Wednesday, April 6, 2016

Jabal C. Lashkari & Ors. V/s. Official Liquidator & Ors.-MARCH 29, 2016.


                            IN THE SUPREME COURT OF INDIA
                            CIVIL APPELLATE JURISDICTION

                        CIVIL APPEAL NOS. 3147-3149 OF 2016
             (Arising out of S.L.P.(C) Nos.29282-29284 of 2008)

Jabal C. Lashkari & Ors.                              ...Appellant (s)

Official Liquidator & Ors.                    ...Respondent (s)


                        Civil Appeal No. 3153 of 2016
                  (Arising out of SLP(C) No. 29952 of 2008)
                        Civil Appeal No. 3157 of 2016
                  (Arising out of SLP(C) No. 29632 of 2008)
                        Civil Appeal No.3158 of 2016
                   (Arising out of SLP(C) No. 940 of 2009)
                        Civil Appeal No. 3159 of 2016
                  (Arising out of SLP(C) No. 1866 of 2009)
                        Civil Appeal No. 3160 of 2016
                  (Arising out of SLP(C) No. 2583 of 2009)
                        Civil Appeal No. 3161 of 2016
                  (Arising out of SLP(C) No. 5880 of 2009)
                        Civil Appeal No.3162_ of 2016
                  (Arising out of SLP(C) No. 7864 of 2009)
                        Civil Appeal No. 3163 of 2016
                  (Arising out of SLP(C) No. 12835 of 2009)
                        Civil Appeal No. 3164 of 2016
                  (Arising out of SLP(C) No. 12919 of 2009)
                        Civil Appeal No. 3165 of 2016
                  (Arising out of SLP(C) No. 14276 of 2009)
                        Civil Appeal No. 3166 of 2016
                  (Arising out of SLP(C) No. 14316 of 2009)
                        Civil Appeal No. 3167 of 2016
                  (Arising out of SLP(C) No. 21949 of 2009)
                        Civil Appeal No.3168 of 2016
                  (Arising out of SLP(C) No. 31354 of 2009)
                     Civil Appeal Nos.3169-3170 of 2016
              (Arising out of SLP(C) Nos. 32444-32445 of 2010)
                        Civil Appeal No.3171 of 2016
                  (Arising out of SLP(C) No. 31663 of 2011)
                        Civil Appeal No. 3172 of 2016
                  (Arising out of SLP(C) No. 4816 of 2012)

                                 J U D G M E N T


Leave granted in each of the Special Leave Petitions.

The facts arising in the Civil Appeals arising from SLP(C) Nos.  29282-29284
of 2008, which is being taken as the  lead  case,  may  be  noticed  at  the

One Durgaprasad Lashkari (predecessor of  the  appellants)  had  leased  out
land admeasuring 35,772 sq. mtrs. in favour  of one Bechardas  Spinning  and
Weaving Mills Ltd. (subsequently known as Prasad Mills Ltd.)  for  a  period
of 199 years by a lease  deed  dated  10.12.1916.   A  secured  creditor  of
Prasad Mills Ltd. had in the year 1984 filed a company petition seeking  the
winding up of the aforesaid Prasad Mills Ltd.  While  the  company  petition
was pending some of the legal heirs of  Durgaprasad  Lashkari  had  filed  a
suit in the Small Causes Court  seeking  permanent  injunction  against  the
sale of  assets  of  company  more  particularly  the  sale  of  the  leased

