M/S. Otoklin Global Business And ... vs The State Of Maharashtra And Ors
2016 Latest Caselaw 4219 Bom

    Dixit
                      IN THE HIGH COURT OF JUDICATURE AT BOMBAY




                                                                                     
                                        CIVIL APPELLATE JURISDICTION

                                  CIVIL WRIT PETITION NO.1092 OF 2016




                                                             
            1. M/s. Otoklin Global Business,                      ]
               A Partnership Firm,                                ]
               having its address at Ground Floor,                ]




                                                            
               Plot No.1, Shah Industrial Estate,                 ]
               Veera Desai Road, Andheri (W),                     ]
               Mumbai - 400 053.                                  ]
                                                                  ]
            2. Mr. Dhaval Dilip Jhaveri,                          ]




                                                  
               Partner of M/s. Otoklin Global Business,           ]
               having its office at Ground Floor,
                                        ig                        ]
               Plot No.1, Shah Industrial Estate,                 ]
               Veera Desai Road, Andheri (W),                     ]
               Mumbai - 400 053.                                  ]   .... Petitioners
                                      
                                Versus

            1. The State of Maharashtra                          ]
               Through Additional Government Pleader,            ]
              


               High Court, Bombay.                               ]
                                                                 ]
           



            2. The Authorised Officer,                           ]
               International Assets Reconstruction               ]
               Company Private Limited (Assignee of              ]
               Bank of Baroda), having its office at             ]





                        th
               A-508, 5 Floor, 215, Atrium Kanakia Spacis, ]
               Andheri-Kurla Road, Andheri (East),               ]
               Mumbai - 400 069.                                 ]
                                                                 ]
            3. M/s. Otoklin Plants & Equipments Ltd.,            ]





               (In Liquidation), through the Official Liquidator ]
               of High Court, Bombay, having his office at       ]
                 th
               5 Floor, Bank of India Building,                  ]
               M.G. Road, Fort, Mumbai - 400 001.                ]
                                                                 ]
            4. Mr. Dilip K. Jhaveri (Ex-Director and             ]
               Guarantor), Indian Inhabitant,                    ]
               Residing at 13, Concord Apartments,               ]

                                                    1/30
            WP-1092-16.doc




              ::: Uploaded on - 29/07/2016                   ::: Downloaded on - 30/07/2016 00:36:55 :::
          Bullock Road, Bandra (West),                   ]
         Mumbai - 400 050.                              ]




                                                                                
                                                        ]
    5. Mr. Rajendra K. Jhaveri,                         ]
       (Ex-Director and Guarantor),                     ]




                                                        
       Indian Inhabitant, having address at             ]
       5, Philomena Apartment, Opp. Hotel-In-Phom, ]
       Juhu Tara Road, Santacruz (West),                ]
       Mumbai - 400 049.                                ]




                                                       
                                                        ]
    6. (i) Ms. Saloni S. Jhaveri (Daughter),            ]
       (ii) Ms. Roshnee S. Jhaveri (Daughter),          ]
       (iii) Mr. Rushit S. Jhaveri (Son),               ]
                                                        ]




                                        
    All 6(i) to (iii) are heirs of Late Shirish Jhaveri ]
    having their common address at 242-B,
                                ig                      ]
    Grand Paradi Apartment, 24th Floor, A.K. Marg, ]
    Dadi Seth, Hill Road, Mumbai-400 036.               ]        .... Respondents

Mr. Simil Purohit, a/w. Mr. Manoj Agre and Mr. Girish Kedia, i/by Ms. Divya Sanghvi, for the Petitioners.

Mr. Vishal B. Thadani, A.G.P., for Respondent No.1.

Mr. Nitin Thakkar, Sr. Counsel, a/w. Mr. Rohit Gupta, Mr. Amit Jajoo, Ms. Sushmita Gandhi, Ms. Anisha Zachariah and Ms. Anamika, i/by M/s. PKA Advocates, for Respondent No.2.

CORAM : S.C. DHARMADHIKARI & DR. SHALINI PHANSALKAR-JOSHI, J.J.

                             RESERVED ON          :   30TH JUNE 2016.
                             PRONOUNCED ON :          28TH JULY 2016.


    JUDGMENT : [Per S.C. Dharmadhikari, J.]

