Section 14 of sarfaesi act

1-it is a due process of law and at each stage the time and fixed format is there and after following all that as you have mentioned the notice/demandnotice/paper publication and all the financial institute will approach the concerned CMM and to obtain possession notice along with which they can ask for appontment of advocate commissioner/police protection if they wish to and they do notify the principal borrower 'bout the possession notice and time's mentioned by when they want the buildiing to be vacant.

2-yes tenant can be vacated without any further proceedings for eviction in a civil court, courts do not have jurisdiction to entertain cases under SARFEASI

3-forget 'bout the shoe part . . . if the tenant wants to file a suit under tenancy then it can be done against the owner. . . . and after auction it is upto the new owner how he want's (with tenant or not)

4-the tenant can try civil suit but i seriously doubt that and only remedy is to get into some kinda agreement/understanding with the present owner and then  approach the DRT and by depositing part suit amount get stay or check for the options that they seek . . .

Please find attached a judgment of division bench of Karnataka High Court holding that the Tenant cannot be evicted on the basis of CMM order and has directed the Bank to evict the Tenant under due process of Law. Now the question is What is Due process of Law available to the Bank to take actual/Physical possession if not under section 14.

yes sir , gone through the judgement and i have made my observation's as under and plz correct me if 'am wrong . . -

1-the bank had gained symbolic possession-which could mean they might have not had any advocate commissioner appointed / might not have applied or sought police protection / might not have notified the tenant's about the case or stick any bills to the property to be possessed-- and might have gone ahead with the possession notice and then paper publication and then simply conduct the auction and sell the property . . . these are good enough grounds  for the tenant's / owner's.

2- the respondent's in the said judgement were succesfull enough to prove that there's a tenant(what kind of tenancy is immaterial as observed by the Hon'ble high court) at the time of possession and could be not aware of the proceedings .

3- as erlier mentioned the case was entertained in H.C , and it would be again redirected to the bank/DRT safeguarding the tenant and the due process of law is nothing but notifying and bringing to the notice of the tenant / possessor who's in the scheduled property that there's mortgage and giving them notice period to vacate the suit property and giving them opportunity as to appeal before the concerned bank/DRT if they have any claims and the best thing is to allway's mention the fact of tenancy and take protection along with advocate commission and give notice period to the tenants.

looking forward for inputs and corrections from seniors to correct me.

regards

anand.

and sir, you are the best in the field and you should enlighten me with the possibilites/relief's in such a situation .plz.

regards

anand.

Most cited case by a tenant is

Security interest in occupation by a person as a Tenant under Rent Act, Lessee, Licensee, a Tenant Holding over or an HUF property where coparceners are residing in the property; create certain unresolved issues as discussed herein below.

To obtain actual physical possession the Authorised officer needs to evict the aforementioned persons in occupation of the property.

Orders of CMM under section 14 cannot be considered as “due process of Law” as it does not envisage issuance of notice to the adverse party. The adverse party is also not given an opportunity of being heard. So it is merely a procedure established by Law. Therefore an order of CMM is subject to judicial review.

 What is the forum available to a tenant to seek Judicial Review of CMM order?

1. DRT only considers whether the Secured Creditor has followed all the prescribed procedure as per the SARFAESI Act and Rules framed thereunder. If it grants a declaration under Section 17(4) of SARFAESI Act, the remedy of the Tenant is foreclosed.
2. Civil Court may not entertain any suit which has the effect of staying the proceedings initiated under SARFAESI Act.
3. Hence only a Writ Petition seeking review of CMM order is maintainable by the Tenant to protect his possession

Statutory tenant can approach DRT u/S 17 of the Act as an aggrieved person, and seek orders from physical possession during the pendency of the lease period.  Bank can auction the property by taking symbolic possession and if the purchaser is willing to get the property subject to tenancy.

Fine, what will be his relief: Not to enforce section 14 against him?

If the DRT grants a declaration under section 17(4)  that all the measures initiated by the Bank is in accordance with the Act and rules, then where will he go.

Now, why should the bank be compelled to sell  the property on "as is where is basis" subject to Tenancy?

if mortgage was created during the pendency of the lease or, if the lease was created with the permission of the bank, then the DRT can give relief to the tenent till the expiration of period of lease, from the vacating the property.

