2016 (9) TMI 168 - SC - Companies Law

Eviction of persons - whether the Company Court could evict persons, who have occupied property of a company after commencement of winding up proceedings, on such company being revived under the order of the Company Court? - Held that - Once the Company was ordered to be wound up, the assets of the Company came in the custody of the Company Court and no arrangement, after winding up order, without permission of the Company Court could be recognized in respect of assets of the Company. There was no legal handicap in the occupants, who came into picture during winding proceedings, being evicted by the Company Court so as to restore the possession of the assets of the Company, after the winding up order was recalled. In view of the above, we allow these appeals, set aside the impugned order and hold that the respondents-occupants are liable to be evicted. The official liquidator may hand over possession of the said assets to the appellant within three months. Further dispute, if any, including the implementation of this order may be raised before the Company Court.

Summary

Issues:
1. Consideration of evicting persons occupying company property after winding up proceedings when the company is revived.

Analysis:
The judgment in question involves the consideration of whether the Company Court has the authority to evict individuals who have occupied a company's property after winding up proceedings when the company is subsequently revived. The case at hand involved an appellant-company that was directed to be wound up by a creditor's petition. During the winding up proceedings, the company's premises were occupied by various entities who entered after the winding up order. The company later applied to recall the winding up order, which was allowed, and the possession was directed to be handed over. The main contention was whether the company was entitled to the restoration of its entire property or only that in possession of the official liquidator.

The Division Bench considered the appeals of both the company and the occupants of the premises. The occupants claimed rights to continue possession based on various grounds. Some occupants had given an undertaking to vacate if directed by the Company Court but raised conditions related to participation in the sale. Others claimed possession through a tenant of the company prior to winding up. The Court examined the specific undertakings given by the occupants and the circumstances under which they entered into possession after the winding up order.

The Court differentiated between the occupants who had given undertakings to vacate and those who had not. It held that occupants who entered into possession after the winding up order, without the Court's permission, could be evicted to restore the company's assets. The Court found no legal impediment to evicting such occupants and directed the official liquidator to hand over possession of the assets to the appellant-company within a specified timeframe. The judgment emphasized the importance of restoring the company's assets after the winding up order was recalled and allowed the appeals in favor of the company.