JUDGMENT Mr. Hemant Gupta, J.: - The challenge in the present writ petition is to an order dated 2.9.2011 (Annexure P.14) passed by Debts Recovery Appellate Tribunal whereby an appeal filed by respondents No.2 to 4 was allowed for the reason that the said respondents are tenant in the property mortgaged in favour of the Bank and that such tenant cannot be evicted from the premises without due process of law. Subsequently, the Bank filed an application for clarification of the order that the Bank is already in possession but the said application was dismissed on 22.09.2011 (Annexure P.16) observing that if the premises are occupied by the tenant, then the tenant cannot be evicted without due process of law. Therefore, no further clarification was required to be made by the Tribunal. 2. The Petitioner Bank advanced loan to Respondent No.5 – Rishab Refractories Ltd. (for short ‘the Borrower’). The borrower mortgaged his land and building of the factory by deposit of title deeds in terms of Section 58(f) of the Transfer of Property Act, 1882 (for short, `the Act’). An entry of equitable mortgage by deposit of title deeds was made in the Register of the Bank on 5.11.1997 (Annexure P.5). Later on, after enhancement of loan, another entry for another equitable mortgage was made in the books of the Bank on 28.9.2002 (Annexure P.6). 3. Respondents No.2 to 4 filed a suit for injunction before the Civil Judge (Junior Division), Rajpura on 13.6.2005 on the basis of lease deed dated 17.11.2004 claiming to be tenant on monthly payment of rent of Rs.7500/-. In the said suit, the borrower – the defendant therein, was proceeded ex parte. The Civil Court granted decree on 30.8.2006 restraining the defendants and its agents from interfering in the peaceful possession of the plaintiff in any manner. It may be noticed that the Bank was not party in the aforesaid suit. 4. The Bank has served a notice on the respondents before starting proceedings under the 2002 Act. The relevant extract from the notice reads as under: “1. As you may be aware, Property/ Assets mentioned below were mortgaged as security with our Bank against the above NPA Account by the owner Company in the capacity of borrower for availing financial assistance through our Manimajra Branch, U.T. Chandigarh as per arrangements and agreements duly executed. The relevant extract from the notice reads as under: “1. As you may be aware, Property/ Assets mentioned below were mortgaged as security with our Bank against the above NPA Account by the owner Company in the capacity of borrower for availing financial assistance through our Manimajra Branch, U.T. Chandigarh as per arrangements and agreements duly executed. After the account becoming NPA the Secured Creditor Bank proceeded against the borrower (s)/ guarantor (s) under the Securitisation & Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (the Securitisation Act, 2002) and the Rules framed there under namely, the Security Interest Enforcement Rules, 2002 (the Rules). xxx xxx xxx 3. Meanwhile we understand that you are occupying the premises / portion of the premises, as detailed above, as a tenant / lessee and also using the movable assets (as may have been handed over to you by the Borrower Company) over which the borrowers has created a mortgage in our favour. We are not aware of the existence of any lease agreement / arrangement between you and the owner of the said Assets / property. However, since you are in occupation of the above said property on the date of our taking, symbolic possession, we are furnishing you one opportunity before taking any further steps as provided under the Securitisation & Reconstruction of Financial Assets & Enforcement of Security Interest Act, 2002 (the Securitisation Act). Hence, this notice and you are advised: (a) To pay the rent payable by you to the borrower / owner, to us directly for the period from the date of our symbolic possession and we will be giving you a valid discharge for the said amount under the Act. (b) That we proposed to bring the property for sale as per the provisions of the Securitisation Act. If you are interested in purchasing the said property, you may indicate your readiness and willingness for the same in writing to us immediately and you can participate in the sale process by submitting your bid / taking part in the auction as prescribed under the Rules. (c) That if you are not the successful bidder in the proposed sale process, you should vacate the premises and surrender the same to us within 30 days from the date of the sale. You should give a written commitment to this extent in your letter to us. (c) That if you are not the successful bidder in the proposed sale process, you should vacate the premises and surrender the same to us within 30 days from the date of the sale. You should give a written commitment to this extent in your letter to us. (d) That if you are not interested in participating in the process, you shall vacate and surrender the premises within 330 days from now. (e) That you have to settle any other financial matter like rent deposit / advance money etc. directly with the owner, and Bank is not liable / responsible for the same. In addition, all statutory dues including electricity bills etc. may also be squared-up appropriately. 4. That if you fail to handover the vacant possession as mentioned above, we shall be taking steps for getting actual possession as provided under the Act. Hence, you are requested to cooperate with the Bank and avoid any embarrassment / unpleasant things.” 