Madras High Court
R.V.Subramanian vs Chennai Metropolitan Development on 4 September, 2018
Author: M.Venugopal
Bench: S.Ramathilagam, M.Venugopal
IN THE HIGH COURT OF JUDUCATURE AT MADRAS
Dated: 04.09.2018
Coram:
THE HON'BLE MR.JUTICE M.VENUGOPAL
AND
THE HON'BLE MRS.JUSTICE S.RAMATHILAGAM
W.P.Nos.22183 and 22184 of 2018
R.V.Subramanian
Partner M/s.Raja Holdings,
Financers and Merchants
Partnership Firm ... Petitioner in both the W.Ps.
vs.
1.Chennai Metropolitan Development
Authority,
rep.by its Member Secretary,
Thalamuthu Natarajan Maaligai,
No.1, Gandhi Irwin Road,
Chennai-600 008
2.Corporation of Chennai,
Rep.by its Commissioner,
Rippon Buildings,
Chennai-600 002
3.The State of Tamil Nadu,
Rep.by its Secretary,
Ministry of Housing and Urban
Development,
Secretariat,
St.Fort George,
Chennai-600 009
4.N.Padmanabhan
5.R.R.P.Housing Pvt.Ltd.,
No.12/6, Achutha Nagar,
Ekkattuthangal,
Chennai-32,
rep.by Insolvency Resolution Professional
Mr.N.Arumugam ... Respondents
in both the W.Ps.
Prayer in W.P.No.22183 of 2018:Petition filed under Article 226 of the Constitution of India, praying for the issuance of a Writ of Mandamus directing the First Respondent to de-seal the building at Door No.12/6, Achutha Nagar, Ekkattuthangal, Chennai-600 032 and permit the Petitioner to carry out rectification as per Order of the 3rd Respondent dated 09.08.2016 in Letter No.13524/UD-VI(1)/2016(4).
Prayer in W.P.No.22184 of 2018:Petition filed under Article 226 of the Constitution of India, praying for the issuance of a Writ of Mandamus directing the Third Respondent to consider the Representation and pass orders permitting the Petitioner to rectify the building at Door No.12/6, Achutha Nagar, Ekkattuthangal, Chennai-600 032 and permit the Petitioner to carry out rectification as per Order of the 3rd Respondent dated 09.08.2016 in Letter No.13524/UD-VI(1)/2016(4).
For Petitioner : Ms.S.Vaitheeswari for
Mr.Niranjan Rajagopalan
For Respondents :Mr.Karthick Rajan for R1
Mr.A.Nagarajan for R2
Mr.R.Udayakumar,A.G.P. for R3
COMMON ORDER
(Order of the Court was made by M.VENUGOPAL,J.) Heard the Learned Counsel for the Petitioner, the Learned Counsels for R1 and R2 and the Learned Additional Government Pleader for R3.
2.To avoid an avoidable delay, Notice to R4 and R5 is not ordered by this Court.
3.According to the Petitioner, the present Writ Petitions are filed praying for issuance of Mandamus in directing the First Respondent to de-seal the building at Door No.12/6, Achutha Nagar, Ekkattuthangal, Chennai-32. Further the Petitioner has sought permission from this Court to carry out the Rectification, as per Order of the 3rd Respondent dated 09.08.2016 in Letter No.13524/UD-VI(1)/2016(4) and also sought for a direction to the Respondents to consider his Representation and to pass orders as stated above.
