Thursday, 12 September 2019

Supreme Court: Protection From SARFAESI Act Not Available To Tenant-In-Sufferance

 It is pertinent to note that at the time when the SARFAESI Act
proceedings were pending, the factum of tenancy was never
revealed by the parties. The earlier order dated 09.03.2012,
passed by the Chief Metropolitan Magistrate, Esplanade, Mumbai
directing the Assistant Registrar to take over the possession of the
secured asset, is silent about any existing encumbrance over the
secured asset. It was only after passing of the aforesaid order of
the Chief Metropolitan Magistrate, that the appellanttenant
started agitating his rights before the Small Causes Court based
on a completely different fact scenario, without a whisper of the
alleged tenancy under the concluded Section 14, SARFAESI Act
proceedings. The respondent no.2borrower/
landlord did not even
respond to the claims of the appellanttenant.
The respondent
no.1bank
has produced multiple records to substantiate their
claim that the tenant was nowhere to be seen earlier and that this
tenancy was created just to defeat the proceedings initiated under

the SARFAESI Act. On the contrary, the appellanttenant
has
failed to produce any evidence to substantiate his claim over the
secured asset. In such a situation, the appellanttenant
cannot
claim protection under the garb of the interim protection granted
to him, ex parte, by solely relying upon the xerox of the rent
receipts.
32. In such an event, wherein the claim of the appellanttenant
is not
supported by any conclusive evidence, the rejection of the stay
application by the Chief Metropolitan Magistrate cannot be held
to be erroneous. Although the counsel of the appellanttenant
has
placed ample reliance upon the Vishal N. Kalsaria Case (supra),
but the same would not help the cause of the appellanttenant
herein, as the earlier case proceeded with the assumption of a
valid and bona fide tenancy. But in the present case, the stay
application of the appellanttenant
seems to be an afterthought. It
is clear that the respondent no. 2borrower/
landlord never
intimated the respondent no. 1bank
about the alleged tenancy.
In light of the above, we are unable to accept the claim of bona
fide tenancy of the appellanttenant.
33. In any case, considering the counterfactual pleaded by the
appellanttenant
himself, that he was a tenant who had entered

into an oral agreement, such tenancy impliedly does not carry any
covenant for renewal, as provided under Section 65A
Therefore, in any case, Section 13 (13) SARFAESI Act bars
entering into such tenancy beyond January, 2012. As the notice
under Section 13 (2) SARFAESI Act was issued on 30.04.2011,
subsequent reckoning of the tenancy is barred. Such person
occupying the premises, when the tenancy has been determined,
can only be treated as a ‘tenant in sufferance’. We should note
that such tenants do not have any legal rights and are akin to
trespassers.
34. In this context we may refer to R.V. Bhupal Prasad v. State of
A.P. and Ors., AIR 1996 SC 140, wherein a two Judge Bench of
this Court, speaking through Ramaswamy, J., made the following
pertinent observations in paragraph 8 of the Report:
"8. Tenant at sufferance is one who comes into
possession of land by lawful title, but who holds it,
by wrong after the termination of the term or expiry
of the lease by efflux of time. The tenant at
sufferance is, therefore, one who wrongfully
continues in possession after the extinction of a
lawful title. There is little difference between him
and a trespasser. "
35. On the same lines are the decisions of this Court in Smt. Shanti
Devi v. Amal Kumar Banerjee, AIR 1981 SC 1550, Murlidhar

Jalan (since deceased) through his Lrs. v. State of
Meghalaya and Ors., AIR 1997 SC 2690 and D.H. Maniar and
Ors. v. Waman Laxman Kudav, [1977] 1 SCR 403.
36. The operation of the Rent Act cannot be extended to a ‘tenantinsufferance’
visavis
the SARFAESI Act, due to the operation of
Section 13(2) read with Section 13(13) of the SARFAESI Act. A
contrary interpretation would violate the intention of the
legislature to provide for Section 13(13), which has a valuable role
in making the SARFAESI Act a selfexecutory
instrument for debt
recovery. Moreover, such an interpretation would also violate the
mandate of Section 35, SARFAESI Act which is couched in broad
terms.

