Vidyadhar Upadhyay / v. Sree Sree Madan Gopal Jew & Ors. /Opposite Party.

JUDGMENT

Bimal Chandra Basak, J.:— This appeal is directed against a judgment and order passed by the learned Company Judge in an application under Section 446, 535 and 578 of the Companies Act, 1956, (hereinafter referred to as the said Act). The facts of this case are as follows :

The subject matter of this suit is a room in the demarcated northern portions of premises No. 143/1/1, Cotton Street, Calcutta (hereinafter referred to as the said premises). On or about 13th March, 1983 the said premises was purchased in the name of the plaintiff's relative. On 3rd May, 1944 Ajit Kishore Maitra, the defendant No. 1 in suit No. 961 of 1959, the then Shebait of the plaintiff, executed a deed of lease of the said premises in favour of one Bhagwandas Kalla and others for a period of 90 years. On 26th June, 1947 Kallas transferred the said leasehold interest to Messrs. Kalla Properties and Industrial Corporation Ltd., the defendant No. 6 in the said Suit No. 961 of 1959. On or about 24th August, 1950 the said Messrs. Kalla Properties and Industrial Corporation Limited purported to mortgage the said leasehold interest of the said premises to Jagannath Roy and Baluram Ray the defendants Nos. 7 and 8 in the said Suit No. 961 of 1959. By an indenture, dated the 11th May, 1953 the said Kalla Properties and Industrial Corporation Limited purported to grant a sub-lease of the said premises to one Dhonraj Purohit who was defendant No. 3 in the said Suit No. 961 of 1959. Sometime in 1954 the said Dhonraj Purohit purported to assign the said sub-lease of the said premises in favour of one Asharam Swami, the defendant No. 10 in the said Suit No. 961 of 1959. Thereafter the said Asharam Swami purported to grant a sub-lease to Bholalal, the defendant No. 11 in the said Suit No. 961 of 1959. The said Bholalal and his son purported to assign the sub-lease in favour of Messrs. Latiyal Agricultural and Industrial Private Limited, the defendant No. 12 in the said Suit No. 961 of 1959. Messrs. Latiyal Agricultural and Industrial Private Limited is the company which has gone into liquidation and in respect of which this application has been made. In July, 1959 the Deity filed the suit being Suit No. 961 of 1959 in this Court praying for following reliefs.

“For leave under Clause 12 of the Letters Patent; Leave under Order 2, Rule 4 of the Civil Procedure Code; Declaration that the lease, dated the 3rd May, 1944 in respect of the premises No. 143/1/1, Cotton Street, Calcutta by the defendant No. 1 is invalid, inoperative and not binding in law and no title passed to the lessee; Decree directing restoratoin of possession of premises No. 143/1/1, Cotton Street, Calcutta to the plaintiff Deities; declaration that the Agreement dated the 11th May 1953 granting sub-lease by the defendant No. 6 to the defendant No. 9 is invalid, inoperative and not binding in law and no title or interest passed to the said defendant No. 9; for a declaration that the sub-lease granted by the defendant No. 9 in favour of the defendant No. 10 and by the defendant No. 10 in favour of the defendant No. 12 are all invalid inoperative and not binding in law; cancellation of the said lease, dated 3rd May, 1944, Conveyance, dated 25th June, 1947 mortgage, dated 24th August, 1950, Agreement, dated the 8th June, 1964, Agreement, dated 11th May, 1963, Agreement, dated the 8th June, 1954 and Agreement, dated 8th August, 1957; an enquiry into mesne profits in respect of the said properties and decree for the amount found payable on such enquiry; Removal of the defendant No. 1 from she-baitship and the framing of a Scheme for the proper maintenance of the deb-sheba of the plaintiff deity; injunction, Receiver, enquiries; and accounts, interests, costs and for further or other reliefs.”

2. At that time the said company has been collecting rents, issues and profits of the said premises. Thereafter, an advocate of this court was appointed Receiver in respect of the said premises by an order, dated 14th September, 1959. On 21st April, 1966 an winding up order was made in respect of the said company. On 6th July, 1971 there was a decree passed by consent of the parties in the said Suit No. 961 of 1959. The company (in liquidation) represented by the Official Liquidator was defendant No. 2 therein. The Official Liquidator was given leave to compromise the suit upon the terms of settlement set out in the schedule. The said terms of settlement provided inter alia, as follows :

“It is declared that the lease, dated the 3rd May, 1944 granted by the defendant No. 1 in favour of Bhagwandas Kalla since deceased and the defendants Nos. 4 and 5 in respect of premises No. 143/1/1, Cotton Street, (demarcated northern portion) stood cancelled with effect from June 1965.”

