Madhya Pradesh High Court
Indusind Bank Limited vs Smt. Sunita Gauli on 6 February, 2018
HIGH COURT OF MADHYA PRADESH, PRINCIPAL SEAT AT
JABALPUR
Case No. C.R.No.139/2012
Parties Name Indusind Bank Ltd. and another
Vs.
Smt. Sunita Gauli
Date of Judgment 06/02/18
Bench Constituted Justice Sujoy Paul
Judgment delivered by Justice Sujoy Paul .
Whether approved for reporting NO
Name of counsels for parties Applicant: Shri Rajesh Maindiretta, Adv.
Respondent No.1 : Shri Pranay Verma,
Advocate.
Respondent No.2 and 3 : None
Law laid down -
Significant paragraph numbers -
(ORDER)
(06.02.2018)
The interesting conundrum in this civil revision is relating to ousting of jurisdiction of civil court in the teeth of section 34 of The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 ( for short `the Act') in relation to the reliefs claimed by respondent No.1/ plaintiff .
2. Briefly stated, the relevant facts are that respondent No.1/ plaintiff filed a civil suit No.100-A/11 for declaration and permanent injunction. The respondent/ bank filed an application under Order 7 rule 11 CPC seeking dismissal of the suit being barred by section 34 of the Act. The court below rejected the said application by impugned order dated 23.2.2011.
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C.R No.139/20123. Shri Rajesh Maindiretta, learned counsel for the bank contended that the plaint averments and the relief clause of the plaint shows that the plaintiff is claiming certain reliefs which are hit by section 34 of the Act. If plaintiff is aggrieved by the action of the bank, as mentioned in para-4 of the plaint averments, she could have filed an appeal under section 17 of the Act. It is submitted that in view of judgment of Supreme Court in United Bank of India Vs. Satyawati Tondon and others-(2010)8 SCC 110, which is consistently followed, the expression "any person" in sub section 1 of section 17 is wide enough to include the respondent No.1/plaintiff.
4. Shri Maindiretta placed reliance on 2008(1) MPLJ-619 (Manoj Kumar Jain and another Vs. Corporation Bank and another to bolster his aforesaid contention. He submits that the definition of borrower mentioned in section 2(f) shows that any person who has been granted financial assistance by any bank is covered within the definition of borrower. The 'Security Interest' is defined in section 2(zf). The definition aforesaid is wide enough to include the instant loan transaction in which the property of plaintiff was mortgaged. Shri Maindiretta submits that all ancillary questions arising out of said loan transaction can be gone into by the competent tribunal.
5. The learned counsel for the bank also placed reliance on (2014) 1 SCC-479 (Jagdish Singh Vs. Heeralal and others) to contend that the Supreme court had an occasion to consider the impact of section 34 of the Act in relation to a civil suit claiming declaration of title. In the said case, the similar application of bank filed under Order 7 rule 11 CPC was allowed. The Indore Bench of this court turned down the said order of the trial court and this order of high Court could not sustain judicial scrutiny. It is submitted that the civil court has no jurisdiction to grant the relief claimed by the plaintiff. Lastly, reliance is placed on (2017)1 SCC-53 State Bank of Patiala Vs. Mukesh Jain and another.
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C.R No.139/20126. Per contra, Shri Pranay Verma, learned counsel for the plaintiff supported the impugned order. He submits that at this stage, the court below was required to see the plaint averments only. The plaint averments, on its face value must be treated to be correct at this stage. If plaint averments and the relief claimed are read out conjointly, it will be clear that the suit is not hit by section 34 of the Act. Attention is drawn on the expression "in respect of any matter which a tribunal or appellate tribunal is empowered by or under this Act to determine". It is urged that in view of the legislative mandate ingrained in section 34, the jurisdiction of civil court can be said to be barred only in relation to those matters for which tribunal or appellate tribunal is empowered to determine the interest. It is urged that in the present case, the tribunal is not competent to determine the claim of the plaintiff. The plaintiff has prayed for declaration of title and certain other reliefs which are not covered under section 34 of the Act.
