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Jabal C. Lashkari & Others Versus Official Liquidator & Others

Winding up petition - direction to official liquidator to handover possession of the land to the owners - Held that:- Insofar as liability under Section 13(1)(k) of the Bombay Rent Act is concerned what is to be noticed is the requirement of unjustified non-user for a period exceeding 6 months which evidently is not be attracted to the present case in view of the pendency of the liquidation proceedings. That apart, Clause 5 of the lease deed which deals with non-user of the leased land does not .....

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d by the Companies Act. In the present case it has been repeatedly submitted before this Court by both sides that presently revival of Prasad Mills is a live issue pending before the Gujarat High Court, a fact which cannot be ignored by this Court in deciding the above issue against the appellants. - Civil Appeal Nos. 3147-3149 of 2016 (Arising out of S.L.P.(C) Nos. 29282-29284 of 2008) - Dated:- 29-3-2016 - Ranjan Gogoi And Prafulla C. Pant, JJ. Civil Appeal No. 3153 of 2016 (Arising out of SLP .....

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No. 12835 of 2009) Civil Appeal No. 3164 of 2016 (Arising out of SLP(C) No. 12919 of 2009) Civil Appeal No. 3165 of 2016 (Arising out of SLP(C) No. 14276 of 2009) Civil Appeal No. 3166 of 2016 (Arising out of SLP(C) No. 14316 of 2009) Civil Appeal No. 3167 of 2016 (Arising out of SLP(C) No. 21949 of 2009) Civil Appeal No.3168 of 2016 (Arising out of SLP(C) No. 31354 of 2009) Civil Appeal Nos.3169-3170 of 2016 (Arising out of SLP(C) Nos. 32444-32445 of 2010) Civil Appeal No.3171 of 2016 (Arising .....

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g Mills Ltd. (subsequently known as Prasad Mills Ltd.) for a period of 199 years by a lease deed dated 10.12.1916. A secured creditor of Prasad Mills Ltd. had in the year 1984 filed a company petition seeking the winding up of the aforesaid Prasad Mills Ltd. While the company petition was pending some of the legal heirs of Durgaprasad Lashkari had filed a suit in the Small Causes Court seeking permanent injunction against the sale of assets of company more particularly the sale of the leased pro .....

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y order dated 24.2.1995 ordered that the suit may be withdrawn and instead directions may be sought from the Company Court for return of the leased property. Pursuant thereto a Company Application (C.A. No.462 of 1999) was filed by some of the heirs of Durgaprasad Lashkari for return of the leased property and also for orders restraining the official liquidator from selling/transferring the leased property. While the return of the leased land was sought on the twin grounds that in view of the wi .....

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hinery of the company was sold in a public auction. It appears that on 6.2.2004 an advertisement was issued by the official liquidator for the sale of the leased property. As against the aforesaid advertisement, the appellant had filed Company Application No.33 of 2004 for a declaration that the official liquidator had no right to sell the leased property. The grounds urged were principally on the basis of lack of any such empowerment in the lease agreement and in view of the bar/restriction con .....

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t for a period of over 15 years rendering the company and now the official liquidator liable to eviction under Section 12 of the Bombay Rent Act; (iii) admitted non user of the land for a period of over 6 years attracting Section 13(1)(k) of the Rent Act; (iv) sub-letting in favour of the company, Prasad Mills, in violation of Section 13(1)(e) of the Rent Act. 5. The learned Company Judge by a very elaborate order dated 13.10.2004 rejected all the three company applications. Aggrieved, the appel .....

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ri P.S. Narasimha, learned Additional Solicitor General appearing for the official liquidator; Shri Tushar Mehta, learned Additional Solicitor General and Shri S.N. Shlute learned senior counsel appearing for the Gujarat State Textile Corporation. 7. We have also heard learned counsels appearing for the parties in all the other cases. 8. At the very outset the relevant provisions of the Bombay Rent Act, (hereinafter referred to as the Rent Act ) as applicable to the State of Gujarat and the prov .....

