Official Liquidator vs Orbit Corporation Ltd
2021 Latest Caselaw 995 Bom

         Digitally
         signed by
         N. D.
N. D.    Jagtap
Jagtap   Date:
         2021.01.15
         11:19:07
         +0530


                               IN THE HIGH COURT OF JUDICATURE AT BOMBAY
                                  ORDINARY ORIGINAL CIVIL JURISDICTION
                                                OLR NO.269 OF 2019
                                                          IN
                                      COMPANY PETITION NO. 593 OF 2015
                                                   In the matter of Companies Act, I of 1956;

                                                   And

                                                   In the matter of Orbit Corporation Ltd.

                                                   (In Liquidation)


                      Nina Concrete Systems Private Limited                        ...Petitioner

                      Mr. Sharan Jagtiani, Senior Advocate a/w. Mr. Shanay Shah, Advocate for the
                      Official Liquidator
                      Mr. Zal Andhyarujina, Senior Advocate a/w. Ms. Akanksha Agarwal, Mr.
                      Manthan Unadkat i/b. Unadkat and Company for Trisons Casa Projects Pvt.
                      Ltd., Noticee No.5
                      Ms. Armin Wandrewala a/w. Mr. Akshay Vani i/b. MLS Vani & Associates for
                      Mr. Abdeali Mamaji, Noticee No.11

                                                CORAM : S.J. KATHAWALLA, J.

RESERVED ON: 16th DECEMBER 2020

PRONOUNCED ON: 15TH JANUARY 2021

P.C. :

1. The present Official Liquidator's Report has been fled in the

winding up proceedings of Orbit Corporation Limited ("the Company"). The

Company Petition fled against the Company for winding up came to be

1/28 Nitin admitted by this Court vide its Order dated 19 th January 2018 and the Official

Liquidator was appointed as the Provisional Liquidator of the Company. The

Company was thereafter ordered to be wound up by Order dated 12 th April 2018

and the Official Liquidator was appointed as the Liquidator of the Company. By

this Report, the Official Liquidator is seeking inter alia an order and direction

from this Court against the occupants of the units in the building 'Orbit

Terraces', constructed by the Company on property bearing C.S. No. 460, 461,

462, 1/462 and 2/462 of Lower Parel Division, situated at N.M. Joshi Marg,

Lower Parel, Mumbai ("the said building"). The reliefs are sought against the

occupants who have been in unauthorized and illegal possession of their

respective units.

2. The said building is an under construction building and no

building permissions have been issued either by the Municipal Corporation of

Greater Mumbai (MCGM) or the Slum Rehabilitation Authority (SRA). Also,

no Occupation Certifcate (OC) has been issued by MCGM for the said

building.

3. The relevant facts giving rise to the above Report are briefy set

out hereunder:

2/28 Nitin 3.1. The Official Liquidator had received a letter dated 28th March 2019,

from Orbit Terraces Co-operative Housing Society ("Society"), requesting for

carrying out joint inspection of the said building. As per the request of the

Society, a joint inspection was conducted on 10 th May 2019 of the said building.

At the time of carrying out the inspection, the Official Liquidator learnt that

some of the foors of the said building were in occupation and possession of the

following:

a) The 1st foor was in occupation of Mobile2Win India Pvt. Ltd.

("Noticee No.8"). Noticee No.8 was running a hostel and had

housed approximately 130 students/working officials.

b) The 2nd foor was in occupation of 44EMB Studio Pvt. Ltd.

("Noticee No.9"). Noticee No.9 was running a hand embroidery

unit in the said premises.

c) The 4th and 5th foors were in occupation of one Bhagyodaya

Infrastructure Development Limited ("Noticee No.10").

However, at the time of inspection, the said premises were found

locked.

3/28                                                                                Nitin
         d)    The 8th and 9th foors were in occupation of one Abdeali Mamaji

("Noticee No.11"), admeasuring approximately 8000 square

feet, who was running a furniture making unit on the said foors.

3.2. Pursuant to the inspection being carried out by the Official

Liquidator, OLR No. 235 of 2019 was fled by the Official Liquidator inter alia

for an order and direction from this Court for directing the above occupants to

handover vacant and peaceful possession of their respective units to the Official

Liquidator. The basis for that report was that the said building, though illegally

constructed was an asset of the Company in liquidation and the occupants

/notices without any valid and legal title were using parts of the building for

their commercial gain. At the time of hearing of OLR No.235 of 2019, this

Court had passed several orders on 6th November 2019, 7th November 2019 and

8th November 2019, in respect of the reliefs sought for by the Official

Liquidator, which are referred to hereinabove. This Report has been fled by the

Official Liquidator seeking implementation of the directions passed by this

Court in OLR No. 235 of 2019.

