M/S. China Trust Commercial Bank vs Lilliput Kidswear Ltd. & Ors.
2016 Latest Caselaw 4322 Del

*       IN THE HIGH COURT OF DELHI AT NEW DELHI

%                                 Order delivered on: 3rd June, 2016

+                    C.A. No.775/2016 in CO.PET. No.66/2012

        M/S. CHINA TRUST COMMERCIAL BANK                 ..... Petitioner
                       Through  None

                         versus

        LILLIPUT KIDSWEAR LTD. & Ors.                 ..... Respondents
                       Through    Ms. Sakshi Jain, Adv. with Mr.
                                  Piyush Sharma, Adv. for applicant
                                  M/s Sapphire Diamond Exports Pvt.
                                  Ltd. (in C.A. Nos.775/2016)
                                  Mr. Satya Prakash Yadav, Adv.
                                  with Mr. Rakesh K. Sharma, 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
                                  application in CA No.2664/2014Mr.
                                  Ashish Makhija, Adv. for OL
                                  Mr. Vineet Sharma, Adv. with Mr.
                                  Satish Aggarwal, Adv. for Central
                                  Excise

        CORAM:
        HON'BLE MR.JUSTICE MANMOHAN SINGH

MANMOHAN SINGH, J.

1. By this order, I propose to decide the application on behalf of the M/s Sapphire Diamond Exports Pvt. Ltd., under Order 9 of the Company (Court) Rules, 1959 seeking directions to be issued to the Official Liquidator to company with order dated 5th March, 2014 passed in C.A. No.425/2014 by this Court for obtaining possession of the property of the applicant.

2. The applicant is the owner and landlord of the premises bearing No. D-93, Okhla Industrial Area, Phase-I, New Delhi 110020 comprising of Basement, Ground floor, Mezazanine Floor, First floor with terrace (hereinafter refer to as "suit premises"). The respondent No. 1 M/s.Lilliput Kidswear Limited through its authorized representative Mr.Ravnish Kumar Advani, executed the Lease deed dated 14th March, 2011 with the applicant. 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 (9) years against payment of monthly rent of Rs.7,25,000/- plus service tax on the terms and conditions incorporated in the said lease deed duly registered with the office of the Sub-Registrar, Delhi as Registration No. 4367 in Book No. 1, Vol. No. 110 11 on pages 55 to 71 ("Lease Deed"). Out of the aforesaid term of 9 years, 36 months were 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 3.3 of Lease Deed, the respondent Company/defendant No.1 handed over to the respondent post dated cheques for initial 3 years who has also deposited Rs.43,50,000/- as security deposit, equivalent to 6 months Lease Rent, with the applicant as per clause 3.4 of the Lease Deed. The respondent No.1 had in terms of clause 3.5 of Article 3 of the Lease Deed assured the applicant that the respondents shall make timely payment of the lease rent. It was also assured on behalf of the respondent No.1 that the respondent No.1 has the capacity to pay the agreed lease 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, since the beginning of the Lease period, the respondents made continuous and persistent default in making timely payment of lease rental but as a good will gesture, the applicant also accepted delayed payments without interest from the respondents. The applicant was compelled to remind the respondents about the said defaults time and again. The cheques issued by the respondents against the monthly rents to the applicant were also dishonored.

4. The respondents had also failed to make payment of service tax amount as agreed in the Lease Deed. It is further stated that the applicant has also been requesting the respondents to clear the outstanding service tax amounts as was agreed in the Lease Deed but the same also stands unpaid till now despite various letters and service tax invoices raised by the applicant in that respect.

5. Despite the assurances given by the respondents, the rental cheques for the month of December, 2011 and for all subsequent months thereafter, till date, have been getting dishonored. Thus, the applicant was constrained to bear huge litigation expenses to file numerous complaint cases for cheques bounced against the respondents under Section 138 of Negotiable instruments Act, which are pending before Patiala House and Saket Courts, Delhi.

6. The applicant in terms of Article 8.2 of the aforesaid Lease Deed served a notice dated 30th December, 2011 for termination of the Lease Deed and demand of possession/handover the peaceful and vacant possession of the premises in question and also to make payment of arrears of both lease rent and service tax to which the

defendants again did not reply, which further confirms that the respondents had no intention to pay the rentals and were illegally occupying the premises.

Despite the receipt of the aforesaid notice demanding peaceful and vacant possession of the premises to the applicant, the respondents have to comply with the same and failed to handover the possession. In terms of Article 8 of the Lease Deed, the defendants are also liable to pay damages @ Rs.50,000/- per day for the illegal and unauthorized use and occupation of the suit premises without any justifiable or cogent reasons for the same.

