Supreme Court of India
JABAL C. LASHKARI & ORS.versusOFFICIAL LIQUIDATOR & ORS.
- Citation
- 2016 INSC 280
- Decided
- 29 March 2016
- Disposal
- Disposed off
- Bench
- RANJAN GOGOI
Holding
The landlord is not entitled to evict the Official Liquidator, and the Official Liquidator is not liable for eviction; the lease remains protected despite the winding‑up, and the High Court’s order is affirmed.
Summary
The appellants, heirs of Durgaprasad Lashkari, sought to prevent the Official Liquidator from selling a 199‑year leasehold property of Prasad Mills Ltd., which was under winding‑up. The High Court held that the landlord could not evict on the ground of non‑payment of rent because the secured creditors were ready and willing to pay, and no statutory notice under Section 12 of the Bombay Rent Act had been served. It also held that the Official Liquidator was not liable for eviction under Sections 13(1)(e) and 13(1)(k) as the alleged assignment was not completed and the lease permitted sub‑letting, while Section 15’s non‑obstante clause does not override the Transfer of Property Act. The Court further ruled that the winding‑up order does not terminate the lease or the corporate existence of the company until dissolution under the Companies Act. Consequently, the Supreme Court affirmed the High Court’s order and dismissed the appeals. The decision reaffirmed the protective provisions of the Rent Act for tenants in liquidation and clarified the limited reach of the non‑obstante clause.
Issues considered
- The landlord’s right to evict under Section 12 of the Bombay Rent Act for alleged non‑payment of rent.
- The Official Liquidator’s liability to eviction under Section 13(1)(e) (unauthorised assignment/sub‑letting) and Section 13(1)(k) (unjustified non‑use).
- The effect of a winding‑up order on the leasehold rights and corporate existence of the company under the Companies Act.
- The applicability and scope of Section 15 of the Bombay Rent Act and its non‑obstante clause vis‑à‑vis the lease terms and the Transfer of Property Act.
- Whether the High Court’s order under Section 12(3)(b) of the Rent Act was valid.
Legislation cited
- Bombay Rent, Hotel and Lodging House Rates Control Act, 1947s. 12, s. 12(3)(b), s. 13(1)(e), s. 13(1)(k), s. 15
- Companies Acts. 525
- Transfer of Property Act, 1882s. 106, s. 118(0)
Subjects
leaseevictionBombay Rent Actofficial liquidatorwinding upsub‑lettingassignmentCompanies ActTransfer of Property Actnon‑obstante clause
Judgment
[2016] 2 S.C.R. 541
JABAL C. LASHKARI & ORS. A
v.
OFFICIAL LIQUIDATOR & ORS.
(Civil Appeal Nos. 3147-49 of2016)
MARCH 29, 2016 B
[RANJAN GOGOi AND PRAFULLA C. PANT, JJ.]
Bombay Rents, Hotel and Lodging House Rates Control Act,
1947: ss.12, 15 - Predecessor of appellant had leased out land for
199 years - Secured creditors of lessee filed winding up petition -
Pending same, appellants filed suit seeking permanent injunction
c
against sale of assets of co111pany particularly sale of leased
property ·- Company judge passed winding up order and order for
appointment of Official Liquidator (Ol) - Co111pany application by
appellants for return of leased property on the grounds that in view
of winding up order the company no longer required the leased D
land and furthermore default in payment of rent had occurred and
that OL was not authorised to transfer the leased property in view
of Rent Act of 1947 - Pending company application, advertisement
for sale of leased land - Appellant filed company application for a
declaration that the OL had no right to sell the leased property -
E
Another company application filed seeking permission from the
Company Court to file a suit for eviction of OL from the leased
property - Company Co1irt rejected all the applications - High Court
upheld the same - On appeal, held: No notice issued by landlord
for giving oppot:!_unity to tenant to pay unpaid rent - In such
situation, the readiness and willingness of the tenant to pay the F
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 - Therefore, landlord cannot seek eviction on the ground
of non-payment of rent - Case of sub-letting and non user was also
not made out by the appellant-landlord - Mere fact that the company
G
has been ordered to be wound up cannot be a ground to direct OL
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 compldion of the liquidation
proceedings in the manner contemplated by the Companies Act - In
the instant case, it has been submitted before this Court that presently H
541
542 SUPREME COURT REPORTS [2016) 2 S.C.R.
A revival of the company is a live issue pending before High Court, a
fact which cannot be ignored by :his Court in deciding the above
issue against the appellants - For these reasons, the order of the
High Court is upheld.
