JABAL C. LASHKARI & ORS. versus OFFICIAL LIQUIDATOR & ORS.

11. The Division Bench of the High Court took note of the fact that the non-obstante clause in Se.ction 13 of the Rent Act only gave the G 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 2 I 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- H '1994(2)SCC67t JABAL C. LASHKARI & ORS. v. OFFICIAL LIQUIDATOR [RANJAN GOGOi, J.] 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 Laxmil/(ls B(lpUd(ls D(lrb(lr (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 oflaw. 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 I ight 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 : "Jn view of the statement of Mr. RM Desai. learned counsel for the secured creditor that the arreai·s of ~ent, 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 c c the period uplo 31" 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 lo the lessors lo 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(I)(e) and !3(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 oflndia 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 I 2(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 l 0.12.1916 subletting JABAL C. LASHKARI & ORS. v. OFFICIAL LIQUIDATOR [RANJAN GOGOi, J.] 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. Bejov Lal Se/4 and Ram Kinkar B<merjee vs. Satya Charan Srimani' 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 oflease is not spelt out in the lease deed and in any event Section 13( l )(k) contemplates non-user of the leased prenrises 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 rentand the reasons for non payment appears to be (para 43 of the impugned order of the High Court) lack ofcommunication by the official liquidator to the SB! 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) bas 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 '[AIR 1930 PC 59) '[AIR 1939 PC I4) c c 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 hot 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 ofreasoning 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(l)(e) of the Bombay Rent Act. As already discussed in a preceding paragraph of the present order, the non obstante clause of Section 13 (I) 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 pennitting 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 LftXmidas Bapudas Darhar vs. Rutlravva (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. Bejov Lal Se/ and Ram Kinkar Banerjee vs. Salva Cllaran Srimani (supra) inasmuch as from Company Application No. 34 of2004, which deals with the claim of the appellants for eviction of JABAL C. LASHKARI & ORS. v. OFFICIAL LIQUIDATOR [RANJAN GOGOi, J.) 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/prohibitoty 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(l)(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 land.

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 unti 1 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. c

21. For the aforesaid reasons we affirm the order of the High Court dated 17.10.2008 in O.J. Appeal Nos. 65 of2006, 66 of2006 and 67 of 2006 and dismiss the civil appeals arising out of SLP(C) Nos. 29282-29284 of2008 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 of2006 [Jabal C. Lashkari & Ors.Vs. Official Liquidator & Ors.] impugned ill 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 c 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 ofthe Gujarat High Court passed in O.J. Appeal Nos. 65 of2006, 66 of2006 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 ~ourt 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 b?' the High Court in each of the cases. That apart whether the order dated 17.07.2006 passed in Company Application No. 250 of2006 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 oflaw contained in the present order. Oevika Gujral Appeals disposed of.