Vividh Wires Limited vs State Of U P And 2 Others
2023 Latest Caselaw 10136 ALL

HIGH COURT OF JUDICATURE AT ALLAHABAD
 
 

Judgment Reserved on 28.2.2023
 
Judgment Delivered on 06.04.2023
 
Court No. - 39
 

 
Case :- WRIT - C No. - 31046 of 2022
 
Petitioner :- Vividh Wires Limited
 
Respondent :- State Of U P And 2 Others
 
Counsel for Petitioner :- Ashish Kumar
 
Counsel for Respondent :- C.S.C.,Anjali Upadhya
 

 
Hon'ble Mrs. Sunita Agarwal,J.

Hon'ble Manjive Shukla,J.

Heard Shri Ashish Kumar, learned counsel for Petitioner, Ms. Anjali Upadhyay, learned counsel appearing for Respondent Nos. 2 and 3 and learned Standing Counsel appearing for Respondent No. 1.

Supplementary affidavit filed by the counsel for the petitioner is taken on record.

Petitioner Vividh Wires Limited which is a public company has filed writ petition challenging the order dated 17.6.2022 whereby representation submitted by the petitioner pursuant to the order dated 9.3.2022 passed by this Court in Writ Petition No. 35423 of 2021 has been rejected and the notice dated 6.7.2022 whereby the petitioner's company has been directed to deposit the sum of Rs. 61,76,600/- towards charges for change in shareholding of the company (hereinafter referred as CIS charges).

Learned counsel appearing for the petitioner has submitted that neither there is any provision in U.P. Industrial Development Act, 1976 nor in the lease deed which empowers the Respondent Nos. 2 and 3 to impose the liability for charges towards change in shareholding of the company.

Learned counsel appearing for the petitioner has further submitted that Section 7 of the U.P. Industrial Development Act, 1976 categorically provides that the development authority can sell, lease or otherwise transfer any land or building belonging to the authority in the industrial development area on such terms and conditions as it may, subject to any rules that may be made under this Act, thinks fit to impose. Learned counsel for the petitioner has vehemently argued that neither there is any provision in the U.P. Industrial Development Act, 1976 nor there are any rules framed under the said Act which empowers the Respondent Nos. 2 and 3 to impose the liability of charges on the petitioner's company towards change in shareholding of the company.

Learned counsel for petitioner has further submitted that the issue regarding imposition of liability of charges towards change in shareholding of the company has already been thrashed out by this Court in the judgment and order dated 6.9.2003 rendered in Civil Misc. Writ Petition No. 13556 of 2003 (International Hospital Pvt. Ltd. Vs. State of U.P. and others) and judgment and order dated 12.9.2013 rendered in Civil Misc. Writ Petition No. 7852 of 2009 (International Recreation Parks Pvt. Ltd. Vs. State of U.P. and another). Learned counsel for the petitioner has vehemently argued that in the aforesaid decisions this Court has categorically held that the development authority cannot impose liability of charges towards change in shareholding of the company.

It has also been submitted by the learned counsel for petitioner that the NOIDA authority had issued a Notification on 27.10.2010 relying on the clarification issued by the State Government dated 10.10.2010 and thereby it has provided that no charges can be imposed on the company towards the change in shareholding and, therefore, the Respondent Nos. 2 and 3 while rejecting representation of the petitioner and issuing fresh demand notice to the petitioner's company have acted in most illegal manner and the orders impugned in the writ petition cannot be sustained in the eyes of law.

Counter affidavit has been filed on behalf of Respondent Nos. 2 and 3 wherein stand has been taken that the industrial policy has been formulated by the Greater NOIDA Industrial Development Authority which is applicable with effect from the year 2013 and Clause B-3 of the said policy categorically provides that charges for change in shareholding (CIS charge) will be 10 % on 100% change in the shareholding and for less than 100% change CIS charges would be proportionate to the change of shares-holding on pro-rata basis, and since there has been change in shareholding of the petitioner's company, therefore, the company is liable to pay the charges towards the change in shareholding as provided in aforesaid Clause B-3 of the Industrial Policy, 2013. Learned counsel appearing for the Respondent Nos. 2 and 3 has vehemently argued that the aforementioned provision of the Industrial Policy, 2013 has not been challenged by the petitioner in the present writ petition and, therefore, in absence of the challenge to Clause B-3 of the Industrial Policy, 2013 petitioner is not entitled for any relief prayed for in the writ petition and the writ petition is liable to be dismissed.

