Yum Restaurants (India) Pvt. Ltd vs Bank of India & Ors

Brijesh Sethi, Chairperson

This is an Appeal filed by the appellant i.e. Yum Restaurants (India) Private Limited under Section 18 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 against the Impugned Order dated 29.12.2021 passed by the Presiding Officer, Debts Recovery Tribunal-II, Delhi in S.A. 36 / 2017.

It is submitted that Appellant is a multinational business entity operating several restaurants such as KFC, Pizza Hut, Taco Bell across India and is carrying out the business of running a restaurant at the Leased Premises under the name of KFC.

It is further submitted that the Respondent No. 2 had approached the Respondent No. 1 Bank as the consortium leader to avail various credit facilities to the tune of Rs. 62.95 Crores (Rupees Sixty Two Crores Ninety Five Lakhs only) against first Pari Pasu charge by way of hypothecation of entire current assets, stock/books debts and also Pari Pasu charge on other fixed / immovable assets of the company.

It is further submitted that the Respondents No. 3, 4 and 5 in their personal capacity and Respondents No. 6 and 7 in their corporate capacity stood as guarantors for the credit facilities granted to the aforementioned Borrower. Besides other securities, the Respondent No. 7 offered their property / asset as security for the repayment of the said credit facilities. The said property / asset included the property bearing address „Plot No. 230, Service Centre, Sector 9, Dwarka, Delhi‟ (“Leased Premises”), which is the subject matter of the present Petition.

It is further submitted that the Appellant had approached the DRT by way of the SA No. 36 / 2017 titled “Yum! Restaurant (India) Pvt. Ltd. Vs. Bank of India & Ore.” impugning/ assailing the purported action(s) and measure(s) that had been initiated by the Respondent No. I Bank by allegedly invoking the provisions of The Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, as amended (“The Securitization Act”), including but not limited to the notice issued under Section 13(2) of the Securitization Act dated 17.10.2014 to Respondent No. 7 being the Lessor of the Leased Premises as well as the measures taken under Section 13(4) of the Securitization Act that had put the Appellant herein under the constant threat of eviction from the Leased Premises as the same are in complete contravention of the provisions of the Securitization Act and the ruling of the Apex Court.

It is further submitted that the Appellant herein was served the notice of petition filed by the Respondent No. 1 Bank through the Ld. CMM court, for taking possession of the Leased Premises. The Respondent No. l Bank had issued a No-Objection Certificate to the Respondent No. 7 / Lessor of the Leased Premises pursuant to which the Appellant entered into the Memorandum of Understanding (“MOU”) dated 29.03.2013 and acquired the valid legal interest in the aforesaid Leased Premises, which is much prior to the issuance of the Notice under Section 13(2) of the Securitization Act. Consequently, the Appellant had taken the possession of the Leased Premises vide the Letter of Possession for fit-outs dated 25.07.2013. Further, pursuant to the aforesaid MOU, the Appellant executed the Lease Deed for the Leased Premises with the Respondent No. 7 / Lessor, vide registered lease deed dated 27.07.2014, registered vide Document No. 10236, Additional Book No. 1, Volume No. 7855, Pages 71 to 102 with the Sub-Registrar-IX, Kapashera, Delhi. It is pertinent to note that the said execution of the Lease Deed was prior to the issuance of notice under Section 13(2) of the Securitization Act by the Respondent No.l Bank. It is therefore clearly evident that the Appellant had taken the legal and valid possession of the Leased Premises on 25.07.2013 itself and the documents executed thereafter were only a manifestation of the same.

It is further submitted that the Appellant is carrying out the business of running a restaurant at the Leased Premises under the name of KFC, and for the said purpose the Appellant has invested a huge sum of money for the purpose of establishment and running of the restaurant. Further, the Appellant has employed close to 40 (forty) employees working in the Leased Premises.

It is further submitted that at the time of entering into the Lease Agreement, the Director of the Respondent No.7 / Lessor had assured the Appellant / Lessee that the Leased Premises is free from all encumbrances apart from the fact that the Respondent No. 1 Bank has issued an NOC for the same to the Respondent No. 7. Based on such assurance, the Appellant entered into the lease arrangement for the Leased Premises.

It is further submitted that the Respondent No. 1 Bank issued the statutory notice under Section 13(2) of the Securitization Act on 17.10.2014, which is clearly post the date of the Lease Agreement dated 24.07.2013. Thus, it was contended by the Appellant before the DRT that the issuance of the said notice is not only de-hors the Securitization Act apart from being malafide, arbitrary and illegal but is also a malafide attempt to cover up the act on part of the Respondent No. 1 Bank to have issued the NOC vis-a-vis the Leased Premises.

