Bheruji Estate vs Official Liquidator Of Shree ...
2022 Latest Caselaw 7837 Guj

     C/COMA/68/2017                                 JUDGMENT DATED: 13/09/2022




            IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

                  R/COMPANY APPLICATION NO. 68 of 2017

                      In R/COMPANY PETITION NO. 66 of 1988


FOR APPROVAL AND SIGNATURE:


HONOURABLE MS. JUSTICE VAIBHAVI D. NANAVATI

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1     Whether Reporters of Local Papers may be allowed
      to see the judgment ?

2     To be referred to the Reporter or not ?

3     Whether their Lordships wish to see the fair copy
      of the judgment ?

4     Whether this case involves a substantial question
      of law as to the interpretation of the Constitution
      of India or any order made thereunder ?

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                          BHERUJI ESTATE
                               Versus
         OFFICIAL LIQUIDATOR OF SHREE AMBICA MILLS LTD. (IN
                       LIQUIDATION) & 4 other(s)
==========================================================
Appearance:
MR MONAAL J DAVAWALA(6514) for the Applicant(s) No. 1
MR ABHIJIT P JOSHI(1330) for the Respondent(s) No. 1
MR GAURAV K MEHTA(5227) for the Respondent(s) No. 2
MR P P MAJMUDAR(5284) for the Respondent(s) No. 4.2
NOTICE SERVED for the Respondent(s) No. 3,4,4.3,5,5.1,5.2
OFFICIAL LIQUIDATOR for the Respondent(s) No. 1
SERVED BY AFFIX(N) for the Respondent(s) No. 4.1,5.3
==========================================================

    CORAM:HONOURABLE MS. JUSTICE VAIBHAVI D. NANAVATI

                                Date : 13/09/2022

                               ORAL JUDGMENT

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1. Heard learned advocate Mr. Davawala for the applicant, learned advocate Mr. Joshi for respondent no.1- official Liquidator and learned advocate Mr. Gaurav Mehta for respondent no.2.

2. The facts of the present case, stated briefly for adjudication of the dispute in the present application are stated thus:

2.1 Shree Ambica Mills Ltd (hereinafter referred to as "the said company"), was ordered to be wound-up by order dated 17.01.1997, passed in Company Petition No. 66 of 1988 and the Official Liquidator attached to this Court was appointed as the liquidator of the company with directions to take charge of the assets and properties of the company including the property situated at Akota Road, Vadodara and deployed its security guards for safe guarding the assets and properties of the company. After following due procedures for sale of assets of the company, the Official Liquidator had put all the assets of the company including the property situated at Akota Road, Vadodara for sale.

2.2 In response to the advertisement published by the Official Liquidator, no offers were received from the intending purchasers for the purchase of land of the company situated at Akota Road, Vadodara. The applicant submitted offer before the Official Liquidator for purchase of the assets of the company for an amount of Rs.5.15 crores, which was in turn placed before this Court for due consideration.

2.3 This Court thereafter directed the Official Liquidator to publish fresh advertisement keeping the upset price at Rs.5.15 crores. Thereafter, fresh advertisement came to be

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published by the Official Liquidator, in accordance with the order passed by this Court. However, no offers were received then. Accordingly, this Court by order dated 23.12.2003 in Company Application No. 414 of 2003 passed an order confirming the sale of land of the company in favour of the applicant for a total consideration of Rs. 8.60 crores, on the condition that the dues of the GEB and the Municipal Corporation will be borne by the purchaser.

2.4 One Mr. Manubhai Maganbhai Patel, the nominee of the company had preferred Company Application No. 449 of 2004 seeking direction against the Official Liquidator to hand over possession of the freehold land and execute the sale deed in his favour and similarly the leasehold land of the company be executed in favour of the applicant. Accordingly, the Official Liquidator executed the sale deed of freehold land in favour of Mr. Manubhai Maganbhai Patel and leasehold land in favour of the applicant.

2.5 The applicant then preferred Company Application No. 260 of 2008 seeking direction that the Official Liquidator to remove encroachment from the leasehold land of the company. The said application came be rejected on 06.08.2009 by this Court on the ground that Company Application No. 429 of 2008 and similar matters were pending before this Court for consideration.

