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TMI Blog2019 (12) TMI 15X X X X Extracts X X X X X X X X Extracts X X X X ..... ets of the Company in liquidation. Hence, under the scheme and the provisions of the Companies Act, 1956, this Court is required to protect the assets of the Company in order to not defeat the rights of the workers and the creditors of the Company. The record reveals a shocking state of affairs, which supports the stand of the Official Liquidator of the collusion and fraud on part of the ex-directors of the Company and the tenants. The relationship between the ex-directors of the Company and the directors/partners of the tenants is not in dispute. It is also not in dispute that the orders/decrees passed by the Courts are passed after the order of winding up was passed - In view of the record and facts extensively dealt by me above, it can be hardly contended by the tenants that the orders/decrees were not collusive and/or that no fraud was played by the tenants and the ex-directors of the Company on the Courts in Mumbai and Surat. The orders/decrees passed by the Courts in favour of tenants declaring them to be tenants are a nullity in the eyes of law and are declared illegal and void, as being coram non judice and hence not binding on the Official Liquidator of the Company ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rees have been obtained from the Courts after the date of the winding up order, i.e., 19th June, 2012 and no leave under section 446 of the Companies Act, 1956, have been obtained by the alleged tenants/Plaintiffs in the R.A.D. Suits from this Court. In fact, even today, no such application for seeking leave under section 446 has been filed by the tenants/Plaintiffs/alleged decree holders. 3. The relevant facts giving rise to the above report are briefly set out hereunder: 4. The Company was ordered to be wound up by this Court vide Order dated 19th June, 2012 and the Official Liquidator attached to this Court came to be appointed as the liquidator for the Company. By Order dated 6th June, 2018, this Court in Company Application No. 128 of 2018, filed by Kotak Mahindra Bank Limited (secured creditor), had directed the Official Liquidator to take possession of the following assets of the Company: a. Office Premises at 6-B Unity House, 3rd floor, Prasad Chambers, Tata Road No.1, Swadeshi Mills Compound, Opera House, Mumbai-400 004; b. Office Premises at Unit No.405, 4th floor, Prasad Chambers, Tata Road No.1, Swadeshi Mills Compound, Opera House, M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Suit No.1343 of 2011 in the case of Bhavik Gems v. J.B. Diamonds Limited, in respect of Office Premises at Unit No.406, 4th floor, Prasad Chambers, Opera House, Mumbai-400 004; c. Order dated 2nd September, 2013, passed by the Court of Small Causes at Mumbai in R.A.D. Suit No.1416 of 2011 in the case of J.B. Jewellery Pvt. Ltd. v. J.B. Diamonds Limited, in respect of Office Premises at Unit No.418, 4th floor, Prasad Chambers, Opera House, Mumbai-400 004; d. Order dated 9th May, 2017, passed by the 15th Additional Senior Civil Judge, Surat, in Regular Civil Suit No.273 of 2011 in the case of Riya Diamonds v. J.B. Diamonds Limited, in respect of factory premises No. 12, Patel Nagar, Ashwani Kumar Road, TP Scheme No.4, Surat; e. Order dated 3rd September, 2012, passed by the Small Causes Court at Surat in Small Rent Suit No. 86 of 2012 and Order dated 8th January, 2013, passed by the Principal Senior Civil Judge, at Surat, in the Regular Civil Suit No.282 of 2012 in the case of Bhavik Gems v. J.B. Diamond Ltd., in respect of Factory Building, 248-249, Lambe Hanuman Road, Near Railway Station, Surat; f. Order dated 9th May, 2017, passed by the 15th A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be in possession of Riya Diamonds; c. Factory Building, 248-249, Lambe Hanuman Road, Near Railway Station, RS No. 46/A/2 Paikee TP Scheme No.4, FP No.249-A 248, Surat City, Ward, Navagam, Surat, which was in possession of Bhavik Gems; d. Factory Building, Plot Nos.147 to 151, Pandoi Industrial Estatem Ved Road, Surat. RS No. 9 10/1, Moje: Tunki, Tal: Choryasi, Dist: Surat, which was in possession of Meer Gems; and e. Factory Building, Plot Nos.21, 22, Nehru Nagar, Lambe Hanuman Road, B/H Railway Station, Surat, Ward : Navagam. RS No.30, CS No.1722, 1723, TP Scheme No. 4, FP Nos. 234, 235, Surat, which was also found to be in possession of Bhavik Gems. 9. After taking symbolic possession of the above properties belonging to the Company (In Liquidation), the Official Liquidator filed a compliance report dated 17th July 2018 before this Court, annexing all the orders/decrees produced by the tenants obtained from the Courts. The Official Liquidator vide the compliance report also placed on record the minutes recorded by the representative of the Official Liquidator at the time when he attempted to take