9911796707
TMI Blog2008 (6) TMI 619X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the said Company in Liquidation had issued statutory notice on 26th July 1996. As the demand remained unfulfilled, the petitioner proceeded to file Company Petition No. 14 of 1997 praying for winding up of the Company, on or about 25th October 1996/28th November 1996. 3. The said Company Petition was accepted by the Company Judge on 16th January 1997, whereafter the Company entered appearance in the said proceedings. During the pendency of the said Company Petition, however, the Company executed rent note on 20 rupees stamp paper on 13th June 1997. 4. The said document gives the description of the premises as all part and parcel of office room no. 33 on the 3rd floor admeasuring 431 square feet and the address, as indicated above. It is mentioned therein that the Company is owner of 806 equity shares of ₹ 10/- each bearing Nos. 15639 to 16444 and 4838 Loan Bond Certificates of ₹ 5/- each bearing Nos. 77785 to 82632 of Deepak Talib Estate Private Limited. Consequent to the Company holding of said equity shares and loan bond certificates, had been allotted the said office premises and had every right to lease out the same. It is then stated that the Company has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 51 and 52, the name plate of the Company could not be found, instead, on the main door, the name of M/s Videocon Leasing and Industrial Finance Limited was displayed. When the representatives of the Official Liquidator entered inside and told the security man the purpose of their visit, the security man took them to one Shri. Dhawal Desai, Executive Director of the Company in Liquidation. When Shri. Dhawal Desai was apprised about the winding-up order and the purpose of visit, he informed that the premises being rooms no. 51 and 52 in one block along with furnitures and fixtures were given on rent to M/s Videocon Appliances Limited since 13th June 1997. The representatives of the Official Liquidator prepared rough inventory of furnitures and fixtures lying inside, which is annexed to the Minutes dated 19th March 1999. It was noticed that besides the furnitures and fixtures, computers, key-boards, printers were lying inside the premises which, on the basis of slips pasted on the computers were presumably belonging to the said occupant under the lease deed. The representative of the Official Liquidator then visited the said premises on the third floor being office premises No.33 belo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ose of the relief claimed by the applicant, but it was only an interim arrangement allowing the applicant to remain in possession of the premises as agent of the Official Liquidator, subject to the further order to be passed on this application on merits. 12. Be that as it may, the applicant, in the first place, has referred to the agreement and/or Rent Note dated 13th June 1997 to assert that the applicant was in lawful possession of the said premises along with furnitures, fixtures, fittings, telephone connection installed therein on monthly rent of ₹ 2500/- and was put in possession thereof by the Company. The applicant has then referred to the supplementary agreement dated 14th January 1998 extending the lease period on same terms and conditions. The applicant has then referred to letter received from Official Liquidator dated 13th March 1999 calling upon the applicant to hand over possession of the said premises immediately on expiry of the lease period on 12th April 1999. The applicant thereafter refers to letter received from Official Liquidator dated 1st April 1999 and has also stated that similar letter was received by applicant's associate Company Videocon Ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or to its associate Company (Videocon Appliances Limited). According to the Official Liquidator, since the applicant as well as its associate Company are not the original tenant, the question of getting protection under the provisions of the Bombay Rent Act does not arise. It is stated that since the lease period has already expired on 12th April 1999, the applicant as well as its associate company (Videocon Appliances Limited) are obliged to return possession of the concerned premises to the Official Liquidator. In the circumstances, the Official Liquidator had called upon the applicant and its associate Company to vacate the premises. Since that request was not complied with by the applicant as well as the associate Company, the Official Liquidator had no option but to proceed to take possession of the premises and as the premises were found closed at the relevant time, came to be sealed. The Official Liquidator has also sought direction from this Court that the associate company (Videocon Appliances Limited) should hand over possession of the premises on the 5th floor to the Official Liquidator as the Company in Liquidation is owner thereof and the premises would be required in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... same. The only purpose of such transaction was to defeat the claim of other creditors. The petitioners have asserted that the so-called transaction was not bonafide and for the benefit of and in interest of the Company or for keeping the Company as a going concern. The petitioners have relied on the orders and communications which are appended to the reply affidavit. 