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The Supreme Court has held that "tenant in sufferance" is not entitled to any protection under Rent Act and even if the tenancy has been claimed to be renewed in terms of Section 13(13) of the SARFAESI Act, the Borrower would be required to seek the consent of the secured creditor for transfer of the Secured Asset by way of sale, lease or otherwise.

A bench of Justice S Abdul Nazeer and Justice Krishna Murari noted that the consent of the secured creditor has to be taken, "after issuance of the notice under Section 13(2) of the SARFAESI Act and, admittedly, no such consent has been sought by the Borrower in the present case."

The plea has been filed challenging the order of the Chief Metropolitan Magistrate, Esplanade, Mumbai, rejecting the Application filed by the appellant herein for restraining HDFC Bank from taking possession of the property in the appellant’s possession.

The tenant in the matter was living on rent in a mortgaged property, whereas, in furtherance of the same the bank issued notice under Section 13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 to the Borrower for securing the asset.

Counsel appearing for the appellant submitted, "appellant is a protected tenant under the provisions of the Maharashtra Rent Control Act 1999. He has been paying rent regularly to the landlord. He has also paid advance rent till 17.12.2018. There are continuous rent receipts with him from the date of his induction as a tenant. The tenant was residing in the said premises on the basis of an oral tenancy from 12.06.2012. Therefore, he cannot be evicted from the Secured Asset without due process of law."

However, Counsel appearing for the HDFC Bank stated, "that the rent receipt said to have been issued by the landlord for the period from 12.06.2012 to 12.05.2013 is of 12.05.2013 which is after the date of creation of mortgage in favour of the Bank. There is absolutely no material to show that the tenancy was created earlier to the date of mortgage."

The bench while dismissing the appeal observed that, "he is a “tenant ­in­ sufferance”, therefore, he is not entitled to any protection of the Rent Act. Secondly, even if the tenancy has been claimed to be renewed in terms of Section 13(13) of the SARFAESI Act, the Borrower would be required to seek consent of the secured creditor for transfer of the Secured Asset by way of sale, lease or otherwise, after issuance of the notice under Section 13(2) of the SARFAESI Act and, admittedly, no such consent has been sought by the Borrower in the present case."

Case Title: Hemraj ratnakar Salian v. HDFC Bank and others