Dismissed

Pratheesksha Nidhi Ltd. v. South Indian Bank

DRT23 Jun 2025SA/287/2024

Case brief

AI extract

What is this about?

This Debt Recovery Tribunal application challenged the eviction of tenants claiming tenancy rights over a mortgaged property. The Tribunal held that without a registered instrument extending the tenancy beyond the initial period, applicants could not obstruct the secured creditor's possession. The application was dismissed.

What did the court decide?

The Siddhitzen order dismissed the Securitization Application without cost and directed applicants to vacate premises within four months.

Pratheesksha Nidhi Ltd. versus South Indian Bank — Contract and Commercial Disputes | DRT (2025)

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IN THE DEBTS RECOVERY TRIBUNAL-2, KERALA AT ERNAKULAM

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PRESENT: SRI.SOVAN KUMAR DASH PRESIDING OFFICER

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Dated this the 23^rd day of June, 2025

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SECURITIZATION APPLICATION No.287/2024

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Between

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Pratheeksha Nidhi Ltd., 1/181, Akku’s Building, Chettuvakadavu, Kundaliyur P.O., Engandiyur, Thrissur – 680 616. Represented by its Director, Retnakumari M.A.

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Pratheeksha Hire Purchase, 1/181, Chettuvakadavu, Kundaliyur P.O., Engandiyur, Thrissur – 680 616. Represented by its Partner, Retnakumari M.A. W/o.Rajan, Kadavil House, Vadanappally, Thrithallu West, Thrissur – 680 619. …Applicants

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And

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Authorised Officer, South Indian Bank, Regional Office, Thrissur. 1^st Floor, SIB Platinum Jubilee Building, Civil Line Road, Ayyanthole, Thrissur – 680003.

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SA 287/2024

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South Indian Bank, Chavakkad Branch, Sha Shopping Mall, Chettuva Bye Pass Road, Opp. Bus Stand, Chavakkad, Thrissur – 680 506.

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Mr. Saidu Muhamed, Panikkaveetil Thirunelly House, Kundaliyur, Chettuva, Thrissur – 680 616.

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Ms. Sajeena Saidu Muhamed, Panikkaveetil Thirunelly House, Kundaliyur, Chettuva, Thrissur – 680 616.

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…Defendants

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This Securitization Application having been heard on

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22.05.2025 in the presence of Advocate Mr. Sreehari Indukaladharan for the applicants and Advocate Mr.Anto Thomas Adipuzha for defendant Nos.1 & 2 and defendant Nos.3 and 4, being absent, and stood over to this day for consideration, the Tribunal delivered the following:

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F I N A L O R D E R

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Challenging the securitization proceeding initiated by the defendants under the provisions of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as ‘the SARFAESI Act’),

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SA 287/2024

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the applicants, claiming tenancy right over the secured asset, have filed this SA under S.17(1) of the SARFAESI Act.

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Brief facts of the case :

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2.1 The applicants have filed this SA claiming while continuing the business of partnership, the 1^st applicant was incorporated as a Company registered under the Companies Act, as per the certificate produced in this case, marked as Annexure-A2. On 01.12.2017 the 1^st applicant entered into Annexure-A3 rent agreement with the 3^rd defendant for creation of tenancy over the subject matter property for a period of 11 months. The said tenancy was periodically renewed and the applicants are paying rent to the house owners regularly.

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2.2. Subsequently it came to the knowledge of the applicants on receipt of notice from an Advocate Commissioner to vacate the subject matter property that the 3^rd and 4^th defendants mortgaged the subject matter properties with the 2^nd defendant to secure the loan availed by them. Due to default committed by them, the securitization proceeding was initiated against them. The learned Chief Judicial Magistrate, Thrissur appointed an Advocate Commissioner to take physical possession of the secured asset. It is claimed by the applicants that defendant Nos.1 and 2 cannot

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SA 287/2024

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evict them from the subject matter property without taking legal recourse under the law. Hence the SA is filed to declare the legal right of the applicants over the subject matter property and to further declare in the securitization proceeding initiated by the 1^st and 2^nd defendants, they cannot be evicted.

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3.1 The defendants filed written statement denying the averments in the SA and claimed inter alia that on 10.07.2018, 3^rd and 4^th defendants availed SIB-Loan against property of Rs.4,27,00,000/- after executing necessary loan documents. Due to default committed by the borrowers, the loan was classified as ‘NPA’ and securitization proceeding was initiated by issuing demand notice to them. They never objected on receipt of demand notice that the secured asset was occupied by any tenant for which security interest was created by them. Possession notice under Section 13(4) of the SARFAESI Act was also issued after compliance of the statutory requirements. As the defendants faced difficulty in taking physical possession of the secured asset, application under Section 14(1) of the SARFAESI Act was moved before the Chief Judicial Magistrate Court, Thrissur to take possession of the secured asset. The Advocate Commissioner, being appointed by the Chief Judicial Magistrate to take possession of the secured asset, issued

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SA 287/2024

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notice to take possession of the same, which is impugned in this proceeding by the applicants.

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3.2. It is claimed by the defendants that the alleged Lease Agreement filed by the applicants is not a valid and legal document under Section 107 of Transfer of Property Act. 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 registering the instrument. Since there is no registered instrument, the alleged Lease Agreement is not a valid document and the applicant is not entitled for any protection. Hence this SA, being devoid of any merit, may be dismissed.

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From the respective case of the applicants and defendants, the following points are emerged for adjudication in this case:

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(i) Whether the applicants have any tenancy right over the secured asset to restrain the defendant No.1 in taking possession of the secured asset?

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(ii) Whether the applicants are entitled to get any relief in this proceeding?

