Delhi District Court
(NorthWest) Rohini Courts Delhi vs Haryana Financial Corporation on 5 March, 2014
1
IN THE COURT OF SH. SANJEEV AGGARWAL ADJ03
(NorthWest) ROHINI COURTS DELHI
Suit No.92/13
05.03.2014
M/s Biopolymers System
C4/18, Model Town,
Delhi110009
Through its partner
Dr. Mahesh Chand Jain ......PLAINTIFF
Versus
1.Haryana Financial Corporation Ray No. 17, 18 & 19, Sector17A, Chandigarh160013 Through its Managing Director
2. M/s Haryana Financial Corporation Village Rai G.T.Karnal Road, Sonepat, Haryana Through its Branch Manager
3. Haryana Finance Corporation A2,. HUDCO Place, Room No. 203204, Second Floor, Near Ansal Plaza, Andrews Ganj, New Delhi110049 Through its Managing Director
4. M/s Sidhartha Speciality Coats Pvt. Ltd., C276, Vivek Vihar, Suit No. 92/13 M/s Biopolymers Systems Vs. Haryana Financial 2 Delhi110095 Through its Director Rakesh Jain
5. Board and Paper Laminators(India) Pvt. Ltd., Plot No. 158159, Pocket14, Sector 24, Rohini, Delhi Through its Director Sh. Satbir Lohia .......DEFENDANTS Date of Institution of the Suit : 24.12.2009 Date on which judgment was reserved : 25.02.2014 Date of decision : 05.03.2014 J U D G M E NT
1. Vide this judgment I shall dispose off following preliminary issue framed on 03.02.2011 "Whether the court has territorial jurisdiction to entertain the territorial jurisdiction of this suit" It appears to be wrongly typed it should be read as "Whether this court has territorial jurisdiction to entertain and try the present suit ?"
2. Brief facts are the plaintiff has filed the suit for declaration, possession and permanent injunction on the ground that plaintiff is one of the partner of plaintiff firm, which is duly registered with the Registrar of Firms and it started business under a partnership firm namely M/s Biopolymers System at Khila No. 37/24, Village Ferozepur Banger, District Sonepat, Haryana and the plaintiff firm applied for a loan to the defendant no. 1 for running the aforesaid Suit No. 92/13 M/s Biopolymers Systems Vs. Haryana Financial 3 business.
3. It is stated that defendant no. 1 is having its office at Delhi, as mentioned in the title of the suit and is also having its head office at Chandigarh and they are also having its branch office at Village Rai, G.T.Karnal Road, Sonepat, Haryana and after applying for the loan the defendants no. 1 & 2 sanctioned a term loan of Rs. 19,00,000/ vide their letter dated 27.11.95 and the term loan facility was availed by the plaintiff to the extent of Rs. 13.55 lacs.
4. That to avail the aforesaid term loan facility the plaintiff firm mortgaged to the defendant no. 1 the land & building situated at the address mentioned above vide mortgage deed dated 16.07.1996 and the said mortgage deed was executed by one of its partners and the same was duly registered with the Sub Registrar, Kharkhoda on 16.07.1996. It is stated that due to unavoidable circumstances the business of the plaintiff could not be continued and the plaintiff suffered financial crises and due to that the plaintiff firm entrusted the suit property to the defendant no. 1 in accordance with Section 29 of the State Financial Corporation Act on 04.08.98 and with the assurance by the defendant no. 1 that they will deal with the property suitably. Thereafter defendants no. 1 & 2 took over the entire property of the plaintiff firm as a trustee. The plaintiff was not in a Suit No. 92/13 M/s Biopolymers Systems Vs. Haryana Financial 4 position to repay the said loan amount and it was suggested in writing vide letter dated 04.08.1998 to defendant no. 1 and 2 to sell the unit and adjust the sale proceeds towards the defendant no. 1's legitimate dues and to pay the balance of the sale proceed to the plaintiff.
