2012 (9) TMI 310 - HC - Companies Law

Winding up of company - dispute on tenancy rights - Wacoma a company claiming to be a tenant of the self-same bungalow as against Incandescent s who went into liqudation - At one point of time Wacoma was Incandescent s subsidiary but subsequently the companies became independent of each other - Held that - Incandescent was a tenant in respect of the property under Tivoli Park, since 1970. Admittedly, there was no evidence that the tenancy was terminated at any point of time - Unless the tenancy is terminated, it would continue to remain. If a tenant defaults in making payment of rent, the tenancy does not automatically come to an end. It would depend upon a positive consequential act of the parties. The landlord may give notice to quit. The tenant may accept such notice and quit the tenancy. If he does not do so, the landlord has to approach a Civil Court for a decree of eviction and recovery of possession. In the instant case, Incandescent was paying rent. At one point of time Wacoma was its subsidiary. Subsequently the companies became independent of each other Incandescent had gone in liquidation in September 2002. There was evidence on record to show that Incandescent paid rent even in August 2002. Wacoma claimed tenancy since April 2002, on the strength of the receipts, thus there could not be two tenancies in respect of one self-same premises. Incandescent paid rent even in August 2002 that would automatically demolish the case of Wacoma, having entered into agreement for tenancy in March, 2002. Pertinent to note, Wacoma could not produce any document except the receipts to prove their tenancy - in absence of a surrender of tenancy by Incandescent there could not be any new tenancy created in favour of Wacoma - Incandescent paid rent up to August 2002 and as it went in liquidation in September 2002. Hence, the case made out by Wacoma that they got the tenancy under Tivoli through Sutodia in March, 2002, falls to the ground. The company in liquidation admittedly does not own the property Tivoli cannot be forced either to sell or let it out to Wacoma as Court cannot create tenancy without the consent of the landlord.

Summary

Issues Involved:
1. Ownership and tenancy of the bungalow.
2. Validity of Wacoma's claim of tenancy.
3. Application of Section 535 of the Companies Act, 1956.
4. Role of the Official Liquidator.
5. Summary adjudication by the Company Court.

Detailed Analysis:

1. Ownership and Tenancy of the Bungalow:
Tivoli Park owned the bungalow at 225 Acharya Jagadish Chandra Bose Road, Calcutta. Incandescent became a tenant in 1970. Financial difficulties led to BIFR proceedings and a winding-up order in 2002. Tivoli Park claimed they were unaware of these proceedings and continued to receive rent. They sought vacant possession post the winding-up order, contending tenancy termination. The Official Liquidator, unaware of the tenancy, did not initially take possession.

2. Validity of Wacoma's Claim of Tenancy:
Wacoma claimed tenancy from March 2002, citing rent receipts. However, evidence showed Incandescent paid rent up to August 2002. The receipts produced by Wacoma lacked company seals and were denied by Tivoli Park. The court found no evidence of tenancy termination by Incandescent or new tenancy creation for Wacoma. The court concluded the tenancy of Incandescent continued until the winding-up order.

3. Application of Section 535 of the Companies Act, 1956:
Tivoli Park applied for disclaimer of the tenancy under Section 535. The court held that Section 535 allows the Company Judge to disclaim onerous property to facilitate beneficial winding up. The tenancy was deemed onerous as it incurred monthly expenses without benefit. The court affirmed that the Company Judge could summarily adjudicate such matters.

4. Role of the Official Liquidator:
The Official Liquidator, unaware of the tenancy, attempted to take possession post-disclaimer notice but was resisted by Wacoma. The court noted that the Official Liquidator's lack of initial knowledge did not affect the disclaimer's validity.

5. Summary Adjudication by the Company Court:
The court emphasized that Sections 446 and 535 enable summary adjudication by the Company Court for issues arising during winding up. This process is considered due process of law, aiming for speedy resolution. The court dismissed Wacoma's argument that Tivoli Park failed to prove their case, stating that the evidence supported Tivoli Park's claim.

Conclusion:
The court dismissed Wacoma's appeal, affirming the disclaimer of tenancy in favor of Tivoli Park. The court rejected Wacoma's request to continue occupancy under existing terms, stating that tenancy cannot be created without the landlord's consent. The judgment was stayed for two months, maintaining the interim arrangement during this period.