was obtain~d collusively.
Before this Court the same contentions as in the courts
below were raised.
Held: (i) The mere fact that the defendant agreed with the
plaintiff that if a suit is brought he would not defend it would
not necessarily prove coJ.lusion. It is only if this agreement is
done improperly in the sense that a dishonest purpose was
intended to be achieved that they can be said to have colluded.
Scott v. Scott. 1913 Law Reports (Probate Division) 52 and
Nagubai Ammaz & Ors. v. B. Shamma Rao, [1956) S.C.R 451,
referred to.
(ii) The law allows a landlord to institute a suit against
a lessee for the possession of the land on the basis of a valid
notification without impleading the sub-lessee and the decree
in such suit would bind the sub-lessee and hence the suit instituted by respondent No. 1 in the present case cannot be said
to have constituted an improper act.
(iii) The omission of the respondent No. 2 to defend the
earlier suit was not also an improper act because even if it
had a good defence it was not bound to take it.
(iv) Even if the appellant was a Thika tenant within the
meaning of the Calcutta Thika Tenants Act, 1949, it would
have protected him against eviction by respondent No. 2 but
It would not have given protection against the evictim1 by respondent No. 1 because the Act was designed to protect the
Thika Tenant from eviction by the landlord only and not
against eviction from any other source.
,
7 S.C.R.
SUPREME COURT REPORTS
761
Shamsuddin Ahmad v. Dinanath l\fa!iick, Appeal from
1964
original decree No. 123 of 1957, decided on 13-8-59.
Bup Chand Guplal
. (v) The respondents Nos. 1 and 2 are two distinct legal Baghvra:.hi Pri .. ie
entitles and therefore simply because both had the same d:recLtd. "' Anolhu
tors it cannot be said that the purpose of the suit was dishonest
·
or sinlster.
(vi) The appellate Bench of the High Court has correctly
decided that the present appellant has failed to establish that
the impugned decree was procured collusively.
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 172
of 1964. Appeal from the judgment and decree dated July
6, 1962 of the Calcutta High Court in Appeal from Original
Decree No. 213 of 1959.
S. T. Desai, B. Sen and B. P. Maheslnvari, for the appellant.
H. N. Sanyal, Solicitor-General, Ajit Kumar Sen and
S. N. Mukherjee, for the ;espondent No. I.
April 15, 1964. The judgment of the Court was delivered
by
DAS GUPTA, J.-The subject-matter of this litigation. is
Do.! 1Jv¥o, J.
a piece of land in the heart of the business centre of the city·
of Calcutta. This was part of a block of 52 cottahs of land
taken on lease on January 21. 1950 from the Official Trustee,
West Bengal, by a private limited company. Raghuvanshi
Private Ltd. The lease was a building lease for a period of
75 years commencing from January 21, 1950. The lessee .was
required to complete the construction of a three or four ·
storeyed building on the land within 10 years. In September
1960, Raghuvanshi Private
Limited in its turn leased 10!
cottahs out of the 52 cottahs to a public limited company,
Land and Bricks Ltd. This lease by Raghuvanshi Private
Ltd., (hereinafter referred to as "Raghuvanshi") in favour of
Land & Bricks Ltd., (hereinafter referred to as "Land &
Bricks") created a monthly tenancy commencing froin the
!st October 1950. Land and Bricks in its turn sub-let the
entire IO! cottahs to the present appellant, Rupchand Gupta
in his business name of Hind Airways. The lease was on the
terms as settled by two letters dated August 19, 1950 and
September 5, 1950 between Hind Airways and Land and
Bricks. By the terms of the sub-lease, the sub-lessee undertook
not to sub-let the land to anybody, to vacate the land as soon
as it was required by Land and Bricks for any purpose and
not to construct anything on the land but only to' use the
open land for "garage purpose for mo_tor vehicles". lnspite
of this undertaking however the
appellant constructed a
pacca structure on the land. Land and Bricks protested unsuccessfully and then started proceedings under the Calcutta
762
SUPRE~IE COURT R'EPORTS
(1964)
1964
Municipdity Act for demolition of the structures. Those proRup c/lanci '111pta ceedings were also unsuccessful. Land and Bricks, it appears,
•·
also served on the appellant in February 1953 a notice to
Rauhum1u/li Private
.
