JUDGMENT
N.K. Sodhi, J.
1. Whether proceedings for the execution of an order creating a limited tenancy under Section 21 of the Delhi Rent Control Act, 1958 (hereinafter called “the Rent Act”) are “other legal proceeding” within the meaning of Section 446(1) of the Companies, Act, 1956 (for short, “the Act”), necessitating leave of the court for their continuance after the company has been ordered to be wound up and whether the Rent Controller before whom such proceedings are pending is “a court” within the meaning of Section 446(3) of the Act so as to entitle this court to transfer the proceedings to its own file, are the two meaningful questions that arise for determination in this petition filed under Section 446 of the Act.
2. Dr. S. P, Bhargava is the owner of the premises situate at 83, Anand Lok, New Delhi. As he did not require the premises for a limited period of two years he decided to let out the same for this period to Haryana Electro Steel Limited, a company incorporated under the provisions of the Act with its registered office in the State of Haryana (referred to hereinafter as “the company”). A joint application was filed before the Rent Controller, Delhi, under Section 21 of the Rent Act by the landlord and the company through its director, Shri Jagdish Prashad Gupta, who had been authorised to represent the company by a resolution in this regard. The Rent Controller, after recording the statements of the parties, passed the following order on November 1, 1976 :
“In view of the statement of the parties, I am satisfied that the petitioner wants to let out, and the respondent wants to take the premises shown in plan, exhibit A-1, being House No. 83, Anand Lok, New Delhi, for a period of two years from the date of letting according to law for residence and the petitioner will require the premises after two years for himself. I permit the petitioner to let out this premises to the respondent for a period of two years from the date of letting according to law for residence. The respondent shall vacate the premises after the expiry of two years. If he fails, the petitioner can apply for possession within six months after the expiry of two years. File be consigned.”
3. It may be mentioned that the premises had been taken on rent by the company for the residence of its managing director, Shri Pradeep Gupta. On the expiry of the tenancy on October 31, 1978, the company did not deliver vacant possession of the premises to the landlord who then filed an application for the execution of the order dated November 1, 1976. In the execution proceedings, the company through its director, Shri Pradeep Gupta, gave an undertaking to vacate the premises by October 31, 1980, and till then it would continue to pay rent of Rs. 2,700 per month for use and occupation of the premises. The execution application was consigned to the record room. Even after October 31, 1980, the vacant possession of the premises was not delivered to the landlord and he was compelled to file another execution application on February 17, 1981, which is still pending.
4. In the meantime, the company was ordered to be wound up by this court on January 16, 1986, on the ground that it was unable to pay its debts. On an application filed under Section 446 of the Act, operation of the winding up order was stayed on March 4, 1986 (annexure P-2 with the petition), and the company undertook to pay the amount due to the petitioning creditor by instalments as fixed by this court in the order staying the winding up proceedings. It was stipulated in the stay order that in case the company made default in any two successive instalments, the stay order would be deemed to be vacated. Counsel for the parties are agreed that the order staying the winding up proceedings was vacated by this court on March 11, 1988 (annexure P-5 with the petition).
5. As already stated above, the execution application for the ejectment order is still pending before the Additional Rent Controller, Delhi. When the order staying the winding up proceedings of the company was operative, the company through its director, Shri Pradeep Gupta, gave another undertaking before the Rent Controller on August 22, 1986, stating that the arrears of the rent amounting to Rs. 1,76,000 would be paid to the landlord in three instalments. The first two instalments were to be of Rs. 50,000 each while the balance of Rs. 76,000 was to be paid on or before October 20, 1986. In case of default of any instalment, the premises were to be vacated and possession delivered to the landlord. It was further agreed that because of the improvements and repairs which were got made by the landlord the company would pay a sum of Rs. 8,000 per month as rent with effect from June 1, 1986. The director, Shri Pradeep Gupta, as undertaken by him before the Rent Controller, was to keep the premises till December 31, 1990, for himself and his family on the condition that the rent would be regularly paid and in case of any two consecutive defaults, the landlord would be entitled to have the order of eviction executed at once. After recording the aforesaid
undertaking of the company through its director, the Rent Controller passed the following order on August 22, 1986 :
“Present : counsel for the parties along with Dr. S. P. Bhargava and Shri Pradeep Gupta.
Counsel for the parties have stated that the parties have compromised the matter in suit. Statements of Shri S. P. Bhargava, petitioner, and Shri Pradeep Gupta, director of the company, were recorded. Authority letter of Shri Pradeep Gupta is exhibit A-2. In view of the statement given by the parties and the undertakings which are exhibit A and exhibit B, I accept the undertakings and the parties shall be bound by their undertakings. File be consigned to the R-R.
