Madras High Court
The Authorised Officer vs K.Panneer Selvam ... 1St on 28 April, 2009
Author: M.Venugopal
Bench: M.Venugopal
BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT DATED: 28/04/2009 CORAM THE HONOURABLE MR.JUSTICE M.VENUGOPAL C.R.P.(PD)MD.No.381 of 2009 and M.P(MD)No.1 of 2009 The Authorised Officer, Indian Bank, Namakkal. ... Petitioner/6th Respondent/ 6th defendant Vs. 1.K.Panneer Selvam ... 1st Respondent/Petitioner/ Plaintiff 2.S.Karuppiah Pillai 3.K.Tamizharasan 4.K.Venkatesan ... Respondents 2 to 4/Respondents 1 to 3 / Defendants 1 to 3 5.K.K.Jadagadish 6.K.J.Malliga ... Respondents 5 & 6/Respondents 4 & 5 / Defendants 4 and 5 Prayer Civil Revision Petition filed under Article 227 of the Constitution of India, to set aside the orders passed by the learned First Additional Subordinate Judge, Madurai, in the injunction application filed by the respondent/petitioner/plaintiff in I.A.No.727 of 2006 in O.S.No.410 of 2004. !For Petitioner ... Mr.S.Rengasamy ^For Respondents ... Mr.R.A.Mohanram for R.1 :ORDER
The revision petitioner/6th Respondent/6th defendant, has filed this civil revision petition as against the order in I.A.No.727 of 2006 in O.S.No.410 of 2004 passed by the learned First Additional Subordinate Judge, Madurai, in allowing the application filed by the first respondent/petitioner/plaintiff praying for the relief of temporary injunction under Order XXXIX Rule 1 and 2 and Section 151 of the Code of Civil Procedure.
2. The trial Court while passing orders in I.A.No.727 of 2006, has inter alia observed that the first respondent/petitioner/plaintiff's prayer for the relief of temporary injunction restraining the further proceedings to be initiated by the 6th respondent/Bank till the disposal of the main suit is to be granted and resultantly, has allowed the application without costs.
3. The learned Counsel for the revision petitioner/6th Respondent/6th defendant, submits that the trial Court ought to have dismissed the injunction application in I.A.No.727 of 2006 in O.S.No.410 of 2004 on the file of the trial Court and that the trial Court has failed to take note of the ingredients of Section 13(2) and Section 13(4) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, and that the trial Court should have seen that the civil Court's jurisdiction has been completely taken away by virtue of Section 34 of Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, and therefore, the trial Court has no power to grant injunction against the secured creditor, the revision petitioner/Bank which invokes the provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, and further that, the trial Court has committed an error in not dismissing the suit based on the application filed by the revision petitioner/Bank, even though ample opportunity has been given to the first respondent/plaintiff who has failed to file counter and that the trial Court has not only committed an error of law, but also violated the provisions of law and has granted the relief of interim injunction in I.A.No.727 of 2006 and added further that, the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, has an overriding effect over the present existing laws in force and this aspect of the matter has not been taken note of by the trial Court in a proper perspective and inasmuch as the suit filed before the trial Court is not maintainable and prays for allowing the civil revision petition to promote substantial cause of justice.
4. Expatiating his arguments, the learned Counsel for the revision petitioner/6th respondent/6th defendant, submits that the true fact is that the first respondent/petitioner/ plaintiff's father namely the second respondent/first defendant in the suit and the third respondent/second defendant, (the brother of the first respondent herein) as partners of Sri Venkateswara Dyeing Company have created a mortgage of deposit of title deeds with the revision petitioner/6th respondent/6th defendant Bank in respect of the loan availed by one Ashok Cartons Company and that with a view to cheat the revision petitioner/6th respondent/6th defendant, the plaintiff, his brother and his father have filed the present suit among themselves with an ulterior motive against law by not impleading the revision petitioner as a party and that the revision petitioner has full right to initiate action as per Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, in regard to taking of possession by issuance of possession notice and to bring the property for auction and to take possession of mortgaged property etc. and therefore, as per Section 32 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, a direction is given to the revision petitioner/Bank or its Officer, for the auction taken in good faith and resultantly, as against the revision petitioner, no interlocutory application can be filed and that the revision petitioner cannot be added as a party to the suit as per law and that as per Section 34 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, the present suit or any application being filed thereto, cannot be entertained by the trial Court and even as per Section 9 of the Code of Civil Procedure, the present suit cannot be entertained by the trial Court.
5. Added further, it is the stand of the revision petitioner/6th respondent/6th defendant that the second respondent/first defendant in his capacity as Managing Parter of Sri Venkateswara Dyeing Company, has purchased the suit property as per sale deed dated 07.02.1979 and has given the suit property as Guarantee for the loan taken by Ashok Cartons Company and that the second respondent and third respondent have executed the Guarantee documents to the revision petitioner/6th defendant and that later, Ashok Cartons Company inspite of numerous opportunities given, have not paid the loan taken by it and therefore, notice has been issued to all individuals and since the debt amount has not been paid, the property given in Guarantee namely, the suit property belonging to Sri Venkateswara Dyeing Company, has been taken on 26.09.2006 and later, the revision petitioner/Bank has given advertisement in Hindu paper and through the mortgaged property, has taken steps to recover loan and that the first respondent/plaintiff has no right or enjoyment of the same at any point of time and therefore, the partition suit filed is not maintainable in law and facts and that the suit property is not a joint family property and in that, the first respondent/plaintiff and his brother (third respondent) and respondents 4 and 5 have no manner of right or enjoyment and that if the first respondent/plaintiff has any objection in regard to the suit property, then he must file a proper application or suit as per Section 17 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, before the Debts Recovery Tribunal and that the trial Court has no jurisdiction in this regard.
