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.

JUDGMENT :

Shekhar B. Saraf, J.

1. Heard learned counsel appearing on behalf of the parties.

2. This is a writ petition under Article 226 of the Constitution of India wherein the writ petitioner has made the following prayer:

"(i) Issue a writ, order or direction in the nature of Mandamus commanding to respondent no. 3 (Sub-Divisional Magistrate (SDM), Dhoulana, District-Hapur) to take physical possession of the property in question i.e. All that part and Parcel of Land/property Khasra No. 373, Situated at Village-Ravali, Pargana & Tehsil-Dhaulana, District-Hapur having Area 12590 Sq. Mt in pursuance to order dated 17.02.2025 passed by respondent no. 3 as subordinate of respondent no. 2 under section 14 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act, 2002) and forwarded to petitioner Bank."

3. Learned counsel appearing on behalf of the petitioner bank submits that in spite of an order dated 17.02.2025 passed under Section 14 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as 'the Act'), physical possession of the property has not been provided to the petitioner.

4. Learned counsel appearing on behalf of the State submits that the borrowers have created a mortgage of the property after grant of the loan to them. He further submits that a tenant of the borrowers has filed a suit and obtained a stay order from the Civil Court without making the petitioner bank a party in the said suit.

5. Learned counsel appearing on behalf of the petitioner submits that the order passed by the Civil Court is non-est in law as the same is barred by Section 34 of the Act. Learned counsel further relies on the judgment of a coordinate Bench [authored by one of us (Shekhar B. Saraf, J.)] in M/s Trilokchand Fabrication Pvt. Ltd. vs. State of U.P. and Others passed in Writ (C) No. 39914 of 2023 on 11.01.2024. He relies specifically on the summary at paragraph No.40 of the said judgment, which is delineated below:

"40. We have outlined the principles emerging from the aforesaid discussion below:

a) As mandated by Section 107 of the TPA 1882 and Section 17 of the IRA, 1908, the lease of an immovable property, beyond the period of one year can only be created by a registered instrument. An oral agreement, accompanied by the delivery of possession cannot create a lease beyond the prescribed period under Section 107 of the TPA 1882. An unregistered lease, cannot be taken into consideration by the courts, given the bar placed under Section 49 of the IRA, 1908.

b) A tenancy where no period has been fixed, or a tenancy which is deemed to be a month-to-month tenancy, cannot entitle a tenant to seek possession of a secured asset beyond a period of one year when proceedings have been initiated under Section 14 of the SARFAESI Act.

c) If a tenant intends to claim the possession of a secured asset when proceedings have been initiated under Section 14 of the SARFAESI Act it must necessarily be done by way of a registered instrument executed in his favour.

d) When a tenant becomes aware, that proceedings have been initiated under Section 14 of the SARFAESI Act he can either approach the concerned officer authorised by the DM/CMM to take possession of the secured asset, or surrender the possession of the secured asset. The authorised officer, in a case where, the tenant, resists surrendering the possession of a secured asset, will file an application accompanied by an affidavit containing the nece