7. To elaborate, reliance is placed by Shri Verma on (2004) 4 SCC- 311 (Mardia Chemicals Ltd. And others Vs. Union of India and others, (2009)8 SCC 646 (Nahar Industrial Enterprises Ltd. Vs. Hong Kong and Shanghai Banking Corporation and on the judgment of Bombay High Court in the case of State Bank of India Vs. Sagar Pramod Deshmukh and others-AIR 2011 Bombay-144. Attention of this court is drawn on these judgments wherein it was held that for declaration that creation of mortgage in respect of suit property or fraud, is not barred by section 34 of the Securitisation Act. Shri Verma also placed reliance on the judgments in the case of Sadanand Properties Pvt. Ltd and others Vs. Punjab National Bank and others-2015 SCC online Del-7179, Ashok kumar Raizada Vs. The Bank of Rajasthan and another-ILR (2014) 1 Delhi-356, Ram Prakash Mehra Vs. Union Bank of India and others-2011 Scc online Del-4542 and Ritu Gupta and another Vs. Usha Dhand and others -2013 Scc online Del-4628 and contended that in view of consistent view taken in this regard by various High Courts, it is
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C.R No.139/2012clear that the civil suit of present plaintiff is not barred by the provision of the Act. Hence, no interference is warranted on the order of the trial court.
8. No other point is pressed by learned counsel for the parties.
9. I have heard learned counsel for the parties at length and perused the record.
10. Before dealing with rival contentions advanced by the parties, it is apposite to refer relevant provisions of the Act. Relevant portion of Section 13 of the Act reads as under:-
"13.Enforcement of security interest.-- (4) 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 realising 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 realising 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 business of the borrower which is relatable to the security for 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
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borrower, to pay the secured creditor, so much of the money as is sufficient to pay the secured debt.
Section 34 of the Act reads as under:-
"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."
11. The Supreme Court considered the impact of Section 13 and 34 of the Act in the case of Mardia Chemicals Ltd. vs. Union of India reported in (2004) 4 SCC 311. In the said judgment, the Apex Court held that 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.
12. A Seven Judges Bench of Supreme Court in the case of Kamala Mills Ltd. vs. State of Bombay reported in AIR 1965 SC 1942 has considered the issue- under what circumstances a suit of civil nature can be held to be barred by special statute. It was held that for deciding the
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C.R No.139/2012issue, the Court is to be very cautious about the words used in the statutory provisions on which the plea is rested, the scheme of relevant provision, their object and purpose. The issue became more important when the bar is pleaded by necessary implication and it becomes pertinent to inquire as to whether remedy is normally associated with actions in Civil Courts are prescribed by the said institution or not.
13. The judgment of Mardia Chemicals (supra) was again considered in catena of judgments. In Jagdish Singh (supra), it was poignantly held that the opening portion of Section 34 clearly states that no civil court shall have the jurisdiction to entertain any suit or proceeding "in respect of any matter" which a DRT or an Appellate Tribunal is empowered by or under the Securitisation Act to determine. The expression "in respect of any matter" referred to in Section 34 would take in the "measures" provided under sub-section (4) of Section 13 of the Securitisation Act. Consequently, if any aggrieved person has got any grievance against any "measures" taken by the borrower under sub-section (4) of Section 13, the remedy open to him is to approach the DRT or the Appellate Tribunal and not the civil court. The civil court in such circumstances has no jurisdiction to entertain any suit or proceedings in respect of those matters which fall under sub-section (4) of Section 13 of the Securitisation Act because those matters fell within the jurisdiction of the DRT and the Appellate Tribunal. Further, Section 35 says, the Securitisation Act overrides other laws, if they are inconsistent with the provisions of that Act, which takes in Section 9 CPC as well.
