State Consumer Disputes Redressal Commission
Mr. Skoda Tadeo Do Rosario Cotta, vs The Mapusa Urban Co-Op. Bank Of Goa Ltd., on 15 December, 2011
BEFORE GOA STATE CONSUMER DISPUTES REDRESSAL COMMISSION, PANAJI GOA Complaint No. 06/2011 Mr. Skoda Tadeo Do Rosario Cotta, Malwara, Agacaim, Ilhas, Goa. .Complainant V/s. 1. The Mapusa Urban Co-op. Bank of Goa Ltd., a Co-operative Society registered under the Multi-State Co-op Societies with its Registered office at Nandeep Mapusa, Bardez-Goa. 2. Recovery/Sale Officer, Registrar of Co-operative Society Court Room No. 1, The Mapusa Urban Co-op. Bank of Goa Ltd., Mapusa, Bardez, Goa. .. Opposite Parties Adv. A. Monteiro present for the Complainant. Adv. P. S. Rao present for the Opposite Party. Coram: Shri. Justice N.A. Britto, President Dated: 15/12/2011 ORDER
1. There is a stalemate in the application filed by the Complainant under Section 12 of the C.P. Act, 1986 and the application for interim relief dated 14/07/11 and hence this order under Section 16 (1-B)(iii) of the C.P. Act, 1986.
2. Some facts are required to be stated to decide the controversy.
3. The Complainant is a member of the Opposite Party-Mapusa Urban Co-operative Bank of Goa Ltd., (Bank, for short). The Complainant under a deed dated 12/05/1995 styled as a mortgage deed borrowed from the said Bank a loan of Rs. 50,00,000/- with interest at the rate of 21% repayable in 60 monthly installments, with his brothers Alfred M. Cotta of Mac Enterprises and Edgar Cotta standing as sureties for the repayment of the said loan and one Remiz Cardoz mortgaging his property known as Soranto surveyed under survey No. 204/1 of Anjuna village. By deed of modification dated 19/05/1995 Shri. Alfred M. Cotta was replaced by Miss. Lizette de Noronha.
4. The Complainant soon became a defaulter and the loan was treated as N.P.A and the said Bank raised a dispute before the Assistant Registrar of Co-op. Societies under the Multi-State Co-op. Societies Act, 1984. The Complainant was duly served in the said dispute case. The Complainant appeared before the Assistant Registrar and admitted the claim of the Bank and as a result, by order dated 30/08/1999, the Complainant alongwith the said Lizette and the said Edgar, as opponents, were directed to pay to the Bank a sum of Rs. 99,99,733/- with interest at the rate of 20% from 29/07/99 and costs of Rs. 2450/-.
5. The said order of the Asst. Registrar attained finality. The Complainant did not challenge it nor the Bank acted upon it.
6. The Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 came into force with effect from 18/12/02 or there about ( SARFAESI Act, for short) whose constitutional validity was upheld by the Apex Court in Mardia Chemicals, AIR 2004 SC 2371, and the Bank issued a notice to the Complainant under section 13 (2) of the said SARFAESI Act dated 31/10/2005. After some correspondence between the Complainant and the Bank, the Bank ultimately took possession of the mortgaged property on 11/03/2008, as can be seen from possession notice (copy of which is at page 88.) The Bank then published a notice for sale of the said mortgaged property on 20/8/09 which made one Michael DSouza, one of the flat owners, to approach the DRT (Debts Recovery Tribunal) at Mumbai, in case No. 125/09 which ultimately ended in consent terms being filed on 30/7/2010 under which the Bank agreed to accept from Mac Enterprises i.e. Complainants brother Alfred M. Cotta a sum of Rs. 3 crores in full and final settlement of all claims of the Bank as per the schedule given therein. As there was no repayment on the part of the Mac Enterprises, another auction notice was published on 3/5/2011 for auction to be held on 6/5/11 which made the Complainant to approach this Commission with the present complaint on 2/6/2011 with following refliefs:
a. Make a judgment and order directing the O.P. to forthwith provide to the Complainant all the documents with respect to the suit property as also the documents relating to the recovery proceedings if any.
b. Make a judgment and order directing the O.P. to confirm that they have followed the due process of law in bringing about the suit property for sale by the auction in public notice dated 3.5.2011.
c. Make a judgment and order directing that the auction notice and all the recovery proceedings, if not in accordance with law is of no legal consequence and thus illegal and not binding as against the complainant.
d. Make a judgment and order restraining the O.P. from carrying on with the auction as threatened by the auction notice dated 3.5.2011.
e. Ad-interim, exparte relief in terms of prayer (d) above. 7. Another notice for
auction of the mortgaged property was published on or about 16/6/2011 which made the Complainant to file the application on 16/7/2011 for interim relief.
