IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 21.11.2007 CORAM THE HONOURABLE MR.JUSTICE S.MANIKUMAR W.P.No.17979 of 2007 M.P.Nos.1 and 2 of 2007 R.Uma Krupa ... Petitioner vs. 1. Tamil Nadu Industrial Investment Corporation Limited, rep. By its Managing Director, 692, Anna Salai, Nandanam, Chennai-35. 2. Tamil Nadu Industrial Investment Corporation Limited, rep. By its Branch Manager, 100, Railway Feeder Road, Virudhunagar. 3. Mr.V.S. Vekatesan (deceased) 4. Mrs.S.V.Krishnaveni 5. Mrs.K.R.Subapriya 6. Mrs.S.R.Buvana 7. Mr.D.Venkatraj 8. Mrs.V.V.Ramalakshmi 9. Minor V.V.Janath Seshan ... Respondents (Minor represented by his mother V.V.Ramalakshmi, 8th respondent) Writ petition is filed under Article 226 of the Constitution of India for issuance of a writ of Mandamus, directing respondents 1 and 2 to put back/to hand over possession of "M/s.Ome Tex Industries" situated at S.No.114/1A, (Shown as S.No.114/2A in the Lease Deed between the third respondent and the Writ Petitioner dated 17.06.2005) Melapattam Karisalkulam Village, Rajapalayam Taluk, Virudhunagar District to the Writ Petitioner on the liabilities of the third respondent being cleared either by the third respondent or his nominees either in the form of one time settlement or in any other manner and charge being raised pursuant to the auction sale notification of the second respondent dated 04.02.2007 bearing reference TIIC/TNY/RO/15/2006-07 or pursuant to any other action. For Petitioner : Mr.M.Sundar For Respondents 1 and 2 : Mr.T.Murugamanickam For 3rd Respondent : Mr.V.Subramanian O R D E R The petitioner has sought for a Writ of Mandamus, directing respondents 1 and 2 to put back/hand over possession of "M/s.Ome Tex Industries" situated at S.No.114/1A, (Shown as S.No.114/2A in the Lease Deed between the third respondent and the Writ Petitioner dated 17.06.2005) Melapattam Karisalkulam Village, Rajapalayam Taluk, Virudhunagar District to her, on the liabilities of the third respondent being cleared either by the third respondent or his nominees either in the form of one time settlement or in any other manner and charge being raised pursuant to the auction sale notification of the second respondent dated 04.02.2007 bearing reference TIIC/TNY/RO/15/2006-07 or pursuant to any other action. 2. Brief facts leading to the Writ Petition are as follows: The petitioner is carrying on business in the name and style of "Vhasinathan Textiles" at No.65-A, Venkaesanam Savadi Street, Rajapalayam  626 117, Virudhunagar District and "Vasinathan Traders" at No.6, Lakshmanaperumal Koil Street, Rajapalayam -262 117, Virudhunagar District, both as sole proprietrix. She had supplied cotton to the third respondent, who is carrying on business in the name and style of "M/s.Ome Tex Industries", at Melapattam Karisalkulam Village, Rajapalayam Taluk. Over a period of time, the third respondent did not pay any amount due for the cotton sold and supplied and when she approached the third respondent, he expressed his inability to mobilise funds and pay the amount and stated that he would give his Textile Mill viz., M/s.Ome tex Industries" on lease to her. 3. It is further submitted that a lease deed was entered into between the petitioner and the third respondent on 17.06.2005. On the execution of the lease deed, the petitioner took possession of the demised mill. It is further submitted that the arrangement between the petitioner and the third respondent was that the profits generated from the "demised mill" would be appropriated by the petitioner and set off against the liabilities of the third respondent, which at the time of execution of the lease deed stood at Rs.21.60 lakhs. It is further submitted that the petitioner stepped into the shoes of the "demised mill" and was running the same in an orderly manner. Since the third respondent started to interfere with the possession of the petitioner, she filed a suit in O.S.No.310 of 2005 on the file of the Principal District Munsif Court, Srivilliputhur, for permanent injunction restraining the third respondent from interfering with her peaceful possession and enjoyment of the "demised mill". The third respondent submitted to the decree and therefore, a consent decree was passed on 23.09.2005. The said decree is still in force. 4. The petitioner has further submitted that the third respondent was running another Textile Mill in the name and style of "Supa Omtex Spinners Private Limited"(SOSPL) situated in S.Nos.511/1, 511/3, 524/3, 138/B4, 143/3F and 144/2A at Kothankulam Village, Rajapalayam Taluk, Virudhunagar District. The petitioner came to know that the third respondent has obtained financial assistance from the first respondent, the Tamil Nadu Industrial Investment Corporation Limited (hereinafter referred to as "TIIC") for SOSPL and offered the said "mill" as collateral security. The petitioner has further submitted that the third respondent had defaulted in payment to TIIC and therefore, TIIC exercising its power under State Financial Corporation Act, forcibly took possession of the demised mill from her on 28.11.2005. 