V.P. THAMARAISELVI vs DHANALAKSHMI BANK on 7 October 2022

O R D E R

1. This is an Appeal filed by the Appellant u/s.30 of the Recovery of Debt Due to the Bank and Financial Institutions Act, 1993, prays to set aside the impugned Order dated 03.06.2014 passed by the 2nd Respondent in IA No.510/2014 in RP No.84/2009 in DRC No.22/2009 in OA No.386/2003.

BRIEF FACTS

2. The Averments made by the Appellant in the Appeal are stated as follows: 2.1 The 2nd Respondent - Recovery Officer has published a Sale Notice in the RP No.84/2009, by fixing the Sale on 21.04.2014 in respect of Appeal schedule mentioned properties i.e., five items of Agricultural Properties specified in the Sale Notice were put for Public Auction to recover the outstanding amount due and payable by the borrower viz., “Silky Cotton Knits (India) Ltd.,” to the 1st Respondent/Certificate Holder Bank. 2.2 The Appellant is neither the borrower nor guarantor in respect of loan transaction between the 3rd Respondent viz., Silky Cotton Knits (India) Ltd., and 1st Respondent - Certificate Holder Bank. 2.3 The Appeal schedule mentioned properties are originally belonged to one P. Krishnasamy, and the Appellant became a cultivating tenant in respect of the above properties under P. Krishnasamy from the year 1988 and ever since the Appellant has been personally cultivating the lands and is in effective possession and enjoyment of the above said properties including the surrounding lands forming a larger extent of 31 Acres. Therefore, the Appellant got rights, under the Tamilnadu Cultivating Tenants Protection Act, 1955. Subsequent enactments of the State Government enacted with a view to protect the cultivating tenants from eviction and other measures and the Appellant is legally entitled for protection under the Provisions of the said enactments. 2.4 In the year 2001, before the expiry of the earlier Tenancy, the Appellant gain entered into a Renewal Tenancy Agreement with the said Krishnasamy in respect of Appeal schedule mentioned properties for renewal of the Tenancy rights of the Cultivating Tenant, excluding Factory Building and 3 Rooms in the 10 Anganam House situated in SF No.90/1 for another two years on an yearly rent. The Appellant paid an Advance of Rs.50,000/- also to Krishnasamy and Receipt of the same was acknowledged by him.

