Full Judgment Text
2025 INSC 847
Reportable
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. OF 2025
(Arising out of SLP (C) No.7288 of 2024)
PNB Housing Finance Limited …..Appellant(s)
VERSUS
Sh. Manoj Saha & Anr. …..Respondent(s)
J U D G M E N T
Joymalya Bagchi, J.
1. Leave granted.
Appellant has assailed the judgment and order passed by High
2.
1
Court whereby the secured asset whose possession was taken by
st
the Appellant, was directed to be handed back to the 1
Respondent.
st
1 Respondent claims to be a tenant of the secured asset. He
3.
had entered into an unregistered tenancy agreement with M/s
Signature Not Verified
Digitally signed by
SATISH KUMAR YADAV
Date: 2025.07.15
17:19:24 IST
Reason:
2
Janapriya Finance and Industrial Investment (India) Pvt. Ltd for
1 Space of 450 sq.ft. on first floor, 1 Allenby Road, Kolkata – 700020
2 Original landlord
Page 1 of 14
st
a period of 5 years. In 1992, the term of tenancy expired. But 1
Respondent alleged he continued as a monthly tenant under the
original landlord. In 2007, the original landlord sold the secured
nd
asset to 2 Respondent. By letter of attornment dated
nd
04.03.2008, 2 Respondent that is, the new landlord called upon
st st
1 Respondent to pay rent. 1 Respondent contends he paid rent
nd
to 2 Respondent and continued to occupy the secured asset as
a tenant.
nd
4. On 09.02.2017, 2 Respondent took a loan from the Appellant
against creation of security interest on the premises. A second
loan was also taken. The loan account was not serviced and
became a NonPerforming Asset (NPA). Demand notice under
Section 13(2) of the Securitisation and Reconstruction of
3
Financial Assets and Enforcement of Security Interest Act, 2002
nd
was issued to the 2 Respondent on 13.07.2021, requiring the
latter to pay Rs.3,09,65,636.97/ along with applicable future
interest and charges within 60 days. The notice further stated
that, in the event of nonpayment, the secured creditor would
initiate measures under Section 13(4) of SARFAESI, including
3 hereinafter referred to as, ‘SARFAESI’
Page 2 of 14
taking possession and sale of the secured asset. Despite such
intimation, no payment was made within 60 days of receipt of
nd
notice. In the meantime, 2 Respondent instituted an ejectment
st
suit against 1 Respondent on various grounds, including non
payment of rent.
5. On 02.12.2021, symbolic possession of the secured asset was
taken by the Appellant under section 13(4) of SARFAESI. As per
Rule 8 (1) and (2) of the Security Interest (Enforcement) Rules,
2002, notice of symbolic possession was published in two leading
newspapers and also affixed on a conspicuous part of secured
asset.
nd 4
6. 2 Respondent filed a securitization application before Debt
5
Recovery Tribunal III, Kolkata challenging the recovery
measures initiated under section 13(4) of SARFAESI.
7. On 08.04.2022, Appellant filed an application under section 14
of SARFAESI, seeking assistance of District Magistrate to take
physical possession of the secured asset. District Magistrate
allowed the application and directed Deputy Magistrate to take
4 No.139/2022
5 hereinafter referred to as, ‘DRT’
Page 3 of 14
possession of the secured asset. However, DRT by order dated
nd
09.11.2022, directed the Appellant to serve prior notice to 2
Respondent before taking physical possession. Accordingly, on
nd
19.07.2023 intimation was given to 2 Respondent with regard to
taking over possession of the secured asset. Similar notice was
also pasted on the secured asset. On 02.08.2023, physical
possession was taken by the Deputy Magistrate and handed over
to the Appellant.
st
8. On 23.08.2023, 1 Respondent informed the Appellant he was a
tenant of the secured asset and called upon the latter to hand
over documents on the basis of which possession of secured
st
asset was taken. Thereafter, 1 Respondent filed a securitization
6
application , inter alia, praying for various reliefs including
handing back possession of the secured asset. An interim
7
application seeking stay of notice dated 02.08.2023 under
section 13(4) and other reliefs was also filed.
