JUDGEMENT
-
(1.)Leave granted.
Facts:
(2.)The appellants claim to be tenants of different premises in Mumbai. These premises were mortgaged to different banks as securities for loans advanced by the banks (hereinafter referred to as 'the secured creditors'). As the borrowers have defaulted in repayment of their secured debts or instalments thereof and their accounts in respect of such debts have been classified by the secured creditors as nonperforming assets, the secured creditors have issued notices of 60 days period under sub-section (2) of Section 13 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short 'SARFAESI Act') to the borrowers saying that they intend to enforce the secured assets in the event of non-payment of the secured debts. As the borrowers have failed to discharge their liability in full within the period of sixty days from the date of notice, the secured creditors have exercised their right under sub-section (4) of Section 13 of the SARFAESI Act to take possession of the secured assets of the borrowers. The secured assets, however, consist of the premises under possession of the appellants. The secured creditors have, therefore, made a request under Section 14(1) of the SARFAESI Act to the Chief Metropolitan Magistrate, Mumbai, to take possession of the premises and handover the possession of the premises to the secured creditors in accordance with the provisions of Section 14 of the SARFAESI Act. Threatened by dispossession of the premises under their possession by the Chief Metropolitan Magistrate, Mumbai, under Section 14 of the SARFAESI Act, the appellants have moved this Court in this batch of cases. Their case is that they are not borrowers, but they are lessees of the borrowers and are entitled to remain in possession of the secured assets. A Division Bench of the Bombay High Court in M/s Trade Well, a Proprietorship Firm, Mumbai & Anr. v. Indian Bank & Anr., 2007 CrLJ 2544] has, however, held that when a secured creditor takes measures under subsection (4) of Section 13 of the SARFAESI Act on account of failure of the borrower to repay his liability and approaches the Chief Metropolitan Magistrate for assistance to take possession of the secured assets, the liability of the borrower having been crystallized, there can be no adjudication by the Chief Metropolitan Magistrate and possession has to be taken by a nonadjudicatory process and there is no question of pointing out to the Chief Metropolitan Magistrate at that stage that the person who is to be dispossessed is a tenant. The Division Bench of the Bombay High Court has further held in M/s Trade Well that the remedy of the borrower as well as a third-party is to file an application under Section 17 of the SARFAESI Act before the Debts Recovery Tribunal and in case the borrower or a third-party succeeds, the Debts Recovery Tribunal can restore possession of the secured assets to the borrower or a third-party. This view taken by the Bombay High Court in M/s Trade Well has been followed in the impugned judgment dated 20.08.2011 of the High Court passed in the case of International Assets Reconstruction Company Limited v. Union of India & Ors. The grievance of the appellants is that if the impugned judgment of the High Court is implemented, the appellants have no option but to surrender possession to the Chief Metropolitan Magistrate, Mumbai, and move the Debts Recovery Tribunal under Section 17 of the SARFAESI Act. Such a remedy, according to the appellants, is not actually available under Section 17 of the SARFAESI Act and if the remedy is available, it is meaningless as they have to move out from the tenanted premises and only in the event the Debts Recovery Tribunal decides in favour of the appellants, they may come back to the tenanted premises. Aggrieved by the impugned judgment, they have, therefore, filed these appeals by way of special leave under Article 136 of the Constitution. Contentions of the learned counsel for the appellants:
(3.)Mr. C.A. Sundaram, learned senior counsel appearing for the appellants, submitted that under Article 300A of the Constitution, every person has a constitutional right not to be deprived of his property save by authority of law. He submitted that a tenant is a lessee and has a right to be in possession of the property of the lessor during the period of the lease and this right cannot be taken away save by authority of law. He submitted that there is nothing in the provisions of the SARFAESI Act, and in particular Section 13 of the said Act, to show that this right of a lessee to remain in possession of the secured asset during the period of the lease stands extinguished when the secured creditor initiates action under Section 13 of the SARFAESI Act. He submitted that the language of sub-section (13) of Section 13 of the SARFAESI Act, however, shows that no borrower shall, after receipt of notice under sub-section (2) of section 13, transfer by way of sale, lease or otherwise any of his secured assets referred to in the notice, without the prior written consent of the secured creditor. He submitted that this provision in the SARFAESI Act is a clear indication that a lease of a secured asset by the borrower before receipt of a notice by him under subsection (2) of Section 13 of the SARFAESI Act was not prohibited under the said Act. He submitted that in the absence of any express language in the SARFAESI Act affecting a lease of a secured asset made by the borrower in favour of a lessee, the lease continues to be a valid lease even after the secured creditor initiates action under Section 13 of the SARFAESI Act.