7. The respondent are continuing with the aforesaid unauthorized acts and conducts and are still occupying the same without any permissions/ authorizations granted by the applicant. It is stated by the applicant that by notice for termination of the Lease Deed and demand of possession dated 30th December, 2012, the applicant had terminated the Lease Deed and the respondent's occupation of the premises is illegal and impermissible under law and the respondent is in any case bound to handover the possession immediately, clear the arrears, outstanding service tax amounts and also to pay damages to the applicant for the said illegal/unauthorized use and occupation of the said premises.

8. It is submitted that since, the respondents failed to vacate and handover the peaceful, vacant and physical possession of the premises in question in compliance with the notice dated 30th December, 2011, the applicant again issued another legal notice dated 15 th March, 2012, calling upon the respondents to immediately vacate and hand over the peaceful and vacant possession of the premises and also to make the payment for damages for the illegal and unauthorized use

and occupation of the premises besides paying the outstanding service tax amount of Rs.36,405/-. But the respondents neither did vacate and handover the possession of the premises nor made any payment for arrear of rent.

9. Despite receipt of the notice and the 7 days clear period to hand over peaceful vacant possession of the premises to the applicant, the respondents failed, refused and neglected to hand over peaceful and vacant possession of the premises by 22nd March, 2012 to the applicant. Thus, the respondents became illegal occupants and trespassers in the premises and were liable to be evicted. The Directors of the respondent company are also jointly and severally liable to pay the damages for its continued illegal and unauthorized use and occupation of the premises.

10. The applicant above-named had filed a civil suit being CS (OS)2324/2012 seeking recovery of possession, arrears of rent, service tax deducted and damages/mesne profit against the respondent i.e. M/s Lilliput Kidswear Wear Pvt. Ltd. before this Court.

11. On 9th January, 2014, the respondents informed the Court that an Official Liquidator has been appointed against the respondent Company by this Court by its order dated 6th January, 2014 passed in C.P. No.66/2012 and the said suit could not proceed without obtaining the necessary leave of this Court. In view of Section 446 of Companies Act, 1956 and in accordance with order dated 9th January, 2014 passed by this Court, the applicant by way of C.A. 42/2014, sought the permission from this Court to proceed with CS (OS) 2324/2012 as the claim of the applicant is subsisting.

12. This Court by order dated 5th March, 2014 allowed the said C.A 425 of 2014 filed by the applicant seeking the said permission and

thereby permitted the applicant to pursue the Civil Suit 2324/2012 pending before the Court (original side) and directed the official liquidator to make arrangements for the disposal of the assets of the respondent Company lying in the premises of the applicant and handover the possession of the property situated at D-93, Okhla Industrial Phase-1 to the applicant.

The relevant excerpt from the said order dated 5th March, 2014 is reproduced hereinbelow for reference:

"The official liquidator shall approach the MCD for de-sealing the premises in order to secure the goods and assets of the respondent Company.

On obtaining the de-sealing order the official liquidator shall take possession of the said goods and assets of the company at the said premises.

The official liquidator shall thereafter, make a detailed list of the assets of the company and then make arrangements for the disposal of the said assets.

Without prejudice to the right and contentions of the parties in the pending suit, the possession of the premises shall be handed over to the applicant, thereafter".

13. The said order was passed in the presence of the counsel for the respondents company. The respondent company did not challenge the said order.

14. The applicant in the Civil suit being CS(OS) No.2324/2012 had also filed an application under Order XII Rule 6 CPC which was pending before the Court (original side) praying for a decree of possession based upon the admissions made by the Defendant in its written statement, but after the specific directions issued to the official liquidator vide order dated 5th March, 2014 passed in C.A 425/2014 by this Court, with regard to handing over the possession of the property

in question, the plaintiff did not further press upon the same during the proceedings before this Court (original side).

15. In view of order dated 5th March, 2014, the applicant wrote a letter dated 26th March, 2014 to the official liquidator enquiring about the status of the proceedings being conducted with respect to the property situated at D-93, Okhla Industrial Phase-1, New Delhi. The applicant again wrote a letter dated 4th June, 2014 to the official liquidator, referring the previous letter dated 26th March, 2014, to which a reply letter dated 10th April, 2014 was received by the applicant from office of the Deputy official Liquidator, this Court.