    1.      Rule. Respondents waive service.


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2. By this Writ Petition, under Article 226 of the Constitution of India,

the Petitioners have sought a Writ of Certiorari or any other appropriate

writ, order or direction in the nature thereof, calling for the records and

proceedings of Case No.67/SA/2012 from the file of the learned Chief

Metropolitan Magistrate, Bombay and after examining the legality, validity

and correctness of the three orders passed therein dated 6th November

2015, 19th December 2015 and 29th December 2015, the same be

quashed and set aside. This relief is sought in the following facts and

circumstances.

3. The first Petitioner before us is claiming to be a Partnership Firm,

registered under the Indian Partnership Act, 1932. It is engaged in the

business of manufacturing various kinds of filters and filtration system

used for industrial purposes. It is stated that the Firm operates from the

business premises admeasuring 3740 sq.ft., lying and situated at Ground

Floor, Plot No.1, Shah Industrial Estate, Veera Desai Road, Andheri

(West), Mumbai-400053.

4. It is stated that these premises are in the possession of the

Petitioners prior to 1998. The third Respondent to this Writ Petition is a

Company incorporated under the provisions of the Indian Companies Act,

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1956 and in the business as above, so also of pipe coating from a factory

at MIDC, Taloja, District Thane and in the State of Gujarat.

5. The second Petitioner is an individual and a Partner of the first

Petitioner. The claim of the Petitioners further is that from the premises on

the Ground Floor in Shah Industrial Estate, about 627 sq.ft. were being

used as a registered office by this third Respondent, but the Petitioners

and the third Respondent were separate Entities.

6. Later on, the third Respondent was ordered to be wound-up by this

Court by an order passed in the Company Petition No.970 of 1997. The

Official Liquidator attached to this Court took charge of the assets and

affairs of the third Respondent on 31st May 2002.

7. The Petitioners claim that Respondent Nos.4 and 5 have inducted

them as tenants in the premises, described in para 2 of the Petition, from

1998 or prior thereto. One Shirish Jhaveri was brother of Respondent

Nos.4 and 5. The said Shirish Jhaveri expired in 1994. Respondent

No.6(i) to (iii) are his legal heirs and representatives. The second

Respondent is an Asset Reconstruction Company and has taken over the

debt of Bank of Baroda. The Petitioners state that Respondent Nos.4 and

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5 along with deceased Shirish Jhaveri were the Directors of Respondent

No.3.

8. The Petitioners have set out as to how after formation of Petitioner

No.1-Firm in 1997, the registration under the Indian Partnership Act, 1932

was obtained. They have also explained as to how the registration under

various other laws, which is necessary for carrying on business, came to

be obtained. The Petitioners' claim is that Respondent Nos.4 and 5 had let

out the premises to Petitioner No.1-Firm as a monthly tenant. The rent of

Rs.1,000/- per month was agreed upon, together with the obligation to pay

the property tax, in respect of the ground and first floor of the building. It is

the case of the Petitioners that they were diligent and regular in payment

of the monthly rent. There was no default. The Petitioners cannot,

therefore, be evicted, except in accordance with the law, namely, the

Maharashtra Rent Control Act, 1999. The Petitioners were constrained to

file a Suit, being R.A.D. Suit No.692/2011 of 2014 in the Court of Small

Causes at Mumbai for a declaration that they are the tenants in respect of

the tenancy premises and in which Suit, a Decree was passed on 31st July

2014, declaring the Petitioners to be the lawful tenants. Thus, the status of

the Petitioners as lawful tenants has been confirmed by the competent

Court.

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9. From the record it is then revealed that the third Respondent

availed of certain financial facilities from the Bank of Baroda for the

purpose of its business. The Bank of Baroda filed an Original Application

No.1025 of 2001 on 15th October 2001 before the Debt Recovery Tribunal-

II, Mumbai against Respondent Nos.3, 4, 5, 6(i) and 6(ii) for recovery of

the so called outstanding amount. The claim of the Bank referred to

certain security interest created and styled as a mortgage of immovable

property. The mortgage by deposit of Title Deeds in relation to certain

immovable properties at Mumbai included the tenancy premises. It is

stated that in the Original Application, the third Respondent pointed out

that majority of the properties were in possession of the tenants and they

should not be evicted only on the strength of a Recovery Certificate. This

legal position was not disputed by anybody and, therefore, though the

Recovery Certificate was issued, the Debt Recovery Tribunal did not

empower the Recovery Officer attached to it to dispossess anybody, save

and except in accordance with the law. The Petitioners place reliance

upon the order dated 5th September 2005 of the Debt Recovery Tribunal-

II, Mumbai in Original Application No.1025 of 2001. The Petitioners also

rely upon Annexure-I to the Writ Petition, being a copy of the minutes of

the meeting before the Official Liquidator dated 31st May 2002, which

would confirm that the possession of 627 sq.ft. area on the ground floor of

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the building came to be handed over and that is how the record of the

Official Liquidator would indicate and confirm the events, which occurred

during obtaining the said possession.

