Gopal Krishna Daw Vs. Official Liquidator - Court Judgment

SooperKanoon Citationsooperkanoon.com/880542
SubjectCompany
CourtKolkata High Court
Decided OnApr-03-2001
Case NumberA.P.O. No. 349 of 1998
JudgeTarun Chatterjee and ;Subhro Kamal Mukherjee, JJ.
Reported in[2003]115CompCas452(Cal)
ActsCompanies Act, 1956 - Section 446 and 446(2); ;Limitation Act, 1963 - Schedule - Article 137; ;West Bengal Non-Agricultural Tenancy Act, 1949; ;Transfer of Property Act, 1882 - Section 108
AppellantGopal Krishna Daw
RespondentOfficial Liquidator
Appellant AdvocateArindya Mitra and ;M. Chatterjee, Advs.
Respondent AdvocateP.N. Chatterjee, Adv.
DispositionAppeal allowed
Cases ReferredVidyadhar Upadhyay v. Sree Sree Madan Gopal Jew
Excerpt:
- orders.k. mukherjee, j.1. this appeal is directed against the order dated 5-5-1998 passed by a learned single judge of this court inter alia, rejecting an application for an order directing restoration of possession of the disputed premises to the appellants herein.2. the facts leading to the case may be summarised as under :on or about 31-10-1959 a deed of lease was executed by the daws in favour of one haradhan dutta, who was carrying on business under the name and style of a. coomer & company. the demised premises was about 16 cottahs, 10 chittacks and 35 square feet of land being a portion of premises no. 242, jessore road of south dum dum municipality and presently recorded as premises nos. 84, 85 and 86, sarat chatterjee road. the lease was for a period of 25 years with effect from nov., 1959 and ending with oct., 1984. the important clauses of the said lease are as under:-- '(a)... lessee's covenant :4. they will use the demised premises for running factory and/or their office purpose only and not for any other purpose and for this purpose they will be at liberty to erect or build necessary structures on the demised premises according to building rules, factory rules and all other law of land.7. they will at the expiration or sooner determination of the said lease peaceably and quitely surrender the demised premises in the same condition is now, together with all such erections or building and or all such fixtures there or as may be thereon, provided the lessors be agreeable to pay proper valuation of the same at then market price but the lessee shall remove all their machineries and plants to be fitted there.8. if the lessors be not agreeable to take over all such erections building and all such fixtures or in case the lessors be not agreeable to pay proper price for the same it shall be lawful for the lessees to remove the same within the period of the lease but not later after the expiration and determination of the said terms.10. the lessee shall not assign or otherwise mortgage the said leasehold interest or any construction, if any erected thereon or any part thereof without permission in writing of the lessors. except in the case of a private limited company in which the lessee shall remain a share holder and/or a director such consent shall not unreasonably be withheld and even in all such cases the liability of the lessees will remain to the lessors in respect of all the covenants herein contained.11. in case of the insolvency of the lessee herein and/or any attachment of the structures or leasehold by any decree of court the lease herein shall be deemed to be determined.(b) lessors' covenant:2. the lessors will at the request and cost of the lessee at the end of the terms of lease hereby granted execute a renewal of the lease for another terms of 25 years on the terms and conditions and rent to be mutually settled by the parties at the then prevailing market rate and the salami or premium, fixed therefor. the said new terms covenants and conditions are to be mutually settled before the expiry of the lease for 25 years.' 3. that the leasehold interest with the building and structures standing thereon were assigned by the said haradhan dutta to a. coomer & company (p.) ltd. sometime in 1960 in which the said haradhan dutta was a shareholder and director.4. the daws received a letter from the official liquidator, high court, calcutta dated 15-7-1980 intimating that the said a. coomer & co. (p.) ltd. went into liquidation with effect from 20-6-1977 and by an order passed by the hon'ble justice salil kumar roy choudhary dated 4-7-1980, the leasehold interest in the said land will be sold in court on 25-7-1980.5. on receipt of the aforesaid letter the daws moved the appeal court on 24-7-1980 for a direction to stop the sale fixed on 25-7- 1980, but the appeal court did not pass any order and observed that daws might take appropriate proceedings in the trial court if so advised.6. on 25-7-1980 the leasehold interest of the company was sold in auction in favour of the respondent nos. 2 to 6.7. it appears from the list of the assets of the said a. coomer & company (p.) ltd. that the residue period of the leasehold period of the company expiring on october, 1984 was sought to be sold in auction. however, it was indicated that the said lease could be renewed for another terms of 25 years on the terms and conditions to be mutually settled with the owners of the land at the then prevailing market rate and the salami or premium fixed therefor. that the said new terms and conditions were to be mutually settled six months before the expiry of the above lease.8. from the sale notice it appears that the sale would be 'as is where is and whatever there is' basis.9. it was contended on behalf of the appellants that they were advised to wait till the expiry of the lease period and they were advised not to challenge the sale at the relevant point of time as the same might not yield any result and the owners did not agree amongst themselves to incur further costs in litigation at that stage.10. the official liquidator, high court, calcutta, by his letter dated 28-7-1980 informed shrimati sutara daw, one of the owners, that the leasehold interest of a. coomer & co. (p.) ltd. has been sold at the auction sale on 25-7-1980 in the company court and that the said auction would be confirmed on 1 -8-1980. the sale was confirmed by the hon'ble justice salil kumar roy choudha on 1-8-1980.11. k.k. daw, one of the owners, by his letter dated 24-11-1980 requested the auction-purchasers to contact him at any early date on prior engagement.12. on 3-4-1981, the learned advocate for the auction-purchasers, shri ramesh chandra ganguly, informed the owners that his clients intended to take the renewal of the lease and called upon the owners to send the draft of the lease document for renewal as provided in the deed of lease dated 31-10-1959. the said learned advocate, also, informed that his clients would contact the owners and settle all the terms and conditions for execution and registration of the deed of lease,13. however, on 23-2-1983 the official liquidator, high court, calcutta, describing himself as the assignor, assigned the residue period of the lease dated 31-10-1959 in favour of the respondent nos. 2 to 6 and demised the land and structures standing thereon. it was categorically stated in the said document that the assignees to hold for the residue of the terms of lease which is still unexpired.14. by a letter dated 16-3-1983 assignees requested the owners to accept them as the lessees.15. again the learned advocate for the assignees/auction-purchasers on 26-10-1984 called upon the owners that his clients intended to take the renewal of the lease for another term of 25 years in respect of the said property on the terms and conditions to be mutually agreed between the parties and that his clients would contact the owners to settle all the terms and conditions for execution and registration of the deed of lease.16. on 31-10-1984 the tenure of the lease dated 31-10-1959 expired and admittedly no terms and conditions for renewal could be mutually settled between the parties.17. in the aforesaid background the daws as owners, on or about 29-11-1984, moved the present application under section 446(2) of the companies act, 1956 ('the act') being company application no. 284 of 1984 in company petition no. 279 of 1976. the owners in the application, inter alia, prayed for the following reliefs:--'(a) that all the official liquidator and the respondent nos. 2 to 6 may be directed to hand over possession of the premises nos. 46, 47, 48 and 77 sarat chatterjee road, dum dum mentioned in paragraph 2 of the affidavit to the petitioners within a week from date of the order or within such time as to this hon'ble court may deem fit and proper.