Mesdames Tara Moolgaukar and ors. Vs. T. Raja Mohan Rao - Court Judgment

Excerpt:
- securitisation & reconstruction of financial assets & enforcement of security interest act, 2002 [c.a. no. 54/2002]section 17; power of tribunal to impose condition relating to deposit for grant of stay of auction held, there is no specific provision made under section 17 of securitisation act or under any other provisions of the said act empowering the tribunal to pass any interim order. but under sub-section (12) of section 19 of the recovery of debts due to banks and financial institutions act, 1993, the tribunal has been empowered to pass various interim orders. if sub-section (7) of section 17 of securitisation act is read along with sub-section (12) of section 19 of recovery of debts due to bank is and financial institutions act, it would be clear that the tribunal also has jurisdiction to pass interim orders under section 17 of the securitisation act in appropriate cases. the tribunal is empowered to grant interim stay subject to such conditions as may be deemed proper including condition of deposit. even under section 69 of the transfer of property act, the only remedy of the borrower whose mortgage has invoked section 69 of the transfer of property act, is to file a civil suit and in such suit the court has power to grant injunction and to impose condition for the grant thereof--section 17; [a.p. shah c.j., f.m. ibrahim kalifulla & v. ramasubramanian, jj] proceedings under section 17 power of the tribunal to pass any interim order held, once the possession of the secured asset is taken, there would be no occasion for the tribunal to order redelivery of possession till final determination of the issue. in other words, it is only when the tribunal comes to the conclusion that any of the measures, referred to in section 13 (4) taken by the secured creditor are not in accordance with the provisions of the act and the rules made thereunder, then only the tribunal can restore possession of such secured assets to the borrower. by virtue of sub-section (7) of section 17 of the securitisation act read with section 19 (12) of the recovery of debts due to banks and financial institutions act the tribunal undoubtedly possess ancillary power to pass interim orders subject to the conditions as it may deems fit and proper to impose, but it does not in any way override the special provisions contained in section 17(3) of the securitisation act. the statutory scheme of the securitisation act is such that the borrower could take recourse to application under section 17 only if one or other measure is taken by the secured creditor, and the tribunal can restore the status quo ante only if it comes to the conclusion that any of the measure taken by the secured creditor is not in accordance with the provisions of the act. the scheme cannot be bypassed by issuing a mandatory order for redelivery of the possession before conclusion of the proceedings under section 17--sections 17, 13 (4); [a.p.shah, c.j., f.m. ibrahim kalifulia &v. ramasubramanian, jj] scope of enquiry under section 17 held, the main purpose of the securitisation act, and in particular section 13 thereof, is to enable and empower the secured creditors to take possession of their securities and to deal with them without the intervention of the court. therefore, in an application under section 17, the tribunal is concerned only with the validity of the acts of the secured creditor in taking possession of the securities and dealing with the same under section 13. all such grounds, which would render the action of the bank/financial institution illegal, can be raised before the tribunal in the proceedings under section 17. it is for the tribunal to decide in each case whether the action of the bank was in accordance with the provisions of the act and legally sustainable. however, while considering the question of validity of the action of the bank, it is not necessary for the tribunal to adjudicate the exact amount due to the secured creditors. in other words, the purpose of an application under section 17 is not the determination of the quantum of claim per se as the tribunal is concerned with the issue of the validity of the measures taken by the banks/financial institutions under section 13(4)--sections 17(4), 13(4) ; [a.p. shan c.j.,f.m.ibrahim kalifulla & v. ramasubramanian, jj] appeal right of bank held, the right of the bank is not automatically suspended upon filing of an appeal by borrower under section 17 of the securitisation act and the bank as secured creditor can proceed to auction secured asset where no stay is granted by the tribunal. there is nothing in section 17 of the securitisation act which would indicate that the legislature intended that there would be automatic stay of recovery proceedings by bank under section 13(4) on filing an appeal by borrower under section 17. use of the expressions if and then under section 17 would not mean that the bank can take one or more measures laid down under section 13(4) only if the tribunal declares that the action taken already is in accordance with the provisions of the securitisation act and the rules made thereunder. use of the word if does not connote a condition precedent. it is a recognised rule of interpretation of statutes that expressions used therein should ordinarily be understood in a sense in which they harmonized with the object of the statute and which effectuate the object of the legislature. the provisions of section 17 must, therefore, receive such construction at the hands of the court as would