NAOSHIR S. CHENOY, HYDERABAD Vs. DISTRICT COLLECTOR OF HYDERABAD AND OTHERS

JUDGEMENT

(1.) This appeal is directed against the order of our earned brother Justice Satyanarayana Raju, dismissing a petition filed by the Liquidator of the Hyderabad Pictures Ltd., Hyderabad (hereinafter referred to as the Company) under Section 518 of the Indian Companies Act (hereinafter called the Act for two reliefs, viz., to declare that the respondents, i.e. the District Collector of Hyderabad, Superintending Engineer, P.W.D. and the Estate Officer, Hyderabad have no right to distrain and sell the Projectors of the Company and to stay the sale of the Cinema Projectors pursuant to the notice published by the respondents in The Deccan Chronicle.

(2.) The material facts which are rot in dispute may be shortly stated. The Company was incorporated under the provisions of the Hyderabad Companies Act with an authorised capital of Rs. 2,80,000/-, the Government of the erstwhile Hyderabad State owning eighty per cent of the shares. Among the several objects set out in the Memorandum of Association of the Company, ore was the promotion of visual education, by means of exhibiting documentary films. For the exhibition of these films, a building belonging to the erst-while Hyderabad Government was taken on lease in March, 1952 on a monthly rent of O. S. Rs. 500/- for a period of 15 years. The Company abandoned the exhibition of pictures as it was not profitable to continue it. So, in April, 1958, the theatre with the equipment and the furniture was leased out to one Gyan Sagar for a period of two years on a monthly rental of I.G. Rs. 600/-. That document contained a clause giving option to the lessee to renew the lease for a further period of one year.

(3.) The two questions that were debated before us are whether the Government could claim preferential rights in regard to the rent payable to them and whether this Court could stay the proceedings started by the Government for the realisation of their dues.