Leasehold rights in liquidation remain company property until dissolution; lessors cannot seek possession or disclaimer without lawful forfeiture or statutory basis.

A company's leasehold interest in immovable property remains a subsisting asset in liquidation until dissolution and may be transferred, attached or sold subject to the lease terms. Liquidation does not extinguish the company's corporate existence or lease rights by itself. Lessors cannot recover possession or compel disclaimer merely on non-payment of rent or alleged forfeiture unless the lease is lawfully determined and the statutory requirements for forfeiture or disclaimer are met. In winding up, the liquidator alone may pursue disclaimer in the manner provided by company law, while the interests of mortgagees and workmen must also be protected.

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Issues: (i) Whether the leasehold interest of companies in liquidation was a valuable and transferable asset which continued to subsist until dissolution. (ii) Whether the lessors were entitled to recover possession or compel disclaimer on the grounds of non-payment of rent, alleged forfeiture, statutory tenancy, or the winding up of the company.

Issue (i): Whether the leasehold interest of companies in liquidation was a valuable and transferable asset which continued to subsist until dissolution.

Analysis: A leasehold interest in immovable property was treated as an asset of the company capable of transfer, attachment, and sale, subject to the terms of the lease. The corporate existence of the company continued after an order of winding up until dissolution, and the liquidator stepped into the shoes of the company under the control of the Court. The Court also distinguished winding up from dissolution and held that the leasehold rights did not disappear merely because the company entered liquidation.

Conclusion: Yes. The leasehold interest remained a subsisting and transferable asset of the company in liquidation and could not be treated as extinguished by the winding up order.

Issue (ii): Whether the lessors were entitled to recover possession or compel disclaimer on the grounds of non-payment of rent, alleged forfeiture, statutory tenancy, or the winding up of the company.

Analysis: The Court held that the Rent Act and the Transfer of Property Act had to be applied according to the nature of the tenancy and the terms of the lease deed. On the facts, the leases were permanent, perpetual, or of long duration, and no express forfeiture clause was shown to justify automatic re-entry. Non-payment of rent by itself did not create an onerous covenant, and disclaimer could be sought only by the liquidator in the manner contemplated by the Companies Act, not at the instance of the lessors. The existence of mortgagees and the interests of workmen also had to be protected in winding up.

Conclusion: No. The lessors were not entitled to possession, and no direction could be issued compelling disclaimer of the leasehold property on the facts of the case.

Final Conclusion: The applications failed because the leasehold rights of the companies in liquidation remained valuable assets and the lessors had not established a legal basis for eviction or disclaimer.

Ratio Decidendi: In winding up, a company's subsisting leasehold interest remains property of the company until dissolution, and lessors cannot recover possession or seek disclaimer unless the lease is lawfully determined and the statutory requirements for forfeiture or disclaimer are satisfied.

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