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Sunday, August 19, 2012

the application of the provisions of Order 2 Rule 2 CPC to a winding-up proceeding under the Companies Act that may be filed for recovery of the dues payable by the Respondent-tenant to the Appellant-landlord. We are, however, ad idem with the Division Bench that the relief of the Appellant-landlord, if any, in this case, will not lie in a winding-up petition, but in a suit filed for the said purpose, particularly when the said relief is not available under the rent laws which only deal with protection of tenants from eviction and the right of the landlords to recover the tenanted premises on the grounds specified therein.


|REPORTABLE          |


                        IN THE SUPREME COURT OF INDIA
                        CIVIL APPELLATE JURISDICTION

                     CIVIL APPEAL NO.5886       OF 2012
                   (Arising out of SLP(C)No.10362 of 2007)



1 Raju Jhurani                       … Appellant



           Vs.





           2 M/s Germinda Pvt. Ltd.             … Respondent





                               J U D G M E N T



ALTAMAS KABIR, J.


   1. Leave granted.


2.    An interesting point has been raised in this Appeal as to whether  the
provisions of Order 2 Rule 2 of the Code  of  Civil  Procedure  (CPC)  would
have any impact on a proceeding under Sections  433,  434  and  439  of  the
Companies Act, 1956.

3.    This Appeal is directed against the  judgment  and  order  dated  14th
August, 2006, passed by the Calcutta  High  Court  in  A.C.  No.54  of  2005
dismissing the Appeal on the ground that in  the  absence  of  any  specific
finding whatsoever as to  the  rate  of  rent  and  the  period  of  default
committed by the respondent-tenant,  the  proceedings  under  the  Companies
Act, 1956, for winding-up was not maintainable.

4.    The Appellant herein as landlord filed a  suit  for  eviction  against
the respondent company on the ground of default in  making  payment  of  the
rents and also on grounds of  reasonable  requirement,  in  the  City  Civil
Court at Calcutta, under the provisions of the West Bengal Premises  Tenancy
Act, 1956.  The same was registered as Ejectment Suit No.201 of  1999.   The
said suit was  decreed  only  on  the  ground  of  default,  but  only  upon
recording that notice under Section 13(6) of  the  aforesaid  Act  had  been
duly served and that the ground of default had been proved, the Trial  Court
decreed the suit. There was no  finding  whatsoever  as  to  the  period  of
default in the said judgment.

5.    After the passing of the decree, as the Respondent did not  hand  over
vacant possession of the suit premises, the Appellant put  the  decree  into
execution and pursuant thereto vacant possession  of  Flat  No.10-D  in  the
10th Floor and car parking space No.4 in the ground floor  of  the  premises
No.28-B, Shakespeare Sarani,  Calcutta,  was  made  over  to  the  Appellant
through Court Bailiff  on  22nd  February,  2002.   Having  obtained  vacant
possession of  the  suit  premises,  the  Appellant  issued  notice  to  the
Respondent Company demanding payment of arrears of rent, Corporation  taxes,
etc. but without yielding any result.  Consequently, the  Appellant  had  no
other option, but  to  file  a  winding-up  petition  before  the  concerned
Company Court for payment of arrears  of  rent  amounting  to  Rs.7,22,381/-
from the month of June, 1998, till August, 2004 at the rate  of  Rs.12,650/-
per month, together with interest amount of Rs.8,92,211/-  at  the  rate  of
18% per annum. The learned Single  Judge  (Company  Affairs)  dismissed  the
winding-up petition on the ground of the alleged bar of Order 2 Rule  2  CPC
as well as the observations made  that  the  Appellant  could  approach  any
other appropriate forum with regard to  the  claim  raised  by  him  in  the
winding-up petition and that no summary order  could  be  passed  since  the
relationship between the parties had already been terminated.

6.    The Division Bench dismissed the Appeal filed by the Appellant  herein
on the ground that the winding-up petition was  not  maintainable  as  there
was no admitted arrears of rent for any particular period and there  was  no
ascertained amount due in respect of  which  a  winding-up  order  could  be
passed. The Appellate Court, however, also observed that  the  Appellant  as
the petitioning creditor would be entitled to claim the  amount  of  arrears
claimed by him in an appropriate proceeding before the appropriate forum.

