Summary
A secured creditor challenged release of industrial leasehold premises from a company’s winding-up proceedings to the lessor. The leases had been terminated for cessation of manufacturing activity, and termination remained unchallenged. The Court held that the mortgagee of the leasehold rights could claim no greater rights than the lessee and upheld restoration of possession to the lessor.
Issues
- Whether the mortgagee could resist release of leased premises after final termination of the company’s leasehold rights.
Held
- Where the lessor’s exercise of its contractual right to determine the lease had attained finality, the mortgagee of the leasehold rights could not claim rights superior to the company-lessee. The risk of loss on the secured advances did not enlarge the mortgagee’s interest. (¶¶ 4, 5, 6, 9, 10, 11)
- The lessor had approached the company court for possession of premises held by the Official Liquidator. The Court applied the distinction recognised in Phatu Rochiram Mulchandani between termination of a lease and taking possession during winding up, and found no basis to interfere with the concurrent orders permitting release. (¶¶ 8, 9, 10, 11)
Result
The appeal was dismissed without an order as to costs. The orders allowing the lessor to recover possession of the terminated leasehold premises remained undisturbed.