{"id":252403,"date":"2008-10-17T00:00:00","date_gmt":"2008-10-16T18:30:00","guid":{"rendered":"https:\/\/www.legalindia.com\/judgments\/jabal-vs-o-l-of-on-17-october-2008"},"modified":"2019-03-09T21:34:21","modified_gmt":"2019-03-09T16:04:21","slug":"jabal-vs-o-l-of-on-17-october-2008","status":"publish","type":"post","link":"https:\/\/www.legalindia.com\/judgments\/jabal-vs-o-l-of-on-17-october-2008","title":{"rendered":"Jabal vs O.L.Of on 17 October, 2008"},"content":{"rendered":"
Gujarat High Court<\/div>\n
Jabal vs O.L.Of on 17 October, 2008<\/div>\n
Author: Mohit S. K.A.Puj,&Nbsp;<\/div>\n
   Gujarat High Court Case Information System \n\n  \n  \n    \n\n \n \n    \t      \n         \n\t    \n\t\t   Print\n\t\t\t\t          \n\n  \n\n\n\t \n\t \n\t \n\t \n\t \n\t \n\t \n\t\n\n\n \n\n\n\t \n\nOJA\/66\/2006\t 39\tJUDGMENT \n \n \n\n\t\n\n \n\nIN\nTHE HIGH COURT OF GUJARAT AT AHMEDABAD\n \n\n \n\n\n \n\nO.J.APPEAL\nNo. 66 of 2006\n \n\nIn\n\n\n \n\nCOMPANY\nAPPLICATION No. 34 of 2004\n \n\nIn\n\n\n \n\nCOMPANY\nPETITION No. 21 of 1994\n \n\nWith\n\n\n \n\nO.J.APPEAL\nNo. 65 of 2006\n \n\nIn\n\n\n \n\nCOMPANY\nAPPLICATION No. 33 of 2004\n \n\nWith\n\n\n \n\nO.J.APPEAL\nNo. 67 of 2006\n \n\nIn\n \n\n\nCOMPANY APPLICATION\nNo. 462 of 1999\n \n\n \n \nFor\nApproval and Signature:  \n \nHON'BLE\nMR. JUSTICE MOHIT .S.SHAH  \n                         AND\n\n\n \n\nHON'BLE\nMR. JUSTICE K.A.PUJ\n \n \n=================================================\n<\/pre>\n
1<\/span><\/p>\n
Whether
\n\t\t\tReporters of Local Papers may be allowed to see the judgment ?\n<\/p>\n
\t\t\t                                                     Yes<\/p>\n
2<\/span><\/p>\n
To
\n\t\t\tbe referred to the Reporter or not ?                   Yes<\/p>\n
3<\/span><\/p>\n
Whether
\n\t\t\ttheir Lordships wish to see the fair copy of the judgment ?\n<\/p>\n
\t\t\t                                                           No<\/p>\n
4<\/span><\/p>\n
Whether
\n\t\t\tthis case involves a substantial question of law as to the
\n\t\t\tinterpretation of the constitution of India, 1950 or any order
\n\t\t\tmade thereunder ?                                 No<\/p>\n
5<\/span><\/p>\n
Whether
\n\t\t\tit is to be circulated to the civil judge ?       No<\/p>\n
=================================================<\/p>\n
JABAL
\nC. LASHKARI – Appellant(s)<\/p>\n
Versus<\/p>\n
O.L.OF
\nPRASAD MILLS LIMITED & 3 – Opponent(s)<\/p>\n
=================================================<\/p>\n
Appearance :\n<\/p>\n
MR
\nDV PARIKH for Appellant(s) : 1,
\nOFFICIAL LIQUIDATOR for
\nOpponent(s) : 1,
\nMR RM DESAI for Opponent(s) : 1,
\nNOTICE SERVED
\nBY DS for Opponent(s) : 2,
\nMR RM DESAI for Opponent(s) : 3,
\nMR
\nAS VAKIL for Opponent(s) :\n<\/p>\n
4,
\n================================================= <\/p>\n
CORAM
\n\t\t\t:\n<\/p>\n
HONOURABLE
\n\t\t\tMR JUSTICE MOHIT S.SHAH<\/p>\n
                                 and<\/p>\n
HONOURABLE
\n\t\t\tMR.JUSTICE K.A.PUJ<\/p>\n
Date
\n:  17 \/ 10 \/2008
\nCAV JUDGMENT <\/p>\n
(Per
\n: HON’BLE MR JUSTICE MOHIT S.SHAH)<\/p>\n
\t\tThese
\nappeals are directed against the judgment and order dated 13.10.2004
\npassed by the learned Company Judge as common order in Company
\nApplication Nos.462 of 1999 and 33 and 34 of 2004.\n<\/p>\n
2.\t\tThe
\nappellants claim to be the heirs of the owner of the land in question
\nadmeasuring 35,772 sq.mtrs. in Ahmedabad, who had leased out the land
\non long term basis for the period of 199 years as per the lease deed
\nexecuted on 10.12.1916 in favour of Bechardas Spinning and Weaving
\nMills Ltd. which subsequently came to be known as Prasad Mills Ltd.
\nAfter the Prasad Mills Ltd. was ordered to be wound up by judgment
\ndated 5.5.1989 in Company Application No.21 of 1984, the appellants
\nfiled the above-numbered company applications in 1999 and thereafter
\nfor a direction to the Official Liquidator to return the land in
\nquestion to the appellants mainly on the ground that the lease stood
\ndetermined on winding up order being made by the Company Court. It
\nwas also contended that the rights and liabilities of the parties to
\na lease deed subsist even when the Company is in liquidation and
\nhence provisions of the Bombay Rent Act, 1947 would apply so as to
\nenable the applicants to get back possession of the land in question
\nunder the provisions of the Rent Act<\/a>.\n<\/p>\n
3.\t\tThe
\nlearned Company Judge hearing the above-numbered company applications
\nhad an occasion to consider similar questions in Company Application
\nNo.47 of 1993 and connected matters. After considering the relevant
\nprovisions  of the Companies Act<\/a> including Sections 457<\/a>, 535<\/a>, 529A<\/a>
\nand also the provisions of Transfer of Property Act<\/a>, 1882 and the
\nprovisions of the Bombay Rent Act,  in his judgment dated 30.7.2002,
\n(Legal heirs of deceased Fakirchand Ambaram Patel vs. OL of Ambica
\nMills Ltd. & ors. reported in (2003) 116 Comp. Cases 588 = 2002
\n(3) GLH 367), the learned Company Judge laid down the following
\nprinciples :-\n<\/p>\n
[a]
\n\tLeasehold interest is an intangible asset,  which  is  valuable  in
\nnature though the valuation may differ from  case  to  case
\ndepending  upon  the unexpired period of lease.\n<\/p>\n
b] \tSuch  an  asset is transferable subject to the same  terms and conditions as may be  stipulated  in  the lease deed.\n<\/p>\n
c] \tOnce  there  is  a  contract  which  has  not  been              determined,  the relationship of the parties to the contract continues to subsist till the  period  for which   the  contract is in existence subject to an express condition to the contrary.\n<\/p>\n
[d] \tThere is a distinction between the  point  of  time  when  an  order  of  winding  up is made and at the point of time when an order of dissolution is made, the company continues  to  exist  between  the  two  termini.\n<\/p>\n
[e] \tA condition in the lease deed permitting  a  lessee   to  give back the possession as and when the lessee chooses to  do  so  cannot  be  converted  into  an obligation entitling the lessor to seek possession.\n<\/p>\n
[f] \tA condition in the lease deed by way of requirement to  pay rent,  per  se, does not create an onerous covenant, once readiness and willingness  is  shown by  the lessee, or on its behalf, to discharge such  obligation.\n<\/p>\n
4.\t\tSince the above
\nreported judgment dated 30.7.2002 has also been challenged in other
\nOJ Appeals, all the connected matters numbering about 31 appeals
\nraising common and similar questions of law, but involving
\ninterpretation of separate lease deeds were  heard together initially
\nand also when rehearing took place on 28th April 2008.
\nSince   the  learned  advocate  for the appellants herein argued the
\nmatter at length, the present appeals have been treated as the lead
\nappeals and are being disposed of by this judgment.\n<\/p>\n
 RIVAL
\nSUBMISSIONS BEFORE LEARNED COMPANY JUDGE<\/p>\n
5.\t\tThe
\nappellants’ case before the learned Company Judge was as under :-\n<\/p>\n
5.1\t\tOne
\nShri Bechardas started Bechardas Spinning and Weaving Mills  some
\ntime  in  1860.  The land, building,  machinery, etc.  were owned by
\nsaid Bechardas.  On  death of  said  Bechardas the said properties
\nwere inherited by  Shambhuprasad,  on  whose  death  the   properties
\n  were  inherited  by  late  Durgaprasad  Shambhuprasad  Laskari.