2.6 Further, the respondents Nos. 2 to 4 herein were directed to file application to implead Official Liquidator as a party to the cases pending before the lower Court. The relevant part of the order dated 06.08.2009 in COMA No. 260 of 2008 reads thus :

"6. So far as the OL is concerned, he may be required to take action for removal of encroachment, but if

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there is any prohibitory order of any competent Court, unless it is vacated, OL is bound by it. Further, it also appears that in the concerned suit, OL is not joined as party. Therefore, respondents no.3 to 4, if desirous to protect their possession, may move appropriate application for leave to proveed with the suit and may also join OL as party in the suit. It is only thereafter the order of the Civil Court can be enforced by respondents 2 to 4."

It appears that notice came to be issued to the Official Liquidator, from the Small Cause Court at Vadodara in Rent Suit No. 372 of 1998 filed by the respondent no.2 herein. In the aforesaid connection, it is stated that the Official Liquidator had filed reply in the said proceedings stating that since permission of this Court under Section 446 of the Companies Act, 1956 has not been taken by the applicants of the suit and the same cannot be proceeded with till permission is obtained from the Court.

2.7 It appears that the Small Cause Court, Vadodara passed a judgment dated 05.01.2015 in Rent Suit No. 372 of 1988 thereby granting the application in favour of the applicant of the said suit i.e, the respondent no.2 therein, without taking into consideration of the order passed by this Court as well as the affidavit filed by the official liquidator.

 The title in Rent Suit No. 372 of 1988 is as under:

Plaintiff Baijubhai Baburao Kanojia Residing at-Ambica Mill Nr. Second gate, Vadodara.

Vs.

Defendants

1. Rajesh Jaykishan residing at Ambica No.1 Kankaria Bridge, Ahmedabad.

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2. Ambica Mill-Through its Manager Mr. K.N.Parikh- residing at Bunglow No.2, Gautamnagar Race Course, Vadodara No.1 and 2 through their Official Liquidator- High Court of Gujarat, Jivabhai Chambers, Ashram Road, Navrangpura Ahmedabad.

2.8 It is true that the Official Liquidator has been joined in the suit proceedings on behalf of both the defendants, but he has not made any fruitful representation against any point narrated by plaintiff in the plaint at Exh,1. It must be observed that the Official Liquidator of defendants has been joined in the suit proceeding by the Court by order passed below Exh. 65. Thus, the plaintiff firstly obtained leave of the Court and thereafter the Official Liquidator is joined in the suit proceedings. As stated earlier the Official Liquidator has not filed any written statement or reply against the facts stated by the plaintiff in the plaint or deposition in Exh.74 and in fact, he had remained silent during the entire suit proceedings from the date he appeared before the Court.

3. It appears that respondents nos. 3 to 5 had preferred Rent Suit No. 211 of 1991 before the Small Cause Court, Vadodara and in the said proceedings as well the Official Liquidator had taken identical stand that since the permission of this Court under Section 446 of the Companies Act was not taken by the applicants. Therefore, the suit cannot be proceeded with till the permission is obtained by the applicants. The respondents nos. 3 to 5 had preferred Civil Misc. Application No. 26 of 2008 for restoration of the Rent Suit No. 211 of 1991, which came to be

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granted by the Small Cause Court, Vadodara by order dated 31.03.2017, without taking consideration of the orders passed by this Court and the affidavit filed by the Official Liquidator.

4. The operative part of the order dated 31.03.2017 in CMA No. 26/2008 reads thus :

"6. Looking to the fact and circumstances of the case and as per the order passed by the Hon'ble Gujarat High Court has passed the order in the Company Application No. 260/2008 in Official Liquidator Report No. 81/2003 in Company Petition No. 66/1988 in para.6 that "Therefore, respondents no.2 to 4, if desirous to protect their possession, may move appropriate application for leave to proved with the suit and may also join, OL as party in the suit."

As per the above order of the Hon'ble High Court order there is no need to separate leave from the Hon'ble High Court for further proceeding. The Rent suit No. 211/1991 was dismissed on 08.09.2010. The applicant has filed the present application on 03.10.2008 ie, on 30 days from the dismissal of the order. The shows in application of the applicant is bonafide therefore this application is required to grant. Therefore, I pass the following order in the interest of justice:

- The application of the Applicant is hereby granted and the Rent Suit No.211/1991 is hereby ordered for restore.

- The applicants and opponents shall bear their own cost."

5. Undisputedly, the applicant has purchased the property for a total consideration of Rs.8.60 crores and the same has been confirmed by this Court by order dated 23.12.2003 in Company Application No. 414 of 2003. Though the Official Liquidator ought to make appropriate application to join as party respondent. The Small Cause Court has erroneously construed that there is no need to seek leave under Section 446 of the Companies Act,1956 without seeking permission of this Court. Thereby passed and order dated 05.01.2015 in Rent Suit No.

