Holding

The amalgamation of the lessee with the transferee company constitutes a transfer of the leased plots, thereby invoking clause II(4)(a) and entitling the DDA to recover fifty percent of the unearned increase in value.

Summary

The appellant, Jaiprakash Associates Ltd., was created by the amalgamation of Jaiprakash Associates Pvt Ltd (the original lessee) and Jaypee Rewa Cement Ltd, pursuant to a scheme sanctioned by the High Court in 1986, which transferred four perpetually leased plots to the amalgamated entity. The Delhi Development Authority (DDA), as the lessor, demanded payment of an unearned increase in value (UEI) of Rs.2,13,59,511.20 on the basis of clause II(4)(a) of the perpetual lease deeds, which requires the lessor's written consent and allows recovery of 50% of the UEI upon any transfer. The appellant contended that the amalgamation was not a transfer within the meaning of the Transfer of Property Act, 1882, and thus the UEI claim was inapplicable. The Supreme Court examined the lease clause, the scheme of amalgamation, and relevant policy instructions, concluding that the amalgamation did constitute a transfer of the leased plots and triggered the lessor’s right to recover UEI. Consequently, the Court dismissed the appeal, upholding the DDA’s entitlement to the UEI.

Issues considered

Whether the amalgamation of the lessee company with another company amounts to a transfer of the leased plots under clause II(4)(a) of the perpetual lease deed.
Whether such a transfer obliges the lessee to pay the unearned increase in value as stipulated in the lease deed.
Whether Section 5 of the Transfer of Property Act, 1882, bars the DDA’s claim of UEI in the context of a corporate amalgamation.
Whether the High Court erred in holding that the amalgamation did not constitute a transfer.

Legislation cited

Transfer of Property Act, 1882s. 5

Subjects

LeasePerpetual lease deedsLesseeLessorDemand for an unearned increase valuePermanent lesseeAmalgamationScheme for amalgamationParting with the possessionTransfer of plotsInvoluntary transfers

Judgment

[2024] 4 S.C.R. 427 : 2024 INSC 273

M/s. Jaiprakash Industries Ltd.
(Presently known as M/s. Jaiprakash Associates Ltd.)
v.
Delhi Development Authority
(Civil Appeal No. 8336 of 2009)
05 April 2024
[Abhay S. Oka* and Pankaj Mithal, JJ.]

Issue for Consideration
High Court had sanctioned the scheme for amalgamation of
M/s. Jaiprakash Associates Pvt Ltd and M/s. Jaypee Rewa
Cement, directing that the properties in the Schedule thereto
which included four plots perpetually leased to M/s. Jaiprakash
Associates Pvt Ltd shall stand vested in M/s. Jaypee Rewa
Cement-transferee (now known as the appellant). Whether
amalgamation amounted to transferring the plots. Respondent-
DDA’s demand for an unearned increase in the value (i.e.
difference between the premium paid and the market value)
from the appellant, if justified.

Headnotes
Lease – Perpetual lease deeds – Demand for unearned increase
in the value of the plot at the time of sale, transfer, assignment,
or parting with the possession – Perpetual lease deeds of
four plots in favour of lessee (M/s. Jaiprakash Associates
Pvt Ltd) – Scheme for amalgamation sanctioned by High
Court, directing that the properties in the Schedule thereto
which included the aforesaid plots shall stand vested in the
transferee company (now known as the appellant ) – Demand
by respondent-DDA for an unearned increase in the value from
the appellant – Justification:
Held: Perpetual leases put an embargo on the lessee selling,
transferring, assigning or otherwise parting with the possession
of the whole or any part of the commercial plots except with the
previous consent of the lessor in writing – The second proviso
makes it clear that the respondent-DDA, which has stepped into
the shoes of the lessor, will be entitled to recover a portion of the
unearned increase in the value – Further, there was a specific
clause in the order of amalgamation passed by the High Court which
* Author
428 [2024] 4 S.C.R.

