Leasehold land transfer fee dispute over statutory corporation demand, petition dismissed for misrepresentation and unclean hands

A writ petition under Art. 226 challenging a statutory corporation's demand for transfer fee on leasehold land was held not maintainable because the petitioner invoked the HC's equitable jurisdiction with unclean hands by wilful misrepresentation and suppression of material facts, including selectively quoting an insolvency appellate order to portray recorded submissions as judicial observations; the petition was dismissed on this ground. On merits, the HC held the case involved transfer of leasehold interest (not merely change in shareholding), rendering relied precedents inapplicable; the demand for transfer fee could therefore be raised. The "clean slate" principle under s.31 IBC did not bar the demand because the approved resolution plan did not settle it and insolvency fora had expressly left it open to be pursued before the competent authority. The appeal was dismissed.

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1. ISSUES PRESENTED AND CONSIDERED

(i) Whether the writ petition was liable to be dismissed in limine because the petitioner invoked Article 226 by willful misrepresentation and deliberate suppression of material facts relating to the appellate insolvency order.

(ii) Whether, on merits, the petitioner could deny liability to pay transfer fee by asserting that the transaction was only a change in shareholding and not a transfer of leasehold interest, despite the resolution plan expressly contemplating transfer of the lease.

(iii) Whether the land allotment/transfer policy brought into effect on 26.12.2012 was applicable to the post-approval transfer of leasehold rights arising from the resolution plan approved on 04.09.2019.

(iv) Whether the petitioner could rely on Section 31 of the Insolvency and Bankruptcy Code, 2016 and the "clean slate" principle to contend that WBIDC's transfer fee demand stood frozen/waived, notwithstanding that the adjudicating authority did not approve the waiver and left exemption/waiver to be decided by the competent authority.

2. ISSUE-WISE DETAILED ANALYSIS

(i) Clean hands in writ jurisdiction: effect of misrepresentation/suppression

Legal framework: The Court treated Article 226 jurisdiction as extraordinary, discretionary, and equitable, requiring the litigant to approach the Court with clean hands.

Interpretation and reasoning: The Court examined the pleadings (particularly paragraphs 9-12 of the writ petition) and found that the petitioner represented that certain portions of the insolvency appellate order were "observations" of the appellate tribunal, when in fact they were the petitioner's own submissions recorded in that order. The Court also found that the petitioner pleaded that the resolution plan suffered "no variation" except a minor aspect, despite the adjudicating authority's explicit refusal to approve the waiver/exemption component embedded in the clause dealing with transfer. Further, the petition stated that the purported "observations" were confirmed by the Supreme Court, reinforcing the misleading impression. The Court held this distortion was aimed at supporting the contention that the transfer fee demand was already adjudicated as impermissible.

Conclusions: The Court affirmed the finding that there was willful misrepresentation and deliberate suppression of material facts, disentitling the petitioner to any relief under Article 226, and that dismissal could rest on this ground alone.

(ii) Whether the case involved only change in shareholding or a transfer of leasehold rights

Interpretation and reasoning: The Court held the "change in shareholding is not a transfer" argument was untenable on the facts because the approved resolution plan itself contemplated transfer of the lease of the industrial land in favour of the corporate debtor/beneficiary from the effective date. The Court distinguished the authorities relied upon by the petitioner on the basis that those matters concerned a demand triggered merely by transfer of shares, without an issue of transfer of leasehold rights. Here, the petitioner had itself sought transfer of leasehold interest through the plan; therefore it could not assert that no transfer was involved.

Conclusions: The Court conclusively found that the present matter was not confined to change in shareholding; it involved transfer of leasehold interest, and the petitioner could not avoid transfer fee liability on the "share transfer only" theory.

(iii) Applicability of the 26.12.2012 policy to the transfer contemplated by the resolution plan

Legal framework: The Court relied on the policy's own applicability clause stating it applies to land owned/held by State departments or State-funded agencies.

Interpretation and reasoning: The Court found no dispute that the land was held by a State agency. Since the resolution plan contemplated transfer of leasehold rights and the plan was approved in 2019 (after the policy came into force), the Court reasoned the policy applied to the transfer of leasehold rights undertaken pursuant to the resolution plan. The Court rejected the petitioner's argument of impermissible retrospectivity because the relevant transfer event arose post-policy.

Conclusions: The Court held the policy applied to the transfer arising from the resolution plan approved after the policy's commencement.

(iv) Section 31 IBC / "clean slate" and whether transfer fee demand was frozen or barred

Legal framework: The Court considered the effect of the resolution plan as approved under Section 31, and the adjudicating authority's treatment of waiver/exemption claims in the plan.

Interpretation and reasoning: The Court noted that the plan clause sought transfer of the lease without payment of any fee/premium and sought extinguishment/waiver of arrears/penalties/interest; however, the adjudicating authority did not approve the waiver/exemption component and explicitly left exemption/waiver to be determined by the competent authority if applied for. The Court held that, because no waiver of transfer fee was approved and the question was left open for determination by the authority, there was no basis to contend that the transfer fee demand stood frozen under Section 31 or barred on a "clean slate" theory. The Court further held that rights and obligations must be assessed from the resolution plan as approved and the adjudicating authority's order, not from positions taken in submissions during the insolvency process. The Court treated the matter regarding waiver of transfer fee as having attained finality in the insolvency proceedings up to the Supreme Court to the extent that waiver was not granted and the issue was left to the appropriate authority.

Conclusions: The Court rejected the contention that Section 31/"clean slate" prevented the transfer fee demand. Since waiver was not approved and the issue was left open to the authority, the petitioner could not maintain that the demand was impermissible or frozen, and the writ challenge to the demand failed.

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