Calcutta High Court
Wellman Wacoma Limited vs Tivoli Park Apartments Private Limited ... on 7 September, 2009
Author: Pinaki Chandra Ghose
Bench: Pinaki Chandra Ghose
IN THE HIGH COURT AT CALCUTTA
CIVIL APPELLATE JURISDICTION
ORIGINAL SIDE
Present :
Hon'ble Justice PINAKI CHANDRA GHOSE
And
Hon'ble Justice I. P. MUKERJI
A.C.O. No. 62 of 2009
A.P.O.T. No.294 of 2009
C.A. No.475 of 2009
Connected with
C.A. No.302 of 2006
B.I.F.R. Case No.55 of 1998
WELLMAN WACOMA LIMITED
Versus
TIVOLI PARK APARTMENTS PRIVATE LIMITED & ANR.
For the Appellant : Mr. P.C. Sen, Sr. Advocate,
Mr. S.K. Kapur, Sr. Advocate,
Mr. Utpal Bose, Advocate,
Mr. Jaydip Kar, Advocate,
Mr. R.R. Sen, Advocate
For the Respondent : Mr. S.B. Mookherji, Sr. Advocate,
Mr. R. Deb, Sr. Advocate, Mr. T.K. Bose, Advocate Heard on : 25.08.09, 31.08.09, 02.09.09 & 04.09.09 Judgment on : 7th September, 2009 PINAKI CHANDRA GHOSE, J. : This appeal is directed against an order passed by the Hon'ble First Court on 20th July, 2009 when His Lordship was pleased to dismiss the application filed by the appellant for dismissal of the application filed by the respondent under Section 535 of the Companies Act, 1956.
It appears that the respondent filed an application under Section 535 of the Companies Act praying for disclaimer of the property at premises No. Bungalow 5, Tivoli Park 225 B, A.J.C. Bose Road, Kolkata. The said application of the respondent was disposed of by an order dated 19th September, 2007 by the learned Single Bench of this High Court dismissing the said application. Similarly, Wellman Wacoma Limited (hereinafter referred to as "Wacoma") claims to be in possession of the said premises and also claims themselves to be a monthly tenant in respect of the said premises. An application filed under Sections 446, 457 and 460 of the Companies Act, 1956 seeking an order of injunction restraining the Official Liquidator and other respondents from interfering with the possession of Wellman Wacoma in respect of the said premises. The said applications were taken up by the Hon'ble Single Bench and, subsequent thereto, by the said judgment dated 19th September, 2007.
Being aggrieved with the said order, an appeal was preferred before the Division Bench. The facts of the case briefly are as follows :-
On 25th May, 2004 Tivoli Park Apartments Private Limited (hereinafter referred to as "Tivoli") came to learn that an order has been passed by the Court winding up Wellman Incandescent (India) Limited. According to Tivoli, the said company (in liquidation) was a tenant under the Tivoli in respect of Bunglow No.5 measuring about 1500 square feet at Tivoli Park 225 B, A.J.C. Bose Road, Kolkata. Tivoli on 28th April, 2006 made an application before this Court claiming for a direction upon the Official Liquidator to disclaim the said property in favour of the Tivoli. Subsequent thereto, Wacoma on 10th May, 2006 made an application under Section 446 of the Companies Act praying for an order of injunction restraining the Official Liquidator from interfering with the possession of Wacoma and further prayed leave to initiate appropriate proceedings against the respondents.
On 11th August, 2006 Wacoma instituted a suit in the District Court of Alipore claiming a declaration that Tivoli had no right to obstruct ingress and egress of Wacoma to and from the premises in question and for injunction and other necessary reliefs. On 19th September, 2007 the Hon'ble Company Court dismissed the application of Tivoli as well as the application of Wacoma.
On 5th October, 2007 the Appeal Court in the appeal filed by the parties passed the following order :-
"The parties shall jointly apply before the Hon'ble Judge taking interlocutory matters for disposal of the application under Clause 13 of the Letters Patent being ALP No.9 of 2007 by passing a consent-order for transfer of Title Suit No.31 of 2006 pending in the court of the learned Civil Judge (Senior Division) 2nd Court to this Court.
