Gujarat High Court
M/S Kumar Wire Mesh Pvt Ltd Erstwhile ... vs Gujarat Industrial Development Corp. on 4 November, 2020
Author: Bhargav D. Karia
Bench: Bhargav D. Karia
C/SCA/54/2020 ORDER
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 54 of 2020
With
CIVIL APPLICATION (FOR FIXING DATE OF HEARING) NO. 1
of 2020
In
R/SPECIAL CIVIL APPLICATION NO. 54 of 2020
With
CIVIL APPLICATION (FOR FIXING DATE OF HEARING) NO. 2
of 2020
In
R/SPECIAL CIVIL APPLICATION NO. 54 of 2020
=====================================================
M/S KUMAR WIRE MESH PVT LTD ERSTWHILE KNOWN AS M/S
MULTI WIRES PVT. LTD.
Versus
GUJARAT INDUSTRIAL DEVELOPMENT CORP.
=====================================================
Appearance:
MR. SUNIT SHAH, ADVOCATE WITH MR.VASIM MANSURI(8824)
for the Petitioner
MR ANKIT SHAH(6371) for the Respondent Nos. 1, 2
=====================================================
CORAM: HONOURABLE MR. JUSTICE BHARGAV D. KARIA
Date : 04/11/2020
ORAL ORDER
1. Heard learned advocate Mr. Sunit Shah assisted by learned advocat Mr. Vasim Mansuri for the petitioner and learned advocate Mr. Ankit Shah for the respondents through video conference.
2. Rule returnable forthwith. Learned advocate Mr. Ankit Shah waives service of notice of rule on behalf of the respondents.
Page 1 of 24 Downloaded on : Wed Feb 10 12:15:20 IST 2021 C/SCA/54/2020 ORDER3. Having controversy raised in this petition in narrow compass, with the consent of the learned advocates for the respective parties, the same is takenup for hearing.
4. By this petition under Article 226 of the Constitution of India, the petitioner has prayed for the following reliefs :
"(A) This Hon'ble Court be pleased to issue writ of mandamus or any other appropriate writ direction or order to the Respondents to issue 2(r) permission as applied by Petitioner Company without demanding any transfer fees from Petitioner company and further direct for reimbursement of amount of penal interest claimed by ICICI Bank, on account of withholding permission; AND (B) Pending hearing and final decision of this petition, direct Respondents to issue 2(r) permission without demanding transfer fees from Petitioner Company upon such conditions as may be deemed fit and proper by this Hon'ble Court; AND (C) This Hon'ble Court may be pleased to pass such other and further orders may be deemed just and proper in the facts and circumstances of the present case."
5. The brief facts of the case are as under :
5.1 The Petitioner is a company incorporated and registered under the Companies Act, 2013 in the year Page 2 of 24 Downloaded on : Wed Feb 10 12:15:20 IST 2021 C/SCA/54/2020 ORDER 1989 in the name of M/s Multi Wires Pvt Ltd, carrying on business of drawers, designers, manufacturers, fabricators and dealers in steel and other metallic wires, earth wires, etc., by Mr. Dhiren K Jhaveri & Mr. Jiten Choksey representating their respective families. In the year 2011 petitioner company changed its name from M/s Multi Wires Pvt. Ltd. to M/s. Kumar Wire Mesh Pvt. Ltd., Petitioner herein. The Ministry of Corporate Affairs issued certificate of change of name on 08.02.2011.
5.2 In the year 1989 respondent no.2, Gujarat Industrial Development Corporation (for short 'GIDC') Industrial Estate, Chhatral allotted plot no. 3211, situated at GIDC Industrial Estate, consisting of Revenue Block No. 77.78 paiki within village limits of Chhatral Taluka Chhatral, District Mehsana to M/s.
Multi Wires Pvt. Ltd., on lease. Respondent no. 2 issued allotment and possession letter on 14.02.1989 and thereafter lease deed was executed between Respondent no.2 & M/s. Multi Wires Pvt. Ltd. on 30.09.1992.
5.3 In the year 2011, Mr. Jadgish Dubey & Ms. Madhu Kejriwal were directors in the petitioner company. Mr. Jagdish Dubey and Ms. Madhu Kejriwal were friend and associates of Jiten Choksey who was founder member of Petitioner Company. At that time Jagdish Dubey held 64.07% share and Anay s/o Jiten Choksey held 35.93% shares in the company.
