BAJARANG SHYAMSUNDER AGARWALversusCENTRAL BANK OF INDIA & ANR.

352                       [2019]
               SUPREME COURT     12 S.C.R. 352
                              REPORTS                     [2019] 12 S.C.R.


A                 BAJARANG SHYAMSUNDER AGARWAL
                                        v.
                    CENTRAL BANK OF INDIA & ANR.
                       (Criminal Appeal No. 1371 of 2019)
B                            SEPTEMBER 11, 2019
       [N. V. RAMANA, MOHAN M. SHANTANAGOUDAR AND
                    INDIRA BANERJEE, JJ.]
             Securitization and Reconstruction of Financial Assets and
      Enforcement of Security Interest Act, 2002: ss. 13, 14, 17 and 35 –
C
      Tenancy rights over secured interest – Tenant, if protected from
      ejectment proceedings under the SARFAESI Act – On facts, secured
      asset mortgaged by borrower/landlord with the bank in equitable
      mortgage, to secure the credit facility – Failure of borrower/landlord
      to make the due repayment of the said credit facilities – Notice u/s.
D     13(2) to borrower/landlord demanding the payment due –
      Application u/s. 14 by the Bank seeking directions to take physical
      possession of the secured asset – Allowed by the Magistrate –
      Thereafter, application by the tenant seeking stay of the order passed
      for taking possession of the property – Rejected by the Magistrate
      holding that tenant being a tenant without any registered instrument
E
      is not entitled for the possession of the secured asset for more than
      one year from the date of execution of unregistered tenancy
      agreement – On appeal, held: Claim of bona fide tenancy of the
      tenant cannot be accepted, as there is no good or sufficient evidence
      to establish the tenancy – Records do not demonstrate that the tenant
F     has been able to prove his status as a valid leaseholder to merit the
      protection sought for – Furthermore, when the SARFAESI Act
      proceedings were pending, the factum of tenancy was never revealed
      by the parties – Tenant himself pleaded that he was a tenant who
      had entered into an oral agreement, such tenancy impliedly does
      not carry any covenant for renewal – Such person occupying the
G
      premises, when the tenancy has been determined, can only be treated
      as a ‘tenant in sufferance’ – They do not have any legal rights and
      are akin to trespassers – Operation of the Rent Act cannot be
      extended to a ‘tenant–in–sufferance’ vis–a–vis the SARFAESI Act,
      due to the operation of s.13(2) read with s. 13(13) – Thus, tenant to
H
                                       352
BAJARANG SHYAMSUNDER AGARWAL v. CENTRAL BANK                            353
               OF INDIA & ANR.

hand over the possession of the secured asset within the stipulated     A
time which would be delivered to the bank – Maharashtra Rent
Control Act, 1999.
     Objective of SARFAESI Act, coupled with the Transfer of
Property Act and the Rent Act – Requirement of reconciliation –
Explained.                                                              B
     s. 13 – Enforcement of security interest – Self–executory
mechanism for the banks – Explained.
      Dismissing the appeal, the Court
      HELD : 1.1 The Securitization and Reconstruction of               C
Financial Assets and Enforcement of Security Interest Act, 2002
was enacted in response to a scenario where slow–paced recovery
and staggering amounts of non–performing assets were looming
over the banks. The SARFAESI Act is intended to enable the
bank to resolve the issue of liquidity and aim for the reduction in
the number of non–performing assets. The Preamble to the Act            D
emphasises upon the efficient and expeditious recovery of bad
debts. This is also evident from the scheme of the Act. [Para 12]
[361-G-H; 362-A-B]
       1.2 Section 13 of the SARFAESI Act provides for the
enforcement of security interest. This is a self–executory              E
mechanism for the banks. Once the process of realizing the
secured interest takes place, the secured creditor acts as trustee
having de–jure/symbolic possession of the property and is
required by law to realize it strictly in accordance with the
provisions of Section 13, 14 and 15 of the SARFAESI Act.                F
Crucially, sub–Section (2) of Section 13 of the SARFAESI Act
envisages a notice, which acts as the trigger point for initiation of
the recovery process under the SARFAESI Act. In the said notice,
the secured creditor is required to disclose information on the
amount payable by the borrower and the secured interest intended
to be enforced by the secured creditor in the event of non–             G
payment of the secured debt. If the borrower fails to discharge
the liability, the secured creditor has four options including taking
possession of the secured assets of the borrower (Section 13(4)
of the SARFAESI Act). Critically for this case, once a notice is
served on the borrower, he cannot further enter into any contract
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354            SUPREME COURT REPORTS                      [2019] 12 S.C.R.


A     to create any encumbrance on the property (Section 13(13) of
      the SARFAESI Act). This extinguishes the right of the mortgagor
      to lease the property under Section 65–A of the Transfer of
      Property Act. Section 14 of the SARFAESI Act provides for the
      procedural mechanism for taking possession of property and
      documents with respect to the secured assets, from the borrower.
B
      [Para 13, 14] [362-B-F]
           1.3 The objective of SARFAESI Act, coupled with the
      Transfer of Property Act and the Rent Act are required to be
      reconciled in the following manner:
C           (a) If a valid tenancy under law is in existence even prior to
      the creation of the mortgage, the tenant’s possession cannot be
      disturbed by the secured creditor by taking possession of the
      property. The lease has to be determined in accordance with
      Section 111 of the TP Act for determination of leases. As the
      existence of a prior existing lease inevitably affects the risk
D     undertaken by the bank while providing the loan, it is expected
      of Banks/Creditors to have conducted a standard due diligence
      in this regard. Where the bank has proceeded to accept such a
      property as mortgage, it will be presumed that it has consented
      to the risk that comes as a consequence of the existing tenancy.
E     In such a situation, the rights of a rightful tenant cannot be
      compromised under the SARFAESI Act proceedings.
            (b) If a tenancy under law comes into existence after the
      creation of a mortgage, but prior to the issuance of notice under
      Section 13(2) of the SARFAESI Act, it has to satisfy the conditions
F     of Section 65–A of the T.P. Act.
            (c) In any case, if any of the tenants claim that he is entitled
      to possession of a secured asset for a term of more than a year, it
      has to be supported by the execution of a registered instrument.
      In the absence of a registered instrument, if the tenant relies on
G     an unregistered instrument or an oral agreement accompanied
      by delivery of possession, the tenant is not entitled to possession
      of the secured asset for more than the period prescribed under
      Section 107 T.P. Act. [Para 25] [367-H; 368-A-E]