5. The petitioner has further submitted that when the officials of TIIC came to the demised mill for taking over possession for the liability of the third respondent, she strongly protested and pleaded them not to dispossess her. At the time of dispossession, the petitioner pleaded that she had suffered huge loss and put to severe hardship by the third respondent, due to non-payment for the cotton sold and supplied to him. Even though the petitioner produced the decree in O.S. No 310 of 2005 dated 11.07.2005, obtained by her against the third respondent to the Officials of TIIC and protested, they forcibly took possession of the demised mill from her. It is the case of the petitioner that officials of TIIC had stated that as and when the liability of the third respondent is cleared, they would restore Possession to her. It is also the case of the petitioner that after taking possession of the demised mill from the third respondent, she had installed valuable machineries. Inspite of protest, Officials of TIIC took possession of the premises along with the valuable machineries installed at her cost. 6. The petitioner has further submitted that TIIC has caused a notification dated 04.02.2007, by which, SOSPL and the demised mill were brought for public action on 21.02.2007 at 11.00 a.m. After the public auction, it was learnt that the third respondent had negotiated with third party purchasers, who purchased SOSPL and the demised mill, and the TIIC officials and arrived at an arrangement, whereby, amounts would be paid by the third party purchasers, which would be treated as one time settlement by the third respondent. Based on which, the charge over SOSPL as well as the demised mill would be released and third respondent would be given the possession of the property. On the basis of such illegal design to defeat the rights of the petitioner, the third respondent has hurriedly executed a sale deed dated 01.03.2007, registered as Document No.1013 of 2007 in the Office of the Sub-Registrar, Rajapalayam in favour of the seventh respondent herein. In the said sale deed, the third respondent has arrayed respondents 4 to 6 herein, who are his nieces (full brother late V.S.Perumal Raja's daughters) as co-venders. The seventh respondent is none other than the third respondent's brother V.S.Perumal Raja's son-in-law and husband of the fourth respondent. 7. The petitioner has further submitted that the execution of the sale deed to close relatives, would clearly show that the whole exercise has been done only to defeat the petitioner of her rights as a lessee as well as creditor and usurp possession through back door by abusing the powers of TIIC, an instrumentality of the State. The petitioner has further submitted that the seventh respondent is fully aware of the fact that the third respondent owes huge sum to her and that in lieu of such liability has executed the Lease Deed dated 27.06.2005, in respect of the demised mill to her and that possession of the demised mill was taken over by the officials of TIIC on 28.11.2005. The petitioner has further submitted that the seventh respondent was one of the witnesses in the lease deed dated 27.06.2005, said to have been executed by the third respondent in favour of the petitioner and therefore, the whole transaction of sale and realisation of debt is mala fide. 8. The petitioner has further submitted that coming to know about the illegal attempt of the third respondent to deprive her valuable rights to repossession, she caused telegraphic notice dated 31.03.2007 to the Branch Manager, TIIC , Virudhunagar District. Following the telegraphic notice, she also personally visited the respondents 1 and 2, requesting them to put the petitioner back in possession of the demised mill, as it was taken only from her. Suddenly, on 07.05.2007, the petitioner was informed by the Office of the Branch Manager, TIIC, Virudhunagar, that the head Office of TIIC, the first respondent herein, has decided to receive a specified sum of money from the third respondent towards the outstanding dues and hand over the possession of the demised mill to him by 18.05.2007 or immediately thereafter. The petitioner was shocked by the information and on confirmation from the first respondent, caused telegraphic notices to respondents 1 and 2 on 08.05.2007 and there was no response. On the other hand, the officials of TIIC are making attempts to release the charge of the demised mill and handover possession to the third respondent on 18.05.2007 and under such circumstances, the petitioner is constrained to prefer the Writ Petition for the relief as stated supra. 