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High Court Of Madhya Pradesh
A. G. QURESHI
VIRENDRA SINGH BHANDARI - Appellant
Versus
NANDLAL BHANDARI AND SONS PVT.LTD.(IN LIQUIDATION) - Respondents
COMPANY PETITION 4 Of 1972
Decided On : 12/05/1994
COMPANIES ACT - SECTION 457 - LEASE OF PROPERTY - OFFICIAL LIQUIDATOR - COURT'S SANCTION - NECESSITY - TENANTS INDUCTION WITHOUT COURT'S SANCTION - VALIDITY - FRESH LEASE DEEDS - EXECUTION - RENT - REVISION.
Fact of the Case:
The Official Liquidator, without seeking the Court's permission, inducted several tenants into properties under liquidation. The Court issued notices to the tenants to show cause why action should not be taken against them under Section 536 of the Companies Act.
Finding of the Court:
The Court held that the induction of tenants by the Official Liquidator without the Court's sanction was illegal and that the agreements arrived at between the tenants and the Official Liquidator were without jurisdiction. However, the Court also held that it would not be appropriate to oust the tenants from the premises, considering that they had been paying rent and that the accounts had been audited and reports submitted to the Court.
Issues: 1. Whether the Official Liquidator has the power to lease out property without the Court's sanction. 2. Whether the tenants inducted by the Official Liquidator without the Court's sanction are trespassers. 3. Whether the tenants should be ousted from the premises.
Ratio Decidendi: 1. The Court held that the power to lease out property is not specifically mentioned in either sub-section (1) or sub-section (2) of Section 457 of the Companies Act. Therefore, the provisions of sub-section (3) to Section 457 have to be looked into, which provides for the overall control of the Court on the acts of the Official Liquidator. 2. The Court held that the tenants were not trespassers, as they had been inducted into the premises by the Official Liquidator and had been paying rent. 3. The Court held that it would not be appropriate to oust the tenants from the premises, considering that they had been paying rent and that the accounts had been audited and reports submitted to the Court.
Final Decision: The Court directed that the tenants who had been inducted by the Official Liquidator without the Court's sanction should be asked to execute fresh lease deeds with the Official Liquidator. The rent in respect of the properties leased on M. G. Road was to be five times of the existing rent, and for the properties situated in other areas, it was to be four times of the existing rent. If the tenants agreed to execute the agreements, they would continue to be tenants. Those who did not execute the agreements within 15 days of the receipt of the notice from the Official Liquidator would face summary ejectment proceedings.
( 1 ) INITIALLY on 15-2-1991 a report of the Official Liquidator was considered wherein it was stated that three tenants have been inducted unauthorisedly by the employees of the Official Liquidator. A direction was given to issue notice to them treating them as trespassers. There was an interlocutory application No. 1360 of 1984 about the induction of one Nagar in one of the buildings under liquidation. Vide proceedings dated 5-4-1991 it was directed that list of all the tenants and property should be filed in the Court along with the persons in possession of the property and the nature of their possession along with the fact whether any permission has been sought from the Court. A direction was given to the Official Liquidator to furnish the list and the list has been furnished. Notices were issued to the tenants.
( 2 ) THE tenants appeared through Shri Panjwani and Shri V. K. Jain, Advocates. On 25-10-1991 Shri Panjwani appeared on behalf of Mukeshkumar Rochaldas Shri Gangrade on behalf of Komal Jain, Shri S. S. Samvatsar for Dayal and Dayal, Inder Kumar, Ramesh Kumar, Satyanarayan and Premchand. Shri Samwatsar filed reply on their behalf. Shri Bagadiya, learned counsel appeared on behalf of Mandrlal Nagar. Time was given to the remaining tenants to file reply.
( 3 ) THE report of the Official Liquidator was that the occupation is unauthorised. Therefore, the copy of the report was also given to the tenants. The report was filed as directed earlier by the Court by the O. L. on 21-2-1992, which was directed to be kept in safe custody. All the tenants who were noticed why action should not be taken against them under S. 536 of the Companies Act have filed reply. Arguments have been heard.
( 4 ) NOW from the report of the Official Liquidator given in compliance to the order of this Court, it appears that there are many tenants against whom action has to be initiated. The report be kept with the file in a sealed cover as before and action may be initiated after asking the parties to make submissions in this behalf. This matter may be taken up on the next date of hearing.
( 5 ) AS regards the induction of certain tenants by the then Official Liquidator, the matter has been heard at length. The Official Liquidator in his report dated 26-4-1991 in, compliance of the order of this Court has submitted the details of the tenants who have been inducted by the then Official Liquidator. First of all let us take I. A. No. 1360 of 1984 wherein the Court had directed, vide order of this Court that suit for eviction be instituted against Smt. Saryu Devi for her ejectment from the premises under the M. P. Accommodation Control Act. Non-applicants Nos. 3 and 4 were issued show cause notices. It was further directed that in the meanwhile the non-applicants shall not enter the premises to carry out their business there. Non-applicant No. 4 Madanlal Chhaganlal stated in reply that Nagar has been a partner of their partnership firm from 195 9/10/1983. Therefore, they said that there was no occasion for issuing any restraint order against non-applicant No. 4 and the order may be vacated.
( 6 ) NON-APPLICANT No. 3 Nagar in his reply dated 19-4-1984 stated that the order dated 30-3-1984 has been served on them on 16-4-1984 and in the meanwhile the firm has commenced its business in the premises since November 1983 under a deed of partnership dated 2-11-1983, but this I. A. remained pending for long. However, in pursuance of the order dated 30-3-1984 a suit against Smt. Saryu Devi Baheti for ejectment has already been filed in the District Court in 1984. But no substantial progress has been made in that suit. This application pertaining to ejectment suit has to be decided after hearing the parties concerned. Therefore, its decision at this moment is not necessary. However, to understand the chronology of the events this fact had been noticed by the Court.
( 7 ) WHEN the suit was pending in the Court, on 18-11-1986 the Official Liquid
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