Dismissed

M/s Gun Affairs v. State Bank of India and 2 others

Telangana HC11 Apr 2022WP/17953/2022

Case brief

AI extract

What is this about?

Writ petition challenging possession notice under SARFAESI Act against petitioner claiming tenancy via unregistered lease; dismissed as no case for interference under Article 226.

What the court decided

AI extract

M/s Gun Affairs Vs State Bank of India and 2 others — Landlord and Tenant | Telangana HC (2022)

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HIGH COURT FOR^{THE STATEOF TELANGANA AT HYDERABAD} (Special Original Jurisdiction)

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IVONDAY, THE ELEVENTH^{DAY OF APRIL} TWO THOUSAND AND TWENTY^TWO

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PRESENT

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THE HONOURABLE SRI^{JUSTICEUJJALBHUYAN} AND THE HONOURABLE MRS^{JUSTICESUREPALLI NANDA}

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WRIT PETITI ON NO: 17953OF²⁰²²

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Between:

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M/s GUN AFFAIRS, registered^{partnershipfirm, rqp.by. its Managing} fartlgr' MonammeO Sirajuddin Siafiq,^{S/o late Sri Ghulam.^DastagirRafiq, aged about59} vii, oC". arii"e'ss,^{nyo. Flat'No.2F'H.No.8-2-369/3, ShangrillaApartments, Road} l{o.2, Banjara Hills. Hyderabad, 34.

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...pETtTtoNER

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AND

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State Bank of lndia, City Centre^{Branch, rep. by its Branch [\ilanager, having} office at SBl, Banjara Hllls,^{Road NoJHyderabad.}

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Z. Stii" Aanf ot lndia, Stressed^{Asset Rec6very Branch2Code05172,2nd Floor,} - i5nrC Commuter Amenity Centre Bus Terminal Complex' Koti, Hyderabad500095.

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S. Mr. N. Sai Tharun, S/o^{N. Bhaskar Rao, aged about 29 years,Occ:Business'} R/o, H.No.5^{-11-67711,Premnagar Colony, Naim Nagar' Hanamkonda,} Waranoal.

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..RESPONDENTS

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Petition under Article 226 of the^{constitution of lndiaprayingthat in the} circumstances stated in^{the affidavit filed therewith,the High Court may be} pleased to pass an order, direction or a writ^{particularlyin the natureof writ of} Mandahus declaring that the orders^{passed by the Learnedchief Metropolitan} tvlagistrate, Hyderabad in Crl.MP No.99 of^{2021' daled.|7l12l2o21, is highly.} arbitrary and in violation of the^{mandatesof the Hon'ble SupremeCourt in the} case reported in LAWS^(SC) 2019-9-28.^{Consequently,this Hon'ble Court may} he^pleased to stay all further^{proceedings pursuantto the orders passed by the} learned Chief l/etropolitan Magistrate,^{Hyderabadin Crl.M.P.No.99of 2021,} dated 1711212021 .

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il2il

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IANO:1O F 2022

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Petition under Section 151 CPC^{prayingthat in the circumstancesstated} in the affidavit filed in support^{of the petition,the High Court may be pleasedto} pass ah interim direction thereby directing .respondents^{No.1 and 2 not to take} over possession of the shop^{No. G-'l1, on ground floor or building known as} Lumbini Jewel Mall, bearing door^{No. 8-2-269, situatedat RoadNo. 2, Banjara} Hills, Hyderabad,^pursuant to the orders^{passed in Crl.M.P.No.99 of 2021 passed} by Chief Metropolitan lvlagistrate,^Hyderabad.

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Counsel for the Petitioner: SRI^{MOHAMMADI HAFSAFOR} SRI. MOHAMMAD ADNAN

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Counsel for the Respondents:^NONEAPPEARED

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The Court made the following: ORDER

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HONOURABLE SRI JUSTICE UJJAL BH(ryAN And HONOURABLE SRI JUSTICE SUREPALLI NANDA

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WRIT PETITION No.17953 of 2O22

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ORDER:( Per Hon'ble Sri Justice Ujjal Bhuyan)

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Heard Mr.Mohammadi Hafsa, learned counsel representing Mr.Mohd.Adnan, learned counsel for the petitioner.

