Lease – DDA – TP Act 1882 – Lease hold plots became property of transferee Company on amalgamation – Lease conditions still apply – Supreme Court of India
On 12.8.1983, four perpetual lease deeds were executed in favour of M/s.Jaiprakash Associates. Clause II(4)(a) of the Lease Deed puts embargo on the lessee not to sell, transfer, assign or otherwise with possession of the plots except with previous consent in writing from the lessor. However, the proviso to the said clause permitted the lessor to impose condition of unearned increase in the value i.e. difference between premium paid and the market value.
By the order dated 30.7.1986, on the joint application of M/s. Jaiprakash and M/s.Jaypee, the scheme of amalgamation was sanctioned and the said leased plots were included in the scheme of properties. It was directed that the properties I, II and III of Schedule II shall stand vested in the transferee company. The name was changed to M/s. Jaiprakash Industries Ltd and then to the appellant M/s. Jaiprakash Associates.
On the application for permission to mortgage the lease plots to IFCI, the respondent – DDA demand an unearned increase value of Rs.2,13,59,511.20 ps from the appellant vide letter dated 14.3.1991.
The writ petition of the appellant was dismissed on 30.1.2003 and same was confirmed by the Division Bench.
HELD that Clause II(4)(a) does not exclude involuntary transfers. However, in the facts of the case, it cannot be said that there is an involuntary transfer as the transfer was based on amalgamation petition filed by the lessee. In a sense this is an act done by lessee and transferee company on their own. It was a transfer subject to Clause II(4)(a) of the lease deed and therefore, it is applicable in such transfer due to demerger. The said principles will apply to a merger and unearned increase will be payable. Section 5 of the Transfer of Property Act is of no assistance since it clarifies that nothing contained therein shall affect any law for the time being in force in relation to the transfer to by or by companies.
Judgment dated 5.4.2024 in Civil Appeal No.8336 of 2009 of M/s. Jaiprakash Industries Ltd Vs. Delhi Development Authority