It is further submitted that the mortgage on which the Respondent No. 1 Bank had filed their Application before the Ld. CMM is that of equitable mortgage for which no deemed notice could have been issued or be taken notice of by the Appellant and along with the fact that the Leased Premises has a running restaurant shows complete lack of due diligence and a huge signage has been put on the premises since April, 2014. It is indeed impossible for the Respondent No. 1 Bank to have ignored this signage that too when the Respondent Bank is supposed to inspect the mortgaged premises every year at the time of renewal of the documents. It is pertinent to mention that the bank officials have to give a Certificate of having inspected all the mortgaged assets every year. In this case also all these procedures have been duly followed by the Respondent No. 1.Hence, the lease was in complete knowledge of the Respondent No. 1 Bank that is prior to the issuance of notice under Section 13(2) of the Securitization Act.

It is further submitted that the Lease Agreement is squarely legal and covered under the corners and ambit of the Transfer of Property Act, 1881 as the Lease is not violative of any provisions and is complete consonance of the parameters of the Transfer of Property Act as the Lessor / Mortgagor entered into the .Lease with the Appellant with the knowledge of the Mortgagee / Respondent No. 1Bank, for which a due NOC was issued.

It is further submitted thatas required under Section III of the Transfer of Property Act, 1881, the Lease Agreement stands undetermined for any breach or expiry of the terms of the agreement, thus, as submitted, the same cannot be determined for proceedings arising under the Securitization Act.

It is further submitted that the Appellant without prejudice to the submissions above, submits that the applying the principles of natural justice and equity, the pool of other properties that have been secured by the Respondent No. 1 Bank can be attached to recover the outstanding dues from the borrower. It is further submitted that a mortgagee can exercise their rights of sale of mortgaged assets without laying their hands on legally recognized tenancy rights and the provisions of the Securitization Act cannot be availed as a tool to disposes a person in legal occupancy of a mortgaged property.

It is further submitted that the acts of the Respondent No. 1 Bank to evict and dispossess the Appellant from the Leased Premises was wholly inconsistent with the directions passed in the Stay Order, the provisions of the Securitization Act as well asother statutory rights under other applicable laws. It is further submitted that the Respondent No. 1 Bank is fully aware that the Appellant herein cannot be evicted from the Leased Premises in view of the rights of the Appellant as the Lessee of the premises in question, thus the Respondent No. 1 Bank availed the provisions of the Securitization Act as a tool to arm twist the Appellant to be evicted from the Leased Premises.

It is further submitted that the acts of the Respondent No. 1 Bank under the garb of initiating the proceedings under the Securitization Act are prima facie malafide and unreasonable apart from being completely in contravention of the principles of the Securitization Act. The Appellant was constrained to approach the DRT under Section 17 of the Securitization Act, along with an Application for Stay of the Order of the Ld. CMM, Dwarka dated 22.12.2016. The Respondent No. l Bank filed its response to the Application under Section 17. The Respondent No. 7, i.e. the owner / Lessor of the Leased Premises also filed its response to the Application under Section 17 wherein it has been admitted by the said Respondent that the lease of theLeased Premises in favour of the Appellant was well withinthe knowledge of the Respondent No. 1 Bank for which they had issued appropriate NOC.

It is further submitted that when the Stay Application was taken up by the DRT on 31.03.2017, the Tribunal passed a well-balanced Stay Order whereby the Respondent No. 1 Bank was permitted to exercise the right to sell the Leased Property, while the tenancy rights of the Appellants were still protected. Vide the said Stay Order, the Parties were directed that the monthly rental amount was to be deposited by the Appellant with the Respondent No. 1 Bank and the said Respondent was also given the liberty to sell the secured property „with symbolic possession and there is no need for the consent of the purchaser for attornment of the tenancy. The Appellant would be a lessee even under the auction purchaser of the premises in question who participates in the auction.

It is further submitted that the said Order dated 31.03.2017 was not challenged by the Respondent No. 1 Bank till for about four and a half years, when on 31.07.2021, the said Respondent filed an Application praying for the vacation of the Stay Order primarily on the fallacious ground that there existed alleged defaults in the payment of rents by the Appellant. This delay of nearly four and a half years in challenging the Order dated 31. 03.2017  is  a  clear  testimony  to  the  said  Order  dated 3. 1.03.2017 being a well- balanced order which while protecting the Appellant from being evicted did not cause any prejudice to the interest of Respondent No. 1 since it was given the liberty to sell the property with symbolic possession.In the meantime, considering the fact that the Appellant was not in the possession of the NOC, which was vital for the proceedings, the Appellant moved an Application being IA No. 2770 of 2019 in SA No. 36 / 2017 before the DRT on 10.12.2019 seeking production of documents by the Respondent No. 1 Bank. The documents referred to therein was the complete file / documents relating to the Leased Property, including the NOC provided by the Respondent No. 1 Bank for the leasing of the Lease Premises.

