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REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

   CIVIL APPEAL NO.2731 OF 2005

U.P. STATE INDUSTRIAL DEV.CORPN. LTD.  APPELLANT                  VS. MONSANTO MANUFACTURES (P) LTD. & ANR.   RESPONDENTS WITH C.A.NO.1310 OF 2006

C.A.NO.1318 OF 2015 (@SLP(C) NO.16404 of 2006)

C.A.NO. 1319 OF 2015 (@SLP(C) NO.5838 of 2008)

J U D G M E N T

Leave granted in SLP (C) No.16404 of 2006 and SLP(C) No.5838 of  

2008.

2. The  Government  of  Uttar  Pradesh  acquired  land  in  various  districts  and  conveyed  the  same  to  the  appellant-U.P.  State  

Industrial  Development  Corporation  (hereinafter  referred  to  as,  

‘the  Corporation’  for  short)  for  the  purpose  of  setting  up  

industrial area. The Corporation thereafter divided the said land  

into  plots  for  leasing  the  same  to  industrial  units.  The  

respondents-Companies,  applied  to  the  appellant-Corporation  for  

grant  of  lease.  On  receiving  part  premium  of  the  plot,  the  

appellant  executed  an  agreement  for  licence  and  later  executed  

lease  deed  in  favour  of  the  respondents-Companies.  Later  the  

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appellant-Corporation  made  an  allegation  that  the  respondents-

companies’ share holders transferred their company/their shares to  

new  shareholders  without  the  consent  of  appellant-Corporation,  

which amounted to transfer of interest, for which transfer levy is  

required  to  be  deposited.  Demand  notices  were  issued  by  the  

appellant-Corporation  to  the  respondents-Companies.  Those  demand  

notices were challenged by the respondents-Companies in different  

writ petitions or suits which were allowed by the Division Bench  

of  the  High  Court  of  Judicature  at  Allahabad  by  impugned  

judgments.  

3. In the aforesaid cases the High Court held that unless the  respondents-Companies transfer its right in the plot in question  

in favour of another legal entity, there is no question to apply  

clause 4(h) of the Agreement for licence. The High Court further  

held  that  mere  change  in  shareholders  or  Directors,  does  not  

change  legal  entity  of  the  Company  and  as  such  it  continues  

unchanged.  

4. The questions that arise for our consideration in these appeals  are:

(i) Whether  by  the  alleged  action  the  respondents-

Companies directly or indirectly had transferred or  

parted  with  their  interest/benefit  under  their  

respective agreements for licence.

(ii) Whether  the  respondents-Companies  violated  the  

terms as contained in Clause 4(h) of agreement and  

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Clause 3(p)of their lease deed and

(iii) Whether the respondents-Companies are liable to pay  

transfer  fee  for  alleged  transfer  of  its  own  

interest.  

5.  The facts leading to the cases are as follows:- Monsanto Manufactures Private Ltd.(A Company registered under the  Companies Act, 1956)

The respondent-Company applied to the appellant-Corporation for  

grant  of  lease  of  plot  of  land  bearing  no.38/1-A  situated  in  

Sahibabad  Industrial  Area,  Site  No.4  of  Tehsil   and  District  

Ghaziabad  admeasuring  14,533  square  yards  for  the  purpose  of  

constructing an industrial unit.  The appellant-Corporation after  

receiving part premium of the plot land executed an agreement for  

licence on 12th June, 1978 in favour of the respondent-Company. The  

possession  of  the  land  was  given  on  12th June,  1978.  After  

construction  of  the  building  of  the  factory,  the  respondent-

Company and the appellant-Corporation executed a deed of lease on  

5th September, 1979 for a period of 90 years. Later, the appellant-

Corporation  vide  letter  dated  12th April,  1994  asked  the  

respondent-Company  to  provide  the  list  of  its  Directors  and  

shareholders duly certified by the Chartered Accountant. The same  

was  furnished  by  the  respondent-Company  to  the  appellant-

Corporation  on  7th May,  1994.  According  to  the  appellant-

Corporation  the  respondent-Company  changed  the  Directors  and  

shareholders  without  prior  permission  and  consent  of  the  

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appellant-Corporation  and  since  the  respondent-Company  was  

purchased by the present Directors from the previous Directors.  

