,,,
1 Official Liquidator has placed this Official Liquidator's Report for the following reliefs :,,,
(a) Whether this Hon'ble Court may be pleased to condonethe delay in filing the present report for charges that may become payable to MIDC,,,
pursuant to the order dated 14th January 2016;,,,
(b) Whether this Hon'ble Court may be pleased to directMIDC to disclose basis for claim of Transfer Charges, Differential Premium or Extension",,,
Charges for transfer of the said plot;,,,
(b) (1) Whether in view of para 34A of the report, this Hon'ble Court be pleased to hold and declare that the sale or liquidation of the subject property",,,
in the course of winding up of the allottee/lessee is a formal transfer under the extant MIDC Circulars and therefore not subject to payment of,,,
“Differential premiumâ€;,,,
(b) (2) Whether in view of para 42A of the report, thisHon'ble Court be pleased to exercise powers under Section 446 (2) of the Companies Act, 1956",,,
read with MIDC Circular dated 11th June 2011 and waive the levy of “Extension Charges†as claimed by MIDC over the subject property;,,,
(c) Whether this Hon'ble Court be pleased to direct MIDCto file its claim with regard to the charges that would become payable upon the said,,,
property being transferred so as to enable the Official Liquidator to take steps for revaluation and sale in compliance of the Hon'ble High Court order,,,
dated 1st July 2016.,,,
2 Official Liquidator was appointed pursuant to an order dated 22nd January 2008 as Liquidator of Transpower Engineering Limited [the company (in,,,
liquidation)]. The subject matter of this Official Liquidator's Report are two plots bearing no.AÂ26/3 admeasuring 64,569.50 sq. mts. and plot bearing",,,
no.A/26/2/2 admeasuring 22,879 sq. mts. situated at Butibori Industrial Area, Nagpur (the said plots). In this judgment, we are also considering the",,,
transfer policy of MIDC in respect of transfer of plots. MIDC was not originally a party to this petition or Official Liquidator's Report but since reliefs,,,
were being sought against MIDC, MIDC was directed to file an affidavit giving the details of its policy and various charges that it levies, should it wish",,,
to oppose the OLR.,,,
3 MIDC had alloted plot bearing no.AÂ26/3 on 24th November 1994 to the company (in liquidation). On 11th January 1995, MIDC executed an",,,
Agreement to Lease with the company (in liquidation). Under the terms of the Agreement to Lease, the allottee, viz., the company (in liquidation), was",,,
required to build and completely finish the building and structure to be used for industrial factory within 36 months, i.e., by 10th January 1998. On 20th",,,
June 1995, MIDC alloted another plot bearing no.A/26/2/2 to the company (in liquidation). On 16th April 1996, MIDC executed a predetermined",,,
Lease Agreement in respect of the said plots which provided that the lessee shall, on or before 22nd May 1998, complete the building and other",,,
structures. PreÂdetermined Lease Agreements are entered into when the lessee wants to take financial assistance and give the leasehold rights in the,,,
plot as security.,,,
4 On 22nd January 2008, this Court ordered Transpower Engineering Limited be wound up. Subsequently, on or about 16th May 2008 after the",,,
company was ordered to be wound up and as the company had not constructed a factory building on the said plots, MIDC called upon the company",,,
(not Official Liquidator, who had by then taken possession) to submit the building completion certificate on or before 31st December 2008.",,,
5 On 12th June 2010, MIDC called upon the company (again not Official Liquidator) to show cause as to why action should not be taken against them",,,
for failure to complete construction of the factory building and submit the building completion certificate within the stipulated time. On 11th April 2011,",,,
MIDC issued a panchanama notice in which it was mentioned that the effective date of termination was 29th April 2011. On 31st August 2011,",,,
MIDC issued another letter to the company and again not to Official Liquidator, calling upon it to file a reply to the show cause notice that it had",,,
issued on 12th June 2010. In the meanwhile, on or about 17th February 2011, Official Liquidator had already taken possession of the said plots.",,,
6 On 21st September 2011, MIDC cancelled the allotment of the said plots as the company had not filed a reply to the show cause notice and called",,,
upon the company to return the documents of the said plots. Again this was addressed to the company and not to Official Liquidator even though more,,,
than three years had passed after the company was ordered to be wound up and after Official Liquidator took possession. This position is not disputed,,,
by MIDC. Even after MIDC had express knowledge of the order of winding up and the appointment of the Official Liquidator, it took no steps visÂ‐",,,
à Âvis the Official Liquidator.,,,
7 On 23rd January 2012, Official Liquidator, pursuant to order dated 13th January 2012 passed in company application no.583 of 2011 filed by the",,,
workers of the company (in liquidation), invited claims from the workers/creditors under Rule 148 of the Companies (Court) Rules, 1959. The last date",,,
for filing the claims was 10th February 2012. Official Liquidator received 285 claims. On 24th January 2013, the reserve price for the said plots was",,,
fixed at Rs.8,00,00,000/Â. All this while MIDC was not in the picture at all. Despite public notice and the fact that Official Liquidator had taken",,,
possession of the said plots, MIDC did not even come forward to lodge its claim or any protest with Official Liquidator. Bids were received and the",,,
offer of one Gold Chip Infraventure Private Limited (Gold Chip) for Rs.8,50,00,000/Â was accepted by this Court. Gold Chip paid the entire",,,
consideration and on or about 18th October 2013 possession of the property was given to Gold Chip. Due to various reasons, which we need not go",,,
into at this stage, the formalities for transfer of title to Gold Chip could not be completed and therefore, Gold Chip took out a company application",,,
praying for conveyance and possession of the said plots or in the alternative, for refund of the purchase price. The said company application being",,,
company application no.461 of 2013 came to be disposed and Official Liquidator offered to transfer the said plots to Gold Chip and also to pay all,,,
