Calcutta High Court (Appellete Side)
Kaaiser Oils Private Limited & Ors vs Allahabad Bank & Ors on 30 August, 2017
Author: Jyotirmay Bhattacharya
Bench: Jyotirmay Bhattacharya
HIGH COURT AT CALCUTTA
Civil Appellate Jurisdiction
Appellate Side
Present:
The Hon'ble Justice Jyotirmay Bhattacharya
AND
The Hon'ble Justice Shivakant Prasad
F.A.T. 166 of 2017
with
CAN 2763 of 2017
with
F.M.A. 648 of 2017
With
CAN 2764 of 2017
with
CAN 4475 of 2017
Kaaiser Oils Private Limited & Ors.
-versus-
Allahabad Bank & Ors.
For the Appellants : Mr. Abhrajit Mitra, Sr. Advocate
Mr. Anirudho Mitra,
Mr. Satadeep Bhattacharyya,
Ms. Saamidheni Das,
Mr. Rajesh Upadhyay.
For the Respondent : Mr. Joy Saha,
Mr. Om Narayan Rai.
Heard On : 18th August, 2017 & 30th August, 2017.
Judgement On : 30th August, 2017.
Jyotirmay Bhattacharya, J.
Two appeals were filed by the plaintiffs/appellants against the bank/defendant/respondent. One of such appeals being FAT 166 of 2017 is directed against an order being no. 14 dated 28th February, 2017 passed by the learned Civil Judge, Senior Division, 2nd Additional Court at Burdwan, in Title Suit No. 19 of 2016; by which the suit was dismissed partially as the part of the relief claimed in the suit was found to be not maintainable due to the bar under Section 34 of the SARFAESI Act. The said order was passed on an application taken out by the defendant bank under Order 7 Rule 11 of the Civil Procedure Code. The learned Trial Judge while holding that the suit is not partially maintainable held that the relief which the plaintiffs have claimed for damages and/or compensation for the wrong or misdeed on the part of the bank is maintainable. As such, the suit was kept pending for consideration for that part of the relief claimed by the plaintiff in the said suit.
The other appeal being FMA 648 of 2017 is directed against an order being no. 13 dated 28th February, 2017 passed by the learned Civil Judge, Senior Division, 2nd Court at Burdwan, in the very same Title Suit being Title Suit No. 19 of 2016. By the impugned order, the application for temporary injunction which was filed by the plaintiffs/appellants was rejected on contest. The plaintiffs felt aggrieved. Hence, the plaintiffs/appellants have filed this First Miscellaneous Appeal.
Since the fate of the First Miscellaneous Appeal is dependent on the fate of the aforesaid regular First Appeal, this Court heard both the appeals and has decided to dispose of both the appeals simultaneously one after another. Re: F.A.T No 166 of 2017 Let us first of all consider the merit of the First Appeal in the facts of the present case.
The plaintiffs approached the defendant bank for a loan. Loan was sanctioned. Subsequently, the plaintiffs again approached the said bank for restructuring loan account. The defendant/bank agreed to enhance the loan limit as per the revised proposal of the plaintiffs/appellants partially and also allowed the plaintiffs/appellants to raise further loan from a consortium bank. While the plaintiffs tried to get loan from the other consortium bank, the other consortium bank refused to give loan to the plaintiffs/appellants as the defendant bank declared the account of the plaintiffs/appellants company as 'Sub-standard Account. Problem started from this juncture between the parties.
Initially the plaintiffs filed a writ petition before this Court praying for the following reliefs :
(a) A writ of certiorari quashing and/or setting aside the restructuring made by the respondent bank in May, 2012 dehors the banking norms stipulated by the Reserve Bank of India vide its Master Circular being prudential norms on income recognition, asset classification and provision pertaining to advances dated July 02, 2012 and general guidelines on Sick Micro and Small Enterprises dated November 1, 2012.
(b) A writ of or in the nature of mandamus do issue commanding the respondent bank, their men, agents and assigns :-
i) to act in accordance with law,
ii) to forthwith rescind and/or withdraw and/or cancel the
restructuring dated May 11, 2013.
(c) A writ of or in the nature of mandamus do issue declaring that the respondent's conduct of reporting the petitioner company's account as 'Sub-
standard' to CIBIL database while maintaining in their books as 'Standard' and restructuring the same dehors the RBI Master Circular dated July 2, 2012 and the general guidelines for rehabilitation of Micro and Small Enterprises dated November 1, 2012 is malafide, illegal, null and void.
d) A writ of mandamus directing the respondent bank to act in all fairness and consider the accounts of the petitioner company as on 30th September, 2011 (Sic), 2012; i.e. as on the cutoff date considered in the application for restructuring.
