REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NOS. 3147-3149 OF 2016
(Arising out of S.L.P.(C) Nos.29282-29284 of 2008)
Jabal C. Lashkari & Ors. ...Appellant (s)
Versus
Official Liquidator & Ors. ...Respondent (s)
WITH
Civil Appeal No. 3153 of 2016
(Arising out of SLP(C) No. 29952 of 2008)
Civil Appeal No. 3157 of 2016
(Arising out of SLP(C) No. 29632 of 2008)
Civil Appeal No.3158 of 2016
(Arising out of SLP(C) No. 940 of 2009)
Civil Appeal No. 3159 of 2016
(Arising out of SLP(C) No. 1866 of 2009)
Civil Appeal No. 3160 of 2016
(Arising out of SLP(C) No. 2583 of 2009)
Civil Appeal No. 3161 of 2016
(Arising out of SLP(C) No. 5880 of 2009)
Civil Appeal No.3162_ of 2016
(Arising out of SLP(C) No. 7864 of 2009)
Civil Appeal No. 3163 of 2016
(Arising out of SLP(C) 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 out of SLP(C) No. 31663 of 2011)
Civil Appeal No. 3172 of 2016
(Arising out of SLP(C) No. 4816 of 2012)
J U D G M E N T
RANJAN GOGOI, J.
Leave granted in each of the Special Leave Petitions.
The facts arising in the Civil Appeals arising from SLP(C) Nos. 29282-29284
of 2008, which is being taken as the lead case, may be noticed at the
outset.
One Durgaprasad Lashkari (predecessor of the appellants) had leased out
land admeasuring 35,772 sq. mtrs. in favour of one Bechardas Spinning and
Weaving 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
property.
An order dated 5.5.1989 was passed by the learned Company Judge of the
Gujarat High Court directing the winding up of Prasad Mills Ltd. and the
appointment of an official liquidator. The official liquidator was directed
to take charge and possession of all the assets of the company. An
application was filed by another heir of Durgaprasad Lashkari in the
winding up petition seeking direction to further prosecute the suit pending
before the Small Causes Court. The learned Company Judge by 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 winding up order
the Company no longer required the land and furthermore default in payment
of rent had occurred, for the second relief sought it was urged that the
official liquidator was not authorised to transfer/alienate the leased
property in view of the provisions of the Bombay Rents, Hotel and Lodging
House Rates Control Act, 1947, as it then existed (hereinafter referred to
as ‘the Bombay Rent Act’). While the above Company Application was pending
the building, superstructure, plant and machinery 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 contained in Section 15 of the
Bombay Rent Act. Another Company Application i.e. C.A. No.34 of 2004 was
filed seeking permission from the Company Court to file a suit before the
appropriate court for eviction of the official liquidator from the leased
property. Eviction of the official liquidator was claimed, inter alia, on
the ground that –
the occupant Company i.e. Prasad Mills had no document in its favour
entitling it to be in possession of the demised land;
admitted non payment of rent 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;
admitted non user of the land for a period of over 6 years attracting
Section 13(1)(k) of the Rent Act;
sub-letting in favour of the company, Prasad Mills, in violation of Section
13(1)(e) of the Rent Act.
The learned Company Judge by a very elaborate order dated 13.10.2004
rejected all the three company applications. Aggrieved, the appellant and
other legal heirs of Durgaprasad Lashkari filed three separate appeals
before the Division Bench of the High Court. The High Court by a common
order dated 17.10.2008 dismissed all the appeals on grounds and reasons
that will be noticed shortly. It is against the aforesaid common order
dated 17.10.2008 that the present appeals have been filed.
We have heard Shri Mihir Thakur learned senior counsel appearing for the
appellants in civil appeal arising out of SLP(C) No. 29282-84/2008; Shri
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.
We have also heard learned counsels appearing for the parties in all the
other cases.
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 provisions of the lease agreement dated 10.12.1916 may be
noticed -
“12. - No ejectment ordinarily to be made if tenant pays or is ready and
willing to pay standard rent and permitted increases
(1) A landlord shall not be entitled to the recovery of possession of any
premises so long as the tenant pays, or is ready and willing to pay, the
amount of the standard rent and permitted increases, if any, and observes
and performs the other conditions of the tenancy, in so far as they are
consistent with the 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 premises remain so destroyed or unfit.]