8. The application for Interim Relief was decided by the Learned Members of this Commission vide order dated 18/07/11 against which the Bank preferred a writ petition, being writ petition No. 469/2011 which was decided by the Honble High Court by Order dated 24/8/11. In the said order it was held that :
It was mandatory for the State Commission to deal with the said aspect since jurisdiction of the State Commission to grant any interim relief was challenged. When jurisdiction of a Court/Tribunal to deal with the matter is challenged on the ground that its jurisdiction is outsted under the provision of a statute, it is obligatory for the Court/Tribunal to deal with objection before dealing with the matter on merits.
9. The High Court, therefore, directed the Commission to decide the application dated 14/07/11 and pass a fresh Order dealing with all the contentions of the Petitioner i.e. the Bank as well as the Respondent No. 1 i.e. the Complainant.
10. In compliance with the said directions contained in Lr. judgment dated 24/8/11, the Learned Members of this Commission by separate orders dated 8/11/11 have decided the application and the issue of jurisdiction.
11. Somehow, this Complaint came up before me on 6/12/2011 and again on 7/12/11, without any reference having been made to the President, as required by Section 16 (1-B)(iii) of the C.P. Act. The following Order was made on 7/12/2011:
After hearing the counsel for sometime it is noted that both the Learned Members of this Commission have expressed divergent views on the point of jurisdiction as well as on the grant of application for interim relief, and the matter has ended at that, without making a reference to the President as required by Section 16 (1-B)(iii). Parties may like to challenge the said orders of the Learned Members dated 8/11/11 or may like to submit the controversy to be decided by the President. They may seek instructions and make their submissions. Shri. P. Rao, Lrnd. Counsel on behalf of the O.P. states that the O.P. desires that the controversy be decided by the President.
12. When the complaint was again taken up on 12/12/11 Shri. A. Monteiro, Lrnd. Counsel on behalf of the Complainant followed suit and also submitted that the controversy be decided by the President. According to the Lrnd Counsel on behalf of both the parties, the application for interim relief and the point of jurisdiction has been held in favour of the Complainant by one member (Honble Shri. J. G. Prabhudesai) and in favour of the Bank by the other member (Honble Member Smt. Vidhya R. Gurav)
13. I therefore proceed to decide the controversy by consent of parties as well as out of compelling necessity.
14. Before going into the controversy a reference is required to be made to certain provisions of C.P. Act, 1986, particularly Section 3 thereof and certain provisions of the SARFAESI Act, 2002.
15. Section 3 of the C.P. Act on which reliance has been placed by Shri. A. Monteiro, Lrdn. Counsel on behalf of the Complainant only states that the provisions of this Act shall be in addition to and not in derogation of the provision of any other law for the time being in force.
As regards this section we had occasion to refer to the case of Vishwabarathi House Building Co-op. Soc. And others (2003) (2) ALL MR 1091 (S.C.), wherein the Apex court had stated that:
By reason of the provision of Section 3 of the Act it is evident that remedies provided thereunder are not in derogation of those provided under other laws. The said Act supplements and not supplants the jurisdiction of the civil Courts or other statutory authorities.
The said Act provides for a further safeguard to the effect that in the event a complaint involves complicated issues requiring recording of evidence of experts, the complainant would be at liberty to approach the civil Court for appropriate relief. The right of the consumer to approach the civil Court for necessary relief has, therefore, been provided under the Act itself.
The provisions of the said Act are required to be interpreted as broadly as possible. It has jurisdiction to entertain a complaint despite the fact that other forums/courts would also have jurisdiction to adjudicate upon the lis.
16. Chapter 3, Section 13 of the SARFAESI Act, in substance, provides for enforcement of security interest executed in favour of any secured creditor by such creditor without the intervention of the Court or tribunal in accordance with the provisions of the SARFAESI Act.
Sub Section 2 of section 13 of SARFAESI Act deals with a notice in writing to be given to the borrower to discharge his liabilities in respect of debt which has been classified by the secured creditor as a non performing asset.
Sub Section 3 of Section 13 stipulates that notice be given to give details of the amount payable.
Sub Section 3 (A) of Section 13 provides a remedy to the borrower to make a representation and in case representation is made, the decision is required to be communicated to the borrower.
The proviso stipulates that the reasons so communicated will not confer any right on the borrower to prefer an application to the DRT (Debts Recovery Tribunal) under Section 17 or the Court of the District Judge under section 17 (A).