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held that the plots stood transferred from the original permanent
lessee to the transferee M/s. Jaypee Rewa Cement Ltd, now
known as M/s. Jaiprakash Associates Ltd-appellant – Relevant
clause II(4)(a) covers all the categories of transfers as it provided
that the lessee shall not sell, transfer, assign or otherwise part with
the possession of the whole or any part of the commercial plots
without the written consent of the lessor – The said clause does not
exclude involuntary transfers – In the facts of the case, it cannot
be said that there was an involuntary transfer, as the transfer was
made based on a petition filed by the lessee and the transferee for
seeking amalgamation – In a sense, this is an act done by them
of their own volition – Nothing illegal in the impugned judgment
dismissing the appeal filed by the appellant against dismissal of
its writ petition. [Paras 6, 8 and 12]
Transfer of Property Act, 1882 – s.5 – “Transfer of property”
defined – High Court had sanctioned the scheme for
amalgamation of M/s. Jaiprakash Associates Pvt Ltd and
M/s. Jaypee Rewa Cement, directing that the properties in
the Schedule thereto which included four plots perpetually
leased to M/s. Jaiprakash Associates Pvt Ltd shall stand
vested in M/s. Jaypee Rewa Cement-transferee (now known
as the appellant) – Plea of the appellant that transfer in this
case was not covered by the transfer defined u/s.5:
Held: Clause II(4)(a) in the perpetual leases was very wide as it not
only covered transfers but also parting with possession – Therefore,
the transfer contemplated by the said clause is much wider than
what is defined u/s.5 – s.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, s.5 will be of
no assistance to the appellant. [Para 11]

Case Law Cited
Delhi Development Authority v. Nalwa Sons Investment
Ltd. & Anr. [2019] 6 SCR 783 : (2020) 17 SCC 782 –
referred to.
Indian Shaving Products Limited v. Delhi Development
Authority & Anr. (2001) SCC Online Del 1123 :
2002 1 AD (Del) 175; Vijaya C. Gursahaney v. Delhi
Development Authority & Ors. 1994 SCC Online Del
306 : 1994 II AD (Delhi) 770 – referred to.
[2024] 4 S.C.R. 429

M/s. Jaiprakash Industries Ltd. (Presently known as M/s. Jaiprakash
Associates Ltd.) v. Delhi Development Authority

List of Acts
Transfer of Property Act, 1882.

List of Keywords
Lease; Perpetual lease deeds; Lessee; Lessor; Demand for an
unearned increase value; Permanent lessee; Amalgamation;
Scheme for amalgamation; Parting with the possession; Transfer
of plots; Involuntary transfers.

Case Arising From
CIVIL APPELLATE JURISDICTION: Civil Appeal No.8336 of 2009
From the Judgment and Order dated 16.08.2007 of the High Court
of Delhi at N. Delhi in LPA No. 252 of 2003
Appearances for Parties
Kavin Gulati, Sr. Adv., Ms. Sharmila Upadhyay, Pawan R Upadhyay,
Sarvjit Pratap Singh, Ms. Supriya R Pandey, Advs. for the Appellant.
Sanjiv Sen, Sr. Adv., Ms. Anjali Singh, Ms. Tanwangi Shukla, Ms.
Malvika Kapila, Advs. for the Respondent.
Judgment / Order of the Supreme Court

Judgment
Abhay S. Oka, J.
FACTUAL ASPECTS
1. The Hon’ble President of India executed four separate perpetual
lease deeds on 12th August 1983 in favour of M/s. Jaiprakash
Associates Pvt Ltd in respect of the plots more particularly described
in Schedule-I to the lease deeds (for short, ‘the said plots’). In July
1986, a joint application was made by M/s. Jaiprakash Associates
Pvt Ltd and M/s. Jaypee Rewa Cement Ltd before the High Court of
Judicature at Allahabad, praying for amalgamation of M/s. Jaiprakash
Associates Pvt Ltd with M/s. Jaypee Rewa Cement Ltd. By the
order dated 30th July 1986, the High Court sanctioned the scheme
of amalgamation. The said plots were included in the Schedule of
the properties to the scheme of amalgamation. While passing the
order dated 30th July 1986 approving amalgamation, the High Court
directed that the properties in Parts I, II and III of Schedule II to
430 [2024] 4 S.C.R.