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BAJARANG SHYAMSUNDER AGARWAL v. CENTRAL BANK                            355
               OF INDIA & ANR.

      1.4 In the instant case, the bona fides of the tenant is highly   A
doubtful, as there is no good or sufficient evidence to establish
the tenancy in the first place. The case involves a tenant who
allegedly entered into an oral agreement of tenancy before the
mortgage deed was entered into between the borrower and Bank/
Creditor. Additionally, it must be noted that tenancy created under
                                                                        B
such an oral agreement, results in a fresh tenancy after the expiry
of statutory period fixed under the T.P Act. [Para 26] [368-F-G]
      1.5 The records also do not demonstrate that the appellant–
tenant has been able to prove his status as a valid leaseholder to
merit the protection sought for. Admittedly, an equitable
mortgage on the secured asset was created by the respondent             C
no. 2–borrower/landlord by depositing title deeds with respondent
no. 1–bank on 20.05.2000. However, the date of creation of the
tenancy is not established in the instant case. The appellant–
tenant, while seeking protection before the Small Causes Court,
stated that the premises were let out to him in January, 2000, but      D
the Court noted that the appellant–tenant produced photocopies
of rent receipts for the period of 2001 to 2011. Contrarily, the
tenant, has stated that he entered into the tenancy in October,
2005. [Para 27] [368-G-H; 369-A-B]
      1.6 The claim of tenancy made by the appellant–tenant is          E
not supported by a registered instrument. In the absence of a
written lease deed the tenant may prove his existing rights by
producing other relevant evidence before the Magistrate. The
appellant–tenant has to produce evidence of payment of rent,
property taxes, etc. Furthermore, if the rent and permitted
increases were payable, then the quantum ought to have been             F
mentioned. In addition to the above, the claim of tenancy could
have been substantiated by relying upon other tax receipts such
as BMC tax, water tax, electricity charges consumed by the
tenant, etc. However, the appellant–tenant has only submitted
xerox copies of rent receipts. Although the Small Causes Court          G
held that the appellant–tenant seems to have, prima facie, a right
over the secured asset, the order was passed ex parte, against
the respondent no. 2–borrower/landlord, who did not oppose the
application. The prima facie case was decided in favour of the

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356            SUPREME COURT REPORTS                     [2019] 12 S.C.R.


A     appellant–tenant solely on the basis of the xerox copies of rent
      receipts produced by him. [Para 28–29] [369-C-E]
             1.7 When the SARFAESI Act proceedings were pending,
      the factum of tenancy was never revealed by the parties. The
      earlier order dated 09.03.2012, passed by the CMM directing
B     the Assistant Registrar to take over the possession of the secured
      asset, is silent about any existing encumbrance over the secured
      asset. It was only after passing of the said order of the Chief
      Metropolitan Magistrate, that the appellant–tenant started
      agitating his rights before the Small Causes Court based on a
      completely different fact scenario, without a whisper of the alleged
C     tenancy under the concluded Section 14, SARFAESI Act
      proceedings. The respondent no.2–borrower/landlord did not even
      respond to the claims of the appellant–tenant. The respondent
      no.1–bank has produced multiple records to substantiate their
      claim that the tenant was nowhere to be seen earlier and that this
D     tenancy was created just to defeat the proceedings initiated under
      the SARFAESI Act. On the contrary, the appellant–tenant has
      failed to produce any evidence to substantiate his claim over the
      secured asset. In such a situation, the appellant–tenant cannot
      claim protection under the garb of the interim protection granted
      to him, ex parte, by solely relying upon the xerox of the rent
E     receipts. [Para 31] [370-B-E]
             1.8 In such an event, wherein the claim of the appellant–
      tenant is not supported by any conclusive evidence, the rejection
      of the stay application by the Chief Metropolitan Magistrate
      cannot be held to be erroneous. In the instant case, the stay
F     application of the appellant–tenant seems to be an afterthought.
      It is clear that the respondent no. 2–borrower/landlord never
      intimated the respondent no. 1–bank about the alleged tenancy.
      The claim of bona fide tenancy of the appellant–tenant cannot be
      accepted. [Para 32] [370-E-G]
G           1.9 In any case, considering the counterfactual pleaded by
      the appellant–tenant himself, that he was a tenant who had entered
      into an oral agreement, such tenancy impliedly does not carry
      any covenant for renewal, as provided under Section 65–A of T.P.

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BAJARANG SHYAMSUNDER AGARWAL v. CENTRAL BANK                           357
               OF INDIA & ANR.

