Bombay High Court
Punjab National Bank vs Shaikh Jumman Shaikh Guljar on 29 April, 2010
Author: R. K. Deshpande
Bench: R. K. Deshpande
1
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
NAGPUR BENCH, NAGPUR
Civil Revision Application No. 6/2007
Punjab National Bank,
thr. its Branch Manager,
Branch-Ballarpur, Tq. Ballarpur,
Dist. Chandrapur. APPLICANT
...VERSUS...
Shaikh Jumman Shaikh Guljar,
aged 32 years, Occ. business,
r/o Shriram Ward, Ballarpur,
Tq. Ballarpur, Dist. Chandrapur. NON APPLICANT
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Mr. M. Anilkumar, Advocate for applicant.
Mr. S. Y. Deopujari, Advocate for non applicant.
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CORAM: R. K. DESHPANDE, J.
Date of Reserving the Judgment:- 19.04.2010
Date of Pronouncing the Judgment:- 29.04.2010
ORAL JUDGMENT
1. This revision application is preferred by original defendant-
Punjab National Bank challenging order dated 31.10.2006 passed by learned District Judge, Chandrapur setting aside order dated 15.10.2005 passed below Exh.-13 by learned 2nd Jt. Civil Judge Senior ::: Downloaded on - 09/06/2013 15:54:21 ::: 2 Division, Chandrapur below Exh.-13 dismissing the suit i.e. Regular Civil Suit No.142/2005, filed by the plaintiff. The appellate Court has directed the trial Court to restore the suit and to proceed further as per law, to decide the same on merits.
2. Such of the facts as are necessary to decide the controversy are stated below.
The applicant is the original defendant and respondent is original plaintiff. The parties shall hereinafter referred to according to their original status as the "Plaintiff" and the "Defendant". The plaintiff filed Regular Civil Suit No. 142/2005 claiming relief of injunction, restraining the defendant and its officers permanently from taking over the possession of M/s. Janta Plastic Industries, Ballarpur till the decision of the suit. The plaintiff alleged that he is the proprietor of M/s. Janata Plastic Industries and has obtained the financial assistance of Rs. 4,91,622/- by way of term loan and Rs. 2,50,000/- by way of cash credit facility from the defendant bank. The plaintiff averred that he has received notice dated 20.12.2004, under Section 13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of ::: Downloaded on - 09/06/2013 15:54:21 ::: 3 Security Interest Act, 2002 (hereinafter referred to as "the Act") from the defendant, alleging that the plaintiff is liable to pay Rs. 7,46,729/-.
Though, the plaintiff alleged this claim to be false, he stated that he has paid an amount of Rs. 5,00,000/- and has requested the defendant Bank, to provide him rehabilitation scheme, so that he can repay the loan amount. He further alleges that he never intended to avoid the payment. What is disputed by the plaintiff in the plaint is that he is the secured creditor and the allegation of the defendant Bank, contained in the notice under Section 13(2) of the said Act, that plot no. 73, Sheet no. 42 survey no. 978, City Survey No. 273/1, Shriram Ward, Ballarpur belonging to his father, has been kept as security with the defendant Bank, is fraudulent. Hence, according to him, the action proposed in the notice under Section 13(2) of the said Act by the defendant Bank in respect of the aforesaid property, is fraudulent.
3. The applicant/defendant filed an application under Order IX Rule 11 of the Code of Civil Procedure for dismissal of the suit, for want of jurisdiction. According to the appellant/defendant, the plaintiff has no right to claim relief of permanent injunction with temporary ::: Downloaded on - 09/06/2013 15:54:21 ::: 4 injunction in respect of notice under Section 13 (4) of the said Act dated 20.12.2004. It is the objection raised that the plaintiff has right to file an appeal to the Debt Recovery Tribunal within a period of 45 days from the date of which, the measures are taken and the Civil Court has no jurisdiction to entertain any suit or proceeding in respect of any matter, which the Debt Recovery Tribunal or Appellate Tribunal, is empowered to decide under the said Act. The plaintiff opposed the said application by filing his say. The trial Court framed the issue as to whether the Court has jurisdiction to entertain and try the suit.
