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Issues: Whether an unregistered tenancy agreement claiming annual rent and possession created in favour of the petitioners could defeat action under Section 14 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, and whether the secured creditor was bound to disclose and respect such alleged tenancy before seeking assistance of the Magistrate.
Analysis: The petitioners relied on an unregistered agreement dated 1 September 2000 and contended that, despite the annual rent recital, the arrangement should be treated as a month-to-month tenancy protected by rent control law. The Court held that the tenancy claim was prima facie doubtful, especially as one signatory to the tenancy document was also a signatory to the earlier mortgage. It further held that, on the facts, the secured creditor could not be faulted for not treating the petitioners as persons in lawful possession under a valid lease, because the document was unregistered and did not establish a legally protected tenancy that would bar recourse under the SARFAESI Act. The Court distinguished the authorities relied upon by the petitioners and held that the protection recognised for valid and lawful leases in the context of SARFAESI did not extend to the present facts.
Conclusion: The alleged tenancy did not prevent the secured creditor from taking measures under the SARFAESI Act, and the writ petition was rejected.
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