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TMI Blog2024 (8) TMI 727X X X X Extracts X X X X X X X X Extracts X X X X ..... hall remain solely with Respondent No.2. Except for the right to operate, maintain and use the Facility, the Corporate Debtor will have no right whatsoever in the ownership of the Facility. We have also extracted Clause 2.2.(d) of the Facility Agreement dated 12.08.2013. There can be no dispute that Facility has been handed over to the Appellant for operation and maintenance. Further, Respondent No.2 was also obliged to provide access to representative of the Corporate Debtor for operating and maintenance, but the mere fact that the Appellant has been permitted to use the Facility for operation and maintenance, cannot lead to conclusion that the Corporate Debtor is in occupation of the Facility and there is any breach of Section 14(1)(d). Section 14(1)(d) of the IBC prohibits recovery of any property by an owner or lessor, where such property is occupied and in possession of the Corporate Debtor. The present is not a recovery of the Facility by owner or lessor, who is Respondent No.2 herein. Further, the Facility is neither in occupation, nor in possession of the Corporate Debtor, since the Corporate Debtor has been appointed as operating and maintenance contractor The Adjudicating ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Debtor constructed the substations and switch yards, on which the Corporate Debtor was allowed to operate. The Facility Agreement was modified from time-to-time upto the year 2016. (iii) Respondent No.2 entered into a Loan Agreement with Respondent No.1. Under the first Loan Agreement, Respondent No.1 sanctioned loan of Rs.90 Crores. Under the second Loan Agreement, another Rs.90 crores loan was sanctioned. (iv) Under the Facility Agreement, the Corporate Debtor was liable to pay facility usage charges to Respondent No.2, a subsidiary Company. Respondent No.1 and Respondent No.2 entered into Hypothecation Agreement and created charge in favour of Respondent No.1 over the substations and other assets on 05.07.2012 and 19.12.2023. A Conditional Deed of Assignment dated 23.12.2013 was also executed by Respondent No.2 and Respondent No.1 assigning all rights of Respondent No.2 in favour of lender, i.e. Respondent No.1. (v) On an Application filed under Section 7 of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as the IBC ), Corporate Insolvency Resolution Process ( CIRP ) against the Corporate Debtor commenced by order dated 20.02.2018. Respondent No.2 having commi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubmits that measures adopted by Respondent No.1 are not in contravention of Section 14 of the IBC. Section 14(1)(d) is not applicable in the instant case. It is submitted that Respondent No.1 is neither the owner nor lessor of the property. It is submitted that it is Respondent No.2, who is owner and in possession of substations and switchyards and has handing over the facility for use, operate and maintenance by the Appellant/ Corporate Debtor, cannot be said to be in occupation for the purpose of Section 14. The Corporate Debtor was liable to pay Facility usage charges under the Facility Agreement, which has not been paid by the Corporate Debtor to Respondent No.1 and dues of more than Rs.170 crores are to be paid as on date. On account of non-payment of facility use charges, Respondent No.2 has not been able to service the loan, leading to event of default. When the event of default has taken place, Respondent No.1 has proceeded under SARFAESI Act, 2002 against Respondent No.2. Respondent No.2 having not service the Loan Agreement, Respondent No.1 has every right to proceed and take action. It is submitted that an IA was filed by the Appellant for staying the SARFAESI proceeding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in the name of EIIPL. f. Not do or omit to do any act which may result in seizure and/or confiscation of the Facility by the Central or State Government or Local Authority or any Public Officer or Authority under any law for the time being in force. 8. Clause 2.4 deals with Facility Use Charges , which was required to be paid by the Corporate Debtor to Respondent No.2, is as follows: 2.4 FACILITY USE CHARGES EIL shall pay EIIPL a fixed Facility Usage Charge @ Rs.4.30 Lakh per Mega Watt of installed Capacity i.e. Rs.25.70 Crore per annum on monthly basis on 7th of every month (the Facility Usage Charges). EIL shall ensure that the Installed Capacity in any month shall not be lesser than 597.60 MW. 9. Clause 8.6 deals with Assignment , which is as follows: 8.6 Assignment. Neither Party shall assign or part with any of its rights or obligations under this Agreement to any third party, without the prior approval in writing of the other Party. Notwithstanding the foregoing, for the purpose of financing the Facility, EIIPL may assign or create security over its rights interests under or pursuant to a) this agreement and b) any agreement related to the Facility in favour of the Lender. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... SARFAESI Act was initiated by Respondent No.1 against Respondent No.2 as per the rights conferred on it by way of Loan Agreement, Hypothecation Agreement and Conditional Deed of Assignment. The Appellant filed an Application in this Appeal praying for injuncting Respondent No.1 from proceeding with SARFAESI Act, which Application was decided by this Tribunal by order dated 25.05.2023, refusing to stay the SARFAESI proceedings. Order dated 25.05.2023 is as follows: 25.05.2023: I.A. No. 2243 of 2023 The Applicant is seeking a direction that Respondent No. 1 not to take action under Section 13(4) if SARFAECI Act in pursuance to the Notice dated 25.04.2023. 2. The case of the Appellant is that under the contract dated 21.12.2007 he is operating the facility. 3. Learned Counsel for the Respondent submits that action under Section 13(4) of SARFAECI Act is not against the Appellant and is against the Subsidiary and Section 13(4) cannot be interjected by the Appellant. 