State Consumer Disputes Redressal Commission
M/S. Ascent Construction Co. vs The State Bank Of India, on 27 September, 2012
BEFORE THE GOA STATE CONSUMER DISPUTES REDRESSAL COMMISSION, PANAJI GOA Complaint No. 14/10 M/s. Ascent Construction Co. A partnership firm duly registered With the Registrar of Firms, represented by its Partner, Mr. Edgar Cotta, Married, son of late Mr. Eustaquio Cotta, Aged 41 years, Indian national, With office at Hotel Miramar, P.O. Caranzalem, Panaji, Goa ..Complainant V/s. The State Bank of India, Through its Assistant General Manager, Patto Branch, Panaji, Goa. .Opposite Party Complainant is represented by Adv. Shri. A. Monteiro. O.P is represented by Adv. Shri. A. V. Pavithran. Coram: Shri. Justice N.A. Britto, President Smt. Vidhya R. Gurav, Member Dated: 27/09/2012 ORDER
[Per Justice Shri. N. A. Britto, President] A notice dated 21/05/10, followed by another notice dated 21/09/10 issued by the O.P. under Section 13(2) and Section 13(4), respectively, of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act, for short) made the complainant to invoke the jurisdiction of this Commission on 25/08/2010, with a complaint filed under Section 17 of the C.P. Act, 1986, seeking several reliefs including a declaration that the said notices are illegal, null and void and of no legal consequence in terms of prayer (a) and injunctions in terms of prayers
(c) and (d).
2. Some more facts are required to be stated to understand the case of the complainant and to answer the objections raised.
3. The complainant is a firm consisting of partners who are family members. The O.P. is a Bank constituted under the State Bank of India Act, 1955.
4. The complainant obtained a loan from the O.P. of Rs. 40 lacs on or about 29/06/2000 by mortgaging two plots in favour of the O.P., bearing plot Nos. 13 and 36, having Chalta No. 5 of P.T. Sheet No. 143 of Panaji City Survey. The complainants loan became a non-performing asset (NPA, for short). The complainant was given facility of OTS (one time settlement), for the sum of Rs. 90 lacs, out of which Rs. 80 lacs were required to be deposited, with deferred payment of Rs. 10 lacs.
The complainant could not keep to the terms of OTS, as conveyed by letter dated 30/03/07 r/w letter dated 07.03.06. The complainant was then asked by letter dated 27/05/09 to submit a fresh proposal.
By letters dated 19/3/10 read with letter dated 6/4/10, the complainant was offered a revised OTS on terms and conditions of letter dated 6/4/10 and the complainant was required to pay Rs. 65,94,250.46 being the outstanding balance as on date the account was categorized as doubtful NPA. According to the complainant by then the complainant had deposited Rs. 78,20,000/-. As per the complainant by letter dated 9/4/10 the said offer of the O.P. was accepted by the complainant but the O.P. withdrew the offer, by letter dated 21/04/10. The case of the complainant in short is that the offer made by the O.P. by their letter dated 6/4/10 and accepted by the complainant by their letter dated 9/4/10 amounted to a concluded contract between the parties and the O.P. therefore could not have withdrawn the offer unilaterally. According to the complainant at that point of time the complainant had already deposited a sum of Rs. 88,18,412/- with the O.P.
5. There is no dispute that the O.P. on or about 28/04/04 approached the DRT (Debt Recovery Tribunal, No. III, at Mumbai) to recover from the complainant a sum of Rs. 75,60,856.67 due on loan taken, as on 27/04/04 with further interest at the rate of 12.85% per annum with quarterly rests. Obviously, this was much prior to notice issued by the O.P. under Section 13(2) of the SARFAESI Act demanding a sum of Rs. 1,76,91,792.67 as on 20/05/10 together with further interest thereon at contractual rate, etc.
6. This complaint came up for hearing before this Commission on various dates, and very often it was adjourned, at the request of one or the other party on the representation that the application No. 165/2004 was pending for orders before DRT, No. III, at Mumbai. At one stage we impressed upon the parties that we were not inclined to keep this complaint indefinitely pending on that count, in view of the mandate of Section 13(3A) of the C.P. Act and, as such arguments have been heard on objections taken to the complaint as well as the objection taken for not filing the written version, in time.
