Gujarat High Court
Official Liquidator Of M/S Maharana ... vs M/S Shri Jagdish Oil Mills Ltd on 24 December, 2018
Author: R.M.Chhaya
Bench: R.M.Chhaya
C/COMA/399/2011 CAV JUDGMENT
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/COMPANY APPLICATION NO. 399 of 2011
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR.JUSTICE R.M.CHHAYA
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1 Whether Reporters of Local Papers may be allowed to see
the judgment ?
2 To be referred to the Reporter or not ?
3 Whether their Lordships wish to see the fair copy of the
judgment ?
4 Whether this case involves a substantial question of law as
to the interpretation of the Constitution of India or any
order made thereunder ?
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OFFICIAL LIQUIDATOR OF M/S MAHARANA MILLS CO LTD (IN LIQN.)
Versus
M/S SHRI JAGDISH OIL MILLS LTD
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Appearance:
MS KJ BRAHMBHATT(202) for the PETITIONER(s) No. 1
OFFICIAL LIQUIDATOR(16) for the PETITIONER(s) No. 1
AMIT BAROT, AGP for the RESPONDENT(s) No. 3,4
MR ASHOK L SHAH(737) for the RESPONDENT(s) No. 1
MR SIRAJ R GORI(2298) for the RESPONDENT(s) No. 2
MS MIRELLA M CARDOZO(3281) for the RESPONDENT(s) No. 7
NOTICE SERVED(4) for the RESPONDENT(s) No. 5,6
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CORAM: HONOURABLE MR.JUSTICE R.M.CHHAYA
Date : 24/12/2018
CAV JUDGMENT
Page 1 of 74
C/COMA/399/2011 CAV JUDGMENT
1.0. The present application is filed by the Official Liquidator for direction directing the respondent no.1 to vacate the land bearing City Survey No.5105 admeasuring 20529.0353 sq mtr situated at Porbandar, Dist. Porbandar. As can be culled out from the record of the application more particularly, affidavit of the Official Liquidator in support of his application following noteworthy facts emerge. That the Company named M/s. Maharana Mills Company Limited was ordered to be wound up by an order dated 22.12.1989 passed by this Court in Company Petition No. 138 of 1989 on the basis of the information forwarded by the Board of Industrial and Finance Reconstruction and the Official Liquidator attached to this Court was appointed as the Official Liquidator of the company in liquidation with a direction to take possession of the assets and properties of the company in liquidation. 2.0. As the record indicates that the Company Application No. 300 of 1992 was filed by the Official Liquidator seeking direction for getting properties and the assets of the company valued and then put the same for sale by public auction after inviting offers. The Official Liquidator has further brought on record that one application was filed by Shri Amit S Adatia, Director of M/s. Abhijeet Developers Pvt. Ltd being Company Application No.427 of 198 seeking orders and directions for holding meetings of various classes of Creditors, Workmen, Employees and Shareholders for Page 2 of 74 C/COMA/399/2011 CAV JUDGMENT consideration of a scheme of compromise and arrangement between the Company and them under Section 391 of the Companies Act, 1956 for revival of the company. By an order dated 08.02.2002 this Court directed to convene meeting of classes of Creditors. However, the said application came to be withdrawn vide order dated 14.08.2002.
2.1. The Official Liquidator has further contended that respondent no.1 herein Shree Jagdish Oil Industries Limited addressed a letter to the Official Liquidator on 20.04.2005 informing the Official Liquidator that the land admeasuring 20529.0353 sq mtr i.e. 24553 sq yard has been leased for a period of 25 years by the company in liquidation to respondent no.1 and that they are in possession of the said land. As the record indicates that thereafter the Official Liquidator again approached this Court by way of filing OLR No. 70 of 2005, which came to be allowed by order of this Court dated 7.8.2009, whereby, this Court permitted the Official Liquidator to sell all the properties of the company in liquidation by giving advertisement in newspapers fixing upset price, EMD as per the said order. The Official Liquidator also prayed to direct the respondent no.1 Shree Jagdish Oil Industries Page 3 of 74 C/COMA/399/2011 CAV JUDGMENT Limited to handover vacant and peaceful possession of the land to the Official Liquidator in view of the fact that lease already expired way back in the year 1982. It is a matter of record that on receipt of the notice, respondent no.1 herein appeared in the matter and filed affidavit claiming rights as a statutory tenant and the said report culminated into order dated 7.8.2009 passed by this Court (Coram:
Hon'ble Mr. Justice Jayant Patel, as he then was) and by the said order direction for sale came to be given as aforesaid. 2.2. The Official Liquidator called for meeting of sale committee on 28.09.2010 to decide the sale of the land of the company in liquidation wherein it was decided to get land valued as last valuation was done in the year 2007. The Official Liquidator thereafter filed report being OLR No.155 of 2010 for confirmation of sale of the assets and properties of the company in liquidation. It is also matter of record that M/s. Abhijeet Developers Private Limited filed an appeal, which was dismissed by this Court vide order dated 8.4.2010. That by an order dated 09.07.2010 passed in OLR No. 155 of 2010, this Court was pleased to confirm the sale of Lot No. D, E and F i.e. civil structure, plant and machineries and Furniture and Fixtures of the company in liquidation for Rs.10.50 Page 4 of 74 C/COMA/399/2011 CAV JUDGMENT crores in favour of one M/s. Chechani Trading Company. 2.3. As per the earlier order, sale committee meeting was held as per the order dated 09.07.2010 and it was decided to get lands valued again. It is also further contended that one M/s. OM Consulting Engineer, Porbandar was appointed as a Valuer who submitted its report through State Bank of India on 12.10.2010. As per the order dated 29.10.2010 passed by this Court, the Official Liquidator gave advertisement in English Daily "Time of India" and "Divya Bhaskar" Gujarati Daily on 10.11.2010 in Ahmedabad Editons and Gujarat Samachar, Gujarati Daily in Ahmedabad and Rajkot Editions inviting offers in sealed covers and the auction was kept before this Court on 3.12.2010. Pursuant to the advertisement, only three offers were received and OLR remained pending and ultimately by order dated 11.07.2017 passed by this Court the said OLR came to be disposed of. Thereafter, the Official Liquidator has filed the present application for direction against the respondent no.1 to vacate the land in question. It is basically averred by the Official Liquidator that land was granted on lease to respondent no.1 by the company in liquidation for a period of 25 years from 1957 and accordingly lease expired on 1982 but the possession of Page 5 of 74 C/COMA/399/2011 CAV JUDGMENT the land still lies with the lessee. The Official Liquidator on receipt of the intimation by the respondent no.1 vide their communication dated 20.04.2005 informed respondent no.1 that by communication dated 10.05.2005 inter alia informing the respondent no.1 that since lease has already expired way back in the year 1982 and thereafter the lease is neither renewed nor extended nor any rent is received by the Official Liquidator, the respondent no.1 should vacate land and handover the vacant and peaceful possession thereof to the Official Liquidator forthwith.
That one M/s. Mahesh Jani & Co. by letter dated 17.5.2005 informed the Official Liquidator that respondent no.1 company is a sick company as provided under Sick Industrial Companies (Special Provisions) Act, 1985 and therefore, they refused to handover the possession of the land to the Official Liquidator. It is the case of the Official Liquidator that since long the Official Liquidator is not in possession to dispose of the subject land because the respondent no.1 has continued in possession. In response to the notice issued by this Court, respondent no.1 has filed his affidavit in reply. It is contended by the respondent no.1 that company in liquidation has granted lease of approximately 24533 sq yard freehold land at monthly rent of Rs.400/ w.e.f. 19.12.1957 and even after the Page 6 of 74 C/COMA/399/2011 CAV JUDGMENT expiry of lease period in 1982, respondent company has continued to be in possession of the said freehold land and that the company in liquidation never demanded back the possession of the leasehold land and thus, it is contended that the respondent no.1 has continued to be in possession of the said land and has become a statutory tenant and is entitled to protection granted by the law to statutory tenant. It is also averred that the respondent no.1 is ready and willing of pay arrears of monthly rent in respect of the said land for the period after 1982. That it has already paid all legal taxes. The respondent no.1 has also averred that as per the order passed by this Court dated 29.08.2005, respondent no.1 has deposited Rs.5 lakhs with Official Liquidator and therefore, prayer of recovery or rent would not survive any more. The respondent no.1 has also relied upon the order passed by this Court (Coram:
Hon'ble Mr. Justice Jayant Patel, as he then was) dated 7.8.2009 and has contended that by the said order prayer prayed for by the Official Liquidator in para 14 A is covered and same is finally disposed of in terms of the said order. It is further contended that pursuant to filing of OLR No. 155 of 2009 and pursuant to the order of advertisement given in newspapers dated 16.10.2009, the Official Liquidator himself has stated that highest offer of Rs.3.10 Page 7 of 74 C/COMA/399/2011 CAV JUDGMENT crore for Lot No.B was received by the respondent no.1 i.e. Shree Jagdish Oil Industries Limited, however the Court did not accept the offer. The respondent no.1 relied upon the order dated 29.10.2010 and advertisement issued by the Official Liquidator pursuant to the said order in newspapers dated 10.11.2012, has contended that even in the said advertisement, it is mentioned by the Official Liquidator that respondent no.1 Shree Jagdish Oil Industries Limited, is in possession of the land in question. It is also brought on record that even as per the Official Liquidator pursuant to the advertisement given by the Official Liquidator as per the order passed by this Court in OLR No. 139 of 2010 three tender forms were sold and as such one offer was received in sealed cover and as far as lot no. CI and CII are concerned, no offers was received by the Official Liquidator. The respondent no.1 has further averred that Maharana Rashitriya Kamgar Sangh, Porbandar objected to the upset price of the land in possession of the respondent and contended that it is very low. The respondent no.1 has further averred that according to the union, in last auction, one offer for Rs.6.55 crores was received with the condition that the possession will be handed over to the offerer free from all encumbrances and after evicting the present tenant i.e. respondent Page 8 of 74 C/COMA/399/2011 CAV JUDGMENT no.1 and according to the union more price can be fetched. The respondent has also referred to the report submitted by the Official Liquidator in OLR No. 155 of 2009 dated 1.12.2009, however it is alleged that earlier order passed by this Court on 7.8.2009 was overlooked by this Court and therefore, it is contended that the prayer prayed for by the Official Liquidator to handover the vacant possession of the land in question does not survive and does not need any consideration at this stage. It is also averred that as no other offer is received except offer given by the respondent no.1, the same may be confirmed. The respondent no.1 has also filed a further reply dated 19.10.2011 and has contended that claim of the Official Liquidator is barred by law of limitation. It is contended that the lease period has expired on 18.12.1982 and the respondent is continued in possession of the property uninterruptedly even after expiration of the lease period on 18.12.1982. It is contended that the fix rent was Rs.400/ per month and over and above the monthly rent, respondent was also required to pay house tax, education cess and other taxes in respect of the land in question, which has been regularly paid by the respondent. It is contended that company was ordered to wound up by order of this Court dated 22.12.1989 passed in Company Application No. 138 of 1989 Page 9 of 74 C/COMA/399/2011 CAV JUDGMENT and the Official Liquidator attached to this Court was appointed as liquidator of the company. It is contended that respondent company enjoys the protection of statutory tenant granted under the Rent Act and that it is always ready and willing to pay rent to the company, which company has refused to accept. It is contended by the respondent no.1 that claim of the Official Liquidator for getting possession is barred by law of limitation. It is contended by the respondent no.1 that any proceedings by the landlord to get the possession after determination of the lease has to be filed within 12 years of the determination of the lease by efflux of time. It is contended that if the company in liquidation wanted to get back possession of the leased property from the respondent, it ought to have filed such proceedings within 12 years from 18.12.1982 that is to say on or before 17.12.1994. . It is further contended that even the Official Liquidator after being appointed as liquidator of the company in the year 1989 has never claimed back the possession, except for the first time in the year 2005 and therefore, it is submitted that the plea of Official Liquidator is beyond the time of limitation. It is also contended that law of landlord and tenant does not change merely because the company goes into liquidation and the only change that liquidation effects is that after the liquidation, Page 10 of 74 C/COMA/399/2011 CAV JUDGMENT the Official Liquidator would represent the company instead of Board of Directors, however the liquidation also would be subject to the same law as would be applicable to the company prior to its winding up. It is further contended by the respondent that respondent company has its own land adjacent to the land which is leased for company in liquidation and the respondent has constructed its factory on the combined plot of land. The respondent has further urged that respondent company owns land admeasuring 21715 sq yards and the land which is leased by the company in liquidation is admeasuring 24551 sq yard and has also contended that how the respondent became owner and occupier of the adjacent land admeasuring 21715 sq yards. In nutshell, it is contended by the respondent that out of 21715 sq yards of land owned by the respondent no.1 company, 20156 sq yards of land was transferred in favour of the respondent company by its original owner and 1559 sq yards was transferred by the company in liquidation in favour of respondent no.1 company and the respondent no.1 company has also relied upon para 2, in particular, of the lease deed. It is also contended that after the contract period was over, the respondent no.1 has remained in possession of the land in question uninterruptedly as a statutory tenant. The Page 11 of 74 C/COMA/399/2011 CAV JUDGMENT respondent has also relied upon the document such as rent note dated 29.1.1966, report dated 16.12.2005 submitted by the Official Liquidator to this Court, letter dated 19.07.1986 addressed by the company in liquidation to State Bank of Saurashtra, Porbandar stating that land in question is leased to Shree Jagdish Oil Industries Limited for a period of 25 years, valuation report dated 29.11.2007 of Shri Pranav Parikh, Government Approved Valuer which was submitted to this Court and further valuation report dated 8.10.2010 of Om Consulting Engineer, Porbandar through State Bank of India.
