Karnataka High Court
Yashavant S/O Laxman Sable vs Senior Manager on 1 March, 2013
Author: A.N.Venugopala Gowda
Bench: A.N. Venugopala Gowda
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®
IN THE HIGH COURT OF KARNATAKA
CIRCUIT BENCH AT DHARWAD
DATED THIS THE 01st DAY OF MARCH, 2013
BEFORE
THE HON'BLE MR. JUSTICE A.N. VENUGOPALA GOWDA
REGULAR SECOND APPEAL No.5317/2010 (DEC/INJ)
C/w.
REGULAR SECOND APPEAL Nos.5315, 5316, 5318, 5319,
5320 AND 5328 OF 2010 (DEC/INJ)
BETWEEN:
YASHAVANT S/O LAXMAN SABLE
AGE 45 YEARS,
OCC: PRO. BOWER OF MOSSES
PATEL NAGAR, BESIDES NAGARJUN HOTEL
HOSPET, DIST: BELLARY-583 101
... APPELLANT (COMMON)
(By Sri. V P KULKARNI ADV.)
AND:
SENIOR MANAGER
A.B.N. AMRO BANK N.V.
O/A HANSALAYA BUILDING,
15, BARAKAMBA RAOD,
NEW DELHI-110 001
... RESPONDENT (COMMON)
(By Sri. MAHABALESHWAR G.C. ADV.)
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IN RSA: 5317/2010:
THIS RSA IS FILED U/SEC.100 OF CPC., AGAINST
THE ORDER DTD:26.02.2010 PASSED IN R.A.NO.73/2009
ON THE FILE OF THE PRL. CIVIL JUDGE (SR.DVN) &
J.M.F.C., HOSPET, STANDS DISMISSING THE APPEAL
FILED AGAINST THE JUDGMENT AND DECREE DT:
25.03.2009 IN OS.NO.107/2009 ON THE FILE OF THE
ADDL. CIVIL JUDGE (JR.DN.) JMFC, HOSPET, ALLOWING
THE APPLICATION FILED U/O.7 RULE 11 R/W. SEC.151
OF CPC.
IN RSA: 5315/2010:
THIS RSA IS FILED U/SEC.100 OF CPC., AGAINST
THE ORDER DTD:26.02.2010 PASSED IN R.A.NO.71/2009
ON THE FILE OF THE PRL. CIVIL JUDGE (SR.DVN) &
J.M.F.C., HOSPET, DISMISSING THE APPEAL BY
CONFIRMING THE ORDER PASSED IN I.A. NO.3 DATED
31.08.2009 IN O.S NO.103/2009, ON THE FILE OF ADDL.
CIVIL JUDGE (JR.DN.) JMFC, HOSPET, ALLOWING THE
APPLICATION FILED U/O.7 RULE 11 R/W. SEC.151 OF
CPC. AND REJECTING THE PLAINT IN THE SUIT FILED
FOR DECLARATION AND PERMANENT INJUNCTION.
IN RSA: 5316/2010:
THIS RSA IS FILED U/SEC.100 OF CPC., AGAINST
THE ORDER DTD:26.02.2010 PASSED IN R.A.NO.72/2009
ON THE FILE OF THE PRL. CIVIL JUDGE (SR.DVN) &
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J.M.F.C., HOSPET, DISMISSING THE APPEAL BY
CONFIRMING THE ORDER PASSED IN I.A. NO.3 DATED
31.08.2009 IN O.S NO.109/2009, ON THE FILE OF ADDL.
CIVIL JUDGE (JR.DN.) JMFC, HOSPET, ALLOWING THE
APPLICATION FILED U/O.7 RULE 11 R/W. SEC.151 OF
CPC. AND REJECTING THE PLAINT IN THE SUIT FILED
FOR DECLARATION AND PERMANENT INJUNCTION.
IN RSA: 5318/2010:
THIS RSA IS FILED U/SEC.100 OF CPC., AGAINST
THE ORDER DTD:26.02.2010 PASSED IN R.A.NO.74/2009
ON THE FILE OF THE PRL. CIVIL JUDGE (SR.DVN) &
J.M.F.C., HOSPET, DISMISSING THE APPEAL BY
CONFIRMING THE ORDER PASSED IN I.A. NO.3 DATED
31.08.2009 IN O.S NO.105/2009, ON THE FILE OF ADDL.
CIVIL JUDGE (JR.DN.) JMFC, HOSPET, ALLOWING THE
APPLICATION FILED U/O.7 RULE 11 R/W. SEC.151 OF
CPC. AND REJECTING THE PLAINT IN THE SUIT FILED
FOR DECLARATION AND PERMANENT INJUNCTION.
