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1984 Supreme(Cal) 203
High Court Of Calcutta
M. M. Dutt, A. K. Sengupta
MANECK NOSHIRWAN KAKA - Appellant
Versus
OFFICIAL LIQUIDATOR, HIGH COURT - Respondent
Company Petition 493 Of 1979
Decided On : 06/13/1984
D.Choudhuri, Jayanta Mitra, P.C.Sen, S.C.Vkil, S.K.ACHARYA, SANKAR MITRA, T.K.BOSE
A disclaimer of leasehold interest made at the instance of a party other than the official liquidator, pursuant to a court order, is operative even if not filed in court, and the provisions of the Relief Undertakings Act do not apply to such a disclaimer if it became effective before the issuance of relevant notifications under the Act.
Headnote:
DISCLAIMER OF LEASEHOLD INTEREST - COMPANIES ACT, 1956 - SECTIONS 446, 466, 535, 536(2) - COMPANY COURT RULES, 1959 - RULE 268 - WEST BENGAL RELIEF UNDERTAKINGS (SPECIAL PROVISIONS) ACT, 1972 - SECTIONS 3, 4 - APPLICABILITY OF RULE 268 IN CASE OF COURT-DIRECTED DISCLAIMER - EFFECT OF DISCLAIMER ON WINDING-UP PROCEEDINGS - RELEVANCE OF RELIEF UNDERTAKINGS ACT IN SUCH CASES.
Fact of the Case:
The LIC terminated the lease of the company in respect of the building due to non-payment of rent. The company was wound up and the official liquidator was directed to disclaim the leasehold interest. The appellants, claiming to be authorized representatives of the company's contributories, filed an application under Sections 446 and 466 of the Companies Act, seeking a stay of the winding-up proceedings and the disclaimer order.
Finding of the Court:
1. The transfer of shares to appellant No. 1 by appellants Nos. 2 and 3 after the commencement of the winding-up proceeding was void under Section 536(2) of the Companies Act, affecting their locus standi to maintain the application. 2. The disclaimer of the leasehold interest by the official liquidator, though not filed in court, was operative as it was made at the instance of the LIC and not at the instance of the official liquidator under leave of the court. 3. The disclaimer became effective from the date the appeal court directed the official liquidator to disclaim the property, which was before the issuance of notifications under the Relief Undertakings Act, rendering the Act and notifications inapplicable.
Issues: 1. Whether the appellants had the locus standi to maintain the application under Sections 446 and 466 of the Companies Act, considering the void transfer of shares after the commencement of winding-up proceedings. 2. Whether the disclaimer of the leasehold interest was operative despite not being filed in court, given that it was made at the instance of the LIC and not the official liquidator. 3. Whether the provisions of the Relief Undertakings Act and the notifications issued thereunder had any effect on the disclaimer and the winding-up proceedings, considering the timing of the disclaimer's effectiveness.
Ratio Decidendi: 1. The court held that the transfer of shares to appellant No. 1 after the commencement of the winding-up proceeding was void under Section 536(2) of the Companies Act, affecting the appellants' locus standi to maintain the application. Although appellants Nos. 2 and 3 were contributories, the application was not maintainable at the instance of appellant No. 1 alone. 2. The court interpreted the combined effect of Section 535(2) of the Companies Act and Rule 268 of the Company Court Rules, 1959, to conclude that a disclaimer made at the instance of the LIC and not the official liquidator was operative even if not filed in court. The order of the court directing the official liquidator to disclaim the property acted as the disclaimer itself. 3. Since the disclaimer became effective before the issuance of notifications under the Relief Undertakings Act, the court held that the Act and notifications had no effect on the disclaimer or the winding-up proceedings.
Final Decision: The appeal was dismissed with costs, and the prayer for a stay of the operation of the judgment was disallowed.
( 1 ) THIS appeal has been preferred by the three appellants against the judgment and order dated December 20, 1983, of D. K. Sen J. dismissing the application of the appellants under Sections 446 and 466 of the Companies Act 1956.
( 2 ) THE building being premises No. 12, Chowringhee Road and No. 1 Chowringhee Palace, Calcutta, admittedly belongs to the Life Insurance Corporation of India, hereinafter referred to as " the LIC ". The said building was in possession of the Ritz Continental Hotels Ltd. , hereinafter referred to as " the company ", by virtue of a deed of lease, dated November 30, 1973, executed by the LIC for a period of 25 years commencing from March 15, 1971, at a rent of Rs. 65,235'85 per month. The company defaulted in payment of rent and other charges to the LIC from April 1, 1974. The LIC by its advocate's letter forwarded to the company a statement of the outstanding dues of the company to the LIC amounting to about Rs. 10,00,000 from April. 1, 1974, up to July, 1976. On July 27, 1976, the LIC terminated the lease of the company in respect of the said building being premises No. 12, Chowringhee Road and No. 1, Chowringhee Palace, Calcutta, by serving on the company a notice calling upon it to quit and vacate and deliver vacant and peaceful possession of the buiding. Thereafter, on March 12, 1977, the LIC also served on the company a statutory notice under Section 434 of the Companies Act. The LIC also filed a winding-up petition before a company court judge of this court and obtained an order for the winding-up of the company. The said order, however, was stayed by the appeal court in the appeal preferred by the company. On March 25, 1980, the company was, however, directed to be wound up on an application for winding-up of one Md. Noor Navi and the official liquidatandr was directed by the court to take possession of the books, documents and assets of the company. Against that order of winding-up, the company preferred an appeal and also obtained an interim order for stay of winding-up. The application, however, was dismissed by the appeal court on June i 1, 1980, and the ad interim order for stay was also vacated. On January 14, 1981, the LIC took out a judge's summons, inter alia, praying for an order on the official liquidator directing him to disclaim the leasehold interest of the company in respect of premises No. 12, Chowringhee Road and No. 1 Chowringhee Palace, Calcutta. The said application was dismissed by the learned company court judge. The LIC preferred an appeal against the said order of the learned judge dismissing the application.
( 3 ) THE appeal court, consisting of Sabyasachi Mukharji and S. C. Sen JJ. , set aside the order of the learned judge and allowed the appeal of the LIC and directed the official liquidator to disclaim the property as prayed for by the LIC. The LIC was given leave to continue the proceedings under the Public Premises (Eviction of Unauthorised Occupants) Act, 1971. The official liquidator prayed for the stay of the operation of the said order of the appeal court but the appeal court by its order dated February 9, 1983, disallowed the said prayer of the official liquidator. The official liquidator filed a special leave petition before the Supreme Court against the order of the appeal court. The special leave petition was, however, dismissed by the Supreme Court. Pursuant to the order of the appeal court, D. K. Sen J. , by his order dated April 29, 1983, directed the official liquidator to forthwith formally disclaim the premises in question in favour of the LIC and the latter was directed to provide a godown or a storing space for storing the movable goods in the premises till the title thereto was decided. The appeal of the company against the said order of D. K. Sen J. directing the official liquidator to disclaim the said premises was dismissed by the appeal court by its order dated June 22, 1983. On July 22, 1983, the official liquidator discl
