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Legal Case Shots

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Legal Case Shots is a searchable database of Supreme Court of India judgments, each broken down into the case type, the court's key holding, and a practical lesson learnt, with the full judgment available as a PDF for citation or deeper reading.

Banking & Debt Recovery LawSupreme Court of India

Bajarang Shyamsunder Agarwal v. Central Bank of India & Anr.

Criminal Appeal · 2019 INSC 1017Decided 11 Sept 2019
Criminal Appeal No. 1371 of 2019
Justice N.V. Ramana · Justice Mohan M. Shantanagoudar · Justice Indira Banerjee

Background

A borrower had mortgaged a Mumbai flat with Central Bank of India as security for a loan; when the loan turned into a non-performing asset, the bank invoked the SARFAESI Act to take physical possession of the flat. The appellant, who claimed to be an oral/unregistered tenant of the borrower since 2000 (and said he had been paying rent), tried to resist the bank's possession proceedings, asserting tenant protections under the Maharashtra Rent Control Act. The Chief Metropolitan Magistrate rejected his claim, holding that an unregistered tenancy could not defeat the bank's possession rights beyond the one-year statutory limit set out in an earlier Supreme Court ruling (Harshad Govardhan Sondagar).

Decision Breakdown

The Supreme Court found the claimed tenancy highly suspect: the borrower had never informed the bank of any tenancy, and the stay application appeared to be an afterthought. The Court held that, under Section 13(13) of the SARFAESI Act, once the statutory demand notice was issued, no fresh tenancy rights could be recognized beyond the cut-off date in 2012, and since the appellant's own claimed tenancy was based only on an oral agreement with no right of renewal, his continued occupation after that date made him merely a "tenant at sufferance": someone with no legal right to remain, legally very close to a trespasser. The Court held the Rent Act's protections could not override the SARFAESI Act's self-executing debt-recovery scheme, criticized what it called a "devious practice" by the borrower's side to obstruct the bank's legitimate recovery, and ordered the appellant to hand over possession within 12 weeks, dismissing the appeal.

Lesson Learnt

An unregistered, informal tenancy created without the bank's knowledge offers very limited protection against a bank's legal right to repossess mortgaged property under the SARFAESI Act, once the statutory cut-off for recognizing such tenancies passes, continued occupation does not carry real legal rights and can be treated almost like trespass.

Bajarang Shyamsunder Agarwal v. Central Bank of India & Anr. – Legal Case Shots | LegalAware