Allowed

Dhruv Cables and Conductors through its Partner Sh. Ramesh Chand son of Late Sh. Tika Ram v. Indusind Bank Limited

DRT22 Jul 2022SA/133/2022

Case brief

AI extract

What is this about?

In a securitisation application by a partnership firm claiming tenancy over mortgaged industrial property, the Debts Recovery Tribunal held that the bank is estopped from denying the tenancy. Relying on valuer reports and subsequent conduct, the Tribunal ruled that the bank cannot forcibly dispossess the tenants under the SARFAESI Act unless following the Rent Act.

What did the court decide?

Granted restraining order preventing the respondent bank from dispossessing the applicants forcibly, except in accordance with the provisions of the Rent Act.

Dhruv Cables and Conductors through its Partner Sh. Ramesh… — Company and Corporate | DRT (2022)

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DEBTS RECOVERY TRIBUNAL-2, CHANDIGARH, PRESIDED

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OVER BY M.M. DHONCHAK

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DATED THE 22^nd DAY OF JULY, 2022

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Securitisation Application N0.133/2022

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Dhruv Cables and Conductors a Partnership Firm, having office & works at 116117 B, Sector-7, HSIIDC, CG Bawal, IMT Bawal, Rewari, (Haryana)-123501 through its Partner Shri Ramesh Chand son of late Shri Tika Ram, Pan No. AAMFD7099N Mobile No. 9899212016, Email [email protected]

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Shri Ramesh Chand son of late Shri Tika Ram, age 72 years, Partner of Dhruv Cables and Conductors, Resident of 342-B, J & K Pocket, Dilshad Garden, Delhi110095, Aadhar Card No. 985718773681, Mobile NO. 9899212016

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…. Applicants

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Versus

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Indusland Bank Ltd., New Tower, Hyatt Regency Complex, Block-A, District Centre, Bhikaji, Cama Place, R.K. Puram, New Delhi-110066 through its Authorized Officer

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M/s CMI Limited having its Registered Office at 501-503, New Delhi House, 27 Barakhamba Road, New Delhi-110001 through its Authorized Signatory

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IInd Address

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At Paramdeep Singh-II, Jhilmil Metro Station, Jhilmil Industrial Area, Delhi-110095

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…. Respondents

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Argued by: Sh. Vivek Verma, counsel for the applicants Sh. G.S. Anand, counsel for the respondent No.1 Sh. Sandeep Goyal, counsel for respondent No. 2

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ORDER

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In brief, it is the case of the applicants that applicant No. 1 is a partnership firm in which partners are applicant No. 1 and 2; that applicant No.1 had taken part of property measuring 4590 square meters out of 9382 square meters at Plot Nos. 116-117-B Sector-7 HSIIDC CG Bawal IMT Bawal, Rewari, Haryana, on monthly rent of Rs.50,000/- plus service tax for a period of 3 years with effect from 01.10.2016, from respondent No.2; that it was unregistered memorandum of rent agreement dated 03.10.2016; that corrigendum to the rent deed was executed between the applicant and respondent No.2 on 23.01.2017 as respondent No.2 had agreed to let out another portion measuring 3890 square meters by making it total 8480 square meters with the increase of monthly rent

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SA/133/2022 DHRUV CABLES AND CONDUCTORS THROUGH ITS PARTNER SH. RAMESH CHAND SON OF LATE SH. TIKA RAM Vs INDUSIND BANK LIMITED 2