6. According to the learned Counsel for the revision petitioner/6th respondent/6th defendant Bank, in respect of the suit property, an equitable mortgage has been created by deposit of title deeds made by the defendants 1 and 2 and that nearly Rs.49,00,000/- (Rupees Forty Nine Lakhs only) is due to the Bank and that the Bank is the secured creditor as per Section 2(z)(d) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, and that I.A.No.715 of 2008 filed by the Bank praying to reject the plaint filed by the first respondent/plaintiff is pending before the trial Court for filing counter and that from out of the mortgaged property, 10 cents of land have been sold to the respondents 4 and 5 who are the purchasers and that O.A.No.131 of 2008 has been filed by the revision petitioner/Bank before the Debts Recovery Tribunal, Madurai and that the suit has been filed by the first respondent/plaintiff before the trial Court in the year 2004 and since the trial Court has committed an error in entertaining the suit filed by the first respondent/plaintiff and also by allowing the I.A.No.727 of 2008 for granting the relief of injunction, the same needs to be corrected by this Court sitting in revision.
7. The learned Counsel for the revision petitioner/6th respondent/6th defendant, Bank cites the decision of the Honourable Supreme Court in Hasham Abbas Sayyad v. Usman Abbas Sayyad and others reported in (2007) 2 SCC 355 [MANU/SC/5541/2006], wherein it is held that 'Any order passed by a Court without jurisdiction would be coram non judice being a nullity and principles of estoppel, waiver and acquiescence or even res judicata which are procedural in nature would have no application in a case where an order has been passed by Tribunal/Court which has no authority in that behalf.'
8. He also refers to the decision of this Court in Dadha Estates Pvt. Ltd. rep. by its Managing Director, Mr.Mahendar Dadha v. C.Ravindran and others reported in AIR 2007 Mad 217 wherein it is observed that 'Any person including the borrower who has got any grievance on account of the action taken by the secured creditor could approch the Debts Recovery Tribunal by way of appeal and the Civil Court was barred from entertaining such kind of suits.'
9. He also presses into service the decision of this Court in Bank of India v. Manickam reported in (2006) 4 MLJ 914 wherein it is held that 'Plaint transactions come within the purview of Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 and the Bank being the secured creditor is entitled to enforce its right against the borrower by issuing notice under Section 13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 and that borrower has filed the suit to escape from the action contemplated under Section 13(4)(a) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 and that Section 34 of the Act, bars the jurisdiction of the civil Court and only the Debts Recovery Tribunal can entertain the suits and that the plaints are rejected and the revisions are allowed.'
10. He also places reliance on the decision of this Court in Bank of India v. N.Natarajan reported in 2007(4) CTC 360 wherein it is held that 'a person aggrieved by action taken under section 13(4) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, cannot maintain civil suit in view of specific bar under Section 34, but should approach the Debts Recovery Tribunal and the Debts Recovery Appellate Tribunal later and that once a notice under Section 13(2) of Act is issued, further proceedings can be only as contemplated under Act and suit cannot be maintained and that Order of civil Court granting interim order is set aside in revision.'
11. Yet another decision in Mohan Lal and another v.Dwarka Prasad and others reported in AIR 2007 RAJASTHAN 129, has been cited on the side of the revision petitioner, wherein it is held that ' Securitisation Act does not bar jurisdiction of Civil Court to decide inter se rights between third parties, including borrowers in cases of partition, cancellation of sale deed, gift etc., but no suit or injunction in any Civil Court can be allowed to prohibit and debar measures taken by Banks and Financial Institutions under Securitisation Act, 2002 or under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993. However, in cases of partition of ancestral joint Hindu Family property, co-parceners can claim injunction against Bank or Financial Institutions insofar as their share in property is concerned.'
12. He also draws the attention of this Court to the decision in Mehek Feed Industries v. Amrutlal Kataria reported in AIR 2007 ANDHRA PRADESH 230, wherein it is inter alia held that 'For preventing bank from recovering a sum of Rupees 2 crores and 75 lakhs to the Bank due to it, the borrower creating false deed in favour of third party in relation to factory premises and the Bank initiating proceedings under the Act and the borrowers not filing any counter and remaining ex parte, the civil suit by third party against Bank even though maintainable but it is claim for injunction restraining the Bank from interfering with his peaceful possession is not maintainable as neither prima facie case nor balance of convenience was in its favour.'
13. The learned Counsel for the revision petitioner/6th respondent/6th defendant Bank cites the decision in Akola Urban Co-operative Bank Ltd. and another v. Anurag Anilkumar Rathi and others reported in 2005(4)MhLj 97 : (2006) 66 SCL 255 (Bom) {Manu/MH/0714/2005}, wherein at paragraph Nos.12 to 14, it is observed thus:
"12. I agree with the submission made by Mr. Dharmadhikari that the examples given by the Apex Court are not exhaustive but are merely illustrative and that the right of a co-parcener or a member of joint family can be inquired into by the Civil Court only and not by any other tribunal. However, a perusal of the plaint would reveal that according to respondent Nos. 1 and 2 there was a partition between respondent No. 3 and his father long back and that respondent No. 3 purchased the plot along with the Cinema Theatre out of the property received by him in the family partition. It may be noted that after partition there is severance joint status and thereafter each member takes a separate property which becomes his self acquired property. According to the pleadings of respondent Nos. 1 and 2 themselves as there was partition between respondent No. 2 and his father whatever property was received by respondent No. 3 in partition became his self acquired property and, thereafter, there is no question of any joint family property.
13. It may be noted that it does not follow that after partition whatever property was purchased by respondent No. 3 would fall into common hatch potch by presuming that he purchased the property out of the property received by him in the family partition. That being the position, in the present case, respondent Nos. 1 and 2 cannot be said to be co-parceners along with respondent No. 3 so as to hold that for mortgaging the suit property their consent was necessary. Thus, in the instant case, Civil Court has no jurisdiction and it is only Debts Recovery Tribunal which has got jurisdiction.