It is further submitted that in spite of several opportunities being provided by the Tribunal below, the Respondent No. 1 Bank failed to file its response to the said Application for production of documents. Instead, on 31.07.2021, the Respondent No. 1 Bank filed an Application for vacation of the Stay Order dated 31. 03.2017 being IA No. 271 of 2021 in SA No. 36 / 2017. This Application was moved primarily on the grounds of alleged non-payment of rent by the Appellant and that no NOC was provided by the Bank for the said Lease. This Application was opposed by the Appellant by way of its Reply dated 20.08.2021 wherein the contention of non- payment of rent was vehemently denied by the Appellant by providing details of the rent being paid by the Appellant to the Respondent No. 1 Bank. In the said reply, the Appellant also raised the ground that on one hand the Respondent Bank alleges non-production of the NOC by the Appellant and on the other hand the Respondent Bank refuses to file its response to the Application for production of documents as filed by the Appellant. It is only now when the Appellant had raised such objections, did the Respondent No. 1 Bank decide to file its response to the Application for production of document wherein it denied having possession of such NOC. Perusal of the above clearly shows that the Respondent No. 1 Bank is trying to take advantage of its own wrong, i.e. on one hand, it refuses to disclose the documents and on the other hand, takes the plea of the Appellant not being in possession of the said NOC. Thereafter, during the hearing on the aforesaid SA along with the IAs on 29.12.2021, the Tribunal, by the Impugned Order, vacated the stay granted to the Appellant vide Order dated 31.03.2017, on the cryptic ground that there is a fraud being played by the Appellant as it was not being able to produce the NOC for the Lease. Accordingly, the Respondent No. 1 Bank has been allowed to proceed further under the Securitization Act. The DRT has come to the finding that the Appellant has played a fraud merely on the basis of the Appellant‟s submission that it was not in the possession of the NOC and had in fact filed an application way back in 2019 asking the Respondent No. 1 Bank to produce the same. It is beyond comprehension as to how this submission could have led the DRT to not only set aside the Order dated 31.03.2017 despite the Appellant having scrupulously abided by the conditions imposed upon it by the said Order but return a finding of fraud against the Appellant. It is submitted that the Appellant has never claimed to be in possession of the NOC, so the question of misleading or playing fraud upon the DRT does not arise. As mentioned above, in fact the Appellant has filed an application seeking directions to the Respondent No. 1 Bank to produce the entire records including the NOC. Shockingly, while the said Application is yet to be decided, the DRT has allowed the Application filed by the Respondent loo. 1 for vacation of the Stay Order dated 31.03.2017.

It is further submitted that on 13.04.2022, the Possession notice dated 13.04.2022 (“Impugned Notice”) was issued by the Court appointed Receiver, Sh. Dinesh Negi, Advocate pursuant to the Order dated 08.04.2022 as passed by the Ld. CMM, South West District, Dwarka, New Delhi, Sh. Vinod Kumar Meena, whereby the Appellant has been directed to hand over the possession of the Leased Premises by 07.05.2022. Pertinently, such Impugned Notice which has been issued acting on the strength of the Impugned Order, is also bad in law as the said eviction is bad in law and equity.

It is further submitted that the Stay Order clearly provides that the said Order can be vacated only on the ground of non-payment of rent by the Appellant. However, it is submitted that the Tribunal went beyond the mandate and vacated the stay on the ground of non- production of the NOC by the Appellant. It is submitted that by passing the Impugned Order and allowing the Respondent No. 1 to take possession of the Leased Premises, the Tribunal has essentially decided the Appellant‟s Application u/s 17 and has made the said Application infructuous. The Appellant is not in the possession of the NOC and had accordingly moved an Application before the DRT praying for production of documents by the Respondent No.1 Bank. The Appellant, in all its bona fides, and as directed by the DRT in its Stay Order dated 31.03.2017, has been regularly depositing the rent for the Leased Premises with the Respondent No. 1 Bank. Considering the same, it is submitted that the DRT had no occasion to vacate the stay granted, when the Appellant was not defaulting in the paying of the monthly rental amount. The issue of NOC and the right of the Appellant to continue with the tenancy was to be decided at the final stage of the proceedings and by the passing of the Impugned Order allowing the Respondent No. 1 to evict the Appellant, the Appellant‟s Application u/s 17 of the Securitization Act has been rendered infructuous.

