Thus, even if we keep aside the contentions on the cause of action, it is very evident that no tenant pleading oral tenancy could get the protection from the provisions of the Securitisation Act. Besides that, as we have noted, Section 34 is emphatic in its declaration that Civil Court shall have no jurisdiction over any matter which the Debts Recovery Tribunal or the Appellate Tribunal is empowered under this Act to determine. And, last, none of the reliefs the petitioner has sought is amenable to an ordinary civil court’s jurisdiction.{Para 58}
IN THE HIGH COURT OF BOMBAY AT GOA
FIRST APPEAL NO.15 OF 2019
Modinasab Indikar V/s Board of Directors of Indian Overseas Bank,
Coram:- DAMA SESHADRI NAIDU, J.
Date:- 14th February 2020
The appellant claims to be a tenant. The first respondent is the
Board of Directors of the second respondent Bank; the third respondent,
the authorised officer, that is the Assistant General Manager of the Bank;
and the fourth respondent, according to the Bank, does not exist.
2. To ascertain the identity of the fourth respondent, I have asked
the learned counsel for the appellant. She has then consulted the appellant
present in the Court. He too has said he has no idea.
3. The fifth and sixth respondents are the borrowers. The seventh
respondent is the District Magistrate; the eighth respondent is the
Mamlatdar; and the ninth respondent, the SI of Police.
3 fa no.15 of 2019
4. As narrated by both the learned counsel, the fifth and sixth
respondents borrowed the money in 2008 and later defaulted in repaying
it. So the Bank has approached the DRT to recover that money, and those
proceedings are said to be pending. Pending those proceedings, the Bank
invoked the Securitisation and Reconstruction of Financial Assets and
Enforcement of Securities Interest Act, 2002 (“the Securitisation Act”). It
issued notice under Section 13 of the Securitisation Act. It was on
24.11.2016.
5. To the Bank’s notice under Section 13 of the Securitisation Act,
the fifth and sixth respondents, that is the borrowers, did not respond.
Then, the Bank invoked Section 14 and approached the District
Magistrate for taking possession of the secured asset. In turn, on
25.07.2017, the District Magistrate passed an order, requiring the
Mamlatdar to take possession of the secured asset, with the help of the
police, and deliver it to the Bank.
6. In tune with the District Magistrate's order, on 08.09.2017, the
Mamlatdar and the Bank officials, along with the police, are said to have
gone to the secured asset. Then, the borrowers, as the Bank’s counsel
maintains, informed the Mamlatdar and others that “a case was filed”,
though they did not provide the details. Therefore, the Mamlatdar and
the Bank Officials returned.
7. Later, the Bank received the summons in Civil Suit No.23/2017
4 fa no.15 of 2019
from Fast Track Court II, Margao. In fact, the appellant claimed to be the
tenant. He questioned the Bank’s efforts to dispossess him. On the date of
the first hearing, the Bank filed its written statement, besides filing a reply
in the appellant’s interlocutory application for stay. That apart, the Bank
also applied under Order VII Rule 11 of CPC, requiring the trial Court to
reject the plaint because it revealed no cause of action and the suit is
barred by law, too.
8. Initially, the trial Court granted no stay but later, according to
the Bank's counsel, the appellant mentioned the matter out of turn
without notice to the Bank and secured an ex parte stay. It was on
21.02.2018. Eventually, the Trial Court rejected the plaint on 11.01.2019.
The rejection was on the premise that the Civil Court has no jurisdiction
and that the plaint revealed no cause of action. Aggrieved, the appellant
has filed this First Appeal.
Submissions:
Appellant:
9. Ms. Maria Nedumpara, the learned counsel for the appellant,
advanced the arguments. At that stage, I queried with the advocate
whether she had the wakalatnama; then, she submitted that though she
had no wakalatnama she was willing to file one. So I permitted her to file
wakalatnama signed by the appellant, who is present in the Court. The
wakalatnama filed, the learned counsel has resumed her submissions.
