HC Karnataka (10.03.2022) in Mohammed Maqmoor Ateeq Vs. HDB Financial Services Ltd.[Writ Petition No. 5005/2022 (Gm-Res)] declined to examine as to whether the petitioner is in lawful possession under a valid lease and whether such valid lease is made prior to the creation of mortgage by the borrower in favour of the respondent-Financial Institution or whether the petitioner is a protected tenant, since the same could be examined by the Tribunal under Section 17(4A) of the 2002 Act, which requires placing of evidence to decide the said question.
That ordinarily relief under Articles 226 and 227 of the Constitution of India is not available, if an efficacious alternative remedy is available to any aggrieved person.
Excerpts of the order;
The petitioner, claiming to be a lessee of 1st floor of the property bearing No.145, Prathamesh Apartment, 3rd Cross, R.K. Garden, RMV 2nd Stage, New BEL Road, Devasandra, Bengaluru – 560 054, which is mortgaged to the first respondent-HDB Financial Services Limited (for short ‘the Financial Institution’) is before this Court, questioning the correctness of the order dated 27.05.2020 passed under Section 14 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short “the 2002 Act”) and also the mahazar dated 24.02.2022.
# 2. Heard Smt Sona Vakkund, learned counsel for the petitioner and Sri V.B.Ravishankar, learned counsel for caveator/respondent No.1. Perused the writ petition papers.
# 3. Learned counsel for the petitioner submits that petitioner is a lessee of 1st Floor consisting of 3 Bed Rooms in the property bearing No.145, Prathamesh Apartment, 3rd Cross, R.K. Garden, RMV 2nd Stage, New BEL Road, Devasandra, Bengaluru – 560 054, in pursuance of the Lease Agreement dated 03.02.2017. Initially the period of lease was for a period of 36 months and thereafter, the same was extended by another 36 months under lease agreement dated 07.02.2020. It is submitted that respondents 2 to 5 had borrowed loan from the 1st respondent-Financial Institution. As the respondents 2 to 5 failed to honour their commitment in repaying the loan taken by them, the 1st respondent initiated recovery action under the provisions of 2002 Act. The 1st respondent approached the VII Additional Chief Metropolitan Magistrate at Bangalore (for short ‘the ACMM’) under Section 14 of the 2002 Act for possession of the mortgaged property. In pursuance to the impugned order passed by the ACMM, the 1st respondent-Financial Institution on 24.02.2022 barged into the house of the petitioner with police force and forcibly the petitioner and his family members were pulled out of the house, without even allowing to take the belongings of the petitioner. Subsequently on enquiry, the petitioner came to know that since the respondents 2 to 5 failed to pay the loan amount, as the property was mortgaged as security to the loan, the 1st respondent has taken action to take possession of the mortgaged property. Challenging the impugned order dated 27.05.2020 passed under Section 14 of the 2002 Act as well as the mahazar dated 24.02.2022, taking possession of portion of the property in which the petitioner was lessee, the petitioner is before this Court in this writ petition.
# 4. Heard Smt. Sona Vakkund, learned counsel for the petitioner and Sri V.B. Ravi Shankar, learned counsel for the 1st respondent. Perused the writ petition papers.
# 5. Smt. Sona Vakkund, learned counsel submits that petitioner is a lessee under unregistered lease from 03.02.2017 which is continued subsequently by lease agreement dated 07.02.2020. The petitioner was not a party to any of the proceedings and without giving an opportunity to the petitioner and without following due process of law, the petitioner is dispossessed from the 1st floor of the premises in question. Learned counsel submits that at least the petitioner ought to have been made a party to the proceedings initiated under Section 14 of the 2002 Act. It is her submission that Section 14 of the Act requires filing of an affidavit by the secured creditor with regard to the nature of the property and as to whether there are tenants in the property mortgaged. Without disclosing the occupation of the property by the tenants the 1st respondent-Financial Institution approached the ACMM Court under Section 14 of the Act.
