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High Court of Judicature at Calcutta
ASHIM KUMAR BANERJEE, SHUKLA KABIR SINHA, JJ.
Wellman Wacoma Ltd.
Versus
Tivoli P A Rk Apartments (P) Ltd.
A.P.O. No. 316 of 2011 & BIFR No. 55 of 1998
Decided On : 04-09-2012
DISCLAIMER OF TENANCY - WINDING UP - COMPANY IN LIQUIDATION - SUMMARY ADJUDICATION - SECTION 535 OF COMPANIES ACT, 1956 - TENANCY HELD BY COMPANY IN LIQUIDATION - ONEROUS COVENANT - SUMMARY ADJUDICATION BY COMPANY COURT - DUE PROCESS OF LAW - RIVAL CLAIM ON PROPERTY - ADJUDICATION ON DOCUMENTARY EVIDENCE AND PLEADINGS - INTEREST OF COMPANY IN LIQUIDATION - DISCLAIMER IN FAVOUR OF APPLICANT - TENANCY CONTINUES UNTIL TERMINATION - DEFAULT IN PAYMENT OF RENT - NOTICE TO QUIT - EVICTION DECREE - BREACH OF CONTRACT - APPROACH TO COURT FOR EVICTION - RECEIPTS FOR ACCEPTANCE OF RENT - ACKNOWLEDGMENT OF TENANCY - SURRENDER OF TENANCY - CREATION OF NEW TENANCY - ORAL EVIDENCE - CREDENCE TO EVIDENCE - TENANT CANNOT QUESTION OWNER'S RIGHT - PAYMENT OF RENT BY TENANT - LIQUIDATION OF COMPANY - FALL OF CASE OF NEW TENANCY - INTERIM ARRANGEMENT AT ADMISSION OF APPEAL - BALANCE OF CONVENIENCE AND INCONVENIENCE - PERMANENT INTERIM ARRANGEMENT - COURT CANNOT CREATE TENANCY WITHOUT CONSENT OF LANDLORD - DISMISSAL OF APPEAL - STAY OF OPERATION OF JUDGMENT AND ORDER FOR TWO MONTHS - ADHERENCE TO EXISTING ARRANGEMENT DURING STAY PERIOD.
Fact of the Case:
Incandescent, a company under the Companies Act, 1956, became a tenant of Bungalow No. 5 under Tivoli Park Apartments in 1970. Due to its precarious financial condition, BIFR declared Incandescent as a "Sick industrial company" and ordered its winding up in 2002. The Official Liquidator took possession of all assets, including the bungalow. Tivoli Park, unaware of the BIFR proceedings and winding-up order, continued to receive rent from Incandescent. Upon learning about the winding-up order, Tivoli Park wrote to the Official Liquidator requesting possession of the premises, claiming that the tenancy had terminated due to the winding-up order. The Official Liquidator, initially unaware of the tenancy, visited the premises and was resisted by Suman Basu, claiming to be an executive of Wacoma, a company claiming to be the tenant. Wacoma filed an application under Section 446 of the Companies Act, 1956, seeking an order of restraint on the Official Liquidator from interfering with their possession. Tivoli Park filed an application for disclaimer of the tenancy under Section 535 of the Act. The learned Judge allowed the disclaimer application, giving rise to the present appeal.
Finding of the Court:
The Court found that Wacoma based their claim on a surrender by Incandescent and a fresh tenancy created in their favor since March 2002, before the winding-up order in September 2002. The Court observed that the receipts relied upon by Wacoma to show that Tivoli Park accepted rent from them did not contain any seal of the company and were signed by someone with an illegible initial. Tivoli Park denied issuing such receipts and disclosed receipts issued in favor of Incandescent even in August 2002, which contradicted Wacoma's claim of a fresh tenancy in March 2002. The Court held that the tenancy of Incandescent continued to exist on the date of the winding-up order.
Issues: 1. Whether the tenancy of Incandescent was surrendered and a new tenancy created in favor of Wacoma? 2. Whether Section 535 of the Companies Act, 1956, could be invoked to evict Wacoma, who claimed to be a lawful tenant? 3. Whether Tivoli Park had the necessary interest in the property and whether Incandescent was a tenant as on the date of winding up?