(2) No suit for recovery of possession shall be instituted by a landlord
against a tenant on the ground of non payment of the standard rent or
permitted increases due, until the expiration, of one month next after
notice in writing of the demand of the standard rent or permitted,
increases has been served upon the tenant in the manner provided in section
106 of the Transfer of Property Act, 1882 (IV of 1882).
(3) (a) Where the rent is payable by the month, 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 hearing of the suit or oil or before such"
other date as the Court may fix, the tenant pays or tenders in Court the
standard rent and permitted increases then due.3[and thereafter,--
(i) continues to pay or tender in Court such rent and permitted increases
till the suit is finally decided; and
(ii) pays costs of the suit as directed by the Court.
(4) Pending the disposal of any such suit, the Court may out of any amount
paid or tendered by the tenant pay to the landlord such amount towards
payment 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 permitted increases
specified in the order made by the Court.”
“13. - When land-lord may recover possession-
(1) Notwithstanding anything contained in this Act1[but subject to the
provisions of section 15]; a landlord shall be entitled to recover
possession of any premises if the Court is satisfied--
(a) to (d) ***
(e) that the tenant has, since the coming into operation of this.
Act3[unlawfully sub-let] the whole or part of the premises or assigned or
transferred in any other manner his interest therein; 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 any part of
the premises let to him or to assign or transfer in any other manner his
interest therein:
[Provided that the5[State] Government may, by notification in the Official
Gazette, permit in any area the transfer of interest in premises held under
such leases or class of leases and to such extent as may be specified in
the notification.]
[(2) The bar against sub-letting, assigning or transferring premises
contained in sub-section (1) shall be deemed not to have had any effect
before the commencement 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
possession at the commencement of the said Ordinance, shall be deemed to be
valid and effectual].”
“19. - Unlawful charges by tenant
(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 relinquishment2[transfer or assignment] of his tenancy of
any premises.
(2) Any tenant or person who in contravention of the provision 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 fixed at Rs.3501-00 - Rs. three thousand five
hundred and one. for one year of 12 months to be paid to First Party, by
the Second Party; as rent on the following conditions :
(1) The said rent will be given to First Party, by Second Party every year
and if the Second Party does not pay the rent due to them every year, the
First Party will give registered notice for recovery of rent; and in spite
of such notice the Second Party or their successors, heirs or
administrators do not pay the rent, 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 or administrators, whosoever would be, and while
giving back the possession, Second Party will not raise any dispute or
objection, and even if raised will not be admissible by virtue of this
agreement.
(3) The First Party, or their successors, heir, are not entitled to sale or
pledge, or give possession of these pieces of land, to any other party, and
even if they do so, it will be void by virtue of this agreement.
(4) In case the government needs this land and/or if the government
purchase some 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 not
sustainable by virtue of this agreement.
(5) In case the Second Party, or their successors, attorneys.
administrators, assinee or executors do not stay, or do not make use of, or
do not store material, on the land; or vacate the land and give possession
to the First Party, before the specified period, then the First Party is
entitled to receive rent till the date of possession so given; and the
First Party has no right to claim rent for the remaining period.
(6) The municipal tax for the land is Rs.500-00 per year. which will be
paid by the Second Party; and the Second Party will give rent of Rs.3501/-
to First Party every year. However, the Second Party do not pay the
municipal tax of Rs.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 administrators, construct buildings with
necessary government permission, or use a free land or the Second Party
give on rent or on lease, and the First Party is entitled to take
possession of the land immediately on expiry of 199 years.
(8) The First Party, or their successors, heirs, administrators or
attorneys are entitled to take possession of the land before the expiry of
rent period, if the Second Party fail to pay rent to First Party every
year.
(9) The government tax on this land is to be 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 Rs.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 First Party has no right to take possession of the
land before expiry of 199 years, but the First Party has right to receive
amount of rent till the above period.
(10) The First Party and the Second Party and their successors, heirs,
administrators, attorneys and assignees, are accepting the terms and
conditions set out in this agreement.
Thus the Second Party has rented the pieces of land, from the First
Party under the terms set out in this agreement, at our will, and signed
and sealed this agreement.”
