Bombay High Court
Maharashtra Industrial Development … vs Union Bank Of India And Ors on 26 May, 2025
Author: A. S. Chandurkar
Bench: A.S. Chandurkar
RAMESHWAR
LAXMAN
DILWALE
2025:BHC-AS:22203-DB
Digitally signed by
RAMESHWAR
LAXMAN DILWALE
Date: 2025.05.26
18:38:41 +0530
3-WP-1930-11 GROUP judgment-.doc Rameshwar Dilwale
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CIVIL APPELLATE JURISDICTION
WRIT PETITION NO.1930 OF 2011
Maharashtra Industrial Development }
Corporation, a statutory Corporation }
Constituted under the Maharashtra }
Industrial Development Corporation }
Act, 1961. Head quarter at Andheri, }
Mumbai-400 093, and having its office }
at MIDC, Office Complex Building 1st }
Floor, Near Wagale Estate Octroi Naka, }
Thane-400 604. }..Petitioner
Versus
1. Union Bank of India, }
a banking corporation constituted }
under the provisions of the Banking }
Companies (Acquisition and }
Transfer for Undertaking) Act, 1970 }
and having its Head Office at 239 }
Vidhan Bhavan Marg, Backbay }
Reclamation, Mumbai-400 020 and }
a branch amongst others at 66/80 }
Mumbai Samachar Marg, Mumbai }
400 023 through authorised officer }
Shri Hari Krishnan K, Senior Manager. }
2. M/s. Benelon Industries, }
a partnership firm under the Indian }
Partnership Act, 1932 and having its }
office at 109 Sir Vithaldas Chambers, }
Appollo Street, Mumbai-400 023 }
and having its factory at D/9, 21st }
Road, Marol Industrial Estate Area, }
Andheri-400 093, through any }
authorized officer/partner. }
3. Phiroz Horumsjee Patel residing at }
Flat No.214, 12th Road, Jolly Maker }
Apartments No.3, Cuffe Parasde, }
Colaba, Mumbai-400 005 }
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4. Income Tax Recovery Officer, }
Range -12 (1), Room No.117, }
Aaykar Bhavan, Mumbai-400 020. }
5. Kalindi Properties Private }
Limited, a company having its office }
at 41 Dashashrimali Nagar, }
Narsingh Lane, Malad-West-Mumbai }
400 064. }..Respondents
WITH
CIVIL APPLICATION NO.232 OF 2017
WITH
CIVIL APPLICATION NO.2047 OF 2018
IN
WRIT PETITION NO.1930 OF 2011
Kalindi Properties Private Limited, }
a company having its office }
at /41 Dashashrimali Nagar, }
Narsingh Lane, Malad (West) }
Mumbai 400 064. }..Applicant
(Org.Respondent No.5)
IN THE MATTER OF
Maharashtra Industrial Development }
Corporation, a statutory Corporation, }
Constituted under the Maharashtra }
Industrial Development Corporation }
Act, 1961. Head quarter at Andheri, }
Mumbai-400 093, and having its office }
at MIDC, Office Complex Building 1st }
Floor, Near Wagale Estate Octroi Naka, }
Thane-400 604. }..Petitioners
VERSUS
1. Union Bank of India, }
a banking corporation constituted }
under the provisions of the Banking }
Companies (Acquisition and }
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Transfer for Undertaking) Act, 1970 }
and having its Head Office at 239 }
Vidhan Bhavan Marg, Backbay }
Reclamation, Mumbai-400 020 and }
a branch amongst others at 66/80 }
Mumbai Samachar Marg, Mumbai }
400 023 through authorised officer }
Shri Hari Krishnan K, Senior Manager. }
2. M/s. Benelon Industries, }
a partnership firm under the Indian }
Partnership Act, 1932 and having its }
office at 109 Sir Vithaldas Chambers, }
Appollo Street, Mumbai-400 023 }
and having its factory at D/9, 21st }
Road, Marol Industrial Estate Area, }
Andheri-400 093, through any }
authorized officer/partner. }
3. Phiroz Horumsjee Patel residing at }
Flat No.214, 12th Road, Jolly Maker }
Apartments No.3, Cuffe Parasde, }
Colaba, Mumbai-400 005 }
4. Income Tax Recovery Officer, }
Range -12 (1), Room No.117, }
Aaykar Bhavan, Mumbai-400 020. }
5. Kalindi Properties Private }
Limited, a company having its office }
at 41 Dashashrimali Nagar, }
Narsingh Lane, Malad-West-Mumbai }
400 064. }..Respondents
CIVIL APPLICATION NO.2546 OF 2018
IN
WRIT PETITION NO.1930 OF 2011
Harvinder Singh Vijan }
