Andhra HC (Pre-Telangana)
Mehek Feed Industries, Rep. By Jatin ... vs Amrutlal Kataria And Ors. on 23 February, 2007
Equivalent citations: AIR2007AP230, 2007(6)ALD610, AIR 2007 ANDHRA PRADESH 230, 2007 (5) ALL LJ NOC 755, 2007 (2) AJHAR (NOC) 498 (AP), 2007 (1) AIR KAR R 113, 2007 (5) AKAR (NOC) 631 (AP), (2007) 5 ANDHLD 339, (2007) 6 ANDHLD 610
ORDER P.S. Narayana, J.
1. This Court on 27-6-2006 in C.M.A.M.P. No. 646 of 2006 made the following order.
Heard learned Counsel for the petitioner and perused the record. In the circumstances, there shall be interim direction to the respondents or their agents or their representatives, not to interfere with the petitioner's peaceful possession and enjoyment of the premises in question, provided the lease is subsisting.
C.M.A.M.P. No. 1964 of 2006 was filed to vacate the interim direction. The said application was filed by the third respondent-State Bank of India (hereinafter in short referred to as 'the Bank' for the purpose of convenience). This Court on 8-2-2006 made the said order absolute and directed the Registry to list the matter for final hearing.
2. Sri Pratap Narayan Sanghi, learned Counsel representing the appellant, the petitioner in I.A. No. 817 of 2005 in O.S. No. 9 of 2005 on the file of the District Judge. Nizamabad, would maintain that in the light of the registered lease deed dated 19-2-2005, the appellant can be evicted only by due process of law. The learned Counsel also would submit that even if the registered lease deed to be taken as not a valid document, the same cannot be over looked unless it is declared so by the competent Court. The learned Counsel also would contend, that inasmuch as the factum of possession is not in dispute, the appellant being a tenant/ non-party to the borrowing transaction, his interest to be protected. The counsel also would submit that the ground of attack that the lease transaction is a collusive one and brought into existence to defeat the rights of the bank, cannot hold water and even otherwise this is a question to be decided at the time of final disposal of the suit. While further elaborating his submissions, the learned Counsel would maintain that no notice was issued to the appellant-petitioner and the suit was filed on 28-3-2005. The learned Counsel also had given the dates of publications made in Eenadu and Hindu on 10-9-2006 and 12-9-2006. The learned Counsel also had taken this Court through Section 2(f), Section 13 Sub-sections (2) and (4), Section 31(e), Sections 34, 35 and 37 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter in short referred to as 'the Act' for the purpose of convenience) and would maintain that even in the light of the definition of the "borrower" and also the scheme of different provisions of the Act the third party interest cannot be jeopardized. The learned Counsel also would maintain that a third party like one in the present case, a tenant, cannot get himself impleaded even before the Debt Recovery Tribunal and cannot pray for appropriate reliefs. Hence, the suit is perfectly maintainable in a competent civil Court. The counsel also would submit that it cannot be taken as though that in all cases there would be collusive transactions only, there may be bona fide transactions as well and such bona fide transactions relating to the non-parties may have to be protected, and hence, the appellant is having a strong prima facie case and balance of convenience also in his favour and in the event of the relief of temporary injunction be negatived at this stage, the appellant would be put to irreparable loss. The learned Counsel also would contend that the bank is interested in recovery of the amount, and as a tenant, the appellant is prepared to deposit the rents even with the bank if such directions are to be issued in the peculiar facts and circumstances of the case, by this Court. The counsel also relied on certain decisions to substantiate his submissions.
3. Sri Razak, learned Counsel representing R-1 and R-2 would maintain that these are real owners of the property and they had created security over these properties and had obtained the loan and they are willing to repay the amount. The learned Counsel also would contend that in fact serious attempts are being made in the direction of getting one time settlement in this regard. The counsel also would maintain that the landlord and tenant relationship between the appellant and the respondents 1 and 2 is not in serious controversy.
