Bombay High Court
The Maharashtra State Co ... vs The Collector Yuavatmal on 18 July, 2016
Bench: B.P. Dharmadhikari
Judgment wp2998.11
1
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
NAGPUR BENCH, NAGPUR.
WRIT PETITION No. 2998/2011.
The Maharashtra State Cooperative
Bank Ltd., having its Regional Office
at Tilak Putla, Mahal, Nagpur
[through its Deputy General Manager) ....PETITIONER.
ig VERSUS
1. The Collector, Yavatmal.
2. M/s. Jaikisan Sahakari Sakhar Karkhana
Ltd., at Post Bodegaon, Tal. Darwha,
District Yavatmal, through its
Liquidator.
3. M/s. Tatyasaheb Kore Warna Sahakari
Sakhar Karkhana Ltd., presently Leaseee
of Jaikisan Sahakari Sakhar Karkhana
Ltd., at Post Bodegaon, Tal. Darwha,
District Yavatmal. ....RESPONDENTS
.
-----------------------------------
Mr. C.S. Kaptan, Senior Advocate with
Shri S.S. Ghate, Advocate for Petitioner.
Ms. A.R. Kulkarni, Asstt. Govt. Pleader for Respondent No.1.
Mr. Anand Parchure, Advocate for Respondent No.3.
------------------------------------
CORAM : B.P. DHARMADHIKARI
& KUM. INDIRA JAIN , JJ.
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DATE : JULY 18, 2016 .
ORAL JUDGMENT. (Per B.P. Dharmadhikari, J)
Writ Petition is already admitted for final hearing. Civil
Application No. 1216/2016 is taken out by the petitioner pointing out
urgency and the fact that on 22.07.2014, petition was directed to be listed
for final hearing on 07.08.2014.
2.
It appears that petitioner - a Secured Creditor is attempting to
recover its outstanding from respondent no.2 borrower under Section 13 of
the Securitization and Reconstruction of Financial Assets and Enforcement
of Security Interest Act, 2002 (hereinafter referred to as "the Securitization
Act" for short). Hence, with the consent of parties, we have heard the
matter finally.
3. Shri C.S. Kaptan, learned Senior Counsel with Shri S.S. Ghate, learned
Counsel for the petitioner has invited our attention to the fact that here the alleged
lease by respondent no.2 in favour of respondent no.3 is after serving a notice
under Section 13[2] of the Securitization Act. As it is without written consent of
the petitioner, as prescribed in Section 13[3] of the Securitization Act, the lease
deed is invalid. To substantiate this contention, support is being taken from a
judgment of Hon'ble Supreme Court reported at (2014) 6 SCC 1 (Harshad
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Govardhan Sondagar .vrs. International Assets Reconstruction Company Ltd.
and others). It is also urged that the lease deed, though for a period of One year
has been executed only on stamp paper of Rs. 100/-, has not been registered.
4. The petitioner after serving notice dated 13.02.2006, under Section
13[2], proceeded under Section 13[4] on 18.12.2009. As possession was not
delivered, respondent no.1 Collector was approached on 07.07.2010. Respondent
no.3 objected to these proceedings and thereafter by the impugned order dated
28.02.2011, respondent no.1 has permitted petitioner to proceed with the auction,
only of property of respondent no.2 or then asked it to pay to respondent no.3 an
amount towards consideration of machinery and fittings installed by it. In order
to point out limited power available to the Collector, while exercising jurisdiction
under Section 14, he has placed reliance upon Division Bench judgment of this
Court reported at 2007 Cr.L.J. 2544 (Trade Well .vrs. Indian Bank). To point
our procedure to be adopted in such matters, he has also taken support from
judgment of Hon'ble Supreme Court reported at (2013) 9 SCC 620 (Standard
Chartered Bank .vrs. V. Noble Kumar and others).
5. None for the respondent no.2 - Borrower. Shri A. Parchure, learned
Counsel appearing on behalf of respondent no.3 has submitted that the petition
needs to be viewed as a proceeding not only challenging the order of Collector,
but, also independent of it, as this Court has in its extra ordinary jurisdiction
passed some interlocutory orders. He has invited our attention to orders dated
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19.10.2011, by which this Court has while issuing Rule in the matter, looked into
contention of respondent no.3, that property installed by it [disputed property],
was never mortgaged, and therefore, by interim order directed that said property
would not be sold in auction, subject to petitioner Bank furnishing security for
valuation of the consideration thereof, either by way of an undertaking or by any
other mode to this Court. He submitted that thereafter an attempt to resolve the
dispute by appointing a Mediator was also made on 21.03.2012. A Special Leave
Petition was filed before the Hon'ble Supreme Court against the order dated
19.10.2011 and it was allowed to be withdrawn on 02.07.2013. Leave was given
to petitioner to move appropriate application before the High Court for
modification / clarification of order under challenge. That application CAW No.
