M/s. National Laminate Corporation v. The Cosmos Co-operative Bank Ltd. & Anr.

M/s. National Laminate Corporation

…Appellant

…Respondent

Case No: Appeal No. 37/2022

Date of Judgement: 08/08/2023

Judges:

Mr Justice Ashok Menon, Chairperson

For Appellant: Mr. Rohit Gupta along with Mr. Alok Mishra, Advocate.

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Facts:

M/s. National Laminate Corporation, a partnership firm, filed an appeal against the order of the Debts Recovery Tribunal (DRT) dismissing its Securitization Application (S.A.) No. 119/2016. The subject property is situated at Glow Metal Compound, Safed Pool, Village Mohili, Sakinaka, Taluka Kurla, admeasuring about 2,299 square yards. M/s. National Laminate Corporation (appellant) claimed that its sole proprietor, Mr. Jayantilal L. Nisar, took the subject property on lease from M/s. Subhnen Ply Pvt. Ltd. (2nd respondent) on 01.09.2000 for an annual rent of ₹60,000, which was later enhanced to ₹1,20,000 after eighteen months through an unregistered lease deed. In 2008, the sole proprietorship was converted into a partnership firm, and Ms. Gunvantiben Nenshi Shah, wife of Mr. Nenshi L. Shah (director of the 2nd respondent company), was made a partner. The Cosmos Co-operative Bank Ltd. (1st respondent) had granted a loan to the 2nd respondent company and had a mortgage over the subject property, executed on 22.06.1998. The loan was classified as a Non-Performing Asset (NPA) on 31.03.2012, and the 1st respondent bank initiated proceedings under the Securitization and Reconstruction of Financial Assets and Enforcement of Securities Interest Act, 2002 (SARFAESI Act) to take possession of the secured assets, including the subject property. The appellant firm filed a suit (R.A.D. Suit No. 614/2014) before the Small Causes Court, Mumbai, seeking a declaration of its tenancy rights and an injunction against the 2nd respondent company. The 1st respondent bank also filed a case (No. 154/SA/2015) before the Chief Metropolitan Magistrate Court (C.M.M.), Mumbai, under Section 14 of the SARFAESI Act to take possession of the subject property. The C.M.M. ordered the Assistant Registrar to take possession of the property on 18.06.2015, which was challenged by the appellant in the Bombay High Court and the Supreme Court, leading to the order being set aside on 20.01.2016. However, the C.M.M. passed another order on 30.07.2016, deputing an Advocate Commissioner to take over possession of the property, leading the appellant to file S.A. No. 119/2016 before the DRT.

Arguments by the Appellant:

Arguments by the 1st Respondent (Cosmos Co-operative Bank Ltd.):

Cases Cited:

Vishal N. Kalsaria v. Bank of India and Ors. (2016) 3 SCC 762

Harshad Govardhan Sondagar vs. International Asset Reconstruction Company Ltd. (2014) 6 SCC 1

Hemraj Ratnakar Salian vs. HDFC Bank Ltd. 2021 SCC OnLine SC 611

Sections and Laws Referred:

Securitization and Reconstruction of Financial Assets and Enforcement of Securities Interest Act, 2002 (SARFAESI Act)

• • Section 13(2) (Demand notice)
  • Section 17(1) (Right to appeal)
  • Transfer of Property Act
    • • Maharashtra Rent Control Act
        • • Section 55 (Requirement for registration of tenancy agreements)

        Registration Act (Requirement for registration of leases)

        Stamp Act (Requirement for stamp duty on lease deeds)