Act. Therefore, in any case, Section 13 (13) SARFAESI Act bars         A
entering into such tenancy beyond January, 2012. As the notice
under Section 13 (2) was issued on 30.04.2011, subsequent
reckoning of the tenancy is barred. Such person occupying the
premises, when the tenancy has been determined, can only be
treated as a ‘tenant in sufferance’. Such tenants do not have any
                                                                       B
legal rights and are akin to trespassers. Thus, the operation of
the Rent Act cannot be extended to a ‘tenant–in–sufferance’ vis–
a–vis the SARFAESI Act, due to the operation of Section 13(2)
read with Section 13(13) of the SARFAESI Act. A contrary
interpretation would violate the intention of the legislature to
provide for Section 13(13), which has a valuable role in making        C
the SARFAESI Act a self–executory instrument for debt recovery.
Moreover, such an interpretation would also violate the mandate
of Section 35, SARFAESI Act which is couched in broad terms.
[Para 33, 36] [370-H; 371-A-B, F]
      1.10 The instant case, does not mandate the additional           D
protection to be provided under the Rent Act, to the appellant–
tenant. The lower courts were correct in ordering delivery of
possession to the respondent no. 1–bank as the tenancy stands
determined. [Para 37] [371-G]
      1.11 Since 7 years have lapsed from the deadline date, the       E
appellant–tenant is directed to hand over the possession of the
secured asset within the stipulated time to the Assistant Registrar,
Mumbai Courts, who in turn would deliver the same to the
respondent no.1–bank. Such devious practices by the borrower
to obstruct the rights of the bank to legitimately realize its dues
cannot be appreciated by this Court. [Para 38] [372-A-B]               F

      Harshad Govardhan Sondagar v. International Assets
      Reconstruction Co. Ltd. and Ors. (2014) 6 SCC 1 :
      [2014] 11 SCR 605 ; Kanaiyalal Lalchand Sachdev and
      Ors. v. State of Maharashtra and Ors. (2011) 2 SCC
      782 : [2011] 2 SCR 602 ; R.V. Bhupal Prasad v. State             G
      of A.P. and Ors. AIR 1996 SC 140 : [1995] 2 Suppl.
      SCR 658 ; Smt. Shanti Devi v. Amal Kumar Banerjee,
      AIR 1981 SC 1550 : [1981] 2 SCC 199 ; Vishal N.

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358            SUPREME COURT REPORTS                        [2019] 12 S.C.R.


A           Kalsaria v. Bank of India and Ors. (2016) 3 SCC
            762 : [2016] 1 SCR 419 ; Murlidhar Jalan (since
            deceased) through his Lrs. v. State of Meghalaya and
            Ors. AIR 1997 SC 2690 : [1997] 1 Suppl. SCR 255 ;
            D.H. Maniar and Ors. v. Waman Laxman Kudav, [1977]
            1 SCR 403 – referred to.
B
                              Case Law Reference
      [2014] 11 SCR 605                referred to              Para 6
      [2016] 1 SCR 419                 referred to              Para 9

C     [2011] 2 SCR 602                 referred to              Para 16
      [1995] 2 Suppl. SCR 658          referred to              Para 34
      [1981] 2 SCC 199                 referred to              Para 35
      [1997] 1 Suppl. SCR 255          referred to              Para 35
D     [1977] 1 SCR 403                 referred to              Para 35
            CRIMINAL APPELLATE JURISDICTION : Criminal Appeal
      No. 1371 of 2019.
            From the Judgment and Order dated 31.12.2014 of the Chief
      Metropolitan Magistrate, Esplanade, Mumbai in Exhibit No. 7 in Case
E     No. 42/SA/2012.
           H. A. Ahmadi, Sr. Adv., Nikhil Goel, Ms. Naveen Goel, Ashutosh
      Ghade, Advs. for the Appellant.
            O. P. Gaggar, Aditya Gaggar, Advs. for the Respondents.
F           The Judgment of the Court was delivered by
            N. V. RAMANA, J. 1. Leave granted.
             2. The present appeal arises out of the impugned order dated
      31.12.2014 in Case No. 42/SA/2012 of the Chief Metropolitan Magistrate,
      Esplanade, Mumbai rejecting the application of the intervenor who is the
G     appellant-tenant herein seeking to stay the execution of order passed
      under Section 14 of The Securitization and Reconstruction of Financial
      Assets and Enforcement of Security Interest Act, 2002 [hereinafter
      referred to as the ‘SARFAESI Act’] for taking possession of the
      property in question.
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BAJARANG SHYAMSUNDER AGARWAL v. CENTRAL BANK                                  359
        OF INDIA & ANR. [N. V. RAMANA, J.]

