Dismissed

Ms Maniks salon and mangli kitchen rep by R Shiva Kumar v. Indusind Bank Limited

DRT22 Jan 2024SA/241/2023

Case brief

AI extract

What is this about?

In a Securitisation Application under the SARFAESI Act, the Debt Recovery Tribunal dismissed the tenant's plea to stop the bank from taking possession of secured assets, citing that an unregistered lease deed for fifteen years was invalid under the Transfer of Property Act and Registration Act.

What did the court decide?

Securitisation Application dismissed; interlocutory applications closed; no order as to costs.

Ms Maniks salon and mangli kitchen rep by R Shiva Kumar versus… — Property and Title | DRT (2024)

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IN THE DEBTS RECOVERY TRIBUNAL-II AT HYDERABAD

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DATED THIS THE 22ND DAY OF JANUARY, 2024

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PRESENT: SH. RAMESHWAR KOTHE, B.Com, L.LB. (Hons.), M.A, PRESIDING OFFICER

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SECURITISATION APPLICATION No.241 OF 2023

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Between:

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M/s Manik's Salon and Mangli Kitchen Rep by R. Shiva Kumar Occ:Business, Aged about 49 years

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Gender: Male, H.No. 1-8-1531/A, Shiva Sadan Apartment PG Road, Innovation Colony Ra mgopa I pet, Secu ndera bad - 5000 30

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.....Applicant

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And

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Induslnd Bank Limited Rep by its Authorised Officer

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F i n a n c i a I Restru ctu ri n g & Reco n stru cti o n G ro u p No.1-10-72, 3d Floor, Ashoka Janardhana Chambers

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Beg u m pet, Hyde ra bad - 1 6.

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Smt. Shilpa Agarwal W/o Nitin Kumar Agarwal

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Aged about 47 years, Occ:Business H. No. 5-9-22/4/ 1/3 1, Ada rsh Naga r Saifabad, Himayat Nagar, LIC Division Hyderabad-500063

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.....Respondents.

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Counsel for the Applicant : Sri Shaik Khaja Peer Counsel for 7st Respondent Bank: Sri G. Bhanu Murthy 2nd respondent : Ex parte 3("\

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sA No.24r/2023^'

-:re_E_R:-

The present Securitization Application is filed by the Applicants u/s. 17 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (the "Act" for brevity) assailing the proceedings initiated by the 1st respondent bank for taking the physical possession of the SA schedule property pursuant to advocate commissioner warrant issued in pursuance of orders on the file of learned XXII Addl. Chief Metropolitan Magistrate at Secunderabad.

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2, The case of applicant as averred in the application, is that; the applicant is a tenant in the SA schedule premises having taken the same on lease for 15 years from 2nd respondent for running a salon as well as cloud kitchen business at a initial monthly rent of Rs.1,60,000/- with enhancement of l0o/o every two years. The applicant made a interest-free deposit of Rs.5 lakhs with the 2nd respondent. The applicant invested huge amounts towards furnishing the premises. Suddenly on 10.05,2023 the officials of respondent bank came with advocate commissioner and demanded to vacate the property. Prior to that no notice was issued, affixed and published. The lease of applicant was much prior to loan transaction. The applicant cannot be evicted till expiry of lease agreement dated 18.Lt.2O2l. Hence this SA.

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The 2nd respondent was set ex parte on 30.06.2023 as called absent and no representation despite service of notice. 4. The 1st respondent bank adopted counter filed in lA 1519/2023 as reply statement in the SA. The submissions of the respondent bank briefly, are that the lease agreement dated 18.11.2021 is an

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SA No.24112023

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unregistered one and hence applicant has no locus standi to file the SA. The 2nd respondent executed registered Memorandum of Entry of deposit of title deeds vide Doc.No.643l19 dated 11.03.2019 and thus the alleged lease, if any, was subsequent to creation of mortgage and would be subject to mortgage rights of respondent bank. The respondent bank has followed the procedure under the sARFAESI Act and obtained orders from learned xxII cMM court for taking physical possession of secured asset. The applicant is not entitled to any relief and hence SA may be dismissed.

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5, Both the parties flled written arguments. perused the same along with the material documents placed on record.

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In addition to what is stated in application, the applicant contends that he cannot be evicted from the schedule premises unless by following due process of law.