4. Sri Satyanarayana, learned Counsel representing respondent No. 3-the Bank, made the following submissions.
The learned Counsel would maintain that a suit for perpetual injunction was thought of against R-1 to R-3 and R-3 is a banking institution. R-3 is proceeding under the provisions of the Act and Section 34 of the Act bars the maintainability of such suit. The provision does not draw any distinction between a third party or a borrower and even otherwise this person who approached the Court is claiming to be a tenant and in fact the appellant, a relative of respondents 1 and 2, had been set up by R-1 and R-2 to defeat the legitimate rights of the banking institution in further taking steps under the Act for the purpose of realizing the loan amount. The counsel also would submit that the loan amount is a very huge amount. The counsel also had drawn the attention of this Court to Sections 2(2)(f), 31(e), 13(4), 13(13) of the Act and also had explained the debt, to convince the Court that this, is only a transaction which had been thought of to ward of further steps which may be taken by the banking institution under the provisions of the Act. This is highly impermissible. The counsel also would contend that if such contention put forth by the parties to be accepted, the very object of the Act would be defeated and even otherwise the remedy, if any, for such party is to approach the Debt Recovery Tribunal and the learned Counsel pointed out Recovery of Debts due to Banks and Financial Institutions Act, 1993. The counsel also placed strong reliance on certain decisions to substantiate his contentions.
5. Heard the counsel and perused the material available on record and the findings recorded by the learned District Judge, Nizamabad, in the order dated 4th January 2006 made in I.A. No. 817 of 2005 in O.S. No. 9 of 2005.
6. The appellant herein, the petitioner-plaintiff, filed an application I.A. No. 817 of 2005 in O.S. No. 9 of 2005 on the file of the District Judge, Nizamabad, under Order XXXIX Rules 1 and 2 read with Section 151 of the Code of Civil Procedure (hereinafter in short referred to as 'the Code' for the purpose of convenience) praying for interim injunction restraining the respondents, their henchmen, employees, their mortgagee and their agents from causing interference into the peaceful possession of the petitioner over the plaint schedule property.
7. It is the case of the appellant that respondents 1 and 2 are the owners of the petition schedule premises and had leased the same to the appellant under a registered lease deed dated 19-2-2005 and the appellant was inducted into possession as tenant during the month of December 2004 on a monthly rent of Rs. 11,000/- and as the premises were defunct, the appellant had undertaken the repairs at the behest of the respondents 1 and 2. On 15-12-2004 respondents 1 and 2 through a letter requested him to undertake repairs and also to adjust the same from the monthly rents. Accordingly, the appellant got repaired the machinery and sheds of the schedule premises to an extent of Rs. 1,00,000/- and also paid Rs. 22,665/- towards arrears of electricity charges and Rs. 31,531/- towards electricity charges. It is also the case of the appellant that he had obtained valid licence from the Commercial Department vide Rc. No. NZB/02/1/4612/ 2004-2005 and CST No. NZB/02/1/2792/2004-2005 and also obtained licence from the Agricultural Market Committee, Nizamabad, and had invested huge amounts towards purchasing of Maize, Turmeric etc. and stored the same in the petition schedule premises. There is ground stock of 8665 quintals of turmeric Kadi at the petition schedule premises belonging to his customers. It is also stated that the appellant is having goodwill relating to the qualitative production. It is also stated that R-1 and R-2 began demanding higher rents and began harassing him through third respondent, the banker. It is also stated that the third respondent under the guise that the entire property was given to the third respondent as collateral security for the loan obtained by R-l and R-2 cannot dispossess the appellant forcibly. Certain other factual details also had been narrated.
8. The first respondent had not filed any counter and the second respondent remained ex parte.
9. The third respondent filed counter denying the averments and had taken specific stand that the appellant is none other than son-in-law of the first respondent and a resident of Mumbai and he never does any business in Nizamabad. The factory premises known as M/s. Jalaram Industries bearing municipal No. 1-14-1309/4 belongs to respondents 1 and 2 who had obtained huge financial assistance from their bank on the names of M/s. Amruthlal & Co. M/s. Jalaram Industries and M/s. Jyoti & Co. bearing loan account Nos. 016000-30019, 0165000-5588 and 016000-30081. Itis also stated that R-1 and R-2 were not rooting all their business activities through their bank and they are not paying even the loan amounts in spite of repeated demands. The third respondent also stated that respondents 1 and 2 have to pay total sum of Rs. 2,75,26,154-00 and in order to prevent the third respondent from recovering the loan, the respondents 1 and 2 had created a false lease of the suit schedule property in favour of the appellant and hypothecated the stock of maize and turmeric worth of Rs. 2,48,14,188/- in favour of the third respondent. It is further stated that in the second week of February 2005 when their bank was contemplating to initiate action under the Securitization of Financial Assets and Enforcement of Security Interest Act and having known the said steps, the respondents 1 and 2 created false lease agreement in favour of the petitioner. It is further stated that the property and business in the name and style of M/s. Jalaram Industries belonged to the respondents 1 and 2 and the same had been mortgaged in favour of their bank and the mortgage was subsisting. Under Sub-section (13) of Section 13 of the Securitisation Act, the respondents 1 and 2 have no right to alienate or lease out the said property in favour of the appellant, and therefore, the so-called registered lease agreement in favour of the appellant was illegal and it cannot be enforced, as such no right would accrue in favour of the appellant. It is also stated that the appellant was not in possession of the suit schedule property. But the respondents 1 and 2 were in physical possession of the suit schedule property and that the appellant, in collusion with the respondents 1 and 2, filed false suit and obtained ex parte injunction. It is also stated that when the suit schedule property was mortgaged in favour of their bank, it cannot be leased out to the appellant when the mortgage was subsisting. There is no prima facie case, balance of convenience in favour of the appellant.
