Post commencement disposition void: court refused validation and upheld liquidator's entitlement to possession, subject to vacate time.

Disposition of company property executed after commencement of winding up is void under the statutory provision, and the official liquidator is entitled to possession where no court validation was obtained; limitation and estoppel do not defeat the statutory nullity because passive receipt of rent or delay did not cure the invalid transaction; equitable denial of relief requires proof that the post petition transaction benefited the company or creditors, which was absent; the court will not exercise its validation power where no evidence showed the transaction furthered the company's business or creditors' interests, and validation was refused.

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Issues: (i) Whether an agreement executed on July 18, 1978, after the filing of a winding-up petition dated July 7, 1978, is void and whether the official liquidator is entitled to possession of the premises; (ii) Whether the official liquidator's claim is barred by limitation or estoppel or should be denied on equitable grounds; (iii) Whether the court should validate the post-petition transaction.

Issue (i): Whether an agreement executed after the commencement of winding up is void and the official liquidator entitled to possession.

Analysis: Section 536(2) of the Companies Act provides that dispositions of company property made after the commencement of winding up are void unless the court orders otherwise. The agreement was executed after the winding-up petition was filed and before the winding-up order; no court order validating the disposition was obtained. The official liquidator sought possession based on the statutory nullity of the post-petition transaction.

Conclusion: The agreement executed on July 18, 1978 is void under Section 536(2) and the official liquidator is entitled to possession of the premises.

Issue (ii): Whether the official liquidator's claim is barred by limitation, estoppel, or equitable considerations.

Analysis: Article 59 of the Limitation Act was relied on to contend that cancellation claims must be brought within three years, but the statute (Section 536(2)) operates to render the post-petition disposition void without a declaratory proceeding; limitation does not defeat the statutory nullity. Acceptance of rent and delay were offered as estoppel and laches arguments; however, the official liquidator accepted rent subject to rights and court sanction, and statutory invalidity of the disposition cannot be cured by passive receipt of rent or conduct. Equitable denial of relief requires showing that the transaction benefitted the company or its creditors; no such benefit was demonstrated.

Conclusion: The official liquidator's claim is not barred by limitation or estoppel and equitable considerations do not preclude relief in favour of the liquidator.

Issue (iii): Whether the court should validate the post-petition transaction.

Analysis: The power to validate a post-commencement disposition rests with the court and requires that the transaction be in furtherance of the company's business or in the interests of the company in liquidation or its creditors. No evidence was presented to show the transaction furthered the company's business or benefited the creditors. The respondent did not apply for validation at any time despite knowledge of the winding-up proceedings.

Conclusion: The court will not validate the post-petition transaction; validation is refused and the liquidator remains entitled to relief.

Final Conclusion: The official liquidator is entitled to have the post-petition agreement declared void and to possession of the premises; the judge's summons is made absolute in respect of the primary reliefs claimed, subject to a limited period before taking possession to permit vacation of the premises.

Ratio Decidendi: A disposition of a company's property made after the commencement of winding up is void under Section 536(2) of the Companies Act and cannot be sustained by delay, acceptance of rent, or estoppel unless the court, upon proper application showing benefit to the company or its creditors, orders validation.

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