14. If respondent Nos. 1 and 2 feel that they are aggrieved by the steps taken by the applicants under Section 13(4) of the Act, they are to approach Debts Recovery Tribunal under Section 17 of the said Act. Thus, the impugned order is patently illegal and cannot be sustained. It is however made clear that respondent Nos. 1 and 2 are free to raise their contentions before Debts Recovery Tribunal and the Debts Recovery Tribunal would not be influenced by the observations made by this Court in the present judgment."
14. He also places reliance on the decision of this Court in Pyramid Saimira Theatre Ltd. v. S.Murugan and others reported in MANU/TN/1176/2008 wherein at paragraph Nos.27 to 34, it is held as follows:
"27. At the forefront of the contention on behalf of the second defendant was the plea that the suits were not maintainable. As regards the suit instituted by an individual shareholder, it was his contention, as well by Mr. P.S. Raman, learned Senior counsel for the lessee that an individual shareholder has no interest in the assets of the company and he has no locus standi to institute the suit. (Mrs. Bacha Gaizdar v. Commissioner, Income Tax MANU/SC/0072/1954. Now that another suit has been filed at the instance of shareholder this objection does not obtain much weight. It is also their contention that the SARFAESI Act is a complete code in itself for enforcement of securities by securing creditors. The counsel relies on the decision in Transcore v. Union of India and Anr. 2006 (5) CTC 757, The Bank of India v. N. Natarajan and Anr. MANU/TN/8642/2007, State of Bikaner and Jaipur v. Vallab Das and Ors. MANU/SC/0571/1999, Union Bank of India v. Debt Recovry Tribunal and Ors. (2001) B.C.662, Krishna Filament (118) CC 35 and Bank of India v. Manikam MANU/TN/9403/2006. State of Bikaner and Jaiur v. Vallab Das JT (1998) 7 SC 102 deals with the power of the Court to transfer a case pending before a civil Court when the SARFAESI Act was introduced. The issue was whether the civil Court should adjudicate on the subsistence of the debt in the case or whether the debt was discharged, as contended and that only when the Court records the finding that the debt is subsisting, the case could be transferred. The Supreme Court held that all pending matters before the Civil Court which was filed on the basis of debt as subsisting was enough ground for a transfer and it would be only a Tribunal which could adjudicate on the contentious issues.
28. Union of India v. Debt Recovery Tribunal and Ors. reported in 2001 (BC) 662 was a case where the Court decided on the expression 'debt' referred to under SARFAESI Act and dealt with similar issue where the Supreme Court held that the expression 'debt' has to be given its wide amplitude if the averment in the plaint indicated that the suit was essentially for recovery of debt due to it and it shall be the Tribunal which would have exclusive jurisdiction to decide the dispute and not the ordinary Civil Court.
29. Krishna Filaments Limited v. Industrial Development Bank of India reported in 118(CC) 35 was a decision of the Bombay High Court which while deciding on the effect of Section 18 of the SARFAESI Act which laid down that even if the particular bank is not a banking company within the meaning of Banking Regulation Act or if it answers the description of "financial institution' as defined in Section 2(G)(i) under the Recovery of Debt due to Banks & Financial Institutions Act 1993 (RDB Act), such a bank would have recourse only to the debt Recovery Tribunal and not Civil Court.
30. The Bank of India v. Natesan and Anr. reported in MANU/TN/8642/2007 was a case where the bank issued a notice under Section 13(2) when a third party filed a suit claiming himself to be a lessee in possession and that he would not be bound by the action taken by the bank and that his possession should not be therefore disturbed.
31. None of the cases referred to above has a bearing to the claim of a third party impeaching principally the transactions of a person who is not a 'financial institution', though the 'financial Institution' is also one of the parties. We have already seen that the right to enforce the lease or sub-
mortgagee's right to enforce its claim could be done without reference to the right of the bank to claim its own due. The validity or otherwise of these transactions will not in any way prevent the bank from enforcing its own right, if its debts shall still subsist under the procedure established in the SARFAESI Act.
32. These decisions refer to the exclusion of jurisdiction of the civil court in respect of action initiated by the financial Institutions defined under that Act. Of them, the decisions of the Madras High Court in MANU/TN/9403/2006 and MANU/TN/8642/2007 dealt with cases where averments had been expressly made attacking the transactions that were put through at the instance of bank on the ground of fraud. The counsel for the second defendant refers the decision particularly to show that only by assailing the transactions as vitiated by fraud it will not take away the jurisdiction of the Debt Recovery Tribunal and SARFAESI ACT. According to him, if the plaintiff has challenged the assignment made by the bank which is protected under Section 13(4) the proper remedy of persons affected by such a decision would be only to prefer an appeal provided under Section 17 of the Act. According to him, the decision of the Supreme Court in Transcore v. Union of India and Anr. 2006 (5) CTC 757 puts beyond the pale of any controversy that even in respect of matters where proceedings have been taken either before the civil Court or before the Debt Recovery Tribunal, it shall be possible for the secured creditor under SARFAESI Act and that the remedy of an aggrieved party would be only by means of appeal under Section 17 of SARFAESI Act before the Debt Recovery Tribunal only. The reliance on this judgment is to lend support to the primacy in the jurisdiction that vests with the Debt Recovery Tribunal excluding the jurisdiction of the civil court in respect of matters covered under the Act. If the suit had been merely an action challenging the assignment by the bank in favour of the second defendant or firm, it could well be urged that the party affected by the such an act ought to challenge the same only under Section 17 of the Act by way of appeal.
