9911796707
TMI Blog2008 (12) TMI 400X X X X Extracts X X X X X X X X Extracts X X X X ..... cheme No. 5 Ahmedabad admeasuring 12818 sq. yds. equivalent to 11501 sq. mts. together with construction standing thereon. (C)It may be declared that Respondent Nos. 4 to 13 are encroachers and trespassers on the land situate lying and being at Mouje Dariapur Kazipur, City Taluka, bearing Final Plot No. 31 (Original Survey No. 416) of Town Planning Scheme No. 5 Ahmedabad admeasuring 12828 sq. yds. equivalent to 11501 sq. mts. Together with construction thereon and are liable to be evicted therefrom. (D)It may be declared that the Respondent Nos. 4 to 13 have no right, title or interest to occupy the premises situate, lying and being at Mouje Dariapur Kazipur,City Taluka, bearing Final Plot No. 31 (Original Survey No. 416) of Town Planning Scheme No. 5 Ahmedabad admeasuring 12828 sq. yds. equivalent 11501 sq. mts. together with construction thereon. (E)Respondent Nos. 4 to 13 be called upon to establish their title and interest if any to the said land situate, lying and being at Mouje Dariapur Kazipur, City Taluka, bearing Final Plot No. 31 (Original Survey No. 416) of Town Planning Scheme No. 5, Ahmedabad admeasuring 12828 sq. yds. equivalent 11501 sq. mts. together with constru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e No. 5 of Dariapur Kazipur, Ahmedabad and as such reference to other survey numbers in details is not necessary. 4. The applicant, State Bank of India, had sanctioned and granted financial assistance by way of several credit facilities to NGSL. Terms and conditions stipulated by the applicant Bank for sanction and grant of several credit facilities by way of financial assistance were that the amount due under respective financial assistance will inter alia be secured by mortgage of the lands bearing Survey Nos. 34/1, 20/1, 33 and 416 situated, lying and being at Mouje Dariapur Kazipur, City Taluka, Ahmedabad. 5. By Memorandum dated 19-1-1983 and registered with the Sub-Registrar of Assurances Ahmedabad under Serial No. 12253 on 18-7-1987, NGSL by way of extension of equitable mortgage by deposit of title deeds by constructive delivery of the deeds and documents relating to leasehold piece of lands together with the building and other structure thereon created security on the immovable property to secure the amount due and payable by the Company in liquidation to the applicant-Bank. As recorded in the said Memorandum though oral assent and consent was given on 18-1-1982 to hold a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing Final Plot No. 31 of Town Planning Scheme No. 5 of Dariapur-Kazipur. It was, however, found that it was not the correct position. The said land was not included and hence the applicant-Bank started inquiry. The applicant-Bank has also inquired from the Official Liquidator as to whether in the Statement of Affairs filed by the Ex-Directors of the Company in liquidation, the details of the property mortgaged, namely, land being Survey No. 416 being Final Plot No. 31 of Town Planning Scheme No. 5 were furnished or not. The Official Liquidator gave reply to the effect that Survey Number 416 and/or Final Plot No. 31 of the land was not indicated in the Statement of Affairs filed by the Ex-Directors of the Company. Even in the valuation report given by Batli Boy & Co., the land bearing Survey No. 416 was not mentioned. The Balance-sheet for the year 1985-86 was filed with the Official Liquidator. On perusal of the said Balance-sheet it was noticed that the details of this Survey Number and/or Final Plot of the land were not mentioned therein. 8. On further inquiry with IIBI, the applicant-Bank was informed that site was inspected by the Dy. General Manager of IIBI on 2-8-2003, where ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mortgage and mortgage runs with the land. The State Bank of India as a mortgagee is entitled to take possession from the mortgagor or third party in whose favour the mortgagor or any person may have assigned or sold the said property. Since occupation of Indumati Properties and Credit Pvt. Ltd., and respondent Nos. 5 to 13 is contrary to the provisions of the law and without any title and without any right, State Bank of India is entitled to take possession of the said land. Mr. Desai further submitted that the particulars of charge by way of mortgage created by NGSL were filed with Registrar of Companies and hence the Official Liquidator is supposed to have taken the possession of land bearing Final Plot No. 31 (Survey No. 416) of Town Planning Scheme No. 5. He has submitted that in Statement of Affairs, details of immovable properties are not furnished. The Official Liquidator has not taken proper care in ascertaining the details regarding properties of the Company in liquidation. He has, therefore, submitted that the possession of the properties in question over which the applicant-Bank has created its charge, should be handed over to the applicant-Bank. 11. On notice being iss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sconceived, baseless and devoid of merits and, therefore, is required to be rejected. 