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TMI Blog2024 (7) TMI 1263X X X X Extracts X X X X X X X X Extracts X X X X ..... ht in the property beyond what was available to the company (in liquidation) during the subsistence of the sub-lease rights. In other words, since the rights of the bank to seek forfeiture of the mortgaged property flew from the rights of the sub-lessee i.e. the company (in liquidation), on the termination of such rights at the behest of the applicant-IIPL, nothing survived in favour of the objector-PNB, so as to lay its claim over the property for the remainder of the period of the lease. Incidentally, the facts of this case are similar to what came up for consideration before Supreme Court in the case of Stressed Assets Stabilization Fund [ 2019 (10) TMI 1526 - SUPREME COURT ], wherein the loans were obtained by the lessee on the strength of mortgage of title deeds of the leased industrial property, but subsequently, the company went into liquidation. The West Bengal Small Industries Development Corporation Limited, which was the original lessor terminated the lease as the lessee had ceased to carry on manufacturing activities beyond the stipulated acceptable period. Thus, leave is granted to the Official Liquidator to disclaim the entire sub-demised office space containing super ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esidual period of 90 years with effect from 02.04.2004, commencing from 01.10.2009. Further, by virtue of a Supplementary Indenture of Sub-Lease dated 24.04.2011, the company (in liquidation) was allotted a parking space for twenty (20) road worthy motors cars in the compound of the building Infinity Benchmark , commencing from 01.04.2010, for a residual term of 90 years with effect from 02.04.2004. It is stated that the Indenture of Sub-Lease as well as the Supplementary Indenture were duly registered. 3. As per the terms and conditions of the Indenture of Sub-Lease as well as the Supplementary Indenture of Sub-Lease, the company (in liquidation) was contractually obligated to pay various monthly charges to the applicant on account of lease rent, electricity charges, air conditioning charges, common service and maintenance charges and such other charges as enumerated therein. It is stated in this regard that the applicant raised several invoices against the company (in liquidation) and the said invoices were duly accepted by the company (in liquidation) and no objections were raised against the same. However, in breach of the Indenture of Sub-Lease and the Supplementary Indenture ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ompany (in liquidation) became liable to be wound up. 6. It is stated on behalf of the applicant that it came to know that against mortgage of the sub-demised office space, the company (in liquidation) secured certain credit limits for working capital and a Term Loan from Punjab National Bank PNB , and such account was classified as a Non-Performing Asset NPA by the Bank on 31.12.2011 consequent to the default in repayment, and subsequently, a notice under Section 13(2) of the SARFAESI Act, 2002 was issued on 07.08.2012, followed by a notice under Section 13(4) on 06.02.2013, by way of which the Bank took symbolic possession of the sub-demised office space. It is also stated that PNB sought to take over physical possession by applying for the same under Section 14 of the SARFAESI Act, before the leaned District Magistrate, Barasat. 7. Subsequent thereto, PNB instituted O.A. No. 243/2013 under Section 19 of the Recovery of Debts due to Banks and Financial Institutions Act, 1993, before the Debts Recovery Tribunal DRT , New Delhi, for recovery of its outstanding dues from the company (in liquidation). In the said proceedings, vide order dated 21.08.2013, the learned DRT restrained th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o dismissal of its IA No. 1390/2018 vide order dated 28.11.2018 of this Court disallowing permission to proceed with such arbitration. 11. On a perusal of the record, it is borne out from the Status Report filed by the Official Liquidator, being OL Report No. 279/2017, that the Official Liquidator has taken possession of the sub-demised office space, and that the said premises has been locked and sealed and a security guard has been posted for watch and ward of the same. SUBMISSIONS: 12. It has been submitted on behalf of the applicant that the sub-demised office space has admittedly been lying vacant since October 2011 and neither the applicant nor the company (in liquidation) has been in use, occupation or enjoyment of the said premises. It is urged that in light of the termination of the Indenture of Sub-Lease in terms of statutory notice dated 08.05.2012, the applicant has paramount rights in relation to the sub-demised office space and that the company (in liquidation) is a trespasser therein. It is further submitted that neither attachment of the said premises under Income Tax, nor proceedings under the SARFAESI Act, 2002 instituted at the behest of the Secured Creditor - PNB ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the company (in liquidation), the account of the company was declared as an NPA. Thereafter, since the company (in liquidation) did not approach the Bank after its account was declared as an NPA, the Bank was constrained to initiate appropriate proceedings under the SARFAESI Act, 2002 and also file an OA bearing No. 234/2013 before the DRT New Delhi seeking recovery from the borrower/company (in liquidation). ANALYSIS DECISION : 16. I have given my anxious consideration to the submissions advanced by the learned counsels for the rival parties at the Bar and have also carefully perused the record pertaining to the instant applications. 17. In order to adjudicate upon these applications, it would firstly be apposite to consider Section 535 of the Companies Act, 1956, which is reproduced hereinbelow: 535. Disclaimer of onerous property in case of a company which is being wound up.