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.[1]. The
Division Bench took note of the fact that in Laxmidas Bapudas Darbar
(supra) the Bench had occasion to consider the purport and effect of the
decision of this Court in V. Dhanapal Chettiar vs. Yesodai Ammal[2] (7-
Judges) before holding that “as a matter of fact the question of
curtailment of fixed-term contractual lease was not involved in the case of
Dhanapal Chettiar” (Para 14). In fact in paragraph 15 of the judgment in
Laxmidas Bapudas Darbar (supra) it was held :
“It has nowhere been held that by virtue 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.[3] rendered in the context of Section 21 of the Karnataka
Rent Act and, specifically, the provisions of the aforesaid Section of the
Karnataka Act were considered. The non-obstante clause in Section 21 of the
Karnataka Act which gives an overriding effect over any provision in any
other law was specifically taken note of and eventually it was held that
the effect of the non-obstante clause contained in Section 21 of the
Karnataka Act on a fixed-term contractual lease would be as follows :
“18. The effect of the non obstante 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 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 the Act and it is also provided as one of the grounds for
forfeiture of the lease rights in the lease deed, not otherwise.
The period of fixed-term lease is ensured and remains protected except in
the cases indicated in the preceding paragraph.”
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-lease or
assign the leased rights/property, though, gives an overriding effect over
any other law has been made subject to any contract to the contrary.
Therefore, the terms of the lease and other cognate provisions of law is
not obliterated. The Division Bench, in view of the above provisions of
the Bombay Rent Act, went on to hold that the “ratio of the decision of 3-
Judge Bench of the Apex Court in Laxmidas Bapudas Darbar (supra) would
apply with much greater force for the benefit of the lessee 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 the leased land for its use is
concerned, the High Court, in the impugned judgment, disagreed with the
aforesaid proposition as a viable and acceptable proposition of law.
Furthermore, it was held that the liability/obligation to pay rent for the
leased land does not constitute an onerous obligation on the company in
liquidation so as to justify surrender of the leased land by the Official
Liquidator or any direction to the said effect under Section 525 of the
Companies Act.
13. So far as the issue 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 the company presently in winding up”. However, in the operative
part of its order the Bombay High Court was pleased to observe as follows :
“In view of the statement of Mr. RM Desai, learned counsel for the secured
creditor that the arrears of rent, if any, remaining unpaid by the company
in liquidation shall be paid by the secured creditor, we direct that within
one month from today, the Official Liquidator shall supply to the secured
creditor the particulars of the rent for the demised land for 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 liable to eviction on the ground of
default in payment of rent under Section 12 of the Rent Act. It is further
contended on behalf of the appellants that eviction of the official
liquidator is required to be ordered on the grounds enumerated in Sections
13(1)(e) and 13(1)(k) of the Rent Act. Pointing out the provisions of
Section 15 of the Rent Act it has been urged that the official liquidator
has assigned the property contrary to the provisions of Section 15, such
act not being saved either by express 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 property has ceased to serve the purpose of lease in view of
the liquidation of the company. Accordingly, the official liquidator is
liable to surrender the same to the original owners, it is urged.
15. Shri P.S. Narasimha, learned Additional Solicitor General on the
other hand has submitted that the provisions of default in the matter of
payment of rent would not be attracted as the secured creditors including
the State Bank of India had all along been ready and willing to pay all
rents due. In fact, 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
concerned, it is urged by the learned Additional Solicitor General that
under Clause 7 of the lease deed dated 10.12.1916 subletting is admittedly
permissible. In the present case, according to the learned Additional
Solicitor General, there is no assignment. In this regard reliance is
placed on two decisions of the Privy Council in Hans Raj vs. Bejoy Lal
Sel[4] and Ram Kinkar Banerjee vs. Satya Charan Srimani[5] to contend that
the law, as prevailing in India, does not recognize 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
already noticed, is the operation of Sections 12 (default), 13(1)(e)
(unauthorized assignment) and 13(1)(k) (non-user of the leased land). We
may now take up the aforesaid issues in seriatim.
