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2010 DIGILAW 247 (KAR)

AGORAMA, BANGALORE v. DEBTS RECOVERY TRIBUNAL, BANGALORE

2010-02-26

ANAND BYRAREDDY

body2010
ORDER Heard the Counsel for the petitioner. 2. The Counsel for the respondent 2 is absent. A request is made for an adjournment on his behalf. However, having regard to the facts and circumstances of the case, the petition is taken up for final disposal. 3. The petitioner is a partnership firm and had applied for allotment of an industrial land with the Karnataka Industrial Area Development Board (hereinafter referred to as the 'Board' for brevity) respondent 4 herein and was allotted land measuring 1 acres in plot No. 27 at Jigani I Phase, Industrial Area, Jigani and was further allotted an additional 1 acre at a cost of Rs. 62.90/- per square foot, the total area measuring 7,991 square metres. The petitioner was put in possession and thereafter, had constructed a factory building. It was at that juncture that respondent 4 informed the petitioner that the petitioner should not utilise the additional one acre of land, on the ground that the previous allottee, one Magnus Vision Private Limited-respondent 3 herein had filed a writ petition challenging the resumption of the land by the Board. This compelled the petitioner to file a writ petition of his own in Writ Petition No. 34564 of 1995, questioning the directions issued by the Board. This petition was allowed whereby, this Court had directed the Board to resume the land from respondent 3 and execute necessary documentation, in favour of the petitioner. Since this was not complied with, the petitioner had to approach this Court by way of a contempt petition and thereafter, enforced the orders of this Court. It is pursuant to this, a lease-cum-sale agreement dated 20-6-2003 was executed and the petitioner was in possession running his industrial establishment. At this juncture, the State Bank of India-respondent 2 herein, is said to have instituted recovery proceedings before the Debt Recovery Tribunal (hereinafter referred to as the 'Tribunal' for brevity), Bangalore under the Recovery of Debts due to Banks and Financial Institutions Act, 1993 (hereinafter referred to as the 'DRT Act' for brevity) for recovery of a sum of Rs. 2,06,22,308/- in O.A. No. 325 of 1995. The petitioner however was not a party to the said proceedings, though the property in the possession of the petitioner was the subject-matter of those proceedings. 2,06,22,308/- in O.A. No. 325 of 1995. The petitioner however was not a party to the said proceedings, though the property in the possession of the petitioner was the subject-matter of those proceedings. It transpires that respondent 3, who was the earlier allottee of a portion of this property, had offered as security, the lease hold rights conferred on it, in favour of respondent 2 and recovery proceedings were initiated seeking to enforce the security so offered and it is in this background that the Tribunal proceeded to issue the recovery certificate enabling respondent 2 to proceed, to deal with the lease hold rights thus offered as security and pursuant to the recovery certificate. Notice of demand is stated to have been issued along with an order of attachment of the schedule property and there was also a sale proclamation against the respondents 3 to 5. It is in this background that the petitioner is before this Court. 4. The Counsel for the petitioner would contend that though there is a remedy provided under the DRT Act, the primary contention is that the petitioner would have to deposit the amount covered under the recovery certificate, even in order to enter the Tribunal in questioning the recovery certificate, which includes the petition property and it is this onerous circumstance which has driven the petitioner to approach this Court by way of a writ petition, as there is no fault of the petitioner in having taken possession of the lands in the manner known to law, as a statutory Board has conferred the lease hold rights on the petitioner and it is only on a careful examination of the legal title of the Board to confer such lease that the petitioner is conferred possession and this cannot be brought to the attention of the Tribunal, without complying with the pre-condition of the deposit of the amount covered under the recovery certificate, which has compelled the petitioner to approach this Court, as a last resort. 5. The Counsel for the Board would also submit that the petitioner has been put in possession, after the cancellation of lease deed in favour of respondent 3 and the alleged security created by the respondent 3, is subsequent to the termination of the lease deed and without the consent of the Board. 