2005 (6) TMI 284 - HC - Companies Law

Summary

Issues:
1. Liability of respondent No. 3 to pay compensation/royalty for the use of a flat in a housing society.
2. Determination of the amount of compensation/royalty to be paid by respondent No. 3 until a specific date.

Analysis:
1. The main issue in this case was whether respondent No. 3 was liable to pay compensation or royalty for using a flat in a housing society. The applicants claimed that the respondent should pay compensation from the date of filing the Company Petition until the flat was vacated. The respondent, who was a Director of the Company in liquidation, occupied the flat on a gratuitous license basis. The court examined the legal status of the respondent and concluded that he continued to be the Director of the Company, and the arrangement for using the premises should prevail until expressly terminated between the parties.

2. The court considered the provisions of the Companies Act and legal precedents to determine that the respondent's status as Director continued even after the Company Petition was filed. The court highlighted that the order passed did not expressly terminate the arrangement between the respondent and the Company. The court emphasized that the mere filing of the application did not determine the arrangement, and the respondent was entitled to occupy the premises under the same terms as before the legal proceedings.

3. The court also referenced a Supreme Court decision to support the view that in summary proceedings, it is not appropriate to determine issues regarding rights claimed between parties, which should be decided by the proper forum. Ultimately, the court found that there was no substantiation for the applicant's claim that the respondent was liable to pay compensation for the use of the premises. Since the respondent had vacated the premises as directed, the court ruled against the applicants, and the Company Application failed in terms of the relief sought.

4. In conclusion, the court dismissed the application regarding the liability of the respondent to pay compensation, emphasizing that there was no evidence to support the claim and that the respondent had vacated the premises as per the court's direction. The judgment highlighted the legal status of the respondent as a Director and the importance of expressly terminating arrangements between parties in such cases.