Madras High Court
N.R.Manivannan vs Apex Laboratories Pvt. Ltd on 27 March, 2018
Bench: S.Manikumar, R.Suresh Kumar
IN THE HIGH COURT OF JUDICATURE AT MADRAS
Dated: 27.03.2018
CORAM:
THE HON'BLE MR.JUSTICE S.MANIKUMAR
AND
THE HONOURABLE MR.JUSTICE R.SURESH KUMAR
O.S.A.No.202 of 2016
N.R.Manivannan ... Appellant
vs.
1. Apex Laboratories Pvt. Ltd.,
3rd Floor, SIDCO Garment Complex,
Guindy, Chennai 600 032.
2. The Official Liquidator,
High Court, Madras, as
Provisional Liquidator of
M/s.Dhurgesh Nandhini Spinning Mills Ltd.,
No.87, Cumbum road, Theni 625 531. ... Respondents
Original Side Appeal is filed under Order XXXVI Rule 1 of the OS Rules with Clause 15 of Letters Patent, against the order and decreetal order, dated 19.09.2016 in Company Application No.1209 of 2015 in Company Petition No.415 of 2014.
For Appellants : Mr.PH.Aravind Pandian
For 1st Respondent : Mr.Rajkumar Jhabakh
For 2nd Respondent : Mr.S.R.Sundar
JUDGMENT
(Judgment of the Court was delivered by S.MANIKUMAR, J.) Instant Original Side Application is directed against the order and decreetal order, dated 19.09.2016 in Company Application No.1209 of 2015 in Company Petition No.415 of 2014.
2. At the instance of the Apex Laboratories Private Ltd., Chennai, in C.P.No.415 of 2014, Official Liquidator, High Court, Madras, as Provisional Liquidator, has taken possession of the assets of M/s.Dhurgesh Nandhini Spinning Mills Ltd., Theni. Mr.N.R.Manivannan, Creditor Partner of the abovesaid Spinning Mills Ltd., who had leased out his lands to the firm, subsequently taken over by the Company has filed C.A.No.1209 of 2015, praying for a direction to the Official Liquidator, High Court, Madras, to forthwith release the property in S.Nos.1434/1B, 1453/1B, 1453/1C and 1453/1D, in extent of 3.84 acres or thereabouts and bearing No.3-1-47, Cumbum Road, Theni and put the appellant in possession.
3. In C.A.No.1209 of 2015, the properties mentioned are, buildings and civil structures, situated at No.87, Cumbum Road, Theni 625 531, valued by M/s.ITCOT at Rs.1,91,73,000/-. After obtaining necessary orders on 21.06.2016, the Official Liquidator, High Court, Madras, has issued sale notices, fixing the date of sale as 10.11.2016.
4. In C.A.No.1209 of 2015, the Official Liquidator, High Court, Madras, has filed a report, stating that the appellant herein has quoted the price of Rs.25 Lakhs for the building and civil structures. M/s.Apex Laboratories Private Ltd., Chennai, petitioning creditor, has offered Rs.70 Lakhs, at a scrap value. M/s.Sakthi Kanna Constructions Private Ltd., had given a letter, dated 04.02.2017, stating that they are willing to purchase the property at Rs.1,20,00,000/- and ready to deposit Rs.50 lakhs initially.
5. On the directions prayed for, by the appellant, for release of the above mentioned property, arguments have been made. With reference to the question framed, as to whether, in terms of Clauses 2 and 3 of the lease agreement, dated 16.03.2006, executed between M/s.Dhurgesh Nandhini Spinning Mills, Theni and Mr.N.R.Manivannan, appellant herein, buildings/other civil structures should revert to the appellant, after referring to the said clauses of the lease agreement, dated 16.03.2016, the Company Court has proceeded to decide the prayer for release of the property in Company Application No.1209 of 2015. On 11.08.2016, the Company Court dealt with the contentions of the appellant, regarding the ownership in the building, civil structures and draft sale notice issued by the Official Liquidator, High Court, Madras, as hereunder:
"1. Pursuant to the last order, the Official Liquidator has filed a corrected draft sale notice.
1.1. The draft sale notice envisages sale of building and /or other civil structures, as also plant and machinery and other immovable assets, situate on land described as: 87, Cumbum Road, Theni 625 531.
2. As per the report of the Official Liquidator dated 05.8.2016, and earlier reports, these assets are owned by the company-in-provisional liquidation, i.e, Dhurgesh Nandhini Spinning Mills Limited.
3. The applicant herein, one N.R.Manivannan, via the captioned application, though, seeks issuance of a direction, to the Official Liquidator, to forthwith release the property, comprised in S.Nos.1434/1B, 1453/1B, 1453/1C and 1453/1D, admeasuring, approximately, 3.84 acres, located in No.3-1-47, Cumbum Road, Theni.
4. As would be evident, the Official Liquidator is not seeking sale of the land. Even according to the Official Liquidator, the land belongs to the applicant.
5. What is contested before me, is the ownership of the building and or other civil structures, which are situate on the land in issue.
5.1. According to the applicant, via, the lease deed dated 06.03.2006, the land was leased out to a Partnership Firm, by the name, Durgesh Nandhini Oil Mills.
5.2. It is the case of the applicant, that lease is to run for a period of 15 years, with effect from 16.06.2004.
5.3. It is also the case of the applicant that, on termination of the lease, the lessee ought to have reverted the possession of land along with building and/or other civil structures to him, i.e. lessor.
6. The fact, that the lease has been terminated, is sought to be established by the applicant, by referring to a communication, dated 13.7.2015, which, apparently, was issued by the Partnership Firm, i.e, Durgesh Nandhini Oil Mills.
7. On the other hand, I am informed by the petitioning creditor that a business take over deed was executed between the Partnership Firm, i.e. Durgesh Nandhini Oil Mills, and the company-in-liquidation, which is, represented by the Official Liquidator.
8. The submission advanced on behalf of the petitioning creditor is that the business take over deed was executed on 01.04.2007.
8.1. Based on the aforesaid, it is argued that the lease hold rights both in the land, as well as in the building and/or other civil structures erected thereat, would stand transferred to the company-in-liquidation.
9. The Official Liquidator supports the stand of the petitioning creditor.
10. Any which ways, it is, quite, apparent, that the lease tenure would come to an end in 15.06.2019, having regard to the fact, that the effective date of the lease agreement is 16.06.2004.
11. The question, therefore, which, this Court, needs to adjudicate upon is: whether in terms of clauses 2 and 3 of the aforementioned lease deed, the buildings and/or other civil structures should revert to the applicant?
12. In support of this submission, the learned counsel for the applicant, seeks to place reliance on the provisions of clause 2 and 3 of the lease deed. For the sake of convenience, the said clauses are extracted hereafter:
02. Immediately on the execution of these presents or as soon there after as possible, the lessee shall commence and complete with all possible expedition to take possession of the land. It is further agreed that the lessee shall construct or erect additional buildings, structures on the existing land demised according to and in conformity with plans that will be sanctioned by the Veerapandi Panchayat Union.
