2000 (3) TMI 917 - HC - Companies Law

Issues Involved:
1. Possession of the premises by the Official Liquidator.
2. Lease termination and subsequent legal actions.
3. Role and rights of the Saraswat Co-operative Bank.
4. Appointment and scope of the Court Receiver's authority.
5. Applicability of Section 457 of the Companies Act, 1956.
6. Relevant Supreme Court judgments and their applicability.
7. Interim orders and their finality.

Issue-wise Detailed Analysis:

1. Possession of the premises by the Official Liquidator:
The application seeks an order directing the Official Liquidator to hand over vacant and peaceful possession of the premises, which includes non-agricultural land and an old factory shed, to the applicant. The applicant, an 88-year-old man, leased the property to the company under liquidation and has been attempting to regain possession for 19 years.

2. Lease termination and subsequent legal actions:
The premises were leased to the company on 27-11-1975 for ten years. The lease was terminated on 27-2-1981 due to non-payment of rent, leading to Civil Suit No. 223 of 1981, which was resolved by a consent order on 20-9-1983. The company defaulted again, prompting another notice on 3-10-1985 and Civil Suit No. 163 of 1986. The lease expired in 1985 by efflux of time.

3. Role and rights of the Saraswat Co-operative Bank:
The Bank, claiming the company owed it Rs. 60 lakhs, sought to be a party in Suit No. 163 of 1986, which was rejected. The Bank's application for various reliefs, including the appointment of a Court Receiver, was partially successful. The Bank's claim was restricted to tenancy rights, not ownership or mortgage of the land and factory.

4. Appointment and scope of the Court Receiver's authority:
The Co-operative Court appointed a Special Recovery Officer as Court Receiver on 11-12-1992, who took possession of the premises. The Appellate Court modified this order on 15-6-1993, limiting the receiver's authority to movable property. However, the Division Bench's order on 29-9-1993 reinstated the receiver's role over the tenancy rights of the immovable property.

5. Applicability of Section 457 of the Companies Act, 1956:
The applicant argued that under Section 457, the Official Liquidator does not require the premises for the company's beneficial winding-up, as no business has been conducted there since 1992. The Supreme Court's interpretation in Ravindra Ishwardas Sethna v. Official Liquidator was cited, emphasizing that the Liquidator can only carry on the business if necessary for the beneficial winding-up.

6. Relevant Supreme Court judgments and their applicability:
The Supreme Court's judgment in Ravindra Ishwardas Sethna was deemed applicable, establishing that the Liquidator's powers under Section 457 are limited to actions necessary for beneficial winding-up. The Bank's reliance on Union Bank of India v. Official Liquidator was found inapplicable as it involved different circumstances, including a subsisting lease and a different section of the Act (Section 535).

7. Interim orders and their finality:
An interim order dated 23-7-1999 directed certain actions but did not constitute a final resolution of the Official Liquidator's report. The Court clarified that this order was not final and proceeded to dispose of the report, directing the Receiver to hand over possession to the Official Liquidator.

Conclusion:
The application was allowed, directing the Receiver to hand over possession of the premises to the Official Liquidator, who would then return it to the applicant. The Official Liquidator's report was also made absolute in these terms, ensuring the applicant's ownership rights were upheld.

← Previous Next →