Gujarat High Court
The Legal Heirs Of Deceased Fakirchand ... vs O.L.Of M/S.Shri Amruta Mills Ltd on 24 February, 2023
Author: Sonia Gokani
Bench: Sonia Gokani
NEUTRAL CITATION
C/OJA/60/2003 JUDGMENT DATED: 24/02/2023
undefined
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/O.J.APPEAL NO. 60 of 2003
In
R/COMPANY APPLICATION NO. 47 of 1993
With
R/O.J.APPEAL NO. 13 of 2009
In
COMPANY APPLICATION NO. 428 of 2008
With
CIVIL APPLICATION (OJ) NO. 1 of 2009
In
R/O.J.APPEAL NO. 13 of 2009
In
COMPANY APPLICATION NO. 428 of 2008
FOR APPROVAL AND SIGNATURE:
HONOURABLE THE CHIEF JUSTICE MS. JUSTICE SONIA GOKANI
and
HONOURABLE MR. JUSTICE HEMANT M. PRACHCHHAK
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1 Whether Reporters of Local Papers may be allowed No
to see the judgment ?
2 To be referred to the Reporter or not ? No
3 Whether their Lordships wish to see the fair copy No
of the judgment ?
4 Whether this case involves a substantial question No
of law as to the interpretation of the Constitution
of India or any order made thereunder ?
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THE LEGAL HEIRS OF DECEASED FAKIRCHAND AMBARAM PATEL & 1
other(s)
Versus
O.L.OF M/S.SHRI AMRUTA MILLS LTD. & 1 other(s)
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Appearance:
MR MI HAVA(348) for the Appellant(s) No. 1.2,1.3,1.4,2,2.1,2.2,2.3
MR MUKESH A PATEL(636) for the Appellant(s) No. 1,1.1
MR.CHANAKYA BHAVSAR(6316) for the Appellant(s) No.
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NEUTRAL CITATION
C/OJA/60/2003 JUDGMENT DATED: 24/02/2023
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1.2,1.3,1.4,2,2.1,2.2,2.3
MR DHAWAN M JAYSWAL(5878) for the Opponent(s) No. 1
NOTICE SERVED for the Opponent(s) No. 2
MR DS VASAVADA for the Opponent Textile Labour Association
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CORAM:HONOURABLE THE CHIEF JUSTICE MS. JUSTICE
SONIA GOKANI
and
HONOURABLE MR. JUSTICE HEMANT M.
PRACHCHHAK
Date : 24/02/2023
ORAL JUDGMENT
(PER : HONOURABLE MR. JUSTICE HEMANT M. PRACHCHHAK)
1. The O. J. Appeal No.60 of 2003 is filed challenging the impugned judgment and order dated 30.07.2002 passed by this Court (Coram: Hon'ble Mr.Justice D. A. Mehta) in Company Application No.47 of 1993 in Company Petition No.72 of 1991 whereby the learned Company Judge rejected the said application. The O. J. Appeal No.13 of 2009 is filed challenging the impugned judgment and order dated 17.11.2008 passed by this Court (Coram: Hon'ble Mr.Justice K. A. Puj) in Company Application No.428 of 2008.
2. Brief facts of O. J. Appeal No.60 of 2003 are in nutshell as under:-
2.1 That deceased Fakirchand Ambaram Patel and deceased Page 2 of 54 Downloaded on : Sun Sep 17 22:10:09 IST 2023 NEUTRAL CITATION C/OJA/60/2003 JUDGMENT DATED: 24/02/2023 undefined Shakerbhai Boghabhai and deceased Channabhai Boghabhal were owners of the land bearing survey No. 46/3, 47, 50/1 and 46/2 and they were in possession of the said land. The pre-
deceased had executed the lease deed in favour Shri Ramanlal Lallubhai vide survey no. 1788 dated 20.04.1928 and accordingly being legal heirs, the appellants have derived the interest and ownership of the land in question.
2.2 Pursuant to the lease deed, the possession of the land was transferred to lessee i.e. Ramantal Lallubhai and Ramanilal Lallubhai transferred his leasehold right to M/s Vikram Mills Ltd., and M/s Vikram Mills Ltd. transferred the land in question to the company in liquidation i.e. M/s. Shri Amruta Mills Limited and M/s. Shri Amruta Mills Limited has been lead into winding up process and the original appellant preferred Company Petition No.72 of 1991 and in pursuance of the order dated 22.11.1991 passed by learned Company Judge in the said company petition, the official liquidator has taken over the possession of the properties of company on 17.12.1991.
2.3 As there is arrears of the land revenue of the company in Page 3 of 54 Downloaded on : Sun Sep 17 22:10:09 IST 2023 NEUTRAL CITATION C/OJA/60/2003 JUDGMENT DATED: 24/02/2023 undefined winding up, the lease deed is terminated and appellants are entitled to receive peaceful and vacant possession of the land in question. The notice came to be issued to the official liquidator on 09.03.1992, however, the official liquidator has not taken any action in that regard.
2.4 The land revenue authority has initiated the action and the Collector has issued notice for recovery of land revenue stating that if the land revenue is not paid, the land shall be attached and sold away by public auction.
2.5 The official liquidator had addressed a letter dated 09.03.1992 with regard to handing over the possession of land. The appellants preferred Company Application No.47 of 1993 before the Company Court. Thereafter, the learned Company Judge had passed an order on 07.10.1994 in Company Application No. 47 of 1993 and allied matters and against that order, the appellants and other persons had filed O.J. Appeal No. 48 of 1998 before this Court and this Court after hearing all the parties passed an order on 16.12.1999 by which the matter was remanded back for deciding a fresh and accordingly the order Page 4 of 54 Downloaded on : Sun Sep 17 22:10:09 IST 2023 NEUTRAL CITATION C/OJA/60/2003 JUDGMENT DATED: 24/02/2023 undefined passed by learned Single Judge was set aside. 2.6 Thereafter, the appellants preferred Company Application No.47 of 1993, which came to be disposed of along with the group matters by this Court vide the impugned judgment and order dated 07.10.1994. Against the said order, the appellants preferred O.J. Appeal No.48 of 1998, which came to be disposed of by the Division Bench (Coram: Hon'ble Mr. Justice B. C. Patel and Hon'ble Mr. Justice K. M. Mehta) vide order dated 16.12.1999 by remanding back the matter for deciding afresh and after the order dated 07.10.1994, the respondent - Company failed to make payment of the rent and the Company is bound to take care of the land in question and it was obligatory on the part of the lessee that the ownership and title of the land in question may not be damaged during the period of holding the land on lease. As per the resolution of the company itself the possession of the land has been given by Shri Ramanial (Original Lessee) for limited purpose of running Mill and the Mill has been closed the purpose for which the possession of the land in question was given has came to an end.
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3. Brief facts of O. J. Appeal No.13 of 2009 are in nutshell as under:-
3.1 The appellants claim to be the heirs of Shri Bhogilal Girdhardas Patel and Shri Achratlal Dalsukhbhai Jash who were the owners of the land in question admeasuring 4 acres and 36 gunthas forming part of Survey No.51 and 52 paiki of Town Planning Scheme No.11, Final Plot No.63 situated at Mouje Village: Rakhial, Taluka: City. The said land had been leased by the original owners on 06th June, 1928 to The Vikram Mills Company Limited. The name of Vikram Mills Company Limited, was subsequently changed to M/s. Shree Amruta Mills Limited.
Vide order dated 22nd November, 1991 made in Company Petition No.72 of 1991, M/s. Shree Amruta Mills Limited was ordered to be wound up by the learned Company Judge and the Official Liquidator attached to this High Court was appointed as Official Liquidator. On 04th June, 2007, the Official Liquidator issued a notice in "The Times of India", Ahmedabad edition for sale of land of M/s. Shree Amruta Mills Limited admeasuring 1,22,741.84 sqr. mtrs. including the subject property. The Page 6 of 54 Downloaded on : Sun Sep 17 22:10:09 IST 2023 NEUTRAL CITATION C/OJA/60/2003 JUDGMENT DATED: 24/02/2023 undefined appellants herein, filed Company Application No.428 of 2008 contending that the Official Liquidator has no jurisdiction to sell or auction or deal with the said property which belongs to the appellants and is not the property of the Company under liquidation i.e. M/s. Shree Amruta Mills Ltd. By the impugned judgment and order dated 17 th November, 2008, the said application came to be rejected.
4. We have heard extensively learned counsel appearing for both the sides. The parties have filed affidavits and rejoinder affidavits respectively.