       3. The property in question is a residential flat admeasuring about    A
1020 sq. ft., situated in Andheri (West), Mumbai (hereinafter referred to
as the “secured asset”). The secured asset was mortgaged by
respondent no. 2-borrower/landlord with the respondent no. 1-bank in
equitable mortgage, by depositing title deeds on 20.05.2000, with an
intention to secure the credit facility. When the respondent no. 2-
                                                                              B
borrower/landlord failed to make the due repayment of the said credit
facilities, the respondent no.1-bank classified the debt as a “Non-
Performing Asset (NPA)”. Thereafter, on 30.04.2011 a statutory Demand
Notice under Section 13 (2) of the SARFAESI Act was issued to
respondent no. 2-borrower/landlord demanding payment of
Rs.10,72,10,106.73 (Rupees Ten Crores Seventy-Two Lacs Ten                    C
Thousand One Hundred Six and Seventy Three Paisa Only) which was
due as on 30.04.2011.
       4. When the respondent no.2-borrower, failed to repay the
outstanding loan amount, the respondent no. 1-bank made an application
under Section 14 of the SARFAESI Act seeking directions to take physical      D
possession of the secured asset. This application was allowed by the
Chief Metropolitan Magistrate, Esplanade, Mumbai by his order dated
09.03.2012. In this order, the Magistrate directed the Assistant Registrar
to take possession of the secured asset and handover the same to the
respondent no. 1-bank.
                                                                              E
       5. For the brevity of discussion, it may be pointed out that the
appellant, who claims to be the tenant, asserts that the secured asset
was let out to him by respondent no. 2-borrower/landlord in January,
2000 and he has been paying rent since then. Admittedly, the tenancy
was based on an oral agreement. The appellant-tenant received a legal
notice dated 25.07.2012, from respondent no. 2-borrower/landlord              F
directing the appellant-tenant to vacate the premises within 15 days.
The appellant-tenant preferred a suit being R.A.D Suit No. 652 of 2012
before the Court of Small Causes at Mumbai against the respondent no.
2-borrower/landlord. On 18.09.2012, the Small Causes Court allowed
the application for interim injunction of the appellant-tenant filed in the   G
above suit and respondent no. 2-borrower/landlord was restrained from
disturbing the possession of the appellant-tenant.
       6. Meanwhile, the High Court of Bombay, in Criminal Public
Interest Litigation No. 24 of 2011, held that a Magistrate has the power
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360               SUPREME COURT REPORTS                         [2019] 12 S.C.R.


A     to pass an order of eviction without giving an opportunity of hearing to
      the tenant under SARFAESI proceedings. An appeal against the aforesaid
      order along with a batch of other appeals was heard by this Court in
      Harshad Govardhan Sondagar v. International Assets
      Reconstruction Co. Ltd. and Ors, (2014) 6 SCC 1 [hereinafter referred
      to as ‘Harshad Govardhan Case’]. This Court directed the Magistrate
B
      to decide the applications after giving the tenants an opportunity of hearing.
            7. The appellant-tenant preferred an application in Case No. 42/
      SA/2012 before the Chief Metropolitan Magistrate, Esplanade, Mumbai.
      By the impugned order dated 31.12.2014, the Chief Metropolitan
      Magistrate after hearing the appellant-tenant, rejected the application
C     holding that the appellant-tenant being a tenant without any registered
      instrument is not entitled for the possession of the secured asset for
      more than one year from the date of execution of unregistered tenancy
      agreement in accordance with the law laid down in Harshad Govardhan
      Case (supra).
D          8. Aggrieved by the same, appellant-tenant filed this appeal by
      way of Special Leave.
           9. The learned senior counsel on behalf of the appellant-tenant
      submitted that-

E            a.    The Appellant was a protected tenant under the Maharashtra
                   Rent Control Act, 1999 [hereinafter referred to as the
                   “Rent Act”], and was in occupation of the tenanted premises
                   since October, 2005.
             b.    Even though there was no registered lease deed, the factum
F                  of tenancy can be demonstrated by multiple rent receipts.
             c.    The Small Causes Court made a prima facie determination
                   of rights in his favour (refer to order in R.A.D. Suit No. 652
                   of 2012).
             d.    the appellant-tenant’s case is covered by the ruling of this
G                  Court in Harshad Govardhan Case (supra), and Vishal
                   N. Kalsaria v. Bank of India and Ors., (2016) 3 SCC 762
                   [hereinafter referred to as ‘Vishal N. Kalsaria Case’].
            10. On the contrary, the counsel on behalf of respondent no.1-
      bank submits that
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BAJARANG SHYAMSUNDER AGARWAL v. CENTRAL BANK                                  361
        OF INDIA & ANR. [N. V. RAMANA, J.]

      a.    The appellant-tenant and the respondent no. 2-borrower            A
            landlord have devised this litigation to commit a large-scale
            fraud on the bank. The appellant is not a tenant and has
            been brought into the picture by the respondent no.2-
            borrower/landlord to misuse the process of law and is not
            entitled for any equitable relief.
                                                                              B
      b.    At the time of creation of the mortgage, the bank officers
            were given to understand that the family of the mortgager
            was residing in the secured asset. Even after multiple
            inquiries, and even after initiating proceedings under Section
            14 of the SARFAESI Act, the bank officers were never
            intimated about the existing tenancy.                             C

      c.    The respondent no. 2-borrower/landlord, had given a non-
            encumbrance certificate to the bank at the time of creation
            of the mortgage.
      d.    In 2016, the respondent no. 1-bank made enquiries regarding       D
            the status of the secured asset from the Housing Society
            which had built the property and is still maintaining the same.
            The Society, vide letter dated 12.07.2016, had confirmed
            that the secured asset is occupied by the respondent no. 2
            borrower/landlord and there were no third-party rights
            created over the same.                                            E

       11. Since the learned senior counsel on behalf of the appellant has
extensively relied on the judgment of this Court passed in Harshad
Govardhan Case (supra) and Vishal N. Kalsaria Case (supra) in
support of the proposition that a tenant is protected from any ejectment
proceedings under the SARFAESI Act, we have to examine if the law             F
declared by these rulings accurately reflects the legal position and if
these rulings applies to the facts of the present case.
       12. Before we proceed further, the circumstances which led to
the enactment of the SARFAESI Act deserve close scrutiny. The
SARFAESI Act was enacted in response to a scenario where slow-                G
paced recovery and staggering amounts of non-performing assets were
looming over the banks. In order to overcome the practical reality, and
keep in pace with the changing commercial world, Narasimham
Committee I and II and the Andhyarujina Committee were constituted
by the Central Government to provide solutions for the issues plaguing
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362              SUPREME COURT REPORTS                              [2019] 12 S.C.R.


