TMI Blog1980 (1) TMI 164X X X X Extracts X X X X X X X X Extracts X X X X ..... to receive the rent. - CIVIL APPEAL NO. 575 OF 1970 - - - Dated:- 25-1-1980 - N.L. UNTWALIA AND O. CHINNAPPA REDDY, JJ. S.S. Jawali and B.R. Aggarwal for the Appellant. R.K. Garg and V.J. Francis for the Respondent. JUDGMENT Chinnappa Reddy, J. Hulas Chand and Bilas Chand, original Owners of a certain plot of land in Saharanpur, granted a permanent lease of the land to Patel Mills Ltd., in May, 1930. The annual rent was Rs. 75. The lessee was empowered to use the land for any purpose whatsoever. The rights of the lessee were expressly made transferable. Though the lease was permanent, there was a condition that the lessor could forfeit the lease if the lessee failed to pay rent for three consecutive years. On November 1, 1932, Hulas Chand and Bilas Chand transferred their interest to Budh Sing and Jiolal. Jugal Kishore, became entitled to the rights of Budh Singh and Jiolal by purchase under sale deeds dated April 27, 1943, and May 11, 1943. But, Shankarlal and Piareylal (present plaintiffs) filed a suit for pre-emption against the vendors and Jugal Kishore and as a result of the decree passed in the suit, they became entitled to the lessor's ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lal. Later, on March 21, 1946, Jugal Kishore, who had purchased the rights of Budh Singh and Jiolal, also accepted rent from the official liquidator of the Benaras Bank Ltd. Shankarlal and Piareylal who became entitled to the lessor's interest in the suit plot of land as a result of the decree for pre-emption which they obtained against Jugal Kishore and his vendors, filed the suit out of which the appeal arises to recover possession of the land. Their case was that the leasehold interest in the land was not validly transferred by the voluntary liquidator and, therefore, the defendant acquired no right in the land. Several defences were raised. It was claimed that the voluntary liquidator had the authority in law to execute the deed of sale and formally complete the transaction which had already taken place. It was also claimed that the predecessors-in-interest of the plaintiffs having accepted rent from the official liquidator of the bank, the plaintiffs were estoppel from contending that the transfer in favour of the bank was not valid. Section 53A, Transfer of Property Act, was also invoked as a defence to the action of the plaintiffs. It was lastly pleaded that the plaintif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In the words of Farwell J., "A more gross dereliction of duty by a liquidator I have seldom heard of". Though in possession of sufficient assets of the liquidating company to pay all its debts in full the liquidator took no steps to ascertain the creditors of the liquidating company or to see that they were paid. Instead he sold the business and assets of the company to a purchasing company who consented to pay all the debts and liabilities of the liquidating company. The purchasing company did not pay the debts. The liquidating company was dissolved. The creditors had no remedy by which they could recover their debts. A creditor of the liquidating company sued the liquidator for recovery of damages. It was held that the liquidator was guilty of negligence in the discharge of his statutory duty and was liable in damages to the unpaid creditors of the liquidating company. What was decided in the case was not that a liquidator could represent the erstwhile company after it was dissolved but that a liquidator could be sued in damages for the breach of a statutory duty which he had failed to perform while functioning as liquidator. We do not think that this case is of any assistance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ia. In India the law is well settled that the property of an intestate dying without leaving lawful heirs and the property of a dissolved corporation passes to the Government by escheat or as bona vacantia. Of course such property will be subject to trusts and charges, if any, previously affecting it, vide Peirce Leslie Co. Ltd. v. Miss Violet Ouchterlony Wapshare [1969] 39 Comp. Cas. 808 ; AIR 1969 SC 843. It is also to be noticed here that section 244B of the Indian Companies Act, 1913, as well as section 555(2) of the Companies Act, 1956, expressly enjoin a duty on the liquidator to deposit, on the dissolution of the company, into an account in the Reserve Bank of India known as the companies liquidation account any money representing unpaid dividend or undisputed assets lying in his hands at the time of dissolution. The learned counsel for the appellant relied upon the decisions of the Allahabad High Court in Tulsi Ram Sahu v. Gur Dayal Singh [1911] ILR 33 All 111 [FB] and Musammal Ramman Bibi v. Mathra Prasad, 75 Indian Cases 621. Both were cases of fixed rate tenancies. As pointed out by the Full Bench in Tulsi Ram Sahu v. Guru Dayal Singh, one of the i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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