\nDuring life time of late Durgaprasad  Laskari,  Bechardas
\nSpinning  and Weaving Mills Company Limited was formed in 1914 to
\ntake over the said business of Bechardas Spinning and Weaving Mills
\nCompany.  Shares of  the  said  Limited Company   were  issued  in
\nfavour  of  late  Durgaprasad Shambhuprasad Laskari  towards
\nconsideration.    It   was    averred  in  the  supporting  affidavit
\nthat land bearing  Survey Nos.4823 to 4832, 4844  to  4895,  4899,
\n4901  to      4911, 5002 to 5011  and  5049 of Village Ward Raikhad,
\n   Ahmedabad admeasuring 35722.41 sq.  mtrs.  (hereinafter
\nreferred  to  as  ‘the  demised  land’) was leased out to   Bechardas
\nSpinning and Weaving Mills Company  Limited  by late Durgaprasad
\nShambhuprasad  Laskari.   It was further averred that “It may be
\nappreciated that  the  said  land was  of  ownership  of Durgaprasad
\nLaskari and was leased out to the company as the company  was  taking
\n over  the mill owned  by  Durgaprasad  Laskari”.   Accordingly,
\nthe  Lease Deed came to be  executed  on  10-12-1916  by  said
\nDurgaprasad Laskari.\n<\/p>\n
5.2\t\tDurgaprasad
\nShambhuprasad Laskari, who was at the relevant time Managing Director
\nand had controlling interest in Bechardas Spinning and Weaving Mills
\nCompany Limited (now Prasad Mills Ltd.), passed away on 7.7.1962 and
\non his death his properties came to be inherited by the appellants
\nalong with other heirs (who have not joined the appellants) under the
\nprovisions of the Hindu Succession Act<\/a>.\n<\/p>\n
5.3\t\tThe  basis  for  preferring  Company  Application  No.34  of  2004, according to the applicant, was that the demised land was never leased  out  to  the  Company  (in liquidation), but was leased out to the Managing Agent of the Mill Company, and hence, the Company (in liquidation) was  in  illegal possession and occupation of the demised      land.  However,  the  facts  averred  in  the  supporting affidavit  of  Company  Application No.462 of 1999 do not  support  this  stand  of   the   applicant   of   Company Application No.34 of 2004.\n<\/p>\n
5.4\t\tMr. Devan Parikh, learned advocate  appearing  for the applicants  in all the three applications, submitted  that the Lease Deed was entered into with Managing Agent of Bechardas Spinning and  Weaving  Mills  Company  Limited  and  not  with  the Company (in  liquidation);\n<\/p>\n
\t\tIn support of this contention,  Mr. Parikh  sought  to place  reliance upon Memorandum of Association and Articles of Association,  a copy  of which was tendered during the course of hearing before the learned Company Judge.   On being pointed out that neither the Memorandum nor  the Articles  appeared  to   bear   the   signatures  of  the subscribers \/promoters of the  Company,  Mr. Parikh  sought time.  After the hearing was over before the learned Company Judge and the matter was kept for  orders, an additional affidavit dated 28.9.2004 was  placed on  record  along  with  copy  of  the  same documents viz.   unregistered Memorandum of Articles with   Annexures and in the additional affidavit it was submitted that Bechardas Spinning and Weaving Mills Company Limited was registered on 03-09-1914 at Sr.No.41 before  the Registrar of Companies, Bombay.  That the applicants made inquiry   with   the  Office  of  Registrar  but  as  the Memorandum of Association and Articles of Association were  very old they were not available with the Registrar.  That this was the only document which  was available  with  the  applicants  and  hence  the same was being endorsed by the   applicants to verify that the  same  was  a  copy  of  the  Memorandum  of  Association  as in 1914 and as found with  the applicants.\n<\/p>\n
5.5\t\tAlternatively even on the basis of Lease Deed being in favour of the Company (in liquidation), it was contended that by  virtue  of provisions  of  the Bombay Rents, Hotel and Lodging House Rates Control Act, 1947 (the  Rent  Act<\/a>)  the  applicants  were entitled to be put in possession;  that  the lease stood determined on  winding up order being made by the Court; that rights and liabilities of the parties to a Lease Deed subsisted even  when  the  Company was in liquidation and hence provisions of the Rent Act<\/a> would apply.\n<\/p>\n
\t\tMr. Parikh invited attention to Section  15(1)<\/a>  of the Rent  Act  as well  as  Section  13(1)(a)<\/a> read with Section  13(1)(k)<\/a> of  the  Rent  Act to  contend   that provisions of the Rent Act<\/a> were applicable overriding any  other  law  and that eviction under Section 13<\/a> of the Act was de hors the Lease Deed. That the purpose of the Lease was solely  to run  the mill and once the premises were not used for the  purpose for  which  the  premises  were  let  the lessor becomes entitled to seek eviction.\n<\/p>\n
5.6\t\t Alternatively, it  was  not  open  to  the  Official Liquidator to assign rights under  the Lease Deed and hence he could not sell them, as  only  subletting was permissible. It  was  submitted that   there   was difference  between  subletting  and assignment.\n<\/p>\n
6.\t\tOn the other hand,
\nthe stand of the Official Liquidator, the secured creditors and the
\nworkmen represented by the Textile Labour Association was as under :-\n<\/p>\n
6.1\t\tthe
\nprovisions of the Rent Act<\/a> cannot come to the  aid  of  the
\nappellants because  in  1916  when  the  Lease Deed was executed and
\nregistered, no  Rent  Act<\/a>  was  in  force.     That   even otherwise,
\n once  there was a subsisting contract between the parties, if any
\nforfeiture or eviction  was  intended by any of the parties to the
\ncontract, they were governed by  the  terms of the subsisting
\ncontract because tenancy had not been determined.\n<\/p>\n
6.2
\n\tthere was  no  breach  of  provisions  of Section 108(o)<\/a> of the
\nTransfer of Property Act, nor was  there  any  notice  of forfeiture
\nissued  and  served. The secured  creditors  are  ready  and  willing
\n to  pay  rent  if so     directed, but in  absence  of  any  claim
\nthere  was  no occasion  to make  any  such  direction to make any
\nsuch  payment. That if deemed fit a direction may be given.\n<\/p>\n
6.3\t\tthe
\n appellants have  themselves stated that they  are  some  of  the
\nheirs  of  deceased Durgaprasad  and, therefore, they shall have to
\nestablish before they can make any claim, that they are legal heirs
\nof the deceased lessor, and that the other heirs have relinquished
\ntheir interest  in  the  properties  in   question.\n<\/p>\n
6.4\t\tthe
\nappellants had placed on record a copy of plaint Civil Suit No.3960
\nof 1986 at Annexure-B wherein defendant No.1  was  shown  as  the
\nCompany  (in liquidation).   Inviting  attention  to Paragraph No.2
\nof      the plaint it was submitted that there was a  categorical
\naverment  that  the Company (in liquidation) was formerly known as
\nBechardas Spinning  and  Weaving  Mills  Company Limited;  that the
\nerstwhile Bechardas Mills is now known as Prasad Mills Limited.
\nHence it was now not open to the appellants to  raise  the
\ncontention that the Company (in liquidation) was in illegal
\npossession and occupation of the demised land de hors the Lease
\nDeed,  but  considering the aforesaid averments in the plaint of the
\naforesaid civil suit  as  well  as  the document  showing  the
\nmortgage  in favour of respondent No.2 – State Bank of India, the
\nsaid contention  did  not  merit acceptance.\n<\/p>\n
6.5\t\tthe
\nentire Lease Deed not only did not specify the purpose of Lease, but
\nas per terms of the Lease Deed it was not open to the   lessor,
\nassuming  that  the  present  applicants   could represent  the
\nlessor,  to  claim back possession of the  land.\n<\/p>\n
 FINDINGS GIVEN BY LEARNED COMPANY JUDGE<\/p>\n
7.\t\tAfter considering
\nthe rival submissions, the learned Company Judge gave the following
\nfindings :-\n<\/p>\n
7.1
\n \t\tthe  Lease  Deed  (Annexure-A) executed  and registered on
\n10-12-1916 is for a period of 199 years (Clause 2), Therefore, there
\nis  a  subsisting contract  and  the parties would be governed by the
\nterms     of the contract.   The  contractual  tenancy,  therefore,
\nwould  subsist  as  governed  by  the  provisions  of the Transfer of
\nProperty Act<\/a> and there cannot be any eviction from such tenancy.  It
\nis also settled  position  in  law that  merely  because a company
\ngoes into liquidation and  the Official Liquidator takes charge of
\nthe properties of the Company on his appointment, the rights of the
\nCompany (in liquidation) vis-a-vis the landlord  do  not  undergo any
\nchange and they continue to be governed by the subsisting  contract.\n<\/p>\n
7.2\t\tAfter
\nreferring to all the clauses of the lease deed, the  learned Company
\nJudge gave the following findings :-\n<\/p>\n
(i) \tThe   Lease
\nDeed   is  executed  between  Sheth      Durgaprasad Shambhuprasad
\nLaskari, described as party  of  the  First  Part  and the party of
\nthe Second Part is the Secretary,   Treasurers   and    Agent
\nM\/s.Durgaprasad  Shambhuprasad Laskari & Company of the Bechardas
\nSpinning and Weaving Mills Company Limited (the Company) and
\ndirectors Bhulabhai  Bulakhidas and Patel Jagjivandas Amthasa of the
\nCompany.\n<\/p>\n
(ii)\tUnder clause 7 of
\nthe lease deed, the lessee is entitled to assign its rights in favour
\nof a third party.\n<\/p>\n
(iii)\tThe lessee is
\nentitled to build any superstructure after obtaining necessary
\npermission from the appropriate authority or the land may be used as
\nland or the same may be let out on rent or leased out and the lessor
\nshall not be entitled to raise any objection or dispute in this
\nregard till the period of 199 years and  only on completion of 199
\nyears, the lessor is entitled to obtain possession of the land
\n(clauses 7 & 9).\n<\/p>\n
(iv)\tThe landlord does
\nnot have any right to seek possession of the demised land except as
\nstipulated in clause (1) read with clause (8) which provided that in
\ncase the lessee fails to pay the annual rent from year to year, the
\nlessor shall be entitled to give a registered notice and if during
\nthe notice period, the payment is not made, the lessor would be
\nentitled to initiate action to claim back possession. (clauses 5, 7,
\n9 and 10).\n<\/p>\n
(v)\tClause 10 of the
\nlease deed also stipulates that in the aforesaid lease deed whatever
\nterms and conditions have been written, they are acceptable and
\nbinding on the lessor and the lessee as well as  their heirs,
\nadvocates, administrators, assignees and executors.\n<\/p>\n
7.3\t\tThe
\nlearned Company Judge rejected the contention urged on behalf of the
\nappellants that a lease deed was executed in favour of the Managing
\nAgent of the company which is now in liquidation and not in favour of
\nthe company in liquidation itself. The learned Company Judge held
\nthat on a plain reading of the opening portion of the preamble in the
\npart where the lease deed is executed and witnessed, the party of the
\nsecond part was not only the Managing Agent of the company, but also
\ntwo Directors of the company  (Bhulabhai Bulakhidas and Patel
\nJagjivandas Amthasa )  were specified as party of the second part.
