DRT Mumbai dismissed a securitisation application by a tenant challenging an Indian Bank's possession order under Section 14 SARFAESI Act. The Tribunal held the applicant failed to prove tenancy rights as no registered agreement pre-existed the mortgage and no creditor consent was shown for subsequent tenancy creation.
This page shows the compact analysis of this judgement. The full analysis — procedural history, issue-by-issue holdings with ratio and obiter, advocates, and paragraph-level evidence for every claim — is being added to the record in batches and will appear here when this judgement has been through it.
SECURITISATION APPLICATION NO.426 OF 2024
DEBTS RECOVERY TRIBUNAL No.3, MUMBAI AT: DRT-2, Mumbai
I/c PRESIDING OFFICER: HARISH KUMAR KAUSHIK
SECURITISATION APPLICATION NO.426 OF 2024
Date of Institution: 03.10.2024 Date of Decision: 15.06.2026
Ghansham Vitthal Jondhale Gat No.610/5, near Subhash Dairy, Mumbai-Agra Road, Chandanpuri, Malegaon, Dist, Nashik
… Applicant
Versus
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SECURITISATION APPLICATION NO.426 OF 2024
| Swayambar Mangal Karyalay, |
|
|---|---|
| Pimplalgaon Baswant, Tal. Niphad Dist. Nashik |
|
| 5. | Nishant Prakashchandra Bhutada (Karta) |
| 6. | Nishant Prakashchandra Bhutada |
| 7. | Sarita Nishant Bhutada |
| 8. | Siddhi N Bhutada |
| 9. | Riddhi N Bhutada |
| 10. | Shaurya N Bhutada |
| 11. |
Prakashchandra Bhutada |
| 12. | Kanchan P Bhutada Respondent |
| No.5 to 12, all residing at 8, | |
| Chopda Duplex, Kala Nagar, Near, | |
| Chopda Lawns, Gangapur Road, Nashik-422002 |
|
| 13. | The State of Maharashtra |
…Respondents
APPEARANCES
| For the Applicant | : Mr Avinash Fatangare i/b Ms Archana Shelar - Advocate |
|---|---|
| For Respondent No.1 | : Mr Sidharth Samantaray and |
| Mr V.N. Ajikumar i/b M/s. VNA | |
| Legal – Advocates | |
| For Respondent No.2 to 13 | None |
Final Order
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SECURITISATION APPLICATION NO.426 OF 2024
Factual matrix of the case:
(2) The Applicant has preferred this Securitization Application No.426 of 2024 challenging the order of Ld. District Magistrate, dated 05.04.2024 under Section 14 of the SARFAESI Act, 2002 and notice issued under Section 13(2) and 13(4) of the SARFAESI Act in respect of Gat No.610/3/2, new showroom, admeasuring 8000 sq. mts. And 4000 sq. mts. respectively at Malegaon, near Subhash Dairy, Mumbai-Agra Road, Chandanpuri Shivar, Tal. Malegaon, Dist. Nashik along with structure standing thereon; which includes the showroom therein and workshop therein along with the entire machinery and spare parts. (for short, “the said property”.)
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SECURITISATION APPLICATION NO.426 OF 2024
of the said property. Thereafter, the Respondent No.1 through its Advocate letter dated 01.03.2019 addressed to the Applicant, raising false and frivolous issues. The Applicant vide its reply dated 11.03.2019 informed to the Respondent No.1, Bank that the content of its reply dated 01.03.2019 are false and frivolous and once again placed before the Respondent Bank the true and correct facts.
(5) That the Applicant states that the Respondent No.1 Bank vide its letter dated 04.06.2019 accepted the tenancy of the Applicant and demanded rent of the said property. Further, the Applicant also informed the Respondent No.1 that the Applicant is ready and willing to deposit the future rent with the Respondent No.1 upon the Respondent No.1 obtaining appropriate order from the concerned civil court to such effect. However, the applicant refused to pay the past rent to the Respondent No.1, in as much as the same was already paid by the Applicant to its landlord.
(6) The Respondent No.1 did not deem it appropriate to reply to the aforesaid letter dated 26.06.2019 and published a possession notice dated 04.07.2019 in the Newspaper being Deshdoot on 09.07.2019. By the said possession notice, the Respondent No.1 claimed to have taken symbolic possession under section 8(1) of the security interest (Enforcement) Rules, 2002. The Applicant
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once again, through its advocates, reply by letter dated 11.07.2019 objecting to the Fraudulent possession notice issued by the Respondent No.1. (7) That the Respondent No.1, through its advocate, address a reply dated 01.08.2019 to the Applicant aforesaid letter dated 11.07.2019, once again attempting to place on record false and misleading facts. However, it is pertinent to note that the Respondent No.1 did not deem it appropriate to deal with the issue in terms of the tenancy created in favour the Applicant herein.
(8) That the Respondent No.1 issued an E-auction notice dated 16.11.2019 published in the newspaper Deshdoot on 20.11.2019, wherein the Respondent No.1 once again attempted to illegally and unlawfully sell the said property for a reserve price of Rs.14,20,00,000/-. The Respondent No.1 was at one end corresponding with the Applicant regarding the tenancy created in favour of the Applicant. However, the Respondent No.1 with malafide intention and ulterior motive chose to deliberately make false assertions in auction notice dated 16.11.2019.
(9) That Applicant once again, through its advocate, objected to the auction notice dated 16.11.2019 issued by the Respondent No.1 for not disclosing the tenancy in favour of the Applicant but also, the
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claim of the Applicant in respect of the said property.
