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JABAL C. LASHKARI Versus O.L. OF PRASAD MILLS LIMITED & 3

2008 (10) TMI 683 - HIGH COURT OF GUJARAT

O.J.APPEAL No. 65 of 2006, 66 of 2006, 67 of 2006, C.A. No. 21 of 1994, 462 of 1999, 33 of 2004, 34 of 2004 - Dated:- 17-10-2008 - Honourable Mr Justice Mohit S.Shah And Honourable Mr.Justice K.A.Puj MR DV PARIKH for Appellant(s) MR AS VAKIL, MR RM DESAI, MR RM DESAI for the Opponent(s) CAV JUDGMENT (Per : HON'BLE MR JUSTICE MOHIT S.SHAH) These appeals are directed against the judgment and order dated 13.10.2004 passed by the learned Company Judge as common order in Company Application Nos.4 .....

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984, the appellants filed the abovenumbered company applications in 1999 and thereafter for a direction to the Official Liquidator to return the land in question to the appellants mainly on the ground that the lease stood determined on winding up order being made by the Company Court. It was also contended that the rights and liabilities of the parties to a lease deed subsist even when the Company is in liquidation and hence provisions of the Bombay Rent Act, 1947 would apply so as to enable the .....

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0.7.2002, (Legal heirs of deceased Fakirchand Ambaram Patel vs. OL of Ambica Mills Ltd. & ors. reported in (2003) 116 Comp. Cases 588 = 2002 (3) GLH 367), the learned Company Judge laid down the following principles :- [a] Leasehold interest is an intangible asset, which is valuable in nature though the valuation may differ from case to case depending upon the unexpired period of lease. b] Such an asset is transferable subject to the same terms and conditions as may be stipulated in the leas .....

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e to give back the possession as and when the lessee chooses to do so cannot be converted into an obligation entitling the lessor to seek possession. [f] A condition in the lease deed by way of requirement to pay rent, per se, does not create an onerous covenant, once readiness and willingness is shown by the lessee, or on its behalf, to discharge such obligation. 4. Since the above reported judgment dated 30.7.2002 has also been challenged in other OJ Appeals, all the connected matters numberin .....

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under :- 5.1 One Shri Bechardas started Bechardas Spinning and Weaving Mills some time in 1860. The land, building, machinery, etc. were owned by said Bechardas. On death of said Bechardas the said properties were inherited by Shambhuprasad, on whose death the properties were inherited by late Durgaprasad Shambhuprasad Laskari. During life time of late Durgaprasad Laskari, Bechardas Spinning and Weaving Mills Company Limited was formed in 1914 to take over the said business of Bechardas Spinnin .....

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rasad Shambhuprasad Laskari. It was further averred that "It may be appreciated that the said land was of ownership of Durgaprasad Laskari and was leased out to the company as the company was taking over the mill owned by Durgaprasad Laskari". Accordingly, the Lease Deed came to be executed on 10-12-1916 by said Durgaprasad Laskari. 5.2 Durgaprasad Shambhuprasad Laskari, who was at the relevant time Managing Director and had controlling interest in Bechardas Spinning and Weaving Mills .....

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ny (in liquidation) was in illegal possession and occupation of the demised land. However, the facts averred in the supporting affidavit of Company Application No.462 of 1999 do not support this stand of the applicant of Company Application No.34 of 2004. 5.4 Mr. Devan Parikh, learned advocate appearing for the applicants in all the three applications, submitted that the Lease Deed was entered into with Managing Agent of Bechardas Spinning and Weaving Mills Company Limited and not with the Compa .....

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rs, an additional affidavit dated 28.9.2004 was placed on record along with copy of the same documents viz. unregistered Memorandum of Articles with Annexures and in the additional affidavit it was submitted that Bechardas Spinning and Weaving Mills Company Limited was registered on 03-09-1914 at Sr.No.41 before the Registrar of Companies, Bombay. That the applicants made inquiry with the Office of Registrar but as the Memorandum of Association and Articles of Association were very old they were .....

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Act) the applicants were entitled to be put in possession; that the lease stood determined on winding up order being made by the Court; that rights and liabilities of the parties to a Lease Deed subsisted even when the Company was in liquidation and hence provisions of the Rent Act would apply. Mr. Parikh invited attention to Section 15(1) of the Rent Act as well as Section 13(1)(a) read with Section 13(1)(k) of the Rent Act to contend that provisions of the Rent Act were applicable overriding a .....

