Punugupati Srinivasa Rao vs Union Bank Of India
2023 Latest Caselaw 4588 AP

Citation : 2023 Latest Caselaw 4588 AP
Judgement Date : 29 September, 2023

Andhra Pradesh High Court - Amravati

Punugupati Srinivasa Rao vs Union Bank Of India on 29 September, 2023

        THE HON'BLE SRI JUSTICE RAVI NATH TILHARI
                           AND
     THE HON'BLE SRI JUSTICE DUPPALA VENKATA RAMANA

                   [   WRIT PETITION No.20011 of 2023

JUDGMENT:- (per Hon'ble Sri Justice Ravi Nath Tilhari)
[[




1.     Heard Sri. Nalluri Ramesh Babu, learned counsel for the

petitioner and Sri. Hanumantha Rao Bachina, learned Standing

Counsel for respondent No.1/Union Bank of India.

2. This writ petition under Article 226 of Constitution of India

has been filed for the following relief:

"... declaring the action of the Respondents 1 to 4 alienating the agricultural lands of Scheduled property without following the rules of SARFAESI Act is as illegal arbitrary and also oppose to Article 14 of the Constitution of India as well as oppose to principles of natural justice and pass..."

3. Respondent Nos.2 to 4 are the borrowers who took loan

from the 1st respondent-Bank by mortgaging the property with

respect to which the present case is filed claiming that the

petitioner is the lessee from the borrowers.

4. Learned counsel for the petitioner submits that there was a

lease agreement between the petitioner and the respondent

Nos.2 to 4, dated 17.01.2016 for a period of thirty (30) years

commencing from 17.01.2016 to 16.01.2046.

5. Learned counsel for the petitioner further submits that

the petitioner has filed A.T.C.No.4 of 2020 in the Court of the

Special Tenancy Tribunal Court, (Principal Junior Civil Judge)

Ongole, against the respondent No.4/borrower under Section

16(1) of Andhra Pradesh Tenancy Act, in which the said

respondent has filed the counter affidavit. He submits that the

Bank is not a party to those proceedings.

6. Learned counsel for respondent No.1 referring to the

counter affidavit submits that respondent Nos.2 to 4/borrowers

are the absolute owners of the property which was offered for

mortgage for the loan taken. The mortgage was executed on

13.01.2017 and was registered on 16.01.2017. He further

submits that Notice under Section 13(2) of SARFAESI Act 51 of

2002, dated 05.04.2021 was issued against the borrower. He

approached the Debt Recovery Tribunal, Visakhapatnam, in

S.A.No.351 of 2021 in which initially an interim order was

granted but the same was vacated. Now, the borrower has

colluded with the petitioner in filing the present writ petition.

7. We have considered the submissions advanced by learned

counsels for the parties and perused the material on record.

8. The writ petitioner claims to be lessee of the

borrower/respondent No.4, for thirty (30) years, and based

thereon to protect possession from the Secured Creditor.

9. In Bajarang Shyamsunder Agarwal v. Central Bank of

India and Another1, the Hon'ble Apex Court reconciled the

objectives of SARFAESI Act, with the Transfer of Property Act,

1882 and the Rent Act in paragraph 24 as under:

"24. In our view, the objective of SARFAESI Act, coupled with the T.P. Act and the Rent Act are required to be reconciled herein in the following manner:

24.1. If a valid tenancy under law is in existence even prior to the creation of the mortgage, the tenant's possession cannot be disturbed by the secured creditor by taking possession of the property. The lease has to be determined in accordance with Section 111 of the TP Act for determination of leases. As the existence of a prior existing lease inevitably affects the risk undertaken by the bank while providing the loan, it is expected of Banks/Creditors to have conducted a standard due diligence in this regard. Where the bank has proceeded to accept such a property as mortgage, it will be presumed that it has consented to the risk that comes as a consequence of the existing tenancy. In such a situation, the rights of a rightful tenant cannot be compromised under the SARFAESI Act proceedings.

24.2. If a tenancy under law comes into existence after the creation of a mortgage, but prior to the issuance of notice under Section 13(2) of the SARFAESI Act, it has to satisfy the conditions of Section 65A of the T.P. Act.

(2019) 9 SCC 94

24.3. In any case, if any of the tenants claim that he is entitled to possession of a secured asset for a term of more than a year, it has to be supported by the execution of a registered instrument. In the absence of a registered instrument, if the tenant relies on an unregistered instrument or an oral agreement accompanied by delivery of possession, the tenant is not entitled to possession of the secured asset for more than the period prescribed under Section 107 of the T.P. Act."

10. In view of the aforesaid judgment of the Hon'ble the Apex

Court, in particular paragraph No.24.3, the lease agreement

being unregistered, the petitioner would not be entitled to

possession of the secured assets for a term of more than a year.

Section 107 of the Transfer of Property Act, 1882 provides that a

lease of immovable property from year to year or for any term

exceeding one year or reserving a yearly rent, can be made only

by a registered instrument. It further provides that all other

leases of immovable property may be made either by a

registered instrument or by oral agreement accompanied by

delivery of possession. Consequently, the lease not being

registered the petitioner would not be entitled to possession of