REPORTABLE
IN THE SUPREME COURT OF INDIA
CRIMINAL APPELLATE JURISDICTION
CRIMINAL APPEAL NO. 1371 OF 2019

BAJARANG SHYAMSUNDER  AGARWAL Vs CENTRAL BANK OF INDIA 
N.V. RAMANA, J.
Dated:September 11, 2019.

1. Leave granted.
2. The present appeal arises out of the impugned order dated
31.12.2014 in Case No. 42/SA/2012 of the Chief Metropolitan
Magistrate, Esplanade, Mumbai rejecting the application of the
intervenor who is the appellanttenant
herein seeking to stay the
execution of order passed under Section 14 of The Securitization
and Reconstruction of Financial Assets and Enforcement of
Security Interest Act, 2002 [hereinafter referred to as the
‘SARFAESI Act’] for taking possession of the property in
question.
3. The property in question is a residential flat admeasuring about
1020 sq. ft., situated in Andheri (West), Mumbai (hereinafter
referred to as the “secured asset”). The secured asset was

mortgaged by respondent no. 2borrower/
landlord with the
respondent no. 1bank
in equitable mortgage, by depositing title
deeds on 20.05.2000, with an intention to secure the credit
facility. When the respondent no. 2borrower/
landlord failed to
make the due repayment of the said credit facilities, the
respondent no.1bank
classified the debt as a “NonPerforming
Asset (NPA)”. Thereafter, on 30.04.2011 a statutory Demand
Notice under Section 13 (2) of the SARFAESI Act was issued to
respondent no. 2borrower/
landlord demanding payment of
Rs.10,72,10,106.73 (Rupees Ten Crores SeventyTwo
Lacs Ten
Thousand One Hundred Six and Seventy Three Paisa Only) which
was due as on 30.04.2011.
4. When the respondent no.2borrower,
failed to repay the
outstanding loan amount, the respondent no. 1bank
made an
application under Section 14 of the SARFAESI Act seeking
directions to take physical possession of the secured asset. This
application was allowed by the Chief Metropolitan Magistrate,
Esplanade, Mumbai by his order dated 09.03.2012. In this order,
the Magistrate directed the Assistant Registrar to take possession
of the secured asset and handover the same to the respondent no.
1bank.

5. For the brevity of discussion, it may be pointed out that the
appellant, who claims to be the tenant, asserts that the secured
asset was let out to him by respondent no. 2borrower/
landlord in
January, 2000 and he has been paying rent since then.
Admittedly, the tenancy was based on an oral agreement. The
appellanttenant
received a legal notice dated 25.07.2012, from
respondent no. 2borrower/
landlord directing the appellanttenant
to vacate the premises within 15 days. The appellanttenant
preferred a suit being R.A.D Suit No. 652 of 2012 before
the Court of Small Causes at Mumbai against the respondent no.
2borrower/
landlord. On 18.09.2012, the Small Causes Court
allowed the application for interim injunction of the appellanttenant
filed in the above suit and respondent no. 2borrower/
landlord was restrained from disturbing the possession
of the appellanttenant.
6. Meanwhile, the High Court of Bombay, in Criminal Public Interest
Litigation No. 24 of 2011, held that a Magistrate has the power to
pass an order of eviction without giving an opportunity of hearing
to the tenant under SARFAESI proceedings. An appeal against the
aforesaid order along with a batch of other appeals was heard by

[hereinafter referred to as ‘Harshad Govardhan Case’]. This Court
directed the Magistrate to decide the applications after giving the
tenants an opportunity of hearing.
7. The appellanttenant
preferred an application in Case No.
42/SA/2012 before the Chief Metropolitan Magistrate, Esplanade,
Mumbai. By the impugned order dated 31.12.2014, the Chief
Metropolitan Magistrate after hearing the appellanttenant,
rejected the application holding that the appellanttenant
being a
tenant without any registered instrument is not entitled for the
possession of the secured asset for more than one year from the
date of execution of unregistered tenancy agreement in
accordance with the law laid down in Harshad Govardhan Case
(supra).
8. Aggrieved by the same, appellanttenant
filed this appeal by way
of Special Leave.
9. The learned senior counsel on behalf of the appellanttenant
submitted thata.
The Appellant was a protected tenant under the
Maharashtra Rent Control Act, 1999 [hereinafter
referred to as the “Rent Act”], and was in occupation
of the tenanted premises since October, 2005.

