Raizada Brothers (P) Ltd. vs Lt. Governor
1997 Latest Caselaw 368 Del

JUDGMENT

Vijender Jain, J.

(1) Petitioners in a public auction held on 31.10.1973, conducted by respondent-Delhi Development Authority (in short "DDA") purchased plot bearing No.18/3, Block 'D', Okhla Industrial Area, Phase-II, New Delhi. It is the case of the petitioners that after taking over the possession of the aforesaid plot of land, the petitioners wrote to the Dda to execute the lease deed in favour of the petitioner. One such letter is dated 25.2.1974, which is at page-39 of the paper book, interÿalia, requesting the respondent to execute lease deed. It seems correspondence was exchanged between the petitioners and the respondent. Some time vide its letter dated 13.5.1974 respondent informed the petitioners to collect the lease deed for stamping. Petitioner on 27.4.1976 submitted to the respondent three copies of the perpetual lease deed duly stamped by the office of Collector of Stamps vide its letter of even date, which is at page-45 of the paper book. Respondent vide its letter dated 17.9.1976 wrote to the petitioner that certain documents were to be sent to enable them for proceeding further for execution/registration of the lease deed, the said letter is at page-46 of the paper book. Subsequently a letter was written by the respondent dated 20.6.1984 to the following effect:- "WITH reference to your letter dated in continuation to this office letter of even number dated __________ on the above subject, I am directed to request you to attend this office with one witness known to you on 4.7.84 at 11.00 A.M./ A sum of Rs.27212.00 being the ground rent w-e-f-025/2/74 to 14.7.84 penalty for late 17272.00 + 9940-00 = 37212 - execution of lease deed, would be required to be paid which can be deposited on Central Bank of India/Vikas Minar through Challan in favour of D.D.A. (with full particulars) and the copy of the same will be handed over to the concerned Branch Officer at the time of execution of lease deed. You are also requested to bring all the following documents in original along with the attested copies........."

(2) With this background of events, Mr.Arun Mohan, learned counsel appearing for the petitioners, has contended that in spite of the letter written by the respondent way back in the year 1984, no lease deed was executed in favour of the petitioner till date. Mr.Arun Mohan has further contended that the stand of the respondent that on account of transfer of share within the family members of the petitioner, respondent in 1986 informed the petitioners that petitioners had to pay unearned increase as said transfer of shares amounted to transfer of land is illegal and arbitrary. He has argued that there was no change in the company, same was not converted from partnership to a company nor any change was brought in the character of company. Company being a separate entity, the disputed property was owned by the company and any change in the holding of the shares among the family would not attract any unearned increase as same being not leviable. He has further contended that the stand of the respondent that unearned increase was on the basis of the amended policy of the respondent-DDA dated 8.5.1979 charging unearned increase retrospectively is deÿhors illegal. He has further contended that respondent cannot demand any amount on account of a policy which came into existence in 1979 whereas the petitioners have participated in the open auction on the basis of terms and conditions of auction of 1973. Mr.Mohan has contended that the draft lease deed as prepared by the respondent in 1974 did not fasten any liability on the petitioner on account of impugned unearned increase. Arguing vehemently that respondent is not right in demanding unearned increase on account of transfer of share to some members of the family or on account of some adjustment between the shareholders in the same family, learned counsel has contended that, as a matter of fact, by transfer or sale of shares, it is the shares, which are sold and not the land and as such there is no transfer of land which would attract unearned increase in the case of the petitioner. For this proposition he has cited Commissioner of Income Tax Vs. Standard Vacuum Oil Company Air [53] 1966 Sc 1393 Western Coalfields Ltd Vs.Special Area Development Authority Phoenix Properties Pvt Ltd & anr. Vs.Union of India and anr. 1989 [1] Delhi Lawyer 326 Scindia Potteries and Services Ltd. Vs.Deputy Land and Development Officer 1992 [2] Delhi Layer 75 V B Rangaraj Vs. V B Gopalkrishnan & ors. and Dda Vs.Skipper .

(3) On the other hand, Mr.Jayant Bhushan, counsel appearing for the respondent, has contended that as per the terms and conditions of the draft original lease deed itself, respondent was entitled to charge unearned increase. He has further contended that in cases where on account of ingenuity or motive to evade unearned increase, shares have been transfered, this Court may lift the corporate veil and see behind the smoke screen as to what is the nature of such transfer and in this connection, he has cited the cases of Commissioner of Income-tax Madras Vs.Sri Mennakshi Mills Ltd.Madurai Air 1987 Sc 819, Juggilal Kamlapat Vs.Commissioner of Income-tax, U.P. , The Workmen Employed in Associated Rubber Industry Limited Bhavnagar Vs.The Associated Rubber Industry Limited Bhavnagar and anr. , State of Up & ors. Vs.Renusagar Power Co. & ors. and Harish Tandon Vs. Addl.District Magistrate, Allahabad, Up & ors. (1995) 2 Scc 537.