16. The Official Liquidator filed further affidavit dated 6th September 2007 and has supported the stand taken by the petitioners that since the transaction in favour of the applicant in respect of the said premises was after the commencement of the winding-up action, the same was void and could not be validated by the Court, as it was not in good faith. The Official Liquidator has denied the case of the applicant that the applicant is a lawful tenant of the Company in Liquidation. The Official Liquidator has also placed on record that the applicant was put back in possession on 15th October 1999 as agent in respect of the premises no. 33 on the 3rd floor on monthly royalty of ₹ 6000/- pursuant to the order dated 30th September 1999. The Official Liquidator has also asserted that the two documents relied by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the said premises and it is not as if the premises are given to the applicant only on payment of ₹ 2500/- per month as rent, but right has been created in favour of the applicant based on the sponsorship agreement entered into by the applicant and the Company and subsequent confirmation of liability by the Company which is in the nature of liquidated amount. The applicant would rely on the copy of sponsorship agreement dated 7th November 1994 executed by the Company in Liquidation in favour of Videocon Leasing and Industrial Finance Limited; agreement dated 13th June 1997 between said Videocon Leasing and Industrial Finance Limited and the Company in Liquidation whereunder the Company in Liquidation accepted its liability to repay and refund sum of ₹ 1.33 crores. The applicant also relies on agreement dated 13th June 1997 whereunder Company in Liquidation accepted its liability to pay the amount specified therein. Similar agreement has been executed between Videocon Appliances Limited and the Company in Liquidation to acknowledge and confirm the liability and assuring that the amount will be repaid within one year. The applicant then relies on the correspondence and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the application be not only dismissed, but the applicant be directed to vacate the premises and hand over vacant, quiet and peaceful possession thereof to the Official Liquidator. 20. I have heard learned counsel for the parties as also perused pleadings and documents on record. The counsel for the applicant has filed two compilations of reported judgments. However, during the hearing, reference is made only to cases reported in (1962) XXXII Company Cases, 876 in the case of J. Sen Gupta (Private) Limited; (1970) 10 Comp Cas 1161 in the case of Globe Financiers (P) Ltd. v. Official Liquidator ; 1999(2)BomCR237 in the case of Dinesh and Anr. v. Hemchandra and Ors . and in the case of Anthony C.Leo v. Nandlal and Ors . AIR1997SC173 . He had additionally relied on Ram Sewak Jaiswal v. Abdul Majeed and Ors. reported in AIR1980All262 . On the other hand, counsel for the Official Liquidator has relied on the decision in the case of Kanchan Kumar Dhar v. Dr L.M. Visari and Ors . reported in (1986) 60 CompCas 746. 21. The first question that needs to be addressed is, whether the transaction relied upon by the applicant is affected by Section 536, in particular, Sub-section (2) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y that the transaction is not void. 4. If it be found that the transaction was for the benefit of, and in the interests of, the company or for keeping the company going or keeping things going generally, it ought to be confirmed. 23. In the present case, even if the pleadings are fairly read, there is absolutely no case made out by the applicant that the rent note and the supplementary agreement or any other agreement was executed by the Company in liquidation as well as the applicant without any knowledge of the winding-up proceedings. In the absence of such plea, it necessarily follows that both the Company in Liquidation as well as the applicant had complete knowledge about the winding-up proceedings. As a matter of fact, the Company in Liquidation was admittedly served with the Company petition as back as on 18th January 1997. Appearance on behalf of the Company in Liquidation was also entered in the proceedings after service of the notice and yet the rent note in question came to be executed on 13th June 1997, which is obviously with the knowledge of the winding-up proceedings. If transaction is entered with such knowledge, the question is, whether such a transaction can ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of ₹ 2500/- per month for the premises admeasuring 431 square feet situated at a prime location in Mumbai in commercial complex at Fort is not only starkly inadequate, but preposterous. The agreement does not refer to any other consideration or deposit paid by the applicant to the Company before parting with such a prime property. Indeed, the document mentions the agreement as lease. However, the tenure is prescribed as only for eleven months. It was argued that the tenure was extendable on same terms and conditions for further period. The fact remains that this arrangement has been