IMPORTANT POINTS
(1) If a tenancy under law comes into existence after creation of a mortgage but prior to issuance of a notice under Section 13(2) of SARFAESI Act, it has to satisfy conditions of Section 65A of Transfer of Property Act, 1882.
(2) Rent Act would not come to aid of a “tenant-in-sufferance” vis-à-vis SARFAESI Act due to operation of Section 13(2) read with Section 13(13) of SARFAESI Act.

JUDGMENT :

S.ABDUL NAZEER, J.

Leave granted.

2. These appeals are directed against the Orders dated 30.12.2015 and 06.01.2016 in Case C.C. No.381/SA/2014 passed by the Chief Metropolitan Magistrate, Esplanade, Mumbai, rejecting the Application (Exh.8) filed by the appellant herein for restraining HDFC Bank, the first respondent herein, from taking possession of the property in the appellant’s possession.

3. HDFC Bank had granted financial facility to respondent nos.2 and 3 (for short, ‘the Borrowers’) of Rs.5,50,00,000/(Rupees Five Crore Fifty Lakhs). On 03.04.2013, the Borrowers had mortgaged a property bearing Flat No.501, 5th Floor, Solitaire, Village Kopari, Adi Shankaracharya Road, MHADA Layout, Powai, Andheri (E), Mumbai (for short, “the Secured Asset”) in favour of the Bank with an intention to secure the said credit facility.

4. The accounts of the Borrowers were declared as non-performing assets (NPA) on 31.10.2013. On 25.01.2014, the Bank issued a notice under Section 13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short, “SARFAESI Act”) to the Borrowers. It is the case of the appellant that he is a tenant of the Secured Asset on a monthly rent of Rs.20,000/- since 12.06.2012 with an increase of 5% every year. He has been paying rent regularly to his landlord since inception of his tenancy.

5. The appellant filed Exh.8 application before the Magistrate seeking protection of his possession of the Secured Asset as the Magistrate was ceased with the petition under Section 14 of SARFAESI Act filed by the respondent no.1-Bank. Vide Order dated 30.12.2015, the intervention application of the appellant was dismissed by the Magistrate holding that there was no registered tenancy placed on record by the appellant.

6. We have heard learned counsel for the parties. Learned counsel for the appellant would contend that the appellant is a protected tenant under the provisions of the Maharashtra Rent Control Act 1999. He has been paying rent regularly to the landlord. He has also paid advance rent till 17.12.2018. There are continuous rent receipts with him from the date of his induction as a tenant. The tenant was residing in the said premises on the basis of an oral tenancy from 12.06.2012. Therefore, he cannot be evicted from the Secured Asset without due process of law.

7. On the other hand, learned counsel for the respondent-Bank submits that the rent receipt said to have been issued by the landlord for the period from 12.06.2012 to 12.05.2013 is of 12.05.2013 which is after the date of creation of mortgage in favour of the Bank. There is absolutely no material to show that the tenancy was created earlier to the date of mortgage. The tenancy pleaded by the appellant is an oral tenancy. At the time of grant of facility, third-party valuers had confirmed that the Borrowers were staying at the Secured Asset. The Borrowers, while making representation to the Bank, have not claimed that any tenant is staying at the Secured Asset. The tenancy claimed by the appellant is an afterthought which cannot be believed in the facts and circumstances of the case. He prays for dismissal of the appeal.

8. We have carefully considered the submissions made at the Bar and perused the materials placed on the record.

9. As noticed above, it is the case of the appellant that he is a tenant of the Secured Asset since 12.06.2012 and has paid advance rent upto 17.12.2018. The documents produced by the appellant are xerox copies of the rent receipts. However, in response to the notice issued under Section 13(2) of the SARFAESI Act, the Borrowers have sent a very detailed representation wherein they have not claimed that any tenant is staying at the Secured Asset. The appellant has pleaded tenancy from 12.06.2012 to 17.12.2018. The rent receipt claiming tenancy from 12.06.2012 is a xerox copy of 12.05.2013, which is after the date of creation of mortgage.

10. Procedural mechanism for taking posse