TMI Blog2013 (3) TMI 18X X X X Extracts X X X X X X X X Extracts X X X X ..... ents: Mr. S. Parthasarathy, Senior Counsel, for Mr. S. Thangavel. O R D E R Revision petitioner is the second defendant in the suit. The suit O.S.No.1757 of 2011 was filed by the first respondent/plaintiff on the file of District Munsif Court, Coimbatore, for the relief of permanent injunction, restraining the defendants, their men and agents from in any manner evicting the plaintiff from the property more fully described in the schedule except following due process of law. Pending the said suit, the first respondent also filed an interlocutory application I.A.No.2266 of 2011 for grant of interim injunction. 2. The case of the first respondent before the trial Court was that he was a firm actively associated with Reliance Telecommunication and engaged in the distribution of e-recharging coupons and peripherals of Reliance group of companies; for the purpose of the said business, the firm had taken on lease the suit premises on 27.05.2006 and 27.12.2006; since the process was a continuous one, the lease period was extended on 21.10.2011; while the activities of the firm were going on, the second respondent herein offered the suit property as security for his business wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uch notice would be null and void. Any tenancy created by the mortgager after the mortgage in contravention of Section 65-A would not be binding on the bank/FI, and in any event such tenancy rights shall stand determined once action under Section 13 (4) has been taken by the bank/FI. When the petitioner is claiming a tenancy prior to the creation of mortgage and such tenancy is disputed by the bank the remedy of the petitioner is to approach DRT by way of an application under Section 17 of the SARFAESI Act to establish his rights." 6. Conversely, learned Senior Counsel for the respondents would argue that it is only the civil court that can deal with the matter under Tamil Nadu Buildings (Lease and Rent Control) Act, but not DRT under SARFAESI Act. He would cite a Division Bench authority of this Court in the case of Indian Bank v. Nippon Enterprises South, 2011 (2) CTC 474, wherein it was held as follows : "36. Under Section 13 (4) of the SARFAESI Act, the secured creditor can take possession of the secured assets of the borrower. There can be no difficulty in taking such possession of the secured assets either under Section 13 (4) or under Section 14 of the SARFAESI Act, if t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had created a mortgage over the suit properties and other properties in favour of the fourth respondent-bank for the loans and facilities availed by him for his companies and for housing term loan availed by him and his wife. Since the loans were not repaid by the second respondent, the fourth respondent, after following due procedure, has taken possession of the suit properties. Thereafter, the suit properties were put to auction, wherein the revision petitioner was declared as the successful bidder and, pursuant thereto, confirmation of sale was also given to the revision petitioner. It also transpires, as could be seen from the records, that the second respondent, had leased out the said properties to the first respondent, suppressing the fact of the said properties being mortgaged to fourth respondent. 8. Under the circumstances, the legal provisions that are relevant for consideration are: (1) Sections 13, 17 and 34 of The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (in short, "the Act"), which provisions read as under: Section 13: "13. Enforcement of security interest. (1) Notwithstanding anything contain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alising the secured asset: Provided that the right to transfer by way of lease, assignment or sale shall be exercised only where the substantial part of the business of the borrower is held as security for the debt: Provided further that where the management of whole of the business or part of the business is severable, the secured creditor shall take over the management of such business of the borrower which is relatable to the security for the debt; (c) appoint any person (hereafter referred to as the manager), to manage the secured assets the possession of which has been taken over by the secured creditor; (d) require at any time by notice in writing, any person who has acquired any of the secured assets from the borrower and from whom any money is due or may become due to the borrower, to pay the secured creditor, so much of the money as is sufficient to pay the secured debt." Section 17: "17. Right to appeal. (1) Any person (including borrower) aggrieved by any of the measures referred to in sub-section (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 p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion made under sub-section (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 sub-section (1). (6) If the application is not disposed of by the Debts Recovery Tribunal within the period of four months as specified in sub-section (5), any part to the application may make an application, in such form as may be prescribed, to the Appellate Tribunal for directing the Debts Recovery Tribunal for expeditious disposal of the application pending before the Debts Recovery Tribunal and the Appellate Tribunal may, on such application, make an order for expeditious disposal of the pending application by the Debts Recovery Tribunal. (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 provisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s per the said Section, any person, including borrower, aggrieved by any of the measures referred to in sub-section (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 forty-five days from the date on which such measure had been taken. Thereafter, the Debts Recovery Tribunal shall consider whether any of the measures referred to in sub-section (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. 