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from Rs.50,000/- to Rs. 1,00,000/- and service tax starting from 01.01.2017; that yet another corrigendum to the rent deed dated 01.01.2017, was executed between the applicant and respondent No.2 on 01.08.2018 when respondent No.2 let out another plot measuring 890.75 square meters making total land of the plot measuring 9370.75 square meters and monthly rent was enhanced to Rs. 1,20,000/- and GST for the period of 9 years starting from 01.01.2018 to 31.07.2027; that the tenancy of the applicant does not fall under Sub-Clause A to D of Clause-1 of Section 4A of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as ‘the Act’ for brevity); that the applicant constructed industrial shed in the property from time to time; that there is RCC structure measuring five thousand seven hundred square feet and the industrial shed has been constructed on the remaining land of Plot Nos.116-117 in the said property; that respondent No.1 pasted possession notice under Section 13(4) of the Act on the property of respondent No.2 which was in possession of the applicants seeking payment of Rs. 35,90,52,009/-; that applicant moved one representation to respondent No.1 claiming him to be a tenant and informing that the machinery had been installed by applicant over the plot in question; that the applicant made request to provide substantial time to remove the large quantity of industrial shed as well as to dismantle and remove the entire plant as well as reinstallation of the machinery to save themselves from heavy loss and for this purpose, 18 months’ time was requested for which the applicant would have kept paying licence fee at the rate of Rs.1,20,000/- per month; that the bank could take symbolic possession of the properties and treat the applicant as a licencee; that the representation of the applicant was declined vide reply dated 17.03.2022 contending that the shed was constructed without permission of respondent No.1; that the bank had exclusive charge on the entire land and building of the mortgaged property either constructed by the borrower or the tenant; that under the Act, applicant and respondent No.2 were prohibited from dismantling industrial shed as the same

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SA/133/2022 DHRUV CABLES AND CONDUCTORS THROUGH ITS PARTNER SH. RAMESH CHAND SON OF LATE SH. TIKA RAM Vs INDUSIND BANK LIMITED 3

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would tantamount to violate the Act and symbolic possession was taken on 31.01.2022.

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It was contended in reply to the SA that applicant and respondent No.2 were related parties and they colluded with each other with a view to hampering the recovery efforts; that address of Dhruv Cables and Conductors was the residential address of Managing Director of respondent No. 2, Mr. Amit Jain; that no landlord would allow a tenant to use the residential address of his Managing Director; that borrower Company of three manufacturing facilities out of which one was in Bawal, was exclusively mortgaged in favour of the respondent bank; that tenant was sham and as a result of collusion to defeat the interest of the creditor bank; that lease was compulsorily registerable under Section 17(1)(d) of the Indian Registration Act; that removal of any fixture, plant or machinery or any other part could not be permitted by the bank; that manufacturing process could not be carried out without machinery; that it was made amply clear in the sanction letter that first the loan availed of from Kotak Mahindra Bank would be cleared and only then the said property at Bawal would be mortgaged in favour of the respondent bank having exclusive charge on land and building; that it was made clear that not only the land but also the building thereon would be charged in favour of the respondent bank; that photographs revealed that the unit was functional; that function of the valuer was just to reflect the ground in the valuation report and not the factum of tenancy being genuine or fake; that the applicants wanted to remove the industrial unit which could not be permitted as that would lead to reduction of the value of the same; that the right of the creditor-mortgagee was superior to that of a tenant; that the applicants did not approach this Tribunal with clean hands and the applicant could not be permitted to destroy the mortgaged property.

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Rest of the averments made in the application were also denied by the respondent bank.

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The reply of the respondent No. 2, is almost non-committal as well as admitting the contentions of the application.

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SA/133/2022 DHRUV CABLES AND CONDUCTORS THROUGH ITS PARTNER SH. RAMESH CHAND SON OF LATE SH. TIKA RAM Vs INDUSIND BANK LIMITED 4

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Rejoinder to the reply by respondent No. 1, was filed wherein the averments made in the reply were controverted and those of the Application were reiterated. I have heard counsel for the parties and gone through the record.

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It was admitted position that the lease deeds were not registered. It was argued by Sh. Vivek Verma, Advocate that before granting loan by the respondent, the valuation of the property in question, was done and that valuation report clearly indicated the fact that the applicants were the tenants in the premises in question at the relevant time. The factum of mention of the applicants as tenants in the valuation report was admitted by respondent No.1, but it was argued by Sh. G.S. Anand, Advocate that the valuer had no role to render any conclusive finding about the tenant being there and his role was confined only to what was existing on the spot.

