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TMI Blog2015 (10) TMI 2445X X X X Extracts X X X X X X X X Extracts X X X X ..... f Metropolitan Magistrate, Esplanade, Mumbai has, on an application made by the Cosmos Cooperative Bank Limited, directed as under: "ORDER Application is allowed. Judicial Clerk, who is incharge of Assistant Registrar of Bandra Center of Courts, Mumbai is appointed as the Court Commissioner to take possession of the secured assets viz 1)village Mohili, Tah. Kurla, and situated within registration district of Mumbai and subdistrict of Mumbai suburban district bearing S. No. 63/1(P); CTS No. 569 admeasuring about 2299 sq. yards and the said property with structure standing thereon and being constructed and 2) shop No. 1 admeasuring about 39.50 sq. mtrs. Situated on the ground floor of the building known as "Abhishek" standing on piece of land bearing plot No. S. No. 254 of village Vile Parle, TPS II Vile Parle, CTS No. 1257/2 to 6 of Vile Parle within the registration district and subdistrict of Mumbai city and Mumbai suburban and within the local limits of Greater Mumbai Municipal Corporation by taking such steps and using such force including breaking open the lock thereof or taking assistance of police, if required, at the expenses of the applicant and deliver possession the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the second Respondent was admitted as a partner of Petitioner No. 1 firm. Thereafter, reliance is placed on para 3.4 of the Petition and the subparagraphs thereof to submit that the second Respondent has been issuing the rent receipts and there are also registrations and licences obtained under the Bombay Sales Tax Act, 1959 and the Central Sales Tax Act, 1956. The Petitioners have also been making payment of all utility charges in relation to the said property, including the electricity charges payable to Reliance Infrastructure Limited. Copies of all these documents and the registration certificate under the Bombay Shops and Establishment Act, 1948 have been annexed to this Writ Petition. It is claimed that Petitioner No. 1 has been carrying on business of trading in plywood and other wood products since the month of September, 2000. The said premises are the only place where the Petitioners store their stock of plywood and other wood products. They do not have any other premises and for use as godown or warehouse of adequate size. The Petitioners also place heavy reliance on the fact that Respondent No. 4 Cosmos Bank is the banker of Petitioner No. 1 as well. They have availed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bai, by which temporary injunction has been granted to the aforesaid effect. 8) The Petitioners, therefore, proceeded on the footing that they have taken the requisite steps to protect their lawful possession. However, the officers of Respondent No. 4 Bank attended the premises on or about 8th September, 2015 with a view to take possession thereof. It is for the first time that the Petitioners were informed that the said premises were mortgaged in favour of Respondent No. 4 and that they having failed to discharge the debt, the mortgage security can be proceeded against under the SERFAESI Act. That is how the Bank has proceeded and after taking the requisite measures in terms of section 13 has sought assistance of the learned Chief Metropolitan Magistrate so as to take peaceful possession of the premises. 9) It is then the Petitioners were made aware of a case, which was filed under section 14 of the SARFAESI Act in the Court of Chief Metropolitan Magistrate, Esplanade, Mumbai. After obtaining the requisite copies the Petitioners learnt about the impugned order dated 18th June, 2015. 10) It is in these circumstances that the impugned order has been challenged in this Petition by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ning thereby if there is a tenancy created and pursuant to which the lessee is put in possession it would denote this tenancy to be of month to month. That requires no registration. That tenancy has not been determined by the landlord. In the circumstances, the Bank would not be in a position to take possession from the tenant and when this tenancy is protected by the then Bombay Rent, Hotel and Lodging House Rates Control Act, 1947 (for short "the Bombay Rent Act") and the successor enactment, namely, the Maharashtra Rent Control Act, 1999. Once the law is construed to mean that a Bank can override such lawful tenancy, then, that would mean the protection granted by another State legislation for the benefit of tenants would be rendered nugatory. Such is never the intent of the legal provisions and which are relied upon by the Bank. Thus, Mr. Samdani would submit that the settled law is that the lease of more than one year under the indenture, which is unregistered, is void. However, equally well settled position in law and that is if a lessee is put in possession and is paying rent to the lessor, he is a tenant from month to month. Mr. Samdani would further submit that as far as t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt dated 22nd June, 1998 by Respondent No.2 and states that the signatories thereto are Mr. Nensi L. Shah and branch manager of Respondent No. 4. It is this Nensi Shah who is the signatory to the tenancy agreement dated 1st September, 2000. Thus, the Petitioners, who were one time associates of Respondent Nos. 1 and 2, namely the borrowers and guarantors, have been put up by them in order to defeat the rights of the Bank and particularly the order and protection under section 14 of the SARFAESI Act. The reliance placed on the tenancy agreement is thus of no avail. That agreement is executed on 1st September, 2000. That is an unregistered agreement. Mr. Pandey would submit that after the promulgation of the Maharashtra Rent Control Act from 31st March, 2000, by virtue of section 55 thereof, an agreement for tenancy is to be registered and compulsorily. In the absence of a registered agreement, and a unregistered agreement subsequent to the mortgage and which cannot be said to be to the knowledge of the Respondent No. 4 Bank, the action and proceedings under the SARFAESI Act cannot be frustrated. That would mean a parliamentary statute