Calcutta High Court
Bangur Brothers Ltd. (In Ltqn) & Pdgd ... vs Official Liquidator & Anr on 16 November, 2017
Bench: Jyotirmay Bhattacharya, Arijit Banerjee
In the High Court At Calcutta
Civil Appellate Jurisdiction
Original Side
APO 78 of 2013
APOT 82 of 2013
CA 325 of 2010
CP 151 of 2003
Bangur Brothers Ltd. (In LTQN) & PDGD Investments & Trading (P) Ltd.
Vs.
Official Liquidator & Anr.
Before : The Hon'ble The Acting Chief Justice Jyotirmay Bhattacharya
&
The Hon'ble Justice Arijit Banerjee
For the appellant : Mr. Ratnanko Banerjee, Sr. Adv.
Mr. Kuldeep Mallick, Adv.
Mr. Ajay Gaggar, Adv.
Mr. Sanket Sarawgi, Adv.
Mr. Ashok Bose, Adv.
For the Official : Mr. Mukti Ghosh, Adv.
Liquidator Ms. Mithua Sen, Adv.
For the Respondent : Mr. Nilay Sengupta, Adv.
Mr. Arik Banerjee, Adv.
Ms. Pooja Shukla, Adv.
Heard On : 31.10.2017, 01.11.2017 CAV On : 02.11.2017 Judgment On : 16.11.2017 Arijit Banerjee, J.:-
(1) At all material times, one Venkatish Company Limited (in short VCL) was the absolute owner of the 2nd Floor of premises no. 14, Netaji Subhas Road, Kolkata 1 (in short "the said premises"). Pursuant to an order dated 1 February, 2006 passed by this Court sanctioning a Scheme of Arrangement, the estate division of VCL alongwith all its properties including the said premises stood transferred to and vested in the appellant company.
(2) At all material times, a company by the name of Bangur Brothers Limited (in short "the said company") was a monthly tenant in respect of a demarcated portion of the said premises under VCL. Subsequent to the transfer of the said premises to the appellant, the said company became a tenant under the appellant. (3) It appears that the said company had inducted various sub-tenants in various demarcated portions of the said premises. Some of such sub-tenants are Jugal Kishore Agarwal, Ghanshyam Das Agarwal and Nirmal Kumar Agarwal (collectively referred to as "the Agarwals"); Neepaz Metaliks Private Limited (in short Neepaz) and Adhunik Corporation Limited (in short Adhunik). (4) By an order of this Court passed on 6 December, 2006, the said company was ordered to be wound up. Accordingly, the said company is in liquidation and is in the process of being wound up.
(5) The appellant took out a Judge's Summons on 30 April, 2010 supported by an affidavit praying for inter alia a direction on the Official Liquidator to disclaim the said tenanted premises and for a direction on the Official Liquidator to hand over vacant and peaceful possession of the said premises to the appellant. The learned Company Judge directed notices to be issued to the occupants of the said premises pursuant whereto the Agarwals appeared and contested the said disclaimer application on their own behalf as also on behalf of Adhunik and Neepaz. It is not in dispute that Adhunik and Neepaz are companies controlled and managed by the Agarwals.
(6) By a judgment and order dated 22 January, 2013 the learned Single Judge directed the Official Liquidator to release the property in favour of the appellant. As regards a portion of the said premises (1030 sq.ft.) the learned Judge directed the Official Liquidator to remove the trespassers from the said portion and hand over vacant possession to the appellant, if necessary, with police assistance, since nobody appeared before the Court to claim any interest in respect of such portion. As regards the balance portion (1645 sq.ft.) which is under the occupation of the Agarwals and their two companies, the learned Judge held as follows:-
"According to the provisions contained under the Rent Act both old and new, creation of sub-tenancy without written consent of the landlord is a ground of eviction of the tenant. In the instant case two different agreements were disclosed by the interveners wherein it was stipulated that prior permission of landlord was obtained for induction of sub-tenant but no written permission was ever produced by any of the occupants being the interveners who are claiming to be lawful sub-tenants. Although it creates doubt in the mind of the Court but considering period of occupancy and making payment of rent to the Company (in liquidation), etc. this Court is of the view that the issue should be resolved by filing a suit before the Company Court. Accordingly liberty is granted to the applicant, admittedly the landlord, to institute a suit against the company (in liquidation) as well as the interveners for the purpose of resolving issue and for getting back possession of the property in question, before the Company Court, which the Company Court is entitled to entertain under Section 446 (2) of the Companies Act, 1956.
