Company Court jurisdiction in liquidation extends to eviction and rent default claims against an occupant of company property.
In winding up proceedings, the Company Court was treated as having wide control under section 446 of the Companies Act, 1956 to entertain the official liquidator's claim for eviction and consequential reliefs against an occupant of company property, with execution to follow through the company-court mechanism. The court also found that non-payment of rent despite notice justified treating the occupant as a defaulter and trespasser, so eviction, arrears of rent, and damages were granted, with damages fixed at double the rent until delivery of possession.
Issues: (i) Whether, in winding up proceedings, the official liquidator could seek eviction and ancillary reliefs against an occupant of the company's immovable property under section 446 of the Companies Act, 1956 read with section 20 of the U.P. Urban Buildings (Regulation of Letting, Rent and Eviction) Act, 1972; (ii) whether the occupant, having defaulted in payment of rent, was liable to be treated as a defaulter and trespasser and subjected to eviction, arrears of rent, and mesne profits/damages.
Issue (i): Whether, in winding up proceedings, the official liquidator could seek eviction and ancillary reliefs against an occupant of the company's immovable property under section 446 of the Companies Act, 1956 read with section 20 of the U.P. Urban Buildings (Regulation of Letting, Rent and Eviction) Act, 1972.
Analysis: Section 446 was treated as conferring wide control on the Company Court over proceedings involving the company in liquidation, so that the liquidator could approach the court directly and avoid unnecessary litigation. The court proceeded on the footing that, after a winding up order, claims affecting company property and possession could be dealt with within the liquidation proceedings, and the court could issue the consequential decree and send it for execution under sections 634 and 635 of the Companies Act, 1956.
Conclusion: The issue was decided in favour of the official liquidator, and the court held that the application was maintainable.
Issue (ii): Whether the occupant, having defaulted in payment of rent, was liable to be treated as a defaulter and trespasser and subjected to eviction, arrears of rent, and mesne profits/damages.
Analysis: The court found that rent had remained unpaid for the stated period despite notices, and treated the default as sufficient to terminate the tenancy for the purposes of the liquidation proceedings. On that basis, the occupant was characterised as no longer entitled to remain in possession, and damages were directed at double the rent until delivery of possession.
Conclusion: The occupant was held to be a defaulter and trespasser, liable to eviction, arrears of rent, and damages at double the rent until possession was delivered.
Final Conclusion: The application of the official liquidator was granted, and the Company Court directed eviction and monetary reliefs to be worked out and executed through the prescribed company-court mechanism.
Ratio Decidendi: In liquidation proceedings, the Company Court may entertain and adjudicate claims for possession and consequential monetary reliefs concerning company property, and an occupant who is found in rent default can be ordered to vacate and pay arrears and damages within the liquidation framework.
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AI Drafter ✕
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