Dismissed

M S Lavanya Constructions v. Karur Vysya Bank

DRT21 Aug 2025SA/216/2022

Case brief

AI extract

What is this about?

Applicant, claiming tenancy via an unregistered lease deed, filed an application under Section 17 of SARFAESI Act challenging possession proceedings under Section 14. The Tribunal held the lease deed void against the mortgagee bank due to the owner’s prior alienation and dismissed the application.

What did the court decide?

The application challenging the possession proceeding was dismissed. No relief was granted for re-delivery of the schedule property.

M S Lavanya Constructions versus Karur Vysya Bank — Banking and Recovery | DRT (2025)

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TRIBUNAL-IATHYDERABAD

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IN^{THE DEBTSRECOVERY}

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DATED^{THIS THE21STDAY OFAUGUST, 2025}

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PRESENT:^{GUMMADI GOPICHAND, PRESIDING OFFICER}

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SA.NO.216/2O22

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M/s Lavanya Constructions Rep. by its Partners Musa Babu, S/o Venkanna & Smt.Chennamma, W/o Musa Babu Office at:8-2- 109/3/ 1, APSEB Colony, .. Applicant Sagar Road, Hyderabad-79

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And.

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The Karur Vysya bank Ltd., Asset Recovery Branch, 5-8-356 to 362, III floor, Chirag Ali Lane, Abids, Hyderabad-500 001. Rep. by its^{Authorized officer}

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M/s^{Virtue Marketing P.Ltd.,} MCH No.^{1-2-137 to154, Unit No.306,} Minerva Complex, III floor,

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S.D. Road,^{Sec.bad-500 003.}

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Sri Jain Hitesh Ramesh Kumar, S/o Sri Ramesh Kumar Otarmal jain, R/o^{D.No.2-3-450,Flat No.303,}

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Block B, Sri Sai Residency, Nallakunta, Sec.bad-500 003.

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Sri^{RAmeshKumar Otarmal Jain,} S/o otarmal Jain, R/o^{D.No.2-3-450,Flat No.303,} Block B, Sri Sai Residency, Nallakunta, Sec.bad-500 003 e

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MSSri Skighna Gases P.Ltd., Regd. Office 4-109, Patancheru, Patancheru Mandal, Sanga Reddy Dist., ? Rep:bEs direcdtor Smt.L.Rupavani Respondents

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Counsel for the Applicant Counsel for the 1st Respondent

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:Sri V.Sethu Madhava Rao :Sri G. Krishna Chaitanya

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Respondent No. 5 Respondents No.2 to 4

: Exparte

-:ORDER:

This^{applicationisfiledbytheApplicantu/s. 17of theSARFAESIAct,} 2002,^{challenging theproceedings initiatedbythe 1stRespondent Bank} 1or^{taking physical possession of theschedule property and also forre} delivery of the same to the Applicant.

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The^{averments made inthe application, inbrief,are that:} The^{Applicantisneitheraborrower,mortgagororguarantortorthe} credit facilities^{availed by the Respondent No.2fromthe1st Respondent} bank. The^{Applicant took theschedule property onleasefora period} of five^{yearsfromRespondentNo.5forestablishment ofReadyMix} Concrete^{(RMC)UnitandtheApplicantavailedloanfromtheAxis} Bank and^{purchased plant,machineryand vehiclesand running the} business. On^{25.08.2022, anAdvocate commissioner appointed by the} Ld.CJM,^{SangaReddyalongwithpolicepersonalandantisocial} elements^{undertheguiseofsecuritypersonalforcefullyenteredinto} the SA^{schedule property and took possession of the schedule property.} The^{Applicant cametoknowthat Respondent No.5filedO.S.No.25/ 20} before the^{Hon'bleDistrict Judge,Sanga Reddyforcancellationof the} Regd.Sale Deed^{No. 12593/2015 dt. 15.07.2015 and also foradecree of} perpetual^{injunction restrainingtheRespondentsNo.1to4from} interfering with^{thepeacefulpossessionandenjoymentofthe} Respondent No.5.^{RespondentsNo.2to 5 are notinpossessionof the} scheduleproperty since^{2020. The1stRespondentbankhasnot} folowed"the^{procedurelaiddownundertheprovisionsofSARFAESI} Act, 2002^{for taking physicalpossession ofthe schedule property. The} 21^{adoGatecomhissionerfailedtoissue fifteendaysnoticetothe} OCcupants^{of thescheduleproperty.RespondentsNo.2to4initiated} DE

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proceedings under the SARFAESI Act,2002 to obtain possession of the schedule property. Hence the SA.

