Dismissed

Mr Althaf Pasha v. Punjab National Bank

DRT12 Dec 2023SA/271/2022

Case brief

AI extract

What is this about?

The Tribunal dismissed the application of tenants claiming leasehold rights in a mortgaged property, holding their agreements invalid due to lack of registration, contravention of TPA and SARFAESI Act provisions, and absence of locus standi.

What did the court decide?

Application dismissed; applicants declared not to have tenancy/leasehold rights; bank permitted to continue enforcement proceedings.

Mr Althaf Pasha versus Punjab National Bank — Banking and Recovery | DRT (2023)

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IN THE DEBTS RECOVERY TzuBUNAL - I, KARNATAKA AT BENGALURU

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PRESENT: SRI IMTI AZ ALI

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PRESIDING OFFICER

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Dated the 07th day of December,2023

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SECURITISATION APPLICATION NO. 271 OF 2022

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Between

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ffiH: Patel Muni y appa Layout, V Nagenahalli R T Nagar P.O, Bengaluru, Karnataka - 560032. 2. Aftab Pasha, S/o Althaf Pasha, 51/6,5th Cross, Patel Muniyappa Layout, V Nagenahalli R T Nagar P.O, Bengaluru, Karnataka - 560032. ...Applicants And l. Punjab National Bank, (represented by its authorised officer), 100, Mosque Road, Fruzer Town, Bangalore, Karnataka - 560005. 2. S H Eshwar, S/o late Sanjeevappa H, 42,Kavery Layout, Mariyannapalya, Dasarahalli, Near Manyata Tech Park, Bangalore, ' Karnataka - 560024. .. .. .. Defendants This Securitisation Application having been heard on 15.06.2023 in the presence of Advocate Shri M K Venkatramana for the I't def'endant, and the applicants being

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absent, and stood over to this day for consideration, the Tribunal delivered the following:-

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FINAL ORDER

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The applicants filed the above Securitisation Application (SA) on 25.04.2022 under S.l7(l) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 as amended from time to time - hereinafter referred to as'the Act'-praying to set aside the order dated 03.04.2021passecl by the Additional Chief Metropolitan Magistrate in Crl Misc No.1549/2021 and also the notice dated 15.03.2022 issued by the I't defendant. The applicant are claimed to be the tenants in the schedule immovable property.

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The case set out by the applicants in the SA in brief is as follows:- The applicants are the tenants in the schedule immovable property owned by the 2nd defendant on lease for a period of three years from 30.04.2018 to 10.05 .2014, 30.04.2021 to 01.05.2022 and 30.04.2025, which will get extended every year according to their terms and conditions by paying deposit consideration of t10 lakhs and legally valid rentals. Being so, the officials of the I't defendant visited the schedule premises and affixed the notice dated 15.03.2022. On the above grounds, the applicants prayed for the relief sought for.

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The I't defendant filed 'statement of objections' denying the case set up by the applicants and inter-alia contending as follows:- The application is not maintainable. The applicants have no locus standi to file the present application. The relief sought for challenging the order dated 03.04.2021 is barred by limitation. The 2nd defendant had created equitable mortgage over the schedule immovable property by deposit of title deeds on 29.03.2014 in favour of the bank as collateral security for repayment of the amounts due under the business loan of {43 lakhs availed by him. Therefore, the schedule immovable property is the secured asset of the bank.

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' 4. No summons appears to have been taken out as against the 2nd defendant despite arraying him in the cause title. Hence, the SA as against the 2nd defendant is dismissed.

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The applicants produced five documents along with the SA. For convenience, they are referred to as Annexures Al to A'5. Similarly, the l't defendant produced seven documents along with the statement of objection, which are for convenience referred to as Annexures B1 to 87.

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On appreciation of the rival contentions, the only issue arises for consideration is as to whether the applicants are entitled to the relief prayed for?

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This Tribunal would like to make a passive remark that the authorised officer of the l't defendant bank who issued the notice dated 15.03.2022 on its behalf, should have been made a party in the cause title to the SA. The right to sue accmes under S.l7(l) of the Act to any person (including borrower) if he is aggrieved by any of the measures referred to in sub-section (a) of S.13 of the Act taken by the secured creditor or his authorised officer under the Act. The secured creditor is a creditor holding security the realisation of which would satisfy his claim. S.13(12) of the Act says that the right of the secured creditor can be exercised by one or more of his officers authorised in the manner as may be prescribed. 'Authorised officer' under R.2(a) of the Security Interest (Enforcement) Rules, 2002 (as amended from time to time) is an officer of the secured creditor who is competent to exercise the rights of the secured creditor and also right of the creditor secured under the Act and to exercise power in respect of and also any other right of the secured creditor conferred under the Act. In the instant case, the secured creditor being a banking company, it can only be represented by its principal officer. On the showing of the applicants itself, they are aggrieved by the notice dated 15.03.2022 issued by the authorised officer of the I't defendant bank, who does not have an independent status without the existence of the secured creditor. Therefore, in the opinion

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of the Tribunal, the authorised officer also should have been made a party in the cause title along with the secured creditor.

