The main legal point established in the judgment is that the transfer of leasehold rights from a partnership firm to a private limited company constituted a transfer or assignment within the meaning of the Lease Deed clauses, thereby incurring liability for unearned increase.

RAJIV SAHAI ENDLAW, J.

1. This intra court appeal impugns the judgment dated 10th June, 2005 of the learned Single Judge of this Court allowing W.P.(C) No.2546/2003 filed by the respondent M/s Mahalaxmi Saw Mills Pvt. Ltd. by quashing the communications dated 5th September, 2001 and 26th March, 2003 of the appellants Land & Building Officer (L&DO) and issuing a mandamus directing the appellants to mutate the leasehold rights in the land underneath property No.3/13, Industrial Area, Kirti Nagar, New Delhi from the name of Mahalaxmi Saw Mills, a partnership firm to the name of the respondent, a private limited company, without treating the same as a sale of the property.

2. The appeal, vide order dated 9th January, 2007, was admitted for hearing and the statement of the counsel for the respondent that he would not press for compliance of the direction/writ issued by the leaned Single Judge was recorded. The appeal, when came up for hearing on 28th January, 2010 was dismissed for non-prosecution. After a long delay of more than four years, the appellants applied for restoration of the appeal and which was allowed vide detailed order dated 19th January, 2015. We heard the counsel for the parties and reserved judgment giving them liberty to file written submissions. Though the counsel for the respondent has filed written submissions, no written submissions have been filed by the appellants.

3. The facts which are not in dispute are as under:

(i) the lease of land admeasuring 207 sq. yards bearing No.3/13, Industrial Area, Kirti Nagar, New Delhi was granted by the President of India to one Sh. Jagjodh Singh vide Lease Deed dated 31st December, 1962 for a term of 99 years commencing from 1st August, 1962;

(ii) Clauses (b) & (c) of the said Lease Deed are as under:

“(b) The Lessee shall before any assignment or transfer of the said premises hereby demised or any part thereof obtain from the Lessor approval in writing of the said assignment or transfer and all such assignees and transferees and the heirs of the Lessee shall be bound by all the covenants and conditions herein contained and be answerable in all respects therefor.

(c) The Lessee can transfer the land after obtaining the permission of the Lessor aforesaid and the Lessor will not share any unearned increment in the value of the land (being the difference in the premium paid by him to the Lessor and the market value of the land then prevailing) for permitting such transfer. The Lessor will, however, be entitled to claim and recover the unearned increment in the value of land in the event of any subsequent transfer of the land by a transferee the amount so to be recovered being 50% of the unearned increment in the value of the land.”

In the case of any subsequent transfer the Lessor shall have the pre-emptive right to purchase the premises as hereby demised and all the buildings and structures standing thereon, after deducting 50% of the unearned increment as aforesaid.

(iii) the lessee Sh. Jagjodh Singh sought and was granted permission vide letter dated 14th July, 1966 to transfer the leasehold rights in the said property to M/s Mahalaxmi Saw Mills, a partnership firm of (1) Sh. Moolji Gopal, (2) Sh. Bhanji Moolji, (3) Sh. Panna Lal Moolji, (4) Sh. Bhanji Nathu and (5) Sh. Harji Moolji and the leasehold rights were accordingly transferred in the name of M/s Mahalaxmi Saw Mills;

(iv) the constitution of the said M/s Mahalaxmi Saw Mills changed from time to time but no intimation thereof was given to the appellants L&DO as on 7th May, 1986, M/s Mahalaxmi Saw Mills was a partnership firm of (1) Sh. Harji Moolji, (2) Sh. Damodar Moolji, (3) Sh. J.C. Gupta, (4) Smt. Anuradha Gupta, (5) Smt. Maneesha Gupta, (6) Smt. Sushila Gupta and (7) Sh. Satish Gupta;

(v) the aforesaid seven partners of M/s Mahalaxmi Saw Mills on 26th August, 1986 got incorporated the respondent Company and transferred the business, assets and liabilities of partnership firm M/s Mahalaxmi Saw Mills to the r