High Court Of Calcutta
Dipak Kumar Sen
LAKSHMI TRACTORS CO - Appellant
Versus
OFFICIAL LIQUIDATOR - Respondent
Company Petition 270 Of 1967
Decided On : 08/25/1983
COMPANIES ACT - SECTION 446 - LEAVE TO PROCEED WITH SUIT AGAINST COMPANY IN LIQUIDATION - FACTORS TO BE CONSIDERED - INTEREST OF CREDITORS, PRESERVATION OF ASSETS AND RIGHTS OF THIRD PARTIES - SUIT PRIMARILY AGAINST LANDLORDS WITH OFFICIAL LIQUIDATOR AS PRO FORMA PARTY - LEAVE REFUSED.
Fact of the Case:
Lakshmi Tractor Company, one of the occupiers of a property in the custody of the court, filed an application seeking leave to proceed with a suit against the official liquidator and the owners of the property. The suit sought a prohibitory injunction restraining the defendants from interfering with the applicant's possession of the property and from evicting the applicant. The applicant claimed that it had been paying rent to the official liquidator and that the matter fell within the purview of the U.P. Urban Buildings (Regulation of Letting, Rent and Eviction) Act, 1972.
Finding of the Court:
The court found that the applicant had full knowledge of the liquidation proceedings and had appeared in the liquidation proceeding. The court also found that the suit was primarily against the landlords and that the official liquidator was only a pro forma party. The court further found that the suit sought to nullify an order passed by the court directing the official liquidator to obtain vacant possession of the property.
Issues: 1. Whether leave should be granted to the applicant to proceed with the suit against the official liquidator and the owners of the property. 2. Whether the suit was vexatious and would expose the company in liquidation to unnecessary litigation and costs.
Ratio Decidendi: The court held that in allowing a person to commence or proceed with a suit or other legal proceedings against a company in liquidation, the court has to take into account the entire facts and circumstances. The relevant factors are the interest of creditors, preservation of the assets of the company against frivolous litigation and the rights or liabilities of third parties. The court found that the suit was prima facie improper and vexatious and if allowed to continue, would expose the company in liquidation to unnecessary litigation and costs leading to the depletion of its assets.
Final Decision: The court dismissed the application for leave to proceed with the suit. The applicant was ordered to pay the costs of the official liquidator.
( 1 ) UNITED Provinces Commercial Corporation P. Ltd. Was directed to be wound up by an order passed by this court in Company Petition No. 270 of 1967. In the course of liquidation of the said company, the official liquidator made an application under Section 446 (2) of the Companies Act, 1956, for realisation of occupation charges from Lakshmi Tractor Company, Hind Batteries Service Co. , Khesh Kumar, Sheel Spin Enterprises and Rita Ice Cream and Refrigerating Company who claimed to be in possession and occupation of premises No. 10, Ashoke Marg, Lucknow.
( 2 ) BY a judgment and order dated September 6, 1969, passed in the said application, the said five occupiers were directed to pay compensation to the official liquidator for use and occupation of the said premises, amounts of which payable per month were fixed till vacant possession was delivered. The said occupiers were further directed to deliver up vacant possession of the portions of the said premises in their respective occupation, to the official liquidator by October 31, 1979.
( 3 ) IT was, inter alia, found in the said judgment that the official liquidator had issued receipts to the said persons purportedly for rent but subsequently, realising his mistake, had issued receipts for occupation charges. It was further held that the official liquidator without leave of court was not entitled and had no jurisdiction to induct tenants or sub-tenants in property in the custody of court and that the acts of the official liquidator in collecting money from the said occupiers purportedly on account of rent was illegal and unauthorised. The said occupiers, it was held, had no legal title whatsoever to the said premises and were in illegal and unauthorised occupation thereof as trespassers. It was also decided that the U. P. Urban Buildings (Regulation of Letting, Rent and Eviction) Act, 1972 (hereinafter referred to as "the said Act"), did not apply in the facts of the case. An appeal filed from the said judgment and order was dismissed on June 10, 1982. It has been stated from the Bar that (a) further appeal has since been preferred to the Supreme Court, but no particulars of the same could be furnished.
( 4 ) IN the present application by Lakshmi Tractors Co. , one of the said occupiers, on a summons dated July 14, 1983, it is prayed that leave be given to the applicant to proceed with a suit in the court of the Civil Judge, Lucknow, against the official liquidator.
( 5 ) IN the affidavit of Bhim Sain Mehta affirmed on July 13, 1983, in support of the said summons it is, inter alia, alleged that on May 30, 1983, the applicant has instituted the said suit against Srikrishna Gaur, Harikrishna Gaur, Sekhar Gaur, Amar Gaur (the owners of the premises) and the company represented by the official liquidator claiming, inter, alia, a prohibitory injunction against the defendants restraining them from interfering with the peaceful possession by the applicant in the said premises and from evicting the applicant therefrom.
( 6 ) IT is, inter alia, alleged that a part of the said premises was let out to the applicant some time in 1971 on a monthly rent of Rs. 400 and the official liquidator had issued receipts in respect of the said rent to the applicant. It is contended that in the facts, the matter comes within the purview of the said Act.
( 7 ) IT is alleged that the applicant has obtained an ad interim order against the defendants in an appeal preferred against an order passed in the said suit. It is contended that the applicant is protected by Section 20 of the said Act and Section 446 of the Companies Act, 1956, does not bar the institution of the said suit as the applicant had claimed relief in the said suit against the main landlords, viz. , the Gaurs. Inasmuch as the official liquidator has been made a party to the said suit and as it may be contended that leave of this court is necessary under Section 446 of the Companies Act, 1956, such leave has be
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