Karnataka High Court
Cyient Ltd vs Karnataka State Electronics ... on 20 December, 2024
Author: Suraj Govindaraj
Bench: Suraj Govindaraj
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WP No. 28909 of 2015
R
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 20TH DAY OF DECEMBER, 2024
BEFORE
THE HON'BLE MR JUSTICE SURAJ GOVINDARAJ
WRIT PETITION NO. 28909 OF 2015 (GM-RES)
BETWEEN
CYIENT LTD
A COMPANY INCORPORATED UNDER
THE PROVISIONS OF THE COMPANIES ACT, 1956
AND HAVING ITS OFFICE AT
CYIENT IT PARK, 110A & 110B, PHASE I,
ELECTRONIC CITY,
BENGALURU-560 100
REPRESENTED BY ITS GENERAL MANAGER
DR. RAJARAM KOTA
...PETITIONER
(BY SRI. M.V. SUNDARARAMAN., ADVOCATE)
AND
KARNATAKA STATE ELECTRONICS DEVEOPMENT
Digitally signed
by SHWETHA CORPORATION LTD.
RAGHAVENDRA 2ND FLOOR, TTMC "A" BLOCK,
Location: HIGH
COURT OF BMTC, SHANTINAGAR, K.H. ROAD,
KARNATAKA BANGALORE-560 027.
REPRESENTED BY IT MANAGING DIRECTOR
...RESPONDENT
(BY SRI. NISHANTH A.V., ADVOCATE)
THIS WRIT PETITION IS FILED UNDER ARTICLES 226 & 227
OF THE CONSTITUTION OF INDIA PRAYING TO ISSUE A WRIT IN THE
NATURE OF CERTIORARI OR ANY OTHER APPROPRIATE WRIT, ORDER
OR DIRECTION TO QUASH THE LETTER DATED 26.05.2015 BEARING
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NO. KSEDC/MD/E-CITY/CYIENT/2015-16 AT ANNEXURE-A ISSUED BY
THE RESPONDENT TO THE PETITIONER AND ETC.
THIS WRIT PETITION COMING ON FOR ORDERS AND HAVING
BEEN RESERVED FOR ORDERS ON 05.12. 2024, THIS DAY, THE
COURT PRONOUNCED THE FOLLOWING:
CORAM: HON'BLE MR JUSTICE SURAJ GOVINDARAJ
CAV ORDER
1. The Petitioner is before this Court seeking for the
following reliefs:
a. To issue a writ in the nature of certiorari or any other
appropriate writ, order, or direction to quash the
letter dated 26.05.2015 bearing No. KSEDC/MD/E-
City/Cyient/2015-16 at Annexure-A issued by the
Respondent to the petitioner.
b. Issue a writ in the nature of Mandamus directing the
Respondent to execute a sale deed in favour of the
petitioner in respect of the Schedule Property in
terms of Lease cum Sale Agreement dated
09.06.2005;
c. Pass such other/further order/s as this Hon'ble Court
deems fit and proper in the facts and circumstances
of the case in the interests of justice and equity.
2. The Petitioner claims to be a Company incorporated
under the provisions of the Companies Act 1956,
providing various software services. The Petitioner
was originally incorporated as Infotech Enterprises
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Private Limited company in the year 1991,
subsequently became a Public Limited Company in
the year 1995 and consequently, a Certificate of
Registration and change of name was issued on
7.9.1995. The name of the Petitioner came to be
changed from Infotech Enterprises Ltd. to Cyient
Limited on 5.5.2014.
3. The Petitioner being desirous of setting up of a
computer software development project applied for
allotment of a site to the Respondent vide application
dated 25.5.2002. A Letter of Intent on allotment
came to be issued along with a Possession Certificate
on 26.11.2004. Subsequently, a Lease-cum-Sale
agreement came to be executed on 9.6.2005 for a
period of six years. The Petitioner got a plan
approved for construction and put up the
construction in the year 2007 of 2.40 lakh square
feet on the scheduled property. All the payments
which have been called upon by the Respondent for
payment have been so paid.