Page 3 of 24 Downloaded on : Wed Feb 10 12:15:20 IST 2021 C/SCA/54/2020 ORDER5.4 The petitioner requested Respondent no.2 to change the name of Company in their record. Though there was no transfer of plot no. 3211 in favour of any other entity and merely change of name under Section 23 of Companies Act, 1956, petitioner was wrongly asked to pay transfer fees of Rs. 62,100 @ 18.95/ per sq mtr. The petitioner having no option paid the transfer fee of Rs. 62,100 as demanded by Respondents. Upon paying up transfer fee of Rs. 62,100/ @ Rs. 18.75/ per sq mtrs, respondent no 2 GIDC issued office order dated 14.10.2011 and transferred the said plot in name of M/s. Kumar Wire Mesh Pvt. Ltd. and accordingly on 14.10.2011 Supplementary Agreement was executed between GIDC and petitioner, M/s. Kumar Wire Mesh Pvt. Ltd. At the relevant time Jagdish Dubey & Anay son of Jiten Choksey were holding shares in the company.
5.5 In November 2016, to take credit facilities from financial institution, petitioner applied for Permission as per the clause 2(r) of the Lease Deed to create charge of lease hold land in favour of SVC Bank. That Respondent no 2 vide letter dated 08/09.11.2016 issued 2(r) Permission in favour of Petitioner company for a period of 84 months. It is the case of the petitioner that at that time Respondent no. 2 has not demanded any fees to issue 2(r) permission. That in 2016 Suneja Jhaveri d/o Jiten Choksey & Anay s/o Jiten Choksey were directors. That Suneja Jhaveri d/o Jiten Choksey held 99.88% share and Madhu Kejriwal who happens to be Page 4 of 24 Downloaded on : Wed Feb 10 12:15:20 IST 2021 C/SCA/54/2020 ORDER associates of Jiten Choksey held 0.12% share in company.
5.6 It is the case of the petitioner that when the said permission was in operation, somewhere in June 2019, petitioner Company decided to change their Banker from SVC Bank to ICICI Bank. ICICI Bank vide its sanction letter dated 25.06.2019 sanctioned financial assistance for working capital to the petitioner wherein a term for creating mortgage of lease hold land in its favour was provided with a condition that if security is not created and perfected within the sanctioned timeline after 15 days, penalty @ 1% p.a. would be payable on monthly basis.
5.7 Thereafter on 27.08.2019 petitioner applied for 2(r) permission from respondent no 2GIDC for Mortgage of lease hold right of Plot no. 3211 to ICICI bank for collateral purpose. Ms. Sonalwife of Jiten Choksey was one of directors of the Petitioner company. Suneja Jhaveri d/o Jiten Choksey held 99.88% share and Anay s/o Jiten Choksey held 0.12% share in company. Mr. Vijay Chaulkar was also made director in the Company but did not hold any share in the company. That pattern of Director in Petitioner company from 2011 till 2019 was as under:
Page 5 of 24 Downloaded on : Wed Feb 10 12:15:20 IST 2021 C/SCA/54/2020 ORDERIn 2016 Anay s/o Jiten Choksey Suneja Jhaveri d/o Jiten choksey (05.10.2016 to 05.10.2018) In 2018 Anay s/o Jiten Choksey Sonal w/o Jiten Choksey
06.04.2014 to 03.04.2019 (from 05.10.2018 till now) In 2019 Vijay G Chaulkar Sonal w/o Jiten Choksey (associates of Jiten Choksey) (from 05.10.2018 till now) (From 03.04.2019 till now) That share pattern of Petitioner company from 2011 till date is as under:
07.04.2015 Suneja Jhaveri Anay s/o Jiten Anay s/o Jiten Choksey d/o Jiten Choksey (41.32) (35.93%) Choksey (22.75) Suneja Jhaveri d/o Jiten choksey Anay s/o Jiten Choksey (22.75%) (77.25%) (35.93 + 41.32) 21.07.2015 Suneja Jhaveri d/o Jiten Choksey (22.75) Suneja Jhaveri d/o Madhu Jiten choksey Kejriwal (77.13%) Friend and associate s of Jiten Choksey) (0.12%) Suneja Jhaveri d/o Jiten Choksey Madhu Kejriwal (99.88%) (0.12%) (22.75 + 77.13) 28.09.2019 Suneja Jhaveri d/o Jiten Choksey Anay J Chokshey (99.88%) (0.12%) The change in directorship and membership were for other purpose but there was no change in the management of company. All throughout Choksey family were in the management of the petitioner company.
