Agreement to lease creates no transferable title until execution and registration; liquidation funds cannot be diverted for unearned income.

An agreement to lease does not create any right, title or interest in the land until a lease is executed and registered; where no lease deed was ever executed, the auction purchaser could not acquire ownership or independent leasehold rights and could take only the transferor's limited interest. A transferee in an as-is auction cannot obtain a better title than the transferor held. Sale proceeds in pending liquidation, being subject to competing creditor claims, could not be directed towards unearned income, though the affected party remained free to pursue remedies and seek regularisation in accordance with law.

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Issues: (i) whether the auction purchaser acquired ownership or leasehold rights in the plot when the original lease was never executed; (ii) whether any direction could be issued for appropriation of sale proceeds towards unearned income payable to the appellant.

Issue (i): whether the auction purchaser acquired ownership or leasehold rights in the plot when the original lease was never executed.

Analysis: The agreement dated 17 July 1957 was only an agreement to lease and, by its own terms, created no right, title or interest until a lease was executed and registered. The admitted position was that no lease deed was ever executed. M/s Mehta Constructions could therefore pass only such rights, if any, as it had under the agreement, and the purchaser in liquidation could not acquire ownership or independent leasehold rights in the land. The auction was also on an as-is basis and could not enlarge the transferor's interest.

Conclusion: The auction purchaser was not entitled to ownership or leasehold rights in the plot.

Issue (ii): whether any direction could be issued for appropriation of sale proceeds towards unearned income payable to the appellant.

Analysis: The amount realised in the liquidation proceedings was subject to claims of multiple creditors, and the liquidation process was still pending before the Company Court. In that situation, no direction could be issued to divert part of the funds towards unearned income. The appellant was left free to pursue appropriate remedies in accordance with law, and any request for regularisation or acceptance of unearned income was to be considered by the appellant on its own merits.

Conclusion: No direction for payment or appropriation towards unearned income was issued.

Final Conclusion: The appeal was dismissed after clarifying that the respondent could not claim ownership or leasehold rights, while the appellant's remedies against the parties concerned and any request for regularisation remained open in accordance with law.

Ratio Decidendi: An agreement to lease does not confer transferable rights in the land until the lease is executed and registered, and a transferee cannot acquire a better title than that held by the transferor; liquidation proceeds also cannot be diverted for unearned income where they remain subject to competing claims in pending insolvency proceedings.

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