7.    Questioning the said  order  of  the  Division  Bench  dismissing  the
appeal, learned Advocate, Ms. Shobha, urged that  both  the  learned  Single
Judge,  as  well  as  the  Division  Bench,  proceeded   on   an   erroneous
interpretation of the provisions of Order 2 Rule 2  CPC  and  Sections  433,
434 and 439 of the Companies Act,  1956.   Ms.  Shobha  contended  that  the
eviction suit had been decreed only on the ground of  default,  since  under
the West Bengal Premises Tenancy Act, 1956, there  is  no  provision  for  a
decree for recovery of rents.  In fact, in the absence of any  provision  in
the Act, the Court could not have made any decree towards the rents  payable
by the Respondent-tenant to the Appellant-landlord. However,  although,  the
default period or the rate of rent  had  not  been  computed  by  the  Trial
Court, the Trial Court had found  that  the  Respondents  had  defaulted  in
payment of rent from the month of June, 1998.   It  was  submitted  that  in
order to ascertain the dues on the basis of the aforesaid finding, was  only
a matter of calculation and mathematics and could be easily ascertained.   A
proceeding for winding-up would, therefore, be maintainable  in  respect  of
the debts, which the Company was unable to pay.

8.    On the question of the bar under  Order  2  Rule  2  CPC,  Ms.  Shobha
submitted that the same relates to suits which were required to include  the
whole of the claim which the Plaintiff was entitled to make  in  respect  of
the cause of action, with liberty to relinquish any portion of his claim  to
bring the  suit  within  the  jurisdiction  of  any  Court,  but  having  so
relinquished such claim or portion thereof, the Plaintiff  would  no  longer
be entitled to sue in respect of the portion  so  omitted  or  relinquished.
Ms. Shobha also pointed out that Clause (3)  of  Rule  2  of  Order  2  also
prohibits a person from suing for any relief which may have been omitted  by
the Plaintiff, except with the leave of the Court.  In contradistinction  to
the above, the provisions  of  Section  439  of  the  Companies  Act,  1956,
provide for an application to be made to the Court  for  the  winding-up  of
the Company to be  presented  by  a  petition,  subject  to  the  provisions
indicated in the Section. Ms. Shobha pointed out that the proceedings  under
Section 439 not being a suit, but a Petition,  the  provisions  of  Order  2
Rule 2 CPC would not be attracted since the bar indicated  therein  is  with
regard to suits. On the basis of  such  distinction,  Ms.  Shobha  submitted
that the learned Single Judge had  wrongly  interpreted  the  provisions  of
Order 2 Rule 2 CPC in holding that the  winding-up  petition  filed  by  the
Appellant for recovery of its arrear  rents/dues  was  not  maintainable  in
law.

9.    On the question of the findings of the  Division  Bench  that  in  the
absence of any finding regarding the rate of rent and  the  arrears  due,  a
procedure under Section 439 of the Companies Act was not  maintainable,  Ms.
Shobha urged that such an interpretation  was  erroneous  and  based  on  an
incorrect understanding of the provisions of Section 439  of  the  Companies
Act, 1956, in relation to Order 2 Rule 2 CPC.  Ms.  Shobha  reiterated  that
once it had been held by the Court that the Respondent-tenant had  defaulted
in payment of rent for a particular month, viz. June 1998,  it  was  only  a
matter of calculation and mathematics  to  ascertain  the  dues  which  were
payable by the Respondent-tenant to the Appellant-landlord.  The  relief  in
the winding-up petition being ascertainable, the Division Bench of the  High
Court erred in law in holding otherwise.

10.   Ms. Shobha further  submitted  that  recognizing  the  fact  that  the
Respondent-tenant was in default of payment  of  rent  since  the  month  of
June, 1998, the Division Bench had observed that the Appellant would  be  at
liberty to enforce his rights to the arrear rentals before  the  appropriate
forum.  In  other  words,  according  to  Ms.  Shobha,  the  Division  Bench
recognized the  right  of  the  Appellant  to  recover  its  dues  from  the
Respondent-tenant, though not  by  means  of  a  winding-up  petition  under
Section 439 of the Companies Act, 1956.

