K.M.THAKER

1. The petitioner, a Cooperative Bank, has brought under-challenge the order dated 31.08.2010 passed by the Debts Recovery Appellate Tribunal (hereinafter referred to as “the Appellate Tribunal”) in Appeal No.162 of 2010 whereby the Appellate Tribunal confirmed the order dated 25.05.2010 passed by the Debts Recovery Tribunal-II (hereinafter referred to as “the DRT”) in Application No.56 of 2010. The petitioner has also challenged the aforesaid order dated 25.05.2010 passed by the DRT.

1.1 While allowing the application filed by present respondent no.1, the DRT, vide the aforesaid order dated 25.05.2010, directed the petitioner-Bank to restore the possession of the disputed property in favour of the respondent no.1. The Appellate Tribunal, by the order dated 31.08.2010, confirmed the said order passed by the DRT. The petitioner-Bank is aggrieved by the said orders and directions. Hence, present petition.

2. The petition on hand raises the issue regarding the extent of the jurisdiction of DRT in the matter concerning disputes pertaining to secured asset in possession of / occupied by tenant.

2.1 Mr.Navin Pahwa, learned advocate has appeared for the petitioner-Bank and Mr.Gogia, learned advocate has appeared for the respondent no.1. Though served no one has entered appearance for the respondent no.2. Having regard to the rival contentions, Rule. Mr. Gogia, learned advocate has waived service of Notice of Rule on behalf of the respondent No.2. With the consent of the learned advocates appearing for the contesting parties, the petition is taken up for hearing and final decision today.

3. So as to appreciate the issue raised by the parties contesting present petition, it is necessary to take into account the factual matrix. The relevant facts are as follows:-

3.1 The petitioner is a Cooperative Society registered under the Gujarat Cooperative Societies Act, 1961 and is, inter-alia, engaged in banking activity. The petitioner is also governed by the provisions under Banking Regulation Act, 1949.

3.2 The petitioner-Bank had given loan to the respondent no.2 for purchasing the property in dispute. The respondent no.2 had, for the said purpose, mortgaged the property in favour of the Bank.

3.3 It is the claim of the petitioner-Bank that at the time when the respondent no.2 created the mortgage in favour of the petitioner-Bank neither there was any tenant in possession and occupation of the disputed property nor any tenancy rights in favour of anyone was existing and/or created by the borrower and the property in question was vacant. The respondent No.1 claimed, and continues to claim, that he is the tenant and his allegations are diagonally opposite to the case put-up by the petitioner Bank inasmuch as the bank claims that vacant property was mortgaged while the respondent No.1 is claiming preexisting tenancy.

3.4 Sometime after the loan was availed and mortgage was created, the respondent no.2 failed to pay the installments and eventually defaulted in repayment of the loan.

3.5 Therefore, in May-2005, the petitioner-Bank issued notice under Section 13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as “the Act”). The respondent no.2, allegedly, did not pay any heed to the said notice. Therefore, the aforesaid notice was followed by notice under Section 13(4) of the Act. Since the respondent no.2 neglected both the notices, request to the District Magistrate was made under Section 14 of the Act which culminated into order passed by the District Magistrate in exercise of powers under Section 14 of the Act.

3.6 The petitioner has claimed that subsequently the respondent no.1, (who claims to be the tenant) filed a Civil Suit in the Small Cause Court at Rajkot and invoked the provision under the Bombay Rents, Hotel and Lodging House Rates Control Act, 1947 (hereinafter referred to as the “Rent Act”) which was registered as Civil Suit N