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2016 DIGILAW 1227 (ORI)

Chandra Sekhar Patra v. Jitan Manki

2016-12-14

BISWANATH RATH

body2016
JUDGMENT : Biswanath Rath, J. This is a writ petition assailing the order dated 4.12.2013 passed by the Additional District Magistrate, Sundargarh in Revenue Appeal No.3/2010 appearing at Annexure-5 and also the order dated 23.12.2009 passed by the Officer on Special Duty, Panposh, in Revenue Misc. Case No.125/2007, vide Anenxure-4. 2. Short background involved in this case is that the father of the present O.P.1, Bahadur Manki in the year 1993 asked for permission from the Officer on Special Duty, Panposh to mortgage his land bearing khata no.148 plot no.1432 having an area Ac.1.530 decimals. Upon due consideration, necessary permission was also granted in favour of the party concerned on 23.12.1993, vide Annexure-1. One Dilor Topno established a crusher unit involving the father of the present O.P.1 remaining as a collateral security by way of mortgaging his landed property, which was also the subject matter of the permission under Annexure-1. As the loan taken from the O.S.F.C. could not be paid back by the loanee, the O.S.F.C. by invoking power under Section 29 of the S.F.C. Act, 1951 put the mortgaged property into auction in the year 2006. The present petitioner emerged as the successful bidder and thereby was put in possession of the crusher unit in question. Permission was granted under the provision of Regulation-II of 1956 in respect of the property involving khata no.148 plot no.1432 having an area Ac.1.530 decimals and the auction in favour of the petitioner was finalised for a total sum of Rs.3,25,000/-. It is at this stage, after the sale proceeds were duly credited to the loan account of Dilor Topno, it was found that there was balance outstanding of Rs.13,00,530/- as on 30.6.2006. Consequently, notices were also issued to Dilor Topno for payment of balance dues. Neither the loanee nor the mortgager or guarantor could pay the balance amount, as a result of which the other property mortgaged as collateral security situated in Mouza-Balanda, khata no.148, plot no.1432, area Ac.1.03 decimals was taken over by the O.S.F.C. in exercise of power under Section 29 of the S.F.C. Act on 29.12.2006 and put to public auction on 12.1.2007. This property was sold in favour of the present petitioner for a total sum of Rs.3,31,000/-on outright purchase basis. The sale was finalised. Property was also handed over to the petitioner. This property was sold in favour of the present petitioner for a total sum of Rs.3,31,000/-on outright purchase basis. The sale was finalised. Property was also handed over to the petitioner. It is at this stage, it is alleged that O.P.1 filed an application under Regulation-II of 1956 on 11.9.2007, Revenue Misc. Case No.125/2007 for restoration of the property to the custody of O.P.1. In the final outcome, the Officer on Special Duty, vide order dated 23.12.2009 on disposal of the Revenue Misc. Case No.125/2007 directed for eviction of the petitioner from the case land, vide Annexure-4. Revenue Appeal No.3/2010 preferred by the present petitioner ended with an order of dismissal thereby confirming the order passed by the Officer on Special Duty, vide Annexure-5, giving rise to the present writ petition. 3. Assailing the impugned orders, Sri Mishra, learned counsel for the petitioner, raised three grounds; firstly, the petitioner being a bona fide purchaser from the O.S.F.C. in exercise of power under Section 29 of the S.F.C. Act, the provision of Regulation-II of 1956 has no application involving the transaction between the O.S.F.C. and the present petitioner. Relying on a decision in the case of Subhransu Sekhar Padhi vs. Gunamani Swain & others reported in (2014) 12 SCC 368 , Sri Mishra, learned counsel for the petitioner claimed that this decision has full support to the case of the petitioner. Secondly, the provision contained in S.F.C. Act, 1951 being involving a Central Act, would prevail over the provision of Regulation-II of 1956 being a State Act and took support of the decisions in the case of Govt. of A.P. & another vs. J.B. Educational Society & another, (2005) 3 SCC 212 , State of West Bengal & others vs. Committee for Protection of Democratic Rights, West Bengal & others, (2010) 3 SCC 571 and lastly, the recent decision of the Hon’ble apex Court dated 25.11.2016 (UCO Bank & others vs. Dipal Debbarma & Others) rendered in Civil Appeal No. 11247 of 2016. The third point, as raised by Sri Mishra, learned counsel for the petitioner, is that the application under Regulation-II of 1956 is also hit by the principle of waiver and acquisition. 4. The third point, as raised by Sri Mishra, learned counsel for the petitioner, is that the application under Regulation-II of 1956 is also hit by the principle of waiver and acquisition. 