5. Mr.M.I.Hava, learned counsel appearing for the appellants in O.J. Appeal No.60 of 2003 has submitted that the learned Company Judge has not properly considered the evidence and the provisions of law and also not considered the directions issued by the Division Bench vide order dated 16.12.1999 passed in O. J. Appeal No.48 of 1998. Learned advocate for the appellants has submitted that the learned Company Judge at the relevant time passed an order dated 03.08.1998 examining the various issues with regard to the clauses of the contract and the Page 7 of 54 Downloaded on : Sun Sep 17 22:10:09 IST 2023 NEUTRAL CITATION C/OJA/60/2003 JUDGMENT DATED: 24/02/2023 undefined provisions of the law and the said order dated 03.08.1998 came to be challenged by way of filing O.J. Appeal No.48 of 1998 before the Division Bench of this Court which was remanded back for deciding a fresh. It is submitted by Mr.Hava, learned counsel that the learned Company Judge ought to have held that the appellants are entitled for possession of the land more particularly the company's business which has been closed and the lease holder and/or the official liquidator have failed to protect the titles and ownership rights of the land. Mr.Hava, learned counsel has also submitted that the company in liquidation has not produced any relevant resolutions or executed any documents to show that the land in question has been validly transferred to the company in liquidation. He has submitted that the appellants had made an application before the official liquidator for handing over the possession but the official liquidator had not bothered to take any action and hence, the application was filed before the Hon'ble Company Court. While referring to the provisions of the Transfer of Property Act, Company Law and the Tenancy Law along with the documentary evidence, Mr.Hava, learned counsel has submitted that the Page 8 of 54 Downloaded on : Sun Sep 17 22:10:09 IST 2023 NEUTRAL CITATION C/OJA/60/2003 JUDGMENT DATED: 24/02/2023 undefined company in liquidation is unable to use the land for it's business purpose and unable to produce documentary evidence about holding permanent leasehold rights. It is submitted by Mr.Hava, learned counsel that the appellants executed a registered lease deed No.1788 dated 02.04.1928 in favour of lessee Seth Ramanlal Lallubhai in his individual capacity and Ramanlal Lallubhai without executing deed of assignment of lease and registering the same under the provisions of Section 107 of the Transfer of Property Act and Section 17(d) of the Registration Act and to obviate the restrictions under Section 15 of the Rent Act transferred interest in favour of M/s. Vikram Mills Ltd. (renamed to M/s. Shri Amruta Mills Ltd.) vide mutation entry no. 4454 dated 30.01.1959. Mr.Hava, learned counsel has submitted that in absence of any registered assignment of lease between Ramanlal Lallubhai and Vikram Mills Ltd. there is no document of title in favour of Vikram Mills Ltd. It is submitted by Mr.Hava, learned counsel that such surreptitious transfer by mutation entries was undertaken since Section 15 of the Bombay Rents, Hotel and Lodging, House Rate Control Act (Bombay Act LVII of 1947) ("Rent Act" for short) prior to the amendment in 1959 Page 9 of 54 Downloaded on : Sun Sep 17 22:10:09 IST 2023 NEUTRAL CITATION C/OJA/60/2003 JUDGMENT DATED: 24/02/2023 undefined prohibited any tenant from sub-letting the whole or any part of the premises let to him or to assign or to transfer in any manner his interest therein. He has submitted that since, Ramanlal Lallubhai illegally, unlawfully and surreptitiously assigned and transferred all his rights under the lease by effecting mutation entries. It is submitted by Mr.Hava, learned counsel that no any deed is executed by Raman Lallu in favour of Vikram Mills Ltd and, therefore, Vikram Mills Ltd cannot claim any rights, title or interest under the lease dated 02.04.1928 and it does not become the Sub-Lessee or Assignee under the law. He has also submitted that the change of name effected by mutation entries does not create or extinguish any right, title or interest in the property and the mutation entries are entered in the record for the purpose of revenue and fiscal liabilities. He has submitted that in absence of any contractual lease in favour of M/s. Vikram Mills Ltd (M/s. Shri Amruta Mills Ltd) it become a deemed statutory tenant and the possession whereof is protected under Section 15(2) of the Rent Act enjoying tenancy right month to month governed by the protection and restrictions contemplated under the Rent Act and is not entitled to claim any rights under Page 10 of 54 Downloaded on : Sun Sep 17 22:10:09 IST 2023 NEUTRAL CITATION C/OJA/60/2003 JUDGMENT DATED: 24/02/2023 undefined the original lease deed dated 02.04.1928 as no contractual tenancy was created by execution and registration of assignment deed in favour of Vikram Mills Ltd (M/s. Amruta Mills Ltd) by Ramanbhai Lallubhai. It is submitted by Mr.Hava, learned counsel that considering the facts and circumstances of the case, the inference is liable to be drawn in favour of the appellants and they are entitled for possession of the land in question. Mr.Hava, learned counsel has, therefore, urged to allow the appeal and to quash and set aside the impugned judgment and order dated 30.07.2002 passed by the learned Company Judge in Company Application No.47 of 1993.
5.1 Mr.Hava, learned counsel appearing for the appellants in O.J. Appeal No.60 of 2003 has relied upon the following decisions.
1. Jabal C. Lashkari and others Vs. Official Liquidator and others reported in (2016) 12 SCC 44;
2. Jitendra Singh Vs. State of Madhya Pradesh and others reported in 2021 SCC Online SC 802;
3. Anilkumar Vaikunthlal Patel Vs. Official Liquidator of Ahmedabad Jubilee Mills Ltd reported in 2020 (0) AIJEL HC 242208;
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4. M/s. Bajaj Auto Limited Vs. Behari Lal Kohli reported in (1989) 4 SCC 39;
5. Anthony Vs. K. C. Ittoop and sons and others reported in (2000) 6 SCC 394;
6. Samir Mukherjee Vs. Davinder K. Bajaj and others reported in (2001) 5 SCC 259;
7. K. B. Saha and Sons Private Limited Vs. Development Consultant Limited reported in (2008) 8 SCC 564;
8. Suraj Lamp and Industries Private Limited Vs. State of Haryana and another reported in (2021) 1 SCC 656;
9. Park Street Properties Private Limited Vs. Dipak Kumar Singh and another reported in (2016) 9 SCC 268;
10. Visvesvaraya Industrial Research and Development Centre Vs. Official Liquidator Rustom Mills and Industries Limited and others reported in (2003) SCC Online Guj 280;
11. Shyam Narayan Prasad Vs. Krishna Prasad and others reported in (2018) 7 SCC 646;
12. Jaisingh Morarji and others Vs. M/s. Sovani Pvt. Ltd and others reported in (1073) 1 SCC 197;
13. Shantibai and others Vs. Dinkar Balkrishna Vaidya and others reported in (1994) 4 SCC 85;
14. South Indian Photographic and allied Trades Association Vs. State of Tamil Nadu and others reported in (1996) 5 SCC 394;
15. M/s. Parasram Harnand Rao Vs. M/s. Shanti Parsad Narinder Kumar Jain and another reported in (1980) 3 SCC 565;
16. Shree Chamundi Mopeds Ltd Vs. Church of South India Trust Association GSI Cinod Secretariate, Madras reported in (1992) 3 SCC 1;
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17. Ravindra Ishwardas Sethna and another Vs. Official Liquidator, High Court, Bombay and another reported in (1983) 4 SCC 269;
18. Official Liquidator of M/s.Globe Associates Ltd Vs. H. P. Sharma rendered in Civil Appeal No.389 of 1969;
19. Globe Financiers (P) Ltd. Vs. Official Liquidator reported in (1969) SCC Online Del 171;
20. Nirmala R. Bafna Kershi Shivax Cambatta and others Vs. Khandesh Spinning and Weaving Mills Co. Ltd and another reported in (1992) 2 SCC 322;
21. Kanubhai H. Prajapati and others Vs. Official Liquidator rendered in Company Application No.269 of 1994 dated 03.08.1998.
22. Devinder Kumar Bajaj and others Vs. Pure Drinks (New Delhi) Pvt. Ltd. Reported in 2001 (57) DRJ 773;
23. Uttra Achuyt Chinubhai Vs. O.L. Nanikram Shobhraj Mills reported in 2010 (5) GLR 4029;
24. Anil Pvt. Ltd. Vs. O.L. of G.S.T.C. rendered in Company Application No.174 of 2001 dated 10.05.2002;
25. Dhairyasinh P. Rajda - Managing Owner Vs. O.L. of M/s.
Ahmedabad Manufacturing Owner and Calico PTG Mills Co Ltd and others rendered in Company Application No.371 of 2009 dated 29.09.2015;
26. Dunlop India Limited Vs. A. A. Rahna and another reported in (2011) 5 SCC 778;
27. Vora Rahimbhai Haji Hasanbhai Popat Vs. Vora Sunderlal Manilal and another reported in (1985) 4 SCC 551;
28. Chapsibhai Dhanjibhai Danad Vs. Purushottam reported in (1971) 2 SCC 205;
29. Bavasahed Walad Mansursaheb Korti and another Vs. Page 13 of 54 Downloaded on : Sun Sep 17 22:10:09 IST 2023 NEUTRAL CITATION C/OJA/60/2003 JUDGMENT DATED: 24/02/2023 undefined West Patent Co. Ltd and others reported in 1954 ILR 448;
30. Abdul Khuddus Vs. H. M. Chandiramani and others reported in 2021 SCC Online SC 714;
31. Trivenibai and another Vs. Smt. Lilabai reported in AIR 1959 SC 620;
6. Mr.Dharmesh Shah, learned counsel appearing for the appellants in O. J. Appeal No.13 of 2009 has submitted that the impugned order is against the principles of natural justice and without appreciating the evidence on record and the same is required to be rejected especially for forfeiting the amount of Rs.1 Lakh deposited by the appellants. Learned counsel for the appellants has submitted that the purported sale / auction of the property of the appellants is without any jurisdiction and the same is against the principles of natural justice. He has submitted that the learned Single Judge has not properly appreciated the fact that the leasehold rights of the company in liquidation cannot be the subject matter of exercise of powers under Section 457 (1) of the Companies Act without giving any notice to the persons having rights, title and interest in the land purported to be sold / auctioned. Mr.Shah, learned counsel has submitted that the lessors are entitled to restoration of Page 14 of 54 Downloaded on : Sun Sep 17 22:10:09 IST 2023 NEUTRAL CITATION C/OJA/60/2003 JUDGMENT DATED: 24/02/2023 undefined possession of the lands leased to the company in liquidation because of non-payment of rent and non user of the lands for more than six months. Mr.Shah, learned counsel has submitted that the lands were leased to M/s. Vikram Mills Ltd. which later on came to be known in the name of M/s. Shree Amruta Mills Ltd and, thereafter, the company has been ordered to be wound up by an order dated 22.11.1991 passed by this Court in Company Petition No.72 of 1991 and the company as well as official liquidator have not paid the rents to the appellants for a long time. Mr.Shah, learned counsel has also submitted that as per Clause 2 of the lease deed, the lessee is entitled to take over the possession of the lands if the lessee does not pay the rents as