9911796707
TMI Blog2005 (4) TMI 655X X X X Extracts X X X X X X X X Extracts X X X X ..... s. 2,000/- per month. The demised premises were, however, not vacated by the company after the expiry of the contractual period of tenancy. 2. Some time in the year 1990, the company became sick and consequently it made reference before the Board for Industrial and Financial Reconstruction (BIFR). Proceedings in that reference being Case No. 57/1990 went on for years together. Ultimately, the BIFR forwarded its opinion dated 23rd February, 2000 recommending winding up of the company under Section 20(1) of the Sick Industrial Companies (Special Provisions) Act, 1985 (SICA). The operative portion of this order reads as under: "On consideration of the facts of the case and the submission made at today's hearing, the Bench came to the conclusion that the promoters were not serious in rehabilitating the company nor were they resourceful enough to mobilize the funds required for this purpose and were only enjoying the protection under the Act unduly. As such there was no rehabilitation proposal with means of finance fully tied up, for consideration of the Board despite ample opportunities having been given to all concerned. Under the circumstances, the Bench confirmed its prima fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lication, i.e. CA No. 50/2004. In this application it is pointed out that the company has been Wound up vide order dated 14th August, 2003. It is also stated that after his appointment when the Official Liquidator went to take possession of the demised premises, being Ground Floor and 9 servant quarters of the property, he took possession of the Ground Floor and 3 servant quarters leaving 6 servant quarters, which had, by then, been occupied by a few persons claiming themselves to be the workmen of the company (in liquidation). In spite of repeated efforts, those persons have not handed over the possession of 6 servant quarters to the Official Liquidator. It is also stated that the applicants are in dire need of the accommodation and as the residential house is not of any use or otherwise required by the company, this Court should direct the Official Liquidator to remove the workers from 6 servant quarters immediately with the aid of police authorities and give possession of the entire demised premises to the applicants. 6. Mr. H.L. Tiku, learned Senior Counsel appearing for the applicants, after highlighting the aforesaid facts, submitted that the company had not paid rent since ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the following judgments: (i) Ravindra Ishwardas Sethna and Anr. v. Official Liquidator, High Court, Bombay and Anr. 1983 (54) Comp.Cas. 702. (ii) Britannia Engineering Company Ltd., In re: (In liquidation) 1983 (54) Comp.Cas. 277. (iii) In re Osier Electric Lamp Manufacturing Co. Ltd. (In liquidation) 1967 (37) Comp.Cas. 306. (iv) Faizabad Distillers Pvt. Ltd. (in liquidation) v. Salim Tailor. 1993 (76) Comp.Cas. 127. (v) Sudarsan Chits (P) Ltd. O. Sukumaran Pillai and Ors. 1985 (58) Comp.Cas. 633. (vi) Dr. S.P. Bhargava v. Haryana Electric Steel Company Limited, New Delhi and Anr. (supra). (vii) Joshi Trading Co. (P) Ltd. v. Essa Ismail Sait (supra). 9. The first question which requires determination is the maintainability of such an application before the Company Court. Admitted legal position is that once the company is ordered to be wound up, all the proceedings against such a company are to be stayed unless leave of the Company Court is specifically obtained. Likewise, no fresh proceedings can be filed in any Court of Law against the company unless permission of the Company Court is secured. That is the mandate of Section 446 of the Companies Act, 1956 which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 446 is given very wide interpretation [See Sudarsan Chits (P) Ltd. v. O. Sukumaran Pillai and Ors. 1985 (58) Comp.Cas. 633. 11. It is for this reason that when a landlord is to recover the possession of the premises which were let out to the winding up company and possession whereof is taken by the Liquidator, the applications are filed in the Company Court. While dealing with such applications, approach of the Court would be to examine as to whether the Liquidator needs the premises for liquidation proceedings. If not, the Company Court directs the Official Liquidator to hand over the possession to the landlord. Even the need of the Official Liquidator has to be strictly construed. Merely on his ipse dixit that he requires the premises, the Court would not treat the said need as gospel truth but would go into the aspect as to whether the demised premises are genuinely needed by the Official Liquidator. In the case of Ravindra Ishwardas Sethna and Anr. v. Official Liquidator, High Court, Bombay and Anr. (supra), the Supreme Court repelled the argument of the Liquidator that premises let out to the company were needed to carry on business and for the beneficial winding up