IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 12TH DAY OF APRIL, 2019 PRESENT THE HON’BLE MR.L.NARAYANA SWAMY ACTING CHIEF JUSTICE AND THE HON’BLE MR. JUSTICE P.S.DINESH KUMAR WRIT APPEALS No.2654/2018 & 3142-43/2018 c/w WRIT APPEALS No.2655/2018 & 2929-33/2018 WRIT APPEAL No.2782/2018 (GM-DRT) IN WAs No.2654/2018 & 3142-43/2018 BETWEEN:
1. M/S MOHAN BHANDAR A PARTNERSHIP FIRM NAGEETHA COMPLEX, 17TH MAIN 15TH CROSS, SOUTH EAST CORNER NUMBER SARASWATHIPURAM, TONACHIKOPPAL 2ND STAGE MYSORE-570 023 REPRESENTED BY ITS PARTNER MR. SANDEEP GOEL 2. REID AND TAYLOR (INDIA) LTD NAGEETHA COMPLEX, 17TH MAIN 15TH CROSS, SOUTH EAST CORNER NUMBER SARASWATHIPURAM, TONACHIKOPPAL 2ND STAGE MYSORE-570 023 REPRESENTED BY ITS STORE IN CHARGE MANAGER MR. H.S. SRIKANTH 3. M/S BAKE POINT NAGEETHA COMPLEX, 17TH MAIN 15TH CROSS, SOUTH EAST CORNER NUMBER SARASWATHIPURAM, TONACHIKOPPAL 2ND STAGE MYSORE-570 023 REPRESENTED BY ITS MANAGER PRAVEENA. B.R. ... APPELLANTS (BY SHRI. S.S. NAGANAND, SENIOR ADVOCATE & SHRI. U.R. VIKRAM, ADVOCATE FOR SHRI. S. SRIRANGA, ADVOCATE) AND:
1. VIJAYA BANK KUVEMPUNAGAR BRANCH MYSORE-570 023 REPRESENTED BY ITS BRANCH MANAGER 2. SRI. M. NAGARAJA NO.487, A & B BLOCK CHITRABANU ROAD KUVEMPUNAGAR MYSURU-570 023 3. SRI. A.C. DHANASHEKAR NO.187, LOWER PALACE ORCHARD BENGALURU-560 080 4. RECOVERY OFFICER-I DEBT RECOVERY TRIBUNAL-2 JEEVAN MANGAL BUILDING II FLOOR, NO.4, RESIDENCY ROAD BENGALURU-560 035 5. THE REGISTRAR DEBTS RECOVERY TRIBUNAL-II NO.4, JEEVAN MANGAL BUILDING 1ST FLOOR, RESIDENCY ROAD BENGALURU-560 025 ... RESPONDENTS (BY SHRI. K. SHASHIKIRAN SHETTY, SENIOR ADVOCATE FOR SHRI. VIGNESH SHETTY, ADVOCATE FOR R1;
SHRI. D.R. RAVISHANKAR, ADVOCATE FOR SHRI. D.N. MEGHACHANDRA, ADVOCATE FOR R2; SHRI. .M.N. KUMAR, CGC FOR R4 & R5;
V.O.DATED 2.1.2019 NOTICE TO R3 DISPENSED WITH) THESE WRIT APPEALS ARE FILED UNDER SECTION 4 OF THE KARNATAKA HIGH COURT ACT PRAYING TO SET ASIDE THE IMPUGNED ORDER DATED 23/7/2018 PASSED BY THE LEARNED SINGLE JUDGE IN WP NOS.27975-977/2018 [GM-DRT] AND ALLOW THE WP NOS.27975-77/2018 [GM-DRT] AS PRAYED FOR THEREIN, WITH COSTS.
