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TMI Blog2004 (2) TMI 368X X X X Extracts X X X X X X X X Extracts X X X X ..... ications Ltd. having its registered office at B-76, Phase VII, Mohali and Punjab Wireless Systems Ltd. having its registered office at Mohali. 3. For facility of reference, the facts are taken from C.A. No. 367 of 2002 in respect of Punwire Paging Services Ltd., from C.A. No. 936 of 2002 in the case of Punwire Mobile Communications Ltd. and from C.A. No. 499 of 2001 in the case of Punjab Wireless Systems Ltd. C.A. No. 367 of 2002: 4. The applicant has sought direction to the official liquidator to hand over the vacant possession of the premises situated at Panipat and also to pay arrears of rent to the extent of Rs. 2,84,465 upto March 1, 2002, and future rent up to the date of vacation of the premises at the agreed rate of Rs. 24,255 per month with interest past and future and also to hand over physical possession of the premises. 5. It has been alleged that by virtue of the lease agreement dated June 19, 1996, premises were let out for a period of ten years at a monthly rent of Rs. 34,000. However, vide supplementary lease dated April 26, 1999, the area of the premises let out was reduced to 1,500 square feet and consequently lease rent was also reduced to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shifted to the Mohali office of the company in liquidation which will enable the applicant to make best use of the premises. Counsel for the official liquidator has the apprehension that there may not be physical space for storage of large quantity of goods from more than 150 centres situated all over the country. The parties had taken time to find out the availability of physical space. Subsequently a report has been filed wherein it has been stated that the premises at B-77, Phase 7, Mohali, belong to M/s. Punwire. The first floor of the said premises had been rented out to M/s. Punwire Mobile Communications Ltd. M/s. Punwire Paging Services Ltd. as also M/s. Punwire Trunking Services Ltd. It has been pointed out that the space is available on the ground floor of the premises where material can be stored but it is not possible to report as to whether the assets lying at more than 150 centres could be adjusted in the said space. It has been pointed out that the inventories at all the 150 centres, are not available with the office of the official liquidator nor is it possible to state whether the goods can be adjusted in the space which is lying vacant in the premises though the v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the creditors interest of the workmen and Government dues. 11. The official liquidator has also mentioned that he will write to the official liquidators of the respective States to dispose of the properties of various centres in their respective States through auction or by inviting tenders on "as is where is basis". All the expenses incurred by the official liquidators of the respective States would be paid by the applicants before this court to the official liquidator in the first instance including expenses or advertisement, etc. The payment by the respective landlords would be a precondition for disposal of the properties of the various centres. 12. The official liquidator has been given permission for the sale of movable and immovable assets of M/s. Punjab Wireless Systems Ltd. (Punwire) on December 4, 2003 by this Court. It was suggested that valuation is being got done in respect of the items lying at various centres at random in towns and cities so as to make available an yardstick with the official liquidator of the actual valuation of the said items. The stand of the official liquidator is that on the basis of such valuation the possession of the properties belo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll these assets. Even if a conservative estimate is applied that each step would require minimum of five days including travelling time taken and completion of other formalities and that minimum of two persons would be required from the office of the official liquidator and it would be total 1,670 days for granting similar relief to all the landlords of the company in liquidation. That would be a period of five years. Thus the entire function of the official liquidator would be held up only for the purpose of vacation of the leased premises of the companies in liquidation. It has been pointed out that since the property of the companies in liquidation are spread all over India, therefore, this court has given direction to the District Magistrates/Chief Presidency Magistrate within whose jurisdiction the operational and non-operational offices of the company are situated, to take possession of the offices of the company in liquidation and to hand over the same to the official liquidator vide order dated August 16, 2001, passed in C.A. No. 420 of 2001 in C.P. No. 47 of 2000. 15. It has been pointed out that the official liquidator is dealing with more than 190 companies in liqu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unsel for the parties at great length and find that more than 167 centres of the companies in liquidation, i.e., 30 of M/s. Punwire Paging Services Ltd. and 137 of M/s. Punwire Mobile Communications Ltd. are in possession of the official liquidator. The official liquidator has not paid rent of such premises after the order of winding up was passed or after the premises were sealed by the official liquidator. Still further the official liquidator is not utilising the said premises or any purpose except for storage of the goods which are lying as it is. The official liquidator has not prepared inventories of the goods rather has taken a stand that he lacks manpower to prepare the inventories and that he is engaged in many other companies in liquidation to watch the interest of secured, unsecured creditors, workmen and the Government dues. 19. The questions which arise are : whether the applicant/landlords are concerned with the extent of work being discharged by the official liquidator, whether the applicants can be deprived of the rent or the occupation of the premises by the official liquidator without carrying any activity; whether it is sufficient for the official liquidato ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... counsel for the respondent has argued that the premises are required by the official liquidator to carry out the winding up activities of the company. The applicants have no legal right to seek vacation of the premises by the official liquidator. M/s. Punwire Paging Services Ltd. and M/s. Punwire Mobile Communications Ltd. are not the owners of any premises at Mohali and therefore the applicants cannot seek shifting of the properties of the company in liquidation to the premises of Punwire Ltd. which is separate juristic entity, may be it is holding company of these two companies. It has been pointed out that the properties of Punwire is at the stage of sale, therefore, the premises in occupation of Punwire cannot be utilised or storage of goods and such shifting of material will hamper the sale process. It has further been submitted that the applications are not maintainable as it is the official liquidator who can disclaim the property in Form Nos. 124 to 134 appended to the Companies (Court) Rules, 1959. The applicants, have no right to see disclaimer of the property. 