NARENDRA BAHADUR TANDON Vs. SHANKAR LAL

JUDGEMENT

(1.) Hulas Chand and Bilas Chand, original owners of a certain plot of land in Saharanpur, granted a permanent lease of the land to Patal Mills Ltd., in May, 1930. The annual rent was Rs. 75. The lessee was empowered to use the land for any purpose whatsoever. The rights of the lessee were expressly made transferable, Though the lease was permanent, there was a condition that the lessor could forfeit the lease if the lessee failed to pay rent for three consecutive years. On November 1, 1932, Hulas Chand and Bilas Chand transferred their interest to Budh Singh and Jialal:Jugal Kishore, became entitled to the rights of Budh Singh and Jialal by purchase under sale deeds dated April 27, 1943 and May 11, 1943, But Shankerlal and Piareylal (present plaintiffs) filed a suit for pre-emption against the vendors and Jugal Kishore and as a result of the decree passed in the suit, they became entitled to the lessor's interest in the suit plot of land on August, 13, 1945.

(2.) Meanwhile the lessee Patel Mills Ltd. went into liquidation and Mehra was appointed voluntary liquidator of the Company on May 11, 1937 by a special resolution at a meeting of the creditors of the Company. Banaras Bank Ltd., was the biggest creditor of the Company. So the liquidator negotiated the sale of all the assets of the Company to the Banaras Bank Ltd., for a sum of Rupees 70,000 and on February 23, 1939 executed an agreement of sale after receiving the consideration. The lease-hold interest in the suit plot was also included as one of the assets in the agreement of sale. At a meeting held on May 4, 1939 the creditors accepted the final report of the voluntary liquidator. The report was sent to the Registrar of joint Stock Companies, and registered on September 9, 1939. The Company thus stood dissolved with effect from December 9, 1939. Subsequently on March 1, 1940 the Banaras Bank Ltd. itself went into liquidation. The official liquidator of the Banaras Bank Ltd. found that there was no duly executed deed of transfer executed by the voluntary liquidator of the company in favour of the Banaras Bank Ltd. in respect of the lease-hold interest in the suit plot of land. At the instance of the official liquidator of the bank, Shri Mehara the erstwhile voluntary liquidator of the Company executed a deed of sale on January 28, 1941 and had it duly registered. On March 9, 1943 the official liquidator transferred the lease-hold interest in the suit plot of land in the defendant-appellant.

(3.) We have mentioned that patel Mills Ltd., stood dissolved with effect from December 9, 1939. Budh Singh and Jialal had earlier, i.e. on April 12, 1939 accepted rent from the voluntary liquidator of the Company. After the dissolution of the Company and the transfer of the lease-hold interest by the voluntary liquidator to the Banaras Bank Ltd. Budh Singh and Jialal sent a notice dated January 11, 1941 to the liquidator of the Banaras Bank Ltd. through their lawyer demanding payment of arrears of rent for four years and asserting that the lease was forfeited consequent on the lessee's failure to pay rent for a continuous period of three years. The liquidator denied the claim or right of the lessor to forfeit the lease but admitted the claim for rent. Rent was accordingly paid and was accepted by Budh Singh and Jialal. Later, on March 21, 1946, Jugal Kishore who had purchased the rights of Budh Singh and Jialal also accepted rent from the official liquidator of the Banaras Bank Ltd.