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2021 DIGILAW 29 (TS)

Nune Munthala Rama Laxmi v. Canara Bank

2021-01-25

A.RAJASEKHAR REDDY, KUNURU LAKSHMAN

body2021
JUDGMENT : 1. Assailing the notice dated 5.11.2020 issued by respondent No. 1-Bank to the petitioner to hand over possession of the schedule property on or before 19.11.2020, the petitioner filed the present writ petition to declare the same as illegal and to set aside the same. 2. Heard Mr. Muddu Vijay, learned Counsel for the petitioner and Mr. M.V.K. Viswanadham, learned Counsel appearing on behalf of respondent No. 1-Bank. 3. The case of the petitioner is that she is a tenant of property bearing H. No. 5-664/1 (Old) and H. No. 1-5-660/2 (New) on plot No. 6, admeasuring 191.75 square yards, situated at Kummarabasthi, Alwal, Malkajigir, Ranga Reddy District, and Mr. S. Seetharama Rao S/o. Sesharao is the owner of the said property. The said owner has executed lease agreement on 28.3.2016 in her favour for a period of five (05) years which expires on 27.3.2021. The monthly rent is Rs. 6,000/-. She has also deposited an amount of Rs. 50,000/- towards advance and the same shall be refundable. The owner has also executed a document on 11.7.2016 agreeing to sell the subject property to her for a sum of Rs. 40,00,000/- (Rupees forty lakh only). The petitioner has been paying the monthly rent regularly. 4. The petitioner's further case is that she received the impugned notice vide Ref. 13085/Tenant Notice/2020-2021/001, dated 5.11.2020 on 8.11.2020 under Section 13(4)(d) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest Act, 2002 (for short 'SARFAESI Act, 2002) read with Rule 4(5)(1)(iii) of the Security Interest (Enforcement) Rules, 2002. Respondent No. 1-Bank has also pasted the possession notice, dated 'nil' to the door of subject property, and as per the same, it has taken the possession on 2.1.2020, whereas, as per the impugned notice, respondent No. 1 is asking the petitioner to hand over the property on or before 19.11.2020. Through the impugned notice, the petitioner came to know that the original owner has sold the subject property in favour of M/s. Om Sri Baireeswara Polymers and Fittings, respondent No. 2 herein. She does not know about the loan transaction between respondent Nos. 1 and 2. Since the petitioner is in possession and enjoyment of the subject property, respondent No. 1-Bank cannot issue the impugned notice. Prior to the impugned notice, she did not receive any other notice. She does not know about the loan transaction between respondent Nos. 1 and 2. Since the petitioner is in possession and enjoyment of the subject property, respondent No. 1-Bank cannot issue the impugned notice. Prior to the impugned notice, she did not receive any other notice. Thus, the impugned notice is against the provisions of SARFAESI Act and the Rules framed there-under and, therefore, declare the impugned notice as illegal. 5. Respondent No. 1-Bank filed its counter denying the contentions of the petitioner. According to it, respondent No. 2 had availed credit facilities to the tune of Rs. 100.00 lakh of SOD facility (working capital) and Rs. 300.00 lakh of term loan facility vide sanction letter dated 5.12.2016. As a security for the said facilities, respondent No. 2 had created an equitable mortgage by way of Memorandum of Deposit of Original Title Deeds dated 21.9.2016 and 12.6.2015 in favour of respondent No. 1 on 22.12.2016 vide document No. 129 of 2016. 6. According to respondent No. 1-Bank, it has filed O.A. No. 875 of 2019 before the Debts Recovery Tribunal (DRT), Hyderabad for recovery of dues and respondent No. 2 did not appear before the DRT despite receipt of summons and the said case is pending. Respondent No. 2 has also filed S.A. No. 03/2020 before the DRT challenging the possession notice and obtained ex parte interim order on 6.1.2020 subject to certain conditions. Respondent No. 2 did not comply with such conditions. It appears that respondent No. 2 in collusion with the petitioner herein are preventing the Bank from realization of lawful dues. Respondent No. 2 herein is due and liable to pay a sum of Rs. 2,95,08,749.30 as on 23.12.2019 with future interest. 7. According to the Bank, the stamp paper on which the lease agreement said to have executed by the owner in favour of the petitioner was purchased by the husband of the petitioner and it is for self. As per law, the stamp paper should be in the name of beneficiary. Thus, the alleged agreement is invalid in the eye of law. Further, the document under which the owner said to have received an amount of Rs. 40.00 lakh for sale of subject property does not indicate as to the mode of said payment as any payment above Rs. 20,000/- should be by way of cheque. Thus, the alleged agreement is invalid in the eye of law. Further, the document under which the owner said to have received an amount of Rs. 40.00 lakh for sale of subject property does not indicate as to the mode of said payment as any payment above Rs. 20,000/- should be by way of cheque. The petitioner has not filed any document to show that the owner is having any title over the subject property. 