2.4. The respondent no.2 workers union has also filed affidavit in reply. The workers union in its affidavit in reply, inter alia alleged that respondent no.1 is now an encroacher as it is in occupation of the premises unauthorizedly. It is contended by the respondent no.2 union that even electric connection is cut off by the Paschim Gujarat Vij Company Limited w.e.f. 1.5.1996. It is specifically averred by the workers union that it had filed an affidavit in OLR No., 139 of 2010 and the same is adopted even in this application.
Relying upon the provisions of Section 466 of the Act, it is contended by the workers union that this Court can also direct the Page 12 of 74 C/COMA/399/2011 CAV JUDGMENT Official Liquidator to evict the trespasser and thus the respondent no.2 workers union has reiterated its stand taken in OLR No.139 of 2010 wherein it is contended that even though lease period was over since 1982, respondent no.1 is continued in possession till date without payment of any rent. It is also contended in the said affidavit that Rs.5 lakhs paid by the respondent no.1 may be treated as possession cost.
2.5. The Official Liquidator has filed rejoinder to the affidavit in reply filed by the respondent no.1 company. The Official Liquidator has referred to clause 8 and 10 of the lease deed and has inter alia contended that as provided thereunder, on expiry of lease deed after 25 years, the respondent will have to handover vacant and peaceful possession of the land removing all the fixture, building and machinery from the said land. It is further contended by the Official Liquidator that respondent is in illegal and unauthorized possession of the land in question. The Official Liquidator has further averred that in the year 2005, the Official Liquidator wrote letter in the form of notice to the respondent no.1 to handover the vacant and peaceful possession of the land in question. The Official Liquidator referring to para 10 of the affidavit Page 13 of 74 C/COMA/399/2011 CAV JUDGMENT of the respondent no.1 has contended that respondent no.1 has wrongly claimed that this Court had not granted the prayer of vacating of land in question and said issue is disposed of by the order dated 7.8.2009. It is contended by the Official Liquidator that in fact question as regards statutory tenancy rights was left open by the Court to be decided as and when time arise to consider the same and as referred in para 6 of the said order wherein inter alia it is decided that company in liquidation is owner of the property as it has right to sell the property. It is contended by the Official Liquidator that respondent no.1 as occupants of the land has no right whatsoever to retain the possession of the land once the company has gone into liquidation. It is further contended that there is no dispute about the title of the property as property belongs to the company either as a landlord or as a lessee even in that case, the lease being of a permanent nature as being under 99 years lease. It is further contended that there was no dispute about the fact that the possession of the property with the occupants was by virtue of the lease deed of 25 years, which has expired way back in 1982 and there was no relationship of the tenantlandlord as contended by the respondent as they have never paid a single amount of rent since year. Referring to Section 456 of the Page 14 of 74 C/COMA/399/2011 CAV JUDGMENT Companies Act, 1956, it is contended by the Official Liquidator that where a winding up order has been made all the properties of the company shall be deemed to be in the custody of the Court from the date of order for winding up. It is further contended that the object of the winding up proceedings is to put all secured creditors and workers at par and to pay them pari passu. It is also alleged that attachment effected by the revenue authority on the property of company in liquidation was ineffective and the liquidator could take the properties of the company in liquidation in his custody free from all attachments and realise their value according to the winding up procedure. On the aforesaid basis, it is also contended that therefore, Official Liquidator has rightly exercised its jurisdiction and has rightly issued eviction letter cum notice in the year 2005. The Official Liquidator has also filed additional affidavit dated 30.01.2015 pursuant to the order dated 4.12.2014 passed by this Court (Coram: Hon'ble Mr. Justice N V Anjaria) wherein details of the sale procedure followed and the valuation of the free hold land occupied of the respondent no.1 and government lease hold bifurcated and queries which were raised as far as valuation is concerned, is answered. However, at this stage, the said aspect is not necessary to be considered in detail. Similar Page 15 of 74 C/COMA/399/2011 CAV JUDGMENT affidavit is filed by the Official Liquidator and the sale proclamation, proposed sale proceeds along with schedule is brought on record by way of additional affidavit dated 3.11.2015. The Official Liquidator has thereafter filed compliance report dated 15.12.2015, pursuant to the order passed by this Court (Coram:
Hon'ble Mr. Justice Vipul M Pancholi) dated 5.11.2015, which also relates to the sale procedure, which was carried out by the Official Liquidator wherein pursuant to the advertisement given in the newspapers on 24.11.2015, pursuant to the order dated 5.11.2015, 8 tenders forms have been sold and other prayers for payment of advertising bill is made. The Official Liquidator has filed a further report dated 18.12.2015 wherein reference is made to OJCA No.795 of 2015 filed by the Collector, Porbandar and Secretary, Revenue Department, State of Gujarat wherein inter alia it was prayed by those applicants not to sell lease hold lands of the subject company in liquidation and to recall the order dated 5.11.2015 was prayed for. However, both the applications came to be disposed of by this Court (Coram: Hon'ble Mr. Justice Vipul M Pancholi) vide order dated 5.11.2015. The Official Liquidator has therefore, prayed that Secretary, Land & Revenue Department, Gandhinagar, Collector, Porbandar and State Bank of India, ARM Brnach, Page 16 of 74 C/COMA/399/2011 CAV JUDGMENT Ahmedabad, IDBI Bank Limited, Recovery Branch, Mumbai and Central Bank of India, Recovery Branch, Ahmedabad may be joined as party respondents to the present application and accordingly those parties were joined as respondents to the application vide order dated 09.02.2016.
2.6. The respondent no.4 Collector, Porbandar through Deputy Collector has filed an affidavit. It is inter alia contended by the District Collector that authorities have given land on lease to the company in liquidation which are enlisted in para 4. It is also contended by the Deputy Collector that all these lands are new tenure lands and cannot be sold in auction and dispose of in any manner whatsoever as the ownership of the said lands vest with the State Government and that lease rentals worth Rs.6,75,121,82 is due and payable to the State Government for usage of the said parcel of land. The Deputy Collector has also relied upon the photo copies of the extract, revenue record as well as order of lease granted by the Hazur Office, Porbandar.
2.7. That by a further affidavit dated 09.10.2017, the respondent no.1 has brought on record the fact that respondent Page 17 of 74 C/COMA/399/2011 CAV JUDGMENT no.1 is existing the company and is not wound up by High Court of Bombay. In the very said affidavit the fact that respondent no.1 was declared Sick under the provisions of SICA, factum of BIFR proceedings and the orders passed by the BIFR as well as in appeal as well as writ petition filed before the Delhi High Court, against the order of AAIFR is brought on record. It is contended by the respondent no.1 company that respondent no.1 had become positive by Rs.64.44 lakh and that the company was entitled to be deregistered from the purview of SICA and order dated 13.09.2004 passed by the BIFR was quashed and set aside and matter was remanded back to the BIFR to take further steps in accordance with the provisions of SICA and it is also brought on record that ultimately by order dated 22.02.2007 respondent no.1 was discharged from the purview of the BIFR.
