CHANDRAKANT MAGANLAL SHAH Vs. OFFICIAL LIQUIDATOR APPOINTED AS LIQUIDATOR IN DELMOT ENGINEERING COMPANY PRIVATE LIMITED

JUDGEMENT

(1.) THIS order will dispose of Company Application No. 517 of 1999, the Official Liquidators Report dated 18th March, 1999 and the re-submitted report dated 7th July, 1999. This application has been filed with a prayer that the Official Liquidator be ordered and directed to hand over vacant and peaceful possession of the premiss viz. Non-agricultural land admeasuring 8343. 64 sq. mtrs. (bearing S. No. 472, Hissa 5/6) together with old factory shed admeasuring 5883 sq. mtrs. (bearing Gram Panchayat No. 379 and 379-B) situated, lying and being at Village Navghar of Bhayander. Tal. and Dist. Thane, to the applicant. The application has been filed by an 88 year old man who unfortunately leased the land and the factory shed to the company. He has spent the last 19 years trying to get possession of his property by following the due process of law. Till today he has not been put in possession. In fact, as the situation stands today, it appears that he will probably not get possession of his property during his life time.

(2.) IT is the case of the applicant that the aforesaid premises were given on lease on 27th November, 1975 to the company under liquidation for a period of ten years. The lease was terminated by a notice dated 27th February, 1981 as the company failed to pay the rent. Civil Suit No. 223 of 1981 was filed by the applicant for vacant possession and recovery of arrears of rent. This suit was disposed of on the basis of the consent order dated 20th September, 1983. The company agreed to pay the arrears of rent and also agreed to pay rent in future regularly. The suit was, therefore, withdrawn. The company, however, defaulted in payment of rent. Thus, another notice was given to the company on 3rd October, 1985. Thereafter Suit No. 163 of 1986 was filed. The lease in favour of the company expired in 1985 by efflux of time. The company was using the premises for business/industrial purposes. The Saraswat Co-operative Bank Ltd. (hereinafter referred to as "the Bank") applied to be joined as a party defendant in Suit No. 163 of 1986. This application was rejected on 6th April, 1993. The Bank had also filed an application before the Co-operative Court against the company for various reliefs including appointment of the Court Receiver. It was the case of the Bank that the company was indebted to the Bank in the amount of Rs. 60 lacs which have been advanced to the company by way of loans. It was stated that against the aforesaid loans, the company had pledged its plant, machinery and leasehold rights. By order dated 11th February, 1992, the Co-operative Court appointed one Lele as a Special Recovery Officer. By order dated 11th December, 1992, Lele was also appointed as Court Receiver. The applicant, however, was not impleaded as a party to the proceedings in the Co-operative Court. Thus, the Receiver took possession of the premises from the company on 12th December, 1992. The applicant appealed against the order dated 11th December, 1992 by way of Appeal No. 57 of 1993 to the Co-operative Appellate Court. By order dated 15th June, 1993 the Appeal Court modified the earlier order dated 11th December, 1992 and directed the company to furnish adequate security and appointed Lele as Court Receiver only of the movable property of the company. The Bank filed Writ Petition No. 1913 of 1993 against the order of dismissal of the application for being impleaded as a party defendant in Suit No. 163 of 1986. This writ petition was summarily rejected on 3rd August, 1993. It was specifically held that there was no assignment of the tenancy rights by the company to the Bank. L. P. A. No. 124 of 1993 filed by the Bank was dismissed on 30-8-93. The Bank also filed W. P. No. 2369 of 1993 against the order dated 15th June, 1993. This was dismissed by the learned Single Judge on 4th August, 1993. Against the dismissal of the writ petition, the Bank filed Letters Patent Appeal No. 125 of 1993, which was admitted on 30th August, 1993. In this appeal, the Bank had also filed an application for stay of the order dated 4th August, 1993 in Writ Petition No. 2369 of 1993 and the order dated 15th June, 1993 in Appeal No. 57 of 1993. On 29th September, 1993 the rule was made absolute by the Division Bench of this Court. Thus, it appears that the appointment of the Receiver in the initial order dated 11th December, 1992 continues by virtue of the order of the Division Bench. This order dated 11th December, 1992 clearly states that the Receiver is appointed for the land and factory premises of the company.