Legal heir of the }
Jogindersingh Isharsingh }
Vijan (since deceased) }
having his address at Plot }
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No.D/9, Road No.21, MIDC, Andheri }
(E) Marol Industrial Estate Area, }
Andheri 4000093 and residing at 1701, }
Kritika Tower, Sion Trombay Road, }
Chembur, Mumbai-400071. }
Inventor/Applicant
IN THE MATTER OF
Maharashtra Industrial Development }
Corporation, a statutory Corporation, }
Constituted under the Maharashtra }
Industrial Development Corporation }
Act, 1961. Head quarter at Andheri, }
Mumbai-400 093, and having its office }
at MIDC, Office Complex Building 1st }
Floor, Near Wagale Estate Octroi Naka, }
Thane-400 604. }..Petitioners
VERSUS
1. Union Bank of India, }
a banking corporation constituted }
under the provisions of the Banking }
Companies (Acquisition and }
Transfer for Undertaking) Act, 1970 }
and having its Head Office at 239 }
Vidhan Bhavan Marg, Backbay }
Reclamation, Mumbai-400 020 and }
a branch amongst others at 66/80 }
Mumbai Samachar Marg, Mumbai }
400 023 through authorised officer }
Shri Hari Krishnan K, Senior Manager. }
2. M/s. Benelon Industries, }
a partnership firm under the Indian }
Partnership Act, 1932 and having its }
office at 109 Sir Vithaldas Chambers, }
Appollo Street, Mumbai-400 023 }
and having its factory at D/9, 21st }
Road, Marol Industrial Estate Area, }
Andheri-400 093, through any }
authorized officer/partner. }
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3. Phiroz Horumsjee Patel residing at }
Flat No.214, 12th Road, Jolly Maker }
Apartments No.3, Cuffe Parasde, }
Colaba, Mumbai-400 005 }
4. Income Tax Recovery Officer, }
Range -12 (1), Room No.117, }
Aaykar Bhavan, Mumbai-400 020. }
5. Kalindi Properties Private }
Limited, a company having its office }
at 41 Dashashrimali Nagar, }
Narsingh Lane, Malad-West-Mumbai }
400 064. }..Respondents
INTERIM APPLICATION NO.10133 OF 2022
IN
WRIT PETITION NO.1930 OF 2011
Maharashtra Industrial Development }
Corporation, a statutory Corporation, }
Constituted under the Maharashtra }
Industrial Development Corporation }
Act, 1961. Head quarter at Andheri, }
Mumbai-400 093, and having its office }
at MIDC, Office Complex Building 1st }
Floor, Near Wagale Estate Octroi Naka, }
Thane-400 604. }..Applicant
(Org. Petitioner)
IN THE MATTER OF
Maharashtra Industrial Development }
Corporation, a statutory Corporation, }
Constituted under the Maharashtra }
Industrial Development Corporation }
Act, 1961. Head quarter at Andheri, }
Mumbai-400 093, and having its office }
at MIDC, Office Complex Building 1st }
Floor, Near Wagale Estate Octroi Naka, }
Thane-400 604. }..Petitioner
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VERSUS
1. Union Bank of India, }
a banking corporation constituted }
under the provisions of the Banking }
Companies (Acquisition and }
Transfer for Undertaking) Act, 1970 }
and having its Head Office at 239 }
Vidhan Bhavan Marg, Backbay }
Reclamation, Mumbai-400 020 and }
a branch amongst others at 66/80 }
Mumbai Samachar Marg, Mumbai }
400 023 through authorised officer }
Shri Hari Krishnan K, Senior Manager. }
2. M/s. Benelon Industries, }
a partnership firm under the Indian }
Partnership Act, 1932 and having its }
office at 109 Sir Vithaldas Chambers, }
Appollo Street, Mumbai-400 023 }
and having its factory at D/9, 21st }
Road, Marol Industrial Estate Area, }
Andheri-400 093, through any }
authorized officer/partner. }
3. Phiroz Horumsjee Patel residing at }
Flat No.214, 12th Road, Jolly Maker }
Apartments No.3, Cuffe Parasde, }
Colaba, Mumbai-400 005 }
4. Income Tax Recovery Officer, }
Range -12 (1), Room No.117, }
Aaykar Bhavan, Mumbai-400 020. }
5. Kalindi Properties Private }
Limited, a company having its office }
at 41 Dashashrimali Nagar, }
Narsingh Lane, Malad-West-Mumbai }
400 064. }..Respondents
...
