Dismissed

Shashibhushan Ramchabila Pandey v. Placid Limited

DRT30 Jan 2024SA/34/2024

Case brief

AI extract

What is this about?

The Divisional Rent Tribunal dismissed the applicant's interim application seeking to stay eviction proceedings. The court held that the applicant's tenancy agreement was unregistered, making the claim unsustainable for a term exceeding one year under Section 107 of the Transfer of Property Act. Consequently, the secured creditor retained priority rights under the SARFAESI Act.

What did the court decide?

None. The interim application seeking stay of the order is dismissed.

Shashibhushan Ramchabila Pandey versus Placid Limited — Landlord and Tenant | DRT (2024)

¶1

SA 34 of 2024

¶2

30/01/2024	Ex. No.	Before Presiding Officer Dr. Rekha G. Dhakar, DRT-1, Mumbai. *Order in SA 34 of 2024* *Shashibhushan Ramchabila Pandey Vs* *Placid Limited*	Next date
D	R	T1 MUMBA Advocate Partho Sarkar appeared for the Applicant. Advocate Tikshta Modi i/b Akhil Modi & Associates appeared for the Respondent. 1. By way of the interim relief, the Applicant has prayed to quash and set aside the order of Ld. CMM and/or till the disposal of the SA, stay the order of Ld. CMM. 2. Ld. Counsel for the Applicant contends that the Applicant is the bonafide tenant on the property in question since 2019 and he also submits that alleged mortgage was created thereafter only. 3. He also contends that the tenancy is for 6 years and for the said purpose he drawn my attention to the (Exhibit -A of the SA). He also submits as per the said Tenancy Agreement, the borrower of the Bank was required to deposit the interest on the amount of Rs. 63.32 Lakhs which was deposited by the Applicant with the borrowers of the Bank and it is agreed that	I

¶3

¶4

SA 34 of 2024

¶5

DRT1 MUMBAI
in case the borrower could not pay interest
to the Applicant/Tenant then by way of
consideration
against
monthly
rent
an
amount
of
0.5%
per
month
would
be
construed as discharge of obligation towards
monthly rent payment.
4.
He also states that as per the Tenancy
Agreement,
the
rental agreement would
conclude as and when Landlord/Licensor
returns the deposit of Rs.63.32 lakhs to the
Applicant
or
on
31/12/2025
whichever
occurs
earlier.
Thus,
he
submits
the
Applicant
is
having
prior
Tenancy
Agreement and that would be continued as a
debt
till
31/12/2025 and therefore, the
Applicant is having better rights than the
Respondent.
5.
In support of his contentions, Ld.
Counsel for the Applicant relied upon the
judgments of Hon’ble Supreme Court in
Visal N. Kalsaria Vs. Bank of India, (2016) 3
SCC 762; and Hon’ble Bombay High Court
in
Maharashtra
Govt.
and
Another
Vs.
Rajaram Digamber Padamwar and Ors. 2011
SCC Online Bom 2021.

¶6

6.	He also contends	that the SA filed by
the	landlord is pending	with this Tribunal

¶7

¶8

SA 34 of 2024

¶9

and Respondent is well aware about the existence of the tenant of the property in
RT1 MUMBAI question however, despite having the knowledge, the Respondent did not take any steps for making the Applicant a necessary party in the proceeding under Section 14 of the SARFAESI Act, 2002. 7. He also raised an objection that despite having knowledge about the tenancy of Applicant, the Respondent did not disclose the said fact before the Ld. ACMM thus, the order dated 30/09/2023 of LD. ACMM is liable to be quashed/vitiated. For the said purpose, the Applicant relied upon the judgement of Hon’ble HIgh Court of Telangana in Writ Petition No.8945/2020 8. Per contra, Ld. Counsel for the Respondent vehemently objected on the present SA and submits that Applicant is well aware about the action of the
D Respondent since the beginning as the Applicant as well as the borrower Mr. Vinay
Pandey are the relatives and she also submits that the various notices including the demand notice under section 13 (2) of the SARFAESI Act, 2002, as well as symbolic possession notice under Section 13 (4) of the SARFAESI Act, 2002, and auction

