Case: Board Of The Trustees,Port Of Kolkata Vs. Efclon Tie-Up Pvt. Ltd.

Company. Any adverse orders passed by this Court, at this stage, would affect the right and interest of the members of the union. The Company was directed to be wound up and the Official Liquidator was directed to take charge of the assets and properties. The assets and properties thereof were put up for sale in terms of a sale notice made and published on 05.09.1997. In these circumstances, in an attempt to protect the livelihood of its members, the union entered into an agreement with respondent No.1 providing, inter alia, that respondent No.1 would take necessary steps in Court to purchase the assets and properties of the Company and also would assure employment to all the eligible workers of the Company in phase-wise manner. There are other conditions with which we are not now concerned. In terms of the commitment made, respondent No.1 participated in the sale of the assets and properties of the Company and was declared the successful purchaser in respect thereof by an order dated 16.01.1989. Several other proceedings were taken by both the parties with which also we are not concerned. It is stated that in terms of the order, respondent No.1 has made payment of the entire consideration to the Official Liquidator. The intention of the High Court while passing the orders dated 16.01.1998 and 09.04.2003 is manifest from the fact that while confirming the order dated 16.01.1998 for sale of the assets and properties of the Company, the High Court made the same free from encumbrances and without any liabilities on account of any other dues. With the revival and rehabilitation of the Company in mind, the High Court directed that the properties where the factories of the Company are situate be provided to respondent No.1. The High Court also directed that a fresh lease in respect thereof be granted to Respondent No.1 presently in possession of the factory premises. Respondent No.1 is also in possession of the assets and properties located therein. It is also not in dispute that respondent No.1 is not operating the factory for want of former renewal of the lease. As a result, the right of the members of the workers of the union has been put in jeopardy. The Port Trust itself allowed the erstwhile lessee to continue to occupy the property even after the expiry of the original terms of the lease. 34. In our view, the workmen of the Company have a right to earn their livelihood. The workmen are as such vitally interested in the renewal of the lease in respect of the property in question. The Port Trust, by its conduct, accepted the right of the Company to obtain renewal of the lease. The Port Trust has never called upon the Company or the official liquidator to vacate the property. The act of the Port Trust in allowing the respondent to continue is only a benevolent act of the Port Trust keeping in view the consequences that can arise if this was not allowed for the large number of workmen of the company. As such, the lease of the property has been renewed or must be deemed to have been renewed as the workmen being interested in the renewal of the lease of the property. They were also heard through their senior counsel. 35. Social justice demands that the lease in respect of the factory premises be renewed by the Port Trust in favour of respondent No.1 so that the operation of the factory thereof can be commenced. However, the lease can be renewed only subject to the payment of all the arrears and dues together with interest. We are, therefore, inclined in the larger interest of the industry as also the workmen and of the Port Trust to direct the Port Trust to grant a fresh lease to respondent No.1 herein subject to the respondent No.1 complying with the terms relating to the payment of the arrears/dues together with interest at the rate of 15% p.a. as suggested by the Kolkata Port Trust in its letters dated 07.03.1992 and 13.04.1995. The Port Trust shall also grant a fresh lease in favour of respondent No.1 on the basis of the scheduled rate from the date of possession i.e. 04.08.2003. In conclusion, we order a fresh lease indenture to be drawn from the date the company came into possession of the land (i.e.04.08.2003) between the Port Trust and the Respondent No.1 (Efclon) with regard to the premises situated at P-10, Taratola Road, Kolkata at the rental rates contained in the present Schedule of the Kolkata Port Trust Act as soon as the dues of the liquidated company are discharged with by the respondents. 36. We are, therefore, directing the Port Trust to inform the Efclon Tie-up Private Limited; respondent No.1 herein of the rental arrears together with interest as suggested by the Port Trust in its letters dated 07.03.1992 and 13.04.1995 within four weeks from the date of this order. In other words, the Port Trust shall inform the first respondent herein of the rental arrears from the date of expiry of the earlier lease (21.01.1992) till the date of the execution of the fresh lease at the old rate together with interest at the rate of 15% p.a. within 4 weeks from the date and upon such intimation the said dues are to be cleared by the first respondent within 2 weeks thereafter and upon such dues being cleared, the Port Trust shall grant a fresh lease from 04.08.2003 i.e. the date on which the first respondent was to be in possession of the property by the official liquidator on the basis of the scheduled rate as now prevalent. The rate fixed by the Kolkata Port Trust as per the scheduled rate will be effective from 04.08.2003. We are inclined to grant the lease in favour of the respondent No.1 who sought renewal of the lease with the sole object of reviving and rehabilitating its units and to re-employ its workmen thereof. 37.