Dismissed

Messrs Nordea Corpus Pvt. Ltd. v. Bank of Baroda and Others

DRT16 Jul 2024SA/224/2024

Case brief

AI extract

What is this about?

The court dismissed a securitization application filed by a private limited company challenging possession and sale notices issued under the SARFAESI Act. Upholding settled law, the court held that an unregistered lease deed does not confer valid tenancy rights sufficient to grant locus standi to file such an application, ruling the applicant as a tenant-in-sufferance with no protection under the

What did the court decide?

Securitization Application dismissed; no stay granted on possession or sale notices.

Messrs Nordea Corpus Pvt. Ltd. versus Bank of… — Contract and Commercial Disputes | DRT (2024)

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DEBTS RECOVERY TRIBUNAL-III, CHANDIGARH

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PRESIDED OVER: SH. MRIDULESH KUMAR SINGH

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SECURITIZATION APPLICATION NO.224/2024

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Date of Institution: 26.06.2024

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Date of Decision: 16.07.2024

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M/s Nordea Corpus Pvt. Ltd., through its Authorised Director, Sh. Sumeet Kumar having Registered Address:- 112/3/1A, Elite Arcade, 2^nd Floor, Mall Road, Ludhiana-141001

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--Applicant

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Versus

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Authorised Officer, Bank of Baroda, Regional Manager, Regional Office, 3^rd Floor, Opposite Circuit House, Sandhu Tower-II, Civil Lines, Ferozpur Road, Ludhiana-141001

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Authorised Officer/Executive Director, Bank of Baroda, Plot No. C-26, Block-G, Bandra Kurla Complex, Bandra (East), Mumbai-400051

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Dr. Prashant Jerath, S/o Dr. Ved Prakash Jerath, 3^rd Floor, Elite Arcade, Mall Road, Ludhiana

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--Respondents

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Argued by: Sh. Aman Sharma, Advocate for Applicant Sh. C.S. Pasricha, Advocate for Respondent Nos. 1 & 2 None for Respondent No.3

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FINAL ORDER

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(1) This Securitization Application was filed under Section 17 (1) of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as ‘the Act’ for brevity) to set aside the possession notice dated 03.06.2024, sale notice dated 06.06.2024 and to quash and set aside all actions taken by respondent Nos. 1 & 2 under the provisions of the Securitization Act.

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SA/224/2024

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M/S NORDEA CORPUS PVT. LTD. VS. BANK OF BARODA AND OTHERS

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(2) It was stated in the application that applicant No.1 is private limited company registered under the Companies Act; that applicant No.1 is original lessee of respondent No.3 in property no. 3^rd Floor, B-19112/3/2, Shop No. 504, 505, 506, Elite Arcade Mall Road, Ludhiana, Punjab-141001 and was fully authorized and competent to sub lease the said premises under lease deed dated 07.03.2023 and addendum dated 06.07.2023; that applicant sub-let the property to M/s Arora Productions and the same is working under name of M/s Arora Productions at the above said property since 01.04.2023; that applicant is in lawful possession since lease deed executed between Smt. Gurdeep Kaur and applicant under the Agreement and M/s Arora Production is in actual and lawful possession since 01.04.2023; that all the lease deeds and agreements were in knowledge of all respondents; that respondent No.3 is the lessor of applicant and applicant had paid rent to the tune of Rs.7,60,000/from August, 2023 till March, 2024; that respondent No.1 & 2 are the Principal Officers, who had sanctioned the facility to the applicant and respondent No.3, who is landlord of applicant; that all the respondents had played fraud and causing huge loss to applicant; that applicant is the lawful tenant in the said premises; that Mrs. Gurdeep Kaur was the owner of the said premises and she entered in lessor-lessee agreement/deed with applicant i.e., M/s Nordea Corpus Pvt. Ltd., which was executed on 07.03.2023; that the said Lease Deed was executed for the period of 9 years commencing from 01.05.2023 to 30.04.2032 against mortgage of immovable property bearing no. B-19/112/3/2 situated at 3^rd Floor of Elite Mall and no B-19/112/6 Elite Mall; that the said property i.e., property bearing no. B- 19/112/3/2 situated at 3^rd Floor of Elite Mall was purchased by Sh. Prashant Jerath (respondent No.3) registered on 06.07.2023 bearing wasika No.20232024/106/1/8125; that when Mrs. Gurdeep Kaur executed sale deed in favour of Sh. Prashant Jerath on 06.07.2023, applicant company was already in possession and besides other agreed terms it was specifically agreed that the tenancy will continue in the same manner as it was in past and possession would

