2003 (1) TMI 537 - HC - Companies Law

Summary

Issues Involved:
1. Ejectment of the Defendant from the property.
2. Arrears of rent and damages.
3. Future damages/mesne profits.
4. Application of Section 22 of the Sick Industrial Companies (Special Provisions) Act (SICA).

Detailed Analysis:

1. Ejectment of the Defendant from the Property:
The suit was filed for the ejectment of the Defendant from the property located at 8/3, Asaf Ali Road, New Delhi. The Plaintiff claimed that the Defendant failed to pay the rent from March 1998 onwards, leading to the termination of the lease as per Clause 4(a) of the Lease Deed dated 11th July 1991. The Defendant admitted receipt of the notice but disputed its legal efficacy, arguing that as a sick company under SICA, it could not pay the arrears without BIFR's permission.

The Court referenced the Supreme Court decision in *Shree Chamundi Mopeds Ltd. v. Church of South India Trust Association*, which clarified that eviction proceedings do not fall under the protection of Section 22 of SICA. The Court concluded that the Defendant's argument was without merit, and the Plaintiff was entitled to a decree for possession.

2. Arrears of Rent and Damages:
The Plaintiff sought a decree for Rs. 2,40,000 as arrears of rent from 1-3-1998 to 23-9-1998 and damages from 24-9-1998 to 31-12-1998. The Defendant argued that due to its status as a sick company, it was protected under Section 22 of SICA and could not be sued for these arrears without BIFR's consent. The Court, however, found that the Defendant's status did not exempt it from paying rent or facing eviction for non-payment. The Court noted that the Defendant had not specifically denied the receipt of the notice or the arrears claimed by the Plaintiff.

3. Future Damages/Mesne Profits:
The Plaintiff also sought future damages at the rate of Rs. 24,000 per month. The Court directed the Deputy Registrar (Original) to conduct an enquiry regarding the future damages/mesne profits. This enquiry would determine the exact amount payable by the Defendant for occupying the premises beyond the lease termination date.

4. Application of Section 22 of SICA:
The Defendant argued that as a sick company, the provisions of Section 22 of SICA should apply, preventing the Plaintiff from taking legal action for arrears of rent and eviction. The Court referred to the Supreme Court's interpretation in *Dy. Commercial Tax Officers v. Corromandal Pharmaceuticals*, which stated that Section 22 does not cover eviction proceedings initiated by a landlord against a sick company. The Court held that the Defendant's reliance on Section 22 was misplaced and did not protect it from eviction or payment of rent.

The Court also referenced the decision in *Balraj Taneja v. Sunil Madan*, emphasizing that even in cases where a deemed admission can be drawn, the Court can insist on evidence. However, in this case, the Defendant's denial was not sufficient to raise a triable issue, and the Court found that no further evidence was required to decide on the ejectment.

Conclusion:
The Court granted the Plaintiff's prayer for the ejectment of the Defendant from the property and directed the Deputy Registrar to conduct an enquiry into the future damages/mesne profits. The issue of arrears of rent was deferred for further arguments, considering the application of Section 22 of SICA. The Defendant's arguments based on its status as a sick company were rejected, and the Court emphasized the need for prompt resolution of litigation to prevent undue delays.