NARENDRA BAHADUR TANDON v. SHANKERLAL (SINCE DECEASED) BY LRS. AND ANR

Citation: [1980] 2 S.C.R. 821

Court: Supreme Court of India

Bench: N.L. UNTWALIA, O. CHINNAPPA REDDY

Case summary

The learned Single Judge found in favour of the defendant on the question of estoppel, escheat and authority of the voluntary liquidator to execute the sale deed but found against the defendant on the applicability of s....

Judgment text

NARENDRA BAHADUR TANDON v. ~HANKERLAL (SINCE DECEASED) BY LRS. AND ANR. January 25, 1980 [N. L. UNTWALIA AND 0. CHINNAPPA REDDY, JJ. J Lease-Land leased to a company--Company went into voluntary liquida- Jion-Land transferred to one of the Creditors, a Bank-Bank went into liqui- 4ation--Official liquidator of Bank found no deed of transfer executed- Voluntary liquidator executed deed of trans/er-If competent to do so-Property if passed to state by escheat-Lessor's interest transferred to plaintiffs-Official liquidator sold land to defendant-Defendant raised structures on landl'laintiffs never objected to raising of slructures-Plaintif! s, if estopped from contending that defendant had no right in land. The original Owners of the land in dispute granted a permanent loose of the ]and to a company. The lessee could use the land for any purpose and couJd also transfer the leasehold interest.

Though a permanent lease the lessor could forfeit the lease if the lessee failed to pay rent for three conse- . cutive years. The lessors interest changed hands twice and by virtue of a ~d of sale. Once the company was dissolved it ceased to exist and the liquidator could not represent a non-existing company. If tl1e liquidator was to discharge any duty or perform any function on behalf of the dissolved company he should have express statutory authority. The Companies Act 1913 contained no provision enabling the liquidator to do any act on behalf of a dissolved company. S. 209 (H) of the Companies Act, 1913 enjoined the liquidator as soon as the affairs of the company were n wound up to make up an account of the winding up and to call a gene- (! ) [1903] 2 Ch. Divn. p. 625. [1980] 2 S. C. R, ral meeting of the company and a mreting of the creditors for the purpose of laying the accounts before the meetings.

The liquidator was then required to send to the Registrar a copy of tho acconnt and to· make a return to him of the holding of the meetings. The Registrar ' on receiving the accounts and the returns was required to register them an on the expiration of three months of registration the company was to be deemed as dissolved. The only duty cast upon the liquidator thereafter was that under s. 244(B). It was that the liquidator should on the dissolution of the company pay into the Reserve Bank of India, to the credit of the Central Government in an acconnt called the Companies Liquidation Account any money representing unclaimed dividend or any undistributed assets in his hands on the day of dissolution. No other duty was stipulated to be performed by the liquidator under the provisions of the Companies Act, 1913, after the dissolution of the company.

We are, therefore, unable to agree with the submission of the learned counsel that the liquidator had the jurisdiction to execute the deed of sale dated January 28, 1941 after the company had been dissolved. The next question which we must consider is what was the effect of the dissolution of the company on the lease-hold interest which the company had in the land. No term of the lease has been brought to our notice by which the lease would stand extinguished on the dissolutio'n of the company. If the company had a subsisting interest in the lease on the date of dissolution such interest must necessarily vest in the Government by escheat or as bona vacantia. In India the law is well settled that the property of an intestate dying without leaving lawful heirs and the property of a dissolved Corporation pas~2s to the Government by escheat or as bona vacant/a. Of course such property will be subject to trusts and charges, if any, previously effecting its vide M/s. rierce Leslie & Co.

