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SUPREME COURT OF INDIA
A.M. Khanwilkar, Ajay Rastogi, JJ.
Delhi Development Authority – Appellant(s)
Versus
Nalwa Sons Investment Ltd. and Anr. – Respondent(s)
Civil Appeal No. 4260 of 2019 (Arising out of SLP(Civil) No. 29201 of 2014)
Decided on : 24-04-2019
Facts of Case:
Seminal question involved in present appeal is: if original lessee (respondent No.1, a public limited company) in respect of plot given on lease by appellant, transfers the same to another public limited company, an alter ego of former, consequent to an order of arrangement and demerger passed by Company Judge, then whether it is liable to pay 50% unearned increase (UEI) on the market value of plot to appellant (lessor).
Findings of Court:
Fact that same group of persons or directors/promoters/shareholders would be and are associated with transferee company does not cease to be a case of transfer or exempted from payment of UEI, as envisaged in clause 6(a) of Lease Deed. Unearned increase be charged irrespective of the fact that directors in both companies are common and old (parent) company has not changed its name.
Result : Appeal allowed.
JUDGMENT
A.M. Khanwilkar, J.
Leave granted.
2. The seminal question involved in the present appeal is:
if the original lessee (respondent No. 1, a public limited company) in respect of the plot given on lease by the appellant, transfers the same to another public limited company, albeit an alter ego of the former, consequent to an order of arrangement and demerger passed by the Company Judge, then whether it is liable to pay 50% unearned increase (UEI) on the market value of the plot to the appellant (lessor) ?
3. Briefly stated, in an auction conducted by the appellant, respondent No.1 (former name Jindal Strips Limited) was allotted a commercial plot in Bhikaji Cama Place, New Delhi, on 23rd March, 1993. Possession of the plot was handed over to respondent No.1 on 6th September, 1993 and a Perpetual Lease Deed dated 28th September, 1993, was executed by the appellant in favour of respondent No.1. It is apposite to reproduce stipulation 6(a) of the said Lease Deed, which reads thus:
6. (a) The Lessee shall not sell, transfer, assign or otherwise part with the possession of the whole or any part of the Commercial Plot except with the previous consent in writing of the Lessor which he shall be entitled to refuse in his absolute discretion.
PROVIDED that in the event of the consent being given, the Lessor may impose such terms and conditions as he thinks fit and the Lessor shall be entitled to claim and recover a portion of the unearned increase in the value (i.e. the difference between the premium paid and the market value) of the Commercial plot at the time of sale, transfer assignment, or parting with the possession, the amount to be recovered being fifty per cent of the unearned increase and the decision of the Lessor in respect of the market value shall be final and binding:
PROVIDED FURTHER that the Lessor shall have the preemptive right to purchase the whole property or any part thereof that may be subject of sale, transfer, assignment or otherwise parting with the possession as the case may be, after deduction fifty percent of the unearned increase as aforesaid.
PROVIDED FURTHER that notwithstanding the limitations and conditions as mentioned in sub-clause 6(a), the lessee may sell or transfer the floor space constructed on the plot subject to the permission of the Lessor in writing on payment of Rs.100/- for each flat/floor space for the first sale/transfer, for subsequent sale/ transfer the lessor may on payment of proportionate 50% of the unearned increase (i.e. the difference between the premium already paid by the purchase/transferor and the market price of the time of sale transfer towards the portion of the land) grant permission to the sub-lessee/transferor for such subsequent sale/transfer of the floor space to be transferred. Prior permission of the lessor for such second and subsequent sale/transfer of floor space shall be subject to the conditions of getting the Deed of Apartment and the sub-lease (as defined under the Delhi, Apartment Ownership Act, 1986) executed by the lessee in favour of such floor space buyers/transferee.
PROVIDED FURTHER that the lessee shall be required to intimate the first list of the floor space buyer/transferees giving full details of name, address and quantum of floor space to the Lessor, simultaneously with the grant of completion certificate. However, completion certificate shall be issued only on furnishing the valid list of first purchaser of floor space alongwith copies of deed of apartment duly executed with each one of them. The grant of permission by the Lessor to the Lessee for transfer of floor space or subsequent transfer of floor space to another persons, shall not absolve the lessee from violation of the terms & conditions of the lease. The Lessee shall also be responsible for making all arrangements as are necessary for maintenance of the building including but without limitation affecting the fire fighting system and the common services."
(emphasis supplied)
4. Respondent No.1
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