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2022 Supreme(Guj) 1029

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
Bhargav D. Karia, J.
Dhirubhai Ramchandra Patel – Applicant
Versus
Official Liquidator Of The Marsden Spinning – Respondent
R/Company Application No. 294 of 2009 In R/Company Petition No. 205 of 1996 with Civil Application (For Joining Party) No. 1 of 2022
Decided On : 21-10-2022

Advocates Appeared:
For the Applicant : Mr. MI Hava, Mr.Chanakya Bhavsar.
For the Respondent:Ms. P.J. Davawala, Mr. S.N. Shelat, Senior Advocate for Mr. M.G. Nagarkar.

Headnote:(A) Companies Act, 1956 - Sections 457(1)(e), 529, 529A; Gujarat Closed Textile Undertakings (Nationalisation) Act, 1986 - Winding up of company; Official Liquidator's authority to transfer possession of leasehold property; rent rights and statutory tenant provisions; Supreme Court in Jabal C. Lashkari v. Official Liquidator clarified leasehold rights vesting; the lease of 1919 held as permanent; applicability of the Rent Act provisions limited. (Paras 19, 36, 46, 48)

(B) Lease Agreements - Nature of leases; differences between fixed-term and indefinite leases; implications of statutory tenancy; the lessor's rights confined to rent recovery in case of non-use. (Paras 30, 34)

Facts of the case:
The application filed by the successor of the original lessor sought possession of land leased to a company in liquidation since 1919. The company was wound up and management transferred to the State under nationalization laws, resulting in disputes over leasehold rights and property possession.

Findings of Court:
The Court found that leasehold rights established under the 1919 agreement were permanent and afford minimal rights to the lessor. The Government's use of the property for public purpose was deemed lawful under previous judgments, affirming the Official Liquidator's actions.

Issues: The central issues involved determining proper possession rights post-liquidation, the application and implications of lease clauses, and the obligations of the Official Liquidator under the Companies Act and Rent Act provisions.

Ratio Decidendi: The Court concluded the lease's permanent nature curtails the lessor's rights, indicating that the official liquidator acted within authority. Any prior ruling enabling Government handover for public purpose aligns with law.

Result: Application dismissed; State Government joined as a necessary party.

Table of Content
1. factual background regarding property lease and liquidation. (Para 1 , 2 , 3 , 4 , 5 , 6 , 7 , 8)
2. arguing claims regarding rent arrears and land possession. (Para 9 , 10 , 11 , 12 , 13 , 14 , 15 , 16 , 17 , 18 , 19 , 20)
3. court's analysis on lease validity and implications of the rent act. (Para 21 , 22 , 23 , 24 , 25 , 26 , 27 , 28 , 29 , 30 , 31 , 32)
4. legal debate on applicability of prior judgments and lease terms. (Para 33 , 34 , 35 , 36 , 37 , 38 , 39 , 40 , 41 , 42 , 43 , 44)
5. final ruling on case application and dismissal, allowing claims to state systems. (Para 45 , 46 , 47 , 48 , 49)

JUDGMENT :

1. Company Application No.294/2009 is filed by the legal heir of original lessor of land admeasuring 57870 sq. mtrs. situated at survey nos.474 and 476 at Rakhial, District Ahmedabad, Town Planning Scheme No.11, Final Plot No. 15 (here-in-after referred to as “the subject land”).

2. One Ramji Harilal, the predecessor-in-title of the applicant had executed a lease deed on 20.06.1919 through his aunt Ichaben Bapuji Bajibhai, as he was minor at the relevant time in respect of the subject land in favour of Khushaldas Gokaldas.

3. It is the case of the applicant that subsequent to the aforesaid transfer of land in favour of Khushaldas Gokaldas, he executed lease deed on 16.06.1920 in favour of M/s. Marsden Spinning and Manufacturing Company Limited in respect of the subject land as per the same terms and conditions of the first lease deed.

4. Thereafter, the said mill was taken into winding up and in the year 1986, management of the said mill was taken over by Gujarat State Textile Corporation Limited (For short “GSTC Ltd.”) as per the provisions of the the Gujarat Closed Textile Undertakings (Nationalisation) Act, 1986 (for short ‘Act,1986’) enacted for revival of 16 sick textile mills.

5. However, GSTC LTd. also could not achieve its object of revival of sick textile mills and was taken to Board For Industrial and Financial Reconstruction (BIFR) for its revival.

6. Thereafter, as per opinion of BIFR, GSTC Ltd. was also ordered to be wound up by this Court (Coram : Hon’ble Mr. Justice S.D. Pandit, J. As His Lordship was then) vide order dated 6.02.1997 in Company Petition No.205 of 1996.

7. The applicant being a lessor of the land was receiving lease rent of from lessee Khushaldas Gokaldas and thereafter from his legal heirs upto 1986. It is the case of the applicant that after 1986, the applicant has not received any lease rent from the lessee or from the liquidator of GSTC Ltd.(In Liquidation).

8. The applicant has therefore, filed this application with a prayer to handover the vacant and peaceful possession of the subject land and has further prayed to direct the Official Liquidator to make the payment of arrears of lease rent due and payable by GSTC Ltd. (In Liquidation) in view of lease agreement dated 20.06.1919. It was also prayed to direct the Official Liquidator to disclaim the subject land in favour of the applicant. The other incidental prayer made by the applicant is to direct the Official Liquidator to clarify as to how the advertisement at Annexure-D was published in Gujarat Samachar newspaper to sell leasehold rights in absence of any order of this Court.

9. This Court (Coram : Hon’ble Mr. Justice Jayant Patel, As His Lordship was then) by order dated 24.07.2009 disposed of this Company Application No.294 of 2009 applying the decision in case of Legal Heirs of Deceased Fakir Chand Ambaram Patel v. Official Liquidator of Amruta Mills Ltd. & Ors. reported in 2002(3) GLH 367 as well as the decision of Division Bench of this Court in case of Jabal C. Lashkari & Ors. vs. Official Liquidators & Ors rendered in OJ Appeal No.66/2006 and allied matters vide order dated 17.10.2008 and it was observed that reliefs as prayed by the applicant cannot be granted. It was pointed out on behalf of the applicant be

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