Disposing of the appeals, the Court
B HELD: 1. 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
c willing to pay the rent and the reasons for non payment appears
to be 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) ofSectiou 12 is a notice in writing
D by the landlord raising a demand of rc;nt 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 uu paid rent is the first chance/opportunity that the Rent Act
E 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.
In such a situation, !'he 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
F protection under the Rent Act. Though the order of the High
Court has been placed before the Court as an order under Section
12(3)(b) of the Rent Act, the said order is not 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
G 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 h?s 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
H one contemplated under Section 12(3)(b). In the said situation,
JABAL C. LASHKARI & ORS. v. OFFICIAL LIQUIDATOR 543
the finding of the High Court that the landlord is not entitled to A
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. [Para 17)
(577-D-H; 558-A-C]
2. Next question for consideration is relating to the liability B
. of the official-liqujdator to a decree of eviction on the ground
contemplated under Section. 13(l)(e) of the Bombay Rent Act.
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 c
other law, is subject to any contract to the contrary. Though the
lease deed is capable of being read as permitting sub-letting and
not assignment what has been held by the. High Court is that in
view of the limited operation of the non obstante clause in Section
1.5 of the Bombay Rent Act, unlike Section 21 of the Karnataka D
Act, the provisions of the Tra;,sfer 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. (Para 18] [558-D-G)
E
3. 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 F
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. That apart the said argument
overlooks the fact that the assignment was only sought to be G
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 Born bay Rent Act dealing
with the consequential liability for eviction. Such argument also
belies the injunctive/prohibitory relief sought for in the Company
H
544 SUPREME COURT REPORTS (20 I 6] 2 S.C.R.
A Applications, insofar as the contemplated sale/transfer/assignment
of the leased property by the official liquidator is concerned. [Para
18) (559-A-D)
4. Insofar as liability nnder Section 13(1)(k) of the Bombay
Rent Act is concerned, the requirement of unjustified non-user
B for a period exceeding 6 months which evidently is not be
att-rscted 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.
c 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
D 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 iss.ue against the appellants.
For these reasons, the order of the High Court is upheld. [Paras
E 19, 20, 21) [559-E-H; 560-A)
Laxmidas Bapudas Darbar & Am: vs. Rudravva (Smt.)
& Ors. 2001 (7) SCC 409: 2001 (2) Suppl. SCR 229;
V. Dhanapal Chettiar vs. Yesodai Ammal 1979 (4) SCC
214:1980 (1) SCR 334; Shri Lakshmi Ve11katesh1rnra
F Enterprises (P) Ltd. vs. Syeda Vajhiunnissa Begum (Smt.)
& Ors. 1994 (2) SCC 671; Hans Raj vs. Beioy Lal Se/
AIR 1930 PC 59; Ram Kinkar Banerjee vs. Satya
Charan Srimani AIR 1939 PC 14 - referred to.