The suit will be taken up by the Hon'ble Judge along with the application on the following issues as suggested by the parties :
1. (a) Whether the tenancy of Wellman incandescent (India) Ltd. (Now in Liquidation) under Tivoli Park Apartment Pvt. Ltd. was terminated by surrender or otherwise ?
b) if so,
i) How was the tenancy terminated?
ii) When was such tenancy terminated?
2. (a) Whether there was any creation of a new tenancy by Tivoli Park Apartment Pvt. Ltd.
in favour of Wellman Wacoma Ltd ?
b) if so,
i) How was such tenancy created?
ii) When was such tenancy created?
All the issues in the said proceedings shall be set down for trial on evidence and the Hon'ble Judge shall decide the entire matter after evidence.
Since the parties have agreed to the above terms we do not intend to make any further order in the matter and the parties will be at liberty to apply before the Hon'ble Chief Justice for assignment so that the three matters can be disposed of by a Hon'ble Judge."
At the instance of the parties under Clause 13 application filed by the parties. The Hon'ble Interlocutory Judge on 28th March, 2008 transferred the suit instituted by Wacoma before the District Court of Alipore to this Court.
The case of the Wacoma is that this Court has no jurisdiction to adjudicate or grant the relief as prayed for by the Tivoli in the said application under Section 535 of the Companies Act, 1956. It is submitted that the company (in liquidation) was not a tenant in respect of the premises in question and, as such, the application filed by Tivoli, is not maintainable.
In support of the appeal it is contended before us that the Tivoli could not establish that the premises in question or any tenancy right therein was the property of the company (in liquidation) nor it could prove that the alleged tenancy was burdened with onerous covenants. Hence the application filed under Section 535 of the Companies Act was not maintainable.
Learned Sr. counsel, Mr. P.C. Sen, appearing on behalf of the appellants in this matter contended that no documents have been annexed to the application of the respondent No.1, and that the company in liquidation was never a tenant in the Bunglow in question. He further submitted that on 24th September, 2002 an order for winding up the said company in liquidation was passed and the notice was published in the newspaper and, according to him, at no point of time the Official Liquidator has ever taken possession of the property in question. He further submitted that an application was filed being C.A. No.475 of 2009 before the Hon'ble First Court claiming the disclaimer application of the respondent No.1 is not maintainable. The said application of the appellant was in the nature of a demurrer application. He also drew our attention to Section 535 of the Companies Act and submitted that the powers under Section 535 of the said Act should be exercised cautiously and relied upon a decision in the case of United Bank of India Vs. Official Liquidator & Ors., reported in (1994) 1 SCC 575. He further contended that tenancy right of the company in liquidation may not even be an asset for the purpose of liquidation proceedings. He also relied on a decision in the case of NIrmala R. Bafna Vs. Khandesh Spinning and Weaving Mills Co. Ltd., reported in (1992) 2 SCC 322 in support of his contention.
According to him, disclaimer application of the respondent No.1 does not disclose cause of action. Hence, it is not maintainable under Section 535 of the Companies Act. His further contention is that the Code of Civil Procedure is made applicable to the proceedings of the Companies Act, 1956 under Rule 6 of the Companies (Court) Rules, 1959. He relied on a decision in the case of Ramesh B. Desai & Ors. Vs. Bipin Vadilal Mehta & Ors., reported in (2006) 5 SCC 638. Accordingly, he submitted that Order VII Rule 11 of Civil Procedure Code applies to such proceedings.
He further submitted that the Hon'ble First Court is wrong in not holding that the Appellate Court did not decide the issue in question and remanded the matter before the Trial Court keeping all points open. Hence, he submitted that the Hon'ble First Court had to consider all the points including the point of maintainability and he relied on the decisions in the case of Orient Papers and Industries Ltd. & Anr. Vs. Tahsildar-Cum-Irrigation Officer & Ors., reported in 1998 (7) SCC 303 and in the case of Rajgopal (Dead) by Lrs. Vs. KIshan Gopal & Anr. , reported in 2003 (10) SCC 653, in support of such contention.