8. Mr. Muddu Vijai, learned Counsel for the petitioner, would submit that respondent No. 1-Bank has issued notice dated 5.11.2020 to the petitioner for vacating the subject property and the same would amount to violation of principles of natural justice as she was not given any opportunity of being heard before initiation of proceedings under the provisions of SARFAESI Act and that, respondent No. 2 is no way concerned with her as she entered into lease agreement with Mr. S. Seetharama Rao, who is the owner of the subject property. In support of his contentions, the learned Counsel has relied upon the principle laid down by the Hon'ble Supreme Court in Harshad Govardhan Sondagar v. International Assets Reconstruction Company Limited, II (2014) CCR 137 (SC) : II (2014) BC 340 (SC) : II (2014) DLT (Cri) 836 (SC) : III (2014) SLT 469 : (2014) 6 SCC 1 , Vishal N. Kalsaria v. Bank of India, I (2016) SLT 393 : 226 (2016) DLT 474 (SC) : I (2016) DLT (Cri) 836 (SC) : I (2016) BC 471 (SC) : (2016) 3 SCC 762 . 9. On the other hand, Mr. M.V.K. Viswanadham, learned Standing Counsel appearing on behalf of respondent No. 1 would submit that respondent No. 1 has followed the due procedure in initiation of measures under the SARFAESI Act and the Bank did not violate any of the provisions therein. He would further submit that there is no error in issuing the possession notice. Respondent No. 2 at the time of availing credit facilities, mortgaged the subject property by way of deposit of title deeds. Since respondent No. 2 failed to repay the amounts due, respondent No. 1-Bankhas initiated the proceedings under the provisions of SARFAESI Act. As the petitioner herein is in possession of the subject property, the Bank has issued the notice under challenge. Since respondent No. 2 failed to repay the amounts due, respondent No. 1-Bankhas initiated the proceedings under the provisions of SARFAESI Act. As the petitioner herein is in possession of the subject property, the Bank has issued the notice under challenge. Respondent No. 2 in collusion with the petitioner is trying to prevent the Bank from realizing the due amount and, therefore, he sought to dismiss the writ petition. 10. From the above said contentions and the contents of affidavit filed in support of writ petition and the counter, the undisputed facts are that respondent No. 2 had availed the credit facility from respondent No. 1-Bank by mortgaging the subject property - secured asset herein and failed to repay the same. Therefore, respondent No. 1-Bank has initiated the proceedings under the SARFAESI Act for recovery of the dues. In the said process, it has issued the impugned notice. The petitioner herein is in possession of the subject property. She is claiming lease-hold rights under an unregistered lease agreement dated 28.3.2016 said to have executed by Mr. S. Seetharama Rao in her favour. It is also trite to note that the proceedings are at the stage of Section 13(4)(d) of the SARFAESI Act itself. 11. In view of the same, the only question that falls for consideration by this Court is as to whether the petitioner, who is claiming possessory rights over the subject property under an unregistered lease agreement dated 28.3.2016, can question/challenge the notice issued by respondent No. 1-Bank under Section 13(4)(d) of the SARFAESI Act? 12. In Harshad Govardhan Sondagar (supra), the Apex Court had an occasion to deal with the provisions of the SARFAESI Act, and the Transfer of Property Act, 1882 (for short 'T.P. Act'), and held that Section 13 of the SARFAESI Act does not provide that the lease in respect of the secured asset will get determined when the secured creditor decides to take the measures in the said section. Hence, possession of the secured asset from a lessee in lawful possession under a valid lease is not required to be taken under the provisions of the SARFAESI Act and the Chief Metropolitan Magistrate or the District Magistrate, therefore, does not have any power under Section 14 of the SARFAESI Act to take possession of the secured asset from such a lessee and hand over the same to the secured creditor. When, a secured creditor moves the Chief Metropolitan Magistrate or the District Magistrate for assistance to take possession of the secured asset, he must state in the affidavit accompanying application that the secured asset is not in possession of a lessee under the valid lease made prior to creation of the mortgage by the borrower or made in accordance with Section 65-A of the T.P. Act prior to receipt of a notice under Section 13(2) of the SARFAESI Act by the borrower. But, in the present case, respondent No. 1-Bank has issued the impugned notice under