M/S. Chinatrust Commercial Bank vs Lilliput Kidswear Ltd. & Ors.
2016 Latest Caselaw 4960 Del

*        IN THE HIGH COURT OF DELHI AT NEW DELHI

%                                            Order delivered on: 29th July, 2016

+                        C.A. No.2670/2016 in CO.PET. No.66/2012

         M/S. CHINATRUST COMMERCIAL BANK                          ..... Petitioner
                       Through   None

                                 versus

         LILLIPUT KIDSWEAR LTD. & Ors.                ..... Respondents
                        Through    Mr.Nakul Mohta, Adv. for Lilliput
                                   Kidswear Ltd.
                                   Mr.Rajiv Tuli, Adv. for applicant
                                   in CA No.777/2016 and
                                   2520/2016.
                                   Mr. Piyush Sharma, Adv. with
                                   Ms. Sakshi Jain, Adv. for
                                   applicant in C.A. Nos.2357/2016.
                                   Mr. Rahul Rajpal, Adv. for
                                   applicant M/s. L.R. Verma
                                   Fashion Pvt. Ltd. (in C.A.
                                   Nos.3730-31/2015 & 950 &
                                   952/2016)
                                   Mr. Nayantara Narayan, Adv. for
                                   applicant in CA No.2664/2014.
                                   Mr. Ashish Makhija, Adv. for OL
                                   Ms.Pooja Bhaskar, Adv. for
                                   Central Excise.
                                   Mr.Harshbir Singh Kohli, Adv. for
                                   applicants in CA No.2670/2016.

         CORAM:
         HON'BLE MR.JUSTICE MANMOHAN SINGH

MANMOHAN SINGH, J. (Oral)

1. By this order I propose to decide the application on behalf of Mr.Janak Bir Singh, Smt. Mahinder Kaur, M/s Jasdeep Singh & Sons (HUF), Sh. Harvinder Singh and Smt. Ajit Kaur, under Rule 9 of the

Companies (Court) Rules, 1959 seeking directions to be issued to the Official Liquidator/ respondent No.1-Company to de-seal the premises, to remove the articles of respondent No.1-Company and to hand over the physical, vacant and peaceful possession of the property of the applicants.

2. The applicants are the joint owners of property being Shop no. 2, J-79, Main Market, Rajouri Garden, New Delhi 110027 measuring approximately 2200 sq. ft. (built up area) comprising of lower ground floor, upper ground floor and first floor (hereinafter referred to as "said premise"). The respondent No. 1-M/s.Lilliput Kidswear Limited through its authorized representative Mr.Anurag Tiwari, executed the Lease Deed dated 13th April, 2009 with the applicants. The respondent Nos. 2 to 5 are the Directors of the respondent No. 1, who are jointly and severally liable in their capacity as Directors of the respondent No. 1 to use and occupy the aforesaid premises for a period of nine years i.e. three terms of three years each. The rent for the first term was Rs.3,15,000/-, the rent for the second term was Rs.3,62,250/- and rent for the third term was Rs.4,16,587.50/- apart from other outgoings such as electricity etc. on the terms and conditions incorporated in the said Lease Deed duly registered with the office of the Sub-Registrar, Delhi as Registration No. 5529 in Additional Book No. 1, Vol. No. 16757 at page No. 45 to 52. Out of the aforesaid term of 9 years, 36 months was to be the lock-in- period, wherein neither party was allowed to terminate the Lease Deed, except for the breach/default as mentioned in the said Deed.

3. As per the clause 8 of Lease Deed, the respondent Company deposited Rs.12,60,000/- as security deposit, equivalent to 4 months lease rent. The respondent No.1 assured the applicants that

the respondent No.1-Company shall make timely payment of the lease rent. As per Clause 2 of the Lease Deed the commencement of rent would start after completion of fitout period i.e. 1st April, 2009 and as per Clause 3, delayed payment of rent beyond 8 days after the due date shall incur an interest rate of 18% p.a. It was also represented and assured on behalf of the respondent No.1 that the respondent No.1 has the capacity to pay the agreed rent for using the aforesaid premises. It was also agreed that the respondent No.1 shall be entitled to deduct the applicable tax at source from the rent and shall periodically issue to the applicant, certificates for such deductions of tax at source. However, w.e.f. October, 2011 respondent No.1 Company stopped making the payment of the rent and made continuous and persistent default in making timely payment of lease rental but as a goodwill gesture, the applicants also accepted delayed payments without interest from the respondent No.1 Company. The applicants were compelled to remind the respondent No.1 Company about the said defaults time and again and also issued a legal notice dated 27th February, 2012 calling upon the respondent No.1 to make the payment of rent along with interest. Despite the assurance, the respondent No.1 Company failed to comply with the requisition made in the legal notice dated 27th February, 2012 and as such the applicants filed a suit for recovery of Rs.23,51,475/- and mandatory injunction against the respondent No.1 Company before this Court being CS(OS) No.1179/2012. Thereafter, the respondent No.1 Company started making payment to the applicants in instalments and the amount as claimed in the said suit was cleared.

