Ajay Kumar & Another vs Kashipur Urban Co-operative Bank Ltd. & Another

SHARAD KUMAR SHARMA, J.

K.M. JOSEPH, C.J. (ORAL)

Appellants are the writ petitioners. The writ petition was filed seeking the following reliefs:

i) Issue a writ, order or direction in the nature of certiorari to quash the possession notice dated 22.08.2017 (Annexure No. 11) issued by the

respondent No. 1.

ii) Issue a writ, order or direction in the nature of mandamus, directing the respondent no. 1, not to evict the petitioners from the shop in question.â€​

Briefly put, the proceeding, which is impugned, is actually purported to be initiated by the first respondent/Bank under Section 13(4) of the

Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as the “SARFAESI

Actâ€) as against Respondent No. 2 herein. In other words, it purports to recover the debt due from the party respondent in this Appeal by way of

seeking to recover it from his property which according to the appellant is occupied by him in the capacity of being tenant of Respondent No. 2, which,

according to the Bank, was mortgaged to it, and treating it as a secured property, steps were taken.

The case of the appellants/writ petitioners is that they are tenants in the property, and therefore, they cannot be evicted in terms of the proceedings

instituted under the SARFAESI Act. The arguments of the appellants / writ petitioners did not find favour with the learned Single Judge and the

learned Single Judge took the view that the appellants have absolutely no right to challenge the said proceedings as whatever rights the appellants have

are limited only in the capacity of a tenant. The appellants did not have any better rights than the landlord, who was specifically a defaulter. In fact, it

was the landlord, who could have come before the Court. The appellants in the capacity of a tenant have absolutely no rights to challenge the present

proceedings under the Act. The writ petition was found to be not maintainable at the hands of the appellants and the same was dismissed.

We heard Shri Tapan Singh, learned counsel on behalf of the appellants/writ petitioners. We also heard Shri Gopal Kumar Verma, learned counsel,

who appears on behalf of the Bank (respondent No. 1) and Shri Davesh Bishnoi, learned counsel for the party respondent, who is the

landlord/borrower from the bank.

Shri Tapan Singh, learned counsel for the appellants/writ petitioners would submit that the learned Single Judge was not right in dismissing the writ

petition and the appellants are not liable to be evicted in terms of the proceedings under the Act drawn against landlord respondent No. 2. In this

regard, he drew support from the judgment of this Court dated 06.05.2015 passed in Special Appeal No.31 of 2015. He also tried to draw support

from the judgment of the Hon’ble Apex Court in the case of Harshad Govardhan Sondagar Vs. International Assets Reconstruction Company

Limited and others reported in (2014) 6 SCC 1. He would argue and support the lease based on the rent being deposited under Section 30 of the Uttar

Pradesh Urban Building (Regulation of Letting, Rent and Eviction) Act, 1972 and also the fact that their names are entered in the Assessment

Register. He would also submit that the lease is of the year 1975 and the lease was initially created in favour of the grandfather of the appellants and

it continued from time to time and tenancy too continued as a consequence thereto.

Shri Davesh Vishnoi, learned counsel on behalf of the landlord and defaulter/borrower would submit that respondent no. 2 had purchased the

property in the year 2014 and he submits that the party respondent has not created any lease under law after the purchase of the property.

Shri Gopak K. Verma, learned counsel for respondent No. 1, on the other hand, also does not admit the lease. He would also seek support from

Paragraph Nos. 37.1 and 37.3 of the judgment of the Hon’ble Apex Court in Harshad Govardhan Sondagar’s case (Supra) which read as

under:

“37.1 In criminal appeals arising out of Special Leave Petitions (Criminal) Nos. 9426, 9170, 9163, 9253, 9164 and 9160 of 2012, 379, 1467, 1782 and

3575 of 203, 4062-63, 4053, 4068, 4119 and 4129 of 2012, 7835, 8365, 9217 and 10346 of 2013, 6587, 6639, 6523, 6622, 7731, 7747, 4618, 1666, 4066,