10. Then it is stated that the Bank of Baroda assigned its debt by a

Deed of Assignment dated 21st January 2008 in favour of the second

Respondent to this Petition. Thus, the Recovery Certificate dated 5 th

September 2005 could have been enforced by the second Respondent,

who stepped into the shoes of Bank of Baroda. The second Respondent,

therefore, did not claim any rights higher than that of Bank of Baroda. It

also appears that the Recovery Officer, Debt Recovery Tribunal, Mumbai

sought intervention of the Official Liquidator for taking possession of the

premises, but noticed that the Official Liquidator had already taken

possession of less than 200 sq.ft. of the area. The Tribunal Receiver,

acting in execution of the Recovery Certificate, did not take possession of

the balance portion. Then it is stated that the proceedings, namely,

Executing Proceedings, were allowed to be amended to correct the area

in possession of the Recovery Officer, Debt Recovery Tribunal-II, Mumbai.

After the corrections / amendments were carried out, a public notice for

sale of the tenancy premises was put up. That described the Petitioner

No.1 only as an occupant and not a lawful tenant. Further, the area of the

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premises was erroneously mentioned as 4187 sq.ft. In pursuance of this

bid / notice, nobody came forward to place his or her bid for the property.

The Petitioners, being apprehensive about loosing their valuable tenancy

rights, made certain application before the Recovery Officer. The

Recovery Officer passed an order and the details of the same are referred

to in para 14 of the Petition. It is stated that the Recovery Officer was

aware of the order and directions of the Tribunal dated 16th March 2011.

The Petitioners also referred to the application filed by the second

Respondent to this Writ Petition before the Recovery Officer claiming a

relief of handing over possession of the entire ground floor of Plot No.1,

Shah Industrial Estate, to the Tribunal Receiver. It is stated that after

hearing the necessary parties, the Recovery Officer was pleased to reject

the application on 10th May 2012. However, the second Respondent still

prevailed upon the authorized officer to issue notice styled as Possession

Notice dated 22nd August 2011 and referable to Section 13(4) of the

Securitisation and Reconstruction of Financial Assets and Enforcement of

Security Interest Act, 2002, (for short "SARFAESI Act"). This was to take

possession of entire ground and first floor of the building. The Petitioners,

in paras 18 and 19 of the Petition, have referred to the public notice and

the reply thereto by the second Respondent by an Advocate's notice.

There is a reference made to a rejoinder and eventually it is stated that

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against the pasting and issuance of notice under Section 13(4) of the

SARFAESI Act, the Petitioners preferred Securitisation Application No.322

of 2011. The Petitioners' reference to the contents of this Securitisation

Application and its prayers is in para 19 of the Petition.

11. The Petitioners then refer to the application under Section 14 of the

SARFAESI Act made by the Respondent-Company. The Petitioners were

apprehensive of loosing their tenancy and that is why applied before the

Chief Metropolitan Magistrate for intervention. That application was

rejected on 23rd January 2013. Thereafter the Chief Metropolitan

Magistrate was pleased to allow the Securitisation Application

(No.67/SA/2012) by his order dated 5th February 2013.

12. The Petitioners state that during the pendency of their Securitisation

Application No.322 of 2011 and after it was substantially heard by the

Debt Recovery Tribunal-II, Mumbai, the Supreme Court delivered its

verdict in the case of Harshad Govardhan Sondagar Vs. International

Assets Reconstruction Co. Ltd. & Ors. In Criminal Appeal No.736 of 2014,

along with connected matters. The Petitioners submit that this Judgment

recognized and protected the tenants and it was held that the Chief

Metropolitan Magistrate / District Magistrate cannot, in the garb of

resorting to Section 14 of the SARFAESI Act, interfere with the physical

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possession of the parties like the present Petitioners. Thus, the

Petitioners' submission would also take care of the issue as to whether

the parties like them can have recourse to Section 17 of the SARFAESI

Act. The Petitioners, therefore, had questioned the proceedings in

Securitisation Application No.322 of 2011. The preliminary objection raised

to the maintainability of the above Securitisation Application was

purported to be dealt with by the Tribunal by its order dated 9 th June 2014.

