No Remedy Is Available Under Section 17 Of The SARFAESI ACT To The Lessee To Protect His Lawful Possession Under A Valid Lease, Hence No Jurisdiction

Hon’ble Supreme Court in Harshad Govardhan Sondagar Vs International Assets Reconstruction Co. Ltd. & Ors {(2014) 6 SCC 1; Criminal Appeal No. 736 of 2014; Decided on 03-04-2014) has, inter alia, held as follows.

 

“16. Thus, so long as a lease of an immovable property does not get determined, the lessee has a right to enjoy the property and this right is a right to property and this right cannot be taken away without the authority of law as provided in Article 300A of the Constitution. As we have noticed, there is no provision in Section 13 of the SARFAESI Act that a lease in respect of a secured asset shall stand determined when the secured creditor decides to take the measures mentioned in Section 13 of the said Act. Without the determination of a valid lease, the possession of the lessee is lawful and such lawful possession of a lessee has to be protected by all courts and tribunals.”

 

 

“18. Hence, possession of the secured asset from a lessee in lawful possession under a valid lease is not required to be taken under the provisions of the SARFAESI Act and the Chief Metropolitan Magistrate or the District Magistrate, therefore, does not have any power under Section 14 of the SARFAESI Act to take possession of the secured asset from such a lessee and hand over the same to the secured creditor.

 

“24. But when we read subsection (3) of Section 17 of the SARFAESI Act, we find that the Debts Recovery Tribunal has powers to restore possession of the secured asset to the borrower only and not to any person such as a lessee. Hence, even if the Debt Recovery Tribunal comes to the conclusion that any of the measures referred to in sub-section (4) of Section 13 taken by the secured creditor are not in accordance with the provisions of the Act, it cannot restore possession of the secured asset to the lessee. In our considered opinion, therefore, there is no remedy available under Section 17 of the SARFAESI Act to the lessee to protect his lawful possession under a valid lease.” (Emphasis supplied)

 

Thus, in April, 2014, Hon’ble Supreme Court held that there is no provision in Section 13 of the SARFAESI Act that a lease in respect of a secured asset shall stand determined when the secured creditor decides to take the measures mentioned in Section 13 of the said Act. The Chief Metropolitan Magistrate (‘CMM’) or the District Magistrate (‘DM’), therefore, does not have any power under Section 14 of the SARFAESI Act to take possession of the secured asset from such a lessee and hand over the same to the secured creditor. As per sub-section (3) of Section 17 of the SARFAESI Act, the Debts Recovery Tribunal has powers to restore possession of the secured asset to the borrower only and not to any person such as a lessee. Therefore, there is no remedy available under Section 17 of the SARFAESI Act to the lessee to protect his lawful possession under a valid lease.

 

It is pertinent to note here that the court has without fail examined whether a remedy is available under Section 17 of the SARFAESI Act to the lessee to protect his lawful possession under a valid lease, apart from there being no provision in Section 13 of the SARFAESI Act for determination of a lease.

DRT Has No Jurisdiction

























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