According to him, the question of maintainability has not been decided by the Hon'ble Appellate Court and, therefore, the observation of the Hon'ble Judge is that the demurrer application is not maintainable is erroneous on the ground that the appellant did not file any demurrer application earlier.
On the contrary, Mr. S.B. Mookherji, learned Sr. Counsel, appearing on behalf of the respondent/Tivoli submitted that Section 535 of the Companies Act cannot be read in isolation and must necessarily take into consideration other relevant Sections e.g. Section 456(2), Section 446, Section 457(3) and Rule 9 of the Companies (Court) Rules, 1959. It has been held that even if a wrong Section is mentioned in the petition, relief will not be refused if the petitioner is entitled to the reliefs prayed for. In support of his contention, Mr. Mookherji relied on a decision in the case of Suledha Works Ltd. reported in AIR 1965 Calcutta 98.
Mr. Mookherjee further submitted that the application of Tivoli under Section 535 was opposed by Wacoma. He pointed out that the point of maintainability in the affidavit-in-opposition filed by the appellant before the Trial Court was specifically taken. The disclaimer application of the respondent No.1 was dismissed by the Court mainly on the ground that the matter requires a trial on evidence and Wacoma did not prefer any appeal from the said order/judgment. Appeal was preferred by Tivoli and this was disposed of by the Division Bench on 13th March, 2009. In fact, that was a consent order since the parties agreed to the issues what were recorded in the said order.
Mr. Mookherji, further submitted that the disclaimer application was set down for trial on evidence along with the issues mentioned in the order dated 13th March, 2009. In the affidavit-in-opposition filed by Wacoma it is admitted that the company in liquidation was a tenant and, Wacoma thereafter, became a tenant in respect of the said premises which was also admitted by Wacoma in its affidavit filed under Section 446 and he drew our attention to the said affidavit. (Paper Book page 86 at page 92, being affidavit affirmed on 17.03.2007).
He submitted that order dated 13th March, 2009 has been accepted and acted upon by the parties in the following manner :-
(a) Wacoma had called its witness first who was examined in part. (See Deposition of Kalyan Banerjee, Paper Book page 140).
(b) All the matters namely the suit filed by Wacoma in the Alipore Court which was transferred under Clause 13 of the Letters Patent to this Hon'ble Court, Tivoli's application under Section 535, Wacoma's application under Section 446 and the interlocutory application made therein for raising additional issues and the application for demurrer. The Appeal Court by the order dated 13th March, 2009 also directed that all the matters to be heard together and decision to be taken only after evidence.
He further submitted that there is no scope for raising an issue of demurrer at this stage, particularly, when the Appeal Court has set down the matter for trial on evidence. Point of demurrer, according to him, cannot be raised midway after the Court has directed by consent of the parties that the matters should be heard on evidence.
He further submitted that the suit which has been transferred before this Court in terms of the order of the Appellate Court has already been withdrawn by the Wacoma after the trial of evidence had started and Wacoma had called its witness Kalyan Banerjee, which is also recorded in the judgment of the Trial Court. He further pointed out that the application made by Wacoma under Section 446 was also withdrawn. The application which was filed by Wacoma being C.A. No.461 of 2009 for framing additional issues was dismissed as the main application under Section 446 was withdrawn. No interlocutory application made by Wacoma in the main application under Section 446 could survive when the main application did not exist.
Mr. Mookherji further drew our attention at page 166 of the Paper Book and he submitted that even from the said additional issues as suggested by Wacoma only issue No.1 was pressed and the other issues were abandoned. In the said suggestion there was no mention of any preliminary issue or demurrer in the said suggested new issues which are annexed by them. He also submitted that the so-called demurrer application was made only with a view to delay the hearing of the matter and it is in gross abuse of the process of Court. The issues were also raised before the Appellate Court by consent of the parties. He further submitted that the interpretation suggested by the appellant is wholly untenable. The expression 'property of a company' cannot be read in isolation.
