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IN THE HIGH COURT OF DELHI
Talwant Singh, J.
Frigorifico Allana Private Limited - Appellant
Versus
East Delhi Municipal Corporation - Respondent
O.M.P.(I) (COMM.) 60 of 2021, I.A. 2366-2368 of 2021 and O.M.P.(I) (COMM.) 61 of 2021, I.A. 2375-2377 of 2021
Decided On : 16-02-2021




The court ruled that a retrospective transfer date in a lease agreement is invalid, confirming the necessity for timely notices regarding lease terminations and transfers.

Headnote:(A) Arbitration and Conciliation Act, 1996 - Section 9 - Lease Agreement - Appellant sought extension for transfer delay after EDMC concluded new tender process; respondent argued for immediate compliance based on Clause 10.2(b) which stipulates divestment upon transfer date. Divergence in notice periods highlighted. Courts find petitioner effectively informed through ongoing tender process; no formal termination process required. Extension granted until 4th March, 2021 for asset transfer. (Paras 9 and 10)

(B) Contract Law - Lease Agreement interpretation - Court confirmed necessity of timely communication from lessor regarding crucial dates, stating retrospective notification invalid. Obligations for asset handover emphasized, yet allowed for rectifications. (Paras 8 and 9)

Facts of the case:
The appellant challenged the EDMC's 2nd February, 2021 order, asserting rights to operate the Ghazipur Slaughter House due to the retrospective transfer date of 20th January, 2021 fixed by the EDMC without sufficient notice. Significant capital investments and workforce implications were highlighted.

Findings of Court:
The court found that the appellant was aware of the tender process and held the EDMC responsible for improper notice. The transfer date does not hold retrospectively but must be from when the notice was served, extending the applicable timeline accordingly.

Issues: The primary concerns were the validity of the transfer date fixed by EDMC and any obligation for a notice period before asset transfer.

Ratio Decidendi: The court determined that fixed notice was essential for fairness and that EDMC's retrospective determination of the transfer date was unjust.

Result: Petitions allowed with the divestment process extended to 4th March, 2021.

ORDER

1. The present matter has been taken up for hearing in physical Court. Both these petitions have been taken up together for adjudication as the office order assailed in both these petitions is the same; which is office order dated 2nd February, 2021 by which the respondent, East Delhi Municipal Corporation (EDMC), directed for handing over/taking over of Ghazipur Slaughter House and other related facilities from the petitioner w.e.f. 18th February, 2021. The impugned office order is reproduced here under:

    "No. 23/DVS/EDMC/2021

    To,

    The General Manager (North)

    M/S Frigorifico Allana Pvt Ltd

    A 15, Site-IV, Industrial Area, Sahibabad,

    District: Ghaziabad (U.P) PIN 201010

    Ph No: 0120-2895411, 2896159, Fax No. 0120-2895147

OFFICE ORDER

    Sub:- Regarding handing over/taking over of Ghazipur Slaughter House, Carass ulitization cum rendering plant including live stock markets and other facilities to M/s Qureshi International DS-Max-Fresh N Frozen Consortium through Dr. Kuldip Singh, Dy. Dir (VS)/Incharge Ghazipur Slaughter House/Plant Manager on behalf of the Commissioner, EDMC

    Sir,

    The Ghazipur Slaughter House was leased out to M/S Frigorifico Allana Pvt. Ltd. (M/s FAPL) w.e.f. 04.08.2009 by erstwhile MCD through tender process for 10 years. The carcass utilization cum rendering plant was also leased out to M/s FAPL from 13.08.2010 for a period of 5 years initially and further extended from 13.08.2015 upto 03.08.2019 to be coterminous w.e.f. leasing out of Ghazipur Slaughter House (upto 03.08.2019). The first extension of Ghazipur Slaughter House and carass utilization cum rendering plant given to M/s FAPL w.e.f. 04.08.2019 to 03.02.2020. The second extension was given to FAPL w.e.f. 04.02.2020 to 03.05.2020 and the third and last extension was given to M/s FAPL w.e.f. 04.05.2020 to 03.05.2022 or till finalization of tender whichever is earlier.

    As you aware the tender was opened on 03.09.2020 and financial bids were opened on 17.12.2020 at 04:00 PM and tender was finalized. The EDMC have signed the lease agreement on 19.01.2021 between Dr. Kuldip Singh Dy. Director (VS)/Incharge Ghazipur Slaughter House/ Plant Manager on behalf of the Commissioner, EDMC and Ms. Yousuf Mujahed (leading member of consortium) Managing Director on behalf of new lessee M/s Qureshi International DS-Max-Fresh N Frozen Consortium.

    Therefore, your extension of lease agreement for operation and maintenance of Ghazipur Slaughter House and carcass utilization cum rendering plant and other facilities have been ended over on 19.01.2021. Since the fresh agreement between EDMC and new lessee has been signed.

    As per article 10.2(b) of lease agreement between M/s FAPL and erstwhile MCD dated 04.08.2009 the transfer date i.e., 20.01.2021 has been decided. So that M/s FAPL cannot legally operate the plant after 20.01.2021 (transfer date). Now the EDMC has the right to take the possession of the project and project facilities immediately from M/s FAPL after the transfer date i.e., 20.01.2021.

Article 10.2 (b) is as under:

    "(b) The Divestment of all rights, title and interest in the project and project facilities shall be deemed to be complete on the transfer date but no later than 30 (thirty) days thereafter, by when all the requirements of clause (I) to (XII) above shall be fulfilled. The plant Manager shall on such date issues a compliance certificate, with a copy thereof endorsed to the MCD, which shall have the effect of consulting evidence of divestment by the Licensee of all of its rights, title and interest in the project and the vesting thereof in the MCD or its nominee, as the case may be pursuant thereto."

    1. Dr. Kuldip Singh, Dy. Dir (VS)/Incharge Ghazipur Slaughter House/Plant is requested to facilitate/provide two rooms to new lessee M/s Qureshi International DS-Max-Fresh N Frozen Consortium inside the premises/campus to be utilized by their officers and staff for preliminary working and planning as per norms and conveniences.

    2. M/s FAPL will be bound

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