MIDC charges as may be determined by the Court. In the meanwhile, Official Liquidator had received the quantum of charges from MIDC which he",,,
was challenging. The Company Court had directed Official Liquidator to take out an application, if he so desired, seeking reliefs pertaining to the",,,
demand of MIDC charges.,,,
8 Official Liquidator, thereafter presented Official Liquidator's Report No.185 of 2015 seeking, inter alia, appropriate orders concerning payment of",,,
MIDC charges including a suitable waiver or reduction of those charges. In reply to Official Liquidator's Report, MIDC took a position that the",,,
company (in liquidation) had failed to complete the factory building within the stipulated period as per the Lease Agreement and as a result, MIDC had",,,
an option either to determine the lease or continue the demise on payment of additional charges to MIDC, MIDC had vide its letter dated 21st",,,
September 2011 cancelled the allotment and Agreement of Lease of the said plots and hence the property could not be transferred by Official,,,
Liquidator to any third party. MIDC, however, was agreeable for such transfer, if Official Liquidator pays the outstanding amount of its service and",,,
other charges, extension charges and differential premium, all aggregating in excess of Rs.8,40,00,000/Â. MIDC had also raised objection to the",,,
jurisdiction of this Court to order any waiver or modification of these charges. I must add this is the stand taken by MIDC even today.,,,
9 In view of the stand of MIDC, Gold Chip took out an application bearing lodging no.544 of 2015 and sought refund of the amount of",,,
Rs.8,50,00,000/Â paid to Official Liquidator and also claimed damages. The Court allowed refund of the amount together with interest thereon at 9%",,,
p.a. But, there was a problem. The problem was, Official Liquidator had, in the meanwhile, utilised part of this amount of Rs.8,50,00,000/Â to pay",,,
some of the workers' dues, which I am informed, was in the region of about Rs.1,50,00,000/Â.",,,
10 As MIDC had filed a reply dated 24th June 2014 in company application no.358 of 2013, this Court in its order dated 1st July 2016 in Official",,,
Liquidator's Report No.67 of 2016, had directed Official Liquidator to file a report to this Court in respect of the charges payable to MIDC for any",,,
transfer of the said plots in favour of third party. Pursuant thereto, Official Liquidator by a letter dated 9th March 2015 to MIDC, called upon MIDC",,,
Charge,Plot No.AÂ26/3,Plot No.AÂ26/2/2,
Differential Premium,"Rs.2,54,40,200/Â","Rs.88,20,400/Â",
Extension Charges,"Rs.2,48,43,200/Â","Rs.88,02,700/Â",
Service and other Charges,"Rs.39,84,611/Â","Rs.94,08,455/Â",
Total,"Rs.5,42,58,011/Â","Rs.1,90,31,555/",
(1A) …........,,,
(1B) ….......,,,
(2) All the property and effects of the company shall be deemed to be in the custody of the court as from the date of the order for the winding up of,,,
the company.,,,
457. Powers of liquidator.,,,
(1) The liquidator in a winding up by the Court shall have power, with the sanction of the Court,(a) …....... (b) .…......",,,
(c) to sell the immovable and movable property and actionable claims of the company by public auction or private contract, with power to transfer the",,,
whole thereof to any person or body corporate, or to sell the same in parcels; …........",,,
17 Shri Jagtiani relied upon judgment in the matter of (i) Sisters of St. Joseph of Cluny V/s. The State of West Bengal and Ors.,,,
2018 SCC Online SC 397 , (ii) Maharashtra Industrial Development Corporation and Ors. V/s. Mahendra G. Wadhwani and (iii) Ajay Y. Mafatlal",,,
V/s. M/s. Mafatlal Dyes Chemicals Limited in support of his submissions that this Court has jurisdiction.,,,
18 Section 446 gives very wide powers to the Company Court. Section 446 (2) (d) was introduced pursuant to an amendment, which came into effect",,,
from 28th December 1960. The Apex Court in the matter of Sudarsan Chits (I) Limited V/s. O. Sukumaran Pilla1i 984 (4) SCC 657Â has analysed,,,
this provision extensively. Paragraphs 7, 8, 9 and 13 of the said judgment read as under :",,,
“7. Sec. 446(2) reads as under:,,,
446(2): The Court which is winding up the company shall, notwithstanding anything contained in any other law for the time being in force, have",,,
jurisdiction to entertain, or dispose of(a) any suit or proceeding by or against the company;",,,
(b) any claim made by or against the company (including claims by oragainst any of its branches in India);,,,
(c) any application made under Section 391 by or in respect of thecompany;,,,
(d) any question of priorities or any other question whatsoever, whetherof lay or fact, which may relate to or arise in course of the winding up of the",,,
company; whether such suit or proceeding has been instituted or is instituted, or such claim or question had arisen or arises or such application has",,,
been made or is made before or after the order for the winding up of the company, or before or after the commencement, of the Companies",,,
(Amendment) Act, 1960.â€",,,
8. Before we advert to the question of construction of Sec. 446(2)(b), itwould be advantageous to notice the historical evolution of the provision as",,,
well as its present setting. Sec. 171 of the Indian Companies Act, 1913, the predecessor of Sec. 446(1) did 517 not contain any provision similar or",,,
identical to that of Sec. 446(2). Sec. 171 only provided for stay of suits and proceedings pending at the commencement of winding up proceeding, and",,,
embargo against the commencement of any suit or other legal proceedings against the company except by the leave of the court. This provision with,,,
little modification is reÂenacted in Sec. 446(1). There was no specific provision conferring jurisdiction on the court winding up the company analogous,,,
to the one, conferred by Sec. 446(2). SubÂsec. (2) was introduced to enlarge the jurisdiction of the court winding up the company so as to facilitate",,,
the disposal of winding up proceedings. The provision so enacted probably did not meet with the requirement with the result that the Committee,,,
appointed for examining comprehensive amendment to the Companies Act in its report recommended that ‘a suit’ by or against a company in,,,
winding up should notwithstanding any provision in law for the time being be instituted in the court in which the winding up proceedings are pending.,,,