17. Section 12 of the Rent Act confers protection on a tenant who is
regularly paying or is ready and willing to pay the rent. In the present
case while there is no doubt that rent has not been paid, equally, there is
no doubt that the secured creditors including the State Bank of India had
all along been ready 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 the failure of the tenant to comply with such notice within a period of
one month that the filing of a suit for recovery of possession is
contemplated. The service of notice giving an opportunity to the tenant to
pay the unpaid rent is the first chance/opportunity that the Rent Act
contemplates as a legal necessity incumbent on the landlord to afford to
the tenant. Admittedly, in the present case, no such notice as contemplated
by Section 13 (2) has been issued by the landlord; at least none has 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 not only the order does
not mention any specific rent which has to be tendered in Court but what is
encompassed therein is a direction to the official liquidator to let the
State Bank of India know the precise amount that is required to be paid on
account of rent and, thereafter, to pay the same to the official liquidator
whereafter it has been left open for the lessors to withdraw the said
amount from the official liquidator. Such an order by no stretch of
reasoning would be one contemplated under 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 discussed in a
preceding paragraph of the present order, the non obstante clause of
Section 13 (1) overrides only the other provisions of the Bombay Rent Act
and is also subject to the provisions of Section 15. Section 15 which
deals with sub-letting and transfer, though overrides the provisions
contained in any other law, is subject to any contract to the contrary.
Though in the present case the lease deed (clause 7) is capable of being
read as permitting sub-letting and not assignment what has 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 content of clause 7 of the lease
deed in question. However, we need not dwell on this issue at any length or
would also be required to consider the efficacy of the arguments of the
learned Additional Solicitor General on the strength of the two Privy
Council decisions mentioned above i.e. Hans Raj vs. Bejoy Lal Sel and Ram
Kinkar Banerjee vs. Satya Charan Srimani (supra) inasmuch as from Company
Application No. 34 of 2004, which deals with the claim of the appellants
for eviction of the official liquidator 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 notice/advertisement for disposal of the leased land
thereby making the said authority liable for eviction is an argument
advanced only at the hearing of the appeals before us. That apart the said
argument overlooks the fact that the assignment was only sought to be made
by the advertisement/notice issued and did not amount to a completed action
on the part of the official liquidator so as to attract the relevant
provisions of the Bombay Rent Act dealing with the consequential liability
for eviction. 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 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 contemplate eviction on account of such non-user but merely
entitles the lessor to receive rent for the period of such non-user of the
land.
20. The mere fact that the company has been ordered to be wound up cannot
be a ground to direct 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 Court in deciding the above issue against the appellants.
21. For the aforesaid reasons we affirm the order of the High Court dated
17.10.2008 in O.J. Appeal Nos. 65 of 2006, 66 of 2006 and 67 of 2006 and
dismiss the civil appeals arising out of SLP(C) Nos. 29282-29284 of 2008
wherein the said order is under challenge.
22. The other civil appeals, which have been heard analogously, can be
divided into two categories. The first is where the order dated 17.10.2008
passed in O.J. Appeal No. 65 of 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 putting the property to sale does not arise.
23. Though we have affirmed the order dated 17.10.2008 of the Gujarat
High Court passed in O.J. Appeal Nos. 65 of 2006, 66 of 2006 and 67 of
2006 and dismissed the civil appeals arising out of SLP(C) Nos. 29282-29284
of 2008 [Jabal C. Lashkari & Ors. Vs. Official Liquidator & Ors.], our
decision to affirm the said judgment of the High Court is based on a
consideration of the specific clauses in the lease deed between the parties
to the case. What would be the effect of the principles of law underlying
the present order vis-a-vis the specific clauses of the lease deed between
the parties in the other cases is a question that has to be considered by
the High Court in each of the cases. That apart whether the order dated
17.07.2006 passed in Company Application No. 250 of 2006 has attained
finality in law and forecloses the question raised and further whether
constructions have been raised on such land by the State Government for the
benefit of the general public, as has been submitted to dissuade us from
interfering with the order of the High Court, are questions that would
require a full and complete consideration by the High Court on the
materials available. To enable the said exercise to be duly performed, we
set aside the order of the High Court impugned in each of the aforesaid
civil appeals and remit all the matters to the High Court for a fresh
consideration in accordance with the observations and principles of law
contained in the present order.
.……......................,J.
[RANJAN
GOGOI]
.……......................,J.
[PRAFULLA
C. PANT]
NEW DELHI,
MARCH 29, 2016.