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 sub-section (4) of Section 13, taken by the secured creditor are 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sdiction to entertain any suit with regard to the matters of present nature, this Court is at a loss to understand how the first respondent, under the guise of tenancy, has approached the trial Court and got the interim injunction in his favour, despite there being a stiff opposition to that effect. 13. As held by the Division Bench of this Court in Lakshmi Products Limited's case, cited above and relied upon by the learned Senior Counsel for the petitioner, by virtue of Section 17 (4) read with Section 35 of the SARFAESI Act, if in a given case the measures undertaken by the secured creditor under Section 13 (4) come in conflict with the provisions of any State law, then notwithstanding to such conflict, the provisions of Section 13 (4) shall override the local law, which, in this case is, Tamil Nadu Buildings (Lease Rent Control) Act. Section 13 (13) of the SARFAESI Act operates as an attachment/injunction restraining the borrower from disposing of the secured assets and, therefore, any tenancy created after such notice would be null and void. Any tenancy created by the mortgager after the mortgage would not be binding on the bank, and, in any event, such tenancy rights shall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le, laid down by the Division Bench had not been placed before the Division Bench in Indian Bank's case, wherein, the Division Bench, while considering the provisions of the SARFAESI Act particularly under Section 13 (4), observed that the secured creditor can take possession of the secured assets of the borrower. There can be no difficulty in taking such possession of the secured assets either under Section 13 (4) or under Section 14 of the SARFAESI Act, if the secured asset is in the possession of the borrower or guarantor, as the case may be. SARFAESI Act entitles the creditor to take possession of the secured assets either by issuing possession Notice under Section 13 (4) or by making Application to the Chief Metropolitan Magistrate/District Magistrate to take physical possession under Section 14. Though the function of Chief Metropolitan Magistrate/District Magistrate is only ministerial, the provision of Section 14 confers drastic power to take possession even by use of force. The difficulty arises only in cases where the possession of the property is in the hands of the Tenant (lessee). The SARFAESI Act does not contain any specific provision enabling the secured creditor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hereas the purpose of the State legislation i.e., the TN Rent Control Act is to protect the possession of the tenants. Thus, they are traceable to two different entries in their respective fields and there is neither any conflict nor repugnancy or overlapping. In such view of the matter, there is no difficulty in holding that the Bank cannot take physical possession from the tenant protected under Tamil Nadu Rent Control Act, by invoking the provisions of Section 13 (4) and 14 of the SARFAESI Act, in the event the tenant is in bona fide occupation. 16. It is true, when a tenant is legally entitled for protection, his right has to be protected under the Rent Control Act, but the decision rendered by the Division Bench in Sree Lakshmi Products' case would reveal a situation where a tenancy is created after the mortgage and for the reasons best known, it would defeat the creditor's claims for recovery of possession in case of default or non-performing asset's liabilities. 17. In the present case, it is clear that the tenancy is created after the mortgage of the property in question to the secured creditor, namely, bank. When that is the position, the ratio laid down by the Divisio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ced by him is not a registered one and, therefore, no much credence can be given thereto. 19. In the light of the above discussion, as there was a clear bar of jurisdiction for the Civil Court under Section 34 of the SARFAESI Act, the Court below ought not to have entertained the suit. Moreso, when there was no jurisdiction at all to entertain the suit itself, it was not proper for the Court below to invoke Order 39 Rules 1 and 2 of CPC to grant interim injunction. Therefore, the Court below committed a grave error and injustice by allowing the interlocutory application. On that very score, the order of the trial Court suffers from legal infirmity. Correctly speaking, it was not the duty of the Court below to sift the chaff from the grain, when it was absolutely the duty of DRT concerned under Section 17, as held by me in the foregoing paragraphs. 20. Considering the totality of facts and circumstances of the case and also the propositions laid down by the two Division Benches of this Court one in Sree Lakshmi Products' case and the other in Indian Bank's case, I am of the staunch opinion that there is a clear bar of jurisdiction for the Civil Court under Section 34 of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X
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