In Brief
The Delhi Development Authority (DDA) leased a commercial plot to Jindal Strips Limited in 1993. In 2003, following a court-approved demerger order under the Companies Act, the plot's rights were transferred to Jindal Stainless Limited, a related public company with common directors and majority shareholding. The DDA demanded 50% 'unearned increase' (the gain between the original premium paid and current market value) of Rs 6.17 crore. The Supreme Court held that clause 6(a) of the Perpetual Lease Deed requires lessor consent for any transfer and empowers recovery of 50% unearned increase. This obligation applies regardless of whether consideration is exchanged or the parties are related. Since the demerger constituted a transfer not covered by policy exemptions, UEI liability attached. The Court allowed the DDA's appeal and restored the Single Judge's decision upholding the demand."
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