# Axis Bank Ltd v. State of U.P. & Ors

- **Citation:** (2025) 8 ILRA 256
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2025-08-11
- **Case number:** Writ C No. 21492 of 2025
- **Bench:** Shekhar B. Saraf, Praveen Kumar Giri
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/axis-bank-ltd-v-state-of-u-p-ors-53662
- **Pages:** 6

## Headnote

Issue pertains to whether, after order u/s 14 of
SARFAESI Act, 2002 has been passed directing
delivery of possession of secured asset to
secured creditor, the Sub-Divisional Magistrate
can withhold execution of such order on the
ground that tenant of borrower has obtained
stay order from Civil Court, particularly when
said order has been passed without impleading
secured creditor and in view of statutory bar u/s
34 of SARFAESI Act.
Headnotes
Securitisation
and
Reconstruction
of
Financial
Assets
and
Enforcement
of
Security Interest Act, 2002 - ss.14, 17, 34
- Transfer of Property Act, 1882 - s.65A -
Petitioner, filed present writ petition u/a
226 of Constitution of India seeking
direction to Sub-Divisional Magistrate to
take physical possession of secured asset
being land comprised in Khasra No. 373
measuring
12,590
square
metres,
in
pursuance of order dated 17.02.2025
passed u/s 14 of SARFAESI Act, 2002 -
Despite such order, possession was not
handed over to Bank, as purported tenant
8 All. Axis Bank Ltd. Vs. State of U.P. & Ors.
257
of borrower had instituted a civil suit and
obtained order of status quo/stay from
Civil Court, without impleading petitioner
Bank - State authorities contended that
lease was created after mortgage was
effected in favour of Bank - Petitioner
argued that civil court's order was non est
in law, being barred by Section 34 of
SARFAESI Act and relied upon precedents
- Controversy centered on whether civil
court's
order
could
legally
restrain
delivery of possession to secured creditor
pursuant to order passed u/s 14 of
SARFAESI Act.
Held: It is evident from cited judgments that
any tenancy created during pendency of a
mortgage
without
the
secured
creditor's
permission is governed by Section 65A of
Transfer of Property Act, and compliance with
its conditions must be determined exclusively by
Debts Recovery Tribunal - Tenant claiming such
rights must file application u/s 17 before DRT -
Once an order is passed under Section 14, the
authorities must act in accordance with it and
the provisions of the Act; any attempt by
borrowers to evade their liability cannot be
entertained - In the instant case, borrowers, after
availing the loan, executed a registered lease deed
without bank's knowledge - In such circumstances,
it was incumbent upon tenant to approach DRT for
appropriate relief - However, tenant procured
order of status quo / stay from Civil Court by
suppressing material facts, including mortgage of
property by borrower without reference to
secured creditor, that is, petitioner bank - Learned
counsel for respondent No. 5 submits that
application u/s 17 has been filed before DRT
seeking stay of proceedings initiated u/s 14 of Act
- Thus, authorities are directed to act in
accordance with Supreme Court's judgment in
Bajarang Shyamsunder Agarwal (infra) and
hand over possession to petitioner bank - Order
obtained by tenant, without impleading petitioner
bank, is non est in law being in contravention of
Section 34 of Act. [Paras 7 to 12] (E-13)
Case Law Cited
M/S Trilokchand Fabrication Pvt. Ltd. v. State of
U.P. and Others passed in Writ-C No. 39914
of
2023
on
11.01.2024;
Bajarang
Shyamsunder Agarwal v. Central Bank of India
and another; (2019) 9 SCC 94 - referred to

List of Acts
Securitisation and Reconstruction of Financial
Assets and Enforcement of Security Interest Act,
2002; Transfer of Property Act, 1882