5.8 On 09.09.2019 Respondent no 2 on its own, Page 6 of 24 Downloaded on : Wed Feb 10 12:15:20 IST 2021 C/SCA/54/2020 ORDER generated 'Application for transfer' wherein some of the details were filed wrong.
5.9 Based on the said transfer application dated 09.09.2019, respondent no 2 vide its order dated 21.09.2019 granted transfer Permission with a condition that transfer fees of Rs. 3,08,746/ (Rs. 2,61,648 plus Rs. 47,09818 GST) plus additional transfer fees Rs. 3,08,746/ (Rs. 2,61,648 plus Rs. 47,09818% GST). The relevant paras of the said letter read as under:
"The Corporation ......................... You have applied to the Corporation for transfer of the said Industrial Plot in favour of Kumar Wire Mesh Pvt Ltd Private Limited Company consisting partners/proprietor/ Director/Shareholders are (1) Madhu V Kejriwal : 0.12% (2) Ms. Suneja Jhaveri : 99.88% for Wire Mesh. Your request for transfer can be considered provided the following conditions are fulfilled and the permission of transfer can be granted as provided in the clause of license agreement/agreement of sale executed with yo as mentioned above.
(1) (A) You shall have to make online payment of Rs. 308746.00 (Rs.
Three Lakhs Eight Thousand Seven Hundred Fortysix only) towards applicable transfer fee i.e. including 18.00% GST, out of which transfer fees is Rs. 261,648.00 calculated @10.00% and 18.00% GST amounting to Rs. 47,098.00.
(D) You shall have to make online Page 7 of 24 Downloaded on : Wed Feb 10 12:15:20 IST 2021 C/SCA/54/2020 ORDER payment of Rs. 308746.00 (Rs. Three Lakhs Eight Thousand Seven Hundred Fortysix only) towards applicable additional transfer fee i.e. including 18.00% GST, out of which transfer fees is Rs. 261,648.00 calculated @ 10.00% and 18.00% GST amounting to Rs.47,098.00.
5.10 Thereafter, petitioner by email dated 19.10.2019 requested respondent no.2 to intimate under which provision of rule, regulation or clause of lease agreement, license agreement or allotment letter Respondent no 2 demanded transfer fees and additional transfer fees.
5.11 The Respondent no. 2 replied vide its email dated 19.10.2019 informed the petitioner that as per the policy of the corporation and all the policies are on the GIDC website.
5.12 After receiving email from Respondent no 2, petitioner by email dated 21.10.2019 mentioned that GIDC site is very big and would be impossible to go through entire site, hence please inform about policies or send copy of the same.
5.13 Thereafter, petitioner again by email dated
22.10.2019 & 23.10.2019 requested Respondent no.2 to provide details.
5.14 The respondent no.2 vide its email dated 23.10.2019 informed the Petitioner to visit GIDC office and meet dealing assistant for any query, who would explain procedure as per circular.
Page 8 of 24 Downloaded on : Wed Feb 10 12:15:20 IST 2021 C/SCA/54/2020 ORDER5.15 Thereafter, the petitioner through its advocate, issued notice dated 25.10.2019 (02.11.2019) to the Respondent no 2 and called upon to pin point the rule, regulation, bylaws clause of lease deed relied upon by Respondent no 2 for demanding transfer fees and additional transfer fees.
5.16 As nothing was heard from Respondent no 2, on 26.11.2019 Petitioner Company wrote Email to Executive Director of Respondent no 1 and informed that Petitioner through their lawyer had sent notice to Respondent no 2 and further requested to look into the matter and resolve it as Bankers of Petitioner Company were pressurizing Petitioner company for 2(r)permission.
5.17 The respondent no.2 replied to the said notice vide its letter dated 18.11.2019 and sent copies of four Circulars dated 6th July, 2017, 13th June, 2019, 17th June, 1997 and 6th May, 2015 and claimed that they were relying upon the said resolutions for demanding transfer fees and additional transfer fees.
5.18 On 07.12.2019 petitioner through its advocate, replied the said letter dated 18.11.2019 and informed that the said resolutions are not applicable to fact of present case and once again called upon specifically pin point on which part of the said resolution Respondent no. 2 was relying upon. The petitioner also mentioned that due to delay Page 9 of 24 Downloaded on : Wed Feb 10 12:15:20 IST 2021 C/SCA/54/2020 ORDER in getting 2(r) permission, Petitioner is required to pay higher rate of interest to their Bankers.