A     the banking system of the country. The present Act is a culmination of
      the suggestions made by the aforesaid committees intended to enable
      the bank to resolve the issue of liquidity and aim for the reduction in the
      number of non-performing assets. The Preamble to the Act emphasises
      upon the efficient and expeditious recovery of bad debts. This is also
      evident from the scheme of the Act.
B
              13. Section 13 of the SARFAESI Act provides for the enforcement
      of security interest. This is a self-executory mechanism for the banks.
      Once the process of realizing the secured interest takes place, the secured
      creditor acts as trustee having de-jure/symbolic possession of the property
      and is required by law to realize it strictly in accordance with the provisions
C     of Section 13, 14 and 15 of the SARFAESI Act. Crucially, sub-Section
      (2) of Section 13 of the SARFAESI Act envisages a notice, which acts
      as the trigger point for initiation of the recovery process under the
      SARFAESI Act. In the aforesaid notice, the secured creditor is required
      to disclose information on the amount payable by the borrower and the
D     secured interest intended to be enforced by the secured creditor in the
      event of non-payment of the secured debt. If the borrower fails to
      discharge the liability, the secured creditor has four options including
      taking possession of the secured assets of the borrower (Section 13(4)
      of the SARFAESI Act). Critically for this case, once a notice is served
      on the borrower, he cannot further enter into any contract to create any
E     encumbrance on the property (Section 13(13) of the SARFAESI Act).
      This extinguishes the right of the mortgagor to lease the property under
      Section 65-A of the Transfer of Property Act [hereinafter referred to
      as the ‘T.P. Act’].
             14. Section 14 of the SARFAESI Act provides for the procedural
F     mechanism for taking possession of property and documents with respect
      to the secured assets, from the borrower.
            15. Section 17 of the SARFAESI Act, dealing with the Right to
      Appeal has been amended in the year 20161. However, we are only
      concerned with the earlier law which reads as under -
G
             17. Right to appeal.— (1) Any person (including borrower)
             aggrieved by any of the measures referred to in sub-section (4)
             of Section 13 taken by the secured creditor or his authorised officer
      1
        The Enforcement of Security Interest and Recovery of Debts Laws and Miscellaneous
H     Provisions (Amendment) Act, 2016 (44 of 2016).
BAJARANG SHYAMSUNDER AGARWAL v. CENTRAL BANK                                 363
        OF INDIA & ANR. [N. V. RAMANA, J.]

   under this Chapter, may make an application along with such fee,          A
   as may be prescribed, to the Debts Recovery Tribunal having
   jurisdiction in the matter within forty-five days from the date on
   which such measures had been taken:
        Provided that different fees may be prescribed for making
   the application by the borrower and the person other than the             B
   borrower.
   ……
   (2) The Debts Recovery Tribunal shall consider whether any of
   the measures referred to in sub-section (4) of Section 13 taken by
   the secured creditor for enforcement of security are in                   C
   accordance with the provisions of this Act and the Rules made
   thereunder.
   (3) If, the Debts Recovery Tribunal, after examining the facts
   and circumstances of the case and evidence produced by the
   parties, comes to the conclusion that any of the measures referred        D
   to in sub-section (4) of Section 13, taken by the secured creditor
   are not in accordance with the provisions of this Act and
   the Rules made thereunder, and require restoration of the
   management of the business to the borrower or restoration of
   possession of the secured assets to the borrower, it may by order,        E
   declare the recourse to any one or more measures referred to
   in sub-section (4) of Section 13 taken by the secured creditors
   as invalid and restore the possession of the secured assets to
   the borrower or restore the management of the business to
   the borrower, as the case may be, and pass such order as it may
   consider appropriate and necessary in relation to any of the              F
   recourse taken by the secured creditor under sub-section (4) of
   Section 13.
   (4) If, the Debts Recovery Tribunal declares the recourse taken
   by a secured creditor under sub-section (4) of section 13, is in
   accordance with the provisions of this Act and the rules made             G
   thereunder, then, notwithstanding anything contained in any other
   law for the time being in force, the secured creditor shall be entitled
   to take recourse to one or more of the measures specified under
   sub-section (4) of section 13 to recover his secured debt.
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364            SUPREME COURT REPORTS                          [2019] 12 S.C.R.


A           (5) Any application made under sub-section (1) shall be dealt with
            by the Debts Recovery Tribunal as expeditiously as possible and
            disposed of within sixty days from the date of such application:
                           Provided that the Debts Recovery Tribunal may,
            from time to time, extend the said period for reasons to be recorded
B           in writing, so, however, that the total period of pendency of the
            application with the Debts Recovery Tribunal, shall not exceed
            four months from the date of making of such application made
            under sub-section (1).
            (6) ………..
C           (7) Save as otherwise provided in this Act, the Debts Recovery
            Tribunal shall, as far as may be, dispose of the application in
            accordance with the provisions of the Recovery of Debts Due to
            Banks and Financial Institutions Act, 1993 (51 of 1993) and the
            rules made thereunder.
D                                                       (emphasis supplied)
             16. Section 17 provides for an invaluable right of appeal to any
      person including the borrower to approach the Debt Recovery Tribunal
      (hereinafter referred to as the “DRT”). In Harshad Govardhan Case
      (supra) this Court held that the right of appeal is available to the tenant
E     claiming under a borrower, however the right of re-possession does not
      exist with the tenant. However, in Kanaiyalal Lalchand Sachdev
      and Ors. vs. State of Maharashtra and Ors., (2011) 2 SCC 782, this
      Court held that the DRT can, not only set aside the action of the secured
      creditor, but even restore the status quo ante. We do not intend to
F     express any view on this issue since it is not relevant for the disposal of
      this appeal. We also note that Parliament has stepped in and amended
      Section 17 by the Enforcement of Security Interest and Recovery of
      Debts Laws and Miscellaneous Provisions (Amendment) Act, 2016 (44
      of 2016). Under the amendment, possession can be restored to the
      “borrower or such other aggrieved person”.
G
            17. Section 35 of the SARFAESI Act provides an overriding effect
      over “anything inconsistent contained in any other law”, in the following
      manner-
            “35. The provisions of this Act to override other laws.- The
            provisions of this Act shall have effect, notwithstanding anything
H
BAJARANG SHYAMSUNDER AGARWAL v. CENTRAL BANK                                    365
        OF INDIA & ANR. [N. V. RAMANA, J.]