(b) that the respondent no. 7 be directed to correct the municipal records and to record and names of the petitioners as owners thereof.(c) such further order or orders as this hon'ble court may deem fit and proper.'18. that the application was opposed by both the auction-purchasers and the official liquidator, high court, calcutta.19. it is alleged by the auction-purchasers that the said application has been filed upon suppression of material facts and on misleading allegations; the sale of the assets of the company in liquidation included the leasehold right of the disputed premises with the right of renewal of the said lease for another terms of 25 years and the said asset of the company was sold along with other assets of the company and the assignees gave highest offer and were declared purchasers subject to confirmation by the court.20. a sum of rs. 67,500 was paid in full and final satisfaction of the offer and on 1-8-1980 learned company judge confirmed the same.21. although the owners gave an assurance that there would be renewal of the lease and that the draft terms and conditions would be handed over to the assignees, but such assurance was not acted upon.22. the application filed by the owners is barred by limitation inasmuch as the application filed long after three years from the date of confirmation of the sale.23-24. the official liquidator in the affidavit-in-opposition alleged further that since lease was only in respect of the land on which the company built the structures with right to transfer the land, they are entitled to protection under the relevant provisions of the west bengal non-agricultural tenancy act, 1949.25. that by order dated 5-5-1998 a single judge of this hon'ble court rejected the said application and directed the official liquidator to make payment of the sum of rs. 5712 to the owners in respect of the suit premises upto the deed of assignment executed by him in favour of the assignees. the learned judge held that no order could be passed upon the official liquidator directing restoration of possession of the premises as the official liquidator was not in possession of the suit premises.26. against the said order dated 5-5-1998 this appeal has been preferred.27. we have heard mr. anindya kumar mitra, senior advocate, in support of the appeal, mr. p.n. chatterjee, senior advocate, appearing on behalf of the respondent nos. 2 to 6 and mr. a.c. kar, advocate, on behalf of the respondent no. 1.28. mr. p.n. chattejree urged three points, that is, (a) the application under section 446(2) was not maintainable in the garb of the setting aside the sale; (b) since the application under section 446(2) has been filed long after three years from the date of the order of confirming the sale, the same is barred by limitation; (c) the application was liable to be dismissed for the simple reason that the owners have come forward with unclean hands as they have suppressed material facts in their application.29. mr. a.c. kar while adopting the argument of mr. p.n. chatterjee highlighted that west bengal non-agricultural tenancy act, 1949 applies and the owners are not entitled to any order in this application under section 446(2).30. mr. anindya kumar mitra in repelling the said contentions submitted that his clients have not asked for setting aside the sale inasmuch as his clients have accepted the sale of the residue period of the lease, but is praying for a direction to the official liquidator and the assignees to hand over possession as the lease has expired and that the application has been filed immediately after the expiry of the lease.31. therefore, the points for determination in the aforesaid appeal are :1. whether the relief prayed for in the application under section 446(2) could be granted or not ?2. is the application barred by limitation ?3. whether the relief claimed by the owners are barred by the provisions of west bengal non-agricultural tenancy act, 1949?32. in order to appreciate the rival contentions certain provisions of the transfer of property act and the companies act are required to be looked into:--section 1080) runs as under:--'(i) the lessee may transfer absolutely or by way of mortgage or sublease the whole or any part of his interest in the property, and any transferee of such interest or part may again transfer it. the lessee shall not, by reason only of such transfer, cease to be subject to any of the liabilities attaching to the lease;'33. the provisions of section 446(2)(b) and (d) of the companies act run as under :'(b) any claim made by or against the company (including claims by or against any of its branches in india);(c) ***(d) any question of priorities or any other question whatsoever, whether of law or of fact, which may relate to or arise in course of the winding up of the company.'34. therefore, the question is whether, in view of the aforesaid provisions of the said two acts, directions could be passed against the official liquidator, high court, calcutta to restore the possession to the owners.35. admittedly, there was a lease dated 31-10-1959 with effect from 1-11-1959 and ending with 31-10-1984. the original lessee assigned his interest in the disputed premises in favour of a. coomer & co. (p.) ltd. and the company went in liquidation and in processes thereof the residue period of the lease was sold in auction in favour of the assignees. although there was a clause for renewal for another term of 25 years of the lease deed, but no mutual agreement could be arrived at between the owners and the assignees and as such no deed renewing the lease was executed at all.36. mr. chatterjee to bring home his points cited the case of kamala ranjan roy v. baijnath bajoria : [1950]1scr840 , and particularly referred to paragraph 14 of the supreme court decision :'14. finally it is said that by directing the specific performance of the agreement the court has exposed the defendant to the risk of an action for damages for breach of covenant. if the assignment of the lease by the defendant to the plaintiff without the lessor's consent amounted to a breach of covenant, the lessor could forfeit the lease and sue for possession. such a course would affect only the plaintiff but not the defendant, for he had already parted with the lease for valuable consideration. it is said that the lessor could sue the defendant for damages for breach of that covenant and the court should not, by decreeing specific performance, have put the defendant in that perilous position. there appear to us to be two answers to this argument, namely, (1) that the defendant should have, by proper language, made his obligation to transfer dependent or conditional upon his being able to obtain the lessor's consent which he did not do and (2) that the plaintiff being a respectable and responsible person of means, the measure of damages could only be a problematic conjecture. indeed, it may have been