The Debt Recovery Appellate Tribunal held that an unregistered tenancy does not entitle the tenant to protection under SARFAESI Act. The appeal was not entertained without directing a pre-deposit of 25% of the demand amount.
Directed appellant to deposit Rs.1,57,12,230 in two equal instalments and withdrawn appeals upon failure to deposit.
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DEBT RECOVERY APPELLATE TRIBUNAL-MUMBAI . (SITTING AT -CHENNAI) LA. No. 426/2025 (WoD) In Regular Appeal Dy No. 687/2024
Dated: 22.07.2025
The matter is taken up for hearing by way of a praecipe filed by the Petitioner/Appellant for seeking urgent relief. This Application is filed seeking waiver of stalutoiy deposit required under Section 18(1) of the SARFAESI Act, 2002, for entertaining the Appeal. teamed Counsel for Petitioner/Appellant submitted that the Petitioner/Appellant filed S.A. No.396/2016 challenging the order passed by Learned Chief Metropolitan Magistrate, Esplanade, Mumbai, in case No.203/SA/2016 on 08.10.2016 along with challenge to the measures taken under Section 13(4), etc. The S.A. was dismissed on 28.02.2024, Therefore, this Appeal is filed against the order of dismissal of S.A. along with Waiver Application. . It is further submitted that the Petitioner/Appellant is the tenant id the property. He has been residing in the property since 2005. Thus, he is neither a borrower nor a guarantor and he is . not liable to pay any amount towards pre-deposit for entertaining the Appeal. On the other hand, Learned Counsel for the Respondent Bank submitted that the property in which the Petitioner/Appellant claims tenancy, was mortgaged by Respondent Nos. 3 to 6, the guarantors. The loan was availed by Respondent No.2, on 18.07.2006. The tenancy is not a registered tenancy.
Considered the rival submissions and perused the records.
It is the settled proposition of law. as per law laid down by Honhle Supreme Court in Bajarang Shyamsunder Agarwal Vs. Central Bank of India & Ant., reported in (2019) 9 SCC 97 that only a registered tenant is entitled for protection against the measures under SARFAESI Act, 2002. If the tenancy is not registered, then, the tenancy agreement will not be executed more the period prescribed under Section 107 of T.P. Act. Here in this case, there is no written tenancy agreement entered into between the Petitioner/Appellant and Respondent No.6, mortgagor. Therefore, this Tribunal is of the new that this Appeal cannot be entertained without pre-deposit.
The relevant portion is extracted hereunder:-
"25. In our view, the objective of SARFAES1 Act, coupled with the T.P. Act and the Rent Act are required to be reconciled herein in the following manner:
a) 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 SARFAESiAct proceedings.
b) 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 ofthe T.P. Act.
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c) 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. 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 under Section 107 of the T.P. Act.B As per Demand Notice, the amount due is shown as Rs. 1,72,98,575.71p as on 09.10.2015. Learned Counsel for Respondent Bank submits that the amount due as on today is Rs.6,28,48,921/-. Therefore, this Tribunal is of the view directing the Petitioner/Appellant to deposit 25% of Rs.6,28,48,921/would meet the requirement under Section 18 (1) of SARFAESI Act, 2002, for entertaining the Appeal. Admittedly, 25% of Rs.6,28,48,921/conies to Rs. 1,57,12,230.25 (rounded off to Rs. 1,57,12,230/-). Therefore, Petitioner/Appellant shall deposit Rs.1,57,12,230/- tn two equal instalments, 1K instalment of Rs.78,56,115/- shall be deposited on or before 05.08,2025 and 2"* instalment of Rs.78,56,115/- shall be deposited on or before 19.08.2025. It is made dear that on failure to deposit of either of the instalments, the Appeal shall stand rejected. On making such deposit by Petitioner/Appellant, Registrar, DRAT, Mumbai is to invest the same in a Nationalized Bank, from time to time, till further orders are passed. List the case on 21.08.2025, for reporting compliance.
, CHAIRPER3CHENNAI (IN-CHARGE, DRAT. MUMDAI)
PAM
1 issue framed by the court
Whether a tenant can avail waiver of statutory deposit under Section 18(1) of SARFAESI Act without a registered tenancy agreement.
Colour shows how this judgement treated each authority
Bajarang Shyamsunder Agarwal Vs. Central Bank of IndiaReferred¶6
Bajarang Shyamsunder Agarwal Vs. Central Bank of India & Ant., reported in (2019) 9 SCC 97 · Who else cites this
1 provisions across 1 enactments
Petitioner/Appellant
Respondent Bank
CHAIRPERSON CHENNAI (IN-CHARGE, DRAT, MUMBAI)
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