per the contract and the appellants are entitled to resume the land as per Section 12(3) (b) of the Rent Act. According to Mr.Shah, learned counsel, the lands were leased to the company for the purpose of constructing a mill, however, the company or the official liquidator cannot put the land to use for any purpose and the official liquidator has advertised sale of leasehold land of the company in liquidation and the leasehold right of the company in the demised lands is treated as asset of the Page 15 of 54 Downloaded on : Sun Sep 17 22:10:09 IST 2023 NEUTRAL CITATION C/OJA/60/2003 JUDGMENT DATED: 24/02/2023 undefined company. Mr.Shah, learned counsel has, while referring to the provisions of the Rent Act, submitted that Section 13(1)(k) of the the Rent Act is attracted in the present case and the appellants are entitled to resume the lands. He has submitted that when the extension of the Rent Act was reserved for the assent of the president, repugnancy with certain provision of the Transfer of Property Act was indicated. According to Mr.Shah, learned counsel, upon termination of the lease, the tenant become a statutory tenant and the prohibition against assignment in the statute will operate with full force and in the case of statutory tenant, the relation is not governed by the contract. According to Mr.Shah, learned counsel, the prohibition against assignment and transfer is absolute and the interest of the statutory tenant can neither be assigned nor transferred. He has submitted that in the present case, the appellants have terminated lease by filing the Company Application before this Court seeking eviction of the company on the ground of non-payment of rent and non- user of lands. He has submitted that as indicated in the advertisement, the Official Liquidator wanted to sale the leasehold rights of the company. It is further submitted by Page 16 of 54 Downloaded on : Sun Sep 17 22:10:09 IST 2023 NEUTRAL CITATION C/OJA/60/2003 JUDGMENT DATED: 24/02/2023 undefined Mr.Shah, learned counsel that the Official Liquidator cannot assign the lease hold rights, and cannot claim or receive any consideration as a condition of the transfer or assignment in view of Section 19 of the Rent Act. Mr.Shah, learned counsel has submitted that the official liquidator can neither assign the leasehold rights nor can he charge a premium or consideration for such assignment in view of the prohibition in law and therefore, the official liquidator may be directed to return the lands to the appellants - lessors. He has prayed that the official liquidator may be directed to return the lands of the appellants. 6.1 In support of his submissions, Mr.Shah, learned counsel appearing for the appellants in O. J. Appeal No.13 of 2009 has relied upon the following decisions:-
1. Vora Rahimbhai Haji Hasanbhai Vs. Vora Sundarlal Manilal and others reported in (1985) 4 SCC 551;
2. Shree Chamundi Mopeds Limited Vs. Church of South India Trust reported in (1992) 3 SCC 1;
3. United Bank of India Vs. Official Liquidator reported in (1004) 1 SCC 575;
7. Mr.Vasavada, learned counsel appearing for the Textile Page 17 of 54 Downloaded on : Sun Sep 17 22:10:09 IST 2023 NEUTRAL CITATION C/OJA/60/2003 JUDGMENT DATED: 24/02/2023 undefined Labour Association in both the O.J. Appeals has submitted that the mutation entry has been made and there is a change of assignee. He has submitted that in the first instance, the name is changed, but no assignee is changed and, therefore, the Registration Act is not applicable and though, all the legal formalities is completed by the competent authority, the violation of Sections 17 and 49 of the Registration Act has no substance. He has submitted that with the permission of the government, the mortgage is effected and the principles of the mortgage will apply. He has submitted that the official liquidator is co-mortgagee with the Punjab National Bank, IDBI, IFCI, ICICI, IIBI and total dues of secured creditors and workers are at Rs.29,49,59,655/-. Mr.Vasavada, learned counsel has submitted that two lessors have filed the litigation and others, whose land is approximately one lakh meters, have not filed any litigation either before the Civil Court or this Court and, therefore, the appellants in O.J. Appeal No.60 of 2003 and O.J. Appeal No.13 of 2009 cannot espouse the cause of other lessors. According to Mr.Vasavada, learned counsel, on earlier occasion, the association has filed written submission on 02.08.2022 and the Page 18 of 54 Downloaded on : Sun Sep 17 22:10:09 IST 2023 NEUTRAL CITATION C/OJA/60/2003 JUDGMENT DATED: 24/02/2023 undefined IFCI filed affidavit in O.J. Appeal No.13 of 2009 along with the document where in it has been stated that assignment between Seth Ramanial Lallubhai and the M/s. Vikram Mills Ltd has been duly registered with the Registrar of the Companies bearing Registration No.AHD 9745/1/13/ 1965. With regard to the contention of the appellants in O.J. Appeal No.60 of 2003 is that no further assignment has been registered before the registering authority, Mr.Vasavada, learned counsel has submitted that it emerges from the affidavit filed by IFCI that on 23.11.1965 that the document was duly registered before the Sub Registrar at Ahmedabad and the assignment was duly registered under the Registration Act. With regard to the submissions made on behalf of the appellants in Appeal No.60 of 2003 that the deed of assignment is not duly signed by the parties and it does not bear the seal of the company, Mr.Vasavada, learned counsel has submitted that when the parties approached the Registrar for registration, the Registrar has duly signed the same after verification of all the aspects. He has submitted that Shri Gautam Chandrakant Gandhi, advocate, Ahmedabad has known both the parties and he has signed such document as an advocate on the Page 19 of 54 Downloaded on : Sun Sep 17 22:10:09 IST 2023 NEUTRAL CITATION C/OJA/60/2003 JUDGMENT DATED: 24/02/2023 undefined same date and thus, if anybody is aggrieved by this document, it is between assignor and assignee and not the lessor. Mr.Vasavada, learned counsel has also submitted that the Textile Labour Association makes the submission for the reason that in the lease deed executed in 1928 gives plenary power to the assignee to further assign the land without permission of the lesser, but in the present case, the assignment deed has been registered in 1965 and, therefore, when lease deed confers such an undisputed power to the lessee then it is not open for the appellants to challenge the same. It is also submitted that the appellants have accepted the lease rent from M/s. Vikram Mills Ltd from 23.11.1965 till the name was changed from M/s. Vikram Mills Ltd to M/s. Shri Amruta Mills Ltd and upto 22.11.1991, the appellants have accepted rent from M/s. Amruta Mills Ltd and thus, the appellants were aware that the assignment was made to M/s. Vikram Mills Ltd and thereafter, the name has been changed from M/s. Vikram Mills Ltd to M/s. Amruta Mills Ltd. It is submitted by Mr.Vasavada, learned counsel that the appellants have accepted the benefit of the lease deed by accepting rent from M/s. Vikram Mills Ltd and/or M/s. Amruta Mills Ltd Page 20 of 54 Downloaded on : Sun Sep 17 22:10:09 IST 2023 NEUTRAL CITATION C/OJA/60/2003 JUDGMENT DATED: 24/02/2023 undefined respectively for 26 years or 32 years and after accepting such benefits, the appellants are estopped from raising contention with regard to registration of the documents. It is also submitted that the financial institution has accepted the validity of the registration of the document and created the mortgage and it is also presumed to be validly registered document under the provisions of Evidence Act. It is also submitted that Sections 91, 92 and 93 of the Evidence Act are not applicable to the facts of the present case because the financial institutions have accepted the validity of the document which is duly registered. It is also submitted by Mr.Vasavada learned counsel that IFCI and other four financial institutions have accepted the deed of assignment and validity of the registered document under the Registration Act. It is also submitted that the appellants in O.J. Appeal No. 60 of 2003 have placed reliance on the order passed by the Division Bench in O.J. Appeal No.1 of 2003 and allied matters which was stayed by the Supreme Court, however, at the first instance, in O.J. Appeal No.1 of 2003, the Division Bench found that there was no registration, the registered document in form of assignment deed produced on record by I.F.C.I dated Page 21 of 54 Downloaded on : Sun Sep 17 22:10:09 IST 2023 NEUTRAL CITATION C/OJA/60/2003 JUDGMENT DATED: 24/02/2023 undefined 23.11.1965. He has also submitted that without prejudice to such contention, the order passed by the Supreme Court is self- explanatory and stayed the operation of the impugned order dated 26.02.2020 and when entire operation of the judgment is stayed by the Supreme Court, no reliance can be placed by any party. It is submitted by Mr.Vasavada, learned counsel that the company was ordered to be wound up on 22.11.1991 and as on the date of winding up order, there were 2652 workmen on the muster roll of the company (in liquidation) and more than 50% of the workmen have expired during the span of 31 years and they are eagerly waiting for their dues under Section 529 and 529(A) of the Companies Act, 1956. It is submitted by Mr.Vasavada, learned counsel that from the contents of statement and objects, it reveals that the legislature has given the utmost priority to the dues of the workmen which is in consonance with Article 21 of the Constitution of India which speaks about right to life. 7.1 Mr.Vasavada, learned counsel appearing for the Textile Labour Association in both the O.J. Appeals has relied upon the decisions in the case of International Coach Builders Ltd Vs. Karnataka State Financial Corporation, reported in (2003) Page 22 of 54 Downloaded on : Sun Sep 17 22:10:09 IST 2023 NEUTRAL CITATION C/OJA/60/2003 JUDGMENT DATED: 24/02/2023 undefined 10 SCC 482 wherein the Hon'ble Supreme Court has held and observed in paragraphs no. 20, 21 and 22 as under:-
"20. The rights of the pan passu charge holders would run equally, temporally and potently. with the rights of the secured creditors. The Official Liquidator, as the representative of the workmen, to enforce such pari passu charge would have the right of representing the workmen equally with the rights of the secured creditors. Charge is defined under Section 100 of the Transfer of Properties Act thus:
"100. Where immoveable property of one person is by act of parties or operation of law made security for the payment of money, to another, and the transaction does not amount to a mortgage. The latter person is said to have a charge on the property; and all the provisions hereinbefore contained [which apply to a simple mortgage shall, so far as may be, apply to such charge".