It is further submitted that the Hon‟b1e DRT has passed the Impugned Order without considering the Application filed by the Appellant for the production of the complete file / documents relating to the Leased Property by the Respondent No. 1. The Ld. DRT has further failed to take note of the fact that the reply to the Application for production of documents was filed only on 23.08.2021 after a period of almost one year eight months from the date of filing of the Application by the Appellant, and that also after Appellant raised this point in the reply to the Application for vacation of Stay. It is reiterated that the DRT has failed to consider the said Application, adjudication of which was necessary to come out with a finding on the NOC. Vide the Impugned Order, the DRT has passed a final order in respect of the NOC, without affording the Appellant an opportunity to advance arguments on merits, and also without considering the merits of the matter.

It is further submitted that no prejudice will be caused if the Impugned Order is quashed / stayed. The Respondent No. 1 Bank will continue to get the rent while still having the right to sell the property. It is further submitted that the Appellant is being highly prejudiced by the operation of the Impugned Order and on the ground of equity itself, the Impugned Order is bad. It is further submitted that the right of the Appellant as a Lessee and to continue with the enjoyment of the Leased Premises is protected by a registered Lease Deed. A Three-Judge Bench of the Supreme Court, in the judgment of Bajarang Shyamsunder Agarwal v. Central Bank of India & Anr. [(2019) 9 SCC 94] has held that if a tenancy under law comes into existence after the creation of a mortgage but prior to issuance of a notice under Section 13(2) of the Securitization Act, it has to satisfy the conditions of Section 65A of the Transfer of Property Act, 1882. If a tenant claims that he is entitled to possession of a Secured Asset for a term of more than a year, it has to be supported by the execution of a registered instrument. In the said decision of the Hon‟ble Supreme Court, it was clarified that in the absence of a registered instrument, if the tenant only relies upon an unregistered instrument or an oral agreement accompanied by delivery of possession, the tenant is not entitled to possession of the securedasset for more than the period prescribed under the provisions of the Transfer of Property Act.

It is further submitted that even in the present case, the Lease was created after the creation of the mortgages. The Appellant and the Respondent No. 7 entered into a registered Lease Deed on 27.08.2014 which was placed on record before the DRT. However, in spite of the same being on record, and the same being pointed out to the DRT, the Tribunal ignored the said document and went on to vacate the Stay Order thereby paving the path for the Respondent No. l to evict the Appellant from the Leased Premises, which, in the opinion of the Appellant, is against the law laid down by the Three-Judge Bench of the Hon‟ble Apex Court.

It is further submitted the Impugned Order is non-speaking Order and remarks and findings made therein are without any basis and material on record, without noticing that every month rent  was  being  paid  in  compliance  of  the  Stay  Order  dated 31.03.2017 as passed by Ld. DRT-II, Delhi.  The Stay Order dated 31.03.2017 is a detailed and speaking order.

It is further submitted that the DRT has failed to consider the conduct of the Respondent No. 1. If, as the Hon'b1e DRT has held that the Appellant has got the Order dated 31.03.2017, by playing fraud on the Tribunal, the Respondent No. l would not have waited for a period of around four and a half years to seek vacation thereof, that too primarily on the erroneous ground of the Appellant's having defaulted in the payment of rent to the Respondent No. 1.Respondent No. 1 did not file any appeal against the Stay Order dated 31.03.2017 and thus, the said Order has become final and could therefore only be set aside or vacated on account of any default on the condition of paying the rent, which was the only condition set by the Tribunal for the vacation of the said Order. In the absence of a finding that the Appellant has violated the aforesaid condition imposed, the DRT could not have vacated the Order dated 31.03.2017.

It is further submitted that vide the Impugned Order, the DRT has come to the conclusion that the NOC is in the possession of the Appellant which it is unable to produce. The DRT has reached the conclusion without even deciding the Application filed by the Appellant praying for production of documents by the Respondent No. 1. Perusal of the above clearly shows that the Respondent No.1 Bank is trying to take advantage of its own wrong, i.e. on one hand, it refuses to disclose the documents and on the other hand, takes the plea of the Appellant not being in possession of the said NOC. It is submitted that by arriving at the said conclusion, albeit erroneously, the DRT has essentially given the final Order and has made the Securitization Application of the Appellant infructuous.

It is further submitted that the DRT had failed to consider the fact that the reply to the Application for production of documents was filed only on 23.08.2021, i.e. after a period of almost one year eight months from the date of filing of the Application by the Appellant, and that also after Appellant raised this point in the reply to the Application for vacation of Stay. It is reiterated that the DRT has failed to consider the said Application, adjudication for which was necessary to come out with any finding on the NOC. Vide the Impugned Order, the DRT has passed a final order in respect of the NOC, without affording the Appellant an opportunity to advance arguments on merits, and also without considering the merits of the matter.

