Tenant protection under rent law prevails over SARFAESI enforcement, and unregistered lease documents do not automatically defeat tenancy claims.

The SARFAESI Act does not displace a State rent control statute protecting tenants in lawful possession, because the two laws operate in distinct fields and the non obstante clause cannot be used to defeat statutory tenant safeguards. A secured creditor cannot evict a protected tenant merely by invoking SARFAESI where eviction must still follow rent law and due process. A tenancy also cannot be rejected solely because the lease deed is unregistered if possession and other evidence support the landlord-tenant relationship. The tenant's protection continues, and the secured creditor must respect the applicable rent control regime.

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Issues: (i) Whether the SARFAESI Act, 2002 overrides the Maharashtra Rent Control Act, 1999 so as to permit eviction of a protected tenant from premises mortgaged to a bank; (ii) Whether a tenancy can be treated as unenforceable against the secured creditor merely because the lease deed is unregistered, where tenancy and possession are otherwise asserted.

Issue (i): Whether the SARFAESI Act, 2002 overrides the Maharashtra Rent Control Act, 1999 so as to permit eviction of a protected tenant from premises mortgaged to a bank.

Analysis: The two enactments operate in distinct fields. The SARFAESI Act is a recovery statute intended to enable banks to enforce security interests and realise non-performing assets, whereas the Rent Control Act is a social welfare legislation governing landlord-tenant relations and protecting tenants from arbitrary eviction. The non obstante clause in Section 35 of the SARFAESI Act cannot be read to extinguish statutory tenant protections under the Rent Control Act, since there is no real inconsistency between the two laws when each is confined to its own field. A landlord cannot, indirectly through mortgaging rented premises, achieve what the rent law prohibits directly. Tenant eviction must still follow the procedure prescribed by the rent legislation and due process of law.

Conclusion: The SARFAESI Act does not override the Rent Control Act to the prejudice of a protected tenant. The tenant's statutory protection continues, and the bank cannot evict the tenant merely by invoking SARFAESI measures.

Issue (ii): Whether a tenancy can be treated as unenforceable against the secured creditor merely because the lease deed is unregistered, where tenancy and possession are otherwise asserted.

Analysis: The absence of a registered lease deed does not by itself negate the existence of tenancy if the relationship of landlord and tenant is otherwise established by possession, payment and acceptance of rent, and surrounding evidence. The law recognises that leases may arise by oral agreement accompanied by delivery of possession, and a tenant cannot be deprived of protection only because the landlord failed to register the instrument. In proceedings under Section 14 of the SARFAESI Act, the Magistrate must examine the tenancy claim in accordance with the applicable law, including the rent protection regime, instead of assuming that non-registration automatically authorises eviction.

Conclusion: The tenancy claim could not be rejected merely for want of a registered lease deed; the appellants were entitled to assert protection under the rent law.

Final Conclusion: The impugned orders were set aside, the appeals were allowed, and the appellants' possession as tenants was held protected against dispossession under SARFAESI, while the amounts deposited pursuant to interim orders were directed to be adjusted towards the landlords' debt.

Ratio Decidendi: Section 35 of the SARFAESI Act does not displace a State rent control statute governing tenant protection, and a secured creditor must respect the tenant's lawful possession and eviction safeguards under the applicable rent law.

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