4. However, vide order dated 6th January, 2014 passed by this Court, the respondent No.1 Company was ordered to be wound up and Official Liquidator attached with this Court was appointed Provisional Liquidator to take charge of all the assets of the respondent No.1 company and subsequent to the winding up order, the Official Liquidator sealed the said premise on 28th March, 2014.

5. The applicants also made a representation to the Official Liquidator on 20th May, 2014 to de-seal the said premise stating that the applicants are the lawful owners of the said premise and that the said premise was let out to the respondent No.1-Company on rent. However, no action was taken by the Official Liquidator, despite the representation made by the applicants.

6. The applicants thereafter in terms of Clause 14 and 20 of the Lease Deed sent a legal notice dated 9th October, 2014 to the respondent No.1 Company with a copy to the Official Liquidator calling upon the respondent No.1 Company to pay the unpaid arrears of rent of Rs.55,38,250/- along with interest @ 18% p.a. amounting to Rs.12,25,000/- and also terminated the tenancy of the respondent No.1 Company, calling upon them to hand over the vacant and peaceful possession on or before 24th October, 2014. Despite receipt of legal notice, the respondent No.1-Company did not reply, which further confirms that the respondent No.1-Company had no intention to pay the rentals and was illegally occupying the premises.

7. Despite the receipt of the aforesaid notice demanding peaceful and vacant possession of the premises to the applicants, the respondent No.1-Company has not complied with the same and has failed to handover the possession.

8. The respondent No.1-Company is continuing with the aforesaid unauthorized acts and conduct and is still occupying the same without any permission/ authorization granted by the applicants. It is stated by the applicants that by notice for termination of the Lease Deed and demand of possession dated 9th October, 2014, the applicants have terminated the Lease Deed and the respondent's occupation of the premises is illegal and impermissible under law and the respondent No.1 Company is in any case bound to handover the possession immediately, clear the arrears and also to pay damages to the applicant for the said illegal/unauthorized use and occupation of the said premises.

9. Despite receipt of the notice and the 15 days clear period to handover peaceful vacant possession of the said premise to the applicants, the respondents failed, refused and neglected to hand over peaceful and vacant possession of the said premise by 24th October, 2014 to the applicants. The applicants filed CA No.218/2015 seeking permission of this Court to continue with the civil suit being CS (OS)1179/2012 and also to file a fresh suit for recovery of possession against the respondent No.1 Company. The applicants thereafter filed CA No.1519/2015 praying for directions to the Official Liquidator/ respondent No.1- Company to vacate the premise and also to hand over the possession of the premises to the applicants. Since the respondent No.1 -Company had filed an appeal being Company Appeal No.6/2014, the proceedings before this Court were being adjourned, awaiting the outcome of orders of the Division Bench.

10. The applicants then came to know that Company Application No. 6/2014 has been filed before this Court by the respondents

against the winding up order dated 6th January, 2014 passed in Company Petition being No.66/2012 and in the said Company Application being No. 06/2014, the Division Bench by order dated 17th April, 2014, directed the Official Liquidator not to take further action with regard to the winding up of the Company. The said order would show the submissions of the counsels of both the parties stating that the parties have settled the matter inter-se.

11. The applicant therefore had to approach the Division Bench of this Court by way of CM No.21341/2015 in Co. App. 06/2014 seeking directions to be issued to the official liquidator to de-seal and vacate the said premise.

12. While deciding the said CM 21341/2015 filed by the Applicants herein before the Division Bench along with several other applications being filed by the landlords per se in Co. App. No.06/2014, having considered the rival contention, vide order dated 23rd November, 2015, liberty was granted by the Division Bench permitting the applicants to approach Company Judge for relief of possession. The relevant excerpt from the order dated 23rd November, 2015 has been reproduced herein below:

"It is necessary to also note certain further developments. In the meantime, several property owners who had let out different premises to the appellant company, aggrieved by the fact that the company was paying no rental or use and occupation charges as well as the fact that, in some cases on account of the fact that lease agreements with the appellant stood expired by the efflux of time, approached the learned Company Judge for leave to prosecute their claims against the company. Some of these landlords had already initiated eviction and recovery proceedings against the company before the winding up petition came to be filed. These landlords have filed CM Nos.12576/2014, 16879/2014, 16881/2014, 17415/2014, 6906/2015, 12435/2015, 21341/2015, 23096/2015 and 27907/2015

before us seeking leave to prosecute their claims against the company.

