1995 (11) TMI 319 - HC - Companies Law

Summary

Issues Involved:
1. Jurisdiction of the Court
2. Interpretation of Order Dated October 31, 1984
3. Validity of Transfer and Assignment of Leasehold Rights
4. Payment of Differential Premium
5. Compliance with Transfer Guidelines

Detailed Analysis:

1. Jurisdiction of the Court
The first issue addressed was whether the court had jurisdiction to entertain Company Application No. 261 of 1995. It was contended by respondent No. 1 that the application did not fall within the ambit of section 446 of the Companies Act, 1956, and that the State Bank of Hyderabad, being a secured creditor, was outside the winding-up proceedings. The court found no merit in this contention, stating that section 446 was irrelevant as it dealt with the stay of suits or proceedings, which was not applicable here. Instead, the court relied on section 457(1)(c) of the Companies Act, 1956, which grants the liquidator power to sell the company's property with the court's sanction. The court emphasized its jurisdiction to issue necessary directions to effectuate the sale of the company's assets, including leasehold rights.

2. Interpretation of Order Dated October 31, 1984
Respondent No. 1 argued that the order dated October 31, 1984, did not exempt the applicants from paying the differential premium. The court examined clause 3 of the order, which restricted the transfer and assignment of the lease to the transferee alone and required a fresh application for any further transfer. The court clarified that this was the first transfer by the official liquidator in favor of applicant No. 2 as a nominee of applicant No. 1, and not a further transfer. Therefore, the clause did not apply, and respondent No. 1 was bound by its decision not to charge any premium for this transfer.

3. Validity of Transfer and Assignment of Leasehold Rights
The court noted that applicant No. 1 had paid the entire consideration amount and interest for the transfer of assets, including leasehold rights. The official liquidator was directed to execute the transfer deed in favor of applicant No. 2. The court rejected respondent No. 1's argument that applicant No. 2 was incorporated to evade the transfer fee, stating that respondent No. 1 failed to prove any circumvention or fraud. The court found it just to impose reasonable conditions on the applicants before granting effective relief.

4. Payment of Differential Premium
Respondent No. 1 demanded a differential premium of Rs. 65 lakhs for the transfer of leasehold rights. The court examined the transfer guidelines issued by respondent No. 1, which stipulated that no differential premium was payable for formal transfers, only a standard transfer fee. The court applied these guidelines by analogy and directed the applicants to pay the standard transfer fee of Rs. 10 per square meter, amounting to Rs. 3,27,600, instead of the differential premium.

5. Compliance with Transfer Guidelines
The court imposed conditions based on the transfer guidelines to ensure compliance:
- The official liquidator was directed to execute the transfer deed within four weeks.
- The applicants were required to pay the standard transfer fee and submit the necessary documents for the transfer.
- Applicants Nos. 1 and 2 were to file an undertaking to maintain their holding-subsidiary relationship for at least two years.
- Applicant No. 1 was to provide a written guarantee for the performance of applicant No. 2's obligations for two years.
- The applicants were to bear all costs related to the transfer, including stamp duty and registration charges.

The court concluded by directing the official liquidator to act on an authenticated copy of the order and expedited the issuance of a certified copy. There was no order as to costs.