2011 (9) TMI 1229 - HC - Indian Laws

Court Protects Tenants' Rights under Rent Control Act despite Securitisation Act

N.P. Pushpangadan, S/o. Prabhakaran And 5 Ors. Versus The Federal Bank Ltd. And 5 Ors.

The court concluded that the Securitisation Act does not override the Kerala Buildings (Lease and Rent Control) Act. It held that tenants inducted before ... - Issues Involved:1. Overriding effect of the Securitisation Act over the Kerala Buildings (Lease and Rent Control) Act.2. Summary eviction of tenants under the Securitisation Act despite protections under the Rent Control Act.Issue-wise Detailed Analysis:1. Overriding Effect of the Securitisation Act over the Kerala Buildings (Lease and Rent Control) Act:The core issue was whether the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (Securitisation Act) overrides the Kerala Buildings (Lease and Rent Control) Act, 1965 (Rent Control Act). The court noted that the Securitisation Act and the Rent Control Act operate in different fields, with the former enacted under Entry 45 of List I (Union List) and the latter under Entry Nos. 6, 7, and 13 of the Concurrent List. It was emphasized that Article 254 of the Constitution, which addresses repugnancy between State and Central laws, applies only when both legislations occupy the same field within the Concurrent List. The court concluded that there is no conflict between the Securitisation Act and the Rent Control Act, and hence, the former does not override the latter. The court held, 'The Securitisation Act has no overriding effect over the provisions of the Kerala Buildings (Lease and Rent Control) Act, 1965.'2. Summary Eviction of Tenants under the Securitisation Act:The court examined whether tenants could be summarily evicted under Sections 13(4) and 14 of the Securitisation Act, despite protections under the Rent Control Act. It was noted that the Securitisation Act allows secured creditors to take possession of secured assets, but this does not automatically annul pre-existing tenancy rights. The court observed that Section 13(1) of the Securitisation Act specifically mentions Sections 69 and 69A of the Transfer of Property Act, indicating that other provisions of the Transfer of Property Act, which protect tenants' rights, continue to apply. The court stated, 'The secured creditor is entitled to realise the amounts due to him/it. For that purpose, different modes are provided in the Securitisation Act. The overriding effect as provided under Section 35 of the Securitisation Act would empower the secured creditor to take recourse to one or more of the measures provided in sub-section (4) of Section 13 of the Act, notwithstanding anything inconsistent therewith contained in any other law for the time being in force.'The court also referenced Section 109 of the Transfer of Property Act, which ensures that the rights of tenants continue despite the transfer of property. It was concluded that a tenant inducted before the creation of the security interest cannot be summarily evicted, and their rights under the Rent Control Act remain intact. The court held, 'A tenant inducted in the premises before creation of the security interest cannot be summarily evicted under Sections 13(4) and 14 of the Securitisation Act.'Conclusion:The court disposed of the Writ Petition, permitting the petitioners to file an application under Section 17 of the Securitisation Act within a month, which the Debts Recovery Tribunal should treat as filed within the period of limitation. The final holding was, 'The Securitisation Act has no overriding effect over the provisions of the Kerala Buildings (Lease and Rent Control) Act, 1965. A tenant inducted in the premises before creation of the security interest cannot be summarily evicted under Sections 13(4) and 14 of the Securitisation Act.'