advance the object and at any event not thwart it. in other words, the principle of purposive interpretation should be applied while construing the said provisions. the securitisation act is enacted to provide a speedy and summary remedy for recovery of thousands of crores which were due to the banks and financial institutions. ordert. ramaprasada rao, c.j.1. the landlords who failed before the appellate authority in an application filed by them under sections 10(2)(i) and 10(2)(iii) of the tamil nadu buildings (lease and rent control) act, 1960, are the petitioners herein. the case of the petitioners is that they let out the premises in question to the respondent on a monthly rent of rs. 700 plus rs. 300 for fittings, etc., under a lease deed, dated 1st august, 1972, for the purpose of running a boarding and lodging house. the lease deed also provided that the demised premises shall take into its fold a garage. the main contention of the petitioner was that the tenant-respondent did not pay the corporation tax due and payable for the premises, which, according to the petitioners, was payable by the tenant under the terms of the lease and that the respondent used the garage as a dormitory and had thus committed or caused to be committed such acts of waste as are likely to impair materially the value or utility of the building. on the evidence let in, the rent controller was satisfied that there was such imparing of the utility of the building and granted eviction. he also thought that there was a legal obligation on the part of the tenant to pay the corporation tax due and that not having been paid that could be taken as wilful default on the part of the tenant in the matter of the payment or tendering of the rent payable for the premises.2. the appellate authority found that, on the ground of non-payment of corporation tax, the tenant-respondent could not be evicted. in fact, be found that there was absolutely no evidence to show that the corporation tax was payable by the tenant as part of the rent of the building in question. section 10(2)(i) would be attracted only in a case where the rent which was agreed to as the consideration for the occupation of the premises had not been paid or tendered by the tenant. inasmuch as there is nothing on record to show that under the terms of the lease, dated 1st august, 1972, the tenant had undertaken to pay the corporation tax as part of the rent for the premises, the appellate authority rightly found that the petition for eviction could not be founded on the ground that there had been wilful default in the payment of rent. i agree with the said finding. corporation tax is payable by the owner, though, of course, there is a statutory right to the corporation, in certain circumstances, to collect the same, when it is in default, from the tenant in occupation. but that, by itself, does not mean that non-payment of corporation tax by the tenant would be a ground for eviction under section 10(2)(i). as this is a legislation which has to be interpreted strictly, i am of the view that, unless there is default in the payment of rent which is the consideration for the demise, there cannot be any default, if such rent had been paid in accordance with the terms or the lease. i have already referred to the fact that there was no evidence that there was any legal obligation cast on the tenant to pay such corporation tax, as part of the rent. the finding of the appellate authority on this aspect is, therefore, confirmed.3. regarding the other ground on which eviction was sought, the plea is that the tenant has converted the garage into a room and is using it as a dormitory, as the main purpose of the lease was for boarding and lodging purposes. whatever may be the position regarding the nature of the user, as agreed to, the question before us is whether by using the garage as a dormitory, the tenant could be said to have committed or caused to be committed such acts of waste as are likely to impair materially the value or utility of the building. section 10(2)(iii) of the act is a very stringent provision, and therefore, it becomes all the more necessary for courts to administer it cautiously and accept the request of the landlord for eviction only under stated circumstances which satisfy every limb of the sub-section. by using a garage as a room it cannot be said that the tenant has committed acts of waste. in the absence of any evidence to show that by such user the utility of the building has been materially impaired, it cannot equally be said that the tenant has committed any acts of waste which would come within the mischief or meaning of section 10(2)(iii) of the act. this position was appreciated by the appellate authority, who, after considering the evidence found as a fact that the landlords had not established that any acts of waste had been committed by the tenant. he also rightly laid accent upon the non-examination of any technical person like an engineer, who might possibly speak to the impairment of the value of the building by any particular user of the same by the tenant. i also agree with the finding of the appellate authority that, in the absence of any evidence to show that the value of the building had been materially impaired or damaged in any manner whatever, no order for eviction could be passed under section 10(2)(iii) of the act.4. the appellate authority has come to the correct conclusion and there is no ground to interfere with the same. the civil revision petition, therefore, fails and is accordingly dismissed. there will be no order as to costs.