Ratio Decidendi: 1. The Court held that there was no evidence to suggest the termination of Incandescent's tenancy and the formation of a new tenancy in favor of Wacoma before the winding-up order. The receipts relied upon by Wacoma were not sufficient to establish a fresh tenancy, and the evidence showed that Incandescent continued to pay rent even after the alleged surrender of tenancy. 2. The Court held that Section 535 of the Companies Act, 1956, empowered the Company Judge to disclaim any onerous property. The tenancy in question was considered onerous as it would attract expenses month by month and had no worth to support beneficial winding up. 3. The Court held that Tivoli Park was the admitted owner of the bungalow, and Wacoma admitted Tivoli Park as their landlord. Tivoli Park had an interest in the property, and Incandescent was a tenant as on the date of winding up.
Final Decision: The Court dismissed the appeal filed by Wacoma. The disclaimer of tenancy in favor of Tivoli Park was upheld, and Wacoma was ordered to vacate the premises. The Court also declined Wacoma's request to continue in possession on terms and conditions to be determined by the Court, stating that it could not create a tenancy without the consent of the landlord.
Ashim Kumar Banerjee, J.
TivoliPark, the respondent No. 1 was the owner of a bungalow situated at No. 225 Acharya Jagadish Chandra Bose Road, Calcutta-700 020. Wellman Incandescent Ltd. (hereinafter referred to as ‘Incandescent’) was a company incorporated under the provisions of the Companies Act, 1956. In the year 1970 Incandescent became a tenant in respect of bungalow No. 5 measuring about fifteen hundred square feet under Tivoli Park Apartments (P) Ltd. The financial condition of Incandescent became precarious resulting in a BIFR proceeding where it was declared as a “Sick industrial company”. By an order dated July 25, 2002 BIFR recommended winding up of Incandescent and this Court ultimately passed an order of winding up vide order dated September 24, 2002. Since then the Official Liquidator would be in deemed possession of all the assets of the company in liquidation including the bungalow in question.
According to Tivoli Park, they did not have any information about the BIFR proceeding or the subsequent order of winding up. They were getting rent month by month. They came to know of the order of winding up from an advertisement published by the Official Liquidator in Media inviting offer for sale of the assets of the company in liquidation. They wrote letter to the Official Liquidator on August 22, 2005, asking the Official Liquidator to deliver vacant possession of the premises in question as according to them tenancy stood terminated in view of the order of winding up. The Official Liquidator subsequently contended, he did not take possession of the bungalow.
In fact, Official Liquidator did not know of such tenancy as we find from the record. On April 28, 2006 Tivoli Park made an application inter alia praying for disclaimer of the said tenancy under Section 535 of the said Act of 1956. Official Liquidator subsequently decided to take possession of the said bungalow in question and visited the premises on May 5, 2006 when he was resisted by one Suman Basu, claiming to be an Executive of Wellman Wacoma Ltd. (hereinafter referred to as ‘Wacoma’), a company claiming to be a tenant of the self-same bungalow. Suman however could not produce any agreement for tenancy or any rent receipt. He supported his act by production of telephone bill, electric bill and Municipal Trade Licence. Wacoma approached the learned Company Judge on May 10, 2006 inter alia praying for an order of restraint on the Official Liquidator from interfering with their possession. Wacoma subsequently filed a suit in the Alipore Court inter alia praying for a declaration that Tivoli Park had no right to obstruct ingress and egress of Wacoma to and from the said premises coupled with prayer for permanent injunction and other reliefs. The learned Judge dismissed both the applications. On an appeal by Tivoli Park, the Division Bench set aside the judgment and order dated September 19, 2007 passed on the disclaimer application and directed the said application to be tried on evidence. The Alipore Court suit was also transferred to this Court. Wacoma subsequently withdrew the said suit and did not proceed further in respect of their prayer made in their application under Section 446. Hence, the only application being the application for disclaimer was heard by the learned Judge by trial on evidence.
One Kalyan Banerjee adduced evidence on behalf of Wacoma. The matter reached up the Apex Court level on the question of framing of additional issues when the Apex Court directed expeditious disposal of the disclaimer application. His Lordship allowed the application for disclaimer that gave rise to the present appeal.
From the evidence and the judgment and order of the learned Single Judge it would appear that Wacoma based their claim on a surrender by Incandescent and a fresh tenancy being created in their favour since March 2002. Pertinent to note, the order of winding up was passed in September 2002. In March 2002 admittedly the BIFR proceeding wa
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