Karnataka High Court
Union Bank Of India vs Sri Darshan S/O Deepak Telsang on 12 December, 2024
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NC: 2024:KHC-D:18149
CRP No. 100033 of 2024
IN THE HIGH COURT OF KARNATAKA, DHARWAD BENCH
DATED THIS THE 12TH DAY OF DECEMBER, 2024
BEFORE
THE HON'BLE SMT. JUSTICE LALITHA KANNEGANTI
CIVIL REVISION PETITION NO.100033 OF 2024
BETWEEN:
1. UNION BANK OF INDIA,
THE CHIEF MANAGER/AUTHORIZED OFFICER,
REGIONAL OFFICE, 1049, B2 KHANAPUR ROAD,
RANADE COLONY HINDWADI BELAGAVI-590 011,
NAMELY SURESH DAMODAR PAI,
AGE: 59 YEARS, OCC: CHIEF MANAGER/AO.
2. UNION BANK OF INDIA,
THE BRANCH MANAGER,
BASAVAN GALLI, SHAHPUR,
BELAGAVI-590 003.
... PETITIONERS
(BY SRI. GIRISH S. HULMANI, ADVOCATE)
AND:
SRI. DARSHAN S/O DEEPAK TELSANG,
AGE: 17 YEARS, OCC: STUDENT,
Digitally signed
by V N BADIGER
Location: HIGH
VN COURT OF
KARNATAKA
SINCE MINOR REPRESENT BY HIS
BADIGER DHARWAD
GUARDIAN MOTHER SMT. SHILPA
BENCH
Date: 2024.12.20
12:25:29 +0530
W/O DEEPAK, TELSANG,
R/O: H.NO.188/B ADAVI GALLI,
ALARWAD, TQ: DIST: BELAGAVI,
PIN CODE-590 007.
... RESPONDENT
(BY SRI. VEERESG SAJJAN, ADVOCATE FOR
SRI. D.M. KULKARNI, ADVOCATE)
THIS CRP IS FILED UNDER SEC.115 OF CPC, 1908,
PRAYING TO SET ASIDE THE ORDER DATED 20.11.2023
PASSED ON IA NO.III IN O.S.NO.232/2023 ON THE FILE OF
HON'BLE III ADDL. CIVIL JUDGE AND JMFC, BELAGAVI VIDE
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NC: 2024:KHC-D:18149
CRP No. 100033 of 2024
ANNEXURE-E FILED BY THE PETITIONER/DFDNT NO.1 AND 2 BY
ALLOWING THE SAID IA AND CONSEQUENTLY DISMISS THE
SUIT BY REJECTING THE PLAINT FILED BY THE RESP
NO.1/PLAINTIFF AND COST OF THIS PETITION BE AWARDED.
THIS PETITION IS COMING ON FOR HEARING, THIS DAY,
THE COURT MADE THE FOLLOWING:
CORAM: THE HON'BLE SMT. JUSTICE LALITHA KANNEGANTI
ORAL ORDER
The present revision petition is filed aggrieved by the order dated 20.11.2023 passed on I.A. No.3 in O.S. No.232/2023 by the III Additional Civil Judge and JMFC, Belagavi, whereby the Trial Court has dismissed the application filed by the petitioners-Bank under Order VII Rule 11(d) of the Code of Civil Procedure, 1908, seeking rejection of the plaint.
