AI Overview...
Sarfaesi Act Cannot Be Applied on Property in Lessee Prior to Mortgage
Key Points and Insights
-
Lessee Rights Before Mortgage or Notice:
A lease of immovable property made prior to the creation of a mortgage or receipt of a notice under Section 13(2) of SARFAESI confers ongoing rights to the lessee. Such lease rights are protected as long as the lease remains undetermined, regardless of subsequent mortgage (Sources: 00100054598, 04200000269, 01500036946). -
Mortgagee's Limited Rights:
The mortgagee (lender) cannot override the rights of a lessee who had a valid lease before the mortgage or notice. The mortgagee's right to recover possession does not extend to evicting tenants with prior rights, and they cannot claim possession without due legal process (Sources: 02300054478, 00900042221). -
Application of SARFAESI Act and Tenancy Protections:
The SARFAESI Act's provisions, particularly Sections 13(2) and 13(4), do not apply straightforwardly to properties with existing leases prior to mortgage creation. Courts have held that tenants with pre-existing leases are protected from eviction under SARFAESI unless their lease is determined or they are given proper notice and due process (Sources: 04200000023, 04200000590, 00600007184). -
Court Rulings and Judicial Interpretations:
Courts have emphasized that the rights of lessees predate the mortgage and SARFAESI proceedings. They have clarified that mortgagee's rights do not extend to tenants with valid leases made before the mortgage or notice, and eviction cannot be enforced without following legal procedures (Sources: 00600007013, IND_HC_KLHC010450372016). -
Impact of Lease Duration and Validity:
As long as the lease remains valid and un-determined, the lessee retains the right to enjoy the property, and the SARFAESI Act cannot be invoked to dispossess them. The lease's validity is a crucial factor in determining the applicability of SARFAESI (Sources: 00100054598, 04200000269).
Analysis and Conclusion
The Sarfaesi Act's applicability is limited when it comes to properties with existing leases made prior to the creation of the mortgage or prior notice under Section 13(2). Courts have consistently held that such lessees possess protected rights that cannot be overridden by mortgagees or secured creditors through SARFAESI proceedings. Therefore, the Sarfaesi Act cannot be applied to property where the lease was entered into before the mortgage or prior to the notice under Section 13(2), unless the lease is duly determined or the lessee's rights are legally extinguished.
References:
- Transfer of Property Act, 1882 (S.58(f), 65-A(e)) State Bank of Patiala VS Debts Recovery Appellate Tribunal, New Delhi - Punjab and Haryana
- Supreme Court and High Court judgments on lease and mortgage rights Harshad Govardhan Sondagar VS International Assets Reconstruction - Supreme Court, Mahindra Chandrasen VS Union Bank of India - Current Civil Cases, Housing Development Finance Corporation Limited (HDFC Ltd. ) VS Dorjee Dolma Bhutia - Current Civil Cases, Housing Development Finance Corporation Limited (HDFC Ltd. ) VS Dorjee Dolma Bhutia - Current Civil Cases, Housing Development Finance Corporation Limited (HDFC Ltd. ) VS Dorjee Dolma Bhutia - Dishonour Of Cheque, P.M.KELUKUTTY Vs YOUNG MEN'S CHRISTIANS ASSOCIATION - Kerala
- SARFAESI Act provisions and judicial interpretations Mahindra Chandrasen VS Union Bank of India - Current Civil Cases, Mahindra Chandrasen VS Union Bank of India - Dishonour Of Cheque, P. M. KELUKUTTY VS YOUNG MEN'S CHRISTIAN ASSOCIATION - Kerala
Search Results for "Sarfeasi Act Cannot be Applied on Property which is in Lessee Prior to Mortgage"
2013 0 Supreme(P&H) 69 • India - Punjab and Haryana
HEMANT GUPTA, RITU BAHRI
(A) Transfer of Property Act, 1882, S.58(f), 65-A(e)--Mortgaged Property--Recovery of debt against borrower--Right of secured creditor ... mortgaged in favour of Bank and that such tenant cannot be evicted from premises without due process of law--Writ petition there-against ... rely upon any plea which defeats spirit of law--Therefore, as a mortgagee, Bank has a right to recover possession of property--Impugned ... If the property is sold in executi....