Case Law Reference
G
2001 (2) Suppl. SCR 229 referred to. Para 10
1980 (1) SCR 334 referred to. Para 10
1994 (2) sec 671 referred to. Para 10
AIR 1930 PC 59 referred to. Para 15
H AIR 1939 PC 14 referred to. Para 15
JABAL C. LASHKARI & ORS. v. OFFICIAL LIQUIDATOR 545
CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 3147- A
49of2016
From the Judgment and Order dated 17.10.2008 of the High Court
of Gujarat at Ahmedabad in OJ Appeal Nos. 65, 66 and 67 of 2006
WITH
B
C.A. NOS. 3153, 3157, 3158, 3159, 3160, 3161, 3162, 3163, 3164,
3165, 3166, 3167, 3168, 3169-3170, 3171AND3172 OF 2016
Mihir Thakur, Sanjiv Sen, V. Giri, Ms. Meenakshi Arora, Colin
Gonsalves, Shekhar Naphade, Sr. Advs., Rudreshwar Singh, Gautam
Singh, Kaushik Poddar, D. N. Ray, Lokesh K. Choudhary, Mrs. Sumita c
Ray, Mrs. Nandini Gore, Abhishek Roy, Ms. Trishala Kulkarni, Kartik
Bhatnagar, Mrs. Manik Karanjawala, Abhigya, Abhay Singh Kushwaha,
Pradeep Kumar Dubey, Ms. Anus~ree Kapadia, C. George Thomas,
Ejaz Maqbool, Faraz Maqbool, Nikhil Goel, Chankya B., Ms. Naveen
Goel, Marsook Bafaki, Mrs. Sheela Goel, B. K. Satija, Ms. Apama Bhat,
Runjun Borah, A. Venayagam Balan, NachiketaJoshi, Ms. SuchetaJoshi, D
Ritwiz Rishabh, Venkita Subramoniam T. R., Dharmesh V. Shah, Divya
Jyoti Jaipuiror, Satya Mitra, Mohit D. Ram, Advs., with them for the
Appellants.
Tushar Mehta, P. S. Narsimha, ASGs, S. H. Shalet, Jaideep Gupta,
Sanjay R. Hegde, Mahendra Anand, Mihir Joshi, Shekhar Naphade, E
Mahendra Anand, Yashank Adhyaru, Sr. Advs., Mukund G. Nagarkar,
S. Nithin, Anil Kumar Mishra-I, Aditya Kr. Choudhary, Harshul Singh,
Ms. Kanika Gaur, Dharmendra Kumar Sinha, Mahesh Agarwal, Vivek
Jain, Apoorva Vakil, E. C. Agrawala, Rishabh Parikh, Ms. Devika Mohan,
Gaurav Agrawal, Mohit D. Ram, Ram Lal Roy, R. N. Keshwani, Rajesh
F
Kumar, Gaurav Kumar Singh, Rakesh Chaurasiya, M/s. Mitter & Mitter
Co., K. R. Sasiprabhu, Somiran Sharma, Biju P. Raman, Manish K.
Bishnoi, Venkat Poonia, Ms. Hemantika Wahi, Ms. Jesal Wahi, Ms.
Vinakshi Kadan, Aditya Kr. Choudhary, Upendra S. Dindsha, D. K.
Sinha, R. Chandrachud, S. K. Sabharwal, D. N. Ray, Mrs. Sumita Ray,
Dinesh Mathur, Ms. Aparna Singh, (For M/s. Dua Associates), Ritesh G
Kumar, Kaushik P., Ms. Madhavi Divan, Ms. Nidhi Khanna, Sridhar
Potaraju, Ms. Sushma Sur, Ankur Mittal, (For M/s. Khaitan & Co.),
Ayushya Kumar, Abhijeet Sinha, Advs., with them for the Respondents.
The Judgment of the Court was delivered by
H
546 SUPREME COURT REPORTS (2016] 2 S.C.R.
A RANJAN GOGOi, J. I. Leave granted in each of the Special
Leave Petitions.
2. 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 outset.
B 3. 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
c petition seeking the winding up of the aforesaid Prasad Mills Ltd. While
the company petition was pending some of the legal heirs ofDurgaprasad
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 property.
