ORIENTAL BANK OF COMMERCE vs PRIYANK GAGNEJA AND ORS on 22 October 2026

1. The present appeal was initially filed by the Oriental Bank of Commerce which was vide Gazette Notification dated 04.03.2020 issued by the Government of India, has been amalgamated with Punjab National Bank. Accordingly it is prayed that the original appellant i.e. Oriental Bank of Commerce be substituted by Punjab National Bank. Copy of the Gazette Notification dated 04.03.2020 has also been placed on record.

2. After considering all facts, the original appellant, Oriental Bank of Commerce is now substituted by Punjab National Bank. Amended memo of parties has already placed on record.

**Appeal No. 493/2018**

3. The respondent no. 1, Priyank Gagneja had filed S.A. bearing No. 35/2018 titled as **Priyank Gagneja V Oriental Bank of Commerce & others**, wherein it is stated that she is the tenant in respect of the subject property i.e. House No. 1309, Sector 37-B, Chandigarh, except one room in the front side of the ground floor the respondent no. 1 and claimed to be in the physical possession of the said premises since 01.02.2006 in terms of lease deed dated 01.02.2006. The tenancy was initially created for a period of 11 months from 01.02.2006 to 31.12.2006 and subsequently extended upto 31.08.2012 on the enhancement of rent.

4. The appellant stated to have initiated proceedings under the SARFAESI Act and the respondent no. 1 being aggrieved by the issuance of order dated 14.11.2017 passed by the District Magistrate, Chandigarh for taking physical possession of the subject property filed the present S.A. bearing No. 35/2018.

5. The perusal of the record reflects that vide sanctioned letter dated 03.09.2012 House Loan (Term Loan) of Rs. 16.81 lacs under the general scheme was sanctioned in favour of the respondents no. 2 & 3 which was accordingly disbursed. The respondents no. 2 & 3 could not stick to the financial discipline as such the appellant has initiated proceedings under the SARFAESI Act by issuance of notice under Section 13(2) & 13(4) of the SARFAESI Act.

6. The District Magistrate, Chandigarh also passed an order dated 14.11.2017 under Section 14 of the SARFAESI Act for taking physical possession of the subject property bearing House No. 1309, Sector 37-B, Chandigarh. The respondent no. 1 being aggrieved filed the S.A. bearing No. 35 /2018 as stated hereinabove and claim protection on the basis of tenancy created by the respondents no. 2 & 3 as detailed hereinabove.

7. The DRT-II, Chandigarh vide order dated 18.08.2018 has allowed the S.A. and set aside the order dated 14.11.2017 passed by the District Magistrate, Chandigarh for taking physical possession of the subject property. The DRT-II, Chandigarh opined that the respondent no. 1 is in the possession of the mortgaged property prior to the date of creation of mortgage. The appellant being a financial institution aggrieved filed the present appeal.

8. Sh. S. K. Sharma, Counsel for the appellant during the course of arguments has referred the lease agreement dated 01.02.2006 stated to have been executed between the respondent no. 1 and respondents no. 2 & 3 vide which tenancy was created in respect of the subject property for a period of 11 months commencing from 01.02.2006. The tenancy was extended from time to time and lastly with effect from 01.10.2011 to 31.08.2012. Sh. S. K. Sharma, Counsel for the appellant further stated that there is no evidence or document on record which can establish that the tenancy was also renewed or extended beyond the 31.08.2012. Sh. S. K. Sharma, Counsel for the appellant also argued that the loan was advanced vide sanctioned letter dated 03.09.2012 and equitable mortgage was created in respect of the subject property and at that time there was no tenancy in favour of the respondent no. 1. During the course of argument he also referred to valuation reports dated 04.07.2012 and 21.09.2012 wherein, it is mentioned that the subject property was self-occupied by the respondents no. 2 & 3. He further argued that in the loan application the respondents no 2 & 3 also claimed that they are in the self-occupation of the subject property. In the light of these submissions and documents, Sh. S. K. Sharma, Counsel for the appellant stated that the impugned order be set-aside

9. None has appeared on behalf of the respondents to advance counter arguments.

10. The perusal of the impugned order dated 18.08.2026 reflects that the DRT-II, Chandigarh opined that if any person is a tenant with respect to the mortgage property prior to the date of mortgage he/she can be dispossessed only after adopting the due process of law. DRT-II, Chandigarh also opined that the respondent no. 1 being the applicant of the S.A. bearing no. 35/2018 was in the possession of the mortgaged property prior to the date of creation of mortgage. However, it is reflecting from the documents on record that the tenancy of the respondent no. 1 was not extended beyond 31.08.2012 and in the loan application form and valuation reports the property was claimed to be in the occupation of the respondents no. 2 & 3 being the landlords /owners. Accordingly, the impugned order dated 18.08.2025 cannot be sustained and is accordingly set-aside. The appellant shall be at liberty to apply for fresh order under Section 14 in pursuance of the previous notices under Section 13(2) and 13(4). The pending application, if any, also stands disposed of.

\_\_\_\_\_ **(Dr. Justice Sudhir Kumar Jain)** **Chairperson**

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