2015 (3) TMI 372 - HC - Companies Law

Company in liquidation - Disclaimer of the property - Ground of estoppel - Held that - In equity, a person drawing benefit from a transaction is not permitted to escape from the disadvantage, if any flowing from it. In the instant case the appellant is estopped from challenging the said order dated May 14, 2013 as it accepted the benefit of the sale notice containing the stipulation fixed by the learned Company Judge that the successful purchaser shall have to vacate the said property within May 31, 2014.In view of the reasons for our finding that the appellant is estopped from challenging the first impugned order, we also reject the contention of the appellant that by purchasing the business of SST Media they are entitled to carry on the said business from said property. In the instant case, from the conduct of the appellant it is evident that it was all along interested to wrongfully continue to occupy the said property and we find total lack of bona fide on the part of the appellant to file these appeals. It is further interesting to note, while in the Memo of Appeal filed in the second appeal, the appellant states that they are looking for a new accommodation to carry on their business, still they strenuously urged the first appeal challenging the decision of the leaned Company Judge for disclaimer of the said property. At the same time, we are also disturbed with the conduct of the official liquidator. In spite of the fact that it had sold the business of SST Media property, in terms of the said order dated May 14, 2013, with the express stipulation that the appellant had to vacate the said property on or before May 31, 2014, the Official Liquidator took no step to comply with the said order dated May 14, 2013 passed by the learned Company Judge to disclaim of the said property and hand over possession of the said property, if required with the police assistance, to the respondent no. 2. The Official Liquidator, belatedly issued a letter dated September 8, 2014 requesting the appellant to vacate the said property, but the appellant refused to vacate the said property. Still the Official Liquidator took no step. Thus, the learned Company Judge had to pass the order dated May 30, 2014. We direct the Official Liquidator to have the said property vacated by the appellant, if necessary with police help within January 31, 2015 and make over vacant possession of the said property to the respondent no. 2 within February 07, 2015. The appellant shall cause payment of the monthly occupation charges at the rate of ₹ 6,14,000/- to the Official Liquidator for the period till the month of January, 2015. All such monthly occupation charges, including the arrear amount, if any, shall be paid by the appellant to the Official Liquidator within January 07, 2015 and the Official Liquidator shall in turn pay the said sum to the respondent no.2.

Issues Involved:
1. Disclaimer of property by the Official Liquidator.
2. Eviction of the appellant from the said property.
3. Compliance with the orders dated May 14, 2013, and October 30, 2014.
4. Rights of the appellant as the purchaser of SST Media's business.
5. Applicability of Section 535 of the Companies Act, 1956.
6. Estoppel against the appellant for challenging the first order.
7. Onerous nature of the property for the Official Liquidator.
8. Due process of law for recovery of possession.
9. Conduct and responsibilities of the Official Liquidator.

Detailed Analysis:

1. Disclaimer of Property by the Official Liquidator:
The learned Company Judge directed the Official Liquidator to disclaim the property and hand over possession to the respondent no. 2. The appellant contested this direction, arguing that the property was not onerous and that SST Media had no right or interest in the property. However, the court found that SST Media was in possession of the property and had a right in respect of it, thus falling under the definition of "property" in Section 535 of the Companies Act, 1956.

2. Eviction of the Appellant from the Said Property:
The court upheld the order directing the eviction of the appellant from the property. It was noted that the appellant had accepted the sale notice's condition to vacate the property by May 31, 2014, and thus was estopped from challenging the eviction order. The appellant's argument that the business involved 300 employees and their livelihood would be jeopardized was not accepted.

3. Compliance with the Orders Dated May 14, 2013, and October 30, 2014:
The Official Liquidator was found to have complied with the order for the sale of SST Media's business but failed to execute the order for disclaiming the property and handing over possession to the respondent no. 2. The court directed the Official Liquidator to ensure the property is vacated by January 31, 2015, and possession handed over by February 07, 2015.

4. Rights of the Appellant as the Purchaser of SST Media's Business:
The appellant argued that purchasing the business of SST Media included the right to carry on business from the property. However, the court held that the appellant was bound by the condition in the sale notice to vacate the property by May 31, 2014, and thus had no right to continue occupying the property.

5. Applicability of Section 535 of the Companies Act, 1956:
The court found that the conditions under Section 535 for disclaiming property were met. SST Media was in possession of the property, and the Official Liquidator was deemed to be in possession post-winding up order. The property was considered onerous as the Official Liquidator was liable to pay monthly occupation charges without benefiting the winding-up process.

6. Estoppel Against the Appellant for Challenging the First Order:
The appellant was estopped from challenging the order dated May 14, 2013, as it had accepted the sale notice's terms and conditions and benefited from purchasing SST Media's business. The principle of estoppel was applied, preventing the appellant from approbating and reprobating.

7. Onerous Nature of the Property for the Official Liquidator:
The court determined that the property was onerous for the Official Liquidator. The business and assets of SST Media had been sold, and the Official Liquidator was incurring significant monthly occupation charges without any benefit to the winding-up process.

8. Due Process of Law for Recovery of Possession:
The court held that proceedings under Sections 446 and 535 of the Companies Act, 1956, constituted due process of law for recovering possession from the Official Liquidator. The respondent no. 2 was entitled to invoke these statutory provisions without needing to pursue the eviction suit.

9. Conduct and Responsibilities of the Official Liquidator:
The court criticized the Official Liquidator for not taking timely steps to comply with the order to disclaim the property and hand over possession. The Official Liquidator was directed to ensure compliance with the court's orders and facilitate the eviction of the appellant.

Conclusion:
Both appeals filed by the appellant were dismissed. The appellant was directed to vacate the property by January 31, 2015, and pay the monthly occupation charges till January 2015. The Official Liquidator was instructed to ensure the property was vacated and possession handed over to the respondent no. 2 by February 07, 2015.

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