B. Even though there was no registered lease deed, the
factum of tenancy can be demonstrated by multiple
rent receipts.
c. The Small Causes Court made a prima facie
determination of rights in his favour (refer to order in
R.A.D. Suit No. 652 of 2012).
d. the appellanttenant’s
case is covered by the ruling of
this Court in Harshad Govardhan Case (supra),
and Vishal N. Kalsaria v. Bank of India and Ors.,
(2016) 3 SCC 762 [hereinafter referred to as ‘Vishal
N. Kalsaria Case’].
10. On the contrary, the counsel on behalf of respondent no.1bank
submits that
a. The appellanttenant
and the respondent no. 2borrower/
landlord have devised this litigation to
commit a largescale
fraud on the bank. The
appellant is not a tenant and has been brought into
the picture by the respondent no.2borrower/
landlord to misuse the process of law and
is not entitled for any equitable relief.
b. At the time of creation of the mortgage, the bank
officers were given to understand that the family of

the mortgager was residing in the secured asset.
Even after multiple inquiries, and even after
initiating proceedings under Section 14 of the
SARFAESI Act, the bank officers were never
intimated about the existing tenancy.
c. The respondent no. 2borrower/
landlord, had given a
nonencumbrance
certificate to the bank at the time
of creation of the mortgage.
d. In 2016, the respondent no. 1bank
made enquiries
regarding the status of the secured asset from the
Housing Society which had built the property and is
still maintaining the same. The Society, vide letter
dated 12.07.2016, had confirmed that the secured
asset is occupied by the respondent no. 2borrower/
landlord and there were no thirdparty
rights created over the same.
11. Since the learned senior counsel on behalf of the appellant has
extensively relied on the judgment of this Court passed in
Harshad Govardhan Case (supra) and Vishal N. Kalsaria
Case (supra) in support of the proposition that a tenant is
protected from any ejectment proceedings under the SARFAESI

Act, we have to examine if the law declared by these rulings
accurately reflects the legal position and if these rulings applies to
the facts of the present case.
12. Before we proceed further, the circumstances which led to the
enactment of the SARFAESI Act deserve close scrutiny. The
SARFAESI Act was enacted in response to a scenario where slowpaced
recovery and staggering amounts of nonperforming
assets
were looming over the banks. In order to overcome the practical
reality, and keep in pace with the changing commercial world,
Narasimham Committee I and II and the Andhyarujina Committee
were constituted by the Central Government to provide solutions
for the issues plaguing the banking system of the country. The
present Act is a culmination of the suggestions made by the
aforesaid committees intended to enable the bank to resolve the
issue of liquidity and aim for the reduction in the number of nonperforming
assets. The Preamble to the Act emphasises upon the
efficient and expeditious recovery of bad debts. This is also
evident from the scheme of the Act.
13. Section 13 of the SARFAESI Act provides for the enforcement of
security interest. This is a selfexecutory
mechanism for the
banks. Once the process of realizing the secured interest takes

place, the secured creditor acts as trustee having dejure/
symbolic possession of the property and is required by law to
realize it strictly in accordance with the provisions of Section 13,
14 and 15 of the SARFAESI Act. Crucially, subSection
(2) of
Section 13 of the SARFAESI Act envisages a notice, which acts as
the trigger point for initiation of the recovery process under the
SARFAESI Act. In the aforesaid notice, the secured creditor is
required to disclose information on the amount payable by the
borrower and the secured interest intended to be enforced by the
secured creditor in the event of nonpayment
of the secured debt.
If the borrower fails to discharge the liability, the secured creditor
has four options including taking possession of the secured
assets of the borrower (Section 13(4) of the SARFAESI Act).
Critically for this case, once a notice is served on the borrower, he
cannot further enter into any contract to create any encumbrance
on the property (Section 13(13) of the SARFAESI Act). This
extinguishes the right of the mortgagor to lease the property
under Section 65A
of the Transfer of Property Act [hereinafter
referred to as the ‘T.P. Act’].