The second proviso further provides that the management of the business where it is severable can be taken over by secured creditor and Sub section (4) of section (13) provides that in case the borrower fails to discharge his liabilities in full within the period specified in sub section (2) the secured creditor at its discretion can take one or more of the measures to recover his secured debts, as specified in clause (a) to (d) of sub section (4) of section 13.
Sub clause (a) with which we would be concerned with, deals with taking possession of the secured assets of the borrower including the right to transfer by way of lease, assignment or sale for realizing the secured assets. (This is only a summary of Section 13 of SARFAESI Act)
17. Section 17 of the SARFAESI Act deals with the right of appeal and it provides that:
(1) Any person including borrower, aggrieved by any of the measures referred to in sub-section 4 of section 13 taken by the secured creditor or his authorized officer under this chapter , may make an application alongwith such fee, as may be prescribed, to the Debts Recovery Tribunal having jurisdiction in the matter within forty-five days from the date on which such measures had been taken:
Provided Explanation (2) The Debts Recovery Tibunal shall consider whether any of the measures referred to in sub-section (4) of section 13 taken by the secured creditor for enforcement of security are in accordance with the provisions of this Act and the rules made thereunder:(3) (4) (5) (6) (7)
18. Section 34 of the SARFAESI Act states that 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 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 under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (51 of 1993).
Section 35 of the SARFAESI Act provides that the provisions of this Act shall have effect, notwithstanding anything inconsistent therewith contained in any other law for the time being in force or any instrument having effect by virtue of any such law. In other words the SARFAESI Act overrides all other laws even in case where there is something which is inconsistent with the provisions of SARFAESI Act.
Section 37 of the SARFAESI Act provides that the provisions of this Act or the rules made thereunder shall be in addition to, and not in derogation of, the Companies Act, 1956 (1 of 1956), the Securities Contracts (Regulation)Act, 1956 (42 of 1956), the Securities and Exchange Board or India Act, 1992 (15 of 1992), the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (51 of 1993) or any other law for the time being in force.
19. I will take up first, the application dated 14/7/2011 for interim relief which has been exhaustively replied to by the Bank by their reply dated 18/7/11 supported by an affidavit and not only that the Bank has also filed their written version or written statement dated 20/10/11, in the form of an affidavit. The complainant has not countered the facts stated by the Bank in the said written version by filing any rejoinder and therefore the facts stated on behalf of the Bank can be accepted at this stage of deciding the application for interim relief.
20. In any jurisdiction, including in this consumer beneficial jurisdiction, before a party gets an order of interim relief in its favour, the party has to make out a prima facie case. Did the complainant make out a prima facie for the grant of interim relief? The answer has got to be in the negative. The Complainant by admission of his liability invited an order against the Complaint and others dated 30/8/1999 of the Asst. Registrar of Co-op. Stys. in the sum of Rs. 99,99,733 with interest @ 20% from 29/7/1999. It is not the case of the Complainant that the Complainant had paid any substantial amount which was ordered to be recovered from him. The Complainant was given twice O.T.S. facility. As pleaded by the Complainant, the Complainant was given OTS on or about 7/12/04 in the sum of Rs. 1,17,00,000/-. It is not the case of the complainant that he had paid the said amount or atleast sizeable part of it. According to the Bank the Complainant was again granted OTS facility on or about 7/1/2005 which was also not complied with by the Complainant. Then the Bank had sent a letter datd 5/3/05 demanding a sum of Rs. 2,59,58,369/- which was also not replied nor complied with.
Thereafter the complainant was issued the said notice dated 31/10/05 under section 13 (2) of the SARFAESI Act by which a sum of Rs. 3,54,75,860/- was demanded from the complainant as on 30/09/05 alongwith future interest. The receipt of the notice is admitted but the Complainant but the Complainant did not react to the same although the Complainant could have represented against the same in the light of section 13 (3-A) of the SARFAESI Act and one may be constrained to observe at this stage that the contents of the said notice are deemed to have been admitted by the Complainant, as contended by the Bank.
21. Thereafter the possession of the mortgage property was taken over by the Bank on 11/03/07, regarding which there is some dispute, with which I will deal little later in greater to detail, and thereafter the Bank announced the auction of the mortgaged property on the Navhind Times dated 19/08/09 to be held on 4/9/09 and still the Complainant did not react against the said auction and who reacted was one Michael DSouza, owner of one of the flats being constructed by Mac Enterprises, by approaching the DRT in SA No. 12509 but was unable to get a blanket stay of the said auction. The Lr. DRT only directed the Bank not to confirm the sale, if made. Subsequently the said DRT case ended in consent terms being filed on 30/07/10.