precisely for this very consideration that the defendant had unconditionally agreed to obtain the consent of the lessor and to assign his interest in the lease. that the plaintiff was a respectable and responsible person cannot, on the evidence before the court, be denied or disputed and, indeed, learned counsel for the appellant did not so contend. we find ourselves in agreement with the high court that in the circumstances and on the evidence on record the lessor had unreasonably withheld his consent so as to enable the defendant to assign the lease without such consent. in the circumstances, we are satisfied that both the trial court and the appeal court exercised their discretion properly and no ground has been made out for interfering with the judgment of the high court. the appeal is accordingly dismissed. the appellant to pay the costs of this appeal.' (p. 5)37. we fail to see how this decision helps mr. chatterjce.38. with regard to question of limitation the entire approach of mr. chatterjee is erroneous as rightly pointed out by mr. mitra that his client has not come forward with a prayer for setting aside the sale confirmed by the company court, but his client has accepted the sale and has only come forward after the lease has expired for restoration of possession inasmuch as only the residue of the term of the lease which was still unexpired was conveyed in auction sale in favour of the assignees. the decisions cited by mr. chatterjee in raoji bapuchand pendharkar v. k. l. bavachekar : air1950bom399 , to bring home his point that the court is bound to look into the question of limitation as limitation is one of the defence available to the assignees, has no application in' the facts and circumstances of the case.39. mr. chatterjee, also, cited the decision of the kerala state electricity board, trivandrum v. t.p. kunhaliumma : [1977]1scr996 , in support of his contention that article 137 of the limitation act, 1963 applies to an application under section 446(2) of the companies act and since the application has not been filed within a period of 3 (three) years from the date of confirmation of the sale, the application is barred by limitation. the contention is fallacious inasmuch as, as has already been discussed hereinabove, in the application under section 446(2), the owners have not come forward with the prayer for setting aside of the sale, but the present application proceeds on the basis that there has been a sale of the residue period of the term of the lease and since the period has expired, the official liquidator, representing the company, is required to restore back possession to the owners.40. in view of the provisions of section 108(j) of the transfer of property act, as quoted hereinabove, the lessee by transferring the whole of his interest does not absolve himself from his contractual liability to the lessor and the notice to the lessee of the transfer does not affect the liability. the original lessee is liable on his covenant, that is, by the privity of contract and assigned his liability by privity of estate. there is no inconsistency between the liability of the two.41. with regard to the question of suppression of material facts, mr. chatterjee cited the decision of the apex court in s.p. chengalvaraya naidu v. jagannath : air1994sc853 , and contended that the courts of law are meant for imparting justice between the parties. one who comes to court, must come with clean hands. it can be said without hesitation that a person whose case is based on falsehood, he has no right to approach the court. he can be summarily thrown out at any stage of the litigation. we fail to see how this decision is relevant for the purpose.42. in paragraph 12 of the application under section 446(2) the owners have narrated their proceedings before the appeal court and the directions of the appeal court. they have given explanation as to why they have not proceeded any further at that stage. we, therefore, hold that there is no material suppression of the relevant facts in the application.43. mr. anindya kumar mitra cited the decision reported in r.i. sethna v. official liquidator high court : [1983]3scr657 and particularly referred to paragraph 11 of the said decision :'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 official liquidator to' surrender possession to landlords and save recurring liability to pay rent.'44. mr. mitra, further, cited the decision of the apex court in the case of sudarsan chit (i) ltd. v. g. sukumaran pillai : [1985]1scr511 , and particularly referred to the following three paragraphs :--'7. before we advert to the question of construction of section 446(2)(b), it would be advantageous to notice the historical evolution of the provisions as well as its present setting section 171 of the indian companies act, 1913 the predecessor of section 446(2) did not contain any provision similar or identical to that of section 446(1). section 171 only provided for stay of suits and proceedings pending at the commencement of winding up proceeding, and embargo against the commencement of any suit or other legal proceedings against the company except by the leave of the court. this provision with little modification is re-enacted in section 446(1). there was no specific provision conferring jurisdiction on the court winding up the company analogous to the one conferred by section 446(2). sub-section (2) was introduced to enlarge the jurisdiction of the court winding up the company so as to facilitate the disposal of winding up proceedings. the provision so enacted probably did not meet with the requirement with the result that the committee appointed for examining comprehensive amendment to the companies act in its reported recommended that 'a suit by or against a company in winding up should notwithstanding any provision in law for the time being be instituted in the court in which the winding up proceedings are pending (see para 207) of the company law committee report)' to give effect to these recommendations, sub-section (2) was suitably amended to bring it to its present form by companies (amendment) act, 1960. the committee noticed that on a winding up order being made and the official liquidator being appointed a liquidator of the company, he has to take into his custody company property as required by section 456. section 457 confers power on him to institute or defend any suit, prosecution, or other legal proceeding, civil or criminal, in the name and on behalf of the company. power is conferred upon him to sell the properties both movable and immovable of the company and to realise the assets of the company and this was to be done for the purpose of distributing the assets of the company amongst the claimants. now at a stage when a winding up order is made the company may as well have subsisting claims and to realise these claims the liquidator will have to file suits. to void this eventuality and to keep all incidental proceedings in winding up before the court which is winding up the company, its jurisdiction was enlarged to entertain petition amongst others for recovering the claims of the company. in the absence of a provision like section 446(2) under the repealed indian companies act, 1913, the official liquidator in order to realise and recover the claims and subsisting debts owed to the company had the unenviable fate of filing suits. these suits as is not unknown, dragged on through the trial court and courts of appeal resulting not only in multiplicity of proceedings but would hold up the progress of the winding up proceedings. to save the company which is ordered to be wound up from this prolix and expensive litigation and to accelerate the disposal of winding up proceedings, the parliament