In the opening sentence of my answer to the query itself, I stated that a bona fide tenant cannot be evicted as precaution. This is settled law.But did not certify that the tenant is bona fide.
It is settled law that a 'bona fide' tenant cannot be dispossessed from the leased out mortgaged property under Sec. 13 and or 14 of SARFAESI Act. If lease is created prior to serving 13(2) notice to the mortgagor no prior written consent of the mortgagee is required as contemplated under Sec. 13(13) of the Act. But in the present case the tenant was inducted prior to serving 13(2) notice.
Sec. 65 A of Transfer of Property Act is not inconsistent to the provisions of SARFAESI Act. Hence there is no bar to lease out the mortgaged property.
65A. Mortgagor's power to lease
(1) Subject to the provisions of sub-section (2), a mortgagor, while lawfully in possession of the mortgaged property, shall have power to make leases thereof which shall be binding on the mortgagee.
(2) (a) Every such lease shall be such as would be made in the ordinary course of management of the property concerned, and in accordance with any local law, custom or usage.
(b) Every such lease shall reserve the best rent that can reasonably be obtained, and no premium shall be paid or promised and no rent shall be payable in advance.
(c) No such lease shall contain a covenant for renewal.
(d) Every such lease shall take effect from a date not later than six months from the date on which it is made.
(e) In the case of a lease of buildings, whether leased with or without the land on which they stand, the duration of the lease shall in no case exceed three years, and the lease shall contain a covenant for payment of the rent and a condition of re-entry on the rent not being paid with a time therein specified.
(3) The provisions of sub-section (1) apply only if and as far as a contrary intention is not expressed in the mortgage-deed; and the provisions of sub-section (2) may be varied or extended by the mortgage-deed and, as so varied and extended, shall, as far as may be, operate in like manner and with all like incidents, effects and consequences, as if such variations or extensions were contained in that sub-section.
Is there any law that, after creating mortgage the mortgagor cannot transfer his mortgaged property by way of lease, mortgage, sale or gift (except postponement of priority of rights of the transferee). It is settled law that, SARFAESI Act is not alternative to Rent Control Act or T.P. Act to forcibly dispossess a bona fide tenant. If this analogy that SARFAESI Act can be invoked for forcibly removing a bona fide tenant, is acceptable in the eye of law, then all the landlords to avoid eviction proceedings may borrow money mortgaging the premises under occupation of a tenant and commit default allowing bank to dispossess the tenant without undertaking the pain of obtaining eviction orders. That’s why the banker or FI has to examine if the tenant inducted is bona fide or not. How much price the tenant occupied mortgaged property would fetch if sold under SARFAESI Act depends upon how much efforts the bank / FI makes to find out if the tenancy is bona fide or mala fide.
In the present query the tenant inducted is unmarried 26 years old daughter staying separately from her father in the same place for no reasons. The lease is executed for 10 years (i.e.exceeding 3 years) which is contrary to Sec.65-A of TP Act. Hence the tenant in this particular query is not bona fide.