03. It is hereby declared that immediately on the expiry of such terms or on sooner determination there of and in any event of expiry of 15 years from the date here of or on completion of such periods as may be extended by the parties by mutual consent, the land and buildings and structures, if any, shall revert back to the Lessor who shall be entitled to enter upon and take possession of the same and shall in the meantime have and posses a vested interest therein, it being agreed that during the continuance of tenancy hereby created the lesser shall not sell mortgage or otherwise alienate the buildings and / or the structures or the materials there of.
13. A mere perusal of the clause (2) would show that the lessee was given the right to construct and erect an "additional buildings" and "structures"on the subject land. In the same vain, clause (3) provides that on determination of the lease or expiry of the lease tenure, the land and, building and structure would revert to the lessor.
14. Therefore, what the applicant, needs to establish by way of appropriate material, being, placed before this Court is the following: Firstly, was there any building and/or civil structure in place at the point in time, when the lease was executed. Secondly, were any additional building(s) and/or civil structures erected after the execution of the lease deed..
15. Once this aspect of the matter is resolved, then, the decision can be taken on facts, as to which building and/or civil structure should revert to the applicant, i.e. Lessor.
16. In principle, though, in my view, upon a bare reading of clauses (2) and (3) it would emerge that what can revert to the applicant, i.e. lessor, is only the building and/or civil structures which were erected by the applicant and, were thus, obtaining on the subject land on the date of execution of the lease deed, i.e. on 16.6.2004.
17. The contention of the learned counsel for the applicant that the ground rent for a huge swathe of land, which is nearly 3.84 acres, was fixed at Rs.5,000/-, only for the reason, that all buildings and/or other civil structures would revert to the applicant, i.e. lessor, is in my view, a contention which is not tenable for the following reasons:
17.1. The lease by itself did not envisage that the lessee was bound to erect additional buildings and/or other civil structures. The lessee was only given a leeway in that behalf. Therefore, fixation of ground rent at Rs.5000/- and reversion of building and/or other civil structures cannot be interlinked, as is sought to be contended by the learned counsel for the applicant.
17.2. The other reason, why, I am not inclined to accept this submission, is that, even according to the learned counsel for the applicant, the applicant was not only a partner in Durgesh Nandhini Oil Mills, but was also shareholder and, at the relevant point of time, a Director in the company-inliquidation. Quite clearly, it is, perhaps, for this reason that the ground rent was fixed at Rs.5,000/-.
18. As indicated above, I am of the view that if any additional buildings and/or other civil structures are erected, by the lessee, the proprietary rights qua them would continue to vest with the lessee and by virtue of the business take over agreement, the ownership in such assets, would, ordinarily, rest in the company-in-liquidation.
18.1. Accordingly, if such a situation obtains, the companyin-liquidation would have, to my mind, the right to sell the additional buildings and/or civil structures located on the subject land.
19.1 Therefore, as adverted to, the applicant will have to demonstrate to this Court that, the entirety of the building and civil structures, were erected by the applicant i.e. lessor.
19.1. Unless material is placed before the Court, which would demonstrate to the contrary, the applicant's plea cannot be accepted.
20. For this purpose, I intend to give short accommodation to the counsel for the applicant.
21. The applicant will place the relevant materials before this Court, within 10 days from today. A copy of the same will be supplied to the Official Liquidator as well as to the counsel for the petitioning creditor.
22. Re-notify on 30.8.2016."
6. Thereafter, when the matter was re-notified, taking note of the submission of the learned counsel for the applicant therein that sanction plan or completion certificate could not be produced, vide order, dated 19.09.2016, the Company Court dismissed C.A.No.1209 of 2015, as hereunder:
"2.2. Consequent to the order passed on 11.08.2016, the matter came before Court, on 30.08.2016, when, the applicant filed an additional affidavit, dated 20.08.2016, accompanied by a site plan.
3. As noted, in the proceedings dated 30.08.2016, the said site plan bore three dates, i.e., 09.03.2007, 09.04.2007 and 16.04.2007. Since I had doubts as to whether, the said site plan produced before me was the original site plan, I directed the counsel for the applicant to place on record the sanctioned plan and the completion certificate qua the building and civil structures.
4. Ms.S.P.Arthi, learned counsel for the applicant says that her client is unable to produce the sanctioned plan or the completion certificate.
5. In these circumstances, I am of the opinion that, since, the applicant has been unable to establish that at the point in time, when, the lease was executed, there were buildings and civil structures erected on the subject land, no relief as prayed for in the application can be granted."
7. Being aggrieved by the abovesaid order, instant Original Side Appeal is filed, on the following grounds, "(i) The appellant has submitted that the finding of the Company Court that the ownership of the buildings and the civil structures on the land was contested, when in fact there was no such contest was sought to be raised by the appellant, is contrary to his own observation in paragraph 11 of the order, dated 11.8.2016, wherein it has been clearly spelt out the issue for adjudication viz., whether in terms of clauses 2 and 3 of the lease deed, the buildings and other super structures should revert to the appellant.
(ii) The appellant has further submitted that the impugned order stems out of misinterpretation of the terms of a registered Lease deed executed between the concerned parties, which sets out the arrangement between the parties in unequivocal terms. After extracting the terms of clauses 2 and 3 of the lease deed, the observation of the Company Court that the appellant has to establish by appropriate material existence of buildings and/or civil structures at the point in time, is contrary to the fact that the additional buildings and/or civil structures, were erected after the execution of the lease deed.
(iii) The appellant has further submitted that the Company Court has failed to note Clauses 2 and 3 of the lease deed, which gave rights to the appellant to get back the buildings, whether existing or constructed after the execution of the lease. The reference to the ownership of the buildings was an issue which was never pressed into focus for claiming the relief in the application.
(iv) According to the appellant, Clauses 2 and 3 of the lease deed clearly provided for the lessor getting back the buildings at the end of the 15 year period or earlier termination of the lease. While so, the finding of the Company Court that the ownership of the buildings would be fundamental in deciding the claim of the appellant, is not correct.
(v) On the finding that the appellant was, upon termination of the lease, entitled only to the super structures that were in existence on the date of the lease and not to such structures, if any, constructed by the Lessee, the appellant has submitted that a bare perusal of Clause 3 of the agreement of lease, dated 16.03.2006, would clear that upon termination of the lease, all the buildings and structures thereon would revert to the appellant herein. Evidently, the clause does not make any distinction between structures/buildings on the site constructed by the appellant and those by the Lessee.
(iv) The appellant has further submitted that by dismissal of the application and directing sale of the buildings and structures, his rights as a lessor and as protected under a registered lease deed, stand defeated. The agreement, at clause 3, specifically prohibits alienation of the structures and buildings, during the tenure of the lease. Therefore, the impugned order has ignored such a condition accepted by the parties, thereby defeating the rights of the appellant as a lessor.
