Delhi District Court
Mahesh Chand Nagar & Another vs Icici Bank Limited on 24 March, 2022
1
IN THE COURT OF HEM RAJ
ADJ-08 : Central : Room No. 152 : THC : DELHI
Suit No. 3210/2017
In the matter of:
Mahesh Chand Nagar & Another ..............Plaintiffs
Vs.
ICICI Bank Limited . ...........Defendant
ORDER
1. This order intends to dispose of an application under Section 34 of SARFAESI Act, 2002 read with Section 151 CPC of the defendant claiming that this court has no jurisdiction to try and entertain the present suit.
2. The defendant in the application states that the plaintiffs have availed the home/top up loan facility from the defendant bank thrice under three different loan accounts at the floating rate of interest against the mortgage of property/plot No. 6/132, Sector-2, Rajendra Nagar, Sahibabad, Block-6, Ghaziabad-201012. The statement of account dated 12.02.2018, shows that the tenure of each loan was CS No. 3210/2017 Page No. 1 of 11 2 increased over the period of time. The account was declared as NPA. A notice under Section 13 (2) of the SARFAESI Act, 2002 got served upon the defendant to repay the entire loan amount, but to no avail. Instead the plaintiff has instituted the present suit. The defendant further stated that as per Section 17 of the SARFAESI Act, 2002 only the Debt Recovery Tribunal has the jurisdiction to entertain and try the grievance in respect of any objection raised with regard to the said notice similarly the appeal also lies before DRT. Section 34 of the SARFAESI Act, further bars the jurisdiction of the civil court. Hence, the present application.
3. On the other hand, the plaintiffs have stated that provisions of Section 34 of SARFAESI Act, 2002 are not applicable and defendant has filed the instant application just to delay the proceedings in the suit. Further, the plaintiffs have paid more than the required amount to the defendant bank. The suit filed by the plaintiffs is well maintainable before this Court. Hence, the application of defendant bank is liable to be dismissed with exemplary costs.
4. I have heard the arguments advanced by the Ld counsel for the parties.
5. Ld counsel for the defendant has relied upon the judgment of Mardia Chemicals Ltd. and others v. Union of India CS No. 3210/2017 Page No. 2 of 11 3 and others, AIR 2004 SC 237 and Bank of Baroda vs Gopal Shriram Panda, 2021 SCC Online Bom 466.
6. Ld counsel of the plaintiff has relied upon the judgment of (i) Sushma Suri & Another Vs. Maha Medha Urban Co- Operative Bank Ltd. & Another, 185 (2011) DLT 307 DB, (ii) Ritu Gupta & Another Vs. Usha Dhand & Others, CS (OS) 188 of 2011, decided by the Hon'ble Delhi High Court on 19.11.2013 and (iii) Mardia Chemicals & Others Vs. Union of India & Others, AIR 2004 SC 237.
7. It is not under dispute that Section 34 of SARFAESI Act bars the jurisdiction of the civil court. Section 34 of SARFAESI Act reads as under:-
"Section 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 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)"
8. However, in the Judgment Mardia Chemicals Ltd. and others v. Union of India and others, AIR 2004 SC 237 in Para-51, the Hon'ble Supreme Court held that for a limited extent the jurisdiction of the civil court can also be invoked. The relevant CS No. 3210/2017 Page No. 3 of 11 4 observations in para-51 of the said Judgment are reproduced as under:-
"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 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 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 appearing for the Union of India, namely V.Narasimhachariar (supra) p.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 twofold 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 (Z49). 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. (See Rashbehary Ghose Law of Mortgages, Vol.II, Fourth Edn., page 784)."
9. In the judgment of Gopal Shriram Panda, (supra) the Hon'ble Division Bench of the Bombay High Court dealt with the question of the jurisdiction of Civil Court in view of Section 34 of the SARFAESI Act, 2002. The Hon'ble High Court discussed the earlier judgment of the Hon'ble Supreme Court given in the judgment of Mardia Chemicals Ltd. (supra) and held that jurisdiction of Debt Re- covery Tribunal to decide all matters under Sections 13 & 17 of the CS No. 3210/2017 Page No. 4 of 11 5 SARFAESI Act, 2002 are exclusive. It further held that any plea raised by the borrower or the guarantor under the SARFAESI Act, 2002 will have to be determined by the Debt Recovery Tribunal. It was further held that jurisdiction of the Civil Court to decide all the matters of civil nature exclusively under Section 13 & 17 SARFAESI Act, 2002 is not barred by Section 434 of the SARFAESI Act, 2002. It further held that civil rights of persons other than the borrower or guarantor are involving the Court would not bar the jurisdiction and that too when it is prima-facie apparent from the face of the record that the re- lief claimed cannot be decided by the the Debt Recovery Tribunal Un- der Section 17 of the DRT Act read with Sections 13 & 17 of the SARFAESI Act, 2002. It was further held that Civil Courts have the jurisdiction when the enforcement of a secured interest involves the is- sues as contained in Mardia Chemicals Ltd. (supra). The relevant ob- servations of the Hon'ble High Court are reproduced herein as under
for the sake of benefit:-
"27. In view of what we have discussed above, our considered opinion to the question as referred to is as under:-- Question:
"Whether the jurisdiction of a Civil Court to decide all the matters of civil nature, excluding those to be tried by the Debts Recovery Tri- bunal under Section 17 of the Securitisation Act, in relation to en- forcement of security interest of a secured creditor, is barred by Sec- tion 34 of the Securitisation Act?