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The Issue:- According to the applicants, they are the tenants in the schedule immovable property owned by the 2nd defendant on lease for a period of three years from 30.04.2018 to 10.05.2014,30.04.2021to 01.05.2022 and 30.04.2025, which will get extended every year according to their terms and conditions by paying deposit consideration of {10 lakhs and legally valid rentals and being so, the officials of the l't defendant visited the schedule premises and affixed the notice dated 15.03.2022. Per contra, it is contended by the l't defendant bank that the 2nd defendant had created .quitubl. mortgage over the schedule immovable property by deposit of title deeds on 29.03.2014 in favour of the bank as collateral security for repayment of the amounts due under the business loan of {43 lakhs availed by him and, therefore, the schedule immovable property is the secured asset of the bank.

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The applicants are claimed to be a tenants in the schedule immovable property, which is claimed to be the secured asset of the l't defendant bank. Sub-section (aA) of S.l7 of the Act [as amended in the year 2016] deals with the jurisdiction and power of the Tribunal to examine the claim relating to lease or tenancy if any person in an application preferred under sub-section (1) has raised such claim, and the sub-section reads as below:-

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" (4A) llthere

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(i) any person, in an application under sub-section (1), claims any tenancy or leasehold rights upon the secured asset, the Debt Recovery Tribunal, afler examining the facts of the case and evidence produced by the parties in relating to such claims shall, for the purposes of enforcement of security inlerest, have the jurisdiction to examine whether lease or lenancy,-

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(a) has expired or stood determined; or

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(b) is contrary to section 65A ofthe Transfer ofProperty Ac| 1882 (4 of 1882); or

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(d) is created after the issuance of notice of defoult and demand by the Bank under sub-section (2) of section I3 of the Act; ond

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' (i, the Debt Recovery Tribunal is satisfied that tenancy right or leasehold rights claimed in secured asset falls under the sub-clause (a) or sub-clause (b) or sub-clause (c) or sub-clause (d) of clause

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(i), then notwithstanding anything to the contrary contained in any other lawfor the time being inforce, the Debt Recovery Tribunal may pass such order os it deems fit in accordance with the provisioni of ihis Act."

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, 10. Annexure Al is a copy of order dated 03.04.2021 passed by the I't Additional Chief Metropolitan Magistrate, Bengaluru in Crl Misc No.l54912021. The applicants in the SA have sought for multiple reliefs. They have challenged the aforesaid order as well as the notice dated 15.03.2022 issued by the authorised officer of the l't defendant bank requesting them to vacate the premises. Of course, the notice dated 15.03.2022 is a concurrent measure as under S.l3(4) of the Act taken by the authorised officer ofthe I't defendant bank to take physical possession ofthe secured asset as it is a concurrent phenomenon. Therefore, the applicants were not entitled to club the reliefs sought for together but should have been filed separate SAs for the same. The applicants along with the SA filed IA ll2ll2022 praying to condone the delay of 337 days in filing the SA. Except praying ignorance about the proceedings initiated by the I't defendant bank invoking the provisions under the Act, the applicants have not furnished any valid reason for condoning the delay.

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ll. In fact, the applicants on 25.04.2022 filed an application under S.l7(l) of the Act challenging the order dated 03.04.2021 passed by the I't Additional Chief Metropolitan Magistrate in Crl Misc No.l549l2021. As per the stricture given under S.17(i) of the Act, an application under S.17(l) of the Act ought to have been filed on or before 18.05.2021but they filed the same only on25.04.2022 witha delay of 342 days in filing the same. The IA was filed under S.5 of the Limitation Act, 1963.It may be noted that by virtue of S.24 of the Recovery of Debts and Bankruptcy Act, 1993 (as amended from time to time), - for short 'the RDB Act' - the provisions of the Limitation Act, 1963 are, as far as may be, made applicable to an application made to a Tribunal. The word 'application' as per S.2(b) of the RDB Act takes in an application made to a Tribunal under S.19 of RDB Act only. Therefore, it may be noted that the provisions of the Limitation Act, 1963 are not applicable to an application filed under S.l7(1) of the Act.