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According to 1st respondent bank, the application schedule property covers loan facilities availed by four persons including 2nd respondent herein. All the loan accounts became NpA on LO.LO.2022 and hence demand notices were issued. The unregistered lease deed dated 18.11.2021 was subsequent to mortgage created on 11.03.2019 and hence it cannot be considered, The respondent bank relied on^judgement of Hon'ble Supreme Court in Anthonv vs. K.C. Ittoop & Sons and Others reported in (2000.) 6 Suoreme Court Cases 394 in support of the contention that the lease deed being unregistered one, cannot be looked into.

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Now the points that arise for determination are:-

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i) Whether the Applicants made out any valid ground for quashing the measures initiated by the respondent company for taking physical possession of the SA schedule property? l2('rv .ii) To what relief?

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sA No.24112023

Point No.^(i):

Admittedly,^{the applicantis a third partyto the loan transaction} between^{respondents1 and 2. Tenancyof fifteen years is being} claimed by the^{applicant by virtueof unregistered lease deed dated} 18.11.2021^{executedby the 2nd respondent' According to the 1st} respondent bank,^{the mortgage in respect of subject property was} created on 11.03.2019^{whichWas prior to lease. However, the} apparentfactisthattheleasedeedisanunregistereddocument.In the^{judgement in Anthon} vs. K.C. Ittoo the Hon'ble APex Court^{held that:-}

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"The tease deed^{reliedon by the ptaintiffwas intendedto be} operative for a^{period of five years' Itwas an unregistered} iistrument. Hence,^{it couldnot createa lease on accountof the} inhibiting^{provisionsof section 7O7 of the Transferof Property} A,ct, $dZ) and^{Sections 77(7) and 49 of th-e RegistrationAct'} 1g68. therefore,^{so far as the instrument of lease is concerned} ii"re is no scope^{for holding that the appellantis a lesseeby} virtue of the s;id^{instrument.The Courtis disabled from using} the instrument^as evidence." (emphasis supplied)

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Under^{paragraphsB, 9, 10 and 12 of the cited judgment,the} Hon'ble Apex Court^{dealt with Sections 105 and 107 of the T'P' Act,} Sections 17(1) and^{49 of the RegistrationAct, 1908' The provision} under Section 107^{of the Transfer of Property Act, 1882 reads as} hereunder:

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"107. A tease of immoveable^{propertYfromyearto year, or for any term} exceeding one^{year, or reserving a yearlyrent, can be madeonly by a} reg i stered i nstrument.

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1[All other leases of immoveable^propefty may be made either bY^a registered instrument or by oral agreement accompanied by delivery of possession. 2[Where a lease of immoveable^property is made by a registered instrument, such instrument or, where there are more instruments than one, each such instrument shall be executed by both the lessor and the lessee: l ffi"t

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SA No.241l202g

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Provided that the sfate Government may, 3[x**1 from time to time, by notification in the Official Gazette, direct that- /eases of immoveable property, other than leases from year to year, or for any term exceeding one year, or reserving a yearly rent, or any class of such leases, may bb made by unregistered instrument or by oral agreement without delivery of possession.l

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The lease agreement dated 19.11.202L pressed into service by the applicant is obviously not oral and nor is it for below one year. since it is for fifteen years as claimed by the applicant and reduced into writing, it must be a registered instrument as per Section 107 of the T.P. Act read with sec.17(1Xd) of the Indian Registration Act, 1908. once the lease deed is not as per provisions of law, the same is devoid of having evidential value. Therefore, the applicant cannot be permitted to interdict the SARFAESI proceedings of the 1st respondent bank against its secured asset based on an unregistered lease deed. The applicant failed to make out any valid ground to interdict the SARFAESI proceedings against the sA schedule property and accordingly SA is liable to be dismissed.

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Point No.(ii):

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In the result, SA fails and is hereby dismissed.

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Consequently, Interlocutory Applications pending, if any, shall stand closed. No order as to costs.

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t4. communicate a copy of this order to the parties concerned.

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(fyped to my dictatign by the PS, corrected, signed and pronounced by me in the open court on this the 22"d day of January,2024).

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dw* (R-AMESHWAR KOTHE) PRESIDING OFFICER

Ms Maniks salon and mangli kitchen rep by R Shiva Kumar v. Indusind Bank Limited

Case brief

What is this about?

What did the court decide?

Ms Maniks salon and mangli kitchen rep by R Shiva Kumar v. Indusind Bank Limited

Case brief

What is this about?

What did the court decide?

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