10. The learned Judge at para 6 framed the following point for consideration.
Whether the petitioner is entitled for interim injunction as prayed for pending disposal of the suit?
The learned Judge recorded reasons at paras 7, 8 and 9 and came to the conclusion that the balance of convenience was in favour of the third respondent and ultimately dismissed the application. Hence, the present appeal.
11. The well settled principles, relating to the granting or refusal of the temporary injunction need not be repeated again. Be that as it may, in the present civil miscellaneous appeal, the first point to be decided is whether the appellant has made out a prima facie case for getting the relief of temporary injunction. The second question would be balance of convenience and the third ingredient irreparable loss. On the aspect of prima facie case elaborate submissions were made by the counsel on record and several provisions relating to the Act specified supra had been pointed out and several decisions also were cited by the learned Counsel representing the parties. The possession of the appellant is not in serious controversy. Whether the appellant is in possession of the property on his own accord as a tenant or whether the appellant being the close relative is just in possession on behalf of the respondents 1 and 2 as a nominee of respondents 1 and 2, appears to be the question of controversy.
12. At the outset, it is to be seen that R-1 did not file any counter at all and R-2 was set ex parte. So, the ground of attack taken by the appellant that respondents 1 and 2 being aggrieved of the flourishing business of the appellant had demanded higher rents and with a view to throw him out respondents 1 and 2 had colluded with the banking institution R-3 prima facie may not be a sustainable contention.
13. Section 34 of the Act dealing with 'civil Court not to have jurisdiction' reads as hereunder:
No civil Court shall have jurisdiction to entertain any suit or proceeding in respect of any matter which a Debts Recovery Tribunal or an 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 31(e) of the Act specifies that the provisions of this Act shall not apply to any conditional sale, hire-purchase or lease or any other contract in which no security interest has been created.
Section 37 of the Act deals with application of other laws not barred. Section 35 of the Act specifies that the provisions of this Act to override other laws. It is no doubt true that Section 37 of the Act, the opening words read "the provisions of this Act or the rules made thereunder shall be in addition to, and not in derogation of". This Act is an Act to regulate Securitisation and reconstruction of financial assets and enforcement of security interest and for matters connected therewith or incidental thereto.
Section 2(1)(f) of the Act defines "borrower" as in this Act, unless the context otherwise requires:
(f) "borrower" means any person who has been granted financial assistance by any bank or financial institution or who has given any guarantee or created any mortgage or pledge as security for the financial assistance granted by any bank or financial institution and include a person who becomes borrower of a Securitisation company or reconstruction company consequent upon acquisition by it of any rights or interest of any bank or financial institution in relation to such financial assistance.
Section 13 of the Act on which strong reliance had been placed by the counsel on record falls under Chapter III of the Act and the provision deals with enforcement of security interest. Section 13 (2) of the Act reads as hereunder:
Where any borrower, who is under a liability to a secured creditor under a security agreement, makes any default in repayment of secured debt or any installment thereof, and this account in respect of such debt is classified by the secured creditor as non-performing asset, then, the secured creditor may require the borrower by notice in writing to discharge in full his liabilities to the secured creditor within sixty days from the date of notice failing which the secured creditor shall be entitled to exercise all or any of the rights under Sub-section (4).