21. Though the charge by itself may not amount to mortgage, all the provisions which apply to a simple mortgage, so far as may be. apply to a charge. Thus, the Official Liquidator, as the representative of the workmen's pari passu charge, would be in the position of a co- mortgagee. Though Section 29 hitherto enabled the SFC as a mortgagee to exercise its right thereunder by taking possession of the property and selling it in satisfaction of its debt, the situation has now changed. Because of the aforesaid statutory intervention, the SFC must necessarily contend with a pari passu charge holder who has equal rights. It is well established law that where there are co- mortgagees, one co-mortgagee cannot sell without consent of the co-mortgagee or institute any proceedings for sale of mortgaged property without joining the other co-mortgagees either as plaintiffs or as defendants. The SFC's right under Section 29 of freely realising its security gets trammeled if it has to take on a pari passu charge holder. The realisation of the security can thereafter only be done either by satisfaction of the pari passu charge or by a suit in which the pari passu charge holder would be a party defendant. Though when the SFC Act was enacted in 1951 it was intended that SFC could act unilaterally, the amendments made to the Companies Act in 1985 have Page 23 of 54 Downloaded on : Sun Sep 17 22:10:09 IST 2023 NEUTRAL CITATION C/OJA/60/2003 JUDGMENT DATED: 24/02/2023 undefined introduced a pari passu charge holder as a co-helms man of the ship of the SFC, who can neither be ignored nor overridden. In other words, the existence of the pari passu charge holder being represented by the Official Liquidator would necessarily bring in supervision of the Company Court as the Official Liquidator cannot act without directions from and supervision of the Company Court. This is precisely the reason why the Judgement of this Court A.P. State Financial Corporation (supra) holds that the statutory right of the SFCs to sell the property under Section 29 of the SFC Act is now subject to the provisions of Section 529 and Section 529A of the Companies Act. The statutory right to sell the property under Section 29 of the Act has now to be exercised in tandem with the rights of pari passu charge in favour of the workmen created by the proviso to Section 529 of the Companies Act. This Court observed in A.P. State Financial Corporation, (2000) 7 SCC 291:
"The Act of 1951 is a special Act for grant of financial assistance to industrial concerns with a view to boost up industrialisation and also recovery of such financial assistance if it becomes bad and similarly the Companies Act deals with companies including winding up of such companies. The proviso to sub-section (1) of Section 529 and Section 529-A being a subsequent enactment, the non obstante clause in Section 529-A prevails over Section 29 of the Act of 1951 in view of the settled position of law. We are, therefore, of the opinion that the above proviso to sub- sec. (1) of Section 529 and Section 529-A will control Section 29 of the Act of 1951. In other words the statutory right to sell the property under Section 29 of the Act of 1951 has to be exercised with the rights of pari passu charge to the workmen created by the proviso to Section 529 of the Companies Act. Under the proviso to sub-sec.
(1) of Section 529, the liquidator shall be entitled to represent the workmen and force (sicenforce) the above pan passu charge. Therefore, the Company Court was fully justified in imposing the above conditions to enable the Official Liquidator to discharge his function properly under the supervision of the Company Court as the new Section 529-A of the companies Act confers upon a Company Court the duty to ensure that the workmen's dues are paid in priority to all other debts in accordance with the provisions of the above section. The legislature has amended the Companies Act in 1985 with a social purpose viz. to protect dues of the workmen. If conditions are not imposed to Page 24 of 54 Downloaded on : Sun Sep 17 22:10:09 IST 2023 NEUTRAL CITATION C/OJA/60/2003 JUDGMENT DATED: 24/02/2023 undefined protect the right of the workmen there is every possibility that the secured creditor may frustrate the above pan passu right of the workmen."
22. Since the Official Liquidator is in the position of a co- mortgagee, the SFCs cannot act independently or by ignoring him for enforcing their security. It is established law that, in case of co-mortgagees, all of them should join in the suit for enforcing the security, but if some of them refuse to join, they have to be included as defendants, not merely as performa parties, but as necessary parties inasmuch as the mortgage right vests in them along with the plaintiffs-mortgagees. (See in this connection the Judgement of the Privy Council in Sunitibala Debi vs. Dharae Sundari Deb, [AIR 1919 PC 24]. The same principle would be substantially true and applicable in the case of a mortgagee and a pan' passu charge-holder over the same security for realising the security. The realization of the security can only be done by both the charge -holders joining and realising the security simultaneously. If a sale takes place, it can only be simultaneously for recovers of the claim of all paro passu charge holders and sale proceeds are required to be divided proportionately in the same proportion as their dues. "
7.2 Mr.Vasavada, learned counsel appearing for the Textile Labour Association has alos relied upon the decision in the case of State Bank of India Vs. Official Liquidator of Commercial Ahmedabad Mills Co. and others reported in (2009) 1 GLR 420 wherein the Division Bench (Coram: Hon'ble Mr.Justice D. A. Mehta and Hon'ble Mr.Justice Bankim N. Mehta) has held and observed in paragraph No.15 as under:-
"15. In fact, when Sec. 529-A of the Act was proposed to Page 25 of 54 Downloaded on : Sun Sep 17 22:10:09 IST 2023 NEUTRAL CITATION C/OJA/60/2003 JUDGMENT DATED: 24/02/2023 undefined be introduced vide Companies (Amendment) Bill, 1985, the statement of object and reasons provided as under :-
["Another announcement made by the Finance Minister in his Budget speech relates to the decision of the Government to introduce necessary legislation so that legitimate dues of workers rank pari passu with secured creditors in the event of closure of the company and above even the dues to Government. The resources of the companies constitute a major segment of the material resources of the community and common good demands that the ownership and control of the resources of every company are so distributed that in the unfortunate even of its liquidation, workers, whose labour and effort constitute an invisible but easily perceivable part of the capital of the company are not deprived of their legitimate right to participate in the product of their labour and effort. It is accordingly proposed to amend Secs. 529 and 530 of the Companies Act and also to incorporate a new Section in the Act, namely Sec. 529A vide clauses 4, 5 and 6 of the Bill).]"
8. Mr.Dhawan Jayswal, learned advocate appearing for the Official Liquidator has submitted that predecessor of O. J. Appeal No. 60 of 2003 i.e. Late Shri Fakirchand A. Patel had executed lease deed dated 02.04.1928 of Land bearing Survey Nos.46/3, 47, 50/1 & 46/2 in favour of Shri. Ramanlal Lallubhai as Managing Agent of M/s. Vikaram Mills Ltd., which came to be registered before the concerned Sub-Registrar. He has submitted that predecessor of O. J. Appeal No. 13 of 2009 i.e. Late Shri. Bhogilal G. Patel and late Shri Achratlal D. Jash had executed lease deed Page 26 of 54 Downloaded on : Sun Sep 17 22:10:09 IST 2023 NEUTRAL CITATION C/OJA/60/2003 JUDGMENT DATED: 24/02/2023 undefined dated 06.06.1928 of land bearing Surveys No.52/P and 51 in favour of Shri Ramanlal Lallubhai as Managing Agent of M/s. Vikaram Mills Ltd., which was registered in the book of the concerned Sub-Registrar. He has submitted that vide mutation entry No.4454 dated 30.01.1959, Shri Ramanilal Lallubhai on the basis of the resolution dated 20.04.1959, the Board of Directors got the name of "Sheth Shri Ramantal Lalubhai as Managing Agent of M/s. Shri Vikram Mills Ltd." entered in the revenue records. He has submitted that pursuant to the letter dated 02.03.1959 written by the Manager of the said company, another mutation entry no.4461 dated 30.03.1959 came to be entered into whereby, the name of Shri Ramanial Lalubhai as Managing Agent of Shri Vikram Mills Ltd came to be deleted and the name of "The Vikram Mills Limited" came to be mutated in respect of all the said lands and thereafter, on re-organization of the erstwhile State of Maharashtra and State of Saurashtra, the State of Gujarat was constituted w.e.f. 01.05.1960. He has submitted that on the basis of Resolution No. 2 of the company dated 12.05.1978, the registered office of the company was shifted from Maharashtra to Gujarat and the name of the company was Page 27 of 54 Downloaded on : Sun Sep 17 22:10:09 IST 2023 NEUTRAL CITATION C/OJA/60/2003 JUDGMENT DATED: 24/02/2023 undefined changed to M/s. Shri Amruta Mills Limited and, therefore, on the basis of the certificate issued by the Registrar of Companies, Gujarat, the mutation entry no. 8915 dated 12.05.1978 was mutated in the revenue record. Mr.Jayswal, learned advocate has also submitted that the leasehold rights of land of the company in liquidation being valuable assets were mortgaged by M/s. Shri Amruta Mills Ltd. According to Mr.Jayswal, learned advocate, by an order dated 22.11.1991 passed by this Hon'ble Court in Company Petition No. 72 of 1991, the above company has been ordered to be wound up and the Official Liquidator has been appointed as liquidator of the company under the provisions of the Companies Act, 1956. He has also submitted that thereafter, this Court vide order dated 12.03.1997 passed in Misc. Application No. 6 of 1992 constituted a Safe Committee comprising IFCI as Chairman and the Official Liquidator, Secured Creditor and Workers Union as members of the Sale Committee. He has submitted that legal heirs of appellant of O. J. Appeal No. 60 of 2003 issued notice dated 09.03.1992 informing that founder of M/s. Amruta Mills Ltd had taken land bearing Survey Nos.46/3, 47, 50/1 & 46/2 on lease of their predecessors and Page 28 of 54 Downloaded on : Sun Sep 17 22:10:09 IST 2023 NEUTRAL CITATION C/OJA/60/2003 JUDGMENT DATED: 24/02/2023 undefined since, the company went into liquidation and not paid outstanding revenue, the Official Liquidator requested to hand over the aforesaid land in question to them. Mr.Jayswal, learned advocate has submitted that lessors preferred Company Application No. 47 of 1993 with a prayer to direct the Official Liquidator to hand over the possession of leasehold land and this Court vide common judgment and order dated 30.07.2002 rejected the said application along with other applications preferred by lessors of land of the other company in liquidation. He has also submitted that against the order dated 30.07.2002, legal heirs of deceased Fakirchand Ambalal preferred O. J. Appeal No. 60 of 2003. Mr.Jayswal, learned advocate has submitted that Shri Jabal Lashkari, lessor of Prasad Mills Ltd., (in liquidation) also preferred Company Application No. 462 of 1999 with a prayer to direct the the Official Liquidator to hand over and surrender leasehold land to the applicant. He has submitted that the company application was rejected by the Court vide order dated 13.10.2004 and against the order dated 13.10.2004, Shri Jabal Lashkari preferred O. J. Appeal No. 67 of 2006. Mr.Jayswal, learned advocate has further submitted that O. J. Appeal No. 67 Page 29 of 54 Downloaded on : Sun Sep 17 22:10:09 