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Also, vide order dated 12.07.2023 in Miscellaneous Application IR No.101112019 in Securitisation Application IR No.3708/2018 this Tribunal categorically held that the Debts Recovery Tribunal has no power to condone the delay in filing application under S.l7 (1) of the Act, which has become absolute and final. In the above circumstances, IA 112112022 is liable to be dismissed and thus dismissed. In the above circumstances, the relief sought for as against the order dated 03.04.2021 passed by the l't Additional Chief Metropolitan Magistrate in Crl Misc No.1549/2021 is barred by limitation and thus rejected.

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Annexure A2 is a copy of lease agreement dated 30.04.2018 executed between the 2"d defendant and the 2nd applicant leasing out the schedule immovable property for a period of three years from 01.05.2018 to 30.04.202I as against an advance payment of {10 lakhs, which shall be returned without carrying any interest at the time of vacating the premises. Annexure ,A'3 is a copy of lease agreement dated 20.01,.2022 executed between the 2"d defendant and the 2nd applicant leasing out the schedule immovable property for a period of three years from 01.05.2021 to 30.04.2025 as against an advance payment of { l0 lakhs, which shall be retumed without carrying any interest at the time of vacating the premises. According to the l't defendant, the 2nd defendant had created equitable mortgage over the schedule immovable property by deposit of title deeds on 29.03.2014 in favour of the bank as collateral security for repayment of the amounts due under the business loan of {43 lakhs availed by him and, therefore, the schedule immovable property is the secured asset of the bank. Annexure Bl is a copy of the demand notice dated 03.07.2019 issued by the authorised officer of the l't defendant bank to the 2nd defendant calling upon him to discharge the debt amounting to the sum of <43,00,000/- as on 03.07 .2019 within sixty days from the date of receipt of such notice. It is specifically stated therein that the 2nd defendant availed a term loan (housing loan) of {37 lakhs under account No.408000NC00005299 and another overdraft (housing loan) of

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t9 lakhs under account No.4080009900000424 and to secure the outstanding under the aforesaid facilities the 2"d defendant had created security interest in respect of the schedule immovable property. This has not been controverted or rebutted by the applicants in the proceedings.

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Undisputedly, Annexures ,{2 and ,{3 lease agreements have been executed by the mortgagor subject to mortgage only. Now let us examine as to whether Annexures A2 and ,{3 are in accordance with the provisions under 5.654. of the Transfer of property Act, 1882. No averment relating to such right has been made in the SA. No doubt, the purported lease agreements executed on 30.04.2018 and 20.01.2022 are only after creation of the mortgage on29.03.2014. The I't defendant has submitted in its statement of objection that the contention regarding the lease agreements during the mortgage period are not within its knowledge. The applicants also have no case that the 2nd defendant had taken permission from the I't defendant bank before executing the aforesaid lease agreements in favour of the 2nd applicant. Therefore, going by S.52 of the Transfer of Property Act, 1882, Annexures A.2 and ,A,3 lease agreements are subject to mortgage only.

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The Hon'ble Supreme Court has laid down a detailed frame work of leases granted by the borrowers/lessees classifying it into three categories in Harshad SCC I : 2014 (3.t KLT 357 (SC.U with respect to tlie claim of tenancy or lease hold right to be determined under S.l7(4A) of the Act. They are (1) leases created prior to mortgage which created the secured asset; class (2) leases created after creation of the mortgage, vide 5.65,4 TPA but prior to receipt of S.l3(2) notice by borrower; and class (3) leases created after creation of the mortgage, vide S.654. TPA but after receipt of S.l3(2) notice by borrower. It was held therein that for leases falling in classes (1) and (2) a proper regisered lease deed is required to retain possession under such a lease beyond a period

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of one year and that leases falling in class (3) are invalid. The relevant portion reads as

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below:-

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"- Leasesfalling in classes (1) and (2)

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Held, such leases would not stand automatically determined upon action being initiated under S. I 3/5. I 4 of 2002 Act, and lessees in possession under such leases cannot be evicted by secured creditor or CMM/DM, unless and until the lease is validly terminated qs per any of the modes specified in S. I t I TPA, including by surrender of lease by lessee to secured creditor CMNI/DM - Further, to retain possession under such a lease beyond a period of one year from date on which such lease commenced, vide mandate of S.107 TPA, such lessee would have to produce proof of execution of a proper registered lease deed to secured creditor or CMlu[/DM.

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- Leasesfalling in class (3)

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Held, such leases are invalid, since 5.65A TPA is inconsistent with S.l3(13) of 2002 Act, and vide 5.35 of 2002 Act, S.l3(13) of 2002 Act would prevail over 5.65A TPA to that extent - Hence, lessees in possession under such leases can be immediately evicted by secured creditor or CMM/DM."

