2012 (11) TMI 1334 - HC - Indian Laws

Summary

Issues:
1. Challenge against the order of Debt Recovery Tribunal II, Mumbai and Debts Recovery Appellate Tribunal, Mumbai.
2. Possessory lien over office premises under SARFAESI Act.
3. Dispute over charge registration with Registrar of Companies.
4. Claim of possession by petitioner against mortgage by borrower.
5. Interpretation of Section 65-A of the Transfer of Property Act.

Issue 1: Challenge against Tribunal Orders
The petitioner challenged the orders of Debt Recovery Tribunal II and Debts Recovery Appellate Tribunal, Mumbai. The petitioner contended that the possession of the office premises should not have been revoked under the SARFAESI Act due to a default by the borrower. The petitioner claimed to have a possessory lien over the premises, disputing the charge registered with the Registrar of Companies by the respondent banks.

Issue 2: Possessory Lien under SARFAESI Act
The petitioner argued that they had a possessory lien over the office premises, preventing eviction by the respondent under the SARFAESI Act. The petitioner claimed to be in possession since 1997 due to non-repayment of dues by the borrower. The respondent banks, however, asserted that the borrower had mortgaged the premises to them, creating a legal charge registered with the Registrar of Companies.

Issue 3: Dispute over Charge Registration
The petitioner contended that the Tribunal erred in holding that the respondent had registered their charge with the Registrar of Companies. The petitioner claimed that only State Bank of India had a charge over the premises, supported by a Certificate of Registration of Mortgage under the Companies Act. The Tribunal's finding was challenged as incorrect and legally unsound.

Issue 4: Claim of Possession against Mortgage
The respondent argued that the borrower had mortgaged the office premises to the consortium banks, including State Bank of India, creating a legal charge. The petitioner, not being a tenant or lessee, claimed a right over the premises based on a possessory lien. The court analyzed whether the mortgagor could permit the petitioner to occupy the mortgaged premises after creating a mortgage, considering the provisions of Section 65-A of the Transfer of Property Act.

Issue 5: Interpretation of Section 65-A of Transfer of Property Act
The court referred to a decision by the Madras High Court regarding Section 65-A of the Transfer of Property Act. The court emphasized that the duration of a lease by a mortgagor cannot exceed three years to protect the rights of the mortgagee. In this case, the petitioner's claim based on a possessory lien without a lease or tenancy agreement did not meet the requirements of Section 65-A, leading to the dismissal of the petition.

The High Court of Bombay dismissed the petition, ruling against the petitioner's claims of possessory lien over the office premises under the SARFAESI Act. The court upheld the respondent banks' legal charge on the premises, emphasizing the importance of complying with the Transfer of Property Act's provisions, particularly Section 65-A regarding leases and tenancies concerning mortgaged properties.