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2015 Supreme(Bom) 1804
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
S. C. DHARMADHIKARI & B. P. COLABAWALLA, JJ.
National Laminate Corporation & Ors. - Petitioners
Versus
Euro Merchandise (India) Private Limited & Ors. - Respondents
Writ Petition No.2419 of 2015
Decided On : 09-10-2015
Advocate Appeared:
Mr. Samdani Senior Advocate with Mr. Mandevia i/b. M/s. Maniar Srivastava and Associates for the Petitioners
Mr. Rajeev K. Pandey and Mr. Balraj Kulkarni i/b. PRS Legal for Respondent No. 4
An unregistered tenancy agreement cannot be relied upon to protect possession against a secured creditor under the SARFAESI Act, and the Maharashtra Rent Control Act, 1999 does not apply to unregistered tenancy agreements.
Headnote:
SARFAESI ACT - SECTION 14 - CHIEF METROPOLITAN MAGISTRATE - POSSESSION OF SECURED ASSETS - TENANCY AGREEMENT - RENT CONTROL ACT - JURISDICTION - INJUNCTION - VALIDITY OF LEASE - REGISTRATION - INTERPRETATION OF STATUTES - OVERRIDING EFFECT - LAWFUL POSSESSION - COLLUSIVE ACTION - FALSE STATEMENT - ASSISTANCE OF MAGISTRATE - SECURED CREDITOR - MORTGAGE - AFFIDAVIT - CHIEF METROPOLITAN MAGISTRATE OR DISTRICT MAGISTRATE - JURISDICTION - REMEDIES - TENANT PROTECTION - RENT CONTROL LEGISLATION - JURISDICTION OF COURTS - INJUNCTION AGAINST SECURED CREDITOR - SECTION 34 OF THE SARFAESI ACT - JURISDICTION OF CIVIL COURTS - SECTION 33 OF THE MAHARASHTRA RENT CONTROL ACT - SECTION 107 OF THE TRANSFER OF PROPERTY ACT - SECTION 55 OF THE MAHARASHTRA RENT CONTROL ACT - TENANCY AGREEMENT TO BE COMPULSORILY REGISTERED - MONTHLY TENANCY - EVICTION OF TENANT - CONTRACTUAL TENANCY - STATUTORY TENANCY - TENANT HOLDING OVER - INTERPRETATION OF STATUTES - OVERRIDING EFFECT - LAWFUL POSSESSION - COLLUSIVE ACTION - FALSE STATEMENT - ASSISTANCE OF MAGISTRATE - SECURED CREDITOR - MORTGAGE - AFFIDAVIT - CHIEF METROPOLITAN MAGISTRATE OR DISTRICT MAGISTRATE - JURISDICTION - REMEDIES - TENANT PROTECTION - RENT CONTROL LEGISLATION - JURISDICTION OF COURTS - INJUNCTION AGAINST SECURED CREDITOR - SECTION 34 OF THE SARFAESI ACT - JURISDICTION OF CIVIL COURTS - SECTION 33 OF THE MAHARASHTRA RENT CONTROL ACT - SECTION 107 OF THE TRANSFER OF PROPERTY ACT - SECTION 55 OF THE MAHARASHTRA RENT CONTROL ACT - TENANCY AGREEMENT TO BE COMPULSORILY REGISTERED - MONTHLY TENANCY - EVICTION OF TENANT - CONTRACTUAL TENANCY - STATUTORY TENANCY - TENANT HOLDING OVER - INTERPRETATION OF STATUTES - OVERRIDING EFFECT - LAWFUL POSSESSION - COLLUSIVE ACTION - FALSE STATEMENT - ASSISTANCE OF MAGISTRATE - SECURED CREDITOR - MORTGAGE - AFFIDAVIT - CHIEF METROPOLITAN MAGISTRATE OR DISTRICT MAGISTRATE - JURISDICTION - REMEDIES - TENANT PROTECTION - RENT CONTROL LEGISLATION - JURISDICTION OF COURTS - INJUNCTION AGAINST SECURED CREDITOR - SECTION 34 OF THE SARFAESI ACT - JURISDICTION OF CIVIL COURTS - SECTION 33 OF THE MAHARASHTRA RENT CONTROL ACT - SECTION 107 OF THE TRANSFER OF PROPERTY ACT - SECTION 55 OF THE MAHARASHTRA RENT CONTROL ACT - TENANCY AGREEMENT TO BE COMPULSORILY REGISTERED - MONTHLY TENANCY - EVICTION OF TENANT - CONTRACTUAL TENANCY - STATUTORY TENANCY - TENANT HOLDING OVER
Fact of the Case:
The Petitioners, a partnership firm and its partner, challenged an order passed under section 14 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act) by the Chief Metropolitan Magistrate, Esplanade, Mumbai, directing the Chief Metropolitan Magistrate, who is in-charge of Assistant Registrar of Bandra Center of Courts, Mumbai, to take possession of the secured assets, a property and a shop, by taking such steps and using such force including breaking open the lock thereof or taking assistance of police, if required, at the expenses of the applicant and deliver possession thereof along with documents/articles, if any, found therein to the authorised officer of the applicant after preparing panchanama and taking inventory of the secured assets. The Petitioners claimed to be in possession of the property as tenants based on an unregistered agreement dated 1st September, 2000, and argued that the Bank, as the secured creditor, was aware of their possession and failed to disclose the same in the application filed before the learned Chief Metropolitan Magistrate, Esplanade, Mumbai. The Bank, on the other hand, contended that the Petitioners were colluding with the borrowers and guarantors to defeat the rights of the Bank and that the tenancy agreement was executed after the mortgage was created and was not registered as required by law.
