Boon Realtors Triumphs as Court Upholds Auction Sale Against Julien Educational Trust's Tenancy Claims
In a significant judgment delivered on June 9, 2026, the Calcutta High Court, presided by Justices Sabyasachi Bhattacharyya and Supratim Bhattacharya, ruled in favor of Boon Realtors Private Limited, dismissing claims of tenancy by Julien Educational Trust. The court set aside a previous order granting temporary injunction, thereby reinforcing the rights of secured creditors under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act).
The dispute arose when Julien Educational Trust claimed tenancy over a property auctioned to Boon Realtors. The trust's claim was based on a tenancy agreement allegedly created by the property's original owners after a notice under Section 13(2) of the SARFAESI Act was issued. The court, however, found this agreement void, emphasizing that any transfer of secured assets post-notice, without the secured creditor's consent, is invalid under Section 13(13) of the Act.
Boon Realtors, represented by senior advocate Mr. Joydip Kar, successfully argued that the trust's tenancy was null and did not confer any legal rights. The court noted that the sale of the property to Boon Realtors was conducted under due process, with a valid sale certificate and deed issued following the necessary legal procedures.
The judgment highlighted that the Debts Recovery Tribunal holds exclusive jurisdiction over disputes arising from measures taken under Section 13(4) of the SARFAESI Act, thereby barring civil courts from entertaining such suits. Consequently, the court found the suit filed by Julien Educational Trust to be not maintainable.
Moreover, the court observed that Julien Educational Trust's claim of possession was unsupported, as it could not demonstrate continuous physical possession of the property. The court underscored that symbolic possession of vacant land, as transferred to Boon Realtors, is equivalent to physical possession.
The ruling affirms the robust framework of the SARFAESI Act in safeguarding the rights of secured creditors and provides clarity on the invalidity of post-notice tenancies without creditor consent. This verdict is expected to set a precedent for similar cases, reinforcing the legal position of financial institutions and auction purchasers.
Bottom line:-
A tenancy created by the borrower after the issuance of a notice under Section 13(2) of the SARFAESI Act without the secured creditor's prior written consent is void and does not confer any rights, title, or interest on the tenant.
Statutory provision(s): SARFAESI Act, 2002 Sections 13(2), 13(4), 13(13), 34; Civil Procedure Code, 1908 Section 9; Security Interest (Enforcement) Rules, 2002.
