The petitioner is a tenant of the residential building owned by the 4th respondent over which security interest was created by the borrower, in favour of the respondent Bank at the time of availing financial assistance from the Bank. The building was taken on lease in November, 2012. While so, there occurred some dispute between the petitioner and the 4th respondent. Apprehending forceful eviction from the premises, the petitioner approached the Munsiff - Magistrate's Court, Mannarkkad and obtained an interim order of temporary injunction against forceful eviction from the property concerned, as discernible from Ext. P3 dated 25.08.2014. The borrower/4th respondent turned to be a defaulter, when the Bank proceeded with steps under the SARFAESI Act, by filing a petition under Section 14 of the Act before the concerned Chief Judicial Magistrate's Court, for getting vacant surrender of the premises, whereupon an Advocate Commissioner came to be appointed. It is stated that physical possession of the property is taken over by the Bank. The petitioner has approached this Court contending that, since she is in occupation of the premises in question as a tenant, the respondent Bank is not justified in proceeding with steps without giving an opportunity to put forth her version.
2. Heard the learned counsel for the petitioner as well as the learned counsel for the respondent Bank.
3. During the course of hearing, the learned counsel for the petitioner points out that, the legal position stands declared by the Apex Court as to the course of action to be pursed by secured creditors, as per the judgment reported in (2014) 6 SCC 1 [Harshad Govardhan Sondagar v. International assets Reconstruction Company Limited and Others]. It has been categorically stated that, Banks cannot take the law into their hands and can't forcefully evict a tenant, merely with reference to the provisions of SARFAESI Act. Two circumstances are contemplated, which have to be given effect to, even under the SARFAESI Act, although Section 17 starts with a 'non-obstante clause'.
4. The Apex Court observed that, the non obstante clause will come into operation, only when any other provision of law stands inconsistent to the provisions of the SARFAESI Act. After elaborate discussion, the Apex Court also held that the right of a lessee to continue to occupy the premises, even after creation of a mortgage, is not otherwise dealt with by the SARFAESI proceedings and hence, two types of leases will stand recognized, to have the benefit to the extent as specified therein. First one, in respect of the leases created prior to the mortgage and the second one, in respect of leases created after mortgage.
5. Section 13(13) stipulates that, after service of notice under Section 13(2), no borrower is supposed to effect any conveyance/alienation with regard to the property concerned. It is pointed out that, the course of action open to the Bank i.e, secured creditor, is to affix a notice in the premises under Rule 8(1) of SARFAESI Rules upon which it will be open for the tenant either to vacate the premises or to resist the eviction by producing necessary materials to justify the continued occupation. If the eviction is resisted, the next course of action for the Bank is to file an application before the concerned Chief Judicial Magistrate's Court under Section 14 of the SARFAESI Act, along with an affidavit, also giving particulars of the tenant and then, it will be for the Chief Judicial Magistrate/competent authority to consider the matter after issuance of notice to the tenant and to proceed with further steps accordingly. The observations made by the Apex Court in paragraph '28'; relevant portion of which sought to be relied on from the part of the petitioner, is as follows:
28. A reading of sub-rules (1) and (2) of Rule 8 of the Security Interest (Enforcement) Rules, 2002 would show that the possession notice will have to be affixed on the outer door or at the conspicuous place of the property and also published, as soon as possible but in any case not later than seven days from the date of taking possession, in two leading newspapers, one in vernacular language having sufficient circulation in that locality, by the authorised officer. At his stage, the lessee of an immovable property will have notice of the secured creditor making efforts to take possession of the secured assets of the borrower. When, therefore, a lessee becomes aware of the possession being taken by the secured creditor, in respect of the secured asset in respect of which he is the lessee, from the possession notice which is delivered, affixed or published in sub-rule (1) and sub-rule (2) of Rule 8 of the Security Interest (Enforcement) Rules, 2002, he may either surrender possession or resist the attempt of the secured creditor to take the possession of the secured asset by producing before the authorised office proof that he was inducted as a lessee prior to the creation of the mortgage or that he was a lessee under the mortgagor in accordance with the provisions of Section 65-A of the Transfer of Property Act and that the lease does not stand determined in accordance with Section 111 of the Transfer of Property Act. If the lessee surrenders possession, the lease, even if valid, gets determined in accordance with clause (f) of Section 111 of the Transfer of Property act, but if he resists the attempt of the secured creditor to take possession, the authorised officer cannot evict the lessee by force but has to file an application before the Chief Metropolitan Magistrate or the District Magistrate under Section 14 of the SARFAESI Act and state in the affidavit accompanying the application, the name and address of the person claiming to be the lessee. When such an application is filed, the Chief Metropolitan Magistrate or the District Magistrate will have to give a notice and give an opportunity of hearing to the person claiming to be the lessee as well as to the secured creditor, consistent with the principles of natural justice, and then take a decision. If the Chief Metropolitan Magistrate or the District Magistrate is satisfied that there is a valid lease created before the mortgage or there is a valid lease created after the mortgage in accordance with the requirements of Section 65-A of the Transfer of Property act and that the lease has not been determined in accordance with the provisions of Section 111 of the Transfer of Property Act, he cannot pass an order for delivering possession of the secured asset to the secured creditor. But in case he comes to the conclusion that there is in fact no valid lease made either before creation of the mortgage or after creation of the mortgage satisfying the requirements of Section 65-A of the Transfer of Property Act or that even though there was a valid lease, the lease stands determined in accordance with Section 111 of the Transfer of Property Act, he can pass an order for delivering possession of the secured asset to the secured creditor.”
