Bombay High Court
Eleganza Furnishings Pvt Ltd vs Official Liquidator In ... on 26 August, 2015
Bench: S.C. Gupte
sg 1/6 cal98-15
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
COMPANY APPLICATION (L) NO.98 OF 2015
IN
COMPANY PETITION NO.28 OF 2012
Eleganza Furnishings Private Limited
...Applicant
(Original Respondent)
In the matter between :
The Bank of New York Mellon, London Branch ...Petitioner
vs.
The OL of Zenith Infotech Limited
.....
...Respondent
Ms. Rita Yadav, for the Applicant.
Mr. Divij Kishore, i/b. AZB & Partner, for the Petitioner.
Ms. Pratibha Ramaswamy, Assistant OL present.
.....
CORAM: S.C. GUPTE, J.
DATE : 26 AUGUST, 2015.
P. C. :-
. The Company Application is for direction to the Official
Liquidator to vacate and/or shift goods and materials of the Respondent
Company, if any, lying in, Gala No.17, Building No. A-9, Harihar
Corporation, Village Dapode, Bhiwandi, Dist. Thane and to handover
physical and vacant possession of the premises to the Applicant. The
Applicant is the owner of the premises. Under an agreement of leave and
licence dated 30 July 2014, the Applicant gave the premises on licence to
the Respondent Company. The licence period was three years from 1
August 2014 to 31 July 2017. The licence fee was Rs.24,425/- per month.
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The Respondent Company kept a deposit of Rs.72,675/- with the
Applicant as and by way of security deposit for fulfillment of the terms
and conditions of the licence agreement. It is the Applicant's case that the
Official Liquidator, who is in possession of the premises as a liquidator of
the Respondent Company, does not require the premises for beneficial
winding up and should be asked to handover vacant and peaceful
possession thereof to the Applicant after removing the goods, if any, lying
within the premises.
2. The Official Liquidator has filed a reply to the Company
Application submitting inter alia that the Official Liquidator may either
dispose of the movables lying in the premises by public auction or, in the
alternative, shift the furniture, fixtures and records lying within the
premises to another property of the Company in liquidation, which is
already in possession of the Official Liquidator.
3. The only debatable question is of payment of licence fees to
the Applicant. Learned Counsel for the petitioning creditor opposes the
Applicant's prayer for payment of arrears of licence fee. He submits that
as far as the arrears are concerned, the Applicant, as unpaid licensor of
the Company in liquidation, is really in the position of an unsecured
creditor and cannot get any priority in payment over the secured creditors
and workmen. Learned Counsel relies upon the judgments of the
Supreme Court in the case of Official Liquidator of High Court of
Karnataka Vs. Smt. V. Lakshmikutty 1 and of the Delhi High Court in
Amersey Industries & Exports Vs. CRB Capital Markets Ltd. 2, in
1 (1981) 3 Supreme Court Cases 32
2 ILR (2004) II Delhi 782
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support of his submissions.
4. As far as the arrears of licence fees for the period prior to the
order of winding up are concerned, it is no doubt correct that the
Applicant, as a licensor of the Company, can at the most adjust the
security deposit held by it against unpaid licence fee, but for the balance,
if any, after such adjustment, it is an unsecured creditor and must avail its
turn in liquidation for recovery of its dues in accordance with the law of
priorities of debts in liquidation. But if, in the course of winding up, that
is to say, after the passing of the winding up order but before the
Company is actually wound up, the Official Liquidator requires and uses
the premises for beneficial winding up, the licence fees payable during the
period of such beneficial use must rank as liquidation expenses and be
accorded top priority, i.e. even over the priority claims under Sections 529
A, 529 and 530 of the Companies Act, 1956.
5. In the present case, the Company was ordered to be wound
up and the Official Liquidator was appointed as its liquidator on 2
September 2014. The licence agreement was executed before this order.
The licence fees claimed to be due are from September 2014 till the filing
of this application and thereafter till delivery of possession of the
premises, that is to say, entirely for a period after the winding up order. It
is not disputed by the Official Liquidator that all throughout this period,
during which the Liquidator was in possession thereof, the premises were
required to store the movable assets of the Company so as to enable the
Liquidator to make a valuation and bring the same to sale with a view to
accomplish administration of assets in winding up. In other words, it is
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not in dispute that for the period for which the licence fees are claimed,
the premises were required and used for beneficial winding up. In that
case, licence fees are clearly payable as expenses of winding up.
6. In the case of V. Lakshmikutty (supra) cited by learned
Counsel for the Petitioner, the Supreme Court has held that under Section
529 of the Companies Act, 1956, in the winding up of an insolvent
Company, the same rules shall prevail and be observed with regard to the
provable debts as are in force for the time being under the law of
insolvency with respect to the estates of persons adjudged insolvent; that
the rule enacted in Section 46 of the Provincial Insolvency Act, thus,
should apply, and when there are mutual dealings between the creditor
and the Company, only that amount which is due at the foot of the
account of such mutual dealings would be recoverable. It cannot be said
that the amount due from the creditor to the Company should be
recovered in full, whilst the amount due to him should rank in payment
after the preferential claims provided under Section 530. What this
means is that the Applicant Licensor, in the present case, is entitled to
adjust the security deposit held by it towards unpaid arrears even prior to
the period of winding up, though it is an unsecured creditor in respect of
such arrears.
7. We are really not concerned with this situation in the present
case, since the entire arrears claimed are for the post-winding up order
period. As for that period, since the Applicant is anyway entitled to
preferential payment which comes under liquidation expenses, there is no
difficulty in allowing the Applicant to retain the deposit and adjust it
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towards the arrears and pay the balance of arrears to the Applicant.
8. Learned Counsel for the Petitioner relies on the decision of
Delhi High Court in Amersey Industries' case (supra). Relying on this
decision, learned Counsel submits that as far as the security deposit is
concerned, since there is no case for adjustment of it towards arrears
arising for a pre-winding up order period, the Applicant should be asked
to make over the same to the Liquidator and then wait in the queue for
the arrears for the post-winding up order period. There is no substance in
this contention. Delhi High Court in Amersey Industries holds exactly to
the contrary. Delhi High Court, relying inter alia on V. Lakshmitkutty's
case (supra), holds that the landlord has the right to adjust the
outstanding amount of rental from the security lying with him and it
would not make any difference whether the arrears of rent are for the
period before or after the winding up order.
9. In the premises, the application deserves to be allowed.
Accordingly, the following order is passed :
(i) The Official Liquidator is permitted to shift the furniture,
fixtures and records lying in the premises, described in prayer clause (a)
of the Company Application, to Zenith House, 30 MIDC, Central Road,
Andheri (East), Mumbai 400 093.
(ii) Such shifting of movables shall be accomplished within a
period of four weeks from today.
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(iii) After shifting the movables lying within the premises, the
Official Liquidator shall handover vacant and peaceful possession of the
premises to the Applicant forthwith.
(iv) The Official Liquidator shall pay the licence fees to the
Applicant for the period between 2 September 2014 to the date of
handing over possession of the premises at the rate provided in the Leave
and Licence Agreement dated 30 July 2014, after adjusting the security
deposit held by the Applicant towards the arrears of licence fees.
(v)
The Company Application is disposed of accordingly.
(S. C. GUPTE, J.)
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