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Relying on the decision in Harshad Govardhan's case (supra), the Hon'ble Supreme Court in Vishal N Kals'aria v Bank of Indiu freported in (20]0 3 SCC 7621 has categorically held that as far as granting leasehold rights being created after the property has been mortgaged to the bank, the consent of the creditor needs to be taken.

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, 16.^'fhe case in hand falls on class (2) as defined by the llon'ble Supreme Court in Harshad Govardhan's case. Of course, Annexures z\2 and ,A3 lease agreements are not registered. Following the Harshad Govardhan's case (supra), the Hon'ble High Court of Kerala in Sivan v Federal Bank Lrd [reporred in 20]5 (1.) KLT 303J has held that the benefit which could be extended to persons like who are having unregistered lease deed is only to an extent of the cooling period or breathing time for 'one year' from the date of the instrument or from the date of delivery of possession, and the relevant portion reads as below:-

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' "ln the circumstance, the petitioner, since does not have a case lhat he is having a registered docwnent to estqblish the tenancy, butfor Ext.Pl rent deed and Ext.P3 rent receipt, he comes in the 'orher category' dealt with by the Suprente Court in paragraph '36'. ln the case of such persons, the course pointed out by the Apex Court with reference to qny unregistered instruntent or oral agreement accompanied by delivery of possession, the Chief Metropolitan Magistrate or the District Magistrate, as the case ruay be, will have lo come to the conclusion that he is not entitled to the possession of the secured assetfor more than ayearfront the date of the instruntent orfrom the date of delivery of possession in his favour^{by the landlord. In other words, the benefitwhich} could be extended to persons like the petitioners who are having unregistered lease deed is, only to qn extent of the cooling period or breathing time for 'one year'.from the date of the instrument orfrom the date of delivery of possession. Delivery of possession in the instqnt case is admittedly .front^' I 0.0I .2009' qnd the period o/. one year is already over os the lease was onlyfor a period of I I ntonths. This being the position, no.further relief can be reasonably aspired or by the petitioner.from the CJM Court in view of the specific ruling rendered by the Apex Court;

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:::,*",

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holding that the learned Magistrate has no other option. This Courtfinds that, there is absolurely no merit or bonafides in the Ll/rit Petition and the same is dismissed accordingly. "

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Relying on the decision in Harshad Govardhan's case (supra), the Hon'ble High Court of Kerala in illai v Authorised Oflicer freoorted i

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KLT 109J has held that if duration of lease is more than a year and if lease deed is unregistered lessee will not be entitled to possession of secured asset for more than a year and that a tenant cannot take shelter by saying that she is a tenant holding over and her right should be protected as against secured creditor. The relevant portion reads as below:-

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"HarshadGovardhanSondagar [2014 (3) KLT 357 (SC)J notices the dfficulties the unregistered lease deeds present. It holds that if a lessee claims possession of a secured asset for qny term eieeding one year from the date of the lease ntade in his favour, he has to produce the regisrered instrument in his favour^{by Jayalakshmi. I"f he} fails to^produce that instrument but, instead, ,l"lirs on an unregistered instrumenl or oral agreement accompanied by delivery of possession, the CJM will have to conclude that lhe lessee is nol entilled to the possession of the secured asset for ntore than a year. Because of the statutory mandate under the SARFAESI Act, no tenant, I reckon, can hang on to the statutoryfacilitation of 'holding over', cts engrafted in S.l l6 of the TP Act, or the common law notion of 'at sufferaiie'."

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Again in Jayalakshmi's case (supra) relying on the decision of the Hon'ble Supreme Court in Harshad Govardhan's case (supra) and Vishal's case (supra). the Flon'ble lligh Court of Kerala fuither held that if lease deed is executed for less than one year, it need not be registered; that if it is one year or more, it has to be registered and that neither 5.654 of TP Act nor S.14 of SARFAESI Act affects statutory position on the registration of a lease deed. The relevant portion reads as below:-

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"Neither 5.65A of the TP Act nor S.l4 of the SARFAEST Act affects the.stctrutory position on the registrationofaleasedeed.Even HarshadGovardhansondagar[2014(3)KLT357(SC)J,asclarifiedby Vishal N Kalsaria [2016 (1) KLf 623(SC)], spealc about the consequences thatJlowfroi an unregisterid document - an unregistered docutnent in the context of the Registrarion Act that governs the place of liligation, so to sqy."