-----------------------
[1]
2001 (7) SCC 409
[2] 1979 (4) SCC 214
[3] 1994 (2) SCC 671
[4] [AIR 1930 PC 59]
[5] [AIR 1939 PC 14]
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NOS. 3147-3149 OF 2016
(Arising out of S.L.P.(C) Nos.29282-29284 of 2008)
Jabal C. Lashkari & Ors. ...Appellant (s)
Versus
Official Liquidator & Ors. ...Respondent (s)
WITH
Civil Appeal No. 3153 of 2016
(Arising out of SLP(C) No. 29952 of 2008)
Civil Appeal No. 3157 of 2016
(Arising out of SLP(C) No. 29632 of 2008)
Civil Appeal No.3158 of 2016
(Arising out of SLP(C) No. 940 of 2009)
Civil Appeal No. 3159 of 2016
(Arising out of SLP(C) No. 1866 of 2009)
Civil Appeal No. 3160 of 2016
(Arising out of SLP(C) No. 2583 of 2009)
Civil Appeal No. 3161 of 2016
(Arising out of SLP(C) No. 5880 of 2009)
Civil Appeal No.3162_ of 2016
(Arising out of SLP(C) No. 7864 of 2009)
Civil Appeal No. 3163 of 2016
(Arising out of SLP(C) 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 out of SLP(C) No. 31663 of 2011)
Civil Appeal No. 3172 of 2016
(Arising out of SLP(C) No. 4816 of 2012)
J U D G M E N T
RANJAN GOGOI, J.
Leave granted in each of the Special Leave Petitions.
The facts arising in the Civil Appeals arising from SLP(C) Nos. 29282-29284
of 2008, which is being taken as the lead case, may be noticed at the
outset.
One Durgaprasad Lashkari (predecessor of the appellants) had leased out
land admeasuring 35,772 sq. mtrs. in favour of one Bechardas Spinning and
Weaving 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
property.
An order dated 5.5.1989 was passed by the learned Company Judge of the
Gujarat High Court directing the winding up of Prasad Mills Ltd. and the
appointment of an official liquidator. The official liquidator was directed
to take charge and possession of all the assets of the company. An
application was filed by another heir of Durgaprasad Lashkari in the
winding up petition seeking direction to further prosecute the suit pending
before the Small Causes Court. The learned Company Judge by 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 winding up order
the Company no longer required the land and furthermore default in payment
of rent had occurred, for the second relief sought it was urged that the
official liquidator was not authorised to transfer/alienate the leased
property in view of the provisions of the Bombay Rents, Hotel and Lodging
House Rates Control Act, 1947, as it then existed (hereinafter referred to
as ‘the Bombay Rent Act’). While the above Company Application was pending
the building, superstructure, plant and machinery 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 contained in Section 15 of the
Bombay Rent Act. Another Company Application i.e. C.A. No.34 of 2004 was
filed seeking permission from the Company Court to file a suit before the
appropriate court for eviction of the official liquidator from the leased
property. Eviction of the official liquidator was claimed, inter alia, on
the ground that –
the occupant Company i.e. Prasad Mills had no document in its favour
entitling it to be in possession of the demised land;
admitted non payment of rent 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;
admitted non user of the land for a period of over 6 years attracting
Section 13(1)(k) of the Rent Act;
sub-letting in favour of the company, Prasad Mills, in violation of Section
13(1)(e) of the Rent Act.
The learned Company Judge by a very elaborate order dated 13.10.2004
rejected all the three company applications. Aggrieved, the appellant and
other legal heirs of Durgaprasad Lashkari filed three separate appeals
before the Division Bench of the High Court. The High Court by a common
order dated 17.10.2008 dismissed all the appeals on grounds and reasons
that will be noticed shortly. It is against the aforesaid common order
dated 17.10.2008 that the present appeals have been filed.
We have heard Shri Mihir Thakur learned senior counsel appearing for the
appellants in civil appeal arising out of SLP(C) No. 29282-84/2008; Shri
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.
We have also heard learned counsels appearing for the parties in all the
other cases.
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 provisions of the lease agreement dated 10.12.1916 may be
noticed -
“12. - No ejectment ordinarily to be made if tenant pays or is ready and
willing to pay standard rent and permitted increases
(1) A landlord shall not be entitled to the recovery of possession of any
premises so long as the tenant pays, or is ready and willing to pay, the
amount of the standard rent and permitted increases, if any, and observes
and performs the other conditions of the tenancy, in so far as they are
consistent with the 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 premises remain so destroyed or unfit.]
