Court-sanctioned amalgamation treated as transfer under lease covenant, triggering prior consent and unearned increase liability.

A lease covenant prohibiting transfer, assignment or parting with possession without prior written consent, and authorising recovery of unearned increase, was construed broadly to cover a court-sanctioned amalgamation. Because the sanctioned scheme expressly vested the leased plots and the transferor's rights in the transferee company without further act or deed, that vesting was treated as a transfer within the lease clause. Section 5 of the Transfer of Property Act, 1882 did not exclude liability, as the lease covenant was wider and the provision preserves laws dealing with company transfers. The result was that unearned increase remained payable under the lease terms.

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Issues: Whether amalgamation of the lessee company under a scheme sanctioned by the Company Court amounted to a transfer of the leased plots so as to attract the lease condition requiring prior consent and payment of unearned increase, and whether Section 5 of the Transfer of Property Act, 1882 excluded such liability.

Analysis: The lease covenant prohibited not only sale, transfer and assignment but also any parting with possession, except with prior written consent, and empowered the lessor to recover 50% of the unearned increase on such transfer. The sanctioned amalgamation order expressly provided that the transferor's properties, rights and powers, including the subject plots, stood transferred and vested in the transferee company without further act or deed under Section 394(2) of the Companies Act, 1956. Such vesting amounted to a transfer within the wide language of the lease clause. The Court held that the clause was not confined to voluntary transfers for consideration and that the policy instructions of the lessor also supported charging unearned increase in such cases. Section 5 of the Transfer of Property Act, 1882 did not assist the appellant because the lease covenant was broader and that provision itself preserves laws relating to transfers by companies.

Conclusion: The amalgamation constituted a transfer attracting the lease covenant for payment of unearned increase, and the demand raised by the lessor was upheld.

Ratio Decidendi: Where a lease deed bars transfer or parting with possession without prior consent and authorises recovery of unearned increase, a court-sanctioned amalgamation that expressly vests the leased property in the transferee company constitutes a transfer for the purpose of that covenant.

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