Answer:
The answer, looking to the nature of the question, in our view, is in parts:--
(A) Jurisdiction of the Debts Recovery Tribunal to decide all matters relating to Sections 13 and 17 of the SARFAESI Act, is exclusive. (B) In all cases, where the title to the property, in respect of which a 'security interest', has been created in favour of the Bank or Finan-
cial Institution, stands in the name of the borrower and/or guaran- tor, and the borrower has availed the financial assistance, it would be only the DRT which would have exclusive jurisdiction to try such CS No. 3210/2017 Page No. 5 of 11 6 matters, to the total exclusion of the Civil Court. Any pleas as raised by the borrowers or guarantors, vis-a-vis the security interest, will have to be determined by the DRT.
(C) The jurisdiction of the Civil Court to decide all the matters of civil nature, excluding those to be tried by the Debts Recovery Tri- bunal under Sections 13 and 17 of the SARFAESI Act, in relation to enforcement of security interest of a secured creditor, is not barred by Section 34 of the SARFAESI Act.
(D) Where civil rights of persons other than the borrower(s) or guarantor (s) are involved, the Civil Court would have jurisdiction, that too, when it is prima facie apparent from the face of record that the relief claimed, is incapable of being decided by the DRT, under Section 17 of the DRT Act, 1993 read with Sections 13 and 17 of the SARFAESI Act.
(E) Even in cases where the enforcement of a security interest in- volves issues as indicated in Mardia Chemicals (supra) of fraud as established within the parameters laid down in A. Ayyasamy (supra); a claim of discharge by a guarantor under Sections 133 and 135 of the Contract Act [Mardia Chemicals (supra)]; a claim of dis- charge by a guarantor under Sections 139, 142 and 143 of the Con- tract Act; Marshaling under Section 56 of the Transfer of property Act [J.P. Builders (supra)]; the Civil Court shall have jurisdiction. (F) Examples as indicated in para 22.3, are illustrative of the Civil Court's jurisdiction.
(G) The principles laid down in para 33 (i) to (ix) of Sagar Pramod Deshmukh (supra) are in accordance with what we have discussed and held above.
10. From the aforesaid observations of the Hon'ble Supreme Court in Mardia Chemicals Ltd. (supra) and Gopal Shriram Panda, (supra) of the Hon'ble Bombay High Court, it is clear that a Civil Court can have the jurisdiction pertaining to the enforcement of a se- cured interest and the same is not barred under Section 34 of the SAR- FAESI Act, 2002, but in certain eventualities.
11. Let us see, if, in view of the aforesaid pronouncements if the plaintiff has been able to make out a case to confer the jurisdiction upon this Court. In the plaint, the plaintiff has stated that the defendant has forged and fabricated the schedule of re-payment and increased CS No. 3210/2017 Page No. 6 of 11 7 the re-payment schedule and also increased the equated monthly installments. The said act was done by the defendant bank three times. Apart from this averment, the plaintiff has not mentioned any other averment regarding the fraud committed on the part of defendant. The only averment regarding the alleged fraud and fabrication is that the defendant bank has forged and fabricated the schedule of re-payment and to have committed mischief with the plaintiff. The plaintiff has submitted that the defendant bank has segregated the amount towards the principle and interest which is in the contravention of the agreement between the parties. The plaintiff has further stated that a rank formula/calculation has been adopted by the defendant which amounts to a fraud. The plaintiff has further averred that the bank has been over-charging the interest by its own formula which is illegal.
12. On the other hand, Ld. Counsel for the defendant has argued that the plaintiff had availed the loan at the floating rate of interest which resulted into merger of the re-payment schedule being changed and further the same has increased the equated monthly installments of the plaintiff. Ld. Counsel for the defendant has pointed out towards the loan agreements. Ld. Counsel has pointed out that as per clause (D) of Schedule-B it was agreed between the parties that there shall be a amortization of the loan and sub-clause (a) clearly provides that the number of EMIs is likely to vary. Clause (E) of the Schedule-B of the loan agreement talks about the interest which clearly shows that the interest was agreed to be paid at the floating rate CS No. 3210/2017 Page No. 7 of 11 8 and not on the static rate of interest, therefore, the increase in the number of EMIs was due to the said reason. Therefore, it is clear that the plaintiff has not been able to make out as a case, as discussed in the judgment of Mardia Chemicals Ltd. (supra) and Gopal Shriram Panda, (supra). The plaintiff has been unable to show on record that the action of the defendant i.e. secured creditor is fraudulent or the claim of the bank is absurd and so untenable which does not require any probe. In the case of Gopal Shriram Panda (supra) it was clearly held that all the questions under Section 13 & 17 of the SARFAESI Act, 2002 with relation to enforcement of a secured credit has to be seen by the Debt Recovery Tribunal. It is the plea of the plaintiff viz- a-viz the secured interest and the same can only be determined by the Debt Recovery Tribunal and not by a Civil Court. Moreover, the plaintiff has not been able to show on record as to how any fraud has been committed.