Though the Securitisation Application No.322 of 2011 was held to be not

maintainable and dismissed, yet, the interim protection therein was

extended by four weeks, namely, till 8th July, 2014. The Petitioners,

therefore, were of the view that it had correctly moved this Securitisation

Application by invoking Section 17 of the SARFAESI Act. The second

Respondent questioned its maintainability and at its instance, this order

dated 9th June 2014 was passed. Now, the Petitioners have not been able

to substantiate the claim of tenancy either in this Securitisation Application

or in the proceedings before the learned Chief Metropolitan Magistrate.

This once again puts the Petitioners' claim in serious jeopardy. The

Petitioners, therefore, filed a Criminal Writ Petition No.2418 of 2014 in this

Court. The Petitioners were aggrieved by the two orders of the learned

Chief Metropolitan Magistrate dated 23rd January 2013 and 5th February

2013. This Court was pleased to set aside both the orders. This Court also

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permitted the Petitioners to file an Intervention Application before the

learned Chief Metropolitan Magistrate and the said Chief Metropolitan

Magistrate was directed to dispose of the same within four months. This

order of this Court was challenged by the aggrieved Respondents to the

Writ Petition in the Hon'ble Supreme Court of India. However, there was

no stay to the said order from the Supreme Court. The result would be

that a senior citizen is dispossessed from the premises, though the

Judgment of the Supreme Court in Sondagar's case (Supra) supports the

Petitioners' version. The Petitioners then received the order rejecting the

Intervention Application filed by them. The Chief Metropolitan Magistrate

made the Securitisation Application No.67/SA/2012 absolute. The

assistance under Section 14 of the SARFAESI Act by the Chief

Metropolitan Magistrate was granted so as to take forcible possession of

the tenancy premises from the Petitioners. The three orders to the above

effect are Annexures "R", "S" and "T". They are dated 6 th November 2015,

19th December 2015 and 29th December 2015.

13. It is these orders which are challenged in the present Petition by the

Petitioners. Mr. Purohit, learned counsel appearing on behalf of the

Petitioners, submits that the impugned orders are contrary to law. The

said orders are passed at the instance of the Assignee of the Debt of the

Bank. If the Bank/Original Decree-holder has accepted the Petitioners'

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tenancy, then, this Assignee was bound by that stand of the Bank of

Baroda. The petitioners could not have been evicted by the Assignee of

the Debt of the Bank. Mr. Purohit would submit that this is not a case

where there is a doubt about the tenancy. The apprehension is absolutely

clear. Mr. Purohit submits that all the details of the tenancy have been

disclosed. The Petitioners have not suppressed anything from this Court.

Mr. Purohit submits that the Assignee of the Debt of the Bank was aware

of the proceedings before the Debt Recovery Tribunal-II, Mumbai and the

order passed on 5th September 2005. This was the order allowing the

Original Application No.1025 of 2001 and pursuant to the said order, the

Bank of Baroda and Respondent No.2 had initiated Execution Application

No.322 of 2005, in which an application for forcible dispossession of the

Petitioners from the tenancy premises was made, but that application was

rejected on 10th May 2012 (Annexure-"K"). It is in such circumstances that

the Assignee of the Debt of the Bank could not have taken recourse to

Section 14 of the SARFAESI Act. Thus, there is an abuse of the process

of law. Mr. Purohit has relied upon the grounds in the Memo of the present

Petition to submit that a lawful tenancy cannot come to an end in the

above manner. It is in this circumstances that Mr. Purohit would submit

that this Writ Petition should be allowed.

14. Mr. Purohit has relied upon the Judgment of the Hon'ble Supreme

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Court of India in the case of Harshad Govardhan Sondagar Vs.

International Assets Reconstruction Co. Ltd. & Ors. In Criminal Appeal

No.736 of 2014, along with connected matters and Vishal N. Kalsaria Vs.

Bank of India & Ors., AIR 2016 SC 530.

15. On the other hand, Mr. N.G. Thakkar, learned Senior Counsel

appearing on behalf of Respondent No.2 (contesting Respondent)

submits that the entire Petition is bogus, frivolous and vexatious. He

would submit that the Petitioners have not set out any particulars of the

tenancy. Mr. Thakkar would submit that the Writ Petition involves disputed

questions of fact. The Petitioners' claim of tenancy cannot be accepted, as

the Petitioners have not been able to prove that the tenancy existed prior

to creation of the mortgage. If there is a written agreement of tenancy,

then, that should have been produced and if that written agreement is in

force, then, it should have been registered.

16. In the present case, the mortgage was created in favour of the

predecessor-in-title of the second Respondent in 1992. That mortgage

was declared as to be valid and binding by the Debt Recovery Tribunal-II,

Mumbai on 5th September 2005 in its order passed in the Original

Application No.1025 of 2001. There is no written document of tenancy.

