IN THE HIGH COURT OF JUDICATURE AT ALLAHABAD
Surya Prakash Kesarwani, Chandra Kumar Rai, JJ.
Bank of Baroda, Branch Rosarb, Agra - Petitioner
Versus
State of U.P. and others - Respondents
Civil Misc. Writ Petition No. 9412 of 2022
Decided On : 27-07-2022
Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 - Section 14, 34 - Registration Act, 1908 - Section 17, (1)(b), 49, 69 - Mortgaged property - Physical possession - Issue direction in nature of MANDAMUS commanding Respondent Nos. 2 to pass fresh order on Bank's application in order to hand over actual physical possession of mortgaged property to Petitioner Bank within a stipulated period – Held, Court is unable to understand that how and under what circumstances afore-quoted interim order has been passed when Civil Judge who himself has noted that alleged unregistered lease agreement executed in favour of her husband conferring right to him to mortgage and sublet etc - Unregistered rent deed is hit by provisions of Section 17 read with Section 49 of Registration Act, 1908 - Interim order could not have been passed as secured asset in question was mortgaged with bank and jurisdiction of Civil Court was barred by Section 34 of SARFAESI Act, 2002 - Respondent No. 2 is directed to pass an order afresh for physical possession over secured asset - Petition allowed.
Parties Involved: Petitioner is Bank of Baroda, Branch Rossar Bazar, Agra; Respondents include State of U.P., Additional District Magistrate (Finance & Revenue), Agra (ADM), owner Smt. Roopa Singh (Respondent 4), and alleged tenant Abhimanyu Singh, Director of Eena Cable T.V. Network Pvt. Ltd. (Respondent 5, son of Respondent 4). (!) [25001116270009] (!)
Reliefs Sought by Petitioner: Quash order dated 17.2.2022 rejecting S.14 SARFAESI application; direct Respondent 2 (ADM) to pass fresh order handing over physical possession of mortgaged property (House No. 247, Jaipur House, Lohamandi Ward, Agra). [25001116270001][25001116270021]
Background of Proceedings: Bank initiated SARFAESI recovery for dues of Rs. 2,83,82,364/- against borrower M/s. Gayatri Development Well Pvt. Ltd.; property mortgaged by owner Roopa Singh; initial S.14 order dated 26.2.2018 allowed, set aside by DRT on 30.3.2019 for natural justice violation; fresh proceedings pending, accelerated by writ orders dated 24.8.2021 and 11.11.2021 directing conclusion within 30 days absent stay. (!) [25001116270010]
Impugned Order (17.2.2022): ADM rejected S.14 application due to status quo interim order dated 7.12.2020 in O.S. No. 1258/2020 by Civil Judge (Sr. Div.), Agra (Abhimanyu Singh v. Roopa Singh & others), where bank not impleaded; advised by District Govt. Counsel. (!) [25001116270009] (!)
Alleged Tenancy Claim: Respondent 5 claims tenancy via unregistered lease dated 1.8.2010 (11 months, Rs.500/month) from Roopa Singh to her husband Pawan Kumar Singh (authorizing sublet/mortgage), extended to 2039; later alleged registered lease dated 23.2.2019 from Pawan to Abhimanyu (29 years, Rs.2000/month); property leased before 2012 mortgage substitution. [25001116270006][25001116270008][25001116270011][25001116270012] (!) (!) (!) [25001116270013]
Court's Observations on Lease Documents: Unregistered 1.8.2010 lease hit by S.17(1)(b) & S.49 Registration Act (creates rights in immovable property like mortgage/sublet); cannot be evidence; 23.2.2019 lease post-dates mortgage/recovery; documents fraudulent/manipulated between family (mother-son-husband), concealed from bank/DRT/authorities. [25001116270015][25001116270016][25001116270036]
Civil Suit O.S. 1258/2020: Filed by Respondent 5 without impleading bank; interim status quo granted despite noting unregistered lease; suit barred by S.34 SARFAESI (no civil court jurisdiction over secured asset measures). (!) (!) [25001116270014][25001116270016][25001116270017] (!)
