The High Court
Case Details
IN THE HIGH COURT OF ORISSA AT CUTTACK W.P.(C) No.36726 of 2021 Rajendra Prasad Agarwal & another …. Petitioners Mr. D. Mishra, Advocate -Versus- State of Orissa and others …. Opposite parties Mr. P.K. Mohanty, ASC Ms. S.L. Patnaik, Advocate (O.P.5) CORAM: MR. JUSTICE R.K. PATTANAIK
Decision
ORDER 28.11.2024 Order No. 08. 1. Heard Mr. Mishra, learned counsel for the petitioners, Mr. Mohanty, learned ASC for the State opposite parties and learned counsel for opposite party No.5. 2. Instant writ petition is filed by the petitioners challenging the impugned decision vide order dated 2nd November, 2018 passed in OSS Case No.1485 of 2017 by the Board of Revenue, Odisha, Cuttack confirming the orders in Mutation Appeal No.09 of 2010 and Mutation Case No.387 of 2009 on the grounds inter alia that the same is not legally tenable and hence, is liable to be interfered with and set aside with consequential directions issued. 3. Mr. Mishra, learned counsel for the petitioners submits that the petitioners acquired interest vis-(cid:224)-vis the schedule land through a statutory sale on 3rd August, 2024 by a Registered Sale Deed (RSD No.2889) executed as per the provisions of the State Financial Corporations Act, 1951 (in short „the OSFC Act‟), whereafter, they Page 1 of 5 approached opposite party No.4 seeking mutation of the same, but it was disallowed, later to which, Mutation Appeal No.09 of 2018 was filed but the same was without any result and at last revision was disposed of vide Annexure-3 in OSS Case No.1485 of 2017 and was dismissed. It is further submitted by Mr. Mishra, learned counsel that the authorities below failed to take cognizance of the covenant of the lease and on the premise that permission has not been obtained at the time of mortgage with the conclusion that opposite party No.5 did not have right and any semblance of interest to dispose it of in favour of the petitioners by a sale as per the OSFC Act and finally passed the impugned orders. According to Mr. Mishra, learned counsel, such view and conclusion of the revisional authority at the end is not sustainable in law and hence, is to be quashed with a direction to opposite party No.4 to allow the mutation in respect of the land in question. 4. Recorded the submission of learned counsel for opposite party No.5-OSFC. 5. Mr. Mohanty, learned ASC for the State submits that the authorities below did not commit any illegality denying the mutation with the fact that the lessee was to obtain the permission before mortgaging the schedule land and hence, opposite party No.5 could not have gone for the statutory sale in favour of the petitioners and therefore, rightly the interim order under Annexure-3 in OSS Case No. 1485 of 2017 was passed. 6. In course of hearing, Mr. Mishra, learned counsel for the petitioner relies on the lease deed dated 24th August, 1985 as at Annexure-4 and the relevant clause which runs as follows: “PROVIDED FURTHER THAT this Covenant shall not apply to any transfer or assignments of the said demised land or any part thereof by way of Page 2 of 5 mortgage for securing loans for the undertaking and/or for completing the construction work of the factory or other work or the Lessee, and/or in favour of the Trustees of debenture Trust in respect of any issue of debentures of debenture stock which may be hereafter issued by the Lessee.” The contention of the learned counsel for the petitioner is that the statutory sale is not invalidated for the above covenant which is clear and conspicuous that it shall not apply to any transfer or assignments of the said demised land or any part thereof by way of mortgage for securing loans. 7. In the instant case, the lessee availed the loan and subsequently defaulted in making the payment, consequent upon which, the action was initiated as per Section 29 of the OSFC Act and finally the schedule land was transferred in favour of the petitioners. From Annexure-3, it is made clear that the permission at the time of mortgage was obtained from the Government. 8. In so far as the OSFC Act is concerned, it would be apposite to make a mention of the relevant provision, such as, Section 29 of the OSFC Act and the same is extracted hereby below: “29(1) Where any industrial concern, which is under a liability to the Financial Corporation under an agreement, makes any default in repayment of any loan or advance or any instalment thereof [or in meeting its obligations in relation to any guarantee given by the Corporation] or otherwise fails to comply with the terms of its agreement with the Financial Corporation, the Financial Corporation shall have the [right to take over the management or possession or both of the industrial concern], as well as the [right to transfer by way of lease or sale] and realize the property pledged, mortgaged, hypothecated or financial assigned Corporation. the to Page 3 of 5 (2) Any transfer of property made by the Financial Corporation, in exercise of its powers under sub- section (1), shall vest in the transferee all rights in or to the property transferred[as if the transfer] had been made by the owner of the property.” Section 29 of the Act mandates that the Corporation shall have the right to take over the management or possession or both the industrial concern as well as the right to transfer by way of lease or sale and realize the property pledged, mortgaged, hypothecated or assigned to the Corporation. It further stipulates that any transfer of property made by the Corporation, in exercise of its power under Sub-section (1), shall vest in the transferee, all rights in the property transferred, as if the transfer had been made by the owner of the property. 9. Considering the same and in exercise of power vested with opposite party No.5 as per Section 29 of the OSFC Act, the sale has been executed in favour of the petitioners, the latter having acquired the interest over the same with all rights so transferred. In so far as the covenant is concerned, it is to the effect that the same shall not apply to any transfer or assignments with the terms and conditions therein of the demised land which has been lost sight by the authorities below. Mr. Mohanty, learned ASC for the State relies the correspondence received from opposite party No.4 and submits that such consent to the mortgage was not obtained and it has been factually denied. However, considering the clause of the lease deed and in view of discussions as aforesaid, there is no escape from conclusion that a permission was duly obtained at the time of mortgage and since the lessee failed to make payment and as such, defaulted in respect thereof, sale in question resulted as per Section 29 of the OSFC Act. As a necessary corollary, it is to be concluded that the Corporation did have the authority to dispose of the subject Page 4 of 5 in favour of the petitioners. Having said that, the final conclusion of the Court is that the learned Board of Revenue, Odisha failed to take judicial notice of the same and declined mutation in respect of the case land, hence, therefore, the impugned orders under Annexures-1, 2 & 3 are liable to be set aside. 10. Accordingly, it is ordered. 11. In the result, the writ petition stands allowed. Consequentially, the impugned order under Annexure-3 passed in OSS Case No.1485 of 2017 is hereby set aside with a direction to opposite party No.4 to consider mutation in respect of the case land in favour of the petitioners with issuance of RoR and to conclude the above exercise at the earliest preferably within a period of four weeks from the date of receipt of the copy of the order. 12. Issue urgent certified copy of the order as per rules. Alok (R.K. Pattanaik) Judge Signature Not Verified Digitally Signed Signed by: ALOK RANJAN SETHY Designation: Asst. Registrar-Cum-Senior Secretary Reason: Authentication Location: ORISSA HIGH COURT Date: 29-Nov-2024 15:02:27 Page 5 of 5