# 6. Learned counsel would further submit that petitioner being a lessee under the lease agreement dated 03.02.2017 as well 07.02.2020, the petitioner ought to have been evicted by following due process of law. The 1st respondent could not have taken forcible possession of the premises in which the petitioner was residing. The 1st respondent- Financial Institution had not even taken inventory, while taking possession of the property from the petitioner. By drawing attention of this Court to the Mahazar under which possession of the property is taken, learned counsel submits that owner of the property, who was residing in the 3rd floor of the Apartment has not been evicted and without evicting the landlord, it is unreasonable and arbitrary to evict only the petitioner, who was in occupation of 1st floor. Thus she submits that action of the 1st respondent is wholly unreasonable. Learned counsel in support of her contention relies on the decision of the Hon’ble Apex Court in Harshad Govardhan Sondagar Vs. International Assets Reconstruction Company Limited & Others reported in (2014) 6 SCC 1 inviting attention of this Court to paragraph 25 of the judgment to contend that the petitioner was in lawful possession under a valid lease. Hence without following the due process of law, petitioner could not have been evicted. Further learned counsel also relies upon the decision in Vishal N. Kalsaria Vs. Bank of India & Ors. reported in (2016) 3 SCC 762 to say that the petitioner is a protected tenant and could be evicted only by following the due process of law.
# 7. Per contra, Sri V.B. Ravi Shankar, learned counsel for the 1st respondent submits that petitioner is not a lawful tenant or lessee and the petitioner is not in lawful possession of the premises. He submits that the property was mortgaged in favour of the 1st respondent-Financial Institution on 17.03.2015 much prior to the alleged lease dated 07.02.2017 in favour of the petitioner. Further he submits that the lease is not a registered lease and there is no document with regard to lawful possession or to establish valid lease in favour of the petitioner. It is his submission that in the decisions of Harshad Govardhan Sondagar as well as Vishal N. Kalsaria cited supra, the lessee was in lawful possession under a valid lease. Further learned counsel relied upon the decision of the Hon’ble Apex Court in Criminal Appeal No.1371/2019 disposed of on 11.09.2019 in Bajarang Shyamsunder Agarwal Vs. Central Bank of India & Anr. to contend that the Three Judges Bench of the Hon’ble Supreme Court has held that tenant claiming entitlement to possession of a secured asset shall be supported by a registered lease instrument or if the tenant relies on an un-registered instrument or oral agreement, the tenant is not entitled to possession more than the period under Section 107 of the Transfer of Property Act. Further he submits that only where a valid tenancy is created prior to the creation of mortgage to the Bank, only such tenancy is recognized. It is his submission that petitioner is not a tenant prior to the mortgage of the property to the 1st respondent-Financial Institution and further submits that creation of tenancy in favour of the petitioner is also not intimated to the Bank.
# 8. Learned counsel would next contend that the writ petition is not maintainable since the petitioner is provided with alternate remedy to approach the Debt Recovery Tribunal under Section 17 of the 2002 Act. Referring to Section 17(4A) of the 2002 Act, the learned counsel would submit that the Debt Recovery Tribunal is empowered to pass appropriate order, if the tenancy right or lease hold rights are established. Thus he prays for dismissal of the writ petition.
# 9. The petitioner claims that he is a lessee/tenant in respect of the 1st floor of the property in question, which is admittedly mortgaged on 17.03.2015 to the 1st respondent-Financial Institution for the financial assistance obtained by respondents 2 to 5. It is an admitted fact that when respondents 2 to 5 failed to adhere to their commitment in repaying the loan amount, the 1st respondent initiated action under the provisions of the 2002 Act to recover the amount due from respondents 2 to 5. On initiation of proceedings under Section 13 of the Act, the 1st respondent filed a petition before the ACMM under Section 14 of the 2002 Act. Under the impugned order petition filed under Section 14 of the Act is allowed. The 1st petitioner was permitted to take possession of the mortgaged property with the help of the jurisdictional police. Pursuant to the order dated 27.05.2020, after more than 1 ½ years the 1st respondent-Bank on 24.02.2022 took possession of a portion of the mortgaged property. Though the impugned order is dated 27.05.2020, the date of taking possession of the property is on 24.02.2022 and the petitioner is before this Court by filing the petition on 03.03.2022. The sequence of dates mentioned above, creates a doubt in the mind of the Court with regard to the bonafides of the petitioner. As contended by the learned counsel for the 1st respondent-Financial Institution the petitioner is provided with an alternate remedy of approaching the Debt Recovery Tribunal by filing an application under Section 17 of the 2002 Act. If the petitioner establishes valid lease and lawful possession as observed by the Hon’ble Apex Court in the decision of Harshad Govardhan Sondagar and Vishal N. Kalsaria supra, the Tribunal is competent to pass appropriate order under sub-Section (4A) (ii) of Section 17 of the 2002 Act.