D 4. 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
E 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 ofl 999) was filed by some of the heirs of Durgaprasad Lashkari
F for return of the leased property and also forordcrs 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
G 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, superstmcture,
plant and machinery of the company was sold in a public auction. It
H appears that on 6.2.2004 an advertisement was issued by the official
JABAL C. LASHKARI & ORS. v. OFFICIAL LIQUIDATOR 547
[RANJAN GOGOi, J.]
liquidator for the sale of the leased property. As against the aforesaid A
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 oflack
of any such empowerment in the lease agreement and in view of the
bar/restriction contained in Section 15 oft he Bombay Rent Act. Another
B
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 a/ia, on the ground
that -
(i) the occupant Company i.e. Prasad Mills had no document
c
in its favour entitling it to be in possession of the demised
land;
(ii) admitted non payment of rent for a period ofover 15 years
rendering the company and now the official liquidator liable
to eviction under Section 12 of the Bombay Rent Act; D
(iii) admitted non user of the land for a period of over 6 years
attracting Section 13( 1)(k) of the Rent Act;
(iv) sub-letting in favour ofthe company, Prasad Mills, in violation
of Section 13( 1)( e) of the Rent Act. E
5. 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. l 0.2008 dismissed all the appeals
F
on grounds and reasons that will be noticed shortly. It is against the
aforesaid common order dated 17. l 0.2008 that the present appeals have
been filed.
6. We have heard Shri Mihir Thakur learned senior counsel
appearing for the appellants in civil appeal arising out of SLP(C) No.
G
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. Sh lute learned senior counsel appearing
for the Gujarat State Textile Corporation.
H
548 SUPREME COURT REPORTS (2016) 2 S.C. R.
A 7. We have also heard learned counsels appearing for the parties
in all the other cases.
8. 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
B 10.12.1916maybenoticed-
"12. - No ejectment ordinarily to he made if tenrmt pt1ys or is
ready 11nd willing to pay stt1ndard rent (lilt/ permitted
increases
(]) A landlord shall not be entitled to the recovery of
c possession of any premises so long as the tenant pays, or is
ready and willing to pav, the amount of the standard rent and
permitted increases, if any, and observes and pe1forms the
other conditions <!f the tenancy, in so far as they are consistent
with the provisions of this Act.
D L[( IA) 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 substallfially and permanent~v 1111.fit jiJr
the purpose for which it was let. the landlord shall. not be
ellfitled to;-
E (a) the standard rent and permitted increases due for the
premises.
(b) recover possession qfsuch premises mere~v oh the ground
r!f non payment of standard rent and permilted increases due,
during the period in which such premises remain so destroyed
F or lll!fit.]
(2) No suit for recove1:v of possession shall be instituted by a
landlord against a tenant 011 the ground of 11011 payment qf
the standard rent or permiued increases due, until the
expiration, <~f one nionth next after notice h~ irriting <~!·the
G demand of the standard rent or permitted. increases has been
served upon the tenant in the manner provided in section I 06
of the Tran.~fer of Property Act, 1882 (IV <!f 1882).
(3) (a) Where the rent is payable by the month. and there is no
dispute regarding the amount <if standard rent or permitted
H increases, if such relll or increases are in arrears for a period
JABAL C. LASHKARI & ORS. v. OFFICIAL LIQUIDATOR 549
[RANJAN GOGOi, J.]
r~f six month\ or 111ore and the tenant neglects to make A
payment thereof w11il the expiration of the period of one
month, qfter notice referred to in sub-section (2). the Court
may pass a decree for el'iction in any such suit jar recovery
of possession.
(b) Jn any other case, 110 decree jiir el'iction shall be passed B
in any such suit if on the .first day of hearing of the suit or oil
or be.fore such'' other date as the Court may fix, the tenant
pays or tenders in Court the standqrd rent and per111iued
increases then due.;[and thereafte1:-·-
(i) continues to pay or lender i11 Court such rent and permitted C
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 ou/
of any ~11110u111 paid or tendered by !he tenanl pay lo the
landlord such amounl towards payment 1!f rent or permitted D
increases due lo him as the court thinks fit.]
