Purnangini Trehan vs Intec Capital Ltd. And Ors

P.K. Bhasin, J

In this appeal the order dated 28.4.2018 passed the learned Tribunal below (DRT) is being challenged by the appellant, owner of a commercial flat No. 908, (9th floor) Plot No. 15, Ansal Bhawan, Kasturba Gandhi Marg, New Delhi, who had equitably mortgaged it in favour of M/s. Unitel Credit (P) Ltd. sometime in the year 2010, to secure the re-payment of loan of three crores of rupees obtained from the said Company by respondent No. 2 herein M/s. Paras Equipments & Engineering Pvt. Ltd. The said lending Company subsequently got amalgamated with the present respondent No. 1 Company. The borrower Company defaulted in re-payment of the loan despite having been served with notice of demand under Section 13(2) of SARFAESI Act after declaration of its account as an NPA (Non Performing Asset) and thereafter proceedings were initiated under Section 13(4) of SARFAESI Act by the secured creditor to take the actual physical possession of the aforesaid mortgaged flat.

The appellant-mortgagor then approached the DRT with an application (S.A.) under Section 17(1) of SARFAESI Act with a prayer that her mortgaged property's possession be not permitted to be taken over by respondent No. 2 herein from respondent No. 4 herein, M/s. Mekaster Engineering Limited, which Company is stated to be her tenant in the mortgaged flat. The appellant had also made a prayer for an interim injunction but that relief has been declined by the learned DRT vide impugned order dated 28.4.2018 relevant parts thereof are re-produced below:

"2. By way of the present interim application, the applicant prayed to stay the operation of the orders dated 31.3.2018 and 17.4.2018 passed by the Tribunal of Sh. Deepak Sherwat, CMM, Patiala House Courts, New Delhi: restrain the respondent No. 5 from taking any action in pursuance of its letter dated 16.4.2018 and grant stay on the operation of taking the possession of the property bearing flat No. 908, (9th floor) Plot No. 16, Ansal Bhawan, Kasturba Gandhi Marg, Delhi-110001 (hereinafter referred as "property in question")

Learned Counsel for the applicant submits that the Hon'ble NCLT Ahmedabad has admit the petition under Section 19 of the Insolvency and Bankruptcy Code 2016 (for short "I&B Code") qua the respondent No. 4 and also ordered for moratorium under Section 14 of the I&B Code on 4.8.2017 and 24.1.2018 which is still in operation. He submits that the moratorium under Section 14 of the I&B Code would apply to the SARFAESI Act, 2002 also and I&B Code has overriding effect over all other statute including SARFAESI. Despite the said fact the respondent No. 1 obtained the order from learned CCM and also learned CCM has passed the order for possession of the property in question. He submits that the applicant by way an application under Section 340 of the Cr.P.C has brought the said fact before the learned CCM however, learned CMM dismissed the said application. He also submits that the matter was mentioned before the Hon'ble NCLT vide order dated 25.4.2018 has directed that all the concerned are legally expected to abide the moratorium order under Section 14 of the I&B Code. He also referred the judgment of Hon'ble Apex Court in the matter of Alchemist Asset Reconstruction Company Ltd. v. M/s. Hotel Gaudavan Pvt. Ltd. (Civil Appeal No. 16929 of 2017) and submits that all the action of respondent No. 1 under the SARFAESI Act, 2002 is null and void thus, the impugned possession- notice may be quashed.

Learned Counsel for the respondent No. 1 submits that the respondent No. 4 is a corporate debtor and the property in question is not its property therefore, in terms of Section 14 of the I&B Code as well as judgment of Hon'ble NCLAT in the matter of Alpha & Omega Diagnostics (India) Ltd. v. Asset Reconstruction Company of India Ltd. & Ors. (Company Appeal (AT) (Insol.) No. 116/2017) and also in Schweitzer Systematic India Pvt. Ltd. v. Phoenix ARC Pvt. Ltd. & Ors. (Company Appeal (AT) (Insolvency) No. 129/2017), the property in question do not fall within the category of the properties of the respondent No. 4 thus, moratorium as such is not applicant for the property in question. He submits that the owner of the property in question and since July, 2014 applicant did not paid the dues of the respondent No. 1 therefore, action under SARFAESI Act, 2002 were initiated thus, he submits that the present interim relief application may be dismissed.

The only question which is raised by learned Counsel for the applicant is that since a moratorium period under the provisions of I&B Code is declared qua the respondent No. 4 therefore, any action under the SARFAESI Act, is not sustainable against the property in question. Admittedly, the said issue was already raised before the Hon'ble NCLT, Ahmedabad Bench under Section 60(5) of the I&B Code and Hon'ble NCLT vide dated 25.4.2018 has decided the issue in following manner:

"Therefore, in the light of the above stated decision and in view of the announcement of moratorium order under Section 14 of the I&B Code, all concerned are legally expected to abide the same.

Failing which this may lead to attract the penal provision under Section 74 of the I&B Code.