5 fa no.15 of 2019
10. Ms. Maria Nedumpara has submitted that Section 17 (4) of the
Securitisation Act sets out the grounds of tenancy that could be
considered by the DRT. But here the tenant has raised larger issues which
could not be decided by the Tribunal. Therefore, it is unexceptionable that
the appellant has approached the Civil Court, which alone could grant the
relief the appellant has sought. In other words, Ms. Nedumpara has
insisted that the Civil Court does have jurisdiction.
11. To elaborate, Ms. Nedumpara has also contended that tenancy
falls under List II, that is the State List. So the scope of central legislation
concerning the disputes involving a tenant is limited. Even in that
context, the Civil Court must have jurisdiction.
12. When the Court queried about whether the appellant has filed
any proof before the trial Court about the tenancy, Ms. Nedumpara has
submitted that the tenancy is oral and equitable. When I further queried
about any rent receipts, she has submitted that she is not aware of that.
Later, she has also submitted that under equitable tenancy, the payment of
rent assumes no importance. Nevertheless, Ms. Nedumpara has repeatedly
told the Court that if this Court remands the matter, the appellant will
place every proof before the trial Court and establish that he is the tenant.
13. About the cause of action Ms. Nedumpara has drawn my
attention to the Supreme Court judgment in Dhulabhai v. The State of
Madhya Pradesh AIR 1969 SC 78 and contended that the suit is eminently sustainable, but
the trial Court has failed to consider it. Thus, she has urged this Court to
allow the appeal.
Respondents:
14. Shri Ajay Kumar, the learned counsel for the respondent Bank,
has submitted that the appellant as the alleged tenant had been nowhere
in the picture until the District Magistrate passed the order under Section
14 of the Securitisation Act. According to him, the notice under Section
13 of the Act was issued on 24.11.2016, and the District Magistrate
passed the order under Section 14 on 25.07.2017. For all these months,
the tenant did not choose to agitate the issue.
15. To elaborate, Shri Ajay Kumar has also submitted that the Bank
published the notice in the newspapers. Even then the alleged tenant did
not respond. He has also submitted that though the Bank officials visited
the property on more than one occasion, they found no other person than
the respondents no.5 & 6, the original borrowers and owners, at the
secured asset.
16. On the objective of the Securitisation Act and the devious
devices the borrowers adopt, Shri Ajay Kumar has drawn my attention to
the Supreme Court’s judgment in Bajarang v. Central Bank of India 2019 (9) SCC 94. He
has submitted that the appeal lacks merit and deserves to be dismissed.
Finally, Shri Ajay Kumar has submitted that though both before the trial
Court and before this Court the respondent nos.5 & 6, that is the owners
and borrowers, were put on notice, they did not respond. Had there been
any tenancy, they would have approached and informed the Court about it.
According to him, that might have, in the end, benefited their own cause—
buying more time.
Petitioner’s Reply:
17. In reply, Ms. Nedumpara has submitted that if at all the
landlord remained unresponsive, the tenant could not be blamed for that.
Then, she has once again wanted the Court to remand the appeal to the
trial Court, so the appellant could establish his case.
18. Heard Ms. Maria Nedumpara, the learned counsel for the
appellant, and Shri V. Ajay Kumar, the learned counsel for the respondents
no.1 to 3.
Discussion:
19. Indeed, as to the borrowing by the respondents 5 and 6, their
defaulting the loan, and their suffering orders under the Securitisation
Act, the facts are not disputed. The dispute concerns the appellant: Is he a
tenant?
20. The appellant filed Civil Suit No.23/2017 before the Fast Track
Court-II, Margao. In that suit, the appellant sought various reliefs. The
Bank appeared and filed its counter-pleadings. Besides, it has also applied
under Order VII Rule 11 of CPC. True, the appellant initially secured an
8 fa no.15 of 2019
interim order, which remained in force until the suit was dismissed.
Eventually, the trial Court took up the Bank's application under Order VII
Rule 11 and passed the impugned order. It rejected the plaint.