2. The facts of the case are that, the respondent herein, who is the plaintiff, had filed the suit seeking permanent injunction. It is the case of the plaintiff that he purchased the suit schedule property as a co-owner along with his uncle, and the suit property was purchased under the registered sale deed dated 23.08.2016 before the Sub- Registrar, and his name is also mutated. It is stated that his -3- NC: 2024:KHC-D:18149 CRP No. 100033 of 2024 uncle had applied for loan and borrowed loan of Rs.30,00,000/- and he has also informed the plaintiff's father that, he is paying the loan regularly into the loan account and there is no default in payment of loan. The plaintiff saw a paper publication in 'Times of India' published on 19.05.2022, in respect of the suit property regarding demand notice. It is stated that the plaintiff is not the borrower of the loan and he will not come within the definition of 'borrower of the Bank' and the loan transaction is between the Bank and his uncle. Accordingly, the plaintiff has come up with the present suit seeking injunction restraining the Bank from obstructing and illegally dispossessing him from the suit property. In the said suit, the Bank filed the present application seeking rejection of the plaint stating that the proceedings under the provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short 'the SARFAESI Act') were already initiated, and in view of the bar under the SARFAESI Act, the civil Court has no jurisdiction to entertain the suit. The said application came to be dismissed by the Trial Court wherein it was observed that, in this case, -4- NC: 2024:KHC-D:18149 CRP No. 100033 of 2024 the plaintiff is not the borrower of the Bank, he is the joint owner of the suit property along with his uncle. The Court has observed that the suit property is secured to the Bank for the loan obtained by his uncle and the Bank has initiated proceedings before the Debt Recovery Tribunal against him, and in those circumstances, the plaintiff cannot file any of his claim before the Debt Recovery Tribunal. The Court has observed that the Debt Recovery Tribunal has power only to entertain and decide the applications from the Banks and Financial Institution for recovery of debts due to such Banks and Financial Institutions, and therefore, the Debt Recovery Tribunal has no power to decide the liability of the plaintiff and the plaintiff has no right to appear before the Tribunal and seek for any relief, and the suit is maintainable before the Court and rejected the application. Aggrieved thereby, the defendant-Bank is before this Court.
3. Learned counsel appearing for the petitioner-Bank submits that the uncle of the plaintiff had entered into an agreement to purchase the property on 09.02.2016. Thereafter, basing on the said agreement entered into by the -5- NC: 2024:KHC-D:18149 CRP No. 100033 of 2024 plaintiff's uncle and the purchaser, they have sanctioned the loan in the month of July and August 2016. Thereafter, when the sale deed is executed on 23.08.2016, the name of the plaintiff was shown as the co-owner. As there is an exemption to the Bank Officers from appearing before the Sub-Registrar, they were not aware of the same and a mortgage was created on the same date i.e. on 23.08.2016. It is stated that when the loan account was declared as NPA, proceedings under Section 32 of the SARFAESI Act were initiated, and immediately the present suit is filed. He submits that the suit is not maintainable before the Civil Court in view of the bar under the provisions of the SARFAESI Act. Further, it is submitted that the plaintiff is not alleging any fraud or any other thing and in the light of the law laid down by the Hon'ble Apex Court in Mardia Chemicals Ltd. And Ors. Vs. Union of India and Ors.1, the Civil Court has no jurisdiction to entertain the suit. He submits that all these aspects were not considered by the Trial Court. Learned counsel has relied on the judgment of the Apex Court in the 1 (2004) 4 SCC 311 -6- NC: 2024:KHC-D:18149 CRP No. 100033 of 2024 case of State Bank of Patiala Vs. Mukesh Jain and Ors.2, particularly paragraphs 22, 23 and 24, which read thus:
"22. In the instant case, we are concerned with the challenge to the proceedings initiated under Section 13 of the Act. There is a specific provision in the Act to the effect that the proceedings initiated under the Act cannot be challenged before a civil court because the civil court has no jurisdiction to entertain any matter arising under the Act and in that event, the debtor concerned has to approach the Tribunal under the provisions of Section 17 of the Act.
23. Thus, the Tribunal would be exercising its appellate jurisdiction when the action initiated under the provisions of Section 13 of the Act is challenged before the Tribunal. There is a difference between the Tribunal's original jurisdiction under the provisions of the DRT Act and the appellate jurisdiction under the Act.
24. The issue with regard to availability of a forum for challenging the action under the provisions of the Act had been dealt with by this Court in the case of Mardia Chemicals Ltd. (supra). This Court, in the said case, unequivocally held that the aggrieved debtor can never be without any remedy and we firmly believe that the legislature would normally not leave a person without any remedy when a harsh action against him is initiated under the provisions of the Act."