possession of the above properties situated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l Liquidator and the tenants reveal that: a. The ex-directors of the Company, save and except for Mr. Jivrajbhai Surani, are the Directors of J.B. Jewellery Pvt. Ltd., who allegedly claim to be a tenant of office premises at 418, 4th Floor, Prasad Chamber, Opera House, Mumbai - 400 004; b. The ex-directors of the Company namely Mr. Sureshbhai Kukadiya, Mr. Rajeshbhai Surani, and Mr. Virjibhai Kukadiya, are also partners of Bhavik Gems, who allegedly claim to be in possession of premises Nos. 405 and 406, Prasad Chambers, Opera House, Mumbai - 400 004; c. Mr. Deepak Kukadiya, Director of Riya Diamonds Pvt. Ltd. is the nephew of Mr. Bhagwanbhai Kukadiya, the ex-director of the said Company; d. Mr. Miral Surani, who claims to be a partner of Meer Gems is the son of Mr. Vallabhbhai Surani, the ex-director of the Company. Mr. Deepak Kukadiya is also a partner of Meer Gems, holding 35% in the said firm, whereas Mr. Miral Surani holds 65% in the firm; e. Moreover, the Advocate who represented the ex-directors of the said Company before this Court on 17th December, 2018, is the same Advocate who also represents the tenants, who are none other th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inst the Company and the application for interim reliefs filed by tenant was allowed. 18. It is in these circumstances, the Official Liquidator filed the present report before this Court on 1st February, 2019. Before dealing with the arguments canvassed before me, I shall first refer to and deal with the Affidavits dated 12th February, 2019, filed by the tenants pursuant to the Orders dated 19th December, 2018 and 21st December, 2018, passed by this Court: Bhavik Gems: a. Bhavik Gems has filed an Affidavit of Mr. Suresh Kukadia dated 12th February, 2019. Mr. Suresh Kukadiya, Virjibhai Kalanyanbhai Kukadia, Mr. Vallabh P. Surani and Mr. Rajesh P. Surani are the partners of Bhavik Gems. All the partners of Bhavik Gems, save and except for Mr. Virjibhai Kukadia, are the ex-directors of the Company (in liquidation). Bhavik Gems claims to be in possession of four properties as a tenant belonging to the Company in liquidation viz. (i) Office Premises at 405/406 Prasad Chambers, Opera House; (ii) Office Premises at 6B, Unit House, Opera House; (iii) Factory Building, 234-235 at Surat; and (iv) Factory Building, 248-249 at Surat. b. Bhavik Gems claims to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ems has also produced a registration certificate dated 23rd June 2005 of establishment issued by Surat Municipal Corporation, which registration certificate bears a different address altogether. J.B. Jewellery: e. J.B. Jewellery has filed an Affidavit of Mr. Bhagwanbhai Kukadia dated 12th February, 2019. All the ex-directors of the Company in liquidation except Mr. Virjibhai Kukadiya are the directors of J.B. Jewellery. J.B. Jewellery claims to be a tenant of office premises at 418, Prasad Chambers, Opera House, Mumbai. No agreement has been produced by J.B. Jewellery. Infact, it was Mr. Bhagwanbhai Kukadia who had made a statement before this Court on 19th December 2018 that J.B. Jewellery was a tenant of the Company since 2011. It is an admitted position that J.B. Jewellery does no business and has hardly done any business since its incorporation. This position is even reflected in the income tax returns filed by J.B. Jewellery for AYs. 2004-05 to 2017-18. f. If J.B. Jewellery was a tenant of the Company since 2011, there is no Explanation as to how and why the income tax returns filed by J.B. Jewellery for AYs. 2004-05 to 2009-10 reflect the address o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7, 2017-18. This question remains unanswered/unexplained. Even otherwise, Riya Diamond has not produced any rent receipts. k. In view of the above, no other statutory document such as the certificate of registration dated 26th February, 2007, issued under GVAT 2003; license dated 1st January, 2008 issued by Directorate Industrial Safety and Health, Gujarat; professional tax receipts dated 12th October, 2010, issued by Gujarat Municipal Corporation, would assist the case of Riya Diamond. Meer Gems: l. Meer Gems has filed an Affidavit of Mr. Miral Surani dated 12th February, 2019. Mr. Deepak Kukadiya and Mr. Miral Surani are the partners of Meer Gems, holding 35% and 65% share, respectively. Mr. Miral Surani is holding 65% share in Meer Gems and he is the son of Mr. Vallabhbhai Surani, ex-director of the Company, whereas Mr. Deepak Kukadia is the nephew of Mr. Bhagwanbhai Kukadia, the ex- director of the said Company in liquidation. Meer Gems claims to be a tenant of factory building at plot Nos. 147 to 151, Pandol Estate, Ved Road, Surat. m. Meer Gems has produced two agreements dated 30th April 2008, and 11th March, 2009. On a perusal of the