IN RSA: 5319/2010:
THIS RSA IS FILED U/SEC.100 OF CPC., AGAINST
THE ORDER DTD:26.02.2010 PASSED IN R.A.NO.75/2009
ON THE FILE OF THE PRL. CIVIL JUDGE (SR.DVN) &
J.M.F.C., HOSPET, DISMISSING THE APPEAL BY
CONFIRMING THE ORDER PASSED IN I.A. NO.3 DATED
31.08.2009 IN O.S NO.105/2009, ON THE FILE OF ADDL.
CIVIL JUDGE (JR.DN.) JMFC, HOSPET, ALLOWING THE
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APPLICATION FILED U/O.7 RULE 11 R/W. SEC.151 OF
CPC. AND REJECTING THE PLAINT IN THE SUIT FILED
FOR DECLARATION AND PERMANENT INJUNCTION.
IN RSA: 5320/2010:
THIS RSA IS FILED U/SEC.100 OF CPC., AGAINST
THE ORDER DTD:26.02.2010 PASSED IN R.A.NO.76/2009
ON THE FILE OF THE PRL. CIVIL JUDGE (SR.DVN) &
J.M.F.C., HOSPET, DISMISSING THE APPEAL BY
CONFIRMING THE ORDER PASSED IN I.A. NO.3 DATED
31.08.2009 IN O.S NO.93/2009, ON THE FILE OF ADDL.
CIVIL JUDGE (JR.DN.) JMFC, HOSPET, ALLOWING THE
APPLICATION FILED U/O.7 RULE 11 R/W. SEC.151 OF
CPC. AND REJECTING THE PLAINT IN THE SUIT FILED
FOR DECLARATION AND PERMANENT INJUNCTION.
IN RSA: 5328/2010:
THIS RSA IS FILED U/SEC.100 OF CPC., AGAINST
THE ORDER DTD:26.02.2010 PASSED IN R.A.NO.70/2009
ON THE FILE OF THE PRL. CIVIL JUDGE (SR.DVN) &
J.M.F.C., HOSPET, DISMISSING THE APPEAL BY
CONFIRMING THE ORDER PASSED IN I.A. NO.3 DATED
31.08.2009 IN O.S NO.87/2009, ON THE FILE OF ADDL.
CIVIL JUDGE (JR.DN.) JMFC, HOSPET, ALLOWING THE
APPLICATION FILED U/O.7 RULE 11 R/W. SEC.151 OF
CPC. AND REJECTING THE PLAINT IN THE SUIT FILED
FOR DECLARATION AND PERMANENT INJUNCTION.
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These appeals coming on for hearing this day, the
Court delivered the following:
JUDGMENT
The appellant / plaintiff calls in question legality of the identical but separate Order/s passed by the Trial Judge rejecting the plaint/s in terms of Order 7 Rule 11(d) of the Code of Civil Procedure, 1908, as the suits are barred by S.34 of The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short, the Act). Said orders were upheld by identical but separate Judgment/s and Decree/s passed by the First Appellate Court. This group of second appeals were heard together as the parties are common and the appeals involve common questions of fact and law. For convenience, parties will be referred by their rank in the Trial Court.
2. The plaintiff's case in brief:
The plaintiff, carrying on business in supply of iron ore and other materials at Hospet, made representations and availed different loans. To secure the loans, plaintiff 6 mortgaged the suit property - equipment / machinery etc. in favour of the defendant. Plaintiff committed default in remittance of loan instalments. His accounts were declared as 'non performing assets' by the defendant, which sent notices through the Authorised Officer, under S.13(2) of the Act, demanding the plaintiff to clear the outstanding in full, within the statutory period of 60 days. Apprehending that the defendant through the Authorized Officer would seize the mortgaged machines / equipments etc. and that he will not be able to carry on the business and clear the outstanding loans, the suits were instituted. Since the prayers in all the suits are identical, suffice to notice the prayers in O.S. No.103/2009, which are to the following effect:
" (a) a decree declaring that due to loss in supply of iron ore the rate falling to Rs.750/- per ton and the recession in the market the plaintiff is unable to make the payment of instalments that requires rescheduling and modifications thereof.
(b) Consequently, by permanent prohibitory injunction the Defendant, their men, agents and servants or any person claiming through them should be restrained from seizing suit machines and not to create third party charge on the suit machine by way of sale or transfer.7
(c) By way of mandatory injunction directions be issued to the Defendant bank to reschedule the entire loan the instalments thereof and fix it to 25% per month payable by the Plaintiff.
(d) Cost of the suit, any other relief deemed fit and further the Plaintiff also reserves his right to effect, alter and amend the plaint as and when found necessary.
(e) Draw the decree accordingly in the above terms in the interest of justice and equity."
3. The defendant filed I.A.3 under Order 7 Rule 11 read with S.151 CPC and contended that the plaintiff failed to adhere to financial discipline and committed wilful defaults, on account of which, his accounts were declared as 'non performing assets' in consonance with the RBI Prudential Guidelines of Asset Classification and notices dated 12.02.2009 were sent through the Authorised Officer, under S.13(2) of the Act, demanding the plaintiff to clear the outstanding loans in full, within a period of 60 days, failing which, it shall be entitled to take steps under S.13(4) of the Act, for enforcement of the rights. It stated that, despite service of the said notices the plaintiff failed to comply with the demand and therefore, it has a right to act in terms of S.13(4) of the Act. It was stated that the 8 relationship of the parties is that of a 'borrower' and a 'secured creditor' and that the bank has a security interest in the mortgaged property / secured assets and that, it fell within the definition of 'secured creditor' as defined under S.2(zd) read with S.2(c) of the Act and as such is entitled to relief under the provisions of the Act. It was stated that, under S.34 of the Act, jurisdiction of the Civil Court is expressly barred and for that reason, the Court has no jurisdiction to entertain and decide the suits.