(1) ‘To give effect to these recommendations, subÂsec. (2) was suitably amended to bring it to its present from by Companies (Amendment) Act,",,,
1960. The Committee noticed that on a winding up order being made and the Official Liquidator being appointed a Liquidator of the company, he has",,,
to take into his custody company property as required by Sec. 456. Sec. 457 confers power on him to institute or defend any suit, prosecution, or other",,,
legal proceeding, civil or criminal, in the name and on behalf of the company. Power is conferred upon him to sell the properties both movable and",,,
removable of the company and to realise the assets of the company and this was to be done for the purpose of distributing the assets of the company,,,
amongst the claimants. Now at a stage when a winding up order is made the company may as well have subsisting claims and to realise these claims,,,
the Liquidator will have to file suits. To avoid this eventuality and to keep all incidental proceedings in winding up before the court which is winding up,,,
the company, its jurisdiction was enlarged to entertain petition amongst others for recovering the claims of the company. In the absence of a provision",,,
like Sec. 446(2) under the repealed Indian Companies Act, 1913, the official Liquidator in order to realise and recover the claims and subsisting debts",,,
owed to the company had the unenviable fate of filing suits. These suits as is not unknown, dragged on through the trial court and Courts of appeal",,,
resulting not only in multiplicity of proceedings but would hold up the progress of the winding up proceedings. To 518 save the company which is,,,
ordered to be wound up from this prolix and expensive litigation and to accelerate the disposal of winding up proceedings, the parliament devised a",,,
cheap and summary remedy by conferring jurisdiction on the court winding up the company to entertain petitions in respect of claims for and against,,,
the company. This was the object behind enacting Sec. 446(2) and therefor, it must receive such construction at the hands of the court as would",,,
advance the object and at any rate not thwart it.,,,
9. The fasciculus of sections included in Part VII of the Companies Actbears the heading ‘Winding up’. Sec. 443 sets out the circumstances in,,,
which a company may be wound up by the court. Sec. 444 provides that where the court makes an order for the winding up of a company, the Court",,,
shall forthwith cause intimation thereof to be sent to the official Liquidator and the Registrar. Sec. 446(1) provides that when a winding up order has,,,
been made or the official Liquidator has been appointed as provisional liquidator, no suit or other legal proceeding shall be commenced, or if pending at",,,
the date of the winding up order, shall be proceeded with, against the company, except by leave of the Court and subject to such terms as the court",,,
may impose. Then comes subÂsec. (2) of Sec. 446. It specifies the contours of the jurisdiction of the court which is winding up the company. It,,,
confers special jurisdiction on the Court which is winding up the company to do things that are set out in the various subÂclauses notwithstanding,,,
anything contained in any other law for the time being in force. Sec. 446(2) thus conferred special jurisdiction on the court winding up the company,,,
which otherwise it may not have enjoyed. The court in the Companies Act is defined in Sec. 2(11) to mean with respect to any matter relating to a,,,
company (other then any offence against this Act), the Court having jurisdiction under the Act with respect to that matter relating to that company, as",,,
provided in Section,,,
10. Section 10 provides that the court having jurisdiction under the Actshall be the High Court having jurisdiction in relation to the place at which the,,,
registered office of the company concerned is situate, except to the extent to which jurisdiction has been conferred on any District Court or District",,,
Courts subordinate to that High Court in pursuance of subÂsec. (2). The winding up petition has thus to be presented in the High Court before the,,,
Judge who is assigned the work under the Companies Act. Therefore, the Court which is winding up the Company will be the court to whom the",,,
petition for winding up was presented and which passed the order for winding up the Company. In this case, the order was made by the learned",,,
Company Judge in the Kerala High Court directing winding up the company. An appeal lies against the order for winding up the Company under,,,
section 483 to the same court to which and in the same manner in which and subject to the same conditions under which, appeals lie from any order or",,,
decision of the court in cases within its ordinary jurisdiction. In exercise of this Appellate jurisdiction, the Appellate Bench entertained the appeals and",,,
directed that the winding up order shall be held in abeyance till the scheme is implemented and if any default is committed the winding up order made,,,
by the learned Company Judge would be revived.,,,
10. ……..,,,
11. ……..,,,
12. ……..,,,
13. The approach of the High Court, with respect, overlooks the objectand purpose sought to be achieved by introducing subÂsec. (2) in Sec. 446 by",,,
Amending Act 65 of 1960. As noted earlier, winding up proceedings dragged on far decades with no end in sight and with no benefit to the creditors",,,
and contributories of the Company. To accelerate the process of winding up so as to bring them to an end, this subÂsection was amended in its",,,
present form in 1960 conferring jurisdiction on the court winding up the company to entertain amongst others any suit or proceeding by or against the,,,
company or any claim made by or against the company. If therefore, 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 of the company and ipso facto it would have jurisdiction to entertain the proceeding enumerated in clauses (a) to (d) of subÂsec. (2),,,
of Sec. 446. The apprehension of the High Court that if such jurisdiction is conferred on the court at a stage anterior to the winding up order being,,,
made but subsequent to the appointment of official Liquidator as provisional Liquidator an anomalous situation would arisen has left us unimpressed. If,,,
the winding up petition fails the proceedings pending in the court may have to be transferred to the court which can entertain the proceeding. But if the,,,
