The Securitisation Act has overriding effect over the Kerala Buildings (Lease and Rent Control) Act, and the word 'encumbrances' includes tenancy arrangements. The borrower's undertaking not to lease out the property was violated, and the bank was not required to resort to the Rent Control Act for evicting the tenant.

Radhakrishnan, Ag.C.J.

Writ petition was preferred by the appellant herein seeking a declaration that the word "encumbrances" enumerated in Rule 9(9) of Security Interest (Enforcement) Rules, 2002 does not include tenancy arrangements with respect to the secured ' assets sold as per Rule 8 and also for a declaration that the provisions of Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (Enforcements) Rules, 2002 does not authorise the eviction of tenants in occupation of secured assets and also for other consequential relief’s. Petitioner has also challenged the notice dated 31-10-2006 received from the bank directing the petitioner to handover vacant possession of the premises to the bank failing which petitioner was informed that coercive steps would be taken to evict the petitioner from the premises. Learned Single Judge found no infirmity in the notice issued by the bank and dismissed the writ petition. Aggrieved by the same this appeal has been preferred.

2. Sri D. Kishore, counsel appearing for the appellant submitted that the Bank has no legal right to evict the petitioner invoking the provisions of the Securitisation Act as well as the Rules framed there under without resorting to the provisions of the Kerala Buildings (Lease and Rent Control) Act. Counsel submitted that Rule 9(9) of the Security Interest (Enforcement) Rules, 2002 would not take in tenancy arrangement and the word "free from encumbrances" enumerated in Rule 9(9) means the encumbrances set forth in Rule 9(7). Counsel submitted that the rights of a tenant available under the Kerala Buildings (Lease and Rent Control) Act as well as under the Code of Civil Procedure cannot be set at naught by the Securitisation Act and Rules framed there under. Counsel submitted, in any view of the matter the decision of the Division Bench of this Court in Shameem v. City Police Commissioner 2005 (4) KLT (S.N.) page 70, requires reconsideration since the Bench has not properly considered the effect of Rules 9(7) and 9(9) of the Security Interest (Enforcement) Rules, 2002.

3. Sri A.V. Thomas, counsel appearing for the first respondent bank has filed a detailed counter-affidavit in writ appeal and narrated various steps taken by the bank for realising the amount from the borrower. Counsel submitted that M/s Anupam, a partnership firm and M/s Anupam Exports (India), a proprietory concern had availed cash credit hypothecation limit, packing credit limit, FDBP etc. from the Mavelikara Branch of the Union Bank of India to the tune of Rs. 35,00,000, Rs. 15,00,000 and Rs.30,00,000 respectively. Towards security for due repayment of the loan amounts, an extent of 8.86 Ares (20.500 cents) of land in Survey No. 20/37 and 20/35 of Mavelikara Village (old survey No.84/3 and 84/2) with the building therein was mortgaged by the partner and proprietor on 12-1-1995 to the bank by deposit of title deeds. The account became non performing asset and the bank initiated proceedings under the Securitiation Act as per notice dated 27-9-2002. Later, the bank filed O.A. No.279/03 before the Debts Recovery Tribunal, Ernakulam on 2-9-2003 and the bank after getting permission from the Tribunal, continued proceedings under Securitisation Act. Notice issued by the bank was challenged before this court and the same was repelled. Ultimately bank had filed I.A. 1232/04 before the Tribunal for permission to conduct sale of the securities under the Securitisation Act and the Tribunal vide order dated 21-7-2004 accorded sanction to the bank to issue notice under the Act. Based on the notice dated 5-5-2004 the authorized officer went to the property for taking possession on 2-8-2004 and the same was obstructed by the persons set up by borrowers. Ultimately the bank sought the assistance of the District Magistrate to take possession of the secured assets and the District Magistrate gave necessary instructions to the police to assist the bank to take possessio