4. The learned 2nd Jt. Civil Judge Junior Division, Chandrapur by his order dated 15.10.2005 passed below Exh.-13 dismissed the suit filed by the plaintiff, holding that there is no case of fraud made, either in the pleadings or by placing any material on record. The averments of fraud made in the plaint, are totally vague and unspecific. The plaintiff is provided adequate remedy under the provisions of the said Act, before the Debt Recovery Tribunal and further an appeal before the appellate Tribunal, which can consider such question and the jurisdiction of the Civil Court is barred.
::: Downloaded on - 09/06/2013 15:54:21 ::: 55. On Regular Civil Appeal No. 250/2005 being preferred by respondent/plaintiff, the same was allowed by the learned Ad hoc District Judge-2 by his judgment and order dated 31.10.2006. It has been held that there are specific allegations made in the plaint regarding fraud and the civil Court has jurisdiction to entertain the said suit and the Debt Recovery Tribunal has no jurisdiction under Section 17 of the said Act, to decide the question of fraud in the transaction. It is held that the jurisdiction of the Civil Court depends upon averments made in the plaint and it does not depend upon the defence taken in the written statement. The averments made in the plaint regarding fraudulent claim can be gone into by the Civil Court and the jurisdiction of the Civil Court is not ousted. The appeal is allowed. The judgment and order dated 15.10.2005 passed below Exh.-13 by the trial Court dismissing the Regular Civil Suit No. 142/2005, has been set aside and the trial Court is directed to restore the suit and to proceed further as per law and to decide the same on its own merits.
6. Being aggrieved by this judgment and order of the appellate Court, the defendant Bank has filed the present Civil Revision ::: Downloaded on - 09/06/2013 15:54:21 ::: 6 Application. Mr. Anilkumar, the learned counsel for the appellant/ defendant has referred to the provisions of Section 13(1) of the said Act, to urge that any security interest, created in favour of the secured creditors, is required to be enforced without intervention of the Court or Tribunal, by such creditors, in accordance with the provisions of the Act. According to him, it is the question of security interest created in favour of the appellant-Bank, by plaintiff, which is sought to be enforced by issuing notices under Section 13 (2) of the said Act, on 20.12.2004 and hence intervention of the Civil Court or of any other Tribunal, except the Debt Recovery Tribunal under Section 17 of the said Act and its appellate Authority under the provisions of Section 18 of the said Act, is barred in view of Section 34 of the said Act.
According to him, the trial Court has rightly held that the question raised in the plaint, can be gone into by Debt Recovery Tribunal under Section 17 and hence jurisdiction of the Civil Court is barred.
According to him, the appellate Court has committed an error of law, in holding that since some averments regarding the alleged fraud are made in the plaint, the same confers the jurisdiction upon the Civil Court to entertain, try and decide the suit.
::: Downloaded on - 09/06/2013 15:54:21 ::: 77. Mr. Deopujari, the learned counsel for the plaintiff, submits that there are specific averments made in the plaint regarding fraud on the part of the respondent-Bank in obtaining the security interest and in view of decision of the Apex Court in Mardia Chemicals Ltd. Etc. ..vs..
Union of India Etc.; 2004 (4) SCC 311, the jurisdiction of the Civil Court to enquire into the question of fraud is not ousted. According to him, the remedy under Section 17 of the said Act is available only when the measures are taken as contemplated by Section 13(4) of the said Act. The plaintiff has, however, approached the Civil Court immediately after issuance of notice under Section 13(2) of the said Act. The jurisdiction of the Civil Court is, therefore, not ousted. He supported the order passed by the appellate Court.
