Case: M/S. Swati Ferro Alloys Pvt.Ltd Vs. Orissa Indl.Infr.Dev.Corpn.(Idco)

facility of Letter of Credit from State Bank of India for Rs.1,50,000/- in the year 1992, which was renewed every year. It has also been sanctioned cash credit limit of Rs.40 lakhs by the State Bank of India in the year 1992 and the same was extended every year, as apparent from letter dated 27.5.1997.12. 2nd respondent also accepted the execution of Tripartite Agreement with the State Bank of India by letter dated 29.1.1998. The Tripartite Agreement clearly states that 2nd respondent had in its custody the title deeds relating to the property of the appellant company. It appears that the appellant persuaded the 2nd respondent for transfer of lease right and title of the appellant since it has taken all the assets of the partnership firm of M/s Eastern Fans. In support of this, the appellant company relied upon letter dated 23.12.2003 issued by the 2nd respondent duly recommending the transfer of title of the plot in favour of the appellant. The grievance of the appellant company is that despite several representations made to 1st respondent between 2003 and 2008 no action was taken by it to transfer the title of the said plot in favour of the appellant company.13. As no action was taken, the appellant company moved before the High Court seeking transfer of the right in their favour, wherein the aforesaid observation was made by the Division Bench of the High Court by impugned judgment dated 18th April, 2012.14. Learned counsel for the appellant submits that all the facts as were pleaded in the writ petition were not disputed by the 1st and 2nd respondents. It was contended that refusal of 1st respondent to transfer the lease of the Plot No.C/9, Industrial Estate, Cuttack in favour of the appellant is wrong, arbitrary and highly illegal and the same was subject to judicial review under Article 226 of the Constitution of India and the High Court erred in dismissing the writ petition holding disputed question of fact merely because 3rd to 5th respondents have opposed the writ petition with a mala fide intention for their vested interests, which cannot be a ground for the High Court to dismiss the writ petition without giving any reasons.15. Respondents have disputed the claim of the appellant to transfer the land in the name of the appellant company.16. From the bare pleading of the case and the record, we find that there is disputed question of fact about the ownership of the Plot No.C/9, Industrial Estate, Cuttack. Therefore, the High Court was justified in dismissing the same and directing the parties to approach the Civil Court for resolving such dispute. 17. From the pleading and record the following fact emerges: The 1st respondent-IDCO allotted Plot no.C/9, Industrial Estate, Cuttack on 18.3.1982 in favour of M/s Prachi Vanijya (P) Ltd. on hire-purchase basis subject to payment of outstanding amount of Rs.9,78,880/- as on 30.11.1986. The appellant has pleaded that the land along with building, shed and fan machines situated at C/9, Industrial Estate, Cuttack were purchased from the 2nd respondent by M/s Eastern Fans on 5.12.1987, of which Sri Satya Narayan Swain was the Managing Partner along with a loan liability of Rs.6,60,000/- of the 2nd respondent. It is not clear as to how M/s Eastern Fans purchased the land from M/s Prachi Vanijya, if the land was originally taken from 1st respondent on hypothecation basis subject to payment of Rs.9,78,880/-. From letter of M/s Eastern Fan dated 10.7.1989, Annexure P-5 (Page 31), we find that the said M/s Eastern Fan intended to setup plant of Ferro alloy in their factory premises at C/9, Industrial Estate, Khapuria, Cuttack and therefore it was decided between themselves and M/s Swati Ferro Alloys Pvt. Ltd. that the appellant-Company will take responsibility to clear the term loan paid by 2nd respondent-Orissa State Financial Corporation along with accrued interest. In the said letter, it was intimated that M/s Eastern Fan intended to start manufacturing activities under the name and style of M/s Swati Ferro Alloys Pvt. Ltd. The appellant company was thereby incorporated by M/s Eastern Fan for the said purpose. Letter dated 9.1.1990 issued by 2nd respondent-Orissa State Financial Corporation to the appellant company shows that the appellant company was intimated that entire assets and liabilities of M/s Prachi Vanijya was transferred to the appellant company and the same was agreed upon by the appellant company on certain terms and conditions. Letter dated 23.12.2003 written by 2nd respondent-Orissa State Financial Corporation to the Managing Director, IDCO, indicates that M/s Eastern Fan availed loan from 2nd respondent and mortgaged the leasehold land in favour of 2nd respondent as security. Letter dated 26.4.1989 written by 1st respondent-IDCO shows that the appellant-company -M/s Swati Ferro Alloys Pvt. Ltd. was allowed only accommodation inside the premises of M/s Eastern Fan for a period of 2 years and they have not given permission for transfer of the land. 18. We agree with the observation of the High Court that this matter involves disputed question of fact. Despite the same, prima facie it appears that neither original borrower nor the present appellant does any business in the land in question, except for taking loan against the land. In this background while we upheld the impugned judgment dated 18th April, 2012 passed by the Division Bench of High Court of Orissa at Cuttack in WP(C) No.16790 of 2008, we are of the opinion that the respondent-IDCO should inquire into the matter to find out as to whether the land is properly used by one or other party for the purpose it was open or by opening different firms or companies in different names in same premises, they are availing loan mortgaging the same very land. For such inquiry the respondent-IDCO will issue notice to the 2nd respondent-Orissa State Financial Corporation, appellant-M/s Swati Ferro Alloys Pvt. Ltd., M/s Eastern Fan and any other party who may be interested. On such enquiry it will be open for the competent authority to pass an appropriate order.