(Sd/-) A. C.”.
6. The aforesaid undertaking given by Shri Pradeep Gupta, on behalf of the company, was not adhered to and vacant possession of the premises was not delivered to the landlord on or before the stipulated date. The landlord filed a contempt petition (CCP No. 19 of 1991) in the High Court of Delhi. This petition is stated to be pending there. Shri Pradeep Gupta, who has been arrayed as respondent No. 1 in that petition, filed a reply stating that the undertaking given by him was on behalf of the company as its director. It is his categoric stand that he did not give the undertaking in his personal capacity. It was at this stage that the present petition was filed by the landlord under Section 446 of the Act read with Rule 9 of the Companies (Court) Rules, 1959, for the transfer of the execution application pending before the Additional Rent Controller, Delhi, to this court. The company in liquidation through the official liquidator attached to this court has been arrayed as respondent No. 1 whereas Shri Pradeep Gupta, the ex-managing director of the company, is respondent No. 2.
7. The official liquidator representing the company has no objection if the execution proceedings pending before the Rent Controller, Delhi, are transferred to this court for disposal. Shri Pradeep Gupta has, however, contested the petition. In the written statement filed on his behalf, it is stated that the proceedings before the Rent Controller cannot be transferred to this court as the Rent Controller is not “a court” within the meaning of Section 446(1) of the Act. He has further stated that the premises in dispute were not under the tenancy of the company and that he in his individual capacity was a tenant therein. It is further stated that he made a statement before the Rent Controller on August 22, 1986, whereby a fresh lease came into being between him in his individual capacity and the landlord (petitioner herein) and that he was paying rent thereafter which was being accepted by the landlord and the company having gone into liquidation could not be a tenant. It is further stated on behalf of Shri Pradeep Gupta, that the execution proceedings could not
continue as leave of this court has not been obtained under Section 446 of the Act.
8. It is interesting to note that Shri Pradeep Gupta, while replying to the contempt petition pending in the Delhi High Court, took the stand that the statement made by him before the Rent Controller on August 22, 1986, was made by him on behalf of the company and in his capacity as a director and that since the company had gone into liquidation, and he had ceased to be a director, he could not be held guilty of contempt. In reply to the present petition, he has taken a somersault. His stand is that the statement had been made by him in his individual capacity and a fresh tenancy in his favour came into being by reason of that statement. It is unfortunate that Shri Gupta is blowing hot and cold at the same time and does not seem to have respect for truth. He, in fact, does not hesitate to take inconsistent stands so long as they suit his interest. His conduct cannot but be deprecated. This, however, does not detract the court from deciding on the merits the issues that arise for consideration in the present petition.
9. On the contentions raised before me by learned counsel for the parties, the two questions mentioned in the opening para, of this judgment arise for my consideration and these may now be dealt with.
10. A bare reading of Section 446 of the Act makes it clear that when a winding up order has been made, 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. Sub-section (2) provides that the court which is winding up the company shall, notwithstanding anything contained in any other law for the time being in force, have jurisdiction to entertain or dispose of any suit or proceeding or any claim by or against the company. Sub-section (3) provides that any suit or proceeding by or against the company which is pending in any court other than that in which the winding up of the company is proceeding may, notwithstanding anything contained in any other law for the time being in force, be transferred to and disposed of by that court. What is to be seen in the present case is whether the execution proceedings pending before the Rent Controller, Delhi, would be governed by these provisions.
11. Section 14 of the Rent Act provides for the protection of tenants against eviction and enumerates the grounds on which a tenant could be ejected. Section 21, however, provides for the creation of tenancies for limited periods for which the landlord does not need the premises conditional upon the tenant surrendering possession as soon as the need of the landlord revives. Rent Controllers have been appointed for dealing
with all matters provided for in the Rent Act and further appeals have been provided to the Rent Control Tribunals, Section 50 of the Rent Act bars the jurisdiction of civil courts with regard to all matters relating to fixation of standard rent in relation to any premises or eviction of any tenant therefrom which the Controller is empowered by or under the Rent Act to decide. It is indisputable that when a limited tenancy is created by the parties with the permission of the Controller, the latter has to satisfy himself that the two conditions mentioned in the section stood fulfilled and this section being a code by itself, it is open to the tenant at the time of execution to say that the conditions in fact did not exist. In such an event the Rent Controller will have to examine the matter afresh although there will be a presumption in favour of the sanction being regular. This is clear from the following observations of their Lordships of the Supreme Court in Inder Mohan Lal v. Ramesh Khanna, AIR 1987 SC 1986, 1991 :,
“When the application under Section 21 is filed by the landlord and/or tenant the Controller must satisfy himself by such inquiry as he may make, about the compulsive requirements of that provision. If he makes a mindless order, the court, when challenged at the time of execution will go into the question as to whether the twin conditions for sanction have really been fulfilled. Of course, there will be a presumption in favour of the sanction being regular, but it will still be open to a party to make out his case that in fact and in truth the conditions which make for a valid sanction were not present.”
