Merely inserting a clause “as is where is” and “as is what is” the responsibility of the Bank does not get diluted nor it can in any manner assist the bank in denying physical possession to the auction purchaser – IFCI Ltd. Vs. Lucknow Municipal Corporation- Allahabad High Court

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I. Case Reference

Case Citation : [2020] ibclaw.in 35 HC
Case Name : IFCI Ltd. Vs. Lucknow Municipal Corporation
Appeal No. : Misc. Bench No. – 4517 of 2013
Judgment Date : 29-Apr-20
Court/Bench : High Court of Allahabad
Bench : Lucknow Bench
Act : SARFAESI Act 2002
Present for Petitioner(s) : Apoorva Tewari, Ashish Kumar Sharma, Ganga Sagar Misra
Present for Respondent(s) : Shashi Prakash Singh, Dinesh Kumar Pathak, Kuldeep Pati Tripathi, Mudit Agarwal, Shailendra Singh Chauhan
Coram : Justice Anil Kumar
Coram : Justice Saurabh Lavania,

II. Full text of the judgment 

(Delivered by Hon’ble Saurabh Lavania,J.)

Heard Sri Kuldeep Pati Tripathi, learned counsel appearing for Lucknow Nagar Nigam, Sri Asit Chaturvedi, Senior Advocate, assisted by Sri G. S. Misra, Advocate appearing for IFCI Ltd., Sri J. N. Mathur, Senior Advocate assisted by Sri Mudit Agarwal appearing for Shalimar Corporation Ltd. and Sri Manjiv Shukla, Additional Chief Standing Counsel for State.

In both the connected writ petitions, primarily, the subject matter of dispute is the property/land measuring 2,17,936 sq. ft. of the Sullage Farm situated at Village Ujariyon Gaon, District-Lucknow and it appears that keeping in view the same, both the writ petitions were clubbed vide order dated 31.05.2003 passed in Writ Petition No.4517 (MB) of 2013 filed by IFCI Ltd.

The Writ Petition No.2397 (MB) of 2013 was filed by Lucknow Nagar Nigam (in short “L.N.N.”) challenging the auction proceedings of property/land in issue carried out by IFCI Corporation Ltd. The main prayers sought in the writ petition are as under: –

“(1) Issue writ, order or direction in the nature of certiorari for quashing of the proceedings of the Sale of the land measuring about 2,17,936 sq. ft. land of Sullage Farm Situated in Village-Jagauli (earlier village-Ujariyaon) leased out to M/s Uptron Digital System Limited (M/s. Uptron India Ltd.), after summoning the same.

(2) Issue writ, order or direction in the nature of mandamus commanding the opposite parties to stop further proceedings of confirmation of Sale of the land measuring about 2,17,936 sq. ft. land of Sullage Farm situated in Village-Jugauli (earlier Village-Ujariyaon) leased out to M/s Uptron Digital System Limited (M/s Uptron India Ltd.).

The Writ Petition 4517 (MB) of 2013 was filed by IFCI Ltd. challenging the order dated 20.03.2013, whereby the L.N.N. determined/terminated the lease of the property/land in issue with effect from 19.06.2013 and the order dated 06.04.2013, whereby the L.N.N. has refused to accept the arrears of lease rent which was deposited by IFCI Ltd. During the pendency of writ petition the relief for quashing of the order dated 19.06.2013 (Annexure No.20A to the writ petition) was added through amendment. The main prayers sought in the writ petition are as under:-

“To issue a writ, order or direction in the nature of certiorari to quash the impugned orders dated 20.03.2013 and 06.04.2013.

To issue a writ, order or direction in the nature of certiorari to quash the impugned order dated 19.06.2013.

To issue a writ, order or direction in the nature of mandamus commanding the Lucknow Municipal Corporation not to interfere in the enjoyment of lease hold rights of the property in question by the petitioner.

To issue a writ, order or direction in the nature of mandamus commanding the Lucknow Municipal Corporation to consider the renewal of the lease in respect of the property in question in favour of the petitioner.”

It is relevant to clarify here that the order dated 20.03.2013, under challenge in the Writ Petition No.4517 (MB) of 2013, is in fact is a ‘Notice’ determining the lease and as such hereinafter the “Order dated 20.03.2013” is referred as “notice dated 20.03.2013”.

Brief facts, which lead to the filing of the writ petitions, are as under:

The property/land in issue admittedly belongs to L.N.N. In other words, it is also not in dispute that the L.N.N. is the owner of the property/land in issue. The property/land in issue was leased out to Uptron India Ltd. The lease deed was executed on 23.05.1985 for a period of 30 years on payment of Rs.25,06,285 as a premium and as per term of the lease deed the Uptron India Ltd. the lessee was required to pay the lease rent by the end of month of April each year in advance and any failure in making of such payment of rent regularly in advance by the end of month of April each year shall render the lease deed terminable by the lessor/L.N.N. by giving only three months notice to the lessee through registered post to the registered office of Uptron India Ltd. The relevant part of the lease deed on reproduction reads as under:

“NOW THEREFORE it is mutually agreed and consented between the lessor and the lessee that in consideration of the said premium of Rs.22,06,265/- (already paid by the lessee to the lessor in three installments by three cheques aggregating to Rs.25,06,265/- as stated above the receipt of which as already stated above, the lessor here acknowledges with the liability of refunding Rs.3,00,000/- as stated above) and in consideration of the rent of Rs.25,062.65/- (Rs.Twenty five thousand sixty two and Paise sixty five) only per annum payable from the date of handing over the possession of the land hereby demised, and in consideration of the mutually agreed terms and conditions contained herein, the Lessor does hereby grant to the lessee the lease of the said plot of land of its Sullage Farm in Village Ujariyaon, Lucknow rectangular in shape measuring 2,17,936 sq. ft. more particularly described in the scheduled below and for clarity shown by red lines in the plan attached herewith on the following terms and conditions:-

1. That this lease of the said measuring 2,17,936 sq.ft. with all its advantages and disadvantages what so ever is hereby granted for a term of 30(thirty) years from …..x… the date on which the possession of the plot of land hereby demised was handed over by the Lessor to the Lessee with two rights of renewal for a similar term of 30 (thirty) years on each renewal on the same terms and conditions provided that no premium shall be chargeable on any of the two renewals but the rent will be enhanced with due regard to market value subject to a maximum of 50% of the rent payable before the due date for the renewal.

2. That the rent of Rs. 22,062.65 (Rs. Twenty two thousand sixty two & paise sixty five) only which is calculated as on the reduced premium of Rs,22,06,265/- for the period from the date of handing over the possession aforesaid to 31.03.1985 the date of end of the financial year 1984-85 will be paid up by the lessee to the lessor through Bank draft at the time of presentation of this deed of lease for Registration and thereafter the rent of each year shall be paid up by the lessee to the lessor by Bank Draft latest by the end of the month of April each year in advance the first such advance payment being payable by the end of April 1985 and any failure in making such payment of rent regularly in advance by the end of April each year shall render this lease terminable by the lessor by only three months notice and sending such notice by registered post to the lessee to its Registered Office shall be deemed to be sufficient service.

3. That the lessee shall be entitled to erect a building or buildings without houses etc. on the land hereby demised after getting its plan sanctioned by the Lucknow Development Authority in accordance with law and shall be entitled to use subject of limitations if any under the law enforce the buildings so erected and the land hereby deminised for any of the objects and/or purpose authorised by its constitution under which the Lease has been create and constituted by the Government. Provided that the Lessee shall not use the premises aforesaid for any purposes or in any manner which may become and nuisance to the neighbourers or the people living in the neighbourhood.

4. That in consideration of the Lessee having agreed to absolve the Lessor and to take upon itself the responsibility of filling up and/or raising the level of the land hereby demised at its own cost according to its own desire and needs, the Administrator had agreed to reduce the total amount of the premium from Rs.25,06,265/- to Rs.22,06,265/- and because, this change, in the initial agreement was affected by as agreement subsequent to the said three payments the Lessor agreed and hereby agrees to refund Rs.3,00,000/- to the lessee within one month of the date or presentation of the deed of lease for registration.

5. That with effect from ……x….. the date of handing over the possession of the land hereby deminished to the lessee, the responsibility and liability of paying up besides the rent hereby reserved all cesses, taxes assessments and levies etc. existing or future whatsoever in respect of or attaching to the land hereby deminished or to any buildings and structures that may be erected or re-erected thereon shall all be absolutely of the Lessee alone and the lessee hereby agrees to discharge the said liabilities by full regular payments to the authorities concerned including the Nagar Maha Palika Lucknow.

6. The lessee shall be fully entitled without the requirement of the consent of the Lessor to enter into the agreements of Collaboration or similar agreements with others or agreements to under let or sublet to subsidiary Companies or Ancillaries permitting these portions the user of the land hereby demised or of the building and structures thereon in connection with the legitimate business objects and activities of the lessee. Any permission or collaboration stipulated above shall be intimated to the lessor within one month of entering into such agreement.

7. That it shall be lawful for the lessor or any one authorised in this respect to enter on or upon land hereby demised or the buildings or structures thereon from time to time to inspect the same and to bring to the notice of the Lessee any matter which may be considered undesirable by the lessor and to remove or discontinue any such thing whereupon the same shall be discontinued or removed unless the matter be amicably settled.

8. That any default on the part of the lessee in respect of any of the terms and conditions required to herein to be carried out or discharged by or on the part of the lessee notwithstanding any previous waiver of any such default shall entitle the lessor to terminate this lease even before the expiry of the said terms of 30 years by notice of three months only.

9. That on the expiry of the terms of this case, if no renewal is obtained, or on sooner determination of this lease by notice as provided herein the Lessee shall be bound to remove all the buildings and structures aforesaid and their materials from the land hereby demised within a period of one month from the date of expiry of the term or within the period of the notice as the case may be and all rights of the Lessee in respect of the building or structure aforesaid shall come to an end at the expiry of the said period of one month and the Lessor shall be entitled to re-enter on into or upon the land hereby demised on the buildings and structures standing thereon unless the matter is amicably settled between the parties.

10. That any dispute or difference arising from under or in connection with this deed of lease may be referred by any of the parties to the secretary L.S.G. of the State of U.P. and to none else for his arbitration in the matter and his decision thereon shall be binding on both the Lessor and the Lessee and if he refuses or neglects to arbitrate or is otherwise incapable of working as arbitrator the parties shall be free to seek their remedy in a court of law.”

In view of the undisputed facts related to the ownership of property/land in issue and the terms of lease deed, it would be appropriate to mention here that the L.N.N. did not transferred the property/land in issue in favour of Uptron India Ltd. and being lessee the Uptron India Ltd. was entitled to enjoy the rights of lessee as provided under the lease deed read with the provisions of the Transfer of Property Act, 1882 (in short “Act of 1882”).

It is also not disputed that due to financial needs the Uptron India Ltd. mortgaged the property/land in issue with IFCI Ltd. For the purposes of mortgaging the property/land in issue, no objection certificate dated 13.10.1987 was issued by L.N.N.. It was issued to enable the Uptron India Ltd. to deposit the lease deed of the property/land in issue with Financial Institutions/Banks for the purposes of mortgaged and obtaining loan. The original lease deed dated 23.05.1985 was deposited with IFCI Ltd. and the mortgaged was created with respect to property/land in issue. It would be proper to mention here, on the basis of pleadings on record, that the Uptron India Ltd. took the financial assistance from IFCI Ltd., IDBI Bank, State Bank of India, for which, property in question was mortgaged as security.

Needless to say that the mortgaged was/is permissible as per the provisions of Section 108 (j) of the Act of 1882 and such mortgaged can be made by deposit of title deed as provided under Section 58 of the Act of 1882. In view of Section 108 (j) of the Act of 1882 the lessee i.e. Uptron India Ltd. was empowered to transfer the lease hold rights. In view of the Section 108 (j) of the Act of 1882 a lessee is not empowered to transfer more than the rights available to him under the lease deed.

