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TMI Blog2013 (5) TMI 488X X X X Extracts X X X X X X X X Extracts X X X X ..... evision channel. It is run by a company, R.P. Techvision (I) Pvt. Ltd. This company operates from an area of about 10,000 sq. ft. in a premises numbered as 119, Park Street, Kolkata- 16. The building is called "White House". The owner of the property is Calcutta Business Centre. How R.P. Techvision came to occupy this 10,000 sq. ft. area is quite important. Another company Xenitis Info Tech Ltd. occupied this area on or from 1st December, 2005, as a licensee of Calcutta Business Centre. The licence agreement was dated 12th December, 2005 with effect from 1st December, 2005. The licence fee was Rs.6,14,000/- per month. On 21st March, 2006 Xenitis wrote to Calcutta Business Centre to allow SST Media Pvt. Ltd., their sister concern, to carry on the same business from the property. By their reply of the same date Kolkata Business Centre agreed. However, Calcutta Business Centre made it plain that SST Media Pvt. Ltd. would not be treated as a sub-lessee and that the terms and conditions of the above agreement would remain the same. It appears that Xenitis was unable to pay the licence fees. Arrears accumulated. By a letter dated 22nd Augutst, 2007 Calcutta Business Centre proposed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Media by a creditor, on 21st May, 2009, the company was directed to wound up. At or about this time, another entity entered the field. Its name was R.P. Techvision (I) Pvt. Ltd. It appears that in or about September, 2009 the employees of the SST Media took out an application under Section 466 of the Companies Act 1956 (C.A. No. 651 of 2009) to bring R.P. Techvision to revive the company in liquidation on the basis, of a scheme to be presented before the Court. On 1st September, 2009 this Court stayed the winding up. It seems that immediately on stay of the winding up if not earlier, R.P. Techvision took over the business of SST Media. They started operating from the said property. On 22nd September, 2009 this Court directed a sum of Rs.2 crores to be deposited by R.P. Techvision (I) Pvt. Ltd. with the Official Liquidator. On this condition the stay was continued. On 8th January, 2010 the application for revival of the company by R.P. Tech Vision (C.A. No. 651 of 2009) along with a connected application (C.A. No. 699 of 2009) was dismissed. An appeal was preferred and once again the winding up was stayed. On 16th February, 2010, the appeal was dismissed and the Official Liquid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,68,334.84. The Reports are dated 1st October, 2010 and 14th January, 2011, respectively. It is further clarified that the advertisement for public auction shall indicate the actual amount spent by the petitioner herein during the post-winding up period as per the certificate of the Auditor appointed by the Court. Needless to add that the sale will go for confirmation before the Company Court and at that time, it would be open to the petitioner herein to seek adjustment of the amount paid by it during the post-winding up period in case the petitioner becomes the highest bidder in the public auction. We once again make it clear that our Order passed today will not prejudice the rights of the landlord in the pending eviction proceedings. The Order passed today will supercede the Order of the High Court." The above judgment of the Supreme Court has to be carefully scrutinized. This scrutiny is very important. The fate of these matters will turn on it. First of all, the Court held that the "business" of S.S.T. Media had to be sold. Next, it said that it was to be sold as a going concern, by public auction. The sale was to be confirmed by the Company Court. The order passed would n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... right to evict such person under Section 446 of the Act. Calcutta Business Centre claimed the right to receive the property by a decree to be passed by this Court in the Civil Suit filed by it or in the alternative by exercise of a right of disclaimer by the Official Liquidator under Section 535 of the Companies Act or by the exercise of powers under S. 446 or both. It was argued before me that any other assets apart from the above movables which the company could possibly possess were its technical skill and goodwill. On the other hand the defence of R.P. Techvision was that by the above Supreme Court order the property had to be sold as a going concern. The property could not be sold as a going concern after eviction of R.P. Techvision. The licence to operate the television channel was in favour of R.P. Techvision to operate the channel from 119, Park Street. If they were evicted the licence would become inoperative. Moreover, the Supreme Court had recognised the right of R.P. Techvision to bid at the auction sale and buy the business of the company as a going concern. On behalf of R.P. Techvision and various friendly groups in the organisation supporting it like workers' uni ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, the business must be a live business, a going business where transactions take place from time to time though not with clockwise regularity. For a business to go on, there must be a stock-in-trade in the suit premises. On the other hand if, as the first defendant himself has admitted, for more than a year before the date of assignment no transaction has taken place at all in the suit premises and his business had come to a standstill, then one cannot resist the conclusion that there was no stock-intrade at all in the suit premises which could have been transferred as has been purportedly done under Exhibit 77. 