Case Title:
Shanker Lal And Anr. vs Narendra Bahadur Tandon
Date of Order:
25 January, 1980
Judge:
Reddy, O. Chinnappa
Parties:
Appellant: Shanker Lal And Anr
Respondents: Narendra Bahadur Tandon
FACTS OF THE CASE
- In May 1930, Patel Mills Ltd. received a perpetual lease from the original proprietors of a particular parcel of land in Saharanpur, Hulas Chand and Bilas Chand. The rent per year was Rs 75. The land might be used for any purpose the lessee chose. The lessee's rights were explicitly made transferrable. Although the lease was long-term, there was a provision that allowed the lessor to revoke it if the lessee missed three rent payments in a row.
- October 31st, 1932. Budh Singh and Jialal received Hulas Chand and Bilas Chand's stake transfer. Jugal Kishore acquired the rights to Budh Singh and Jialal by the acquisition of the properties described in the sale documents dated April 27, 1943, and May 11, 1943. On August 13, 1945, however, Shankarlal and Piareylal (the current plaintiffs) filed a pre-emption lawsuit against the sellers and Jugal Kishore, and as a consequence of the judgement entered in the lawsuit, they were granted the lessor's interest in the property area at issue.
- In the meantime, the lessee Patel Mills Ltd. entered voluntary liquidation, and on May 11, 1937, Mehra was appointed voluntary liquidator of the firm by a special resolution passed at a meeting of the company's creditors.
- The company's largest creditor was Benaras Bank Ltd. Therefore, the liquidator negotiated the sale of all the company's assets to the Benaras Bank Ltd for Rs 70,000 and, on February 23, 1939, after receiving the price, executed an agreement of sale. The agreement of sale listed the leasehold interest in the suit plot as one of the assets as well.
- The creditors approved the voluntary liquidator's final report in a meeting on May 4, 1939. On September 9, 1939, the report was submitted to the Register of Joint Stock Companies and registered. As a result, the corporation was declared insolvent as of December 9, 1939. The Benaras Bank Ltd. itself then entered liquidation on March 1, 1940.
- The official liquidator of the Benaras Bank Ltd. determined that the leasehold interest in the suit portion of land was not the subject of a properly completed deed of transfer signed by the company's voluntary liquidator in favour of the Benaras Bank Ltd. On January 28, 1941, Shri Mehra, the former volunteer liquidator of the firm, executed a deed of sale and got it properly recorded at the request of the official liquidator of the bank. The defendant appellant received the lease hold interest in the suit plot of property on March 9, 1943, from the official liquidator.
QUESTIONS RAISED
- Whether in the case of a permanent lease, on the death of the lessee, without leaving any heirs or successors, the lease-hold rights would revert to the lessor or would escheat to the Government.
- Whether the plaintiffs were estopped from denying the validity of the sale in favour of the Benaras Bank Ltd., and the character of the possession of the Benaras Bank Ltd. and its successors-in-interest.
ARGUMENTS ADVANCED BY THE APPELLANT
- According to the official liquidator of the Benaras Bank Ltd, the leasehold interest in the suit portion of the property was not the subject of a legally executed document of transfer signed by the company's voluntary liquidator in favour of the Benaras Bank Ltd.
- The leasehold interest in the suit portion of the property was not the subject of a legally executed document of transfer signed by the company's voluntary liquidator in favour of the Benaras Bank Ltd.,
ARGUMENTS ADVANCED BY THE RESPONDENT
- It was asserted that the voluntary liquidator had the legal power to sign the deed of sale and legally close up a transaction that had already happened.
- The plaintiffs were allegedly restrained from arguing that the transfer in the bank's favour was invalid since the successors in the plaintiffs' interest had taken rent from the bank's official liquidator.
- The Transfer of Property Act's Section 53-A was also cited as a defence to the plaintiffs' claim. Finally, it was argued that since the leasehold interest in the land had escheated to the government with the company's dissolution, the plaintiffs had no standing to file a lawsuit for possession.
OBSERVATION BY COURT
- It was noted by the court that Budh Singh and Jialal sent a notice to the liquidator of the Benaras Bank Ltd. on January 11, 1941, through their attorneys, demanding payment of four years' worth of rent arrears and claiming that the lease had been forfeited as a result of the lessee's three-year streak of unpaid rent.
- The liquidator acknowledged the claim for rent but rejected the lessor's right to claim a forfeiture of the lease. Budh Singh and Jialal acknowledged the rent payment made by the liquidator. Later, the evidence demonstrates that Jugal Kishore, the buyer from Budh Singh and Jialal, took rent from the Benaras Bank Ltd. official liquidator.
- • By acting in this manner, Budh Singh, Jialal, and their successor Jugal Kishore made it abundantly plain that they accepted the Benaras Bank Ltd.'s claim to the company's leasehold interest rights as their own.
- According to the court, the circumstances of the current case are drawn to Section 53-A of the Transfer of Property Act. The transferor who executed the incomplete transfer, as well as any person making a claim on his behalf, are subject to the right under Section 53-A. It is unclear how the person claiming under a lessee who transfers the leasehold interest in part can ever deemed to be the successor-in-interest of a lessor.
- The court was in the view that the learned lawyer's argument that the voluntary liquidator had the legal right to execute the deed of sale after the business was dissolved in order to legally complete the deal that had already been made lacks merit.
CONCLUSION
The appeal was ultimately upheld, and the case was dismissed with costs incurred. The plaintiffs' entitlement to obtain rent from the defendants was made apparent, nevertheless.