It is further undisputed that the Uptron India Ltd. committed default in payment of its dues and as such the loan account(s) with above mentioned Financial Institutions became a Non Performing Assets (NPA). For recovery of due amount a meeting was held between the representative of secured creditors, Managing Director of Uptron India Ltd. and Principal Secretary, Department of Information and Technology, Government of U.P. on 17.01.2012. Thereafter a meeting of creditors was again held on 23.04.2012 and it was decided therein that IFCI Ltd. would initiate action under the Securitization and Reconstruction of Financial Assets and Information of Security Interest Act, 2002 (in short “Act of 2002”). It is also stated in writ petition filed by IFCI Ltd. that in furtherance to the decision dated 23.04.2012 the State Bank of Patiala and IDBI Bank gave their consent in terms of Section 13 (9) of the Act of 2002. The IFCI Ltd. also called upon vide letter dated 02.05.2012 Uptron India Ltd. to make payment in terms of One Time Settlement (in short “OTS”). The amount i.e. Rs.13.90 crores, of OTS was also communicated by the IFCI Ltd. to the Uptron India Ltd. vide letter dated 22.05.2012. In absence of any response from the Uptron India Ltd. as also on account of non payment of due amount in terms of OTS the IFCI vide letter dated 01.08.2012 revoked its offer for OTS. After revoking the offer of OTS the IFCI Ltd. proceeded under the Act of 2002 and issued the notice dated 02.08.2012 under Section 13 (2) of the Act of 2002 to Uptron India Ltd. and its guarantor, the U.P. Electronics Corporation. No reply was given by the Uptron India Ltd. to the notice dated 02.08.2012. However, the reply was given by the guarantor, the U.P. Electronics Corporation. The reply submitted by the guarantor was rejected by the IFCI Ltd. vide order dated 05.10.2012 and thereafter the IFCI Ltd. issued the possession notice dated 08.12.2012 with respect to the property/land in issue through its authorized officer. The notice dated 08.12.2012 was issued in view of Rule 8 of Security Interest (Enforcement) Rules, 2002 (in short “Rules, 2002”). The notice was published on 09.12.2012 in daily newspaper (s) namely ‘Times of India’ and ‘Dainik Jagran’. The possession notice dated 11.12.2012 under Rule 8 (6) of Rules, 2002 was also issued calling upon the Uptron India Ltd. to clear its dues within thirty days. In the notice dated 11.12.2012 it has been stated that IFCI Ltd. would proceed under Rule 8 (5) of Rules, 2002, if Uptron fails to clear its dues. The Uptron failed to clear the dues and accordingly public notice dated 22.01.2013 inviting bids for sale of the mortgaged properties including the property/land in issue was published on 23.01.2013 in daily newspaper(s) namely ‘Times of India’ and ‘Dainik Jagran’. At this stage this Court feels it proper to reproduce the contents of possession notice dated 08.12.2012 as also the contents of public notice dated 22.01.2013.

“Rule 8 (1) POSSESSION NOTICE

WHEREAS IFCI Ltd. (formerly known as Industrial Finance Corporation of India, being secured creditor of M/s. UPTRON India Ltd. (UIL), (Borrower) has issued demand notice dated 2nd August, 2012 under Section 13 (2) of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (Securitization Act) calling upon the borrower to repay the sum of Rs.140,48,74,218/-(Rupees One hundred forty crore forty eight lakhs seventy four thousand two hundred and eighteen only) towards outstanding dues of IFCI, as on 31.07.2012, with further interest on contractual rates till payment besides the dues of other secured creditors, within sixty days from the date of receipt of the said notice.

The Authorized Officer of IFCI, under the Securitization Act and in exercise of powers conferred under Section 13 (12) read with rule 9 of the Security Interest (Enforcement) Rules, 2002, demanded the amount of Rs.140,48,74,218/-(Rupees One hundred forty crore forty eight lakhs seventy four thousand two hundred and eighteen only) towards outstanding dues of IFCI, as on 31.07.2012, with further interest on contractual rates till payment, besides the dues of other secured creditors from the borrower. The borrower having failed to repay the amount within 60 days from the date of the said notice, IFCI hereby gives notice to the borrower and the public in general that the undersigned, being the Authorized Officer appointed by IFCI has taken possession of the property described herein below, on this 8th day of December, 2012, in exercise of powers conferred on him under Section 13 (4) of the Securitization Act, 2002 read with Rules 6 (1) & 8 (1) of the said Rules. The borrower in particular and the public in general is hereby cautioned not to deal with the property and any dealings with the property will be subject to the charge of the IFCI for Rs.140,48,74,218/-(Rupees One hundred forty crore forty eight lakhs seventy four thousand two hundred and eighteen only) towards outstanding dues of IFCI, as on 31.07.2012, with further interest on contractual rates till payment, besides the dues of other secured creditors.

“DESCRIPTION OF THE PROPERTIES

1. Plot No. A-1 UPSIDC Industrial Area, Deva Chinhat Road, Village Goela,Pargana/Tehsil-Malihabad, Lucknow Uttar Pradesh admeasuring 39,753 sq. mtrs or 9.82 acres (app) together with all the buildings and structures/erections constructed erected thereon, plant and machinery attached to the earth of permanently fastened to anything attached to the earth and fixtures and fitings erected/installed thereon and every part thereof, in the name of Company viz. UPTRON India Ltd. (UIL).

2. Village Jugauli (earlier known as Ujariyan Gaon) near Gomti Barrage, Gomti Nagar, Lucknow Uttar Pradesh admeasuring 8 Bigha, 2 Biswani together with all the buildings and structures/erections constructed erected thereon, plant and machinery attached to the earth or permanently fastened to anything attached to the earth and fixtures and fitings erected/installed thereon and every part thereof, in the name of Company viz. UPTRON India Ltd. (UIL).

Date : 08.12.2012

Sd/-

Place – Lucknow Authorized Officer under Securitization Act”

“PUBLIC NOTICE

(In terms of Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002(SARFAESI) read with rule 6,7,8,9 of Security Interest (Enforcement) Rules, 2002).

Pursuant to the possession taken by the Authorized Officer under SARFAESI Act, 2002 for recovery of secured debts of Rs.140,48,74,218/-(Rupees One hundred forty crore forty eight lakhs seventy four thousand two hundred and eighteen only) towards outstanding dues of IFCI, as on 31.07.2012, with further interest on contractual rates till payment besides the dues of other secured creditors, SEALED BIDS are invited for purchase of movable and immovable assets of two units of M/s. UPTRON India Ltd. (UIL) at Village Jugauli (earlier known as Ujariyan Gaon) Near Gomti Barrage, Gomti Nagar, Lucknow, Uttar Pradesh AND A-1, UPSIDC Industrial Area, Deva Road, Chinhat, Lucknow, Uttar Pradesh on AS IS WHERE IS AND WHATEVER THERE IS BASIS as per details given below :

Sl. No. Particulars of Assets Reserve Price (Rs.In Lakh) Earnest Money Deposit (EMD) (Rs.In Lakh)
1. Unit -1: Gomti Nagar, Lucknow Uttar Pradesh Village-Jugauli (earlier known as Ujariyan Gaon) Near Gomti Barrage, Gomti Nagar, Lucnow, Uttar Pradesh admeasuring 8 Bigha, 2 Biswani together with all the buildings and structures/erections constructed erected thereon, plant and machinery attached to the earth or permanently fastened to anything attached to the earth and fixtures and fitings erected/installed thereon and every part thereof 7400.00

744.00
2. UPSIDC Industrial Area, Chinhat Road, Lucknow Uttar Pradesh Plot No. A-1 UPSIDC Industrial Area, Deva Chinhat Road, Village Goela, Pargana/Tehsil-Malihabad, Lucknow Uttar Pradesh admeasuring 39,753 sq. mtrs or 9.82 acres (app.) together with all the buildings and structures/erections constructed erected thereon, plant and machinery attached to the earth or permanently fastened to anything attached to the earth and fixtures and fittings erected/installed thereon and every part thereof. 1431 143.10

2. Copy of tender document containing details of assets and particulars of terms and conditions of sale forming part of this sale notice may be collected from the office of Authorized Officer at IFCI Tower, 16th Floor, 61, Nehru Place, New Delhi-1100019 from 1st February, 2013 onwards on payment of Rs.1,000/- by D.D./pay order favouring “IFCI Ltd.” payable at New Delhi. The tender document can also be downloaded from IFCI’s Website at http://www.ifciltd.com after 1st February, 2013, however, the submission of such downloaded tender document should be accompanied by a Demand Draft of Rs.1,000/- towards the cost of the tender document at the time of submission of bid.

3. Interested parties shall submit their bid for individual unit along with Earnest Money Deposit (EMD) in the form of demand draft/pay order in favour of “IFCI Ltd.” payable at New Delhi drawn on any Nationalized/scheduled Bank in sealed cover superscribed “Bid for assets of M/s. UPTRON India Ltd., Gomti Nagar, Lucknow, U.P.” and “Bid for assets of M/s. UPTRON India Ltd., Chinhat Unit, Lucknow, U.P.” addressed to “The Authorized Officer, Sri Anil Kumar Chauhan, AVP, IFCI Ltd., IFCI Tower, 16th Floor, 61 Nehru Place, New Delhi-110019″. No interest shall be payable by the Authorized Officer/IFCI Ltd. on the EMD. The sealed bid can be dropped in the ”Tender Box’ to be kept at the reception on the ground floor of IFCI Tower, 61 Nehru Place, New Delhi-110019 on or before 01.03.2013 by 11:30 A.M..

4. The bid so received by the Authorized Officer shall be opened and considered by an Asset Sale Committee (ASC) specifically constituted for the purpose, at 12:00 noon on 01.03.2013 at IFCI Tower, 61 Nehru Place, New Delhi-110019 in the presence of bidders who wish to attend the auction proceedings. The Authorized Officer may allow inter-se bidding amongst eligible bidders as per the terms of Tender Document. The assets shall not be sold below the reserve price.

5. The successful bidder shall deposit 25% of the amount of sale price after adjusting the EMD already deposited within two (2) working days of acceptance of the offer by the Authorized Officer failing which the EMD shall be forfeited. The balance 75% of the sale price is payable on or before 15th day of issue of letter of acceptance conferring the highest bid (Letter of Acceptance). If the 15th day happens to be Sunday or a holiday the balance 75% may be deposited on the next working day. In case of failure to deposit the balance amount within the prescribed period mentioned above, the amount deposited shall be forfeited. The Authorized Officer reserves the right to accept or reject any/or all the bids or to adjourn, postpone or cancel the auction sale without assigning any reason thereof.

6. For any clarification/information, interested parties may contact Shri S. K. Bhandari (09990725917)/Shri S. G. Kundu (09990725969)/Shri Anil Kumar Chauhan (09990725738)/Shri D. P. Rauhilla (09990725916)

Place : New Delhi
Sd/-
Dated : 22.01.2013  (ANIL KR. CHAUHAN)
AUTHORIZED OFFICER
IFCI Ltd., IFCI Tower, New Delhi”

It is also not in dispute that in the auction proceedings the bid of M/s. Shalimar Corporation Ltd. (in short “M/s. Shalimar”) was accepted and IFCI Ltd. vide letter dated 01.03.2013 directed the M/s. Shalimar to deposit 25% of sale consideration and 1/4th (25%) of the bid amount i.e. Rs.18,64,01,000/- was deposited by the M/s. Shalimar.

On coming to know about the auction proceedings carried out by IFCI Ltd., the L.N.N. being aggrieved by the auction proceedings approached this Court by means of Writ Petition No.2397 (MB) of 2013, for the reliefs quoted herein above, and while entertaining the writ petition, this Court on 19.03.2013 passed a detailed interim order, whereby the opposite parties to the writ petition including the IFCI Ltd. were restrained from confirming the sale proceedings. The interim order dated 19.03.2013 on reproduction reads as under :-

“Yesterday i.e. on 18.3.2013, learned Counsel for the petitioner made a mention that the land measuring about 2,17,936 Sq.Ft. situated in village Jugauli (earlier village Ujariyaon) has been auctioned but the sale has not been confirmed and the last date of confirmation of sale of the land in question is 20.3.2013. Therefore, it was urged that the matter is urgent and it may be taken up tomorrow. Accordingly, on permission being granted by this Court, the instant writ petition has come up for admission/hearing today.

At the outset, Sri S.K. Kalia, Senior Advocate, appearing on behalf of the petitioner submits that he may be permitted to implead the auction purchaser i.e. Shalimar Corps. Ltd., Lalbagh, Lucknow as opposite party No.5 in the array of the opposite parties as he is necessary party.

Let him do so during the course of the day.

Issue notice.

Notice on behalf of opposite party No.1 has been accepted by the Chief Standing Counsel, whereas notice on behalf of opposite parties Nos. 2 and 3 has been accepted by Sri G.S.Misra, Advocate and on behalf of opposite party No.4 by Sri Sanjay Bhasin. On behalf of opposite party No.5, appearance has been put in by Sri Vishal Dixit, Heard learned Counsel for the parties and perused the records.

Through the instant writ petition under Article 226 of the Constitution of India, the petitioner challenges the proceedings of the sale of the land measuring about 2,17,936 Sq. Ft. situated at Village Jugauli (earlier known as Village-Ujariayon), which has been leased out to M/s UPTRON Digital System Limited (M/s UPTRON India Ltd.). It has also been prayed that opposite parties may be directed to stop the further proceedings of confirmation of Sale of the land in question.