He has also relied on the judgment of the Apex Court in the case of Sree Anandhakumar Mills Ltd Vs. Indian Overseas Bank and Ors.3, on paragraphs 6 and 7, which read thus: 2
AIR 2016 SC 5140 3 (2019) 14 SCC 788 -7- NC: 2024:KHC-D:18149 CRP No. 100033 of 2024 "6. We also make it clear that if the second respondent approaches the jurisdictional Debts Recovery Tribunal within a period of 45 days from today the said application will be entertained and adjudicated on merits. We make it clear that we have expressed no opinion on the merits of the rival contentions of the parties which we leave open for adjudication by the learned Debts Recovery Tribunal.
7. Consequently OS No. 1243 of 2009 and OS No. 106 of 2009 filed by the second respondent shall stand closed with liberty to the second respondent as above. The order of the High Court is set aside subject to above conditions and the appeals are allowed. The deposit of Rs 5 crores (Rupees five crores) made in the Registry of this Court in terms of the order of this Court dated 28th September, 2012 along with interest, if any, shall be returned to the second respondent forthwith on proper identification. The appeals as also all pending applications are disposed of in terms of the above"
He also relied on the judgment of the Apex Court in the case of Jagadish Singh Vs. Heeralal and Ors.4 He relied on paragraphs 16, 17 and 18 which read thus:
"16. Any person aggrieved by any order made by the DRT under Section 17 may also prefer an appeal to the Appellate Tribunal under Section 18 of the Act.
17. The expression 'any person' used in Section 17 is of wide import and takes within its fold not only the borrower but also the guarantor or any other person who may be affected by action taken under Section 13(4) of the Securitisation Act.4
AIR 2014 SC 371 -8- NC: 2024:KHC-D:18149 CRP No. 100033 of 2024 Reference may be made to the judgment of this Court in Satyawati Tondon's case (supra).
18. Therefore, the expression 'any person' referred to in Section 17 would take in the plaintiffs in the suit as well. Therefore, irrespective of the question whether the civil suit is maintainable or not, under the Securitisation Act itself, a remedy is provided to such persons so that they can invoke the provisions of Section 17 of the Securitisation Act, in case the Bank (secured creditor) adopt any measure including the sale of the secured assets, on which the plaintiffs claim interest."
Relying on the above judgments, learned counsel submits that the expression " any person" used in Section 17 of the SARFAESI Act would take into its fold not only the borrower but also the guarantor or any other person who will be affected by the action of the bank.
4. Learned counsel appearing for the respondent submits that the respondent is co-owner of the property, but he is not borrower and he has no relationship with the Bank, he has not obtained any loan from the Bank. In that case, the bar to approach the Civil Court will not arise in case of the respondent as he is not a borrower. The Trial Court has rightly considered all these aspects and dismissed the application. Learned counsel has relied on the judgment of -9- NC: 2024:KHC-D:18149 CRP No. 100033 of 2024 the Apex Court in Bank of Rajasthan Ltd. Vs. VCK Shares & Stock Broking Services Ltd.5. He has relied on paragraph 50 which read thus:
"We must also notice an important aspect that even where a defendant is to invoke the jurisdiction of the DRT by filing a counterclaim, the bank has a right to seek a relegation of that claim to the Civil Court and the DRT has been empowered to do so, albeit, at the final adjudication stage. This is so in view of the summary nature of remedy provided before the DRT and thus, if certain inquiries beyond the contours of what the DRT does are envisaged, a Civil Court remedy may be considered as appropriate."
He has also relied on the judgment of the High Court of Madras in the case of Arasa Kumar and Another vs. Nallammal and others6, on paragraph 30 which reads thus:
"30. Section 9, C.P.C. and bar of jurisdiction created under relevant Sections in respect of the Co- operative Societies Act, Arbitration and Conciliation Act, 1996 and also Section 29 of the Recovery of Debts due to Banks and Financial Institutions Act, 1993 and under Rule 40 of the Income Tax (Certificate Proceedings) Rules, 1962 an also the bar under the Tamil Nadu Hindu Religious and Charitable Endowments Act, 1959 were all considered by this Court and the Apex Court as referred supra and now, it is manifestly clear that the power under Section 34 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act is not absolute and the same is subject to certain restrictions, they are:5
Civil Appeal No.8972-8973 of 2014, dated 10.11.2022 6 2004(4) CTC 261
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NC: 2024:KHC-D:18149 CRP No. 100033 of 2024 (1) that the parties, who filed the suit must be a party to the liabilities created in favour of the secured creditor, (2) the disputes between the parties could be resolved under the provisions of the Act itself, (3) that if the claim made by the parties is outside the jurisdiction of the Debts Recovery Tribunal or the appellate tribunal or any action taken or to be taken under this Act and also under the Recovery of Debt due to Banks and Financial Institutions Act, 1993 and the dispute raised by the parties can not be adjudicated by any of the tribunal or authority, created under the act or under any other Act, the right of the parties to approach the Civil Court for appropriate relief cannot be deprived and taken away."