“It is declared that the defendants Nos. 3, 3A, 3B, 4, 5, 6, 9, 10, 11, 12 and 13 have no right title or interest in the said premises”.

“Sri Kamalesh Banerjee, Receiver appointed herein shall forthwith make over possession of the said premises to the plaintiff No. 2 upon making over possession and upon payment of the amounts mentioned in Clauses 4 and 5 hereunder the Receiver shall stand discharged the Receiver shall file his final accounts within six months”.

3. The plaintiff started execution proceedings for eviction under the decree in Suit No. 961 of 1959. In respect of another proceedings there was an appeal being No. 26 of 1976 where setting aside the Lower Court's order in execution, the Appeal Court held that the decree was not a decree for delivery of possession which could be executed. Following the same in the appeal preferred by the appellant herein in such execution case, the appeal was allowed and Order passed in execution was set aside and execution application was dismissed. However, it was made clear that the judgment would not prejudice the plaintiff from instituting or taking any other action against the appellants for the purpose of recovery of possession of the disputed room in accordance with law.

4. This Judge's Summons was taken out on 5th July, 1983 claiming, inter alia, as follows :

(a) The alleged right title and interest with regard to the said premises situated at No. 143.I/1, Cotton Street, Calcutta, be determined and the said respondent No. 2 Vidyadhar Upadhyay be declared a trespasser of the said premises situated at No. 143/1/1, Cotton Street, Northern Portion, Fifth Floor, Calcutta;

(b) The occupation of the said Vidyadhar Upadhaya the respondent No. 2 abovenamed be declared illegal, null and void and direction be given directing the said respondent No. 2 Vidyadhar Upadhyay to vacate the said premises within a period of 4 weeks from the date of the Order to be passed herein and to deliver up vacant possession of the said room in the fifth floor at premises No. 143/1/1, Cotton Street, (Northern Portion) Calcutta to the Official Liquidator of Sree Latiyal Agricultural & Industrial Private Ltd. (In Liquidation) to enable the Official Liquidator to make over vacant possession of the said room to the applicants herein;

(c) Direction be given upon the Official Liquidator of Sree Latiyal Agricultural & Industrial Private Ltd. (In Liquidation) to make over possession of the said room fully described in the affidavit of Sm. Sabitra Moitra at present in the occupation of the said respondent No. 2 Vidyadhar Upadhyay;

(d) Injunction restraining the said Respondent No. 2 Vidyadhar Upadhyay from encumbering and/or subletting and/or inducting anybody in the possession of the said room during the pendency of this application;

(e) Ad interim order in terms of prayer (d) above;

(f) The said Vidyadhar Upadhyay the Respondent No. 2 herein be directed to pay the mesne profits for the period wrongful occupation of the said room at the rate of Rs. 75 per month;

5. By a judgment and Order, dated 20th December 1985 the learned Company Judge allowed such application. It appears from the said judgment that the case of the appellant herein being wholly disputed by the applicant, the matter was set down for trial on evidence. Issues were framed and directions for discovery and inspection of documents were given. However, the appellant took no step to have the matter tried on evidence. The onus of proof of the issues as framed was on the appellant but he failed to appear on the trial on more than one occasion as has been recorded in an order passed earlier on the said application on the 20th September 1985, where it was held that on all questions of fact the matter was concluded in favour of the applicants and the issues were, therefore, answered all in favour of the applicants and against the respondent No. 2. At that stage learned Advocate for the respondent No. 2 submitted that he will address the Court on the maintainability of this application on point of law. In spite of opportunities given, no submission was made on the question of maintainability of the said application. Learned Advocate failed to appear at the time of hearing.

6. On behalf of the applicant reliance was placed on the Division Bench judgment of this Court dated the 6th December, 1976 passed in Appeal No. 154 of 1976, Indramoni v. Shriram Jute Mills (P) Ltd.. The learned Judge held that the facts of this case were similar to the facts of Indramoni's case and in view of the said judgment held that the application was maintainable. The learned Judge held that the application has succeeded both on facts and in law. Accordingly, the said application was allowed and it was directed that there will be order in terms of prayers (a), (b), (c), (d) and (f) of the Judges' Summons as quoted above.

