BOARD OF TRUSTEES, PORT OF KOLKATA versus EFCLON TIE-UP PVT. LTD. AND ORS.

Citation: [2006] SUPP. 2 S.C.R. 95 · Decided: 08-05-2006 · Supreme Court of India · Bench: H.K. SEMA · Disposal: Appeal(s) allowed
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Judgment (excerpt)

_, 
BOARD OF TRUSTEES, PORT OF KOLKATA 
A 
v. 
EFCLON TIE-UP PVT. LTD. AND ORS. 
MAY 8, 2006 
.~ 
B 
[H.K.SEMA AND DR. AR. LAKSHMANAN, JJ.] 
Lease-Indenture of lease-Entered into by a Company and the Port 
Trust-It was stated in the deed that the lessee had the option of afresh lease 
for a further term of 30 years provided a notice stating the same was given 
---';. 
to the Port Trust at least six months before expiration of the subsisting c 
lease-Port Trust had also the option of renewing the lease for such further 
period, provided the conditions of the lease deed were fulfilled-It was also 
stipulated that in the event of the Company going into liquidation or is wound 
up compulsorily or voluntarily, the Port Trust would reenter possession and 
the lease would be brought to an end-The Company, in a letter, requested 
the Port Trust to renew the lease executed in its favour in 1962 for another 
D 
term of 30 years-The Company also stated that it had rental dues and 
municipal taxes to be paid which it would clear before the expiry of the/ease 
which was subsisting-The Port Trust, however, did not respond to this 
letter-The lease expired by ejjlux of time-The Company had still not paid 
its outstanding dues-High Court directed the Port Trust to take possession 
of the assets of the Company forthwith-Offers for purchase of assets of the 
E 
liquidated company were invited-The High Court accepted the offer made 
by a bidder and also approved the agreement whereby the bidder agreed 
to reemploy the workmen of the liquidated company-Aggrieved by the 
order, United Bank of India filed an appeal in the High Court on the ground 
that the sale. of the assets of the liquidated company was conducted with 
F 
undue haste and without t1ying to ensure that the maximum price was fetched 
for the assets of the company-The appeal was dismissed-However, the 
-
High Court directed the Port Trust to grant fresh lease in consonance with 
< 
the lease indenture that existed between the Port Trust and the liquidated 
company provided the bidder cleared all the outstanding rental dues and 
taxes-Correctness of-Held: The option to renew the lease was not validly 
G 
exercised by the company in liquidation-The bidder was the auction 
purchaser of only the assets of the company (ftxtures and furniture)-The 
land belonged to the Port Trust-Hence the bidder had no automatic right 
, ( 
for renewal of the /ease-However, Social justice demands that the lease in 
respect of the factory premises be renewed by the Port Trust in favour of H 
95 
96 
Sl.!PREME COURT REPORTS l2006] SUPP. 2 S.C.R. 
A the bidder so that the operation of the factory thereof can be commenced-
Port Trust directed to grant fresh lease to the bidder in the larger interest 
of the industry as also the workmen and of the Port Trust subject to the 
payment of all arrears and dues together with interest-The lease will be 
granted on the basis of the scheduled rate from the date of possession i.e. 
04.08.2003. 
B 
c 
An indenture of lease was entered into by a Company and the 
Kolkata Port Trust in respect of a premises. The lease was for a period 
of 29 years, 1 month and 25 days. It was stated in the deed that the lessee 
may have the option of a fresh lease for a further term of 30 years 
provided a notice stating the same was given to the Port Trust at least 
six months before expiration of the subsisting lease. The Port Trust had 
the option of renewing the lease for such further period, provided the 
covenant conditions were duly performed and the increase in rent is up 
to 25%, but not exceeding the rent as per the 'Schedule of Rates'. It was 
also clearly stipulated in the lease deed that, if the Company goes into 
D 
liquidation or is wound up compulsorily or voluntarily, the Port Trust 
would reenter possession and the lease would be brought to an end. 
E 
F 
G 
H 
On 01.08.1991, a letter was written by the Company to the Port 
Trust requesting the appellant for considering the renewal of the lease 
executed in their favour in 1962 for another term of 30 years. It was also 
stated in that letter that, the Company had rental dues and municipal 
taxes to be paid which they would clear before the expiry of the lease 
whkh was subsisting. The Port Trust, however, did not respond to this 
letter. Another letter was sent by the Company to the Port Trust requesting 
for the extension of the lease of the land. The lease deed expired by efflux 
of time. The Company had not ev
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