4. After considering the submission of the Counsel of the parties, we are of the view that action under Section 13(4) of SARFAECI Act in pursuance of the notice dated 25.04.2023 is not restrained by this Tribunal, however, o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s then to be read with the expression occupied or in the possession of . One manner of reading this clause is to state that whether recovery is sought by an owner or lessor, the property should either be occupied by or be in the possession of the corporate debtor. The difficulty with this interpretation is that a lessor would not normally seek recovery of property occupied by a tenant having leased the property, a transfer of property has taken place in favour of a tenant, possession of which would then have to be recovered. This is where the Latin maxim reddendo singula singulis comes in. In an earlier judgment of this Court in Board of Revenue v. Arthur Paul Benthall [Board of Revenue v. Arthur Paul Benthall, (1955) 2 SCR 842 : AIR 1956 SC 35] , this Court dealt with two different expressions used in Sections 5 and 6 of the Stamp Act, 1899, and held : (SCR p. 846 : AIR p. 38, para 4) 4. We are unable to accept the contention that the word matter in Section 5 was intended to convey the same meaning as the word description in Section 6. In its popular sense, the expression distinct matters would connote something different from distinct categories . Two transactions might be of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... day, can be realised by the Central Government by virtue of their powers under sub - section (3) of Section 22 of the Nationalisation Act, to the exclusion of all other persons including such contractor and applied under sub-section (4) of Section 22 towards the discharge of the liabilities of the coking coal mine, which could not be discharged by the appointed day. 21. Likewise, in Dunlop (India) Ltd. v. A.A. Rahna [Dunlop (India) Ltd. v. A.A. Rahna, (2011) 5 SCC 778 : (2011) 3 SCC (Civ) 148] , this Court was concerned with Section 11(4)(v) of the Kerala Buildings (Lease and Rent Control) Act, 1965 which was set out in para 19 of the judgment as follows : (SCC p. 794) 11. (4)(v) if the tenant ceases to occupy the building continuously for six months without reasonable cause. Coming to the word occupy in the said section, this Court then held : (Dunlop India Ltd. case [Dunlop (India) Ltd. v. A.A. Rahna, (2011) 5 SCC 778 : (2011) 3 SCC (Civ) 148] , SCC pp. 794- 95 799-800, paras 21, 25 29-30) 21. The word occupy used in Section 11(4)(v) is not synonymous with legal possession in technical sense. It means actual possession of the tenanted building or use thereof for the purpose for w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the onus keeps shifting. Once the landlord has been able to show that the tenancy premises were not being used for the purpose for which they were let out and the tenant has discontinued such activities in the tenancy premises as would have required the tenant's actually being in the premises, the ground for eviction is made out. The availability of a reasonable cause for ceasing to occupy the premises would obviously be within the knowledge and, at times, within the exclusive knowledge of the tenant. Once the premises have been shown by evidence to be not in occupation of the tenant, the pleading of the landlord that such non-user is without reasonable cause has the effect of putting the tenant on notice to plead and prove the availability of reasonable cause for ceasing to occupy the tenancy premises. * * * 29. In Ananthasubramania Iyer v. Sarada Amma [Ananthasubramania Iyer v. Sarada Amma, 1978 SCC OnLine Ker 57 : 1978 KLT 338] , the learned Single Judge of the Kerala High Court held : (SCC OnLine Ker para 6 : KLT pp. 339-40, para 3) The physical absence of the tenant from the building for more than six months would raise a presumption that he had ceased to occupy the buil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ote the tenant's actual physical use of the building either by himself or through his agents or employees. The Division Bench of this Court of which one of us is a party (Radhakrishnan, J.), in Rajagopalan v. Gopalan [Rajagopalan v. Gopalan, (2004) 1 KLT (SN) 54] interpreting Section 11(4)(v) took the view that occupation in the context of Section 11(4) means only physical occupation, which requires further explanation. Occupation in the context of Section 11(4)(v) means actual user. If the landlord could establish that in a given case even if the tenant is in physical possession of the premises, the premises is not being used, that is a good ground for eviction under Section 11(4)(v) of the Act. Section 11(4) uses the words put the landlord in possession and not occupation , but Section 11(4)(v) uses the words the tenant ceases to occupy . In Section 11(4)(v) in the case of landlord the emphasis is on possession but in the case of tenant the emphasis is on occupation . The word occupy has a distinct meaning so far as the Rent Act is concerned when pertains to tenant, that is, possession with user. (emphasis in original) 16. The submission of learned Counsel for the Appellant i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ner or lessor, who is Respondent No.2 herein. Further, the Facility is neither in occupation, nor in possession of the Corporate Debtor, since the Corporate Debtor has been appointed as operating and maintenance contractor. The Facility, which was constructed by Respondent No.2, the subsidiary of the Corporate Debtor and has been hypothecated and charged with the lender, i.e. Respondent No.1, it continues to be in possession and occupation of Respondent No.2, the subsidiary of the Corporate Debtor. The Adjudicating Authority has considered the various Clauses of the Facility Agreement and has rightly come to the conclusion that the EoI issued by Respondent No.1 to appoint another operating and maintenance contractor, cannot be interfered with. 20. The fact is not disputed that the Corporate Debtor is not paying the facility use charges and is trying to set off the same against the claim against Respondent No.2. It is due to the non-payment of facility use charges, Respondent No.2 is unable to service the debt, causing an event of default for which Respondent No.1 has already initiated proceedings under the SARFAESI Act, 2002 against Respondent No.2. 21. In the facts of present case ..... X X X X Extracts X X X X X X X X Extracts X X X X
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