Learned counsel appearing for Respondent Nos. 2 and 3 has further argued that the judgment dated 6.9.2003 rendered in Civil Misc. Writ Petition No. 13556 of 2003 and the judgment dated 12.9.2013 rendered in Civil Misc. Writ Petition No. 7852 of 2009 are distinguishable on the facts and circumstances of the case and further, in both the writ petitions the provisions of Industrial Policy, 2013 were neither under challenge nor the same have been interfered by this Court. The petitioner, therefore, cannot be given any benefit on the basis of the said decisions as liability on the petitioner has been fixed on the strength of the provisions contained in Clause B-3 of the Industrial Policy, 2013.

Learned counsel appearing for the Respondent Nos. 2 and 3 has further argued that the Section 7 of the U.P. Industrial Development Act, 1976 empowers the development authority to sell, lease or otherwise transfer any land or building belonging to the authority in the industrial development area on such terms and conditions as it may, subject to any rules that may be made under the Act, thinks fit to impose, which means that the authority is empowered to prescribe terms and conditions for sale, lease or otherwise transfer of the land or building either by issuing general guidelines in the nature of industrial policy or by making specific provisions in the lease deed executed between the parties. The provisions made by the authority in respect of the charges payable by a company towards change in shareholding are referable to the power conferred on the development authority under Section 7 of the U.P. Industrial Development Act, 1976 and till such time, it is pleaded and proved that the said provisions in any manner, are contrary to the provisions of U.P. Industrial Development Act, 1976 or any rules framed under the said Act, same cannot be held to be illegal.

In the present case, petitioner nowhere has pleaded that the provisions made in Clause B-3 of the Industrial Policy, 2013 are contrary to the provisions made in the Act or the rules made thereunder, and, as such, the orders passed by the respondents which are impugned in the present writ petition are perfectly legal and valid.

The petitioner in the writ petition has mentioned that it was originally incorporated as ''Taftan Exim Private Limited' and was registered with the Registrar of the companies as a Private Limited Company. Respondent No. 2 launched a scheme for allotment of large group housing/builders residential/industrial plots and M/s Taftan Exim Private Limited had applied for allotment of industrial land. Greater NOIDA Industrial Development Authority, Gautam Budh Nagar allotted Plot no. B-29A and B-30 ad-measuring 6000 Sq. metres in Eco-tech-1, extension, Greater NOIDA on lease of 90 years at the rate of Rs. 1735/- per Sq. metres. Thereafter, the lease deed was executed between Respondent No. 2 and M/s Taftan Exim Private Limited on 6.3.2013 in respect of the aforementioned industrial plots.

It is also noteworthy that the possession of the aforesaid plots was handed over to M/s Taftan Exim Private Limited on 4.12.2009, that is much prior to the execution of the lease deed.

The case of the petitioner is that the name of the original company, i.e. Taftan Exim Private Limited was changed to Vividh Wires Private Limited after intimation to the Registrar of the companies under the original Corporate Identification Number (CIN) and a certificate in that regard was issued on 7.6.2016 by the Registrar of companies. Thereafter, the company which was the private limited company was changed to public limited company on 1.8.2016 and approval in that regard was granted by the Registrar of the companies under Section 18 of the Companies Act, 2013 and the certificate in that regard was also issued on 1.8.2016.

In the year 2016, the petitioner company applied for and intimated to the respondents regarding change in shareholding vide letter dated 28.3.2016 and for that purpose a Demand Draft of Rs. 5,00,000/- was also submitted to Respondent No. 2 and 3 towards process fee. Respondent No. 3 had approved the change in shareholding of the petitioner's company vide letter dated 28.3.2016. Later on, two demand notices dated 10.6.2021 and 8.12.2021 were issued whereby demand was made from the petitioner's company in respect of the charges for change in shareholding in view of Clause B-3 of Industrial Policy, 2013.

The petitioner challenged the notices dated 10.6.2021 and 8.12.2021 by filing Civil Misc. Writ Petition No. 35323 of 2021 which was finally disposed of by this Court vide order dated 9.3.2022 whereby direction was issued to Respondent No. 2 to decide the representation of the petitioner by reasoned and speaking order. In compliance of the aforesaid order passed by this Court, the Chief Executive Officer of Greater NOIDA Development Authority, Gautam Budh Nagar has decided petitioner's representation by which it has been held that the petitioner's company is liable to pay the charges as per Clause B-3 of Industrial Policy, 2013 towards change in shareholding of the company and thereby representation of the petitioner has been rejected. Thereafter a revised demand notice has been issued on 6.7.2022 whereby petitioner has been directed to deposit CIS charges of Rs. 61,76,000/-. The aforesaid order dated 17.6.2022 and the notice dated 6.7.2022 have been challenged by the petitioner in this writ petition.