An order dated 5.5.1989 was passed by  the  learned  Company  Judge  of  the
Gujarat High Court directing the winding up of Prasad  Mills  Ltd.  and  the
appointment of an official liquidator. The official liquidator was  directed
to take charge  and  possession  of  all  the  assets  of  the  company.  An
application was filed  by  another  heir  of  Durgaprasad  Lashkari  in  the
winding up petition seeking direction to further prosecute the suit  pending
before the Small Causes Court. The learned  Company  Judge  by  order  dated
24.2.1995 ordered that the suit may be withdrawn and instead directions  may
be sought from  the  Company  Court  for  return  of  the  leased  property.
Pursuant thereto a Company Application (C.A. No.462 of 1999)  was  filed  by
some of the heirs of Durgaprasad Lashkari for return of the leased  property
and   also   for   orders   restraining   the   official   liquidator   from
selling/transferring the leased property. While the  return  of  the  leased
land was sought on the twin grounds that in view of  the  winding  up  order
the Company no longer required the land and furthermore default  in  payment
of rent had occurred, for the second relief sought it  was  urged  that  the
official liquidator was  not  authorised  to  transfer/alienate  the  leased
property in view of the provisions of the Bombay Rents,  Hotel  and  Lodging
House Rates Control Act, 1947, as it then existed (hereinafter  referred  to
as ‘the Bombay Rent Act’).  While the above Company Application was  pending
the building, superstructure, plant and machinery of the  company  was  sold
in a public auction. It  appears  that  on  6.2.2004  an  advertisement  was
issued by the official liquidator for the sale of the  leased  property.  As
against  the  aforesaid  advertisement,  the  appellant  had  filed  Company
Application No.33 of 2004 for a declaration  that  the  official  liquidator
had  no  right  to  sell  the  leased  property.  The  grounds  urged   were
principally on the basis of lack  of  any  such  empowerment  in  the  lease
agreement and in view of the bar/restriction contained in Section 15 of  the
Bombay Rent Act. Another Company Application i.e. C.A.  No.34  of  2004  was
filed seeking permission from the Company Court to file a  suit  before  the
appropriate court for eviction of the official liquidator  from  the  leased
property.  Eviction of the official liquidator was claimed, inter  alia,  on
the ground that –

the occupant Company i.e.  Prasad  Mills  had  no  document  in  its  favour
entitling it to be in possession of the demised land;

admitted non payment of rent for a period of over  15  years  rendering  the
company and now the official liquidator liable to eviction under Section  12
of the Bombay Rent Act;

 admitted non user of the land for a  period  of  over  6  years  attracting
Section 13(1)(k) of the Rent Act;

sub-letting in favour of the company, Prasad Mills, in violation of  Section
13(1)(e) of the Rent Act.

The learned Company  Judge  by  a  very  elaborate  order  dated  13.10.2004
rejected all the three company applications. Aggrieved,  the  appellant  and
other legal heirs of  Durgaprasad  Lashkari  filed  three  separate  appeals
before the Division Bench of the High Court. The  High  Court  by  a  common
order dated 17.10.2008 dismissed all the  appeals  on  grounds  and  reasons
that will be noticed shortly. It  is  against  the  aforesaid  common  order
dated 17.10.2008 that the present appeals have been filed.

We have heard Shri Mihir Thakur learned senior  counsel  appearing  for  the
appellants in civil appeal arising out of  SLP(C)  No.  29282-84/2008;  Shri
P.S. Narasimha, learned  Additional  Solicitor  General  appearing  for  the
official  liquidator;  Shri  Tushar  Mehta,  learned  Additional   Solicitor
General and Shri S.N.  Shlute  learned  senior  counsel  appearing  for  the
Gujarat State Textile Corporation.

We have also heard learned counsels appearing for the  parties  in  all  the
other cases.

At the  very  outset  the  relevant  provisions  of  the  Bombay  Rent  Act,
(hereinafter referred to as the ‘Rent Act’) as applicable to  the  State  of
Gujarat and the provisions of the lease agreement dated  10.12.1916  may  be
noticed -

“12. - No ejectment ordinarily to be made if tenant pays  or  is  ready  and
willing to pay standard rent and permitted increases

(1) A landlord shall not be entitled to the recovery of  possession  of  any
premises so long as the tenant pays, or is ready and  willing  to  pay,  the
amount of the standard rent and permitted increases, if  any,  and  observes
and performs the other conditions of the tenancy, in  so  far  as  they  are
consistent with the provisions of this Act.

1[(1A) Where by reason of riot or violence of a mob  any  material  part  of
the  premises  in  a  disturbed  area  is  wholly  destroyed   or   rendered
substantially and permanently unfit for the purpose for which  it  was  let,
the landlord shall not be entitled to;--

(a) the standard rent and permitted increases due for the premises,

(b) recover possession of such premises merely oh the ground of non  payment
of standard rent and permitted increases due, during  the  period  in  which
such premises remain so destroyed or unfit.]

(2) No suit for recovery of possession shall be  instituted  by  a  landlord
against a tenant on the ground of  non  payment  of  the  standard  rent  or
permitted increases due, until the  expiration,  of  one  month  next  after
notice in  writing  of  the  demand  of  the  standard  rent  or  permitted,
increases has been served upon the tenant in the manner provided in  section
106 of the Transfer of Property Act, 1882 (IV of 1882).

(3) (a) Where the rent is payable by the month,  and  there  is  no  dispute
regarding the amount of standard rent or permitted increases, if  such  rent
or increases are in arrears for a period of six  month's  or  more  and  the
tenant neglects to make payment thereof until the expiration of  the  period
of one month, after notice referred to in sub-section  (2),  the  Court  may
pass a decree for eviction in any such suit for recovery of possession.