There is absolutely no registered instrument on record either. In these

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circumstances, a very vague submission as made by Mr. Purohit that

there was a tenancy much prior to 1998, cannot be accepted. The

relevant documents evidencing creation of such tenancy, which is,

admittedly, after the mortgage in favour of the predecessor-in-title of

Respondent No.2, therefore, should not be protected by this Court.

Further, Mr. Thakkar submits that Petitioner No.2-Dhaval Dilip Jhaveri is a

Director and Promoter of Respondent No.3. That the Petitioner No.2 is the

son of Dilip Jhaveri. Dilip Jhaveri is the part-owner of the property and

nephew of other two co-owners. The Petitioners have sought to establish

the tenancy by filing a collusive Suit. That Suit was filed so as to defeat

the measures in relation to the mortgaged property in favour of the Bank.

Therefore, this Court should not accept the claim of the Petitioners. The

tenancy is bogus and fake. Mr. Thakkar relies upon the Judgment of the

Hon'ble Supreme Court in Harshad Govardhan Sondagar Vs.

International Assets Reconstruction Company Limited & Ors., (2014) 6

SCC 1. The Petitioner No.2 is the son of the owner of the premises, who

created the mortgage. Thus, none of the Petitioners are strangers to the

rights of the Bank. Further, the documents that are produced are not

sufficient to prove a valid lease / right created in favour of any party. The

Petitioners are suppressing the true and correct facts from this Court.

Mr. Thakkar submits that the Bank of Baroda has extended several credit

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facilities to one M/s. Otoklin Plants and Equipments Limited (In

Liquidation). This is Respondent No.3. It was the mortgagor of the

immovable property. The property was admeasuring 4367 sq.ft.

approximately. The factum of creation of mortgage is evidenced by the

Memorandum of Entry dated 3rd August 1992, as extended by the

Memorandum of Entry dated 23rd December 1994. Annexure "A" of the

affidavit-in-reply is relied upon by Mr. Thakkar in that regard. Mr. Thakkar

then relied upon the Recovery Certificate issued by the Debt Recovery

Tribunal in favour of the Bank of Baroda in Original Application No.1025 of

2001, the recovery proceedings / Petition No.376 of 2005 and a Deed of

Assignment of the Debt dated 28th January 2008 in favour of the Assignee.

He would then submit that Respondent No.2-Assignee issued the

Demand Notice on 9th June 2009 to Respondent Nos.3 to 6 under Section

13(2) of the SARFAESI Act and submitted that, after meeting of the

statutory period of 60 days, the second Respondent took symbolic

possession of the property, in respect of which the possession notice

dated 27th August 2006 was published in the local newspaper. Mr. Thakkar

submits that the property is one-storied building, out of which total ground

floor area admeasuring approximately 4367 sq.ft. Only an area of 180

sq.ft. was in possession of Tribunal Receiver and was given to the

authorized officer of the second Respondent by the Receiver of the Debt

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Recovery Tribunal-II, Mumbai, who himself was put in possession of the

smaller property by the Official Liquidator. The remaining area on the

ground floor admeasuring 4187 sq.ft. continues to be in illegal possession

of Petitioner No.1. It is that property / part over which the claim of tenancy

is laid. Mr. Thakkar submits that the Petitioners went on delaying the

proceedings, namely, the Securitisation Application No.67/SA/2011 before

the Chief Metropolitan Magistrate, Mumbai. There were several frivolous

applications made in that proceedings. Mr. Thakkar then invites our

attention to the proceedings before the Chief Metropolitan Magistrate. Mr.

Thakkar submits that the Special Leave Petition to challenge the order of

this Court dated 9th July 2014 in Criminal Writ Petition No.2418 of 2014 is

pending. Still the second Respondent participated in the proceedings

before the learned Chief Metropolitan Magistrate, Mumbai, without

prejudice. The Chief Metropolitan Magistrate has given the Petitioners

extensive opportunities. Mr. Thakkar, therefore, supports the impugned

orders and submits that the Writ Petition be dismissed.

17. A list of dates and events was handed over by Mr. Thakkar. He also

handed over a copy of the plaint, in which the alleged collusive Decree

was passed. Thus, relying upon the Judgment of the Supreme Court in

the case of Vishal N. Kalsaria Vs. Bank of India, (2016) 3 SCC 762, Mr.

Thakkar submits that this is not a genuine and bonafide claim of tenancy.