devised a cheap and summary remedy by conferring jurisdiction on the court winding up the company to entertain petitions in respect of claims for and against the company. this was the object behind enacting section 446(2) and, therefore, it must receive such construction at the hands of the court as would advance the object and at any rate not thward it.8. the fasciculus of sections included in part vii of the companies act bears the heading 'winding up'. section 443 sets out the circumstances in which a company may be wound up by the court. section 444 provides that where the court makes an order for the winding up of company, the court shall forthwith cause intimation thereof to be sent to the official liquidator and the registrar. section 446(2) 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 date 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 are set out in the various sub-clauses notwithstanding anything contained in any other law for the time being in force. section 446(2) thus conferred special jurisdiction on the court winding up the company which otherwise it may not have enjoyed. the court in the companies act is defined in section 2(11) to mean with respect to any matter relating to a company (other than any offence against this act), the court having jurisdiction under the act with respect to that matter relating to that company, as provided in section 10. section 10 provides that the court having jurisdiction under the act shall be the high court having jurisdiction in relation to the place at which the registered office of the company concerned is situate, except to the extent to which jurisdiction has been conferred on any district court or district courts subordinate to that high court in pursuance of sub-section (2). the winding up petition has thus to be presented in the high court before the judge who is assigned the work under the companies act. therefore, the court which is winding up the company will be the court to whom the petition for winding up was presented and which passed the order for winding up the company. in this case, the order was made by the learned company judge in the kerala high court directing winding up of the company. an appeal lies against the order for winding up the company under section 483 to the same court to which and in the same manner in which and subject to the same conditions under which, appeals lie from any order or decision of the court in cases within its ordinary jurisdiction. in exercise of this appellate jurisdiction, the appellate bench entertained the appeals and directed that the winding up order shall be held in abeyance till the scheme is implemented and if any default is committed the winding up order made by the learned company judge would be revived.9. ***10. sub-section (2) of section 446 confers jurisdiction on the court which is winding up the company to entertain and dispose of proceedings set out in clauses (a) to (d). the expression 'court which is winding up the company' will comprehend the court before which a winding up petition is pending or which has made an order for winding up of the company and further winding up proceedings are continued under its directions. undoubtedly, looking to the language of section 446(1) and (2) and its setting in part vii which deals with winding up proceedings would clearly show that the jurisdiction of the court to entertain and dispose of proceedings set out in sub-clauses (a) to (d) of sub-section (2) can be invoked in the court which is winding up the company.' (p. 1581)45. the apex court in the said decision explained the provisions of section 446(2) of the companies act and held that undoubtedly looking into the language of sections 446(1) and (2) and its setting in part vii which deals with winding up proceedings, would clearly show that the jurisdiction of the company court to entertain and dispose of proceedings set out in sub-clauses (a) to (d) of sub-section (2) could be invoked in the court which is winding up the company.46. lastly, mr. mitra cited a bench decision of this court in the case of vidyadhar upadhyay v. sree sree madan gopal jew [1990] 67 com. cas. 394, where the division bench considered the said provisions and held that whether the official liquidator was in actual possession of the premises or not was immaterial. in view of section 446, he would be deemed to have been in possession, as the premises was, admittedly, an asset of the company and, that the proceedings under section 446 of the said act were 'due process of law'.47. the assignees respondent nos. 2 to 6 with their eyes open purchased in auction sale the residue of the term of lease which admittedly expired on 31-10-1984 and in view of the admitted position that no renewal has been granted by the owners as no mutual terms could be settled between the parties, they cannot resist the claim of the owners for directions upon the official liquidator to restore back possession to the owners and they are not entitled to urge that they are evicted without due process of law inasmuch as sufficient opportunities have been given to them to defend their case.48. with regard to the applicability of the west bengal, non-agricultural tenancy act, 1949, the assignees have approached the landlords for renewal of the lease and thereby accepted their title and it is not open for them to question the title of the landlord at this stage,. moreover, the assignees were given possession not only of the land, but the structures standing thereon.49. we have quoted extensively relevant provisions of the deed of lease which provide that at the expiration or sooner determination of the lease, the lessee was to surrender the demised premises together with all erections or buildings and/or all such fixtures there or may be thereon provided the lessors be agreeable to pay proper valuation for the same, but the lessees should remove all their machineries and plants fitted there. there was further provisions that in the event the lessor be not agreeable to takeover all such erections/buildings and all such fixtures or the lessors be not agreeable to pay proper price for the same, it would be lawful for the lessees to remove the same within the period of the lease, but not later after the expiration and determination of the said premises.50. in view of the aforesaid provisions contained in the deed of lease, the west bengal non-agricultural tenancy act, 1949 has no manner of application in the facts and circumstances of the case.51. the learned single judge, with respect, went wrong in holding that no order could be passed on official liquidator as admittedly he was not in possession of the said premises. the order impugned is, therefore, set aside.52. in the facts and circumstances, it will be in the interest of justice to direct the official liquidator, high court, calcutta to hand over possession of the demised premises to the owners and the auction-purchasers, who are in possession of the land for more than 15 years without making any payment whatsoever and who have not initiated any proceeding to assert their alleged right of renew of the lease during all these days, cannot be permitted to deprive the rightful owners of the premises. it will be unjust to relegate the owners to a regular suit, which is bound to continue for years.53. the official liquidator, high court, calcutta is, therefore, directed to hand over the possession of the demised premises within three months from today. however, it will be open to the owners to initiate appropriate proceedings for correction of the municipal records in presence of the municipal authorities.54. the appeal is allowed to the extent indicated hereinabove.55. there is no order as to costs.
Judgment:
ORDER

