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2019 Supreme(Kar) 1597
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
L.NARAYANA SWAMY, P.S.DINESH KUMAR, JJ.
M/s Mohan Bhandar A Partnership Firm Nageetha Complex and Ors - Appellant
Versus
Vijaya Bank Kuvempunagar Branch Mysore Represented By Its Branch Manager - Respondent
Writ Appeals No.2654, 3142-43 of 2018 c/w Writ Appeals No.2655, 2929-33 of 2018 Writ Appeal No.2782 of 2018 (GM-DRT)
Decided On : 12-04-2019
Advocate Appeared:
For the Appellant :Shri S.S. Naganand, Senior Advocate & Shri. U.R. Vikram, Advocate For Shri. S. Sriranga, Advocate
For the Respondent:Shri K. Shashikiran Shetty, Senior Advocate For Shri Vignesh Shetty, Advocate, Shri D.R. Ravishankar, Advocate For Shri D.N. Meghachandra, Advocate Shri M.N. Kumar, CGC
Headnote:
Recovery of Debts Due to Banks and Financial Institutions Act, 1993 - Section 25(aa) - SARFAESI Act - Debt Recovery - Possession of properties – Tenants - Whether occupants are bonafide tenants – Court have heard learned Senior Advocate for tenants learned Senior Advocate for Bank learned Advocate for landlord - Briefly stated facts of case are who is owner of properties had availed loan from Bank by mortgaging his properties on June - Loan amount was not repaid in time - Bank instituted proceedings to recover its debt - In furtherance of recovery proceedings before Debt Recovery Tribunal Recovery Certificates were issued on November and August submitted following four proposals for one time settlement offering to pay - After issuance of Recovery Certificates a notice was issued proposing to take possession of secured assets and accordingly possession of assets was taken over approached this Court in writ petition - It was disposed of on August based on certain memos filed by petitioner and Bank wherein undertook to pay a sum to Bank within a period of days – Accordingly possession of Commercial complex was given back - He inducted three tenants on May March and December – Held, Learned Senior Advocate for Bank contended that there can be no exception to said proposition of law but such protection is available only to a bonafide tenant - Adverting to paragraph in case he argued that admittedly tenants in instant case are not bonafide tenants inasmuch as their respective tenancies have come into existence after issuance of Recovery Certificates - Landlord as also for tenants strongly relied upon a letter written by landlord to Senior Manager Bank Mysore conveying that he had negotiated to give in premises in question on lease - It is also stated in said letter had agreed to give ten month’s rent as deposit - Landlord by said letter requested Bank not to disturb during currency of lease - Placing reliance on this letter it was argued that contents of said letter clearly indicate that landlord had obtained Bank’s permission to lease premises to tenants – Therefore they are bonafide tenants and their possession cannot be disturbed - Admittedly Bank has been prosecuting litigation by filing applications before DRT - Learned Senior Advocate submitted that landlord had been dodging repayment on one pretext or other - Even after inducting new tenants who have joined hands with landlord in these proceedings neither tenants nor landlord have paid or deposited any money to Bank - In view of law laid down by Hon’ble Supreme Court in case only bonafide-tenants shall be entitled for protection of mutual covenants with regard to certainty of lease period - Tenants before us have come into occupation of premises in question after issuance of Recovery Certificates and without express leave from Bank - Hence writ appeals filed on behalf of tenants must fail - So far as writ appeal filed on behalf of landlord is concerned Hon’ble Single Judge has recorded that landlord has already submitted four offers for One time settlement but has not exhibited any bonafides - He has further held that it would not preclude landlord from making a fresh offer – Appeals dismissed
JUDGMENT :
1. These writ appeals have been presented by the owner and tenants of a commercial building called ‘Nageetha Complex’ situated in Saraswathipuram, Mysuru, challenging common order dated July 23, 2018 passed by the Hon’ble Single Judge in a batch of writ petitions filed by the owner and the tenants of the said building.
2. For the sake of convenience, parties shall be referred as per their status in the writ petition.
3. We have heard Shri.S.S.Naganand, learned Senior Advocate for the tenants, Shri.K.Shashi Kiran Shetty, learned Senior Advocate for the Bank, Shri.D.R.Ravishankar, learned Advocate for the landlord Shri.M.Nagaraja.
4. Briefly stated the facts of the case are, Shri.M.Nagaraja who is the owner of the properties had availed loan from Vijaya Bank by mortgaging his properties on June 6, 1998. The loan amount was not repaid in time. Bank instituted proceedings to recover its debt.
5. In furtherance of recovery proceedings before the Debt Recovery Tribunal (‘DRT’ for short), Recovery Certificates were issued for Rs.39 crores on November 31, 2003 and August 11, 2004. Shri. M.Nagaraja submitted following four proposals for one time settlement offering to pay;
(a) Rs.2.46 crores on 04.11.2003;
(b) Rs.2.05 crores on 31.12.2004;
(c) Rs.2.99 crores on 09.08.2007; and
(d) Rs.6.10 crores on 24.12.2012.
6. After issuance of Recovery Certificates, a notice was issued proposing to take possession of secured assets and accordingly, possession of assets was taken over. Shri.Nagaraja approached this Court in writ petition No.4060/2007. It was disposed of on August 9, 2007 based on certain memos filed by the petitioner and the Bank wherein, Shri.Nagaraja undertook to pay a sum of Rs.299 lakhs to the Bank within a period of 90 days. Accordingly, possession of the Commercial complex was given back to Shri.Nagaraja. He inducted three tenants on May 28, 2005, March 1, 2010 and December 1, 2016.
7. The proceedings under the provisions of the SARFAESI Act were initiated. The District Magistrate by order dated March 21, 2016 permitted the creditors to take possession of the properties and the said order has been challenged by the tenants in W.Ps. No.37112-117/2016 and the owner Shri.Nagaraja in W.P. No.48475/2016. On July 08, 2016, this Court has granted an interim order not to dispossess the tenants from Schedule ‘A’ and ‘B’ properties for a period of eight weeks and the same has been continued from time to time.
8. Thereafter, the Bank approached Recovery Officer-II for an order under Section 25(aa) of DRT Act. Recovery Officer passed an order on June 13, 2018 directing the tenants to hand over vacant possession and accordingly, the Bank has taken possession of the properties on July 4, 2018.
9. The tenants have challenged order dated June 13, 2018 passed under Section 25(aa) of Recovery of Debts Due to Banks and Financial Institutions Act, 1993 in W.Ps. No.27975-977/2018.
10. The Hon’ble Single Judge has disposed of the writ petitions by the common order confirming order dated March 21, 2016 passed by the Deputy Commissioner, Mysore and order dated June 13, 2018 passed by the Recovery Officer, DRTII, Bengaluru, granting liberty to the owner of the building to submit fresh proposal for ‘one time settlement’. Hence, these appeals.
11. Thus in substance, there are two sets of challenges. One on behalf of owner of the property and other by the tenants.
12. Shri.S.S.Naganand, learned Senior Advocate on behalf of the tenants mainly urged that petitioners are bonafide tenants and they can be dispossessed in accordance with law by initiating separate proceedings. Creditor can only take symbolic possession of the property.
13. Shri.D.R.Ravishankar, learned Advocate on behalf of the owner, Shri. M.Nagaraja urged that the owner has already paid a sum of Rs.1.86 crores and willing to pay a further sum of Rs.4.24 crores to settle dues in its entirety. In substance, his plea is for consideration of his offer and to discharge him from the debt.
14. We have ca
