Hindustan Petroleum Corporation Ltd vs Bassein Catholic Co-operative Bank Ltd. & Ors

Ashok Menon, Chairperson

The appellant claimed to be a tenant seeking protection from being dispossessed from the secured assets under the provision u/s 17 (4-A) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act of 2002 ( “SARFAESI Act” for short).

The appellant challenges the order in Interlocutory Application No. 2186/2024 (I.A.) in Securitisation Application No. 81/2023 (S.A.) by the Debt Recovery Tribunal, Pune (D.R.T.) vide order dated 16. 09.2024 which was dismissed along with the another I.A. No. 2184/2024 which was filed by the person who was in possession of the premises as the dealer. The dealer does not come in appeal and it is only the appellant who claims to be a tenant who came in appeal. The 3rd respondent who is the borrower and the mortgager is the owner of the plot which was leased to the appellant on 01.04.2005 by the registered lease deed. The initial period of the lease was 15 years but there was a renewal option given in the lease deed for a further period of 15 years on certain conditions being fulfilled. The appellant would contend that the lease was originally for 30 years and that there was no requirement for renewal in between after the expiry of the 1st period of the 15 years. A mortgage was created after the execution of the lease deed in favour of the respondent bank by the 3rd respondent. The appellant claimed that the lease has already been extended and that the appellant continues in possession of the subject premises and therefore, cannot be abdicated in violation of the terms of the lease.

On considering the rival arguments, the D.R.T. found that the appellant does not have a prima facie case and no injunction could be granted to protect the possession. Hence, the I.A. of the appellant as also the I.A. filed by the dealer were dismissed. The appellant is aggrieved and hence, in appeal.

The appellant has to prima facie prove that the appellant is a valid tenant and complies with the requirement of section 17 (4-A) of the SARFAESI Act. The section 17 (4-A) specifically states that he cannot get any protection and the lease has been determined. The clause pertaining to the extension specifically states that the lessee had requested the lessor to grant them a lease of the demised premises for 15 years with a further renewal option of 15 years in the manner stated thereunder and the lessor for entitled to grant the lease of the said property in favour of the lessee on the terms and conditions which have been stated therein. There are terms regarding the enhancement of the rent which has to be complied with in case there is an extension of the lease after 15 years.

The Ld. Counsel appearing for the appellant vehemently argues that the lease has been extended and can be terminated only after 30 years but the plain reading of the document would indicate that there should be a specific renewal of the lease and the renewal option is to be exercised by the lessor, not by the lessee. What the parties to the contract have understood is made more explicit from the letter that has been addressed by the appellant to the lessor which indicates that they would wish to get an extension of the lease for a further period of 15 years which itself indicates that the what the party have understood is that lease for originally only for the period of the 15 years which was extendable and the option of the lessor for the further period of 15 years.

The decision of the Hon’ble Supreme Court in Harshad Govardhan Sondagar V/s International Assets Reconstruction Co. Ltd. (2014) 6 SSC 1, states that the tenant in sufferance is not entitled to any protection u/s 17 (4-A). The Ld. Counsel appearing for the appellant had relied upon the decision of the Supreme Court of India in M/s. Govind Impex V/s. Appropriate Authority, Income Tax 2011 CRI. L.J. (Supp) 20, wherein it is stated that the conjoint reading of all clauses of the lease agreement makes it clear that the appellant intended to lease the property for 15 years and therefore, the reading of the present lease deed also indicates that the parties had initially intended for grant a lease for the lease for the 30 years. There is a substantial difference in the fact of the case which is relied upon by the Ld. Counsel appearing for the appellant. As per the lease agreement therein, the lease was made extendable for a further period of 9 years after the initial period of 12 years expired and the option of the lessee but here it is the lessor who has been given the option to extend the period of lease and not the lessee.

The appellant is therefore, not entitled to get the lease extended without the permission of the mortgagee because the mortgage was already created during the interregnum and as required u/s 65 (A) of the Transfer of Property Act and renewal of lease was not possible without the sanctioned of the mortgagee. It is also relevant to note that the renewal of the lease if provided in the lease deed can only be by way of a further registered lease deed of renewal as held by the Hon’ble Supreme Court of India in Bharat Petroleum Corporation Limited V/s. Rama Chandrashekhar Vaidya & Anr. (2014) 1 SSC 657, where in a similar situation, it was held that the extension of a lease and the renewal of a lease are two different things and in case there is a renewal of a lease it can only be the way of a separately registered lease deed.

It is pertinent to note that in the letter which has been sent by the appellant for an extension of renewal of the lease, the 3rd respondent did not respond. It is also pertinent to note that the demand notice was issued u/s 13 (2) of the SARFAESI Act dated 12. 09.2019 and therefore, a further renewal of the lease could only have been with the permission and sanctioned of the mortgagee and there is an embargo u/s 13 (13) of the SARFEASI Act from renewal of the lease.

Under the circumstance, I find that there is no prima facie case made out by the appellant that permits them to continue with the possession of the premise as the lessee. No injunction can therefore be granted to protect their protection and the application for stay has no merits and is, therefore, dismissed.

List the matter on 18.02.2025 for a reply to the Appeal.