Section 5 Of TPA Won’t Be Of Any Assistance: SC Allows DDA To Withdraw Principal Amount In Lease Case
The Supreme Court permitted the Delhi Development Authority (DDA) to withdraw the principal amount of more than 2 crores in a lease matter.
The Court was deciding an appeal filed by a company against the judgment of the High Court as its representations were not favourably considered by DDA.
The two-Judge Bench of Justice Abhay S. Oka and Justice Pankaj Mithal said, “The relevant clause II(4)(a) in the perpetual leases subject matter of this appeal is very wide. It not only covers transfers but also parting with possession. Therefore, the transfer contemplated by the said clause is much wider than what is defined under Section 5. Importantly, Section 5 clarifies that nothing contained therein shall affect any law for the time being in force in relation to the transfer of property to or by companies. Therefore, Section 5 of the TPA will not be of any assistance to the appellant.”
Advocate Sharmila Upadhyay represented the appellant while Advocate Malvika Kapila represented the respondent.
Brief Facts -
The then President of India executed four separate perpetual lease deeds in August 1983 in favour of the appellant company in respect of the plots more particularly described in Schedule-I to the lease deeds. In July 1986, a joint application was made by the appellant company and another company before the Allahabad High Court, praying for amalgamation of M/s. Jaiprakash Associates Pvt Ltd (appellant) with M/s. Jaypee Rewa Cement Ltd. The High Court sanctioned the scheme of amalgamation and the said plots were included in the Schedule of the properties to the scheme of amalgamation. While passing the order approving amalgamation, the High Court directed that the properties in Parts I, II and III of Schedule II to the said order shall stand vested in the transferee company (M/s. Jaypee Rewa Cement Ltd). After the amalgamation, in September 1986, the name of M/s. Jaypee Rewa Cement Ltd was changed to M/s. Jaiprakash Industries Ltd.
Subsequently, the name was changed to M/s. Jaiprakash Associates Ltd, which is the appellant. Thus, in short, the appellant was a company created as a result of the amalgamation of the erstwhile M/s. Jaiprakash Associates Pvt Ltd and M/s. Jaypee Rewa Cement Ltd and the appellant was the transferee company. An application was made by the appellant to DDA (respondent) for a grant of permission to mortgage the said plots in favour of the Industrial Finance Corporation of India. DDA demanded an unearned increase value of Rs. 2,13,59,511.20/- and being aggrieved by such demand, representations were made by the appellant which were not favourably considered by DDA. Therefore, the appellant filed a writ petition before the Delhi High Court. The Single Judge dismissed the said petition and being aggrieved, the appellant preferred an appeal before the Division Bench. However, the said appeal was also dismissed and hence, the matter was before the Apex Court.
The Supreme Court in view of the facts and circumstances of the case observed, “This Court was dealing with an order of the Company Judge, which provided that the property of a company shall stand transferred to the respondent before this Court, and therefore, it was a case of transfer to which clause 6(a) of the lease deed will be attracted. Clause 6(a) in the lease subject matter of the said case was identical to clause II(4)(a) of the perpetual lease in the present case. This Court also held that clause 2(d) of the policy determining unearned income was attracted in the case of transfer due to demerger.”
The Court referred to the case of Indian Shaving Products Limited v. Delhi Development Authority & Anr. 2001 SCC Online Del 1123: 2002 1 AD (Del) 175 in which the High Court dealt with the amalgamation of companies under the ICA and not under the Companies Act and the Supreme Court confirmed the said decision by summarily dismissing the petition.
“In the present case, the relevant clause II(4)(a) of the leases covers involuntary transfers as well. … An argument is also sought to be canvassed that the transfer in this case is not covered by the transfer defined under Section 5 of the TPA”, it added.
Accordingly, the Apex Court dismissed the appeal and permitted the respondent to withdraw the principal amount along with the interest.
Cause Title- M/s. Jaiprakash Industries Ltd. (Presently known as M/s. Jaiprakash Associates Ltd.) v. Delhi Development Authority (Neutral Citation: 2024 INSC 273)
Appearance:
Appellant : AOR Sharmila Upadhyay, Advocates Pawan R Upadhyay, Sarvjit Pratap Singh, Rishab Khare, and Supriya R Pandey.
Respondent : AOR Malvika Kapila and Advocate Tanwangi Shukla.