3.3. On 6th November 2019, the CFO of Noticee No.9 undertook to

hand over vacant and peaceful possession of the premises being on the 2 nd foor

of the said building being Unit No. 201, admeasuring 8440 square feet of carpet

area to this Court in OLR No. 235 of 2019. Similarly, the Advocate appearing

4/28 Nitin for Noticee No. 11 undertook to this Court to hand over to the Official

Liquidator vacant and peaceful possession of the premises on the 8 th and 9th

foor of the said building within a period of six (6) weeks from the date of the

said order. The Advocate appearing for Noticee No. 10, being Bhagyodaya

Infrastructure Development Ltd., also undertook to this Court not to open the

premises on the 4th and the 5th foor of the said building.

3.4. On the same day, i.e. 6th November 2019, I had passed a separate

order in respect of Noticee No. 8 being Mobile2win India Pvt. Ltd., who had

housed approximately 130 students/working officials under the garb of running

a hostel on the 1st foor of the said building. This Court had in the said order

recorded that by running a hostel in an under-construction building, Noticee

No. 8 was playing with the lives of students/working officials by taking

advantage of the fact that they do not have a roof over their heads. After

directing the Executive Engineer of G South Ward and an officer from the

BEST Authority to remain present before this Court on 7 th November, 2019,

this Court directed that the occupants of the hostel must immediately vacate

the premises, as allowing them to stay in an under-construction building was

unsafe and a risk to their lives.

3.5. On 7th November 2019, the Assistant Engineer and Sub-Engineer

of G South Ward, Water Works Department, along with the Deputy Engineer

5/28 Nitin of Brihanmumbai Electricity Supply and Transport Undertaking (BEST) were

present before this Court. They informed the Court that the Noticee No. 5, i.e.

Trisons Casa Projects Pvt. Ltd. ("Trisons") had applied for a permanent

meter connection for the 1st foor of the said building. However, the said request

was not acceded to by the BEST. Thereafter, in view of a temporary connection

application of 80 KW meter made by Trisons, the BEST sanctioned a

temporary connection of 80 KW metre on 2 nd February, 2019, which was

provided later in June 2019. This Court was also informed by the learned

Advocate for the BEST that there was an incident of fre, which broke out on

29th December, 2018 on the 10th foor of the said building.

3.6. In view thereof, this Court in paragraph 5 of the order dated 7 th

November 2019, recorded as under:

"5. It is therefore clear that in the absence of an occupation certifcate or a fre NOC and despite a fre havinge taken place in December 2018, Trisons/Noticee No. 5 and the Noticee No. 8 are makinge illegeal geains by collectinge lakhs of rupees per month by housinge innocent students/inmates in an under-construction buildinge which is absolutely unsafe and a risk to their lives."

3.7. On 8th November 2019, this Court was informed that MCGM had

not provided any water connection to the said building and Noticee No. 8 was

supplying water to the inmates of the hostel through water tankers stored in the

6/28 Nitin overhead tanks on the 12 th foor. Thereafter, on 8th November 2019, this Court

had recorded inter alia as under:

"1. ... The buildinge is in the possession of the Ofcial Liquidator attached to this Court. None of the purchasers premises in the said buildinge were/are entitled in law to occupy and/or carry on any commercial activities by themselves and/or througeh orders. Therefore, the amounts collected by them througeh unauthorized use and occupation of the premises ougeht to be deposited by them with the Ofcial Liquidator."

3.8. The Order recorded the statement of Mr. Anuj Agarwal of

Noticee No. 8, in respect of deposit of the amounts collected by him from the

inmates of the hostel (after deducting the amounts paid to Trisons). This Court

also directed Noticee No.9 to fle an Affidavit disclosing the amounts paid by

him to Trisons and the amounts earned by him by unauthorizedly carrying out

activities in the said building. Even as regards Noticee No. 11, a direction was

passed for him to submit a statement to this Court showing the amounts earned

by him by unauthorized use of the premises in his occupation. Accordingly, in

paragraph 7 of the said order dated 8th November 2019, this Court directed

Trisons (Noticee No.5), Noticee Nos.8, 9 and 11, as under:

"7. Noticee Nos. 5, 8, 9 and 11 will have to deposit all the amounts earned by them by unauthorisedly lettinge out/makinge use of the premises in custody/possession of the Ofcial Liquidator. After perusinge the statements submitted by them, the Court will geive

7/28 Nitin directions qua the exact amounts to be deposited by them with the Ofcial Liquidator."

