Implied and irrevocable licence principles upheld where company made permanent improvements and winding-up directions protected creditor interests.

A licence may be inferred from the grantor's conduct where the owner permits use of land and structures for company operations, and it becomes irrevocable under the Indian Easements Act, 1882 when the licensee acts on it by making permanent improvements and incurring expenditure. On the facts, the court accepted that the company had developed the orchard, converted barracks and installed machinery and fixtures, so the appellant could not deny the licence or its binding effect. In the winding-up context, equitable directions requiring the appellant to account for and pay sums to the company were sustained under the Companies Act, 1956 because they protected the company's assets and creditors pending liquidation and claims settlement.

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Issues: (i) whether the appellant had granted a licence, express or implied, in favour of the company and whether such licence became irrevocable under the Indian Easements Act, 1882; (ii) whether the directions requiring the appellant to account for and pay amounts to the company in the winding-up proceedings were justified under the Companies Act, 1956.

Issue (i): Whether the appellant had granted a licence, express or implied, in favour of the company and whether such licence became irrevocable under the Indian Easements Act, 1882.

Analysis: The material on record showed that the appellant himself promoted the company and permitted it to use the land and barracks for developing an orchard and establishing a factory. The conduct of the parties supported the existence of a licence, and the company had acted upon it by developing the orchard, converting the barracks and installing machinery and fixtures. Under section 54 of the Indian Easements Act, 1882, a licence may arise from the grantor's conduct, and under section 60, revocation is barred where the licensee, acting upon the licence, has executed work of permanent character and incurred expenses in doing so.

Conclusion: The licence was proved on the facts and it was not open to the appellant to deny its existence or its binding effect against him.

Issue (ii): Whether the directions requiring the appellant to account for and pay amounts to the company in the winding-up proceedings were justified under the Companies Act, 1956.

Analysis: The company's records reflected expenditure on plant, machinery, electric installations and orchard development, and the learned company judge treated the appellant as accountable to the company for the value of the benefits derived from the licence. The order did not finally determine all liabilities but secured the company's interest pending liquidation and claims settlement. In the setting of winding-up, and in view of the powers under sections 542, 543 and allied provisions of the Companies Act, 1956, the appellate court found no reason to interfere with the equitable directions made to protect the company and its creditors.

Conclusion: The directions for payment and accountability were upheld.

Final Conclusion: The appeal failed on merits and the impugned directions were sustained, leaving the appellant liable in the manner directed by the company court.

Ratio Decidendi: A licence can be inferred from the grantor's conduct and, once the licensee has acted upon it by making permanent improvements and incurring expense, the licensor cannot deny its binding character; in winding-up proceedings, equitable directions may be sustained to protect the company's assets and creditors.

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