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TMI Blog2007 (3) TMI 392X X X X Extracts X X X X X X X X Extracts X X X X ..... nd conditions set out in the agreement of leave and licence dated June 17, 1975, executed between the applicant s father Mr. B. P. Irani and the said company. The licence although expired by afflux of time the said company continued to occupy the suit premises and tendered licence fee which was accepted by the applicant s father without prejudice to his rights. 5. The applicant s father had filed an eviction suit being RAE Suit No. 901/2695 of 1990 in the Small Causes Court at Mumbai against the said company under the provisions of section 13(1)( g ), read with section 13(2) of the Bombay Rents, Hotel and Lodging House Rates (Control) Act, 1937, ( the Bombay Rent Act for short) on the ground of bona fide requirement of the applicant s father. During the pendency of the said suit, Mr. B.P. Irani, father of the applicant, died. His heirs and legal representatives brought themselves on record of the said suit. The said suit has now been withdrawn on 12-7-2004. 6. In the meanwhile, M/s. Poysha Industrial Co. Ltd. was ordered to be wound up by order of this Court dated 9-1-1998. Company Application No. 731 of 1999 was made seeking return of the premises to the owner. The said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r section 41 of the Presidency Small Causes Court Act. At this stage it would be relevant to note that the sub-tenant Mr. Tukaram Bhat was not impleaded as a party respondent to the said application. The learned Company Judge allowed the said Application No. 720 of 2006 by the order dated 27-7-2006. 12. Pursuant to the leave granted by the learned Company Judge on 27-7-2006, the landlord chose to file eviction suit in respect of the suit premises against the Official Liquidator of the company in liquidation as well as the sub-tenant. 13. Mr. Tukaram Bhat (sub-tenant) after having acquired knowledge of the aforesaid order dated 27-7-2006, took out Company Application No. 863 of 2006 to recall the order dated 27-7-2006. However, the said application came to be rejected by order dated 28-9-2006. 14. Being aggrieved by the aforesaid orders dated 27-7-2006, and 28-9-2006, an appeal being Appeal No. 779 of 2006 was preferred by the sub-tenant Mr. Tukaram Bhat, inter alia , on the ground that the prejudicial order granting of leave came to be passed behind his back and in disregard to rule 117 of the Companies (Court) Rules, 1959. 15. The Division Bench was pleased to hea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hikari, J.) vide order dated 27-7-2006, whereby the applicant herein was granted leave to file suit. 20. Learned counsel for the applicant submits that though the relief for possession was claimed in the suit already filed, the cause of action in two suits was entirely different. Hence, under legal advise fresh application was moved being Company Application No. 720 of 2006 seeking leave of the Court under section 446 of the Companies Act for filing fresh eviction suit against the company in liquidation without joining the alleged sub-tenant as party respondent. He further submits that pursuant to the leave already granted by the Company Judge vide order dated 27-7-2006, the suit under section 41 of the Presidency Small Causes Court Act came to be instituted. However, the said order dated 27-7-2006, having been set aside by the Division Bench in appeal, the applicant/plaintiff cannot proceed with the said suit, hence leave to proceed with the suit needs to be granted in view of the subsequent event narrated hereinabove. 21. Learned counsel submits that the substantial question in the suit between the plaintiff and the defendants is that whether the premises is exempted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ay Rent Act is pending since the cause of action for both suits are different. 23. So far as the power of this Court to grant leave under section 446 of the Companies Act is concerned, reliance is placed on the Division Bench judgment of this Court in the case of Balkrishna Mahadeo Vartak v. Indian Association Chemical Industries Ltd. [1958] 28 Comp. Cas. 179 , wherein Chainani, J. (as he then was), stated that leave to file suit should ordinarily be granted where the question at issue is one which cannot be gone into and decided in the winding up proceeding. He also relied upon the judgment of the Madras High Court in the matter of T.V. Purushottam Co. v. Provisional Liquidators, Subhodaya Publications Ltd. [1955] 25 Comp. Cas. 49 (Mad.), wherein the above principle governing grant of leave to continue proceedings were laid down by the Madras High Court in the following words : "Cases where the company is necessary party to the action but there are other defendants as well, the Courts generally grant leave : and that Court may obtain undertaking of the applicant that he will not enforce against the company any judgment which he may obtain without the leave of the C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9. Mr. Thakkar, after laying the aforesaid foundation went a step ahead and urged that this Court has to examine not only the maintainability of the suit but the merits of the contention with regard to the applicability or non-applicability of the provisions of the rent legislation, the jurisdiction of the Small Causes Court to entertain and try the suit, the question of necessity to grant successive leaves when the applicant is indulging in spate of litigation against the company which causes financial strain on the resources of the company in liquidation. 