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SA/224/2024

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M/S NORDEA CORPUS PVT. LTD. VS. BANK OF BARODA AND OTHERS

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also remain with applicant. Thereafter, an addendum was signed and executed between applicant and Sh. Prashant Jerath (respondent No.3 Landlord) on 06.07.2023 and the applicant started paying rent to respondent No.3 continuously and regularly; that similarly applicant executed lease deed with M/s Arora Productions on 01.04.2023; that the said tenancy under the lease deed is till 31.03.2032 and shall further extended automatically for nine additional years; that now respondent Nos. 1 & 3 become dishonest and they want to dispossess the applicants from the rented premises, illegally and forcibly to which respondents have no right or interest with each other; that perusal of notices under Section 13(2) & 13(4) of the Act shows that property of applicant was not mortgaged with the bank by respondent No.3; that respondent Nos. 1 & 2 had issued the possession notice dated 03.06.2024 and sale notice dated 06.06.2024 regarding property bearing no. B-XIX-112/6 owned by respondent No.3, which is never informed to applicant and only pasted at premises; that respondent No.1 & 2 without following the procedure, illegally wants to take physical possession of the property of the applicant; that respondent Nos. 1 & 2 wants to take possession of the properties forcibly which is not the same which respondent bank alleges to be mortgaged; that the action taken by respondent Nos. 1 & 2 against the applicant on the basis of said notices is illegal, null and void, non-sustainable under law and as such is liable to be set aside/quashed.

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(3) Reply filed by respondent Nos. 1 & 2.

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(4) It is stated in the reply that applicant has not approached this Tribunal with clean hands, the SA is malafide and filed in collusion with the borrowers; that the tenancy claim is based upon the documents prepared as an afterthought and the documents filed in support are fictitious, fake and forged; that applicant is claiming tenancy on the basis of unregistered instrument; that Section 107 of Transfer of Property Act provides that no valid tenancy can be claimed that too on the basis of unregistered instrument; that in fact, perusal of the aforesaid provision would reveal that the leases for any term exceeding one year would

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SA/224/2024

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M/S NORDEA CORPUS PVT. LTD. VS. BANK OF BARODA AND OTHERS

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by way of registered lease deed; that applicant is illegal occupant of the property in question and the claim regarding alleged tenancy is on the basis of lease deed dated 01.04.2023, which is an unregistered document has got no sanctity in the eyes of law; that if the applicant alleges to be in possession of the property charged by the bank, still as per judgment of Hon’ble Apex Court wherein, the applicant cannot retain the possession beyond the period of one year on the basis of alleged unregistered lease deed and thus the possession being held allegedly illegal. Sh. C.S. Pasricha, Advocate relied upon pronouncement of the Hon’ble Apex Court in the matter of Vishal N. Kalsaria Vs. Bank of India (2016) 3 SCC 762 wherein the onus is upon the applicant to place on record the registered instrument executed by the registered owner of the secured asset, whereas the applicant has been relying upon an alleged unregistered lease deed. It was further stated that as per records, applicant M/s Nordea Corpus Pvt. Ltd., is not the registered owner and the mortgagor has purchased the property from Smt. Gurdeep Kaur; that the lease deed created in favour of one Arora Productions again is of no substance in absence of any registered instrument of lease and it is incorrect to allege that the applicant is in lawful possession of the secured asset as tenant; that respondent bank had conducted the inspection report dated 13.03.2023 of the secured asset and it reveals that there was no tenancy whatsoever; that the said inspection was conducted after the alleged lease deed dated 07.03.2023, if applicant was in possession of the property as tenant since 07.03.2023 then why none was present on the spot when the property was inspected by the respondent bank on 13.03.2023; that the sale deed executed by Smt. Gurdeep Kaur favouring the borrower to the respondent Nos.1 & 2 however, it has not been revealed as to how it has obtained copy thereof. This shows collusion between the borrower and the applicant, who are trying to create hindrance in the recovery process by preparing false and fictitious documents; that applicant has been put in the property as tenant by preparing an unregistered instrument of lease and the payment of

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SA/224/2024

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M/S NORDEA CORPUS PVT. LTD. VS. BANK OF BARODA AND OTHERS

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alleged rent to the tune of Rs. 7,60,000/- allegedly paid to the borrower/ respondent No.3 again is misplaced and unsupported by any cogent receipt/documentary evidence nor any mode and manner in which the same has been paid; that the property was originally owned by Smt. Gurdeep Kaur and it is proved from the sale deed that there is no mention of any encumbrance over the property or any tenancy created upon the same; that applicant is claiming lease of 9 years but on the basis of unregistered lease deed; that the lease deed on the basis of which addendum has been executed, does not provide any covenant for creating any sub lease, this shows the malafide of the applicant who is trying to mislead the Hon’ble Tribunal on the basis of fake/forged documents prepared in connivance with the borrower to obstruct the recovery process of the bank; that no notice is required to be served to a third party, who is admittedly claiming tenancy on the basis of fake/forged documents; that all the actions under the Act are taken by the answering respondents after the proper compliance and procedure under the law.