9. After hearing the parties, DRT held the claim of tenancy was
based on an unregistered instrument. Neither borrower nor the
6 No.737/2023
7 No.2331/2023
Page 4 of 14
tenant had intimated the Appellant about the tenancy at the time
of creation of mortgage. Given these facts, in view of Harshad
Govardhan Sondagar v. International Assets Reconstruction
8
Company Limited and Ors. , DRT rejected interim relief and fixed
the matter for final hearing.
st
10. 1 Respondent assailed DRT order before the High Court under
Article 227 of the Constitution. The Appellant resisted the
application on the ground of existence of alternate remedies as
well as on merits. Referring to paragraph 29 of Harshad
(supra), High Court repelled the argument
Govardhan Sondagar
regarding alternate remedy and directed restoration of possession
as follows:
“ 17. Thus, the contention of the bank that there is an
alternative remedy of appeal is not accepted by this court in
the peculiar facts and circumstances of this case. By the order
impugned, the right of the petitioner as canvassed in his SA,
has been finally decided. A doctor who was in occupation of
the premises and running his chamber, in my, prima facie,
view could not be thrown away without due process of law.
The issue whether the doctor was inducted as a valid tenant
and/or whether his possession was legal or not, are matters
which will be decided in the SA, but the occupation cannot be
doubted, as available from the records.
18. Under such circumstances, the interim prayer for use of
the premises as a chamber ought to have been granted to the
petitioner by the learned tribunal in lawful exercise of
jurisdiction vested upon it, with certain conditions.
8 (2014) 6 SCC 1
Page 5 of 14
19. Accordingly, the revisional application is allowed.”
11. Mr. Suri contended the High Court ought not to have
entertained the matter in view of the existence of appellate
remedy under section 18 of SARFAESI. We are in wholesome
agreement with this submission.
12. In 2016, SARFAESI was amended. By the amending Act,
section 17(4A) was introduced with effect from 01.09.2016,
enabling any person claiming to be lessees/tenants in respect of
secured assets to approach the DRT against measures under
section 13(4) of SARFAESI, including taking possession of the
secured asset. Tribunal was empowered to declare such
measures invalid and restore possession. Order of DRT was
made appealable before the appellate tribunal under section 18
of SARFAESI. In light of the aforesaid statutory scheme, this
Court repeatedly deprecated interference of High Courts under
9
Article 226/227 in matters pertaining to SARFAESI.
13. In the present case, High Court erroneously relied on Harshad
Govardhan Sondagar (supra) to entertain the application. The
9 Varimadugu Obi Reddy v. B. Sreenivasulu and Ors. (2023) 2 SCC 168 [Para 36]; South
Indian Bank Ltd. and Ors. v. Naveen Mathew Philip and Anr. (2023) 17 SCC 311 [Para 17]
Page 6 of 14
observations in Harshad Govardhan Sondagar (supra) with
regard to absence of statutory remedy available to a
lessee/tenant to assail measures under section 13(4) before
DRT is based on the preamended law and has no manner of
application under the post amendment regime. Be that as it
may, as the High Court had examined the matter on merits and
st
restored possession of the secured asset to 1 Respondent, we
have tested the correctness of the impugned direction in the
facts and circumstances of the case.
st
14. Defending the order, Mr. Gupta submitted 1 Respondent had
been inducted as a tenant in 1987 initially under an
unregistered lease agreement for 5 years. Thereafter, he was
continuing as a monthly tenant. His tenancy is protected under
10
the West Bengal Premises Tenancy Act, 1997 and he could be
evicted only on the grounds enumerated under section 6 of the
said Act. Recovery of possession of secured asset by the
Appellant illegally extinguished the tenancy and deprived him of
his constitutional right to property.
