1999 (2) TMI 605 - HC - Companies Law

Court rules in favor of applicant, invalidates respondent's claims, orders return of premises.

The court ruled in favor of the applicant, finding respondent No. 2's possession and occupancy claims invalid and lacking legal basis. Respondent No. 2 ... Winding up - Powers of court to summon persons suspected of having property of company, etc. Issues Involved:1. Validity of the possession and occupancy claims by respondent No. 2.2. Allegations of suppression of material facts and collusion.3. Legal standing of the respondent No. 2's tenancy claims.4. Entitlement to compensation and the role of the official liquidator.5. Contempt of court by respondent No. 2.Detailed Analysis:1. Validity of the possession and occupancy claims by respondent No. 2:The applicant and Dr. (Mrs.) Padma J. Mehta were lessees of the premises by a deed of assignment dated 29-3-1971. The company in liquidation (respondent No. 1) was granted leave and license to occupy the premises. The applicant claimed that respondent No. 2 had no connection with the premises and was surprised to receive compensation from them. Respondent No. 2 claimed possession from the inception of the lease and alleged they were in possession since 1966. However, the agreement between the applicant and respondent No. 1 was from 1971. The court found that respondent No. 2's claims were inconsistent and lacked legal basis.2. Allegations of suppression of material facts and collusion:Respondent No. 2 was accused of suppressing the fact that Suit No. 848 of 1998 was filed against the applicant in the Court of Small Causes. The court noted that respondent No. 2 had filed an application based on false statements to grab the premises, indicating collusion with the directors of respondent No. 1. The court found that respondent No. 2 had shifted its stand in various legal documents and suppressed material facts from the court.3. Legal standing of the respondent No. 2's tenancy claims:Respondent No. 2 claimed to be a deemed tenant under Maharashtra Act XXXVII of 1973 and a protected tenant under the 1987 amendment. However, the court found no privity of contract between the applicant and respondent No. 2. The court referred to the Supreme Court judgments in Nirmala R. Bafna v. Khandesh Spg. & Wvg. Mills Co. Ltd. and Ravindra Ishwardas Sethna v. Official Liquidator, which established that possession should revert to the owner if the liquidator does not require the premises. The court concluded that respondent No. 2's possession was neither settled nor based on any legal right.4. Entitlement to compensation and the role of the official liquidator:The court noted that the compensation for the use of the premises was paid by the company in liquidation until January 1998. The applicant contested the payments made by respondent No. 2, stating there was no privity of contract. The court ordered the official liquidator to take back possession of the premises and call for bids for occupation, with the highest bidder to be appointed as the agent of the liquidator. The official liquidator was also directed to pay the applicant from the amount received, less office expenses.5. Contempt of court by respondent No. 2:The court found prima facie evidence that the company secretary of respondent No. 2 and the company itself were guilty of contempt of court. The court issued a show-cause notice to the managing director and company secretary of respondent No. 2 to explain why they should not be punished for contempt.Order:1. The official liquidator to take back possession of the premises from respondent No. 2 and call for bids for occupation.2. The official liquidator to pay the applicant from the amount received, less office expenses.3. The managing director and company secretary of respondent No. 2 to show cause for contempt of court.4. The applicant to deposit an amount for initial expenses.The court rejected the respondents' request for a stay of the order.