Tenants' pre-existing rights cannot be disregarded under SARFAESI; they must invoke the DRT for remedies.

JUDGMENT

(Dated this the 2^nd day of February 2026)

Petitioners are the tenants in a 3 storied complex consisting of 3 apartments in 1.42 ares of property in Sy. Nos. 1018/4 and 1018/8 in Ernakulam village. Petitioners are in possession of the building and occupying each apartment, along with their family. They took the building on lease from the 4^th respondent as per Ext.Nos.P1 to P3. The 4^th respondent collected Rs.5,50,000/- from the 1^st petitioner, Rs.6,00,000/- from the 2^nd petitioner and Rs.7,00,000/- from the 3^rd petitioner as security deposit. On 29.11.2014, the 4^th respondent sold the property and building to the 2^nd respondent. The 2^nd respondent, at the time of purchase, was aware of the tenancy and he agreed to repay the security deposit as soon as possible.

2. Even after the lease period, the security deposit was not returned, and the petitioners are in possession as per the terms of agreement from 2012 and 2013 onwards. The loan agreement with the 1^st respondent bank was entered into by respondent Nos.2 and 3, the 2^nd respondent being the borrower and the 3^rd respondent as the guarantor. The title deeds in respect of the property were deposited with the 1^st respondent bank for availing the loan. When there was default in repayment, the bank initiated proceedings under the SARFAESI Act and notice was issued under Section 13 of the Act to respondent Nos.2 and 3 followed by notice under Section 13 (4). The 2^nd respondent assured the petitioners that the loan will be closed, and no steps will be taken by the bank to evict the petitioners.

3. On 2.1.2026, an Advocate Commissioner affixed a notice of taking of physical possession of the building within 14 days. On enquiry, it was understood that the 1^st respondent Bank had approached the Additional C.J.M., Ernakulam by filing M.C. No.925 of 2025 and an order has been passed under Section 14 of the Act through Ext.P8. Though the 1^st respondent was aware that the tenancy of the petitioners started in the year 2012 onwards, they were not made as parties to the notice under Section 14 of the Act. In such circumstances, the petitioners have approached this court to call for records relating to M.C. No.925 of 2025 on the files of Additional C.J.M. court, Ernakulam and to quash Ext.P8 order and for a further direction to respondents not to dispossess the petitioners from the residential building.

4. Heard the counsel, Shri.Viswanath Salish for the petitioners, the standing counsel Sri.P S George for the 1^st respondent Bank and Sri.Lavy Bastin Thomas, the 2^nd respondent appeared as party in person.

5. The contention raised by the counsel for petitioners is that the petitioners are the tenants of the building in question right from 2012 onwards. The mortgage was effected only in the year 2014 and therefore, they are legally entitled to continue in possession of the building, and they cannot be evicted by the 1^st respondent under Section 14 of the Act.

6. The counsel for the bank submitted that the loan is taken by respondent Nos.2 and 3 by mortgaging the title deeds. When there was a default, they had initiated proceedings for recovery of the amounts and since there was restriction in taking physical possession, they had approached the Additional C.J.M. Court, Ernakulam under Section 14 of the Act and the learned C.J.M. has passed Ext.P8 order. There is no privity of contract between the petitioner and the 1^st respondent. If they are aggrieved by the steps taken, they will have to approach the D.R.T. under section 17 and cannot invoke jurisdiction of this court under Article 226 of the Constitution of India.

7. The party-in-person submitted that he had availed loan for purchase of property of building from the 4^th respondent and the money obtained from the loan was given to the 4^th respondent and he is abscondi