List of Keywords
Article 226 of Constitution of India; Mandamus;
Physical possession; Secured asset; Order u/s
14 of SARFAESI Act; Sub-Divisional Magistrate
(SDM); Secured creditor; Borrower; Mortgage of
property; Tenant of the borrower; Civil suit; Civil
Court; Stay order; Non-est in law; Bar u/s 34 of
SARFAESI Act; Registered instrument; Tenancy;
Transfer of Property Act; Debts Recovery
Tribunal; Legal impediment; Suppression of
material facts; Registered lease executed after
mortgage; Possession to be delivered to
petitioner bank; Stay from DRT.
Ca

## Text

256 INDIAN LAW REPORTS ALLAHABAD SERIES
07.12.2009. The U. P. State Electricity
Board ceased to exist after coming into
force of the Electricity Act, 2003 and
constitution of the U. P. Power Corporation
Limited in the year 2003 itself. The U. P.
Power Corporation Limited chose not to
get
itself
impleaded
and
the
said
application came to be filed only in
September, 2023.

5. It is argued that the restoration of
the writ petition dismissed for non prosecution
on 7.12.2009 was sought by a restoration
application being preferred by the U. P.
Electricity Board even without U. P. Power
Corporation Limited or the Dakshinanchal
Vidyut
Vitran
Nigam
Limited
being
impleaded as petitioners in the writ petition.

6. It is thus sought to be argued that
the order dated 24.05.2019 could not have
been passed and the recall application is liable
to be allowed and the writ petition would be
deemed to have been dismissed for default in
view of the order dated 07.12.2009.

7. We have heard learned counsel for
the parties and have also gone through the
affidavits exchanged between the parties in
respect of the recall application.

8. Having gone through the respective
pleadings, we are of the opinion that the recall
is being sought on hyper technical grounds
and issue involved in the writ petition is liable
to be adjudicated on merits. We also find from
the records that the impleadment of the U. P.
Power Corporation Limited as well as
Dakshinanchal Vidyut Vitran Nigam Limited
was allowed by this Court vide order dated
18.10.2024.

9. In view of above, we do not find
any merit in the recall application. The
same is accordingly, rejected.
----------
(2025) 8 ILRA 256
ORIGINAL JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 11.08.2025

BEFORE

THE HON'BLE SHEKHAR B. SARAF, J.
THE HON'BLE PRAVEEN KUMAR GIRI, J.

Writ C No. 21492 of 2025

Axis Bank Ltd. ...Petitioner
Versus
State of U.P. & Ors. ...Respondents

Counsel for the Petitioner:
Arpita Tarmali, Sanjay Kumar Gupta

Counsel for the Respondents:
C.S.C.