5. Subsequently, respondents No.2 to 4 filed an application under Section 17 of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for Short the 2002 Act) to seek protection of their possession on the basis of their plea of tenancy. The said application was dismissed by the Debts Recovery Tribunal vide order dated 21.04.2011. A categorical finding was recorded that the property in question was mortgaged by the borrower in favour of Bank. The Tribunal returned a finding that the lease deed relied upon by respondents No.2 to 4 has not been created in favour of the borrower in accordance with the provisions of Section 65-A of the Act and that maximum period of lease contemplated by the Statute has already expired. The appeal against the said order before the Debt Recovery Appellate Tribunal was disposed of by the Debts Recovery Appellate Tribunal, when the following order was passed:- “Mr. Suneet Bhardwaj appears for the appellant and Mr. Shailender Ojha, proxy counsel for Mr. S.K. Tyagi for the respondent bank. The matter is heard. In the present case, the only question is that the appellant is a tenant and he submits that he being a tenant cannot be evicted from the premises without due process of law even if the proceedings are to be taken against the borrower who is the owner of the property. The matter is heard. In the present case, the only question is that the appellant is a tenant and he submits that he being a tenant cannot be evicted from the premises without due process of law even if the proceedings are to be taken against the borrower who is the owner of the property. While taking action to recover the debt against the borrower, the secured creditor cannot evict the tenant without due process of law. Under these circumstances, it is directed that the appellant being tenant cannot be evicted from the premises without due process of law. In view of the aforesaid, the appeal stands disposed of. Copies of this order be furnished to the parties as per law and one copy be sent to Ld. DRT forthwith.” 6. Learned counsel for the petitioner has vehemently argued that the Act including Section 65A is not applicable to the State of Punjab as only Sections 54, 59, 107 & 123 of the Act have been extended in the State. Section 58(g) of the Act i.e. provision for mortgage by deposit of title deeds has been extended to the district headquarters in the State of Punjab vide notification dated 28.08.1975 and to all the block headquarters vide notification dated 23.06.1979. Therefore, after the mortgage by respondent No.5, the mortgagor could not induct any tenant without the permission of the mortgagee. It is further argued that in terms of Section 65A(2)(e), the duration of lease cannot exceed 3 years, whereas a tenant inducted by a mortgagor in respect of a property situated in an urban area would be a statutory tenant governed by the provisions of East Punjab Urban Rent Restriction Act, 1949. Therefore, such statutory tenancy contravenes the provisions of Section 65A of the Act as well. Thus, the order passed by the Appellate Tribunal extending protection to the respondents as tenant is not sustainable. 7. Mr. Chopra, learned counsel representing respondents No.2 to 4 has vehemently argued that the Civil Court as well as the Debt Recovery Appellate Tribunal had ordered that the tenant can be dispossessed only after following the due process of law. The due process of law is by seeking eviction in terms of the provisions of the East Punjab Urban Rent Restriction Act, 1949. Therefore, the Bank cannot seek eviction of the tenant inducted by a mortgagor. The due process of law is by seeking eviction in terms of the provisions of the East Punjab Urban Rent Restriction Act, 1949. Therefore, the Bank cannot seek eviction of the tenant inducted by a mortgagor. Secondly, it is argued that the Bank itself has called upon respondents No.2 to 4 to pay rent, therefore, the Bank has accepted the respondents as tenant and, thus the Bank is estopped to dispute the tenancy created by the mortgagor. Another argument is that the Bank has no jurisdiction to take possession under the guise of the proceedings under the 2002 Act, when the stand of the Bank in the writ petition as well as before the Debts Recovery Appellate Tribunal, is that it had taken possession in pursuance of the proceedings initiated under Section 13(4) of the Act. It is argued that that the respondents have taken possession illegally after breaking upon the locks. Therefore, the Bank can seek possession as per the procedure to take possession from an unauthorized occupant. 8. We have heard Learned Counsel for the parties and find that the orders passed by the Debt Recovery Appellate Tribunal are liable to be set aside. The provisions of the Act, except those which have been notified specifically, are not applicable to Punjab. A Full Bench of this Court in Bhaiya Ram Hargo Lal Vs. Mahavir Parshad Murari Lal Mahajan, AIR 1969 P&H 110 proceeded to examine the question of termination of tenancy in terms of Section 106 of the Transfer of Property Act on the basis of common case of both sides that statutory provisions of the said Act do not apply to the State of Punjab nor there is any dispute about the well settled proposition of law that the equitable principles contained in any of the provisions of that enactment have all along been and are entitled to be followed in Punjab and principles of equity, justice and good conscience relating to the points covered by those provisions for or against which there is no specific statutory enactment in force in the State. The Court held to the following effect: “5. The Court held to the following effect: “5. Having held that despite the fact that the Transfer of Property Act is not applicable to the State of Punjab, it is necessary under the general law of the land to terminate a monthly tenancy by at least fifteen days’ notice of ejectment, all that remains to be considered in connection with the first question if whether the said requirement (which will for the purposes of the said question be treated on the same level as a statutory requirement) has been abrogated by anything contained in the East Punjab Urban Rent Restriction Act, 11949 or not. Before dealing with the first question referred to us, I would refer to the case law on the subject in a year wise chronological order.” 