In compliance with the foregoing direction, Noticee No.8 had deposited

a sum of Rs.12,00,000/- (Rupees Twelve Lakhs Only) with the Official

Liquidator.

3.9. This Court was informed that Noticee No.11, Mr. Abdeali

Mamaji, occupant of the 8th and 9th foor of the said building, had fled an Appeal

(L) No.571 of 2019 challenging the order dated 8 th November, 2019 and that the

matter was listed on the production board of the Division Bench of this Court

on 16th December 2019, when Advocates on behalf of Noticee No.11 had

applied for ad-interim reliefs; however, this Court is informed that the Division

Bench of this Court had not granted any ad-interim relief to Noticee No.11.

3.10. This Court was also informed that Noticee No.9, occupant of the

2nd foor of the building, had fled an Appeal (L) No.556 of 2019 before the

Division Bench of this Court and vide Order dated 6th December 2019, the

Division Bench stayed the implementation of the Order dated 8th November

2019 only qua Noticee No.9. Therefore, the Official Liquidator has sought

liberty in prayer clause (a) of the Report to fle a fresh OLR seeking reliefs

against Noticee No.9, subject to the outcome of the Appeal (L) No.556 of 2019.

8/28 Nitin 3.11. In accordance with the directions passed by this Court, the

occupiers of the said building have fled several Affidavits setting out the

amounts which they claim to have earned/spent in the due course of the

commercial activity carried out unauthorizedly by them in the said building.

3.12. It is pertinent to note that after the Affidavits were fled by the

respective Noticees, on 25th November 2019, this Court granted opportunity to

all the Noticees to fle further affidavits. Since none of the parties were desirous

to fle further Affidavit/s pursuant to the order dated 8 th November 2019, the

Official Liquidator was directed to fle his report seeking appropriate relief/s

within a period of one (1) week from that date.

3.13. It is in these circumstances, the Official Liquidator fled the

present report before this Court on 6th December 2019. Written Submissions

were fled on behalf of the Official Liquidator and Noticee No.11. Soon

thereafter, the lockdown due to COVID 19 pandemic commenced. Once

physical hearings resumed, the matter was listed on 16th December 2020 and

the parties were given an opportunity to add to their submissions. After hearing

the parties and their Advocates, the matter was closed for orders on 16th

December 2020. A request was made by the learned Advocate for Noticee

No.11 that additional written submissions, if any, shall be fled on behalf of

Noticee No.11 by 21st December 2020. The same was allowed. In the

9/28 Nitin interregnum, Noticee No.11 moved his Appeal before the Division Bench on

18th December 2020; however, no orders were passed by the Division Bench of

this Court.

4. Before dealing with the submissions canvassed by the Advocates

for the parties, I shall frst refer to and deal with the Affidavits fled by the

Noticees pursuant to the Orders passed by this Court in OLR No.235 of 2019.

5. NOTICEE NO. 11 - MR. ABDEALI MAMAJI, OCCUPANT OF

THE 8TH AND 9TH FLOORS OF THE SAID BUILDING:

5.1. Noticee No. 11 had fled 3 Affidavits, being Affidavits of Mr.

Abdeali Mamaji dated 4th November, 2019 (1st Affidavit of Noticee No. 11), 13th

November, 2019 (2nd Affidavit of Noticee No. 11) and 25 th November, 2019 (3rd

Affidavit of Noticee No. 11).

5.2. Noticee No. 11 claims to be in possession of the 8 th and 9th foor of

the said building on basis of an oral arrangement with the Company, to which

Noticee No. 11 claims to have advanced a sum of Rs.7,62,00,000/-. Noticee

No. 11 also claims to be a childhood friend of Mr. Pujit Agarwal of the said

Company.

10/28 Nitin 5.3. In the 1st Affidavit of Noticee No. 11, it has been stated that in the

year 2010-2011, the amount of Rs.7,62,00,000/- was lent by a company Y.A.