petition praying for winding up the company ends in a winding up order the proceedings initiated under subÂsec. (2) will have to be proceeded with till,,,
they are finally disposed of because winding up order will relate back to the date of the presentation of the winding up petition. In this view of the,,,
matter no anomalous situation can ever arise.â€,,,
 This Court in Ajay Y. Mafatlal (Supra) considered the decision of the Hon’ble Supreme Court passed in Sudarsan Chits (I) Ltd. (Supra) and,,,
held that Section 446 of the Act gives very wide powers to the company court. This Court held that Section 446(2) of the Act conferred wide,,,
jurisdiction on the court winding up the company to entertain, amongst others, any suit or proceeding by or against the company or any claim made by",,,
or against the company or any other question whatsoever which may relate to or arise in course of the winding up of the company.,,,
19 Therefore, as the winding up proceedings used to drag on for decades with no end in sight and with no benefit to the creditors and contributories of",,,
the company, to accelerate the process of winding up so as to bring them to an end, this subÂsection was amended in its present form in 1960",,,
conferring jurisdiction on the court winding up the company to entertain amongst others any suit or proceeding by or against the company or any claim,,,
made by or against the company or any other question whatsoever which may relate to or arise in course of the winding up of the company. In the,,,
absence of a provision like Section 446(2), Official Liquidator in order to realise and recover the claims and subsisting debts owed to the company",,,
would have to otherwise file suit in various forums. These suits may drag on through the trial courts and then the appeal court resulting not only in,,,
multiplicity of proceedings but also holding up the progress of the winding up proceedings. The Liquidator will have to also incur expensive litigation,,,
cost. This was the object behind enacting Section 446(2) and therefore, it must receive such construction at the hands of the court as would advance",,,
the object and not thwart it. This court is the court as defined in the Companies Act.,,,
20 Section 446 (2) starts with a nonÂobstante clause and it says “Notwithstanding anything contained in any other law for the time being in force,,,
….......†and under subÂsection (d) it says “any question of priorities or any other question whatsoever, whether of law or fact, which may relate",,,
to or rise in course of the winding up of the companyâ€, whether such suit or proceeding has been instituted or is instituted or such claim or question",,,
has arisen or arises or such application has been made or is made before or after the order for the winding up of the company. The powers under,,,
Section 446 bestowed to this Court are so wide that the Court has power “to decide any other question whatsoeverâ€, “whether of law or",,,
factâ€, “which may relate to or rise in course of the winding up of the companyâ€. The expression “any other question whatsoever†as well as",,,
the expression “which may relate to or rise in the course of the winding up of the companyâ€, are words of wide import, clothe the Company Court",,,
with the power to decide any question whatsoever that may arise whether of law or fact, which may relate to or rise in course of the winding up of",,,
the company. The power as given under Section 446 (2) (d) therefore, could include the power to grant a declaration as prayed for in this Official",,,
Liquidator's Report. Whether such declaration as prayed for should be granted is dealt with separately.,,,
21 The Apex Court in Sisters of St. Joseph of Cluny (Supra) while considering the provisions of Section 11 of the National Commission for Minority,,,
Education Institutions Act 2004 (NCMEIA) held that the expression “all questions†as well as the expression “relate to†are words of wide,,,
import. Though the facts are totally different, in Section 446 (2) (d), the words “any other question whatsoever†and “which may relate to or",,,
rise in course of the winding up of the company†have been used. When one draws a parallel between Section 11 of NCMEIA and Section 446 (2),,,
(d) of the Companies Act, 1956, it would show that the provisions of Section 446 (2) (d) are of much wider import than the provisions used in",,,
Section 11 (f) of NCMEIA. Paragraph 14 and 19 of Sisters of St. Joseph of Cluny (Supra) read as under :,,,
14. Section 11 has been amended since the enactment of the 2004 Act as follows:,,,
…................,,,
Functions of Commission. Notwithstanding anything contained in any other law for the time being in force, the Commission shallÂ",,,
…..............,,,
(f) decide all questions relating to the status of any institution as a Minority Educational Institution and declare its status as such; …............,,,
19. Secondly, Section 11(f) is a very wide provision which empowers the NCMEI to decide all questions relating to the status of an institution as a",,,
minority educational institution and to declare its status as such. The expression ""all questions"" as well as the expression ""relating to"", which are words",,,
of wide import, clothe the NCMEI with the power to decide any question that may arise, which may relate directly or indirectly, with respect to the",,,
status of an institution as a minority education institution. Looked at by itself, Section 11(f) would include the declaration of the status of an institution",,,
as a minority educational institution at all stages. Article 30 of the Constitution of India grants a fundamental right to all minorities, whether based on",,,
religion or language, to establish and administer educational institutions of their choice. The power under Section 11(f), read by itself, would clothe the",,,
NCMEI with the power to decide any question that may arise with regard to the right to establish and/or administer educational institutions by a,,,
minority. The power does not stop there. It also includes the power to declare such institution as a minority educational institution, which is established",,,
and administered as such, so that it can avail of the fundamental right guaranteed under Article 30 of the Constitution. Â Â Â (emphasis supplied)",,,
22 Moreover, subÂsection (1) of Section 456 provides “where a winding up order has been made or where a provisional liquidator has been",,,
