Calcutta High Court
Mageba Bridge Products Ltd. & Anr vs The West Bengal Small Industries ... on 8 April, 2021
IN THE HIGH COURT AT CALCUTTA
CIVIL APPELLATE JURISDICTION
ORIGINAL SIDE
BEFORE: HON'BLE MR. JUSTICE HARISH TANDON
&
HON'BLE MR. JUSTICE KAUSIK CHANDA
APO 446 OF 2015
WITH
WP 933 OF 2013
In the matter of:
MAGEBA BRIDGE PRODUCTS LTD. & ANR.
-VS-
THE WEST BENGAL SMALL INDUSTRIES DEVELOPMENT
CORPORTATION LTD.
Mr. Ratnanko Banerji,Sr. Adv.
Mr. Debnath Ghosh, Adv.
Mr. Sushovit Dutta Majumder,Adv.
Ms. Pubali Sinha Chowdhury,Adv.
... For the Appellant.
Mr.Jaydip Kar, Sr.Adv.
Mr.Kamal Kr. Chattopdhyay, Adv.
Mr. T.Ali,Adv.
... For the Respondent
Judgment On: 08.04.2021
Harish Tandon, J.
Several issues were raised in the instant appeal
touching upon the demand of premium by the
respondent no.1 in granting the lease for 99 years in
respect of the plot no. J-49 on acquisition of the
interest by virtue of the sanction of the scheme of
amalgamation and the methodology of ascertaining
such premium without giving the credit to the value of
the structure to the extent of 30% despite having
accepted in earlier demand.
The background of the litigation is required to be
adumbrated before we embark upon the issues raised
before us. In order to set up the industrial hub and its
development within the State of West Bengal, the
Government of West Bengal decided to let out the plots
of land for industrial purposes to various intending
industrialist.
One Arvind Fabrications Pvt. Ltd applied before
the Government signifying its intention to take the plot
of land on a long-term lease which was subsequently
agreed upon and by virtue of a deed of lease dated 24th
August 1973, the Governor of the State of West Bengal
granted a lease in respect of plot no. J-49 in the
industrial estate for a period of 99 years commencing
from 1st day of January 1973, at an annual rent of the
land reserved therein. The said lease deed contained a
specific clause that the lessee shall not assign,
underlet or part with possession of the demised
premises or any part thereof without first obtaining the
written consent of the Government. However, the
lessee was permitted to mortgage or otherwise charge
or hypothecate the lease hold interest in the land to
the Life Insurance Corporation of India or any bank or
financial corporations but only for the purpose of
raising or securing any loan or overdraft or other
financial accommodation in connection with the
business carried on by the lessee at the demised
premises. The said lessee applied before the Registrar
of Company for change of its name under Section 21 of
the Companies Act 1956 which was duly granted with
effect from 22nd December, 1987 and the second
certificate of incorporation was issued by the Deputy
Registrar of Companies, West Bengal, Kolkata.
In the meantime, by virtue of the several
government orders the administrative control of the
Industrial estate at Baltikuri comprising the said plot
no. J-49 was transferred to the West Bengal State
Industrial Development Corporation Limited, the
respondent no.1 herein, since the name of the lessee
was changed to Shree Fabrications Pvt. Ltd by an
order of the Registrar of Companies. A further lease
deed was executed on 4th April, 2008 by the
respondent no.1 in favour of the said Shree
Fabrications Pvt. Ltd for the residuary period of the
original deed of lease dated 24th August, 1973
containing the identical clause that the said Shree
Fabrications Pvt. Ltd shall not assign, underlet or part
with possession of the demised premises without
obtaining the prior written consent of the respondent
no.1. Subsequently, an agreement for assignment was
executed between the Shree Fabrications Pvt. ltd and
the METCO Group engineers Private Limited whereby
and whereunder the said lessee assigned the residuary
period of the lease infavour of the assignee i.e.,
METCO Group Engineers Pvt. Ltd in respect of the plot
no. J-49 at Baltikuri. The said deed of assignment was
executed on 19th June, 2008, on the same day two
applications were made one by the assignor and the
other by the assignee to the respondent no.1 seeking
consent for assignment in terms of the clause
embodied in the lease deed. By a letter dated 22nd
May, 2009 the respondent no. 1 considered and
allowed the prayer for assignments/ transfer of the
plot no. J-49 at Baltikuri subject to the payment of Rs.
