Dismissed

Shampa Basak v. M/s Poonawalla Fincorp Ltd.

DRAT3 Oct 2024MISC APPEAL/46/2024

Case brief

AI extract

What is this about?

The Appellate Tribunal dismissed an appeal against the DRT's order dismissing an application filed under Section 17 of the SARFAESI Act. The tenant could not prove possession exceeding one year via an unregistered instrument. The court held the securing creditor had the right to take possession and the appeal was infructuous.

What did the court decide?

The appeal was dismissed. The order of the learned DRT-III Kolkata dated 27.05.2024 was confirmed. Costs awarded to the respondent to be dealt with easily.

Shampa Basak versus M/s Poonawalla Fincorp Ltd. — Writ and Judicial Review | DRAT (2024)

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IN THE DEBTS RECOVERY APPELLATE TRIBUNAL AT KOLKATA

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Misc. Appl. No. 46 of 2024 (Arising out of I.A. No. 1895 of 2024 in T.S.A. No. 09 of 2024 – DRTIII Kolkata)

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THE HON’BLE JUSTICE SHRI ANIL KUMAR SRIVASTAVA, CHAIRPERSON

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Order No. 03.10.2024

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Shampa Basak having residing at Flat No 7, 3rd Floor, 162 Purbalok, Kalikapur, KMC Ward No 109, PS: Purva Jadavpur, Kolkata – 700099

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... Appellant

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--Vs--

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M/s Poonawalla Fincorp Ltd having office at 201 & 202 2ndfloor, AP81, Koregaon Park Annx, Mundhwa, Pune – 411036 and Regional Office at, Appejay House, 6th Floor, Block – B, Unit No B/6/1, 15 Park Street, Kolkata – 700016

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... Respondents

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For Appellant : Mr. Ayon Saha, ld. adv. Ms. Debolina Dey, ld. Adv. For Respondent : Mr. Rajiv Maity, ld. adv.

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THE APPELLATE TRIBUNAL :

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Instant appeal is preferred against the order dated

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27.05.2024 passed by learned DRT-III Kolkata in I.A. No. 1895 of 2024 arising out of S.A. No. 09 of 2024 [Mrs. Shampa Basak Vs. M/s. Poonawala Fincrop Ltd.] whereby I.A. was dismissed. I.A.

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No. 1895 of 2024 was filed by the appellant for setting aside the order dated 22.04.2024 passed by learned ACJM, Alipore u/s 14

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of the SARFAESI Act. 2022 (hereinafter referred to as Act).

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As per pleadings of the parties, S.A. No. 09 of 2024 u/s 17

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of the Act was filed before learned DRT with the assertion that SARFAESI applicant (hereinafter referred to as ‘applicant’) is a tenant in the secured asset. Since May, 2014 applicant was in possession as a tenant by virtue of a tenancy agreement at a monthly rent of Rs.5,000/-. Further, Addendum tenancy agreement dated 07.09.2015 was executed modifying previous tenancy agreement dated 02.05.2014 enhancing the monthly rent of Rs.4,000/- for the use of tenanted portion for nonresidential purpose. Since then, appellant is in peaceful possession over the property. Appellant has no knowledge about the loan against which secured asset was mortgaged. Respondent sought to take over the physical possession of the secured asset.

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A Civil Suit was pending before the Learned 3^rd Addl. Civil Judge (Jr. Div.) at Alipore wherein an ad-interim injunction was passed in favour of the appellant. Respondent has approached Learned Addl. Chief Judicial Magistrate u/s 14 of the Act. Being aggrieved, applicant filed application u/s 17 of the Act.

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Opposition filed by the respondent stating that this alleged

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rented property is secured asset in favour of the respondent.

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Respondent has sanctioned loan in favour of the owner of the property, namely M/s. Rajprotim Agencies Pvt. Ltd.. Tenanted portion was mortgaged by the owner by creating equitable mortgage on 01.09.2015. Alleged tenancy agreement is unregistered document and cannot be relied upon.

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After hearing the learned counsel for the parties placing reliance upon the judgement of the Hon’ble Apex Court in

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Harshad Govardhan Sonegar Vs. International ARC Ltd &

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Ors. [(2014) 6 SCC 1] and Vishal N. Kalsaria Vs. Bank of India & Ors. [(2016)3 SCC 762], learned DRT recorded a finding that in the absence of registered instrument, if the tenant relies on an un-registered instrument, the tenant is not entitled to possession of the secured asset for more than the period prescribed under Sec. 107 of the Transfer of Property Act. Accordingly, I.A. No.1895 of 2024 was dismissed.

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I have heard the learned counsel for the parties and perused the records.