Issue for Consideration
Issue pertains to whether, after order u/s 14 of
SARFAESI Act, 2002 has been passed directing
delivery of possession of secured asset to
secured creditor, the Sub-Divisional Magistrate
can withhold execution of such order on the
ground that tenant of borrower has obtained
stay order from Civil Court, particularly when
said order has been passed without impleading
secured creditor and in view of statutory bar u/s
34 of SARFAESI Act.
Headnotes
Securitisation
and
Reconstruction
of
Financial
Assets
and
Enforcement
of
Security Interest Act, 2002 - ss.14, 17, 34
- Transfer of Property Act, 1882 - s.65A -
Petitioner, filed present writ petition u/a
226 of Constitution of India seeking
direction to Sub-Divisional Magistrate to
take physical possession of secured asset
being land comprised in Khasra No. 373
measuring
12,590
square
metres,
in
pursuance of order dated 17.02.2025
passed u/s 14 of SARFAESI Act, 2002 -
Despite such order, possession was not
handed over to Bank, as purported tenant
8 All. Axis Bank Ltd. Vs. State of U.P. & Ors.
257
of borrower had instituted a civil suit and
obtained order of status quo/stay from
Civil Court, without impleading petitioner
Bank - State authorities contended that
lease was created after mortgage was
effected in favour of Bank - Petitioner
argued that civil court's order was non est
in law, being barred by Section 34 of
SARFAESI Act and relied upon precedents
- Controversy centered on whether civil
court's
order
could
legally
restrain
delivery of possession to secured creditor
pursuant to order passed u/s 14 of
SARFAESI Act.
Held: It is evident from cited judgments that
any tenancy created during pendency of a
mortgage
without
the
secured
creditor's
permission is governed by Section 65A of
Transfer of Property Act, and compliance with
its conditions must be determined exclusively by
Debts Recovery Tribunal - Tenant claiming such
rights must file application u/s 17 before DRT -
Once an order is passed under Section 14, the
authorities must act in accordance with it and
the provisions of the Act; any attempt by
borrowers to evade their liability cannot be
entertained - In the instant case, borrowers, after
availing the loan, executed a registered lease deed
without bank's knowledge - In such circumstances,
it was incumbent upon tenant to approach DRT for
appropriate relief - However, tenant procured
order of status quo / stay from Civil Court by
suppressing material facts, including mortgage of
property by borrower without reference to
secured creditor, that is, petitioner bank - Learned
counsel for respondent No. 5 submits that
application u/s 17 has been filed before DRT
seeking stay of proceedings initiated u/s 14 of Act
- Thus, authorities are directed to act in
accordance with Supreme Court's judgment in
Bajarang Shyamsunder Agarwal (infra) and
hand over possession to petitioner bank - Order
obtained by tenant, without impleading petitioner
bank, is non est in law being in contravention of
Section 34 of Act. [Paras 7 to 12] (E-13)
Case Law Cited
M/S Trilokchand Fabrication Pvt. Ltd. v. State of
U.P. and Others passed in Writ-C No. 39914
of
2023
on
11.01.2024;
Bajarang
Shyamsunder Agarwal v. Central Bank of India
and another; (2019) 9 SCC 94 - referred to

List of Acts
Securitisation and Reconstruction of Financial
Assets and Enforcement of Security Interest Act,
2002; Transfer of Property Act, 1882

List of Keywords
Article 226 of Constitution of India; Mandamus;
Physical possession; Secured asset; Order u/s
14 of SARFAESI Act; Sub-Divisional Magistrate
(SDM); Secured creditor; Borrower; Mortgage of
property; Tenant of the borrower; Civil suit; Civil
Court; Stay order; Non-est in law; Bar u/s 34 of
SARFAESI Act; Registered instrument; Tenancy;
Transfer of Property Act; Debts Recovery
Tribunal; Legal impediment; Suppression of
material facts; Registered lease executed after
mortgage; Possession to be delivered to
petitioner bank; Stay from DRT.
Case Arising From
ORIGINAL JURISDICTION: Writ C No. 21492 of
2025

From the Judgment and Order dated 17.02.2025
of Sub - Divisional Magistrate, Dhoulana,
District- Hapur

Appearances for Parties
Advs. for the Petitoner:
Arpita Tarmali, Sanjay Kumar Gupta

Adv. for the Respondent:
C.S.C.
(Delivered by Hon'ble Shekhar B. Saraf, J.)

1. Heard learned counsel appearing on
behalf of the parties.

2. This is a writ petition under
Article 226 of the Constitution of India
wherein the writ petitioner has made the
following prayer:

"(i) Issue a writ, order or
direction in the nature of Mandamus
258 INDIAN LAW REPORTS ALLAHABAD SERIES
commanding to respondent no. 3 (Sub-
Divisional Magistrate (SDM), Dhoulana,
District-
Hapur)
to
take
physical
possession of the property in question i.e.
All that part and Parcel of Land/property
Khasra No. 373, Situated at Village-
Ravali, Pargana & Tehsil- Dhaulana,
District- Hapur having Area 12590 Sq. Mt
in pursuance to order dated 17.02.2025
passed by respondent no. 3 as subordinate
of respondent no. 2 under section 14 of the
Securitisation
and
Reconstruction
of
Financial Assets and Enforcement of
Security Interest Act, 2002 (SARFAESI Act,
2002) and forwarded to petitioner Bank."