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The case in hand falls on class (2) as defined by the Hon'ble Supreme , Court in Halshad Govardhan's cass. In the above premises, even if for the sake of argutnent, the validity of execution of Annexures 42 and r\3 are accepted, its validity automatically was got terminaled after the lapse of one year. i.e on 30.04.2019 and 30.04.2022. Annexure l\3 is executed fbr lbur years even though it is rvritten that it is

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four three years only.^'l'he I't defendant bank invokecl the provisions under the Act and comlnenced the proceedings thereurder by issuing a demand notice under S.l3(2) of the Act on 03.07.2019. Symbolic possession of the scheclule immovable property was taken by the 1't def'endant bank vide possession notice datecl 17.09.2019. The 2nd defendant was duly served with the demiind notice dated 03.07.2019 by registerecl post. It was specifically advised therein that in tenns of S.13(13) of the Act the 2"d defendant shall no{, after receipt of the notice, transfbr by way of sale, lease or otherwise (other than in the ordinary course of business) any of the secured assets refered to therein, without the prior r,vritten consent of the bank. [-le was also put on notice that any contravention of the sall1e ,vas an oft-ence. Therefore. Amexure A'3 lease agreemellt is in contravention of S.l3(13) of the Act only and, therefore, not valid. I'he SA was filed only on 25.04.2A22. ln the above circumstances. even taking into account the validity of unregistered Annexure ,{2 lease agreenient. the applicants are not entitled to have possession of the schedule immovable property on and after 01.05.2019 and they cannot take shelter by saying that they are tenants holding over and their right should be protected as against the secured creditor. Such lessee can immediately be evicted by the secured creditor. For other reasons also, this'l'ribunal finds Annexures A2 and .A'3 as clef-ective and invalid in law. 5.65-4 of the Transfer of Property Act. 1882 deals with the mortgagor's power to lease the mortgaged propetly, subject to and operate in like manner to the terms under the rnortgage deed. It reads as below:-

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"(l) Subject lo the provision,s ofsttb-section (2), a mortgagor, while lavttulll, itt possession of the rnortgaged property, shall hove pov)er to ruqke leases thereof y,hic:h shall be binding on the rnortgagee.

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(2) (a) Every such leose shall be such as would be made I the ordinary course of management o/' lhe properN concerned, etncl in ucc:orclance with uny locerl layv, cu.tlottt ot. usoge. '

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(b) Every^evg1, lease ,shall re,i;erve the best rent thar can reasonably be obtainecl, and no prentium shall be paid or promised and no rent shall be payable in advance,

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(d1 Every .such lease shall take e/fbct Jiom a date not later than six month _frotn the date on y'hich it is made,

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(e) ln the case of lease of buildings, whether leased with or vyithout the land on y,hich thq- stand, the duration of the lease shall in no cese exceed three ysctvs. qnd the lease shall contain q covenant lbr pctyntent o.f the rent and a condition of re-entr1' on the rent not being paid v,ith a time rherein specified.

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(3) Tlte provisions of sub-section (l) uppl.v on if uncl as.far us a controry intetttictn is not expressed in the ntortgage-deecl: and the provisions of sub-section (2) ma.v be varied or ertentlerJ b)t lhe mortgage-deed: and the provisions q/-suh-section (2) muy be voried ctr extencled b1'the mortgage-rleed antl, us sovaried and extended, shall, as./hr ds muy be, ope:rote in like manner uncl v,itlt ull liktt incitlenls, elfects and consequences, es if such vqridtions or exlensiotts vt'ere t:ottluiued in that sub-se<:tion."

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A mortgagor, .vhile larvfully in possession of the nrofigaged property has the power to make leases thereof subject to the provisiotls o1'sub-section (2) as above only, failing which the same shall not be binding on the mofigagee. ln this case, contrary to the provision laid down tmder clause 2(b) as above. Amexures A2 and A3 contain clauses therein that the lessee paid to the lessor in advance an amount of tlO lakhs torvards interest free security cieposit. r.vhich shall be refiurded to the lessee iit the time of' vacating the prenrises. No monthly rent is to be paicl by the lessee to the lessor as the agreement is on no rellt - no illterest basis. Also, Amrexures A'2 and l\3 do not contain a covenant for payment of the rent and a condition of re-entry on the rent not being paid within a time specified therein as conternplated in sub-section 2(e) of S.654 of the Transfer of Property Act, 1882. In contravention to sub-section 2(e) of 5.654 of the Trdnsfer of Property Act, 1882, the dtration of the lease period in Annexure 43 lease agreement has exceeded three years.^'I'herefore. even if for the sake of argument Annexures l\2 and A3 are accepted, the same is not binding on the mortgagee.

