The tenancy rights of a statutory tenant, whose contractual tenancy has been terminated but whose possession is protected by the Bombay Rent Act, are not property that vests in the Official Assignee under the Presidency Towns Insolvency Act.

Headnote:
INSOLVENCY - TENANCY RIGHTS - TRANSFER - VALIDITY - OFFICIAL ASSIGNEE'S RIGHTS - BOMBAY RENT ACT, 1947 - SECTIONS 12(1), 13, 14, 15 - PRESIDENCY TOWNS INSOLVENCY ACT, 1909 - SECTION 17.
Fact of the Case:

The appellant company, a sole proprietorship, claimed tenancy rights to a room in a building in Bombay. The company's owner, Vadilal Shah, and his son were adjudicated insolvents, and an appeal against the order of adjudication was filed. During the pendency of the appeal, Vadilal died. The Official Assignee sought an order for the sale of the insolvents' business as a going concern, including the tenancy rights to the room. An attachment was also levied on the room by the Sheriff of Bombay pursuant to a court order in a suit filed by attaching creditors.
Finding of the Court:

The court found that the appellant company's claim to tenancy rights was based on a bogus and sham declaration by Vadilal Shah, and that there was no genuine transfer of tenancy in favor of the company. The court also held that the tenancy rights of a statutory tenant, whose contractual tenancy has been terminated but whose possession is protected by the Bombay Rent Act, are not property that vests in the Official Assignee under the Presidency Towns Insolvency Act.
Issues: 1. Whether the appellant company had valid tenancy rights to the room in question. 2. Whether the tenancy rights of a statutory tenant vest in the Official Assignee upon adjudication of insolvency.
Ratio Decidendi: 1. The court held that the appellant company's claim to tenancy rights was based on a bogus and sham declaration by Vadilal Shah, and that there was no genuine transfer of tenancy in favor of the company. The court found that the story of the alleged transfer was inconsistent with the conduct of the partners in bringing about a new partnership deed to continue the business of the old partnership in the same premises. 2. The court held that the tenancy rights of a statutory tenant, whose contractual tenancy has been terminated but whose possession is protected by the Bombay Rent Act, are not property that vests in the Official Assignee under the Presidency Towns Insolvency Act. The court relied on the decision in Anand Nivas (P) Ltd. v. Anandji, which held that a statutory tenant has no estate or interest in the premises occupied by him and that his right to remain in possession is personal and not transferable.
Final Decision: The court dismissed the appeal, holding that the appellant company had no valid tenancy rights and that the tenancy rights of a statutory tenant do not vest in the Official Assignee upon adjudication of insolvency.

JUDGMENT - Chandurkar J.-The appellant company is a sole proprietary concern of one Ashok Vadilal Shah who claims to be a tenant of room No. 23B, Lalsing Mansing Building at Lohar Chawl, Bombay (hereinafter referred to as the “suit premises”). Vadilal Shah and his another son Ajitlal Shah were adjudicated insolvents by an order dated 21st January 1975. An appeal was filed against the order of adjudication by both the insolvents. During the pendency of the appeal, Vadilal Shah died on 8th July 1975. On 9th March 1978 Ajitlal Vadilal Shah withdrew the appeal and the appeal was dismissed for want of prosecution. The present proceedings arose out of the report mad; by the Official Assignee for directions seeking an order for sale of the insolvents' business known as Messrs Vadilal R. Shah as a going concern with furniture, fixtures, etc. together .with goodwill and tenancy rights of the business premises, which are the said premises, as well as another room No. 24 with which we are not concerned in this appeal. An attachment was also levied by the Sheriff of Bombay in respect of the suit premises pursuant to the order of the Bombay City Civil Court in Suit No. 9512 of 1973 which was filed by the two attaching creditors Mr. Dhotiwala and Mrs. Dhotiwala. The Official Assignee had also sought an order directing the withdrawal of the said attachment. The claim of Ashok Vadilal Shah was that the tenancy of the suit premises was transferred in his favour by the landlord with the consent of Vadilal on 31st March 1973 and the Official Assignee had sought an order for setting aside the alleged transfer.

2. The proceedings before the learned single Judge were contested only by Ashok Vadilal, though the report of the Official Assignee was served on the owner as well as on the petitioning creditors and Ajit Vadilal Shah. It is not in dispute that by a notice dated 16th December 1970 the tenancy in respect of the suit premises was terminated with effect from the end of the tenancy month of January 1971. It was, however, a matter of dispute as to whether the tenancy was individually held by Vadilal personally or by the partnership firm of Messrs Vadilal R. Shah. The landlord had also filed a suit for ejectment, being suit No. 1014/5750 of 1971 in the Court of Small Causes at Bombay. According to the appellant, during the pendency of this suit, deceased Vadilal had given his consent to the landlord to make the appellant company his tenant and the landlord had conferred a direct tenancy upon the appellant company with effect from 1st April 1975. It may be pointed out at this stage that while before the Official Assignee the surviving partner of Messrs Vadilal R, Shah, namely, the insolvent Ajitlal Vadilal Shah had made a statement that on 31st March 1973, a partnership business of Messrs Vadilal R. Shah had transferred the partnership business in favour of the appellant company along with the tenancy rights, goodwill, fixtures, furnitures, etc. for a consideration of Rs. 5,000. In the proceedings before the learned single Judge, a writing alleged to have been given by deceased Vadilal in the ejectment suit was produced, by which Vadilal purported to give his consent to the landlord to transfer the tenancy in favour of the appellant company, who, it is alleged, was already in occupation of the suit premises on leave and licence basis since 1972. On the basis of this document, the main point which was argued before the learned single Judge was that Vadilal Shah was a statutory tenant on the date of the passing of the order of adjudication and hence, no tenancy rights could pass to the Official Assignee and reliance was placed on a decision of this Court in In re Peregrino Rodrigues1. In this decision, it was laid down that the statutory tenancy to which an insolvent becomes entitled under the Bombay Rent Restriction Act, 1939, is not his property within the meaning of section 62 of the Presidency Towns Insolvency Act, 1909, and does not vest in the

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