2.8. The Official Liquidator has also filed affidavit dated 09.10.2017 pursuant to the order passed by this Court dated 4.10.2017 and has declared that the respondent no.1 is not in liquidation and has relied upon the communication dated 5.10.2017 addressed by the Official Liquidator, Mumbai as well as document supplied by the office of Registrar of Companies, Page 18 of 74 C/COMA/399/2011 CAV JUDGMENT Maharashtra at Mumbai. The Official Liquidator has filed further affidavit dated 08.08.2018. The Official Liquidator has averred that the OLR report being OLR No. 70 of 2005 was filed for various prayers wherein one of the prayer was to direct respondent no.1 herein to handover the vacant and peaceful possession of the land to the Official Liquidator in view of the fact that the lease has already expired way back in the year 1982. The Official Liquidator has further referring to the affidavit filed by the State Bank of Saurashtra in OLR No. 70 of 2005 has contended that as stated by the State Bank of Saurashtra in para 4 and 6 of the said affidavit as per legal opinion dated 13.3.2006 the company in liquidation has leased 24551 sq yards of its land to M/s. Shree Jagdish Oil Industries Limited respondent no.1 for a period of 25 years running from 19.12.1957 as per the registered lease deed no. 176 dated 29.1.1966 for industrial purpose and that as per the registered lease deed the period of lease has expired around 18.12.1982 and despite the same respondent no.1 continues to be in possession of 24551 sq yards of land leased to it under said registered lease deed dated 19.12.1957. The copy of the legal opinion and the relevant correspondences exchanged between State Bank of Saurashtra company in liquidation and respondent no.1 Page 19 of 74 C/COMA/399/2011 CAV JUDGMENT dated 8.7.1986, 14.07.1986, 19.7.1986, 13.11.1986, 11.11.1986 and 18.09.1987 have been brought on record. Even "Bhadachhithi No Samolekha", is brought on record by the respondent no.1 in OLR No. 70 of 2015. It is inter alia contended by the Official Liquidator that on bare perusal of the letters exchanged between the State Bank of Saurashtra, company in liquidation and M/s Jagdish Oil Industries Limited respondent no.1 shows that said lease period has expired on 17.12.1982 and on expiry of the said lease period, respondent no.1 failed to handover the possession in compliance with condition no.8 of said registered lease deed dated 29.1.1966, the company in liquidation also asked respondent no.1 to handover the possession and still respondent no.1 continued in possession illegally and in express breach of condition no.8 and 10 of the registered lease deed dated 29.1.1966 and it is therefore, alleged that respondent no.1 has no right to continue with the possession / remain in possession of said land in question and has reiterated that on the aforesaid grounds, this Court may direct the respondent no.1 to give vacant and peaceful possession of the land bearing city survey no. 5105 admeasuring 24551 sq yards. 3.0. Heard Ms. K.J. Brahambhatt, learned advocate for the Official Page 20 of 74 C/COMA/399/2011 CAV JUDGMENT Liquidator, Mr. Ashok L Shah, learned advocate for the respondent no.1, Mr.Siraj R Gori, learned advocate for the respondent no.2 workers union, Mr. Prakash K Jani, learned Additional Advocate General with Mr. Amit Barot, learned Assistant Government Pleader for the respondent nos. 3 and 4. Learned counsel for the Official Liquidator, respondent nos. 1 and 2 have also filed their written submission, which are taken on record.
4.0. Ms. K.J. Brahambhatt, learned advocate for the Official Liquidator referring to the clause 8 and 10 of the registered lease deed dated 28.01.1966, which has been given effect from 19.12.1957 contended that it is provided in clear terms that lease for said land was for fixed period of 25 years, which has come to an end in the year 1982. It was contended that as provided under Clause 8, the respondent no.1 was required to handover the possession of the land in question in original position / condition, however the respondent no.1 did not comply with the condition of clause no. 8 and did not handover the possession of the land in question to the company and remained in possession under the pretext of purchasing the same and then company came to be wound up. It was also contended by Ms. Brahambhatt that the said Page 21 of 74 C/COMA/399/2011 CAV JUDGMENT lease deed has not been renewed or extended nor any fresh agreement has been executed by the company in liquidation and hence respondent no.1 has no right to continue in possession of the said land and thus it was contended that respondent no.1 has remained in possession of the said land unauthorizedly and illegally. It was also contended that the contention raised by the respondent no.1 company to the effect that on expiry of the said fixed lease deed period, the company in liquidation had never demanded the possession, is incorrect. Relying upon the communication dated 8.7.1986 addressed by the State Bank of Saurashtra to respondent no.1, communication dated 19.07.1986 addressed by the State Bank of Saurashtra to the company in liquidation, communication dated 14.07.1986 addressed by the respondent no.1 to State Bank of Saurashtra, letter dated 13.11.1986 addressed by the company in liquidation to the General Manager of respondent no.1 company and also letter dated 18.11.1987 addressed by the company in liquidation to the General Manager of respondent no.1 company, it was contended by Ms. Bhrambhatt that, in no uncertain terms the company in liquidation had asked respondent no.1 to handover the vacant possession of the land in question as the lease period has already expired. Page 22 of 74 C/COMA/399/2011 CAV JUDGMENT 4.1. Ms. Bhrahmbhatt further referring to subsection 2 of Section 456 of the Companies Act contended that by virtue of the said provisions the properties and assets of the company shall be deemed to be in custody of this Court as from the date of order for winding up of the company. Ms. Bhrahmbhatt further submitted that this Court by order dated 22.12.1989 was pleased to pass an order of winding up of the company in liquidation and from that day the properties and assets of the company in liquidation vested in the custody of this Court and therefore, respondent no.1 had no right whatsoever to retain possession of the said land of the company. It was contended that the possession of the land in question by respondent no.1 is unauthorized and illegal and even though by notice dated 10.05.2005, the Official Liquidator demanded the possession, the respondent no.1 has refused to handover the same by communication dated 17.5.2005 addressed by its advocate inter alia stating that it is not illegal and unauthorized possession of the said land in question. Ms. Bhrahmbhatt therefore, submitted that for the first time respondent no.1 specifically refused to handover the possession of the said land through said communication. It was contended by Ms. Page 23 of 74 C/COMA/399/2011 CAV JUDGMENT Bhrahmbhatt that even if respondent no.1 had remained in physical possession of the land, such possession is unauthorized and illegal and respondent no.1 is trespasser and therefore, this Court may pass order directing the respondent no.1 to handover the possession of the land in question forthwith as provided under Section 456(2) of the Act and the properties and assets of the company shall be deemed to be in custody of this Court. Again referring to Section 456(2) of the Act, Ms. Bhrahmbhatt contended that by virtue of the said provisions, the land in question has come in deemed custody of this Court - Official Liquidator and therefore, there is no question of application of Article 67 of the Limitation Act, 1963. Ms. Bhrahmbhatt therefore, contended that contention raised by the respondent no.1 that present application is barred by limitation and more particularly, Article 67 is bad in law and respondent no.1 being trespasser and in illegal and unauthorized possession of the land in question, cannot be allowed to say that present application is barred by limitation and it was contended that the present application is proper and legal and in accordance with law and same needs to be allowed in larger interest of justice.
It was contended that judgment of this Court reported in 2008(3) GLR 2291 relied upon by the respondent no.1 on the contrary holds Page 24 of 74 C/COMA/399/2011 CAV JUDGMENT that the Official Liquidator is entitled to claim possession on termination of lease agreement with company going into liquidation. Ms. Bhrahmbhatt also further contended that the lease deed expired after the efflux of time of 25 years as contended herein above and there was crystal clear condition to handover possession of the land in question on expiry of such fixed period of 25 years. Ms. Bhrahmbhatt also contended that the lease deed does not contain any stipulation for renewal or extension of the said lease period and thus it was contended that by not handing over the possession and remaining in possession of said land after expiry of the said lease period is nothing but unauthorized and illegal possession. It was also contended by Ms. Bhrahmbhatt that respondent no.1 has breached the said conditions (condition nos. 8 & 10) and therefore, the respondent no.1 is required to be directed to vacate and handover the possession of the said land to Official Liquidator. Ms. Bhrahmbhatt also further contended that as provided under Section 108(q) of the Transfer of Property Ac, 1882 on the determination of the lease, the lessee is bound to put the lessor into possession of the property, however respondent no.1 refused to handover the possession of the land in question to the company on being immediately demanded on expiry by the Page 25 of 74 C/COMA/399/2011 CAV JUDGMENT company and continued in possession of said land in question and has thereby breached conditions stated in clause 8 and 10 of the said lease deed, which is in contravention of the provisions of Section 108(q) of the Transfer of Property Act. It was also further contended that thus the respondent no.1 is in illegal possession of the land in question.
