TMI Blog2021 (8) TMI 1385X X X X Extracts X X X X X X X X Extracts X X X X ..... ND SACHDEV VERSUS STATE OF MAHARASHTRA [ 2011 (2) TMI 1277 - SUPREME COURT ] this Court has held that DRT can not only set aside the action of the secured creditor but even restore the status quo ante. Therefore, an alternative remedy was available to the Appellant to challenge the impugned order Under Section 17 of the SARFAESI Act even before the amendment to Section 17 of the SARFAESI Act - However, given that the instant appeal has been pending consideration before this Court from the year 2016, it is proposed to examine the case on merits without directing the Appellant to avail the alternative remedy. In Harshad Govardhan Sondagar this Court has categorically held that if the tenancy claim is for any term exceeding one year, the tenancy can be made only by a registered instrument. A Three-Judge Bench of this Court in BAJARANG SHYAMSUNDER AGARWAL VERSUS CENTRAL BANK OF INDIA ANOTHER [ 2019 (9) TMI 569 - SUPREME COURT ], after considering almost all decisions of this Court, in relation to the right of a tenant in possession of the secured asset, has held that if a valid tenancy under law is in existence even prior to the creation of the mortgage, such tenant' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs had mortgaged a property bearing Flat No. 501, 5th Floor, Solitaire, Village Kopari, Adi Shankaracharya Road, MHADA Layout, Powai, Andheri (E), Mumbai (for short, the Secured Asset ) in favour of the Bank with an intention to secure the said credit facility. 4. The accounts of the Borrowers were declared as non-performing assets (NPA) on 31.10.2013. On 25.01.2014, the Bank issued a notice Under Section 13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short, SARFAESI Act ) to the Borrowers. It is the case of the Appellant that he is a tenant of the Secured Asset on a monthly rent of Rs. 20,000/- since 12.06.2012 with an increase of 5% every year. He has been paying rent regularly to his landlord since inception of his tenancy. 5. The Appellant filed Exh. 8 application before the Magistrate seeking protection of his possession of the Secured Asset as the Magistrate was ceased with the petition Under Section 14 of SARFAESI Act filed by the Respondent No. 1-Bank. Vide Order dated 30.12.2015, the intervention application of the Appellant was dismissed by the Magistrate holding that there was no registered t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... person including the borrower to approach Debt Recovery Tribunal (DRT). Section 17 has been amended by Act No. 44 of 2016 providing for challenging the measures to recover secured debts (for short, the Amendment ). Under the Amendment, possession can be restored to the borrower or such other aggrieved person. This Amendment has come into force w.e.f. 1st September, 2016. This Court in Harshad Govardhan Sondagar v. International Asset Reconstruction Co. Ltd. and Ors. (2014) 6 SCC 1 has held that right of appeal is available to the tenant claiming under the borrower. In Kanaiyalal Lalchand Sachdev v. State of Maharashtra (2011) 2 SCC 782 this Court has held that DRT can not only set aside the action of the secured creditor but even restore the status quo ante. Therefore, an alternative remedy was available to the Appellant to challenge the impugned order Under Section 17 of the SARFAESI Act even before the amendment to Section 17 of the SARFAESI Act. However, given that the instant appeal has been pending consideration before this Court from the year 2016, we propose to examine the case on merits without directing the Appellant to avail the alternative remedy. 11. In Harshad Gov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to possession of a Secured Asset for a term of more than a year, it has to be supported by the execution of a registered instrument. In the said decision of this Court, it was clarified that in the absence of a registered instrument, if the tenant only relies upon an unregistered instrument or an oral agreement accompanied by delivery of possession, the tenant is not entitled to possession of the secured asset for more than the period prescribed under the provisions of the Transfer of Property Act. It was held thus: 24.1. If a valid tenancy under law is in existence even prior to the creation of the mortgage, the tenant's possession cannot be disturbed by the secured creditor by taking possession of the property. The lease has to be determined in accordance with Section 111 of the TP Act for determination of leases. As the existence of a prior existing lease inevitably affects the risk undertaken by the bank while providing the loan, it is expected of banks/creditors to have conducted a standard due diligence in this regard. Where the bank has proceeded to accept such a property as mortgage, it will be presumed that it has consented to the risk that comes as a consequence of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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