\nDurgaprasad Shambhuprasad Laskari  not only signed the lease deed on
\nhis own behalf as party of the first part (lessor) but also as
\nSecretary, Proprietor and Agent of the company. Thus on behalf of the
\nlessee, the lease deed was signed by the Secretary, Proprietor and
\nAgent of the Company and also by its two Directors. Hence, the
\ncontention raised on behalf of the appellants was misconceived. In
\nsupport of the above conclusion, the learned Company Judge also
\nreferred to the averments made in the plaint in Civil Suit No.3960 of
\n1986 which also proceeded on the basis that the company in
\nliquidation was in possession of the land in question and the
\nconstruction made thereon under registered lease deed dated
\n14.12.1916. Reference was also made to Article No.111 of the Articles
\nof Association  which provided that every deed or other instrument to
\nwhich the seal is required to be affixed may be signed by two
\nDirectors and the Agents only except where the instrument   is in
\nfavour of the agent when it shall be signed by two Directors. The
\nlearned Company Judge noted that the lease deed was signed by two
\nDirectors and the agents and, therefore, the lease deed was signed
\nfor and on behalf of the company in liquidation. The learned Company
\nJudge also noted that although the company was ordered to be wound up
\non 5.5.1989, the first amongst present applications for taking back
\npossession was filed on 8.12.1999 without any explanation for the
\ndelay of more than a decade.\n<\/p>\n
7.4\t\tWhile
\nconsidering the question whether the lessee had committed any act
\ncontrary to Section 108(o)<\/a> of the Transfer of Property Act, in other
\nwords, whether the lessee had used or permitted another to use the
\nproperty for a purpose other than for which it was leased, the
\nlearned Company Judge answered the question in the negative after
\nnoting that in the lease deed no specific purpose was provided. On
\nthe contrary, a conjoint reading of various clauses of the lease deed
\nindicated that it was open to the lessee  either to construct
\nsuperstructure or building on the land or to use it as open land or
\nto sublet it to anyone and the lessor would not be entitled to raise
\nany objection. Thus the appellants’ case did not fall under Section
\n108(o)<\/a> of the Transfer of Property Act.\n<\/p>\n
7.5\t\tAs
\nregards the contention that the appellants’ case was governed by
\nSection 13(1)(a)<\/a> or Section 13(1)(k) of the Bombay Rent Act, the
\nlearned Company Judge held that the appellants had failed to bring
\ntheir case within the above provisions.\n<\/p>\n
 APPELLANTS’
\nCONTENTIONS<\/p>\n
8.\t\tAssailing
\nthe above judgment of the learned Company Judge, Mr Deven Parikh,
\nlearned advocate for the appellants raised the following contentions
\n:-\n<\/p>\n
(i)\tThe decision of
\nthe seven Judge Bench of the Apex Court in Dhanapal Chettiyar’s case,
\nAIR 1979 SC 1745 = (1979) 4 SCC  214 has done away with the
\ndistinction of statutory tenancy and contractual tenancy. Hence, the
\nprovisions of the Bombay Rent Act including all the provisions of
\nsub-section (1) of Section 13<\/a> thereof providing for various grounds
\nof eviction are available to lessors to evict lessees, irrespective
\nof the fact whether the lease is a short-term or a long-term lease or
\nlease in perpetuity  or whether it is contractual tenancy or
\nstatutory tenancy.\n<\/p>\n
\tReliance is also
\nplaced on the decisions of the Apex Court in Parasram Harnand Rao vs.
\nShanti Parsad Narinder Kumar Jain<\/a>, AIR 1980 SC 1655, K.K. Krishnan
\nvs. M.K. Vijaya Raghavan<\/a>, AIR 1980 SC 1756, Ravindra Ishwardas Sethna
\nvs. Official Liquidator, H.C. Bombay<\/a>, AIR 1983 SC 1061, Nirmala R.
\nBafna vs. Khandesh Spinning & Weaving Mills Co. Ltd<\/a>., AIR 1993 SC
\n1380 and also on the decision of Deshpande, J in Canara Bank vs.
\nYusuf<\/a>, AIR 2000 Bom. 71.\n<\/p>\n
(ii)\tThere are various
\nclauses of the Rent Act<\/a> which neither the landlord nor the tenant can
\ncontract out of. Hence irrespective of the terms and conditions of
\nthe contract, the prohibitions contained in the provisions of the
\nBombay Rent Act are applicable to all categories of lease. The Rent
\nAct<\/a> is a unifying Act for all lessees.\n<\/p>\n
\tSection 15 of the
\nBombay Rent Act prohibits the tenant from transferring or sub-letting
\nthe lease premises and the said prohibition is applicable to all
\nlessees, irrespective of the fact whether  the lease is a short-term
\nlease or a long-term lease or whether it is contractual tenancy or
\nstatutory tenancy.\n<\/p>\n
\tSection 18 of the
\nBombay Rent Act prohibits lessee from taking lumpsum consideration
\nfor the purpose of surrendering the leasehold interest or
\ntransferring the leasehold interest and such prohibition applies to
\nall lessees irrespective of the fact whether the lease  is a
\nshort-term lease or a long-term lease or whether it is contractual
\ntenancy or statutory tenancy.\n<\/p>\n
(iii)\tClause 5 of the
\nlease deed is a forfeiture clause and the appellant   lessors are
\nentitled to invoke the said clause.\n<\/p>\n
(iv)\tClause 7 of the
\nlease deed on page 8 granting lease for 199 years permits only
\nsub-letting but does not permit transfer of leasehold interest.\n<\/p>\n
(v)\tThe land was to be
\nused for running a textile mill. While the lease deed did not
\nprohibit construction of additional building over and above the
\nfactory premises already constructed, the land of the Company in
\nliquidation cannot be permitted to be used for any other purpose.
\nRelying on the decisions of this Court in 2002 (1) GLR 140 (para 4)
\n(given for wood business, used for scrap business), AIR 2002 SC 1822,
\nAIR 1993 SC 2646, it is submitted that change of user is also a
\nground justifying the eviction of the tenant and if it can be a
\nground for eviction, the Company Court cannot permit the land of the
\nCompany in liquidation or even the leasehold interest therein to be
\nsold.\n<\/p>\n
\tReliance is also
\nplaced on the decision in Canara Bank vs. Yusuf<\/a>, AIR 2000 Bom. 71
\n(Paras 2, 7, 8 and 11) and in 1969 (2) Company Law Journal 253.\n<\/p>\n
(vi)\tRelying on the
\ndecisions of the Apex Court in AIR 1980 SC 1655, AIR 1983 SC 1061 and
\nAIR 1988 SC 145, it is submitted that during the course of winding-up
\nproceedings, the Official Liquidator can only carry on the business
\nof the Company in winding-up for the limited purpose of winding up
\nand not for the purpose of profit.\n<\/p>\n
(vii)\tAny sale of
\nleased land by the OL in absence of notice to the lessors will be
\nillegal and void-ab-initio.\n<\/p>\n
(viii)\tOn facts, Mr
\nParikh has also reiterated the submissions made by the appellants
\nbefore the learned Company Judge that lessee of the land was
\nDurgaprasad Lashkari and not the company in liquidation.\n<\/p>\n
 SUBMISSIONS ON
\nBEHALF OF OFFICIAL LIQUIDATOR, SECURED CREDITORS AND WORKERS<\/p>\n
9.\t\tMr RM Desai,
\nlearned counsel for the Official Liquidator  and also for secured
\ncreditor, State Bank of India has opposed the appeals and supported
\nthe judgment of the learned Company Judge.\n<\/p>\n
9.1 \t\tThe Deputy
\nOfficial Liquidator has submitted Official Liquidator’s further
\nreport dated 25.07.2007 stating that the details of the claims as on
\nthe date of the winding up order (5.5.1989) as filed by the creditors
\nand workers in the office of Official Liquidator are as under :-\n<\/p>\n
1<\/span><\/p>\n
Claim
\n\t\t\t\tlodged by IDBI<\/p>\n
14,81,000<\/p>\n
2<\/span><\/p>\n
Claim
\n\t\t\t\tlodged by SBI<\/p>\n
3,53,28,000<\/p>\n
3<\/span><\/p>\n
Ahmedabad
\n\t\t\t\tMunicipal Corporation (July 2002) <\/p>\n
3,03,21,951<\/p>\n
4<\/span><\/p>\n
Workers
\n\t\t\t\tof the Company (As per CA report)<\/p>\n
7,83,65,193<\/p>\n
\tIt was also brought
\nto our notice at the hearing of the appeals that as per the statement
\nof affairs, the claims of unsecured creditors were to to tune of
\nRs.3,19,76,000\/- and that the unsecured claim of secured creditors
\nwere to the tune of Rs.92,95,942\/-\n<\/p>\n
9.2\t\tMr
\nDesai has also submitted that the Transfer of Property Act<\/a> does not
\nprovide for termination of lease upon winding up order and  that the
\nBombay Rent Act is not applicable in case of long term lease. It is
\nalso submitted that the lease deed does not provide that upon the
\norder of winding up being passed against the lessee company, the
\nlease will come to an end. None of the provisions of the Companies
\nAct<\/a>, 1956 also provides for determination of the lease on the ground
\nof winding-up of the Company.\n<\/p>\n
9.3\t\tIn
\nsupport of the above submission, Mr Desai has placed strong reliance
\non the decisions in 2001 (7) SCC 409 (paras 15 and 19), 1994 (2) SCC
\n671,  AIR 1980 SC 571  (para 7), AIR 1993 Karnataka 90 (FB) and AIR
\n1986 Bom. 284 (FB).\n<\/p>\n
9.4\t\tThe
\nsecured creditor SBI has always been, and is, ready and willing to
\npay the rent as per the lease deed and all the arrears thereof  till
\nthe leasehold rights are assigned to another party after public
\nauction.\n<\/p>\n
9.5\t\tWhen
\nthe sale is through a sale committee appointed by the Company Court
\nwith representatives of the secured creditors and workers, the
\nmortgagee also sells its own interest in the property. Therefore,
\nthere is nothing illegal about the sale of the leasehold interest of
\nthe Company in winding up. In support of this submission, reliance is
\nplaced on 2002 (10) SCC 682.\n<\/p>\n
9.6\t\tThe
\napplication before the learned Company Judge for possession of the
\nland in question was filed by seven heirs of the lessor, the OJ
\nAppeal was also filed by seven heirs. However, when the appeal was
\ndismissed and the Division Bench of this Court  refused to restore
\nthe appeal, SLP was filed by only four heirs. Hence the matter being
\nrestored upon the order in the SLP,  is an appeal by only four heirs.\n<\/p>\n
10.\t\tOn behalf of the
\nTextile Labour Association, Mr DS Vasavada has submitted written
\nsubmissions mainly contending that –\n<\/p>\n
10.1\t\tMr
\nVasavada for the Textile Labour Association has further submitted
\nthat since the winding-up order was passed on 5.5.1989, it is high
\ntime that the land of the Company in liquidation is put to sale. All
\nthe Mills and Textile Industries in Ahmedabad were installed on
\nleasehold land.  The lease was either perpetual or permanent or for a
\nterm of 199 years (as in the Prasad Mills Ltd.) or 99 years with
\noption with the lessee to renew the lease and obligation of the
\nlessor to renew the lease subject to increase in the amount of rent.
