Tenants can not be , thrown away, evicted forcibly
Generally under the power of the Sarfaesi Act, without bothering for who is in possession of the property mortgaged, anyone/everyone is thrown away from the property under attack. Under the imminent threat of dispossession, both the owner as well as the tenant runs up to the DRT and the High Court for protecting their prized possessions. Under the present head the discussion shall revolve around tenants.
The Tenants in respect of the building/property sought to be sold under Sarfaesi Act, cannot be forcibly evicted or thrown away, merely on account of action under this Act. Even if the sale is successfully conducted, tenancy has to be adorned in favour of the highest bidder on conclusion of sale. For all practical purposes, the purchaser steps into the shoes of the original owner. The rights of a tenant or any other person in possession of the property , would in no way be defeated on account of action under Sarfaesi Act. It is ultimately for the purchaser of the property to choose whether or not to continue the tenant. In case he decides to evict the tenant, he has to take recourse to law.
To avoid multiplicity of litigations, the Authorized Officer should personally visit the premises sought to be taken under possession to see for himself who is in possession and under what capacity. The ground realities must be checked/verified before taking proper action under the Act. It the property appears to be or is actually under the possession of the tenants, the lease deeds may be checked particularly for the date of creation of lease deed. The position of the tenants and theirs rights shall be got effected if the tenancy is created after the date of mortgage of the property, without the consent of the mortgagee. It is well settled that third party interests are created overnight and in many cases those third parties take up the defence of being a bonafide tenant/purchaser for value without notice. Another angle worth consideration is that if the tenant is summarily dispossessed under the Act, he may sue the borrowers/lessor for no fault on the parts of borrowers/ lessor.
No protection to tenants entering after creation of mortgage
An important decision given by a Division Bench of Punjab and Haryana of M/S Delhi Punjab Goods Carrier Pvt.Ltd versus Bank of Baroda,2008 AIR (Punjab & Haryana ) 107 is worth mentioning here.
In this case reliance has been placed on the decisions of Supreme Court in the cases Mahbir Gope versus Harbans Narain Singh, Air 1952 SC 205 ; Mathuralal V/s Kehsar Bai, AIR 1971 SC 310 and Nirmal Chandra v/s Vimal chand,2000(5) SCC 51.
The Petitioner has claimed that he is a tenant in the property in dispute since 2006 and the notices have been issued to the borrowers after recalling the huge outstanding amount of loan with interest. It is evident from the perusal of the notices that charge on the property was created much earlier to the commencement of tenancy. The court while relying upon decisions of Apex Court and dismissing the petition held as under:-
It is evident that 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 mortgagee 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 land lord admitted 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 and above principles laid down by Hon’ble the Supreme Court would fully apply to the facts of the instant case and it has to be held that the petitioner in his capacity as tenant does not enjoy any right qua the charge holder respondent bank. The writ petition is wholly misconceived and is thus liable to be dismissed.