30. Mr. Thakkar took me through the various provisions of the Maharashtra Rent Act and advanced his submission on the length and width of section 33 of the said Act to contend that all suits between the landlord and tenant must be filed under section 33 of the said Act irrespective of the fact whether Act is applicable or not. In his submission suit under section 41 of the Presidency Small Causes Court Act is not tenable. In other words, submission of Mr. Thakkar is that notwithstanding the fact that the Maharashtra Rent Act is not applicable to the suit premises, still the suit has to be filed under section 33 of the said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... whether failure to obtain permission prior to institution of suit debars the court from granting such leave subsequently. This question has already been answered by the Apex Court in the case of Bansidhar Shankarlal ( supra ) and reiterated by the Apex Court in the recent judgment in the case of State of Jammu Kashmir ( supra ) wherein the Apex Court held that the failure to obtain leave prior to institution of suit would not debar the Court from granting such leave subsequently and that the only consequence of this would be that the proceedings would be regarded as having been instituted on the date on which the leave was obtained from the High Court. In view of this categorical pronouncement of the law, the objection to the maintainability of the application raised by the learned senior counsel appearing for the sub-tenant is devoid of any substance. 34. The next objection sought to be raised by Mr. Thakkar is that the order passed by the learned Company Judge (Vazifdar, J.) dated 23-2-2006, would debar the applicant from moving and prosecuting another or fresh application for leave to file fresh suit under section 41 of the Presidency Small Causes Court Act on the app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order, therefore, is that no suit can be filed against the company without obtaining leave of the Court. In dealing with the question of grant of leave, the Court has to necessarily consider the interest of the company and to see that the assets are not wasted in unnecessary litigation. Leave to file suit should ordinarily be granted where the question at issue is such which cannot be gone into and decided in the winding up proceeding. 37. This Court, while considering the prayer for grant of leave has to bear in mind the aforesaid settled principles culled down from the various judgments of the various Courts. Now, let me turn to the question whether the interest of the company would get affected, if the leave to file suit as prayed for by the applicant is granted. While considering this aspect, one has to keep in mind the law laid down by the Apex Court in the case of Smt. Nirmala R. Bafna ( supra ), wherein the Apex Court ruled that in addition to the factual situation there are two other circumstances which must be taken into consideration, namely, ( a ) the tenancy rights of the company in the tenanted premises are not an asset for the purpose of liquidation proceeding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g, only half of it is issued, then that becomes the issued capital of the company. If the offer of issue is made to the public the whole of it may not be taken up. That part of the issued capital which has been allotted is known as the subscribed capital. The company need not immediately call upon the whole amount. The actual amount received is called the paid up capital. The uncalled capital of a company can be converted into reserve capital. By passing a special resolution, the company may declare that a portion or whole of its uncalled capital which shall not be called except in the event of winding up. Such a capital cannot be converted except with the leave of the court; it cannot be charged by the directors. 41. Section 69 of the Companies Act provides for subscription. The first requisite of valid allotment is that of minimum subscription. When shares are offered to the public, the amount of minimum subscription has to be stated in the prospectus. Minimum subscription means the amount which is, in estimate of directors, enough to meet the following needs, namely, purchase price of any property to be defrayed partly or wholly out of the proceeds of the issue, preliminary ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , it would be open for that Court either to return or reject the plaint or permit the conversion of the suit. All these conflicting questions need not be gone into and adjudicated upon by this Court at the stage of grant of leave. Only this Court has to consider that the suit is not a frivolous suit, that the suit is not such which is bound to fail for the reasons apparent on the face of the record and the same is not going to create strain on the resources of the Official Liquidator. At any stage the question raised in the suit is arguable one. 46. In the aforesaid view of the matter, this is a fit case for grant of leave, however, subject to the condition that in the event of the decree the same shall not be executed against the company in liquidation without the leave of this Court. 47. In the result, the application is made absolute in terms of this order. 48. Company Application is disposed of accordingly, with no order as to costs. 49. At this stage, learned counsel for the respondent prayed for stay of this order. I do not think it is necessary because decision of suit shall take its own time during which this order can conveniently be challenged, if advised. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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