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TMI Blog1966 (2) TMI 58X X X X Extracts X X X X X X X X Extracts X X X X ..... t in the case of non-payment of rent for three consecutive years, the lease could be forfeited. On 1st November, 1932, Hulas Chand and Bilas Chand sold their rights in the plot in dispute to Budh Sen and Jia Lal. Jia Lal died on 27th April, 1943, and his heirs on 11th May, 1943, transferred their rights in favour of Jugal Kishore. Before this Budh Sen had already transferred his rights in favour of Jugal Kishore, with the result that he became the owner and lessor of the whole plot in dispute. Shanker Lal and Pyare Lal, the appellants, filed a suit for pre-emption in 1944 which was decreed. On 30th August, 1945, they obtained possession over the plot in dispute through the court. Patel Mills Limited went into voluntary liquidation and Sri Ram Gopal Mehra, an advocate of Saharanpur, was appointed as the liquidator. Banaras Bank Limited being the largest creditor of the Patel Mills Limited, Sri Mehra entered into negotiations for the sale of the entire assets of the Patel Mills Ltd. to the Banaras Bank Ltd. and on 23rd February, 1933, executed an agreement for sale of the entire assets of the Patel Mills Ltd., including the leasehold rights over the plot in dispute, in favour of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the dissolution of the Patel Mills Ltd. and the leasehold rights reverted to the lessors, who were entitled to get back possession of the plot in dispute. Bishambhar Dayal J. recorded the following findings : That it being the case of a permanent lease, the lessors's rights could not revert to the lessor and they stood escheated to the Government. Sri Mehra was competent to execute the sale-deed on 28th January, 1941, even though he had ceased to be the liquidator of the Patel Mills Ltd. with effect from 9th December, 1939, as a consequence of the dissolution of the aforesaid Mills. The plaintiff-appellants were estopped from obtaining possession over the plot in dispute on account of certain representations made, on which the defendant-respondent or his predecessor in interest had acted. That the suit was barred by section 53A of the Transfer of Property Act. Mr. Gopi Nath Kunzru, who has appeared for the plaintiff-appellants, has assailed all the findings recorded by Bishambhar Dayal J, We would first like to consider the question whether, in the case of a permanent lease, on the death of the lessee, without leaving any heirs or successors, the lease-hold rights wo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h Court has dealt with, namely, whether, on the death of Shurfoonnissa without heirs, the right to the possession of the land reverted to the original grantor, or whether the tenure on such a failure of heirs should be taken to have escheated to the Crown. " Their Lordships concluded : "It has been argued, however, that this Mokurrari, not being an independent Zamindari, but being carved out of a Zamindari, stands upon a peculiar footing, and that upon the failure of heirs, the Zamindari takes by right of reversion, or, if not strictly by right of reversion that the tenure escheats to him as the superior lord rather than to the Crown; The Mokurrari was clearly an absolute interest. It was also an alienable interest. It might have been seized and sold, as Mr. Doyne has shown, under Act X of 1859, even in a suit for rent. It could not have been forfeited for the non payment of rent; for in such a case the Zamindar could only have caused it to be seized, put up for sale and sold to the highest bidder. . . . . . . (Underlined by us) Here printed in italics. It cannot, their Lordships think, be successfully argued that, having so passed, the estate would have determined upon th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bidder. It was therefore property which might have passed to any purchaser, and having so passed the estate would not have determined upon the death of the grantee without heirs if it had been sold in her lifetime. The language of their Lordships is as follows:.........The grant in this case was, it with fee observed, that of an absolute interest and altogether unlike the interest of a fixed rate tenant." The question in this case was also clearly different from the one before us. In our judgment Panchubala Debi v. Jotindra Nath Goswatnil AIR. 1926 Cal. 933 is also distinguishable because there was no forfeiture clause. We would, however, like to point out that the test laid down in those cases is answered by the case of the plaintiff-appellants rather than that of defendant-respondent. The right of a lessee is carved out of the right of the owner and is not an absolute interest. Section 105 of the Transfer of Property Act defines "lease" and reads : "A lease of immovable property is a transfer of a right to enjoy such property, made for a certain time, express or implied, or in perpetuity, in consideration of a price paid or promised, or of money, a share of crops, ser ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... liabilities and assets. Consequently, with great respect to Bishambar Dayal J., we are of the opinion that in the present case the right of the lessee did not escheat to the Government, but reverted to the owner or lessor. We now proceed to consider whether Mr. Mehra was competent to exe cute the sale deed on 28th January, 1941, transferring the rights of the lessee in the land in dispute to the Banaras Bank Ltd. Relying upon Pulse-ford v. Devenish [1903] 2 Ch. D 625, Bishambhar Dayal J. held that even though on the date of the sale Sri Mehra was not the liquidator of the Patel Mills Ltd., he was still competent to execute the sale deed. He relied upon the following observation of Farwell J. at page 633 of the report : "But when and so soon as under the provisions contained in the Act of 1862 the company is dissolved, so that there is no longer any existing liquidation, then there is no longer a remedy under the Act. But the duty to pay the debts as stated above is an absolute statutory duty, without limit in point of time and with no provision for the release of the voluntary liquidator similar to that in section 22 of the Act of 1890 for the release of other liquidators a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion in March, 1901. Devenish was appointed the liquidator. He was authorised, when and so soon as the debts and liabilities of the licensee company had been paid and satisfied, to distribute the 52,500 fully paid-up shares amongst the contributiories of the licensee company. The assets of the licensee company were sufficient to pay all the creditors, including the plaintiffs, in full; and all the creditors, other than the plaintiffs, were paid, and by a deed dated March 25, 1901, the business, goodwill, and assets of the licensee company, and the benefit of all contracts (including the agreement of March 2,1900) were duly assigned to and vested in the new company and by the same deed the new company covenanted to keep the licensee company indemnified against all claims and demands by reason of the non-performance or the non-execution of the said contracts. 