IST 2023 NEUTRAL CITATION C/OJA/60/2003 JUDGMENT DATED: 24/02/2023 undefined of 2006 was rejected by the Division Bench of this Court vide order dated 17.10.2008 and on the basis of the said order dated 17.10,2008, the Division Bench of this Court had also rejected O. J. Appeal No. 60 of 2003 on 23.10.2008. He has submitted that Harshad D. Patel, appellant of O. J. Appeal No. 13 of 2009 is one of the lessors of the company in liquidation preferred Company Application No. 428 of 2008 for direction to the Official Liquidator to hand over the possession of land bearing Survey No. 51/P and 52/P which came to be rejected by the Court on 17.11.2008. It is submitted by Mr.Jayswal, learned advocate that appellants preferred O. J. Appeal No. 13 of 2009 challenging the order dated 17.11.2008 passed in Company Application No. 428 of 2008, which came to be rejected by the Division Bench of this Court vide order dated 23.07.2010. He has submitted that Shri Jabal Lashkari and others preferred Special Leave Petition (C) No.2928229284 of 2008 before the Hon'ble Supreme Court challenging the order dated 17.10.2008 passed in Company Application No.428 of 2008 and legal heirs of Fakirchand Ambalal and Shri Harshadbhai D. Patel preferred Special Leave Petition (C) No. 29952 of 2008 and Special Leave Petition (C) No. Page 30 of 54 Downloaded on : Sun Sep 17 22:10:09 IST 2023 NEUTRAL CITATION C/OJA/60/2003 JUDGMENT DATED: 24/02/2023 undefined 4816 of 2012 challenging the orders dated 23.10.2008 and 23.07.2010 passed by the Division Bench of this Court. He has submitted that the Hon'ble Supreme Court on 29.03.2016 quashed and set aside the order passed by the Division Bench of this Court and remit all the matters to this Court for fresh consideration. He has submitted that the Official Liquidator is duty bound to disburse the dues of Secured Creditors, workmen and other statutory creditors which are yet to be settled and hence, the Official Liquidator is required to auction the leasehold rights of the land of the company in liquidation to be transferred, so as to pay the dues of creditors including workmen under provision of Sections 529, 529A and 530 of the Companies Act, 1956. He has submitted that the leasehold right of Land is an intangible asset of the company in liquidation, which is required by the Official Liquidator for efficient winding up proceedings of the company in iiquidation. He has submitted that M/s. Mahendra Bhavsar and Co., Advocates and Solicitors issued notice dated 11.12.2016 on behalf of legal heirs of deceased Fakirchand A. Patel for recovery of rent and payment of arrears of AMC to the Official Liquidator and the Official Liquidator has Page 31 of 54 Downloaded on : Sun Sep 17 22:10:09 IST 2023 NEUTRAL CITATION C/OJA/60/2003 JUDGMENT DATED: 24/02/2023 undefined replied to the notice on 21.12.2016. He has further submitted that the Official Liquidator received one more notice from lessors of leasehold land bearing Survey No.52/1, 52/3, 52/4 and 52/6 which came to be replied by the Official Liquidator by writing a letter dated 28.12.2017. It is further submitted that under Section 529 and 529A of the Companies Act, 1956, the claim of secured creditors and workmen are yet to be settled since the Official Liquidator sold movables assets of the company in liquidation. Mr.Jayswal, learned advocate has submitted that both the appeals being meritless deserve to be dismissed. Mr.Jayswal, learned advocate has relied upon the decisions of the Hon'ble Supreme Court in the case of Jabal C. Lashkari and others Vs. Official Liquidator and others reported in (2016) 12 SCC 44 and in the case of Virendra Bhogilal Shah (HUF) Vs. Official Liquidator of Sarangpur Cotton Man Co. Ltd. (Unit of G.S.T.C) rendered in O. J. Appeal No.13 of 2007 dated 06.04.2018.
9. In the case of Jitendra Singh (Supra), the Hon'ble Page 32 of 54 Downloaded on : Sun Sep 17 22:10:09 IST 2023 NEUTRAL CITATION C/OJA/60/2003 JUDGMENT DATED: 24/02/2023 undefined Supreme Court has held and observed in paragraphs no.7 and to 8 as under:-
"6. Right from 1997, the law is very clear. In the case of Balwant Singh v. Daulat Singh (D) By Lrs., reported in (1997) 7 SCC 137 , this Court had an occasion to consider the effect of mutation and it is observed and held that mutation of property in revenue records neither creates nor extinguishes title to the property nor has it any presumptive value on title. Such entries are relevant only for the purpose of collecting land revenue. Similar view has been expressed in the series of decisions thereafter.
8 In the case of Suraj Bhan v. Financial Commissioner, (2007) 6 SCC 186 , it is observed and held by this Court that an entry in revenue records does not confer title on a person whose name appears in record-of-rights. Entries in the revenue records or jamabandi have only "fiscal purpose", i.e., payment of land revenue, and no ownership is conferred on the basis of such entries. It is further observed that so far as the title of the property is concerned, it can only be decided by a competent civil court. Similar view has been expressed in the cases of Suman Verma v. Union of India, (2004) 12 SCC 58; Faqruddin v. Tajudd in (2008) 8 SCC 12; Rajinder Singh v. State of J&K, (2008) 9 SCC 368; Municipal Corporation, Aurangabad v. State of Maharashtra, (2015) 16 SCC 689; T. Ravi v. B. Chinna Narasimha, (2017) 7 SCC 342; Bhimabai Mahadeo Kambekar v. Arthur Import & Export Co., (2019) 3 SCC 191; Prahlad Pradhan v. Sonu Kumhar, (2019) 10 SCC 259; and Ajit Kaur v. Darshan Singh, (2019) 13 SCC 70."
10. In the case of Samir Mukherjee (Supra), the Hon'ble Supreme Court has held and observed in paragraphs no.5 to 8 as under:-
"5. Section 106 lays down a rule of construction, which is to apply when the parties have not specifically agreed Page 33 of 54 Downloaded on : Sun Sep 17 22:10:09 IST 2023 NEUTRAL CITATION C/OJA/60/2003 JUDGMENT DATED: 24/02/2023 undefined upon as to whether the lease is yearly or monthly. On a plain reading of this section it is clear that legislature has classified leases in two categories according to their purposes and this section would be attracted to construe the duration of a valid lease in the absence of a contract or local law or usage to the contrary. Where the parties by a contract have indicated the duration of a lease, this section would not apply. What this section does is to prescribe the duration of the period of different kinds of leases by legal fiction - leases for agricultural or manufacturing purposes shall be deemed to be lease from year to year and all other leases shall be deemed to be from month to month. Existence of a valid lease is a pre-requisite to invoke the rule of construction embodied in Section 106 of Transfer of Property Act.
6. Section 107 prescribes the procedure for execution of a lease between the parties. Under the first paragraph of this section a lease of immovable property from year to year or for any term exceeding one year or reserving yearly rent can be made only by registered instrument and remaining classes of leases are governed by the second paragraph that is to say all other leases of immovable property can be made either by registered instrument or by oral agreement accompanied by delivery of possession.
7. In the case in hand we are concerned with an oral lease which is hit by the first paragraph of Section 107 of the Transfer of Property Act. Under Section 107 parties have an option to enter into a lease in respect of an immovable property either for a term less than a year or from year to year, for any term exceeding one year or reserving a yearly rent. If they decide upon having a lease in respect of any immovable property from year to year or for any term exceeding one year, or reserving yearly rent, such a lease has to be only by a registered instrument. In absence of a registered instrument no valid lease from year to year or for a term exceeding one year or reserving a yearly rent can be created. If the lease is not a valid lease within the meaning of the opening words of Section 106 the rule of construction embodied therein would not be attracted. The above is the legal position on a harmonious reading of both the sections.
8. In Ram Kumar Das (supra), Section 106 was considered by a bench of four Judges of this Court. This Court held that this Section 106 lays down the rule of Page 34 of 54 Downloaded on : Sun Sep 17 22:10:09 IST 2023 NEUTRAL CITATION C/OJA/60/2003 JUDGMENT DATED: 24/02/2023 undefined construction which is to be applied when there is no period agreed upon between the parties and in such cases duration has to be determined by the reference to the object for purpose for which tenancy is created. It was also held that rule of construction embodied in this section applies not only to express leases of uncertain duration but also to leases implied by law which may be inferred from possession and acceptance of rent and other circumstances. It was further held that it is not disputed that a contract to the contrary as contemplated by Section 106 of the Transfer of Property Act need not be an express contract; it may be implied, but it certainly should be a valid contract. On the facts of that case, the Court held (at AIR p.27, para 13) that "the difficulty in applying this rule to the present case arises from the fact that tenancy from year to year or reserving an yearly rent can be made only by registered instrument as laid down in Section 107 of the Transfer of Property Act."
(emphasis supplied) "
11. In the case of Suraj Lamp and Industries Private Limited (Supra), the Hon'ble Supreme Court has held and observed in paragraphs no.18, 19 and 24 as under:-
"18. It is thus clear that a transfer of immoveable property by way of sale can only be by a deed of conveyance (sale deed). In the absence of a deed of conveyance (duly stamped and registered as required by law), no right, title or interest in an immoveable property can be transferred.
19. Any contract of sale (agreement to sell) which is not a registered deed of conveyance (deed of sale) would fall short of the requirements of sections 54 and 55 of TP Act and will not confer any title nor transfer any interest in an immovable property (except to the limited right granted under section 53A of TP Act). According to TP Act, an agreement of sale, whether with possession or without Page 35 of 54 Downloaded on : Sun Sep 17 22:10:09 IST 2023 NEUTRAL CITATION C/OJA/60/2003 JUDGMENT DATED: 24/02/2023 undefined possession, is not a conveyance. Section 54 of TP Act enacts that sale of immoveable property can be made only by a registered instrument and an agreement of sale does not create any interest or charge on its subject matter.
24. We therefore reiterate that immovable property can be legally and lawfully transferred/conveyed only by a registered deed of conveyance. Transactions of the nature of `GPA sales' or `SA/GPA/WILL transfers' do not convey title and do not amount to transfer, nor can they be recognized or valid mode of transfer of immoveable property. The courts will not treat such transactions as completed or concluded transfers or as conveyances as they neither convey title nor create any interest in an immovable property. They cannot be recognized as deeds of title, except to the limited extent of section 53A of the TP Act. Such transactions cannot be relied upon or made the basis for mutations in Municipal or Revenue Records. What is stated above will apply not only to deeds of conveyance in regard to freehold property but also to transfer of leasehold property. A lease can be validly transferred only under a registered Assignment of Lease. It is time that an end is put to the pernicious practice of SA/GPA/WILL transactions known as GPA sales."
