U.P.State Industrial Dev.Corpn. Ltd vs Monsanto Mfg. (P) Ltd. & Anr

2. The Government of Uttar Pradesh acquired land in various districts and conveyed the same to the appellant-U.P. State Industrial Development Corporation (hereinafter referred to as, 'the Corporation' for short) for the purpose of setting up industrial area. The Corporation thereafter divided the said land into plots for leasing the same to industrial units. The respondents- Companies, applied to the appellant-Corporation for grant of lease. On receiving part premium of the plot, the appellant executed an agreement for licence and later executed lease deed in favour of the respondents- Companies. Later the appellant-Corporation made an allegation that the respondents-companies' share holders transferred their company/their shares to new shareholders without the consent of appellant-Corporation, which amounted to transfer of interest, for which transfer levy is required to be deposited. Demand notices were issued by the appellant-Corporation to the respondents-Companies. Those demand notices were challenged by the respondents-Companies in different writ petitions or suits which were allowed by the Division Bench of the High Court of Judicature at Allahabad by impugned judgments.

5. The facts leading to the cases are as follows:-

7. The appellant-Corporation executed an agreement with respondent- Company followed by lease deed dated 27th May, 1977 by which the Corporation leased plot nos.9 and 23-A admeasuring approximately 1,10,926 square meters of land situated at Sikandrabad Industrial Area, District Bulandshahr, Uttar Pradesh to the respondent-Company. The lease was executed for 90 years. In the year 1994, the respondent-Company suffered heavy losses to the tune of Rs.42 crores. Therefore, the respondent- Company sold almost its entire shares including shares of its promoters and shares lying with financial institutions to a foreign company known as "Rotar India Ltd.". As entire shares of the respondent-Company transferred to Rotar India Ltd., the promoters of the said Company were replaced by new promoters/Directors.

9. The Corporation vide its letter dated 26th April, 1995 requested the respondent-Company to supply list of new shareholders, list of new Directors and copies of Memorandum of Association and Articles of Association. However, it is alleged that respondent-Company neglected the same and refused to supply the documents. The appellant-Corporation thereafter vide letter dated 15th May, 1995 asked the respondent-Company to pay a sum of Rs.24,95,835/- towards transfer levy as there was disposal of controlling interest in the venture by the existing allottee. The said demand of transfer levy, according to appellant, was as per lease deed and guidelines of the Corporation pertaining to re-constitution and transfer.

11. The Civil Judge, Bulandshahr vide judgment and decree dated 23rd January, 1999 allowed the suit and directed the appellant-Corporation not to charge transfer levy from the respondent-Company. The Civil Judge, held that the respondent-Company is a legal person and disposal of its majority shares in the name of a foreign Company namely Rotar India Ltd. does not change the legal status of the Company and therefore, there is no transfer.

12. The appellant-Corporation being dissatisfied with the aforesaid order filed Civil Appeal No.45 of 1999 in the Court of District Judge, Bulandshahr which was dismissed vide order dated 15th July, 2000. Thereafter, the appellant-Corporation filed Second Appeal No.1425 of 2000 before the High Court of Judicature at Allahabad and the same dismissed by impugned judgment dated 24th October, 2005.

13. One M/s Tyres & Tubes Co. Pvt. Ltd. having its registered office at Scooters India Ltd. Premises, Sarojini Nagar, PO Lucknow through its Directors Shri S.Sounderarajan s/o of late Shri S. Srinivasan applied to appellant-Corporation for allotment of plots of land. After agreement which was followed by lease deed dated 21st December, 1976 the appellant- Corporation allotted industrial plot no.A-4 and A-5 admeasuring approximately 40,489 square yards and 8.36 square yards respectively situated at site no.2, Rai Bareilly, Uttar Pradesh to M/s Tyres & Tubes Company Pvt. Ltd. The lease was for 90 years. M/s Tyres & Tubes Co. Pvt. Ltd. suffered heavy losses and pursuant to its winding up, Allahabad High Court vide judgment and order dated 9th January, 1996 appointed Official Liquidator. The Official Liquidator sold the properties of M/s Tyres & Tube Co. Pvt. Ltd. including right and interest on the land in question to respondent M/s Enrich Engineering Pvt. Ltd. The said sale was affirmed by the Allahabad High Court vide order dated 9th February, 2000. Pursuant to the order of the Allahabad High Court dated 10th September, 2003 the Official Liquidator issued sale certificate dated 12th March, 2004 in favour of respondent-Company.

14. The appellant-Corporation was not a party in the winding up proceedings nor was any notice issued to the appellant-Corporation by the Official Liquidator. On knowing about transfer of the rights of the original allottee- M/s Tyres & Tubes Co. Pvt. Ltd., the appellant- Corporation demanded transfer levy amounting to Rs.3,80,621.25/- from respondent-Company. According to the appellant, such demand was made from the respondent-Company, as the said company had purchased M/s Tyres & Tubes Co. Pvt. Ltd., with all its assets and liabilities.

16. The appellant-Corporation entered into an agreement dated 10th October, 1990 with one M/s Super Agro Tech Ltd. for setting up of specialty paper unit in industrial plot nos.A-9 and A-10 admeasuring approximately 45,080/- square meters in Industrial Area Unnao Site-2. No right whatsoever in regard to transfer of said plots were given to the licensee M/s Super Agro Tech Ltd. The possession of the said plots was handed over on 25th January, 1991 and subsequently lease was also executed. M/s Super Agro Tech Ltd. thereafter did not set up any specialty paper unit and no investment was made. According to the appellant-Corporation said licensee M/s Super Agro Tech Ltd. with a view to enrich itself started amalgamation proceeding with the new company namely M/s Super Tannery (India) Ltd.-respondent herein. The said amalgamation was a mutual understanding between M/s Super Agro Tech Ltd. and M/s Super Tannery (India) Ltd. The Allahabad High Court vide order dated 9th May, 1997 sanctioned the amalgamation in Company Petition No.32 of 1997. Though the land belongs to the appellant-Corporation, it was not made a party to the said petition. According to the appellant-Corporation, the amalgamation does not create any right whatsoever on respondent-M/s Super Tannery (India) Ltd. over industrial plots in question and the said two plots cannot be legally transferred to the new Company i.e. M/s Super Tannery (India) Ltd.

17. The respondent-Super Tannery (India) Ltd. made an application for the transfer of the said industrial plot. On such request, the appellant-Corporation demanded transfer levy from M/s Super Tannery (India) Ltd. for transfer of the said industrial plot. However, no amount was deposited. The Corporation by notice dated 3rd November, 2001 demanded a sum of Rs.34,23,954.51/- as on that date from M/s Super Tannery (India) Ltd. towards transfer levy. The aforesaid notice was challenged by the respondent-M/s Super Tannery (India) Ltd. by filing a writ petition being Civil Misc. Writ Petition No.18535 of 2002 before Allahabad High Court and the same was allowed, by the impugned judgment dated 22nd August, 2007 following the decision rendered in another case.

U.P. Twiga Fiberglass Limited

And "the Company is a juristic person and is distinct from the share- holders. It is the Company which owns the property and not the share- holders".

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.

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.

M/s Enrich Engineering Works Pvt. Ltd

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.

42. For the reason aforesaid, we set aside the impugned judgments dated 11th May, 2004 in C.W.P.No.5094 of 2000, 24th October, 2005 in Second Appeal No.1425 of 2000, 27th April, 2006 in Civil Misc.W.P.No.56982 of 2005 and 22nd August, 2007 in C.M. Writ Petition No.18535 of 2002 passed by the High Court of Judicature at Allahabad and allow the appeals.

JANUARY 29, 2015