7. The first objection taken by Shri. Pavithran, the Lr. Advocate on behalf of the O.P., is that the present complaint is barred by Section 34 of the SARFAESI Act, which reads as follows:
34. Civil Court 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 any Court or other Authority in respect of any action taken or to be taken in pursuance of any power conferred by or under this Act or under the Recovery of Debts due to Banks and Financial Institutions Act, 1993 (51 of 1993).
8. Before dealing with the submission made by Shri. Pavithran it is necessary to have look at some of the provisions of the SARFAESI Act whose object is to achieve speedier recovery of the dues declared as NPAs and better availability of capital liquidity and resources to help in growth of economy of the country and welfare of the people in general which would subserve the public interest, as observed by the Apex Court in Mardia Chemicals Ltd (AIR 2004 SC 2371).
9. Chapter 3, Section 13 of the SARFAESI Act, in substance, provides for enforcement of security interest executed in favour of any secured creditor by such creditor without the intervention of the Court or tribunal in accordance with the provisions of the SARFAESI Act.
Sub Section 2 of section 13 of SARFAESI Act deals with a notice in writing to be given to the borrower to discharge his liabilities in respect of debt which has been classified by the secured creditor as a non performing asset.
Sub Section 3 of Section 13 stipulates that notice be given to give details of the amount payable.
Sub Section 3 (A) of Section 13 provides a remedy to the borrower to make a representation and in case a representation is made, the decision is required to be communicated to the borrower.
The proviso stipulates that the reasons so communicated will not confer any right on the borrower to prefer an application to the DRT (Debts Recovery Tribunal) under Section 17 or the Court of the District Judge under section 17 (A).
Sub section (4) of section (13) provides that in case the borrower fails to discharge his liabilities in full within the period specified in sub section (2) the secured creditor at its discretion can take one or more of the measures to recover his secured debts, as specified in clause (a) to (d) of sub section (4) of section 13.
Sub clause (a) with which we would be concerned with, deals with taking possession of the secured assets of the borrower including the right to transfer by way of lease, assignment or sale for realizing the secured assets. (This is only a summary of Section 13 of SARFAESI Act)
10. Section 17 of the SARFAESI Act deals with the right of appeal and it provides that:
(1)Any person including borrower, aggrieved by any of the measures referred to in sub-section 4 of section 13 taken by the secured creditor or his authorized officer under this chapter , may make an application alongwith such fee, as may be prescribed, to the Debts Recovery Tribunal having jurisdiction in the matter within forty-five days from the date on which such measures had been taken:
Provided Explanation (2) The Debts Recovery Tibunal shall consider whether any of the measures referred to in sub-section (4) of section 13 taken by the secured creditor for enforcement of security are in accordance with the provisions of this Act and the rules made thereunder:(3) (4) (5) (6) (7)
11. Section 34 of the SARFAESI Act as already seen, states that no Civil Court shall have jurisdiction to entertain any suit or proceeding in respect of any matter which a Debts Recovery Tribunal or the Appellate Tribunal is empowered by or under this Act to determine and no injunction shall be granted by any Court or other authority in respect of any action taken or to be taken in pursuance of any power conferred by or under this Act or under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (51 of 1993) (emphasis, ours).
11.1 Section 35 of the SARFAESI Act provides that the provisions of this Act shall have effect, notwithstanding anything inconsistent therewith contained in any other law for the time being in force or any instrument having effect by virtue of any such law. In other words the SARFAESI Act overrides all other laws even in case where there is something which is inconsistent with the provisions of SARFAESI Act.
11.2 Section 37 of the SARFAESI Act provides that the provisions of this Act or the rules made thereunder shall be in addition to, and not in derogation of, the Companies Act, 1956 (1 of 1956), the Securities Contracts (Regulation)Act, 1956 (42 of 1956), the Securities and Exchange Board or India Act, 1992 (15 of 1992), the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (51 of 1993) or any other law for the time being in force.
12. We are entirely in agreement with submission made by Shri. Pavithran. The remedy provided against notice under Section 13(2) of the SARFAESI Act is a representation to the Bank concerned under Section 13(3-A) of the SARFAESI Act. In case the borrower fails to discharge his liability in full specified in the notice issued under Section 13(2), the secured creditor can take recourse to any of the remedies provided by clauses (a) to (d) of the sub Section 4 of Section 13 of the SARFAESI Act but in between the stages of Section 13(3A) and 13(4) no remedy is provided to a borrower, and Section 34 bars the remedy of injunction to be granted by the Civil Court not only in respect of any action taken but also proposed to be taken in pursuance of any power conferred by or under the SARFAESI Act or under Recovery of Debts due to Banks and Financial Institutions Act, 1993.
