Unregistered lease deeds cannot block SARFAESI possession proceedings unless a valid lease predates the mortgage or complies with property law

Unregistered lease deeds do not support a tenant's claim to notice or protection against possession proceedings under Section 14 of the SARFAESI Act. A lessee can resist such action only where there is a valid lease created before the mortgage, or a valid post-mortgage lease made in accordance with Section 65A of the Transfer of Property Act and not determined under Section 111. On that basis, unregistered rental documents were treated as insufficient to interfere with the Magistrate's possession order or the bank's application.

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Issues: Whether tenants claiming under unregistered lease deeds could seek interference with proceedings under Section 14 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, and whether the Chief Metropolitan Magistrate's order appointing Advocate-Commissioners and directing possession required to be set aside.

Analysis: The petitioners claimed tenancy rights and contended that notice ought to have been given before action under Section 14 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. The rental agreements relied on were found to be unregistered. The Court applied the principle that a lessee can resist action under Section 14 only if there is a valid lease created before the mortgage or a valid lease created after the mortgage in accordance with Section 65A of the Transfer of Property Act, 1882, and the lease has not been determined under Section 111 of the Transfer of Property Act, 1882. It further noted that unregistered deeds could not be treated as valid lease deeds for the purpose of claiming notice and protection against possession proceedings. On that basis, the petitioners were held not entitled to insist upon notice before the Chief Metropolitan Magistrate acted on the bank's application.

Conclusion: The challenge to the order under Section 14 failed, and the writ petition was not maintainable on the basis of the unregistered lease deeds relied upon by the petitioners.

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