TMI Blog2015 (4) TMI 846X X X X Extracts X X X X X X X X Extracts X X X X ..... ting clever means that too without taking written consent of the Lessor i.e. appellant-Corporation. There are many instances/examples in which the lessee gets allotment of huge industrial plots and thereafter sells the same for huge monetary gains. This adversely affects the aims and objectives of appellant-Corporation i.e. the planned development of industrial areas in the State of Uttar Pradesh. - The Hon'ble High Court ought not to have interfered in the matter looking into the public interest involved and Clause 3(p) of the lease deed. U.P. Twiga Fiberglass Limited - It is not in dispute that the appellant-Corporation on 27th May, 1977 allotted huge plot measuring 1,10,926 sq. mtrs. to respondent no. 1 Company in the industrial area, Sikandarabad, Bulandshehar on nominal amount. The respondent no. 1 clearly admitted that it had a huge debt of ₹ 13,14,00,000/- the different financial institutions and, therefore, it sold shares of company, its own shares, shares of promoters and shares of financial institutions to the foreign company, namely, "M/s Rotar Ltd. - There is larger public interest involved in incorporating alteration in "Capital Structure" in Clause 3(p) o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the respondents and there was no reason for the High Court to interfere with the same. - Decided in favour of appellant. - CIVIL APPEAL NO. 2731 OF 2005 - - - Dated:- 29-1-2015 - SUDHANSU JYOTI MUKHOPADHAYA AND V. GOPALA GOWDA, JJ. For The Appellant : Mr. S.K. Dubey, Adv., Ms. Sushma Yadav, Adv., Mr. Rakesh Uttamchandra Upadhyay,Adv. For The Respondent : Mr. K.V. Mohan, Adv., Mr. Pradeep Kumar Bakshi, Adv., Mr. Mohd. Irshad Hanif, Adv., Mr. Aftab Ali Khan, Adv. JUDGMENT 1. Leave granted in SLP (C) No.16404 of 2006 and SLP(C) No.5838 of 2008. 2. The Government of Uttar Pradesh acquired land in various districts and conveyed the same to the appellant-U.P. State Industrial Development Corporation (hereinafter referred to as, 'the Corporation' for short) for the purpose of setting up industrial area. The Corporation thereafter divided the said land into plots for leasing the same to industrial units. The respondents-Companies, applied to the appellant-Corporation for grant of lease. On receiving part premium of the plot, the appellant executed an agreement for licence and later executed lease deed in favour of the respondents-Companies. Later the appellan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dent-Company to provide the list of its Directors and shareholders duly certified by the Chartered Accountant. The same was furnished by the respondent-Company to the appellant-Corporation on 7th May, 1994. According to the appellant-Corporation the respondent-Company changed the Directors and shareholders without prior permission and consent of the appellant-Corporation and since the respondent-Company was purchased by the present Directors from the previous Directors. The appellant-Corporation by letter dated 27th May, 1994 asked for details in order to take necessary action in accordance with the terms of the lease deed. The respondent-Company categorically denied the allegations levelled by the appellant-Corporation by their letter dated 27th September, 1994. 6. By letter dated 1st October, 1999 the appellant-Corporation demanded ₹ 25,51,781/- from respondent-Company towards transfer levy charges as the original shareholders of the respondent-Company transferred their entire shareholding and interest to the new shareholders and there was change in the Directors of the respondent-Company. According to the appellant such change makes the shifting of the controlling inter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s transfer levy as there was disposal of controlling interest in the venture by the existing allottee. The said demand of transfer levy, according to appellant, was as per lease deed and guidelines of the Corporation pertaining to re-constitution and transfer. 10. Being aggrieved the respondent-Company filed suit bearing No.876 of 1996 before Civil Judge, Bulandshahr seeking permanent injunction and praying for restraining the appellant-Company from claiming any amount as transfer levy. The appellant filed written statement and contested the suit. 11. The Civil Judge, Bulandshahr vide judgment and decree dated 23rd January, 1999 allowed the suit and directed the appellant-Corporation not to charge transfer levy from the respondent-Company. The Civil Judge, held that the respondent-Company is a legal person and disposal of its majority shares in the name of a foreign Company namely Rotar India Ltd. does not change the legal status of the Company and therefore, there is no transfer. 12. The appellant-Corporation being dissatisfied with the aforesaid order filed Civil Appeal No.45 of 1999 in the Court of District Judge, Bulandshahr which was dismissed vide order dated 15th Ju ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n another similar case. M/s Super Tannery (India) Ltd.(A Company registered under the Companies Act, 1956) 16. The appellant-Corporation entered into an agreement dated 10th October, 1990 with one M/s Super Agro Tech Ltd. for setting up of specialty paper unit in industrial plot nos.A-9 and A-10 admeasuring approximately 45,080/- square meters in Industrial Area Unnao Site-2. No right whatsoever in regard to transfer of said plots were given to the licensee M/s Super Agro Tech Ltd. The possession of the said plots was handed over on 25th January, 1991 and subsequently lease was also executed. M/s Super Agro Tech Ltd. thereafter did not set up any specialty paper unit and no investment was made. According to the appellant-Corporation said licensee M/s Super Agro Tech Ltd. with a view to enrich itself started amalgamation proceeding with the new company namely M/s Super Tannery (India) Ltd.-respondent herein. The said amalgamation was a mutual understanding between M/s Super Agro Tech Ltd. and M/s Super Tannery (India) Ltd. The Allahabad High Court vide order dated 9th May, 1997 sanctioned the amalgamation in Company Petition No.32 of 1997. Though the land belongs to the app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r individual person. 