4.It is the case of the Petitioner that 'Raja Holdings', is a Registered Partnership firm, doing banking business since 1995 and it is a reputed firm in the business circle. The 4th Respondent claiming to be a 'Real Estate Promoter', approached the Partnership firm, stating that they are constructing and selling Villas in Guduvancherry, Tiruvallur etc, as 'RRP Housing Pvt Ltd.'. As a matter of fact, they had approached the Petitioner firm for financial assistance to an extent of Rs.5,50,00,000/- (Rupees Five and half Crores) for their business. Further, the 4th Responder offered to mortgage the properties situated at Ekkattuthangal and Tambaram, owned by them personally, as security for the amounts borrowed from the Petitioner's Partnership firm,
5.Based on the discussions between the Petitioner and the 4th Respondent, it was agreed to execute separate Mortgage Deeds, wherein, the properties belonging to the 4th Respondent's sons, at Agaram-Then Village, Tambaram Taluk and the land and building at at No.4, Achutan Nagar, 1st Street, Old Poonamallee Road, Ekkattuthangal, Chennai-32, which was owned by the Fourth Respondent, were to be mortgaged, assuring the Petitioner that he had valid legal title to the Properties and that the building that was there in the property also had valid approval. Indeed a sum of Rs.5,10,00,000/- (Rupees Five Crores and Ten Lakhs) was disbursed by the Petitioner Firm through an 'Account Payee Only' Cheque to the 4th Respondent, as mentioned in the Mortgage Deed. The balance sum of Rs.40 Lakhs was disbursed by Cheques through associates of the Petitioner's firm, viz., Mrs.Shantha Jayaram and Mrs.G.Kalpana. Apart from that three Promissory Notes were issued by the 4th Respondent and his two Sons to the Petitioner Firm and the two Associates acknowledged the dues.
6.It comes to be known that among other Mortgage Deeds, a Simple Mortgage of the Property at Ekkattuthangal was executed at Chennai, on 27.4.2015 and Registered as Document No.4862 in the Office of the Chennai South Joint Sub Registrar and the detail of the same runs as under:-
Date Mortgagor Mortgagee Description of Property 27.04.2017 N.Padmanaban, S/o.Nataraja Pillai Raja Holdings, Financiers and Merchants Land and building at Door No.12/6, Achutha Nagar, Ekkattuthangal Chennai-32, comprised in Block-1, T.S.No.92, New T.S.No.92/6, Patta in C.A.No.332/2014, measuring 4,347 sq.ft.of land along with building.
7.The version of the Petitioner is that the 'Mortgage Deed' conferred a specific right to the 'Mortgagee' for a right of 'Private Sale' as specified in Section 69-A of the Transfer of Property Act, 1882, in case of default, where the 'Mortgagee' can effect sale, without intervention of Court. Besides this, in case of invocation, the Petitioner was to be appointed as 'Receiver'. The building aforestated, which was mortgaged, was styled as 'RRP Towers' and was supposed to be the Office of five Companies, viz., R.R.P.Housing Pvt.Ltd., Naagar Properties Pvt. Ltd, K.B.P.Traders Pvt.Ltd., Surya Ganesh Properties Pvt Ltd and Royal Gowtham Construction Pvt.Ltd. All of them appear to be group Companies of the 5th Respondent Company, managed and run by the 4th Respondent and his family.
8.It is represented on behalf of the Petitioner that the 4th Respondent defaulted in payment and although the Petitioner had approached the 4th Respondent to repay the amount, the 4th Respondent did not repay the amount. Moreover, all sorts of promises and assurances were made to the Petitioner and despite the same, no amount was paid by the 4th Respondent. Under these circumstances, when the Petitioner's firm was about to invoke the 'Right of Private Sale' under the Mortgage Deed, the Petitioner was shocked to find that in respect of the property at Ekkattuthangal, owned by the 4th Respondent, the First Respondent/Chennai Metropolitan Development Authority, Chennai, had sealed the property and had put up Notice to all the prospective Purchasers, cautioning them from dealing with the same, also that the building had deviations beyond permissible limits. Added further, the Petitioner was shocked to learn that numerous First Information Reports were Registered in the name of the 4th Respondent and his sons by numerous Vendors and Prospective flat Purchasers, relating to the Offences such as Cheating, Forgery and Land Grabbing.
9.Continuing further, the Learned Counsel for the Petitioner submits that the Cheques given for payment of Principal and interest also bounced, leading to the filing of complaint under Section 138 of the Negotiable Instruments Act, 1881. On coming to know that the security furnished by the 4th Respondent is insufficient and apprehending that the 4th and 5th Respondents and their connected company, viz., M/s.RRP Housing Pvt Ltd, who had given a corporate guarantee, would liquidate their assets, the Petitioner, as Plaintiff, has filed a Suit, seeking Injunction, restraining the alienation of the property of Maraimalai Nagar, before this Hon'ble High Court. The Suit in O.S.No.No.2 of 2018 was returned directing the Petitioner to present the same before the appropriate Court, on the ground that the Suit for Land.
