Case: U.P.State Industrial Dev.Corpn. Ltd Vs. Monsanto Mfg. (P) Ltd.

transfer in the Companys assets, immovable or otherwise. It is equally not a transfer in fact, since the provisions of the Lease-Deed do not recognise/nor prohibit any such transfer.vii) The Guidelines and in particular Clause 6.01(F) is not applicable in the present case as there has been no "disposal of controlling interest in the venture by an existing allottee". Undoubtedly, the respondent-company is the "existing allottee" and the respondent-company has not disposed its "controlling interest in the venture". In other words, there is no transfer even upon a literal construction of the Guidelines. 30. It is not in dispute that the appellant-Corporation on 27th May, 1977 allotted huge plot measuring 1,10,926 sq. mtrs. to respondent no. 1 Company in the industrial area, Sikandarabad, Bulandshehar on nominal amount. The respondent no. 1 clearly admitted that it had a huge debt of Rs.13,14,00,000/- the different financial institutions and, therefore, it sold shares of company, its own shares, shares of promoters and shares of financial institutions to the foreign company, namely, "M/s Rotar Ltd." 31. The appellant-Corporation in written statement filed in Suit No. 876/1996 clearly and categorically mentioned that the shares of original promoters were transferred in the name of new promoters of foreign company and therefore, the appellant-Corporation demanded list of new shareholders and Memorandum and "Articles of Association" of the Company. The change of original promoters shares to the new promoters means the subscribers of shares were changed and, therefore, there is material change in the "Memorandum of Association" and "Articles of Association" of the Company. 32. The appellant-Corporation clearly brought on record that there is change in "Capital Structure" of the company and the "Capital structure" in common parlance means "debt-equity ratio". In this case admittedly there a huge amount of Rs. 13,14,00,000/- was funded by the foreign company, i.e. "M/s Rotar Ltd." towards settling the debt. In this background the appellant alleged that there is change in "debt-equity ratio" resulting alteration in the "capital structure" of the company.33. There is larger public interest involved in incorporating alteration in "Capital Structure" in Clause 3(p) of the lease deed. There are many instances where the company takes loan from third parties on the security and land and structure allotted to them in lease, keeping in dark the lessor which amounts to incurring liabilities on the property without the knowledge of the lessor. In this case also there was huge amount of debt on the company as it took loan on land and building/factory from different financial institutions. Therefore, there is public interest involved for which consent of lessor was necessary. M/s Enrich Engineering Works Pvt. Ltd 34. In this case also similar submission has been made by the parties. 35. It is not in dispute that the huge plot of about 40, 489 & 8.35 sq. yards in the industrial area of Rai Bareilly (U.P.) was allotted by appellant-Corporation to M/s Tyres and Tubes Company Pvt. Ltd. As the said company suffered heavy losses, on 9.1.1996 the company Judge of Allahabad High Court appointed Official Liquidator and perused High Courts Order on 12.3.2004 the said company was sold to M/s Enrich Engineering Works Pvt. Ltd., by the Official Liquidator. 36. Learned counsel for the respondent submitted that it was a case of reconstitution and therefore payment of transfer fee does not arise. However, such submission can not be accepted in view of Clause 6.01(E) & (F) of the guidelines. The fact that there is a change of hand of the asset including the land in question by transfer. Therefore, the respondent is liable to pay transfer fee. M/s Super Tannery (India) Ltd. 37. Learned counsel for the appellant submitted that the huge plot of 45080 sq. mtrs. in Kanpur was allotted to M/s Supre Ago Tech Ltd. For establishing and running a "Specialty Paper Industry". In this case, only a "License Agreement" dated 10.10.1990 was executed by UPSIDC and the admitted fact on record is that no lease deed was executed by UPSIDC with M/s Super Agro Tech. Ltd. 38. In view of the above, M/s Super Agro Tech Ltd. was merely a licensee and as per the license agreement dated 10.10.1990 it had no authority whatsoever to transfer the said industrial land to M/s Super Tannery (I) Ltd. 39. On the other hand, according to the learned counsel for the respondents, due to various constraints over head costs and financial hardship company became non viable and the major production activities was not feasible to run the company. In order to avoid the future problem a scheme of amalgamation was prepared as per the provisions of the Companies Act, seeking amalgamation under Chapter V of the Companies Act. A joint application was filed before the Allahabad High Court. The High Court vide order dated 9.5.1997 allowed the petition for amalgamation and sanctioned the scheme of amalgamation and ordered that M/s Super Agro will be merged into M/s Super Tannery (India) Ltd. 40. In the present case it has not been denied that respondent company M/s Super Tannery (India) Ltd. and the other company Super Agro Tech. Ltd. are family held companies of the same family having