Mamaji Furnishing Pvt. Ltd. (now in Liquidation vide Order dated 13th

February, 2019). Noticee No. 11 claims to be a Director and a majority

shareholder of Y.A. Mamaji Furnishing Pvt. Ltd. Noticee No. 11 has further

stated in the 1st Affidavit that the Company as well as Mr. Pujit Agarwal

"dragged their feet" when it came to formulizing any agreement/arrangement

in respect of the amounts allegedly payable by the Company to Y.A. Mamaji

Furnishing Pvt. Ltd. Interestingly, Noticee No. 11 claims that instead of the

amounts being paid to Y.A. Mamaji Furnishing Pvt. Ltd., the amount of

Rs.7,62,00,000/- was owed by Orbit to him.

5.4. It is further stated by Noticee No. 11, that in the year 2015, in lieu

of these purported amounts advanced by him to the Company; the Company,

Mr. Pujit Agarwal and one Mr. Ravi Kiran put Noticee No.11 in possession of

the entire 2nd foor premises of the said building, admeasuring approximately

8000 square feet. Noticee No. 11 further claims that in the end of 2016, he was

approached by the representative of Trisons, who claimed that the Company

had sold the 2nd foor premises to Trisons and Mr. Ravi Kiran thereafter offered

possession of the 8th and the 9th foor of the said building to Noticee No. 11.

Accordingly, Noticee No. 11 claims that he was put in possession of 8 th and 9th

11/28 Nitin foor of the said building, admeasuring approximately 8000 square feet, which

premises was admittedly used by Noticee No. 11 and an interior designing

concern by the name of Palate Interiors for conducting their business activities.

Thus, Noticee No. 11 claims that from January, 2017, he has been in

uninterrupted and exclusive use of the premises on the 8th and 9th foor and

that Noticee No. 11 claims to be a fat purchaser for value, having right, title and

interest in the premises on the 8th and 9th foor of the said building.

5.5. Noticee No. 11 had also fled a Company Application No. 268 of

2019 in this Court for seeking leave under Section 446 of the Companies Act, to

institute a suit against the Company. This Court had vide Order dated 6 th

September, 2019, dismissed the said Company Application, by reserving liberty

of Noticee No. 11 to lodge its claim with the Official Liquidator.

5.6. Thus, on basis of an alleged oral arrangement, Noticee No. 11

claims to be a purchaser, having right, title and interest in the said premises on

the 8th and 9th foor of the said building. Noticee No. 11 has also stated in his 1 st

Affidavit that there are approximately ffty (50) workers working in the

premises and that there are several ongoing projects and/or assignments being

carried out by Noticee No.11 which requires involvement of the employees.

12/28 Nitin 5.7. In the 2nd Affidavit fled by Noticee No. 11, he has stated that

through the commercial activity, he has generated fees towards sales and

consultancy, as under:

                    Year                  Sales &               Net Profits in
                                      Consultancy Fees            Rupees
                                         in Rupees
1.         1st April, 2015 - 31st         10,90,917/-             5,69,520/-
           March, 2016
2.         1st April, 2016 - 31st         69,20,432/-             7,29,064/-
           March, 2017
3.         1st April, 2017 - 31st        3,44,46,409/-           14,03,022/-
           March, 2018

5.8. Subsequently, in the 3rd Affidavit of Noticee No. 11, he has

claimed that the amounts generated for the period after 31st March, 2018 till

31st October, 2019 are as under:

                Year                          Sales &            Net Profits in
                                            Consultancy            Rupees
                                           Fees in Rupees
 1.               1st April, 2018 -            10,90,917/-           5,69,520/-
                  31st March, 2019
 2.               1st April, 2019 -            69,20,432/-            7,29,064/-
                 31st October, 2019

5.9. Noticee No. 11 has also claimed in the 3 rd Affidavit that most of

the work was executed at the site of the client and not from the premises. It is

further stated that only a part of the entire business is actually carried out from

13/28 Nitin the premises and therefore the profts of Palate Interiors cannot be said to be

derived from the premises. Paragraph 6 of the 3rd Affidavit reads as under:

"6. I say that I have been occupying the Premises only because Orbit Corporation owed me monies and that I did not need the ENTIRE Premises, as such, to carry on my business operations with Palate Interiors as most of the work, as aforesaid, is carried out at the site of the client."

6. NOTICEE NO. 5 - TRISONS CASA PROJECTS PVT. LTD.:

6.1. Trisons claims to have entered into Agreements for Sale dated

17th September, 2013 and 6th March, 2014 ("the Trison Agreements"), with

the Company in respect of the premises on the 1 st and 2nd foor of the building,

respectively. On the strength of the Trison Agreements, Trisons has proceeded

to give the premises out on the 1st and 2nd foor on leave and license basis.

