Karnataka High Court
M/S Bharat Petroleum vs The Deputy Commissioner on 1 August, 2024
Author: H.P.Sandesh
Bench: H.P.Sandesh
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WP No. 22802 of 2014
IN THE HIGH COURT OF KARNATAKA,
DHARWAD BENCH
DATED THIS THE 1ST DAY OF AUGUST, 2024
BEFORE
THE HON'BLE MR. JUSTICE H.P.SANDESH
WRIT PETITION NO. 22802 OF 2014 (GM-RES)
BETWEEN:
M/S BHARAT PETROLEUM,
CORPORATION LIMITED,
BELGAUM TERRITORY OFFICE,
NEAR DESUR RAILWAY STATION,
ZEDSHAHAPUR POST,
DESUR BELGAUM-14.
REPRESENTED BY ITS
TERRITORY MANAGER RAJA.M.
...PETITIONER
(BY SRI. C.V. ANGADI, ADVOCATE)
GIRIJA A AND:
BYAHATTI
Location: HIGH 1. THE DEPUTY COMMISSIONER
COURT OF
KARANTAKA
DHARWAD AND DISTRICT MAGISTRATE,
BENCH
DHARWAD DISTRICT,
DHARWAD-580 001.
2. M/S SYNDICATE BANK,
DURGADBIL BRANCH,
HUBLI BRANCH,
KALGHATGI PLAZA,
DURGABAIL, HUBLI-580 020.
REPRESENTED BY ITS
CHIEF MANAGER/AUTHORIZED OFFICER.
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WP No. 22802 of 2014
3. SRI. ASADALIKHAN M. KITTUR,
S/O. MUSTAK ALIKHAN KITTUR,
AGED ABOUT 37 YEARS,
4. SRI. ZAFARALIKHAN M. KITTUR,
S/O. MUSTAK ALIKHAN KITTUR,
AGED ABOUT 35 YEARS,
RESPONDENT NO.3 AND 4
ARE RESIDING AT PLOT NO.21,
BELAVANKI COLONY,
KUSUGAL ROAD, HUBLI-580020.
...RESPONDENTS
(BY SRI. PRAVEEN K. UPPAR, AGA FOR R1;
SRI. SURESH B. GUNDI, ADV. FOR R2;
R3-DISMISSED AS ABATED; R4-SERVED)
---
THIS WRIT PETITION IS FILED UNDER ARTICLES 226
AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO
ISSUE A WRIT IN THE NATURE OF CERTIORARI OR ANY
OTHER WRIT OR ORDER QUASHING THE IMPUGNED
ORDER DATED 3.4.2014 IN NO.SARFAESI/CR-37/2013-14
PASSED UNDER SECTION 14 OF THE SARFAESI ACT, 2002
PASSED BY THE FIRST RESPONDENT VIDE ANNEXURE-A
AND ETC.
THIS PETITION COMING ON FOR PRELIMINARY
HEARING IN 'B' GROUP THIS DAY, THE COURT MADE THE
FOLLOWING:
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WP No. 22802 of 2014
ORAL ORDER
(PER: THE HON'BLE MR. JUSTICE H.P.SANDESH)
1. This matter is listed in 'B' Group. Heard the learned
counsel for the petitioner, learned AGA for
respondent No.1 and also the learned counsel for
respondent No.2. The petition against respondent
No.3 is abated and respondent No.4, though served,
did not choose to engage the counsel and represent
in the matter.
2. In this petition, the petitioner has prayed this court
to issue writ in the nature of certiorari or any other
writ or order quashing the impugned order dated
03.04.2014 in No.SARFAESI/CR-37/2013-14 passed
under Section 14 of the SARFAESI Act, 2002, passed
by the first respondent vide Annexure-A and also
sought for issue of writ of mandamus or any other
writ or order directing the respondents No.1 and 2
not to interfere with the possession of the scheduled
leasehold property of the petitioner till determination
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of lease period i.e., 30.11.2034 and so also to issue
writ, order or direction and such other order or
direction as this Hon'ble Court may deem fit in the
facts and circumstances of the case.