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]11. From the record we find that the appellant company has also setup a fresh unit for making Ferro Alloys in aluminium thermic process on 27.5.1997 and also taken facility of Letter of Credit from State Bank of India for Rs.1,50,000/- in the year 1992, which was renewed every year. It has also been sanctioned cash credit limit of Rs.40 lakhs by the State Bank of India in the year 1992 and the same was extended every year, as apparent from letter dated 27.5.1997.12. 2nd respondent also accepted the execution of Tripartite Agreement with the State Bank of India by letter dated 29.1.1998. The Tripartite Agreement clearly states that 2nd respondent had in its custody the title deeds relating to the property of the appellant company. It appears that the appellant persuaded the 2nd respondent for transfer of lease right and title of the appellant since it has taken all the assets of the partnership firm of M/s Eastern Fans. In support of this, the appellant company relied upon letter dated 23.12.2003 issued by the 2nd respondent duly recommending the transfer of title of the plot in favour of the appellant. The grievance of the appellant company is that despite several representations made to 1st respondent between 2003 and 2008 no action was taken by it to transfer the title of the said plot in favour of the appellant company.13. As no action was taken, the appellant company moved before the High Court seeking transfer of the right in their favour, wherein the aforesaid observation was made by the Division Bench of the High Court by impugned judgment dated 18th April, 2012.14. Learned counsel for the appellant submits that all the facts as were pleaded in the writ petition were not disputed by the 1st and 2nd respondents. It was contended that refusal of 1st respondent to transfer the lease of the Plot No.C/9, Industrial Estate, Cuttack in favour of the appellant is wrong, arbitrary and highly illegal and the same was subject to judicial review under Article 226 of the Constitution of India and the High Court erred in dismissing the writ petition holding disputed question of fact merely because 3rd to 5th respondents have opposed the writ petition with a mala fide intention for their vested interests, which cannot be a ground for the High Court to dismiss the writ petition without giving any reasons.15. Respondents have disputed the claim of the appellant to transfer the land in the name of the appellant company.16. From the bare pleading of the case and the record, we find that there is disputed question of fact about the ownership of the Plot No.C/9, Industrial Estate, Cuttack. Therefore, the High Court was justified in dismissing the same and directing the parties to approach the Civil Court for resolving such dispute.We agree with the observation of the High Court that this matter involves disputed question of fact. Despite the same, prima facie it appears that neither original borrower nor the present appellant does any business in the land in question, except for taking loan against the land. In this background while we upheld the impugned judgment dated 18th April, 2012 passed by the Division Bench of High Court of Orissa at Cuttack in WP(C) No.16790 of 2008, we are of the opinion that the respondent-IDCO should inquire into the matter to find out as to whether the land is properly used by one or other party for the purpose it was open or by opening different firms or companies in different names in same premises, they are availing loan mortgaging the same very land. For such inquiry the respondent-IDCO will issue notice to the 2nd respondent-Orissa State Financial Corporation, appellant-M/s Swati Ferro Alloys Pvt. Ltd., M/s Eastern Fan and any other party who may be interested. On such enquiry it will be open for the competent authority to pass an appropriate order.