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tting and assignment. 6. On the other hand, the stand of the Official Liquidator, the secured creditors and the workmen represented by the Textile Labour Association was as under :- 6.1 the provisions of the Rent Act cannot come to the aid of the appellants because in 1916 when the Lease Deed was executed and registered, no Rent Act was in force. That even otherwise, once there was a subsisting contract between the parties, if any forfeiture or eviction was intended by any of the parties to the .....

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themselves stated that they are some of the heirs of deceased Durgaprasad and, therefore, they shall have to establish before they can make any claim, that they are legal heirs of the deceased lessor, and that the other heirs have relinquished their interest in the properties in question. 6.4 the appellants had placed on record a copy of plaint Civil Suit No.3960 of 1986 at Annexure-B wherein defendant No.1 was shown as the Company (in liquidation). Inviting attention to Paragraph No.2 of the p .....

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d civil suit as well as the document showing the mortgage in favour of respondent No.2 - State Bank of India, the said contention did not merit acceptance. 6.5 the entire Lease Deed not only did not specify the purpose of Lease, but as per terms of the Lease Deed it was not open to the lessor, assuming that the present applicants could represent the lessor, to claim back possession of the land. FINDINGS GIVEN BY LEARNED COMPANY JUDGE 7. After considering the rival submissions, the learned Compan .....

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dation and the Official Liquidator takes charge of the properties of the Company on his appointment, the rights of the Company (in liquidation) vis-a-vis the landlord do not undergo any change and they continue to be governed by the subsisting contract. 7.2 After referring to all the clauses of the lease deed, the learned Company Judge gave the following findings :- (i) The Lease Deed is executed between Sheth Durgaprasad Shambhuprasad Laskari, described as party of the First Part and the party .....

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or the land may be used as land or the same may be let out on rent or leased out and the lessor shall not be entitled to raise any objection or dispute in this regard till the period of 199 years and only on completion of 199 years, the lessor is entitled to obtain possession of the land (clauses 7 & 9). (iv) The landlord does not have any right to seek possession of the demised land except as stipulated in clause (1) read with clause (8) which provided that in case the lessee fails to pay .....

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s and executors. 7.3 The learned Company Judge rejected the contention urged on behalf of the appellants that a lease deed was executed in favour of the Managing Agent of the company which is now in liquidation and not in favour of the company in liquidation itself. The learned Company Judge held that on a plain reading of the opening portion of the preamble in the part where the lease deed is executed and witnessed, the party of the second part was not only the Managing Agent of the company, bu .....

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appellants was misconceived. In support of the above conclusion, the learned Company Judge also referred to the averments made in the plaint in Civil Suit No.3960 of 1986 which also proceeded on the basis that the company in liquidation was in possession of the land in question and the construction made thereon under registered lease deed dated 14.12.1916. Reference was also made to Article No.111 of the Articles of Association which provided that every deed or other instrument to which the seal .....

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s for taking back possession was filed on 8.12.1999 without any explanation for the delay of more than a decade. 7.4 While considering the question whether the lessee had committed any act contrary to Section 108(o) of the Transfer of Property Act, in other words, whether the lessee had used or permitted another to use the property for a purpose other than for which it was leased, the learned Company Judge answered the question in the negative after noting that in the lease deed no specific purp .....

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tion 13(1)(k) of the Bombay Rent Act, the learned Company Judge held that the appellants had failed to bring their case within the above provisions. APPELLANTS' CONTENTIONS 8. Assailing the above judgment of the learned Company Judge, Mr Deven Parikh, learned advocate for the appellants raised the following contentions :- (i) The decision of the seven Judge Bench of the Apex Court in Dhanapal Chettiyar's case, AIR 1979 SC 1745 = (1979) 4 SCC 214 has done away with the distinction of stat .....

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d Narinder Kumar Jain, AIR 1980 SC 1655, K.K. Krishnan vs. M.K. Vijaya Raghavan, AIR 1980 SC 1756, Ravindra Ishwardas Sethna vs. Official Liquidator, H.C. Bombay, AIR 1983 SC 1061, Nirmala R. Bafna vs. Khandesh Spinning & Weaving Mills Co. Ltd., AIR 1993 SC 1380 and also on the decision of Deshpande, J in Canara Bank vs. Yusuf, AIR 2000 Bom. 71. (ii) There are various clauses of the Rent Act which neither the landlord nor the tenant can contract out of. Hence irrespective of the terms and co .....

