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TMI Blog2024 (4) TMI 442X X X X Extracts X X X X X X X X Extracts X X X X ..... d the transferee for seeking amalgamation. In a sense, this is an act done by them of their own volition. A similar issue arose for consideration before this Court in the case of DELHI DEVELOPMENT AUTHORITY VERSUS NALWA SONS INVESTMENT LTD. AND ANR. [ 2019 (4) TMI 2009 - SUPREME COURT] . The Court was dealing with a case where the Company Court passed an order of arrangement and demerger. As a result, the plot given on lease to a company was transferred to another company. In paragraph 5 of the decision, this Court had set out the policy instructions regarding charging an unearned increase. This Court was dealing with an order of the Company Judge, which provided that the property of a company shall stand transferred to the respondent before this Court, and therefore, it was a case of transfer to which clause 6(a) of the lease deed will be attracted. Clause 6(a) in the lease subject matter of the said case was identical to clause II(4)(a) of the perpetual lease in the present case. This Court also held that clause 2(d) of the policy determining unearned income was attracted in the case of transfer due to demerger. The same principles will apply to a merger, and an unearned increase ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ates Ltd, which is the present appellant. Thus, in short, the appellant is a company created as a result of the amalgamation of the erstwhile M/s. Jaiprakash Associates Pvt Ltd and M/s. Jaypee Rewa Cement Ltd. In short, the present appellant is the transferee company. 2. An application was made by the appellant to the respondent-Delhi Development Authority (for short, DDA ) for a grant of permission to mortgage the said plots in favour of the Industrial Finance Corporation of India. By the letter dated 14th March 1991, the respondent-DDA demanded an unearned increase value of Rs.2,13,59,511.20. Being aggrieved by the said demand, representations were made by the appellant which were not favourably considered by the respondent-DDA. Therefore, the appellant filed a writ petition before a learned Single Judge of the High Court of Delhi. By the order dated 30th January 2003, the learned Single Judge dismissed the said petition filed by the appellant by relying upon a decision a Division Bench of the same High Court in the case of Indian Shaving Products Limited v. Delhi Development Authority Anr. 2001 SCC Online Del 1123: 2002 1 AD (Del) 175 Being aggrieved by the decision of the learn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court of Delhi in the case of Delhi Development Authority v. Nalwa Sons Investment Ltd. Anr (2020) 17 SCC 782 . He also relied upon a decision of the Division Bench of the High Court of Delhi in the case of Vijaya C. Gursahaney v. Delhi Development Authority Ors 1994 SCC Online Del 306 : 1994 II AD (Delhi) 770 . 5. The learned senior counsel appearing for the respondent-DDA invited our attention to the order passed by the High Court of Judicature at Allahabad on 30th July 1986. He submitted that clause (1) of the order provides that the transferor company's properties, rights and powers in respect of the property described in the first, second and third parts of schedule II shall be transferred without any further act or deed to the transferee company. He would, therefore, submit that the demand for unearned increase was lawful. CONSIDERATION OF SUBMISSIONS 6. We have given careful consideration to the submissions. In the perpetual leases, clause (II)(4)(a) was incorporated, which reads thus: II. The Lessee for himself, his heirs, executors, administrators and assigns covenants with the Lessor in the manner following that is to say:- .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e properties, rights and powers of the Transferor Company specified in the first, second and third parts of the Schedule II hereto and all other properties, rights and powers of the Transferor Company be transferred without further act or deed to the transferee company and accordingly the same shall pursuant to section 394(2) of the Companies Act, 1956 be transferred to and vest in the Transferee Company for all the estate and interest of the Transferor Company therein but subject, nevertheless to all charges now affecting the same; and 2. That all the liabilities and duties of the Transferor Company be transferred without further act or deed to the Transferee company and accordingly the same shall pursuant to section 394(2) of the Companies Act, 1956 be transferred to and become the liabilities and duties of the transferee company, and .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. ( emphasis added ) 8. The said plots are a part of the Schedule of the properties referred to in clause (1). Thus, there is a specific clause in the order of amalgamation which holds that the said plots stand transferred from the original permanent lessee to the transferee M/s. Jaypee Re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned by the party by way of allotment. (d) Change from private limited company to public limited company where a private limited company becomes a public limited company under Section 43-A of the Companies Act, 1956. 2. Where unearned increase is to be charged : (a) Addition of outsiders not falling within the family members shall be allowed through a conveyance deed on payment of 50% unearned increase on his proportionate shares. The unearned increase shall be calculated at the market rate prevalent on the date of receipt of the application in the office of the DDA. (b) Substitution of the original allottee/auction-purchasers shall be allowed on payment of 50% unearned increase of his shares in the value of the plot which will be calculated at the market rate. The market rate shall be the rate prevalent on the date of receipt of the application. It is irrespective of the fact whether the lease deed has been executed or not. (c) 50% unearned increase will be charged in respect of proportionate shares of the plot parted with by way of addition, deletion or substitution of partner/partners in case of single ownership or partnership firm and Director/Directors/Shareholders/Sub scribers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the stipulation. This position is reinforced from the contemporaneous instructions issued by the competent authority of the appellant about the manner in which the unearned increase should be charged and from whom such charges should be recovered. That can be discerned from the instructions dated 6-9-1988. 15. Indeed, the said instructions advert to the category of persons from whom no unearned increase should be charged, despite being a case of transfer of the property as mentioned in Clause 1 thereof. The Division Bench of the High Court has relied upon the category mentioned in Clause 1(b). The same reads thus: 1. No unearned increase to be charged: (a)*** (b) In case of conversion of partnership firm into private limited company comprising original partners as Directors/Subscribers/Shareholders. From the plain language of this clause, we fail to fathom how the said clause will be of any avail to the respondents. For, we are not dealing with a case of conversion of a partnership firm into a private limited company as such. The fact that the instructions extricate the category of transfers referred to in Clause 1 of the instructions from the liability of paying an unearned inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clause referred to in the instructions is equally significant. Indeed, the latter merely provides for the mechanism to recover the unearned increase from the original lessee. The fact that the same group of persons or Directors/promoters/ shareholders would be and are associated with the transferee company does not cease to be a case of transfer or exempted from payment of UEI, as envisaged in Clause 6(a) of the lease deed. Rather, Clause 2(d) of the policy, noted above, makes it expressly clear that unearned increase be charged irrespective of the fact that the Directors in both companies are common and the old (parent) company has not changed its name. 18. The fact that it was a case of transfer is reinforced from the order of demerger passed by the Company Judge and once it is a case of transfer, coupled with the fact that the respondents are not covered within the categories specified in Clauses 1(a) to 1(d) of the policy of the appellant, reproduced in para 5 above, they would be liable to pay unearned increase ( UEI ) in the manner specified in Clause 6(a) of the lease deed. The obligation to pay UEI does not flow only from the instructions issued by the competent authority o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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