Bank of Baroda v. State of Chhattisgarh & Others), whereby
Case Details
1 2025:CGHC:1085-DB NAFR HIGH COURT OF CHHATTISGARH AT BILASPUR WA No. 373 of 2020 Bank of Baroda A Banking Company Constituted Under The Banking Companies (Acquisition and Transfer of Undertaking) Act, 1970 Having Its Head OfÏce At Mandvi, Baroda And Anassets Recovery Management Branch At B-3, Connaught Place, New Delhi-01, Through Its Chief Manager Zosarb, Delhi, District : New Delhi, Delhi ... Appellant(s) versus 1. State of Chhattisgarh Department of Revenue Through Its 2. 3. Secretary Mahanadi Bhawan, Atal Nagar, Raipur Chhattisgarh. The District Collector Durg, District Durg, Chhattisgarh. Om Hydro Mech. Pvt. Ltd. Through Its Director, Having Its Registered OfÏce At Om Tower Church Road, M. I. Road Jaipur 302001 4. Priya Engineering Co. Limited Through Its Director B-6/4, Community Centre, Safdarjang Enclave, New Delhi ...Respondent(s) For Appellant For Respondent/State : :
Legal Reasoning
Mr. Manoj Sharma, Senior Advocate, assisted by Mr. Ankit Singhal, Advocate. Mr. Shashank Thakur, Deputy Advocate General. BRIJMOHAN MORLE Digitally signed by BRIJMOHAN MORLE Date: 2025.01.08 17:51:41 +0530 2 Hon'ble Shri Ramesh Sinha, Chief Justice Hon'ble Shri Ravindra Kumar Agrawal , Judge Judgment on Board Per Ramesh Sinha , Chief Justice 08 .0 1 .202 5 1. Heard Mr. Manoj Sharma, learned Senior Advocate through video conferencing, assisted by Mr. Ankit Singhal, learned counsel for the appellant. Also heard Mr. Shashank Thakur, learned Deputy Advocate General, appearing for the State. 2. The present intra Court appeal has been filed by the appellant/writ petitioner against the order dated 04.08.2020 passed by the learned Single Judge in WPC No. 628 of 2011 (Bank of Baroda vs. State of Chhattisgarh & Others), whereby the learned Single Judge has
Decision
dismissed the writ petition filed by the appellant/writ petitioner. 3. Learned Senior Advocate for the appellant submits that the appellant is a Banking Company duly constituted under the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 (for short, ‘Act of 1970’), having its Head OfÏce at Mandvi, Baroda, Gujarat and an Assets Recovery Management Branch at B-3, Connaught Place, New Delhi-01. He also submits that Mr. P Gangte, S/o S Gangte, Chief Manager is a duly constituted attorney and authorized signatory of the appellant Bank and is empowered to sign, verify, make and present plaint, petitions, appeals, interlocutory applications, afÏdavits and other 3 documents as may be necessary or required on behalf of the appellant, engage pleaders and advocates and to do all acts as may be found incidental and consequential thereto. 4. It is further submitted by the learned Senior Advocate for the appellant that vide lease deed dated 18.04.1966, the State of Madhya Pradesh perpetually demised lands comprising 64 acres in Khasra Nos. 113/1, 114/1, 114/2 & 3, situated at Heavy Industrial Area, Village Hathkhoj, Bhilal, District Durg, Chhattisgarh in favor of one M/s Jain & Rai for a period of ninety nine years. He also submits that on 20.09.1972, the paramount lessor i.e. State of Madhya Pradesh accorded permission for transfer of 26 acres of the aforesaid land by the lessee M/s Jain & Rai in favor of M/s Jain Industries. Vide transfer deed dated 31.10.1972, M/s Jain & Rai agreed to transfer the said land in favor of M/s Jain Industries. This lease deed was signed by Mr. Anil Jain on behalf of M/s Jain Industries. He would submit that with reference to memorandum No.254/RCII(G)/73 dated 12.12.1973 vide confirmation letter dated 07.09.1974, the State of Madhya Pradesh, the paramount lessor accorded permission to M/s Jain Industries to transfer the said 26 acres of land in favor of M/s Priya Engineering Co. Limited, respondent No. 4 herein on the same terms and conditions as mentioned in the lease deed dated 20.09.1972. 5. Learned Senior Advocate for the appellants states that on 02.03.1976, the respondent No. 4 by depositing the lease deed and transfer deeds of the said property with the appellant Bank, obtained initially a loan of Rs. 50 lakhs from the appellant Bank and created equitable mortgage on the said property which mortgage was extended to 4 secure huge bank guarantee facilities granted by the consortium of banks consisting of this appellant and Indian Overseas Bank. Payments were made to the said beneficiary under the said Bank guarantee and the amounts became due for payment from the respondent No. 4. He also states that since default committed in repayment of load obligation, in April 1986, the appellant Bank along with Indian Overseas Bank filed a civil suit being Civil Suit No. 802 of 1986 entitled Bank of Baroda vs. Priya Engineering Company Limited & Others for recovery of Rs. 2,88,96,224/- along with interest thereto. In the year 1995, the Civil Suit No. 802 of 1986 was transferred to the learned Debt Recovery Tribunal, Delhi and the same was registered as O.A No. 982 of 1995. 