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Vaz Forwarding Limited Versus State Bank Of India And Others

1994 (1) TMI 295 - BOMBAY HIGH COURT

Dated:- 3-1-1994 - N Vyas, J. JUDGMENT N.D. Vyas, 1. The petitioners are the owners of the office premises bearing No. 4, Atlanta Building, Nariman Point, Bombay-400 021. The petitioners are praying that the respondents be ordered and directed to forthwith hand over quiet, vacant and peaceful possession of the office premises to the petitioners and that the respondents be ordered and directed to pay to the petitioners a sum of ₹ 20,000 per day as mesne profits from November 24, 1991, till .....

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d bank's office at Bombay. The said 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 ass .....

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r 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 first respondent herein, as provisional liquidator of the Bombay branch of the BCCI. On the same day, the RBI also moved an application, being Company Application No. 203 of 1991 in the said Company Petition No. 389 of 1991 for interim a .....

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o the said order dated July 15, 1991, the provisional liquidator so appointed on the same day appointed S.M. Parande, the then chief general manager and now deputy managing director of the SBI, as the authorised officer to perform the functions of the provisional liquidator. (f) On November 24, 1991, the petitioners terminated the lease. (g) On January 14, 1992, an order was passed by the Grand Court of the Cayman Islands and certain persons were appointed as official liquidators of the BCCI(O) .....

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en the official liquidator and the RBI for the disposal of the Bombay branch of the BCCI and the same was agreed to be sold to one of the buyers to be approved by the RBI on the terms and conditions mentioned therein. By the said MOU, the purchaser was, inter alia, required to assume full responsibility for meeting 100 per cent. dues of the depositors and other creditors of the Bombay branch of the BCCI including the liabilities of the staff of the Bombay branch of BCCI and all liabilities of th .....

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oval 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 &q .....

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pproved the said offer of the first respondent and the said draft agreement and authorised the official liquidator of the BCCI(O) to enter into the said agreement. The RBI had recommended to the then provisional liquidator of the Bombay branch of the BCCI that subject to the permission and orders of this court, the then provisional liquidator of the Bombay branch of the BCCI may sell the business and undertaking of the Bombay branch of the BCCI to the first respondent and/or its subsidiary to be .....

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as stated in the draft agreements on the terms and conditions contained therein. (o) On August 3, 1993, by an order passed on the said Company Petition No. 123 of 1993 by my brother Jhunjhunuwala J., the said company petition was allowed on certain conditions thereby approving the draft agreement being exhibit "G" to the said petition for purchase of the Bombay branch of the BCCI as a going concern on an "as is where is" basis on the conditions contained in the said exhibit .....

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ch 1, 1993, were accepted and it was ordered that the rights and claims of the present petitioners in the said premises being the subject-matter of the present company petition including those taken in the present company petition and in the affidavit of Mario Vaz affirmed on March 11, 1993, as also the question 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 s .....

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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 .....

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. However, on behalf of the petitioners it was submitted that although the order was passed on November 12, 1993, the same not having been signed, amendments were not applied for. However, on December 10, 1993, an application for amendment of the present petition was made in view of the order, viz., the order of winding up passed on November 12, 1993, and the same was allowed. 2. Before I deal with the various contentions raised by counsel appearing for the parties before me, it is necessary to .....

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lord and tenant, under the provisions of section 28 of the Bombay Rents, Hotel and Lodging House Rates Control Act, 1947 (hereinafter referred to as "the Rent Act"), the only court which can have jurisdiction would be the Small Causes Court, Bombay. It was further contended that the present petition was filed prior to the winding up order of BCCI(O) Ltd., Bombay, and, therefore, the same was not maintainable. In support of the said contention, it was submitted that the said section 28 .....

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g 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 .....

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r 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 , the Supreme Court, while dealing with the said provision, inter alia, held that if a winding up petition is pending, meaning thereby that an official liquidator is appointed as provisional liquidator which is a stage in the process of winding up, the court before which such proceeding is pending can be styled as a court winding up the company and i .....

