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2007 (10) TMI 393 - HC - Companies LawWinding up - Fraudulent preference - official liquidator seeks eviction of a lessee at a property of the company in liquidation in Hyderabad - status and nature of possession of a person who was admittedly a tenant of the premises - Held that - The lease of 23-11-2001 is void. The respondent is not entitled to any protection to remain in possession of the Hyderabad shop-rooms as its initial induction thereat under 24-11-1998 deed was illegal and it is in any event not entitled to any protection under the Andhra Pradesh Rent Control Act. It is recorded that the respondent has insisted that it continues to be in possession of the shop-rooms. The respondent is directed to deliver vacant possession of the shop-rooms to the official liquidator or his duly authorised representative within seven weeks from date. The respondent will not part with the possession in respect of the shop-rooms or either of them or create any interest in respect thereof in favour of any person other than the official liquidator till it hands over possession of the same to the official liquidator. The official liquidator will be at liberty to apply to recover occupation charges from the respondent for the duration of its illegal occupation of the premises in question. The respondent will pay costs assessed at 6, 000 GMs to the official liquidator.
Issues Involved:
1. Eviction of the lessee from the property of the company in liquidation. 2. Validity of the lease agreements under the Companies Act, 1956. 3. Jurisdiction of the Company Court. 4. Applicability of sections 531, 531A, and 536(2) of the Companies Act, 1956. 5. Protection under the Andhra Pradesh Rent Control Act. Detailed Analysis: Issue 1: Eviction of the Lessee from the Property of the Company in Liquidation The official liquidator sought eviction of the lessee from the company's property in Hyderabad. The lessee resisted the order, claiming a valid lease agreement. Issue 2: Validity of the Lease Agreements under the Companies Act, 1956 The company, Prudential Capital Markets Ltd., entered into a lease agreement on 24-11-1998, and a subsequent agreement on 23-11-2001, with the respondent. The official liquidator argued that the second lease was void as it was executed after the commencement of winding-up proceedings (7-4-2001). The court found that the second agreement was made in bad faith and without adequate consideration, thus void under section 536(2) of the Companies Act, 1956. Issue 3: Jurisdiction of the Company Court The court affirmed its jurisdiction under section 446(2) of the Companies Act, 1956, to entertain questions arising in the course of winding up, including the eviction of trespassers from the company's property. This was supported by precedents such as Vidyadhar Upadhyay v. Sree Sree Madan Gopal Jew and Smt. Pushpa Devi Jhunjhunwalla v. Official Liquidator. Issue 4: Applicability of Sections 531, 531A, and 536(2) of the Companies Act, 1956 - Section 531: The court noted that this section was not applicable as the respondent was not a creditor. - Section 531A: This section was also not applicable as the first agreement was beyond the period covered by this section. - Section 536(2): The court held that the second lease agreement was void as it was executed during the period covered by this section without the court's leave. The court emphasized that the terms of the second agreement demonstrated bad faith and lack of consideration. Issue 5: Protection under the Andhra Pradesh Rent Control Act The respondent claimed protection under the Andhra Pradesh Rent Control Act. However, the court noted that the rent exceeded Rs. 3,500 per month, thus excluding the property from the Act's protection as per section 32(c) of the Andhra Pradesh Buildings (Lease, Rent and Eviction) Control (Amendment) Act, 2005. Conclusion: The court directed the respondent to deliver vacant possession of the shop-rooms to the official liquidator within seven weeks. The respondent was also ordered to pay costs to the official liquidator and was prohibited from creating any interest in the property in favor of any person other than the official liquidator. The official liquidator was granted liberty to apply for recovery of occupation charges for the respondent's illegal occupation.
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