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TMI Blog1986 (3) TMI 282X X X X Extracts X X X X X X X X Extracts X X X X ..... in the said deed of lease dated June 23, 1966, in favour of the appellant; ( d )Direction be given to the official liquidator to hand over possession of the demised premises to the appellants; ( e )Stay of the order dated August 7, 1984, or any order for sale of the purported tenancy right of the company in liquidation in the said demised premises." The facts of this case, relevant for the purpose of disposal of the appeal herein, are as follows: The appellants are the owners of the disputed land. On June 23, 1966, a deed of lease was executed by the appellants in favour of Sakow Industries Pvt. Ltd. (now in liquidation) (hereinafter referred to as "the said company"), whereby the appellants granted in favour of the said company a lease for a term of 21 years commencing from June 1, 1966, and ending on May 31, 1987, at a monthly rent payable on the 10th day of every month. The relevant clauses of the said lease are as follows: "2( a ). To use the demised premises for the construction and running of a factory and business of the lessee. 2( f ). The lessee shall be entitled to assign their interest in the demised premises for the stipulated period to such person or person ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tions on the part of the lessee to be observed and performed and shall be desirous of continuing in occupation of the said premises hereby demised after the expiration of the said term of twenty-one years hereby granted it shall at least three months before the expiration thereof signify such desire by a notice in writing to the lessors. The lessors shall at or before the expiration of the said term execute at the cost of the lessee a new and effectual lease of the said premises hereby demised for a term of ten years to commence from and after the expiration of the term hereby granted with and subject to the same covenants and provisions as are now herein contained except the present covenant for renewal and except that the rent payable during such period shall be Rs. 315 per month for the first five years and Rs. 330 for the next five years of tenancy such monthly rent to be paid on or before the tenth day of each month then current without any deduction or abatement whatsoever." The admitted position is that this lease is not covered by the provisions of the West Bengal Premises Tenancy Act, 1956 (hereinafter referred to as "the Tenancy Act"). By an order dated June 5, 1972, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of rent for 30 days after the same became due and also in case the tenant goes into liquidation, the said lease will be forfeited and the lessors will be at liberty to re-enter the premises. Inasmuch as the said tenant has defaulted in payment of rent and also has gone into liquidation, our clients became entitled to re-enter upon the said premises as the lease stood forfeited. As no possession of the property was delivered to our clients in spite of the lease being forfeited, our clients, in exercise of their rights, made an application before the Hon'ble High Court, inter alia, for stay of sale of the said property and for your disclaimer thereof. Although our clients could not succeed in getting an order as prayed for, the property could not (be) sold, and as the law now stands you have no right to sell any interest in the said property. The lease having been forfeited in the circumstances stated above, the company in liquidation cannot have any right, title or interest in the said property. The said property is still under your custody. Although the company in liquidation has no right, title or interest thereof and no mesne profit and/or damages for such unlawful possessio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ately on the purchase. It may not be worthwhile for a purchaser to venture into a project which will necessarily be of a limited duration. In the event the property is ultimately found to be unsaleable, then rent under the lease would be annexed without any cases proceeding return and certainly will not force to be beneficial to the liquidation proceeding ( sic ) . For the reasons as above, I dispose of this application by the following order. The official liquidator is directed to invite offers for sale on the usual fees of the movable assets lying on the said land forthwith. In the same advertisement, the official liquidator will also call for offers for sale or assignment of the unexisted portion of the case as a last effort. Advertisements inviting such offers are directed to be published within ten days from date in the Statesman and the Viswamitra. Offers should be made before the 11th June, 1984, and would be considered by the caveat on 13th June, 1984, at 2 p.m. At the instance of the applicants, the operation of this order is stayed for a fortnight. It appears that the official liquidator has available funds to pay the arrears of rent which have accrued since ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rty. In this context, Mr. Mukherjee has relied on a decision of the Supreme Court in the case of Ravindra Ishwardas Sethna v. Official Liquidator [1983] 54 Comp Cas 702, and, the unreported decision of a Division Bench of this court in Inqonducts ( India ) Ltd. v. New Industrial Chemicals ( P. ) Ltd. ( In Liquidation ) (Appeal No. 153 of 1981, decided on October 6, 1982). He has drawn our attention to clause 4( d ) of the deed and submitted that the conditions have not been performed. There has been no payment. As the company has been wound up, the question of the company being desirous of continuing in occupation cannot and does not arise. He has also drawn our attention to clause 12 wherein it shows that the said lease was made for the purpose of enabling the lessee to carry on the business but no such business can be carried on. So far as the question of assignment is concerned, referring to clause 2( f ), he has submitted that such assignment cannot be made beyond February 28, 1987, i.e. , less than one year from now. Accordingly, the question of assignment cannot and does not arise. Mr. Kar, appearing on behalf of the official liquidator, has submitted that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urt