According to the petitioner, land in question belongs to Nagar Nigam Ltd., which was leased out to M/s UPTRON India Ltd.by the erstwhile Nagar Maha Palika, Luckow on 23.5.1985 for a period of 30 years on payment of Rs.25,06,285/- as premium and further M/s UPTRON India Ltd. was required to pay Rs.22,062.65per year as lease rent. According to him, M/s UPTRON India Ltd./Company registered under the Companies Act, 1956 and an undertaking of Government of Uttar Pradesh, applied for certain loan and cash credit facilities from certain Banks and financial institutions, to which State Bank of India required ‘No objection certificate’ for creating equitable mortgage pertaining to land in question vide letter dated 14.9.1987. The erstwhile Nagar MahaPalika, Lucknow granted ‘No Objection Certificate’ on 13.10.1987 for equitable mortgage. Thereafter, certain loan and financial assistance was granted to M/s UPTRON India Ltd. Of late, M/s UPTRON India Ltd. became sick and as such, Company was referred to BIFR on 20.7.1994. Therefore, M/s UPTRON India Ltd.did not pay lease rent since 1998.

Learned Counsel for the petitioners submits that even after not paying the lease rent since 1998 as per the terms and conditions of the lease agreement, the petitioner did not take any action against M/s UPTRON India Ltd. as M/s UPTRON India Ltd. is an undertaking of U.P. State Government. However, all of asudden, vide letter dated 11.3.2013, M/s UPTRON India Ltd.informed the Municipal Commissioner, Nagar Nigam, Lucknow that the Company has taken a loan of Rs.9.70 Crores in 1986-87 as a long term loan from different banks and financial institutions such as I.F.C.I, I.D.B.I., State Bank of India and State Bank of Patiala but due to financial crunch, the Company could not repay the debts and interest also and as such, the said Bank had published a notice in Newspaper ‘Dainik Jagran’ dated 8.12.2012 for taking possession of the building of M/s UPTRON India Ltd. and thereafter on 22.1.2013, notice was also published, by which the building was put to sale by inviting tender.

Learned Counsel for the petitioner submits that though the 3I.F.C.I. Ltd. was fully aware that building of M/s UPTRON India Ltd. is situated on the land belonging to Lucknow Nagar Nigamand the property was under lease with certain conditions but neither M/s UPTRON India Ltd. nor I.F.C.I. Ltd. brought to the notice of the petitioner that the land belonging to the Lucknow Nagar Nigam has been taken possession by the I.F.C.I. Ltd. under Rule 8 (1) of the Security and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 [herein after referred to as the “Act”], which is in violation of the provisions of section 6 (1) of the Act. Thus, the entire action has been done behind the back of the Luckow Nagar Nigam.

Learned Counsel for the petitioner submits that the auction of the property in question was done on 1.3.2013 but till date the same has not been confirmed.

Sri Sanjay Bhasin, learned Counsel for the opposite party No.4 submits that as stated by the petitioner’s counsel, the matter has been referred to BIFR, wherein the matter was reserved once upon a time but subsequently, it was released and the matter has been fixed for 18.4.2013. He submits that in the said proceedings,IFCI Ltd. is also one of the parties and as such, the conduct of IFCI Ltd. is dubious and not on board. Therefore, the entire exercise has been done in a haste manner by the IFCI Ltd.

Sri G.S. Misra, earned Counsel for the opposite parties Nos.2 and 3 has filed a counter affidavit. The same is taken on record. He has raised a preliminary objection that the petitioner has got equally efficacious alternative remedy by filing Securitization Application under Section 17 of the Act before the Debts Recovery Tribunal. He further submits that lease deed, which was executed by the petitioner in favour of M/s UPTRON India Ltd. was for 30 years only and the same is going to expire in the year 2015 and as such, M/s UPTRON India Ltd. has no right.

Per contra, Sri S.K. Kalia, Senior Advocate, appearing on behalf of the petitioner submits that due to non-availability of the Presiding Officer, Debts Recovery Tribunal, Lucknow, its jurisdiction is attached with Debts Recovery Tribunal, Jabalpur and the Presiding Officer, Debts Recovery Tribunal, Jabalpur has earmarked two days in a month to hear the cases of Debts Recovery Tribunal, Lucknow. He further submits that the opposite parties Nos. 2 and 3 are adament to confirm the sale of the landin question by fixing 20.3.2013 as date of confirmation of sale and as such, the petitioner has no option but to approach this Court under Article 226 of the Constitution of India.

Sri Vishal Dixit, learned Counsel for the auction purchaser i.e. opposite party No. 5 submits that in the auction notice, which has been published, it was not made clear as to what would be the status of the auction purchaser i.e. whether he has been given lease right or free hold right till 2015 as the term of the lease is going to expire in the year 2015. He submits that he has only deposited 1/4th amount at the time of bidding and the Bank has assured him to consider the matter thereafter.

At this stage, a specific query was put to learned Counsel for the opposite parties Nos. 2 and 3 that since the lease of the land in question is going to expire in the year 2015, as such, what is the status of the auction purchaser, to which learned Counsel for the opposite parties Nos. 2 and 3 submits that he may be allowed some time to file an affidavit to this effect.

Under the circumstances, we direct the parties to file respective affidavits by tomorrow.

Since the confirmation of the sale of the property in question is going to expire tomorrow, as such, as an interim measure, we restrain the opposite parties from confirming the sale of the property in question. List/put up tomorrow i.e. 20.3.2013.”

Thereafter on 20.03.2013 the L.N.N. determined/terminated the lease of the land leased out to the Uptron India Ltd. on 23.05.1985. The reasons for termination of lease was non payment of lease rent from 1997-98. It is also stated in the notice dated 20.03.2013 that the Uptron India Ltd. has violated the term no.6 of lease deed, as the Uptron India Ltd. had used the property for the purposes other than those for which it was leased out and the parts of the property were rented out to third parties in an unauthorized manner and no information regarding the same was given to the L.N.N., as required under the lease deed.

According to term no. 6 of lease deed, the lessee-Uptron India Ltd. was entitled to entering into the agreements of collaboration or similar agreements with others or agreements to under let or sub-let to subsidiary Companies or Anciliaries Companies permitting the use of portion of property leased out to the Uptron India Ltd. including building and structure thereon in connection with business objects and activities of lease. However, as per the same term, the Uptron India Ltd. was under obligation to intimate the L.N.N. within one month from the date of entering into agreement, as provided in term no.6 of lease deed.

It is also stated in the notice dated 22.03.2013 that Uptron India Ltd did not inform about the facts related to auction proceeding in relation to the property/land in issue at appropriate time.

After notice dated 20.03.2013, whereby the lease deed in favour of Uptron India Ltd. was determined/terminated, the IFCI Ltd. on 28.03.2013 tried to deposit the lease rent amounting to Rs.4,00992/- with L.N.N. which was outstanding since 1997-98. The L.N.N. by order dated 06.04.2013 refused to accept the lease rent on the ground that lease had already been determined/terminated and the matter is sub-judice before this Court.

Being aggrieved by the notice dated 20.03.2013 and order dated 06.04.2013 the IFCI Ltd. filed the Writ Petition No.4517 (MB) of 2013.

It would be appropriate to state here that on 27.05.2013 this Court passed the following order in Writ Petition 2397 (MB) of 2013.

“.Heard Sri S. K. Kalia, Senior Advocate for the petitioner, Sri Anil Tiwari, Senior Advocate for the IFCI Limited and Sri J. N. Mathur, Senior Advocate appearing for Shalimar Corporation Limited.

It has been brought to out notice by Mr.J. N. Mathur that after filing of the instant writ petition, certain proceedings for cancellation of lease deed have been initiated by the petitioner. He submits that 1/4th of the bid amount has already been deposited by his client, namely, opposite party No.5/ Shalimar Corp. Limited. He further submits that on account of pendency of instant writ petition, they are losing the interest on the said amount. Accordingly, he prays that the said amount, which has been deposited with the IFCI Limited, may be directed to be invested in an interest bearing account. The aforesaid request of the opposite party No.5 appears to be genuine.

Accordingly, we direct the IFCI Limited/opposite party No.2 to deposit the amount in the interest bearing account, which will be maintained separately and it will be in the joint name of IFCI and opposite party No.5 initially for a period of one year.The encashment of the aforesaid amount would be subject to the final outcome of the writ petition. List/put up on 31.5.2013. Till then, interim order granted earlier shall remain in operation. “

In regard to the aforesaid order, it is stated by the counsel for the IFCI Ltd. as also by Shri J. N. Mathur, learned Senior Advocate appearing for M/s. Shalimar that the 25% of the bid amount is lying in interest bearing account.

It would also be appropriate to state here that the during the pendency of writ petitions, under consideration, the term of the lease provided under the lease deed dated 23.05.1985 i.e. 30 years, which was determined/terminated vide notice dated 20.03.2013 by L.N.N. (Lessor), has expired on 23.05.2015.

Sri Kuldip Pati Tripathi, learned counsel appearing for L.N.N. in support of the reliefs sought in Writ Petition No.2397 (MB) of 2013 filed by L.N.N. made following submissions.

(i) The property/land in issue belongs to L.N.N. and the same was leased out on 23.05.1985 to Uptron India Ltd. and only rights available under the lease can be auctioned and the property/land in issue cannot be auctioned for recovery of any amount due on Uptron India Ltd.

(ii) In the instant case, it appears from the possession notice as well as public notice, pursuant to which auction proceedings were carried out, that in same, it has not been mentioned that lease hold rights are being auctioned. It appears from the contents of notices that ownership rights were being auctioned in the auction proceedings. The impression given in the notices is to the effect that IFCI Ltd. steps in as the owner of the property in issue.

(iii) The IFCI Ltd. had no right to sell the property/land in issue and what could have been auctioned off were only the rights available in the lease deed.

(iv) The notice issued under Section 13(2), order under Section 13(4), possession notice and public notice for auctioning the property are defective as they do not disclose the correct nature and status of the property/land in issue.

(v) The public notice for auctioning the property is in violation of Rule 8(6) sub-rule (a) and (f) of Rules, 2002, as in the same nowhere it has been mentioned that land in question belongs to L.N.N. which was leased out to Uptron India Ltd. and the lease hold rights are on sale in the auction proceedings.

(vi) The entire auction proceedings were carried out by IFCI Ltd. without giving any information to the L.N.N.. Being owner of the property the L.N.N. ought to have been informed in writing about the recovery of due amount by auctioning the property/land in issue. The fact pertaining to ownership of L.N.N. was well within the knowledge of IFCI Ltd. as the original lease deed was deposited for the purposes of seeking financial assistance by the Uptron India Ltd.

(vii) The property/land in issue is a public land belonging to L.N.N. and it cannot be sold/auctioned in the manner in which it was being sold/auctioned by the IFCI Ltd.

On the basis of aforesaid, Sri Kuldeep Pati Tripathi submitted that indulgence of this court is required. Prayer is allowed to the writ petition and quash the entire auction proceedings.

In regard to the Writ Petition No.4517 (MB) of 2013, Sri Kuldeep Pati appearing for L.N.N. submitted that the writ petition for the reliefs sought is liable to be dismissed. In this regard, he made following submissions.

(i) In the writ petition the notice dated 20.03.2013, whereby the lease deed was determined/terminated, is under challenge and the same is not liable to be interfered as the Uptron India Ltd. violated the term nos. 2 and 6 of the lease deed dated 23.05.1985 and in exercise of power vested under term no.8 of lease deed it was determined/terminated. He further submitted that in the notice dated 20.03.2013 the reasons of termination of lease have been mentioned. Further submitted that reasons for termination of lease deed are that the lease rent due from 1997-98 was not paid and the Uptron India Ltd. failed to provide the information regarding sub-letting the parts of property/land in issue as also that the parts of the property/land in issue was sub-letted to third parties in an unauthorized manner.

(ii) It is further stated that in regard to the grounds/reasons for termination of lease there is no explanation in the writ petition nor it has been mentioned therein that the grounds/reasons mentioned in the notice dated 20.03.2013, whereby the lease was determined/terminated, are unsustainable.

(iii) With regard to the order dated 06.04.2013, whereby the L.N.N. refused to accept the lease rent, it is submitted by Sri Kuldeep Pati Tripathi that after determination/termination of lease on 20.03.2013 the IFCI Ltd. just to claim certain rights in the property/land in issue vide letter dated 28.03.2013 tried to deposit the due lease rent from 1997-98 and vide order dated 06.04.2013 the request to accept the lease rent was rejected on the ground to the effect that lease deed has already been terminated and the matter is sub-judice before this Court. The reasons mentioned in the order dated 06.04.2013 are just and proper.

