---
title: "Lenders beware, the property is leased"
date: 2014-04-07
author: "Suresh Palav"
url: https://www.indialaw.in/blog/real-estate/lenders-beware-property-is-leased/
---

# Lenders beware, the property is leased

Posted On - 7 April, 2014 •

By - [Suresh Palav](https://www.indialaw.in/people/suresh-palav/ "Posts by Suresh Palav") and [Shweta Tiwari](https://www.indialaw.in/people/shweta-tiwari/ "Posts by Shweta Tiwari")

*By Shiju. P. V*

The Supreme Court has given a very important judgement last week where the Court considered the validity of leases created on mortgaged property. The Court has examined whether the provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (“SARFAESI Act”) have in any way affected the right of a lessee to remain in possession of the secured asset during the period of a lease.

While delivering the judgement, the Court has made a distinction between the leases made before and after the creation of mortgage. As far as the leases made prior to the creation of mortgages, the court has categorically stated that the lessee will have the right to enjoy the possession of the leased property till the expiration of lease. In other words, a secured creditor cannot oust the lessee in respect of the leases made prior to the creation of mortgage.

Thereafter, the court considered the validity of the leases made after the creation of mortgages. Section 65A of the Transfer of Property Act, 1882 (“TP Act”) allows a borrower to create lease on the mortgaged property subject to certain terms and conditions. In this regard, the Court also considered Section 35 of the SARFAESI Act which provides that the provisions of the SARFAESI Act shall have effect, notwithstanding anything inconsistent with any other law for the time being in force. Hence, if a provision of law is not consistent with any provisions of SARFAESI Act, the provision of SARFAESI Act will be valid. Accordingly, a lease created on a mortgaged property shall be valid if it complies with Section 65A of TP Act, unless there is anything under the SARFAESI Act which affects the right of a borrower to create lease on the mortgaged property.

The Court examined provision of Section 13 of the SARFAESI Act which confers a right to the secured creditor to take possession of the secured asset and enforce the asset for the realization of the debt. Section 13 (2) requires the creditor to serve a notice on the borrower in case of any default. Section 13 (4) states that If the borrower fails to discharge his liability within 60 days of the notice, the lender can take various measures provided in the Section. One of such measure is the right to take possession of the mortgaged property from the borrower. In case of leased properties, the lawful possession of the secured asset is not with the borrower, but with the lessee. A lease allows legal right to the lessee to enjoy the possession of leasehold property during the lease period. It cannot be taken away without authority of laws. The court observed that there is no mention in Section 13 that a lease created on the mortgaged property will stand terminated upon the creditor deciding to initiate measures under Section 13. Hence, a secured creditor cannot take over the possession of secured asset until the lawful possession of the lessee gets terminated.

The Court observed an inconstancy between Section 13 (13) of the SARFAESI Act and the provision of the TP Act enabling the mortgagor to create lease on the mortgaged property. Section 13 (13) provides that no borrower shall create a lease on the mortgaged property, if a notice has been given to the borrower under Section 13 (2) unless a prior written consent of the mortgagor has been obtained. Hence, a lease of a secured asset made by the borrower after he receives the notice under sub-section (2) of Section 13 from the secured creditor intending to enforce that secured asset will not be a valid lease.

Accordingly, a secured creditor can take possession of the mortgaged property from the lessee if the lease has been created after a notice has been served on the borrower under Section 13 (2) provided no prior written consent of the Lender has been obtained. However, the lender cannot oust a lessee from the possession the leased property:

1. If the lease has been made prior to the creation of mortgage; or  

2. If the lease has been made after the creation of mortgage in accordance with Section 65A of the TP Act but before the lender served a notice to the borrower under Section 13 (2) of the SARFAESI Act.

