KBP 1627-09.sxw 1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURISDICTION WRIT PETITION NO.1627 OF 2009 Shakuntala Jethalal Shah ..Petitioner Vs. Rajasthan Commercial and anr. ..Respondents ......... Mr.Kevic Sethalwad i/b.M/s.D.H.Law Associates, for petitioner. Mr.M.P.Pawar, for respondent No.1. Mr.C.J.Sawant, Senior Counsel i/b. Mr.K.J.Hakani, for respondent No.2. ......... CORAM : A.S.OKA, J.. DATE : 13 th August, 2009. JUDGMENT : 1] The submissions of the learned counsel for parties were heard on the last date and today the petition is kept for dictation of judgment. 2] By order dated 24 th February, 2009, this Court directed that the writ petition shall be finally decided at the stage of admission. The petitioner, by filing this writ petition under Article 227 of the Constitution of India has taken an exception to the order dated 6 th April, 2005, passed by the learned Judge of the Court of Small Causes as well as the order dated 7 th October, 2008 passed by the appellate bench of the Court of Small Causes. 3] It will be necessary to refer to the facts of the case in brief. The petitioner is the original plaintiff. The case of the petitioner is that the first respondent was inducted in the suit premises as a tenant. The first respondent illegally inducted the second respondent - Allen Co-operative Bank Limited in the suit premises without consent of the petitioner. A suit for KBP 1627-09.sxw 2 eviction was filed by the petitioner against the first and second respondents. One of the grounds for eviction was unauthorised subletting by the 1 st respondent . The said suit was decreed. The first respondent preferred an appeal for challenging the decree. The said appeal was dismissed by the appellate bench of the Court of Small Causes. The first respondent filed a writ petition challenging the decree of eviction. Even, the second respondent also had filed a writ petition. The petition filed by the first respondent was dismissed and the petition filed by the second respondent was withdrawn. The decree was put to execution by the petitioner. The second respondent in the said execution proceedings filed an application praying for stay of execution of the decree contending that the second respondent was ordered to be wound up by the order dated 13 th August, 2003, passed by the Registrar, Co-operative Societies, and the Assistant Registrar of the Co- operative Societies has been appointed as the liquidator. It is stated that the name of second respondent bank was later on changed to Shri Labh Co- Operative Bank Limited. In the said application filed by the second respondent, a contention was raised that in view of the Section 107 of the Maharashtra Co-Operative Societies Act, 1960 (hereinafter referred to as “said act of 1960”) the execution proceedings cannot be continued unless a leave of the Registrar was obtained. The said application was heard and decided by the learned Trial Judge by order dated 6 th April, 2009. By the said order, the learned trial Judge came to the conclusion that unless the petitioner complies with the requirement of obtaining a leave under Section 107 of the said Act of 1960, the execution proceedings cannot proceed, and therefore, the execution proceedings was ordered to be stayed. An appeal was preferred by the petitioner before the appellate bench of the Court of Small Causes. By the impugned judgment and order dated 7 th October, 2008, the appeal has been dismissed. KBP 1627-09.sxw 3 4] Learned counsel appearing for the petitioner relied upon various precedents. His submission is that the pending execution proceedings was not at all concerned with the winding up or dissolution of the second respondent. His submission is that the execution proceedings is not touching the winding up or dissolution of the second respondent. He submitted that the decree was passed by the Court of the Small Causes for eviction on the ground that the first respondent has unauthorisely inducted the second respondent in the suit premises. He pointed out that the suit was decreed in October, 1999, the appeal preferred by the first respondent was dismissed on 20 th September, 2004 and the writ petition filed by the second respondent challenging the decree of eviction was withdrawn on 19 th October, 2005. Therefore, the second respondent had no subsisting right, title and interest in the suit premises on the date on which the decree was sought to be executed. As the said respondent had no right, title and interest as a consequence of decree for eviction attaining finality, the suit premises cannot be treated as forming part of the assets of the second respondent. Apart from the other decisions, he invited my attention to the decision of the Punjab and Haryana High court in the case of Harbans Lal Sharma Vs.Chemical Vessels Fabricators Pvt. Ltd. [1989 (65) Company Cases 506]. He also placed reliance on the decision of the Apex Court in the case of Shree Chamundi Mopeds Ltd. Vs. Church of South India Trust Association [(1992)3 SCC 1]. It is submitted that after the decree of eviction was confirmed, the second respondent could not have claimed any rights including rights as tenant in asmuch as there was no protection available to the second respondent as a consequence of the decree of possession which has attained finality. A reliance was also placed on a decision of the Apex Court in the case of Ravindra Inshwardas Sethna and another Vs.Official Liquidator, High Court, Bombay and another [(1983)4 SCC 269]. He KBP 1627-09.sxw 4 submitted that the suit premises is not at all required by the liquidator for the purpose of winding up of the second respondent bank, and therefore, there was no occasion for the petitioner to apply for the leave under Section 107 of the said Act of 1960. He invited my attention to the findings recorded by the trial court while passing the decree of eviction and in particular the findings that the second respondent was not entitled to the protection. He, therefore, submitted that Section 107 of the said Act of 1960 will not be applicable as there is no necessity of obtaining a leave as provided therein. 