4.2. Referring to the order dated 10.08.2011 passed by this Court in OLR No. 139 of 2010, it was contended that this Court has observed that said land is in unauthorized occupation of the respondent no.1 and said order is not challenged by the respondent no.1 and therefore, it was contended that respondent no.1 has accepted that it is in unauthorized possession of the said land in question. Ms. Bhrahmbhatt contended that the contention as regards applicability of Section 5(11)(b) of the Gujarat Rents, Hotel and Lodging House Rates Control Act, 1947 is bad and not tenable in law. It was contended that the registered lease deed dated 28.01.1966 was for a fixed period of 25 years and the said lease deed is not or rent note. Ms. Bhrahmbhatt further referring to the lease deed contended that the land in question was given on lease for the purpose for which it was to be used and on expiry of the Page 26 of 74 C/COMA/399/2011 CAV JUDGMENT fixed period of 25 years, the land in question has to be handed over to the company. It was therefore, contended by Ms. Bhrahmbhatt that lease deed is covered under the provisions of Transfer of Property Act, 1882 and not by the Rent Act. Referring to Sections 105 and 111(a) of the Transfer of Property Act, Ms. Bhrahmbhatt contended that the lease deed was for a fixed period of 25 years w.e.f. 19.12.1957 and therefore, it expired after 25 years on 1982. Ms. Bhrahmbhatt further contended that as per Section 108(q) of the Transfer of Property Act on determination of lease period, the respondent no.1 was bound to put company in possession of the said land and from that date, respondent no.1 has no right or authority to remain in possession and in fact has refused to give possession even though the land in question is in deemed custody of this Court by virtue of Section 456(2) of the Act. Ms. Bhrahmbhatt therefore, contended that physical possession of the land in question by respondent no.1 is without any authority and the same is illegal and that respondent no.1 has no right to remain in physical possession/ occupation of the land in question and therefore, contended that this Court may direct respondent no.1 to vacate the said land and handover the possession to the Official Liquidator. It was also contended that further without admitting Page 27 of 74 C/COMA/399/2011 CAV JUDGMENT that provisions of Rent Act applies, the respondent no.1 has not complied with the condition as provided under Section 12(1) of the Rent Act and has even not shown readiness and willingness to pay rent since expiry of lease right from 19.12.1982. Ms. Bhrahmbhatt contended that absence of any document on record showing payment of any amount towards rent by respondent no.1 is a pointer that neither rent is paid after expiry of lease period nor rent is tendered by it to the company after expiry of lease period till winding up order. Ms. Bhrahmbhatt contended that the record shows even after winding up order dated 22.12.1989 no rent is paid or tendered by it to the Official Liquidator expressing its readiness and willingness. Ms. Bhrahmbhatt referring to the communication dated 20.04.2005 addressed by the respondent no.1 pursuant to and in response to the advertisement dated 5.4.2005 given by the Official Liquidator contended that respondent no.1 is in possession of 24553 sq yard of land of Maharana Mills, Porbandar as per the Lease Land Act and Official Liquidator was further informed that whatever action will be taken that will be subject to their rights and contention. Ms. Bhrahmbhatt submitted that even in the first instance respondent no.1 neither tendered rent nor showed it readiness and willingness to pay rent Page 28 of 74 C/COMA/399/2011 CAV JUDGMENT for said land as communicated in the said letter. Ms. Bhrahmbhatt also referring to the reply given by the advocate for the respondent no.1 dated 17.5.2005 contended that even though it was mentioned that no amount towards rent or adverse possession was tendered along with the said reply showing its readiness and willingness and it was further contended that even thereafter also it has never offered or tendered rent or arrears of rent of the land in question and thus it was contended by Ms. Bhrahmbhatt that even if provision of Section 12(1) of the Rent Act is applied, respondent no.1 has not satisfied the condition therein. Ms. Bhrahmbhatt referring to the condition nos. 8 and 10 of the lease deed contended that the said conditions inter alia provide to vacate and handover the possession of the said land in original condition on expiry of fixed lease period of 25 years and utilize said land for the purpose for which it is being leased on the date of lease deed. Ms. Bhrahmbhatt contended that however in reality both these conditions are not fulfilled as vacant possession has not been handed over and since 1983 land in question is not used for the purpose for which lease is granted. It was therefore, contended that even assuming that Section 12(1) of the Rent Act qua condition no.2 is not observed and performed by the respondent no.1 and Page 29 of 74 C/COMA/399/2011 CAV JUDGMENT hence no protection can be granted to the respondent no.1. 4.3. Ms. Bhrahmbhat further relying upon clause 7 of the lease deed contended that as such lease deed was executed on 28.01.1966 with retrospective effect from 19.12.1957. The said clause specifically provides that it is to be used for the purpose for which it is to be used on the date of said lease deed, however, even before the order of winding up respondent no.1 in its letter dated 18.09.1987 addressed to the company in liquidation has admitted that it is closed since 11.2.1983. Ms. Bhrahmbhatt again referring to the reply given by the respondent no.1 through his advocate dated 17.5.2005 contended that even in that letter it is admitted that respondent no.1 was declared Sick Industry. Ms. Bhrahmbhatt further referring to the letter dated 19.09.2005 contended that electricity company PGVCL has disconnected electricity connection of the respondent no.1 on permanent basis since 1.5.1996 and same is proof that respondent no.1 is closed and not working. Ms. Bhrahmbhatt submitted that thus respondent no.1 is not using the land in question since 1983 and same is lying as it is. It was contended that respondent no.1 has not placed anything on record to show that any industrial activity is carried out by it on the Page 30 of 74 C/COMA/399/2011 CAV JUDGMENT said land and according to Ms. Bhrahmbhatt same amounts to breach of condition of the lease deed. Reiterating the clause 8 and 10 of the lease deed, it was contended by Ms. Bhrahmbhatt that thus, the respondent no.1 is in possession of the land in question, in clear breach of conditions of lease deed. It was further contended that only because of taxes are paid by the respondent no.1, same would not construe that conditions of lease deed are complied with by the respondent no.1 and on this ground the respondent no.1 is not entitled to any protection as per Section 12(1) of the Rent Act even if it is assumed that said provision applies. It was contended that Rs.5 lakh has been deposited by the respondent no.1 in compliance of the order dated 22.08.2005 in OLR No. 70 of 2005 not as an arrears of rent or rent towards possession cost. It was therefore, contended that the contention that respondent no.1 is ready and willing to pay rent towards land in question and that other conditions of lease deed are complied with is not true and not in consonance with the evidence on record and therefore, it was contended by Ms. Bhrahmbhatt that respondent no.1 is not entitled to any protection as statutory tenant and is required to be directed by this Court to vacate lands in question. Ms. Bhrahmbhatt further contended that considering the Page 31 of 74 C/COMA/399/2011 CAV JUDGMENT provisions of Sections 457 and 458 of the Act, this Court is vested with ample powers under provisions of Section 446 to consider and issue directions upon respondent no.1 to vacate and handover the possession of the said land to the Official Liquidator as prayed for in the present application. Relying upon the judgment of this Court reported in 2005(125) Company Cases 765(Guj), Ms. Bhrahmbhatt contended that once it is found that person is trespasser, proceedings under Section 446 of the Act are due process of law and the trespasser as such can be directed to be evicted and such direction cannot be said to be without due process of law and this Court can always make an order which is just and proper in facts and circumstances of the case and that this Court has ample power under Section 446(2) of the Act r/w Section 468 r/w Rule 9 of the Companies (Court) Rules, 1959, to pass such order as it may think proper in the facts and circumstances of the case for determining the rights of the parties. It was contended that the contention raised by the respondent no.1 that as respondent no.1 is in continues possession of the land in question, as per Article 65 of the Limitation Act, respondent no.1 has acquired rights in the said land by adverse possession is false, bad in law and not tenable in law. Ms. Bhrahmbhatt contended that first condition of Article 65 of the Page 32 of 74 C/COMA/399/2011 CAV JUDGMENT Limitation Act is that the limitation period to recover possession will start from the time the landlord / owner comes to know that the possession has become adverse i.e. possession is denied. It was contended that just holding possession of land on expiry of lease period will not amount to adverse possession. Again referring the lease deed as well as communications dated 19.11.1986, 13.11.1986 and 18.09.1987, Ms. Bhrahmbhatt contended that company in liquidation had demanded possession from respondent no.1 still however it continued showing its willingness to purchase the said land and negotiations were going on for the same and meanwhile company went in liquidation. Ms. Bhrahmbhatt contended that it refused to handover the possession of the land in question to the company and therefore, there is no question of possession of the said land become adverse within the knowledge of the company. Ms. Bhrahmbhatt contended that it is a matter of fact that winding up order is dated 22.12.1989 and no plea of adverse possession was taken by the respondent no.1 in its first letter dated 20.04.2005 addressed to the Official Liquidator and in fact for the first time it denied / refused to handover the possession of the land in question by stating that "we are instructed to state that since our clients are not in illegal and unauthorized possession Page 33 of 74 C/COMA/399/2011 CAV JUDGMENT of the land in question, vacating and handing over vacant and peaceful possession of the said land, to your honour does not arise." It was therefore, contended that even if that is reckoned as the date, the present application is filed by Official Liquidator within time frame under Article 65 of the Limitation Act.. Ms. Bhrahmbhatt also relied upon the judgment of the Hon'ble Supreme Court in the case of Krishnamurthy S Setlur vs. O.V.Narasimha Setty and Ors. reported in (2007) 3 SCC 569 and contended that as held by the Hon'ble Supreme Court that the tenant must plead and prove the date on and from which he claims to be in exclusive, continuous and undisturbed possession and also that such possession was actual and to the knowledge of the real owner. It was contended that as per the said judgment such person has to show hostile title and communicate it to the real owner. Relying upon the judgment of the Hon'ble Supreme Court in the case of C. Albert Morris vs. K. Chandra Sekaran And Ors. reported in (2006) 1 SCC 228, Ms. Bhrahmbhatt contended that mere continuance in occupation of the demised premises after expiry of lease, notwithstanding the receipt of an amount by the landlord, same would not create a tenancy so as to confer on the erstwhile tenant the status of tenant or a right to be in possession. Ms. Page 34 of 74 C/COMA/399/2011 CAV JUDGMENT Bhrahmbhatt also contended that as provided under Section 116 of the Transfer of Property Act, respondent no.1 cannot be termed as tenant holding over as canvassed by the respondent no.1. Again referring to the facts Ms. Bhrahmbhatt contended that no rent is tendered by it after expiry of lease period and accepted by the company in liquidation. Ms. Bhrahmbhatt contended that the company has never assented to its continuing in possession of the said land and therefore, in absence of any agreement to the contrary, renewed from year to year, or from month to month, provisions of Section 116 of the Transfer of Property Act would not apply.
4.4. Mr. Bhrahmbhatt contended that on the contrary in the order dated 10.08.2011 passed in OLR No. 139 of 2010 , it is made clear that issue as regards prayer of handing over possession of the land in question to the Official Liquidator is kept open, to be decided at appropriate time and therefore, Ms. Bhrahmbhatt submitted that contention raised by respondent no.1 that the said issue is already decided and does not survive, is not true and proper. Ms. Bhrahmbhatt contended that the record clearly establishes the fact that since year 1983 the land in question is not put to any use and Page 35 of 74 C/COMA/399/2011 CAV JUDGMENT is lying idle. Ms. Bhrahmbhatt contended that land was granted for industrial purpose to respondent no.1 and it is illegally holding possession of the valuable land only with ulterior motive to take undue advantage. Again referring to clause 7 of the lease deed, Ms. Bhrahmbhatt has further contended that land has been given for specific purpose and respondent no.1 is not entitled to land in question for any purpose other than the purpose for which it was given on lease and the said purpose of use do not survive since 1983. Ms. Bhrahmbhatt contended that today thousands of workers and heirs of deceased workers are waiting for payment of their dues and therefore, even in the larger interest it was contended that application be allowed. Ms. Bhrahmbhatt also relied upon the judgments in the case of Sureshchandra Lalbai Desai vs. Official Liquidator, Gujarat State Textile Corporation Ltd (In Liquida) and Anr reported 2008(2) GLR 1644 and in the case of Ramkumar Sukhchandra Gupta vs. Official Liquidator of the Navjivan Mills Company Ltd & Ors reported in 2008(3) GLR 2291 on the aforesaid contention. Ms. Bhrahmbhatt therefore, submitted that present application deserves to be allowed as prayed and respondent no.1 be directed to vacate and handover the land bearing City Survey No.5105 admeasuring 20529.0353 sq mtr i.e. and 24551 sq yards Page 36 of 74 C/COMA/399/2011 CAV JUDGMENT situated at Porbandar, Dist. Porbandar.