arrived at by the parties with knowledge of pending winding-up action. We shall refer to the afterthought stand now taken for the first time in the latest affidavit filed by the applicant a little later. Reverting to the stand founded on the rent note, upon scrutiny of the said document clause by clause set out therein, the arrangement seems to be most unnatural. For, no landlord would create right in favour of lessee, to whom premises are given only for a period of eleven months permitting the lessee to sub-lease or assign premises to any other person for which lessor would have no objection. S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t and the stand taken before this Court, obviously such a lease was required to be registered in terms of Section 17 (d) of the Registration Act, 1908. It is only to avoid registration that the applicant and the Company in Liquidation have limited the lease term to 11 months, which obviously is not in good faith. Insofar as the decision of the Allahabad High Court in the case of Ram Sewak Jaiswal's case (supra) is concerned, the said decision is of no avail to the applicant having regard to the fact situation of the present case. 26. As mentioned earlier, the rent note not only authorises the applicant to use the premises for its office use, but also enables the applicant to sub-lease or assign the same to third party and the Company in Liquidation would take no objection for the same. If the lease is for a limited period of eleven months, the question of providing such a right to the lessee, itself, makes the document/transaction suspicious and not in good faith, especially because there is nothing to indicate as to what was the compelling need to enter into such transaction by the Company in Liquidation. By no stretch of imagination, the transaction can be said to be for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plicant as to the necessity of executing the supplementary agreement on 14th January 1998 even though the tenure of the rent note dated 13th June 1997 was subsisting till May 1998. The description of the document to be supplementary lease agreement is only deceptive. In fact, by this agreement the parties have purportedly agreed for extending the lease period on same terms and conditions as noted in the rent note dated 13th June 1997. In that sense, it will have to be treated as a fresh agreement for the further period. Assuming that it is to be treated as supplementary agreement, then naturally, the lease term under the agreement dated 13th June 1997 stood extended for a period which would be far in excess of one year's lease period, necessitating compulsory registration of the said agreement. Thus understood, the documents pressed into service by the applicant to establish its right to remain in possession as lawful tenant have been executed not in good faith or for that matter, in the interest of the Company in Liquidation. 28. Having realised this difficulty after opening of the arguments of the applicant, the applicant has now thought it fit to file further affidavit da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rooms no. 21, 51 and 52 have been allotted to the Company in Liquidation. What is significant to note is clause 4 and clause 6 of the agreement under consideration. It mentions that the parties thereto have agreed that the party of second part shall sell the aforesaid equity shares and loan stock bond certificates to the party of first part together with the right of occupancy enjoyment of office premises bearing Nos. 51 and 52 for a total stated consideration. The consideration amount was to be appropriated from the dues payable by the Company in Liquidation to Videocon Leasing and Industrial Finance Limited. 30. Going by this agreement, it is obvious that the intention of the Company in Liquidation and Videocon Leasing and Industrial Finance Limited was to indirectly sell the subject property of the Company in Liquidation or create third party interest therein to said Videocon Leasing and Industrial Finance Limited under the garb of adjusting the consideration amount so as to appropriate the outstanding dues payable by the Company under the sponsorship agreement. 31. Be that as it may, it may be relevant to note that the sponsorship agreement makes no reference, not even a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion, which has been possible only on account of rent note dated 13th June 1997 executed after presentation of the winding up petition with knowledge thereof. Though separate agreements have been executed on the same date (i.e.13th June 1997), as the parties to the respective agreement are separate juristic persons, it is not possible for the applicant as also Videocon Appliances Limited to rely on the agreement between Videocon Leasing and Industrial Finance Limited and the Company in Liquidation, assuming that the said agreement makes reference to the manner in which outstanding amount of ₹ 1.33 crores were to be paid and settled. 