Trisons has fled Suit (L) No.963 of 2019 before this Court inter alia seeking

specifc performance of its Agreements.

7. Before dealing with the submissions made on behalf of the Official

Liquidator and Noticee No.11, it is necessary to note that the learned Advocate

for Trisons had also made submissions before this Court, opposing the reliefs

prayed for in the OLR. However, in the interregnum, in compliance of the said

Order dated 19th December 2019, the Society vide their Advocates' letter dated

16th January 2020 submitted a report (running into 755 pages) containing their

14/28 Nitin detailed scrutiny in respect of the claims of the various allottees/ fat purchasers

("the Report"), including Trisons. In this background, the learned Senior

Advocate Mr. Zal Andhyarujina for Trisons made an alternate and without

prejudice submssion that Trisons was willing to make payment, as prayed for in

the OLR, only if it is found eligible to the premises by the Scrutiny Committee

appointed by the Society. The Official Liquidator has fled OLR No.29 of 2020

seeking necessary directions in respect of the Society Scrutiny Report referred

to above.

8. This Court is informed that the Society and the Scrutiny

Committee are yet to fnalize some aspects arising out of the Report in

consultation with the architects, which may be benefcial to Trisons. Since the

OLR No.29 of 2020 is fxed for hearing on 30th January 2021, this Court is

presently not passing any order against Trisons as the outcome of OLR No.29

of 2020 may result in Trisons agreeing to pay the amounts prayed for by the

Liquidator in this report. However, this Court has heard the submissions made

on behalf of Trisons and the Official Liquidator and in these circumstances the

order to be passed against Trisons is reserved, till such time the Scrutiny

Committee Report is considered by this Court OLR No.29 of 2020.

9. In light of the above facts and circumstances, the learned Senior

Advocate on behalf of the Official Liquidator, submitted that:

15/28 Nitin 9.1. In view of the Orders passed by this Court, none of the

owners/occupants are entitled to carry on any business/commercial activity

from the premises under their occupation without a NOC from the fre

department and OC from MCGM. The under-constructed building admittedly

is in occupation of the Official Liquidator and thus in possession of this Court.

He further submitted that by his above report, the Official Liquidator is merely

seeking to implement the directions passed by this Court in OLR No.235 of

2019, more particularly paragraph No.7 of the order dated 8 th November, 2019.

9.2. Any submission on behalf of the concerned Noticees, would

effectively tantamount to a review of this Court's direction passed in paragraph

7 of the order dated 8th November, 2019, which was fnal qua them. He further

submits that the order dated 25th November, 2019 passed by this Court also

assumes signifcance. He drew the attention of the Court to paragraph 4 of the

order dated 25th November 2019.

9.3. Without prejudice to the case of the Official Liquidator that the

directions passed in the order dated 8th November, 2019 read with the

observations made by this Court in Orders dated 6th November, 2019, 7th

November, 2019 and 25th November, 2019, are fnal and binding on the

Noticees, Notice No.11 occupied the premises under the garb of an alleged

16/28 Nitin understanding with the Company, which understanding, to say the least, was

without any basis and is untenable.

9.4. In any event, Noticee No.11 had enjoyed possession of the

premises and had not paid any amounts for occupying the same to the Official

Liquidator. Thus, the amount prayed for in the OLR is required to be deposited

by Noticee No.11, who had enjoyed possession of units admeasuring

approximately 8000 sq ft on the 8th and 9th Floor of the said building from

January, 2017 till December 2019 without paying anything and making

commercial gains at the same time.

9.5. Till date, the Society has not paid the entire consideration to the

Banks payable under the Consent Order dated 15th February 2019 passed by this

Court and in fact the time for such payment is extended by this Court from time

to time. Till such time the Consent Order dated 15 th February 2019 is fully

implemented and given effect to, the Official Liquidator is the custodian of the

assets of the Company in Liquidation and is in possession of the building 'Orbit

Terraces'.

9.6. The position that the Official Liquidator can invite the Company

Court to exercise its powers under Section 446 of the Companies Act, 1956, by

way of a report seeking directions is also frmly established. He placed reliance

17/28 Nitin on the decision of this Court in Modi Stone Limited, (2017) 202 Comp Cas 551,

to contend that the nomenclature of the proceedings i.e. whether by way of the

official liquidator s report or by way of company application for seeking various

directions including the relief for recovery of possession, does not matter and

the powers of the Company Court remain the same.

