Jharkhand High Court
The Managing Director vs M/S. Narrow Structures Pvt. Ltd. Having ... on 7 January, 2020
Author: Ravi Ranjan
Bench: Chief Justice, Sujit Narayan Prasad
IN THE HIGH COURT OF JHARKHAND AT RANCHI
L.P.A. No. 621 of 2018
1. The Managing Director, Ranchi Industrial Area Development
Authority, RIADA Central Office, Namkum Industrial Area,
Lowadih, P.O. and P.S. Namkum, District - Ranchi, Now
Regional Director, Jharkhand Industrial Area Development
Authority, Ranchi Region, Mr. Ajay Kumar Singh, aged about
52 years, having its office at JIADA Bhawan, P.O. & P.S.
Namkum, District - Ranchi
... ... Respondent No.3/Appellant No.1
2. The Secretary, Ranchi Industrial Area Development Authority,
RIADA Central Office, Namkum Industrial Area, Lowadih, P.O.
and P.S. Namkum, District - Ranchi, Now Deputy Regional
Director, Jharkhand Industrial Area Development Authority,
Ranchi Region, Mr. Sunil Kumar Singh, aged about 52 years,
having its office at JIADA Bhawan, P.O. & P.S. Namkum,
District - Ranchi
... ... Respondent No.4/Appellant No.2
3. The Development Officer, Ranchi Industrial Area Development
Authority, RIADA Central Office, Namkum Industrial Area,
Lowadih, P.O. and P.S. Namkum, District - Ranchi, Now
Development Officer, Jharkhand Industrial Area Development
Authority, Ranchi Region, Mr. Niranjan Tirkey, aged about 55
years, having its office at JIADA Bhawan, P.O. & P.S.
Namkum, District - Ranchi
... ... Respondent No.5/Appellant No.3
Versus
1. M/s. Narrow Structures Pvt. Ltd. having registered addressed
as shop No.13 Nidhivan CSH Ltd. Plot No.166, Upper Govind
Nagar, Malad (East) Mumbai through its authorized signatory
Anil Kumar Jha, son of Sri Ashok Jha, presently residing at
plot No.33(P), 34 & 36 respectively in the Tupudana Industrial
Area Ranchi, situated in village Pugru, P.O. and P.S. Hatia,
District - Ranchi
... ... Petitioner/Respondent No.1
2. The State of Jharkhand
2 L.P.A. No.621 of 2018
3. The Principal Secretary, Department Industry, Government of
Jharkhand, at Nepal House, P.O. and P.S. Doranda, District -
Ranchi
4. The Central Bureau of Investigation, S.K. Singh Path, Bailey
Road, Patna (Bihar), P.O. & P.S. Shastri Nagar, District -
Patna, Pin 800022.
5. The Deputy General Manager, Stressed Assets Stabilization
Fund, 5th Floor, IDBI Tower, WTC Complex, Cuffe Parade, P.O.
& P.S. Mumbai District - Mumbai 400005 (Maharashtra)
... ... Respondents/Proforma Respondents
------
CORAM: HON'BLE THE CHIEF JUSTICE
HON'BLE MR. JUSTICE SUJIT NARAYAN PRASAD
------
For the Appellants: M/s. V.P. Singh (Sr. Advocate), C.A.
Bardhan, Advocate
For Respondent No.1: M/s. M.S. Mittal (Sr. Advocate),
Ashok Kr Yadav, Advocate
For the State-Respondents: Mr. Jai Prakash (A.A.G.), Rishi
Pallava, A.C.
------
Oral Order
Per Dr. Ravi Ranjan, C.J.
08/Dated: 07.01.2020
1) This intra-court appeal has been preferred by the appellants- Ranchi Industrial Area Development Authority and its office bearers assailing the decision dated 01.08.2018 passed by learned Single Bench of this Court in W.P. (C) No.4151 of 2016 and W.P. (C) No.4157 of 2016.