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In the facts and circumstances of the case, this Tribunal is of the considered opinion that the report of the valuer cannot be thrown away like a hot potato and it cannot be said that it was so obtained with a view to bringing a case of tenancy at a belated stage. Moreover, no conclusive proof is needed for rendering the findings to dispose of the lis between the parties. There is a lot of documentary evidence which shows the running of the business of the applicant in the premises in question. These documents are as under:

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“1. Udyog Adhaar dated 08.10.2016, 2. The National Small Industries Corporation Limited Certificate dated 13.09.2018 valid upto 03.09.2020, 3. ISO 9001:2015 Certificate issued dated 21.02.217, 4. Factory Licence dated 07.03.2018 valid upto 31.12.2023, 5. Haryana State Pollution Control Boad Letter dated 31.08.2018 giving the grant of consent to operate, 6. Research Design and Standards Organization Letter dated 02.01.2019 for fresh registration of firm in the list of approved vendor, 7. NOC dated 21.04.2017 issued by Haryana Fire and Emergency’s Services, 8. Central Exercise Registration Certificate dated 13.10.2016, 9. Registration Certificate under Section 11 of Haryana Value added Tax Act dated 24.10.2016, 10. Government of India Registration Certificate for GST issued on 22.09.2017, 11. Amended Certificates issued by the Govt. of India

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SA/133/2022 DHRUV CABLES AND CONDUCTORS THROUGH ITS PARTNER SH. RAMESH CHAND SON OF LATE SH. TIKA RAM Vs INDUSIND BANK LIMITED 5

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dated 17.06.2020, 12. Bills/tax invoices (2018-2022), 13. Bill paid to DHBVNL (24.04.2018), 14. Copy of RC registered on the said address (30.01.2019), 15. Valuation report dated 06.03.2019 Column No.10 and 14, 16. Bills of plant and machinery and fixtures purchased by the Applicant no.1 Firm, 17. GST returns form the period 2017-18 to 2021-2022, 18. Ledger Account of the Applicants showing payment of rent from 01.10.2016 to till date, 19. Valuation Report dated 23.09.2021 Column No.14 and 15.”

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It was admitted by the Advocate for the borrower, Sh. Sandeep Goyal that Sh. Amit Jain was promoter and Director of the borrower Company. Sh. Vivek Verma, Advocate argued that the theory of collusion between the borrower and applicants/tenants propounded by respondent No. 1, was liable to be disbelieved because Dhruv Jain [applicant No.1] ceased to be a partner of the firm on February 2017 and he remained the partner of applicant No. 1 firm only for a brief period of five months. It was further argued that the fact that Dhruv Jain ceased to be a partner of the firm in the year of 2017, could not come in the way of availing of loan facility sanctioned in the year 2019 and mortgage of the relevant property coming into effect on 6^th March 2020. In the facts and circumstances of the case, this Tribunal is of the considered opinion that argument advanced by the learned counsel for the applicants is loaded with merit and there is hardly anything which dilutes the case of tenancy.

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It was argued by Sh. G.S. Anand, Advocate that there was documentary evidence to show that Amit Jain, Dhruv Jain, Ms. Himani Jain and Mrs. Viswa Prabha Jain were members of one family who were residing jointly at C-483, Yojna Vihar, Delhi.

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On the other hand, it was argued by Sh. Vivek Verma, Advocate that even if the landlord and tenants were close relatives and also residing under the same roof, the right to tenancy, could not be defeated. It was argued by Sh. Vivek Verma, Advocate that there were various documents produced by the applicants pertaining to the period before the grant of loan and the mortgage of the property and all those documents showed clearly that there was tenancy of the applicants.