Ltd. , v. Violat Ouchterlong Wapshare & Ors. ('). It is also to be noticed here thats. 244(B) of the Companies Act 1913, as well ass. 555(2) of the Companies Act 1956 expressly enjoin a duty on the liquidator to deposit, on the dissolution of the company, into an account in the Reserve Bank of India known as the Companies Liquidation Acconnt any money representing nnpaid • dividend or undisputed assets lying in his hands at the time of dissolution. The learned counsel for the appellant relied upon the decisions of the Allahabad High Court in Tulshi Ram Sahu & Anr. v. Gur Dayal 2 Si11gh & Anr. ( ) and Mussamat Ramman Bibi v. Mathura Prasad & Anr. ("). Both were cases of fixed rate tenancies. As pointed out u (I) A. LR. 1969 pp. 843, (3) 75 Indian Cases 621. N. B. TANDON v. SHANKERLAL (Chinnappa Reddy, J. ) 827 by the Full Bench in Tulsi Ram Sahu & Anr. v. Gur Dayal Singh & Anr. ,(I) one of the incidentsi of a fixed rate tenancy was that ph\vid· ' ed bys.

18 of the Agra Tenancy Act 1901 which prescribed that a right • of occupancy would stand extinguished when a fixed-rate tenant died leaving no heir entitled under the Act to inherit the right of occupancy. It followed therefrom that the land had to revert to the landlord and could not go to the Government by escheat. On the other hand in Sonet Kooer v. Himmat Bahadur & Ors. (2). The Privy Council held that on the failure of heirs to a tenant holding land under Mukerrori Tenure there was nothing in the nature of the tenure which prevented the Crown from taking the Mukerrori by escheat, subject to the payment of rent to the Zamindar. If the lease-hold interest of the company in the land became vested in the government on the dissolution of the company it must follow that the suit at the instance of the plaintiffs was not maintainable. The next question for consideration is whether the plaintiffs were estopped from denying the validity of the sale in favour of the Benaras Bank Ltd.

, and the character of the possession of the Benaras Bank. Ltd. , and its successors in interest. As already mentioned by us Budhsingh and Jialal sent a notice dated January 11, 1941, through their lawyer demanding of the liquidator of ·the Benaras Bank Ltd. , payment of arrears of rent for four years and asserting that the lease • was forfeited consequent on the lessee's failure to pay rent for a conti· nuous period of three years. The liquidator denied the claim of right of the lessor to forfeit the lease but admitted the claim for rent. The liquidator paid the rent and it was accepted by Budh Singh and Jialal. Later also the evidence shows that Jugal Kishore the purchaser froni Budh Singh and Jialal also accepted rent from the official liquidator of the Benaras Bank Ltd. This course of conduct of Budh Singh and Jialal and their successor Jugal Kishore clearly indicates the acceptance, by them, of the position that the Benaras Bank Ltd.

had succeeded to the rights of the company in the lease-hold interest. Further, the offi· cial liquidator of the Benaras, Bank Ltd. said first tried to sell tl_1e leaie· hold interest by public auction. When that sale did not frustify because c: of the failure of the higll'ost bidder to deposit the sale price, the lease· hold interest was sold to the defendant with the sanction of the Com· parry Judge. At no point of time did the predecessors-in-interest of the plaintiffs raise the slightest objection to the sale of the lease-hold interest. It was thereafter that the defendant obtained the permission (2) I. LR. (I) Calcutta 391. r of the Municipal Board, Saharanpur, and raised construction on the land. The plaintiffs themselves admittedly reside nearabout the land in dispute. They did not raise any objection to the raising of the con- ' structions.

The plaintiffs as well as the defendants appeared to proceed on the common understanding that the defendants had succeeded to the interest of Patel Mills Ltd. , in the lease-hold interest. We are, B therefore, of the view that the plaintiffs were estopped from contending that the defendant had no interest in land. The amount only right of the plaintiffs was to receive the rent. The result of our discussion is that the appeal is allowed and the suit is dismissed with costs throughout. It is, however, made clear that the plaintiffs have the right to reo~ive rent from the defendl! nts. c P. B. R. Appeal allowed. • • /