4. Learned Trial Judge, by separate but identical orders passed on 31.08.2009, allowed the applications filed by the defendant and rejected the plaint/s on the ground that the suit/s are not maintainable in view of the proceedings initiated by the defendant under S.13 of the Act. The appeal/s filed thereagainst by the plaintiff having been found to be devoid of merit, were dismissed, by identical but separate Judgment/s and Decree/s passed on 26.02.2010. Hence, the plaintiff has filed these second appeals.
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5. Sri V.P. Kulkarni, learned advocate for the appellant, firstly, contended that both the Trial Court and the First Appellate Court have committed manifest errors in passing the impugned Orders and the Judgments, since they failed to take into consideration the scope and purport of the Act. Secondly, the Courts below misdirected themselves in passing the impugned Orders and the Judgments, as they have proceeded on the premise that having regard to the nature of suits and the properties, S.34 of the Act gets attracted. He submitted that the Civil Court has the requisite jurisdiction to deal with the questions raised in the suit/s, since the defendant attempted to arbitrarily takeover the equipment / machinery etc. and disrupt the business of the plaintiff. Learned counsel by inviting my attention to the Judgments in (i) KRISHNA Vs. KEDARNATH - 2005(6) KAR L.J. 337, (ii) VYSYA CO-OPERATIVE BANK LTD., Vs. Ms. G. KEERTHANA AND OTHERS - ILR 2007 KAR 4998 and (iii) R. GOPALAKRISHNA Vs. KARNATAKA STATE FINANCIAL CORPORATION - (2008) 2 AIR 10 KAR R 547 (DB), contended that keeping in view the nature of the suits, the Civil Court has the jurisdiction. He submitted that the Debts Recovery Tribunal being a creature of statute, must exercise its jurisdiction within the scope of the Act under which it has been constituted and the matters which do not come within the purview of the Tribunal must necessarily be left to the jurisdiction of Civil Court. He submitted that under the circumstances of the case, the Trial Court has the jurisdiction to decide the suit/s, even if they involve the issues concerning the mortgaged property. He further submitted that the I.As. filed by the defendant to reject the plaint/s, without filing the written statement/s to the suit/s, being not maintainable, both the Courts below are unjustified in passing the impugned Judgment/s and decree/s.
6. Sri Mahabaleswar G.C. learned advocate for the respondent on the other hand contended that the view taken in the matters by the Trial Court and affirmed by the First Appellate Court is justified. He took me through the 11 averments made in the plaint/s and also the relevant provisions of the Act and submitted that the Act is a self- contained Code and deals with all questions governing the 'borrower', 'secured creditor' and 'the security interest' created in the suit properties by the borrower. He submitted that the provisions of Ss.17 and 34 of the Act must be read together and in the facts and circumstances of the cases the Trial Court was justified in rejecting the plaint/s and the First Appellate Court was justified in dismissing the appeal/s, since the Act has provided a specialized mechanism to determine all the issues between a borrower and a secured creditor. He submitted that the decision in R. GOPALAKRISHNA Vs. KSFC (supra) is not a binding precedent in as much as it takes note of the decision in MARDIA CHEMICALS case but does not deal with it. He further submitted that the findings recorded by the Courts below being neither perverse nor illegal and there being no substantial question of law arising for decision, the second appeals are not maintainable.
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7. In view of the rival contentions and the record of the cases, the points for determination are:
(i) Whether the plaint can be rejected in a case where the defendant has not filed the written statement?
(ii) Whether the suit/s are not maintainable and whether the Courts below are justified in passing the impugned order/s & Judgment/s?
Re: Point (i):
8. A plaint shall be liable for rejection in exercise of the jurisdiction under Order 7 Rule 11(d) CPC, if it appears from the averments made therein that the suit is barred by any law in force. In the case of RAPTAKOS BRETT & CO. LTD. Vs. GANESH PROPERTY, ( 1998) 7 SCC 184, Apex Court has held that the averments in the plaint as a whole have to be seen to find out whether Clause (d) of Rule 11 of Order 7 CPC is applicable.
9. In SALEEM BHAI Vs. STATE OF MAHARASHTRA -
(2003) 1 SCC 557, Apex Court has held as follows:
" 9. A perusal of Order 7 Rule 11 CPC makes it clear that the relevant facts which needed to be looked into for deciding an application thereunder are the averments in the plaint. The trial court 13 can exercise the power under Order 7 Rule 11 CPC at any stage of the suit-before registering the plaint or after issuing summons to the defendant at any time before the conclusion of the trial. For the purposes of deciding an application under clauses (a) and (d) of Rule 11 of Order 7 CPC, the averments in the plaint are germane; the pleas taken by the defendant in the written statement would be wholly irrelevant at that stage, therefore, a direction to file the written statement without deciding the application under Order 7 Rule 11 CPC cannot but be procedural irregularity touching the exercise of jurisdiction by the trial court."