10 hereinafter referred to as, ‘the Rent Act’
Page 7 of 14
15. Rights of lessees/tenants in properties which are held by
financial institutions as secured assets under SARFAESI fell for
consideration in Harshad Govardhan Sondagar (supra). The
Bench analyzed the impact of SARFAESI, particularly section
13 on the rights of lessees/tenants in the secured asset. The
Bench held though section 13(13) of SARFAESI overrides
11
section 65A of the Transfer of Property Act, 1882 and renders
invalid any lease created by the borrower after issuance of
notice under section 13(2) without taking written permission of
the secured creditor, the said section does not determine a
prior lease created by a registered instrument. However, if the
lessee claims tenancy through an oral/unregistered agreement,
the term of the lease cannot exceed one year and the lessee is
not entitled to possession of the secured asset beyond a period
of one year.
12
In Vishal N. Kalsaria v. Bank of India and Ors. , a Coordinate
16.
Bench carved out an exception from the ratio in Harshad
Govardhan Sondagar (supra) with regard to tenancies created
11 hereinafter referred to as, ‘TP Act’
12 (2016) 3 SCC 762
Page 8 of 14
under the rent laws. The Bench held SARFAESI and rent laws
operate in separate fields and the nonobstante clause in the
former cannot override the latter:
“35. The decision of this Court rendered in Harshad
Govardhan Sondagar cannot be understood to have held that
the provisions of the SARFAESI Act override the provisions of
the Rent Control Act, and that the banks are at liberty to
evict the tenants residing in the tenanted premises which
have been offered as collateral securities for loans on which
default has been done by the debtor/landlord”
xxx xxx xxx xxx xxx
“37. It is a settled position of law that once tenancy is
created, a tenant can be evicted only after following the due
process of law, as prescribed under the provisions of the
Rent Control Act. A tenant cannot be arbitrarily evicted by
using the provisions of the SARFAESI Act as that would
amount to stultifying the statutory rights of protection given
to the tenant. A non obstante clause (Section 35 of
the SARFAESI Act) cannot be used to bulldoze the statutory
rights vested in the tenants under the Rent Control Act. The
expression “any other law for the time being in force” as
appearing in Section 35 of the SARFAESI Act cannot mean to
extend to each and every law enacted by the Central and
State Legislatures. It can only extend to the laws operating in
the same field .”
17. Subsequently, a ThreeJudge Bench in Bajarang Shyamsunder
13
Agarwal v. Central Bank of India and Anr. differed from Vishal
N. Kalsaria (supra) with regard to width of the nonobstante
clause under section 35 of SARFAESI:
13 (2019) 9 SCC 94
Page 9 of 14
“23. While we agree with the principle laid out in Vishal N.
Kalsaria case that the tenancy rights under the Rent Act
need to be respected in appropriate cases, however, we
believe that the holding with respect to the restricted
application of the non obstante clause under Section 35 of
the SARFAESI Act, to only apply to the laws operating in the
same field is too narrow and such a proposition does not
follow from the ruling of this Court in Harshad Govardhan
case”
(emphasis supplied)
18. Noting the interplay between the objective of the SARFAESI visà
TP Act and rent laws, (supra)
vis Bajarang Shyamsunder Agarwal
clarified onus lies on tenants claiming through an
oral/unregistered agreement to produce rent receipts,
property/water taxes receipts, electricity charges, etc., to
14
establish the creation of a valid tenancy. Even then, such
tenancies created through an oral/unregistered agreement would
not continue beyond one year from issuance of notice under
section 13(2) of SARFAESI and the tenant upon expiry of the said
period shall be deemed to be a ‘ tenant in sufferance’ .
Mr. Gupta vehemently argued the ratio in
19. Bajarang
Shyamsunder Agarwal (supra) that tenancy under the Rent Act is
determined by efflux of time runs counter to the Constitution
14 See Para 27
Page 10 of 14
15
Bench in V. Dhanapal Chettiar v. Yesodai Ammal and is not
good law.