enacted for expeditious recovery of loans, which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eme Court in decisions after decisions has emphasised that an interpretation be placed on its provisions which would subserve the above purpose and object. That is how section 13 appearing in Chapter III, titled as "Enforcement of Security Interest" has been interpreted. Notwithstanding anything contained in section 69 or section 69A of the Transfer of Property Act, 1882, any security interest created in favour of any secured creditor may be enforced, without the intervention of the Court or Tribunal, by such creditor in accordance with the provisions of this Act. By subsection (4) it is provided that in case the borrower fails to discharge his liability in full within the period specified in subsection (2), the secured creditor may take recourse to one or more of the measures to recover his secured debts. One of the measures to recover the debt is to take possession of the secured assets of the borrower including the right to transfer by way of lease, assignment or sale, for realising the secured asset. By section 14, the Bank is enabled to approach the Chief Metropolitan Magistrate or the District Magistrate within whose jurisdiction any such secured asset is situated and request ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he provisions of subsection (2) of section 13, demanding payment of the defaulted financial assistance has been served on the borrower; (vii) the objection or representation in reply to the notice received from the borrower has been considered by the secured creditor and reasons for nonacceptance of such objection or representation had been communicated to the borrower; (viii) the borrower has not made any repayment of the financial assistance in spite of the above notice and the Authorised Officer is, therefore, entitled to take possession of the secured assets under the provisions of subsection (4) of section 13 read with section 14 of the principal Act; (ix) that the provisions of this Act and the rules made thereunder had been complied with: provided further that on receipt of the affidavit from the Authorised Officer, the District Magistrate or the Chief Metropolitan Magistrate, as the case may be, shall after satisfying the contents of the affidavit pass suitable orders for the purpose of taking possession of the secured assets: provided also that the requirement of filing affidavit stated in the first proviso shall not apply to proceeding pending before any Di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he following paragraphs in the judgment of the Hon'ble Supreme Court of India in the case of Harshad G. Sandagar (supra): "22. We may now consider the nature of the right of the lessee and as to when the lease under the Transfer of Property Act gets determined. Sections 105 and 111 of the Transfer of Property Act, which are relevant in this regard, are quoted hereinbelow: "105. Lease defined - A lease of immovable property is transfer of a right to enjoy such property, made for a certain time, express or implied, or in perpetuity, in consideration of a price paid or promised, or of money, a share of crops, service or any other thing of value, to be rendered periodically or on specified occasions to the transferor by the transferee, who accepts the transfer on such terms. Lessor, lessee, premium and rent defined. - The transferor is called the lessor, the transferee is called the lessee, the price is called the premium, and the money, share, service or other thing to be so rendered is called the rent. 111. Determination of lease. - A lease of immovable property, determines - (a) by efflux of the time limited thereby; (b) where such time is limited conditionally ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 14 of the SARFAESI Act make it clear that where the possession of any secured assets is required to be taken by the secured creditor or if any of the secured assets is required to be sold or transferred by the secured creditor "under the provisions of the Act", the secured creditor may, for the purpose of taking possession or control of any such secured asset, request, in writing, the Chief Metropolitan Magistrate or the District Magistrate within whose jurisdiction any such secured asset or other documents relating thereto may be situated or found, to take possession thereof. Thus, only if possession of the secured asset is required to be taken under the provisions of the SARFAESI Act, the secured creditor can move the Chief Metropolitan Magistrate or the District Magistrate for assistance to take possession of the secured asset. We have already held that Section 13 of the SARFAESI Act does not provide that the lease in respect of a secured asset will get determined when the secured creditor decides to take the measures in the said section. Hence, possession of the secured asset from a lessee in lawful possession under a valid lease is not required to be taken under the pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tan Magistrate or the District Magistrate may pass an order for delivery of possession of secured asset in favour of the secured creditor to enable the secured creditor to sell and transfer the same under the provisions of the SARFAESI act. Subsection (6) of Section 13 of the SARFAESI Act provides that any transfer of secured asset after taking possession of secured asset by the secured creditor shall vest in the transferee all rights in, or in relation to, the secured asset transferred as if the transfer had been made by the owner of such secured asset. In other words, the transferee of a secured asset will not acquire any right in a secured asset under subsection (6) of Section 13 of the SARFAESI Act, unless it has been effected after the secured creditor has taken over possession of the secured asset. Thus, for the purpose of transferring the secured asset and for realizing the secured debt, the secured creditor will require the assistance of the Chief Metropolitan Magistrate or the District Magistrate for taking possession of a secured asset from the lessee where the lease stands determined by any of the modes mentioned in Section 111 of the Transfer of Property Act. 27. We ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rsigned has taken possession of the property described hereinbelow in exercise of powers conferred on him/her under Section 13(4) of the said Act read with Rule 9 of the said Rules on this .......... Day of .......... Of the year ......... The borrower in particular and the public in general is hereby cautioned not to deal with the property and any dealings with the property will be subject to the charge of the .......... (name of the institution) for an amount Rs. .......... And interest thereon. _______________________________________________________ Description of the immovable property _______________________________________________________ All that part and parcel of the property consisting of Flat No. ..... /Plot No. ..... in Survey No. ..... /City or Town Survey No. ...../ Khasra No. ..... within the registration subdistrict ..... and District ..... Bounded; On the north by On the south by On the east by On the west by Sd/Authorised Officer (Name of the institution) Date: Place: ___________________________________________________" 29. Subsection (3) of Section 14 of the SARFAESI Act provides that no act of the Chief Metropolitan Magi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shtra 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 to 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 authorized 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. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding to Mr. Samdani, concluded that the said Courts and set up under the Maharashtra Rent Control Act cannot grant the protection by taking cognizance of the dispute between the secured creditor and the tenant under landlord who is a borrower of the secured creditor. The second limb of section 34 restraining it from granting an injunction would come into play. 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 under section 14 thereof, the Court or the authority mentioned in section 33 of the Maharashtra Rent Control Act cannot grant the injunction to prevent such action. Mr. Samdani, therefore, relied upon heavily on paras 36 and 37.1 and 37.2 of this judgment. 23) We are unable to agree with Mr. Samdani and for more than one reason. True it is, that these conclusions of the Hon'ble Supreme Court would enable parties like the Petitioners to approach this Court to challenge the proceedings and the order under section 14 of the SARFAESI Act but that is in exceptional circumstances. This Court cannot as a matter of course entertain a Writ Petition under Articles 226 and 227 of the Constitut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d instrument that lease cannot be said to be affecting any of the measures under the SARFAESI Act. Meaning thereby, the Chief Metropolitan Magistrate or the District Magistrate, as the case may be, are not prevented from proceeding to pass orders on the application and rendering the requisite assistance merely because such persons claim that they are in possession of the secured assets. 25) In the present case, undisputedly, there is a statement of fact in the Petition itself and that the agreement dated 1st September, 2000, copy of which is at Annexure 'B' contemplates rate of Rs. 60,000/payable annually and which was increased subsequently. Admittedly, this tenancy agreement is unregistered. It is therefore that Mr. Samdani would rely upon the second limb of section 107 and to urge that so long as the Petitioner is put in possession, then, the lease is created and which is month to month. First of all section 107 of the Transfer of Property Act in clearest terms states 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 ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which may extend to three months or with fine not exceeding rupees five thousand or with both." 28) In such circumstances, Mr. Samdani would rely upon the fact that even if there is no registration, still, for approaching the Courts and Tribunals under the Rent Control Act, that is not an impediment. He relies upon subsection (2) of section 55 as reproduced above. We are not concerned with a case of a statute governing the landlord tenant relationship. No provision thereof falls for our interpretation. We are concerned with the situation where no registered agreement of tenancy being placed on record, could the Chief Metropolitan Magistrate be attributed with the knowledge of any valid and lawful tenancy in favour of the Petitioners and equally the Bank canbe said to be obliged to make a declaration in that behalf and not making such a declaration is fatal. We have found from the object and purpose of the SARFAESI Act and the interpretation which is required to be placed on section 14 thereof, that the omission, if any, in the given facts and circumstances was not fatal. Apart therefrom, the claim of tenancy in this case is prima facie doubtful. The parties to the written agreeme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent landlord before the Hon'ble Supreme Court, the Single Judge of the High Court, Kerala set aside the judgment and remanded the matter back to the Trial Court. It in that context that the Appellant approached the Hon'ble Supreme Court and urged that in spite of there being no registered instrument, there could be a lease and covered by the rent control legislation. It is in this context that the observations from paras 6 onwards as made and heavily relied upon by Mr.Samdani. We do not think that reliance placed on this decision and the further decisions of the Hon'ble Supreme Court would advance the case of the Petitioners any further. If a claim of contractual tenancy and statutory tenancy, which has been dealt with in the other judgments of the Hon'ble Supreme Court. Those are on the footing that the provisions of the rent control legislation will enable the tenant holding over to assert and protect his claim. Even if the contractual tenancy has come to an end, the statutory protection can be availed of. We are not holding that the action of the Bank in the present case determines the tenancy, if any. It is while dealing with an argument of suppression of a relevant and materia ..... X X X X Extracts X X X X X X X X Extracts X X X X
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