Madras High Court
K.R.Radhakrishnan vs K & N Trade on 31 August, 2012
Author: V.Dhanapalan
Bench: V.Dhanapalan
IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED :: 31-08-2012 CORAM THE HONOURABLE MR.JUSTICE V.DHANAPALAN C.R.P.PD.No.906 OF 2012 K.R.Radhakrishnan ... Petitioner -vs- 1.K & N Trade, rep.by its Managing Partner, L.Kannan. 2.K.Sivakumar 3.K.Iqbal 4.State Bank of India, rep.by its Authorised Officer, Sambi Branch, No.29, Montieth Road, Egmore, Chennai-08. ... Respondents For petitioner : Mr.R.Muthukumarasamy, Senior Counsel, for Mr.K.S.Karthik Raja. For respondents : Mr.S.Parthasarathy, Senior Counsel, for Mr.S.Thangavel. O R D E R
Revision petitioner is the second defendant in the suit. The suit O.S.No.1757 of 2011 was filed by the first respondent/plaintiff on the file of District Munsif Court, Coimbatore, for the relief of permanent injunction, restraining the defendants, their men and agents from in any manner evicting the plaintiff from the property more fully described in the schedule except following due process of law. Pending the said suit, the first respondent also filed an interlocutory application I.A.No.2266 of 2011 for grant of interim injunction.
2. The case of the first respondent before the trial Court was that he was a firm actively associated with Reliance Telecommunication and engaged in the distribution of e-recharging coupons and peripherals of Reliance group of companies; for the purpose of the said business, the firm had taken on lease the suit premises on 27.05.2006 and 27.12.2006; since the process was a continuous one, the lease period was extended on 21.10.2011; while the activities of the firm were going on, the second respondent herein offered the suit property as security for his business without any intimation to him; on 20.10.2011, he noticed a paper publication stating that the properties were to be auctioned by the fourth respondent and, hence, he filed the suit and also the application for the reliefs stated above.
3. The above case of the first respondent was resisted by the revision petitioner, contending that he was the successful auction purchaser of the suit property; the first respondent was not at all in possession of the suit property from 2006 onwards and, when that be so, the first respondent had no right to file the suit and also the application.
4. The application I.A.No.2266 of 2011 was allowed by the trial Court by an order, dated 12.01.2012, granting interim injunction. Peeved at the said order, this revision petition is directed.
5. Learned Senior Counsel for the petitioner would primarily contend that the civil court has no jurisdiction to entertain the suit or for that matter but it is only the Debts Recovery Tribunal. He would rely upon a Division Bench decision of this Court in Sree Lakshmi Products v. State Bank of India, 2007 (2) CTC 193, wherein it was held as under :
"9. On a plain reading of the observations made in Transcore case, it is clear that the bank/FI is entitled to take actual possession of the secured assets from the borrower or from any other person in terms of Section 13 (4) of the SARFAESI Act. Any transfer of secured assets after taking possession of the same by the bank/FI shall vest in the transferee all rights in relation to the secured assets as if the transfer has been made by the owner of such secured assets. Any party aggrieved by such dispossession will have to take recourse to approaching the DRT under Section 17 (4) of the SARFAESI Act. If the party is dispossessed, not in accordance with the provisions of the Act, then the DRT is entitled to put the clock back by restoring the status quo ante. By virtue of Section 17 (4) read with Section 35 of the SARFAESI Act, if in a given case the measures undertaken by the secured creditor under Section 13 (4) come in conflict with the provisions of any State law, then notwithstanding to such conflict, the provisions of Section 13 (4) shall override the local law. Section 13 (13) of the SARFAESI Act operates as an attachment/injunction restraining the borrower from disposing of the secured assets and therefore, any tenancy created after such notice would be null and void. Any tenancy created by the mortgager after the mortgage in contravention of Section 65-A would not be binding on the bank/FI, and in any event such tenancy rights shall stand determined once action under Section 13 (4) has been taken by the bank/FI. When the petitioner is claiming a tenancy prior to the creation of mortgage and such tenancy is disputed by the bank the remedy of the petitioner is to approach DRT by way of an application under Section 17 of the SARFAESI Act to establish his rights."