33. Assuming that the applicant and Videocon Appliances Limited could be permitted to do so on the argument that Videocon Leasing and Industrial Finance Limited is the associate company, I have no hesitation in concluding that the subject transaction cannot be validated as it is not in good faith. It is not as if that transaction has been entered without knowledge of the pending winding-up action. Similarly, it is not the applicant's case that the transaction was for the benefit and in the interest of the Company or for keeping the Company g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pliances Limited. 36. From the aforesaid discussion, the argument of the applicant that the applicant was in possession of the premises on account of charge and was entitled to hold the same as charge over the outstanding dues, will have to be stated to be rejected. The applicant has approached this Court with clear case that it was in possession as tenant on monthly rent basis inducted by the Company in Liquidation. If at all the Company in Liquidation was liable to pay any amount, that is to be paid to Videocon Leasing and Industrial Finance Limited and not to the applicant or Videocon Appliances Limited. In that sense, neither the applicant nor Videocon Appliances Limited can claim that they were in possession of the respective premises and having charge thereon towards the outstanding dues. The arrangement arrived at under agreement of repayment and appropriation of the outstanding amount to be adjusted against the consideration in respect of the disputed premises does not take the matter any further. The claim of the applicant and Videocon Appliances Limited would then be only of a creditor. The said agreements no where expressly mention that possession of the premises has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ird party in respect of property under custodia legis remain unaffected and Receiver cannot interfere with rights of third party. There can be no difficulty in accepting the general proposition that mere appointment of court receiver does not result in vesting of property of the Company in the court receiver or the Official Liquidator. They are supposed to act only as administrator of the said property. 39. However, the principal question in our case is, whether the transaction entered between the parties and in favour of the applicant and Videocon Appliances Limited is affected by the sweep of Section 536 (2) of the Act and if yes, should the transaction be validated. On both the counts I have already elaborately examined the matter and recorded my opinion against the applicant. 40. That takes me to the last decision pressed into service on behalf of the Official Liquidator to dispel the argument of the applicant that the applicant was paying rent to the Company in Liquidation. In the case of Kanchan Kumar Dhar v. Dr L.M. Visarai and Ors . (supra), our High Court has held that acceptance of rent by Liquidator cannot validate a void lease. The validation has to be by the Cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... winding up by the Official Liquidator, whether the affected party approaches the Company Judge or the Official Liquidator brings any issues before the Company Judge, the Company Judge is also free to exercise jurisdiction on the basis of facts and material which would come to his notice in the proceedings pertaining to the Company in Liquidation. As in the present case, although the applicant has approached this Court limiting its relief to premises on 3rd floor which were in its occupation before sealing, however, the material which has come on record and brought to my notice by the Official Liquidator indicates similar complicity of Videocon Appliances Limited in respect of 5th floor premises. It would be but necessary and in the interest of justice to pass appropriate direction even in respect of those premises. 44. On the finding already recorded that the transaction between the Company in Liquidation on the one hand and the applicant as well as said M/s Videocon Appliances Limited on the other hand being void, the Official Liquidator will have to take steps to recover market rent from the applicant as well as said Videocon Appliances Limited with effect from 13th June 1997- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d amount from the applicant as well as M/s Videocon Appliances Limited while providing adjustment to them towards the amount already paid by them from time to time towards monthly rent in terms of the agreement or the Court's order, as the case may be, as also to exclude the period during which the premises on 3rd floor remained sealed between 13th April 1999 till 15th October 1999. (v) The applicant as well as its associate company M/s Videocon Appliances Limited are directed to forthwith deposit the original copies of all the agreements appended to the Application, affidavit in support of the application as well as further affidavit of Shri. Bharat More dated 3rd December 2007 and produced alongwith the affidavits filed on behalf of the Official Liquidator, in this Court within eight weeks from today. On depositing the said documents, it would stand impounded and then made over to the Deputy Inspector General of Registration and Deputy Controller of Stamps, Old Custom House, Mantralaya, Mumbai-32 for proceeding against the said documents in accordance with law. All questions in that behalf are kept open to be decided on merits. (vi) Order accordingly. 47. After the O ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