18,10,083 as transfer fees payable by demand draft/
pay order/ bankers cheque within thirty days from the
issue of the said letter. It was further indicated that
upon a payment of such transfer fees the assignee
shall also pay the stamp duty, registration charges
and the legal expenses involved for execution of the
lease deed for such remaining period. The assignee
thereafter caused the letter dated 19.06.2009 to the
respondent no.1 requesting for revisitation of the
transfer fees and extension of time to arrange for
payment thereof.
Amidst the pendency of the prayer for
review/revisitation of the transfer fees for extension of
time to make the payments thereof, an application was
made on 26th June, 2009 before the High Court at
Calcutta to sanction a scheme of amalgamation
between the said assignee company and the present
appellant. The said scheme provides that all the assets
and the properties, rights, entitlement and interest of
the transferor company would vest with the transferee
company i.e., the present appellant on and from the
appointed date i.e., 1st November, 2007. It is pertinent
to record that before such scheme of amalgamation got
sanctioned from this court the METCO Group
Engineers Pvt. Ltd deposited the said transfer fee on
2nd July, 2009 with the respondent no.1 in respect of
plot no. J-49. The respondent no.1 in turn issued a
letter dated 29.07.2009 to METCO Group Engineers
Pvt. Ltd granting permissive possession of the said
shed for a period of thirty days subject to the
execution and registration of the lease deed. While the
execution and registration of the further lease deed
was pending, the application for sanction of the
scheme for amalgamation was allowed by this Court
on 26th June, 2009 and the certified copy thereof was
obtained on 31st July, 2009. Despite having deposited
the transfer fees as demanded by the respondent no.1,
a reply was given by the respondent no. 1 giving the
break up of the details of the said amount charged as
the transfer fees wherefrom it appears that the 30% of
the total value of the transfer fees was deducted
therefrom as the lessee i.e., the transferor got
ownership of the said shed. It was for the first time
indicated in the said reply that the said METCO Group
Engineers Pvt. Ltd shall be entitled to have the lease
for a period of 99 years instead of the residuary period
of the lease. The present appellant thereafter issued a
letter dated 31st August, 2009 to the respondent no.1
disclosing the sanction of the scheme of the
amalgamation by this Court with a request to take
note of such changes.
The said letter though relied upon by the
present appellant on its meaningful reading appears to
have been restricted to the other sheds baring the
shed no. J-49 which is the subject matter of dispute in
the instant appeal. Be that as it may, subsequently the
respondent no.1 demanded the list of the present
share-holders and the share holding pattern of the
present appellant which was duly replied to. Upon
compliance of all the requisitions having made
suddenly a letter dated 31st May 2011, was given to
the present appellant demanding a transfer fees of
Rs.33,65,721/- in respect of the shed no. J-49 from
the said METCO Group in favour of the present
appellant.
The aforesaid demand is the substratum of the
instant litigation and the writ petition came to be filed
challenging the various letters in which the demands
were raised. The Single Bench dismissed the writ
petition as the claim raised by the present appellant
does not stand both on fact as well as on law.
