2007 (3) TMI 392 - HC - Companies Law

Summary

Issues Involved:
1. Jurisdiction under Section 446 of the Companies Act, 1956.
2. Applicability of Maharashtra Rent Control Act, 1999.
3. Maintainability of the suit under Section 41 of the Presidency Small Causes Court Act.
4. Doctrine of Res Judicata.
5. Financial implications on the company in liquidation.
6. Share capital concept in a company under liquidation.

Detailed Analysis:

1. Jurisdiction under Section 446 of the Companies Act, 1956:
The applicant sought leave under Section 446 of the Companies Act to file and proceed with an eviction suit in the Small Causes Court, Mumbai. The court emphasized that leave should be granted where the question at issue cannot be decided in the winding-up proceedings. The court also noted that the failure to obtain leave prior to instituting the suit does not debar the court from granting such leave subsequently, as established by the Supreme Court in *Bansidhar Shankarlal v. Mohd. Ibrahim*.

2. Applicability of Maharashtra Rent Control Act, 1999:
The applicant argued that the Maharashtra Rent Act does not apply to premises let to companies with a paid-up share capital of Rs. 1 crore or more. The court acknowledged that the tenancy of such companies is governed by the Indian Contract Act and the Transfer of Property Act, not the Rent Act. The applicant had terminated the tenancy of the company by notice under Section 106 of the Transfer of Property Act.

3. Maintainability of the suit under Section 41 of the Presidency Small Causes Court Act:
The applicant contended that the suit for eviction under Section 41 of the Presidency Small Causes Court Act was maintainable. The court held that the Small Causes Court has the jurisdiction to decide its own jurisdiction and to adjudicate on the issues raised in the suit. The court emphasized that it is not for the Company Court to decide the maintainability of the suit at the stage of granting leave.

4. Doctrine of Res Judicata:
The respondent argued that the applicant's failure to comply with an earlier order should bar the present application under the doctrine of res judicata. The court rejected this contention, stating that the earlier order did not decide the application on merits and merely recorded a concession given by the counsel. Therefore, the doctrine of res judicata was not applicable.

5. Financial implications on the company in liquidation:
The court considered whether granting leave would strain the financial resources of the company in liquidation. It noted that the Official Liquidator did not need the premises and had no objection to releasing it. The court concluded that defending the suit would not create a financial strain on the company, as the tenancy rights are not considered an asset for liquidation purposes.

6. Share capital concept in a company under liquidation:
The court addressed the argument regarding the concept of share capital in a company under liquidation. It explained that the share capital remains relevant and that uncalled capital can be realized by the Official Liquidator. The court held that the question of share capital and its implications should be decided by the competent court in the suit, not by the Company Court at the stage of granting leave.

Conclusion:
The court granted leave to the applicant to file and proceed with the eviction suit under Section 41 of the Presidency Small Causes Court Act, subject to the condition that any decree obtained shall not be executed against the company in liquidation without the leave of the Company Court. The application was disposed of with no order as to costs, and a request for a stay of the order was denied.