23. Before adverting to the respective merits of the contentions of the parties, it will be beneficial to r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terms as a condition of granting leave and make such other order in the matter as the court thinks just. (4) The liquidator shall not be entitled to disclaim any property in any case where an application in writing has been made to him by any person interested in the property requiring him to decide whether he will or will not disclaim, and the liquidator has not within a period of twenty-eight days after the receipt of the application or such extended period as may be allowed by the court, given notice to the applicant that he intends to apply to the court for leave to disclaim; and in case the property is a contract, if the liquidator, after such an application as aforesaid, does not within the said period or extended period disclaim the contract, he shall be deemed to have adopted it. (5) The Court may, on the application of any person who is, as against the liquidator, entitled to the benefit or subject to the burden of a contract made with the company, make an order rescinding the contract on such terms as to payment by or to either party of damages for the non-performance of the contract, or otherwise as the court thinks just; and any damages payable under the order to a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cordingly prove the amount as a debt in the winding up." 24. In Official Liquidator, U.P. Union Bank Ltd. v. Rameshwar Nath Agarwal [1960] 30 Comp. Cas. 114, the Hon ble Supreme Court was considering the case where a bank who was a tenant in the premises was ordered to be wound up. The Hon ble Supreme Court considered the various provisions of sections 193, 230 of the Indian Companies Act, 1913, corresponding to sections 476 and 530 of the Companies Act, 1956, and held that the rent payable up to the date of winding up order is not one of such debts to which priority is given by sections 530 of the Companies Act. The outstanding contracts of the company do no become ipso facto inoperative after the winding up order is passed. The contracts remain operative until disclaimed or rescinded in the manner provided by section 230A of the of the 1913 Act corresponding to section 535 of the 1956 Act. The Hon ble Supreme Court held as follows: "(6) In the winding up of the company it is open to the liquidators to disclaim land burdened with onerous covenants, of shares or stock in companies, of unprofitable contracts or of any other property that is unsaleable or not readily sale ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat by leasing the premises it would utilise the fund for payment to the creditors is a mere euphemism. The Hon ble Supreme Court held that the learned company judge could not have permitted holding on to possession of the premises not needed for efficiently carrying on winding up proceedings. It is only those proceedings which are beneficial to the interest of the company that could be permitted to be carried out. Therefore the only course open to the court was to direct the liquidator to surrender the possession to the landlord and save recurring liability to pay the rent. However, the court accepted the offer of the landlord to pay rent for the period of six years as the expected income for the distribution amongst creditors of the company in liquidation. 26. In Smt. Nirmala R. Bafna s case ( supra ) was inducted as a sub-tenant by the company in liquidation prior to its liquidation. Mrs. Bafna was sister of one of the directors of the company and her husband was manager of the company. She relied upon the agreement of sub-tenancy. The company court found that the said agreement of sub-tenancy appears to be bogus, but granted leave for the adjudication of the claim of Mrs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e instance of the official liquidator but instead the court directed the official liquidator to disclaim the property and the official liquidator complied with the order of the court of disclaiming of the property. Therefore, the provisions of rule 268 will not be applicable when the property of the company is disclaimed at the instance of a party other than at the instance of the official liquidator. 28. In view of the principles of law discussed above it is apparent that the company in liquidation has entered into a contract with each of the landlords of 167 centres which is containing onerous covenant on cessation of business of company of payment of monthly rent. Thus, it is within the jurisdiction of the company court to rescind such contract so as to reduce the burden on the company in liquidation for the larger interest of the creditors. In view of the facts mentioned above, the liability of the company after the possession was taken over by the official liquidator is increasing every month. The official liquidator has stated in the reply that such expenses are liquidation expenses. May be the official liquidator is right in declaring the rent of such 167 premises as liq ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the presence of the representative of the official liquidator attached to this court or of the High Court where the property is situated, after informing the District Magistrate/Presidency Magistrates and secured creditors to enable them to depute their representative at the time of opening of seals and preparation of inventory. 2.The applicants who have filed the present applications for disclaiming the tenancy rights will get the equipment, furniture, fixtures and all other property lying in the premises photographed in the presence of such representatives. The landlords shall get the photographs at their costs without removal of the goods from the site. 3.The applicants shall then cause the removal of equipment such as antennas, etc. at their costs and get it properly packed and insured for transportation to the premises at Mohali or at any other place to be determined by the official liquidator. The official liquidator may take the assistance of the secured creditors to provide suitable accommodation for stock of the goods if not available. 4.The official liquidator shall take immediate steps for sale of such goods. In other cases: 1.The property other than that of t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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