8. From the averments made in the plaint, it is apparent that the plaintiff is coming before the Civil Court by filing Regular Civil Suit No. 142/2005, in the capacity as borrower of the defendant Bank. The plaintiff has admitted that he has availed the financial assistance of Rs.4,91,622/- by way of term loan and Rs. 2,50,000/- by way of cash credit facility from the defendant-Bank. The dispute is only in respect ::: Downloaded on - 09/06/2013 15:54:21 ::: 8 of quantum of the amount outstanding against the plaintiff. The defendant Bank has alleged in notice dated 20.12.2001, issued under Section 13 (2) of the said Act to the plaintiff that the outstanding dues are of Rs. 7,46,721/-, which has been denied by plaintiff. The plaintiff has alleged that he has paid Rs.5,00,000/- and has requested the defendant Bank to provide him rehabilitation scheme, so that he can repay the loan amount. He alleges that he has never intended to avoid repayment. Thus, the fact that the plaintiff is the borrower and also a defaulter, has to be accepted.
9. The plaintiff has filed Regular Civil Suit No. 142/2005 immediately upon the receipt of notice under Section 13(2) of the said Act calling upon the plaintiff to repay the outstanding amount of Rs.7,46,721/- and failure to pay the same within the stipulated time, the defendant Bank intends to exercise any or all of the powers as provided under Section 13(4) of the said Act, including enforcement of security, of immovable property, belonging to the father of the plaintiff and kept with the bank as security. The plaint allegations show that the plaintiff has raised a dispute about the immovable property belonging ::: Downloaded on - 09/06/2013 15:54:21 ::: 9 to his father, being kept with the bank by way of security. Such dispute is raised in para 8 of the plaint, which is reproduced below.
"8. Surprisingly on 20th December 2004 plaintiff received notice purportedly under Section 13 (2) of the Securitisation And Reconstruction Of Financial Assets And Enforcement of Security Interest Act, 2002 falsely alleging that plaintiff is liable to pay Rs. 7,46,721/-. it is also alleged that plot NO. 73, sheet No. 42, Survey No. 978, 1 and survey No. 273/ area 648 sq. ft. at Shriram ward is kept with defendant bank as security. In fact the said land is owned by father of the plaintiff. Defendant bank had only asked for no objection certificate from the father of plaintiff to run the industry on said land and documents showing ownership of plaintiff's father. However, now it seems that defendant bank by playing fraud trying to show that the land is kept as security. It is submitted that neither the plaintiff nor his father kept the land mentioned above as security. Therefore, immediately plaintiff rushed to the defendant bank and explain his situation. On that officers of the defendant bank assured to co-operative with the plaintiff. However when despite of repeated request defendant bank refused to provide rehabilitation assistance."::: Downloaded on - 09/06/2013 15:54:21 ::: 10
The cause of action as contained in para 12 is reproduced as under:-
"12. The cause of action for the present suit firstly arose on 20/12/2004 when defendant falsely issued a notice under section 13 (2) of Securitization act and thereafter on 2/3/2005 when plaintiff submitted his reply/objection and again on 14/6/2005 when defendant threatened to take action for recovery of alleged loan amount. The suit of the plaintiff is well within limitation. The Hon'ble Court have every jurisdiction to try and decide the present suit."
The entire relief claimed in the plaint runs as under:-
"(a) By decree of permanent injunction defendant its officers or any other claiming through it may kindly be permanently restrained from taking over the possession of M/s Janata Plastic Industries, Ballarpur till decision of the suit.
(b) Any other relief which is just and proper in the circumstances of the case."
Thus, the dispute with which, the plaintiff is coming before the civil court, is about the security interest created in favour of the defendant Bank, in respect of immovable property belonging to the ::: Downloaded on - 09/06/2013 15:54:21 ::: 11 father of the plaintiff. The cause of action for giving rise to such dispute is shown to be the notice under Section 13(2) of the said Act and hence relief of permanent injunction, as prayed for is claimed.
