Ashim Kumar Banerjee, J.@mdashM/s. Quality Pharmaceuticals Pvt. Ltd. was carrying on business at the Kasba Industrial Estate belonging to West Bengal Small Industries Development Corporation (WBSIDC). They were occupying a plot of land measuring about 8 cottahs, 2 chittacks and 14 sq. ft being plot Nos. 52 and 53 through a Deed of Lease executed on July 24, 1991 for a period of 75 years commencing from July 24, 1991. The company defaulted in making payment of lease rent to the extent of Rs. 1,73,972.08 apart from electricity charges amounting to Rs. 62,855.63. The Corporation also assisted the company by supplying raw-materials valued at Rs. 11,98,046.37 that also became outstanding. Since the company was not clearing their dues the Corporation filed a winding up petition. Another financial institution IDBI filed a recovery proceeding at Debt Recovery Tribunal. Ultimately, the Corporation terminated the lease by appropriate notice issued on January 19, 2000. The company was subsequently wound up and the Official Liquidator took steps for sale of the assets of the company in liquidation. The Official Liquidator attempted twice for sale the assets. However, attempt failed in absence of appropriate offer being received for the assets. Ultimately, the learned Company Judge vide order dated August 17, 2001 confirmed the sale in favour of Pollen Laboratories Pvt. Ltd. at and for a sum of Rs. 40 lacs. While confirming so, His Lordship observed as follows :
Even though the offer does not match the valuation report but since Pollen Laboratories Pvt. Ltd. is going to purchaser the assets of the company (in liquidation) as a going concern with an undertaking to engage all the employees who are eligible and are on record, this court feels inclined to accept this offer.
So despite being objected by the Corporation and without disposing of their application for disclaimer, then pending, His Lordship confirmed the sale. On the disclaimer application, His Lordship observed that the learned counsel for the Corporation was not able to inform the Court whether any claim was lodged with the Official Liquidator. The learned counsel for the Official Liquidator contended, Official Liquidator did not receive any notice of termination. From the order appearing at pages 13-15, it is not clear how His Lordship disposed the application of the Corporation. Being aggrieved, Corporation preferred the instant appeal that was heard by us on behalf of the above-mentioned date.
2. Initially we asked Mr. Hirak Mitra, learned senior counsel, appearing for the appellant to take steps for service of notice of the appeal on the purchaser, such attempt failed as Mr. Mitra informed us, the unit was closed for a substantial period. We again asked to make further attempt when the Local Security Guards guarding the assets, received the notice as it appears from the affidavit of service. The Corporation also sent notice at the address given at the time of sale of the assets. The undelivered packet came with the remark, "No such company in this address, house not known". Hence, we took up the hearing in their absence. The learned counsel for the Official Liquidator was also absent.
3. Appearing for the appellant, Mr. Mitra contended, lease did not provide for any liberty to create any sub-lease or power to assign the same. Hence, the Official Liquidator, stepping into the shoes of the company in liquidation, could not have sold it as a going concern, impliedly permitting the purchaser to run the unit from the said premises, Mr. Mitra contended, the property admittedly belonged to the Corporation. The company in liquidation was the lessee under the Corporation, subject to payment of lease rent and other statutory and contractual outgoings. The company in liquidation failed and neglected to discharge such obligation. Hence, Official Liquidator was not competent to assign it for the remaining period to the purchaser. In any event, the unexpired period of the lease was not the asset of the company, assuming it be so it could never be preserved without discharge of the responsibility under the agreement that the company in liquidation failed to do. Hence, the order under appeal was liable to be set aside.
4. We have considered the contention of the appellant. We have carefully perused the judgment and order of the learned Single Judge. We have also considered the decision cited at the Bar in the case of Official Trustee, West Bengal and Others Vs. Sachindrar Nath Chatterjee and Another. reported in All India Reporter 1969 56 823. Mr. Mitra relied on the head note that would depict, according to the Apex Court, Court was not competent to pass order, permitting settlor to revoke and/or alter any clause of the Deed of Lease that was entered into by and between the parties. It was a case u/s 34 of the Indian Trust Act.
5. To decide this question, we have to look back to find out the status of the lessee as on the date of winding up of the company. As per the lease, lessee was supposed to pay and discharge all existing and future rates and taxes. They would have to discharge their obligation to pay all necessary charges including service charges required to be paid in maintaining the said demised plot. As per clause 2(j) they were not supposed to assign or transfer the lease-hold interest absolutely, except to the Registered small scale unit and to any financial or Governmental institution for obtaining any financial assistance with prior permission of the Corporation. They were also not allowed in terms of other sub-clauses to hand over possession of the asset to anyone, even to enter into joint venture agreement without permission being obtained for the purpose. In case of breach, the Corporation was entitled to enter upon the said demised premises in part or as a whole and would be entitled to take any other action including sale of the assets belonging to the occupant for recovery of their dues. As on the date of winding up, the company was not carrying on business. The unit was closed down long before as submitted by the appellant and not contradicted by the Official Liquidator. Admittedly, there were dues in arrear more than six months. Hence, there was no valid lease as on the date of winding up. Moreover, the Corporation terminated the same as discussed hereinbefore. Once the lease stood terminated the Official Liquidator was not entitled to sell the un-expired period of the lease without the consent of the Corporation.
6. The matter may be looked up from a different angle. The company in liquidation was a small-scale unit. To support this small-scale unit a migre amount of rent at the rate of Rs. 500/- per month was fixed for a land comprising of about 10 cottahs at the prime location of the city. The terms of the lease as a whole would depict, it was nothing but an incentive to a small-scale unit given at the behest of the Corporation. That facility could not be used for commercial purpose by assigning the same to any outsider. Admittedly, the company in liquidation did not have a valid lease on the date of winding up. It was not the case of the Official Liquidator, there was no rent in arrear as on the date of the winding up. Hence, there was no valid lease.
7. In our view, Corporation was entitled to re-possess the land in question. The sale that was held by His Lordship was for the moveable assets and the sheds and structures, if any, belonged to the company in liquidation. His Lordship''s observation that the company was being sold as a going concern with an undertaking to engage all employees, would mean, the unit was to be run by the new purchaser along with the existing machinery and the work-force. Where it would be run, was the headache of the purchaser. The purchaser might approach the Corporation for a fresh lease. The order of His Lordship might help them to have a fruitful negotiation with the Corporation. If the bid would fail, the purchaser would have to look for a different venue. The order of His Lordship could not be construed to mean, sale as a going concern, would also include the unexpired lease.
8. With such observation, we dispose of the appeal.
9. We abundantly make it clear, the Corporation was entitled to repossess the plots in question and they were entitled to an order of disclaimer that was impliedly denied by His Lordship. We, however, observe that the Corporation being a public sector undertaking should sympathetically consider retention of the unit, provided they make an independently approach to the Corporation for a fresh lease being obtained on such terms and conditions as may be mutually agreed upon. The Corporation should wait for three months to have such approach and on expiry they would be entitled to take lawful step to remove the purchaser from the premises and re-possess the plots in question, but after observing due process of law.
10. The appeal is disposed of accordingly without any order as to costs. Urgent certified copy of this judgment, if applied for, be given to the parties on their usual undertaking.
Shukla Kabir (Sinha), J.
I agree.