This would be pertinent to note it here that the said two writ petitions were filed by the writ petitioners M/s. Narrow Structures Pvt. Ltd. and M/s. Rajgir Petro Chemical Ltd for a direction to the RIADA authorities to regularize the lease deed in their favour with respect to two sets of industrial plots since for both the sets, two Certificates were issued by the Debts Recovery Tribunal, Ranchi and those Certificates were put to 3 L.P.A. No.621 of 2018 e-auction sale as the properties were leased out to the original allottees through two lease deeds by Ranchi Industrial Area Development Authority (hereinafter referred to as 'RIADA'). Hence, the aforesaid writ petitions were filed by the auction purchaser for regularizing the leasehold in its favour on identical terms and conditions which were there in the original lease deed. W.P. (C) No.4151 of 2016 was filed for regularization of lease deed for the land measuring 2 acrers appertaining to Plot Nos.352P, 360P, 394P, 395P, 396P, 397P and 398P of Tupudana Industrial Area, Ranchi for which a Certificate was issued and e-auctioned vide order passed in R.P. Case No.03 of 2012 dated 02.03.2015.
The 2nd writ petition, i.e., W.P. (C) No.4157 of 2016 was filed for regularization of lease deed in favour of the writ petitioner for the land measuring 2.69 acres of Plot Nos.33P, 34, 35 & 36 of the Tupudana Industrial Area, Ranchi, for which in R.P. Case No.02 of 2012 the petitioner purchased the property through e-auction sale.
Surprisingly, though the appellants-RIADA has challenged the impugned order with respect to the judgment having been passed in W.P. (C) No.4151 of 2016, but there is no challenge to the order passed in W.P. (C) No.4157 of 2016. Thus, it has to be understood that the impugned order dated 01.08.2018, though is a common judgment passed in W.P. (C) No.4151 of 2016 and W.P. (C) No.4157 of 2016, since having not been challenged with respect to W.P. (C) No.4157 of 2016, the same has attained its finality so far as the aforesaid writ 4 L.P.A. No.621 of 2018 petition is concerned. So far as W.P. (C) No.4151 of 2016 is concerned, the present appeal has been preferred by the appellants.
Now further question would arise, even supposing the appellants succeed in this appeal, the impugned order cannot be set aside so far as W.P. (C) No.4157 of 2016 is concerned because the same has not been challenged by filing a separate appeal and as such it has attained finality.
2) The factual matrix, which would be necessary to be discussed for consideration of the lis, stands enumerated as under: -
(i) The properties involved were originally allotted to M/s Eastern Natural Herb Extracts Limited and M/s. Rajgir Petro Chemical Ltd (hereinafter referred to as 'the original allottees") for a period of 90 years by RIADA by executing two lease-deeds both dated 11th of October, 1999, for the purpose of manufacturing of medicated herbal extracts, natural colours and flavours.
(ii) The lessees/original allottees applied to the Lessor/RIADA for a permission to mortgage the leased properties to the Industrial Development Bank of India (hereinafter referred to as 'IDBI') for the purpose of obtaining loan so that their industrial unit can be made functional. The permission for mortgaging the lease deed was given by RIADA through its letter dated 30.10.1999, a copy of which was produced for perusal of this Court at the time of hearing. Learned counsel appearing for RIADA has also admitted the aforesaid 5 L.P.A. No.621 of 2018 fact before this Court.