6. Conversely, learned Senior Counsel for the respondents would argue that it is only the civil court that can deal with the matter under Tamil Nadu Buildings (Lease and Rent Control) Act, but not DRT under SARFAESI Act. He would cite a Division Bench authority of this Court in the case of Indian Bank v.Nippon Enterprises South, 2011 (2) CTC 474, wherein it was held as follows :
"36. Under Section 13 (4) of the SARFAESI Act, the secured creditor can take possession of the secured assets of the borrower. There can be no difficulty in taking such possession of the secured assets either under Section 13 (4) or under Section 14 of the SARFAESI Act, if the secured asset is in the possession of the borrower or guarantor, as the case may be. SARFAESI Act entitles the creditor to take possession of the secured assets either by issuing possession Notice under Section 13 (4) or by making Application to the Chief Metropolitan Magistrate/District Magistrate to take physical possession under Section 14. Though the function of Chief Metropolitan Magistrate/District Magistrate is only ministerial, the provision of Section 14 confers drastic power to take possession even by use of force. The difficulty arises only in cases where the possession of the property is in the hands of the Tenant (lessee). The SARFAESI Act does not contain any specific provision enabling the secured creditor to take possession from the hands of a Tenant (lessee). On the other hand, the TN Rent Control Act contemplates that a Tenant is entitled in law to continue to be in possession unless he is evicted under the provisions of the said Act. SARFAESI Act being mainly procedural and the TN Rent Control Act being exclusively dealing with the substantive right of Tenants, both the Acts operate on different fields. Only in the event the SARFAESI Act contains a provision to enable the Bank to take possession of a secured asset from a lessee, then only it can be held that there is conflict between the SARFAESI Act and the TN Rent Control Act in which case, the TN Rent Control Act should give way for the SARFAESI Act to have overriding effect. However, there is no such provision in the SARFAESI Act enabling the Bank to take possession from the lessee, though the Act speaks of the right of the Bank to take possession of the secured asset. Moreover, right from Section 13 (2) till exhausting the provision of Appeal, the Bank deals only with the borrower/guarantor and the lessee is nowhere in the picture, as the Act does not require the Bank to involve the lessee/Tenant as well in the proceedings. Thus, we do not find any overlapping or inconsistency between these two Acts. When there is no such overlapping or repugnancy between these two provisions in respect of taking possession from the lessee, it has to be held that physical possession of the secured assets from the lessee/Tenant can be taken only by invoking the provisions of the TN Rent Control Act."
7. On going through the records, what comes to be known is, that, originally, the second respondent had created a mortgage over the suit properties and other properties in favour of the fourth respondent-bank for the loans and facilities availed by him for his companies and for housing term loan availed by him and his wife. Since the loans were not repaid by the second respondent, the fourth respondent, after following due procedure, has taken possession of the suit properties. Thereafter, the suit properties were put to auction, wherein the revision petitioner was declared as the successful bidder and, pursuant thereto, confirmation of sale was also given to the revision petitioner. It also transpires, as could be seen from the records, that the second respondent, had leased out the said properties to the first respondent, suppressing the fact of the said properties being mortgaged to fourth respondent.
8. Under the circumstances, the legal provisions that are relevant for consideration are : (1) Sections 13, 17 and 34 of The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act,2002 ( in short, "the Act"), which provisions read as under :
Section 13 :
"13. Enforcement of security interest.(1) Notwithstanding anything contained in Section 69 or Section 69-A of the Transfer of Property Act, 1882 (4 of 1882), any security interest created in favour of any secured creditor may be enforced, without the intervention of the court or tribunal, by such creditor in accordance with the provisions of this Act.
(2) Where any borrower, who is under a liability to a secured creditor under a security agreement, makes any default in repayment of secured debt or any instalment thereof, and his account in respect of such debt is classified by the secured creditor as non-performing asset, then, the secured creditor may require the borrower by notice in writing to discharge in full his liabilities to the secured creditor within sixty days from the date of notice failing which the secured creditor shall be entitled to exercise all or any of the rights under sub-section (4).
(3) The notice referred to in sub-section (2) shall give details of the amount payable by the borrower and the secured assets intended to be enforced by the secured creditor in the event of non-payment of secured debts by the borrower.