S.K. Mukherjee, J.

1. This appeal is directed against the order dated 5-5-1998 passed by a learned single Judge of this Court inter alia, rejecting an application for an order directing restoration of possession of the disputed premises to the appellants herein.

2. The facts leading to the case may be summarised as under :

On or about 31-10-1959 a deed of lease was executed by the Daws in favour of one Haradhan Dutta, who was carrying on business under the name and style of A. Coomer & Company. The demised premises was about 16 cottahs, 10 chittacks and 35 square feet of land being a portion of premises No. 242, Jessore Road of South Dum Dum Municipality and presently recorded as premises Nos. 84, 85 and 86, Sarat Chatterjee Road. The lease was for a period of 25 years with effect from Nov., 1959 and ending with Oct., 1984. The important Clauses of the said lease are as under:--

'(a)... Lessee's covenant :

4. They will use the demised premises for running factory and/or their office purpose only and not for any other purpose and for this purpose they will be at liberty to erect or build necessary structures on the demised premises according to building rules, factory rules and all other law of land.

7. They will at the expiration or sooner determination of the said lease peaceably and quitely surrender the demised premises in the same condition is now, together with all such erections or building and or all such fixtures there or as may be thereon, provided the Lessors be agreeable to pay proper valuation of the same at then market price but the lessee shall remove all their machineries and plants to be fitted there.

8. If the Lessors be not agreeable to take over all such erections building and all such fixtures or in case the Lessors be not agreeable to pay proper price for the same it shall be lawful for the Lessees to remove the same within the period of the lease but not later after the expiration and determination of the said terms.

10. The Lessee shall not assign or otherwise mortgage the said leasehold interest or any construction, if any erected thereon or any part thereof without permission in writing of the Lessors. Except in the case of a Private Limited Company in which the Lessee shall remain a share holder and/or a Director such consent shall not unreasonably be withheld and even in all such cases the liability of the Lessees will remain to the Lessors in respect of all the covenants herein contained.

11. In case of the insolvency of the lessee herein and/or any attachment of the structures or leasehold by any decree of Court the lease herein shall be deemed to be determined.

(b) Lessors' covenant:

2. The Lessors will at the request and cost of the Lessee at the end of the terms of lease hereby granted execute a renewal of the lease for another terms of 25 years on the terms and conditions and rent to be mutually settled by the parties at the then prevailing market rate and the salami or premium, fixed therefor. The said new terms covenants and conditions are to be mutually settled before the expiry of the lease for 25 years.'

3. That the leasehold interest with the building and structures standing thereon were assigned by the said Haradhan Dutta to A. Coomer & Company (P.) Ltd. sometime in 1960 in which the said Haradhan Dutta was a shareholder and director.

4. The Daws received a letter from the Official Liquidator, High Court, Calcutta dated 15-7-1980 intimating that the said A. Coomer & Co. (P.) Ltd. went into liquidation with effect from 20-6-1977 and by an order passed by the Hon'ble Justice Salil Kumar Roy Choudhary dated 4-7-1980, the leasehold interest in the said land will be sold in Court on 25-7-1980.

5. On receipt of the aforesaid letter the Daws moved the appeal Court on 24-7-1980 for a direction to stop the sale fixed on 25-7- 1980, but the appeal Court did not pass any order and observed that Daws might take appropriate proceedings in the trial Court if so advised.

6. On 25-7-1980 the leasehold interest of the company was sold in auction in favour of the respondent Nos. 2 to 6.

7. It appears from the list of the assets of the said A. Coomer & Company (P.) Ltd. that the residue period of the leasehold period of the company expiring on October, 1984 was sought to be sold in auction. However, it was indicated that the said lease could be renewed for another terms of 25 years on the terms and conditions to be mutually settled with the owners of the land at the then prevailing market rate and the salami or premium fixed therefor. That the said new terms and conditions were to be mutually settled six months before the expiry of the above lease.

8. From the sale notice it appears that the sale would be 'as is where is and whatever there is' basis.

9. It was contended on behalf of the appellants that they were advised to wait till the expiry of the lease period and they were advised not to challenge the sale at the relevant point of time as the same might not yield any result and the owners did not agree amongst themselves to incur further costs in litigation at that stage.

10. The Official Liquidator, High Court, Calcutta, by his letter dated 28-7-1980 informed Shrimati Sutara Daw, one of the owners, that the leasehold interest of A. Coomer & Co. (P.) Ltd. has been sold at the auction sale on 25-7-1980 in the Company Court and that the said auction would be confirmed on 1 -8-1980. The sale was confirmed by the Hon'ble Justice Salil Kumar Roy Choudha on 1-8-1980.

11. K.K. Daw, one of the owners, by his letter dated 24-11-1980 requested the auction-purchasers to contact him at any early date on prior engagement.

12. On 3-4-1981, the learned Advocate for the auction-purchasers, Shri Ramesh Chandra Ganguly, informed the owners that his clients intended to take the renewal of the lease and called upon the owners to send the draft of the lease document for renewal as provided in the deed of lease dated 31-10-1959. The said learned Advocate, also, informed that his clients would contact the owners and settle all the terms and conditions for execution and registration of the deed of lease,

13. However, on 23-2-1983 the Official Liquidator, High Court, Calcutta, describing himself as the assignor, assigned the residue period of the lease dated 31-10-1959 in favour of the respondent Nos. 2 to 6 and demised the land and structures standing thereon. It was categorically stated in the said document that the assignees to hold for the residue of the terms of lease which is still unexpired.

14. By a letter dated 16-3-1983 assignees requested the owners to accept them as the lessees.

15. Again the learned Advocate for the assignees/auction-purchasers on 26-10-1984 called upon the owners that his clients intended to take the renewal of the lease for another term of 25 years in respect of the said property on the terms and conditions to be mutually agreed between the parties and that his clients would contact the owners to settle all the terms and conditions for execution and registration of the deed of lease.

16. On 31-10-1984 the tenure of the lease dated 31-10-1959 expired and admittedly no terms and conditions for renewal could be mutually settled between the parties.