(emphasis supplied)
10. In POPAT AND KOTECHA PROPERTY Vs. SBI STAFF ASSOCIATION - (2005) 7 SCC 510, Apex Court has held that the plaint averments cannot be compartmentalized or dissected, nor can the averments be read in isolation. Taking note of the statement of law made in the case of MAYAR (H.K.) LTD. V. VESSEL M.V. FORTUNE EXPRESS - (2006) 3 SCC 100, it has been held as follows:
" 12. From the aforesaid, it is apparent that the plaint cannot be rejected on the basis of the allegations made by the defendant in his written statement or in an application for rejection of the plaint."
(emphasis supplied)
11. In PEARLITE LINEARS (P) LTD. Vs. MANORAMA SIRSI - AIR 2004 SC 1373, Apex Court has held that, when a 14 suit is bound to be dismissed as barred by any law, it should be thrown out at the threshold.
12. In BHAU RAM Vs. JANAK SINGH AND OTHERS -
(2012) 8 SCC 701, Apex Court has held as follows:
"15. The law has been settled by this Court in various decisions that while considering an application under Order 7 Rule 11 CPC, the court has to examine the averments in the plaint and the pleas taken by the defendant in the written statement would be irrelevant [vide C. Natarajan v. ashim bai (2007) 14 SCC 183, Ram Prakash Gupta v. Rajiv Kumar Gupta (2007) 10 SCC 59, Hardesh Ores (P) Ltd. v. Hede and Co. (2007) 5 SCC 614, Mayar (H.K.) Ltd. v. Vessel M.V. Fortune Express (2006) 3 SCC 100, Sopan Sukhdeo Sable v. Asstt. Charity Commr. (2004) 3 SCC 137 and Saleem Bhai v. State of Maharashtra (2003) 1 SCC 557. The above view has been once again reiterated in the recent decision of this Court in Church of Christ Charitable Trust & Educational Charitable Society v. Ponniamman Educational Trust - (2012) 8 SCC 706.
16. As rightly pointed out by the learned counsel for the respondents, the questions of law, as raised in the second appeal, before the High Court are no longer needed to be decided in view of the settled law that only the averments in the plaint can be looked into while deciding the application under Order 7 Rule 11. This aspect has been rightly dealt with by the High Court."
(emphasis supplied) From the statement of law in the decisions noticed supra, it is clear that while considering a case under Order 15 7 Rule 11 CPC, the Court has to look only into the averments in the plaint and that the averments made in the written statement or the application filed for rejection of plaint are immaterial, in as much as it is the duty of the court to consider the pleading in the plaint and at that stage, the defence pleaded by the defendant in the written statement is wholly irrelevant. Hence, the contention urged that the plaint could not have been rejected before the defendant filed written statement has no merit. Re: Point No.(ii):
13. In these appeals, S.34 of the Act being material, the same is reproduced below:
" 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 Debt 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) (hereinafter referred to as DRT Act).
By a mere reading of the said provision it is clear that bar of jurisdiction is twofold i.e.,:16
(i) No Civil Court shall have jurisdiction to entertain any suit or proceeding in respect of any matter which a DRT or DRAT is empowered by or under the Act;
(ii) No injunction shall be granted by any other Court or authority in respect of action taken or to be taken in pursuance of any power conferred by or under the provisions of the Act or under the provisions of the DRT Act.
14. Sri V.P. Kulkarni, contended that despite the bar under the said provision the jurisdiction of the Civil Court can be invoked and placed reliance on the three decisions of this Court, noticed in para 5 above. There is no merit in the contention.
15. In KRISHNA Vs. KEDARNATH (supra), in a suit filed for passing of a decree for partition and separate possession, the plaint having been rejected by taking note of the bar under S.34 of the Act, while allowing the appeal, it was held as follows:
" 7. Whether all the suits schedule properties are joint family properties and all the properties are mortgaged to the Bank and plaintiffs are entitled to partition etc., after the first charge upon the same is cleared, are all the aspects required to be decided by 17 the Civil Court as the plaintiffs rights are traceable to the provision of Section 9 of the CPC. Section 34 of the Act is a bar for the Civil Court to entertain the suits in respect of the matters which are empowered to be determined by the Debts Recovery Tribunal or Appellate Tribunal. But, adjudication or determination of rights or claims of the parties for partition of the property which are in the nature of civil rights, cannot be stopped. Partition suits that would be instituted by a party claiming civil rights in respect of either ancestral joint family property or co-ownership properties will have to be exclusively dealt with by the Civil Court. That is the view taken by the Madras High Court in the decision referred to above. Of course the said decision is rendered prior to Mardia Chemicals Limited's case. The Supreme Court has upheld the constitutional validity of the provisions of the Act, at paragraph 51 in the above referred case, it is held that jurisdiction of the Civil Court also can be invoked for limited purposes. While the Bank can enforce its security interest for realisation of its amount, right of the plaintiffs to claim partition in the suit schedule properties if they prove they are ancestral joint family properties cannot be deprived of as contended by the Bank, which contention was erroneously accepted by the Trial Court. For adjudication of such claim, the Bar under Section 34 of the Act shall not come in the way."
