The Calcutta High Court recently comprising of a bench of Justices Harish Tandon and Kaushik Chanda observed that the benefit of deduction of transfer fees in the first instance should be extended in the subsequent incidents to avoid arbitrariness. (Mageba Bridge Products Ltd. v West Bengal Small Industries Development Corporation Ltd.)
Facts of the Case
By virtue of the several government orders the administrative control of the Industrial estate at Baltikuri comprising the said plot no. J-49 was transferred to the West Bengal State Industrial Development Corporation Limited. A further lease deed containing the identical clause that the said Shree Fabrications Pvt. Ltd shall not assign, underlet or part with possession of the demised premises without obtaining the prior written consent of the respondent no.1.
Subsequently, an agreement for assignment was executed between the Shree Fabrications Pvt. ltd and the METCO Group engineers Private Limited whereby and where under the said lessee assigned the residuary period of the lease in favour of the assignee i.e., METCO Group Engineers Pvt. Ltd in respect of the plot no. J-49 at Baltikuri subsequently the respondent no.1 demanded the list of the present share-holders and the share holding pattern of the present appellant which was duly replied to. Upon compliance of all the requisitions having made suddenly a letter dated 31st May 2011, was given to the present appellant demanding a transfer fees of Rs.33,65,721/- in respect of the shed no. J-49 from the said METCO Group in favour of the present appellant.
The aforesaid demand is the substratum of the instant litigation and the writ petition came to be filed challenging the various letters in which the demands were raised. The Single Bench dismissed the writ petition as the claim raised by the present appellant does not stand both on fact as well as on law.
Contention of the Parties
The Advocate appearing for the appellant submitted that after the application for sanctioning the scheme of amalgamation is allowed by the High Court the transferor company merged with the transferee company and such act being by operation of law the respondent no.1 cannot charge the transfer fees. In other words, it is sought to be contended that the merger of the transferor company with the transferee company by operation of law neither tantamounts to assignment nor transfer and therefore no transfer fees can be levied for the same.
It was further contended that while determining the transfer fees the methodology adopted by the respondent no.1 would evince that the 30% of the total amount was allowed to be deducted as the ownership of the shed remained with the lessee which did not appear to have taken note of in the subsequent demand raised by the respondent no.1. It was further contended that the application seeking permission to transfer was pending on the date of the sanction of the scheme and therefore what was transferred under such scheme is the application seeking a permission to transfer and not the transfer of the lease itself; therefore, the charging of any amount on a contemplated transfer of the lease or the shed is not permissible and placed reliance upon a Division bench judgment of this Court in Castron Technologies Limited-Vs- Castron Mining Limited reported in 2013 (5) CHN 553.
The learned Advocate appearing for the respondent no.1 submitted that there was a prohibition of assignment of the lease reserved in the lease deed without the prior permission of the respondent no.1. Since the respondent no.1 has permitted the transfer and demanded the fees for such transfer, it cannot be questioned in the writ jurisdiction. It was vehemently submitted that the petitioner accepted and paid the transfer fees in respect of the other sheds held by the lessee, even after the scheme of amalgamation was sanctioned by this court and having accepted such a position, he cannot take a rebound and challenge the demand of the transfer fees in respect of the present plot/shed.
It was further submitted that even if the scheme of amalgamation is sanctioned by the High Court, it does not erase the concept of transfer of the immovable property vis-à-vis the lessor. It was further contended that, in fact, more than 30% amount out of the total transfer fees so determined has been deducted and therefore the contention that the same has not been considered is not legally sustainable. It was however contended that the Single Bench have taken note of such fact and rejected the contention of the present appellant by giving proper reasons thereof which does not require any interference in the instant appeal.
Courts Observation & Judgment
The bench observed, “As indicated above, several questions have been raised touching upon the incidents of the amalgamation having allowed by the High Court and the methodology of determining the transfer fees and not permitting the deductions while demanding the transfer fees in respect of the first incident of transfer.
It admits no ambiguity that the lease is an incident of transfer of enjoyment of the immovable property in view of section of 105 of the Transfer of Property Act. The undisputed facts as narrated hereinabove are explicit, clear and expounded the real estate of affairs concerning the dealing of the demised premises. Neither in the writ petition nor before us an issue is raised whether the respondent no.1 was within its competence to charge the fees for the permission to be granted but it hovers around the incident of the scheme of amalgamation having sanctioned by the High Court and the manner in which the determination of the transfer fees having made. A distinction has to be drawn between an involuntary transfer and the voluntary transfer. In the former case there is no element of act of the parties as such transfer is affected by operation of law. On the other hand, in the case of later situation if by act of parties, the incident of transfer can be visualized and seen with certainty whether such transfer vis-à-vis the lessor remained binding is a question to be answered.”
The bench referred to the case of General Radio & Appliances Co. Ltd. & Ors.-Vs- M.A Khader (Dead) By Lrs. 1986 (2) SCC 656 wherein the apex court has held that the vesting of the immovable property of the transferor company with the transferee company by virtue of the scheme of amalgamation having sanctioned by the High Court attracts the element of transfer vis-à-vis the lessor, despite the fact that the transferor company loses its legal entity or existence.
The court was of the opinion that the scheme of amalgamation binds the parties thereto but once they come along vis-à-vis the lessor it is treated as an incident of transfer. It is immaterial whether the permission was granted for transfer of the demised premises or the application for demised premises.
The bench even note that the uniformity in the decision is the hallmark of the decision-making process. Once the deduction to the tune of 30 % was allowed at the time of charging the transfer fees on the first incident of transfer, the same benefit should be extended at the time of the second incident of transfer. The administrative authority cannot act whimsically, capriciously and/or arbitrarily but must treat all persons equally.
The bench disposing of the appeal remarked, “Once the amount of transfer fees deposited on the first incident of transfer has been allowed to be deducted at the time of determination of the lease premium/ transfer fee on the second incident of the transfer is more than the 30% of the total amount, the appellant is required to pay the entire amount so demanded.”
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