Writ Petition Founded on Misrepresentation and Suppression: Calcutta HC Upholds WBIDC’s Transfer Fee Demand and Dismisses Appeal [Read Order]

The Calcutta High Court has dismissed an appeal filed by the appellant, affirming the Single Judge’s refusal to interfere with the West Bengal Industrial Development Corporation’s (WBIDC) demand for a transfer fee in relation to 315 acres of industrial land at Kharagpur.

It was held that the writ petition was vitiated by wilful misrepresentation and suppression of material facts, disentitling the petitioner from any relief under Article 226 of the Constitution.

The dispute arose after the appellants S.S. Natural Resources Pvt Ltd and, as successful resolution applicants for Ramsarup Industries Ltd. (RIL), sought transfer of the leasehold land without payment of transfer fee, penalties, arrears, or interest.

Their resolution plan contained Clause 15.15.5, which explicitly sought a direction that WBIDC, the respondents, must transfer the lease “without the requirement of payment of any fee, consideration or premium.”

The National Company Law Tribunal (NCLT), while approving the resolution plan on 04.09.2019, refused to approve this waiver clause, holding that statutory dues and charges must be paid in accordance with law and that any exemption must be considered by the respective authorities.

The National Company Law Appellate Tribunal (NCLAT) affirmed this view.

After dismissal of the appeal by the NCLAT the WBIDC raised the demand for transfer fee calculated at 10% of the prevailing market rate for the Kharagpur land, quantified at Rs. 6,45,66,626/- (Rupees six crore forty five lakhs sixty six thousand six hundred and twenty six).

The Supreme Court dismissed the appellants’ further challenge in Civil Appeal No. 1142 of 2021.

Despite this, the appellants approached the writ court contending that the transfer‑fee claim stood extinguished under the “clean slate” principle embodied in Section 31 of the Insolvency and Bankruptcy Code (IBC).

They relied heavily on paragraphs 24, 25, and 36 of the NCLAT judgment, presenting them as observations of the appellate tribunal supporting their position that WBIDC’s claim was an “afterthought” and barred by estoppel, waiver, and acquiescence.

The Division Bench, comprising Justice Madhuresh Prasad and Justice Supratim Bhattacharya, found this to be a deliberate distortion.

Those paragraphs, the Court noted, were not findings of the NCLAT, but merely submissions of the appellants, which the writ petition misleadingly reproduced as judicial observations. The writ petition further stated that these supposed “observations” were affirmed by the Supreme Court, another misrepresentation.

The Court held that such conduct amounted to wilful suppression and misrepresentation, attracting the settled principle that a litigant who approaches the writ court must do so with clean hands.

In affirming the Single Judge’s dismissal, the Division Bench relied on a line of Supreme Court authorities, including K.D. Sharma v. Steel Authority of India Ltd. (2008) Vijay Syal v. State of Punjab (2003), and Madras Bar Association v. Union of India (2015), all of which reiterate that a party guilty of misleading the court or suppressing material facts is not entitled to equitable relief under Article 226.

The Court also held that the issue of waiver of transfer fee had already been conclusively decided by the NCLT, NCLAT, and Supreme Court, and was therefore barred by issue estoppel.

On merits, the Court rejected the appellants’ argument that the transfer‑fee claim was a “hydra head”, a recurring, unpredictable liability that would undermine the viability of the resolution plan.

The Court held that the claim was never frozen, never waived, and never extinguished by the resolution plan. Since Clause 15.15.5 was expressly not approved, the appellants could not rely on the “clean slate” doctrine under Section 31 IBC to avoid the transfer fee.

The Court clarified that the “clean slate” principle applies only to claims dealt with in the resolution plan, not to claims that were rejected or left open for determination by statutory authorities.

The Bench also rejected the argument that a change in shareholding does not amount to a transfer of leasehold rights. The appellants relied on earlierHigh Court decisions such as Green Hut Pvt. Ltd., Din Chemicals, and Gopi Vallabh Solutions, but the Court held that these precedents were inapplicable to the present factual matrix, particularly given the explicit refusal of the NCLT to waive transfer‑fee obligations.

Ultimately, the Court concluded that the writ petition was fundamentally tainted by misrepresentation and suppression, and that the appellants could not invoke equitable jurisdiction to avoid a liability that had already been left open by the insolvency forums. The appeal was accordingly dismissed, and WBIDC’s demand for the transfer fee was upheld.

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