IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 17-7-2008 CORAM THE HONOURABLE MR.JUSTICE M.CHOCKALINGAM AND THE HONOURABLE MR.JUSTICE R.SUBBIAH O.S.A.No.170 of 2003 1.K.Ramesh 2.R.Vanaja .. Appellants vs The Official Liquidator High Court, Madras. The Official Liquidator of Ramesh Cars Limited .. Respondent Original side appeal preferred under Order XXXVI Rule 11 of O.S. Rules and Clause 15 of Letters Patent against the Order and decree of this Court dated 4.3.2003 in Comp. Appln.No.540 of 2002 in C.P.No.97 of 1997. For Appellants : Mr.Prakash Goklaney for M/s.Menon & Goklaney Associates For Respondent : Mr.A.P.Babu Official Liquidator of Ramesh Cars Ltd. JUDGMENT (Judgment of the Court was delivered by M.CHOCKALINGAM, J.) This appeal challenges an order of the learned Single Judge of this Court in Company Application No.540 of 2002 in C.P.No.97 of 1997. 2.The Court heard the learned Counsel for the appellant and also the Official Liquidator. 3.The short statement of facts which led the respondent Official Liquidator to file the application before the Court was that M/s.Andhra Bank, a secured creditor of M/s.Ramesh Cars Limited, which was under liquidation, informed him that the land and building in 5/245-B, Junction Road, Salem, was mortgaged to them, and the property was owned by them. The Official Liquidator made an inspection and took possession of the same. When he made https://hcservices.ecourts.gov.in/hcservices/ inspection, he came to know that the property was having an extent of 3300 sq. ft. in which 2700 sq. ft. was the plinth area, out of which 2000 sq. ft. was leased out to one Mr.Arunsingh Shekhwat, while the remainder 700 sq.ft. was retained by the first appellant herein who was the erstwhile Managing Director of the Company which is under liquidation. On further enquiry, the Official Liquidator came to know that the monthly rent was Rs.6,000/-, and the monthly maintenance charge was Rs.4,000/- totalling to Rs.10,000/-. The first appellant was collecting the same from 1.11.1999 onwards. At the time of the commencement of the lease, Rs.1 lakh was actually received by him by way of advance, and thus, all those calculated amounts should be ordered to be paid by him. Under the circumstances, after issuing a notice to the first appellant, the Official Liquidator moved the Court for necessary orders and direction in this regard. 4.The appellants filed a counter stating that it is true that the building was owned by the company; that it is also true that there was a lease of 2000 sq. ft.; that the rental amount and the advance as stated by the Official Liquidator, were correct; that the first respondent is also recovering the same from 1.11.1999 onwards; that it is true that there was an advance of Rs.1 lakh; but, out of which, Rs.77,830/- was spent for the maintenance of the building; that as far as the rental amount was concerned, the business was closed; but, he continued to be the Managing Director, and he was getting a salary of Rs.10,000/- per month; that there was no income for the company, and hence, it has got to be adjusted from the rent recovered from the tenant; that under the circumstances, they are not liable to make any payment, and hence, the application was to be dismissed. 5.The learned Single Judge posed four questions. On enquiry, the learned Single Judge passed an order directing the appellants herein to return a sum of Rs.1,38,000/- collected by way of rent, and also Rs.1 lakh received by them by way of advance, and further directed that the monthly rental of Rs.2,000/- should be collected from February 1997 to till the date of that order from the appellants who were actually occupying 700 sq. ft. Under the circumstances, this appeal has arisen before this Court. 6.The point that would arise for consideration is whether the appellants were liable to make the payment of either the advance of Rs.1 lakh or the rental arrears as put forth by the Official Liquidator, and also to make payment of rental for the occupation by them. 7.Advancing the arguments on behalf of the appellants, the learned Counsel inter alia would submit that he has only one legal submission that it is an admitted fact that the first appellant's Company namely M/s.Ramesh Cars Limited, was under liquidation; that it is also true that the proceedings were pending during the relevant point of time; that though the lease came to be effected on 1.11.1999, the liquidation proceedings were pending; that actually the company was wound up by the orders of the Court only https://hcservices.ecourts.gov.in/hcservices/ in 2001; and that under the circumstances, the liability could be fastened if at all, on the appellants only from the time of the winding up and not prior to that. Added further the learned Counsel that in the instant case, the learned Single Judge who conducted enquiry, as far as Rs.4,000/- for maintenance was concerned, has recorded a