It  is  further  submitted  that  the  Impugned  Notice  dated 13. 04.2022, whereby the Appellant has been directed to evict from the Leased Premises by 07.05.2022 is also bad in law and illegal as the same derives its authority from the Impugned Order. The Impugned Notice dated 13.04.2022 is bad in law in light of the decision of the Hon'ble Supreme Court of India in Harshad Govardhan Sondagar v. International Assets Reconstruction-2014 (5) CTC 546 wherein the Hon'ble Apex Court has held that if the Lessee resists the attempt of the secured creditor to take possession, the authorized officer cannot evict the lessee by force but has to file an application before the Chief Metropolitan Magistrate  or  the  District  Magistrate  under  Section  14  of  the SARFAESI Act and state in the affidavit accompanying the application, the name and address of the person claiming to be the lessee. The Hon'ble Court further held that when such an application is filed, the Chief Metropolitan Magistrate or the District Magistrate will have to give a notice and give an opportunity of hearing to the person claiming to be the lessee as well as to the secured creditor, consistent with the principles of natural justice, and then take a decision. It is submitted that in the present case, no such notice was received by the Appellant herein and as a consequence, no opportunity was granted to the Appellant to be heard before the Ld. CMM while passing its Order dated 08.04.2022.

Ld. counsel for the appellant has prayed for the following relief:-

i) Set aside the Impugned Order dated 29.12.2021 passed by the Debt Recovery Tribunal in the Application bearing OA No. 36/2017, as being wrong, illegal, incorrect and untenable in law;

ii) Consequently all further action(s)/ measures taken and/or cause to be taken by the Respondent No. 1 Bank pursuant to Impugned Order dated 29.12.2021, be also set aside.

iii) Award the cost of the present proceedings in favour of the Appellant and against the Respondents herein; and

iv) Pass any other or further order(s), which this Hon‟ble Tribunal may deem fit and proper in the facts and circumstances of the present case and in the interest of justice.

Ld. Counsel for the appellant has also filed written submissions more or less on the same line as stated in the appeal and has relied upon the following case law in support of his contentions:-

Padam Singhee v. Gas and Energy Ltd., 2018 SCC OnLine Del 13386;

Omar Salay Mohd. Sait v. CIT, AIR 1959 SC 1238: (1959) 37 ITR 151;

Udhavdas Kewalram v. CIT, (1967) 66 ITR 462;

State of Rajasthan v. Rajendra Prasad Jain, (2008) 15 SCC 711;

Bharat Barrel and Drum Mfg. Co. Ltd.& Anr. v. ESI Corpn., (1971) 2 SCC 860.

Submissions made by the Ld. counsel for the Respondent Bank.

Ld. counsel for the respondent has submitted that the applicant had not approached this Appellate Tribunal with clean hands and have filed the concerned MA with the sole evil intent to delay the recovery proceedings initiated by the Respondent Bank. Hence, the present misc. appeal of the applicant is not maintainable and liable to be dismissed.

It is further submitted that the applicant in the MA has contended to be a tenant in one Portion of the mortgaged property i.e. ground and first floor of the property mortgaged by virtue of lease deed dated 29/08/2014, however, it is pertinent to mention here that the said agreement is executed totally in contravention to the provisions as so enshrined under section 65A of Transfer of Property Act.

It is further submitted that the said property was mortgaged by the owner of the property with the respondent no. 1 bank on 09/04/2010 in the account of M/s Bansal diamonds private limited, which eventually defaulted in its repayment and ran into NPA on 30/03/2014 and a total outstanding of more that Rs. 500 crores approx.(as of today) is involved which is still pending recovery and for which OA no. 248/2016 has already been filed by the respondent bank which is titled as BANK OF INDIA VS BANSAL DIAMONDS PVT. LTD. AND ORS. before the Tribunal-II seeking recovery of Rs.313,91,41,957.86 along with interest.

It is further submitted that the appellant herein is contending that he has entered into lease dated 27/08/2014 with respondent no. 7 only on the basis of alleged NOC which was issued by the respondent no. 1 bank in this regard and in favour of respondent no. 7. However, both respondent no. 7 as well as appellate have vehemently failed to show on record and have always failed to produce before the Tribunal the said alleged NOC which further clarifies that no such alleged NOC was ever issued.

It is further submitted that the appellant is not in possession of the alleged NOC (dated:- unknown) which was alleged to have been provided to respondent no. 7 i.e. N/s A.S. Technobuild Pvt. Ltd. and have also obtained favourable orders from the Tribunal by filing SA 36/17 before DRT- II, Delhi.

It is further submitted that leaseagreement was executed in the year 2014, whereas, the loan documents by the borrowers and guarantors were executed by Respondent No. 1 on 08/06/2006 and the said property was mortgaged by the Borrowers and the guarantors way back on 09/04/2010 in favour of the respondent bank which was again assented by them on 11/09/2013 which clearly means that the right, if any, created in favour of the applicant is subsequent to the rights created in favour of the respondent bank and, therefore, the applicant herein is not entitled to any relief on the bases of the said illegal lease agreement. Further, it is a well laid/settled law that any subsequent charge/right created in favour of any third party shall be subject to the rights of the preceding charge holder i.e. respondent bank herein.