(vii) The appellant has further submitted that when the applicant was burdened with the obligation of establishing that there were buildings/structures in existence a the site on the date of execution of the lease deed and having taken note of the point in the lease deed, which is a registered instrument, that the Lessee was permitted to erect "additional buildings", which only implies the existence of buildings or the date of the lease, the Company Court has shifted the onus on the appellant to prove the existence of buildings on the date of the lease deed.
(viii) The appellant has further submitted that the registered lease deed incorporates a clause requiring the Lessee to erect buildings strictly, as per sanctioned plans. Palpably, such plans would only be in the possession of the Lessee and it would be erroneous to expect him to establish if structures were constructed over the site by the lessee pursuant to the lease. When there being no claim over the buildings by the Lessee, the Company Court ought to have allowed the appellant to take over all the structures, along with his land upon termination of the lease.
(ix) According to the appellant, the finding of the Company Court that the lease deed did not envisage the construction of building at the site is contrary to the finding that the appellant has failed in discharging the onus of proving ownership of structures. The company under winding up/the Official Liquidator, were not called upon to submit any papers establishing construction of structures, post the lease deed, calling upon the appellant to prove ownership of the buildings/structures would in effect amount to calling upon him to prove the negative.
(x) The appellant has further submitted that the relationship between the Lessor and the Lessee, as found in the impugned order, has weighed in the mind of the Company Court in assigning reasons for the low ground rent as fixed by the parties. However, according to him, such relationship between the parties has been lost sight of in interpreting the agreement to read that the buildings thereon, whether constructed by the lessor or the lessee, were to revert to him.
(xi) The appellant has further submitted that the plan submitted before the Company Court was a copy submitted to the Inspector of Factories by the company under liquidation. The company under liquidation / the official liquidator, not having denied such plan, the Company Court had no reason to discard the same. The said plan indicates the structures that were in existence on such date and those proposed to be constructed, thereby providing sufficient material to delineate the buildings that existed prior to the lease deed and those that were then proposed to be constructed.
8. On the above grounds and inviting the attention of this Court to Clauses 2, 3 and 6 of the lease agreement, Mr.PH.Aravind Pandian, learned Senior Counsel appearing for the appellant submitted that immediately on the execution of the deed, the lessee shall commence and complete with all possible expedition to take possession of the land and construct or erect additional buildings, structures on the existing land demised according to and in conformity with plans that would be sanctioned by the Veerapandi Panchayat Union. Immediately on the expiry of lease or sooner the determination there of and in any event on the expiry of 15 years form the date hereof or on completion of such periods as may be extended by the parties by mutual consent, the land and buildings and structures, if any, shall revert back to the lessor who shall be entitled to enter upon and take possession of the same. If default is made in the payment of the rent for any year, then on each such default, it shall be lawful for the lessors, in addition to or on the alternative to any other remedy that may be available to them at their discretion, to eject the lessee from the land hereby demised and from the buildings and structures that may have been erected thereon and to take possession thereof as full and absolute owner, thereof provided that a notice in writing shall be given by the lessors to the lessee of their intention to take possession of the same. Thus, by referring to the above clauses in the agreement, he submitted that the finding of the Company Court that the appellant has not adduced any evidence, to prove that there was any additional construction, as mentioned in Clause 3, is uncalled for, for the reason that as per Clause 6, land, buildings and structures, if any, have to revert back to the appellant and has to take possession thereof, as full and absolute owner.
9. Inviting the attention of this Court to business take over agreement, dated 01.04.2007, learned Senior Counsel for the appellant submitted that what was intended to be taken over was ongoing business concern and that there were plants, machineries, fixtures, erected in the building. He further submitted that when the bank has instituted O.A.No.126 of 2015, before the Debts Recovery Tribunal, Madurai, for recovery of the debt due by M/s.Dhurgesh Nandhini Spinning Mills Ltd., the appellant has discharged the entire loan amount of Rs.7,70,00,000/-, to the IDBI bank, Madurai.
10. Taking this Court through the letter, dated 13.07.2015 addressed to the appellant, learned Senior Counsel further submitted that with reference to the letter of the appellant, regarding termination of land lease, Durgesh Nandhini Oil Mills, Theni, has terminated the land lease agreement. He further submitted that the Official Liquidator, High Court, Madras, while taking inventory, has noticed that there are buildings.
11. He further submitted that the Petitioning Creditor had no knowledge of the existing building and it is only the Official Liquidator, who has taken the inventory. According to him, Clause 6 of the lease agreement speaks for itself and that there is no need for the appellant to prove, as to whether, any building was put up. By application of Clause 6 of the lease agreement, the question of reverting the land with building is automatic. According to him, the word, "additional" in Clause 3 of the lease agreement does not change or alter the effect of Clause 6 of the lease agreement.
12. Inviting the attention of this Court to the order impugned before us, learned Senior Counsel for the appellant submitted that when the Company Court has accepted the case of the appellant, the Court went wrong in saying that the Official Liquidator will have the right to sell the buildings. According to him, the effect of termination of the lease, as per Clause 6 of the lease agreement, is that all the buildings and land, will automatically revert back to the appellant.
13. Repelling the contentions and inviting the date of commencement of the lease agreement, executed between the partnership firm and the appellant, ie., 06.03.2006, Mr.S.R.Sundar, learned counsel for the Official Liquidator, High Court, Madras, submitted that the lease would expire 15 years, ie., on 15.06.2019.
14. Learned counsel for the Official Liquidator further submitted that though the letter, dated 13.07.2015, has been issued by M/s.Durgesh Nandhini Oil Mills, Cumbum Road, Theni, the Company had not terminated the lease agreement. Termination was done only by the partnership firm. According to him, though adequate time was given, the appellant has not proved additional construction, if any, made by the Company. He further submitted that lease deed can be cancelled only with the consent of the Board of Directors and not by M/s.Dhurgesh Nandhini Spinning Mills Ltd., which is no longer in existence.
15. He further submitted that though the appellant has settled the dues and by the act of subrogation, claims to have stepped into the shoes of the company, but the right over the property in liquidation, does not enable the appellant to appropriate the properties of the company in liquidation, without claiming liabilities. According to him, it is the duty of the Official Liquidator to protect the interest of the workmen and others, in the Company.
16. Mr.S.Rajkumar Jhabakh, learned counsel for the 1st respondent/petitioner creditor also made similar submissions.
17. By way of reply, Mr.PH.Aravind Pandian, learned Senior Counsel for the appellant submitted that if according to the official Liquidator, the lease was not terminated by the Company, the Official Liquidator ought to have filed an application, under the provisions of the Companies Act, 1961, questioning the same before the Company Court, which was not done.