The learned Advocate appearing for the appellant
submits that after the application for sanctioning the
scheme of amalgamation is allowed by the High Court
the transferor company merged with the transferee
company and such act being by operation of law the
respondent no.1 cannot charge the transfer fees. In
other words, it is sought to be contended that the
merger of the transferor company with the transferee
company by operation of law neither tantamounts to
assignment nor transfer and therefore no transfer fees
can be levied for the same. It is further contended that
while determining the transfer fees the methodology
adopted by the respondent no.1 would evince that the
30% of the total amount was allowed to be deducted as
the ownership of the shed remained with the lessee
which did not appear to have taken note of in the
subsequent demand raised by the respondent no.1. It
is further contended that the application seeking
permission to transfer was pending on the date of the
sanction of the scheme and therefore what was
transferred under such scheme is the application
seeking a permission to transfer and not the transfer
of the lease itself; therefore, the charging of any
amount on a contemplated transfer of the lease or the
shed is not permissible and placed reliance upon a
Division bench judgment of this Court in Castron
Technologies Limited-Vs- Castron Mining Limited
reported in 2013 (5) CHN 553.
Per contra the learned Advocate appearing for the
respondent no.1 submits that there was a prohibition
of assignment of the lease reserved in the lease deed
without the prior permission of the respondent no.1.
Since the respondent no.1 has permitted the transfer
and demanded the fees for such transfer, it cannot be
questioned in the writ jurisdiction. It is vehemently
submitted that the petitioner accepted and paid the
transfer fees in respect of the other sheds held by the
lessee, even after the scheme of amalgamation was
sanctioned by this court and having accepted such a
position, he cannot take a rebound and challenge the
demand of the transfer fees in respect of the present
plot/shed. It is further submitted that even if the
scheme of amalgamation is sanctioned by the High
Court, it does not erase the concept of transfer of the
immovable property vis-à-vis the lessor. It is further
contended that, in fact, more than 30% amount out of
the total transfer fees so determined has been
deducted and therefore the contention that the same
has not been considered is not legally sustainable. It is
however contended that the Single Bench have taken
note of such fact and rejected the contention of the
present appellant by giving proper reasons thereof
which doesnot require any interference in the instant
appeal.
The state has a negligible role as they adopt the
stand of the respondent no.1 in its entirety and it
would be a mere repetition of the submissions
advanced by the State.
As indicated above, several questions have been
raised touching upon the incidents of the
amalgamation having allowed by the High Court and
the methodology of determining the transfer fees and
not permitting the deductions while demanding the
transfer fees in respect of the first incident of transfer.
It admits no ambiguity that the lease is an
incident of transfer of enjoyment of the immovable
property in view of section of 105 of the Transfer of
Property Act. The undisputed facts as narrated
hereinabove are explicit, clear and expounded the real
estate of affairs concerning the dealing of the demised
premises. Neither in the writ petition nor before us an
issue is raised whether the respondent no.1 was
within its competence to charge the fees for the
permission to be granted but it hovers around the
incident of the scheme of amalgamation having
sanctioned by the High Court and the manner in
which the determination of the transfer fees having
made. A distinction has to be drawn between an
involuntary transfer and the voluntary transfer. In the
former case there is no element of act of the parties as
such transfer is affected by operation of law. On the
other hand, in the case of later situation if by act of
parties, the incident of transfer can be visualized and
seen with certainty whether such transfer vis-à-vis the
lessor remained binding is a question to be answered.
In case of General Radio & Appliances Co. Ltd.
& Ors.-Vs- M.A Khader (Dead) By Lrs. reported in
1986 (2) SCC 656. The apex court has held that the
vesting of the immovable property of the transferor
company with the transferee company by virtue of the
scheme of amalgamation having sanctioned by the
High Court attracts the element of transfer vis-à-vis
the lessor, despite the fact that the transferor company
loses its legal entity or existence.
