DESAI - (1.) AS the matter brooked no delay, after granting special leave to appeal, we proceeded to hear tile appeal on merits. When the hearing was over, we pronounced the following order and stated that the reasons would follow. The order reads as under : "The appeal is allowed and the order made by the learned single Judge as well as the Division Bench of he Bombay High Court rejecting the Judge's Summons taken out by the appellants is set aside and the Judge's Summons is granted to the extent indicated herein. The appellants shall deposit Rs. 1,50,000.00 by or before 1/03/1983 in this Court. Respondent No. 2 - Smt. Sabita V. Adapa shall hand over vacant and peaceful possession of the property being shops Nos. 8/9 on the ground floor of the building formerly known as 'Jagmohan Building No. 2' or as 'Ayaz Mansion' and now styled as 'Ram Kutir' situated at Station Road, Andheri, Bombay-400058 to the liquidator on or before 28/02/1983 who shall forthwith hand over possession on 1/03/1983 to the appellants, after taking a statement from the appellants that they have deposited the amount of Rs. 1,50,000.00 in this Court as herein indicated. On respondent No. 2 handing over vacant and peaceful possession of the aforementioned shops to the liquidator by or before 28/02/1983, the liquidator shall forthwith refund to her the security deposit of Rs. 28,800.00 deposited by the second respondent with the liquidator. Respondent No. 2 will be at liberty to remove all furniture and fixtures placed by her in the suit shop without causing damage to the property. The amount of Rs. 1,50,000.00 to be deposited by the appellants in this Court will with the consent of the appellants be disbursed according to the direction to be given by this Court to the needy and the deserving, creditors of the Chit Centre Pvt. Ltd. already ordered to be wound up by the High Court. Neither the liquidator nor the creditors of Chit Centre Pvt. Ltd. have any right to claim this amount of Rs. 1,50,000.00 or any part thereof as it is an ex gratia payment made by the appellants for alleviating the misery if any of some of the hard hit creditors of Chit Centre Pvt. Ltd. The distribution, of the aforesaid amount will be at the absolute discretion of this Court. The appeal is allowed to the extent herein indicated with no order as to Costs."These are the reasons.
(2.) ON a winding up petition filed tinder the Companies Act, 1956, a learned Company Judge of the Bombay High Court made an order on 23/09/1974 winding up Chit Centre Private Ltd. ('Company' for short). The Company had its office in shops bearing Nos. 8 and 9 on the ground floor of the building formerly known as 'Jagmohan Building No. 2' or as 'Ayaz Mansion' now known as 'Ram Kutir'. ON the winding up order being made, the Official Liquidator who was appointed As Liquidator of the Company while taking possession of the assets of the Company also took possession of the office premises of the Company. It is in this manner that the Liquidator acquired possession of shops Nos. 8 and 9, the premises involved in this appeal. Subsequently, the Liquidator sought direction of the Court on 25/04/1979 whether the premises should be let out on lease or licence or whether the furniture and fixtures in the premises should be sold? The Court gave a direction that the premises be given on caretaker basis after obtaining a proper document on a compensation not less than Rs. 2,250 per month. Pursuant to this direction the Liquidator invited offers from persons willing to occupy the premises on terms and conditions laid down by the Court. ON 2/07/1980, the Liquidator sought the direction of the Court whether to accept the offer of M/s. Modern Caterers represented by respondent No. 2 herein, Smt. Sabita V. Adapa. The Company Judge by his order dated 3/07/1980 directed the Liquidator to accept the offer as modified by the Court, of the second respondent. The Liquidator thereupon entered into an agreement on 29/07/1980 with the second respondent and gave possession of the premises to the second respondent on terms and conditions set out in the agreement. Appellants herein are the landlords of the building of which the premises involved in this appeal formed part. Appellants took out Judge's summons praying for a direction to the Liquidator to terminate the care"taker's agreement entered into with the 2nd respondent under the directions of the Court, and to hand over vacant and peaceful possession of the premises to the appellants. There were other prayers in the Judge's summons with which we are not concerned in this appeal. The learned Company Judge repelled the contention of the appellants that the so-called caretakers' agreement entered into by the Liquidator with the' 2nd respondent was in contravention of the various provisions of the Bombay Rents, Hotel and Lodging House Rates Control Act, 1948 (1947 ?) as amended in 1973 ('Rent Act' for short) and held that in substance and in form it was a caretaker's agreement which was permissible, Accordingly, the learned Judge rejected the Judge's summons in respect of both the prayers. Appellants preferred an appeal to the Division Bench of the High Court. The Division Bench held that appellants were not entitled to the notice in respect of the report submitted by the Liquidator for directions in respect of the premises and further observed that the appellants had no right to the present possession of the premises, more so, because the appellants had already filed a suit for eviction in the Small Causes Court at Bombay against the official liquidator and on this Abort ground the appeal was dismissed. Hence this appeal by special leave.
(3.) THE Company is already ordered to be wound up by the order of the Court dated 23/09/1974. THE name of the Company clearly spells out the objects for which it was formed. THE name of the Company was Chit Centre Pvt. Ltd. THE Company had undertaken the business of floating prize chit schemes. THE nature of business in modern times is sufficiently well known and does not require elaboration. THE Company bad set up an office for carrying on this business and the office was set up in premises taken on lease. THE business of the Company of floating prize chit schemes came to a standstill, the moment it was ordered to be wound up. It is not the Liquidators' case that he is carrying on business of the Company which is being wound up with the permission of the Court under Section 457 of the Companies Act Section 457 enables the liquidator in a winding-up by the Court, with the sanction of the Court, amongst others, to carry on the business of the Company so far as may be necessary for the beneficial windingup of the Company. If the floating of the schemes for prize chits came to a standstill, the moment the Company was ordered to be wound up, there was no question of the business of the Company to be carried on by the 'Liquidator and that too for the beneficial winding up of the Company. Whether to carry on the business of the Company which is ordered to be wound up is not a matter left to the uncontrolled discretion of the Liquidator. The Liquidator undoubtedly has the power under Section 457 to carry on the business of the Company, if it is necessary for the beneficial winding up of the Company. And this power can be exercised not at the discretion of the Liquidator but with the sanction of the Court. Reliance was placed on In re Batey; Ex parte Emmanuel, (1881) 17 Ch D 35 wherein it was observed that the power to carry on the business can only be exercised for the purpose of the beneficial winding up of the Company not because the creditors may think that the business will be a very profitable one and that the longer it is carried on the better it will be, and that they will make a profit from it. Reliance was also placed on Panchmahals Steel Ltd. v. Universal Steel Traders, (1976) 46 Corn Cas 706 (Guj), wherein it was held that amongst others 'the Liquidator with the sanction of the Court has the power to carry on business of the Company so far as may be necessary for the beneficial winding up of the Company, It is true that the Liquidator cannot carry on business for any other purpose except the purpose for which the power is conferred upon him, namely, for the beneficial winding up of the Company. He cannot carry on any business on the ground that it would be beneficial to the creditors or the contributors. The jurisdictional fact which must be ascertained and established for the exercise of the power by the Liquidator to carry on business of a Company, is that carrying on of the business of the Company is necessary for the beneficial winding-up of the Company.' However, the language of the section being unambiguous and clear, one does not need the assistance of precedents to come to a conclusion that the Liquidator with the sanction of the Court can carry on the business of the Company only to the extent that such carrying on of the business is necessary for the beneficial winding-up of the Company.;