18. On the other hand, inviting the attention of this Court to the letter of the Superintending Engineer, Theni Electricity Distribution Circle, Theni, addressed to M/s.Dhurgesh Nandhini Spinning Mills Ltd., Theni, learned Senior Counsel for the appellant submitted that the electricity service connection was disconnected, on and from 16.06.2014 itself and that there was a due for Rs.11,46,771/-. He further submitted that had the termination has not been given effect to, the Official Liquidator ought to have paid the rent, at the rate of Rs.5,000/-, which has not been done and that therefore, it is not open to the Official Liquidator to contend that there was no termination of lease. For the reasons, stated supra, he prayed for reversal of the order impugned.
Heard the learned counsel appearing for the parties and perused the materials available on record.
19. Lease deed, dated 06.03.2006, executed between M/s.Dhurgesh Nandhini Spinning Mills, Theni and Mr.N.R.Manivannan, appellant herein, for a period of 15 years, from 16.06.2004 to 15.06.2019, is extracted hereunder:
"This deed of Lease made this 06th Day of March, 2006 between:-
Sri.N.R.Manivannan son of Shri N.Ramasamy residing at 53, N.R.T.Road, Theni hereinafter called "THE LESSOR" (which expression shall include their respective successors, heirs, administrators, executors and assigns) of the one part and;
DURGESH NANDHINI OIL MILLS, Theni a partnership firm represented by its partner Sri.L.Kamalakkannan, hereinafter called the "LESSEE" (which expression shall include his successors, heirs, administrators and executors) of the second part;
WHEREAS the lessors are exclusive owners of a Factory Land situated at Survey Nos.1434/1B, 1453/1B, 1453/1C and 1453/1D, Cumbum Road, Theni - 625 531 and whereas the lessee has agreed to take a lease of the said land from the lessors for a period of 15 years upon terms and conditions hereinafter mentioned.
Now this lease witnesses as follows:-
IN consideration of a annual ground rent of Rs.5,000/- and the lessee's covenants hereinafter mentioned and contained the lessors hereby demise and lease unto the lease and the lessee hereby takes on rent the factory land situated at Survey Nos.1434/1B, 1453/1B, 1453/1C and 1453/1D, Cumbum Road, Theni - 625 531 for a period of 15 years from the date 16.06.2004 to 15.06.2019 or on completion of such peiods as may be extended by the parties mutually agreed.
02. Immediately on the execution of the presents or as soon there alter as possible, the lessee shall commence and complete with all possible expedition to take possession of the land, it is further agreed that the lessee shall construct or erect additional buildings, structures on the existing land demised according to and in conformity with plans that will be sanctioned by the Veerapandi Panchayat Union.
03. It is hereby declared that immediately on the expiry of such terms or on sooner determination there of and in any event on the expiry of 15 years form the date hereof or on completion of such periods as may be extended by the parties by mutual consent, the land and buildings and structures, if any, shall revert back to the lessor who shall be entitled to enter upon and take possession of the same and shall in the meantime have and possess a vested interest therein, it being agreed that during the continuance of tenancy hereby created the lesser shall not sell mortgage or otherwise alienate the buildings and/or the structures of the materials thereof.
04. All taxes which are payable by lessor such as land revenue, property tax, as well as insurance premium on the buildings, shall be paid by lessors. The taxes payable on additional constructions made on the existing vacant land after this date of agreement shall be paid by the lessee.
05. The rent payable hereunder shall be paid in advance every year by lessee to the lessors on or before the 10th day of each calendar year and the receipt of any one of the lessor with be a complete discharge in respect of the same on behalf of all the lessors.
06. If default is made in the payment of the rent for any year, then on each such default it shall be lawful for the lessors, in addition to us on the alternative to any other remedy that may be available to them at their discretion, to eject the lessee from the land hereby demised and from the buildings and structures that may have been erected thereon and to take possession thereof as full and absolute owner there of provided that a notice in writing shall be given by the lessor's to the lessee of their intention to take possession of the same but if the arrears of the rent are paid within seven days from the service of such notice then the lessors shall not be entitled to take possession of the said land buildings, provided further that is the lessors nevertheless exercise their right to take possession of the said land and buildings as provided herein then the lessee shall not be liable to pay to the lessors the full rent hereby agreed to be paid for the whole of the remaining term of the tenancy hereby granted subject, however to the rent of the lessee to claim refund of the rent. If any that the lessor may be recover during such remaining term form the other lessee.
07. The lessee shall insure and shall at all times during the continuance of this lease keep insured all the buildings that may be erected on the said demised land against loss or damages by fire with an insurance company approved in writing by the lessors for an amount which shall not be less than the cost or construction unless other wise agreed to i writing between the parties.
08. In the event of loss by fire of the aforesaid buildings or part thereof, the insurance money received form the insurance company shall be applied to rebuilding or restoring the buildings as in their previous condition unless otherwise agreed to in writing between the lessors and the lessee and till the completion of such rebuilding or restoration, the rent hereby agreed or a proportionate part thereof shall remain suspended unless the fire was intentionally or willfully caused by the lessee or his servants or agent and the period of the lease hereby granted shall be extended by the time occupied in such rebuilding or restoration, in the event of the insurance company refusing to pay the claim arising out of the loss aforesaid on the ground that the fire was intentionally or willfully caused by the lessee or his servants or agent the lessee shall be liable for and compensate the lessor on account of the loss or damage caused to the said buildings.
09. The lessee will be liable to keep the building or buildings and the structures erected in the said demised land in a good state of repair and wind and waterlight condition and shall restore any damage or injury caused thereto except such damages as may be caused by ordinary and reasonable wear and tear.
10. The lease shall permit the lessors or their duty authorized agent or agents to enter the premises at all convenient times for periodical inspection of the same.
11. The lessee shall not except with the permission of the lessor in writing first, had and obtained, use the premises for any purpose other than running a factory for producing goods articles or processing goods or articles. In case of breach of this condition the tenancy shall be deemed to be terminated with all consequences herein before mentioned.
12. Subject to fulfillment of the terms and conditions of these presents, the lessee will have the option to extend the lease of the said land and buildings and structures erect thereon for a further period of 15 years on the expiry of the lease hereby granted provided he gives a notice to the effect in writing by registered post to the lessors of his intention to do so at least three calender months before the termination of the present lease.
13. The lessee shall deposit a sum of Rs.1,00,000/- with the lessor as security for the due performance of the conditions thereof this amount the lessor shall return without interest to the lessee on the termination of the tenancy created hereby subject, however, to any lawful deduction that they may be entitled to make hereunder In witness whereof the said lessor and the said lease have put their respective signatures hereunder the 6th day of March, 2006.
SCHEDULE OF THE PROPERTY Theni District Periyakulam Regn. District Theni Sub-Division P.C.Patty Land situated at Cumbum Road, Veerapandi village in survey No.1434/1B, 1453/1B, 1453/1C and 1453/1D measuring about 3.84 Acres."
