Court Orders Execution of Lease Deed in Favor of Petitioner Company

The court directed the respondent to execute the lease deed in favor of the petitioner company within six weeks, as control of the company had not shifted to outsiders due to share transfers, and unearned increase was not payable under the guidelines or lease conditions.

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Issues Involved:
1. Whether any unearned increase is payable to the respondent in terms of the guidelines for management of industrial land in Delhi.
2. Whether any unearned increase is payable to the respondent in terms of the condition contained in the lease document.

Summary:

The petitioner, a private limited company, applied to the respondent - DSIIDC for allotment of an industrial plot in Narela Industrial Complex under its Relocation Scheme. The plot was provisionally allotted on 7.7.1990, and possession was handed over on 17.5.1993. The respondent sent lease papers on 9.10.2006, but the lease deed has not been executed. The petitioner seeks a writ of mandamus directing the respondent to execute the lease deed.

The respondent contends that changes in the shareholding pattern and directorship of the petitioner company necessitate the calculation of unearned increase, as shares were transferred outside the family. The guidelines define "family" narrowly, excluding sister-in-law and nephews. However, as of 29.9.2007, the original shareholders held 50% shares each.

The first issue is whether unearned increase is payable per the guidelines. The guidelines do not provide for charging unearned increase when shares in a private limited company are transferred to non-family members. Clauses 1(iii)(a) and (b) apply to proprietorship or partnership concerns, not to private limited companies. Therefore, the policy decision cited by the respondent does not entitle them to claim unearned increase from the petitioner.

The second issue concerns the lease conditions. Clause 5(a) of the lease format prohibits selling, transferring, or assigning the plot without prior written consent of the lessor, who can recover 50% of the unearned increase upon granting such consent. However, the petitioner company, as a legal entity, continues to own the land despite changes in shareholding. Unearned increase can be charged if control of the company shifts due to transfer of majority shares or issuance of additional equity to non-family members. In this case, the original shareholders always held more than 50% shares, maintaining control of the company.

Since Mr. Davender Kumar Gupta and Mr. Dinesh Kumar Gupta always held more than 50% shares, control never shifted to outsiders. Therefore, the respondent is not entitled to recover any unearned increase from the petitioner company.

The writ petition is disposed of with a direction to the respondent to execute the lease deed in favor of the petitioner company within six weeks, subject to completion of all formalities. There shall be no orders as to costs.

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