(10) That the Respondent No.1 again published E- auction notice dated 18.01.2023, in the Loksatta Newspaper, Nashik Edition on 24.01.2023 wherein the Respondent No.1 attempted to E-auction the said property at a reserve price of Rs.18,32,22,000/-. Further Respondent No.1 once again published E-auction notice in the Indian Express Newspaper, Nashik Edition on 11.06.2023 with a reserve price at Rs.17,40,00,00/- to which Ld. Advocate for the Applicant replied and objected to the same.
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possession and that the Respondent No.1, Bank has demanded rent from the Applicant.
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submitted that the borrower/Respondents have adopted an identical modus operandi in the past by creating purported “tenancy agreement” with respect to said property.
(18) That the Respondents/borrower and their associates are not even allowing the Authorised officer to visit the said property in spite of order passed by Hon’ble Bombay High Court, permitting Tahsildar to take possession of secured asset on 23.09.2024 which is serious in nature. Ld. Advocate further stated that upon request of the borrower/Respondents, the Respondent No.1, Bank has granted various credit facilities to M/s. Kanchan Motors, Respondent No.3, M/s. Magic Motors, Respondent No.2, M/s. Shaurya Motors, Respondent No.3 for their business purpose. Initially, the said borrowers/Respondents were regularly paying instalments, but later committed default, therefore the account has been classified as NPA on 25.09.2018, 28.10.2018 in the respective accounts. Thereafter, the Respondent No.1, Bank issued two demand notices under Section 13(2) of SARFAESI Act wherein they were called upon to pay the entire dues but, the borrowers/guarantors/mortgagors have failed to do so.
(19) That the Respondent No.1 Bank, through Authorised Officer, took symbolic possession of
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said property under Section 13(4) of the SARFAESI Act, 2002 on 12.09.2019. Furthermore, the Respondent No.1, Bank had also approached to Ld. Additional District Magistrate, Nashik and filed Securitisation Application No.10 of 2024 under section 14 of the SARFAESI Act, 2002 for taking physical possession of the said secured assets. By an order dated 05.01.2024, the Additional District Magistrate has allowed the Securitisation Application with a direction to the Tahsildar, Malegaon to take physical possession of the said property. By a possession notice dated 09.07.2024, Tahsildar Malegaon Nashik has directed the borrowers/mortgagors to handover peaceful possession of the secured assets on 07.08.2024. (20) That inspite of making all the arrangements, on 07.08.2024, the Tahsildar did not remain present on the said date but unauthorizedly sub-delegated its power to Mandal Adhikari, who in turn also did not remain present on the aforesaid date. Therefore, the physical possession could not be taken. Being aggrieved by the non-compliance of the order dated 05.01.2024, the Respondent No.1, Bank filed a Writ Petition No.12964 of 2024 in the Hon'ble Bombay High Court seeking direction to implement the above order passed under section 14 of the SARFAESI Act by Tahsildar Malegaon in time bound manner.
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SARFAESI Act so as to resist the measures undertaken by the secured creditor? "
(25) The Applicant has contended that he has been in possession of the subject premises as a tenant since the year 2013 and that the Respondent Bank was aware of such possession. Reliance has been placed upon certain civil proceedings, orders passed therein and correspondence exchanged between the parties. It is further contended that the order passed under Section 14 of the SARFAESI Act adversely affects the Applicant's rights as a tenant.
(26) On the contrary, the Respondent Bank has contended that the Applicant has failed to establish any legally enforceable tenancy in accordance with law. It is submitted that no registered tenancy agreement existing prior to creation of the mortgage has been produced. It is further contended that if the tenancy is claimed to have been created after creation of the mortgage, no consent of the secured creditor has been demonstrated. The Respondent Bank has further relied upon Section 17(4A) of the SARFAESI Act read with Rule 13A and Appendix X of the Security Interest (Enforcement) Rules, 2002 and has contended that the Applicant has failed to satisfy the statutory requirements contemplated therein.
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such consent has been established by the Applicant.
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tenancy nor can it substitute the statutory requirements necessary to establish tenancy rights under law.
(34) The Respondent Bank has relied upon various judgments concerning the issues raised in the present matter. This Tribunal has carefully considered the principles laid down therein. There can be no dispute regarding the propositions of law emerging from the said authorities. The principles laid down therein support the proposition that a person claiming tenancy rights against a secured creditor must first establish the existence of a legally valid and enforceable tenancy in accordance with law before seeking protection under Section 17(4A) of the SARFAESI Act.
(35) Upon overall consideration of the material placed on record, this Tribunal is of the considered view that the Applicant has failed to establish a tenancy protected under Section 17(4A) of the SARFAESI Act. No registered tenancy agreement existing prior to creation of the mortgage has been produced. No consent of the secured creditor for creation of tenancy after creation of the mortgage has been demonstrated. The Respondents/Borrowers had not mentioned any encumbrance on the secured assets at the time of creation of mortgage. The statutory requirements contemplated under
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Section 17(4A) read with Rule 13A and Appendix X of the Security Interest (Enforcement) Rules, 2002 have not been satisfactorily established.
Accordingly, the principal issue framed by this Tribunal is answered in the negative.
ORDER
Sd/(Harish Kumar Kaushik) I/c Presiding Officer DRT-3, Mumbai At:DRT-2, Mumbai
Radhika
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3 issues framed by the court
Whether the Applicant has established tenancy rights protected under Section 17(4A) of the SARFAESI Act to resist the secured creditor's measures?
Whether mere possession or correspondence evidence satisfies the statutory requirements against a secured creditor lacking a registered tenancy prior to mortgage?
Whether civil proceedings orders or creditor awareness of occupation substitute for proving a legally enforceable tenancy against a secured creditor?
4 provisions across 2 enactments
Ghansham Vitthal Jondhale
Indian Bank
Magic Motors Firm
Kanchan Motors
Shaurya Motors Proprietorship Firm
The State of Maharashtra
HARISH KUMAR KAUSHIK
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
