Purchaser of plot at auction sought transfer permission denied by lessee due to lack of prior approval under lease deed. Court held that given loan recovery under SARFAESI Act, Lessor must grant permission and remit matter.
Writ petition disposed of; matter remitted to 2nd respondent to pass fresh order within six weeks.
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Neutral Citation No. - 2023:AHC:141639-DB
Court No. - 46
Case :- WRIT - C No. - 22519 of 2023 Petitioner :- Rajesh Kumar Respondent :- State Of U.P. And 5 Others Counsel for Petitioner :- Raghav Dev Garg,Sr. Advocate Counsel for Respondent :- C.S.C.,Kaushalendra Nath Singh,Krishna Mohan Asthana,Manish Trivedi
Hon'ble Ashwani Kumar Mishra,J. Hon'ble Syed Aftab Husain Rizvi,J.
The petitioner is auction purchaser of plot no.20/C-50, NOIDA Complex, admeasuring 125.25 Sq. metres, pursuant to the auction proceedings conducted by the 5th respondent. He is aggrieved by an order passed by respondent no.3 on 06.04.2023, declining the application moved by 5th respondent for transfer of plot in favour of the petitioner on the ground that prior permission for mortgage has not been obtained in the matter.
Record reveals that the plot was leased out by NOIDA to original allottee on 14.05.1981. Certain constructions were later on raised over it. The original allottee transferred the leased premises to one Devraj Bhati i.e. respondent no.6. 6th respondent has availed of certain loan from ICICI Bank and on account of default in repayment of such loan amount, auction proceedings have been undertaken by the 5th respondent to whom the loan was assigned.
Learned Senior Counsel appearing for the petitioner submits that premises since has already been leased out by the authority in 1981, there would be no useful purpose served in declining permission for transfer, particularly when auction itself has been conducted for non-payment of loan dues. It is further urged that petitioner being auction purchaser is entitled to fruits of the auction and denial of permission for transfer is wholly arbitrary.
Sri K.M. Asthana, learned counsel for the respondent has invited our attention to Clause-II(i) of the lease deed which reads as under:-
"(i) That the lessee will in no case assign, relinquish (except in favour of the Lessor), sub-let, transfer or part with possession of the demised premises without the prior permission of the Lessor. Such permission shall not be given for a period of 10 years from the date of the commencement of this lease, unless, in the opinion of the Lessor exceptional circumstances exist for the grant of such permission. The discretion of the Lessor the matter shall be conclusive, binding and final. The lessee may, however, with the prior permission of the Lessor and subject to such conditions as it may impose mortgage the demised premises to any person. In the case of transfer other than by way of mortgage, 25% of the uneared increased in the value of the demised premises i.e. the difference between the premium paid and the market value of the demised premises at the time of the transfer, shall be paid by the lessee to the Lessor at the time of the transfer."
It is observed that obtaining of prior permission for securing mortgage is contemplated in the lease deed and its absence justifies the passing of the order itself.
Counsel for the petitioner, on the contrary, submits that the lease deed clearly vests a discretion in the authority to grant permission, even where prior approval is not obtained, subject to the conditions imposed in accordance with law. It is contended that the property has been purchased in open auction and the petitioner ought not to be deprived of the said property purchased in open auction.
We have heard learned counsel for the parties and have examined the materials on record. Clause-II(i) clearly indicates that prior permission of the Lessor would be needed in specified exigencies. There is a restriction for grant of such permission for a period of ten years. The aforesaid clause, however, clearly vests discretion in the Lessor in the matter relating to the grant of such permission. Such discretion is to be exercised for valid reasons and in
accordance with law. In the facts of the case, we find that Lessor having executed the lease deed in 1981, no useful purpose would be served in declining the permission for transfer of plot. It is otherwise not disputed that 6th respondent has obtained the loan from the ICICI Bank and has failed to repay it. Public money is involved and the bank has acted in accordance with law under the SARFAESI Act to recover the amount. It is in that context that mortgaged property has been put to the auction. The bank had assigned the loan to the 5th respondent which conducted the auction. Petitioner having purchased the property in such auction is clearly entitled to fruits of such auction proceeding. Clause in the lease deed, in such circumstances, cannot be interpreted in a narrow sense so as to result in declining the rights of the auction purchaser who has paid valuable consideration for the property itself. Considering the fact that repayment of loan has been secured under the SARFAESI Act, the respondent authority ought not to deny the grant of permission for transfer, in such circumstances, when the lease otherwise vests discretion in the authority. It is otherwise open to the authority to raise appropriate demand in terms of lease deed and in accordance with law. The matter is thus remitted to the 2nd respondent to pass a fresh order in terms of the observation made hereinabove within six weeks from the date of presentation of a certified copy of this order.
The order impugned shall abide by the fresh orders to be passed by 2nd respondent, as stated above.
In view of above, the writ petition stands disposed of.
Order Date :- 17.7.2023
MN/-
Digitally signed by :- MAHENDRA NATH High Court of Judicature at Allahabad
2 issues framed by the court
Whether an auction purchaser of a leased plot is entitled to transfer rights despite the lease deed requiring prior permission for transfer without specifying exception for SARFAESI Act auctions
Whether the Lessor's discretion to deny transfer permission under the lease deed can be exercised when the underlying loan has been recovered under the SARFAESI Act
Rajesh Kumar
State Of U.P.
Ashwani Kumar Mishra
Syed Aftab Husain Rizvi
As recorded by the court registry
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