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Tenant in sufferance is not entitled to protection of Rent Act against SARFAESI proceedings

In Hemraj Ratnakar Salian vs Hdfc Bank Ltd. & Ors, appeal was filed before the Supreme Court against the Orders passed by the Chief Metropolitan Magistrate, Esplanade, Mumbai, rejecting the Application  filed by the appellant herein for restraining HDFC Bank, the first respondent herein, from taking possession of the property in the appellants possession.

The SC observed that in Harshad Govardhan Sondagar v. International Asset Reconstruction Co. Ltd. & Ors. (2014) 6 SCC 1, this Court has categorically held that if the tenancy claim is for any term exceeding one year, the tenancy can be made only by a registered instrument.

A Three-Judge Bench of this Court in Bajarang Shyamsunder Agarwal v. Central Bank of India & Anr. (2019) 9 SCC 94 , after considering almost all decisions of this Court, in relation to the right of a tenant in possession of the secured asset, has held that if a valid tenancy under law is in existence even prior to the creation of the mortgage, such tenants possession cannot be disturbed by the secured creditor by taking possession of the property. If a tenancy under law comes into existence after the creation of a mortgage but prior to issuance of a notice under Section 13(2) of the SARFAESI Act, it has to satisfy the conditions of Section 65-A of the Transfer of Property Act, 1882. If a tenant claims 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 said decision of this Court, it was clarified that in the absence of a registered instrument, if the tenant only relies upon 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 the provisions of the Transfer of Property Act. 

It was further held that the Rent Act would not come to the aid of a tenant-in-sufferance vis-à-vis SARFAESI Act due to the operation of Section 13(2) read with Section 13(13) of the SARFAESI Act.

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