20. In V. Dhanapal Chettiar (supra), question which fell for
consideration before the Constitution Bench is whether a notice
to determine tenancy under section 106 of the TP Act is
necessary for eviction of a tenant under the rent laws. Answering
in the negative, the Bench, inter alia , held under the extended
16
definition of the word “tenant” under various State laws, jural
relationship between the landlord and tenant is not snapped on
determination of contractual tenancy and continues till order of
eviction is passed.
17
21. In Anthony v. K.C. Ittoop & Sons and Ors. , this Court reiterated
jural relationship between lessor/lessee created through an
unregistered instrument shall be protected under rent laws.
22. It has been argued on behalf of the Appellant that the impact of
the nonobstante clause in SARFAESI on the provisions of the
Rent Act did not fall for consideration in the aforesaid authorities.
15 (1979) 4 SCC 214 [Para 6]
16 Section 2(g) of West Bengal Premises Tenancy Act, 1997– “ ‘tenant’ means any person by
whom or on whose account or behalf the rent of any premises is or, but for a special contract,
would be payable, and includes any person continuing in possession after termination of his
tenancy….”
17 (2000) 6 SCC 394
Page 11 of 14
On the other hand, such issue was raised and answered visàvis
rights of tenants/lessees under oral/unregistered agreement in
Bajarang Shyamsunder Agarwal (supra).
23. We choose not to delve into the aforesaid issue further as we are
st
not convinced with the evidence adduced by 1 Respondent
st
before the DRT with regard to prior tenancy. Although 1
Respondent claimed he was a tenant in the secured asset from
1987, he was unable to place on record any rent receipt, tax
receipt or electricity bill evidencing continued occupation of the
premises prior to issuance of demand notice under section 13(2)
st
of SARFAESI. 1 Respondent has only relied on documents
showing deposit of rent with Rent Controller from January 2022
to December 2022, that is, after demand notice was issued by the
Appellant. Mere reference to some preexisting tenancy in the sale
nd
deed or issuance of letter of attornment by 2 Respondent (who
is also the borrower) unsubstantiated by independent and
convincing possessory evidence would not establish a compelling
st
case of preexisting tenancy in favour of 1 Respondent. Given
nd
this situation, institution of the ejectment suit by 2 Respondent
Page 12 of 14
may not be a determining factor as the possibility of setting up a
sham and collusive suit to defeat the claim of the Appellant
cannot be ruled out.
24. High Court failed to consider these relevant aspects and illegally
directed restoration of status quo ante . High Court also lost sight
st
of the conduct of the 1 Respondent in failing to take prompt
steps to protect his interest in the secured asset. Appellant had
on 02.12.2021 published notice of taking symbolic possession of
the secured asset in two leading newspapers and also pasted the
notice in a conspicuous place on the secured asset. In spite of
st
such publication, 1 Respondent did not bother to intimate the
Appellant with regard to his preexisting tenancy rights or
approach the DRT.
25. Thereafter, on 19.07.2023 intimation notice regarding taking over
physical possession had been pasted on the secured asset. Even
st
then 1 Respondent remained indifferent. Only after physical
possession had been taken over by the Appellant, did he
approach the DRT for restoration of possession. A mandatory
order restoring status quo ante necessitates a compelling cast
Page 13 of 14
st
iron case which 1 Respondent has failed to establish. His
indifferent conduct and failure to produce rent receipts and/or
other evidence regarding continued possession prior to issuance
of demand notice under section 13(2) of SARFAESI does not
justify a mandatory order.
26. In light of the aforesaid discussion, we allow the appeal and
set aside the impugned order passed by the High Court and
direct status quo in respect of the secured asset till the
18
disposal of securitization application . The application shall be
disposed of within 2 months from the date of communication
of this order without granting unnecessary adjournment to
either of the parties.
27. Pending applications, if any, shall stand disposed of.
….……..…..……...……………………….J.
(PAMIDIGHANTAM SRI NARASIMHA)
….……..…..……...……………………….J.
(JOYMALYA BAGCHI)
New Delhi,
July 15, 2025.
