DISTRICT CONSUMER DISPUTES REDRESSAL FORUM II
UDYOG SADAN C 22 & 23 QUTUB INSTITUTIONAL AREA
(BEHIND QUTUB HOTEL) NEW DELHI – 110016.
Case No. 477/10
D. D. Gears Pvt. Ltd.
A company incorporated under the
Provisions of Indian Companies Act 1986
Having its office at Plot No. 34
Block A G.T. Karnal Raod
Delhi – 110033
Through its Director
Shri Pradeep Gambhir Complainant
Vs
Delhi Devlopment Authority
Through its Vice Chairman
Vikas Sadan INA
New Delhi. Opposite Party
Date of Institution 14.07.2010
Date of decision 26.12.2015
Coram
Sh. N.K. Goel President
Ms. Naina Bakshi Member
O R D E R
The case of the complainant company in the present complaint filed through Sh. Pradeep Gambhir stated to be one of the Directors and duly authorized by the Company through Board Resolution dated 12.2.10 in his favour to institute sign file and verify the present complaint is that the complainant company which is a closely held family company having all the family members as the Directors and share holders was allotted Plot No. 34 Black A G.T. Karnal Road Industrial Area Delhi by the OP on 5.3.1973 through perpetual lease deed and that the possession of the plot was handed over to the complainant by the OP on 15.10.1974 and lease deed was executed on 3.11.1978. It is stated that thereafter construction was raised in conformity with building bye laws and lease deed dated 3.11.1978 and the complainant started carrying out industrial activity on the leased property and lease property is being used in conformity with the terms and conditions of lease deed dated 3.11.1978. It is further stated that the complainant company was made a limited company namely DD Gears Ltd. on 12.10.92 but constitution and status of complainant company remained the same i.e. all family members; that M/s Tishtha Leasing and Finance Pvt. Ltd. is also a family company as directors in the said company are Sh. Pradeep Gambhir and Sh. Sandeep Gambhir both sons of Sh. Dharambir Gambhir who is also one of the Directors of D.D.Gears Pvt. Ltd. and the complainant informed the OP about the said change vide letter dated 1.6.1993; that on 5.11.1993 the complainant requested the OP to grant permission to mortgage the plot to the bank to secure loan and it was made known to the Director of the complainant that the request of the complainant for mortgage of the land could be acceded only when the complainant company pay damages as complainant company had changed the status/identity of the complainant company. It is stated that as per terms and conditions of lease deed lessee is liable to pay UEI in case there is a change in the constitution of the company or there is transfer of interest sub letting sale etc. of lease property and there is no term/condition in the lease deed which stipulates that lessee has to pay UEI if company is converted from private limited to public limited. Further case of the complainant is that the complainant approached the OP for conversion of plot in question from leasehold to freehold basis and the complainant was willing to pay all the requisite charges for conversion of property but the OP turned down the request of the complainant and told the complainant that it was liable to pay UEI/damages to the OP. It is stated that the complainant company again converted back to the same condition as it was at the time of grant of lease i.e. to private limited company on 12.8.2008. According to the complainant even otherwise mere transfer of share does not amount to transfer of interest in immovable properties of company and it is well established principle of law that shareholders do not have any right title or interest in the immovable property of the company and company is a distinct and separate entity in the eyes of law. According to the complainant complainant is a consumer within the meaning of the Consumer Protection Act 1986 (in short the Act) as it has hired the services of the OP for consideration and the Directors of the complainant company are earning their livelihood from the aforesaid property. Hence the prayers of the complainant company are as follows
- direct the respondent to covert Plot No. 34 Block A G.T. Karnal Road Industrial Area Delhi from leasehold to freehold;
- direct the respondent not to claim/raise any demand/damages/unearned increase in profit from the complainant company of any nature whatsoever for converting Plot No. 34 Block A G.T. Karnal Road Industrial Area Delhi from leasehold to freehold;
- Direct the respondent to pay compensation of Rs. 1 00 000/ to the complainant company for causing mental pain torture and harassment;
- Award litigation expenses of Rs. 33 000/ to the complainant company.