9. Section 65A inserted by amendment in the Act in the year 1929 reads as under: “65A. Mortgagor’s power to lease – (1) Subject to the provisions of sub section (2), a mortgagor, while lawfully in possession of the mortgaged property, shall have power to make leases thereof which shall be binding on the mortgagee. (2) (a) Every such lease shall be such as would be made in the ordinary course of management of the property concerned, and in accordance with any local law, custom or usage, (b) Every such lease shall reserve the best rent that can reasonably be obtained, and no premium shall be paid or promised and no rent shall be payable in advance, (c) No such lease shall contain a convenant for renewal. (d) Every such lease shall take effect from a date not later than six months from the date on which it is made, (e) In the case of a lease of buildings, whether leased with or without the land on which they stand, the duration of the lease shall in no case exceed three years, and the lease shall contain a covenant for payment of the rent and a condition of re-entry on the rent not being paid with a time therein specified. (3) The provisions of sub-section (1) apply only if and as far as a contrary intention is not expressed in the mortgage-deed; and the provisions of sub-section (2) may be varied or extended by the mortgage-deed and, as so varied and extended, shall, as far as may be, operate in like manner and with all like incidents, effects and consequences, as if such variations or extensions were contained in that sub-section.” 10. Even in terms of Section 65A of Act, the lease granted by a mortgagor is against clause (e) of Section 65A(2) of the Act as a tenant in an urban area enjoys the protection of the East Punjab Urban Rent Restriction Act, 1949. Such tenancy contravenes the Central Act i.e the Act, which only permits tenancy for a period of three years which terms alone has been considered reasonable. Since, the protection of the Local Act would confer statutory protection; therefore, such tenancy is not permissible in terms of Section 65A(2)(e), which contemplates the duration of lease by a mortgagor shall not exceed three years. 11. The mortgage is a transfer of an interest in specific immoveable property in terms of clause (a) of Section 58 of the Act. Having transferred the interest, the mortgagor is not free to deal with the property in the manner, he considers appropriate. His rights are subject to the consent of the mortgagee. 12. Prior to introduction of Section 65A, the right of the mortgagor to induct tenant was recognized only if the terms of the lease are not unfair and unreasonable. In Kamakshaya Narayan Singh Vs. Chohan Ram & another AIR 1952 SC 401 , the Supreme Court was considering the right of a mortgagor to induct a lessee prior to insertion of Section 65A of the Act by the Transfer of Property (Amendment) Act, 1929, which came into force on 01.04.1930. The Court observed that though a mortgagor may assign mortgaged premises, but the assignee can only take subject to the encumbrances, and if the property is sold or foreclosed by the mortgagee, any interest which the mortgagor may have created since the mortgage will be destroyed. It was held to the following effect: “6. The Court observed that though a mortgagor may assign mortgaged premises, but the assignee can only take subject to the encumbrances, and if the property is sold or foreclosed by the mortgagee, any interest which the mortgagor may have created since the mortgage will be destroyed. It was held to the following effect: “6. “It is an elementary rule that though a mortgagor may assign the mortgaged premises the assignee can only take subject to the encumbrances, and if the property is sold or foreclosed by the mortgagee any interest which the mortgagor may have created since the mortgage will be destroyed.” (Ghost on Mortgages, vol.I, p. 212). As was observed by Lord Selborne in Corbett Vs. Plowden (1884) 25 ch. D. 678 at p. 681: “If a mortgagor left in possession, grants a lease without the concurrence of the mortgagee (and for this purpose, it makes no difference whether it is an equitable lease by an agreement under which possession is taken or a legal lease by actual demise), the lessee has a precarious title, inasmuch as although the lease is good as between himself and the mortgagor who granted it, the paramount title of the mortgagee may be asserted against both of them.” It does not, however, follow that a lessee from the mortgagor acquires no interest whatever in the property demised to him. A person taking a lease from a mortgagor after the mortgage does acquire an interest in the equity of redemption and can claim to redeem on that footing. But this right of redemption does not necessarily