Emphasis was laid on Section 13(4)(d) of the Act. Section 13(4) of the Act reads as hereunder:
In case the borrower fails to discharge his liability in full within the period specified in Sub-section (2), the secured creditor may take recourse to one or more of the following measures to recover his secured debt, namely:
(a) take possession of the secured assets of the borrower including the right to transfer by way of lease, assignment or sale for realizing the secured asset.
(b) take over the management of the business of the borrower including the right to transfer by way of lease, assignment or sale for realizing the secured asset:
Provided that the right to transfer by way of lease, assignment or sale shall be exercised only where the substantial part of the business of the borrower is held as security for the debt:
Provided further that where the management of whole, of the business or part of the business is severable, the secured creditor shall take over the management of such business of the borrower which is relatable to the security or the debt;
(c) appoint any person (hereafter referred to as the manager) to manage the secured assets the possession of which has been taken over by the secured creditor;
(d) require at any time by notice in writing, any person who has acquired any of the secured assets from the borrower and from whom any money is due or may become due to the borrower, to pay the secured creditor; so much of the money as is sufficient to pay the secured debt.
Section 13(8) of the Act reads as hereunder:
If the dues of the secured creditor together with all costs, charges, and expenses incurred by him are tendered to the secured creditor at any time before the date fixed for sale or transfer, the secured asset shall not be sold or transferred by the secured creditor, and no further step shall be taken by him for transfer or sale of that secured asset.
14. Submissions at length were made on the aspect of non-giving of notice to the appellant and the violation of the procedure specified under different Sub-sections of Section 13 of the Act. Several of the facts are not in controversy. The fact that the registered lease deed is for ten years dated 19-2-2005 also is not in serious controversy, since the executants had not denied the same. No doubt, the stand taken by the third respondent is that it is a collusive transaction. In Indian Bank v. ABS Marine Products (P) Ltd. the Apex Court at paras 13, 14, 15 and 16 observed as hereunder (Paras 12 to 15 of AIR):
Section 31 of the Debts Recovery Act provides that every suit or other proceeding pending before any Court immediately before the date of establishment of a tribunal under the said Act, being a suit or proceeding the cause of action whereon it is based is such that it would have been, if it had arisen after such establishment, within the jurisdiction of such Tribunal, shall stand transferred on that date to such Tribunal.
Section 9 of the Code of Civil Procedure provides that the Courts shall have jurisdiction to try all suits of a civil nature, excepting suits of which their cognizance is either expressly or impliedly barred.
It is evident from Sections 17 and 18 of the Debts Recovery Act that civil Court's jurisdiction is barred only in regard to applications by a bank or a financial institution for recovery of its debts. The jurisdiction of civil Courts is not barred in regard to any suit filed by a borrower or any other person against a bank for any relief. It is not disputed that the Calcutta High Court had jurisdiction to entertain and dispose of CS No. 7 of 1995 filed by the borrower when it was filed and continues to have jurisdiction to entertain and dispose of the said suit. There is no provision in the Act for transfer of suits and proceedings, except Section 31, which relates to suit/proceeding by a bank or financial institution for recovery of a debt. It is evident from Section 31 that only those cases and proceedings (for recovery of debts due to banks and financial institutions) which were pending before any Court immediately before the date of establishment of a tribunal under the Debts Recovery Act stood transferred, to the Tribunal. In this case, there is no dispute that the Debts Recovery Tribunal, Calcutta, was established long prior to the Company filing CS No. 7 of 1995 against the Bank. The sad suit having been filed long after the date when the Tribunal was established and not being a suit or proceeding instituted by a bank or financial institution for recovery of a debt did not attract Section 31.
