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M.T.V. Networks India Pvt. Ltd V/S Oriental Bank of Commerce and Another.

    Securitisation Appeal No. 115 of 2004

    Decided On, 31 May 2005

    At, Debts Recovery Tribunal Mumbai


    For Petitioner: H.M. Jagtiyani, Advocate., i/b., Ashwin Ankhad and Asso And For Respondents: Faisal Sayyed, Advocate., i/b., M.K. Ambalal and Co.

Judgment Text

1. This Securitisation Appeal (S.A.) under Section 17 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short 'SRFAESI Act') pertains to Flat No. 23, Second Floor, Chitrakoot Co-operative Housing Society Limited, Altamount Road, Mumbai-400026 owned by respondent No. 2. The appellant is aggrieved by the respondent No. 1's taking on 18.10.2004 symbolic possession under Section 13(4) of SRFAESI Act of the aforesaid flat. The respondent No. 1-secured creditor took possession on the Borrower's (respondent No. 2) failure to pay Rs. 531.48 crore as demanded by the Bank's notice dated 19.2.2003 under Section 13(2) of SARFAESI Act.

2. The grounds on which Appeal is filed are that the appellant is in occupation of the flat under Leave and Licence Agreement dated 26.2.2001 (registered on 5.11.2004) on monthly compensation of Rs. 25,000/-. The housing society had given no objection by letter dated 18.2.2001 for the Leave and Licence Agreement under said Leave and Licence Agreement for 22 months, the appellant had given security deposit of Rs. 1.25 crore. The agreement had a renewal clause for 11 months which also ended on 30.11.2003. Under the agreement, the respondent No. 2 had agreed to refund the aforesaid security deposit amount failing which the appellant was not only entitled to continue its occupation but also was entitled to interest @ 18% p.a. on the security deposit amount.

3. The appellant has contended that it was and is always ready to vacate the subject to its getting back the security deposit amount. Since, however, the respondent No. 2 has not given back and is not returning the security deposit amount, the appellant is entitled to continue possession, says it.

4. Vide reply in the nature of affidavit of Mr. Jayant Kakodkar (Exh. 12) the respondent has resisted the appellant's claim by claiming to be Mortgagee of the flat. Its case is that the mortgage is anterior in point of time (17.1.2001). In any case, the Leave and Licence Agreement has stood terminated by efflux of time. Even otherwise, no interest or even obligation qua the property was created by the Leave and Licence Agreement. The appellant's entitlement to the refund of security deposit is personal against respondent No. 2 and is not annexed to the property. The Appeal is sought to be dismissed on these grounds.

5. I have heard arguments of learned Counsel representing the rival parties. I have also gone through the affidavits and the Xerox copies of the documents on record.

6. The factual matrix which is not in controversy may not be recounted. The learned Counsel for the appellant has not questioned the mortgage of the flat by the respondent No. 2 in favour of predecessor of the respondent No. 1. It is also admitted that since even the extended period of Leave and Licence Agreement has come to an end by efflux of time, the right of possession on the basis of the agreement came to an end. Mr. Jagtiyani, learned Counsel representing the appellant has submitted that the appellant does not claim any statutory protection for continuation of possession of the flat. It must be stated to his credit that he has submitted that since his client's occupation was only permissive, the appellant does not have any statutory protection under the beneficial legislation. The only ground pressed into the service is founded on second para of Section 40 of Transfer of Property Act reproduced below for ready reference:

"40. Burden of obligation imposing restriction on use of land or of obligation annexed to ownership but not amounting to interest or easement.--Where..., or
Where a third person is entitled to the benefit of an obligation arising out of contract and annexed to the ownership of immovable property, but not amounting to an interest therein or easement thereon."

7. My attention is invited to the fact that at the time of Leave and Licence Agreement dated 26.2.2001, the appellant was not knowing about the Equitable Mortgage created by respondent No. 2 in the appellant's favour on 17.2.2001. On the other hand, the Bank came to know the Leave and Licence Agreement as is clear from the extract of the housing society's reservation in the meeting held on 18.7.2003 a copy of which is Exh. D to the S.A. It is stated that the Leave and Licence Agreement which is a contract did create an obligation not amounting to interest or easement. According to Mr. Jagtiyani, the case in hand squarely falls under Para No. 2 of Section 40 of Transfer of Property Act.

8. On consideration of the submissions advanced at the Bar and careful reading of the relevant provision I find myself in disagreement with the view taken by learned Counsel for the appellant. In my considered opinion, for application of second Para of Section 40 of Transfer of Property Act, the requirement is that the obligation (arising out of cont

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ract) should be annexed to the ownership of the immovable property. The words 'and annexed to the ownership of immovable property' have to be attached to the word 'obligation'. The obligation, arising from Leave and Licence Agreement cannot be said to be annexed to the ownership. Therefore, the provisions of Para No. 2 of Section 40 are in my considered opinion not attracted. With that conclusion, the appellant's edifice falls and the Appeal fails. Hence, following order: ORDER The Appeal is dismissed with no order as to costs.