Himachal Pradesh High Court
Decided On : 27.03.2025 vs State Of Himachal Pradesh And Others on 27 March, 2025
Author: Ajay Mohan Goel
Bench: Ajay Mohan Goel
2025:HHC:7969
IN THE HIGH COURT OF HIMACHAL PRADESH AT
SHIMLA
CWP No. 8154 of 2022
Decided on : 27.03.2025
M/s Power Chem Plast Limited.
...Petitioner
Versus
State of Himachal Pradesh and others.
...Respondents
Coram
Hon'ble Mr. Justice Ajay Mohan Goel, Judge
Whether approved for reporting?1 Yes
For the petitioner : Mr. Rakesh Gupta, Advocate.
For the respondents : Mr. Rajpal Thakur, Additional
Advocate General, for
respondents No.1 & 6.
Mr. Mehar Chand, Advocate, for
respondents No.2 & 3.
Mr. N.K. Sood, Senior Advocate,
with Mr. Aman Sood, Advocate,
for respondents No.4 & 5.
Ajay Mohan Goel, Judge (Oral)
By way of this writ petition, the petitioner has, inter alia, prayed for the following reliefs:-
"(1) To issue an appropriate writ in the nature of certiorari quashing the impugned letter dated 26.8.2022 vide which respondent No.6 has refused to register the sale certificate with regard to sale of property bearing Plot 1Whether reporters of the local papers may be allowed to see the judgment? 2
2025:HHC:7969 No.8, measuring 10109 sq. meters situated in Industrial Area, Baddi, Tehsil Baddi, Distt. Solan, Himachal Pradesh, which the petitioner has purchased free from all encumbrances in terms of the sale certificate dated 4.7.2022.
(2) Further to issue an appropriate writ in the nature of mandamus in favour of the petitioner with appropriate directions to respondent No.6 to register the sale certificate dated 4.7.2022 in accordance with the provisions of the Security Interest (Enforcement) Rules, issued by the Authorized Officer, IFCI.
(3) Further to issue an appropriate writ in the nature of mandamus directing respondents No. 2 and 3 to immediately transfer the land in favour of the petitioner in their records, without the demand of unearned increase. (4) Further to issue an appropriate writ in the nature of mandamus directing respondent No.5 to immediately pay the unearned profit from the sale consideration received by IFCI from the petitioner, to remove the objection in this regard."
2. As per the petitioner, HPSIDC is the owner of plot No.8 in Industrial Area, Baddi, District Solan, measuring 10109 sq. metres. In terms of a Conveyance Deed executed on 3 2025:HHC:7969 09.09.1988, the property was let out to Himachal Advanced Circuits Limited for the purpose of setting up of an industry. In the year 1990, HPSIDC permitted Himachal Advanced Circuits Limited to mortgage the property with financial institutions to raise money with the condition that unearned profit was to be paid by Himachal Advanced Circuits Limited to HPSIDC. Further, as per the petitioner, on 23.11.1992, the land in issue was mortgaged by Himachal Advanced Circuits Limited with a consortium of banks with IFCI Bank being the lead bank. The Unit went into red and it was taken over by the Official Liquidator in the year 2022. This was followed by litigation under the Companies Act.
3. This Court, in a Company Petition, permitted IFCI to auction the properties of Himachal Advanced Circuits Limited under the provisions of the SARFAESI Act. Thereafter, vide advertisement dated 20.09.2021, the property was put to auction and the petitioner herein is the successful bidder.
4. The Court stands informed that thereafter, the Company Court permitted IFCI Bank to issue a Sale Certificate in favour of the petitioner, which was duly issued. This was 4 2025:HHC:7969 followed by the handing over of the auctioned property to the petitioner by the Official Liquidator in terms of the direction passed by the Company Court in Company Petition No. 15 of 2003.
5. The petitioner has approached this Court with the grievance that the Sale Certificate in issue is not being registered in the name of the petitioner and the respondent- State is insisting upon the payment of stamp duty for the purpose of registration, whereas, in light of the fact that the petitioner had purchased the property in an auction, it is exempted from paying the stamp duty. It is further the grievance of the petitioner that respondents No.2 & 3 are not transferring the property in favour of the petitioner and are demanding unearned increase as well as certain other charges.
6. Learned counsel for the petitioner has argued that in the light of the fact that the property in issue was purchased by the petitioner in a bid conducted under the provisions of the SARFAESI Act, the demand by the State of stamp duty for registration of the Sale Certificate in the name of the petitioner is per se bad. Learned counsel has relied upon the judgment of 5 2025:HHC:7969 Hon'ble Division Bench of this Court in CWP No. 221 of 2019, titled Mohan Singh Guleria Vs. State of H.P & Ors., decided on 08.10.2020 and submitted that this issue is no more res integra and, therefore, the insistence on the part of the Authority of payment of Stamp Duty is illegal. He further submitted that the demand of payment of unearned increase by respondents No.2 & 3, is totally unjustified, whereas, other charges, which are being demanded by respondents No.2 & 3 and which the petitioner is under obligation to the pay to the said respondents, shall be duly paid by the petitioner to respondents No.2 & 3.
