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TMI Blog2007 (11) TMI 422X X X X Extracts X X X X X X X X Extracts X X X X ..... declaring the action of the first respondent in proposing to take physical possession of residential building bearing No.48-18-25, Danavaipeta, Rajahmundry, as illegal, arbitrary, violative of Articles 14 and 21 of Constitution of India and the provisions of the Securitisation Reconstruction of Financial Assets Enforcement of Security Interest Act, 2002 (for short hereinafter called 'the Securitisation Act', for the purpose of convenience) and consequently to restrain the first respondent from taking physical possession of the building in question, and to pass such other suitable order or Orders in the circumstances of the case. 3. It is Stated that the petitioner is a tenant of a residential building bearing No.46-18-25 Situated at Danavaipet, Rajahmundry, which consists of eight portions and is a double floor structure, and that an agreement was entered into between him and the second respondent on 27.03.2003, whereunder he took the said premises on lease for a monthly rent of Rs.6,500/- and even he was permitted to sub-lease, and an amount of Rs. 2,00,000/- was given as advance to the second respondent. It appears that the said premises was given as security by the secon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s no provision in the Securitisation Act annulling the tenancy rights of tenants of secured assets. In the absence of such a provision, the tenancy rights shall remain unaffected and possession of a tenant ought not to be disturbed by the first respondent. 6. The provisions of Section 31 of the Securitization Act, shall not apply to certain cases. Section 31 ( e ) reads as follows : "The provisions of this Act not to apply in certain cases: ( a ) .. ( b ) .. ( c ) .. ( d ) .. ( e )Any conditional sale, hire-purchase or lease or any other contract in which no security interest has been created; ( f ) .. ( g ) .. ( h ) .. ( i ) .. ( j ) .." 7. It is therefore stated that in view of the above provision, it is clear that the Securitization Act shall not apply to a lease in which no security interest is created. Therefore, since in the lease entered into between petitioner and the second respondent, no security interest had been created in favour of the first respondent-bank, the Securitization Act is not applicable to the lease agreement of the petitioner, dated 27.03.2003. It is also stated that the petitioner is unable to approach the D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce of the present writ petition and the interim orders passed therein. 11. In the counter at para-6, the contention of the petitioner that he is a tenant of second respondent under an agreement entered into on 27.03.2003, whereunder he took the premises on lease for a monthly rent of Rs.6,500/- and that the building consists of eight portions and is a double floor structure and that he was permitted sub-lease, is categorically denied. It is stated that the date of mortgage created by the borrowers in favour of the Bank in respect of the premises is 17.11.2000, whereas the alleged tenancy of the petitioner with the second respondent is dated 27.03.2003 i.e., long after creation of equitable mortgage by the borrowers in favour of the Bank. The petitioner also did not specify in his affidavit under which portion of the building he is residing and what portion of the building was let out by him under the alleged sub-lease granted/permitted by the second respondent. It is stated that as admitted by the petitioner in paras-3 and 4 of the affidavit, he and the second respondent are aware of the notices issued under Section 13(2) of the Securitisation Act and also the failure on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f peace or untoward incident at the time of taking possession of the premises and it cannot under any circumstances be labeled as illegal, arbitrary or malafide exercise of power. 14. It is also averred that the contention of the petitioner that Section 31( e ) of the Securitisation Act shall not apply to a lease in which no security interest is created and the lease between him and the second respondent does not create any security interest in favour of the first respondent-Bank and therefore the Securitisation Act is not applicable to the lease agreement, dated 27.03.2003, is absolutely false and untenable. It is stated that security interest is already in existence in the building by virtue of the equitable mortgage created over it on 17.11.2000, long prior to the alleged lease agreement, dated 27.03.2003. In view of the same, neither the petitioner nor the second respondent can be permitted to say that there is no security interest in the property. 15. It is therefore stated that the writ petition itself is misconceived arid is not maintainable in law and the petitioner has no locus standi to challenge the action of the first respondent, which has invoked the provis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... way. Public interest has always been considered to be above the private interest. Interest of an individual may, to some extent, be affected but it cannot have the potential of taking over the public interest having an impact on the socio-economic drive of the country. The two aspects are intertwined which are difficult to be separated. There have been many instances where existing rights of the individuals have been affected by legislative measures taken in public interest. Certain decisions which have been relied on behalf of the respondents, on the point are V. Ramaswami Aiyengar v. T.N.V. Kailasa Thevar (AIR 1951 SC 189 : 1951 SCR 292). In that case by enacting the Madras Agriculturist's Relief Act, relief was given to the debtors who were agriculturists as a class, by scaling down their debts. The validity of the Act was upheld though it affected the individual interest of creditors. In Dahya Lala v. Rasul Mohd. Abdul Rahim, (AIR 1964 SC 1320 : [1963] 3 SCR 1), the tenants under the provisions of the Bombay Tenancy Act, 1939 were given protection against eviction and they were granted the status of protected tenant, who had cultivated the land personally six years prio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, every legal entity of public character does not necessarily become an 'authority' within the meaning of Article 12 of the Constitution. Even if a body or organization is a creature of statute, unless such body or organization is entrusted with governmental functions, fundamental to the life of people, the same cannot be treated as 'authority' 'instrumentality' and 'agency' for the purpose of Article 12 of the Constitution. A person alleging an entity to be a State must satisfy the Court of brooding presence of Government or deep and pervasive control of the Government duly demonstrating the real source of governing power. The Karur Vysya Bank no doubt obtained licence from the Reserve Bank of India. Nevertheless keeping in view the law laid down by the Supreme Court, it cannot be treated as a "State" for the purpose of Article 12 of Constitution and mandamus cannot be issued to it as the same does not perform any public duty. The petitioner is given liberty to file appeal under Section 17 of the Act before the competent authority. As the writ petition is not maintainable, this writ petition is misconceived and is accordingly dismissed. No costs.' 