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2017 DIGILAW 1177 (MP)

Vikas Patidar v. District Magistrate

2017-11-17

SUBODHABHYANKAR

body2017
ORDER : 1. The order of this petition shall also govern the disposal of W.P. No.17248/2017. For the purpose of convenience the facts of W.P. No.17237/2017 are being taken into consideration. 2. This petition has been filed by the petitioner under Article 226 of the Constitution of India against the order dated 20.06.2017 (Annexure P/4) whereby the objections of the petitioner/defendant have been rejected by the District Magistrate, Bhopal in a proceeding initiated at the instance of the Central Bank of India under Section 14 of the Securitization And Reconstruction of Financial Assets And Enforcement of Security Interest Act, 2002 (hereinafter referred to as “SARFAESI Act”). 3. The petitioner’s case is that he happens to be a tenant in the basement and ground floor of a triple storeyed building at plot No. 155, Zone I, M.P. Nagar, Bhopal with area ad-measuring 1600 Sq. Ft. since 01.03.2011. The aforesaid premises was let out by the owners i.e. respondents No. 4(a) Shri Kailash Narayan Patidar and 4(b) Shri Laxmi Narayan Patidar. They also created equitable mortgage in respect of the said premises in favour of respondent No.3 Bank in the year 2012 for securing due repayment of financial assistance secured by M/s Indicus Ventures Pvt. Ltd. On account of the default in making the payment by the borrowers. Respondent No.3 Bank moved an application under Section 14 of the SARFAESI Act before respondent No.1 for taking physical possession of the secured assets inter-alia the premises occupied by the petitioner. In the aforesaid proceedings, the Bank did not implead the petitioner as one of the parties, despite the fact that the petitioner is the occupant of the said premises. On the objection filed by the petitioner before respondent No.1 the impugned order dated 20.6.2017 has been passed by respondent No.1 with direction for taking over of physical possession of the asset and a notice has also been issued by respondent No.2 Tehsildar, Bhopal for vacating of the aforesaid premises. Petitioner’s contention is that he being tenant cannot be evicted by the respondents under the provision of Section 14 of the SARFAESI Act) and can only be evicted after following the due process of law as provided under the provisions of M.P. Accommodation Control Act, 1961. 4. The petitioner has also relied upon the decision rendered by the Hon’ble Apex Court in the case reported in AIR 2016 SC 530 (Vishal N. Kalsaria Vs. 4. The petitioner has also relied upon the decision rendered by the Hon’ble Apex Court in the case reported in AIR 2016 SC 530 (Vishal N. Kalsaria Vs. Bank of India and others). In the said judgment, it is held that the provisions of SARFAESI Act do not override the provisions of the Rent Control Act. It is further submitted that the petitioner has no objection even if the aforesaid property is sold by the bank provided his tenancy rights are protected. It is further submitted that the petitioner has no alternative and efficacious remedy available to him as an appeal cannot be preferred under the SARFAESI Act since the same is barred as already held by the Debts Recovery Tribunal, Jabalpur vide order dated 21.09.2017 passed in Securitization Application No. 217/2017 wherein it is held that an order under Section 14 of the SARFAESI Act can be challenged by the borrower before DRT only after losing possession and defendant can also prefer an application before DRT when he has lost his possession. Under these circumstances, it is prayed that as decided by the Apex Court in the case of Vishal N. Kalsaria (supra), the impugned order be quashed and the petition be allowed. 5. On the other hand, the counsel for the respondent Bank has stated that the petition itself is not maintainable as an alternative and efficacious remedy of appeal is available under Section 14 of the SARFAESI Act before the appellate authority and without availing the alternative remedy, the petitioner has directly approached this Court, hence the petition is liable to be dismissed on this short ground only. On merits it is submitted that the Bank has followed the procedure as laid down in the SARFAESI Act for recovery of its dues. It is further submitted that the property belongs to the landlord and when the landlord himself is not entitled to claim possession of the property under Section 14 of the SARFAESI Act, a person who happens to be tenant of such landlord and is in possession of the said property on the basis of tenancy agreement executed between the tenant and the landlord, can claim no better right than the one exercised by the landlord. 6. 6. Learned counsel for the respondents has also relied upon the decision rendered by the Hon’ble Supreme Court in the case reported in (2010)8 SCC 110 (United Bank of India Vs. Satyawati Tondon and others) as also Single Bench order dated 17.01.2017 of the High Court at Gujarat passed in Special Civil Application No. 9979 of 2015 (Firozhussain Yusufbhai Vahora Vs. State Bank of India) wherein it is observed that the defendant’s right can be examined by the Tribunal in an appeal under Section 17 of the SARFAESI Act allowing the parties to lead the evidence. 7. Heard the learned counsel for the parties and perused the record. 8. Before adverting to the merits of the case, it would be apt to refer to the judgment rendered by the Apex Court in the case of Vishal N. Kalsaria (supra), the relevant paras of the same read as under:- “35. The decision of this Court rendered in Harshad Govardhan Sondagar cannot be understood to have held that the provisions of the SARFAESI Act override the provisions of the Rent Control Act, and that the banks are at liberty to evict the tenants residing in the tenanted premises which have been offered as collateral securities for loans on which default has been done by the debtor/landlord. 