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IN THE HIGH COURT OF JUDICATURE AT MADRAS
S.S. SUNDAR, P.B. BALAJI, JJ.
M/s. Asset Reconstruction Company (India) Ltd. (`ARCIL`), Shreepati Arcade, August Kranti Marg, Mumbai – Appellant
Versus
M/s. Chennai Petroleum Corporation Limited, Chennai & Others – Respondents
O.S.A. Nos. 355 to 357 of 2013 & W.P. No. 4092 of 2019 & M.P. Nos. 1, 2 & 2 of 2023, W.M.P. Nos. 4573 & 4576 of 2019
Decided On : 07-07-2023
Land Acquisition Act - Mortgage - Sections 44-A[1], 44-A[2] - The court upheld the impugned Government Order declaring the transfer of land by way of mortgage without prior permission as null and void and forfeiting the land as penalty. The court also affirmed the resumption of land by the Government and dismissed the appeals and writ petition.
Fact of the Case:
The case involved a dispute over the transfer of land by way of mortgage without prior permission, leading to the Government's declaration of the transfer as null and void and the forfeiture of the land as a penalty. The appellant, who had taken over the debts of the company in liquidation, sought to uphold its actions as a rightful exercise of its entitlements under the SARFAESI Act.
Finding of the Court:
The court found that the mortgage created in respect of the property was invalid, not only for the lack of prior sanction from the appropriate Government but also for other vitiating factors. The court affirmed the resumption of land by the Government and dismissed the appeals and writ petition.
Issues: The issues involved the validity of the mortgage created without prior permission, the rights of the appellant as a secured creditor, and the Government's power to declare the transfer as null and void and forfeit the land as a penalty.
Ratio Decidendi: The court held that the mortgage was void and declared as such, and affirmed the Government's resumption of the land. The court also found that the appellant's possession of the property, while unlawful, entitled them to remain in possession until evicted by due process of law.
Final Decision: The court dismissed the appeals and the writ petition, affirming the validity of the Government's resumption of the land and providing directions for the petitioner to seek refund and compensation.
JUDGMENT
(Prayer: Original Side Appeals in O.S.A.Nos.355 to 357 of 2013 filed under Order XXXVI Rule 1/11 of Original Side Rules against the order of this Court, dated 12.09.2013, in Company Application Nos.163 to 165 of 2011 respectively in Company Application Nos.1114 & 1115 of 2010 in Company Petition No.265 of 2002. Writ Petition filed under Article 226 of the Constitution of India for issuance of a Writ of Certiorarified Mandamus to call for the records relating to the impugned G.O.(Ms) No.59, Industries (MID.1) Department, dated 04.03.2016, issued by the 1st respondent and quash the same and consequently direct the 1st respondent not to disturb the petitioner on the possession of alleged land.)
S.S. Sundar.
1. All the three Original Side Appeals in O.S.A.Nos.355 to 357 of 2013 are directed against the order of learned Single Judge of this Court, dated 12.09.2013, in Company Application Nos.163 to 165 of 2011. The 1st respondent in Company Application Nos.163 to 165 of 2011 is the appellant in all the three Original Side Appeals.
2. The writ petition in W.P.No.4092 of 2019 is filed during the pendency of the Original Side Appeals, for issuance of a Writ of Certiorarifed Mandamus to quash the impugned Government Order vide G.O.(Ms) No.59, Industries (MID.1) Department, dated 04.03.2016, issued by the Government of Tamil Nadu, through Secretary to Government, Industries Department, declaring the transfer of 268.38 Acres of land by way of mortgage to various banks without prior permission of Government as null and void and forfeiting the land as penalty by invoking the provision under Section 44-A[2] of Land Acquisition Act.
3. Though the Original Side Appeals and the writ petition arise out of different cause of action, the appellant in the appeals and the petitioner in the writ petition have raised a few issues which are common and hence, the Original Side Appeals and the writ petition are disposed of by this common judgment.
4. The appellant herein, who is also the writ petitioner, namely, M/s.Asset Reconstruction Company (India) Ltd., is hereinafter referred to as “M/s.ARCIL”. The 1st respondent in the writ petition, who is the 3rd respondent in the appeals, is hereinafter referred to as “State” or “Government”. The 2nd respondent in the appeals, who is also the 3rd respondent in the writ petition, is hereinafter referred to as “M/s.SPIC Petro Chemicals Ltd.” The 1st respondent in the appeals, who is the 4th respondent in the writ petition, is hereinafter referred to as “M/s.CPCL”.
5. Brief facts that are necessary for the disposal of these appeals and the writ petition may be summarized as follows :
5.1. The appellant/writ petitioner-M/s.ARCIL is a company incorporated under the Companies Act, 1956, and registered as a securitization and reconstruction company under Section 3 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as “SARFAESI Act” for brevity). The appellant''s business is to take over the debts of Companies from Banks and Financial Institutions and to step into the shoes of lending institutions to exercise all rights and liabilities of the lending institutions with respect to the debts assigned to it in terms of the provisions of Section 5(4) of SARFAESI Act.
5.2. M/s.CPCL (formerly known as Madras Refineries Limited), the 1st respondent in the appeal who is the 4th respondent in the writ petition, entered into a Memorandum of Understanding on 17.01.1989 with M/s.Southern Petrochemicals Industries Corporation Limited (“M/s.SPIC” for brevity) for floating a Public Limited Company as a Joint Venture to implement a project, for which the Government of India had agreed to grant licence. The name of the Joint Venture Company to be formed was “National Aromatics and Petrochemicals Corporation Ltd.” and the project was referred to as “AROCHEM”.
5.3. By an order dated 16.09.1989, the Governmen
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