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Karnataka High Court · body

2016 DIGILAW 259 (KAR)

Nandini Dinesh Shingte, W/o Sri. Dinesh Rajaram Shingte v. NGEF Ltd.

2016-03-11

ARAVIND KUMAR

body2016
ORDER : Aravind Kumar, J. Heard Sri Vishwanath H.M., learned counsel appearing for the petitioner and Sri G.C. Yadhav, the learned official liquidator, who has addressed the arguments on this application with the leave of this court. Perused the records. 2. The applicant, who is the absolute owner of the immovable property situated at Shiye Phata, Old National Highway No. 4, Tuluqa, Hatkanan-gale, Kolhapur District had undisputedly leased said property in favour of the company (in liquidation) by executing lease deed dated July 30, 1983, which was with effect from August 1, 1983, where under it was agreed that rate of rent was Rs. 2,500 per month as per annexure A. From time to time, rent is said to have been enhanced and as on April 1,1996, the rate of rent was Rs. 6,000 per month, which was being paid by the company (in liquidation) to the applicant. The copy of the letter dated January 12, 2000 (annexure C) issued by the company (in liquidation), which is not in dispute would also evidence said fact. The company (in liquidation) was ordered to be wound up by an order dated August 3, 2004 and the official liquidator came to be appointed, and he took charge of the assets of the company (in liquidation). Subsequently, on June 13, 2005, a mahazar came to be drawn for taking possession, inventorisation and valuation of the assets (stocks) of the company as per mahazar drawn on date (annexure E). At the time of drawing of the said mahazar, the applicant as well as the representative of the official liquidator apart from others were also present. The official liquidator while drawing said mahazar had directed the present applicant to safeguard the stocks, which were lying in the godown. In fact, a communication was also forwarded by the official liquidator on February 28, 2006 (annexure F) to the applicant herein to safeguard the assets lying in the said godown till he takes further steps in the matter. When this was the factual position, property in the custody of the court was being taken care of by the applicant. 3. In fact, a communication was also forwarded by the official liquidator on February 28, 2006 (annexure F) to the applicant herein to safeguard the assets lying in the said godown till he takes further steps in the matter. When this was the factual position, property in the custody of the court was being taken care of by the applicant. 3. The official liquidator submitted a report in O.L.R. No. 284 of 2015 seeking leave of the court to disclaim the movables situated in the godown in favour of the owner of the premises, i.e., the applicant and this court while disposing of the said O.L.R. No. 284 of 2015 on July 21, 2015, permitted the official liquidator to disclaim the movables situated at Kolhapur (belonging to the applicant) apart from permitting the official liquidator to disclaim the movables located in Ahmedabad and New Delhi. This court had also made an observation that in so far as rent and demurrage which was payable in respect of the goods being apparently inflated and exorbitant, gave liberty to the concerned persons to approach this court for adjudication of their claim and leaving open the said question. It is also not disputed by the applicant that at the time of disposal of O. L. R. No. 284 of 2015 the official liquidator had sought leave of the court to disclaim the movables and same had been granted by this court. 4. Even prior to the disposal of the above said OLR, the applicant herein had made a claim before the official liquidator for payment of arrears of rent, security charges, cost of shifting of the materials and interest component amounting to Rs. 12,35,400 as per the representation dated October 14, 2010 (annexure G), which was followed up by a reminder dated January 19, 2012 (annexure IT) and representation dated "Nil" (annexure J). Subsequently, on March 31, 2015, the applicant made a claim for Rs. 16,17,984 with the official liquidator, which is at annexure K. On account of non-payment of said amount, the present application has been filed seeking for a direction to the official liquidator to make payment of Rs. 16,22,036 and the break-up of the amounts claimed by the applicant reads as under : Sl. No. Particulars Amount in Rs. 1. Arrears of rents for the year 1-1-2014 to 31-3-2015 at Rs. 6,000 per month 8,10,000 2. Towards security payment at Rs. 16,22,036 and the break-up of the amounts claimed by the applicant reads as under : Sl. No. Particulars Amount in Rs. 1. Arrears of rents for the year 1-1-2014 to 31-3-2015 at Rs. 6,000 per month 8,10,000 2. Towards security payment at Rs. 2,000 per month for two security guards (day/night) 6,00,000 3. Towards shifting of materials and maintenance charges 30,000 4. Service tax at 12.36 per cent, on Rs. 14,40,000 (rupees fourteen lakhs forty thousand) 1,77,984 Grand total 16,17,984 (In words :- Rupees sixteen lakhs seventeen thousand nine hundred eighty-four only). 5. It is the contention of Mr. Vishwanath, learned counsel appearing for the applicant that, the official liquidator despite repeated reminders, has not paid the amounts and as such a direction be issued in that regard. 