2800/2013, was rejected on 22.07.2014. In the light of these developments,
according to Shri Parchure, learned Counsel, as this Court has already looked into
the rights of respondent no.3 and attempted to balance equities, contention based
only upon order of Collector, cannot be accepted.
6. He has invited our attention to minutes of meeting dated 29.12.2009,
conducted in the Chamber of Hon'ble Minister (Cooperation) to urge that
representative of petitioner also attended it and thus, petitioner has accepted the
sub-letting. He further contends that respondent no.3 has paid lease rent to the
Liquidator appointed under Maharashtra Cooperative Societies Act, 1960.
7. In this situation, he argues that as installation of additional machinery
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by respondent no.3 is not in dispute, respondent no.1 Collector has not undertaken
any adjudication and as per list of such machineries identified by the Sugar
Commissioner in an inventory, respondent no.1 has proceeded further. He
submits that in this situation, even challenge to order of Collector on merit is
erroneous. He has taken us through Clause no.44 of the lease agreement between
respondent nos. 2 and 3.
8. Shri Kaptan, learned Senior Counsel in reply invites attention to a letter
dated 13.11.2006 sent by the petitioner opposing grant of any sub-lease and has
further pointed out that even as per the arrangement between the parties,
respondent no.3 had to obtain prior permission. This violation by respondent no.3
has been noted by a Committee consisting of three members and as those findings
are not in dispute, the Collector could not have recognized any independent right
or interest of respondent no.3.
9. Facts show that respondent no.2 Sugar Factory has mortgaged its' entire
land and plant on it, on 05.10.2001 to petitioner. On 13.02.2006, petitioner has
served a notice under Section 13[2] of the Securitization Act. On 25.08.2006,
interim liquidator was appointed under Section 102 of the Maharashtra
Cooperative Societies Act on respondent no.2. On 04.12.2006, the Sugar Factory
was let-out by said Liquidator to respondent no.3. On 18.12.2009, petitioner has
served notice under Section 13[4].
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10. The provisions of Section 13[13] of the Securitization Act expressly bar
any handing over of possession by borrower to third person or any sub-letting
except without consent in writing of the secured creditor, if such secured creditor
has served notice under Section 13[2]. In present facts it is not in dispute that no
such written consent has been given by the petitioner at any point of time.
11. Perusal of agreement dated 04.12.2006 entered into between
respondent no.2 and respondent no.3 reveals that it is drawn on stamp of
Rs.100/-. It is not registered with Sub-Registrar of Documents and no stamp duty,
as required by law, is paid upon it. The proceedings before Minister are of a
meeting held three years thereafter i.e. 29.12.2009. Minutes show that there over
all view of working of various Sugar Factories was taken. Name of respondent
no.2 Factory appears at the beginning. It is recorded that as per decision taken in
the meeting convened by the Hon'ble Minister on 04.10.2006, respondent no.2
Sugar Factory has been leased out to respondent no.3 for a period of 7 years. It is
further mentioned that accordingly respondent no.3 has performed crushing in
2006-07, 2007-08 and 2008-09 seasons. Managing Director of petitioner is shown
to have attended meeting conducted on 29.12.2009, as he was one of the invitees
thereto.
12. The respondents have not shown that petitioner is party to meeting
conducted on 04.10.2006, wherein a decision to let-out Sugar Factory of
respondent no.3 for 7 years was taken. Participation of Managing Director of
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petitioner in a meeting conducted on 29.12.2009 by itself does not mean that the
petitioner - a Cooperative Bank has given its consent or no objection to such sub-
letting or lease. Petitioner being a Cooperative Society is bound to function
democratically and decision by it must come out in the shape of a resolution passed
by a competent body like Managing Committee or Board of Directors. Respondent
no.3 has not pointed out any such resolution. We therefore, find no substance in
the contention that the petitioner has agreed to such leasing out of land and
machinery by respondent no.2 to respondent no.3.
13.