appointed, the official liquidator or provisional liquidator, as the case may be, shall take into his custody or under his control, all the property, to which",,,
the company is or appears to be entitledâ€. It provides therefore, not only where parties agree the company is entitled to a property but even in cases",,,
where to the Liquidator it “appears†that the company is entitled to a property. The power is vast. The leasehold rights of the Company are an,,,
asset of the Company which is capable of sale through the process of liquidation. Therefore, Official Liquidator has powers to take possession of even",,,
MIDC property given on lease and sell the subsisting leasehold rights during the course of winding up. As provided under Section 457 (1) (c), Official",,,
Liquidator in a winding up by the Court shall have power, with the sanction of the Court, to sell the immovable property of the company by public",,,
auction or private contract, with power to transfer the whole thereof to any person or body corporate, or to sell the same in parcels.",,,
23 This Court in MIDC V/s. Mahendar Wadhwani (Supra) held that Liquidator, in a winding up by the Court, had power to sell and transfer, inter alia,",,,
leasehold rights of the company under liquidation for the unexpired period of lease and the Company Court has the jurisdiction and the powers to issue,,,
all necessary, ancillary and incidental directions so as to effectuate the main power contained in Section 457 (1) (c) of the Companies Act 1 of 1956,",,,
read with other enabling provisions of the Act. The Court held that the Company Court has jurisdiction to issue necessary directions to one and all in,,,
respect of matters interlinked with the disposal of the property of the company under liquidation by the Official Liquidator with the sanction of the,,,
Court. The Court did not consider the provisions of Section 446 (2) and it appears that it was not argued. The facts in MIDC V/s. Mahendar,,,
Wadhwani (Supra) though were not very similar it still has relevance to this matter. In that case, one Gannon Dunkerley and Co. Ltd. had offered to",,,
purchase all the assets of the company in liquidation alongwith the leasehold interest of the company under liquidation in respect to certain MIDC,,,
plots. MIDC was pleased to grant its consent for transfer of the lessee's interest in those plots without charging any amount of additional premium.,,,
The leasehold interest was not transferred to Gannon Dunkerley because Gannon Dunkerley requested Official Liquidator to transfer the leasehold,,,
rights in favour of a nominee of Gannon Dunkerley. It was MIDC's case that it was a further transfer and therefore, it was entitled to payment of",,,
premium in a sum of Rs.55,00,000/Â. When this was challenged by Gannon Dunkerley by way of judge's summons, it was submitted by MIDC that",,,
the Company Court had no jurisdiction as MIDC was a third party unconcerned with the winding up proceedings. The Company Court held that it has,,,
jurisdiction (only by reference to Section 457 of the Act and despite not noting Section 446(2) (d)) to consider the correctness of the demand of,,,
differential premium made by MIDC on such transfer. After reviewing the transfer guidelines of MIDC, the Court exercised this jurisdiction and held",,,
that differential premium is not payable and that the applicants shall pay ‘standard transfer fees’. Paragraphs 15 to 18 of the said judgment,,,
reads as under :,,,
15. By judge's summons herein, i.e., Company Application No. 261 of1995, the applicants have sought a direction from this court as company court to",,,
respondents Nos. 1 to 3 not to press for payment of premium in a sum of Rs. 65 lakhs (rupees sixtyÂfive lakhs) and set aside the demand made by,,,
respondent No. 1, for payment of such premium by its letter dated January 6, 1995, copy whereof is exhibit ""A"" to the affidavit in support of the",,,
judge's summons. By this judge's summons the applicants have also sought a direction from this court to respondents Nos. 1 to 3 to transfer the,,,
leasehold rights in respects of the eight plots of land referred to hereinabove in favour of applicant No. 2.,,,
16. Learned counsel for respondent No. 1 has raised several contentionsat the Bar while opposing the application herein.,,,
17. The first question which arises for consideration of the court is as towhether this court has jurisdiction to entertain the application made by the,,,
applicants herein, i.e., Company Application No. 261 of 1995.",,,
18. Shri R. M. Bardey, an officer of respondent No. 1, has filed hisaffidavit dated November 17, 1995, and has formulated the abovereferred objection",,,
as set out in para 2 of the said affidavit. It is contended that the application herein does not come within the ambit of section 446 of the Act, which has",,,
no application at all to this proceeding. It is contended that the State Bank of Hyderabad being a secured creditor was outside the winding up,,,
proceedings and respondent No. 1 as a third party is unconcerned with the winding up proceedings herein.,,,
24 Hence, Section 446 (2) (d) of the Companies Act, 1956 is a very wide provision to empower the Company Court to decide all questions, which may",,,
relate to or rise in course of the winding up of the company. This power is bolstered by provisions of Section 456 and Section 457 of the Companies,,,
Act. The issue as to whether MIDC is entitled to any of the charges, viz., differential premium or extension charges and whether the transfer is a",,,
formal transfer or nonÂformal transfer certainly relates to and rises in the course of the winding up of the company. Though the property had been,,,
leased to the company (in liquidation), the leasehold rights in the property belong to the company and therefore, it is in the custody of the Liquidator,",,,
who had infact taken possession and under Section 457, Official Liquidator in a winding up by the Court has power, ofcourse with the sanction of the",,,
Court, to sell the leasehold rights. Since this relates to an asset of the company, viz., the leasehold rights, it certainly relates to and arises in course of",,,
the winding up of the company.,,,
 Therefore, this Court has jurisdiction to decide the prayer sought in Official Liquidator's Report and Official Liquidator need not go to a Civil Court",,,
or file a writ petition under Section 226 of the Constitution of India.,,,
DIFFERENTIAL PREMIUM :,,,
