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TMI Blog2012 (8) TMI 1094X X X X Extracts X X X X X X X X Extracts X X X X ..... pellants with logic. Passing the order ex parte however strong it is, would defeat the above sermon of the legal Bible. ( 6. ) Mr . S. B. Mukherjee realises as he does always for a right cause. Mr. S. N. Mukherjee, although realises, tries to divert the flow with his eloquence. He does not succeed as the combined fragrance is so strong that rules the judgment. Alas! the author has no control. ( 7. ) This would accordingly decide the fate of the appeals arising out of order dated July 8, 2011 (A. Talukdar and Co. (Fertilizers) P. Ltd. v. Official Liquidator (2011) 167 Comp Cas 239 (Cal)) by which the learned single judge declined to recall the order dated September 20, 2010. However, the appeal arising out of the order dated September 6, 2010, would stand on its own merit. Scenario ( 8. ) A . Talukdar and Co. (Fertilizers) P. Ltd., was incorporated under the provisions of the Companies Act, 1956 (hereinafter referred to as the said Act ) having its registered office at 15C, Clive Row, Kolkata. It was a closely held company of Talukdar family of North Kolkata as we find from the pleadings. ( 9. ) The company could not pay its debt to M/s. Indian Potash Ltd., another comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elow : (a) The existing three unauthorised occupants in the subject pro perty, viz. (I) Narmada Equipment and Spares Co., (ii) Magnet Industries (Cal) P. Ltd., and (ii) Royal Blue Accessories Co., be issued notice directing their presence before this hon'ble court and to satisfy the hon'ble court as to their leave and licence and the terms and conditions of their existence in the subject property failing which the property under their occupation be directed to be handed over to the official liquidator immediately. (b) Upon fixing the date of sale the official liquidator be granted leave to publish sale notice once in each of English, Bengali and Hindi daily newspapers as this hon'ble court may direct. (c) Leave be granted to the official liquidator to incur all expenses in this respect from the funds of the company (in liquidation) as stated above. (d) General Manager, Operation (C and M), CESC Ltd., be issued notice as to appear before this hon'ble court and to clarify as to how they have proceeded for construction in the subject premises having been sufficiently aware of the above status of the company (in liquidation). ( 10. ) Vide order dated Ju ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tor to hand over the assets and other properties of the company in his hands to the applicants. Accordingly, the official liquidator handed over possession to one Rajib Talukdar, being legally authorised by and on behalf of the company for that purpose. Such possession was handed over on September 20, 2010, when Rajib Talukdar accepted possession on as is where is and whatever there is basis in full satisfaction. Pertinent to note, the possession was handed over late in the afternoon whereas early in the morning his Lordship was approached by one of the occupants' Royal Blue and his Lordship observed that while handing over possession the official liquidator must not disturb any other right of the occupants. Fact would remain, five occupants continued to be in possession even after the order of winding up was set aside by his Lordship. Protracted litigations started soon thereafter. Talukdars were not happy, the way the official liquidator handed over possession. They preferred appeal against the order dated September 6, 2010. The Division Bench dismissed the said appeal having found it defective. Fresh appeal was filed on June 8, 2011. The learned judge dismissed the appli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecific while giving direction on the official liquidator to hand over possession of the assets of the company. ( 16. ) Elaborating his argument Mr. Basak contended, once the company went in liquidation the properties belonging to the company would automatically come in the hands of the official liquidator. The official liquidator would be in deemed possession of the assets. Since the occupants admittedly came in possession of the company's assets while it was in liquidation they were supposed to vacate and the official liquidator was dutybound to remove them and hand over peaceful and vacant possession to the management of the company soon after the winding up proceeding was set aside. He further contended that driving the parties in a protractive litigation before a civil court would obviously amount to shifting the responsibility which the official liquidator had to discharge at the time of handing over of possession. He also drew our attention to the order of the learned single judge regarding specific undertaking given by two of the five occupants to vacate the premises in question. He contended, once the order of winding up was set aside and the official liquidator was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 466 would make the company court functus officio and any proceeding under section 446, if brought, would be without jurisdiction. He further contended, the civil court was the appropriate forum who could resolve the controversy. In fact, the company appeared before the civil forum and asked for time to file written statement. Hence their belated plea before the