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Judgment
Anand Byrareddy, J.—Heard the learned counsel for the Official Liquidator in C.A. 1458/07 and the learned Senior Advocate Shri S. Vijayashankar, appearing for the learned counsel for the respondent No. 2 and the learned counsel appearing for respondent No. 1. The present application in C.A. 1458/07 is filed in the following background:
M/s. Star Spin and Twist Machineries Limited, the company in liquidation, was ordered to be wound up by an order dated 10/12/1998 in COP No. 111/98. The Official Liquidator attached to this court, was appointed as the liquidator. M/s. M.J. Mehta and Company, a partnership firm, having its registered office at Mumbai, had applied to the Karnataka Industrial Area Development Board (KIADB, for brevity), the second respondent herein, for allotment of land and an extent of 133.34 acres was allotted against a lease amount of Rs. 6,76,269/-, which was 99% of the tentative cost of the land, at that point of time, under an agreement dated 7/12/1983, entered into with the KIADB, as the lessor, in lands bearing Block Nos. 115/1, 116, 118, 119/2, 120 and 128 of Kelageri, Dharwad Taluk KIADB had thereafter granted a further extent of 36 acres 32 guntas of land under a possession certificate dated 20.6.1983.
In terms of the lease deed, the lessee was at liberty to sub-lease the demised land with the permission of the lessor. This option had been exercised and it had been sub-leased in favour of two companies namely M/s. Suessen Textiles Bearing Limited and M/s. Star Volkman Limited, now known as Star Spin and Twist Machineries Limited, the company in liquidation, measuring 27 acres and 28 acres, respectively. Under the sub-lease dated 12/4/1985 for a period of 10 years under which was agreed that the land measuring 28 acres situated in Block No. 115 and 116 of Kelageri Hobli, with the right to purchase the land in terms of the original lease deed in favour of M/s. M.J. Mehta and Company. It transpires that after expiry of the lease period, M/s. M.J. Mehta and Company had approached the KIADB for extension of the lease, for a further period of 11 years, since the lease was coupled with the condition that the land ought to have been developed, apart from meeting other conditions. Since M/s. M.J. Mehta and Company had not complied with the condition of developing the land, a further extension of the lease period was sought from 18/1/1982 and it was so extended, under a supplementary agreement dated 22/11/1993, for a period of 11 years or till the sale deed was executed, whichever was earlier. The extended period also expired on 17/1/2003.
Insofar as the company in liquidation is concerned, it was also extended by a supplementary agreement dated 2/12/1993 between M/s. M.J. Mehta and Company and Star Spin and Twist Machineries Limited. Thereafter the company in liquidation, having been ordered to be wound up, and since there were no funds available with the Official Liquidator to pay the balance sale consideration, in order to have the sale deed executed in respect of the demised premises, the transaction was not carried forward. '' It is in this background that the present application is filed seeking a direction to the KIADB to execute a sale deed after receiving the balance consideration due under the lease cum sale agreement, at this point of time.
The said application has been opposed and it is contended on behalf of the KIADB by the learned Senior Advocate Shri S. Vijayashankar that the lease in favour of M/s. M.J. Mehta and Company was duly determined and resumption of the land was notified as per show cause notice dated 29.3.1996, out of the total extent of 150 acres and 26 guntas, which was allotted to the lessee M/s. M.J. Mehta and Company, an extent of 95 acres and 26 guntas has been resumed by the KIADB and the lands have been subsequently allotted to various entrepreneurs and the remaining extent of 55 acres, out of which a part is the subject-matter of the present application, the Board after having terminated a lease insofar as the original lease deed in favour of M/s. M.J. Mehta and Company is concerned, in terms of Annexure-R dated 25/2/2000, had proceeded to take possession of the above extent. The remaining extent, including the portion which is the subject-matter of the present application, could not be resumed in view of the proceedings pertaining to the units which were in their occupation, pending before the Board of Industrial and Financial Reconstruction (BIFR, for brevity), in a proceeding bearing No. 30/97 and 29/98. It is in this background that the KIADB stayed its hand in proceeding to resume possession of the remaining extent and after the proceedings before the BIFR culminated, there were proceedings initiated by recourse to the provisions of Section 4 of the Karnataka Public Premises (Eviction of Unauthorized Occupants); Act, 1974, to which the Official Liquidator had replied indicating that the company in liquidation has been wound up and therefore the matter is pending in proceedings before this court. In the meanwhile, it is stated that an application was filed by a financial institution namely Industrial Development Bank of India (IDBI) before the Debts Recovery Tribunal, Bangalore, in O.A. 649/1999. In the said proceedings, the IDBI claimed recovery of its debt and extensively sought to attach the lease hold rights which were held by the company in liquidation. The guarantors to the debt, were also made parties to the proceedings. It is pursuant to the said proceedings, that the IDBI is said to have obtained a recovery certificate. The IDBI being left with no effects of the company in liquidation against which it could proceed, except the lease hold rights which were available, has sought for transfer of the same in its favour through the KIADB. It is at that point of time that the present application is filed. Therefore it is the case of KIADB that the lease having been terminated in favour of M/s. M.J. Mehta and Company, the sub-lease, if any, would also terminate and the question of the Official Liquidator seeking to claim that the lease hold rights conferred on M/s. Star Spin and Twist Machineries Limited, the company in liquidation, would be available for being transacted, is therefore misleading and without reference to the tenability of the claim of the IDBI or M/s. M.J. Mehta and Company, who is also represented in these proceedings. It is contended that any such permission, is not capable of being granted in favour of the Official Liquidator.
It is on this short question that the present application would have to be decided. Given the fact situation that there was a lease deed in respect of 150 acres of land in favour of the lessee, who was in turn permitted to sub-lease the property, subject, of course to the conditions that he shall pay the rent and develop the land as contemplated under the lease deed and that not having been complied with, though there were permissions granted to sub-lease the lands, the question whether on termination of the lease, the sub-lease would subsist on general principle, would have to be answered in the negative. Therefore, without addressing the rights of the several parties involved herein, the short question as to whether the Official Liquidator would be in a position to lay a claim to any leasehold rights which the company in liquidation, might have procured under a sub-lease which is any longer subsisting, is the question. The answer is clearly in the negative. Accordingly the application stands disposed of. Consequently, the application in C.A. 663/08 is also disposed of without expressing any opinion.