Delhi High Court
Basumati Mahajan vs Foremost Industries India Ltd. on 1 September, 1995
Equivalent citations: 1995(34)DRJ732
Author: K. Ramamoorthy
Bench: K. Ramamoorthy
JUDGMENT K. Ramamoorthy, J.
(1) The above suit is for the recovery of possession of the suit property from the defendant Company who was a tenant in the premises.
(2) The defendant Company has filed Ia 4234/95 under Section 442 and 446(1) of the Companies Act read with Section 22 of the Sick Industrial Company (Special Provision) Act, 1985 for staying of proceedings in the suit until the plaintiff obtains leave of the Hon'ble Company Judge Bombay High Court and also consent from Bifr .
(3) According to defendant Company M/s Nicco Corporation had filed a company petition No. 415/92 in the Bombay High Court for winding up the defendant Company. On 28.9.1983, the Company Judge, Bombay High Court appointed the official liquidator as Provisional liquidator under Section 446(1) of the Companies Act. The Petitioner in Ia has stated as follows:- a) The Defendant most respectfully submits that prior to the company has become a sick unit as defined under the Sick Industrial Companies Act; in a Company Petition for winding up being Petition No. 415/92 initiated by M/s Nicco Corporation Ltd. against the Defendant Company, herein, the Hon'ble Company Judge of Hon'ble High Court of Judicature at Bombay having jurisdiction under the Companies Act, 1956, by order dated 28.9.1993 appointed an Official Liquidator as Provisional Liquidator of the Defendant Company as provided under Section 446(1) of the Companies Act, 1956. (Copy of order dated 28.9.1993. is annexed hereto as Annexure A). The functions of the Provisional Liquidator have, however, been kept in abeyance and the Provisional Liquidator so appointed has to carry out its functions in case of default in the performance of the conditions imposed in the said order dated 28.9.93 by the defendant. b) That by the said order dated 28.9.93 the Hon'ble High Court of Judicature at Bombay directed the Provisional Liquidator to forthwith make the inventory of the assets of the Company and the other powers have been restricted as provided under Section 450 clause (1) of the Companies Act, 1956 and the same have been kept in abeyance. c) That in pursuation of and in terms of the said order dated 28.9.1993, the Provisional Liquidator so appointed vide letter dated 17.12.1993 informed the company for making an inventory of moveable and immoveable assets of the defendant company and the Provisional Liquidator so has prepared the inventory of assets of the Company in compliance with the orders dated 28.9.1993. Copy of letter dated 17.12.1993 is annexed hereto and marked as Annexure B. (d) That the Company committed default in compliance with the said order as the company could not deposit the amount within the time as mentioned in the said order dated 28.9.1993. However, on or about 27/28.1.1994, the parties to the said winding up company petition entered into a compromise and mutually agreed to extend the time for the payment and consent terms recorded between the parties were filed in the Hon'ble High Court of Judicature at Bombay on or about 28.1.1994. The order of appointment of the Official Liquidator as Provisional Liquidator however continued to be subsisting and in force. Copy of the consent terms dated 27/28.1.1994 is annexed hereto and marked as Annexure C, and the same were accepted by the Hon'bic Company Judge vide order dated 28.1.1994 copy of which is annexed hereto and marked as Annexure D. (e) That the defendant company even failed to comply with terms of subsequent consent terms dated 28.1.1994 and committed default thereof. Consequent thereupon the appointment of Provisional Liquidator vide order dated 28.9.1993 stands confirmed as provided under Section 446(1) of the Companies Act. 1956 and has become fully empowered to carry its powers as provided under order dated 28.9.1993.
(4) Learned counsel for defendant drew my attention to the judgment of the Supreme Court in the case of Sudan-hail Chits (1) Ltd. Vs. C. Sukumaran Pillai1984 (3) Sc Company Law Journal Page 46 and in particular the observations of the Supreme Court, which is as follows :- "SECTION 446(1) provides that when a winding up order has been made or the official liquidator has been appointed as provisional liquidator, no suit or other legal proceeding shall be commenced, or if pending at the dale of the winding up order, shall be proceeded with, against the company except by leave of the Court and subject to such terms as the court may impose. Then comes sub-section (2) of Section 446. It specifies the contours of the jurisdiction of the court which is winding up the company. It confers special jurisdiction on the Court which is winding up the company to do things that arc set out in the various sub clause notwithstanding anything contained in any other law for the lime being in force. Section 446(2) thus conferred special jurisdiction on the court winding up the company which otherwise it may not have enjoyed".
(5) Learned counsel for the defendant contended that in view of the-facts staled above and in view of the judgment of the Supreme Court above referred to, no suit or other legal proceedings shall be commenced or if pending at the lime of winding of the order shall be proceeded with against the Company except by leave of the court and according to the Petitioner the plaintiff/respondent should obtain leave from the Bombay High Court for prosecuting the suit and till such lime the proceedings in the suit should be stayed. Sudarshan Chits case is of no assistance to us.