(7) Being aggrieved by the portion of the said judgment and order whereby the appellant was relegated to filing a suit for recovering possession regarding the aforesaid portion of the said premises the appellant has filed the present appeal. (8) Appearing for the appellant Mr. Ratnanko Banerjee, learned senior counsel submitted that the Agarwals and the said two companies (compendiously referred to as the Agarwals) are unauthorized sub-tenants and have no protection of law. He drew our attention to two tenancy agreements whereunder the said company inducted the Agarwals in the said premises. He submitted that the appellant's predecessor-in-
interest, i.e., VCL was not a party to the said agreements and nothing has been disclosed to show that VCL had consented to induction of the Agarwals in the said premises. The agreements are not binding on the appellant. No notice under Section 16 (1) of the West Bengal Premises Tenancy Act, 1956 (in short the 1956 Act) was served either by the said company or the Agarwals on VCL. Accordingly, the protection of Section 13 (2) of the 1956 Act is not available to the Agarwals. Mr. Banerjee also drew our attention to the rent receipts issued by VCL to the said company wherein it is expressly stated that "The tenant is bound not to make sub- tenant'.
(9) Learned senior counsel submitted that the Agarwals have no independent right directly or indirectly in respect of the said premises nor have the right or locus standi to contest any proceeding for recovery of possession of the said premises initiated by the owner of the said premises. He submitted that the Company Court, on an application under Section 535 of the Companies Act, has the power to direct the Official Liquidator to deliver vacant possession of a property of which the company in liquidation was a tenant, after removing all unauthorized occupants therefrom including alleged sub-tenants inducted by the company in liquidation without prior to consent of the owner/landlord of the premises. In this connection, Mr. Banerjee relied on a decision of a Division Bench of this Court in ACO No. 43 of 2015 (PDGD Investments & Trading (P) Ltd. Vs. Vikrant Forge Limited & Ors.) delivered on 12 April, 2016.
(10) Mr. Nilay Sengupta learned advocate appearing for the Agarwals referred to a Genealogical table at page 345 of the Paper Book and submitted that the appellant and the said company are both controlled by the Bangurs. If the Court lifts the corporate veil of the two companies, the Court will find that the Bangurs are at the helm of affairs of both the appellant and the said company. Hence, the appellant was always aware of the sub-tenancy created by the said company in favour of the Agarwals.
(11) Learned counsel further submitted that no eviction order can be passed by the Company Court under Section 535 of the Companies Act, 1956. Further, in any event, notice of eviction was required to be given to the Agarwals even if they are illegal sub-tenants. In support of his submission he relied on the following decisions:-
(i) Ashoke Ghosh & Ors. Vs. The Official Liquidator (2003) 3 Cal LT, 608, Para 35.
(ii) West Bengal Small Industries Development Corporation Ltd. Vs. Official Liquidator (20060 133 Company Cases 717.
(iii) Dr. S.P. Bhargava Vs. Harhyana Electric Steel Company Limited & Anr. (1998) 94 Company Cases 867.
(iv) Pushhpa Devi Jhunjhunwala Vs. Official Liquidator (1991) 1 Cal LJ 447.
(v) Mrs. Dr. Avtar Chawla Vs. Seghal Papers Limited (1985) 57 Company Cases 765.
(vi) East India Trading Company Vs. Radha Kanta Deb unreported judgment in APOT No: 377 of 2010.