learned company judge for vacant possession should not be entertained. ( 19. ) Mr . Bhattacharya relied on the following decisions : (1) Stock Broking Services Ltd. v. Bank of Rajasthan Ltd. reported in [2011] (3) Cal. HCN 19). (2) P. R. Deshpande v. Maruti Balaram Haibatti reported in (1998) 6 SCC 507. (3) Karam Kapahi v. Lal Chand Public Charitable Trust reported in [2010] 4 SCC 753. (4) Nahar Industrial Enterprises Ltd. v. Hong Kong and Shanghai Banking Corporation reported in [2009] 8 SCC 646. (5) Jaipal Singh v. Tanwar Finance P. Ltd., (1978) 48 Comp Cas 149 (Delhi). ( 20. ) Mr . Jishnu Chowdhury, learned counsel appearing for M/s. Pack Tech being similarly circumstanced with Subhashish and Premashish Chatterjee adopted what was argued by Mr. Bhattacharya. He added that the order of winding up was set ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ompany was in liquidation. Mr. Mookherjee in his usual fairness categorically admitted that the provisions of section 446(2) would vest the learned company judge with summary power to decide each and every controversy that came in the way of beneficial winding up of the company in liquidation including title of the occupants, being in possession of the assets of the company in liquidation. He however distinguished the present case by contending that such power could only be applied when the company was in liquidation. Similar was the case in respect of invocation of the provisions of sections 456 and 457. He referred to pages 250 to 256 to show that M/s. Hindustan Bone Mills was in possession since 1977 much prior to the company being sent in liquidation. He referred to the affidavit filed by the company where the company sought to explain the conduct of Rajib. We would find from the said affidavit that Rajib was not posted with the updated facts that caused the mistake in recording his full satisfaction. ( 23. ) Mr . Mookherjee drew our attention to the fact that Rajib and Nawal Joshi were appointed directors on September 20, 2010, the day when the company took possession throu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er 6, 2010, was amply clear and in any event could not disturb the status of the occupants on the order of winding up being set aside. ( 25. ) Mr . S. N. Mookherjee, learned senior counsel appearing for another occupant Narmada Equipments adopted what was argued by Mr. S. B. Mookherjee. He added by saying that assuming the order dated September 20, 2010, was bad in view of non-service of notice that defect stood cured by the order of remand dated January 5, 2011, when the Division Bench granted liberty to the company to agitate all points before his Lordship while praying for recall of the order dated September 20, 2010. Mr. S.N. Mookherjee further contended that even if the said order was bad for nonservice such non-service would have no consequence in absence of any prejudice being shown to have suffered by the complainant. The company miserably failed to demonstrate any prejudice being caused to them as the learned judge merely clarified his Lordship's earlier order dated September 6, 2010, that could not be said to be in furtherance of the earlier order. He lastly contended that in the application for recall made by the company in pursuance of the liberty granted by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty to assist in absence of the documents. Despite inspection being offered to him, he did not come back to take inspection of the documents, despite repeated appointments being made on that score. The official liquidator prayed for a direction upon the persons having the management and control of M/s. Hindustan Bone Mills to appear before the court along with all the relevant documents. Mr. Chowdhury contended that despite opportunities given the persons having control of M/s. Hindustan Bone Mills never appeared again to sustain their alleged right on purported tenancy. Subsequently when the present occupants approached the official liquidator the official liquidator also denied their existence and refused to accept rent from them. According to Mr. Chowdhury, creation of tenancy in favour of M/s. Hindustan Bone Mills was nothing but an attempt to forestall the beneficial winding up. He contended that in view of the order of stay the official liquidator would have nothing further to do. Mr. Basak in reply ( 29. ) Replying to what was argued before us by the respondents, Mr. Basak raised a point of law. According to him, in a company in liquidation the official liquidator would be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot arise. Distinguishing the decision in the case of Cycle Corporation of India Ltd. (in liquidation) v. West Bengal Small Industries Development Corporation Ltd. (2008) 142 Comp Cas 73 (Cal). Mr. Basak contended that he appeared in the said case and the said decision was appealed against. He was however not sure about the result of the appeal. He lastly contended that even if Rajib was satisfied about the possession his personal satisfaction would not foreclose the right of the company in making a grievance as was done before his Lordship as also in this appeal. Applicability of section 536(2) ( 31. ) Section 536(2) would otherwise make the disposition valid in case there was specific order to the said effect, otherwise all disposition in case of winding up would become void. It is admitted position, the occupants came in