IN WAs No.2655/2018 & 2929-33/2018 BETWEEN:
1. M/S MOHAN BHANDAR A PARTNERSHIP FIRM NAGEETHA COMPLEX, 17TH MAIN 15TH CROSS, SOUTH EAST CORNER NUMBER SARASWATHIPURAM TONACHIKOPPAL 2ND STAGE MYSORE-570 023 REPRESENTED BY ITS PARTNER MR. SANDEEP GOEL 2. REID AND TAYLOR (INDIA) LTD NAGEETHA COMPLEX, 17TH MAIN 15TH CROSS, SOUTH EAST CORNER NUMBER SARASWATHIPURAM TONACHIKOPPAL 2ND STAGE MYSORE-570 023 REPRESENTED BY ITS STORE IN CHARGE MANAGER MR. H.S. SRIKANTH 3. M/S NEW BAKE POINT NAGEETHA COMPLEX, 17TH MAIN 15TH CROSS, SOUTH EAST CORNER NUMBER SARASWATHIPURAM TONACHIKOPPAL 2ND STAGE MYSORE-570 023 REPRESENTED BY ITS PROPRIETOR MR. GIYZA AHAMMED. T. V.
4. LIVE-MAX CLINIC & PHARMA, NAGEETHA COMPLEX, 17TH MAIN 15TH CROSS, SOUTH EAST CORNER NUMBER SARASWATHIPURAM TONACHIKOPPAL 2ND STAGE MYSORE-570 023 REPRESENTED BY ITS PROPRIETOR DR. RAJ KUMAR P. WADHWA.
5. MR. NANJUNDA RAJE URS, S/O ODESH RAJE URS AGED ABOUT 38 YEARS MAYAMMA COMPLEX KHATA NO. 1471/, 1382/1 BANNUR TOWN MYSURU - 571 101 ... APPELLANTS (BY SHRI. S.S. NAGANAND, SENIOR ADVOCATE & SHRI. U.R. VIKRAM, ADVOCATE FOR SHRI. S. SRIRANGA, ADVOCATE) AND:
1. VIJAYA BANK KUVEMPU NAGAR BRANCH MYSORE DISTRICT-570 023 REPRESENTED BY ITS AUTHORIZED OFFICER SRI. R. SRINIVASA REDDY 2. OFFICE OF THE DEPUTY COMMISSIONER & DISTRICT MAGISTRATE, MYSORE MYSURU DISTRICT-570 005 3. SMT. SOBHA.S.
D/O LATE SHEKAR SHETTY AGED ABOUT 30 YEARS MAYAMMA COMPLEX KHATA NO.1471/1, 1382/1 BANNUR TOWN MYSURU-571 101 ... RESPONDENTS (BY SHRI. K. SHASHI KIRAN SHETTY, SENIOR ADVOCATE FOR SHRI. VIGNESH SHETTY, ADVOCATE FOR R1;
SMT. R. ANITHA, HCGP FOR R2) THESE WRIT APPEALS ARE FILED UNDER SECTION 4 OF THE KARNATAKA HIGH COURT ACT PRYAING TO SET ASIDE THE IMPUGNED ORDER DATED 23.07.2018 PASSED BY THE LEARNED SINGLE JUDE IN WP 37112-117/2016 (GM-RES) AND ALLOW WP 37112-117/2016 (GM-RES) AS PRAYED FOR THEREIN WITH COSTS.
IN WA No.2782/2018 BETWEEN:
MR. M. NAGARAJA AGED ABOUT 66 YEARS S/O LATE MAYIGOWDA NOW PRESENTLY R/AT FLAT NO.1010, ARCHITHA AITHAL AROHI, HALAGEVADERAHALLI RAJARAJESHWARI NAGAR BENGALURU-560 098 ... APPELLANT (BY SHRI. D.R. RAVISHANKAR, ADVOCATE FOR SHRI. D.N. MEGHACHANDRA & SHRI. K. BHARATH, ADVOCATES) AND:
VIJAYA BANK A SCHEDULED COMMERCIAL BANK & NATIONALISED UNDER BANKING COMPANIES (ACQUISITION & TRANSFER OF UNDERTAKINGS) ACT,1980 HAVING ITS HEAD-OFFICE AT 41/2 M.G. ROAD, BANGALORE-560 001 REPRESENTED BY ITS CHAIRMAN & MANAGING DIRECTOR & CONCERNED BRANCH OFFICE IS AT:
VIJAYA BANK NEW SARASWATHIPURAM BRANCH NO.568, NEW KANTHARAJE URS ROAD KUVEMPU NAGAR, MYSORE-570 023 REPRESENTED BY ITS MANAGER/ AUTHORISED OFFICER ... RESPONDENT (BY SHRI. K. SHASHI KIRAN SHETTY, SENIOR ADVOCATE FOR SHRI. VIGNESH SHETTY, ADVOCATE) THIS WRIT APPEAL IS FILED UNDER SECTION 4 OF THE KARNATAKA HIGH COURT ACT PRAYING TO SET ASIDE THE ORDER DATED 23.7.2018 PASSED BY THE LEARNED SINGLE JUDGE IN WP 48475/2016 AND ALLOW WP 48475/2016 AS PRAYED FOR THEREIN.