\nWinding up orders have been passed in almost all the cases about more
\nthan 15 years ago and the assets of the Company (in liquidation),
\nexcept lands have been sold in a phased manner.  Each Mill had
\nemployed thousands of workers as per the following statement, out of
\nwhich hundreds of workers have expired without getting their dues
\nfrom the Company in liquidation.\n<\/p>\n
Sr.\n<\/p>\n
\t\t\t\tNo.\n<\/p>\n
OJ
\n\t\t\t\tAppeal No.<\/p>\n
Name
\n\t\t\t\tof Unit<\/p>\n
Nature
\n\t\t\t\tof Lease<\/p>\n
No.\n<\/p>\n
\t\t\t\tof workmen<\/p>\n
No.\n<\/p>\n
\t\t\t\tof workmen expired<\/p>\n
1<\/span><\/p>\n
65,66,67\/
\n\t\t\t\t2006<\/span><\/p>\n
Prasad
\n\t\t\t\tMills<\/p>\n
-do-\n<\/p>\n
1429<\/span><\/p>\n
402<\/span><\/p>\n
2<\/span><\/p>\n
60\/2003<\/p>\n
Amruta
\n\t\t\t\tMills<\/p>\n
Permanent\/
\n\t\t\t\tperpetual<\/p>\n
3471<\/span><\/p>\n
273<\/span><\/p>\n
3<\/span><\/p>\n
46\/2003,
\n\t\t\t\t81\/2006<\/p>\n
Aryodaya
\n\t\t\t\tSpinning<\/p>\n
-do-\n<\/p>\n
3288<\/span><\/p>\n
394<\/span><\/p>\n
upto
\n\t\t\t\t2002<\/span><\/p>\n
4<\/span><\/p>\n
31\/2003<\/p>\n
Omex<\/p>\n
-do-\n<\/p>\n
1874<\/span><\/p>\n
396<\/span><\/p>\n
upto
\n\t\t\t\t2002<\/span><\/p>\n
5<\/span><\/p>\n
1\/2003,
\n\t\t\t\t3\/2003<\/p>\n
A’bad
\n\t\t\t\tJubilee Mills<\/p>\n
-do-\n<\/p>\n
3786<\/span><\/p>\n
687<\/span><\/p>\n
upto
\n\t\t\t\t2004<\/span><\/p>\n
6<\/span><\/p>\n
47\/2003<\/p>\n
Kalol
\n\t\t\t\tCalico<\/p>\n
-do-\n<\/p>\n
2000<\/span><\/p>\n
400<\/span><\/p>\n
7<\/span><\/p>\n
—\n<\/p>\n
Navjivan
\n\t\t\t\tMills <\/p>\n
(delay
\n\t\t\t\tcondonation application pending)<\/p>\n
-do-\n<\/p>\n
2086<\/span><\/p>\n
400<\/span><\/p>\n
10.2\t\tIt is also
\npointed out on behalf of the Textile Labour Association that in many
\ncases, the lessors had prayed for getting back possession of the
\nlands and after dismissal of their claims, the lessors have also
\nfiled OJ Appeals against the judgment dated 13.07.2002.  However,
\nsome of them did not pray for any interim stay of the order of the
\nlearned Single Judge during pendency of the OJ Appeals and therefore,
\nleasehold lands have been sold by the Sale Committee consisting of
\nthe Official Liquidator and representatives of the secured creditors
\nand the Textile Labour Association.  The details of the said Mills
\nare as under :-\n<\/p>\n
Sr.\n<\/p>\n
\t\t\t\tNo.\n<\/p>\n
Name
\n\t\t\t\tof Mill<\/p>\n
OJ
\n\t\t\t\tAppeal<\/p>\n
Remarks<\/p>\n
1<\/span><\/p>\n
Vijay
\n\t\t\t\tMills<\/p>\n
50\/2003<\/p>\n
—\n<\/p>\n
2<\/span><\/p>\n
Aruna
\n\t\t\t\tMills<\/p>\n
72\/2002<\/p>\n
Another
\n\t\t\t\tOJ Appeal is pending.\n<\/p>\n
3<\/span><\/p>\n
Aryodaya
\n\t\t\t\tGinning Mills<\/p>\n
—\n<\/p>\n
The
\n\t\t\t\tland owned by lessor admeasuring 58000 sq. mtrs. has been sold
\n\t\t\t\tvide OLR No.101\/2007   dt. 11.09.2007.\n<\/p>\n
4<\/span><\/p>\n
Continental
\n\t\t\t\tTextile Mills<\/p>\n
—\n<\/p>\n
Winding
\n\t\t\t\tup petition is pending in Delhi High Court, the leasehold land
\n\t\t\t\tadmeasuring approx. 1,22,000 sq. mtrs. is sold and the sale is
\n\t\t\t\tconfirmed by the Delhi High Court and the highest bid was 41 Cr.
\n\t\t\t\tThe mill is located in Naroda area of Ahmedabad.\n<\/p>\n
5<\/span><\/p>\n
Arbuda
\n\t\t\t\tMills<\/p>\n
50\/2005<\/p>\n
—\n<\/p>\n
6<\/span><\/p>\n
Vivekanand
\n\t\t\t\tMills<\/p>\n
64\/2002<\/p>\n
—\n<\/p>\n
7<\/span><\/p>\n
Ambica,
\n\t\t\t\tUnit No.1<\/p>\n
Com.\n<\/p>\n
\t\t\t\tAppl. No. 287\/2005<\/p>\n
Referred
\n\t\t\t\tto Division Bench and majority part of the land was also
\n\t\t\t\tleasehold land and sale was confirmed in 2003 by the learned
\n\t\t\t\tSingle Judge as per the information, no OJ Appeal is preferred.\n<\/p>\n
\t\tIt is further stated
\nby Mr Vasavada that as per the information available with the Textile
\nLabour Association even conveyance deeds have been executed in favour
\nof the purchasers and the Official Liquidator has already handed over
\nthe possession of the properties to the purchasers.  Thus, title and
\npossession having been passed on to the purchasers, it is not open to
\nthe lessors to contend that the sale was illegal.  In fact, the
\nOfficial Liquidator has become functus officio in such cases.\n<\/p>\n
10.3\t\tIt is submitted
\nby Mr Vasavada for the Textile Labour Association that there were in
\nall 74,659 workmen of 35 Textile Mills.  So far those workmen have
\nreceived on an average only about 23.40% of their dues from the
\nassets of the companies in liquidation. In cases where the leasehold
\nlands or freehold lands of the Company in liquidation have been sold,
\nthe workmen have received compensation in the range between 30% to
\n50% of their dues, but in 8 cases where the leasehold lands belonging
\nto the companies in liquidation have not been sold on account of
\ninterim stay obtained by the lessors during pendency of the OJ
\nAppeals. In most of the cases, the workmen have received on an
\naverage only about 10% to 15% of their dues.  The Textile Labour
\nAssociation has even invoked the provisions of Article 21<\/a> of the
\nConstitution for contending that the workman have been denied their
\nterminal benefits after long years of service and that these terminal
\nbenefits are their only source of livelihood and that if such
\nterminal benefits are to be denied to the workmen, there will be
\nbreach of their fundamental right under Article 21<\/a> of the
\nConstitution.  That the machineries and buildings of the Companies in
\nliquidation have not fetched any substantial amounts as they have
\ndeteriorated in value with passage of time and only lands have
\nappreciated in value and therefore, the consideration which the
\nOfficial Liquidator will receive upon sale of the leasehold rights of
\nthe companies in liquidation is going to be the only real source of
\ngenerating funds for paying dues of workmen.  Even upon sale of such
\nleasehold rights, the appellants will continue to be in a position to
\nexercise their rights as lessors.\n<\/p>\n
10.4\t\tSo long as the
\nsecured creditors and workers are ready to offer rent, the lessors
\nhave no right of re-entry. Reliance is placed on the following
\ndecisions :-\n<\/p>\n
\t6 GLR 512 (513)<\/p>\n
\t1996 (1) GLH 203<\/p>\n
\t1996 (85) Comp. Cases
\n603 (Bombay)<\/p>\n
\t2004 (3) GLH 416
\n(419, Para 8)<\/p>\n
10.5\t\tAbsence of
\nnotice to lessor does not render the sale void. In support of the
\nsubmission, reliance is placed on the decisions in –\n<\/p>\n
\t 2003 (10) SCC 482<\/p>\n
\t2007 AIR SCW 4080
\n(4086, para 11) <\/p>\n
\t1995 (1) GLH 12 (19)<\/p>\n
 INTERVENTION
\nBY THIRD PARTY<\/p>\n
11.\t\tMr AS Vakil
\nappears for Shaan Jhaveri who had made the highest offer of Rs.7.75
\ncrores along with a Demand Draft of Rs.1 crore towards EMD on
\n04.05.2006 for purchasing the lands leased out to Prasad Mills Ltd.
\nThis offer was made in response to the advertisement dated
\n07.04.2006.  The Sale Committee found that the other offer was made
\nwithout any EMD and, therefore, rejected.  The Official Liquidator
\nfiled OL Report No.45 of 2006 recommending acceptance of the above
\noffer of Shaan Jhaveri and seeking directions of the Company Court.
\nThe said OL Report is still pending before the learned Company Judge.
\n Till the above OL Report was filed on 18.05.2006, the lessors of the
\nland in relation to Prasad Mills Ltd. had not obtained any interim
\norders in OJ Appeals which were filed in January 2005 but which were
\nnever circulated for any urgent orders.  For the first time, three OJ
\nAppeals in relation to the lands leased out to Prasad Mills were
\ncirculated for admission hearing on 27.06.2006.  The Textile Labour
\nAssociation and the secured creditor, SBI, who were parties before
\nthe learned Company Judge, were not initially impleaded as
\nrespondents in three OJ Appeals.  At the admission hearing also, the
\nappellants did not bring it to the notice of the Court that the
\nprocess of sale of the leasehold lands of Prasad Mills Ltd. had
\nalready commenced and that the highest valid offer of Rs.7.75 crores
\nwas also made by Shaan Jhaveri.  Hence, the appeals were admitted and
\nex-parte ad-interim injunction was granted by the Division Bench on
\n27.06.2006 resulting into stay of the process of sale of leasehold
\ninterest and lands.  Hence, Shaan Jhaveri filed Application No.272 of
\n2006 for being impleaded as respondent in OJ Appeal No.67 of 2006.