(6) The learned counsel for respondent/ plaintiff contended that the petition filed by the defendant company is wholly misconceived. Neither Section 446 nor Section 442 would apply to the facts of this case. The Company was only a tenant of the premises and after the determination of the tenancy, the status of the tenant is only that a tresspasser because it is a tenant by sufferance and, therefore, the plaintiff/defendant is not at all obliged in law to gel leave from the Company Court (Bombay High Court).
(7) Learned Senior Counsel for the plaintiff Shri L.R. Gupta brought to my notice the judgment of the Supreme Court in the case of M/s Shree Chumundi Mopeds Lid Versus Church of South India Trust Association the Supreme Court has held that eviction proceedings are not covered by Section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985.
(8) In , The Official Liquidator vs. Dharti Dhan(P) Ltd., the Supreme Court considered the scope of Section 442 and 446. The Supreme Court dealt with the nature of the powers conferred on the court by employing the word may the discussion paragraphs 7 and S of the judgment is relevant and they are as follows : - "SECTIONS 442 and 446 of the Act have to be read together. It is only where the object of the two sections, when read together, is served by a stay order that the slay order could he justified. That object is to expeditiously decide and dispose of pending claims in the course of winding up proceedings. A stay is not to be granted if the object of applying for it appears to be as it does in the case before us merely to delay adjudication on a claim and, thereby to defeat justice. In other words, a slay order, under Section 442, cannot be made mechanically, or, as a mailer of course, on .showing fulfilllment of some fixed and prescribed conditions, It can only be made judiciously upon an examination of the totality of the facts which vary from case to case. It follows that the order to he passed must be discretionary and the power to pass it must, therefore, he directory and not mandatory. In other words, the word "may" used before "slay" in Section 442 of the Act really means "may" and not''must" or "shall" in such a context. In fact, it is not quite accurate to say that the word "may" by itself, acquires the meaning of "most" or "shall" sometimes. This word, however, always signifies a conferment of power, that power may having regard to the context in which it occurs and the requirements contemplated for its exercise, have annexed to it an obligation which compels its exercise in a certain way on facts and circumstances from which the obligation to exercise it in that way arises. In other words, it is the context which can attach the obligation to the power compelling its exercise in a certain way. The context, both legal and factual, may impart to the power that obligalorincss".
The Supreme Court further laid down the following terms :- "THE principle laid down above has been followed consistently by this Court whenever it has been contended that the word "may" carries with it the obligation to exercise a power in a particular manner or direction. In such a case, it is always the purpose of the power which has to he examined in order to determine the scope of the description confined upon the donee of the power. If the conditions in which the power is to he exercised in particular cases are also specified by a statute then, on the fulfilllment of the conditions, it power conferred becomes annexed with a duly to exercise it in that manner. This is the principle we deduce from the cases of this Court cited before us: Bhaiya Punjalal Bhagwandin Vs. Dave Bhagwatprasad Prabhuprasad State of Uttar Pradesh Vs. Jogendra Singh : Govindmo Vs. Stale ofM.P. ; A.C. Aggarwal Vs. Sml. Ram Kali ; Basiwa Vs. State of U.P. and Prakash Chand Aggarwal Vs. Mis Hindustan Steel Ltd., ".
(9) Therefore, the contention of the plaintiff is that defendant is not entitled to the relief prayed for ex debito Justiciae.
(10) Learned Senior Counsel invited my attention to Smt. Nirmala R. Bafna/Kershi Shivox Cambatta and others Versus Khandesh Spinning & Weaving Mitts Co. Ltd and another/Official Liquidator and others, the Supreme Court observed as follows: - "IN addition to this factual situation, there are two other circumstances which must be taken into consideration, viz., a. The tenancy rights, the company had, in the said flat may not be an asset for the purpose of liquidation proceedings and b. merely because a company goes in liquidation and a liquidator/official liquidator is appointed, the rights of the company vis-a-vis its landlord and/or its tenants do not undergo any change"
(11) THE.KCRALA High Court had occasion to consider the question whether for proceedings against a Company which was a tenant under the Keral Building Act, leave from the Company Court is necessary. The Kerala High Court took the view that having regard to the fact that the Keral Building Act is a Special Act and the Company was only a tenant no leave under Section 446(1) of the Companies Act was necessary. The case is reported in Joshi Trading Co. (P) Ltd. Vs Essa Ismail Sait, 1980 50 Companies page 801 = Ilr 1981 Kerala page 38.
(12) Having regard to the view expressed by the Supreme Court in the above case referred to, I need not to consider , submissions made by the defendant in this case. Therefore, I hold that no leave is necessary and the defendant Company cannot seek for stay proceedings under Section 22 of the Sick Industrial Companies (Special Provisions) Act 1985 in the light of the judgment in the Supreme Court Mis. Shree Chamundi Moped,' Ltd. vs. Church of South India Trust Association, Madras, .
(13) Therefore, Ia 4234/95 filed by the defendant is dismissed. No orders to costs. Ia No. 7614/95 (14) The learned senior counsel Mr. L.R. Gupta mentioned that IA.7614/95 is not necessary and he is not pressing it. Accordingly, the Ia is dismissed without prejudice to the rights of the parties.
(15) Post the suit for framing of issues on 9th of November 1995.