Bangur Brothers Ltd. (in liquidation), in re (2013) 3 CHN 306 (Cal.)

The present case involves the issue related to sub-tenancy. A tenant has no right to lend the property for sub-tenancy without the consent and written agreement of the landlords. The sub-tenants have to inform about the agreement in writing to the landlord within one month of taking over the possession. The case also discusses that the official liquidator under Section 535 of the Companies Act, 1956 has a right to deliver the vacant possession of the property to the appellant.
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Introduction

The Bangur Brothers case came into existence when a company entered into a tenancy agreement with the appellant company. In the agreement between them, it was mentioned that the tenant company is bound not to sublet the property. The Tenancy Act also asks that a property cannot be given as sub-tenancy by the tenants without the written consent from the landlords. The given case also discusses the provision for disclaimer of onerous property at the time of winding up of the company. This provision tries to protect the assets of an insolvent company by stopping it to incur further losses and allows the liquidator of the company to dispose of the onerous property by disclaiming it. In this case, the claimant had lodged a request for clarification, asking the official liquidator to take over the possession of tenured premises as they were the tenants. The tenured company was in liquidation and the said property was of no use to them. Therefore, the court ordered to return back the said property to the applicant by removing the occupants and the sub-tenants.

Facts of the case

The Venkatish Company Limited (in short VCL) was the absolute owner of the 2nd Floor of premises No. 14, Netaji Subhash Road, Kolkata (said premises/ said property) ,the power to divide all the property of VCL lies with the appellant company. A company named Bangur Brothers Ltd. (said company) was a tenant for the above mentioned premises. Since the above premises were transferred to the appellant company, Bangur Brothers Ltd became a tenant under appellant company. The Bangur Company appointed some sub-tenants on the said premises, they are Jugal Kishore Agarwal, Ghanshyam Das Agarwal and Nirmal Kumar Agarwal (collectively referred to as “the Agarwals”); Neepaz Metaliks Private Limited (in short Neepaz) and Adhunik Corporation Limited (in short Adhunik). All these sub-tenants are collectively controlled and managed by “the Agarwals”. The appellant company in agreement with the Bangurs have mentioned that the said premises should not be given for sub-tenancy. The case was earlier filed before the court and directed to the company court under Section 446(2). The court ordered the winding up of the Bangur Company for which it has to go through the liquidation process. The said company asked the court to direct the official liquidator to ask the occupants and sub-tenants to vacant the premises and hand over the possession of that property to the appellant company. The present appeal has been filed requesting the court to pass an eviction order for the removal of the Agarwals and the companies managed by it.

Issues

  • Whether the sub-tenancy of the said premises was valid and the Agarwals have the right over that property.
  • Whether the appellant or the said company will get the possession over the tenanted premises after taking it back from the sub-tenants.
  • Whether the appellant was aware of the sub-tenancy agreement between the Bangur Brothers and the Agarwals.
  • Whether the company court has the jurisdiction under Section 535 of the Companies Act, 1956 to decide the disclaimer of onerous property.

Contentions from both the sides

Appellant

  • The learned counsel for appellant contended that the Agarwals and the companies managed by it are not authorised sub-tenants and are not given any identification under the law.
  • The Counsel also drew the attention of the Court towards the rent receipt issued by VCL and the agreement between the landlords and the tenants that no sub-tenancy is allowed and if done it leads to eviction of the property by the tenants.
  • The learned Counsel submitted that the Agarwals neither have any right in respect of the said premises nor the locus standi to initiate the proceeding for the same.

Respondent

  • The learned Counsel for the respondents contended that the appellant and the Bangur Brothers Ltd. both the companies are managed by the Bangurs, if they lift the corporate veil of the two companies, it will be known that the appellants are aware of the sub-tenancy agreement.
  • The Counsel further submitted that no eviction order can be passed against them without giving a prior notice to them for a particular time period.

Summary of the Judgement

This court in the Bangur Brothers case is of the opinion that it has an appropriate jurisdiction to decide this particular case. The learned judge directed the official liquidator to release the property in favor of the appellants after removing all the occupants and sub-tenants from the said premises. The honorable court is of the view that all the cases relied upon by the learned counsel for respondents have no relevance to the present case. The court passed an eviction order to remove the occupants from the property as directed by the due process of law. The court asked the Official Liquidator to deliver vacant possession of the said premises to the appellant after evicting the Agarwals and the limited companies under their control. The sub-tenancy agreement was not considered as a valid agreement because as per the act the written consent of the landlord was not taken. The court ordered to transfer the possession of the property in the favour of the appellant. In the court’s view, because the Agarwals could not demonstrate an iota of right to remain in the occupation of the said premises, it would be unfair and improper for the claimant to be subjected to an eviction suit for the recovery of the said premises. The court opined that as per the agreement between the tenants and sub-tenants, it was mentioned that the consent of the landlord was taken for sub-tenancy but there is no such written agreement.

Analysis

The company court appropriately delivered its judgement with a justified reasoning stating the provisions lay down. The court did justification in handing over the possession of the said premises to the appellant because no valid agreement as directed by the law had been made for the property to remain in possession of the Agarwals and its subsidiary companies. The court proposed a reasonable point by directing the official liquidator for the transfer of vacant premises in favour of the appellant company. The court did justification by not making VCL a party to the proceeding because it has no interest in the property. The court on the demand of the tenant company asked the official liquidator to disclaim the onerous property and transfer the vacant possession in the favour of the applicant company because the tenant company was going to wound up as per the order of the court and the said premises was of no use for the Bangurs.

Conclusion

It can be deducted from the judgement of the above case that the company Court has jurisdiction under Section 535 to decide the question of disclaimer of onerous property and while adjudicating the same court relied upon the rights and liabilities of the tenants and sub-tenants. Under this section the court also has the power to pass an order directing official liquidator to vacate the said premises. Another legal point which arose was that the consent of the landlord must be taken in writing before transferring any property for sub-tenancy.

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