Summary of the Judgment: PNB Housing Finance Limited vs. Sh. Manoj Saha & Anr

1. Heading of the Judgment

Case Title: PNB Housing Finance Limited vs. Sh. Manoj Saha & Anr.
Court: Supreme Court of India
Citation: 2025 INSC 847
Judges: Pamidighantam Sri Narasimha and Joymalya Bagchi, JJ.
Date: July 15, 2025

2. Related Laws and Sections

The judgment interprets the following legal provisions:

• SARFAESI Act, 2002:
  Section 13(2): Demand notice to borrower for loan repayment.
  Section 13(4): Measures for secured asset possession (symbolic/physical).
  Section 14: Magistrate’s assistance for possession.
  Section 17(4A): Tenant’s right to challenge possession before DRT.
  Section 18: Appeal against DRT orders.
  Section 35: Non-obstante clause overriding other laws.

• Transfer of Property Act, 1882:
  Section 65A: Restrictions on leases by mortgagors.

• West Bengal Premises Tenancy Act, 1997:
  Section 6: Grounds for tenant eviction.

3. Basic Judgment Details

• Background:
  The appellant (PNB Housing Finance) took possession of a secured asset (commercial space in Kolkata) after the borrower (2nd respondent) defaulted on loans.
  The 1st respondent (Dr. Manoj Saha) claimed to be a tenant since 1987 under an unregistered agreement, continuing as a monthly tenant.

• Procedural Timeline:
  2017: Loan secured against the property; later declared NPA.
  2021: SARFAESI notice issued; symbolic possession taken.
  2023: Physical possession secured; tenant challenged restoration before DRT and High Court.

• High Court’s Order: Directed restoration of possession to the tenant, citing tenancy rights under state rent law.

• Supreme Court’s Ruling: Reversed the High Court’s order, upholding the lender’s possession rights under SARFAESI.

4. Explanation of the Judgment

Key Issues and Analysis

A. Tenant’s Rights vs. SARFAESI Provisions

1. Unregistered Tenancy:
   The tenant’s claim relied on an unregistered agreement (1987) and monthly payments.
   SC’s View: Unregistered leases cannot exceed one year post-SARFAESI notice (per Harshad Govardhan Sondagar). The tenant failed to prove continuous occupation with rent receipts or utility bills.

2. Non-Obstante Clause (Section 35, SARFAESI):
   Conflict with Rent Laws:
   Vishal N. Kalsaria (2016): SARFAESI cannot override rent laws.
   Bajarang Shyamsunder Agarwal (2019): SARFAESI’s non-obstante clause prevails; tenants must prove valid tenancy with documentary evidence.
   SC’s Ruling: Followed Bajarang, emphasizing SARFAESI’s supremacy in recovery proceedings.

B. Procedural Lapses by Tenant

• Delayed Action:
  Tenant ignored public notices (2021–2023) and approached DRT only after physical possession was lost.
  SC’s Observation: Such indifference weakened his claim for status quo ante.

• Insufficient Evidence:
  No pre-2022 rent receipts or tax records were produced to substantiate tenancy.

C. High Court’s Error

• Jurisdiction: High Court wrongly entertained the petition under Article 227 despite an alternate remedy (appeal to DRT Appellate Tribunal under Section 18).

• Misapplication of Precedent: Relied on Harshad Govardhan Sondagar (pre-2016 amendment), ignoring the statutory remedy introduced under Section 17(4A).

Final Decision

1. SARFAESI Prevails: Tenant’s unsubstantiated claim cannot override secured creditor’s rights.

2. Possession Restored to Lender: High Court’s order set aside; PNB Housing retains possession pending DRT’s final decision.

3. Timely Disposal Directed: DRT to conclude proceedings within 2 months.

Significance

• Clarifies Tenant Rights: Only registered leases or tenants with documentary proof (rent receipts, tax records) can resist SARFAESI actions.

• Strengthens Lender Protections: Reinforces banks’ ability to recover NPAs without undue interference from unverified tenancy claims.

• Procedure Overrides Equity: Tenant’s failure to act promptly or prove tenancy defeats equitable relief.

Note: The judgment balances creditor rights with tenant protections but mandates strict evidentiary standards for tenancy claims under SARFAESI.