18 No.737/2023
Page 14 of 14
Reportable
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. OF 2025
(Arising out of SLP (C) No.7288 of 2024)
PNB Housing Finance Limited …..Appellant(s)
VERSUS
Sh. Manoj Saha & Anr. …..Respondent(s)
J U D G M E N T
Joymalya Bagchi, J.
1. Leave granted.
Appellant has assailed the judgment and order passed by High
2.
1
Court whereby the secured asset whose possession was taken by
st
the Appellant, was directed to be handed back to the 1
Respondent.
st
1 Respondent claims to be a tenant of the secured asset. He
3.
had entered into an unregistered tenancy agreement with M/s
Signature Not Verified
Digitally signed by
SATISH KUMAR YADAV
Date: 2025.07.15
17:19:24 IST
Reason:
2
Janapriya Finance and Industrial Investment (India) Pvt. Ltd for
1 Space of 450 sq.ft. on first floor, 1 Allenby Road, Kolkata – 700020
2 Original landlord
Page 1 of 14
st
a period of 5 years. In 1992, the term of tenancy expired. But 1
Respondent alleged he continued as a monthly tenant under the
original landlord. In 2007, the original landlord sold the secured
nd
asset to 2 Respondent. By letter of attornment dated
nd
04.03.2008, 2 Respondent that is, the new landlord called upon
st st
1 Respondent to pay rent. 1 Respondent contends he paid rent
nd
to 2 Respondent and continued to occupy the secured asset as
a tenant.
nd
4. On 09.02.2017, 2 Respondent took a loan from the Appellant
against creation of security interest on the premises. A second
loan was also taken. The loan account was not serviced and
became a NonPerforming Asset (NPA). Demand notice under
Section 13(2) of the Securitisation and Reconstruction of
3
Financial Assets and Enforcement of Security Interest Act, 2002
nd
was issued to the 2 Respondent on 13.07.2021, requiring the
latter to pay Rs.3,09,65,636.97/ along with applicable future
interest and charges within 60 days. The notice further stated
that, in the event of nonpayment, the secured creditor would
initiate measures under Section 13(4) of SARFAESI, including
3 hereinafter referred to as, ‘SARFAESI’
Page 2 of 14
taking possession and sale of the secured asset. Despite such
intimation, no payment was made within 60 days of receipt of
nd
notice. In the meantime, 2 Respondent instituted an ejectment
st
suit against 1 Respondent on various grounds, including non
payment of rent.
5. On 02.12.2021, symbolic possession of the secured asset was
taken by the Appellant under section 13(4) of SARFAESI. As per
Rule 8 (1) and (2) of the Security Interest (Enforcement) Rules,
2002, notice of symbolic possession was published in two leading
newspapers and also affixed on a conspicuous part of secured
asset.
nd 4
6. 2 Respondent filed a securitization application before Debt
5
Recovery Tribunal III, Kolkata challenging the recovery
measures initiated under section 13(4) of SARFAESI.
7. On 08.04.2022, Appellant filed an application under section 14
of SARFAESI, seeking assistance of District Magistrate to take
physical possession of the secured asset. District Magistrate
allowed the application and directed Deputy Magistrate to take
4 No.139/2022
5 hereinafter referred to as, ‘DRT’
Page 3 of 14
possession of the secured asset. However, DRT by order dated
nd
09.11.2022, directed the Appellant to serve prior notice to 2
Respondent before taking physical possession. Accordingly, on
nd
19.07.2023 intimation was given to 2 Respondent with regard to
taking over possession of the secured asset. Similar notice was
also pasted on the secured asset. On 02.08.2023, physical
possession was taken by the Deputy Magistrate and handed over
to the Appellant.
st
8. On 23.08.2023, 1 Respondent informed the Appellant he was a
tenant of the secured asset and called upon the latter to hand
over documents on the basis of which possession of secured
st
asset was taken. Thereafter, 1 Respondent filed a securitization
6
application , inter alia, praying for various reliefs including
handing back possession of the secured asset. An interim
7
application seeking stay of notice dated 02.08.2023 under
section 13(4) and other reliefs was also filed.