3. The contentions of the petitioner is that;
3.1. The main contention of the petitioner is that, he
is having a registered leasehold right for a
period of 30 years commencing from
01.02.2004 to 30.11.2034. The said lease has
been entered in terms of payment of rentals
payable monthly with the receipt of advance
amount and terms and conditions of the lease
were categorically mentioned in the said lease
deed.
3.2. It is also the contention of petitioner that,
respondents No.3 and 4, who are the owners of
the property, have mortgaged the scheduled
premises in favor of respondent No.2 Bank and
availed loan and their loan account has been
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declared as non-performing account (NPA) as
on 05.12.2007 and a sum of Rs.1,73,08,456.99
is the outstanding due payable to the 2nd
respondent bank. The 2nd respondent bank had
called upon respondents No.3 and 4 to clear the
outstanding due and has been declared as NPA,
the 2nd respondent bank appears to have taken
symbolic possession by its letter dated
12.01.2013 calling upon respondents No3 and
4 to hand over the possession of the scheduled
premises. Further, a letter dated 12.01.2013
was issued to the petitioner herein to hand over
vacant possession and further intimated the
process of taking steps for getting the actual
possession under the Provisions of SARFAESI
Act.
3.3. The petitioner also after the receipt of the
notice, got issued its reply dated 25.01.2013,
informing the respondent No.2 bank about the
existence of the long lease agreement. The 2nd
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respondent has issued the sale notice of
immovable property under Rule 8 (5) and (6)
under Security Interest(Enforcement) Rules
2002, which was published in Times of India,
daily newspaper dated 23.02.2013. The bank
has served possession notice on respondents
No.3 and 4 published in Vijay Karnataka and
Times of India dated 28.11.2012. It is further
communicated in the said notice of the
respondent bank that the bank would proceed
to realize the amount by selling the scheduled
property after expiry of 30 days from the date
have not taken any steps to discharge the loan
amount. However, the petitioner aggrieved by
the said notice dated 23.02.2013, filed an
appeal under section 17(2) of the Securitization
and Reconstruction of Financial Assets and
Enforcement Security Interest Act, 2012 before
the Debt Recovery Tribunal at Bengaluru in
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I.R.No.1129/2013. Initially, the Debt Recovery
Tribunal had granted interim order and directed
to status quo with regard to the possession of
the scheduled property, but subsequently, since
the sale has not taken place in terms of the
sale notice dated 23.02.2013.
3.4. It is also contended that, it is the dictum of the
Hon'ble Supreme Court that, when there is a
valid lease, without determination of a valid
leased possession of the lessee is lawful, such
lawful possession of a lessee has to be
protected by all Courts and Tribunal unless the
lease stand determined. If the property is in
the legal possession of the lessee, the
Authorized Officer shall refer the dispute to
Chief Metropolitan Magistrate who shall then in
accordance with the principles of natural justice
validate the lease and accordingly award the
possession of the property to the lessee or to
the security creditor.
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4. The learned counsel for the petitioner in his
argument vehemently contended that;
4.1. When the petitioner is having 30 years of lease
right and built superstructure and developed
other facilities like pump, underground tank
and paying rent periodically, the bank has no
right to sell or interfere with the assets of the
petitioner. This being the case, if the impugned
order is allowed to be continued and the 2nd
respondent is permitted to implement the
order, the petitioner would be put to untold
hardship.
4.2. In support of his argument, learned counsel
relied upon the judgment of the Hon'ble Apex
Court reported in the case of Vishal N.
