Case Note & Summary
The matter concerns an Official Liquidator’s report filed in the winding up of Modi Stone Limited, seeking a declaration that a sub-lease dated 20 May 2002 executed between Modi Rubber Limited and Bharat Marketing and Advertising Company Private Limited is void, and for a direction to Bharat Marketing to hand over possession of the property. Modi Stone Limited, a company in liquidation, had earlier executed a lease deed dated 30 September 1997 in favour of Modi Rubber Limited for a flat and garage in Mumbai. The lease contained a clause prohibiting subletting without prior written consent. Correspondence was allegedly exchanged between the companies regarding renovation of the flat and extensions of the lease term. Modi Stone Limited applied to the Board for Industrial and Financial Reconstruction (BIFR) in 1998 and was declared sick; BIFR recommended winding up in 2001. The winding up petition was registered in the High Court on 24 January 2002 and the company was ordered to be wound up on 25 July 2002. On 20 May 2002, before the winding up order, Modi Rubber Limited executed a sub-lease with Bharat Marketing, purportedly with the consent of Modi Stone Limited. The Official Liquidator disputes the genuineness of the consent letters, alleging they are backdated and fabricated. Bharat Marketing paid rent to the Official Liquidator in 2003 but the Official Liquidator sought possession. The report was heard and reserved for judgment on 17 February 2017. No final decision or reasoning is provided in the excerpted text.
Issue of Consideration
Whether the sub-lease dated 20 May 2002 executed between Modi Rubber Limited and Bharat Marketing and Advertising Company Private Limited is void and whether possession of the property should be handed over to the Official Liquidator.
Case Details
2017 LawText (BOM) (05) 5
Official Liquidator’s Report No. 136 of 2015 in Company Petition No. 166 of 2002
Pravin Samdhani, Simil Purohit, Mangesh Nalawade, Cherag Balsara, Ashraf Dimondwala, Sharan Jagtiani, Aditya Pimple
Official Liquidator of Modi Stone Ltd. (In Liquidation)
Modi Rubber Limited and Bharat Marketing and Advertising Company Private Limited
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Nature of Litigation
The Official Liquidator seeks a declaration that a sub-lease deed dated 20 May 2002 executed between Modi Rubber Limited and Bharat Marketing and Advertising Company Private Limited is void, and a direction to hand over possession of the property to the Official Liquidator.
Remedy Sought
Official Liquidator prays for declaration of sub-lease as void and direction to Bharat Marketing to hand over possession.
Filing Reason
Modi Stone Limited was ordered to be wound up and the Official Liquidator took over. During winding up, it was discovered that a sub-lease was executed without proper authority and with alleged fabricated documents.
Previous Decisions
Board for Industrial and Financial Reconstruction recommended winding up of Modi Stone Limited; winding up petition accepted by High Court; company ordered to be wound up on 25 July 2002.
Issues
Whether the sub-lease dated 20 May 2002 is void and liable to be set aside.
Judgment Excerpts
The Official Liquidator has placed this official liquidator's report for declaration of lease deed dated 30th September 1997 ... and sub-lease dated 20th May 2002 ... as void.
Clause 11 of the said lease deed dated 30th September 1997 provided that lessee shall not sublet, assign, underlet or part with possession of the demised premises ... without the previous consent in writing of Modi Stone Ltd.
It is the case of the official liquidator that all these correspondence alleged to have been exchanged between Modi Stone Limited and Modi Rubber Limited are backdated and fabricated.
On 20th May 2002, the said Modi Rubber Limited has alleged to have executed a sub-lease with Bharat Marketing.
Procedural History
Modi Stone Limited executed a lease deed in favour of Modi Rubber Limited on 30 September 1997. The company filed an application with BIFR in 1998 and was declared sick; BIFR recommended winding up on 25 April 2001. The winding up petition was registered in the High Court on 24 January 2002. On 20 May 2002, Modi Rubber Limited executed a sub-lease in favour of Bharat Marketing. The company was ordered to be wound up on 25 July 2002 and the Official Liquidator was appointed. The Official Liquidator filed the present report in 2015.
Acts & Sections
- Companies Act, 1956:
- Sick Industrial Companies (Special Provisions) Act, 1985: Section 15(1), Section 3(1)(o)