¶10

¶11

SA 34 of 2024

¶12

notice were sent on property in question and also some of the notice were pasted on the
property in question however, despite
MUMBAI having knowledge of the action by the Respondent Bank, the Applicant did not approach this Tribunal earlier and also challenge to the action of the Bank is liable on the ground of limitation. 9. She further informs that the address of the principal borrower is at the property in question only. 10. She also informs that this morning only she got the information regarding the listing of the present matter. She further submits that she has received the copy of the SA in digital mode only.
RT1 11. She also contends that in the judgement relied upon by the Ld. Counsel for the Applicant, it is clearly stated that tenancy should be a registered tenancy or
D else the same is for the more than 1 year as provided under Section 107 of the Transfer
of Property Act 1882, however, the Applicant is claiming his right on the basis of unregistered agreement only and the said tenancy is not legally maintainable. She submits that the present SA along with the

¶13

¶14

SA 34 of 2024

¶15

IA may be dismissed as the Applicant has not come before this Tribunal with clean hands.
I 12. Having considered the revival contentions of the parties and gone through the record.
DRT1 MUMBA 13. Admittedly, the Applicant is claiming his tenancy right on the basis of tenancy agreement dated 15.10.2019 entered into between Mr. Vinay Kumar Pandey and the Applicant herein. As per the relevant clause 3 of the said Agreement, it was agreed between the parties that: Period/Consideration: That in terms of consideration against the rent, the Tenant/Licensee would make an interest free deposit of Rs.63.32 lacs with the Landlord/Licensor. The Landlord/Licensor hereby confirms the receipt of Rs.61 lacs & Rs.2.32 lacs (totaling Rs.63.32 lacs) by way of Bank Transfer on 01.08.2019 (totalling Rs.63.32 lacs), And that the Landlord/Licensor would not be paying any interest on the deposit of Rs.63.32 lacs. It is also further agreed that since Landlord/Licensor would be paying no interest to the Tenant/Licensee hence by way of consideration against monthly rent an amount of 0.5% per month (on the deposit of Rs.63.32 lacs)

IA may be dismissed as the Applicant has
not come before this Tribunal with clean
hands.

I
12.
Having
considered
the
revival
contentions of the parties and gone through
the record.

DRT1 MUMBA
13.
Admittedly, the Applicant is claiming
his tenancy right on the basis of tenancy
agreement dated 15.10.2019 entered into
between Mr. Vinay Kumar Pandey and the
Applicant herein. As per the relevant clause
3 of the said Agreement, it was agreed
between the parties that:
Period/Consideration:
That
in
terms of consideration against the
rent, the Tenant/Licensee would
make an interest free deposit of
Rs.63.32
lacs
with
the
Landlord/Licensor.
The
Landlord/Licensor
hereby
confirms the receipt of Rs.61 lacs &
Rs.2.32
lacs
(totaling
Rs.63.32
lacs) by way of Bank Transfer on
01.08.2019
(totalling
Rs.63.32
lacs),
And
that
the
Landlord/Licensor would not be
paying any interest on the deposit
of Rs.63.32 lacs. It is also further
agreed
that
since
Landlord/Licensor
would
be
paying
no
interest
to
the
Tenant/Licensee hence by way of
consideration
against
monthly
rent an amount of 0.5% per month
(on the deposit of Rs.63.32 lacs)

¶16

¶17

SA 34 of 2024

¶18

RT1 MUMBAI would be construed as discharge of obligation towards monthly rent payment. That this rental arrangement would conclude as and when Landlord/Licensor returns the deposit of Rs.63.32 lacs to the Tenant/Licensee on or 31st Dec’ 2025 whichever occurs earlier. It is also agreed upon the tenancy agreement to commence on the date of execution of this arrangement, and so long the Landlord/Licensor does not repay the deposit, the Landlord/Licensor agrees the deposit of Rs.63.32 lacs from the Tenant/licensee would be by way of debt to the Landlord/Licensor and the Premises would be under the lien or collateral in favour of Tenant/Licensee & non-refund of deposit of Rs.63.32 lacs, the Landlord/Lessor undertakes execution of registered sale deed in favour of the Tenant/Licensee on or after 31st Dec’ 2025 at a price mutually agreed upon, & on the date of execution of sale-deed, the deposit of Rs.63.32 lacs would be adjusted against the sale consideration of the Premises.
D (emphasis provided) 14. On perusal of the above clause, it reveals that the Applicant gave a interest free loan of Rs.63.32 lakhs to Mr. Vinay Kumar Pandey on 01.08.2019, and the same was to be repaid by Mr. Vinay Kumar Pandey on or before 31.12.2025, and in case of default for repayment of the said amount,