The appellant-Corporation by letter dated 27th May, 1994 asked for  

details in order to take necessary action in accordance with the  

terms  of  the  lease  deed.   The  respondent-Company  categorically  

denied the allegations levelled by the appellant-Corporation by  

their letter dated 27th September, 1994.  

6. By  letter  dated  1st October,  1999  the  appellant-Corporation  demanded  Rs.25,51,781/-  from  respondent-Company  towards  transfer  

levy  charges  as  the  original  shareholders  of  the  respondent-

Company transferred their entire shareholding and interest to the  

new  shareholders  and  there  was  change  in  the  Directors  of  the  

respondent-Company. According to the appellant such change makes  

the shifting of the controlling interest of the respondent-Company  

and transfer levy for the same was demanded from the respondent-

Company as per the rules of the Corporation. The Company submitted  

its reply vide letter dated 8th December, 1999 and reiterated its  

earlier stand to the effect that there is no breach of any terms  

of the lease deed as no transfer or assignment or sale of premises  

in question has been made.  However, it was not accepted by the  

Corporation,  who sent  another reminder  dated 13th January, 2000  

asking the Company to pay a sum of Rs.25,51,781/- towards transfer  

levy charges.  

The aforesaid demand notice was challenged by the respondent-

Company  before  the  High  Court  of  Allahabad  which  by  impugned  

judgment dated 11th May, 2004 allowed the writ petition.   

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U.P.  Twiga  Fiberglass  Limited  (A  Company  registered  under  the  Companies Act, 1956) 7. The  appellant-Corporation  executed  an  agreement  with  respondent-Company followed by lease deed dated 27th May, 1977 by  

which  the  Corporation  leased  plot  nos.9  and  23-A  admeasuring  

approximately  1,10,926  square  meters  of  land  situated  at  

Sikandrabad Industrial Area, District Bulandshahr, Uttar Pradesh  

to the respondent-Company.  The lease was executed for 90 years.  

In the year 1994, the respondent-Company suffered heavy losses to  

the tune of Rs.42 crores.  Therefore, the respondent-Company sold  

almost its entire shares including shares of its promoters and  

shares  lying  with  financial  institutions  to  a  foreign  company  

known as “Rotar India Ltd.”. As entire shares of the respondent-

Company transferred to Rotar India Ltd., the promoters of the said  

Company were replaced by new promoters/Directors.  

8. According to the appellant-Corporation, in view of the above  disposal of controlling interest in the venture of the existing  

allottee, they were liable to pay transfer levy as per Clause 6(f)  

of the guidelines of the Corporation pertaining to reconstitution  

and transfer.

9. The  Corporation  vide  its  letter  dated  26th April,  1995  requested  the  respondent-Company  to  supply  list  of  new  

shareholders, list of new Directors and copies of Memorandum of  

Association and Articles of Association.  However, it is alleged  

that respondent-Company neglected the same and refused to supply  

the  documents.  The  appellant-Corporation  thereafter  vide  letter  

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dated 15th May, 1995 asked the respondent-Company to pay a sum of  

Rs.24,95,835/-  towards  transfer  levy  as  there  was  disposal  of  

controlling interest in the venture by the existing allottee.  The  

said demand of transfer levy, according to appellant, was as per  

lease deed and guidelines of the Corporation pertaining to re-

constitution and transfer.

10. Being  aggrieved  the  respondent-Company  filed  suit  bearing  No.876 of 1996 before Civil Judge, Bulandshahr seeking permanent  

injunction and praying for restraining the appellant-Company from  

claiming any amount as transfer levy. The appellant filed written  

statement and contested the suit.   

