MS Shyam Industries vs State Bank Of India on 4 July 2022

**FINAL ORDER**

Delivered on 04.07.2022

Appeal under Section 30 of Recovery of Debts due to Banks and Financial Institutions Act, 1993 arising out of the Order no. 14 dated 24.04.2019 passed by Sri S.Chatterjee, the Recovery Officer, DRT-2, in RC/163/2018. The Appeal filed on 24-05-2019 praying to set aside / quash the Order No.14 dated 24.04.2019 in R.C./163 of 2018, restraining the respondents from taking steps in accordance with the impugned order No.14 dated 24.04.2019, to call for the LCR (R.C. No.163 / 2018 SBI Vs. Kharkia Steel Pvt. Ltd. & ors. from the Recovery Officer, Kolkata DRT-2.

2. The brief facts of the Appeal as set out by the Appellant in its Original Appeal are, as under :

(i) That the Appellant states that since the year 2002, the appellant is a tenant in respect of some properties belonging to Sri Ashok Kharkia, the respondent no.3 herein i.e.(i) one property measuring about 25 Cottahs 4 Chittaks 20 sq.ft. under P.S.- Sankrail, Dist.- Howrah, (ii) another property measuring more or less 14 cottahs 10 chittaks under Mouza Mirzapur, P.S. Sankrail, Dist. Howrah (iii) Property measuring 1 Bigha 4 cottah under mouza Mirzapur, P.S. Sankrail (iv) another property measuring 1 cottah 11 chittaks in Mouza Mizapur, P.S. Sankrail Dist. Howrah (v) Property measuring 3 cottahs in Mouza Mirzapur, P.S.-

That the appellant at its own cost and expenses, constructed factory/godown/shed at the above mentioned lands belonging to the Respondent No.3.

(ii) In November, 2007, the Respondent no.3 wanted to enter into Agreements of Tenancy with the Appellant with the following terms and conditions :

1. a. The appellant will pay rent @ Rs.32,000/- per month in respect of each Agreement of Tenancy aggregating to a sum of Rs.64,000/- per month.

2. b. The Appellant will be entitled to carry on its business from the tenanted properties with a right to make necessary addition, alteration and further construction therein.

3. c. The Appellant will be entitled to sub-let the tenanted properties ;

4. d. The Appellant for the purpose of running its business from the tenanted properties will entitle to obtain Trade License and other Licenses ;

5. e. The appellant will be entitled to obtain separate electric connection in the tenanted properties from the West Bengal State Electricity Board or other statutory authorities and

6. f. The appellant will have a right of pre-emption in respect of the tenanted properties.

Copies of the aforesaid two Agreements of Tenancy both dated 28^th November, 2007 are annexed hereto and marked as **Annexure "A-1" and "B respectively.**

(iii) That subsequently to being inducted as a tenant in the tenanted properties, the Appellant has made substantial investments for the purpose of construction and for installation of shed and building and working capital and plant and machinery which even at a conservative estimate huge.

The copies of the relevant documents are annexed hereto and marked as **Annexure C.**

(iv) That in view of various disputes and differences between the Appellant and Ashok Kumar Kharkia, the Respondent no.3 herein, the appellant had to file two suits against Ashok Kumar Kharkia in the Court of 5^th Civil Judge (Junior Division), Howrah namely Title Suit no. 17014 of 2014 and Title suit no. 17013 with various prayers as mentioned in the above two Title suits.

By an order dated 23.12.2014 passed in Title Suit No.17013 of 2014, the Ld. Civil Judge(Junior Division), 5^th Court Howrah was pleased to allow the application filed by the Appellant under Order 39, Rule 1 and 2 read with Section 151 of the Code of Civil Procedure and both the parties were directed to maintain status quo.

