Unregistered agreement confers no title; leave to sue for specific performance granted without impeding public auction.

The company in liquidation, Dunlop India Limited ("Dunlop"), and Guest Keen Williams Ltd ("GKW") originally co-owned the premises at 46B, Chowringhee Road, Kolkata ("the property") in equal 50% shares

An agreement in 1953 between the co-owners provided for a right of pre-emption

Salasar Towers Pvt. Ltd. ("Salasar") acquired GKW’s 50% share through various agreements and seeks to purchase Dunlop’s remaining 50% share at fair value or match the highest auction bid

Eyelid Mercantiles Pvt. Ltd. ("Eyelid") challenged the sale, claiming a right to Dunlop’s 50% share based on an unregistered agreement for sale dated September 25, 2006, for which it allegedly paid ₹8 Crores

Dunlop was ordered to be wound up in 2013

The Official Liquidator ("OL") took possession of the property in 2018, noting Salasar's presence but not Eyelid's

Eyelid filed CA/83/2021 seeking a disclaimer of the property in its favor under Section 535 and CA/386/2024 seeking leave to sue for specific performance under Section 446 of the Companies Act, 1956

1. Whether the property could be disclaimed in favor of Eyelid under Section 535 of the Companies Act, 1956, and whether the OL could be directed to execute a conveyance based on an unregistered agreement

2. Whether leave should be granted to Eyelid under Section 446 of the Companies Act, 1956, to institute a suit for specific performance despite allegations of siphoning and circular transactions

3. Whether Salasar’s right of pre-emption should be recognized in the ongoing auction process

The Court applied Section 535 of the Companies Act, 1956, which governs the disclaimer of onerous property by a liquidator

It also applied Section 446, which requires leave of the Company Court to commence or proceed with legal proceedings against a company in liquidation

Regarding property law, the court relied on the principle that an unregistered agreement for sale does not confer title or ownership, citing Suraj Lamp and Industries Pvt. Ltd. v. State of Haryana [(2012) 1 SCC 656] and Narandas Karsondas v. S.A. Kamtam [(1977) 3 SCC 247]

Furthermore, it noted the restrictions on property transfers during the pendency of BIFR proceedings under Section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985

The Court found that Eyelid's claim for disclaimer and mandatory conveyance under CA/83/2021 was untenable because Eyelid failed to establish an existing legal title; its claim rested solely on an unregistered 2006 agreement

The OL’s records and municipal data did not reflect Eyelid’s possession or interest, whereas Salasar was a recorded owner

The Court highlighted evidence produced by Salasar and the OL suggesting that Eyelid’s purported payment of ₹8 Crores involved "circular transactions" and "siphoning" of funds between associate companies of Dunlop

Regarding CA/386/2024, the Court observed that while the validity of the 2006 transaction was doubtful, it would be imprudent to summarily deny Eyelid the procedural right to attempt to establish its claim in a civil forum

The Court noted that granting leave under Section 446 does not equate to conferring a right or validating the agreement

The Court allowed CA/386/2024, granting Eyelid liberty/leave to institute a suit or proceeding to establish its rights in accordance with law

CA/61/2019 (Salasar) was held to be subject to the outcome of the auction, where Salasar may match the highest bid as per previous orders

The Official Liquidator was directed to proceed with the sale, and CP/233/2008 was listed for March 20, 2026, for confirmation of the auction sale