(2) No suit for recovery of possession shall be instituted by a landlord
against a tenant on the ground of non payment of the standard rent or
permitted increases due, until the expiration, of one month next after
notice in writing of the demand of the standard rent or permitted,
increases has been served upon the tenant in the manner provided in section
106 of the Transfer of Property Act, 1882 (IV of 1882).
(3) (a) Where the rent is payable by the month, 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 hearing of the suit or oil or before such"
other date as the Court may fix, the tenant pays or tenders in Court the
standard rent and permitted increases then due.3[and thereafter,--
(i) continues to pay or tender in Court such rent and permitted increases
till the suit is finally decided; and
(ii) pays costs of the suit as directed by the Court.
(4) Pending the disposal of any such suit, the Court may out of any amount
paid or tendered by the tenant pay to the landlord such amount towards
payment 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 permitted increases
specified in the order made by the Court.”
“13. - When land-lord may recover possession-
(1) Notwithstanding anything contained in this Act1[but subject to the
provisions of section 15]; a landlord shall be entitled to recover
possession of any premises if the Court is satisfied--
(a) to (d) ***
(e) that the tenant has, since the coming into operation of this.
Act3[unlawfully sub-let] the whole or part of the premises or assigned or
transferred in any other manner his interest therein; 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 any part of
the premises let to him or to assign or transfer in any other manner his
interest therein:
[Provided that the5[State] Government may, by notification in the Official
Gazette, permit in any area the transfer of interest in premises held under
such leases or class of leases and to such extent as may be specified in
the notification.]
[(2) The bar against sub-letting, assigning or transferring premises
contained in sub-section (1) shall be deemed not to have had any effect
before the commencement 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
possession at the commencement of the said Ordinance, shall be deemed to be
valid and effectual].”
“19. - Unlawful charges by tenant
(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 relinquishment2[transfer or assignment] of his tenancy of
any premises.
(2) Any tenant or person who in contravention of the provision 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 fixed at Rs.3501-00 - Rs. three thousand five
hundred and one. for one year of 12 months to be paid to First Party, by
the Second Party; as rent on the following conditions :
(1) The said rent will be given to First Party, by Second Party every year
and if the Second Party does not pay the rent due to them every year, the
First Party will give registered notice for recovery of rent; and in spite
of such notice the Second Party or their successors, heirs or
administrators do not pay the rent, 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 or administrators, whosoever would be, and while
giving back the possession, Second Party will not raise any dispute or
objection, and even if raised will not be admissible by virtue of this
agreement.
(3) The First Party, or their successors, heir, are not entitled to sale or
pledge, or give possession of these pieces of land, to any other party, and
even if they do so, it will be void by virtue of this agreement.
(4) In case the government needs this land and/or if the government
purchase some 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 not
sustainable by virtue of this agreement.
(5) In case the Second Party, or their successors, attorneys.
administrators, assinee or executors do not stay, or do not make use of, or
do not store material, on the land; or vacate the land and give possession
to the First Party, before the specified period, then the First Party is
entitled to receive rent till the date of possession so given; and the
First Party has no right to claim rent for the remaining period.
(6) The municipal tax for the land is Rs.500-00 per year. which will be
paid by the Second Party; and the Second Party will give rent of Rs.3501/-
to First Party every year. However, the Second Party do not pay the
municipal tax of Rs.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 administrators, construct buildings with
necessary government permission, or use a free land or the Second Party
give on rent or on lease, and the First Party is entitled to take
possession of the land immediately on expiry of 199 years.
(8) The First Party, or their successors, heirs, administrators or
attorneys are entitled to take possession of the land before the expiry of
rent period, if the Second Party fail to pay rent to First Party every
year.
(9) The government tax on this land is to be 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 Rs.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 First Party has no right to take possession of the
land before expiry of 199 years, but the First Party has right to receive
amount of rent till the above period.
(10) The First Party and the Second Party and their successors, heirs,
administrators, attorneys and assignees, are accepting the terms and
conditions set out in this agreement.
Thus the Second Party has rented the pieces of land, from the First
Party under the terms set out in this agreement, at our will, and signed
and sealed this agreement.”