9. After hearing the parties, DRT held the claim of tenancy was
based on an unregistered instrument. Neither borrower nor the
6 No.737/2023
7 No.2331/2023
Page 4 of 14
tenant had intimated the Appellant about the tenancy at the time
of creation of mortgage. Given these facts, in view of Harshad
Govardhan Sondagar v. International Assets Reconstruction
8
Company Limited and Ors. , DRT rejected interim relief and fixed
the matter for final hearing.
st
10. 1 Respondent assailed DRT order before the High Court under
Article 227 of the Constitution. The Appellant resisted the
application on the ground of existence of alternate remedies as
well as on merits. Referring to paragraph 29 of Harshad
(supra), High Court repelled the argument
Govardhan Sondagar
regarding alternate remedy and directed restoration of possession
as follows:
“ 17. Thus, the contention of the bank that there is an
alternative remedy of appeal is not accepted by this court in
the peculiar facts and circumstances of this case. By the order
impugned, the right of the petitioner as canvassed in his SA,
has been finally decided. A doctor who was in occupation of
the premises and running his chamber, in my, prima facie,
view could not be thrown away without due process of law.
The issue whether the doctor was inducted as a valid tenant
and/or whether his possession was legal or not, are matters
which will be decided in the SA, but the occupation cannot be
doubted, as available from the records.
18. Under such circumstances, the interim prayer for use of
the premises as a chamber ought to have been granted to the
petitioner by the learned tribunal in lawful exercise of
jurisdiction vested upon it, with certain conditions.
8 (2014) 6 SCC 1
Page 5 of 14
19. Accordingly, the revisional application is allowed.”
11. Mr. Suri contended the High Court ought not to have
entertained the matter in view of the existence of appellate
remedy under section 18 of SARFAESI. We are in wholesome
agreement with this submission.
12. In 2016, SARFAESI was amended. By the amending Act,
section 17(4A) was introduced with effect from 01.09.2016,
enabling any person claiming to be lessees/tenants in respect of
secured assets to approach the DRT against measures under
section 13(4) of SARFAESI, including taking possession of the
secured asset. Tribunal was empowered to declare such
measures invalid and restore possession. Order of DRT was
made appealable before the appellate tribunal under section 18
of SARFAESI. In light of the aforesaid statutory scheme, this
Court repeatedly deprecated interference of High Courts under
9
Article 226/227 in matters pertaining to SARFAESI.
13. In the present case, High Court erroneously relied on Harshad
Govardhan Sondagar (supra) to entertain the application. The
9 Varimadugu Obi Reddy v. B. Sreenivasulu and Ors. (2023) 2 SCC 168 [Para 36]; South
Indian Bank Ltd. and Ors. v. Naveen Mathew Philip and Anr. (2023) 17 SCC 311 [Para 17]
Page 6 of 14
observations in Harshad Govardhan Sondagar (supra) with
regard to absence of statutory remedy available to a
lessee/tenant to assail measures under section 13(4) before
DRT is based on the preamended law and has no manner of
application under the post amendment regime. Be that as it
may, as the High Court had examined the matter on merits and
st
restored possession of the secured asset to 1 Respondent, we
have tested the correctness of the impugned direction in the
facts and circumstances of the case.
st
14. Defending the order, Mr. Gupta submitted 1 Respondent had
been inducted as a tenant in 1987 initially under an
unregistered lease agreement for 5 years. Thereafter, he was
continuing as a monthly tenant. His tenancy is protected under
10
the West Bengal Premises Tenancy Act, 1997 and he could be
evicted only on the grounds enumerated under section 6 of the
said Act. Recovery of possession of secured asset by the
Appellant illegally extinguished the tenancy and deprived him of
his constitutional right to property.