(emphasis supplied) Ex-facie, the said decision has no application in the present cases instituted for grant of reliefs noticed supra. Even otherwise, the clarification, to which emphasis has been supplied, makes clear that the said decision has no 18 application to the legal issues involved in the case on hand and is of no help to the appellant.
16. In VYSYA CO-OPERATIVE BANK LTD., Vs. Ms. G. KEERTHANA (supra), a suit filed to pass a decree for partition and separate possession was contested by the defendant - bank as not tenable in view of the provision under S.34 of the Act. The plea having been negatived, in the Civil Revision Petition filed by the defendant - bank, taking note of the factual scenario of the case, it was held as follows:
4. A perusal of this statutory provision (S.34 of the Act) indicates that the exclusion of jurisdiction of the Civil Court is in respect of matters which can be taken before the Debts Recovery Tribunal for adjudication. The suit filed by the respondents 1 and 2 before the Civil Court is a suit for partition. It is very obvious that the Tribunal or the appellate Tribunal is not the competent forum to adjudicate a suit for partition. The present suit filed by the respondents 1 and 2-minor children of third respondent assuming to be a collusive one, it is nevertheless a suit which can be adjudicated only by a Civil Court and not by the Debts Recovery Tribunal or the appellate Tribunal.
In fact, the Debts Recovery Tribunal or the appellate Tribunal has no jurisdiction to entertain a suit of this nature. If so as a consequential corollary Civil Court necessarily continues to have jurisdiction and in fact Civil Court only can adjudicate a matter of 19 this nature, unless the parties have recourse to any other informal forum of resolution of the dispute by choice.
5. Even though the learned Counsel for the petitioner submits that the subject-matter of the suit, is a property mortgaged in favour of the Bank and in respect of which the bank had already taken proceedings under the Act and had taken possession of the very property and, therefore, it should be construed that Section 34 of the Act is attracted to oust the jurisdiction of the Civil Court, I am unable to accept this submission for the simple reason that the right of the bank in whose favour the properties are mortgaged is only that of a secured creditor. That right remains intact. It is for the enforcement of that security the bank invokes the provisions of the Act. Whether it invokes the provision of Section 13 or approaches the Debts Recovery Tribunal for recovery, it is only for the enforcement of the security or recovery of the amount in respect of the amount lent by the bank. There is absolutely no embargo for such a course of action even if the civil suit for partition is filed involving the very property as subject-matter and is decreed also.
6. It is also to be noticed that the petitioner-Bank is only a mortgagee and legally and technically, the title suit remains with the mortgager and if at all the respondents 1 and 2-plaintiffs in the suit should succeed in the suit also, that will in no way defeat the rights of the petitioner-Bank as if assuming that the plaintiffs get a share in the properties, it will be subject to the mortgage in favour of the petitioner-Bank. But such aspects are not one which have the effect of excluding the jurisdiction of the Civil Court to entertain a partition suit even in respect of the same properties. It is for this reason, I hold that the learned trial Judge has rightly answered the preliminary issue regarding the maintainability of the suit before the Civil Court. There is absolutely no 20 error or illegality or material irregularity in the impugned order and, therefore, this revision petition is dismissed.
(emphasis supplied) The said decision has no application to the facts of the present case and in fact, does not advance the case of the appellant.
17. In R. GOPALAKRISHNA Vs. KSFC(supra), the appellant -plaintiff had filed a suit to pass a decree declaring his liability issued earlier by mortgage of the suit property as having extinguished by operation of law and for grant consequential injunctive reliefs. The plaintiff's property had been offered as collateral security to the loan transaction of M/s. Srirama Borewell with the defendant - KSFC, which initiated recovery proceedings alleging that the entire loan was not wiped out. At that stage, the suit was filed against the KSFC for the said reliefs. The Trial Court dismissed the suit as not maintainable. The Trial Judge held that, by cogent and combined reading of the provisions of S.3 of Karnataka Public Money (Recovery of Dues) Act, 1979, S.61 of the Karnataka Land Revenue Act, 21 1964 and Ss.28 & 29 of the State Financial Corporation Act, 1951, the general jurisdiction of the Civil Court under S.9 of the Code of Civil Procedure, 1908, is either expressly or impliedly barred and that under S.34 of the Specific Relief Act, the declaratory relief could be sought only on the ground of fraud, misrepresentation, coercion etc. and since there is no pleadings to that effect, the suit is not Maintainable. In the appeal filed by the plaintiff, with reference to the applicability of provisions of the Act, it has been held as follows:
30. The last Act viz., Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, it is contended that now a new machinery has been provided by way of Debt Recovery Tribunals in respect of the debt transactions or loan transactions and as this statute gives adequate machinery for the redressal of the persons like the plaintiff, it is to be held that the jurisdiction of the civil Courts under Section 9 is barred. In this regard, it is contended that Section 17 of the Act provides for an appeal and as such, the suit is to be held as not maintainable. On perusal of Section 17 of the Act, it is to be noted that the appeal provided therein is only in respect of any action taken or proposed to be taken under Section 13 of the Act and not otherwise. As we have already noted, the present claim of the plaintiff for the declaration is directly outside the purview of this provision also and hence it is held that the suit is maintainable. It is also to be noted 22 that under Section 13 of the Act, the machineries provided for enforcement of security interest or for recovery of money, but it does not give or provide any forum for a borrower or a guarantor like the appellant in the present case to raise directly such question and seek the declaratory relief. Even under the Recovery of Debts due to Banks and Financial Institutions Act, 1993, vide Section 17, wherein the jurisdiction, power and authority of the Institution is defined, it indicates that it is for the limited purpose and for the specified institutions alone, the civil Courts does not have jurisdiction. Similarly Section 34 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, which is relied upon by the learned counsel for the respondents does not create any bar in respect of suits of present nature.