Mr. Prashant Chawan, Senior Advocate with Mr. Rajmani Varam,
Mr. Meet Vora i/by Navdeep Vora & Associates for the petitioner-
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MIDC.
Mr. Sahil Mahajan with Mr. Saurabh S. Godbole, Advocates for
the applicant in CAW No.2546 of 2018.
Mr. A. I. Patel, Additional Government Pleader with Mr. S. P.
Kamble, Assistant Government Pleader for the respondent-State.
Mr. Pankaj Sawant, Senior Advocate with Mr. Ziyad Madon, Mr.
Amit Mehta, Ms. Nipa Gupte, Mr. Hitesh Mishra i/by Mr. Amit
Mehta, Advocates for the respondent no.5.
CORAM : A.S. CHANDURKAR &
M. M. SATHAYE, JJ
Date on which the arguments concluded : 16 th APRIL 2025
Date on which the judgment is pronounced : 26 th MAY 2025
JUDGMENT:
(PER : A. S. CHANDURKAR, J)
1. Rule. Rule made returnable forthwith and heard learned
counsel for the parties.
2. The challenge raised in this writ petition is to the judgment
dated 18/01/2011 passed by the learned Chairperson, Debts
Recovery Appellate Tribunal, Mumbai in Miscellaneous Appeal
No.25 of 2009. By the said order, the appeal preferred by the
petitioner came to be partly allowed and various directions were
issued to the parties with a view to put an end to the dispute
amongst them.
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3. The facts in brief giving rise to the present proceedings can
be stated thus: Plot No.D-9 located in Marol Maharashtra
Industrial Development Corporation Area was under control of the
petitioner-Maharashtra Industrial Development Corporation-(for
short, ‘MIDC’). On 23/03/1979, the MIDC alloted the said plot to
the second respondent-M/s. Benelon Industries (for short, ‘BI’). In
the lease deed executed between the parties with a duration of
ninety five years, various terms and conditions were incorporated
including a restriction on the assignment or letting or parting
with possession of the leasehold plot without prior consent of the
MIDC. There was also a provision for determination of the lease
deed with a further right of re-entry in case of breach of any
covenant by the lessee. BI had obtained financial assistance from
the Maharashtra State Financial Corporation (for short, the
“MSFC”). On 01/04/1981, the MSFC issued a No Dues Certificate
to BI on receiving its dues. Since BI sought further financial
assistance from the respondent no.1- Union Bank of India (for
short, “UBI”) it approached the MIDC for grant of No Objection for
creation of mortgage of the aforesaid plot in its favour. BI was
however informed by the UBI that unless all requisite documents
were furnished to the MIDC, it would not be able to consider such
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request. According to the MIDC, notwithstanding aforesaid, UBI
granted financial assistance to BI. Since there was a default on
the part of BI in making repayment of the loan amount, UBI filed
Suit No.2118 of 1990 against BI for recovery of the outstanding
dues. On 09/02/1996 an ex-parte decree was passed by the High
Court against BI. After the Recovery Of Debts Due To Banks And
Financial Institutions Act, 1993 (for short, the Act of 1993) came
into force on 25/06/1993, the execution proceedings stood
transferred to the Debts Recovery Tribunal (for short, “the DRT”).
A recovery certificate was thereafter issued in favour of UBI in the
said proceedings on 28/06/2004.