THESE WRIT APPEALS, HAVING BEEN HEARD AND RESERVED FOR JUDGMENT ON 22.02.2019, COMING ON FOR PRONOUNCEMENT OF JUDGMENT, THIS DAY, P.S.DINESH KUMAR J, PRONOUNCED THE FOLLOWING:-
J U D G M E N T These writ appeals have been presented by the owner and tenants of a commercial building called ‘Nageetha Complex’ situated in Saraswathipuram, Mysuru, challenging common order dated July 23, 2018 passed by the Hon’ble Single Judge in a batch of writ petitions filed by the owner and the tenants of the said building.
2. For the sake of convenience, parties shall be referred as per their status in the writ petition.
3. We have heard Shri.S.S.Naganand, learned Senior Advocate for the tenants, Shri.K.Shashi Kiran Shetty, learned Senior Advocate for the Bank, Shri.D.R.Ravishankar, learned Advocate for the landlord Shri.M.Nagaraja.
4. Briefly stated the facts of the case are, Shri.M.Nagaraja who is the owner of the properties had availed loan from Vijaya Bank by mortgaging his properties on June 6, 1998. The loan amount was not repaid in time. Bank instituted proceedings to recover its debt.
5. In furtherance of recovery proceedings before the Debt Recovery Tribunal (‘DRT’ for short), Recovery Certificates were issued for Rs.39 crores on November 31, 2003 and August 11, 2004. Shri. M.Nagaraja submitted following four proposals for one time settlement offering to pay;
(a) Rs. 2.46 crores on 04.11.2003;
(b) Rs. 2.05 crores on 31.12.2004;
(c) Rs. 2.99 crores on 09.08.2007; and (d) Rs. 6.10 crores on 24.12.2012.
6. After issuance of Recovery Certificates, a notice was issued proposing to take possession of secured assets and accordingly, possession of assets was taken over. Shri.Nagaraja approached this Court in writ petition No.4060/2007. It was disposed of on August 9, 2007 based on certain memos filed by the petitioner and the Bank wherein, Shri.Nagaraja undertook to pay a sum of Rs.299 lakhs to the Bank within a period of 90 days. Accordingly, possession of the Commercial complex was given back to Shri.Nagaraja. He inducted three tenants on May 28, 2005, March 1, 2010 and December 1, 2016.
7. The proceedings under the provisions of the SARFAESI Act were initiated. The District Magistrate by order dated March 21, 2016 permitted the creditors to take possession of the properties and the said order has been challenged by the tenants in W.Ps. No.37112-117/2016 and the owner Shri.Nagaraja in W.P. No.48475/2016. On July 08, 2016, this Court has granted an interim order not to dispossess the tenants from Schedule ‘A’ and ‘B’ properties for a period of eight weeks and the same has been continued from time to time.
8. Thereafter, the Bank approached Recovery Officer-II for an order under Section 25(aa) of DRT Act. Recovery Officer passed an order on June 13, 2018 directing the tenants to hand over vacant possession and accordingly, the Bank has taken possession of the properties on July 4, 2018.
9. The tenants have challenged order dated June 13, 2018 passed under Section 25(aa) of Recovery of Debts Due to Banks and Financial Institutions Act, 1993 in W.Ps. No.27975-977/2018.
10. The Hon’ble Single Judge has disposed of the writ petitions by the common order confirming order dated March 21, 2016 passed by the Deputy Commissioner, Mysore and order dated June 13, 2018 passed by the Recovery Officer, DRT-II, Bengaluru, granting liberty to the owner of the building to submit fresh proposal for ‘one time settlement’. Hence, these appeals.
11. Thus in substance, there are two sets of challenges. One on behalf of owner of the property and other by the tenants.
12. Shri.S.S.Naganand, learned Senior Advocate on behalf of the tenants mainly urged that petitioners are bonafide tenants and they can be dispossessed in accordance with law by initiating separate proceedings. Creditor can only take symbolic possession of the property.