22. It is not the case of the Complainant that his brother, the said Alfred M. Cotta of Mac Enterprises, Respondent No. 2 before the DRT has paid any sizable amount out of Rs. 3 crores agreed to be paid to the Bank. As can be seen from the perusal of the Complaint, the Complainant has put the onus on the Bank to prove that, the actions taken by them are in accordance with law. On the contrary it was necessary for the Complainant to have shown, prima facie, that the procedure adopted by the Bank was not in conformity with SARFAESI Act before the Complainant could get an order of interim relief prohibiting the Bank from holding the auction either on 3/5/2011 or thereafter, in his favour.
23. In my view the Complainant had filed to make out a prima facie case for the grant of interim relief in his favour and therefore his application was rightly dismissed by one of the Lrnd. Members of this Commission. No effort is made to demonstrate which are the documents which are dishonestly fabricated by the Bank. Mere averment is not enough. There was also no question of the Complainant suffering any irreparable loss either, as admittedly the property in dispute belonged to the mortgagor Shri. Remiz Cardoz and if at all it was in possession it was not in the possession of the Complainant but his brother the said Alfred M. Cotta of Mac Enterprises who was doing the development in the said property by building flats, etc. by an internal arrangement between them. The mortgagor had not reacted to the sale notices nor the said Alfred M. Cotta of Mac Enterprises. The Complainant therefore had failed to make out a case for the grant of interim relief.
Secondly, there was an embargo of granting an injunction by any authority when action was taken under the SARFAESI Act, etc. imposed by Section 34. The expression other authority is broad enough to include any Forum under the C.P. Act, 1986.
24. That should take me to the aspect of possession of mortgaged property. According to Shri. Monteiro, Lrnd. Counsel on behalf of the Complainant, the Complainant is still in possession of the mortgaged property.
This aspect is also necessary to appreciate the other submission made by him that the Complainant would have been required to take recourse to DRT in terms of section 17 of the SARFAESI Act only in case possession was taken under sub section (4) of Section 13 of the SARFAESI Act.
25. Shri. Monteiro pointing out to the averment of para 13 of the complaint has submitted that the complainant continued to be in possession of the mortgaged property as the complainant had intimated to the Bank by letter dated 8/3/07 that the complainant was unable to hand over the possession. However, it is interesting to note what the Complainant stated in para 31 of the complaint which reads as follows:
31. Despite the above, the O.P. addressed a possession notice to the complainant in another fatal attempt to bring about one more pressure on the complainant.
26. The averments of para 31 as reproduced hereinabove is nothing but an implied admission that the Bank did take the possession of the mortgaged property as stated by the Bank, on 11/03/07. This is also otherwise evident from the memorandum of possession dated 11/03/08 produced by the Bank, styled as possession notice. It is also evident from auction notice published on 20/08/09 on the Navhind Times, wherein the fact that the possession was taken on 11/03/07 was reiterated and presumably it is this reason that made the said Michael approach the DRT and the Complainants brother subjected to its jurisdiction for no other reason but because the possession was taken by the Bank. That apart, there is the written version filed on behalf of the Bank supported by affidavit wherein the Bank has categorically stated through its General Manager that the Bank after making a demand under Section 13, and after complying with the procedure took over the possession of the property. As already stated, there is no rejoinder to the said written version /affidavit. In the circumstances Complainants contention that the possession was with the Complainant cannot be accepted. The Bank has taken it over on or about 11/3/07 and once the said possession has been taken over by the Bank under SARFAESI Act there was no other option for the Complainant but to challenge the same, whether it was rightly taken or wrongly taken, before the DRT as provided by section 17 of the SARFAESI Act. In other words the remedy of the complainant against taking over the possession of the mortgaged property was before the DRT.
