Full Text
CO.APP. 11/2013
ASHOK KUMAR KRISHNALAL PATEL & ANR. ..... Appellant
Through Mr. Venkita Subramaniam, Mr. Dharmesh Shah and Mr. Rahul Bansal, Advocates.
Through
HON'BLE MR. JUSTICE SIDDHARTH MRIDUL O R D E R
05.04.2013 C.M.No.2197/2013 Exemption allowed subject to all just exceptions.
The application is disposed of.
JUDGMENT
1. There is delay of 47 days in filing of the appeal. Before issuing notice on the application for condonation of delay, we have deemed it appropriate to examine the grounds of appeal on merits.
2. The appellants‟ predecessor-in-interest had executed two registered perpetual or permanent lease deeds dated 23rd March, 1918 and 3rd November, 1927 in respect of agricultural lands in favour of Chandulal Karsandas, Mohanlal Vardhmanbhai and Lallubhai Narsinhdas Patel and Seth Rathilal Nathalal. Subsequently, Seth 2013:DHC:1685-DB Rathilal Nathalal established a company under the name of New Commercial Mills Co. Ltd. It appears that the lessees mentioned above transferred their rights in respect of the land in favour of New Commercial Mills Co. Ltd. The said transfer/assignment of the leasehold rights was accepted by the predecessors of the appellants. In other words, New Commercial Mills Co. Ltd. became the perpetual lessee. Subsequently, there were transactions with New Commercial Mills Co. Ltd. transferring the land to Bharat Vijay Mills Ltd., who in turn vide registered sale deed sold or transferred the lease hold rights to National Textile Corporation and ultimately to Continental Textile Mills Ltd., the company under liquidation. The transfer in favour of Continental Textile Mills Ltd. was made in the year 1991. The said transfer/assignments were accepted by the predecessors of the appellants.
3. During the course of liquidation proceedings, the official liquidator attempted to sell/dispose of the lease hold rights in the said land. Auction was held wherein M/s Suchit Pavitra Industrial Cooperative Society gave the highest bid, but their bid was rejected because auction money was not deposited within time.
4. The appellants herein who claim right, being inheritors of the original lessors, filed company application C.A. No.219/2007, inter alia, alleging that the company in liquidation has no right, title or interest in the property and the lease hold right subsisting with them stands terminated. They claim that since the object of the lease stands completed and the Continental Textile Mills Ltd. is being wound up, the land subject matter of the lease deeds should revert to them and the official liquidator cannot transfer or alienate the lease land and the sale proceeds cannot be used for disbursement amongst the creditors/contributories.
5. By the impugned order dated 7th November, 2010, the aforesaid application has been dismissed.
6. Learned counsel for the appellant has submitted that The Bombay Rents, Hotel and Lodging House Rates Control Act, 1947 (for short „the said Act‟) has been extended and is applicable to whole State of Gujarat. Our attention has been drawn to Section 2(1) of the said Act wherein it is stipulated by Parts I and IV of the State of Gujarat. Part I of the said Act consists of Sections 1 to 5 and Part IV consists of Sections 47 to 51. None of the provisions in Part I and IV prohibits or bar a lessee from transferring the leasehold rights in favour of a third person. Learned counsel has relied upon Section 13 (e), 13 (ee) and 15 of the said Act. The said provisions are included in Part II of the said Act. Assuming though not accepting that Part II is applicable, we do not think that there is a bar or prohibition or the Official Liquidator must surrender the leasehold rights to the appellant. Section 15 (1) of the said Act reads as under:-
9. Similarly, the second lease deed dated 3rd November, 1927 records that the land in question was government land and the lessor had granted permanent lease on annual rent of Rs.138/-. The various covenants state that the lessee was entitled to transfer or alienate their lease hold rights in favour of third parties. Clauses 1,2,[3] and 5 of the subsequent Lease Deed of 03.11.1927 records as under:-
1) The lease amount of the said field has been agreed to be Rs. 138=00 (Rupees One Hundred Thirty Eight Only) for every year. The said lease amount shall be paid by the Second Party or heirs – guardians of the Second Party to the heirs-guardians of the First Party every year by year in future.
2) The Second Party has taken the aforesaid land on lease from the First Party permanently. If the Second Party uses the said land for the use of mill, etc. or raise construction thereupon, or the Second Party uses it as per his wish and will or keep it surplus, then also, the Second Party shall go on fully paying the aforesaid lease amount to the First Party and his guardians, heirs/successors, and shall not raise any kind of objection or obstacle whatsoever and if the Second Party or the guardians and heirs/successors of the Second Party takes any objection, then, it shall not be permissible under this deed, but, in case the Second Party let out or assign this land to any party, then, the First Party or the guardians and heirs/successors of the First Party shall not raise any dispute in connection thereof.
