Whether tenancy court can decide dispute between tenant and secured creditor?

 A further question of law raised in these appeals is
whether the tenants have remedies under the
concerned tenancy law. In the State of Maharashtra,
the Maharashtra Rent Control Act, 1999 is in force
and this Act applies to premises let for the purposes of
residence, education, business, trade or storage
specified in Schedule I and Schedule II of the Act as
well as houses let out in areas to which the Bombay
Rents, Hotel and Lodging House Rates Control Act,
1947 applied before the commencement of the Act.

Section 33 of the Maharashtra Rent Control Act is
titled ‘Jurisdiction of courts’ and it provides that the
courts named therein ‘shall have jurisdiction to
entertain and try any suit or proceeding between a
landlord and a tenant relating to the recovery of rent
or possession of any premises and to decide any
application made under the Act and the applications
which are to be decided by the State Government or
an officer authorised by it or the Competent Authority.
The question of law that we have to consider is
whether the appellants as tenants of premises in the
State of Maharashtra including Mumbai will have any
remedy to move these courts having jurisdiction under
Section 33 of the Maharashtra Rent Control Act and
obtain the relief of injunction against the secured
creditor taking possession of the secured asset from
the appellants. The answer to this question is in
Section 34 of the SARFAESI Act, which is extracted
hereinbelow:
“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
Institutions Act, 1993 (51 of 1993).
A reading of the second limb of Section 34 of the SARFAESI
Act would show that 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
the Act. Thus, when action is sought to be taken by the
secured creditor under Section 13 of the SARFAESI Act or
by the Chief Metropolitan Magistrate or the District
Magistrate under Section 14 of the SARFAESI Act, the Court
or the authority mentioned in Section 33 of the
Maharashtra Rent Control Act cannot grant the injunction
to prevent such action by the secured creditor or by the
Chief Metropolitan Magistrate or the District Magistrate.
Even otherwise, Section 33 of the Maharashtra Rent Control
Act vests jurisdiction in the courts named therein to decide
disputes between the landlord and the tenant and not

disputes between the secured creditor and the tenant under
landlord who is a borrower of the secured assets.
 Reportable
IN THE SUPREME COURT OF INDIA
CRIMINAL APPELLATE JURISDICTION
CRIMINAL APPEAL No. 736 OF 2014
(Arising out of S.L.P. (Crl.) No.1666 of 2012)

Harshad Govardhan Sondagar v. International Assets Reconstruction Co. Ltd. & Ors.,

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Whether tenants can obtain injunction from court to restrain secured creditor from taking possession of property?

A further question of law raised in these appeals is
whether the tenants have remedies under the
concerned tenancy law. In the State of Maharashtra,
the Maharashtra Rent Control Act, 1999 is in force
and this Act applies to premises let for the purposes of
residence, education, business, trade or storage
specified in Schedule I and Schedule II of the Act as
well as houses let out in areas to which the Bombay
Rents, Hotel and Lodging House Rates Control Act,
1947 applied before the commencement of the Act. 6
Section 33 of the Maharashtra Rent Control Act is
titled ‘Jurisdiction of courts’ and it provides that the
courts named therein ‘shall have jurisdiction to
entertain and try any suit or proceeding between a
landlord and a tenant relating to the recovery of rent
or possession of any premises and to decide any
application made under the Act and the applications
which are to be decided by the State Government or
an officer authorised by it or the Competent Authority.
The question of law that we have to consider is
whether the appellants as tenants of premises in the
State of Maharashtra including Mumbai will have any
remedy to move these courts having jurisdiction under
Section 33 of the Maharashtra Rent Control Act and
obtain the relief of injunction against the secured
creditor taking possession of the secured asset from
the appellants. The answer to this question is in
Section 34 of the SARFAESI Act, which is extracted
hereinbelow:
“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 6
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
Institutions Act, 1993 (51 of 1993).
A reading of the second limb of Section 34 of the SARFAESI
Act would show that 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
the Act. Thus, when action is sought to be taken by the
secured creditor under Section 13 of the SARFAESI Act or
by the Chief Metropolitan Magistrate or the District
Magistrate under Section 14 of the SARFAESI Act, the Court
or the authority mentioned in Section 33 of the
Maharashtra Rent Control Act cannot grant the injunction
to prevent such action by the secured creditor or by the
Chief Metropolitan Magistrate or the District Magistrate.
Even otherwise, Section 33 of the Maharashtra Rent Control
Act vests jurisdiction in the courts named therein to decide
disputes between the landlord and the tenant and not 
disputes between the secured creditor and the tenant under
landlord who is a borrower of the secured assets.
Reportable
IN THE SUPREME COURT OF INDIA
CRIMINAL APPELLATE JURISDICTION
CRIMINAL APPEAL No. 736 OF 2014
(Arising out of S.L.P. (Crl.) No.1666 of 2012)

Harshad Govardhan Sondagar Vs International Assets Reconstruction Co.Ltd. 

Dated:April 03, 2014. 
Citation:( 2014 ) 6 SCC 1

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Supreme Court: Secured creditor cannot take over possession unless lawful possession of lessee comes to an end

Supreme Court: The major issue in the present case was whether a mortgagee of a previously leased out property (unknown to the creditor) claim possession of the property upon the failure of the mortgagor in clearing his debts within the stipulated time. The bench comprising of Hon'ble Justice A. K. Patnaik and Hon'ble Justice Gopala Gowda,primarily ruled that without the determination of a valid lease, the possession of the lessee is lawful and such lawful possession of a lessee was to be protected by all courts and tribunals. Discussing the primary need of determining the lease, the Court required that a lessee could either surrender or resist the possession of the property by the secured creditor. In the former case, the lease would stand determined even if the property be in the legal possession of the lessee but in the latter case, the authorized officer shall refer the dispute to the Chief Metropolitan Magistrate who shall then, in accordance to the principles of natural justice, validate the lease and accordingly award possession of the property to the lessee or the secured creditor. Further, the Court set aside a Judgment of the Bombay High Court and the views taken in the case of M/s Trade Well v. Indian Bank [2007 CRI. L.J. 2544], observing that the appellants, however, had no remedy under the SARFAESI (Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest) Act for moving the Debts Recovery Tribunal. Concluding, the Court set aside the previous orders passed by the Chief Metropolitan Magistrate asking of him to pass fresh orders in accordance with the Court's judgment and any other law that may be relevant, after hearing the appellants and the secured creditors.  

 Reportable
IN THE SUPREME COURT OF INDIA
CRIMINAL APPELLATE JURISDICTION
CRIMINAL APPEAL No. 736 OF 2014
(Arising out of S.L.P. (Crl.) No.1666 of 2012)

Harshad Govardhan Sondagar v. International Assets Reconstruction Co. Ltd. & Ors.,

 Dated: April 3, 2014
Citation: (2014) 6 SCC 1
A. K. PATNAIK, J.

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