9. The grounds on which, the petitioner has filed the Writ Petition are as follows: a) When the State Financial Corporation exercised power under the Act to release/raise the charge over a property (given as collateral security) the possession of the property concerned reverts back to the position that prevailed on the date of dispossession. b) Sections 29 and 30 of the State Financial Corporation Act empowers the Financial Corporation to provide for safeguarding the financial interest and as far as the tenancy rights of lease are concerned, even when the ownership changes, the attornment of tenancy is automatic and the tenancy rights remain unaltered. c) As soon as the liability of the third respondent to financial Corporation are cleared by whatever means and when the TIIC clears/raises charge over the demised mill, they will have no right whatsoever vis-a-vis on a leasehold right of the petitioner. d) The Financial Corporation being an instrumentality of the State has failed to keep the promise given to the petitioner that she would be put back in possession on the charge being raised and therefore, the action of the TIIC is violative under Article 14 of the Constitution of India. e) Though the loan was approved and sanctioned by the Branch Manager, TIIC, Virudhunagar District, the second respondent herein, the proposal for One Time Settlement decided only at Head Office, Chennai and therefore, the major portion of the cause of action had arisen within the territorial jurisdiction of this Court and the Writ Petition is maintainable. 10. While admitting this Writ Petition, this Court, by order dated 15.05.2007, granted interim injunction. The third respondent has filed a vacate stay petition in M.P.No.2 of 2007 to vacate the interim order granted by this Court, wherein, the third respondent has submitted that the writ petition is not maintainable, as this Court cannot go into the contractual obligations arising out of the lease deed between two private individuals and therefore, the relief prayed against TIIC is without jurisdiction. He further submitted that the Writ petition is a vexous litigiation and an abuse of process of law. The third respondent has further submitted that he availed a loan of Rs.45,00,000/- from TIIC, represented by its Branch Manager, Virudhunagar for starting a Spinning Mill in the name and style of M/s.Ome Tex Industries at 114/1, A.Melapattam, Kariasalkulam, Rajapalayam in the year 2001. Subsequently, he availed loan to an extent of Rs.1,69,84,000/- from the second respondent, TIIC and started a spinning mill in the year 2001 in the name and style of M/s.Supa Omtex Spinners (P) Ltd., at No.102/1.A, P.S.K.Nagar, Rajapalayam. 11. The third respondent has further submitted that since he had cleared his liabilities towards TIIC loan offered to M/s.Om Tex Industries, he had mortgaged the land, building and machineries comprising in M/s.Om Tex Industries in favour of the TIIC for the loan availed of for M/s.Supa Omtex Spinners Pvt. Ltd. Knowing fully well that the subject matter of the property was mortgaged with TIIC, the petitioner entered into a lease agreement for the purpose of the using the land, building and machineries of M/s.Om Tex Industries situated at No.114/1, A.Malapattam, Karisalkulam, Rajapalayam on a monthly rent of Rs.50,000/-. It was specifically agreed between the parties that the rent amount should be paid on or before 5th day of every succeeding month. The duration of the lease deed for three years. Since there was default in payment of rent as agreed, the third respondent was not able to pay dues to the TIIC for the loan availed for M/s.Supa Omtex Spinners Pvt. Ltd., and therefore, the Financial Corporation in exercise of their statutory powers under the State Financial Act, had taken over the possession of M/s.Om Tex Industries. 12. The third respondent has further submitted that as the petitioner has failed to register the aforesaid lease deed due to payment of substantial stamp duty, as a measure of protection for her leasehold rights, she insisted for a consent decree of permanent injunction from the Court of law, which the third respondent had agreed. In the above suit, the 3rd respondent was the sole defendant and the officials of the Financial Corporation were not impleaded as defendants. The third respondent has further submitted that the petitioner has no legal right over the mortgaged property, as it stood as a collateral security in default of payment of money borrowed and the petitioner has no right to insist the Financial Corporation to put her back in possession. The property was mortgaged by the owner of the property, by way of deposit of title deeds to the Financial Corporation and as and when the money due to them is cleared or settled, the owner is entitled to possession and not the lessee. The third respondent has further submitted that the consent decree has become non-est in law in view of taking over possession by the Financial Corporation and even assuming that there is a decree for injunction, the same could be enforced only as against the defendant and the decree does not pre include TIIC from taking over possession. The third respondent has further submitted the lease deed dated 17.06.2005, is a forged document, not executed by him and the petitioner has committed serious crime by obtaining interim orders on the basis of the forged lease deed. According to him, unless the lease deed said to have been executed for a period of three years is registered, no legal rights would flow from the said document and even if there is any subsisting right between the tenant and landlord, the proper remedy is only to initiate a suit before the competent civil Court and therefore, tenancy rights cannot be agitated in the writ jurisdiction. 