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GLR 2009 (1) 158
Hon 'ble Mr. Justice Mohit S. Shah and the Hon 'ble Mr. Justice K. A. Puj
JABAL C. LASHKARI - Appellant
Vs
OFFICIAL LIQUIDATOR OF PRASAD MILLS LTD. & ORS. - Respondent
O. J. Appeal No. 66 of 2006 in Company Application No. 34 of 2004 in Company Petition No. 21 of 1994 with O. J. Appeal No. 65 of 2006 in Company Application No. 33 of 2004 with O. J. Appeal No. 67 of 2006 in Company Application No. 462 of 1999 against the judgment and order dated 13-10-2004 in Company Application Nos. 4620f 1999 and 33 and 34 of 2004. Decided on 17-10-2008.
Companies Act — Sections 457, 535 and 529-A — Transfer of Property Act, 1882(Central Act 4 of 1882) — Section 108(o) — Bombay Rents, Hotel and Lodging House Rates Control Act, 1947 — Sections 13, 13(1)(a), 13(i)(k) and 15 — Land — On long term lease to company — Company under winding up order — Claim for return of land — Scope of — Finding as to — Appellants, claim to be heirs of the owner of the disputed land who had leased out the said land on long term basis for a period of 199 years as per Lease-deed executed on 10.12.1916 in favour of B.S. & W. Mills Ltd., which later came to be known as Prasad Mills Ltd. — As Prasad Mills Ltd. was ordered to be wound up appellants has filed applications for direction to Official Liquidator to return the land to them — Company Judge pointed out that in view of settled position of law merely because company has gone into liquidation the right of the company does not undergo any change and they continue to be governed by subsisting contract — Court found that it is sustainable finding of the Company Judge — These is no distinction between long term tenancy and short term tenancy and rights of lessees under long term tenancy are not curtailed by the provisions of Rent Act before the expiry of the term — Court therefore, held, that it is only on expiry of the period of fixed term lease that the lessors can pray for eviction of the Company in liquidation on the grounds which may be available under the Rent Act in operation at the relevant time — The period of fixed term lease of 199 years is ensured and will remain protected — In the facts of the instant case, the term of the lease is 199 years from 10.12.1916 hence the lease is still subsisting till 09.12.2115 therefore, all the grounds made on behalf of appellants are not sustainable and liable to be rejected.
Held :
The Lease-deed(Annexure-A) executed and registered on 10.12.1916 is for a period of 199 years(Clause 2). Therefore, there is a subsisting contract and the parties would be governed by the terms of the contract. The contractual tenancy, therefore, would subsist as governed by the provisions of the Transfer of Property Act and there cannot be any eviction from such tenancy. It is also settled position in law that merely because a company goes into liquidation and the Official Liquidator takes charge of the properties of the Company on his appointment, the rights of the Company(in liquidation) vis-a-vis the landlord do not undergo any change and they continue to be governed by the subsisting contract. [Para 7.1]
Though the contentions on behalf of the appellants, were more or less those canvassed before the learned Company Judge and though the Advocate for the appellants cited more than 50(fifty) decisions for the purpose of buttressing his legal submissions, in spite of the repeated queries from the Court as to whether, in the matter of applicability of Rent Act, there was any distinction between a fixed term or long term lease and a short term lease, the Advocate for the appellants went on asserting that there was no such decision. [Para 13]
A perusal of Sub-section(1) of Section 13 of the Bombay Rent Act makes it clear that the non-obstante clause with which Sub-section(1) of Section 13(providing for various grounds of eviction) commences gives Sub-section(1) overriding effect only over other provisions of the Bombay Rent Act(but makes it subject to the provisions of Section 15 of the Bombay Rent Act) and the non-obstante clause does not give any overriding effect over “any other law or contract” [Para 27]
Court held that—
(i) It is only on expiry of the period of fixed term lease that the lessors can pray for eviction of the Company in liquidation or its successor in interest on the grounds which may be available under the Rent Act which may be in operation at the relevant time,
(ii) Any ground contained in the agreement of lease other than or in addition to the grounds enumerated in Sub-section(1) of Section 13 of the Bombay Rent Act shall remain inoperative during subsistence of the lease and even after expiry of the lease term.
