VISHAL N. KALSARIA v. BANK OF INDIA & Ors.

Judgment

1 S.C.R. 419 VISHAL N. KALSARIA v. BANK OF INDIA & ORS. (Criminal Appeal No. 52 of2016 etc.) JANUARY 20, 2016 [V. GOPALA GOWDA AND AMITAVA ROY, JJ.] Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act. 2002 - s. 35 - Scope of - Whether the SARFAESI Act, by virtue of s. 35 thereof. would override the provisions of the Maharashtra Rent control Act, 1999 - Held: SARFAESI Act cannot mean to extend to each and every law enacted by the Central and State legislature - It can extend only to the laws operating in the same field- The SARFAESI Act and the Rent Control Act, both operate in different fields - A tenant cannot be evicted under the provisions of SARFAESI Act as the same would amount to stultifying the statutory rights of the tenant provided under the Rent Control Act - A landlord cannot be permitted to do through the SARFAESI Act, what he has been barred to do under the Rent Control Act - Thus, the provisions of the SARFAESI Act cannot be used to override the provisions of the Rent Control Act - Maharashtra Rent Control Act, 1999. Maharashtra Rent Control Act, 1999 - 'Protected tenant' under the Act - Whether can be treated as 'lessee' - Held: If the two parties are executing their rights and liabilities in the nature of a landlord-tenant relationship, and if regular rent is being paid and accepted, mere non-registration of the tenancy deed will not make the lease nugatory. Judgment - Interpretation of - Held: In order to construe ratio decidendi of a judgment, a word or sentence cannot be picked up - A judgment cannot be read as a statute and interpreted and applied to fact situations. Allowing the appeals, the Court A B c D E F G HELD: 1.1 The Securitisation and Reconstruction of Financial Assets and enforcement of Security Interest Act, 2002 is meant to operate as a tool for banks and ensures a smooth H 419 SUPREME COURT REPORTS [2016] I S.C.R. debt recovery process. The object behind the enactment of Maharashtra Rent Control Act, 1999, is to control and regulate the ra1·e of rent so that unnecessary hardship is not caused to the tenant, and also to provide protection to the tenants against arbitrary and unreasonable evictions from the possession of the property. Thus, both the Acts are meant to operate in completely different spheres. [Paras 10, 22 and 23) [436-A) [437-E] [427-G) Transcore v. Union of India & Anr. (2008) 1 SCC 125: 2006 (9) Suppl. SCR 785 - relied on. Miss Santosh Mehta v. Om Prakash & Ors. (1980) 3 SCC 610:1980 (3) SCR 325 - referred to.

1.2 In the present case, there is an interest of the bank in recovering the Non· Performing Asset on the one hand, and protecting the right of the blameless tenant on the other. The Rent Control Act being al- social welfare legislation, mus·t be to do construed as such. A landlord cannot be permitted indirectly, what he has been barred from doing nnder the Rent Control Act, more so when the two legislations, that is the SARFAESI Act and the Rent Control Act operate in completely different fields. The provisions of the SARFAESI Act cannot be used to override the provisions of the Rent Control Act. [Para 24] [438-1)-D]

1.3 If it is held that the provisions of SARFAESI Act override the provisions of the various Rent Control Acts to allow a Bank to evict a tenant from the tenanted premise, which has become Jl secured asset of the Ban'k after the default on loan by the landlord and dispense with the procedure laid down under the provisions of the various Rent Control Acts and the law laid down by this Court then the legislative powers of the state legislatures are denuded which would amount to subverting the law enacted by the State Legislature. Such interpretation would not only tantamount to violation of rule of law, .butwould also render a valid Rent Control statute enacted by the State Legislature in exercise of its legislative power under Article 246 (2) of the Constitution of India useless and nugatory. The Constitution of India envisages a federal feature, which has been held to be a basic feature of the Constitution. Such a 420 A B c D E F G H VISHAL N. KALSAR!A v. BANK OF !NOIA & ORS. 421 situation was uot contemplated by the Parliament while A enacting the SARFAESI Act and therefore the interpretation sought to be made by the Banks cannot be accepted by this Court as the same is wholly untenable in law. [Paras 31 and 32] [444-D-E; 445-D-F] S.R. Bommai & Ors. v. Union of India (1994) 3 SCC 1 :1994 (2) SCR 644 - followed. Harshad Govardhan Sondagar v. International Assets Reconstruction Co. Ltd. & Ors. (2014) 6 SCC 1; Jshwari Khetan Sugar Mills Pvt. Ltd. & Ors. 1' St at e of Uttar Pradesh & Ors. (1980) 4 SCC 136.: 1980 (3) SCR 331; Bhanu Kumar Jain v. Arehano Kumar & Anr. (2005) 1 SCC 787: 2004 (6) Suppl. SCR 1104 - referred to. 1.4 It is a settled position of law that once tenancy is created, a tenant can be evicted only after following the due process of law, as prescribed under the provisions of the Rent Control Act. A tenant cannot be arbitrarily evicted by using the provisions of the SARFAESI Act as t.hat would amount to stultifying the statutory rights of protection given to the tenant. A non obstante clause (Section 35 of the SARFAESI Act) cannot be used to bulldoze the statutory rights vested on the tenants under the Rent Control Act. The expression 'any other law for the time being in force' as appearing in Section 35 of the SARFAESI Act cannot mean to extend to each and every law enacted by the Central and State legislatures. It can only extend to the laws op"rating in the same field. [Para 30] [442-D-E] Central Bank of India v. State ()(Kera/a & Ors. (2009) 4 SCC 94 (10): 2009 (3) SCR 735 - relied on.

1.5 The decision of this Court . rendered in the case of Harsltad Govardltan Sondagar case cannot be understood to have held that the provisions of the SARFAESI Act override the provisions of the Rent Control Act, and that the Banks are at liberty to evict the tenants residing in the tenanted premises which have been offered as collateral securities for loans on which- default has been done by the debtor/landhird. A w~rd or sentence cannot be picked up from a judgment to construe that it is the ratio decidendi on the relevant aspect of the case. It is B C D E F G H 422 SCPREME COURT REPORTS [2016] 1 S.C.R. A also a well settled position of law that a judgment cannot be read to fact situations. as a statute and interpreted and applied (Paras 27 and 28][440-C; 441-H; 442-A] H.H. Maharajadhiraja Madhav Rao Jivaji Rao Scindia v. Union of India (1971) 1 SCC Bahadur of Gwalior & Ors. B 85: 1971 (3) SCR 9 - followed.