mean that a lease of this character is always operative against the mortgagee. Merely because a lessee acquires an interest in the mortgaged property which is sufficient to enable him to redeem the mortgage it does not follow that the interest which the lessee has thus acquired is operative against the mortgagee. The true position is somewhere in the middle of these two extremes. Merely because a lessee acquires an interest in the mortgaged property which is sufficient to enable him to redeem the mortgage it does not follow that the interest which the lessee has thus acquired is operative against the mortgagee. The true position is somewhere in the middle of these two extremes. The mortgagee is not normally bound by the acts of the mortgagor with reference to the mortgaged property: “But if a mortgagee takes his security with knowledge of the purposes to which the land is applied and allows the mortgagor to remain in possession he will be bound by the acts done by the mortgagor in accordance with the usual course.” (Ghosh on Mortgages, Vol.I, p.212) As indicated in the observations of Sir James Parke in Pope v. Briggs, (1829) 9 Barn. & cres. 245 at p. 258, the mortgagor might be considered as acting in the nature of a bailiff or agent for the mortgagee. Consequently, if the mortgagor, after he has granted the mortgage, deals with the property in the usual course of management, the interest created by him may be rightly deemed operative against the mortgage……” 13. The Court considered the judgment of Calcutta High Court in Madan Mohan Singh Vs. Raj Kishore, AIR 1917 Cal. 222 and observed that if the mortgagor dealt with a property in the usual course of management and the interest which was, thus, created by the mortgagor in the usual course must rightly be deemed operative against the mortgagee. In the aforesaid case, the lease was granted in good faith, was for a limited term and stipulated a fair and reasonable rent. The Supreme Court further observed as under: “11. The only relevant consideration is whether, the mortgagor in possession having the authority to deal with the property in the usual course of management, the lease granted by him can be rightly deemed operative against the mortgagee. The true position has been stated in the following terms by Mukherjee J. in Madan Mohan Singh vs. Raj Kishore AIR 1917 Cal. 222: “The true position thus is that the mortgagor in possession may make a lease conformable to usage in the ordinary course of management, for instance, he may create a tenancy from year to year in the case of agricultural lands or from month to month in the case of houses. 222: “The true position thus is that the mortgagor in possession may make a lease conformable to usage in the ordinary course of management, for instance, he may create a tenancy from year to year in the case of agricultural lands or from month to month in the case of houses. But it is not competent to the mortgagor to grant a lease on unusual terms, or to alter the character of the land or to authorize its use in a manner or for a purpose different from the mode in which he himself had used it before the granted the mortgage.” 12. The question whether the mortgagor in possession has power to lease the mortgaged property has got to be determined with reference to the authority of the mortgagor as the bailiff or agent for the mortgagee to deal with the property in the usual course of management….” 14. The Supreme Court in Mangru Mahto & others Vs. Thakur Taraknathji Tarkeshwar & others AIR 1967 SC 1390 was considering the case of the mortgagor inducting a tenant prior to insertion of Section 65A of the Act. It was held that the power of the mortgagor to lease the mortgaged property must be determined with reference to the authority of the mortgagor, as the bailiff or agent for the mortgagee to deal with the property in the usual course of management. The Court quoted with approval the extract from the judgment in Gobinda Chandra Saha Vs. Sasadhar Mandal, AIR 1947 Calcutta 73, wherein it was observed as under: “The mortgagor might be within his rights to create a lease which is from month to month or from year to year as the case might be but he cannot grant a permanent lease with a rent fixed in perpetuity. This amounts to an alienation of his right to increase the rent in future and is as good as the sale of the property itself. This is not sanctioned by the ordinary course of management as has been mentioned above nor is it warranted by the previous user of this particular property.” 15. After considering the fact that leases granted by the mortgagor were permanent leases with rent fixed in perpetuity, the Court returned a finding that such lease is not binding on the mortgagee, though it is binding as between the mortgagor and the lessee. It was observed as under: “11. After considering the fact that leases granted by the mortgagor were permanent leases with rent fixed in perpetuity, the Court returned a finding that such lease is not binding on the mortgagee, though it is binding as between the mortgagor and the lessee. It was observed as under: “11. A lease granted by the mortgagor, out of the ordinary course of management, though not binding on the mortgagee, is binding as between the mortgagor and the lessee. Such a lesser acquires an interest in the right of redemption and is entitled to redeem. If such a lease is created before the institution of a suit relating to the mortgage the lessee must be joined as a party to the suit under O. 34, R. 1, CPC otherwise he will not be