21. In the impugned order, the trial Court noticed that the appellant
wanted the trial Court to declare the Supreme Court's judgment in
Harshad Govardhan Sondagar v. International Assets Reconstruction Co. Ltd.3
as “sub silentio, nay per incuriam and to declare that investiture of a
jurisdiction of the District Magistrate”. Faced with this plea, the trial
Court has held that it has no jurisdiction to sit over the Supreme Court’s
judgment and consider its correctness, much less declare that the
judgment has “gone in silence” about certain statutory aspects of the
Securitisation Act. As to the cause of action, the trial Court has found that
the plaint on its comprehensive reading has revealed no cause of action.
Has the trial Court erred in rejecting the plaint?
22. The scope of Order 7, Rule 11 needs no reiteration. Challenged
as to its sustainability, the plaint should survive on its own—based on the
averments it contains. And the documents produced along with the plaint
should also form part of the plaint. At that stage, the defence, if any,
stands disregarded. Culled out from the judicial precedents, the
fundamental aspects of Order 7, Rule 11 are that this provision is not
exhaustive, nor does it affect the inherent powers of the court.
3
(2014) 6 SCC 1
9 fa no.15 of 2019
23. If we examine the propositions of law further, the trial court
may well remember that if a meaningful (and not formal) reading of the
plaint shows that it is vexatious and meritless, disclosing no right to sue,
the court should exercise its power under Rule 11 to ensure that the
requirement of law is fulfilled. And if clever drafting has created the
illusion of a cause of action, it should be nipped in the bud. “An activist
Judge is the answer to irresponsible lawsuits.”4 In Ram Singh v. Gram
Panchayat, Mehal Kalan5, the Supreme Court noted when the suit is barred
by any law, the plaintiff cannot be allowed to circumvent the bar by clever
drafting. Finally, we may note that the court should look into not only the
plaint averments but also the documents filed and referred to in the plaint.
It is settled law that where a document is sued upon and is referred to in
the plaint, that document gets incorporated by reference in the plaint6.
24. True, the appellant has relied on Dhulabai, rendered by a
Constitution Bench of the Supreme Court. It concerns the remedy of a
party in the face of a constitutionally invalidated provision. It pays to
examine the facts of Dhulabai.
25. In Dhulabai, the appellants are dealers in tobacco. They get their
tobacco locally within the state or import it from outside. Under the
4
T. Arivandandam v. T.V. Satyapal, AIR 1977 SC 2421
5
(1986) 4 SCC 364
6
Church of Christ Charitable Trust And Educational Charitable Society v.
Ponniamman Educational Trust, 2012 SCC 8 706
10 fa no.15 of 2019
Madhya Bharat Sales Tax Act, Section 3 requires every dealer to pay tax
regarding sales or supplies of goods in Madhya Bharat from 1st May
1950. Under the Act, the Government issued several notifications between
April 1950 and January 1954. All these notifications imposed the tax at
different rates on tobacco. The authorities collected tax in varying
amounts from the appellants for different quarters. Aggrieved, after
issuing notice under Section 80 of CPC, the appellants sued for refund of
the tax. They contended that the tax was illegally collected from them
being; it was unconstitutional.
26. In fact, the High Court of Madhya Pradesh, earlier, declared as
unconstitutional the notifications under which the State collected the tax
from the appellants. The decision was later confirmed by the Supreme
Court. That said, the appellants did not take recourse to Article 226 of the
Constitution but filed the suits.
27. Section 17 of the Madhya Bharat Sales Tax Act bars civil
court’s jurisdiction. No assessment made and no order passed under the
Act or the Rules by the assessing authority, appellate authority, or the
Commissioner shall be questioned in any Court. After elaborately
considering the precedential position on the point in issue, Dhulabhai has
held:
“(1) Where the statute gives a finality to the orders of the special
tribunals, the Civil Court's jurisdiction must be held to be excluded if
there is adequate remedy to do what the Civil Courts would normally
do in a suit. Such provision, however, does not exclude those cases
where the provisions of the particular Act have not been complied
11 fa no.15 of 2019
with or the statutory tribunal has not acted in conformity with the
fundamental principles of judicial procedure.
(2) Where there is an express bar of the jurisdiction of the court, an
examination of the scheme of the particular Act to find the adequacy
or the sufficiency of the remedies provided may be relevant but is not
decisive to sustain the jurisdiction of the civil court.
