2004 Supreme(Guj) 862

IN THE HIGH COURT OF GUJARAT
D.A. MEHTA, J.
Official Liquidator of Aryodaya Spinning and Weaving Mills Co. Ltd. – Appellant
Versus
Charansingh Dhupsingh – Respondent
Company Application No. 278 of 2001, Company Petition No. 33 of 1983, Misc. Civil Application Nos. 5, 6 of 2002
Decided On : 16-04-2004

The High Court has jurisdiction under Section 446 of the Companies Act, 1956 to entertain and dispose of any claim made by or against the company, any question of priorities or any other question whatsoever, whether of law or fact, which may relate to or arise in the course of the winding-up of the company.

Headnote:

COMPANY - WINDING UP - JURISDICTION - SUIT FOR POSSESSION OF PROPERTY - LIMITATION - SECTION 446 OF THE COMPANIES ACT, 1956 - SECTION 27, 64, 136, 137 OF THE LIMITATION ACT, 1963 - SECTION 13(1)(E) AND 13(1)(EE) OF THE BOMBAY RENTS, HOTEL AND LODGING HOUSE RATES (CONTROL) ACT, 1947 - SECTION 23 OF THE INDIAN CONTRACT ACT, 1872 - Held, the application is not barred by limitation. The Official Liquidator has become entitled to claim vacant and physical possession of the land from the respondents. The respondents are liable to be evicted from the land in question being encroachers or unauthorized occupants of the premises.

Fact of the Case:

The Official Liquidator of Aryodaya Spinning and Weaving Mills Company Limited filed an application seeking directions to establish the right, interest, and title of certain persons to reside in the property known as Dhupsingh Chali at the premises of Aryodaya Spg. & Wvg. Mills Co. Ltd. (In Liquidation) and to declare them as trespassers and encroachers. The respondents challenged the maintainability and jurisdiction of the application, claiming that the Official Liquidator should file a separate suit for recovering the property and cannot seek a remedy through this application. They also contended that the application was barred by limitation and that they were not encroachers or unauthorized occupants.

Finding of the Court:

The Court held that the application was maintainable and that the Official Liquidator had the jurisdiction to entertain the application under Section 446 of the Companies Act, 1956. The Court further held that the application was not barred by limitation as the period of limitation for institution of a suit for possession of immovable property had not been determined and that the respondents had committed default in making payment of compensation in terms of the decree dated 18-12-1978 and the order dated 03-12-2003 made by the Court. The Court also held that the respondents were liable to be evicted from the land in question being encroachers or unauthorized occupants of the premises.

Issues: 1. Whether the application is maintainable and the Official Liquidator has the jurisdiction to entertain the application? 2. Whether the application is barred by limitation? 3. Whether the respondents are encroachers or unauthorized occupants of the premises?

Ratio Decidendi: 1. The Court held that the application was maintainable and that the Official Liquidator had the jurisdiction to entertain the application under Section 446 of the Companies Act, 1956. The Court relied on the case of Rajratna Naranbhai Mills Co. Ltd. vs. New Quality Bobbin Workers, (1973) 43 Company Cases 131, wherein it was held that Section 446(2) of the Act confers jurisdiction on the High Court to entertain and dispose of any claim made by or against the company, any question of priorities or any other question whatsoever, whether of law or fact, which may relate to or arise in the course of the winding-up of the company. 2. The Court held that the application was not barred by limitation as the period of limitation for institution of a suit for possession of immovable property had not been determined. The Court relied on the case of Karnataka Steel and Wire Products and Others vs. Kohinoor Rolling Shutters & Engg. Works and Others, (2003) 1 Comp L.J. 193 SC, wherein it was held that Section 458-A of the Companies Act, 1956 excludes the period during which a company was being wound up by the court from the date of the commencement of the winding up till the order of winding up is made and an additional period of one year immediately following the date of the winding-up order from the period of limitation prescribed for any suit or application in the name and on behalf of a company which is being wound up by the Court. 3. The Court held that the respondents were liable to be evicted from the land in question being encroachers or unauthorized occupants of the premises. The Court relied on the case of Gajanan Dattatraya vs. Sherbanu Hosang Patel, AIR 1975 SC 2156, wherein it was held that a tenant is disentitled to any protection under the Bombay Rents, Hotel and Lodging House Rates Control Act, 1947 if he is within the mischief of the provisions of Section 13(1)(e), namely, that he has sublet.

Final Decision: The Court allowed the application and directed the Official Liquidator to give a general notice to the occupants of the chawl that if they do not hand over vacant and peaceful possession of the premises to the Official Liquidator within one week, the Official Liquidator will take possession of the premises with police protection. The Court also directed the Police Commissioner, Ahmedabad City to provide all necessary police protection to the Official Liquidator for recovering possession of the premises from unauthorized occupants and also for removing unauthorized construction put up on the land of Aryodaya Spinning Mills Ltd. (the Company in liquidation).