2019 (4) TMI 334 - HC - Companies Law

Official Liquidator obtained possession of the flat - exparte order - seeking consequential directions upon Official Liquidator to remove lock and seal put on the flat in question and hand over possession thereof to applicant - HELD THAT - Earlier order for possession was also exparte on a letter for direction . Due process of law for eviction by adjudication on eviction proceedings, with leave obtained under section 446, was not resorted to by Official Liquidator. There was no dispute raised by Mr. Chowdhury regarding manner in which Official Liquidator obtained possession of the flat except submission that notices issued prior thereto by the office, addressed to applicant at his address of the flat, went unserved. As such the application for, inter alia, recall of order dated 5th May, 2017 is allowed in part as the order was obtained exparte and there appears error of fact apparent on face of it, the flat being occupied and not locked. However, as aforesaid, applicant having had thereafter relinquished possession, other prayers in the application cannot be granted.

Summary

Issues:
1. Recall of order dated 5th May, 2017 passed by a coordinate Bench.
2. Consequential directions upon Official Liquidator to remove lock and seal put on the flat and hand over possession.

Analysis:
1. The application sought the recall of the order dated 5th May, 2017, which allowed the Official Liquidator to take possession of the subject property in Worli, Mumbai. The applicant, an employee of the company in liquidation, claimed to have a clear understanding to acquire the flat upon retirement. The Official Liquidator had taken possession of the flat, leading to the applicant's request for the order's recall.

2. The Court examined the applicant's claim of obtaining membership in the cooperative society where the flat was situated. However, the Court found that the membership did not grant the applicant title to the flat. The Court highlighted the provisions of the Companies Act, 1956, regarding the custody of property in liquidation and the powers of the liquidator. The Court noted that the Official Liquidator did not follow the prescribed procedures for taking possession of the flat.

3. The Court referenced a previous order dated 1st August, 2008, which dismissed the applicant's appeal against the Official Liquidator's possession of the flat. The Court emphasized that the applicant had voluntarily given up possession of the flat, and therefore, could not claim restoration of possession based on the current application. The Court also cited the Supreme Court's ruling on the rights of possession in similar cases.

4. The Court acknowledged that the Official Liquidator had obtained possession of the flat through an ex parte order and noted errors in the process. The Court allowed the application in part, directing the Company Matters Department to register and number company applications in accordance with the rules. The Court did not grant the applicant's request for restoration of possession due to the voluntary relinquishment of possession.

5. In conclusion, the Court allowed the application for the recall of the order dated 5th May, 2017, in part, based on errors in the possession process. The Court emphasized the importance of following legal procedures outlined in the Companies Act for the Official Liquidator's actions. The judgment highlighted the need for proper adjudication of possession rights and adherence to due process in such matters.