5.0. Mr. Shiraj Gori, learned advocate for the respondent no.2 Workers Union has as such adopted the arguments made by Ms. Bhrahmbhatt, learned advocate for the applicant Official Liquidator. Ms. Gori, learned counsel for the respondent no.2 Workers Union submitted that OLR No. 70 of 2005 was filed seeking direction against the respondent no.1 to handover vacant possession of the land in question in view of the fact that lease had already expired way back in the year 1982. Mr. Gori submitted that in the said proceedings State Bank of Saurashtra filed detailed affidavit on 20.03.2006. Relying upon the said affidavit, it was contended that Bank had placed on record document which goes to the root of the matter and conclusively demonstrates that the land in question was leased in favour of respondent no.1 without there being any provision in the registered lease deed for renewal of lease and therefore, respondent no.1 was required to handover the possession in favour of the lessor on expiry of period of lease deed. Mr. Gori submitted that respondent no.1 at no point of time had ever claimed adverse possession and only during the final hearing of this application, it has taken plea of adverse possession. Page 37 of 74 C/COMA/399/2011 CAV JUDGMENT Mr. Gori, submitted that at no stretch of imagination, respondent no.1 can be termed and treated as statutory tenant. Referring to order dated 10.08.2011 passed by this Court (Coram: Hon'ble Mr. Justice K M Thakar) in OLR No. 139 of 2010, it was contended by Mr. Gori that in the said order, it is specifically mentioned that respondent no.1 has been declared as unauthorized occupant of the land in question and that said order has attained the finality as the said order is not challenged by the respondent no.1. Mr. Gori also referred to letter dated 13.11.1986 addressed by the company in liquidation to respondent no.1 asking it to handover the possession of the property and it was contended that it is specifically mentioned in the said letter that the possession is neither statutory nor legal and same is in violation of undertaking and express promise given by the lessee to the lessor at the time of entering into registered lease deed, which was for a period of 25 years. Ms. Gori further submitted that letter dated 10.09.1987 was addressed by the company to the respondent no.1 to handover the possession of the land in question. Mr. Gori also referred to the registered lease deed and submitted that after a period of 25 years as there was no provision of renewal of lease, lessee is required to handover the peaceful and actual possession of the lease property to the lessor. Page 38 of 74 C/COMA/399/2011 CAV JUDGMENT 5.1. Mr. Gori further submitted that admittedly respondent no.1 has no business operation going on over the land in question since more than 25 years. Mr. Gori submitted that it is matter of record that electricity connection of the respondent no.1 has also been removed by the Electricity CompanyPGVCL as the said company is not functioning as such. Mr. Gori submitted that therefore, the appropriate order deserves to be passed directing the respondent no.1 to handover the possession of the land in question so that the same can be put to sale by Official Liquidator and in turn poor workers represented by respondent no.2 Union may get their dues. Mr. Gori humbly submitted that during the pendency of the present litigation hundred of workers have died and therefore, appropriate direction be issued upon the Official Liquidator to ascertain due of such workers by carrying out necessary exercise. Mr. Gori also submitted that Official Liquidator be directed to carry out fresh valuation of the property in liquidation and also be further directed to put same on sale to discharge the liability of the company in liquidation towards dues of the workers. Further referring to the Chartered Accountant report dated 1.8.2005, Mr. Gori contended that company in liquidation was declared closed on 11.02.1983, as Page 39 of 74 C/COMA/399/2011 CAV JUDGMENT many as 2908 workers were employed and the outstanding dues of those workers (without interest) was worked out to an amount of Rs.37,59,75,624/ and Rs.44,10,44,272/ with interest as on 1.8.2005. Mr. Gori submitted that by now half of those workers have died and hence the legal heirs of deceased workers were also entitled to their dues, for which, appropriate verification is necessary.
5.2. Mr. Gori submitted that in view of the facts as can be culled out from record of this application, status of the respondent no.1 is nothing but an encroacher as its occupation has been declared as unauthorized occupation, by this Court in an order dated 10.08.2011 passed in OLR No. 139 of 2010 and that since 1.5.1986, PGVCL has also disconnected the electricity connection of the respondent no.1. Mr. Gori therefore submitted that this Court in exercise of powers under the Act pass appropriate order directing the respondent no.1 to handover the possession to the Official Liquidator and Official Liquidator be directed to evict the trespasser and encroachers and that proceedings under Section 446 of the Act may be undertaken. Mr. Gori has also relied upon the judgments of the Hon'ble Supreme Court in the case of Larsen and Turbro Page 40 of 74 C/COMA/399/2011 CAV JUDGMENT Limited Club House Road, Madras vs. Trustees of Dharmamurthy Rao Bahdur Calavala Cunnan, Chetty's Charities by its Trustee reported in (1988) 4 SC 260, in the case ofC. Albert Morris vs. K. Chandrasekaran reported in (2006) 1 SCC 228, Leelaben Gajanan Pansare vs. Oriental Insurance Company Limited reported in (2008) 9 SCC 720, Ravindra Ishwardas Sethna vs. Official Liquidator, High Court, Bombay reported in (1983) 4 SCC 269, Ramjumar Sukhchandan Gupta vs. O. L Of the Navjivan Mills Company Ltd reported in 2008(3) GLR 2291 and judgment of the Hon'ble Supreme Court in the case rendered in Civil Appeal No. 7266 of 2013. On the aforesaid contentions as well as adopting arguments of Ms. Bhrahmbhatt, learned advocate for the respondent no.1, Mr. Gori submitted that application be allowed and appropriate orders directing the respondent no.1 to handover the possession of the land in question be passed by this Court by allowing the present application.
6.0. Per contra, Mr. Ashok L Shah, learned advocate for the respondent no.1 has opposed this application. Mr. Shah inter alia contended that company in liquidation M/s. Maharana Mills Limited has given on lease about 24551 sq yards of land with two Page 41 of 74 C/COMA/399/2011 CAV JUDGMENT quarters constructed thereon to respondent no.1 by "rent note"
dated 28.01.1966. The lease commenced from 19.12.1957 and said lease period was for 25 years and the rent was for Rs.400/ per month. Over and above, the respondent no.1 had to pay Municipal Tax, Education Cess and Government Property Tax in respect of the said property. Mr.Shah contended that as per agreed position, the lease period expired on 19.12.1982 and leased stood terminated by efflux of time. Mr. Shah also agreed that said contractual period was not extended for any further period and contended that respondent no.1 has possession of the land in question from the commencement of the lease i.e. 19.12.1957 till 19.12. 1982 as contractual tenant and even thereafter till date. Mr. Shah contended that Company Petition No. 138 of 1989 was filed against M/s. Maharana Mills Limited and even if it is presumed that it could at the earliest have been filed on 1.1.1989 and winding up order is dated 22.12.1989 and Official Liquidator attached to this Court was appointed as Liquidator of the company on 22.12.1989 whereas the present application was filed on 21.07.2011 wherein the Official Liquidator has prayed for direction directing the respondent no.1 to vacate and handover the possession of the land beraing City Survey No.5105 admeasuring 20529.0353 sq mtr i.e. Page 42 of 74 C/COMA/399/2011 CAV JUDGMENT 24551 sq yards situated at Porbandar, Dist. Porbandar. 6.1. Mr. Shah, learned advocate for the respondent no.1 has raised following three main contentions.
(A). That on termination of contractual period of lease of 25 years on 19.12.1982, the respondent no.1 has become statutory tenant and is required to be granted protection as a statutory tenant and it cannot be dispossessed.
(B). Relying upon the provision of Article 67 of the Limitation Act, 1963, it was contended by Mr. Shah that Official Liquidator representiing company in liquidation as landlord is required to file such an application within 12 years from the determination of the lease.
(C). That the respondent no.1 has also acquired rights by way of prescription and adverse possession since it has been in open, uninterrupted and continuous adverse possession of the property and that determination of the contractual lease on 19.12.1989, it was contended that thus adverse possession is for more than 12 years till date and that the present application is filed on 21.07.2011 is barred by law of limitation by referring to Article 65 Page 43 of 74 C/COMA/399/2011 CAV JUDGMENT of the Limitation Act.
6.2. Mr. Shah submitted that on a winding up order being passed the Official Liquidator substitutes the Board of Directors of the company in liquidation and the liquidator gets the same rights which the company had before passing of the winding up order and that rights which could have been enforced by the company through its Board of Directors before passing of winding up order, said rights can be enforced by the Official Liquidator. Relying upon the judgment of the Hon'ble Supreme Court in the case of Nirmala R Bafna and Ors vs. Khandesh Spinning & Weaving Mills Co Ltd and Ors reported in AIR 1993 SC 138, more particularly, para 18, thereof, it was contended by Mr. Shah that law does not change merely because company is ordered to wound up. It was contended that the company in liquidation acts through its Official Liquidator and the same law as to landlord and tenant and other laws would continue to apply even if the landlord company is ordered to be wound up, the same law would apply as would apply if the company had not gone into liquidation.
6.3. On the aforesaid basis, it was therefore, contended by Mr. Page 44 of 74 C/COMA/399/2011 CAV JUDGMENT Shah that on termination of the contractual period of lease of 25 years on 19.12.1982 respondent no.1 has become statutory tenant and is required to be granted protection as a statutory tenant and it cannot be dispossessed. Referring to Section 5(11)(b) of the Rent Act, it was contended by Mr. Shah that by virtue of Rent Note dated 28.01.1966, respondent no.1 was a contractual tenant for a period of 25 years on a monthly rent of Rs.400/ and that the contractual tenancy came to an end on 19.12.1982 by efflux of the time of 25 years period of tenancy and thereafter respondent no.1 has become a statutory tenant. Referring to Section 12 (1) of the Rent Act, it was contended by Shah that said provisions mandates that the landlord shall not be entitled to recover possession of any premises from a tenant so long as the tenant is ready and willing to pay the rent and observes and performs other terms and conditions of tenancy in so far as they are consistent with the provisions of the Rent Act. It was contended that reading of Section 5(11)(b) r/w Section 12(1) of the Rent Act, therefore, respondent no.1 has acquired the status of a statutory tenant and it cannot be dispossessed so long as it is ready and willing to pay the rent and is ready and willing to perform and observe other terms and conditions of the tenancy and therefore, it was contended that the Page 45 of 74 C/COMA/399/2011 CAV JUDGMENT respondent no.1 become trespasser but remains tenant by sufferance. Relying upon the judgment of the Hon'ble Supreme Court in the case of Anand Nivas Pvt Ltd vs. Anandji Kalyanji's Pedhi and Ors reported in 1964 GLR online V page 111, it was contended that as a statutory tenant respondent no.1 has protection of statute and it has right to remain in possession after the determination of the contractual tenancy. It was contended by Mr. Shah that the said judgment is followed by this Court in the case of Rana Gokaldas Zinabhai vs. Dadhra Thakorlal Chunilal reported in 1974 GLR 842 and even by other High Courts. 6.4. Mr. Shah contended that after expiry of the period of lease on 19.12.1982, respondent no.1 become statutory tenant within meaning of Section 5(11)(b) of the Rent Act. Mr. Shah pointed out that in the affidavit in reply only in this proceedings respondent no.1 has expressed that is has always been ready and willing to pay arrears of rent. Mr. Shah also contended that respondent has paid all local taxes, municipal taxes and other taxes including house tax, education cess in respect of the said property from 198283 till date. Mr. Shah also contended that respondent has already deposited sum of Rs.5 lakhs with the Registry of this Court by Page 46 of 74 C/COMA/399/2011 CAV JUDGMENT demand draft dated 29.08.2005 and same may be treated as payment of arrears of rent from the end of the lease period and respondent no.1 may be directed to pay other or further amount towards arrears of rent which the respondent no.1 will pay within a week of such direction.