(iv) It is also stated that during the pendency of writ petition, the term of the lease deed i.e. of 30 years, has already been expired and the present writ petition has become infructuous for all practical purposes.

(v) It is also stated that the tenancy was determined on 20.03.2013 and thereafter on 23.03.2013 the Uptron India Ltd. represented its case before the L.N.N. and after considering entire facts including the notice determining tenancy dated 20.03.2013 the L.N.N. passed the order dated 19.06.2013, challenged by the IFCI Ltd. In the facts of the case as also in view of the provisions of Section 111(h) there is no illegality in the order dated 19.06.2013.

Sri Asit Chaturvedi, learned Senior Advocate assisted by Sri G. S. Misra, Advoate for IFCI Ltd. submitted that the writ petition No.2397 (MB) of 2013 filed by L.N.N. which relates to auction proceedings carried out by IFCI Ltd. under the provisions of Act of 2002 is not maintainable in view of availability of remedy of appeal under Section 17 of the Act of 2002 and being so the same is liable to be dismissed and L.N.N. be relegated to avail the remedy provided under Section 17 of the Act of 2002. In this regard reliance has been placed on the judgment passed by Hon’ble the Apex Court in the case of Jagdish Singh vs. Heeralal and others, (2014) 1 SCC 479 and Union Bank of India vs. Satyawati Tondon, (2010) 3 SCC (Civ.) 260.

On merits, Sri Asit Chaturvedi, submitted that the possession notice as also the public notice pursuant to which the auction proceedings were carried out are not violative to any provision of Act of 2002 or Rules, 2002 and being so are not liable to be interfered by this Court. In this regard, it is further stated that in the public notice dated 22.01.2013, it has been specifically mentioned that property is being sold “AS IS WHERE IS AND WHATEVER THERE IS BASIS” and the same is sufficient compliance of the provisions contained in Act and Rules. Further submitted that the notice(s) were published in newspaper(s) in wide circulation and as such it is a presumption that the L.N.N. was well aware with the recovery proceedings initiated by the IFCI Ltd. It is further submitted that the IFCI Ltd. being secure creditor entered into the shoes of mortgagor when the property was mortaged with IFCI Ltd. after completion of all formalities including after taking note of NOC issued by the L.N.N. to mortgage the property in favour of Financial Institutions. To recover the due amount towards Uptron India Ltd. the recovery proceedings were initiated under the Act of 2002 against the property/land in issue mortgaged with IFCI Ltd. The recovery proceedings under the Act of 2002 are legally sustainable in view of the contents of possession notice and public notice as also in view of the provisions of Act of 1882. It is also stated that the L.N.N. ought to have applied to redeem the mortgaged property as provided under Section 60 of the Act of 1882 and it is still open for L.N.N. to approach the IFCI Ltd. for redemption of the mortgage property/land in issue.

With respect to the reliefs sought in the writ petition No. 4517 (MB) of 2013, it is submitted that :

(i) The L.N.N. being lessor ought to have received the lease rent, which was submitted on coming to know about the default committed by the Uptron India Ltd. The IFCI Ltd. tried to deposit the due lease rent from 1997-98 onwards through Bank Draft vide letter dated 28.03.2013. Further submitted that as per Section 65(d) of the Act of 1882 even after mortgage the Uptron India Ltd. (mortgagor) was bound to pay all the lease rent and for the default committed by the mortgagor the IFCI Ltd. can not be made to suffer ans as such the order dated 06.04.2013 whereby the L.N.N. refused to accept the rent submitted by IFCI Ltd. through demand draft is liable to be interfered by this Court.

(ii)In relation to notice dated 20.03.2013, whereby the lease of the property/land in issue was determined/terminated, Sri Asit Chaturvedi submitted that the notice dated 20.03.2013, terminating the lease was passed without any intimation to the IFCI Ltd. nor any opportunity was provided to the IFCI Ltd. to make the deficiency good. The notice dated 20.03.2003 is violative to the terms of the lease specifically term no.2 of the lease deed.

(iii) It is also stated that the order dated 19.06.2013, cancelling the lease deed is nothing but an eye wash as the decision to determine/terminate the lease was taken vide notice dated 20.03.2013.

(iv) It would be appropriate to mention here that in regard to violation of terms no.6 of the lease deed, one of the reasons of determination/termination of lease mentioned in the notice dated 20.03.2003, no argument has been advanced.

Sri J.N. Mathur, learned Senior Advocate assisted by Sri Mudit Agarwal, appearing for M/S Shalimar, submitted that earlier M/s Shalimar was supporting the case of the IFCI Ltd. as the bid was settled in its favour and period of lease was not expired and M/s Shalimar could have utilized the property/land in issue for its business purpose and during the pendency of the present writ petitions the term of lease, which was of 30 years with provison of renewal, has already been expired on 23.05.2015 and now the terms of the lease can not be renewed and as such the 25 % of the bid amount deposited by M/s Shalimar with IFCI Ltd. be provided to M/S Shalimar. In this regard, Sri J.N. Mathur, learned Senior Advocate elaborating his arguments made following submissions:-

(i) Keeping in view the facts of the case as also the term no.1 read with term no.9 of the lease deed and provisions envisaged under Section 56 of the Indian Contract Act, 1872 (in short “Act of 1872”) the renewal of term of lease of property/land in issue is not possible.

(ii) Since the lease has been determined/terminated and lease rent by the L.N.N. has not been accepted from IFCI Ltd. as such also the present case would not fall under Section 116 of the Act of 1882, which provides lease by holding over and in this view also the IFCI Ltd. has no right to transfer the property/land in issue in favour of M/s Shalimar.

(iii) It is stated that Section 111 of the Act of 1882, provides determination of lease and taking note of Section 111(a) and (h) now the lease deed is not existence and in view of the same also the IFCI Ltd. has no right to transfer the property/land in issue.

(iv) With regard to deposit of rent it is stated in view of Section 65(d) of the Act of 1882 after the mortgage is created the IFCI Ltd. was under obligation to pay the lease rent.

(v) The lease rent was demanded by L.N.N. vide letter dated 18.01.2002, as appears from the notice dated 20.03.2013, however the lease rent was not paid till the notice dated 20.03.2013 was issued. The IFCI Ltd. through its letter dated 28.03.2013 tried to deposit the lease rent.

(vi) Admittedly, IFCI Ltd. being mortgagee of the property/land in issue took over the possession of the property/land in issue on 08.12.2012, as appears from the possession notice published in news paper on 09.12.2012 (Annexure No. 13 to the writ petition filed by IFCI Ltd.) and even then IFCI Ltd. failed to clear the dues immediately in terms of Section 65(d) of the Act of 1882.

(vii) Section 108 (j) of the Act of 1882 provides that the lessee can only mortgage or sub-lease whole or any part of his interest in the property and any transferee of such interest or part may again transfer it. It further provides that the lessee shall not by reason only of such transfer cease to be subject to any of the liabilities attaching to the lease and in view of the same as well as in view of Maxim(s) “Nemo Dat Quod Non Habet” (no one can bestow or grant a greater right, or a better title than he has himself) and “Nemo Plus Juris Tribuit Quam Ipse Habet” (no one gives what he has not got) only lease hold rights could have been auctioned but otherwise impression appears from the possession notice as also from the auction notice and accordingly in view of the same as also keeping in view the provisions of Rule 8(6) of the Rules, 2002 the auction proceedings are not sustainable.

With regard to the issue of maintainability of the writ petition no.2397 (MB) of 2013, Sri Kuldeep Tripathi and Sri J.N. Mathur, Senior Advocate, made following submissions:-

(i) Keeping in view the Section 2(f), which defines “borrower”, Section 13, wherein the expression “borrower” has been used and which relates to taking measures against borrower and secured assets as also Section 17, which provides right to appeal and which says that any person (including borrower), aggrieved by any of the measures referred to in Sub-Section 4 of the Section 13 taken by the secured creditor or his authorized officer may make an application before the Debt Recovery Tribunal (in short “DRT”), the writ petition no.2397 (MB) of 2013 is maintainable and L.N.N. should not be relegated to avail the remedy of appeal provided under Section 17 of the Act of 2002. In this regard, it is further stated that the L.N.N. is neither a borrower nor a guarantor nor claiming any right through borrower or guarantor as legal heir/successor/ representative/ attorney/ assignee etc. nor has entered into the shoes of borrower or guarantor in any manner whatsoever it may be and in fact, the L.N.N. is owner of the property/land in issue as such taking into account the same, the writ petition is maintainable on behalf of L.N.N. challenging the auction proceedings initiated and carried out by IFCI Ltd.

(ii) It is also stated that expression “Any Person” referred in Section 17 of the Act of 2002 can not be read independently and it has to be read in the context of Section 13(4) and (5) of the Act of 2002 and a conjoint reading of both the provisions read with the definition of “borrower” provided under Section 2(f) of the Act of 2002 would make the point in issue crystal clear that expression “Any Person” would mean and cover either the borrower or guarantor or any person claiming through borrower or guarantor and would not cover the true owner of the property, who is neither borrower nor guarantor.

(iii) Further stated that the subject matter of both the writ petition is same i.e. property/land in issue and relegating the L.N.N. to approach the DRT would result in multiplicity of proceedings and it would not be in the interest of substantial justice between the parties.

(iv) Further submitted that the matter is pending since 2013 and more than 6 years have elapsed and the matter is ripe for final hearing as such relegating the matter to another forum would only prolong the litigation between the parties and it would not be in the interest of substantial justice, in this regard placed reliance on the judgments passed in the case of Regl. Provident Fund Commr. v. Hooghly Mills Co. Ltd. & Ors., (2012) 2 SCC 489 at page 499, Krishan Lal v. Food Corporation of India & Ors., (2012) 4 SCC 786 at page 792, Durga Enterprises (P) Ltd. and another v. Principal Secy. Govt. of U.P. & Ors., (2004) 13 SCC 665 at page 665 and Bal Krishna Agarwal (Dr.) v. State of U.P. & Ors., (1995) 1 SCC 614.

(v) Further stated that it is well settled principle of law that availability of alternative remedy is not an absolute bar for granting relief in exercise of power under Article 226 of the Constitution of India. The restriction to remedy under Article 226 of the Constitution on the ground of alternate remedy is a self imposed restriction. In this regard reliance has been placed on the judgments passed in the cases of Ram and Shyam Co. v. State of Haryana & Ors., (1985) 3 SCC 267 at page 274 and Rajasthan SEB v. Union of India & Ors., (2008) 5 SCC 632 at page 633.

Heard counsel for the parties and perused the record.

We have also taken note of relevant statutory provisions referred by the counsel for the parties i.e. Act of 2002, Rules, 2002 and Act of 1882.

During the course of arguments, for the purposes clarification of facts and issues involved in the case, this Court on 18.09.2019 framed following questions:-

“(a) Whether the action on the part of the petitioner to put the auction of the property in question, which was mortgaged by the opposite party no.2/UPTRON Indian Ltd. as security while taking the loan, which was leased out and lease deed was executed in its favour by Lucknow Municipal Corporation, in view of the provisions of Section 105 read with 108 (J) and other relevant provisions of Transfer of Property Act, 1882, is correct or not ?

(b) Whether the public notice dated 22.01.2013 issued by the petitioner inviting bids for sale of the mortgaged property including the property in question (Annexure No.15 to the writ petition) is in accordance with law or not ?

(c) If the Lucknow Municipal Corporation has cancelled the original lease deed executed by it in favour of opposite party no.2/UPTRON India Ltd., then after expiry of the lease deed, the same can be extended by this Court while exercising the power under Article 226 of the Constitution of India.”

After the above on 11.12.2019, this Court again framed the following questions:-

“(a) Whether the demand notice issued by the IFCI being the secured creditor of UPTRON under section 13 (2) of SARFAESI Act and auction process held for recovery of the amount towards outstanding dues of IFCI, is in accordance with law or not ?

(b) Whether the land in issue can be auctioned treating the UPTRON as owner of the property in question and only the lease hold rights can be auctioned as the Lucknow Nagar Nigam is the original owner of the property in question.

(c)Whether cancellation of lease by Lucknow Nagar Nigam is justified.”

After conclusion of arguments, this Court feels that following questions are required to be considered in the matter in issue.

(i) Whether the writ petition no.2397 (MB) of 2013 filed by L.N.N. challenging the auction proceedings initiated and carried out by IFCI Ltd. in furtherance to recover the due amount from the Uptron India Ltd. (lessee of L.N.N.), which became due on account of default in payment of financial assistance provided by IFCI Ltd., is entertainable and maintainable before this Court or the L.N.N. should be relegated to avail the remedy available under Section 17 of the Act of 2002.

