Dismissed

Munilal Mahato v. the Authorized Officer Aditya Birla Housing Finance Ltd. and Ors.

DRAT7 Aug 2024

Case brief

AI extract

What is this about?

The Debts Recovery Appellate Tribunal dismissed the appeal preferring to a challenge against the DRT's rejection of a stay application. The court held that absent a registered lease agreement, the appellant could not prove tenancy rights exceeding one year, allowing the secured creditor to take possession under the SARFAESI Act.

What did the court decide?

Appeal dismissed; impugned order dated 05.10.2023 passed by the DRT in S.A. No. 806 of 2023 is confirmed.

Munilal Mahato versus the Authorized Officer Aditya Birla… — Landlord and Tenant | DRAT (2024)

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Reportable/ Not Reportable

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IN THE DEBTS RECOVERY APPELLATE TRIBUNAL AT KOLKATA

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(Misc. Appeal Dy. No. 802 of 2023)

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(Arising out of S.A. No. 806 of 2023 in DRT – 3 Kolkata)

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THE HON’BLE MR. JUSTICE ANIL KUMAR SRIVASTAVA

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CHAIRPERSON

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Munilal Mahato, son of Sri Ramchandra Mahato, residing at flat No. 412, 4^th floor, Block-B, G.C. Roy Chowdhury Towers, 138, Feeder Road, P.O. & P.S..- Belghoria, North 24 Parganas, Kolkata -700056.

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…Appellants

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-Versus-

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The Authorized Officer, Aditya Birla Housing Finance Limited, carrying on business at 2^nd Floor, Bhangore, BFL, Estate, 31 Chowringhee Road, P.S- Shakespear Sarani, Kolkata -700016.

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Aditya Birla Housing Finance Limited having its office at 2^nd Floor, Bhangore, BFL, Estate, 31 Chowringhee Road, P.S. - Shakespear Sarani, Kolkata -700016.

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Susant Kumar Dalai , 42B/1-11, Bhatpara (M), Jagatdal, Guptar Bagan, North 24 Parganas, West Bengal -743125.

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Gouri Punan 42B/1-11, Bhatpara (M), Jagatdal, Guptar Bagan North 24 Parganas, West Bengal -743125.

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Menu Mobile Repairing Centre, 42B/1-11, Bhatpara (M), Jagatdal, Guptar Bagan North 24 Parganas, West Bengal - 743125.

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Ashis Roy Chowdhury, 151, Feeder Road, P.O. & P.S. -Belghoria, North 24 Parganas, Kolkata -700056, Proprietor of M/s U.K Traders of 1.

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Snehasis Roy Chowdhury, 151, Feeder Road, P.O. & P.S. - Belghoria, North 24 Parganas, Kolkata -7000056, Proprietor of M/s U.K. Traders of 1.

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Swapna Roy Chowdhury, 151, Feeder Road, P.O. & P.S. - Belghoria, North 24 Parganas, Kolkata -7000056, Proprietor of M/s U.K.Traders of 1.

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Smt. Falguni Mukherjee, 151, Feeder Road, P.O. & P.S. - Belghoria, North 24 Parganas, Kolkata -7000056, Proprietor of M/s U.K. Traders of 1.

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Smt. Chaitali Banerjee, 151, Feeder Road, P.O. & P.S. - Belghoria, North 24 Parganas, Kolkata -7000056, Proprietor of M/s U.K. Traders of 1.

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… Respondents Counsel for the parties Mr. Samrat Mukherjee, Learned Counsel for the Appellants Mr. Abhishek Guha, Learned Counsel Ms. Ritika Pal, Learned Counsel for the Respondents JUDGMENT : On 7^th August, 2024

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THE APPELLATE TRIBUNAL :

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Instant Appeal is preferred against a judgment and order dated 05.10.2023 passed by Learned DRT -3 Kolkata in S.A. No. 806 of 2023 (Sri Munilal Mahato versus Aditya Birla Housing Finance Ltd. & Ors.) 2. As per pleadings of the parties Appellant herein Sri Munilal Mahato is a tenant in respect of the property being a flat measuring 840 sq.ft. on the 4^th Floor being Flat No. 412,

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Block-B, J.C. Roy Chowdhury Tower at premises No. 139 Feeder Road, Post Office and Police Station – Belghoria, North 24 Parganas, Kolkata -700056. He was inducted as tenant by the Respondent Nos. 6 to 10. A suit No. 491 of 2022 was filed by him claiming himself to be tenant wherein ad interim injunction was passed in his favour. Appellant executed a leave and license agreement with the Respondent Nos. 6 to 10 for a monthly rent of Rs. 3000/-. Respondent No. 6 to 10 sold the flat to one Susanta Kumar Dolui Respondent No. 3 on 19.12.2020. Susanta Kumar Dolui had taken a loan of Rs. 18 lacs from Respondent No. 1 and 2 wherein the flat was mortgaged. Tenancy was well within the knowledge of Financial Institution Aditya Birla Housing Finance Limited. Application under Section 14 of SARFAESI Act was filed by the Respondent No. 1 and 2 before the Chief Judicial Magistrate, North 24 Parganas, Barasat and order for taking physical possession was obtained. Challenging the same, S.A. No. 806 of 2023 was filed by the Appellant.

