M/S Vishnu Chemicals Limited vs State Of Chhattisgarh

The instant petition has been preferred challenging the order/demand letter dated 19.8.2020 (Annexure P46) passed by the Director, Directorate of Industries, Raipur, whereby and whereunder the Petitioner’s company has been informed that for change of name of the Petitioner’s company it has to deposit Rs.2,13,70,535 applying Rule 3.4.1.5.3 of the Chhattisgarh Industrial Land and Building Management Rules, 2015 (henceforth ‘the Rules of 2015’).

Facts of the case, in short, are that in the year 1965, M/s Hindustan Chemical Works Limited was established in the Industrial Estate situated at Bhilai allotted by the District Trade and Industries Centre, Durg (henceforth ‘the DTIC’) and the lease of 16 acres of industrial land for a period of 99 years from 15.1.1965 to carry out manufacturing and industrial activity was given to the Hindustan Chemical Works. On 15.1.1993, M/s Keystone Industries Limited was incorporated under the Companies Act, 1956 and the certificate of incorporation was also issued in its favour. In the year 1994, M/s Hindustan Chemical Works Limited was purchased and taken over by M/s Keystone Industries Limited. Thereafter, the lease and hold right was also transferred to M/s Keystone Industries Limited by the DTIC. The amended lease deed was also executed. In the year 2005, the registered office of M/s Keystone Industries was shifted from Bombay (Maharashtra) to Hyderabad. Thereafter, for the scheme of amalgamation of M/s Keystone Industries Limited with M/s Vishnu Chemicals Private Limited two separate petitions pursuant to Sections 391 and 394 of the Companies Act were filed by both of them before the High Court of Andhra Pradesh, Hyderabad. A common order was passed on 15.12.2005 disposing of both the company petitions and sanction was granted to the proposed scheme of amalgamation. Accordingly, M/s Vishnu Chemicals Limited (transferer company) dissolved and closed their operations and as per the order of High Court of Andhra Pradesh, M/s Keystone Industries Limited is holding its existence and continuing the operation in the present lease hold land at Durg. On 31.12.2005, the Board of Directors of the company passed a special resolution and after having obtained approval of the Central Government and the Company Law Board, the name of M/s Keystone Industries Limited was changed to M/s Vishnu Chemicals Limited. Upon consequent of change of name, the Registrar of Companies Hyderabad issued fresh certificate of incorporation on 2.1.2006 effecting the name change as mentioned above. On 8.5.2006, an application with request was submitted to the General Manager, District Trade and Industries Centre, Durg for change of the name of the company from M/s Keystone Industries Limited to M/s Vishnu Chemicals Limited along with relevant documents. On 21.6.2006, a letter was also received from Incharge, General Manager of the DTIC, Durg. It was informed that for the year 2006-07, M/s Keystone Industries Limited was required to pay Rs.7122 as ground rent charges. The Petitioner/company replying the letter paid the remaining ground rent through challan. The above application submitted by the Petitioner for change of the name of the Petitioner/company is pending since 2006 and no action has been taken by the Respondents/authorities despite several requests letters and communications. Every year, the Petitioner/company was duly paying ground rent and the same was duly accepted and acknowledged by the General Manger of the DTIC, Durg, but, the name of the company was not changed by the DTIC in their record as submitted by the Petitioner/company. The Petitioner/company filed a writ petition, being Writ Petition (C) No.1815 of 2018 before this Court. On 5.7.2018, the writ petition was disposed of and the Respondents/authorities were directed to decide the application for change of name of the Petitioner/company within a period of 6 months. The Petitioner/company submitted a copy of the order of this Court to the Chief General Manager, DTIC, Durg. The Petitioner/company again made a request letter on 5.9.2018. On 16.1.2019, again a request letter was made by the Petitioner for change of the name. On 8.2.2019, the Additional Director, Directorate of Industries issued a letter (Annexure P39) to the Petitioner/company. For the first time, in the said letter, it was mentioned that the company’s unit is situated in the Industrial Estate, Bhilai, where the provisions of Chhattisgarh Industrial Land and Building Management Rules, 2015 are applicable and as per Rule 3.4.1.3 all mergers, de-mergers, amalgamations, de-amalgamations come under the category of transfer and as per the Rules the Petitioner/company has to pay the transfer and other charges applicable. Pursuant to the said letter (Annexure P39), the DTIC issued a demand letter dated 29.3.2019 (Annexure P40) mentioning that as per the Chhattisgarh Industrial Land and Building Management Rules, 2015, the Petitioner/company is liable to pay transfer charges at the rate of 15% of the land premium of 16 acres amounting to Rs.1,16,56,656 and ground rent of Rs.23,31,331, security amount Rs.69,93,993 and amendment charge amounting to Rs.3,88,555, total Rs.2,13,70,535. The Petitioner preferred an appeal against the said order, which was dismissed as not maintainable. Thereafter, the Chief General Manager, DTIC, Durg sent a letter dated 18.2.2019 (Annexure P43) to the Petitioner/company advising the company to submit a CA certificate along with list of Directors for consideration of name change. The said information was given by the Petitioner/company. Meanwhile, the Petitioner preferred a second appeal before the Department of Commerce and Industries, Raipur challenging the demand raised by the Chief General Manager, DTIC, Durg. Later on, it was known that a direction was issued by the competent authority to the Chief General Manager/Director to pass necessary orders as per Annexure P45. Thereafter, the Director, Directorate of Industries, Raipur issued the impugned letter dated 19.8.2020 (Annexure P46). Hence, the instant petition by the Petitioner/company.