As far as Sub-sections (6) to (11) of Section 19 are concerned, they are merely enabling provisions. The Debts Recovery Act, as it originally stood, did not contain any provision enabling a defendant in an application filed by the bank/financial institution to claim any set-off or make any counter-claim against the bank/financial institution. On that among other grounds, the Act was held to be unconstitutional (see Delhi High Court Bar Assn. v. Union of India AIR 1995 Del 323. During the pendency of appeal against the said decision, before this Court, the Act was amended by Act 1 of 2000 to remove the lacuna by providing for set-off and counter-claims by defendants in the applications filed by banks/financial Institutions before the Tribunal. The provisions of the Act as amended were upheld by this Court in Union of India v. Delhi High Court Bar Assn. . The effect of Sub-sections (6) to (11) of Section 19 of the amended Act is that any defendant in a suit or proceeding initiated by a bank or financial Institution can : (a) claim set-off against the demand of a bank/financial institution, any ascertained sum of money legally recoverable by him from such bank/financial Institution; and (b) set-up by way of counter-claim against the claim of a bank/financial Institution, any right or claim in respect of a cause of action accruing to such defendant against the bank/financial institution, either before or after filing of the application, but before the defendant has delivered his defence or before the time for delivering the defence has expired, whether such a counter-claim is in the nature of a claim for damages or not. What is significant is that Sections 17 and 18 have not been amended. Jurisdiction has not been conferred on the Tribunal, even after amendment, to try independent suits or proceedings initiated by borrowers or others against banks/financial institutions, nor the jurisdiction of civil Courts barred in regard to such suits or proceedings. The only change that has been made is to enable the defendants to claim set-off or make a counterclaim as provided in Sub-sections (6) to (8) of Section 19 in applications already filed by the banks or financial institutions for recovery of the amounts due to them. In other words, what is provided and permitted is a cross-action by a defendant in a pending application by the bank/financial institution, the intention being to have the claim of the bank/financial institution made in its application and the counter-claim or claim for set-off of the defendant, as a single unlifted proceedings, to be disposed of by a common order.
15. In Krishna v. Kedarnath the Division Bench of Karnataka High Court at para 7 observed as hereunder:
Whether all the suits schedule properties are joint family properties and all the properties are mortgaged to the Bank and plaintiffs are entitled to partition etc. after the first charge upon the same is cleared, are all the aspects required to be decided by the Civil Court as the plaintiffs rights are traceable to the provision of Section 9 of CPC. Section 34 of the Act is a bar for the Civil Court to entertain the suits in respect of the matters which are empowered to be determined by the Debts Recovery Tribunal or Appellate Tribunal. But, adjudication or determination of rights or claims of the parties for partition of the properties which are in the nature of civil rights, cannot be stopped. Partition suits that would be instituted by a party claiming civil rights in respect of either ancestral joint family properties or co-ownership properties will-have to be exclusively dealt with by the Civil Court. That is the view taken by the Madras High Court in the decision referred to above. Of course the said decision is rendered prior to Marida Chemical's Ltd. case. The Supreme Court has upheld the constitutional validity of the provisions of the Act, at paragraph 51 in the abovereferred case, it is held that jurisdiction of the Civil Court also can be invoked for limited purposes. While the Bank can enforce its security interest for realization of its amount, right of the plaintiffs to claim partition in the suit schedule properties if they prove they are ancestral joint family properties cannot be deprived off as contended by the Bank, which contention was erroneously accepted by the trial Court. For adjudication of such claim the Bar under Section 34 of the Act shall not come in the way.
16. Strong reliance was placed on the decision of the Apex Court in Transcore v. Union of India in Appeal (civil) 3228 of 2006 dated 29-11-2006 wherein it was observed as hereunder:
The word possession is a relative concept. It is not an absolute concept. The dichotomy between symbolic and physical possession does not find place in the Act. As stated above, there is a conceptual distinction between securities by which the creditor obtains ownership of or interest in the property concerned (mortgages) and securities where the creditor obtains neither an interest in nor possession of the property but the property is appropriated to the satisfaction of the debt (charges). Basically, the NPA Act deals with the former type of securities under which the secured creditor namely, the bank/F1 obtains interest in the property concerned. It is for this reason that the NPA Act ousts the intervention of the Courts /tribunals.
