Bajarang Shyamsunder Agarwal: The Limits of Tenant Protection

Vishal N. Kalsaria protected a bona fide tenant, but left open how far that protection runs and what a tenant must prove. In Bajarang Shyamsunder Agarwal, the Supreme Court supplied a structured test, turning on whether the lease pre-dated the mortgage and whether it was validly created. Protection is real but not automatic: a tenant must establish a lawful, subsisting lease. This note sets out the context, the test, and the present position.

1. The Context

Figure 1: How far does Kalsaria run?

• After Kalsaria. Kalsaria protected a bona fide tenant; the question was how far that protection runs and what a tenant must prove (Topic 54)
• The tenant's claim. A person in possession claimed to be a tenant and resisted the secured creditor's possession under SARFAESI.
• The need for a test. The Court set out a structured test to decide when a tenant is protected and when the creditor prevails.

2. The Test

Figure 2: Before or after the mortgage, and validly created

• Lease before the mortgage. If a valid tenancy was created before the mortgage, the tenant is entitled to possession for the lease term and is protected.
• Lease after the mortgage. If created after the mortgage, the lease is subject to s.65A of the Transfer of Property Act, and a non-conforming lease does not bind the creditor (Topic 77)
• The tenancy must be proved. The tenant must prove a valid, subsisting tenancy; a mere assertion of possession is not enough to resist the creditor.
• Registration for leases over a year. A lease for more than one year must be by a registered instrument under s.107 of the Transfer of Property Act, or it does not confer the claimed term.

3. The Present Position

Figure 3: Lawful lease, proved before the DRT

• Prove a lawful lease. Protection is for a genuine, lawful tenancy, not a bare claim of possession, so the tenant carries the burden of proof.
• Registration where required. A lease beyond one year needs registration under s.107 TP Act to carry its term, or the tenant holds at best a month-to-month tenancy (Topic 77)
• Raised before the DRT. The tenant's claim is examined by the DRT under s.17(4A), which weighs these factors when the creditor seeks possession (Topics 36, 54)
• Kalsaria refined, not reversed. Bajarang refines Kalsaria: a bona fide tenant is still protected, but the protection is structured and conditional, not automatic.

4. Frequently Asked Questions

When is a tenant of a secured asset protected under SARFAESI after Bajarang Agarwal?

In Bajarang Shyamsunder Agarwal v Central Bank of India (2019), the Supreme Court set out a structured test. If a valid tenancy was created before the mortgage, the tenant is entitled to possession for the term of the lease and is protected. If the tenancy was created after the mortgage, it is subject to Section 65A of the Transfer of Property Act, and a lease that does not conform to those conditions will not bind the secured creditor. In every case, the tenant must prove a valid and subsisting tenancy, and a lease for more than one year must be by a registered instrument under Section 107 of the Transfer of Property Act. A bare assertion of possession is not enough, so protection is conditional, not automatic.

How does Bajarang Agarwal relate to the Kalsaria decision?

Bajarang Agarwal refines, rather than reverses, the protection recognised in Vishal N. Kalsaria. Kalsaria held that a bona fide tenant under a valid lease cannot be summarily dispossessed under SARFAESI, and that Rent Control Act protections are not overridden merely by a security interest. Bajarang gives that principle structure: it turns on whether the lease pre-dated the mortgage, whether a post-mortgage lease conforms to Section 65A of the Transfer of Property Act, and whether the tenant can prove a valid, registered lease where registration is required. A genuine tenant remains protected, but the tenant must establish a lawful, subsisting tenancy, and the claim is examined by the Debt Recovery Tribunal under Section 17(4A).

5. Related Topics

• Topic 54: Vishal N. Kalsaria v Bank of India. The protection this case refines.
• Topic 77: SARFAESI and the Transfer of Property Act. Section 65A and Section 107 on leases.