Revival scheme rejected for lack of bona fides, winding up restored, and eviction upheld for persistent rent default.

A revival scheme under the Companies Act was refused because the proposal was incomplete, unworkable and unsupported by bona fide prospects of implementation: the company had lost its substratum, had no buses or revived route permits, and had not properly addressed secured creditors. The earlier partial stay of winding up was recalled because its revival purpose failed, so liquidation was directed to proceed with possession of assets and records by the Official Liquidator. In the eviction dispute, repeated non-payment of rent after prior statutory protection justified eviction; lack of prior company-law leave did not defeat the proceedings, especially after transfer to the Company Court and ex post facto leave.

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Issues: (i) Whether the proposed scheme of arrangement under the Companies Act, 1956 deserved sanction. (ii) Whether the earlier partial stay of the winding up order should continue or be recalled, with revival of the winding up order. (iii) Whether the landlord was entitled to eviction of the company for non-payment of rent and whether want of prior leave under company law defeated the petition.

Issue (i): Whether the proposed scheme of arrangement under the Companies Act, 1956 deserved sanction.

Analysis: The scheme was examined against the company's actual capacity to revive its business. The company had no buses, its route permits had not been revived, the projected funding requirement was unrealistic, and the proposal did not comprehensively address secured creditors. The court treated the company as having lost its substratum and found the proposal incomplete, unworkable, and lacking bona fides.

Conclusion: The scheme was not sanctioned and the petition seeking approval of the arrangement failed.

Issue (ii): Whether the earlier partial stay of the winding up order should continue or be recalled, with revival of the winding up order.

Analysis: The partial stay had been granted only to facilitate revival of the company and renewal of route permits. Those objectives were not achieved, the scheme for revival failed, and there remained no viable basis to keep the winding up order in abeyance. Once the court concluded that revival was not feasible, continuation of the stay was no longer justified.

Conclusion: The partial stay was recalled and the winding up order was revived, with the Official Liquidator directed to proceed with liquidation and take possession of the company assets and records.

Issue (iii): Whether the landlord was entitled to eviction of the company for non-payment of rent and whether want of prior leave under company law defeated the petition.

Analysis: The tenant had again fallen into arrears after earlier availing the statutory protection against eviction for first default. The notice of demand was served and the arrears were not paid within the statutory period. The absence of prior leave under company law was held not to nullify the proceedings, particularly where the matter had already been transferred to the Company Court and ex post facto leave was also granted. The company had also exhausted the benefit available under the rent law and could not claim it again after repeated defaults.

Conclusion: The landlord was entitled to eviction, and the petition for eviction was allowed.

Final Conclusion: The proposed revival failed, the company was returned to winding up, and the landlord obtained possession on the ground of persistent non-payment of rent.

Ratio Decidendi: A court will sanction a revival scheme only if it is bona fide, workable, complete, and capable of real implementation; where the company has lost its substratum and repeated default persists, revival cannot be used to defeat lawful claims of creditors or a landlord.

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