5] The learned Senior Counsel appearing for the second respondent has submitted that apart from the fact that the decision of the Punjab and Haryana High court in the case of Harbanslal is no longer a good law, the view taken by this Court is that the Section 107 of the said Act, 1960 will definitely apply in such a case. He has placed reliance on a decision of this Court dated 3 rd December, 1999 in Chamber Summons No.641 of 1997. He has also placed reliance on a decision of learned Single Judge of the Delhi High Court in the case of Bharat Steel Tubes Pvt. Ltd. [121(2005) DLT 65]. A reliance is also placed on another decision of the Delhi High Court in the case of Life Insurance Corporation of India Vs Asia Udyog Private Limited [1982-ILR (Del)1-582]. Lastly, he placed reliance on a decision of the Division Bench of this Court in the case of Fertilizer Corporation of India Vs. Kolaba Zilla Sahakari Kharedi Vikri Sangh Ltd. [1990-CTJ-0-371] which, according to him, concludes the issue regarding applicability of Section 107 of the said Act of 1960. He submitted that the reliance cannot be placed on a decision dealing with Section 446 of the Companies Act, 1946 as the scheme of the said Section is totally different. 6] I have given careful consideration to the submissions. It will be necessary to consider Section 107 of the said Act of 1960 which reads thus: KBP 1627-09.sxw 5 “107.Bar of suit in winding up and dissolution matters.- Save as expressly provided in this Act, no Civil Court shall take cognizance of any matter connected with the winding up or dissolution of a society under this Act; and when a winding up order has been made no suit or other legal proceedings shall lie or be proceeded with against the society or the Liquidator, except by leave of the Registrar, and subject to such terms as he may impose: Provided that where the winding up order is cancelled the provisions of this section shall cease to operate so far as the liability of the society and of the members thereof to be sued is concerned, but they shall continue to apply to the person who acted a Liquidator.” There are two parts of the said Section. The first part says that no Civil Court shall take cognizance of any matter connected with the winding up or dissolution of a society under the said Act of 1960. The second part says that when winding up order is made, no suit or other legal proceedings shall lie or be proceeded with against the society or liquidator except by leave of the Registrar and subject to such terms as he may impose. The first part is not applicable in this case and we are concerned with the second part of the said Section. The second part of the Section makes no reference to the assets of the society or property held by the society under liquidation. It only seeks to prevent the initiation and/or continuation of the suit or other legal proceedings against the society under liquidation without obtaining leave. In the present case, there is no dispute that winding up order as regards the KBP 1627-09.sxw 6 second respondent was passed during the pendency of the appeal against the decree. It will be necessary to make a reference to the other provisions of the said Act of 1960. Section 102 provides for passing order of winding up. Section 103 provides that when an interim order is passed under Section 102 or when a final order is passed under the said Section 103, the Registrar is permitted to appoint a liquidator for winding up of the society. Sub-Section 3 of the 103 provides that when final order is passed confirming the interim order, the Officers of the Society shall vacate their office and till the time of winding up order remains in force, the general body of Society shall not exercise any powers. Section 104 provides for preferring an appeal against the order of liquidation. Section 105 provides for powers of the Liquidator. One of the powers of Liquidator is to institute or defend any suit, civil or criminal proceedings on behalf of the Society in the name of his Office. Under Section 106 of the said Act of 1960 it is provided that when winding up order becomes effective, the Liquidator shall represent the Society in the name of his office. The effect of winding up order and the appointment of Liquidator is that the managing committee of the Society ceases to exist, and in view of Sub-Section 3 of Section 103 the Officers of the Society are required to vacate their offices on confirmation of interim order. Sub-Section 3 further provides that so long as the winding up order remains in force, the general body of the Society under liquidation cannot exercise any powers. This provision read with clause “a” of Section 1 of Section 105 makes it clear that when winding up order is