Tl .
r' II
d
b
. .
B
Ltd . .c- .dnotl.er
qlllt.
11s was not o owe
up y any smt m court.
ut a
suit for arrears of rent was instituted by Land and Bricks
o,.,Gupta,J.
against the appellant in September 1955 and another in 1957.
Consent decrees were passed in both of these suits. It appears
that in about May or June 1954, Raghuvanshi was desirous
of getting possession of the land it has leased to Land and
Bricks. The difficulty was that Land and Bricks having sublet to the appellant was not in a position to deliver possession
to its lessor Raghuvanshi until anj unless possession
was
obtained from the appellant. It was in these circumstance;
that Ra~huvanshi determined its
lease in favour of Land
and Bricks by a notice to quit dated the J J th April
1955.
Raghuvanshi then instituted a suit No. 3283 of 1955 in the
High Court of Calcutta against Land and Bricks for possession of the land. The appellant was not impleaded in the suit
and Land and Bricks did not contest it. An ex parte decree
was made by the Court in favour of Raghuvanshi on the
l lth May l 956.
The necessary legal consequences of that decree is that
the plaintiff as the sub-lessee of Land and
Bricks has no
right to stay on the land and has become a trespass€r. It is
to avoid the consequence of that decree, that the present suit
was brought by Rupchand Gupta. His case is that the decree
had been obtained "by fraud and collusion between the defenJants in order to injure the plaintiff and to evict the plaintiff from the said premises without any decree being passed
against the plaintiff." Both Land and Bricks and Raghuvanshi
have been impleaded in the suit-Land and Bricks as the
first defendant. and Raghuvanshi as the second defendant.
Both of them denied the allegations of fraud and collusion.
The case that the decree was obtained , by fraud was
given up at the hearing and only the allegation that it was
a collusive suit was presse(l.
The Trial Judge held that there was collusion between
defendant No. l and defendant No. 2 in the matter of obtaining an ex-parte decree in suit No. 3283 of 1955 ~nd that the
plaintiff was not bound by that decree. He gave a declaration
that the plaintiff was still a tenant under defendant No. I
and was not liable to be ejected under the ex-parte decree.
He also ordered the issue of an injunction restraining the
defendants from taking any steps in execution of the ex-parte
decree.
On appeal by the defendant No. 2, Raghuvanshi, the
decree made by the Trial Judge was set aside. The learned
Judges, who heard the appeal, came to the conclusion that
'
'
7 S.C.R.
SUPREME COURT REPORTS
763
1964
Rup Oltand Gupl4'
v.
the plaintiff had failed to prove that the decree in suit No.
3283 of 1955 had been procured collusively. So, they held
that the plaintiff was bound by the decree in that suit.
RaghuvafUJhi Prioolt'
It is against this decree of the appellate Bench of the
Ltd. "' A"°""'
High Court that the present appeal has been filed by the
Das Gupta, J.
plaintiff Rupchand Gupta.
The only question for decision in the appeal is whether
the plaintiff had establislied his allegation that the ex-parte
decree had been obtained as a result of collusion between
Raghuvanshi and Land and Bricks. The main circumstances
on which the plaintiff relied to i prove collusion and which
according to _the learned Judge established his case were
these: Raghuvanshl and Land and· Bricks though distinct
entities had the same persons as directors. The construction
of building in terms of indenture of lease with Official Trustee·
was necessarily in the interests of shareholders of Raghuvanshi and so this was in the interest of Land and Bricks also
as the main shareholders were the same. The Calcutta Thika
Tenancy Act, 1949 was a serious impedil)lent in the way of
the plaintiff's eviction in any suit by Land and Bricks. So,
Land and Bricks attempted to get possession of the land by
obtaining an order of demolition of structures by proceedings
under the Calcutta Municipality Act. When these failed and
it was apprehended that a suit for ejectment by Land and
Bricks might not succeed against the plaintiff that this device
of having a suit by Raghuvanshi against Land and Bricks
was decided upon by agreement between Raghuvanshi and
Land and Bricks. By arrangement between the two, Land·
and Bricks did not contest the suit and to avoid any risk of
any defence being raised by the plaintiff he was not implead~
ed in the suit at all.
