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TMI Blog2015 (4) TMI 846X X X X Extracts X X X X X X X X Extracts X X X X ..... n favour of the respondents-Companies. Later the appellant-Corporation made an allegation that the respondents-companies' share holders transferred their company/their shares to new shareholders without the consent of appellant-Corporation, which amounted to transfer of interest, for which transfer levy is required to be deposited. Demand notices were issued by the appellant-Corporation to the respondents-Companies. Those demand notices were challenged by the respondents-Companies in different writ petitions or suits which were allowed by the Division Bench of the High Court of Judicature at Allahabad by impugned judgments. 3. In the aforesaid cases the High Court held that unless the respondents-Companies transfer its right in the plot in question in favour of another legal entity, there is no question to apply clause 4(h) of the Agreement for licence. The High Court further held that mere change in shareholders or Directors, does not change legal entity of the Company and as such it continues unchanged. 4. The questions that arise for our consideration in these appeals are: (i) Whether by the alleged action the respondents-Companies directly or indirectly had transferred o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shifting of the controlling interest of the respondent-Company and transfer levy for the same was demanded from the respondent-Company as per the rules of the Corporation. The Company submitted its reply vide letter dated 8th December, 1999 and reiterated its earlier stand to the effect that there is no breach of any terms of the lease deed as no transfer or assignment or sale of premises in question has been made. However, it was not accepted by the Corporation, who sent another reminder dated 13th January, 2000 asking the Company to pay a sum of Rs. 25,51,781/- towards transfer levy charges. The aforesaid demand notice was challenged by the respondent-Company before the High Court of Allahabad which by impugned judgment dated 11th May, 2004 allowed the writ petition. U.P. Twiga Fiberglass Limited (A Company registered under the Companies Act, 1956) 7. The appellant-Corporation executed an agreement with respondent-Company followed by lease deed dated 27th May, 1977 by which the Corporation leased plot nos.9 and 23-A admeasuring approximately 1,10,926 square meters of land situated at Sikandrabad Industrial Area, District Bulandshahr, Uttar Pradesh to the respondent-Company. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... July, 2000. Thereafter, the appellant-Corporation filed Second Appeal No.1425 of 2000 before the High Court of Judicature at Allahabad and the same dismissed by impugned judgment dated 24th October, 2005. M/s Enrich Engineering Works Pvt. Ltd.(A Company registered under the Companies Act, 1956) 13. One M/s Tyres & Tubes Co. Pvt. Ltd. having its registered office at Scooters India Ltd. Premises, Sarojini Nagar, PO Lucknow through its Directors Shri S.Sounderarajan s/o of late Shri S. Srinivasan applied to appellant-Corporation for allotment of plots of land. After agreement which was followed by lease deed dated 21st December, 1976 the appellant-Corporation allotted industrial plot no.A-4 and A-5 admeasuring approximately 40,489 square yards and 8.36 square yards respectively situated at site no.2, Rai Bareilly, Uttar Pradesh to M/s Tyres & Tubes Company Pvt. Ltd. The lease was for 90 years. M/s Tyres & Tubes Co. Pvt. Ltd. suffered heavy losses and pursuant to its winding up, Allahabad High Court vide judgment and order dated 9th January, 1996 appointed Official Liquidator. The Official Liquidator sold the properties of M/s Tyres & Tube Co. Pvt. Ltd. including right and interest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n, it was not made a party to the said petition. According to the appellant-Corporation, the amalgamation does not create any right whatsoever on respondent-M/s Super Tannery (India) Ltd. over industrial plots in question and the said two plots cannot be legally transferred to the new Company i.e. M/s Super Tannery (India) Ltd. 17. The respondent-Super Tannery (India) Ltd. made an application for the transfer of the said industrial plot. On such request, the appellant-Corporation demanded transfer levy from M/s Super Tannery (India) Ltd. for transfer of the said industrial plot. However, no amount was deposited. The Corporation by notice dated 3rd November, 2001 demanded a sum of Rs. 34,23,954.51/-as on that date from M/s Super Tannery (India) Ltd. towards transfer levy. The aforesaid notice was challenged by the respondent-M/s Super Tannery (India) Ltd. by filing a writ petition being Civil Misc. Writ Petition No.18535 of 2002 before Allahabad High Court and the same was allowed, by the impugned judgment dated 22nd August, 2007 following the decision rendered in another case. Case wise stand of the parties and finding of this Court. Monsanto Manufactures Private