(ii)Whether the determination of lease by alleged order/notice dated 20.03.2013 by L.N.N. is just and proper.

(iii) Whether auction proceedings in relation to the property/land in issue, which belongs to L.N.N. and leased out to Uptron India Ltd., carried out by the IFCI Ltd. for recovery of outstanding dues/debt of Uptron India Ltd. under the provisions of the Act of 2002 and Rules 2002 is sustainable in the eye of law.

(iv) Whether the mortgagee IFCI Ltd. for the purposes of recovery of dues was empowered to sell the property/land in issue or was empowered to sell only lease hold rights available to the Uptron India Ltd. under the lease deed.

(v) Whether in the facts of the case, a direction can be issued to lessor to renew the lease.

(vi)Whether M/s. Shalimar is entitled to refund of 25% of bid amount with interest w.e.f. the date of passing of interim order dated 27.05.2013 in the Writ Petition No.2397 (MB) of 2013.

First, we would like to consider the issue of maintainability of the writ petition and in this regard, we feel it appropriate to reproduce Section 2(f), Section 13 and Section 17 of the Act of 2002.

“Section 2 (f) ” borrower” means any person who has been granted financial assistance by any bank or financial institution or who has given any guarantee or created any mortgage or pledge as security for the financial assistance granted by any bank or financial institution and includes a person who becomes borrower of a (asset reconstruction company) consequent upon acquisition by it of any rights or interest of any bank or financial institution in relation to such financial assistance (or who has raised funds through issue of debt securities).

Section 13. Enforcement of security interest.-

“(1) Notwithstanding anything contained in section 69 or section 69A of the Transfer of Property Act, 1882 (4 of 1882), any security interest created in favour of any secured creditor may be enforced, without the intervention of the court or tribunal, by such creditor in accordance with the provisions of this Act.

(2) Where any borrower, who is under a liability to a secured creditor under a security agreement, makes any default in repayment of secured debt or any installment thereof, and his account in respect of such debt is classified by the secured creditor as non-performing asset, then, the secured creditor may require the borrower by notice in writing to discharge in full his liabilities to the secured creditor within sixty days from the date of notice failing which the secured creditor shall be entitled to exercise all or any of the rights under sub- section (4).

[Provided that :

(i) the requirement of classification of secured debt as non-performing asset under this sub-section shall not apply to a borrower who has raised funds through issue of debt securities; and

(ii) in the event of default, the debenture trustee shall be entitled to enforce security interest in the same manner as provided under this section with such modifications as may be necessary and in accordance with the terms and conditions of security documents executed in favour of the debenture trustee;]

(3) The notice referred to in sub-section (2) shall give details of the amount payable by the borrower and the secured assets intended to be enforced by the secured creditor in the event of non- payment of secured debts by the borrower. [(3A) if, on receipt of the notice under sub-section 92), the borrower makes any representation or raises any objection, the secured creditor shall consider such representation or objection and if the secured creditor comes to the conclusion that such representation or objection is not acceptable or tenable, he shall communicate [within fifteen days] of receipt of such representation or objection the reasons for non-acceptance of the representation or objection to the borrower.

Provided that the reasons so communicated or the likely action of the secured creditor at the stage of communication of reasons shall not confer any right upon the borrower to prefer an application to the Debts Recovery Tribunal under Section 17 or the Court of District Judge under Section 17A.

(4) In case the borrower fails to discharge his liability in full within the period specified in sub- section (2), the secured creditor may take recourse to one or more of the following measures to recover his secured debt, namely:-

(a) take possession of the secured assets of the borrower including the right to transfer by way of lease, assignment or sale for realising the secured asset;

(b) take over the management of the business of the borrower including the right to transfer by way of lease, assignment or sale for realising the secured asset;

Provided that the right to transfer by way of lease, assignment or sale shall be exercised only where the substantial part of the business of the borrower is held as security for the debt:

Provided further that where the management of whole, of the business or part of the business is severable, the secured creditor shall take over the management of such business of the borrower which is relatable to the security or the debt;

(c) appoint any person (hereafter referred to as the manager), to manage the secured assets the possession of which has been taken over by the secured creditor;

(d) require at any time by notice in writing, any person who has acquired any of the secured assets from the borrower and from whom any money is due or may become due to the borrower, to pay the secured creditor, so much of the money as is sufficient to pay the secured debt.

(5) Any payment made by any person referred to in clause (d) of sub- section (4) to the secured creditor shall give such person a valid discharge as if he has made payment to the borrower.

[(5A) Where the sale of an immovable property, for which a reserve price has been specified, has been postponed for want of a bid of an amount not less than such reserve price, it shall be lawful for any officer of the secured creditor, if so authorized by the secured creditor in this behalf, to bid for the immovable property on behalf of the secured creditor at any subsequent sale.]

[(5B) Where the secured creditor, referred to in sub-section (5A), is declared to be the purchaser of the immovable property at any subsequent sale, the amount of the purchase price shall be adjusted towards the amount of the claim of the secured creditor for which the auction of enforcement of security interest is taken by the secured creditor, under sub-section (4) of section 13.]

[5C) The provisions of section 9 of the Banking Regulation Act, 1949 (10 of 1949) shall, as far as may be, apply to the immovable property acquired by secured creditor under sub-section (5A).]

(6) Any transfer of secured asset after taking possession thereof or take over of management under sub- section (4), by the secured creditor or by the manager on behalf of the secured creditors shall vest in the transferee all rights in, or in relation to, the secured asset transferred as if the transfer had been made by the owner of such secured asset.

(7) Where any action has been taken against a borrower under the provisions of sub- section (4), all costs, charges and expenses which, in the opinion of the secured creditor, have been properly incurred by him or any expenses incidental thereto, shall be recoverable from the borrower and the money which is received by the secured creditor shall, in the absence of any contract to the contrary, be held by him in trust, to be applied, firstly, in payment of such costs, charges and expenses and secondly, in discharge of the dues of the secured creditor and the residue of the money so received shall be paid to the person entitled thereto in accordance with his rights and interests.

(8) where the amount of dues of the secured creditor together with all costs, charges and expenses incurred by him is tendered to the secured creditor at any time before the date of publication of notice for public auction or inviting quotations or tender from public or private treaty for transfer by way of lease, assignment or sale of the secured assets,-

(i) the secured assets shall not be transferred by way of lease, assignment or sale by the secured creditor; and

(ii) in case, any step has been taken by the secured creditor for transfer by way of lease or assignment or sale of the assets before tendering of such amount under this sub-section, no further step shall be taken by such secured creditor for transfer by way of lease or assignment or sale of such secured assets.]

(9) [Subject to the provisions of the Insolvency and Bankruptcy Code, 2016, in the case of financing of a financial asset by more than one secured creditors or joint financing of a financial asset by secured creditors, no secured creditor shall be entitled to exercise any or all of the rights conferred on him under or pursuant to sub- section (4) unless exercise of such right is agreed upon by the secured creditors representing not less than (sixty percent) in value of the amount outstanding as on a record date and such action shall be binding on all the secured creditors:

Provided that in the case of a company in liquidation, the amount realised from the sale of secured assets shall be distributed in accordance with the provisions of section 529A of the Companies Act, 1956 (1 of 1956 ):

Provided further that in the case of a company being wound up on or after the commencement of this Act, the secured creditor of such company, who opts to realise his security instead of relinquishing his security and proving his debt under proviso to sub-section (1) of section 529 of the Companies Act, 1956 (1 of 1956 ), may retain the sale proceeds of his secured assets after depositing the workmen’ s dues with the liquidator in accordance with the provisions of section 529A of that Act:

Provided also that liquidator referred to in the second proviso shall intimate the secured creditor the workmen’ s dues in accordance with the provisions of section 529A of the Companies Act, 1956 (1 of 1956 ) and in case such workmen’ s dues cannot be ascertained, the liquidator shall intimate the estimated amount of workmen’ s dues under that section to the secured creditor and in such case the secured creditor may retain the sale proceeds of the secured assets after depositing the amount of such estimated dues with the liquidator:

Provided also that in case the secured creditor deposits the estimated amount of workmen’ s dues, such creditor shall be liable to pay the balance of the workmen’ s dues or entitled to receive the excess amount, if any, deposited by the secured creditor with the liquidator:

Provided also that the secured creditor shall furnish an undertaking to the liquidator to pay the balance of the workmen’s dues, if any.

Explanation.- For the purposes of this sub- section,-

(a) “record date” means the date agreed upon by the secured creditors representing not less than [sixty percent] in value of the amount outstanding on such date;

(b) “amount outstanding” shall include principal, interest and any other dues payable by the borrower to the secured creditor in respect of secured asset as per the books of account of the secured creditor.

(10) Where dues of the secured creditor are not fully satisfied with the sale proceeds of the secured assets, the secured creditor may file an application in the form and manner as may be prescribed to the Debts Recovery Tribunal having jurisdiction or a competent court, as the case may be, for recovery of the balance amount from the borrower.

(11) Without prejudice to the rights conferred on the secured creditor under or by this section, secured creditor shall be entitled to proceed against the guarantors or sell the pledged assets without first taking any of the measured specifies in clause (a) to (d) of sub- section (4) in relation to the secured assets under this Act.

(12) The rights of a secured creditor under this Act may be exercised by one or more of his officers authorised in this behalf in such manner as may be prescribed.

(13) No borrower shall, after receipt of notice referred to in sub- section (2), transfer by way of sale, lease or otherwise (other than in the ordinary course of his business) any of his secured assets referred to in the notice, without prior written consent of the secured creditor.

Section 17. Application against measures to recover secured debts.–

“(1) Any person (including borrower), aggrieved by any of the measures referred to in sub-section (4) of section 13 taken by the secured creditor or his authorised officer under this Chapter, [may make an application along with such fee, as may be prescribed] to the Debts Recovery Tribunal having jurisdiction in the matter within forty-five days from the date on                                                                                                  

[Explanation.–For the removal of doubts it is hereby declared that the communication of the reasons to the borrower by the secured creditor for not having accepted his representation or objection or the likely action of the secured creditor at the stage of communication of reasons to the borrower shall not entitle the person (including borrower) to make an application to the Debts Recovery Tribunal under sub‑section (1) of section 17.]

[(1A) An application under sub-section (1) shall be filed before the Debts Recovery Tribunal within the local limits of whose jurisdiction-

(a) the cause of action, wholly or in part, arises;

(b) where the secured asset is located; or

(c) the branch or any other office of a bank or financial institution is maintaining an account in which debt claimed is outstanding for the time being.]

[(2) The Debts Recovery Tribunal shall consider whether any of the measures referred to in sub‑section (4) of section 13 taken by the secured creditor for enforcement of security are in accordance with the provisions of this Act and the rules made thereunder.

(3) If, the Debts Recovery Tribunal, after examining the facts and circumstances of the case and evidence produced by the parties, comes to the conclusion that any of the measures referred to in sub‑section (4) of section 13, taken by the secured creditor are not in accordance with the provisions of this Act and the rules made thereunder, and require restoration of the management or restoration of possession of the secured assets to the borrower or other aggrieved person, it may by order,-

(i) declare the recourse to any one or more measures referred to in sub-section (4) of section 13 taken by the secured assets as invalid and

(b) restore the possession of the secured assets or management of secured assets to the borrower or such other aggrieved person, who has made an application under sub-section (1), as the case may be; and

(c) pass such other direction as it may consider appropriate and necessary in relation to any of the recourse taken by the secured creditor under sub‑section (4) of section 13.

(4) If, the Debts Recovery Tribunal declares the recourse taken by a secured creditor under sub-section (4) of section 13, is in accordance with the provisions of this Act and the rules made thereunder, then, notwithstanding anything contained in any other law for the time being in force, the secured creditor shall be entitled to take recourse to one or more of the measures specified under sub‑section (4) of section l3 to recover his secured debt.

[(4A) Where-

(i) any person, in an application under sub-section (1), claims any tenancy or leasehold rights upon the secured asset, the Debt Recovery Tribunal, after examining the facts of the case and evidence produced by the parties in relation to such claims shall, for the purposes of enforcement of security interest, have the jurisdiction to examine whether lease or tenancy-

(a) has expired or stood determined; or

(b) is contrary to section 65A of the Transfer of Property Act, 1882 (4 of 1882); or

(c) is contrary to terms of mortgage; or

(d) is created after the issuance of notice of default and demand by the Bank under sub-section (2) of section 13 of the Act; and

(ii) the Debt Recovery Tribunal is satisfied that tenancy right or leasehold rights claimed in secured asset falls under the sub-clause (a) or sub-clause (b) or sub-clause(c) or sub-clause (d) of clause (i), then notwithstanding anything to the contrary contained in any other law for the time being in force, the Debt Recovery Tribunal may pass such order as it deems fit in accordance with the provisions of this Act.]