That apart the RP is at liberty to challenge the impugned action of Authorized official and the order of the learned Chief Metropolitan Magistrate before a revisional Court/Higher forum, under the relevant provision of the CRPC and pray for appropriate direction to the concerned to follow the provision of the I&B Code in the light of the rulings of Hon'ble Supreme Court."

Therefore, in the light of the above observation made by Hon'ble NCLT, I am of the view that since a similar issue and on the same ground has already been decided by a Competent Court therefore, the present application is not maintainable being a forum shopping tactics thus, the present interim relief application is hereby declined accordingly."

It becomes clear from a reading of the impugned order of the learned DRT and also from the submissions, oral as well as written, from the side of the appellant and respondent No. 1, that the appellant is trying to save her tenant from being dispossessed from her flat which is mortgaged with respondent No. 1. At one time the tenants had no remedy to avail of whenever a secured creditor of the landlord took recourse to the provisions of SARFAESI Act and that situation used to cause lot if injustice to the tenants. However, when the Hon'ble Supreme Court in one of the cases Vishal N. Kalsaria v. Bank of India & Ors., I (2016) SLT 393 : 226 (2016) DLT 474 (SC) : I (2016) DLT (Cri) 836 (SC) : I (2016) BC 471 (SC) : (2016) 3 SCC 762, noticed this predicament of the tenants of the mortgaged properties the Government came out with a provision in the SARFAESI Act whereunder the aggrieved tenants could also approach DRTs whenever there was a threat of their dispossession from the properties in their occupation which stood mortgaged with a Bank or some recognised financial institution as a security for re-payment of loans obtained by their landlords. That provision added in SARFAESI Act was in the form of Section 17(4A) which reads as under-

"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 measures had been taken:

xxx xxx xxx

4A. Where:

(i) Any person, in on 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 purpose 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 65-A of the Transfer of Property Act, 1882 (4 of 1883); 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 Debts 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."

In view of this provision inserted in SARFAESI Act it is clear that now even a tenant can approach the DRT with a grievance that no secured creditor of its landlord can dispossess it from the leased property even if the same is mortgaged by its landlord with a Bank or any financial institution for the re-payment of loan taken by the landlord. In the present case the alleged tenant M/s. Mekaster Engineering Ltd., however, has come forward with an application before the DRT under Section 17(1) read with Sub-section 4A of SARFAESI Act to protect its possession in the mortgaged flat in question. On the contrary its landlady, the appellant herein, is fighting this legal battle on its behalf. Prima facie, the appellant has no right to resist the measures initiated by her secured creditor to recover the loan money re-payment of which she had guaranteed by placing at the disposal of the secured creditor her property. The only pointed urged at the time of arguments by the learned Counsel for the appellant and as was urged even before the DRT was that the appellant's tenant who is in possession of the flat in question is being proceeded against as a corporate debtor under the provisions of the Insolvency and Bankruptcy Code, 2016 and as a result of the proceedings before NCLT moratorium has come into operation in respect of the properties of the said corporate debtor, tenant of the appellant, and consequently no action can be taken by the secured creditor here to take possession of the leased premises in its occupation. However, this Tribunal need not to go into the question whether the flat in question becomes the property of the corporate debtor which happens to be a tenant in the property which does not belong to it since is the fight which is to be fought by the corporate debtor itself before the competent forum and the appellant has no locus to fight for her tenant taking shelter under the provisions of the Insolvency and Bankruptcy Code, 2016 Similarly the alleged tenant in occupation of the mortgaged property in question could itself have taken recourse to the remedy under Section 17(4A) of SARFAESI Act through the Resolution Professional concerned and in fact even it was observed by the NCLT also when it was brought to its notice by the R.P. that SARFAESI measures had been initiated by the respondent No. 1 herein in respect of the premises in which the corporate debtor was a tenant. No such steps have been taken by the RP and the appellant cannot fire from the shoulders of a third party i.e. her tenant which is a defaulting corporate debtor of some other creditor.

None of the judgments cited by the learned Counsel for the appellant says that the landlord of a mortgaged premises can invoke Section 17(4A) of SARFAESI Act. All the cited judgments deal with the effect of moratorium on the assets of the corporate debtor. So, I need not refer to those decisions as that point is not the subject matter of controversy in this litigation. The appellant has invoked Section 17 of SARFAESI Act and all that she had to plead in the S.A. and show that there was some violation of any of the provisions of SARFAESI Act by the respondent No. 1 herein. Neither she has pleaded any violation nor showed at the time of hearing through her learned Counsel whose main thrust was to convince that the appellant's tenant in the mortgaged property in question being a corporate debtor of some creditor who had approached the NCLT and moratorium having been ordered by NCLT that moratorium will come to the rescue of even the appellant despite the fact that she has nothing to do with the proceedings in which moratorium has been ordered by the NCLT. That argument has, however, no force at all behind it.

Therefore, this Tribunal finds no merit in this appeal and consequently the same is dismissed.