13. Mr. Nanavati has further submitted that an immovable property consisting of land admeasuring 4.23 acres and 3 gunthas forming part of Town Planning Scheme No. 5, Dariapur-Kazipur, Ahmedabad situated on Final Plot No. 31 in the registration district and sub-district of Ahmedabad, was initially owned by a Trust, namely, Vrajraj Vallabhbhai Vaishnav Haveli Asarwa Bethak Trust. The said Trust had given the said land on lease to a company known as Ahmedabad Hitechhu Spinning and Manu-facturing Co. Ltd., for a period of 99 years from 11-9-1894 for a yearly rent of Rs. 585. Thus, the said company thereafter constructed various build-ings, godowns, etc., with regard to the process house for a textile mill and a textile mill was functioning on the said land. Subsequently, the said leasehold rights in the said land were transferred to M/s. Harivallabh Mulchand Mills Co. Ltd. Later on, the said company changed its name from Harivallabh Mulchand Mills Co. Ltd. to New Asarwa Manufacturing Co. Ltd. Thus, the New Asarwa Manufacturing Co. Ltd., become the assignee of the leasehold rights in the said property ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under the provisions of the Companies Act, 1956 and having its registered office at Calcutta had made an offer to the said Trust for purchase of the property-in-question. Since the said property was owned by the public charitable trust, appropriate permissions by the Charity Commissioner, were also required to be obtained. On 22-12-1989, the Board of Trustees in its meeting passed a Resolution for sale of the said property to the respondent No. 4 along with the encumbrances of lease for 99 years. Thereafter, on 12-1-1990, an advertisement was published in the news-paper, 'Gujarat Samachar' by the said Trust inviting any objection by any person, with regard to the sale of the said property and the application for permission to sell being made before the Charity Commissioner. At that time no objections were received. Neither the applicant-Bank nor the Official Liquidator had raised any objection. Thereafter, on 6-3-1990 an order came to be passed in an application under section 36 of the Bombay Public Trust Act by the Charity Commissioner, Ahmedabad granting permission for sale of the property-in-question. Pursuant to the said permission granted on 8-3-1990 the said Trust called up ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nveyance deed produced by the said respondents. It is, therefore, contended that the application made by the State Bank of India is absolutely devoid of merit and misconceived and the same deserves to be rejected at the very threshold inasmuch as the State Bank of India has no right or interest as a mortgagee as contended by it. With effect from 10-9-1993, when the lease period expired, the leasehold rights which were mortgaged to the State Bank of India by NGSL also came to an end and, therefore, the State Bank of India has no right or interest over the said property. 18. On notice being issued Mr. Nitin Mehta, learned advocate has filed his appearance on behalf of respondent Nos. 5 to 13 and separate affidavits are filed by the respondent Nos. 5 to 13. Mr. Pushpendra Kataria, partner of the M/s. Mutha Automobile, respondent No. 5 has produced along with his affidavit relevant documents establishing the title over the land-in-question and raising the contention that the application filed by the applicant-Bank is hopelessly barred by limitation. It is further stated that the respondent No. 5 has purchased the land admeasuring 1112 sq. yards by deed of conveyance dated 7-4-1995 fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rred, has not been registered. It is further contended that NGSL was declared as Relief Undertaking during this period and hence, it could not dispose of its assets under the guise of corporate re-organisation. Though the registered office of NGSL and the property was situated at Ahmedabad, the document was executed at Mumbai. The consideration for transfer of this property was received by NGSL in the form of shares of AIDL, which has no value. Hence, the transfer was without consideration and was void. It is further contended that no resolution under section 293(1)(a) of the Companies Act has been passed by NGSL authorising the Board of Directors to transfer the leasehold rights and hence, no right was conferred on AIDL. It is further contended that deed of conveyance dated 28-5-1984 and handing over possession of the assets including the land in question by NGSL to AIDL was contrary to the mortgage created in favour of applicant-Bank and contrary to the provisions of law and it was done without prior permission of the State Government. The said Conveyance Deed was, therefore, void and no right flowed thereunder. It is further contended that the Ex-Directors of NGSL who were also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lease which expired on 10-9-1993. The applicant-Bank, therefore, cannot claim any right whatsoever as a mortgagee against the respondent Nos. 5 to 13 who have acquired the rights of owner in possession after the expiry of the said lease. 