5. The Counsel for the Board would also submit that the petitioner has been put in possession, after the cancellation of lease deed in favour of respondent 3 and the alleged security created by the respondent 3, is subsequent to the termination of the lease deed and without the consent of the Board. The lease agreement itself as a standard condition imposes an embargo, on the lessee alienating the leased property, in any manner, without the consent or approval ofthe Board. In any event, it is a lease-cum-sale agreement and the Board continues to be the owner till the execution of the sale deed in favour of the lessee. In this regard, since only lease hold rights conferred in favour of the respondent 3 which stood cancelled, even before the security was said to have been created on the same, the security created is a nullity and could not have been enforced through the Tribunal. 6. The Counsel for respondent 2 in its counter has denied the termination of lease in favour of respondent 3 and there is no reason for the respondent 2 to have disbelieved, when there were subsisting lease hold rights which was sought by respondent 3 and the same has been enforced in the manner known to law before the Tribunal and the remedy, if any of the petitioner is to approach the Tribunal or file an appeal. The petitioner is not enabled to circumvent the provision of law, in approaching this Court by way of a writ petition, when there is an alternative remedy open, the doors of this Court in its writ jurisdiction are closed and therefore, the petitioner ought to be left to his remedies before the Tribunal. 7. In the light of these contentions, there are areas where facts which are disputed require to be addressed. Secondly, though the contention raised by the second respondent is tenable, in that, the petitioner may be provided with an alternative remedy under the Act, it is not wholly correct to contend that the petitioner cannot approach this Court in its writ jurisdiction, in all circumstances. Secondly, though the contention raised by the second respondent is tenable, in that, the petitioner may be provided with an alternative remedy under the Act, it is not wholly correct to contend that the petitioner cannot approach this Court in its writ jurisdiction, in all circumstances. In the present case, the petitioner has certainly satisfied this Court that it has proceeded legitimately, at the instance of a statutory Board in having entered into a lease agreement and having taken possession of the land and that there was no encumbrance on the same and this is seconded by the statutory body itself which asserts that lease hold rights in favour of respondent 3 stood cancelled, on the date the security is said to have been created by respondent 3. This is a glaring circumstance which requires to be examined not by this Court but by a fact finding authority. Hence, it is appropriate that the Tribunal which has enforced the security offered by respondent 3 even without ascertaining from the Board, whether there was any embargo or whether there was permission granted by it to convey such lease hold rights, since the Board is governed by the provisions of the Karnataka Industrial Areas Development Act, 1966 and Karnataka Industrial Areas Development Rules, 1966 and Karnataka Industrial Areas Development and Board Regulations, 1969 thereof and therefore, there was a duty cast on the Tribunal to have verified the subsistence of the lease deed in proceeding to enforce the same. It is this lapse which has resulted in the impasse being created. In that, the petitioner is in possession of the land and has established his industry and has been in possession throughout, when, without his knowledge of lease hold rights in respect of the property has been brought to sale and this is also without the knowledge of the Board. It is therefore imperative that the Tribunal reconsider the recovery certificate that has been issued, on the basis of the application filed by respondent 2, in bringing the lease hold rights in respect of the property in the possession of the petitioner, which were earlier held by respondent 3, to sale. Therefore, the petition is allowed. Annexure-E which is the recovery certificate dated 30-9-2003 issued by the Debt Recovery Tribunal in O.A. No. 325 of 1995 is hereby quashed and set aside. Therefore, the petition is allowed. Annexure-E which is the recovery certificate dated 30-9-2003 issued by the Debt Recovery Tribunal in O.A. No. 325 of 1995 is hereby quashed and set aside. The Tribunal is directed to restore the application O.A. No. 325 of 1995 to file and permit the petitioner to enter appearance, as a respondent in the proceedings along with the Board, as the other additional respondent and consider their contentions and documents that may be produced to reconsider whether the property offered as security by respondent 3 was capable of being enforced in the light of the same said to have been cancelled by the Board and having put the petitioner in possession thereof, who has established his industry over a period of time and is firmly in position thereof, and thereafter proceed in accordance with law, in dealing with the application of the respondent 2. The petition is disposed of accordingly.