20. For deciding the issue involved in the present case it is necessary to refer certain clauses of licence agreement, lease deed and guidelines issued by the appellant-Corporation which are common in all the cases. 21. Clause 4(h) of the licence agreement prohibits licensee's acts to directly or indirectly transfer, assignment, sale, encumber or part with its interest under the benefit of the said Agreement without previous consent in writing of the Grantor, relevant portion of which reads as follows: 4(h). That the Licence will not directly or indirectly transfer, assign, sell, encumber or part with its interest under or the benefit of this Agreement or any part thereof in any manner whatsoever without the previous consent in writing of the Grantor and it shall be open to the Grantor to refuse such consent or grant the same subject to such conditions as may be laid down by the Grantor in the behalf. 22. Sub-Clause (p) of Clause 3 of lease deed also prohibits any alteration in the Memorandum and Articles of Association or in its capital structure without the written consent of the Lessor, relevant portion of which reads as follows: 3(p) T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the deeds or deed executed in its or their favour by the Lessee as provided herein above, or under any law for the time being in force. 23. The Corporation has issued guidelines for transfer/re-construction in respect of the plots in the industrial area of the Corporation. Clause 6.01(E) of the said guidelines prescribes Transfer Levy and Clause 6.01(F) defines transfer. The aforesaid provisions reads as follows: 6.01(E) Transfer Levy - per sq.m. @ 5% to 15% of the rate of premium in fast moving areas and 2.5% to 7.5% of the current premium in slow moving areas prevailing on the date of issuance of transfer approval letter will be changed as applicable. While calculating the transfer levy the locational charges of a particular plot will not be considered and only basic premium will be taken into account. 6.01(F) Transfer - Means disposal of controlling interest in the venture by the existing allottee. In the case of reconstitution, the existing allottee retains controlling interest except in case, where interest is transferred to family members as defined in 6.3(iv)(a) below or where there is change in the constitution of the allottee due to inheritance, succession or op ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Limited 28. Similar submissions as made in the above case were made by the learned counsel for the appellant in the present case also. It was contended that the respondent-U.P. Twiga Fiberglass Ltd. has violated Clause 3(p) of lease deed dated 27th May,1977 entered between the said company and appellant-Corporation inasmuch as its Memorandum of Association , Articles of Association and capital structure were altered without the written consent of Lessor appellant-Corporation and in view of the same, the appellant-Corporation has the right to determine the said lease deed dated 27th May,1977. 29. Per contra, according to the respondent, the aforesaid contention(s) are fallacious, misconceived and untenable. Learned counsel for the respondent made the following submissions: (i) The Lease-Deed dated 27th May, 1977 has been executed by the respondent-company, in the capacity of a lessee . Consequently, the provisions of the Lease-Deed obligate the Lessee/the Company and not its shareholder(s); (ii) The Lease-Deed contains no clause whatsoever, that authorises such levy of transfer-fee, nor does it prohibit any change in the share-holding of the respondent-company. Ev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y, 1977 allotted huge plot measuring 1,10,926 sq. mtrs. to respondent no. 1 Company in the industrial area, Sikandarabad, Bulandshehar on nominal amount. The respondent no. 1 clearly admitted that it had a huge debt of ₹ 13,14,00,000/- the different financial institutions and, therefore, it sold shares of company, its own shares, shares of promoters and shares of financial institutions to the foreign company, namely, M/s Rotar Ltd. 31. The appellant-Corporation in written statement filed in Suit No. 876/1996 clearly and categorically mentioned that the shares of original promoters were transferred in the name of new promoters of foreign company and therefore, the appellant-Corporation demanded list of new shareholders and Memorandum and Articles of Association of the Company. The change of original promoters shares to the new promoters means the subscribers of shares were changed and, therefore, there is material change in the Memorandum of Association and Articles of Association of the Company. 32. The appellant-Corporation clearly brought on record that there is change in Capital Structure of the company and the Capital structure in common parlance means ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ro Tech Ltd. was merely a licensee and as per the license agreement dated 10.10.1990 it had no authority whatsoever to transfer the said industrial land to M/s Super Tannery (I) Ltd. 39. On the other hand, according to the learned counsel for the respondents, due to various constraints over head costs and financial hardship company became non viable and the major production activities was not feasible to run the company. In order to avoid the future problem a scheme of amalgamation was prepared as per the provisions of the Companies Act, seeking amalgamation under Chapter V of the Companies Act. A joint application was filed before the Allahabad High Court. The High Court vide order dated 9.5.1997 allowed the petition for amalgamation and sanctioned the scheme of amalgamation and ordered that M/s Super Agro will be merged into M/s Super Tannery (India) Ltd. 40. In the present case it has not been denied that respondent company M/s Super Tannery (India) Ltd. and the other company Super Agro Tech. Ltd. are family held companies of the same family having common Directors/Promoters. Pursuant to the order of amalgamation by the High Court the plot of land in question namely A-9, A ..... X X X X Extracts X X X X X X X X Extracts X X X X
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