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2023 Supreme(All) 350
IN THE HIGH COURT OF ALLAHABAD
MANOJ KUMAR GUPTA, PRASHANT KUMAR, JJ.
V Mart Retail Ltd - Petitioner
Versus
LIC Housing Finance Ltd and Others - Respondents
Writ - C No. 39191 of 2022
Decided On : 19-04-2023
For the Petitioner: Jitendra Prasad.
For the Respondent: CSC, Pranjal Mehrotra.
Point of Law: 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.
Headnote:
Petitioner is a company incorporated under Companies Act – Company - Memorandum of Understanding - Lease deed - It is running its retail business from aforesaid premises in pursuance of a Memorandum of Understanding - According to MOU, petitioner was let out ground floor and first floor of the building admeasuring 11300 square feet - Lessors were to hand over possession of premises to the petitioner on or before - Petitioner was given right to vacate demised premises after serving a three months' notice on lessors - On other hand, the lessors were given right of forfeiture of tenancy only when there was continuous default of three months or more in payment of rent and petitioner fails to pay it within one month of receipt of notice of demand - Whether Chief Metropolitan Magistrate or District Magistrate is empowered to deliver actual physical possession of secured asset to secured creditor under Section 14 of Act even in cases where the secured asset is in possession of a lawful tenant - In such cases, it has been held that secured creditor will have right to receive any money due or which may become due, including rent from lessee of borrower after expiry of sixty days of notice under Section 13 (2) of the Act. [Para 11]
Finding of the Court: Although it is argued that registered lease deed was executed, after sanction of loan, but it is not disputed that it was preceded by a memorandum of understanding dated under which petitioner became entitled to occupy the premises as lessee on or before and registered lease agreement specifically recites that tenancy commenced - Possession of petitioner as lessee since aforesaid date is not in dispute – Court are of opinion that case of petitioner would be covered under category (i) and possession of petitioner could not be disturbed by second respondent under provisions of Act unless lease is validly determined as per contract of tenancy or statutory provisions – Court are of opinion that no purpose would be served in relegating the petitioner to agitate its claim before the District Magistrate or Chief Metropolitan Magistrate - It will only lead to procrastination of litigation.
Result: Instant petition dispose.
JUDGMENT :
1. The instant petition has been filed praying for a writ of mandamus commanding the respondents to consider the representation of the petitioner dated 24.11.2020 and not dispossess the petitioner from Property No.3/67, Rui Ki Mandi, Shahganj, Agra or interfere in the running of business by the petitioner in the said premises.
2. The facts necessary for disposal of the petition are that the petitioner is a company incorporated under the Companies Act. It is running its retail business from the aforesaid premises in pursuance of a Memorandum of Understanding (MOU) dated 10.5.2016 between it and respondents no.4 to 8, the owners of the premises (hereinafter for short 'the lessors'). According to the MOU, the petitioner was let out ground floor and first floor of the building admeasuring 11300 square feet. The lessors were to hand over possession of the premises to the petitioner on or before 25.05.2016. The petitioner was given right to vacate the demised premises after serving a three months' notice on the lessors. On the other hand, the lessors were given right of forfeiture of tenancy only when there was continuous default of three months or more in payment of rent and the petitioner fails to pay it within one month of receipt of notice of demand. Subsequently, registered lease agreement dated 15.03.2017 was also executed between the parties. The lease agreement mentions the date of commencement of the lease as 1st July, 2016. The rent for the carpet area of 11000 square feet was approximately Rs.29 per month per square feet payable before 10th of every calendar month. The monthly lease rent was liable to enhancement after regular intervals. According to the petitioner, in terms of the Memorandum of Understanding and the registered lease deed, it occupied the demised premises and is carrying on its retail business therefrom.
3. On 20.02.2020, the petitioner received a notice from the second respondent i.e. LIC Housing Finance Ltd. from which it came to know that the demised property was equitably mortgaged by the lessors in its favour. On 23.11.2020, the second respondent fixed a possession notice on the demised premises in purported exercise of its powers under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short 'the Act'). The petitioner on 24.11.2020 filed a detailed objection before the second respondent mentioning therein about the MOU dated 10.5.2016 and registered lease deed dated 15.6.2017 and requested the second respondent to immediately stop proceedings for taking actual physical possession of the leased property. The petitioner also made a prayer that in case the property is auctioned, the auction purchaser be informed that he would step into the shoes of the lessors/borrowers, but shall not be entitled to actual physical possession as the property was in possession of a lawful tenant. However, the second respondent did not take notice of the said objection and threatened to take possession of the leased property and consequently, the instant petition.
4. The second respondent has filed a counter affidavit in which the stand taken is that the private respondents (lessors) had taken a loan of Rs.2,35,00,000/- on 28.2.2017 from it and had equitably mortgaged the property in question in favour of the second respondent by deposit of title deeds. The date on which equitable mortgage was allegedly created, has not been disclosed in the counter affidavit. The date of issuance of notice under Section 13 (2) of the Act is 5.12.2019. The date of issuing possession notice is 23.11.2020. It is admitted to the second respondent that it had filed an application under Section 14 of the Act for delivery of actual physical possession of the aforesaid property and the said application is pending.
5. It is clear from the stand taken by the second respondent that it proposes to take actual physical possession of the property in question in exercise of its rights un