Section 65 A of the TP Act further provides that borrower will have power to create lease on the mortgage property only if the mortgage deed does not specify anything to the contrary. Hence, a lender can prevent the creation of lease on the mortgage property after the creation of mortgage by expressly prohibiting the same in the mortgage deed. However, it may not be practical to prevent the borrower from creating lease altogether. In such cases, appropriate provisions should be provided in the mortgage deed to ensure that the lender has a say in respect of creation of lease by the borrower. Similarly, lenders should also ascertain whether the property is leased and the period of lease before creating mortgage on the property.

[Download PDF](https://www.indialaw.in/blog/real-estate/lenders-beware-property-is-leased//pdf/)

Last Updated On - 7 April, 2014

Disclaimer - This article is intended for general informational purposes and does not constitute legal advice. Readers should seek specific legal counsel in relation to their individual circumstances.

Get IndiaLaw’s legal updates in your Google feed[![Add IndiaLaw as a preferred source on Google](https://www.indialaw.in/wp-content/uploads/google_preferred_source_badge_light_en@2x.png)](https://www.google.com/preferences/source?q=https://www.indialaw.in/)

---

# IndiaLaw LLP — Offices & Contact Details

---

## General Contact

| | |
|---|---|
| **Website** | https://www.indialaw.in |
| **Primary email** | contact@indialaw.in |
| **Primary phone** | +91 836-9995919 |
| **Contact form** | https://www.indialaw.in/connect/ |
| **Careers (separate channel)** | https://www.indialaw.in/careers/ |


---

## All Offices (9 locations across 8 cities)

### 1. Mumbai — Registered Office & Head Office (Apeejay Chambers)

| | |
|---|---|
| **Address** | Apeejay Chambers, Ground Floor, Wallace Street, Fort, Mumbai – 400 001 |
| **Phone** | [022-6924-7400](tel:02269247400) |
| **Email** | contact@indialaw.in |
| **Page** | https://www.indialaw.in/mumbai/ |
| **Practice focus** | Litigation · Arbitration · Insolvency & Bankruptcy · Corporate · Banking · Real Estate · IP |
| **Notes** | The HQ. 5 partners based here. Handles PAN-India litigation, arbitration, corporate, banking, IP and real estate practice. Largest team across all offices. |

### 2. Mumbai — Non-Litigation Office (Excelsior, Fort)

| | |
|---|---|
| **Address** | 4th Floor, New Excelsior Theatre Pvt. Ltd., Amrit Keshav Nayak Marg, Fort, Mumbai – 400 001 |
| **Phone** | [022-697-40500](tel:022-697-40500) |
| **Email** | contact@indialaw.in |
| **Page** | https://www.indialaw.in/mumbai/ |
| **Practice focus** | Non-litigation only — consultations, negotiations, transactional work |
| **Notes** | Opened 2024. Litigation and arbitration remain at the Apeejay Chambers head office. |

### 3. Delhi

| | |
|---|---|
| **Address** | Flat No. 1107 & 1108, Prakashdeep Building, Tolstoy Marg, Connaught Place, New Delhi – 110 001 |
| **Phone** | (general line: +91 836-9995919) |
| **Email** | contact@indialaw.in |
| **Page** | https://www.indialaw.in/delhi/ |
| **Practice focus** | Litigation · Arbitration · Insolvency & Bankruptcy · Corporate · Banking · Real Estate |
| **Notes** | 3 partners based here. Located near the Supreme Court of India, Delhi High Court and other appellate bodies. |

### 4. Kolkata

| | |
|---|---|
| **Address** | Centre Point Building, Room No. 214, 2nd Floor, Premises No. 21, Hemanta Basu Sarani, Opp. Great Eastern Hotel, P.S. Hare Street, Kolkata – 700 001, West Bengal |
| **Phone** | [+91 33 4813 1001](tel:+913348131001) |
| **Email** | contact@indialaw.in |
| **Page** | https://www.indialaw.in/kolkata/ |
| **Practice focus** | Insolvency & Bankruptcy · Commercial & Civil Litigation · Arbitration · Banking Litigation · Real Estate · Labour & Employment · Consumer |
| **Notes** | Advises banks, NBFCs, MSMEs and corporates on transactions and dispute resolution. Works in close coordination with the Mumbai HO. |

