IMPORTANT POINTS
Section 13 of the Bombay Rent Act having overriding effect but subject to section 15 and Section 15 also having overriding effect, but in turn, is subject to contract to the contrary. Rent Act thus does not obliterate effect of provisions of Section 108(j) of Transfer of Property Act vesting a right in the lessee not only to sublet but also to assign the subject matter of the lease granted by original lessor.
Liability to pay rent by original lessee does not obligate Official Liquidator to surrender the leased land.
In absence of notice u/s 12(2) appellants not entitled to eviction on ground of non-payment of rent.
Section 15 subject to lease deed, clause 7 whereof permits assignment.
Section 13 providing for eviction on ground of unjustified non-user will not be attracted to a Company under liquidation which is still retaining its corporate existence until dissolved.

Headnote:(a) Bombay Rents, Hotel and Lodging House Rates Control Act, 1947 – Section 13 and 15 – Section 13 having overriding effect but subject to section 15 – Section 15 also having overriding effect, in turn, subject to contract to the contrary – Rent Act thus not obliterating effect of provisions of Section 108(j) of Transfer of Property Act vesting a right in the lessee not only to sublet but also to assign the subject matter of the lease granted by original lessor. (Para 11)
       (2001) 7 SCC 409 – Relied upon
       (1979) 4 SCC 214; (1994) 2 SCC 671; AIR 1930 PC 59; AIR 1939 PC 14 – Referred
       (b) Bombay Rents, Hotel and Lodging House Rates Control Act, 1947 – Section 15 r/w section 525, Companies Act, 1956 – Liability/obligation to pay rent for the leased land – Not constituting such an onerous obligation on the company in liquidation as to justify surrender of the leased land by the Official Liquidator or any direction to the said effect. (Para 12)
       (c) Bombay Rents, Hotel and Lodging House Rates Control Act, 1947 – Section 12 – Rent not paid by lessee – Appellants not serving notice required u/s 12(2) – Secured creditor ready and willing to pay rent – High Court rightly holding that in absence of notice u/s 12(2) appellants not entitled to eviction on ground of non-payment of rent. (Para 17)
       (d) Bombay Rents, Hotel and Lodging House Rates Control Act, 1947 – Section 13(1)(e) – Section 13(1) overriding only the other provisions of the Rent Act but subject to provisions of Section 15 – Section 15 though overriding provisions of any other law, subject to any contract to the contrary – Clause 7, Lease deed – Assignment may also be permissible – Section 118(o), Transfer of Properties Act, 1882 – Moreover, assignment made by original lessee and not the Official Liquidator. (Para 18)
       (e) Bombay Rents, Hotel and Lodging House Rates Control Act, 1947 – Section 13(1)(k) – Eviction on ground of unjustified non-user 6 months – Not attracted in view of pendency of liquidation proceedings – Moreover clause 5 of lease deed not contemplating eviction on ground of such non-user – Lease deed merely entitling lessor to receive rent for the period of such non-user of the land. (Para 19)
       (f) Bombay Rents, Hotel and Lodging House Rates Control Act, 1947 – Section 13(1)(k) – Company under liquidation – Still retaining its corporate existence until dissolved – Section 13 not attracted. (Para 20)
       (2001) 7 SCC 409 – Relied upon
       AIR 1930 PC 59; AIR 1939 PC 14 – Referred
       Facts of the case:
       One Durgaprasad Lashkari (predecessor of the appellants) had leased out land admeasuring 35,772 sq. mtrs. in favour of one Bechardas Spinning and Weaving Mills Ltd. (subsequently known as Prasad Mills Ltd.) for a period of 199 years by a lease deed dated 10.12.1916. A secured creditor of Prasad Mills Ltd. had in the year 1984 filed a company petition seeking the winding up of the aforesaid Prasad Mills Ltd. While the company petition was pending some of the legal heirs of Durgaprasad Lashkari had filed a suit in the Small Causes Court seeking permanent injunction against the sale of assets of company more particularly the sale of the leased property.
       An order dated 5.5.1989 was passed by the learned Company Judge of the Gujarat High Court directing the winding up of Prasad Mills Ltd. and the appointment of an official liquidator.
       An application was filed by another heir of Durgaprasad Lashkari in the winding up petition seeking direction to further prosecute the suit pending before the Small Causes Court.
       Pursuant to direction of Company Judge, Company Application was filed by some of the heirs of Durgaprasad Lashkari for return of the leased property and also for orders restraining the official liquidator from selling/transferring the leased property.
       While the above Company Application was pending the building, superstructure, plant and machinery of the company was sold in a public auction.
       On 6.2.2004 an advertisement was issued by the official liquidator for the sale of the leased property. As against this advertisement, the appellant had filed Company Application for a declaration that the official liquidator had no right to sell the leased property. Another Company Application was filed seeking permission from the Company Court to file a suit before the appropriate court for eviction of the official liquidator from the leased property.
       The Company Judge rejected all the three company applications.
       Aggrieved, the appellant and other legal heirs of Durgaprasad Lashkari filed three separate appeals before the Division Bench of the High Court. The High Court by a common order dismissed all the appeals.
       Finding of the Court:
       The order of the High Court dated 17.10.2008 in O.J. Appeal Nos. 65 of 2006, 66 of 2006 and 67 of 2006 deserves to be affirmed.
       Result: Civil appeals arising out of SLP(C) Nos. 29282-29284 of 2008 dismissed. All other civil appeals remitted back to High Court.