Finding of the Court:
The Court held that the Petitioners' claim of tenancy was prima facie doubtful as the tenancy agreement was unregistered and the parties to the agreement were the same as those who executed the mortgage deed. The Court further held that the Bank was not required to make a declaration regarding the Petitioners' tenancy in its application under section 14 of the SARFAESI Act, as the Petitioners' possession was not known to the Bank and the tenancy agreement was not registered. The Court also held that the Petitioners could not rely on the Maharashtra Rent Control Act, 1999 to protect their possession as the tenancy agreement was not registered as required by section 55 of the Act.
Issues: 1. Whether the Bank was required to make a declaration regarding the Petitioners' tenancy in its application under section 14 of the SARFAESI Act? 2. Whether the Petitioners could rely on the Maharashtra Rent Control Act, 1999 to protect their possession?
Ratio Decidendi: 1. No, the Bank was not required to make a declaration regarding the Petitioners' tenancy in its application under section 14 of the SARFAESI Act, as the Petitioners' possession was not known to the Bank and the tenancy agreement was not registered. 2. No, the Petitioners could not rely on the Maharashtra Rent Control Act, 1999 to protect their possession as the tenancy agreement was not registered as required by section 55 of the Act.
Final Decision: The Court dismissed the Writ Petition and refused to stay the order of the learned Chief Metropolitan Magistrate.
S.C. Dharmadhikari, J.
Rule. Respondents waive service. By consent, Rule mad returnable forthwith.
2) By this Petition under Article 226 of the Constitution of India, the Petitioners are challenging an order under section 14 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short “the SARFAESI Act”) dated 18th June, 2015, copy of which is at Annexure 'A' to the Petition.
3) By this order, passed under section 14(1) of the SARFAESI Act, the Chief Metropolitan Magistrate, Esplanade, Mumbai has, on an application made by the Cosmos Cooperative Bank Limited, directed as under:
“ORDER
Application is allowed.
Judicial Clerk, who is in-charge of Assistant Registrar of Bandra Center of Courts, Mumbai is appointed as the Court Commissioner to take possession of the secured assets viz 1)village Mohili, Tah. Kurla, and situated within registration district of Mumbai and sub-district of Mumbai suburban district bearing S. No. 63/1(P); CTS No. 569 admeasuring about 2299 sq. yards and the said property with structure standing thereon and being constructed and 2) shop No. 1 admeasuring about 39.50 sq. mtrs. Situated on the ground floor of the building known as “Abhishek” standing on piece of land bearing plot No. S. No. 254 of village Vile Parle, TPS II Vile Parle, CTS No. 1257/2 to 6 of Vile Parle within the registration district and sub-district of Mumbai city and Mumbai suburban and within the local limits of Greater Mumbai Municipal Corporation by taking such steps and using such force including breaking open the lock thereof or taking assistance of police, if required, at the expenses of the applicant and deliver possession thereof along with documents/articles, if any, found therein to the authorised officer of the applicant after preparing panchanama and taking inventory of the secured assets.
The Assistant Registrar concerned shall report compliance within one month from the receipt of the writ of commission.
Issue writ of commission accordingly on payment of P.F., And Rs.5,000/- towards the Court Commissioner's fees, which, if deposited be credited to DLSA, Mumbai.”
4) The present Petition is concerning the premises Survey No. 63, Hissa No. 1(Part), City Survey No. 569 and admeasuring 2299 square yards, situate at Village Mohili, Taluka Kurla in the registration District and Sub-District of Mumbai Suburban. Petitioner No. 1 is a partnership firm registered under the Indian Partnership Act, 1932. The second Petitioner claims to be a partner of Petitioner No. 1 firm.
5) Respondent Nos. 1 and 2 to this Writ Petition are two private limited companies, both registered under the Indian Companies Act, 1956, having their office at the address mentioned in the cause title. The third Respondent is the Senior Police Inspector attached to Sakinaka Police Station and the fourth Respondent is the Cosmos Cooperative Bank Limited, which is registered as a Multi State Cooperative Society under the Multi State Cooperative Societies Act, 2002 functioning from the address mentioned in the cause title.
6) The Petitioners state that the second Respondent is the owner of the said property/premises. After referring to a conveyance in favour of the second Respondent and its registration, what is relied upon is a document, copy of which is at Annexure 'B' to the Writ Petition. It is stated to be an agreement of tenancy dated 1st September, 2000, which has been executed by and between Respondent No. 2 and Petitioner No. 1. It is stated that Respondent No. 2 has demised the said property in favour of Petitioner No. 1 and permitted to use, occupy and possess the said property on tenancy basis at the rent reserved therein. Upon execution of the said agreement, it is claimed that the second Respondent has put Petitioner No. 1 in vacant and peaceful possession of the said premises. It is stated that the rent payable annually was Rs.60,000/It was increased after expiry of the initial period of 18 months
