Back
2020 Supreme(Guj) 780
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
Biren Vaishnav, J.
Orient Abrasives Ltd. – Petitioner
Versus
State Of Gujarat – Respondent
R/Special Civil Application No. 7333 of 2020
Decided On : 05-10-2020
Advocate Appeared:
For the Petitioner: VMP LEGAL
For the Respondent: Mr Pavan S Godiawala
Point of Law: As the registered deed of assignment could happen only if there was an eventuality of transfer of the company from one person to another which was not the case on hand as the company remained the same, the insistence of the GIDC that the provisional transfer order stood cancelled with effect from 4.2.2020 and therefore a fresh application for transfer be made is a stand contrary to law
Headnote:
Constitution of India - Article 226 – Registered deed of assignment - Seek financial assistance from financial institutions – Lease Deed - That there is no transfer from one person to another person, inasmuch as, “M/s. Orient Abrasives Limited” has remained as “M/s. Orient Abrasives Limited” - By virtue of cancellation of provisional transfer order by communication on account of GIDC insisting for a deed of assignment treating as an informal transfer, is bad -
Facts of the case: Petitioner is a Public Limited Company engaged in manufacturing of aluminum oxide, abrasive grains, calcined bauxite etc - At its factory in industrial area of GIDC at Porbandar - Company was allotted plot bearing plot on an application made by petitioner - Plot is situated at Ranavav, District Porbandar - Gidc has entered into an indenture of lease granting plot on lease for a period of 99 years with effect - Lease deed had certain clauses such as clauses 2(q) and 2(r) which read as under - Clause 2 (q): NOT TO ASSIGN - That, it will not a transfer, assign, under late or part with possession of demised premises or any part thereof or any interest therein without previous permission of lessor - For purposes of this covenant, any change in construction of lessee shall be deemed to be a transfer by lessee of its interest in demised premises in favour of another person
Findings of the court: Company has suffered a loss inasmuch as because of such insistence it has not been able to avail financial assistance from any financial institution because of permission having been withdrawn - These actions are therefore also contrary to law - Respondent GIDC is directed to grant permission for transfer without insisting for a registered deed of assignment as action of refusing such permission for such transfer without petitioner furnishing a registered deed of assignment is bad - Respondent GIDC is directed to grant permission under Clause 2(r) of lease deed in favour of petitioner Company so that petitioner company can seek financial assistance from institutions on basis of it being a recognized transfer without providing registered deed of assignment –
Result: Petition is allowed.
JUDGMENT :
1. The petitioner – M/s. Orient Abrasives Limited has filed this petition under Article 226 of the Constitution of India for the following prayers:
“18 (A) Your Lordship may be pleased to issue a writ of mandamus or any other appropriate writ or order or a direction declaring that the action of the respondent No.2 - GIDC insisting/compelling for registered deed of assignment from the petitioner No.1 – Company is illegal, invalid and not required in law and further directing respondent No.2 – GIDC to accept the change in transfer of shares in the petitioner – company and grant permission under clause 2(r) of the indenture of lease dated 20.7.1973 to enable the petitioner – company to seek financial assistance from financial institutions;
(B) Pending the hearing and final disposal of the petition, Your Lordships may be pleased to direct respondent No.2 – GIDC to grant permission under Clause 2 (r of the indenture of lease dated 20.7.1973 to enable the petitioner – company to seek financial assistance from financial institution.”
2. The facts, in brief, are as under:
The petitioner is a Public Limited Company engaged in manufacturing of aluminum oxide, abrasive grains, calcined bauxite etc. at its factory in the industrial area of GIDC at Porbandar. The company was allotted plot bearing plot No.400 on an application made by the petitioner. The plot is situated at Ranavav, District Porbandar. The GIDC has entered into an indenture of lease on 20th July, 1973 granting the plot on lease for a period of 99 years with effect from 1-7-1973. The lease deed had certain clauses such as clauses 2(q) and 2(r) which read as under:
“Clause 2 (q): NOT TO ASSIGN:
That, it will not a transfer, assign, under late or part with the possession of the demised premises or any part thereof or any interest therein without the previous permission of the lessor. For the purposes of this covenant, any change in the construction of the lessee shall be deemed to be a transfer by the lessee of its interest in the demised premises in favour of another person. Provided that where the lessee is a body corporate, a change in its Board of Directors or Managing Committee by whatever name called shall not be deemed to be a change in the Constitution of the lessee provided further that where the lessee, for the purpose of constructing a building on the demised premises and/or creation or installation of fixed assets thereof in pursuance of the implementation of the Company's abrasives, plant, is to obtain loan from a Bank or grant permission under Clause 2(r) of the indenture of lease dated 20.7.1993 to enable the petitioner – company to seek financial assistance from financial institution;
Clause 2(r) ASSIGNMENT TO BE REGISTERED WITH LESSOR AND UNEARNED INCREMENT:
In the event of such transfer, assignment, underletting or parting with, there shall be delivered by the lessee at its expense a notice thereof to the Chief Executive Officer or such Officer of the lessor as the lessor may direct within 20 days from the date on which the transfer, assignment, underletting or parting with becomes effective whether by registration thereof under the Indian Registration Act or otherwise, provided that in the event of such transfer, assignment, underletting or parting with 50% of the assessment then due and shall have performed and observed that covenants and conditions herein contained prior to the expiration or determination, of the said term, to remove and appropriate himself all buildings, erection and structures and materials from the demised premises but so nevertheless that the lessee shall deliver to the lessor all land from which such building, erections or structures may have been removed after the same is levelled and put in good order and condition to the satisfaction of the lessor.”
3. Various circulars of the GIDC stipulate a percentage of the fees to be paid by the transferor in the event the transfer falls within the various categories of transfer.
4.
