TMI Blog2001 (10) TMI 1042X X X X Extracts X X X X X X X X Extracts X X X X ..... d Financial Reconstruction ( the BIFR ) on the ground of Sharpedge Ltd. being a sick industrial company. On 9-8-1989, the BIFR declared Sharpedge Ltd. as a sick industrial company within the meaning of section 3(1)( o ) of the Sick Industrial Companies (Special Provisions) Act, 1985 ( the SICA ). Thereafter on 9-7-1991, under section 16(2) of the SICA the Industrial Credit and Investment Corporation of India ( the ICICI ) was appointed as the operating agency to formulate a proposal for rehabilitation of the company in consultation with the concerned authorities. On 4-10-1991, the operating agency submitted a final draft rehabilitation scheme to the BIFR. Consequent upon the submission of final draft scheme by the operating agency, the Board formulated its draft scheme which was circulated to the concerned authorities, namely, the sick industrial company, concerned financial institutions and Banks, the State Government, the union of the sick industrial company s workers. Short particulars of the scheme were also published in two daily newspapers, one in English and the other in Hindi, for circulation in the Union Territory of Delhi for information of the shareholders and creditors ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i be not granted, the Bench limited the notice to the following question : ". . . whether the scheme framed under SICA by virtue of section 32 of the Act would have such an overriding effect as to take away the right to recover unearned increase ?" The Bench also restrained the respondents from taking coercive steps for the recovery of the amount in question. Subsequently, on 6-2-1996 the Bench modified the earlier interim order by directing the appellant to deposit the amount of Rs. 3.50 crores with the DDA and to furnish a bank guarantee in an amount of Rs. 1,87,95,788 undertaking to pay the same consistently with the final order that may be passed by this Court in the main petition. 6. We have heard the learned counsel for the parties. 7. Before we deal with the question in issue we may note that a perpe- tual lease deed dated 5-7-1978 was executed by the first respondent in favour of Sharpedge Ltd. whereby Industrial Plot No. 31, Block E, Okhla Industrial Area, Phase II, New Delhi, was demised unto Sharpedge Ltd. in perpetuity. Clauses (4)( a ), (5) and (7) of the perpetual lease deed have a bearing on the question in issue. These clauses read as follows : 4( a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had reserved for itself the pre-emptive right to purchase the property after deducting 50 per cent of the unearned increase as aforesaid. 9. It was argued by the learned counsel for the petitioner that since the vesting of the undertaking is in pursuance of the order of the BIFR, it does not constitute a transfer within the meaning of clause 4( a ) of the perpetual lease deed. It was urged that clause 4( a ) of the perpetual lease deed will not come into operation as it was not a case of transfer of the demised property from Sharpedge Ltd. to Indian Shaving Products Ltd. According to him, it was a case of amalgamation of the two companies and as a consequence of the amalgamation directed by the BIFR consequent changes have to be made in the record of the DDA. It was also pointed out that no consideration has passed from the petitioner to Sharpedge Ltd. in respect of the demised property. It was canvassed that since no consideration has been paid, there is no question of payment of unearned increase by the petitioner to the DDA. The learned counsel also canvassed that in the instant case the vesting of the undertaking of Sharpedge Ltd. was made in pursuance to an order of the BI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me of amalgamation, inter alia, provided that consequent to the amalgamation, all properties of the transferor-company shall vest in the transferee-company as owner and all authorities including the DDA were required to effect the necessary changes in the licences, permissions, approvals, deeds, agreements, without payment of any transfer charges on account of stamp duty, registration, etc. 14. It is, however, significant to note that clause 14.3 of the scheme talks of properties of the transferor. Therefore, this clause will apply only to the properties owned by the transferor. Transferor was the lessee of the property. The demised property, therefore, cannot vest in the transferee-company even after amalgamation. The BIFR by approving the scheme of amalgamation was not competent to effect change in the ownership of the property, which belongs to the DDA, and it has not done so. The ownership of the property still remains with the DDA. Since the transferee-company has applied for mutation of the property in its name, it is required to pay the unearned increase. It may be noted that even before the amalgamation of the transferor and the transferee, the transferee had purchase ..... X X X X Extracts X X X X X X X X Extracts X X X X
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