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By hling this petition under Article 226 of Constitution of India, petitioner secks interference with the notice dated 12.O3.2022 issued by rhe Advocate Commissioner calling upon the petitioner to vacate thc premises and to handover vacant physical possession of the schedule property to the Advocate Commissioner. 3. Petitioner claims to bc a tenant in the schedule property oI respondent No-3. [t was mortgaged by respondent No.3 while availing the loan. Pctitioner claims tenancy on the strength of unregistered iease agrcernenr dared 02.O4.2018, as per which, the premises has been leased out to the petitioner for a period of ten years_

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From the materials on record, it is seen that respondent No.3 had availed loan from respondent No.1-State Bank of India (S.B.l.) buf had defauited in repayment, lor which, respondent No. 1 invoked the provisions ol thc Securitization and Reconstruction of Financial Assets and Enlorcemcnt of Securitlr Interest Act, 2OO2

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(briefly "the sARFAESI Act")'^{After classiff ing loan accountof} respondent No.3 as Non-Performing^{Asset (NPA), respondentNo'1} issued demand notice^{dated 16.02.2021under Section13(2)of the} SARFAESI Act giving sixty^{(60) days time to respondent No.3 to pay} the outstanding balance of^{Rs.3,67,52,24O} l-^{as on 11.O2.2021' As} the amount was not^{paid,possessionnotice was issued on} 2O.O5.2O21 under Section^{13(a) of the SARFAtrSIAct. Itwas} thereafter, respondent No.1^{moved the Chief Metropolitan} Magistrate, Hyderabad under^{Section 14 of the SARFAESIAct in} which learned Magistrate^{issued warranton 17. l2.2o2lappointing} Advocate Commissioner. On the^{strengthof the} '*'arrant,^Advocate Commissioner issued the^{impugned notice dated12.O3.2022.}

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On query of the Court as^{to why petitioner has not availed its} statutory remedy by filing securitisation^{applicationbefore the} jurisdictional Debts Rccovery Tribunal undcr Seclion 17 of the SARFAESI Act, learned counsel lor the^{pctitioner submitsthat} Jince law is against the^petitioner, the^{Tribunalmay not grant any} relief to the petitioncr. On a further^{queryof the Court as to} whether the petitioner would give an undertaking that it^{will vacate} the premises alter thirty days, protection to that^extent can^be granted by the Court, learned counsel for the petitioner submits that because of procedural rcquircments. at leasl one year^period would be required by the petitioner to vacate lhe^premises.

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On due consideration, we are of the view that such indulgence can not be granted to the petitioner. The law regarding right of a tenant bascd on unregistered lease agreement vis_d_vis provisions of the SARFAtrSI Act has been settled by the Supreme Court in Bajrang Shgamsunder Agarutal v.Central Bank of

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Indial , wherein it has been held as follows:

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In our vieu,, the objectir.'e of SARFAESI Act, coupled with the T.P. and the Rent Act are required to be reconciled herein in the following manner;

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24.1 [f a valid tenanc,y undcr law is in existence even prior to the creation of the mortgagc. the tenant's possession cannot be disturbed by the secured crcrliror b1, taking possession of the property. The lcase has to bc determined in accordance with Section 1l I ol thc TP Act lor detcrmination of leases. As the existence of a pnor existrng lease inevitably affects the risk undertaken by the bank rvhilc pror.iding the loan, it is expected of Banks/Creditors to have conducted a standatd due diligence in this regard. Where the bank has proceeded to accept such a property as mortgage, it will bc presumed that it has consented to the risk that comes as a consequence of the existing tenancy. In such a situation, thc rights of a rightful tenant cannot be compromrsed under the SARFAESI Act proceedings.

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24.2 If a tenalcy under lau, comes into existence after the creation of a mortgage, but prior to the issuance of notice under Section l3(2) ol the SARFAtrSI Acr, it has to satisfy the conditions ol Section 65A of thc '1. p. Aci

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24.3 [n any casc, i[ an_r. of the tcnants claim that he is entit]ed to possession of a sccured asset for a term of more than a year, it has to be supported b,v the execution of a regisiered instrument. In the absence of a registered instrument, if the tenant relies on ar unregistcrcd instrument or an oral agreement accompanied by delir,erl, of possession, the tenant is not entitled to possessiorl of the sccured asset for more than the period prescribed under Secrion 107 of the T.p. Act..

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1 (20 l9) 9 Silpr.me (lolrn (lnses 9.1

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In view thereof, while it is open to the petitioner to avail its statutory remedy under Section 17 of the SARFAESI Act, no case for interference is made out under Article 226 of the Constitution of India.

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