IMPORTANT POINT
Provisions of SARFAESI Act cannot override provisions of Rent Control Act.

Headnote:(A) Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 – Section 35 – Maharashtra Rent Control Act, 1999 – Section 15 – Rights of Protected tenant – Section 35 of SARFAESI Act cannot be used to bulldoze statutory rights vested on tenants under Rent Control Act – Expression ‘any other law for the time being in force’ as appearing in Section 35 of SARFAESI Act cannot mean to extend to each and every law enacted by Central and State legislatures – It can only extend to laws operating in same field – Once tenancy is created tenant can be evicted only after following due process of law as prescribed under provisions of Rent Control Act – Tenant cannot be arbitrarily evicted by using provisions of SARFAESI Act as that would amount to stultifying statutory rights of protection given to tenant – Landlord cannot be permitted to do indirectly what he has been barred from doing under Rent Control Act, more so when two legislations, SARFAESI Act and Rent Control Act operate in completely different fields – Provisions of SARFAESI Act cannot be used to override provisions of Rent Control Act – Neither landlord nor banks can be permitted to exploit fact of non-registration of tenancy deed against tenant.. (Paras 22, 24, 25, 30 and 33)
       (2014) 6 SCC 1; (2000) 6 SCC 394; (2008) 1 SCC 125 ; (1980) 3 SCC 610; (1971) 1 SCC 85 ; (1992) 4 SCC 363 ; (1996) 6 SCC 44 ; (2009) 4 SCC 94 ; (1994) 3 SCC 1 – Relied.
       (B) Judicial Discipline – Binding Precedent – Ratio decidendi – A judgment cannot be read as a statute and interpreted and applied to fact situations – A word or sentence cannot be picked up from a judgment to construe that it is ratio decidendi on relevant aspect of case. (Para 27)
       Facts of Case:
       Point in issue is whether a protected tenant under Maharashtra Rent Control Act, 1999 can be treated as a lessee and whether the provisions of The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 will override the provisions of Rent Control Act. How can right of the ‘protected tenant’ be preserved in cases where debtor-landlord secures a loan by offering very same property as a security interest either to Banks or Financial Institutions.
       Findings of Court:
       If we accept legal submissions made on behalf of Banks to hold that provisions of SARFAESI Act override provisions of various Rent Control Acts to allow a Bank to evict a tenant from tenanted premise which has become a secured asset of Bank after the default on loan by landlord and dispense with procedure laid down under the provisions of various Rent Control Acts and law laid down by this Court in catena of cases, then legislative powers of State legislatures are denuded which would amount to subverting the law enacted by State Legislature. Surely, such a situation was not contemplated by Parliament while enacting SARFAESI Act and interpretation sought to be made by Counsel appearing on behalf of the Banks cannot be accepted by this Court as the same is wholly untenable in law.
       Result : Appeals allowed.

JUDGMENT :

V. Gopala Gowda, J.

The applications for impleadment are allowed.

2. Leave granted in all the special leave petitions.

3. In the present batch of appeals, the broad point which requires our attention and consideration is whether a ‘protected tenant’ under The Maharashtra Rent Control Act, 1999 (in short the ‘Rent Control Act’) can be treated as a lessee, and whether the provisions of The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (in short, the ‘SARFAESI Act’) will override the provisions of the Rent Control Act. How can the right of the ‘protected tenant’ be preserved in cases where the debtor-landlord secures a loan by offering the very same property as a security interest either to Banks or Financial Institutions, is also the essential legal question to be decided by us.

4. In all the appeals, the same question of law would arise for consideration. For the sake of convenience and brevity, we would refer to the relevant facts from the appeal arising out of S.L.P.(Crl.) No.8060 of 2015, which has been filed against the impugned judgment and order dated 29.11.2014 in M.A. No. 123 of 2011 in Case No.237 of 2010 passed by the learned Chief Metropolitan Magistrate, Esplanade, Mumbai, wherein the application of the appellant herein for impleadment as intervenor as well as stay of the order dated 08.04.2011 passed in Case No.237 of 2010 by the learned Magistrate, Esplanade, Mumbai, was dismissed.

5. Respondent Nos. 4 and 5 had approached the Bank of India (Respondent No.1) (in short “the respondent Bank”) for a financial loan, which was granted against equitable mortgage of several properties belonging to them, including the property in which the appellant is allegedly a tenant. The respondent nos. 4 and 5 failed to pay the dues within the stipulated time and thus, in terms of the SARFAESI Act, their account became a non- performing asset. On 12.03.2010, the respondent-Bank served on them notice under Section 13(2) of SARFAESI Act. On failure of the respondents to clear the dues from the loan amount borrowed by the above respondent nos. 4 and 5 within the stipulated statutory period of 60 days, the respondent-Bank filed an application before the Chief Metropolitan Magistrate, Mumbai under Section 14 of the SARFAESI Act for seeking possession of the mortgaged properties which are in actual possession of the Appellant. The learned Chief Metropolitan Magistrate allowed the application filed by the respondent-Bank vide order dated 08.04.2011 and directed the Assistant Registrar, Borivali Centre of Courts to take possession of the secured assets. On 26.05.2011, the respondent no.4 served a notice on the appellant, asking him to vacate the premises in which he was residing within 12 days from the receipt of the notice. The appellant fearing eviction, filed a Rent Suit R.A.D. Suit No. 913 of 2011 before the Court of Small Causes, Bombay. Vide order dated 08.06.2011, the Small Causes Court allowed the application and passed an ad interim order of injunction in favour of the appellant, restraining respondent no.4 from obstructing the possession of the appellant over the suit premises during the pendency of the suit. In view of the order dated 08.06.2011, the appellant then filed an application as an intervenor to stay the execution of the order dated 08.04.2011 passed by the Chief Metropolitan Magistrate. The learned Chief Metropolitan Magistrate vide order dated 29.11.2014 dismissed the application filed by the appellant by placing reliance on a judgment of this Court rendered in the case of Harshad Govardhan Sondagar v. International Assets Reconstruction Co. Ltd. & Ors., (2014) 6 SCC 1. Dismissing the application, the learned judge held as under:-

“3. ...the Hon’ble Supreme Court has held that the alleged tenant has to produce proof of execution of a registered instrument in his favour by the lessor. Where he does not produce proof of execution of a registered instrument in hi

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2016 Supreme(SC) 59

IMPORTANT POINTProvisions of SARFAESI Act cannot override provisions of Rent Control Act.

Cases Referred (11)

IMPORTANT POINT
Provisions of SARFAESI Act cannot override provisions of Rent Control Act.