(3-A) If, on receipt of the notice under sub-section (2), the borrower makes any representation or raises any objection, the secured creditor shall consider such representation or objection and if the secured creditor comes to the conclusion that such representation or objection is not acceptable or tenable, he shall communicate within one week of receipt of such representation or objection the reasons for non-acceptance of the representation or objection to the borrower:
Provided that the reasons so communicated or the likely action of the secured creditor at the stage of communication of reasons shall not confer any right upon the borrower to prefer an application to the Debts Recovery Tribunal under Section 17 or the Court of District Judge under Section 17-A. (4) In case the borrower fails to discharge his liability in full within the period specified in sub-section (2), the secured creditor may take recourse to one or more of the following measures to recover his secured debt, namely:
(a) take possession of the secured assets of the borrower including the right to transfer by way of lease, assignment or sale for realising the secured asset;
(b) take over the management of the business of the borrower including the right to transfer by way of lease, assignment or sale for realising the secured asset:
Provided that the right to transfer by way of lease, assignment or sale shall be exercised only where the substantial part of the business of the borrower is held as security for the debt:
Provided further that where the management of whole of the business or part of the business is severable, the secured creditor shall take over the management of such business of the borrower which is relatable to the security for the debt;
(c) appoint any person (hereafter referred to as the manager), to manage the secured assets the possession of which has been taken over by the secured creditor;
(d) require at any time by notice in writing, any person who has acquired any of the secured assets from the borrower and from whom any money is due or may become due to the borrower, to pay the secured creditor, so much of the money as is sufficient to pay the secured debt."
"17. Right to appeal.(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 authorised officer under this chapter, may make an application along with 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 measure had been taken:
Provided that different fees may be prescribed for making the application by the borrower and the person other than the borrower.
Explanation.For the removal of doubts, it is hereby declared that the communication of the reasons to the borrower by the secured creditor for not having accepted his representation or objection or the likely action of the secured creditor at the stage of communication of reasons to the borrower shall not entitle the person (including borrower) to make an application to the Debts Recovery Tribunal under this sub-section.
(2) The Debts Recovery Tribunal 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) If, the Debts Recovery Tribunal, after examining the facts and circumstances of the case and evidence produced by the parties, comes to the conclusion that any of the measures referred to in sub-section (4) of Section 13, taken by the secured creditor are not in accordance with the provisions of this Act and the rules made thereunder, and require restoration of the management of the business to the borrower or restoration of possession of the secured assets to the borrower, it may by order, declare the recourse to any one or more measures referred to in sub-section (4) of Section 13 taken by the secured creditors as invalid and restore the possession of the secured assets to the borrower or restore the management of the business to the borrower, as the case may be, and pass such order as it may consider appropriate and necessary in relation to any of the recourse taken by the secured creditor under sub-section (4) of Section 13.
(4) If, the Debts Recovery Tribunal declares the recourse taken by a secured creditor under sub-section (4) of Section 13, is in accordance with the provisions of this Act and the rules made thereunder, then, notwithstanding anything contained in any other law for the time being in force, the secured creditor shall be entitled to take recourse to one or more of the measures specified under sub-section (4) of Section 13 to recover his secured debt.
(5) Any application made under sub-section (1) shall be dealt with by the Debts Recovery Tribunal as expeditiously as possible and disposed of within sixty days from the date of such application:
Provided that the Debts Recovery Tribunal may, from time to time, extend the said period for reasons to be recorded in writing, so, however, that the total period of pendency of the application with the Debts Recovery Tribunal, shall not exceed four months from the date of making of such application made under sub-section (1).
(6) If the application is not disposed of by the Debts Recovery Tribunal within the period of four months as specified in sub-section (5), any part to the application may make an application, in such form as may be prescribed, to the Appellate Tribunal for directing the Debts Recovery Tribunal for expeditious disposal of the application pending before the Debts Recovery Tribunal and the Appellate Tribunal may, on such application, make an order for expeditious disposal of the pending application by the Debts Recovery Tribunal.
(7) Save as otherwise provided in this Act, the Debts Recovery Tribunal shall, as far as may be, dispose of the application in accordance with the provisions of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (51 of 1993) and the rules made thereunder."
"34. Civil court not to have jurisdiction.No civil court shall have jurisdiction to entertain any suit or proceeding in respect of any matter which a Debts Recovery Tribunal or the Appellate Tribunal is empowered by or under this Act to determine and no injunction shall be granted by any court or other authority in respect of any action taken or to be taken in pursuance of any power conferred by or under this Act or under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (51 of 1993)."