(iii) The proceedings for eviction of a tenant under the fixed term contractual lease can be initiated during subsistence or currency of the lease only on a ground as may be enumerated in Sub-section(1) of Section 13 of the Bombay Rent Act provided it is also enumerated as one of the grounds for forfeiture of the lease rights in the Lease-deed, but not otherwise.
(iv) The period of fixed term lease of 199 years is ensured and remains protected except in the cases indicated in(iii) hereinabove, and during this period, the rights of the lessee under the Lease-deed and the Transfer of Property Act are not curtailed by the provisions of the Bombay Rent Act. [Para 28]
Law Laid Down :
The proceedings for eviction of a tenant under the fixed term contractual lease can be initiated during subsistence of lease on a ground enumerated in Rent Act provided it is so mentioned as ground of forfeiture of tenancy.
Mohit S. Shah, J.—These appeals are directed against the judgment and order dated 13.10.2004 passed by the learned Company Judge as common order in Company Application Nos. 462 of 1999 and 33 and 34 of 2004.
2. The appellants claim to be the heirs of the owner of the land in question admeasuring 35,772 sq. mtrs. in Ahmedabad, who had leased out the land on long term basis for the period of 199 years as per the Lease-deed executed on 10.12.1916 in favour of Bechardas Spinning and Weaving Mills Ltd. which subsequently came to be known as Prasad Mills Ltd. After the Prasad Mills Ltd. was ordered to be wound up by judgment dated 05.05.1989 in Company Application No. 21 of 1984, the appellants filed the above-numbered company applications in 1999 and thereafter for a direction to the Official Liquidator to return the land in question to the appellants mainly on the ground that the lease stood determined on winding up order being made by the Company Court. It was also contended that the rights and liabilities of the parties to a Lease-deed subsist even when the Company is in liquidation and hence provisions of the Bombay Rent Act, 1947 would apply so as to enable the applicants to get back possession of the land in question under the provisions of the Rent Act.
3. The learned Company Judge hearing the above-numbered company applications had an occasion to consider similar questions in Company Application No. 47 of 1993 and connected matters. After considering the relevant provisions of the Companies Act including Sections 457, 535, 529-A and also the provisions of Transfer of Property Act, 1882 and the provisions of the Bombay Rent Act, in his judgment dated 30.07.2002,(Legal heirs of deceased Fakirchand Ambaram Patel vs. O.L. of Ambica Mills Ltd. & Ors., 2003(116) Comp Cases 588 = 2002(3) GLH 367, the learned Company Judge laid down the following principles :—
(a) Leasehold interest is an intangible asset, which is valuable in nature though the valuation may differ from case to case depending upon the unexpired period of lease.
(b) Such an asset is transferable subject to the same terms and conditions as may be stipulated in the Lease-deed.
(c) Once there is a contract which has not been determined, the relationship of the parties to the contract continues to subsist till the period for which the contract is in existence subject to an express condition to the contrary.
(d) There is a distinction between the point of time when an order of winding up is made and at the point of time when an order of dissolution is made, the company continues to exist between the two termini.
(e) A condition in the Lease-deed permitting a lessee to give back the possession as and when the lessee chooses to do so cannot be converted into an obligation entitling the lessor to seek possession.
(f) A condition in the Lease-deed by way of requirement to pay rent, per se, does not create an onerous covenant, once readiness and willingness is shown by the lessee, or on its behalf, to discharge such obligation.
4. Since the above reported judgment dated 30.07.2002 has also been challenged in other OJ Appeals, all the connected matters numbering about 31 appeals raising common and similar questions of law, but involving interpretation of separate Lease-deeds were heard together initially and also when rehearing took place on 28.04.2008. Since the learned Advocate for the appellants herein argued the matter at length, the present appeals have been treated as the lead appeals and are being disposed of by this judgment.
Rival Submissions Before Learned Company Judge
5. The appellants’ case before the learned Company Judge was as under :—
5.1. One Shri Bechardas started Bechardas Spinning and Weaving Mills some time in 1860. The land, building, machinery, etc. were owned by said Bechardas. On death of said Bechardas the said properties were inherited by Shambhuprasad, on whose death the properties were inherited by late Durgaprasad Shambhuprasad Laskari. During life t
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