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Issues: Whether the lessor was bound to recognise the petitioner as lessee after a court-sanctioned scheme of arrangement and whether the demand of 10% of the market value for such recognition was arbitrary and liable to be interfered with under writ jurisdiction.
Analysis: A sanctioned scheme of arrangement operates in rem and binds the company and its stakeholders, but it does not override the landlord's rights under the lease where the lease prohibits assignment without prior written consent and makes such consent a matter of the lessor's contractual choice. The authorities dealing with transfer by operation of law and the effect of sanctioned schemes on property transfer were distinguished in the context of landlord-tenant/lessor-lessee relations. In the given facts, the petitioner acquired rights through successive corporate changes, yet no enforceable right arose against the lessor to compel recognition as lessee. The demand made by the lessor for consideration to recognise the petitioner as lessee was held to lie in the contractual field and not to be per se arbitrary.
Conclusion: The petitioner was not entitled to compel the lessor to accept it as lessee on the strength of the sanctioned scheme alone, and the impugned order did not warrant interference under Article 226.
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