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SUPREME COURT OF INDIA
SUDHANSU JYOTI MUKHOPADHAYA, V. GOPALA GOWDA, JJ.
U.P. STATE INDUSTRIAL DEV.CORPN. LTD. APPELLANT
VS.
MONSANTO MANUFACTURES (P) LTD. & ANR. RESPONDENTS
CIVIL APPEAL NO.2731 OF 2005 C.A.NO.1310 OF 2006 C.A.NO.1318 OF 2015 (@SLP(C) NO.16404 of 2006) C.A.NO. 1319 OF 2015 (@SLP(C) NO.5838 of 2008)
Decided On : 29-01-2015
(a) Government contract – Lease Clause 4(h) and 3(p) r/w Clause 6.01(E) and (F) of Guidelines of UPSIDC – Corporation allotting please on lease basis to the Company – Company changing entire list of shareholders and Directors – MoA and AoA completely changed – Valuable commercial property transferred from one family to another for financial gains – Not permissible under clause 3(p) – High Court ought not to have interfered in the matter. (Para 27)
U.P. Twiga Fiberglass Limited
(b) Government contract – Lease Clause 4(h) and 3(p) r/w Clause 6.01(E) and (F) of Guidelines of UPSIDC – Company changing its Capital structure by taking huge loan on land leased to it by respondent Corporation – Ought to be done after bringing the matter to the knowledge of the Corporation – Consent of the Corporation was necessary – Interference by High Court unwarranted. (Para 33)
AIR 1955 SC 74 – Referred
M/s Enrich Engineering Works Pvt. Ltd
(c) Government contract – Lease Clause 4(h) and 3(p) r/w Clause 6.01(E) and (F) of Guidelines of UPSIDC – Clause 6.01(E) & (F) – Change of hand of the asset including the land in question by transfer – Corporation rightly charging transfer fee – Interference by High Court unwarranted. (Para 36)
M/s Super Tannery (India) Ltd.
(d) Government contract – Lease Clause 4(h) and 3(p) r/w Clause 6.01(E) and (F) of Guidelines of UPSIDC – Property law – Respondent company merely a licensee – Not entitled to transfer the licensed property – Even if Company merges with another Company of the same family, it is transfer – Appellant rightly demanding transfer fee – Interference by High Court unwarranted. (Para 38, 40)
Facts of the case:
The Government of Uttar Pradesh acquired land in various districts and conveyed the same to the appellant-U.P. State Industrial Development Corporation 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 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.
Finding of the Court:
High Court ought not to interfere in these cases.
Result: Appeal allowed.
JUDGMENT
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 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:
Whether by the alleged action the respondents-Companies directly or indirectly had transferred or parted with their interest/benefit under their respective agreements for licence.
Whether the respondents-Companies violated the terms as contained in Clause 4(h) of agreement and Clause 3(p) of their lease deed and Whether the respondents-Companies are liable to pay transfer fee for alleged transfer of its own interest.
5. The facts leading to the cases are as follows:-
Monsanto Manufactures Private Ltd.(A Company registered under the Companies Act, 1956)
The respondent-Company applied to the appellant-Corporation for grant of lease of plot of land bearing no.38/1-A situated in Sahibabad Industrial Area, Site No.4 of Tehsil and District Ghaziabad admeasuring 14,533 square yards for the purpose of constructing an industrial unit.
The appellant-Corporation after receiving part premium of the plot land executed an agreement for licence on 12th June, 1978 in favour of the respondent-Company. The possession of the land was given on 12th June, 1978. After construction of the building of the factory, the respondent-Company and the appellant-Corporation executed a deed of lease on 5th September, 1979 for a period of 90 years. Later, the appellant-Corporation vide letter dated 12th April, 1994 asked the respondent-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 Rs.25,51,781/- from respondent-Company towards transfer levy charges as the original shareholders of the respo
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