11. The Civil Judge, Bulandshahr vide judgment and decree dated  23rd January, 1999 allowed the suit and directed the appellant-

Corporation  not  to  charge  transfer  levy  from  the  respondent-

Company. The Civil Judge, held that the respondent-Company is a  

legal person and disposal of its majority shares in the name of a  

foreign Company namely Rotar India Ltd. does not change the legal  

status of the Company and therefore, there is no transfer.  

12. The appellant-Corporation being dissatisfied with the aforesaid  order filed Civil Appeal No.45 of 1999 in the Court of District  

Judge, Bulandshahr which was dismissed vide order dated 15th July,  

2000.  Thereafter,  the  appellant-Corporation  filed  Second  Appeal  

No.1425 of 2000 before the High Court of Judicature at Allahabad  

and the same dismissed by impugned judgment dated 24th October,  

2005.  

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M/s Enrich Engineering Works Pvt. Ltd.(A Company registered under  the Companies Act, 1956) 13. One M/s Tyres & Tubes Co. Pvt. Ltd. having its registered  office at Scooters India Ltd. Premises, Sarojini Nagar, PO Lucknow  

through its Directors Shri S.Sounderarajan s/o of late Shri S.  

Srinivasan applied to appellant-Corporation for allotment of plots  

of land.  After agreement which was followed by lease deed dated  

21st December, 1976 the appellant-Corporation allotted industrial  

plot no.A-4 and A-5 admeasuring approximately 40,489 square yards  

and  8.36  square  yards  respectively  situated  at  site  no.2,  Rai  

Bareilly, Uttar Pradesh to M/s Tyres & Tubes Company Pvt. Ltd. The  

lease was for 90 years.  M/s Tyres & Tubes Co. Pvt. Ltd. suffered  

heavy losses and pursuant to its winding up, Allahabad High Court  

vide judgment and order dated 9th January, 1996 appointed Official  

Liquidator.  The  Official  Liquidator  sold  the  properties  of  M/s  

Tyres & Tube Co. Pvt. Ltd. including right and interest on the  

land in question to respondent M/s Enrich Engineering Pvt. Ltd.  

The said sale was affirmed by the Allahabad High Court vide order  

dated 9th February, 2000. Pursuant to the order of the Allahabad  

High  Court  dated  10th September,  2003  the  Official  Liquidator  

issued  sale  certificate  dated  12th March,  2004  in  favour  of  

respondent-Company.  

14. The appellant-Corporation was not a party in the winding up  proceedings nor was any notice issued to the appellant-Corporation  

by  the  Official  Liquidator.  On  knowing  about  transfer  of  the  

rights of the original allottee- M/s Tyres & Tubes Co. Pvt. Ltd.,  

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the  appellant-Corporation  demanded  transfer  levy  amounting  to  

Rs.3,80,621.25/-  from  respondent-Company.   According  to  the  

appellant, such demand was made from the respondent-Company, as  

the said company had purchased M/s Tyres & Tubes Co. Pvt. Ltd.,  

with all its assets and liabilities.  

 15. Against  the  demand,  respondent-Company  preferred  a  writ  petition being Civil Misc. Writ Petition No.56982 of 2005 before  

the  Allahabad  High  Court  which  was  allowed  by  the  impugned  

judgment dated 27th April, 2006.  The demand notice was set aside  

by the High Court in view of judgment rendered in another similar  

case.  

M/s  Super  Tannery  (India)  Ltd.(A  Company  registered  under  the  Companies Act, 1956) 16. The appellant-Corporation entered into an agreement dated  10th October, 1990 with one M/s Super Agro Tech Ltd. for setting up  

of  specialty  paper  unit  in  industrial  plot  nos.A-9  and  A-10  

admeasuring  approximately  45,080/-  square  meters  in  Industrial  

Area Unnao Site-2. No right whatsoever in regard to transfer of  

said plots were given to the licensee M/s Super Agro Tech Ltd. The  

possession of the said plots was handed over on 25th January, 1991  

and subsequently lease was also executed.  M/s Super Agro Tech  

Ltd. thereafter did not set up any specialty paper unit and no  

investment was made.  According to the appellant-Corporation said  

licensee M/s Super Agro Tech Ltd. with a view to enrich itself  

started amalgamation proceeding with the new company namely M/s  

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Super  Tannery  (India)  Ltd.-respondent  herein.  The  said  