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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 present appellant.
Thus, in short, the appellant is 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. In short, the present appellant
is the transferee company.
2. An application was made by the appellant to the respondent-Delhi
Development Authority (for short, ‘DDA’) for a grant of permission to
mortgage the said plots in favour of the Industrial Finance Corporation
of India. By the letter dated 14th March 1991, the respondent-DDA
demanded an unearned increase value of Rs.2,13,59,511.20. Being
aggrieved by the said demand, representations were made by the
appellant which were not favourably considered by the respondent-
DDA. Therefore, the appellant filed a writ petition before a learned
Single Judge of the High Court of Delhi. By the order dated 30th
January 2003, the learned Single Judge dismissed the said petition
filed by the appellant by relying upon a decision a Division Bench
of the same High Court in the case of Indian Shaving Products
Limited v. Delhi Development Authority & Anr.1 Being aggrieved
by the decision of the learned Single Judge, the appellant preferred
an appeal before a Division Bench of the High Court of Delhi. By
the impugned judgment, the said appeal had also been dismissed.
SUBMISSIONS
3. The learned senior counsel appearing for the appellant invited our
attention to clause II(4)(a) of the lease deed, which puts an embargo
on the lessee not to sell, transfer, assign or otherwise part with the
possession of the whole or any part of the said plots except with
the previous consent in writing from the lessor. The proviso to the
said clause entitled the lessor to impose a condition while granting
consent, of payment of a portion of the unearned increase in the
value (i.e. the difference between the premium paid and the market
value). He submitted that the amalgamation of the lessee with another
company under the orders of the Company Court will not amount

1 2001 SCC Online Del 1123: 2002 1 AD (Del) 175
[2024] 4 S.C.R. 431

M/s. Jaiprakash Industries Ltd. (Presently known as M/s. Jaiprakash
Associates Ltd.) v. Delhi Development Authority

to the sale, transfer or assignment of the said plots. His submission
is that in the case of Indian Shaving Products Limited1, the High
Court had dealt with a completely different set of factual and legal
nuances. In the said case, the submission of the petitioner was that
Section 32 of the Sick Industrial Companies (Special Provisions) Act,
1985 (for short, ‘SICA’) would have an overriding effect over the terms
and conditions of the lease deed. He submitted that the merger or
amalgamation was taken up in the said case for rehabilitation of a sick
company and that it was a distressed company merger. Therefore,
the said decision will have no application to the facts of this case.
4. The learned senior counsel for the appellant further submitted that
the amalgamation or merger of the two companies does not involve
any transfer within the meaning of the Transfer of Property Act, 1882
(for short, ‘TPA’). He submitted that only in view of the operation of
Section 394 of the Companies Act, 1956, the assets and liabilities
of the lessee had merged and devolved on the appellant. He urged
that the order sanctioning the scheme of amalgamation is an order
in rem, which binds everyone. He pointed out that in the scheme
of amalgamation, there was no element of sale consideration or
consideration for transfer. The learned senior counsel submitted that
in the scheme subject matter of this appeal, the transferor personality
ceased to exist and merged with the transferee. The learned senior
counsel relied upon a decision of the High Court of Delhi in the case
of Delhi Development Authority v. Nalwa Sons Investment Ltd.
& Anr2. He also relied upon a decision of the Division Bench of the
High Court of Delhi in the case of Vijaya C. Gursahaney v. Delhi
Development Authority & Ors3.
5. The learned senior counsel appearing for the respondent-DDA invited
our attention to the order passed by the High Court of Judicature
at Allahabad on 30th July 1986. He submitted that clause (1) of the
order provides that the transferor company’s properties, rights and
powers in respect of the property described in the first, second and
third parts of schedule II shall be transferred without any further act
or deed to the transferee company. He would, therefore, submit that
the demand for unearned increase was lawful.