The learned counsel for the petitioner submits that, instead of filing a proper petition before the concerned Chief Judicial Magistrate's Court showing the particulars of tenancy, the Bank sought to take law into their hands. It is also stated that, an Advocate Commissioner was got appointed by the respondent Bank, who came to the premises and threatened the petitioner on 21.11.2014, to effect vacant surrender, lest physical possession should be taken over forcefully. Though the petitioner sought to resist, it was only a futile attempt and the petitioner and the members of her family were forcefully evicted with the help of police. Even the personal belongings and other records could not be taken out and the building is now under the lock and key, in custody of the Bank.
6. The averments and allegations raised in the writ petition are denied by the respondent Bank by filing a detailed counter affidavit. It is stated that the writ petition is the outcome of a collusive affair between the petitioner/alleged tenant and the father of the 4th respondent by name Achuthankutty, who stood as a guarantor to the housing loan availed by the 4th respondent. After availing the loan of Rs. 35 lakhs in May 2012 and a further sum of Rs.1,02,000/- by the 4th respondent, through his father Achuthankutty [power of attorney holder], who executed all the relevant documents in this regard, no proper payment was effected and the account came to be classified as 'NPA' on 01.01.2014. Various notices issued and paper publication effected did not yield any positive result in causing repayment. The authorities of the Bank visited the premises on different occasions, when the house and gate were found locked. On moving the concerned Chief Judicial Magistrate's Court by filing a petition under Section 14 of the SARFAESI Act, an Advocate Commissioner came to be appointed as per Ext. R2(a) order dated 01.08.2014, simultaneously directing the Village Officer and Station House Officer to render assistance to take physical possession of the premise.
7. The Advocate Commissioner issued Ext. R2(b) notice to the 4th respondent and his father Achuthankutty and visited the property of 14.08.2014, when the house was opened by brother of the 4th respondent by name Pradeep, who accepted notice on behalf of the 4th respondent and his father Achuthankutty. Thereafter, the Advocate Commissioner and the officers of the Bank visited the house of the guarantor (father of the 4th respondent - Achuthankutty), when his wife alone was available. On 04.09.2014, the date fixed for effecting vacant surrender, the Advocate Commissioner informed that an application was filed by the guarantor Achuthankutty to recall Ext. R2(a) order. The respondent Bank filed a detailed objection and after considering the same, the petition preferred by the guarantor Achuthankutty was dismissed on 20.11.2014. On the next day, the Advocate Commissioner and the concerned officer of the Bank along with Recovery Cell Manager Mr. Rajan went to the spot with a Videographer, when brother of the 4th respondent by name Pradeep and one lady were present in the house. Since brother of the 4th respondent refused to effect vacant surrender, referring to Ext. P3 interim order of injunction (which was only against the forceful eviction by the landlord/4th respondent, in the case wherein the Bank was not at all party), the Advocate Commissioner sought for assistance of Police. A Civil Police Officer and a Woman Police Officer were deputed and on their arrival, physical possession of the building was handed over, which in fact was recorded in the 'mahazar' and 'inventory' prepared by the Advocate Commissioner [produced as Exts. R2 (c) and R2 (d)]. It is also stated that everything was 'videographed' by the respondent Bank in order to avoid unnecessary controversy in taking possession of the collateral security under the SARFAESI Act. It is asserted that nobody was residing in the house as tenant at any point of time and no such case was put up at the time of issuance of notices, including the notice under the relevant Rules. The allegation as to the denial of request made by the petitioner to take out the medicines and dresses from the house, is also stated as an instance of cooked up version, to prejudice the mind of the Court.