14. Shri Pranay Verma, learned counsel has rightly pointed out that the expression used in Section 34 namely "in respect of any matter which a Tribunal or Appellate Tribunal is empowered by or under this act to determine" are very crucial and prescribes the real test. In view of this litmus test, it is to be seen whether in a case of this nature, Section 34 of the Act can be pressed into service and whether it can be held that the
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C.R No.139/2012suit is liable to be dismissed by entertaining the application filed under Order 7 Rule 11 of the CPC.
15. The contention of Shri Verma is based on Para 51 of the judgment of Mardia Chemicals (supra) wherein it was clarified that "to a very limited extent jurisdiction of Civil Court can also be invoked, where for example, the action of secured creditor is alleged to be fraudulent or their scheme may be so absurd and untenable, which may not require any probe whatsoever. Pertinently, this principle is applied by Delhi High Court in the case of Ritu Gupta, Ashok Kumar Raizada, Sadanand Properties Pvt. Ltd. And Ram Prakash Mehra (supra). In the case of Ritu Gupta (supra), the allegation of fraud made in the plaint averments were not disputed by the defendant-Bank and in this fact situation, it was held that suit was maintainable. In the instant case, no such admission is made by the secured creditor. In Ashok Kumar Raizada (supra), also the Court recorded that the plaintiff has admittedly nothing to do with defendant No.1 and 2 (Para 14). In Sadanand Properties (supra) also the principle laid down in Mardia Chemicals (supra) was applied where the claim of Bank was held to be so absurd and untenable, the jurisdiction of Civil Court cannot be excluded. In Ram Prakash Mehra (supra) also the same principle flowing from Mardia Chemicals (supra) were pressed into service. In Mardia Chemicals (supra), it was held that where claim is so absurd and untenable, which may not require any probe whatsoever, suit may be maintainable. In the instant case, the parties are at loggerheads on the factual aspects and there is no clinching material as per plaint averments and documents to establish that the respondent No.1/plaintiff has nothing to do with the transaction. Thus, the aforesaid judgments are distinguishable and are of no help to the plaintiff in the present case.
16. A Division Bench of this Court in 2008 (1) MPLJ 619 (Manoj Kumar Jain vs. Corporation-Bank) considered the similar question. In
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C.R No.139/2012the said case, the plaintiff filed the suit for declaration that they are the absolute owners in possession of the house situated at Gol Bazaar, Jabalpur. The Bank filed an application under Order 7 Rule 11 of the CPC by contending that the suit is not maintainable because of bar mentioned in Section 34 of the Act. The learned District Judge upheld the objection of Bank, allowed the application under Order 7 Rule 11 of the CPC and consequently dismissed the suit. The Division Bench after considering the judgment of Mardia Chemicals (supra) and M/s. Transcore vs. Union of India AIR 2007 SC 172 opined that Section 34 is normally attracted. Resultantly, the appeal was dismissed and order passed under Order 7 Rule 11 of the CPC was affirmed.
17. In the case of Jagdish Singh (supra), the plaintiffs filed a suit for declaration of title. The similar objection of Bank on the basis of Section 13 & 34 of the Act was entertained and suit was dismissed. In FA. No.130/08, the Indore Bench of this Court turned down the said order of Court below. After considering the scheme and object of the Act, the Apex Court opined that Civil Court's jurisdiction is clearly barred. Thus, in view of judgment of Division Bench of this Court in Manoj Kumar Jain (supra) and the judgment of Jagdish Singh (supra), it can be safely concluded that the Court below has erred in rejecting the application of the Bank preferred under Order 7 Rule 11 of the CPC. A combined reading of plaint averments and reliefs claimed shows that suit is barred by Section 34 of the Act. The Tribunal has exclusive jurisdiction to decide the aforesaid aspect. In this view of the matter, the impugned order dated 23-02-2012 has become vulnerable. The said order is set aside. In the result, suit filed by the plaintiff is dismissed.
18. The revision is allowed. No cost.
(Sujoy Paul) Judge /MKL/mohsin Digitally signed by MOHAMMED MOHSIN QURESHI Date: 2018.02.06 21:14:31 -08'00'