Point of Law : Creditor has right to take actual possession of the secured asset even after transfer of title to an auction purchaser.

JUDGMENT :

The petitioner is a Banking Company constituted under the Banking Companies (Acquisition & Transfer of Undertakings) Act, 1970. It has approached this Court being aggrieved by Ext.P7 order of the Chief Judicial Magistrate Court, Alappuzha, in proceedings under Section 14 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act (hereinafter referred to as the ‘SARFAESI’ Act) Act.

2. The petitioner, a secured creditor in respect of a loan availed by the 1st respondent, brought to sale an item of property in which the 3rd respondent claims to be a tenant under the provisions of the SARFAESI Act. The property was purchased by the 4th respondent. The application filed by the petitioner under Section 14 of the SARFAESI Act for obtaining vacant possession of the property has been rejected by the learned Magistrate finding inter alia the rights of the tenant cannot be defeated by the provisions in the SARFAESI Act. The learned Magistrate has concluded that the tenancy was created much before the creation of the mortgage, and therefore such tenants cannot be evicted by reporting to proceedings under Section 14 of the SARFAESI Act.

3. The learned counsel appearing for the petitioner submits that the learned Magistrate has travelled beyond the scope of Section 14 of the SARFAESI Act and has decided matters outside the purview of an enquiry under Section 14. It is submitted that the application under Section 14 of the SARFAESI Act was filed as the petitioner had not obtained physical possession of the secured asset. It is submitted that the application under Section 14 was maintainable and that there were no documents whatsoever to establish that the 3rd respondent was a bonafide tenant. It is submitted that the recovery proceedings initiated by the petitioner Bank have been thwarted by collusive action between the original borrower and the 3rd respondent. The learned counsel placed reliance on the judgments of the Supreme Court in Harshad Govardhan Sondagar v. International Assets Reconstruction Co.Ltd. & Ors; (2014) 6 SCC 1, Bajarang Shyamsundar Agarwal v. Central Bank of India; (2019) 9 SCC 94, Hemraj Ratnakar Salian v. HDFC Bank Ltd. & Ors. 2021 SCC Online SC 611 and the judgment of this Court in The Kottakkal Co-Operative Urban Bank v. T. Balakrishnan & Another; CDJ 2008 Ker HC 262, to contend that, in the absence of a registered agreement, the 3rd respondent could not claim any right as a tenant. It is also pointed out that, even after the sale of the asset in favour of the 4th respondent, the petitioner continued to be a secured creditor entitled to exercise the rights of a secured creditor u/s.14 of the SARFAESI Act in the light of the law laid down in ITC Limited v. Blue Coast Hotels Ltd & Others in (2018) 15 SCC 99.

4. The learned counsel appearing for the 3rd respondent would contend that the learned Chief Judicial Magistrate has committed no error and the order of the learned Magistrate cannot be interfered with by this Court in the exercise of jurisdiction under Article 226 of the Constitution of India. It is submitted that the notice u/s.13 (2) of the SARFAESI Act was issued on 24.1.2020, followed by Ext.P2 notice u/s.13(4) on 16.10.2020. It is submitted that the sale notice published by the Bank on 24.3.2021 clearly shows that the asset was sold in ‘as is where is’ condition. It is submitted that Ext.P5 is the initial order passed by the learned Chief Judicial Magistrate, Alappuzha permitting the application filed u/s.14 of the SARFAESI Act. It is submitted that this order was subsequently recalled through Ext.P7 order dated 11.11.2021, at the instance of the 3rd respondent. It is submitted that there are documents such as municipal records etc., which would establish that the 3rd respondent is a tenant in respect of the secured asset from the year 1976 and the rights of the 3rd respondent to continue in occupation stands protected by the Rent Control Laws which cannot be