Ltd. 18. Learn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ership firm declares, affirms and undertakes that during the subsistence of the terms of this agreement, the said partnership shall not be dissolved, reconstituted or wound up, and/or dealt with in any way which may jeopardize the rights and interests of the Lessor in the matter of this lease, nor shall its constitution be altered in any manner otherwise written consent of the Lessor, first and obtained, and it shall not stand dissolved on the death or insolvency of any of its partners; OR The Lessee being an individual or sole proprietor of a firm, shall not allow any person(s) as partner(s) with him without the prior written consent of the Lessor; OR The Lessee being a Company shall not make or attempt to make any alterations, whatsoever in the provisions of its Memorandum and Articles of Association or in its capital structure without the written consent of the Lessor, first had and obtained, and the Lessee hereby undertakes to get registered the prescribed particulars of the charge hereunder created with Registrar of Joint Stock Companies under Section 126 of Companies Act, 1956, within stipulated period. While granting its consent as aforesaid the Lessor may require ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ire shareholding of Goyal family headed by Mr. Amar Nath Goyal in the said company was transferred to the Mehta-Lamba Family. The entire list of shareholders, Managing Director and Board of Directors was provided by Monsanto to the appellant-Corporation vide letter dated 7.5.1994. The record shows that the original subscribers of shares were members of Goyal family and the entire shareholding was transferred to Mehta-Lamba family. Therefore, the original subscribers of shares of respondent No. 1 Company were totally changed. 25. The "Memorandum of Association" of a company limited by shares mandatorily prescribes in "Table-B" (Table-B of 1956 Act and Table-A of 2013 Act deals with Company Limited by shares) of the Companies Act mandatorily prescribed that the names, addresses, description, occupation of subscribers shall be given in Memorandum of Association. In this case as the original subscribers of shares were changed in 1994, there was material alteration in the "Memorandum of Association" of respondent no. 1 Company. 26. It was also contended that there was an alteration in "Articles of Association" of respondent no. 1 Company as well. The last column of "Articles of Associ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss consent and approval of the petitioner; (iii) Law recognises a categorical distinction between a Company and its share-holders, who have otherwise no right whatsoever on the assets of a company. Reliance was placed on Constitution Bench decision in Bacha F. Guzdar, Bombay v. CIT AIR 1955 SC 74, which observed as follows: "A share-holder has got no interest in the property of the company though he has undoubtedly a right to participate in the profits if and when the company decides to divide them". And "the Company is a juristic person and is distinct from the share-holders. It is the Company which owns the property and not the shareholders". (iv) In a relationship between the Lessor and a Lessee, it is the Lease-Deed which is paramount and whose contents are binding on the parties. (v) A unilateral guideline issued by the Lessor cannot be held applicable or binding to a lessee. On the face of the lease deed, such guideline has no binding force. Further, change in share-holding was admittedly done with the express consent/approval of the appellant; and (vi) Any fee, penalty, compensation, damages or transfer charges to be claimed by the lessor from the lessee must neces ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the foreign company, i.e. "M/s Rotar Ltd." towards settling the debt. In this background the appellant alleged that there is change in "debt-equity ratio" resulting alteration in the "capital structure" of the company. 33. There is larger public interest involved in incorporating alteration in "Capital Structure" in Clause 3(p) of the lease deed. There are many instances where the company takes loan from third parties on the security and land and structure allotted to them in lease, keeping in dark the lessor which amounts to incurring liabilities on the property without the knowledge of the lessor. In this case also there was huge amount of debt on the company as it took loan on land and building/factory from different financial institutions. Therefore, there is public interest involved for which consent of lessor was necessary. M/s Enrich Engineering Works Pvt. Ltd 34. In this case also similar submission has been made by the parties. 35. It is not in dispute that the huge plot of about 40, 489 & 8.35 sq. yards in the industrial area of Rai Bareilly (U.P.) was allotted by appellant-Corporation to M/s Tyres and Tubes Company Pvt. Ltd. As the said company suffered heavy loss ..... 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