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TMI Blog2005 (3) TMI 486X X X X Extracts X X X X X X X X Extracts X X X X ..... filed by the Kolkata Port Trust under section 446 of the Companies Act, 1956 for a direction to the official liquidator for payment of arrear rent amounting to Rs. 1,11,04,114 for the period from July 16, 2001 (date of taking over possession of the land by the official liquidator) till September 13, 2004 (date of completion of sale by the official liquidator) and for a further direction to the official liquidator to hand over possession of the leased land to the applicant Kolkata Port Trust as the owner thereof. The questions arising in the aforesaid 3 applications being similar were considered together and accordingly this court finds it convenient to decide on the tenability of the claims raised in the 3 cases noted above by means of the present common order. The facts in brief that would be necessary for an adjudication of the claims made by the respective parties may be noticed at the outset : Him Containers Limited (hereinafter referred to as "the company") was ordered to be wound up by this court on September 1, 2000. On the basis of the orders passed by the company court, the official liquidator, on July 16, 2001, took over possession of the land which was leased to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1, 2002, inter alia , holding that the retention of the leased land by the official liquidator is necessary to bring the liquidation proceedings to a successful conclusion and therefore, the disclaimer prayed for ought not be granted. The court, by its aforementioned order, also held that the lessor would undoubtedly be entitled to claim rent for the period of possession of the leased property by the official liquidator. The official liquidator, thus, continued to remain in possession of the leased land. Thereafter, pursuant to orders passed by this court, a sale notice was published in the newspapers inviting bids/tenders for purchase of the assets of the "company". As per the terms and conditions of sale, the sale was to be as per the inventory made by the valuer on as is where is and whatever there is basis. The report of the valuer clearly mentioned that the assets included leasehold land measuring 40460.456 sq. metres which was obtained by the company on lease from the Port Trust of Calcutta for a period of 30 years commencing from December 22,1982. It was also specifically mentioned by the valuer that the company had erected its structures on the said land for the purposes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dator to the lessor had also been prayed for Similarly, the purchaser M/s. Scrapt Traders, has filed Misc. Cast No. 382 of 205 for a direction to the Kolkata Port Trust for renewal/transfer of the leased land in its favour. I have heard Shri S. K. Chaudhury, learned senior counsel for the lessor Kolkata Port Trust, Mrs. Milie Hazarika, learned senior counsel appearing for the purchaser, M/s. Scrapt Traders, Shri H. Roy, learned senior counsel for the official liquidator and Shri P. C. Deka, learned senior counsel who has appeared on behalf of the ICICI Bank, one of the secured creditors of the company in liquidation. Two questions arise for determination in the present proceeding. First is the entitlement of Kolkata Port Trust to the lease rent for the period during which the land had remained in the possession of the official liquidator by treating the said claim to be one on account of cost and expenses incurred by the official liquidator in connection with the liquidation proceedings ; the second is with regard to the entitlement of the lessor or the new purchaser to have possession of the leasehold land on the basis of the directions prayed for, as noticed above. The subm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for under the provisions of section 476. In this regard, the sub mission advanced is that as the other assets of the company sold under order of this court were situated on the leased land, the amount on account of rent for the leased land must be construed by the court to be a part of the winding up expenses, inasmuch as, had it not been for the possession of leased land by the official liquidator, such assets of the "company" could not have been sold at all, a situation that had already been visualized by this court in its earlier order dated October 11, 2002. The provisions of section 520 of the Companies Act dealing with the payment of costs, charges and expenses incurred in voluntary winding up as well as the provisions of section 530(6), which provide for retention of such sums as may be necessary for the costs and expenses of winding up before applying the assets of the company in liquidation for payment of debts due has also been pressed into service by Shri Roychaudhury in support of the claim made. The contention advanced by learned counsel for the Kolkata Port Trust has met with no stiff resistance either from the official liquidator or from learned counsel for the se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... session of the leased land had not been retained by the official liquidator, realization made by way of sale of the other assets of the company in liquidation could not have been successfully completed. In such a situation, the rent, that is payable by the official liquidator for his possession of the leased land must be necessarily construed by this court to be a part of the expenses incurred in the winding up proceeding Had it not been for the retention of such possession of the leased land by the official liquidator, the sale of assets of the company in liquidation would not have materialized. Therefore, the rent payable by the official liquidator must be reasonably construed to be a part of the expenses incurred for the purposes of winding up of the company in liquidation. Viewed from the aforesaid perspective there can be no manner of doubt that the rent payable by the official liquidator for the possession of the leasehold land is a part of the costs and expenses of the winding up and payment of such costs and expenses to the lessor, Kolkata Port Trust, must be made before application/apportionment of the value of the assets of the "company" towards discharge of any of its de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the company in liquidation for a period of 30 years commencing from December 22,1982. Under the terms and conditions on which the sale of the assets of the company in liquidation was to be made, it was also made clear that it well the responsibility of the new purchaser to negotiate with the Kolkata Port Trust for renewal or transfer of the lease. The valuation of the land made by the valuer was on the basis of the goodwill value of the land calculated on the balance rent payable for the unexpired period of the lease. In such circumstances, can it be said that the unexpired period of the lease was the subject-matter of the sale and what was sold along with the other assets was the unexpired period of the lease ? The answers to the above question is inbuilt in the clear and unambiguous stipulation appearing in different parts of the detailed terms and conditions governing the sale transaction, to the effect that the responsibility of renewal/transfer of the lease will be of the purchaser and the purchaser will also be liable to make all payments in this regard to the Port Trust Authority. M/s. Scrapt Traders had entered into the deal with its eyes open and what must be assumed by ..... X X X X Extracts X X X X X X X X Extracts X X X X
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