. . .
(3) Challenge to the provisions of the particular Act as ultra vires
cannot be brought before Tribunals constituted under that Act. Even
the High Court cannot go into that question on a revision or reference from
the decision of the Tribunals.
(4) When a provision is already declared unconstitutional or the
constitutionality of any provision is to be challenged, a suit is open. A writ
of certiorari may include a direction for refund if the claim is clearly
within the time prescribed by the Limitation Act but it is not a
compulsory remedy to replace a suit.
(5) Where the particular Act contains no machinery for refund of tax
collected in excess of constitutional limits or illegally collected a suit
lies.
(6) Questions of the correctness of the assessment apart from its
constitutionality are for the decision of the authorities and a civil suit
does not lie if the orders of the authorities are declared to be final or
there is an express prohibition in the particular Act. In either case
the scheme of the particular Act must be examined because it is a
relevant enquiry.
(7) An exclusion of the jurisdiction of the Civil Court is not readily to be
inferred unless the conditions above set down apply.
(italics supplied)
28. In the light of the above proposition, let us examine the
exclusionary provision in the Securitisation Act. Section 34 of the Act
reads:
34. Civil Court not to have jurisdiction:- No civil court shall have
jurisdiction to entertain any suit or proceeding in respect of any
matter which a Debts Recovery Tribunal or the Appellate Tribunal is
empowered by or under this Act to determine and no injunction shall
be granted by any court or other authority in respect of any action
taken or to be taken in pursuance of any power conferred by or under
this Act or under the Recovery of Debts Due to Banks and Financial
12 fa no.15 of 2019
Institutions Act, 1993 (51 of 1993).
29. In Mardia Chemicals v. Union of India7, the Supreme Court has
held that a full reading of Section 34 shows that the civil court’s
jurisdiction is barred “in respect of matters which a Debts Recovery
Tribunal or an Appellate Tribunal is empowered to determine in respect
of any action taken or to be taken under any power conferred under the
Act. “That is to say, the prohibition covers even matters which can be
taken cognizance of by the Debts Recovery Tribunal, though no measure
in that direction has so far been taken under Sub-section (4) of Section
13.”
30. Later, in Jagdish Singh v. Heeralal8, the Apex Court has held that
the opening portion of Section 34 clearly states that no civil court shall
have jurisdiction to entertain any suit or proceeding "in respect of any
matter" which a DRT or an Appellate Tribunal is empowered by or under
the Securitisation Act to determine. The expression 'in respect of any
matter' referred to in Section 34, according to Jagdish Singh, would take in
the "measures" provided under Sub-section (4) of Section 13 of the
Securitisation Act. Consequently, if any aggrieved person has any
grievance against any "measures" taken by the creditor under Sub-section
(4) of Section 13, the remedy open to him is to approach the DRT or the
Appellate Tribunal and not the civil court.
7
(2004) 4 SCC 311
8
AIR 2014 SC 371
13 fa no.15 of 2019
31. Jagdish Singh emphasises that Civil Court in such circumstances
has no jurisdiction to entertain any suit or proceedings regarding those
matters which fall under Sub-section (4) of Section 13 of the
Securitisation Act. Further, Section 35 says, the Securitisation Act
overrides other laws if they contradict that Act, “which takes in Section 9
Code of Civil Procedure as well.” To conclude, Jagdish Singh holds that
“the civil court jurisdiction is completely barred.”
32. In the same vein, recently in Sree Anandhakumar Mills Ltd. v.
Indian Overseas Bank9, the Supreme Court has quoted with approval
Jagdish Singh. In Anandhakumar Mills, a person claiming to be a co-owner
sued for partition. The High Court of Madras has held that the suit is
maintainable in law, despite Section 34 of the Securitisation Act. Then, the
Supreme Court has held that under Sections 17 and 18 of the
Securitisation Act, the aggrieved party has an adequate and efficacious
remedy.
33. In Harshad Govardhan, the Supreme Court has held that only if
possession of the secured asset is required to be taken under the
Securitisation Act, will the secured creditor move the CMM or the
District Magistrate “for assistance to take possession of the secured
asset.”
