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TMI Blog2012 (6) TMI 175X X X X Extracts X X X X X X X X Extracts X X X X ..... pplication, in the history of this court. At one point of time there was a famous cinema house by the name of "Uttara Cinema", in north Calcutta. This Uttara Cinema was run from properties which were numbered as Premises No. 138/2, Bidhan Sarani and 3, Gurucharan Lane, Calcutta. It is quite sometime now that this cinema house has stopped showing cinema. 3. On July 18, 1957, these properties were owned by Debi Prasanna Ghosh and Smt. Charusila Dassi. Both of them are long dead. By a registered deed of lease they demised these properties from July 18, 1957, till July 17, 1997, to one organisation called Cultural Enterprise Corporation. The lessee had a right to sub-lease. By a sub-lease made on October 5, 1963, the lessee demised the properties to Exhibitors' Syndicate Ltd., the petitioning creditor, for the whole of the unexpired term of the lease. Therefore, there can be no doubt that the lease and the sub-lease determined by efflux of time on July 17, 1997. The petitioning creditor did not vacate the properties. The heirs of the deceased owners took no steps for their eviction. 4. At this point of time it may be said that, during the course of hearing of this application, Mr. Ah ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a defendants. It claimed, inter alia, a decree of eviction, from the above properties, against the above parties. In or about September, 2005 the company instituted a suit in the same court (Title Suit No. 1389 of 2005) against the petitioning creditor and Dilip Chand Kankaria where the legal owners were made pro forma defendants. They claimed in this suit, inter alia, for a declaration that the company was liable to pay rent to the legal owners only and not to the petitioning creditor or Dilip Chand Kankaria. 8. What is of considerable importance is that from June, 2005 the respondent-company started paying rent to Round Up Properties. 9. On September 27, 2008, the legal owners conveyed these properties to Round Up Properties. 10. The petitioning creditor has filed this winding up application on the cause of action that they were entitled to payment of rent from the company from January, 2005 which the company had not paid and that on those circumstances the company should be wound up. Arguments in a nutshell Petitioning creditor 11. The petitioning creditor was in occupation of the properties and had the right to let it out. The status of the petitioning creditor was of a l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed and who could only be evicted by due process of law. Therefore, the petitioning creditor did not have the title to enter into the agreement dated September 22, 2004, with the company. The agreement could have had some legal sanctity had the owners of the properties counter signed the agreement showing their concurrence or been a confirming party to it. I do not think that any support or concurrence of the owners or the head lessee could convert the petitioning creditor into a lessor. To my mind the case of Vashu Deo v. Balkishan [2002] 2 SCC 50, arose from the issue formulated by the court (page 55) : "whether a sub-tenant inducted by a tenant in the premises governed by the provisions of the rent control law can, during the continuance of sub-tenancy and without vacating the premises, attorn in favour of the owner of the premises and thereby refused to discharge his obligations towards the tenant who admittedly inducted him in the premises". 16. Under the concerned rent law a tenant would be treated to be so till there was a decree for his eviction. The hon'ble Supreme Court observed that such a tenant continued to be so until a decree of eviction was passed against him. There ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Companies Act, 1956. If there is no neglect, the deeming provision does not come into play and the winding up on the ground that the company is unable to pay its debts is not substantiated. Thirdly, a debt about the liability to pay which at the time of the service of the insolvency notice, there is a bona fide dispute, is not "due" within the meaning of section 434(1)(a) and non-payment of the amount of such bona fide disputed debt cannot be termed as "neglect to pay" the same so as to incur the liability under section 433(e) read with section 434(1)(a) of the Companies Act, 1956. Fourthly, one of the considerations in order to determine whether the company is able to pay its debts or not is whether the company is able to meet its liabilities as and when they accrue due. Whether it is commercially solvent means that the company should be in a position to meet its liabilities as and when they arise.' The Madras High Court in Tube Investments of India Ltd. v. Rim and Accessories P. Ltd. [1990] 3 Comp. LJ 322 , 326, has evolved the following principles relating to bona fide disputes : '(i) If there is a dispute as regards the payment of the sum towards principal however small ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y has a genuine dispute to the claimed debt ? A dispute would be substantial and genuine if it is bona fide and not spurious, speculative, illusory or misconceived. The company court, at that stage, is not expected to hold a full trial of the matter. It must decide whether the grounds appear to be substantial. The grounds of dispute, of course, must not consist of some ingenious mask invented to deprive a creditor of a just and honest entitlement and must not be a mere wrangle. It is settled law that if the creditor's debt is bona fide disputed on substantial grounds, the court should dismiss the petition and leave the creditor first to establish his claim in an action, lest there is danger of abuse of winding up procedure. The company court always retains the discretion, but a party to a dispute should not be allowed to use the threat of winding up petition as a means of forcing the company to pay a bona fide disputed debt . . . The principles laid down in the abovementioned cases indicate that if the debt is bona fide disputed, there cannot be 'neglect to pay' within the meaning of section 433(1)(a) of the Companies Act, 1956. If there is no neglect, the deeming provision does n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y only allowing the defence to proceed if the amount claimed is paid into court or otherwise secured and give leave to the defendant on such condition and thereby show mercy to the defendant by enabling him to try to prove a defence'." 22. These facts of this case are substantially different from the case of Vashu Deo (supra ). In that case the lessee had the right to sub-lease and the sub-lease was created during the subsistence of the lease. The sub-lessee tried to become a lessee directly under the lessor during continuance of a suit between the lessor and the lessee. In the lease in question where the petitioning creditor was the sub-lessee, I do not find any provision which enables the sub-lessee to further the sublease. Moreover the sub-lessee has long expired. Therefore, the position of the petitioning creditor from 1997 is very precarious. In my opinion he did not have any legal right to let out and hence could not create any tenancy. I have no doubt that such alleged letting out was done with the concurrence of the owners and the head lessee. There is nevertheless substantial evidence to suggest that the company was a licensee of the petitioning creditor, with the concurr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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