NCLAT declares Tata Steel’s 10,444 sub-leases in Jamshedpur illegal

Mail News Service

Jamshedpur, Jan 8: In a significant ruling, the National Company Law Appellate Tribunal (NCLAT) has declared the 10,444 so-called sub-leases (or sub-grants) given by Tata Steel in Jamshedpur, which were not registered, as illegal. The decision, passed on January 7, 2024, has far-reaching implications, as it invalidates all subsequent transfers of the land without proper registration. The case was heard under Company Appeal (AT) Insolvency No.2373 of 2024, and the ruling puts a cloud over thousands of transactions involving land in Jamshedpur.

The issue revolves around Tata Steel’s handling of land originally granted by the British government as a government grant, which falls under the Government Grants Act, 1895. As per the Act, Tata Steel had transferred rights to various entities, including Narbheram & Company and Precision Fasteners, through unregistered sub-grants. The sale deed for the land purchased by Rahat Hussain, who later acquired the shop in Kamani Centre, was also unregistered, leading to its declaration as illegal by the Hon’ble National Company Law Tribunal (NCLT), Mumbai, on October 4, 2024.

Rahat Hussain’s advocate, Akhilesh Srivastava, argued before the NCLAT that the NCLT lacked jurisdiction over transactions dating back two years under Section 43 (4) of the Insolvency Act, 2016. He also contended that since the government land in Jamshedpur is not leased but granted under the Government Grants Act, 1895, the Transfer of Property Act does not apply, and therefore, no sale deed needs to be registered.

Despite the argument, the Hon’ble NCLAT upheld the position that registration of subsequent transfers is necessary. The tribunal did not clarify the exact law under which the registration would be required but refused to accept the claim that no law exists for the registration of sub-grants.

The ruling has raised concerns about the validity of 10,444 sub-grants, which are part of Tata Steel’s expansive land holdings in Jamshedpur. Advocate Srivastava emphasized that if the sale deed of one property is declared illegal, it would affect the legitimacy of all similar transactions.

The Bihar and Jharkhand governments, which have classified government grants as leases, are now under scrutiny, and the matter is expected to escalate further. Srivastava has indicated that the legal battle will likely proceed to the Hon’ble Supreme Court or the Jharkhand High Court, as he believes the jurisdiction lies with the Civil Court of Jamshedpur, not the NCLT or NCLAT.

The ruling has left the residents of Jamshedpur, many of whom are affected by these land transactions, anxious about the future. It remains to be seen how this will unfold in the higher courts and whether any new legislation will emerge in response to this complex legal challenge.