(v) That the Appellant states that on or about November 26, 2018, two persons namely P.Pal and R.D. Bagchi claiming to be Joint Receivers appointed by the Debts Recovery Tribunal –II entered the tenanted properties for the purpose of attaching it. Upon enquiry the Appellant was informed that the tenanted properties were mortgaged in favour of certain banks by Ashok Kumar Kharakia and upon his default to repay the loan and order has been passed for attachment of such properties. The appellant was further informed that the next date of hearing was fixed before the Ld. Recovery Officer on 27.11.2018.

(vi) That the Appellant filed an Intervening Application on 11.12.2018 before the Ld. Recovery Officer with the prayer as mentioned in the Appeal. Copy of the said Application along with all annexures is annexed hereto and marked as Annexure-D.

3Appeal/03/2019 - DRT-2/Kol

(vii) The Respondent Bank filed an Affidavit-in-opposition to the said application filed by the Appellant before the Recovery Officer, copy of said Affidavit-in-opposition is annexed and marked as Annexure 'E'. In para 3 of the said Affidavit-in-opposition the respondent Bank stated that the Bank has no knowledge about the tenancy in the name of the Appellant and as such is denying the existence of the tenancy. On 09.04.2019, the Ld. R.O. permitted to file its Affidavit-in-Reply on 24.04.2019. On 24.04.2019, the Ld. Advocate for the Appellant could not appear before the Ld. Recovery Officer because in a traffic jam. By and time the Ld. Advocate reached the DRT, the hearing before Ld. R.O. had already been completed and the application filed by the Appellant had been dismissed ex-parte on merits.

(viii) Being aggrieved and dissatisfied with the Order no.14 dated 24.04.2019 passed by Sri S. Chatterjee, Recovery Officer, Debts Recovery Tribunal No.2, Kolkata in RC/163/2018, the Appellant prefer this Appeal with various grounds as mentioned in the Appeal.

(ix) That the Appellant prays for set aside / quash the Order No.14 dated 24.04.2019 passed by Sri S. Chatterjee, Recovery Officer, Debts Recovery Tribunal No.2, Kolkata in RC/163 of 2018 including all actions and orders for execution/furtherance of the said order dated 24.04.2019.

3. (i) That the Respondent No.1 and 2 filed Affidavit in Opposition against the Appeal and denying and disputing the contention of alleged tenancy in favour of the Appellant in as much equitable mortgage in respect of the said property has been made free from encumbrances by the respondent no.3 in favour of the respondent bank. The Respondent bank is praying for a direction upon the appellant to produce the Original Tenancy Agreements in as much the genuinity, legality, propriety and validity of said Tenancy Agreements are under serious challenge. In paragraphs nos. 3 and 4 of the said Memorandum of Appeal, it is respectfully submitted from Annexure -A of the Appeal, it shall be found that Agreement of Tenancy has allegedly been executed between the respondent no.3 and the Appellant herein on 28.11.2007 it has been found that the First party has become the absolute owner of the property in question by a registered Gift Deed by the Deed of Gift dated 11.12.2011. It is also pertinent to point out herein that Ashok Kumar Kharkia has become the absolute owner of the property in 2006 and in such a case how a tenancy can start from the year 2002. Further to establish the alleged Tenancy, it has been alleged that the appellant is paying the monthly rent of Rs.32,000/- but except some scanty money receipts of 2014 annexed with the petition no current rent receipt and the previous rent receipts have been enclosed. The Appellant kindly be directed to file Income Tax Return since 2007 to till date to establish that the said money have been paid to the Certificate debtor No.2 month wise. That from the paragraph no.2 of the said Agreement it is found that the said alleged lease has been given for setting up a factory without mentioning any period although the time is the essence of contract. It is submitted that the land in question is lying under Mashila Gram Panchayet and as such any tenancy in respect of the said property shall be governed under the Transfer of Property Act. It is submitted that as per Section 107 of Transfer of Property Act any lease for one year or more shall be compulsorily registered. The present purported instrument enclosed by the Appellant that to after passing the order of attachment by the Ld.

