2018 (7) TMI 1763 - HC - Companies Law

Winding up petition - sale by Official Liquidator pursuant to orders of the Court - differential premium - whether Transfer of leasehold rights which is an asset of a company in liquidation, either by the BIFR or the Company Court, would qualify as a formal transfer and accordingly no differential premium would be payable on the same? - Held that - An aid to interpretation is that sales under BIFR schemes, according to Shri Chawan, are formal transfers. Therefore, under SICA (Sections 17(3) and 18(11)) in a restructuring scheme to revive the company, a sale of MIDC lease/assets by the Operating Agency was to be treated as a formal transfer. It would be wholly anomalous and illogical to treat a sale in winding up as a non formal voluntary sale. Yet another aid to interpretation is the use of the expression ordinary course of business in connection with transfers by the process of merger, amalgamation, demerger. This indicates that where such transfers, even if sanctioned by the court, are part of business (i.e. commerce and not necessarily day to day business alone) then such transfers of MIDC land will be voluntary and shall attract differential premium. The position of the company in winding up is the very opposite of ordinary course of business because the company is not carrying on business and is being wound up instead. Hence, it would be reasonable and logical to treat this situation differently under the extant MIDC circulars as forming part of the category of formal/involuntary transfers that do not attract differential premium. In the circumstances, as holding that a sale by Official Liquidator pursuant to orders of the Court will be formal and involuntary transfer, MIDC will not be entitled to any differential premium but only to standard transfer charges. Extension charges - Held that - For MIDC to claim the extension charges upto the date of winding up or even beyond upto the sale of the property, MIDC has to lodge its claim with Official Liquidator. This is because the extension charges have already accrued in favour of MIDC as against differential premium, which will have to be paid and determined, if payable only at the time of considering the transfer application of a transferee. Therefore, for extension charges, Official Liquidator to consider while adjudicating MIDC s affidavit of proof of debt and decide the quantum of extension charges, if any payable and for what period, whether upto the date of winding up or any earlier period or it is continuing. I am not making any observation with regard to extension charges and that can be decided at the appropriate stage. Therefore, (a) hold that this Court will be the Competent Court and has jurisdiction to decide whether MIDC is entitled to claim differential premium and extension charges; (b) in a sale of leasehold rights by Official Liquidator, it will be a formal and involuntary sale and therefore, no differential premium is payable to MIDC by Official Liquidator but only standard transfer charges and (c) extension charges whether payable and to what extent can be decided at the appropriate stage once MIDC lodges its claim with Official Liquidator.

Summary

Issues Involved:
1. Jurisdiction of the Court to decide on MIDC charges.
2. Whether differential premium is payable on the transfer of plots.
3. Whether extension charges are payable on the transfer of plots.
4. Whether the Court is the competent authority to waive extension charges.

Issue-wise Detailed Analysis:

1. Jurisdiction of the Court to Decide on MIDC Charges:
The Court examined whether it had jurisdiction to decide on the charges claimed by MIDC. MIDC contended that only a Civil Court or a Writ Court under Article 226 of the Constitution of India could decide on these charges. The Court, however, referred to Section 446 (2) of the Companies Act, 1956, which confers wide jurisdiction on the Company Court to entertain any suit or proceeding by or against the company, any claim made by or against the company, and any question of priorities or any other question whatsoever, whether of law or fact, which may relate to or arise in the course of the winding up of the company. The Court concluded that it had the jurisdiction to decide the prayer sought in the Official Liquidator's Report.

2. Whether Differential Premium is Payable on the Transfer of Plots:
MIDC argued that differential premium was payable as per its circulars, which categorized transfers into formal and non-formal transfers. According to MIDC, the transfer by the Official Liquidator would be a non-formal transfer, thus attracting differential premium. The Court, however, held that a sale by the Official Liquidator pursuant to orders of the Court is a formal and involuntary transfer. The Court reasoned that the transfer of leasehold rights, which is an asset of a company in liquidation, either by the BIFR or the Company Court, would qualify as a formal transfer, and accordingly, no differential premium would be payable. The Court also noted that the circular dated 12th December 2011 clarified that involuntary transfers pursuant to any order of the Competent Court shall be permitted on recovery of standard transfer charges and not differential premium.

3. Whether Extension Charges are Payable on the Transfer of Plots:
MIDC claimed that extension charges were payable as per its circular dated 10th June 2013. The Court noted that Clause 8 of the circular provided that the Competent Court might order that such extension charges are not to be paid. The Court held that the Company Court is the Competent Court as contemplated by Clause 8 of the circular, which has jurisdiction to consider the question of waiver of extension charges. The Court stated that extension charges had already accrued in favor of MIDC and that MIDC should lodge its claim with the Official Liquidator. The quantum of extension charges, if any payable, would be decided at the appropriate stage.

4. Whether the Court is the Competent Authority to Waive Extension Charges:
The Court held that it is the Competent Court as per Clause 8 of the MIDC circular dated 10th June 2013, which can waive the extension charges. The Court emphasized that the identification of the Competent Court depends on the context of the proceeding in question. In the context of winding up, the Company Court is the Competent Court to decide on the waiver of extension charges.

Conclusion:
The Court concluded that it had jurisdiction to decide on MIDC charges, the transfer by the Official Liquidator is a formal and involuntary transfer, and no differential premium is payable. The Court also held that it is the Competent Court to decide on the waiver of extension charges, and MIDC should lodge its claim with the Official Liquidator for adjudication.