2008 (3) TMI 476 - HC - Companies Law

Winding up - Custody of company s property - Held that - There is no substance in the contention that the applicants are ready and willing to purchase the property in question at market value. When the possession is sought to be taken from the applicants it is not just and proper on their part to put forward such a contention especially when the applicants are not legally inducted tenants in the premises. Property which is in the possession of a tenant is the property of the Company and on the appointment of the Provisional Liquidator or the Liquidator under the authority of the Court the Liquidator is entitled to take into his hands all the properties which belongs to or which appear to belong to the Company. The Official Liquidator is in the process of liquidating the undisputed assets of the Company and now the disputed assets are taken on hand. So at this stage the Court will not allow the applicants to raise such contention. Even otherwise there is no merits or substance in this contention and hence it is rejected. Section 468 empowers the Court to make an order at any time after making a winding up order on any contributory Trustee Receiver Banker Agent Officer or other employee of the Company to pay deliver surrender or transfer forthwith or even such time as the Court directs to the Liquidator any money property or books and papers in his custody or under his control to which the Company is prima facie entitled. Thus none of the applicants of this group deserve any relief from this Court. All these applications are therefore rejected. T

Issues Involved:

1. Quashing and setting aside the notices issued by the Official Liquidator.
2. Restraining the Official Liquidator from taking possession of the rooms.
3. Determination of tenancy rights of the applicants.
4. Applicability of the Bombay Rent Act.
5. Applicants' offer to purchase the premises at market value.
6. Allegation of adverse possession by the applicants.

Detailed Analysis:

1. Quashing and Setting Aside the Notices Issued by the Official Liquidator:

The applicants sought to quash the notices dated 24-5-2007 and 10-10-2007 issued by the Official Liquidator, which demanded the applicants to vacate the premises. The Court observed that the Official Liquidator issued these notices following the winding-up order of Vijay Mills Limited. The Court found that the applicants failed to establish their claim as lawful tenants of the Company in liquidation. The documents provided, such as rent receipts, telephone bills, and electricity bills, were deemed insufficient to prove tenancy rights.

2. Restraining the Official Liquidator from Taking Possession of the Rooms:

The applicants requested the Court to restrain the Official Liquidator from taking possession of the rooms they occupied. The Court held that the Official Liquidator is entitled to claim possession of the premises upon the termination of any lease agreement as the Company went into liquidation. The Court emphasized that the Official Liquidator's actions were in compliance with the winding-up process and the directions of the Court.

3. Determination of Tenancy Rights of the Applicants:

The applicants contended that they were lawful tenants of the premises and entitled to protection under the Bombay Rent Act. However, the Court concluded that the applicants did not establish their tenancy rights. The Court noted that the applicants' own admission before the Official Liquidator indicated that most of them were ex-workers or employees of the closed Mills Company. The Court found no evidence of any tenancy or sub-tenancy created by the Company in liquidation or with its consent.

4. Applicability of the Bombay Rent Act:

The applicants argued for protection under the Bombay Rent Act, which restricts landlords from evicting tenants who pay rent and adhere to tenancy conditions. The Court clarified that the provisions of the Bombay Rent Act do not apply as the applicants failed to prove their status as tenants. The Court referenced multiple judgments, including Smt. Nirmala R. Bafna v. Khandesh Spinning & Weaving Mills Co. Ltd. and Bhaiya Punjalal Bhagwanddin v. Dave Bhagwatprasad Prabhuprasad, to support its decision that the applicants were not entitled to protection under the Rent Act.

5. Applicants' Offer to Purchase the Premises at Market Value:

The applicants offered to purchase the premises at market value, suggesting that the Court determine the value through a valuation report. The Court rejected this offer, stating that the applicants were not legally inducted tenants and had no right to purchase the property. The Court emphasized that the sale of the Company's assets is governed by the Companies Act, and the Official Liquidator is responsible for such transactions with the Court's approval.

6. Allegation of Adverse Possession by the Applicants:

The applicants claimed they had acquired ownership of the premises through adverse possession due to their long-term occupancy. The Court dismissed this contention, noting that the applicants had consistently claimed to be lawful tenants. The Court emphasized that the applicants' possession was under consideration due to their tenancy claims, and they could not now claim adverse possession. The Court reiterated that the Official Liquidator is empowered to take possession of the Company's property under the Companies Act.

Conclusion:

The Court rejected all the applications, directing the Official Liquidator to implement the eviction notices and take possession of the premises. The Police authorities were instructed to assist the Official Liquidator in this process. The Court also permitted the Official Liquidator to engage labor force if the applicants did not vacate the premises voluntarily. The judgment was stayed until 28-3-2008 upon the applicants' request.

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