1983 (12) TMI 211 - HC - Companies Law

Issues Involved:
1. Whether the official liquidator can part with possession of the premises on a caretaker basis.
2. Whether the appellants are entitled to immediate possession of the premises.
3. The status and rights of respondent No. 2 concerning the premises.
4. The appellants' entitlement to arrears of rent and other dues.

Issue-wise Detailed Analysis:

1. Whether the official liquidator can part with possession of the premises on a caretaker basis:

The appellants argued that the official liquidator's intention to part with the premises on a caretaker basis was impermissible under the Bombay Rent Act, referencing the Supreme Court decision in Ravindra Ishwardas Sethna v. Official Liquidator, High Court, Bombay. The court observed that the arrangement contemplated by the official liquidator did not fall within the provisions of section 457 of the Companies Act, which allows the liquidator to carry on the business of the company only to the extent necessary for its beneficial winding-up. The Supreme Court had previously ruled that entering into a caretaker's agreement was a facade to circumvent the Rent Act, which prohibits sub-leasing or licensing the premises if the company no longer requires them. The High Court concluded that the official liquidator's plan to use the premises on a caretaker basis was unfair and impermissible, as it was not necessary for the winding-up process.

2. Whether the appellants are entitled to immediate possession of the premises:

The court noted that since the official liquidator did not require the premises for the winding-up of the company, the appellants, as landlords, were entitled to possession. However, considering the possibility of the company being revived under a proposed scheme, the court ordered that the official liquidator would hand over possession to the appellants if no order for reviving the company was passed by December 31, 1984. This decision balanced the interests of the appellants and the potential revival of the company.

3. The status and rights of respondent No. 2 concerning the premises:

Respondent No. 2 claimed to be in occupation as sub-tenants or permitted licensees with the knowledge and consent of the appellants. However, the court found that respondent No. 2 had given an undertaking to the official liquidator to vacate the premises upon demand, which was a condition set by the court. The court held that respondent No. 2, having accepted the status of licensees from the official liquidator, could not now claim sub-tenant rights. Therefore, respondent No. 2 was required to vacate the premises as per the undertaking given to the official liquidator. The court directed that respondent No. 2 should not be dispossessed before March 31, 1984, but must vacate by November 30, 1984, if required by the official liquidator.

4. The appellants' entitlement to arrears of rent and other dues:

The appellants sought arrears of rent and other dues amounting to Rs. 6,16,810.47. The court noted that for dues prior to the winding-up order, the appellants would rank as creditors along with others. For dues after the winding-up order, the official liquidator was prevented from paying rent directly to the appellants due to an attachment order by the sales tax authorities. The court directed the official liquidator to provide the appellants with an account of the amounts credited to the sales tax authorities within four weeks, along with copies of the challans.

Conclusion:

The appeal was allowed, and the summons made absolute in terms of prayer clauses (a), (b), and (c), with specific directions regarding the handing over of possession and the provision of accounts for the rent paid to the sales tax authorities. The court ensured that the interests of all parties, including the potential revival of the company, were safeguarded. There was no order as to costs.

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