Tenancy created after creation of charge by borrower on property : No protection in law available to such tenant : Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002.

The petitioner has challenged the notice issued u/s.13(4) of
the Securitisation and Reconstruction of Financial Assets and Enforcement of
Security Interest Act, 2002. The petitioner had claimed that he is a tenant in
the property in dispute since August, 2006 and the notices have been issued to
the borrowers after recalling the huge outstanding amount of loan with interest.
The charge on the property was created much earlier to the commencement of
tenancy. In such a situation, a tenant of the present nature would not enjoy any
protection as the property was already been encumberated by the charge created
over it by the owner/borrower.

Tenancy has to be proved by a document or otherwise prior to
the date of creation of charge of equitable mortgage. It is well settled that a
mortgage or mortgagor cannot induct a tenant without mutual agreement and confer
upon a tenant any right to the prejudice of either of the parties. In the
instant case, the relationship of the petitioner as a tenant with the borrower
as a landlord admittedly came into existence after the creation of charge by the
borrower on the property which is under the tenancy of the petitioner and,
therefore, no protection in law would be available to such a tenant. It was held
that the petitioner in his capacity as tenant does not enjoy any right qua the
charge holder respondent Bank.