Case Note & Summary
The Official Liquidator filed a report seeking permission to break open the lock put by the ex-management of J.B. Diamonds Limited (in liquidation) and take physical possession of the premises at Bharat Diamond Bourse, Bandra Kurla Complex, Mumbai. The Official Liquidator had already taken symbolic possession but physical possession was obstructed by alleged tenants claiming rights under decrees obtained from the Court of Small Causes at Bombay, the 15th Additional Civil Judge Court at Surat, and the Small Causes Court at Surat. The winding up order was passed on 19th June 2012, and all the decrees were obtained after that date without leave under Section 446 of the Companies Act, 1956. The Official Liquidator contended that the ex-directors colluded with the tenants to create false tenancy rights and obtain collusive orders to defeat the claims of creditors. The court examined the facts and found that the decrees were obtained without the requisite leave and were therefore void under Section 537 of the Companies Act, 1956. The court also noted that the tenants had not filed any application for leave under Section 446 even after the report was filed. The court held that the Official Liquidator was entitled to take physical possession of the premises and directed the police to provide assistance if required. The court also directed the Official Liquidator to suggest a panel valuer for valuation of the premises and to pay professional fees as per norms.
Headnote
A) Company Law - Winding Up - Possession of Assets - Official Liquidator - Section 446 Companies Act, 1956 - The Official Liquidator sought permission to break open the lock and take physical possession of the company's premises, alleging collusive tenancy decrees obtained after the winding up order without leave under Section 446. The court held that the decrees were obtained without leave and were therefore void, and directed the Official Liquidator to take physical possession with police assistance if necessary (Paras 1-41).
Issue of Consideration
Whether the Official Liquidator can be permitted to break open the lock and take physical possession of the company's premises despite alleged tenancy rights and decrees obtained after the winding up order without leave under Section 446 of the Companies Act, 1956.
Final Decision
The court allowed the Official Liquidator's report and directed the Official Liquidator to break open the lock and take physical possession of the premises with police assistance if necessary. The court also directed the Official Liquidator to suggest a panel valuer for valuation and to pay professional fees as per norms.
Law Points
- Winding up
- Official Liquidator
- Possession
- Collusive decrees
- Leave under Section 446
- Tenancy rights
- Fraud on court
- Section 446 Companies Act
- 1956
- Section 537 Companies Act