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]We are of the opinion that:1. There is no right over the property of the Port Trust existing with the respondent No.1 (Efclon) as claimed by them. In the present case only the assets of the company which was liquidated has been bought by the respondents, the land belonged to the Port Trust. Even according to the original indenture of lease between the Port Trust and the liquidated company, there were clauses which very clearly stated that, the Port Trust had the option of renewing the lease for such further period, provided the covenant conditions are duly performed. It was also clearly stipulated in the Lease deed that, if the company goes into liquidation or is wound up compulsorily or voluntarily, the Port Trust would re-enter possession and the lease would be brought to an end. In the present fact situation, the company in liquidation was clearly in breach of the covenant conditions by having outstanding rental dues and tax liability with interest. Also the company did go into liquidation and therefore as the lease indenture says, the original lease has come to an end and the Port Trust is presumed to have automatically come into possession of the land in questionTherefore we hold that, there is no lease that is subsisting between the Port Trust and the liquidated company and hence the respondent No.1 (Efclon) claim that the original lease deed is subsisting thereby giving them an automatic right to the land in question is untenable and has no merit2. To the question as to whether the High Court was correct in granting a fresh lease to the respondent No.1 (Efclon) in accordance with the clause stipulated in the original lease agreement, we are of the opinion that the High Court is correct as far as the grant of fresh lease is concerned. Coming to the second part of the question as to whether the rental amount should be based on the stipulation mentioned in original lease deed is concerned; we believe that the rates that are present in the current Schedule of the Port Trust Act in Kolkata should apply. We are of the view that, the claim of the respondent that they should be allowed to pay the rates in accordance to the clause in the original lease indenture of 1962 is not fair on the Port Trust. Also we are satisfied that the prices that are prevalent in the schedules of the Port Trust Act are not based on profiteering, but on inflationary tendencies3. With regard to the respondent No.1s (Efclon) claim of, if Das Reprographics had not gone into liquidation, while renewing the lease, the company would have only had to pay 25% over and above the last rent paid under the original lease for the period of renewal of the same, does not hold good in our view, as such a renewal need not be contemplated at this point, as the company itself is not in existence and also the clause in the original lease indenture will come in the way which specifically mentions that if the company goes into liquidation or is wound up compulsorily or voluntarily, the Port Trust would re-enter possession and the lease would be brought to an endIn our view, the workmen of the Company have a right to earn their livelihood. The workmen are as such vitally interested in the renewal of the lease in respect of the property in question. The Port Trust, by its conduct, accepted the right of the Company to obtain renewal of the lease. The Port Trust has never called upon the Company or the official liquidator to vacate the property. The act of the Port Trust in allowing the respondent to continue is only a benevolent act of the Port Trust keeping in view the consequences that can arise if this was not allowed for the large number of workmen of the company. As such, the lease of the property has been renewed or must be deemed to have been renewed as the workmen being interested in the renewal of the lease of the property. They were also heard through their senior counselSocial justice demands that the lease in respect of the factory premises be renewed by the Port Trust in favour of respondent No.1 so that the operation of the factory thereof can be commenced. However, the lease can be renewed only subject to the payment of all the arrears and dues together with interest. We are, therefore, inclined in the larger interest of the industry as also the workmen and of the Port Trust to direct the Port Trust to grant a fresh lease to respondent No.1 herein subject to the respondent No.1 complying with the terms relating to the payment of the arrears/dues together with interest at the rate of 15% p.a. as suggested by the Kolkata Port Trust in its letters dated 07.03.1992 and 13.04.1995. The Port Trust shall also grant a fresh lease in favour of respondent No.1 on the basis of the scheduled rate from the date of possession i.e. 04.08.2003. In conclusion, we order a fresh lease indenture to be drawn from the date the company came into possession of the land (i.e.04.08.2003) between the Port Trust and the Respondent No.1 (Efclon) with regard to the premises situated at P-10, Taratola Road, Kolkata at the rental rates contained in the present Schedule of the Kolkata Port Trust Act as soon as the dues of the liquidated company are discharged with by the respondentsWe are, therefore, directing the Port Trust to inform the Efclon Tie-up Private Limited; respondent No.1 herein of the rental arrears together with interest as suggested by the Port Trust in its letters dated 07.03.1992 and 13.04.1995 within four weeks from the date of this order. In other words, the Port Trust shall inform the first respondent herein of the rental arrears from the date of expiry of the earlier lease (21.01.1992) till the date of the execution of the fresh lease at the old rate together with interest at the rate of 15% p.a. within 4 weeks from the date and upon such intimation the said dues are to be cleared by the first respondent within 2 weeks thereafter and upon such dues being cleared, the Port Trust shall grant a fresh lease from 04.08.2003 i.e. the date on which the first respondent was to be in possession of the property by the official liquidator on the basis of the scheduled rate as now prevalent. The rate fixed by the Kolkata Port Trust as per the scheduled rate will be effective from 04.08.2003. We are inclined to grant the lease in favour of the respondent No.1 who sought renewal of the lease with the sole object of reviving and rehabilitating its units and to re-employ its workmen thereof.