Relying on these judgments, learned counsel submits that the jurisdiction of the Civil Court is not ousted and in this particular facts and circumstances, the civil Court has jurisdiction to decide the issue as the issue is with regard to title of the property and the entitlement of the plaintiff. It is submitted that the Trial Court has rightly considered all these aspects and has rejected the application filed under Order VII Rule 11 of CPC.
5. Having heard the learned counsel on either side, perused the material on record.
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NC: 2024:KHC-D:18149 CRP No. 100033 of 2024
6. There is no dispute about the fact that the loan of Rs.29,00,000/- and odd was granted by the Bank and initially, an agreement was entered into by the uncle of the plaintiff with the purchaser and basing on that, the loan was sanctioned. It is also an admitted fact that in the sale deed, the names of the uncle as well as the plaintiff, who is the brother's son of the original applicant, are shown. The sale consideration in the registered sale deed shows that, initially, the uncle of the plaintiff had entered into an agreement and has paid an amount of Rs.7,50,000/- and thereafter, a sum of Rs.29,00,000/- and odd, what has been given as loan by the Bank was handed over to the owner of the property. Basing on that the sale deed was executed. The entire sale deed does not refer to what is the amount that is paid by the plaintiff. Now, the only ground that is taken by the plaintiff is that he is not a borrower and as such, the civil Court has got jurisdiction to entertain the suit. The mortgage was in the year 2016. The SARFAESI proceedings were initiated in the year 2022. The 90% of the sale consideration is the loan that is granted by the Bank. It is a clear case where just to get
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NC: 2024:KHC-D:18149 CRP No. 100033 of 2024 over the SARFAESI proceedings and taking advantage of the fact that the plaintiff is a joint owner, these proceedings are initiated before the Civil Court. The judgment of the Apex Court in the case of Jagadish Singh referred to supra has clearly interpreted considering the judgment in United Bank of India Vs. Satyavati Tondon and Ors.7, who is an aggrieved party or any person used in Section 17 of the SARFAESI Act and it includes not only the borrower, but any person who is affected by the proceedings that are initiated by the Bank under the SARFAESI Act. There is absolutely no bar for the plaintiff to approach the Tribunal if there is a cause of action for him. The whole purpose of establishing these Tribunals and the purpose of incorporating particular sections which ousts the jurisdiction of the Civil Court is to see that the money lent by the financial institution is secured and the process of recovery becomes fast. The Hon'ble Apex Court in Mardia Chemicals case referred supra has laid down the law, when the Civil Court has jurisdiction to entertain the suit where fraud is alleged. Here, it is not a case of fraud. In the 7 (2010)8 SCC 110
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NC: 2024:KHC-D:18149 CRP No. 100033 of 2024 light of the above discussion, the Civil Court has no jurisdiction and the party has to necessarily go before the Tribunal. In those circumstances, this Court is of the considered opinion that the Trial Court has failed to consider the application filed by the petitioner-Bank under Order VII Rule 11. Accordingly, this Court is passing the following:
ORDER
i) The impugned order dated 20.11.2023 passed on I.A. No.III in O.S. No.232/2023 by the III Additional Civil Judge & JMFC, Belagavi, is hereby set aside. Consequently, I.A. No.III is allowed and the plaint is rejected.
ii) Accordingly, civil revision petition is allowed.
iii) All pending I.As., in this petition shall stand closed.
Sd/-
JUSTICE LALITHA KANNEGANTI KMS CT:BCK LIST NO.: 1 SL NO.: 75