13. This Commission by order dated 15/12/11 in complaint No. 6/11, presumably filed by one of the family members of the complainant-firm has held that:
28. Section 35 of the SARFAESI Act overrides the provisions of any other law even in case where there is something inconsistent in any other law even in case where there is something inconsistent in any other law. There is none in the C.P. Act 1986 which is inconsistent with the provisions of SARFAESI Act.
Section 37 makes the position further clear by stating that the provision of this Act shall be in addition to and not in derogation of any other law for the time being in force. True, Section 3 of the C.P. Act, 1986 states that the provisions of the Act shall be in addition to and not in derogation of the provisions of any other law for the time being in force. Section 37 of the SARFAESI Act which is similar to Section 3 will now prevail over, Section 3 of the C.P. Act, 1986 being a special law enacted later in point of time.
It is therefore obvious that action taken under the special law providing for special remedies have barred the jurisdiction of the Civil Courts to entertain any proceedings in respect of any matter which a DRT is empowered to determine. If Civil Courts are barred from exercising jurisdiction, by implication, the Consumer Fora which have the trapping of the Civil Courts and which are supplemental Fora their jurisdiction would also be barred in respect of the matters which are required to be dealt with by the DRT.
We are therefore inclined to uphold the first objection taken on behalf of the O.P.
14. The second objection taken by Shri. Pavithran, the Lr. Advocate on behalf of the O.P. is that there were already parallel proceedings pending before the DRT of which the complainant had notice much before the complainant approached this Commission, with his complaint dated 25/08/2010. Relying on Topline Shoes Ltd & anr. vs. Corporation Bank & anr. (2002 10 SCC 358), Shri. Pavithran has submitted that this complaint ought not to be entertained as the complainant is free to seek all the reliefs sought by him before the D.R.T.
15. On the other hand Shri. Monteiro, would submit that in the recovery proceedings filed by the O.P. before the DRT there is no counter claim filed by the complainant. Shri. Monteiro submits that this complaint cannot be termed as parallel proceedings to the proceedings filed before the DRT in as much as the cause of action in both the proceedings is not one and the same. Shri. Monteiro would submit that cause of action to file the present complaint was the threat to take possession under Section 13(4) of the SARFAESI Act, though Shri. Monteiro fairly concedes that he could have obtained a stay from the DRT.
16. We are not impressed with the submissions made by Shri. Monteiro. In Topline Shoes Ltd., (supra). It was held by the Apex Court as follows:
2. It is brought to our notice by the learned counsel for the respondent Bank that a proceeding is pending before the Debts Recovery Tribunal at Ahmedabad (for short the Tribunal) against the appellant and the appellant brings to our notice that he has already made a counter-claim in that proceeding and both submit that the proceedings before the Commission and the Tribunal arise out of the same cause of action. If that is so, appropriate course for the appellant would be to pursue the remedy before the Tribunal rather than the remedy before the Commission.
Perhaps bearing this aspect in view the Commission has passed the order under appeal. In that view of the matter, we think it appropriate not to interfere with the order made by the Commission. The appeal is therefore dismissed.
Admittedly, whether before DRT or by initiating the proceedings under SARFAESI Act what the secured creditor namely, the O.P., was trying to do is to recover the dues due by the complainant, on the loan taken initially of Rs. 40 lacs. Therefore, it is obvious that the cause of action as far as the O.P is concerned is one and the same but the remedies chosen were under two different enactments. That the cause of action is also one and the same can be gathered from what the complainant has stated in his notice dated 30/07/12:
5. You will not be able to deny that the subject matter of both the above mentioned proceedings are the same and are inseparable and thus connected.
6. You will also be aware that the applications filed in both the matters pertain to the monies claimed by you We may also refer to another decision on the subject in the case of Shri. Jagannath Constructions (2001 (1) CPR 1 ) wherein it was observed by the Tamilnadu State Commission as follows:
This apart, in respect of the same matter in dispute, the complainant Company had admittedly instituted civil proceedings against the O.Ps before the competent Civil Forum. Axiomatic a proposition of law it is that if, in respect of the same subject matter, proceedings before the Civil Forum had been instituted prior to the institution of the proceedings before the Fora constituted under the Act and such proceedings are pending, the Fora constituted under the Act definitely gets ousted of jurisdiction.
