Section 13(13) of the SARFAESI Act, 2002, prohibits borrowers from leasing secured assets after receiving a Section 13(2) notice without the secured creditor's written consent, and this provision overrides Section 65A of the Transfer of Property Act.

COMMON ORDER

1. MA 81/2025 and MA 82/2025 are filed to set aside the orders passed by Learned Presiding Officer, DRT-I, at Karnataka at Bengaluru in IA 2625/2025 and IA 2971/2025 respectively in SA 314/2015 on 17.10.2025 and 07.11.2025.

2 SA 314/2015 was filed by Respondents 1 to 4 to declare that notices issued under Sections 13(2) and 13(4) of the SARFAESI Act, 2002 are illegal, arbitrary, unreasonable and unjustifiable; to appoint Auditor to detect the fraud committed by the Appellant in dealing with various account of the Respondents 1 to 4 and for other reliefs.

2.1 When the SA was pending, Appellant filed three Applications in IA 2625/2025, IA 2626/2025 and IA 2627/2025 for vacating the interim status quo order passed by the Tribunal on 16.07.2015; to reopen the case to file the additional statement of objection along with documents and to direct the first Respondent to produce the lease deed/agreement in order to demonstrate that the lease deed in compliance with Section 65 A of the Transfer of Property Act, respectively. Of these three Applications, IA 2626/2025 and IA 2627/2025, to reopen the case to file the additional statement of objection along with documents and direction to produce the lease deed/agreement were allowed. In IA 2625/2025, for vacating the interim status quo order passed by the Tribunal on 16.07.2015, Learned Presiding Officer passed an order to continue the earlier status quo till the disposal of the SA with certain modification. Aggrieved against this order, MA (SA) 81/2025 is filed.

2.2 Appellant also filed IA 2971/2025 to implead the tenant as Respondent in the Securitisation Application. The said Application was dismissed. Therefore, MA(SA) 82/2025 is filed.

2.3 Mr. Srinath Sridevan, Learned Senior Counsel submitted that SA 314/2015 was filed by the Respondents 1 to 4 challenging the Demand Notice issued under Section 13 (2) and Possession Notice issued under Section 13(4) of the SARFAESI Act and for consequential and incidental reliefs. Learned Presiding Officer, DRT-I, Bengaluru, passed an order of status quo on 16.07.2015. Thereafter, the said order of status quo was extended from time to time on the premise that Hon’ble High Court of Karnataka at Bengaluru passed an order of stay of further proceedings in the SA. The loan facilities were availed by the Respondents 1 to 4 from the State Bank of India. The State Bank of India assigned the loan to the Appellant, Pridhvi Asset Reconstruction and Securitization Company Limited. On taking charge, the Appellant verified and came to know that no such stay was operating against the proceedings in SA 314/2015 as ordered by Hon’ble High Court. Therefore, Respondents filed Applications in IA 2625/2025, 2626/2025 and 2627/2025 for the aforesaid reliefs and the Learned Presiding Officer, passed the order as follows:-

“The earlier order of status quo shall continue to operate till disposal of the SA with the following modifications and safeguards:-

(i) The respondents No.1 to 4/applicants shall not create any new third party rights, transfer or encumber the secured asset in any manner.

(ii) The existing lease arrangement, if any, already created prior to this order and duly disclosed to the Tribunal, may continue only for its original limited term, and shall not be renewed; extended or modified without prior permission of this Tribunal.

(iii) The petitioner/1st defendant shall not ta