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The l-Ion'ble I-ligh Court of Kerala in .layalakshmi's case (supra) has held that lease deed providing for payment of advance amount as security and retum of amount after expiry of tenancy is prohibited, and it reads so:-

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"5.65A of the TP Act prohibits both premium and advance. True, it does not speak about security. But in the lease deed between Jayalakshmi and Prasad, 'the advance amount shall be returned by the l" Party to 2'd Party after adjusting rent arrears, tf any'. So inevitably, the amount described as advance in the lease deed is advance, and nothing else. And it is prohibited."

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It was also held by the Hon'ble High Court of Kerala in Jayalakshmi's case (supra) that lessees get protection from dispossession under S.l4 only if leases accord with statutory mandate as under 5.65A of TP Act and that the Tribunal can

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examine the leases to ascertain whether they accord with 5.654.. The relevant portion of

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the decision reads thus:-

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"Lessees get protectionfront dispossession under S. l4 of the 2002 Act only if the leases accord with the statutory mandate under 5.65A of the TP Act. And the Tribunal can examine the leases, to ascertain whether they accord with 5.65A.^"

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As per sub-section 2(e) of 3.654' of the Transfer of Property Act, 1882, the maximum period of lease that can be made by a mortgagor is three years. S.107 of the Transfer of Property Act, 1882 says that a lease of immovable property for any term

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exceeding one year can be made only by a registered instrument, and it reads so:-

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"A leqse of immovable property from year lo year, or for any term exceeding one yeqr, or resbrving a yearly rent, ca,l be nrade only by a registered inslntment.

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All other leases of imtnovable property may be made either by a registered instrument or by oral ogreement accompanied by delivery of possession.

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lYhere^q lease of inntovable property is made by a registered inslrument, such instrument or, where there are more instruments than one, each such instruntent shall be executed by both the lessor and the lessee.

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Provided that the State governtnent nuyJiom time to time, by notification in the Official Gazette, direct that leases of imtnovablc properly, otlzer than leases from year to year, or for any term exceeding one year, or reserving a yearly rent, or any class of such leases, ntay be made by unregistered inslruntent or by oral agreement without delivery of possession.^"

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S.17 of the Registration Act, 1908 deals with the compulsorily registrable

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documents and sub-section^(1)(d) thereto takes in leases of immovable property from year to year, or for any term exceeding one year, or reserving a yearly rent. Though stamp duty has been paid, Annexures A2 and A.3 lease agreements leasing out the schedule immovable property for a period of three years or more are not registered. The stipulation under S.107 of the Transfer of Property Act, 1882 r/w sub-section l(d) of S.17 of the Registration Act, 1908 is applicable to a lease deed executed under sub-section 2(e) of 3.654. of the Transfer of Property Act, 1882 also.

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The Hon'ble Supreme Court h Sunitha Jugalkishore Gilda v Ramanlal UdhojiTanna freportedin20l3⁽¹⁾ KLTSN 29^(C.No.28) SC: (2013) 10 SCC 258]has held that a tenant who is inducted during subsistence of the mortgage is not entitled to get the protection of the Rent Control Act.

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The Hon'ble Supreme Court rn Park Street Properties Pvt Ltd v Dipak Kumar Singh [reported in 20]6 4.) KLT SN 55^(C.No.6l.) SCI has held that in the absence of a registered lease agreement, what is deemed to be created is a month to month tenancy, the termination of which is governed by 3.106 of the TP Act, and the relevant portion reads as below:-

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"ln the absence o/'a registered inslruntent, the courts are not precluded /rom delermining the factum^{oftenancyfromtheother evidenceon recordas wellas theconduct ofthe parties. In the} absence of regislralion of a document, vvhat is deemed lct be created is a nonth to month t€nanq,, the termination of which is governed by S. 106 of the Act.^"

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It was held by the Hon'ble Supreme Court in Bql'arong Shyamsunder Agarwal v Central Bank of India [reported in 20] 9 (4) KLT I43 (SC,t.,,t 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 under S.107 of the TP Act, and it reads as below:-

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"ln any case, d any of the lenants 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 instruntent, i/' the tenonl relies on an unregistered instruntent or an oral agreement accompanied by delivery ofpossession, lhe tenant is not entitled to possession ofthe secured assetfor more than the period presuibed uncler S. I 07 of the TP Act.^"

¶109

¶110

In the present case, this Tribunal has already held that Annexures A2 and A3 are not binding on the I't defendant bank (mortgagee) as the same have not been executed in accordance with the provisions as under sub-section (2) of 5.65A r/w S.107 of the Transfer of Property Act, 1882. At any rate, if the applicants claim that they are entitled to the possession of the secured asset for a term of more than one year, it has to be supported by the execution of a registered lease deed made in accordance with the provisions laid down under S.107 of the Transfer of Properly Act, 1882. In the absence of such a document, tlie applicants are not having any right of tenancy or leasehold right over the schedule immovable property and the secured creditor is entitled to evict them imtnediately. In the above circumstances, the evidences adduced by the applicants are of