25 It is the case of MIDC that as per the policies framed by MIDC, it has recognised two categories of transfer, viz., formal transfer and nonÂformal",,,
transfer. The formal categories of transfer, as per the circular dated 12th May 1998 read with its resolution annexed thereto, will be “all involuntary",,,
transfers including amalgamation, demergers, etc. under the direction of the Competent Court/Tribunals/appropriate Government not being this nature",,,
of permission and shall be permitted on recovery of the transfer charges. According to MIDC, when the transfer falls under a formal category, no",,,
differential premium is charged, whereas in the case of nonÂformal transfers, such transfers will be permitted subject to the recovery of the",,,
differential premium and the differential premium will be either 10% or 30% depending whether the Licensee/Lessee has constructed or consumed,,,
atleast 10% of the permissible F.S.I. of the plot area.,,,
26 The circular dated 12th May 1998 reads as under :,,,
The formal categories of transfer will be only following :,,,
1. …........,,,
2. …........,,,
3. All involuntary transfers including amalgamation, demergers etc.under the direction of the Competent Court/Tribunals/appropriate Government not",,,
being this nature of permission and shall be permitted on recovery of the transfer charges.,,,
…..........,,,
NONÂFORMAL TRANSFERS,,,
Any other transfer which do not cover under the formal transfers referred to above will be treated as a NON FORMAL transfer and the same will be,,,
permitted subject to the recovery of the differential premium as mentioned below :,,,
1. Whether the Licensee/Lessee has constructed or consumed atÂleast10% of the permissible F.S.I. of the plot area, such transfer will be permitted",,,
on recovery of the 10% of the differential premium.,,,
2. Where the condition at (1) above is not fulfilled, i.e., has notconstructed at least 10% of the permissible F.S.I. of the plot area such transfer will be",,,
permitted on recovery of the 30% of the differential premium.,,,
2.A. “Differential Premium†in respect of land shall mean the difference between the occupancy premium amount for the plot calculated at the,,,
land rates prevalent at the time of receipt of the application of the transfer by the Corporation and the amount calculated at the land rates prevalent at,,,
the time of initial allotment in favour of the transferor.,,,
 The Board of MIDC by its resolution no.3314 passed on 18th April 1998 approved the revised transfer guidelines set out in the above circular. The,,,
said resolution contains a statement which provides a description of transfers and whether such transfers constitute formal or informal transfers. Item,,,
Sl. No.,Description,As per existing guidelines,As per proposed guidelines
m),"i) Involuntary transfer by operation of law
viz. Amalgamation of Companies. ii)
Amalgamation/Restructuring/Merger
occasioned as per BIFR orders",Formal  transfer,Formal transfer
9.6.1952, (i) subÂlet, or (ii) assigned, or (iii) otherwise parted with the possession of the whole or any part of the premises, he would be liable for",,,
eviction. The applicability of the Section depends upon occurrence of a factual situation, namely, subletting or assignment or otherwise parting with",,,
possession of the whole or any part of the premises by the tenant. Whether it is a voluntary act of the tenant or otherwise and also the reasons for,,,
doing so are wholly irrelevant and can have no bearing. This view finds support from an earlier decision rendered in M/s. Parasram Harnand Rao vs.,,,
M/s. Shanti Prasad Narinder Kumar Jain and another AIR 1980 SC 1655 wherein Section 14(1)(b) of Delhi Rent Control Act came up for,,,
consideration. The tenant in the premises, was Laxmi Bank, which was ordered to be wound up and in that winding up proceeding, the Court",,,
appointed an Official Liquidator who sold the tenancy rights in favour of S.N. Jain on 16.2.1961. The sale was confirmed by the High Court and, as a",,,
result thereof, S.N. Jain took possession of the premises. Thereafter, the landlord filed a petition for eviction of Laxmi Bank. The High Court held that",,,
as the transfer in favour of S.N. Jain by the Official Liquidator was confirmed by the Court, he acquired the status of the tenant by operation of law",,,
and, therefore, the transfer of the tenancy rights was an involuntary transfer and the provision of Section 14(1)(b) of the Act would not be attracted.",,,
Reversing the judgment, this Court held that the Official Liquidator had merely stepped into the shoes of Laxmi Bank which was the original tenant",,,
and even if the Official Liquidator had transferred the tenancy interest to S.N. Jain under the orders of the Court, it was on behalf of the original",,,
tenant. It was further held that the sale was a voluntary sale, which clearly was within the mischief of the Section, and assuming that the sale by the",,,
Official Liquidator was an involuntary sale, it undoubtedly became an assignment as provided by Section 14(1)(b) of the Act. The Court further held",,,
that the language of Section 14(1)(b) is wide enough not only to include any subÂlease but even an assignment or any other mode by which,,,
possession of the tenanted premises is parted and the provision does not exclude even an involuntary sale.,,,
35 Further the Apex Court did not say that it was a voluntary sale because the Court also went ahead and said assuming it was an involuntary sale,",,,
still it would be hit within the mischief of the section. Section 14 did not have any separate categories for voluntary and involuntary sale as stated in the,,,
circular of MIDC. Section 14 also did not have anything like formal and nonÂformal transfer and certainly the Apex Court was not interpreting,,,
Clause 3 of the MIDC circular dated 12th December 2011. The wordings of Section 14 (1) and the circular are as different as chalk and cheese. It,,,
was once again asked to Shri Chawan as to what according to him would be an involuntary sale, Shri Chawan unconvincingly stated perhaps BIFR",,,
orders confirmed by the Court though that is not the wording of the circular. Therefore, I would proceed on the basis that even Shri Chawan and",,,
hence MIDC, had no idea as to what then should be an involuntary transfer pursuant to any order of the Competent Court.",,,
36 Shri Jagtiani submitted that when a company is in liquidation, Official Liquidator has no option but to liquidate all the assets to pay the creditors and",,,