common Directors/Promoters. Pursuant to the order of amalgamation by the High Court the plot of land in question namely A-9, A-10, Industrial Area Unnao Site-II which was allotted to Super Agro Tech. Ltd. became the asset of the respondent company M/s Super Tannery (India) Ltd. As per Amalgamation Scheme, all the property, rights and power of Super Agro Tech. Ltd., having its office at 184/170, Jajmau Kanpur was transferred without further act or deed to M/s Super Tannery (India) Ltd. Thus it is clear that by the order of the Court the premises in question was transferred in favour of the other Company.41. In view of the aforesaid facts as noticed in each case, we hold that the appellant rightly issued notice demanding transfer fee from each of the respondents and there was no reason for the High Court to interfere with the same.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]24. In the present case the entire shareholding of Goyal family headed by Mr. Amar Nath Goyal in the said company was transferred to the Mehta-Lamba Family. The entire list of shareholders, Managing Director and Board of Directors was provided by Monsanto to the appellant-Corporation vide letter dated 7.5.1994. The record shows that the original subscribers of shares were members of Goyal family and the entire shareholding was transferred to Mehta-Lamba family. Therefore, the original subscribers of shares of respondent No. 1 Company were totally changed.25. The "Memorandum of Association" of a company limited by shares mandatorily prescribes in "Table-B" (Table-B of 1956 Act and Table-A of 2013 Act deals with Company Limited by shares) of the Companies Act mandatorily prescribed that the names, addresses, description, occupation of subscribers shall be given in Memorandum of Association. In this case as the original subscribers of shares were changed in 1994, there was material alteration in the "Memorandum of Association" of respondent no. 1 Company.26. It was also contended that there was an alteration in "Articles of Association" of respondent no. 1 Company as well. The last column of "Articles of Association" also mandatorily provides for giving names, addresses and description of subscribers. In this case, the subscribers of shares has been completely changed from the Goyal Family to Mehta-Lamba Family and hence there was material alteration of "Articles of Association" of the respondent no. 1 Company.27. In this case, the ownership of a huge Industrial plot measuring 14,533 sq. ft. in the prestigious and economically affluent area of Sahibabad (Ghaziabad) has been transferred from Goyal family to the Mehta- Lamba family for material financial gains, by adopting clever means that too without taking written consent of the Lessor i.e. appellant-Corporation. There are many instances/examples in which the lessee gets allotment of huge industrial plots and thereafter sells the same for huge monetary gains. This adversely affects the aims and objectives of appellant-Corporation i.e. the planned development of industrial areas in the State of Uttar Pradesh. The Honble High Court ought not to have interfered in the matter looking into the public interest involved and Clause 3(p) of the lease deed.The appellant-Corporation clearly brought on record that there is change in "Capital Structure" of the company and the "Capital structure" in common parlance means "debt-equity ratio". In this case admittedly there a huge amount of Rs. 13,14,00,000/- was funded by the foreign company, i.e. "M/s Rotar Ltd." towards settling the debt. In this background the appellant alleged that there is change in "debt-equity ratio" resulting alteration in the "capital structure" of the company.33. There is larger public interest involved in incorporating alteration in "Capital Structure" in Clause 3(p) of the lease deed. There are many instances where the company takes loan from third parties on the security and land and structure allotted to them in lease, keeping in dark the lessor which amounts to incurring liabilities on the property without the knowledge of the lessor. In this case also there was huge amount of debt on the company as it took loan on land and building/factory from different financial institutions. Therefore, there is public interest involved for which consent of lessor was necessary.In the present case it has not been denied that respondent company M/s Super Tannery (India) Ltd. and the other company Super Agro Tech. Ltd. are family held companies of the same family having common Directors/Promoters. Pursuant to the order of amalgamation by the High Court the plot of land in question namely A-9, A-10, Industrial Area Unnao Site-II which was allotted to Super Agro Tech. Ltd. became the asset of the respondent company M/s Super Tannery (India) Ltd. As per Amalgamation Scheme, all the property, rights and power of Super Agro Tech. Ltd., having its office at 184/170, Jajmau Kanpur was transferred without further act or deed to M/s Super Tannery (India) Ltd. Thus it is clear that by the order of the Court the premises in question was transferred in favour of the other Company.41. In view of the aforesaid facts as noticed in each case, we hold that the appellant rightly issued notice demanding transfer fee from each of the respondents and there was no reason for the High Court to interfere with the same.