Case Note & Summary
The petitioner, Amit Mohan Bhatia, claiming to be a tenant of a property attached by Maratha Sahkari Bank Ltd., filed an intervention application (Exhibit-9) before the Chief Metropolitan Magistrate (CMM), Mumbai, in proceedings under the SARFAESI Act. The petitioner relied on an Agreement of Tenancy dated 30th March 2000 and the Supreme Court judgment in Vishal N. Kalsaria v. Bank of India to argue that he could not be evicted without due process. The CMM initially rejected the application on 29th December 2017, holding that the tenancy issue must be decided by the Debt Recovery Tribunal, and allowed the bank's application under Rule 107(11)(vi)(a) of the Maharashtra Co-operative Societies Rules, 1961 for possession. The petitioner challenged this in Writ Petition No.212 of 2018, which was allowed on 23rd January 2018, remanding the matter for fresh hearing on all aspects including tenancy. After remand, the CMM again rejected the petitioner's application on 9th February 2018, finding that the tenancy agreement was not genuine and not binding on the bank. The petitioner then filed the present writ petition under Article 227. The High Court examined the CMM's order and found that the CMM had correctly considered the evidence, including the fact that the tenancy agreement was not registered, the rent receipts were not produced, and the petitioner failed to prove that the tenancy was created prior to the mortgage. The court held that the CMM has jurisdiction to decide the genuineness of a tenancy claim under Section 17(4A) of the SARFAESI Act. The court also noted that the petitioner's claim was not bonafide and that the bank was entitled to take possession. The High Court dismissed the writ petition, upholding the CMM's order and confirming the bank's right to possession.
Headnote
A) SARFAESI Act - Tenancy Claim - Jurisdiction of CMM - Section 17(4A) of SARFAESI Act, 2002 - The CMM has jurisdiction to decide the genuineness of a tenancy claim when the tenant intervenes in possession proceedings. The CMM must examine whether the tenancy is bonafide and whether it was created prior to the mortgage. In this case, the CMM found the tenancy agreement not genuine and not binding on the bank, and the High Court upheld this finding. (Paras 7-10)
B) SARFAESI Act - Eviction of Tenant - Due Process - Section 17(4A) of SARFAESI Act, 2002 - A tenant in possession of secured assets cannot be evicted without following due process of law. However, if the tenancy is found to be not genuine or created after the mortgage, the tenant is not entitled to protection. The bank can take possession through the Recovery Officer under Rule 107(11)(vi)(a) of the Maharashtra Co-operative Societies Rules, 1961. (Paras 8-10)
C) Co-operative Societies - Recovery of Dues - Rule 107(11)(vi)(a) of Maharashtra Co-operative Societies Rules, 1961 - The Special Recovery Officer is empowered to take possession of secured assets for recovery of dues. The CMM's order allowing the bank's application for possession was upheld. (Paras 4, 10)
Issue of Consideration
Whether the Chief Metropolitan Magistrate (CMM) has jurisdiction to decide the genuineness of a tenancy claim in proceedings under the SARFAESI Act, and whether the tenant can be evicted without following due process.
Final Decision
The High Court dismissed the writ petition, upholding the order of the Chief Metropolitan Magistrate dated 9th February 2018, which rejected the petitioner's intervention application and allowed the bank's application for possession under Rule 107(11)(vi)(a) of the Maharashtra Co-operative Societies Rules, 1961.
Law Points
- Tenancy claim under SARFAESI Act
- Section 17(4A) of SARFAESI Act
- 2002
- Rule 107(11)(vi)(a) of Maharashtra Co-operative Societies Rules
- 1961
- Article 227 of Constitution of India
- Vishal N. Kalsaria v. Bank of India (2016) 3 SCC 762
Case Details
2018 LawText (BOM) (02) 47
Writ Petition No.2298 of 2018
Dr. Shalini Phansalkar-Joshi
Mr. Vishal Kanade, Mr. Girish Thakur for Petitioner; Mr. Mahesh N. Devlekar for Respondent No.1; Mr. A.A. Alaspurkar, A.G.P. for Respondent No.4-State
Maratha Sahkari Bank Ltd. & Ors.
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Nature of Litigation
Writ petition under Article 227 of the Constitution challenging the order of the Chief Metropolitan Magistrate rejecting the petitioner's intervention application claiming tenancy and allowing the bank's application for possession of secured assets.
Remedy Sought
The petitioner sought to set aside the CMM's order dated 9th February 2018 and to restrain the bank from evicting him without following due process.
Filing Reason
The petitioner claimed to be a bonafide tenant of the secured assets and argued that he could not be evicted without due process of law.
Previous Decisions
The CMM initially rejected the petitioner's application on 29th December 2017, which was set aside by the High Court in Writ Petition No.212 of 2018 on 23rd January 2018, remanding the matter for fresh hearing. After remand, the CMM again rejected the application on 9th February 2018.
Issues
Whether the Chief Metropolitan Magistrate has jurisdiction to decide the genuineness of a tenancy claim in SARFAESI proceedings?
Whether the petitioner's tenancy agreement was bonafide and binding on the bank?
Whether the bank can take possession of the secured assets without evicting the tenant through a separate proceeding?
Submissions/Arguments
Petitioner argued that he is a bonafide tenant under an Agreement of Tenancy dated 30th March 2000 and relied on Vishal N. Kalsaria v. Bank of India to submit that he cannot be evicted without due process.
Respondent-Bank argued that the tenancy agreement was not genuine, not registered, and the petitioner failed to produce rent receipts or prove that the tenancy was created prior to the mortgage.
Ratio Decidendi
The Chief Metropolitan Magistrate has jurisdiction under Section 17(4A) of the SARFAESI Act to decide the genuineness of a tenancy claim. A tenant claiming protection must prove that the tenancy is bonafide and created prior to the mortgage. If the tenancy is found not genuine, the bank is entitled to take possession through the Recovery Officer without a separate eviction proceeding.
Judgment Excerpts
The Trial Court has, however, holding that the issue of tenancy has to be decided by the Debt Recovery Tribunal and he is not required to look into it, vide order dated 29th December 2017, rejected the said application and allowed the Application of Respondent No.1-Bank filed under Rule 107(11)(vi)(a) of the Maharashtra Co-operative Societies Rules, 1961.
The Trial Court has again heard learned counsel for the Petitioner and Respondent No.1-Bank and after considering the rival submissions, has again rejected the application at Exhibit-9, vide impugned order dated 9th February 2018.
In the present case, the Trial Court has considered the rival submissions and has come to the conclusion that the Petitioner has failed to prove that he is a bonafide tenant of the suit property.
The Trial Court has also considered the fact that the Petitioner has not produced any rent receipts to show that he is paying rent to the owner of the property.
In my opinion, the Trial Court has rightly held that the Petitioner has failed to prove that he is a bonafide tenant of the suit property and that the tenancy agreement is not genuine and not binding on the Bank.
Procedural History
The petitioner filed an intervention application (Exhibit-9) before the Chief Metropolitan Magistrate in Case No.72/SA/2017. The CMM rejected it on 29th December 2017. The petitioner challenged this in Writ Petition No.212 of 2018, which was allowed on 23rd January 2018, remanding the matter for fresh hearing. After remand, the CMM again rejected the application on 9th February 2018. The petitioner then filed the present writ petition under Article 227, which was dismissed on 22nd February 2018.
Acts & Sections
- Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act): Section 17(4A)
- Maharashtra Co-operative Societies Rules, 1961: Rule 107(11)(vi)(a)
- Constitution of India: Article 227