(iii) However, it appears that when the original allottees became defaulter then IDBI filed two cases before the Debts Recovery Tribunal, Ranchi in which two Certificates were issued by the Tribunal. The Certificates were put to execution before the Recovery Officer and finally, by order dated 02.03.2015, the properties were purchased in e-auction by the writ petitioners-respondent who, as per the direction contained in order dated 02.03.2015 (Annexure 3), was directed to be put in possession by the Certificate Holder/Bank as well as the District authorities and the RIADA was directed to transfer the leasehold allotted to the previous lessees by the lessor for the remaining lease period and as per the terms and conditions put to the previous lessees by the lessor. The relevant passages from one of the cases as contained in Annexure-3, i.e, the order of the Recovery Officer, as appended within this appeal, are extracted and quoted below for better appreciation: -
"R.P. No.02 of 2012
SASF & IDBI VS M/s. Rajgir Petrochem Limited & Others 02.03.2015 xxx xxx xxx ORDERS
01. xxx xxx xxx
02. xxx xxx xxx
03. xxx xxx xxx
04. xxx xxx xxx
05. xxx xxx xxx
06. xxx xxx xxx
07. xxx xxx xxx
08. Let a copy of the order sheet be sent to RIADA with a direction to transfer the Lease Hold Right in respect of abovementioned property in the name of Narrow Structures Private Limited, Mumbai for the 6 L.P.A. No.621 of 2018 remaining period of lease as per the terms & condition and rate allotted to the previous Lessee by the Lessor, Ranchi Industrial Area Development Authority(RIADA).
09. xxx xxx xxx
10. xxx xxx xxx Sd/-
R.O."
(Emphasis is ours)
3) This is an admitted position that the writ petitioners were put in possession of the said properties and it has further been stated in the counter affidavit filed by RIADA in the concerned writ petition that RIADA had given 'No Objection' to the Electricity authorities for installation of electric meter and supply of electricity in the e-auction purchased properties. It further appears that though a direction was given by the Debts Recovery Tribunal to regularize the remaining period of lease in favour of the writ petitioners on the same terms & condition and rate at which the plots were allotted to the previous lessees by the Lessor-RIADA, the RIADA authorities did not take any step for any clarification, etc which is now being raised before this Court by the appellants by saying that the regularization of lease can only be done in terms of the new Regulation known as 'Ranchi Industrial Area Development Authority Regulations, 2015' (hereinafter referred to as 'the Regulations, 2015'). The writ petitioners, sensing that the RIADA authorities are sitting tight over the matter and are not complying with the direction of the Debts Recovery Tribunal for regularization of lease-deed raised a grievance before the Department of Industry, Government of Jharkhand, where the RIADA raised an objection that the CBI cases have been 7 L.P.A. No.621 of 2018 registered against the erstwhile allottees, therefore, unless the CBI gives a nod, the lease-deeds cannot be regularized in favour of the writ petitioners. However, according to the learned counsel for the writ petitioner-respondent No.1, the Department of Industry turned down the objection of RIADA saying that since the properties have been auction-purchased by the writ petitioners in a proceeding held by the Debts Recovery Tribunal, the properties would be considered to have been validly transferred and the possession has also been handed over in favour of the writ petitioners and the RIADA. It has been urged that it does not appear from the record that such decision of the State Government was ever challenged by RIADA before any competent authority. However, when the RIADA authorities sat tight over the matter, the writ petitioners filed the writ petitions for regularization of the lease-deeds.
4) The RIADA authorities, being respondent Nos.3 to 5 in the writ petitions, filed identical counter affidavits in both cases stating therein that the Project Clearance Committee (PCC) meeting was held on 20.01.2016 where the RIADA took a decision to get clarification from CBI and if 'No Objection' is issued by the CBI then the lease-deeds would be regularized as per Clauses 17, 21 and 23 of the Regulations, 2015. However, the learned Single Judge has noticed that though CBI cases were lodged against the earlier allottees for ascertaining the alleged financial misappropriation and the premises were raided, but the premises have not been attached in the said criminal case and no objection having been raised by the CBI in any form, 8 L.P.A. No.621 of 2018 the properties have been allowed to be auction sold and sale was confirmed by the Debts Recovery Tribunal. It has also been noticed that, as the criminal case was lodged by the CBI against the erstwhile allottees for fraudulently obtaining the loan from the IDBI and the writ petitioners are auction- purchasers of the said properties through lawful process and the IDBI has received the sale proceeds on payment of auction money by the writ petitioners, therefore, such objection cannot be raised by RIADA. RIADA was directed to execute lease-deeds in favour of the writ petitioners with a rider/condition that the said lease would be subject to the order as may be passed by the Special Judicial Magistrate, Patna in the criminal trial.
