TMI Blog1994 (1) TMI 295X X X X Extracts X X X X X X X X Extracts X X X X ..... bank was granted a licence by the Reserve Bank of India for carrying on banking business in Bombay. On October 6, 1978, the NOC was obtained from the Controller of Accommodation. The lease was extended in October, 1983, for a further period of five years and lastly again it has been extended by a further period of nine years, i.e., up to October, 1997. (b) On July 5, 1991, an order was passed by the Governor of Cayman Islands who appointed Ian Wight to assume control of the said bank with the powers of a receiver appointed under section 18 of the Banking Law as applicable in the Cayman Islands and to assume control and custody of its affairs, premises, assets, books and records wheresoever situated. (c) On July 6, 1991, the Reserve Bank of India (hereinafter referred to as the RBI ) instructed the Bombay branch of the said bank to suspend its business and on July 15, 1991, the RBI filed Company Petition No. 389 of 1991 in this court for winding up of the Bombay branch of the BCCI under section 38 of the Banking Regulation Act, 1949 (hereinafter referred to as the said Banking Act ), and for appointment of the State Bank of India (hereinafter referred to as the SBI ), the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1991 and confirmed the ad interim order passed on July 15, 1991, appointing the SBI central office as provisional liquidator of the Bombay branch of the BCCI. (j) In February, 1992, the then provisional liquidator of the Bombay branch of the BCCI submitted its report No. 29 to this court, inter alia, seeking directions from this court for approval of the proposal contained in the said MOU. By its order dated February 14, 1992, this court gave directions to the then provisional liquidator of the Bombay branch of the BCCI approving the said MOU subject to certain conditions and safeguards stipulated therein. (k) On July 20, 1992, the present petition was filed by the petitioners. (l) In pursuance of the said MOU as approved by this court, the official liquidator of the BCCI(O) invited offers for sale of the Bombay branch of the BCCI as a going concern on as is where in basis and for a slump consideration. On December 26, 1992, the first respondent offered to purchase the business and undertaking of the Bombay branch of the BCCI as a going concern for a slump consideration and forwarded a draft agreement for sale containing terms and conditions on which the first responde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... estion of the power of the then provisional liquidator of the Bombay branch of the BCCI to assign the said premises and the validity of the assignment were not and will not be affected by the said order dated August 3, 1993, and the same would be determined in the present petition which was pending at that time. Lastly, it was ordered that any new company to be formed by the first respondent as per the terms and conditions contained in the draft agreement, exhibit G , would also be bound by the undertakings given by the RBI to the first respondent through their counsel as recorded in the said order. (p) On October 7, 1993, the fourth respondent-company was incorporated and the certificate of commencement of business was given to the fourth respondent on October 18, 1993, and the agreement as per exhibit G to Petition No. 123 of 1993 was signed by the fourth respondent on October 24, 1993, to take over the business and undertaking of the Bombay branch of the BCCI. On November 12, 1993, the main petition, viz., Company Petition No. 389 of 1991, was made absolute by my brother Rane. J. granting prayers (a) and (b) of the main petition and ordering winding up of the BCCI(O), Bomb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly the present petition having been filed before the winding up order, the same is not maintainable. However, on behalf of the petitioners it was contended, and in my opinion rightly, that despite the non-obstante clause contained in section 28 of the Rent Act, the Banking Act being a special Act, would apply and under section 45B of the said Banking Act, this court alone would have jurisdiction in the matter, and, therefore, the petition is maintainable. Support was sought from various authorities cited on behalf of the petitioners. 3. The position to my mind seems to be clear. The phraseology being wound up cannot mean that such an application has to be made only after the winding up order is passed. The legislative intent is very clear from the words used. Otherwise, it would have been easier to provide that only after a winding up order is passed the powers given to the High Court could be exercised as is provided in section 45C of the Banking Act, where the section starts with such a specific pre-requisite of a winding up order having been made. Section 446(2) of the Companies Act, deals with a somewhat similar situation. In Sudarsan Chits (I) Ltd. v. G. Sukumaran Pillai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hts can be assigned and the prohibition contained in section 15 of the Rent Act against, inter alia, assignments would not be applicable as there is a contract to the contrary, viz., a covenant authorising lessee to assign. 