11.   On the other hand, Mr. Gaurav Mitra, learned Advocate,  appearing  for
the Respondent Company, reiterated the submissions which  had  found  favour
both with the learned Single Judge as also the Division Bench  of  the  High
Court.   It  was  reiterated  that  the  Appellant-landlord  ought  to  have
included all the reliefs in the eviction suit and having omitted to sue  for
the arrear rents, he was no longer entitled to claim the same on account  of
the bar imposed under Order 2 Rule 2 CPC.   Mr.  Mitra  also  supported  the
view expressed by the Division Bench  of  the  High  Court  holding  that  a
winding-up  proceeding  was  not  a  proper  remedy  for  the  recovery   of
undetermined  dues,  particularly  when  so  many  different  criteria  were
involved in ascertaining the amount due and/or payable  by  the  Respondent-
tenant to  the  Appellant-landlord.   Learned  counsel  submitted  that  the
judgment and order of the learned Single Judge and  the  Division  Bench  of
the Calcutta High Court did not require  any  interference  and  the  Appeal
was, therefore, liable to be dismissed.

12.   Having considered the submissions made on  behalf  of  the  respective
parties, we are inclined to accept Ms. Shobha’s submissions as  far  as  the
provisions of Order 2 Rule 2 CPC are concerned.  Order 2 CPC deals with  the
frame of suits and the various rules contained therein also refer  to  suits
for obtaining the  reliefs  of  a  civil  nature.   On  the  other  hand,  a
proceeding under Sections 433, 434 and 439 of the Companies  Act,  1956,  is
not a suit, but a Petition which does not attract the provisions of Order  2
Rule 2 CPC, which deals with suits. Ms. Shobha has submitted that  the  West
Bengal Premises Tenancy Act, 1956, does not make any provision for  recovery
of arrear rents and provision has only been made  under  the  provisions  of
Section 17 for deposit of the arrear rents which are admitted by the  tenant
at the time of entering appearance and filing Written Statement in the  suit
for eviction.  Provision has also been made for payment of such  arrears  in
instalments, but there is no provision for recovery of the arrear rents  for
which a separate suit has  to  be  filed,  as  has  been  indicated  by  the
Division Bench of the Calcutta High Court.

13.   Viewed in the context of what has  been  stated  hereinabove,  we  are
unable to accept the second limb of Ms.  Shobha’s  submissions.   There  are
various stages involved in deciding the amount  of  rents  payable  and  the
periods of default and also  the  amount  to  be  ultimately  calculated  on
account of such default and the same cannot  be  tried  in  a  summary  way,
without adducing proper evidence.  It is,  therefore,  necessary  that  such
issues be heard and tried in a properly constituted  suit  for  recovery  of
such dues, in which the issue relating to the actual  dues  payable  by  the
Respondent-tenant to the Appellant-landlord can be decided.

14.   We, therefore, set aside the findings of the learned Single Judge,  as
also the Division Bench, in regard to the application of the  provisions  of
Order 2 Rule 2 CPC to a winding-up proceeding under the Companies  Act  that
may be filed for recovery of the dues payable by  the  Respondent-tenant  to
the Appellant-landlord.  We are, however, ad idem with  the  Division  Bench
that the relief of the Appellant-landlord, if any, in this  case,  will  not
lie in a winding-up petition, but in a suit  filed  for  the  said  purpose,
particularly when the said relief is  not  available  under  the  rent  laws
which only deal with protection of tenants from eviction and  the  right  of
the landlords to recover the tenanted  premises  on  the  grounds  specified
therein.

15.   The Appeal is, therefore, allowed in part to the aforesaid extent.

16.   Having regard to the facts of the case, the parties shall  bear  their
own costs throughout.




                                                     ………………………………………………………J.
                                     (ALTAMAS KABIR)





                                                     ………………………………………………………J.
                                     (J. CHELAMESWAR)
New Delhi
Dated:16.8.2012

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