34. In this context, Harshad Govardhan deals with the right of
9
2018 (10) SCJ 514
14 fa no.15 of 2019
lessees to remain in possession of secured asset when the lease is
subsisting and how the Securitisation Act affects those rights. It holds that
if the lease precedes the mortgage or the security interest, the lessee is
entitled to enjoy the lease as per the terms of the lease. Even after making
the property a secured asset, the borrower can lease it out unless the
creditor—say the bank—prohibits the borrower from leasing out the
property. As declared under Section 35, the Securitisation Act overrides
any other law if there is anything inconsistent.
35. Indeed, Harshad Govardhan holds that if the lessee is in lawful
possession of the secured asset under a “valid lease,” the secured creditor
cannot take possession of the secured asset. Granted, any lease created
after the borrower’s receiving a notice under Section 13(2) is forbidden
under Section 13(13) of the Act; such a lease is invalid. In other words,
once a property is mortgaged, the borrower’s right to lease out the
mortgaged property depends on Section 65A of the Transfer of Property
Act.
36. In this context, on the tenant's rights, we may examine the
interplay between Section 17(4A) of the Securitisation Act and Section
65(A) of the Transfer of Property Act. Section 17(4A) of the
Securitisation Act reads:
Section 17(4A) Where-
(i) any person, in an application under sub-section (1), claims any
tenancy or leasehold rights upon the secured asset, the Debt
Recovery Tribunal, after examining the facts of the case and
15 fa no.15 of 2019
evidence produced by the parties in relation to such claims shall, for
the purposes of enforcement of security interest, have the
jurisdiction to examine whether lease or tenancy,-
(a) has expired or stood determined; or
(b) is contrary to section 65A of the Transfer of Property Act, 1882 (4 of
1882); or
(c) is contrary to terms of mortgage; or
(d) is created after the issuance of notice of default and demand by
the Bank under sub-section (2) of Section 13 of the Act; and
(ii) the Debt Recovery Tribunal is satisfied that tenancy right or
leasehold rights claimed in secured asset falls under the sub-clause (a)
or sub-clause (b) or sub-clause (c) or sub-clause (d) of clause (i), then
notwithstanding anything to the contrary contained in any other law
for the time being in force, the Debt Recovery Tribunal may pass
such order as it deems fit in accordance with the provisions of this
Act.
(italics supplied)
37. Now we will also extract Section 65A of the TP Act, and it
reads:
65A. (1) Subject to the provisions of sub-section (2), a mortgagor,
while lawfully in possession of the mortgaged property, shall have
power to make leases thereof which shall be binding on the
mortgagee.
(2) (a) Every such lease shall be such as would be made in the
ordinary course of management of the property concerned, and in
accordance with any local law, custom or usage,
(b) Every such lease shall reserve the best rent that can reasonably be
obtained, and no premium shall be paid or promised, and no rent
shall be payable in advance,
(c) No such lease shall contain a covenant for renewal,
(d) Every such lease shall take effect from a date not later than six
months from the date on which it is made,
(e) In the case of a lease of buildings, whether leased with or without
the land on which they stand, the duration of the lease shall in no
case exceed three years, and the lease shall contain a covenant for
payment of the rent and a condition of re-entry on the rent not
being paid with a time therein specified.
(3) The provisions of sub-section (1) apply only if and as far as a
contrary intention is not expressed in the mortgage-deed; and the
provisions of sub-section (2) may be varied or extended by the
mortgage-deed and, as so varied and extended, shall, as far as may be,
operate in like manner and with all like incidents, effects and
consequences, as if such variations or extensions were contained in
that sub-section.
(italics supplied)
16 fa no.15 of 2019
38. In the light of the above statutory mandate, in Jayalakshmi N.
Pillai v. Authorized Officer10, Kerala High Court has held that Section
17(4A) of Securitisation Act, engrafted through an amendment on
01.09.2016, provides a forum for tenants to have their grievance redressed.
