2016 (1) TMI 1043 - HC - Indian Laws

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 action initiated under Section 14 of the Act, they approached this Court for the aforesaid relief under Article 226 of the Constitution of India. Held that - We would like to observe that M/s. ITCS International Private Limited, said to be the lessee under the rental agreement, dated 14-03-2014, Medexpress (Clinics & Diagnostics), said to be the lessee under the rental agreement, dated 06-02-2013, and Movie Rainbow Web Services India (Private) Limited, said to be the lessee under the rental 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 officer to move the learned CMM requesting to issue notice to the petitioners herein. Hence, we are of the considered view that the impugned orders passed by the learned CMM do not suffer from any illegality or infirmity warranting interference. Thus, the writ petition is devoid of merit.

Summary

Issues Involved:
1. Legality of the eviction orders passed by the Chief Metropolitan Magistrate (CMM) under Section 14 of the SARFAESI Act.
2. Validity of the lease agreements held by the petitioners.
3. Petitioners' locus standi and the availability of alternative remedies.

Detailed Analysis:

1. Legality of the Eviction Orders:
The petitioners challenged the eviction orders issued by the CMM in Criminal M.P. Nos. 1072, 1073, and 1074 of 2015, claiming these orders were illegal and arbitrary. They argued that the bank suppressed their possession as tenants and did not provide them an opportunity to be heard. The court, however, noted that the CMM had followed due process by appointing Advocate-Commissioners and issuing 15 days' notice to any occupants found during the eviction process. The court concluded that the CMM's orders did not suffer from any illegality or infirmity, as the petitioners' interests were sufficiently protected by the notice provision.

2. Validity of the Lease Agreements:
The petitioners' claim to tenancy was based on various rental agreements. The court scrutinized these agreements and found them to be unregistered. According to the court, unregistered lease agreements cannot be considered valid under the Indian Registration Act, 1908, and the Indian Stamp Act, 1899. The court referred to the Supreme Court's decision in Harshad Govardhan Sondagar v. International Assets Reconstruction Co. Ltd., which held that only valid leases created before the mortgage or in compliance with Section 65-A of the Transfer of Property Act could protect tenants from eviction under the SARFAESI Act. Since the petitioners' leases were unregistered, they did not meet these criteria, and thus, the petitioners were not entitled to notice under Section 14 of the SARFAESI Act.

3. Petitioners' Locus Standi and Alternative Remedies:
The bank argued that the petitioners had no locus standi as they were third parties to the proceedings and suggested that the writ petition was filed in collusion with the principal borrower. The bank also contended that the petitioners had an alternative remedy available under Section 17 of the SARFAESI Act by approaching the Debts Recovery Tribunal (DRT). The court agreed with the bank's position, emphasizing that the petitioners could not maintain the writ petition based on invalid lease deeds and that they had an effective alternative remedy under the Act.

Conclusion:
The court dismissed the writ petition, stating that the impugned orders by the CMM did not suffer from any illegality or infirmity. The rental agreements were unregistered and thus invalid, and the petitioners had no right to challenge the eviction orders. The court also noted that the petitioners had an alternative remedy available under Section 17 of the SARFAESI Act. Consequently, the writ petition was devoid of merit and was dismissed with no order as to costs.