2011 (9) TMI 1161 - HC - Companies Law

Summary

Issues Involved:
1. Whether the procedure adopted by the learned trial judge is in due process of law for passing an order of eviction or not?
2. Whether the decision of the learned trial judge that letting out of the said properties of the company (in liquidation) is void under the provisions of the Companies Act, 1956, is correct or not?

Summary:

Issue 1: Due Process of Law for Eviction Order

19. The first point regarding the procedure was not agitated before the learned trial judge and is raised for the first time in this appeal. The letter written by the official liquidator to the Assistant Registrar of Companies was accepted by the learned trial judge as an application for direction. The appellant participated in the proceedings by filing an affidavit defending its claim of tenancy. Under section 446 of the Companies Act, once the order of winding up is passed, the company court has jurisdiction to decide all disputes. This is evident from sub-section (2) of section 446, which states that the court shall have jurisdiction to entertain or dispose of any suit or proceeding by or against the company, any claim made by or against the company, any application made u/s 391, and any question of priorities or any other question whatsoever, whether of law or fact, which may relate to or arise in the course of the winding up of the company.

20. The claim of the company made by the official liquidator and the defense of the appellant are adjudicatable under clause (b) of sub-section (2) of section 446. No regular suit is required to be filed, and the learned trial judge can pass an order on the application in any form. This procedure is well established by judicial pronouncements, as seen in the case of Vidhyadhar Upadhyay v. Sree Sree Madan Gopal Jew [1990] 67 Comp Cas 394 (Cal).

23. Section 446 is a special provision with a summary procedure, enabling the company court to take all legal measures to avoid multiplicity of judicial proceedings and conflicting decisions. All that is necessary is to give an opportunity of being heard to the third party before any judicial step is taken by the court.

24. Therefore, the contention that the procedure adopted by the learned trial judge is not in due process of law is not accepted.

Issue 2: Validity of Letting Out Properties

25. The findings of the learned trial judge that the creation of two leases by the company are void are legally flawless. The first lease was executed on November 24, 1998, when the prohibitory order of the Reserve Bank of India (RBI) was not in force. However, in July 1997, the company gave an undertaking to the RBI not to alienate its assets without RBI's approval. This undertaking is considered a solemn declaration and its breach amounts to betraying the confidence of the statutory authority. The company was estopped from committing breach of such undertaking.

26. The renewal of the lease on November 23, 2001, after the presentation of the winding up petition, is void u/s 536(2) of the Companies Act, 1956, which states that any disposition of the property of the company made after the commencement of the winding up shall be void unless the court orders otherwise.

27. The contention that the company became a monthly tenant under the Andhra Pradesh Rent Act, 1960, is not accepted. The Andhra Pradesh Rent Act, 1960, has no application in this case as per section 32(c) of the said Act.

28. The appeal is dismissed with no order as to costs.

S.K. Chakraborty, J.

29. I agree.