20. As per Clause 2 of the lease agreement, immediately on the execution of the lease deed, the lessee shall commence and complete with all possible expedition to take possession of the land. Lessee shall construct or erect additional buildings, structures on the existing land demised according to and in conformity with plans that will be sanctioned by the Veerapandi Panchayat Union.
21. As per Clause 3, immediately on the expiry of such terms or on sooner determination thereof and in any event of expiry of 15 years from the date hereof or on completion of such periods as may be extended by the parties by mutual consent, the land and buildings and structures, if any, shall revert back to the Lessor who shall be entitled to enter upon and take possession of the same.
22. As per Clause 6, in addition to or on the alternative to any other remedy that may be available to the lessor, at their discretion, to eject the lessee from the land, buildings and structures that may have been erected thereon and take possession thereof as full and absolute owner, by giving notice in writing to the lessee of their intention to take possession of the same.
23. As rightly contended by Mr.PH.Aravind Pandian, learned Senior Counsel for the appellant that nowhere in the order impugned before us, there is any reference to Clause 6 of the lease agreement. Conjoint reading of Clauses 2 and 3, makes it clear that no sooner the lease agreement is executed, the lessee shall take possession of the leand and shall construct or erect additional buildings, structures on the existing land. Description of the schedule of the property of the land leased also shows that what was leased was land situated at bearing No.3-1-47, Cumbum Road, Theni, in S.Nos.1434/1B, 1453/1B, 1453/1C and 1453/1D, measuring an extent of 3.84 acres.
24. It is also noted that when the business was taken over by the Company, it has been specifically mentioned that four parties were carrying on business in the manufacture of oil, yarn and other activities, under the name and style of "M/s.Dhurgesh Nandhini Oil Mills" for six decades, under a partnership deed, dated 01.04.2006 and that the said four persons were interested in selling their business, a going concern and the abovesaid Company had purchased the business of going concern, for which, the vendors have agreed to sell. By virtue of the taken over agreement, the Company had purchased the business and activities of the business, with fixed plant, machinery and fixtures and benefit of subsisting contracts, stock in trade, book debts, cash in hand, etc. For brevity, business takeover deed executed by Mr.R.N.Jagadeesan, is extracted hereunder:
"An agreement made at Theni this first day of April 2007 between
1.Shri.R.N.Jagadeesan, son of R.Narajayasamy Naicker, aged about 57 years, residing at No.7, Gandhiji Nagar, NRT Road, Theni, hereinafter called as the First party of the First Part.
2.Shri.K.Kaliraj, son of K.Krishnasamy Naicker aged about 60 years, residing at No.39, Gandhiji Road, NRT Nagar, Theni hereinafter called as the Second party of the First Part,
3.Shri.N.R.Manivannan, son of N.Ramasamy, aged about 47 years, residing at No.53, NRT Main Road, NRT Nagar, Theni, hereinafter called as the Second party of the First Part,
4.Shri.L.Kamalakkannan, son of N.Lakshmanan, aged about 44 years residing at No.45, NRT Main Road, NRT Nagar, Theni, hereinafter called as the Third party of the First Party.
WHEREAS the above said four parties have been carrying on the business of manufacture of oil, manufacture of yarn, and other activities, having its Head Office at 3-1-47, Cumbum Road, Theni, under the name and style of "Durgesh Nandhini Oil Mills" and branch at Theni in the name of "Durgesh Nandhini Oil Mills Spinning division" for the past six decades under a deed of partnership, the latest being executed on 01.04.2006 (hereinafter called as Vendor) AND Shri. R.N.Jagadeesari, son of R.Narayanasamy Naicker, residing at No.7, Gandhiji Nagar, NRT Road, Theni, representing Dhurgesh Nandhini Spinning Mills Limited, in the capacity of Director and having its registered office at No.3-1-47 Cumbum Road, Theni (hereinafter called as the Company) of the other part.
WHEREAS the vendors are carrying on the business in partnership and they are interested in selling their business as a going concern.
WHEREAS the company has agreed to purchase the business of the vendors as a going concern, which the vendors have agreed to sell on the terms and conditions hereinafter appearing;
NOW IT IS HEREBY AGREED BY AND BETWEEN THE PARTIES HERETO FOLLOWS:
1. The vendors as the legal and beneficial owners shall sell and the company shall purchase the business and activities of business, spinning mills, and others carried on under the name and style of "Durgesh Nandhini Oil Mills" and its branches in the name of "Durgesh Nandhini Oil Mills Spinning division" with freehold and leasehold properties more fully described in the annexure and fixed plant, machinery and fixtures and benefit of subsisting contracts, stock in trade, book debts, cash in hand and at Bank and other properties and assets of the vendors relating to the said business as on the first day of April, 2007.
2. The company has agreed to take over all the liabilities as appearing in the books of the firms as on first day of April, 2007, as part of the agreement.
3. The vendors have assured the company that they have a clear and marketable title to the said business together with its properties and assets and the vendors declare that the properties and assets are mortgaged, charged, hypothecated or otherwise encumbered to Karur Vysya Bank and Industrial Development Bank of India Ltd for the loan specifically sanctioned by them.
4. The vendors further declare that the firms do not have any other liability other than those disclosed in the books of accounts.
5. The vendors further declare that the assets and properties of the firms are not alienated otherwise in favour of anybody for any liability.
6. The vendors have submitted the original Title Deed relating to the lease deeds, contracts executed and other agreement for the purpose of transferring the same in the name of the company.
7. The company shall purchase the said business on ' as is where is basis' subject to all debts and liabilities of the vendors in respect thereof as at day of 31st March 2007 and shall indemnify the vendors and each of them against all claims, demands, actions or other proceedings in respect of such debts or liabilities.
8. The consideration for the said sale, net of debts and liabilities, shall be the sum of Rs.4,95,00,000 which shall be satisfied by the allotment to the vendors in equal proportions of Rs.49,50,000 equity shares of Rs.10/- each in the capital of the company credited as fully paid up.
9. The sale shall be completed on or before the day of 30th April 2007, by which time the company shall deliver to the vendors, certificates for the equity shares and the vendor shall execute and do all such deeds and things as may be necessary for effectually vesting the said business and property in the company.
10. The vendors and each of them jointly and severally, irrevocably appoint the company to be their and his attorney for executing all documents and for giving and executing all documents for giving of all notices on behalf of the vendors or any of them for carrying into effect the aforesaid sale and also for demanding, recovering and giving receipts for all debts due to the vendors or any of them in respect of said business and bringing all proceedings for the recovery of the same and in respect of all assets and properties of the said business.
11. The vendors shall carry on the business as a going concern untill actual completion of the sale for their own benefit and if the completion of sale is delayed for any reason, the vendors shall form the mutually agreed date carry on the said business for and on behalf of the company and as from that date shall account to and be indemnified by the company accordingly.
12. The legal expenses, stamp duty and all other costs of and incidental to this agreement and the conveyance and assignment of the said business to the company shall be borne by the company.