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18 of the Bombay Rent Act prohibits lessee from taking lumpsum consideration for the purpose of surrendering the leasehold interest or transferring the leasehold interest and such prohibition applies to all lessees irrespective of the fact whether the lease is a short-term lease or a long-term lease or whether it is contractual tenancy or statutory tenancy. (iii) Clause 5 of the lease deed is a forfeiture clause and the appellant - lessors are entitled to invoke the said clause. (iv) Clause 7 of .....

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ness, used for scrap business), AIR 2002 SC 1822, AIR 1993 SC 2646, it is submitted that change of user is also a ground justifying the eviction of the tenant and if it can be a ground for eviction, the Company Court cannot permit the land of the Company in liquidation or even the leasehold interest therein to be sold. Reliance is also placed on the decision in Canara Bank vs. Yusuf, AIR 2000 Bom. 71 (Paras 2, 7, 8 and 11) and in 1969 (2) Company Law Journal 253. (vi) Relying on the decisions of .....

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re the learned Company Judge that lessee of the land was Durgaprasad Lashkari and not the company in liquidation. SUBMISSIONS ON BEHALF OF OFFICIAL LIQUIDATOR, SECURED CREDITORS AND WORKERS 9. Mr RM Desai, learned counsel for the Official Liquidator and also for secured creditor, State Bank of India has opposed the appeals and supported the judgment of the learned Company Judge. 9.1 The Deputy Official Liquidator has submitted Official Liquidator's further report dated 25.07.2007 stating tha .....

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e of ₹ 3,19,76,000/- and that the unsecured claim of secured creditors were to the tune of ₹ 92,95,942/- 9.2 Mr Desai has also submitted that the Transfer of Property Act does not provide for termination of lease upon winding up order and that the Bombay Rent Act is not applicable in case of long term lease. It is also submitted that the lease deed does not provide that upon the order of winding up being passed against the lessee company, the lease will come to an end. None of the pr .....

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he leasehold rights are assigned to another party after public auction. 9.5 When the sale is through a sale committee appointed by the Company Court with representatives of the secured creditors and workers, the mortgagee also sells its own interest in the property. Therefore, there is nothing illegal about the sale of the leasehold interest of the Company in winding up. In support of this submission, reliance is placed on 2002 (10) SCC 682. 9.6 The application before the learned Company Judge f .....

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the Textile Labour Association has further submitted that since the winding-up order was passed on 5.5.1989, it is high time that the land of the Company in liquidation is put to sale. All the Mills and Textile Industries in Ahmedabad were installed on leasehold land. The lease was either perpetual or permanent or for a term of 199 years (as in the Prasad Mills Ltd.) or 99 years with option with the lessee to renew the lease and obligation of the lessor to renew the lease subject to increase in .....

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ls -do- 1429 402 2 60/2003 Amruta Mills Permanent/perpetual 3471 273 3 46/2003,81/2006 Aryodaya Spinning -do- 3288 394 upto 2002 4 31/2003 Omex -do- 1874 396 upto 2002 5 1/2003,3/2003 A'bad Jubilee Mills -do- 3786 687 upto 2004 6 47/2003 Kalol Calico -do- 2000 400 7 - Navjivan Mills (delay condonation application pending) -do- 2086 400 10.2 It is also pointed out on behalf of the Textile Labour Association that in many cases, the lessors had prayed for getting back possession of the lands an .....

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Appeal Remarks 1 Vijay Mills 50/2003 - 2 Aruna Mills 72/2002 Another OJ Appeal is pending. 3 Aryodaya Ginning Mills - The land owned by lessor admeasuring 58000 sq. mtrs. Has been sold vide OLR No.101/2007 dt. 11.09.2007. 4 Continental Textile Mills - Winding up petition is pending in Delhi High Court, the leasehold land admeasuring approx. 1,22,000 sq.mtrs. is sold and the sale is confirmed by the Delhi High Court and the highest bid was 41 Cr. The mill is located in Naroda area of Ahmedabad. 5 .....

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ready handed over the possession of the properties to the purchasers. Thus, title and possession having been passed on to the purchasers, it is not open to the lessors to contend that the sale was illegal. In fact, the Official Liquidator has become functus officio in such cases. 10.3 It is submitted by Mr Vasavada for the Textile Labour Association that there were in all 74,659 workmen of 35 Textile Mills. So far those workmen have received on an average only about 23.40% of their dues from the .....