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(5) No replication filed by applicant to the reply filed by respondent Nos.1 & 2.

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(6) Applicant has not served respondent No.3, whom applicant is claiming as his landlord.

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(7) I have heard arguments advanced by Sh. Aman Sharma and Sh. C.S. Pasricha, Advocates and gone through the record carefully.

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(8) Sh. Aman Sharma, Advocate argued that applicant is tenant of the property in question and applicant is neither borrower nor mortgagor nor guarantor in the said loan; that all the sale deeds are with applicant in respect of ownership of the property in question; that details of property mentioned in the notices are not correct; that applicant was tenant of Smt. Gurdeep Kaur and after the sale of the property by Smt. Gurdeep Kaur to Dr. Prashant Jeerath now he is tenant of Dr. Prashant Jeerath (respondent No.3) on the basis of lease deed; that applicant has executed lease deed with M/s Arora Productions and sub-let the property to it with handing over the physical possession; that now the sale notice dated 06.06.2024 was issued and the sale is fixed for 16.07.2024. It was

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SA/224/2024

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M/S NORDEA CORPUS PVT. LTD. VS. BANK OF BARODA AND OTHERS further argued that sale notice was issued in contravention of legal principal. (9) Per contra , Sh. C.S. Pasricha, Advocate argued that applicant himself admitted that he is not in the actual and physical possession of the secured asset; that applicant has admitted in para 5(D) of the SA, that applicant executed a lease deed with M/s Arora Productions and M/s Arora Productions is in lawful possession of the property in question; that specific shop Numbers, which were mortgaged are mentioned in the notice; that before mortgage of the property, respondents got the inspection of the property and it was found without any tenant; that applicant is claiming his possession on the basis of unregistered lease deed, which has no value in the eyes of law; that applicant is claiming his tenancy for 9 years but as per settled law this tenancy cannot be accepted as valid tenancy without Registered Tenancy Deed.

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(10) Sh. C.S. Pasricha, Advocate placed reliance upon the judgment passed by Hon’ble Supreme Court of India in the case of Bajrang Shyamsunder Agarwal Vs. Central Bank of India & Another 2019 (9) SCC 94 wherein it was held that if any of the tenants claim that he is entitled to possession of a secured asset for the term of more than one year, it has to be supported by the execution of a registered instrument. It was further held that the operation of the Rent Act cannot be extended to a ‘tenant-in-sufferance’ vis-à-vis the SARFAESI Act, due to the operation of Section 13(2) read with Section 13(13) of the SARFAESI Act. A contrary interpretation would violate the intention of the legislature to provide for Section 13(13), which has a valuable role in making the SARFAESI Act a self-executory instrument for debt recovery. Moreover, such an interpretation would also violate the mandate of Section 35, SARFAESI Act which is couched in broad terms.

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(11) Sh. C.S. Pasricha, Advocate further argued that no landlord will handover the sale deeds of the property to tenant but here in this case applicant is claiming himself a tenant of the property in question and has filed the sale deed, which shows that applicant is in connivance with actual borrower; that no

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SA/224/2024

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M/S NORDEA CORPUS PVT. LTD. VS. BANK OF BARODA AND OTHERS

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replication was filed by applicant to rebut the contents stated in the reply.

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(12) After considering the rival arguments advanced by the counsel of parties and evidence available on the record, it shows that applicant is claiming himself as tenant on the basis of unregistered lease deed. It is admitted fact that applicant itself is not in the actual physical possession of the property in question. As per settled law applicant has no locus to file the Securitization Application for prayer of stay of the proceedings.

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(13) Applicant is ‘ Tenant-in-Sufferance’ therefore, protection from SARFAESI Act is not available to applicant. (14) After considering all the facts and circumstances, in the considered opinion of this Tribunal, applicant is not entitled for any relief. Resultantly, this SA is liable to be dismissed. (15) Accordingly, this SA is dismissed. Record be consigned to record room after due compliance. Date: 16.07.2024 Pronounced by me in the open Tribunal. (MRIDULESHKUMARSINGH) Presiding Officer, DRT-III, Chandigarh

Messrs Nordea Corpus Pvt. Ltd. v. Bank of Baroda and Others

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Messrs Nordea Corpus Pvt. Ltd. v. Bank of Baroda and Others

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