The court ruled that tenants must provide substantial evidence of tenancy, especially when claiming rights under SARFAESI, and that High Court's intervention in such cases is limited.

JUDGMENT :

Joymalya Bagchi, J.

1. Leave granted.

2. Appellant has assailed the judgment and order passed by High Court whereby the secured asset¹[Space of 450 sq.ft. on first floor, 1 Allenby Road, Kolkata – 700020] whose possession was taken by the Appellant, was directed to be handed back to the 1st Respondent.

3.1st Respondent claims to be a tenant of the secured asset. He had entered into an unregistered tenancy agreement with M/s Janapriya Finance and Industrial Investment (India) Pvt. Ltd²[Original landlord] fora period of 5 years. In 1992, the term of tenancy expired. But 1st Respondent alleged he continued as a monthly tenant under the original landlord. In 2007, the original landlord sold the secured asset to 2nd Respondent. By letter of attornment dated 04.03.2008, 2nd Respondent that is, the new landlord called upon 1st Respondent to pay rent. 1st Respondent contends he paid rent to 2nd Respondent and continued to occupy the secured asset as a tenant.

4. On 09.02.2017, 2nd Respondent took a loan from the Appellant against creation of security interest on the premises. A second loan was also taken. The loan account was not serviced and became a Non­Performing Asset (NPA). Demand notice under Section 13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002³[hereinafter referred to as, ‘SARFAESI’] was issued to the 2nd Respondent on 13.07.2021, requiring the latter to pay Rs.3,09,65,636.97/­ along with applicable future interest and charges within 60 days. The notice further stated that, in the event of non­payment, the secured creditor would initiate measures under Section 13(4) of SARFAESI, including taking possession and sale of the secured asset. Despite such intimation, no payment was made within 60 days of receipt of notice. In the meantime, 2nd Respondent instituted an ejectment suit against 1st Respondent on various grounds, including non­ payment of rent.

5. On 02.12.2021, symbolic possession of the secured asset was taken by the Appellant under section 13(4) of SARFAESI. As per Rule 8 (1) and (2) of the Security Interest (Enforcement) Rules, 2002, notice of symbolic possession was published in two leading newspapers and also affixed on a conspicuous part of secured asset.

6. 2nd Respondent filed a securitization application⁴[No.139/2022] before Debt Recovery Tribunal⁵[hereinafter referred to as, ‘DRT’] ­ III, Kolkata challenging the recovery measures initiated under section 13(4) of SARFAESI.

7. On 08.04.2022, Appellant filed an application under section 14 of SARFAESI, seeking assistance of District Magistrate to take physical possession of the secured asset. District Magistrate allowed the application and directed Deputy Magistrate to take possession of the secured asset. However, DRT by order dated 09.11.2022, directed the Appellant to serve prior notice to 2nd Respondent before taking physical possession. Accordingly, on 19.07.2023 intimation was given to 2nd Respondent with regard to taking over possession of the secured asset. Similar notice was also pasted on the secured asset. On 02.08.2023, physical possession was taken by the Deputy Magistrate and handed over to the Appellant.

8. On 23.08.2023, 1st Respondent informed the Appellant he was a tenant of the secured asset and called upon the latter to hand over documents on the basis of which possession of secured asset was taken. Thereafter, 1st Respondent filed a securitization application⁶[No.737/2023], inter alia, praying for various reliefs including handing back possession of the secured asset. An interim application⁷[No.2331/2023] seeking stay of notice dated 02.08.2023 under section 13(4) and other reliefs was also filed.

9. After hearing the parties, DRT held the claim of tenancy was based on an unregistered instrument. Neither borrower nor the tenant had intimated the Appellant about the tenancy at the time of creation of mortgage. Given these facts, in view of Harshad Govardhan Sondagar v. Intern