5. It is further stated that thereafter defendants no. 1 to 3 had unnecessary delayed taking suitable action for auction and they never submitted any valuation report to the plaintiff to file objections. Defendants no. 1 to 3 never obtained any court permission to auction plant and machinery before final auction which took place on 01.02.1999. Defendants no.1 to 3 only informed the partnership firm vide their letter dated 15.01.1999 about the final auction on 01.02.1999, but both the partners were never individually informed about the proposed auction on 01.02.1999. Defendants No. 1 to 3 despite their being no court permission to auction plant and machinery invited consolidated bids for the auction of land, building, plaint and machinery and ultimately the same was auctioned to the highest bidder for a sum of Rs. 28,25,000/, which was much below the prevailing market rate and defendants no. 1 to 3 had not complied with the rules and regulations of State Financial Corporation Act, Indian Contract Act and the guidelines of Hon'ble Suit No. 92/13 M/s Biopolymers Systems Vs. Haryana Financial 5 Apex court in this regard.
6. It is further stated that defendants no. 1 to 3 never intimated the firm and its partners about the highest price at which they intended to accept the tender before acceptance of tendered amount. It is further stated that after much delay the auction proceedings defendants no. 1 to 3 gave a letter to the plaintiff that they have sold out the unit vide their letter dated 24.08.1999 for a sum of Rs. 19,39,332/ have been adjusted and a sum of Rs. 8,85,668/ being excess bid amount is pending decision for adjustment and for refund of excess amount in due course. Therefore plaintiff firm has filed the present suit praying for the following reliefs:
(a) That a decree of declaration be passed declaring the auction dated 01.02.1999 of the suit property as null and void and same be set aside in respect of suit property, as shown in Red colour in the site plan.
(b) That a decree of possession be also passed in favour of plaintiff and defendants no. 5 & 6 may be directed to handover the vacant and peaceful possession of the plant and machinery alongwith the land & building in respect of the suit property.
(c) That a decree of permanent injunction be also passed, thereby restraining the defendants from creating any third party interest Suit No. 92/13 M/s Biopolymers Systems Vs. Haryana Financial 6 in the suit property alongwith costs.
7. Written Statement has been filed on behalf of defendants no. 1 to 3 as well as defendant no. 5 separately.
8. Defendants no. 1 to 3 have taken various objections. However, their main objection is that the suit is not maintainable, as civil courts in Delhi do not have jurisdiction to try and entertain the present suit. The suit property is admittedly situated in District Sonepat, Haryana. Section 16(c) CPC provides that the suit in respect of mortgaged property has to be instituted in the court in whose jurisdiction the property lies. Further, the loan was applied at Sonepat and sanctioned at Chandigarh and the loan disbursement and recovery was effected at Sonepat through the account of the plaintiff firm with the Sonepat Branch Office of defendants no. 1 to 3. The defendants are conducting their business through its branch office situated all over Haryana States, one of which is at Sonepat. No business whatsoever, is conducted by the defendants at Delhi where it maintains only an administrative office.
9. On merits, all the other contentions have been denied which have been taken in the plaint and it is stated that the plaintiff has already approached the State Consumer Disputes Redressal Suit No. 92/13 M/s Biopolymers Systems Vs. Haryana Financial 7 Commission and the State Commission had directed the corporation to refund the excess bid amount of Rs. 8,85,668/ with interest @ 12% p.a to the plaintiff firm vide order dated 03.11.2000. The corporation has preferred an appeal before National Consumer Disputes Redressal Commission which has been dismissed vide order dated 18.08.2009.
10.Written Statement has also been filed on behalf of defendant no.
5 separately in which he has also taken objection of territorial jurisdiction of this court. The Ld. Predecessor of this court has framed the following preliminary issue on 03.02.2011 "Whether the court has territorial jurisdiction to entertain the territorial jurisdiction of this suit" It appears to be wrongly typed it should be read as "Whether this court has territorial jurisdiction to entertain and try the present suit"
11. I have heard Ld. Counsel for the plaintiff Sh. Subhash Chandra and counsel for defendants no. 1 & 2 Sh. S.B.Singh and perused the record.