(b) In any other case, no decree for eviction shall be passed  in  any  such
suit if, on the first day of hearing of the suit  or  oil  or  before  such"
other date as the Court may fix, the tenant pays or  tenders  in  Court  the
standard rent and permitted increases then due.3[and thereafter,--

(i) continues to pay or tender in Court such rent  and  permitted  increases
till the suit is finally decided; and

(ii) pays costs of the suit as directed by the Court.

(4) Pending the disposal of any such suit, the Court may out of  any  amount
paid or tendered by the tenant pay  to  the  landlord  such  amount  towards
payment of rent or permitted increases due to him as the court thinks fit.]

Explanation.---In any case where there is. a dispute as  to  the  amount  of
standard rent or permitted increases recoverable under this Act  the  tenant
shall be deemed to be ready and. willing to pay such amount if,  before  the
expiry of the period of one month after notice referred  to  in  sub-section
(2), he makes an application to the Court under sub-section (3)  of  section
11 and thereafter pays or tenders the amount of rent or permitted  increases
specified in the order made by the Court.”

“13. - When land-lord may recover possession-

(1) Notwithstanding anything contained  in  this  Act1[but  subject  to  the
provisions  of  section  15];  a  landlord  shall  be  entitled  to  recover
possession of any premises if the Court is satisfied--

(a) to (d) ***

(e)  that  the  tenant  has,  since  the  coming  into  operation  of  this.
Act3[unlawfully sub-let] the whole or part of the premises  or  assigned  or
transferred in any other manner his interest therein; or

(ee) to (j) ***

(k) that the premises have not been used without reasonable  cause  for  the
purpose for which they were let  for  a  continuous  period  of  six  months
immediately preceding the date of the suit; “

“15. - In absence of contract to  the  contrary  tenant  not  to  sublet  or

(1)] Notwithstanding anything contained in  any  law,3[but  subject  to  any
contract to the contrary,] it shall not be  lawful  after  the  coming  into
operation of this Act for any tenant to sub-let the whole  or  any  part  of
the premises let to him or to assign or transfer in  any  other  manner  his
interest therein:

[Provided that the5[State] Government may, by notification in  the  Official
Gazette, permit in any area the transfer of interest in premises held  under
such leases or class of leases and to such extent as  may  be  specified  in
the notification.]

[(2)  The  bar  against  sub-letting,  assigning  or  transferring  premises
contained in sub-section (1) shall be deemed not  to  have  had  any  effect
before the commencement of the Bombay Rents, Hotel and Lodging  House  Rates
Control (Amendment) Ordinance, 1959 (Bom. Ord. No.  III  of  1959),  in  any
area in which this Act  was  in  operation  before  such  commencement;  and
accordingly, notwithstanding anything contained in any contract  or  in  the
judgement, decree or order of a Court  any  such  sub-lease,  assignment  or
transfer in favour of such persons as have entered into  possession  despite
the bar as sub-lessees, assignees or  transferees,  and  have  continued  in
possession at the commencement of the said Ordinance, shall be deemed to  be
valid and effectual].”

“19. - Unlawful charges by tenant

(1) [Save in cases provided for under the proviso to section 15,]  it  shall
not be lawful for the tenant or any person acting or purporting  to  act  on
behalf of the tenant to claim or receive any sum, or any consideration as  a
condition of the relinquishment2[transfer or assignment] of his  tenancy  of
any premises.

(2) Any tenant or person who in  contravention  of  the  provision  of  sub-
section (1) receives any sum  or  consideration  shall,  on  conviction,  be
punished with imprisonment for a term which may extend  to  six  months  and
shall also be punished with fine which shall not be less  than  the  sum  of
the value of the consideration received by him.”

The terms of the lease deed are as follows :
“............;And whereas the above  mentioned  three  pieces  of  land  are
owned by the First Party, and the Second Party  has  rented  the  same  from
First Party;

And whereas the rent is fixed  at  Rs.3501-00  -  Rs.  three  thousand  five
hundred and one. for one year of 12 months to be paid  to  First  Party,  by
the Second Party; as rent on the following conditions :

(1) The said rent will be given to First Party, by Second Party  every  year
and if the Second Party does not pay the rent due to them  every  year,  the
First Party will give registered notice for recovery of rent; and  in  spite
of  such  notice  the  Second  Party   or   their   successors,   heirs   or
administrators do not pay the rent, First Party or their successors,  heirs,
attorneys or administrators are entitled to obtain possession  of  the  land
with buildings, either by mutual understanding or through government.