21. On behalf of respondent No. 4, an affidavit-in-sur-rejoinder is filed on 24-8-2005, wherein it is, inter alia, contended that the declaration of relief undertaking under the BRU Act by the State Government does not debar the Company from transferring its assets pursuant to the corporate reorganization. It is further contended that the registration of the Conveyance Deed at Mumbai is not illegal. It is permissible in law. This Conveyance Deed was validly executed and validly registered at Mumbai. There has been no challenge to such transfer and it is challenged at such a belated stage when the respondent No. 4 paid huge consideration for purchase of the said property. The lease period expired on 10-9-1993 and, therefore, the leasehold rights no longer exist with effect from 10-9-1993 in favour of NGSL and in turn, in favour of its mortgagee, the applicant-Bank. It is, therefore, contended that the present application is baseless, false and friv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decision of Calcutta High Court in the case of Ranjit Kumar Dutta v. Tapan Kumar Shaw AIR 1997 Cal. 278, wherein it held that if the lease determined by efflux of time of 15 years then the question of extension or renewal for another 15 years will not arise. It will arise only if through the original registered deed of lease some rights flow and in exercise of such rights flowing from the original deed of lease the lessee is made entitled to opt for a further period. In such a case, therefore, it can be said that the lease does not determine finally and completely by efflux of the initial period of the lease. Therefore, in such a case of lease containing renewal or extension clause, the period does not remain limited to the initial period only but it breaks the limit to further flow for another term and the lease in such a case does not determine at the end of the initial period, if at that moment or before, option is exercised as per terms of the deed of lease. In the circumstance it cannot be said that the lease of immovable property determined by efflux of initial period of 15 years limited by the lease as the lease did not limit it to 15 years only. Exercise or non-exercise of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion amounted to fraud. When the declarant clearly committed a fraud, Tribunal was not divested of its power to correct the error merely because an enquiry was made and hence the Tribunal was satisfied in modifying the earlier order varying it. 27. Mr. Desai further relied on the decision of the Hon'ble Supreme Court in the case of Ram Chandra Singh v. Savitri Devi [2003] 8 SCC 319 wherein it is held that a judgment and decree has been obtained by practising fraud on the court, it is trite that the principles of res judicata shall not apply. It is further held that fraud as is well known vitiates every solemn act, fraud and justice never dwell together. Fraud is a conduct either by letter or words, which induces the other person or authority to take a definite determinative stand as a response to the conduct of the former either by word or letter. It is also well settled that misrepresentation itself amounts to fraud. Indeed, innocent misrepresentation may also give reason to claim relief against fraud. A fraudulent misrepresentation is called deceit and consists in leading a man into damage by wilfully or recklessly causing him to believe and act on falsehood. It is a fraud in la ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the workers demanded that they should be allowed to resume work and they were not allowed to resume work the cause of action was complete. In such a case the workers going on demanding each day to resume work would not arise at all. The question of demanding to allow to do work on refusal does not stand to reason. 32. Mr. Thakore further relied on the decision of Kirpa Ram v. Shriyans Prasad AIR (38) 1951 Punj. 79 and Shyamapada Chakrabertty v. Collector of Insurance, Government of India AIR 1962 SC 1355, for the proposition that section 86H of the Companies Act, 1913 puts a restriction on the powers of Directors in regard to disposing of the undertaking of a company, but it does not say that such a thing cannot be done. All it says is that it must be done with the consent of the company i.e., the share-holders. 