9. Section 13 (1) of the Act would make it clear that any security interest created in favour of any secured creditor may be enforced, without the intervention of the court or tribunal, by such creditor in accordance with the provisions of the Act. Sub-section (4) further clarifies that in case the borrower fails to discharge his liability in full within the period specified in sub-section (2), the secured creditor may take recourse to one or more of the following measures to recover his secured debt, namely:(i) take possession of the secured assets of the borrower including the right to transfer by way of lease, assignment or sale for realising the secured asset; (ii take over the management of the business of the borrower including the right to transfer by way of lease, assignment or sale for realising the secured asset; provided that the right to transfer by way of lease, assignment or sale shall be exercised only where the substantial part of the business of the borrower is held as security for the debt; provided further that where the management of whole of the business or part of the business is severable, the secured creditor shall take over the management of such business of the borrower which is relatable to the security for the debt; (iii) appoint any person as the manager, to manage the secured assets the possession of which has been taken over by the secured creditor; and (iv) require at any time by notice in writing, any person who has acquired any of the secured assets from the borrower and from whom any money is due or may become due to the borrower, to pay the secured creditor, so much of the money as is sufficient to pay the secured debt.
10. Section 17 facilitates for appeal. As per the said Section, 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 authorised officer under this chapter, may make an application along with 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 measure had been taken. Thereafter, the Debts Recovery Tribunal 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. If, the Debts Recovery Tribunal, after examining the facts and circumstances of the case and evidence produced by the parties, comes to the conclusion that any of the measures referred to in sub-section (4) of Section 13, taken by the secured creditor are not in accordance with the provisions of this Act and the rules made thereunder, and require restoration of the management of the business to the borrower or restoration of possession of the secured assets to the borrower, it may by order, declare the recourse to any one or more measures referred to in sub-section (4) of Section 13 taken by the secured creditors as invalid and restore the possession of the secured assets to the borrower or restore the management of the business to the borrower, as the case may be, and pass such order as it may consider appropriate and necessary in relation to any of the recourse taken by the secured creditor under sub-section (4) of Section 13. Also, if the Debts Recovery Tribunal declares that the recourse taken by a secured creditor under sub-section (4) of Section 13 is in accordance with the provisions of this Act and the rules made thereunder, then, notwithstanding anything contained in any other law for the time being in force, the secured creditor shall be entitled to take recourse to one or more of the measures specified under sub-section (4) of Section 13 to recover his secured debt.
11. In the instant case, if the first respondent is aggrieved by the measures referred to in sub-section (4) of Section 13 taken by the fourth respondent/secured creditor or his authorised officer, he ought to have filed an application under Section 17 (1) to the Debts Recovery Tribunal having jurisdiction in the matter within forty-five days from the date on which such measure had been taken, which is, admittedly, not done. Moreover, when the proceedings were initiated by the secured creditor under Section 13 (4) in the year 2008, the first respondent/plaintiff, sleeping over the matter for nearly three years, without filing an application before DRT as contemplated under the Act, had filed the suit, particularly when such recourse is not provided under the Act, and got the interim injunction in his favour, by causing much prejudice to the revision petitioner. Besides, as per Section 34, 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 the 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.
12. When the provisions of the Act are conspicuous as to the manner in which the parties have to avail their remedies and also the bar of Civil Court jurisdiction to entertain any suit with regard to the matters of present nature, this Court is at a loss to understand how the first respondent, under the guise of tenancy, has approached the trial Court and got the interim injunction in his favour, despite there being a stiff opposition to that effect.
13. As held by the Division Bench of this Court in Lakshmi Products Limited's case, cited above and relied upon by the learned Senior Counsel for the petitioner, by virtue of Section 17 (4) read with Section 35 of the SARFAESI Act, if in a given case the measures undertaken by the secured creditor under Section 13 (4) come in conflict with the provisions of any State law, then notwithstanding to such conflict, the provisions of Section 13 (4) shall override the local law, which, in this case is, Tamil Nadu Buildings (Lease & Rent Control) Act. Section 13 (13) of the SARFAESI Act operates as an attachment/injunction restraining the borrower from disposing of the secured assets and, therefore, any tenancy created after such notice would be null and void. Any tenancy created by the mortgager after the mortgage would not be binding on the bank, and, in any event, such tenancy rights shall stand determined once action under Section 13 (4) has been taken by the bank. Also, as, in the case on hand, the first respondent is claiming tenancy prior to the creation of mortgage and such tenancy is disputed by the revision petitioner, who is the auction purchaser, and also the bank, the secured creditor, the remedy of the first respondent is to approach DRT by way of an application under Section 17 of the Act to establish his rights.
