SMT. NIRMALA R. BAFNA/KERSHI SHIVAX CAMBATTA AND ORS. versus KHANDESH SPINNING AND WEAVING MILLS CO. LTD. AND ANR./OFFICIAL LIQUIDATOR AND ORS.

Citation: [1992] 1 S.C.R. 985 · Decided: 25-02-1992 · Supreme Court of India · Bench: M.N. VENKATACHALIAH · Disposal: Disposed off
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Judgment (excerpt)

. 
7 
SMT. NIRMALA R. BAFNNKERSHI SHIVAX CAMBATTA AND 
A 
ORS. 
v. 
KHANDESH SPINNING AND WEAVING MILLS CO. LTD. AND 
ANR./OFFICIAL LIQUIDATOR AND ORS. 
FEBRUARY 25, 1992 
[M.N. VENKATACHALIAH, A.M. AHMADI AND B.P. JEEVAN 
REDDY, JJ.] 
Landlord and Tenant : 
B 
c 
Tenant-Company under liquidation---Official Liquidator took posses-
sion of premises-Suit by appellant claiming sub-tenancy pending--ln appeal 
arising out of an application under s. 446 of Companies Act, appellant 
allowed to be in occupation as agent of official liquidatoi-Directions of High · D 
court-Whether amounted to dispossession and altered status of appellant; 
Whether wa"anted at interlocutory. stage. 
The respondent company was the tenant of the Oat in dispute. 
Consequent upon a winding up order in respect of the Company in 
Company Petition No. 59of1984 the official liquidator to9k possession of E 
the Oat and sealed it. The appellant in C.A.No. 886/92 before this Court, 
who is the sister of one of the Directors of the Company claimed on the 
basis ofan agreement dated 15.7.79 said to have been entered into between 
her and the Company, to be the sub-tenant of the flat except a small 
portion thereof and that with the consent of the landlord she was in F 
possession of the premises since the date of the agreement. The official 
liquidator delivered the possession of the premises to her, but later he 
threatened to dispossess her, whereupon the appellant filed a suit against 
the company in the court of Small Causes for injunction and for a 
declaration that she was the lawful tenant and/or a protected sub-tenant G 
of the Oat in dispute (excluding the portion reserved for the Company). 
On an objection raised by the official liquidator the appellant ap-
plied under s. 446 of the Companies Act to the High Court for grant of 
leave to proceed with the suit. The Company Judge rejected the applica-
tion holding the suit a• collusive. 
H 
985 
A 
B 
986 
SUPREME COURT REPORTS 
[1992] 1 S.C.R. 
On appeal, the Division Bench transferred the suit to the High Court 
granting leave with the conditions that the official liquidator would take 
possession of the entire premises and would allow the appellant to occupy 
the area in the premises, which at the relevant time was in her possession, 
as an agent of the official liquidator pending the disposal of the suit, on 
payment of a monthly compensation of Rs. 7,500 besides depositing Rs. 
15,000. Aggrieved the appellant preferred the appeal by special leave to 
this Court. 
The landlord· Trust tiled a company application in CompanY, Petition 
No. 59 of 1984 for possession of the Oat including symbolic possession or 
C the premises in occupation or the appellant on the ground that the Com· 
pany no more required the portion in their possession. The Single Judge 
dismissed the application holding that the liquidator required the said 
portion for storing the company records at Bombay. Dismissing the con· 
sequent appeal the Division Bench of the High Court held that a proposal 
from Rashtriya Glrni Kamgar Sangh for revival the Company was under 
D consideration. The said order is the subject matter of C.A.No. 887 of 1992. 
It was contended on behalf of the appellant that the tenancy interest 
of the company in the Oat was not an asset of the Company in liquidation 
and the liquidator could not trade in the said right; that the appellant bad 
E 
a right to be in possession orthe premises in her own right as a sub-tenant; 
and in view of the Bombay Rent Act, the High Court erred in converting 
the appellant into an agent of the official liquidator and in imposing the 
conditions and enhancing the rent. 
F 
The official liquidator contended that the landlord Trust acted 
beyond the authority in consenting, if at all, to the said sub-tenancy. 
Counsel for the landlord-trust accepted the fact of oral consent to 
the sub-tenancy. 
Against an order dated 9.8.1989 passed by the Company Judge, the 
G landlord Trust • filed S.L.P No. 16368 of 1990 before this Court as also an 
appeal before the Division Bench of the High Court. Since the appeal had 
been dismissed by the High Court, this court dismissed the special leave 
petition as infructuous. 
H 
Disposing of the appellant's appeal (C.A.No. 886/92) and dismissing 
NIRMALA v. KHANDESH SPINING MILLS 
987 
the appeal of the landlord ·Trust (C.A.No. 887/92), this Court, 
HELD : 1. Merely because a company goes in liquidation and a 
liquidator/otncial liquidator Is ap
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