Keeping the above conceptual aspect in mind, we find that Section 13(4) of the NPA Act proceeds on the basis that the borrower, who is under a liability, has failed to discharge his liability within the period prescribed under Section 13(2), which enables the secured creditor to take recourse to one of the measures, namely, taking possession of the secured assets including the right to transfer by way of lease, assignment or sale for realizing the secured assets, Section 13(4-A) refers to the word "possession" simpliciter. There is no dichotomy in Sub-section (4-A) as pleaded on behalf of the borrowers. Under Rule 8 of the 2002 Rules, the authorized officer is empowered to take possession by delivering the possession notice prepared as nearly as possible in Appendix IV to the 2002 Rules. That notice is required to be affixed on the property. Rule 8 deals with sale of immovable secured assets. Appendix IV prescribes the form of possession notice. It inter alia states that notice is given to the borrower who has failed to repay the amount informing him and the public that the bank/Fl has taken possession of the property under Section 13(4) read with Rule 9 of the 2002 Rules. Rule 9 relates to time of sale, issue of sale certificate and delivery of possession. Rule 9(G) states that on confirmation of sale, if the terms of payment are complied with, the authorized officer shall issue a sale certificate in favour of the purchaser in the form given in Appendix V to the 2002 Rules. Rule 9(9) states that the authorized officer shall deliver the property to the buyer free from all encumbrances known to the secured creditor or not known to the secured creditor, (emphasis supplied) Not found in certified copy...Ed. Section 14 of the NPA Act states that where the possession of any secured asset is required to be taken by the secured creditor or if any of the secured asset is required to be sold or transferred, the secured creditor may, or the purpose of taking possession, request in writing to the District Magistrate to take possession thereof. Section 17(1) of NPA Act refers to right of appeal. Section 17(3) states that if the DRT as an appellate authority after examining the facts and circumstances of the case comes to the conclusion that any of the measures under Section 13(4) taken by the secured creditor are not in accordance with the provisions of the Act, it may by order declare that the recourse taken to any one or more measures is invalid, and consequently, restore possession to the borrower and can also restore management of the business of the borrower. Therefore, the scheme of Section 13(4) read with Section 17(3) shows that if the borrower is dispossessed, not in accordance with the provisions of the Act, then the DRT is entitled to put the clock back by restoring the status quo ante. Therefore, it cannot be said that if possession is taken before confirmation of sale, the rights of the borrower to get the dispute adjudicated upon is defeated by the authorized officer taking possession. As stated above, the NPA Act provides for recovery of possession by non-adjudicatory process, therefore, to say that the rights of the borrower would be defeated without adjudication would be erroneous. Rule 8, undoubtedly, refers to sale of immovable secured asset. However, Rule 8(4) indicates that where possession is taken by the authorized officer before issuance of sale certificate under Rule 9, the authorized officer shall take steps for preservation and protection of secured assets till they are sold or otherwise disposed of. Under Section 13(8), if the dues of the secured creditor together with all costs, charges and expenses incurred by him are tendered to the creditor before the date fixed for sale or transfer, the asset shall not be sold, or transferred. The costs, charges and expenses referred to in Section 13(8) will include costs, charges and expenses which the authorized officer incurs for preserving and protecting the secured assets till they are sold or disposed of in terms of Rule 8(4). Thus, Rule 8 deals with the stage anterior to the issuance of sale certificate and delivery of possession under Rule 9. Till the time of issuance of sale certificate, the authorized officer is like a Court receiver under Order XL, Rule 1, CPC. The Court receiver can take symbolic possession and in appropriate cases where the Court receiver finds that a third party interest is likely to be created overnight, he can take actual possession even prior to the decree. The authorized officer under Rule 8 has greater powers than even a Court receiver as security interest in the property is already created in favour of the banks/FIs. That interest needs to be protected. Therefore, Rule 8 provides that till issuance of the sale certificate under Rule 9, the authorized officer shall take such steps as he deems fit to preserve the secured asset. It is well settled that third party interests are created overnight and in very many cases those third parties take up the defence of being a bona fide purchaser for value without notice. It is these types of disputes which are sought to be avoided by Rule 8 read with Rule 9 of the 2002 Rules. In the circumstances, the drawing of dichotomy between symbolic and actual possession does not find place in the scheme of the NPA Act read with the 2002 Rules.
17. Reliance also was placed on a decision in Mardia Chemicals Ltd. etc. etc. v. Union of India wherein it was observed at para 51 as hereunder:
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 their 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 mort-gages. 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 appearing for the Union of India, namely V. Narasimhachariar (supra) 135 at p. 141 and 144, a judgment of the learned single Judge where it is observed as follows in para 22:
The remedies of a mortgagor against the mortgagee who is acting in violation of the rights, duties and obligations are two-fold in character. The mortgagor can come to the Court before 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 (1859) 7 WR (Eng) 213 (249). 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 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.
18. Further reliance was placed on the decision of the Division Bench of this Court in Branch Manager, State Bank of India, Commercial Branch, Ongole v. Chinigepalli Lathangi wherein the Division Bench at paras 39, 40, 41 and 55 observed as hereunder:
From the aforesaid paper notification, it could be further seen that consequent upon such taking over of possession of the property by the Bank, the principal borrower and the guarantors, who are no other than defendants 1 to 4 in the suit, were informed by the Bank not to deal with the property in any manner whatsoever.