3. Learned counsel appearing on
behalf of the petitioner bank submits that in
spite of an order dated 17.02.2025 passed
under Section 14 of the Securitisation and
Reconstruction of Financial Assets and
Enforcement of Security Interest Act, 2002
(hereinafter referred to as 'the Act'),
physical possession of the property has not
been provided to the petitioner.

4. Learned counsel appearing on
behalf of the State submits that the
borrowers have created a mortgage of the
property after grant of the loan to them. He
further submits that a tenant of the
borrowers has filed a suit and obtained a
stay order from the Civil Court without
making the petitioner bank a party in the
said suit.

5. Learned counsel appearing on
behalf of the petitioner submits that the
order passed by the Civil Court is non-est
in law as the same is barred by Section 34
of the Act. Learned counsel further relies
on the judgment of a coordinate Bench
[authored by one of us (Shekhar B. Saraf,
J.)] in M/S Trilokchand Fabrication Pvt.
Ltd. vs. State of U.P. and Others passed
in Writ-C No. 39914 of 2023 on
11.01.2024. He relies specifically on the
summary at paragraph No.40 of the said
judgment, which is delineated below:

"40.
We
have
outlined
the
principles emerging from the aforesaid
discussion below:

a) As mandated by Section 107 of
the TPA 1882 and Section 17 of the IRA,
1908, the lease of an immovable property,
beyond the period of one year can only be
created by a registered instrument. An oral
agreement, accompanied by the delivery of
possession cannot create a lease beyond
the prescribed period under Section 107 of
the TPA 1882. An unregistered lease,
cannot be taken into consideration by the
courts, given the bar placed under Section
49 of the IRA, 1908.

b) A tenancy where no period has
been fixed, or a tenancy which is deemed to
be a month-to-month tenancy, cannot
entitle a tenant to seek possession of a
secured asset beyond a period of one year
when proceedings have been initiated
under Section 14 of the SARFAESI Act.

c) If a tenant intends to claim the
possession of a secured asset when
proceedings have been initiated under
Section 14 of the SARFAESI Act it must
necessarily be done by way of a registered
instrument executed in his favour.

d) When a tenant becomes aware,
that proceedings have been initiated under
Section 14 of the SARFAESI Act he can
either approach the concerned officer
authorised by the DM/CMM to take
possession of the secured asset, or
surrender the possession of the secured
asset. The authorised officer, in a case
where, the tenant, resists surrendering the
possession of a secured asset, will file an
application accompanied by an affidavit
containing the necessary details before the
8 All. Axis Bank Ltd. Vs. State of U.P. & Ors.
259
DM/CMM. The DM/CMM on receipt of
such an application, will determine the
rights of the tenant in accordance with the
law. If the DM/CMM comes to the
conclusion that the tenant has a valid lease
entitling him to possession of the secured
asset, he will not pass an order delivering
the possession of the secured asset to the
creditor.

e) Even if a tenant approaches
the DRT, under Section 17 of the
SARFAESI Act, the DRT cannot restore
possession of the secured asset to the
tenant. The DRT is only empowered to
restore possession of the secured asset to
the borrower, and not anyone else.

f) Section 34 of the SARFAESI
Act, read in conjunction with Section 9 of
the CPC 1908 places a bar on the
institution of civil suits regarding matters
which a DRT or Appellate Tribunal has
been empowered to deal with under the
SARFAESI Act. Furthermore, no civil
court, can entertain a suit or proceeding, if
an aggrieved person has grievance against
any measures taken under Section 13(4) of
the SARFAESI Act.