13. On the question of territorial jurisdiction, the third respondent has submitted that the property is situated at Rajapalayam within the jurisdiction of the Madurai Bench of the Madras High Court and therefore this court has no territorial jurisdiction to entertain the Writ Petition. He further submitted that possession is said to have been taken on 28.11.2005, by the Branch Manager, TIIC, Virudhunagar, the second respondent herein and the Managing Director of the TIIC, Chennai, has been roped into the Writ Petition only for the sake of filing the Writ petition before this Court. As the seventh respondent in the Writ Petition had already cleared the dues of Om Tex Insutries as well as M/s.Supa Omtex Spinners Private Limited, the third respondent had issued "No Due Certificate". Due to injunction granted by this Court, the petitioner is not able to obtain possession of the mortgaged assets. In these circumstances the third respondent has prayed for dismissal of the Writ Petition. 14. The petitioner in her counter affidavit to the vacate stay petition, has submitted that she was put in possession of the demised mill only under the circumstances narrated in the Writ petition and she has denied default in payments of rent as alleged by the third respondent. According to her, the petitioner has made payments on behalf of the third respondent towards interest from sales tax, old arrears/ penalty to TNEB (arrears prior to lease), TIIC etc., besides cash payment as per the instructions from the third respondent. The petitioner has denied the contention of the third respondent that the lease deed is forged. According to her, the original draft sale deed was taken back by the third respondent, when it was drafted. In spite of notice issued to the local counsel for the third respondent, the third respondent has failed to produce the lease deed and therefore, a copy of the lease deed available with her was filed in the Writ Petition. 15. As regards territorial jurisdiction, the petitioner has submitted that the third respondent has availed loan of Rs.45,00,000/- and subseqent loan of Rs.1,69,84,000/- and for loan assistance exceeding Rs.30,00,000/-, the Managing Director, TIIC, Chennai, is the proper authority to sanction and disburse the loan amount and therefore, the Writ Petition is maintainable. 16. On the basis of the pleadings and documents annexed in the typed set of papers, counsel for the parties advanced their arguments. 17. On the question of territorial jurisdiction, Mr.M.Sundar, learned counsel for the petitioner submitted that since the quantum of financial Assistance was above Rs.30 lakhs, the application of the third respondent was forwarded to the Head Office, Chennai and the loan application was processed and sanctioned by the first respondent, viz., The Managing Director, TIIC, Chennai. As the decision to release/raise charge, on accepting the One Time Settlement in complete liquidation of the liabilities and put the third respondent back in possession was taken at Chennai and as part of cause of action had arisen at Chennai, this Court has territorial jurisdiction to maintain the Writ Petition, notwithstanding the fact that the property is situated at Virudhunagar, within the territorial jurisdiction of the Madurai Bench of Madras High Court. In this regard, he placed reliance on the decisions in Madurai Veeran., A., Ex.Rect (MP) v. Union of India reported in 2006 (1) CTC 732, Navinchandra N.Majithia v. State of Maharashtra reported in 2000 (7) SCC 640. 18. Learned counsel for the petitioner submitted that the third respondent has borrowed huge money from the petitioner and she was put in possession, pursuant to the lease deed executed in her favour and thereafter, she had installed valuable machineries in the demised mill. When the petitioner's lawful possession and the Court decree are admitted by the third respondent, dispossession of the petitioner from the demised mill amounts to violation of constitutional rights and even if the petitioner could be treated as tress-passer, her possession cannot be disturbed without due process of law and if there is an infringement of right to trade, the petitioner is entitled to invoke the writ jurisdiction. In support of his contention, learned counsel for the petitioner relied on the decision in Express Newspaper's case reported in AIR 1986 SC 872. 