2.5 The Appellant has been regular in payment of Tenancy rent and has been granted Patta Pass Book by Tahsildar, Avinashi in the year 1999. In Revenue Records viz., House Tax, Electricity Charges are paid by the Appellant and they are also in the name of the Appellant. 2.6 In the year 2002, the family members of the Krishnasamy disturbed the rights of the Appellant in Appeal schedule mentioned properties and tried to forcibly interfere with lawful and peaceful possession and enjoyment of the same. Therefore, the Appellant filed a Suit for Permanent Injunction, to restrain the family members of the Krishnasamy, their relatives, partisans, agents and servants from in any manner interfering with the Appellant’s peaceful possession and enjoyment of the Appeal schedule mentioned properties before the Ld. District Munsif, Avanashi in OS No.131/2002 and the Ld. District Munsif also granted Interim Injunction. 2.7 The 1st Respondent - Certificate Holder Bank is also a party viz., 7th Defendant in the above suit and being aware of the Appellant’s Rights in the said Appeal schedule mentioned properties, the 1st Respondent - Certificate Holder Bank is unjustified in bringing the Appeal schedule mentioned properties for sale, without mentioning the above facts in the Auction Notice and without considering the Appellant’s Legal Rights as a Cultivating Tenant and entitled to Protection under the Provisions of the Cultivating Tenants Protection Act. The 1st Respondent - Certificate Holder Bank has suppressed the facts of the pending of the suit and the Ad-Interim Injunction granted in favour of the Appellant in the Auction Sale Notice. The suit is precluded and prohibited from further proceedings under the Provisions of the RDDBFI Act. 2.8 The said Krishnasamy had availed a Term Loan from Tamilnadu Industrial and Investment Corporation Ltd., (TIIC) by mortgaging the adjacent lands, in which the Appellant had Tenancy rights and the said Corporation released the said mortgage after the Appellant remitted payment due to the said Corporation. Since, the Appellant has a pre-emptive right in the Appeal schedule mentioned properties, the Appellant cannot be dispossessed unless and otherwise under the Provisions of the Tamilnadu Cultivating Tenants’ Protection Act. 2.9 The Sub-division of the Appeal schedule mentioned properties is against law, the 1st Respondent - Certificate Holder Bank cannot sub-divide the lands as per the whims and fancies of the 1st Respondent - Certificate Holder Bank, therefore the Auction Sale Notice is liable to be set-aside. The sub-division of the Appeal schedule mentioned properties, which are agricultural property, can be done by adjudicating the matter before the competent Civil Court. 2.10 It was also submitted before the Recovery Officer that unless the title to the property is investigated including the rights of the Appellant with regard to the Possession of the properties and her entitlement under the Provisions of the Cultivating Tenants Act, the Appellant put to untold hardship and inconvenience. The 1st Respondent - Certificate Holder Bank filed counter statement, in which the Application filed by the Applicant is at the instigation of the Respondents with a view to delay the Recovery Proceedings. In the counter, it is stated by the Bank, the mortgage created with the bank on 29.03.2000 and in view of the same, the renewal of the lease in favour of the Appellant on 26.09.2002 should have been done with the 1st Respondent - Certificate Holder Bank’s consent only. 2.11 The Recovery Officer has no rights to sub-division of lands and demarcation of boundaries. The Appellant is a cultivating tenant and contributed her own physical labour and the members of the family in the cultivation of the properties which are the subject matter of the Auction Notice. As per the Provisions of Section 3(1) of the Act, cultivating tenant shall not be evicted from his holding or any part thereof by or at the instance of his landlord. 2.12 The authenticity of the Rent Receipts and Lease Deed in favour of the Appellant has been disputed by the 1st Respondent - Certificate Holder Bank. The Recovery Officer dismissed the Application of the Appellant, based on the submissions made by the 1st Respondent - Certificate Holder

Bank vide Order dated 03.06.2014. Aggrieved by the said order, the Appellant filed this Appeal. 2.13 The Order of Recovery Officer is unsustainable in law, facts, biased, erroneous and based on a wrong perception and understanding of sub- sections 2(c) and 2(e) of Sec.65A of the Transfer of Property Act 1882. The Recovery Officer has come to a erroneous conclusion by stating that the provisions of the Transfer of Property Act has been violated and the Lessee could not get any protection and such a lease would be not be binding on the mortgagee. The Recovery Officer failed to note that the lease of the lands is prior to the mortgage to the Certificate Holder Bank, therefore the mortgage is subject to the Tenancy by Lease. 2.14 The Recovery Officer failed to consider the fact that the said Krishnasamy had mortgaged one portion the land comprising the properties, put up for sale with the 1st Respondent Bank and another portion of the said land was mortgaged with Tamil Nadu Industrial Investment Corporation (TIIC) and the Appellant paid the dues payable by the Certificate Debtors to TIIC and obtained the release of the said properties. Therefore, the Certificate Holder Bank under any circumstances can have any right over the said properties. 2.15 Therefore the Appellant filed an Application u/R.11 of the II Schedule of the IT Act, 1961, to investigate into the Tenancy rights of the Appellant in the Appeal schedule mentioned properties put up for the Sale and defer the sale pending such investigation and dispose the Application as per law. 2.16 Therefore, the Appellant prays this Hon'ble Tribunal to set aside the impugned Order dated 03.06.2014 passed by the 2nd Respondent in IA No.510/2014 in RP No.84/2009 in DRC No.22/2009 in OA No.386/2003.