9.7. He further contended that Noticee No.11 has taken inconsistent

stands in his Affidavits and to enforce his purported oral arrangements with the

Company, had fled a Company Application No. 268 of 2019 in this Court

seeking leave under Section 446 of the Companies Act, 1956, to institute a suit

against the Company. This Court had vide order dated 6 th September, 2019,

declined to grant leave to Noticee No.11 and had dismissed the said Company

Application, by reserving liberty of Noticee No. 11 to lodge its claim with the

Official Liquidator.

9.8. Even otherwise, under Rule 9 of the Company Court Rules, 1959,

this Court has the inherent powers to pass such directions or orders as may be

necessary for securing the ends of justice or to prevent abuse of the process and

that this is a ft case to exercise its powers and pass such directions as sought for

in the captioned OLR.

18/28 Nitin 9.9. It was further contended that it is not clear as to whether there

are any permissions issued for the said building either by the Corporation or the

SRA. The Corporation by its Affidavit dated 25th November, 2019 had stated

that the proposal in respect of the said building was forwarded to SRA

Department on 23rd February, 2015. It appears that SRA had issued a Letter of

Intent to the Company and the proposed society then for a Slum Rehabilitation

Scheme under DCR 33(10). However, the Executive Engineer of SRA had fled

an Affidavit affirmed on 1st November, 2019, wherein it was stated that the

validity of the Letter of Intent had lapsed and there was no proposal in force

today. The Affidavit further states that SRA had not approved any plan in the

subject scheme. Thus, there was no proposal either by SRA or any fnal

sanction plan by the Corporation for the said building. The entitlement of any

occupant of their respective units are not crystallised in view of MCGM/SRA

not having sanctioned any building permissions for construction of the entire

building.

10. As against the above submissions advanced on behalf of the

Official Liquidator, the learned Advocate for Noticee No.11 has submitted that:

10.1. The reliefs sought for by the Official Liquidator is beyond

the powers in law to seek the reliefs, especially in a summary

19/28 Nitin manner. She further contended that no consideration is given to

the expenses incurred by the Noticee.

10.2. Moreover, this Court vide Order dated 6th November,

2019 had kept all rights and contentions of the noticees open.

That being the case, granting any reliefs in the OLR would

tantamount to going against the Order dated 6 th November 2019

and would be totally unwarranted and unjustifed in law and in the

facts of the present case.

10.3. The inherent powers of the Company Court cannot be

invoked in aid of contentious issues. Further, the deposit of

amounts cannot be called for when the unit itself is not the asset

of the Company in liquidation.

10.4. Noticee No.11 has challenged the Order dated 8th

November, 2019, by fling an appeal being Appeal (L) No.571 of

2019 and which is pending admission. Moreover, the Order dated

8th November, 2019, has been stayed qua other Noticees and it

would be just and necessary to await the consideration of the

appeal by the Division Bench of this Court.

20/28 Nitin 10.5. Noticee No.11 is himself a victim of fraud played by the Company

and its promoters. Noticee No.11 had paid consideration in respect of the

subject premises i.e., 8th and 9th foor of the building 'Orbit Terraces'. Further,

that the actions of the Official Liquidator discriminates against this Noticee

No.11.

11. I have heard the learned Advocates for both the parties and have

perused the Official Liquidator's Report, the Affidavits fled by Noticee No.11

and have considered the oral/written submissions made/fled on behalf of the

Official Liquidator and Noticee No.11. I am inclined to allow the Official

Liquidator's Report for more than one reason.

12. Firstly, the circumstances under which the directions were

passed by this Court in the Orders dated 6th November 2019, 7th November

2019 and 8th November 2019, assume signifcance. At no stage, did Noticee

No.11 contend before me that he was in 'authorised' occupation of the unit or

had produced any document to assert his right in the units. The entire case of

Noticee No.11 is based on an oral arrangement with the ex-director of the

Company in liquidation. Moreover, Noticee No. 11 had fled a Company

Application No. 268 of 2019 in this Court, seeking leave under Section 446 of

the Companies Act, to institute a Suit against the Company. However, this

Court had vide Order dated 6th September, 2019, dismissed the said Company

21/28 Nitin Application, by reserving liberty of Noticee No. 11 to lodge its claim with the

Official Liquidator. The effect of this refusal of the Company Court to grant

leave under Section 446 is that Noticee No.11 cannot fle any suit for

performance to perfect its alleged title-based claim to the units occupied by it. It

can never become the owner thereof. In any event, its occupation is not

supported by any agreement.