7. Learned counsel has taken the Court through relevant provisions of the e-auction notice and submitted that there is a complete misreading of the provisions thereof and by no stretch of imagination it can be suggested that as per the terms and conditions of the same, the petitioner is obliged to pay any unearned increase to the said respondents as is being demanded. Accordingly, he prayed that this writ petition be disposed of by directing the Authorities concerned to register the Sale Certificate in the name of the petitioner without insisting upon the petitioner to pay the Stamp Duty and further 6 2025:HHC:7969 it be ordered that the demand of payment of unearned increase by respondents No. 2 & 3 is not justified.
8. Though learned Additional Advocate General has vehemently argued that the petitioner is liable to pay the Stamp Duty for the purpose of the registration of the Sale Certificate in its name, however, this fact not being any more res integra could not be disputed by the learned Additional Advocate General.
9. On the other hand, learned counsel appearing for respondents No. 2 & 3 has vehemently argued that there is no merit in this writ petition. He has taken the Court through the documents appended with the pleadings and submitted that in fact in this case HPSIDC was not associated at all with the process of the auction of the property, which is a patent illegality in the process of auction of the property itself. He further submitted that in terms of the initial Conveyance Deed entered into between HPSIDC and Himachal Advanced Circuits Limited, there was an express condition about the payment of the unearned increase and because now the petitioner has entered into the footsteps of Himachal Advanced Circuits 7 2025:HHC:7969 Limited, therefore, this obligation necessarily has to be obligated by the petitioner towards respondent No.2. He also submitted that even as per the terms of the auction, specifically condition No. 2.12 under the heading 'Terms and Conditions of Sale', it stands specifically mentioned that the successful purchaser shall bear the applicable Stamp Duties/Additional Stamp Duties/transfer charges, fee etc. and unearned increase is, therefore, payable by the petitioner under the head of 'transfer charges'. He thus submitted that as the writ petition is without any merit, the same be dismissed.
10. Learned Senior Counsel appearing for respondents No.4 & 5 submitted that the auction was necessitated by the fact that the debt given by the banks to Himachal Advanced Circuits Limited, ended into a bad debt. Learned Senior Counsel further submitted that the property was auctioned strictly in accordance with law, in terms of the directions passed by this Court in a Company Petition and, therefore, it does not lie in the mouth of respondents No.2 & 3, to allege that the auction was conducted in an illegal manner. Learned Senior Counsel further submitted that respondent No.4 being one of 8 2025:HHC:7969 the secured creditors, has first right over the liquidity that has now flown post the auction of the property in favour of the petitioner and respondents No.2 & 3 have no right thereupon nor they can seek any unearned increase from respondent No.4.
11. I have heard learned counsel for the parties and also carefully gone through the pleadings as well as documents appended therewith.
12. I will firstly deal with the issue as to whether the Registering Authority/respondent No.6 can refuse registration of the Sale Certificate in favour of the petitioner and insist upon the petitioner to pay Stamp Duty for the registration thereof or not.
13. In terms of the judgment of the Hon'ble Division Bench in Mohan Singh Guleria Vs. State of H.P & Ors. (supra), the Hon'ble Division Bench has been pleased to hold by placing reliance on the judgment of the Hon'ble Supreme Court of India that in such like situation where the petitioner purchases a property by way of auction, the Sale Certificate is required to be registered without insisting for affixation of Stamp Duty. This 9 2025:HHC:7969 view has been reiterated by the Hon'ble Division Bench even post review of this judgment i.e. in CWP No. 221 of 2019, titled Mohan Singh Guleria Vs. State of H.P & Ors., decided afresh on 28.03.2023.
14. In the light of the law so declared by the Hon'ble Division Bench of this Court, which has been followed in plethora of judgments by the Hon'ble Coordinate Benches also of this Court, this Court has no hesitation in holding that the insistence of payment of Stamp Duty by respondent No.6 for the purpose of registration of the Sale Certificate in favour of the petitioner, in the revenue records, is per se bad.
15. The respondents cannot compel the petitioner to pay Stamp Duty to register the Sale Certificate and enter the mutation quasi-landing. Therefore, as far as this issue is concerned, the same is disposed of with the direction that as there is no question of insisting for affixation of Stamp Duty by respondent No.6 to register the Sale Certificate and enter mutation qua sale of land in favour of the petitioner, respondents are directed to do the needful as expeditiously as possible, without insisting upon the payment of Stamp Duty. 10
2025:HHC:7969
16. Now addressing the issue as to whether respondents No. 2 and 3 can demand the payment of unearned increase from the petitioner, this Court is of the considered view that the same cannot be demanded by respondents No.2 and 3 from the petitioner.
17. The Court is putting a caveat that it is not returning a finding that respondents No. 2 and 3 cannot demand unearned increase from anyone. However, the question which this Court is answering in this writ petition is whether it can be demanded by respondents No.2 and 3 from the petitioner or not.