14. Section 14 of the SARFAESI Act provides for the procedural
mechanism for taking possession of property and documents with
respect to the secured assets, from the borrower.
15. Section 17 of the SARFAESI Act, dealing with the Right to Appeal
has been amended in the year 2016. However, we are only
concerned with the earlier law which reads as under 17.
Right to appeal.— (1) Any person
(including borrower) aggrieved by any of the
measures referred to in subsection
(4) of
Section 13 taken by the secured creditor or his
authorised officer under this Chapter, may
make an application along with such fee, as
may be prescribed, to the Debts Recovery
Tribunal having jurisdiction in the matter within
fortyfive
days from the date on which such
measures had been taken:
Provided that different fees may be
prescribed for making the application by the
borrower and the person other than the
borrower.
……
(2) The Debts Recovery Tribunal shall consider
whether any of the measures referred to in subsection
(4) of Section 13 taken by the secured
creditor for enforcement of security are in
accordance with the provisions of this Act
and the Rules made thereunder.
(3) If, the Debts Recovery Tribunal, after
examining the facts and circumstances of the
case and evidence produced by the parties,
comes to the conclusion that any of the
measures referred to in subsection
(4) of
Section 13, taken by the secured creditor are
1 The Enforcement of Security Interest and Recovery of Debts Laws and Miscellaneous
Provisions (Amendment) Act, 2016 (44 of 2016).

not in accordance with the provisions of this
Act and the Rules made thereunder, and
require restoration of the management of the
business to the borrower or restoration of
possession of the secured assets to the
borrower, it may by order, declare the
recourse to any one or more measures
referred to in subsection
(4) of Section 13
taken by the secured creditors as invalid
and restore the possession of the secured
assets to the borrower or restore the
management of the business to the
borrower, as the case may be, and pass such
order as it may consider appropriate and
necessary in relation to any of the recourse
taken by the secured creditor under subsection
(4) of Section 13.
(4) If, the Debts Recovery Tribunal declares the
recourse taken by a secured creditor under subsection
(4) of section 13, is in accordance with
the provisions of this Act and the rules made
thereunder, then, notwithstanding anything
contained in any other law for the time being in
force, the secured creditor shall be entitled to
take recourse to one or more of the measures
specified under subsection
(4) of section 13 to
recover his secured debt.
(5) Any application made under subsection
(1)
shall be dealt with by the Debts Recovery
Tribunal as expeditiously as possible and
disposed of within sixty days from the date of
such application:
Provided that the Debts Recovery Tribunal
may, from time to time, extend the said period
for reasons to be recorded in writing, so,
however, that the total period of pendency of the
application with the Debts Recovery Tribunal,
shall not exceed four months from the date of

making of such application made under subsection
(1).
(6) ………..
(7) Save as otherwise provided in this Act, the
Debts Recovery Tribunal shall, as far as may be,
dispose of the application in accordance with
the provisions of the Recovery of Debts Due to
Banks and Financial Institutions Act, 1993 (51
of 1993) and the rules made thereunder.
(emphasis supplied)
16. Section 17 provides for an invaluable right of appeal to any
person including the borrower to approach the Debt Recovery
Tribunal (hereinafter referred to as the “DRT”). In Harshad
Govardhan Case (supra) this Court held that the right of appeal
is available to the tenant claiming under a borrower, however the
right of repossession
does not exist with the tenant. However, in
Kanaiyalal Lalchand Sachdev and Ors. vs. State of
Maharashtra and Ors., (2011) 2 SCC 782, this Court held that
the DRT can, not only set aside the action of the secured creditor,
but even restore the status quo ante. We do not intend to express
any view on this issue since it is not relevant for the disposal of
this appeal. We also note that Parliament has stepped in and
amended Section 17 by the Enforcement of Security Interest and
Recovery of Debts Laws and Miscellaneous Provisions
(Amendment) Act, 2016 (44 of 2016). Under the amendment,

possession can be restored to the “borrower or such other
aggrieved person”.
17. Section 35 of the SARFAESI Act provides an overriding effect over
“anything inconsistent contained in any other law”, in the
following manner“
35. The provisions of this Act to override
other laws.The
provisions of this Act shall
have effect, notwithstanding anything
inconsistent therewith contained in any other
law for the time being in force or any
instrument having effect by virtue of any such
law.”
Section 35 is critical to this case and we will examine the
conflicting views on Section 35.
18. The interplay between the SARFAESI Act and the right of the
tenant was first examined by this Court in Harshad Govardhan
Case (supra). It may be noted that the present appellant was a
party to the aforesaid proceedings. This Court was confronted
with the question as to whether the provisions of the SARFAESI
Act affect the right of a lessee to remain in possession of the
secured asset during the period of the lease. After noticing the
scheme of the Act, this Court held that if the lawful possession of
the secured asset is not with the borrower, but with a lessee