12.It is admitted case of the parties that suit property is situated at village Ferozpur Banger, Kharkhoda District Sonepat, Haryana. It is also admitted case of the parties that the loan was applied for by the plaintiff firm at Sonepat Branch of the defendant no. 1 and Suit No. 92/13 M/s Biopolymers Systems Vs. Haryana Financial 8 the same was also sanctioned at Chandigarh. The loan disbursement and recovery was effected at Sonepat through branch account of the plaintiff firm with defendant no. 2. The mortgage deed was also executed at Sonepat and was also registered with the office of Sub Registrar Kharkhoda on 16.07.96. The plaintiff has not placed any document on the record from which it could be gathered that defendant no. 1 and 3 are carrying on any business at Delhi, where it is claimed that they were running their administrative office. It is not clear how this court has jurisdiction to try the present suit in view of Section 16 CPC which is reproduced as under:
Suits to be instituted where subject matter situate Subject to the pecuniary or other limitations prescribed by any law, suits
a) for the recovery of immovable property with or without rent or profits,
b) for the partition of immovable property,
c) for foreclosure, sale or redemption in the case of a mortgage of or charge upon immovable property.
d) for the determination of any other right
to or interest in immovable property,
e) for compensation for wrong to
immovable property,
f) for the recovery of movable property
actually under distraint or attachment, Suit No. 92/13 M/s Biopolymers Systems Vs. Haryana Financial 9 shall be instituted in the court within the local limits of whose jurisdiction the property in situate:
Provided that a suit to obtain relief respecting, or compensation for wrong to, immovable property held by or on behalf of the defendant may, where the relief sought can be entirely obtained through his personal obedience, be instituted either in the court within the local limits of whose jurisdiction the property is situate, or in the court within the local limits of whose jurisdiction the defendant actually and voluntarily resides, or carries on business, or personally works for gain.
13.Since the suit property is situated in District Sonepat Haryana, as per Section 16(c) any foreclosure, sale or redemption in the case of a mortgage of immovable property can only be instituted in the court within the local limits of whose jurisdiction the property is situated. However, proviso to Section 16 carves out an inception providing that a suit to obtain relief respecting, or compensation for wrong to the immovable property held on behalf of the defendant, where the relief sought can be entirely obtained through his personal obedience may be instituted either Suit No. 92/13 M/s Biopolymers Systems Vs. Haryana Financial 10 in the court where the suit property was situated or within the local limits of whose jurisdiction the defendant actually and voluntarily resides, or carries on business, or personally works for gain. The answer to the present problem can be found in the judgment of Hon'ble Apex Court AIR 005 SC 4446 titled as Harshad Chiman Lal Modi Vs. DLF Universal and Anr. The relevant paras of the same are reproduced as under:
13.Now, Sections 15 to 20 of the Code contain detailed provisions relating to jurisdiction of courts. They regulate forum for institution of suits. They deal with the matters of domestic concern and provide for the multitude of suits which can be brought in different courts. Section 15 requires the suitor to institute a suit in the court of the lowest grade competent to try it. Section 16 enacts that the suits for recovery of immovable property, or for partition of immovable property, or for foreclosure, sale or redemption of mortgage property, or for determination of any other right or interest in immovable property, or for compensation for wrong to immovable property shall be instituted in the court within the local Suit No. 92/13 M/s Biopolymers Systems Vs. Haryana Financial 11 limits of whose jurisdiction the property is situate. Proviso to Section 16 declares that where the relief sought can be obtained through the personal obedience of the defendant, the suit can be instituted either in the court within whose jurisdiction the property is situate or in the court where the defendant actually or voluntarily resides, or carries on business, or personally works for gain. Section 17 supplements Section 16 and is virtually another proviso to that section. It deals with those cases where immovable property is situate within the jurisdiction of different courts.
Section 18 applies where local limits of jurisdiction of different courts is uncertain. Section 19 is a special provision and applies to suits for compensation for wrongs to a person or to movable property. Section 20 is a residuary section and covers all those cases not dealt with or covered by Sections 15 to 19.