8. After hearing both the sides and after going through the judgment rendered by the Apex Court, it is no more 'res integra' as to the course of action that is to be pursued. By virtue of the specific observation in paragraph '28' of the verdict passed by the Apex Court cited supra, if the eviction is resisted by the tenant in occupation, it is open for the Bank to file proper proceedings before the Chief Judicial Magistrate's Court, with an affidavit as to the particulars of tenancy, upon which it will be for the Chief Judicial Magistrate's Court to pass appropriate orders in the manner as specified by the Apex Court. The question to be considered in this case is, whether any relief can be extended to the petitioner with reference to the course ordered to be pursued by the Apex Court. In this context, the factual position as to the tenancy, to the undisputed extent, as averred by the petitioner with reference to the pleadings and materials produced, is to be looked into.
9. According to the petitioner, she is a continuing tenant from November 2012 onwards. But there is no registered lease deed. It is true that, the lease is not compulsorily liable to be registered, if it is for a period less than one year. The necessity to have a registered document, with reference to the relevant provisions of Transfer of Property Act, is relevant in this context. Section 107 of the said Act reads as follows:
“Sec.107. Leases how made - 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.
All other leases of immovable property may be made either by a registered instrument or by oral agreement accompanied by delivery of possession.
Where a lease of immovable property is made by a registered instrument, such instrument or, where there are more instruments than one, each such instrument shall be executed by both the lessor and the lessee:
Provided that the State Government may from time to time, by notification in the Official Gazette, direct that leases of immovable property, other than leases from year to year, or for any term exceeding one year, or reserving a yearly rent, or any class of such leases, may be made by unregistered instrument or by oral agreement without delivery of possession.”
10. Incidentally, a look into the Registration Act, 1908 is also relevant. Section 17 of the said Act deals with documents which are compulsorily liable to be registered, which (to the relevant extent) is in the following terms:
“Sec.17. Documents of which registration is compulsory:- (1) The following documents shall be registered, if the property to which they relate is situate in a district in which, and if they have been executed on or after the date on which, Act No. XVI of 1864, or the Indian Registration Act, 1866 (20 of 1866), or the Indian Registration Act, 1871 (7 of 1871) or the Indian Registration Act, 1877 (3 of 1877), or this Act came to comes into force, namely”:-
(a) instruments of gift of immovable property;
(b) other non-testamentry instruments which purport or operate to create, declare, assign, limit or extinguish, whether in present or in future, any right, title or interest, whether vested or contingent, of the value of one hundred rupees and upwards, to or in immovable property;
(c) non-testamentary instruments which acknowledge the receipt or payment of any consideration on account of creation, declaration, assignment, limitation or extinction of any such right title or interest;
(d) leases of immovable property from year to year, or for any term exceeding one year, or reserving a yearly rent; and xxxxxxxx” (emphasis supplied)
11. The effect of a document which otherwise is compulsorily to be registered/registerable, but not registered, is separately dealt with under Section 49(c) in the following terms:
“Sec.49(c) be received as evidence of any transaction affecting such property or conferring such power, unless it has been registered:
Provided that an unregistered document affecting immovable property and required by this Act or the Transfer of Property Act, 1882 (4 of 1882), to be registered may be received as evidence of a contract in a suit for specific performance under Chapter II of the Specific Relief Act, 1877 (3 of 1877), or as evidence of any collateral transaction not required to be effected by registered instrument.”
12. Admittedly, the alleged lease was only for a period of 11 months and the tenure is already over. Even if the case of tenancy is accepted, the continued occupation could only be on the basis of 'monthly tenancy'. Now coming to the rights of such a tenant, the observation made' by the Apex Court in paragraph '36' of the judgment cited supra is very relevant, which reads as follows:
“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 bonafide 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.”
13. In view of the above circumstance, the petitioner since does not have a case that, she is having a registered document to establish the tenancy, she comes in the 'other category' dealt with by the Supreme Court in paragraph '36'. In the case of such persons, the course pointed out by the Apex Court with reference to any unregistered instrument or oral agreement accompanied by delivery of possession, is that 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.
14. In other words, the benefit which could be extended to tenants who are having unregistered lease deed is, only to an extent of the cooling period or breathing time of 'one year' from the date of the instrument or from the date of delivery of possession. Delivery of possession in the instant case is admittedly from '18.11.2012' and the period of one year is already over; as the lease was only for a period of 11 months. This being the position, no further relief can be reasonably aspired or obtained by the petitioner from the Chief Judicial Magistrate's Court, in view of the specific ruling rendered by the Apex Court; holding that the learned Magistrate has no other option. This Court finds that, there is absolutely no merit or bonafides in the writ petition and the same is dismissed accordingly.
kmd Sd/-
P. R. RAMACHANDRA MENON, (JUDGE)