under a valid lease, the secured creditor cannot take possession
of the secured asset until the lawful possession of the lessee gets
determined and the lease will not get determined if the secured
creditor chooses to take any of the measures specified in Section
13 of the SARFAESI Act. Accordingly, this Court concluded that
the Chief Metropolitan Magistrate /District Magistrate can pass
an order for delivery of possession of secured asset in favour of
secured creditor only when he finds that the lease has been
determined in accordance with Section 111 of the T.P. Act.
19. The Court further held that if the Chief Metropolitan Magistrate /
District Magistrate is satisfied that a valid lease is created before
the mortgage and the lease has not been determined in
accordance with Section 111 of the T.P. Act, then he cannot pass
an order for delivery of possession of the secured asset to the
secured creditor. In case, he comes to the conclusion that there
is no valid lease either before the creation of mortgage or after
the creation of the mortgage satisfying the requirements of
Section 65A
of the T.P. Act or even though there is a valid lease
the same stands determined in accordance with Section 111 of
the T.P. Act, he can pass an order for delivery of possession of the
secured asset to the secured creditor.

20. This Court also recognised the inconsistency between Section
13(13) of the SARFAESI Act and Section 65A
of the Transfer of
Property Act. While Section 13(13) of SARFAESI prohibits a
borrower from leasing out any of the secured assets after receipt
of a notice under Section 13(2) without the prior written consent
of the secured creditor, Section 65A
of the T.P. Act enables the
borrower/mortgagor to lease out the property. This inconsistency
was resolved by holding that the SARFAESI Act will override the
provisions of the T.P. Act.
21. Before concluding, the Court in Harshad Govardhan Case
(supra), distinguished the implications of a registered and an
unregistered instrument/oral agreement, in the following manner:
36. We may now consider the contention of the
respondents that some of the appellants have not
produced any document to prove that they are
bona fide lessees of the secured assets. We find
that in the cases before us, the appellants have
relied on the written instruments or rent receipts
issued by the landlord to the tenant. Section 107
of the Transfer of Property Act provides that 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 a registered
instrument” and all other leases of immovable
property may be made either by a registered
instrument or by oral agreement accompanied by
delivery of possession. Hence, if any of the
appellants claim that they are entitled to
possession of a secured asset for any term
exceeding one year from the date of the lease
made in his favour, he has to produce proof of

execution of a registered instrument in his
favour by the lessor. Where he does not
produce proof of execution of a registered
instrument in his favour and instead relies on
an unregistered instrument or oral agreement
accompanied by delivery of possession, the
Chief Metropolitan Magistrate or the District
Magistrate, as the case may be, will have to
come to the conclusion that he is not entitled
to the possession of the secured asset for more
than a year from the date of the instrument or
from the date of delivery of possession in his
favour by the landlord.
(emphasis supplied)
22. The second case which dealt with the issue of tenants’ rights
under the SARFAESI Act is Vishal N. Kalsaria Case (supra).
This Court was concerned with the question Whether
a
“protected tenant” under the Maharashtra Rent Control Act, 1999
can be treated as a lessee and whether the provisions of the
SARFEASI Act, will override the provisions of the Rent Act?
23. After examining the legal and constitutional position, the Court
held that while the SARFAESI Act has a laudable objective of
providing a smooth and efficient recovery procedure, it cannot
override the objective of Rent Acts to control the rate of rent and
provide protection to tenants against arbitrary and unreasonable
evictions. To resolve this conflict, this Court held that15

a) The provisions of the SARFAESI Act cannot be used to
override the provisions of the Rent Act. The landlord cannot
be permitted to do indirectly what he has been barred from
doing under the Rent Act.
b) While a yearly tenancy requires to be registered, oral
tenancy can still be proved by showing that the tenant has
been in occupation of the premises before the Magistrate
under Section 14 of the SARFAESI Act.
c) The nonregistration
of the tenancy deed cannot be used
against the tenant. For leasehold rights being created after
the property has been mortgaged to the bank, the consent of
the creditor needs to be taken.
d) Even though Section 35 of the SARFAESI Act has a non
obstante clause, it will not override the statutory rights of
the tenants under the Rent Control Act. The non obstante
clause under Section 35 of the SARFAESI Act only applies to
laws operating in the same field.
24. While we agree with the principle laid out in Vishal N. Kalsaria
Case (supra) that the tenancy rights under the Rent Act need to
be respected in appropriate cases, however, we believe that the
holding with respect to the restricted application of the non

obstante clause under section 35 of SARFAESI Act, to only apply
to the laws operating in the same field is too narrow and such a
proposition does not follow from the ruling of this Court in
Harshad Govardhan Case (supra).
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
following manner:
a) 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
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.