(2) This rent note is valid for  199,  in  words  one  hundred  ninety  nine
years, agreed by Second Party and on expiry of  the  said  period,  we,  the
Second Party will vacate the land, resurface it and  will  give  it  to  the
First Party or their successor with any amount of rent due,  by  the  Second
Party or their successors or administrators, whosoever would be,  and  while
giving back the  possession, Second Party will  not  raise  any  dispute  or
objection, and even if raised will not  be  admissible  by  virtue  of  this

(3) The First Party, or their successors, heir, are not entitled to sale  or
pledge, or give possession of these pieces of land, to any other party,  and
even if they do so, it will be void by virtue of this agreement.

(4) In case  the  government  needs  this  land  and/or  if  the  government
purchase some part of this land; then the right to receive compensation  for
such acquisition is of First Party; however, interest at  the  rate  of  one
percent per hundred of whatever amount the First Party  thus  receive.  will
be adjusted by the Second Party from the rent payable, or the  Second  Party
will give such reduced rent to First Party after adjusting the said  amount,
in the following years; and the First  Party  will  have  no  right  to  any
objection or dispute, and even if they raise any  dispute  it  will  be  not
sustainable by virtue of this agreement.

  (5)  In  case  the  Second  Party,   or   their   successors,   attorneys.
administrators, assinee or executors do not stay, or do not make use of,  or
do not store material, on the land; or vacate the land and  give  possession
to the First Party, before the specified period, then  the  First  Party  is
entitled to receive rent till the date  of  possession  so  given;  and  the
First Party has no right to claim rent for the remaining period.

(6) The municipal tax for the land is Rs.500-00  per  year.  which  will  be
paid by the Second Party; and the Second Party will give rent  of  Rs.3501/-
to First Party every  year.  However,  the  Second  Party  do  not  pay  the
municipal tax of Rs.500/- and the same has to be paid by  the  First  Party,
then the Second Party, or their successors will reimburse such  amount  with
six percent interest per hundred per year thereon.

(7) The First Party will not object upto 199 years, if the Second Party,  or
their  successors,  heirs  or  administrators,  construct   buildings   with
necessary government permission, or use a free  land  or  the  Second  Party
give on rent  or  on  lease,  and  the  First  Party  is  entitled  to  take
possession of the land immediately on expiry of 199 years.

(8)  The  First  Party,  or  their  successors,  heirs,  administrators   or
attorneys are entitled to take possession of the land before the  expiry  of
rent period, if the Second Party fail to  pay  rent  to  First  Party  every

(9) The government tax on this land is to be paid by we,  First  Party;  but
if some additional tax is levied because of construction  on  the  land,  it
will be borne by the Second Party. Municipal tax is  Rs.500/-  per  year  at
present. However, hereafter if municipality levies some  additional  tax  on
First Party or on Second Party; or the government decide to  levy  some  new
tax; then all such taxes will be borne by the Second  Party,  and  will  not
claim it from First Party; nor will adjust it against rent  payable  to  the
First Party; and the First Party has no right  to  take  possession  of  the
land before expiry of 199 years, but the First Party has  right  to  receive
amount of rent till the above period.

(10) The First Party and the  Second  Party  and  their  successors,  heirs,
administrators,  attorneys  and  assignees,  are  accepting  the  terms  and
conditions set out in this agreement.

      Thus the Second Party has rented the pieces of land,  from  the  First
Party under the terms set out in this agreement, at  our  will,  and  signed
and sealed this agreement.”

9.    Before cataloguing the arguments  advanced  on  behalf  of  the  rival
parties it will be apposite to take note of the reasoning of the High  Court
which had prompted it to arrive at the impugned conclusions recorded in  the
order under appeal.

10.   The Division Bench of the High Court in answering the  appeals  before
it exhaustively considered  a  3-Judge  Bench  decision  of  this  Court  in
Laxmidas Bapudas  Darbar   &  Anr.   vs.  Rudravva  (Smt.)  &  Ors.[1].  The
Division Bench took note  of  the  fact  that  in  Laxmidas  Bapudas  Darbar
(supra) the Bench had occasion to consider the purport  and  effect  of  the
decision of this Court in V. Dhanapal  Chettiar  vs.  Yesodai  Ammal[2]  (7-
Judges)  before  holding  that  “as  a  matter  of  fact  the  question   of
curtailment of fixed-term contractual lease was not involved in the case  of
Dhanapal Chettiar” (Para 14). In fact in paragraph 15  of  the  judgment  in
Laxmidas Bapudas Darbar (supra) it was held :

“It has nowhere been held that by virtue of the provisions of the  Rent  Act
the contract of term lease is completely obliterated in  all  respects.  The
effect of the Rent Act on tenancy under contract has  been  considered  only
to a limited extent, confining it to the necessity of  giving  notice  under
Section 106 of the Transfer of Property Act.”