Interim Orders in Writ: Directions for counters/records; noted prima facie invalidity of injunction/unregistered lease; questioned Civil Judge's order ignoring Registration Act/SARFAESI bar. [25001116270002] (!) [25001116270003] (!) (!) [25001116270004] (!) [25001116270005]
Findings on Collusion/Fraud: Respondents 4 & 5 (mother-son) colluded; suit suppressed family ties, bank not party; no tenancy whisper in prior DRT proceedings by owner. [25001116270006][25001116270015] (!)
Outcome: Impugned order quashed; Respondent 2 directed to pass fresh S.14 order for physical possession within 30 days; O.S. 1258/2020 dismissed as barred by S.34 SARFAESI; writ allowed. [25001116270019]
JUDGMENT :
By the Court.-Heard Sri Sandeep Kumar Singh, learned counsel for the petitioner, Sri Nimai Das, learned Additional Chief Standing Counsel for the respondent Nos. 1 and 2 and Sri Vidyapati Tripathi, learned counsel for the respondent No. 5.
2. This writ petition has been filed by the petitioner - Bank praying for the following reliefs :
(b) issue a writ order or direction in the nature of MANDAMUS commanding the Respondent Nos. 2 to pass fresh order on the Bank's application dated 17.2.2018 in order to hand over the actual physical possession of the mortgaged property (specifically detailed in the body of the writ petition in Para No. 4) to the Petitioner Bank within a stipulated period;''
3. By order dated 6.7.2022, this Court directed the respondent No. 1 (State of U.P. through the District Magistrate, Agra), the respondent No. 2 (The Additional District Magistrate (Finance & Revenue), Agra and the respondent No. 5 (Abhimanyu Singh Director, Eena Cable T.V. Network Pvt. Ltd., Agra) to file counter-affidavit. The order dated 6.7.2022 is reproduced below:
Prima facie, it appears that neither the civil suit is maintainable nor the application of the bank under Section 14 of the SARFAESI Act ought to have been rejected on the ground of temporary injunction obtained by the tenant, when the bank was not a party in the suit and therefore, the temporary injunction so obtained would not be operative against the bank in respect of the secured asset. In paragraph 19 of the writ petition, it has been alleged that the aforesaid temporary injunction has been obtained on the basis of an alleged unregistered lease deed dated 1.8.2010 for a period of 29 years and 8 months which, prima facie, was required to be compulsorily registered in view of Section 17 of the Registration Act, 1908 and failure of registration would attract the consequences under Section 49 of the Registration Act, 1908.
It further appears that the order under Section 14 of the SARFAESI Act on the application of the petitioner/bank was passed by the competent authority on 26.8.2018 by the Additional District Magistrate (F & R), Agra. The respondent No. 4/owner of the secured asset filed S.A. No. 113 of 2018 in which there is not even a whisper about the tenancy of the respondent No. 5. The aforesaid S.A. was partly allowed by the Debts Recovery Tribunal, Allahabad by order dated 30.3.2019 on the ground that opportunity of hearing to the owner/borrower was not afforded by the ADM (F & R), Agra while passing the order dated 26.2.2018 under Section 14 of the SARFAESI Act. Consequently, the order was quashed and it was directed that both the parties shall appear before the ADM (F & R), Agra on 30.4.2019, who shall decide the matter afresh following principles of natural justice. It appears that, thereafter, the respondent No. 5 (alleged tenant) filed a Suit No. 1258 of 2020 without impleading the bank as defendant in which an interim order was passed despite bar of jurisdiction of Civil Court created under Section 34 of the SARFAESI Act. Now by the impugned order, on the ground of temporary injunction in the aforesaid suit, the application of the petitioner/bank has been rejected by the ADM (F & R), Agra dated 17.2.2022.
In vie
Validity of unregistered lease agreements and the availability of alternative remedies under the SARFAESI Act
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....
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.
Point of Law : Nature of powers to be exercised by learned Chief Metropolitan Magistrate/learned District Magistrate, High Court in impugned judgment and order has rightly observed and held that powe....
The main legal point established in the judgment is that allegations of fraud and misrepresentation must be supported by compelling evidence, and contentions regarding the creation of a valid mortgag....
A secured creditor's rights under the SARFAESI Act are unaffected by a civil court's interim injunction binding only the parties in the suit.
Tenants must establish valid, registered tenancy agreements to protect their possession against secured creditors under the SARFAESI Act.
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