b) 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.
c) 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.
26. In the present case, the bona fides of the tenant is highly
doubtful, as there is no good or sufficient evidence to establish
the tenancy in the first place. The present case involves a tenant
who allegedly entered into an oral agreement of tenancy before
the mortgage deed was entered into between the borrower and
Bank/Creditor. Additionally, it must be noted that tenancy
created under such an oral agreement, results in a fresh tenancy
after the expiry of statutory period fixed under the T.P Act.

27. The records also do not demonstrate that the appellanttenant
has been able to prove his status as a valid leaseholder to merit
the protection sought for. Admittedly, an equitable mortgage on
the secured asset was created by the respondent no. 2borrower/
landlord by depositing title deeds with respondent no.
1bank
on 20.05.2000. However, the date of creation of the
tenancy is not established in the present case. It is to be noted
that the appellanttenant,
while seeking protection before the
Small Causes Court, stated that the premises were let out to him
in January, 2000, but the Court noted that the appellanttenant
produced photocopies of rent receipts for the period of 2001 to
2011. Contrarily, the appellanttenant,
in this appeal before us,
has stated that he entered into the tenancy in October, 2005.
28. The claim of tenancy made by the appellanttenant
is not
supported by a registered instrument. We recognise the legal
position, as laid out in the Vishal N. Kalsaria Case (supra), that
in the absence of a written lease deed the tenant may prove his
existing rights by producing other relevant evidence before the
Magistrate. The appellanttenant
has to produce evidence of
payment of rent, property taxes, etc. Furthermore, if the rent and
permitted increases were payable, then the quantum ought to

have been mentioned. In addition to the above, the claim of
tenancy could have been substantiated by relying upon other tax
receipts such as BMC tax, water tax, electricity charges
consumed by the tenant, etc. However, the appellanttenant
has
only submitted xerox copies of rent receipts.
29. Although the Small Causes Court held that the appellanttenant
seems to have, prima facie, a right over the secured asset, the
order was passed ex parte, against the respondent no. 2borrower/
landlord, who did not oppose the application. It is to be
noted that the prima facie case was decided in favour of the
appellanttenant
solely on the basis of the xerox copies of rent
receipts produced by him.
30. The respondent no. 1bank
has vehemently contested the bona
fides of the appellanttenant
and has argued that the claim of
tenancy has been raised just to defeat the legal process of
realisation of dues as per the SARFAESI Act. To substantiate this
claim, the respondent no. 1bank
has placed on record a legal
scrutiny report dated 08.05.2000, wherein the property is
indicated to be selfoccupied
by the respondent no. 2borrower/
landlord for residential usage. Additionally, the
aforesaid fact is corroborated by the nonencumbrance
certificate

submitted by the respondent no. 2borrower/
landlord at the time
of creation of the mortgage. Furthermore, the respondent no. 1bank
has also placed a letter dated 12.07.2016 from the Housing
Society that maintains the secured asset, which confirmed that
no tenancy had been created on the secured asset.
31. It is pertinent to note that at the time when the SARFAESI Act
proceedings were pending, the factum of tenancy was never
revealed by the parties. The earlier order dated 09.03.2012,
passed by the Chief Metropolitan Magistrate, Esplanade, Mumbai
directing the Assistant Registrar to take over the possession of the
secured asset, is silent about any existing encumbrance over the
secured asset. It was only after passing of the aforesaid order of
the Chief Metropolitan Magistrate, that the appellanttenant
started agitating his rights before the Small Causes Court based
on a completely different fact scenario, without a whisper of the
alleged tenancy under the concluded Section 14, SARFAESI Act
proceedings. The respondent no.2borrower/
landlord did not even
respond to the claims of the appellanttenant.
The respondent
no.1bank
has produced multiple records to substantiate their
claim that the tenant was nowhere to be seen earlier and that this
tenancy was created just to defeat the proceedings initiated under

