Dismissed

Vikas Agarwal v. Canara Bank

DRT7 Oct 2025SA/218/2023

Case brief

AI extract

What is this about?

The Debts Recovery Tribunal, Hyderabad, dismissed the applicant's Securitization Application challenging Canara Bank's possession of schedule property. The Tribunal held the unregistered lease was invalid and the bank's actions were lawful.

What did the court decide?

Securitization Application dismissed; Interlocutory Applications closed; No order as to costs.

Vikas Agarwal versus Canara Bank — Banking and Recovery | DRT (2025)

¶1

IN THE DEBTS RECOVERY^TRIBUNAL -^{II AT HYDERABAD}

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DATED THIS THE^{OTTH DAY OF OCTOBER,2025}

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

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Securitization Application^{No.218OF 2023}

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Sri. Vikas Agarwal S/o Sri Naresh Agarwal Aged 47 years, Occ:Business Gender: Male,^R/ o^15-2-372 Siddiambar Bazar, HYderabad

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.......Applicant.

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Versus

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Canara Bank

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Rep by its Authorized Officer Asset Recovery Management^Branch Near Rail Nilayam, Secunderabad

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Dinesh Kumar Agarwal

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S/o Late Sri Mahesh Chand^Agarwal Aged :45 years, Occ: Business Gender: Male, R/o^{H. No.8-2-269} lS/⁵⁶ Road No.1, Sagar Society,^{Banjara Hills} Hyderabad

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M/s Dinesh Gold

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Rep by its Managing Partner Dinesh Kumar Agarwal R/o H.No.B-2-269/S/s6

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Road No.1, Sagar Society,^{Banjara Hills} Hyderabad

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....ResPondents'

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Counsel for the Applicant^{: Mr. Abhay Singh} Counsel for 1't Respondent^{Bank: Mr'A'V.S'9.Prasad} Respondents2and i : No representation

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-:ORDER:-

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The Applicant filed the^{present Securitisation Applicatlonu/s 17} of the securitization and^{Reconstruction of FinancialAssets and} Enforcement of security^{Interest Act, 2002 (hereinafter referredto as} "the Act") assailing the action^{of the 1't respondent bank against the} ,r42fr," t/

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Page 2 of 9

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SA No.21812023

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SA schedule property pursuant to advocate commissioner notice dated 19.04.2023 in pursuance of orders dated 14.02.2023 passed in Crl.MP No.19812023 on the file of learned I ACMM, Hyderabad.

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The case of the applicant, in brief, is that the applicant has taken the application schedule property on rent from 2nd respondent for running his artificial pearls and cosmetics at a monthly rent of Rs.15,000/- in writing through unregistered lease deed dated 25.0L.2020 and has been regularly paying the monthly rents even during the Covid lockdown period. Applicant incurred considerable expenditure on renovation work. The 2nd respondent demanded to pay rents during lockdown as against clause in lease deed pertaining to Force Majure. When the 2nd respondent tried to forcibly tried to get the applicant vacated, he filed OS No.67612021 before the file of XX Junior Civil Judge, City Civil Court, Hyderabad. Since case is pending, the 2nd respondent in collusion with 1't respondent bank is now trying to evict the applicant from application schedule property through advocate commissioner. The l't respondent bank on 06.05.2023 took physical possession of the schedule premises by break-opening the locks in the absence of applicant. In the order dated 14.02.2023, learned I Additional Chief Metropolitan Magistrate did not give any such powers to break-open the doors, It is not known whether inventory and Panchanama contain the signature of the advocate commissioner. The applicant cannot be evicted unless by following due process of law as held by the Hon'ble Supreme Court in Vishal N Kalsaria vs. Bank of India and others in Criminal Appeal No.52 of 2016 (Arising out of SLP (Crl.) No.8060 of 2015, decided on 2o.or.2oL6. Hence the sA.OY-,s,\9

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Page 3 of9

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sA No'218/2023

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The 1$ respondent bank^{submits inter alia that the unregistered} lease deed cannot be looked^{into. According to sec'14(3) of the} SARFAESI Act no act of the^{CMM can be questionedin any court.As} the door was locked, the^{commissioneramxedvacate noticeon} secured asset on 19.04.2023^{giving15 days time to vacateand} executed warrant on 06.05.2023.^{Even at the time of visit on} 06.05.2023, none was^{present and therefore, the commissioner} proceeded to break open the door as^{per powers conferredunder} warrant. The concerned^{police authorities received the request for} police aid assured of their assistance in case of any^problemsince they were unable to immediately^{move due to bandobasthduty} ' However,^{physicalpossessionwas takenwithoutresistanceas none} was present. The applicant^{wrongly invoked jurisdictionof this} Tribunal.