12. In the case of Park Street Properties Pvt. Ltd (Supra), the Hon'ble Supreme Court has held and observed in paragraphs No.7, 14 and 16 as under:-
"7. Mr. C.A. Sundaram, learned senior counsel appearing on behalf of the appellant contends that the agreement dated 07.08.2006 creates a monthly tenancy. It is submitted that in terms of Section 17(1)(d) of the Registration Act and Section 107 of the Act, the said document would require registration only if it leases the immoveable suit property from year to year or for any term exceeding one year or receiving yearly rent. Therefore, the agreement dated 07.08.2006 was not required to be registered. It is further contended that it is not even the Page 36 of 54 Downloaded on : Sun Sep 17 22:10:09 IST 2023 NEUTRAL CITATION C/OJA/60/2003 JUDGMENT DATED: 24/02/2023 undefined case of the appellant that the agreement intended to grant lease of year to year.
14. The learned senior counsel submits that in the instant case, the requirements under Section 106 of the Act need to be adhered to, as clause 6 of the agreement operates as a contract to the contrary.
16. At the outset, it would be useful to refer to the statutory provisions at play in the instant case, which are Sections 106 and 107 of the Act, which read as under:
"106. Duration of certain leases in absence of written contract or local usage. - In the absence of a contract or local law or usage to the contrary, a lease of immovable property for agricultural or manufacturing purposes shall be deemed to be a lease from year to year, terminable, on the part of either lessor or lessee, by six months' notice expiring with the end of a year of the tenancy; and a lease of immovable property for any other purpose shall be deemed to be a lease from month to month, terminable, on the part of either lessor or lessee, by fifteen days' notice expiring with the end of a month of the tenancy.
Every notice under this section must be in writing, signed by or on behalf of the person giving it, and either be sent by post to the party who is intended to be bound by it or be tendered or delivered personally to such party, or to one of his family or servants at his residence, or (if such tender or delivery is not practicable) affixed to a conspicuous part of the property.
107. Leases how made. - A lease of immovable property from year to year, or for any term exceeding one year or reserving a yearly rent, can be made only by a registered instrument.
All other leases of immovable property may be made either by a registered instrument or by oral agreement accompanied by delivery of possession.
Where a lease of immovable property is made by a registered instrument, such instrument or, where there are more instruments than one, each such instrument shall be executed by both the lessor and the lessee:Page 37 of 54 Downloaded on : Sun Sep 17 22:10:09 IST 2023
NEUTRAL CITATION C/OJA/60/2003 JUDGMENT DATED: 24/02/2023 undefined Provided that the State Government from time to time, by notification in the Official Gazette, direct that leases of immovable property, other than leases from year to year, or for any term exceeding one year, or reserving a yearly rent, or any class of such leases, may be made by unregistered instrument or by oral agreement without delivery of possession." (emphasis laid by this Court)"
13. In the case of Shri Chamundi Mopeds Ltd (Supra), the Hon'ble Supreme Court ha held and observed in paragraphs no.12 to 15 as under:-
"12. Eviction proceedings initiated by a landlord against a tenant company would not fall in categories (1) and (3) referred to above. The question is whether they fall in category (2). It has been urged by the learned counsel for the appellant company that such proceedings fall in category (2) since they are proceedings against the property of the sick industrial company. The submission is that the leasehold right of the appellant-company in the premises leased out to it is property and since the eviction proceedings would result in the appellant- company being deprived of the said property, the said proceedings would be covered by category (2). We are unable to agree. The second category contemplates proceedings for execution, distress or the like against any other properties of the industrial company. The words 'or the like' have to be construed with reference to the preceding words, namely, 'for execution, distress' which means that the proceedings which are contemplated in this category are proceedings whereby recovery of dues is sought to be made by way of execution, distress or similar process against the property of the company. Proceedings for eviction instituted by a landlord against a tenant who happens to be a sick industrial company, cannot in our opinion, be regarded as falling in this category. We may, in this context, point out that as indicated in the Preamble, the Act has been enacted to make special provisions with a view to securing the timely detection of sick and potentially sick companies owning industrial Page 38 of 54 Downloaded on : Sun Sep 17 22:10:09 IST 2023 NEUTRAL CITATION C/OJA/60/2003 JUDGMENT DATED: 24/02/2023 undefined undertakings, the speedy determination by a Board of experts of the preventive, ameliorative, remedial and other measures which need to be taken with respect to such companies and the expeditious enforcement of the measures so determined The provision regarding suspension of legal proceedings contained in Section 22(1) seeks to advance the object of the Act by ensuring that a proceeding having an effect on the working or the finances of a sick industrial company shall not be instituted or continued during the period the matter is under consideration before the Board or the Appellate Authority or a sanctioned scheme is under implementation without the consent of the Board or the Appellate Authority. It could not be the intention of Parliament in enacting the said provision to aggravate the financial difficulties of a sick industrial company while the said matters were pending before the Board of the Appellate Authority by enabling a sick industrial company to continue to incur further liabilities during this period. This would be the consequence if Sub-section (1) of sec. 22 is construed to bring about suspension of proceedings for eviction instituted by landlord against a sick industrial company which has ceased to enjoy the protection of the relevant rent law on account of default in payment of rent. It would also mean that the landlord of such a company must continue to suffer a loss by permitting the tenant (sick industrial company) to occupy the premises even though it is not in a position to pay the rent. Such an intention cannot be imputed to Parliament. We are, therefore, of the view that Section 22(1) does not cover a proceeding instituted by a landlord of a sick industrial company for the eviction of the company premises let out to it.
13. We are also unable to agree with the contention of the learned counsel for the appellant company that the leasehold interest of the appellant company in premises leased out to it is property for the purpose of Section 22(1). It is no doubt true that leasehold interest of the lessee in the premises leased out to him is property which can be transferred and the said interest can also be attached and sold by way of execution in satisfaction of a decree against a lessee. In that sense, it can be said that the leasehold interest of a company is its property.
But the question is whether the same is true in respect of the interest of a company which is in occupation of the premises as statutory tenant by virtue of the protection Page 39 of 54 Downloaded on : Sun Sep 17 22:10:09 IST 2023 NEUTRAL CITATION C/OJA/60/2003 JUDGMENT DATED: 24/02/2023 undefined conferred by the relevant rent law because in the instant case on the date of reference to the Board the proceedings for eviction of the appellant company were pending and the appellant company was in occupation of the premises only as a statutory tenant governed by the provisions of the Karnataka Rent Control Act. In Smt. Gian Devi Anand V/s. Jeevan Kumar, 1985 Supp (1) SCR 1, this Court has laid down that the termination of a contractual tenancy does not bring about a change in the status and legal position of the tenant .unless there are contrary provisions in the relevant Rent Act and the tenant, notwithstanding the termination of tenancy, does enjoy an estate or interest in the tenanted premises. It is further laid down that this interest or estate which the tenant continues to enjoy despite termination of the contractual tenancy creates a heritable interest in the absence of any provision to the contrary. This Court has also held that the legislature which by the Rent Act seeks to confer the benefit on the tenants and to afford protection against eviction, is perfectly competent to make appropriate provision regulating the nature of protection and the manner and extent of enjoyment of such tenancy rights after the termination of contractual tenancy of the tenant including the rights and the nature of protection of the heirs on the death of the tenant.
14. In the instant case, we are concerned with the right of the tenant as governed by the Karnataka Rent Control Act. In Cl. (r) of sec. 3, the expression "tenant" has been defined to include "the surviving spouse or any son or daughter or father or mother of a deceased tenant who had been living with the tenant in the premises as a member of the tenant's family after the death of the tenant and a person continuing in possession after the termination of the tenancy in his favour". In view of Cl. (5) of the proviso to sub-sec. (1) of sec. 21, protection against eviction is not available to a tenant who has "unlawfully sublet the whole or part of the premises or assigned or transferred in any other manner his interest therein and where the subletting, assignment or transfer has been made before the coming into operation of this part (except in respect of sub-letting, assignment or transfer to which the provisions of sec. 61 are applicable), such sub-letting, assignment or transfer has been made contrary to any provision of law then in force. sec. 23 prohibits subletting or transfer by the tenant and provides as under:
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NEUTRAL CITATION C/OJA/60/2003 JUDGMENT DATED: 24/02/2023 undefined "(1) Notwithstanding anything contained in any law, but subject to any contract to the contrary, it shall not be lawful after the coming into operation of this part, for any tenant to sub-let whole or any part of the premises let to him or to assign or transfer in any other manner his interest therein:
Provided that the State Government may, by notification, permit in any area the transfer of interest in premises held under such leases or class of leases and to such extent as may be specified in the notification:
Provided further that nothing in this section shall apply to a tenant having a right to enjoy any premises in perpetuity.
(2) Any person who contravenes the provisions of sub-
sec.
(1), shall, on conviction, be punished with fine which may extend to one hundred rupees."
15. From these provisions, it would appear that except in cases covered by the two provisos to sub-sec. (1) of sec. 23, there is a prohibition for a tenant to sub-let whole or any part of the premises let to him or to assign or transfer in any other manner his interest therein. This prohibition is, however, subject to a contract to the contrary. A tenant who subjects or assigns or transfers the premises, in contravention of this prohibition loses the protection of law and can be evicted by the landlord under sec. 21(1)(f). In the case of a statutory tenant, the relationship is not governed by contract. The prohibition against assignment and transfer is, therefore absolute and the interest of a statutory tenant can neither be assigned nor transferred. This means that the interest of the statutory tenant in the premises in his occupation, as governed by the Karnataka Rent Control Act is a limited interest which enables the surviving spouse or any son or daughter or father or mother of a deceased tenant who had been living with the tenant in the premises as a member of the tenant's family up to the death of the tenant and a\person continuing in possession after the termination of the tenancy in his favour, to inherit the interest of the tenant on his death. The said interest of the tenant is, however, not assignable or transferable Page 41 of 54 Downloaded on : Sun Sep 17 22:10:09 IST 2023 NEUTRAL CITATION C/OJA/60/2003 JUDGMENT DATED: 24/02/2023 undefined and, therefore, the interest, of a company which is continuing in occupation of the premises as a statutory tenant by virtue of the protection conferred by the Karnataka Rent Control Act, cannot be regarded as property of the company for the purpose of sub-see. (1) of sec. 22 of the Act and for that reason also the provisions of sec. 22(1) were not attracted to the eviction proceedings instituted by the respondents against the appellant company. The provisions of sec. 22(1) did not, therefore, bar the prosecution of the said proceedings by the respondents and the order dated 30.09.1989 passed by the XII Additional Small Cause Judge, Bangalore allowing the eviction petition cannot be held to have been passed in contravention of the provisions of sec. 22(1) of the Act. Civil Appeal No. 2553 of 1991 also, therefore, fails and is liable to be dismissed."
