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TMI Blog1998 (8) TMI 447X X X X Extracts X X X X X X X X Extracts X X X X ..... rdered to be wound up. The premises are no more required for the company s business and therefore the applicants landlords have become entitled to the possession of the land. In these circumstances, prayer has been made for delivery of possession to the applicants. 3. It is urged by Mr. Thakore, the learned counsel appearing for the applicants that the land in question is property to which Rent Act applies and under The Bombay Rents, Hotel and Lodging House Rates Control Act, 1947 ( the Rent Act ) a tenant is prohibited to sublet to whole or part or any of the premises let to him or to assign or transfer in any manner his interest therein unless there is a contract to contrary. Notwithstanding order of winding up until company is dissolved a company continues to exist and the Official Liquidator as a tenant. The company in liquidation administered by liquidator is inhibited by the provisions of section 15 of the Rent Act. He pointed out that notification issued under proviso to sub-section (1) of section 15 of the Rent Act will not govern the present case unless the proposed transfer of assets of the company do not fall within either of exception carved out in notification date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... laim for recovery of the possession of the leased out premises will be governed by section 28 of the Rent Act. However, section 446 of the Companies Act, 1956 ( the Act ) which comes into operation as soon as an order for winding up is made in respect thereof provides under sub-section (2) that the Court which is winding up the company shall notwithstanding anything contained in any other law for the time being in force shall have jurisdiction to entertain or dispose of any suit or proceedings by or against the company. This jurisdiction is conferred not only in respect of fresh proceedings but also in respect of pending proceedings. It may also be noticed that under sub-section (1) of sectiqn 446 of the Act, all suits and proceedings pending against the company are stayed by operation of law as soon as order for winding up of a company is made by the Court or Official Liquidator is appointed as provisional Liquidator and cannot be proceeded with except with the leave of the Court and subject to such terms as the Court may impose. The other legal proceedings in section 446(2) are expression of wide amplitude and includes proceedings under Rent Act as well against or by the company. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such properties. The conclusion is irresistible that all provisions of the Rent Act which grants protection or imposes restrictions and obligations on any of the party continue to operate. If under section 15, there is a prohibition against transfer of leased premises by way of subletting, assigning or transferring in any other manner, it would be impossible to accept the contention of Mr. Mehta that notwithstanding this prohibition operating, the Court should direct the Official Liquidator to act in breach of law by transferring the leased premises, contrary to said provision. This is apart from the question whether landlord becomes entitled to recover possession on such breach or not. The Courts always act in furtherance of implementa- tion of laws and not in furtherance of committing breaches, on the jejune ground of realising more money by committing breach of statutory provision in that regard as suggested by the learned counsel for the respondent Nos. 2 and 3. It will be sacrificing rule of law at the alter of expediency. In fact Mr. Thakore has been candid enough to point out that vigour of section 15 has been mitigated by issuing notice dated 28-4-1969 which envisages trans ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was not carrying out the business of the company. The Court concluded that : "... The statutory tenancy confers the right to be in possession but if the tenant does not any more require use of the premises, the provisions of the Rent Act and especially sections 13 and 15 completely prohibit giving the possession of the premises on licence or on sub-lease... The Rent Act is no doubt enacted for protecting the tenants, and indisputably its provisions must receive such interpretation as to advance the protection and thwart the action of the landlord in rendering tenants destitutes. But this does not imply that the Court should lend its aid to flout the provisions of the Rent Act so as to earn money by unfair and impermissible use of the premises. And that is what the Liquidator sought to do and the Court extended its help to the Liquidator. This, in our opinion, is wholly impermissible. .. ." (p. 1064) Thus the conclusion which I have reached above that the Liquidator cannot be permitted to part with possession of the lease property in contravention of the provisions of the Rent Act accords with the ratio of aforesaid decision. The aforesaid decision arose with reference to Bomba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uirement of storing the companies records may be fulfilled by storing the same in the office or elsewhere and for that purpose, the premises in question were not required by him. Repelling the contention, the Court said : "23. That the Official Liquidator requires the portion of the flat (now in his actual possession) for storing the company books, is certainly a relevant consideration. Mr. Sanghi, learned counsel for the appellant, argued that the Official Liquidator does not require the said premises for storing the books and that he can store the books in his office or anywhere else. May be, the liquidator can do so, but we cannot force him to do so, so long as the reason given by him for continuing in possession is a relevant one .... Suffice it to say that the reasons for which the application filed by the appellant landlord have been dismissed cannot said to be irrelevant.. .." (p. 1385) 11. In the aforesaid decision, though it has not decided but prima facie it was opined that merely because a company goes in liquidation and Liquidator/Official Liquidator is appointed, the right of company vis-a-vis the landlord do not undergo any change and secondly, that if the O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... monthly instalments. More importantly all the dues of the workers present and past will be settled by Shyam Sundar Agarwal that the workers who are represented by various unions and workers were to run the mill in adjustment with the purchaser as a going concern. 13 . Thus fixing the consideration for the transfer of the company s assets as a going concern, modalities for its payment and directions to run the company s business as a going concern by the purchaser and erstwhile workmen, the Court observed that : "The High Court ought to have appreciated that it was rather unlikely that the party who had the benefit of onerous covenants would apply for disclaimer and ought to have viewed the Official Liquidator s application to disclaim made pursuant to the Trust s letter to him in that behalf, in that light. It is difficult to see how such a large area of land leased to the company in liquidation for 99 years with the option of renewal for a further 99 years for the meagre rent of Rs. 1200 per annum can be said to be land burdened with onerous covenants. The High Court was not justified in debating and holding in proceedings under section 535 that the lease of the said land ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... operties by the company in liquidation which are subject to rent laws. 14. Principles emerging as a result of above discussion can broadly be summarised thus : 1 .The rights and obligations arising under Rent laws as landlord and tenant subsist between the owner and the company in liquidation after the order of winding up is made until the company is dissolved. 2 .The leased property cannot be transferred or alienated contrary to the provisions of the Rent laws. 3 .Even where the company has closed its business and the premises are not required for the purposes of carrying on the business, still the Official Liquidator is entitled to retain possession if it is required by him during the course of winding up for the purpose of companies affairs, for example, keeping records, storing the stock-in-trade and other movables or if the same are occupied by plant and machinery. Such requirement is relevant consideration for refusing the permis-sion to return possession to the landlord; and 4 .The leasehold tenancy rights under a lease are the assets of the company which may be dealt with and transferred if Official Liqui-dator is required to transfer the assets of the compa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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