2004 (12) TMI 391 - HC - Companies Law

Issues Involved:
1. Validity of tenancy rights of M/s. Indequip Leasing and Finance Ltd.
2. Powers of the Official Liquidator under the Companies Act.
3. Applicability of Supreme Court judgments cited by the tenant.
4. Review of previous orders dated 27-8-1999, 12-5-2000, and 25-8-2000.
5. Disposal of property under liquidation.

Detailed Analysis:

1. Validity of Tenancy Rights of M/s. Indequip Leasing and Finance Ltd.:
The tenant, M/s. Indequip Leasing and Finance Ltd., claimed lawful tenancy since 28-7-1984. However, the court highlighted that the company petition was filed on 23-5-1984, and any subsequent actions by the management, including creating tenancy rights, would not be saved. The court determined that the lease rights created after the filing of the company petition were void and did not bind the court or the liquidator, as they were not made in the ordinary course of business and were deemed fraudulent under Section 531 and 531A of the Companies Act.

2. Powers of the Official Liquidator under the Companies Act:
Sections 456 and 457 of the Companies Act empower the liquidator to take custody of all company properties and sell them to distribute assets. Section 477(6) allows the court to order any person in possession of the company's property to deliver it to the liquidator. The court emphasized that the liquidator's position is higher than that of a receiver appointed under Order XL, Rule 1 of the CPC, as the liquidator's powers stem from the Act itself.

3. Applicability of Supreme Court Judgments Cited by the Tenant:
The tenant cited judgments from Smt. Nirmala R. Bafna v. Khandesh Spg. & Wvg. Mills Co. Ltd. and Anthony C. Leo v. Nandlal Bal Krishnan. The court distinguished these cases, noting that in Smt. Nirmala R. Bafna, the issue was about sub-letting without the landlord's consent, which was not applicable here as the company owned the property. In Anthony C. Leo, the comparison with a receiver under CPC was deemed irrelevant as the liquidator's statutory powers are more extensive.

4. Review of Previous Orders Dated 27-8-1999, 12-5-2000, and 25-8-2000:
The tenant's application for review and stay of the mentioned orders was rejected. The court found no valid cause for review or declaration of lawful tenancy, reiterating that the tenancy rights created post-petition filing were void.

5. Disposal of Property under Liquidation:
The court emphasized the need to convert the company's properties into liquid cash for distribution. It noted that properties occupied by tenants do not fetch real market value and continuing tenancy would reduce the property's value. The court directed the tenant to vacate the property by 15th January 2005, failing which, the Official Liquidator could seek assistance from the District Magistrate/Local Administration for eviction.

Additional Judgment on Property Offer:
An offer to purchase the property known as "Sahu Jain Court" for Rs. 7 Lakhs was rejected due to the property's substantial size and value. The court directed future offers to be made in accordance with the law.

Conclusion:
The court upheld the Official Liquidator's authority to take possession and dispose of the company's properties, rejected the tenant's claims of lawful tenancy, and emphasized the liquidation process's goal of asset conversion and distribution.

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