18. At this stage itself, this Court would like to refer to certain clauses of the Conveyance Deed which was entered into between respondents No.2 and 3 and Himachal Advanced Circuits Limited. The Conveyance Deed is dated 09.09.1988. Clause 2(xi)(a) & (b) of the said Conveyance Deed provide as under:-
"2(xi) a) The Vendee shall not sell, leaseout, transfer, assign or otherwise part with the possession of the plot or building errected thereon either in whole or part except with the prior written approval of the 11 2025:HHC:7969 Managing Director of the Vendor/Corporation. The Managing Director of the Corporation shall have the right to refuse such requests in his absolute discretion.
In the event of such consent being given the Corporation may impose such terms, and condition as it deemed fit and the Corporation shall be entitled to claim and recover a portion of the unearned increase in the value (i.e. the difference between the final price paid and market value) of the Industrial Plot at the time of sale, transfer, assignment, or parting with the possession. The amount to be recovered will be 50% of the unearned increase and the decision of the Managing Director of the Corporation in respect of determination of market value shall be final and binding;
b) The Vendee may, with the prior written consent from the Corporation, mortgage his rights in the Industrial Plot to such financial institutions as may be approved by the Corporation in its absolute discretion. In the event of sale or fore-closure of the mortgaged property, the Corporation shall be entitled to claim and recover the 50% of the unearned increase in the value of the Industrial plot as aforesaid, and the amount of the Corporation's share of the said un-earned increase shall 12 2025:HHC:7969 be a first charge having priorty over the said the said mortgage or charge;"
19. In the considered view of this Court, the issue of the claim and recovery of unearned increase would arise if an event takes place as is envisaged in Clause 2(xi) of the Conveyance Deed. In other words, in case the Vendee with the prior written consent from the Corporation mortgage his rights in the Industrial Plot to such financial institutions as may be approved by the Corporation in its absolute discretion and thereafter a sale or foreclosure of the mortgaged property took place, then in terms of this Clause the Corporation is stated to be entitled to claim and recover the 50% of the unearned increase in the value of the Industrial Plot as aforesaid and the amount of the Corporation's share of the said unearned increase shall be a first charge having priority over the said mortgage or charge.
20. The first and foremost point for consideration in the course of interpretation of Clause 2(xi) is that in such like situation, an entity like the petitioner does not come into picture at all. The issue of unearned increase etc. would arise post sale 13 2025:HHC:7969 or foreclosure of the mortgaged property and but natural the Corporation can stake its claim for unearned increase vis-a-vis those who claim to be the beneficiaries of the outcome of this sale or foreclosure of the mortgaged property.
21. Applying this analogy to the present case, the auction took place at the behest of respondent No.4 as well as other secured creditors in the winding up proceedings. Therefore, in the considered view of this Court, the fight, if any, for the unearned increase, has to be intra respondent No.2 and other creditors including the secured creditors. As observed hereinabove, the petitioner does not come into picture in this at all. Therefore, the demand of unearned increase from the petitioner by respondents No.2 and 3 is totally unjustified, even as per the terms of the Conveyance Deed.
22. As far as the terms and conditions of the auction notice are concerned, this Court is of the considered view that Clause 2.12 thereof cannot be so interpreted so as to suggest that the word 'transfer charges' mentioned therein have to be read as 'unearned increase'. The word 'transfer charges' mentioned in Clause 2.12 have to be read harmoniously with 14 2025:HHC:7969 other contents of this particular Clause, which are Stamp Duties, Additional Stamp Duty, fee etc. and, therefore, transfer charges have to be read with these words and transfer charges as has been mentioned in Clause 2.12 only refer to such transfer charges, which a party may have to pay to the revenue in the course of the transfer of the property in its name. By no stretch of imagination, the same can be termed to be a reference to 'unearned increase' as has been argued by the learned counsel for respondents No.2 & 3.
23. At this stage, this Court would like to point out one more fact and the same is that respondents No.2 & 3 are not the authors of the tender document. In fact, they claim that entire exercise of the auction has been done at their back. That being the case, it is not understood how they are construing that there is something contained in the contents of the auction document, which is favourably referrable to respondents No. 2 and 3.
24. Accordingly, in view of the findings returned hereinabove, this writ petition, is allowed in the following terms:-
(a) As directed hereinabove also, respondent no. 6 15 2025:HHC:7969 shall not insist upon the payment of the Stamp Duty for the registration of the Sales Certificate and entering the mutation of the property in favour of petitioner
(b) No unearned profit is payable by the petitioner in favour of respondents No.2 and 3.
25. It is further observed that the adjudication in this writ petition should not be construed as an adjudication qua the claims that have been filed by respondents No.2 and 3 before the Official Liquidator in Company Petition no. 15 of 2003.
26. The petition is accordingly disposed of in the above- said terms. No order as to cost. Pending miscellaneous application(s), if any, also stand disposed of accordingly.
(Ajay Mohan Goel) Judge March 27, 2025 (Shivank Thakur)