While deciding the said writ petition, the learned Single Judge of this Court observed that the R.B.I. circular does not apply and is therefore no help to the appellant company, as the refinery of the appellant company could not start regular operation despite its completion in May, 2011. Since the refinery could not start its operation, the learned Single Judge of this Court held that the appellant company is becoming sick due to recent global slow down, did not arise at all. It was, further, held therein that the relationship between the appellants and the respondent bank is in the realm of a contract. As such, the writ petition is not the appropriate remedy for impeaching the contractual obligations for ascertainment as to whether the respondent bank has violated any of the contractual stipulation between the parties.
It was, further held that the appropriate remedy for impeaching the contractual obligation is provided by the general laws of the country which the writ petitioner, namely, the plaintiffs/appellants ought to have pursued. Holding as such, the said writ petition was dismissed by giving an opportunity to the writ petitioner, namely, the plaintiffs/appellants herein to pursue their remedies in accordance with law, with this rider that the observations made in the said judgment will not influence any subordinate court or tribunal, if approached by the petitioners, namely, the plaintiffs/appellants.
The plaintiffs/appellants felt aggrieved. Hence, they preferred an Intra- Court appeal being APO No. 338 of 2015 which was disposed of by the Division Bench of this Court on 1st March, 2016 by maintaining the order of rejection passed by the learned Single Judge of this Court by making almost identical observation in the order. According to the Appeal Court, whether there was delay on account of non-cooperation of the respondent bank in securing fund from the other bank or sanctioning fund by them and further as to whether the guidelines of RBI cannot be extended to the appellants in the facts of the present case, cannot be looked into by the Appeal Court while taking up the mandamus appeal. While dismissing the said appeal the respondent bank was directed not to proceed further in realising its dues as per the Debt Recovery Act for a period of two weeks from the date of the order. Such interim protection was given to the appellants in order to accommodate the appellant to approach the Debt Recovery Tribunal or any other Forum, as it thinks fit proper and correct in the available circumstances for seeking the releifs which was declined by the Appeal Court.
Fact remains that notice under Section 13(2) of the SARFAESI Act was issued by the defendant bank after classifying the appellant's account as non- performing account. Steps were also taken by the defendant bank as per Section 13(4) of the SARFAESI Act. In this set of fact the plaintiffs/appellants approached Debt Recovery Tribunal III Kolkata by filing an application being SA No. 309 of 2015 claiming reliefs under Section 17 of the SARFAESI Act. The respondent bank appeared in the said proceeding and raised a preliminary objection as to the competence of the Tribunal to adjudicate the dispute raised by the applicants in the said proceeding. A definite and positive stand was taken by the respondent bank before the Tribunal that the appropriate forum for consideration of the dispute which is raised by the plaintiffs/appellants in the said proceeding, will be the Civil Court and Section 34 of the SARFAESI Act will not operate as a bar for institution of the suit against the respondent bank for pursuing their remedy before the Civil Court.
After considering the submission advanced on behalf of the respondent bank and also after taking note of the order passed by the learned Single Judge of this Court in the writ petition as well as the order passed by the Appeal Court in the mandamus appeal as aforesaid, the learned Tribunal expressed its opinion that Tribunal is not within the jurisdiction under Section 17 of the SARFAESI Act 2002 to grant any relief as claimed by the applicant in the said proceeding. Such conclusion was drawn by the learned Tribunal as the learned Tribunal found that the objection which was raised by the applicant therein mainly relates to the challenge thrown against initial action by the respondent bank i.e., short and delayed financing, non-providing the reliefs available to MSME sector, non- compliance of directions of RBI etc. In this back ground the learned Tribunal after accepting the submission of the respondent bank that Section 34 of the SARFAESI Act will not operate as bar in maintaining the civil suit held that there would be no bar under Section 34 of the SARFAESI Act to the applicants in filing suit before the Civil Court. Accordingly the said proceeding being SA No. 309 of 2015 was dismissed. Liberty was given to the plaintiffs/appellants to raise those issues and/or to ventilate their grievances which were raised in the said proceeding before the appropriate Civil Court having jurisdiction as per law. Liberty was also given to the respondent bank to defend themselves before the Civil court if any such litigation/suit is filed. While disposing of the said proceeding, the learned Tribunal directed the respondent bank not to take any coercive action at least for four weeks from the date of the said order for enabling the appellants to approach the appropriate Civil Court with the rider that in case the claimants fail to obtain any suitable injunction from the Civil Court within four weeks, the respondent bank shall be at liberty to proceed in the matter as per rules and in that event injunction shall automatically stand withdrawn after expiry of four weeks.
