IFCI Limited & Anr. v. Hotel Mythri & Anr.
A lessee who has litigated its enforcement grievance before DRT cannot start a civil suit to obtain the same protection, and post-mortgage leasing remains subject to section 65A.
By CA Nikhil Gupta · Reviewed against the retained judgment 2026-09-26
A lessee who has litigated its enforcement grievance before DRT cannot start a civil suit to obtain the same protection, and post-mortgage leasing remains subject to section 65A. Civil suit terminated; plaint-rejection application allowed
What happened
A lessee obtained a nine-year lease after creation of the mortgage. Its securitisation application was dismissed by DRT in December 2024, after which it brought a civil suit to restrain IFCI’s enforcement and eviction. The trial court refused to reject the plaint because the mortgage deed did not expressly prohibit leasing.
Questions before the court
- Whether the lessee could relitigate its SARFAESI grievance in a civil suit after an adverse DRT decision.
What each side argued
IFCI sought rejection of the plaint. The trial court had relied on the absence of an express mortgage restriction and older tenancy precedent. The High Court examined the statutory tenancy remedy introduced in 2016 and the limits of the mortgagor’s leasing power.
Why the court ruled this way
The absence of a prohibition clause did not dispense with section 65A’s conditions. A lease violating those conditions did not bind the mortgagee. Section 17(4A) gave the tenant a DRT remedy, which this tenant had already used unsuccessfully. A fresh injunction suit was an abuse of process and barred by res judicata; reliance on the pre-amendment legal framework was misplaced.
Controlling point
A lessee who has litigated its enforcement grievance before DRT cannot start a civil suit to obtain the same protection, and post-mortgage leasing remains subject to section 65A.
Order and next steps
The trial court’s order was set aside, IFCI’s Order VII rule 11 application was allowed, the suit declared not maintainable and all further proceedings terminated.
Practical implications
Tenant due diligence should include the mortgage date, lease duration, mortgage terms and existing DRT orders. Registration of a lease does not by itself resolve its enforceability against a prior mortgagee. Follow the statutory appellate route after an adverse DRT order.
Limits of this ruling
- The case concerns the particular post-mortgage lease and prior DRT adjudication.
- The judgment references section 35; the summary does not silently substitute a different statutory section.
Law and judgment source
- SARFAESI Act 2002, sections 17(4A) and 35
- Transfer of Property Act 1882, section 65A
- CPC, Order VII rule 11
The linked PDF is a complete public court-copy document. The official court portal is provided for independent verification; a stable judgment-specific official link was not independently established.
Source checked: 2026-09-26 · Judgment paragraphs: Paragraphs 2–13 and final directions · Later case history: not verified. Verify subsequent orders before reliance.
This page is informational. Verify the current official court record, subsequent history and applicable law, and obtain professional advice for a specific matter.