5) It would be evident from the memorandum of appeal that the appellants challenged the said order passed in W.P. (C) No.4151 of 2016 on only one ground that though a direction was given to RIADA to execute the lease-deed in favour of the writ petitioners but the learned Single Judge has not observed in the said order that the lease-deed should be executed in favour of the writ petitioners as per Ranchi Industrial Area Development Authority Regulations, 2015 (amended in 2016) (hereinafter to be referred to as 'Regulations, 2015'), even though such a point was raised in the counter affidavit in paragraph 21. Thus, only that modification has been sought in the appeal. However, at the time of hearing, learned counsel for the appellants raised several grounds some of which were never raised earlier. The main issues raised by the appellants stand 9 L.P.A. No.621 of 2018 summarized as under:-
(i) The Writ Court is not a Court for execution of the order passed by the Debts Recovery Tribunal, thus, the writ petition was not maintainable;
(ii) As per the decision of the Division Bench of this Court rendered in Sardul Auto Works Pvt Ltd vs. State of Jharkhand & Ors [2018 (4) JBCJ 733 (HC)], the Debts Recovery Tribunal could not have issued a Certificate and put the property for auction sale without impleading RIADA as a party.
(iii) The regularization of the lease even for remaining period can only be made in terms of the Regulations, 2015.
6) Issue No.(i) - So far as this submission is concerned, it is noted to be rejected only for the reason that it is well established principle that exercise of power under Article 226 of the Constitution of India is not a matter of jurisdiction rather is a matter of discretion. In the present case, there is a direction by the Tribunal to the RIADA authorities to transfer the leasehold right in favour of the auction purchasers for the remaining period of lease as per the terms & condition and rate allotted to the previous lessees by the Lessor. In such a situation, after such direction by a Tribunal of a competent jurisdiction, the RIADA authorities cannot sit tight over the matter by raising petty objection like the matter having been under consideration by a criminal court in a CBI case. If it was not possible to be done, then it was the bounden duty of 10 L.P.A. No.621 of 2018 RIADA to inform Debts Recovery Tribunal regarding the same so that a proper step could have been taken or they could have challenged the Certificate or the auction sale under the provisions contained in the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 or the Debts Recovery Tribunal (Procedure) Rules, 1993 or other relevant statutes or Rules. Having not done so, it would never be the option open for the RIADA authorities to sit tight over the matter for this reason or that reason ignoring a command of a Tribunal of competent jurisdiction. The writ petitioners had approached the State Government also but since nothing could be done, though the writ petitioners were already put in possession and the RIADA gave 'No objection' to the electricity connection to be given to the writ petitioners, in our considered view, since the RIADA authorities are the statutory authorities and they are sitting tight over the matter even after a direction given by the Tribunal having competent jurisdiction, the writ petitioners would have a right to approach this Court by invoking its jurisdiction under Article 226 of the Constitution of India. That apart, even if such relief is given to the appellants in the present appeal which has been preferred against W.P. (C) No.4151 of 2016, what will happen to the common impugned order which has also been passed in W.P. (C) No.4157 of 2016 as no appeal has been preferred in connection with that writ petition?
7) Issue No.(ii) - In support of this submission, learned counsel for the appellants placed reliance upon the Division Bench 11 L.P.A. No.621 of 2018 decision of this Court rendered in Sardul Auto Works Pvt Ltd's case (supra). Of course, the Division Bench in the facts and circumstances of that case, has held that in the given circumstances of the case when there was an application for recovery of loan from M/s. Baynee Engineering Limited before the Debts Recovery Tribunal, the Adityapur Industrial Area Development Authority (hereinafter referred to as 'AIADA') ought to have been joined as a party, as the order should have been passed by Debts Recovery Tribunal only after giving an opportunity of hearing to the Lessor, however, in our view, the said case is easily distinguishable on facts. It has been noted in the aforesaid decision of the Division Bench that M/s.