6. Learned advocate Mr. Sunit Shah submitted that the petitioner have applied for permission under Clause2(r) as per the terms of the lease deed dated 30th September, 1992 as the petitioner was to transfer the financial facilities from Shyamrao Vitthalrao Cooperative bank (SVC bank) to ICICI bank so as to avail the financial assistance from the ICICI bank.
7. It was submitted that the petitioner earlier applied for 2(r) permission of the lease deed of plot no.3211 at Chhatral Industrial Estate when the said plot was mortgaged with SVC Bank. The respondent - GIDC on 8/9th November, 2016 granted such permission on terms and conditions stipulated therein which is produced at AnnexureH (page111 of the petition).
8. Mr. Shah further submitted that the petitioner applied for permission under clause 2(r) of the lease deed in the year 2019 by applying online on 27th August, 2019. The said application was registered by the respondent - GIDC as application of 2(r) Application no.2R20191948d4. Mr. Shah invited the attention of the Court with regard to the details of the said application, which reads as under : "Details of fees if permission is to be given for the unit outside GIDC Estate/Sister Concern Page 10 of 24 Downloaded on : Wed Feb 10 12:15:20 IST 2021 C/SCA/54/2020 ORDER (Details of collateral security): Applicable only for outside GIDC Estate Time period for which 2R permission is required (in Months) : 12 Whether 2R permission has been given to any other institution In past for the same unit : No Administrative Charges (Rs.) :"
9. Mr. Shah er submitted that the respondentno.2 - GIDC suomotu registered another application for transfer on 9th September, 2019 on the presumption that there is a change in shareholding of the petitioner undertaking though the petitioner never preferred such application. He invited attention to AnnexureK Page 132 to pointout that the wrong details are mentioned in the said self generated application by the GIDC, wherein it is mentioned that transferor and the transferee are the same entity i.e. the petitioner. It is also stated in the said application, which is generated online as to whether 2(r) permission is taken in the past and the answer stated in the said application is "No". It was pointedout that details mentioned in such application are contrary to the record as the GIDC has already given a permission under Clause 2(r) of the lease deed on 8/9th November, 2016.
10. Learned advocate Mr. Sunit Shah submitted that there was a change in shareholding pattern of the petitioner company in 2015 by transferring the shares Page 11 of 24 Downloaded on : Wed Feb 10 12:15:20 IST 2021 C/SCA/54/2020 ORDER of one person to another but thereafter there was no significant change in shareholding of the petitioner company and it was pointedout that after 2015 there was a transfer of share of 12% of Ms. Madhu Kejriwal to Anay J. Chokshey on 28th February, 2019.
11. Relying upon the aforesaid facts, it was submitted that the respondent - GIDC has thereafter, passed the impugned order dated 21st September, 2019 holding that there is a transfer as per the various Circulars of the GIDC and the transfer fee of Rs.3,08,746/ and additional transfer fee of Rs.3,08,746/ is levied which is not legal and valid as there is no transfer of the shares of more than 51% after 2015 of the petitioner company. Mr.Sunit Shah submitted that the impugned order dated 21st September, 2019 passed by the respondent - GIDC on its selfgenerated application for transfer is contrary to the Circulars of GIDC itself. Mr. Sunit Shah relied upon the letter dated 18th November, 2019 of the GIDC (AnnexureO, page 160 of the petition), wherein reference is made to Circulars dated 6th July, 2017, 13th June, 2019, 17th June, 1997 and 6th May, 2015 to pointout that relying on such circular, the GIDC has levied the transfer and additional transfer fee. It was further submitted that none of the circulars is applicable to the facts of the petitioner as the Circular dated 6th July, 2017 would be applicable in the case where there is a transfer of the unit and therefore, the said circular read with Circular dated 6th May, 2015 could not have been Page 12 of 24 Downloaded on : Wed Feb 10 12:15:20 IST 2021 C/SCA/54/2020 ORDER applied by the respondent - GIDC for levy of the additional transfer fee. Referring to the circular dated 17th June, 1997 and 13th June, 2019, it was pointedout that the said two circulars referred to the levy of the rate of allotment price of the land prevailing for the financial year 201920 for levy of the transfer fee, as well as, in the Circular dated 17th June 1997 refers to the cases of informal transfer, which is not applicable in the facts of the case. Mr. Sunit Shah, therefore, would submit that at no stage it can be said that there is a transfer by the petitioner in any manner whatsoever. Mr. Sunit Shah referred to Clause - 2(r) of the lease deed to point out that the change in Board of Directors, Managing Committee would not amount to transfer. It was pointedout that there is no change in the share holding of more than 51% after 2(R) permission was granted in the year 2016 by the respondent - GIDC.