2 [2019] 6 SCR 783 : (2020) 17 SCC 782
3 1994 SCC Online Del 306 : 1994 II AD (Delhi) 770
432 [2024] 4 S.C.R.

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CONSIDERATION OF SUBMISSIONS
6. We have given careful consideration to the submissions. In the
perpetual leases, clause (II)(4)(a) was incorporated, which reads thus:
“II. The Lessee for himself, his heirs, executors,
administrators and assigns covenants with the Lessor in
the manner following that is to say:-
.. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. ..
.. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. ..
(4) (a) The lessee shall not sell, transfer, assign or
otherwise part with the possession of the whole or any
part of the commercial plot except with the previous
consent in writing of the lessor which he shall be
entitled to refuse in his absolute discretion.
Provided that such consent shall not be given for a period
of ten years from the commencement of this Lease unless
in the opinion of the Lessor, exceptional circumstances
exist for the grant of such consent.
Provided further that in the event of the consent
being given the Lessor may impose such terms and
conditions as he thinks fit and the Lessor shall be
entitled to claim and recover a portion of the unearned
increase in the value (i.e. the difference between the
premium paid and the market value) of the plot at the
time of sale, transfer, assignment, or parting with the
possession, the amount to be recovered being fifty
percent of the unearned increased and the decision
of the Lessor in respect of the market value shall be
final and binding.
Provided further that the Lessor shall have the pre-emptive
right to purchase the property after deducting fifty per cent
of the unearned increase as aforesaid.”
(emphasis added)
The same clause has been incorporated in all four perpetual leases
with which we are concerned. Therefore, the perpetual leases put an
embargo on the lessee selling, transferring, assigning or otherwise
[2024] 4 S.C.R. 433

M/s. Jaiprakash Industries Ltd. (Presently known as M/s. Jaiprakash
Associates Ltd.) v. Delhi Development Authority

parting with the possession of the whole or any part of the commercial
plots except with the previous consent of the lessor in writing. The
second proviso makes it clear that the respondent-DDA, which has
stepped into the shoes of the lessor, will be entitled to recover a
portion of the unearned increase in the value.
7. Now, the question is whether amalgamation will amount to transferring
the said plots. We have carefully perused the order dated 30th July
1986 of the High Court of Judicature at Allahabad sanctioning the
scheme of amalgamation. In the said scheme, M/s. Jaiprakash
Associates Private Ltd (the erstwhile company) was shown as the
‘transferor company’ and M/s. Jaypee Rewa Cement Ltd was shown
as the ‘transferee company’. Clauses (1) and (2) of the operative
part of the order dated 30th July 1986 read thus:
“.. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. ..
1. That all the properties, rights and powers of
the Transferor Company specified in the first,
second and third parts of the Schedule II hereto
and all other properties, rights and powers of
the Transferor Company be transferred without
further act or deed to the transferee company and
accordingly the same shall pursuant to section
394(2) of the Companies Act, 1956 be transferred
to and vest in the Transferee Company for all the
estate and interest of the Transferor Company
therein but subject, nevertheless to all charges
now affecting the same; and
2. That all the liabilities and duties of the Transferor
Company be transferred without further act or deed
to the Transferee company and accordingly the same
shall pursuant to section 394(2) of the Companies
Act, 1956 be transferred to and become the liabilities
and duties of the transferee company, and
.. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. ..”
(emphasis added)
8. The said plots are a part of the Schedule of the properties referred
to in clause (1). Thus, there is a specific clause in the order of
amalgamation which holds that the said plots stand transferred from
434 [2024] 4 S.C.R.