Recovery Officer as such the plea of Tenancy is purely an afterthought. From the paragraph no.4 of the said Appeal, it is respectfully submitted that from the suits filed by the appellant against the respondent 3 , it is found that the said Appellant has prayed for a declaration that the said Appellant is the tenant in respect of the properties in question. In paragraph no.5 of the said Appeal it is submitted that the joint Receiver has visited the spot to attach the said property pursuant to the order of Ld. Recovery Officer. With reference to paragraph no. 6,7 and 8 of the Appeal, it is submitted that in the Affidavit-in-Opposition against the Intervention application the respondent bank has challenged the legality, propriety and validity of the purported Tenancy Agreement on different scores as stated in foregoing paragraphs of the present affidavit in opposition.

(ii) That with reference to the allegations made in the paragraph no.9 of the said Appeal it is submitted that on 19^th March, 2019, the appellant has been given opportunity to file the reply against the affidavit-in-opposition of the respondent bank and the date has been fixed on 09.04.2019.

(iii) That the Respondent Bank has denied all the allegations made in the Appeal and ultimately prayed for dismissal of the Appeal.

4. That during the proceeding of the Appeal the appellant filed an I.A. being I.A.650 of 2019 arising out RC No.163 of 2018.

5. In view of the above, I pass the following order :

ORDER

(i) The Appellant herein claims to be a Tenant in respect of the properties belonging to one Mr. Ashok Kharkia, Respondent No.3 herein has filed an application before the Ld.Recovery officer on 11.12.2018 praying for an order restraining the Respondent No.1, State Bank of India from dispossessing or evicting M/s.Shyam Industries from the Tenanted properties more detailed therein and to order directing any sale of the tenanted properties to be conducted on," As is where is " basis and by disclosing the subsistence of tenancy in the sale notice and for an order directing the Banks and /or their men, agents ,officers, employees as well as Joint receivers to give notice of any proceedings or steps which might affect the possessory rights of M/s.Shyam Industries in the tenanted properties.

(ii) That by an order dated 24.04.2019 annexed as Annexure A, at page 19 of the Appeal paper book, the Ld.Recovery officer dismissed the said application, holding, *inter-alia*, as follows:

"In view of the above, the petition filed by the M/s.Shyam Industries has no merit and is liable to be dismissed and hence dismissed and accordingly disposed of"

(iii) That there was no mention of the case made out by the Appellant, the Ld. Recovery officer merely stated that the Appellant had not filed reply to the objection filed by the Bank and did not attend the hearing on 24.04.2019. It is further averred that without going into the details of the case and also without considering the case made out by the appellant the Ld.RO dismissed the Appeal.

(iv) The instant Appeal has been filed challenging the said order dated 24.04.2019 of the Ld.RO praying to set aside / quash the order No.14 dated 24.04.2019 including all actions and orders for execution/furtherance of the said order, to pass an order to restrain the respondents from taking steps in accordance with or in furtherance of the aforementioned impugned order No.14, dated 24.04.2019 apart from other prayers more detailed therein.

Upon hearing both sides and on perusal of the Affidavits and pleadings filed, I pass the following order:

(v) The Appellant claiming to be a Tenant of Respondent No.3, Mr.Ashok Kumar Kharkia, by virtue of Tenancy agreements in the name of Shyam Industries had constructed factory/Godown/shed at the aforementioned properties belonging to Respondent No.3. Evidencing such tenancy has filed Two Tenancy agreements executed by and between Ashok Kumar Kharkia (Landlord) and Shyam Industries, dated 28.11.2007 in respect of several properties more detailed therein (Annexure A) at page No.21 and (Annexure –B) at page no.25 of the Appeal paper book and Certain Rent bills, annexed as (Annexure–C) at page no.29 to 34. Trade registration certificate dated 04.12.2018 issued by the Mashila Gram Panchyat, Block Sanrail, Howrah District. Copies of the Title suit No.17013 of 2014 before Civil Judge (Junior Division) 5^th Court at Howrah between M/s.Shyam Industries and Ashok Kumar Kharkia, Annexure – D at page no.37 to 46 and the Title suit No.17014 of 2014 before Civil Judge(Junior Division) 5^th Court at Howrah between M/s.Shyam Industries and Ashok Kumar Kharkia , Annexure –D at page no.47 to 54 .