12. Mr. Sunit Shah also invited attention to the Office Order dated 14th October, 2011 passed by the respondent - GIDC when the name of the petitioner unit was changed from Multi Wires Pvt. Ltd., to M/s. Kumar Wire Mesh Pvt. Ltd., and the respondent - GIDC has levied the transfer fee merely on change of name, which was paid by the petitioner under bonafide belief.
13. Mr. Sunit Shah also submitted that the respondent - GIDC in the affidavitinreply filed has Page 13 of 24 Downloaded on : Wed Feb 10 12:15:20 IST 2021 C/SCA/54/2020 ORDER considered the change of Director as transfer from one person to another. It was pointed out that if the change in shareholding also is taken as transfer from one person to another by relying upon the Circular dated 10th September, 1996, which provides for levy of transfer fee in relation to the transfer of share for more than 51% by treating the same as deemed transfer. However, it was submitted that when the petitioner applied for 2(r) permission of the lease deed in the year 2019, there was a change of share holding of only 0.12% and not 51%. It was pointedout that the earlier 2(r) permission was granted in the year 2016 and therefore, the GIDC could not have considered the transfer of shares prior to 2016 for levy of transfer fee for considering the application made by the petitioner in the year 2019.
14. Mr. Sunit Shah therefore, submitted that on the facts of the case, the impugned order passed by the respondent - GIDC for levy of transfer fee and additional transfer fee for issue of 2(r) permission is contrary to its own Circulars and facts on record and therefore, the same is required to be quashed and set aside.
15. On the other hand, the learned advocate Mr. Ankit Shah appearing for the respondentGIDC submitted that there was a change in the shareholding of the petitioner company after 2011 and merely because the GIDC did not levy transfer fee while Page 14 of 24 Downloaded on : Wed Feb 10 12:15:20 IST 2021 C/SCA/54/2020 ORDER granting permission under Clause 2(r) in the year 2016, the respondent - GIDC cannot be precluded from levy of transfer fee while considering the 2(r) application filed by the petitioner in the year 2019. Mr. Ankit Shah relied upon the Circulars dated 6th July, 2017, 13th June, 2019, 17th June, 1997, 6th May, 2015, as well as, Circular dated 10th September, 1996 of the GIDC to justify the levy of transfer fee, as well as, the additional transfer fee by the impugned order.
16. Mr. Ankit Shah in support of his submissions relied upon the following averments made in the affidavitinreply filed by the Regional Manager of the GIDC, which reads as under : "4. It is respectfully submitted that an application for taking a Plot for industrial purpose in industrial estate at Chhatral was made by M/s. Multi Wires Pvt. Ltd. on December 17, 1988. On 14/02/1989, the allotment of plot no. 3211 at Chhatral was made. There were three directors in the company at the time of agreement, namely, 1) Dhiren Kasturchand Javeri,
2) Jiten Sushil Choksey and 3) Venkata Iyer. The agreement was signed on 28th September, 1989. And the possession was handed over on 20/10/1989. On 22/09/1992, M/s Multi Wires Ltd. applied for changing of the directors as all the previous directors had resigned and two new directors namely Mr. Motichand J Javeri and Mr. Pankaj N Bawiskar were appointed. Permission for same has been granted by GIDC via letter dtd. 28/10/1992. They were then asked to pay Rs. 62,928/ as transfer fee to GIDC as a change in directorship is equivalent to transfer of the plot. A lease deed was executed on 30/09/1992 between GIDC and M/s Multi wires Pvt Ltd.