27. The Complainant might have been a borrower from the Bank and as such a consumer within the meaning of section 2 (d) (iii) of the CP Act 1986 but once the Bank took recourse to the SARFAESI Act under section 13 (2), the remedy of the complainant against the action taken would be one available to the Complainant under the provision of the said SARFAESI Act. There can be no dispute that the C.P. Act, 1986, is a general law while SARFAESI Act is a later and special law meant to regulate securitization and financial assests and enforcement of security interest and for matters connected therewith or incidental thereto. It was meant to empower banks and financial institutions to take possession of the securities and sell them without the intervention of the Court. It is well settled that a special law overrides the general law. If any authority is required for this proposition, I may refer to General Manager, Telecom Vs. Krishnan & Anr, wherein the Honble Supreme Court by judgment dated 1/9/09 has held that the special law overrides the general law. The Apex Court also reiterated its earlier view in Chairman, Thiruvalluvar Transport Corporation Vs. Consumer Protection Council (1995) 2 SCC 479 that the National Commission had no jurisdiction to adjudicate upon claims for compensation arising out of motor vehicles accidents. Even earlier, the Complainant being a member of the Bank had submitted to the special jurisdiction of the Asst. Registrar under the Multistate Co-op. Stys Act, 1984.
28. Section 35 of the SARFAESI Act overrides the provisions of ay other law even in case where there is something inconsistent in any other law. There is none in the C.P. Act, 1986 which is inconsistent with the provisions of SARFAESI Act.
Section 37 makes the position further clear by stating that the provisions of this Act shall be in addition to and not in derogation of any other law for the time being in force. True, Section 3 of the C.P. Act, 1986 states that the provisions of the Act shall be in addition to and not in derogation of the provisions of any other law for the time being in force. Section 37 of the SARFAESI Act which is similar to Section 3 will now prevail over, Section 3 of the C.P. Act, 1986, being a special law enacted later in point of time.
It is therefore obvious that action taken under the special law providing for special remedies have barred the jurisdiction of the Civil Courts to entertain any proceedings in respect of any matter which a DRT is empowered to determine. If Civil Courts are barred from exercising jurisdiction by implication the Consumer Fora which have the trapping of the Civil Courts and which are supplemental fora, their jurisdiction would also be barred in respect of the matters which are required to be dealt with by the DRT.
29. In fact this issue is no longer res integra. It has been held by the High Court of Kerala in Punjab National Bank Vs. CDRF & others (CDJ 2011 KER H.C 494) that the remedy provided under the C.P. Act is clearly barred by the provisions of SARFAESI Act. In coming to the said conclusion the Kerala High Court noted what the Madras High Court stated in BPV Classic Tea Factory (P) Ltd Vs. Corporation Bank, 2008, (3) BC 557 and the Apex Court in Transcore Vs. Union of India (2008 (1)SCC 125) In BPV Classic Tea Factory, the Madras High Court had held that in respect of enforcement of a secured asset under the SARFAESI Act, the provisions of that Act alone would apply with regard to sale of an immovable property by the secured creditor and the same cannot be challenged before the Company Court under the provisions of the Companies Act. It was further held that, if aggrieved by any of the measures taken by the creditor under Section 13 (4) of the SARFAESI Act, the aggrieved person has to work out his remedy as provided in that Act only.
In Transcore Vs. Union of India it was observed by the Apex Court that Section 35 of the SARFAESI Act gives an overriding effect to that Act with all other laws and if such other laws are inconsistent with the SARFAESI Act. The object of section 13 of the SARFAESI Act, the Apex Court observed, is recovery by non adjudicatory process and it is for this reason section 13 (1) and 13 (2) of the Act proceeds on the basis that security interest needs to be enforced expeditiously without the intervention of the Court/Tribunal. The SARFAESI Act states that the enforcement would take place by non adjudicatory process and the Act removes all fetters on the rights of the secured creditors.
30. In Laximiba L. Zawar V/s Jalgao Merchant Coop. Bank Ltd (2011(3) Bom. C.R. 236, a Division Bench of Bombay High Court has held that once notice under Section 13(4) of SARFAESI Act was issued by the Bank, the partys available remedy is under Section 17 of the same Act and there is a complete bar under Section 34 to approach a Cooperative Court. This decision is equally applicable to the facts of the case at hand. The bar of Section 34 of SARFAESI Act would come in the way of approaching the Consumer fora as well.
31. The Complainant can take no benefit of consent terms filed before DRT dated 30/07/10 particularly of clause (g), thereof which stipulated that all notices issued by the Bank or any of its officers in respect of the said property would stand withdrawn or cancelled. Firstly, the complainant was not a party to the said consent order. Moreover, the Complainant might have been able to take the benefit of the same only incase the same was complied with by making the payment of 3 crores as stipulated therein and not otherwise. That consent order has got to stand or fall as a whole.
32. In the light of the above discussion, I hold that the application for interim relief filed by the complainant was bound to fail and so also the Complaint, for want of jurisdiction. Since this is the view now held by majority of members of this Commission (2:1) the Complaint alongwith the application for interim relief shall stand dismissed.
[Justice Shri. N. A. Britto] President