10.The contention of the Petitioner is that the Petitioner Firm proceeded to invoke the ingredients of Section 69-A of the Transfer of Property Act, 1882 and took over the Assets, by appointing him as the 'Receiver'. The Petitioner as well as his Co-Partners met the 4th Respondent and his Sons on several occasions and requested to carry on the demolitions, as per the order of the First Respondent/CMDA, for which, the 4th Respondent stated that all steps were taken, which ultimately turned out to be a false one. The Petitioner did not get Purchasers for the Property at Ekkattuthangal, considering the violations in the building and taking note of the attitude and the approach of the 4th Respondent, the Petitioner approached the Respondents 1 and 2 in regard to de-sealing of the property at Ekkattuthangal, so that necessary rectifications can be carried out to make the building come within the norms. In this connection, the 3rd Respondent/The State of Tamil Nadu, rep. by its Secretary, Ministry of Housing and Urban Development, had passed an Order on 26.8.2016, permitting the building to be de-sealed and rectified as follows:
(b)Chennai Metropolitan Development Authority has stated that if the Petitioner removes the temporary construction on the 3rd floor as well as convert the ground floor to stilt parking, Floor Space Index, violation can be brought within the permissible limit. Similarly, the front set back can be restored by restricting the built up area of the security room as per the Development Regulations and by removing the projections on the first and 2nd floors in the setback area. However, some minor side set back violations will still remain which will require exemption.
11.The petitioner, in the present Writ Petitions, comes out with a case that the 4th Respondent, who obtained the aforestated permission, misused the same to de-seal the premises and used the building, instead of carrying out the demolition and therefore, it was re-sealed. Since the 4th Respondent never carried out the Rectification, the Petitioner had come forward to carry out the same, as it would enable them to sell the property in the name of 4th Respondent and recover a part of amount due to it. Also that the Petitioner had demanded additional security, which the 4th Respondent denied and in this regard, the Petitioner had issued a Notice, informing the 4th Respondent as regards the invocation of Section 69-A of the Transfer of Property Act, 1882. As a matter of fact, the 4th Respondent had denied stating that the advance is already secured by the properties that were mortgaged. The Petitioner had addressed Representations dated 6.3.2018 and 12.03.2018, requesting the Respondents 1 and 2 to de-seal the building, so that Rectification can be carried out, as per the Government Order and a Representative was also sent to meet the officials of the Respondents 1 and 2. However, no response has been forthcoming.
12.The prime grievance of the Petitioner is that the Respondents 1 and 2, by their inaction, are causing immense agony and financial loss to them and the 4th Respondent and his Sons are already due to pay a sum of Rs.12.75 Crores to the Petitioner's firm and therefore, if the Petitioner's firm is not able to sell the Mortgaged properties and recover the money, they will be put to heavy financial loss. As such, the property concerned can be practically disposed of only if the building is Rectified or regularised and without the same, the Petitioner will be unable to secure any Purchasers. There is no justifiable reason on the part of R1 and R2 in not granting the Petitioner's request, since all that the Petitioner wants to do is to Regularise the Building as per the Government norms, to protect their interests.
13.It comes to be known that in regard to one of the Companies, viz., R.R.P.Housing Private Limited, there is a Proceeding pending before the National Company Law Tribunal, Chennai and an Insolvency Professional was appointed and further it has come to knowledge that the 'Insolvency Resolution Professional' had obtained orders for documents of the 5th Respondent Company from the Tribunal. As a matter of propriety and by abundant caution, the Company, represented by Insolvency Resolution Professional is impleaded as 5th Respondent.
14.The Petitioner categorically takes a stand in the Writ Petitions that the property concerned in the present Writ Petitions is not affected by the Proceedings of the National Company Law Tribunal, or any Order of 'Moratorium' etc. Since the Petitioner has no other alternative or efficacious remedy, has filed the present Writ Petitions, seeking necessary reliefs as stated therein.
15.The Petitioner takes a plea that by virtue of Powers under Section 69 and 69-A of the Transfer of Property Act, 1882, in his capacity as the 'Mortgagee' as well as 'Receiver', stands in the shoes of the owner of the property by invoking its rights and as such, the Petitioner Firm is entitled to approach the Respondents 1 and 2 for rectification and Regularisation.