IN WITNESS WHEREOF the parties of the one part have set an subscribed their respective hands and the company has caused its seal to be affixed in the presence of its two directors, who have also set their respective hands on the day and year first hereinabove mentioned."
25. On 08.09.2014, the Superintending Engineer, Theni Electricity Distribution Circle, Theni, addressed to M/s.Dhurgesh Nandhini Spinning Mills Ltd., Theni, disconnecting the electricity service connection, on and from 16.06.2014 itself, as there was a due for Rs.11,46,771/-. The said letter is extracted hereunder:
Lr.No.SE/TEDC/TNI/DFC/AS/HT/F.TA Notice/D.No. /14, dated ....... dt. 2014 Sir/Madam, Sub: Elecy - Disconnected HT Service Connection No.059094760052 HTTF 1A - Agreement Holder M/S.Dhurgesh Nandhini Spg. Mills Ltd., Termination of agreement - Notice - Issued.
******
1. The HT Service Connection No.059094760052 HT Tariff IA Standing in the name of M/S.DHURGESH NANDHINI SPINNING MILLS LTD., at premises No.3-1-47, Cumbum Road, Theni is under disconnection on and from 16.6.2014. The Sum of Rs.11,46,771/= (Rupees Eleven lakhs forty six thousand seven hundred and seventy one) being the dues payable to TANGEDCO as detailed below as on the date of disconnection is outstanding to be paid by you. Belated payment surcharge/interest on such amount till the date of payment and also monthly minimum charges till the date of payment are also payable.
Month Details Amount CCD arrear 5,11,952.00 05/2014 CC Charge 2,62,930.00 06/2014 CC Charge 2,65,889.00 07/2014 Monthly minimum 53,000.00 08/2014 Monthly minimum 53,000.00 Total 11,46,771.00
2. As you have not come forward so far to pay the dues and avail supply, you are hereby informed that if you fail to pay outstanding dues along with the belated payment/Interest thereon and reconnection charges within three months on and from the date of receipt of this letter, the agreement entered into with TANGEDCO shall stand terminated without any further notice as per the terms and conditions of supply on the expiry of said period of three months. You are further informed that, I) If you fail to resume supply within the period stipulated above, you will have to apply for a new service therefore, after setting the dues to TANGEDCO and monthly minimum charges till the date to termination of the Agreement.
II) Action under Tamil Nadu Electricity Board (Recovery of dues) act 1978 will be instituted to distrain your properties to recover the dues together with the belated payment surcharge/interest and monthly minimum charges along with incidental charges.
3. You are therefore advised to take note of this notice and settle the arrears to avoid termination of the Agreement and further action as indicated above.
26. On 13.07.2015, M/s.Durgesh Nandhini Oil Mills, Cumbum Road, Theni, has sent a letter to Mr.N.R.Manivannan, appellant herein, stating that as they are not running the Unit, the lease agreement, dated 06.03.2006, is terminated. Letter, dated 13.07.2015, is extracted hereunder:
"To Mr.N.R.Manivannan, No.53, NRT Main Road, NRT Nagar, Theni - 625531.
Sub: Land Lease Termination - reg.
Refer to your letter dated 1st July 2015, regarding the termination of land lease. As we are not running this unit, we shall terminate the land lease agreement. Kindly prepare the cancellation documents to cancel this lease in Theni SRO.
With Regards, For DURGESH NANDHINI OIL MILLS, R.N.Jagadeesan Partner."
27. Letter, dated 13.07.2015 is in response to the letter, dated 01.07.2015 of the appellant, regarding the termination of land lease. Thus, the appellant has given notice of termination of lease, which has been responded. Registered document, dated 29.07.2015, cancelling the lease agreement, is extracted hereunder:
Fj;jif uj;J Mtzk;
2015 k; tUlk; $%iy khj;k 29 k; njjpf;F jkpH; kd;kj tUlk; Mo khj;k 13 k; njjp njdp khtl;;lk;. njdp tl;lk;. njdp my;ypefuk; efuhl;rp. njdpapy; N.R.T. nuhl;oy; fjt[vz; 53 y; trpj;JtUk; jpU/uhkrhkp mth;fs; Fkhuh; jpU/N.R.kzptz;zd; (Pan Card No.AHZPM6723C)-1, njdp khtl;;lk;. njdp tl;lk;. njdp my;ypefuk; efuhl;rp. njdpapy; ,a';fptUk; Jh;nfc&; ee;jpdp Mapy; kpy;!;?f;fhf mjd; g';Fjhuh;fspy; xUtUk;. nkw;go njdpapy; N.R.T. efh;. fhe;jp$p nuhl;oy; trpj;JtUk; jpU/R.ehuhazrhkp mth;fspd; FkhuUkhd jpU/R.N.b$fjPrd; (Pan Card No.ABZPJ1876F)-2, ehkpUtUk; nrh;;e;J vGjpf;bfhz;l Fj;jif uj;J Mtzk;/ ek;kpy; 1 tJ egUf;F ghj;jpag;gl;l ,jpy;fz;l brhj;ij nkw;go Jh;nfc&; ee;jpdp Mapy; kpy;!;?f;fhf mjd; g';Fjhuh; vd;w Kiwapy; tl;Rkzd; mth;fs; Fkhuh; L.fkyf;fz;zd; mth;fs; K:yk; nkw;go Jh;nfc&; ee;jpdp Mapy; kpy;!;?f;F tUlk; 1 (xd;W) f;F Fj;jif U:gha;/5.000-/ (U:gha; Ie;jhapuk;) tPjk; fle;j 16?06?2004 k; njjp Kjy; 15?06?2019 k; njjptiu 15 (gjpide;J) tUl fhyj;jpw;F Fj;jiff;F ngrpKoj;J nkw;go Fj;jiff;F Kd; ml;thd;!hf U:gha;/1.00.000-/ (U:gha; xU ,yl;rk;) kl;Lk; nkw;go Jh;nfc&; ee;jpdp Mapy; kpy;!;?f;fhf L.fkyf;fz;zd; mth;fsplkpUe;J ek;kpy; 1 tJ egh; bgw;Wf;bfhz;L. nkw;go L.fkyf;fz;zd; mth;fSk;. ek;kpy; 1 tJ egUk; nrh;e;J fle;j 06?03?2006 k; njjpapy; xU Fj;jif xg;ge;jk; vGjp 07?03?2006 k; njjpa njdp rh/g/m/1/1428/2006 vz; Mtzg;go gjpe;J bfhz;nlhk;/ ,e;epiyapy; nkw;go Jh;nfc&; ee;jpdp Mapy; kpy;!; ,jpy;fz;l brhj;jpy; bjhlh;e;J elj;jptu tpUk;gk; ,y;yhj fhuzj;jhYk;. ek;kpy; 1 tJ egUf;F ,jpy;fz;l brhj;J njitg;gLtjhYk; ehk; ,uz;L ngh;fSk; nrh;e;J ngrpKoj;J kdg;g{h;tkhf xg;g[f;bfhz;l epiyapy;. ,jpy;fz;l brhj;ij nkw;go Jh;nfc&; ee;jpdp Mapy; kpy;!;? bghWg;gpypUe;J ek;kpy; 1 tJ efh; trk; xg;gilj;Jk;. nkw;go Fj;jif xg;ge;jk; vGJk; fhyj;jpy; nkw;go ee;jpdp Mapy; kpy;!; ? f;fhf nkw;go L.fkyf;fz;zd; mth;fsplkpUe;J ek;kpy; 1 tJ egh; bgw;Wf; bfhz;l ml;thd;!; bjhifahd U:gha;/1.00.000-?(U:gha; xU ,yl;rk;)Kk;. ek;kpy; 1 tJ eghplkpUe;J nkw;go Jh;nfc&; ee;jpdp Mapy; kpy;!;?f;fhf ek;kpy; 2 tJ egh; jpUk;g bgw;Wf;bfhz;L ,e;j Fj;jif Mtzj;ij ehk; ,uz;L ngh;fSk; nrh;e;J kdg;g{h;tkhf rk;kjpj;J uj;J bra;J bfhs;fpnwhk;/ brhj;J tpguk;