4. According to the MIDC during inspection of the plot on
18/08/2007, its Officers noticed unauthorised use of the same by
third parties without its permission. On 18/10/2007, the MIDC
issued a show cause notice to BI stating therein that various
violations of the terms of the lease deed had been noticed. In the
meanwhile, the DRT issued an order of proclamation for the sale
of the plot on 29/10/2007. According to the MIDC, it was
informed about the attachment of the said plot on 06/11/2007
and hence on 01/02/2008 it filed an application before the
Recovery Officer for raising the attachment. The said application
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however was permitted to be withdrawn by the Recovery Officer on
26/02/2008 with liberty to file a fresh application. The MIDC
thereafter filed Miscellaneous Application No.37 of 2008 under
Section 19(25) of the Act of 1993 for setting aside the recovery
proceedings as being illegal. A separate application for
condonation of delay was also filed. In the meanwhile, on
10/10/2008 auction of the plot was undertaken wherein the fifth
respondent-Kalindi Properties Private Limited (for short, “KPPL”)
was successful. The learned Presiding Officer, DRT on
01/01/2009 dismissed Miscellaneous Application No.37 of 2008
that was preferred by the MIDC under Section 19(25) of the Act of
1993. Being aggrieved,the MIDC challenged the said order by filing
Miscellaneous Appeal No.25 of 2009 before the Debts Recovery
Appellate Tribunal (for short, the DRAT). On 02/02/2009, the
Recovery Officer proceeded to confirm the sale in favour of KPPL
with a direction to handover possession of the plot to it. Thereafter
on 05/02/2009, the DRAT passed an interim order staying the
recovery proceedings initiated by UBI and steps taken pursuant
thereto till the adjudication of the Miscellaneous Appeal. Since
KPPL was aggrieved by the order dated 05/02/2009, it challenged
the same by filing Writ Petition No.2781 of 2009 (M/s. Kalindi
Properties Private Ltd. Vs. Maharashtra Industrial Development
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Corporation & others). The MIDC also filed Writ Petition No.5928 of
2009 (Maharashtra Industrial Development Corporation Vs. Union
Bank of India & Ors) raising a challenge to the order passed by the
DRAT on 05/02/2009 directing the parties to settle the dispute
inter se. On 21/04/2009 while issuing Rule in the writ petition
filed by KPPL, it was noted that if KPPL deposited an amount of
Rs. 14,51,00,000/-, the said amount would satisfy the claims of
all parties. Hence by an interim order the stay granted by the
learned Chairperson to the recovery proceedings came to be
vacated. The plot was accordingly handed over to KPPL. Being
aggrieved, the MIDC approached the Supreme Court for
challenging the order dated 21/04/2009 passed by this Court.
This Special Leave Petition came to be dismissed by the Supreme
Court on 28/08/2009 in view of the fact that Writ Petition
No.5928 of 2009 preferred by the MIDC was pending in this Court.
5. The writ petitions preferred by KPPL and the MIDC were
heard together and decided by a common order dated
16/08/2010. It was noted that KPPL had deposited an amount of
Rs. 14,51,00,000/- as directed. It was observed that if KPPL
deposited the amount of differential premium, the lease deed
could be executed in its favour. KPPL was thereafter directed to
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deposit an amount of Rs.1,71,81,300/- towards differential
premium and incidental charges of Rs.52,000/- after which the
MIDC was directed to issue a sanction letter indicating allotment
of the plot in favour of KPPL treating it as a lessee. Directions were
also issued to the DRAT to decide Appeal No.25 of 2009 on its own
merits. The MIDC being aggrieved by the aforesaid order
approached the Supreme Court. By the order dated 04/01/2011
as modified on 06/01/2011, the Supreme Court noted that the
arguments in the appeal pending before the DRAT had been heard
and that the order was reserved. It therefore was of the view that
the Special Leave Petition need not be entertained on merits and
that if the MIDC was aggrieved by the order that would be passed
by the DRAT in Miscellaneous Appeal No.25 of 2009, it would be
at liberty to challenge that order before an appropriate forum on
all grounds. Thereafter, the DRAT on 18/01/2011 decided the
aforesaid appeal and held that the mortgage of the plot by BI in
favour of UBI was neither illegal nor void. BI had committed
breach of Clause 2(t) of the lease deed by creating a charge over
the plot. However, the MIDC did not take any steps under Clause
4 of the lease deed so as to determine the lease and re-enter the
premises. KPPL was directed to pay subletting charges to the
MIDC from 18/08/2007 when the alleged subletting was noticed
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till 10/10/2008 which was the date on which auction of the plot
was held. The amount available with the Recovery Officer was
directed to be paid to the MIDC towards its claim of subletting
charges. The further balance amount was to be utilised for
satisfying the claim of the Income Tax Department. It is this
judgment dated 18/01/2011 passed by the learned Chairperson
that is challenged by the MIDC in this writ petition.
