Case Note & Summary
The Applicant, M/s. Hardcastle Waud Manufacturing Company Limited, is the owner of a large portion of land at Netivali Baug, Kalyan, out of which a portion admeasuring about 3096 sq. yds. was leased to M/s. Enamelled Wires Limited (the Respondent Company) under a registered lease deed dated 30th June 1960, effective from 1st June 1960, for a period of 25 years with an option to renew for another 25 years on six months' notice. The Respondent Company constructed factory buildings and installed machinery on the land and created a charge in favour of Canara Bank. By an order dated 14th January 1983, this Court ordered the winding up of the Respondent Company, and the Official Liquidator took possession of the property. The lease period expired on 31st May 1985, and the Respondent Company did not exercise the renewal option. The Applicant sought directions from the Court for the Official Liquidator to hand over quiet, vacant and peaceful possession of the land and to pay arrears of rent and municipal property tax. The Court held that since the lease was not renewed, the Official Liquidator was a tenant at will and liable to pay rent and taxes until possession was handed over. The Court directed the Official Liquidator to hand over possession within four weeks and to pay Rs. 14,250 towards arrears of rent and taxes, with further directions to pay compensation for use and occupation at the rate of Rs. 125 per month until possession is handed over.
Headnote
A) Company Law - Liquidation - Lease - Possession - Arrears of Rent - The Official Liquidator, as tenant at will, is liable to hand over possession of the leased property to the lessor and pay arrears of rent and municipal taxes from the date of termination of lease until actual possession is handed over, as the lessee company did not exercise the renewal option and the lease stood terminated. (Paras 1-5) B) Company Law - Liquidation - Official Liquidator - Liability - The Official Liquidator is bound to pay rent and taxes for the period of occupation after lease expiry, as the lessor is entitled to compensation for use and occupation. (Paras 4-5)
Issue of Consideration
Whether the Official Liquidator is liable to hand over possession of the leased property to the lessor and pay arrears of rent and municipal taxes after the lease period expired and the lessee company went into liquidation.
Final Decision
The Court directed the Official Liquidator to hand over quiet, vacant and peaceful possession of the land to the Applicant within four weeks from the date of the order. The Official Liquidator was also directed to pay Rs. 14,250 towards arrears of rent and municipal property tax, and to pay compensation for use and occupation at the rate of Rs. 125 per month from 1st August 2010 until the date of handing over possession.
Law Points
- Lease renewal option not exercised
- lease stands terminated
- Official Liquidator is a tenant at will
- liability to pay rent and taxes until possession handed over