14. Section 16 thus recognizes a well established principle that actions against res or property should be brought in the forum where such res is situate. A court within whose Suit No. 92/13 M/s Biopolymers Systems Vs. Haryana Financial 12 territorial jurisdiction the property is not situate has no power to deal with and decide the rights or interests in such property. In other words, a court has no jurisdiction over a dispute in which it cannot give an effective judgment. Proviso to Section 16, no doubt, states that though the court cannot, in case of immovable property situate beyond jurisdiction, grant a relief in rem still it can entertain a suit where relief sought can be obtained through the personal obedience of the defendant.
The proviso is based on well known maxim "equity acts in personam, recognized by Chancery Courts in England, Equity Courts had jurisdiction to entertain certain suits respecting immovable properties situated abroad through personal obedience of the defendant. The principle on which the maxim was based was that courts could grant relief in suits respecting immovable property situate abroad by enforcing their judgments by process in personam, i.e by arrest of defendant or by attachment of his property.
15.The proviso is thus an exception to the main part of the section which in Suit No. 92/13 M/s Biopolymers Systems Vs. Haryana Financial 13 our considered opinion, cannot be interpreted or construed to enlarge the scope of the principal provision.
It would apply only if the suit falls within one of the categories specified in the main part of the section and the relief sought could entirely be obtained by personal obedience of the defendant.
16. In the instant case, the proviso has no application. The relief sought by the plaintiff is for specific performance of agreement respecting immovable property by directing the defendant No.1 to execute sale deed in favour of the plaintiff and to deliver possession to him. The trial court was, therefore, right in holding that the suit was covered by clause (d) of Section 16 of the Code and the proviso had no application.
14.Now,question arises what is the subject matter involved. In case, the subject matter is not immovable, the things will be determined accordingly and in that eventuality, the situation alike referred in section 20 CPC would be determinant for jurisdiction. In case, the subject-matter is immovable property, wherever it is located would be determinant for jurisdiction, as per the spirit of section 16 of CPC. Section 20 of CPC Suit No. 92/13 M/s Biopolymers Systems Vs. Haryana Financial 14 begins with word "subject to limitations aforesaid....." , means section 20 is to be read with other provisions inclusive of section
16. When section 16 applies, it excludes the applicability of section 20 or in relevant situation, both the sections are to be read together. The proviso of Section 16 CPC talks about the eventuality of relief of compensation or alike, but it does not invest the jurisdiction with the court other than the place where subject matter is located. In AIR 2005 SC 4446(Supra), "it was held that Section 16 recognises a well established principle that actions against res or property should be brought in forum where such res is situated. A court within whose territorial jurisdiction property is not situated has no power to deal with and decide rights or interests in such property. In other words, a court has no jurisdiction over a dispute in which it cannot given an effective judgment. Proviso to Section 16, no doubt, states that though the court cannot, in case of immovable property situate beyond jurisdiction, grant a relief in rem still it can entertain a suit where relief sought can be obtained through personal obedience of the defendant."
15. Since the suit property was located at Sonepat(haryana). As per Section 16(c) only courts located at Sonepat are having the Suit No. 92/13 M/s Biopolymers Systems Vs. Haryana Financial 15 territorial jurisdiction to try and entertain the present case. Proviso to Section 16 CPC is not applicable to make out the jurisdiction of the present court. Therefore it appears that the present court at Delhi lacks territorial jurisdiction. The present suit cannot be adjudicated by this court.
16.Consequently, the preliminary issue framed on 03.02.11 is decided in favour of defendants and against the plaintiff and it is held that this court has no territorial jurisdiction to entertain and try the present suit. In these circumstances, present suit stands dismissed. No order as to cost. Decree be made.
17.File be consigned to Record Room.
ANNOUNCED IN THE OPEN (Sanjeev Aggarwal) COURT ON 05.03.2014 ADJ(N/w) Rohini Courts Delhi/05.03.2014 Suit No. 92/13 M/s Biopolymers Systems Vs. Haryana Financial