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3. An I.A. No.2602 of 2023 was filed for staying the orders of the Chief Judicial Magistrate Barasat which was refused and I.A. was disposed of. 4. Feeling aggrieved by the order, Appellant preferred the Appeal.

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5. I have heard the Learned Counsel for the Appellant as well as the Respondent Nos. 1 and 2 and perused the records.

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6. Learned Counsel for the Appellant would submit that the Learned DRT has erred in passing the impugned order by disposing of the I.A. No. 2602 of 2023. It is submitted that the Appellant is a tenant since 23^rd January, 2017 while the loan was taken by Respondent No. 3 in 2021. It is further submitted that the Appellant is regularly paying the rent and rent receipts are being issued by the owner. Civil Suit No. 491 of 2022 was filed by the Appellant against the land lord wherein interim order was passed in Appellant’s favour which shows that the Appellant was in possession over the secured assets. Conveyance Deed was executed by the erstwhile owner i.e. Respondent No. 6 to 10 in favour of Respondent No. 3 on 19^th December, 2020 while the Appellant was already in possession as a tenant over the secured assets.

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7. Learned Counsel for the Appellant would further submit that there is no requirement of execution of a registered agreement between the Appellant and the Respondent No. 6 to 10 as rent of the secured assets for 3000/- per month only. Learned Counsel has placed reliance upon Section 3(e) (II) of the West Bengal Premises Tenancy Act,1997. Reliance is also placed upon judgment of Vishal N. Kalsaria Versus Bank of India and others (2016) 3 SCC 762.

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8. Per contra, Learned Counsel for the Respondents would submit that there is no material available on record to show that the Appellant was in possession over the secured assets. No document of possession is filed. Rather,only

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rent receipts and agreement were filed which could not be a proof of possession.

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9. It is further submitted that in the Civil Suit No. 491 of 2022 filed by the Appellant neither the Financial Institution nor his borrower i.e. Respondent No. 3 were a party. Hence, it is not binding upon them. Learned Counsel has placed reliance upon the judgment of Bajrang Shyam Sunder Agarwal Versus Central Bank of India and another (2019) 9 SCC 94. Reliance is also placed upon Section 17(4) (A) of the SARFAESI Act. It is further submitted that the Agreement is for 10 years which requires registration in accordance with Section 107 of the Transfer of Property Act. 10. At the very outset it is to be observed that in pending S.A. No. 806 of 2023, an I.A. No. 2602 of 2023 was filed by the Appellant for staying the proceedings and for an interim order staying the orders of the Chief Judicial Magistrate passed under Section 14 of the SARFAESI Act. Application was disposed of by the Learned DRT holding that the Appellant is claiming to be a tenant for more than a year which requires registration of the agreement as per Section 107 of the Transfer of Property Act. Learned DRT has also placed reliance upon the judgment of the Hon’ble Apex Court in Bajrang Shyam Sunder Agarwal Versus Central Bank of India and another (2019) 9 SCC 94. It is further held that the Learned CJM has passed the order under Section 14 of the SARFAESI Act in accordance with law.

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11. Facts of the present case are similar to the facts of the case of Bajrang Shyam Sunder Agarwal Versus Central Bank of India and another (supra).

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12. In the present case, Appellant is claiming to be a tenant since 23^rd January, 2017 on the basis of an agreement which was executed for 10 years and the lease rent was fixed at Rs. 3000/- per month. Secondly, Appellant has placed reliance upon the rent receipts which are on record from 07.07.2017 to 08.08.2022. The rent was shown as Rs. 3000/- per month. Further, reliance is placed upon the order passed by Civil Court in Suit No. 491 of 2022 which was filed by the Appellant against the erstwhile owners. A copy of information is placed on record which shows that some ad interim orders of injunction was extended till 08.09.2023. On the strength of these documents, Appellant is claiming protection of his possession as tenant. It is also noteworthy that pending proceedings, Appellant has been dispossessed from the secured assets in view of the orders passed by Learned CJM under Section 14 of the SARFAESI Act.