In Laxmidas Bapudas Darbar (supra) another decision of this  Court  in  Shri
Lakshmi Venkateshwara Enterprises (P)  Ltd.  vs.  Syeda  Vajhiunnissa  Begum
(Smt.) & Ors.[3] rendered in the context of  Section  21  of  the  Karnataka
Rent Act and, specifically, the provisions of the aforesaid Section  of  the
Karnataka Act were considered. The non-obstante clause in Section 21 of  the
Karnataka Act which gives an overriding effect over  any  provision  in  any
other law was specifically taken note of and eventually  it  was  held  that
the effect of the  non-obstante  clause  contained  in  Section  21  of  the
Karnataka Act on a fixed-term contractual lease would be as  follows :

“18. The effect of the non obstante clause contained  under  Section  21  of
the Karnataka Rent Act on the fixed-term contractual lease may be  explained
as follows:

(i) On expiry of period of the fixed-term lease, the tenant would be  liable
for eviction only on the grounds as enumerated in clauses (a) to (p) of sub-
section (1) of Section 21 of the Act.
(ii) Any ground contained in  the  agreement  of  lease  other  than  or  in
addition to the grounds enumerated in clauses (a) to (p) of sub-section  (1)
of Section 21 of the Act shall remain inoperative.
(iii) Proceedings for eviction of a tenant under  a  fixed-term  contractual
lease can be initiated during subsistence or currency of the lease  only  on
a ground as may be enumerated in clauses (a) to (p) of  sub-section  (1)  of
Section 21 of the Act and it is also provided as  one  of  the  grounds  for
forfeiture of the lease rights in the lease deed, not otherwise.
The period of fixed-term lease is ensured and remains  protected  except  in
the cases indicated in the preceding paragraph.”

11.   The Division Bench of the High Court took note of the  fact  that  the
non-obstante clause in Section 13  of  the  Rent  Act  only  gave  the  said
Section 13 an overriding effect  over  the  other  provisions  of  the  Act.
Section 13 was also made subject to the provisions  of  Section  15  of  the
Bombay Act.  This is in contrast to Section 21 of the  Karnataka  Act  which
had an overriding effect over any other law or  contract  to  the  contrary.
Section 15 which deals with the authority of  the  lessee  to  sub-lease  or
assign the leased rights/property, though, gives an overriding  effect  over
any other law has been  made  subject  to  any  contract  to  the  contrary.
Therefore, the terms of the lease and other cognate  provisions  of  law  is
not obliterated.  The Division Bench, in view of  the  above  provisions  of
the Bombay Rent Act, went on to hold that the “ratio of the decision  of  3-
Judge Bench of the Apex Court  in  Laxmidas  Bapudas  Darbar  (supra)  would
apply with much greater force for the benefit  of  the  lessee  under  fixed
long term lease in the State of Gujarat.” It is on the aforesaid basis  that
the Division Bench came  to  the  conclusion  that  the  Rent  Act  did  not
obliterate the effect of the provisions of Section 108(j)  of  the  Transfer
of Property Act which would vest a right in the lessee not  only  to  sublet
but also to assign the subject matter of the lease granted  to  him  by  the
original lessor.

12.   So far as the contention of the appellants that  as  the  company  has
been wound up it  no  longer  required  the  leased  land  for  its  use  is
concerned, the High Court, in the  impugned  judgment,  disagreed  with  the
aforesaid proposition  as  a  viable  and  acceptable  proposition  of  law.
Furthermore, it was held that the liability/obligation to pay rent  for  the
leased land does not constitute an onerous  obligation  on  the  company  in
liquidation so as to justify surrender of the leased land  by  the  Official
Liquidator or any direction to the said effect  under  Section  525  of  the
Companies Act.