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.[1]. The
Division Bench took note of the fact that in Laxmidas Bapudas Darbar
(supra) the Bench had occasion to consider the purport and effect of the
decision of this Court in V. Dhanapal Chettiar vs. Yesodai Ammal[2] (7-
Judges) before holding that “as a matter of fact the question of
curtailment of fixed-term contractual lease was not involved in the case of
Dhanapal Chettiar” (Para 14). In fact in paragraph 15 of the judgment in
Laxmidas Bapudas Darbar (supra) it was held :
“It has nowhere been held that by virtue 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.[3] rendered in the context of Section 21 of the Karnataka
Rent Act and, specifically, the provisions of the aforesaid Section of the
Karnataka Act were considered. The non-obstante clause in Section 21 of the
Karnataka Act which gives an overriding effect over any provision in any
other law was specifically taken note of and eventually it was held that
the effect of the non-obstante clause contained in Section 21 of the
Karnataka Act on a fixed-term contractual lease would be as follows :
“18. The effect of the non obstante 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 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 the Act and it is also provided as one of the grounds for
forfeiture of the lease rights in the lease deed, not otherwise.
The period of fixed-term lease is ensured and remains protected except in
the cases indicated in the preceding paragraph.”
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-lease or
assign the leased rights/property, though, gives an overriding effect over
any other law has been made subject to any contract to the contrary.
Therefore, the terms of the lease and other cognate provisions of law is
not obliterated. The Division Bench, in view of the above provisions of
the Bombay Rent Act, went on to hold that the “ratio of the decision of 3-
Judge Bench of the Apex Court in Laxmidas Bapudas Darbar (supra) would
apply with much greater force for the benefit of the lessee 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 the leased land for its use is
concerned, the High Court, in the impugned judgment, disagreed with the
aforesaid proposition as a viable and acceptable proposition of law.
Furthermore, it was held that the liability/obligation to pay rent for the
leased land does not constitute an onerous obligation on the company in
liquidation so as to justify surrender of the leased land by the Official
Liquidator or any direction to the said effect under Section 525 of the
Companies Act.
13. So far as the issue 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 the company presently in winding up”. However, in the operative
part of its order the Bombay High Court was pleased to observe as follows :
“In view of the statement of Mr. RM Desai, learned counsel for the secured
creditor that the arrears of rent, if any, remaining unpaid by the company
in liquidation shall be paid by the secured creditor, we direct that within
one month from today, the Official Liquidator shall supply to the secured
creditor the particulars of the rent for the demised land for 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 liable to eviction on the ground of
default in payment of rent under Section 12 of the Rent Act. It is further
contended on behalf of the appellants that eviction of the official
liquidator is required to be ordered on the grounds enumerated in Sections
13(1)(e) and 13(1)(k) of the Rent Act. Pointing out the provisions of
Section 15 of the Rent Act it has been urged that the official liquidator
has assigned the property contrary to the provisions of Section 15, such
act not being saved either by express 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 property has ceased to serve the purpose of lease in view of
the liquidation of the company. Accordingly, the official liquidator is
liable to surrender the same to the original owners, it is urged.
15. Shri P.S. Narasimha, learned Additional Solicitor General on the
other hand has submitted that the provisions of default in the matter of
payment of rent would not be attracted as the secured creditors including
the State Bank of India had all along been ready and willing to pay all
rents due. In fact, 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
concerned, it is urged by the learned Additional Solicitor General that
under Clause 7 of the lease deed dated 10.12.1916 subletting is admittedly
permissible. In the present case, according to the learned Additional
Solicitor General, there is no assignment. In this regard reliance is
placed on two decisions of the Privy Council in Hans Raj vs. Bejoy Lal
Sel[4] and Ram Kinkar Banerjee vs. Satya Charan Srimani[5] to contend that
the law, as prevailing in India, does not recognize 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
already noticed, is the operation of Sections 12 (default), 13(1)(e)
(unauthorized assignment) and 13(1)(k) (non-user of the leased land). We
may now take up the aforesaid issues in seriatim.
