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2014 Supreme(Del) 2381
High Court of Delhi
G. ROHINI & RAJIV SAHAI ENDLAW, JJ.
Delhi State Industrial & Infrastructure Development Corporation Ltd.
Versus
M/S. K.G. Electronics Pvt. Ltd. & Another
LPA. No. 391 of 2014
Decided on: 07-11-2014
For the Appellant:Anusuya Salwan & Vikas Sood Advocates.
For the Respondent: R2, Bandana Shukla for Ruchi Sindhwani, Swati Yadav, Official from DSIIDC.
The legal entity of a company is distinct from its shareholders and directors, and the transfer of shares does not change the legal entity of the company.
Headnote:
Perpetual Lease - Industrial Plot Allotment - Guidelines for Management of Industrial Land in Delhi - [186(2012) DLT 395, Delhi Development Authority Vs. Mahabir Prasad and Sons, Rama Association (P) Ltd. Vs. Delhi Development Authority, Salomon Vs. Salomon and Co. Ltd., State Trading Corporation Vs. C.T.O., Ram Chand and Sons Sugar Mills Vs. Kanhaya Lal Bhargava, Electronics Corporation of India Ltd. Vs. Secretary, Revenue Department, Bacha F. Guzdar Vs. Commissioner of Income Tax, Bombay, Scindia Potteries and Services Ltd. Vs. Deputy Land and Development Officer, Government of India] - The court discussed the Guidelines for Management of Industrial Land in Delhi and their provisions regarding charging unearned increase, transfer of shares in a private limited company, and the applicability of such guidelines to the respondent. The court also referred to previous judgments to establish the legal principles regarding perpetual lease, unearned increase charges, and the legal entity of a company.
Fact of the Case:
The respondent sought execution of a perpetual lease for an industrial plot allotted in 1987. The appellant demanded unearned increase charges for executing the lease due to changes in shareholding and directorship of the respondent company. The Single Judge allowed the writ petition, finding that the guidelines did not entitle the appellant to claim unearned increase from the respondent.
Finding of the Court:
The court dismissed the appeal, holding that the judgment of the Single Judge was based on settled legal principles and could not be considered as non-precedential. The court also rejected the appellant's contentions regarding the entitlement to transfer shares and directorship under the Relocation Scheme.
Issues: The issues involved the entitlement to execute a perpetual lease, the applicability of guidelines for charging unearned increase, and the impact of changes in shareholding and directorship on the execution of the lease.
Ratio Decidendi: The court relied on previous judgments and legal principles to establish that the guidelines did not support the appellant's claim for unearned increase charges due to changes in shareholding and directorship of the respondent company.
Final Decision: The appeal was dismissed, and no costs were imposed on the appellant.
Rajiv Sahai Endlaw, J.
1. This intra-court appeal impugns the judgment dated 10th December, 2013 of the learned Single Judge of this Court, allowing W.P.(C) No.2324/2013 preferred by the respondent no.1 by directing the appellant to execute the perpetual lease of plot of land bearing no.A-102 at Narela Industrial Complex in favour of the respondent no.1/writ petitioner within six weeks thereof subject to the respondent no.1/writ petitioner completing all the formalities.
2. Though this appeal was accompanied with an application for condonation of 110 days delay in filing thereof, however being prima facie of the opinion that the appeal does not deserve to be entertained, we, without entertaining the controversy whether the appellant discloses sufficient cause for condonation of delay in filing the appeal, heard the counsel for the appellant on merits and reserved judgment on the aspect of admission. We may notice that the counsel for the respondent no.2 Commissioner of Industries, Government of National Capital Territory of Delhi (GNCTD), a non-contesting respondent, appeared on advance notice.
3. The facts are not in dispute. The respondent no.1/writ petitioner through its two Directors Sh. Devender Kumar Gupta and Sh. Dinesh Kumar Gupta, in or about the year 1987, applied to the appellant for allotment of an industrial plot in Narela area and the appellant allotted plot no.A-102 at Narela Industrial Area to the respondent no.1/writ petitioner and in or about the year 1995 handed over the possession of the said plot of land to the respondent no.1/writ petitioner on perpetual lease basis. The said perpetual lease was to be executed subsequently. The work of execution of the lease deed by the respondent no.2 in favour of the respondent no.1/writ petitioner was taken up in the year 2007 when the respondent no.2 asked the respondent no.1/writ petitioner to furnish details of changes in the shareholding and directorship of the respondent no.1/writ petitioner company so as to calculate the unearned increase charges if applicable. Finding that shares of the respondent no.1/writ petitioner, subsequent to allotment and being put in the possession of the plot of land aforesaid, had been transferred to persons other than family members and further finding that there had also been change in directorship of the respondent no.1/writ petitioner, the work of execution of the perpetual lease was held up. The respondent no.2 in or about the year 2009-10 transferred the Narela Industrial Area to the appellant. The appellant finally demanded unearned increase charges of Rs.15,08,436/-from the respondent no.1/writ petitioner for executing the perpetual lease deed and impugning which demand, the writ petition from which this appeal arises was filed.
4. The learned Single Judge has allowed the writ petition as aforesaid finding/observing/holding:
(i) that at the time of allotment of the land to the respondent no.1/writ petitioner company, the brothers Sh. Devender Kumar Gupta and Sh. Dinesh Kumar Gupta were its only shareholders and Directors; however as on 30th September, 2004, the said Sh. Devender Kumar Gupta and Sh. Dinesh Kumar Gupta held only 28.814% share each and Smt. Anju Gupta, wife of Sh. Devender Kumar Gupta held 14.124% shares, Smt. Rekha Gupta, sister-in-law of Sh. Devender Kumar Gupta and Sh. Dinesh Kumar Gupta held 14.124% shares and one Sh. Tarun Gupta held the remaining 14.124% shares;
(ii) that Smt. Rekha Gupta and Mr. Tarun Gupta who together held 28.248% in the respondent no.1/writ petitioner company were not family members as defined in the Guidelines for Management of Industrial Land managed by the Delhi Government; however as on 29th September, 2007, Sh. Devender Kumar Gupta and Sh. Dinesh Kumar Gupta were again the only shareholders of the respondent no.1/writ petitioner company;
(iii) that in the aforesaid Guidelines for Management of Industrial Land in Delhi, there is no provision for charging unearned increase wh