6(a) Mr. Prashant Chawan, learned Senior Advocate for the
MIDC in support of the prayers made in the writ petition
submitted that the DRAT committed an error in not accepting the
contentions raised by the MIDC that the mortgage deed executed
in favour of UBI being without consent of the MIDC was void in
law. Referring to various provisions of the Maharashtra Industrial
Development Act, 1961 (for short, “the Act of 1961”) and
especially Sections 15, 43-1A, 64 and 67 thereof, it was submitted
that the MIDC was empowered to make regulations with regard to
the matter of dealing with lands under its control. In exercise of
such power, the Maharashtra Industrial Development Corporation
Disposal of Land Regulations, 1975 (for short, “the Regulations of
1975”) had been framed. Perusal of the same indicated that the
MIDC was justified in demanding subletting charges from KPPL as
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it was in unlawful possession. It was submitted that admittedly
consent of the MIDC had not been obtained prior to executing the
mortgage deed in favour of UBI. Despite recording this finding, the
DRAT erred in holding that the mortgage deed was not void.
Referring to the decision of the Supreme Court in State of Uttar
Pradesh and Others vs. United Bank of India and Others, 2015
INSC 867, it was submitted that on the basis of such void
mortgage no rights were created in favour of UBI. For the same
reason, KPPL as an auction purchaser did not get valid title to the
mortgaged property and it had merely stepped into the shoes of
BI, the original allottee. Moreover, the lease deed dated
23/03/1979 executed in favour of BI had been terminated in July
2007 and hence no rights accrued in favour of the auction
purchaser. It was then submitted that in breach of terms of
Clause 2(t) of the lease deed, the mortgage deed had been created
in favour of UBI. In absence of any consent of the MIDC, any
steps taken by BI were invalid and not binding on the MIDC. A
reference was also made to the provisions of Sections 58 and 108
(j) of the Transfer of Property Act, 1882. It was thus submitted
that if the initial execution of the mortgage in favour of UBI was
illegal, all actions/transactions entered into by it thereafter would
have no legal effect and the same would fall to the ground.
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Reliance was placed on the judgment of the Supreme Court in
State of Punjab vs. Davinder Pal Singh Bhullar and Others, (2011)
14 SCC 770 in that regard. It was thus submitted that the DRAT
was not justified in holding that though the mortgage deed had
been executed without consent of the MIDC, it was not void.
(b) On the claim for subletting charges made by the MIDC, it
was submitted that such demand was made in accordance with
the Regulations of 1975. The MIDC was empowered by the said
Regulations to demand subletting charges from KPPL in view of
the fact that there was no consent whatsoever granted by the
MIDC to transfer/sublet the land in its favour. Referring to
Regulation 29 of the Regulations of 1975 read with Section 15 of
the Act of 1961 it was submitted that the MIDC was legally
justified in claiming subletting charges. Further, the DRAT was
not justified in limiting the levy of subletting charges till
10/10/2008 on the ground that the sale was effected in favour of
KPPL on that day. As the UBI did not get any legal right in the
said property, the sale effected by it also had no basis
whatsoever. KPPL was therefore liable to pay subletting charges
till date. It was also submitted that the DRAT was not justified in
holding that the MIDC had made various changes in the demand
for subletting charges from time to time. Its stand in that regard
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was consistent and in view of the Regulations of 1975, it was
entitled to claim subletting charges. Reliance was placed on the
judgment of the Division Bench at Aurangabad in Writ Petition
No.8499 of 2014 (Aurangabad Carbon Produces Private Limited vs.
The State of Maharashtra and Others) dated 06/07/2015 in the
matter of paying differential charges.
(c) It was then submitted that the decree passed in favour of
UBI was on the basis of suppression of material facts and
documents. This resulted in vitiating the said decree on the
ground of fraud. Moreover, as the MIDC was not a party to the
aforesaid suit filed by UBI against BI, the decree passed therein
was not binding on the MIDC. It was pointed out that KPPL as an
auction purchaser had participated in the auction that was
conducted on “as is where is basis” and therefore it was duty
bound to satisfy the claim of the MIDC against BI.