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SA/133/2022 DHRUV CABLES AND CONDUCTORS THROUGH ITS PARTNER SH. RAMESH CHAND SON OF LATE SH. TIKA RAM Vs INDUSIND BANK LIMITED 6

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Sh. Vivek Verma, Advocate further argued that vide email dated 05.03.2020 received from respondent No. 1, there was admission on the part of respondent No. 1 about the status of applicants as tenants and this email was to the effect that Bawal Property was occupied by the tenants and respondent No. 1 had sought NOC from the tenants and those tenants were Dhruv Cables and Conductors and the said NOC was sought on the letter head of the tenants. In the considered opinion of this Tribunal, the respondent bank cannot be allowed to blow hot and cold in the same breath. The bank is estopped by its own act and conduct from saying that the applicants are not the tenants because it was the bank itself which had sought clearance from the applicants in their capacity as tenants.

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Sh. G.S. Anand, Advocate placed reliance upon the judgment of Maharaji Educational Trust V/s Housing & Urban Development Corporation Ltd. & Others 2017(3) R.C.R. (Civil) 210, wherein it was held that if the mortgagor builds on the property mortgaged, the building forms part of the mortgagee’s security.

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Sh. Vivek Verma, Advocate argued that the above authority was not applicable to the case in hand because the construction was not that of the mortgagor but it was that of the applicants. In the facts and circumstances of the case, this Tribunal is in agreement with the contention of the learned counsel.

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It was argued by Sh. G.S. Anand, Advocate that the lease deeds were not registered. Sh. Vivek Verma, Advocate argued that non-registration of the lease deeds was not everything and the tenancy could be proved otherwise. He relied upon the judgment of the Apex Court in the case of the Bajrang Shyam Sunder Aggarwal V/s Central Bank of India and Another (2019) 9 Supreme Court Cases 94, wherein it was held as under:

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“If a valid tenancy under law is in existence even prior to creation of mortgage, tenant’s possession cannot be disturbed by secured creditor by taking possession of property and lease has to be determined in accordance with S. 111 of TP Act for determination of leases i.e., rights of a rightful tenant cannot be compromised under the SARFAESI Act proceedings.”

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SA/133/2022 DHRUV CABLES AND CONDUCTORS THROUGH ITS PARTNER SH. RAMESH CHAND SON OF LATE SH. TIKA RAM Vs INDUSIND BANK LIMITED 7

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It was argued by Sh. G.S. Anand, Advocate that as per Annexure R1/3, there was exclusive charge not only on land but also on building of CMI. It was further argued by Sh. G.S. Anand, Advocate that the shed was part of the building. Sh. G.S. Anand, Advocate drew the attention of this Tribunal towards Annexure R1/5 which was Resolution dated 13.12.2019 of the Directors of CMI Ltd. showing that CMI Energy India Pvt. Ltd. was amalgamated with CMI Ltd. vide NCLT order dated 03.04.2019.

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It was argued by Sh. Vivek Verma, Advocate that initially, tenancy was created by corporate guarantor i.e., CMI Ltd. whereas loan was availed of by CMI Energy Pvt. Ltd.

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The sum and substance of the controversy between the parties is with regard to the tenancy and after the establishment of tenancy, the other factors fade into insignificance.

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In view of the above discussion, the SA succeeds and the same is allowed with costs and resultantly, respondent bank is restrained from dispossessing the applicants forcibly except in accordance with the provisions of the Rent Act.

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Announced in the open Tribunal

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(M.M.Dhonchak) Presiding Officer DRT-2, Chandigarh

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Dhruv Cables and Conductors through its Partner Sh. Ramesh Chand son of Late Sh. Tika Ram v. Indusind Bank Limited

Case brief

What is this about?

What did the court decide?

Dhruv Cables and Conductors through its Partner Sh. Ramesh Chand son of Late Sh. Tika Ram v. Indusind Bank Limited

Case brief

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What the court decided

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