2002 (4) TMI 878 - HC - Companies Law

Summary

Issues Involved:
1. Return of D.G. sets.
2. Payment of outstanding lease rentals.
3. Insufficient stamp duty on lease agreements.
4. Ownership and termination of lease agreements.
5. Role of the official liquidator and secured creditors.

Detailed Analysis:

1. Return of D.G. Sets:
The applicant, a limited company, requested the return of four diesel generating (D.G.) sets leased to Mahendra Mills Ltd., now in liquidation. The applicant argued that under clause 7.1.3 of the lease agreements, the lease was terminated due to the company's liquidation, entitling them to recover the leased assets. The court noted that the official liquidator confirmed no charge existed on the D.G. sets, establishing the applicant's ownership. The court ordered the return of the D.G. sets to the applicant, subject to an undertaking to pay any due stamp duty and penalties, supported by a bank guarantee of Rs. 15 lakhs.

2. Payment of Outstanding Lease Rentals:
The applicant sought payment of outstanding lease rentals. The court found that the lease agreements were not adequately stamped, hence not admissible as evidence. Consequently, the applicant could not establish the termination of the lease or the payment due. The court directed the applicant to lodge an appropriate claim with the official liquidator and await its turn as an unsecured creditor.

3. Insufficient Stamp Duty on Lease Agreements:
A preliminary objection was raised regarding the insufficient stamp duty on the lease agreements, which were stamped at Rs. 50 each, while they should have been stamped as per the provisions of the Bombay Stamp Act, 1958. The court directed the Joint Registrar to examine and impound the lease agreements and take appropriate action. The applicant was allowed to lift the D.G. sets after providing an undertaking to pay any determined stamp duty and penalties.

4. Ownership and Termination of Lease Agreements:
The applicant claimed ownership of the D.G. sets based on invoices and a letter dated January 11, 1998, from the company acknowledging the applicant's ownership and the lease agreements. The court noted that the case was primarily based on the termination clause of the lease agreements. However, without the lease agreements being admissible due to insufficient stamp duty, the applicant could not establish the termination of the lease or the outstanding rentals. The court acknowledged the applicant's ownership based on the invoices but could not grant relief for lease rentals without the lease agreements.

5. Role of the Official Liquidator and Secured Creditors:
The official liquidator reported that no charge existed on the D.G. sets, and the secured creditors argued that the lease agreements were insufficiently stamped. The court directed the official liquidator to allow the applicant to lift the D.G. sets after receiving the required undertaking and bank guarantee. The court also directed the Joint Registrar to impound the lease agreements and take necessary action regarding the stamp duty.

Conclusion:
The court ordered the return of the D.G. sets to the applicant, subject to conditions, and directed the applicant to lodge a claim for outstanding lease rentals with the official liquidator. The lease agreements were to be examined and impounded for insufficient stamp duty. The application was disposed of without any order as to costs.