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e provisions of this Act. 1[(1A) Where by reason of riot or violence of a mob any material part of the premises in a disturbed area is wholly destroyed or rendered substantially and permanently unfit for the purpose for which it was let, the landlord shall not be entitled to;- (a) the standard rent and permitted increases due for the premises, (b) recover possession of such premises merely oh the ground of non payment of standard rent and permitted increases due, during the period in which such .....

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and there is no dispute regarding the amount of standard rent or permitted increases, if such rent or increases are in arrears for a period of six month's or more and the tenant neglects to make payment thereof until the expiration of the period of one month, after notice referred to in sub-section (2), the Court may pass a decree for eviction in any such suit for recovery of possession. (b) In any other case, no decree for eviction shall be passed in any such suit if, on the first day of h .....

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yment of rent or permitted increases due to him as the court thinks fit.] Explanation.-In any case where there is. a dispute as to the amount of standard rent or permitted increases recoverable under this Act the tenant shall be deemed to be ready and. willing to pay such amount if, before the expiry of the period of one month after notice referred to in sub-section (2), he makes an application to the Court under sub-section (3) of section 11 and thereafter pays or tenders the amount of rent or .....

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herein; or (ee) to (j) *** (k) that the premises have not been used without reasonable cause for the purpose for which they were let for a continuous period of six months immediately preceding the date of the suit; 15. - In absence of contract to the contrary tenant not to sublet or transfer (1)] Notwithstanding anything contained in any law,3[but subject to any contract to the contrary,] it shall not be lawful after the coming into operation of this Act for any tenant to sub-let the whole or an .....

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encement of the Bombay Rents, Hotel and Lodging House Rates Control (Amendment) Ordinance, 1959 (Bom. Ord. No. III of 1959), in any area in which this Act was in operation before such commencement; and accordingly, notwithstanding anything contained in any contract or in the judgement, decree or order of a Court any such sub-lease, assignment or transfer in favour of such persons as have entered into possession despite the bar as sub-lessees, assignees or transferees, and have continued in posse .....

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on of sub-section (1) receives any sum or consideration shall, on conviction, be punished with imprisonment for a term which may extend to six months and shall also be punished with fine which shall not be less than the sum of the value of the consideration received by him. The terms of the lease deed are as follows : ............;And whereas the above mentioned three pieces of land are owned by the First Party, and the Second Party has rented the same from First Party; And whereas the rent is f .....

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First Party or their successors, heirs, attorneys or administrators are entitled to obtain possession of the land with buildings, either by mutual understanding or through government. (2) This rent note is valid for 199, in words one hundred ninety nine years, agreed by Second Party and on expiry of the said period, we, the Second Party will vacate the land, resurface it and will give it to the First Party or their successor with any amount of rent due, by the Second Party or their successors o .....

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part of this land; then the right to receive compensation for such acquisition is of First Party; however, interest at the rate of one percent per hundred of whatever amount the First Party thus receive. will be adjusted by the Second Party from the rent payable, or the Second Party will give such reduced rent to First Party after adjusting the said amount, in the following years; and the First Party will have no right to any objection or dispute, and even if they raise any dispute it will be no .....

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is ₹ 500-00 per year. which will be paid by the Second Party; and the Second Party will give rent of ₹ 3501/- to First Party every year. However, the Second Party do not pay the municipal tax of ₹ 500/- and the same has to be paid by the First Party, then the Second Party, or their successors will reimburse such amount with six percent interest per hundred per year thereon. (7) The First Party will not object upto 199 years, if the Second Party, or their successors, heirs or ad .....

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paid by we, First Party; but if some additional tax is levied because of construction on the land, it will be borne by the Second Party. Municipal tax is ₹ 500/- per year at present. However, hereafter if municipality levies some additional tax on First Party or on Second Party; or the government decide to levy some new tax; then all such taxes will be borne by the Second Party, and will not claim it from First Party; nor will adjust it against rent payable to the First Party; and the Firs .....