(5) Any application made under sub-section (1) shall be dealt with by the Debts Recovery Tribunal as expeditiously as possible and disposed of within sixty days from the date of such application:

Provided that the Debts Recovery Tribunal may, from time to time, extend the said period for reasons to be recorded in writing, so, however, that the total period of pendency of the application with the Debts Recovery Tribunal, shall not exceed four months from the date of making of such application made under sub‑section (1).

(6) If the application is not disposed of by the Debts Recovery Tribunal within the period of four months as specified in sub-section (5), any party to the application may make an application, in such form as may be prescribed, to the Appellate Tribunal for directing the Debts Recovery Tribunal for expeditious disposal of the application pending before the Debts Recovery Tribunal and the Appellate Tribunal may, on such application, make an order for expeditious disposal of the pending application by the Debts Recovery Tribunal.

(7) Save as otherwise provided in this Act, the Debts Recovery Tribunal shall, as far as may be, dispose of application in accordance with the provisions of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (51 of 1993) and the rules made thereunder.]

Section 17 of the Act of 2002 provides remedy of appeal before DRT to any person (including borrower), if he is aggrieved by any of the measures referred to in Sub-Section 4 of the Section 13 taken by the secured creditor or his authorized officer.

Section 13 of the Act, 2002, which starts from non-obstante clause, says that notwithstanding anything contained in Section 69 or Section 69-A of the Act of 1882, any security interest created in favour of any secured creditor be enforced, without the intervention of the Court or Tribunal, by such creditor in accordance with the provisions of the Act. As per Sub-Section (2) of Section 13 if the account/debt is classified by the secured creditor as NPA on account of default of repayment of secured debt or any installment thereof then the secured creditor may require the “borrower” by notice in writing to discharge in full his liabilities within 60 days from the date of notice failing which the secured creditor shall be entitled to exercise all or any of the rights under Sub-Section (4).

Sub-Section 4 of Section 13 of the Act, 2002 provides measures to recover the secured debt from the “borrower”, in case the “borrower” fails to discharge his liabilities in full within the period specified in Sub-Section (2). Sub-section 4 (d) of Section 13 of the Act of 2002 empowers the secured creditors to call upon “any person” who has acquired any of the secured assets from the borrower and from whom any money is due or may become due to the borrower, to pay the secured creditor, so much of the money as is sufficient to pay the secured debt.

As per Section 2(f) of the Act of 2002 expression “borrower” means a person who has been granted financial assistance by the Bank or Financial Institution or who has given any guarantee or created any mortgage or pledge as security for the financial assistance granted by any Bank or Financial Institution and would also include a person who becomes borrower of a securitization company or reconstruction company consequent upon acquisition by it of any rights or interest of any Bank or financial institution in relation to such financial assistance.

Taking into account the scheme of the Act of 2002 and above quoted provision, in our view the expression “borrower” would also cover any person or institution who claims any right in the secured asset as legal heir/successor/representative/assignee/attorney of “borrower” or “guarantor” and would also cover “any person” who by virtue of lawful agreement enters into the shoes of “borrower” or “guarantor”. Expression “borrower” would also cover any person who is covered under Section 13 (4) (d) of the Act of 2002. As such, a person who is not in the category, as stated, would not be considered as “borrower”.

In the instant case, in our view, in the light of the observation made hereinabove, the L.N.N. would not come within the purview of expression “borrower”.

Reverting to Section 13 and 17 of the Act of 2002, we would like to observe, in the light of aforesaid, that the provisions of Section 13 would apply to the “borrower” and “any persons” who is covered under Section 13 (4) (d) of the Act of 2002 and would not apply on a person who is neither covered under the expression “borrower” nor is person as mentioned in Section 13 (4) (d) of the Act of 2002. Thus, in our view the person who is covered under the expression ‘borrower’ and “a person” who is covered under Section 13 (4) (d) of the Act of 2002 being “a person” aggrieved by the measures adopted by the secured creditor under Section 13(4) of the Act of 2002 can approach to the appellate forum provided under Section 17 of the Act of 2002.

It would be appropriate to mention here that under Section 17 (3) of the Act of 2002, if the Debts Recovery Tribunal, after examining the facts and circumstances of the case and evidence produced by the parties, comes to the conclusion that any of the measures referred to in sub-section (4) of section 13, taken by the secured creditor are not in accordance with the provisions of this Act and the rules made thereunder, and require restoration of the management or restoration of possession of the secured assets to the borrower or other aggrieved person, it may by order, (i) declare the recourse to any one or more measures referred to in sub-section (4) of section 13 taken by the secured assets as invalid and (b) restore the possession of the secured assets or management of secured assets to the borrower.

Taking into consideration the provisions of Section 2 (f), 13 and 17 of the Act of 2002 and what we have observed herein above with respect to expression “borrower”, we are of the view that Section 17(1) can not be read independently and it has to be read in the context of Section 13 of the Act of 2002, which provides measures for recovery of debt from the “borrower” and “the person” covered under Section 13 (4) (d) of the Act of 2002, and accordingly we hold that the L.N.N. or any other person, who is neither covered under the expression “borrower”, as held by us, nor is a person covered under Section 13 (4) (d) of the Act of 2002 would not be covered under the expression “Any Person” mentioned under Section 17 of the Act of 2002.

For the reasons aforesaid, we are of the view that the remedy of appeal provided under Section 17 of the Act of 2002 is not available to L.N.N. as it is neither a borrower nor guarantor nor covered under the expression “borrower”, as observed by us hereinabove, nor is “a person” covered under Section 13 (4) (d) and accordingly, we hold that the Writ Petition No.2397 (MB) of 2013 filed by L.N.N., challenging the auction proceedings initiated and carried out by IFCI Ltd. under the provisions of Act of 2002, is maintainable before this Court. First question answered accordingly.

In addition to above, in the light of the judgments, on which reliance has been placed on the issue of maintainability of the writ petition, we would also like to observe that relegating a party to avail the alternative remedy after elapsed of six years would prolonged the litigation between the parties and it would be against the principle of substantial justice. It is also in view of the fact that the matter is ripe for hearing and subjust matter of both the writ petition is the same.

In view of the aforesaid, we reject the submissions made by Sri Asit Chaturvedi on the issue of maintainability of writ petition. With regard to question no.2, which relates to determination of lease, we have taken note of the following aspects:-

(i) The lease rent was demanded by the L.N.N. from Uptron India Ltd. vide letter dated 18.01.2002, as appears from notice dated 20.03.2013 (determining the lease) but the lease rent due from 1997-98 was not paid by the Uptron India Ltd.

(ii) The possession was taken by the IFCI Ltd. on 08.12.2012, as appears from the possession notice published on 09.12.2012, but the due lease rent even was not paid by the IFCI Ltd. till issuing of notice dated 20.03.2013. The IFCI Ltd. after determination of lease submitted the lease rent to the L.N.N. through demand draft vide letter dated 28.03.2013. In view of the Section 65(d) of the Act of 1882, after taking over the possession of the property/land in issue, it was the liability of the IFCI Ltd. to clear the entire dues towards lease rent. The IFCI Ltd. failed to discharge its obligation as provided under Section 65(d) of the Act of 1882 in reasonable time.

(iii) The term no. 2 of the lease deed says that lease rent of each year shall be paid up by the lessee to lessor by the demand draft latest by the end month of April each year in advance and failure in making of such payment of rent regularly in advance by the end of April each year rendered the lease terminable by lessor by three months notice.

(iv) The violation of term no.6 of the lease deed, one of the reasons of determination of lease, is undisputed, which is the effect that Uptron India Ltd. failed to provide the information regarding sub-letting the parts of property/land in issue as also that the parts of the property/land in issue was sub-letted to third parties in an unauthorized manner.

(v)Terms no.8 of the lease deed provides termination of lease even before the expiry of the term of lease i.e. 30 years by notice of three months only.

(vi) Section 108(j) of the Act of 2002 empowers the lessee to transfer whole or any part of his interest in the property, which includes mortgage or sub-lease. It further provides that lessee shall not, by reason only of such transfer ceased to be subject to any of the liabilities attaching to the lease and in view of the same the determination of lease by the L.N.N., after taking possession of the property/land in issue by the IFCI Ltd., in terms of the lease deed could not be held faulty.

(vii) The determination of lease is provided under Section 111 of the the Act of 1882. Section 111 does not provide that prior to determination of lease through notice determining the lease an opportunity should be provided to the lessee. Moreover, in the terms and conditions of the lease deed dated 23.05.1985, in issue, it has not been mentioned that prior to determining the lease an opportunity should be given to lessee. We have taken this issue of opportunity of hearing as the same was raised by the counsel for IFCI Ltd.

(viii) Under this question, we are also taking up the issue related to orders dated 06.04.2013 and 19.06.2013, challenged by IFCI Ltd. It is in view of the fact that no question has been framed in this regard as the orders dated 06.04.2013 and 19.06.2013 relate to determination/termination of lease. In regard to order dated 06.04.2013, whereby the L.N.N. refused to accept the lease rent tendered by the IFCI Ltd., we are of the view that to accept the lease rent or to refuse to accept the lease rent after determination of lease is the choice of the lessor and the lessee can not compel the lessor to accept the lease rent. It is in view of the provisions of the Act of 1882 particularly Section(s) 112, 113 and 116. Thus, we are of the view that the order dated 06.04.2013 there is no illegality in the order dated 06.04.2013. In regard to the order dated 19.06.2013, we have taken note of the fact that after determination of lease vide notice dated 20.03.2013 the Uptron India Ltd. represented its case before the L.N.N. vide letter/representation dated 23.03.2013, as appears from the order dated 19.06.2013, and the same was rejected by the impugned order dated 19.06.2013 on the basis of the fact that the tenancy has already been determined. In view of Section 111(h) of the Act of 1882 the tenancy would come to an end on the expiration of notice to determined the lease and in the instant case, on 20.03.2013 the L.N.N. informed the Uptron India Ltd. that the lease would come to end after expiration of three months on 19.06.2013 and the same has been narrated in the impugned order dated 19.06.2013. Thus, we are of the view that there is no illegality in the order dated 19.06.2013. For the reasons aforesaid, we are of the view that the orders dated 06.04.2013 and 19.06.2013 are not liable to be interfered.

Taking into account the above said facts, we are of the view that the L.N.N. determined the lease deed as per terms and conditions of the lease deed dated 23.05.1985 and Section 111 of the Act of 1882 and there is no violation of any term of the lease deed or statutory provisions. Question no. 2 answered accordingly.

With regard to question no.3, which relates to auction proceedings, in relation to property/land in issue, initiated and carried out for recovery of debt by the IFCI Ltd., we have considered the following aspect of the case:-

(i) Admittedly, the property/land in issue, of which the L.N.N. is the owner, was leased out to Uptron India Ltd. and in this regard the lease deed dated 03.05.1985 was executed and being so the Uptron India Ltd. was entitled to the rights available under the lease deed read with Section 108 of the Act of 1882.

(ii) The Uptron India Ltd. was never become the owner of the property/land in issue.

(iii) The Uptron India Ltd. by submitting the title deed as provided under Section 58(f) of the Act of 1882 with the IFCI Ltd. mortgaged the property/land in issue, leased out by L.N.N. It was for taking financial assistance.

(iv) The Uptron India Ltd. committed default and failed to repay the due amount to the IFCI Ltd.

(v) The IFCI Ltd. for recovery of debt took recourse of the provisions of the Act of 2002 particularly Section 13.

(vi) A perusal of the possession notice dated 08.12.2012, published in the newspaper on 09.12.2012, shows that in the said notice it has not been specifically mentioned that IFCI Ltd. has taken the possession of the property leased out by the L.N.N. to the Uptron India Ltd. and IFCI Ltd. steps into the shoes of Uptron India Ltd. as lessee of the L.N.N.. From the contents of the possession notice, an impression can be drawn by the public at large that the IFCI Ltd. steps in as owner of the property.

(vii) From the letter dated 11.12.2012 written by IFCI Ltd. to Uptron India Ltd., U.P. Electronic Corporation and the Principal Secretary, Telecommunication Government of U.P., relevant portion of which is quoted herein  under, also gives an impression that IFCI Ltd. was intending to sell the property/land in issue and not the lease hold rights.

(a) “We hereby give you notice under Rule 8(6) of the Security Interest (Enforcement) Rules, 2002 and in case the dues as mentioned in the possession notice are not cleared within the stipulated time off 30 days from the date of this letter, the secured creditor will proceed with the sale of the secured assets by invoking any modes as mentioned in Rule 8(5) of the Security Interest (Enforcement) Rules, 2002”.