(vii) AVO Engineers Pvt. Ltd. Vs. India Ice Acrated Water & Cold Storage Co. Ltd. (2006) 2 CHN 384.
(viii) Sri Ram Rayons Vs. Ashok Nain & Ors. (2005) 3 CHN 596 para 12 & 13.
(ix) Smt. Chander Kali Bail & Ors. Vs. Jagdish Singh Thakur & Anr.
1977 SC 2262 para 8, 9, 10 and 12.
(x) Atma Ram Properties (P) Limited Vs. Federal Motors (P) Limited (2005) 1 SCC 705 para 19.
(12) We have considered the rival contentions of the parties. (13) Two questions arise for our consideration. Firstly, whether the Company Court has jurisdiction under Sec. 535 of the Companies Act 1956, to pass an order directing the Official Liquidator to disclaim a property which was let out to the company in liquidation by the owners thereof after removal of unauthorized occupants therefrom? Secondly, if the answer to the first question is in the affirmative, whether the Company Judge, in the facts of the present case, should have passed such an order instead of granting liberty to the appellant to file a suit for evicting the Agarwals from the said premises.
(14) Section 535 of the Companies Act confers a right on the Official Liquidator to disclaim a property of the company in liquidation which in effect has ceased to be an asset and has become a liability and is not required for beneficial winding up of the company in liquidation, with the leave of the Court. Such leave is ordinarily granted by the Court where the property has become onerous and burdensome and the company in liquidation does not derive any benefit from the property in question. The Court may also direct the Official Liquidator to disclaim a property at the instance of some other interested party e.g. the owner/landlord in a case where the company was a tenant/lessee of the property if the tenancy/lease has ceased to be of any use or benefit to the company in liquidation. This is the settled position in law. (15) That the Company Court has jurisdiction under Sec. 535 to decide the question of disclaimer of onerous contracts and onerous property and in deciding such question, the learned Company Judge may adjudicate the rights and liabilities of lessors, lessees, tenants, sub-tenants, sub-lessees, trespassers etc. is no longer res integra. The Division Bench of this Court in its judgment dated April 12, 2016 delivered in ACO No. 43 of 2015 (PDGD Investment & Trading (P) Ltd.-vs.- Vikrant Forge Ltd. and Ors) has also held so. What is essential is that an occupant should be given notice and an opportunity of hearing before an order is passed which would adversely affect such occupant. In the present case, admittedly the Agarwals were heard by the learned Company Judge. We have no doubt in our mind that the Company Court has the jurisdiction under Sec. 535 to pass an order directing the Official Liquidator to disclaim a property of which the company in liquidation was a tenant/lessee and to deliver vacant possession thereof to the landlord/owner. In Wellman Wacoma Ltd.-vs.-Tivoli Park Apartments (P) Ltd., (2012) 4 CHN (Cal) 645, a Division Bench of this Court in effect held that eviction following adjudication upon documentary evidence and pleadings by the Company Court, of rights and liabilities in respect of property held by the company in liquidation would be eviction following due process of law. Hence, the first question is answered in the affirmative.