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the original permanent lessee to the transferee M/s. Jaypee Rewa
Cement Ltd, which is now known as M/s. Jaiprakash Associates Ltd.
Clause II(4)(a) covers all the categories of transfers as it provides
that the lessee shall not sell, transfer, assign or otherwise part with
the possession of the whole or any part of the commercial plots
without the written consent of the lessor. The said clause does not
exclude involuntary transfers. In the facts of the case, it cannot be
said that there is an involuntary transfer, as the transfer is made
based on a petition filed by the lessee and the transferee for seeking
amalgamation. In a sense, this is an act done by them of their own
volition.
9. A similar issue arose for consideration before this Court in the case
of Nalwa Sons Investment Ltd2. The Court was dealing with a
case where the Company Court passed an order of arrangement
and demerger. As a result, the plot given on lease to a company
was transferred to another company. In paragraph 5 of the decision,
this Court had set out the policy instructions regarding charging an
unearned increase. Paragraph 5 reads thus:
5. The instructions followed by the competent authority
in regard to charging of UEI have been articulated in
document Annexure P-1, which reads thus:
XXX XXX XXX
Sub. : Substitution/addition/deletion of names in lease/
sub-lease of industrial/commercial plots unearned increase
In supersession of previous instructions on the subject, the
Lt. Governor, Delhi is pleased to order that henceforth in
the matters of addition/deletion and substitution of names
in respect of industrial/commercial lease/sub-lease to be
executed or already executed, the following procedure
shall be followed:
1. No unearned increase to be charged:
(a) The auction-purchaser/allottee shall be permitted
free of charge, to add, delete or substitute the
names of family members which may, where
necessary, take the form of partnership firm or
private limited company.
[2024] 4 S.C.R. 435

M/s. Jaiprakash Industries Ltd. (Presently known as M/s. Jaiprakash
Associates Ltd.) v. Delhi Development Authority

(b) In case of conversion of partnership firm into
private limited company comprising original
partners as Directors/Subscribers/Shareholders.
(c) In case of addition, deletion or substitution of
partners in a firm or Directors and conversion of
sole proprietorship firm or partnership concern
into private limited company when change in
constitution is limited, for approval by the DDA,
within one year from the date of purchase of
plot in auction. This will to apply in case of plot
obtained by the party by way of allotment.
(d) Change from private limited company to
public limited company where a private limited
company becomes a public limited company
under Section 43-A of the Companies Act, 1956.
2. Where unearned increase is to be charged:
(a) Addition of outsiders not falling within the family
members shall be allowed through a conveyance
deed on payment of 50% unearned increase on
his proportionate shares. The unearned increase
shall be calculated at the market rate prevalent
on the date of receipt of the application in the
office of the DDA.
(b) Substitution of the original allottee/auction-
purchasers shall be allowed on payment of 50%
unearned increase of his shares in the value of
the plot which will be calculated at the market
rate. The market rate shall be the rate prevalent
on the date of receipt of the application. It is
irrespective of the fact whether the lease deed
has been executed or not.
(c) 50% unearned increase will be charged in
respect of proportionate shares of the plot parted
with by way of addition, deletion or substitution
of partner/partners in case of single ownership
or partnership firm and Director/Directors/
Shareholders/Subscribers in case of private
436 [2024] 4 S.C.R.