njdp khtl;lk;. bghpaFsk; gjpt[ khtl;lk;. njdp rg;o. njdp tl;lk;. tPughz;o fpuhkk;. cl;fil gHdpbrl;ogl;oapy; fk;gk; nuhl;oy; rh;nt vz;fs; 1434/1 B, 1453/1B, 1453/1C, 1453/1D y; fl;Lg;gl;l Vf;fh; 3. brz;L 84 cs;s epyk; rh;tlf;fk;/"
28. Consequent to the termination of lease by notice, Clause 6 would come into operation. Though the learned Official Liquidator, High Court, Madras, as well as the Petitioning Creditor, made strenuous submissions that after the take over of the business, lease deed can be cancelled only by the Board of Directors and not by M/s.Durgesh Nandhini Oil Mills, Theni, which is not in existence and that the said cancellation is void, as rightly pointed out by the learned Senior Counsel for the appellant, the same was not challenged before the Company Court, under the provisions of the Companies Act.
29. In fact, in the minutes of proceedings recorded at the registered office cum mill premises at No.3-1-47, in the matter of M/s.Durgesh Nandhini Spinning Mills Ltd., situated on Cumbum Road, theni, on 26.11.2015, learned counsel representing Shri Menaka Mills Pvt. Ltd., has stated that the area of the land leased out by the appellant to M/s.Durgesh Nandhini Spinning Mills Ltd., for the period from 16.06.2004 to 15.06.2019, has been cancelled, taking note of the Surrender Lease Deed, 29.07.2015. By brevity, the abovesaid minutes is extracted hereunder:
"Pursuant to order, dated 01.10.2015 of the Hon'ble High Court Madras made in C.P.No.415/2014 and upon the directions of the Official Liquidator attached to the Hon'ble High Court, madras, the officials referred at serial Nos.1 & 2 were present for the purpose of taking possession of the properties belonging to M/s.Durgesh Nandhini Spinning Mills Ltd., (in provisional liquidation).
The representative referred at serial No.3 above who also present at the site for the abovesaid purpose.
The person referred at Serial No.4 have representing the company, viz., Shri Menaka Mills Pvt. Ltd., informed that except machineries, the other assets, viz., land which belongs to Shri N.R.Manivannan and the building constructed thereon belongs to M/s.Durgesh Nandhini Spinnings Mills Pvt. Ltd., (in provisional liquidation).
Further, the representative referred as Serial No.4 informed that the area of the land leased out by Shri.N.R.Manivannan to M/s.Durgesh Nandhini Spinning Mills Ltd., for the period from 16.06.2004 to 15.06.2019. A copy of the surrender Lease Deed, dated 29.07.2015, tendered by him at the spot stating that the above said lease period has been cancelled and the possession of the landed property handed over to Shri N.R.Manivannan by the company in provisional liquidation.
It is further informed that there are some renovation works going on in the same premise pertains to M/s.Menaka Mills Pvt. Ltd., and requested to provide access through the main gate for which the representative representing M/s.Menaka Mills Pvt. Ltd., has been advised to approach the Hon'ble High Court, Madras, in the matter.
The movable which belongs to M/s.Durgesh Nandhini Spinnings Mills Ltd., were identified by said Shri Guru Radhakrishnan and sealed the rooms/sheds in the presence of the Petitioning Creditor/Police Officials (deputed by the DSP Theni). It is noticed that there are no employees and no electricity power available at the mill premises.
After duly recorded this minutes and signed by the members concerned left the spot by deploying one M/s.Raj Security Services Chennai in the capacity of the guards per shift, totally thirty guards for three shifts plus three reliefs (thirty + three = thirty three) to safeguard the assets of the Company in provisional liquidation, considering the area of the mill premises."
30. When IDBI Bank Ltd., Madurai, has initiated the proceedings in O.A.No.126 of 2015, before the Debts Recovery Tribunal, Madurai, against M/s.Dhurgesh Nandhini Spinning Mills Ltd., Theni, the appellant/3rd defendant therein, has filed I.A.No.1969 of 2015 and offered to deposit Rs.7,70,00,000/-, due to IDBI Bank, Madurai. Order made in I.A.No.1969 of 2015 in O.A.No.126 of 2015, is extracted hereunder:
"PRECEEDINGS IN OA No.126/15 on 18-09-2015 Ld. Counsel Mr.Kasirajan and Ms.Poornima, Authorised Representative/Manager of the Respondent are appearing for the Applicant Bank.
Ld. Counsel Ms. Arthi is appearing for the Petitioner/Defendant No.3.
IA No.1968/15 (Advance hearing petition)- In view of the affidavit averments, this petition is allowed and hearing advanced from 29.09.15 to 18.09.15.
IA.No.1969/2015 - direction petition & IA No.1002/15 & IA No.1003/2015 - exoneration petition - Heard both. For perusal and orders after lunch.