5. Before embarking upon the consideration of authorities cited by both the sides, which may not even become necessary, the basic controversy has to be resolved by first determining whether there is a valid termination of lease or not. In Smt. Gian Devi Anand v. Jeevan Kumar, , the Supreme Court has, inter alia, held that a valid termination of the contractual tenancy puts an end to the contractual relationship. Let us see whether in fact the lease itself has been validly terminated or not. The petitioners have relied on the notice of termination dated November 24, 1991. In the said termination notice the grounds which are taken are that the bank has violated the terms of the agreement of lease dated October 12, 1988, by conducting themselves in business contrary to the terms and the spirit of the lease agreement and the provisions of law and that the business has been suspended from July 6, 1991, and the premises remained unused and vacant since July 6, 1991 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ental for the period October 12, 1988, to October 31, 1988, and asked the bank to credit the lease rentals that would become due from November 1, 1988, to their current account with the bank. The bank, under cover of their letter dated October 12, 1988, sent payment of ₹ 66,274 being the rental for the period October 12, 1988, to October 31, 1988, and recorded that future lease rent would be paid by crediting the petitioners' account. The official liquidator, while acting as provisional liquidator, after seeking necessary directions from this court on his report No. 3, dated July 18, 1991, continued to pay rent by crediting the petitioners' account. As far as outgoings are concerned, clause 2(b) of the lease requires bills to be sent to the bank on the same being received from the society. Under cover of its letter dated July 29, 1991, the bank sent its cheque for ₹ 37,018.60 being maintenance charges for the period July, 1991, to September, 1991, in response to the society's bills sent by the petitioners to the bank. The petitioners could not show their having sent further bills. There is no substance in this grievance also. The petitioners have completely ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... k to assign and is to my mind, the contract to the contrary whereby the petitioners have given specific permission, and the lease being subsisting as not having been validly terminated, the bank and now the official liquidator, would be within their right to assign in favour of the fourth respondent. Thus, I see no substance in the argument that the assignment is hit by the prohibition contained in section 15 of the Rent Act. 8. It was also argued that the proviso to section 15 permits transfer of interest in the premises on certain conditions being that the transfer or assignment can be only of a running business with goodwill and stock-in-trade where transfer of tenancy rights is incidental. This was the contention which was taken by the respondents in their affidavit as the alternative to their submission that the prohibition contained in section 15(1) of the Rent Act would not affect assignment. In view of the fact that I am clearly of the opinion that it is not hit by section 15(1) of the Rent Act and that the assignment can be validly made in view of specific provision in the lease deed granting permission to the bank to assign or transfer and the lease not having been val ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the present case as provided in section 39A of the Banking Regulation Act, the official liquidator is having all powers as official liquidator would have under the Companies Act and in exercise of such powers the scheme to assign the running business was presented and approved by this court. It was also further submitted, relying on Kailash Financiers (Cal) P. Ltd., In re [1982] 1 Comp LJ 100 (Cal) that the court has to look to the larger interests of the creditors and the depositors. 11. It is settled law that till the company is dissolved, it retains its corporate existence though administration of the affairs of the company passes to the liquidator. All the properties of the company in liquidation are deemed to be in the custody of the court winding up the company and the official liquidator becomes the custodian thereof. His act is that of the company and, therefore, in the present case also he acts on behalf of the lessee-bank. It cannot be denied that the monthly tenancy rights or leasehold rights of a company are valuable assets and if the bank had not been subjected to winding up proceedings, the bank, under the lease would have been free to assign. As discussed above, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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