Section 13(4)(d) of the SARFAESI Act. Therefore, the principle laid down by the Apex Court in Harshad Govardhan Sondagar (supra), is not applicable to the facts of the present case. 13. In Vishal N. Kalsaria (supra), the Apex Court while dealing with the provisions of the SARFAESI Act, T.P. Act and protection given to the tenants under the relevant Rent Control Act, held that if the parties are executing their rights and liabilities in the nature of a landlord - tenant relationship and if regular rent is being paid and accepted, then the mere factum of non-registration of deed will not make the lease itself nugatory. By referring the facts of the said case and also Section 55(2) of the Maharashtra Rent Control Act, 1999, the Apex Court further held that the onus to get a deed registered is on the landlord. Neither can landlord nor the Banks be permitted to exploit the fact of non-registration of a tenancy deed against the tenant. Thus, the Apex Court reiterated the principle laid down in Harshad Govardhan Sondagar (supra). 14. In the present case, the petitioner is not claiming protection under Rent Control Act. As discussed supra, the proceedings in the present case are under Section 13 of the SARFAESI Act and, therefore, the principle held in Vishal N. Kalsaria (supra), is not applicable to the facts of the present case. 15. In view of the said settled principle of law, coming to the facts of the case on hand, the petitioner in the present writ petition is claiming tenancy and possessory rights over the secured asset under an unregistered lease agreement said to have executed by Mr. S. Seetharama Rao, but not by respondent No. 2 herein. 15. In view of the said settled principle of law, coming to the facts of the case on hand, the petitioner in the present writ petition is claiming tenancy and possessory rights over the secured asset under an unregistered lease agreement said to have executed by Mr. S. Seetharama Rao, but not by respondent No. 2 herein. The petitioner has filed a copy of the said unregistered lease agreement dated 28.3.2016, wherein the term of lease is for a period of five (05) years commencing from 28.3.2016 till 27.3.2021. By virtue of the said unregistered lease agreement, the petitioner is claiming that she is in possession of the secured asset - subject property. Therefore, respondent No. 1-Bank having knowledge of the tenancy of the petitioner over the secured asset has issued the impugned notice to the petitioner to hand over the possession of the subject property. 16. Section 107 of the T.P. Act deals with 'leases how made' and as per it, a lease of immovable property from year to year, or for any term exceeding one year, or reserving a yearly rent, can be made only by registered document. All other leases of immovable property may be made either by a registered instrument or by oral agreement accompanied by delivery of possession. 17. It is also relevant to note that as per Section 35 of the Indian Stamp Act, 1899, no instrument chargeable with duty shall be admissible in evidence for any purpose by any person having by law or consent of parties, authority to receive evidence, or shall be acted upon, registered or authenticated by any such person or by any public officer. But, in the present case, it appears that lease agreement dated 28.3.2016 is not properly stamped and unregistered one. 18. It is also relevant to note that as per Section 17(1)(d) of the Registration Act, 1908 as amended by A.P. Act No. 4 of 1999 w.e.f. 1.4.1999, registration of leases of immovable property is compulsory irrespective of period of lease. 19. 18. It is also relevant to note that as per Section 17(1)(d) of the Registration Act, 1908 as amended by A.P. Act No. 4 of 1999 w.e.f. 1.4.1999, registration of leases of immovable property is compulsory irrespective of period of lease. 19. In Samir Mukherjee v. Davinder K. Bajaj, 91 (2001) DLT 50 (SC) : III (2001) SLT 517 : (2001) 5 SCC 259 , the Apex Court by dealing with Sections 106 and 107 of the T.P. Act held that leases for agricultural or manufacturing purposes shall be deemed to be lease from year to year and all other leases shall be deemed to be from month to month. Existence of a valid lease is a pre-requisite to invoke the rule of construction embodied in Section 106 of the T.P. Act. It further held that under Section 107 of the T.P. Act, parties have an option to enter into a lease in respect of an immovable property either for a term less than a year or from year to year, for any term exceeding one year or reserving a yearly rent. If they decide upon having a lease in respect of any immovable property from year to year or for any term exceeding one year, or reserving yearly rent, such a lease has to be only by a registered instrument. In the absence of a registered instrument no valid lease from year to year or for a term exceeding one year or reserving a yearly rent can be created. If the lease is not a valid lease within the meaning of the opening words of Section 106 the rule of construction embodied therein would not be attracted. The above is the legal position on a harmonious reading of both the sections. 