it does not see to reason that MIDC, as submitted by Shri Chawan, would say that no differential premium is required to be paid when the company is",,,
being restructured in BIFR cases but when it is being wound up by the Company Court, differential premium will have to be paid. Shri Jagtiani",,,
submitted and rightly so, that it defies rationale because in BIFR reÂstructuring, the company is being kept alive for profit to be made and creditors",,,
paid off but in a winding up proceeding it is to liquidate the assets of the company and to pay off the creditors.,,,
37 One more reason why Shri Chawan's submissions that in a sale by Official Liquidator differential premium has to be paid cannot be accepted, is",,,
initially, the position under the 12th May 1998 circular was that formal categories of transfers included all involuntary transfers including amalgamation,",,,
demergers, etc. under the direction of the Competent Court/Tribunals/appropriate Government. The statement to the resolution passed by the Board of",,,
MIDC further clarified that involuntary transfers by operation of law, viz., amalgamation of companies and amalgamation/ restructuring/merger",,,
occasioned as per BIFR orders would be considered as formal transfers.,,,
38 On a bare reading of the 12th May 1998 circular, it is clear that the transfer of leasehold rights which is an asset of a company in liquidation, either",,,
by the BIFR or the Company Court, would qualify as a formal transfer and accordingly no differential premium would be payable on the same. Since",,,
mergers or amalgamations or similar arrangements under Section 391Â394 of the Companies Act had the effect of transferring the leasehold rights,,,
from the target company to the acquiring company, MIDC found (and it was also their policy) that such arrangements which eventually require",,,
sanction of the court, were considered formal transfers and accordingly, no differential premium was payable. Since such arrangements were",,,
otherwise in the ordinary course of business (in that the companies to the merger were going concerns and the merger/demerger was for,,,
economic/commercial reasons) and were undertaken to obtain a specific commercial advantage, the circular dated 12th December 2011 was issued",,,
stating that voluntary arrangements under Section 391Â394 of the Act would be categorised as nonÂformal transfers on which differential premium is,,,
liable to be paid. The underlying rationale would appear to be that simply because a court sanction is necessary to give effect to such a scheme of,,,
arrangement should not deprive MIDC of its legitimate revenue on such transfer, which is, in effect, a voluntary transfer between parties at arm’s",,,
length.,,,
39 Therefore, vide the 12th December 2011 circular, MIDC amended the 12th May 1998 circular and carved out a species of transfers which were",,,
effected pursuant to court orders, which transfers would be categorised as nonÂformal transfers, namely any scheme of amalgamation, takeover,",,,
merger or demerger etc. between two or more entities in the ordinary course of business as part of their corporate/business strategy. Such transfers,,,
would be subject to payment of differential premium. The language of the 12th December 2011 circular would not alter the position of sale in,,,
liquidation still being a formal transfer on which no differential premium is payable. This is because, the sale by the Official Liquidator is not like a",,,
voluntary willing buyer  willing seller sale, but the consequences of winding up. It is also under express orders of the Company Court. Hence it",,,
squarely falls within the definition of formal transfers under the 12th December 2011 circular.,,,
40 An aid to interpretation is that sales under BIFR schemes, according to Shri Chawan, are formal transfers. Therefore, under SICA (Sections 17(3)",,,
and 18(11)) in a restructuring scheme to revive the company, a sale of MIDC lease/assets by the Operating Agency was to be treated as a formal",,,
transfer. It would be wholly anomalous and illogical to treat a sale in winding up as a nonÂformal voluntary sale.,,,
 Yet another aid to interpretation is the use of the expression “ordinary course of business†in connection with transfers by the process of,,,
merger, amalgamation, demerger. This indicates that where such transfers, even if sanctioned by the court, are part of business (i.e. commerce and",,,
not necessarily day to day business alone) then such transfers of MIDC land will be voluntary and shall attract differential premium. The position of,,,
the company in winding up is the very opposite of ordinary course of business because the company is not carrying on business and is being wound up,,,
instead. Hence, it would be reasonable and logical to treat this situation differently under the extant MIDC circulars as forming part of the category of",,,
formal/involuntary transfers that do not attract differential premium.,,,
41 It was specifically clarified in the 12th December 2011 circular that involuntary transfers pursuant to any order/scheme of the Competent,,,
Court/Tribunals/appropriate Government/BIFR/AAIFR etc. shall be permitted on recovery of the standard transfer charges and not differential,,,
premium. If transfers pursuant to DRT orders are formal transfers, where the company whose assets are transferred is still a going concern, is one",,,
more circumstance in support of the position that transfers of MIDC land as part of winding up are also formal transfers.,,,
42 In the circumstances, as I am holding that a sale by Official Liquidator pursuant to orders of the Court will be formal and involuntary transfer,",,,
MIDC will not be entitled to any differential premium but only to standard transfer charges.,,,
43 To Shri Chawan's submissions that this Court cannot decide what would be the premium or only a Civil Court can hear after MIDC passes an,,,
order on a transfer application, I am not deciding the quantum. I am only deciding whether differential premium is chargeable or not and I have said it",,,
is not. Once this is done, certainly it will be easier to liquidate the assets of the company.",,,
EXTENSION CHARGES :Â,,,
44 It is MIDC's case that as per circular no.BÂ73864 dated 10th June 2013 in case of formal and nonÂformal transfer, if the time limit for",,,
development of the plot has been exhausted, then the plot shall not be transferred without recovery of extension charges. This includes the transfer",,,