4111, 4123, 4115, 4118, 4127 and 7733 of 2012, 614, 3579-81, 4024, 4032, 4030, 4025, 4031, 3715, 3563, 5533-34, 2914, 2915 and 10502 of 2013, the

appellants claim that they are in possession of the secured asset under a lease made prior to the mortgage but the Chief Metropolitan Magistrate,

Mumbai, has passed orders under Section 14 of the SARFAESI Act for delivery of possession of the secured asset to the respective secured

creditors. These orders passed by the Chief Metropolitan Magistrate, Mumbai, are set aside and the matters are remitted to the Chief Metropolitan

Magistrate to pass fresh orders in accordance with this judgment and any other law that may be relevant after giving an opportunity of hearing to the

appellants and the secured creditors.

37.3 In the criminal appeals arising out of Special Leave Petitions (Criminal) Nos. 4619, 6598, 6522, 7745, 7746 and 4120 of 2012, when the special

leave petitions were filed under Article 136 of the Constitution of India, no application under Section 14 of the SARFAESI Act had been filed by the

secured creditors. In case such application under Section 14 of the SARFAESI Act has been filed in the meanwhile or is filed in future, the Chief

Metropolitan Magistrate or the District Magistrate, as the case may be, will decide the applications in accordance with this judgment and any other

law that may be relevant after giving opportunity of hearing to the appellants and the secured creditors.â€​

Shri Gopal K. Verma, learned counsel for the respondent No. 1 would, therefore, submit that without an order being passed under Section 14 of the

Act, in accordance to the procedure laid and as per ratio of law laid down by his  lordship of Hon’ble Apex Court, the respondent Bank cannot

take possession, and further he would submit that the Bank will move before the District Magistrate under Section 14 of the Act and after hearing the

appellants, the District Magistrate can pass an order. He would also submit that the writ petition itself is not maintainable insofar as the first

respondent is concerned, it is not an Authority under Article 12 of the Constitution of India and not a State. As far as the judgment in Special Appeal

No. 31 of 2015 relied by the appellant in support of his case is concerned, we notice that it was a case, where the learned Single Judge had granted

the relief and it appears to have been a case, where there were decided proceedings between the tenant of the shop, who, it is alleged, had been

inducted long ago and there was a litigation between the parties. In that case the litigation between the parties was under Section 21(1) (a) of U.P.

Act No. 13 of 1972, in which the existence of relationship of landlord and tenant is condition precedent, and was not the case like the one which we

are dealing with where respondent No. 2 landlord, denies relationship of landlord and tenant and further there is proceedings under Section 30 of the

Act pending due to denial of landlord tenant relationship and denial to receive the rent, for the purpose of depositing the rent only.

In this case, having regard to what has been laid down by the Hon’ble Apex Court, we would think that the course, which is suggested by the

learned counsel for the respondent Bank, appeals to us in the facts of this case. It is also to be noticed that the learned Single Judge had dismissed the

writ petition without ordering notice to the respondents. There was no opportunity to file counter. No doubt, it is true that the first respondent has filed

a counter affidavit in the Appeal. We would think that the interest of the appellants will also be protected if we record the submission of the first

respondent as he has made and relegate the appellants to raise his contentions before the District Magistrate on notice being issued to them in a

proceeding under Section 14. Accordingly, the Appeal is disposed of as follows:

We record the submission of the first respondent/Bank that the Bank will not take forceful possession of the property and will take possession only if it

is permitted by the District Magistrate under Section 14 of the Act. If the first respondent moves the District Magistrate, the District Magistrate will

issue notice to the appellants and will afford an opportunity to the appellants to establish their case as tenants and to raise their contentions. We make

it clear that if the first respondent moves the District Magistrate, the District Magistrate will consider the matter untrammeled by what has been

observed by the learned Single Judge in the impugned judgment and he will consider the matter in the light of the law, which has been laid down by the

Hon’ble Apex Court in Harshad Govardhan Sondagar’s case

(Supra).

The Appeal is allowed as above.