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2016 Supreme(Tri) 306
IN THE HIGH COURT OF TRIPURA, AGARTALA
S.C. DAS, J.
In the death of Kiran Sankar Modak, his heirs - Smt. Sikha Rani Modak – Petitioner
Versus
Tripura Industrial Development Corporation Ltd. – Respondent
WP (C) No. 249 of 2009
Decided On : 21-09-2016
For the Petitioners: Mr. S.M. Chakraborty and Ms. P. Sen.
For the Respondents: Mr. S. Deb and Mr. P. Dutta.
Headnote:
STATE FINANCIAL CORPORATION ACT - SECTION 29 - RIGHT OF CORPORATION TO TAKE OVER MANAGEMENT AND POSSESSION OF PROPERTY - EXTENT AND LIMITATIONS - CORPORATION CANNOT USURP OWNERSHIP OF PROPERTY - CORPORATION TO ACT FAIRLY AND REASONABLY - PROCEDURE TO BE FOLLOWED WHILE SELLING MORTGAGED PROPERTY - CREATION OF KHATIAN IN NAME OF CORPORATION INSTEAD OF BORROWER IS ILLEGAL - CORPORATION TO MAINTAIN LOAN ACCOUNT AND COMMUNICATE THE SAME TO BORROWER - CORPORATION CAN DISPOSE OF PROPERTY IN ACCORDANCE WITH PROCEDURE PRESCRIBED BY LAW.
Fact of the Case:
Borrower took a loan from TIDCL and mortgaged a hotel as security. Borrower defaulted in repayment. TIDCL took over possession and management of the hotel under Section 29 of the State Financial Corporation Act. TIDCL collected rent from tenants of the hotel and created a Khatian in its name in place of the borrower. Borrower's successors filed a writ petition challenging the takeover, creation of Khatian, and seeking a loan account.
Finding of the Court:
1. TIDCL had the right to take over management and possession of the hotel under Section 29 of the SFC Act, but it could not usurp ownership of the property. 2. TIDCL was required to act fairly and reasonably in exercising its powers under Section 29. 3. TIDCL was required to follow the procedure prescribed by the Supreme Court for selling mortgaged property. 4. Creation of Khatian in the name of TIDCL instead of the borrower was illegal. 5. TIDCL was required to maintain a loan account and communicate the same to the borrower.
Issues: 1. Whether TIDCL had the right to take over management and possession of the hotel under Section 29 of the SFC Act? 2. Whether TIDCL could usurp ownership of the property? 3. Whether TIDCL was required to act fairly and reasonably in exercising its powers under Section 29? 4. Whether TIDCL was required to follow the procedure prescribed by the Supreme Court for selling mortgaged property? 5. Whether the creation of Khatian in the name of TIDCL instead of the borrower was illegal? 6. Whether TIDCL was required to maintain a loan account and communicate the same to the borrower?
Ratio Decidendi: 1. The right of TIDCL to take over management and possession of the hotel under Section 29 of the SFC Act was limited to the extent of realizing the dues and not to usurp the property as owner of the same. 2. TIDCL was required to act fairly and reasonably in exercising its powers under Section 29, which included obtaining the best price for the property through a transparent and acceptable procedure. 3. The creation of Khatian in the name of TIDCL instead of the borrower was illegal as it violated the borrower's right to property. 4. TIDCL was required to maintain a loan account and communicate the same to the borrower to ensure transparency and accountability.
Final Decision: 1. The creation of Khatian in the name of TIDCL in place of the borrower was set aside and quashed. 2. TIDCL was directed to communicate a detailed loan account to the petitioners within 15 days. 3. TIDCL was allowed to dispose of the property in accordance with the procedure prescribed by law, but it could not usurp ownership of the property. 4. TIDCL was directed to follow the standard procedure prescribed by the Supreme Court while disposing of the property. 5. Parties were allowed to approach the appropriate Court of law if they felt aggrieved in the process.
1. Heard learned Sr. counsel, Mr. S.M. Chakraborty assisted by learned counsel, Ms. P. Sen for the petitioners and learned Sr. counsel, Mr. S. Deb assisted by learned counsel, Mr. P. Dutta for the respondents.
2. Kiran Sankar Modak, since deceased, (herein-after mentioned as borrower), the predecessor of the present petitioners, took a loan of total Rs. 19,55,000/- in the year 1990-91 for setting up/running a hotel business namely “Hotel Kakoli” at Post-office Chowmohani, Agartala, from the Tripura Industrial Development Corporation Limited (for short, TIDCL) and the loan was sanctioned under certain specific terms and conditions of repayment by installments with interest. Loan agreements were also signed between the borrower and TIDCL (Annexure-P/1, P/2 and P/3 to the writ petition) and further the borrower hypothecated the hotel building with assets to the TIDCL. An equitable mortgage was also created by the borrower by depositing the title Deed of the land of “hotel Kakoli” which is admittedly a very valuable land. The borrower failed to make payment in terms of the agreements and only an amount of Rs. 4,33,000/- was paid by the borrower to the TIDCL. There is no dispute of the fact stated above.
It is the case of the petitioners that it was the misfortune of the borrower that he had fallen ill immediately after the hotel business started and was suffering from cancer and for his treatment in Tripura and outside, huge amount was spent and, therefore, he could not make repayment of the loan amount with interest in terms of the agreements. The borrower died out of cancer on 06.09.1998.
3. It is the further case of the petitioners that without issuing any show cause notice, the respondent TIDCL by writing a letter dated 08.07.1998 addressed to the borrower informed him that TIDCL will be taking over possession of the “Hotel Kakoli” on 16.07.1998, invoking the provision of Section 29 of the State Financial Corporation Act (for short, SFC Act). In that letter it was mentioned by the TIDCL that as on 31.01.1998 the principal amount Rs. 19,55,000/- interest amounting to Rs. 24,55,201/- and penal interest amounting to Rs. 3,94,293/- in total Rs. 48,04,494/- was lying due to be paid by the borrower. The borrower was informed that since the borrower has failed to make payment of the amount due, TIDCL shall take over the possession of the hotel on 16.07.1998.
4. It is the case of the petitioners that the borrower approached TIDCL to have One Time Settlement (for short, OTS) on payment of an amount of Rs. 22,00,000/- (rupees twenty two lakhs) but TIDCL insisted that they were ready to have an OTS if an amount of Rs. 32,00,000/- (rupees thirty two lakhs) was paid which the borrower could not and, therefore, according to the petitioners, the TIDCL taken over possession and management of the hotel on 16.07.1998.
5. It is further alleged by the petitioners that the respondent-TIDCL after taking over possession of the hotel, most wrongly and illegally approached the revenue authority to record the property in the name of the respondent-TIDCL and knowing it the petitioner No. 1 submitted a written objection on 12.10.2006 (Annexure-P/11 to the writ petition) but in spite of objection the property was recorded in the name of the respondent-TIDCL in place of the borrower as the owner of the property.
6. It is alleged by the petitioners that TIDCL has wrongly and illegally occupied the property of the borrower which has been inherited by the petitioners and that the petitioners paid rent to the revenue authority but the borrower’s name was deleted from Khatian without any Deed of Transfer according to law. It is further alleged by the petitioners that TIDCL earning rent by leasing out the property to different tenants and collecting the rent from the tenants every month. The petitioners through RTI collected information from the office of the respondents and found that upto March, 2014 a total amount of Rs. 74,29,745/- was realized