8. The auction/public notice dated 22.01.2013 is already quoted above, however, for ready reference relevant part of the same is quoted below:-

(b) “”… Sealed bids are invited for purchase of movable and immovable assets of two units of M/s UPTRON INDIA LTD. (UIL) at Village Jugauli (earlier known as Ujariyan Gaon), Near Gomti Barrage, Gomti Nagar, Lucknow, Uttar Pradesh AND …..”

Further under particulars of Assets, the description of the property for sale has been mentioned as under :

“Unit 1: Gomti Nagar, Lucknow, Uttar Pradesh Village Jugauli (earlier known as UjariyanGaon) Near Gomti Barrage, Gomti Nagar, Lucknow, Uttar Pradesh admeasuring 8 Bigha, 2 Biswansi to gather with all the buildings and structures / erections constructed erected thereon, plant and machinery attached to the earth or permanently fastened to anything attached to the earth and fixtures and fittings erected / installed thereon and every part thereof.”

Para 5 of the auction/public notice again mentions reads as under:-

“The successful bidder shall deposit 25% of the amount of sale price after adjusting the EMD already deposited within two (2) working days of acceptance of the offer by the Authorized Officer failing which the EMD shall be forfeited. The balance 75% of the sale price is payable on or before 15th day of issue of letter of acceptance confirming the highest bid (Letter of Acceptance).”

(ix) A perusal of the auction notice dated 22.01.2013 would shows that in the same it has not been mentioned that the auction proceedings would be carried out by the IFCI Ltd. only with respect of lease hold rights.

(x) Section 108 (j) of the Act of 1882 provides that the lessee can only mortgage or sub-lease whole or any part of his interest in the property and any transferee of such interest or part may again transfer it and it further provides that the lessee shall not by reason only of such transfer cease to be subject to any of the liabilities attaching to the lease and in view of the same as well as in view of Maxim(s) “Nemo Dat Quod Non Habet” (no one can bestow or grant a greater right, or a better title than he has himself) and “Nemo Plus Juris Tribuit Quam Ipse Habet” (no one gives what he has not got) only lease hold rights could have been auctioned but otherwise impression appears from the possession notice as also from the auction notice, and accordingly in view of the same as also keeping in view the provisions of Rule 8(6) (a) of the Rules, 2002 the auction proceedings are not sustainable.

(xi) It would be relevant at this stage to refer the judgment of the Division Bench passed in the case of Rakesh Kumar Kaushal vs. State of U.P. & Others, 2019 (1) ADJ 689. In this case, the Division Bench of this Court after considering the Section 13,14 and 17 of the Act of 2002 and Rules 8 and 9 of the Rules, 2002, in facts of the case held that writ petition is maintainable and also held that the responsibility of bank does not get diluted by merely inserting a clause “as is where is and as is what is” and further held that secured creditor is under a mandate to disclose every aspect of the property to be auctioned under the provisions of Act of 2002 and Rules, 2002. The relevant paras are quoted below :

  1. The manner and procedure, in which the secured assets have to be disposed of, has been detailed in the Rules, 2002, and especially in Rule 8 and 9 of the said Rules. For ready reference Rule 8 and 9 are quoted below:-

“8. Sale of immovable secured assets.–

(1) Where the secured asset is an immovable property, the authorised officer shall take or cause to be taken possession, by delivering a possession notice prepared as nearly as possible in Appendix IV to these rules, to the borrower and by affixing the possession notice on the outer door or at such conspicuous place of the property.

(2) The possession notice as referred to in sub-rule (1) shall also be published in two leading newspapers, one in vernacular language having sufficient circulation in that locality, by the authorised officer.

(3) In the event of possession of immovable property is actually taken by the authorised officer, such property shall be kept in his own custody or in the custody of any person authorised or appointed by him, who shall take as much care of the property in his custody as a owner of ordinary prudence would, under the similar circumstances, take of such property.

(4) The authorised officer shall take steps for preservation and protection of secured assets and insure them, if necessary, till they are sold or otherwise disposed of.

(5) Before effecting sale of the immovable property referred to in sub-rule (1) of rule 9, the authorised officer shall obtain valuation of the property from an approved valuer and in consultation with the secured creditor, fix the reserve price of the property and may sell the whole or any part of such immovable secured asset by any of the following methods:–

(a)by obtaining quotations from the persons dealing with similar secured assets or otherwise interested in buying the such assets; or

(b) by inviting tenders from the public;

(c) by holding public auction; or

(d) by private treaty.

(6) The authorised officer shall serve to the borrower a notice of thirty days for sale of the immovable secured assets, under sub-rule (5): Provided that if the sale of such secured asset is being effected by either inviting tenders from the public or by holding public auction, the secured creditor shall cause a public notice in two leading newspapers one in vernacular language having sufficient circulation in the locality by setting out the terms of sale, which shall include,–

(a) The description of the immovable property to be sold, including the details of the encumbrances known to the secured creditor;

(b) the secured debt for recovery of which the property is to be sold;

(c) reserve price, below which the property may not be sold;

(d) time and place of public auction or the time after which sale by any other mode shall be completed; (e)depositing earnest money as may be stipulated by the secured creditor;

(f) any other thing which the authorised officer considers it material for a purchaser to know in order to judge the nature and value of the property.

(7) Every notice of sale shall be affixed on a conspicuous part of the immovable property and may, if the authorised officer deems if fit, put on the web-site of the secured creditor on the Internet.

(8) Sale by any method other than public auction or public tender, shall be on such terms as may be settled between the parties in writing.

(9) Time of sale, issues of sale certificate and delivery of possession, etc.–

(1) No sale of immovable property under these rules shall take place before the expiry of thirty days from the date on which the public notice of sale is published in newspapers as referred to in the proviso to sub-rule (6) or notice of sale has been served to the borrower.

(2) The sale shall be confirmed in favour of the purchaser who has offered the highest sale price in his bid or tender or quotation or offer to the authorised officer and shall be subject to confirmation by the secured creditor: Provided that no sale under this rule shall be confirmed, if the amount offered by sale price is less than the reserve price, specified under sub-rule (5) of rule 9: Provided further that if the authorised officer fails to obtain a price higher than the reserve price, he may, with the consent of the borrower and the secured creditor effect the sale at such price.

(3) On every sale of immovable property, the purchaser shall immediately pay a deposit of twenty-five per cent. of the amount of the sale price, to the authorised officer conducting the sale and in default of such deposit, the property shall forthwith be sold again.

(4) The balance amount of purchase price payable shall be paid by the purchaser to the authorised officer on or before the fifteenth day of confirmation of sale of the immovable property or such extended period as may be agreed upon in writing between the parties.

(5) In default of payment within the period mentioned in sub-rule (4), the deposit shall be forfeited and the property shall be resold and the defaulting purchaser shall forfeit all claim to the property or to any part of the sum for which it may be subsequently sold.

(6) On confirmation of sale by the secured creditor and if the terms of payment have been complied with, the authorised officer exercising the power of sale shall issue a certificate of sale of the immovable property in favour of the purchaser in the form given in Appendix V to these rules.

(7) Where the immovable property sold is subject to any encumbrances, the authorised officer may, if the thinks fit, allow the purchaser to deposit with him the money required to discharge the encumbrances and any interest due thereon together with such additional amount that may be sufficient to meet the contingencies or further cost, expenses and interest as may be determined by him.

(8) On such deposit of money for discharge of the encumbrances, the authorised officer may issue or cause the purchaser to issue notices to the persons interested in or entitled to the money deposited with him and take steps to make the payment accordingly.

(9) The authorised officer shall deliver the property to the purchaser free from encumbrances known to the secured creditor on deposit of money as specified in sub-rule (7) above.

(10) The certificate of sale issued under sub-rule (6) shall specifically mention that whether the purchaser has purchased the immovable secured asset free from any encumbrances known to the secured creditor or not.”

22. The aforesaid provisions enjoins that Authorised Officer shall take or cause to be taken possession, by delivering a possession notice, and the same should also be published within 7 days in two leading newspapers, and the notice is also to be served upon the borrower as per the methods prescribed therein.

23. Sub-rule (3) of Rule 8 provides for possession of immovable property if it is actually taken by the Authorised Officer, who shall keep the same in his own custody or in the custody of any other person appointed by him, and it shall be his duty to take steps for preservation and protection of the secured interest. The rules further provides for obtaining the valuation of the property by the approved valuer and the secured asset also to fix reserve price of property by methods provided for in sub rule (5) by obtaining quotations, tenders, public auctions or by private treaty, and in case the secured asset is being sold by inviting tenders or holding public auction the secured creditor shall have the notice published in two leading newspapers having sufficient circulation clearly stating the terms for sale including description of the immovable property to be sold, the detail of encumbrances known to the secured creditor, the reserve price and place of public auction, deposit of earnest money, and any other thing which the Authorised Officer considers it material for a purchaser to know in order to judge the nature and value of the property.

24. Rule 9 of the aforesaid Rules provides for time of sale, issue of sale certificate and delivery of possession apart from other mandatory guidelines. Further, sub-rule (9) of Rule 9 provides that the Authorised Officer shall deliver the property to the purchaser free from encumbrances.

25. As far as the present case is concerned, the petitioner is not aggrieved by any of the measures taken by the respondent bank, rather he is aggrieved by inaction in not handing over the possession of the auction property and, therefore, there is no occasion for the petitioner to approach the Debt Recovery Tribunal challenging any action of the Bank taken under subsection (4) of section 13.Under sub-section (b), the Debt Recovery Tribunal can only restore the possession. It is admitted case of the parties that the petitioner was never in possession, inasmuch as he is only an auction-purchaser seeking possession of the auctioned property being the successful bidder.

26. The entire gamut of remedies provided under Section 17 of the SARFAESI Act is to oversee that the statutory provisions of Section 13(4) read with Rule 8 and 9 of the Rules, 2002 are adhered to, and the Debt Recovery Tribunal would immediately step in, whenever it finds any infraction by the secured creditor.

27. The respondent Bank in paragraph 8 of its short counter affidavit has stated that they have moved an application under Section 14 of the SARFAESI Act on 08/05/2017, which was supposed to be disposed of by 7th June 2017, but the District Magistrate has failed to pass the order even till date i.e. 26.11.2018 despite the case being fixed on fifty nine occasions. It is for this reason that the physical possession could not be handed over to the petitioner and the Bank is eventually pursuing the matter before the District Magistrate Sultanpur. They have also stated that the Field General Manager of the Bank has also written a letter dated 09/08/2018 to the Director General, Directorate of Institutional Finance, Uttar Pradesh for early disposal of various application moved by the Bank under Section 14 of the SARFAESI Act where the property in question is also involved.

28.That the respondent bank in support of its contention with regard to the alternative remedy has placed before us judgement of the Hon’ble Supreme Court in the case of Agarwal Tracom Pvt Ltd vs Punjab National Bank and Others, 2017 AIR (SC) 5562.

29. That in the aforesaid judgment there was a dispute between the bank and the auction purchaser whereby the bank had forfeited the deposit money as the appellant therein had failed to pay regular instalments towards sale money in terms of memorandum of understanding. The Hon’ble Supreme Court in paragraph number 31 of the said judgement have stated that the auction purchaser is one such person who is aggrieved by the action of the secured creditor in forfeiting their money, and found that the action of secured creditor in forfeiting the deposit made by the auction purchaser is part of the measures taken by the secured creditor under section 13 (4) and, therefore, the High Court was justified in dismissing the writ petition on the ground of availability of alternate remedy.

30. So far as the present case is concerned, there is no dispute between the auction-purchaser and the Bank with regard to any of the measures under section 13 (4) of the SARFAESI Act read with rule 8 and 9 of the Rules, 2002. Here, the petitioner, who is a auction-purchaser has deposited the entire amount of bid and the Bank has issued a sale certificate dated 15/07/2017, wherein it has been recorded that “the undersigned acknowledges the receipt of the sale price of Rs. 60 lakhs in full and handed over the delivery in possession of the schedule property”. The said sale certificate issued under rule 9(6) has been signed by Authorised Officer, Allahabad bank. The Bank has stated that though the sale certificate has not been received by the petitioner, but the Bank is ready to hand over the sale certificate to the petitioner. In view of the above the judgment of the Hon’ble apex court in the case of Agarwal Tracom Pvt Ltd vs Punjab National Bank and Others is clearly distinguishable on facts, and in the peculiar set of facts and circumstances of this case, the petitioner does not have any efficacious alternative remedy under the SARFAESI Act.

31. Putting it differently, here the petitioner is not aggrieved by the action of the secured creditor nor any of the reliefs to which the DRT is empowered to grant under this section, would be of any use to redress the grievance of the petitioner, and therefore the plea of alternate remedy raised by the respondent bank is misconceived and is rejected.