14. While holding as above, this Court is also concerned about another Division Bench decision of this Court in Indian Bank's case, relied upon by the learned Senior Counsel for the respondents. On analysing the legal position and the ruling of the said Division Bench, it could be seen that a tenant, who is in physical possession of the mortgaged property and claims that he is to be protected under the provisions of the Rent Control Act, cannot be dispossessed without taking recourse to the provisions of the said Act. The said claim has been contested by the secured creditor that the protection afforded under the Rent Control Act to a tenant is from the landlord of the premises and the landlord of the premises cannot recover possession from the tenant unless he takes recourse to any of the grounds as available to him under the Rent Control Act and the right of the tenant is fully protected notwithstanding anything contrary contained in any other law or contract. This protection however is not available against the mortgagee who seeks to enforce his right under SARFAESI Act against the principal borrower who had mortgaged the property in question by duly and validly executing the memorandum of mortgage in favour of the mortgagee.
15. On the above position having been visualised, the Division Bench in Sree Lakshmi Products' case would come to the conclusion that any tenancy created by the mortgager after the mortgage in contravention of Section 65-A of the Transfer of Property Act would not be binding on the bank and in any event such tenancy rights shall stand determined once action under Section 13 (4) of the SARFAISI Act has been taken by the bank. When the petitioner is claiming a tenancy prior to the creation of mortgage and such tenancy is disputed by the bank the remedy of the petitioner is to approach DRT by way of an application under Section 17 of the SARFAESI Act to establish his rights. However, this principle, laid down by the Division Bench had not been placed before the Division Bench in Indian Bank's case, wherein, the Division Bench, while considering the provisions of the SARFAESI Act particularly under Section 13 (4), observed that the secured creditor can take possession of the secured assets of the borrower. There can be no difficulty in taking such possession of the secured assets either under Section 13 (4) or under Section 14 of the SARFAESI Act, if the secured asset is in the possession of the borrower or guarantor, as the case may be. SARFAESI Act entitles the creditor to take possession of the secured assets either by issuing possession Notice under Section 13 (4) or by making Application to the Chief Metropolitan Magistrate/District Magistrate to take physical possession under Section 14. Though the function of Chief Metropolitan Magistrate/District Magistrate is only ministerial, the provision of Section 14 confers drastic power to take possession even by use of force. The difficulty arises only in cases where the possession of the property is in the hands of the Tenant (lessee). The SARFAESI Act does not contain any specific provision enabling the secured creditor to take possession from the hands of a Tenant (lessee). On the other hand, the TN Rent Control Act contemplates that a Tenant is entitled in law to continue to be in possession unless he is evicted under the provisions of the said Act. SARFAESI Act being mainly procedural and the TN Rent Control Act being exclusively dealing with the substantive right of Tenants, both the Acts operate on different fields. Only in the event the SARFAESI Act contains a provision to enable the Bank to take possession of a secured asset from a lessee, then only it can be held that there is conflict between the SARFAESI Act and the TN Rent Control Act in which case, the TN Rent Control Act should give way for the SARFAESI Act to have overriding effect. However, there is no such provision in the SARFAESI Act enabling the Bank to take possession from the lessee, though the Act speaks of the right of the Bank to take possession of the property. Therefore, the Division Bench held that there is no overlapping or inconsistency between these two Acts. When there is no such overlapping or repugnancy between these two provisions in respect of taking possession from the lessee, it has to be held that physical possession of the secured assets from the lessee/Tenant can be taken only by invoking the provisions of the TN Rent Control Act. The Division Bench further took a view, on considering the judgment of the Supreme Court in Central Bank of India v. State of Kerala and Others, 2009 (6) CTC 656, wherein the Supreme Court dealt with as to whether there is repugnancy between Kerala Sales Tax Act,1963, and Bombay Sales Tax Act,1959, on one hand and the SARFAESI Act on the other, that in the above case, the Supreme Court found that since there was no specific provision creating first charge in respect of the amount due to the Bank in the SARFAESI Act, such provision contained in the State enactment creating first charge in respect of the dues to the Government shall not indicate any conflict or inconsistency or overlapping between the same. In that case, there was no specific provision in the SARFAISI Act in respect of taking possession from the hands of the tenant. But, the right of the tenant to continue to be in possession is protected by the TN Rent Control Act. The SARFAESI Act is an Act for the expeditious recovery of dues to the Banks, financial institutions and secured creditors, whereas the purpose of the State legislation i.e., the TN Rent Control Act is to protect the possession of the tenants. Thus, they are traceable to two different entries in their respective fields and there is neither any conflict nor repugnancy or overlapping. In such view of the matter, there is no difficulty in holding that the Bank cannot take physical possession from the tenant protected under Tamil Nadu Rent Control Act, by invoking the provisions of Section 13 (4) and 14 of the SARFAESI Act, in the event the tenant is in bona fide occupation.