13.   So far as the issue with regard to default in the payment of  rent  is
concerned, the High Court, in the light of its  views  with  regard  to  the
applicability of the  provisions  of  the  Transfer  of  Property  Act,  had
invoked both Section 114 of the Transfer of Property Act and Section 12  (3)
of the Rent Act to hold that as “the  secured  creditors  and  workers  have
always shown their readiness and willingness to pay  the  rent  and  arrears
thereof the lessors are not entitled to claim or get possession of the  land
leased to the company presently in winding up”. However,  in  the  operative
part of its order the Bombay High Court was pleased to observe as follows  :

“In view of the statement of Mr. RM Desai, learned counsel for  the  secured
creditor that the arrears of rent, if any, remaining unpaid by  the  company
in liquidation shall be paid by the secured creditor, we direct that  within
one month from today, the Official Liquidator shall supply  to  the  secured
creditor the particulars of the rent for the demised  land  for  the  period
upto 31st October, 2008, remaining unpaid so far, and the  secured  creditor
– State Bank of India shall deposit the amount with the Official  Liquidator
within one month thereafter. It will be open  to  the  lessors  to  withdraw
such amount.”

14.   On  behalf  of  the  appellants  it  is  urged  that  the  company  in
liquidation i.e. Prasad Mills Ltd. and the official liquidator appointed  by
the learned Company Judge in the liquidation proceedings involving the  said
company have rendered  themselves  liable  to  eviction  on  the  ground  of
default in payment of rent under Section 12 of the Rent Act.  It is  further
contended on  behalf  of  the  appellants  that  eviction  of  the  official
liquidator is required to be ordered on the grounds enumerated  in  Sections
13(1)(e) and 13(1)(k) of the Rent  Act.   Pointing  out  the  provisions  of
Section 15 of the Rent Act it has been urged that  the  official  liquidator
has assigned the property contrary to the provisions  of  Section  15,  such
act not being saved either by express term of the contract/lease deed or  by
the proviso to Section 15 of the Rent Act.  Sections 18 and 19 of  the  Rent
Act have also been relied upon by the appellants to show that  the  official
liquidator is not entitled to receive any payment apart  from  the  standard
rent.  It is urged that in the absence of any such  enabling  provision  not
only receipt of such  consideration  upon  assignment  is  illegal  but  the
property itself has become onerous being incapable of  earning  any  profit.
Besides, the property has ceased to serve the purpose of lease  in  view  of
the liquidation of the company.  Accordingly,  the  official  liquidator  is
liable to surrender the same to the original owners, it is urged.

15.   Shri P.S. Narasimha,  learned  Additional  Solicitor  General  on  the
other hand has submitted that the provisions of default  in  the  matter  of
payment of rent would not be attracted as the  secured  creditors  including
the State Bank of India had all along been ready  and  willing  to  pay  all
rents due.  In fact, the learned Additional Solicitor General has drawn  the
attention to the directions of the High Court contained in para  43  of  the
impugned judgment (extracted above) to contend that the  same  is  an  order
passed under Section 12(3)(b) of the Rent Act which, however, could  not  be
honoured in view of the interim order passed by this Court at  the  time  of
entertaining  the  special  leave  petitions.   Insofar  as  the   arguments
advanced on behalf of the appellants with  regard  to  Section  13(1)(e)  is
concerned, it is urged by the  learned  Additional  Solicitor  General  that
under Clause 7 of the lease deed dated 10.12.1916 subletting  is  admittedly
permissible.  In the present  case,  according  to  the  learned  Additional
Solicitor General, there is no  assignment.   In  this  regard  reliance  is
placed on two decisions of the Privy Council  in  Hans  Raj  vs.  Bejoy  Lal
Sel[4] and Ram Kinkar Banerjee vs. Satya Charan Srimani[5] to  contend  that
the law,  as  prevailing  in  India,  does  not  recognize  any  substantial
difference between subletting and assignment.   So far as  Section  13(1)(k)
is concerned, it is urged that the purpose of lease is not spelt out in  the
lease deed and in any event Section 13(1)(k) contemplates  non-user  of  the
leased premises without a reasonable cause.  In the present case, such  non-
user is on account of the fact that the company was ordered to be  wound  up
as far back as in the year 1989.
16.   The main plank on which the  appellants  have  based  their  case,  as
already noticed,  is  the  operation  of  Sections  12  (default),  13(1)(e)
(unauthorized assignment) and 13(1)(k) (non-user of the  leased  land).   We
may now take up the aforesaid issues in seriatim.