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372 of 1998. Notice came to be issued on 04.12.2018, various orders were passed from time to time.

6. Submissions on behalf of the applicant Learned advocate Mr. Davawala appearing on behalf of the applicant herein has submitted the averments made in the applicant and submitted that the applicant is the bonafide purchaser of the land in question Mr. Davawala has submitted that the applicant herein is the person aggrieved in view of the fact that the decree passed by the Small Cause Court, Vadodara has adversely affected the applicant. That the decree is passed without following due procedures under Section 446 of the Companies Act, 1956. Though the Official Liquidator was joined as party respondents the same is without following due procedures of law. He has submitted that in absence of due permission taken from this Court under the provisions of section 446 of the Companies Act, 1956, the decree passed by the Small Cause Court in Rent Suit No. 211 of 1991 is required to be set aside.

7. Submissions on behalf of the Official Liquidator:

7.1 Learned advocate Mr. Abhijit Joshi for the Official Liquidator supported the contentions advanced by learned advocate Mr. Davawala for the applicant. He has submitted that one Mr. Manubhai Patel is the nominee of M/s Bheruji Estate, has preferred COMA No. 449 of 2004 inter-alia seeking directions to direct the Official Liquidator to execute the sale deed in his favour. Since there were inter-se dispute amongst the partner. M/s Bheruji Estate also preferred COMA No. 37 of 2005.

        7.2     Mr.      Joshi   has     submitted    that     this     Court        on






    C/COMA/68/2017                             JUDGMENT DATED: 13/09/2022

05.04.2005, had allowed the COMA No. 449 of 2004 and directed the Official Liquidator to execute the conveyance deed of freehold land in favour of Mr. Manubhai Patel. Being aggrieved by the said order, M/s Bheruji Estate had preferred OJ Appeal No. 13 and 14 of 2005. This Court vide order dated 23.08.2005 along with order dated 25.08.2005 was pleased to direct the Official Liquidator to incorporate/ add conditions mentioned in the said order in the conveyance deed, which is to be approved by the Official Liquidator and further to be approved by this Court. After incorporating various conditions in compliance of the aforesaid order, the Official Liquidator executed conveyance deed of freehold land ad measuring 2,732.77 sq.mtrs, being situated at Rent Suit No. 488 and 489, City Survey No. 1297 in Jetalpur,Vadodara in favour of Mr. Manubhai Maganbahi Patel on 01.11.2007.

7.3 Mr. Joshi has submitted that one Shri. Pravinbhai J. Patel & Others are said to be Lessors of Survey No.482 and 483 preferred an application being COMA No. 187 of 2004 inter-alia praying this Hon'ble Court to direct the Official Liquidator to hand over the possession of aforesaid land to them. This Hon'ble Court vide order dated 06.05.2005 was pleased to reject the said application. Being aggrieved by the aforesaid order, the aforesaid lessors had preferred an O. J. Appeal No.34 of 2005, and the Division Bench of this Court vide order dated 01.10.2012 had remanded back the matter to the Company Court with a direction to examine the matter afresh.

7.4 It is further submitted that the Company Court examined the matter afresh and rejected the COMA No.187 of 2004 filed by lessors vide order dated 10.10.2013. It is further submitted that being aggrieved by the said order, Lessors had

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again preferred appeal being O. J. Appeal No. 05 of 2014, which was rejected vide order dated 20.02.2015, by the Division Bench of this Court.

7.5 Furthermore, M/s. Bheruji Estates, preferred an application being COMA No. 134 of 2015 inter-alia praying this Court to direct the Official Liquidator to execute deed of conveyance by way of Assignment of Leasehold Rights in its favour. This Court vide order dated 28.04.2015 passed in COMA No. 134 of 2015 was pleased to direct the Official Liquidator to execute the deed of conveyance by way of Assignment of Leasehold Rights of Leasehold Land ad measuring 13,238.26 Sq. mtrs., lying and being at Vadodara Kasba, bearing R.S. No.482 and 483, City Survey No.1298 in favour of present applicant. In compliance of the said order, the Official Liquidator has executed deed of conveyance by way of Assignment of Leasehold Rights in favour of present applicant on 12.05.2015.

