Shaktipunj Foundation vs Canara Bank And Ors.

S.N.H. Zaidi, J

This appeal impugns the order dated 11.10.2011 passed by the learned Presiding Officer of the DRT-II, Delhi in a fresh S.A. (Dy. No. 6031/2011), whereby the interim relief for restraining the respondents from taking further steps under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short, the SARFAESI Act) in respect of the property in question till the disposal of the S.A, was declined. Briefly stated, the relevant facts as emerged from the record, are that a credit facility up to the limit of Rs. 240 lacs was sanctioned by the respondent Bank to M/s. Finite Energy Limited through respondents 7 to 4. who had created equitable mortgage of Plot No. 161-A, Block B, Sushant Lok, Phase-I, Gurgaon (Haryana) by deposit of title deed and executed security documents on 18.11.2009. As the borrower could not repay the loan, the account was classified as Non Performing Asset (NPA) and a sum of Rs. 5,67,92,244.52 with further interest became due on it and the respondent Bank took recourse to the provisions of the SARFAESI Act and issued possession notice dated 26.8.2011 in respect of the secured asset under Section 13(4) of the said Act. The appellant herein filed application, under Section 17(1) of the SARFAESI Act for quashing/setting aside the said notice on the ground that it, being a registered charitable trust, is a lawful tenant of part of the ground floor and part of basement of the said property, which is a residential house and it is neither a borrower nor guarantor or mortgagor of the property in question. It was also alleged that though the property in question was in use of the applicant since November, 2006 as its office, yet it was taken on lease vide lease deed dated 31.3.2010 for five years on an annual rent of Rs. 6,000/-, excluding electricity and other charges, and was lawfully inducted as tenant by respondents 2 to 4 and it is regularly paying the rent without any default. It was also alleged that when the respondents 2 to 4 tried to interfere in its possession and peaceful enjoyment of the property in question, it had filed a suit for permanent injunction against them before the Civil Judge, Gurgaon, which had allowed its application under Order 39 Rules 1 and 2, CPC and restrained the defendants (respondents 2 to 4 herein), vide order dated 6.7.2011, from dispossessing the applicant from the property in question. It was also alleged that the respondent Bank wanted to dispossess it unlawfully on the basis of the possession notice in question. An interim relief against its dispossession, as mentioned above, was also made in the said application filed under Section 17(1) of the SARFAESI Act. The learned Presiding Officer of the Tribunal below, after hearing the appellant and the respondent Bank, vide order dated 11.10.2011, declined to grant any interim protection with the observation that no prima facie case in favour of the applicant was made out. Feeling aggrieved, the appellant has filed this appeal.

Mr. Sanjeev Bhandari, appearing on behalf of the appellant, submitted that the appellant is a lawful tenant and in possession of the property in question by virtue of the lease deed dated 31.3.2010 executed by respondents 2 to 4 in its favour and is paying rent to the landlords without any default, as is evident from the rent receipts. He also pointed out to the injunction order dated 6.7.2011 of the learned Civil Judge (Junior Division), Gurgaon passed in favour of the applicant in this regard. It has also been contended by him that the learned Presiding Officer of the Tribunal below did not properly appreciate the facts and circumstances of the case and had also failed to consider the settled legal position as has been held by the Supreme Court as well as various High Courts. His further contention is that during the subsistence of the tenancy, which will expire on 31.3.2015, the appellant cannot be dispossessed from the property in question without due process of law and the secured creditor (respondent Bank) is not authorized to evict it in the process of realisation of any dues from the borrower even if the property in question is mortgaged with it. It has also been contended that under Section 65A of the Transfer of Property Act, 1882 (for short, the T.P. Act), a mortgagor who is in lawful possession of the property is empowered to make lease of the same, which shall be binding on the mortgagee and the lease deed dated 31.3.2010 is in conformity with the said section.

