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TMI Blog2018 (10) TMI 120X X X X Extracts X X X X X X X X Extracts X X X X ..... s to whether it was within the competence of the Company Judge to have entertained the application on merit. To conclude, when the impugned order is tested on the anvil of above analysis, it cannot be given the stamp of approval. Consequently, it is set-aside. Application filed by the State of Madhya Pradesh claiming to be the owner of the immovable property in question, being the successor of erstwhile owner, is allowed. It is held that the lessee and subsequent transferee from the original lessee did not incur absolute right and title in the immovable property in question. In other words, they continue to remain as lessee. And the object for which the land was leased out being frustrated, on winding up of the company in question; the land leased out to it stands reverted to its owner, the State of Madhya Pradesh. As a consequence whereof, it is held that the official liquidator has no right to auction the leased property in question. X X X X Extracts X X X X X X X X Extracts X X X X ..... b National Bank, the Andhra Bank, the State Bank of Indore, Union Bank of India, Bank of Baroda, also filed applications for claiming outstanding dues or the permission [under Section 446 (2) of Companies Act] to continue with the suit for recovery. Besides, the labour union also filed application claiming the wages and dues of the workmen. (6) The winding up application was decided by learned Company Judge on 04.05.1998, whereby the J.C. Mills was directed to be wound up, on the following terms: "22. It is, therefore, ordered that the company, M/s. Jiyajeerao Cotton Mills Ltd., having its registered office at Birlanagar, Gwalior, be wound up. It is further directed that the winding up order be drawn up and published according to Rules. 23. The intimation of this order be sent to the Official Liquidator and the Registrar of Companies at Gwalior. 24. The Official Liquidator shall be the liquidator of the company and shall take over the custody of the assets of the company as detailed in the chart annexed with the application and affidavit dated 2nd February 1998 filed by the company. The company shall, however, submit to the Official Liquidator the statement as to the affairs of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... men to whom the amount is payable shall also be indicated. (D) The Liquidator shall submit a report clearly indicating the amount of cash available and recoverable from the assets, referred to hereinabove, including raw-materials and finished goods. He shall also indicate the extent of liability towards the payment of wages to the workmen. This report shall be submitted by the next date fixed in this case. (E) It has been stated on behalf of the petitioner-company that the balance of its various accounts maintained in various banks comes to ₹ 2,55,70,000.00 and the value of the Fully Paid Up Equity shares and debentures etc. detailed in Annexure 6, referred to herein above, comes to about six crores. This has to be verified by the Liquidator before submitting his report. (F) The Liquidator shall open an account in any branch of the Nationalised Bank at Gwalior in his official capacity and give its information to the petitioner-company. (G) The counsel for the petitioner-company has stated that company will provide ₹ 2,00,000/lying in its account in the Bank of Tokyo Mistubishi Ltd which amount shall be deposited by the company in the account of Liquidator opened ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted by the Government. Transfer of the property was not objected by the Government. Thereafter possession of J.C. Mill continued over the said land. When J.C. Mill transferred its land to Grasim and CIMMCO, the said transfer was not objected by the State Government Therefore now State Government is estopped from their conduct in claiming the said land. Even otherwise at the time of winding up order the property belonged to the Mill and after its possession is taken over by the Official Liquidator, the property of the company is under liquidation under the law. 17. As discussed above the State Government has no right over the said property and the lands belong to the company and the lands are of the company. As regards the property of company at Ujjain, there is no objection by the State Government regarding its title. However, objection was raised by the Collector District Ujjain. This objection was uncalled for. Application of the State Government is therefore dismissed. The properties, which have been taken over by Official Liquidator after winding up proceedings and are in control of Official Liquidator, shall be deemed to be the properties of the company. Other applications ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f law of estoppels is not attracted. The law of estoppel cannot supersede the conditions of the grant as per Section 3 of the Government Grants Act. (14) It is contended that the issues raised before the Company Court were: "(i) A lease was granted to company on 24.02.1921 and the conditions were specifically mentioned in the lease deed that the grant was conditional. The land will remain in Gair Dakhilkar rights. (ii) The lease was granted for running the factory with the condition that the lease of land is only for the purpose of running the factory and as an when the factory is closed the land will revert back to the State Government without claiming any compensation. (iii) The original lease was for a period of 5 years and another lease was granted on condition for the running of factory and the period of lease was till such time as the factory continued. Admittedly the company has gone in liquidation and the factory