MARATHA MANDIR LTD Vs. OFFICIAL LIQUIDATOR GOLCHA

JUDGEMENT

(1.) THIS is a special appeal against an order of the learned Company Judge refusing to grant leave under Section 446 of the Companies Act to continue a pending suit.

(2.) THE appellants M/s. Maratha Mandir Ltd. a company registered under the Indian Companies Act. having their office at Bombay, are the owners of a property situated at Bombay part of which was given on lease to M/s. Golcha Properties (P) Ltd. under an agreement dated 31 -10 -55. Thereafter disputes arose between the parties and in 1958 Messrs. Golcha Properties (P) Ltd. filed a suit in the High Court of Bombay in which a consent decree was passed on 25th February 1959. The terms of the compromise are contained in consent decree Ex. B. Under this consent decree the appellants agreed to grant a lease of the premises specified therein for a term of 20 years commencing from 16th October 1958 on a monthly rent of Rs. 5,500/ - payable in advance on or before the 10th day of each month. All the terms of the lease are contained in the consent decree. We reproduce Clause 26 of the consent decree as there is a dispute between the parties about the interpretation of this clause: The lease shall contain the usual provision for forfeiture and reentry. In the event of difference of opinion between the parties as regards the clause it will also be determined by arbitration hereinafter provided M/s. Golcha Properties (P) Ltd. (hereinafter referred to as 'the Company',) made defaults in payment of rent and municipal taxes which were payable by it. Ultimately on 11 -4 -66 the appellants instituted a suit against the Company for recovery of arrears of rent and for eviction under the provisions of the Bombay Rents, Hotel and Lodging House Rates Control Act, 1947 (hereinafter referred to as the Bombay Rent Control Act') in the court of the Small Cause Court, at Bombay which has exclusive jurisdiction to try such suits. They claimed a sum of Rs. 55,000/ - as arrears of rent from 16 -2 -1965 to 15 -12 1965 & a sum of Rs. 55,252,94 as arrears of taxes. The company filed a written statement on 17 -8 66, which is Ex. 2. Para 3 of the written statement runs as follows: With further reference to paragraphs 1 to 9 of the plaint, the defendants say that the plaintiffs have failed and neglected to carry out their obligations under the said High Court decree and inspite of repeated demands have failed and neglected to execute the 20 years lease in favour of the defendants. The defendants submit that in view of the defaults and until the plaintiffs obey the said High Court decree and execute the said 20 years lease the plaintiffs are not entitled to maintain this suit or to seek to enforce against the defendants any right in respect of the said premises. On the other hand, the defendants have at all times material to this suit (being already in possession) have continued in possession of the said premises in part performance of the said consent terms and the said High Court decree and have also done acts in furtherance thereof and have performed and/or are willing to perform the defendants' part of the obligations thereunder. On this ground also the defendants submit that the plaintiffs are not entitled to maintain this suit. In para 5 it was stated -.The defendants say that they have spent about Rs. 20,00,000/. in the construction of the building and structures constituting the said premises and notwithstanding the defendants' strict legal rights in the matter, the defendants have paid the rent at the rate of Rs. 5,500/ - per month and have also paid the amounts of Municipal taxes on the basis of the apportionment made by the plaintiffs. In para 7 it was stated -.The defendants say that the true facts are that the monthly rent of Rs. 5, 600/ - is highly excessive and exorbitant and the municipal taxes in respect of the said premises may also thereby get inflated. The defendants having spent about rupees 20,00,000/ - as aforesaid for the construction of the premises and having regard to the provisions of Bombay Rent Act as also to all the circumstances of the case the monthly standard rent of the said premises and the municipal taxes should be much less than Rs. 5,500/ - and the amounts of the municipal taxes claimed. The defendants have bonafide disputed the rent and the amount of the municipal taxes and by reason of this dispute the full payments in the said excessive and exorbitant amounts have not been made, but the defendants submit that on the taking of accounts of the amounts paid by them to the plaintiffs over and above the standard rent and the proper municipal taxes, a large sum will be found due and repayable by the plaintiffs to the defendants. In para 12 it was stated - -.The defendants say that it is the plaintiffs who have committed breach in failing to execute the said 20 years lease and that the defendants are entitled to execute the said decree and have the said 20 years lease granted by the plaintiffs to the defendants. The defendants intend to take execution proceedings against the plaintiffs in the High Court under the said decree. Moreover the defendants have carried out and/ or have been and are willing to carry out all their obligations under the said consent terms and said High Court decree. The defendants thus submit in the alternative and without prejudice that they are entitled to be treated as lessees of the said premises under the 20 years lease from 16th October 1958 and are entitled not only to the benefit and enjoyment of the said premises but are also entitled to the enforcement of all the terms which were to be incorporated in the said lease as if the same had been duly executed. The defendants further submit on this alternative basis also that they are entitled to relief against forfeiture, if any, as the tenants of the plaintiffs in respect of the said premises under a 20 years lease in accordance with the said High Court decree. A winding up application against the Company was filed in the court of the learned Company Judge on 4 -7 -66. A provisional liquidator was appointed on 5 -12 -67 and a winding up order was made on 10 -5 68. After the winding up order the Official Liquidator took possession over all the properties of the Company. The appellants filed the present application under Section 446 of Companies Act 1956 on 12 -7 -69. This application was opposed by the Official Liquidator and was rejected by the learned Company Judge on 19 -11 -69.

(3.) AS for relief (2) the learned Company Judge was of the opinion that on the basis of admitted facts as disclosed by the plaint and the documents accompanying it Section 53A of the Transfer of Property Act was attracted and the suit of the appellants was bound to fail.