\nThe above application was granted on 23.08.2006.\n<\/p>\n
\t\tShaan Jhaveri has
\npreferred OJ Misc. Civil Application No.96 of 2007 contending that
\nthe Company Court be permitted to consider the offer of Rs.7.75
\ncrores made by Shan Jhaveri in response to the advertisement dated
\n07.04.2006.\n<\/p>\n
12.\t\tMr
\nDevan Parikh for the appellant-lessors has opposed the above
\napplication and submitted that Shaan Jhaveri – auction purchaser has
\nno locus-standi to oppose the appeal. It is contended on the basis of
\nth decisions in  1972 (2) SCC 36 and 1991 Supp. (1) SCC 214 that the
\nhighest bidder acquires no right in the property in question. Merely
\nbecause the auction purchaser is ready to  purchase the property
\ncannot come in the way of  lessor getting back possession of the
\nproperty upon winding up of the lessee   company. In Ravindra
\nIshwardas Sethna, AIR 1983 SC 1061, the Apex Court interfered even
\nafter the property of the Company in liquidation was sold and the
\npurchaser was put into possession.\n<\/p>\n
 DISCUSSION<\/p>\n
13.\t\tThough
\nthe contentions on behalf of the appellants, were more or less those
\ncanvassed before the learned Company Judge and  though the learned
\nadvocate for the appellants  cited more than 50 (fifty) decisions for
\nthe purpose of buttressing his legal submissions, in spite of the
\nrepeated queries from the Court as to whether, in the matter of
\napplicability of Rent Act<\/a>,  there was any distinction between a fixed
\nterm or long term lease and a short term lease,  the learned advocate
\nfor the appellants went on asserting that there was no such decision.\n<\/p>\n
\t\tIt
\nwas the learned counsel for the respondents who invited our attention
\nto the direct decision of a three Judge Bench of the Apex Court in
\nLaxmidas Bapudas Darbar vs. Rudravva<\/a>  2001 (7) SCC 409 = AIR 2001 SC
\n3738.   Since it is a direct decision of a three Judge Bench on  the
\nabove distinction, it is necessary to note the facts giving rise to
\nthe decision in Laxmidas Bapudas (supra), and the reasoning which
\nappealed to the Court.\n<\/p>\n
14.
\n\tA non-agricultural land was  leased for a period  of 99 years to
\nestablish a factory. Before expiry of the contractual lease period,
\nthe lessor filed an application under the relevant provisions of the
\nKarnataka Rent Control Act (the Karnataka Rent Act) enabling the
\nlandlord to evict a tenant on the ground of reasonable and bonafide
\nrequirement of the landlord. The High Court held that the provisions
\nof the Karnataka Rent Act were applicable dehors the contract of
\nlease and that the lessors were entitled to move a petition for the
\neviction of the lessee on the ground of reasonable and bonafide
\nrequirement of the lessor, even before expiry of the fixed term of 99
\nyears. In taking the above view, the High Court  relied on its Full
\nBench decision  which in turn had followed the decision of the Apex
\nCourt in Shri Lakshmi Venkateshwara Enterprises case, 1994 (2) SCC\n<\/p>\n
671. <\/p>\n
15.\t\tAfter
\nconsidering the previous decisions including the one in Sri Laxmi
\nVenkateshwara Enterprises, (supra)  rendered by a two Judge Bench and
\nalso the decision of the seven Judge Bench in Dhanapal Chettiar vs.
\nYesodai Ammal<\/a>, (1979) 4 SCC 214, the three Judge Bench in Laxmidas
\nBapudas Darbar vs. Rudravva<\/a>,  2001 (7) SCC 409 in terms held that Sri
\nLaxmi Venkateshwara Enterprises (P) Ltd. case (supra) is no longer
\ngood law. The Apex Court set aside the judgment of the High Court,
\nallowed the lessee’s appeal and held that rights of lessees under
\nfixed term leases (like 99 years lease) are not curtailed by the
\nprovisions of the Rent Act<\/a>, before expiry of the term.\n<\/p>\n
16.\t\tThe
\nprovisions of Section 21 of the Karnataka Rent Act, which were under
\nconsideration, read as under :-\n<\/p>\n
 21.\tProtection
\nof tenants against eviction    Notwithstanding anything to
\nthe contrary contained in any other law or contract, no order or
\ndecree for the recovery of possession of any premises shal be made by
\nany court or other authority in favour of the landlord against the
\ntenant;\n<\/p>\n
\tProvided
\nthat the court may on an application made to it, make an order for
\nthe recovery of the possession of a premises on one or more of the
\nfollowing grounds only, namely  –\n<\/p>\n
\t\t…\t…\t…\n<\/p>\n
\t\t\t\t\t\t(emphasis
\nsupplied)<\/p>\n
17.\t\tIn
\nLaxmidas Bapudas case (supra), the three Judge Bench of Apex Court
\nheld as under in para 17 of the judgment :-\n<\/p>\n
 17.\tIt
\nmay have to be scrutinized as to what extent the provisions of
\nSection 21 of the Karnataka Rent shall have an overriding effect over
\nany other law or a contract.  The Rent Act<\/a>s have primarily been
\nmade, if not wholly, to protect the interest of tenants, to restrict
\ncharging of excessive rent and their rampant eviction at will. In
\nthat view of the matter, Section 21 of the Karnataka Rent Act
\nprovides that notwithstanding anything to the contrary contained in
\nany contract, no order for eviction of a tenant shall be made by the
\ncourt or any other authority.  Undoubtedly, it is a provision
\nproviding statutory protection to the tenants as it is also
\nevident from the heading of Section 21<\/a> of the Act. This prohibition
\nis however relaxed under the proviso saying that an order for
\nrecovery of possession of the premises can be made on an application
\nmade on that behalf only on the grounds as enumerated in clauses (a)
\nto (p) to the proviso. The non obstante clause contained under
\nSection 21<\/a>  of the Act, will override any condition in any contract
\nwhich may provide a ground for eviction other than those   enumerated
\nin clauses (a) to (p) of sub-section (1) of Section 21<\/a>. Such an
\nadditional ground in a contract shall be rendered ineffective. The
\nuse of the word  only  in the proviso is significant to emphasise
\nthat it relates to grounds alone which cannot be added over and above
\nas provided. The whole contract or other conditions not related to
\neviction of grounds of eviction shall not be affected.  So far as a
\nfixed-term lease is concerned, it shall be affected only to the
\nextent that even after expiry of period of the lease the possession
\ncannot be obtained by the lessor unless one or more of the grounds
\ncontained in Section 21<\/a> of the Act are available for eviction of the
\ntenant.  There is nothing to indicate nor has it been held in
\nany case that in view of Section 21 of the Karnataka Rent Act a
\ncontract of fixed-term  tenancy stands obliterated in totality.
\nAs indicated in the earlier part of this judgment in the case of
\nDhanapal Chettiar it has been observed in para 5 that none of the
\nState Rent Acts have abrogated or affected the provisions of Section
\n107<\/a> of the Transfer of Property Act which provides for lease of
\nimmovable property from year to year or for a term more than a year
\nor reserving a yearly rent. As indicated earlier, the proviso to
\nsub-section (1) of Section 21 of the Karnataka Rent Act limits the
\ngrounds on which a landlord can seek eviction of tenant.  Nothing
\nhas been indicated by reasons of which  it can be concluded that a
\ncontract of tenancy loses significance on coming into force of the
\nKarnataka Rent Act. The effect of non obstante clause, in our
\nview has been rightly explained in the Full Bench decision in the
\ncases of Sri Ramakrishna Theatres Ltd. vs. General Investments and
\nCommercial Corpn. Ltd..  In<\/a> one of the decisions of this Court
\nreported in Modern Hotel vs. K Radhakrishnaiah<\/a> it has been held  that
\nperiod of a subsisting lease for fixed term could not be curtailed in
\nthe absence of a forfeiture clause in the lease.\n<\/p>\n
\t\t\t\t\t\t(emphasis
\nsupplied)<\/p>\n
18.\t\tThereafter in
\nparas 18 and 19 of the judgment, the three Judge Bench laid down the
\nfollowing principles :-\n<\/p>\n
 18.\tThe
\neffect of the non obstante clause contained under section 21 of the
\nKarnataka Rent Act on the fixed-term contractual lease may be
\nexplained as follows;\n<\/p>\n
\t(i)\t On
\nexpiry of period of the fixed term lease, the tenant would be
\nliable for eviction only on the grounds as enumerated in clauses (a)
\nto (p) of sub-section (1) of Section 21<\/a> of the Act.\n<\/p>\n
\t(ii)\tAny
\nground contained in the agreement of lease other than or in addition
\nto the grounds enumerated in clauses (a) to (p) of sub-section (1) of
\nSection 21<\/a> of the Act shall remain inoperative.\n<\/p>\n
\t(iii)\tProceedings
\nfor eviction of a tenant under a fixed term contractual lease can be
\ninitiated during subsistence or currency of the lease only on a
\nground as may be enumerated in clauses (a) to (p) of sub-section (1)
\nof Section 21<\/a> of the Act,if and only it is also provided as one of
\nthe grounds of forfeiture of the lease rights in the lease deed, not
\notherwise.\n<\/p>\n
\t(iv)\tThe
\nperiod of fixed-term lease is ensured and remains protected except in
\nthe cases indicated in the preceding paragraph.\n<\/p>\n
19.\tWith
\ngreat respect therefore, in our view,  the decision in the case of
\nDhanapal Chettiar has not been correctly construed in the case of
\nShri Lakshmi Venkateshwara Enterprises (p) Ltd. and it no more
\nholds good nor the Full Bench decision following it, in the case of
\nBombay Tyres International Ltd. The earlier judgment of the Full
\nBench of the High court in the case of Sri Ramakrishna Theatres Ltd.
\nlays down the law correctly.\n<\/p>\n
\t\t\t\t\t\t(emphasis
\nsupplied)<\/p>\n
\t\tIt
\nis unfortunate that the aforesaid direct decision of a Three Judge
\nBench of the Apex Court  squarely covering the controversy and
\nholding that the provisions of the Rent Act<\/a> do not curtail the
\ncontract period  was not brought by the learned counsel for the
\nparties to the notice of the learned Company Judge either in Company
\nApplication No.47 of 1993 which was decided on 30.7.2002 (reported as
\n2002 (3) GLH 367) nor was it brought to the notice of the same
\nlearned Company Judge when the judgment under appeal was rendered on
\n13.10.2004. It is all the more unfortunate that this decision was not
\nbrought to our notice by the learned advocate for the appellants in
\nspite of repeated queries.\n<\/p>\n
19.\t\tMr
\nParikh also relied upon the decision of the Apex Court in Gain Devi
\nvs. Jeevan Kumar, AIR 1985 SC 796 in support of his contention that
\nthere is no distinction between a contractual tenant enjoying
\nprotection under the Transfer of Property Act<\/a> and a statutory tenant
\nenjoying protection under the Rent Act<\/a>.\n<\/p>\n
\t\tWe
\nfail to see how this decision takes the appellants’ case any further.
\n Gain Devi’s case merely dealt with the question whether the heirs of
\na deceased tenant inherit the tenancy rights in respect of commercial
\npremises, although the amendment to the Delhi Rent Control Act<\/a> gave
\npersonal protection and personal right of continuing in possession to
\nthe heirs of the deceased statutory tenant in respect of residential
\npremises only.\n<\/p>\n
\t\tThe
\nApex Court held that as in the Delhi Rent Control Act<\/a> there is no
\nprovision regulating the rights of such heirs, tenancy right which is
\nheritable devolved on the heirs under the ordinary law of succession.