It was submitted by Learned Senior Counsel appearing for the Petitioner that the Petitioner/company for the first time on 8.5.2006 had submitted an application with request for change of name of the company to the General Manager, DTIC, Durg along with all the relevant documents which was also acknowledged vide letter dated 21.6.2006, but the same was never acted by the Respondents/authorities even after a lapse of 14-15 years. The case of the Petitioner would govern by the prevalent rules, i.e., M.P./C.G. Industrial (Shed, Plant and Land Allotment) Rules, 1974 (henceforth ‘the Rules of 1974’) as amended upto 1.4.1999, when the first application was submitted by the Petitioner for change of the name. The first application submitted by the Petitioner was not decided and taken care of by due diligence by the Respondents despite continuous requests/reminders made by the Petitioner and now the Respondents are applying the Chhattisgarh Industrial Land and Building Management Rules, 2015 and demanding the exorbitant amount for change of name of the Petitioner which is wholly illegal, unwarranted and unjustified. It was further submitted that there is a final order of High Court of Andhra Pradesh passed in Company Petition No.95 and 96 of 2005 dated 15.12.2005 which has also attained finality. There should be no hesitation for the Respondents for changing the name. It was further submitted that being a welfare State, the Respondents are expected to act promptly in accordance with law. Further, referring to the notification dated 31.10.2019 (Annexure P50) issued by the Commerce and Industries Department, it was submitted that vide the said notification, amendment has been introduced in the Chhattisgarh Industrial Land and Building Management Rules, 2015. In view of the amendment and decrease in the premium amount, the Petitioner/company on 19.6.2021 had again submitted a representation before the Director, Directorate of Industries, Raipur for reconsideration of the demand as per the amendment introduced. According to the Learned Senior Counsel for the Petitioner, as per the amendment, the lease rent has been reduced to 2% from 3%. Transfer charges has also been reduced to 5% from 15% and the land premium has also been reduced for small industries to Rs.70 Lakhs per hectare and for medium and large industries to Rs.84 Lakhs per hectare. It was submitted that though the fault was of the Respondents for not deciding the application for change of the name since 2006, the Petitioner/company to settle all the disputes finally is ready to pay the transfer charges, lease rent etc. as per the amendment, i.e., Annexure P50. Therefore, it was prayed that the Respondents be directed to consider the application of the Petitioner/company and change the name of the company as per the amended rules (Annexure P50).

Learned Counsel appearing for the Respondents submitted that the present writ petition has been filed by the Petitioner/company against the letter dated 19.8.2020 (Annexure P46) which is merely a letter communication, whereas the said letter clearly refers to the order dated 8.2.2019 as well as the demand notice dated 29.3.2019. According to the Learned Counsel for the Respondents, merely seeking quashment of the letter dated 19.8.2020 is inconsequential since the Petitioner has chosen not to challenge the order dated 8.2.2019 and the demand notice dated 29.3.2019. Therefore, the writ petition is liable to be dismissed. With reference to the order passed by the High Court of Andhra Pradesh, it was submitted that in those matters, the Respondents were neither party before the Andhra Pradesh High Court nor did the scheme of amalgamation consider the rights and liabilities qua the answering Respondents, therefore, the Petitioner herein cannot claim any advantage upon referring the order passed by the High Court of Andhra Pradesh. The decision taken by the Respondents has been done in accordance with the prevalent rules and the claim of the Petitioner that the Rules of 2015 are not applicable is wholly misplaced. It was further submitted that since Rule 3.4.1.3 of Rules of 2015 clearly provides that in case of change of share holding the same shall be treated as a transfer. Hence, the Petitioner is liable to make a payment of requisite amount. Therefore, it was prayed that the writ petition may be dismissed accordingly.