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At the very outset, it is observed that appellant was in possession of the secured asset. A Civil Suit No. 675 of 2024 (Mrs. Shampa Basak Vs. Rajprotim Agencies Pvt. Ltd.) was filed

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before the Learned 3^rd Addl. Civil Judge (Jr. Div.) at Alipore

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wherein an injunction was granted in favour of the appellant on 24.04.2024 directing the respondent to maintain status quo.

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Appeal No. 177 of 2024 was filed before the learned District Judge South 24 Parganas, Alipore which was allowed on 28.05.2024 and injunction order passed by the learned 3^rd Addl.

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Civil Judge (Jr. Div.) was vacated. It is also not in dispute that

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the respondent has taken over possession of the secured asset on

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19.06.2024.

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It is also borne out from the record that tenancy agreement

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is filed by the appellant which is dated 07.09.2015. Appellant alleges that she was tenant from 2014, but no tenancy agreement from 2014 has been filed. As far as rent receipt or

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any other document of possession is concerned only one rent receipt allegedly issued on 05.06.2014 is filed, but no other receipt prior to 07.09.2015 was filed by the appellant. It does not prove the possession of the appellant since 2014. Accordingly, there is no record to show that appellant was in possession since 2014. A letter written by the appellant to the Officer-in-Charge, Purba Javpur P.S. (K.P.), Mukundapur, Kolkata

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dated 17.04.2024 is brought on record wherein it is admitted by

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the appellant that she was staying in the secured asset since September, 2015 as a tenant by virtue of a tenancy agreement

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dated 07.09.2015 duly executed between the landlord and herself. This is an admission by the appellant herself that she is staying in the secured asset since September, 2015 as a tenant by virtue of the tenancy agreement dated 07.09.2015. Hence,

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there is nothing on record to prove that appellant was tenant

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since 2014.

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T enancy agreement dated 07.09.2015 is an un-registered instrument wherein tenancy was created in favour of the appellant by the landlord. Now we have to see the legal consequence of an unregistered instrument of tenancy.

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Learned counsel for the appellant would submit that she was

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a tenant since 2014 in the secured asset and was paying rent and

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was in possession. Even in the civil suit her possession was established before the learned 3^rd Addl. Civil Judge (Jr. Div.) at

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Alipore. It is further submitted that Rs.9,000/- was paying as rent per month. Reliance is placed upon Section 3(e)(ii) of the

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West Bengal Premises Tenancy Act, 1997. Reliance is also placed

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upon the judgement of Hon’ble Apex Court in Vishal N. Kalsaria

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(supra). It is further submitted that there is no requirement of registered instrument of tenancy under West Bengal Premises Tenancy Act. It is further submitted that provision of Transfer of Property Act will not apply in this case as respondent has not come with clean hands. No opportunity of hearing was granted before the learned ACJM, Alipore before passing the order u/s. 14 of the Act.

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Per contra, learned counsel for the respondent would submit

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that no evidence was adduced by the appellant other than alleged unregistered tenancy agreement dated 07.09.2015. There is nothing on record to show that tenancy was from 2014. Loan facility was availed by the owner of the property on 01.09.2015

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and equitable mortgage was created in favour of the secured

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creditor. Even if it is accepted for the sake of argument that

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appellant was a tenant from 07.09.2015 then no intimation or permission was sought from the secured creditor for creating the tenancy. Reliance is placed upon the judgement of Vishal N. Kalsaria (supra). Reliance is also placed upon Section 17 of the

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Act. It is submitted that document of tenancy is an un-registered

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instrument.

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10. In the case of Bajrang Shyam Sunder Agarwal Vs.

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Central Bank of India & Anr. [(2019) 9 SCC 94] Hon’ble Apex Court has recorded the circumstances under which that matter

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was filed. In that case also, the Appellant was in possession of the tenant premises but no registered lease Deed was there, rather on the basis of certain rent receipts factum of tenancy was

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demonstrated. An order was also passed by Civil Court. Hon’ble Apex Court held that the SARFAESI Act will override the provisions of Transfer of Property Act. Hon’ble Apex Court has distinguished implications of a registered and an unregistered instrument/ oral agreement in the case of Harshad Govardhan

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Sondagar versus International Assets Reconstruction Company

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Limited and others (2014) 6 SCC 1 and quoted with approval Para

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no. 36 of Harshad Govardhan Sondagar (supra) which reads as under:

