Executed leave and licence agreements and bona fide defence in winding up turned on contract formation and disputed debt.

Executed leave and licence agreements were held to exist from the date of execution, even though the licence term was to begin later, because postponement of performance did not negate formation of the contract. Non-registration under section 55 of the Maharashtra Rent Control Act did not help the company where the dispute concerned construction of admitted contractual terms rather than a true factual contention, and the company could not rely on its own conduct to avoid the agreements. On winding up, the Court found no bona fide defence: the alleged ability to pay and mitigation arguments did not displace the undisputed debt. Conditional relief was granted, subject to deposit and further procedural consequences on default.

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Issues: (i) Whether the leave and licence agreements had come into existence despite the licence period commencing at a future date; (ii) whether non-registration of the agreements under section 55 of the Maharashtra Rent Control Act, 1999 prevented reliance on their terms; and (iii) whether the company had shown a bona fide defence so as to resist winding up, including on the grounds of mitigation of loss and ability to pay.

Issue (i): Whether the leave and licence agreements had come into existence despite the licence period commencing at a future date.

Analysis: The agreements were executed by both parties and were binding from the time of execution. A distinction was drawn between the coming into existence of an agreement and the future date fixed for performance. The postponement of the commencement of the licence term did not mean that no agreement existed. The correspondence also acknowledged the existence of the agreements and only referred to the future commencement of the licence term.

Conclusion: The agreements had come into existence on execution, and the contrary contention was rejected.

Issue (ii): Whether non-registration of the agreements under section 55 of the Maharashtra Rent Control Act, 1999 prevented reliance on their terms.

Analysis: The statutory provision places responsibility for registration on the landlord, but the company could not rely on its own wrongful conduct after terminating the agreements before the registration period expired. Further, the term "contention" in the provision was treated as referring to factual contention, not an erroneous legal construction of admitted contractual terms. Since the dispute turned on the construction of admitted terms, the absence of registration did not assist the company.

Conclusion: Section 55 did not defeat the petitioner's claim on the facts, and the company's objection failed.

Issue (iii): Whether the company had shown a bona fide defence so as to resist winding up, including on the grounds of mitigation of loss and ability to pay.

Analysis: The Court found no credible material showing that the petitioner could readily re-let the premises on similar terms, especially with a comparable lock-in period. In a leave and licence arrangement, mitigation is not mechanically assessed as in a sale transaction, because the choice of licensee and contractual terms are material. The company's plea that it was financially capable of paying did not answer the finding that there was no bona fide dispute. The governing principles were that a bona fide disputed debt will not justify winding up, but an undisputed debt cannot be defeated merely by asserting ability to pay without paying.

Conclusion: The company had not established a bona fide defence, and the winding up petition was entitled to conditional relief.

Final Conclusion: The petition was disposed of by a conditional order requiring deposit of a substantial sum, with the petition to be advertised on default and dismissed if the deposit was made and the petitioner did not pursue a suit within the stipulated time.

Ratio Decidendi: In a winding up petition, an undisputed debt is not displaced by a mere assertion of financial capacity to pay, and contractual terms in an executed agreement cannot be avoided by an incorrect legal construction or by relying on non-registration where the objection is not a true factual defence.

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