It is next submitted that since the lease was entered into between the parties without the permission of the Respondent No. 1 Bank, therefore the present MA is not maintainable and is liable to be dismissed.

Ld. Counsel for the respondentin support of his submissionshas also relied upon the following case law:-

I.  Welcome  Hotel  and  others  v.  State  of Andhra Pradesh and others etc. AIR 1983 SC 1015;

S.P. Chengalvaraya Naidu (dead) by L.Rs. v. Jagannath (dead) by L.Rs. and Anr JT 1993 (6) SC 331;

K.D. Sharma v. Steel Authority of India Ltd. and others (2008) 12 SCC 481;

4.G. Jayashree and others v. Bhagwandas S. Patel and others (2009) 3 SCC 141;

5.Oswal Fats And Oils Ltd vs Addl.Commnr.,Bareilly Division. on [2010] 4 SCC728;

6.Pottakalathil Ramakrishnan v. Thahsildar Trur & Ors. [WA NO. 1513/2020];

7.Arunima Baruah v. Union of India [(2007) 6 SCC 120];

8.Prestige Lights Ltd., v. State Bank of India [(2007) 8 SCC 449];

9.Dalip Singh v State of U.P.& Ors. [(2010) 2 SCC 114];

10.Amar Singh v Union of India and others, [(2011) 7 SCC 69];

11.Kishore Samrite v. State of U.P. & Others [(2013) 2 SCC 398];

12.Hari  Narain  v.  Badri Das,  AIR  1963  SC 1558,

It is further submitted by Ld. Counsel for the respondentthat from various clauses as elucidated in the terms of the lease, it is quite clear that the present lease has been executed in total contravention to the provisions of section 65A of Transfer of Property Act, 1882 in which the legislature have enshrined the term for which the said lease should be executed.

It is further submitted that after taking into consideration of the facts of the case in hand, it can clearly be held that the said lease has been executed in violation of section 65A of TPA as the lease dated 27/08/2014 has been executed for a period of 12 years without taking any permission from the respondent bank.

It is further submitted that the present applicant has approached this Tribunal with sour hands and it is, therefore, not entitled to any relief as prayed for in the present case as the Hon‟ble Apex Court has clearly held that the party seeking relief should approach the Court with Clean hands.

It is further submitted that merely on the basis of averment that appellant or respondent no. 7 has NOC,appellants should not be granted any relief by this Tribunal and the present misc. appeal be, therefore, dismissed with cost.

Findings:

I have heard the Ld. counsel for the parties and gone through the record carefully and perused the impugned Order 29. 12.2021Passed by the DRT-II, Delhi which runs as follows:-

“29.12.2021

Present: Shri Abhishek Kisku, counsel for the applicant.

Shri Sahil Ralli, counsel for the respondent bank.

Due to Covid 19 situation the matter is taken through VC.

In this matter, applicant is stated to be holding the lease from 2014 for 12 years for running a restaurant. It is submitted that lease was entered on the basis of NOC issued by the bank, which is opposed by the Counsel for the respondent bank.

A straight forward question put to the applicant, if he will be producing the NOC, he submits that he moved an application for directing the bank to produce the NOC as they believe that NOC is lying with the respondent bank.

This appears a beautiful gambit and this Tribunal cannot be a part fraud played by the applicant. Let respondent bank proceed further under the Securitisation Act. The stay granted in this matter stands vacated.

Matter be listed on 10.03.2022 before Registrar for completion of pleadings. The parties may download the order from the official web-site which will be treated as a true copy as due to COVID 19 & staff constraints, the certified copies cannot be issued as of now till further orders.”

In the above order, the Ld. PO has observed that appellant is holding the lease from the year 2014 for a period of 12 years for running a restaurant and it is the case of the appellant that it had entered into the lease on the basis of an NOC issued by the Bank. In such circumstances, a question was put by Ld. PO to the Ld. Counsel for the appellant to the effect whether he can produce the NOC? The appellant had, however, submitted that it has already filed an application for issuing directions to the Bank to produce the NOC as it believed that NOC was lying with the Bank. The Ld. PO has, thereafter, observed that he cannot be party to a fraud being played by the appellant and, thus, allowed the respondent bank to proceed under the Securitization Act and the stay granted by the DRT was vacated.

Ld. counsel for the appellant has argued that Ld. PO has no suo motu power as held by the Hon‟ble Supreme Court in “Padam Singhee v. Gas and Energy Ltd., 2018 SCC OnLine Del 13386”. Moreover, according to him, the Ld. PO could not have asked the question about production of document during the proceedings since the question could only have been asked under Order 10 Rule 1 of CPC.