of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m of Rs. 82,000/- from its life insurance fund to the general department. This was done anticipating the takeover of the life insurance business by the Life Insurance Corporation. The Life Insurance (Emergency) Provisions Ordinance, 1956 was promulgated which was followed by the Life Insurance Corporation Act, 1956 and the life insurance business was taken over by the Corporation. A special Tribunal was constituted under Section 17/15 there of provided that the Tribunal could decide whether a particular transfer from the life insurance fund to the general department was without consideration and the transfer was not reasonably necessary for the purposes of the controlled business of the company. Life insurance Corporation after the take over filed an application after the takeover filed an application before the Tribunal that the transfer by the company was without consideration and was not reasonably necessary for the purpose of controlled business. While the proceedings were pending before the Tribunal the company was ordered to be wound up by the Bombay High Court. The Tribunal negatived the contention that leave of Bombay High Court was necessary under Section 446 of the Act an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs Pvt. Ltd. (In liquidation) (supra), has taken the view that the proceedings against the tenant for arrears of rent or seeking eviction can be disposed of by the Company Court. 14. However, learned Senior Counsel for the applicants submitted that this Court should not accept the view taken by the Punjab & Haryana High Court and the Kerala High Court in the aforesaid judgments as the Full Bench of this Court has held otherwise in the case of Life Insurance Corporation of India (supra), which would be binding on me. Therefore, let me first scan through this judgment extensively. 15. The facts which can be deciphered from the Full Bench judgment are these: M/s. Asia Udyog Pvt. Ltd. was ordered to be wound up on 2nd February, 1978 and winding up proceedings were pending before the Company Court. The company was tenant of the premises at 8, Darya Ganj, Delhi which belonged to the LIC. These premises were 'Public premises under the Public Premises (Eviction of Unauthorised Occupants) Act, 1971. (for short 'the PP Act'). The case of the LIC was that because of various unlawful acts done by the company, its possession was unauthorised and it was entitled to seek possessio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Military Estate Officer, Delhi [1973]1SCR515 . It will be immediately clear that the 1971 Act deals with a very limited objective. It only means that if the Act of 1971 was not there, the LIC would have to file a civil suit or go before the Rent Controller for recovery of possession of premises or recovery of rent/damages. What is important to be emphasised is that the Act of 1971 is not a distinct Code which has created its own liabilities and rights and has brought forth a new set of rights and liabilities under the said Act not existing before. The 1971 Act deals with the rights and liabilities of the parties under ordinary law but only a new forum and a remedy has been created in respect of public premises. It is this limited nature of coverage by the 1971 Act which must be borne in mind when answering the poser raised before us." 16. While deciding the issue, the Court also took into consideration judgment of the Madras High Court in the case of T.V. Purushottam & Co. v. Provisional Liquidator, Sobhodaya Publications Ltd. (1955) 25 Comp Cas 49. It was a case under the Rent Control Act. It would be appropriate to reproduce this discussion as well: "No doubt the learned Jud ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be entertainable by the winding up Court. But the Counsel for the LIC, Mr. Gupta, contends that whatever be the position when a suit has to be filed for this purpose, the position is different when proceedings are to be initiated under the 1971 Act, the validity of the argument depends on the answer to two questions --whether the proceedings for the recovery of premises and the recovery of arrears of rent can be considered to be legal proceedings within Section 446(1) of the Companies Act; and, secondly, whether the provisions of the 1971 Act confer sole and exclusive jurisdiction on the authorities under the said Act to deal with "public premises" even in the case of a company which is under winding up. In other words, does the provisions of the 1971 Act override the provisions of the Companies Act insofar as the latter provide for the rights and consequences flowing from the winding up order." 