Company court jurisdiction in winding up upheld for possession disputes; post-commencement lease without leave was void against the liquidator.

A company court under section 446(2) may determine possession disputes concerning company property in winding up, including whether an occupant is a tenant or trespasser, and may order eviction where occupation is unlawful. A lease executed after commencement of winding up, without leave of court and on terms showing bad faith, inadequate consideration and extended rights over company assets, is void against the liquidator under section 536(2). A claimed tenancy protection under the Andhra Pradesh rent control law was unavailable because the premises fell outside the statutory protection regime and the respondent had no enforceable right to remain in possession. Vacant possession was ordered to be delivered to the official liquidator.

---

---

Issues: (i) whether the company court had jurisdiction under the winding-up provisions to examine the respondent's claim to possession and order eviction; (ii) whether the lease transactions of 24-11-1998 and 23-11-2001 were void or avoidable under the provisions governing fraudulent preference, voluntary transfers, and post-commencement dispositions; and (iii) whether the respondent could retain possession on the basis of tenancy protection under the Andhra Pradesh rent control law.

Issue (i): whether the company court had jurisdiction under the winding-up provisions to examine the respondent's claim to possession and order eviction.

Analysis: Section 446(2) conferred wide authority on the company court to decide any question of law or fact arising in the course of winding up, including claims relating to possession of company property. That jurisdiction extended to determining whether an occupant was a tenant or trespasser and to granting appropriate directions in a summary proceeding where the facts were sufficiently before the court.

Conclusion: The company court had jurisdiction to determine the dispute and direct eviction if the respondent's occupation was unlawful.

Issue (ii): whether the lease transactions of 24-11-1998 and 23-11-2001 were void or avoidable under the provisions governing fraudulent preference, voluntary transfers, and post-commencement dispositions.

Analysis: The court held that the first agreement of 24-11-1998 fell outside the reach of section 531 and section 531A, but the second agreement of 23-11-2001 was entered into after the winding-up petition had commenced and without leave of court, attracting section 536(2). The company's continuing undertaking to the Reserve Bank not to alienate assets without permission, the grossly inadequate consideration, the long tenure, the renewal rights, and the right to sub-let showed bad faith and made the second arrangement indefensible. The transaction was treated as a disposition of company property that could not be sustained against the liquidator.

Conclusion: The lease of 23-11-2001 was void and the respondent could not rely on it to resist eviction.

Issue (iii): whether the respondent could retain possession on the basis of tenancy protection under the Andhra Pradesh rent control law.

Analysis: The respondent's reliance on an alleged protected tenancy failed because the initial induction itself was tainted by the company's inability to lawfully part with the property, and, in any event, the statutory rent ceiling under section 32(c) excluded the premises from the protection regime by the relevant time. The rent control defence therefore did not furnish an enforceable right to remain in possession.

Conclusion: The respondent was not entitled to protection under the Andhra Pradesh rent control law.

Final Conclusion: The respondent's occupation of the Hyderabad premises was held to be unlawful and unsustainable against the official liquidator, and vacant possession was ordered to be delivered to the liquidator.

Ratio Decidendi: A company court may, under section 446(2), adjudicate possession disputes arising in winding up, and a post-commencement disposition of company property entered into without leave of court and on manifestly bad terms is void and cannot be protected by rent-control rights where the statutory protection is unavailable.

---