13. I have already dealt with the Affidavits fled by Noticee No.11,

and I am of the view that Noticee No.11 cannot have any claim over the said

units in absence of any registered document in his favour. Moreover, the

alleged oral arrangement cannot confer any right on Noticee No.11 to occupy

the unit without payment of any amount or like.

14. As regards the contention urged on behalf of Noticee No.11 that

the reliefs sought for by the Official Liquidator is beyond the powers in law to

seek the reliefs, especially in a summary manner, is misconceived and is liable to

be rejected. The powers of the Company Court under Section 446 of the

Companies Act, 1956 ('the Act') have been very broadly construed by the

Supreme Court in Sudarsan Chits (I) Ltd. v. O. Sukumaran Pillai, (1984) 4

SCC 657, where the Supreme Court observed as thus:

"8.... Now at a stagee when a windinge up order is made the company may as well have subsistinge claims and to realise these claims the Liquidator will have to fle suits. To avoid this

22/28 Nitin eventuality and to keep all incidental proceedinges in windinge up before the court which is windinge up the company, its jurisdiction was enlargeed to entertain petition amongest others for recoveringe the claims of the company. In the absence of a provision like Sec. 446(2) under the repealed Indian Companies Act, 1913, Ofcial Liquidator in order to realise and recover the claims and subsistinge debts owed to the company had the unenviable fate of flinge suits. These suits as is not unknown, dragged on througeh the trial court and Courts of appeal resultinge not only in multiplicity of proceedinges but would hold up the progeress of the windinge up proceedinges. To save the company which is ordered to be wound up from this prolix and expensive litigeation and to accelerate the disposal of windinge up proceedinges, the parliament devised a cheap and summary remedy by conferringe jurisdiction on the court windinge up the company to entertain petitions in respect of claims for and ageainst the company. This was the object behind enactinge 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."

15. The position that the Official Liquidator can invite the Company

Court to exercise its powers under Section 446 by way of a report seeking

directions has been dealt by this Court in the case of Modi Stone Limited

(supra). This Court in Modi Stone Limited (supra), has held that under Section

455 of the Act read with Rule 135 and 137 of the Companies (Court) Rules,

1959, the Official Liquidator is empowered to submit a report in a case where

the winding up order is made by the Company Court for appropriate directions

and reliefs. It was further held that the Official Liquidator is not required to fle

any suit for seeking any reliefs which can be granted by the Company Court by

exercising powers under Section 446(2) of the Act. All contentious issues can

23/28 Nitin be decided by the Company Court by exercising powers under Section 446(2).

This Court in Modi Stone Limited (supra), further held that under Section

446(2)(d) of the Act, the Company Court is also empowered to entertain or

dispose of any question whatsoever, whether of law or fact, which may relate to

or arise in course of the winding up of the company. In light of the judgment of

this Court delivered in Modi Stone Limited (supra), I am unable to accept the

above contention canvassed on behalf Noticee No.11 and thus the same stands

rejected.

16. Under Section 456 of the Act, where a winding up order has been

made or where a provisional liquidator has been appointed, the Official

Liquidator is required to take into his custody or under his control, all the

property, effects and actionable claims to which the company is or appears to be

entitled. Under Section 441 of the Act, the winding up proceedings relates back

to the date of presentation of the Petition, in this case being 16 th March 2015.

Neither Noticee No.11 claims rights to the units under any agreement nor does

he claim to have any document under which he obtained possession thereof. In

my view, Noticee No.11 was in unauthorised occupation of the subject units.

His use of the units after commencement of winding up proceedings is an

unlawful disposition of the Company's property, which is void unless validated.

In the present case, the question of validation also does not arise. Thus every

24/28 Nitin commercial activity carried out in the said building by Noticee No.11, is ex-facie

illegal, unauthorized and the benefts which Noticee No.11 has derived by

utilizing the premises in the said building is required to be deposited with the

Official Liquidator. This must follow as a consequence of the use being void.

17. I am also inclined to accept the submission of the learned Senior

Advocate for the Official Liquidator that the Liquidator is only seeking to act in

furtherance of the directions passed by this Court, as recorded in several Orders

passed in OLR No.235 of 2019. I see no reason how, granting any reliefs in the

OLR would tantamount to going against the Order dated 6 th November 2019.