17.   Section 12 of the Rent Act confers  protection  on  a  tenant  who  is
regularly paying or is ready and willing to pay the rent.   In  the  present
case while there is no doubt that rent has not been paid, equally, there  is
no doubt that the secured creditors including the State Bank  of  India  had
all along been ready and willing to pay the rent and  the  reasons  for  non
payment appears to be (para 43 of the impugned  order  of  the  High  Court)
lack of communication by the official liquidator to the SBI of  the  precise
amount of rent due.  While there can be no doubt  that  mere  readiness  and
willingness to pay without actual payment cannot enure  to  the  benefit  of
the tenant in perpetuity what is required under Sub-section (2)  of  Section
12 is a notice in writing by the landlord raising a demand of rent and  only
on the failure of the tenant to comply with such notice within a  period  of
one month  that  the  filing  of  a  suit  for  recovery  of  possession  is
contemplated.  The service of notice giving an opportunity to the tenant  to
pay the unpaid rent is  the  first  chance/opportunity  that  the  Rent  Act
contemplates as a legal necessity incumbent on the  landlord  to  afford  to
the tenant. Admittedly, in the present case, no such notice as  contemplated
by Section 13 (2) has been issued by the landlord; at least  none  has  been
brought to our notice.  In such a situation, the readiness  and  willingness
of the tenant to pay the rent, though may have continued for a  fairly  long
time without actual payment, will not deprive the tenant of  the  protection
under the Rent Act.  Though the order of the High Court in para  43  of  the
impugned judgment has been  placed  before  the  Court  as  an  order  under
Section 12(3)(b) of the Rent Act we do not find the said order to be of  the
kind contemplated by Section 12(3)(b) inasmuch as not only  the  order  does
not mention any specific rent which has to be tendered in Court but what  is
encompassed therein is a direction to the official  liquidator  to  let  the
State Bank of India know the precise amount that is required to be  paid  on
account of rent and, thereafter, to pay the same to the official  liquidator
whereafter it has been left open  for  the  lessors  to  withdraw  the  said
amount from the official  liquidator.   Such  an  order  by  no  stretch  of
reasoning  would  be  one  contemplated  under  Section  12(3)(b).   In  the
aforesaid situation, the finding of the High Court that the landlord is  not
entitled to seek eviction on  the  ground  of  non  payment  of  rent  under
Section 12 of the Bombay Rent Act cannot be said to be so inherently  infirm
so as to require the interference of this Court.

18.   This will bring the Court to a consideration of the liability  of  the
official liquidator to a decree  of  eviction  on  the  ground  contemplated
under Section 13(1)(e) of the Bombay Rent Act.  As already  discussed  in  a
preceding paragraph of  the  present  order,  the  non  obstante  clause  of
Section 13 (1) overrides only the other provisions of the  Bombay  Rent  Act
and is also subject to the provisions  of  Section  15.   Section  15  which
deals  with  sub-letting  and  transfer,  though  overrides  the  provisions
contained in any other law, is subject to  any  contract  to  the  contrary.
Though in the present case the lease deed (clause 7)  is  capable  of  being
read as permitting sub-letting and not assignment  what  has  been  held  in
the present case by the High Court, by virtue of the decision of this  Court
in Laxmidas Bapudas Darbar vs. Rudravva (supra), is  that  in  view  of  the
limited operation of the non obstante clause in Section  15  of  the  Bombay
Rent Act, unlike Section 21 of the Karnataka  Act,  the  provisions  of  the
Transfer of Property Act [Section 118 (o)] will  not  become  irrelevant  to
the relationship between the parties in which event assignment may  also  be
permissible notwithstanding the specific content of clause 7  of  the  lease
deed in question. However, we need not dwell on this issue at any length  or
would also be required to consider the efficacy  of  the  arguments  of  the
learned Additional Solicitor General  on  the  strength  of  the  two  Privy
Council decisions mentioned above i.e. Hans Raj vs. Bejoy Lal  Sel  and  Ram
Kinkar Banerjee vs. Satya Charan Srimani (supra) inasmuch  as  from  Company
Application No. 34 of 2004, which deals with the  claim  of  the  appellants
for eviction of the official liquidator from the leased  property,  what  is
clear and evident is that the case of sub-letting of the leased premises  on
which basis eviction has been prayed for is  not  sub-letting/assignment  by
the official liquidator but assignment of  the  leased  premises  to  Prasad
Mills by the original managing agents in whose favour the initial lease  was
executed  by  the  predecessors  of  the  present  owners.  The  ground   of
unauthorized and impermissible assignment by the official liquidator on  the
strength of  the  notice/advertisement  for  disposal  of  the  leased  land
thereby making the  said  authority  liable  for  eviction  is  an  argument
advanced only at the hearing of the appeals before us. That apart  the  said
argument overlooks the fact that the assignment was only sought to  be  made
by the advertisement/notice issued and did not amount to a completed  action
on the part of the  official  liquidator  so  as  to  attract  the  relevant
provisions of the Bombay Rent Act dealing with the  consequential  liability
for eviction.  Such argument also belies the  injunctive/prohibitory  relief
sought for in the Company Applications, as already noticed, insofar  as  the
contemplated  sale/transfer/assignment  of  the  leased  property   by   the
official liquidator is concerned. The arguments advanced on the strength  of
the provisions of Section 19  of  the  Bombay  Rent  Act  would  also  stand
answered on the above basis.