agr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpany Court may set aside or refuse to enforce a Decree..... c. The judgment of Forbes and Company (supra) has been confirmed by the Division Bench of this Court vide its judgement in Forbes Company Ltd. v. Board For Industrial And Financial Reconstruction (B.I.F.R) . The Division Bench of this Court in paragraph 12 of the judgment has held as under: 12. We have given careful consideration to the submissions. We have also perused the impugned order and the material on record. On analysis of the material on record as well as the legal position, which according to us has been correctly appreciated by the learned Company Judge, we see no good ground to interfere with the impugned order. d. The Official Liquidators Report has been filed on the basis that the decrees have been obtained by collusion and fraud; therefore, in view of the law laid down by this Court in Forbes and Company (supra), the orders/decrees passed by the Courts in favour of the tenants having been procured by fraud, ought not to be enforced by this Court and this Court must declare the orders/decrees as illegal and void. e. The orders/decrees, on which the tenants have place ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urt in Harshad Modi (supra) held as under: 30. We are unable to uphold the contention. The jurisdiction of a court may be classified into several categories. The important categories are (i) territorial or local jurisdiction; (ii) pecuniary jurisdiction; and (iii) jurisdiction over the subject-matter. So far as territorial and pecuniary jurisdictions are concerned, objection to such jurisdiction has to be taken at the earliest opportunity and in any case at or before settlement of issues. The law is well settled on the point that if such objection is not taken at the earliest, it cannot be allowed to be taken at a subsequent stage. Jurisdiction as to subject-matter, however, is totally distinct and stands on a different footing. Where a court has no jurisdiction over the subject-matter of the suit by reason of any limitation imposed by statute, charter or commission, it cannot take up the cause or matter. An order passed by a Court having no jurisdiction is a nullity. [Emphasis Supplied] j. The Supreme Court in Harshad Modi's case (supra) in paragraph 32 has also held that: 32. .It is well settled and needs no authority that where a court takes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ances. Thus, the jurisdiction may have to be considered with reference to place, value, and nature of the subject matter. The power of a tribunal maybe exercised within defined territorial-limits. Its cognizance maybe restricted to subject-matters of prescribed value. It maybe competent to deal with controversies of a specified character, for instance, testamentary or matrimonial causes, acquisition of lands for public purposes, Record of Rights as between landlords and tenants. This classification into territorial jurisdiction, pecuniary jurisdiction and jurisdiction of the subjectmatter is obviously of a fundamental character. Given such jurisdiction, we mustbe careful to distinguish exercise of jurisdiction from existence of jurisdiction, for fundamentally different are the consequences of failure to comply with statutory requirements in the assumption and in the exercise of jurisdiction. The authority to decide a cause at all, and not the decision rendered therein, is what makes up jurisdiction, and when there is jurisdiction of the person and subjectmatter, the decision of all other questions arising in the case is but an exercise of that jurisdiction. [Emphasis Supplied] ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r Section 446 and are at this stage attempting to obstruct the Official Liquidator from taking custody of the properties of the company. p. This Court cannot lose sight of the fact that the decrees which have been obtained by the purported tenants are in fact for the benefit and advantage of the ex-directors of the Company (in liquidation). 20. During the course of oral submissions, the Official Liquidator made a disclosure that a letter dated 14th October, 2013, was received by the office of the Official Liquidator from the tenants, wherein references were made to the pending suits filed by them against the Company in liquidation. However, due to sheer inadvertence, there was no response from the Official Liquidator. Mr. Jagtiani submitted that the letter dated 14th October, 2013, will not in any manner dilute the collusion and fraud committed at the behest of the ex-directors of the Company (in liquidation) with the tenants and that the same would not discharge the tenants from its obligation to approach this Court for seeking leave under Section 446 of the Companies Act, 1956. Mr. Jagtiani placed reliance on a judgment of this Court in the case of Magnasound In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proceedings