Court Rules Share Transfer Isn't Asset Transfer; Quashes Fee Demand; Land Use Change Assessed Under 2005 Rules.

M/s. Din Chemicals & Coatings Pvt. Ltd. & Anr. Versus The State of West Bengal & Ors.

M/s. Din Chemicals & Coatings Pvt. Ltd. & Anr. Versus The State of West Bengal & Ors. - TMI Issues Involved:
1. Whether transfer of shares by the shareholders of a company to a stranger purchaser amounts to transfer of assets of the company, whether acquired by way of lease or otherwise.
2. Whether the petitioner's representation for change of use of the said plot of land submitted on December 20, 2006, can be decided based on the subsequent Notification dated April 17, 2007, when the court directed the concerned authority to consider the representation in light of the Notification dated May 6, 2005.

Issue-Wise Detailed Analysis:

1. Transfer of Shares and Transfer of Assets:
The court examined whether the transfer of shares by the shareholders to a stranger purchaser amounts to a transfer of the company's assets, including leasehold interests. The court referenced the precedent set in the case of Green Hut Pvt. Ltd. & Anr. Vs. State of West Bengal and Ors., which relied on Supreme Court decisions in Bacha F. Guzdar, Bombay Vs. Commissioner of Income Tax, Bombay, and Kopila Hingorani vs. State of Bihar. It was established that a shareholder has no interest in the property of the company, and the company, being a distinct juristic person, owns the property, not the shareholders. Thus, the transfer of shares does not equate to the transfer of the company's assets. The court concluded that the lease agreement was with the company, not the individual shareholders, and merely changing shareholders does not constitute a transfer of the leasehold interest. The court held that the demand for transfer fees for recognizing the alleged transfer of leasehold interest due to the change in shareholding was illegal and quashed it.

2. Applicability of Subsequent Notification:
The court considered whether the petitioner's representation for change of use of the land, submitted on December 20, 2006, should be decided based on the Notification dated May 6, 2005, or the subsequent Notification dated April 17, 2007. The court noted that the earlier writ petition directed the concerned authority to consider the petitioner's representation in light of the Notification dated May 6, 2005, which was the only notification in operation at that time. The subsequent Notification of 2007 was not in existence when the petitioner submitted its representation or when the court's directive was issued. The court held that the concerned authority acted illegally by demanding fees based on the modified Notification of 2007, contrary to the court's direction. The court referenced an unreported decision in M/s. Seven Hill Bytes Pvt. Ltd. & Anr. Vs. Kolkata Municipal Corporation & Ors., which held that pending applications should be considered based on the notification in effect at the time of submission. Consequently, the court quashed the demand for permission fees based on the 2007 notification and directed the authority to raise a fresh demand based on the 2005 notification.

Conclusion:
The court allowed the writ petition, quashing the demands based on the subsequent notification and directing the concerned authority to issue a fresh demand based on the 2005 notification. The judgment emphasized the distinction between share transfer and asset transfer and upheld the principle that pending applications should be decided based on the regulations in effect at the time of submission.