2017 (7) TMI 181 - HC - Companies Law

Direction to Official Liquidator to hand over possession - winding up - Held that - In view of the status-quo order passed by this Court against the applicant in the said notice of motion, which order is in force, the applicant even could not have applied for seeking possession of the leasehold land in question in this proceeding. Be that as it may, the applicant has not made out any case for recovery of possession of the leasehold land from the Official Liquidator, as prayed or otherwise. In my view transfer of the leasehold rights of the company in liquidation for the remaining period which is for substantial period for clearing the debts of the creditors of the company in liquidation is for beneficial winding up of the company in liquidation and is permissible. As the prayer of the applicant for recovery of the arrears of rent from the Official Liquidator is concerned, the Official Liquidator through his counsel has made a statement before this Court that the arrears of rent would be cleared by the office of the Official Liquidator within such time as may be granted by this Court. In my view, this grievance of the applicant for recovery of arrears of rent from the Official Liquidator is justified and deserves acceptance. As the direction sought by the Official Liquidator for reduction of the reserve price fixed by this Court in respect of the leasehold property in question is concerned, in my view, the interest of justice would be met with if such prayer is considered after a fresh valuation report is obtained by the Official Liquidator in respect of the said leasehold rights in view of passage of time. The Official Liquidator can apply for the said relief after such valuation report is obtained by his office in respect of the leasehold land in question. Company Application seeking an order and direction against the Official Liquidator to hand over quiet, vacant and peaceful possession of the open land admeasuring 4743.21 sq. mtrs, bearing survey no.194/1, village Majiwade, Thane (West) is rejected. The Official Liquidator is directed to pay the arrears of rent from the date of winding up of the respondent company till 30th June, 2017 within eight weeks from today and shall continue to pay the agreed rent every month to the applicant on or before the 15th day of each month. The Official Liquidator is directed to obtain a fresh valuation report in respect of the leasehold rights in the land in question within three months from today.

Issues Involved:

1. Possession of leasehold land.
2. Payment of arrears of rent.
3. Reduction of reserve price for the leasehold property.

Issue-wise Detailed Analysis:

1. Possession of Leasehold Land:

The applicant sought an order directing the Official Liquidator to hand over possession of the leasehold land. The court noted that the lease agreement dated 1st July 1968, granted the respondent company (now in liquidation) a 60-year lease, expiring on 1st July 2028. The lease had not been terminated by the lessor. The court observed that the Official Liquidator had taken possession of the company's assets, including the leasehold land, following the winding-up order dated 21st November 2006.

The court highlighted that the Official Liquidator had made multiple attempts to sell the leasehold land through public auction, but no offers were received. The applicant had not challenged the court's orders permitting the sale of the leasehold land, which had attained finality. The court emphasized that the leasehold rights did not automatically end with the winding-up order and that the Official Liquidator stepped into the shoes of the lessee.

The court referenced several judgments, including the Supreme Court's decision in Jabal C. Lashkari & Ors. vs. Official Liquidator & Ors., which held that a company in liquidation continues to exist until dissolved, and thus, the leasehold rights remain intact. The court also cited the Full Bench decision in Tangerine Electronics Systems Pvt. Ltd. vs. Indian Chemicals & Ors., affirming that leasehold interests are valuable assets and can be sold for the benefit of creditors.

Given these considerations, the court concluded that the Official Liquidator could not be directed to hand over possession of the leasehold land to the applicant, as the leasehold rights were valuable assets needed for the beneficial winding up of the company.

2. Payment of Arrears of Rent:

The applicant also sought payment of arrears of rent amounting to ?19,800/-. The Official Liquidator, through counsel, expressed willingness to pay the arrears. The court directed the Official Liquidator to pay the arrears from the date of winding up until 30th June 2017 within eight weeks and to continue paying the agreed rent monthly.

3. Reduction of Reserve Price for the Leasehold Property:

The Official Liquidator sought a reduction of the reserve price for the leasehold property, initially fixed at ?30 crores and later at ?22 crores. The court noted that the Official Liquidator had been unable to sell the property despite multiple attempts and public notices. The court directed the Official Liquidator to obtain a fresh valuation report within three months and allowed the Official Liquidator to apply for a reduction of the reserve price based on the new valuation.

Conclusion:

The court rejected the applicant's request for possession of the leasehold land, directed the Official Liquidator to pay the arrears of rent, and allowed the Official Liquidator to seek a reduction of the reserve price after obtaining a fresh valuation report. The court emphasized the importance of the leasehold rights as valuable assets for the beneficial winding up of the company and the protection of creditors' interests.

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