We have considered the submissions advanced by the counsels appearing for the parties.

Before considering the arguments point-wise, it is important to have a look over the provisions of U.P. Industrial Development Act, 1976 and provisions contained in the Industrial Policy, 2013.

Section 7 of the U.P. Industrial Development Act, 1976 is extracted below:-

"The authority may sell, lease or otherwise transfer whether by auction, allotment or otherwise any land or building belonging to the Authority in the industrial development area on such terms and conditions as it may, subject to any rules that may be made under this Act think fit to impose."

Clause B-3 of the Industrial Policy, 2013 is extracted as under:-

"Charges for change in shareholding (CIS charge) will be 10% on 100% change in shareholding and for less than 100% change, CIS charges would be proportionate to the change of shares/holding on a pro-rata basis."

From a bare perusal of Section 7 of the U.P. Industrial Development Act, 1976 we find that the said Section 7 in unambiguous terms confers power on the development authority to provide terms and conditions for sale, lease or transfer of any land or building belonging to authority and the only restriction imposed is that the said terms and conditions should not be contrary to any express provision of the Act of 1976 or any provision made in the rules made thereunder. We further find that the Section 7 of the Act, 1976 only confers power to the authority to provide terms and conditions of the sale, lease or otherwise transfer but nowhere restricted that the said terms and conditions can only be provided in the lease deed. We, thus, find that under Section 7 authority can provide specific terms and conditions of the sale, lease or otherwise transfer of any land or or building by formulating Industrial Policy, the Industrial Policy in question i.e. Industrial Policy, 2013 is referable to Section 7 of the Act of 1976. Further we are of the view that the authority while imposing liability of charges towards the change in shareholding of the company has derived the power from the Section 7 of the Act of 1976 and the term and condition of the lease laid therein are also binding on the petitioner apart from the specific terms and conditions which find mention in the lease deed executed between the parties. Learned counsel appearing for the petitioner has not made any submission that the liability of charges towards change in shareholding in any way is contrary either to any provision made in the aforesaid Act of 1976 or the rules framed thereunder. The argument of the learned counsel for petitioner that the imposition of charges on the company towards change in shareholding has been made without there being any legal provision in that regard is misconceived and, is liable to be rejected.

Learned counsel for petitioner has relied upon judgment dated 6.9.2003 rendered by this Court in Writ Petition No. 13556 of 2003 wherein this Court relying on Notification dated 27.10.2010 issued by the authority has recorded a finding that the company is not liable to pay any charges towards change in shareholding of the company. The said judgment is of no help to the petitioner as the authority itself after the aforesaid Notification dated 27.10.2010 has framed a policy, i.e. Industrial Policy, 2013 and therein provision for imposition of charges towards change in shareholding has been made and the said policy was not the subject matter of consideration in the aforesaid judgment. In the facts and circumstances of the said case, the said judgment is not applicable in the case of the petitioner.

Learned counsel for petitioner has also relied on the judgment and order dated 12.9.2013 passed in Civil Misc. Writ Petition No. 7852 of 2009. We find that in Civil Misc. Writ Petition No. 13556 of 2003 the provisions made in Clause B-3 of the Industrial Policy, 2013 were not under challenge, whereas in the instant case, charges have been imposed on the petitioner in view of the provisions contained in the Industrial Policy, 2013. Therefore, in the facts and circumstances of the present case, petitioner cannot get any help from the judgment and order dated 12.9.2013 passed in Civil Misc. Writ Petition No 7852 of 2009.

We have further considered that the case in hand, is not only in respect of the change in shareholding rather the documents filed along with the writ petition and supplementary affidavits clearly reveal that it was not a case of change in the name of the company, but of the complete legal entity. The company has been changed from private limited to public limited company, shareholding of the company has been changed completely. The Memorandum of Association and Articles of Association categorically demonstrate that, in fact, the nature of business to be performed by the subsequent company has been completely changed. The instant case, therefore, cannot be said to be the simple case of change of shareholding.

We are, thus, of the view that till such time the petitioner company challenges the aforementioned Clause B-3 of the Industrial Policy, 2013 and the said clause is interfered by this Court, the petitioner company cannot be absolved from the liability to pay charges towards the change in shareholding of the company and in the present case, there is no such challenge. The claim of the petitioner set out in the Writ Petition is, thus, liable to be rejected.

In view of the aforesaid reasons, we do not find any illegality or infirmity in the order dated 17.6.2022 and the consequential demand notice dated 6.7.2022. The writ petition is, accordingly, dismissed being devoid of merits.

Order Date :- 06.04.2023

Aiman