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their dues. The Textile Labour Association has even invoked the provisions of Article 21 of the Constitution for contending that the workman have been denied their terminal benefits after long years of service and that these terminal benefits are their only source of livelihood and that if such terminal benefits are to be denied to the workmen, there will be breach of their fundamental right under Article 21 of the Constitution. That the machineries and buildings of the Companies in liquidation .....

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long as the secured creditors and workers are ready to offer rent, the lessors have no right of re-entry. Reliance is placed on the following decisions :- 6 GLR 512 (513) 1996 (1) GLH 203 1996 (85) Comp. Cases 603 (Bombay) 2004 (3) GLH 416 (419, Para 8) 10.5 Absence of notice to lessor does not render the sale void. In support of the submission, reliance is placed on the decisions in - 2003 (10) SCC 482 2007 AIR SCW 4080 (4086, para 11) 1995 (1) GLH 12 (19) INTERVENTION BY THIRD PARTY 11. Mr AS .....

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seeking directions of the Company Court. The said OL Report is still pending before the learned Company Judge. Till the above OL Report was filed on 18.05.2006, the lessors of the land in relation to Prasad Mills Ltd. had not obtained any interim orders in OJ Appeals which were filed in January 2005 but which were never circulated for any urgent orders. For the first time, three OJ Appeals in relation to the lands leased out to Prasad Mills were circulated for admission hearing on 27.06.2006. Th .....

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injunction was granted by the Division Bench on 27.06.2006 resulting into stay of the process of sale of leasehold interest and lands. Hence, Shaan Jhaveri filed Application No.272 of 2006 for being impleaded as respondent in OJ Appeal No.67 of 2006. The above application was granted on 23.08.2006. Shaan Jhaveri has preferred OJ Misc. Civil Application No.96 of 2007 contending that the Company Court be permitted to consider the offer of ₹ 7.75 crores made by Shan Jhaveri in response to th .....

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f the property upon winding up of the lessee - company. In Ravindra Ishwardas Sethna, AIR 1983 SC 1061, the Apex Court interfered even after the property of the Company in liquidation was sold and the purchaser was put into possession. DISCUSSION 13. Though the contentions on behalf of the appellants, were more or less those canvassed before the learned Company Judge and though the learned advocate for the appellants cited more than 50 (fifty) decisions for the purpose of buttressing his legal s .....

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2001 SC 3738. Since it is a direct decision of a three Judge Bench on the above distinction, it is necessary to note the facts giving rise to the decision in Laxmidas Bapudas (supra), and the reasoning which appealed to the Court. 14. A non-agricultural land was leased for a period of 99 years to establish a factory. Before expiry of the contractual lease period, the lessor filed an application under the relevant provisions of the Karnataka Rent Control Act (the Karnataka Rent Act) enabling the .....

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had followed the decision of the Apex Court in Shri Lakshmi Venkateshwara Enterprises case, 1994 (2) SCC 671. 15. After considering the previous decisions including the one in Sri Laxmi Venkateshwara Enterprises, (supra) rendered by a two Judge Bench and also the decision of the seven Judge Bench in Dhanapal Chettiar vs. Yesodai Ammal, (1979) 4 SCC 214, the three Judge Bench in Laxmidas Bapudas Darbar vs. Rudravva, 2001 (7) SCC 409 in terms held that Sri Laxmi Venkateshwara Enterprises (P) Ltd. .....

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law or contract, no order or decree for the recovery of possession of any premises shal be made by any court or other authority in favour of the landlord against the tenant; Provided that the court may on an application made to it, make an order for the recovery of the possession of a premises on one or more of the following grounds only, namely - ... ... ... (emphasis supplied) 17. In Laxmidas Bapudas case (supra), the three Judge Bench of Apex Court held as under in para 17 of the judgment :- .....

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tion of a tenant shall be made by the court or any other authority. Undoubtedly, it is a provision providing statutory protection to the tenants as it is also evident from the heading of Section 21 of the Act. This prohibition is however relaxed under the proviso saying that an order for recovery of possession of the premises can be made on an application made on that behalf only on the grounds as enumerated in clauses (a) to (p) to the proviso. The non obstante clause contained under Section 21 .....

