Liquidator cannot use a caretaker arrangement to bypass rent restrictions; an undertaking to vacate binds the occupier.

A company liquidator cannot lawfully create a caretaker arrangement over premises unless the possession is genuinely required for a beneficial winding-up under section 457 of the Companies Act, 1956; where the company has ceased business and the premises are not needed for winding-up, such an arrangement is impermissible and cannot be used to bypass restrictions on transfer, licence, or sub-lease under the Bombay Rent Act. An occupant who was regularised during winding-up proceedings and undertook to vacate on demand cannot later deny that licensee status or resist delivery of possession to the owners. The owners were therefore entitled to possession, subject to the limited protection fixed by the court.

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Issues: (i) Whether the official liquidator could lawfully part with possession of the company's premises on a caretaker basis when the premises were not required for the winding-up; (ii) Whether respondent No. 2, who was already in occupation and had given an undertaking to vacate on demand, could resist delivery of possession to the owners.

Issue (i): Whether the official liquidator could lawfully part with possession of the company's premises on a caretaker basis when the premises were not required for the winding-up.

Analysis: The arrangement contemplated by the official liquidator was held to be impermissible. The power under section 457 of the Companies Act, 1956 could be exercised only where carrying on the business was necessary for the beneficial winding-up. Where the company had ceased business and the premises were not required for winding-up, creating a caretaker arrangement was only a device to hand over exclusive occupation for compensation. Such parting with possession could not be used to bypass the prohibitions in the Bombay Rent Act against transfer, licence, or sub-lease of the premises.

Conclusion: The proposed caretaker arrangement was not permissible and the appellants were entitled to possession if the premises were not needed for winding-up.

Issue (ii): Whether respondent No. 2, who was already in occupation and had given an undertaking to vacate on demand, could resist delivery of possession to the owners.

Analysis: Although respondent No. 2 had been in occupation before the winding-up order, its continued occupation was expressly regularised during the winding-up proceedings on the basis of the undertaking given to the official liquidator. In those circumstances, respondent No. 2 could not later resile from the accepted status of licensee and resist the liquidator's demand for vacation. The fact of prior occupation did not displace the effect of the undertaking and the court-directed arrangement.

Conclusion: Respondent No. 2 could not resist eviction under the undertaking and was bound to hand over possession in accordance with the court's directions.

Final Conclusion: The appeal succeeded, the order of the single judge was set aside, and the owners were held entitled to possession, with limited protection for the company and respondent No. 2 up to the dates fixed by the court.

Ratio Decidendi: A liquidator cannot use a caretaker arrangement to part with possession of leased premises unless such possession is genuinely necessary for the beneficial winding-up, and an occupier who has accepted a licensee status and undertaken to vacate on demand cannot later deny that obligation.

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