RT1 MUMBAI
would be construed as discharge of
obligation towards monthly rent
payment.
That
this
rental
arrangement would conclude as
and
when
Landlord/Licensor
returns the deposit of Rs.63.32 lacs
to the Tenant/Licensee on or 31st
Dec’
2025
whichever
occurs
earlier. It is also agreed upon the
tenancy agreement to commence
on the date of execution of this
arrangement,
and
so
long
the
Landlord/Licensor does not repay
the deposit, the Landlord/Licensor
agrees the deposit of Rs.63.32 lacs
from the Tenant/licensee would be
by
way
of
debt
to
the
Landlord/Licensor
and
the
Premises would be under the lien
or
collateral
in
favour
of
Tenant/Licensee & non-refund of
deposit
of
Rs.63.32
lacs,
the
Landlord/Lessor
undertakes
execution of registered sale deed in
favour of the Tenant/Licensee on
or after 31st Dec’ 2025 at a price
mutually agreed upon, & on the
date of execution of sale-deed, the
deposit of Rs.63.32 lacs would be
adjusted
against
the
sale
consideration of the Premises.

D
(emphasis provided)
14.
On perusal of the above clause, it
reveals that the Applicant gave a interest
free loan of Rs.63.32 lakhs to Mr. Vinay
Kumar Pandey on 01.08.2019, and the same
was to be repaid by Mr. Vinay Kumar
Pandey on or before 31.12.2025, and in case
of default for repayment of the said amount,

¶19

¶20

SA 34 of 2024

¶21

Mr. Vinay Kumar Pandey required to execute the registered sale deed in respect of the property in question in favour of the
RT1 MUMBAI Applicant. Thus, the Alleged Tenancy Agreement seems like an Undertaking/Loan Agreement. Therefore, as per provisions of Section 26(E) of the SARFAESI Act, 2002, the Respondent No.1 being the secured creditor, has priority right over the other debts. Section 26(E) of the SARFAESI Act, 2002, is extracted herein below: “26E. Notwithstanding anything contained in any other law for the time being in force, after the registration of security interest, the debts due to any secured creditor shall be paid in priority over all other debts and all revenues, taxes, cesses and other rates payable to the Central Government or State Government or local authority.” (emphasis supplied)
D 15. Therefore, as per provision of Section 26(E) of the SARFAESI Act, 2002, the Respondent No.1 being the secured creditor, has priority right to the alleged dues of the Applicant.
16. Even otherwise, the alleged Tenancy Agreement dated 15.10.2019 is not a

¶22

¶23

SA 34 of 2024

¶24

registered document as provided under Section 107 of the Transfer of Property Act, which inter alia provides that: “107. Leases how made.—A lease of immoveable 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. [All other leases of immoveable property may be made either by a registered instrument or by oral agreement accompanied by delivery of possession. [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:] Provided that the State Government may, 4 *** from time to time, by notification in the Official Gazette, direct that leases 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 be made by unregistered instrument or by oral agreement without delivery of possession.”] (emphasis supplied) 17. Therefore, as per Section 107 of the Transfer of Property Act, 1882 (“TPA,

¶25

¶26

SA 34 of 2024

¶27

UMBAI 1882”), the parties have an option to enter into a lease in respect of an immovable property either for a term less than a year or from year to year, for any term exceeding one year or reserving a yearly rent. If they decide upon having a lease in respect of any immovable property from year to year or for any term exceeding one year, or reserving yearly rent, such a lease has to be only by a registered instrument. In the absence of a registered instrument no valid lease from year to year or for a term exceeding one year or reserving a yearly rent can be created. 18. The Hon'ble Supreme Court in
Harshad Govardhan Sondagar Vs.
RT1 M International Assets Reconstruction Company Ltd. and Others, Special Leave to Appeal (Crl) No(s).1666/2012, has held that if a tenant claims possession of a secured asset for any term exceeding one year from the date of the lease made in his favour, he
D must produce a registered instrument. The relevant paragraphs from the said judgement is extracted herein below:
"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

¶28

¶29

SA 34 of 2024

¶30

DRT1 MUMBAI
the cases 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."
(emphasis provided)