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of a banking company being filed, the only court in seisin of the winding up proceedings is the High Court and questions and claims in respect of the banking company which is thus "being wound up" can be entertained and disposed of by the High Court alone. One has to bear in mind the fact that the said Banking Act is a special Act dealing with banking companies and Part III-A thereof provides for special provision for speedy disposal of winding up proceedings. In view of this, I see n .....

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be assigned in view of the provisions of section 15 of the Rent Act. However, on behalf of the respondents it was submitted, firstly, that the lease has not been validly terminated and, therefore, the contractual tenancy was still subsisting and under the terms of the lease in question the lessee had power to assign. It was further submitted that assuming the termination of lease was valid in law there was no distinction between contractual and statutory tenancies, their incidence being same, a .....

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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, .....

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main ground that emerges from the termination notice is that of business having been suspended and no banking business having been carried out. As far as rent and outgoings are concerned, no specific allegation is made in the notice of termination. Taking the first ground first, it is necessary to see what has been provided in the indenture of lease. The indenture of lease in clause 2(d) provides that the demised premises are to be used by the bank for the purpose of its business of banking and .....

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k and subsidiary companies only and not for any other purpose. By no stretch of imagination can this be read to mean that if the banking business came to a standstill it would amount to a breach of the said condition. If that were the intention of the parties, a clear provision would have been made in the lease to the effect that on the banking business coming to a standstill, the petitioners would be entitled to determine the lease and re-enter. 6. As far as the second condition, viz., regardin .....

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mped receipt for an amount of ₹ 4,13,852.28 being the difference in the deposit amount. The petitioners further requested the bank to pay the rental 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, 1 .....

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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 suppressed from this court the arrangement regarding rent and being fully aware of the same have deliberately chosen to be vague not only in the termin .....

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ngs. In view of this, this ground also does not survive. Thus, the petitioners fail to make out any ground for terminating the lease. Moreover, the right of re-entry which is reserved is provided for in clause 4(a) of the indenture. The same is not complied with at all inasmuch as the notice purporting to terminate the lease did not give the stipulated time to rectify the alleged breaches. Since no ground whatsoever for terminating the lease is made out, there is no question of the bank having c .....

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o use and occupy the demised premises or any part thereof on such terms and conditions as it may deem fit provided that the same shall not be inconsistent with or contrary to the terms and conditions of the other clauses. In view of the fact that there is no valid termination and in view of the fact that the lease is still subsisting and would come to an end by efflux of time only in October, 1997, I see no reason why the bank, now the official liquidator, cannot assign the same. Section 15 of t .....

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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 w .....

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subsisting, there is no necessity for dealing with the alternative submission advanced on behalf of the respondents. Although it was vehemently argued on behalf of the petitioners that neither the bank was a going concern, nor there was any goodwill nor there was any stock-in-trade, I see no reason why the same should be examined. 9. Next, it was argued that the assignment is hit by the provisions of the Bombay Land Requisition Act, 1948 (hereinafter referred to as "the Requisition Act&quo .....

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s cast on the landlord. The landlord is also prohibited without a written permission of the State Government from letting, occupying or permitting to be occupied the premises which have become vacant. There is nothing in the provision to render the assignment invalid. The assignee would be occupying the premises at the risk of the same being requisitioned. In these circumstances, I see no substance in the submission. 10. Lastly, it was submitted that in any view of the matter as laid down in Rav .....

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ent case the lease is not validly terminated, whereas in Ravindra Ishwardas Sethna's case, a suit for eviction was pending in the Small Causes Court and the company which was being wound up was a statutory tenant; that in the present case the lease is still subsisting in view of the termination not being valid and is in operation till October, 1997, and than in the present case as provided in section 39A of the Banking Regulation Act, the official liquidator is having all powers as official .....

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