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e affected. So far as a fixed-term lease is concerned, it shall be affected only to the extent that even after expiry of period of the lease the possession cannot be obtained by the lessor unless one or more of the grounds contained in Section 21 of the Act are available for eviction of the tenant. There is nothing to indicate nor has it been held in any case that in view of Section 21 of the Karnataka Rent Act a contract of fixed-term tenancy stands obliterated in totality. As indicated in the .....

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Nothing has been indicated by reasons of which it can be concluded that a contract of tenancy loses significance on coming into force of the Karnataka Rent Act. The effect of non obstante clause, in our view has been rightly explained in the Full Bench decision in the cases of Sri Ramakrishna Theatres Ltd. vs. General Investments and Commercial Corpn. Ltd.. In one of the decisions of this Court reported in Modern Hotel vs. K Radhakrishnaiah it has been held that period of a subsisting lease for .....

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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 remain inoperative. (iii) Proceedings for eviction of a tenant under a fixed term contractual lease can be initiated during subsistence or currency of the lease only on a ground as may be enumerated in clauses (a) to (p) of sub-section (1) of Section 21 of .....

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following it, in the case of Bombay Tyres International Ltd. The earlier judgment of the Full Bench of the High court in the case of Sri Ramakrishna Theatres Ltd. lays down the law correctly. (emphasis supplied) It is unfortunate that the aforesaid direct decision of a Three Judge Bench of the Apex Court squarely covering the controversy and holding that the provisions of the Rent Act do not curtail the contract period was not brought by the learned counsel for the parties to the notice of the l .....

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IR 1985 SC 796 in support of his contention that there is no distinction between a contractual tenant enjoying protection under the Transfer of Property Act and a statutory tenant enjoying protection under the Rent Act. We fail to see how this decision takes the appellants' case any further. Gain Devi's case merely dealt with the question whether the heirs of a deceased tenant inherit the tenancy rights in respect of commercial premises, although the amendment to the Delhi Rent Control A .....

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out any change in the status and legal position of the tenant, unless there are contrary provisions in the Act. The contractual tenancy, therefore, does enjoy an estate or interest in the tenanted premises and that interest is heritable. This decision, therefore, only buttresses the case of the respondents that enactment of the Rent Act was not intended to restrict or curtail the rights of the tenant under the Transfer of Property Act or under the ordinary law relating to lease of inheritance. 2 .....

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andlords, however, heavily relied on the following observations made by the Seven Judge Bench of the Apex Court in V. Dhanapal Chettiar vs. Yesodai Ammal, 1979 (4) SCC 214 :- "Section 108 deals with the rights and liabilities of lessors and lessees. Many State Rent Acts have brought about considerable changes in the rights and liabilities of a lessor and a lessee, largely in favour of the latter, although not wholly. The topic of Transfer of Property other than agricultural land is covered .....

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n one language or the other, it has been provided that a tenant can be evicted on the grounds mentioned in certain sections of the said Acts, then how does the question of determination of a tenancy by notice arise? If the State Rent Act requires the giving of a particular type of notice in order to get a particular kind of relief, such a notice will have to be given. Or, it may be, that a landlord will be well advised by way of abundant precaution and in order to lend additional support to his .....

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ention that the subletting of premises without consent of the landlord or in absence of right to do so under the lease deed is sufficient to evict the tenant and that in such action the rights under Section 108 of the Transfer of Property Act is no defence. Mr Parikh particularly relied on the following observations made by the Apex Court in the concluding para of the above decision and submitted that this is how the Apex Court had spelt out the ratio of the seven Judge Bench of the Apex Court i .....

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stands displaced by S. 11 (4)(i) of the Kerala Buildings (Lease and Rent Control) Act and is no defence to an action for eviction based on S. 11(4)(i). 23. Although the above observations taken by themselves may prima facie support the contention of the appellant - landlords, it is required to be seen that the lease in that case was not a long term lease. Besides, in paras 12 and 13 of Laxmidas Bapudas Darbar vs. Rudravva, (2001) 7 SCC 409 = AIR 2001 SC 3738, a Three Judge Bench of the Apex Cour .....

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the matter in revision, held that notice to quit under Section 106 of the Transfer of Property Act was not necessary for seeking an eviction of a tenant under the provisions of the Rent Act. The question therefore, as was under consideration before this Court is mentioned in para 1 of the judgment itself which is quoted below : .... as to whether in order to get a decree or order for eviction against a tenant under any State Rent Control Act it is necessary to give a notice under Section 106 of .....