13. The next question which arises is whether the plaintiff has made sufficient averments pertaining to the fraud in the plaint or not. Order 6 Rule 4 of CPC requires that in case of mis-representation, fraud, breach of trust, willful default or undue influence and in all other cases in which particulars may be necessary, shall be stated in the pleadings. It is well settled principle of law that a party pleading fraud must set up the particulars of fraud and in the absence of such particulars it could not be said that the fraud has been pleaded.
CS No. 3210/2017 Page No. 8 of 11 914. In the case of H.S. Goutham v. Rama Murthy, (2021) 5 SCC 241, the Hon'ble Supreme Court held as under:
"36. As per the settled principle of law, when the fraud is alleged the same is required to be pleaded and established by leading evidence. Mere allegation that there was a fraud is not sufficient.........."
15. Further in the case of Union of India v. K.C. Sharma & Co., (2020) 15 SCC 209 it was held as under:-
"20. Though the learned Additional Solicitor General appearing for the appellants has relied on several judgments in support of her plea that as the judgment and decree was obtained by fraud same is a nullity and vitiated, but in a given case whether such decree was obtained by fraud or not, is a matter which is to be judged with reference to pleadings and the evidence on record. When the judgment and decree is assailed only on the ground that lease was created in collusion with the ex-Pradhan, as the same is contrary to evidence, the only plea of the respondents was rightly not accepted by the High Court. As at every stage the proceedings for grant of lease were approved by the competent authority/Deputy Director, Panchayat, as such it cannot be said that the respondents have obtained lease in collusion with ex-Pradhan of the Panchayat. Except such a vague plea, there were no particulars how the fraud was played. It is fairly well settled that fraud has to be pleaded and proved. More so, when a judgment and decree passed earlier by the competent court is questioned, it is necessary to plead alleged fraud by necessary particulars and same has to be proved by cogent evidence. There cannot be any inference contrary to record. As the evidence on record discloses that fraud, as pleaded, was not established, in absence of any necessary pleading giving particulars of fraud, we are of the view that no case is made out to interfere with the well- reasoned judgment of the High Court. The case law in this regard submitted by the learned ASG for the appellants would not render any assistance to support their plea. Further cases referred in Associated Hotels [Associated Hotels of India Ltd. v. R.N. Kapoor, (1960) 1 SCR 368 : AIR 1959 SC 1262] and C.M. Beena [C.M. Beena v. P.N. Ramachandra Rao, (2004) 3 SCC 595] also will not come to the rescue of the case of the appellants in any manner."CS No. 3210/2017 Page No. 9 of 11 10
16. In view of the settled law, let us see if the plaintiffs have pleaded the fraud with material particulars or not. The averments in the plaint shows that the plaintiffs have pleaded specifically that the defendant bank has acted contrary to the agreed terms and overcharged the EMIs by bifurcating principal and interest amount. There are no specific particulars of fraud. Fraud has to be pleaded. Mere allegations of fraud are not sufficient. Hence, I am of the opinion that the plaintiff has not been able to make out a case that this Court has the jurisdiction to try and entertain the present suit.
17. I have also gone through the judgments filed by the plaintiff in this regard. The plaintiff has also relied upon the judgment of Mardia Chemicals Ltd. (supra) and further the judgments in cases of (i) Sushma Suri (supra) and (ii) Ritu Gupta (supra), I have already discussed the judgment of Mardia Chemicals Ltd. (supra). The judgments of (i) Sushma Suri (supra) and (ii) Ritu Gupta (supra), are not applicable to the case of the plaintiff as they are distinguishable on the facts. They do not support the case of the plaintiff.
18. Accordingly, in view of the aforesaid discussions, this Court is of the considered opinion, that this Court has no jurisdiction to try and entertain the present suit, in view of Section 34 of the SARFAESI Act, 2002. Accordingly, the suit of the plaintiff is rejected under Order 7 Rule 11 (d) CPC.
CS No. 3210/2017 Page No. 10 of 11 1119. Decree sheet be prepared accordingly.
20. File be consigned to Record Room after necessary compliance.
HEM Digitally signed
by HEM RAJ
Date: 2022.03.24
RAJ 16:47:55 +0530
Pronounced in the open Court (HEM RAJ)
on 24th March, 2022 Additional District Judge-08
Central District : Tis Hazari Courts
Delhi.
CS No. 3210/2017 Page No. 11 of 11