"We are informed that the learned Company Judge has refused to consider the prayer of these landlords in view of the interim order passed by us on 17th of April, 2014. We find that by the order passed on 17th of April 2014, we had only interdicted the Official Liquidator from taking further action with regard to winding up of the company which on that date related to taking over the properties of the company. We had not interdicted consideration of a prayer made by the third party before a learned Company Judge with regard to its claims against the appellant company. This position would subsist even on date.

So far as the appellant's submission that in view of the registration of its reference, none of these matters can be proceeded with is concerned, it is open for the company to make such submission as well as any other submission it may have before the court or forum before which such prayer is made by the landlords/ property owners.

So far as this court is concerned, without opining in any manner on the merits of the submissions made in these applications, the applications are disposed of with liberty to the applicants to avail appropriate remedy before the learned Company Judge or any other court or forum".

13. It is submitted that the Official Liquidator was bound to take an action in terms of the clear instructions issued under the order dated 23rd November, 2015 but for some reason the same hasn't been done so far.

14. The applicants have now approached this Court by virtue of the present application seeking directions to the Official liquidator to de-seal and to hand over the vacant, physical and peaceful possession of the said premise expeditiously in terms of the liberty granted by the Division Bench vide order dated 23rd November, 2015.

15. Pursuant to the liberty granted by the Division Bench, the applicants filed a suit for recovery of possession against the respondent No.1 Company as well as Official Liquidator being Suit No.125/2016 titled "Mahinder Kaur & Ors vs. Lilliput Kidswear Ltd & Anr" which has been decreed in favour of the applicants on 4 th July, 2016 by the Court of Sh. Rakesh Kumar-IV, ADJ-10 (West) Tis Hazari Courts, Delhi. However, the applicants apprehend that while executing the said decree, the respondent No.1 Company and/or the Official Liquidator may raise technical issues with regard to execution of the said decree and hence have approached this Court praying that the Official Liquidator be directed to de-seal the premises and further to direct the respondent No.1-Company/ Official Liquidator to remove the goods and articles of the respondent No.1 Company lying in the said premises and to hand over the vacant, physical and peaceful possessions to the applicants. The said application is also premised in view of the order dated 3rd June, 2016 passed by this Court in CA No.950/2016.

16. The respondent No.1-Company is in unauthorized/illegal occupation of the said premise therefore, the present application has been filed seeking appropriate directions to the official liquidator to de-seal and to hand over the possession of the property in question of which the applicants are the absolute owners.

17. In view of the above referred facts and circumstances and the liberty granted by the Division Bench, the applicants are entitled to take the possession of the said premise. As per the settled law, the respondents have no case on merit. The prayer made in the application for possession filed by the applicant is liable to be allowed. Consequently, the respondent No.1/ Official Liquidator is

directed forthwith to de-seal and to handover the peaceful and vacant possession of the said premise being Shop No.2, J-79, Rajouri Garden, New Delhi-110027.

18. As far as other reliefs are concerned, the applicants shall be entitled to claim the same as per law. As the applicant is facing problem in getting the possession from Official Liquidator, it is necessary to appoint a Local Commissioner to comply with the order.

19. Accordingly, Mr.Pranav Gambhir, Advocate (Mob.9958868577) is appointed as Local Commissioner to visit and take vacant possession of the premises bearing Shop No.2, J-79, Rajouri Garden, New Delhi-110027 after approaching the Official Liquidator in advance and informing about the passing of orders.

20. The Official Liquidator has agreed to co-operate with the Local Commissioner and to de-seal and to open the premises in case the same is locked and transfer all the goods lying in the said premises, in order to enable the Local Commissioner to take vacant possession of the suit premises.

21. Counsel appearing on behalf of the Official Liquidator submits that M/s Lilliput Kidswear Limited has sufficient space at C-39, Phase-II, Noida, UP to keep the goods lying at Shop No.2, J-79, Rajouri Garden, New Delhi. Learned counsel appearing on behalf of respondent No.1 upon instruction has made the statement that his client would be able to shift the goods and belongings within three weeks without any hindrance.

22. If necessary, the Local Commissioner shall also take the police assistance from the local Police Station through SHO concerned if there is any protest from the side of respondents who shall otherwise co-operate with the Local Commissioner to comply with

the orders passed by this Court. The fee of the Local Commissioner is fixed at Rs.80,000/- excluding expenses, which shall be paid by the applicants.

23. The Local Commissioner shall file his report by the next date of hearing.

A copy of this order be given dasti to the learned counsel for the applicant under the signatures of the Private Secretary.

The present application is accordingly disposed of. C.A. No.2664/2014 Counsel appearing on behalf of the respondent No.1 and Official Liquidator submit that copy of the application has not been supplied to them. Let the same be supplied to them within a week. Reply, if any, be filed by the next date.

List on 23rd August, 2016.

(MANMOHAN SINGH) JUDGE JULY 29, 2016