An application for grant of exparte ad interim injunction was also filed along with the complaint. In this regard order dated 14.7.10 passed by the then Ld. President is relevant. The same is reads as follows
14.7.10
Heard the Complainant Counsel. There is a Consumer dispute. Admit. Issue notice to OP for 2.9.10.
This is an application for grant of ex parte ad interim injunction .
Heard the Complainant Counsel.
OP is hereby restrained to cancel the lease deed dated 3.11.1978 at plot No. 34 Block A G.T. Karnal Road Delhi till the pendency of the complaint.
Sd/
(President)
In the written statement the OP has inter alia stated that as per the perpetual lease the lessee had applied by bid at public auction to the OP/DDA for the grant of a lease of the plot of land belonging to the OP and therefore the complainant in a public auction does not hire the services of the OP and thus is not a consumer. It is further stated as under
Plot no. A 34 GTK Industrial Area was allotted in favour of M/s DD Gears Pvt. Ltd in auction. The possession was handed over to the unit on 15.10.1974. The perpetual lease deed of the plot was executed on 31.01.1978. Subsequently the unit applied for the mortgage permission. While processing the case for mortgage permission it was found that the shareholding of the company was changed as such the request of the company was not acceded to and it was communicated to the unit that the request for mortgage permission can be considered only after the conversion from DD Gears Pvt. Ltd. to DD Gears Ltd. is regularized. Thereafter the case was processed for charging the UEI and the opinion of Sr. Standing Counsel was taken. A sum of Rs. 7 74 14 927/ and interest amounting to Rs. 8 07 05 061/ (Revised to Rs. 24 50 18 244/ tentatively upto 31.12.2010) was worked out. The demand letter was sent to the unit on 21.05.99 for the payment of the same followed by reminders dated 2.01.2001 and 31.08.10. In the present case DDA is entitled to charge unearned increase for changes that have taken place several times in the share holding before it was converted into public limited company and also for change of the company to Public limited company. Charging of unearned increase for these changes are fully justified. However the unit instead of paying the outstanding dues has filed the present case before the Hon’ble forum.
It is submitted that there have been several changes in the shareholding of the company out of family as such the unit had violated the terms and conditions of the lease deed as such it was liable to pay the UEI as per the policy of the DDA/OP/Lessor. In the present case DDA is entitled to charge unearned increase for changes that have taken place several times in the share holding before it was converted into public limited company and for converting Private Limited company into Public limited company. Charging of unearned increase for these changes are fully justified.
The complainant was intimated that the mortgage permission can be granted to them on regularization of the constitution of the unit from M/s DD Gears Pvt. Ltd. to DD Gears Ltd. as the plot was leased out to M/s DD Gears Pvt. Ltd. and the mortgage permission was sought by M/s DD Gears Ltd. However it seems that the unit mortgaged the premises without consent of the lessor as the property under consideration is under alleged sale from DRT II. The complainant has deliberately concealed this fact from the Hon’ble Forum.
The complainant has not so far applied for conversion of the plot into freehold in the prescribed form as per brochure of conversion of plot from Lease Hold to free hold. The representative of the unit appeared in the public hearing and he was intimated the process of the conversion into freehold. It was also intimated that all dues on any account have to be cleared before the conversion is allowed. Further it has also come to notice that the title of the plot is also under dispute as the questioned plot is under sale from DRT II as intimated by the DRT. This fact has not been disclosed by the complainant intentionally and deliberately with malafide intentions. The complainant has not yet applied for the conversion under prescribed form hence the question of turning down the request does not arise.
It is prayed that the complaint be dismissed.