As seen from the above extract, the Debt Recovery Tribunal can resolve
all claims of tenancy or leasehold rights upon the secured asset. But to
assume jurisdiction, the Tribunal must ensure that the tenancy has not
expired or stood determined. Jurisdiction assumed, the Tribunal will rule
on whether the lease is contrary to Section 65(A) of the TP Act, or the
terms of the mortgage. It will also examine whether the lease has been
created after notice of default and demand by the Bank under Section
13(2) of the Act.
39. On the other hand, Section 65(A) of the TP Act elaborates on
mortgagor's power to lease. Section 65(A)(2)(b) mandates that every lease
shall reserve the best rent and "no premium shall be paid or promised, and
no rent shall be payable in advance." Under Clause (c) no lease shall
contain a covenant for renewal. Eventually, Clause (e) prescribes that if
the lease concerns a building, the duration of the lease shall not exceed
three years.
40. If we examine deeper, Harshad Govardhan also reveals that when
a lessee comes to know about the creditor’s efforts to take possession, he
10
2019 (1) KHC 838
17 fa no.15 of 2019
may either surrender the possession or resist the secured creditor’s
attempt. For this, he should produce before the authorised officer proof
that he was inducted as a lessee before the creation of the mortgage or
that he was a lessee under the mortgagor in accordance with the
provisions of Section 65A of the Transfer of Property Act. He should
also demonstrate that the lease has not been determined under Section
111 of the TP Act. If he resists the attempt of the secured creditor to
take possession, the authorised officer cannot evict the lessee by force but
has to apply before the Chief Metropolitan Magistrate (CMM) or the
District Magistrate under Section 14 of the Securitisation Act.
41. Finally, Harshad Govardhan interprets the second limb of
Section 34 of the Securitisation Act and holds that no court or authority
should grant an injunction against any action taken or to be taken under
the Securitisation Act.
42. I reckon the Supreme Court's recent judgment in Bajarang
Shyamsunder Agarwal squarely applies to the facts of this case. It pays to
examine the case in detail. The owner of a residential flat mortgaged it
with the bank and secured a loan. On his default, the bank invoked the
recovery proceedings. It issued a statutory demand notice under Section
13(2) of the Securitisation Act. When the borrower failed to comply with
its demand, the bank applied under Section 14 of the Act to take physical
possession of the secured asset. The CMM allowed that application.
18 fa no.15 of 2019
43. Then, the appellant, claiming to be a tenant, applied to intervene
in the proceedings under Section 14. He wanted the CMM’s order stayed.
The appellant has asserted that the secured asset was let out to him by the
borrower/landlord in January 2000 and that he has been paying rent since
then. Indeed, the tenancy was said to be based on an oral agreement.
Allegedly faced with a notice from the landlord to vacate the flat, the
appellant filed a suit before the Court of Small Causes at Mumbai. In
course of time, the Small Causes Court granted interim injunction to the appellant.
44. Pending the civil suit, the appellant applied to the CMM not to
dispossess him. But the CMM rejected the application, “holding that the
appellant 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.” Aggrieved, the
appellant filed an appeal by Special Leave before the Supreme Court.
45. In the above factual context, to begin with, Bajarang
Shyamsunder Agarwal has considered the legislative purpose of the
Securitisation Act. It has held that the Act “in response to a scenario
where slow-paced recovery and staggering amounts of non-performing
assets were looming over the banks.” The present Act is to enable the
banks to resolve the issue of liquidity and aim for the reduction in the
number of non-performing assets. The Preamble to the Act emphasises
19 fa no.15 of 2019
upon the efficient and expeditious recovery of bad debts.
46. Bajarang Shyamsunder Agarwal notes that Section 17 provides for
an invaluable right of appeal to any person including the borrower to
approach the Debt Recovery Tribunal. Quoting with approval Harshad
Govardhan, it has further held that the right of appeal is available to the
tenant claiming under a borrower, though the right of re-possession does
not exist with the tenant.