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13. In the case of Bajrang Shyam Sunder (supra), Hon’ble Apex Court has recorded the circumstances under which that matter 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 demonstrated. An order was also passed by Civil Court. Hon’ble Apex Court held that the

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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 Sondagar versus International Assets Reconstruction Company Limited and others (2014) 6 SCC 1 and quoted with approval Para no. 36 of Harshad Govardhan Sondagar (supra) 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 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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14. In Para 24 of the Bajarang Shyamsunder Agarwal versus Central Bank of India and another (supra), 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

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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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15. 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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16. In the present case, the tenancy was allegedly created on 23.01.2017. It was for 10 years. Admittedly, the agreement is an unregistered agreement. Learned Counsel for the Appellant would submit that under the West Bengal Premises Tenancy Act, a tenancy can be created without executing a registered agreement. I could not accept the submission made by the Learned Counsel as in view of the

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law laid down by the Hon’ble Apex Court in Bajarang Shyamsunder Agarwal versus Central Bank of India and another (supra), wherein it has specifically been held that if any of the tenants claims that he is entitled to possession of a secured assets for a term of more than a year, it has to be supported by the execution of a registered document. It was further held that in the absence of a registered instrument, if the tenant relies upon an unregistered instrument accompanied by delivery of possession, the tenant is not entitled to possession of the secured assets for more than the period prescribed under Section 107 of the Transfer of Property Act. No evidence is adduced or is on record to show or prove that the Appellant is in possession over the secured assets. No evidence of payment of property taxes etc. is on record. Further, the claim of the tenancy could have been substantiated by relying upon other tax receipts such as water tax, electricity charges or other payments made by the Appellant in respect of the secured assets. But no such material is brought on record which could have proved the Appellant’s possession. Accordingly, it cannot be held that the Appellant was in possession over the secured assets as a tenant.

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17. A plea is taken about an interim injunction passed by the Civil Court in original Suit No. 491 of 2022. The suit was filed against the erstwhile owners. No copy of order is brought on record which can prove on what basis interim order was passed, whether any finding was recorded by the

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Civil Court regarding possession of the Appellant over the secured assets? Accordingly, Appellant cannot take any advantage of the orders of the Civil Court.

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18. Appellant can also not take any advantage of the unregistered lease deed. Even if it is to be accepted for the sake of arguments then the lease would automatically expire after one year of the execution i.e. in the year 2018, then the status of the Appellant would become “tenant in sufferance.” Hon’ble Apex Court in Bajarang Shyamsunder Agarwal versus Central Bank of India and another (supra) held that such tenants do not have any legal rights and are akin to trespassers. Hon’ble Apex Court has also placed reliance upon a judgment in R.V. Bhupal Prasad Vs. State of A.P. (1995) 5 SCC 698 wherein it was held that- 8. “Tenant at sufferance” is one who comes into possession of land by lawful title, but who holds it, by wrong after the termination of the term or expiry of the lease by efflux of time. The tenant at sufferance is, therefore, one who wrongfully continues in possession after the extinction of a lawful title. There is little difference between him and a trespasser.”

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19. There is another aspect of this case which shows that the Appellant is simply trying to secure the possession of the borrowers by making false claim of tenancy. Section 18 of the West Bengal Premises Tenancy Act provides for enhancement of rent after four years of the tenancy. Initially, as per the agreement rent was fixed for Rs. 3000/but as per the rent receipts filed by the Appellant for the year 2022 rent was shown as Rs.3000/- only. Had it been a

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genuine tenancy, then the rent should have been raised as per the law. Nothing is brought on record to show that the parties have agreed that rent will not be enhanced. This is a circumstance which shows collusion between the Appellant and the borrowers.

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20. As far as the order passed by Learned Chief Judicial Magistrate dated 18.05.2023 is concerned, no ground is taken in the memo of Appeal about the legality of that order. However, a perusal of the order will show that the Learned CJM has passed an order in accordance with the provisions of Section 14 of the SARFAESI Act. He has also recorded his satisfaction about the nine points in the affidavit.

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21. On the basis of the discussion made above, I am of the considered view that there is no irregularity or illegality in the impugned order passed by Learned DRT. Accordingly, Appeal lacks merit and is liable to be dismissed.

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ORDER

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Appeal is dismissed. Impugned order dated 05.10.2023 passed by Learned DRT -3 Kolkata in S.A. No. 806 of 2023 (Sri Munilal Mahato versus Aditya Birla Housing Finance Ltd. & Ors.) is confirmed.

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No Order as to costs.

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File be consigned to Record Room.

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Copy of the order be supplied to Appellant and the Respondents and a copy be also forwarded to the concerned DRT.

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Copy of the Judgment/ Final Order be uploaded in the Tribunal’s Website.

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Order signed and pronounced by me in the open Court on this the 7^th day of August, 2024.

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