COMMERCIAL ART ENGRAVERS PVT LTD Vs. INDIAN AND EASTERN NEWSPAPERS SOCIETY

JUDGEMENT

(1.) By this judge's summons three joint stock companies, which claim to be creditors of Mass Communications and Marketing Pvt. Ltd. (in liquidation) (hereinafter referred to as "the company"), pray for a direction that the official liquidator (hereinafter called "the liquidator") be directed to furnish to them a copy of his report made to this court for direction in connection with a suit filed in the Small Causes Court, Bombay. The claim for such a direction by the applicants is founded on their legal rights as creditors of the company as also on the principles of natural justice. The applicants are supported by the petitioners at whose instance the company was directed to be wound up by this court. The liquidator resists the application. Having regard to the importance of the questions involved, the Incorporated Law Society, a body which represents the profession of solicitors at Bombay, sought permission to intervene in the matter. Such permission was granted and the said Society appeared through its counsel and made submissions on various aspects of the matter.

(2.) The facts leading to the judge's summons are not much in dispute. On 19th August, 1970, the company took on lease three flats, being flats Nos. 702, 703 and 803 in a building called "Bhaktvar" at Colaba, Bombay. The area of the said flats is in the vicinity of 7,000 sq. feet and the rent payable in respect thereof is Rs. 3,500 per month. The company was wound up by an order of this court on 23rd January, 1976. The said flats thereafter remained vacant and unoccupied. In fact, by an order made earlier at the instance of the landlords of the said flats, M/s. Pallen Mehrijibhoy Mistry and others (hereinafter called the "landlords") a Metropolitan Magistrate had directed the company to desist from using the said flats in any other manner save and except for its business purposes. On 6th October, 1975, the landlords filed a suit in the Court of Small Causes at Bombay, being Suit No. ARE & R No. 993/5064 of 1975, inter alia, for possession of the said flats and for arrears of rent and mesne compensation. The arrears of rent aggregated to Rs. 24,500 for the period from 1st January, 1975, to 30th July, 1975. To that amount was added a sum of Rs. 7,000 as compensation for the period between 1st August, 1975, and 30th September, 1975. Besides the said amounts, a further sum of Rs. 3,500 per month was claimed as mesne compensation until the possession of the flats was delivered to the landlords. During the pendency of the said suit the landlords, by their letter dated 28th January, 1976, made a without prejudice offer to the liquidator. The landlords, inter alia, initiated to the liquidator that they were willing to forgo the arrears of rent and compensation which by then aggregated to Rs. 45,000 and were also willing to purchase movables lying in the said flats for a sum of Rs. 30,000 if the liquidator agreed to release and hand over possession of the said flats and to sell the said movables to the landlords.

(3.) On 11th February, 1976, the liquidator made a report to this court, inter alia, seeking directions whether "he should defend the said Small Causes Court suit and if so what stand the official liquidator should take or whether the official liquidator should accept the offer of the landlord". At the hearing of the said report some ex-directors of the petitioners and the applicants appeared before Madon J. The applicants also filed an affidavit, inter alia, opposing any acceptance of the offer made by the landlords. By an oral order made on 29th March, 1976, Madon J. adjourned the said matter and directed the applicants to take out a judge's summons for relief sought by them. It may be observed that the relief the applicants then sought was that the liquidator should be directed to defend the suit. On 19th April, 1976, the judge's summons taken out by the applicants (Company Application No. 95 of 1976) and the liquidator's report came up before Madon J. After hearing the parties, Madon J. passed an order, inter alia, directing the liquidator to take advice of his attorneys who were appointed by the court, "with respect to the advisability of defending the suit" filed by the landlords and "if the attorneys so think fit they will obtain counsel's opinion in the matter". I is further significant to observe that by the said order the applicants were given liberty by the court in the following words : "If the applicants desire to place any facts before the official liquidator in connection with the advisability of defending the said suit, they may do so, and the official liquidator will communicate such facts to his own attorneys who will apply their minds to them."