### 5. Chennai

| | |
|---|---|
| **Address** | GF-A, 19 Casa Major Road, Egmore, Chennai – 600 008 |
| **Phone** | (general line: +91 836-9995919) |
| **Email** | contact@indialaw.in |
| **Page** | https://www.indialaw.in/chennai/ |
| **Practice focus** | Litigation · Insolvency & Bankruptcy · Real Estate |
| **Notes** | Full-fledged office with experienced legal team. Supported by Mumbai HO. |

### 6. Bengaluru (Bangalore)

| | |
|---|---|
| **Address** | INDIALAW LLP, No. 7 Chinnaswamy Mudaliar Road, Shivaji Nagar, Bangalore – 560 051 |
| **Phone** | [080-4167-2444](tel:08041672444) |
| **Email** | contact@indialaw.in |
| **Page** | https://www.indialaw.in/bengaluru/ |
| **Practice focus** | Litigation · Insolvency & Bankruptcy · Real Estate · Family Laws · Labour |
| **Notes** | Located near Bangalore High Court. Handles corporate, commercial, banking and matrimonial disputes. |

### 7. Hyderabad

| | |
|---|---|
| **Address** | 403, 4th Floor, Sanatana Ecstasy Building, beside Tanishq Show Room, Himayathnagar, Hyderabad – 500 029, Telangana |
| **Phone** | [040-6666-5166](tel:04066665166) |
| **Email** | contact@indialaw.in |
| **Page** | https://www.indialaw.in/hyderabad/ |
| **Practice focus** | Litigation · Banking · Insolvency & Bankruptcy · Real Estate |
| **Notes** | Particularly well known for complex banking matters and real estate transactions. |

### 8. Cochin (Kochi)

| | |
|---|---|
| **Address** | Second Floor, Pulikkal Building, K.K. Padmanabhan Road, Ernakulam North – 682 018, Kerala |
| **Phone** | [0484-3583961](tel:04843583961) |
| **Email** | contact@indialaw.in |
| **Page** | https://www.indialaw.in/cochin/ |
| **Practice focus** | Litigation · Insolvency & Bankruptcy · Real Estate |
| **Notes** | Commercial disputes, property litigation, financial-claim arbitrations and real estate transactions. |

### 9. Noida (NCR)

| | |
|---|---|
| **Address** | No. 16 & 17, Silver Offices, 17th Floor, Wave One, Sector 18, Noida – 201 301 |
| **Phone** | (general line: +91 836-9995919) |
| **Email** | contact@indialaw.in |
| **Page** | https://www.indialaw.in/noida/ |
| **Practice focus** | Aviation · Insurance · Mergers & Acquisitions · Corporate |
| **Office head** | **Mr. Dinesh Gupta** (joined August 2025 to lead and expand the corporate practice) |
| **Notes** | Newest office. Sector-focused on highly regulated industries serving NCR-based clients. |

---

## Quick-Dial Phone List

| Office | Phone |
|---|---|
| Mumbai HO (Apeejay) | 022-6924-7400 |
| Mumbai Excelsior | 022-697-40500 |
| Kolkata | +91 33 4813 1001 |
| Bengaluru | 080-4167-2444 |
| Hyderabad | 040-6666-5166 |
| Cochin | 0484-3583961 |
| **General / Marketing line** | **+91 836-9995919** |

Delhi, Chennai and Noida route through the general number.

---

## Social Channels

- LinkedIn: https://www.linkedin.com/company/indialaw
- X / Twitter: https://twitter.com/Indialawmumbai
- Facebook: https://www.facebook.com/indialawllp/
- Instagram: https://www.instagram.com/indialawllp

---