33. The present suit does not merely assail the transactions by the bank but a whole series of actions to which the bank is not party including the assignment by the second defendant to the partnership firms, the execution of sub-mortgage by the firm and the execution of lease. The transactions assailed does not terminate with the first transaction of assignment by the bank to the second defendant. The subsequent transactions cannot be a subject of any adjudication by the Debt Recovery Tribunal. If the transaction had stopped with the discharge of loan to the bank, neither the bank nor any of the shareholders could have had any grievance and it could have been perceived as the most beneficial act. On the other hand, the bone of contention has been only the action of the second defendant that has resulted in not merely displacing possession of the theatre premises from the 7th defendant company but also makes possible the assumption of control by the second defendant in anafarious manner. It is veritably a plausible perception that the second defendant could not have lawfully assumed the prospect of control over the asset of the company viz. Cinema Theatre without shedding a single paise by playing with the money of other parties and continuing the indebtedness of the company. The right which a "private transferee" obtains from the bank by virtue of assignment under Section 13(4) Clause (a), cannot extend to have a relief under the SARFAESTI Act, unless he himself is a secured creditor in the manner defined under Section 2(zd) of the said Act. We have already seen neither the second defendant nor the partnership firm could describe itself as such nor indeed M/s Lavanya could have any relief pursued under the SARFAESI Act in its assumed right of subrogation or sub-mortgage respectively.
34. A sub-mortgagee himself cannot redeem the mortgage for he has only derive title from the mortgagee and not from the mortgagor. (1966 2 MLJ 308:
1966 (79) LW 400). It has been held that sub-mortgagee has no priority of estate or contract with the original mortgagor. (Ramanadha Chettiar v. Sethu Madigarao Sahib and Anr. MANU/TN/0463/1927) It will be therefore not possible for M/s Lavanya to come to the succour of the 8th defendant and redeem itself out of the financial stringency that these transactions have involved the principal debtor or the cinema theatre complex."
15. In the aforesaid decision, at paragraph Nos.35 to 38, it is further held thus:
"35. Above all, when the action of the second defendant is questioned by means of suits and there exists ample prima facie proof that the transactions are a fraudulent ploy to wrest control of the business of the 7th defendant and persisting the indebtedness of the company, it is not possible to accept the contention that the civil Court's jurisdiction is ousted. The Courts have held that exclusion of jurisdiction of civil Court is not to be readily inferred, unless the statue excludes the jurisdiction giving the finality to the issues raised before it. The validity of the transactions and alleged fraud have relevance to the series of documents that have been generated by the second defendant to route to the partnership firm through assignment and through instruments of debts by sub-mortgage and lease, all of which, cannot be considered by the Debt Recovery Tribunal. It is therefore not possible to give in to the proposition canvassed by the counsel for the second defendant. It is not merely a plea of fraud or the alleged non-est nature of transactions canvassed by the plaintiff that ousts the jurisdiction of the Debt Recovery Tribunal and vests the jurisdiction of the Civil Court. It is the series of actions that the second defendant had indulged in where he could not have any relief before the Tribunal that gives the civil Court its jurisdiction.
36. A conjoint reading of several decisions could be paraphrased to set down the following propositions of law with regard to the exclusion civil Court jurisdiction in respect of matters covered by the SARFAESI Act and the Recovery Debts due to Banks and Financial Institutions Act, 1993 (RDB Act).
37. The approach shall be first to ascertain the particular action that is complained of. If the impugned action is at the instance of financial institution, the next question is whether the remedy for the act complained of, is available under the SARFAESI Act itself. If fraud is complained against the financial institution, it will not immediately take the issues of adjudication outside the purview of the SARFAESI Act or RDB Act. However, if the act is illegal and fraud has been practised on the Tribunal itself, the remedy will be always available through the civil courts. Ouster clause in any statue shall be strictly construed. Section 34 of SRFAESI Act and Section 18 of RDB Act shall be so construed to invest in the Tribunal jurisdiction in every matter which is directly connected with indebtedness to the financial institutions itself. If the relief does not pertain to the indebtedness and the mode of enforcement of debt by a "secured creditor" defined under the SRFAESI Act or a "financial institution" defined under RDB Act, there could be no exclusion of jurisdiction.
38. As a matter of fact, after the payment of amount of Rs. 13.5 crores to the bank, which it has received as one time settlement, no further remains to be done by the bank. Although, we are aware that the Debt Recovery Tribunal proceedings are not terminated formally by withdrawal of the petition or recording full satisfaction before the Tribunal, for all practical purposes, the bank's remedy before the Debt Recovery Tribunal has come to an end. It could be only a matter of time to formalize full satisfaction by the bank. The assignment that the bank has made in favour of the second defendant cannot by itself offer to the second defendant to have any relief under the Act and consequently, it does not lie in the mouth of the second defendant to deflect the proceedings taken before the Civil Court to the Debt Recovery Tribunal again. In the arguments before us, all the parties including the counsel appearing for the plaintiffs, sound in unison that they do not desire to put the clock back so as to revive the loan in favour of the bank. Though the plaintiffs have attacked the assignment of the bank to the second defendant, among other transactions, they will not go so far as to say that the banks loan shall stand revived. It is perhaps uncharitable to characterise the assignment of the debt by the bank to the 2nd defendant as fraudulent and we do not associate ourselves with the branding that the learned single Judge had made against the bank, especially when it has offered OTS by way of concession to the outstanding liability. Mr. A.L. Somajji, learned Counsel appearing on behalf of the bank requests the remarks made against the bank in paras 86, 87 and 107 of the judgment to be expunged. We are convinced that it is a justified request and accordingly they are expunged. The contention against the bank should be seen in the context that it has given a chain of actions which according to the respective plaintiffs is a part of larger scheme of the second defendant to reach the assets of the 7th defendant company and gain its control. The suits as framed are maintainable and amenable to Civil Court's jurisdiction."