[
d) On these contentions it was submitted that the impugned
judgment of the DRAT was liable to be set aside and the recovery
proceedings be set aside.
[
7(a) Mr. Pankaj Sawant, learned Senior Advocate appearing for
the fifth respondent-KPPL opposed the writ petition and supported
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the judgment passed by the DRAT. According to him, the DRAT
rightly found that the mortgage deed in favour of UBI could not be
treated to be void. Though it was the stand of the MIDC that there
was a breach of the terms of the lease deed by BI and especially
Clause 2(t) thereof, no steps whatsoever were taken by the MIDC
to exercise its right of re-entry or to terminate the lease. The
DRAT rightly found that the MIDC was guilty of inaction without
any justifiable reason. Though it was the case of the MIDC that it
noticed the subletting of the land on 18/08/2007 after which
show cause notice was issued on 16/10/2007, no steps were
taken by it for such breach in accordance with the terms of the
lease deed. Pursuant to various orders passed by the DRT in the
execution proceedings, a public auction was conducted in which
KPPL participated and was successful. Having paid the entire
consideration as per its bid, KPPL could not be deprived of its
rights in that regard. On the contrary, the MIDC failed to
safeguard the subject property as a result of which various
encroachments were committed therein. As a result, KPPL did not
get vacant possession of the said property despite having paid the
entire consideration. It was submitted that the DRAT rightly held
that the mortgage deed executed in favour of UBI could not be
treated to be void. At the highest, it could have been stated to be
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irregular on the basis of which the MIDC could have taken action
for breach of conditions of the lease. The same was however not
done. It was therefore submitted that there was no reason
whatsoever to interfere with the finding recorded by the DRAT.
[
(b) On the aspect of subletting charges imposed by the MIDC, it
was submitted that the same were sought to be levied on the basis
of the Circular issued by the MIDC on 15/03/2007. Referring to
the decision of the Division Bench at Nagpur in Prakash
Fabricators Pvt. Ltd., Nagpur vs. Maharashtra Industrial
Development Corporation, Mumbai and another, 2010(3) Mh.L.J.
413, it was submitted that after considering a similar Circular, it
was held that said Circular did not indicate that it had been
issued in exercise of any authority of law. Hence there was no
legal basis whatsoever to levy subletting charges. It was also
pointed out that the DRAT correctly observed that there had been
periodical and arbitrary increase in the amount of subletting
charges levied by the MIDC. This was without any justification.
Despite the absence of power in that regard, the DRAT had
maintained levy of sub-letting charges from 18/08/2007 to
10/10/2008.
[
(c) On the contention raised on behalf of the MIDC that the
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decree passed in favour of UBI was vitiated by fraud, it was
submitted that there was no material suppression of any relevant
fact. Despite the MIDC having knowledge of the said decree, it
had not been challenged by the MIDC at any point of time. It was
not open for the MIDC to raise this contention in the present writ
petition as the same was not raised earlier either before the DRT
or the DRAT.
[
(d) The learned Senior Advocate submitted that pursuant to
the order dated 15/08/2010 passed by this Court in the earlier
round of litigation, KPPL had deposited an amount of Rs
1,71,81,300/- on 27/08/2010 in compliance with the order dated
16/08/2018. Despite aforesaid, the MIDC had failed to execute
the lease deed in its favour. Thus having parted with the entire
amount of sale consideration as well as the amount of differential
premium, KPPL did not receive vacant possession of the property
purchased by it in the public auction.
[
(e) On these contentions, it was submitted that the challenge
raised by the MIDC to the impugned judgment passed by the
DRAT had no merits. The writ petition was therefore liable to be
dismissed.
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8. We have heard the learned counsel for the parties at length
and with their assistance we have perused the documentary
material on record. Having given due consideration to the
respective submissions, in our view, the impugned judgment of
the DRAT dated 18/01/2011 does not call for any interference
whatsoever. The reasons for arriving at this conclusion are as
under:-
8.1 On the legality of the mortgage deed executed
by BI in favour of UBI, the DRAT has held that the
mortgage could not be held to be illegal, void and non-
est. While recording this finding, it has been held
that the mortgage of leasehold rights was not
prohibited by law and that execution of such
mortgage deed by BI could be treated to be in breach
of the covenants of the lease deed. It has referred to
Clause 2(t) of the lease in that regard.