19.   Insofar as liability under Section 13(1)(k) of the Bombay Rent Act  is
concerned what is to be noticed is the requirement of  unjustified  non-user
for a period exceeding 6 months which evidently is not be attracted  to  the
present case in view of the pendency of the liquidation  proceedings.   That
apart, Clause 5 of the lease deed which deals with non-user  of  the  leased
land does not contemplate eviction on account of such  non-user  but  merely
entitles the lessor to receive rent for the period of such non-user  of  the

20.   The mere fact that the company has been ordered to be wound up  cannot
be a ground to direct the official liquidator to handover possession of  the
land to the owners inasmuch as  the  company  in  liquidation  continues  to
maintain its corporate existence until it stands dissolved  upon  completion
of the liquidation proceedings in the manner contemplated by  the  Companies
Act.  In the present case it  has  been  repeatedly  submitted  before  this
Court by both sides that presently revival of Prasad Mills is a  live  issue
pending before the Gujarat High Court, a fact which  cannot  be  ignored  by
this Court in deciding the above issue against the appellants.

21.   For the aforesaid reasons we affirm the order of the High Court  dated
17.10.2008 in O.J. Appeal Nos. 65 of 2006, 66 of 2006 and  67  of  2006  and
dismiss the civil appeals arising out of SLP(C)  Nos.  29282-29284  of  2008
wherein the said order is under challenge.

22.  The other civil appeals, which have  been  heard  analogously,  can  be
divided into two categories.  The first is where the order dated  17.10.2008
passed in O.J. Appeal No. 65 of 2006 [Jabal C. Lashkari & Ors. Vs.  Official
Liquidator & Ors.] impugned in civil appeals  arising  out  of  SLP(C)  Nos.
29282-29284 of 2008 has been followed.  In the other  group  are  the  cases
where the said order has been followed and also  an  additional  ground  has
been cited namely that in view of  the  order  dated  17.07.2006  passed  in
Company Application No. 250 of 2006 a direction has been issued to  handover
possession of the  leased  premises  to  the  State  Government;  hence  the
question of putting the property to sale does not arise.
23.   Though we have affirmed the order  dated  17.10.2008  of  the  Gujarat
High Court passed in  O.J. Appeal Nos. 65 of 2006, 66  of  2006  and  67  of
2006 and dismissed the civil appeals arising out of SLP(C) Nos.  29282-29284
of 2008 [Jabal C. Lashkari & Ors.  Vs.  Official  Liquidator  &  Ors.],  our
decision to affirm the said judgment  of  the  High  Court  is  based  on  a
consideration of the specific clauses in the lease deed between the  parties
to the case.  What would be the effect of the principles of  law  underlying
the present order vis-a-vis the specific clauses of the lease  deed  between
the parties in the other cases is a question that has to  be  considered  by
the High Court in each of the cases.  That apart  whether  the  order  dated
17.07.2006 passed in Company  Application  No.  250  of  2006  has  attained
finality in law and forecloses  the  question  raised  and  further  whether
constructions have been raised on such land by the State Government for  the
benefit of the general public, as has been submitted  to  dissuade  us  from
interfering with the order of the  High  Court,  are  questions  that  would
require a  full  and  complete  consideration  by  the  High  Court  on  the
materials available. To enable the said exercise to be  duly  performed,  we
set aside the order of the High Court impugned  in  each  of  the  aforesaid
civil appeals and remit all the matters  to  the  High  Court  for  a  fresh
consideration in accordance with the  observations  and  principles  of  law
contained in the present order.


                                  C. PANT]

MARCH 29, 2016.

       2001 (7) SCC 409
[2]    1979 (4) SCC 214
[3]    1994 (2) SCC 671
[4]    [AIR 1930 PC 59]
[5]    [AIR 1939 PC 14]

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