6. Per contra, Sri G.C. Yadav, the official liquidator, has vehemently contended that the official liquidator has a right to disclaim movables belonging to the company (in liquidation) which was situated in the godown in question and this was also intimated to the applicant by communication dated August 7, 2015 (annexure L), where under the official liquidator had disclaimed all the items and granted liberty to the applicant to take suitable/appropriate action regarding demurrage, rentals/repair charges, etc. As such, he contends that the official liquidator is not required to pay the arrears of rent. He further elaborates his submission by contending there is a statutory duty cast on the applicant under sub-section (4) of section 535 of the Companies Act, to submit an application in writing to the official liquidator by calling upon the official liquidator to decide as to whether he would disclaim the goods and in the event of the official liquidator not acting upon such notice within a period of 28 days after receipt of such application or such extended period as may be allowed by the Tribunal by intimating the applicant that he (official liquidator) intends to apply to the court for leave to disclaim, then, the official liquidator is deemed to have adopted. He submits in the instant case, such an application having not been filed by the applicant before the official liquidator, the applicant cannot seek for arrears of rent or any other amount due to him. He submits in the instant case, such an application having not been filed by the applicant before the official liquidator, the applicant cannot seek for arrears of rent or any other amount due to him. He would further submit that the applicant had to first file such an application and without exhausting the remedy available under sub-section (4) of section 535 of the Act has approached this court and as such application is liable to be dismissed. 7. He would further contend that in view of the applicant not having exhausted such remedy and the official liquidator having approached this court to disclaim the goods and lease hold rights and same having been granted by this court, he contends that the official liquidator is not required to pay arrears of rent. Hence, he seeks dismissal of the application. 8. Having heard the learned advocate appearing for the applicant and the official liquidator appearing in person, this court is of the considered view that, in order to examine the contentions raised by the official liquidator, it is appropriate to extract section 535 of the Act, which reads thus : "Sec. 535. Disclaimer of onerous property in case of a company which is being wound up. Disclaimer of onerous property in case of a company which is being wound up. - (1) Where any part of the property of a company which is being wound up consists of - (a) land of any tenure, burdened with onerous covenants ; (b) shares or stock in companies ; (c) any other property which is unsaleable or is not readily saleable, by reason of its binding the possessor thereof either to the performance of any onerous act or to the payment of any sum of money ; or (d) unprofitable contracts ; the liquidator of the company, notwithstanding that he has endeavoured to sell or has taken possession of the property, or exercised any act of ownership in relation thereto, or done anything in pursuance of the contract, may, with the leave of the Tribunal and subject to the provisions of this section, by writing signed by him, at any time within twelve months after the commencement of the winding up or such extended period as may be allowed by the Tribunal, disclaim the property : Provided that, where any such property has not come to the knowledge of the liquidator within one month after the commencement of the winding up, the power of disclaiming the property may be exercised at any time within twelve months after he has become aware thereof or such extended period as may be allowed by the Tribunal. (2) The disclaimer shall operate to determine, as from the date of disclaimer, the rights, interest, and liabilities of the company, and the property of the company, in or in respect of the property disclaimed, but shall not, except so far as is necessary for the purpose of releasing the company and the property of the company from liability, affect the rights or liabilities of any other person. (3) The Tribunal, before or on granting leave to disclaim, may require such notices to be given to persons interested, and impose such terms as a condition of granting leave, and make such other order in the matter as the Tribunal thinks just. (3) The Tribunal, before or on granting leave to disclaim, may require such notices to be given to persons interested, and impose such terms as a condition of granting leave, and make such other order in the matter as the Tribunal thinks just. (4) The liquidator shall not be entitled to disclaim any property in any case where an application in writing has been made to him by any person interested in the property requiring him to decide whether he will or will not disclaim, and the liquidator has not, within a period of twenty eight days after the receipt of the application or such extended period as may be allowed by the Tribunal, given notice to the applicant that he intends to apply to the court for leave to disclaim ; and in case the property is a contract, if the liquidator, after such an application as aforesaid, does not within the said period or extended period disclaim the contract, he shall be deemed to have adopted it (5) xxx xxx xxx (6) xxx xxx xxx (7) xxx xxx xxx There cannot be any dispute to the proposition that the official liquidator can disclaim the rights, interest and liabilities of a company (in liquidation) as provided under sub-section (1) of section 535 of the Act. Said provision would indicate that even in the event of liquidator taking steps to sell the property