Neither party to the said proceeding challenged the legality of the said order passed by the learned Tribunal before the Appellate Authority. As such, the order which was passed by the learned Tribunal is binding upon the parties.
Pursuant to the order passed by the learned Tribunal in the said proceeding, the plaintiff filed the present suit being Title Suit No. 19 of 2016 before the Court of the learned Civil Judge (Senior Division) 2nd Additional Court at Burdwan. The cause of action of the said suit was mainly founded on the allegation of breach of contract made by the defendant bank in disbursing the loan amount as per the agreement and/or illegal adjustment of cash credit and a letter of credit limit against interest that was debited against the long-term loans and adjustment of interest as against short-term loan though the plaintiff no.1 was not allowed to run its plant in terms of the rehabilitation scheme due to the failure of the bank to provide nearly 70% of the incremental portion of the working capital facilities as per the bank's own assessment as appearing in the sanctioned letter in respect thereof. It was also alleged by the plaintiffs/appellants that denial and refusal of the defendant no.1 to provide the plaintiffs with the bank's benefits under the said RBI guidelines/circulars dated 4th May, 2009 and 1ST November, 2012 as evident from notice dated 30th March, 2015 and another issued by the defendant bank also formed part of causes of action of the said suit. The plaintiffs/appellants thus claimed that it suffered huge losses due to short and delayed financing, non-providing the reliefs available to MSME sector, non-compliance of the directions of the RBI etc. The plaintiff claimed the following releifs in the said suit.
(a) Decree for Rs.15219.86 lacs in favour of the plaintiff No.1 as against the defendant No.1 as more fully stated in paragraphs 67,68 and 69 above;
(b) Alternatively, an enquiry into damages and decree for such sums as may be found due and payable to the plaintiffs by the defendant No.1;
(c) True and faithful accounts be taken of all dealings and transactions between the plaintiff No.1 and the defendant No.1 and an enquiry be made for the purpose of ascertaining what amount, if any, is due and payable by the defendant No.1 to the plaintiff No.1 or vice versa after taking into consideration what has been stated above;
(d) Decree for such sum as may be found due and payable upon such accounts being taken and enquiry being taken in terms of prayer © above;
(e) Mandatory injunction directing the defendant No.1 to forthwith return to the plaintiff No.1 the title deeds pertaining to the properties more fully described in Schedule C hereto;
(f) Mandatory injunction directing the defendant No.1 to forthwith return to the plaintiff Nos. 2 and 3 the title deeds pertaining to the property more fully described in Schedule D hereto;
(g) Mandatory injunction directing the defendant No.1 to return to the defendant No.3 the title deeds pertaining to the properties more fully described in Schedule E hereto;
(h) Mandatory injunction directing the defendant No.1 to discharge its second charge over the properties more fully described in Schedule F hereto against payment of any amount that may be ultimately found due and payable by the plaintiff No.1 to the defendant No.1 and in case, no money is found to be due and payable, then and in that case, immediately upon such finding being rendered by this Learned Court;
(i) Mandatory injunction directing the defendant No.1 to discharge the guarantee given by the defendant No.2 to the defendant No.1 for the plaintiff No. 1's credit facilities;
(j) Interim interest and interest upon judgment @ 18% per annum
(k) Receiver;
(l) Injunction;
(m) Attachment;
(n) Costs;
(o) Such further and/or other releif or reliefs.
In the said suit, the defendant/Bank filed an application challenging maintainability of the suit before the civil court. It is stated by them that on the request made by the plaintiffs, the defendant/Bank rendered financial support for the expansion of business of the plaintiffs after enquiry and verification of the relevant documents relating to the plaintiffs' proposed business. The properties mentioned in the schedule of plaint were mortgaged against the loan advanced by the Bank by deposit of title deeds and other documents. The plaintiffs and its guarantors committed default in payment of loan which led to declaration of its account as NPA. The demand notice under Section 13(2) of the SARFAESI Act was served on 30th March, 2015 demanding a sum of Rs.50,81,38,799/- and interest accrued thereon. The plaintiffs and its guarantors neglected the said notice. The notice under Section 13(4) of the said Act was served after expiry of 60 days. The notice was duly published in all leading newspapers. A proceeding initiated by the bank before D.R.T.-III, Kolkata for recovery of the debts of the appellant is pending before the Tribunal. Another application under Section 14 of the SARFAESI Act, 2002 is pending before the D.M., Burdwan. The defendant/Bank, thus, claimed that provision of Section 34 of the said Act ousts the jurisdiction of the Civil Court to entertain the said suit as the dispute raised in the said suit concerns a dispute which is capable of being redressed by the Tribunal as per the SARFAESI Act, 2002. It was contended by the bank that Debt Recovery Tribunal has exclusive jurisdiction to entertain such dispute under Section 17 of the said Act.