amalgamation  was  a  mutual  understanding  between  M/s  Super  Agro  

Tech Ltd. and M/s Super Tannery (India) Ltd. The Allahabad High  

Court vide order dated 9th May, 1997 sanctioned the amalgamation in  

Company Petition No.32 of 1997. Though the land belongs to the  

appellant-Corporation,  it  was  not  made  a  party  to  the  said  

petition. According to the appellant-Corporation, the amalgamation  

does  not  create  any  right  whatsoever  on  respondent-M/s  Super  

Tannery (India) Ltd. over industrial plots in question and the  

said two plots cannot be legally transferred to the new Company  

i.e. M/s Super Tannery (India) Ltd.

17. The  respondent-Super  Tannery  (India)  Ltd.  made  an  application for the transfer of the said industrial plot. On such  

request, the appellant-Corporation demanded transfer levy from M/s  

Super Tannery (India) Ltd. for transfer of the said industrial  

plot.   However,  no  amount  was  deposited.   The  Corporation  by  

notice dated 3rd November, 2001 demanded a sum of Rs.34,23,954.51/-  

as  on  that  date  from  M/s  Super  Tannery  (India)  Ltd.  towards  

transfer  levy.   The  aforesaid  notice  was  challenged  by  the  

respondent-M/s  Super  Tannery  (India)  Ltd.  by  filing  a  writ  

petition being Civil Misc. Writ Petition No.18535 of 2002 before  

Allahabad High Court and the same was allowed, by the impugned  

judgment dated 22nd August, 2007 following the decision rendered in  

another case.  

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Case wise stand of the parties and finding of this Court. Monsanto Manufactures Private Ltd. 18. Learned  counsel  for  the  appellant-Corporation  submitted  that the respondent-Company has violated Clause 3(p) of lease deed  

dated 5th September, 1979 entered into between the  said Company  

and  appellant-Corporation  inasmuch  as  its  “Memorandum  of  

Association” and “Article of Association” were altered without the  

written consent of Lessor i.e. appellant-Corporation. In view of  

the same the appellant-Corporation has the right to determine the  

said lease deed dated 5th September, 1979.

19. On the other hand, according to counsel for the respondent  as the Company has got separate legal status and the Corporation  

has allotted the industrial plot to it by name and not in the name  

of its Directors, the Directors being only officials working on  

behalf  of  the  Company,  mere  change  of  names  of  Directors  or  

shareholders does not in any way or manner affect the legality or  

status of the respondent-Company.  It was further contended that  

change of names of Directors, shareholders duly done within the  

purview  of  the  Companies  Act,  1956,  does  not  affect  the  legal  

status of the respondent-Company and much less there has been any  

transfer of the site by the Company to any other individual person.

20. For deciding the issue involved in the present case it is  necessary  to  refer  certain  clauses  of  licence  agreement,  lease  

deed and guidelines issued by the appellant-Corporation which are  

common in all the cases.  

21. Clause 4(h) of the licence agreement prohibits licensee’s  

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acts  to  directly   or  indirectly   transfer,  assignment,  sale,  

encumber or part with its interest under the benefit of the said  

Agreement  without  previous  consent  in  writing  of  the  Grantor,  

relevant portion of which reads as follows:

“4(h). That the Licence will not directly or  indirectly  transfer,  assign,  sell,  encumber  or  part  with  its  interest  under  or  the  benefit of this Agreement or any part thereof  in any manner whatsoever without the previous  consent  in  writing  of  the  Grantor  and  it  shall be open to the Grantor to refuse such  consent  or  grant  the  same  subject  to  such  conditions as may be laid down by the Grantor  in the behalf.”

