Estate Officer Ut Chandigarh And Ors vs M/S. Esys Information Technologies ...

2. On 2.1.2008 it came to the notice of the Director, Information Technology that the respondent company namely M/s. Esys Information Technologies Pvt. Ltd., Singapore had transferred a major portion of shares to other company namely, M/s. Esys Global Holdings, Dubai, without informing the appellant or seeking necessary permission as provided in Rule 9 and clause 15 of the allotment letter. Consequently, Director, IT, sought following clarifications from the respondent on 2.1.2008: (i) what is the business plan of the company for its activities; (ii) what are the business activities of M/s. Esys Information Technologies Ltd. from the campus site;

(iii) what was the holding structure of the shareholding of the company at the time of making request for allotment; (iv) what was the holding structure of the company at the time of allotment; and (v) what is the shareholding structure of the company at present. Reply by the respondent was not satisfactory, as such show cause notice was issued on 18.1.2008 by the Estate Officer as to why due to violation of Rule 9 of the Rules and clause 15 of the allotment letter, action be not taken and allotment be cancelled and further why whole or part of the premium, EDC calculated till date of cancellation be not forfeited. The Estate Officer by order dated 24.9.2008 cancelled the allotment and ordered resumption of the site and ordered to forfeit 10% of the total premium, interest earned and other dues payable in respect of the site. Aggrieved by the same, the respondent preferred an appeal under section 10(1) of the Capital of Punjab (Development and Regulation) Act, 1952. The appeal was dismissed vide order dated 14.2.2011 passed by the Chief Administrative Officer, UT Chandigarh. The respondent preferred a revision before the Advisor to Administrator, UT Chandigarh. Same had been dismissed vide order dated 24.9.2008. It is pertinent to mention that the affidavit filed by Mr. Vikas Goel in the High Court of Singapore was placed on record and was referred to in the order passed by the revisional authority. Before the appellate authority, it was argued that the allottee company had transferred a major portion of shareholding changing its control to another company i.e. Esys Global Holdings, Dubai which in turn sold its stake to Teledata Informatics Ltd., a Chennai based company.

3. The High Court by the impugned judgment and order has allowed the writ petition. This Court while entertaining the special leave petition had passed an order on 16.7.2015 directing the respondent to file a counter affidavit containing certain information specified in the order. Following order was passed by this Court on 16.7.2015 :

4. In short, in the counter affidavit of the respondent, the shareholding pattern has been given as on 1.6.2006, 31.3.2007, 3.5.2007 and it is not disputed that M/s. Esys Information Technologies Pvt. Ltd., Singapore had transferred 1,97,55,188 shares to Esys Global Holdings, Dubai owned by one Niraj Goel. It is further stated in the counter filed by the respondent that EZY Global Holding FZE, Dubai has not further transferred the shares to Teledata Informatics Ltd., Chennai. It is also stated that on 29.11.2006 a shareholder agreement was executed between Mr. Vikas Goel, M/s. Esys Information Technologies Pvt. Ltd. Singapore and M/s. Teledata Informatics Ltd., Chennai. This agreement could not be implemented due to the fraud perpetrated upon Mr. Goel and M/s. Esys Information Technologies Pte., Singapore by M/s. Teledata Informatics. Following are the cases pending inter se parties :

5. Along with the rejoinder, the appellant has filed two affidavits filed by Mr. Vikas Goel in the High Court of Republic of Singapore in Suit No.854/2006/H. It is submitted that the holding company was the Singapore Company and Dubai and India based companies were its subsidiary companies. The allotment was made in favour of M/s. Esys Information Technologies. M/s. Esys, Singapore could not have transferred assets as per clause 15 of the allotment order for a period of ten years. The stake of Dubai company by virtue of 95% shares transfer has raised to 98%. M/s. Esys Global Holdings Ltd., Dubai further sold these stakes to Teledata, a Chennai based company. Facts stated in Affidavit dated 2.7.2008 of Mr. Vikas Goel which was part of the record of the Estate Officer have been concealed in spite of the categorical order dated 16.7.2015 passed by this Court. The way in which the transaction has been made is a transfer which is not permissible as per rules and conditions of allotment letter. In fact there is transfer of plot from one company to the other company. The respondent is using the land for increasing valuation of assets and thereby improving financial worth. The holding company and its subsidiaries are two distinct legal entities. This Court should lift the veil so as to unearth mala fide, dishonest and fraudulent design of the respondent. Teledata is claiming to have acquired M/s. Esys Singapore and showing the plot in question as its asset.

