DELHI DEVELOPMENT AUTHORITY versus NALWA SONS INVESTMENT LTD. AND ANR.

Citation: [2019] 6 S.C.R. 783 · Decided: 24-04-2019 · Supreme Court of India · Bench: A.M. KHANWILKAR · Disposal: Appeal(s) allowed

Cited by 2 judgment(s) · cites 2 · see the full citation network in Lexace

Judgment (excerpt)

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DELHI DEVELOPMENT AUTHORITY
v.
NALWA SONS INVESTMENT LTD. AND ANR.
(Civil Appeal No. 4260  of  2019)
APRIL  24, 2019
[A. M. KHANWILKAR AND AJAY RASTOGI, JJ.]
Lease – Lease deed – Recovery of unearned increase (UEI)
in the value of the commercial plot at the time of sale, transfer
assignment – Respondent no.1-public Ltd. company was allotted a
commercial plot by the appellant-DDA – Pursuant thereto, a
perpetual lease deed was executed by the appellant in favour of
respondent no.1 – Respondent no.1 and respondent no.2 entered
into an arrangement and invited an order of demerger from the
Company Judge, of the High Court – The order of demerger was
passed –  Consequent to which, all the assets rights, powers, debts
and liabilities of respondent no.1 stood transferred to respondent
no.2 – As the subject plot transferred to another company-respondent
no.2, appellant demanded respondents u/cl.2(d) of the appellant’s
policy to pay Rs.6,17,53,998/- towards UEI and an amount of
Rs.10,44,394/- towards misuse charges – Respondents failed to pay
– Show cause notice issued by the appellant – Writ petition by
respondents challenging the said show cause notice – Single Judge
of the High Court held that the notice issued by the appellant was
valid – However, Division Bench of High Court set aside the demand
notice and show cause notice issued by the appellant – Respondents
contended that the two companies were admittedly group companies
and respondent no.1 continued to have control over the property in
question – Also, the transfer of property was not to an outsider
and, in any case, was without any consideration and on no-profit
basis – As a result, the respondents were not liable to pay UEI –
Held: The order passed by the Company Judge approving the scheme
of demerger made it clear that all property, assets, rights and powers
in respect of the specified properties, including the said plot,
transferred to and vested in respondent no.2 – Once it is a case of
transfer, it must abide by the stipulation in cl. 6(a) of the Lease
Deed of taking previous consent in writing of the lessor (appellant)
   [2019] 6 S.C.R. 783
783
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SUPREME COURT REPORTS
[2019] 6 S.C.R.
and to fulfill such terms and conditions as may be imposed, including
to pay any unearned increase amount – Further, cl.2(d) of the
appellant’s policy relating to the charge of unearned increase plainly
applied to the present case – The obligation to pay UEI did not flow
only from the instructions/policy issued by the competent authority
of the appellant but primarily from the stipulation in the Perpetual
Lease Deed in the form of cl.6(a) – Going by the plain language of
cl.6(a) of the Lease Deed, there is no reason to extricate the
respondents from the obligation of the lessee (transferor) flowing
therefrom – Therefore, judgment of the Division Bench of the High
Court set aside and the order passed by the single judge restored –
DDA policy/instructions No.LSAI/ 1(6) 87/Policy Case/ Unearned
Increase dated 06.09.88 – cl.2(d)
Allowing the appeal, the Court
HELD: 1.  In the first place, it is not open to the
respondents to contend that the arrangement and demerger
scheme does not result in transfer of the subject plot from the
original lessee (respondent No.1) to respondent No.2.  Inasmuch
as, clause (2) of the order passed by the Company Judge
approving the scheme of demerger, as reproduced above, makes
it amply clear that all property, assets, rights and powers in respect
of the specified properties, including the subject plot, shall stand
transferred to and vest in respondent No.2. Once it is a case of
transfer, it must abide by the stipulation in clause 6(a) of the Lease
Deed of taking previous consent in writing of the lessor (appellant)
and to fulfill such terms and conditions as may be imposed,
including to pay any unearned increase (UEI) amount. There is
force in the argument of the appellant that the fact situation of
the present case would, in fact, be governed by clause 2(d) of the
instructions. This clause plainly applies to the present case.  The
demand of unearned increase from the respondents is founded
on that basis. The High Court misinterpreted the said clause and
erroneously opined that it is not applicable to a case of demerger
of a public limited company. [Para 13][799-G-H; 800-A-E]
2. The principal clause is clause 6(a) of the Lease Deed.
The clause referred to in the instructions is equally significant.
Indeed, the latter

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