Undisputedly on 23/03/1979, the lease deed
was executed by the MIDC in favour of BI for the
period from 01/02/1975 till 31/01/2070. As per
Clause 2(t) of the lease deed, the lessee was not
permitted to assign, underlet or part with
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possession of the demised premises or any part
thereof or any interest therein without the previous
written consent of the Chief Executive Officer of the
MIDC. Clause 4 of the lease deed provides for
consequences of breach of any covenant of the
lease deed. The said Clause requires initially a
notice to be given by the lessor to the lessee of any
specific breach of any covenant that would entitle
the lessor to the right of re-entry in the leased land.
An opportunity of remedying such breach or
breaches within three months of issuing such
notice has been granted. According to the MIDC,
pursuant to an inspection conduced on
18/08/2007, it noticed illegal subletting of the
leased property without its consent. It therefore
issued a show cause notice to BI on 16/10/2007
but there was no reply to the same. It however
appears that thereafter the MIDC did not take any
further steps pursuant to its show cause notice
dated 16/10/2007 or the right available to it under
Clause 4 of the lease deed. This inaction on the
part of the MIDC has gone unexplained.
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8.2 It thus becomes clear that the action of BI of
creating a mortgage of the leased plot in favour of
UBI was without the prior consent of the Chief
Executive Officer of the MIDC and thus in violation
of Clause 2(t) of the lease deed. Though MIDC
sought to invoke its right under Clause 4 of the
lease deed by issuing a show cause notice on
16/10/2007, it did not take any further steps in
that regard. Since the consequence of a breach of
any covenant of the lease deed has been provided,
the creation of the mortgage in breach thereof
cannot be treated to be void. In our view, the
DRAT has rightly found that the creation of the
mortgage by BI was without the prior permission of
the MIDC and it was open for the MIDC to exercise
its right of re-entry due to breach of a covenant
which it failed to enforce. The said finding
recorded by the DRAT is in accordance with the
terms of the lease deed dated 23/03/1979. The
said finding therefore cannot be said to be perverse
for being interfered with in exercise of writ
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jurisdiction.
[
8.3 The MIDC sought to rely upon the decision
in United Bank of India and Others (supra) to
contend that creation of the mortgage in favour of
UBI was void ab initio. We find that the facts
involved in the aforesaid decision are sufficient to
hold that ratio of the said decision is not applicable
to the case in hand. The subject property in the
aforesaid decision was Nazul land and the
mortgage was created by lessee without previous
sanction in writing of the State Government. In the
present case, since the terms of the lease deed
itself indicate the consequence of the
violation/breach of any covenant thereof, the
action provided therein was available for the MIDC
to invoke. Hence the ratio of the aforesaid decision
does not not further the case of the MIDC.
8.4 On the validity of levy of subletting charges, it
would be necessary to briefly refer to the order
dated 16/08/2010 passed by this Court in the
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earlier round of litigation. While considering the
challenge to the interim order passed by the DRAT
on 05/02/2009, it was observed in paragraph 3 of
the said order that insofar as subletting charges
were concerned, the same did not find place in the
Regulations of 1975. According to the MIDC, the
same have been provided by way of Resolutions
passed by the Board of Directors of the MIDC. It
was further observed in paragraph 4 of the said
order that from the date of issuance of the auction
notice in 2008, the MIDC would not be entitled to
subletting charges either from UBI or KPPL as the
MIDC was aware of the alleged subletting. It was
clarified that for the anterior period, the rights of
the MIDC to claim subletting charges as well as
liability on whom it could be saddled would be
adjudicated by the DRAT.
8.5 It is true that the order dated 16/08/2010
passed in Writ Petition No.5928 of 2009 was
challenged before the Supreme Court. However, on
the ground that the appeal before the DRAT had
been heard and the order thereon was reserved,
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the Supreme Court did not interfere with the order
dated 16/08/2010 passed in the writ petition and
kept all grounds of challenge open for the MIDC to
raise if it was aggrieved by the adjudication of the
appeal by the DRAT. Perusal of the Regulations of
1975 however does not indicate that the same
contains any specific power which empowers the
MIDC to levy subletting charges. The learned
Senior Advocate for the MIDC referred to
Regulations 1(c), 4, 16 to 18 and 29 of the
Regulations of 1975 in that regard. We however do
not find that the said Regulations contain any
provision for imposing subletting charges.