6.5. Mr. Shah further referring to the provisions of Section 12(1) of the Rent Act further contended that respondent no.1 is ready and willing to perform and observe other terms and conditions of the tenancy and that the respondent no.1 is ready and willing to perform and observe the same. It was submitted that for the purpose of attracting the application of Section 12(1) of the Rent Act, it is not necessary that after determination of the period of lease the tenant is in fact paying the rent or is performing other terms and conditions of the tenancy. It was submitted that for provisions of Section 12(1) of the Rent Act what is required is that the tenant is ready and willing to pay the rent and whether is ready and willing to perform and observe the other conditions of the tenancy. It was therefore, contended that Section 12 (1) of the Act envisages the future readiness and willingness of payment of rent and performing and observing other terms and conditions of the Page 47 of 74 C/COMA/399/2011 CAV JUDGMENT tenancy.
6.6. It was contended by Mr. Shah that case of the Official Liquidator is only on ground that period of lease has already expired way back in the year 1982. Referring to the letter addressed by Official Liquidator dated 10.05.2005, it was contended that even in the said letter the Official Liquidator has referred to the fact that lease granted by the company in your favour has expired way back in the year 1982. It was contended that however it is not the case of the applicant Official Liquidator that the respondent no.1 has not performed or observed other terms and conditions of the tenancy. In view of the aforesaid, it was therefore, submitted by Mr. Shah that respondent no.2 is entitled to be granted protection available to a statutory tenant and it cannot be dispossessed from the land in question. Mr. Shah further contended that without prejudice to the above, respondent no.1 also contended that Official Liquidator representing the company in liquidation as landlord and by virtue of Article 67 of the Limitation Act, an application for recovery of possession of the leased premises is required to be filed within 12 years from the date of determination of the lease. Mr. Shah contended that the Official Page 48 of 74 C/COMA/399/2011 CAV JUDGMENT Liquidator acting for on and behalf of the company in liquidation is the landlord of the premises and the respondent no.1 is the tenant. It was contended that if the landlord wants to get possession of the leased premises from the tenant after determination of the lease, the landlord will have to file appropriate proceedings within a period of 12 years from the date of determination of the tenancy. Referring to Section 446(2) of the Companies Act, it was submitted that under the said provisions instead of filing suit before the regular Court, the Official Liquidator can file such proceedings before this Court, which has passed order of winding up and this Court shall have power and jurisdiction to decide such applications, of course subject to the law applicable to the facts of the case. It was submitted that what is provided under Section 446(2) of the Companies Act only changes the forum and not the applicable law. 6.7. Referring to Section 458 A of the Companies Act, it was submitted that said provisions provides for exclusion of two periods while calculating the period of limitation for any suit or application by the Official Liquidator. It was submitted that period of limitation has reference to cause of action and that the period of limitation attaches to the cause of action and not the person who prosecutes Page 49 of 74 C/COMA/399/2011 CAV JUDGMENT the action. Referring to the facts of the case, it was contended by Mr. Shah that cause of action to get the premises vacated accrued to the landlord when the tenancy was terminated by efflux of time of 25 years on 19.12.1982 and therefore, it was contended that period of limitation of 12 years under Article 67 of the Limitation Act would start from 19.12.1982. Mr. Shah further contended that winding up petition is filed on 1.1.1989 and therefore, as per the provisions of Section 458 A of the Act the period of limitation that had started running from 19.12.1982 stopped running on the filing of the Company Petition No.138 of 1989 till winding up order was passed on 22.12.1989. Mr. Shah contended that as further provided in Section 458 of the Act, it continued to stop running for a period of one year from the date of passing of the winding up order on 22.12.1989 that is upto 22.12.1990. It was therefore, contended by Mr. Shah that period of limitation was consumed by six years and 12 days and the remaining period of 5 years and 353 days would expire on 09.12.1996 whereas present application is filed on 21.07.2011, which is beyond period of limitation as provided under Article 67 of the Limitation Act and therefore, it was contended that the present application is grossly barred by law of limitation. Referring to the judgment of the Bombay High Court in the case of Page 50 of 74 C/COMA/399/2011 CAV JUDGMENT M. Thankamani vs. Official Liquidator reported in (1996) 85 Company Cases 318 (Bom), it was contended that Section 458 of the Companies Act does not give a fresh cause of action, it only lays down the two periods which are required to be excluded while counting period of limitation. Mr. Shah also relied upon the judgment of the Division Bench of the Bombay High Court in the case of Mahomed Akbar vs. Associated Banking Corporation Limited reported in (1950) 20 Company Cases 325 as well as the judgment in the case of Karnataka Steel & Wire Products and Ors vs. Kohinoor Rolling Shutters & Engineering Works and ors reported in (2002) 112 Company Cases 606 (SC) and contended that the application is barred by limitation. It was contended by Mr. Shah that thus as per the judgment of the Bombay High Court in the case of M. Thankamani (supra) gets support from the above view expressed by the Hon'ble Supreme Court. It was submitted that in the said judgment it was held that a time barred debt does not get revived on a winding up order being passed, Section 458 A of the Companies Act does not have effect of reviving a time barred debt. It was contended that similarly where the period of limitation has started would only stop for the period provided therein and would start running again from the point where it had stood Page 51 of 74 C/COMA/399/2011 CAV JUDGMENT suspended and only the balance remaining period of limitation is required to be calculated for the purpose of limitation after the suspension period under Section 458 A is over. Mr. Shah relied upon the judgment of the Andhra Pradesh High Court in the case of Pennar Paterson Ltd vs. L P Polymers Ltd and ors rendered in CA No. 653 of 2001 in CP No.131 of 1999 and contended that present application which is filed 21.07.2011 is filed almost 15 years after the period of limitation expired on 9.12.1996 and it was therefore, submitted that application is grossly barred by limitation and present application deserves to be dismissed. It was also contended that even if benefit of Section 458 A of the Companies Act is provided and considering the fact that winding up order has passed on 22.12.1989 then also period of limitation has expired on 22.12.2002 whereas the present application is filed on 21.07.2011 and is thus, grossly barred by law of limitation and same deserves to be dismissed.
6.8. Third point was raised by Mr. Shah in relation to Article 65 of the Limitation Act that too on the aspect of adverse possession. It was contended by Mr. Shah that lease was determined on 19.12.1989 and that the respondent no.1 is in possession of the Page 52 of 74 C/COMA/399/2011 CAV JUDGMENT land in question till date and the present Company Application is filed on 21.07.2011 i.e. after 12 years. Mr. Shah submitted that in view of the law of adverse possession and prescription also respondent no.1 cannot be evicted from the premises. It was submitted by Shah that respondent no.1 by virtue of adverse possession has become owner of the subject property by adverse possession and it was contended that under Article 65 of the Limitation Act, respondent no.1 acquired adverse right on the day when the contractual tenancy came to an end on 19.12.1982 by efflux of time and it refused to hand over the possession of the company. It was contended by Mr. Shah that respondent no.1 is in possession of the land in question openly, uninterruptedly and continuously and even without consent from the company and even in spite of the company demanding possession of the property. It was contended by Mr. Shah that the facts indicate that company is aware of the adverse possession of the land in question with respondent no.1 and the company has also admitted that it is demanding possession from the respondent no.1 from the date of determination of the lease on 19.12.1982 but the respondent no.1 is not handing over the possession. Referring to the communication dated 19.07.1986 addressed by the company in liquidation and Page 53 of 74 C/COMA/399/2011 CAV JUDGMENT State Bank of Saurashtra, Bhavnagar wherein it has referred to the land in possession of the respondent no.1 and has informed the bank "we have asked the party on expiry of lease to handover the possession but they have not done so. It was contended that it is clear from the communication dated 19.07.1986 company is aware that respondent no.1 is holding adverse possession right from the date of determination of the lease and is not returning the possession in spite of demand for the same being made by the company. Mr. Shah contended that the company has clearly stated "we have asked the party on expiry of lease to hand over possession and it was therefore, contended that demand for possession was thus made on expiry of lease and possession of the respondent no.1 become adverse right from the date of expiry of lease on 19.12.1982. It was therefore, submitted by Mr. Shah that Official Liquidator of the company in liquidation acting for company ought to have filed present application within a period of limitation as provided under Section 65 of the Limitation Act within 12 years from 19.12.1982 plus the period that provided under Section 458 A of the Act i.e. on or before 09.12.1996. Relying upon Section 27 of the Limitation Act, Mr. Shah contended that the determination of the period of limitation laid down by the Page 54 of 74 C/COMA/399/2011 CAV JUDGMENT Limitation Act to any person for institution of a suit or application under Section 446(2) of the Companies Act for possession of property, his right to such property shall be extinguished. It was submitted that company in liquidation and the Official Liquidator has failed to file any suit or application under Section 446(2) of the Companies Act within the period of 12 years prescribed both under Articles 65 relating to adverse possession and Article 67 relating to a landlord initiating action to recover possession from a tenant after determination of the period of lease and therefore, company's right to such property is extinguished in view of express provisions of Section 27 of the Limitation Act. It was therefore, submitted that in this view of the matter also, respondent no.1 cannot be dispossessed, the prayer made in the judge's summons cannot be granted and present application deserves to be dismissed. 7.0. Before reverting to the submissions made by the learned counsel for the respective parties, it would be appropriate to refer to the basic facts and basic documents, which are referred to this application. That a lease deed was executed by company in liquidation M/s. Maharana Mills Limited with respondent no.1 Shree Jagdish Oil Industries Limited on 20.01.1966 and the same is Page 55 of 74 C/COMA/399/2011 CAV JUDGMENT made effective from 19.12.1957. The lease deed clearly stipulates that it was made effective from 19.12.1957 at monthly rent of Rs.400/. Clause 7 of the lease deed provides that land is to be used for the very purpose, for which, it is to be used and clause 8 of the lease deed stipulates that the same is for a period of 25 years from 19.12.1957. Clause 8 further provides that on expiry of term of 25 years any structure raised by the lessee will have to be removed including machineries and construction if any and the possession is to be handed over back to the lessor. Clause 10 clearly provides that no extension is to be made on expiry of 25 years. Admittedly, therefore, the lease expired on 19.12.1982. As can be culled out from the record that on such expiry, State Bank of Saurashtra, Porbandar called for details from the company in liquidation. The respondent no.1 company by a communication dated 14.07.1986 addressed a letter to the State Bank of Saurashtra, Porbandar giving details of the land in question and has stated that the lease expired on 17.12.1982 and that the rent at the rate of Rs.400/ per month is paid till expiry of the lease deed. The respondent no.1 also mentioned in the said communication that "in para 4 thereof" as under:
"We have not held any negotiations with M/s.