The respondent/Bank, thus, prayed for dismissal of the said suit, as according to the defendant bank, the suit was filed only to avoid the liability of the plaintiffs to repay the loan by indirectly challenging the legality of the notice under Section 13(2) or Section 13(4) of the said Act. According to the defendant, the legality of the notice under Section 13(2) and the steps taken under Section 13(4) of the SARFAESI Act cannot be challenged in the suit before the civil court in view of Section 34 of the SARFAESI Act. The Bank, thus, claimed that the suit is liable to be dismissed.
Learned Trial Judge disposed of the defendant's said application under Order 7 Rule 11 of the Code of Civil Procedure by the impugned order holding that the suit is partially not maintainable in respect of the allegation against the statutory notice under the SARFAESI Act as well as the prayer relating to the decree for mandatory injunction i.e., prayers (d) to (i) mentioned in the plaint. The legality of the said order is under challenge in this appeal.
While passing the impugned order, the learned Trial Judge held that the relief for damages claimed by the plaintiffs is, however, maintainable. The legality of this part of the said order has not been challenged in this appeal.
Let us now consider as to how far the learned Trial Judge was justified in passing the impugned order in the facts of the present case.
The bar in maintaining a civil suit before the civil court for challenging certain action taken by the Bank and/or other financial institutions for recovering the unpaid loan amount from the debtor is provided under Section 34 of the SARFAESI Act, 2002 which runs as follows:-
"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 Bank and Financial Institutions Act, 1993 (51 of 1993)."
To attract the provision of Section 34 of the said Act, it must be established that the dispute which is raised in the suit concerns any matter which a debt recovery tribunal or the appellate tribunal is empowered to determine by or under the SARFAESI Act.
Let us now consider as to whether this condition is satisfied in the instant case so as to attract the provision contained in Section 34 of the said Act.
Mr. Mitra, learned advocate appearing for the plaintiffs/appellants- Bank has relied upon in following decision of the Hon'ble Supreme Court to demonstrate before us that the suit for recovery of damages and for injunction is well maintainable before the Civil Court.
(i) In the case of Nahar Industrial Enterprises Ltd. Vs. Hong Cong and Shanghai Banking Corporation reported in (2009)8 SCC 646. Mr. Saha, learned advocate appearing for the Bank has also relied upon following decisions of the Hon'ble Supreme Court to impress upon us that if any challenge is made in the suit touching any dispute which is triable by the debt recovery tribunal and/or the appellate tribunal, such dispute is not entertainable by the Civil Court.
(i) In the case of Jagdish Sigh Vs. Hirlalal & Ors. reported in (2014)1 SCC 479.
(ii) In the case of Eureka Forbes Ltd. Vs. Allahabad Bank & Ors.
Reported in (2010)6 SCC 193.
(iii) In the case of State Bank of Patiala Vs. Mukesh Jain & Anr. reported in (2017)1 SCC 53.
