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Hemraj Ratnakar Salian v. HDFC Bank Ltd.

Criminal Appeal · 2021 INSC 408Decided 17 Aug 2021
Criminal Appeal Nos. 843-844 of 2021
Justice S. Abdul Nazeer · Justice Krishna Murari

Background

HDFC Bank had granted a loan secured by a mortgage over a flat in Mumbai. When the borrowers defaulted and the loan account was declared a non-performing asset, the Bank initiated proceedings under the SARFAESI Act to take possession of the mortgaged flat. The appellant, claiming to be a tenant in the flat since mid-2012 (before the mortgage), sought protection from eviction, but the Magistrate rejected his application for lack of proof of a registered tenancy.

Decision Breakdown

The Supreme Court held that the appellant's tenancy claim was doubtful and unsupported by credible evidence: the only rent receipt produced was dated after the mortgage was created, the borrowers had never disclosed any tenant to the Bank, and third-party valuers had found the borrowers themselves residing at the property. Applying its earlier precedents, the Court reiterated that a tenancy for a period exceeding one year must be backed by a registered instrument, and an unregistered or oral tenancy does not entitle a tenant to resist SARFAESI possession proceedings beyond a limited period. Finding no genuine, legally valid tenancy pre-dating or properly surviving the mortgage, the Court dismissed the appeals.

Lesson Learnt

A long-term tenancy claim cannot defeat a bank's right to repossess mortgaged property under the SARFAESI Act unless it is backed by a registered lease document: oral tenancies or unregistered receipts offer very limited protection against a secured creditor.

Official source (sci.gov.in)View Judgment (PDF)

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