Page 56 of 74 C/COMA/399/2011 CAV JUDGMENT Maharana Mills Limited regarding sale of land."
7.1. The company in liquidation M/s. Maharana Mills Limited by a communication dated 19.07.1986 informed State Bank of Saurashtra giving details of the land and has stated that the lease has expired on 18.12.1982 and therefore, no rent is accepted. It has also mentioned that "we have asked party on expiry of lease to handover the possession but they have not done so. We have persisted the matter and they have now expressed their desire to purchase the land but inspite of repeated reminders they have not yet come on negotiation table and hence the matter is pending." The erstwhile Secretary of the company in liquidation by letter dated 13.11.1986 informed the General Manager of the respondent no.1 company that the price of Rs.150/ per sq yard is quoted and in that very letter, it is mentioned thus:
"If in case, you are not willing to reconsider the price of land, we shall feel pleased if your will please hand over possession of our land and buildings as your possession is not statutory as legal and is in violation of the undertaking and express promises given by Sheth Shree Hansrajbhai Mariwala and Shri Manekjibhai to our Sheth Shri Dhirendranbhai and late Sheth Shri Dhanjibhai Kalidas Mehta to the effect that Jagdish Oil Industries will handover vacant possession of Mills sympathetically consider and give him premises for a period of 25 years."
7.2. The said letter was replied by the respondent no.1 not accepting the offer and refused to pay price which was quoted. The Page 57 of 74 C/COMA/399/2011 CAV JUDGMENT company in liquidation M/s. Maharana Mills Limited by communication dated 18.12.1987 has addressed a further communication wherein it is specifically mentioned that "please treat this as urgent and handover the vacant possession of our land or give us market price of our land."
7.3. Thereafter, it is matter of record that by an order dated 22.11.1989 passed by this Court in Company Petition No. 138 of 1989 the company M/s. Maharana Mills Limited came to be wound up. The aforesaid facts therefore, clearly spells out that after the expiry of lease, which is also admitted by the respondent no.1 the company when it existed in eye of law and was not ordered to be wound up has repeatedly asked for possession of the land in question. This Court (Coram: Hon'ble Mr. Justice Jayant Patel, as he then was) have also noted in the order dated 7.8.2009 in para 6 & 7 as under:
6. It appears from the documents produced on record, including the four affidavitsinreply filed on behalf respondent No.5 Company that the lease agreement was entered into by the company in liquidation with the respondent No.5 on January 20, 1966 for a period of 25 years w.e.f.
19.12.1957 and as per the lease agreement, upon the expiry of the period, respondent No.5 company had to vacate the same. The intention of not to continue with the lease appears to be from Clause 10 of the lease deed that it was not to be Page 58 of 74 C/COMA/399/2011 CAV JUDGMENT continued for any further period. It also appears and rather admitted position that the period of 25 years of the lease has expired as back as in the year 1982 and the respondent No.5 has continued to remain in occupation of the said land after the expiry of the period. Whether respondent No.5 is required to vacate the area, which was given on lease basis as per the aforesaid lease agreement after the expiry of the period or whether respondent No.5 can claim the rights as statutory tenant are the aspects, which may be required to be examined by the Court, if such contingency arises at the proper time.
However, even if the stand of respondent No.5 is taken into consideration to the extent that it is in occupation of the land, the fact remains that the company in liquidation is the owner of the property and in capacity as the owner of the property it has right to sell the property. Whether the owner can seek eviction of respondent No.5 or that respondent No.5 can maintain the possession as statutory tenant upon the compliance of the terms and conditions are the aspects which are required to be decided at this stage, more particularly when as per the OL as well as per the secured creditors, the first attempt may be made to sell the property with the occupation of respondent No.5 of the property in question. It appears to the Court that if such a course is adopted at this stage, leaving the other questions to be decided at the appropriate time, neither the corpus of the company would be prejudiced, nor respondent No.5 suffer in any manner.
7. It may also be recorded that it is the case of respondent No.5 that it is desirous to purchase the land, which is in its occupation at the market value minus the benefits as may be available as that of the actual physical occupation or otherwise and it has also been stated that it has approached before A.I.F.R., for its revival since it is a sick company and the matter is pending before the said forum.
7.4. Furthermore, it is necessary to refer to the order dated 10.08.2011 passed by this Court (Coram: Hon'ble Mr. Justice K.M. Page 59 of 74 C/COMA/399/2011 CAV JUDGMENT Thakar) in OLR No. 139 of 2010. In para 3 this Court has observed thus:
"3. So as to enable the Official Liquidator to ascertain as to whether the lease in respect of land described at lot No.B on page 2 of the report dated 1st December 2010 has come to an end, and since, other connected matter is to come up for hearing on 30th August 2011, for the present, the proceedings of present application/ report are adjourned to 30th August 2011. In the meanwhile the Official Liquidator may consider the matter and explore other suggestions or possibilities for getting the possession of the part of the land which is presently under unauthorized occupation by the establishment viz. Jagdish Oil Mill..."
7.5. That since 1996, the respondent no.1 company was declared as Sick Industrial Company in terms of Section 3(1)(O) of the SICA and same was referred to BIFR as Case no. 41 of 1996. As can be seen from the order passed by the BIFR, which is brought on record by the respondent no.1 that hearing took place before BIFR on 25.07.1996 and IDBI Bank was appointed as operating agency under Section 17(3) of the said Act and its rehabilitation scheme was circulated as per the order dated 4.8.1997 passed by the Board and ultimately same culminated into an order dated 13.09.2004 whereby BIFR came to the conclusion that company i.e. respondent no.1 was not likely to become viable on a long term basis and therefore, it was just equitable and in public interest that it would Page 60 of 74 C/COMA/399/2011 CAV JUDGMENT be wound up under Section 20(1) of the SICA and show cause notice came to be issued. The said order was challenged by the respondent no.1 before the Appellate Authority and the said appeal was registered as Appeal No.232 of 2005. The appeal came to be admitted and the order dated 13.09.2004 passed by the BIFR was stayed and ultimately Appellate Authority dismissed the said appeal vide order dated 12.08.2005. The respondent no.1 challenged the same by way of writ petition before the Delhi High Court wherein orders of the Appellate Committee was set aside and it was remanded to reconsider the issue. Thereafter, an order dated 5.9.2006 was passed by the Appellate Authority wherein it is observed that net worth of the respondent no.1 company has become positive by Rs.64.44 lakhs and the company was entitled to be deregistered from the purview of SICA and ultimately set aside the order dated 13.09.2004 passed by the BIFR and the Reference / Matter was remanded back to the BIFR to take further steps in accordance with provisions of SICA and ultimately by order dated 22.12.2007 BIFR discharged respondent no.1 company from the purview of BIFR. The aforesaid facts therefore, clearly spells out that from 1996 till 22.02.2007, the respondent no.1 remained sick company as provided under the SICA.
Page 61 of 74 C/COMA/399/2011 CAV JUDGMENT 7.6. At this stage, it also deserves to be noted that the lease deed dated 28.01.1966, by which, land in question was leased to respondent no.1 was for a specific purpose i.e. for an industrial purpose and it is an admitted position as the same is not denied by the respondent no.1. The electricity company PGVCL has permanently disconnected the connection no. 212002 standing in the name of respondent no.1 w.e.f. 1.5.1996. It therefore, transpires that present land in question is not put to any use by the respondent no.1 since then.
7.7. At the outset, it may be stated that on winding up order being passed, the Official Liquidator attached to this Court came to be appointed as liquidator of the company in liquidation. As discussed herein above, orders were passed by this Court in OLR No. 70 of 2005 and vide order dated 07.08.2009, the Official Liquidator was permitted to sell the properties and assets of the company and thereafter attempts have been made even by State Bank of Saurashtra by getting valuation to Official Liquidator to dispose of the land, however except respondent no.1 no bid / offer is received and thereafter present application is filed.
Page 62 of 74 C/COMA/399/2011 CAV JUDGMENT 7.8. From the aforesaid facts as well as basic facts narrated herein above, it clearly transpires that lease has expired long back on 18.12.1982 and that the respondent no.1 is in possession of the land in question without any authority. That on the basis of documents which are referred to herein above, the contention raised by the respondent no.1 that company when it was not wound up has not demanded the possession, is factually incorrect. The facts also prove beyond doubt that even respondent no.1 company is not working concern and has ceased its operation permanently since 1.5.1996 when even electricity connection came to be disconnected by the PGVCL.
7.9. As discussed herein above, clause 8 and 10 of the registered leased deed dated 28.01.1966 clearly postulates that the lease was for a fixed period of 25 years and same expired on 18.12.1982 and that respondent no.1 was to give back the possession and that there was no renewal or extension clause inter alia provided in it. Though, the contention of statutory tenant and adverse possession as well as limitation are raised before this Court the conduct of the respondent no.1 clearly spells out that no such claim was raised when the company was in working condition and not wound up Page 63 of 74 C/COMA/399/2011 CAV JUDGMENT and on the contrary at that stage also the negotiations for purchase of land in question took place between the respondent no.1 and the company. As can be seen from the record of this application itself on an attempt being made by the Official Liquidator to dispose of the properties of the company in liquidation, the respondent no.1 gave its offer and therefore, on the basis of facts and conduct of the respondent no.1 it is matter of fact that the respondent no.1 is not a going concern and no industry is being run and is in possession of the land in question even after the lease has expired. Learned counsel for the respondent no.1 has claimed that by virtue of adverse possession the respondent no.1 has become the owner of the land in question and that the present application filed by the Official Liquidator on 21.07.2011 is beyond the time prescribed for in Article 65 of the Limitation Act. The said plea is taken during the course of hearing of this application. However, the respondent no.1 has not been able to bring any evidence on record to show that in fact when the possession became adverse. As the record indicates that when company which was not wound up and was still in working condition did demand back possession from the respondent no.1. Till 22.02.2007, respondent no.1 was declared sick unit under SICA and in facts of this case, it cannot be said that Page 64 of 74 C/COMA/399/2011 CAV JUDGMENT the possession of the respondent no.1 was hostile to the real owner in facts of this case. As held by the Hon'ble Apex Court in the case of Ram Nagina Rai (Supra) by mere denial of other's title the possession would not make his possession adverse so as to give himself the benefit of the statute of limitation. Ratio laid down by the Hon'ble Supreme Court in the case of Ram Nagina Rai (Supra) would squarely apply to the case on hand and it cannot be said that the possession is adverse in any manner.