The Hon'ble Supreme Court has in case of Harshan Govardhan
Sondagar .vrs. International Assets Reconstruction Co. Ltd. and others (supra),
specifically found that such sub-leasing is invalid. It has also found that there
cannot be any such sub-leasing or leasing out by an unregistered document.
14. The scope of jurisdiction available with the respondent no.1 - Collector
in the matter is laid down by the Division Bench of this Court in a judgment in case
of Trade Well .vrs. Indian Bank (supra). Division Bench of this Court has found
that proceedings under Section 14 of the Securitization Act are not quasi judicial in
nature. In paragraph no.67, it has also held that respondent no.1 cannot
adjudicate any disputed question. Judgment of Hon'ble Supreme Court in case of
Standard Chartered Bank .vrs. V. Noble Kumar and others (supra), also clinches
this aspect.
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15. Documents on record show that respondent no.3 has made a capital
investment of Rs. 6,12,92,676/- in plant and machinery. In rejoinder filed by it, in
paragraph no.7, it has referred to report of 3 Men Committee sent by Sugar
Commissioner and pointed out that in report, investment of Rs. 4,89,85,000/- by
respondent no.3 finds mention. In paragraph no.9 it has claimed that it paid
amount of Rs. 3,02,66,000/- to the Liquidator of respondent no.2.
16. The agreement purportedly of lease dated 04.12.2006 is unregistered
and necessary stamp duty upon it has not been paid. In paragraph no.43 thereof,
respondent no.3 has agreed in following terms -
"43. The Lessee if replaces/ installs any machinery or
party of machinery costing more than Rs. Two lacs is allowed
to take away such machinery or part after lease period is
over. The machinery or part of machinery so installed must
be in consultation with the Board of Directors/ Liquidator/
Administrator and an agreed list of such machinery or part of
thereof be kept with them. In case such a machinery required
by Karkhana then they can keep it at cost or market value
which is minimum."
Thus, respondent no.3 in any case could have installed machinery in consultation
with Board of Directors/ Liquidator/ Administrators and a agreed list of such
machinery or part thereof should have been provided to them. The report of 3
Men Committee mentioned supra, shows that respondent no.3 has not followed
this condition and as such there was no list of such new machinery or parts of
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machinery installed by him.
17. Discussion above, therefore, shows that respondent nos. 2 and 3 have
acted in violation of Section 13 of the Securitization Act, and their action is not
binding upon petitioner. Even respondent no.3 has not got the purported
agreement of lease registered, had not paid necessary stamp duty on it and also did
not abide by its terms and conditions. Respondent no.3, therefore, cannot attempt
to project an independent right in itself, over and above the right of respondent
no.2 Sugar Factory.
18. In so far as the contention of Shri Parchure, learned counsel, that this
Court has independently taken cognizance of the controversy and balanced equities
between the petitioner and respondent no.3 is concerned, we find that orders
passed by this Court are essentially interim and interlocutory in nature. There is
no adjudication in any of these orders and the binding precedent or relevant legal
provisions have not been looked into. Those orders therefore, cannot clothe
respondent no.3 with any right.
19. Respondent no.1 Collector could not have accepted objection of
respondent no.3. It is for respondent nos. 2 and 3 to work out their rights in
accordance with law. However, they cannot attempt to supersede better right
provided to petitioner by Securitization Act.
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20. We therefore, find the impugned orders passed by the Collector on
28.02.2011 unsustainable. It is accordingly quashed and set aside. Application
filed by petitioner before respondent no.1 Collector is granted. Respondent no.1
Collector is directed to proceed further to provide necessary assistance to petitioner
in terms of Section 13[4] of the Securitization Act, at the earliest.
21. Writ Petition is accordingly allowed. Rule is made absolute in the
aforesaid terms with no order as to costs.
22.
At this stage, Shri Parchure, learned counsel appearing for respondent
no.3 submits that operation and effect of this judgment be stayed for a period of six
weeks and interim orders already operating may be allowed to operate in the
meanwhile. The said request is opposed by learned Counsel for the petitioner.
23. However, in the interest of justice, we grant request made by Shri
Parchure, learned Counsel. Accordingly this judgment shall take effect after a
period of 6 weeks from today. Till then interim order passed by this Court on
19.10.2011 shall hold the field. This stay of judgment shall cease to operate
automatically after expiry of period of six weeks.
JUDGE JUDGE
Rgd.
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