In Nahar Industrial Enterprises Ltd. the Hon'ble Supreme has held that Section 34 of the SARFAESI Act does not oust the jurisdiction of the Civil Court altogether to entertain a suit under Section 9 of the Civil Procedure Code. It was held therein that the jurisdiction of the Civil Court is plenary in nature and the Civil Court is entitled to decide the respective claims of the parties in a suit unless the jurisdiction of the Civil Court to entertain such suit under Section 9 of the Civil Procedure Code is ousted expressly by a statute or by necessary implication therefrom. After examining the scope and/or ambit of the Debt Recovery Act and the SARFAESI Act, the Hon'ble Supreme Court held therein that the Debt Recovery Tribunal cannot be treated as a Civil Court, as the said Debt Recovery Tribunal was constituted with a specific purpose and has a limited jurisdiction; it can neither pass a decree nor can debtor seek declaratory relief from the Debt Recovery Tribunal. The Debt Recovery Tribunal can only issue recovery certificate. Some instances were also mentioned in the said judgment. It was further held therein that notwithstanding the provision contained in Section 34 of the SARFAESI Act, the Civil Court's jurisdiction is not ousted in certain circumstances; say for example, (i) the banks and the financial institution for the purpose of enforcement of their claim for a sum below rupees ten lakh is required to file civil suit before the Civil Court; (ii) even the debtors can file their claims or set off or counter-claim before the Civil Court; (iii) even before filing any proceeding or recovery of debt by the bank or the financial institution, the debtor may file preemptive suits and obtain order of injunction; (iv) civil suit is also maintainable in a case where allegation of fraud and misrepresentation is involved; (v) Civil Court's jurisdiction can also be invoked when several other issues of complicated nature may arise between the parties etc. The decision which was cited by Mr. Saha either in the case of Jagadish Singh Vs. Hiralal and Ors. (supra) or in the case of State Bank of Patiala Vs. Mukesh Jain & Anr. (supra) or in the case of Eureka Forbes Ltd. Vs. Allahabad Bank & Ors. (supra) do not lay down any principle of law different from the principles which were laid down in the case of Jagadish Singh Vs. Hiralal & Ors.
In the case of Jagadish Singh Vs. Hiralal & Ors(supra) the Hon'ble Supreme Court held that Section 17 of the SARFAESI Act confers a right of appeal to any person including the borrower, if that person is aggrieved by any of the measures taken by the secured creditor under Section 13(4) of the said Act. It was further held therein that Section 34 of the SARFAESI Act ousted the Civil Court's jurisdiction when the secured creditor proposes to proceed against the secured asset under Section 13(4). It was further held therein that the expression "in respect of any matter" referred to in Section 34 would mean taking any measure provided under Section 13(4) of the SARFAESI Act and consequently, if any aggrieved person has got any grievance against any measures taken by the bank against the borrower under Section 13(4) of the SARFAESI Act, 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 Section 13(4) of the SARFAESI Act, because those matters fell within the jurisdiction of the DRT and the Appellate Tribunal. It was further held therein that Section 35 says the SARFAESI Act overrides other laws, if they are inconsistent with the provisions of that Act which takes in Section 9 of the Civil Procedure Code as well.
In State Bank of Patiala Vs. Mukesh Jain & Anr. (supra) the Hon'ble Supreme Court held that when the amount of debt due is more than Rs.10 lakh, no Civil Court, in view of Section 34 of the SARFAESI Act, is having jurisdiction to entertain any suit or proceeding in respect of any matter which Debt Recovery Tribunal or the Appellate Tribunal is empowered by or under the Act to determine the dispute. Further, the Civil Court has no right to issue any injunction in pursuance of any action taken under the 2002 Act under the provision of RDDB Act, 1993.
In Eureka Forbes Ltd. Vs. Allahabad Bank & Ors. (Supra), the Hon'ble Supreme Court, after considering the definition of debt in Section 2(g) of the Act of 1993, held that legislature has not restricted the jurisdiction of the DRT to relationship of a creditor or debtor alone but has extended the jurisdiction of DRT to try a party intermeddling with hypothecated goods without authority of law, not being the debtor. It was further held therein that the debtor cannot be permitted to take advantage of its own wrong and cannot cause any delay in repayment of its liability on the plea that goods had been disposed of.
This Court has given an anxious consideration to the decisions cited at the bar. On perusal of those decisions, it appears to us that if the amount of debt due to the Bank is more than Rs.10 lakh, no Civil Court, in view of Section 34 of the SARFAESI Act, will have jurisdiction to entertain any suit or any proceeding in respect of any matter which a Debt Recovery Tribunal or Appellate Tribunal is empowered to determine by or under the Act. However, there are some exceptions to the general principles which are as follows:-
(i) Civil Court's jurisdiction to entertain a declaratory suit is not barred as the DRT is not authorized to issue any declaration relating to title of the parties etc. DRT' s jurisdiction is restricted only to issuance of certificate.
(ii) Civil Court's jurisdiction to entertain a civil suit is not barred when complicated questions of disputed facts are involved in the lis which is required to be resolved by elaborate trial on evidence.
(iii) Civil Court's jurisdiction to entertain a suit is not barred when ultimate decision is to be taken on the allegations of fraud and misrepresentation.
(iv) Civil Court's jurisdiction to entertain any suit filed before the Bank takes any step for recovery of its dues by following the provisions of the Debt Recovery Act or the SARFAESI Act, is not barred
(v) Civil Court's jurisdiction to entertain any suit in the nature of set off or counter-claim is also not barred, particularly when any of the actions of the bank to recover its dues as per the SARFAESI Act is not challenged in the suit.
