A company is a separate legal entity from its shareholders and directors, and a change in the company's constitution does not automatically terminate a lease.

( 1 ) THE present revision petition is directed against the order dated February 15, 1989, whereby, the First Appellate Court, affirmed the order dated July 19, 1986, by which the trial Court had dismissed the application of petitioner, under Order 39 Rules 1 and 2 Civil Procedure Code. , for grant of temporary Injunction.

( 2 ) BRIEFLY stated, the facts and circumstances, giving rise to the institution of the present petition, are as under : Petitioner, which Is a private limited company, obtained perpetual leasehold rights, from the Delhi Development Authority, respondent herein, in respect of plot No. B-10, Lawrence Road Industrial Area, New Delhi, for a consideration of Rs. 3,13,000. 00 , and a regular perpetual lease deed was executed. Thereafter, the construction was raised on the plot, after getting the necessary permission from the Authority from the Authorities. Petitioner has been running its own business in the premises. Clause 4 (a) of the lease deed provides that the lessee shall not sell. transfer, assign or otherwise part with possession of whole or any part of the industrial plot, except with the previous consent, in writing of the Lessor. It may be pointed out that at the auction, the plot was purchased by M/s. Rama Associates, a partnership firm, comprising of Shri Rajinder Singh, Shri Devinder Singh, Tarlochan Singh, Shiv Devi and Rjinder Kaur. The partnership firm was converted into a private limited company, with the same partners, becoming the Directors/ Subscribers. The firm also requested respondent to execute the lease-deed, in favour of the Company. At that time, affidavits were filed that original purchaser of land would not sell or transfer, their shares, representing value of land, without the prior permission of the Lessor.

( 3 ) ACCORDING to respondent, the share were transferred and a majority of the shares were being held by the new Directors and the old Directors, who were the partners, were having nominal shares. In other words, -according to respondent, the control of the company had passed in to the new Directors and the original partners of M/s. Rama Associates, were having only 50 shares each. Petitioner was served with a letter dated August 1, 1983, by respondent, there by, pointing out that petitioner had sub let the property to M/s. Lamina Packers and Mouldwel Corporation. In reply, petitioner informed respondent that M/s. Lamina Packers was a sister concern of petitioner and that there was no business of Mouldwel Corporation, that was being done, because, the idea was given up to start any such business. On October 13, 1983, petitioner was asked to furnish the list of the Directors and of the partners of M/s. Lamina Packers and Mouldwel Corporation.) The stand, taken by respondent was that if the Company had changed its Constitution or Subscribers/shareholders then the lease was liable to be determined. At the time of the execution of the lease deed, names of Directors of the companies were furnished. As, respondent threatened to terminate the lease of petitioner, so, it became necessary to file a suit for permanent injunction.

( 4 ) MR. P. N. Lekhi, learned Counsel for petitioner, contends that under law, no conditions can be imposed by respondent. In the lease-deed, which Is contrary to the provisions of the Companies Act, 1956, and also opposed to the public policy. Petitioner is a separate legal entity, which is independent from its shareholders, and Directors. Clause III of the lease deed, thereby proceeding for automatic termination of the lease-deed, is not legal and constitutional In fact, petitioner made out a prima facie case, but the Courts below have not applied their mind, in considaring these questions. Mr. Lekhi further argued that the case was fully covered by the judgment of this Court in Scindia Poteries and Services Ltd. and Others v. Deputy Land and Development Officer and f Others, 41 (1990) Delhi Law Times 261.

( 5 ) THREE well known principle