(16) In so far as the second question is concerned, it is not in dispute that neither the said company nor the Agarwals gave notice under Sec. 16(1) of the 1956 Act to VCL. Sec. 16(1) provides that where after the commencement of the said Act, any premises are sub-let either in whole or in part by the tenant with the previous consent in writing of the landlord, the tenant and every sub-tenant to whom the premises are sub-let shall give notice to the landlord in the prescribed manner of the creation of the sub-tenancy within one month from the date of such sub-letting and shall in the prescribed manner notify the termination of such sub-tenancy within one month of such termination. This provision is mandatory. Once such notice is given the sub- tenant would be entitled to the protection of Sec. 13(2) of the 1956 Act in the sense that they will be entitled to contest any suit for eviction that the landlord may file against the tenant. Sec. 13(2) provides that the sub-tenants, if any, referred to in Sec. 16 who have given notice of their sub-tenancy to the landlord under the provisions of that Section shall be made parties to any suit or proceeding for the recovery of possession of the premises by the landlord. What follows from this, is that a sub-tenant who has not given notice of his alleged sub-tenancy to the landlord need not be made a party to a proceeding initiated by the landlord for recovery of possession of the premises in question and any order passed in such proceeding would none the less be binding on the sub-tenant. However, this does not seem to be of great significance in the facts of this case since the learned Judge admittedly heard the Agarwals. The question is whether the learned Judge should have passed an order for removal of the Agarwals from the said premises and delivery of vacant possession of the said premises to the appellant? Not a scrap of paper has been produced before us to show that the said company obtained consent in writing from VCL before inducting the Agarwals in the said premises. Learned Counsel for the Agarwals relied on Clause 8 of the agreements under which they were inducted in the said premises by the said company which reads as follows:-
"8. The Landlord declares that it has the permission of its superior landlords for sub-letting the space mentioned herein and in case of any action, claim and/or proceedings against the tenant by Superior Landlords and upon his eviction and vacating of premises the landlord herein does hereby undertake to indemnify the Tenant by providing alternate accommodation mutually acceptable as per terms of this agreement filing which compensation will be paid to tenant at then prevailing market rates."
However, VCL was not a party to the said agreement. It is the specific case of the appellant that no consent of VCL was obtained and in fact, VCL was not even aware of the presence of the Agarwals in the said premises.
(17) That the Agarwals are in physical occupation of the said premises is not in dispute. However, we are of the opinion that such occupation cannot create any right in their favour viz-a-viz the landlord/owner of the said premises being the appellant. In Biswanath Poddar-vs.-Archana Poddar, AIR 2001 SC 2849, the Apex Court held that if a sub-tenancy is created in contravention of the provisions of the 1956 Act, it would be unnecessary for the landlord to implead the sub-tenant while seeking eviction of the tenant. The said decision was followed by this Court in Birla Corporation Ltd.-vs.-Basant Properties Ltd, (2011) 3 CHN (Cal) 193. In other words, the Agarwals cannot claim any kind of recognition from the appellant nor can assert any right, title or interest in respect of the said premises viz-a-viz the appellant. The observation of the learned Single Judge that since the Agarwals have been in occupation for a long period, the appellant should file a suit to recover possession of the property, cannot be sustained. Long occupancy per se cannot create any kind of right in respect of a property except perhaps a right of being heard before an order is passed for eviction of such occupant, in certain cases. In Smt. Pushpa Devi Jhunjhunwala-vs.-Official Liquidator, High Court, Calcutta, (1993) 1 CLJ 447, a learned Judge of this Court relying on the Apex Court decision in Ravindra Ishwardas Sethna-vs.-Official Liquidator, High Court, Bompany, AIR 1983 SC 1061, held that in liquidation proceedings summary eviction can be ordered in an appropriate case and no suit regularly filed is necessarily called for before such an order is passed.