16. Contending contra, the learned Counsel for the first respondent/plaintiff submits that the first respondent/plaintiff has filed the present suit in O.S.No.410 of 2004 on the file of the learned First Additional Subordinate Judge, Madurai, praying for the relief of partition and separate possession of share of the first respondent/plaintiff in the schedule properties and for rendition of true and proper accounts of the income of the family business and income from the property and to decree 1/4 of the same to be paid to the plaintiff and for permanent injunction restraining the defendants in any way interfering in the possession and enjoyment of the family properties and that the first respondent/plaintiff has filed I.A.No.727 of 2006 (Under Order XXXIX Rule 1 and 2 and Section 151 of the Code of Civil Procedure) restraining the respondents 1 and 2 (defendants 1 and 2), their men, agents, partisans and assginees from in any way interfering with the peaceful possession and enjoyment by the first respondent/plaintiff of the suit property pending disposal of the suit and that the trial Court has inter alia observed that 'if action initiated by the first respondent succeeds, then the suit filed by the first respondent/plaintiff will become otiose and therefore, the interest of the first respondent/plaintiff has to be protected and resultantly, allowed the I.A.No.727 of 2006 without costs.' and moreover, the suit filed by the first respondent/plaintiff is perfectly maintainable in law since the relief of partition and separate possession of 1/ 4 of the first respondent/plaintiff's share in the schedule mentioned properties etc, cannot be granted by the Debts Recovery Tribunal and therefore, temporary injunction granted by the trial Court in I.A.No.727 of 2006 need not be interfered with by this Court sitting in revision.
17. The learned Counsel for the first respondent/ plaintiff in support of his contention that exclusion of Civil Court jurisdiction is not to be readily inferred and that the presumption is in favour of existence of Civil Court jurisdiction, relies on the decision of this Court in Shanita Holdings SDN, BHD, Malaysia v. Shanita Hotel Trichy Pvt. Limited reported in 2009 (2) CTC 210 wherein it is held that 'unless a particular matter is specified in Companies Act to be dealt with by Company Court it cannot exercise its jurisdiction merely because it is also a matter which relates to Company and that when no specific remedy is provided under Companies Act, proper remedy is suit and that exclusion of civil jurisdiction is not to be readily inferred and exclusion must either be explicitly or clearly implied and presumption is in favour of existence of civil Court jurisdiction.'
18. He also cites the decision of the Honourable Supreme Court in Mardia Chemicals Ltd. v. Union of India reported in AIR 2004 SUPREME COURT 2371 at 2373, whereby and whereunder, it is inter alia held that '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 their 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.'
19. In the aforesaid decision, at page 2373, it is also held as follows:
"A full reading of S.34 shows that the jurisdiction of the Civil Court is barred in respect of matters which a Debt Recovery Tribunal or Appellate Tribunal is empowered to determine in respect of any action taken or to be taken in pursuance of any power conferred under this Act. That is to say prohibition covers even matters which can be taken cognizance of by the Debt Recovery Tribunal though no measure in that direction has so far been taken under sub- sec.(4) of S.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, 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 Debt Recovery Tribunal, apart from those matters in which measures have already been taken under sub-sec.(4) of S.13. Therefore, it is incorrect to say that before any action or measure is taken under sub-sec.(4) of S.13 there would be no bar to approach the Civil Court."
20. He further invites the attention of this Court the decision of the Honourable Supreme Court in Mohd.Yunus v. Mohd. Mustaqim and others reported in AIR 1984 SUPREME COURT 38 wherein it is held that 'the errors of law cannot be corrected under Article 227 of the Constitution of India.'
21. In regard to the plea that the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, does not create the first charge in property in favour of the Banks, financial institutions and other secured creditors, the learned Counsel for the first respondent/plaintiff relies on the decision of the Honourable Supreme Court in Central Bank of India v. State of Kerala reported in II(2009)SLT 247 at page 289, wherein it is laid down that 'On the basis of above discussion, we hold that the DRT Act and Securitisation Act do not create first charge in favour of Banks, financial institutions and other secured creditors and the provisions contained in Section 38C of the Bombay Act and Section 26B of the Kerala Act are not inconsistent with the provisions of the DRT Act and Securitisation Act so as to attract non obstante clauses contained in Section 34(1) of the DRT Act or Section 35 of the Securitisation Act.'
22. Furthermore, he cites the decision of the Honourable Supreme Court in Goa Foundation and another v. Fomento Resorts and Hotels Ltd. reported in II(2009)SLT 593, wherein it is among other things, held that 'Writ petition filed in 2000 was highly belated and that the High Court was justified in non- suiting petitioners on ground of delay.'
23. He also presses into service the decision of this Court in Arasa Kumar v. Nallammal reported in (2004) 3 M.L.J 252 wherein it is held that 'Bar of Civil Court under Securitisation and Reconstruction of Financial Assets and Encroachment of Security Interest Act does not apply to decide rights of parties and that a secured creditor cannot bring the property for sale by invoking the bar under Sec.34 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act or the bar under Sec.13 of the Act.'
24. Continuing further, he seeks in aid the decision of Honourable Supreme Court in Karnataka State Financial Corporation v. N.Narasimahaiah reported in AIR 2008 SUPREME COURT 1797 wherein it is held that 'Court while weighing between right of recovery and protection of right would lean in favour of person who would be deprived.'
25. At this stage, this Court aptly points out that in the plaint, the first respondent/plaintiff has averred that the suit properties are situated at Villapuram in Arupputkottai Main Road, Madurai, Madurai District and that the first defendant is the father of the second defendant and the plaintiff and the third defendant are his sons and they constituted a Hindu Undivided Trading Family and the first respondent is the Head and Manager of the Hindu Undivided Family and as the Manager, the first defendant started while he was an employee at V.K.Palani Chettiar, a dyeing factory under the name and vilasam of M/s.Sundararajan Dyeing Factory in 1967-68 as a joint family concern in a rented residential premises at Nagu Pillai Thope, etc.