10. The first contention of Shri Deopujari, the learned counsel for the plaintiff, is that the Civil Suit is maintainable as the plaintiff is coming before the civil court immediately after issue of notice under Section 13(2) of the said Act and before taking any of measure, as contemplated by Section 13(4) of the said Act. It is his contention that such a situation cannot be dealt with under Section 17 of the said Act and hence the jurisdiction of Civil Court is not barred. In my opinion, the point urged, is no more res integra and it has been dealt with in para 50 of the Apex Court's judgment Mardia Chemical's case (supra), which is reproduced below "50. It has also been submitted that an appeal is entertainable before the Debts Recovery Tribunal only after such measures as provided in sub-section (4) of Section 13 are taken and Section 34 bars to entertain any proceeding in respect of a matter which the Debts Recovery Tribunal or the Appellate Tribunal is empowered to determine. Thus ::: Downloaded on - 09/06/2013 15:54:21 ::: 12 before any action or measure is taken under sub-section (4) of Section 13, it is submitted by Mr Salve, one of the counsel for the respondents that there would be no bar to approach the civil court. Therefore, it cannot be said that no remedy is available to the borrowers. We, however, find that this contention as advanced by Shri Salve is not correct. A full reading of Section 34 shows that the jurisdiction of the Civil Court is barred in respect of matters which a Debts Recovery Tribunal or an Appellate Tribunal is empowered to determine in respect of any action taken "or to be taken in pursuance of any power conferred under this Act". That is to say, the prohibition covers even matters which can be taken cognizance of by the Debts Recovery Tribunal though no measure in that direction has so far been taken under sub-section (4) of Section 13. It is further to be noted that the bar of jurisdiction is in respect of a proceeding which matter may be taken to the Tribunal.
Therefore, any matter in respect of which an action may be taken even later on, the civil court shall have no jurisdiction to entertain any proceeding thereof. The bar of civil court thus applies to all such matters which may be taken cognizance of by the Debts Recovery Tribunal, apart from those matters in which measures have already been taken under sub-section (4) of Section 13."
::: Downloaded on - 09/06/2013 15:54:21 ::: 13Thus, the contention in respect of the jurisdiction of the Civil Court to entertain, try and decide the civil suit challenging notice under Section 13(2) of the said Act, is concluded against the plaintiff in Mardia Chemical's judgment. The bar of jurisdiction of Civil Court under Section 34 of the said Act, would operate even before the measures, as provided under Section 13(4), are taken. It is thus settled that any matter, in respect of which, an action may be taken even later on, the Civil Court will have no jurisdiction to entertain any proceedings thereof.
11. Relying upon the allegations of fraud as pleaded in para 8 of the plaint reproduced above, Shri Deopujari has urged that the action of the defendant Bank is fraudulent and hence such action can be assailed only before the Civil Court. For this purpose, the observation of the Apex Court in para 51 of the Mardia Chemical's case have been relied upon by Shri Deopujari and the same are, therefore, reproduced below.
"51. However, to a very limited extent jurisdiction of the civil court can also be invoked, where for example, the action of the secured creditor is alleged to be fraudulent or ::: Downloaded on - 09/06/2013 15:54:21 ::: 14 his claim may be so absurd and untenable which may not require any probe whatsoever or to say precisely to the extent the scope is permissible to bring an action in the civil court in the cases of English mortgages. We find such a scope having been recognized in the two decisions of the Madras High Court which have been relied upon heavily by the learned Attorney General as well as appearing for the Union of India, namely, V. Narasimhachariar, AIR at pp. 141 and 144, a judgment of the learned Single Judge where it is observed as follows in para 22 (AIR p.143) "22. The remedies of a mortgagor against the mortgagee who is acting in violation of the rights, duties and obligations are twofold in character. The mortgagor can come to the court before the sale with an injunction for staying the sale if there are materials to show that the power of sale is being exercised in a fraudulent or improper manner contrary to the terms of the mortgage. But the pleadings in an action for restraining a sale by mortgagee must clearly disclose a fraud or irregularity on the basis of which relief is sought: Adams v. Scott.
I need not point out that this restraint on the exercise of the power of sale will be exercised by courts only under the limited circumstances mentioned above because otherwise to grant such an injunction would ::: Downloaded on - 09/06/2013 15:54:21 ::: 15 be to cancel one of the clauses of the deed to which both the parties had agreed and annul one of the chief securities on which persons advancing moneys on mortgages rely. (See Ghose, Rashbehary: Law of Mortgages, Vol. II, 4th Edn. p. 784)."
