East India Trading Company vs Radha Kanta Dhar and Others

Bhaskar Bhattacharya, J.—This appeal is at the instance of an alleged sub-tenant under the company in liquidation and is directed against an order dated May 4, 2010, passed by a learned single judge, by which his Lordship, while disposing of an application u/s 535 of the Companies Act, 1956 (hereinafter referred to as "the Act") filed by the landlord of the premises in question, gave liberty to the said applicant to institute a suit against the company in liquidation subject to the condition that such suit should be instituted only in the company court.

Being dissatisfied, the alleged sub-tenant has come up with the present appeal.

In the proceedings for winding up of the company in liquidation, the applicant, namely, Radha Kanta Dhar, claiming to be the owner of the three godowns, let out at premises No. 309, B. B. Ganguly Street, Calcutta-700 012 in favour of the company in liquidation, came up with the prayer for disclaimer on the allegation that the company in liquidation having illegally let out the property in favour of the three sub-tenants without his consent, an appropriate direction should be given to the official liquidator for releasing the same as the company in liquidation had ceased to be in occupation of the property for a long time and the said assets of the company were of no use to the company. It was further alleged that the property in the tenancy right of the company was an onerous one.

The said application was opposed by the appellant thereby contending that it is a lawful sub-tenant inducted by the company in liquidation from the year 1975 with the knowledge and consent of the landlord, the applicant u/s 535 of the Act and as such, its right as sub-tenant should be protected.

The learned company court on consideration of the materials on record came to the conclusion that the official liquidator could not assist the court to arrive at the conclusion as to whether prior consent in writing of the applicant was obtained by the company in liquidation for subletting the property in favour of the present appellant and in such circumstances, the learned single judge decided to give leave to the applicant to institute a suit against the company in liquidation subject to the condition that such suit should be instituted in the company court.

Being dissatisfied, the alleged sub-tenant has come up with the present appeal.

Mr. Bose, the learned advocate appearing on behalf of the appellant, strenuously contended before us that the learned company court acted without jurisdiction in granting such leave while disposing of an application u/s 535 of the Act. In other words, Mr. Bose contends that there was no scope of granting such liberty within the scope of Section 535 of the Act. He, therefore, prays for setting aside the order granting leave.

After hearing learned Counsel for the parties and after going through the materials on record, we find that a company court is vested with jurisdiction u/s 446(2) of the Act to entertain any suit against the company in liquidation notwithstanding anything to the contrary contained in any law for the time being in force involving any question of priorities or any other question whatsoever, whether of law or fact, which may relate to or arise in course of winding up of the company.

In the case before us, there is no dispute that the company in liquidation was a tenant in respect of the property in question governed by the provisions of the West Bengal Premises Tenancy Act, 1956 and such tenanted property has been found to be in the possession of somebody else claiming to be a tenant under the company. According to the provisions contained in Section 13 of the said West Bengal Premises Tenancy Act, 1956, creation of sub-tenancy without prior written consent of the landlord affords a ground of eviction of the tenant in favour of the landlord. The landlord in such circumstances having made an allegation of illegal sub-tenancy and the official liquidator having failed to furnish any material to throw light on the subject, in our opinion, the learned company court was quite justified in giving liberty to the landlord to institute a suit against the company in liquidation for the purpose of establishing his case for getting back the property on proving that without his written consent an illegal sub-tenancy was created by the company in liquidation.

We do not appreciate the submission of Mr. Bose that the grant of such liberty while disposing of an application u/s 535 of the Act is not within the competence of the company court. The learned single judge, in this case, has refused the prayer of disclaimer made u/s 535 of the Act as the official liquidator failed to produce sufficient materials relating to the tenancy in question in his possession and in such a situation, while refusing such prayer, has merely granted liberty to the landlord to file a suit which the company court is entitled to entertain as provided in Section 446(2) of the Act.

We, therefore, find that there was nothing wrong on the part of the learned single judge in granting such leave while refusing relief in terms of Section 535 of the Act.

We, thus, find no reason to interfere with the discretion exercised by the company court, which was within the power of the said court. The appeal is, thus, devoid of any substance and is dismissed.

Since the subject-matter of this appeal is similar to the one disposed of above, this appeal is also dismissed for the selfsame reasons. In the facts and circumstances, there will be, however, no order as to costs.

J.N. Patel C.J.

I agree.