Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 – s.13(2), (4) – West Bengal Premises Tenancy Act, 1997 – 1st Respondent claimed to be a tenant of the secured asset since 1987, through an unregistered tenancy agreement – Tenancy expired in 1992, however, 1st Respondent alleged that he continued as a monthly tenant – Landlord sold the secured asset to 2nd Respondentborrower in 2007 who later took a loan from the Appellant in 2017 against creation of security interest on the premises – Loan account not serviced, became a NPA – Demand notice issued u/s.13(2) in 2021 – Eventually, physical possession of the secured asset was taken by the Appellant – 1st Respondent sought back possession of the secured asset, High Court directed restoration of possession – Interference with: Held: Onus lies on tenants claiming through an oral/unregistered agreement to produce rent receipts, property/water taxes receipts, electricity charges, etc., to establish the creation of a valid tenancy – Even then, such tenancies created through an oral/unregistered agreement would not continue beyond one year from issuance of notice u/s.13(2) and the tenant upon expiry of the said period shall be deemed to be a ‘tenant in sufferance’ – Although, 1st Respondent claimed he was a tenant in the secured asset from 1987, he was unable to place on record any rent receipt, tax receipt or electricity bill evidencing continued occupation of the premises prior to issuance of demand notice u/s.13(2) – He only relied on documents showing deposit of rent with Rent Controller from January 2022 to December 2022, that is, after demand notice was issued by the Appellant – Mere reference to some pre-existing tenancy in the sale deed or issuance of letter of attornment by 2nd Respondent-borrower unsubstantiated by independent and convincing possessory evidence would not establish a compelling case of pre-existing tenancy in favour of 1st Respondent – Evidence adduced by 1st Respondent before the DRT with regard to prior tenancy not convincing – Further, institution of the ejectment suit by 2nd Respondent may not be a determining factor as the possibility of setting up a sham and collusive suit to defeat the claim of the Appellant cannot be ruled out – Furthermore, 1st Respondent had also failed to take prompt steps to protect his interest in the secured asset – Only after physical possession had been taken over by the Appellant, did he approach the DRT for restoration of possession – A mandatory order restoring status quo ante necessitates a compelling case which 1st Respondent failed to establish – His indifferent conduct and failure to produce rent receipts and/or other evidence regarding continued possession prior to issuance of demand notice u/s.13(2) does not justify a mandatory order – Impugned order set aside – Status quo to be maintained in respect of the secured asset till the disposal of securitization application – Security Interest (Enforcement) Rules, 2002 – r.8(1), (2). [Paras 18, 23-26]
Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 – s.18 – Physical possession of the secured asset was taken by the Appellant – 1st Respondent claimed to be a tenant of the secured asset, filed a securitization application, inter alia, praying for handing back possession of the secured asset – An interim application seeking stay of notice u/s.13(4) and other reliefs was also filed – DRT held the claim of tenancy was based on an unregistered instrument and neither borrower nor the tenant had intimated the Appellant about the tenancy at the time of creation of mortgage – Interim relief rejected by DRT, matter fixed for final hearing – Order challenged by 1st Respondent before High Court u/Art.227 – High Court directed restoration of possession – Propriety:
Held: Order of DRT is appealable before the appellate tribunal u/s.18 – High Court ought not to have entertained the matter in view of the existence of appellate remedy u/s.18 – Interference of High Courts u/Art.226/227 in matters pertaining to SARFAESI, deprecated. [Para 12]
As published in the Supreme Court Reports, Supreme Court of India. Headnotes prepared by: Divya Pandey No.737/2023. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
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