12. Again, in para. 20 of the judgement, their Lordships observed as under (page 1991) :
“But it is open in particular facts and circumstances of the case to prove to the satisfaction of the executing court that there was no collusion or conspiracy between the landlord and the tenant and the landlord did not mean what he said or that it was a fraud or that the tenant agreed because the tenant was wholly unequal to the landlord…..”
13. In view of the provisions of Section 50 of the Rent Act which bar the jurisdiction of the civil courts the Rent Controller obviously has the exclusive jurisdiction to decide all matters between the landlord and the tenant and, therefore, such matters do not come under the purview of Section 446 of the Act. The object of Section 446 of the Act is to see that the assets of the company are brought under the control of the winding up court and to avoid wherever possible expensive litigation and to see that all matters in dispute which are capable of being expeditiously disposed of by the winding up court are taken up by that court. This does not mean that disputes of every nature in which a company is involved should be transferred and dealt with only by the winding up court, In
other words, if matters relating to companies which have been ordered to be wound up are pending before the Tribunals of exclusive jurisdiction, then such matters can appropriately be disposed of by those Tribunals or courts alone and cannot be allowed to be transferred to the file of the company court.
14. In Damji Valji Shah v. LIC of India [1965] 35 Comp Cas 755 ; AIR 1966 SC 135, an insurance company which was a composite insurer transferred a sum 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 of this Act and Section 15 thereof 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 purpose of the controlled business of the company. The Life Insurance Corporation 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 the Bombay High Court was necessary under Section 446 of the Act and decreed the claim of the Corporation against the company and its directors. When the matter was taken to the Supreme Court, their Lordships held that in view of the provisions of Section 41 of the Life Insurance Corporation Act which barred the jurisdiction of the civil courts, the Tribunal alone under Section 15 of the said Act had the exclusive jurisdiction to decide the dispute which, therefore, did not fall within the purview of Section 446 of the Act and so, no leave was necessary.
15. Again, in S. V. Kondaskar, Official Liquidator v. V. M. Deshpande, ITO [1972] 83 ITR 685 ; (1972] 42 Comp Cas 168 (SC) when the winding up proceedings against the company were pending, the Income-tax Officer issued notices proposing to reopen the assessments of the company and to reassess it in respect of a period prior to the winding up. The question arose whether notices of reassessment were “legal proceedings” within the meaning of Section 446 of the Act and whether the Income-tax Officer had the exclusive jurisdiction to make the assessment and further whether leave of the company court was necessary. The learned judges of the apex court held that the expression “other legal proceeding” in Sub-section (1) and the expression “legal proceeding” in Sub-section (2) of Section 446 of the Act conveyed the same meaning and the proceedings
contemplated by these sub-sections must be such as can appropriately be dealt with by the winding-up court. It was further held that the company court could not perform the functions of the Income-tax Officer while assessing the amount of tax payable by the assessee even if it be a company that was being wound up by the court. It was, however, open to the liquidation court to scrutinize the claim of the Revenue after the income-tax had been determined and its payment had been demanded from the liquidator.
16. A similar view has been taken in B. V. John v. Coir Karri and Textiles Ltd. [1960] 30 Comp Cas 162 (Ker), Official Liquidator, Swaraj Motors Ltd. v. ITO [1972] 42 Comp Cas 96 (Ker) and Joshi Trading Co. (P.) Ltd. v. Essa Ismail Sait [1980] 50 Comp Cas 801 (Ker).
17. In my opinion, the execution proceedings pending before the Rent Controller, Delhi, cannot be transferred to the file of this court as the company court cannot convert itself into a Rent Controller and perform the functions which exclusively vest in him under the Rent Act. These proceedings are not “other legal proceeding” as contemplated in Section 446 of the Act nor can the Rent Controller which is a Tribunal of exclusive jurisdiction be said to be a “court” within the meaning of Section 446(3) of the Act.
18. In the result, I find no merit in the petition and the same stands dismissed with no order as to costs.