22. Sub-Clause (p) of Clause 3 of lease deed also prohibits  any alteration in the Memorandum and Articles of Association or in  its capital structure without the written consent of the Lessor,  relevant portion of which reads as follows:

“3(p) That  the  Lessee  being  a  registered  partnership  firm  declares,  affirms  and  undertakes that during the subsistence of the  terms of this agreement, the said partnership  shall  not  be  dissolved,  reconstituted  or  wound up, and/or dealt with in any way which  may jeopardize the rights and interests of  the Lessor in the matter of this lease, nor  shall  its  constitution  be  altered  in  any  manner  otherwise  written  consent  of  the  Lessor, first and obtained, and it shall not  stand dissolved on the death or insolvency of  any of its partners;

OR The Lessee being an individual or sole  

proprietor  of  a  firm,  shall  not  allow  any  person(s) as partner(s) with him without the  prior written consent of the Lessor;

OR The Lessee  being a Company shall not  

make  or  attempt  to  make  any  alterations,  whatsoever  in  the  provisions  of  its  Memorandum and Articles of Association or in  its  capital  structure  without  the  written  consent  of  the  Lessor,  first  had  and  obtained, and the Lessee hereby undertakes to  

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get registered the prescribed particulars of  the charge hereunder created with Registrar  of Joint Stock Companies under Section 126 of  Companies  Act,  1956,  within  stipulated  period.

While granting its consent as aforesaid  the  Lessor  may  require  the  successor  in  interest  of  the  Lessee  to  enter  into  a  binding contract with the Lessor to abide by  and  faithfully  carry  out  the  terms,  conditions,  stipulations,  provisos  and  agreements  herein  contained  or  such  other  terms and conditions as the Lessor may, in  its discretion, impose including the payment  by the successor-in-interest such additional  premium and/or enhanced rent as the Lessor  may in its discretion think proper. In the  even  of  breach  of  this  condition  the  agreement  shall  be  determined  at  the  discretion of the Lessor.

Provided  that  the  right  to  determine  this agreement under this clause will not be  exercised if the industry at the premises has  been financed by the State Government or the  Industrial  Finance  Corporation  of  India  or  the  Industrial  Credit  and  Investment  Corporation of India, or the U.P. Financial  Corporation  or  Pradeshiya  Industrial  and  Investment  Corporation  of  Uttar  Pradesh  or  any scheduled bank(including the State Bank  of  India)  and  the  said  financing  body  or  bodies mentioned above decide to take over  possession or sell, or lease or assign the  mortgaged assets in exercise vesting in it or  them by virtue of the deeds or deed executed  in  its  or  their  favour  by  the  Lessee  as  provided herein above, or under any law for  the time being in force.”

23. The  Corporation  has  issued  guidelines  for  transfer/re- construction in respect of the plots in the industrial area of the  

Corporation.  Clause  6.01(E)  of  the  said  guidelines  prescribes  

Transfer Levy and Clause 6.01(F) defines transfer. The aforesaid  

provisions reads as follows:

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“6.01(E) Transfer Levy – per sq.m. @ 5%  to 15% of the rate of premium in fast moving  areas and 2.5% to 7.5% of the current premium  in slow moving areas prevailing on the date  of issuance of transfer approval letter will  be changed as applicable. While calculating  the transfer levy the locational charges of a  particular plot will not be considered and  only  basic  premium  will  be  taken  into  account.

6.01(F) Transfer  –  Means  disposal  of  controlling interest in the venture by the  existing  allottee.  In  the  case  of  reconstitution, the existing allottee retains  controlling  interest  except  in  case,  where  interest is transferred to family members as  defined in 6.3(iv)(a) below or where there is  change in the constitution of the allottee  due to inheritance, succession or operation  of law.”  

24. In the present case the entire shareholding of Goyal family  headed by Mr. Amar Nath Goyal in the said company was transferred  

to  the  Mehta-Lamba  Family.  The  entire  list  of  shareholders,  

Managing Director and Board of Directors was provided by Monsanto  

to  the  appellant-Corporation  vide  letter  dated  7.5.1994.   The  

record shows that the original subscribers of shares were members  

of Goyal family and the entire shareholding was transferred to  

Mehta-Lamba family. Therefore, the original subscribers of shares  

of respondent No. 1 Company were totally changed.   