4. Per contra, Sri Behera, learned counsel appearing for the private O.P.1, though did not dispute the facts up to mortgage of the disputed land with the S.F.C. as a matter of collateral security in the establishment of the crusher unit of the loanee and the petitioner’s possession over the suit land is by virtue of an outcome in a Section 29 of S.F.C. Act proceeding, but took the stand that the mortgage deed did not contain any condition regarding putting the disputed property to auction in future. Secondly, Sri Behera for O.P.1 also contended that the disputed property since belong to a Scheduled Tribe for the transfer of the land to a non-Scheduled Tribe, sale is not permissible in absence of permission from the competent authority following compliance of the provision under Section 3(1) of Regulation-II of 1956. Referring to certain decisions of this Court in the case of Viswasrai Laxminarayana Dora vs. State of Orissa & another, 2007 (I) OLR-431 and decisions of the Hon’ble apex Court in the case of Harish Chandra Hegde vs. State of Karnataka & others, 2004(1) CLR (SC) 427 and Sri Natabar Jena vs. Collector, Jajpur & others, 2014 (II) CLR 1022, Sri Behera, learned counsel for O.P.1, contended that for the constraint in the Regulation-II of 1956, both the courts have passed the right judgments leaving no scope for interference in the same. 5. Considering the rival contentions of the parties, leaving apart the unnecessary details, this Court finds, there is no dispute that the disputed property was mortgaged by way of collateral security. 5. Considering the rival contentions of the parties, leaving apart the unnecessary details, this Court finds, there is no dispute that the disputed property was mortgaged by way of collateral security. Once a property is mortgaged, as a collateral security, failure of satisfaction with the financer, it becomes automatic on the part of the financer to deal with the property and for the restrictions contained in Regulation-II of 1956 being there in a State Act and the application of provision of Section 29 of S.F.C. Act, 1951 being a Central Act, taking cue from the decisions in Government of A.P. & another (supra), State of West Bengal & others (supra) and the decision of the Hon’ble apex Court involving Civil Appeal No.11247/2016, UCO Bank & others (supra), this Court finds, the Hon’ble apex Court in Civil Appeal No.11247/2016 has dealt with a case involving in similar situation involving provisions in the local Act vis-à-vis the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 deciding the decision of the High Court holding the Tripura Act, 1960 being included in the 9th Schedule to the Constitution, and therefore, enjoying the protection of Article 31(B) of the Constitution would prevail over the Act, 2002 so as to invalidate the sale notification being contrary to the provision of the local Act, Hon’ble apex Court taking into consideration the enabling provision of Act, 2002, discussed in paragraphs-16, 17 & 18 of the judgment, came to hold that the provision of Act, 2002 enabled the bank to take possession of any property, where a security interest has been created in its favour and more particularly, Section 13 of 2002 Act enables the bank to take possession and sell such property to any person to realize its dues. The purchaser of such property acquires a clear title to the property sold subject to compliance with the requirement prescribed. It is needless to observe here that once the loanee failed to discharge the loan, the bank becomes the owner of the mortgaged property and since the disputed land was sold by the O.S.F.C. to the petitioner, the sale deed or transfer involving therein cannot come under the scrutiny of the Regulation-II of 1956. It is needless to observe here that once the loanee failed to discharge the loan, the bank becomes the owner of the mortgaged property and since the disputed land was sold by the O.S.F.C. to the petitioner, the sale deed or transfer involving therein cannot come under the scrutiny of the Regulation-II of 1956. In deciding the dominance of the Central legislation over the State legislation in the case of Government of A.P. & another (supra), the Hon’ble apex Court taking into consideration the repugnancy between the Parliamentary legislation and State legislation in paragraph-12 held as follows :- “12. Thus, the question of repugnancy between the parliamentary legislation and the State legislation can arise in two ways. First, where the legislations, though enacted with respect to matters in their allotted sphere, overlap and conflict. Second, where the two legislations are with respect to matters in the Concurrent List and there is a conflict. In both the situations, parliamentary legislation will predominate, the first, by virtue of the non-obstante clause in Article 246(I), in the second, by reason of Article 254(I). Clause (2) of Article 254 deals with a situation where the State legislation having been reserved and having obtained President’s assent, prevails in that State ; this again is subject to the proviso that Parliament can again bring a legislation to override even such State legislation.” Further taking into consideration the restriction in Section 187 of Tripura Act, 1960 like that of the restriction of provision contained in Regulation-II of 1956, in paragraph-18 of Civil Appeal No. 11247 of 2016 held that dominant legislation being the Parliamentary legislation, the provision of the Tripura Act, 1960, pro tanto, Section 187 would be invalid. It is the provision of the Act, 2002, which does not contain any embargo on the category of persons to whom mortgaged property can be sold by the bank for realisation of its dues that will prevail over the provision contained in Section 187 of the Tripura Act, 1960. 6. In the present case, this Court finds, Section 29 of S.F.C. Act standing parallel to that of the provision of Section 13 of 2002 Act, the mandate of the Hon’ble apex Court in Civil Appeal No. 11247 of 2016 squarely applies to the case of the petitioner and under these circumstances, this Court has no hesitation to hold that the impugned orders are bad in law. Thus, while allowing the writ petition, this Court sets aside the impugned orders at Annexures-4 & 5. No cost.