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limited company. This is applicable where the
incoming persons do not fall within the definition
of family. Unearned increase would be charged
on the basis of market rate prevalent on the
date of intimation for each and every change
in the constitution. This would be applicable
in all cases where the lease deed has been
executed or not.
(d) In case where a private limited company/
public limited company separately floating
a new company although Directors may be
the same and the name of old company has
not changed and it still exists as it was,
50% unearned increase will be chargeable
in such cases.
3. Interest @ 18% p.a. on the unearned increase from
the date of receipt of the application intimating the
change till the payment by the company or individual
or firm shall be charged on the amount of the unearned
increase payable to the DDA.
4. The administrative conditions prescribed in the UO
No. F.1(23)/78/C(L) Part II dated 8-5-1979 will remain
unchanged.
XXX XXX XXX”
(emphasis added)
In paragraphs 14 to 18, this Court held thus:
14. For answering the seminal question, we must first
advert to the obligation of Respondent 1 springing from
the stipulation in the perpetual lease deed. Clause 6(a),
as extracted in para 2 above, envisages a bar to sell,
transfer, assign or otherwise part with the possession
of the whole or any part of the commercial plot, except
with the previous consent in writing of the lessor
(appellant), which the appellant would be entitled
to refuse in its absolute discretion. While granting
consent in terms of the proviso to Clause 6(a), it is open
[2024] 4 S.C.R. 437

M/s. Jaiprakash Industries Ltd. (Presently known as M/s. Jaiprakash
Associates Ltd.) v. Delhi Development Authority

to the appellant to impose such terms and conditions
as may be deemed appropriate and claim and recover
a portion of the unearned increase in the value of the
commercial plot, being 50% of the unearned increase.
The decision of the appellant in this behalf is final and
binding upon the original lessee (Respondent 1). The
amount towards the unearned increase is computed on the
basis of the difference between the premium paid and the
market value of the commercial plot. In doing so, the fact
that the transfer under consideration did not involve any
consideration amount or the value paid by the transferee
is below the market value, would not inhibit recovery of
50% of the prescribed unearned increase amount on
actual or, in a given case, notional basis. This is the plain
meaning of the stipulation. This position is reinforced from
the contemporaneous instructions issued by the competent
authority of the appellant about the manner in which the
unearned increase should be charged and from whom
such charges should be recovered. That can be discerned
from the instructions dated 6-9-1988.
15. Indeed, the said instructions advert to the category
of persons from whom no unearned increase should be
charged, despite being a case of transfer of the property
as mentioned in Clause 1 thereof. The Division Bench of
the High Court has relied upon the category mentioned
in Clause 1(b). The same reads thus:
“1. No unearned increase to be charged:
(a)***
(b) In case of conversion of partnership firm into private
limited company comprising original partners as Directors/
Subscribers/Shareholders.”
From the plain language of this clause, we fail to fathom
how the said clause will be of any avail to the respondents.
For, we are not dealing with a case of conversion of a
partnership firm into a private limited company as such.
The fact that the instructions extricate the category of
transfers referred to in Clause 1 of the instructions from
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the liability of paying an unearned increase despite being
a case of transfer, cannot be the basis to exclude the other
category of transfers/persons not specifically covered by
Clause 1, such as the case of present respondents. That
is a policy matter. The respondents were fully aware about
the existence of such a policy. That policy has not been
challenged in the writ petition. Concededly, the reliefs
claimed in the writ petition were limited to quashing of the
demand letter dated 5-8-2010 and notice dated 31-1-2011,
demanding unearned increase; and to direct the appellant
to convert the said property from leasehold to freehold in
favour of Respondent 2, without charging any unearned
increase. The reliefs are founded on the assertion that
the transfer was not to any outsider, much less for any
consideration.
16. In the first place, it is not open to the respondents
to contend that the arrangement and demerger scheme
does not result in transfer of the subject plot from
the original lessee (Respondent 1) to Respondent 2.
Inasmuch as, Clause (2) of the order passed by the
Company Judge approving the scheme of demerger,
as reproduced above, makes it amply clear that all
property, assets, rights and powers in respect of the
specified properties, including the subject plot, shall
stand transferred to and vest in Respondent 2. Once
it is a case of transfer, it must abide by the stipulation
in Clause 6(a) of the lease deed of taking previous
consent in writing of the lessor (appellant) and to
fulfil such terms and conditions as may be imposed,
including to pay any unearned increase amount. We
find force in the argument of the appellant that the fact
situation of the present case would, in fact, be governed
by Clause 2(d) of the instructions which reads thus:
“2. Where unearned increase is to be charged:
(a)***
(d) In case where a private limited company/public
limited company separately floating a new company
although Directors may be the same and the name
[2024] 4 S.C.R. 439