has stopped working therefore the land should revert back to the State Government. The claim raised on behalf of Grasim Industry, CIMMCO Birla or J.C. Mills Education Institution or D.P. Mandellia who are transferees from the Birla Brother Limited or the JC Mil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ree, may not only support the decree but may also state that the finding against him in the Court below in respect of any issue ought to have been in his favour; and may also take any cross-objection to the decree which he could have taken by way of appeal provided he has filed such objection in the Appellant Court within one month from the date of service on him or his pleader of notice of the day fixed for hearing the appeal, or within such further time as the Appellate Court may see fit to allow." Thus, it is respondent alone who can prefer the cross-objection and that too within one month, after admission, from the date of service of notice. In the present case, the record reveals that the appeal was admitted on 18.02.2005 and despite service of notice, respondent No.2, through whom the present applicant claims his right in property, had chosen not to appear in the proceedings before the learned Company Judge nor has challenged the order passed and has thus allowed it to attain finality, which leaves no scope for entertaining cross-objection under Order XLI Rule 22 CPC at the instance of the applicant who is no less than a stranger. Consequently, I.A.No.3943/2010 stands rejecte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng over the administration of a State by its Ruler "(a) ..... (b) all duties and obligations of the Rulerpertaining or incidental to the Government of the Covenanting State shall devolve on the United State and shall be discharged by it; (c) all the assets and liabilities of the Covenanting State shall be the assets and liabilities of the United State: and (d)..... In accordance with Article VIII of the Covenant, the Raj Pramukh executed on 19th July, 1948 on behalf of the State of Madhya Bharat a revised Instrument of Accession, which was accepted by the Governor-General of India on 13th September, 1948. By that Instrument, the Raj Pramukh accepted all the matters mentioned in List I and List III of the 7th Schedule of the Government of India Act, 1935, except the entries in List I relating to any tax or duty as matters with respect to which the Dominion Legislature may make laws for the State of Madhya Bharat Some time in May 1949 a supplementary covenant" was entered into by the Rulers of Gwalior, Indore and certain other States of Central India modifying the original covenant in certain respects. The modification material here was about the acceptance of the Cons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arked for running a factory. Intention of the Government was that the factory should not be closed therefore certain conditions were imposed.." However, in very next breath learned Judge observes that "later action of the government and condition to start other industries in the year 1947 no such condition was imposed". This finding, in our considered opinion, will not have any adverse bearing on the condition of lease initially created in absence of any new lease agreement. No material is commended at to establish that the lease executed in the year 1921 was superseded. This finding, as apparent from the impugned order, had percolated through entire judgment leading to an observation by learned Judge that the Government is estopped. We consider this to be an erroneous observation. Merely because in later years if further permission is granted for an expansion of the industrial activities. The grant dated 07/04/1947 only exposited certain concession to company for promoting industrial expansion which were not in derogation of the terms and conditions of original lease. There was no waiver of terms and conditions of lease agreement of 24/02/1921. In view whereof, we find it difficul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fer of lease-hold right, which it appears have been without prior permission/intimation as no material to that effect is commended to us, in our considered opinion, will not create any lease right in the transferee and he does not become an owner of the property. In "Badrilal Vs. Municipal Corporation of Indore [AIR 1973 SC 508 (511, 512)]", it is observed by their lordships: "8. It was then urged by Mr. Gupte that the appellant having deposited the rent up to 313-1954 and the Municipal Commissioner having accepted it he should be deemed to be a tenant holding over. Leaving aside for the moment the contention put forward on behalf of the Corporation that this payment was made behind its back, it has to be noted that the payment was at the rate prevailing before 30-9-1949 and on that date the Corporation having passed a resolution specifying a new rate rent of ₹ 9 per Chasma the payment at the old rate by the appellant and its acceptance by the Municipal Commissioner was not an acceptance of rent as such and in clear recognition of the tenancy right of the appellant. It cannot amount to the Corporation consenting to the appellant continuing as a tenant by paying the old rates ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er or a tenant at will. In view of the concluding words of Section 116 of the Transfer of Property Act, a lessee holding over is in a better position than a tenant at will. The assent of the landlord to the continuance of possession after the determination of the tenancy will create a new tenancy. What the section contemplates is that on one side there should be an offer of taking a new lease evidenced by the lessee or sub-lessee remaining in possession of the property after his term was over and