Further, a perusal of the impugned order would reveal that it was passed on 16th November 2004. The inevitable conclusion is that the impugned order of injunction was passed by the Court below much subsequent to the initiation of the proceedings under the Act by the Bank/Defendants 5 and 6, both under Section 13(2) and under Section 13(4) of the Act, whereby notice was issued to defendants 1 to 4 and consequently possession of the schedule property was also taken over by the Bank in accordance with the provisions of the Act.
In other words, as on the date of passing of the impugned order by the Court below, possession of the property in question had gone into the fold of the Bank/defendants 5 and 6, by statutory and necessary implication.
We have to remind ourselves the basic principle that in a suit for partition, when the plaintiffs allege and aver in the plaint that the property is the joint family property, the initial burden lies on the plaintiffs to establish that the property in question is the joint family property. Of course such burden may, in a given case, shall on to the defendants to establish the contra, depending upon the facts and circumstances. Also for the purpose of obtaining temporary injunction or any other incidental/interim order, primarily the plaintiffs have to (1) make out a prima facie case that the properly in question is the joint family property; (c) that they are also having a share in the property in question; (e) that they would suffer irreparable loss or injury in case injunction is not granted and that the defendants are likely to alienate or cause damage/waste to the property.
19. Strong reliance also was placed on the decision in Uttar Pradesh Financial Corporation v. Garlon Polyfeb Industries wherein the Division Bench of Allahabad High Court while dealing with Section 29 of State Financial Corporations Act in relation to recovery of loan amount, considering validity of the proceedings against guarantors of defaulting company observed that as the terms of guarantee stipulating that liability of guarantors shall arise on demand and no condition laid down that the financial Corporation shall first initiate proceedings to recover amount from hypothecated properties of company, the financial Corporation can straightway proceed to recover the amount from the guarantors before proceeding against company and order of injunction directing Financial Corporation to first proceed against Company under Section 29 may not be proper.
20. In S.D. College Society (Lahore) New Delhi v. Municipal Council, Ambala Cantt. 2002 (1) Punjab Law Reporter 329 it was observed that no temporary injunction can be granted to restrain an officer from exercising jurisdiction vested in him under some Act. It is also settled principle that temporary injunction not to be granted when lawful remedies are being pursued.
21. The object of the Act also may have to be kept in mind while deciding an application of this nature wherein the relief of temporary injunction had been prayed for. It is true that there may be certain cases where bona fide third parties may be affected. However, in the present case, the learned Judge recorded reasons in detail to the effect that respondents 1 and 2 are liable to pay total sum of Rs. 2,75,26,154/-as on the date of filing of the counter and in order to prevent the third respondent from recovering the said loan amounts, respondents 1 and 2 had created a false deed in relation to the plaint schedule property in favour of the present appellant. The hypothecation of the stock of respondents 1 and 2 also had been taken into consideration. The deposit of title deeds creating equitable mortgage over the property also had been considered. The fact that the first respondent had not chosen to file any counter and the second respondent remaining ex parte also had been recorded and the learned Judge ultimately came to the conclusion that the appellant herein, petitioner, is not having any prima facie or balance of convenience in his favour for granting equitable relief of injunction pending disposal of the suit.
22. In the light of the reasons, which had beep recorded by the learned Judge, this Court is satisfied that on facts this is not a case where prima facie case is established and it cannot also be said that balance of convenience is in favour of the appellant-petitioner. The specific bar imposed under Section 34 of the Act also may have to be taken into consideration. It may be that in certain cases, the suits may be maintainable, but however, while considering the aspect of prima facie case, balance of convenience the ingredients to be satisfied while dealing with an application for temporary injunction, this aspect also to be taken into consideration. Hence, on overall appreciation of all the facts of the case, this Court is thoroughly satisfied, especially, in the light of the provisions of the Act, the order impugned in the civil miscellaneous appeal cannot be said to be suffering from any legal infirmity warranting interference of this Court.
23. In the light of the same, the civil miscellaneous appeal being devoid of merit, the same shall stand dismissed. It is needless to say that the appellant-petitioner is at liberty to pursue his other remedies available to him in law if the appellant-petitioner is so advised. However, inasmuch as the appellant is putting forth a plea of tenancy, this Court directs the parties to bear their own costs.