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The 1st Respondent Bank filed their Reply denying all the adverse allegations made in the SA and contended that Respondent No.2 is a Private Limited Company represented by their Directors i.e. Respondents No.3&:4. Respondents No.2 to 4 availed credit facilities form the 1st Respondent Bank in the vcar 2014 and thereafter Committed default in repaving the loan dues and the loan account was classified as NPA, The ls Respondent issued demand notice dt. 14.03.2018, possession notice dt.27.01.2020 and sale notice dt. 14.03.2022 and ultimately auction was conducted in respect of the schedule property and M/s. K.Pramod Kumar rep. by its Proprietor Sri Sailesh Kumar Agarwal became successful bidder and Sale Certificate dt.24.06.2022 was also issued in favour of the auction purchaser. In the year 2015 itself, Respondent No.5 sold the schedule property to Respondent No.3 through Regd. Sale Deed vide Documnent No. 12593/15 dt. 15.07.2015. Thereafter Respondent No.3 created mortgage in respect of^{theschedulepropertybydepositoftitledeeds} The lease^{agreementdt.15. 12.2020} with the 1st Respondent^Bank. entered into by the Applicant with Respondent No.5 is illegal and not valid and it is an^{unregisteredinstrumentandRespondentNo.5does} not hold any title in^{respect of theschedule property. TheApplicant is} not entitled^{toclaimanyreliefandhencetheSAisliabletobe} dismissed.

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Heard Ld. Counsel^{fortheApplicantandLd.Counselforthe1st} Respondent whereas^{claimagainst RespondentsNo.2to4 isdismissed} noticeisnot taken against them. Respondent No.5 is set exparte. Perused the material brought on record.

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Now the points^{that ariseforconsideration are}

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ERABAD

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i whether the^{Applicantisentitledtochallengetheproceedings} initiated by the^{1stRespondentfor taking physical possession of the} schedule^{property u/s14 of theSARFAESI Act,2002 ?}

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To what relief?

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Point No.(i):

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Counscl for^{theApplicantandLd.}

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1. During the^{courseofarguments,Ld.} Counsel for^{the1stRespondentrciteratedtheirrespectiveversionsas}

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stated supra.

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The^{specific contention of the Applicant is thattheApplicant is atenant} of the^{schedulepropertywhereasRespondentNo.5istheowner of the} schedule^{propertyand the Applicant took the schedule property on lease} vide^{Lease Agreementdt. 15.12.2020 but the1stRespondent Bankall of a}

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sudden,^{tookphysicalpossessionoftheschedulepropertythrough} Advocate^{commissionerwho was appointed by theLd.CJM, Sanga Reddy} and so,^{the1stRespondentisliabletore-deliverthepossessionof the} schedule^{property tothe Applicant.}

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Per^{contra,1stRespondent contended that Respondent No.5wayback in} the year^{2015,soldtheschedulcepropertytoRespondentNo.3andthat} the^{Respondent No.3created mortgage inrespect of the schedule property} in^{favourofthe1stRespondentbankbydepositoftitledeeds.As} Respondents^{No.2 to4whoavailedloanfromthe1stRespondent bank} the 1st Respondent committed^defaultin repaying the^loandues, classified the^{loanaccountasNPAandinitiatedproceedingsunderthe} provisunâ of^{SARFAESIAct,2002andultimatelyconductedauctionin} tespect othe^{scheduleproperty andthereafter initiatedsteps fortaking} physiçal^{pos$ession of theschedule property.} 21 ALG 20S

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The specific contention of the 1s Respondent bank is that Respondent No.5 has no right tO create any lease rights over the schedule property. Ld. Counscl for the 1st Respondent further argucd that as the Applicant is relying on the unrcgistered lcase deed which is cxecuted for a period of eleven months, hc cannot contend that the 1s Respondent bank is not entitled to take physical possession of the schedule property by initiating proccedings under the provisions of SARFAESI Act, 2002. In suPport of their contentions, Ld. Counsel for the 1st Respondent Bank relied upon the judgement of Hon'ble Supreme Court reported in (2019) 9 Supremne Court Cases 94 between Bajarang Shyamsunder Agarwal Vs. Central^{Bank of India &anotherwhercinitis heldinPara No.24} as follows:

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24:" In our^{view, theobjectiveof theSARFAESI Actcoupledwith} TP Act and^{the Rent Actare required todoreconciledherein} in the following manner:

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24.1. Ifa^{validtenancy under law isinexistence even prior tothe} creation of the^{mortgage,thetenant'spossessioncannot} disturbed by the^{secured creditor bytaking possession of the} property, The^{lease has to bedetermined inaccordance with} Section 11l^{oftheTPAct for determinationofleases. Asthe} existence of a^{prior existingleaseinevitablyaffects therisk} undertaken bå the^{bank whileprovidingthe loan,itis} expected of^{Banks/creditorsto haveconductedastandard} due diligence^{in this regard.Where the bank has proceeded to} will be^{presumed that}

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accept such a^{property as mortgage,it} it has consented to the risk that comes is a consequence of the existing tenancy.^{Insucha situation,therightsof a rightfuf} tenant cannot^{becompromisedundertheSARFAESIAct} PKOceedings

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24.2. If^{atenancy under law comesinto existence after the creation} ofa^{mortgage,but prior to theissuance of notice Under Section} 13(2) of the^{SARFAESI Act,ithastosatisfy theconditionsof}

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Section 65-A of the TP Act.