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4. The Petitioner, on compliance with all its obligations,
vide its letter dated 6.2.2013, 22.5.2013, 6.9.2013,
29.11.2013, 5.12.2013, 2.5.2014, and 5.3.2015
called upon the Respondent to execute necessary
sale deed and provided the latest audit report and
shareholding pattern. No action had been taken on
the said request. After a delay of nearly three years,
the Respondent on 16.3.2015 replied to the
Petitioner alleging that the Petitioner has violated
Clauses 3 (r)(i) and (ii) of the Lease-cum-Sale
agreement and alleged that the Petitioner has
changed its name without obtaining prior approval
and contended that the Lease-cum-Sale agreement
would be cancelled by issuing a show-cause notice on
16.03.2015.
5. The Petitioner replied to the same on 19.03.2015,
stating that there is only a change in the name of the
Petitioner and there is no change in the constitution
of the Petitioner. The Respondent replied vide its
letter dated 26.05.2015 that the allotment could
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continue only if the Petitioner were to make payment
of the present allotment rate at the rate of
Rs.2,250/- per square feet, within the next four
months. It is challenging the said letter dated
26.05.2015 that the Petitioner is before this Court.
6. Sri.Dhyan Chinnappa, learned Senior Counsel
appearing for the Petitioner would submit that there
is no violation on part of the Petitioner of any of the
provisions. The referenced Clauses 3(r)(i) and
3(r)(ii) are not applicable to the present facts and
circumstances. The Petitioner has only undergone a
change in the name which is neither prohibited nor
can be prevented. The Petitioner was always a Public
Limited Company and continues to be a Public
Limited Company and as such the shareholding
changes if any in a Public Limited Company cannot
be held against the Petitioner inasmuch as the
change in shareholding is not as regards the
promoters, but is as regards the institutional
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investors, general public, etc., over which the
Petitioner has no control and on that basis, he
submits that the petition is required to be allowed.
7. Sri.Nishanth A.V., learned counsel for Respondent
submits that in terms of Clause 3(r)(ii) of the Lease-
cum-Sale agreement, there is a specific restriction on
the lessee not to change the name/product as
mentioned in the application. Admittedly, the
Petitioner when the application was filed was known
as Infotech Enterprises Limited and now the name
has been changed to Cyient Limited and therefore,
ex facie, there is a violation of 3(r)(ii) of the Lease-
cum-Sale agreement and as such, the Respondent is
not bound to execute a sale deed on there being a
violation.
8. The Respondent has been liberal in continuing the
allotment on payment of the current market value by
considering it a fresh allotment and on that basis,
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submits that no fault could be found with the actions
on part of the Respondent.
9. Heard Sri.Dhyan Chinnappa, learned Senior Counsel
for the Petitioner and Sri.Nishanth A.V., learned
counsel for Respondent and perused papers.
10. The short question that would arise for consideration
is:
Whether change of the name of a
Public Limited Company, would amount
to a breach of the terms of Clause
3(r)(i) or 3(r)(ii) of the Lease-cum-
Sale agreement dated 9.6.2005?
11. It is not in dispute that the Petitioner was earlier
known as Infotech Enterprises Limited and it is that
limited company which is a party to a Lease-cum-
Sale agreement. It is further not in dispute that the
said company had made payment of all the due
amounts, obtained plan sanctions and put up
constructions and is running its business in the
premises allotted.
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12. The only contention of the Respondent is that the
name of the Petitioner has been changed, without
the prior approval of the lessor and as such, the
lessee has to pay the prevailing rate of the plot.
13. Clauses 3(r)(i) and 3(r)(ii) of Lease-cum-Sale
Agreement are reproduced hereunder for easy
reference:
3 (r) (i) The lessee shall not change the
constitution/status of its firm/company (proprietary
or partnership (registered or un-registered) or
private limited company or unlimited company)
without the previous written consent of the lessor
or any other officer authorised by the lessor and
such consent shall be granted by the lessor subject
to the condition that the original applicant /
partners / promoters/ directors / shareholders
should continue to hold a minimum 51% of the
interest/shares in the newly constituted
firm/company. And in the event of the lessee's
death, the person to whom the title shall be
transferred as heir or otherwise shall cause notice
thereof to be given to the lessor within three
months from such death.