16.It is the stand of the Petitioner that there is no Provision in the Tamil Nadu Town and County Planning Act, 1971, preventing such a recourse to be taken by it. Also that in the Act, 1971, the term 'any person', includes the 'Mortgagee', exercising his right under a 'Mortgage Deed' or a 'Receiver'. Also the inaction of the Respondents 1 to 3 in not granting permission to the Petitioner to carry out the Rectification is arbitrary and violative of Article 14 of the Constitution of India.
17.In response, the Learned Counsel for the First Respondent/CMDA submits that the Petitioner's claim as a 'Mortgagee' is not maintainable, because of the reason that (i) only the 'Owner' (as defined under Section 2(29) of the Act, 1971) or an 'Occupier' (as defined under Act 2(28) of the Act, 1971), can maintain the Application for de-sealing and carrying out Rectifications. Furthermore, it is the stand of the First Respondent that definition of 'Owner' under the Tamil Nadu Town and Country Planning Act, 1971, does not include a 'Mortgagee'. Apart from that, a 'Mortgagee' also does not come under the definition of 'Occupier' under Section 2(28) of the Act, 1971.
18.The emphatic contention advanced on behalf of the First Respondent is that in Law, the 'Mortgagee's right' is different and superior to that of 'Mortgagor', but, in fact, the Petitioner's right is claimed against the 'Mortgagor'. Therefore, the Petitioner, as a 'Mortgagee', cannot claim any right of the 'Mortgagor', i.e., as 'Owner' of the building.
19.The Learned Counsel for First Respondent forcibly projects an argument that although the 'Receiver' appointed under Section 69-A of the Transfer of Property Act, 1882, (without the intervention of the Court), is deemed to be the 'Mortgagor's Agent, it cannot be construed that he has all the powers of the Mortgagor. In short, the 'Receiver' has the power only to the extent of receiving or recovering the income from and out of the Mortgaged property, which it does so on behalf of the Mortgagor. Moreover, the definition of 'Owner' under Section 2(29) of the Act, 1971, is an inclusive definition, thereby, a 'Receiver' for another person is also considered as an 'Owner'. But, the Petitioner, in his capacity as 'Receiver', is not entitled to maintain the present Writ petitions, because of the reason that the Petitioner has not filed the present Writ Petitions in his capacity as 'Receiver', which is latently and patently evident from the Cause Title to the Writ Petitions.
20.The Learned Counsel for the First Respondent proceeds to point out that no correspondence is made available to confirm as to whether the 4th Respondent (Owner) was requested to carry out Rectification and the same was refused by him. Equally, there is no correspondence is made available to confirm that the 'Receiver' so appointed had intimated the fact of his appointment to the Mortgagor. Besides the above, on behalf of the Petitioner, no document is filed in the present Writ Petitions to prove that the named 'Receiver' was in reality appointed by the 'Mortgagee' in exercise of its power conferred under Clause 17 of the Mortgage Deed and further, such 'Receiver' had accepted the appointment and taken possession of the building.
21.The Learned Counsel for the First Respondent draws the attention of the Court that after the failure of the 4th Respondent to comply with the directions of the 3rd Respondent for Rectification of the defects, admittedly, the building was resealed by the First Respondent on 14.02.2017, invoking the provision of Section 56 of the Tamil Nadu Town and Country Planning Act, 1971. Under Section 80-A of the Act, a Statutory Appeal can be filed before the 3rd Respondent, which remedy has not been availed either by the 4th Respondent(Mortgagor) or by the so called 'Receiver'. In short, the plea taken on behalf of the First Respondent is that there is no Cause of Action, which has arisen in the present case and as such, no reliance can be placed on the earlier order passed by the 3rd Respondent.
22.The yet another submission made on behalf of the First Respondent is that the Representations of the Petitioner dated 06.03.2018 and 12.03.2018 were made in the capacity of 'Mortgagee' and as such, the First Respondent cannot be faulted for not acting on the said Representations.
23.While winding up, the Learned Counsel for the First Respondent points out that the Representations aforestated, dated 06.03.2018 and 12.03.2018 were made in the capacity of the Petitioner as 'Mortgagee', who has no right in so far as the claim made in the present Writ Petitions.