g)
The
availability
of
an
alternative
efficacious
remedy
would
normally act as a bar against entertaining
a writ petitioner. Nevertheless, under
certain exceptional circumstances, a writ
petition can be entertained even if an
alternative efficacious remedy is available.
These circumstances being - a) where the
statutory authority has not acted in
accordance with the provisions of the
enactment in question, or in defiance of the
fundamental
principles
of
judicial
procedure, or has resorted to invoke the
provisions which are repealed; b) violation
of the principles of natural justice; and c)
where the vires of an Act is challenged.

h) The writ of certiorari can only
be exercised under extremely limited
circumstances and not every error of law
would warrant the issuance of the writ of
certiorari.
However,
where
a
lower
court/tribunal has failed to exercise its
jurisdiction, the same would call for
issuance of the writ of certiorari by the
High Court."

6. Reliance has been further placed
upon paragraphs 19, 20, 23 and 25 of the
judgment of the Hon'ble Supreme Court in
Bajarang Shyamsunder Agarwal vs.
Central Bank of India and another;
(2019) 9 SCC 94 that are delineated below:

 "19. The Court further held that if
the
Chief
Metropolitan
Magistrate
/
District Magistrate is satisfied that a valid
lease is created before the mortgage and
the lease has not been determined in
accordance with Section 111 of the T.P.
Act, then he cannot pass an order for
delivery of possession of the secured asset
to the secured creditor. In case, he comes
to the conclusion that there is no valid
lease
either
before
the
creation
of
mortgage or after the creation of the
mortgage satisfying the requirements of
Section 65A of the T.P. Act or even though
there is a valid lease the same stands
determined in accordance with Section 111
of the T.P. Act, he can pass an order for
delivery of possession of the secured asset
to the secured creditor.

20. This Court also recognised
the inconsistency between Section 13(13) of
the SARFAESI Act and Section 65A of the
Transfer of Property Act. While Section
13(13) of SARFAESI prohibits a borrower
from leasing out any of the secured assets
after receipt of a notice under Section 13(2)
without the prior written consent of the
secured creditor, Section 65A of the T.P.
Act enables the borrower/mortgagor to
lease out the property. This inconsistency
260 INDIAN LAW REPORTS ALLAHABAD SERIES
was
resolved
by
holding
that
the
SARFAESI Act will override the provisions
of the T.P. Act.

23. After examining the legal and
constitutional position, the Court held that
while the SARFAESI Act has a laudable
objective of providing a smooth and
efficient recovery procedure, it cannot
override the objective of Rent Acts to
control the rate of rent and provide
protection to tenants against arbitrary and
unreasonable evictions. To resolve this
conflict, this Court held that-

a)
The
provisions
of
the
SARFAESI Act cannot be used to override
the provisions of the Rent Act. The landlord
cannot be permitted to do indirectly what
he has been barred from doing under the
Rent Act.

b)
While
a
yearly
tenancy
requires to be registered, oral tenancy can
still be proved by showing that the tenant
has been in occupation of the premises
before the Magistrate under Section 14 of
the SARFAESI Act.

c) The non-registration of the
tenancy deed cannot be used against the
tenant. For leasehold rights being created
after the property has been mortgaged to
the bank, the consent of the creditor needs
to be taken.

d) Even though Section 35 of the
SARFAESI Act has a non obstante clause,
it will not override the statutory rights of
the tenants under the Rent Control Act. The
non obstante clause under Section 35 of the
SARFAESI Act only applies to laws
operating in the same field.

