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Jabal C. Lashkari & Ors. v. Official Liquidator (Prasad Mills Ltd.) & Ors.

Civil Appeal · Neutral citation not assigned (Civil Appeal Nos. 3147-3149 of 2016)Decided 29 Mar 2016
Civil Appeal Nos. 3147-3149 of 2016
Justice Ranjan Gogoi · Justice Prafulla C. Pant

Background

In 1916, the appellants' predecessor leased land for 199 years to a mill that later became Prasad Mills Ltd. When the mill was ordered wound up in 1989, an official liquidator took charge of its assets, including the leased land. The appellants (the lessors' heirs) sought return of the land and eviction of the liquidator, arguing non-payment of rent for over 15 years, non-use of the land, and unauthorized sub-letting/assignment under the Bombay Rent Act, but the Company Judge and, on appeal, a Division Bench of the Gujarat High Court rejected all these claims.

Decision Breakdown

In the lead appeal (arising from S.L.P.(C) Nos. 29282-29284 of 2008), the Supreme Court affirmed the High Court's order in full and dismissed the appeal. It held that the secured creditors (including the State Bank of India) had consistently shown readiness and willingness to pay rent, and since the landlords had never issued the formal notice of demand required under Section 12(2) of the Bombay Rent Act before suing for recovery, the tenant/liquidator retained statutory protection against eviction for non-payment. On the sub-letting/assignment ground, the Court found the actual argument raised (an unauthorized assignment by the official liquidator via a sale advertisement) was not a completed act of assignment and did not attract eviction liability. The non-user ground also failed because the company's winding-up proceedings were still pending, meaning the land's non-use had reasonable cause. (Other, separately-numbered connected appeals heard alongside this one were remitted to the High Court for fresh consideration on their own distinct lease-clause facts That remand applies only to those other appeals.)

Lesson Learnt

A landlord seeking to evict a tenant (or an official liquidator standing in a wound-up company's shoes) for non-payment of rent under rent-control legislation must first serve the statutorily-required notice of demand; merely showing years of unpaid rent is not enough if the tenant has shown continuous readiness and willingness to pay once properly asked.

Official source (sci.gov.in)View Judgment (PDF)

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