17. In the aforesaid background the Daws as owners, on or about 29-11-1984, moved the present application under Section 446(2) of the Companies Act, 1956 ('the Act') being Company Application No. 284 of 1984 in Company Petition No. 279 of 1976. The owners in the application, inter alia, prayed for the following reliefs:--

'(a) That all the Official Liquidator and the respondent Nos. 2 to 6 may be directed to hand over possession of the premises Nos. 46, 47, 48 and 77 Sarat Chatterjee Road, Dum Dum mentioned in paragraph 2 of the affidavit to the petitioners within a week from date of the order or within such time as to this Hon'ble Court may deem fit and proper.

(b) That the respondent No. 7 be directed to correct the Municipal records and to record and names of the petitioners as owners thereof.

(c) Such further order or orders as this Hon'ble Court may deem fit and proper.'

18. That the application was opposed by both the auction-purchasers and the Official Liquidator, High Court, Calcutta.

19. It is alleged by the auction-purchasers that the said application has been filed upon suppression of material facts and on misleading allegations; the sale of the assets of the company in liquidation included the leasehold right of the disputed premises with the right of renewal of the said lease for another terms of 25 years and the said asset of the company was sold along with other assets of the company and the assignees gave highest offer and were declared purchasers subject to confirmation by the Court.

20. A sum of Rs. 67,500 was paid in full and final satisfaction of the offer and on 1-8-1980 learned Company Judge confirmed the same.

21. Although the owners gave an assurance that there would be renewal of the lease and that the draft terms and conditions would be handed over to the assignees, but such assurance was not acted upon.

22. The application filed by the owners is barred by limitation inasmuch as the application filed long after three years from the date of confirmation of the sale.

23-24. The Official Liquidator in the affidavit-in-opposition alleged further that since lease was only in respect of the land on which the company built the structures with right to transfer the land, they are entitled to protection under the relevant provisions of the West Bengal Non-Agricultural Tenancy Act, 1949.

25. That by order dated 5-5-1998 a single Judge of this Hon'ble Court rejected the said application and directed the Official Liquidator to make payment of the sum of Rs. 5712 to the owners in respect of the suit premises upto the deed of assignment executed by him in favour of the assignees. The learned Judge held that no order could be passed upon the Official Liquidator directing restoration of possession of the premises as the Official Liquidator was not in possession of the suit premises.

26. Against the said order dated 5-5-1998 this appeal has been preferred.

27. We have heard Mr. Anindya Kumar Mitra, Senior Advocate, in support of the appeal, Mr. P.N. Chatterjee, Senior Advocate, appearing on behalf of the respondent Nos. 2 to 6 and Mr. A.C. Kar, Advocate, on behalf of the respondent No. 1.

28. Mr. P.N. Chattejree urged three points, that is, (a) the application under Section 446(2) was not maintainable in the garb of the setting aside the sale; (b) since the application under Section 446(2) has been filed long after three years from the date of the order of confirming the sale, the same is barred by limitation; (c) the application was liable to be dismissed for the simple reason that the owners have come forward with unclean hands as they have suppressed material facts in their application.

29. Mr. A.C. Kar while adopting the argument of Mr. P.N. Chatterjee highlighted that West Bengal Non-Agricultural Tenancy Act, 1949 applies and the owners are not entitled to any order in this application under Section 446(2).

30. Mr. Anindya Kumar Mitra in repelling the said contentions submitted that his clients have not asked for setting aside the sale inasmuch as his clients have accepted the sale of the residue period of the lease, but is praying for a direction to the Official Liquidator and the assignees to hand over possession as the lease has expired and that the application has been filed immediately after the expiry of the lease.

31. Therefore, the points for determination in the aforesaid appeal are :

1. Whether the relief prayed for in the application under Section 446(2) could be granted or not ?

2. Is the application barred by limitation ?

3. Whether the relief claimed by the owners are barred by the provisions of West Bengal Non-Agricultural Tenancy Act, 1949?

32. In order to appreciate the rival contentions certain provisions of the Transfer of Property Act and the Companies Act are required to be looked into:--

Section 1080) runs as under:--

'(i) The lessee may transfer absolutely or by way of mortgage or sublease the whole or any part of his interest in the property, and any transferee of such interest or part may again transfer it. The lessee shall not, by reason only of such transfer, cease to be subject to any of the liabilities attaching to the lease;'

33. The provisions of Section 446(2)(b) and (d) of the Companies Act run as under :

'(b) any claim made by or against the company (including claims by or against any of its branches in India);

(c) ***

(d) any question of priorities or any other question whatsoever, whether of law or of fact, which may relate to or arise in course of the winding up of the company.'

34. Therefore, the question is whether, in view of the aforesaid provisions of the said two Acts, directions could be passed against the Official Liquidator, High Court, Calcutta to restore the possession to the owners.

35. Admittedly, there was a lease dated 31-10-1959 with effect from 1-11-1959 and ending with 31-10-1984. The original lessee assigned his interest in the disputed premises in favour of A. Coomer & Co. (P.) Ltd. and the company went in liquidation and in processes thereof the residue period of the lease was sold in auction in favour of the assignees. Although there was a clause for renewal for another term of 25 years of the lease deed, but no mutual agreement could be arrived at between the owners and the assignees and as such no deed renewing the lease was executed at all.

36. Mr. Chatterjee to bring home his points cited the case of Kamala Ranjan Roy v. Baijnath Bajoria : [1950]1SCR840 , and particularly referred to paragraph 14 of the Supreme Court decision :

'14. Finally it is said that by directing the specific performance of the agreement the Court has exposed the defendant to the risk of an action for damages for breach of covenant. If the assignment of the lease by the defendant to the plaintiff without the lessor's consent amounted to a breach of covenant, the lessor could forfeit the lease and sue for possession. Such a course would affect only the plaintiff but not the defendant, for he had already parted with the lease for valuable consideration. It is said that the lessor could sue the defendant for damages for breach of that covenant and the Court should not, by decreeing specific performance, have put the defendant in that perilous position. There appear to us to be two answers to this argument, namely, (1) that the defendant should have, by proper language, made his obligation to transfer dependent or conditional upon his being able to obtain the lessor's consent which he did not do and (2) that the plaintiff being a respectable and responsible person of means, the measure of damages could only be a problematic conjecture. Indeed, it may have been precisely for this very consideration that the defendant had unconditionally agreed to obtain the consent of the lessor and to assign his interest in the lease. That the plaintiff was a respectable and responsible person cannot, on the evidence before the Court, be denied or disputed and, indeed, learned counsel for the appellant did not so contend. We find ourselves in agreement with the High Court that in the circumstances and on the evidence on record the lessor had unreasonably withheld his consent so as to enable the defendant to assign the lease without such consent. In the circumstances, we are satisfied that both the trial Court and the appeal Court exercised their discretion properly and no ground has been made out for interfering with the judgment of the High Court. The appeal is accordingly dismissed. The appellant to pay the costs of this appeal.' (p. 5)