I have heard the arguments raised on behalf of the parties and perused the entire material available with due care.

It is not in dispute that in Company Petition No.95-96 of 2005, the High Court of Andhra Pradesh at Hyderabad, by its order dated 15.12.2005 (Annexure P7), granted sanction to the proposed scheme of amalgamation subject to compliance of the procedure under Sections 94, 97 and 21 of the Companies Act, 1956. Accordingly, after having obtained approval of the Central Government and Company Law Board, on 31.12.2005, Board of the Directors of the Company passed a special resolution. Thereafter, the Registrar of the Companies, Hyderabad issued a fresh certificate of incorporation on 2.1.2006 effecting the name change from M/s Keystone Industries Limited to M/s Vishnu Chemicals Limited. There is also no dispute on the point that thereafter for the first time on 8.5.2006 the Petitioner/company along with other documents (Annexure P11) moved an application for change of name of the company before the DTIC, Durg, which was duly acknowledged by them vide their communication dated 21.6.2006 (Annexure P12), whereby the Petitioner/company was informed that for the year 2006-07, the Petitioner/company was required to pay Rs.7122 as ground rent charges. As demanded, the remaining ground rent charge has also been deposited by the Petitioner/company. From perusal of the documents, it also appears that since then continuously the Petitioner/company approached and represented for change of name of their company and continuously paid the ground rent yearly as demanded by the Respondents/authorities. Unfortunately, their application, which was submitted in the year 2006 was not decided and meanwhile the Rules of 2015 was introduced. At this juncture, it would be appropriate to reproduce Rule 3.4.1.3 of the Rules of 2015, which reads as follows:

Rule 3.4.2.4 of the Rules of 2015 reads as under:

From a bare perusal of the above-quoted rules, it appears that according to the Rules of 2015, the application for change of the name of the Petitioner/company falls within the ambit of transfer as defined in Rule 3.4.1.3 of the Rules of 2015 and for that purpose according to the provision of Rule 3.4.2.4 of the Rules of 2015 the Petitioner is liable to pay 15% amount for the transfer charges. From perusal of the earlier Rules of 1974 as amended upto 1.4.1999, it appears that no such provisions were included in the Rules of 1974. The application for change in the name was submitted by the Petitioner in the year 2006, which was duly acknowledged by the Respondents also and yearly ground rent as demanded by the Respondents was also paid by the Petitioner/company continuously. The Petitioner again and again made requests before the Respondents/authorities for deciding their application for change of the name of the company, but their application and requests were not decided by the Respondents/authorities and meanwhile the Rules of 2015 has been introduced. As in the Rules of 1974, no such provision was included, therefore, if the application of the Petitioner had been decided before introduction of the Rules of 2015, the Petitioner/company would not have been liable to pay any transfer charges as demanded by the Respondents. But, unfortunately, their application was not decided before the introduction of the Rules of 2015. Despite that, the Petitioner/company is still ready to pay the transfer and other charges as per the notification dated 31.10.2019 (Annexure P50) issued by the Commerce and Industries Department, whereby amendment has been introduced in the Chhattisgarh Industrial Land and Building Management Rules, 2015 and accordingly a representation (Annexure P51) dated 19.6.2021 has already been made by the Petitioner/company.

As an outcome of the discussion made hereinabove, the impugned demand letter dated 19.8.2020 (Annexure P46) is quashed. The Respondents are directed to take immediate steps and do the needful for change of name of the Petitioner/company in accordance with the amended provisions of the Rules of 2015 (Annexure P50) and dispose of the application (Annexure P51) submitted by the Petitioner/company as early as possible preferably within a period of 30 days from the receipt of this order.

With the aforesaid directions, the instant writ petition is disposed of.