10 hereinafter referred to as, ‘the Rent Act’
Page 7 of 14
15. Rights of lessees/tenants in properties which are held by
financial institutions as secured assets under SARFAESI fell for
consideration in Harshad Govardhan Sondagar (supra). The
Bench analyzed the impact of SARFAESI, particularly section
13 on the rights of lessees/tenants in the secured asset. The
Bench held though section 13(13) of SARFAESI overrides
11
section 65A of the Transfer of Property Act, 1882 and renders
invalid any lease created by the borrower after issuance of
notice under section 13(2) without taking written permission of
the secured creditor, the said section does not determine a
prior lease created by a registered instrument. However, if the
lessee claims tenancy through an oral/unregistered agreement,
the term of the lease cannot exceed one year and the lessee is
not entitled to possession of the secured asset beyond a period
of one year.
12
In Vishal N. Kalsaria v. Bank of India and Ors. , a Coordinate
16.
Bench carved out an exception from the ratio in Harshad
Govardhan Sondagar (supra) with regard to tenancies created
11 hereinafter referred to as, ‘TP Act’
12 (2016) 3 SCC 762
Page 8 of 14
under the rent laws. The Bench held SARFAESI and rent laws
operate in separate fields and the nonobstante clause in the
former cannot override the latter:
“35. The decision of this Court rendered in Harshad
Govardhan Sondagar cannot be understood to have held that
the provisions of the SARFAESI Act override the provisions of
the Rent Control Act, and that the banks are at liberty to
evict the tenants residing in the tenanted premises which
have been offered as collateral securities for loans on which
default has been done by the debtor/landlord”
xxx xxx xxx xxx xxx
“37. It is a settled position of law that once tenancy is
created, a tenant can be evicted only after following the due
process of law, as prescribed under the provisions of the
Rent Control Act. A tenant cannot be arbitrarily evicted by
using the provisions of the SARFAESI Act as that would
amount to stultifying the statutory rights of protection given
to the tenant. A non obstante clause (Section 35 of
the SARFAESI Act) cannot be used to bulldoze the statutory
rights vested in the tenants under the Rent Control Act. The
expression “any other law for the time being in force” as
appearing in Section 35 of the SARFAESI Act cannot mean to
extend to each and every law enacted by the Central and
State Legislatures. It can only extend to the laws operating in
the same field .”
17. Subsequently, a ThreeJudge Bench in Bajarang Shyamsunder
13
Agarwal v. Central Bank of India and Anr. differed from Vishal
N. Kalsaria (supra) with regard to width of the nonobstante
clause under section 35 of SARFAESI:
13 (2019) 9 SCC 94
Page 9 of 14
“23. While we agree with the principle laid out in Vishal N.
Kalsaria case that the tenancy rights under the Rent Act
need to be respected in appropriate cases, however, we
believe that the holding with respect to the restricted
application of the non obstante clause under Section 35 of
the SARFAESI Act, to only apply to the laws operating in the
same field is too narrow and such a proposition does not
follow from the ruling of this Court in Harshad Govardhan
case”
(emphasis supplied)
18. Noting the interplay between the objective of the SARFAESI visà
TP Act and rent laws, (supra)
vis Bajarang Shyamsunder Agarwal
clarified onus lies on tenants claiming through an
oral/unregistered agreement to produce rent receipts,
property/water taxes receipts, electricity charges, etc., to
14
establish the creation of a valid tenancy. Even then, such
tenancies created through an oral/unregistered agreement would
not continue beyond one year from issuance of notice under
section 13(2) of SARFAESI and the tenant upon expiry of the said
period shall be deemed to be a ‘ tenant in sufferance’ .
Mr. Gupta vehemently argued the ratio in
19. Bajarang
Shyamsunder Agarwal (supra) that tenancy under the Rent Act is
determined by efflux of time runs counter to the Constitution
14 See Para 27
Page 10 of 14
15
Bench in V. Dhanapal Chettiar v. Yesodai Ammal and is not
good law.