18. The contention urged on behalf of Noticee No.11 that the

inherent powers of the Company Court cannot be invoked in aid of contentious

issues is also misconceived. By this Report, the Official Liquidator seeks to

safeguard the asset of the Company in liquidation, and moreover, the burden

lies on Noticee No.11 to establish that they are in authorised occupation of the

unit, which Noticee No.11 has miserably failed to. On basis of oral

arrangements, if the Company Court permits a party to occupy an immoveable

asset of the Company in liquidation, the same would tantamount to a failure to

enforce the provisions and scheme of the Act.

25/28 Nitin

19. Noticee No.11, to overcome the admissions made by him in the 1 st

and 2nd Affidavit, in paragraph 6 of his 3rd Affidavit, had stated that he had

occupied the premises only because Orbit Corporation owed him monies and

that he did not need the entire premises, as such, to carry on his business

operations with Palate Interiors as most of the work, was carried out at the site

of the client. This contention was not canvassed before me by the Advocate for

Noticee No.11. However, I shall deal with this contention as stated in the 3 rd

Affidavit fled by Noticee No.11, which is nothing but an afterthought.

20. I am of the view that Noticee No. 11 cannot claim that part of the

work was carried out at the client's premises and therefore the earnings from

the commercial activity cannot be viewed as being derived solely from the

premises of the said building. This stand taken by Noticee No. 11 is contrary to

the directions passed by this Court as well as to the admission made by Noticee

No.11 in his Affidavits, which sets out the earnings of Noticee No.11 from the

subject premises. The earnings set out in the Affidavits of Noticee No.11 are the

earnings of Noticee No. 11 derived from the commercial activities carried out at

the premises on the 8th and the 9th foor of the said building. Merely because

the fnal activity is not performed at the premises, the same does not give any

right to a party to say that the activity does not form part of the business as a

whole.

26/28 Nitin

21. The learned Advocate on behalf of Noticee No.11 had urged that

in view of the Appeal fled challenging the Order dated 8 th November, 2019, no

orders be passed on the Report. At the time of hearing, I was informed by Mr.

Jagtiani, learned Senior Advocate for the Official Liquidator that ad-interim

reliefs were pressed for i.e., stay of the operation of the Order dated 8 th

November 2019 by Noticee No.11 and the Division Bench of this Court did not

grant any ad-interim relief to Noticee No.11. This is not disputed by the learned

Advocate for Noticee No.11. In view thereof, I see no reason why I should not

proceed to pass directions against Noticee No.11. In my view, there is no

discrimination done by the Official Liquidator against Noticee No.11. This

contention of discrimination canvassed by Noticee No.11 is without any basis

and substance and I reject the same.

22. In my view, Noticee No. 11 cannot claim any equities for having

used the premises, as he does not have any document in his favour, which

would show any contractual relation between him and the Company in

liquidation. Moreover, the business was conducted by Noticee No.11 from the

subject premises without any permissions.

23. I must also note that though the OLR seeks an order of deposit

against Noticee No.11 for a higher amount, in the Written Submissions fled by

27/28 Nitin the Official Liquidator, on basis of revised calculations, the amount has been

reduced to Rs.28,83,872/-. The amount of Rs.28,83,872/- (Rupees Twenty

Eight Lakhs Eighty Three Thousand Eight Hundred and Seventy Two Only)

has been computed by the Official Liquidator at paragraph 34 of the Written

Submissions, which is reproduced hereunder :

                         Year                   Net Profits in Rupees
                                               (As per the Afdavits filed
                                               by Noticee No.11)
1.        1st January, 2017 - 31st March,          1,82,266/- (3 months
          2017 (January 2017 being the            proportionate proft of
          date Noticee No.11 claims to be       7,29,064/- for AY 1st April
          in possession)                         2016 to 31st March 2017)
2.        1st April, 2017 - 31st March,               14,03,022/-

3.        1st April, 2018 - 31st March,              5,69,520/-

4.        1st April, 2019 - 31st October,            7,29,064/-

        TOTAL (Rs.)                                  28,83,872/-

24. In the above circumstances, the following order is passed :

a. Noticee No.11 is directed to deposit a sum of Rs.28,83,872/- (Rupees Twenty Eight Lakhs Eighty Three Thousand Eight Hundred and Seventy Two Only) within a period of four weeks from today with the Official Liquidator, High Court, Bombay;

b. The Official Liquidator's Report is kept pending qua the other reliefs.

                                                   ( S.J.KATHAWALLA, J. )




28/28                                                                            Nitin