bound by the decree passed in the suit and will continue to retain his right of redemption. But in view of S. 52 of the Transfer of Property Act, if the mortgagor grants such a lease during the pendency of a suit for sale by the mortgagee, the lessee is bound by the result of the litigation. If the property is sold in execution of the decree passed in the suit, the lessee cannot resist a claim for possession by the auction-purchaser. The lessee could apply for being joined as a party to the suit and ask for an opportunity to redeem the property. But if he allows the property to be sold in execution of the decree, he loses his right of redemption. In the present case, the lessees allowed the suit lands to be sold in execution of the mortgage decree and they have now lost the right of redemption. They cannot resist the claim of the auction-purchaser for recovery of possession of the lands. 12. If a mortgagor in possession of the mortgaged property executes a lease of the property in the ordinary course of management as the agent or bailiff of the mortgagee during the pendency of a suit by the mortgagee to enforce the mortgage, a question may arise whether such a lease is in the eye of the law is lease granted by the mortgagee through his agent and therefore binding on him. But in the present case, that question does not arise as the leases were not granted by the mortgagor in the ordinary course of management as the bailiff or agent of the mortgagee.” 16. The Kerala High Court in a judgment reported as Kerala State Financial Vs. Meenachil Co-operative AIR 2005 Kerala 76 observed to the following effect: “16. It is beyond dispute that mortgages by deposit of title deeds is a valid procedure, accepted under the Transfer of Property Act, for creating an encumbrance. Under Section 58(a) of the Act, a mortgage is a transfer of interest in specific immovable property. This may be for the purpose of securing the payment of money advanced or to be advanced by way of a loan. It includes an existing or future debt over the performance of an engagement which may give right to pecuniary liability. It is undisputable that in respect of a Kuri transaction the petitioner had entered into such an arrangement. The law recognizes a mortgage by deposit of title deeds. When a person delivers to the creditor or the agent, document or title to immovable property with intend to create a security thereon, the transaction is a mortgage by deposit of title deeds (Section 58(f) of the Transfer of Property Act). The petitioner claims that a mortgage deed as envisaged under Section 2 (17) of the Indian Stamps Act is in existence. A mortgager therefore is disabled from further encumbering the properties in any case without the junction of mortgagee. It can well be presumed that a liability is automatically attached to the property and it is a burden imposed upon the land and the interest in the land, by the owner of the land. 17. Advertence may also be made to the dictionary meaning of the term ‘mortgage’, see Black’s Law Dictionary, 7th Edition, by Bryan A. Garner. It is described as a conveyance of title to property that is given as security for the payment of a debt or the performance of a duty and that will become void upon payment of performance according to the stipulated terms. It is also “a lien against property that is granted to secure an obligation (such as a debt) and that is extinguished upon payment or performance according to stipulated terms. It is also “a lien against property that is granted to secure an obligation (such as a debt) and that is extinguished upon payment or performance according to stipulated terms. Thus, the mortgage presupposes a (notional) conveyance of title as such, though on limited terms and the mortgager may continue the occupation of the property.” 17. In view of the above, we do not find any merit in the arguments raised by Mr. Chopra. The due process of law as observed by the Civil Court or by the Debt Recovery Appellate Tribunal is applicable to a tenant, who was inducted prior to mortgage. Since respondents No.2 to 4 have been inducted as a tenant after mortgage, therefore, the rights of the mortgagee to proceed against his security cannot be defeated in this manner. 18. It may be noticed that the Bank has issued a notice to the respondents to hand over physical possession of the property but also ordered that till such time, as the symbolic possession is with the Bank, the Bank has a right to receive rent from the tenant. A line from the notice of the Bank cannot be picked up to contend that the Bank has accepted the respondents as a tenant. The entire document has to be read as to what was sought to be conveyed by the Bank. The Bank has alleged the respondents to be unauthorized occupants and has sought possession from them. 19. The Bank has asserted that the respondents have forcibly entered into the premises after the possession was earlier taken by them. The respondents herein are relying upon tenancy by the mortgagor. The stand of the respondents is based upon tenancy, which was not permissible from the very inception. Since the possession itself from the very beginning was against law, the respondents cannot rely upon any plea which defeats the spirit of law. Therefore, as a mortgagee, the Bank has a right to recover possession of the property. 20. Consequently, we find that the orders Annexure P.14 and the subsequent order Annexure P.16 are wholly unjustified and are ordered to be set aside while allowing the writ petition with no order as to costs.