\n The Court held that in view of the definition of tenancy in the Act
\nthe termination of the contractual tenancy does not bring about any
\nchange in the status and legal position of the tenant, unless there
\nare contrary provisions in the Act.  The contractual tenancy,
\ntherefore, does enjoy an estate or interest in the tenanted premises
\nand that interest is heritable.  This decision, therefore, only
\nbuttresses the case of the respondents that enactment of the Rent Act<\/a>
\nwas not intended to restrict or curtail the rights of the tenant
\nunder the Transfer of Property Act<\/a> or under the ordinary law relating
\nto lease of inheritance.\n<\/p>\n
20.\t\tMr
\nParikh for the appellants also relied on the decision in Waman
\nShriniwas vs. Ratilal Bhagwandas & Co<\/a>., AIR 1959 SC 689 in
\nsupport of the contention that sub-letting or assignment of leasehold
\nrights is prohibited by Section 15<\/a> of the Rent Act and that it would
\nalso be contrary to public policy.\n<\/p>\n
\t\tThat
\ndecision was not at all concerned with a long term or a fixed term
\nlease, unlike the three Judge Bench decision in Laxmidas Bapudas
\ncase, 2001 (7) SCC 409.\n<\/p>\n
21.\t\tMr Parikh for the
\nappellant-landlords, however, heavily relied on the following
\nobservations made by the Seven Judge Bench of the Apex Court in V.
\nDhanapal Chettiar vs. Yesodai Ammal<\/a>,  1979 (4) SCC 214  :-\n<\/p>\n
“Section
\n108<\/a> deals with the rights and liabilities of lessors and lessees.
\nMany State Rent Acts have brought about considerable changes in the
\nrights and liabilities of a lessor and a lessee, largely in favour of
\nthe latter, although not wholly. The topic of Transfer of Property
\nother than agricultural land is covered by Entry 6 of List III in the
\nSeventh Schedule to the Constitution. The subject being in the
\nconcurrent list, many State Rent Acts have by necessary implication
\nand many of them by starting certain provisions with a non obstante
\nclause have done away with the law engrafted in S. 108<\/a> of the
\nTransfer of Property Act except in regard to any matter which is not
\nprovided for in the State Act<\/a> either expressly or by necessary
\nimplication.”\n<\/p>\n
“But
\nwhen under the various State Rent Acts, either in one language or the
\nother, it has been provided that a tenant can be evicted on the
\ngrounds mentioned in certain sections of the said Acts, then how does
\nthe question of determination of a tenancy by notice arise? If the
\nState Rent Act requires the giving of a particular type of notice in
\norder to get a particular kind of relief, such a notice will have to
\nbe given. Or, it may be, that a landlord will be well advised by way
\nof abundant precaution and in order to lend additional support to his
\ncase, to give a notice to his tenant intimating that he intended to
\nfile a suit against him for his eviction on the ground mentioned in
\nthe notice. But that is not to say that such a notice is compulsory
\nor obligatory or that it must fulfil all the technical requirements
\nof Section 106<\/a> of the Transfer of Property Act.”\n<\/p>\n
22.\t\tMr Parikh for the
\nappellants also placed strong reliance on the judgment of two Judge
\nBench in KK Krishnan vs. MK Vijaya Raghavan<\/a>, AIR 1980 SC 1756 in
\nsupport of the contention that the subletting of premises without
\nconsent of the landlord or in absence of right to do so under the
\nlease deed is sufficient to evict the tenant and that in such action
\nthe rights under Section 108<\/a> of the Transfer of Property Act is no
\ndefence.  Mr Parikh particularly relied on the following observations
\nmade by the Apex Court in the concluding para of the above decision
\nand submitted that this is how the Apex Court had spelt out the ratio
\nof the seven Judge Bench of the Apex Court in V. Dhanapal Chettiar
\nvs. Yesodai Ammal<\/a>, (supra):-\n<\/p>\n
“8.\tit
\nis clear from what has been said that not all the rights conferred on
\nlandlord and tenant by S. 108<\/a> and other provisions of the Transfer of
\nProperty Act<\/a> have been left intact by the various State Rent Acts and
\nthat if a State Rent Act makes provision for eviction on certain
\nspecified grounds, eviction cannot be resisted on the basis of rights
\nconferred by the Transfer of Property Act<\/a>.  Section 108<\/a> (j) of the
\nTransfer of Property Act<\/a> stands displaced by S. 11<\/a> (4)(i) of the
\nKerala Buildings (Lease and Rent Control) Act and is no defence to an
\naction for eviction based on S. 11(4)(i)<\/a>.\n<\/p>\n
23.\t\tAlthough the
\nabove observations taken by themselves may prima facie support the
\ncontention of the appellant   landlords, it is required to be seen
\nthat the lease in that case was not a long term lease.  Besides, in
\nparas 12 and 13 of Laxmidas Bapudas Darbar vs. Rudravva<\/a>, (2001) 7 SCC
\n409 = AIR 2001 SC 3738, a Three Judge Bench of the Apex Court
\nexplained the proposition of law laid down in Dhanapal Chettiar’s
\ncase in the following words :-\n<\/p>\n
 The
\nfacts (in Dhanapal Chettiar’s case) being that the landlady moved an
\napplication for eviction of her tenant under the provisions  of the
\nTamil Nadu Rent Act on the ground of her personal need.  The petition
\nwas dismissed.  On appeal, though her case of bona fide requirement
\nwas upheld but eviction was refused due to lack of notice to quit in
\naccordance with law. The High Court dealing with the matter in
\nrevision, held that notice to quit under Section 106<\/a> of the Transfer
\nof Property Act was not necessary for seeking an eviction of a tenant
\nunder the provisions of the Rent Act<\/a>. The question therefore, as was
\nunder consideration before this Court is mentioned in para 1 of the
\njudgment itself which is quoted below :\n<\/p>\n
 ….\n<\/p>\n
as to whether in order to get a decree or order for eviction against
\na tenant under any State Rent Control Act it is necessary to give a
\nnotice under Section 106<\/a> of the Transfer of Property Act.\n<\/p>\n
13.\tIt
\nhas been held that the purpose of giving a notice under Section 106<\/a>
\nof the Transfer of Property Act is only to terminate the contract of
\ntenancy but it would not be necessary if the tenant incurs the
\nliability of eviction under the provisions of the statute.  IN such a
\ncase the notice under Section 106<\/a> of the Transfer of Property Act
\nwould only be a formality and a surplusage and it need not be given
\nby way of any double protection to the tenant.  It has been further
\nobserved that even though tenancy may be terminated by giving a
\nnotice under Section 106<\/a> of the Transfer of Property Act yet the
\nlandlord will not be in a position to initiate the proceedings for
\neviction in the absence of any liability incurred by the tenant as
\nprovided in the statute.  Therefore, notice under Section 106<\/a> of the
\nTransfer of Property Act loses significance.\n<\/p>\n
24.\t\tDhanapal
\nChettiar’s case was thus confined to the question about necessity or
\notherwise of giving notice under Section 106<\/a> of the Transfer of
\nProperty Act  before filing an eviction suit under the Rent Act<\/a>,
\nwhere the Rent Act<\/a> was applicable in the first place. In view of the
\nabove direct decision of the Three Judge Bench of the Apex Court
\nwhich has not only considered and interpreted the decision of the
\nSeven Judge Bench in Dhanapal Chettiar’s case, but which has also
\nspecifically overruled the decision of the Two Judge Bench in Lakshmi
\nVenkateshwar Enterprises, (1994) 2 SCC 671, there can be no manner of
\ndoubt that the provisions of the Rent Act<\/a>, which are primarily made
\nto protect the interest of tenants, to restrict charging of excessive
\nrent and their rampant eviction at will, will not enable the lessor
\nto move for eviction of the lessee only during subsistence of the
\nterm prescribed in the lease deed, unless identical grounds of
\neviction are provided for in the lease deed.\n<\/p>\n
25.\t\tThe relevant
\nprovisions of the Transfer of Property Act<\/a>, read as under:-\n<\/p>\n
108.\tRights
\nand liabilities of lessor and lessee, –  In the absence of a
\ncontract or local usage to the contrary, the lessor and the lessee of
\nimmovable property, as against one another, respectively, possess the
\nrights and are subject to the liabilities mentioned in the rules next
\nfollowing, or such of them as are applicable to the property leased
\n:-\n<\/p>\n
A.\n<\/p>\n
–  Rights and Liabilities of the Lessor<\/p>\n
(c)\tthe
\nlessor shall be deemed to contract with the lessee that, if the
\nlatter pays the rent reserved by the lease and performs the contract
\nbinding on the lessee, he may hold the property during the time
\nlimited by the lease without interruption.\n<\/p>\n
\tThe
\nbenefit of such contract shall be annexed to and go with the lessee’s
\ninterest as such, and may be enforced by every person in whom that
\ninterest is for the whole or any part thereof from time to time
\nvested.\n<\/p>\n
B.\n<\/p>\n
– Rights and Liabilities of the Lessee<\/p>\n
(j)\tthe
\nlessee may transfer absolutely or by way of mortgage or sub-lease the
\nwhole or any part of his interest in the property, and any transferee
\nof such interest or part may again transfer it.  The lessee shall
\nnot, by reason only of such transfer, cease to be subject to any of
\nthe liabilities attaching to the lease:\n<\/p>\n
(o)\tthe
\nlessee may use the property and its products (if any) as the person
\nor ordinary prudence would use them if they were his own;  but he
\nmust not use, or permit another to use, the property for a purpose
\nother than that for which it was leased, or fell or sell timber,
\npull down or damage buildings belonging to the lessor, or work mines
\nor quarries not open when the lease was granted, or commit any other
\nact which is destructive or permanently injurious thereto:\n<\/p>\n
(q)\ton
\nthe determination of the lease, the lessee is bound to put the lessor
\ninto possession of the property.\n<\/p>\n
111.\tA
\nlease of immovable property determines –\n<\/p>\n
\t(a)\tby
\nefflux of time limited thereby<\/p>\n
114.\tWhere
\na lease of immovable property has determined by forfeiture for
\nnon-payment of rent, and the lessor sues to eject the lessee, if, at
\nthe hearing of the suit, the lessee pays or tenders to the lessor the
\nrent in arrears, together with interest thereon and his full costs of
\nthe suit, or gives such security as the Court thinks sufficient for
\nmaking such payment within fifteen days, the Court may, in lieu of
\nmaking a decree for ejectment, pass an order relieving the lessee
\nagainst the forfeiture; and thereupon the lessee shall hold the
\nproperty leased as if the forfeiture had not occurred.\n<\/p>\n
26.\t\tThe
\nrelevant provisions of the Bombay Rent Act, read as under :-\n<\/p>\n
13.\tWhen
\nlandlord may recover possession, – (1) Notwithstanding anything
\ncontained in this Act but subject to the provisions of Section 15<\/a>, as
