TMI Blog1993 (10) TMI 231X X X X Extracts X X X X X X X X Extracts X X X X ..... G.L Sanghi, S.K. Mehta, Dhruv Mehta and Aman Vachher for the Appellant. Dr. A.M. Singhvi, Ashoh Sen, Tapas Ray, I. Ghosh, Som Mandal, S.K. Jain, M.L Lahoty, Prem Sunder Jha, Ms. Shipra Khanzanchi, M.A Krishnamurthy, Rathin Das, H.K. Puri, G.S. Chatterjee, A.K. Srivastava, Indra Makwana, D.P. Muhherjee, Utpal Mazumdar and Ms. Sarla Chandra, for the Respondent. JUDGMENT S.P. Bharucha, J. The Naskarpara Jute Mills Co. Ltd. was wound up under the orders of the High Court at Calcutta on July 28, 1981, and the official liquidator was appointed its liquidator. The company had taken on lease from Bharat Abhyudaya Cotton Mills Ltd. a lease of about seven bighas of land under a deed dated July 2, 1931. The lease was for 99 years and permitted renewal on the same terms for another 99 years. The rent under the lease was Rs. 1,200 per annum. On September 25, 1935, the lessor's interest in the said land was purchased by Brij Mohan Saraogi who settled the same upon a trust called the Brij Mohan Saraogi Charitable Trust. The company attorned to the trust as its tenant in respect of the said land. At the time when the winding up petition was filed the company had been i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that no notice in writing to the company in liquidation for remedy of the breach was necessary because the trust did not want to file a suit for ejectment. The Division Bench rejected the contention based upon section 114 of the Transfer of Property Act because the official liquidator was not in a position to apply for any relief against forfeiture by tendering arrears of rent and interest. As the lease stood forfeited, the said land ceased to be a part of the assets of the company in liquidation and the company in liquidation had from the date of the notice of termination no right or interest therein. It could not, therefore, be transferred or sold by the official liquidator. Inasmuch as, inspite of forfeiture of the lease, the official liquidator was continuing in possession of the said land, he was liable to pay manse profits for such wrongful possession or occupation. Further, on account of arrears of rent a huge amount was due to the trust. Therefore, the said land was onerous. It may be mentioned that the bank had desired to pay to the trust the arrears of rent but the Division Bench declined to permit it to do so. The bank thereupon filed a special leave petition to ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... till determination by this Hon'ble Court." On May 9, 1988, the offer of one Shyam Sundar Agarwal to purchase the assets and properties of the company in liquidation was accepted. The court said: "The consideration price will be Rs. 2,60,00,000. Out of which Shyam Sundar Agarwal will pay Rs. 30 lakhs within two weeks from today with the United Bank of India in the name of the official liquidator. The balance amount will be paid in 24 equal monthly instalments. Shyam Sundar Agarwal will furnish bank guarantee for Rs. 2 crores and 30 lakhs to the satisfaction of the liquidator concerned within six weeks from today. All the dues of the workers present and past will be settled by Shyam Sundar Agarwal with the workers who are represented by various unions by Mr. A.K. Sen and P.K. Banerjee appearing for unions and they agree to run the mill in adjustment with him as a going concern. The monthly instalments as aforesaid will be deposited with the United Bank of India in the name of the official liquidator. Shyam Sundar Agarwal will not be liable for any past liability except in respect of the workers' dues. If the State of West Bengal has any rights on land about which there is no a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ti Jute Industries (hereinafter referred to as "Triputi") and contempt notices were issued to it and its directors. On October 20, 1992, the court recorded that the modalities of payment of Rs. 1,98,000,00 and 15 per cent. interest had been suggested by counsel appearing on behalf of Triputi which it considered prima facie proper. Triputi was permitted to deposit Rs. 30,00,000 in court by the next day. On October 21, 1992, the court recorded the undertaking given by Triputi, thus: "The purchaser Triputi Jute Industries Ltd. through their director, namely, Shri Ram Ratan Choudhury (one of the contemners) and their principal officer namely Shri Pritam Kr. Jhawar undertake to pay the amount of Rs. 1,98,000,00 in the following manner: ( a )Rupees fifteen lakhs have already been deposited in the Registry of this court today, i.e., October 21, 1992. A further sum of Rs. 15,00,000 shall be deposited with the Registry of this court by 4.00 p.m. tomorrow, i.e., October 22, 1992 ; ( b )A further sum of Rs. 70,00,000 (either by way of demand draft or cash) to be deposited with the Registry of this court on or before December 31, 1992. Balance amount of Rs. 98,00,000 would be paid togeth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s over the said land. The court made it clear that the said land was to be sold free of the lease. The surviving issue, therefore, as Dr. Singhvi rightly pointed out, and which Mr. Sanghi did not really dispute, was that it was for the court to assess what should be paid by the official liquidator from out of the funds of the company in liquidation to the trust as and by way of compensation for its rights in the land. As we have pointed out, the said land though of a substantial size, is subject to a 99 year lease entered into in July, 1931, with a renewal clause for a further 99 years at a rent of only Rs. 1,200 per annum. That the lease extends for another 37 years, that it is liable to renewal for a further 99 years, and all at the meagre rental of Rs. 1,200 per annum must substantially depress the value of the lessor's interest in the said land. In our view, therefore, the trust would be amply recompensed if it received as compensation for the disposal of its rights in the said land and for arrears of rent the sum of Rs. 10 lakhs from the official liquidator out of the funds of the company in liquidation. The trust having already received the amount of Rs. 7.50 lakhs pursuant t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rent to the trust should have been accepted by the High Court. The bank, to protect and keep alive its security, had put the official liquidator in funds in regard to other matters and was eager to meet this liability. Had this been done valuable property of the company in liquidation could have been retained so that its undertaking, which stood on the said land, could have been sold as a running concern, as has been done upon intervention of this court, for the benefit of its creditors. We now consider the contempt proceedings on the one hand and the application on behalf of Triputi on the other for dimunition of the sale price by reason of the fact that, according to Triputi, the official liquidator had not been able to hand over to Triputi possession of certain properties that were sold by him to it, which, it is alleged the company in liquidation did not own. The amount of Rs. 1 crore 98 lakhs having been paid, what this really boils down to is whether Triputi should be made liable to pay interest at the rate of 15 per cent. per annum thereon. In our view, the complete answer to Triputi's allegation in regard to the failure of the official liquidator to hand over to it pos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the application made on behalf of Triputi that there should be a dimunition in price or that it should not be made liable to pay interest on the sum of Rs. 1 crore 98 lakhs. It is true, as was pointed out by Mr. A.K. Sen, learned counsel for Triputi, that on August 27, 1992, this court had said that the question of interest on the sum of Rs. 1 crore 98 lakhs would be decided with the main case. What must also be noted is the unequivocal undertaking given on October 21, 1992, by Triputi to the court, which the court accepted, wherein it was stated that "the balance amount of Rs. 98,00,000 would be paid together with interest due on the total amount Rs. 1,98,00,000 at 15% per annum with effect from January 1, 1989, in 12 equal monthly instalments". We have already referred to the various orders of this court which indicate quite clearly with what reluctance and over what span of time Triputi paid the sum of Rs. 1 crore 98 lakhs ; that itself makes the payment of interest thereon appropriate. Coupled therewith is the undertaking aforementioned. We are, therefore, of the view that Triputi must pay interest upon the amount of Rs. 1 crore 98 lakhs at the rate of 15% per annum from Ja ..... 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