Baynee Engineering Limited had already become defaulter of AIADA (lessor) and as such its lease-deed was already cancelled and was allotted afresh to the appellant of that case namely Sardul Auto Works Private Limited upon the payment of charges fixed by AIADA. Not only the Debts Recovery Tribunal had auctioned the leasehold property, lease-hold which was already cancelled by the AIADA but the auction purchaser had assigned it to some other unit also which clearly indicates that the auction purchaser had no intention to manufacture anything on its own as per the terms of lease. Without obtaining permission of AIADA, the auction purchaser assigned the aforesaid plot to another unit. In such circumstances, the Lessor was definitely required to be heard so that the aforesaid fact could have been brought to the notice of the Debts Recovery Tribunal. However, in the case in 12 L.P.A. No.621 of 2018 hand, the writ petitioners have shown their intention to continue with the concerned industrial activities for which the lease was granted to the original allottees. They have not assigned it to any other person. Apart from the aforesaid facts, it will be pertinent to be noted here that admittedly RIADA had already granted permission to mortgage the property in favour of IDBI which fact would be evident from the letter dated 30.10.1999 which was produced at the time of hearing. Learned counsel for the appellants-RIADA has admitted this position at the time of hearing. Once such permission was granted, the mortgage would be a valid piece of transfer of lease rights in favour of the mortgagee-Bank in case of default. Thus, it has to be construed that in case of any default, the mortgagee would have a right to recover the loan amount as the RIADA had already given its consent for such recovery of loan amount in case of the original allottees became defaulter of the Bank.
That being the situation, the question would be whether at this stage, the RIADA can raise such issues that the order of Debts Recovery Tribunal is bad for the reason that RIADA was not made a party? The second aspect of the matter would be that in Sardul Auto Works Pvt Ltd's case (supra), the Division Bench of this Court has also held that transfer of industrial plot is different from the transfer of other plots as the purpose of industrial plot is different. It cannot be purchased and used for trading purposes only. There cannot be any quarrel with such proposition but whether RIADA is in a 13 L.P.A. No.621 of 2018 position to say that the writ petitioners have used the plots only for the purpose of trading and they are not interested in continuing with use of the plots for the same purpose for which it was given to the original allottees? There is no material on record in support of that stand thus, in our considered view, raising such point at the stage of Letters Patent Appeal would be a futile exercise. Contrary to the above, learned counsel appearing for the writ petitioner has categorically stated that the writ petitioner is interested in pursuing the same industrial activity for which the plots were given to the original allottees. Even the lease-deed, which was executed in favour of the original allottees, takes care of such situation as it stands enumerated therein as under: -
"THIS DEED OF LEASE entered into this the 11th day of Oct 1999(One thousand nine hundred and ninety nine) between the Ranchi Industrial Area Development Authority xxx xxx AND Shri Manmohan T. Bhadra, s/o Shri Tulai Das Bhadra, Director of M/s Rajgir Petrochem Ltd, Tupudana Industrial Area, Ranchi xxx xxx xxx Whereas the lessee has applied xxx xxx xxx AND whereas the Lessee having paid xxx xxx AND whereas the lessor has decided xxx xxx PART -II NOW THIS INDENTURE AS AGREED BY AND BETWEEN THE PARTIES HERETO WITNESSETH.