The aforesaid observations of the Apex Court are in respect of the cases of English mortgage. The present case pertains to an Equitable Mortgage. Hence, the same are not applicable. Though the averments in para 8 of the plaint is that neither the plaintiff nor his father has kept the land mentioned as security, there is no relief of declaration claimed in the suit, that the defendant Bank is an unsecured creditor or that the creation of security interest in favour of the bank in respect of the property of the father of the plaintiff is fraudulent and, therefore, null and void. Hence, the suit of the plaintiff cannot be saved. Be that as it may, the provisions of Section 13 of enforcement of security interest and of Section 17 regarding right to appeal is attracted, only when it is shown that the "security interest" is created in favour of a "secured creditor" and not where the creditor is unsecured. Hence, the question whether security interest is legally created or not, or ::: Downloaded on - 09/06/2013 15:54:21 ::: 16 whether it is the notice issued by secured creditor or not, can be gone into under Section 17 by Debt Recovery Tribunal. Hence, for all these reasons, the jurisdiction of civil court is barred under Section 34 of the said Act. The appellate Court committed an error in holding that such dispute cannot be gone into either by the Debt Recovery Tribunal under Section 17 or its appellate Tribunal.
12. The matter can be looked at from different angle. The plaintiff has filed a suit for simplicitor permanent injunction, restraining the defendant Bank or its officers from taking over the possession of M/s. Janta Plastic Industries, Ballarsha till decision of the suit. The entire relief claimed is already reproduced. Except this, there is no other relief claimed in the suit. In this respect, Section 13(1) of the said Act, which is relevant, is reproduced below:-
"13. Enforcement of security interest-
(1) Notwithstanding anything contained in section 69 or section 69-A of the Transfer of Property Act, 1882, (4 of 1882), any security interest created in favour of any secured creditor may be enforced, without the intervention of the Court or tribunal, by such creditor in accordance with the provisions of this Act."::: Downloaded on - 09/06/2013 15:54:21 ::: 17
The bank has initiated action as contemplated by provisions Section 13(2) of the said Act, to enforce the security interest created in favour of the defendant Bank, by the plaintiff. Hence, the defendant Bank, under Section 13(1) of the said Act is entitled to enforce its security interest, as a matter of right in accordance with Section 13 of the said Act that too, without intervention of the Court or Tribunal. The issuance of notice under Section 13(2) of the said Act, is the initial step to enforce the security interest of the bank, which will ultimately culminate in the sale of property as contemplated by Section 13(4) of the said Act, to realise the outstanding dues. Thus, the intervention of Civil Court at the stage of notice under Section 13(2) of the said Act, is not contemplated.
13. Apart from above, Section 34 of the said Act pertaining to jurisdiction is relevant and the same is reproduced below:-
"34. Civil Court not to have jurisdiction.-
No Civil Court shall have jurisdiction to entertain any suit or proceeding in respect of any matter which a Debts Recovery Tribunal or the Appellate Tribunal is empowered by or under this Act to determine and no ::: Downloaded on - 09/06/2013 15:54:21 ::: 18 injunction shall be granted by any Court or other authority in respect of any action taken or to be taken in pursuance of any power conferred by or under this Act or to be taken in pursuance of any power conferred by or under this Act or under the Recovery of Debts Due to Banks and Financial Institutions Acts, 1993"
Bare perusal of the aforesaid provision reveals that it is in two parts to be read disjunctively. The first part states that no civil court shall have jurisdiction to entertain the suit or proceeding in respect of any matter which a Debt Recovery Tribunal or the appellate Tribunal is empowered by or under this Act to determine. The second part of the provision, prohibits the Court from granting injunction in respect of any action taken or to be taken in pursuance of any power conferred by or under the said Act or under the Recovery of Debts Due to the Banks and Financial Institutions Act, 1993. As pointed out earlier, the suit filed by plaintiff being simplicitor for injunction, the same is, therefore, covered by the second part of Section 34, which prohibits the Court or other authority from granting injunction in respect of any action taken or to be taken in pursuance of the power conferred by or under the Act. The issuance of notice is the exercise of ::: Downloaded on - 09/06/2013 15:54:21 ::: 19 power conferred upon the defendant/Bank under Section 13 (2) of the said Act and hence the jurisdiction of the Civil Court is barred. Further, it is the action to be taken by the defendant Bank in pursuance of power conferred upon the secured creditor under Section 13(4) of the said Act and hence the jurisdiction of Civil Court, to grant injunction sought for, restraining the defendant Bank from taking measures against the plaintiff, is barred under Section 34 of the said Act. Anyway the suit as framed is barred by law as contemplated under Order VII Rule11 (d) of the Code of Civil Procedure and hence the plaint is liable to be rejected.
