1 72oar82-10.sxw jpc/- IN THE HIGH COURT OF JUDICATURE AT BOMBAY INSOLVENCY JURISDICTION OFFICIAL ASSIGNEE’S REPORT NO. 82 OF 2010 IN INSOLVENCY PETITION NO. 71 OF 2006 Anant V. Hegde & Anr. ...Insolvents. Ex-parte: Neeta H. Panchamatia ...Petitioning Creditor. Mr. H.V. Chande for the Petitioning Creditor. Ms. Kavita S. Lalwani for Secured Creditor. Mr. S.G. Bhandary i/b M/s Bhandary & Bhandary for Insolvents. Mr. Shailesh Shukla i/b AZB & Partners for the Applicant in Notice of Motion No. 22 of 2010. Mr. Sanjay P. Shinde i/b Mr. M.M. Sathaye for Applicant in Notice of Motion No. 25 of 2010. Mr. Gaurav Joshi for one of the Secured Creditor. CORAM : S. J. KATHAWALLA, J. DATE : 6th April, 2010 2 72oar82-10.sxw P.C.: 1. By this report the Official Assignee has prayed for the following reliefs: (a) That the Leave & Licence Agreement dated 13th October, 2006 entered between the Insolvent No.1 and Mearsk India Pvt. Ltd. may be treated as expired by efflux of time and be also treated as null and void/cancelled as the same is executed after the date of Petition viz. 24th July, 2006. (b) That this Hon'ble Court may be pleased to pass an order directing the Licensee viz. Measrk India Pvt. Ltd. to vacate the said flat No.6-A, Palm Court, Almeida park Road, Bandra (West), Mumbai 400 050 and handover peaceful possession of the said premises to the Official Assignee, High Court, Bombay. (c) That this Hon'ble Court may be pleased to permit the Official Assignee to proceed with the sale of the said premises for the benefit of the general body of Insolvent No.1's Creditors. 2. Mr. Anant V. Hegde and Mr. D.V. Sathe have been adjudicated Insolvents by an order of this Court dated 20 th February, 2007. In view of the said order, all the estate and effects of the Insolvents are vested in the Official Assignee. 3. During the course of meeting of Insolvent No.1 viz. Anant V. Hegde (the Insolvent) inter alia informed the Official Assignee that Flat No. 3 72oar82-10.sxw 6-A, Palm Court, Almeida Park, Bandra (West), Mumbai 400 050 (the said flat) stands in his name and is mortgaged with Dena Bank, Investment Department, Horniman Circle, Mumbai, since 26 th February,1998. The Insolvent had entered into a Leave and Licence agreement in respect of the said flat with Maersk India Pvt. Ltd. (Licensee). A copy of the Leave and Licence Agreement executed on 13th October, 2006 was handed over to the Official Assignee by the Insolvent at the meeting held on 10th January, 2008. It is submitted by the Official Assignee that the act of insolvency was committed on 2nd May, 2006. The Insolvency Petition was filed on 24th July, 2006. The leave and licence agreement was admittedly executed on 13th October, 2006. The transaction is, therefore, void against the Official Assignee and as such the same is to be treated as null and void and cancelled as per Section 55 of the Presidency Towns Insolvency Act, 1909. In any event the term agreed in the Leave and Licence Agreement has come to an end and the Official Assignee is entitled to possession of the said flat. 4. From Clause No.16 of the Leave and License Agreement, it appears that the Insolvent had taken Security Deposit of Rs.50,00,000/- from the Licensee. As per Clause 1 of the said Agreement the Licensee was allowed to use the Licensed premises for 24 months from 14 th day of October, 2006. The said period expired on 13 th October, 2008. Dispite expiry of the said License period, the said Licensee is still in occupation of the said premises. 4 72oar82-10.sxw 5. The Official Assignee, by his letter dated 3rd November, 2008 informed the Licensee to deposit upto-date arrears of Compensation till October, 2008 and to handover the possession of the said flat to the Official Assignee as the License period had expired in October, 2008. 6. In reply to the letter from the Official Assignee, M/s K.A. Sampat & Co. Advocates for the Licensee, by their letter dated 18 th November, 2008, informed the Official Assignee that the Insolvent had received monthly Licence Fees upto January, 2008 and as per clause 18 of the said Agreement it was agreed between the parties that in case the Licensor does not refund the said Deposit of Rs. 50,00,000/- to the Licensee, Licensee shall not be obliged and bound to vacate and give the charge of the Licensed premises to the Licensor and the Licensee shall be entitled to use the said premises without being liable to pay any License Fee, Compensation or damages or rates taxes non- occupancy charges or outgoings to the Licensor until such time as the Licensor refunds the Licensee the said sum of Rs.50,00,000/- with interest at the rate of 18% per annum. By their said letter the Advocates for the licensee forwarded their clients cheque of Rs.2,42,346/- being monthly compensation for the months from February, 2008 to September, 2008. The said Advocates further informed the Official Assignee that their clients are ready and willing to vacate the said premises against the Refund of security amount of Rs. 50,00,000/- and they would hold possession of the subject flat till the security payment is made as per the Leave and Licence Agreement. 