12. One test of determining as to whether the business is a going concern is to find out whether the assignee after the assignment would be in a position to carry on the business which was being carried on in the suit premise by the assignor. If there was a stock-intrade in the premises, business of which is sought to be transferred, it would provide some indication that there was a business which was a going concern. Ultimately whether a business was a going concern or not is a question of fact. On the facts of this case, we have no manner of doubt on the evidence which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ...................... (2) The disclaimer shall operate to determine, as from the date of disclaimer, the rights, interest, and liabilities of the company, and the property of the company, in or in respect of the property disclaimed, but shall not, except so far as is necessary for the purpose of releasing the company and the property of the company from liability, affect the rights or liabilities of any other person." In United Bank of India Vs. Official Liquidator and Ors reported in (1994) 79 Company Cases 262 cited by Mr. Mitra, the Supreme Court opined as follows: "While the aforesaid direction will dispose of the appeal, we would like to say, having heard counsel on the merits of the appeal, that we are not satisfied that the Division Bench appreciated the purpose of the provisions of section 535 of the Companies Act. Thereunder, the High Court may give leave to the official liquidator to disclaim land of any tenure which is part of the property of the company in liquidation if it is burdened with onerous covenants. The intention of section 535 is to protect the creditors of the company in liquidation and not mulct them by reason of onerous covenants. The power under sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e in course of the winding up of the company, Whether such suit or proceeding has been instituted or is instituted or such claim or question has arisen or arises or such application has been made or is made before or after the order for the winding up of the company, or before or after the commencement of the Companies (Amendment) Act, 1960 (65 of 1960).]" A division bench of this Court in the case of Wellman Wacoma Ltd. Vs. Tivoli Park Apartments (P) Ltd. reported in (2012) 4 CHN 645, cited by Mr. Chakrabarty remarked that Section 446 of the Act had to be read and applied in conjunction with Section 535. Adjudication of any claim by or against the company under these sections, on affidavits could be termed as the "due process of law". In that case in 1970 Wellman Incandescent Ltd. had become a tenant of a bunglow under Tivoli Park Apartments Pvt. Ltd. The lessee or tenant company was wound up on 24th September, 2002. Tivoli Park made an application for disclaimer asking the Official Liquidator to deliver vacant possession of the premises in question. It was contended that the tenancy stood terminated upon winding up of the tenant company. The property was in the possession of an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The company has a lot of equipments, apparatus, accessories and other moveable items in it, which are undoubtedly its assets. They could easily be housed in a lesser space in a less expensive locality. If R.P. Techvision was not there, the Official Liquidator would have been in possession thereof. He would have been, had he retained the property, in all probability, been liable to pay Rs. 6.14 lacs per month as occupation charges to Calcutta Business Centre. Now, the Official Liquidator does not have to pay these occupation charges. It is paid in a round about way. R.P. Techvision is making payment to the Official Liquidator who is handing it over to Calcutta Business Centre. In other words, somebody else is occupying the property in place of the Official Liquidator and paying occupation charges directly to the landlord. The Official Liquidator cannot and even if he be permitted by the Court will get nothing, if he tries to assign his rights of a trespasser in favour of somebody else. This property is akin, in my opinion, to the property in the Wellman Wacoma case where the company in liquidation had no right to occupy the same. CONCLUSIONS: Applying the above principles of law, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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