20. In V. Dhanapal Chettiar (supra), question which fell for
consideration before the Constitution Bench is whether a notice
to determine tenancy under section 106 of the TP Act is
necessary for eviction of a tenant under the rent laws. Answering
in the negative, the Bench, inter alia , held under the extended
16
definition of the word “tenant” under various State laws, jural
relationship between the landlord and tenant is not snapped on
determination of contractual tenancy and continues till order of
eviction is passed.
17
21. In Anthony v. K.C. Ittoop & Sons and Ors. , this Court reiterated
jural relationship between lessor/lessee created through an
unregistered instrument shall be protected under rent laws.
22. It has been argued on behalf of the Appellant that the impact of
the nonobstante clause in SARFAESI on the provisions of the
Rent Act did not fall for consideration in the aforesaid authorities.
15 (1979) 4 SCC 214 [Para 6]
16 Section 2(g) of West Bengal Premises Tenancy Act, 1997– “ ‘tenant’ means any person by
whom or on whose account or behalf the rent of any premises is or, but for a special contract,
would be payable, and includes any person continuing in possession after termination of his
tenancy….”
17 (2000) 6 SCC 394
Page 11 of 14
On the other hand, such issue was raised and answered visàvis
rights of tenants/lessees under oral/unregistered agreement in
Bajarang Shyamsunder Agarwal (supra).
23. We choose not to delve into the aforesaid issue further as we are
st
not convinced with the evidence adduced by 1 Respondent
st
before the DRT with regard to prior tenancy. Although 1
Respondent claimed he was a tenant in the secured asset from
1987, he was unable to place on record any rent receipt, tax
receipt or electricity bill evidencing continued occupation of the
premises prior to issuance of demand notice under section 13(2)
st
of SARFAESI. 1 Respondent has only relied on documents
showing deposit of rent with Rent Controller from January 2022
to December 2022, that is, after demand notice was issued by the
Appellant. Mere reference to some preexisting tenancy in the sale
nd
deed or issuance of letter of attornment by 2 Respondent (who
is also the borrower) unsubstantiated by independent and
convincing possessory evidence would not establish a compelling
st
case of preexisting tenancy in favour of 1 Respondent. Given
nd
this situation, institution of the ejectment suit by 2 Respondent
Page 12 of 14
may not be a determining factor as the possibility of setting up a
sham and collusive suit to defeat the claim of the Appellant
cannot be ruled out.
24. High Court failed to consider these relevant aspects and illegally
directed restoration of status quo ante . High Court also lost sight
st
of the conduct of the 1 Respondent in failing to take prompt
steps to protect his interest in the secured asset. Appellant had
on 02.12.2021 published notice of taking symbolic possession of
the secured asset in two leading newspapers and also pasted the
notice in a conspicuous place on the secured asset. In spite of
st
such publication, 1 Respondent did not bother to intimate the
Appellant with regard to his preexisting tenancy rights or
approach the DRT.
25. Thereafter, on 19.07.2023 intimation notice regarding taking over
physical possession had been pasted on the secured asset. Even
st
then 1 Respondent remained indifferent. Only after physical
possession had been taken over by the Appellant, did he
approach the DRT for restoration of possession. A mandatory
order restoring status quo ante necessitates a compelling cast
Page 13 of 14
st
iron case which 1 Respondent has failed to establish. His
indifferent conduct and failure to produce rent receipts and/or
other evidence regarding continued possession prior to issuance
of demand notice under section 13(2) of SARFAESI does not
justify a mandatory order.
26. In light of the aforesaid discussion, we allow the appeal and
set aside the impugned order passed by the High Court and
direct status quo in respect of the secured asset till the
18
disposal of securitization application . The application shall be
disposed of within 2 months from the date of communication
of this order without granting unnecessary adjournment to
either of the parties.
27. Pending applications, if any, shall stand disposed of.
….……..…..……...……………………….J.
(PAMIDIGHANTAM SRI NARASIMHA)
….……..…..……...……………………….J.
(JOYMALYA BAGCHI)
New Delhi,
July 15, 2025.
18 No.737/2023
Page 14 of 14