Sarfaesi act tenant eviction

Tenant can not be evicted. The tenancy is protected under state rent acts.

 

Dear Maru, 

Sir,

Although the SARFAESI Act & Tenancy Acts of the State operate in their individual fields, repugnancy occurs when the fields intersect. Provision of one enactment may be repugnant to a particular provision of other legislation.

Section 27 of Karnataka Rent Act, protects the Tenant from eviction, except by establishing specified grounds in the court of law. Here, the provisions of sub-section [4] (a) of section 13 read with section 14 of the Act are repugnant to the provisions of section 27 of Karnataka Rent Act.

Item 18 of List II [State List] in the Seventh Schedule of the Constitution pertains to agricultural tenancy. Hence, Legislative powers of enactment of Karnataka Rent Act cannot be said to be in exercise of legislative powers to make laws under List II [State List]. Moreover, the Transfer of Property Act falls under item 6 of the concurrent list. Under the provisions of article 254 of the Constitution, the Union legislation should prevail.

 However, tenant taking shelter under section 6 of the Specific Relief Act can be dispossessed by following “due course of Law”. There is no case law on the point holding that; eviction of a Tenant by invoking the provisions of sub-section [4] (a) of section 13 read with section 14 is not in “due Course of Law”

Accordingly, I am of the view that a tenant is liable to be evicted by the Secured Creditor in exercise of his powers by invoking the provisions of sub-section [4] (a) of section 13 read with section 14 of the SARFAESI Act.

You have raised the querry and you are contradicting it.

 

Ownership and eviction are two separate issues. Landlord of tenant can change but tenant can not be evicted.Sarfesi act can not over ride state tenancy laws.

i agree with maru. secured creditor can step into the shoes of landlord while exercising its powers under section 13(4) of SARFAESI Act, 2002 but the secured creditor shall have to seek the legal remedy for eviction of the tenant as a landlord. even section 14 cannot evict the tenant forcefully.

In Hutchison Essar South Vs.Union Bank of India (AIR 2008 Kar.14) the Hon'ble High Court Karnataka ruled that, a "bonafide tenant"  cannot be dispossesed by invoking Sec. 13 and 14 of SARFAESI Act. It is essential to examine whether the tenant is bona fide or not. Some borrowers let out such mortgaged premises to tenants suppressing the action initiated by secured creditor under the Act which is not within the knowledge of the tenant. Such tenants cannot be forcebly dispossessed.  

If the mortgaged premises is let out after creation of mortgage such tenants also cannot be dispossessed provided  such lease is not in contravention of Sec.65-A of T.P.Act.  Further as opined by my learned brothers SARFAESI Act has no overriding effect on State Rent Contrl Act. When land lord hiself cannot eject a his tenant without following the provisions of the Rent Control Act, the question of the secured creditor invoking Sec.14 SARFAESI Act does not arise at all as SARFAESI Act is not framed as an alternative to State Rent Control Act. Sec.35 of SARFAESI Act has no application in case the tenant is protected under the State Rent Control Act.  

However in cases, where borrower and tenant both have knowledge of service of demand notice under Sec. 13(2) of SARFAESI Act and the mortgage property is let out in collusion and without prior written consent from secured creditor as contemplated under Sec.13(13) of SARFAESI Actde  to defraud the secured credito's rights under SARFAESI Act and  in order to delay the process of taking physical possession by secured creditor, such tenants may be treated as "mala fide tenants"  and are liable to be ejected summerily under Sec.14 of the Act.  

If the tenancy is created legally even prior to  or after the action by lender  the tenency is protected. Mortgaged property can be given on rent or even long term lease can be created.

 

It will be lengthy legal action to prove that such lease was malafide.

 

High Court of Kerala in Pushpangadan Vs. Federal Bank :2011 (4) KLT 134 : 2011 (4) KLJ 93 [Full Bench] has examined the issue of repugnancy of SARFAESI Act vis-à-vis Rent Act. The Supreme court Judgment in STATE OF KERALA & ORS. .Vs. MAR APPRAEM KURI CO. LTD. & ANR. [DOJ :    08/05/2012]
CITATION(S)       2012 AIR 2375 =   2012 (4 )  SCR 448  =   2012 (7 )  SCC 106  =   2012 (5 )  JT 51  =   2012 (5 )  SCALE 266 : clearly recognizes that, in case of any repugnancy, provisions of central legislation should prevail over state Act, if the State legislation is  under concurrent list of seventh schedule. It is clear from Kerala High Court judgment, that Rent Act is a legislation under list III [concurrent List].    

 

 

a)      Right of theSecured Creditor to take physical possession under SARFAESI              

is repugnant to the

b)      Right of Tenant to enjoy peaceful possession under Rent Act /T.P.Act.

Secured Creditor cannot take physical possession without evicting Tenant. Resolution of rights of both is not possible. The procedure prescribed under SARFAESI does not envisage issuance of notice to the Tenant. Tenant is also not given an opportunity of being heard. Hence, violates principles of natural justice. So far, no court has held that the procedure under SARFAESI is not “due process of Law”.Tenant has to obtain a declaration that the procedure prescribed under SARFAESI Act is not a due process of law.

Does it not mean that rights of tenants are protected and they can not be evicted other than by due process of law.

Dispossession  and eviction are two different things. Dispossession u/s 13 & 14 of SARFAESI Act is different and eviction through due process of law is different. Dispossession u/s 13 & 14 of SARFAESI Act does not include eviction. SARFAESI Act is not alternative law for eviction of bonafide tenants. If the tenant is inducted with malafide intention to defeat rights of secured creditor, then dispossession u/s 13 & 14 of SARFAESI Act is appropriate measure. It cannot be called eviction. It is only dispossession

 

It is debatable that filing of eviction / ejectment suit is the only “due process of Law” available to the Secured Creditor against a Tenant. Also, no case-law is available to hold that powers of the secured creditor exercised under provisions of sub-section [4] (a) of section 13 read with section 14 of the Act is not “due process of Law” as regards a Tenant.

Example landlord is a chair and persons sitting on it can change.

 

Tenant is perpetual owner and peculciar position for fact and law.

1) Landlord can change but tanecy can not be changed at the will of tenant.

2) So the tenant can not be evicted other than by conditions  prescribed in rent law.

 

Supreme Court in M/s Transcore Vs Union of India [2007 AIR SC 712] has held “….the drawing of dichotomy between symbolic and actual possession does not find place in the scheme of NPA Act read with the 2002 Rules”. If the concept of symbolic possession is accepted, then presumably the concept of symbolic “dispossession” should imply.

There is no such law dealing with symbolic dispossession. Dispossession means forcefully removing one from possession.