2001 (10) TMI 1042 - HC - Companies Law

Court upholds DDA's demand for unearned increase in lease agreement, dismissing writ petition.

Indian Shaving Products Ltd. Versus Delhi Development Authority

The court dismissed the writ petition, upholding the validity of the DDA's demand for unearned increase. The court held that the scheme of amalgamation ... Effect of Act on other laws Issues Involved:1. Validity of the impugned notice demanding payment of unearned increase.2. Whether the scheme framed under SICA overrides the right to recover unearned increase.3. Interpretation of the perpetual lease deed clauses regarding transfer and unearned increase.4. Impact of BIFR's order on the rights of the DDA.Detailed Analysis:1. Validity of the Impugned Notice Demanding Payment of Unearned Increase:The petitioner challenged the notice dated 29-8-1995, which required the petitioner-company to pay Rs. 5,34,14,966 to the DDA. The demand was based on the unearned increase in the value of the industrial plot leased to Sharpedge Ltd., which was subsequently amalgamated with the petitioner-company.2. Whether the Scheme Framed Under SICA Overrides the Right to Recover Unearned Increase:The court examined whether the scheme approved by the BIFR under SICA, which included the amalgamation of Sharpedge Ltd. with the petitioner-company, had an overriding effect that nullified the DDA's right to recover the unearned increase. The court noted that Section 32 of SICA provides that the provisions of the Act and any rules or schemes made thereunder will have effect notwithstanding anything inconsistent contained in any other law. However, the court clarified that Section 32 does not affect agreements executed by contracting parties and does not override the terms of the perpetual lease deed.3. Interpretation of the Perpetual Lease Deed Clauses Regarding Transfer and Unearned Increase:The court scrutinized clauses (4)(a), (5), and (7) of the perpetual lease deed executed between Sharpedge Ltd. and the DDA. Clause 4(a) stated that the lessee could not sell, transfer, assign, or part with possession of the industrial plot without the lessor's consent and that the lessor could claim 50% of the unearned increase in value upon such transfer. The petitioner argued that the vesting of the undertaking due to BIFR's order did not constitute a transfer within the meaning of clause 4(a). However, the court disagreed, stating that the transaction constituted a transfer of the land by Sharpedge Ltd. to the petitioner-company, thus triggering the DDA's right to claim unearned increase.4. Impact of BIFR's Order on the Rights of the DDA:The court noted that the DDA was not a party before the BIFR, and therefore, its rights could not be affected by the BIFR's order. The court emphasized that the ownership of the property remained with the DDA and that the BIFR was not competent to change the ownership of the property through its approval of the amalgamation scheme. The court concluded that the terms of the perpetual lease deed remained binding and that the DDA's right to recover unearned increase was not overridden by the scheme framed under SICA.Conclusion:The court dismissed the writ petition, upholding the validity of the DDA's demand for unearned increase. The court held that the scheme of amalgamation approved by the BIFR did not override the terms of the perpetual lease deed, and the DDA's right to recover unearned increase was not affected by Section 32 of SICA. The petitioner was required to comply with the demand notice and pay the unearned increase as stipulated in the lease agreement.