24.At this juncture, the Learned Additional Government Pleader for the Third Respondent/State Government, Represented by its Secretary, Ministry of Housing and Urban Development, submits that the 4th Respondent/R.R.P.Housing Pvt.Ltd., preferred an Appeal under Section 80-A of the Tamil Nadu Town and Country Planning Act, 1971, against 'Lock and Seal' of the premises bearing Door No.12/6, Achutha Nagar, Ekkattuthangal, Chennai-32 and ultimately, the Government, taking into consideration of the fact that the building is an old one and remodeled recently, and that the violations can be Rectified, directed the First Respondent/Chennai Metropolitan Development Authority, to take appropriate action to de-seal the premises and provide six months time to the Appellant(4th Respondent) to Rectify the defects, subject to furnishing of an undertaking that the period of de-sealing shall be used only for the purpose of carrying out the Rectification work and the premises shall not be occupied during the said period. Further, the 4th Respondent again submitted a Representation to the Government, seeking additional six months time to carry out the Rectification and the Government had rejected the request of the 4th Respondent through its Letter dated 16.06.2017.
25.The Learned Additional Government Pleader for the 3rd Respondent draws the attention of this Court that the Writ Petitioner has not filed any Appeal before the Government, but he had made a request before the Greater Chennai Corporation and the First Respondent/Chennai Metropolitan Development Authority, to de-seal the building.
26.As per Section 56(2-A) or under Sub-Section 4 of Section 57 and under Section 80-A of the Tamil Nadu Town and Country Planning Act, 1971, only the 'Owner' or 'Occupier' (in default of Owner) can prefer an Appeal to the Government in respect of de-sealing of premises within the definition stipulated under the Tamil Nadu Town and Country Planning Act, 1971. In the present case, according to the 3rd Respondent, the Petitioner is neither an 'Owner' nor an 'Occupier' and as such, an Appeal from him is not an entertainable one.
27.The Learned Additional Government Pleader for the Third Respondent cites the decision of the Karnataka High Court between S.Nagaraj vs. S.V.Swaminathan (reported in 1993(2) Kar LJ 118), wherein at Paragraph Nos.6 to 8, it is observed as under:-
6.Section 69-A of the Act provides that a mortgagee having the right to exercise a power of sale under Section 69 shall be entitled to appoint a Receiver of the income of the mortgaged property or any part thereof; that a person who has been named in the mortgage-deed and is willing to act as Receiver, will have to be appointed by the mortgagee; that if no person has been so named and if the mortgagor does not agree to the appointment of any person as a Receiver, then the mortgagee shall be entitled to apply to the Court for appointment of a Receiver.
7.It is under this provision an application has been made before the Lower-Court for appointment of a Receiver and the Receiver has also been appointed under that provision by the lower Court.
8.At the outset it may be noted that the power of the Court to appoint a Receiver under Order 40 C.P.C. is quite distinct from the power to appoint a Receiver under Section 69-A of the Act. The circumstances under which a Receiver could be appointed under Order 40 C.P.C. are quite different from those under which a Receiver can be appointed under Section 69-A of the Act. A Receiver appointed under Order 40 C.P.C. is an officer of the Court, while the Receiver appointed under Section 69-A of the Act shall be deemed to be the Agent of the mortgagor. That apart though the Court appoints a Receiver under Section 69-A, the statute stipulates that he shall be deemed to have been duly appointed by the mortgagee. Thus an order appointing a Receiver on an application filed by a mortgagee under Section 69-A of the Act cannot be treated as an order under Order 40 C.P.C. against which an appeal is permissible under Order 43 Rule 1 C.P.C. if Order 43 Rule 1 C.P.C. is not applicable to file an appeal against the impugned order, then we have to see under which provision an appeal lies. Transfer of Property Act itself does not provide for any appeal against the appointment of a Receiver under Section 69-A.
28.At this juncture, this Court pertinently points out that a 'Mortgagee', in Law, derives his 'Title' from his 'Mortgagor'. It is to be remembered that on the repayment of money borrowed, it is quite irrelevant/immaterial for the 'Mortgagee' to raise questions pertaining to the Title of 'Mortgagor' even as to whether the same is valid, good or bad. The Mortgagees' remedies by Suit are (a) Resting upon Covenants; (b) For Sale; (c) for 'Foreclosure'.