It is no doubt true that the Hon'ble Supreme Court in Jagdish Singh Vs. Hiralal & Ors. (supra) held that the suit for declaration and partition is not maintainable before the Civil Court but such conclusion was drawn by the Hon'ble Supreme Court, as after considering the evidence of the parties, the Hon'ble apex court found that the plaintiff therein failed to establish that mortgage property was a HUF property and the said property was acquired during the life time of the (Karta) being the father of the plaintiff by utilizing the joint family fund.
Facts in the present case is totally different from the facts of the case which was before the Hon'ble Supreme Court as in the present case the Court unlike the Hon'ble Supreme Court has no opportunity to consider the evidence of the parties at this stage as the written statement is yet to be filed in the suit.
Keeping in mind the aforesaid principles of law, let us now consider as to whether the learned Trial Judge was justified in passing the impugned order in the facts of the present case.
We have already mentioned above, the cause of action for filing the above suit before the civil court. The reliefs which the plaintiffs/appellants have claimed in the said suit have also been quoted hereinabove. On reading the plaint, we do not find that the legality of the notice under Section 13(2) and/or the steps taken by the Bank under Section 13(4) of the SARFAESI Act has been challenged in the said suit. The principal relief claimed in the said suit is for recovery of damages and for holding an enquiry for damages i.e. for ascertainment of the loss sustained by the plaintiffs/appellants due to delayed financing, refusal to provide relief for revival of the sick unit, granting lesser amount etc. Such reliefs were claimed by the appellants without challenging the legality of the notice under Section 13(2) and/or steps taken by the Bank under Section 13(4) of the said Act. Incidentally the plaintiffs/appellants have claimed release of their title deeds amongst other incidental reliefs. Needless to mention here that the quantum of damages which is claimed by the plaintiffs in the said suit surpasses, the quantum of claim mentioned by the Bank in its notice under Section 13(2) of the said Act. As a matter of fact, the Bank has already filed a proceeding before the debt recovery tribunal for realisation of the dues payable by the plaintiffs/appellants. The said proceeding is still pending before the tribunal. The plaintiffs/appellants have not prayed for stay of the recovery proceeding pending before the Tribunal.
Thus, on overall assessment of the facts and circumstances of the instant case, we have no hesitation to hold that this is essentially a suit for recovery of damages where incidentally the other reliefs regarding release of the title deeds etc. were also claimed by the plaintiffs by way of mandatory injunction. If in such a suit, the plaintiffs can establish their claim for damages and if a decree is passed in favour of the plaintiff/appellants and the decretal amount exceeds the bank's claim, the certificate which will be issued by the Tribunal to the extent of the bank's claim will be ultimately adjusted by way of set off against the decree for damage to be passed by the Civil Court and in that event the bank cannot retain the title deeds which the plaintiffs deposited for securing the loan taken by the plaintiffs from the Bank by way of equitable mortgage. If on the contrary, the Civil suit is dismissed and certificate of recovery is ultimately issued by the DRT, then the bank can realise its dues by sell of the mortgaged property. But in any event the Tribunal, in our view, is incompetent to decide the disputed questions of facts raised in the suit concerning the plaintiffs' claim for damage. In fact the Trial Court has retained the suit in itself so far as the plaintiffs claim for damages is concerned. This part of the trial Court's finding and/or order remains unchallenged and thus attained its finality. If the suit which relates to the primary relief is held to be maintainable before the Civil Court then we do not find any justifiable reason for holding that the incidental reliefs cannot be granted by the Civil Court.
Had it been a fact that any of the actions taken by the Bank either by issuance of notice under Section 13(2) and/or the steps taken by the Bank under Section 13(4) of the SARFAESI Act been challenged in the suit, then the civil court could have lost the jurisdiction to entertain the suit which relates to such challenge regarding legality of issuance of notice under Section 13(2) and/or the steps taken by the Bank under Section 13(4) of the SARFAESI Act.
Having regard to the fact that we have already held above that no part of the causes of action is founded on the basis of any challenge with regard to the legality of the notice under Section 13(2) of the said Act and/or the steps taken by the Bank under Section 13(4) of the said Act we are of the view that Section 34 of the SARFAESI Act cannot stand in the way in maintaining the suit which is primarily a suit for recovery of damages where some incidental reliefs were claimed by way of mandatory injunction for release of the title deeds etc. Allegations are also made by the defendant bank against the plaintiff herein for siphoning of the loan amount to the other company and thereby the plaintiffs have committed fraud upon the bank by not utilizing the fund by the plaintiff company for which the loan was advanced by the bank. Thus, an issue relating to element of fraud is also likely to be raised in the said suit along with the other issues which are likely to be raised in the suit. Thus, we hold the issues which are likely to be raised in such suit are required to be resolved by trial on evidence which can only be done conveniently before the Civil Court and not before the Tribunal where the provisions of the Civil Procedure Code or the Evidence Act are not followed.