3 (r) (ii) The lessee shall not change the
name/product (as mentioned in the application)
without the previous written consent of the lessor
or any officer authorised by the lessor and such
consent shall be granted by the lessor subject to
the condition that the lessee has to pay prevailing
rate of the plot.
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14. Though, in the notice, Clause 3(r)(i) of the Lease-
cum-Sale Agreement was referred to, during the
course of the argument, the contention as regards
Clause 3(r)(i) has been given up and as such, it
would not be required for this Court to go into
whether there is any change in the shareholding or
not even though a memo along with documents in
relation thereto has been filed by the Petitioner to
contend that there is no such change in
shareholding.
15. Coming to Clause 3(r)(ii) of the Lease-cum-Sale
Agreement, what is stated therein is that the lessee
shall not change the name/product without the
previous written consent of the lessor or any officer
authorized by the lessor and such consent shall be
granted by the lessor subject to the condition that
the lessee has to pay a prevailing rate of the plot.
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16. Now, the said clause can be divided into two parts.
Firstly, that consent has to be obtained. Secondly,
the consent shall be granted subject to the condition
that the lessee pays the prevailing rate of the plot.
Thus, for a moment, assuming that the Petitioner
had approached the Respondent for change of name,
the only manner in which the Respondent claims that
the change of name would be permitted is on paying
the prevailing rate of the plot. No reason or
justification has been made out, as to how a change
in the name of the company or even the name of the
product would have a bearing on the lease entitling
the Respondent seeking for payment of prevailing
rate of the plot.
17. It is not that the Petitioner has not put up the
construction of the software facility. It is not the
case of the Respondent that this software is not
being developed and the premise is not being used
for such purposes, which is the underlying purpose of
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the agreement. A mere change in the name of the
company, in my considered opinion, cannot lead to
the Respondent seeking for payment of prevailing
rate of the plot. The change in the name could be
necessitated on account of various factors, which is a
business exigency on part of an allottee of the land.
It is one thing to say that on a request being made,
the change in name could be permitted. It is another
thing to say that a change of name would only be
permitted on the condition that the lessee pay the
prevailing rate of the plot. Such a condition is
completely unreasonable. The state and its
instrumentalities are required to encourage and
facilitate businesses, the petitioner having invested
huge amounts of money and put up a construction of
2,40,000 sq feet, which has provided employment to
thousands of people, the same would be in the
interest of the state that such businesses are
encouraged so that more employment as also more
business is generated. Instead of doing so the
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Respondent has sought to impose unreasonable
conditions and make unreasonable demands which
are deprecated.
18. Respondent being an instrumentality of the State, in
my considered opinion, cannot act in such an
unreasonable manner and claim for prevailing rate of
the plot by having inserted the said clause
unilaterally in a standard form of contract. Thus,
even though there is a change in the name of the
Petitioner, I am of the considered opinion that there
being no grounds made out by the Respondent as to
why it would be entitled for the prevailing rate of the
plot and how the change of name has affected the
allotment adversely, the demand made by the
impugned Annexure-A would be required to be
quashed. Hence, I pass the following:
ORDER
i) The Writ Petition is allowed.
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ii) A certiorari is issued the letter dated 26.05.2015 bearing No.KSEDC/MD/E- City/CYIENT/2015-16 issued by the Respondent at Annexure-A is quashed.
iii) A mandamus is issued directing the Respondent to execute a sale deed in favour of the Petitioner in respect of the property scheduled to the Lease-cum-Sale agreement dated 9.6.2005 within 30 days from the date of receipt of a copy of this order.
SD/-
(SURAJ GOVINDARAJ) JUDGE PRS List No.: 1 Sl No.: 41