1988 (3) TMI 391 - HC - Companies Law

Summary

Issues Involved:
1. Whether the tenancy of a dissolved company stands extinguished and reverts to the landlords or vests in the State by escheat or as bona vacantia.
2. Whether the tenancy interest of a thika tenant can vest in the State upon the company's dissolution.
3. Whether the landlords can sue for recovery of possession without the State as a party defendant.

Detailed Analysis:

1. Whether the tenancy of a dissolved company stands extinguished and reverts to the landlords or vests in the State by escheat or as bona vacantia:
The court considered whether the tenancy of a dissolved company would revert to the landlords or vest in the State. The judgment referenced the principle that "the assets of a dissolved company are not without owner" and "the State takes them over." This is based on the doctrine of bona vacantia or escheat, which is part of Indian law as declared by the Privy Council in Collector of Masulipatam v. Cavaly Vencata Narrainapah. The court concluded that the tenancy does not revert to the landlords but vests in the State by escheat or as bona vacantia.

2. Whether the tenancy interest of a thika tenant can vest in the State upon the company's dissolution:
The court examined whether the limited interest of a thika tenant under the Calcutta Thika Tenancy Act, 1949, could vest in the State. It was argued that only property subject to absolute ownership could vest in the State. However, the court held that the term "property" includes every possible interest, including a tenant's interest in the demised land. The court referenced the Supreme Court's decision in Peirce Leslie and Co. Ltd. v. Violet Ouchterlony Wapshare, which established that the property of a dissolved corporation passes to the Government by escheat or as bona vacantia. The court further noted that the interest of a thika tenant is heritable and transferable, thus qualifying as property that can vest in the State.

3. Whether the landlords can sue for recovery of possession without the State as a party defendant:
The court held that since the thika tenancy vested in the State, the landlords could not proceed with the suit for recovery of possession without the State as a party defendant. The court emphasized that the State was a necessary party, and the non-joinder of a necessary party could not be cured. Additionally, the court noted that adverse possession against the tenant is not adverse against the landlord during the continuation of the lease. Therefore, the landlords could not sue the defendant as a trespasser while the tenancy vested in the State subsisted.

Conclusion:
The appeal was dismissed, and the decisions of the lower courts were affirmed. The cross-objection by the respondent was also dismissed as it was not pressed during the hearing. The court concluded that the tenancy of the dissolved company vested in the State by escheat or as bona vacantia, and the landlords could not recover possession without including the State as a party defendant.