19. In Neel Madhav Mi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... conclude that such a discretion was exercised irrationally. The object of authorising the creditors to take possession of the assets of the debtors appears to be to safeguard the interests of the creditors in the event of successful culmination of the proceedings under the Act or under the proceedings before the Debts Recovery Tribunal. The object could still be achieved by injuncting the petitioners from alienating the property in dispute or from creating any encumbrance in the property or altering its nature or by ordering both particularly when the dispute is whether the asset is amenable to the jurisdiction under Section 13(4) of the Act or not.' 20. A Division Bench of this Court in Branch Manager, State Bank of India, Commercial Branch, Ongole v. Chinigepalli Lathang i, at paras-22, 23, 26 and 27 held as under : "From a careful reading of the above provisions of the Act, the Scheme of the Act, broadly, appears to be that the Financial Institutions shall not be unnecessarily subjected to lengthy and arduous procedure for the recovery of monies lent by them to the borrowers. In fact, there are several other statutes, covering different financial Institutions ( e.g., ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 21. A Division Bench of Karnataka High Court in Punjab National Bank v Anwar Sheriff at para-10 observed as follows : In the light of the above legal position, let us now advert to the merits of this appeal. It has to be stated at the outset that the impugned interim order passed by the learned single Judge is a non-speaking order inasmuch as it does not indicate as to what weighed with the Court to pass such an interim order. It is an one line order without indicating any reasons for passing such an order. It is not in dispute that the interim prayer sought for by the respondent - writ petitioner was strongly resisted or opposed by the appellant - bank by filing detailed objections. It is equally not in dispute that after the appellant - bank filed its objections, the matter was heard by the learned single Judge on the question of issue of an interim order. It is only thereafter, the interim order came to be issued. That being so, the impugned interim order passed by the learned single Judge should have reflected the contentions that were urged before him and the reasons which weighed with the learned single Judge to pass such art interim order. In the absence of all this, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . But strangely, the respondent - borrower did not seek to challenge the measures taken by the appellant - bank under the Securitisation Act by filing an appeal and instead he approached the Debt Recovery Tribunal in O.A. No.589/2000 by filing an application under section-22 of the DRT Act, which was totally misconceived and impermissible in law. Section 22 of the DRT Act only deals with the procedure and powers of the Tribunal and the appellate Tribunal which has nothing to do with the relief sought for by the respondent - borrower before the Debt Recovery Tribunal. The prayer made before the Debt Recovery Tribunal itself was improper and misconceived. The appropriate remedy for the respondent - borrower would have been to prefer an appeal under section 17 of the Securitisation Act. Admittedly, the respondent - borrower did not do this. Though he did not think of challenging the measures taken by the appellant bank under the provisions of the Securitisation Act by preferring an appeal under section 17 of the said Act, but when he approached this Court by preferring a writ petition, the Wisdom dawned upon him to seek to challenge the proceedings initiated by the appellant - bank ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the writ proceedings, the same can be taken as a guideline for issue of interim order of stay in a case of this nature in view of the provisions contained in Rule-39 of the Writ Proceedings Rules framed by this Court. Certain specific considerations to be noted in the matter of grant or otherwise of an interim order sought for by the petitioner, the basic being non-expression of opinion as to the merits of the matter by the Court, since the issue of interim order usually, is at the earliest possible stage so far as the time frame is concerned. The other considerations which ought to weigh with the Court hearing the application seeking for interim stay are that :- Extent of damages being an adequate remedy; that the substantial loss may result to the party applying for stay of execution unless the order is made etc. The issue regarding the grant or otherwise of an interim stay is to be looked from the point of view as to whether on refusal of the interim prayer sought for by the petitioner, he would suffer irreparable loss and injury keeping in view the strength of the parties case. We have not been able to gather from the impugned interim order whether all these issues have been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 72) wherein it is observed in para 11 of the decision that : " The first appellate Court exercising power to dismiss the appeals summarily ought to pass a speaking order making it precise that it did go into the pleas - of fact and/or law - sought to be urged before it and upon deliberating on them found them to be devoid of any merit or substance and giving brief reasons. This is necessary to satisfy any superior jurisdiction to whom the aggrieved appellant may approach that the power to summarily dismiss the appeal was exercised judicially and consciously by way of an exception. " In this connection, a reference may also be made to a decision of the Hon'ble Supreme Court in the case of State of Punjab v. Bhagsingh reported in 2004 AIR SCW 102 : (AIR 2004 SC 1203) and also to another decision of the Hon'ble Supreme Court in the case of Cyril Lasrado v. Juliana Maria Lasrado 2004 (6) SCALE 607 : (2005 AIR Kant HCR 954) (relevant paras 10, 11 and 12).' 22 . The learned counsel further relied upon the following decisions - M.R. Utensils v Union of India , Apex Electricals Limited v. ICICI Limited , Manoj D. Kapasi v. Union of India , Hotel Rajahamsa Inte ..... X X X X Extracts X X X X X X X X Extracts X X X X
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