on the other side there must be a definite consent to the continuance of possession by the landlord expressed by acceptance of rent or otherwise. In (AIR 1949 FC 124) the Federal Court had occasion to consider the question of the nature of the tenancy created under section 116 of the Transfer of Property Act and Mukherjea, J., speaking for the majority said that the tenancy which is created by the "holding over" of a lessee or under-lessee is a new tenancy in law even though many of the terms of the old lease might be continued in it, by implication and that to bring a new tenancy into existence, there must be a bilateral act. It was further held that the assent of the landlord w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ers [(1984) 4 SCC 657]": "8. Before we advert to the question of construction of Section 446 (2) (b), it would be advantageous to notice the historical evolution of the provision as well as its present setting. Section 171 of the Indian Companies Act, 1913, the predecessor of Section 446 (1) did not contain any provision similar or identical to that of Section 446 (2). Section 171 only provided for stay of suits and proceedings pending at the commencement of winding up proceeding, and embargo against the commencement of any suit or other legal proceedings against the company except by the leave of the court. This provision with little modification is reenacted in Section 446 (1). There was no specific provision conferring jurisdiction on the court winding up the company analogous to the one conferred by Section 446 (2). Sub-sec. (2) was introduced to enlarge the jurisdiction of the court winding up the company so as to facilitate the disposal of winding up proceedings. The provision so enacted probably did not meet with the requirement with the result that the Committee appointed for examining comprehensive amendment to the Companies Act in its report recommended that "a suit" by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... VII of the Companies Act bears the heading 'Winding up'. Section 443 sets out the circumstances in which a company may be wound up by the court. Section 444 provides that where the court makes an order for the winding up of a company, the Court shall forthwith cause intimation thereof to be sent to the Official Liquidator and the Registrar. Section 446(1) provides that when a winding up order has been made or the official Liquidator has been appointed as provisional liquidator, no suit or other legal proceeding shall be commenced, or if pending at the date of the winding up order, shall be proceeded with, against the company, except by leave of the Court and subject to such terms as the court may impose. Then comes sub-section (2) of Section 446. It specifies the contours of the jurisdiction of the court which is winding up the company. It confers special jurisdiction on the Court which is winding up the company to do things that are set out in the various sub-clauses notwithstanding anything contained in any other law for the time being in force. Section 446 (2) thus conferred special jurisdiction on the court winding up the company which otherwise it may not have enjoyed. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... here a winding up order has been made or where the official Liquidator has been appointed as provisional Liquidator. The first of the two situations envisages an order for winding up of the Company having been made and which is subsisting. The second situation is where without making a winding up order, the court has appointed official Liquidator to be the provisional Liquidator. Section 450 (1) of the Companies Act confers power on the Company Court to appoint official Liquidator to be provisional Liquidator at any time after the presentation of the winding up petition and before making of the winding up order. The Court before which a winding up petition is presented has power to appoint official Liquidator as provisional Liquidator of the Company even before making the winding up order. If ultimately winding up order is made, the official Liquidator acts as such. And let it be remembered that where a winding up order is made, it relates back to the date when petition for winding up is presented. Referring to Section 446 (1) it becomes clear that the court will have jurisdiction to make the order therein contemplated, where a winding up order has been made or prior to the making ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and before a winding up order is passed, where any suit or proceeding against the company is pending in the Supreme Court or in any High Court, the company or any Director or Contributory, may apply to the Court in which the suit or proceeding is pending for stay of proceedings; and in a case where any suit or proceeding is pending against the company in any other Court, they may apply to the Court having jurisdiction to wind up the company, to restrain further proceedings in the suit or proceedings. Therefore, it is clear that if the jurisdiction of the Court which is winding up the company were to commence on the date of the presentation of the petition for winding up, or on the date a resolution is passed by the company for voluntary winding up, to entertain or dispose of a suit or proceedings set out in clauses (a) to (d) of sub-section (2) of Section 446 of the Act, the provisions like those contained in Section 442 of the Act would have been unnecessary. Therefore, the grammatical construction placed by the learned single judge in Karnataka Light Metal Industries Case of Section 446 of the Act cannot be approved and accepted. In JAIPAL SINGH vs TANWAR FINANCE PVT. LTD., it h ..... X X X X Extracts X X X X X X X X Extracts X X X X
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