¶31

¶32

SA 34 of 2024

¶33

Similarly, the Hon’ble Supreme Court in Bajarang Shyamsunder Agarwal Vs. Central Bank of India, reported in (2019) 9 SCC 94, after considering all the decisions in relation to the right of a tenant in possession of the secured assets, has inter alia held that in case a tenant claims possession of a secured asset based on an unregistered instrument or an oral agreement, accompanied by delivery of possession, the tenant will not be entitled to the possession of the secured asset beyond the period prescribed under Section 107 of the TPA 1882. The relevant paragraphs of the said judgement is reproduced herein under: "17. The interplay between the Sarfaesi Act and the right of the tenant was first examined by this Court in Harshad Govardhan case [Harshad Govardhan Sondagar v. International Assets Reconstruction Co. Ltd., (2014) 6 SCC 1 : (2014) 3 SCC (Civ) 1] . It may be noted that the present appellant was a party to the aforesaid proceedings. This Court was confronted with the question

¶34

"17. The interplay between the Sarfaesi Act and the right of the tenant was first examined by this Court in Harshad Govardhan case [Harshad Govardhan Sondagar v. International Assets Reconstruction Co. Ltd., (2014) 6 SCC 1 : (2014) 3 SCC (Civ) 1] . It may be noted that the present appellant was a party to the aforesaid proceedings. This Court was confronted with the question as to whether the provisions of the Sarfaesi Act affect the right of a lessee to remain in possession of the secured asset during the period of the lease. After noticing the scheme of the Act, this Court held that if the lawful possession of the secured asset is not with the

¶35

¶36

SA 34 of 2024

¶37

DRT1 MUMBAI
borrower, but with a lessee under
a valid lease, the secured creditor
cannot
take
possession
of
the
secured
asset
until
the
lawful
possession
of
the
lessee
gets
determined and the lease will not
get
determined
if
the
secured
creditor chooses to take any of the
measures specified in Section 13 of
the Sarfaesi Act. Accordingly, this
Court concluded that the Chief
Metropolitan Magistrate/District
Magistrate can pass an order for
delivery of possession of secured
asset in favour of secured creditor
only when he finds that the lease
has
been
determined
in
accordance with Section 111 of the
TP Act.
18. The Court further held that if
the
Chief
Metropolitan
Magistrate/District Magistrate is
satisfied
that
a
valid
lease
is
created before the mortgage and
the lease has not been determined
in accordance with Section 111 of
the TP Act, then he cannot pass an
order for delivery of possession of
the secured asset to the secured
creditor. In case, he comes to the
conclusion that there is no valid
lease either before the creation of
mortgage or after the creation of
the
mortgage
satisfying
the
requirements of Section 65-A of
the TP Act or even though there is
a valid lease the same stands
determined
in
accordance with
Section 111 of the TP Act, he can
pass
an
order
for
delivery of
possession of the secured asset to
the secured creditor.”

¶38

¶39

SA 34 of 2024

¶40

	(emphasis supplied)
DRT 20.	1 MUMBAI The Hon’ble Court further held that: “23. While we agree with the principle laid out in Vishal N. Kalsaria case [Vishal N. Kalsaria v. Bank of India, (2016) 3 SCC 762 : (2016) 2 SCC (Civ) 452] that the tenancy rights under the Rent Act need to be respected in appropriate cases, however, we believe that the holding with respect to the restricted application of the non obstante clause under Section 35 of the Sarfaesi Act, to only apply to the laws operating in the same field is too narrow and such a proposition does not follow from the ruling of this Court in Harshad Govardhan case [Harshad Govardhan Sondagar v. International Assets Reconstruction Co. Ltd., (2014) 6 SCC 1 : (2014) 3 SCC (Civ) 1] . 24. In our view, the objective of the Sarfaesi Act, coupled with the TP 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

(emphasis supplied)

DRT
20.