36. As far as granting leasehold rights being created after the property has been mortgaged to the bank, the consent of the creditor needs to be taken. We have already taken this view in Harshad Govardhan Sondagar. We have not stated anything to the effect that the tenancy created after mortgaging the property must necessarily be registered under the provisions of the Registration Act and the Stamp Act. 37. It is a settled position of law that once tenancy is created, a tenant can be evicted only after following the due process of law, as prescribed under the provisions of the Rent Control Act. A tenant cannot be arbitrarily evicted by using the provisions of the SARFAESI Act as that would amount to stultifying the statutory rights of protection given to the tenant. A non obstante clause (Section 35 of the SARFAESI Act) cannot be used to bulldoze the statutory rights vested in the tenants under the Rent Control Act. A tenant cannot be arbitrarily evicted by using the provisions of the SARFAESI Act as that would amount to stultifying the statutory rights of protection given to the tenant. A non obstante clause (Section 35 of the SARFAESI Act) cannot be used to bulldoze the statutory rights vested in the tenants under the Rent Control Act. The expression “any other law for the time being in force” as appearing in Section 35 of the SARFAESI Act cannot mean to extend to each and every law enacted by the Central and State Legislatures. It can only extend to the laws operating in the same field. 38. xxxxx 39. If the interpretation of the provisions of SARFAESI Act as submitted by the learned Senior Counsel appearing on behalf of the Banks is accepted, it would not only tantamount to violation of the rule of law, but would also render a valid Rent Control statute enacted by the State Legislature in exercise of its legislative power under Article 246 (2) of the Constitution of India useless and nugatory. The Constitution of India envisages a federal feature, which has been held to be a basic feature of the Constitution, as has been held by the seven-Judge Bench of this Court in S.R. Bommai v. Union of India, wherein K. Ramaswamy, J. In his concurring opinion elaborated as under: (SCC p.205, paras 247-48). “247. Federalism envisaged in the Constitution of India is a basic feature in which the Union of India is permanent within the territorial limits set in Article 1 of the Constitution and is indestructible. The State is the creature of the Constitution and the law made by Articles 2 to 4 with no territorial integrity, but a permanent entity with its boundaries alterable by a law made by Parliament. Neither the relative importance of the legislative entries in Schedule VII Lists I and II of the Constitution, nor the fiscal control by the Union per se are decisive to conclude that the Constitution is unitary. The respective legislative powers are traceable to Articles 245 to 254 of the Constitution. The State qua the Constitution is federal in structure and independent in its exercise of legislative and executive power. However, being the creature of the Constitution the State has no right to secede or claim sovereignty. Qua the Union, State is quasi-federal. The respective legislative powers are traceable to Articles 245 to 254 of the Constitution. The State qua the Constitution is federal in structure and independent in its exercise of legislative and executive power. However, being the creature of the Constitution the State has no right to secede or claim sovereignty. Qua the Union, State is quasi-federal. Both are coordinating institutions and ought to exercise their respective powers with adjustment, understanding and accommodation to render socio-economic and political justice to the people, to preserve and elongate the constitutional goals including secularism. 248. The preamble of the Constitution is an integral part of the Constitution. Democratic form of Government, federal structure, unity and integrity of the nation, secularism, socialism, social justice and judicial review are basic features of the Constitution.”� (emphasis supplied) 40. view of the above legal position, if we accept the legal submissions made on behalf of the Banks to hold that the provisions of SARFAESI Act override the provisions of the various Rent Control Acts to allow a bank to evict a tenant from the tenanted premise, which has become a secured asset of the bank after the default on loan by the landlord and dispense with the procedure laid down under the provisions of the various Rent Control Acts and the law laid down by this Court in a catena of cases, then the legislative powers of the State Legislatures are denuded which would amount to subverting the law enacted by the State Legislature. Surely, such a situation was not contemplated by the Parliament while enacting the SARFAESI Act and therefore, the interpretation sought to be made by the learned counsel appearing on behalf of the Banks cannot be accepted by this Court as the same is wholly untenable in law.” (emphasis supplied) A bare perusal of the aforesaid decision clearly reveals that the Bank has no right to seek eviction of a tenant on the ground of the landlord having become a defaulter of the loan advanced by the Bank. 9. In the considered opinion of this Court the decision relied upon by the learned counsel for the respondents in the case of Firozhussain Yusufbhai Vahora (supra) is distinguishable. In the case of Satyawati Tondon (supra) the Apex Court considered the maintainability of the writ petition on the ground of availability of alternative remedy. 10. 9. In the considered opinion of this Court the decision relied upon by the learned counsel for the respondents in the case of Firozhussain Yusufbhai Vahora (supra) is distinguishable. In the case of Satyawati Tondon (supra) the Apex Court considered the maintainability of the writ petition on the ground of availability of alternative remedy. 10. The respondents’ contention that that the petitioners can avail the remedy of appeal under Section 17 of the SARFAESI Act, has no merit for the reason that it has been held by the Debts Recovery Tribunal in the case of Sunil Gar Vs. Bank of Baroda & others-Securitization Application No. 217/2017(supra) that remedy of appeal cannot be availed till the occupier is dispossessed of the property by the Divisional Magistrate. In the present case, the petitioner has not yet been dispossessed till date. 11. Similarly, in the case of Firozhussain Yusufbhai Vahora (supra) also wherein it is held that the tenancy rights can be examined by the Tribunal in an appeal under Section 17 of the SARFAESI Act, is also not applicable because of the same reason as aforesaid, since the occasion to file an appeal is incidental to the dispossession. 12. In the result, both the petitions filed by the petitioners are hereby allowed and the impugned order dated 20.6.2017 (Annexure P-4) is hereby quashed as the petitioners can be evicted only by invoking the provisions of M.P. Accommodation Control Act, 1961 and by no other means. Certified copy as per rules.