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Judgment
@JUDGMENT-JUDGMENT
Subrata Talukdar, J
Both the writ petitions ventilate a common point and, were therefore taken up for analogous consideration. The petitioners in both the writ petitions, i.e. WP 3949 (W) of 2019 (for short WP I) and WP 3954 (W) of 2019 (for short WP II) are Directors of a Private Limited Company in the name and style of M/s Nobile Ice Cream Company Pvt. Ltd. (for short the Company). The Company is the holder of the lease or, the Lessee of two Plots namely, Plot No. B-13/5 (CA) and Plot No. B-13/8 (CA) (hereinafter referred to as Plot No.1 and Plot No.2 or Plot Nos. 1 & 2 respectively). The Plots were handed over to the original Lessee by the Respondents/the Superior Lessor being the Urban Development Department (for short the UDD), Government of West Bengal, which is effectively represented in both WP I and WP II by the Respondent No. 4 (R4) being the Estate Manager, UDD, Government of West Bengal.
The case in brief made out in the two writ petitions by Mr. Raj Dip Ray, Learned Counsel appearing for the petitioners, is as follows. That the petitioners acting for the Company had earlier mortgaged Plot No. 1 with the State Bank of India (for short SBI) after obtaining prior permission as per the Terms of the Lease with the UDD/the Superior Lessor represented by R4. Subsequently, the mortgage of Plot No. 1 in favour of SBI was redeemed by the petitioners after the loan was repaid in full.
Thereafter, the petitioners for the purpose of expansion of their ice cream business, approached the Proforma Respondent No.1 (for short PR 1) Hinduja Leyland Finance Ltd. for sanction of a loan of Rs. 2 crores upon pledging/mortgaging both Plot Nos. 1 & 2 in favour of PR 1. It is submitted by Learned Counsel for the petitioners that although PR 1 has released the first tranche of the loan amount in their favour, the rest of the loan amount is being withheld by PR 1 since the UDD acting through R4 is yet to give its consent to the mortgage. Therefore, qua Plot No. 1 in WP I and qua Plot No. 2 in WP II the petitioners, inter alia, seek a direction upon UDD through R4 for grant of consent/permission to the petitioners permitting mortgaging of the two Plots in favour of PR 1. It is submitted that due to the non-release of the second tranche of the loan, the petitioners are suffering financial crisis in their business.
Appearing for the Respondents/UDD, Mr. Swapan Kumar Dutta, Learned Senior Counsel, submits that the permission was rightly withheld by R4 since the permission sought was post facto to the loan agreement as well as its sanction. It is submitted that the petitioners finalised the loan agreement with PR 1 in October, 2018. The Sanction Letter of PR 1 is dated 13th October, 2018. It is pointed out that the petitioners thereafter applied to R4 for obtaining permission on 31st December, 2018.
It is further submitted that such post facto application after the first tranche of the loan has been disbursed is violative of Clause 7 of the Lease Deed dated 5th August, 2005 between the Superior Lessor/the UDD and the Company. It is argued that Clause 7 prohibits the creation of any mortgage or charge of leasehold interest of the Lessee inclusive of any construction over the leasehold land without obtaining the previous consent in writing of the Government. It is submitted that it is an admitted position that the application for permission to mortgage was made before R4 on 31st December, 2018, whereas the Sanction Letter is a full two months and above prior thereto dated 13th October, 2018. It is argued that the petitioners having earlier dealt with SBI on a similar fact situation covering the mortgage of Plot No.1, must be presumed to have knowledge of the formalities involved while seeking permission to mortgage.
Having heard the parties and considering the materials placed, this Court is of the view that the prohibition not to mortgage vide Clause 7 of the 2005 Lease Deed requires to be cited in full and reads as follows:-
"7) Not to mortgage or charge the leasehold interest of the lessee and the building to be erected thereon without the previous consent in writing of the Government."
A literal and strict construction of Clause 7 (supra) would lead to the conclusion that without a previous consent in writing of the Government, no mortgage or charge on leasehold interest can be created by the Lessee. However, Clause 7 is significantly silent on any consequence which may befall the Lessee in the event, apropo the present fact situation, a mortgage of the leasehold interest is created without prior consent/permission in writing.
It must be noted at this juncture that it is not the case made out for R4 that no mortgage at all could be created under the terms of the Lease Deed or, the commercial leasehold interest of the petitioners was otherwise incapable of being mortgaged or, the petitioners have acted in any manner in violation of the terms of the Lease Deed or, have defaulted in the payment of rent.
Quite to the contrary, R4 acted on the application of the petitioners/the Lessees dated 31st December, 2018 by causing an inspection of the Plots on 21st January, 2019, i.e. a step towards processing the application for mortgage of the petitioners till the pre facto Sanction Letter surfaced.