1. xxx xxx xxx
2. xxx xxx xxx
3. xxx xxx xxx
4. xxx xxx xxx
7. The lessor and the lessee hereby convenant and agree as follows:-
(i) xxx xxx xxx
(ii) xxx xxx xxx
(iii) xxx xxx xxx
(iv) In case of any change in the ownership or
possession of the leasehold or any part thereof either by auction purchase or transfer by the lease with the permission of the lessor in terms of the conditions of this 14 L.P.A. No.621 of 2018 deed such person so stepping into the shoes of this lessee shall execute a fresh lease deed on the same terms and conditions as of this lease and such person shall not be entitled to use this leasehold or any part thereof for any other purpose or any other industry than the one for which this lease has been granted. In case however such person intends to use this leasehold or any part thereof so transferred to him for any other industry or purpose than the one for which this lease has been granted such lease with such person shall be subject to approval by the lessor for such other industry or purpose and on such approval shall be on new rates prevailing at that time for the lands etc. in question."
(Emphasis is ours) It appears from the above that the auction purchaser of lease hold would be entitled to be inducted as a lessee on the same terms and conditions of the deed as the auction purchaser will be stepped into the shoes of the original lessees. Thus, a fresh lease-deed would be required to be executed on the identical terms and conditions of the original lease for the remaining period and such person or industrial unit shall not be entitled to use the leasehold or any part thereof for any other purpose for any other industry than the one for which this lease has been granted without prior permission of RIADA. Naturally, if there is violation of the terms of lease, consequence has also been provided in the lease-deed itself under which the lease-deed can even be cancelled. Therefore, the interest of RIADA has already been protected and safeguarded. Thus, this submission made on behalf of the appellants has no legs to stand.
8) Issue No.(3) - Learned counsel appearing for the appellants 15 L.P.A. No.621 of 2018 has vehemently argued that the lease can only be finalized and regularized in favour of the writ petitioners in terms of the Rules 21, 23 and 27 of the Regulations, 2015. Now the first question would be that there is a direction by the Debts Recovery Tribunal to the RIADA authorities to execute the lease-deed in favour of the e-auction purchaser on the similar terms and conditions and at the similar rate for the remaining period of the earlier lease on which it was leased out in favour of the earlier allottees. Learned counsel appearing for RIADA was totally at loss when a question was put to him as to whether they raised any issue before the Debts Recovery Tribunal or by filing an appeal of the Debts Recovery Tribunal's decision challenging the decision or modification of such direction? Obviously no step has been taken by RIADA for that purpose. The direction remained unchallenged either in appeal provided in the relevant statute or by filing any application for modification of such direction given by the Debts Recovery Tribunal. Apart from the above, as has been noted and quoted above, the lease deed itself lays down that in case of auction- purchase, the auction purchaser would enter into the shoes of the earlier allottees and thus, a fresh lease-deed should be executed on the same terms and conditions of the lease-deed the auction purchase was made. Further, the RIADA has already granted permission to mortgage the property in favour of the IDBI. In such a situation, since auction purchase was based on the earlier lease executed by RIADA, the Recovery Officer's directions cannot be faulted with. The interest of 16 L.P.A. No.621 of 2018 RIADA stands protected in the original lease-deed itself as there is a term & condition that in case of violation of any terms and conditions, even the lease-deed can be cancelled. So far as the application of the Regulations, 2015 is concerned, the first question would be from which date the said Regulations have come into force? The answer lies in Clause 1.1(iv) of the Regulations itself which lays down as under: -
"1.1 SHORT TITLE, OBJECTIVE, EXTENT AND COMMENCEMENT i. xxx xxx xxx ii. xxx xxx xxx iii. xxx xxx xxx iv. These Regulations shall come into force on such date as the State Government may specify by notification in the official gazette and shall supersede all earlier Government/Board Resolutions, orders or Regulations, if any. However, actions/deeds under earlier orders/circulars/guidelines/ resolutions of Government/Board shall be valid."