31. On perusal and reading of Section 34, of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, it indicates that no civil Court shall have jurisdiction to entertain any suit in respect of any matter which a Debt Recovery Tribunal empowers by or under the Act to determine and no injunction shall be granted by any Court or other authorities in respect of any action taken or to be taken back. Since as already noted under Section 17 of the Recovery of Debts Due to Banks and Financial Institutions Act, jurisdiction is limited. The bar under Section 34 cannot be invoked for the suits of the present type.
Similar reliance placed by Section 35 of the said act that the provisions of this Act, overrides other laws, does not expressly prohibit the provisions of the civil Courts to try the suits of all nature as provided under Section 9 of CPC or explained by the Courts in various pronouncements referred to above.
32. On entire consideration of the laws in this regard, and keeping in view the basic tenet of law that the suit of all nature are maintainable before the civil Courts and civil Courts have 23 jurisdiction to try suits of all nature unless they are expressly or impliedly barred and as we find that there is neither expressed nor implied bar under any of the provisions of the Karnataka Public Moneys (Recovery of Dues) Act and Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, we find that the conclusion of the trial Court as to the non-maintainability of the suit is totally illegal and erroneous and hence liable to be set aside.
(emphasis supplied) Carefully perused the Judgment and the same is distinguishable. With due respect, it is to be pointed out that, therein the Court has not been appraised of the relevant portions (paras 50, 51 and 80) of the decision of the Apex Court in MARDIA CHEMICALS LTD. AND OTHERS Vs. UNION OF INDIA AND OTHERS - (2004) 4 SCC 311, a detailed reference to which would be made later. For the present, it is suffice to point out the statement of law by the Apex Court in KANAIYALAL LALCHAND SACHDEV Vs. STATE OF MAHARASHTRA (2011) 2 SCC 782, which is to the following effect:
" 22. We are in respectful agreement with the above enunciation of law on the point. It is manifest that an action under Section 14 of the Act constitutes an action taken after the stage of Section 13(4), and therefore, the same would fall within the ambit of Section 17(1) of the 24 Act. Thus, the Act itself contemplates an efficacious remedy for the borrower or any person affected by an action under Section 13(4) of the Act, by providing for an appeal before the DRT.
(emphasis supplied)
18. In HANEEF SAIT Vs. SYED ASIF, ILR 2011 KAR 739, while considering the question, whether the later Judgments of the Supreme Court wherein the law has been declared, are applicable to the case in hand or not, it was held as follows:
"14. Article 141 of the Constitution provides that the law declared by the Supreme Court shall be binding on all Courts within the territory of India. The principle underlying in this Article is salutary in the interest of administration of justice. The Article promotes certainty and consistency. If there is divergence of opinion between decisions of the High Courts and the Supreme Court, the decision of the Supreme Court in binding on the point."
(emphasis supplied)
19. The preamble of the Act shows that it was enacted to regulate securitisation and reconstruction of financial assets and enforcement of security interest and for matters connected therewith or incidental thereto. S.2 in Chapter I of the Act contains the 'Definitions'. Chapter III which has Sections 13 to 19 is with regard to 25 'Enforcement of Security Interest'. Chapter VI contains 'Miscellaneous Provisions'. S.17 provides the remedies available to any person including a borrower who may feel aggrieved by the action taken by the secured creditor under sub-section (4) of S.13. A borrower can make an application to the Tribunal within 45 days from the date on which measures referred in sub-section (4) of S.13 is taken by the secured creditor. Sub-section (2) of S.17 casts a duty on the Tribunal to consider whether the measures taken by the secured creditor for enforcement of security interest are in accordance with the provision of the Act and the Rules made thereunder. If the Tribunal, after examining the record of the case produced by the parties comes to the conclusion that the measures taken by the secured creditor are not in consonance with sub- section (4) of S.13, then the Tribunal can direct the secured creditor to restore management of business or possession of the secured assets to the borrower. On the other hand, if the Tribunal finds that the recourse taken by the secured creditor under sub-section(4) of S.13 is in 26 accordance with the provisions of the Act and the Rules, then, notwithstanding anything contained in any other law for the time being in force, the secured creditor can take recourse to one or more of the measures specified in S.13(4) of the Act for recovery of its secured debt. Sub- section (5) of S.17 prescribes the time limit of 60 days within which an application made under S.17 is required to be disposed of. The proviso envisages extension of time, but the outer limit for adjudication of an application is four months. In case, the Tribunal does not decide the application within the said period, then the aggrieved party can move the DRAT for issue of a direction to the DRT to dispose of the application since as against the inaction or the order made by the Tribunal, provision of an appeal is provided under S.18 of the Act.