29.Be it noted that Section 67 of the Transfer of Property Act, 1882 speaks of 'Right to Foreclosure' or 'Sale' and in fact, the said Section relates to the Remedy against the property Mortgaged. However, Section 68 of the Act, 1882 speaks of 'Right to Sue' for Mortgage money i.e. a personal remedy of the Mortgagee. A Mortgagee cannot appoint a 'Receiver', until the power of Sale is exercisable under Section 69(2) of the Act 1882. The 'Mortgagee' in possession is accountable and responsible for an efficient and prudent management.
30.As per Section 69-A of the Transfer of Property Act, 1882, any person, who has been named in the 'Mortgage Deed' and is willing and able to act as 'Receiver' may be appointed by the Mortgagee. If the parties do not agree, then the Mortgagee has the option to apply before the Court in a Summary Proceeding to make the appointment. The 'Receiver' so appointed is accountable to the 'Mortgagee'. It is only by means of fiction that the 'Receiver' is deemed to be an agent of the 'Mortgagor'. As a matter of fact, the fiction is not to be extended so as to make a contract entered into by the Mortgagor binding upon the 'Receiver' as per decision between Radhakrishna v. Thiruvenkatiah [(1963) ILR Mad p.681]. The power conferred as per Section 69-A of the Act, 1882 may be exercised even after the Mortgagee has gone into possession, as per decision between Refuge Assurance Company vs. Pearl Berg (reported in (1938) ch p.687).
31.In so far as the object of appointing a 'Receiver' is concerned, the same is meant to protect, preserve and manage the property during the pendency of a Suit. The power to appoint a 'Receiver' under Order 40 Rul3 1 of the Code of Civil Procedure, 1908 is subject to the ingredients of Section 94 of CPC and is to be exercised with a view to prevent the ends of justice being defeated. A 'Receiver' is not to be appointed unless there is a need for the same like the property in a Suit will be dissipated or irreparable mischief may be caused. Even by consent, the Court can appoint a 'Receiver' in a given Suit. Furthermore, an appointment of 'Receiver' is an act of the Court and made in the interest of justice.
32.To put it precisely, a 'Receiver's possession is the possession of the Court and his possession is the possession of all the parties to the Proceedings based on their Titles. A 'Receiver', in Law, is not a particular agent of any party in the Suit.
33.In a Mortgagee's Suit for 'Foreclosure' or 'Sale', where the Mortgagee is entitled to enter into possession for default in payment of Mortgage money, the 'Mortgagee' is entitled to be appointed as 'Receiver'. A 'Receiver' is appointed to protect the interest of 'Mortgagee'. A 'Receiver' may be appointed at the instance of an 'Equitable Mortgagee' or a 'Simple Mortgagee', as the case may be.
34.Be that as it may, as far as the present case is concerned, it is to be pointed out that Order 40(1) of the Code of Civil Procedure, 1908, speaks of 'Appointment of Receivers'. Order 40 Rule 3 enjoins the 'Duties of Receiver' so appointed in this regard. The circumstances under which a 'Receiver' can be appointed as per Section 69-A of the Transfer of Property Act, 1882, are quite distinguishable and different from the circumstances under which a 'Receiver' under Order 40 Rule (1) of Code of Civil Procedure, 1908, is to be appointed in a given case.
35.On a careful consideration of respective contentions and also this Court, taking note of primordial grievance of the Petitioner and the attendant facts and circumstances of the instant case, in an encircling manner, comes to an inevitable conclusion that the Writ Petitions filed by the Writ Petitioner are per se not maintainable, because of the fact that he is neither an Owner nor an Occupier of the building/property in question. Further, he has not filed the present Writ Petitions in his purported capacity as 'Receiver'. Looking at from any angle, the Writ Petitions filed by the Petitioner, are devoid of merits.
In fine, the Writ Petitions are dismissed. No costs.
(M.V.J.) (S.R.T.J.)
04.09.2018
msk
Index:Yes/No
Internet:Yes/No
To
1.The Member Secretary,
Chennai Metropolitan Development
Authority,
Thalamuthu Natarajan Maaligai,
No.1, Gandhi Irwin Road,
Chennai-600 008
2.The Commissioner
Corporation of Chennai,
Rippon Buildings,
Chennai-600 002
3.The Secretary,
Ministry of Housing and Urban
Development,
Secretariat,
St.Fort George,
Chennai-600 009
M.VENUGOPAL,J.
AND
S.RAMATHILAGAM,J.
Msk
W.P.Nos.22183 and 22184 of 2018
04.09.2018