(Emphasis is ours) A bare perusal of the aforesaid provision reveals that the Regulations shall come into force on such date as the State Government may specify by notification in the official gazette and shall supersede all earlier Government/Board Resolutions, orders or Regulations, however, the actions/deeds under the earlier orders/circulars/guidelines/ resolutions of Government/ Board have been protected. Learned counsel appearing for RIADA authorities could not produce the gazette notification to show the date specified by the State Government from which the Regulations have come into force. What has been produced before us is a copy of the Regulations which has been issued under Memo No.1637 17 L.P.A. No.621 of 2018 dated 16.05.2016. It contains a direction that a copy of the resolution should be sent for publication in the special edition of Jharkhand Gazette and also be forwarded to the Government Press, Hinoo, Ranchi for its publication in special edition of Jharkhand e-Gazette, but no copy of such gazette could be produced before us and that apart, it is not disclosed from any document produced before this Court as to what is the date chosen by the State Government from which the Regulations have become functional. In the absence thereof, it would be very difficult for us to hold that the writ petitioners would be bound by the Regulations. Apart from the above, it appears that the resolution has finally been issued under Memo No.1637 dated 16.05.2016 and there is no clause therein making it operational with retrospective effect. As such, since the direction was given by the Debts Recovery Tribunal to RIADA for executing the lease-deed in favour of the auction purchaser for the remaining period of lease by order dated 02.03.2015 itself and the RIADA authorities sat tight over the matter and even not challenged it before the competent forum and further, since the direction was issued in terms of the earlier lease-deed itself, it would be very difficult to hold that the Regulations would act retrospectively to cover the writ petitioners. What the learned counsel for RIADA wants to say is that even though the RIADA did not challenge the order of Debts Recovery Tribunal and it sat tight over the matter over the years, now since the resolution has come, it would come to their rescue. This limb of argument is not acceptable at all in 18 L.P.A. No.621 of 2018 view observations made hereinabove.
9) The Hon'ble Supreme Court in Kusumam Hotels Private Limited vs. Kerala State Electricity Board & Ors [(2008) 13 SCC 213] has held that the State is entitled to change its policy decision, however, all administrative orders ordinarily are to be considered prospective in nature. For giving it a retrospective effect, it must be stated so expressly or by necessary implication.
10) In M/s. Vikramashila Transformers (Pvt.) Ltd. vs. The State of Bihar & Ors [1994(1) PLJR 601) a Division Bench of Hon'ble Patna High Court has held as under: -
"7. From a perusal of the lease deed executed in favour of M/s Graduate Engineers by the Governor of Bihar it is apparent that the lease of land was given for 99 years to the lessee, subject to renewal at the option' of either party for such period as may be mutually agreed upon. The lessee was obliged to pay to the State Government the proportionate cost of development of land so leased, and such other expenditure as may be decided to be part of the development cost by the State Government. The rate of rent payable annually has also been determined under clause 4 which also contains a clause for revision of the annual rental.
Clause 6 of the lease deed provides that the lessee will not assign, mortgage, under let or part with the possession over the land, or any right or interest therein, or in respect thereto, without the previous consent of the lessor or his nominee. There is, however, a proviso which provides that in case of registered Small Scale Industries no separate permission will be required to be obtained by the lessee for mortgaging it to any financial institution for raising loan for the purpose of the Industry for which the land was alloted. In case such a mortgage is created, the dues of the State Government shall also be a first charge on the property mortgaged paripassu with the charge of the financing institution. Sub-clause (iii) of clause 6 provides that if the lessee assigns its lease hold interest with the written consent of the lessor in the land described in the Schedule to the agreement, the assignee shall duly get his, its or their name or names registered with the lessor or his nominee within four calendar months after obtaining possession of the holding and will possess and use the land and be bound by all the terms, covenants and conditions therein contained. Sub-19 L.P.A. No.621 of 2018
clause (v) provides that if at any time the said land or any part or parts thereof shall no longer be required by the lessee for the purposes for which it was leased out to him, the lessee while selling or assigning the said land or such part or parts thereof shall offer the same to the State Government which may accept it in respect of such part or parts of the land so offered, as it may deem fit, and. decline it in respect of the remainder. In case the State Government declines the offer, the lessee while selling or assignii1g the said land or parts thereof as aforesaid to any other party shall do so with the approval of the State Government.
