2006 (6) TMI 224 - HC - Companies Law

Summary

Issues Involved:
1. Fixation of fair rent.
2. Jurisdiction of the Rent Controller versus the Company Court.
3. Leave of the court under Section 446 of the Companies Act.
4. Continuation of tenancy and eviction proceedings.
5. Payment of mesne profits.

Detailed Analysis:

Fixation of Fair Rent:
The official liquidator sought to fix the fair rent at Rs. 1 lakh per month from October 1, 1987. The first respondent moved before the Rent Controller seeking fixation of fair rent at Rs. 30,637 per month. The official liquidator argued that the first respondent did not obtain the leave of the court to file the petition before the Rent Controller, making the proceedings before the Rent Controller without jurisdiction. The court acknowledged that the Rent Controller has the authority to fix fair rent, but emphasized that the company court retains jurisdiction to scrutinize the decision to safeguard the interests of the company in liquidation.

Jurisdiction of the Rent Controller versus the Company Court:
The first respondent argued that the provisions of the Rent Control Act override the Companies Act, asserting that the company court has no jurisdiction to fix fair rent. The official liquidator countered that once the company is under liquidation, the company court has exclusive jurisdiction over matters concerning the assets of the company. The court held that while the Rent Controller has jurisdiction to fix fair rent, the company court has the authority to scrutinize and ensure the interests of the company in liquidation are protected.

Leave of the Court under Section 446 of the Companies Act:
The court clarified that under Section 446 of the Companies Act, no proceedings can be commenced against the company without the leave of the court. It emphasized that the object of Section 446 is to safeguard the assets of the company and avoid expensive litigation. The court noted that proceedings initiated without leave of the court are not void but voidable, and once leave is obtained, the proceedings are deemed instituted on the date of granting leave.

Continuation of Tenancy and Eviction Proceedings:
The official liquidator sought the eviction of the first respondent and the handover of the premises. The court held that the company court has the jurisdiction to order eviction in winding-up proceedings, as seen in previous cases where tenants could not extend winding-up proceedings for personal interest. The court emphasized that the company court has the responsibility to ensure the smooth administration of the assets of the company in liquidation.

Payment of Mesne Profits:
The official liquidator sought mesne profits at Rs. 1 lakh per month until the first respondent vacates the premises. The court held that the Rent Controller is the authority to decide fair rent, and the company court can scrutinize the decision. The court directed the parties to submit their contentions and evidence on fair rent, allowing the court to fix fair rent without further delay.

Conclusion:
The court upheld the jurisdiction of the Rent Controller to fix fair rent but emphasized the company court's authority to scrutinize the decision to protect the interests of the company in liquidation. The court directed the parties to submit evidence on fair rent and stayed the proceedings before the Rent Controller, transferring the matter to the company court for a final decision. The application was closed, with further decisions on eviction and mesne profits to be made after determining the fair rent.