      inconsistent therewith contained in any other law for the time            A
      being in force or any instrument having effect by virtue of any
      such law.”
      Section 35 is critical to this case and we will examine the conflicting
views on Section 35.
       18. The interplay between the SARFAESI Act and the right of              B
the tenant was first examined by this Court in Harshad Govardhan
Case (supra). It may be noted that the present appellant was a party to
the aforesaid proceedings. This Court was confronted with the question
as to whether the provisions of the SARFAESI Act affect the right of a
lessee to remain in possession of the secured asset during the period of        C
the lease. After noticing the scheme of the Act, this Court held that if
the lawful possession of the secured asset is not with the borrower, but
with a lessee under a valid lease, the secured creditor cannot take
possession of the secured asset until the lawful possession of the lessee
gets determined and the lease will not get determined if the secured
creditor chooses to take any of the measures specified in Section 13 of         D
the SARFAESI Act. Accordingly, this Court concluded that the Chief
Metropolitan Magistrate /District Magistrate can pass an order for delivery
of possession of secured asset in favour of secured creditor only when
he finds that the lease has been determined in accordance with Section
111 of the T.P. Act.                                                            E
       19. The Court further held that if the Chief Metropolitan Magistrate
/ District Magistrate is satisfied that a valid lease is created before the
mortgage and the lease has not been determined in accordance with
Section 111 of the T.P. Act, then he cannot pass an order for delivery of
possession of the secured asset to the secured creditor. In case, he            F
comes to the conclusion that there is no valid lease either before the
creation of mortgage or after the creation of the mortgage satisfying the
requirements of Section 65-A of the T.P. Act or even though there is a
valid lease the same stands determined in accordance with Section 111
of the T.P. Act, he can pass an order for delivery of possession of the
secured asset to the secured creditor.                                          G
      20. This Court also recognised the inconsistency between Section
13(13) of the SARFAESI Act and Section 65-A of the Transfer of
Property Act. While Section 13(13) of SARFAESI prohibits a borrower
from leasing out any of the secured assets after receipt of a notice
                                                                                H
366            SUPREME COURT REPORTS                          [2019] 12 S.C.R.


A     under Section 13(2) without the prior written consent of the secured
      creditor, Section 65-A of the T.P. Act enables the borrower/mortgagor
      to lease out the property. This inconsistency was resolved by holding
      that the SARFAESI Act will override the provisions of the T.P. Act.
            21. Before concluding, the Court in Harshad Govardhan Case
B     (supra), distinguished the implications of a registered and an unregistered
      instrument/oral agreement, in the following manner:
            36. We may now consider the contention of the respondents that
            some of the appellants have not produced any document to prove
            that they are bona fide lessees of the secured assets. We find that
C           in the cases before us, the appellants have relied on the written
            instruments or rent receipts issued by the landlord to the tenant.
            Section 107 of the Transfer of Property Act provides that a lease
            of immovable property from year to year, or for any term
            exceeding one year or reserving a yearly rent, can be made “only
            by a registered instrument” and all other leases of immovable
D           property may be made either by a registered instrument or by oral
            agreement accompanied by delivery of possession. Hence, if any
            of the appellants claim that they are entitled to possession
            of a secured asset for any term exceeding one year from
            the date of the lease made in his favour, he has to produce
E           proof of execution of a registered instrument in his favour
            by the lessor. Where he does not produce proof of execution
            of a registered instrument in his favour and instead relies
            on an unregistered instrument or oral agreement
            accompanied by delivery of possession, the Chief
            Metropolitan Magistrate or the District Magistrate, as the
F           case may be, will have to come to the conclusion that he is
            not entitled to the possession of the secured asset for more
            than a year from the date of the instrument or from the
            date of delivery of possession in his favour by the landlord.
                                                          (emphasis supplied)
G
            22. The second case which dealt with the issue of tenants’ rights
      under the SARFAESI Act is Vishal N. Kalsaria Case (supra). This
      Court was concerned with the question - Whether a “protected tenant”
      under the Maharashtra Rent Control Act, 1999 can be treated as a lessee

H
BAJARANG SHYAMSUNDER AGARWAL v. CENTRAL BANK                                  367
        OF INDIA & ANR. [N. V. RAMANA, J.]

