Lease-cum-sale allotment and winding up notice: ownership failed to crystallise, and lease termination stood valid.

A lease-cum-sale allotment for an industrial project did not vest ownership in the allottee where the stipulated construction and commencement conditions were not fulfilled, so the plots remained leasehold property. The allotting authority was entitled to terminate the lease after repeated notices and time extensions because the project was not implemented within the agreed period. Section 537 of the Companies Act barred coercive steps against company property after winding up without leave of court, but it did not require prior permission merely to issue a cancellation notice. Once the lease was validly terminated, the company court could permit resumption of the land and delivery of possession.

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Issues: (i) Whether the company had acquired ownership of the two plots or continued to hold them as leasehold property under the lease-cum-sale arrangement. (ii) Whether the Board's notice terminating the lease was valid and justified. (iii) Whether prior permission of the Company Court was required before termination of the lease while the company was under liquidation. (iv) Whether the Company Court was justified in permitting the Board to resume the land and take possession.

Issue (i): Whether the company had acquired ownership of the two plots or continued to hold them as leasehold property under the lease-cum-sale arrangement.

Analysis: The agreement created a lease for an initial period with a contingent right to purchase only upon fulfilment of the stipulated covenants, including completion of the factory project within the prescribed time. The company failed to complete the construction or commence the industry, and the contemplated sale did not fructify. The contractual terms preserved the Board's right to terminate the lease on breach.

Conclusion: The plots did not become the company's ownership property and remained leasehold property.

Issue (ii): Whether the Board's notice terminating the lease was valid and justified.

Analysis: The land was allotted for a specified industrial project, subject to time-bound obligations. The company failed to implement the project within the stipulated or extended time, and repeated notices and opportunities were afforded before termination. In these circumstances, the Board was entitled under the agreement and the governing industrial development framework to cancel the allotment and terminate the lease.

Conclusion: The termination notice was valid and justified.

Issue (iii): Whether prior permission of the Company Court was required before termination of the lease while the company was under liquidation.

Analysis: Section 537 of the Companies Act prevents attachment, distress, execution, or sale of company property after commencement of winding up without leave of the Court. A mere cancellation of lease does not itself amount to such coercive process. Leave of the Court would be required before taking possession or effecting sale, but not as a precondition to serving a cancellation notice. The earlier authorities were read in their factual context and did not compel a contrary conclusion.

Conclusion: Prior permission was not required before terminating the lease.

Issue (iv): Whether the Company Court was justified in permitting the Board to resume the land and take possession.

Analysis: Once the lease was validly terminated, the Board's application could be examined on merits. The company had not become owner of the land, no viable rehabilitation scheme had been propounded, and the Board's action was consistent with the statutory scheme governing industrial allotments. The Company Court was therefore justified in granting permission for resumption and delivery of possession.

Conclusion: The Company Court's order permitting resumption and possession was justified.

Final Conclusion: The appeal failed on merits and the Board's action in terminating the lease and resuming the land was upheld.

Ratio Decidendi: In a lease-cum-sale allotment for a specified industrial project, failure to fulfil the contractual conditions prevents ownership from crystallising, and the allotting authority may validly terminate the lease; section 537 of the Companies Act protects company property from coercive process after winding up but does not require prior leave merely to issue a termination notice.

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