7.6 Mr. Joshi further submitted that on perusal of the Judgment and order dated 05.01.2015, passed in Rent Suit No. 372 of 1998, it appears that the said proceedings were carried out by respondent No. 02 i.e. original plaintiff without taking leave under Section 446 of the Companies Act, 1956 from this Court. It is further submitted that Ld. Judge of Small Cause Court has recorded that the Official Liquidator has been joined in the Suit Proceedings by the Court vide order passed below an application in Exh.65. But with regards to said order, it is submitted that Civil Court has got no power and Jurisdiction to Join the Official Liquidator as party / respondents in suit proceedings wherein the company in liquidation is a party Respondent. Hence without obtaining express leave/order of this Court, since the powers are only vested with the High Court in

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Original Jurisdiction as per the aforesaid provisions of Companies Act, 1956. Therefore the Judgment and decree as well as orders passed by the Small Causes Court are not maintainable in eyes of law.

7.7 Mr. Joshi has also submitted that the Ld. Trial Judge has erroneously construed that since this Court has passed order on 06.08.2009, in COMA No.260 of 2008 wherein this Court had granted liberty to original plaintiff that if they so desirous, may move an appropriate application for leave to proceed with the suit for protection of their possession and may also join, Official Liquidator as party-respondent in the suit. Therefore, there is no need to obtain leave of this Court. In this regard by order dated 06.08.2009 passed in COMA No.260 of 2008, this Court had granted liberty to Respondents No. 02 to 5 to move appropriate application in accordance with law before the Competent Court to seek a leave to join the Official Liquidator as party respondent in suit proceedings to protect their possession. However, Ld. Judges of Small Causes Court has erroneously construed that there is no need to seek leave under Section 446 of the Companies Act, 1956 of this Court and without seeking permission, they joined the Official Liquidator as party - respondent and passed an order on 05.01.2015 in Rent Suit No. 372 of 1998 and also the Judgment passed in Civil Misc. Application No.26 of 2008 on 31.03.2017 and passed an order below Ex.5, on 04.12.1999 passed in Rent Suit No.211 of 1991.

7.8 Mr. Joshi has submitted that Shri. Pravinbhai J. Patel & Others, the lessors of Survey No.482 and 483 had preferred suit being Rent Suit No. 41 of 2018 before the Ld. Small Cause Court at Vadodara. It is further submitted that the Official Liquidator filed an application under Order 7, Rule 11(d) of Code

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of Civil Procedure, 1908, inter-alia praying the Ld. Small Causes Court to dismiss the suit filed by the original plaintiffs as the present suit is barred by Section 446 of the Companies Act, 1956 and provisions of Limitation Act. The said application is pending before the Ld. Small Cause Court.

7.9 Therefore, he has submitted that all pending suits and legal proceedings against the company be stayed and no fresh suit or legal proceedings can be commenced without the leave of the Company Court. He has submitted that even the pending actions can be continued and a fresh action can be commenced only with the leave of the Court. It was further submitted that Section 446 of the Companies Act is to safeguard the company from being subjected to liability or being deprived of its rights and claim without the knowledge of the winding up. In view of the aforesaid submissions, learned advocate Mr. Joshi has submitted that appropriate orders be passed by this Court.

8. He has relied upon the provisions of Section 446 of the Companies Act, 1956 and provisions of Limitation Act reads thus:

446. Suits stayed on winding up order "(1) When a winding up order has been made or the Official Liquidator has been appointed as provisional liquidator, no suit or other legal proceeding shall be commenced, or if pending at the date of the winding up order, shall be proceeded with, against the company, except by leave of the Court and subject to such terms as the Court may impose."

9. Submissions on behalf of the respondent no .2:

Learned advocate Mr. Gaurav Mehta for the respondent no.2 has submitted that the present application has been

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rejected on the ground of delay and latches. The applicant herein is the auction purchaser and has preferred this Company Application praying to quash and set aside the decree dated 05.01.2015 passed in Rent Suit No. 372 of 1988. Mr. Mehta has further submitted that the auction purchaser has no locus to file such an application and that too after a period of two years of sale deed which was executed by the Official Liquidator. The sale deed of the land in question was executed on 12.05.2015 and the present application has been filed on 21.07.2017. Mr. Mehta has placed reliance upon the case of Harihar Nath & Ors. Vs. State Bank of India reported in (2006) 4 SCC 457.

9.1 Learned advocate Mr. Mehta has submitted that the contentions of the Applicant in the present application is that the respondents have proceeded with the suit proceeding without obtaining the leave of this Court. He has submitted that the official liquidator was joined as a party to the suit proceeding in the Rent Suit No. 372 of 1988 and thus, official liquidator was well aware of the fact that rent suit is pending before the trial court. Hence, the core purpose of the section 446 is served. In view of this, the application is meritless and hence the same may be rejected.