Explanation.-Jn 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 he ready and
willing to pay such amount ij; before the expirv vf the period E
<~f· one 111011/h qfier notice referre(f to in sub-..;ection (2), he
makes an application to the Court u11de1 sub-sec/ion (3) of
.1·ectio11 11 and !hereafter pays or lenders !he amount of rent
or permilled increases specified in the order made by the
Courl. "
F
"13. - Wiien lu111/-!ord may recover pon·e.1:1'io11-
(}J Notwithstanding anylhing contained in this Acti-[bul subject
to the provisions of section 15}: a landlord shall be entitled
to recover possession of any premises if !he Court is sati.~/ied-
G
(a) 19 (d) ***
(ii) that the tenant has, since the coming info operation of
this. Act'[u11/a11fully sub-let} the whole or part q/'the premises
or assigned or tran~f'erred in any other manner his interest
therein; or
H
550 SUPREME COURT REPORTS [2016] 2 S.C.R.
A (ee) to (i) ***
(k) that the 11re111ises have 1101 been u.•;f!d lvithout rea.•;onahle
cause for the purpose ji1r which Lhey were let for a continuous
period of si:( months immediate/y precedin[!. the date of the
suit:
B "J.5. - In absence of co11tract to the contrary tenant not to
sublet or tra11.1fer
(I)} Notwithstanding anythin[!. contained i11 a11y law, 3[but
subject to a11y contract to the co111ra1y,} it shed! not be /c111fu/
after the coming ii/lo op11ration of this Act j(;r anv tenant LO
c sub-let the 11'/w/e or any part of the premises let to him or ro
assign or tran,~f'er in any other 111a1111er his interest therein:
[Prorided that rhei[Srate} Gol'ernme/1/ may, bv 11ot!flcalio11
in the Official Ga::ette. permit in any area the tran.~fer <~f
interest in JJJY!tnises held under such leases or class of. leases
D and to such extent as may be .1pecijled in rhe 11ot!fication.}
[(2) The bar against suh-lefling. assigning or transferring
premises contained in sub-section (}) sha/I be deemed 1101 LO
have had any effect before the commencemel// of the Bombay
Rents. Hi;te! and Loc~';ing House Rates Control (4111end111enli
E Ordinance. 1959 (Bo111. Ord. No. fl! <!f 1959). in any area in
which this Act was in operation before such co111111enceme11t:
and according!;'. notwithstandinf!. anything contained in any
contract or in tlte jzulgernenl, tfecree or orcll!r <~fa ('our! <.n~v
such sub-lease. assignment or tra/l.\fer in favour of such
11ersu11s as ha\'e entered into possession (/espite the bar a.~·
F
sub-lessee.\', assignees or /ran.~ferees, <.oui hal'e continuec/ in
possession al the commencement <!f the said Ordinance, sha!I
be deemed to be valid and effectual}. ,.
'"19. - Unlawful charges by tenant
G (/) /Save in cases provided for under the proviso to section
15.} it shall not be la11'.ful for the tenant or any person acting
or pwporlinf!. lo act on hehalf <!(the tenant lo claim or receive
any sum. or anv consideration as a condition of the
re!inquishment'frran.~fer or assignment} of his tenancy ()f any
premises.
H
JABAL C. LASHKARI & ORS. v. OFFICIAL LIQUIDATOR 551
[RANJAN GOGOI,'J.]
(2) Any tena/1/ or person who in contravention of the provision A
of sub-se1:·tion (/) receives any sum or consideration shall,
on conviction, be punished with imprisonmentfiJr a term which
may extend to six months and shall also be punished with fine
which shall not be less than the sum c1f the value of the
consideration received by him. "
B
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
rellfed the same from First Party;
And whereas the rent is fixed at Rs.3501-00 - Rs. three c
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 D
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 E
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 e.\]Jiry of the said
period, we, the Second Party will vacate the land, resurface
F
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 he, and while giving back
the possession, Second Party will not raise any di.lpute or
objection, and even if raised will not be admissible by virtue
of this agreement. G
(3) The First Party, or their successors, heir, are not entiiled
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.
H
552 SUPREME COURT REPORTS [2016) 2 S.C.R.
A (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
B
Party will give such reduced rent to First Party after a<fjusting
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.
c (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 111aterial, 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
D 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 rhe land is Rs.500-00 per year. which
will be paid by the Second Party; and the Second Party will
give rent of Rs.35011- to First Party every year. However, the
E Second Party do not pay the municipal tax of Rs.5001- and
the same has to be paid by the First Party, then the Second
Party, or their successors will reimburse such a111ount with
six percent interest per hundred per year thereon.
