Liquidator's power during winding up cannot bypass rent control limits on parting with possession through a caretaker arrangement.

A liquidator may continue a company's business during winding up only with court sanction and only to the extent necessary for beneficial winding up; retaining premises merely to earn rent or monetary return exceeds that power. A caretaker arrangement cannot be used as a label to disguise parting with possession of premises where rent control law restricts licence or sub-lease, especially when the company is only a statutory tenant and the premises are no longer required for its own use. Courts cannot approve a transaction that, in substance, defeats statutory protections by adopting a different form. The note emphasises that colourable arrangements in winding up will not be permitted.

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Issues: (i) Whether the official liquidator could retain and deal with the company premises under a caretaker arrangement in the course of winding up; (ii) Whether the arrangement could be used to part with possession of premises in a manner inconsistent with the rent control law.

Issue (i): Whether the official liquidator could retain and deal with the company premises under a caretaker arrangement in the course of winding up.

Analysis: The power of the liquidator to carry on the business of a company in winding up arises only with the sanction of the court and only to the extent necessary for the beneficial winding up. Where the company's business had already come to a standstill, the premises were not needed for carrying on any business of the company, and no sanction existed to continue business operations through the premises. Retaining possession merely to derive monetary return was outside the scope of the statutory power.

Conclusion: The liquidator had no authority to retain the premises on the footing that they were required for carrying on the company's business.

Issue (ii): Whether the arrangement could be used to part with possession of premises in a manner inconsistent with the rent control law.

Analysis: The arrangement described as a caretaker agreement was treated as a device for charging for exclusive use and occupation of the premises. Since the company was only a statutory tenant and the premises were no longer required for its own use, the provisions restricting parting with possession by licence or sub-lease applied. A court could not sanction a transaction that, in substance, defeated the protections and prohibitions of the rent control statute by adopting a different label.

Conclusion: The caretaker arrangement was impermissible and could not be used to bypass the rent control law.

Final Conclusion: The impugned orders were set aside and the appellants succeeded in obtaining possession relief, with the additional ex gratia deposit directed for distribution to the creditors of the company in liquidation.

Ratio Decidendi: A liquidator may carry on the business of a company in winding up only with court sanction and only when necessary for beneficial winding up, and a court cannot permit a colourable arrangement that, in substance, parts with possession of premises in breach of rent control restrictions.

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