done through financial institutions also, except the cases wherein the appropriate Court has given specific directions for nonÂrecovery of extension",,,
charges.,,,
45 Clause 8 of the circular dated 10th June 2013 provides that the Competent Court may order that such extension charges are not to be paid.,,,
46 Shri Jagtiani submitted that in the facts of the present case, since the Company Court is seized of the sale and transfer of the immovable properties",,,
of the company in liquidation, it is the Competent Court as contemplated by Clause 8 of the said circular dated 10th June 2013. The identification of",,,
the Competent Court is dependent on the context of the proceeding in question. For instance, if an otherwise healthy and solvent company was",,,
directed by MIDC to pay extension charges under the circular dated 10th June 2013, which the said company found unreasonable or incorrect, the",,,
company would be entitled to challenge the demand by MIDC before the appropriate Writ Court. In such a case, the Court would have jurisdiction to",,,
hear this challenge (i.e. the Writ Court) and would be the competent court in terms of the said circular dated 10th June 2013 which may, exercising its",,,
discretion, direct that such charges are not to be paid. In any event, Shri Jagtiani submitted that at this stage, when there is no identified purchaser of",,,
the subject property, the Official Liquidator is not seeking that the extension charges indicated by MIDC be waived. The Official Liquidator, at this",,,
stage, restricted its prayer to a declaration that in these present facts, this Court is the Competent Court as contemplated by Clause 8 of the circular",,,
dated 10th June 2013 which has jurisdiction to consider the question of waiver of extension charges, as and when it may arise.",,,
47 Shri Chawan contended that the Company Court is not the Competent Court. Curiously, MIDC does not indicate which would be the competent",,,
court. There is no forum or authority or Tribunal under the MID Act that would be the Competent Court to exercise the power under Clause 8 of the,,,
abovementioned circular. Hence the Competent Court in the situation of winding up would necessarily include the Company Court, i.e.,this Court.Â",,,
48 The allotment of Plot No.AÂ26/3 was made on 24th November 1994 and 11th January 1995. MIDC executed an Agreement to Lease with the,,,
company (in liquidation). The second plot bearing No.A/26/2/2 was alloted on 20th June 1995 to the company and on 16th April 1996 MIDC executed,,,
a preÂdetermined Lease Agreement in respect of the said plots. The company came to be wound up on 22nd January 2008. For almost 14 years,,,
when the agreement required completion of building and structure within 36 months, MIDC did not even lift a finger. MIDC slept over the whole",,,
thing. After the company was ordered to be wound up and Liquidator took possession of the said plots and issued advertisements in the newspapers,",,,
MIDC still did not come forward to lodge its claim but for reasons best known to MIDC started communicating with the company, which had already",,,
been ordered to be wound up, on the completion certificate for the buildings. First of such letter is dated 16th May 2008 whereby MIDC called upon",,,
the company to submit the certificate on or before 31st December 2008.,,,
49 Shri Chawan relied upon the provisions of the MIDC Act 1961 and MIDC Disposal of Land Regulations 1975 to explain the Court the aim and,,,
objects of the Act and the powers of the corporation under the Act and the regulations framed pursuant to the Act. Shri Chawan submitted that as the,,,
aim of the government in legislating this Act was to make special provision for securing the orderly arrangement in the industrial areas and industrial,,,
estate of industries in the State of Maharashtra and to state generally in the organisation thereof, the extension charges certainly have to be paid",,,
otherwise it will be a drain on the exchequer. Shri Chawan also submitted that if any allotee contravenes any of the terms and conditions of the,,,
Agreement to Lease, the corporation shall be entitled to redeem possession of the plot. Shri Chawan submitted that it is true that the corporation had,",,,
by its letter dated 16th May 2008, granted extension to complete construction on the said plots but that extension was only to submit building",,,
completion certificate by 31st December 2008 subject to approval and the company never submitted any building completion certificate or sought any,,,
extension. Shri Chawan also stated that as per the Act and the regulations and the circulars issued pursuant to the regulations, the company will have",,,
to pay extension charges. Shri Chawan also submitted that in this case even though the affidavit in reply has stated that the Competent Court can,,,
waive extension charges, Official Liquidator always steps into the shoes of the company and should not be granted any waiver.",,,
50 In my view, for MIDC to claim the extension charges upto the date of winding up or even beyond upto the sale of the property, MIDC has to lodge",,,
its claim with Official Liquidator. This is because the extension charges have already accrued in favour of MIDC as against differential premium,",,,
which will have to be paid and determined, if payable only at the time of considering the transfer application of a transferee. Therefore, for extension",,,
charges, Official Liquidator to consider while adjudicating MIDC's affidavit of proof of debt and decide the quantum of extension charges, if any",,,
payable and for what period, whether upto the date of winding up or any earlier period or it is continuing. I am not making any observation with regard",,,
to extension charges and that can be decided at the appropriate stage.   Â,,,
51 Therefore, (a) I hold that this Court will be the Competent Court and has jurisdiction to decide whether MIDC is entitled to claim differential",,,
premium and extension charges; (b) in a sale of leasehold rights by Official Liquidator, it will be a formal and involuntary sale and therefore, no",,,
differential premium is payable to MIDC by Official Liquidator but only standard transfer charges and (c) extension charges whether payable and to,,,
what extent can be decided at the appropriate stage once MIDC lodges its claim with Official Liquidator. Â,,,
52 Official Liquidator's report accordingly stands disposed.,,,
