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

Citation: [1980] 2 S.C.R. 821 · Decided: 25-01-1980 · Supreme Court of India · Bench: N.L. UNTWALIA · Disposal: Appeal(s) allowed

Judgment (excerpt)

• 
( 
821 
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 
A 
B 
if passed to state by escheat-Lessor's interest transferred to plaintiffs-Official 
liquidator sold land to 
defendant-Defendant raised 
structures on land-
C 
l'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-
D 
.cutive years. The lessors interest changed hands twice and by virtue of a 
<lecreee in a suit for pre-emption filed by the respondents they became entitled 
to such interest. 
In the meanwhile the company went into voluntary liquidation and the 
liquidator executed an agreement of sale of all its assets including the Iease-
ht)ld interest in favour of a Bank which was the biggest creditor of the Com-
·pany. Immediately thereafter the Bank itself went into liquidation. 
Some-
time later the official liquidator of the Bank found that no deed of transfer 
was executed by the voluntary liquidator in favour of the Bank, the erstwhile 
voluntary liquidator therefore executed a deed of sale in favour of the Bank. 
Thereafter the officiad liquidator of the Bank transferred the lease-hold interest 
"'in the land to the defendant-appellant. 
Before the company went into liquidation the first transferee of the land 
accepted rent from the voluntary liquidator. After the transfer of the lease-
hold interest to the Bank the second transferee demanded from the 
official 
liquidator arrears of rent for four years and claimed that the lease was for-
feited by reason of the Bank's failure to pay rent for a continuous period of 
three years in terms of the lease. The official liquidator denied the right to 
forfeit the lease. He, however, paid rent which was accepted by the lesSors. 
Even subsequently rent was accepted by the lessors. 
The respondent sued to recover possession of the suit land on the g'round 
that the lease-hold interest was not validly transferred by the voluntary liqui-
dator and that therefore neither the Bank nor the defendant 
acquired any 
right in the land. The defendants contended that the voluntary liquidator had 
the authority in law to execute the 
deed of sale and formally 
complete a 
transaction which had already taken place, that the predecessors in interest of 
the plaintiff having accepted rent from the official liquidator were estopped 
E 
I' 
G 
B 
822 
SUPREME COURT REPORTS 
[1980] 2 S.C.R. 
A 
from contending that the transfer in favour of the Bank was not valid 
and' 
that the lease-hold interest in the 1'.ind had escheated to the Government 011 
the dissolution of the company. 
The suit was dismissed by the Trial Court and the Appellate Court. On 
s..::ccnd appeal, the High Court decreed the suit holding that the 
voluntary 
liquidator had no authority to exei.·ute the deed of sale after the dissolution of 
B 
the company_ and that there was neither estopp.::l nor escheat. 
c 
D 
E 
F 
Allowing the appeal, 
HELD : 1. The High Court was right in holding that the liquidator had 
110 jurisdiction to execute the deed of sale after the company had been dissolv-
ed. 
Once the company w2s dissolved in accordance with the 
procedur'e laid 
down in the Indian Companies Act, 1913 it ceased to exist and therefore the 
volnntary liquidator could not 
represent a non-existent 
company. If the 
liquidator was to discharge any duty or perform any function on behalf of 
the dissolved company he should have express statutory authority to do so, 
which he did not have under the Act. [826 D, 825 G] 
2. 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 bona vacantia. It is well settled that the property of an intestate dying 
without leaving lawful heirs and the property 
of a dis

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