Page 15 of 24 Downloaded on : Wed Feb 10 12:15:20 IST 2021 C/SCA/54/2020 ORDER5. That the M/s. Multi Wires ltd. made an application dtd. 14th October, 2011 for the change of name to M/s Kumar Wire Mesh Pvt. Ltd. with directors 1) Mr. Jagdish V Dubey and 2) Mrs. Madhu V. Kejriwal and the shareholders 1) Mr. Jagdish V Dubey with 64.07% & 2) Mr. Anay Choksey with 35.93%. They were asked to apy transfer fee of Rs. 62,100/. M/s Kumar Wire Mesh Ltd. has applied on dtd. 27/09/2011 for clause 2 (R) permission under lease deed to create a charge over Lessee's interest in the leasehold land in favour of Axis Bank, Mumbai which was granted via letter dtd. 14/10/2011. On 27/10/2012, Permission to enhance the credit limit under clause 2(R) was granted by GIDC via letter dtd. 23/10/2012. Again the Permission to enhance the credit limit under clause 2 (R) was granted by GIDC via letter dtd. 18/01/2014. Again Permission to enhance the credit limit under clause 2 (R) was granted by GIDC via letter dtd. 16/09/2014. M/s Kumar Wire Mesh Ltd. again applied for 2 (R) permission on 04/11/2016 for SVC Bank. The same was granted by GIDC via letter dtd. 08/11/2016. M/s Kumar Wire Mesh Ltd. again applied for 2 (R) permission on 27/08/2019 for ICICI Bank.
6. It is respectfully stated that as per the certificate of Chartered Accountant, the directors of M/s. Kumar Wire Mesh Pvt. Limited as on 05/09/2019 are 1) Mrs. Sonal KJiten Choksey 2) Mr. Vijay Gajanan Chaulkar and the shareholders as on 26/08/2019 are 1) Ms. Suneja Jhaveri with 33360 shares (99.88%) 2) Madhu V Kejriwal with 40 shares (0.12%). M/s Kumar Wire Mesh made a transfer application on 09/09/2019. After that a Provisional Transfer Order was issued on 21/09/2019 in which it was stated that the company has to pay Rs. 308746/ towards transfer fee. According to the circular dtd. 06/07/2017, it is mandatory for the party to have minimum 20% of construction to call the plot as utilized plot but the party only has 17.68% construction and GIDC via circular dtd.
Page 16 of 24 Downloaded on : Wed Feb 10 12:15:20 IST 2021 C/SCA/54/2020 ORDER06/05/2015 told the party that the plot can be termed as utilized plot if they pay a penalty of 10% which also the party has failed to pay. After that the company raised the question to show the provisions/rules under which the transfer fee was being charged. To which the GIDC replied via letter dtd. 18/11/2019 stating and attaching the relevant circulars (Circular dtd. 06/07/2017, 13.06.2019, 17.06.2017 & 06.05.2015). It has also been stated that if the party still have any doubt left then they can meet with the dealing hand at the GIDC office but they again sent a letter stating that the circulars are not applicable on them.
7. M/s Kumar Wire Mesh Ltd. had applied for 2 (R) permission on 27/08/2019 in favour of ICICI Bank which could be granted by GIDC provided that the petitioner pays the transfer fee of Rs. 308746 as per Provisional Transfer Order dtd. 21/09/2019.
8. An application for taking a Plot for industrial purpose in industrial estate at Chhatral was made by M/s. Multi Wires Ovt. Ltd. on December 17, 1988. On 14/02/1989, the allotment of plot no. 3211 at Chhatral was made. The agreement was signed on 28th September, 1989. And the possession was handed over on 20/10/1989. There were three directors in the company at the time of agreement, namely, 1) Dhiren Kasturchand Javeri, 2) Jiten Sushil Choksey and 3) Venkata Iyer.
9. On 22/09/1992, M/s. Multi Wires Ltd. applied for changing of the directors as all the previous directors had resigned and two new directors namely Mr. Motichand J Javeri and Mr. Pankaj N Bawiskar were appointed. They were then asked to pay Rs. 62,928/ as transfer fee to GIDC as a change in directorships is equivalent to transfer of the plot which was paid by M/s. Multi Wires Ltd. on 22/9/1992. Permission for same has been granted by GIDC via letter dtd.
Page 17 of 24 Downloaded on : Wed Feb 10 12:15:20 IST 2021 C/SCA/54/2020 ORDER28/10/1992. A lease deed was executed on 30/09/1992 between GIDC and M/s. Multi wires Pvt. Ltd.
10. M/s Multi Wires ltd. made an application dtd. 30th August 2011 for the change of name to M/s Kumar Wire Mesh Pvt. Ltd. with directors 1) Mr. Jagdish V Dubey and 2) Mrs. Madhu V Kejriwal and the shareholders 1) Mr. Jagdish V Dubey with 64.07% & 2) Mr. Anay Choksey with 35.93%. They were asked to pay transfer fee of Rs.62,100/. This was also paid by the petitioner company.