That apart, we have also mentioned hereinabove that when the plaintiffs/appellants earlier approached the Tribunal on identical issue seeking identical relief before the Tribunal, the learned Tribunal, accepting the submission made by the defendant-bank held that the dispute which is raised in the said proceeding before the learned Tribunal, is of such nature which is required to be tried by the Civil Court and not by the Tribunal. When the learned Tribunal by accepting such submission of the defendant-bank dismissed the proceeding initiated by the plaintiffs/appellants before the Tribunal seeking identical relief therein, the decision which was so taken by the Tribunal, even if it is erroneous and/or illegal, will certainly operate as res judicata on the identical issue which is now being raised in the present suit between the same parties before the Civil Court. The defendant bank cannot take different stand at different point of time to make the plaintiffs/appellants non-suited. In this regard, we may refer to the following decision of the Hon'ble Supreme Court as well as of this High Court:-
(i) In the case of Daryao & Ors. Vs. State of U.P reported in AIR 1961 SC 1457.
(ii) In the case of S. Nagaraj (dead) by LRs. & Ors. Vs. B. R. Vasudeva Murthy & Ors. reported in (2010) 3SCC 353
(iii) In the case of Mohammad Ali Vs. The State of West Bengal & Ors.
reported in 2012(3) CHN 110.
Before parting with we like to mention here that both the suit pending before the Civil Court and the recovery proceeding pending before the DRT can be proceeded with simultaneously and if the suit is decreed and the decretal amount on account of damages exceeds the bank's claimed amount then the decree for mandatory injunction claimed in the suit by way of incidental reliefs can be allowed by the Civil Court as under such circumstances there will be no recoverable dues which the bank can realise from the appellant company resulting automatic discharge of the security which was guaranteed by way of mortgage. It necessarily follows that if the decree for damages is refused or if the decree for damages is less than the claimed amount of the bank, then the plaintiff will not be entitled to get the relief by way of mandatory injunction and the bank may still enforce mortgage for recovery of its certificated dues. Then again if the suit is disposed of earlier granting the decree for damage in favour of the plaintiff before issuance of certificate by the DRT then conditional relief may be granted by the Civil Court subject to the decision of the Tribunal.
As such, we hold that the impugned order passed by the learned Trial Judge holding a portion of the relief claimed by the plaintiffs in the suit which relates to a decree for mandatory injunction i.e, (d) to (i) mentioned in the plaint is not maintainable, is not sustainable.
We thus, set aside the judgment and/or order passed by the learned Trial Judge on 28.02.2017 vide order no.14.
The suit as it is framed, in our considered view, is maintainable as a whole.
The instant appeal is thus, allowed.
Re: FMA No. 648 of 2017 Let us now consider the other appeal being First Miscellaneous Appeal being F.M.A 648 of 2017. By the impugned order being no.13 dated 28th February, 2017 passed by the learned Trial Judge in Title Suit no.19 of 2016, the plaintiffs' prayer for temporary injunction was rejected by the learned Trial Judge.
After filing the said suit, the plaintiffs filed an application for temporary injunction praying for the following reliefs:-
a. order of Temporary injunction restraining the defendants and their men, agents, assigns and collaborators from dealing with the properties of the petitioner as mentioned in the schedule and/or directing the defendants not to take coercive action against the properties of the petitioner mentioned in the schedule and/or restraining from creating any disturbances to the peaceful carrying on business by the petitioner in the suit property and/or restraining from making any interruption or interference or obstruction in the egress and ingress of the petitioner in the suit property in peaceful carrying on business and/or restraining from making any attempt to dispossess the petitioner from the suit property till the disposal of the suit.
The plaintiffs' such prayer for injunction was rejected by the learned Trial Judge primarily by relying upon the provision contained in Sections 34 and 35 of the SARFAESI Act.
It was held by the learned Trial Judge that restraining the bank from dealing with the properties given under the schedule of injunction application would amount to deprivation of statutory right guaranteed to the creditor (Bank) for recovering outstanding dues by invoking the rights given to the banks under the statute.