OA 126/15 (After lunch) IA No.1969/2015 - (direction petition) - This petition has been filed by the petitioner / 3rd Defendant to direct the Respondent Bank/Applicant Bank to settle the entire dues and to return the original documents pertaining to immovable property mentioned in the petition to the petitioner/Defendant No.3. Admittedly the petitioner is the 3rd Defendant/guarantor in the original application. It is pleaded by the petitioner/D-3 that he has offered his immovable property as security for the loan in question and the original title deed has been deposited before the Respondent/Applicant Bank. The Ld. counsel for the petitioner/D-3 would submit that D-3 has stepped into the shoes of the original borrower, though he was reduced to the rank of mere share holder from the status of Director and has deposited a sum of Rs.50 lakhs before the Respondent/Applicant bank as early as 21.01.15 with a view to resolve the issue before the Respondent/Applicant Bank. The Ld. counsel further submitted that the petitioner/D-3, has deposited Rs.7,70,00,000/- before the Respondent/Applicant Bank on 08.09.15 into the account of M/s Maneka Mills Limited, which has come forward to tender the same to the Respondent Bank on behalf of the Petitioner/D-3. The Ld. counsel further would submit that the Respondent/Applicant Bank having placed reliance on a letter issued by one of the current Directors of the principal borrower that the petitioner/D-3 has not been authorised to clear the debts, is not inclined to release the original title deeds and discharge the petitioner/D-3 from the liability. The Ld. counsel further would add that the Director who issued the letter has not chosen to even appear before this Tribunal and the Respondent/Applicant Bank on the strength of the letter issued by the person who is virtually not prosecuting the matter is not inclined to consider the request of the petitioner/D-3. The Ld. counsel for the petitioner/D-3 represents that D-3, having parted with such a huge sum of Rs.7.70 crore, is put into unnecessary hardship and the deposited amount is parted and lying idle for several days before the Respondent/Applicant Bank. The Ld. counsel seeks to consider the plight of the petitioner/D-3 and discharge him from his liability who is jointly, severally, personally and co-extensively liable to pay the dues to the Respondent/Applicant Bank.
The Ld. counsel for the Respondent/Applicant Bank and the Manager fairly concedes that the petitioner/D-3 has every right to steps into the shoes of the principal borrower in discharging the liability of the Respondent/Applicant Bank and expressed their willingness to discharge the petitioner/D-3 from the proceedings subject to the orders of this Tribunal since the liability is such as submitted by the petitioner/applicant.
Therefore, having taken into consideration of the affidavit avernment and submissions of both the Ld. counsels on record and the submission made by the Manager of the Respondent/Applicant bank this Tribunal is of the view that the prayer of the petitioner/D-3 merits consideration. Hence, this petition has to be allowed and the direction sought in this petition has to be countenanced. Accordingly the Respondent/Applicant Bank is directed to appropriate the amount deposited by the petitioner/D-3 towards the loan account in question. It is open to the parites i.e. (the Director & Share Holder) to resolve their inter-se dispute by approaching the appropriate competent forum established by law to work out their remedies."
31. From the above, it is evident that the appellant has discharged the entire loan amount of Rs.7,70,00,000/-. IDBI Bank has also sent a letter, dated 29.09.2015, to M/s.Dhurgesh Nandhini Spinning Mills Ltd., as hereunder:
"Letter from the IDBI Bank to M/s.Dhrugesh Nandhini Spinning Mills Limited:
OA No.126/15-DRT Madurai order dated 21-09-2015 Payment of IDBI Bank Dues We invite your attention to the hearing held at DRT Madurai on September 18, 2015 in respect of IA No.1968/2015 & IA No.1969/2015 in respect of M/s.Dhurgesh Nandhini Spinning Mills Ltd., (DNSML). The Hon'ble Presiding Officer, DRT, Madurai, vide order dated September 21, 2015, had passed orders for allowing the interim application filed by Shri.N.R.Manivannan for settlement of IDBI dues in his capacity of guarantor or the loans availed by DNSML and release of title deeds in respect of his personal property (an extent of 3.84 Acre of land in Veerapandi Village, Theni) which was inturn mortgaged as collateral security for the financial assistance availed by the company.
In this connection, we advise you that Shri.N.R.Manivannan has approached IDBI for settlement and paid an amount of Rs.7,81,50,000/- (Rupees Seven Crore Eighty One Lakh Fifty Thousand only) towards full and final settlement of captioned company's loan account as on September 23,2015. In compliance with the Hon'ble DRT's directions vide order dated September 21, 2015 IDBI had accepted the above settlement amount and released the title documents deposited with IDBI as security to Shri.N.R.Manivannan (Guarantor) on September 23, 2015.
With the appropriation of the above receipt, loan account in the name of DNSML stands settled in the books of IDBI and all actions initiated by IDBI Bank for recovery of the dues stands withdrawn.
Kindly acknowledge the receipt of this letter."
32. From the description of the property, mentioned in the schedule to the lease deed, it could be seen that what was leased out on 16.06.2004 was the land, situated at bearing No.3-1-47, Cumbum Road, Theni, in S.Nos.1434/1B, 1453/1B, 1453/1C and 1453/1D, measuring an extent of 3.84 acres, for a monthly rent of Rs.5,000/-. At that time, the appellant was a Managing Partner in M/s.Dhurgesh Nandhini Spinning Mills, which has been suitably taken over by the Company Ltd. It was a on going business concern, engaged in the manufacture of oil, yarn and other activities, under the name and style of "M/s.Dhurgesh Nandhini Oil Mills".
33. Though the Company Court has disallowed the prayer of the appellant, on the grounds that the appellant has not produced any evidence, such as, sanctioned plan, completion certificate, to establish that there was any building, civil structure erected on the subject land, quite contrary to the same, the Company Court has taken the view that if any additional building or civil structure were erected, the proprietary rights would continue to vest with the lessee and by virtue of the business take over agreement, ownership in such state, would ordinarily rests in the company liquidation.
34. As rightly contended by the learned Senior Counsel for the appellant, in the light of Clauses 3 and 6 of the lease agreement, dated 06.03.2006, no sooner, there is termination of lease, land and building and structures, if any, should revert back to the lessor, who shall enter upon the land and take possession of the above, as full and absolute owner.
35. As rightly contended by the learned Senior Counsel for the appellant, Clause 6 of the lease agreement has not been taken note of, by the Company Court. If Clause 6 of the lease deed is applied to the case on hand, then there is no need for the appellant to produce any proof of construction of building or any civil structure.
36. Admittedly, an ongoing business concern was taken over by the Company and without building, construction, plant, machinery, fixtures, etc., business of manufacture of oil and yarn, could not have been continued. It is also to be noted that M/s.Dhurgesh Nandhini Oil Mills, has been in existence for six decades, with head Office at No.3-1-47, Cumbum Road, Theni and branch at Theni and the latest partnership deed was executed on 01.04.2006 and taken over by the Company from 01.04.2007 onwards.
37. In the light of the above discussion, we are of the view that the appellant has made out a case for grant of the prayer made in Application No.1209 of 2015. Order impugned is set aside. The Official Liquidator, High Court, Madras, is directed to release the property comprised in S.Nos.1434/1B, 1453/1B, 1453/1C and 1453/1D, measuring an extent of 3.84 acres, land and buildings and put the appellant in possession, within a period of one month, from the date of passing of this order.
(S.M.K., J.) (R.S.K., J.) 27.03.2018 Index: Yes/No Internet: Yes/No skm S. MANIKUMAR, J.
AND R. SURESH KUMAR, J.
skm O.S.A.No.202 of 2016 27.03.2018