and whether the provisions of the SARFEASI Act, will override the             A
provisions of the Rent Act?
       23. After examining the legal and constitutional position, the Court
held that while the SARFAESI Act has a laudable objective of providing
a smooth and efficient recovery procedure, it cannot override the
objective of Rent Acts to control the rate of rent and provide protection     B
to tenants against arbitrary and unreasonable evictions. To resolve this
conflict, this Court held that-
    a) The provisions of the SARFAESI Act cannot be used to override
       the provisions of the Rent Act. The landlord cannot be permitted
       to do indirectly what he has been barred from doing under the          C
       Rent Act.
    b) While a yearly tenancy requires to be registered, oral tenancy
       can still be proved by showing that the tenant has been in
       occupation of the premises before the Magistrate under Section
       14 of the SARFAESI Act.                                                D
    c) The non-registration of the tenancy deed cannot be used against
       the tenant. For leasehold rights being created after the property
       has been mortgaged to the bank, the consent of the creditor
       needs to be taken.
    d) Even though Section 35 of the SARFAESI Act has a non                   E
       obstante clause, it will not override the statutory rights of the
       tenants under the Rent Control Act. The non obstante clause
       under Section 35 of the SARFAESI Act only applies to laws
       operating in the same field.
       24. While we agree with the principle laid out in Vishal N. Kalsaria   F
Case (supra) 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 SARFAESI Act, to only apply to the laws operating
in the same field is too narrow and such a proposition does not follow
                                                                              G
from the ruling of this Court in Harshad Govardhan Case (supra).
       25. In our view, the objective of SARFAESI Act, coupled with
the T.P. Act and the Rent Act are required to be reconciled herein in the
following manner:
                                                                              H
368             SUPREME COURT REPORTS                          [2019] 12 S.C.R.


A         a) If a valid tenancy under law is in existence even prior to the
             creation of the mortgage, the tenant’s possession cannot be
             disturbed by the secured creditor by taking possession of the
             property. The lease has to be determined in accordance with
             Section 111 of the TP Act for determination of leases. As the
             existence of a prior existing lease inevitably affects the risk
B
             undertaken by the bank while providing the loan, it is expected
             of Banks/Creditors to have conducted a standard due diligence
             in this regard. Where the bank has proceeded to accept such a
             property as mortgage, it will be presumed that it has consented
             to the risk that comes as a consequence of the existing tenancy.
C            In such a situation, the rights of a rightful tenant cannot be
             compromised under the SARFAESI Act proceedings.
          b) If a tenancy under law comes into existence after the creation
             of a mortgage, but prior to the issuance of notice under Section
             13(2) of the SARFAESI Act, it has to satisfy the conditions of
D            Section 65-A of the T.P. Act.
          c) In any case, if any of the tenants claim that he is entitled to
             possession of a secured asset for a term of more than a year, it
             has to be supported by the execution of a registered instrument.
             In the absence of a registered instrument, if the tenant relies on
E            an unregistered instrument or an oral agreement accompanied
             by delivery of possession, the tenant is not entitled to possession
             of the secured asset for more than the period prescribed under
             Section 107 of the T.P. Act.
              26. In the present case, the bona fides of the tenant is highly
F     doubtful, as there is no good or sufficient evidence to establish the tenancy
      in the first place. The present case involves a tenant who allegedly entered
      into an oral agreement of tenancy before the mortgage deed was entered
      into between the borrower and Bank/Creditor. Additionally, it must be
      noted that tenancy created under such an oral agreement, results in a
      fresh tenancy after the expiry of statutory period fixed under the T.P
G     Act.
            27. The records also do not demonstrate that the appellant-tenant
      has been able to prove his status as a valid leaseholder to merit the
      protection sought for. Admittedly, an equitable mortgage on the secured
      asset was created by the respondent no. 2-borrower/landlord by
H
BAJARANG SHYAMSUNDER AGARWAL v. CENTRAL BANK                                   369
        OF INDIA & ANR. [N. V. RAMANA, J.]

depositing title deeds with respondent no. 1-bank on 20.05.2000.               A
However, the date of creation of the tenancy is not established in the
present case. It is to be noted that the appellant-tenant, while seeking
protection before the Small Causes Court, stated that the premises were
let out to him in January, 2000, but the Court noted that the appellant-
tenant produced photocopies of rent receipts for the period of 2001 to
                                                                               B
2011. Contrarily, the appellant-tenant, in this appeal before us, has stated
that he entered into the tenancy in October, 2005.
       28. The claim of tenancy made by the appellant-tenant is not
supported by a registered instrument. We recognise the legal position, as
laid out in the Vishal N. Kalsaria Case (supra), that in the absence of
a written lease deed the tenant may prove his existing rights by producing     C
other relevant evidence before the Magistrate. The appellant-tenant
has to produce evidence of payment of rent, property taxes, etc.
Furthermore, if the rent and permitted increases were payable, then the
quantum ought to have been mentioned. In addition to the above, the
claim of tenancy could have been substantiated by relying upon other           D
tax receipts such as BMC tax, water tax, electricity charges consumed
by the tenant, etc. However, the appellant-tenant has only submitted
xerox copies of rent receipts.
      29. Although the Small Causes Court held that the appellant-tenant
seems to have, prima facie, a right over the secured asset, the order          E
was passed ex parte, against the respondent no. 2-borrower/landlord,
who did not oppose the application. It is to be noted that the prima facie
case was decided in favour of the appellant-tenant solely on the basis of
the xerox copies of rent receipts produced by him.
       30. The respondent no. 1-bank has vehemently contested the              F
bona fides of the appellant-tenant and has argued that the claim of
tenancy has been raised just to defeat the legal process of realisation of
dues as per the SARFAESI Act. To substantiate this claim, the
respondent no. 1-bank has placed on record a legal scrutiny report dated
08.05.2000, wherein the property is indicated to be self-occupied by the
respondent no. 2-borrower/landlord for residential usage. Additionally,        G
the aforesaid fact is corroborated by the non-encumbrance certificate
submitted by the respondent no. 2-borrower/landlord at the time of
creation of the mortgage. Furthermore, the respondent no. 1-bank has
also placed a letter dated 12.07.2016 from the Housing Society that
                                                                               H
370            SUPREME COURT REPORTS                          [2019] 12 S.C.R.