(4) Mr. Bhushan has further contended that it was in furtherance to the objective of Clause-4 of the terms and conditions of the draft original lease deed, the respondent formulated a policy in which Clause-4ÿ(aÿa) was inserted, under said policy even the family has been defined, the case of the petitioner is not covered under the definition of 'Family' in the new policy and, therefore, petitioner is liable to pay the unearned increase.

(5) I have given my careful consideration to the arguments advanced by the learned counsel appearing for both the parties. At the outset, I must observe that principles of lifting of veil have been laid down in catena of cases by the Apex Court. I need not repeat them. In appropriate cases, this Court is not without power to lift the veil of a corporate entity to go behind the smoke screen. Court has extended the principle in cases where there is a specific bar under the Statute, holding that piercing of veil is permissible to go behind the smoke screen to find out the real nature of transaction or a fact. How this principle is applicable in the present case. it is not the case of the respondent that there was any concealment about transfer of shares by the petitioner. It is also not the case of the respondent that the nature of petitioners' work has changed or a deceit or fraud is played so as to transfer the company by the petitioner to outsiders. As a matter of fact, subsequent policy of 1979 could not be made applicable to the present case. Therefore, I need not go into the legality of the policy of 1979 until and unless I come to the conclusion that the petitioners are governed under said policy. On account of respondents' own letters dated 26.11.1976, which is at page-49 of the paper book and letter dated 20.6.1984, which is at page-57 of the paper book, which I have reproduced above, can it be said that when the policy of 1979 was in force respondent has not mentioned in the said letter that the petitioner was liable to pay unearned increase on the basis of the said policy even in the year 1984? If respondent themselves has not relied on the 1979 policy in the year 1984 in view of the aforesaid letter, can they turn around and take the stand that the subsequent policy of 1979 is applicable to the case of the petitioner?. The answer is in negative. Therefore, I need not go in the legality of the policy of 1979.

(6) Coming to the arguments advanced by the learned counsel for the respondent that the pursuant to Clause-4ÿ(a) of the draft original lease deed, respondents are entitled to recover unearned increase. Let us examine Clause-4ÿ(a) of the said lease deed, which read as under |-

"4.(A)The Lessee shall not sell, transfer, assign or otherwise part with the possession of the whole or any part of the industrial plot except with the previous consent in writing of the Lessor which he shall be entitled to refuse in his absolute discretion.

PROVIDED that such consent shall nt be given for a period of ten years from the commencement of this Lease unless, in the opinion of the Lessor, exceptional circumstances exist for the grant of such consent.

Provided further that, in the event of the consent being given, the Lessor may impose such terms and conditions as he things fit and the Lessor shall be entitled to claim and recover a portion of the unearned increase in the value (i.e.the difference between the premium paid and the market value) of the industrial plot at the time of sale, transfer, assignment, or parting with the possession, the amount to be recovered being fifty perÿcent of the unearned increase and the decision of the Lessor in respect of the market value shall be final and binding.

Provided further that the Lessor shall have the pre-emptive right to purchase the property after deducting fifty perÿcent of the unearned increase as aforesaid."

(7) On the basis of second proviso of Clause-4ÿ(a), Mr.Bhushan has contended that it would be manifestly clear that the respondents were entitled for unearned increase in the value of the industrial plot at the time of sale transfer, assignment or parting with the possession and as in this case, there has been a transfer of share by virtue of the second proviso of the policy and by applying principles of lifting the corporate veil, respondents are justified in demanding the unearned increase. As I have held earlier, the transfer of shares is not transfer of property. The view so authoritatively taken by this Court as well as by the Apex Court in number of cases cited by the learned counsel for the petitioners and referred to them by me above on this point.

(8) Now coming to the second argument advanced by the counsel for the respondent that by applying the principles of lifting the corporate veil, respondent is entitled to recover unearned increase, the answer is in negative as principle of lifting of veil would be inapplicable in this case. It is the admitted case of the parties that the shares have been transferred between the family members. It is nobody's case that outsider has been given shares. It has been contended by the learned counsel for the petitioner that the transfer of shares has been necessitated on account of the exigencies in the family. Therefore, the argument advanced by the counsel for the respondent that applying the principle of piercing the corporate veil in terms of Clause- 4ÿ(a) of the said draft original lease deed respondent is entitled to recover unearned increase, is devoid of any force. As a matter of fact, the fallacy in the stand of respondent has occurred on account of definition of term 'Family' in new Policy of 1979, which I have already held not applicable to the petitioners.

(9) In view of the fact that the respondent itself had issued various letters till 1984 to the petitioner for getting the lease deed executed and had delayed the execution of lease deed on one pretext or the other from 1974 till 1986, I do not find any merit in the stand of the respondent. Respondent is estopped in view of their letter dated 20.6.1984 reproduced above, from demanding any unearned increase from the petitioner. In these circumstances, writ petition is allowed.

(10) Respondents are directed to execute the lease deed, as per the lease deed submitted by the petitioner duly stamped by the office of Collector of Stamps on 27.4.1976, in favour of the petitioner within six weeks on completion of necessary formalities. The intimation of any formalities, which have to be completed by the petitioners, shall be given by the respondents to the petitioners within 2 weeks from today. With these observations, writ petition is allowed. Rule is made absolute.