37. We fail to see how this decision helps Mr. Chatterjce.

38. With regard to question of limitation the entire approach of Mr. Chatterjee is erroneous as rightly pointed out by Mr. Mitra that his client has not come forward with a prayer for setting aside the sale confirmed by the Company Court, but his client has accepted the sale and has only come forward after the lease has expired for restoration of possession inasmuch as only the residue of the term of the lease which was still unexpired was conveyed in auction sale in favour of the assignees. The decisions cited by Mr. Chatterjee in Raoji Bapuchand Pendharkar v. K. L. Bavachekar : AIR1950Bom399 , to bring home his point that the court is bound to look into the question of limitation as limitation is one of the defence available to the assignees, has no application in' the facts and circumstances of the case.

39. Mr. Chatterjee, also, cited the decision of the Kerala State Electricity Board, Trivandrum v. T.P. Kunhaliumma : [1977]1SCR996 , in support of his contention that article 137 of the Limitation Act, 1963 applies to an application under Section 446(2) of the Companies Act and since the application has not been filed within a period of 3 (three) years from the date of confirmation of the sale, the application is barred by limitation. The contention is fallacious inasmuch as, as has already been discussed hereinabove, in the application under Section 446(2), the owners have not come forward with the prayer for setting aside of the sale, but the present application proceeds on the basis that there has been a sale of the residue period of the term of the lease and since the period has expired, the Official Liquidator, representing the company, is required to restore back possession to the owners.

40. In view of the provisions of Section 108(j) of the Transfer of Property Act, as quoted hereinabove, the lessee by transferring the whole of his interest does not absolve himself from his contractual liability to the lessor and the notice to the lessee of the transfer does not affect the liability. The original lessee is liable on his covenant, that is, by the privity of contract and assigned his liability by privity of estate. There is no inconsistency between the liability of the two.

41. With regard to the question of suppression of material facts, Mr. Chatterjee cited the decision of the Apex Court in S.P. Chengalvaraya Naidu v. Jagannath : AIR1994SC853 , and contended that the Courts of law are meant for imparting justice between the parties. One who comes to Court, must come with clean hands. It can be said without hesitation that a person whose case is based on falsehood, he has no right to approach the Court. He can be summarily thrown out at any stage of the litigation. We fail to see how this decision is relevant for the purpose.

42. In paragraph 12 of the application under Section 446(2) the owners have narrated their proceedings before the appeal Court and the directions of the appeal Court. They have given explanation as to why they have not proceeded any further at that stage. We, therefore, hold that there is no material suppression of the relevant facts in the application.

43. Mr. Anindya Kumar Mitra cited the decision reported in R.I. Sethna v. Official Liquidator High Court : [1983]3SCR657 and particularly referred to paragraph 11 of the said decision :

'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 Official Liquidator to' surrender possession to landlords and save recurring liability to pay rent.'

44. Mr. Mitra, further, cited the decision of the Apex Court in the case of Sudarsan Chit (I) Ltd. v. G. Sukumaran Pillai : [1985]1SCR511 , and particularly referred to the following three paragraphs :--

'7. Before we advert to the question of construction of Section 446(2)(b), it would be advantageous to notice the historical evolution of the provisions as well as its present setting Section 171 of the Indian Companies Act, 1913 the predecessor of Section 446(2) did not contain any provision similar or identical to that of Section 446(1). Section 171 only provided for stay of suits and proceedings pending at the commencement of winding up proceeding, and embargo against the commencement of any suit or other legal proceedings against the company except by the leave of the Court. This provision with little modification is re-enacted in Section 446(1). There was no specific provision conferring jurisdiction on the Court winding up the company analogous to the one conferred by Section 446(2). Sub-section (2) was introduced to enlarge the jurisdiction of the Court winding up the company so as to facilitate the disposal of winding up proceedings. The provision so enacted probably did not meet with the requirement with the result that the Committee appointed for examining comprehensive amendment to the Companies Act in its reported recommended that 'a suit by or against a company in winding up should notwithstanding any provision in law for the time being be instituted in the Court in which the winding up proceedings are pending (See para 207) of the Company Law Committee Report)' to give effect to these recommendations, Sub-section (2) was suitably amended to bring it to its present form by Companies (Amendment) Act, 1960. The Committee noticed that on a winding up order being made and the Official Liquidator being appointed a Liquidator of the company, he has to take into his custody company property as required by Section 456. Section 457 confers power on him to institute or defend any suit, prosecution, or other legal proceeding, civil or criminal, in the name and on behalf of the company. Power is conferred upon him to sell the properties both movable and immovable of the company and to realise the assets of the company and this was to be done for the purpose of distributing the assets of the company amongst the claimants. Now at a stage when a winding up order is made the company may as well have subsisting claims and to realise these claims the Liquidator will have to file suits. To void this eventuality and to keep all incidental proceedings in winding up before the Court which is winding up the company, its jurisdiction was enlarged to entertain petition amongst others for recovering the claims of the company. In the absence of a provision like Section 446(2) under the repealed Indian Companies Act, 1913, the Official Liquidator in order to realise and recover the claims and subsisting debts owed to the company had the unenviable fate of filing suits. These suits as is not unknown, dragged on through the trial Court and Courts of appeal resulting not only in multiplicity of proceedings but would hold up the progress of the winding up proceedings. To save the company which is ordered to be wound up from this prolix and expensive litigation and to accelerate the disposal of winding up proceedings, the Parliament devised a cheap and summary remedy by conferring jurisdiction on the Court winding up the company to entertain petitions in respect of claims for and against the company. This was the object behind enacting Section 446(2) and, therefore, it must receive such construction at the hands of the Court as would advance the object and at any rate not thward it.