SA 287/2024

FINDINGS:

Point Nos.(i) & (ii):

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For the sake of convenience, both the points, being interlinked with each other, are taken up together for adjudication. Admittedly the defendant Nos.3 and 4 availed loans from the first defendant Bank by creating security interest over the subject matter property. Due to default committed by the borrowers defendant Nos.3 and 4, securitization proceeding was initiated against them. After passing the Order by the Chief Judicial Magistrate, Thrissur in a proceeding under Section 14 of the SARFAESI Act and issuance of notice by the Advocate Commissioner to take possession of the secured asset, the present SA is filed by the applicants claiming as tenants in a portion of the secured asset.

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In the SA the applicants pleaded that initially 2^nd applicant along with one Mr. V.N.Renadev and some others started a partnership business under name and style “Pratheeksha Hire Purchase” in the year 2011 and occupied the premises bearing door No.1/179, which was subsequently incorporated as a Company duly registered in the Registrar of Company on 22.04.2016.

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SA 287/2024

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A rent agreement was entered into between the 1^st applicant and 3^rd defendant on 01.12.2017 vide Annexure A3 inducting the 1^st applicant company in the building bearing Door No.1/181 as a tenant initially for a period of 11months and subsequently it was extended. As the applicantno.1 continued the business in the said building as a tenant under the land lord 3^rd defendant in this case; the defendant Nos.1 and 2 have no right to evict them in a summary proceeding without taking recourse to the law after following statutory requirement in evicting a tenant .

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Annexure-A3 tenancy agreement was created on 01.12.2017 at a monthly rent of Rs.3900/- for a period of 11 months. No material is placed by the applicant on record that after the end of the period such tenancy was extended by the landlords/defendant No.3 and 4 of this case.

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In the judgment of the Hon'ble Apex Court in the case of Bajarang Shyamsunder Agarwal v. Central Bank of India & another , reported in 2019 (9) SCC Page it was held in paragraph 24 as follows:-

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“24.1 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 existence of a prior existing lease inevitably affects the risk

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SA 287/2024

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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.

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24.2 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.

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24.3 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.”

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Here in this case, the applicant has failed to show that after expiry of the initial tenancy period any registered tenancy agreement was entered into with the landlord to continue as a tenant in the subject matter property. In view of the ratio decidendi of the Hon’ble Apex Hon'ble High Court of Kerala and also in absence of the registered instrument claiming possession of the secured asset for a term more than a year, the tenant is not entitled to retain possession of the secured asset for more than the period prescribed under Section 107 of the Transfer of Peroperty Act. Here in this case, the applicants have failed to place any materials in continuance of tenancy of the secured asset by a valid tenancy document. In the absence of the same, the applicants

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SA 287/2024

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cannot obstruct defendant No.1 and 2 in taking physical possession of the secured asset. Hence the applicants are not entitled to get any relief and both the points are answered against the applicants. As a business of the applicant is functioning in the subject matter property, the applicant shall vacate the premises within 4 months from passing of this Judgment. After availing of the said period, if the applicant will not hand over the vacant possession of the subject matter property to the defendant Nos.1 and 2, they may proceed in the securitization measure in taking physical possession of the secured asset in accordance with the law.

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Hence it is ordered:-

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ORDER

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In view of the foregoing reasons and with the above observation, this SA, being devoid of any merit, is hereby dismissed, but in the circumstance without cost.

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(Dictated to my PA, corrected and pronounced by me in the open Tribunal on this the 23^rd day of June, 2025).

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[SOVAN KUMAR DASH] PRESIDING OFFICER

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SA 287/2024

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Documents on the part of the applicants

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Annexures	Date	Particulars of documents
Annexure-A1		Licence issued from Engandiyur Grama Panchayat.
Annexure-A1(a)		English translation of Annexure A-1.
Annexure-A2		The Certificate of Incorporation issued by the Central Registration Centre.
Annexure-A3	01.12.2017	Rent Agreement entered into between 1^stapplicant and the 3^rddefendant.
Annexure-A4	02.04.2024	Notice issued by Advocate Commissioner.
Annexure-A4(a)		English translation of Annexure A-4.
Annexure-A5	04.01.2024	Notice issued by 1^stdefendant to 3^rd defendant.

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Documents on the part of the defendants

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Annexure-B1	10.07.2018	True copy of the Credit Facility Agreement executed by the applicant in favour of the bank.
Annexure-B2	05.04.2023	True copy of the demand notice issued under Section 13(2) of the SARFAESI Act by the 1^stdefendant to the borrowers.
Annexure-B3	04.07.2023	True copy of the Possession Notice issued under Section 13(4) of the SARFAESI Act.
Annexure-B4	09.04.2024	True copy of the Sale Notice issued by the 1^stdefendant.
Annexure-B5		True copy of the CERSAI Certificate.
Annexure-B6	10.07.2018	Deed of declaration from the mortgager.

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PRESIDING OFFICER

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IN THE DEBTS RECOVERY TRIBUNAL-2, KERALA AT ERNAKULAM

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PRESENT: SRI.SOVAN KUMAR DASH PRESIDING OFFICER

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Dated the 23^rd day of June, 2025

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SA No.287/2024

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Between Pratheeksha Nidhi Ltd., 1/181, Akku’s Building, Chettuvakadavu, Kundaliyur P.O., Engandiyur, Thrissur – 680 616. Represented by its Director, Retnakumari M.A. & Another. …Applicants

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And

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Authorised Officer, South Indian Bank, Regional Office, Thrissur. 1^st Floor, SIB Platinum Jubilee Building, Civil Line Road, Ayyanthole, Thrissur – 680 003 & Others. …Defendants

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F I N A L O R D E R

Pratheesksha Nidhi Ltd. v. South Indian Bank

Case brief

What is this about?

What did the court decide?

Pratheesksha Nidhi Ltd. v. South Indian Bank

Case brief

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