2024 (7) TMI 1263 - HC - Companies Law

Disclaimer of Onerous property - Praying for leave to be granted to the Official Liquidator to disclaim the office space - praying for peaceful, vacant and khas possession of the sub-demised office space to the applicant from the Official Liquidator - HELD THAT - Any mortgage or charge over the property in question would exist and be enforceable in law only so long as the sub-lease was subsisting in favour of the company (in liquidation) envisaging observance and performance of all stipulations as contained in the sub-lease. As the narrative unfolds, loans were taken from the consortium of the banks, including PNB, by the company (in liquidation) and evidently its account became a Non Performing Asset w.e.f. 31.12.2011 and symbolic possession was taken over by PNB on 06.02.2013. The objections espoused by the objector - PNB to the CO. APPLs. 517/2018 and 60/2022 cannot be sustained in law. The objector-PNB cannot claim right in the property beyond what was available to the company (in liquidation) during the subsistence of the sub-lease rights. In other words, since the rights of the bank to seek forfeiture of the mortgaged property flew from the rights of the sub-lessee i.e. the company (in liquidation), on the termination of such rights at the behest of the applicant-IIPL, nothing survived in favour of the objector-PNB, so as to lay its claim over the property for the remainder of the period of the lease. Incidentally, the facts of this case are similar to what came up for consideration before Supreme Court in the case of Stressed Assets Stabilization Fund 2019 (10) TMI 1526 - SUPREME COURT , wherein the loans were obtained by the lessee on the strength of mortgage of title deeds of the leased industrial property, but subsequently, the company went into liquidation. The West Bengal Small Industries Development Corporation Limited, which was the original lessor terminated the lease as the lessee had ceased to carry on manufacturing activities beyond the stipulated acceptable period. Thus, leave is granted to the Official Liquidator to disclaim the entire sub-demised office space containing super built-up area of 16523 sq. feet on the 15th floor of the building Infinite Benchmark constructed on the demised plot of land number G-1 in Block No. EP GP, Sector V of Bidhannagar in the District of North 24-Parganas within Police Station Bidhannagar (East), Salt Lake City, Kolkata-700 091, and handover the peaceful, vacant and khas possession of the property to the applicant-IIPL by removing padlocks and/or seals put by the Official Liquidator or by PNB upon the same, within 45 days from today. Application disposed off.

Summary

Issues Involved:

1. Disclaimer of Onerous Property
2. Termination of Sub-Lease
3. Rights of Secured Creditors
4. Possession and Payment Claims

Issue-wise Detailed Analysis:

1. Disclaimer of Onerous Property:

The applicant, IIPL Infinity Infotech Parks Limited, moved applications under Section 535 of the Companies Act, 1956, seeking leave for the Official Liquidator (OL) to disclaim the sub-demised office space and to hand over possession to the applicant. The applicant argued that the sub-demised office space is an "onerous property" and should be disclaimed by the OL. The court examined Section 535, which allows the liquidator to disclaim property that is burdensome or unprofitable. The court noted that the sub-demised office space falls under this category due to the non-payment of rents and other charges by the company in liquidation, Mahua Media Private Limited. The court allowed the application, permitting the OL to disclaim the property and hand over possession to the applicant.

2. Termination of Sub-Lease:

The sub-demised office space was leased to the company in liquidation by an Indenture of Sub-Lease dated 11.12.2009 and a Supplementary Indenture dated 24.04.2011. The company failed to pay the requisite monthly rents and other charges, leading to the termination of the sub-lease. The applicant issued several notices, including a statutory notice under Section 434 of the Companies Act, 1956, which the company acknowledged but failed to act upon. The court noted that the applicant was within its rights to terminate the lease due to non-payment, and the sub-lease was effectively terminated before the winding-up order was passed.

3. Rights of Secured Creditors:

Punjab National Bank (PNB) opposed the applications, arguing that the sub-demised office space was mortgaged to them by the company in liquidation. The court examined the covenants in the sub-lease, which allowed the company to mortgage the property but stipulated that the mortgagee must observe all terms and conditions of the sub-lease. The court held that PNB's rights were contingent on the subsistence of the sub-lease. Since the sub-lease was terminated due to non-payment, PNB could not claim superior rights over the applicant. The court cited the legal maxim "nemo dat qui non habet" and relevant case law to support this conclusion.

4. Possession and Payment Claims:

The applicant also sought peaceful, vacant possession of the sub-demised office space and payment of Rs. 99,34,879/- for lease rent, electricity, and other charges up to 08.05.2012, along with mesne profits. The court directed the OL to hand over possession of the property to the applicant within 45 days and to make an inventory of all furniture, fixtures, and fittings for sale or removal. The court left the payment claim to be adjudicated by the OL, to be paid from any surplus assets of the company in liquidation. The applicant was directed to pay security and incidental charges incurred by the OL in safeguarding the property.

Conclusion:

The court allowed the applications, granting the applicant's requests for the disclaimer of the onerous property, termination of the sub-lease, and possession of the sub-demised office space. The objections raised by PNB were dismissed, and the payment claims were left for the OL to adjudicate. The applications were disposed of accordingly, with directions for further proceedings.