3. The Averments made by the 1st Respondent - Certificate Holder Bank in the Reply statement are as follows : 3.1 The Appeal against the Order dated 03.06.2014 passed by the 2nd Respondent – Recovery Officer in IA No.510/2014 in RP No.84/2009 is

frivolous and unsustainable in law and on facts. The present Appeal has been filed only with the collusion and instructions of the Certificate Debtor. The Appellant has not come to this Tribunal with clean hands. 3.2 The Final Order was passed by the Hon'ble Tribunal in OA No.386/2003. In pursuance of the said Final Order, the Recovery Certificate No.22/2009 was issued on 31.08.2009 for enforcement of the mortgaged properties among other properties. Mr. Krishnasamy is the Managing Director of the 1st Certificate Debtor. The mortgage was created on 29.03.2000 with respect to the properties and there is a transfer of interest in favour of the 1st Respondent – Certificate Holder Bank. 3.3 The Rent Receipts have been created by the Krishnasamy among other Certificate Debtors in connivance with the Appellant. The Appellant was inducted into possession of the property during the year 1998 is hereby denied by the 1st Respondent – Certificate Holder Bank. The Loan account became sticky and the1st Respondent - Certificate Holder Bank commenced the Recovery Proceedings, the Certificate Debtors instigated the Appellant to file the suit before the Avinashi Court. The documents relied by the Appellant in the said Civil Suit shall not bind the 1st Respondent - Certificate Holder Bank, which is subsequent to the mortgage created in favour of 1st Respondent - Certificate Holder Bank by the mortgager. The Lease Deed shall not bind the mortgagee. 3.4 The Appellant has not chosen to mention the date of the Lease Deed during the year 1998 and how the Applicant was inducted. The Appellant was granted Patta Pass Book during the year 1999 is denied and the Appellant. The Appellant has not produced records to show that the Government has recognized her as the cultivating Tenant of the landed property. The Revenue Records produced by the Appellant is self serving document and only subsequent to the mortgage of the property with the 1st Respondent - Certificate Holder Bank and the documents have been created for the purpose of this Appeal.

3.5 The Recovery Officer has only proceeded based on the law and the facts that the proclamation of sale did not disclose the encumbrance is baseless. The Appellant had not suffered any irreparable loss by bring a portion of the property for sale. This Appeal filed by the Appellant only to drag on the Recovery Proceedings and defeat and delay in repayment of the lawful loan dues payable to the 1st Respondent - Certificate Holder Bank. The Recovery Officer has applied the Judgments of the Provisions of Section 65A only to show that the lease is subsequent to the first charge in favour of the 1st Respondent - Certificate Holder Bank. The Registered Lease Deed is only after the mortgage and the Recovery Officer has rightly investigated the claim application and has dismissed the Application in the interest of Justice. Therefore, the 1st Respondent - Certificate Holder Bank prays this Hon'ble Tribunal may be dismissed the Appeal with costs.

4. The Averments made by the 3rd Respondent – Auction Purchaser in the Reply statement are as follows : 4.1 This 3rd Respondent is the Auction Purchaser of the property mentioned in the Sale Certificate. This 3rd Respondent – Auction Purchaser has paid the entire sale consideration, so that the 3rd Respondent – Auction Purchaser is a bonafide purchaser with valid sale consideration of the property. 4.2 The 3rd Respondent Company had purchased the property through the Public Auction conducted by this Hon'ble Tribunal on 09.01.2015 and the entire sale consideration was paid by the 3rd Respondent Company. The Hon'ble Tribunal has executed Sale Certificate in favour of 3rd Respondent – Auction Purchaser bearing document Nos. 2456/2015, 2457/2015 & 2458/2015 and subsequently rectifications were made and Rectification Deed was executed by the Hon'ble Tribunal through Rectification Deed bearing documents No.8652/2015, 8653/2015 & 8654/2015. Therefore, the 3rd Respondent – Auction Purchaser is an absolute owner and bonafide purchaser of the of the Appeal schedule mentioned properties with valid sale consideration.

