Back
2016 Supreme(Cal) 239
IN THE HIGH COURT OF JUDICATURE AT CALCUTTA
MANJULA CHELLUR, JOYMALYA BAGCHI, JJ.
State Bank of India & Anr. - Petitioners
Vs.
Vivek Kumar Kejriwal - Respondent
A.P.O. No. 86 of 2015; G.A. No. 694 of 2015 With W.P. No. 931 of 2014
Decided On : 01-02-2016
Advocate Appeared:
For the Petitioners: Mr. Shaktinath Mukherjee, Mr. Biswajit Som
For the Respondent: Mr. Jishnu Saha, Mr. Arindam Banerjee, Mr. Asish Mukherjee, Mr. Siddhartha Banerjee, Mr. Saurabh Prasad
A bona fide pre-existing tenant in a secured asset is entitled to assail measures taken by the secured creditor to take possession of the secured property under Section 13(4) of the SARFAESI Act as well as steps taken by the secured creditor under Section 14 of the Act before the Tribunal or the learned Magistrate as the case may be.
Headnote:
SARFAESI ACT - PRE-EXISTING TENANCY - VALIDITY - SECTION 13(4), 14, 17 - APPLICABILITY - INTERPRETATION - REMEDIES AVAILABLE TO TENANT - SECTION 34, 35 - EFFECT.
Fact of the Case:
Dispute between creditor and borrower led to an appeal concerning secured asset secured for loan advancement by appellant Bank to respondent company. The property consisted of ground floor plus three floors and the rooftop in Premises at No. 10A, Shakespeare Sarani, Kolkata-700071. A third party claiming to be a tenant challenged the order passed by Chief Metropolitan Magistrate dated 03.07.2014 in respect of the above secured property, contending that he as a tenant in possession of the property cannot be evicted except under due process of law.
Finding of the Court:
1. Pre-existing tenancies created under the West Bengal Tenancy Act cannot stand extinguished by operation of SARFAESI Act. 2. A bona fide pre-existing tenant in the secured asset is entitled to assail measures taken by the secured creditor to take possession of the secured property under Section 13(4) of the Act as well as steps taken by the secured creditor under Section 14 of the Act before the Tribunal or the learned Magistrate as the case may be.
Issues: 1. Whether a pre-existing tenancy created under the West Bengal Tenancy Act can be extinguished by operation of the SARFAESI Act? 2. What are the remedies available to a bona fide pre-existing tenant in a secured asset?
Ratio Decidendi: 1. The provisions of the SARFAESI Act do not override the provisions of the Rent Control Act, and the Banks are not at liberty to evict the tenants residing in the tenanted premises which have been offered as collateral securities for loans on which default has been done by the debtor/landlord. 2. A non-obstante clause (Section 35 of the SARFAESI Act) cannot be used to bulldoze the statutory rights vested on the tenants under the Rent Control Act. 3. A bona fide pre-existing tenant in the secured asset is entitled to approach the magistrate and lead evidence to establish tenancy under Section 14 of the Act or if measures are taken under Section 13(4) of the Act to approach the Tribunal under Section 17 of the Act as the case may be.
Final Decision: The appeal and the application are disposed of with a direction to the writ petitioner tenant to approach the learned Magistrate with an application to substantiate his contention of pre-existing tenancy, in case the appellant Bank seeks further course of action under Section 14 of the SARFAESI Act against the borrower in respect of the secured asset.
Manjula Chellur, J.
The dispute between the creditor and borrower ultimately led to the present appeal in respect of secured asset secured for the advancement of the loan by the appellant Bank to the respondent No. 5 company. The property consist of ground floor plus three floors and the roof top in Premises at No. 10A, Shakespeare Sarani, Kolkata-700071 which would be referred to as secured asset hereinafter.
2. The writ petition came to be filed by a third party claiming to be a tenant challenging the order passed by Chief Metropolitan Magistrate dated 03.07.2014 in respect of the above secured property contending that he as a tenant being in possession of the property cannot be evicted except under due process of law. The learned Judge in a detailed order allowed the writ petition by setting aside the order of the Chief Metropolitan Magistrate Calcutta opining that secured creditor is at liberty to approach the relevant authority in terms of Section 14 of the Security and Reconstruction of Financial assets and Enforcement of Security Interest Act 2002 (SARFESI) (hereinafter referred to as the Act) in respect of the secured property.
3. However, so far as validity of the tenancy or the right of the writ petitioner nothing was said on merits.
4. It is not in dispute that when the respondent No. 5 company failed to repay the loan, the same was declared as Non-Performing Asset (NPA). Proceedings were initiated by issuance of notice dated 29.10.2013 to the 5th respondent under Section 13(2) of the Act. Apparently symbolic possession of the secured asset was taken on 30.05.2014. Newspaper publications appeared at the behest of the Bank on 03.06.2014 followed by corrigendum on 06.06.2015.
5. Subsequently, appellant Bank took out an application under Section 14 of the Act before the learned Chief Metropolitan Magistrate Calcutta seeking permission of the Magistrate to take physical possession of the secured asset. Learned Magistrate by order dated 03.07.2014 allowed the Bank to take physical possession of the secured asset with police help.
6. Respondent No. 1/writ petitioner at that point of time claiming to be a tenant in respect of the ground floor and terrace of the above secured asset at a monthly rent of Rs. 8,000/- since 12.08.2006 filed the writ petition in question.
7. Admittedly, reliance was placed on an unregistered tenancy agreement dated 12.08.2006 and certain rent receipts issued by respondent Company till June 2014. He further tried to substantiate his claim by placing trade licenses issued by Calcutta Municipal Corporation etc. Apparently appellant Bank had also issued notice under Section 13(4)(d) of the Act. However, writ petitioner had not paid rents to the Bank in response to the notice.
8. During pendency of the said application before the Chief Metropolitan Magistrate when the sale notice came to be published, the same was assailed in the proceedings before the Debt Recovery Tribunal in S.A. 15/2014.
9. No bidders came forward in response to the publication of said notice, therefore, the Tribunal by order dated 03.09.2014 refused to grant any interim relief to the present writ petitioner in the above S.A. 15/2014. Further Tribunal reserved liberty to the writ petitioner to take appropriate action before appropriate forum in view of the law declared by the Apex Court in Harshad Govardhan Sondagar v. International Assets Reconstruction Company Limited reported in (2014) 6 SCC 1.
10. Learned Single Judge opined while allowing the writ petition that affidavit filed by the Bank was not in terms of the requirements indicated in Sondagar (supra) and that the order of learned Magistrate was also not in consonance with Section 14(1-A) of the Act of 2002.
11. Ms. Mukherjee, learned senior Counsel while arguing for appellant Bank submitted that when writ petitioner/respondent was not a registered lessee he was not entitled to resist taking possession of the secured asset in terms of Section 14 of the Act in the light of