In the rejoinder it is inter alia stated that the complainant is not liable to pay any un earned increase to the OP as shareholding as directors of Complainant Company is the same except with minor changes and Complainant Company is closely held family company. It is stated that the complainant has not challenged the auction in pursuant to which it had purchased the plot from the OP rather the dispute is that OP arbitrarily and whimsically is demanding UEI from complainant for changing the status of complainant company from private limited to limited company. It is submitted that the plot in question as on date also stands in the name of DD Gears Pvt. Ltd.
Affidavit of Sh. Pradeep Gambhir Director has been filed on behalf of the complainant. On the other hand affidavit of Sh. D.K. Gupta Asstt. Director (Indl.) has been filed on behalf of the OP.
Written arguments have been filed on behalf of the parties.
We have heard the counsel for the parties and have also very carefully gone through the record.
It is an admitted fact that it has been held in UT Chandigarh Administration Vs Amarjeet Singh II (2009) CPJ 1 (SC) that where there is a case of public auction the jurisdiction of the Consumer Fora cannot be invoked.
It is an admitted case of the parties that plot in question had been allotted to the complainant in a public auction. It is also not in dispute that thereafter the complainant company raised construction on the said plot and started carrying out industrial activities. Even if we assume for the sake of brevity for a moment that the complaint is not hit by the law laid down in the said judgment we are of the considered opinion that even otherwise the complainant company is not a consumer as there is no evidence on the record to show that the complainant company has been provided services by the OP for consideration as pleaded in the complaint. The complainant company raised construction on the plot and started industrial activities. Thereafter the complainant company changed the status of the complainant company from private limited company to limited company. After doing so the complainant requested the OP to grant permission to mortgage the plot to the Bank to secure loan. It is not the case of the complainant company that while making the said request to grant permission to mortgage the plot to the Bank the complainant company had paid any fee or charges to the OP or in other words any consideration for granting the said permission or any such fee or charges or legal consideration had to be deposited by the complainant with the OP before the grant of said permission. Therefore the OP was not providing any service to the complainant. Secondly it is the case in respect of an industrial plot and hence it is out of the purview of the consumer dispute. The complainant is well aware about this proposition of law. Therefore it has been pleaded in the complaint that the directors of the complainant company are earning their livelihood from the property in question. The balance sheet or the copies of account books of the complainant company are not filed on the record to show about the expenses/income of the complainant company during the relevant period. We do not know how many employees or workers are working in the complainant company. Therefore in the absence of any cogent and convincible reason we are not inclined to believe that the directors of the complainant company are running the said company only for the purposes of earning their livelihood. Therefore in our considered judgment complainant company is not a consumer as defined in the Consumer Protection Act.
Even otherwise while deciding the dispute between the parties the provisions of the Companies Act have to be interpreted. It has to be decided whether the complainant company with the same shareholders and directors can change the status of company from private limited company to limited company and it will not amount to change of status/identity of the complainant company. It has also to be decided whether after forming the limited company the complainant company can again convert it into a private limited company with a view to claim a relief which is otherwise denied to it by the OP. The complainant is required to prove that the Directors/Managing Directors/the shareholders of the two companies are all family members except with minor changes (as pleaded in the replication/rejoinder). What are these minor changes have not been disclosed in the rejoinder or in the affidavit of the Director. The effect of the said minor changes has to be looked into and decided. In other words the complaint involves complicated questions of law and facts which cannot be decided without recording the evidence of the parties and without giving an opportunity to each other to cross examine each other’s witnesses. These questions cannot be decided in a summary manner as provided under the Consumer Protection Act. Therefore we hold that complaint is not maintainable on this account.
In view of the above discussion we dismiss the complaint with no order as to costs.
Copy of this order be sent to the parties as per regulation 21 of the Consumer Protection Regulations. Thereafter file be consigned to record room.
(NAINA BAKSHI) (N.K. GOEL) MEMBER PRESIDENT
Announced on 26.12.15.
Case No. 477/10
26.12.2015
Present – None
Vide our separate order of even date pronounced the complaint is dismissed. Let the file be consigned to record room.
(NAINA BAKSHI) (N.K. GOEL)
MEMBER PRESIDENT