25. The “Memorandum of Association” of a company limited by  shares mandatorily prescribes in “Table-B”  (Table-B of 1956 Act  and Table-A of 2013 Act deals with Company Limited by shares) of  the  Companies  Act  mandatorily  prescribed  that  the  names,  

addresses, description, occupation of subscribers shall be given  

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in  Memorandum  of  Association.  In  this  case  as  the  original  

subscribers of shares were changed in 1994, there was material  

alteration in the “Memorandum of Association” of respondent no. 1  

Company.

26. It  was  also  contended  that  there  was  an  alteration  in  “Articles of Association” of respondent no. 1 Company as well.  

The  last  column  of  “Articles  of  Association”  also  mandatorily  

provides  for  giving  names,  addresses  and  description  of  

subscribers.  In  this  case,  the  subscribers  of  shares  has  been  

completely changed from the Goyal Family to Mehta-Lamba Family and  

hence there was material alteration of “Articles of Association”  

of the respondent no. 1 Company.

27. In  this  case,  the  ownership  of  a  huge  Industrial  plot  measuring  14,533  sq.  ft.  in  the  prestigious  and  economically  

affluent area of Sahibabad (Ghaziabad) has been transferred from  

Goyal family to the Mehta-Lamba family for  material financial  

gains, by adopting clever means that too without taking written  

consent of the Lessor i.e. appellant-Corporation.  There are many  

instances/examples  in  which  the  lessee  gets  allotment  of  huge  

industrial plots and thereafter sells the same for huge monetary  

gains.  This  adversely  affects  the  aims  and  objectives  of  

appellant-Corporation i.e. the planned development of industrial  

areas in the State of Uttar Pradesh. The Hon'ble High Court ought  

not  to  have  interfered  in  the  matter  looking  into  the  public  

interest involved and Clause 3(p) of the lease deed.   

U.P. Twiga Fiberglass Limited

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28. Similar submissions as made in the above case were made by  the learned counsel for the appellant in the present case also.  

It was contended that the respondent-U.P. Twiga Fiberglass Ltd.  

has violated Clause 3(p) of lease deed dated 27th May,1977 entered  

between the said company and appellant-Corporation inasmuch as its  

“Memorandum of Association”, “Articles of Association” and capital  

structure  were  altered  without  the  written  consent  of  Lessor  

appellant-Corporation  and  in  view  of  the  same,  the  appellant-

Corporation has the right to determine the said lease deed dated  

27th May,1977.

29. Per  contra,  according  to  the  respondent,  the  aforesaid  contention(s) are fallacious, misconceived and untenable.  Learned  

counsel for the respondent made the following submissions:

i) The Lease-Deed dated 27th May, 1977 has been executed by the  

respondent-company, in the capacity of a “lessee”.  Consequently,  

the provisions of the Lease-Deed obligate the Lessee/the Company  

and not its shareholder(s);

ii) The  Lease-Deed  contains  no  clause  whatsoever,  that  

authorises such levy of transfer-fee, nor does it prohibit any  

change  in  the  share-holding  of  the  respondent-company.  Even  

otherwise,  such  change  in  share-holding  was  committed  with  the  

express consent and approval of the petitioner;

iii) Law recognises a categorical distinction between a Company  

and its share-holders, who have otherwise no right whatsoever on  

the assets of a company. Reliance was placed on Constitution Bench  

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decision in Bacha F. Guzdar, Bombay vs.Commissioner of Income Tax,  

Bombay, AIR 1955 SC 74, which observed as follows:

“A share-holder has got no interest in the  property of the company though he has undoubtedly  a right to participate in the profits if and when  the company decides to divide them”.  