47. As is the case here, Bajarang Shyamsunder Agarwal, too, notes
that at no stage of the proceedings did the parties reveal about the
tenancy. “It was only after passing of the aforesaid order of the Chief
Metropolitan Magistrate, that the appellant tenant started agitating his
rights before the Small Causes Court.” The borrower/landlord, again as
happened here, did not even respond to the claims of the tenant. The bank
has produced multiple records to substantiate its claim that the tenant was
nowhere to be seen earlier and that this tenancy was created just to defeat
the proceedings initiated under the Securitisation Act. “On the contrary,
the appellant tenant has failed to produce any evidence to substantiate his
claim over the secured asset.” In such a situation, the appellant tenant
“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.”
Here, even they are absent. In fact, it pays to analyse what Bajarang
Shyamsunder Agarwal says about the oral tenancy.
48. In paragraphs 33 and 36, Bajarang Shyamsunder holds that if it
is an oral lease, such tenancy impliedly does not carry any covenant for
renewal, as provided under Section 65-A of T.P. Act. Further, Section
13(13) of the Securitisation Act bars the lessor and the lessee from
entering into such tenancy beyond January 2012. Then, the person
occupying the premises, when the tenancy has been determined, can only
be treated as a ‘tenant in sufferance’. And he has no legal rights and is akin
to a trespasser.
49. Bajarang Shyamsunder also declares that the Rent Act cannot be
extended to a ‘tenant in sufferance’ vis-à-vis the Securitisation Act because
of Section 13(2) read with Section 13(13) of that Act. A contrary
interpretation would violate the legislative efficacy of Section 13(13),
“which has a valuable role in making the SARFAESI Act a self-executory
instrument for debt recovery.” And, further, any contrary interpretation
would also violate the mandate of Section 35 of the Securitisation Act,
which is couched in broad terms.
Equitable Lease:
50. The appellant has pleaded equitable tenancy. According to him,
it is a common law doctrine that survives even the statutory onslaught. I
am afraid it does not. First, equity is not an offshoot or species of common
law. It is, in its origin, antithetical to common law. In fact, equity entered
where common law failed. Historically, the rigidity of common law has
21 fa no.15 of 2019
given rise to equity. Later, they have come to be two streams, as Professor
Ashburner has described, flowing in the same channel but never mingling.
Lord Diplock disagreed. In United Scientific Holdings Ltd. v Burnley
Borough Council11, he has said that the ‘two streams’ have certainly mingled
now.
51. True, the Anglo-Saxon jurisprudence has come to India with
both the streams mixed. That said, it is elementary to note that both the
common-law and equity principles stand displaced to the extent a statute
occupies the adjudicatory arena. They are invoked where the statute is
silent. Further, even in the statutory scheme, they both play a vital role as
interpretative tools. Wherever a statute is ambiguous, its interpretation
must accord with the already-established common law or equity principles.
Thus, they fill the statutory crevices; they neither displace nor negate the
statute law, though.
52. An equitable lease, as the Oxford’s A Dictionary of Law12 defines,
is an agreement for the grant of an interest in land on terms that
correspond to a legal lease but do not comply with the necessary formal
requirements of a legal lease. For example, a landlord purports to grant
tenant a lease for seven years. But the transaction is effected by simple
written contract rather than by deed—a registered instrument. Still, the
11
[1978] AC 904
12
5th Ed. P.178
22 fa no.15 of 2019
court may enforce the contract to grant the lease between the parties.
This follows the principle that “equity looks upon that as done which
ought to be done,” as was held in Walsh v Lonsdale13. That said, first, this
doctrine binds only the parties to that parole contract, but not a third
party. And, second, the very doctrine of Walsh v Lonsdale, as it is popularly
known, sets bounds to that equity principle: The doctrine will only
operate where the contract underlying the defective lease complies with
the law—say in the Indian context, for example, the Transfer of Property
Act—that otherwise governs the transaction. That is, the lease is in
writing, contains all express terms, is signed by all parties, provides for
consideration, and is specifically enforceable.
53. But the Privy Council has held, at least, in two cases—Ariff v.
Jadunath14 and Mian Pir Bux v. Sardar Modh. Tahir15—that no equitable
rule could override the provisions of the Transfer of Property Act or
Registration Act regarding writing or registration. So, evidently, the
doctrine of Walsh v. Lonsdale does not apply except in exceptional cases
where registration is not required.