Both the transferor company and the transferee
company voluntarily approached the court seeking
sanction of the scheme of amalgamation on the basis
of an agreement having entered into in this regard and
by no stretch of imagination, the lessor can be said to
be a part thereof. It is certainly a voluntary act of the
parties choosing the amalgamation and seeking the
sanction by the Court competent in this regard. It is
definitely a case of voluntary transfer and not
involuntary transfer and therefore even the scheme of
amalgamation is allowed by the High Court it does not
bind the lessor who may not choose the transferee
company to be its lessee. Since the lessee have
demanded the transfer fees for granting such
permission, the competence thereof has not been a
center of debate in the instant case. The transferee
company cannot raise any objection thereto simplicitor
on the ground that the incident of amalgamation is an
involuntary transfer.
An interesting point is raised that what was
transferred was the application seeking permission to
transfer and not the transfer of the demised premises
or the lease which is required to be considered in the
perspective of the Division Bench judgment relied
upon the appellants in case of Castron Technologies
(supra). The aforesaid case relates to a coalmine and
the mining lease having granted in favour of the
Castron Technologies belonging to Agarwalla family.
Pursuant to an agreement amongst the members of
the family, the lease of the coal mine was granted in
favour of the Castron Technologies Ltd with stipulation
that and the directors thereof would assign and
transfer the same in favour of the Castron Mining ltd.
Pursuant to the said agreement, an application for
sanction of the scheme for amalgamation of the
Castron Technologies Ltd with the Castron Mining Ltd
was filed on 08.03.2002. however, the mining lease
was executed in favour of the Castron Technologies
Ltd on 18, June 2002 and the scheme for
amalgamation was subsequently sanctioned on
13/05/2003. The said scheme of amalgamation
indicated the appointed date as 31st of October 2001.
After the sanction of the said scheme, an application
for recall was taken out and an argument was
advanced therein that even after the sanction of the
scheme, the mining lease was not transferred in favour
of the transferee company as at the relevant point of
time, the application seeking permission to transfer of
the mining lease was pending and therefore what was
intended to be transferred under the scheme is the
application and not the mining lease itself. The
argument was centered around on the scope of
recalling the scheme of amalgamation sanctioned by
the court at the behest of the transferor company and
while answering the same the Division Bench held:-
"29. In the present case the Scheme of
Arrangement was jointly submitted before the
Company Court for necessary orders in March
2002. Under the Scheme the parties agreed that
the C.M.L would be entitled to pursue and derive
the benefit of applications submitted by C.T.L for
the grant of a mining lease upon the Scheme
being made effective. The mining lease was
granted in favour of C.T.L on 18th June 2002, and
was registered in favour of C.T.L on 1st July 2002.
Notices were addressed to the Ministry of Coal,
Government of India as also to the Government of
Jharkhand in January 2003, indicating that an
application had been filed in this Court for
confirming the scheme of Arrangement between
the parties herein whereby the mining division of
C.T.L was being transferred to C.M.L on 28th April,
2003 the Central Government informed the Court
that it had no objection to the Scheme. The
Scheme was sanctioned by this Court only
thereafter, on 13th May 2003, a deed of
rectification has also been executed in June 2009
changing the name of the lessee on the mining
lease to C.M.L.
30. We are of the view that the application for
the mining lease was transferred and not the
mining lease itself. Such a transfer did not
require the sanction of the government. It is only
if a mining lease is to be transferred that a prior
sanction is required. Admittedly, the Scheme was
sanctioned with effect from 31st October 2001,
when there was no mining lease in favour of C.T.L.
Therefore, the inevitable inference is that the
application for the mining lease was transferred
under the Scheme."
The aforesaid observation came in the light of the
argument advanced before us that such transfer
offends the provision contained in Rule 37 of the
Mineral Concessions Rules and therefore once the
mischief is shown there is no impediment to recall the
scheme of amalgamation. In the backdrop of the said
perspective, the aforesaid observations were made
which in our view has no nexus to the present dispute
arisen in the instant case.
Even though the application seeking permission
to transfer was pending as on the date when the
scheme was sanctioned by the high Court yet the moot
question which is required to be considered is whether
the order sanctioning the scheme of amalgamation
would still bind the lessor.
