The object of the
Act, is aiming at reducing ‘Non-performing Asset” of the banks. The courts in
our country have interpreted the provisions of the Act dealing with many
complicated issues and keeping in view the interest of the borrowers. Many
issues under the provisions of SARFAESI Act, 2002 are settled now. The two most
important cases in that process are Mardia Chemicals Ltd v. Union of India and Transcore v. Union of India. Where the Supreme Court has settled the
legal position substantially with regard to the SARFAESI Act and made the rigor
of SARFAESI Act for the recovery of NPAs effective in letter and spirit.
however, the issue of eviction of Tenant using the authority or the power under
Section 14 remains very significant. Many states have special laws protecting
the interests of the Tenants and it has a very great object despite criticism.
There need not to be any written agreement or registered Lease Deed etc. for
availing the protection under Tenant Protection laws in a particular state and
the provision of tenant protection law will prevail. In the light of the object
of SARFAESI Act, 2002 and the object of Tenant Protection Laws in a particular
state, the issue of eviction of Tenant under Section 14 of SARFAESI Act, 2002
occupies significance. There can be complications if the bank is asked to
approach the Rent Control Courts to evict the Tenant. Again, there can serious
issues if the bank is allowed to proceed against the Tenant under Section 14 of
the SARFAESI Act, 2002 without having any regard to the Lease Agreement,
understanding or the Lease Deed. The complications with the eviction of Tenant
by the bank in the course of its action under the provisions of SARFAESI Act,
2002 are in brief, as follows:-
·
If the bank is not allowed to proceed
against the Tenant under Section 14 to take physical possession of the
property, then the ‘Secured Asset’ may not fetch good value when it goes for
auction. It can be detrimental to the interests of the borrowers and also can
be detrimental to the interests of the banks too in some cases. The bidders may
definitely discount the risk of eviction while bidding for the property in
auction. If the property is not fetching the market value, then, It may provide
a right to the borrower or the owner of the property to challenge the auction.
·
If the bank is asked to approach Rent
Control Courts or Rent Control Tribunal under the special State law dealing
with the protection of Tenants, then, it would be interesting to see as to the
grounds available to the Banks to ask for the eviction of Tenants from the
‘Secured Asset’.
·
From Tenants point of view, he or she
may suffer an irreparable loss due to the action of the bank under SARFAESI
Act, 2002 and the Tenant may find it difficult to proceed against the owner of
the property in getting the Advance amount back or in claiming the damages.
There is a justification from Tenants point of view and it will be definitely
difficult to the Tenant to vacate the premises immediately as against their
plans. Who will compensate the Tenant in genuine cases.
·
We cannot also rule-out the possibility
of fictitious arrangements or Agreements if the protection is provided to the
Tenants and it is held that the banks cannot take physical possession of the
‘Secured Asset’ under Section 14. We know many cases pending before Rent
Control Courts or Tribunal for years. In many cases, Tenants used to approach
Debt Recovery Tribunal now under Section 17 as soon as they come to the
knowledge of SARFAESI proceedings. The DRT, may rule in favor of bank in many
of these cases and the Tenant is carefully been scrutinized.