Reference was then made to the Circular
dated 03/03/2007 in that regard. We may
however note that a Co-ordinate Bench of this
Court had an occasion to consider the Circular
dated 15/03/2007 issued by the MIDC as the
basis for demanding subletting charges and
penalty. It was held in Prakash Fabricators Pvt.
Ltd. (supra) that the said Circular was issued by
the Chief Executive Officer of the MIDC but it did
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not disclose or demonstrate existence of any
authority of law to do so. It was more in the nature
of an internal communication by the Chief
Executive Officer and hence it could not be the
basis for demanding subletting charges or penalty
of such nature. We therefore find that the
observations made in the aforesaid decision are
clearly attracted to the present case.
8.6 The DRAT has considered these relevant
aspects in the light of the observations made by the
Division Bench in its order dated 16/08/2010
referred to earlier. It directed payment of subletting
charges from 18/08/2007 when the subletting
was noticed by the MIDC till 10/10/2008 which
was the date on which the sale was effected in
favour of KPPL. We note that this direction issued
by the DRAT has not been challenged by KPPL and
hence it would bind KPPL. According to the MIDC,
it undertook an inspection of the aforesaid property
on 18/08/2007 when the alleged subletting was
noticed. This date has therefore been rightly taken
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as the date from which the subletting charges were
to be paid. This finding recorded by the DRAT
therefore does not deserve to be interfered with,
notwithstanding the finding that there was an
absence of power under the Regulations of 1975 to
levy subletting charges. Though it was urged on
behalf of the MIDC that the DRAT was not justified
in holding that the MIDC had been changing its
stand in the matter of imposing subletting charges,
we do not find any basis whatsoever to uphold this
grievance raised by the MIDC. The challenge
raised by the MIDC to that extent therefore cannot
be accepted.
8.7 We note that pursuant to the order dated
16/08/2010 passed by this Court, KPPL has paid
an amount of Rs 1,71,81,300/- towards differential
charges and Rs 52,000/- towards incidental
charges. These amounts are determined on the
basis of the claim made by the MIDC itself. In this
backdrop, the ratio of the decision in Aurangabad
Carbon Produces Private Limited (supra) has no
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application.
8.8 Though it was urged on behalf of the MIDC
that the decree passed in the suit filed by UBI
against BI was vitiated by fraud as all relevant
material aspects were not placed on record by UBI,
we find that this ground of challenge was not
raised by the MIDC either before the DRT or the
DRAT. The adjudication of the aspect as to
whether a judgment of a competent court is
vitiated by fraud on account of alleged non-
disclosure of material facts is a mixed question of
fact and law. In absence of any such grievance
being raised by the MIDC earlier either before the
DRT or DRAT, we are not inclined to go into this
disputed question in exercise of jurisdiction under
Article 226 of the Constitution of India.
9. Thus having considered the challenge to the impugned
judgment of the DRAT, we do no find any legal ground
whatsoever to interfere with the same. The various directions
issued by the DRAT are with a view to enable the claims of the
litigating paries to be duly satisfied. The said directions are
accordingly upheld.
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10. It may be stated that during pendency of the writ petition,
various Interim Applications were filed. A grievance was raised
with regard to alleged encroachments being made in the said
property. A prayer to appoint Court Receiver was made. It is seen
that one of the applicants has filed Suit No.1229 of 2017 before
the City Civil Court, Mumbai. In the said suit, the MIDC had
also preferred Notice of Motion No.3777 of 2017. In our view,
since the order passed by the DRAT has been upheld, the parties
would be at liberty to have their other rights adjudicated in
accordance with law in the proceedings pending before the Civil
Court. We clarify that the said proceedings be decided on their
own merits and in accordance with law.
11. For aforesaid reasons, we do not find any merit in the writ
petition. It is accordingly dismissed. Rule stands discharged
with no order as to costs. All pending Interim Applications are
also disposed of.
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