9.2 Learned advocate has submitted that, the decree in rent suit was passed on 5-1-2015. That, official liquidator had executed the sale deed of the land in favor of auction purchaser applicant on 12-5-2015 and the applicant had file this application on 21-7-2017. Thus, there is an unexplained and gross delay of more than two years. In this view of the matter the application may be rejected on the grounds of delay and laches.

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9.3       It was further stated and submitted that for availing the

redress of his claims against the said freeborn land the Applicant is at a liberty to pursue an appropriate remedy of appeal against the Judgment of the Learned Small Cause Court however the present application is not filed under the provisions of an appeal and that the Applicant erred in establishing this claim on the said land by moving an application in the company proceedings itself by invoking the mandate and provisions of the Companies Act, 1956 which are not applicable to the merits of the present case.

9.4 It was further submitted that the sale deed was on "As it where is and whatever it is basis". That it is open for the applicant to move his grievance with regard to the nature of the subject land. Mr. Mehta has submitted that the applicant was party to the said suit and was also the Official Liquidator however neither of them has not raised any objection before the trial court or before this Court. And after a period of two years all of a sudden application came to be filed by the applicant herein. In this view of the matter the application may be dismissed.

Analysis.

"The facts referred herein above being undisputed are not repeated."

10. Undisputedly, the applicant herein is the auction purchaser. The applicant erstwhile Shree Ambica Mills Ltd was ordered to be wound-up on 17.01.1997 in Company Application No. 260 of 2008 in Company Petition No. 66/1988, wherein Official Liquidator was appointed to take charge of the assets

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and properties of the company. The applicant herein is the auction purchaser of the land for a total consideration of Rs.8.30 crores. The operative part of the said order reads thus:

"2.14 In view of the same, the Court is pleased to confirm the sale of land in favor of Bheruji Estate for Rs. 8.60 crore excluding all liabilities on the usual terms and conditions as set out in the minutes of the sale committee meeting held on 24.09.2003 and/or sicj terms and conditions as per page nos. 21 and 22 (O.L.R No. 81 of 2003) and the terms and conditions as may be imposed by this Court. The cost of stamp duty, registration and all other expenses are required to be borne by the purchaser. The Dues of Vadodara Municipal Corporation and Gujarat Electricity Board and other taxes will be borne by the purchaser. The purchaser is entitled to have their own security guards at their own expenses."

11. It appears that the applicant had preferred the Company Application No. 260 of 2008 praying to direct the Official Liquidator to remove encroachment from the leasehold land of the company. The said application came to be rejected by order dated 06.08.2009. The said order dated 06.08.2009, the respondents nos. 2 to 4 were directed to file application seeking leave before this Court to bring Official Liquidator as party in the suit, and the same is pending before the Courts below. It is also appears that the Official Liquidator was in receipt of notice from the Small Cause Court, Vadodara. The Official Liquidator has filed reply in the said proceedings and the applicants in that suit could not proceed till the said permission is not obtained, however, the small cause Court, Vadodara has passed the judgment decree on 05.01.2015 in Rent Suit No. 372 of 1988 and granted the applicant without taking into consideration the affidavit filed by the Official Liquidator. The said affidavit filed by the Official Liquidator reads thus:

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"The Official Liquidator attached to this Hon'ble High Court as Liquidator of M/s. Shree Ambica Mills Ltd.. (In Liquidation) (here in after referred to as "Company") most respectfully submits as under:

(1) That, the official liquidator has been served with copy of present application inter-alia praying this Hon'ble Court to quash and set aside Judgment dated 05.01.2015 passed in Rent Suit No. 372 of 1998 and also the Judgement dated 31.03.2017 passed in Civil Misc. Application No.26 of 2008 No.211 of 1991 as being bad in Law.That. M/s: Shri Ambica Mills Ltd. has been ordered to be wound up by the Hon'ble High Court of Gujarat vide order dated 17.01.1997 passed in Company Petition No. 66 of 1988 and the Official Liquidator attached to the Hon'ble High Court has been appointed as its Liquidator.