25. In our view, the objective of
SARFAESI Act, coupled with the T.P. Act
and the Rent Act are required to be
reconciled herein in the following manner:

a) If a valid tenancy under law is
in existence even prior to the creation of
the mortgage, the tenant's possession
cannot be disturbed by the secured creditor
by taking possession of the property. The
lease has to be determined in accordance
with Section 111 of the TP Act for
determination of leases. As the existence of
a prior existing lease inevitably affects the
risk
undertaken
by
the
bank
while
providing the loan, it is expected of
Banks/Creditors to have conducted a
standard due diligence in this regard.
Where the bank has proceeded to accept
such a property as mortgage, it will be
presumed that it has consented to the risk
that comes as a consequence of the existing
tenancy. In such a situation, the rights of a
rightful tenant cannot be compromised
under the SARFAESI Act proceedings.

b) If a tenancy under law comes
into existence after the creation of a
mortgage, but prior to the issuance of
notice
under
Section
13(2)
of
the
SARFAESI Act, it has to satisfy the
conditions of Section 65A of the T.P. Act.

c) In any case, if any of the
tenants claim that he is entitled to
possession of a secured asset for a term of
more than a year, it has to be supported by
the execution of a registered instrument. In
the absence of a registered instrument, if
the tenant relies on an unregistered
instrument
or
an
oral
agreement
accompanied by delivery of possession, the
tenant is not entitled to possession of the
secured asset for more than the period
prescribed under Section 107 of the T.P.
Act. "

7. From a reading of the above
judgments, it is clear that tenancy that has
been created during the pendency of the
mortgage without permission of the secured
creditor, that is, the bank would be subject
to the condition of Section 65A of the
Transfer of Property Act and whether these
conditions are satisfied will have to be
8 All. Pheasant Infrastructure Pvt. Ltd. Vs. State of U.P. & Ors.
261
decided by the Debts Recovery
Tribunal (hereinafter referred to as 'the
DRT') only. A tenant is required to move
an application under Section 17 before the
DRT for asserting his rights under such a
registered document.

8. In our view, once an order has
been
passed
under
Section
14,
the
authorities are required to act in pursuance
of the same and as per the provisions of the
Act. The mechanism used by the borrowers
to wiggle out of their liability cannot be
countenanced by us.

9. In the present case, it is patently
clear that the loan was taken by the borrowers,
and subsequently, the registered lease deed
was executed by the borrower, without the
knowledge of the bank. In such a case, it was
for the tenant to approach the DRT and obtain
necessary orders therein. However, the tenant
in the present case has obtained an order of
status quo/stay from the Civil Court by alleged
suppression of material facts including
mortgage of the property by the borrower
without reference to the secured creditor, that
is, the petitioner bank.

10. Learned counsel appearing on
behalf of respondent No.5 submits that he
has recently made an application under
Section 17 before the DRT for stay of the
proceedings
being
carried
out
under
Section 14 of the Act.

11. In light of the above discussions,
we are of the view that the authorities should
act in accordance with the judgment of the
Hon'ble
Supreme
Court
in
Bajarang
Shyamsunder Agarwal (supra) and give
possession to the petitioner bank.

12. We make it clear that order
obtained by the tenant, wherein the
petitioner bank has not been made a party
is, in a manner of speaking, non-est in law
as it contravenes the provision of Section
34 of the Act.

13. In light of the same, the
authorities are directed to act in accordance
with law and give possession to the
petitioner bank within a period of eight
weeks from date if there is no other legal
impediment.

14. We make it clear that in the
event respondent No.5 obtains an order of
stay from the DRT, the authorities shall
comply with such stay, if granted.

15. With the above directions, the
writ petition is disposed of.
----------
(2025) 8 ILRA 261
ORIGINAL JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 07.08.2025

BEFORE

THE HON'BLE PRAKASH PADIA, J.

Writ C No. 33964 of 2023

Pheasant Infrastructure Pvt. Ltd.
 ...Petitioner
Versus
State of U.P. & Ors. ...Respondents

Counsel for the Petitioner:
Nikhil Agrawal, Sanjay Kumar Mishra

Counsel for the Respondents:
Amit Manohar, Ravi Prakash Pandey

Issue for Consideration
Issue pertains to whether, after the order of
cancellation of petitioner's sanctioned map
dated 05.10.2012 had been set aside by
Commissioner, Meerut Division on 08.07.2019,
thereby reviving sanction originally granted on