19. Placing reliance on the decisions in New Kenilworth Hotels (P) Ltd., v. Ashoka Industries Ltd., reported in 1995 (1) SCC 161, Samir Sobhan Sanyal v. Tracks Trade Private Ltd., reported in 1996 (4) SCC 144, and Annamalai Club v. Government of Tamil Nadu reported in 1997 (3) SCC 169, learned counsel for the petitioner submitted that dispossession of the petitioner from the property mortgaged to the Financial Corporation is contrary to law and therefore, she is entitled to resumption of possession on the clearance of liabilities, towards TIIC loan. In substance, he submitted that a person, who has been in possession by virtue of contract and protected by the Civil Court decree, dispossessed by TIIC, should be restored with the possession, when the dues are cleared by the borrower. 20. Finally, placing reliance on an unreported order in W.P.No.2199 of 2005, dated 27.01.2005 and the interim orders granted by this Court in the Civil Original Jurisdiction, learned counsel for the petitioner submitted that if the Court is not inclined to accept that remedy under Article 226 of the Constitution of India is the appropriate remedy, then this Court may preserve the property till the petitioner approaches the competent forum for resumption of possession. 21. Mr.V.Subramanian, learned counsel for the third respondent submitted that the Writ Petition is not maintainable in law and on facts, it is nothing but a suit for restoration, sought against a person with whom there is no privity of contract. Disputing the genuineness of two lease deeds, appended in the typed-set of papers, learned counsel for the third respondent submitted that as the documents are forged, the petitioner is not entitled to seek for any equitable relief and assuming that the documents are valid, as the period of lease exceeds more than 12 months, it has to be compulsorily registered under Section 60 of the Transfer of Property Act and in the absence of registration, the petitioner is not entitled to enforce any rights arising out of the lease deed against the respondents. Assuming that the lease deed is a valid document by referring to Clause (2) of the lease agreement, learned counsel for the third respondent submitted that the remedy open to the petitioner is only with regard to monetary claim and he cannot seek for resumption of possession of the property. 22. Learned counsel for the third respondent submitted that as per the recitals of the lease deed, the lessee was not permitted to install any machineries in the demised premises and inviting the attention of this Court to the plaint averments in O.S.No.310 of 2005, he submitted that the petitioner has not stated that he had installed or erected any machineries in the demised premises. Therefore, the contention of the petitioner that he had installed machineries, after taking over possession from the third respondent is false and the only document, invoice enclosed in the typed set of papers is for the purpose of treating evidence. 23. Learned counsel for the third respondent further submitted that as per Section 60 of the Transfer of Property Act, the mortgagee has got statutory right to get back possession of his property, the moment the loan amount is discharged, TIIC, mortgager is bound to restore possession to the third respondent. In the absence of any privity of contract between TIIC and the petitioner, there is no violation of contractual or fundamental rights to maintain action against the Financial Corporation and therefore, the Writ Petition is liable to be dismissed. 24. Mr.T.Murugamanickam, learned counsel for the respondents 1 and 2 submitted that the third respondent has borrowed loan from State Financial Corporation and defaulted in repayment. He further submitted that in furtherance to their final notice, possession of assets of the third respondent were taken over in exercise of statutory powers conferred under Section 29 of the State Financial Corporation Act, 1951 and the machineries found in the demised mill were also taken over by the Financial Corporation in the presence of witnesses. He further submitted that the action of the respondents 1 and 2 is bona fide and when the properties were brought for public auction on 21.02.2007, there was no objection by the petitioner regarding the sale of any machineries alleged to have been installed by him and therefore, the contention of the petitioner made in this Writ Petition is purely an after thought and it is liable to be rejected. He further submitted that subsequently, the borrower has paid Rs.65.93 lakhs and settled the entire loan amount on 21.05.2007. He further submitted that the petitioner, alleged tenant has no right to seek for resumption of possession, but, conceded to the contention of the third respondent that the mortgagee has got anyright to redeem the property as and when the loan amount is settled and