Now, it would be useful for this discussion to refer to Clause 6 of the Lease Deed which prohibits Lessees from assigning, under letting or parting with possession of the demised premises or any portion thereof without the prior permission of the Lessor. Clause 6 however carves out an Exception which, inter alia, provides that consent will not be unreasonably withheld in case (of assignment, under letting or parting) being in favour of a respectable and responsible person. Clause 6 reads as follows:-
"6) Not to assign underlet or part with the possession of the demised premises or any part thereon without first obtaining the written consent of the lessor such consent however not be unreasonably withheld in the case of a respectable and responsible person."
The law on the implications of obtaining 'permission' as distinguished from 'approval' has been discussed in 1995 Supp (3) SCC 456 at Paragraph 6 as follows:-
"6. This Court in Life Insurance Corpn. of India v. Escorts Ltd., considering the distinction between "special permission" and "general permission", "previous approval" or "prior approval" in para 63 held that: "We are conscious that the word 'prior' or 'previous' may be implied if the contextual situation or the object and design of the legislation demands it, we find no such compelling circumstances justifying reading any such implication into Section 29(1) of the Act." Ordinarily, the difference between approval and permission is that in the first case the action holds good until it is disapproved, while in the other case it does not become effective until permission is obtained. But permission subsequently granted may validate the previous Act. As to the word 'approval' in Section 33(2)(b) of the Industrial Disputes Act, it was stated in Lord Krishna Textiles Mills Ltd. v. Workmen, that the Management need not obtain the previous consent before taking any action. The requirement that the Management must obtain approval was distinguished from the requirement that it must obtain permission, of which mention is made in Section 33(1)."
Noticing the declaration of law in 1995 Supp (3) SCC 456 (supra) the Hon'ble Apex Court in its judgement reported in 2003 (4) SCC 239 held at Paragraphs 40 and 42 as follows:-
"40. When an approval is required, an action holds good. Only if it is disapproved it loses its force. Only when a permission is required, the decision does not become effective till permission is obtained. (See U.P. Avas Evam Vikas Parishad v. Friends Coop. Housing Society Ltd.) In the instant case both the aforementioned requirements have been fulfilled.
In any view of the matter, even in a case where the initial action is illegal, the same can be ratified by a body competent therefor. This aspect of the matter has not been considered by the High Court at all. In Parmeshwari Prasad Gupta v. Union of India this Court held: (SCC pp. 546-47, para 14) "Even if it be assumed that the telegram and the letter terminating the services of the appellant by the Chairman was in pursuance to the invalid resolution of the Board of Directors passed on 16-12-1953 to terminate his services, it would not follow that the action of the Chairman could not be ratified in a regularly convened meeting of the Board of Directors. The point is that even assuming that the Chairman was not legally authorized to terminate the services of the appellant, he was acting on behalf of the Company in doing so, because, he purported to act in pursuance of the invalid resolution. Therefore, it was open to a regularly constituted meeting of the Board of Directors to ratify that action which, though unauthorized, was done on behalf of the Company. Ratification would always relate back to the date of the act ratified and so it must be held that the services of the appellant were validly terminated on 17-12-1953."
[See also Marathwada University v. Seshrao Balwant Rao Chavan (SCC para 28), Babu Verghese v. Bar Council of Kerala (SCC para 35) and Barnard v. National Dock Labour Board]"
In the backdrop of the above discussion, having regard to the particular facts of this case, this Court is of the view that in the event post facto processing of the application of the petitioners for permission to mortgage is directed, the respondents, including R4, would not suffer a prejudice which is irreparable. To the contrary, the prejudice to the petitioners may be irreversible to their Rights to Life and to pursue a Business of their choice in the event the processing of the application is denied.
It is reiterated that it is not the case of the respondents/R4 that the petitioners acted with mala fide intent while applying for permission to mortgage or, defaulted in payment of rent or, in any other way violated the terms of the Lease Deed. As holders of commercial Plot Nos. 1 and 2 (supra), the petitioners were well within their rights under the Lease Deed to seek permission to mortgage for a respectable and responsible cause (see Clause 6 (supra)). Since no further or other penal clause attaches to Clause 7 (supra), the time lapse in seeking permission to mortgage requires to be beneficially construed without acting as a precedent.
It is accordingly directed that the respondents/R4 shall process the application of the petitioners for permission to mortgage Plot Nos. 1 and 2 in favour of PR1 subject to the petitioners fulfilling all other formalities not later than a period of four weeks from the date of communication of this order.
W.P. No. 3949 (W) of 2019 and W.P. No. 3954 (W) of 2019 stand thus disposed of. There will be no order as to costs.
Parties shall be entitled to act on the basis of a server copy of this Judgement and Order placed on the official website of the Court.
Let urgent Xerox certified photocopies of this judgment, if applied for, be given to the parties upon compliance of the requisite formalities.