the SARFAESI Act. On the contrary, the appellanttenant
has
failed to produce any evidence to substantiate his claim over the
secured asset. In such a situation, the appellanttenant
cannot
claim protection under the garb of the interim protection granted
to him, ex parte, by solely relying upon the xerox of the rent
receipts.
32. In such an event, wherein the claim of the appellanttenant
is not
supported by any conclusive evidence, the rejection of the stay
application by the Chief Metropolitan Magistrate cannot be held
to be erroneous. Although the counsel of the appellanttenant
has
placed ample reliance upon the Vishal N. Kalsaria Case (supra),
but the same would not help the cause of the appellanttenant
herein, as the earlier case proceeded with the assumption of a
valid and bona fide tenancy. But in the present case, the stay
application of the appellanttenant
seems to be an afterthought. It
is clear that the respondent no. 2borrower/
landlord never
intimated the respondent no. 1bank
about the alleged tenancy.
In light of the above, we are unable to accept the claim of bona
fide tenancy of the appellanttenant.
33. In any case, considering the counterfactual pleaded by the
appellanttenant
himself, that he was a tenant who had entered

into an oral agreement, such tenancy impliedly does not carry any
covenant for renewal, as provided under Section 65A
Therefore, in any case, Section 13 (13) SARFAESI Act bars
entering into such tenancy beyond January, 2012. As the notice
under Section 13 (2) SARFAESI Act was issued on 30.04.2011,
subsequent reckoning of the tenancy is barred. Such person
occupying the premises, when the tenancy has been determined,
can only be treated as a ‘tenant in sufferance’. We should note
that such tenants do not have any legal rights and are akin to
trespassers.
34. In this context we may refer to R.V. Bhupal Prasad v. State of
A.P. and Ors., AIR 1996 SC 140, wherein a two Judge Bench of
this Court, speaking through Ramaswamy, J., made the following
pertinent observations in paragraph 8 of the Report:
"8. Tenant at sufferance is one who comes into
possession of land by lawful title, but who holds it,
by wrong after the termination of the term or expiry
of the lease by efflux of time. The tenant at
sufferance is, therefore, one who wrongfully
continues in possession after the extinction of a
lawful title. There is little difference between him
and a trespasser. "
35. On the same lines are the decisions of this Court in Smt. Shanti
Devi v. Amal Kumar Banerjee, AIR 1981 SC 1550, Murlidhar

Jalan (since deceased) through his Lrs. v. State of
Meghalaya and Ors., AIR 1997 SC 2690 and D.H. Maniar and
Ors. v. Waman Laxman Kudav, [1977] 1 SCR 403.
36. The operation of the Rent Act cannot be extended to a ‘tenantinsufferance’
visavis
the SARFAESI Act, due to the operation of
Section 13(2) read with Section 13(13) of the SARFAESI Act. A
contrary interpretation would violate the intention of the
legislature to provide for Section 13(13), which has a valuable role
in making the SARFAESI Act a selfexecutory
instrument for debt
recovery. Moreover, such an interpretation would also violate the
mandate of Section 35, SARFAESI Act which is couched in broad
terms.
37. As noted above, this case, does not mandate the additional
protection to be provided under the Rent Act, to the appellanttenant
herein. The lower Courts are correct in ordering delivery of
possession to the respondent no. 1bank
as the tenancy stands
determined. Before we part, we must note that we have not
interpreted the new amendment per se or the law with respect to
other categories of tenants, which may be taken up in appropriate
cases.
38. In the present case, as we are in the year 2019, which is 7 years
beyond the deadline of 2012, it is ordered that the appellant

tenant shall hand over the possession of the secured asset within
12 weeks of this order to the Assistant Registrar at Bandra Centre
of Courts, Mumbai, who in turn shall deliver the same to the
respondent no.1bank.
This Court is further of the opinion that
such devious practices by the borrower to obstruct the rights of
the bank to legitimately realize its dues cannot be appreciated by
this Court. Accordingly, we dismiss this appeal.
..............................................J.
(N.V. RAMANA)
..............................................J.
(MOHAN M. SHANTANAGOUDAR)
..............................................J.
(INDIRA BANERJEE)
New Delhi,
September 11, 2019

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