In General Radio (supra) the Apex court has held
that the scheme of amalgamation though binds the
parties thereto but once they come vis-à-vis the lessor
it is treated as an incident of transfer. It is immaterial
whether the permission was granted for transfer of the
demised premises or the application for demised
premises. What is relevant is how the lessor perceived
such incident ? It is a uniform stand of the parties that
such permission was sought for transfer of the
demised premises and if the respondent no.1 had
demanded the transfer fees it was within the realm of
their domain which the appellant cannot question.
Each incident of transfer attracts the transfer fees
whether the earlier permission was pending or not.
The moment an application seeking permission to
transfer of the demised premises in favour of the
METCO was made it is a separate incident of transfer
and the respondent no.1 has treated the same and
determined the transfer fees which has been
admittedly deposited by such outgoing transferor
company. We do not find any justification in the stand
of the appellant that by virtue of the scheme of
amalgamation having sanctioned by the high court
such fees which have been deposited by outgoing
company i.e., a transferor company would inure to the
benefit of the transferee company under the scheme of
amalgamation.
On the plea of determining the transfer fees in
favour of the respondent no.1 from the transferor
company a point has been raised that the manner in
which the deductions are made or disallowed is
required to be revisited. The respondent no.1 have
given a detailed calculation and agreed to grant a fresh
lease for 99 years which is obviously more than the
residuary period of the original lease given to Arvind.
However, we noticed from the said calculation
that there is no deduction of 30% out of the total
determination of the lease premium has been provided
though the transfer fees deposited by the transferor
company in respect of a first incident of transfer has
been given a due credit thereof. It is within the realm
of the decision of the lessor either permitting the
deduction of the amount already received on the first
incident of transfer or not to give such deduction. The
respondent no.1 is a statutory authority and if they
have decided a thing to be done in a particular manner
it is difficult on their part to wriggle out of the same.
The calculation sheet appearing at Page 310 of the first
volume of the paper book indicates that the amount
already deposited by the METCO for the first incident
of transfer has been given a due credit and deducted
from the total amount of the premium so determined
for effecting the transfer and it is not open for the
respondent no.1 to take a different stand. It is sought
to be contended at the bar that the same may not be a
correct stand taken by the respondent no.1 and such
deduction could not have been given. If the statutory
authority have taken a conscious decision and given a
due credit of the amount already deposited in absence
of any explanation or clarification in this regard such
decision cannot be whittled down merely on the basis
of the submissions made at the bar. The statutory
authority have adopted a particular methodology in
calculating the lease premium and if they have allowed
a deduction to the tune of 30% on account of the shed,
it must act uniformly and cannot take a different
approach.
The uniformity in the decision is the hallmark
of the decision-making process. Once the deduction to
the tune of 30 % was allowed at the time of charging
the transfer fees on the first incident of transfer, the
same benefit should be extended at the time of the
second incident of transfer. The administrative
authority cannot act whimsically, capriciously and/or
arbitrarily but must treat all persons equally.
We therefore, cannot agree with the finding of the
Single bench that once the amount of transfer fees
deposited on the first incident of transfer has been
allowed to be deducted at the time of determination of
the lease premium/ transfer fee on the second incident
of the transfer is more than the 30% of the total
amount, the appellant is required to pay the entire
amount so demanded.
The order of the Single judge is modified to the
extent that the appellant is entitled to a deduction to
the tune of 30% of the total amount so determined for
lease premium/ the transfer fees even after the
respondent no.1 have allowed the deduction of the
transfer fees already paid by the METCO on the
incident of first transfer.
The respondent no1 is directed to recalculate the
amount based on such calculation after giving credit
to the amount already deposited for the first transfer
and deducting 30% from the total amount of the
premium so calculated.
The appeal is thus disposed of.
Urgent certified website copies of this judgment, if
applied for, be supplied to the parties upon compliance
with all requisite formalities.
I agree,
( Kausik Chanda, J.) ( Harish Tandon, J.)