(7) The First Party ii>il/ not object upto 199 years, if the Second
F Party; or their successors, heirs or ad111inistrators, construct
buildings with necessary govem111ent 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
G
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 year.
(9) The governmelll tax on this land is to be paid by we, First
Party; but if some additional tax is levied because of
H
JABAL C. LASHKARI & ORS. v. OFFICIAL LIQUIDATOR 553
[RANJAN GOGOi, J.]
construction on the land, it will be borne by the Second Party. A
Municipal tax is Rs.5001- 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 ta~es will be borne by the Second
Party, and will not clai111 it fro111 First Party; nor will adjust it
B
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 c
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 agree111ent. "
9. Before cataloguing the arguments advanced on behalf of the D
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.
I 0. The Division Bench of the High Court in answering the appeals
before it exhaustively considered a 3-Judge Bench decision of this Court E
in Laxmidas Bapudas Darbar & Anr. vs. R1ulravva (Smt.) & Ors.'.
The Division Bench took note of the fact that in Luxmidus Bupudus
Darbar·(supra) the Bench had occasion to consider the purport and
effect of the decision of this Court in V. Dhmwpul Chettiarvs. Yesodai
Ammal1(7-Judges) before holding that "as a matter of fact the question
of curtailment of fixed-term contractual lease was not involved in the F
case of Dlumupul C/1ettiur" (Para 14). In fact in paragraph 15 of the
judgment in Laxmidus Buputlus Durbar (supra) it was held :
"'ft 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 G
contract has been considered only to a li111ited extent, confining
it to the necessity of giving notice under Section 106 of the
Tran~fer of Property Act. "
1
2001 (7) sec 409
2 1979(4)SCC214 H
554 SUPREME COURT REPORTS [2016] 2 S.C.R.
A In Laxmidas Bapudas Darhar (supra) another decision of this
Court in Sl1Ti Lakshmi Venkatesllwam Enterprises (Pl Ltd. vs. Svedt1
Vt1jlliunnisst1 Begum (Smt.) & Ors." rendered in the context of Section
2 I 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 2 I of the Karnataka Act which gives an
B overriding effect over any provision in any other law was specifically
taken note of and eventually it was held that the effect of the 11011-
obstante clause contained in Section 21 of the KarnatakaAct on a fixed-
term contractual lease would be as follows :
"18. The effect of the non obstante clause contained under
c 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 (/) of Section 21 of the
D 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 (}) of Section 21 of the Act shall remain
inoperative.
E (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.
F
(iv). 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 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 555
[RANJAN GOGOi, J.]
lease or assign the leased rights/property, though, gives an overriding A
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
B
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 c
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. D
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.
E
13. So far as the issue with regard to default in the payment of
rent is concerned, the High Court, in the Iight 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 F
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 G
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 H
556 SUPREME COURT REPORTS [2016] 2 S.C.R.
A 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. "
B 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
c 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
D 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.
E 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
F 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,
G
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
H
JABAL C. LASHKARI & ORS. v. OFFICIAL LIQUIDATOR 557
[RANJAN GOGOi, J.]
is admittedly permissible. In the present case, according to the learned A
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
B
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, c
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 D
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 E
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 F
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, G
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)
H
558 SUPREME COURT REPORTS [2016] 2 S.C.R.
A 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
B
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
c 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
D 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
E 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
F 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
G 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.
H 34 of2004, which deals with the claim of the appellants for eviction of
JABAL C. LASHKARI & ORS. v. OFFICIAL LIQUIDATOR 559
[RANJAN GOGOi, J.)
the official liquidator from the leased property, what is clear and evident A
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
B
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 c
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
D
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 E
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. F
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 G
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.
H
560 SUPREME COURT REPORTS· [2016] 2 S.C.R.
A 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,
B 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
also'an additional ground has been cited namely that in view of the order
c 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
D 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
E 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
F 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
G 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.
H
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