14. In the case of Ravindra Ishwardas Sethna (Supra), the Hon'ble Supreme Court has held and observed in paragraphs no.9 to 11 as under:-
"9. The Company was a tenant or a lessee of the premises of which the appellants are the landlords. The date of the commencement of the lease is not made available to us, but it is also not claimed on behalf of the Liquidator that there was lease of long duration. If so, the Company was a statutory tenant under the Rent Act. The statutory tenancy confers the right to be in possession but if the tenant does not any more require use of the premises, the provisions of the Rent Act and especially Sections 13 and 15 completely prohibit giving the possession of the promises on licence or on sublease. The learned Company Judge therefore spelt out a third way of parting with the possession by the Liquidator, namely, that he may give the premises to the second respondent under a caretaker's agreement. This caretaker's agreement appears to us to be an euphemism for collecting compensation which is nothing else but the charge for use and occupation of the premises exclusively by the second respondent. Whether Page 42 of 54 Downloaded on : Sun Sep 17 22:10:09 IST 2023 NEUTRAL CITATION C/OJA/60/2003 JUDGMENT DATED: 24/02/2023 undefined it is sublease or licence does not call for decision. For the purpose of the present proceedings it is enough for us to say that the Company and its Liquidator no more need the premises for its own use. The Liquidator does not need the use of the premises for carrying on the winding up activities of the Company because he sought direction for parting with possession. We are not impressed by the learned Judge saying that there is some third mode of parting with possession of the premises exclusively in favour of the second respondent, namely, caretaker's agreement which appears to us to be a facade to wriggle out of the provisions of the Rent Act. The Rent Act is no doubt enacted for protecting the tenants, and indisputably its provisions must receive such interpretation as to advance the protection and thwart the action of the landlord in rendering tenants destitutes. But this does not imply that the Court should lend its aid to flout the provisions of the Rent Act so as to earn money by unfair and impermissible use of the premises. And that is what the Liquidator sought to do and the Court extended its help to the Liquidator. This, in our opinion, is wholly impermissible. The learned Company Judge could not have authorised the Liquidator to enter into such an agreement and therefore his order is liable to be set aside.
10. In the appeal before the Division Bench, this aspect was not at all examined because it is stated that this aspect was not canvassed before the Bench hearing the appeal. The point we have examined goes to the root of the matter and, therefore, we consider it immaterial whether the point was examined at the hearing of the appeal.
11. The learned Company Judge could not have permitted holding on to possession of the premises, not needed for efficiently carrying on winding up proceedings. The only course open, to him was to direct the Liquidator to surrender possession to landlords and save recurring liability to pay rent. Before we part with this judgment, we must take note of one submission that was made on behalf of the respondent. It was said that the creditors and members of the Company in liquidation have suffered huge losses and if the Liquidator would have been permitted to enter into an agreement with the second respondent, it would fetch a steady income which would have gone towards mitigating the hardships of the Page 43 of 54 Downloaded on : Sun Sep 17 22:10:09 IST 2023 NEUTRAL CITATION C/OJA/60/2003 JUDGMENT DATED: 24/02/2023 undefined creditors and members of the Company. The accounts of the Company in liquidation were not brought to our notice nor can we permit violation of law howsoever laudable the object of such act may be. However, we must record a statement made on behalf of the appellants when the aforementioned argument was being examined by us. It. was said that the second respondent was to pay Rs. 2,500.00 per month as compensation under the directions of the Court. That would have fetched the Liquidator an income of Rs. 30,000.00 per year and deducting the costs, expenses and taxes, the Liquidator may have been able to realise at least Rs. 25,000.00 per year. The learned counsel for the appellants submitted that adopting a multiplier of six, assuming that roughly six years was the period for which the agreement would have been renewed from year to year, the appellants unconditionally, offered to deposit Rs. 1,50,000.00 in the Court to be distributed at the discretion of this Court amongst the creditors of the Company in liquidation. We recorded this offer in our order disposing of the appeal. We are now informed that the amount has been deposited. The Liquidator is accordingly directed to submit the list, of the creditors of the Company with the names, addresses and claims admitted by him within 4 weeks from today when the matter will appear again on board for directions."
15. In the case of Vora Rahimbhai Haji Hasanbhai (Supra), the Hon'ble Supreme Court has held and observed in paragraphs no.9 to 11 as under:-
"9. This contention of the counsel also cannot easily be accepted when on the own admission of the defendant and defendants counsel the premises had been used for the purpose of carrying on tobacco business. Therefore, the defendant fully knew the purpose for which he had taken the premises as a tenant. The stand of the defendant all through appears to be that even if he does not use the premises and have been paying rent he does not incur the liability of eviction and for this he banks upon the recital in Page 44 of 54 Downloaded on : Sun Sep 17 22:10:09 IST 2023 NEUTRAL CITATION C/OJA/60/2003 JUDGMENT DATED: 24/02/2023 undefined the rent note that "even if we use or do not use or keep the said property closed we the tenants are bound to pay the rent as stated above". This stipulation in the rent deed only talks of the liability of the defendant to pay the rent even if he does not use the property and keeps it closed. This however does not mean that the defendant can keep the premises closed without using it for years together before the suit. This could never have been the intention of the law makers especially in these days of scarcity of accommodation in towns. Even if the stipulation made in the rent note is construed to mean that the defendant tenant could keep the premises closed without using it for years together without incurring the liability of eviction, as is sought to be contended for the respondent, it would amount to allowing the parties contracting out of law.
10. This leads us to the second part of the submission made by 'the counsel for the appellant that on a correct interpretation of sec. 13(1)(k) of the Act even non-user of the premises for any purpose whatsoever for years together would make him liable for eviction. The contention on behalf of the respondent, however, is that we cannot add words to sec. 13(1)(k) and the intention of the legislature is clear from the words used therein, and all that sec. 13(1)(k), contemplates is that the premises had not been used for the purpose for which they were let out for a continuous period of six months immediately preceding the date of suit without reasonable cause. It does not say that mere non-user of the premises will make him liable for eviction.
11. The scheme of the Act as it appears from the preamble is to consolidate the law relating to the control of rents and repairs of certain premises, of rates of hotels and lodging houses and of evictions. The control had to be brought in because of the scarcity of accommodation in the cities. If this was the preamble of the Act it cannot be accepted that a tenant may take a premises on rent and keep it locked for years together without using it in the absence of any reasonable cause. The intendment of the legislature could be carried out only when the premises is used and not kept vacant for years together. Shri Sheth, however, sought to support the finding of the High Court that the construction of a superstructure is also a user of the property and the defendant had raised superstructures on the land in question. This argument must be repelled. It appears from the rent note, Ext. 61, that the defendant Page 45 of 54 Downloaded on : Sun Sep 17 22:10:09 IST 2023 NEUTRAL CITATION C/OJA/60/2003 JUDGMENT DATED: 24/02/2023 undefined had taken the premises from the present plaintiff when the defendant had already built the superstructures when he had taken the land on rent from the predecessor in interest of the plaintiff-appellant Therefore, there was no question of using the land by raising constructions by the defendant after the execution of the rent note, Ext. 61. "
16. In the case of Chapsibhai Dhanjibhai Danad (Supra), the Hon'ble Supreme Court has held and observed in paragraph no.10 as under:-
"10. Looking at the document (Ex. P-4) as a whole, the lease undoubtedly is for building a residential structure. Though it is for 30 years certain, the lessee was entitled to remain in possession of the land so long as he paid the stipulated rent, which the lessor was not entitled to increase. But, though the lease is for building structure and the period is indefinite, there are at any rate no express words indicating that the leasehold rights thereunder were intended to be heritable. On the other hand, it expressly provides, as was the case in Abdul Rahim, 30 Bom LR 1596 for the right of the lessee to remove the structures, meaning thereby vacating the land, if he so desired. The clause providing for such removal is not that the lessee would remove the structures on default in payment of rent, but depends on his own volition, a clause indicative of the parties not having intended the lease to be permanent. For, if it was intended to be permanent, there was no necessity for providing such a right. But the argument was that there are words in the document indicative of the lease having been intended to be heritable as was the case in Sivayogeswara Cotton Press, 1962-3 SCR 876 . The mere fact, however, that a lease provided for the interests thereunder to pass on to the heirs of the lessee would not always mean that it is a permanent lease. Such a provision can be made in two ways resulting in two different consequences. A lease may provide a fixed period and then include a provision that in the event of the lessee dying before the expiry of such period, his heirs would be Page 46 of 54 Downloaded on : Sun Sep 17 22:10:09 IST 2023 NEUTRAL CITATION C/OJA/60/2003 JUDGMENT DATED: 24/02/2023 undefined entitled to have the benefit of the lease for the remainder of the period. In such a case, although the lease may provide for the heirs to succeed to the interests in the leased land, it would only mean that such heirs succeed to the rights upto the expiry of the lease period. If the lease, on the other hand, were for an indefinite period, and contains a provision for the rights thereunder being heritable, then, such a lease, though ordinarily for the lifetime of the lessee, would be construed as permanent. The question, therefore, is to which of these two classes of leases the present lease belongs."