In our view both the decisions are squarely applicable to the case at hand. Nothing prevented the complainant to raise a counter claim and seek the reliefs sought in this complaint before the D.R.T. Both the parties were at large before the Lr. DRT, III at Mumbai and whatever reliefs the complainant wanted to seek he could have sought the same before the Lr. DRT. We therefore are inclined to uphold the second objection and are not inclined to entertain this complaint.
17. The third submission of Shri. Pavithran is that the complainant has approached this Commission by committing a fraud and by suppressing the fact that the O.P. had already filed recovery proceedings bearing No. 165/2004 before the DRT No. III, at Mumbai where the complainant and others had filed written statements on or before 16/02/06. In reply Shri. Monteiro submits that there was no question of the complainant suppressing any facts as in letter dated 13/11/07, the complainant did mention that recovery proceedings were pending adjudication against the complainant and therefore there was no intention of hiding anything from the Commission.
18. We are not impressed with this submission of Shri. Monteiro. It can be seen from recovery proceedings No. 165/04 before the DRT No. III, Mumbai that the O.P., as applicant in that case, made an averment that the matter regarding the application is not pending before any Court of law or any other authority or any other bench of the Tribunal.
Ordinarily, such an averment is made whenever more than one Court or authority can exercise the jurisdiction. What prevented the complainant from making such an averment in his complaint? We get no satisfactory answer. Making an averment in the complaint cannot be equated with pointing to a document on record. It is trite law that so as to enable the Court to refuse to exercise its discretionary jurisdiction suppression must be of a material fact. What would be a material fact, suppression whereof would disentitle a party to obtain a discretionary relief, would depend upon the facts and circumstances of each case. It is also trite law that a person invoking the discretionary jurisdiction of the Court cannot be allowed to approach it with a pair of dirty hands (See M/s. Sardar Associates and ors. vs. Punjab & Sind Bank, judgement of the Apex Court dated 31/7/09 in C.A. No. 4970-4971).
19. The complainant could have approached the Civil Court as well as this Commission.
Since the complainant approached this Commission it was necessary for the complainant to have made an averment similar to the averment made by the O.P. in proceedings No. 165/04. Need of making such an averment is that no party can be before two different forums seeking the same reliefs and this is with a view to avoid conflicting decisions. From day one, the complainant has been pressing for exparte interim relief. That status quo was ordered to be maintained only on 10/03/11 is another matter. In fact one fails to understand as to why the O.P. did not take possession of the mortgaged property on the scheduled date i.e 21/9/10. In case the complainant had made an averment to the effect that the recovery proceedings were pending before the DRT in respect of the same subject matter, then this Commission might have not granted exparte or any relief.
In our view, it appears that the complainant did not disclose the pendency of the said proceedings before the DRT with a purpose. In our view, such a non disclosure would amount to suppressing of a material fact and on this count also the complaint needs to be dismissed. In all summary jurisdictions, like the present one, including applications for temporary injunction, writ jurisdiction, etc suppression of material facts has always been held to be fatal to the party approaching the Court. That itself is sufficient to show the door to the party approaching the Court without going to the merits of his case.
19.1 In Morgan Stanley M.F. vs. SEBI & ors.
C.A. 4584/94, the Apex Court has held:
there is an increasing tendency on the part of litigants to indulge in speculative and vexatious litigation and adventurism which the Fora seem really to oblige. We think such a tendency should be curbed...
19.2 In Tarachand Kosle v/s National Aviation (2012(2)CPR 104) the Chhattisgarh State Commission has held that principles of natural justice demand that everyone should come before District Forum with clean hands stating bonafidely, every fact without any concealment. If any concealment of material fact is found on the part of any party, then such party cannot be granted any discretionary relief under the provisions of C. P. Act, 1986.
19.3 The third objection therefore also needs to be upheld.
20. As far as the complainants objection to the written version not having been filed in time, the said objection also needs to be upheld. Firstly, we must note that the facts stated in affidavits are contrary to the facts recorded by the Commission after the O.P was served with the notice. In our view, what is recorded in the roznamas should prevail over what has been stated on behalf of the O.P. That apart, the explanation given by a practicing advocate that he thought the complaint to be an appeal simply cannot be accepted.
21. For the above reasons we have no other option but to reject the complaint, leaving the parties to bear their own costs.
[Smt. Vidhya R. Gurav] [Justice Shri. N. A. Britto] Member President