- (1) Where any part of the property of a company which is being wound up consists of- (a) land of any tenure, burdened with onerous covenants; (b) shares or stock in companies; (c)any other property which is unsaleable or is not readily saleable, by reason of its binding the possessor thereof either to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to disclaim; and in case the property is a contract, if the Liquidator, after such an application as aforesaid, does not within the said period or extended period disclaim the contract, [he shall be deemed to have adopted it.] [ Substituted by Act 65 of 1960, Section 186, for the company shall be deemed to have adopted it (w.e.f. 28.12.1960).] (5) The [Tribunal] [ Substituted by Act 11 of 2003, Section 95, for Court .] may, on the application of any person who is, as against the Liquidator, entitled to the benefit or subject to the burden of a contract made with the company, make an order rescinding the contract on such terms as to payment by or to either party of damages for the non-performance of the contract, or otherwise as the [Tribunal] [ Substituted by Act 11 of 2003, Section 95, for Court .] thinks just; and any damages payable under the order of any such person may be proved by him as a debt in the winding up. (6) The [Tribunal] [ Substituted by Act 11 of 2003, Section 95, for Court ] may, on an application by any person who either claims any interest in any disclaimed property or is under any liability not discharged by this Act in respect of any disclaimed property, and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a debt in the winding-up. 18. A careful perusal of the aforesaid provision would show that a disclaimer of an onerous property in case of a company, which is being wound up, may be claimed by any party having a right, title and interest in the property belonging to or at the disposal of the company (in liquidation). Ex facie, the claim of the applicant-IIPL clearly falls under Clause (a) to sub-Section (1) to Section 535 of the Companies Act, 1956. This Court vide Section 535(6) has to consider the respective claims of the parties in the disclaimed property so as to examine the extent of onerous covenants and may pass appropriate orders with regard thereto. 19. In the instant matter, there is no denying the fact that the applicant-IIPL had been granted lease of the parcel of land measuring 1.006 Acres by West Bengal Electronics Industry Development Corporation Limited vide registered indenture for a period of 90 years effective from 02.04.2004 together with right of renewal for two terms of 90 years each subject to the payment of premium, charges etc. After the construction of the building Infinity Benchmark was raised over the land, the applicant-IIPL sub-leased the office space o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ution during the tenure of the sub-lease; and it was made clear that it would be subject to the mortgagee observing and performing the covenants, restrictions, stipulations, terms and conditions including payment of various charges of the nature as provided for under the sub-lease. It was clearly stipulated that the sub-lessor shall not be liable in case of non payment of any amount borrowed by the sub-lessee. 23. The upshot of the aforesaid stipulation of the covenant between the applicant-IIPL and the company (in liquidation) would be that any mortgage or charge over the property in question would exist and be enforceable in law only so long as the sub-lease was subsisting in favour of the company (in liquidation) envisaging observance and performance of all stipulations as contained in the sub-lease. As the narrative unfolds, loans were taken from the consortium of the banks, including PNB, by the company (in liquidation) and evidently its account became a Non Performing Asset w.e.f. 31.12.2011 and symbolic possession was taken over by PNB on 06.02.2013. 24. However, in view of the fact that the stipulations as mentioned in the registered sub-lease dated 11.12.2019 as also 24.04 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble to the company (in liquidation) during the subsistence of the sub-lease rights. In other words, since the rights of the bank to seek forfeiture of the mortgaged property flew from the rights of the sub-lessee i.e. the company (in liquidation), on the termination of such rights at the behest of the applicant-IIPL, nothing survived in favour of the objector-PNB, so as to lay its claim over the property for the remainder of the period of the lease. 27. The aforesaid situation is aptly expressed by way of a legal maxim nemo dat qui non habet that no one gives what he has not got , which is also expressed as nemo plus juris tribuit quam ipse habet , in other words no one can bestow or grant a greater right, or a better title than he himself has . Applying the legal maxim in the instant matter, once the rights of the sub-lessee/company (in liquidation) came to be terminated, the sub-lease came to an end, and thus no better rights or interest in the subject property could have been passed on to the secured creditor i.e., PNB. 28. Incidentally, the facts of this case are similar to what came up for consideration before Supreme Court in the case of Stressed Assets Stabilization Fund (su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oor of the sub-demised space. (ii) Payment of Rs.99,34,879/- by the Official Liquidator to the Applicant on account of lease rent, electricity charges, water connection and consumption charges, service tax, municipal rates and taxes, car parking charges etc. upto May 8, 2012 together with mesne profits from May 9, 20 12 as on date together with such other amount as may be due till delivery of possession of the sub-demised office space to the Applicant out of the sale proceeds of the assets of Mahuaa Media Pvt. Ltd. (In Provisional Liquidation); (iii) The Official Liquidator be directed to remove from the demised premises all furniture, fixtures and fittings as also all books, papers, documents and records belonging to Mahuaa Media Pvt. Ltd. (In Liqn) and keep them in a secure place to be provided by the Official Liquidator. (iv) Alternatively, leave be granted to the Applicant to remove from the demised premises all furniture, fixtures and fittings and also all books, papers, documents and records belonging to Mahuaa Media Pvt. Ltd. (In Liqn) and keep them in a safe and secure place to be provided by the Applicant subsequent to restoration of possession of the demised premises to t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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