Dena Bank is trying every trick to avoid vacating its branch office near Mumbai whose lease has expired over 32 months ago. This is a lesson to property owners who believe that it is ‘safe’ to rent their premises to government organisations
Property owners usually believe that leasing their premises to a nationalised bank or a government organisation is a safe bet and will give them rental income without any headache. Abhay and Sanjay Acharekar, who leased a property to Dena Bank, are learning otherwise. The bank’s lease expired in 2012, but 32 months later, Dena Bank has not only refused to vacate the property, but its legal department is trying to extort a “compensation” from the property owners.
The case becomes interesting when put in perspective. Dena Bank have bad loans to the tune of Rs4,229.92 crore as on December 2014, a jump of 5.61% compared with same quarter last year. The powerful nationalised bank, which cannot seem to recover legitimate loans, however has a legal department that is not averse to flexing its muscle to extract compensation from property owners who innocently leased their valuable asset to the bank.
Abhay and Sanjay Acharekar leased their property at Govandi in Mumbai to Dena Bank. The lease expired in 2012. In June 2013, the Acharekar brothers decided to sell their property and requested all tenants to give them vacant possession of their rented premises. "All the tenants except Dena Bank willingly vacated the property and gave us possession of their respective premises. Dena Bank, however, has not vacated the occupied premises despite the lease expiry almost 32 months ago," Abhay Acharekar said.
The Acharekar brothers have been meeting, writing to Dena Bank officials repeatedly but have made no headway as yet. On 6 October 2012 and on 11 July 2014, they received an ‘unconditional' written commitment from the Bank (a copy of which is with Moneylife) stating that it would vacate the premises within 2 to 3 months and that it was a matter of completing necessary formalities.
Moneylife wrote to the Dena Bank chairman, its independent directors and other top executives, including its PR firm AD Factors to find out what the bank had to say about its attempt to arm-twist property owners, refusing to vacate their property. This was on 18 February 2015. The PR agency, initially sought more time, but is clearly helpless. The agency has now responded to quote Bank officials as, "We acknowledge receipt of your mail. The matter of Govandi branch premises is under our consideration and will be resolved shortly.”
However, former police DGP, Dr PS Pasricha has been the only one to send a pro-active response almost immediately. On 18th February, in his prompt email response Dr Pasricha, a shareholder director on Dena Bank Board, said, “I have taken a note. I shall personally pursue this matter till its logical conclusion”.
Meanwhile, the Acharekars received a communication from Dena Bank's Govandi branch office, which contained observations from the Bank's Zonal Office Executive Committee. It says, "The landlords of Govandi branch premises had sold the property and want the Bank to vacant the premises. The Committee advised that the ZOPC, Mumbai Suburban to explore the possibility of obtaining compensation from landlords for surrendering premises, as per the Premises Policy 2014-15 , and resubmit the proposal at the earliest. Hence, we once again advise to you to discuss with the existing landlord and inform us accordingly.”
Unfortunately, for the Bank, especially public sector undertaking (PSUs) there is no provision to seek compensation from the property owner in Maharashtra. The Maharashtra State Rent Act 1999, clearly mentions that banks, public sector undertakings, and public limited companies (with paid up share capital of Rs1 crore or more) are not protected under the Act. Moreover, Dena Bank's own guidelines state that the Bank should abide by Rent Acts applicable in each region as and when required.
Dena Bank had already exceeded its stay in the rented premises by about 32 months after expiration of the lease and instead of vacating the premises, it is now trying to extract compensation from the landlord, without even checking its unconditional undertaking and the provisions of laws applicable in the state.
The Bank officials are reluctant to say anything on the issue. When we again contacted the PR agency for Dena Bank, we received a reply that the Bank's legal department is perusing the matter and it would be resolved. However, there was no time frame given by the agency to resolve the issue.
This delaying tactics used by Dena Bank will only make property owners think twice before renting their premises to other banks. This in turn may give headaches to banks themselves, especially in a land-starved city like Mumbai.