Judgment:
ORDER

T. Ramaprasada Rao, C.J.

1. The landlords who failed before the appellate authority in an application filed by them under Sections 10(2)(i) and 10(2)(iii) of the Tamil Nadu Buildings (Lease and Rent Control) Act, 1960, are the petitioners herein. The case of the petitioners is that they let out the premises in question to the respondent on a monthly rent of Rs. 700 plus Rs. 300 for fittings, etc., under a lease deed, dated 1st August, 1972, for the purpose of running a boarding and lodging house. The lease deed also provided that the demised premises shall take into its fold a garage. The main contention of the petitioner was that the tenant-respondent did not pay the Corporation tax due and payable for the premises, which, according to the petitioners, was payable by the tenant under the terms of the lease and that the respondent used the garage as a dormitory and had thus committed or caused to be committed such acts of waste as are likely to impair materially the value or utility of the building. On the evidence let in, the Rent Controller was satisfied that there was such imparing of the utility of the building and granted eviction. He also thought that there was a legal obligation on the part of the tenant to pay the Corporation tax due and that not having been paid that could be taken as wilful default on the part of the tenant in the matter of the payment or tendering of the rent payable for the premises.

2. The Appellate Authority found that, on the ground of non-payment of Corporation tax, the tenant-respondent could not be evicted. In fact, be found that there was absolutely no evidence to show that the Corporation tax was payable by the tenant as part of the rent of the building in question. Section 10(2)(i) would be attracted only in a case where the rent which was agreed to as the consideration for the occupation of the premises had not been paid or tendered by the tenant. Inasmuch as there is nothing on record to show that under the terms of the lease, dated 1st August, 1972, the tenant had undertaken to pay the Corporation tax as part of the rent for the premises, the Appellate Authority rightly found that the petition for eviction could not be founded on the ground that there had been wilful default in the payment of rent. I agree with the said finding. Corporation tax is payable by the owner, though, of course, there is a statutory right to the Corporation, in certain circumstances, to collect the same, when it is in default, from the tenant in occupation. But that, by itself, does not mean that non-payment of Corporation tax by the tenant would be a ground for eviction under Section 10(2)(i). As this is a legislation which has to be interpreted strictly, I am of the view that, unless there is default in the payment of rent which is the consideration for the demise, there cannot be any default, if such rent had been paid in accordance with the terms or the lease. I have already referred to the fact that there was no evidence that there was any legal obligation cast on the tenant to pay such Corporation tax, as part of the rent. The finding of the Appellate Authority on this aspect is, therefore, confirmed.

3. Regarding the other ground on which eviction was sought, the plea is that the tenant has converted the garage into a room and is using it as a dormitory, as the main purpose of the lease was for boarding and lodging purposes. Whatever may be the position regarding the nature of the user, as agreed to, the question before us is whether by using the garage as a dormitory, the tenant could be said to have committed or caused to be committed such acts of waste as are likely to impair materially the value or utility of the building. Section 10(2)(iii) of the Act is a very stringent provision, and therefore, it becomes all the more necessary for Courts to administer it cautiously and accept the request of the landlord for eviction only under stated circumstances which satisfy every limb of the sub-section. By using a garage as a room it cannot be said that the tenant has committed acts of waste. In the absence of any evidence to show that by such user the utility of the building has been materially impaired, it cannot equally be said that the tenant has committed any acts of waste which would come within the mischief or meaning of Section 10(2)(iii) of the Act. This position was appreciated by the Appellate Authority, who, after considering the evidence found as a fact that the landlords had not established that any acts of waste had been committed by the tenant. He also rightly laid accent upon the non-examination of any technical person like an engineer, who might possibly speak to the impairment of the value of the building by any particular user of the same by the tenant. I also agree with the finding of the Appellate Authority that, in the absence of any evidence to show that the value of the building had been materially impaired or damaged in any manner whatever, no order for eviction could be passed under Section 10(2)(iii) of the Act.

4. The Appellate Authority has come to the correct conclusion and there is no ground to interfere with the same. The civil revision petition, therefore, fails and is accordingly dismissed. There will be no order as to costs.