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IN THE HIGH COURT OF ALLAHABAD AT LUCKNOW BENCH
Attau Rahman Masoodi, Subhash Vidyarthi, JJ.
Satyanarayan and Others – Petitioners
Versus
State of U.P. and Others – Respondents
Civil Misc. Writ Petition No. 10552 of 2024
Decided On : 11-12-2024
JUDGMENT :
Subhash Vidyarthi, J.
1. Heard Sri. Sanjay Kumar Srivastava, the learned counsel for the petitioners and Sri Brajendra Amiy, the learned counsel for the opposite party No. 6.
2. By means of the instant Writ Petition filed under Article 226 of the Constitution of India, the petitioners have sought quashing of an order dated 15.3.2024 passed by the Additional District Magistrate (Finance and Revenue), Bahraich in Case No. 542 of 2023 under Section 14 of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as 'the SARFAESI Act') directing the Sub-divisional Magistrate, Bahraich and the Officer In-charge, Police Station - Kotwali Nagar, Bahriach to take possession of two secured assets for recovery of debts taken by the opposite party Nos. 7, 8 and 10, for which the opposite party No. 9 stood a guarantor. They have also sought quashing of the consequential order dated 16.11.2024 passed by the Sub-divisional Magistrate, Sadar Bahraich nominating the Naib Tehsildar Sadar Bahraich as the Magistrate for the purpose of taking possession of the mortgaged property.
3. The petitioners claim that they are tenants in respect of shop Nos. 285, 286, 286, 289, 290 and 291 situated in a building in Mohalla-Steelganj, Bisatkhan, Kasgar Gali, Bahraich for the past more than 60 years. The building in which the aforesaid shops are situated, has been mortgaged by the opposite parties No. 7, 8 and 10 without knowledge or consent of the petitioners. The petitioners have filed an application dated 29.11.2024 before the Additional District Magistrate (Finance and Revenue), Bahraich stating that they are tenants in respect of the aforesaid shops and, therefore, instead of taking physical possession of the shops in their tenancy, merely notional/symbolic possession of the shops should be taken from them. The application remains undisposed off and the petitioners have sought issuance of a direction for disposal of their application dated 29.11.2024.
4. Undisputedly, the building, the shops situated wherein are in tenancy of the petitioners, has been mortgaged with Punjab National Bank (the opposite party No. 6) for a loan taken by the opposite party Nos. 7, 8 and 10. As on 30.11.2022, a sum of Rs. 4,24,92,056.13/- was due against the loan account, besides interest with effect from 1.12.2022 and other expenses. The borrowers have failed to repay the loan amount in spite of a recovery notice having been issued under Section 13(2) of the SARFAESI Act. The borrowers did not deliver possession of the mortgaged property to the Bank whereupon the Bank filed an application under Section 14 of the SARFAESI Act which has been allowed by means of an order dated 15.3.2024 passed by the Additional District Magistrate (Finance and Revenue), Bahraich. Section 14 of the SARFAESI Act provides for taking physical possession of the secured assets in such circumstances.
5. The learned counsel for the petitioner has submitted that the petitioners being the tenants of the shops situated in the mortgaged property, have a legal right to continue in physical possession of the shops in question. Their tenancy rights cannot be affected adversely by the failure of the landlord to repay the amount of loan taken by him from the Bank. He has placed reliance upon a judgment of the Hon'ble Supreme Court in the case of Bajarang Shyamsunder Agarwal v. Central Bank of India and others, AIR 2019 SC 5017 and a judgment passed by this Court in the case of Trilokchand Fabrication (P) Ltd. v. State of U.P. 2024 SCC Online All 103 : 2024 (1) ADJ 824.
6. In Bajarang Shyamsunder Agarwal (Supra), the appellant claimed to be a tenant of the premises in question since January, 2000 whereas the property was mortgaged on 20.5.2000 i.e. after the commencement of tenancy. Upon failure of the borrower-landlord to repay the outstanding amount, the Bank filed an application under Section 14 of the SARFAESI Act for taking possessi
Tenants must establish valid, registered tenancy agreements to protect their possession against secured creditors under the SARFAESI Act.
Point of Law : Tenant would not be entitled to possession of the secured asset for more than the period prescribed under Section 107 of the Transfer of Property Act, 1882 which period evidently has e....
The court ruled that tenants must provide substantial evidence of tenancy, especially when claiming rights under SARFAESI, and that High Court's intervention in such cases is limited.
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....
(1) If a tenancy under law comes into existence after creation of a mortgage but prior to issuance of a notice under Section 13(2) of SARFAESI Act, it has to satisfy conditions of Section 65A of Tran....
A Civil Court's order affecting possession of secured assets is invalid if the secured creditor is not a party, infringing Section 34 of the SARFAESI Act.
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.
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 ....
The SARFAESI Act's provisions on eviction take precedence over tenant protections under Rent Control Law when no valid tenancy exists.
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