Brilliant Estates LTD. Through Its Director Vinod Mishra vs. Indore Development Authority

Held

The Court held that the amalgamation of one company into another does not constitute a transfer of property. It reasoned that only the name of the company had changed, and its property had not been transferred from one party to another. There was no conveyance executed between the companies, and the merger was conducted as per Section 233 of the Companies Act, 2013, with proper stamp duty paid. Consequently, the Court found that the IDA could not treat the amalgamation as a transfer of lease. The Court determined that the applicable fees for a transfer of lease, as per the Rules of 2018, should not exceed Rs. 5,000, which the petitioner was ready to pay. The impugned order dated September 11, 2023, was quashed. The resolutions dated May 28, 2016, and February 21, 2019, to the extent they sanctioned levying transfer fees more than permitted, were also quashed. The petitioner was directed to pay transfer fees not exceeding Rs. 5,000 as per the amended rules of 2018.

Facts

The petitioner, Brilliant Estates Ltd., was allotted Plot No. 9 in Scheme No. 78, Indore, by the Indore Development Authority (IDA). The plot was initially leased to Ubiquity Digital Card Systems Ltd. (UDCS) on March 28, 2012, for 30 years, with dues including a premium of Rs. 4,20,71,400/-. Subsequently, UDCS changed its name to Brilliant Spaces Ltd. on May 26, 2016. Later, on April 10, 2023, Brilliant Spaces Ltd. amalgamated into Brilliant Estates Ltd. The IDA, by an order dated September 11, 2023, directed the petitioner to pay a 6% transfer fee on the guideline value plus 18% GST and additional charges, citing the name changes and amalgamation as two counts of transfer. The petitioner filed a writ petition challenging this order.

Key Issues

1. Whether the change in the name of a company and its subsequent amalgamation with another company constitute a 'transfer of lease' for which transfer fees can be levied under the impugned order? 2. Whether the resolutions passed by the Indore Development Authority (IDA) levying transfer fees are legally valid, particularly in light of the Madhya Pradesh Vikas Pradhikaranou Ki Sampatiyou Ka Prabhadhan Thatha Vyayan Niyam, 2018 ('Niyam, 2018')? Petitioner's arguments: The petitioner contended that the change in company name and amalgamation do not amount to a transfer of property but are internal restructuring. They argued that the resolutions relied upon by the IDA were passed without legal authority and were contrary to Rule 19 of Niyam, 2018, which limits transfer fees to Rs. 5,000. The petitioner also highlighted that proper stamp duty was paid for the amalgamation under the Companies Act, 2013. Respondent's arguments: The respondent (IDA) argued that the impugned order was based on resolutions dated February 4, 2016, May 28, 2016, and February 21, 2019, which clearly provided for charging transfer fees on the transfer of lease. They also referred to Rule 3(2) of Niyam, 2018, regarding the authority's power to amend rules.