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24.3. In any^{case,ifanå of thetenants claim that heis entitled to} possession of a^{secured asset for aterm of more than a year,} it has to^{besupportedbå theexecutiornofa registered} instrument. In the^{absenceof areqisteredinstrument,if the} tenant^{reliesonanunreaisteredinstrumentoranoral} agreement^{accompanied by deliveryofpossession, the tenant} 1S not^{entitled to possession of the secured asset for more than} the^{period prescribed under Section107ofthe TP Act".}

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application 10. During the^{pendencyoftheSA,theApplicantfiledan} L.A.1153/23 for^{taking possessionof the plant and machinery belonging} to^{themandthis Tribunalpermittedthe Applicanttotakeoutplant} Ultimately, the^Applicant and^{machinery fromtheschedule property.} has^{takenbacktheirplant andmachinery availableintheschedule} property.

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The^{Applicant is relying on the unregisteredlease deeddt. 15.12.2020} Deed, it^is executed by^{theRespondentNo.5.Inthe saidlease} mentioned^{that"theleaseisinitiallyforaperiodof11 months} commencing^{from15.12.2020 andthe same isexecuted foraperiodof} five years.

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But the^{1stRespondentBankfiled copyof theRegd.Saledeeddt.} 15.07.2015^{executed by Respondent No.5 in favour of Respondent No.3} in^{respect of the schedule property. As per the said document, it is clear} that way^{back inthe year 2015itself, Respondent No.5alienatedthe} Thereafter, 1n favour of^{RespondentNo.3.} schedule property Respondent No.3^{createdmortgageinrespect of thescheduleproperty} in favouz^{Qf 1st Respondent bank towards security for the credit facilities} availed by^{Respondents No.2to4.} 21 AUG 20 NAL

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eo considering all the circumstances, I am of the opinion that Respondent No,5 title who at the is the time alleged of lessor of the Applicant, is not having subsisting execution of the lease deed dt. 15.12.1020 as Respondent No.5 has alrcady executed Regd. Sale Deed in respect of the schedule property in favour of Respondent No.3 vide Regd. Sale Deed dt. 15.07.2015. Moreover, the said lease deed is an unregistered instrument and basing on the said unregistered lease deed, the Applicant cannot claim possession in the schedule property which was already mortgaged by the Respondent No.3 in favour of the 1st Respondent Bank. However, as the matter stands now, the Applicant had already vacated the schedule property by taking away their plant and machinery. The ratio laid down by the Hon'ble Supreme Court in the case of Bajrang Shyamsunder Agarwal, supra, relicd upon by the 1% Respondent is squarely applicable to the facts of the case.

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In the^{circumstances,I am of theopinion that the Applicant is not entitled} to challenge^{theproceedings initiatedbythe1stRespondent Bank before} the^{Ld.CJM, SangaReddyu/s14oftheSARFAESI Act,2002fortaking} physical^{possession of thescheduleproperty and so,theApplicant isnot} entitled for^{re-delivery of the possession of the schedule property.} So, I see no^{groundwarrantingtheinterferenceof thisTribunalwiththesteps} initiated by the^{1stRespondentfortakingphysical possessionofthe} schedule^{propertyu/sl4oftheSARFAESI Act,2002.Accordingly,this} point is^{answeredinfavourofthe1stRespondentandagainstthe} Applicant.

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Point No.(ti):

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n^{the_restlt, SA 216/ 22 isdismissed as there are nomerits.}

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l4 5. Consequently, the^{Interlocutory Applications,pending if any,shallstand} Zaisöed'. No order as to costs. NAL.

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16.^Communicate a copy of this order to the parties concerned.

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(Dictated to the P.S transcribed bå her. corrected. sianed and pronounced bu me in the open court on this the 21t day of August, 2025).

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Sd/ (G. GOPI CHAND) PRESIDING OFFICER

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TRUE COPY
21 AUG 75
Asst. (le)
oRAg DRr-I, HYDERA
RECO TERY

M S Lavanya Constructions v. Karur Vysya Bank

Case brief

What is this about?

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M S Lavanya Constructions v. Karur Vysya Bank

Case brief

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