13. Shri.D.R.Ravishankar, learned Advocate on behalf of the owner, Shri. M.Nagaraja urged that the owner has already paid a sum of Rs.1.86 crores and willing to pay a further sum of Rs.4.24 crores to settle dues in its entirety. In substance, his plea is for consideration of his offer and to discharge him from the debt.
14. We have carefully considered the rival submissions and perused the records.
15. In the conspectus of facts of this case, the point that arises for consideration is, ‘whether occupants are bonafide tenants’?
16. Undisputed facts are, recovery proceedings were initiated by the Bank in the year 2003. Pursuant thereto, Recovery Certificates were issued on November 3, 2003 and August 11, 2004. The said Certificates were challenged in writ petition No.4060/2007. On August 9, 2007, the writ petition was disposed of based on the assurance by the owner to pay a sum of Rs.299 lakhs within 90 days there from. As on the said date, tenants were not in possession of the property in question. On March 12, 2015, landlord addressed a letter to the Bank stating that he had negotiated with first petitioner M/s.Mohan Bhandar to lease the premises. Accordingly, a lease deed was executed on May 28, 2015 for a period of 29 years commencing from June 01, 2015. The Hon’ble Single Judge has recorded that the lease deeds in respect of other two tenants are dated March 1, 2010 and December 1, 2016. Thus, all three lease deeds have been executed after February 14, 2007, the date on which Recovery Certificates were issued.
17. Shri.S.S.Naganand, for the tenants relied upon decisions in Hutchison Essar South Ltd., Vs. Union Bank of India and another1 and Harshad Govardhan Sondagar Vs. International Assets Reconstruction Company Limited and others2 to support his contention that a tenant cannot be divested of his possession over a leased premises without recourse to law.
1 AIR 2008 KAR 14 2 (2014)6 SCC 1 18. Shri. Shashi Kiran Shetty, learned Senior Advocate for the Bank contended that there can be no exception to the said proposition of law, but such protection is available only to a bonafide tenant. Adverting to paragraph 28 and 36 in the case of Harshad Govardhan Sondagar, he argued that admittedly tenants in the instant case are not ‘bonafide’ tenants inasmuch as their respective tenancies have come into existence after issuance of Recovery Certificates.
19. Shri.D.R.Ravishankar, for the landlord as also Shri.S.S.Naganand for the tenants strongly relied upon a letter dated March 12, 2015 written by the landlord to the Senior Manager, Vijaya Bank, Mysore conveying that he had negotiated with M/s. Mohan Bhandar to give about 11,300 sq. ft. in the premises in question on lease. It is also stated in the said letter that M/s. Mohan Bhandar had agreed to give 10 months rent as deposit. The landlord by the said letter, requested the Bank not to disturb M/s. Mohan Bhandar during the currency of lease. Placing reliance on this letter, it was argued that the contents of the said letter clearly indicate that the landlord had obtained Bank’s permission to lease the premises to the tenants. Therefore, they are ‘bonafide tenants’ and their possession cannot be disturbed.
20. Admittedly, Bank has been prosecuting the litigation since 2001 by filing applications before the DRT, Bengaluru in O.As. No.620/2001 and 616/2001. Shri. Shashi Kiran Shetty, learned Senior Advocate submitted that the landlord had been dodging repayment on one pretext or the other. Even after inducting new tenants who have joined hands with the landlord in these proceedings, neither the tenants nor the landlord have paid or deposited any money to the Bank.
21. In view of the law laid down by the Hon’ble Supreme Court in the case of Harshad Govardhan Sondagar, only bonafide tenants shall be entitled for protection of mutual covenants with regard to certainty of lease period. The tenants before us have come into occupation of the premises in question after issuance of Recovery Certificates and without express leave from the Bank. Hence, writ appeals filed on behalf of the tenants must fail.
22. So far as the writ appeal filed on behalf of the landlord is concerned, the Hon’ble Single Judge has recorded that landlord has already submitted four offers for ‘One time settlement’ but has not exhibited any bonafides. He has further held that it would not preclude the landlord from making a fresh offer.
23. In view of the above discussion, we find no legal infirmity in the impugned common order passed by the Hon’ble Single Judge.
Resultantly, these appeals fail and they are accordingly dismissed.
No costs.
Sd/-
ACTING CHIEF JUSTICE SPS Sd/-
JUDGE