6. It is further contended by the learned Senior Advocate that vide final order dated 09.01.2006, O.A No. 982 of 1995 was decreed in favor of the appellant Bank for a sum of Rs. 2,88,96,224/- along with pendent-elite and future interest thereon @19.5% per annum with effect from 21.04.1986. The learned Debt Recovery Tribunal, inter alia, deemingly upheld the vires of mortgage created by the Principal Borrower, namely Priya Engineering Company Limited, respondent No. 4 herein, in respect of its industrial land admeasuring 26 acres comprised in Khasra Nos.113/1 and 114/1, situated at Heavy Industrial Area, Village- Hathkhoj Bhilai, District- Durg Chhattisgarh. Thereafter, the recovery certificate was issued on 24.01.2006 and the recovery proceedings were commenced under Recovery Case No. 5 of 2006. He further contended that vide auction notice dated 29.04.2009, the mortgaged property was put to auction by the Debt Recovery Tribunal. New Delhi for recovery of its outstanding dues against the respondent No. 4. Thereafter, on 5 03.08.2009, the mortgaged property was auctioned through a public auction and the respondent No. 3 emerged as the successful bidder for a sum of Rs 4.66 crores as against reserve price of Rs 2.41 crores. That pursuant to the said auction, the respondent No. 3 deposited the entire consideration with the appellant Bank. 7. Learned Senior Advocate for the appellant submits that at this juncture it is relevant to mention here that the District Collector- Durg, respondent No. 2 vide memo dated 01.08.2009 registered his objection to the auction on the premise that since the said land was leasehold, the same could not be auctioned. He would submit that vide order dated 01.10.2010, the learned Debt Recovery Tribunal, inter alia, observed that the Revenue Departments of the State of Chhattisgarh and Collector- Durg could not refuse mutation of the auctioned property in the name of the auction purchaser. The State of Chhattisgarh, respondent No. 1 was directed to file their objection, if any and it was expressly mandated that in the event of non filing of objection, the matter shall be decided presuming that they had nothing to say in the matter and the tribunal shall pass appropriate directions. He further states that the District Collector, Durg did not file any objection with the Debt Recovery Tribunal nor was he represented in the said proceedings before the Tribunal pursuant to order dated 01.10.2010. 8. Learned Senior Advocate for the appellant would submit that vide order dated 03.11.2010, the learned Debt Recovery Tribunal, inter alia held that the mortgagors title to the auctioned property was imperfect and accordingly, the appellant and the auction purchaser, i.e. respondent No.3 herein were directed to approach the revenue authorities of the State of 6 Chhattisgarh for perfection of title. He further states that even before the said order, since the auction purchaser wanted full title papers, the appellant Bank tool up this matter with the ofÏcials of the Revenue Department of Chhattisgarh, but in vain. Thereafter, the District Collector Durg, respondent No. 2 herein vide impugned order/memo baring No.12458/P. Nazul/2010 dated 16.09.2010 has stated that the auctioned plot has not been recorded in the revenue records in the name of the mortgagor, thus any charge created upon the land towards repayment of loan is automatically void and auction proceedings of the same is not legal and in accordance with law. Being aggrieved by the order of District Collector- Durg bearing No. 12458/P dated 16.09.2010, the appellant Bank filed writ petition bearing WPC No. 628 of 2011 before this Court. That vide final order dated 04.08.2020, the learned Single Judge dismissed the said writ petition. Being dissatisfied and aggrieved by the said order dated 04.08.2020 passed by the learned Single Judge in WPC No. 628 of 2011, the appellant herein filing the present appeal. 9. On the other hand, learned State counsel submits that the learned Single Judge after considering all the aspects of the matter has rightly dismissed the writ petition filed by the appellant/writ petitioner, in which no interference is called for. 10. We have heard learned counsel for the parties and perused the impugned judgment and materials available on record. 11. From perusal of the records, it is evident that though the permission was granted for such transfer on 07.09.1974, no transfer deed or lease deed was executed in favour of M/s Priya Engineering Co. Ltd. The 7 property stood in the name of M/s Jain Industries without there being any transfer in favour or a lease in favour of M/s Priya Engineering Co. Ltd. That only on the alleged permission to transfer of the land respondent No.4 seems to have approached the appellant-Bank for certain loan after mortgaging the said 26 acres of land. That on 02.03.1976, the respondent No. 4 i.e., Priya Engineering Co. Ltd. is said to have deposited certain documents in this regard to the appellant-Bank on the basis of which loan for an amount of Rs. 50 lacs was issued in favour of M/s Priya Engineering Co. Ltd. 12. However, the said borrower i.e., the respondent No. 4 is said to have defaulted in repayment of the loan and the outstanding which stood upon the respondent No. 4 payable to the appellant-Bank arose to Rs.2,88,96,224/-. For the recovery of the said amount, the appellant-Bank initially filed a civil suit before the competent Court of Law. However, after the enactment of the Recovery of Debts due to Banks and Financial Institutions Act, 1993 came into force the civil suit stood transferred to D.R.T.