26. Added further, it is also mentioned in the paragraph No.6 of the plaint that 'the schedule mentioned property originally purchased as vacant site and thereafter residential and dyeing factory buildings were put up for the benefit of joint family and that the third defendant is residing at No.249, W, Aruppukottai Main Road, First Floor, Villapuram, Madurai and the property in the name of the mother in which the plaintiff was allowed to set up his separate mess was sold in or about 1998 and the plaintiff returned to the joint family house and that the entire sale proceeds were invested only in the family business and that the mother, Mahamayee Ammal died on 06.12.2002 and that prior to the death of mother, both the plaintiff and the second defendant in 1997 again occupied the joint family property and that the second defendant occupied the first floor while the plaintiff occupied a portion in the ground floor as before and that the third defendant has been in occupation in the ground floor and that the defendants 4 and 5 claim to have purchased a piece of vacant site alone in the suit property which is worth more than Rs.10,00,000/- in the open market for a paltry sum of Rs.4,77,000/- and that too without paying the said sum by demand draft or cheque and that from enquiry, the plaintiff learnt that the defendants have no wherewithal to purchase the property and no consideration is passed or paid as stated in the document and that all the recitals of the document are false and fraudulent and that it is learnt that the guideline value of the property is more than Rs.230 per Square foot and that the registration itself is obtained by playing fraud and as such, it has not been noted in the register and as an encumbrance when applied by the plaintiff and that they were not in possession of the property on the date of suit or prior to that date and that the plaintiff and the defendants 1 to 3 alone are in possession as coparceners and that the said sale is not true valid and binding on the plaintiff and that he can ignore the same as he is not a party to the said sale deed and further, it is now revealed that subsequent to the paper publication and suit, the defendants 1 and 2 seem to have deposited the title deeds as guarantors with the sixth defendant Bank and that on 26.09.2006, the 6th defendant has published Possession Notice in respect of the suit property, etc and that the Guarantee alleged to be given is illegal and against the provisions of Hindu Succession Act and is not binding on the first respondent/plaintiff and other coparceners and under these circumstances, the sixth defendant is impleaded in the suit as defendant to have a binding adjudication of the rights of parties in their presence also.
27. It is also further contended on behalf of the first respondent/plaintiff that as against the order passed in I.A.No.727 of 2006 dated 06.12.2006 by the trial Court, the revision petitioner/6th respondent/6th defendant has got remedy of preferring the appeal under Order 43 Rule 1 of the Code of Civil Procedure and therefore, the civil revision petition is liable to be dismissed by this Court.
28. The learned Counsel for the revision petitioner/6th respondent/6th defendant Bank refers to Section 17 of the (17th December, 2002) has been published in the Gazette of India, Extraordinary, Pt.II, Sec.1, dated 18th December 2002, which provides a right to appeal and therefore, any person (including borrower viz. defendants 1 and 2) aggrieved by any of the measures referred to in sub-section (4) of Sec.13 taken by the secured creditor or his authorised officer can file an application before the Debts Recovery Tribunal having jurisdiction in the matter within forty-five days from the date of which such measures have been taken and this remedy cannot be ignored or bye-passed to defeat the very object of the aforesaid Act.
29. Though the revision petitioner/6th respondent/6th defendant Bank has made an endeavour before this Court that it is an aggrieved person in regard to the order passed in I.A.No.727 of 2006 by the trial Court, this Court is of the considered view that 'a person who feels disappointed with the result of the order is not a person aggrieved and in fact, the order must cause him a legal grievance by wrongfully depriving him of something.' This Court points out that the order passed by the trial Court in granting temporary injunction in I.A.No.727 of 2006 in favour of the first respondent/plaintiff is only against the defendants 1 and 2 viz., the respondents 1 and 2 and not against the revision petitioner/6th respondent/6th defendant Bank in real sense of the term. However, if the civil revision petitioner/6th respondent/6th defendant feels aggrieved in regard to the observation made against it in the order passed by the trial Court in I.A.No.727 of 2006, then as an aggrieved person, the revision petitioner/Bank has certainly got a right to appeal as per Order 43 Rule 1 of the Code of Civil Procedure.
30. It is evident that for the possession notice dated 26.09.2006 issued by the revision petitioner/Bank on 30.09.2006, the first respondent/plaintiff has issued a reply through his Counsel among other things mentioning that creation of security in favour of the revision petitioner/Bank is hit by lis pendense and also not binding the first respondent/plaintiff and other brother Venkatesan (fourth respondent/third defendant) and that without any enquiry, the possession notice has been issued without any due regard to the pending civil proceedings in respect of the property and this amounts to interference in due course of the legal proceedings and in derogation of the injunction petition, etc.
31. However, the first respondent/plaintiff's counsel in I.A.No.727 of 2006 in O.S.No.410 of 2004 before the learned First Additional Subordinate Judge, Madurai, has filed a memo dated 04.08.2008 praying for taking action for contempt of Court against the revision petitioner/6th respondent/6th defendant for violating the injunction order and praying the suit property for auction on 06.12.2006.
32. It is needless to point out that Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Ordinance, 2002, has been promulgated on 21.06.2002 to regulate Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest and for matters connected therewith or incidentally thereto and that the provisions of the Ordinance would enable banks and financial institutions to realise long-term assets, manage problem of liquidity, asset liability mismatches and improve recovery by exercising powers to take possession of securities, sell them and reduce non- performing assets by adopting measures for recovery or reconstruction.
33. Later, the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, (Act No.54 of 2002) (17th December, 2002) has been published in the Gazette of India, Extraordinary, Pt.II, Sec.1, dated 18th December 2002.