(vi) That the objections filed by the Respondent No.1 State Bank of India disputing the allegations of the Appellant in toto goes to show that the claim of tenancy said to be pending before the Ld.Civil Judge Court and that the Appellant is protected with a status quo order and that the CHB / Bank is not a party to such proceedings is true.

(vii) This Tribunal is not inclined to go into the merits of the Tenancy as the same already pending adjudication before the competent Civil courts. The Appellant shall not frustrate the sale process of the CHB from realizing its outstanding dues by sale of secured assets. The CHB is at liberty to proceed for sale of the secured assets by following the due process of law.

(viii) That in respect of the impugned order dated 24.04.2019 of the Ld.RO, it is clear that the Ld. R.O. has no power under the RDB Act to pass an order of eviction against a Tenant in the mortgage property. The Hon'ble High Court at Calcutta decided on 13.08.2003 in Ratan Kumar Khaitan Vs United Bank of India and Ors, wherein para 9; *"Judgment the Hon'ble High Court of Calcutta held that the Recovery Officer of a 9. The petitioner is a tenant and is, therefore, entitled to all the protections available under the West Bengal Premises Tenancy Act. The Recovery Officer of the Tribunal has no power under the Recovery of Debts due to Banks and Financial Institutions Act, 1993 to pass an order of eviction against a bona fide tenant in respect of a mortgaged property. Therefore, the order impugned in this application is wholly without jurisdiction. The Recovery Officer of the Tribunal acted without jurisdiction in appointing a receiver in respect of the property*

*in question to take possession from a lawful tenant when a competent forum has not passed a decree for eviction."*

(ix) In the above referred DRT has no Jurisdiction to appoint a receiver in respect of the property in question and to take possession of the same from a lawful tenant when a competent forum has not passed a decree for eviction. But it is to be noted that by virtue of amendment to Sec.25 of RDDB Act by way of insertion of (aa) after (a) to the section under Act.No.44 of 2016 w.e.f 01.09.2016 the Recovery Officer has been given power to take possession and property over which secured interest is created or any other property of the defendant and appointing receiver for such property and to sell the same. However, from the above cited Judgment it could be culled out that the question with regard to issuance of direction evicting a tenaht from the secured asset or the adjudication of rights of tenant to continue in possession of the property etc., cannot be decided by the Recovery Officer as the same are beyond the scope of powers that could be exercised by him under Chapter –V of RDDB Act as Recovery Officer while proceeding to recovery the amount of debt specified in the recovery certificate. Hence, the Appeal filed by the Tenant is allowed by setting aside the Order dated 24.04.2019 of the Ld. RO.

(x) This Tribunal is not oblivious to the fact that it is exercising only appellate jurisdiction in these proceedings and hence, it is confining its decision to the issue whether the Recovery Officer has power to entertain and decide the dispute regarding tenancy rights of applicant-third party vis-à-vis the secured creditor bank and the applicant-third party cannot agitate the issues, which he urged in this appeal, before an appellate forum as the scope of this appeal is limited only to decide the power and jurisdiction of Recovery Officer.

However, the Respondent bank is at liberty to proceed according to law to recover the amount due under recovery certificate and that the appellant is in possession of the secured asset is no bar to proceed according to law.

Accordingly, the Appeal being Appeal No.03 of 2019 is disposed of Registry shall send the file to the Ld. Recovery Officer bench for further proceedings of the Certificate Holder Bank.

This order is dictated and corrected by the undersigned and pronounced on this the 04^th day of July, 2022 in the presence of Ld. Counsel for the Respondent Bank. Mr. Souvik Ghosh.

Copy of the Order be uploaded in the Tribunal's Website.

Sd/-

(Makena Srinivasa Rao) Presiding Officer DRT-2, Kolkata