2007 (12) TMI 284 - HC - Companies Law

Winding up - Custody of company s properties - Held that - There is no doubt that the land does not belong to the company in liquidation. But, since the applicant had applied before the Debts Recovery Tribunal for being permitted to participate in the sale of the structure, the applicant should be held to its bargain and it having voluntarily relinquished its rights under the deed of 1963 in respect of the structure. The applicant will pay Garg the amount paid by Garg and obtain full rights in respect of the structure. The net effect is that Garg need no longer be repaid out of the sale proceeds realised pursuant to the confirmation of sale made by the Debts Recovery Tribunal on 20-1-2004 and such money will now be available for distribution to the company s creditors in accordance with law. Ordinarily, Garg would have been entitled to interest on the sum that he has put in but in view of Garg s assertion that he has remained in possession, the interest is set off against the occupation charges that would be due from Garg. The application is allowed. Garg is declared to be a trespasser with no right to remain in possession of any part of premises No. 2, Jubilee Road, Jamshedpur, or any structure thereon. The Official Liquidator is directed to obtain police help, if necessary, for the purpose of removal of Garg and making over possession of the said premises to the applicant within a period of 10 weeks hereof. The applicant will pay costs assessed at 1,000 GMs to the Official Liquidator.

Issues Involved:
1. Direction to Official Liquidator to surrender rights and remove trespasser.
2. Applicant's lease and sub-lease rights.
3. Official Liquidator's use of the property for beneficial winding up.
4. Previous suit for eviction and current application.
5. Sale proceedings and possession claims by Garg.
6. Jurisdiction of Company Court vs. Debts Recovery Tribunal.
7. Applicant's waiver of claims and offer to pay Garg.

Detailed Analysis:

1. Direction to Official Liquidator to Surrender Rights and Remove Trespasser:
The applicant sought a direction for the Official Liquidator to transfer possession of the premises to it, despite knowing the Liquidator was not in actual possession. The applicant also requested the removal of a trespasser from the premises. The court noted that the answer to this issue was overtaken by subsequent events, specifically Garg's intervention.

2. Applicant's Lease and Sub-Lease Rights:
The applicant held a long lease on land in Jamshedpur from the State Government, which included the premises in question. This lease was sub-leased to a company that became part of the applicant's conglomerate. Although the lease had expired when the proceedings began, it was renewed during the pendency of the case.

3. Official Liquidator's Use of the Property for Beneficial Winding Up:
The applicant argued that the Official Liquidator had no beneficial use for the land in the winding-up process and could not afford the lease rent. The court considered the applicant's assertion that the property was not listed as an asset in the company's balance sheets nor used as security for loans.

4. Previous Suit for Eviction and Current Application:
The applicant had previously filed a suit for eviction against the Official Liquidator but chose to proceed with the current application instead. The court acknowledged the applicant's election to abandon the earlier suit in favor of the current proceedings.

5. Sale Proceedings and Possession Claims by Garg:
Garg claimed possession of the premises based on a sale confirmed by the Debts Recovery Tribunal, which was later set aside. Garg intervened in the proceedings, asserting his possession rights. The court noted that Garg's possession was based on an interim order that was vacated when the sale was set aside. Garg's application for possession was dismissed, and the court declared him a trespasser.

6. Jurisdiction of Company Court vs. Debts Recovery Tribunal:
The court addressed the jurisdictional conflict, noting that the Debts Recovery Tribunal's orders are not subject to the Company Court's supervision. However, since Garg intervened voluntarily, the court proceeded to adjudicate the matter comprehensively to avoid multiplicity of proceedings.

7. Applicant's Waiver of Claims and Offer to Pay Garg:
The applicant offered to waive all claims for unpaid lease rent and to pay Garg the amount he had paid for the property. The court accepted this offer, directing the applicant to pay Garg and obtain full rights to the structure. This resolution allowed the sale proceeds to be available for distribution to the company's creditors.

Conclusion:
The court allowed the application, declared Garg a trespasser, and directed the Official Liquidator to remove Garg and transfer possession to the applicant. The applicant was ordered to pay costs to the Official Liquidator, with no costs awarded against Garg.

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