\nlandlord shall be entitled to recover possession of any premises if
\nthe Court is satisfied –\n<\/p>\n
(a)\tthat,
\nthe tenant has committed any act contrary to the provisions of clause\n<\/p>\n
(o) of section 108<\/a> of the Transfer of Property Act, 1882; or<\/p>\n
(k)\tthat
\nthe premises have not been used without reasonable cause for the
\npurpose for which they were let for a continuous period of six months
\nimmediately preceding the date of the suit.\n<\/p>\n
15(1)\t\tNotwithstanding
\nanything contained in any law, but subject to any contract to the
\ncontrary, it shall not be lawful after the coming into operation of
\nthis Act for any tenant to sub-let the whole or any part of the
\npremises let to him or to assign or transfer in any other manner his
\ninterest therein;\n<\/p>\n
Provided
\nthat the State Government may, by notification in the Official
\nGazette, permit in any area the transfer of interest in premises held
\nunder such leases or class of leases and to such extent as may be
\nspecified in the notification.\n<\/p>\n
19.(1)\t\tSave
\nin cases provided for under the proviso to section 15<\/a>, it shall not
\nbe lawful for the tenant or any person acting or purporting to act on
\nbehalf of the tenant to claim or receive any sum, or any
\nconsideration as a condition of the relinquishment transfer or
\nassignment of his tenancy of any premises.\n<\/p>\n
(2)\tAny
\ntenant or person who in contravention of the provisions of
\nsub-section (1) receives any sum or consideration shall, on
\nconviction, be punished with imprisonment for a term which may extend
\nto six months and shall also be punished with fine which shall not be
\nless than the sum of the value of the consideration received by him.\n<\/p>\n
27.\t\tA perusal of the
\naforesaid provisions, particularly  sub-section (1) of Section 13 of
\nthe Bombay Rent Act makes it clear that the non-obstante clause with
\nwhich sub-section (1) of Section 13<\/a> (providing for various grounds of
\neviction) commences gives sub-section (1) overriding effect only over
\nother provisions of the Bombay Rent Act (but makes it subject to the
\nprovisions of Section 15 of the Bombay Rent Act) and the non-obstante
\nclause does not give any overriding effect over  any other law or
\ncontract ,  unlike the non-obstante clause in Section 21 of the
\nKarnataka Rent Act quoted in para 16 hereinabove.  In other words,
\nthe contention urged by the lessor in the State of Karnataka that
\nSection 21 of the Karnataka Rent Act  (providing for similar grounds
\nof eviction as contained in Section 13(1) of the Bombay Rent Act) is
\ngiven overriding effect even over the Transfer of Property Act<\/a> and
\nthe terms of the fixed long term lease (which contention was
\nnegatived by a three Judge Bench of the Apex Court in Laxmidas
\nBapudas case, 2001 (7) SCC 409) is not even available to a similarly
\nplaced lessor in the State of Gujarat, that is to say, the ratio of
\nthe decision of the three Judge Bench of the Apex Court in Laxmidas
\nBapudas case (supra) would apply with much greater force for the
\nbenefit of the lessee under a fixed long term lease in the State of
\nGujarat.\n<\/p>\n
28.\t\tFollowing
\nthe aforesaid judgment in Laxmidas Bapudas Darbar vs. Rudravva<\/a>,  2001
\n(7) SCC 409 , we hold that –\n<\/p>\n
(i)\tit is only on
\nexpiry of the period of fixed term lease  that the lessors can pray
\nfor eviction of the company in liquidation or its successor in
\ninterest on the grounds  which may be available under the Rent Act<\/a>
\nwhich may be in operation at the relevant time.\n<\/p>\n
(ii)\tAny ground
\ncontained in the agreement of lease other than  or in addition to the
\ngrounds enumerated in sub-section (1) of Section 13 of the Bombay
\nRent Act shall remain inoperative during subsistence of the lease and
\neven after expiry of the lease term.\n<\/p>\n
(iii)\tThe proceedings
\nfor eviction of a tenant under the fixed term contractual lease  can
\nbe initiated during subsistence or currency of the lease only on a
\nground as may be enumerated in sub-section (1) of Section 13 of the
\nBombay Rent Act  provided it is also enumerated as one of the
\ngrounds for forfeiture of the lease rights in the lease deed, but not
\notherwise.\n<\/p>\n
(iv)\t The period of
\nfixed term lease of 199 years is ensured and remains protected
\nexcept in the cases indicated in (iii) hereinabove,  and during
\nthis period, the rights of the lessee under the lease deed and the
\nTransfer of Property Act<\/a> are not curtailed by the provisions of the
\nBombay Rent Act.\n<\/p>\n
29.\t\tIt
\nis in light of the above legal principles that we may examine the
\nother contentions raised by the learned advocate for the appellants.
\n\tIn
\nthe facts of the instant case also, the term of the lease is 199
\nyears from 10.12.1916.   Hence, the lease is still subsisting till
\n9.12.2115. In this set of facts, the question of invoking the
\nprovisions of the Rent Act<\/a> cannot arise unless the lease deed also
\nprovides, for eviction before expiry of the term, a ground mentioned
\nin Section 13(1) of the Bombay Rent Act. There is no such ground in
\nthe lease deed which gives the lessor the right of re-entry except in
\ncase of failure to pay rent for which protection is given to the
\nlessee both by the provisions of Section 114<\/a> of the Transfer of
\nProperty Act and Section 12(3) of the Bombay Rent Act. Since the
\norder of winding up was passed on 5.5.1989 and since the secured
\ncreditors and workers have always shown readiness and willingness to
\npay rent and arrears thereof, the lessors are not entitled to claim
\nor get possession of the land  leased to the company presently in
\nwinding up.\n<\/p>\n
30.\t\tThe appellants’
\ncontention about liability of the lessee to be evicted for change of
\nuser is also without any basis. Apart from the lease deed not
\nproviding for any such ground, the lease deed itself does not
\nindicate any particular  use  to be made by the lessee (para 7.4
\nhereinabove).\n<\/p>\n
31.\t\tIn view of the
\nabove finding,  all the arguments made by Mr Parikh, learned advocate
\nfor the appellant- landlords fall to the ground and, therefore, it is
\nnot necessary to deal with a number of authorities cited by him which
\nare inconsistent with the law laid down by the Three Judge Bench in
\nLaxmidas Darbar’s case (which judgment was rendered after considering
\nthe Seven Judge Bench decision in Dhanapal Chettiar’s case).  This
\ndiscussion is also sufficient to hold that when rights of the lessee
\nunder the lease deed cannot be curtailed by the provisions of the
\nBombay Rent Act during subsistence of the lease period, the other
\narguments about applicability of Sections 15<\/a>, 18<\/a> and 19<\/a> can also not
\nbe accepted.\n<\/p>\n
32.\t\tMr Parikh also
\nstrongly relied on the decision of the Apex Court in Parasram Harnand
\nRao vs. Shanti Prasad Narinder Kumar Jain<\/a>, AIR 1980 SC 1655 in
\nsupport of the contention that assignment or subletting for the
\npurpose of evicting the tenant, would include not only voluntary
\nsale, but also include an involuntary sale and that sale of the
\nproperty of the Company in liquidation by the Official Liquidator
\nwould also be included in such assignment.\n<\/p>\n
33.\t\tThe observations
\nmade by the Apex Court in Parasram’s case (supra) indicate that the
\nOfficial Liquidator had merely stepped into the shoes of the Company
\nin winding up and even if the Official Liquidator had transferred the
\ntenancy interest to the third party under the orders of the Court, it
\nwas a voluntary sale falling within Section 14(1)(b)<\/a> of the Delhi
\nRent Control Act and that assuming that the sale by the Official
\nLiquidator was an involuntary sale, then also it became as assignment
\nas provided for by section 14(1)(b)<\/a> of the Rent Act. But all these
\nobservations were made in the case where  the lease was a short
\nterm lease for a period of three years.  The lease was granted
\nin the year 1942 for three years and the suit was filed in the year
\n1948 for eviction for non-payment of rent and conversion of the
\nuser of the premises.  The suit for possession was dismissed and a
\ndecree for arrears of rent was passed and thereafter the tenant
\ncompany was ordered to be wound up and the Official Liquidator was
\nappointed who sold the tenancy rights.  Thereafter the landlord
\nappellant filed eviction proceedings against the tenant.  The decree
\nfor eviction was passed in favour of the appellant   landlord.
\nThus, it is clear that the observations made in context of a short
\nterm lease cannot apply to a case where the lease is a long term
\nlease like the present one. Moreover in view of Clause 7 of the lease
\ndeed there is no prohibition against subletting or assignment of
\nleasehold rights in favour of a third party.\n<\/p>\n
34.\t\tReliance placed
\nby the appellants on the decision in Ravindra I Sethna vs. OL, 1983
\n(4) SCC 269 is also misconceived as it was a case of short term lease
\nwhich had already expired when the Company Court directed the OL to
\ngive the premises of the Company in winding up to get compensation
\nfrom a caretaker.\n<\/p>\n
35.\t\tSo also the
\ndecision in Nirmala Bafna’s case, 1992 (2) SCC 322 does not carry the
\nappellants’ case any further. On the contrary, the Apex Court in
\nterms laid down therein the legal principle that  merely because a
\ncompany goes in liquidation and a liquidator\/ Official Liquidator is
\nappointed, the rights of the company vis-a-vis its landlord (and\/or
\nits tenants) do not undergo any change . Hence the fixed term of
\n199 years in the lease deed at hand is not curtailed by the order of
\nwinding up passed in the year 1989. The other observation that  the
\ntenancy rights the company had in the said flat may not be an asset
\nfor the purpose of liquidation proceedings  were not made in the
\ncontext of a long fixed term lease.\n<\/p>\n
36.\t\tThe case nearer
\nto the one at hand is  United Bank of India vs. Official Liquidator<\/a>,
\n(1994) 1 SCC 575.  The Apex Court noted the facts of the case that
\nthe lease of 7 bighas of land in favour of the company in winding up
\nwas for a period of 99 years with the option of renewal for further
\n99 years for the meagre rent of Rs.1200 per annum.  The Apex Court
\nset aside the direction given by the Company Court to the Official
\nLiquidator to surrender the land to the lessors for avoiding the
\n onerous covenant  of paying the rent of Rs.1200 p.a.. In the
\nprocess, the Apex Court made  the following observations :-\n<\/p>\n
 Under
\nSection 535<\/a>, the High Court may give leave to the Official Liquidator
\nto disclaim land of any tenure which is part of the property of the
\ncompany in liquidation if it is burdened with onerous covenants.   The
\nintention of Section 535<\/a> is to protect the creditors of the company
\nin liquidation and not mulct them by reason of onerous covenants.