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further observed that even though tenancy may be terminated by giving a notice under Section 106 of the Transfer of Property Act yet the landlord will not be in a position to initiate the proceedings for eviction in the absence of any liability incurred by the tenant as provided in the statute. Therefore, notice under Section 106 of the Transfer of Property Act loses significance. 24. Dhanapal Chettiar's case was thus confined to the question about necessity or otherwise of giving notice und .....

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nner of doubt that the provisions of the Rent Act, which are primarily made to protect the interest of tenants, to restrict charging of excessive rent and their rampant eviction at will, will not enable the lessor to move for eviction of the lessee only during subsistence of the term prescribed in the lease deed, unless identical grounds of eviction are provided for in the lease deed. 25. The relevant provisions of the Transfer of Property Act, read as under:- 108. Rights and liabilities of less .....

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binding on the lessee, he may hold the property during the time limited by the lease without interruption. The benefit of such contract shall be annexed to and go with the lessee's interest as such, and may be enforced by every person in whom that interest is for the whole or any part thereof from time to time vested. B. - Rights and Liabilities of the Lessee (j) the lessee may transfer absolutely or by way of mortgage or sub-lease the whole or any part of his interest in the property, and .....

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to the lessor, or work mines or quarries not open when the lease was granted, or commit any other act which is destructive or permanently injurious thereto: (q) on the determination of the lease, the lessee is bound to put the lessor into possession of the property. 111. A lease of immovable property determines - (a) by efflux of time limited thereby 114. Where a lease of immovable property has determined by forfeiture for non-payment of rent, and the lessor sues to eject the lessee, if, at the .....

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ent Act, read as under :- 13. When landlord may recover possession, - (1) Notwithstanding anything contained in this Act but subject to the provisions of Section 15, as landlord shall be entitled to recover possession of any premises if the Court is satisfied - (a) that, the tenant has committed any act contrary to the provisions of clause (o) of section 108 of the Transfer of Property Act, 1882; or (k) that the premises have not been used without reasonable cause for the purpose for which they .....

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e transfer of interest in premises held under such leases or class of leases and to such extent as may be specified in the notification. 19.(1) Save in cases provided for under the proviso to section 15, it shall not be lawful for the tenant or any person acting or purporting to act on behalf of the tenant to claim or receive any sum, or any consideration as a condition of the relinquishment transfer or assignment of his tenancy of any premises. (2) Any tenant or person who in contravention of t .....

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s grounds of eviction) commences gives subsection (1) overriding effect only over other provisions of the Bombay Rent Act (but makes it subject to the provisions of Section 15 of the Bombay Rent Act) and the non-obstante clause does not give any overriding effect over any other law or contract , unlike the non-obstante clause in Section 21 of the Karnataka Rent Act quoted in para 16 hereinabove. In other words, the contention urged by the lessor in the State of Karnataka that Section 21 of the K .....

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t in Laxmidas Bapudas case (supra) would apply with much greater force for the benefit of the lessee under a fixed long term lease in the State of Gujarat. 28. Following the aforesaid judgment in Laxmidas Bapudas Darbar vs. Rudravva, 2001 (7) SCC 409 , we hold that - (i) it is only on expiry of the period of fixed term lease that the lessors can pray for eviction of the company in liquidation or its successor in interest on the grounds which may be available under the Rent Act which may be in op .....

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on 13 of the Bombay Rent Act provided it is also enumerated as one of the grounds for forfeiture of the lease rights in the lease deed, but not otherwise. (iv) The period of fixed term lease of 199 years is ensured and remains protected except in the cases indicated in (iii) hereinabove, and during this period, the rights of the lessee under the lease deed and the Transfer of Property Act are not curtailed by the provisions of the Bombay Rent Act. 29. It is in light of the above legal principles .....

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se deed which gives the lessor the right of re-entry except in case of failure to pay rent for which protection is given to the lessee both by the provisions of Section 114 of the Transfer of Property Act and Section 12(3) of the Bombay Rent Act. Since the order of winding up was passed on 5.5.1989 and since the secured creditors and workers have always shown readiness and willingness to pay rent and arrears thereof, the lessors are not entitled to claim or get possession of the land leased to t .....

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y to deal with a number of authorities cited by him which are inconsistent with the law laid down by the Three Judge Bench in Laxmidas Darbar's case (which judgment was rendered after considering the Seven Judge Bench decision in Dhanapal Chettiar's case). This discussion is also sufficient to hold that when rights of the lessee under the lease deed cannot be curtailed by the provisions of the Bombay Rent Act during subsistence of the lease period, the other arguments about applicability .....