# 10. The Hon’ble Apex Court in a recent decision in Civil Appeal Nos.257-259/2022 decided on 12.01.2022 Phoenix ARC Private Limited Vs. Vishwa Bharathi Vidya Mandir & Ors. considering Section 17 of the 2002 Act and earlier decisions has held that ordinarily relief under Articles 226 and 227 of the Constitution of India is not available, if an efficacious alternative remedy is available to any aggrieved person. The relevant portion at paragraphs 7.4, 7.5 and 7.6 reads as follows :-
“7.4 In the case of City and Industrial Development Corpn. Vs. Dosu Aardeshir Bhiwandiwala, (2009) 1 SCC 168, it was observed by this Court in paragraph 30 that the Court while exercising its jurisdiction under Article 226 is duty bound to consider whether ……………(c) the petitioner has any alternative or effective remedy for the resolution of the dispute.
7.5 In the case of Kanaiyalal Lalchand Sachdev and Ors. (supra) after referring to the earlier decisions of this Court in the cases of Sadhana Lodh Vs. National insurance Co. Ltd. and Anr., (2003) 3 SCC 524; Surya Dev Rai Vs. Ram Chander Rai and Ors., (2003) 6 SCC 675 and State Bank of India Vs. Allied Chemical Laboratories and Anr., (2006) 9 SCC 252 while upholding the order passed by the High Court dismissing the writ petition on the ground that an efficacious remedy is available under Section 17 of the SARFAESI Act, it was observed that ordinarily relief under Articles 226/227 of the Constitution of India is not available if an efficacious alternative remedy is available to any aggrieved person.
7.6 Similar view has been expressed by this Court in subsequent decisions in the case of General Manager, Sri Siddeshwara Cooperative Bank Limited & Anr. (supra) as well as in the case of Agarwal Tracom Private Limited (supra).”
# 11. In the present proceedings, I decline to examine as to whether the petitioner is in lawful possession under a valid lease and whether such valid lease is made prior to the creation of mortgage by the borrower in favour of the respondent-Financial Institution or whether the petitioner is a protected tenant, since the same could be examined by the Tribunal under Section 17(4A) of the 2002 Act, which requires placing of evidence to decide the said question.
# 12. Smt. Sona Vakkund, learned counsel for the petitioner submits that belongings of the petitioner are inside the premises of the I floor of the mortgaged property, which the 1st respondent-Financial Institution has taken possession and prays for a direction to the 1st respondent-Financial Institution to hand over the movables and belongings of the petitioner or an opportunity to take those articles and movables from the premises.
# 13. The request of the learned counsel for the petitioner appears to be reasonable. Hence the following order :-
(i) The writ petition is disposed of with liberty to the petitioner to approach the Debt Recovery Tribunal under Section 17 of the 2002 Act.
(ii) The 1st respondent-Financial Institution is directed to permit the petitioner to take the movables and house hold articles from the seized premises within ten days from today by notifying the date and time to the petitioner.
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Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. (SARFAESI Act)
# Section 17(4A) Where—
(i) any person, in an application under sub-section (1), claims any tenancy or leasehold rights upon the secured asset, the Debt Recovery Tribunal, after examining the facts of the case and evidence produced by the parties in relation to such claims shall, for the purposes of enforcement of security interest, have the jurisdiction to examine whether lease or tenancy,—
(a) has expired or stood determined; or
(b) is contrary to section 65A of the Transfer of Property Act, 1882 (4 of 1882); or
(c) is contrary to terms of mortgage; or
(d) is created after the issuance of notice of default and demand by the Bank under sub-section (2) of section 13 of the Act; and
(ii) the Debt Recovery Tribunal is satisfied that tenancy right or leasehold rights claimed in secured asset falls under the sub-clause (a) or sub-clause (b) or sub-clause (c) or sub-clause (d) of clause (i), then notwithstanding anything to the contrary contained in any other law for the time being in force, the Debt Recovery Tribunal may pass such order as it deems fit in accordance with the provisions of this Act.
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