2004 (2) TMI 383 - HC - Companies Law

Summary

Issues Involved:
1. Possession of the premises.
2. Pending eviction suit.
3. Commonality of directors.
4. Notice to creditors.
5. Renewal and transfer of lease.

Issue-wise Detailed Analysis:

1. Possession of the premises:
The primary issue is whether the Official Liquidator should be directed to deliver quiet, vacant, and peaceful possession of the premises to the applicant landlord. The Official Liquidator and the ex-director have conceded that the premises are no longer required for the company in liquidation. The judgment references the legal position enunciated by the Apex Court in Ravindra Ishwardas Sethna v. Official Liquidator, High Court, Bombay, which states that if the premises are not needed for winding up activities, the liquidator should surrender possession to the landlords to save recurring liability to pay rent.

2. Pending eviction suit:
The workers' union argued that since the applicant has filed a suit for eviction against the company in liquidation, the relief claimed in the present application is unavailable. The court found no substance in this argument, stating that the landlord can invoke the remedy under the Companies Act independently of the eviction suit, especially given the established fact that the premises are no longer required by the company in liquidation.

3. Commonality of directors:
The workers' union contended that there is commonality of directors between the applicant company and the company in liquidation. The court rejected this argument, noting that since March 1990, there have been no common directors between the two entities. Even if there were common directors, it would not affect the landlord's right to claim possession as the landlord is a separate juristic person.

4. Notice to creditors:
The workers' union argued that notice should be given to all creditors before passing any order on the application. The court found this reliance misplaced, stating that the dictum in Madhusudan Gordhandas & Co. v. Madhu Woolen Industries (P.) Ltd. applies to proceedings before the order of winding up is passed. Since the winding-up order is already in place, the question of giving notice to all creditors does not arise.

5. Renewal and transfer of lease:
The workers' union claimed that the lease deed permitted renewal and that the court should explore transferring the lease to a third party. The court noted that the lease deed clauses required the landlord's consent for any assignment or transfer, which was not given. The tenancy rights of the company in liquidation have been determined, and eviction proceedings are pending. The court also noted that the landlord is unwilling to consent to any transfer or assignment to a third party, making the argument for invoking section 56 of the Maharashtra Rent Control Act irrelevant.

Conclusion:
The court found no legitimate grounds for the workers' union to resist the landlord's claim for possession. Following the Apex Court's dictum in Ravindra Ishwardas Sethna's case, the application was allowed. The Official Liquidator was directed to take steps to sell the movable articles within one month and hand over vacant possession of the premises to the landlord. The landlord agreed to withdraw the eviction suit and not claim any rent or compensation from the company. Security charges were to be shared proportionately between Dena Bank and the landlord.

Operative Order:
1. The Official Liquidator to sell movable articles within one month.
2. Hand over vacant possession to the landlord after the sale.
3. If the sale is incomplete, the landlord to provide a room for storing unsold movables.
4. The landlord to withdraw the eviction suit and not claim rent or compensation.
5. Security charges to be shared between Dena Bank and the landlord.

The order disposes of Company Application No. 405 of 2002 and all related reports of the Official Liquidator. A stay of operation of the order was granted for four weeks.