Mr. Mookherji further drew our attention to Rule 267 of the Companies (Court) Rules, 1959 and Form No.132 under the said Rules. From 132 expressly refers to leasehold property or shares etc. Therefore, the narrow construction sought to be given on Section 535 is wholly untenable and the various Sections mentioned above namely Section 446, 456(2), 457(3), 535 and the Companies (Court) Rules and Forms thereunder give ample power to the Court to make an order directing Official Liquidator to disclaim a particular property which may be monthly tenancy or a leasehold interest in favour of the owner.
He further submitted that under Section 456(2), after a company has been directed to be wound up, the assets of a company are deemed to be in the custody of the Court as the Division Bench has held in the cases of Vidyadhar Upadhyay vs. Shree Shree Madan Gopal Jew & Ors., reported in 67 Company Cases 394; and Sakaw Industries Pvt. Ltd. (in Liquidation), reported in 67 Company Cases 16. The Division Bench has construed Section 456(2) of the Companies Act and held that even if the Liquidator did not in fact take actual physical possession of a company's property it will be deemed to be in the custody of the Court and it is immaterial whether actual possession has been taken by the Liquidator or not.
He further submitted that the expression 'all questions are kept open' means questions of merit relating to the issues raised are covered as it would be evident from the Appeal Court's order dated 13th March, 2009. According to him, there is no infirmity in the judgment and the learned Judge rightly considered the order. Hence he submitted that the appeal should be dismissed.
On the contrary, Mr. P.C. Sen submitted that the decisions cited by Mr. Mookherji, in the facts and circumstances of this case have no application.
After hearing the learned Senior counsel for the parties and perusing the decisions cited before us and analyzing the facts of this case, in our considered opinion the demurrer application which has been filed by the appellant cannot be gone into at this stage since the appellant has applied before the Court for transfer of the suit in question in terms of the order passed by the Division Bench. It further appears to us that parties have already given effect to the order so passed by the Division Bench. The suit which was filed before the District Court was transferred before the High Court and in fact in appears that the appellant themselves withdrew the suit. It further appears from the fact that the appellant has also withdrawn their application which they have filed before the Court being under Section 446 of the Companies Act, 1956.
Therefore, in our considered opinion the contention of Mr. Mookherji that no Interlocutory Application could be made by Wacoma in the main application under Section 446 would survive when the main application under Section 446 has already been withdrawn. Therefore, we accept the contention of Mr. Mookherji. It further appears to us that the appellant has deliberately adopted dilatory tactics which would be evident from their conduct. On one hand, they have already given effect to the order of the Appeal Court and on the other hand they are filing an application for dismissal of the application filed by the respondents under Section 535. It further appears that the issues have already been framed by the Division Bench at the instance of the parties and it is also made clear that the said issues shall be set down for trial on evidence. On that point of time parties agreed before the Division Bench and, therefore, in our considered opinion at this stage they cannot change their stand subsequently. Therefore, the Hon'ble First Court has correctly come to the conclusion as follows:
"Thus I do not think that mere dismissal of Wacoma's present application is enough, as I find that Wacoma having been a party to the past proceedings and with full knowledge of the Judgment and orders passed therein, in compliance defiance of the order of the Appeal Court and in utter abuse of power and process of this Court has made this application, the application is dismissed with costs assessed at Rs.30,000/-. This cost, however, will be paid to Tivoli or its advocate-on-record positively within a week from date."
We further find that the Court has also at the time of dismissal of the application made it clear that :
"However, in dismissing the above application I am not at all unmindful of the Court's power to frame additional issue or issues as may be necessary for determining the matters in controversy between the parties as provided in Sub-rule (1) of rule 5 of Order 14 of the Code. And I agree with the submissions made on behalf of Wacoma in support of its application for framing additional issue that the court enjoys such power and discretion to amend or frame additional issues before passing a decree, meaning thereby, in the present case, before the final adjudication of the proceedings before me by pronouncement of Judgment."
Therefore, in our considered opinion, the order so passed by the Hon'ble First Court cannot be said to suffer from any illegality or irregularity.
Hence, this appeal is dismissed.
Urgent Xerox certified copy of this order, if applied for, be supplied to the parties subject to compliance with all requisite formalities.
(PINAKI CHANDRA GHOSE, J.) I agree.
( I. P. MUKERJI, J. )