(3.) IT was sought to be urged on behalf of the applicant that the order of the Division Bench would now limit the powers of the Receiver only to movable assets and will not apply to immovable properties. This position was, in fact, also accepted by Mr. Naik whilst arguing the matter before the learned Single Judge in Writ Petition No. 2369 of 1993. In paragraph 9 of the judgment, the learned Single Judge has noted that "dr. Naik for the petitioner conceded that there has been an error in stating that the immovable property is also mortgaged with the Bank and he averred that apart from movable property belonging to respondent No. 2 there are no other security except promissory notes. " Thereafter the learned Single Judge has observed that "it appears that due to that annexure, the trial Court while passing the order also ordered attachment of the tenancy rights over the land and building of the factory of respondent No. 2 company. " These observations would certainly give credence to the submission of the learned Counsel for the applicant to the effect that the Receiver continues only of the movable properties. However, the Court is bound by the orders passed by the Division Bench on 29-9-93 in the Letters Patent Appeal in which it is categorically stated that rule is made absolute in terms of prayer (a) of the application. But, the effect of this order has to be seen in the context it was passed. All the aforesaid orders have been passed prior to the order of winding up of the company passed by this Court of 11th October, 1994. It is not the case of the Bank that the land and the factory had been mortgaged by the company with the Bank. The claim of the Bank was also restricted to tenancy rights of the company. By an order dated 4th December, 1992, the Co-operative Court had ordered attachment before judgment in respect of the goodwill interest and tenancy rights of the company in respect of the land and factory premises. Thus, it is apparent that the ownership rights of the applicant was not attached. Order dated 11th December, 1992 had appointed Receiver for land and factory premises of the company. If this order is read in conjunction with the order dated 4th December, 1992, it becomes clear that the Receiver has been appointed only of the tenancy rights of the company in the land and the factory. Thus when the Receiver took possession of the land and the factory, it was only to protect the tenancy rights of the company. The order did not in any manner affect the ownership rights of the applicant. It was in these circumstances that the order dated 11th December, 1992 was clarified by the Appellate Court on 15-6-1993. The Appellate Court clearly observed that the trial Judge had not considered the aspect that the immovable property does not belong to the company. The writ petition against this order was dismissed on 3rd August, 1993. Thus the order dated 29th September, 1993 passed by the Division Bench in Civil Application No. 4151 of 1993 in Letters Patent Appeal No. 125 of 1993 would clearly mean that the Receiver is appointed of the tenancy rights in the immovable property of the applicant. Now, the Bank did not grant a loan to the company till the year 1986. The lease had already expired in the year 1985 by efflux of time. Therefore, in 1986 the company did not enjoy any leasehold right which could have been assigned to the Bank. Even at this stage it is not the case of the Bank that the tenancy rights have been assigned. The Receiver has merely stepped into the shoes of the company. It cannot have any more rights than the company. The order of Receiver in terms of the tenancy rights can, therefore, have no effect on the ownership rights of the applicant. It has already been held by the Division Bench in Letters Patent Appeal No. 125 of 1993 that the Bank who claims to be the creditor of the company cannot be considered as a proper or necessary party in the eviction suit pending in the Court of Civil Judge (S. D ), Thane. This order clearly lays down that by virtue of being a creditor, the Bank cannot claim any interest in the tenancy rights of the company. Viewed in this manner, it has to be held that the order of the Division Bench in Civil Application No. 4151 of 1993 in Letters Patent Appeal No. 125 of 1993 have no effect whatsoever on the ownership rights of the applicant. On the expiry of the lease by efflux of time the company did not even hold the tenancy rights as an asset of the company. On the order of winding up being passed on 11th October, 1994, the property had to be returned to its rightful owner, subject to the provisions of section 457 of the Companies Act, 1956.