(2) That, the Official Liquidator most respectfully submits that this Hon'ble Court has vide order dated 16.02.2000/ 24.03.2000 passed in COMA No. 466 of 1999 constituted a sale committee for sale of the assets and properties of the company in liquidation. This Hon'ble Court has vide order dated 23.12.2003 & 24.12.2003 passed in Official Liquidator's Report No.81 of 2003 was pleased to confirm the sale of "All piece and Parcel of 25,732.77 Sq. Mtrs., of freehold Land along-with 13.238.26 Sq. Mtrs.. of leasehold land situated at jetalpur Road, Vadoara Kasba in the Registration District and Sub District of Vadodara for sale consideration of Rs.8,60,00,000/- in favour of applicant on usual terms and conditions.

(3) That. Mr. Manubhai M. Patel nominee of M/s Bheruji Estate, preferred COMA No. 449 of 2004 inter-alia praying this Hon'ble Court to direct the Official Liquidator to execute the sale deed in his favour. Since there were inter- se dispute amongst partner. M/s. Bheruji Estate also preferred COMA No.37 of 2005. This Hon'ble court had vide order dated 05.04.2005 allowed the COMA No. 449 of 2004 and directed the Official Liquidator to execute the conveyance deed of freehold land in favour of Mr. Manubhai M Patel. Being aggrieved by the said order, M/s. Bheruji Estate, preferred O J. Appeal No. 13 & 14 of 2005. The Hon ble Division Bench vide order dated 23.08.2005 read along with order dated 25.08.2005, was pleased to direct the official Liquidator to incorporate / add conditions mentioned in the said order in the conveyance deed, which is to be approved by the Official Liquidator and further to

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be approved by the Ld Company Court. A copy of order dated 23.08.2005 & 25.08.2005 passed by the Hon'ble Division Bench in 0.1 Appeal No. 13 & 14 of 2005 are annexed herewith and marked as Annexure "B" (Colly.). (4) That, after incorporating various conditions in compliance of the aforesaid order, the Official Liquidator executed conveyance deed of freehold land admeasuring 2.77,000 Sq Ft., lying being and situate at R. S. No. 488 and 489, City Survey No.1297 situated in Jetalpur, Dist. Vadodara in favour of Mr. Manubhai Maganbhai Patel on 01.11.2007. A copy of conveyance deed dated 01.11.2007 is annexed herewith and marked as Annexure "C". (5) That, the Official Liquidator most respectfully submits that that Shri. Pravinbhai J. Patel & Others said to be Lessors of Survey No.482 and 483 preferred an application being COMA No. 187 of 2004 inter-alia praying this Hon'ble Court to direct the Official Liquidator to hand over the possession of aforesaid land to them. This Hon'ble Court has vide order dated 06.05.2005 was pleased to reject the said application A copy of order dated 06.05.2005 is annexed herewith and marked as Annexure "D".

(6) That being aggrieved by the aforesaid order, Sho Pravinbhai J. Patel & Others, preferred O. J. Appeal No.34 of 2005. It is further most respectfully submitted that the Hon'ble Division Bench vide order dated 01.10.2012 remanded back the matter to the Hon'ble Company Court with a direction to examine the matter afresh. A copy of the order dated 01.10.2012 is annexed herewith and marked as Annexure "E".

(7) That, this Hon'ble Court examine the matter afresh and rejected the COMA No.187 of 2004 filed by lessors vide order dated 10.10.2013. It is further most respectfully submits that being aggrieved by the said order. Lessors again preferred appeal being O. J. Appeal No. 05 of 2014. The Hon'ble Division Bench has vide order dated 20.02.2015 rejected the O. J. Appeal No.05 of 2014 filed by Lessors. Copies of order dated 10.10.2013 & order dated 20.02.2015 are annexed herewith and marked as Annexure "F" & "G".

(8) That, M/s. Bheruji Estates, preferred an application being COMA No. 134 of 2015 inter-alia praying this Hon'ble Court to direct the Official Liquidator to execute deed of Conveyance by way of Assignment of Leasehold Rights in its favour. This Hon'ble Court vide order dated

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28.04.2015 passed in COMA No. 134 of 2015 was pleased to direct the Official Liquidator to execute the deed of conveyance by way of Assignment of Leasehold Rights of Leasehold Land admeasuring 13.238.26 Sq. Mtrs, Lying and being at Vadodara Kasba, bearing R.S. No.482 and 483 and City Survey No.1298 and in favour of present applicant. A copy of order dated 28.04.2015 passed in COMA No. 134 of 2015 annexed herewith and marked as Annexure "H".

(9) In compliance of the said order, the Official Liquidator has executed deed of conveyance by way of Assignment of Leasehold Rights in favour of present applicant on 12.05.2015. A copy of deed of conveyance by way of Assignment of Leasehold Rights is annexed herewith and marked as Annexure "I".