Kalsaria Vs. Bank of India and Others
reported in (2016) 3 SCC 762 and brought to
the notice of this Court paragraphs 36 and 37
of the said judgment, which reads as under:
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36. As far as granting leasehold rights being
created after the property has been
mortgaged to the bank, the consent of
the creditor needs to be taken. We have
already taken this view in Harshad
Govardhan Sondagar. We have not
stated anything to the effect that the
tenancy created after mortgaging the
property must necessarily be registered
under the provisions of the Registration
Act and the Stamp Act.
37. It is a settled position of law that once
tenancy is created, a tenant can be
evicted only after following the due
process of law, as prescribed under the
provisions of the Rent Control Act. A
tenant cannot be arbitrarily evicted
by using the provisions of the SARFAESI
Act as that would amount to stultifying
the statutory rights of protection given
to the tenant. A non obstante clause
(Section 35 of the SARFAESI Act) cannot
be used to bulldoze the statutory rights
vested in the tenants under the Rent
Control Act. The expression "any other
law for the time being in force" as
appearing in Section 35 of the SARFAESI
Act cannot mean to extend to each and
every law enacted by the Central and
State Legislatures. It can only extend to
the laws operating in the same filed.
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(Emphasis supplied)
4.3. The counsel also relied upon the judgment of
this Court in the case of Hutchison Essar
South Limited Vs. Union Bank of India
Represented by its Authorised Officer and
Another, reported in ILR 2007 KAR 4362 and
brought to the notice of this Court paragraph
No.23 of the said judgment, which is extracted
below:
23. However if the secured asset is in
the possession of a bonafide lessee or
tenant, he cannot be thrown out by
invoking Sections 13 and 14 of the
Securitization Act. In taking this view, I
am fortified by the decision of Punjab
and Haryana High Court in the case of
PREM GUPTA (SUPRA). The decisions in
the case of C.B. GAUTAM, GHATGE
PATIL TRANSPORT COMPANY, TATA
CONSULTING ENGINEERS AND of ADAIR
DUTT (SUPRA) rendered while examining
the provisions of IT Act are of grant
guidance in resolving the present
controversy. What is contemplated
under Sections 13 and 14 of the
Securitization Act is only symbolic
possession and not actual possession, if
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an bonafide third party is in occupation
of the secured asset. It is also open to
the mortgagee-Bank to sell the assets
with the tenancy intact. Possession
notice under Section 13(4) of the
Securitization Act is like an attachment
notice, but it does not entitle the Bank
to dispossess a person in possession of
the mortgaged property. However, if
the banker or purchaser of the secured
asset has to take the actual possession,
the same has to be in accordance with
the due process of law only. This is the
considered view taken by Patna High
Court in the case of ABHAY KUMAR
PANDEY (SUPRA) while dealing with the
issue of possession of the property
auctioned under section 29 of the State
Financial Corporation Act, 1951.
(Emphasis supplied)
5. Per contra, learned counsel appearing for the
respondent Bank would vehemently contend that,
the right of the bank under the special enactment
i.e.,under Section 13(4) of SARFAESI Act cannot be
curtailed. The counsel also submits that, already an
order has been invoked by filing an application
before the District Magistrate and the petition was
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filed before the District Magistrate, Dharwad District
Court, Dharwad and an order has been passed on
03.04.2014. But consequent upon this order,
possession has not been taken, in view of staying of
the said order by this Court. However, the counsel
would contend that, even property can be brought
for sale by the bank with the leasehold rights and not
to dispossess in view of the principles laid down in
the judgment of the Hon'ble Apex Court.
6. Having heard the learned counsel for the parties and
perusing the judgment of the Hon'ble Apex Court, in
paragraphs 36 and 37, it is very clear that, granting
of leasehold rights being created after the property
has been mortgaged to the bank, the consent of the
creditor needs to be taken. It is further observed in
paragraph 37 that, it is a settled position of law that
once tenancy is created, a tenant can be evicted only
after following the due process of law, as prescribed
under the provisions of the Rent Control Act. A
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tenant cannot be arbitrarily evicted by using the
provisions of the SARFAESI Act as that would amount
to stultifying the statutory rights of protection given
to the tenant. A non abstante (Section 35 of the
SARFAESI Act) cannot be used to bulldoze the
statutory rights vested in the tenants under the Rent
Control Act. The expression "any other law for the
time being in force", as appearing in Section 35 of
the SARFAESI Act cannot mean to extend to each
and every law enacted by the Central and State
Legislatures. It can only extend to the laws
operating in the same field.
