1993 (3) TMI 372 - HC - Companies Law

Summary

Issues Involved:
1. Whether the appellant was a sub-tenant in respect of the premises-in-question.
2. Whether the appellant was entitled to an order of vesting under Section 535(6) of the Companies Act, 1956.
3. Whether there was prior written consent from the landlord for sub-letting.
4. Compliance with the Delhi Rent Control Act, 1958 regarding sub-letting.

Issue-wise Detailed Analysis:

1. Sub-tenancy Status of the Appellant:
The primary issue before the court was whether the appellant, Shree Cement Ltd., was a sub-tenant under the erstwhile company, Shalimar Rope Works Ltd., concerning the guest house at Maharani Bag, New Delhi. The appellant based its claim on a letter dated February 25, 1987, which allegedly confirmed the sub-tenancy. However, the court found that the appellant failed to provide prima facie evidence of such a sub-tenancy. The lease agreement dated July 29, 1970, specifically required prior written consent from the landlord for any sub-letting, which was not provided by the appellant.

2. Entitlement to Vesting Order under Section 535(6) of the Companies Act, 1956:
Section 535(6) of the Companies Act, 1956, allows the court to vest property in any person claiming an interest in disclaimed property. The court examined whether the appellant had any interest in the property that would entitle it to such an order. The court concluded that the appellant did not establish its claim as a sub-tenant and, therefore, was not entitled to an order for vesting the property.

3. Requirement of Prior Written Consent from the Landlord:
Clause 6 of the lease agreement required prior written consent from the landlord for any sub-letting. The appellant argued that the lease agreement itself implied consent. However, the court referenced several Supreme Court decisions, including South Asia Industries Private Ltd. v. Sarup Singh and Shalimar Tar Products Ltd. v. H.C. Sharma, which established that specific prior written consent is necessary for sub-letting. The court found no evidence of such consent from the landlord in favor of the appellant.

4. Compliance with the Delhi Rent Control Act, 1958:
The court also considered the provisions of the Delhi Rent Control Act, 1958, specifically Sections 14, 16, and 17, which require prior written consent from the landlord for sub-letting and notification of such sub-letting. The appellant failed to show compliance with these provisions. There was no evidence of prior written consent or notification to the landlord about the sub-letting. The court noted that in proceedings before the Rent Controller of Delhi, there was no reference to the alleged sub-letting in favor of the appellant.

Conclusion:
The court affirmed the judgment and order of the trial judge, dismissing the appellant's claim for sub-tenancy and entitlement to vesting under Section 535(6) of the Companies Act, 1956. The application by the landlord for disclaimer of the property was allowed. The court also directed that the issue of ownership of movable assets in the guest house be determined through a trial on evidence. The appeal was dismissed with costs, and the appellant's request for a stay of the judgment was denied.