IN THE HIGH COURT OF KERALA AT ERNAKULAM
P.B. SURESH KUMAR, C.S. SUDHA, JJ.
Mohan Sundaram – Petitioner
Versus
Punjab National Bank, Rep. by its Chief Manager, Palakkad – Respondent
R.C. Rev. Nos. 184, 185, 191, 192, 193 of 2015
Decided On : 23-12-2022
Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 - Kerala Buildings (Lease and Rent Control) Act, 1965 - Sections 11(3) and 11(7) - Tenants - Ordered eviction - Rent Control - Rejected claim - Whether a subsequent mortgagee of immovable property has knowledge of a lease or not - Held, Surviving question is as to whether Bank is entitled to seek eviction of tenants from a secured asset taken over by Bank for sale for realising its dues - Argument is that if only institution needs building to be used by it for its purpose can it invoke Section 11(7) and that it cannot invoke said provision for sale of building - As noted Section 11(7) enables a public institution to apply to Rent Control Court for an order directing tenant to put institution in possession if building is needed for purpose of institution - Word purpose means that which a person sets before himself as an object to be reached or accomplished - As noted public institution in case on hand is a Bank governed by provisions contained in Banking Regulation Act, 1949 - Section 5 of said Act provides that unless there is anything repugnant in subject or context banking means accepting for purpose of lending or investment of deposits of money from public repayable on demand or otherwise and with drawable by cheque draft order or otherwise - Petition Dismissed.
ORDER :
1. The tenants in five eviction petitions instituted under Sections 11(3) and 11(7) of the Kerala Buildings (Lease and Rent Control) Act, 1965 (the Act) by a common landlord in respect of five different premises in a commercial complex, are the petitioners in these revision petitions. The eviction petitions were tried together. The landlord in the proceedings is a public sector Bank. The Rent Control Court rejected the claim of the landlord under Section 11(3) and ordered eviction of the tenants under Section 11(7). Though the Appellate Authority took the view that the landlord in a case of this nature ought to have invoked the provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act), it dismissed the appeals. The tenants are aggrieved by the decisions of the authorities below and hence, these revision petitions.
2. The subject matter of the proceedings belonged to one Kasi Viswanathan and his brothers. They mortgaged the premises to the Bank to secure repayments of the credit facilities availed by them from the Bank. When the borrowers committed default in repaying the dues, the Bank initiated proceedings under the SARFAESI Act in respect of the premises and secured symbolic possession of the same. The eviction petitions were instituted by the Bank thereupon, stating that the Bank is a public institution; that they intend to sell the subject premises for realizing the debts due from the mortgagers; that the premises would fetch its true value only if the same is sold without encumbrances and that the tenants are, therefore, to be evicted from the premises for the said purpose. The tenants contested the proceedings mainly contending that the Bank cannot be said to be a public institution within the scope of Section 11(7) of the Act; that even if it is so, the Bank cannot be said to be the landlord of the tenants for the purpose of instituting the eviction petitions and that a tenant cannot be evicted invoking Section 11(7) for the purpose of enabling the Bank to sell the tenanted premises. As noted, the Rent Control Court ordered eviction of the tenants under Section 11(7) of the Act. In appeals, as noted, even though the Appellate Authority found that the remedy of the landlord in a case of this nature is under the provisions of the SARFAESI Act, it chose to dismiss the appeals as not maintainable.
3. Heard the learned counsel for the tenants as also the learned counsel for the Bank.
4. The learned counsel for the tenants argued persuasively that the Bank cannot be said to be a public institution within the scope of Section 11(7) of the Act and even if so, the Bank cannot be said to be the landlord of the tenants. It was also argued by the learned counsel that having regard to the object of the Act, it cannot be said that a tenant in a premises could be evicted under Section 11(7) so as to enable the landlord to sell the tenanted premises. According to the learned counsel, such a need will not fall under Section 11(7).
5. We have examined the contentions raised by the learned counsel for the tenants.
6. Before considering the question as to whether the decision of the Rent Control Court suffers from any illegality, irregularity or impropriety, it is necessary for us to consider the question whether the Appellate Authority was justified in taking the view that the eviction petitions are not maintainable. It is seen that it is in light of the decision of the Apex Court in Harshad Govardhan Sondagar vs. International Assets Reconstruction Co. Ltd. (2014) 6 SCC 1, that the Appellate Authority took the view aforesaid.
7. It is seen that the pleadings of the Bank in the eviction petitions are not of the expected standard, especially in a case of this nature. The common paragraph 2 in the eviction petitions reads thus:
“As the below scheduled property was in occupation of the respondent-tenant, the petitioner-Bank as secured creditor and having stepped into
Bajarang Shyamsunder Agarwal vs. Central Bank of India
Harshad Govardhan Sondagar vs. International Assets Reconstruction Co. Ltd. (2014) 6 SCC 1
SupremeToday
A lessee is entitled to protect his right under Transfer of Property Act and Rent Control Legislation even against a mortgagee whose right is subject to transfer of interest in favour of tenant.
The Debts Recovery Tribunal has no jurisdiction to pass an order of eviction against a bona fide tenant in respect of a mortgaged property.
Tenancy rights created after a mortgage are invalid if they violate statutory provisions, and tenants cannot claim protection under the Rent Control Act in such cases.
The SARFAESI Act's provisions on eviction take precedence over tenant protections under Rent Control Law when no valid tenancy exists.
Important Point :Whether secured creditor is entitled to possession of secured asset in possession of tenant from time much before creditor advanced loan?
The SARFAESI Act, particularly Section 17 (4A) and Section 34, prevails over Civil Courts in matters concerning the tenant-landlord relationship and the rights of parties in secured assets.
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