11. M/s. Kumar Wire Mesh Ltd. again applied for 2 (R) permission on 04/11/2016 for SVC Bank. The same was granted by GIDC via letter dtd. 08/11/2016. There were many permissions that were granted by GIDC in the past also which the petitioner failed to mention in the petition. It was not informed to GIDC that the directors have been changed and when it came to the knowledge of the GIDC, the transfer fee was stated via Provisional Transfer Order dtd. 21/09/2019.
12. M/s. Kumar Wire Mesh Ltd. again applied for 2(R) permission on 27/08/2019 for ICICI Bank. As per the certificate of Chartered Accountant, the directors of M/s. Kumar Wire Mesh Pvt. Ltd., as on 05/09/2019 are (1) Mrs. Sonal Jiten Choksey, (2) Mr. Vijay Gajanan Chaulkar and the shareholders as on 26/08/2019 are (1) Ms. Suneja Jhaveri with 33360 shares (99.88%), (2) Madhu V. Kejriwal with 40 shares (0.12%). M/s. Kumar Wire Mesh made a transfer application on 09/09/2019. After that a Provisional Transfer order was issued on 21/09/2019 in which it was stated that the company has to pay Rs.308746/ towards transfer fee.
13. As per the certificate of Chartered Accountant, the directors of M/s. Kumar Wire Mesh Pvt. Limited as on 05/09/2019 are (1) Mrs. Sonal Jiten CHoksey (2) Mr. Vijay Gajanan Page 18 of 24 Downloaded on : Wed Feb 10 12:15:20 IST 2021 C/SCA/54/2020 ORDER Chaulkar and the shareholders as on 26/08/2019 are (1) Ms. Suneja Jhaveri with 33360 shares (99.88%) (2) Madhu V. Kejriwal with 40 shares (0.12%).
14. M/s. Kumar Mesh Wire Ltd. via letter dtd. 02/11/2019 has raised the question to show the provisions/rules under which it was being charged. To which the GIDC replied via letter dtd. 18/11/2019 stating and attaching the relevant circulars (Circular dtd. 06/07/2017, 10/09/1996, 17.06.1997 & 06/05/2015). It has also been stated that if the company still have any doubt left then they can meet with the dealing hand at the GIDC office but they again sent a letter stating that the circulars are not applicable on them.
15. The change in the shareholding has led to the change in the directors which ultimately shifted the control in other person's hands. Therefore, it should be considered as transfer.
16. It is to be noted that the transfer fee was charged because there was a change in the shareholding which leads to change in control over the company and according to the policy of corporation, this change would amount to transfer of property from one person to other. Therefore, GIDC has levied the transfer fees prior to giving permission u/c 2(R). It is to be noted that the facts stated in the present petition is presented as per the convenience of the party hiding the facts which are relevant in the present case."
17. Referring to the above averments in the affidavitinreply, Mr. Ankit Shah for the respondent
- GIDC submitted that the levy of transfer fee, as well as, the additional transfer fee is justified and no interference may be made in the impugned order Page 19 of 24 Downloaded on : Wed Feb 10 12:15:20 IST 2021 C/SCA/54/2020 ORDER while exercising powers under Articles 226 and 227 of the Constitution of India by the Court.
18. Having considered the rival submissions and having gone through the material on record, it appears that the respondent - GIDC has applied the Circular dated 10th September, 1996 with retrospective effect to levy the transfer fee in view of the change in shareholding, which took place in the year 2015 without considering the fact that the respondent - GIDC has granted 2(r) permission of the lease deed on 8/9th November, 2016. For this purpose, it would be germane to refer to clause 2(r) of the lease deed, which reads thus: "(r) That he will not transfer, assign underlet or part with the possession of the demised premises or any part thereof or any interest therein without the previous permission of the lesser for the purpose of this covenant, any change in the constitution of the lessee shall be demised to be a transfer by the lessee of his interest in the demises premises in favour of another person. Provided that where the lessee is a body corporate, a change in its Board of Directors, Managing Committee by whatever name called shall not be deemed to be a change in the constitution of the lessee provided further the where the lessee, for the purpose of constructing a building on the demised premises, is obtained loan from a bank or other financial Institution by mortgaging his leasehold interest in the demised premises in favour of such bank or Page 20 of 24 Downloaded on : Wed Feb 10 12:15:20 IST 2021 C/SCA/54/2020 ORDER institution, permission of the lessor shall be deemed to have been subject to the conditions : a. that such mortgage shall not affect the rights and powers of the lessor under this lease deed and b. that the lessor before exercising his rights and powers under this lease deed will consult that bank or as case may be the financial institution concerned.
c. The lessor will sent to the said financial institution concerned or as the case may be a copy of the notice, of not less than 90 days that may be served upon the lessor for rectification of the breach of any covenants of the said lease deed."