7. In Hutchison's case (supra), this Court also in
paragraph 23 observed that, it is also open to the
mortgagee-Bank to sell the assets with the tenancy
intact. The possession notice under Section 13(4) of
the Securitization Act is like an attachment notice,
but it does not entitle the bank to dispossess a
person in possession of the mortgaged property.
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However, if the banker or purchaser of the secured
asset has to take actual possession, the same has to
be in accordance with the due process of law only.
8. Learned AGA for the respondent - State would
contend that the State is only a formal party.
9. Having heard the petitioner's counsel and also the
counsel appearing for the respondents, particularly
the respondent No.2 Bank, it is not in dispute that
the loan was obtained by respondents No.3 and 4.
They are the original owners. It is also not in dispute
that there was a registered lease agreement in
favour of the petitioner of the year 2006 and lease
commences from the year 2004 itself. The lease is
valid for a period of 30 years i.e., till 2034. It is also
not in dispute that the proceedings has been initiated
before the Deputy Commissioner in terms of
Annexure-A and the same was allowed, but the order
has not been implemented. The fact that there was
a lease in favour of the petitioner is not in dispute,
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i.e., the lease hold agreement as per Annexure-B
dated 21.01.2006 and lease commences from 2004
is recited in the lease deed. The fact that the lease
holder i.e., the petitioner is in possession is also not
in dispute.
10. In view of the principles laid down by the Hon'ble
Apex Court in the Vishal N. Kalsaria's case (supra),
particularly paragraphs 36 and 37, the rights of the
tenant has to be protected and the tenant cannot be
arbitrarily evicted by using the provisions of the
SARFAESI Act as that would amount to stultifying the
statutory rights of protection given to the tenant.
11. The counsel appearing for respondent No.2 also does
not dispute the principles and also he submits that
the bank can proceed against the respondents No.3
and 4 with the leasehold right of the petitioner. Law
is also settled that interest of the tenant also to be
protected and without following due process of law,
he cannot be removed from the possession. It is
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also not in dispute that Section 14 of the SARFAESI
Act confirms the right of taking up possession to the
bank and protecting of the interest of the petitioner.
12. In view of the principles laid down by the Hon'ble
Apex Court as well as this Court, when the order has
been passed under Section 14 of the SARFAESI Act
and possession has not been taken in view of the
interim order granted by this Court, when such being
the case, the bank is having right to sell the property
with leasehold right and recovery of amount from
respondents No.3 and 4 also cannot be curtailed and
interest of the leasehold right of the petitioner has to
be protected without disturbing the possession and
without due process of law.
13. In view of the discussion made above, the petitioner
is entitled for the relief of writ of certiorari quashing
of order dated 03.04.2014 in No.SARFAESI/CR-
37/2013-14 vide Annexure-A and also writ in the
nature of mandamus directing the respondents No.1
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and 2 not to interfere with the possession of leased
property of the petitioner till the determination of
lease period i.e., 30.11.2034. However, liberty is
given to the respondent No.2 Bank to proceed in
accordance with law, even to sell the property
protecting the interest of the petitioner's leasehold
right. The petitioner is also permitted to continue in
possession till the determination of the leasehold
right i.e., up to 30.11.2024 with a condition to pay
lease amount in favour of the bank, if any sale is
made continue to pay the same in favour of the
prospective purchaser.
14. Writ petition is disposed of accordingly.
Sd/-
(H.P.SANDESH)
JUDGE
gab
CT-MCK
