Dismissed

Texport Syndicate (India) Limited v. Union Bank of India

DRT12 Apr 2024SA/37/2024

Case brief

AI extract

What is this about?

The DRT dismissed the application challenging Section 14 order regarding possession. It held that the second tenancy agreement was void ab initio as it was executed after the issuance of a demand notice under Section 13(2) without the secured creditor's consent.

What did the court decide?

The Summary Application and pending intra-court applications were dismissed with a direction to close the file.

Texport Syndicate (India) Limited versus Union Bank of India — Property and Title | DRT (2024)

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SA No.37 of 2024

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12/04/2024	Ex. No.	Before Presiding Officer Dr. Rekha G. Dhakar, DRT-1, Mumbai. *SA No.37/2024* *Texport Syndicate (India) Limited Vs.* *Union Bank of India and Ors.*	Next date
D	R	T1 MUMBA Advocate Umesh Shetty i/b Sapna R. appeared for the Applicant. Advocate Charles Desouza a/w Adv Sushila V. I/b Orbit Law Services appeared for the Respondent No.1 Advocate Kalyani Wagle appeared for the Respondent No.2 & 3 1. By way of the present SA, the Applicants prayed to quash and set aside the order dated 19.06.2023 passed under Section 14 of the SARFAESI Act, 2002 as well as all action pursuant thereon in respect of the tenanted property i.e. Entire Fourth and Fifth Floor premises in “Rajgrahi” at 53, Nutan Laxmi Society, N.S. Road-9, JVPD Scheme, Vile Parle (West), Mumbai-400049 (for short “the property in question”); and other reliefs. 2. Heard both sides on the present SA. 3. Brief facts as set out in the SA are that the Applicant is a tenant on the property in question since 01.09.2017. It is stated that the Respondent No.2 was in need of	I

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SA No.37 of 2024

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DRT1 MUMBAI
immediate funds therefore the Respondent
No.2 let out the property in question to the
Applicant initially for a period of 24 months
commencing from 01.09.2017 at monthly rent
of Rs.3,00,000/- and interest free refundable
deposit of Rs.38,04,000/-. At his request the
Applicant paid an additional deposit of Rs.5
crores for the period of six months and
thereafter the said deposit carried interest at
the rate of 1.5% per month. The intention of
the parties was always to create tenancy for a
long duration and accordingly, a tenancy
agreement in the form of Leave and License
Agreement
was
executed
on
01.09.2017.
Simultaneous
to
the
execution
of
the
Agreement dated 01.09.2017, the Respondent
No.2
handed
over
peaceful
and
vacant
possession of the tenanted property to the
Applicant.
4.
It is further stated that the Applicant
incurred huge expenses exceeding Rs.75 lakhs
towards furniture, fixture and in renovation of
the tenanted property and the Applicant paid
monthly
rents
of
Rs.3,00,000/-
after
deducing applicable TDS.
5.
It is further stated that in furtherance of
promise to create long tenancy, eventually on
23.03.2021, the Respondent No.2 renewed

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SA No.37 of 2024

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the tenancy in respect of the said tenanted
property. Respondent No.2 executed two
separate registered agreements dated
UMBAI 23.03.2021 in respect of fourth floor and fifth floor premises for five years commencing from 16.03.2021 till 16.03.2026 at monthly rent of Rs.3,25,000/- each. The said agreements are registered with the Joint Sub Registrar, Andheri-5. 6. However, the Applicant was shocked and surprised when they found a notice dated 23.06.2022 issued by the Advocate Commissioner pasted at the entrance of the
building. Thereafter, the Applicant
confronted the Respondent No.2 about notice
dated 23.06.2023 for taking physical
RT1 possession on 08.07.2023. Initially Respondent No.2 assured the Applicant that he will take care of the matter and the Applicant need not to worry. Thereafter, on
08.07.2023, the Applicant made further
D inquiry from Respondent No.2. However, he was not able to give any satisfactory answer. The Applicant got suspicious and approached the Advocate for legal advice and on the
advice of the Advocate, the Applicant obtained papers and proceedings in Case No.427/SA/2021.

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SA No.37 of 2024

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I 7. It is stated that by order dated 19.06.2023, the Ld. Additional CMM allowed Section 14 application for physical possession of scheduled assets therefore, being aggrieved by the said order, the present SA has been filed by the Applicant.
DRT1 MUMBA 8. On the other hand, Ld. Counsel for the Respondent objected to the present SA and submitted that the tenancy claim of the Applicant is not sustainable. He submitted that the alleged Tenancy Agreement dated 01.09.2017 was executed for the period of 24 months and the said period expired in the year 2019. He submitted that in the year 2019, the Respondent No.1 issued Demand Notice dated 19.09.2019 to the Borrowers for recovery of its huge dues however, since the Borrower failed to pay the dues, therefore, on application of the provisions of Section 13(13) of the SARFAESI Act, 2002, the fresh tenancy which was executed on 23.03.2021 is_void ab_ initio and thus he submitted that the present SA is liable to be dismissed.
9. Considered the submissions of the parties and perused the record.
10. In the present SA, the Applicant is
claiming his rights on the property in

