1998 (8) TMI 447 - HC - Companies Law

Summary

Issues Involved:
1. Direction for the Official Liquidator to hand over possession of leased land.
2. Restraint on the Official Liquidator from accepting offers for the purchase of the land.
3. Jurisdiction of the Court to entertain the application.
4. Applicability of the Rent Act to the leased property.
5. Rights and obligations of the landlord and tenant under the Rent Act.
6. Validity of the Official Liquidator's actions under the Rent Act and Companies Act.
7. Precedents from the Supreme Court regarding similar issues.

Issue-wise Detailed Analysis:

1. Direction for the Official Liquidator to hand over possession of leased land:
The applicants sought a direction for the Official Liquidator to hand over possession of land bearing revenue Survey No. 375 of village Kalol, Taluka Kalol, Distt. Mehsana, arguing that the land was leased on 30-3-1933 for an indefinite period and was no longer required for the company's business. The applicants contended they were entitled to possession as landlords due to the company's liquidation.

2. Restraint on the Official Liquidator from accepting offers for the purchase of the land:
The applicants also sought to restrain the Official Liquidator from accepting any offer for the purchase of the land in question, which was advertised for sale on an "as is where is" basis in a local daily. They argued that the Rent Act prohibits the transfer of leased property without the landlord's consent and that the Official Liquidator should not be allowed to transfer the property in violation of this provision.

3. Jurisdiction of the Court to entertain the application:
The respondent's counsel argued that the jurisdiction to entertain a claim for recovery of possession of leased premises is governed by section 28 of the Rent Act, which grants exclusive jurisdiction to specified Tribunals. However, the court held that section 446 of the Companies Act, 1956, provides that the Court winding up the company has jurisdiction to entertain or dispose of any suit or proceeding by or against the company, notwithstanding any other law. This jurisdiction includes proceedings under the Rent Act.

4. Applicability of the Rent Act to the leased property:
The court acknowledged that the land in question is governed by the Rent Act and that section 15 of the Rent Act prohibits the transfer of leased premises by subletting, assigning, or transferring in any manner without the landlord's consent. The court emphasized that it could not sanction any act by the Official Liquidator that is prohibited by law.

5. Rights and obligations of the landlord and tenant under the Rent Act:
The court noted that the relationship of landlord and tenant continues between the owner and the company in liquidation until the company is dissolved. All provisions of the Rent Act, including those granting protection or imposing restrictions and obligations, continue to operate. The court held that the Official Liquidator could not transfer the leased property in contravention of the Rent Act.

6. Validity of the Official Liquidator's actions under the Rent Act and Companies Act:
The court examined the actions of the Official Liquidator in light of the Rent Act and Companies Act. It concluded that the Official Liquidator could not be permitted to transfer the possession of the leased property in violation of the Rent Act. The court also highlighted that the Official Liquidator's requirement to retain possession for winding up purposes, such as storing records or other assets, is a relevant consideration.

7. Precedents from the Supreme Court regarding similar issues:
The court referred to two Supreme Court decisions: Ravindra Ishwardas Sethna v. Official Liquidator and Smt. Nirmala R. Bafna v. Khandesh Spg. & Wvg. Mills Co. Ltd. In Ravindra Ishwardas Sethna's case, the Supreme Court held that the Official Liquidator could not part with possession of leased property in contravention of the Rent Act. In Smt. Nirmala R. Bafna's case, the Supreme Court opined that the rights of the company vis-a-vis its landlord do not change merely because the company goes into liquidation. The court concluded that the Official Liquidator could retain possession if required for winding up purposes.

Conclusion:
The court allowed the application to the extent of restraining the Official Liquidator from transferring the land independently and not as part of a going concern. The court held that the Official Liquidator must continue to pay the annual rent and any arrears from the date of winding up. The application for immediate return of possession was not pressed by the applicant, in line with the Supreme Court's ratio in Smt. Nirmala R. Bafna's case. The court disposed of the application accordingly.