Mr. Ashish, on the other hand, submitted that the appellant had filed the S.A. in collusion with respondents 2 to 4 only to frustrate the recovery of the public money on the false pretext of being a tenant of the property in question. He further contended that the lease deed dated 31.3.2010 (Annexure-C to the application under Section 17) showed that the property was taken for a period of five years, but the deed was not registered and was only attested by a Notary Public without there being any witness to its execution. According to him, the said lease deed is in violation of the mandatory requirement of registration under Section 107 of the T.P. Act, as the said section provides that the lease of immovable property for a term exceeding one year could be made only by a registered instrument. He further contended that Section 65A of the T.P. Act, does empower a mortgagor to make lease of the mortgaged property, but Clause (e) of Sub-section (2) of the said section also puts a condition that in the case of a building the duration of the lease, in no case, would exceed three years, whereas, according to the appellant's case, the alleged lease is for five years, which is in clear violation of the said clause and as such the appellant cannot be held to be a lawful tenant of the property in question. The respondent's Counsel also pointed out that the rent receipts filed in support of the alleged tenancy were highly doubtful and appeared to have been created for the purposes of this litigation as some of the receipts were in the name of Prabha Kiran and not in the name of the appellant and in some of the receipts the year of the date had been interpolated and made as '2010' in place of '2011' as originally written, because it appeared that those receipts had been prepared in 2011.

Mr. Sharma also contended that the connivance of the appellant with other respondents was quite clear as the defendants in the civil suit (respondents 2 to 4 herein) did not contest the said suit before the Civil Judge, (Junior Division), Gurgaon and did not deny any fact or circumstances of the plaint case, as is evident from the copy of the judgment (Annexure -E to the application under Section 17). He also submitted that as the respondent was not a party to that case, any order passed in that case, was not binding on the respondent who was taking the actions as were available to it under the SARFAESI Act.

The respondent's Counsel also pointed out that the appellant's contention that the property in question was being used as office of the appellant since November. 2006 was belied from the circumstance that the appellant, which is a registered trust, was created in 2007 as is evident from the trust deed dated 25.1.2007 (Annexure-A to the application under Section 17).

After having considered the submissions of the parties' Counsel and going through the record, I am of the considered view that the alleged tenancy of the appellant is not prima facie established from the record. There is no dispute that the property in question was mortgaged by respondents 2 to 4 with the respondent Bank. As per the alleged lease deed, the lease was created for a period of five years commencing from 1.4.2010. The lease is, therefore, violative of Clause (e) of Section 65A of the T.P. Act The non-registration of the alleged lease deed also comes in the way of lawful creation of lease in favour of the appellant as Section 107 of the T.P. Act mandates that the lease of immovable property for a term exceeding one year can only be made by a registered instrument.

In the case of Anthony v. K.C. Ittoop and Sons & Others, V (2000) SLT 627: AIR 2000 SC 3523, relied upon by Mr. Bhandari, the Hon'ble Apex Court, on the basis of facts and circumstances of that case, has observed that mere fact that an unregistered instrument came into existence would stand in the way of the Court to determine whether there was in fact a lease otherwise than through such deed. The Hon'ble Court pointed out that non-registration of document caused only two consequences, one that no lease exceeding one year was created, and second, that the instrument became useless so far as the creation of the lease is concerned. The Court further observed that nonetheless, the presumption that a lease not exceeding one year stood created by conduct of parties remain unrebutted. The facts and circumstances of this case are entirely different as, according to the appellant, the lease created on 31.3.2010 was for a period of 5 years. The said case, therefore, has no application to this case and the appellant cannot draw any support from this case.

The rent receipts filed by the appellant in support of its contention of payment of rent also do not inspire confidence and the interpolation/overwriting in the dates of receipts dated 10.5.2010 and 15.11.2010, which is apparent to the naked eye, make the said rent receipts, prime facie, doubtful.

The contention of Mr. Sharma that the Bank was not a party to the injunction suit before the Civil Judge, Gurgaon and, therefore, the order passed in that case does not apply to it, has force and acceptable.

In view of above discussion, the observation of the learned Tribunal below that no prima facie case, qua interim relief as claimed, is made out does not appear to be suffering with any infirmity and as such no interference is called for in it by this Tribunal. The appeal being devoid of any force is liable to be dismissed and is, accordingly, dismissed.

Before parting, it is made clear that the learned Tribunal below shall not be influenced by any of the observations made by this Tribunal in this order, while deciding the S.A. Copy of this order be furnished to the parties as per law and be also sent to the DRT concerned.