IMPORTANT POINTS
The landlady received advance amount, and Section 65(a)(2)(b) prohibits any rent taken in advance-The lease deed also reveals that even if the amount were to be treated as security, it is to hedge the tenant`s default in rent-It is an amount taken in advance to prevent any default and to adjust the amount on default-The lease deed squarely falls within the mischief of Section 65(A) and thus falls foul of Sub Section 2 Clause (b), (c) and (e) because even the lease stood extended beyond three years.

Introduction:

A borrower faces recovery. About to be dispossessed, she approaches the Court, pleads many things, but abandons all in the end, then seeks only one relief: a couple of weeks’ time to vacate. Court grants it. She violates. Then a stranger emerges from the litigious shadows. Claiming to be a tenant, he goes to the Tribunal and gets the eviction stayed. The creditor, all his efforts to get the secured assets stultified, files a contempt case, the alleged tenant added to the proceedings. Can the borrower suffer for the tenant’s assertion? Conversely, can the tenant suffer for the borrower’s breach?

Facts:

2. Petitioner Jayalakshmi N. Pillai borrowed two loans: a housing loan and a mortgage loan, in 2012, by mortgaging her immovable property. With that loan she built a house, but she defaulted on the loan repayment. To recover the loans, the Bank issued a notice under Section 13 (2) of the SARFAESI Act. Then Jayalakshmi filed WP (C) No.4624 of 2017.

3. Through a judgment, dated 22.06.2017, this Court allowed Jayalakshmi to pay the loan arrears in ten equal monthly instalments, along with regular instalments. Jayalakshmi did not pay.

4. Left with no other option, the Bank proceeded further; it invoked Section 14 and had an advocate-commissioner appointed, for taking physical possession of the secured asset: the house. When the advocate commissioner issued the Ext.P4 notice, Jayalakshmi filed this writ petition.

5. On the day the Court took up the matter for hearing, Jayalakshmi’s counsel abandoned all pleas; instead, he sought fifteen days for Jayalakshmi to surrender the vacant secured asset. The Bank's counsel consented to this. He nevertheless, as a stroke of premonition, insisted that if Jayalakshmi violates her undertaking, it should be treated as an act of contempt. Then, on 25th June 2018, this Court disposed of the writ petition observing thus:

“4. So, I hold that the petitioner must, as undertaken, surrender the possession within fifteen days, lest the violation of such an undertaking should be treated as negating the Court directive willfully.”

6. Later, the Bank filed Contempt Case No. 1589 of 2018. It complained that Jayalakshmi willfully violated her undertaking—rather the Court's direction. The Bank's counsel has also brought to the Court's notice one startling factor: a tenant's resistance. Startling I said, because Jayalakshmi has never pleaded about tenancy at any stage, either in the previous writ petition or in the latter one. Startling may be an exaggerated expression, but its use here justifies itself. P. Prasad, the tenant, emerged out of thin air; he filed an S.A. before the Debt Recovery Tribunal and secured a stay on 19.07.2018—nearly a month after Jayalakshmi’s undertaking to vacate the house.

7. In the Contempt case, Jayalakshmi, as the respondent, did not appear before the Court, despite receiving notice. The Court, then, issued a bailable warrant. Eventually, under pain of arrest, Jayalakshmi turned up. She engaged a new counsel for handling the contempt proceedings.

8. Sri T. A. Shain, the new counsel, has told the Court that Jayalakshmi has complied with the judgment and vacated the house. The Court advised Sri Shain to be cautious while committing himself on a factual assertion; it rather advised him to have the facts fully ascertained from Jayalakshmi. Then, he has sought time to file a counter affidavit.

9. Sri Shain, as undertook, did place on record Jayalakshmi’s counter affidavit. The affidavit explains that the secured asset comprises a couple of rooms. Jayalakshmi along with her children used to reside in one room, having let out the other to Prasad. As undertaken, she vacated that room, but Prasad wanted to assert his independent right. So he approached the Debt Recovery Tribunal (“the Tribunal”). Later, this Court suo motu brought Prasad, the alleged tenant, on record and put him on notice. Then he appeared through Sri N. K. Mohan Lal, and defended himself.

10. Heard Sri Paulochan