-Delhi. 13. On 09.01.2006, the DRT-Delhi allowed the application and a decree was passed for an amount of Rs. 2,88,96,224/- with interest @ 19.5 %. Subsequently, DRT-Delhi is said to have put the 26 acres of land for auction who had put the said property for auction on 03.08.2009 and in the auction proceedings, the respondent No. 3 emerged successful in the auction proceedings. It is at this juncture, the District Collector, District: Durg moved an objection before the DRT-Delhi highlighting the fact that the property was never leased in favour of M/s Priya Engineering Co. Ltd. No such lease deed was in favour of the said respondent No. 4 neither 8 does the revenue records reflect the property to be in the name of M/s Priya Engineering Co. Ltd. Thus, the charge created by the Bank in favour of M/s Priya Engineering Co. Ltd. itself is bad-in-law and the auction proceedings initiated also is unsustainable. The DRT-Delhi subsequently on the application moved by the auction purchaser for a return of the entire sale consideration, allowed the said application as the appellant- Bank could not execute/provide the title/right in favour of the auction purchaser. 14. Considering the objection of the Collector-Durg, which he had raised on 01.08.2009, the DRT-Delhi vide order dated 01.10.2010 directed the CMD of the appellant-Bank to monitor the compliance through a negotiation between senior ofÏcers of the Bank by approaching the Chief Secretary of the State of Chhattisgarh requesting him/her to issue necessary directions in pursuant to the order passed by the Tribunal. Subsequently, it has been informed by the counsel for the appellant that later on, the auction was cancelled and the entire sale consideration was refunded back to the auction purchaser on 16.09.2010. 15. The appellant in the writ petition challenge the (Annexure P/1) dated 16.09.2010 issued by the Collector District: Durg, (C.G.); whereby the impugned memo was issued directing the Bank that since no charge was created in favour of M/s Priya Engineering Co. Ltd, the said property could not have been mortgaged by M/s Priya Engineering Co. Ltd. and the auction proceedings also, therefore, is void ab-initio. 16. After perusing the records and considering the submissions made by the counsel for the appellant, learned Single Judge held that the relief 9 sought for by the appellant in the writ petition cannot be granted at this juncture for the reasons as has been pointed by the District Collector. It stands established that there was no lease deed or a transfer deed of the 26 acres of land/property in the name of the respondent No. 4 Company neither was the name of the M/s Priya Engineering Co. Ltd. entered in the revenue records so as to establish their title/right over the said property. 17. From the facts given, it appears that the appellant-Bank had processed the loan in favour of the M/s Priya Engineering Co. Ltd. without scrutinizing the aforesaid factual matrix of the case and seems to have accepted the mortgage without these documents in respect of the title/right of the property. If the appellant-Bank has granted the loan by accepting the said property in mortgage over which the borrower did not have any title/right created would mean, that the appellant-Bank alone has to be held responsible for granting of a loan without properly processing the title documents of the land. 18. A perusal of the pleadings of the State Government in their return filed in the writ petition would reveal that initially lease deed itself was issued for a period of 99 years starting from 06.06.1960 up till 08.06.2059. However, there was a condition that after the expiry of every 30 years term, the lease was required to be renewed for re-fixation of annual rent. The State Government have specifically pleaded that no such renewal of the said lease deed as has been got done in between nor the annual rent has got revised or re-fixed. The State Government has also in their reply taken a stand that the transfer deed in favour of M/s Jain Industries also had a specific clause of the requirement of proper permission from the lessors the State Government, before creation of any charge by the Bank, 10 which again does not seem to have been followed while the loan was being sanctioned by the Bank to the respondent No. 4-Company. 19. With all the aforesaid reasons, the learned Single Judge does not find any merits in the petition and dismissed the same. However, appellant-Bank granted liberty to pursue any other remedies available to them for recovery of the outstanding amount against the respondent No.4. 20. Considering the pleadings made in writ appeal, submissions advanced by the learned counsel appearing for the parties and also considering the findings recorded by the learned Single Judge while dismissing the writ petition filed by the appellant/writ petitioner, we are of the considered opinion that the learned Single Judge has not committed any illegality, irregularity or jurisdictional error warranting interference by this Court. 21. Accordingly, the present writ appeal being devoid of merit is liable to be and is hereby dismissed. Sd/- Sd/- (Ravindra Kumar Agrawal) (Ramesh Sinha) Chief Justice Judge Brijmohan