W.BROOME, J. - (1.) TWO applications require to be disposed of in the liquidation proceedings of the Northern India Oil Industries Limited, which was ordered to be wound up on August 7, 1963, on a petition presented by the Registrar of Companies on May 24, 1962. The first is Company Application No. 8 of 1968 (presented on January 30, 1968), in which the official liquidator had asked the court to direct Bhagwat Saran Garg and Mukat Saran Garg (O.Ps. 1 and 2) to pay up the rent due from them from December 1, 1964, onwards under a lease of the company's properties executed in their favour by the company on November 30, 1961, and extended by the liquidator for a period of two years from December 1, 1966. The second is Company Application No. 4 of 1969 (presented on January 20, 1969), whereby in addition to the prayer in the earlier application for a direction to the lessees to pay up the rent due, the official liquidator has asked for a further direction to be issued to them to hand over possession of the properties forthwith, in view of the fact that the lease has expired on November 30, 1968.
(2.) BY the lease dated November 30, 1961, the Northern India Oil Industries Limited let out to Bhagwat Saran Garg and Mukat Saran Garg the whole of its movable and immovable properties, consisting of an oil mill with its building, the land on which the building stood and the land appurtenant thereto, various ancillary departments (such as paint factory, ice factory, linseed oil plant and soap plant) and all machinery, machine parts and accessories. The lease was to remain in force for a period of five years and the lessees were to pay a sum of Rs. 50,000 annually as rent. The deed further recited that the lessees were entitled to enjoy all the rights that had been enjoyed by the lessor company itself in all these properties, and that with effect from the date of execution of the deed the lessees had been put in possession of all the leased properties. After the winding up order had been passed in August, 1963, the official liquidator attempted to take possession of the company's properties and some portions of the premises were sealed. The lessees, however, maintained that they were entitled to retain possession of the entire premises under the terms of the lease; and as a result, on March 5, 1963, the official liquidator applied to the court to have the lease declared void under Section 531A of the Companies Act. On July 28, 1964, the official liquidator was directed to convert this application into a regular suit and was allowed six weeks for this purpose. On September 18, 1954, however, in order to avoid protracted litigation, the official liquidator with the permission of the court entered into a compromise with the lessees, by which it was agreed that the lease should be extended for another two years, commencing from December 1, 1966, and a corrigendum amending the original lease deed in accordance with this compromise was duly executed on September 8, 1961, containing the following terms : - - (1) That clauses 5 and 16 of the lease deed dated November 30, 1961 be omitted, which read as follows : - - 'Clause 5 : That the initial expenses that may have to be incurred towards repairs and replacements in the machineries and their parts for making the mills into a running and workable condition shall be made by the lessees themselves and expenses so incurred by the lessees shall be debited in the account of lessor and shall be adjusted towards the lease rent payable to lessor. Clause 16 : That in case the mills are closed or the lessees are compelled to vacate the mills during the period of the lease due to any of the lessors or any of its creditors or under orders of any court, the lessees shall have right to recover damages at the rate of Rs. 200 (Rupees two hundred only) per day from the lessor for the remaining period of lease and the lessor shall be liable for damages to the lessees before they are compelled to vacate the same as mentioned above and the lessor shall not be entitled to any compensation for such handing over by the lessees.' (2) That in view of the fact that the factories and some of the premises of the company have remained locked and sealed from the 1st December, 1962 to this date, i.e., September 20, 1964, the period of lease is extended by another two years commencing from December 1, 1966. (3) That if the lessees peacefully pay to the official liquidator rent mentioned above reserved in the lease deed for the period 1st December, 1964, to 30th of November, 1966, by the time stipulated therein and the official liquidator is not obliged to bring legal action for the recovery of the same then only the period of the lease will be extended by another two years commencing from 1st December, 1966, under Clause (ii) above; this clause of payment will operate in favour of the official liquidator only. (4) That the lessor will not be liable for the annual repairs and whitewashing of the premises. It will be the duty of the lessees to carry out the same at their own expenses. (5) That this corrigendum will take effect from 1st of December, 1961.' This compromise, it may be noted, squared up the amount for the rent due from the lessees up to November 30, 1964, and extended the lease, in a slightly modified form, until November 30, 1968. But up to January 30, 1968, when the first of the applications with which we are dealing was presented by the official liquidator, the lessees had paid nothing towards the rent due from December 1, 1964, in spite of repeated demands.
(3.) ON the issue of notice by the court, however, the lessees appeared through counsel and a statement was made on their behalf (on December 15, 1968) that they acknowledged liability to pay the lease money from December 1, 1964, at any rate up to March 23, 1965, the date on which the properties of the company were sold in execution to the Allahabad Bank (a secured creditor which had elected to stay outside the liquidation proceeding and was realising its dues independently). Time was granted for payment, but out of the amount of Rs. 15,513'70 claimed by the official liquidator for the lease money that accrued between December 1, 1964, and March 22, 1965, the lessees sent a draft for only Rs. 1,619'42 along with accounts purporting to show that nothing more was due.;