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2013 (3) TMI 18 - HC - Indian LawsDispute over leased property - Jurisdiction of civil court - held that - When the tenant knows well that there will be a recovery or taking over of the possession of the mortgaged property or otherwise and enters into a lease agreement with the landlord it is for him to seek protection before the appropriate forum namely DRT. Such a view of the matter has been dealt with clearly by the Division Bench in Sree Lakshmi Products case. Therefore I am of the considered opinion that the remedy available to the petitioner is only before the DRT having jurisdiction over the issue. Though I am in complete agreement with the ratio laid down by the Division Bench in Indian Bank s case even as there is inconsistency repugnancy or overlapping the mortgaged property is under the seizure of the secured creditor and if any person comes into the picture in between the remedy for him lies only before the DRT and not the Civil Court.
Issues Involved:
1. Jurisdiction of Civil Court vs. Debts Recovery Tribunal (DRT) 2. Validity of tenancy created after mortgage 3. Applicability of SARFAESI Act vs. Tamil Nadu Rent Control Act Analysis: Jurisdiction of Civil Court vs. Debts Recovery Tribunal (DRT): The primary contention raised by the petitioner was that the civil court lacked jurisdiction to entertain the suit or any interlocutory application related to the enforcement of security interests under the SARFAESI Act. The petitioner relied on a Division Bench decision in Sree Lakshmi Products v. State Bank of India, which held that disputes regarding possession of secured assets should be addressed by the DRT under Section 17 of the SARFAESI Act. Section 34 of the SARFAESI Act explicitly bars civil courts from entertaining suits or proceedings in matters that fall within the jurisdiction of the DRT. The court affirmed this position, stating that the first respondent should have approached the DRT within forty-five days as prescribed under Section 17 (1) of the SARFAESI Act, which he failed to do. Validity of Tenancy Created After Mortgage: The court examined whether the tenancy claimed by the first respondent was valid, especially since it was allegedly created after the property had been mortgaged to the fourth respondent-bank. The court noted that any tenancy created after the mortgage would not be binding on the bank, as per Section 13 (13) of the SARFAESI Act, which operates as an attachment/injunction restraining the borrower from disposing of the secured assets. The court held that the first respondent's tenancy, being created after the mortgage, was null and void and not binding on the bank or the auction purchaser (revision petitioner). Applicability of SARFAESI Act vs. Tamil Nadu Rent Control Act: The respondents argued that the Tamil Nadu Buildings (Lease and Rent Control) Act should govern the matter, protecting the tenant's rights. They cited the Division Bench authority in Indian Bank v. Nippon Enterprises South, which held that the SARFAESI Act does not contain specific provisions enabling secured creditors to take possession from tenants, and therefore, the Rent Control Act should apply. However, the court found that in cases where the tenancy is created after the mortgage, the SARFAESI Act would prevail, as established in Sree Lakshmi Products' case. The court clarified that the SARFAESI Act, being a special law for the expeditious recovery of dues, would override the Rent Control Act in such scenarios. Conclusion: The court concluded that the civil court lacked jurisdiction to entertain the suit and the application for interim injunction, as the matter fell within the exclusive jurisdiction of the DRT under the SARFAESI Act. The interim injunction granted by the trial court was set aside, and the civil revision petition was allowed. The court emphasized that the first respondent's remedy lay with the DRT, not the civil court. The decision underscores the primacy of the SARFAESI Act in matters of enforcement of security interests and the limited role of civil courts in such disputes. Post-Judgment Directions: After the pronouncement of the order, the court noted that no separate liberty needed to be given to the first respondent to approach the DRT, as it was already open for him to do so if he was aggrieved.
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