7. Being aggrieved by the same, this appeal has been preferred. The learned Advocate appearing in support of the appeal has made the following submissions : Firstly, he has submitted that the application is not maintainable. The room was not the property of the Company and the Official Liquidator never took charge of the same. In this context, he has referred to us a letter of the Official Liquidator, dated 13th April, 1983 and the affidavit-in-Opposition affirmed on behalf of the Official Liquidator being paras. 4 and 5 which are set out herein below:

“Govt, of India

Office of the Official Liquidator

High Court of Calcutta

9, Old Post Office Street (5th Floor),

Calcutta - 700001.

No. OL : 329/3/303.G Dated, 13th April, 1983.

Mr. B.N Chatterjee, LL.B

Solicitor & Advocate

7, Old Post Office Street,

Calcutta-700001.

In the matter of :

Sri Latiyal Agricultural & Industrial Pvt. Ltd. (In Liquidation).

Kindly refer to your letter, dated 7-4-83 on the above subject. The Official Liquidator Calcutta in terms of the Order, dated 18-12-79 passed in Suit No. 1772 of 1964 has duly handed over possession of the property being the Southern portion of the premises No. 143/1/1, Cotton Street, Calcutta to the plaintiff on 22-9-79. Please note that the property being Northern Portion of premises No. 143/1/1, Cotton Street was never taken possession by the Official Liquidator at any time as the company in liquidation was never a lessee of the said property. There was also no order passed by the Hon'ble High Court directing the Official Liquidator to take possession of the said Northern portion of the said premises at any time.

In view of the above please note that the Official Liquidator has got nothing to do with the Northern portion of the premises No. 143/1/1, Cotton Street, Calcutta.

Yours faithfully,

Sd. Illegible.

Asstt. Official Liquidator

High Court, Calcutta.”

“With reference to the statements contained in Paragraphs 1 to 16 of the affidavit I say that I have no knowledge about the demarcated Northern portion of the premises No. 143/1/1, Cotton Street, Calcutta. The Official Liquidator being the Liquidator of Sri Latiyal Agricultural and Industrial (P) Ltd. after its winding up order passed by this Hon'ble High Court on 21st April, 1966 in C.P No. 162 of 1965 took possession of the demarcated Southern portion of the premises No. 143/1/1, Cotton Street, Calcutta only and used to collect rents from the tenants occupied in the said premises. The Official Liquidator never took possession of the demarcated Northern portion of the premises No. 143/1/1, Cotton Street, Calcutta and also never collected rent from any tenant occupied in that premises. As such I deny and dispute the statements contained in these paragraphs made by the Applicant. The applicant may be put to strict proof thereof.” (para 4)

“With reference to the statement contained in paragraphs 17 to 24 of the affidavit I say that the order of the Hon'ble Court passed on 18th September 1979 in Suit No. 1772 of 1964 relates in respect of the demarcated Southern portion of the premises No. 143/1/1, Cotton Street, Calcutta as the said Southern portion was taken possession by the Official Liquidator after Sree Latiyal Agricultural and Industrial (P) Ltd. was ordered to be wound up by the Hon'ble High Court on 21st April 1966. The Northern portion of the premises”.

(para 5)

8. Next he relied on the fact that in the execution application an Order was passed against the appellant which was set aside in appeal preferred by the appellant and accordingly it was submitted that no such relief could be given. Next submission was that his client is in possession and no person could be evicted without due process of law and the present proceedings cannot be said to be the due process of law.

9. On behalf of the respondents reliance was placed on Section 456 of the said Act which is set out herein below :

“S. 456. Custody of Company's property (1) Where a winding up order has been made or where a provisional Liquidator has been appointed, the liquidator (or the provisional liquidator, as the case may be) shall take into his custody or under his control, all the property, effects and actionable claims to which the Company is or appears to be entitled. (1-A) For the purpose of enabling the liquidator or the provisional liquidator, as the case may be, to take into his custody or under his control, any property, effects or actionable claims to which the company is or appears to be entitled, the liquidator or the provisional liquidator, as the case may be by writing request the Chief Presidency Magistrate or the District Magistrate within whose jurisdiction such property effects or actionable claims or any book of account or other documents of the company may be found to take possession thereof, and the Chief Presidency Magistrate or the District Magistrate may thereupon, after such notice as he may think fit to give to any party, take possession of such property, effects, actionable claims, books of account or other documents and deliver possession thereof to the liquidator or the provisional liquidator.

(1-B) For the purpose of securing compliance with the provisions of sub-section (1-A) the Chief Presidency Magistrate or the District Magistrate may take or cause to be taken such steps and use or cause to be used such force as may in his opinion be necessary.