It was further held by the learned Trial Judge that undoubtedly the plaintiffs are under obligation to discharge the debt in respect of loan account irrespective of allegations raised against the Bank. It was also held that no statute absolve the liability of plaintiffs from discharging dues owed to bank. The learned Trial Judge thus, held that only raising dispute regarding the manner of sanctioning loan as well as delayed disbursement of the loan amount, cannot take away the right of the bank to adopt legal recourse for recovery of its money.
Holding as such, the plaintiffs' prayer for temporary injunction was rejected by the learned Trial Judge as the learned Trial Judge was of the view that grant of temporary injunction restraining the defendants from dispossessing the plaintiffs means that legal steps taken towards symbolic possession of property by virtue of service of statutory notice under Section 13(4) of the said Act will be waste and grant of injunction will ultimately lead to set aside the process already completed in taking symbolic possession of the property and further proceeding as per the SARFAESI Act for realisation of dues will stand suspended.
We have no quarrel with the observation made by the learned Trial Judge with regard to the legal position. However, while disposing of the first appeal, we have considered as to how far the settled legal provision which is mentioned by the learned Trial Judge in the impugned order is applicable in the facts of the present case. Had the plaintiffs' claim for damages been less than the bank's claim, no injunction could have been passed, as rightly held by the learned Trial Judge.
Here is the case where we have seen that the plaintiffs have made out a case for damages and the quantum of damages claimed by the plaintiffs/appellants exceeds the claimed amount of the bank in the Debt Recovery proceeding initiated by the Bank. As such, if the bank is now permitted to recover its aforesaid dues by selling the mortgaged property and further if the bank is allowed to part with the title deeds which were deposited by the plaintiffs for securing its loan by creating a equitable mortgage over the plaintiffs' property, then the plaintiffs even if they succeed in the suit, will not only be able to get back its title deeds but also will lose title in its property.
In such circumstances, the plaintiff will lose title over its property and the releifs which the plaintiffs claim in the said suit by way of mandatory injunction for delivery of the title deeds, etc. cannot be given to the plaintiffs in the suit. On the contrary if it is ultimately found that the plaintiffs fail to establish its claim for damages in the said suit and the suit is dismissed or alternatively if the suit is decreed to an extent not exceeding the claimed amount of the bank in the debt recovery proceeding initiated by the bank, then certainly the bank can realise its dues by selling the mortgaged property.
As such if the balance of inconvenience and convenience is weighed then we are of the view that the plaintiffs will suffer irreparable loss and injury, if the injunction as sought for by the plaintiffs is not granted.
Prima facie case does not mean full proof case. Prima facie case means raising of a triable issue in the suit. On reading the pleading of the parties without repeating the same over gain here, we hold that a prima facie case has been made out by the plaintiffs/appellants in the suit.
The loss which the plaintiffs will suffer, in case the bank sells the mortgaged properties before disposal of the suit cannot be compensated by money value in case the suit is ultimately decreed for any amount exceeding certificated claim of the Bank.
We thus dispose of this appeal by permitting the defendant bank to take physical possession of all mortgage properties excepting the 'D' schedule property which is the office space on the second floor of the building at premises No.P-79, Nani Gopal Roychowdhury Avenue (C.I.T. Road), 2nd Floor, Kolkata - 700014 wherefrom the plaintiffs are carrying on business, With this rider that the Bank will not be permitted either to transfer and/or sell and/or alienate and/or create any third party interest in those properties and/or alter the nature and character thereof till the disposal of the suit.
The plaintiffs/appellants are restrained from selling and/or dealing with and/or creating any third party interest in respect of any of the mortgaged properties till the disposal of the suit.
Considering the nature of the dispute involved in this proceeding and also the fact that the Bank is restrained from selling the mortgage properties during the pendency of the suit, we request the learned Trial Judge to dispose of the suit as early as possible preferably within one year from the date of communication of this order without granting any unnecessary adjournment to any of the parties and if necessary by conducting day to day trial in the suit.
The plaintiffs are directed to serve copy of the plaint upon the defendants and/or their learned advocate in the Court below within a week. The defendants are thus, directed to file written statement in the said suit within one week after reopening of the Court after Puja Vacation. Time schedule which is fixed either for service of plaint by the plaintiffs upon the defendants or for filing the written statement by the defendants or for disposal of the suit by the learned Trial Court should be regarded as pre-emptory fixed by this Court.
This appeal and the connected applications are thus disposed of.
(Jyotirmay Bhattacharya, J.) (Shivkant Prasad, J.)