7.10. It would be appropriate to refer to the judgment relied upon by the Shri Gori, learned advocate for the respondent no.2 workers union in the case of Larsen and Turbro Limited Club House Road, Madras (supra) C. Albert Morris(supra), Leelaben Gajanan Pansare (supra), Ravindra Ishwardas Sethna (supra) and Ramjumar Sukhchandan Gupta (supra). In case on hand also except bare contention being raised, it cannot be said that the possession of the respondent no.1 is adverse possession and as held by the Hon'ble Supreme Court in the said case only because respondent no.1 has continued in possession, it will not acquire adverse possession by simply remaining in possession and in facts of this case, it cannot be said that respondent no.1 possession Page 65 of 74 C/COMA/399/2011 CAV JUDGMENT become adverse to the interest of the real owner and therefore, contention that by virtue of adverse possession, respondent no.1 is in possession and by applicability of Article 65 of the Limitation Act, the present application filed in 2011 is barred by limitation, deserves to be negatived outright. In facts of this, it cannot be said that the possession of the respondent no.1 is adverse to the applicant i.e. Official Liquidator and therefore, it cannot be said that the present application is barred by Article 65 of the Limitation Act.
8.0. Considering second contention raised by the respondent no.1 to the effect that application is barred by limitation by virtue of Article 67 of the Limitation Act, it deserves to be noted that the lease period came to an end on 19.12.1982 and when company was in working condition did demand back the possession from the respondent no.1, which is already discussed herein above, more particularly, by communication dated 11.11.1986 and 18.09.1987. The winding up order came to be passed on 22.12.1989. 8.1. Section 456(2) of the Companies Act, reads as under:
"456. Custody of company's property.--
(1) xxxx (2)All the property and effects of the company Page 66 of 74 C/COMA/399/2011 CAV JUDGMENT shall be deemed to be in the custody of the Court as from the date of the order for the winding up of the company."
8.2. Thus, on the date of winding up i.e. 22.12.1989 by virtue of Section 456(2) of the Companies Act, all assets of the company in liquidation including the land in question vested in custody of this Court and the possession of the respondent no.1 is unauthorized and illegal and as held by this Court in order dated 10.08.2011 passed in OLR No. 139 of 2010, thus the respondent no.1 is nothing else than the trespasser and the said finding is not challenged by the respondent no.1. As discussed herein above, by condition nos. 8 and 10 of the lease deed, the respondent no.1 had specifically agreed that on expiry of the lease period, the possession of the land in question would be handed over to M/s. Maharana Mills Company Limited i.e. company in liquidation and even though demanded, respondent no.1 has failed to give back the possession and in such circumstances the land in question having been in deemed custody of this Court, as can be seen from the order of winding up of the company, it cannot be said that the present application filed on 21.07.2011 would be barred by Article 67 r/w Section 27 of the Limitation Act and it cannot be said that right of Page 67 of 74 C/COMA/399/2011 CAV JUDGMENT Official Liquidator stands extinguished. As discussed herein above, respondent no.1 company was declared to be Sick company from 1996 till 2007 and even considering said vital fact, it cannot be said that present application is time barred and Article 67 of the Limitation would not be attracted in the present case. 8.3. Even applying provision of Section 108(q) of the Transfer of Property Act on determination of lease,, the respondent no.1 as lessee is bound to put lessor i.e. company in liquidation into possession of the property. It is also matter of record that the company in liquidation when it was in working condition did demand the possession and the Official Liquidator also raised the similar demand and thus the possession of the respondent no.1 is without any authority and illegal and therefore, the respondent no.1 has no right to remain in physical and actual possession of the land in question. Applying the principle of Section 111(A) of the Transfer of Property Act also the lease in question was for a specific period of 25 years without there being any renewal clause and therefore, on determination only option left with the respondent no.1 as a lessee was to return back the possession and therefore, in facts of this case, it cannot be said that the present application is Page 68 of 74 C/COMA/399/2011 CAV JUDGMENT barred by limitation as provided under Article 67 of the Limitation Act.
8.4. It is not the case of the applicant that the present application is filed for a direction directing the respondent no.1 to vacate the land in question only because the company i.e. M/s. Maharana Mills Company Limited is ordered to be wound up but it is the case of the Official Liquidator that the lease is determined way back in the year 1982 and the respondent no.1 is in unauthorized and illegal possession of the land in question and therefore, the ratio laid down by the Hon'ble Supreme Court in the case of Smt. Nirmala R Bafna and Ors (supra) would not apply to the facts of the present case. It is also not the case of the respondent no.1 that lease period is yet to expire and therefore, the contention that the present application is barred by limitation, deserves to be negatived outright. In facts of this case, the contention raised by the respondent no.1 that he became the statutory tenant by virtue of provisions of Section 5(11)(b) of the Rent Act and that he is not trespassers to remain tenant by sufferance also is not well founded. Reliance placed on the judgment of the Hon'ble Peshawar High Court in the case of Ishar Dass s/o Murli Ram vs, Qazi Mohd. s/o Page 69 of 74 C/COMA/399/2011 CAV JUDGMENT Qazi Abdus Somad reported in AIR(32) 1945 Peshawar 16 with respect would not be applicable to the present case. The Hon'ble Peshawar High Court has decided the issue before it totally in a different context has come to the conclusion that even after determination the relationship of landlord and tenant continues. However, facts of this case are totally different and the said judgment would not be applicable. Moreover, the contention raised by learned counsel for the respondent no.1 that the respondent no.1 was ready and willing to pay the rent and is ready and willing to perform and observe other terms and conditions of the tenancy is contrary to the record. The record clearly establish and even letter of the company in liquidation when it was in operation in the year 1987 clearly shows and even the letter of the respondent no.1 shows that the rent was paid only till expiry of 25 years of lease period and therefore, the very contention that the respondent no.1 has become a tenant by sufferance, deserves to be negatived. Moreover, payment of Rs.400/ per month rent was not only condition prescribed in the lease deed. Even if it is presumed that the provision of the Bombay Rent Act applies, the fact remains that as per condition no.7 and 8 and even condition no.10 the land was leased by M/s. Maharana Mills Company Limited company in Page 70 of 74 C/COMA/399/2011 CAV JUDGMENT liquidation for a specific purpose. It is also provided in the lease deed that two quarters were of the ownership of the company in liquidation and was given on lease and that to be used for the staff members of the respondent no.1 whereas the records clearly establish that much before winding up order, the activities of the respondent no.1 has already come to standing halt and except holding the land, the respondent no.1 has not done anything. It is not the case of the respondent no.1 that today industry in working condition and under such circumstances its right should be protected. As discussed herein above, even the respondent no.1 was declared to be sick unit under SICA in the year 1996 and remained under the umbrella of Section 20 of the SICA till 2007. Thus, record of this application clearly established that readiness and willingness to pay rent is only on paper. The conduct of the respondent no.1 is otherwise and therefore, it cannot be said that the respondent no.1 has complied with the requirement of Section 12(1) of the Rent Act. Even considering the judgment of the Hon'ble Supreme Court in the case of Anand Nivas (supra) would be of no assistance to the respondent no.1. It is matter of fact that Rs.5 lakhs were deposited by virtue of order passed by this Court on 29.08.2005 which cannot be termed as payment towards rent Page 71 of 74 C/COMA/399/2011 CAV JUDGMENT and such contention is taken for the first time by respondent no.1 in this application. Similarly, even though it is contended that respondent no.1 is ready and willing to perform and observe other terms and conditions of the lease, as discussed herein above, the fact remains that the respondent no.1 is a closed unit and completely closed unit since 1996 without any electricity power and only exists on paper. Therefore, even considering the provision of the Rent Act, it cannot be said that the respondent no.1 is capable to carry out other condition of tenancy and merely payment of house tax and other legal taxes would not absolve the respondent no.1 from the fact that no rent is paid after the date of determination of the lease.
9.0. It also deserves to be noted that pursuant to the order passed by this Court, respondent no.1 also gave it bid to purchase the land and therefore, the conduct of the respondent no.1 speaks for itself and though this Court has limited jurisdiction while deciding the present issue, the fact remains that the respondent no.1 is only interested in land for the reasons best known to it, which has huge commercial value today that too at the cost of creditors, more particularly workers who are waiting for their dues since 1989 Page 72 of 74 C/COMA/399/2011 CAV JUDGMENT complied with the fact that large number of workers were expired in the interregnum. The judgments relied upon by the learned counsel for the respondent no.1 would not be applicable to the facts of present case. The facts as well as conduct of the respondent no.1 speaks for itself even though it is not engaged in any industries since 1996 and even the electricity power has been disconnected by the electricity company in order to take advantage of the rise in price of the land by one way or the other wants to stick to the land at the cost of the workmen and secured creditors who are waiting for their legitimate dues of the company in liquidation since decades.
10. In light of the aforesaid, therefore, all the three contentions raised by respondent no.1 fail and present application therefore, deserves to be allowed and is accordingly allowed. Accordingly, respondent no.1 is hereby directed to vacate the land bearing City Survey No.5105 admeasuring 20529.0353 sq mtr i.e.24551 sq yards situated at Porbandar, Dist. Porbandar and handover the actual and peaceful possession to the Official Liquidator forthwith. The Official Liquidator shall take all necessary steps to take possession of the lands in question and Deputy Collector, Page 73 of 74 C/COMA/399/2011 CAV JUDGMENT Porbandar is requested to provide all assistance to the Official Liquidator for the same. The Official Liquidator is further directed to file appropriate report before this Court for disposal of the land in question as expeditiously as possible. Present order is passed in facts of present case. The other applications are pending and will be dealt with separately.
(R.M.CHHAYA, J) KAUSHIK J. RATHOD FURTHER ORDER After the order was pronounced, Mr. Ashok L. Shah, learned counsel for respondent no.1Company prays for stay even though the same is objected by Mr. Gori, learned counsel for respondent no.2 and Mrs. K.J. Brahmbhatt, learned counsel for the Official Liquidator.
In the facts of the case, directions issued in this order shall not be implemented by the Official Liquidator till 21st January, 2019.
(R.M.CHHAYA, J) BIJOY B. PILLAI Page 74 of 74