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“36. We may now consider the contention of the respondents that some of the Appellants have not produced any document to prove that they are bona fide lessees of the secured assets. We find that in the case before us, the appellants have relied on the written instruments or rent receipts issued by the landlord to the tenant. Section 107 of the Transfer of Property Act provides that a lease of immovable property from year to year, or for any term exceeding one year or reserving a yearly rent, can be made “only by a registered instrument” and all other leases of immovable property may be made either by a registered instrument or by oral agreement accompanied by delivery

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of possession. Hence, if any of the appellants claim that they are entitled to possession of a secured asset for any term exceeding one year from the date of the lease made in his favour, he has to produce proof of execution of a registered instrument in his favour by the lessor. Where he does not produce proof of execution of a registered instrument in his favour and instead relies on an unregistered instrument or oral agreement accompanied by delivery of possession, the Chief Metropolitan Magistrate or the District Magistrate, as the case may be, will have to come to the conclusion that he is not entitled to the possession of the secured asset for more than a year from the date of the instrument or from the date of delivery of possession in his favour by the landlord.”

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11. In Para 24 of the Bajarang Shyamsunder Agarwal (supra),

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Hon’ble Apex court held that –

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24.1. If a valid tenancy under law is in existence even prior to the creation of the mortgage the tenant’s possession cannot be disturbed by the secured creditor by taking possession of the property. The lease has to be determined in accordance with Section 111 of the TP Act for determination of leases. As the existence of a prior existing lease inevitably affects the risk undertaken by the bank while providing the loan, it is expected of banks/ creditors to have conducted a standard due diligence in this regard. Where the Bank has proceeded to accept such a property as mortgage, it will be presumed that it has consented to the risk that comes as a consequence of the existing tenancy. In such a situation, the rights of a rightful tenant cannot be compromised under the SARFAESI Act proceedings.

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24.2 If a tenancy under law comes into existence after the creation of a mortgage, but prior to the issuance of notice under Section 13(2) of the SARFAESI Act, it has to satisfy the conditions of Section 65-A of the TP Act.

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24.3 In any case, if any of the tenants claim that he is entitled to possession of a secured asset for a term of more than a year, it has to be supported by the execution of a registered instrument. Iin the absence of a registered instrument, if the tenant relies on an unregistered instrument or an oral agreement accompanied by delivery of possession, the tenant is not entitled to possession of the secured asset for more than the period prescribed under Section 107 of the TP Act.”

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Further, Hon’ble Apex Court in Para No. 27 held that –

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“The claim of tenancy made by the Appellant tenant is not supported by a registered instrument. We recognize the legal position, as laid out in Vishal N. Kalsaria case, that in the absence of a written lease deed the tenant may prove his existing rights by producing other relevant evidence before the Magistrate. The appellant tenant has to produce evidence of payment of rent, property taxes, etc. Furthermore, if the rent and permitted increases were payable, then the quantum ought to have been mentioned. In addition to the above, the claim of tenancy could have been substantiated by relying upon other tax receipts such as BMC tax, water tax, electricity charges consumed by the tenant, etc. However, the appellant tenant has only submitted xerox copies of rent receipts.”

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In the present case, tenancy was allegedly created on 07.09.2015 by virtue of an un-registered agreement. Learned counsel for the appellant would submit that under West Bengal Premises Tenancy Act tenancy can be created without executing registered agreement. I am unable to accept the submission made by the learned counsel for the appellant in view of the law laid down by the Hon’ble Apex Court in Bajarang Shyamsunder Agarwal (supra) wherein it is specifically held that if any of the tenants claim that he is entitled to possession of a secured for a term of more than a year, it has to be supported by the execution of a registered instrument. It was further held that in the absence of a registered instrument if the tenant relies on an unregistered instrument or an oral agreement accompanied by delivery of possession, the tenant is not entitled to possession of the secured asset for more than the period prescribed u/s 107 of the Transfer of Property Act.

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In the present case, admittedly appellant was a tenant on the basis of an un-registered agreement since 07.09.2015. It does not create any right in favour of the appellant. More so, when the secured asset for tenanted portion was already

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mortgaged by the owner in favour of the secured creditor by depositing title deed. No consent of the secured creditor was

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sought or obtained by the owner for creating tenancy.

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As far as question of principle of natural justice at the time

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of passing the order u/s 14 of the Act is concerned, there is no mandatory requirement to hear the borrower or guarantor at the time of passing of order u/s 14 of the Act.

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On the factual aspect of the matter admittedly appellant was dispossessed from the secured asset. Secured creditor has taken over possession of the secured asset. Hence, appeal has

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apparently lost its efficacy and has become infructuous.

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16. On the basis of the discussion made above, I am of the considered view that learned DRT has arrived at a right conclusion. There is no irregularity or illegality in the impugned

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order. Appeal lacks merit and is liable to be dismissed.

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O R D E R

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