2007 (11) TMI 422 - HC - Companies Law

Physical possession of residential building - whether the first respondent be restrined from taking physical possession of the building in question - Held that - Inasmuch as no acceptable material as such had been placed relating to the alleged tenancy rights, this question cannot effectively gone into in the present writ petition. Even otherwise, since the petitioner has other alternative remedies, let the petitioner pursue such alternative remedies available to him in law. In the light of the same, liberty is given to the petitioner to pursue the other legal remedies available to him in accordance with law. W.P. dismissed.

Issues Involved:
1. Legality of the first respondent's action in taking possession of the petitioner's leased residential building.
2. Applicability of the Securitisation & Reconstruction of Financial Assets & Enforcement of Security Interest Act, 2002 (Securitisation Act) to the petitioner's lease agreement.
3. Petitioner's rights and remedies under the Securitisation Act and other relevant laws.

Detailed Analysis:

1. Legality of the First Respondent's Action:
The petitioner argued that the first respondent's action in proposing to take physical possession of the residential building was illegal, arbitrary, and violative of Articles 14 and 21 of the Constitution of India, as well as the provisions of the Securitisation Act. The petitioner claimed to be a tenant of the building, having entered into a lease agreement with the second respondent on 27.03.2003. Despite the second respondent's default in loan repayment to Punjab National Bank, the petitioner contended that the first respondent's action to take possession with police assistance was contrary to Section 14 of the Securitisation Act, which mandates that only the Chief Metropolitan Magistrate or District Magistrate can assist in taking possession.

2. Applicability of the Securitisation Act to the Petitioner's Lease Agreement:
The petitioner argued that Section 13(4) of the Securitisation Act, which empowers the first respondent to take possession of secured assets, does not address tenancy rights under the A.P. Rent Control Act or the Transfer of Property Act. The petitioner emphasized that there is no provision in the Securitisation Act that annuls the tenancy rights of tenants of secured assets, and thus, his tenancy rights should remain unaffected. Additionally, the petitioner cited Section 31(e) of the Securitisation Act, which states that the Act does not apply to leases where no security interest is created. The petitioner asserted that since no security interest was created in his lease agreement with the second respondent, the Securitisation Act should not apply.

3. Petitioner's Rights and Remedies:
The first respondent countered that the petitioner's tenancy agreement was subsequent to the creation of an equitable mortgage by the borrowers in favor of the Bank on 17.11.2000, and thus, the tenancy rights could not override the secured interest. The first respondent also argued that the petitioner had alternative remedies under Section 17 of the Securitisation Act to approach the Debt Recovery Tribunal, which the petitioner had not utilized. The first respondent maintained that the petitioner's interpretation of the Securitisation Act was incorrect and that the petitioner's rights as a tenant could not affect the Bank's right to enforce the secured interest.

Judgment:
The Court, after hearing the arguments and examining the relevant legal provisions and precedents, concluded that the petitioner's claim of tenancy rights could not be effectively addressed in the present writ petition due to the lack of acceptable material evidence. The Court observed that the petitioner had alternative legal remedies available under the Securitisation Act and other relevant laws, which he should pursue. Consequently, the writ petition was disposed of, granting the petitioner liberty to seek other legal remedies in accordance with the law. No order as to costs was made.

← Previous Next →