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2019 DIGILAW 652 (CAL)

Bank of Baroda v. West Bengal Small Industries Development Corporation Ltd.

2019-06-19

DEBANGSU BASAK

body2019
JUDGMENT : 1. The petitioner assails a decision of the prescribed authority directing eviction of a lessee of the first respondent from a property belonging to the first respondent. The prescribed authority exercised jurisdiction under the provisions of the West Bengal Government Premises (Tenancy Regulation) Act, 1976 to pass the order of eviction. 2. Learned Advocate appearing for the petitioner submits that, the petitioner as a banker lent and advanced diverse credit facilities to the fourth respondent. As a security for due payment of the credit facilities, the fourth respondent mortgaged the leasehold rights of the immovable property concerned in favour of the petitioner. The mortgage was created with the consent and approval of the first respondent. The first respondent did not issue any notice to the petitioner under the provisions of the Act of 1976. The petitioner was not informed about the decision to evict the fourth respondent from the premises concerned. 3. Learned Advocate appearing for the petitioner submits that, valuable rights of the petitioner stand effected by the decision of eviction taken by the prescribed authority under the Act of 1976. There is a proceeding under Section 19 of the Recovery of Debts and Bankruptcy Act, 1993 pending before the Debts Recovery Tribunal, inter alia, against the fourth respondent. In the event, the petitioner was intimated about the decision of the first respondent to evict the fourth respondent, then, the petitioner would have been in a position to take steps under the provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, 2002. The petitioner is now without any valuable security. The Court should intervene. 4. Learned Senior Advocate appearing for the first respondent submits that the petitioner herein is a mortgagee. As a mortgagee it cannot have a better or higher right than that of the lessee, which is the fourth respondent. He refers to the terms and conditions of the lease between the first respondent and the fourth respondent. He submits that, the first respondent retained the right to terminate the lease and to enter into the leasehold property upon the events happening and stipulated in Clause 3A of the deed of lease dated August 9, 2006 executed between the first respondent and the fourth respondent. He submits that, the first respondent retained the right to terminate the lease and to enter into the leasehold property upon the events happening and stipulated in Clause 3A of the deed of lease dated August 9, 2006 executed between the first respondent and the fourth respondent. Events under Clause 3A of the deed of lease occurred necessitating the first respondent to initiate proceedings for eviction against the fourth respondent from the property concerned. The property is governed under the provisions of the Act of 1976. Due notice was issued to the fourth respondent for eviction. Significantly, the fourth respondent did not challenge the order of eviction, despite, there being an appeal provision under the Act of 1976. He refers to the letter granting consent to mortgage the property. He submits that, the consent letter dated September 13, 2006 retained the right of the first respondent to evict the fourth respondent in the event of default of the terms and conditions of the lease deed. He relies upon an unreported judgment of the Division Bench rendered in A.P.O.T. No. 255 of 2007 B.I.F.R. No. 55 of 1998 (Stressed Assets Stabilisation Fund v. West Bengal Small Industries Development Corporation & Anr.) in support of his contentions. 5. The fourth respondent was enjoying credit facilities from the petitioner. On or about August 9, 2006, the fourth respondent entered into a lease with the first respondent. The lease was for a long term period of 99 years with effect from May 15, 2006 till May 14, 2015. The fourth respondent approached the first respondent for granting permission to mortgage the leasehold rights in favour of the petitioner. By a letter dated September 13, 2006, the first respondent granted such consent. The consent, however, is not unconditional. By the writing dated September 13, 2006, the first respondent noted that, the consent was accorded without prejudice to the rights of the first respondent as lesser within the meaning of statute to be read with the lease deed dated August 9, 2006. Apparently, the fourth respondent failed to discharge its obligations to the petitioner. The loan account of the fourth respondent became a non-performing asset. The petitioner issued demand notice recalling the entire credit facilities. The petitioner thereafter filed an application under Section 19 of the Recovery of Debts Due to Banks and Bankruptcy Act, 1993 on July 2, 2015 before the Debts Recovery Tribunal-I, Kolkata. The loan account of the fourth respondent became a non-performing asset. The petitioner issued demand notice recalling the entire credit facilities. The petitioner thereafter filed an application under Section 19 of the Recovery of Debts Due to Banks and Bankruptcy Act, 1993 on July 2, 2015 before the Debts Recovery Tribunal-I, Kolkata. The petitioner also took steps under the Act of 2002 also for recovery of its loan. The rights of the petitioner, the first respondent and the fourth respondent flows out of a deed of lease dated August 9, 2006 executed by and between the first and the fourth respondent. Admittedly, the first respondent is the lesser of the immovable property concerned. The fourth respondent is the lessee. The terms and conditions governing the relationship between the first and the fourth respondent are enumerated in the deed of lease dated August 9, 2006. Relevant clauses of the terms and conditions of the deed of lease dated August 9, 2006 between the first and the fourth respondent are