MIDC Lease Transfer – New Plant

Fully developed plant on 10 acres property, newly constructed plant was sold as a business but there was a query on land allotment terms.

Conditional Allotment
the 10 acre plot was allotted under conditions of operating for a certain number of years, before any work with real estate can be done.
Sale
Teh company was unable to continue working in India, reasons known to the company only, and was looking out for an exit route. They found a buyer for a running factory, who wished to continue manufacturing the same product under their own brand name.

Potential risk of Violation of Terms
In principle, the factory land was allotted under condition of operation for a certain number of years. The abrupt decision to exit created a real estate matter, one of agreement violation with the industrial development corporation, who is the owner of the plot.
Representation
The entire case had to be proven as a one off and non violation case. The representation had to be done at the highest levels to prove thatit was an exit with continued operations and not a profiteering one.

Solution

The solution to this type of a situation was a detailed consultative process with the development corporation. As a conditional clause could not be written off randomly, the lease agreement to the new occupant had to be modified. As this particular industrial area was a high demand location, and speculative investors have been strictly kept off limits, the corporation wanted to make sure that the commitments of production and employment is being met despite the company’s exit. After detailed representation of the case and submission of adequate proof and commitments, the corporation decided to approve of the lease transfer to the new owner of business.

Outcomes

Original Landlord Exits
New company takes over
Production continues along with employment
Corporations conditions of operations met satisfactorily