And  “the  Company  is  a  juristic  person  and  is  

distinct from the share-holders. It is the Company  which  owns  the  property  and  not  the  share- holders”.

iv) In a relationship between the Lessor and a Lessee, it is  

the Lease-Deed which is paramount and whose contents are binding  

on the parties.

v) A unilateral guideline issued by the Lessor cannot be held  

applicable or binding to a lessee. On the face of the lease deed,  

such guideline has no binding force. Further, change in share-

holding was admittedly done with the express consent/approval of  

the appellant; and

vi) Any fee, penalty, compensation, damages or transfer charges  

to be claimed by the lessor from the lessee must necessarily be  

provided  in  the  lease-deed.  Otherwise,  such  fee,  penalty,  

compensation, damages or transfer charges being beyond the terms  

of the Lease-Deed cannot be sought or claimed by the Lessor; Thus  

the levy of transfer-fee as sought and claimed by the appellant is  

illegal, misconceived and untenable, being beyond the terms of the  

lease deed. It is not a transfer in law, since transfer in share-

holding does not amount to any transfer in the Company's assets,  

immovable  or  otherwise.  It  is  equally  not  a  transfer  in  fact,  

since  the  provisions  of  the  Lease-Deed  do  not  recognise/nor  

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prohibit any such transfer.

vii)  The Guidelines and in particular Clause 6.01(F) is not  

applicable in the present case as there has been no “disposal of  

controlling  interest  in  the  venture  by  an  existing  allottee”.  

Undoubtedly, the respondent-company is the “existing allottee” and  

the respondent-company has not disposed its “controlling interest  

in the venture”. In other words, there is no transfer even upon a  

literal construction of the Guidelines.

30. It is not in dispute that the appellant-Corporation on 27th  

May,  1977  allotted  huge  plot  measuring  1,10,926  sq.  mtrs.  to  

respondent  no.  1  Company  in  the  industrial  area,  Sikandarabad,  

Bulandshehar  on  nominal  amount.  The  respondent  no.  1  clearly  

admitted  that  it  had  a  huge  debt  of  Rs.13,14,00,000/-  the  

different financial institutions  and, therefore, it sold shares  

of  company,  its  own  shares,  shares  of  promoters  and  shares  of  

financial institutions to the foreign company, namely, “M/s Rotar  

Ltd.”

31. The  appellant-Corporation  in  written  statement  filed  in  Suit  No.  876/1996  clearly  and  categorically  mentioned  that  the  

shares of original promoters were transferred in the name of new  

promoters  of  foreign  company  and  therefore,  the   appellant-

Corporation demanded list of new shareholders and Memorandum and  

“Articles of Association” of the Company. The change of original  

promoters shares to the new promoters means the subscribers of  

shares were changed and, therefore, there is material change in  

the “Memorandum of Association” and “Articles of Association” of  

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the Company.

32. The appellant-Corporation clearly brought on record that  there  is  change  in  “Capital  Structure”  of  the  company  and  the  

“Capital structure” in common parlance means “debt-equity ratio”.  

In this case admittedly there a huge amount of Rs. 13,14,00,000/-  

was funded by the foreign company, i.e. “M/s Rotar Ltd.” towards  

settling the debt.  In this background the appellant alleged that  

there is change in “debt-equity ratio” resulting alteration in the  

“capital structure” of the company.   

33. There is larger public interest involved in incorporating  alteration  in  “Capital  Structure”  in  Clause  3(p)  of  the  lease  

deed. There are many instances where the company takes loan from  

third parties on the security and land and structure allotted to  

them  in  lease,  keeping  in  dark  the  lessor  which  amounts  to  

incurring liabilities on the property without the knowledge of the  

lessor.  In this case also there was huge amount of debt on the  

company  as  it  took  loan  on  land  and  building/factory  from  

different  financial  institutions.  Therefore,  there  is  public  

interest involved for which consent of lessor was necessary.  

M/s Enrich Engineering Works Pvt. Ltd 34. In this case also similar submission has been made by the  parties.  