33. Mr. Thakore further relied on the decision of this Court in the case of Navjibhai Dharsibhai v. State of Gujarat [1994] 35 (2) GLR 1168 for the proposition that an invalid transaction per se may be invalid but it will not be invalid unless it is decided or declared to be so. It has to be invalidated. An invalid transaction is equivalent to a voidable transaction and n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rce. He must get his claim for possession adjudicated by a competent Court as per the relevant provisions of law. The status of an erstwhile tenant has to be treated as a tenant at sufferance akin to a trespasser having no independent right to continue in possession. The Court further considered the provisions of section 111(a) of the Transfer of Property which say that a lease of immovable property determines by efflux of the time limited thereby, and provisions of section 108(q) which say that on the determination of the lease, the lessee is bound to put the lessor into possession of the property, and held that on a conjoint reading of section 108(q) read with section 111(a) of the Transfer of Property Act, it becomes obvious that under the law, the erstwhile landlord is entitled to base his cause of action on the statutory obligation of the erstwhile lessee on determination of the lease to put the lessor in possession of the property. It is this statutory right of the lessor and the corresponding statutory obligation of the lessee that can be said to have been relied upon by the erstwhile landlord for getting peaceful possession from the erstwhile tenant. 37. Mr. Thakore furthe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in question nor they are required to be evicted there from. From the documents which are produced before the Court, it cannot be said that the respondent Nos. 4 to 13 have no right, title or interest to occupy and to remain in possession of the properties in question as they have established their title and interest in the property. 40. Before the rival contentions raised before the Court are dealt with, it is necessary to enumerate certain undisputed facts, which are found on record. The Company in liquidation had got the lease hold right in the property in question on 29-4-1972. The lease hold right of the property was mortgaged with the applicant Bank some time in 1981 and 1983. The Company in Liquidation had entered into a registered agreement on 28-5-1984 transferring its lease hold rights in favour of AIDL. In principle approval was received from the applicant Bank and, thereafter, deed of conveyance was executed on 28-5-1986. The applicant Bank had, therefore, knowledge about this transaction way back in 1986 and no dispute was ever raised by the applicant Bank. The Company went into liquidation on 1-9-1989. The Official Liquidator was not aware about this property as by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4 was put into possession of the property in question way back in 1994 and the present application is filed by the applicant in 2004, i.e., after the expiry of the period of 10 years. The respondent No. 4 and, thereafter respondent Nos. 5 to 13 are totally the strangers to the proceedings between the applicant Bank and the Com-pany-in-liquidation. They are the bona fide purchasers and purchased the properties after payment of consideration. Now the possession is sought to be taken away from the respondent Nos. 4 to 13 after the expiry of the period of more than 10 years and that too by alleging the contention that the applicants were not aware about these transactions and that a fraud was committed not only on the applicant Bank but also on the Court. While raising this contention certain other issues were also raised by the applicant that the Company in liquidation had no power to transfer its lease hold rights as the same were already mortgaged with the Bank and that the said transfer was violative of provisions of section 293(1)(a) of the Companies Act, 1956 and that the documents under which the said rights are transferred was unregistered document and that though the property ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt Bank, being mortgagor, has no right after expiry of lease. Even if there is any dispute on this ground, the applicant Bank would have raised the said dispute at an appropriate time. When mortgage was created in favour of the appli- cant Bank it was a known fact that the mortgage was for an expiry period which come to an end in 1993. Despite this knowledge and despite this fact the applicant Bank has not taken any action. Any inaction on the part of the applicant Bank would not give rise to an allegation of fraud and to make a transaction as fraudulent transaction which otherwise appears to be quite genuine and bona fide transaction. 44. Taking overall view of the matter and considering the entire facts and circumstances of the case and considering the various authorities cited before the Court there is no matter of doubt or suspicion that the respondent Nos. 4 to 13 are the lawful owners and are in legal possession of the properties in question and they cannot be deprived of such lawful rights and legal possession vested in them years back, by entertaining these applications after a considerable length of time and by permitting the applicants to raise the plea of fraud. The Cou ..... X X X X Extracts X X X X X X X X Extracts X X X X
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