17. In the case of Trivenibai (Supra), the Hon'ble Supreme Court has held and observed in paragraph no.7 and 8 as under:-
7. Before dealing with these points, we must first consider what the expression "an agreement to lease"
means u/s. 2(7) of the Indian Registration Act, hereinafter referred to as the Act. sec. 2(7) provides that a lease includes a counterpart, kabuliyat, an undertaking to cultivate and occupy and an agreement to lease. In Hemanta Kumari Debi V/s. Midnapur Zamindari Co. Ltd., 46 Ind App 240 the Privy Council has held that "an agreement to lease, which a lease is by the statute declared to include, must be a document which effects an actual demise and operates as a lease". In other words, an agreement between two parties which entitles one of them merely to claim the execution of a lease from the other without creating a present and immediate demise in his favour is not included u/s. 2, sub-sec. (7). In Hemanta Kumari Debis case, 46 Ind App 240 (supra) a petition setting out the terms of an agreement in compromise of a suit stated as one of the terms that the plaintiff agreed that if she succeeded in another suit which she had brought to recover certain land, other than that to which the compromised suit related, she would grant to the defendants a lease of that land upon specified terms. The petition was recited in full in the decree made in the compromised suit u/s. 375 of the Code of Civil Procedure, 1882. A subsequent suit was brought for specific Page 47 of 54 Downloaded on : Sun Sep 17 22:10:09 IST 2023 NEUTRAL CITATION C/OJA/60/2003 JUDGMENT DATED: 24/02/2023 undefined performance of the said agreement and it was resisted on the ground that the agreement in question was an agreement to lease u/s. 2(7) and since it was not registered it was inadmissible in evidence. This plea was rejected by the Privy Council on the ground that the document did not effect an actual demise and was outside the provisions of sec. 2(7). In coming to the conclusion that the agreement to lease under the said section must be a document which effects an actual demise the Privy Council has expressly approved the observations made by Jenkins C. J. in the case of Panchanan Bosh V/s. Chandi Charan Misra, ILR 37 Cal 808 in regard to the construction of sec. 17 of the Act. The document with which the Privy Council was concerned was construed by it as "an agreement that, upon the happening of a contingent event at a date which was indeterminate and, having regard to the slow progress of Indian litigation, might be far distant, a lease would be granted;" and it was held that "until the happening of that event, it was impossible to determine whether there would be any lease or not." This decision makes it clear that the meaning of the expression "an agreement to lease"
"which, in the context where it occurs and in the statute in which it is found, must relate to some document that creates a present and immediate interest in the land". Ever since this decision was pronounced by the Privy Council the expression "agreement to lease" has been consistently construed by all the Indian High Courts as an agreement which creates an immediate and a present demise in the property covered by it.
8. It would be relevant now to refer to the observations of Jenkins C. J. in the case of Panchanan Bose, ILR 37 Cal 808 (supra). In that case, a solehnama by which no immediate interest in immoveable property was created was held not to amount to a lease within the meaning of cl.
(d) of sec. 17 of the Act but merely an agreement to create a lease on a future day. "Such a document", it was observed, "fell within cl. (h) of sec. 17 and as such was admissible in evidence without registration". Jenkins C. J.
held that "on a fair reading of the document, no immediate interest was created, there was no present demise, and the document was merely an agreement to create a lease on a future day, the terms of which were to be defined by documents to be thereafter executed". "This being so", Page 48 of 54 Downloaded on : Sun Sep 17 22:10:09 IST 2023 NEUTRAL CITATION C/OJA/60/2003 JUDGMENT DATED: 24/02/2023 undefined said the learned C. J., "I think the appellants have rightly contended before us that the document was admissible in evidence as it falls within cl. (h) of sec. 17 of the Indian Registration Act." This decision would show that an agreement which creates no immediate or present demise was not deemed to be a lease u/s. 2(7) and so it was held to fall within sec. 17(h) of the Act and this view has been specifically affirmed by the Privy Council in Hemanta Kumari Debi's case.
18. We have considered the oral as well as written submissions canvassed by the learned counsel appearing on behalf of both the sides and perused the decisions cited at the Bar. We have extensively gone through the materials available on record and the impugned judgment and orders passed by the learned Single Judge and the Division Bench of this Court.
19. This Court (Coram: Hon'ble Mr.Justice D. A. Mehta) has passed the impugned judgment and order dated 30.07.2002 in Company Application No.47 of 1993 and allied matters wherein the Court has observed in paragraphs no.37, 38, 39, 40 and 41 as under:-
"37. On overall reading of the lease deeds which have come on record it is apparent that the terms of the lease are mostly permanent or in perpetuity, or for long fixed periods or at least till life time of the Company. The position therefore which emerges is, that the contract which was entered into by the lessors with the company subsists. Once that is so, the position in law is settled that the tenant, viz.Page 49 of 54 Downloaded on : Sun Sep 17 22:10:09 IST 2023
NEUTRAL CITATION C/OJA/60/2003 JUDGMENT DATED: 24/02/2023 undefined the Companies herein, would be entitled to seek protection under the contract dehors the provisions of the Rent Act. In none of the cases, was it contended or pointed out that there is any breach of express condition which would entitle the landlord to invoke forfeiture. Even if non payment of rent for a particular period could be treated as a breach of one of the conditions the terms of the lease deeds do not envisage forfeiture. For the sake of argument, in a given case, even if it is to be found that non payment of rent would entitle the landlord to seek determination of the lease it would be open to the Court to relieve from forfeiture by issuing appropriate directions. However, all these aspects will have to be taken into consideration, in each individual case, after the landlord applicant is able to establish not only non payment of rent, but entitlement to forfeiture and further that he has served a notice for such forfeiture.
38. As already seen hereinbefore Section 535 of the Act, specifically grants a discretion to the liquidator to seek leave of the Court to disclaim the property, provided it is burdened with onerous covenants. The first question therefore that would arise is, as to whether it would be open to any applicant to seek direction to the liquidator from the Court that the liquidator should disclaim the property. The answer has to be in the negative : Section 535(1) of the Act specifically states that the liquidator may with the leave of the Court by writing signed by him disclaim the property. Therefore, the application has to be one which has to be in writing, which has to be signed by the liquidator and which has to be for disclaimer of the property falling within the four classes of property, particularly described in the said section. In none of the present cases there is any application for disclaimer which would require the Court to determine whether a leave as sought for should be granted.
39. This Court, speaking through Justice Balia in the case reported in 1999(1) GLR 429 has very categorically turned down similar prayers for handing over possession to the landlords and in the present proceedings no good reason is advanced to take a contrary view of the matter.
40. To summarise :
[a] Leasehold interest is an intangible asset, which is Page 50 of 54 Downloaded on : Sun Sep 17 22:10:09 IST 2023 NEUTRAL CITATION C/OJA/60/2003 JUDGMENT DATED: 24/02/2023 undefined valuable in nature though the valuation may differ from case to case depending upon the unexpired period of lease.
[b] Such an asset is transferable subject to the same terms and conditions as may be stipulated in the lease deed.
[c] Once there is a contract which has not been determined, the relationship of the parties to the contract continues to subsist till the period for which the contract is in existence subject to an express condition to the contrary.
[d] There is a distinction between the point of time when an order of winding up is made and at the point of time when an order of dissolution is made, the company continues to exist between the two terminii.
[e] A condition in the lease deed permitting a lessee to give back the possession as and when the lessee chooses to do so cannot be converted into an obligation entitling the lessor to seek possession.
[f] A condition in the lease deed by way of requirement to pay rent, per se, does not create an onerous covenant, once readiness and willingness is shown by the lessee, or on its behalf, to discharge such obligation.
41. In light of what is stated hereinbefore, it is not possible to accept the case of the applicants. The possession of the land in question cannot be directed to be handed over to the applicant landlords for the various reasons stated hereinbefore. The applications are therefore rejected. There shall be no order as to costs."
20. This Court (Coram: Hon'ble Mr.Justice K. A. Puj) has passed an order dated 17.11.2008 in Company Application No.428 of 2008 wherein the Court has observed in paragraphs no.6 and 7 as under:
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NEUTRAL CITATION C/OJA/60/2003 JUDGMENT DATED: 24/02/2023 undefined "6. Since the issue involved in the present application is also similar to the issue involved in the aforesaid OJ Appeals, the Court hereby rejects this application subject to the similar direction to the Official Liquidator and further subject to the grant of stay against operation, implementation and execution of this order till 23.11.2008.
7. It is, however, made clear that the amount of Rs.1 Lac deposited by the applicants with this Court is forfeited as the order dated 05.08.2008 was very clear to the effect that in the event of the applicants failure in this application on any ground, it may result into forfeiture of the amount of Rs. 1 Lac. The amount so forfeited shall be paid to the Official Liquidator and the Official Liquidator will in turn deposit the said amount in the Company's account. It is further clarified that if any report is received from the Collector, as directed by this Court vide its order dated 05.08.2008, the same should be placed on the file of this application even though it is disposed of."
21. Considering the facts and circumstances of the case and on reading of the lease deeds, it appears that the terms of the lease are permanent or in perpetuity or for long fixed periods or at least till life time of the Company. Therefore, the position emerges is that the contract which was entered into by the lessors with the company subsists and if it is so, the position in law is settled that the tenant - companies herein would be entitled to seek protection under the contract dehors the provisions of the Rent Act. In none of the cases, was it pointed out that there is any breach of express condition which would Page 52 of 54 Downloaded on : Sun Sep 17 22:10:09 IST 2023 NEUTRAL CITATION C/OJA/60/2003 JUDGMENT DATED: 24/02/2023 undefined entitle the landlord to invoke forfeiture. Even if non-payment of rent for a particular period could be treated as a breach of one of the conditions the terms of the lease deeds do not envisage forfeiture. In the present case, even if it is to be found that non payment of rent would entitle the landlord to seek determination of the lease it would be open to the Court to relieve from forfeiture by issuing appropriate directions. However, all aspects will have to be taken into consideration, in the case, after the landlord is able to establish not only non payment of rent, but entitlement to forfeiture and further that he has served a notice for such forfeiture. The possession of the land in question cannot be directed to be handed over to the applicant for the various reasons as stated above.
22. Looking to the overall facts and circumstances of the case, we are of the view that the learned Single Judge has not committed any error while passing the impugned orders in both the appeals filed by the appellants and, therefore, no interference is required to be called for in the impugned judgment and order dated 30.07.2002 passed by the learned Page 53 of 54 Downloaded on : Sun Sep 17 22:10:09 IST 2023 NEUTRAL CITATION C/OJA/60/2003 JUDGMENT DATED: 24/02/2023 undefined Single Judge in Company Application No.47 of 1993 and the impugned order dated 17.11.2008 passed by the learned Single Judge in Company Application No.428 of 2008. Hence, the O.J. Appeals are hereby dismissed. Notice is discharged.
23. Civil Application shall stand disposed of accordingly. Interim relief, if any, granted earlier shall stand vacated forthwith.
(SONIA GOKANI,CJ) (HEMANT M. PRACHCHHAK,J) V.R. PANCHAL Page 54 of 54 Downloaded on : Sun Sep 17 22:10:09 IST 2023