6. It was submitted on behalf of the appellant that transfer without permission was not permissible as per Rule 9 and clause 15 of the allotment letter for ten years. It is not a case which is covered by Condition No.15- b of the allotment letter. It is not only a case of transfer to Dubai company but transfer of assets to Teledata, a Chennai based IT company. Affidavit of Mr. Vikas Goel mentions various facts though it was filed before the Estate Officer as well as the DIT Office. However, in spite of the direction issued by this Court the respondent has not filed it nor has stated the facts mentioned in the same in the counter affidavit and wrong averments have been made. Reliance has been placed by the appellant on certain portions of the affidavit of Mr. Vikas Goel indicating that there had been transfer of assets of subsidiary in India. The actual facts regarding transfer of shares to Teledata have been suppressed. Teledata had published unaudited results mentioning that Teledata along with its subsidiary is setting up a six acre TBO facility in Rajeev Gandhi Information Technology Park in Chandigarh. The affidavit filed by Mr. Vikas Goel in Singapore court indicates that he has signed an agreement to sell 51% stake to Teledata. Vikas Goel wanted to dupe Teledata and therefore surreptitiously transferred shares to Esys Global Holding, Dubai. It is a clear cut violation of the rules. Esys India had ceased its operations after 2010 as all its businesses were closed down and all the employees were laid off. The company has no business transaction, no employees, never deposited any PF nor filed sales-tax returns. It is a clear case of transfer of property. Transfer means transfer in any form whatsoever and howsoever styled. A prayer was made by respondent on 24.9.2007 to change the zoning plan. The prayer was declined on 25.10.2007 and a letter dated 25.10.2007 was issued. No construction had been made till the cancellation. No step had been taken to raise the construction also. Thus, their intention was never to start the construction.

7. It was submitted on behalf of the respondent that there is no violation of clause 15 of the allotment letter. The allottee remains the same. Clause 15 is not attracted as transfer of site is not to the other entity. It is not a case of allottee company being merged with other company or a case of split. The allottee company was subsidiary of M/s. Esys Singapore. The shares have been transferred to M/s. Ezy Global Holding, Dubai, company owned by Mr. Niraj Goel, brother of Mr. Vikas Goel. There is no occasion to lift the corporate veil in the instant case. There was no transfer of shares of the allottee by M/s. Ezy Dubai to M/s. Teledata, Chennai. The respondent is a reputed company and has not indulged in a speculative land deal.

13. In view of the aforesaid statement made in the affidavit of Mr. Vikas Goel, it is apparent that in spite of the clear direction made by this Court, the respondent has suppressed the facts with respect to its deal with M/s. Teledata Ltd. There is concealment of material facts by the respondent in spite of having been directed to disclose the full facts in the counter affidavit by specific order passed on 16.7.2015. It is apparent from the affidavit dated 2.7.2008 of Mr. Vikas Goel extracted above that in order to raise the fund to pay to its creditors, M/s. Esys Singapore considered its option to raise it through the sale of its assets and subsidiaries and M/s. Esys Global Holding Ltd. was prepared to buy subsidiaries including M/s. Esys India based on book value. It has been mentioned in para 17 that sale of its subsidiaries to M/s. Esys Global Holding meant that these liabilities were transferred to the buyer. Thus there is sale of assets and subsidiaries and the denial that there is no sale is incorrect statement. In the affidavit dated 24.7.2008 in paras 10 and 11, it is apparent that purchase by M/s. Esys Dubai of the assets of M/s. Esys Singapore and its subsidiaries after taking regulatory approvals which were required for transfer of shares. Thus, under the garb of transfer of shares, the respondents have completed the sale and is creating a screen to conceal this aspect. Deal with Teledata is also apparent from the aforesaid paras 19 to 21 of the affidavit of Mr. Vikas Goel. Unfortunately, the respondent has concealed the facts with respect to Teledata and has not come out with clean hands. It is also apparent that Teledata in its unaudited results has published that Teledata along with its subsidiary M/s. Esys Technologies is setting up a six acre TBO facility in Rajeev Gandhi Information Technology Park in Chandigarh.

28. After extensive discussions with potential investors, Esys Singapore decided that Teledata’s offer contained the best terms which Esys could secure in the aftermath of the SEC Announcement. To facilitate the investment of Teledata (which was and is currently listed on the Mumbai Stock Exchange), in late December, 2006, I transferred my 19,999,998 shares in Esys Singapore to Rainforest. In exchange, I received shares in Rainforest.

x x x x x

21. As part of the Teledata deal, and as previously set out in my 2nd Affidavit, I transferred all my shares in Esys Singapore and in Esys Holdings Pte Ltd (collectively referred to herein as “Consideration Shares”) to Rainforest, and received Rainforest shares in return. On completion of the transaction, as set out in paragraph 29 of my 2nd Affidavit, I owned 58,888,000 shares in Rainforest (representing 49% of Rainforest) and Teledata owned 61,120,000 shares in Rainforest (representing 51% of Rainforest).

22. Teledata paid valuable consideration to Rainforest to subscribe for its shares in Rainforest. All of Rainforest’s assets, including the subscription monies received from Teledata, and the Consideration Shares, are subject to the control of the Board of Rainforest, which is controlled by Teledata as the majority shareholder. As minority shareholder of Rainforest, I am certainly in no position to dissipate its assets.”

16. Resultantly, we have no hesitation in setting aside the order passed by the High Court. The appeal is allowed. Parties to bear their own costs.

Date : 11/05/2016 This appeal was called on for pronouncement of JUDGMENT today.

For Appellant(s) Mr. Chandra Prakash,Adv.

For Respondent(s) Mr. Tarun Gupta,Adv.

Hon'ble Mr. Justice Arun Mishra pronounced the judgment of the Bench comprising Hon'ble Mr. Justice V. Gopala Gowda and His Lordship The appeal is allowed in terms of the signed Reportable Judgment.

Pending application(s), if any, stand(s) disposed of.