4.3 Thereafter, the Revenue Records were also mutated in the name of the 3rd Respondent – Auction Purchaser. The 3rd Respondent – Auction Purchaser had invested huge amount in the Appeal schedule mentioned properties. The 3rd Respondent – Auction Purchaser to be protected as per the Judgment of Hon'ble Supreme Court of India, reported in 2008 (12) SCC 582 in Janatha Textiles and Others .Vs. Tax Recovery Officer. 4.4 The Appellant is not a bonafide Tenant of the Appeal Schedule mentioned properties, and the Appellant has kept silent in all those years and during the pendency of the OA Proceedings. The 3rd Respondent – Auction Purchaser is not aware of the allegations and facts mentioned in the Appeal and the Appellant is put to strict proof of the same. The Appellant not produced any valid document to prove her claim. There are no merits in the Application and 3rd Respondent – Auction Purchaser prays this Hon'ble Tribunal to dismiss the Appeal with exemplary costs.

ARGUMENTS

5. The Learned Counsel for the Appellant submitted that the Appellant is a cultivating tenant in the Appeal schedule mentioned property even since 1988 till date and the Appellant has been exercising the rights of tenancy continuously from the year 1988 without any hindrance.

6. The Learned Counsel for the Appellant further submitted that the 2nd Respondent - Recovery Officer has published a Sale Notice in R.P. No. 84/2009, in which 5 items of agricultural properties specified in the Sale Notice were put for Public Auction which has fixed on 21.04.2014, to recover the outstanding amount due and payable by the “Silky Cotton Knits (India) Ltd.,” to 1st Respondent - Certificate Holder Bank. Being aggrieved by the Order of the Recovery Officer, the Appellant filed an Application u/R.11 of the II Schedule of the Income Tax Act, 1961 to investigate into the tenancy rights of the Appellant in the properties put for the Sale.

7. Further, the Ld. Counsel for the Appellant contended that the Properties specified in the Auction Sale Notice are absolutely belonged to one P. Krishnasamy and the Appellant, who became a cultivating Tenant from the year 1988. The Appellant has been personally cultivating the lands and is in possession and enjoyment of the said properties including the lands forming a larger extent of 31 acres. Therefore, the Appellant had acquired rights under Tamilnadu Cultivating Tenants Protection Act, 1955 and also protected the enactments of State Government from eviction and other measures. Hence, the Appellant is legally entitled for protection under the said Act and enactments.

8. Further, the Ld. Counsel for the Appellant submitted that in the year 2001, the Appellant entered into a renewal Tenancy agreement with the said Krishnasamy in respect of the properties, excluding factory building and 3 rooms in the 10 anganam house situated in SF.No.90/1 for another two years on yearly rent. The Appellant paid Advance of Rs.50,000/- to the said Krishnasamy and the receipt of the same was acknowledged by the said Krishnasamy. The Appellant has been regular in payment of tenancy rent and has been granted Patta Pass Book by the Tahsildar in the year 1999. The Revenue Records including the House Tax and Electricity Charges are paid by the Appellant and they are in the name of the Appellant.

9. The Ld. Counsel for the Appellant further submitted that in the year 2002, the Appellant faced illegal disturbance from the family members of the Krishnasamy, who interfered with the lawful and peaceful possession and enjoyment of the properties of the Appellant. Therefore, the Appellant filed a suit for permanent injunction before the District Munsif, Avanashi in OS No.131/2002, praying for restraining the family members of the Krishnasamy and their men etc., and obtained Interim Injunction. The 1st Respondent - Certificate Holder Bank is also a party in OS 131/2002. The Appellant has got rights of cultivating Tenant and entitled to protection under the Provisions of the Cultivating Tenants Protection Act. The 1st Respondent - Certificate Holder Bank has suppressed the facts of the pending suit of the pending suit and he is the 7th Defendant is prohibited from further proceedings under the Provisions of the RDDBFI Act.

