BHAVNAGAR MUNICIPAL CORPORATION Vs. OFFICIAL LIQUIDATOR

JUDGEMENT

(1.) This appeal has been preferred under Section 483 of the Indian Companies Act, 1956 by the Bhavnagar Municipal Corporation (shortly hereianfter referred to as the Corporation) against the order dated 16.2.2000 passed by the Learned Company Judge whereby he rejected the objection raised by the Corporation to the sale of the land by Public Auction of New Jehangir Vakil Mills (unit of Gujarat State Textile Corporation) through the Official Liquidator in the course of winding up proceedings of the company. Before this appeal came to be filed by the Corporation a Public Interest Litigation being Special Civil Application No. 829/2000 was filed and came up for hearing before the Court objecting to the sale/auction of the land of the company alleging that the authorities of the Municipal Corporation are acting in connivance with the auction purchasers in depriving the corporation of a valuable land. After the Public Interest Litigation (Special Civil Application No. 829 of 2000) came to be filed, the Corporation came up before this Court with this appeal under the provisions of the Companies Act. Since the common questions of facts and law arise, the present appeal and Special Civil Application No. 829/2000 preferred by the Ex-Corporation are being decided together by this order.

(2.) Learned Senior Counsel Shri J.R.Nanavati engaged for the Corporation and Shri Yogesh Ravani, appearing in the Public Interest Litigation brought by the Ex-Corporator have raised several objections to the sale by Public Auction of the land by the company. It is submitted that the lands and premises of the mill undoubtedly were granted by Ex-Ruler of erstwhile Bhavnagar State in the year 1918 by a lease deed but on formation of erstwhile State of Saurashra succeeded by the present State of Gujarat, the rights of the erstwhile State and the present State came to be conferred upon the Municipal Corporation, Bhavnagar. This was a result of statutory covenants entered into between the erstwhile ruler and independent India and operation of the statutory provisions contained in Bombay Provincial Municipal Corporation Act, 1949 which is applicable to local bodies in the State of Gujarat. It is contended that the lease hold rights obtained by the company were neither assailable nor transferable without consent of the ruler and after him of the Corporation.

(3.) The other contentions advanced are that the period of lease granted to the company having expired its occupation on the land was unauthorised and it ws liable to be evicted under the Gujarat Public Premises (Eviction of uanuthorised occupants) Act, 1970. It is argued that without notice and proper opportunity of hearing to the Corporation, the Company Judge wrongly permitted the Official Liquidator to proceed with the auction proceedings for disposal of the land by observing that the said auction can be allowed as "as is where is and whatever basis". It is contended that since the land was held by the company in lease hold rights, notice to the lessor was mandatory. Reliance is placed on the judgement in the case of Smt.Jatan Golcha Vs. M/s. Golcha Properties P.Ltd. reported in AIR 1971 SC 374. The argument repeatedly advanced on behalf of the Corporation is that as the objection of the Corporation before the Company Judge was that the Company had no saleble right in the land, the Learned Judge could not have allowed the sale of land by public auction on "as is - where is and whatever basis". It is contended that he ought to have first determined the rights of the company as a lessee of the land to find out whether its rights in the land were transferrable or not. Reliance is placed on the judgement in the case of Smt. Nirmala & Bafna/Kershi Shivax Cambatta & Ors. Vs. Khandesh Spinning & Weaving Mills Co.Ltd. reported in AIR 1993 SC 1380, and in the case of Shree Chamundi Mopes Ltd. Vs. Church or South India Trust Assn & Ors reported in 1992 Vol 3. SCC Page 1 & in the case of Ravindra Ishwardas Shethna & Anr Vs. Official Liquidator, High Court Bombay & Anr reported in AIR 1983 SC 1061.