(10) That, being aggrieved by the order 20.02.2015 passed in 0. J Appeal No.05 of 2014, the said Lessors preferred Special Leave to Appeal (c) No. 15240 of 2015 before the Hon'ble Supreme Court of India. The Hon'ble Supreme Court of India vide order dated 26.07.2017 disposed the said SLP with an observation that "It will always be open for the petitioner to have recourse to the remedies available to them in Law to contest the issue with regard to the nature of the lease". A copy of order dated 26.07.2017 is annexed herewith and marked as Annexure "J".

(11) That, the Official Liquidator most respectfully submits that Shri. Pravinbhai J. Patel & Others, preferred suit being Rent 36 Suit No. 41 of 2018 before the Ld. Small Cause Court at Vadodara. In the said suit. Lessors joined the Official Liquidator as the defendant without seeking / obtaining leave under Section 446 of the Companies Act, 1956 of this Hon'ble Court. It is further most respectfully submits that the Official Liquidator filed an application under order 1. rule 11 (d) of code of civil procedure, 1908 inter-alia praying the Ld. Small Causes Court to dismiss the suit filed by the original plaintiffs as the present suit is barred by Section 446 of the Companies Act, 1956 and provisions of Limitation Act. The said application is pending before the Ld. Small Cause Court."

12. Similarly, the Official Liquidator was in receipt of notice from the Small Cause Court, suit filed by the respondents for

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restoration of Rent Suit No. 211 of 1991. In the aforesaid suit also the Small Cause Court vide judgment dated 31.03.2017, wherein also without taking into consideration the order passed by this Court and the affidavit filed by the Official Liquidator, the Small Cause Court proceeded and passed the order in favour of the respondent nos. 3 to 5.

13. The official liquidator as referred above filed affidavits before the Court below to substantiate the stand that the suit could not be proceeded in absence of the due permission taken from the Company Court under the provisions of Section 446 of the Companies Act,1956 as referred above. The Court below appears to have proceeded on a presumption that merely joining the Official Liquidator below Exh. 65, would suffice the procedure as required under the law.

14. In view of this Court it was incumbent for the respondents herein to take permission / to take leave of this Court under section 446 of the Companies Act, 1956 before proceeding with i.e, the Rent Suit no. 372 of 1988 and Civil Misc. Application No. 26 of 2008 for restoration of the Rent Suit No. 211 of 1991. The respondents herein have accepted the fact that no permission has been sought for from this Court, inspite of the order passed by this Court dated 06.08.2009, as stated in para. 6 and 7 in Company Application No. 260 of 2008, wherein it was categorically stated that if the respondents were to continue with the above referred proceedings then leave of this Court i.e, the Company Court was required. That the Official Liquidator was to be joined as party in the aforesaid proceedings. And only thereafter, the orders passed in the aforesaid proceedings can

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be enforced by the respective respondents.

Position of Law.

15 (A) It is pertinent to refer the ratio laid down by the Apex Court in the case of Harihar Nath & Ors. Vs. State Bank of India reported in (2006) 4 SCC 457 the operative part of the judgment reads thus:

"18. The object of Section 446 of the Act is not to cancel, nullify or abate any claim against the company. Its object is to save the company which has been ordered to be wound up, from unnecessary litigation and from multiplicity of proceedings and protect the assets for equitable distribution among its creditors and shareholders. This object is achieved by compelling the creditors and others to come to the court which is winding up the company and prove their claims in the winding up. For this purpose, all suits and proceedings pending against the company are also stayed subject to the discretion of the winding up court to allow such suits and proceedings to proceed. When a winding up order is passed, the effect is that all the affairs pertaining to the company in liquidation, including all suits/proceedings by or against the company, come within the control and supervision of the winding up court. The winding up court has to decide whether it will let the suit/proceeding to continue in the court where it is pending, or it will itself adjudicate the suit/proceeding. Thus, under Section 446(1), the winding up court only decides about the forum where the suit has to be tried and disposed of. The Limitation Act which prescribes the periods within which a party can approach a court seeking remedies for various causes of action, is not attracted to such applications under Section 446(1) of the Act. However, as elaborate arguments were advanced on this issue, we will deal with it in some more detail.