/-\

sA27U2022

no avail to them to prove that they are having a valid tenancy or lease hold right upon the immovable property described in the schedule. They cannot take any shelter thereunder to prevent the secured creditor to enforce its security interest over the secured asset. The applicants could not produce any evidence of payment of rent except payment to association welfare fund. Furtherrnore, if the rent was payable, then the quantum ought to have been mentioned in Annexures A.2 and ,A.3, which is omitted. It may be noted that despite being the above position, the applicants have produced only photocopies of documents before this Tribunal. It is pertinent to be noted here that the factum of tenancy has never so far been revealed by the borrower to the secured creditor. It was only after issuing the demand notice dated 03.07.2019 under S.l3(2) of the Act, possession notice dated 17.09.2019 under S.l3(4) of the Act and a further notice dated 15.03.2022 requesting them to vacate the premises, the applicants have come up ',vith an application on 25.04.2022 before this Tribunal claiming tenancy right over the irnmovable property described inthe schedule. The claim of the applicants is not supported by any conclusive evidence in the eye of law. According to the Itt defendant bank, the applicants are only third parties illegally invaded into its secured asset. In such a situation, the applicants cannot claim protection under the garb of an invalid lease deed, namely, Annexures 42 and A3, against dispossession solely relying upon some photocopies of the documents. Therefore, looking at any angle, the pleading put forth by the applicants that they are lawful tenants in the immovable property described in the schedule cannot be accepted even for a moment. If such persons occupying the premises on the basis of invalid lease deeds, they can only be treated as a 'tenants in sulferance'. This Tribunal would not hesitate to declare that such tenants are not having any legal right and is akin to trespassers and the secured creditor is absolutely entitled to evict them making Annexure 83 possession notice dated 17.09.2019, the order dated 03.04.2021 passed by the

¶115

sA271/2022

¶116

¶117

Additional Chief Metropolitan Magistrate in Crl Misc No.l54912021 andthe notice dated 15.03.2022 in operation.

¶118

The employment of the words 'any person (including borrower), aggrieved by any of the measures refered to in sub-section (a) of S.13 of the Act taken by the secured creditor or his authorised officer' under 5.17(1) of the Act clearly indicates that only those persons who are really aggrieved by any of the measures taken under 5.13(4) of the Act are having the right to file an application thereunder. The applicants have not established by reason or otherwise that they are deprived of any of their rights guaranteed under the Constitution or under any other law for the time being in force, by way of the measure taken under 5.13(4) of the Act by the I't defendant bank. They could not show that any legal injury caused to them. Therefore, the applicant do not come under the definition of 'aggrieved person' to make an application under S.17(l) of the Act. Thus, the applicants are having no locus standi to present such an application.

¶119

The Hon'ble Supreme Court in Ravi Yashwant Bhoir v District Collector freported in 2012⁽²⁾ KLT SN I (C.No.].t SCJ has held that a person cannot be heard as a

¶120

party unless he answers the description of aggrieved party, and it reads so:-

¶121

"A person who suffers.froru legal injury can only challenge the act or onission. There may be some harm or loss that may not be wrongful in the eyes of law because it may not result in injury to a legal right or legally protected interest of the complainant but judicially harm of this description is called damnum sine injuria. The complainqnt has to establish that he has been deprived of or denied of a legal right and he has sustained iniury to any legally protected interest. In case he has no legal peg for a justiciable claim to hang on, he cannot be heard qs a porty in a lis. Afanciful or sentimental grievance may not,be sufficient to confer a locus standi to sue upon the individual. There ntust be injuria or a legal grievance which can be appreciated and not a stat pro ratione vqlunlqs reasons i.e, a claim devoid of reasons. Under the garb ofbeing necessary porty, a person cannot be permitted to make a cose as that of generol public interest. A person having a remote interest cannol be permiiled to become o party in the lis, as lhe person wants to become a party in a case, has to establish thqt he has o proprietary right which has been or is threatened lo be violqted, .for the reqsons that a legal injury creales a remedial right in the iniured person. A person cannot be heard as a party unless he answers the descriptictn oJ'aggrieved pzrty."

¶122

¶123

In the above circumstances and in view of the discussions as above, it is found that the applicants are not aggrieved by the recourse taken by the I't defendant bank under sub-section (a) of S.l3 of the Act by virtue of the notice dated 15.03.2022. tO is liable to be dismissed, and, therefore, notwithstanding anything contained in :::

¶124

sA27112022

¶125

¶126

any other law for the time being in force, the I't defendant bank is entitled to continue with further proceedings pursuant to the notice dated 15.03.2022 for recovery of its secured debt by enforcing its security interest over the SA schedule secured asset.