17. To decide this question, as posed in the last three lines of the afore-quoted paragraph, the Court discussed the matter at length and also took into consideration various other judgments and concluded: "It is not, Therefore, correct to say that if any proceedings are to take place b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e subject matter of decision of ordinary Courts. If they are not, leave need not be obtained excepting of course, when recovery is to be made against the funds of the company. However, in matters in which proceeding even though before a different forum than the ordinary Courts, are contemplated like under the Act of 1971 or even under the Rent Control Act, these proceedings, which are for recovery of possession or for recovery of damages, are normally and appropriately such which can be determined by the winding up Courts. It is evident that but for the creation of a separate forum the proceedings are of such a nature which would ordinarily be dealt with by the ordinary Courts of law. In such a case leave will have to be obtained even to initiate proceedings against the company." 19. While laying down this test, the Full Bench not only examined the issue in the context of the P.P. Act but specifically referred to the Delhi Rent Control Act as well and held that for recovery of possession or recovery of damages proceedings can be appropriately determined by the winding up Courts. 20. The reading of this judgment would, Therefore, reveal two things: (a) The Court, while dealing w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Companies Act." 21. Reading both the propositions conjointly, as laid down by the Full Bench, it can be concluded that the Full Bench held that once the company is ordered to be wound up and possession of the assets of the company is taken over by the Liquidator (or the provisional liquidator as the case may be) including the tenanted premises, the application for recovery of possession of such tenanted premises can be dealt with by the Company Court. However, while dealing with such an application, the Court shall consider as to whether any case under Section 14 of the Act is made out to pass the eviction order. 22. In view of the aforesaid understanding of the Full Bench decision of this Court, which is binding on me, I with respect, do not subscribe to the view taken by the Punjab & Haryana High Court or Kerala High Court which is contrary to the Full Bench decision of this Court. It may also be pointed out that the Punjab & Haryana High Court in Dr. S.P. Bhargava (supra) had taken support of judgments of the Supreme Court dealing with income tax assessments which are specifically dealt with by the Full Bench of this Court in Life Insurance Corporation of India (supra) a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uch premises, it is not denied that the premises were given for the personal use of Mr. Raunaq Singh and guest house. Mr. Raunaq Singh has died. The premises were not in use for number of years even before the Official Liquidator took the possession. Rent is also not paid since 1997. The Supreme Court has held in the cases of Shree Chamundi Mopeds Ltd. v. Church of South India Trust Association CSI Cinod Secretariat, Madras, reported as [1992]2SCR999 and Gujarat Steel Tube Co. Ltd. v. Virchandbhai B. Shah and Ors. reported as AIR1999SC3839 that the interest of a company, which is a statutory tenant, cannot be regarded as property of the company for the purpose of Section 22(1) of the Sick Industrial Companies (Special Provisions) Act, 1985. All those cases were under SICA, as noted above, in the present case the company petition was registered on the basis of reference sent by the BIFR under SICA. 25. Keeping in view these facts, I am of the view that the applicants have made out a case which entitles them to get an order for recovery of possession of the premises even if the yardsticks contained in the Delhi Rent Control Act are applied. 26. At this stage, I may also add that wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se of the premises. And that is what the liquidator sought to do, and the Court extended its help to the liquidator. This, in our opinion, is wholly impermissible. The learned Company Judge could not have authorised the Liquidator to enter into such an agreement and Therefore his order is liable to be set aside." 27. It would also be of benefit to take note of the approach suggested by the Calcutta High Court in Britannia Engineering Co. Ltd. (supra), wherein emphasising that the law of procedure is a handmaid of justice and not its mistress and the Court can always make an order which is just and proper in the facts and circumstances of the case and it is immaterial as to what the prayers are in the application and particularly in a winding up proceeding, the Court observed: "In an application, by the landlord of the premises under the tenancy of the company, under Section 446 for leave to institute suit and legal proceeding against the Official Liquidator representing the company in liquidation, it would be too technical a plea that no relief by way of vacating the unauthorised ex-employee occupant is asked for in the application and that, Therefore, the ex-employee cannot be ..... X X X X Extracts X X X X X X X X Extracts X X X X
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