I have considered the above submissions of Ld. counsel for the appellant and am afraid that the same cannot be accepted. In the present matter, the Ld. PO has not initiated any suo motu proceedings since the order has been passed on an application moved by the Bank for vacation of the stay order dt. 31.03.2017. The next contention of the Ld. counsel for the appellant that the Ld. PO could not have put the question to the Ld. Counsel for the appellant regarding NOC in view of Order X Rule 1 CPC, also cannot be accepted for the reason that Tribunal i.e. DRT is not bound by the Procedure laid down by the Code of Civil Procedure.

Perusal of the record further reveals that appellant was given an opportunity to produce the document by Ld. PO. However, Ld. Counsel for the appellant had submitted that same is lying with the Bank. On the other hand, respondent Bank categorically stated that it has no such document in its record. In such circumstances, this Tribunal is of the opinion that in a case where a Court or Tribunal finds that an order has been obtained by concealment of fact or by fraud, no fetters can be put upon its power to put a question to any of the parties or Ld. counsels for the parties to unravel the truth and to lay bare the fraud. Moreover, as discussed earlier, this fact has also to be kept in mind that DRT is not bound by CPC or strict law of evidence.

Ld. counsel for the appellant has, however, argued that appellant had already moved an application before the DRT-II for seeking production of the NOC from the bank and this application is still pending for disposal and since the impugned order has been passed without disposing of the same, it cannot be sustained in the eyes of law.

Perusal of the record reveals that reply to the above mentioned application stands filed by the respondent Bank in which it has categorically stated that no NOC as alleged by appellant was ever issued by it. It is also strange that appellant has not even placed on record a copy of the alleged NOC in its pleadings or evidence and has averred that it was assured by the lesser i.e. respondent no. 7 that an NOC was issued by the Bank. Surprisingly, even respondent no. 7 i.e. the lessor in its reply has also neither stated a single word regarding the date on which NOC was issued nor placed the same on record. It is, thus, very strange and surprising that applicant has entered into a lease agreement on the assurance given by the lessor that an NOC has been issued by the Bank but neither the lessor nor the lessee has got the copy of the same. As discussed above, the Bank has vehemently denied the fact that it has ever issued the NOC. In such circumstances, this Tribunal is of the opinion that when it became clear to DRT that NOC, in fact, did not exist at all, there was no reason for it to allow the stay order to continue merely on the ground that an application seeking production of document, is pending for disposal.

It was next argued by Ld. counsel for the respondent Bank that since mortgage deed is dated 09.04.2010, therefore, any lease executed by the lessor thereafter has to be in accordance with Sec. 65-A of Transfer of Property Act and since the lease in question is in violation of the same, the appellant has no right to occupy the premises.

This Tribunal has gone through the record. The lease dated 27. 08.2014, entered into by the lessor with the lessee is for a period of 12 years after creation of mortgage which is dated 9. 04.2010.This lease deed cannot be held to be valid for the reason that as per section 65 A(2)(e), it could have been for a period of three years only. Section 65 A of the Transfer of Property Act runs as under:-

Section 65 A in The Transfer of Property Act, 1882

65A. Mortgagor‟s power to lease.—

(1) Subject  to  the  provisions  of  sub-section (2), a mortgagor, while lawfully in possession of the mortgaged property, shall have power to make leases thereof which shall be binding on the mortgagee.

(2) (a) Every such lease shall be such as would be made in the ordinary course of management of the property concerned, and in accordance with any local law, custom or usage,

(b) Every such lease shall reserve the best rent that can reasonably be obtained, and no premium shall be paid or promised and no rent shall be payable in advance,

(c) No such lease shall contain a covenant for renewal,

(d) Every such lease shall take effect from a date not later than six months from the date on which it is made,

(e) In the case of a lease of buildings, whether leased with or without the land on which they stand, the duration of the lease shall in no case exceed three years, and the lease shall contain a covenant for payment of the rent and a condition of re-entry on the rent not being paid with a time therein specified.

(3) The provisions of sub-section (1) apply only if and as far as a contrary intention is not expressed in the mortgage-deed; and the provisions of sub-section (2) may be varied or extended by the mortgage-deed and, as so varied and extended, shall, as far as may be, operate in like manner and with all like incidents, effects and consequences, as if such variations or extensions were contained in that sub-section.]

In  view  of  the  above,  the  lease  deed  which  is  dated 27. 08.2014could only have been executed for a period of three years i.e. up to 27.08.2017and, therefore, execution of a lease deed for 12 years is in violation of Section 65 A(2)(e) of Transfer of Property Act, and this Tribunal is, therefore, of the opinion that there is no illegality in the impugned order passed by Ld. DRT.