A     maintains the secured asset, which confirmed that no tenancy had been
      created on the secured asset.
             31. It is pertinent to note that at the time when the SARFAESI
      Act proceedings were pending, the factum of tenancy was never revealed
      by the parties. The earlier order dated 09.03.2012, passed by the Chief
B     Metropolitan Magistrate, Esplanade, Mumbai directing the Assistant
      Registrar to take over the possession of the secured asset, is silent about
      any existing encumbrance over the secured asset. It was only after
      passing of the aforesaid order of the Chief Metropolitan Magistrate, that
      the appellant-tenant started agitating his rights before the Small Causes
      Court based on a completely different fact scenario, without a whisper
C     of the alleged tenancy under the concluded Section 14, SARFAESI Act
      proceedings. The respondent no.2-borrower/landlord did not even
      respond to the claims of the appellant-tenant. The respondent no.1-
      bank has produced multiple records to substantiate their claim that the
      tenant was nowhere to be seen earlier and that this tenancy was created
D     just to defeat the proceedings initiated under the SARFAESI Act. On
      the contrary, the appellant-tenant has failed to produce any evidence to
      substantiate his claim over the secured asset. In such a situation, the
      appellant-tenant cannot claim protection under the garb of the interim
      protection granted to him, ex parte, by solely relying upon the xerox of
      the rent receipts.
E
             32. In such an event, wherein the claim of the appellant-tenant is
      not supported by any conclusive evidence, the rejection of the stay
      application by the Chief Metropolitan Magistrate cannot be held to be
      erroneous. Although the counsel of the appellant-tenant has placed ample
      reliance upon the Vishal N. Kalsaria Case (supra), but the same would
F     not help the cause of the appellant-tenant herein, as the earlier case
      proceeded with the assumption of a valid and bona fide tenancy. But in
      the present case, the stay application of the appellant-tenant seems to
      be an afterthought. It is clear that the respondent no. 2-borrower/
      landlord never intimated the respondent no. 1-bank about the alleged
G     tenancy. In light of the above, we are unable to accept the claim of
      bona fide tenancy of the appellant-tenant.
             33. In any case, considering the counterfactual pleaded by the
      appellant-tenant himself, that he was a tenant who had entered into an
      oral agreement, such tenancy impliedly does not carry any covenant for
H     renewal, as provided under Section 65-A of T.P. Act. Therefore, in any
BAJARANG SHYAMSUNDER AGARWAL v. CENTRAL BANK                                   371
        OF INDIA & ANR. [N. V. RAMANA, J.]

case, Section 13 (13) SARFAESI Act bars entering into such tenancy             A
beyond January, 2012. As the notice under Section 13 (2) SARFAESI
Act was issued on 30.04.2011, subsequent reckoning of the tenancy is
barred. Such person occupying the premises, when the tenancy has been
determined, can only be treated as a ‘tenant in sufferance’. We should
note that such tenants do not have any legal rights and are akin to
                                                                               B
trespassers.
       34. In this context we may refer to R.V. Bhupal Prasad v. State
of A.P. and Ors., AIR 1996 SC 140, wherein a two Judge Bench of this
Court, speaking through Ramaswamy, J., made the following pertinent
observations in paragraph 8 of the Report:
                                                                               C
      “8. Tenant at sufferance is one who comes into possession of
      land by lawful title, but who holds it, by wrong after the termination
      of the term or expiry of the lease by efflux of time. The tenant at
      sufferance is, therefore, one who wrongfully continues in
      possession after the extinction of a lawful title. There is little
      difference between him and a trespasser. “                               D

       35. On the same lines are the decisions of this Court in Smt.
Shanti Devi v. Amal Kumar Banerjee, AIR 1981 SC 1550, Murlidhar
Jalan (since deceased) through his Lrs. v. State of Meghalaya and
Ors., AIR 1997 SC 2690 and D.H. Maniar and Ors. v. Waman Laxman
Kudav, [1977] 1 SCR 403.                                                       E

       36. The operation of the Rent Act cannot be extended to a ‘tenant-
in-sufferance’ vis-a-vis the SARFAESI Act, due to the operation of
Section 13(2) read with Section 13(13) of the SARFAESI Act. A contrary
interpretation would violate the intention of the legislature to provide for
Section 13(13), which has a valuable role in making the SARFAESI Act           F
a self-executory instrument for debt recovery. Moreover, such an
interpretation would also violate the mandate of Section 35, SARFAESI
Act which is couched in broad terms.
       37. As noted above, this case, does not mandate the additional
protection to be provided under the Rent Act, to the appellant-tenant          G
herein. The lower Courts are correct in ordering delivery of possession
to the respondent no. 1-bank as the tenancy stands determined. Before
we part, we must note that we have not interpreted the new amendment
per se or the law with respect to other categories of tenants, which may
be taken up in appropriate cases.
                                                                               H
372                SUPREME COURT REPORTS                      [2019] 12 S.C.R.


A            38. In the present case, as we are in the year 2019, which is 7
      years beyond the deadline of 2012, it is ordered that the appellant-tenant
      shall hand over the possession of the secured asset within 12 weeks of
      this order to the Assistant Registrar at Bandra Centre of Courts, Mumbai,
      who in turn shall deliver the same to the respondent no.1-bank. This
      Court is further of the opinion that such devious practices by the borrower
B
      to obstruct the rights of the bank to legitimately realize its dues cannot
      be appreciated by this Court. Accordingly, we dismiss this appeal.


      Nidhi Jain                                                  Appeal dismissed.

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