2009 (8) TMI 701 - HC - Companies Law

Whether the lessor is entitled to get back the possession of the property of the company in liquidation upon the winding up of the company? Held that - If the facts of the present case are considered it cannot be said that the action of the official liquidator for taking over the possession of the property of the company in liquidation was illegal or void nor the possession of the property can be ordered to be handed over to GIDC. However even if it is observed that GIDC is the owner of the property but the same is in the capacity as the lessor and the company in liquidation is in the capacity as the lessee and therefore the rights in the property of the company in liquidation as per the lease agreement are declared as subsisting but on condition that the company in liquidation will be required to discharge all obligations as per the lease agreement with the applicant. Under the above circumstances the application is allowed only to the aforesaid extent. The official liquidator to settle the amount with GIDC with the bifurcation of prior to the date of winding up and after the date of winding up. Such outstanding liability towards GIDC as may be finally settled would be reflected in the advertisement for sale of the property. In view of the above the relief for entrustment of the possession to the applicant cannot be granted.

Summary

The High Court of Gujarat, in the case of GIDC seeking directions against the official liquidator regarding ownership of a plot of land, ruled that GIDC is not entitled to possession of the property as long as lease conditions are met. The court cited a previous decision to support this ruling. The official liquidator must honor lease obligations towards GIDC and discharge any outstanding liabilities before selling the property. The court emphasized that the rights of the lessee continue even after winding up, and any disputes over settlement can be resolved by the company court. The court also clarified that local taxes are the lessee's individual liability and do not fall under the lessor's claim. The application was allowed only to the extent that the official liquidator must settle outstanding liabilities with GIDC before selling the property. The possession was not ordered to be handed over to GIDC. The application was disposed of accordingly.