to give such sanction, the Supreme Court held that giving premises on lease, licence or under caretaker's agreement was not the business of the company. It was pointed out that the company was a statutory tenant under the Rent Act. It was further pointed out that the statutory tenancy conferred the right to be in possession but if the tenant did not any more require the use of the premises, the provisions of the Rent Act and specially sections 13 and 15 completely prohibited giving possession of the premises on licence or on sub-lease. The learned company judge could not have permitted holding on to the possession of the premises not needed for efficiently carrying on the winding-up proceedings. The only course open to him was to direct the liquidator to surrender the possession to the landlord and save the recurring liability to pay rent. A Division Bench of this court by its unreported judgment dated October 6, 1982, in the case of Inconducts ( India ) Ltd. v. New Industrial Chemicals ( P. ) Ltd. ( in Liquidation ) (Appeal No. 153 of 1981, decided on October 6, 1982), had gone into this question and also had gone into various decisions of the Supreme Court in that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t was pointed out that the right of occupancy of a tenant has not been made heritable as such and that only those heirs who are living with the tenant have been brought under the protective umbrella of the Act. This clearly shows that the Legislature did not intend to create any estate or interest in favour of a tenant but only wanted to protect the tenant and such of his heirs as were living with him from eviction. The Division Bench also pointed out that in view of section 14 of the said Act, no tenant can, without the previous consent in writing of the landlord, sublet the whole or any portion of the premises held by him as a tenant or transfer or assign his rights in the tenancy or in any part thereof. It was also pointed out that the Act is protective in nature and provides the tenant with a shield against any threat of eviction even after the contractual relationship is brought to an end by the landlord. But the Act does not revive the contractual relationship nor does it confer upon the tenant any interest or an estate in the tenanted property by express words or necessary implication. The Division Bench thereafter considered various decisions of the Supreme Court including ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccepted this contention of the appellant and held that the corporate existence of a company does not come to an end as soon as an order for winding-up of the company is passed. The assets in the custody of the liquidator continue to be the assets of the company. It was pointed out that the sale that was made in that case was by the official liquidator under the provisions of section 456 on behalf of the company and was made in the name of the company. It was pointed out that the properly of the company after the winding-up order did not vest in the official liquidator and that under section 456 of the Companies Act, the liquidator merely had custody and control of the assets of the company. In this context, the Division Bench referred to a decision in the case of Parasram Harnand Rao v. Shanti Parsad Narinder Kumar Jain, AIR 1980 SC 1655, and held that according to the Supreme Court, the sale by the official liquidator of the tenancy right of a company under the orders of the court is a voluntary sale. It was further held that even if the sale was an involuntary one, it was an assignment by the official liquidator and came within the mischief of section 14( b ) of the Delhi Ren ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r that contractual tenancy has come to an end or whether in spite of non-termination of the same, such tenancy should be allowed to be continued or permitted to be transferred. In our opinion, having regard to the facts and circumstances of this case, such tenancy has come to an end and the right of re-entry given to the lessor has come into force and become effective. Admittedly, after June, 1981, no rent has been paid. Admittedly, the company has gone into liquidation which is one of the circumstances upon which the right of re-entry can be exercised. Moreover, in this case even if it may be contended that the earlier defaults in payment of rent have been waived, at least there has been such default from June, 1981. Further, the company has also gone into liquidation. On these two grounds, a notice of termination has been given by the lessee in December, 1983, and in our opinion, the contractual tenancy has come to an end. The official liquidator is not in a better position. The company still exists. The question is whether it is still an asset of the company. We are of the opinion that having regard to such termination, it is no longer an asset of the company and it is no longer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t case, the company is in the process of liquidation. Further, even if any assignment may be made, the company, i.e. , the liquidator remains liable to pay the rent in terms of clause 2( f ). The official liquidator shall be liable to go on paying the rent as long as the lease is continued. If the lease has not been determined, then it shall continue to be liable to pay such rent without any benefit arising therefrom. For all these reasons, in our opinion, irrespective of the question of termination of the lease, this is a fit and proper case where the official liquidator should no longer continue to be in possession of the said property and should disclaim the same. For the aforesaid reasons, we allow this appeal and set aside the order passed by the learned company judge. The official liquidator is directed to disclaim the said premises as mentioned in the deed of lease dated June 23, 1966, in favour of the appellants-applicants with immediate effect. However, we should give one or two other directions at the instance of the official liquidator. It is recorded that the appellants give up all their claims for rent or mesne profits for any period subsequent to the period for w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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