17. Section 12 of the Rent Act confers protection on a tenant who is
regularly paying or is ready and willing to pay the rent. In the present
case while there is no doubt that rent has not been paid, equally, there is
no doubt that the secured creditors including the State Bank of India had
all along been ready 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 the failure of the tenant to comply with such notice within a period of
one month that the filing of a suit for recovery of possession is
contemplated. The service of notice giving an opportunity to the tenant to
pay the unpaid rent is the first chance/opportunity that the Rent Act
contemplates as a legal necessity incumbent on the landlord to afford to
the tenant. Admittedly, in the present case, no such notice as contemplated
by Section 13 (2) has been issued by the landlord; at least none has 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 not only the order does
not mention any specific rent which has to be tendered in Court but what is
encompassed therein is a direction to the official liquidator to let the
State Bank of India know the precise amount that is required to be paid on
account of rent and, thereafter, to pay the same to the official liquidator
whereafter it has been left open for the lessors to withdraw the said
amount from the official liquidator. Such an order by no stretch of
reasoning would be one contemplated under 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 discussed in a
preceding paragraph of the present order, the non obstante clause of
Section 13 (1) overrides only the other provisions of the Bombay Rent Act
and is also subject to the provisions of Section 15. Section 15 which
deals with sub-letting and transfer, though overrides the provisions
contained in any other law, is subject to any contract to the contrary.
Though in the present case the lease deed (clause 7) is capable of being
read as permitting sub-letting and not assignment what has 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 content of clause 7 of the lease
deed in question. However, we need not dwell on this issue at any length or
would also be required to consider the efficacy of the arguments of the
learned Additional Solicitor General on the strength of the two Privy
Council decisions mentioned above i.e. Hans Raj vs. Bejoy Lal Sel and Ram
Kinkar Banerjee vs. Satya Charan Srimani (supra) inasmuch as from Company
Application No. 34 of 2004, which deals with the claim of the appellants
for eviction of the official liquidator 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 notice/advertisement for disposal of the leased land
thereby making the said authority liable for eviction is an argument
advanced only at the hearing of the appeals before us. That apart the said
argument overlooks the fact that the assignment was only sought to be made
by the advertisement/notice issued and did not amount to a completed action
on the part of the official liquidator so as to attract the relevant
provisions of the Bombay Rent Act dealing with the consequential liability
for eviction. 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 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 contemplate eviction on account of such non-user but merely
entitles the lessor to receive rent for the period of such non-user of the
land.
20. The mere fact that the company has been ordered to be wound up cannot
be a ground to direct 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 Court in deciding the above issue against the appellants.
21. For the aforesaid reasons we affirm the order of the High Court dated
17.10.2008 in O.J. Appeal Nos. 65 of 2006, 66 of 2006 and 67 of 2006 and
dismiss the civil appeals arising out of SLP(C) Nos. 29282-29284 of 2008
wherein the said order is under challenge.
22. The other civil appeals, which have been heard analogously, can be
divided into two categories. The first is where the order dated 17.10.2008
passed in O.J. Appeal No. 65 of 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 putting the property to sale does not arise.
23. Though we have affirmed the order dated 17.10.2008 of the Gujarat
High Court passed in O.J. Appeal Nos. 65 of 2006, 66 of 2006 and 67 of
2006 and dismissed the civil appeals arising out of SLP(C) Nos. 29282-29284
of 2008 [Jabal C. Lashkari & Ors. Vs. Official Liquidator & Ors.], our
decision to affirm the said judgment of the High Court is based on a
consideration of the specific clauses in the lease deed between the parties
to the case. What would be the effect of the principles of law underlying
the present order vis-a-vis the specific clauses of the lease deed between
the parties in the other cases is a question that has to be considered by
the High Court in each of the cases. That apart whether the order dated
17.07.2006 passed in Company Application No. 250 of 2006 has attained
finality in law and forecloses the question raised and further whether
constructions have been raised on such land by the State Government for the
benefit of the general public, as has been submitted to dissuade us from
interfering with the order of the High Court, are questions that would
require a full and complete consideration by the High Court on the
materials available. To enable the said exercise to be duly performed, we
set aside the order of the High Court impugned in each of the aforesaid
civil appeals and remit all the matters to the High Court for a fresh
consideration in accordance with the observations and principles of law
contained in the present order.
.……......................,J.
[RANJAN
GOGOI]
.……......................,J.
[PRAFULLA
C. PANT]
NEW DELHI,
MARCH 29, 2016.
-----------------------
[1]
2001 (7) SCC 409
[2] 1979 (4) SCC 214
[3] 1994 (2) SCC 671
[4] [AIR 1930 PC 59]
[5] [AIR 1939 PC 14]
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