19. An application seeking leave to proceed, in respect of a pending suit or proceeding (filed before the order of winding up) is not an application for enforcement of any claim or right. It does not seek any 'relief' or 'remedy' with reference to any claim or right or obligation or liability. It is an application which is interlocutory in nature. An interlocutory application is not subject to any period of limitation, unless otherwise specifically provided by law. We are conscious of the fact that an application under Section 446(1) seeking leave to proceed with the suit/proceeding, is not filed as an 'interlocutory application' in the suit/proceeding before the court where such suit/proceeding is pending. But an interlocutory application is nothing but an application in the course of an action. It is a request made to a court, for its interference, in a matter arising in the progress of a proceeding. Therefore, in a broad sense, the

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application under section 446(1) filed before the company court seeking leave to proceed with a pending suit or proceeding, is an 'interlocutory application' with reference to the pending suit/proceeding. Article 137 is intended to apply to applications for enforcement of a claim or adjudication of a right or liability in a court. An application for leave to proceed with a pending suit or proceeding not being such an application for any relief, will not attract Article 137.

20. It is now well settled that if any winding up order is passed, during the pendency of a suit against the company, and if the suit is continued without obtaining leave, in spite of that bar contained in section 446(1), the decree passed is only voidable at the instance of the liquidator, and not void ab initio. In fact, where such decree has been passed against the company and others, the only person who can avoid the decree on the ground of non-compliance with section 446(1) of the Act, is the official liquidator of the company and not the other defendants. A suit/proceeding filed against a company, prior to the order of its winding up, does not come to an end on the passing of an order of winding up. The order of winding up merely stays further proceedings in the suit/proceeding. The suit/proceeding becomes dormant. Various alternatives are possible when a suit gets so stayed. The plaintiff in the suit can move an application under section 446(1) of the Act, and when leave is granted, proceed with the suit. If the leave is refused, the suit may be transferred to the company court for being tried and disposed of under section 446 (2) (a) of the Act. The plaintiff may also file an application for transfer of the suit to the Company Court for disposal under Section 446(2)(a). Alternatively, the plaintiff may get the suit dismissed with liberty to make a claim under section 446(2)(b) of the Act. Even if the suit is proceeded with, without obtaining leave of the Company Court, either not being aware of the order of winding up or ignoring the provisions of section 446(1), the resultant decree will not be void, but only be voidable at the instance and option of the official liquidator of the company. It is also possible that the court passing the winding up order may at any time, on the application either of the liquidator or of any creditor or contributory, make an order staying the winding up either altogether or for a limited time on such terms and conditions as the court deems fit, under section 466 of the Act. When the winding up is so stayed, a suit against the company (filed before the winding up order) which stood stayed under section 446(1) could be proceeded with, even though leave had not been obtained to proceed with the suit. We have referred to these alternative possibilities to show that having regard to the nature of an application under Section 446(1) of the Act, it does not attract Article 137."

15 (B) At this stage, it is apposite to refer the ratio laid down by the Apex Court in the case of Erach Boman Khavar vs

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Tukaram Sridhar Bhat & Ors reported in AIR 2014 SC 544 the operative part reads thus:

"20. In State of J&K v. UCO Bank and others[5], while interpreting Section 446(1) of the 1956 Act, the Court opined that a suit cannot be instituted once a winding-up order is passed except by leave of the court. The two-Judge Bench referred to the earlier decision rendered in Bansidhar Shankarlal v. Mohd. Ibrahim[6], wherein the leave had been obtained at the time of filing of the suit and the question was whether fresh leave ought to be obtained before proceeding under Section 446(1) of the 1956 Act before institution of execution proceedings. The Court considered the contrary views expressed by different High Courts on the effect and purport of Section 446(1) of the 1956 Act and came to the conclusion that the view that failure to obtain leave prior to institution of suit would not debar the court from granting such leave subsequently and that the only consequence of the same would be that the proceedings would be regarded as having been instituted on the date on which the leave was obtained from the High Court."

16. In view of the aforesaid ratio laid down by the Supreme Court, as stated herein above, the leave under section 446 of the 1956 Act, is required to be taken. Such leave can be obtained even after initiation of the proceedings. In absence of leave the proceedings cannot be recorded as to have been instituted on the date till leave is obtained. The proceedings can be validated only after the leave from the court is obtained.

17. In view of above, the award passed in Rent Suit No. 372 of 1988 dated 15.01.2015 and also the Judgment passed in Civil Misc. Application No.26 of 2008 on 31.03.2017 below Ex.5 and on 04.12.1999 passed in Rent Suit No.211 of 1991 cannot be executed till the provisions of Section 446 of the Companies Act, 1966 are complied with. The application stands allowed to the aforesaid extent. Rule is made absolute.

(VAIBHAVI D. NANAVATI,J) Radhika