of such company or even after exercising ownership of the property of the company can with the leave of the court and subject to subsections (2) to (4) can within (12) twelve months after commencement of winding up or such extended period that may be allowed by the court can disclaim any part of the property of the company which is being wound up consisting of - (i) land of any tenure burdened with onerous covenants; (ii) shares or stocks in companies ; (iii) any other property which is unsaleable or is not readily saleable ; or (iv) if it is unprofitable contracts. However, if such property which has not come within the knowledge of the liquidator, then in such an event, liquidator can within one (1) month, after commencement of the winding up, the power of disclaiming the property can be exercised at any time within twelve (12) months, after he acquires knowledge or becomes aware of it or such extended period. However, if such property which has not come within the knowledge of the liquidator, then in such an event, liquidator can within one (1) month, after commencement of the winding up, the power of disclaiming the property can be exercised at any time within twelve (12) months, after he acquires knowledge or becomes aware of it or such extended period. A bare reading of sub-section (2) of section 535 of the Act would clearly indicate that, such disclaimer would operate from the date of disclaimer, but such disclaimer shall not operate, except for the purpose of releasing the company and the property of the company from liability, affect the rights or liabilities of any other person. 9. Reading of sub-section (4) of section 535 would clearly indicate that liquidator would not be entitled to disclaim any property in any case where an application in writing has been made to him by any person interested in the property calling upon the liquidator to decide whether he will or will not claim, and in such case where liquidator does not within a period of (28) twenty eight days from the date of receipt of such application or such extended period as may be allowed by the court gives notice to the applicant that he intends to apply to the court for leave to disclaim and in case the property is a contract, if the liquidator, after such an application as afore stated does not within the said period or extended period disclaim the contract, would be deemed to have adopted it. In other words he cannot disclaim where an application has been made to him by any person interested in the property requiring him to decide whether he will or will not disclaim within the period stipulated thereunder. In other words, where the property is owned by the applicant, if he opts to seek from the official liquidator as to whether he is disclaiming or not of any property in his possession, the said provision would operate, otherwise, it would not. 10. In other words, where the property is owned by the applicant, if he opts to seek from the official liquidator as to whether he is disclaiming or not of any property in his possession, the said provision would operate, otherwise, it would not. 10. In the instant case namely when the facts on hand are examined it can be seen that, after drawing up of the mahazar on June 13, 2005, as per annexure E, the official liquidator has intimated the applicant by communication dated February 28, 2006 (annexure F) indicating thereunder that assets lying in the premises belonging to the applicant be safeguarded by the applicant till the official liquidator initiate further steps in the matter. This would clearly indicate that the official liquidator has in equivocal terms intimated the applicant to comply with the direction namely to take steps to safeguard the goods lying in the godown. As such, the applicant cannot be expected to approach either the official liquidator or the company court for a direction to direct the official liquidator either to disclaim or otherwise. The official liquidator himself having intimated the applicant that he would be taking further steps in the matter in the year 2006 and, sleeps over the matter till he files a report in O. L. R. No. 284 of 2015, the official liquidator cannot be heard to contend that the applicant had to approach the company court seeking for a direction or the applicant should have made an application before the official liquidator intimating him as to whether he intends to disclaim or otherwise, and said situation did not arise at all since the official liquidator himself had directed the applicant to safeguard the goods till he (official liquidator) take steps in respect of the property belonging to the company (in liquidation). Hence, the official liquidator cannot be heard to contend that the applicant ought to have filed an application under sub-section (4) of section 535 of the Act, either before the official liquidator or before the company court. At this juncture itself, it would be appropriate to note that, once the official liquidator takes over the property to his custody, it would be the property of the company court and the official liquidator would be its custodian. Hence, no person including the official liquidator, would be entitled to deal with such property without leave of the company court. At this juncture itself, it would be appropriate to note that, once the official liquidator takes over the property to his custody, it would be the property of the company court and the official liquidator would be its custodian. Hence, no person including the official liquidator, would be entitled to deal with such property without leave of the company court. In other words, it would be the property of the court and it is because of this precise reason, O.L.R. No. 284 of 2015 came to be filed by the official liquidator to disclaim the rights and liabilities of the properties, i.e., movables/stocks situated in the godown in question belonging to the applicant. To put it differently, from the date of disclaim is made and is granted by the company court, the liability of the official liquidator does not cease, and it continues to operate till such disclaim is made and permission is granted by the company court. Hence, contentions raised by the official liquidator requires to be rejected and accordingly, it stands rejected. 