against the company (in Liquidation). It had also no claim against the applicant which could be continued against the Official Liquidator. Nor was a prayer made to transfer any pending proceeding by or against the company (in liquidation). Additionally, as noted above, it is the applicant which has approached the Company Court. It has claimed reliefs principally against the appellant before us which is not a company (in liquidation). Ultimately, the declaration as claimed affects the appellant before us. As to how at the instance of the applicant the Company Court could have nullified the decree passed in favour of the appellant before us in its limited jurisdiction, is not clear to us at all. Impleading the company (in liquidation) through Official Liquidator is also of no assistance in this case once the nature of the rights of the company (in liquidation) in the subject premises is appreciated. Unless and until the Company Court was of the view that the tenancy rights constitute asset for the purposes of liquidation proceedings, it could not have taken cognizance of the company application. In indirect and oblique manner, the Company Court could not have recorded any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 956, were invoked to seek a declaration that the second respondent was a trespasser and that the decree is vitiated by fraud and therefore a nullity. It is in the facts of that case, the Division Bench of this Court in Modella Woollens (supra) held that the Company Court had no jurisdiction to take cognisance of the company application and pass any orders/directions in favour of the Applicant before it. 24. Mr. Jagtiani submitted that the judgment of Indian Bank v. Official Liquidator, Chemmeens Exports (P) Ltd. [1998] 5 SCC 401, referred to in Modella Woollens (supra), also would not assist the case of the tenants since Indian Bank (supra) was a case where leave had already been granted under Section 446 of the Companies Act to a creditor to prosecute the suit, in which Official Liquidator had been joined. 25. I have heard the learned Advocates for both the parties and have perused the Official Liquidator's Report, the Affidavits dated 12th February, 2019, fled on behalf of the tenants and have considered the oral submissions made by the parties and the Judgments relied upon by them. I am inclined to allow the Official Liquidator's Report for more than on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5. The plaintiff has lead oral as well as documentary evidence in support of its contention. The plaintiff has examined P.W.1 Mr. Suresh Kukadia, its Director at Exh.21 and produced various documents viz. resolutions at Exh.23 and Exh.24, rent receipts at Exh.25 to Exh.34, letter dated 26/8/2011 at Exh.35, complaint to police at Exh.36 in support of its contention. As against, the defendant has not lead any oral as well as documentary evidence in support of its contention. Heard argument advanced by the learned counsel for plaintiff to this suit. The oral as well as documentary evidence produced by the plaintiff on record of this suit is discussed hereinafter issue-wise. 6. ** ** ** 7. During cross-examination the defendant and its counsel remains absent before this Court and does not cross-examine to P. W.1. The defendant has also not lead any oral as well as documentary evidence in respect of its contention. Therefore, the oral as well as documentary evidence produced by the plaintiff on record of this suit corroborates with each other remains unchallenged and unrebutted. I therefore, no any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d, ought not to be enforced or taken cognizance of, even as a defence to the Official Liquidator's Report by this Court and this Court must declare the orders/decrees as illegal and void. On the other hand, the Advocate for the tenants has not dealt with or even responded to the submissions made on behalf of the Official Liquidator in respect of the collusion and the fraud committed by the ex-directors of the Company and the tenants. The only submission which has been canvassed on behalf of the tenants is that the Division Bench of this Court in Modella Woollens (supra) has held that the Company Court has no jurisdiction to declare a decree passed by the Small Causes Court as null, void and not binding. 