The main legal point established in the judgment is that the sale by the Official Liquidator is not an involuntary sale and is not affected by the restrictive covenant contained in the lease agreement. The application for cancellation of the proposed sale was deemed premature, and the Official Liquidator was directed to file a necessary application before the District Collector for sanction to effect the sale.

1. This MFA is filed challenging the order of a learned Single Judge in Company Application No. 306 of 1986 in Company Petition No. 11 of 1983.

2. The Revenue Divisional Officer, Fort Cochin, who is the appellant herein filed the above application under R.7 of the Companies Court Rules, praying to cancel the sale effected pursuant to a notice of sale dated 15-10-1985 published by the Official Liquidator, High Court of Kerala in respect of 1.35 acres of land specified in the Agreement executed between the Government and M/s. Brunton and Company (Engineers) Ltd. now in liquidation and to direct the Official Liquidator to confine the sale only to the structures standing on the land and to surrender vacant site to the Government after declaring that the lease is terminated.

3. The material averments contained in the affidavit filed in support of the above application are as follows:

4. A lease agreement was executed between the Director of M/s. Brunton & Company (Engineers) Ltd., (in liquidation) and the Government, covering 1.35 acres of land in Sy. No. 8/9/2 and 1173 in Fort Cochin for a period of 50 years from 1-5-1954. This lease deed was only in continuation of an earlier lease deed executed in 1864 by the then District Collector of Malabar and M/s. Brunton and Company Engineers Ltd., for a period of 99 years. One of the conditions in the lease deed was that the lessee will not within the period of lease, underlet or otherwise part with the land demised or any part thereof without the permission in writing of the District Collector within whose jurisdiction the land is situated. The lessee agreed to surrender the land on termination of lease peacefully. The lessee Company is now defunct and liquidation proceedings are pending before this Court The administration of the lessee Company is carried on by the Liquidator appointed by this Court. The Official Liquidator has been making regular payments of rent to the Government. Since the Company is defunct, the purpose of the lease deed no more exists, and therefore the lease agreement has to be terminated. On 15-10-1986 the Official Liquidator published an advertisement inviting tenders for disposing of the property mentioned in the lease deed. On examination of the book-let published by the Official Liquidator it was revealed that the sale related to the properties covered by the lease agreement as well as construction made thereon. The action of the Official Liquidator is illegal and without jurisdiction. It will also violate sub-clause (3) of Clause.2 of the lease. In the circumstances the lease agreement would be terminated and vacant land be landed over to the applicant. The Government is badly in need of offices at important parts of the city, especially in the heart of Fort Cochin where some of the important Government Offices are located at rented buildings. In the circumstances it is necessary to cancel the proposed sale in respect of 1.35 acres of land specified in the agreement and direct the Liquidator to confine the sale only to the structures standing on the land and to surrender the vacant land after declaring that the lease is terminated.

5. Ext.A3 dated 1-2-1867, the original lease was in favour of James Oughterson, but it is not disputed that the lease-hold right executed under Ext.A3 devolved on Brunton & Company (Engineers) Ltd., and that the lease was renewed as per Ext.A2 agreement dated 31-3-1962 with retrospective effect from the date of the expiry of the term of original lease and under Ext.A2, the terms of the lease were extended upto 2003 A.D. There is also no dispute that the third additional respondent was the highest bidder.

6. The Official Liquidator, the Canara Bank which is the principal creditor and the highest bidder who was impleaded as an additional respondent resisted the application. The Official Liquidator contended that the Company still exists and the fact that the Company is ordered to be wound up by itself is not a sufficient or v