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Though respondents^{2 and 3 made appearancethrougha} counsel, they^{havenot filed reply statement.Hence their rightto file} reply statement^{was forfeitedon 30.04'2025 and subsequentlyright} of advancing arguments^{forfeited on 22.07.2025.}

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Heard learned counsel^{for the applicant as well as learned} counsel for l"t^{respondentbank. Perusedthe writtenarguments filed} for respondent bank^{and the material documents placed on record'}

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Learned counsel^for the^{apPlicantreiteratedthe contents of the} application that the^{applicant is a tenant in the application schedule} property having taken from 2nd^{respondentthrough a written} unregistered lease deed^{dated25.01.2020and has beenpaying} regularly^paying the^{monthlyrent of Rs.25,oOO/- to 2nd respondent'} Though there is a^{clausein the leasedeed regarding Force Maiure,} /Mo"

Page 4 of9

sA No,218/2023

the 2nd respondent demanded rents during Covid lockdown^period and else threatened to evict him. The 2nd respondent unsuccessfully attempted to get the applicant evicted from the schedule^property with the help of anti social elements on 02.02.2021 with strong resistance from the applicant. Since the concerned in PS Saidabad did not take the complaint on the ground that it was of civil nature, the applicant filed OS No.676l2021 before learned Xx Junior Civil Judge, City Civil Court, Hyderabad which is^pending adjudication.

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Learned counsel further contended that pending the OS and present SA, the 1't respondent bank on 06.05.2023 took possession of the property illegally by break opening the locks without serving any Panchanama and Inventory, and especially without any grant of authority by the learned I Additional Chief N4etropolitan Magistrate, Nampally in the order passed in Crl.N,lP No.128 of 2023 to do so. The 1st respondent bank did not mention about existing tenancy in the Sec.14 application in violation of sub-section (1)(a) therein. The applicant is a legal tenant and cannot be evicted without following due process of law. While relying on the judgment of Hon'ble Supreme Court in Vishal N Kalsaria's case (suora), learned counsel sought to allow the SA.

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Per contra, learned counsel for the 1st respondent bank submitted that SARFAEI action has been taken against the borrowers l4ls Dinesh Jewellers and M/s Dinesh Gold as the accounts became NPA on 30.06.2017. OA Nos.945/2018 and 923/2018 fited against them were decreed in favour of bank vide order dated 27.03.2079 by learned DRT-1, Hyderabad. Demand notice u/s t3(2) of the Act was issued against the 2nd respondent and six others. They filed SA No.296/2O22, WP No.1177 of 2023 challenqinq the interim order Av^* /)/^<1.!.''

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Page 5 of9

¶36

SA No'218/2023

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passed by the Tribunal, withdrew the same^{and filed Appeal before} Hon'ble DRAT, Kolkata^{which was also withdrawn on 17} '02'2023 '^fhe schedule^property was once^{put for auction. since the successful} bidder failed to^{pay 250lo bid amount within timelines, EMD was} forfeited.

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Learned counsel for^{bank would also submitthat the lease deed} is unregistered hence^{cannot be lookedinto. The leasewas entered} into much after creation of^{mortgagein favour of the bank and after} issuance of demand^{notice u/s 13(2) of the Act. The 1st respondent} bank is not a^party in the^{civil suit however,the suit was dismissed} for default on 22.09.2022.^{As neither the tenant nor the 2nd} respondent were^{present despite affixture of eviction noticeon} property, advocate commissioner^{proceeded to takepossessionof the} property on 06.05.2023 legally, in^{pursuanceof Warrant lssued in} crl.MP No.198/2023^{throughan Inventory'}

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Learned counsel^{for bank furthersubmittedthat the rightof the} bank is not automatically^{suspendedupon filing an appeal under} Sec.17 of the Act,^{Sec.14proceedingscannot be agitated by the} tenant who was^{never informedto be in possessionby the borrower} and cannot^{question the proceedings of advocatecommissioner'In} support of submissions,^{learned counselrelied on the following} judgements and sought to dismiss the SA.

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a. Hon'ble Madras^{High Courtin M/s Lakshmi shankar Mi s} (P) Ltd and others vs. Authorized^{Officer/ChiefManager'} iidian Bank and others^{etc', reported in AIR 2008Madras} 181;

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b. Hon'ble Supreme^{Court in M/sL and T HousingFinance} Ltd. vs. M/s Trishul^{Developers,(2020) 10 SCc 659;,^,(L} /l%'"

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Page 5 of9

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SA No.218/2023

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c. Balkrishna Rama Tarle Dead thr LRs & another vs. Phoenix ARC Pvt. Ltd. and others,2022 LiveLaw (SC) 799;

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d. Bajrang Shaymsunder Agan4al vs, Central Bank of India & another in Crl. Appeal No.1371 of 2019 (Arising out of SLP(CRL.) No.g590/2015) decided on 11.09.2019.