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nment. 33. The observations made by the Apex Court in Parasram's case (supra) indicate that the Official Liquidator had merely stepped into the shoes of the Company in winding up and even if the Official Liquidator had transferred the tenancy interest to the third party under the orders of the Court, it was a voluntary sale falling within Section 14(1)(b) of the Delhi Rent Control Act and that assuming that the sale by the Official Liquidator was an involuntary sale, then also it became as a .....

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nd the Official Liquidator was appointed who sold the tenancy rights. Thereafter the landlord - appellant filed eviction proceedings against the tenant. The decree for eviction was passed in favour of the appellant - landlord. Thus, it is clear that the observations made in context of a short term lease cannot apply to a case where the lease is a long term lease like the present one. Moreover in view of Clause 7 of the lease deed there is no prohibition against subletting or assignment of leaseh .....

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Court in terms laid down therein the legal principle that merely because a company goes in liquidation and a liquidator/ Official Liquidator is appointed, the rights of the company vis-a-vis its landlord (and/or its tenants) do not undergo any change . Hence the fixed term of 199 years in the lease deed at hand is not curtailed by the order of winding up passed in the year 1989. The other observation that the tenancy rights the company had in the said flat may not be an asset for the purpose of .....

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Official Liquidator to surrender the land to the lessors for avoiding the onerous covenant of paying the rent of ₹ 1200 p.a.. In the process, the Apex Court made the following observations :- Under Section 535, the High Court may give leave to the Official Liquidator to disclaim land of any tenure which is part of the property of the company in liquidation if it is burdened with onerous covenants. The intention of Section 535 is to protect the creditors of the company in liquidation and n .....

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Company in liquidation, before giving leave to disclaim them. 11. We are of the view that the High Court ought to have appreciated that it was rather unlikely that the party who had the benefit of onerous covenants would apply for disclaimer and ought to have viewed the Official Liquidator's application to disclaim made pursuant to the Trust's letter to him in that behalf, in that light. We find it difficult to see how such a large area of land leased to the company in liquidation for 9 .....

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the arrears of rent to the Trust should have been accepted by the High Court. The Bank to protect and keep alive its security, had put Official Liquidator in funds in regard to other mattes 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 running concern, as has been done upon intervention of this Court, for the benefit of its creditors. .....

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aim against the company in liquidation of whatever nature in respect of the said land. The Apex Court held that the landlord trust would be amply recompensed if it received as compensation for the disposal of its right in the said land and for arrears of rent the sum of ₹ 10 lacs from the Official Liquidator out of the funds of the Company in liquidation. 37. We may now deal with the last contention urged on behalf of the appellants as an alternative contention that the lease deed permits .....

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her, respectively, possess the rights and are subject to the liabilities mentioned in the rules next following, or such of them as are applicable to the property leased :- B. - Rights and Liabilities of the Lessee (j) the lessee may transfer absolutely or by way of mortgage or sub-lease the whole or any part of his interest in the property, and any transferee of such interest or part may again transfer it. The lessee shall not, by reason only of such transfer, cease to be subject to any of the l .....

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has any local usage to the contrary ever been pleaded. 38. In view of the above discussion, we do not see any merit in any of the legal contentions against assignability of leasehold rights of a Company in winding up urged on behalf of the appellants. 39. As regards the contention that assignment of leasehold rights of the Company in winding up would be invalid in absence of any prior notice to the lessor, the question does not yet arise as the leasehold rights of the Company in winding up over .....

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mpany in winding up. We fail to see how these decisions can be of any assistance to the appellants. In those cases reliance was placed on Rule 139 of the Companies (Court) Rules, 1959 which provides that if the Official Liquidator wants to sell any property of the Company in liquidation in exercise of the power under Section 457, subsection (1) clause (c), he must take out a summons for directions and notice of the summons must be given to the petitioner on whose petition the winding up order is .....

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hat the lease deed was not executed in favour of the company but its managing agent Durgaprasad Lashkari, for the elaborate reasons already given by the learned Company Judge, (indicated in para 7.3 hereinabove) with which we fully concur, we do not see any force in this contention either. 41. As the appeals are being dismissed for the foregoing reasons and separate orders are being passed on Misc. Civil Application No.96 of 2007, it is not necessary to deal with the submissions of Mr AS Vakil f .....

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