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Indian Bank v. M/S Nippon Enterprises South & Ors.

Civil Appeal · Neutral citation not assigned (Civil Appeal Nos. 5610-5611 of 2011)Decided 17 Feb 2016
Civil Appeal Nos. 5610-5611 of 2011
Justice Kurian Joseph · Justice Rohinton Fali Nariman

Background

Indian Bank had succeeded in SARFAESI proceedings against the owner of certain secured assets. The bank then sought to use that success to also assert the same rights directly against a tenant occupying the premises, and the matter reached the Supreme Court on appeal.

Decision Breakdown

The Court held that success in SARFAESI proceedings against an owner does not automatically give the bank the same rights against a tenant in occupation. Relying on its recent ruling in Vishal N. Kalsaria vs Bank of India & Ors. (2016) 1 SCALE 172, the Court reiterated that a tenant, once tenancy is validly created, can only be evicted through due process under the applicable Rent Control law, and cannot be arbitrarily evicted using SARFAESI Act provisions. The appeals were accordingly dismissed, though the Court clarified this did not bar the bank from pursuing any other lawful remedy to evict the tenant.

Lesson Learnt

A secured creditor's victory under the SARFAESI Act against a defaulting borrower/owner does not by itself override a sitting tenant's statutory protection against eviction: the tenant can still only be evicted through the proper legal process under rent control law.

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

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