20. Whereas, in the present case, as discussed supra, the petitioner herein is claiming the possessory and lease hold rights over the subject property under an unregistered lease agreement dated 28.3.2016 said to have executed by Mr. S. Seetharama Rao, but not by respondent No. 2. The petitioner herein did not make the said S. Seetharama Rao as party to the present writ petition. The lease is for a period of five years from 28.3.2016 to 27.3.2021. The property is immovable property and lease agreement is an unregistered one. Therefore, it is not a valid document. 21. S. Seetharama Rao, but not by respondent No. 2. The petitioner herein did not make the said S. Seetharama Rao as party to the present writ petition. The lease is for a period of five years from 28.3.2016 to 27.3.2021. The property is immovable property and lease agreement is an unregistered one. Therefore, it is not a valid document. 21. As discussed supra, the petitioner in the present case is not haying valid lease and, therefore, she cannot question the impugned notice issued by respondent No. 1-Bank under Section 13(4)(d) of the SARFAESI Act asking the petitioner to hand over the secured asset on or before 5.11.2020. 22. It is relevant to note that respondent No. 2 has filed an application under Section 17 of the SARFAESI Act vide S.A. No. 3 of 2020 challenging the notice dated 2.1.2020 issued under Section 13(4) of the SARFAESI Act, and the DRT-II, Hyderabad has passed an interim order dated 6.1.2020 in I.A. No. 62 of 2020 in S.A. No. 3 of 2020 staying all further proceedings pursuant to the said possession notice dated 2.1.2020 in respect of the petition schedule properties therein subject to respondent No. 2 herein depositing 30% of the total outstanding dues indicated therein in two instalments. Thus, respondent No. 2 has already availed the alternative and efficacious remedy available under the SARFAESI Act by way of filing an application under Section 17 of the SARFAESI Act vide S.A. No. 3 of 2020 and the same is pending. It is also relevant to note that perusal of the order dated 6.1.2020 passed in I.A. No. 62 of 2020 would reveal that respondent No. 2 herein has not made the petitioner herein as party to the said proceedings. Thus, the claim of the petitioner with regard to her possession over the subject property appears to be a serious disputed fact. However, it is respondent No. 1-Bank which has issued notice under Section 13(4)(d) of the SARFAESI Act to the petitioner herein and, therefore, we are refrained ourselves in going into the said aspect. 23. It is relevant to note that there is an alternative and efficacious remedy to the petitioner herein under Section 17(1) of the SARFAESI Act, which is reproduced hereunder. "17. Application against measures to recover secured debts. 23. It is relevant to note that there is an alternative and efficacious remedy to the petitioner herein under Section 17(1) of the SARFAESI Act, which is reproduced hereunder. "17. Application against measures to recover secured debts. (1) Any person (including borrower), aggrieved by any of the measures referred to in Sub-section (4) of Section 13 taken by the secured creditor or his Authorised Officer under this Chapter, [may make an application along with such fee, as may be prescribed] to the Debts Recovery Tribunal having jurisdiction in the matter within forty-five days from the date on which such measure had been taken: Provided that different fees may be prescribed for making the application by the borrower and the person other than the borrower. Explanation--For the removal of doubts, it is hereby declared that the communication of the reasons to the borrower by the secured creditor for not having accepted his representation or objection or the likely action of the secured creditor at the stage of communication of reasons to the borrower shall not entitle the person (including borrower) to make an application to the Debts Recovery Tribunal under this sub-section. (1A) An application under Sub-section (1) shall be filed before the Debts Recovery Tribunal within the local limits of whose jurisdiction: (a) the cause of action, wholly or in part, arises; (b) where the secured asset is located; or (c) the branch or any other office of a Bank or financial institution is maintaining an account in which debt claimed is outstanding for the time being] (2) xxx xxx xxx (3) xxx xxx xxx (4) xxx xxx xxx" 24. It is also relevant to note that by way of an amendment vide Act No. 44 of 2016 w.e.f. 1.9.2016, Section 4A was inserted in Section 17 of the SARFAESI Act, which is reproduced as under: "(4A) Where-- (i) any person, in an application under Sub-section (1), claims any tenancy or leasehold