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Dr. K. Venkatesh Versus Indian Overseas Bank, Hyderabad

2016 (1) TMI 1043 - ANDHRA PRADESH HIGH COURT

Eviction of tenant from mortgaged property - validity of lease - Since he defaulted in discharging the debt, the Bank resorted to the measures under Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 - The common case of the petitioners is that the Bank has no right to evict them as it deliberately suppressed the fact of their possession as tenants. Claiming that they have no other effective alternative remedy, as no right is provided for the act .....

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tal agreement, dated 03-09-2014, are not the petitioners herein. The petitioner Nos.2 and 4 in their individual capacity joined the other petitioners though, they were shown representing Medexpress (Clinics & Diagnostics) and Movie Rainbow Web Services India (Private) Limited in the respective rental agreements.

We are of the considered view that since the rental agreements were unregistered, they cannot be construed as valid, and, therefore, no obligation was cast on the authorized .....

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J. - The petitioners herein filed this Writ Petition under Article 226 of the Constitution of India seeking a Writ of Mandamus declaring the action of respondent No.1 Indian Overseas Bank, Adarshnagar Branch, Hyderabad, in proceeding to evict them under the orders passed in Criminal M.P. Nos.1072, 1073 and 1074 of 2015 by the learned Chief Metropolitan Magistrate, Nampally, Hyderabad, as illegal and arbitrary, and consequently not to evict them from their respective portions in Alekhyas Mahesh L .....

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lease for his real estate office on a monthly rent of ₹ 22,000/- about six months prior to filing the instant writ petition. Petitioner No.4 took his portion on lease to run e-commerce business in the name and style of Movierainbow.com on a monthly rent of ₹ 32,000/- per month for the last eight months. Petitioner No.5 being a limited company doing infrastructure business, took a portion on lease on a monthly rent of ₹ 45,000/-. According to the petitioners, owner of the subje .....

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res, filed Criminal M.P Nos.1072, 1073 and 1074 of 2015 before the Chief Metropolitan Magistrate, Hyderabad (CMM) under Section 14 of the Act seeking physical possession of the subject building and obtained orders. Pursuant thereto, the learned Magistrate appointed Advocate- Commissioners by the order, dated 08-05-2015, and warrants were issued accordingly permitting them to take assistance of the police and directing the Advocate-Commissioners to issue a notice by giving fifteen (15) days time, .....

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of the Constitution of India. 5. The Bank resisted the request of the petitioners stating that the petitioners have no locus standi to question the instant action as they are third parties to the proceedings. According to the Bank, the remedy for the petitioners is to file an appeal under Section 17 of the Act before the Debts Recovery Tribunal (DRT). It is also stated that there is no illegality or infirmity in the order under challenge passed by the learned CMM as the interest of the petitione .....

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ding. Petitioner No.5 also borrowed working capital and other commercial loans from it and extended mortgage of the scheduled property for the said loan. Thus, the principal borrower M. Venkatesh, who borrowed amounts towards housing loan and TCI Constructions, which is petitioner No.5, which borrowed amount towards commercial loans, owe a total amount of ₹ 12,41,20,269/- to it and the said account has been classified as Non-Performance Account (NPA) and the Bank initiated proceedings unde .....

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earned CMM before appointing Advocate-Commissioners in the proceedings under Section 14 of the Act. Thus, stating that right of appeal also lies against the action initiated under Section 14 of the Act, sought to dismiss the writ petition. 6. Heard Sri Raja Reddy Koneti, learned counsel for the petitioners, and Sri Subrahmanyam Kurella, learned counsel for the respondents - Bank, and perused the material on record. 7. Learned counsel for the petitioners would submit that no opportunity of being .....

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borrower, who is Managing Director of petitioner No.5, and the very fact that the petitioner No.5 is described as M/s. TCI Constructions Limited, represented by its Director, Smt. M. Anuradha, who is no other than the wife of the principal borrower - M. Venkatesh, would prove that the instant writ petition is an out come of collusion between them. It is his submission that the petitioners have no locus standi as they are third parties to the proceedings. Further, the learned counsel would submi .....

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ed as valid and, therefore, the petitioners cannot maintain the writ petition based on such lease deeds. 9. The short point that arises for consideration is whether the impugned order passed in Criminal M.P. Nos.1072, 1073 and 1074 of 2015 are liable to be set aside? POINT: 10. In the decision relied on by the learned counsel in Aumento Pallinos (P.) Ltd.'s case (supra) this Court while deciding the question whether the petitioner therein was a tenant in respect of a portion of the petition .....

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er was a tenant and by placing reliance on the decision of the Honble Supreme Court in Harshad Govardhan Sondagar v. International Assets Reconstruction Co. Ltd. [2014] 125 SCL 378, rejected the request. 11. The learned counsel has also placed reliance on the decision in Harshad Govardhan Sondagar's case (supra) contending that the lease deeds since were unregistered, cannot be construed as valid leases in favour of the petitioners, and, therefore, they have no right to challenge the impugne .....

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orrower, for a period of eleven (11) months. Third rental agreement said to have executed on 14-03-2014 by M. Venkatesh in favour of M/s. ITCS International Private Limited for a period of two (2) years. Fourth rental agreement said to have executed on 06-02-2013 by the principal borrower in favour of Medexpress (Clinics & Diagnostics), represented by N.Y. Prashanth Chandra, petitioner No.2, with month to month tenancy for a period of eleven (11) months. Last rental agreement said to have ex .....

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t the petitioner No.4 has taken the premises of a portion about six (6) months prior to filing of the writ petition, no document is forthcoming. But, the said rental agreement is not filed into Court to prove the said fact. In Harshad Govardhan Sondager's case (supra), the Honble Supreme Court, in the context of lessee resisting the attempt of the secured creditor to take possession of the secured property, observed that the authorized officer cannot evict the lessee perforce, but has to fil .....

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satisfied that there is a valid lease created before the mortgage or after the mortgage in accordance with the requirements of Section 65-A of the Transfer of Property Act (for short TP Act) entered into prior to receipt of notice under Section 13(2) of the Act by the borrower and that the lease has not been determined in accordance with the provisions of Section 111 of the TP Act, no order can be passed for delivering possession of the secured asset to the secured creditor. The Honble Supreme .....

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rvations of the Honble Supreme Court contained in paragraph Nos.27, 28 and 29, thus: "27. We may now deal with the remedies available to the lessee where he is threatened to be dispossessed by any action taken by the secured creditor under Section 13 of the SARFAESI Act. Sub-rules (1) and (2) of Rule 8 of the Security Interest (Enforcement) Rules, 2002 provide for a possession notice where the secured asset is an immovable property. Sub-rules (1), (2) and (3) of Rule 8 of the Security Inter .....

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the property. (2) The possession notice as referred to in Sub-rule (1) shall also be published, as soon as possible but in any case not later than seven days from the date of taking possession, in two leading newspaper one in vernacular language having sufficient circulation in that locality, by the authorised officer. (3) In the event of possession of immovable property is actually taken by the authorised officer, such property shall be kept in his own custody or in the custody of any person au .....

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date of taking possession, in two leading newspapers, one in vernacular language having sufficient circulation in that locality, by the authorised officer. At this 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 posse .....

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er 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 .....

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itan Magistrate or 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 65A 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 conclus .....

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