8. The fasciculus of sections included in Part VII of the Companies Act bears the heading 'Winding Up'. Section 443 sets out the circumstances in which a company may be wound up by the Court. Section 444 provides that where the Court makes an order for the winding up of company, the Court shall forthwith cause intimation thereof to be sent to the Official Liquidator and the Registrar. Section 446(2) 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 date 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 are set out in the various sub-clauses notwithstanding anything contained in any other law for the time being in force. Section 446(2) thus conferred special jurisdiction on the Court winding up the company which otherwise it may not have enjoyed. The Court in the Companies Act is defined in Section 2(11) to mean with respect to any matter relating to a company (other than any offence against this Act), the Court having jurisdiction under the Act with respect to that matter relating to that company, as provided in Section 10. Section 10 provides that the Court having jurisdiction under the Act shall be the High Court having jurisdiction in relation to the place at which the registered office of the company concerned is situate, except to the extent to which jurisdiction has been conferred on any District Court or District Courts subordinate to that High Court in pursuance of Sub-section (2). The winding up petition has thus to be presented in the High Court before the Judge who is assigned the work under the Companies Act. Therefore, the Court which is winding up the Company will be the Court to whom the petition for winding up was presented and which passed the order for winding up the Company. In this case, the order was made by the learned Company Judge in the Kerala High Court directing winding up of the company. An appeal lies against the order for winding up the Company under Section 483 to the same Court to which and in the same manner in which and subject to the same conditions under which, appeals lie from any order or decision of the Court in cases within its ordinary jurisdiction. In exercise of this Appellate Jurisdiction, the Appellate Bench entertained the appeals and directed that the winding up order shall be held in abeyance till the scheme is implemented and if any default is committed the winding up order made by the learned Company Judge would be revived.

9. ***

10. Sub-section (2) of Section 446 confers jurisdiction on the Court which is winding up the company to entertain and dispose of proceedings set out in Clauses (a) to (d). The expression 'Court which is winding up the company' will comprehend the Court before which a winding up petition is pending or which has made an order for winding up of the company and further winding up proceedings are continued under its directions. Undoubtedly, looking to the language of Section 446(1) and (2) and its setting in Part VII which deals with winding up proceedings would clearly show that the jurisdiction of the Court to entertain and dispose of proceedings set out in Sub-clauses (a) to (d) of Sub-section (2) can be invoked in the Court which is winding up the company.' (p. 1581)

45. The Apex Court in the said decision explained the provisions of Section 446(2) of the Companies Act and held that undoubtedly looking into the language of Sections 446(1) and (2) and its setting in Part VII which deals with winding up proceedings, would clearly show that the jurisdiction of the Company Court to entertain and dispose of proceedings set out in Sub-clauses (a) to (d) of Sub-section (2) could be invoked in the Court which is winding up the company.

46. Lastly, Mr. Mitra cited a Bench decision of this Court in the case of Vidyadhar Upadhyay v. Sree Sree Madan Gopal Jew [1990] 67 Com. Cas. 394, where the Division Bench considered the said provisions and held that whether the Official Liquidator was in actual possession of the premises or not was immaterial. In view of Section 446, he would be deemed to have been in possession, as the premises was, admittedly, an asset of the company and, that the proceedings under Section 446 of the said Act were 'due process of law'.

47. The assignees respondent Nos. 2 to 6 with their eyes open purchased in auction sale the residue of the term of lease which admittedly expired on 31-10-1984 and in view of the admitted position that no renewal has been granted by the owners as no mutual terms could be settled between the parties, they cannot resist the claim of the owners for directions upon the Official Liquidator to restore back possession to the owners and they are not entitled to urge that they are evicted without due process of law inasmuch as sufficient opportunities have been given to them to defend their case.

48. With regard to the applicability of the West Bengal, Non-Agricultural Tenancy Act, 1949, the assignees have approached the landlords for renewal of the lease and thereby accepted their title and it is not open for them to question the title of the landlord at this stage,. Moreover, the assignees were given possession not only of the land, but the structures standing thereon.

49. We have quoted extensively relevant provisions of the deed of lease which provide that at the expiration or sooner determination of the lease, the lessee was to surrender the demised premises together with all erections or buildings and/or all such fixtures there or may be thereon provided the lessors be agreeable to pay proper valuation for the same, but the lessees should remove all their machineries and plants fitted there. There was further provisions that in the event the lessor be not agreeable to takeover all such erections/buildings and all such fixtures or the lessors be not agreeable to pay proper price for the same, it would be lawful for the lessees to remove the same within the period of the lease, but not later after the expiration and determination of the said premises.

50. In view of the aforesaid provisions contained in the deed of lease, the West Bengal Non-Agricultural Tenancy Act, 1949 has no manner of application in the facts and circumstances of the case.

51. The learned single Judge, with respect, went wrong in holding that no order could be passed on Official Liquidator as admittedly he was not in possession of the said premises. The order impugned is, therefore, set aside.

52. In the facts and circumstances, it will be in the interest of justice to direct the Official Liquidator, High Court, Calcutta to hand over possession of the demised premises to the owners and the auction-purchasers, who are in possession of the land for more than 15 years without making any payment whatsoever and who have not initiated any proceeding to assert their alleged right of renew of the lease during all these days, cannot be permitted to deprive the rightful owners of the premises. It will be unjust to relegate the owners to a regular suit, which is bound to continue for years.

53. The Official liquidator, High Court, Calcutta is, therefore, directed to hand over the possession of the demised premises within three months from today. However, it will be open to the owners to initiate appropriate proceedings for correction of the Municipal records in presence of the Municipal authorities.

54. The appeal is allowed to the extent indicated hereinabove.

55. There is no order as to costs.