34. This Court recalls the observation of the Honourable Supreme Court in Allahabad Bank v. Canara Bank and another reported in (2000) 3 M.L.J 36 (S.C) at page 36, wherein it is observed that 'Jurisdiction of the tribunal under Recovery of Debts Due to Banks and Financial Institutions Act (LI of 1993), Secs.17, 18, 19 (22) and 34 of the Act, in regard to adjudication is exclusive and the jurisdiction of Recovery Officer in regard to execution is also exclusive and no other court, or authority, civil Court or Company Court can go into the said questions.'
35. Also, this Court points out the decision of the Bombay High Court in Centurion Bank Ltd. v. Indian Lead Ltd. and another reported in 2000 (Vol.100) Company Cases 537, wherein it is observed that 'Where cause of action is recovery of debt or substantially recovery of debt, Tribunal has exclusive jurisdiction and that even to try ancillary issues and that the Court has to look at the entire averments in the plaint and find out whether civil Court has jurisdiction in which event the jurisdiction of the Tribunal is ousted and that the Court must find out what is the cause of action and not merely the relief prayed for.'
36. Further, it is held that 'The 1993 Act has been principally enacted for the purpose of recovery of loans granted by banks and financial institutions. Therefore, if the suit is a suit for recovery of a debt and also for sale or realisation of securities which would be ancillary to the purpose of recovery of debt, such a suit would be a suit substantially for recovery of debt. Such a suit would not be maintainable before a civil Court.'
37. Coming to the present case on hand, in the Sanction Ticket dated 18.02.2004 issued by the revision petitioner/Bank in respect of Ashok Cartons Account, it is stated that the nature of facility is SSI/OCC, limit is Rs.20,00,000/- and the Margin is 25% and the Bank Gurantee is Rs.15,00,000/- and the Margin is 25% and Com. as per 1 + 0 Norms and the purpose for which the facility is sanctioned as 'Trades working capital against corrugated Paper Boards fully paid stocks, finished and work in process and against Receivables (age 60 days) etc. and in the column 'Security to be furnished', it is described as 'D2, D57, D101, D105, D5, F164, F164A, D73, Guarantee from Sri Venkateswara Dyeing Co and its partners 1) S.Karuppaiah, 2) K.Tamizhalarasan & Sri.D.Sivakumar, S.K.Rajendran, etc. and that in caption 'Special Terms and Conditions', it is mentioned as 'EM of Land and Building situated at R.S.No.409/2A, 2A, Door No.249 W, Aruppukottai Main Road, Villapuram, Madurai, valued by G.Balamurugan, Approved Panel Officer, 153, N, North Veli Street, Madurai, for Rs.82.40 lakhs dated 24.01.2004.
38. It is significant to make a mention that the agreement of Guarantee dated 18.02.2004 has been executed by Sri.S.Karuppaiah and K.Tamizharasan (defendants 2 and 3 in O.S.No.410 of 2004) on the file of the learned First Additional Subordinate Judge, Madurai, as partners of Sri Venkateswara Dyeing Company, No.249 W, Aruppukottai Main Road, Villapuram, Madurai, in favour of the revision petitioner/6th respondent/6th defendant in consideration of the Bank allowing the facilities of OCC - Rs.20,00,000/- (Rupees Twenty Lakhs only) and Guarantee - Rs.15,00,000/- (Rupees Fifteen Lakhs only) to the borrowers and for Srivenkateswara Dyeing Company, S.Karuppaiah (second defendant) and K.Tamizharasan (third defendant) have assigned.
39. Moreover, the sale deed dated 28.07.2004 has been executed by S.Karuppaiah (second defendant) and K.Tamizharasan (third defendant) in favour of K.K.Jagadeesh and K.J.Malliga (the defendants 4 and 5) in respect of 4197 Sq.ft of vacant land in Nanja S.No.409/2 (a portion of the subject matter of the suit property).
40. In the sale notice of the revision petitioner dated 25.10.2006, in respect of the loan availed by Ashok Cartons Company, it is mentioned that Ashok Cartons Company, as on 16.06.2008 is due to pay a sum of Rs.33,93,556.83 and on 31.03.2006, a demand notice has been issued mentioning the interest and other expenses and that even after the notice, since the due amount has not been paid, after following the procedures as per Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, the revision petitioner/bank has taken possession of the mortgaged properties on 26.09.2006. Further, in the said sale notice, the names of S.Jagadeeswari, Prabhu, T.Sivakumar, S.Karuppaiah, K.Tamizharasan and S.K.Rajendran have been mentioned as Grantors to the loan availed by the Ashok Cartons Company.
41. It is axiomatic fact that the inclusion of cause of action is essential (*)requirement under Order VII Rule 1 of the Code of Civil Procedure. Generally speaking, the Court of law has to presume that several allegations in the plaint are true. In the decision in T.Arivandandam v. T.Satyapal, reported in AIR 1977 SC 2421 at 2423, the Honourable Supreme Court has observed as follows:
"... The learned Munsif must remember that if on a meaningful - not formal
- reading of the plaint it is manifestly vaxatious, and meritless, in the sense of not disclosing a clear right to sue, he should exercise his power under O.VII R. 11 C.P.C taking care to see that the ground mentioned therein is fulfilled. And, if clear drafting has created the illusion of a cause of action, nip it in the bud at the first hearing by examining the party searchingly under O. X C.P.C. An activist Judge is the answer to irresponsible law suits. The trial Courts would insist imperatively on examining the party at the first hearing so that bogus litigation can be shot down at the earliest stage. etc.'
42. Be that as it may, that before the trial Court, the revision petitioner/6th respondent/6th defendant Bank has filed I.A.No.715 of 2008 in O.S.No.410 of 2004 praying for an order to reject the plaint on the basis that the first respondent/plaintiff has no locus standi to file the present suit in O.S.No.410 of 2004 or the interim application to obtain an order of injunction and the matter is pending for filing of counter by the first respondent/plaintiff and also in I.A.No.714 of 2008, contempt application is pending before the trial Court.
