Facts of the Case

The petitioner, Siva Kumar M, was a tenant operating a jewellery shop in premises that had been taken possession of by Bank of Baroda under proceedings initiated under Section 14 of the SARFAESI Act, 2002. The petitioner contended that his jewellery stock was still lying inside the shop and alleged that possession had been taken without granting him reasonable notice. He sought reasonable time from the High Court to remove his goods and vacate the premises.

 

Issues Involved

  1. Whether a tenant occupying premises taken over under Section 14 of the SARFAESI Act is entitled to reasonable time to vacate the premises.
  2. Whether the secured creditor can permit temporary occupation of the secured asset subject to payment of rent.
  3. Whether the High Court can issue equitable directions balancing the rights of the secured creditor and the tenant.

 

Petitioner’s Arguments

  • The petitioner was a lawful tenant carrying on a jewellery business from the premises.
  • The jewellery stock belonging to the petitioner remained inside the shop.
  • Possession had allegedly been taken without providing reasonable notice.
  • The petitioner sought only a reasonable opportunity to remove the stock and peacefully vacate the premises.

 

Respondent’s Arguments

  • The Bank submitted that it had no objection to granting reasonable time to the petitioner.
  • However, the Bank requested that the petitioner should pay the rent for the period during which he continued to occupy the premises after possession had been taken under the SARFAESI proceedings.

 

Court Order / Findings

The Kerala High Court disposed of the writ petition with the following directions:

  • The petitioner was permitted to continue occupying the shop until 16.01.2023.
  • The petitioner was directed to hand over vacant possession of the shop to the Authorised Officer of the Bank on or before 5:00 PM on 16.01.2023.
  • The Authorised Officer was directed to permit the petitioner to reopen and occupy the shop immediately, and in any event not later than 5:00 PM on 23.12.2022, enabling the petitioner to remove his stock.
  • The petitioner was directed to pay rent to the Bank for the period of continued occupation.
  • The Court further clarified that if possession was not handed over within the stipulated time, the Bank would be at liberty to initiate contempt proceedings against the petitioner.

 

Important Clarification

  • Even after possession of a secured asset has been taken under Section 14 of the SARFAESI Act, the High Court may grant a tenant reasonable time to vacate in appropriate circumstances.
  • Such equitable relief can be made conditional upon payment of rent to the secured creditor.
  • Failure to comply with the Court's directions regarding delivery of possession may expose the occupant to contempt proceedings.
  • The judgment balances the rights of the secured creditor with the practical difficulties faced by an existing tenant.

 

Sections Involved

  • Section 14 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, 2002


Link to download the order -

https://www.mytaxexpert.co.in/uploads/1782969960_87compressed.pdf

 

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