54. In Ariff, the Privy Council notes that the Courts of equity in
England however have decided that once the making of the contract has
been established by the part performance of it, one of the parties to it
13
(1820) 21 Ch D 9
14
AIR 1931 PC 79
15
AIR 1934 PC 234
23 fa no.15 of 2019
shall not be permitted to use the Statute of Frauds as an instrument of
fraud. These decisions have been described in Britain v. Rossiter16 as "bold
decisions on the words of the statute," and the doctrine as of a nature
"not to be unwarrantably extended."
55. And Ariff has eventually held that whether an English equitable
doctrine should in any case be applied so as to modify the effect of an
Indian statute may well be doubted. Should an English equitable doctrine
affecting the provisions of an English statute relating to the right to sue
upon a contract be applied by analogy to such a statute as the Transfer of
Property Act? More particularly, is it permissible when the application of
the doctrine results in creating, without any writing, an interest which the
statute says can only be created by means of a registered instrument? To
their Lordships mind, in the absence of some binding authority to that
effect, the proposition is “impossible.”
56. Equivocal as the above proposition, Ariff eventually asserts that
“the doubt entertained by Mukerji, J., whether the equitable doctrine
‘which he thought was applicable could operate so as to nullify the
statutory requirement of a registered instrument,’ was justified.” Ariff,
finally, could not find the facts of that case raising any equity in the
respondent’s favour. Even if any such equity was established, Ariff holds,
it could not operate to nullify the provisions of the Indian Code relating
16
[1883] 11 Q.B. 123
24 fa no.15 of 2019
to property and transfers of property.” We may note here that Bajarang Shyamsunder, too, disallows transactions violating the statutory mandate
as contained, for example, in Transfer of Property Act and Registration
Act.
Reliefs Sought:
57. The petitioner wanted the Civil Court to declare that (a) he is an
equitable tenant; (b) his rights as tenant cannot be interfered with,
abrogated, or abridged; (c) Defendants 2 and 3 have no jurisdiction to
secure his forcible dispossession; (d) the District Magistrate is a coram non
judice; (e) the Supreme Court’s judgment in Harshad Govardhan Sondagar
“is rendered sub silentio, nay, per incuriam”; (f) the Supreme Court’s
judgment in Harshad Govardhan Sondagar is rendered sub silentio, if not
per incuriam; (g) the statue conferring jurisdiction on District Magistrate
would destroy or negate the separation of powers.
58. Thus, even if we keep aside the contentions on the cause ofaction, it is very evident that no tenant pleading oral tenancy could get the protection from the provisions of the Securitisation Act. Besides that, as we have noted, Section 34 is emphatic in its declaration that Civil Court shall have no jurisdiction over any matter which the Debts Recovery Tribunal or the Appellate Tribunal is empowered under this Act to determine. And, last, none of the reliefs the petitioner has sought is amenable to an ordinary civil court’s jurisdiction.
Result:
59. Under these circumstances, I reckon that the appellant could not
establish that the plaint in his suit passes the judicial muster under Order
7, Rule 11 of CPC. At this juncture, I may note that for this adjudication
the plaint is the fulcrum, but the appellant has not filed a copy, though he
has secured interim protection and had the matter pending for
considerable time. So I render this judgment based on the rival
submissions and the material on record, including the impugned
judgment. As I find no grounds to interfere with the judgment, I dismiss
this appeal. No order on costs.
Tailpiece:
After the dictation was completed and the verdict pronounced, Ms.
Nedumpara for the appellant wanted the Court to suspend the operation
of this judgment for three weeks, so that the appellant could approach the
DRT, Mumbai. Shri Ajay Kumar for the respondent Bank has opposed
that plea. At any rate, the plaint rejected, there is no further legal hurdle
for the appellant to approach the DRT, Mumbai, if he chooses to. Thus, to
conclude, it is open for the appellant to exhaust all statutory or legal
options available to him in this regard.
DAMA SESHADRI NAIDU, J.
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