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ent. 9. Before cataloguing the arguments advanced on behalf of the rival parties it will be apposite to take note of the reasoning of the High Court which had prompted it to arrive at the impugned conclusions recorded in the order under appeal. 10. The Division Bench of the High Court in answering the appeals before it exhaustively considered a 3-Judge Bench decision of this Court in Laxmidas Bapudas Darbar & Anr. vs. Rudravva (Smt.) & Ors. 2001 (7) SCC 409. The Division Bench took note .....

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of the provisions of the Rent Act the contract of term lease is completely obliterated in all respects. The effect of the Rent Act on tenancy under contract has been considered only to a limited extent, confining it to the necessity of giving notice under Section 106 of the Transfer of Property Act. In Laxmidas Bapudas Darbar (supra) another decision of this Court in Shri Lakshmi Venkateshwara Enterprises (P) Ltd. vs. Syeda Vajhiunnissa Begum (Smt.) & Ors. 1994 (2) SCC 671 rendered in the co .....

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bstante clause contained under Section 21 of the Karnataka Rent Act on the fixed-term contractual lease may be explained as follows: (i) On expiry of period of the fixed-term lease, the tenant would be liable for eviction only on the grounds as enumerated in clauses (a) to (p) of sub-section (1) of Section 21 of the Act. (ii) Any ground contained in the agreement of lease other than or in addition to the grounds enumerated in clauses (a) to (p) of sub-section (1) of Section 21 of the Act shall r .....

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raph. 11. The Division Bench of the High Court took note of the fact that the non-obstante clause in Section 13 of the Rent Act only gave the said Section 13 an overriding effect over the other provisions of the Act. Section 13 was also made subject to the provisions of Section 15 of the Bombay Act. This is in contrast to Section 21 of the Karnataka Act which had an overriding effect over any other law or contract to the contrary. Section 15 which deals with the authority of the lessee to sub-le .....

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under fixed long term lease in the State of Gujarat. It is on the aforesaid basis that the Division Bench came to the conclusion that the Rent Act did not obliterate the effect of the provisions of Section 108(j) of the Transfer of Property Act which would vest a right in the lessee not only to sublet but also to assign the subject matter of the lease granted to him by the original lessor. 12. So far as the contention of the appellants that as the company has been wound up it no longer required .....

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sue with regard to default in the payment of rent is concerned, the High Court, in the light of its views with regard to the applicability of the provisions of the Transfer of Property Act, had invoked both Section 114 of the Transfer of Property Act and Section 12 (3) of the Rent Act to hold that as the secured creditors and workers have always shown their readiness and willingness to pay the rent and arrears thereof the lessors are not entitled to claim or get possession of the land leased to .....

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the period upto 31st October, 2008, remaining unpaid so far, and the secured creditor - State Bank of India shall deposit the amount with the Official Liquidator within one month thereafter. It will be open to the lessors to withdraw such amount. 14. On behalf of the appellants it is urged that the company in liquidation i.e. Prasad Mills Ltd. and the official liquidator appointed by the learned Company Judge in the liquidation proceedings involving the said company have rendered themselves lia .....

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press term of the contract/lease deed or by the proviso to Section 15 of the Rent Act. Sections 18 and 19 of the Rent Act have also been relied upon by the appellants to show that the official liquidator is not entitled to receive any payment apart from the standard rent. It is urged that in the absence of any such enabling provision not only receipt of such consideration upon assignment is illegal but the property itself has become onerous being incapable of earning any profit. Besides, the pro .....

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ct, the learned Additional Solicitor General has drawn the attention to the directions of the High Court contained in para 43 of the impugned judgment (extracted above) to contend that the same is an order passed under Section 12(3)(b) of the Rent Act which, however, could not be honoured in view of the interim order passed by this Court at the time of entertaining the special leave petitions. Insofar as the arguments advanced on behalf of the appellants with regard to Section 13(1)(e) is concer .....