16. The Applicant 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.

17. The applicant therefore had to approach the Division bench of this Court by way of CM No.12576/2014 in Co. App. 06/2014 seeking directions to be issued to the official liquidator to comply with order dated 5th March, 2014 passed in C.A 425 of 2014 by this Court while submitting that C.A no. 425 of 2014 as filed by the Applicant with respect to property situated at D-93, Okhla Industrial Phase-1, New Delhi, was independent of the facts and transactions involved in CO. Pet 66/2012 in which the winding up order dated 6 th January, 2014 was passed. Therefore, any settlement arrived between the parties in

Co. Pet 66/2012 does not relate to C.A 425/2014 filed by the Applicant herein. It was also submitted that the directions as given by this Court vide order dated 5th March, 2014 in C.A no. 425 of 2014 was particular with respect to the applicant's property situated at D-93, Okhla Industrial Phase-1, New Delhi of which the Applicant herein is the owner and the same property is still in the unauthorized possession of the Respondents.

18. The Division bench in Co. App 06/2014 vide order dated 19 th February, 2015, directed the implementation of order dated 4 th February, 2015 passed by the Company Judge in CA No. 16879/2012 In Co. Pet.66/2012, thereby directing the Official liquidator to prepare inventory for the goods lying in the premise. The relevant excerpt of the said order is being reproduced hereinbelow:

"A preparation of the inventory in our view, without anything more, would not stand interdicted by the operation of Section 22 of SICA (Special Provision) Act nor would it in any manner dilute the order of stay passed in the present appeal. Interests of justice also merit that inventories of the goods of the appellant is expeditiously prepared."

In accordance with the said order, the exercise of inventorization as directed by this Court has been carried out by the official liquidator in the presence of Applicant's Counsel, with respect to the suit Premises on 17th April, 2015 and the list of goods lying in premise at the ground floor as sealed by the MCD has been prepared by the Official Liquidator. However, the rest of the premise is still occupied by the Respondent Company unauthorizedely.

19. While deciding the said CM 12576/14 filed by the Applicant 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, the relief 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 is reproduced 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".

20. Pursuant to the order dated 23rd November, 2015 from the Division Bench of this Court, the applicant wrote to the Official Liquidator vide letter dated 2nd December, 2015 requesting to take actions in terms of the Order dated 5 th March, 2014 passed by this Court and Order dated 23rd November, 2015 passed by the Division Bench with regard to the applicant's property but neither a reply has been received from the Official Liquidator's office till date nor they have taken any action to handover the possession of the said property to our Client. It is submitted that the Official Liquidator was bound to take an action in terms of the clear instructions issued under the orders dated 5th March, 2014 and 23rd November, 2015 but for some reason the same hasn't been done so far.

21. The applicant company has now approached this Court by virtue of the present application seeking directions to the Official liquidator to expeditiously comply with the order dated 5th March, 2014 passed by this Court in C.A No.425 of 2014 and act towards handing over the possession of the property situated at D-93, Okhla Industrial Phase-I, New Delhi, to its absolute owner, the applicant herein, as the respondents have been in unauthorized occupation of the same since the year 2012.

22. The respondent is unauthorized/illegal occupation of the suit premises therefore the present application seeking appropriate directions to the official liquidator in terms of the order dated 5th March, 2014 passed by this Court has been filed to have atleast the

possession of the property in question of which the applicant is the absolute owner.

23. In view of the above referred facts and circumstances and order passed on 5th March, 2014, the applicant is entitled to take the possession of the suit property. As per settled law, the respondents have no case on merit. The prayer made in the suit for possession filed by the applicant is liable to be allowed. Consequently, the respondent No.1 Official Liquidator is directed forthwith to handover the peaceful and vacant possession of the demised premises as the respondent No.1 is occupying the adjoining premises being D-95, Okhla Industrial Area Phase-I, New Delhi where the articles/stocks, if any, lying at the demised premises owned by the applicant could be shifted/removed and thus, there would be no prejudice caused to the respondent No.1/Official Liquidator who is directed to hand over to the applicant without any further delay in terms of order dated 5th March, 2014 passed in CA no. 425 of 2014 filed in Co. Pet 66/2012.

24. As far as other reliefs are concerned, the applicant 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 the order.

25. Accordingly, Mr. Paramjeet Singh, Court Master of this Court, (Mobile No.9810004278) is appointed as Local Commissioner to visit and take vacant possession of the premises bearing number D-93, Okhla Industrial Area, Phase-I, New Delhi 110020 in terms of the order dated 5th March, 2014 after approaching the Official Liquidator in advance and informing about the passing of orders.

The Official Liquidator is directed to cooperate with the Local Commissioner and to open the premises in case the same is locked, in

order to enable the Local Commissioner to take vacant possession of the suit premises. If necessary, the Local Commissioner shall also take the police assistance from the local Police Station if there is any protest from the side of respondents who shall otherwise co-operate the Local Commissioner to comply the orders passed by this Court. The fee of the Local Commissioners is fixed at Rs.70,000/- excluding expenses, which shall be paid by the applicant.

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.

26. The present application is accordingly disposed of.

(MANMOHAN SINGH) JUDGE JUNE 03, 2016