(2) All the property and effects of the company shall be deemed to be in the custody of the Court as from the date of the Order for the winding up of the company.”

10. It has been submitted that the Official Liquidator will be deemed to be in possession. The said premises was the subject matter of the suit and the Official Liquidator was a party to the said suit and with the leave of the Court agreed to such compromise decree being passed. This decree was in 1971 and in 1966 the winding up order was passed. He will be deemed to be in possession. It has also been submitted that this application was maintainable in view of the provisions of Section 446(2) of the said Act, which is set out hereinbelow :—

“446(2) — The Court which is winding up the company shall, notwithstanding any thing contained in any other law for the time being in force, have jurisdiction to entertain, or dispose of

(a) any suit or proceeding by or against the company;

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

(c) any application made under Section 391 by or in respect of the company;

(d) any question of priorities or any other question whatsoever, whether of law or fact, which may relate to or arise in course of the winding up of the company; whether such suit or proceeding has been instituted or is instituted, or such claim or question has arisen or arises or such application has been made or is made before or after the order for the winding up of the company, or before or after the commencement of the Companies (Amendment) Act, 1960”.

11. It was submitted that the question of priorities herein can be decided by the Court in this proceedings. In this connection a reference was made to the judgment of the Division Bench in the case of Indramoni v. Sriram Jute Mills Private Ltd. (Supra) which was referred to by the learned Company Judge, Reliance was also placed on the following decisions Mst. Mumtaz Jehan…Plaintiff v. Mst. Insha Allah Alias Noor Jehan…Defendant, Respondents, A.I.R 1983 Delhi 65 and Kattil Raman Kunhi's sons Chathu, Appellants v. Vadakke Poduvath Devaki Amma's daughter Janaki Amma, Respondent, A.I.R (1961) Kerala 121.

12. In reply, on behalf of the appellant it has been submitted that Section 446 does not apply in the facts and circumstances of this case. The Official Liquidator was not in possession as it appeared in his letter and in the affidavit itself.

13. Before we consider the merits of the contentions raised in support of this appeal one thing has to be made clear. The appellant claims his title through one Makhan Lal Sharma who was claimed to be the tenant in respect of the said room. It is claimed that the appellant was the successor-in-interest of the said Makhanlal Sharma. In his affidavit it was merely stated that Makhanlal Sharma was his predecessor-in-interest; that Makhan Lal Sharma/Upadhaya died in the year 1972 leaving behind him the respondent No. 2 as his sole heir and representative and that as legal heir and representative of the said Makhan Lal Sharma/Upadhyay's tenancy in question devolved on the respondent No. 2. Nothing else. Peculiarly enough, appellant's surname being Upadhyay, Makhan Lal was described as Makhan Lal Sharma/Upadhyay and not Makhan Lal Upadhyay. Receipt produced shows the name of Makhan Lal Sharma. When Makhan Lal Sharma became Makhan Lal Upadhyay has not been stated in the affidavit. Obviously, for all these reasons the learned Judge gave an opportunity to the respondent No. 2 for making out his case in trial on evidence. The respondent No. 2 did not avail of the opportunity. Afterwards, when the application came up for hearing, no one appeared for the appellant and no submission was made on his behalf. Under these circumstances we are of the opinion that the learned Judge was right in holding that the appellant has failed to prove his right title and interest in the said room. Whether Makhan Lal Sharma was a tenant or not in respect of the said premises seems to be immaterial in the facts of this case. Even if he was such a tenant, the question is whether such interest of Makhan Lal Sharma has devolved on the appellant. This being disputed, a trial on evidence was directed but such opportunity was not availed of by the appellant. Accordingly we must hold that he was not the heir and representative of Makhan Lal Sharma. Even if Makhan Lal Sharma be treated as a tenant it has not been proved that the right title and interest of Makhan Lal, if any, in respect of the said room in the said premises has devolved upon the respondent No. 2. Accordingly he is merely a trespasser.

