Mr. Syed Abbas vs Authorised Officer, UCO Bank

S. Ravi Kumar, Chairperson

This Appeal is preferred under Section 18 of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act (SARFAESI Act) against order dated 22.6.2022 of DRT-I, Chennai in SA 44/2021. Brief facts leading to this appeal are as follows.

Appellants herein filed SA 44/2021 invoking Section 17 of SARFAESI Act, challenging order of CMM, Egmore, Chennai in Crl.M.P. 5873/2020 dated 29.12.2020 contending that first respondent bank has not followed SARFAESI provisions and order of CMM is contrary to the provisions of the Act. First respondent bank resisted the said application and on a consideration of contentions and rival contentions, Tribunal below dismissed SA, holding it is lack of merits. Aggrieved by the same, present Appeal is preferred.

Heard both sides.

Advocate for appellants submitted that appellants herein filed SA 44/2021 contending that they are tenants of secured asset and first respondent bank obtained an order from Chief Metropolitan Magistrate, Egmore, Chennai behind their back and first respondent bank issued Possession Notice without following Rule 8(1) of Security Interest (Enforcement) Rules, 2002 and without considering possession of appellants as tenants, has obtained order from Ld. CMM and on this ground prayed to set aside order of Ld. CMM, Egmore, Chennai dated 29.12.2020 passed under Section 14 of SARFAESI Act in Cr.M.P.No.5873/2020.

Advocate for auction purchaser, Shri Vijaya Mehanathan submitted that during pendency of SA, appellant used to pay rent but after disposal of SA, rent has not been paid to auction purchaser but deposited with the first respondent bank and auction purchaser having purchased the property in the year 2019 is not able to enjoy the fruits of sale certificate on the ground of pendency of these proceedings.

Advocate for first respondent bank submitted that SA 44/2021 as filed is not maintainable and Tribunal below rightly dismissed the application holding that it lacks any merits.

When this appeal is taken up and when it is put to advocate for appellants under what provision Tribunal below can set aside the order of Ld. CMM passed under Section 14 of SARFAESI Act, Ld. Advocate submitted that under Section 17(4)(A), appellants are entitled to file that application. Therefore, it is relevant to examine the said provision, which reads as follows:

“Section 17(4)(A):

(i) Any person, in an application under sub-section (1) claims any tenancy or leasehold rights upon the secured asset, the Debt Recovery Tribunal 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) In 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; and

(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 Debt Recovery tribunal may pass such order as it deems fit in accordance with the provisions of this Act.”

A bare reading of the above provision would indicate that a person in occupation of secured asset as tenant has right to file application under Section 17 and if Tribunal is satisfied that tenancy right or lease hold rights as claimed in the secured asset are established, then, notwithstanding anything to the contrary contained in any other law for the time being in force, DRT may pass such order as it deems fit in accordance with provisions of SARFAESI Act. That means, if tenancy rights are established, then, that has to be recorded and secured creditor has to proceed against secured asset subject to lease hold rights of that party. But, here, the very prayer is to set aside order of Ld. CMM, which is not provided under Section 17(4)(A), as submitted by Ld. Advocate for appellants.

I do not find any wrong in the order of Tribunal below when the very relief claimed is not maintainable, entertaining Securitisation Application challenging order of CMM under the SARFAESI Act, in my view, is not correct. Even otherwise, on merits also, Tribunal below rightly dismissed SA 44/2021 and I do not find any grounds to interfere with the same.

For these reasons, Appeal RA (SA) 27/2022 is dismissed with no order as to costs.

All pending IAs, if any, stand closed.