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IN THE HIGH COURT OF MADHYA PRADESH BENCH AT GWALIOR
SANJAY YADAV, ASHOK KUMAR JOSHI, JJ.
The State of Madhya Pradesh - Appellant
Vs.
M/s Jiwaji Rao Cotton Mills (In Liquidation) Gwalior thr. the Official Liquidator & Ors. - Respondents
Misc. Appeal No.1052 of 2004
Decided On : 28-09-2018
Companies Act - Land Lease - Section 483
Fact of the Case:
The State of Madhya Pradesh claimed title over land leased to a company, J.C. Mills, which was being wound up. The company court dismissed the State's application, and the official liquidator proceeded to auction the land.
Finding of the Court:
The court found that the land was leased for the purpose of running a factory and should revert to the State if the factory closed. The court held that the State had no right over the property and that the land belonged to the company. The court also dismissed a cross-objection by another company claiming ownership of a portion of the land.
Issues: The main issues were the ownership of the leased land and whether the land should revert to the State after the company's closure.
Ratio Decidendi: The court held that the lease was conditional and that the land should revert to the State after the company's closure. The court also found that the transferees from the original lessee did not acquire absolute right and title in the property.
Final Decision: The court allowed the State's application, holding that the land leased to the company should revert to the State after the company's closure. The official liquidator was prohibited from auctioning the leased property.
ORDER :
Sanjay Yadav, J.
1. This appeal under Section 483 of the Companies Act takes exception to order dated 05.11.2004 passed in Company Case No.4/1997 whereby an application preferred by the appellant, State of Madhya Pradesh through its Commerce and Industries Department claiming title over several parcels of land leased out by erstwhile Gwalior State to the Jiyajeerao Cotton Mills Ltd. Birla Nagar, Gwalior / M/s Birla Brothers has been negatived.
2. Relevant facts leading to the controversy are that M/s Jiyajeerao Cotton Mills Ltd (for short “J.C. Mills”) a company registered under the Companies Act moved an application under Section 439 of he Companies Act, 1956 (in short Companies Act) for winding up of the company in view of the opinion expressed by Board for Industrial and Financial Reconstruction recorded in its proceedings dated 23.01.1995 as the company was unable to pay its dues.
3. In the winding up proceedings the State of Madhya Pradesh through the Officer-in-charge moved an application on 19.12.1997 pointing out that the land on which the J.C. Mills and its other buildings are situated belongs to the State of Madhya Pradesh being successor of erstwhile Gwalior State which had granted pattas of the land only for the purpose of establishing the Mill providing specially that, as soon as the Mill will be closed or will not function the land will revert back to the State. Vide said application leave was sought for impleadment in the liquidation proceedings.
4. Another application was filed in the said proceedings on 31.01.1998 praying that for the help of official liquidator a committee be constituted. Names of three persons were suggested for the committee to assist the official liquidator. The direction was also sought for the J.C. Mills not to alienate or transfer or convert the lease hold property in their possession in any manner. It was also prayed that the payment to the labourers of the company be made at an early date.
5. Pertinent it is to note that besides the State of Madhya Pradesh the creditors viz. State Bank of India, Oriental Bank of Commerce, Punjab National Bank, the Andhra Bank, the State Bank of Indore, Union Bank of India, Bank of Baroda, also filed applications for claiming outstanding dues or the permission [under Section 446 (2) of Companies Act] to continue with the suit for recovery. Besides, the labour union also filed application claiming the wages and dues of the workmen.
6. The winding up application was decided by learned Company Judge on 04.05.1998, whereby the J.C. Mills was directed to be wound up, on the following terms:
“22. It is, therefore, ordered that the company, M/s. Jiyajeerao Cotton Mills Ltd., having its registered office at Birlanagar, Gwalior, be wound up. It is further directed that the winding up order be drawn up and published according to Rules.
23. The intimation of this order be sent to the Official Liquidator and the Registrar of Companies at Gwalior.
24. The Official Liquidator shall be the liquidator of the company and shall take over the custody of the assets of the company as detailed in the chart annexed with the application and affidavit dated 2nd February 1998 filed by the company. The company shall, however, submit to the Official Liquidator the statement as to the affairs of the company in the prescribed form complying with the requirement contained in section 454 of the Companies Act.
25. It may be noticed at this stage that in its judgment and order dated 30-4-1998 passed by the Apex Court in the case of P.C. Agrawal v. Payment of Wages Inspector, M.P. and others, in SLP Civil No.1117/98 connected with SLP Civil No.3273/98, SLP Civil No.905/98 and SLP Civil No.879/98, it has been observed that there must be large liquid assets including raw materials and other movable properties and fixed assets of the company. An indication was given to get the assets of the company realised as soon as possible so that from the amount realised from the sale of these assets the
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