as follows:- "3. The fourth respondent is the lessee. The terms and conditions governing the relationship between the first and the fourth respondent are enumerated in the deed of lease dated August 9, 2006. Relevant clauses of the terms and conditions of the deed of lease dated August 9, 2006 between the first and the fourth respondent are as follows:- "3. (A) IT IS EXPRESSEDLY AGREED by and between the parties hereto that if the rent charges or expenses herein reserved or any part thereof or interest thereon or any part thereof shall remain unpaid for 3 (three) months after the same become payable or if any covenant on the part of the Lessee herein contained shall not be performed or if the demised premises be not used by the Lessee for the purpose for which it is being demised (within twelve months from the date of presents) or if the factory or manufacturing unit to be erected and established thereon as provided by these presents remains closed consecutively for 6 (six) months without reasonable cause or if the Lessee becomes insolvent or the company goes into liquidation or the firm dissolved or if the leasehold property and/or the structure be attached or if a Receiver be appointed of the demised premises or the building and structures to be erected thereon or of the plant, machines and appliance therein due to any act done or omitted to be done or suffered to be done by the Lessee and/or his agent or any partner admitted in the said business of the Lessee without the prior approval as herein above mentioned Lease will come to and end automatically without further notice it shall be lawful for the Lesser at any time (without constituting) any waiver due to delay or inaction on the part of the Lesser and to re-enter upon the demised premises or any part thereof in the name or the whole and thereupon and all structure, sheds, building will rest on the Lesser free from all encumbrances and this demise shall absolutely determine without prejudice to the rights of the Lesser of any other remedies available to the Lesser in respect of breach of the Lessee's covenants herein contained, AND THEREAFTER this lease will be deemed to have been surrendered and it shall be lawful for the Lesser to take immediate possession thereof and remove the machineries and materials if any, therein and in such event the Lesser shall not be liable for action or for damages and such recovery of possession will be without prejudice to any other rights of action of the Lesser AND THAT it shall also be lawful for the Lesser to sell the articles, after 15 days notice to the Lessee by auction or private treaty and appropriate the proceeds thereof for liquidation of arrears of Lesser's dues, if any and in case of any surplus remaining to refund the balance, if any." .......... "3. (C) The Lessee may, however, hypothecate or charge or mortgage the leasehold interest, the machineries and assets with a Bank or any financial institution to obtain advance for the purpose of the business of the lessee on having No Objection Certificate from the Lesser." 6. By a writing dated September 13, 2006, the first respondent gave its No Objection to enable the first respondent to create equitable mortgage of the leasehold interest. The relevant portion of the letter dated September 13, 2006 issued by the first respondent to the petitioner is as follows:- "(5) You shall keep us informed immediately on liquidation of the loan by M/s. Cais Engineering Services Pvt. Ltd. please note that this consent is accorded without prejudice to our rights as Lesser within the meaning of the statue to be read with the indenture of lease executed between ourselves and M/s. Cais Engineering Services Pvt. Ltd. on 9.06.2019." 7. The lease dated August 9, 2006 was granted by the first respondent to the fourth respondent on various terms and conditions. Apparently, the fourth respondent failed to honour its obligations under the deed of lease dated August 9, 2006. Apparently, the first respondent obtained a non-functioning report on March 27, 2014. It issued a show-cause notice dated January 11, 2017 to the fourth respondent and a hearing notice dated May 11, 2017. It also obtained a further non-functioning report on June 21, 2017. The prescribed authority issued an order terminating the lease on November 14, 2017. The prescribed authority also passed an order requiring possession on January 19, 2018. The first respondent obtained possession of the immovable property on February 16, 2018. The proceedings undertaken by the first respondent was under the provisions of the Act of 1976. Although, the first respondent is entitled to prefer an appeal from an order passed by the prescribed authority, the first respondent did not do so. 8. In Stressed Assets Stabilisation Fund (supra) an application under Section 535 of the Companies Act, 1956 was allowed. In the facts of that case, it was held that, a donee or a grantee can have no rights in excess of that possessed by the donor or the grantor. A lease was involved in that case. 8. In Stressed Assets Stabilisation Fund (supra) an application under Section 535 of the Companies Act, 1956 was allowed. In the facts of that case, it was held that, a donee or a grantee can have no rights in excess of that possessed by the donor or the grantor. A lease was involved in that case. It was held, in that case that, the mortgagee of the lessee can have no right greater or higher than that of the lessee in terms of the deed of lease. Applying the ratio laid down in Stressed Assets Stabilisation Fund (supra), in the facts of the present case, the petitioner as the mortgagee can have no right greater or higher than what the first respondent as the lesser possessed under the deed of lease dated August 9, 2006. 9. In such circumstances, I find no ground to interfere with the decision of the first respondent to terminate the lease and take over possession thereof. 10. W.P. No. 155 of 2018 is dismissed. No order as to costs.