The trial Court was right in its view.
14. Mr. Deopujari, the learned counsel for the respondent, relied upon Division Bench of this Court in M. R. Gawai Enterprises ..vs.. Vidarbha Urban Co-operative Bank Limited & anr.; 2005 (1) Bom. C. R. 276 to urge that if the objection, pursuant to the notice under Section 13(2) of the said Act, is raised then such objection has to be considered with due application of mind by the Bank, a secured creditor and the reasons for not accepting the objection must be communicated to the borrower. It was the case where the objection ::: Downloaded on - 09/06/2013 15:54:21 ::: 20 taken pursuant to notice under section 13(2) was not considered and notice under Section 13(4) of the said Act was issued. This Court quashed and set aside the notices under Section 13 (4) on the ground that the objection, pursuant to notice under Section 13(2) of the said Act has not been decided. The question of bar to the jurisdiction of the Civil Court to entertain, try and decide the suit was not involved. At any rate, it was writ petition under Article 226 of the Constitution of India and the bar under Section 34 of the said Act does not apply to the said proceedings. The High Court could exercise powers under Article 226, in a given case, even if there is an alternate statutory remedy available. Hence, the ratio laid down in the said judgment cannot apply in the present case, which involves the question of bar of the jurisdiction of the Civil Court as contemplated under Section 34 of the said Act. The said judgment is of no help to the petitioner.
15. Mr. Deopujari, the learned counsel for the respondent, further relied upon decision of the Division Bench of this Court in Nishit M. Prabhu Verlekar ..vs.. Chandranath Vinayak Dhume and ors.; AIR ::: Downloaded on - 09/06/2013 15:54:21 ::: 21 1986 BOMBAY 46 in support of his proposition that the application under Order VII Rule 11 of the Code of Civil Procedure cannot be entertained unless written statement is filed, raising such objection.
Now, it is well settled that the application under Order VII Rule 11 of the Code of Civil Procedure for rejection of plaint can be filed at any stage of the proceedings. The law laid down by the Apex Court in its judgment in Hari Shankar Jain ..vs.. Sonia Gandhi; (2001) 8 SCC 233;
clearly states that the Court is duty bound to examine the case, regardless of written statement or denial in one form or the other and to reject it, if it does not disclose cause of action under Order VII Rule 11 of the Code of Civil Procedure. Apart from this, the effect of Section 9-A of the Code of Civil Procedure regarding framing of preliminary issue has also not been considered in the said judgment. The plaintiff had filed an application under Order XXXIX Rules 1 and 2 of the Code of Civil Procedure and before grant of injunction, the application under Order VII Rule 11 of the Code of Civil Procedure was filed, raising the issue of jurisdiction of Civil Court to entertain, try and decide the suit.
The said issue was framed and answered against the plaintiff. The suit has been dismissed by the trial Court. In view of this, the judgment ::: Downloaded on - 09/06/2013 15:54:21 ::: 22 relied upon by Mr. Deopujari, the learned counsel for the respondent, is of no help to the plaintiff.
16. In view of above, the judgment and order dated 31.10.2006 passed by the learned District Judge, Chandrapur in Regular Civil Appeal No. 250/2005, cannot be sustained. The same is quashed and set aside. The order dated 15.10.2005 passed by the learned 2nd Jt. Civil Judge Senior Division, Chandrapur, dismissing Regular Civil Suit No. 142/2005 filed by plaintiff is restored. No order as to costs.
JUDGE kahale ::: Downloaded on - 09/06/2013 15:54:21 :::