possession when the company was in liquidation. Hence, section 536(2) would squarely apply. Question would remain, whether it had the specific blessing of the court. The order dated July 16, 2010, would specifically decline to direct vacating of the said premises in question by the occupants. However, there was no specific approval given in favour of the occup ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ility after the orders of winding up. If we closely read the section we would find, the Legislature thought it fit to vest upon the company court the power to decide all issues, pertaining to and arising in the course of company being in liquidation, through a summary trial irrespective and notwithstanding contrary contended in any other law. This special provision is vested upon the company judge to smoothen the beneficial winding up. It would rather expedite beneficial winding up of a company. When an order of winding up is passed by the learned company judge the affairs of the company is kept under suspended animation. The winding up is complete when the assets are disposed of and distributed amongst the shareholders/creditors and all concerned entitled to under sections 529, 529A and 530 and the company is finally dissolved, in terms of section 509 of the said Act. ( 36. ) In the present case, the occupants came in possession in course of winding up. They claimed right through M/s. Hindustan Bone Mills who also could not satisfy the official liquidator as to their entry in the company's assets and their right of possession despite opportunities being given. The official ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not. Royal Blue, Magnet and Narmada ( 40. ) Let us now apply the law as understood by us as above, in case of Royal Blue Accessories, Magnet and Narmada. ( 41. ) The provision of section 446 is discretionary. It is an enabling power without any mandate to the court. The question would thus remain, whether in the present factual matrix the court should be bothered with such an adjudication particularly when there was no lis pending before the company court as the order of winding up had already been set aside. ( 42. ) The occupants came in possession in 2008. The official liquidator initially accepted the rent, soon declined to accept and categorically denied and disputed the alleged right of the occupants. From the letter for direction being dated March 5, 2001, the official liquidator informed the court that M/s. Hindustan Bone Mills could not justify about the alleged tenancy. Such purported tenancy was nothing but a camouflage. Series of opportunities were given to the ex-directors to assist the official liquidator in the affairs of the company so that the official liquidator could proceed in beneficial winding up that would include the issue of purported tenancy. Repe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ence, the Talukdars were eager to resist sale. They were also trying to dispose it surreptitiously. They were successful to find out someone who could pay off their liabilities. Fortunately for the company, the liabilities were paid off. Winding up proceeding was thus set at naught. The said order was set aside vide order dated September 6, 2010. We also find that the Talukdars also brought one person by the name of Ranjit Bhowmick and reconstituted the partnership only in 2008. Ranjit took possession and immediately created further encumbrances by handing over possession to five occupants including Royal Blue Accessories, Magnet and Narmada and immediately disappeared from the scene as his whereabouts were not known, at least nobody informed us. We also find that the application for setting aside the order of winding up was filed by the Talukdars having Tapash on their side. Hence, if the occupants would say, the Talukdars got the share from Ranjit when they paid hefty amount to Ranjit in coming into possession, it could not be brushed aside. Their possession may be illegal. However, the company court should not come to the aid of the Talukdars invoking the summary power. As we sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r of the Division Bench. The Division Bench did not go into the merits. It granted liberty to the company to ventilate their grievance before his Lordship. It was contended, once the issue was remanded back to the learned judge there was fresh hearing that would take care of the mistake if any, initially committed by not giving notice to the Talukdars or the company, as the case may be. We fully agree. The learned judge however, did not take it in that way. The learned judge proceeded on the basis that the applicants were not required to be heard. ( 49. ) The learned judge proceeded on the basis, the order was partly administrative partly judicial . ( 50. ) The learned judge proceeded on the basis, the clarification was formal in nature. ( 51. ) With deepest regard and with all humility may we say, his Lordship was wrong on that aspect. His Lordship might be correct to say, the modification and/or clarification was innocuous that would not change the situation. ( 52. ) In our view, on remand his Lordship would hear both parties on merits and pass a fresh order in case his Lordship would feel it necessary to clarify the earlier order dated September 6, 2010. His Lordshi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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