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Issues: (i) Whether the company applications were maintainable under sections 391 and 392 of the Companies Act, 1956 to remove encroachments on company property; (ii) Whether the existence of an alternative remedy under section 6 of the Specific Relief Act barred the applications; (iii) Whether the opponents had any legal right to remain in possession or had perfected title by adverse possession.
Issue (i): Whether the company applications were maintainable under sections 391 and 392 of the Companies Act, 1956 to remove encroachments on company property.
Analysis: The sanctioned scheme placed the company properties under the Court Committee for realization of assets and implementation of the arrangement. The disputed land formed part of that scheme, and unauthorized occupation obstructed sale and distribution of proceeds to depositors. The supervisory power under section 392 extends to issuing directions necessary for the proper working of the compromise or arrangement, including removal of impediments on company property. The earlier decision relied on by the opponents was distinguished because it dealt with a genuine third-party claim to independent property rights, whereas here the property admittedly belonged to the company and the occupants claimed no title except adverse possession.
Conclusion: The applications were maintainable and the objection to jurisdiction failed, in favour of the petitioner.
Issue (ii): Whether the existence of an alternative remedy under section 6 of the Specific Relief Act barred the applications.
Analysis: Section 6 provides a remedy to a person dispossessed of immovable property and does not restrict the company court's independent supervisory power under sections 391 and 392 of the Companies Act, 1956. The Court held that the company committee was not required to resort to a civil suit where the encroachment itself obstructed implementation of the sanctioned scheme. The general remedy under section 6 did not curtail the special jurisdiction exercised for carrying out the compromise or arrangement.
Conclusion: The alternative remedy did not bar the present proceedings, in favour of the petitioner.
Issue (iii): Whether the opponents had any legal right to remain in possession or had perfected title by adverse possession.
Analysis: The opponents admitted that the land belonged to the company and relied only on adverse possession. The burden to prove adverse possession was heavy and required proof of open, continuous and hostile possession for the statutory period. The evidence showed occupation by huts for varying periods, but there was no credible proof of hostile title, no testimony from the opponents themselves, and no material establishing possession nec vi, nec clam, nec precario. The documentary material and oral evidence were insufficient to prove perfection of title by adverse possession.
Conclusion: The opponents had no legal right to remain in possession and had failed to establish adverse possession, against the opponents.
Final Conclusion: The Court upheld its power to order removal of the encroachers so that the company's property could be sold and the scheme could be effectively implemented; the opponents were found to be unauthorized occupants without any enforceable right in the land.
Ratio Decidendi: Under sections 391 and 392 of the Companies Act, 1956, the company court may issue directions against unauthorized occupants of company property when such directions are necessary to remove impediments to the proper working of a sanctioned compromise or arrangement, and a plea of adverse possession must be strictly proved by clear evidence of open, continuous and hostile possession.
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