Tenancy rights — Property in possession of tenant — SARFAESI Act has overriding effect over local Rent Control Act.

The petition had been filed by the petitioner Vikas Book Ltd. against the respondent No.1 Bank of Baroda and respondent No. 2 Shri Umraomal Chordia, seeking issuance of order or direction against the respondent No. 1 Bank to the effect that the Bank may proceed under the said Act without disturbing the tenancy rights of the petitioner and that the petitioner should not be evicted from the property in question without following the due process of law. It has been averred inter alia in the petition that the petitioner was in occupation as tenant of the residential premises by virtue of the rent note dated 10-5- 2006 executed by the landlord i.e., respondent No. 2 in favour of the petitioner. According to the petitioner, on 7-2-2011, the offices of the respondent No. 1 along with some police personnel came to the said premises and asked the petitioner to vacate the premises.

It has been contended by the respondent Bank that the property in question was mortgaged by the respondent No. 2 towards the security for the repayment of loan advanced to the borrower Vipul Gems along with other properties. Since the said Vipul Gems did not pay the dues of the bank, action was initiated against borrower/ mortgagor u/s.13(4) of the said Act. It has also been contended in the said reply that the petition was filed by the petitioner in collusion with the respondent No. 2 so as to create obstructions in the way of the respondent Bank from taking possession of the disputed property and to frustrate the dues of the bank. The Court held that if the lease was created in contravention of section 65A of the Transfer of Property Act, by the mortgagor in favour of the lessee, neither the mortgagor, nor the lessee can claim any protection to defeat the right of the mortgagee.

The Court observed that in the instant case, there is nothing on record to suggest that the respondent Bank had the knowledge about any tenancy rights created in favour of the petitioners in respect of the mortgaged property in question, while granting credit facilities to the borrower Vipul Gems P. Ltd. The third party interest created before or after the mortgage in question could not frustrate the provisions of the said Act having effect of overriding the other laws for the time being in force.

The Court observed that the petitions had been filed as a collusive and manoeuvred exercise between the petitioners and the respondent No. 2 Umraomal, so as to create the inroads and obstructions in the way of the respondent Bank to take the actual possession of the disputed premises, consequent upon the measures taken by the respondent Bank u/s.13(4) of the said Act. The petitions having been filed by the petitioners as proxy and frivolous litigation at the instance of the respondent mortgagors, the Court held that SARFAESI Act has overriding effect over local Rent Control Act, accordingly the petition of the tenant was dismissed.