JUDGMENT :

Ranjan Gogoi, J.

1. Leave granted in each of the Special Leave Petitions.

2. The facts arising in the Civil Appeals arising from SLP(C) Nos. 29282-29284 of 2008, which is being taken as the lead case, may be noticed at the outset.

3. One Durgaprasad Lashkari (predecessor of the appellants) had leased out land admeasuring 35,772 sq. mtrs. in favour of one Bechardas Spinning and Weaving Mills Ltd. (subsequently known as Prasad Mills Ltd.) for a period of 199 years by a lease deed dated 10.12.1916. A secured creditor of Prasad Mills Ltd. had in the year 1984 filed a company petition seeking the winding up of the aforesaid Prasad Mills Ltd. While the company petition was pending some of the legal heirs of Durgaprasad Lashkari had filed a suit in the Small Causes Court seeking permanent injunction against the sale of assets of company more particularly the sale of the leased property.

4. An order dated 5.5.1989 was passed by the learned Company Judge of the Gujarat High Court directing the winding up of Prasad Mills Ltd. and the appointment of an official liquidator. The official liquidator was directed to take charge and possession of all the assets of the company. An application was filed by another heir of Durgaprasad Lashkari in the winding up petition seeking direction to further prosecute the suit pending before the Small Causes Court. The learned Company Judge by order dated 24.2.1995 ordered that the suit may be withdrawn and instead directions may be sought from the Company Court for return of the leased property. Pursuant thereto a Company Application (C.A. No.462 of 1999) was filed by some of the heirs of Durgaprasad Lashkari for return of the leased property and also for orders restraining the official liquidator from selling/transferring the leased property. While the return of the leased land was sought on the twin grounds that in view of the winding up order the Company no longer required the land and furthermore default in payment of rent had occurred, for the second relief sought it was urged that the official liquidator was not authorised to transfer/alienate the leased property in view of the provisions of the Bombay Rents, Hotel and Lodging House Rates Control Act, 1947, as it then existed (hereinafter referred to as ‘the Bombay Rent Act’). While the above Company Application was pending the building, superstructure, plant and machinery of the company was sold in a public auction. It appears that on 6.2.2004 an advertisement was issued by the official liquidator for the sale of the leased property. As against the aforesaid advertisement, the appellant had filed Company Application No.33 of 2004 for a declaration that the official liquidator had no right to sell the leased property. The grounds urged were principally on the basis of lack of any such empowerment in the lease agreement and in view of the bar/restriction contained in Section 15 of the Bombay Rent Act. Another Company Application i.e. C.A. No. 34 of 2004 was filed seeking permission from the Company Court to file a suit before the appropriate court for eviction of the official liquidator from the leased property. Eviction of the official liquidator was claimed, inter alia, on the ground that –

(i) the occupant Company i.e. Prasad Mills had no document in its favour entitling it to be in possession of the demised land;

(ii) admitted non payment of rent for a period of over 15 years rendering the company and now the official liquidator liable to eviction under Section 12 of the Bombay Rent Act;

(iii) admitted non user of the land for a period of over 6 years attracting Section 13(1)(k) of the Rent Act;

(iv) sub-letting in favour of the company, Prasad Mills, in violation of Section 13(1)(e) of the Rent Act.

5. The learned Company Judge by a very elaborate order dated 13.10.2004 rejected all the three company applications. Aggrieved, the appellant and other legal heirs of Durgaprasad Lashkari filed three separate appeals before the Division Bench of th

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2016 Supreme(SC) 266

Cases Referred (5)