2013 (1) TMI 618 - HC - Companies Law

Official Liquidator to Release Property, PDGD to Address Disputed Area Possession Issue

The Court directed the Official Liquidator to release the property to PDGD and remove trespassers from the undisputed area of 1030 sq. ft. PDGD was ... Disclaimer of onerous property by the Official Liquidator - power of the Company Court under Section 446(2) to order eviction - deemed possession by the Official Liquidator on winding up - requirement of written consent for creation of sub-tenancy under the West Bengal Premises Tenancy Act - vacant possession and removal of trespassers from company property - discretionary exercise of summary jurisdiction subject to the law of the landDisclaimer of onerous property by the Official Liquidator - deemed possession by the Official Liquidator on winding up - Direction to the Official Liquidator to release the property in favour of the owner-applicant (PDGD) by way of disclaimer. - HELD THAT: - The Court found that the tenancy-right property was onerous and of no use for winding up. The Official Liquidator admitted he had no use of the premises and, by reason of the winding up order and Section 446, would be deemed in possession of assets of the company in liquidation. On these findings the Court directed the Official Liquidator to release the property to the applicant PDGD.Application allowed insofar as the Official Liquidator is directed to release the property in favour of PDGD.Vacant possession and removal of trespassers from company property - Removal and handing over of vacant possession of the uncontested portion (1030 sq. ft.) to PDGD. - HELD THAT: - The Court recorded that no one intervened or objected in respect of the balance area of 1030 sq. ft. and accordingly directed the Official Liquidator to remove any trespassers, obtain police assistance if required, and hand over vacant possession to the applicant.Official Liquidator directed to remove trespassers (if any) from the 1030 sq. ft. area and hand over vacant possession to PDGD; police assistance to be rendered if requested.Requirement of written consent for creation of sub-tenancy under the West Bengal Premises Tenancy Act - power of the Company Court under Section 446(2) to order eviction - Disposition of competing claims over the occupied 1645 sq. ft. (alleged sub-tenancy) is not finally decided and is to be adjudicated by proceedings before the Company Court. - HELD THAT: - Although documents filed by interveners purported to show prior landlord consent to sub-letting, no written consent was produced and the Court found doubt on the competing contentions. Considering the period of occupation and payments, the Court refrained from a final finding on the lawfulness of the alleged sub-tenancies and granted liberty to the applicant (the superior landlord) to institute a suit before the Company Court to resolve the issue. The Court thereby left the question of legality of the sub-tenancies and entitlement to possession of the 1645 sq. ft. to be determined in proceedings before the Company Court under Section 446(2).Liberty granted to PDGD to institute suit before the Company Court to determine the rights to the 1645 sq. ft.; the question is remitted for adjudication rather than finally decided in this application.Discretionary exercise of summary jurisdiction subject to the law of the land - power of the Company Court under Section 446(2) to order eviction - Scope and character of the Company Court's jurisdiction under Section 446: summary eviction power is discretionary, may be exercised even if the section is not pleaded, and must apply the same law as other civil courts. - HELD THAT: - The Court held that the Company Court has ample power in winding up to adjudicate questions arising in the course of proceedings, including eviction of trespassers from company property, and can direct summary eviction in an appropriate case. That jurisdiction is discretionary and must be exercised subject to the applicable law (for example, Rent Act requirements). The Court also observed that omission to mention Section 446 in the cause title does not preclude exercise of the power in a proper case.Confirmed that the Company Court's power under Section 446 is discretionary and may be exercised to order eviction by summary process where appropriate, but such exercise must follow the law applicable to eviction.Final Conclusion: The application is allowed in part: the Official Liquidator is directed to release the property to PDGD, and to remove trespassers (if any) and hand over vacant possession of the uncontested 1030 sq. ft. to PDGD (with police assistance if required). The competing claims over the occupied 1645 sq. ft. are not finally determined and PDGD is granted liberty to file suit in the Company Court under Section 446(2) to resolve the legality of the alleged sub-tenancies; the Court affirmed that the Company Court may exercise discretionary summary eviction powers subject to the law applicable to eviction. Issues Involved:1. Disclaimer of property under Section 535 of the Companies Act.2. Possession and eviction of alleged sub-tenants.3. Jurisdiction and powers of the Company Court under Section 446 of the Companies Act.4. Application of the West Bengal Premises Tenancy Act, 1956 and 1997.Issue-wise Detailed Analysis:1. Disclaimer of Property under Section 535 of the Companies Act:The applicant, PDGD Investments & Trading (P) Ltd. (PDGD), filed an application under Section 535 of the Companies Act seeking a direction for the Official Liquidator to disclaim the premises and make over possession to PDGD. PDGD asserted that the Official Liquidator had no beneficial use of the premises for winding up the company and that the property was an onerous covenant. The Official Liquidator acknowledged the premises as onerous and agreed to disclaim it on an 'as is where as basis.'2. Possession and Eviction of Alleged Sub-Tenants:PDGD argued that the entities occupying the premises, namely Adhunik Corporation Ltd., Jugal Kishore Agarwal, and Adhunik Metalic Ltd., were trespassers without any landlord-tenant relationship or written consent for sub-tenancy. PDGD sought the removal of these trespassers and vacant possession of the premises. The interveners, however, claimed to be lawful sub-tenants, having been inducted by the Company (in liquidation) with the alleged consent of the previous landlord. They presented various documents to support their claim of lawful occupation and payment of rent.3. Jurisdiction and Powers of the Company Court under Section 446 of the Companies Act:PDGD requested the application be treated under Section 446 of the Companies Act, which empowers the Company Court to adjudicate matters related to the winding-up process, including eviction of trespassers. The Court acknowledged its jurisdiction under Section 446 and Section 535 to order the eviction of trespassers from the premises held by the Company (in liquidation) as part of the due process of law.4. Application of the West Bengal Premises Tenancy Act, 1956 and 1997:The interveners contended that their sub-tenancies were protected under the West Bengal Premises Tenancy Act, which requires written consent from the landlord for sub-letting. They argued that the Company Court could not bypass the Rent Control Act and that eviction proceedings should be handled by the Rent Controller. The Court noted the lack of written consent for sub-tenancy and the interveners' failure to provide evidence of such consent. The Court granted liberty to PDGD to file a suit for resolving the issue of possession and sub-tenancy before the Company Court.Conclusion:The Court directed the Official Liquidator to release the property to PDGD and remove trespassers from the undisputed area of 1030 sq. ft. The Court also granted PDGD the liberty to file a suit against the Company (in liquidation) and the interveners to resolve the issue of possession for the disputed area of 1645 sq. ft. The Court affirmed its jurisdiction under Section 446 to adjudicate matters arising in the winding-up process, including eviction of trespassers, following the law applicable to such cases. The application was allowed, and the Court emphasized the discretionary nature of its powers under Section 446.