2016 (7) TMI 876 - SC - Indian Laws

Supreme Court rules in favor of Estate Officer in land allotment dispute

Estate Officer UT Chandigarh and Ors. Versus M/s. Esys Information Technologies Pvt. Ltd.

Estate Officer UT Chandigarh and Ors. Versus M/s. Esys Information Technologies Pvt. Ltd. - 2016 AIR 2834, 2016 (2) SCR 682, 2016 (12) SCC 582, 2016 (5) ... Issues Involved:1. Legality of the transfer of shares and assets by the respondent.2. Compliance with Rule 9 of the Allotment of Small Campus Site in Chandigarh Information Services Park, Rules, 2002 and Clause 15 of the allotment letter.3. Validity of the resumption of the allotted land by the Estate Officer.4. Allegations of suppression of material facts by the respondent.Issue-wise Detailed Analysis:1. Legality of the Transfer of Shares and Assets by the Respondent:The respondent, M/s. Esys Information Technologies Pvt. Ltd., Singapore, transferred a major portion of its shares to M/s. Esys Global Holdings, Dubai, without informing or seeking permission from the appellant, as required by Rule 9 and Clause 15 of the allotment letter. The transfer was discovered on 2.1.2008, prompting the Director, IT, to seek clarifications from the respondent. The respondent's reply was unsatisfactory, leading to a show-cause notice and subsequent cancellation of the allotment by the Estate Officer on 24.9.2008.2. Compliance with Rule 9 of the Allotment of Small Campus Site in Chandigarh Information Services Park, Rules, 2002 and Clause 15 of the Allotment Letter:Rule 9 and Clause 15 stipulated that the transfer of the campus site by the allottee was not allowed for ten years from the date of allotment or until all dues were fully paid, whichever was later. The respondent argued that the shareholding pattern change did not constitute a transfer of the site. However, the appellant contended that the transfer of shares to Esys Global Holdings, Dubai, and the subsequent transaction with Teledata Informatics Ltd., Chennai, violated these conditions. The Court noted that the affidavit of Mr. Vikas Goel in the High Court of Singapore confirmed the sale of subsidiaries, including Esys India, to Esys Global Holdings, Dubai, and the involvement of Teledata.3. Validity of the Resumption of the Allotted Land by the Estate Officer:The Estate Officer resumed the site on 24.9.2008, forfeiting 10% of the total premium and other dues. The respondent's appeal and revision petitions were dismissed. The High Court set aside the resumption, but the Supreme Court found that the provisions of Rule 9 and Clause 15 were clearly violated. The Court emphasized that the transfer of shares and assets constituted a transfer of the site, which was not permissible without prior permission.4. Allegations of Suppression of Material Facts by the Respondent:The Supreme Court highlighted that the respondent suppressed material facts regarding its transactions with Teledata. Despite the Court's specific order on 16.7.2015 to disclose full facts, the respondent failed to do so. The affidavits filed by Mr. Vikas Goel in the High Court of Singapore revealed the true nature of the transactions, showing that the respondent engaged in a sale of assets and subsidiaries to Esys Global Holdings, Dubai, and had dealings with Teledata.Conclusion:The Supreme Court concluded that the respondent violated Rule 9 and Clause 15 of the allotment letter by transferring shares and assets without permission. The resumption of the allotted land by the Estate Officer was deemed legal and proper. The Court found the respondent guilty of suppressing material facts and violating the disclosure order dated 16.7.2015. Consequently, the Supreme Court set aside the High Court's order and allowed the appeal, with parties bearing their own costs.