5 72oar82-10.sxw 7. The Official Assignee has also received a letter dated 4 th December, 2007 from Mr. Anant R. Bamne, Advocate for Dena Bank informing the Official Assignee that the said Flat has been mortgaged by the Insolvent to the Dena Bank as a Security for the amount due and payable by M/s Electrex (India) Ltd. and DRT-I has already issued Recovery Certificate to that effect. The said advocate requested the Official Assignee not to take any steps for taking the custody of the said flat as the same is mortgaged to his clients. However, according to the Official Assignee, the Bank has not taken possession of the said flat and has also not taken any steps for disposing of the said flat for the recovery of Bank dues and the flat is still in occupation of the Licensee Maersk India Pvt. Ltd. The Official Assignee has therefore, filed this report and prayed for the reliefs which are set out herein above. 8. Section 55 of the Presidency Towns Insolvency Act, 1909 reads thus: 55. Avoidance of voluntary transfer.- Any transfer of property, not being a transfer made before and in consideration of marriage, or made in favour of a purchaser or incumbrancer in good faith and for valuable consideration, shall, if the transferor is adjudged insolvent within two years after the date of the transfer, be void against the official assignee. 9. Admittedly the act of Insolvency was committed on 2nd May, 2006. The Insolvency Petition has been filed on 24 th July, 2006. The Leave 6 72oar82-10.sxw and License Agreement was thereafter entered into on 13 th October, 2006. It therefore appears that the Insolvent, in order to prevent the Official Assignee from taking possession of the flat, has entered into a Leave and License Agreement and put Maersk (India) Pvt. Ltd in possession of the same. Though Maersk (India) Pvt. Ltd as well as Dena Bank have been served with the report by hand delivery about six weeks back, they have failed to file any reply to this report and have also failed to remain present before this Court at the time of the hearing of this report. No documents in support of their alleged case are filed by Maersk (India) Pvt. Ltd. or the Dena Bank. The Bank has claimed that the mortgage is created in the year 1998. However it is not explained by the Bank why a leave and licence agreement was allowed to be entered into by and between the Insolvent and the licensee in the year 2006. Though the Bank has alleged that it has a recovery certificate issued by the DRT in favour of the Bank, it has not explained why no steps are taken by the Bank to realise its alleged security. All the submissions made by the Official Assignee in his report have remained uncontroverted. In view thereof, it is established that the leave and licence agreement is entered into by and between the Insolvent and the licensee after the act of insolvency committed by the insolvent and after the Insolvency Petition was filed only with a view to create encumbrance on the property thereby preventing handing over the possession of the said flat to the Official Assignee on the pretext that the Insolvent has not returned the alleged deposit to the licensee. Under 7 72oar82-10.sxw the circumstances the Official Assignee’s Report is allowed in terms of prayer clauses (a) and (b). M/s Maersk (India) Pvt. Ltd. shall hand over possession of the said premises to the Official Assignee within a period of four weeks from today. In the meantime, status quo in respect of the said flat shall be maintained by the Insolvent, Maersk (India) Pvt. Ltd. and Dena Bank, Investment Department, Horniman Circle, Mumbai. After obtaining the possession of the said premises the Official Assignee shall submit his report and seek further directions from this Court in the matter. Needless to add, that the said report shall be served once again on the Insolvent as well as on the Dena Bank, Investment Department, Horniman Circle, Mumbai. 10. The report of the Official Assignee is accordingly disposed of. (S. J. KATHAWALLA, J.)