16. It is true, when a tenant is legally entitled for protection, his right has to be protected under the Rent Control Act, but the decision rendered by the Division Bench in Sree Lakshmi Products' case would reveal a situation where a tenancy is created after the mortgage and for the reasons best known, it would defeat the creditor's claims for recovery of possession in case of default or non-performing asset's liabilities.
17. In the present case, it is clear that the tenancy is created after the mortgage of the property in question to the secured creditor, namely, bank. When that is the position, the ratio laid down by the Division Bench in Sree Lakshmi Products' case will have a bearing on the matter. As the tenant has come into picture only after the property in question has been mortgaged to the secured creditor, in the absence of placing of the Division Bench decision in Sree Lakshmi Products' case before the Division Bench in Indian Bank's case, with great respect to the Division Bench, I say that the ratio laid down by the Division Bench in Sree Lakshmi Products' case will hold the field to the facts of the present case. When the tenant knows well that there will be a recovery or taking over of the possession of the mortgaged property or otherwise and enters into a lease agreement with the landlord, it is for him to seek protection before the appropriate forum namely DRT. Such a view of the matter has been dealt with clearly by the Division Bench in Sree Lakshmi Products' case. Therefore, I am of the considered opinion that the remedy available to the petitioner is only before the DRT, having jurisdiction over the issue. Though I am in complete agreement with the ratio laid down by the Division Bench in Indian Bank's case, even as there is inconsistency, repugnancy or overlapping, the mortgaged property is under the seizure of the secured creditor and if any person comes into the picture in between, the remedy for him lies only before the DRT and not the Civil Court.
18. Also, though the SARFAESI Act does not specifically mention the term "lessee" or "tenant", it has referred to the term "borrower". In this case, the second respondent is the borrower of the fourth respondent bank and the property mortgaged to the bank, in case of default of payment, shall be absolutely under the aegis of the bank, though the same is leased or rented out to a third party either previously or subsequently. If not, there is every practicability of the borrower leasing out the said mortgaged property to a third party for decades together to evade payment, in which event, the secured creditor will be in doldrums to recover the amount, amounting even to crores of rupees, advanced by it to the borrower. I do not want to see such a sorry state of affairs of the bank/secured creditor. Though it is the case of the first respondent that the suit schedule property is leased out to him by the second respondent prior to mortgage or before initiation of recovery proceedings by the bank, the lease deed produced by him is not a registered one and, therefore, no much credence can be given thereto.
19. In the light of the above discussion, as there was a clear bar of jurisdiction for the Civil Court under Section 34 of the SARFAESI Act, the Court below ought not to have entertained the suit. Moreso, when there was no jurisdiction at all to entertain the suit itself, it was not proper for the Court below to invoke Order 39 Rules 1 and 2 of CPC to grant interim injunction. Therefore, the Court below committed a grave error and injustice by allowing the interlocutory application. On that very score, the order of the trial Court suffers from legal infirmity. Correctly speaking, it was not the duty of the Court below to sift the chaff from the grain, when it was absolutely the duty of DRT concerned under Section 17, as held by me in the foregoing paragraphs.
20. Considering the totality of facts and circumstances of the case and also the propositions laid down by the two Division Benches of this Court one in Sree Lakshmi Products' case and the other in Indian Bank's case, I am of the staunch opinion that there is a clear bar of jurisdiction for the Civil Court under Section 34 of the Act to entertain the suit in general and the application in particular. Hence, I am quite unambiguous to hold that the order impugned of the Court below is not sustainable in law. Accordingly, it is set aside and the Civil Revision Petition is allowed. No costs. Consequently, the connected M.P.No.1 of 2012 is closed.
Index : Yes 31-08-2012 Internet : Yes dixit
21. After pronouncement of the order, learned counsel for the contesting/first respondent would make a plea that he may be given liberty to approach the Debts Recovery Tribunal for redressal of his grievance.
22. In view of my observations made in the order, no separate liberty need be given to the first respondent. It is open for him to approach the Debts Recovery Tribunal of competent jurisdiction, if he is so aggrieved.
Dixit 31-08-2012 To The District Munsif Court, Coimbatore. V.DHANAPALAN,J. dixit C.R.P.PD.No.906 OF 2012 31-08-2012