10. The Ld. Counsel for the Appellant further contended that the Krishnasamy availed a term loan, from TIIC by mortgaging the adjacent lands in which the Appellant had tenancy rights, the TIIC released the said mortgage after the Appellant remitted payment due to the TIIC. The sub- division of the subject properties is against law and the 1st Respondent - Certificate Holder Bank cannot sub-divide the lands as per the whims and fancies of the Bank and that therefore the Auction Sale Notice is liable to be set aside. The boundaries quoted in the Sale Notice have not been mentioned in the Title Deeds and the same will exceed the lawful jurisdiction vested with the Recovery Officer. The renewal of lease in favour of the Appellant on 26.09.2002 should have been done with the Bank’s consent only.

11. Further, the Ld. Counsel for the Appellant contended that the Ld. Recovery Officer has failed to consider the Appellant is a cultivating Tenant, who had contributed her own physical labour and that the member of the family in the cultivation of the properties. The Recovery Officer totally failed to consider the provisions of Section 3(1) of the Act, hence the Appellant cannot be evicted from the leased properties, who is a cultivating Tenant prior to the mortgage. The Order of the Recovery Officer is biased and erroneous and based on the wrong perception and understanding of sub- sections 2(c) and 2(e) of Sec.65(A) of the Transfer of Property Act 1992. The Recovery Officer failed to note that the lease of the lands is prior to the mortgage to the Certificate Holder Bank and therefore the mortgage is subject to the Tenancy of lease. Accordingly, the Ld. Counsel for the Appellant prays the Hon'ble Tribunal to said aside the Order of the Recovery Officer dated 03.06.2014.

12. Per Contra, the Ld. Counsel for the 1st Respondent & the 2nd Respondent advanced the arguments on the basis of the Reply statement filed by them.

POINTS FOR DETERMINATION :

13. Whether the Relief sought by the Appellant can be granted by this Tribunal?

14. This Tribunal having carefully considered the impugned order passed by the Ld. Recovery Officer, the alleged cultivating Tenancy Rights claimed by the Appellant has found no merits and not sustainable in law.

15. The Appellant is only claiming cultivating Tenancy Right over the property sold by the Recovery Officer under the RDDBFI Act, 1993 on the basis of the Final order and the DRC issued by this Tribunal.

16. The owner of the property who alleged to given the right of cultivating Tenancy is none other than the Managing Director of the Company M/s.Silky Cotton Knits (India) Ltd., who is the 2nd Defendant and the Company being the 1st Defendant in the OA filed by the Respondent Bank. The 1st Defendant Company in the OA who obtained the loan from the bank and created the mortgage over the property and while passing the Final Order in the OA, the said P.Krishnaswamy and the company M/s.Silky Cotton Knits (India) Ltd., was represented by Counsel and the Defendant Company and Mr.Krishnaswamy not even filed the Reply Statement much less argued the case. These defendants are also not made as a party in the present Appeal filed by the Appellant. Hence, the theory of Leasehold rights of Appellant is not liable to be accepted by this Tribunal. Therefore, this Tribunal find some force in the arguments advanced by the Ld. Counsel for the bank that the Appellant has invented a new ground to drag on the Recovery proceedings by the bank.

17. The property having mortgaged during the year on 29.03.2000 and the alleged claim of the Appellant was that the lease was made during the year 1998 and subsequently, renewed the lease in the year 2001 has not substantiated with any evidence in a manner known to the law before this Tribunal. Hence, this Tribunal is liable to reject the contentions of the Appellant.

18. The Ld. Recovery Officer clearly held that the alleged lease claimed by the Appellant is a clear violation of the section 65-A of the Transfer of Property Act and as such this Tribunal finds no merit in the Appeal and no interference is warranted by this Tribunal to set aside the order passed by the Ld. Recovery Officer and this Appeal is only required to be dismissed by this Tribunal. Accordingly, the Appeal is dismissed with no order to costs. A copy of the order be communicated to all the parties concerned by the Registry of this Tribunal. (Dictated to my PA directly on the Computer, corrected and pronounced by me in the Open Tribunal on this 07th Day of October 2022).

Sd/-

[M.P. BALASUBRAMANIAN] PRESIDING OFFICER