19. On perusal of the above clause 2(r) of the lease deed, it is clear that the same is applicable for three purposes i.e. - (i) transfer, (ii) assignment or (iii) when the lessee is a body corporate for the purpose of creating charge on the land to avail the financial assistance for the purpose of constructing building on the premises by mortgaging the lease hold property interest in the property. The petitioner in the year 2016 was granted permission under Clause 2(r) of the lease deed for availing the financial assistance from SVC bank for Rs.461 Lacs. It appears that thereafter, the petitioner wanted to avail financial assistance from ICICI bank as per the sanctioned letter produced at AnnexureI page no.113 of the petition and for further financial assistance for Rs.32,00,000/. The petitioner, therefore, applied for permission under Clause 2(r) of the lease Page 21 of 24 Downloaded on : Wed Feb 10 12:15:20 IST 2021 C/SCA/54/2020 ORDER deed on 27th August, 2019 as the petitioner wanted to shift the mortgage of SVC bank to ICICI bank and accordingly the application was preferred online with the respondent - GIDC.
20. However, the respondent - GIDC without considering the facts on record suo motu registered another application for transfer on 9th September, 2019 without intimation to the petitioner recording the incorrect facts in the said application, which is produced at AnnexureK, page 132 of the petition. The respondent GIDC, thereafter, passed the impugned order on 21st September, 2019 for levy of transfer fees and additional transfer fees. The petitioner thereafter, sought clarification for levy of the transfer fee and additional transfer fee, which was provided by the respondent - GIDC by letter dated 18th November, 2019 along with the copies of the Circulars dated 6th July, 2017, 13th June, 2019, 17th June, 1997 and 6th May, 2015. On perusal of the Circulars, which are provided by the GIDC along with the letter dated 18th November, 2019, it appears that none of the Circulars is applicable to the facts of the case, because there is nothing on record to show that when the petitioner made an application on 27th August, 2019, for permission under clause 2(r) of the lease deed there was a change in the shareholding more than 51% as per the Circular dated 10th September, 1996, which is relied upon by the respondent - GIDC in its affidavitinreply for the first time before this Court. On perusal of the Page 22 of 24 Downloaded on : Wed Feb 10 12:15:20 IST 2021 C/SCA/54/2020 ORDER Circular dated 10th September, 1996 the same is applicable in case of informal transfer of the shareholding of the company if such transfer is more than 51%. Admittedly, there is no transfer of share of more than 51% after 2015 in case of the petitioner, so as to charge transfer fee while granting permission as per clause 2(r) of the lease deed in the year 2019. The respondent - GIDC has not disputed that there is a change in shareholding pattern after 2015 less than 51%. When the respondent - GIDC has already granted permission under Clause 2(r) of the lease deed on 8/9th November, 2016, the respondent - GIDC now cannot invoke the said circular dated 10th September, 1996 along with other circulars for levy of transfer fee and additional transfer fee for the purpose of transfer of shareholding, which had taken place prior to granting of the earlier permission under Clause 2(r) of the lease deed. The impugned order passed by the respondent - GIDC is therefore, contrary to its own order, as well as, the Circulars, as there is no transfer of shareholding more than 51% when the petitioner applied for permission under clause 2(r) of the lease deed for shifting of mortgage and financial assistance from SVC bank to ICICI bank. When there is no transfer of any of the shareholding or of the undertaking of the petitioner then the Circular dated 6th July, 2017, read with Circular dated 6th May, 2015 of the respondent - GIDC would also not be applicable as such circulars are applicable for levy of application fee only in case Page 23 of 24 Downloaded on : Wed Feb 10 12:15:20 IST 2021 C/SCA/54/2020 ORDER of transfer.
21. In view of the foregoing reasons, the petition succeeds and it is accordingly allowed. The impugned order dated 21st September, 2019 passed by the respondent - GIDC for levy of transfer fee, as well as, additional transfer fee being illegal and contrary to the facts and materials on record, the same is hereby quashed and set aside. Rule is made absolute.
22. In view of the disposal of the main Special Civil Application, no orders are required to be passed in the connected Civil Applications and accordingly the same are disposed of.
(BHARGAV D. KARIA, J.) AMAR RATHOD/PRADHYUMAN Page 24 of 24 Downloaded on : Wed Feb 10 12:15:20 IST 2021