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ognize any substantial difference between subletting and assignment. So far as Section 13(1)(k) is concerned, it is urged that the purpose of lease is not spelt out in the lease deed and in any event Section 13(1)(k) contemplates non-user of the leased premises without a reasonable cause. In the present case, such non-user is on account of the fact that the company was ordered to be wound up as far back as in the year 1989. 16. The main plank on which the appellants have based their case, as alr .....

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y and willing to pay the rent and the reasons for non payment appears to be (para 43 of the impugned order of the High Court) lack of communication by the official liquidator to the SBI of the precise amount of rent due. While there can be no doubt that mere readiness and willingness to pay without actual payment cannot enure to the benefit of the tenant in perpetuity what is required under Sub-section (2) of Section 12 is a notice in writing by the landlord raising a demand of rent and only on .....

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been brought to our notice. In such a situation, the readiness and willingness of the tenant to pay the rent, though may have continued for a fairly long time without actual payment, will not deprive the tenant of the protection under the Rent Act. Though the order of the High Court in para 43 of the impugned judgment has been placed before the Court as an order under Section 12(3)(b) of the Rent Act we do not find the said order to be of the kind contemplated by Section 12(3)(b) inasmuch as no .....

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r Section 12(3)(b). In the aforesaid situation, the finding of the High Court that the landlord is not entitled to seek eviction on the ground of non payment of rent under Section 12 of the Bombay Rent Act cannot be said to be so inherently infirm so as to require the interference of this Court. 18. This will bring the Court to a consideration of the liability of the official liquidator to a decree of eviction on the ground contemplated under Section 13(1)(e) of the Bombay Rent Act. As already d .....

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been held in the present case by the High Court, by virtue of the decision of this Court in Laxmidas Bapudas Darbar vs. Rudravva (supra), is that in view of the limited operation of the non obstante clause in Section 15 of the Bombay Rent Act, unlike Section 21 of the Karnataka Act, the provisions of the Transfer of Property Act [Section 118 (o)] will not become irrelevant to the relationship between the parties in which event assignment may also be permissible notwithstanding the specific conte .....

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idator from the leased property, what is clear and evident is that the case of sub-letting of the leased premises on which basis eviction has been prayed for is not sub-letting/assignment by the official liquidator but assignment of the leased premises to Prasad Mills by the original managing agents in whose favour the initial lease was executed by the predecessors of the present owners. The ground of unauthorized and impermissible assignment by the official liquidator on the strength of the not .....

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n. Such argument also belies the injunctive/prohibitory relief sought for in the Company Applications, as already noticed, insofar as the contemplated sale/transfer/assignment of the leased property by the official liquidator is concerned. The arguments advanced on the strength of the provisions of Section 19 of the Bombay Rent Act would also stand answered on the above basis. 19. Insofar as liability under Section 13(1)(k) of the Bombay Rent Act is concerned what is to be noticed is the require .....

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ct the official liquidator to handover possession of the land to the owners inasmuch as the company in liquidation continues to maintain its corporate existence until it stands dissolved upon completion of the liquidation proceedings in the manner contemplated by the Companies Act. In the present case it has been repeatedly submitted before this Court by both sides that presently revival of Prasad Mills is a live issue pending before the Gujarat High Court, a fact which cannot be ignored by this .....

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2006 [Jabal C. Lashkari & Ors. Vs. Official Liquidator & Ors.] impugned in civil appeals arising out of SLP(C) Nos. 29282-29284 of 2008 has been followed. In the other group are the cases where the said order has been followed and also an additional ground has been cited namely that in view of the order dated 17.07.2006 passed in Company Application No. 250 of 2006 a direction has been issued to handover possession of the leased premises to the State Government; hence the question of put .....

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