14. The next question is whether this application made before the Company Court was maintainable or not. Before we deal with the same we shall refer to the Division Bench Judgment of this Court in the case of Indramoni v. Sriram Jute Mills Private Ltd. In that case the Clive Mills Co. Ltd. went into liquidation and the Official Liquidator was appointed as the Liquidator of the said Company in liquidation. Pursuant to the order of the learned Company Judge the Official Liquidator was directed to accept the offer for sale of the assets of the Company. Delivery of possession was given to the purchaser. It appeared that certain persons were residing at certain quarters situated within the area of the same Mills and they were claiming to be the tenant in respect of the said quarters. Under these circumstances a Judges' Summons was taken out for an order directing the Superintendent of Police and other Police Officers to remove all trespassers as shown in the Annexure to the said application who were in the wrongful occupation of the premises in question. Some of the occupiers contended that they had their title to the quarters occupied by them. Thereafter the learned Judge passed an order and three persons who were found to be trespassers preferred an appeal. One of them was Indramoni who was claiming to have been in possession of one of such quarters.

15. It was contended on behalf of the appellent that no such application could be made or order be passed on the basis of Section 446(2) of the said Act. In this connection the Division Bench held as follows :

“In our opinion, the language of Sub-section 2 is clear, it was the intention of learned Judge that all questions which come within the scope of sub-section 2 of the said Section should be dealt with by the Company Court in order to avoid unnecessary delay and multiplicity of proceedings. In an application being made to that effect leave is given to the liquidator or appropriate party to institute or continue such proceedings in other Court or Tribunal. In this case there was an application under Section 446(2). It comes under the Clause (b) which relates to any claim made by or against the Company and in any event it is certainly covered by Clause (d) which includes any question whatsoever whether of law or fact which may relate to or arises in the course of the winding up of the company. In the present case admittedly the winding up proceedings have not come into an end. The Company was not yet dissolved. It was still in the course of the winding up. Further, in our opinion, it was certainly a question relating to or arising in course of such winding up. In the course of the winding up the Official Liquidator was directed to sell the Mill premises to the purchaser who as the applicant before the learned Company Judge. This provided for handing over possession of the immovable properties to the purchaser. The order specifically directed the police authorities referred to therein to render police help in evicting the trespassers. A list of tenants and licencees were prepared. The other in occupation were the trespassers. The Liquidator prepared a list showing whether the tenants or licencees and trespassers. This was challenged by the appellants on the ground that the Liquidator did not give them any opportunity. On that basis they were given further liberty to file supplementary affidavit which they did. Now the question was whether these appellants were trespassers or not within the meaning of the order passed on the 8th of August 1972. In our opinion, it was certainly claim of question coming within the Clause (b) and certainly within the Clause (d) of sub-section 2 of Section 446 of the said Act. Accordingly, in our opinion, the learned Judge was entitled to entertain this application owing to such a question in such a proceeding. Accordingly we reject this contention of Mr. Dutta.”

16. The interpretation of the said section has been given by the said Division Bench judgment. Applying the principles laid down therein, we are of the opinion that this application is certainly maintainable and the questions raised in this application come within the scope of Section 446 (2).

17. On the merits, it is true that in his letter, dated 13th April 1983 it has been stated on behalf of the Official Liquidator that the said northern portion of premises was never taken possession of by the Official Liquidator at any time as the Company in liquidation was never a lessee of the said property. It is stated that there is also no order passed by the High Court directing the Official Liquidator to take possession of the said northern portion. It is interesting to note that though in the affidavit-in-opposition on behalf of the Official Liquidator it was reiterated that the Official Liquidator never took possession of the said premises, but the stand taken in the letter that the company in liquidation was never a lessee of the said property was not repeated. It is too late in the day to say that the Company was not a lessee in the said property having regard to the decree passed to which the Official Liquidator was a party. So far as the possession is concerned, whether the Official Liquidator was in actual possession or not is immaterial. In view of Section 456 of the said Act, which we have quoted above, he will be deemed to have been in possession as it was admittedly an asset of the Company.

18. It is unfortunate that such a stand had been taken by the Official Liquidator. In our opinion having regard to the same, this question can certainly be agitated in the said application under Section 446.

19. So far as the contention in respect of the appellate order setting aside the execution application is concerned, the Appeal Court judgment itself makes it clear that the same would not prevent further proceedings. Such proceedings include and mean proceedings under Section 446.

20. The question of no person to be evicted without due process of law cannot and does not arise in the facts and circumstances of this case. We have found the appellant to be a trespasser. We have found that the applicants before the Trial Court had the right, title and interest in the said premises. Proceedings under Section 446 is “due process of law”. Accordingly, the said contention is rejected.

21. Accordingly, all contentions raised in support of the appeal fail. Appeal is dismissed with costs. Interim Order, if any, is vacated.

Satyabrata Mitra, J.:— I agree.

Appeal dismissed.

A.R