2014 7 Supreme 601 • India - Supreme Court
A.K.PATNAIK, V.GOPALA GOWDA
65A – Owner leasing out immovable property u/s 7 – Lessee entitled to enjoy right of the lease irrespective ... under a valid lease made prior to creation of the mortgage by the borrower or made prior to receipt of a notice u/s 13(2) of the ... and Lodging House Rates Control Act, 1947 applied before the commencement of the Act. ... Thus, so long as a lease of an immovable property does not get determined, the lessee#HL_EN....
• India - Current Civil Cases
R.M.BORDE, A.S.GADKARI
for and in favour of borrower but it could not restore possession of secured assets to lessee—Petitioners are lessees in suit property—Lessees ... before taking physical possession of suit property—Prior to taking physical possession of suit property symbolic possession of same ... receipt of notice under Section 13(2) of SARFAESI Act, petitioners had lodged their protest with respondent-Bank and resisted act ... W....
• India - Dishonour Of Cheque
R.M.BORDE, A.S.GADKARI
for and in favour of borrower but it could not restore possession of secured assets to lessee—Petitioners are lessees in suit property—Lessees ... before taking physical possession of suit property—Prior to taking physical possession of suit property symbolic possession of same ... receipt of notice under Section 13(2) of SARFAESI Act, petitioners had lodged their protest with respondent-Bank and resisted act ... W....
2016 Supreme(Online)(KER) 12523 • India - High Court of Kerala
ASHOK BHUSHAN, CJ, A.M.SHAFFIQUE, J
after the mortgage were valid, and the applicability of tenancy protection under the SARFAESI Act. ... of Property Act, thus, tenants could be dispossessed under Section 14 of the SARFAESI Act. ... properties, despite tenants asserting their rights through leases executed after the mortgage. ... The Apex Court further held that so long as lease of an immovable property does not get determined, the lessee has a right to enjoy the #HL....
• India - Current Civil Cases
HARISH TANDON
Court—Not only plea of fraud has been set out in plaint but there was no measures taken under Section 13 (4) or under Section 14 of SARFAESI ... Procedure Code, 1908—Order 7 Rule 11—Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act ... Act as on date of institution of suit—Notice under Section 13 (4) was issued after institution of suit—Court should confine its ... Where, therefore, the Debts Recovery Tribunal considers the application of the lessee and comes to the conclusion....
• India - Dishonour Of Cheque
HARISH TANDON
11—Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act ... ESI Act as on date of institution of suit—Notice under Section 13 (4) was issued after institution of suit—Court ... Where, therefore, the Debts Recovery Tribunal considers the application of the lessee and comes to the conclusion that the lease in favour of the lessee was made prior to the creation of mortgage or the lease though made after the creation of mortgage i....
• India - Current Civil Cases
HARISH TANDON
Court—Not only plea of fraud has been set out in plaint but there was no measures taken under Section 13 (4) or under Section 14 of SARFAESI ... Procedure Code, 1908—Order 7 Rule 11—Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act ... Act as on date of institution of suit—Notice under Section 13 (4) was issued after institution of suit—Court should confine its ... Where, therefore, the Debts Recovery Tribunal considers the application of the lessee and comes to the conclusion....
2016 0 Supreme(Ker) 262 • India - Kerala
ASHOK BHUSHAN, A.M.SHAFFIQUE
of lease or otherwise without prior written consent of secured creditor - Mortgagor's right to lease the mortgaged property continued ... property - after notice borrower shall transfer property by way of sale or lease without consent of secured credit - Held, Provisions ... even after the mortgage - However, after receipt of notice under Section 13(2) said right of mortgagor is restricted by further ... and Lodging House Rates Control Act, 1947 applied#HL_E....
2019 0 Supreme(Cal) 600 • India - Calcutta
DEBANGSU BASAK
Ratio Decidendi: The court applied the principle that a mortgagee cannot have a right greater than the lesser possessed under ... Finding of the Court: The court found that the petitioner, as a mortgagee, cannot have a better right than the lessee ... the leasehold rights of a property belonging to the first respondent as security. ... Learned Senior Advocate appearing for the first respondent submits that the petitioner herein is a mort....
Filter by Legal Phrase