32. The judgment of the Division Bench of this Court in Modella Woollens (supra) will not assist the case of tenants for more than one reason. Firstly, the ratio in Modella Woollens (supra) have no relevance or application to the facts of the present case. In Modella Woollens (supra), the application for declaring the decree passed by the Court of Small Causes, Mumbai, by which the second respondent (in the facts of that case) was held to be a deemed tenant, as a nullit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubsistence of licence and payment of licence fee or charge as on the relevant date have not been satisfied in the present case. 33. It is pertinent to note that company application has not been instituted by the Official Liquidator. He does not claim any declaration of the nature claimed by the applicant much less any direction that the property be delivered to him. At the instance of the applicant who has a distinct right, title and interest in the premises based upon its character as public premises, it is extremely doubtful as to whether the learned Judge could have passed any orders on the company application. More so, when there is a further doubt as to whether the relationship of licensor and licensee which is claimed by the company in liquidation and the appellant before us, would be covered by the Public Premises Eviction Act, 1971. The forum, in this case, was elsewhere. Either it was the Court of exclusive jurisdiction or the Civil Court which ordinarily has such authority. Consequent upon termination of rights of the persons in occupation of public premises the Authority (Estate Officer) is empowered to issue appropriate directions including order of ev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts do not undergo any change. [Emphasis Supplied] 33. I am also in agreement with the submission made by Mr. Jagtiani that the judgment of Indian Bank (supra), referred to in Modella Woollens (supra), also would not assist the case of the tenants since Indian Bank (supra) was a case where leave had already been granted under Section 446 of the Companies Act to a creditor to prosecute the suit, in which Official Liquidator had been joined. 34. It was urged by Mr. Jagtiani that the Courts at the time of passing the orders/decrees did not have the requisite jurisdiction over the Company (in liquidation) due to the limitation imposed under Section 446 of the Companies Act, 1956, and hence, the orders/decrees passed by the Courts being without jurisdiction is coram non judice. In support of the above submission, reliance was placed on the judgments of the Supreme Court in Hydel Project (supra), Harshad Modi (supra) and the Full Bench of the Calcutta High Court in Hriday Roy (supra). The learned Advocate on behalf of the tenants has not even attempted to argue to the contrary or distinguish the judgments relied on behalf of the Official Liquidator. 35. The sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 446 of the Companies Act was obtained, no post-facto leave under Section 446 of the Companies Act can otherwise validate the collusive orders/decrees obtained by the tenants and/or save them from being declared as illegal and void. The admitted fact that the ex-director of the Company in liquidation had led evidence on behalf of the alleged tenants before the various Courts and that the ex-directors of the Company in liquidation were fully aware about the winding up order dated 19th June, 2012, passed by this Court, cannot be ignored. This in fact goes to the very root of the submission of the Official Liquidator viz. collusion and fraud. 39. Even in respect of the letter dated 14th October, 2013, produced by the Official Liquidator before me, I am of the view that the same will neither dilute the collusion and fraud committed at the behest of the ex-directors of the Company in liquidation with the tenants; nor does this letter absolve the Plaintiffs in the various suits from applying for leave under Section 446 of the Companies Act. The observations made in the judgment and order dated 21st October, 2015, in the case of Magnasound India Ltd. (supra), will apply to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of interim relief is declined. 41. Being aggrieved by the Order dated 8th April, 2015, the tenants and the ex-directors of the Company preferred Special Leave Petition Nos. 11758/2015, 11761/2015, 11764/2015 and 11762/2015 before the Supreme Court of India, which petitions came to be dismissed by the Apex Court vide its Order dated 24th April, 2015, in view thereof, the Order dated 8th April, 2015, passed by the Division Bench of this Court, having attained finality, it can be hardly contended by the alleged tenants that they are protected tenants in law. Even otherwise, the alleged tenants have failed to make out any case which would warrant this Court to direct the Official Liquidator not to take physical possession of the assets of the said Company. 42. It may not be out of place to mention that the modus operandi of the ex-directors as seen above has become a regular practice amongst the ex-directors of companies (in liquidation) to obstruct the Official Liquidator from taking possession of the assets of the company (in liquidation), and the same is required to be dealt with firmly. The rights of the workers and the creditors of the Company (in liquidat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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