2012 (9) TMI 346 - SC - Companies Law

Winding-Up Petition Not for Rent Arrears: Division Bench Emphasizes Separate Suit

The Division Bench ruled that Order 2 Rule 2 of the CPC does not apply to a winding-up petition under the Companies Act, emphasizing the need for a ... Winding-up petition on arrears of rent - Whether the provisions of Order 2 Rule 2 of the Code of Civil Procedure (CPC) would have any impact on a proceeding u/s 433, 434 and 439 of the Companies Act, 1956 - Held that:- Appellant herein as landlord filed a suit for eviction against the respondent company on the ground of default in making payment of the rents and also on grounds of reasonable requirement, in the City Civil Court at Calcutta, under the provisions of the West Bengal Premises Tenancy Act, 1956. The proceedings under Section 439 not being a suit, but a Petition, the provisions of Order 2 Rule 2 CPC would not be attracted since the bar indicated therein is with regard to suits - Order 2 CPC deals with the frame of suits and the various rules contained therein also refer to suits for obtaining the reliefs of a civil nature and on the other hand, a proceeding under Sections 433, 434 and 439 of the Companies Act, 1956, is not a suit, but a Petition which does not attract the provisions of Order 2 Rule 2 CPC, which deals with suits. Petitioner has submitted that the West Bengal Premises Tenancy Act, 1956, does not make any provision for recovery of arrear rents and provision has only been made under the provisions of Section 17 for deposit of the arrear rents which are admitted by the tenant at the time of entering appearance and filing Written Statement in the suit for eviction. Provision has also been made for payment of such arrears in instalments, but there is no provision for recovery of the arrear rents for which a separate suit has to be filed, as has been indicated by the Division Bench of the Calcutta High Court. Set aside the findings of the learned Single Judge in regard to the application of the provisions of Order 2 Rule 2 CPC to a winding-up proceeding under the Companies Act that may be filed for recovery of the dues payable by the Respondent-tenant to the Appellant-landlord. We are, however, ad idem with the Division Bench that the relief of the Appellant-landlord, if any, in this case, will not lie in a winding-up petition, but in a suit filed for the said purpose, particularly when the said relief is not available under the rent laws which only deal with protection of tenants from eviction and the right of the landlords to recover the tenanted premises on the grounds specified therein. Issues:Interpretation of Order 2 Rule 2 of the Code of Civil Procedure (CPC) in relation to Sections 433, 434, and 439 of the Companies Act, 1956 for a winding-up proceeding.Analysis:The appeal raised the question of whether Order 2 Rule 2 of the CPC impacts proceedings under Sections 433, 434, and 439 of the Companies Act, 1956. The appellant, a landlord, filed an eviction suit against the respondent company for default in rent payment. The trial court decreed the suit based only on default, without specifying the period of default. Post decree, the appellant obtained possession and demanded arrears, leading to a winding-up petition for unpaid rent. The Single Judge dismissed the petition citing Order 2 Rule 2 CPC and suggested seeking relief through other forums. The Division Bench upheld this decision, stating no admitted arrears existed for a winding-up order. The appellant argued that the default period could be calculated and a winding-up proceeding was justified for unpaid debts.The appellant contended that Order 2 Rule 2 CPC does not apply to a winding-up petition under the Companies Act, as it pertains to suits, not petitions. The appellant highlighted the absence of provisions in the West Bengal Premises Tenancy Act for rent recovery, supporting the need for a separate suit for arrears. The court agreed with this interpretation but disagreed on the feasibility of a summary decision for rent calculation without proper evidence. It was deemed necessary to resolve the issue in a suit for recovery.The court set aside the lower court's findings regarding Order 2 Rule 2 CPC's application to a winding-up petition for rent recovery. While acknowledging the appellant's relief claim, it ruled that a winding-up petition was not the appropriate remedy due to the complexities involved in determining arrears. The court emphasized that rent laws protect tenants from eviction and landlords' rights to recover premises, suggesting a suit as the proper recourse for such claims. The appeal was partially allowed based on these considerations, with each party bearing their own costs.