passed and the Liquidator is appointed, only the Liquidator can defend any suit or a legal proceedings on behalf of the Society. Thus, the net result is that once a Liquidator is appointed, only he can defend the suit or legal proceedings pending against the Society or which may be thereafter initiated against the Society. After final order of winding up is passed and a liquidator is appointed, the managing committee KBP 1627-09.sxw 7 of Society ceases to exist or even the general body of Society ceases to have any power and that is the reason why there is provision of Section 107 which does not prohibit a party from initiating a suit or legal proceedings against such Society and also does not prohibit continuation of a pending suit or legal proceedings against the Society ordered to be wound up, but it lays down that the suit or proceedings against such society cannot be initiated or cannot be continued except with the leave of the Registrar. On plain reading of the Section 107, it does not provide that the suit or other legal proceeding referred to therein must relate to the assets or property actually or lawfully held by the Society under the liquidation. It is obvious that all suits and other legal proceedings against the Society come within the purview of Section 107 irrespective of the fact whether they relate to the assets held by the society under liquidation. If aforesaid relevant provisions of Chapter 10 are considered, it is obvious that the duty of liquidator is not confined to liquidating the assets of the Society but he is duty bound to defend any suit or other proceedings on behalf of the Society in the name of his office. 7] The learned counsel appearing for the petitioner has placed reliance on a decision of the Punjab High Court in the case of Harbans Lal Sharma (Supra). This was a case where the premises in dispute was owned by said Harbans Lal which was taken on lease by respondent company. The Rent Controller passed an order of eviction against the company. In the meanwhile, a winding up order was passed and a liquidator was appointed. The issue was whether the leave of the Court was required to be obtained under Section 446 of the Companies Act, 1956 to enable the execution proceedings to proceed. A contention was raised that the judgment debtor company had no right, title and interest as an order of eviction was already passed, and therefore Section 446 will have no application. It was held that a KBP 1627-09.sxw 8 combined reading of Sections 446 and 537 of the Companies Act clearly provides that the words “no suit or legal proceedings against the company” in Section 446 will mean proceedings in which assets of the company are involved. It must be stated here that the scheme of Section 446 of the Companies Act appears to be different from Section 107 of the said Act of 1960. There is one more aspect of the matter. Once the liquidator is appointed under the said Act of 1960, then only the liquidator can contest the proceedings on behalf of the Society. A judgment debtor has a right to raise an objection to the execution of the decree on various grounds which are permissible in the law. There could be various grounds available such as decree is nullity or the execution application is barred by limitation. In a given case, if the execution is barred by limitation, the decree obviously cannot be executed. The object of the second part of Section 107 appears to be that the liquidator should be in position to defend legal proceedings initiated or pending against the Society. Merely because there is a decree against the defendant or the judgment debtor, the right to contest the execution proceedings is not taken away. In a given case where the Society under the liquidation has suffered a decree for possession and if an objection raised by the Society is accepted in execution application, the Society under liquidation will be continue to remain in possession of the property subject matter of the decree. In the present case, the Society is in possession of suit premises. The passing the decree of eviction does not have the effect of taking away of defences available to the society in execution application, and therefore, it cannot be said that once the impugned decree of eviction has attained finality, under no circumstances the judgment debtor can claim a right to continue in possession. 8] Therefore, it not possible to accede to the submission made by the learned Counsel appearing for the petitioner that a leave under Section 107 KBP 1627-09.sxw 9 of the said Act of 1960 is not required to be obtained by a landlord to proceed with the execution proceedings on the ground that once a decree passed for possession of the premises in possession of the Society under the liquidation attains finality, the premises ceases to be an asset or property held by the Society. The analogy of the decision of the Punjab and Haryana High Court in the case of Harbans Lal cannot be applied to the present case. 9] In the circumstances, I find no fault in the order impugned. Hence, the Writ Petition is rejected. It must be clarified that the rejection of the petition will not preclude the preclude the petitioner from filing an application under Section 107 of the said Code of 1960. If such application is made, the concerned authority is bound to consider and decide the said application in accordance with law and as expeditiously a possible. ( A.S.OKA, J. )