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IN THE HIGH COURT OF KERALA AT ERNAKULAM
N. NAGARESH, J.
Shiju Mani S/o Late Kurian Mani – Petitioner
Versus
The CSB Rep. by its Authorized Officer – Respondent
W.P. (C) Nos. 25857, 26154 of 2023
Decided On : 14-02-2024
SARFAESI Act - Tenancy Rights - Section 14, Section 17(4-A) - The judgment discusses the interplay between the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act), the Kerala Building (Lease and Rent Control) Act, 1965, and the Transfer of Property Act, 1882. It highlights the rights of tenants in possession of secured assets, the jurisdiction of the Debts Recovery Tribunal, and the limitations of the Chief Judicial Magistrate's Court under Section 14 of the SARFAESI Act.
Fact of the Case:
The petitioners, tenants in possession of commercial buildings, were facing eviction proceedings initiated by a bank under the SARFAESI Act. The bank had obtained orders to take physical possession of the premises, leading to the petitioners filing various legal actions to challenge the eviction.
Finding of the Court:
The court found that the Chief Judicial Magistrate's Court had limited powers under Section 14 of the SARFAESI Act and that the petitioners' challenge against the orders of the Chief Judicial Magistrate's Court failed. The court also directed the petitioners to approach the Debts Recovery Tribunal for redressal of their grievances.
Issues: The court considered the maintainability of the writ petitions, the rights of the petitioners as tenants under the Rent Control Act, and the jurisdiction of the Debts Recovery Tribunal to adjudicate the status of the tenants and the eviction proceedings.
Ratio Decidendi: The court held that tenants in possession of secured assets for an extended period can only be evicted in compliance with the provisions of the Rent Control Act. It also emphasized that the Debts Recovery Tribunal has the jurisdiction to examine the status of a tenant and to pass orders in accordance with the SARFAESI Act.
Final Decision: The court disposed of the writ petitions, directing the petitioners to approach the Debts Recovery Tribunal for redressal of their grievances and ordering the restoration of possession of the tenanted premises to the petitioners pending adjudication by the Debts Recovery Tribunal.
JUDGMENT :
N. NAGARESH, J.
1. These writ petitions are filed by petitioners who are in possession of rooms/shop-rooms of a commercial building. They are aggrieved by the proceedings initiated by the 1st respondent-Catholic Syrian Bank to take over physical possession of the premises invoking the provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, as the borrower-landlord failed to discharge his debt due to the Bank.
2. The facts involved in both these writ petitions are more or less identical and the disputed property is of the 4th respondent in W.P. (C) No. 25857/2023 (the 3rd respondent in W.P. (C) No. 26154/2023). The petitioner in W.P. (C) No. 25857/2023 states that his father Kurian Mani took a property on ground rent in the year 1953 from one Mr. Jacob Kurian and Mrs. Mariamma. Father of the petitioner constructed a building in the property and the building is used for various commercial activities. Legal heirs of late Kurian Mani released their rights in favour of the petitioner and thereafter the petitioner is conducting a Hotel in the property.
3. The petitioner states that in the year 2008, by a registered Sale Deed, the 4th respondent purchased the property along with tenanted premises from its prior owners. In the year 2012, the 4th respondent filed Ext.P3 RCOP No. 13/2012 in the Rent Control Court, Kottayam seeking to evict the petitioner. In Ext.P3 RCOP, the 4th respondent admitted that tenancy of the petitioner started in the year 1966. The RCOP was dismissed by the Rent Control Court as per Ext.P4 order dated 10.02.2014.
4. However, in RCA No. 10/2014 filed by the 4th respondent in the Additional Rent Control Appellate Authority-II, Kottayam, the appellate court set aside the order of the Rent Control Court and ordered eviction of the petitioner, as per Ext.P5 judgment. The petitioner has filed RC Rev. No. 135/2019 before this Court and this Court has stayed further proceedings in the execution petition as per Ext.P6 order dated 23.09.2022.
5. It is seen that in the years 2014 and 2019, the 4th respondent had mortgaged the property to the 1st respondent-Bank and obtained financial advances. On the failure of the 4th respondent to discharge his debts, the 1st respondent-Bank initiated proceedings under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as “the SARFAESI Act”).
6. The petitioner states that suppressing the possession of the property by the petitioner, the Bank moved a petition in the Chief Judicial Magistrate's Court, Kottayam under Section 14 of the SARFAESI Act seeking assistance to take over physical possession of the property. The Chief Judicial Magistrate appointed an Advocate Commissioner for taking possession of the property from the 4th respondent. After obtaining Section 14 order, the Bank officials required the petitioner to stop conducting Hotel and to vacate the premises.
7. The petitioner filed SA No. 327/2023 in the Debts Recovery Tribunal, Ernakulam against the move of the Bank. According to the petitioner, when the case came up for consideration before the Tribunal on 03.07.2023, the Presiding Officer observed that as per Section 17(1), only a persons aggrieved by a proceeding under Section 13(4) can file a petition under Section 17(1). Since no proceedings have been initiated against the petitioner under Section 13(4), maintainability of SA No. 327/2023 is doubtful. The case was adjourned to 11.08.2023.
8. In the circumstances, under the threat of eviction, the petitioner filed Ext.P8 OS No. 368/2023 in the Additional Munsiff's Court, Kottayam seeking to restrain the defendants including the 1st defendant-Bank. By Ext.P9 order dated 10.07.2023, the Munsiff's Court passed Ext.P9 ad interim injunction against the Bank restraining the Bank from forcefully evicting the petitioner from the building otherwise than under due process of law. Ext.P9 orde
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.
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 main legal point established in the judgment is that the existence of a valid tenancy can affect the rights of the secured creditor under SARFAESI Act, emphasizing the need for due diligence by b....
Tenants must establish valid, registered tenancy agreements to protect their possession against secured creditors under the SARFAESI Act.
MAIN POINTSSection 13(13) of the SARFAESI Act, 2002 will override section 65A of the Transfer of Property Act, 1882.Therefore unless a lease is validly determined in terms of section 111, possession ....
A lease exceeding one year must be registered; oral agreements cannot create valid leases beyond that period, and civil courts lack jurisdiction in matters under the SARFAESI Act.
The Debts Recovery Tribunal has no jurisdiction to pass an order of eviction against a bona fide tenant in respect of a mortgaged property.
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