All the circumstances taken together justify, it was-
. urged by the appellant. the conclusion that the defendant
No. 2 colluded with-defendant No. l to procure the ex-parte
decree for the purpose of executing that decree against the·
plaintiff.
One of the simplest definitions of collusion was given
by Mr. Justice Bucknill in Scott v. Scott('). "Collusion may be
defined", said the learned Judge, "as an improper act done
or an improper refraining from doing an act, for a dishonest
purpose". Substantially the same idea is expressed in the
definition given by Whatron's Law Lexicon, 14th Edition,_
p. 212, viz., "Collusion in judicial proceedings is a secret
arrangement between two persons that the one should institute a suit agaimt the other in order to obtain the decision
(') [1913] Law Reports (Probate Division) 52.
764
SUPREME COURT REPORTS
[1964]
1964
of a judicial tribunal for some sinister purpose". This defini1
Rup Clland Gupta non of collusion was approved by the Court in Nagubai
v.
Ammal & ors., v. B. Shamma Rao and ors.(').
Raghui1anshi Private
Lid. &> A1IOlher
Thus the mere fact that the defendant agrees with the
plaintiff that if a suit is brought he would not defend it, would
Dtu Gupta, J.
not necessarily prove collusion. It is only if this agreement
is done improperly in the sense that a dishonest purpose is
intended to be achieved that they can be said to have colluded.
-
There is little doubt that in the present case Land and
Bricks agreed with Raghuvanshi that the suit for ejectment
would not be contested. When the suit was instituted Land
and Bricks did not contest and the ex-parte decree was passed.
Raghuvanshi did not implead this 11ppellant in that suit. Can
any of these acts, viz., Land and Bricks agreeing with Raghuvanshi that it would not contest the suit, the actual refraining by Land and Bricks from contesting the suit or the act
of Raghuvanshi in not impleading the appellant, be an improper act or improper refraining from an act? We do not see
how any of these things can be said to be in1proper.
Taking the last action first, viz., Raghuvanshi's omission
to implead the appellant, it is quite clear that the la~ does
not require that the sub-lessee need be made a party. ·it has
been rightly pointed out by the High Court that in all cases
where the landlord institutes a suit against the lessee for
possession of the land on the basis of a valid notice to quit
served on the lessee and does not implead the sub-lessee as
11 party to the suit, the object of the landlord is to eject the
sub-lessee from the land in execution of the decree and such
an object is quite legitimate. The decree in such a suit would
bind the sub-lessee. This may act harshly on the sub-lessee;
but this is a position well understood by him when he took
the sub-lease. The law allows this and so the omission cannot
be said to be an improper act.
Nor is it possible, in our opinion, to say that the omission of Land and Bricks to contest the ejectment suit was
an improper act. It has not been suggested that Land and
Bricks had a good defence against the claim for ejectment
but did not take it for the. mere purpose of helping Raghuvanshi to get possession of the land. Even if it had a good
defence, we do not think it was bound to take it. It may be
that if Land and Bricks had a defence and the defence was
such which if brought to the notice of the court would have
stood in the way of any decree being passed in favour of
Raghuvanshi there would be reason to say that the omission
to implead the sub-lessee was actuated by a dishonest purpose and consequently was improper. It is not necessary for
(') [1956] S.C.R. 451.