35. It is not in dispute that the huge plot of about 40, 489 &  8.35 sq. yards in the industrial area of Rai Bareilly (U.P.) was  

allotted by appellant-Corporation to M/s Tyres and Tubes Company  

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Pvt. Ltd. As the said company suffered heavy losses, on 9.1.1996  

the  company  Judge  of  Allahabad  High  Court  appointed  Official  

Liquidator and perused High Court’s Order on 12.3.2004 the said  

company was sold to M/s Enrich Engineering Works Pvt. Ltd., by the  

Official Liquidator.

36. Learned counsel for the respondent submitted that it was a  case of reconstitution and therefore payment of transfer fee does  

not arise. However, such submission can not be accepted in view of  

Clause 6.01(E) & (F) of the guidelines.  The fact that there is a  

change of hand of the asset including the land in question by  

transfer.  Therefore, the respondent is liable to pay transfer fee.

M/s Super Tannery (India) Ltd. 37. Learned counsel for the appellant submitted that the huge  plot of 45080 sq. mtrs. in Kanpur was allotted to M/s Supre Ago  

Tech  Ltd.  for  establishing  and  running  a  “Specialty  Paper  

Industry”.  In  this  case,  only  a  “License  Agreement”  dated  

10.10.1990 was executed by UPSIDC and the admitted fact on record  

is that no lease deed was executed by UPSIDC with M/s Super Agro  

Tech. Ltd.

38. In view of the above,  M/s Super Agro Tech Ltd. was merely  a licensee and as per the license agreement dated 10.10.1990 it  

had no authority whatsoever to transfer the said industrial land  

to M/s Super Tannery (I) Ltd.

39. On the other hand, according to the learned counsel for the  respondents,  due  to  various  constraints  over  head  costs  and  

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financial  hardship  company  became  non  viable  and  the  major  

production  activities  was  not  feasible  to  run  the  company.  In  

order to avoid the future problem a scheme of amalgamation was  

prepared  as  per  the  provisions  of  the  Companies  Act,  seeking  

amalgamation  under  Chapter  V  of  the  Companies  Act.   A  joint  

application was filed before the Allahabad High Court.  The High  

Court  vide  order  dated  9.5.1997  allowed  the  petition  for  

amalgamation and sanctioned the scheme of amalgamation and ordered  

that M/s Super Agro will be merged into M/s Super Tannery (India)  

Ltd.   

40. In the present case it has not been denied that respondent  company M/s Super Tannery (India) Ltd. and the other company Super  

Agro  Tech.  Ltd.  are  family  held  companies  of  the  same  family  

having  common  Directors/Promoters.  Pursuant  to  the  order  of  

amalgamation by the High Court the plot of land in question namely  

A-9, A-10, Industrial Area Unnao Site-II which was allotted to  

Super Agro Tech. Ltd. became the asset of the respondent company  

M/s Super Tannery (India) Ltd.  As per Amalgamation Scheme, all  

the property, rights and power of Super Agro Tech. Ltd., having  

its  office  at  184/170,  Jajmau  Kanpur  was  transferred without  

further act or deed to M/s Super Tannery (India) Ltd. Thus it is  

clear that by the order of the Court the premises in question was  

transferred in favour of the other Company.

41. In view of the aforesaid facts as noticed in each case, we  hold that the appellant rightly issued notice demanding transfer  

fee from each of the respondents and there was no reason for the  

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High Court to interfere with the same.  

42. For  the  reason  aforesaid,  we  set  aside  the  impugned  judgments  dated  11th May,  2004  in  C.W.P.No.5094  of  2000,  24th  

October, 2005 in Second Appeal No.1425 of 2000, 27th April, 2006 in  

Civil Misc.W.P.No.56982 of 2005 and 22nd August, 2007 in C.M. Writ  

Petition No.18535 of 2002 passed by the High Court of Judicature  

at Allahabad and allow the appeals.

...........................J. (SUDHANSU JYOTI MUKHOPADHAYA)  

...........................J. (V. GOPALA GOWDA)        

NEW DELHI;  JANUARY 29, 2015

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