Jharkhand High Court : BSFC Must Follow Rent Act to Evict Tenants, Not Just Auction Sale

Court rules that a property sale alone is insufficient grounds for eviction , upholding tenant protections under the state's rent control law.

The Jharkhand High Court , in a significant ruling, has held that the sale of a property by the Bihar State Financial Corporation (BSFC) cannot by itself be used to evict existing tenants. The court emphasized that eviction must strictly follow the procedures and grounds laid out in the Jharkhand Building (Lease, Rent and Eviction ) Control Act .

Case Background: Tenants Challenge Eviction Notice

The petitioners—Kanti Lal Jain, Chandra Shekhar Verma, and others—were tenants occupying shops in a building originally owned by M/s Sahu Hotel . The hotel had taken a loan from BSFC and, upon default, the corporation auctioned the property. After the auction, BSFC issued a notice on May 12, 2017 , directing the tenants to vacate the premises solely on the ground that the property had been sold. The tenants, who had not participated in the auction, challenged this notice before the High Court.

Court's Reasoning: Sale Alone Not a Ground for Eviction

Justice Ananda Sen, presiding over the single-judge bench, rejected BSFC's position. The court noted that tenancy is governed by the Jharkhand Building (Lease, Rent and Eviction ) Control Act , which specifies the only grounds on which a tenant can be evicted. A mere change in ownership—even through an auction—does not override these protections.

The court observed:

“The fact that the property has been sold cannot be a ground to evict the tenants. The law of tenancy is governed by the Jharkhand Building (Lease, Rent and Eviction ) Control Act . The grounds mentioned in the Act can only lead to eviction . Thus, the respondent-BSFC could not have issued the impugned letter directing eviction . It is for the landlord to evict the tenants in consonance with the Jharkhand Building (Lease, Rent and Eviction ) Control Act .”

The court clarified that BSFC, having taken possession of the property, now stands in the shoes of the landlord for all practical purposes. Until the property is formally transferred to a purchaser, BSFC must treat the tenants as lawful occupants .

Key Observations

The judgment further directed that the tenants must continue to pay rent to BSFC. In the event of default, BSFC is entitled to initiate eviction proceedings strictly under the Rent Control Act . If BSFC later transfers the building to a new owner, the tenants will pay rent to that owner, with BSFC obligated to inform them of the change.

Decision and Implications

The writ petition was disposed of with these directions. The ruling reinforces the principle that tenant rights are not extinguished by a sale, even a forced auction by a financial corporation. It underscores that landlords—including state financial institutions—must adhere to the statutory framework governing landlord-tenant relationships . This decision serves as a reminder that the Rent Control Act provides a shield against arbitrary eviction , and any attempt to bypass it will be struck down by the courts.