32. It may be clarified here that the District Magistrate has not passed any order in excise of powers conferred upon him under Section 14 of the SARFAESI Act, despite 59 dates having been fixed in this regard, and we, therefore, record our strong disapproval in the manner in which the District Magistrate has not taken any action on the application of the bank. It has further been brought out on record that a list of 47 properties is being enclosed wherein application under Section 14 of SARFAESI Act have been moved before the various District Magistrates in Uttar Pradesh, which are pending for more than 60 days without any order. The inaction on part of the District Magistrates will have a detrimental effect in securing the possession of the properties and therefore effective mechanism must be taken by respondent no.1 in this regard.

33. The 2nd issue which arises for our consideration is with regard to the clause contained in the advertisement for e-auction, which provides that the property was being sold on “as is where is Basis, as it is where it is Basis and whatever there is”, which according to the Bank, dis-entitles the petitioner from seeking any claim against the respondent bank.

34. In this regard, we would like to mention that relevant provisions of the SARFAESI Act and the Security Interest (Enforcement) Rules have already been quoted wherein sub rule (5) of Rule 8 of the Rules, 2002, provides for publication of the notice into leading newspapers which shall include details as set forth in sub-clause (a) to (f). Sub-clause 6 (f) of Rule 8 provides for publishing of “any other thing which the authorised officer considers it material for a purchaser to know in order to judge the nature and value of the property”. In these circumstance, a duty is cast upon the Authorized Officer to publish all details with regard to the property, whether the property has any encumbrances or not, whether the property is a vacant property or is tenanted, whether there is any other charge on the said property, and all other details which is material for the purchaser to know in order to judge the nature and value of the property.

35. In the present case, the advertisement does not disclose any such detail about the property from which it can be easily inferred that the same is in possession of some third-party, or that there is a litigation pending or for some material reason, it would be difficult to obtain the vacant possession of the property. A joint reading of section 13 (4) of the SARFAESI Act and Rule 9 (clauses 9 and 10) would clearly show that the Authorised Officer, shall deliver the property to the purchaser, free from all encumbrances, on deposit of money as specified in sub rule 2. However, the aforesaid rule does not prevent the bank from bringing the property for auction, when there are encumbrances attached to the property. Merely, by including a clause “as is where is basis or as is what is’ condition stated in the sale notice does not obviate the bank from disclosing the encumbrances attached to the property, brought for auction.

36. The bank cannot shrug off its responsibility in disclosing the encumbrances in the advertisement when it is known that transparency is the essence of good governance and fair play. Concept of transparency is is becoming a core value in democratic and participative governance. The public demand for transparency is getting stronger in good governance. Transparency is built on the basis of free flow of information and the whole process of government, institutions and information needs to be accessible to the interested parties, as well as the information provided should be sufficient to be understood.

37. The undisputed fact in the case at hand is that when notice under section 13(4) of the SARFAESI Act was issued by the Bank, the physical possession of the mortgaged property was not taken. There is a duty cast upon the Bank under clause (9) of rule 9 of the Rules, 2002 to deliver the property to the purchaser free from encumbrances known to the secured creditor on deposit of money as specified in sub rule (7). In the writ petition it has rightly been asserted by the petitioner that he was shocked when he came to know that there were some defects in title of the aforesaid property and the same is defective, which was not disclosed by the Bank at any stage, rather it suppressed the material information.

38. It may be noted that when a person participates in auction to purchase a property, he relies on the auction notice and the documents shown to him by the secured creditor, as he is under a bona fide belief that any material aspect of the property must have been disclosed by the secured creditor inasmuch as the secured creditor is under a mandate to disclose any aspect which the Authorised Officer considers it material for the purchaser to know in order to judge the nature and value of the property as mandated under rule 8(6). The respondent bank has failed to disclose any such circumstance or material fact from which it could be gathered that the physical possession of the property would be difficult or near impossible. In the aforesaid circumstances the respondent Bank cannot take umbrage of the clause “as is where is” “as it is where it is” in order to deny physical possession of the auction property to the petitioner and to non-suit him. In other words, the respondent cannot shirk away the statutory responsibility to deliver possession of the property free from all encumbrances, to the person who was paid full consideration for the said property.

39. Accepting the contention of the Bank would be absolutely inequitable, wholly arbitrary and may on the contrary permit withholding of necessary information by the secured creditor in relation to its valuation in order to seek a higher price of the property. If such an advantage is permitted, it would directly affect the credibility of the entire process and the object of the SARFAESI Act, which is sought to be achieved.

40. The third-party, who comes forward to purchase the secured asset must have the confidence that he would get the property at the earliest and in case, considerable long time is consumed in transferring the property not only it would defeat the purpose of the Act but would also cause colossal loss and injury to a auction-purchaser, like the petitioner.

41. In light of the above, we are of the considered opinion that by merely inserting a clause “as is where is” and “as is what is” the responsibility of the Bank does not get diluted nor it can in any manner assist the bank in denying physical possession to the auction purchaser.

42. Needless to say, that when the Bank has information that there is certain charge on the property, or the property is already encumbered, etc. it can be made known when a notice is published under Rule 8(6) and it would not be necessary for the Bank in such a situation to hand over the physical possession of the property. But in the present case, the Bank has not given any details of any encumbrances, or charge on the property or any such fact which would deny the auction purchaser from the physical possession of the property, and therefore, just by inserting a clause “as is where is”” as is what is” it would not dis-entitle the successful auction purchaser from claiming the physical possession of the secured asset after paying the bid price to the satisfaction of the secured creditor.”

Taking into consideration the above pointed out facts related to possession notice as also in the auction notice dated 22.01.2013 and the Rule 8(6) (a) of Rules, 2002 and the observation made by this Court in the case of Rakesh Kumar Kaushal (supra), we are of the view that the auction proceedings in relation to the property/land in issue carried out by the IFCI Ltd. are not sustainable. Question no. 3 answered accordingly.

Question no. 4 broadly relates to rights of the IFCI Ltd. in the property/land in issue. In this regard, Section 108(j) of the Act of 1882 is relevant, which empowers the lessee to transfer whole or any part of his interest in the property. It says that the lessee may transfer absolutely or by way of mortgage or sub-lease the whole or any part of his interest in the property and any transferee of such interest or part may again transfer it. In the instant case, the property/land in issue was mortgaged by the lessee-Uptron India Ltd. (Mortgager) with IFCI Ltd. (Mortgagee). By virtue of mortgage as also in view of Section 108(j) of the Act of 2002, the IFCI Ltd. entered into the shoes of lessee-Uptron India Ltd. Thus, after taking note of the aforesaid as well as the Maxim(s) “Nemo Dat Quod Non Habet” (no one can bestow or grant a greater right, or a better title than he has himself) and “Nemo Plus Juris Tribuit Quam Ipse Habet” (no one gives what he has not got), we hold that IFCI Ltd. was not having more than the rights which were available under the lease to Uptron India Ltd. Question no.4 answered accordingly.

Question no. 5 is that whether in the facts of the case a direction can be issued to the lessor to renew the lease. In this regard, we have considered the following aspects:-

(i)The lease is a contract between the lessor and lessee. The lessor must have the capacity and the right to grant a lease. As per Section 7 of the Act of 1882 every person competent to contract and entitled to transferable property, or authorized to dispose of transferable property not his own, is competent to transfer such property. Though a minor cannot, his guardian can grant a lease. The manager of a lunatic, the Karta of a joint Hindu family, can grant a lease. But one out of several co-sharers cannot grant a lease unless he is authorized by all the co-sharers to do so. A lease of immovable property, as per Section 105 of the Act of 1882, is a transfer of a right to enjoy of such property made for certain time, express or implied or in perpetuity. The transaction must be in consideration of a price paid or promised (premium, salami or nazrana). In consideration of money, share of crops, service or any other thing of value to be rendered periodically or on specified occasions to the transferor by the transferee (rent). The rights and liabilities of the parties to the lease would be governed by the terms and conditions settled between the parties.

(ii) In the instant case, there is a registered lease deed and accordingly the rights and liabilities of the parties to the lease would be governed by the terms and conditions settled between the parties to the deed.

(iii) It is open to the parties to fix the duration or period of the lease. Section 106 of the Act of 2002 provides that, in the absence of a contract or local law or usage to the contrary, a lease of immovable property for agricultural or manufacturing purposes shall be deemed to be a lease from year to year, and a lease for any other purpose shall be deemed to be a lease from month to month.

(iv) Sometimes a lease contains a renewal clause. In the instant case, the lease was provided for 30 years with two rights of renewal for the similar term of 30 years.

(v) As per term 9 of the e lease deed dated 23.05.1985, the lessee is under obligation to obtain the renewal from the lessor on the expiry of term of the lease.

(vi) A right of renewal should be exercised in writing.

(vii)The tenant not being in breach of terms of the lease is entitled for renewal of lease.

(viii)It appears from term 9 of the lease deed dated 23.05.1985 that right of renewal can be exercised during the term of the lease and not after determination of lease.

(ix) In the instant case, the lease was determined on 20.03.2013 and till that date the right of renewal was not exercised by lessee or any other person entered into the shoes of lessee.

(x) The term of the lease deed dated 23.05.1985 has already been expired on 23.05.2015.

In the facts of the case, as narrated herein above, we are of the view that no direction can be issued to the lessor-L.N.N. to renew the lease. Question no.5 is answered accordingly.

Question no.6 is to the effect that whether M/s. Shalimar is entitled to refund of 25% of bid amount with interest from the date of passing of order dated 27.05.2013. In this regard, we have considering the following aspects of the case.

(i) The bid, with respect to property/land in issue, submitted by M/s. Shalimar pursuant to auction notice dated 22.01.2013, published on 23.01.2013 in daily newspaper namely Dainik Jagran, was accepted by IFCI Ltd. and vide letter dated 01.03.2013 M/s. Shalimar was called upon to deposit 25% of the bid amount i.e. Rs.18,64,01,000/-, which was deposited by M/s. Shalimar.

(ii) On 19.03.2013 this Court passed the interim order, whereby restrained the opposite parties to the Writ Petition No.2397 (MB) of 2013 including IFCI Ltd. from confirming the sale of the property/land in issue.

(iii) Till today the sale of property in issue has not been confirmed in favour of M/s. Shalimar.

(iv) This Court on 27.05.2013 passed the interim order whereby directed the IFCI Ltd. to deposit the bid amount in the interest bearing account.

(vi) Rule 9 (6) and 9 (9) of the Rules, 2002 casts duty on the authorized officer of the Financial Institution to issue sale certificate on confirmation of sale and also to deliver the possession of the property to the purchaser free from all encumbrances known to the secured creditor on deposit of amount as specified in Sub-rule (7) of Rule 9 of Rules, 2002.

(vii) In the instant case, on account of interim order passed by this Court, neither sale was confirmed nor possession was delivered to M/s. Shalimar by the authorized officer. On account of the same M/s. Shalimar could not utilize the property/land in issue.

(viii) In the preceding paras we have already held that auction proceedings in relation to property/land in issue carried out by IFCI Ltd. are unsustainable and the lease, which was rightly determined and no direction to renew the lease can be issued.

Taking into account the aforesaid, we are of the view that M/s. Shalimar is entitled to refund of 25% of bid amount i.e. 18,64,01,000/- from IFCI Ltd with interest from the date of passing of interim order dated 27.05.2013.

For the foregoing reasons, the Writ Petition No.4517 (MB) of 2013 (IFCI Ltd. vs. Lucknow Municipal Corporation and others) is hereby dismissed and Writ Petition No.2397 (MB) of 2013 (Lucknow Nagar Nigam vs. State of U.P. and others) is allowed and the auction/sale proceedings carried out in relation to property/land in issue i.e. land measuring 2,17,936 sq. ft. land of Sullage Farm situated in Village-Jugauli (earlier Village-Ujariyaon) leased out to M/s Uptron Digital System Limited (M/s Uptron India Ltd.) by Lucknow Nagar Nigam through lease deed dated 23.05.1985 are hereby quashed. Consequence shall follow. Further, keeping in view the interim order dated 27.05.2013 passed in Writ Petition No.2397 (MB) of 2013 and the observations made by us that M/s. Shalimar Corporation Ltd. is entitled to refund of 25% of bid amount from IFCI Ltd. as also in the interest of substantial justice, we provide liberty to M/s. Shalimar Corporation Ltd. to represent its case before the IFCI Ltd. for refund of 25% of the bid amount with interest within two months from the date of receipt of a certified copy of this order and we hope and trust that the IFCI Ltd. would release the same keeping in view the observations made herein above expeditiously.

(Saurabh Lavania,J.)

(Anil Kumar,J.)

 

Order Dated: 29.04.2020

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