The Kerala High Court has held that there is no legal bar under the SARFAESI Act that prevents tenants, even if they are under different lease deeds, from filing a consolidated securitisation application if their challenge is against the same secured creditor’s action.
The ruling came in the matter of Moideen Koya & Others v. M/S Pegasus Assets Reconstruction Co. Pvt. Ltd. & Another (OP (DRT) No. 287 of 2024), where four tenants occupying the same secured asset filed a joint application before the Debts Recovery Tribunal (DRT), Ernakulam. The Registrar had earlier rejected the application, stating that each tenant must file separate applications.
This order was challenged before the High Court, where Justice Mohammed Nias C.P. observed that the decision of the Registrar was legally unsustainable.
“Crucially, neither the Act nor the Rules contains any express prohibition against multiple aggrieved persons filing a single, consolidated application. The absence of such a prohibition suggests that the legislature did not intend to bar joint applications,” the Court said.
Read Also:- Supreme Court Removes Glass Panels to Restore Original Grandeur After SCBA and SCAORA Representations
The petitioners were tenants of the borrower whose secured property was subjected to possession measures by the secured creditor under Section 13(4) of the SARFAESI Act. They had moved the DRT under Section 17, which allows any person aggrieved by such action to seek relief.
Highlighting Rule 13A of the Security Interest (Enforcement) Rules, 2002 and Appendix X, the Court noted that while these provisions specify the application format, they do not restrict the filing of a joint application.
“Procedural law is not to be tyrant but a servant, not an obstruction but an aid to justice,” the judgment stated.
Read Also:- MP High Court Seeks State Response on Liquor Overpricing Allegations
The Court also cited the landmark Supreme Court decision in Mardia Chemicals Ltd. v. Union of India (2004), where it was observed that Section 17 proceedings are original in nature, akin to filing a civil suit, and not merely appellate.
“Requiring each tenant to file a separate application would lead to repetitive pleadings, conflicting interim orders, and unnecessary delays — outcomes that defeat the purpose of a summary adjudication mechanism,” the Court stressed.
In view of this, the High Court set aside the Registrar’s refusal and directed that the consolidated application be registered and numbered. It also instructed the DRT to consider the case on its merits.
The petition was accordingly allowed, and interim relief granted earlier by the Court was extended for six more weeks.
Case No: OP (DRT) No. 287 of 2024
Case Title: Moideen Koya & Ors. v. M/S.Pegasus Assets Reconstruction Co. Pvt. Ltd. & Anr.