'
7 S.C.R.
SUPREME COURT REPORTS
765
us however to consider the matter further as neither in t1le
1964
courts below nor before us was any suggestion made on R•p o;;;;; llflf'l4
behalf of the appellant sub-lessee that Land and Bricks had
... . .
eyen a plausible defence against Raghuvanshi's claim for~"";'~~;:''"
eiectment.
We have already mentioned the fact thai one of the
circumstances which the plaintiff claimed showed collusion
was that the Calcutta Thika Tenancy Act stood in the way
of the plaintiff's eviction of Land and Bricks. It is unnecessary for us to decide whether or not the appellant was a
Thika tenant within the meaning of the Calcutta Thika
Tenancy Act, 1949. If he was, that Act would undoubtedly
have protected him against eviction by Land and Bricks.
That Act could however have no operation in a suit brought
by Raghuvanshi against Land and Bricks. It has been held
by the High Court of Calcutta that the Thika Tenancy Act
was designed to protect the Thika renant from eviction by
his landlord only and not against ~viction from any source.
(Shamsuddin Ahmed v. Dinal!ilth Mullick & ors., Appeal
from Original Decree No. 123 of 1957. decided on August
13, I 959). The correctness of this view has not been challenged before us. Nor is it the appellant's case that Land and
Bricks was a Thika tenant of Raghuvanshi. Obviously, this
could not be suggested, because Land and Bricks never ·
erected any structure at all. (See the definition of a Thika
tenant ins. 2. cl. 5 of the Calcutta Thika Tenancy Act; 1949).
On the materials on the record we are satisfied that there was
no defence that Land and Bricks could have raised for resisting Raghuvanshi's claim for ejectment.
The crux of the matter is: Was thi~ attempt by Raghuvanshi to get possession of the land a dishonest or sinister
purpose? We are asked by Mr. Desai to spell dishonesty out
of the fact that the directors of Raghuvanshi and Land and
Bricks were common and so the persons who were interested
in La net and Bricks were also interested in seeing that Raghuvanshi had not to suffer for forfeiture of his lease for failure
to comply with the covenant to construct a building by 1960.
All this may be taken to be true. But, we are unable to see
how this would make Raghuvanshi's attempt to get possession of the land dishonest or sinister. It is not as if Raghuvanshi did not actually want to get possession of the land
but wanted to help Land and Bricks to get possession. lt has
also to be remembered that the identity of the directors and
the identity of the main shareholders do not in any way
affect the position that in law and in fact Raghuvanshi and
Land and Bricks were distinct and separate entities. It is not
even remotely suggested that Raghuvanshi and Land and
Bricks were really one and the same person with two names.
Dal llvpla, J.
766
SUPREME COURT REPORTS
[1964]
1961
If that had been so, there might have been g'JOd reason for
Rup Chand o.,,1a thinking that it was in an attempt to surmount the obstacle
R h
v.h. P .
presented by the Calcutta Thika Tenancy Act, 1949, that
"/,1t"':;,'A'...Ih::" this mode of Raghuvanshi suing Land and Bricks for ejectment was resorted to. Indeed, if Raghuvanshi and Land and
Daa Gupta, J.
Bricks were one and the same person possession of Land and
Bricks would be possession of Raghuvanshi and a suit by
Raghuvanshi to eject Land and Bricks would be meaningless.
But, that is not the appellant's case. It appears from the High
Court's judgment that the plaintiff's counsel made it plain
before the court that it was not his client's case that the plaintiff's real lessor was Raghuvanshi Private Ltd., and not Land
and Bricks Ltd. In the present appeal before us also Mr.
Desai argued on the basis that Land and Bricks and Raghuvanshi were distinct entities and that the lease of Land and
Bricks under Raghuvanshi was a real subsisting lease at the
time of Suit No. 3283 of 195 5.
In our judgment, the appellate Bench of the High Court
has rightly come to the
conclusion that the plaintiff has
failed to establish that the decree in Suit No. 3283 of 1955
was procured collusively. The suit was therefore rightly dismissed.
The appeal is accordingly dismissed with costs.
Appeal dismissed.
-
'
·'