Tenants With Separate Lease Agreements Can File Joint Application: Kerala HC

Moideen Koya Vs Pegasus Assets Reconstruction Co. Pvt. Ltd. (Kerala High Court)

Kerala High Court has ruled that multiple tenants, even with separate lease agreements, can file a joint application before the Debts Recovery Tribunal (DRT) under Section 17 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, 2002. This decision came in the case of Moideen Koya Vs Pegasus Assets Reconstruction Co. Pvt. Ltd., where the petitioners challenged an order from the Registrar of DRT-1, Ernakulam, which had declined to register their consolidated application on the grounds that it was filed by four tenants jointly. The petitioners, all tenants of the same secured asset, had sought to challenge a dispossession notice issued by an Advocate Commissioner.

The High Court deemed the DRT Registry’s dismissal of the consolidated application as legally unsustainable. The Court observed that the SARFAESI Act, particularly Section 17(1), uses the broad term “any person (including borrower)” to describe who may apply to the DRT if aggrieved by measures taken under Section 13(4). This inclusive language, the Court reasoned, extends beyond just borrowers to encompass third parties like tenants whose possessory or leasehold rights are impacted by a secured creditor’s actions. The Court further noted that neither the SARFAESI Act nor Rule 13A of the Security Interest (Enforcement) Rules, 2002, contains any explicit prohibition against multiple aggrieved persons filing a single, consolidated application. This absence of prohibition, according to the Court, suggests a legislative intent not to bar joint applications, aligning with the general legal principle that procedural rules should facilitate, rather than obstruct, access to justice. The DRT, as a specialized forum, is expected to maintain flexibility in procedural matters to ensure that legitimate grievances are heard on their merits.