(18) The decisions relied upon by learned Counsel for the Agarwals do not advance their case at all. In Ashoka Ghosh-vs.-Official Liquidator (supra), a learned Single Judge held that lease-hold interest being an asset of the company in liquidation, possession of the premises in question from the actual occupants could be taken only in accordance with due process of law. We have already indicated that an eviction order passed by the Company Court under Sec. 535 is eviction in due process of law. In West Bengal Small Industries Development Corporation Ltd.- vs.-Official Liquidator (supra), a Division Bench of this Court held that the lease- hold interest of a company in liquidation being an asset of the company, it could be disclaimed under Sec. 535 of the Companies Act only if the conditions mentioned in the Section were complied with and it appeared to the Company Court that the terms of the lease were onerous. In Dr. S. P. Bhargava-vs.-Haryana Electric Steel Co. Ltd. (supra), the question was whether proceedings for the execution of an order creating a limited tenancy under Section 21 of the Delhi Rent Control Act, 1958 are 'other legal proceeding' within the meaning of Sec. 446 (1) of the Companies Act, 1956 requiring leave of the Company Court for their continuance after the company was ordered to be wound up and whether the Rent Controller before whom such proceedings were pending was 'a Court' within the meaning of Sec. 446(3) of the Companies Act so as to entitle the Company Court to transfer the proceedings to its own file. The learned Single Judge of the Punjab and Haryana High Court held that the proceedings pending before the Rent Controller were not 'other legal proceeding' and hence, could not be transferred to the Company Court. In Mrs. Dr. Avtar Chawla-vs.-Sehgal Papers Ltd. (supra), a learned Single Judge of the P & H High Court held that an ejectment petition under the Rent Control Act against a company in liquidation has no bearing on the liquidation proceedings and hence should not be transferred to the Company Court from the Rent Controller. In East India Trading Company-vs.-Radha Kanta Dhar (supra), a Division Bench of this Court held that there was nothing wrong in the learned Company Judge granting liberty to the landlord to file a suit for eviction against the occupant of a premises of which the company in liquidation was a tenant while refusing to grant relief under Sec. 535 of the Companies Act. In AVO Engineers (P) Ltd.-vs.-India Ice Aerated Water & Cold Storage Co. Ltd. (supra), the issue was the manner in which fair rent of a tenanted premises should be determined. In Sriram Rayons-vs.-Ashok Nain (supra), again the issue was regarding determination of fair rent and has no relevance to the facts of the present case. In Smt. Chander Kali Bail-vs.-Jagdish Singh Thakur (supra), the provisions of the Madhya Pradesh Accommodation Control Act, 1961 fell for consideration by the Hon'ble Apex Court. In Atma Ram Properties (P) Ltd.-vs.-Federal Motors (P) Ltd. (supra), the Apex Court held that under O. 41 R. 5 of the CPC, the Appellate Court has jurisdiction to put the applicant on such reasonable terms as would in its opinion reasonably compensate the decree holder for loss occasioned by delay in execution of decree by the grant of stay order, in the event of the appeal being dismissed. The Apex Court further held that in case of premises governed by the provisions of the Delhi Rent Control Act, 1958, in view of the definition of a 'tenant' contained in Sec. 2(l) of the Act, the tenancy does not stand terminated merely by its termination under the general Law but terminates with the passing of the decree for eviction. None of these decisions, according to us are even remotely relevant for the purpose of the present case.
(19) In view of the fact that the Agarwals have not been able to establish or even prima facie show any independent right to be inoccupation of the said premises, in our opinion, while granting leave to the Official Liquidator to disclaim the said premises, the learned Single Judge ought to have directed the Official Liquidator to deliver vacant possession of the said premises to the appellant by removing the occupants therefrom. The Agarwals are clearly in unauthorized occupation of the said premises. The other Division Bench of this Court in ACO 43 of 2015 was of the same view in respect of an occupant of another portion of the 2nd Floor of premises no. 14, Netaji Subhas Road, Calcutta who was identically situated as the Agarwals and claimed tenancy right under the company in liquidation. In our view, since the Agarwals have not been able to demonstrate an iota of right to remain in occupation of the said premises, it would be unjust and improper to relegate the appellant to an eviction suit for recovering possession of the said premises as that will be a long drawn process.
(20) In view of the aforesaid, this appeal succeeds, the Official Liquidator is directed to deliver vacant possession of the said premises to the appellant after evicting the Agarwals and the limited companies under their control and management therefrom, if any, with police help by the end of December, 2017. The Officer-in-Charge of the jurisdictional Police Station is directed to render all assistance to the Official Liquidator in case such help is asked for, for the purpose of implementation of this order.
(21) APO 78 of 2013 is accordingly disposed of, without, however, any order as to costs.
(22) Urgent certified photocopy of this judgment and order, if applied for, be given to the parties upon compliance of necessary formalities.
I Agree.
(Jyotirmay Bhattacharya, ACJ.) (Arijit Banerjee, J.)