2012 (8) TMI 1094 - HC - Companies Law

Summary

Issues Involved:
1. Audi Alteram Partem
2. Possession and Liquidation
3. Validity of Tenancy and Sub-Tenancy
4. Applicability of Section 446(2) and Section 536(2)

Summary:

1. Audi Alteram Partem:
The doctrine of "audi alteram partem" obligates the court to hear all concerned parties unless there is a strong reason not to. The learned judge could have passed the same order after hearing the appellants, considering and discarding their version with logic. Passing the order ex parte, however strong, would defeat the principle of justice being seen to be done.

2. Possession and Liquidation:
The company, A. Talukdar and Co. (Fertilizers) P. Ltd., was wound up by order dated November 9, 1998, due to its inability to pay debts. The official liquidator took possession of the company's assets but faced obstructions from M/s. Hindustan Bone Mills and other occupants. The official liquidator proceeded to sell the land, finding multiple unauthorized occupants. The learned judge allowed the sale on an "as is where is" basis and did not issue specific directions for the removal of occupants.

3. Validity of Tenancy and Sub-Tenancy:
The occupants claimed tenancy through M/s. Hindustan Bone Mills, which was a partnership firm of the Talukdars. The official liquidator initially accepted rent but later objected to the occupants' right to occupy the premises. The court found that the tenancy was created after the commencement of winding up proceedings, making it void under section 536(2) unless otherwise ordered by the court. The court noted that the occupants' possession was coterminous with the official liquidator's possession.

4. Applicability of Section 446(2) and Section 536(2):
Section 446(2) vests the company judge with summary power to decide controversies arising in the course of beneficial winding up, including the title of occupants. The court must restore the status quo ante as on the date of the winding-up order. The official liquidator was responsible for handing over vacant possession to the company. The court held that the order of winding up being stayed does not affect the applicability of section 446(2).

Judgment:
The appeals were allowed on the ground that the appellants were not heard by the learned judge. The order dated September 20, 2010, merged in the order dated July 8, 2011, was set aside. The court directed the official liquidator to remove Chatterjee Brothers and Pack Tech from possession and hand over vacant possession to the company's authorized representative. The appeal against the order dated September 6, 2010, succeeded in part, affirming the discretionary power of the company court under section 446(2). The operation of the judgment was stayed for eight weeks on the condition that Chatterjee Brothers and Pack Tech continue to pay occupation charges.

Conclusion:
The judgment emphasizes the importance of hearing all concerned parties, the responsibilities of the official liquidator in handing over possession, and the applicability of sections 446(2) and 536(2) in winding-up proceedings. The court directed specific actions to ensure compliance with legal and ethical standards in the liquidation process.