8. From these clauses in the lease deed it cannot be doubted that the interest created in favour of the lessee was a transferable interest. Where the lessee intended to sell or assign his interest in the lease hold land, he was required to seek the prior permission of the respondent-Authority. This condition, however, did not apply to a case where the lessee was a registered Small Scale Industry, and a mortgage was sought to he created by the lessee in favour of a financial institution from which it had taken loan to set up its industry. In the instant case, it is not disputed that M/s Graduate Engineers was a registered Small Scale Industry, and it had mortgaged its lease hold interest to the Bihar State Financial Corporation in consideration of the loan advanced by the said Corporation to M/s Graduate Engineers. Since it was a mortgage in favour of the financial institution, no separate permission was required in terms of the lease deed itself. Counsel for the Bihar State Financial "Corporation is, therefore, right in submitting that no prior permission was required in this case. From the other clauses, referred to above, it will also appear that the lease deed envisages cases of transfer, sale or assignment of the lease hold interest. There is no provision in the said lease deed requiring the purchaser of the interest to pay afresh the price of the land in question. It may be that where prior permission is required, the same may not be granted unless the purchaser agrees to pay an additional amount to the lessor. In the instant case, however, no prior permission was required, and the mortgage in favour of the Bihar State Financial Corporation was created by the erstwhile lessee in favour of the Bihar State Financial Corporation in terms of the lease deed itself. It, therefore, logically followed that the mortgagee could enforce the mortgage by bringing to sale the mortgaged assets. If the lease agreement permitted the creation and enforcement of the mortgage, it also logically followed that upon enforcement of the mortgage and sale of the mortgaged assets, the purchaser stepped into the shoes of the original mortgagor and was subject to the same terms and conditions of the lease to which the original lessee/mortgagor was subject. Since the original lessee/mortgagor was not obliged in terms of the lease deed to pay the price of the land over again, such an obligation could not be enforced against the petitioner-Company 20 L.P.A. No.621 of 2018 which stepped into the shoes of the original lessee.
9. We have, therefore, no doubt that the lease deed in favour of M/s Graduate Engineers created a transferable interest in land. It permitted the lessee to mortgage its lease hold interest in favour of financial institutions without seeking separate permission to do so. It was, therefore, open to the financial institution to enforce the mortgage and to bring the lease hold interest to sale. Upon such sale being effected, the purchaser stepped into the shoes of the original lessee, and the respondent- Authority was bound by the terms of the lease to substitute his name in place of the original lessee. There is no provision in the lease deed for payment of any amount by way of current market price by the purchaser of the lease hold interest. The imposition of a condition under Annexure-4 requiring the purchaser to pay again the market price of the land in question is, therefore, clearly illegal and must be quashed."
11) In the case in hand also, the lease-deed was mortgaged after obtaining permission from RIADA. Once the permission was granted by RIADA to mortgage the plots, that would definitely mean that it has assented the right of the mortgagee to sell the property in case of default by loanee/mortgagor. In the lease- deed also, terms and conditions have been given that the auction purchaser will enter into the shoes of the earlier lessee on the same terms and conditions, whereas for the purpose of transfer by sale or otherwise, a permission is required to be obtained. There would hardly be such requirement of obtaining permission for the auction sale by the Bank after the permission was already granted to mortgage the leasehold.
12) We are, therefore, of the view that after the auction purchase in favour of the writ petitioners of the mortgaged property by due process of law, that would definitely create a right in favour of the auction purchaser so that a fresh lease could be executed on the similar terms and conditions which were enumerated in the earlier lease-deed. Such direction was 21 L.P.A. No.621 of 2018 given by the Debts Recovery Tribunal to the RIADA which remained unchallenged and, thus, attained finality.
13) Having regard to the aforesaid discussion and in the facts and circumstances of this case, in our view this appeal is devoid of any merit and as such, the same is hereby dismissed.
(Dr. Ravi Ranjan, C.J.) (Sujit Narayan Prasad, J.) A.F.R. Manoj/