Tenancy rights are not assets of a company in liquidation, and the official liquidator must substantiate the need for premises to retain possession under Section 446 of the Companies Act.

JUDGMENT :

1. The applicants being landlords of subject premises are seeking direction from this Court to the official liquidator to handover vacant and peaceful possession of the said premises, which were taken on monthly tenancy basis by the company in liquidation. Since there are two premises, the applicants have referred to two tenancy agreements. It is the case of the applicants that the company in liquidation does not require the premises and that the same have been lying unused, which mandates a direction to the official liquidator to handover possession of the premises to the applicants.

2. Before adverting to the rival submissions in the present application, the facts in brief leading up to filing of the present application are required to be appreciated.

3. In the year 2015, Company Petition No. 369 of 2015 was filed by M/s. Alliance Logistics against Surendra Engineering Corporation Ltd. (the company in liquidation). By order dated 5^th May 2016, the company petition was admitted and it was directed to be advertised. On 16^th February 2018, this Court ordered winding up of the company and appointed official liquidator of this court as the liquidator of the company with direction to immediately take charge of all the assets, books and accounts etc. of the company in liquidation. On 20^th March 2019, the present application was filed by the applicants being owners/landlords of the premises in question i.e. Flat Nos. 4 and 5 in Jaitirath Mansion, Barrack Road, Mumbai. During the pendency of the instant Company Application No.332 of 2019, an interlocutory application was filed by the applicants for permission to carry out repairs of the said two premises. On 21^st September 2022, this Court permitted the official liquidator and officers of the Maharashtra Housing and Area Development Authority (MHADA) to inspect the premises and to carry out the repairs. Since the official liquidator had taken only symbolic possession of the premises, on 28^th April 2023, this Court was constrained to direct the official liquidator to take physical possession of the said premises along with Flat nos.1 and 2, that were also taken on rent by the company in liquidation from the applicants. On 19^th May 2023, the official liquidator took physical possession of all the four flats, including the two flats i.e. the premises which are subject matter of the present application. Thereupon, the official liquidator filed reply affidavit in the instant Company Application No. 332 of 2019.

4. Mr. Simil Purohit, learned Senior Counsel appearing for the applicants, submitted that the company in liquidation was a monthly tenant in the two premises and since tenancy rights cannot be said to be assets of the company in liquidation, the official liquidator cannot retain possession of the premises. Reliance was placed on judgment of Division Bench of this Court in the case of Modella Woollens Ltd. v/s. Official Liquidator & Ors., 2006 (1) Bom. C.R. 276. It was further submitted that this Court has wide powers under Section 446 of the Companies Act, 1956 , to determine the question as to whether the premises are required for beneficial winding up of the company. He submitted that in the case of Patel Engineering Co. Ltd. v/s. Official Liquidator, 2004 SCC OnLine Bom 171, this Court relied upon the judgment of the Supreme Court in the case of Ravindra Ishwardas Sethna v/s. Official Liquidator, High Court, Bombay, (1983) 4 SCC 269, for directing the official liquidator to handover premises to the landlord even in a situation where the landlord had instituted eviction suit against the company in liquidation. It was held that the landlord had invoked the special remedy under Section 446 of the Companies Act and there was no impediment for this Court to grant such a prayer of the landlord.

5. The learned counsel for the applicants placed specific reliance on judgment of this Court in the case of Metal Tubes and Rolling Mills v/s. Official Liquidator, 2018 SCC OnLine Bom 219