Unregistered lease and forfeiture clauses limit liquidation rights, allowing the landlord to recover possession despite winding-up proceedings.

An unregistered agreement to lease for a term exceeding one year does not create a transferable long-term leasehold estate under section 107 of the Transfer of Property Act, 1882; at most, it gives rise to a month-to-month tenancy. The document further states that leasehold rights in liquidation remain subject to the lease covenants, including restrictions on induction of third parties and other agreed terms. Where those covenants are breached and the lease reserves a right of forfeiture, the landlord may recover possession notwithstanding liquidation proceedings, and the Official Liquidator cannot retain or transfer possession contrary to the lease terms.

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Issues: Whether an unregistered agreement to lease for a stated term created a transferable long-term leasehold right in favour of the company in liquidation, and whether, in view of the breaches of the lease conditions and the right of forfeiture, the landlord was entitled to recover possession from the Official Liquidator and the occupants.

Analysis: The arrangement for a lease exceeding one year required a registered instrument under section 107 of the Transfer of Property Act, 1882. As no registered lease deed had been executed, the company could not claim a subsisting 60-year leasehold estate; at best, the relationship continued as a tenancy from month to month. The court further held that the company had breached the restrictive covenants by inducting third parties without written permission and by failing to comply with the agreed terms. Although leasehold rights of a company in liquidation may constitute an asset under the Companies Act, 1956 and may be dealt with for beneficial winding up, such rights remain subject to the lease terms. Where the lease terms confer a right of forfeiture and the covenants are breached, the Official Liquidator cannot retain or transfer possession contrary to those terms.

Conclusion: The landlord was entitled to recover possession, the occupants were required to hand over the premises to the Official Liquidator, and the Official Liquidator was then to hand over possession to the landlord along with recovery of dues in accordance with the agreements.

Ratio Decidendi: An unregistered lease agreement for a term exceeding one year does not create a long-term leasehold estate, and where the lease conditions are breached and forfeiture is reserved, the landlord may recover possession notwithstanding liquidation proceedings.

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