20. In view of the machinery provided under Ss.17 & 18 of the Act, Civil Court's jurisdiction to entertain a suit or a proceeding in respect of any matter which a Tribunal or DRAT is empowered by or under the Act has been taken 27 away as per S.34 of the Act and hence, no Civil Court shall have jurisdiction to grant injunction in respect of any action taken or to be taken in pursuance of any power conferred by or under the provisions of the Act.
21. In MARDIA CHEMICALS (supra) at para 33, Apex Court has formulated the questions which fell for its determination. The relevant portion thereof reads thus:
" (ii) Whether provisions as contained under Sections 13 and 17 of the Act provide adequate and efficacious mechanism to consider and decide the objections / disputes raised by a borrower against the recovery, particularly in view of bar to approach the civil court under Section 34 of the Act?
(iii) Whether the remedy available under Section 17 of the Act is illusory for the reason it is available only after the action is taken under Section 13(4) of the Act and the appeal would be entertainable only on deposit of 75% of the claim raised in the notice of demand? "
While considering the safeguards available to a secured creditor within the framework of the Act, Apex Court held as follows:
" 50. ..... A full reading of Section 34 shows that the jurisdiction of the civil court is barred in respect of matters which a Debts Recovery Tribunal or an Appellate Tribunal is empowered to determine in 28 respect of any action taken " or to be taken in pursuance of any power conferred under this Act". That is to say, the prohibition covers even matters which can be taken cognizance of by the Debts Recovery Tribunal though no measure in that direction has so far been taken under sub-section (4) of Section 13. It is further to be noted that the bar of jurisdiction is in respect of a proceeding which matter may be taken to the Tribunal. Therefore, any matter in respect of which an action may be taken even later on, the civil court shall have no jurisdiction to entertain any proceeding thereof. The bar of civil court thus applies to all such matters which may be taken cognizance of by the Debts Recovery Tribunal, apart from those matters in which measures have already been taken under sub-section (4) of Section 13.
51. However, to a very limited extent jurisdiction of the civil court can also be invoked, where for example, the action of the secured creditor is alleged to be fraudulent or his claim may be so absurd and untenable which may not require any probe whatsoever or to say precisely to the extent the scope is permissible to bring an action in the civil court in the cases of English mortgages....."
************* 80(2) As already discussed earlier, on measures having been taken under sub-section (4) of Section 13 and before the date of sale / auction of the property it would be open for the borrower to file an appeal (petition) under Section 17 of the Act before the Debts Recovery Tribunal. 80(3) That the Tribunal in exercise of its ancillary powers shall have jurisdiction to pass any stay / interim order subject to the condition as it may deem fit and proper to impose.
********* 29 80(5) As discussed earlier in this judgment, we find that it will be open to maintain a civil suit in civil court, within the narrow scope and on the limited grounds on which they are permissible, in the matters relating to an English mortgage enforceable without intervention of the court. "
(emphasis supplied)
22. After examining the scheme of the DRT Act and the Rules made thereunder, as well as the scheme of the Securitisation Act and the Rules made thereunder, in the case of CENTRAL BANK OF INDIA VS. STATE OF KERALA & OTHERS, (2009) 4 SCC 94, Apex Court has held as follows:
" 92. An analysis of the above noted provisions makes it clear that the primary object of the DRT Act was to facilitate creation of special machinery for speedy recovery of the dues of banks and financial institutions. This is the reason why the DRT Act not only provides for establishment of the Tribunals and the Appellate Tribunals with the jurisdiction, powers and authority to make summary adjudication of applications made by banks or financial institutions and specifies the modes of recovery of the amount determined by the Tribunal or the Appellate Tribunal but also bars the jurisdiction of all courts except the Supreme Court and the High Courts in relation to the matters specified in Section 17. The Tribunals and the Appellate Tribunals have also been freed from the shackles of procedure contained in the Code of Civil Procedure. To put it differently, the DRT Act has not only brought into existence special procedural mechanism for speedy recovery of the dues of banks and financial institutions, but also made provision for 30 ensuring that defaulting borrowers are not able to invoke the jurisdiction of civil courts for frustrating the proceedings initiated by the banks and financial institutions.