finding that it would be fit and proper to accept the contention; that as regards Rs.6,000/- which would represent the rental, there was a direction for payment, and the appellants are ready and willing to make the payment from January 2001 when the winding up order was actually made. He would further add that from the month of March 2001, the appellants have not collected either the rental or the maintenance; that the same was actually paid to the Official Liquidator; that under the circumstances, they were liable only for a period of two months, and hence, the order of the learned Single Judge has got to be set aside; that if at all, a direction has got to be given only for two months namely January 2001 and February 2001; and that in respect of the other claim, it has got to be rejected. 8.Added further the learned Counsel that as far as 700 sq. ft. which is occupied by the appellants herein, is concerned, fixing of rental at Rs.2,000/- would be on the higher side; that the appellants expressed their willingness to pay Rs.1,000/- per month towards rental, and hence, it has got to be considered by the Court. 9.The Court heard the Official Liquidator on the above contentions. 10.Concededly, the said M/s.Ramesh Cars Limited was under liquidation. It is also an admitted position that the building consists of 3300 sq. ft. out of which the plinth area was 2700 sq. ft. The first appellant who was the Managing Director of the company, was occupying 700 sq. ft. along with family, and 2000 sq.ft. has been leased out to one Arunsingh Shekhwat. It is also admitted by the appellants, as put forth by the Official Liquidator, that the monthly rental was Rs.6,000/-, and the maintenance was Rs.4,000/- which were recovered from 1.11.1999 onwards. The learned Single Judge who conducted enquiry, has pointed out that as far as the maintenance charge of Rs.4,000/- was concerned, the claim made by the Official Liquidator, has got to be denied, since maintenance could have been done. As regards monthly rental, there was a direction issued to the appellants for making payment from 1.11.1999 onwards till that time. It is not in controversy that though the liquidation proceedings were pending, the company was wound up only in 2001. In a given case like this, where an order of winding up has been made, the liability could be fastened on the appellants, and thus, applying the legal principle, they are liable to pay only from the month of January 2001. It is an admitted position that they are recovering Rs.6,000/- per month, and they are liable to pay the same from the month of January 2001. https://hcservices.ecourts.gov.in/hcservices/ 11.As far as the contention that the rental was not recovered from March 2001 is concerned, it is not made known, and under the circumstances, the liability must commence from the time of winding up. Till that time the Official Liquidator commenced recovering rental, in between those period, the appellants are liable to make good by making payment at the rate of Rs.6,000/- what has been actually recovered from the tenant. 12.As far as the advance payment of Rs.1 lakh was concerned, it is admitted by the appellants that the said amount was received. The learned Single Judge has pointed out that though there was a contention raised that Rs.77,830/- was actually spent for the maintenance of the building, no materials were placed before him. If actually, towards the maintenance of the building, the expenditure was incurred by the appellants, they have got to be given credit to. As regards the advance of Rs.1 lakh, this Court is of the considered opinion that no direction is necessary at this juncture, and when the materials are placed for expenditure towards the maintenance of the building and it is also approved by the audit, that amount could be given credit to, and the rest has got to be collected from the appellants. But, the same could not be ascertained now. Hence, no direction could be given on the unascertained amounts. However, if necessary, application could be brought forth on the ascertained amount thereafter. 13.As far as 700 sq. ft. which is in the occupation of the appellants, is concerned, they expressed before the learned Single Judge that they are willing to pay Rs.1,000/- per month. However, the learned Single Judge has fixed it at Rs.2,000/- per month which, in the opinion of this Court, could be modified to Rs.1,500/- per month. As they continue to be in the building, they are liable to pay Rs.1,500/- per month from February 1997 towards rental. Accordingly, the order of the learned Single Judge is modified, and this original side appeal is disposed of. No costs. nsv/ Sd/- Assistant Registrar / True Copy / Sub. Assistant Registrar To The Sub Assistant Registrar, Original Side, High Court, Madras. 2 ccs to Mr.Menon & Goklaney, Advocate, SR.38266 rb (co) dv/8.8. OSA No.170 of 2003 https://hcservices.ecourts.gov.in/hcservices/