Hello Narendra Sir,

can there be a relief against SERFEASI if it is proven that the mortgage/loan/advance issued against the property itself is not in accrodance with law . . . .

brief fact: B (banker) approached the property of C(possessor/co parcenor) with a possession notice u/SERFEASI, and the fact is A has morgaged the property paper's belonging to C with A, but for now C requires to get out of the Banker's tension and how to instigate charges against A/B and reclaim his right over the property . And how can it be brought to the notice of the banker/DRT/HC that certain cases can be entertained even though the approach is through SERFEASI and the banker's action could be wrong . . . .

regards

anand

If mortgage created in favour of the Bank is defective, then the owner of the property can file objections in DRT that security interst created in favour of the Bank is defective and cannot be enforced by the Bank. This can be done after Bank issues possession notice. However, if the mortgage was validly created and the mortgagor had authority as Kartha to mortgage the HUF property, then the co-parcerners are bound by  the mortgage [provided the loan was obtained for the benefit of the family]. 

If the Kartha mortgages the HUF property as a guarantor for a third party loan, then the co-parcerners can contend that the loan did not benifit the HUF family. Insuch  a situation, to bind the interest of the co-parcerners  , the Bank generally obtains a specific consent letter from all the coparcerners who have attained majority.

Respected Narendra Sir,

thanks for the prompt reply and plz do accept my due apologies for the delayed reply and the reason being, i was down with fever.

-and coming to the above mentioned case-  i here by present the brief facts of the case and please enlighten me and advice/guide me on my next course of action plz.

1-A is blessed with 3 kids(B,C,D all are married) and he is having an ancestral property(a building) and X is B's husband and B and X (daughter/son-in-law) obtained signatures of the father A by fradulent means by promising construction of building in the said building plot without the knowledge or concent of the co-parcener's i.e-C,D and subsequently mortgaged the same with the Banker and also put A as gurantor to the same loan on default the banker after following the mandatory steps got issued the possession notice and A and C (father and son) are in actual possession with couple of tenants and as a result of this sudden and surprise act of the Banker/daughter+son-in-law , A father suffered heart stroke followed by paralytic attack and they are bankcrupt and do not know what are the remedies available.

and once again thanks to you that you strenghtened my idea that as it is without co - parceners signature without any interest towards the family.

and now my questions sir

1-the mortgage created in favour of the bank was or can be defective ?

2-how to know what are the action/charges framed against the principle debtor , we gave letter to the banker but he has not replied and he is pressing A and his son for repayment threatening otherwise to get evicted

3-is there any limitation or can the son approach DRT and if yes then can you please send sugest me the way out and a proforma or format if any

4-can the banker tried in consumer court's aswell , can the son sue the banker as a consumer (now that he has paid part of the loan amount)

5-i tried to explain the sam (that anyt gift or anything without co-parcenor's signature's is not valid) to police and when asked to register a complaint against the daughter and son in law the P.S was reluctant.

6-i got the complained referred through Cr.Court and FIR registered and now the SHO/CI threatens to compromise as otherwise he will close the case (seek remedy or guidance in here please)

thank you sir thanks for your kind co-operation and guidance in advance

regards

anand.

It is necessary to obtain copies of documents executed by A and the exact nature of mortgage created by A. If theBank is a puiblic sector Bank, then an RTI Applciation can be filed by C as legal heir of A to obtain the information / documents. 

If there is a good case with adequate gorunds available to challenge the mortgage by  C & D ,  then the cheap way out is to file a Lok Adalat pre-Litigation suit against  Bank, B and X 

Objections under section 17 of DRT may be filed against the Possession Notice. If the tenants are coverd by the Rent Act, they may aproach the High Court seeking direction on the Bank not to eject/evit them otherwise than by "due process of Law".

Sir,

thanks for the reply and guidance and tha's exactly what i did , when asked for the documents by the party they shooed him away and when the same happened through RPAD then the senior manager replied by attaching only the possession notice and did not disclosed the kind of documents that are mortgaged or the kind of mortgage, so i have given RTI to the party and asked them to post the same with 10/- or to RPAD the same to the banker , and i have also prepared another RTI to be poseted/lodged with the police as to check what happened to the FIR, and DRT i have prepared the rough draft but was doubtfull as to the limitation and also pertaining to the person representing (as this would be by the son as the father is bedridden) and whether and how to challenge the mortgage rather than SARFEASI(as i do not see much of scope to fight against SARFEASI in this case) or can i file a fresh case with the DRT ?

and thank you once again sir,

regards

anand