Rita Singh v. Official Liquidator of M/s. U. P. State Cement Corporation
2006-11-09
AJOY NATH RAY, ASHOK BHUSHAN
body2006
DigiLaw.ai
JUDGMENT By the Court.—This is an appeal in respect of an order passed by the Hon’ble Company Judge on the 18th of October, 2006, after his Lordship had confirmed on 11.10.2006 the sale of the assets of the Company in liquidation, i.e., the U.P. Cement Corporation. 2. The assets of the Company were huge, but in this appeal, we are concerned only with a single shop owner of shop room No. S-13 in the Dalla Region; it is one of some 100 shops, which are now being looked after by the Hon’ble Company Judge in the matter of the finalization of the beneficial winding up of the Company and harnessing and distribution of the Company assets. 3. It seems that sometime in or about the year 1983, the Company in liquidation had leased out the shop in question to one Mohd. Sharif for a monthly rent of Rs.75/- for a period of five years with a provision for increase of 20% rent after every five years. 4. Mohd. Sharif is now nowhere in the picture; the winding up application against the Company was presented in the year 1997. On 8.12.1999, the Company has been directed to be wound up; there has been no stay of operation of the said order since then. 5. The appellant claims that sometime in the year 1998 (the papers indicate the date 5.6.1998 as perhaps the crucial date) the shop room was alloted to the appellant by the Company, and that thereafter until October, 1999, the appellant obtained rent receipts for paying rent of Rs.108/- per month to the U.P. Cement Corporation. 6. The impugned order directs summary eviction of the appellant and the appellant submits that she being a tenant of the Company in liquidation, the purchasers of the assets must be held to have purchased the assets above heads of the tenants and not as against the interest of the tenants. It is further submitted that eviction cannot be had by use of force and there must be observance of the due process of law. 7. It is not disputed that no amount has been paid by way of rent by the appellant to any person since 1999. The official liquidator states that in 2002, public notice was issued by him calling upon all occupants to regularise their possession or status in regard to the Company property under the official liquidator.
7. It is not disputed that no amount has been paid by way of rent by the appellant to any person since 1999. The official liquidator states that in 2002, public notice was issued by him calling upon all occupants to regularise their possession or status in regard to the Company property under the official liquidator. A collecting officer was also appointed for collecting moneys payable. Difficulties were found in regard to collection and further notices were given in the year 2005. The case of the official liquidator is that never before has the appellant come forward claiming any regularisation of any type; it is only now when eviction is threatened that she has approached the Court. 8. Amendment applications are made before us on behalf of the appellant since further orders have been passed by the Company Court on 18.10.2006 and on 1.11.2006 giving further directions, which would encompass the appellant also along with several others. Directions have been given for depositing of all unpaid arrears of electricity dues as well as unpaid rent; further directions have been given for negotiating rent with the purchasers, so that the successful negotiators can stay in their shops in question. 9. The appellant submits that the arrears of rent and arrears of electricity dues appropriately calculated might be payable by her, but she cannot be forced to negotiate afresh, as the rent claimed by the official liquidator is understood by her to be of the order of Rs.825/- and the rent to be claimed by the purchasers is understood by her to be of the order of Rs.1800/- per month. These figures we have not entered into in details and submission in this regard will be made before the official liquidator, or the Company Court, as the case might be, in appropriate time by the parties concerned. The points raised by the appellant regarding use of force and her having already a confirmed status of a tenant have to be observed upon by us. Once these observations are noted, it would be found that the appeal has become infructuous by reason of the further orders passed by the Hon’ble Company Court and that those orders might very well be the perfect way towards beneficial winding up, as we have mentioned above. 10.
Once these observations are noted, it would be found that the appeal has become infructuous by reason of the further orders passed by the Hon’ble Company Court and that those orders might very well be the perfect way towards beneficial winding up, as we have mentioned above. 10. Under Section 456 (1) of the Companies Act, it is for the official liquidator to take into custody all the properties of the Company. This will include real property like, say, the shop room of the appellant. It is not the law that in regard to every trespasser, the official liquidator has to institute a Suit after obtaining leave of the Company Court and obtain a decree either from the Company Court, or from the regular Civil Court, which has ordinary jurisdiction over the landed area in question. The Company Court is entitled to order summary eviction of trespassers without the necessity of the filing of a Suit. However, the rules of hearing the trespassers out and of assessing and evaluating documents, as might be tendered by the alleged trespassers and by the official liquidator on behalf of the Company, have to be adhered to by the Company Court. The rules of law will prevail in the Company Court, as in the Suit Court, but the procedure of a compulsory Suit is given a go by in appropriate cases in regard to collection of the property of the Company in liquidation. If and when, a good order is passed by the Company Court after hearing the parties and after assessing the law and the facts, such an order is as good an instrument as a decree by a competent Civil Court. The eviction of a trespasser on the basis of such an order of the Company Court is not an eviction by the official liquidator by use of force, but is an eviction under the due process of law. No objection can be raised thereto excepting by way of appeals which are permitted under the law. 11. Regarding the tenancy status of the appellant, it is submitted that even if rent receipts are granted and the payments are called rent, those are not necessarily rent, but might be occupation fee, or licence fee, or even collection by way of damages.
11. Regarding the tenancy status of the appellant, it is submitted that even if rent receipts are granted and the payments are called rent, those are not necessarily rent, but might be occupation fee, or licence fee, or even collection by way of damages. The official liquidator submits that an examination would have to be made of the rent receipts tendered by the appellant, both as regard their genuineness and validity. The purchasers straightaway submit that the alleged rent receipts are in reality only collection by way of damages for occupation. 12. Their further submission is that the document of 5.6.1998 relied upon by the appellant is not an agreement, but objection to an agreement made by her; she and the U.P. Cement Corporation were never ad idem on all points of tenancy and therefore, there was never any lease agreement. As such, any collection month by month cannot be termed as collection of rent although if one person goes simply into occupation without any dispute and the owner of the property simply goes on collecting money month by month, again without any dispute, then and in that event, such monthly payments are usually to be construed as payments of rent as consideration for monthly tenancy. 13. The important subsequent point is that transfers after commencement of winding up by the Company are avoided by force of statute and this aspect has to be borne in mind by all parties concerned. Since the winding up was not a voluntary one, under Section 536 (2) of the Companies Act disposition of Company property after commencement of winding up without an approving order of the Company Court, would be void and there can be no dispute that grant of a fresh tenancy in place of an earlier tenant who has vanished from the scene is most certainly disposition of Company property. 14. As the winding up petition was presented in 1997, because of Section 441 (2) the alleged disposition by the Company in favour of the appellant, even if made, would appear to be void. 15.
14. As the winding up petition was presented in 1997, because of Section 441 (2) the alleged disposition by the Company in favour of the appellant, even if made, would appear to be void. 15. As such, on this basis it seems essential that fresh negotiations be made either for entrenching the possession of the shop owner with the new purchasers, or that the shop owner realise that staying on in the old shop at the old rent on their unilateral term is not possible and thus possession has to be given up. 16. We are of the opinion that the matter has to be worked out on the basis of the subsequent orders passed by Hon’ble Company Court on 18.10.2006 and 1.11.2006. Amendment applications made for including those orders also in the present appeal are turned down, as those are absolutely different orders aiming at different objectives, and this appeal cannot be turned into a different appeal. 17. With the above observations, the appeal is dismissed as having become infructuous. Appeal Dismissed. ———