Post-winding-up rent and liquidation priority depend on actual use or retention of leased property for winding up.

Post-winding-up rent is not automatically treated as a cost or expense of liquidation. Priority arises only where the liquidator retains or uses the leased property for the benefit of the winding up or for better realisation of assets; mere non-surrender of the leasehold is insufficient. On the stated facts, the official liquidator left the godown unused while pledged goods remained under the bank's control, so there was no retention for winding-up purposes. Rule 157 of the Companies (Court) Rules, 1959 preserved the landlord's right to claim rent but did not create a separate priority for payment. The landlord was therefore required to prove the debt in winding up and rank with other unsecured creditors.

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Issues: Whether rent accruing after the winding-up order, while the company's leased godown remained unused and was not retained by the liquidator for the purpose of winding up, could be treated as part of the costs and expenses of the winding up and paid in full in priority to other creditors.

Analysis: The general rule under the winding-up provisions is that debts and claims against the company are admitted to proof so that unsecured creditors share pari passu. Priority is confined to the categories specified by the Act, and the costs and expenses of winding up rank ahead only where the liquidator retains or uses the property for the convenience or benefit of the liquidation, or for better realisation of the assets. On the facts, the official liquidator merely left the godown as he found it while pledged goods remained under the bank's control. There was no material showing retention of the premises for winding-up purposes, and mere abstention from surrendering the leasehold was insufficient. Rule 157 of the Companies (Court) Rules, 1959 did not confer a separate right to priority in payment of post-winding-up rent, as the Supreme Court had clarified that the rule preserves the landlord's right to claim rent but does not create priority.

Conclusion: The post-winding-up rent was not part of the costs and expenses of the winding up. The landlord was required to prove the debt in the winding up and share with the other creditors.

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