\n The power under Section 535<\/a> is not to be lightly exercised.  Due
\ncare and circumspection have to be bestowed.  It must be remembered
\nthat an order permitting disclaimer, while it frees the company in
\nliquidation of the obligation to comply with covenants, puts the
\nparty in whose favour the covenants are, to serious disadvantage.
\nThe Court must therefore, be fully satisfied that there are onerous
\ncovenants, covenants which impose a heavy burden upon the Company in
\nliquidation, before giving leave to disclaim them.\n<\/p>\n
11.\tWe
\nare of the view that the High Court ought to have appreciated that it
\nwas rather unlikely that the party who had the benefit of onerous
\ncovenants would apply for disclaimer and ought to have viewed the
\nOfficial Liquidator’s application to disclaim made pursuant to the
\nTrust’s letter to him in that behalf, in that light.   We find it
\ndifficult to see how such a large  area of land leased to the
\ncompany in liquidation for 99 years for the meagre rent of Rs.1200
\nper annum can be said to be land burdened with onerous covenants.
\n We do not think that the High Court was justified ind debating and
\nholding in proceedings under Section 535<\/a> that the lease of the said
\nland had been validly terminated so that the Official Liquidator
\nbecame liable to pay mesne profits to the Trust, and that this
\ncoupled with arrears of rent, in five figures made the lease onerous.
\n  We are also of the view that the Bank’s offer to pay the arrears
\nof rent to the Trust should have been accepted by the High Court.
\n The Bank to protect and keep alive its security, had put Official
\nLiquidator in funds in regard to other mattes and was eager to meet
\nthis liability.   Had this been done valuable property of the
\ncompany in liquidation could have been retained so that its
\nundertaking, which stood on the said land,  could have been sold
\nas running concern, as has been done upon intervention of this Court,
\n for the benefit of its creditors.\n<\/p>\n
\t\t\t\t\t\t\t(emphasis
\nsupplied)<\/p>\n
\t\tIn the facts of that
\ncase, the Apex Court set aside the High Court’s direction to the
\nOfficial Liquidator to disclaim the land and hand over possession
\nthereof to the landlord trust.  It directed the Official Liquidator
\nto sell the assets and properties of the company in liquidation,
\nincluding the land in question and the Apex Court also directed the
\nOfficial Liquidator to pay the landlord trust a sum of Rs.10 lacs in
\nfull and final settlement of the landlord’s claim against the company
\nin liquidation of whatever nature in respect of the said land.  The
\nApex Court held that the landlord trust would be amply recompensed if
\nit received as  compensation for the disposal of its right in the
\nsaid land and for arrears of rent the sum of Rs.10 lacs from the
\nOfficial Liquidator out of the funds of the Company in liquidation.\n<\/p>\n
37.\t\tWe may now deal
\nwith the last contention urged on behalf of the appellants as an
\nalternative contention that the lease deed permits only subletting
\nand not assignment of leasehold rights of the lessee. The argument is
\nmisconceived because the rights available to a lessee are not merely
\nthe rights under  the lease deed but also the right under clause (j)
\nof Section 108<\/a> of the Transfer of Property Act, the relevant portion
\nof which reads as under :-\n<\/p>\n
108.\tRights
\nand liabilities of lessor and lessee, –  In the absence of a
\ncontract or local usage to the contrary, the lessor and the lessee of
\nimmovable property, as against one another, respectively, possess the
\nrights and are subject to the liabilities mentioned in the rules next
\nfollowing, or such of them as are applicable to the property leased
\n:-\n<\/p>\n
B.\n<\/p>\n
– Rights and Liabilities of the Lessee<\/p>\n
(j)\t the
\nlessee may transfer absolutely or by way of mortgage or sub-lease
\n the whole or any part of his interest in the property, and any
\ntransferee of such interest or part may again transfer it.  The
\nlessee shall not, by reason only of such transfer, cease to be
\nsubject to any of the liabilities attaching to the lease:\n<\/p>\n
\t\t\t\t\t\t(emphasis
\nsupplied)<\/p>\n
\t\tMerely because
\nClause 7 of the lease deed confers upon the lessee the right to
\nsublet the demised land and the superstructure thereon, it does not
\ntake away the right conferred upon the lessee by the above-quoted
\nclause in Section 108<\/a> of the Transfer of Property Act, which right is
\navailable to the lessee in absence of a contract or local usage to
\nthe contrary. There is nothing in the lease deed to take away the
\nsaid right of the lessee nor has any local usage to the contrary ever
\nbeen pleaded.\n<\/p>\n
38.\t\tIn view of the
\nabove discussion, we do not see any merit in any of the legal
\ncontentions  against assignability of leasehold rights of a Company
\nin winding up urged on behalf of the appellants.\n<\/p>\n
39.\t\tAs
\nregards the contention that assignment of leasehold rights of the
\nCompany in winding up would be invalid in absence of any prior notice
\nto the lessor, the question does not yet arise as the leasehold
\nrights of the Company in winding up over the land in question are not
\nyet assigned to any party.\n<\/p>\n
\t\tIn
\nany view of the matter, the decisions relied upon by the appellants
\nbeing Smt Jatan Kumar Colcha vs. Golcha Properties (P) Ltd<\/a>., 1970 (3)
\nSCC 573, and in East India Company vs. Official Liquidator<\/a>, (1969) II
\nComp.LJ 253 (Guj.) dealt with the cases where the grievance was made
\nby the petitioning creditor who was not given any notice before the
\nCompany Court gave directions on the Official Liquidator Report for
\nsale of properties of the Company in winding up.  We fail to see how
\nthese decisions can be of any assistance to the appellants.  In those
\ncases reliance was placed on Rule 139 of the Companies (Court) Rules,
\n1959 which provides that if the Official Liquidator wants to sell any
\nproperty of the Company in liquidation in exercise of the power under
\nSection 457<\/a>, sub-section (1) clause (c), he must take out a summons
\nfor directions and notice of the summons must be given to the
\npetitioner on whose petition the winding up order is made.\n<\/p>\n
\tRule 109 invoked on
\nbehalf of the appellant in the written submissions is also
\nirrelevant. On the contrary Rule 33, inter-alia, provides that no
\nproceedings under the Act or these rules shall be invalidated by
\nreason of any formal defect or irregularity; unless the Judge before
\nwhom the objection is taken is of the opinion that substantial
\ninjustice has been caused by such defect or irregularity and that the
\ninjustice cannot be remedied by an order of Court.\n<\/p>\n
40.\t\tComing to the
\ncontention that the lease deed was not executed in favour of the
\ncompany but its managing agent  Durgaprasad Lashkari, for the
\nelaborate reasons  already given by the learned Company Judge,
\n(indicated in para 7.3 hereinabove) with which we fully concur, we do
\nnot see any force in this contention either.\n<\/p>\n
41.\t\tAs the appeals
\nare being dismissed for the foregoing reasons and separate orders are
\nbeing passed on Misc. Civil Application No.96 of 2007, it is not
\nnecessary to deal with the submissions of Mr AS Vakil for Shaan
\nJhaveri in this judgment.\n<\/p>\n
42.\t\tIt is clarified
\nthat dismissal of the appeals does not preclude the lessors from
\nassigning their own rights in the lands in question in favour of the
\nassignee of the leasehold rights.\n<\/p>\n
 OPERATIVE
\nORDER<\/p>\n
43.\t\tIn view of the
\nstatement of Mr RM Desai, learned counsel for the secured creditor
\nthat the arrears of rent, if any, remaining unpaid by the company in
\nliquidation shall be paid by the secured creditor, we direct that
\nwithin one month from today, the Official Liquidator shall supply to
\nthe secured creditor the particulars of the rent for the demised land
\nfor the period upto 31st October 2008,  remaining unpaid
\nso far, and the secured creditor -State Bank of India shall deposit
\nthe amount with the Official Liquidator within one month thereafter.
\nIt will be open to the lessors to withdraw such amount.\n<\/p>\n
44.\t\tIn the result,
\nsubject to the above directions and subject to further directions,
\nwhich are being given separately regarding the  advertisement for
\nassignment of leasehold rights of the company in liquidation, the
\nappeals are dismissed. The interim stay granted during pendency of
\nthe appeals against transfer or assignment of leasehold rights of the
\ncompany in liquidation is hereby vacated.\n<\/p>\n
\t\t\t\t\t\t\t(M.S. SHAH, J.)<\/p>\n
\t\t\t\t\t\t\t(K.A. PUJ, J.)<\/p>\n
\tAt this stage, Mr
\nDevan Parikh, learned counsel for the appellants prays that the
\ninterim stay which was operating during pendency of the appeals may
\nbe continued for some time to enable the appellants to have further
\nrecourse in accordance with law.\n<\/p>\n
\tThe learned counsel
\nfor the respondents oppose the request.\n<\/p>\n
\tIn the facts and
\ncircumstances of the case, the interim stay operating during pendency
\nof the appeals shall continue for a period of one month from today
\ni.e. upto 17th November, 2008 with a clarification that in
\nthe meantime, it will be open to the Official Liquidator to take all
\nthe preliminary steps required to be taken before publishing the
\nadvertisement.\n<\/p>\n
\t\t\t\t(M.S. SHAH,
\nJ.)\t\t(K.A. PUJ, J.)<\/p>\n
zgs\/-\n<\/p>\n
\t\t   \u00a0\u00a0\u00a0<\/p>\n
\t\t   Top<\/p>\n<\/blockquote>\n","protected":false},"excerpt":{"rendered":"
Gujarat High Court Jabal vs O.L.Of on 17 October, 2008 Author: Mohit S. K.A.Puj,&Nbsp; Gujarat High Court Case Information System Print OJA\/66\/2006 39 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD O.J.APPEAL No. 66 of 2006 In COMPANY APPLICATION No. 34 of 2004 In COMPANY PETITION No. 21 of 1994 With O.J.APPEAL No. 65 […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[16,8],"tags":[],"class_list":["post-252403","post","type-post","status-publish","format-standard","hentry","category-gujarat-high-court","category-high-court"],"yoast_head":"\nJabal vs O.L.Of on 17 October, 2008 - Free Judgements of Supreme Court & High Court | Legal India<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.legalindia.com\/judgments\/jabal-vs-o-l-of-on-17-october-2008\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Jabal vs O.L.Of on 17 October, 2008 - 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