2003 (7) TMI 568 - HC - Companies Law

Summary

Issues Involved:
1. Recovery of possession of office premises.
2. Payment of arrears and outgoings.
3. Payment of damages/mesne profit for wrongful withholding of possession.
4. Compliance with lease terms and conditions.
5. Rights of the Official Liquidator and lessees (Dinesh Polyber and Hi-Rel).

Detailed Analysis:

1. Recovery of Possession of Office Premises:
The Centre sought recovery of possession of Unit No. 60 in Trade Centre Arcade, Cuffe Parade, Mumbai, from the Official Liquidator and the second respondent. The Centre argued that the Company (in liquidation) had violated the lease terms by subletting the premises to Dinesh Polyber and Hi-Rel without permission and failing to pay rent and outgoing charges. The Centre claimed a right to recover possession due to these breaches and the winding-up order of the Company.

2. Payment of Arrears and Outgoings:
The Centre demanded Rs. 1,86,384 towards arrears, including interest on delayed payments, and ongoing monthly outgoings. The breakdown included arrears for 1993-1999, outgoing charges, telephone charges, and interest on delayed payments. The Official Liquidator acknowledged the failure of Dinesh Polyber and Hi-Rel to pay rent and outgoing charges as per their agreements.

3. Payment of Damages/Mesne Profit:
The Centre requested Rs. 6,533 per month as damages/mesne profit for wrongful withholding of possession from the date of the order until the premises were vacated. Additionally, they sought compensation from the Official Liquidator until possession was handed over.

4. Compliance with Lease Terms and Conditions:
The lease agreement prohibited the Company from transferring, assigning, or subletting the premises without written permission from the Centre. The Company breached these terms by subletting to Dinesh Polyber and Hi-Rel. The Centre argued for forfeiture of the lease due to these breaches and the winding-up order.

5. Rights of the Official Liquidator and Lessees:
The Official Liquidator, acting under the Company's winding-up order, had allowed Dinesh Polyber and Hi-Rel to occupy the premises under agreements requiring them to pay rent and outgoing charges. Both lessees failed to comply with these terms. The Centre cited precedents, including Supreme Court and High Court judgments, to support their right to recover possession and enforce lease terms.

Judgment:
The Court directed Dinesh Polyber and Hi-Rel to vacate the premises and hand over possession to the Official Liquidator. The Official Liquidator was instructed to then transfer vacant possession to the Centre. The lessees were also ordered to pay outstanding rent to the Official Liquidator, who would then settle dues with the Centre. The Court recognized the leasehold right as a valuable asset but emphasized compliance with lease terms and the right of forfeiture due to breaches and the winding-up order. The application was allowed in these terms.