1 MUMBAI
The Hon’ble Court further held that:
“23.
While
we agree with the
principle laid out in Vishal N.
Kalsaria case [Vishal N. Kalsaria
v. Bank of India, (2016) 3 SCC 762
: (2016) 2 SCC (Civ) 452] that the
tenancy rights under the Rent Act
need
to
be
respected
in
appropriate cases, however, we
believe
that
the
holding
with
respect
to
the
restricted
application of the non obstante
clause under Section 35 of the
Sarfaesi Act, to only apply to the
laws operating in the same field is
too narrow and such a proposition
does not follow from the ruling of
this Court in Harshad Govardhan
case
[Harshad
Govardhan
Sondagar v. International Assets
Reconstruction Co. Ltd., (2014) 6
SCC 1 : (2014) 3 SCC (Civ) 1] .
24. In our view, the objective of the
Sarfaesi Act, coupled with the TP
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

¶41

¶42

SA 34 of 2024

¶43

DRT1 MUMBAI
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
SARFAESI Act 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
65A of the T.P. Act.
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.”
(emphasis provided)

¶44

¶45

SA 34 of 2024

¶46

MUMBAI 21. In the said decision of the Hon'ble Supreme Court, it was clarified that in the absence of a registered instrument, if the tenant only relies upon 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 TPA, 1882. 22. Further, it is observed by the Hon’ble Supreme Court that in absence of a registered instrument the tenant may prove his existing rights by producing other relevant evidence.
T1 23. In the present case, the alleged Tenancy Agreement is an unregistered document. 24. It is pertinent to mention here that as
per Clause 11 of the alleged Tenancy
D Agreement, the parties were agreed for registration of the Tenancy Agreement. The said clause 11 is reproduced hereinbelow:
Special clause: The Licensor/Landlord agrees that the Tenant/Licensee is entitled to all protection of rights as a tenant and that given clause 3 of this agreement it is mutually agreed

¶47

¶48

SA 34 of 2024

¶49

I upon to effect prospective registration accordingly. Relevant stamp duty and registration charges will be borne by the Tenant/Licensee. (emphasis supplied) 25. However, the Applicant failed to register the alleged Tenancy Agreement.
RT1 MUMBA 26. Thus, the tenancy claim of the Applicant on the basis of the alleged unregistered Tenancy Agreement, is not sustainable. 27. Insofar as the judgement of Visal N. Kalsaria (supra) is concerned, the same has already been discussed in the judgement of Bajrang Shyamsunder Agarwal (supra). 28. As far as judgement of Maharashtra Govt. (supra) is concerned, the same is not applicable in the present matter as the facts of the said case are totally different.
D 29. As the judgement of Hon’ble Telangana High Court in Writ Petition No..8945/2020 is concerned, in the said case, it is clearly held by the Hon’ble Telangana High Court that: “As discussed supra, the petitioner in the present case is not having valid lease and, therefore, it

I
upon
to
effect
prospective
registration accordingly. Relevant
stamp
duty
and
registration
charges
will
be
borne
by
the
Tenant/Licensee.
(emphasis supplied)
25.
However,
the
Applicant
failed
to
register the alleged Tenancy Agreement.

RT1 MUMBA
26.
Thus,
the
tenancy
claim
of
the
Applicant
on
the
basis
of
the
alleged
unregistered Tenancy Agreement, is not
sustainable.
27.
Insofar as the judgement of Visal N.
Kalsaria (supra) is concerned, the same has
already been discussed in the judgement of
Bajrang Shyamsunder Agarwal (supra).
28.
As far as judgement of Maharashtra
Govt. (supra) is concerned, the same is not
applicable in the present matter as the facts
of the said case are totally different.

D
29.
As
the
judgement
of
Hon’ble
Telangana
High
Court
in Writ Petition
No..8945/2020 is concerned, in the said
case, it is clearly held by the Hon’ble
Telangana High Court that:
“As discussed supra, the petitioner
in the present case is not having
valid
lease
and,
therefore,
it

¶50

¶51

SA 34 of 2024

¶52

DRT1 MUMBAI
cannot
question
the
notice
to
vacate order dated 16.06.2020
issued
by
Respondent
No.1
pursuant to the order passed by
the
District
Magistrate,
Sangareddy, asking the petition
to
vacate
the
secured
assets
within (15) days. The writ petition
fails and accordingly the same is
liable to be dismissed”
(emphasis supplied)
30.
In the present case also, since the
Applicant is not having the valid tenancy
agreement, therefore, the said judgement
does not give any support to the Applicant.
31.
In view of above, I find no merit in the
present interim relief and the same is hereby
dismissed.
P.O.
DRT-I

¶53

Tjs/-1

¶54

Shashibhushan Ramchabila Pandey v. Placid Limited

Case brief

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Shashibhushan Ramchabila Pandey v. Placid Limited

Case brief

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