Since no NOC was given by the bank to the lesser for executing the lease agreement with the applicant, the applicant has, thus, concealed a very material fact from the DRT. The Hon‟ble Supreme court in Welcome Hotel and others v. State of Andhra Pradesh and others etc. AIR 1983 SC 1015, has held that a party which has misled the Court in passing an order in its favour is not entitled to be heard on the merits of the case. The Hon‟ble Supreme Court in S.P. Chengalvaraya Naidu (dead) by L.Rs. v. Jagannath (dead) by L.Rs. and Anrs, JT 1993 (6) SC 331, has also held that where a preliminary decree was obtained by withholding an important document from the court, the party concerned deserves to be thrown out at any stage of the litigation.

The Hon‟ble supreme Court in “Oswal Fats And Oils Ltd vs Addl.Commnr.,Bareilly Division on [2010] 4 SCC728has held that it is settled law that a person who approaches the Court for grant of relief, equitable or otherwise, is under a solemn obligation to candidly disclose all the material/important facts which have bearing on the adjudication of the issues raised in the case. In other words, he owes a duty to the court to bring out all the facts and refrain from concealing/suppressing any material fact within his knowledge or which he could have known by exercising diligence expected of a person of ordinary prudence. If he is found guilty of concealment of material facts or making an attempt to pollute the pure stream of justice, the “court not only has the right but a duty to deny relief to such person.

The Hon‟ble Supreme Court in Prestige Lights Ltd., v. State Bank of India [(2007) 8 SCC 449] has held that if the applicant does not disclose full facts or suppresses relevant materials or is otherwise guilty of misleading the Court, the Court may dismiss the action without adjudicating the matter.

Further the Hon‟ble Supreme Court in Dalip Singh v State of U.P. & Ors.[(2010) 2 SCC 114],has observed that those who come with “unclean hands” are not entitled to be heard on the merits of their case. The post-independence period has seen drastic changes as litigants do not hesitate to take shelter of falsehood, misrepresentation and suppression of facts in the court proceedings. To face the challenge posed by this new creed of litigants, the courts have, from time to time, evolved new rules and it is now well settled that a litigant, who attempts to pollute the stream of justice or who touches the pure fountain of justice with tainted hands, is not entitled to any relief, interim or final.2011 (7) SCC 69

The Hon‟ble Apex Court in Amar Singh v Union of India and others, [(2011) 7 SCC 69], has held that Courts have, over the centuries, frowned upon litigants who, with intent to deceive and mislead the courts, initiated proceedings without full disclosure of facts. Courts held that such litigants have come with “unclean hands” and are not entitled to be heard on the merits of their case.

In view of the above law laid down by the Hon‟ble Apex Court, the concealment of fact by the appellant that there was no NOC on the basis of which lease deed was executed vitiates the proceeding and, therefore, it cannot be held that impugned order is not in accordance with law.

The Ld. counsel for the appellant has lastly argued that since a very cryptic order has been passed by Ld. PO, therefore, it cannot be sustained in the eyes of law.

This Tribunal is of the opinion that impugned order is not without reasons thought, no doubt, it is not a lengthy one. It clearly gives the reason that the appellant has entered into a lease agreement with respondent no.7without any NOC from the Bank. In these circumstances, the Ld. PO has come to the conclusion that a fraud has been played by the applicant/appellant and he cannot be a party to the same and, therefore, vacated the stay Order. The impugned order, therefore, cannot be said to be without reasons and the authorities cited by the Ld. counsel for the appellant i.e. Omar Salay Mohd. Sait v. CIT(Supra), Udhavdas Kewalram v. CIT(Supra)and State of Rajasthan v. Rajendra Prasad Jain(Supra)which lays down the law that an order should not be without reasons, do not help the appellant.

Ld. counsel for the appellant has lastly argued that the respondent bank was sleeping over the matter for a long time and, therefore, it is not entitled to any relief. In this regard, he has relied upon the judgment of Hon‟ble supreme Court titled „Bharat Barrel and Drum Mfg. Co. Ltd. & Anr. vs. ESI Corpn., (1971) 2 SCC 860’ where it was held that law helps those who are watchful and not to those who sleep.

This Tribunal has carefully gone through the above judgment and is of the opinion that it does not help the appellant for the reason that since the case of the applicant/appellant is based upon a document which does not exist and a material fact has been concealed from DRT, the delay does not debar the Bank from moving an application for vacation of stay as concealment/ fraud vitiates whole of the proceedings and disentitles the applicant to claim any equitable relief.

In view of the above discussion, there is no illegality or irregularity in the order passed by the Ld. DRT. The appeal is, therefore, dismissed.

It is ordered accordingly.