¶127

In the result, IA No.l12ll2022 and SA 271/2022 are dismissed. IA No.ttSl/2022 is closed. This Tribunal declares that the applicants are not having any tenancy or leasehold right upon the immovable property described in the schedule. The I't defendant bank, notwithstanding anything to the contrary contained in any other law for the time being in force, is permitted to continue with the proceedings in pursuant to the notice dated 15.03.2022 for recovery of its secured debt from the secured debtors by enforcing his security interest over the secured assets. The parties shall suffer their respective costs.

¶128

Communicate copy of this final order to both parties as provided in subsection (7) of S.l7 of the Act r/w R.l6 of the Debs Recovery Tribunal (Procedure) Rules,

¶129

1993 (as amended from time to time).

¶130

[Dictated^{to my PA directlyon the computer, corrected} and^pronounced by me in the open Tribunal on\his the 07'h day ol Decenber. 2023J

¶131

LV'

¶132

I I^{IMT\AZ ALI} ] PRESIDINC bTTICPN

¶133

Appendix toSA2Tl/2022

APPENDIX

Applicant's Exhibits

ExhibitNo.	Date	Particularsofdocuments
Annexure-Al	03.04.2021	Photocopyofthe orderpassedbytlie1"Additional Chief Metropolitan Magistrate, Bengaluruin CrlMisc No.1549/2021(alongwithacopyofthenoticedated 15.03.2022issuedbytheauthorisedofficerofthel't defendant bank requestingthetenant/ownertovacatethe premises)
Annexure-A2	30.04.2018	Photocopyoftheleaseagreement executedbythe2'd defendantinf-avourofthe2"dapplicant
AnnexureA.3	20.01.2022	Photocopyoftheleaseagreement executedbythe2'd delendantinf'avourofthe2"uapplicant
Annexure,{4		Electricity billsinthenameoftlie2"ddefbndant
Annexure.{5		ReceiptsforpaymentofEshwariEnclaveApartment Owners WelfareAssociationfund Defendant's Exhibits
Annexure-Bl	03.07.2019	Photocopyofthe demandnoticeissuedunderS.l3(2)ofthe Actbytheauthorisedofficerofthel'tdefendantbankto the2''ddefendantcallinguponhim todischargethedebt amountingtothesumof<43,00,008/-ason03.07.2019 withinsixtydaysfi'orn thedateofreceiptofsuchnotice
Annexure-B2		Photocopyofthe postal acknowledgement cardsignedby the2n0defendantforhavingreceivedAnnexureB1sentto himbyregisteredpost
Annexure-B3	17_09.20t9	Photocopyofthepossessionnoticeissuedby the authorised officerofthe1" defendant bank underS.l3(4)oftheActin respectoftheschedr-rleimmovableproperty
Annexure84	t7.09.2019	Photocopyofthe panchnama
Annexure85	17.09.2019	Pliotocopyoftheinventory
Annexure86	19.09.2019	Photocopyofthe extractofthepublicationofAnnexure 83 inKannadainthe Samyuktha Karnatakadaily.
Amrexure87	19.09.2019	Photocopyofthe extractofthepublicationofAnnexure 83 in Kamada intheNew IndianExpressdaily.

¶138

,*kt;:::,.,.

¶139

.-\ Schedule to SA 271/2022

¶140

¶141

SCHBDULE

¶142

A,ll that piece and parcel of RCC roofed Flat No. S.F^{No.l0,-Stilt Floor,} , in "ESHWARI ENCLAV APARTMENT" Measuring^{1292 sql't bearing} no.45, South Block, constructed under Bruhat Bengaluru^Mahanagar Palike having PID No.96-310-45, Ward No.96 Situated^{at 8'r' Cross,.} Kanaka Nagar, and Bangalore-560032^(Forrnerly beaimg^porlionsof survey no.28l4 Vishwanatha Nagenahalli,Village^{Kasaba hobli,} Bangalore North Taluk With in Revenue Administrative^{Jurisdictionof} Bruhit Bangalore Mahanagar Palik) under^Gandhinagar (Kacharakanahalli) sub Register office, consisting of hall, two bedrooms, kitchen, attached bathroom, and toilet.

¶143

Bounder by

¶144

East by: private property

¶145

West by: road and retained portion to the extent of 167*50ft

¶146

North by: private property

¶147

South Ly: private^property

¶148

PRESTD,k[l],.