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SA No.37 of 2024

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question on the basis of Leave and License
DRT1 MUMBAI Agreement dated 01.09.2017 and dated 23.03.2021 executed between the Applicant and the Respondent No.2 i.e. the Borrower. 11. According to the Applicant, since both the Leave and License Agreements are the registered agreements and thus, the Applicant is having rightful tenancy on the property in question and thus, in terms of the judgment of the Hon'ble Apex Court in Harshad Govardhan Sondagar Vs. International Assets Reconstruction Co. Ltd., SLP (Crl) No. 1666 of 2012 , the tenancy right of the Applicant may be protected and the Respondent may be restrained from taking possession of the property in question. 12. For the consideration of the tenancy right of the Applicant on the property in question both the Tenancy Agreements i.e. dated 01.09.2017 and dated 23.03.2021 are relevant to decide the controversy in hand. 13. On perusal of the tenancy agreement dated 01.09.2017, it reveals that parties were agreed for creation of the tenancy for a period of 24 months qua the property in question.

question on the basis of Leave and License

DRT1 MUMBAI
Agreement
dated
01.09.2017
and
dated
23.03.2021 executed between the Applicant
and the Respondent No.2 i.e. the Borrower.
11.
According to the Applicant, since both
the Leave and License Agreements are the
registered agreements and thus, the Applicant
is having rightful tenancy on the property in
question and thus, in terms of the judgment
of
the
Hon'ble
Apex
Court
in
Harshad
Govardhan Sondagar Vs. International Assets
Reconstruction Co. Ltd., SLP (Crl) No. 1666 of
2012 , the tenancy right of the Applicant may
be protected and the Respondent may be
restrained
from taking possession of the
property in question.
12.
For the consideration of the tenancy
right of the Applicant on the property in
question both the Tenancy Agreements i.e.
dated 01.09.2017 and dated 23.03.2021 are
relevant to decide the controversy in hand.
13.
On perusal of the tenancy agreement
dated 01.09.2017, it reveals that parties were
agreed for creation of the tenancy for a period
of 24 months qua the property in question.

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SA No.37 of 2024

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On calculation, the said period of 24 months, expired on 31.08.2019. Admittedly, there was no tenancy from 01.09.2019. 15. Record also reveals that the Respondent No.2 has availed the credit facilities from the Respondent No.1 which was renewed in 2015 and also in 2018 but since the borrower has committed to default therefore the account was classified as NPA and the demand notice dated 19.09.2019 under Section 13(2) of the SARFAESI Act, 2002 was issued to the Borrowers including the Respondent No.2 herein. 16. Thus, the SARFAESI action of the Respondent No.1 was in existence in September, 2019. 17. The Applicant herein is claiming his present right of tenancy on the basis of the tenancy agreement dated 23.03.2021 thus, prior to the 23.03.2021, the Demand Notice under Section 13(2) of the SARFAESI Act, 2002 dated 19.07.2019 was already issued by the Respondent No.1 and therefore, as rightly stated by the Ld. Counsel for the Respondent No.1 that on application of the provisions of Section 13(13) of the SARFAESI Act, 2002, the fresh tenancy which was executed on

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SA No.37 of 2024

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23.03.2021 is_void ab initio_and therefore, any
claim on the basis of the said tenancy
agreement dated 23.03.2021 is not
DRT1 MUMBAI maintainable. For the convenience, the relevant provision is extracted herein below: “(13) No borrower shall, after receipt of notice referred to in sub-section (2), transfer by way of sale, lease or otherwise (other than in the ordinary course of his business) any of his secured assets referred to in the notice, without prior written consent of the secured creditor.” (emphasis provided) 18. Therefore, as per provisions of Section 13(13) of the SARFAESI, 2002, after receipt of the demand notice, the borrower shall not transfer, sell or lease the secured assets, without prior written consent of the secured creditor. 19. Admittedly, in the present matter, no such written consent has been obtained by the Respondent No.2 before creating a fresh tenancy right on the property in question in the year 2021 thus, the claim of the Applicant on the basis of the registered agreements dated 23.03.2021, is not sustainable. 20. Insofar as judgment relied upon by the Applicant in Harshad Govardhan Sondagar

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SA No.37 of 2024

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DRT1 MUMBAI
(supra)
is
concerned,
the
same
is
not
applicable
in
the
present
matter
as the
present matter will hit by the provision of
section 13(13) of the SARFAESI Act, 2002 and
the fresh agreement is executed subsequent to
the demand notice under section 13(2) of the
SARFAESI Act, 2002.
21.
Therefore, in view of the above, there is
no merit in the present SA, hence, the present
SA alongwith the pending IAs are hereby
dismissed.
22.
File be closed and consigned to the
record room.
P.O.
DRT-I

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Texport Syndicate (India) Limited v. Union Bank of India

Case brief

What is this about?

What did the court decide?

Texport Syndicate (India) Limited v. Union Bank of India

Case brief

What is this about?

What did the court decide?

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