A.K.PATNAIK, V.GOPALA GOWDA
Harshad Govardhan Sondagar – Appellant
Versus
International Assets Reconstruction – Respondent
Based on the provided legal document, if there is a valid tenant on the property with a registered lease created prior to the mortgage, the District Magistrate (DM) would need to examine the validity of that lease before proceeding with any action to take possession of the property. The DM must consider whether the lease was made in accordance with the provisions of the Transfer of Property Act, specifically Section 107, which requires that leases exceeding one year or for terms beyond one year must be registered, or whether the lease was made through an oral agreement with delivery of possession, which is permissible for shorter terms (!) .
Furthermore, the DM must verify whether the lease was created before the mortgage or in accordance with the requirements of Section 65A of the Transfer of Property Act, which regulates the rights of mortgagors to lease mortgaged properties. If the lease is established as valid and not determined under the appropriate legal provisions, the DM is obligated to recognize that lawful possession of the lessee remains protected, and the lease cannot be deemed terminated solely because of the mortgage enforcement proceedings (!) (!) .
Therefore, the DM's role includes a thorough review of the lease documentation and circumstances to determine the lease's validity and timing relative to the mortgage, ensuring that the rights of the lawful lessee are upheld unless the lease has been properly determined or invalidated under the applicable laws.
Judgment :
A.K. PATNAIK, J.
Leave granted.
Facts:
2. The appellants claim to be tenants of different premises in Mumbai. These premises were mortgaged to different banks as securities for loans advanced by the banks (hereinafter referred to as `the secured creditors'). As the borrowers have defaulted in repayment of their secured debts or instalments thereof and their accounts in respect of such debts have been classified by the secured creditors as non-performing assets, the secured creditors have issued notices of 60 days period under sub- section (2) of Section 13 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short `SARFAESI Act') to the borrowers saying that they intend to enforce the secured assets in the event of non- payment of the secured debts. As the borrowers have failed to discharge their liability in full within the period of sixty days from the date of notice, the secured creditors have exercised their right under sub- section (4) of Section 13 of the SARFAESI Act to take possession of the secured assets of the borrowers. The secured assets, however, consist of the premises under possession of the appellan
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