rights upon the secured asset, the DRT, after examining the facts of the case and evidence produced by the parties in relation to such claims shall, for the purposes of enforcement of security interest, have the jurisdiction to examine whether lease or tenancy,-- (a) has expired or stood determined; or (b) is contrary to Section 65A of the Transfer of Property Act, 1882 (4 of 1882); or (c) is contrary to terms of mortgage; or (d) is created after the issuance of notice of default and demand by the Bank under Sub-section (2) of Section 13 of the Act; (ii) the Debt Recovery Tribunal is satisfied that tenancy right or leasehold rights claimed in secured asset falls under the Sub-clause (a) or Sub-clause (b) or Sub-clause (c) or Sub-clause (d) of Clause (i), then notwithstanding anything to the contrary contained in any other law for the time being in force, the Debts Recovery Tribunal may pass such order as it deems fit in accordance with the provisions of this Act." 25. Thus, the provision of law has been amended by inserting Section 17(4A) in SARFAESI Act, specifically conferring jurisdiction on the Debts Recovery Tribunal for deciding the question of tenancy rights. Even a cursory reading of the Section 17(4A) of SARFAESI Act would make it clear that if any person claims any tenancy or lease-hold rights in respect of secured asset, the Debts Recovery Tribunal will have the jurisdiction to examine the claim of tenancy or lease-hold rights and pass appropriate orders. The Legislative intent of the said amendment appears to be that any person claiming tenancy or lease-hold rights upon secured asset can approach the jurisdictional Debts Recovery Tribunal under the said provision, so that the Debts Recovery Tribunal will examine the claim of tenancy or lease-hold rights and pass appropriate orders. 26. The Legislative intent of the said amendment appears to be that any person claiming tenancy or lease-hold rights upon secured asset can approach the jurisdictional Debts Recovery Tribunal under the said provision, so that the Debts Recovery Tribunal will examine the claim of tenancy or lease-hold rights and pass appropriate orders. 26. As stated above, there is an alternative and efficacious remedy to the petitioner herein by approaching the jurisdiction Debts Recovery of Tribunal by way of filing an application under Section 17(1) of the SARFAESI Act, whereas, in the present case, the petitioner herein without availing the said remedy filed the present writ petition. There is no allegation of violation of principles of natural justice, jurisdiction and violation of any statutory provision or rule by respondent No. 1-Bank in the affidavit filed by the petitioner to maintain the present writ petition. There is no pleading in the writ affidavit to the said effect. Thus, viewed from any angle, the writ petition fails and accordingly the same is liable to be dismissed. 27. Since the matter was argued on merits, we have dealt with the same and since lease deed is insufficiently stamped as per Article 31 of the Schedule I-A of the Indian Stamp Act, the same cannot be looked into as per Section 35 of the Indian Stamp Act and the same is also unregistered as period of one year is over from the date of lease, the petitioner cannot be granted any relief in this writ petition as per dicta laid down by the Apex Court in paragraph No. 36 of Harshad Govardhan Sondagar (supra). 28. In view of the foregoing discussion, the present writ petition is dismissed. The interim stay granted by this Court on 3.12.2020 stands vacated. However, there shall be no order as to costs. 29. At this stage, learned Counsel for the petitioner seeks three (3) months time to vacate the subject premises pursuant to notice, dated 5.11.2020. 30. It is submitted by learned Counsel for the petitioner that the petitioner is a tenant of subject property from 28.3.2016 and accordingly, a lease deed was entered between the petitioner and the 2nd respondent on 28.3.2016. The subject property is a residential house. 31. 30. It is submitted by learned Counsel for the petitioner that the petitioner is a tenant of subject property from 28.3.2016 and accordingly, a lease deed was entered between the petitioner and the 2nd respondent on 28.3.2016. The subject property is a residential house. 31. The learned Counsel for the petitioner would further submit that the petitioner herein is a woman and therefore, by considering the said fact, he sought three (3) months time to vacate the subject premises. 32. Considering the said fact and also the fact that the petitioner is a woman and she is residing in the subject residential house since last 4 years, forty five (45) days time from today is granted to the petitioner to vacate the subject premises and handover the possession of the subject property to respondent No. 1-Bank. As a sequel, miscellaneous petitions, if any, pending in the writ petition shall stand closed.