93. The enactment of the Securitisation Act can be treated as one of the most radical legislative measures taken by the Government for ensuring that dues of secured creditors including banks, financial institutions are recovered from the defaulting borrowers without any obstruction. For the first time, the secured creditors have been empowered to take measures for recovery of their dues without the intervention of the courts or tribunals. "
(emphasis supplied)
23. In UNION OF INDIA AND ANOTHER Vs. DELHI HIGH COURT BAR ASSOCIATION AND OTHERS - (2002) 4 SCC 275, while considering the challenge to the constitutional validity of the DRT Act, holding that the same is a valid piece of legislation, Apex Court has held as follows:
"24. The manner in which a dispute is to be adjudicated upon is decided by the procedural laws which are enacted from time to time. It is because of the enactment of the Code of Civil Procedure that normally all disputes between the parties of a civil nature would be adjudicated upon by the civil courts. There is no absolute right in anyone to demand that his dispute is to be adjudicated upon only by a civil court. The decision of the Delhi High Court proceeds on the assumption that there is such a right. As we have already observed, it is by reason of the provisions of the Code of Civil Procedure that the 31 civil courts had the right, prior to the enactment of the Debts Recovery Act, to decide the suits for recovery filed by the banks and financial institutions. This forum, namely, that of a civil court, now stands replaced by a Banking Tribunal in respect of the debts due to the bank.
(underlining is by me)
24. The Act is a special law. It confers jurisdiction upon the Tribunal and the Appellate Tribunal constituted in pursuance of Ss.17 & 18. On account of the enforcement of the Act, the specialized forums i.e., the DRT and the DRAT have been constituted for expeditious adjudication of disputes relating to debts due to banks and financial institutions. The analysis of the provisions of the DRT Act shows that its primary object is to facilitate creation of special machinery for speedy recovery of dues of banks and financial institutions. The Act has empowered the secured creditors to take steps for recovery of their dues without the intervention of courts or the tribunals. Material provisions of the Act was the subject matter of consideration in the case of UNITED BANK OF INDIA Vs. SATYAWATI TONDON AND OTHERS - (2010) 8 SCC 110. In the said decision the Apex Court has held that the High 32 Court is not at all justified in injuncting the bank from taking action in furtherance of notice issued under S.13(4) of the Act.
25. A perusal of the plaint averments in the case on hand would clearly indicate that the plaintiff executed loan documents, availed the loans, purchased the machinery and created equitable mortgage in favour of the defendant. Due to non-repayment of loan/s availed, the defendant proceeded against the plaintiff under the provisions of the Act in respect of secured property. In view of the clear provision under S.34 of the Act, the action initiated by the defendant under S.13 of the Act cannot be subject matter of consideration in a Civil Court. S.34 of the Act imposes a specific bar to grant any relief of injunction in respect of any action taken by the bank which is clear from the statement of law in the three decisions of the Apex Court shown at paragraphs 21, 22 and 23 above.
26. Undisputedly, the defendant issued notice/s under the Act, whereafter, the suit/s came to be filed. The 33 action of the defendant has not been alleged by the plaintiff to be fraudulent. The availing of loan/s and execution of loan documents and creation of security interest in respect of suit properties has not been disputed. Prima facie, the claim of the defendant is not absurd. The case of the appellant - plaintiff does not fall within 'the very limited extent of jurisdiction' as has been opined by the Apex Court in paras 51 & 80(5) of MARDIA CHEMICALS case (supra). In the circumstances, in view of the bar contained under S.34 of the Act, the suit/s instituted in the Civil Court for the reliefs noticed supra being not maintainable, the plaints have been rightly rejected as per Order 7 Rule 11(d) CPC.
27. A bare reading of the S.100 CPC manifestly makes it clear that a second appeal can lie only when a substantial question of law is involved. The expression "substantial question of law" has not been defined in the Code. However, on account of various judicial pronouncements, the same has acquired a definite 34 connotation {see SIR CHUNILAL V.MEHTA & SONS LTD. Vs. CENTURY SPG. MFG. CO. LTD., AIR 1962 SC 1364, SANTOSH HAZARI Vs. PURUSHOTHAM TIWARI, (2001) 3 SCC 179, HERO VINOTH Vs. SHESHAMMAL (2006) 5 SCC 545, SBI Vs. S.N. GOYAL (2008) 8 SCC 92}. The impugned Order/s and the Judgment/s, when examined with reference to the factual scenario, the relevant statutory provisions and also the statement of law in the decisions noticed in paras 21 to 23 above, in my opinion, the Courts below have correctly analysed the facts, applied the relevant provisions of law and the Judgments cited before them. The findings recorded by the Courts below are neither perverse nor illegal and the same have not given rise to any substantial question of law. The questions which were urged by Sri V.P. Kulkarni, cannot be considered as substantial questions of law, since the same have been considered and decided in the decisions noticed supra.
In the result, second appeals stand rejected. However, it is open to the plaintiff to seek relief, before the DRT, in view of the measures taken by the defendant, 35 invoking the power under S.13 of the Act, which is open to scrutiny and cannot only be set aside but even the status- quo ante can be restored by the Tribunal.
Costs made easy.
Sd/-
JUDGE sac*