2,700 cash was applied in paying off the debentures of the licensee company, and the 52,500 shares were allotted to the defendant as liquidator, and by him distributed amongst the shareholders of the licensee company. On August 6, 1901, the defendant as liquidator submitted to a general meeting of the licensee company an acco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Registrar under the Act, with the result that the company had not been formally dissolved, nor the liquidator become functus officio. Until he had called the meeting, given an account of the affairs and made a return to the Registrar under the Act, it could not be said that he was functus officio, and this is precisely what James L.J. said. The stage before us is a very different one. Not only had the liquidator done all he was required to do to wind up the company, he had already called a meeting, given his account of the affairs of the company and made a return to the Registrar under the Act. This being the position, the observations of James L. J. cannot be of an help to us. As Mr. Mehra had become functus officio, we are satisfied that he had no authority or power to execute the sale deed in question. Even though it is not necessary for us in this case to decide who could execute the sale deed, we would like to point out that under the provisions of section 221 of the Indian Companies Act, 1913 (hereinafter referred to as the Act), even voluntary liquidation is under the supervision of the court. That provision reads : "221. When a company has by special or extraordi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ears to us that it is inherent in the scheme of the Act and the provisions mentioned above that even that even after a company is dissolved and the liquidator becomes functus officio, the court would have jurisdiction to do all that is necessary to complete the winding-up and to do justice, including the power to execute a proper sale deed in respect of property for the sale of which the liquidator, while he was still in office, had contracted. That being the position, in our opinion, the Banaras Bank Ltd. should have approached the court for executing the sale deed rather than Sri Mehra, who had become functus officio and could not validly transfer any property belonging to the Patel Mills. Under the provisions of section 244B of the Act, unclaimed dividends and undistributed assets are to be paid to the company's liquidation account by a liquidator and under sub-section (5) of that section, "any person claiming to be entitled to any money paid into the companies liquidation account in pursuance of this section may apply to the court for any order for payment thereof and the court, if satisfied that the person claiming is entitled, may make an order for the payment to that person ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... awyer for Budh Singh and Jiyala, sent a letter (exhibit A-13) to the liquidator of the Banaras Bank Ltd. demanding a sum of Rs. 395 as arrears of rent for four years and asserted that on account of default for more than three years, the lease was liable to be forfeited. The claim of the lessors came for decision by the liquidator who on the 15th January, 1942, held that Budh Singh and Jiyalal had no right to forfeit the lease and to take over possession of the property. He, however, admitted the claim for rent and made payment of the same which was accepted by Budh Singh and Jiyalal. Thereafter, they never raised the question that the lease had come to an end and that they had become entitled to take possession on any grounds. This decision of the liquidator was binding upon the lessors who were the predecessors-in-interest of the plaintiffs and they did not appeal against that decision. On the 21st of March, 1946, Jugal Kishore, who was the purchaser of the rights of Budh Singh and Jiyalal, also accepted rent from the official liquidator of the Banaras Bank Ltd. It is contended by the defendant that, on account of these acts on the part of the lessors, the Banaras Bank Ltd., belie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rty or any part thereof, or the transferee being already in possession, continues in possession in part performance of the contract and has done some act in furtherance of the contract and the transferee has performed or is willing to performs his part of the contract, then, notwithstanding that the contract, though required to be registered, has not been registered, or where there is an instrument of transfer, that the transfer had not been completed in the manner prescribed therefore by the law for the time being in force, the transferor or any person claiming under him shall be debarred from enforcing against the transferee and persons claiming under him any right in respect of the property of which the transferee has taken or continued in possession, other than a tight expressly provided by the terms of the contract : Provided that nothing in this section shall affect the fights of a transferee for consideration who has no notice of the contract or of the part performance thereof. In the present case, the plaintiffs-appellants are the pre-emptors. They are not the successors-in-interest of the Patel Mills Ltd. and are not bound buy any act of its liquidator, Sri Mehra. The ..... X X X X Extracts X X X X X X X X Extracts X X X X
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