IN THE HIGH COURT OF JUDICATURE OF ANDHRA PRADESH AT HYDERABAD FRIDAY, THIS THE 27TH DAY OF NOVEMBER, 2009 W.P.No.25891 of 2009 Between: Gayathri Kirana & General Merchants and another ….PETITIONER(S) and Union Bank of India, Asset Recovery Branch, Warangal, rep. by its Authorised Officer. …RESPONDENT(S) THE HON’BLE SRI JUSTICE L.NARASIMHA REDDY W.P.No.25891 of 2009 ORDER: The 2nd petitioner is one of the partners to the 1st petitioner firm which is the lessee, in respect of premises, bearing Door No.8/16 (Old), New No.8-1-16, situated near Railway Gate, Old Beat Bazar, Warangal and Sri K.B.R.L.D.Prasad is the owner of the said premises. The rent for the premises is Rs.3,000/- per month. The landlord took loan from the respondent Bank and as a security for repayment of the loan, the premises, referred to above, were mortgaged. The loan was not repaid and default was committed. Therefore, the respondent Bank initiated proceedings under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short ‘the Act’). The physical possession of the premises was taken on 20.10.2009, and they were sealed and locked. The assistance of the Tahsildar was taken for this purpose under Section 14 of the Act. The petitioners feel aggrieved by the action of the respondent Bank. They contend that the respondent Bank does not have the power, or jurisdiction, to evict them, or to seal, the premises, disabling them from conducting the business. Heard the learned counsel for the petitioners and the learned counsel for the respondent Bank. The learned counsel for the respondent Bank submits that the sealing of the premises is very much within its competence and that no exception can be taken to the same. The premises, in respect of which the petitioners are tenants, were mortgaged to the respondent Bank. Admittedly, default was committed by the borrower, and the respondent Bank had exercised its powers, under the Act. The Act, no doubt, empowers the respondent Bank to take possession of the premises, and put them to sale, to recover the amount. The manner, in which the possession of the premises of this nature must be taken, assumes significance. On exercise of powers under the Act, the respondent Bank assumes to itself the right to put the property to sale. This is, in a way, comparable to the power of an executing Court to enforce a decree. Any step taken, preceding the sale, can be equated to attachment. The attachment of an immovable property in the course of execution of a decree does not entail in dispossession of a person, who is otherwise entitled to remain in it. Attachment would clothe the Court, with the right to proceed with the sale and to prevent the transfer of that property in any other manner. To state precisely, in case there is a tenant in respect of a building, or agricultural land, which is sought to be sold, in the course of execution, the tenant cannot be evicted, or thrown away, on mere account of attachment. Even if the sale is successfully conducted, tenancy has to be adorned in favour of the highest bidder on conclusion of the sale. The rights of a tenant, or any other, person in possession of the property, would in no way be defeated, on account of attachment. It is, ultimately, for the purchaser of the property to choose whether or not to continue the tenant. In case he decides to evict the tenant, he has to take recourse to law. For all practical purposes, the purchaser steps into the shoes of the original owner. He cannot do what the owner himself could not have done. The assumption of the property in exercise of the powers under the Act does not stand on a higher footing, than that of an attachment of property before sale. Therefore, steps taken by the respondent Bank to seal the premises and thereby disabling the petitioners from undertaking business, cannot be sustained in law. The petitioners can also participate in the auction and in case they do not emerge as the highest bidders, they would deliver the vacant possession of the premises in favour of the highest bidder within a period of one month, if the purchaser does not intend to continue the tenancy. For the foregoing reasons, the writ petition is allowed, and the action of the respondent Bank in sealing the premises is set aside. It is directed that the respondent Bank shall remove the seals and redeliver the possession of the premises to the petitioners. It is also directed that the petitioners shall be entitled to participate in the auction, that may be conducted for sale of the property. If they do not emerge as the highest bidders and if the purchasers are not inclined to continue them as tenants, they shall be under obligation to vacate the premises within one month from the date of confirmation of sale. Till such time, the rents of the premises shall be deposited with the respondent Bank. There shall be no order as to costs. __________________________ L.NARASIMHA REDDY, J 27th November 2009 CVRK Note: office to issue copy in 5 days. B/o CVRK