3) As written hereinabove, the Second Party, heirs/successors or guardians of the Second Partyadministrators shall go on paying the lease amount every year by year in future and if any delay or procrastination is caused therein, then, shall give those dues with interest from the date when it became due and in making default thereof, if the Second Party gives notice and if the Second Party does not make payment with interst within one month from the receipt of that notice also, then, the First Party shall be entitled to get the land vacated and the First Party shall be entitled to claim the expenditure incurreds in doing so, lease amount and interest from the Second Party. Moreover, the Second Party is binding himself to retian the said land on lease for a minimum period of twenty one years and if within the said period, the Second Party has to return the land, then, by giving the lease amount of the period, which is still left out of twenty one years, at that time only, shall hand over the land to the First Party, and after completion of the period of twenty one years, the Second Party shall go on paying the lease amount, as above, until the Second Party retains the land, and if we surrender the land in between the year, then also, shall give lease amount for the entire year, but, on surrender of the land in the half term i.e. before twenty one years, the First Party has right in respect of th lease amount of the half term, which the Second party has to give, and the Second Party or the heirs/successors, guardians, attorneys, assignees of the Second Party bind themselves to give the same to the First Party and in accordance thereto, if the Second Party or the heirs/successors and guardians of the Second Party then, the First Party has absolute right to recover such amount from the Second Party or heirs/successors of the Second Party, including all expenses and the accruing interest thereupon. No any kind of dispute by the Second Party or heirs/successors and guardians of the Second Party therein shall be permissible and in that event, after filling up and surfacing the pits and knolls and making it in a cultivable condition by duty preparing the hedge, the Second Party or heirs/successors and guardians of the Second Party shall hand over the said land to the First Party or heirs/successors, guardians, attorneys of the First Party after duly receiving the receipt. And, if the Second Party does not hand over the land in that manner, then, all expenditure so incurred in that regard by the First Party, shall be recovered by the First Party from the Second Party with interest. Until the land is not handed over after duly cleaning the same by the Second Party or heirs/successors, guardians, administrators of the Second Party, the lease amount shall go on accumulating and all such shall be on the shoulders of the Second Party. xxxxxxxxxxxxxxxx xxxxxxxxxxxxxxxx
5. If the Second Party sub-lease this land to any person or assign his right in any manner whatsoever, then too, as per this lease deed, all the liabilities of the Second Party shall remain absolute and if the person, in whose favour the Second Party assign his right, is agreeable by the First Party, then, in accordance with the wish of the First Party, the First Party shall get the agreement executed from him. But, it shall be the wish of the First Party whether to release the Second Party from all the liabilities under this lease deed or not, after getting the agreement so executed. The Second Party has no any right whatsoever therein and if the Second Party assigns his rights in any manner whatsoever to anyone, then, subject to complying of all conditions of this lease deed, he can do so.”
10. A perusal of various covenants of the said lease would further show that the lessees therein were entitled to transfer the possession and sell their lease hold rights in favour of third parties. The lessors are bound by the said transfers, assignment.
11. We have noticed and recorded the factual position that there have been transfers of lease hold right from time to time. The last transfer was affected in 1991 when the lease hold right was transferred by National Textile Corporation in favour of Continental Textile Mills Ltd., the company under liquidation.
12. Before we part on this point, it is pertinent to bring to notice the observation of Laxmidas Bapudas Darbar v. Rudravva, (2001) 7 SCC 409 which held as under:
13. Lease hold rights of permanent nature are a capital asset and have market value, when they can be assigned or transferred to a third person unless there is a contractual or statutory bar/prohibition. Section 108 of Transfer of Property Act permits assignment. Such lease hold rights cannot be equated and treated as similar to limited or short term tenancy rights, which are granted in favour of a tenant with a rider, bar or prohibition on further transfer/assignment or subletting.
14. Acquisition of the lease hold rights in question by the company under liquidation was for value and consideration paid to the earlier lessee. The official liquidator is entitled to encash the capital asset and sell the lease hold rights for payment of dues to the creditors/contributories. The lease hold rights have market value is apparent and established from the fact that auction was held and bids were received. To restitute or return the land in question to the appellants will result in dissipation of an asset of considerable value, to the detriment/loss of the creditors/contributories.
15. The contention of the appellants is that there is violation of the terms and conditions of the two perpetual/permanent lease deeds and rentals have not been paid. However, it is admitted and accepted that no proceedings for ejectments etc. have been initiated for recovery of possession. If rent control legislation apply, then proceedings under the specific statute have to be initiated as per the procedure. If the Transfer of Property Act applies, then proceedings have to be initiated before the civil court. These are separate aspects and need not be examined in the present appeal. Normally an auction purchaser would acquire the lease hold rights with the stipulation or covenants in the perpetual lease. This would not affect the rights of the lessor under the lease deed, subject of course to statutory protection, if any, to the new lessee/purchaser.
16. In view of the aforesaid legal position, we do not find any reason to issue notice on the application for condonation of delay. Consequently, the application for condonation of delay and the appeal are dismissed.
SANJIV KHANNA, J. SIDDHARTH MRIDUL, J. APRIL 05, 2013 NA/VKR