11. Now turning my attention to the claim of the applicant it is noticed that it is sum of Rs. 16,17,984 as per representation dated March 31, 2015 (annexure K) submitted to the official liquidator. The rent, which has been claimed as arrears of rent, is for the period from January 1, 2014 to March 31, 2015. The order of winding up came to be passed August 3, 2004. Thus, the rent that becomes payable would be from the date of possession, and possession is deemed to have been taken by the official liquidator from the applicant on August 3, 2004 and up to the date of disclaiming, came to be ordered by this court on July 21, 2015, or it can be safely said till June 30, 2015, would be for a period of 131 months. There being no dispute with regard to rate of rent being at the rate of Rs. 6,000 per month, claim of the applicant to the extent of arrears of rent for 131 months at the rate of Rs. 6,000 per month would be maintainable and it would be Rs. 7,86,000. The said claim of arrears of rent of Rs. 7,86,000 is allowed as against the claim of Rs. 8,10,000. 12. Towards security payment, a sum of Rs. 2,000 per month has been claimed by the applicant. 6,000 per month would be maintainable and it would be Rs. 7,86,000. The said claim of arrears of rent of Rs. 7,86,000 is allowed as against the claim of Rs. 8,10,000. 12. Towards security payment, a sum of Rs. 2,000 per month has been claimed by the applicant. There are no receipts forthcoming from the security agency issued to the applicant to establish that amounts had been paid by the applicant to security agency. Though learned counsel would contend that it was a private security agency and as such, receipts had not been issued by them and such claim cannot be entertained in the absence of any proof being tendered with regard to payment of Rs. 2,000 per month and this court would not be in a position to entertain such claim or grant any relief in that regard as claimed by the applicant. Hence, claim of Rs. 6,00,000 made by the applicant in that regard, i.e., towards security charges stands rejected. 13. The applicant has also made a claim for payment of Rs. 30,000 towards transportation of materials from the company godown which was in the custody of the official liquidator, till it was permitted to be removed. Even in respect of said claim, there is no bill or receipt or invoice forthcoming issued by any transporters. As such, said claim also cannot be entertained and it stands rejected. 14. The fourth claim relates to payment of service tax at 12.6 per cent, on Rs. 14,40,000 amounting to Rs.1,77,984. Even in respect of payment of service tax, there is no receipt produced by applicant for having remitted said tax to the Service Tax Commissionerate. In that view of the matter, claim for Rs.1,77,984 made by applicant also cannot be entertained and it stands rejected. 15. Subsequent to the disclaim made by the official liquidator by filing O. L. R. No. 284 of 2015 and order came to be passed by this court on July 21, 2015 and the official liquidator was permitted to disclaim which was intimated to the applicant herein by the official liquidator on August 7, 2015 (annexure L) and pursuant to same, the applicant is said to have sold the stocks which were located in the godown in question and as against the valuation made by the approved valuer of this court for Rs. 1,04,000 the applicant has sold the stocks for a sum of Rs. 1,04,000 the applicant has sold the stocks for a sum of Rs. 1,42,000 which is admitted by the applicant in paragraph 13 and he has also enclosed the demand drafts (annexures N and P) which has been received by him by way of sale proceeds. In other words in respect of the claim arising out of the goods lying in the godown which was in the custody of the official liquidator, the applicant has realised a sum of Rs. 1,42,000 and same requires to be deducted from out of the arrears of rent payable by the official liquidator and balance amount towards arrears of rent will be payable by the official liquidator to the applicant and same would be Rs. 6,44,000 as indicated herein below : (i) The arrears of rent from August 1, 2004 to June 30, 2015, for 131 months x Rs. 6,000 = Rs. 7,86,000. (ii) The amount received or realised by the applicant by sale of stocks: Rs. 1,42,000. (iii) The balance : Rs. 6,44,000 Thus, the applicant would be entitled to a sum of Rs. 6,44,000 in all from the official liquidator. Hence, the following order : ORDER (i) The application is hereby allowed in part. (ii) The official liquidator is hereby directed to pay a sum of Rs. 6,44,000 from the funds of the company (in liquidation) within one week from today without waiting for certified copy of the order since it is passed in the presence of the official liquidator and after hearing him in person. (iii) The official liquidator would be liable to pay interest at 11 percent, per annum on quarterly rests till the date of payment in the event of amount is not paid within one week from today.