M/s. Jaiprakash Industries Ltd. (Presently known as M/s. Jaiprakash
Associates Ltd.) v. Delhi Development Authority

of old company has not changed and it still exists as
it was, 50% unearned increase will be chargeable in
such cases.”
This clause plainly applies to the present case. The
demand of unearned increase from the respondents is
founded on that basis. The High Court misinterpreted the
said clause and erroneously opined that it is not applicable
to a case of demerger of a public limited company.
17. The principal clause is Clause 6(a) of the lease
deed. The clause referred to in the instructions is equally
significant. Indeed, the latter merely provides for the
mechanism to recover the unearned increase from the
original lessee. The fact that the same group of persons
or Directors/promoters/ shareholders would be and are
associated with the transferee company does not cease
to be a case of transfer or exempted from payment of UEI,
as envisaged in Clause 6(a) of the lease deed. Rather,
Clause 2(d) of the policy, noted above, makes it expressly
clear that unearned increase be charged irrespective of
the fact that the Directors in both companies are common
and the old (parent) company has not changed its name.
18. The fact that it was a case of transfer is reinforced
from the order of demerger passed by the Company
Judge and once it is a case of transfer, coupled with
the fact that the respondents are not covered within the
categories specified in Clauses 1(a) to 1(d) of the policy
of the appellant, reproduced in para 5 above, they would
be liable to pay unearned increase (“UEI”) in the manner
specified in Clause 6(a) of the lease deed. The obligation to
pay UEI does not flow only from the instructions issued by
the competent authority of the appellant but primarily from
the stipulation in the perpetual lease deed in the form of
Clause 6(a). Viewed thus, the Division Bench of the High
Court committed a manifest error in allowing the appeal
and setting aside the judgment of the learned Single Judge,
who had rightly dismissed the writ petition and upheld the
demand notice and the show-cause notice calling upon
the respondents to pay the unearned increase amount in
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terms of Clause 6(a) of the perpetual lease deed. That
demand was final and binding on the respondents, so
long as the stipulation in the form of Clause 6(a) of the
perpetual lease was in force.”
(emphasis added)
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. In our view, the
same principles will apply to a merger, and an unearned increase
will be payable. In the case of Indian Shaving Products Limited1,
the High Court of Delhi dealt with the amalgamation of companies
under the SICA and not under the Companies Act. In any event,
this 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.
10. 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. Section 5 of the TPA reads thus:
“5. “Transfer of property” defined.—
In the following sections “transfer of property” means an
act by which a living person conveys property, in present
or in future, to one or more other living persons, or to
himself, and one or more other living persons; and “to
transfer property” is to perform such act.
In this section “living person” includes a company or
association or body of individuals, whether incorporated
or not, but nothing herein contained shall affect any law
for the time being in force relating to transfer of property
to or by companies, associations or bodies of individuals.”
11. 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
[2024] 4 S.C.R. 441

M/s. Jaiprakash Industries Ltd. (Presently known as M/s. Jaiprakash
Associates Ltd.) v. Delhi Development Authority

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.
12. Therefore, we find nothing illegal about the impugned judgment.
Accordingly, we dismiss this appeal with no order as to costs.
13. By the order dated 3rd January 2008 of this Court, an interim stay
was granted to the impugned judgment subject to a condition
of the appellant depositing a sum of Rs.2,13,59,511.20 with this
Court. The office report shows that the amount and the interest
accrued thereon have been separately invested. Therefore, it will
be open for the respondent-DDA to withdraw the principal amount
of Rs.2,13,59,511.20 along with the interest.

Headnotes prepared by: Divya Pandey Result of the case:
Appeal dismissed.