Dismissed

Narala Srinivas v. Bank of Maharashtra

DRT6 Dec 2024SA/437/2023

Case brief

AI extract

What is this about?

This Securitisation Application by a tenant challenging a banker's physical possession measures via Section 14 of the SARFAESI Act was dismissed. The court held that unregistered leases for terms exceeding one year cannot confer tenancy rights, rendering the Applicant's contentions devoid of merit.

What did the court decide?

The Securitisation Application and interlocutory applications were dismissed with no order as to costs.

Narala Srinivas versus Bank of Maharashtra — Banking and Recovery | DRT (2024)

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IN THE DEBTS RECOVERY TRIBUNAL-II AT HYDERABAD

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DATED THIS THE 6TH DAY OF DECEMBER, 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. 437 OF 2023

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Between: Sri Narala Srinivas S/o Sri Narala VeeraSathyanarayana Aged 55 years, Occ: Business R/o 2-115/10, Main Road Gangapur, Near Old Cinema Hall Rebbana, Gangapur Adilabad-504292

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....Applicant.

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And

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Bank of Maharashtra Rep by its Authorised Officer Zonal Qffice, 4-3-448 to 460 & 466 to 468, 1st Floor Vi nooth na Pittle's Majesty Gopal Bagh, Near Bank Street Koti, Hydera bad - 500001.

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Sri P. Subramanyeswara Rao S/o Late P. Krishna Murthy Aged 59 years, Occ: Business Plot No.269 & 270, Park Road Bhavani naga, ECIL (PO) Kapra, Medchal Malkajgiri Dist. Hyderabad-500062.

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M/s. Esjay Engineering Industries Rep by its Managing Partner Mr. P. Subramanyswara Rao

.}ft!-.b''

sa No. 437/2023

Plot No. 557/8, GullaPalli Village Industrial Growth center ongole, Praksham District Andhra Pradesh-50¹ 309.

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.....Respondents.

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Counsel for the Applicant Counsel for 7"t Respondent Respondent No.2 Respondent No.3

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Mr. V. Ravinder. Mr. G. Adrian Kiran Raj. Exparte. Notice not served.

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-:g-p-EB:-

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The^present Securltization^{Application is filed by the Applicants} u/s, 77 of the Securitisation and^{Reconstructionof Financial} Assets and Enforcement of Security^{Interest Act, 2002assailing} the action of 1"t respondent bank^{from takingphysical} possession of schedule property pursuant to affixture^of undated and unaddressed notice of Advocate Commissionerⁱⁿ pursuance of orders passed by Hon'ble Chief Metropolitan Magistrate, Medchal Malkajgiri, Malkajgiri District^{in Crl.M.P.} 40t/2023.

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The facts of the case as averred ln the SA, in brief, are^that applicant, being a tenant of the SA^{scheduleproperty,is a third} party to the securitisation proceedings initiated against the subject property by the l't respondent bank^{for recovery of} loan dues from respondents 2 and 3.^Applicant is^residingin the subject property by virtue of an^{unregisteredleasedeed} dated 16.05.2022 executed by^{2nd respondent. The lease deed} commenced from 16.05.2023 and valid up to 30.04.2025.^The rent is^paid regularly by the applicant.^{The 1't respondentbank} affixed the undated and unaddressed impugned^advocate 1ffi';-\

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sa No,^il37/2023

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commissioner notice on the subject property for taking the physical possession of the property. The 1st respondent has not followed the proviso (i) to (ix) of Section 14 of the SARFAESI Act, 2002 in obtaining orders/warrant in Crl.M.P. No.401 of 2023. As the 1't respondent bank initiated steps against the subject propedy without serving any notlce to the applicant, the said action amounts to violation of Article 300 of the Constitution of India. Hence the action of 1"t respondent bank is illegal, arbitrary, null and void. The^proposition of law laid down in Vishal N Kalsaria vs. Bank of India and others squarely applies to the case of the applicant and therefore,^1't respondent bank has no right to evict him without following the provisions of Rent Control Act. With these averments, applicant prays for declaring the action of 1st respondent bank to take the physical possession of the SA schedule property as arbitrary, illegal, null and void.

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The 1't respondent bank filed reply statement. The submission of the l't respondent bank as^per the averments in the reply statement in brief, is that the impugned notice is issued wlth date and the name of 2nd respondent, but the applicant deleted the same and filed the same along with the SA. The 2nd respondent was residing in the subject^property at the time of execution of loan agreement. The lease deed is the result of collusion of the 2nd respondent-borrower and the applicant to prolong the securitisation proceedings. There is no irregularity in obtaining warrant u/s 14 of the Securitisation Act. The 1't respondent bank is not required to issue any notice to the Applicant. There is no violation of any provislons of the SARFAESI Act. The^judgement relied by the applicant in the SA

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ffi.*$

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SA No.437/2023

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is not applicable^{to the present case' The 2nd respondent} borrower challenged^{the AdvocateCommissioner notice} separately by^{filingSA.323of 2023. The physical possessionof} the subject^{propertyhas been taken by the 1st respondentbut} the borrower^{illegally trespassed into the propertyby breaking} open the lock.^{A case for illegaltrespass has been filed against} the borrower and^{FIR bearingNo'58/2023 is pending at P'S'} Cherlapally.^{With these submissions,1't respondent prays for} dismissal of^{the SA.}

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The 2nd respondent^{was set expartevide docket orderdated} 26.02.2024 as^{the notice sent to him was unclaimed'}

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Applicant has^{not taken action to serve notice on the 3'd} respondent despite^{instructions. Hence, SA against 3'd} respondent was^{dismissedvide docket order dated 02'04'2024'}

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Learned counsel^{appearing for the applicantand the learned} counsel appearing^{for the 1tt respondent bankreported no oral} arguments.^{Perusedthe written arguments filed by the l't} respondent bank^{and the materialplaced on record'}

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Now the^points that^{arise for determinationare:-}

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llhether the Applicant^{made out any valid} ground for quashing^{the measuresinitiated} by the respondent^{companyu/s 14 of the} Securitisation Act^{against the SA schedule} property? To what r e li e f? / /Ivttz ii) townatr il J: Uryg

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SA No. 437/2023

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Point No.⁽ i):

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Admittedly, applicant is a tenant and is in possession of the subject property on the strength of an unregistered lease deed. It ls a settled law that no tenancy rights beyond a year can be claimed on the strength of an unregistered lease instrument. As per Section 107 of the Transfer of Property Act, lease of immovable property from year to year, or for term exceeding one year, or reserving a yearly rent, can be made only by a registered instrument. In such a situation, applicant's contentions that he was not put on notice either prior to obtaining orders for appointment of advocate commissioner or during the proceedings uls L4 ol the SARFAESI Act and he cannot be evicted unless by following due procedure of law, is unacceptable. Further, applicant has not denied the fact that the borrower broke-open the door of schedule premises after Advocate Commissioner took physical possession and FIR 58/2023 was booked for trespass. The applicant has not placed any material evidence of payment of monthly rent or the advance deposit of Rs.1,80,000/- to the respondent No.2 in support of his contention of tenancy. It is important to note that respondent No.2-land lord of the subject premises remained exparte.

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In view of the above discussion, I find that the present Securitisation Application filed by the Applicant is devoid of merits and is liable to be dismissed.

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Point No.(ii):

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