Case Note & Summary
The case involves an application by tenants (Automobile & Agricultural Industries) seeking an order restraining the Official Liquidator and others from interfering with their possession of galas in the property of M/s. Bombay Silk Mills Ltd., which was ordered to be wound up on 3.12.1998. Prior to winding up, a suit was filed by State Bank of India, and a Court Receiver was appointed. The Receiver was discharged in February 2004 without passing accounts. The applicants claimed they were tenants and had been in possession. The Court examined the facts and held that the applicants were entitled to protection of their possession and granted leave to sue the Official Liquidator if required.
Headnote
A) Company Law - Winding Up - Possession of Tenants - Section 446 Companies Act, 1956 - The applicants, tenants of galas in a company ordered to be wound up, sought restraint against interference by the Official Liquidator and others. The Court held that the applicants were in lawful possession and entitled to protection, and granted leave to sue the Official Liquidator if necessary. (Paras 1-10)
Issue of Consideration
Whether the applicants, who are tenants of galas in a company ordered to be wound up, are entitled to an order restraining the respondents from interfering with their possession, and whether leave to sue the Official Liquidator should be granted.
Final Decision
The Court allowed the application, restraining Respondent Nos.2 and 3 from interfering with the applicants' possession, and granted leave to sue the Official Liquidator if necessary.
Law Points
- Winding up
- Possession
- Leave to sue
- Official Liquidator
- Court Receiver
- Tenancy rights
- Section 446 Companies Act
- 1956
Case Details
2005 LawText (BOM) (01) 32
Company Application No.426 of 2005 in Company Petition No.361 of 1996
Mr. S. Shah with G.C. Mohanti for Applicants, Ms. K.V. Gautam, Dy. Official Liquidator for Respondent No.1, Mr. Ajay Panicker for Respondent Nos.2 and 3
Automobile & Agricultural Industries
The Official Liquidator & Ors.
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Nature of Litigation
Company application seeking restraint against interference with possession and leave to sue Official Liquidator.
Remedy Sought
Order restraining Respondent Nos.2 and 3 from interfering with or demolishing the galas in possession of the applicants, and alternatively, leave to sue the Official Liquidator.
Filing Reason
Applicants, tenants of galas in a wound-up company, faced threat of dispossession by the Official Liquidator and others.
Previous Decisions
Company Petition No.361 of 1996 led to winding up order on 3.12.1998. Suit No.4055 of 1997 filed by State Bank of India resulted in appointment of Court Receiver on 16.2.1998. Receiver discharged in February 2004 without passing accounts.
Issues
Whether the applicants are entitled to an order restraining the respondents from interfering with their possession of the galas.
Whether leave to sue the Official Liquidator should be granted.
Submissions/Arguments
Applicants argued they were tenants in possession and entitled to protection.
Respondents contended that the applicants had no right to possession.
Ratio Decidendi
Tenants in possession of property of a wound-up company are entitled to protection of their possession, and leave to sue the Official Liquidator may be granted under Section 446 of the Companies Act, 1956.
Judgment Excerpts
By this Company Application, the Applicants seek an order restraining Respondent Nos.2 and 3 from interfering or disturbing the possession of or demolishing the galas in the possession of the applicants.
The company known as M/s.Bombay Silk Mills Limited was ordered to be wound up by this Court on 3.12.1998 in Company Petition No.361 of 1996.
Procedural History
Suit No.4055 of 1997 filed by State Bank of India; Court Receiver appointed on 16.2.1998; Company Petition No.361 of 1996 led to winding up order on 3.12.1998; Receiver discharged in February 2004; Company Application No.426 of 2005 filed by tenants.
Acts & Sections
- Companies Act, 1956: Section 446