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The points for consideration are as follows : -

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i) Whether the applicant made out any valid ground to set aside the action of the lst respondent bank in taking physical possession of the SA schedule property, as prayed for?

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ii) To what relie?

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Point No.(i):

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As per respondent bank, it filed OA against the 2nd respondentborrower and other mortgagors/guarantors and a decree was also passed vide order dated 27,03.2019 against them and also against the mortgaged properties. The subject property herein is one of the OA schedule properties. Besides, the 1st respondent bank also initiated measures under the SARFAESI Act against the secured asset and issued demand notice under Sec.13(2) of the Act, 2002 on 24.07.20L7. Whereas, admittedly the applicant entered into lease with 2nd respondent through a written instrument on 25.01.2020. Hence it is abundantly clear that the tenancy was entered into subsequent to creation of mortgage, subsequent to decree passed in OA and also subsequent to demand notice. Sec.13(13) of the SARFAESI Act, 2002 bars entering into lease once demand notice is served to the borrower. Hon'ble Supreme Court in Bairano Shavmsunder's case (supra) held as hereunder:-

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"25, In our view, the objective of SARFAESI Act, coupled with the T.P. Act and the Rent Act are required to- be reconciled herein in the fo owing manner: 1frrr.rl

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Pate 7 of9

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SA No.218/2023

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a) If a valid tenancy under^{law is in existenceeven prior} to the creation of the^{mortgage, the tenant'spossession} cannot be disturbed by^{the secured creditorby 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 existenceof a prior} existing lease inevitably affects^{the risk undertaken by the} bank while^providing the^{loan, it isexpectedof} Banks/Creditors to have^{conductedastandard due} diligence in this regard'^{Where the bank has proceededto} accept such a^{propertyas mortgage, it will be presumed} that it has consented to^{the risk that comesas a} consequence of the^{existing tenancy' In such a situation,} the rights of a rightful^{tenantcannot be compromised} under the SARFAESI^{Act proceedings.}

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b) If a tenancy^{underlaw comes into existence afterthe} creation of a mortqaget^{but prior to theissuanceof notice} under Section 13(2) of^{the SARFAESI Act, it hasto satisfy} the conditions of Section 65-A^{of the T'P. Ad}

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c) In anY case, if any of^{the tenantsclaim that he is} entitled to^possession of^{a securedasset for a term of} more than a^year, it has to^{be supported by theexecution} of a registered instrument.^{In the absenceof a registered} instrument, if the tenant^{relies on an unregistered} instrument or an oral agreement^{accompaniedby delivery} of^possession, the tenant^{is not entitledto possession of} the secured asset for^{more than the period prescribed} under Section 107 of the T.P' Act."

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Paragraph 25(b) of the^{cited judgment squarely applies to the} present case. It is also observed that the^{written unregistered lease} deed is silent on duration^{of the lease. A lease cannot be eternaland} it is against the^{provisions under sec.65-Aof the T.P. Act.}

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Sec.107 of the^{T.P. Act mandatesthat:-}

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"107. Leases how made.-A^{lease of immoveableproperty} from^year to^year, or^{for any term exceedingone yeart or} reserving a Yearly rent,^{can be made only by a registered} instrument.

Nr*"

Page 8 of9

sa No.218l2023

[All^{other leases of immoveableproperty may be made} either by a registered instrument or by oral agreement accompanied by delivery of possession."

¶64

The lease deed pressed into service is neither registered nor oral one accompanied by delivery of possession. Admittedly it is a written instrument without registration. Hence the lease being claimed is not covered under Sec.107 of the Act.

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Though it is stated by the applicant that he filed civil suit against 2nd respondent, he has not made the 1st respondent bank as a party. Further, the applicant is not denying the fact of dismissal of the said civil suit for default.

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The 1st respondent bank filed copies of photographs as proof of affixture of vacate notice and taking physical possession by the advocate commissioner and handing over to bank officials , Panchanama and Inventory with signatures of the advocate commissioner.

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In view of the compendium of aforesaid facts, I have no hesitation to hold that the applicant has failed to establish valid tenancy in his favour or a valid ground to interfere with the measures of the 1"t respondent bank under the provisions of the SARFAESI Act against the application schedule property

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Point No.(ii):

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In the result, the Securitization Application fails and is hereby dismissed.

fu*rg

Page 9 of 9

sA No.21812023

Consequently, the Interlocutory^{Applicationspending, if any,} shall stand closed.

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2L. No order as to costs.

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Communicate a copy of^{this order to the parties concerned and} upload in the official website.

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(Typed to my dictotion by the Ps, corrected, signed ond^{pronounced by mein the opencourt on this} the o/ doy of october,^2025).

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)2.^>0 ESHWAR KOTHE) PRESIDING OFFICER

Vikas Agarwal v. Canara Bank

Case brief

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Vikas Agarwal v. Canara Bank

Case brief

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