43. It is also the contention of the learned Counsel for the first respondent/plaintiff that all the alleged partners have gone in 1998 or 2002 and from 2002, for Sri Venkateswara Dyeing Company, the father and the second son are shown as partners.
44. Admittedly, the present suit filed by the first respondent/plaintiff in O.S.No.410 of 2004 has been filed in the year 2004 and it is also not in dispute that the revision petitioner/Bank has filed O.A.No.131 of 2008 before the Debts Recovery Tribunal, Madurai. Added further, I.A.No.715 of 2008 has been filed by the revision petitioner/Bank for rejecting the plaint in O.S.No.410 of 2004 filed by the first respondent/plaintiff and the same is pending for filing counter. Moreover, I.A.No.714 of 2008, contempt application is also pending.
45. On a careful consideration of respective contentions and taking into consideration the facts and cumulative attendant circumstances of the case that the respective parties have taken divergent stands besides raising arguable points, this Court is not expressing any opinion in regard to the pending interlocutory matters, including the one for rejecting the plaint which is (*)posted for filing counter by the first respondent/plaintiff.
46. As far as the present revision is concerned, this Court is of the considered view that in I.A.No.727 of 2006 filed by the first respondent/plaintiff as against the respondents 1 to 6, the relief of permanent injunction has been sought for by the first respondent/plaintiff only as against the respondents 1 and 2 restraining the respondents 1 and 2, their men, agents, partisans and assigns from in any way interfering with the peaceful possession and enjoyment by the petitioner/plaintiff of the suit property till the disposal of the suit in O.S.No.410 of 2004 and to order ad interim exparte decree.
47. The respondents 1 and 2 in I.A.No.727 of 2006 figured as the defendants 1 and 2, but in the affidavit to I.A.No.727 of 2006, the first respondent/plaintiff at paragraph No.10, has inter alia averred that 'he has come forward with this petition to restrain the 6th respondent, his men, agents, partisans and assigns from in any way dealing with the suit property to the detriment of the rights of the petitioner and third respondent herein till the disposal of the suit and that he has also filed a separate petition to implead the 6th respondent also as a party in the suit and that under these circumstances, in so preventing the 6th respondent, his men, agents, partisans and assigns by an order of temporary injunction from interfering in his peaceful possession and enjoyment of the suit property pending disposal of the suit, he cannot have any valid objections whatsoever.'
48. Therefore, it is candidly clear that the first respondent/plaintiff has not expressly and specifically sought for a relief of temporary injunction restraining the revision petitioner/6th defendant Bank, from in any way interfering with the peaceful possession and enjoyment of the suit property. Moreover, the trial Court while allowing the I.A.No.727 of 2006 at paragraph No.12, has among other things observed that 'if the action initiated by the 6th defendant succeeds, then the suit filed by the first respondent/plaintiff will become otiose. Therefore, the interest of the first respondent/petitioner/plaintiff has to be protected and resultantly, allowed the I.A for temporary injunction without costs.'
49. It is to be noted that the revision petitioner/6th respondent/6th defendant has filed filed O.A.No.131 of 2008 in the year 2008 whereas the suit has been filed by the first respondent/plaintiff in O.S.No.410 of 2004 in the year 2004 notwithstanding the fact that Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, has come into force on 17th December, 2002 published in the Gazette of India, Extraordinary, Pt.II, Sec.1, dated 18th December 2002.
50. Also, a perusal of the decreetal order which has been drawn in pursuance of the order passed in I.A.No.727 of 2006 shows that I.A.No.727 of 2006 has been allowed and that the respondents 1 and 2, his men, agents, are restrained from interfering with the peaceful possession and enjoyment of the first respondent/petitioner/plaintiff till the disposal of the suit.
51. In effect, the revision petitioner/Bank is not an aggrieved person by means of the trial Court allowing the application in I.A.No.727 of 2006 and therefore, the petitioner cannot invoke the jurisdiction of this Court under Article 227 of the Constitution of India (which has to be sparingly exercised in a supervisory jurisdiction) and resultantly, since the revision petition is not per se maintainable in law, the civil revision petition fails and the same is hereby dismissed to prevent miscarriage of justice leaving the parties to bear their own costs. Consequently, the connected Miscellaneous Petition is dismissed.
52. Before parting, inasmuch as the right of appeal is a creature of statue and the same is governed by the ingredients of Order 43 Rule 1 of the Code of Civil Procedure and the same being very much available to the revision petitioner/6th respondent/6th defendant to file the same both on facts and law (but such a procedure has not been adopted by the revision petitioner/6th respondent/6th defendant), liberty is given to the revision petitioner/Bank to prefer an appeal before the competent forum in accordance with law if so advised wherein the revision petitioner can raise all factual and legal contentions in the manner known to law in regard to the observation made against the revision petitioner/Bank in paragraph No.12 of the order of the trial Court in I.A.No.727 of 2006 in O.S.No.410 of 2004. Since I.A.No.715 of 2006 filed by the revision petitioner/Bank praying to reject the plaint, is pending before the trial Court and is at the stage of filing counter, this Court as a matter of Prudence, Equity and Good Conscience, directs the first respondent/plaintiff to file his counter to I.A.No.715 of 2006 on or before 12.06.2009 and thereafter, the trial Court shall dispose of the said I.A.No.715 of 2006 within a period of four weeks thereon after providing due opportunities to both sides to adduce oral and documentary evidence if they so desire and to report compliance to this Court without fail and that the parties are directed to raise all factual and legal contentions before the trial Court including the maintainability of the suit on the point of jurisdiction in accordance with law.
rsb To
1.The First Additional Subordinate Judge, Madurai.
2.The Sub Assistant Registrar (Judicial), Madurai Bench of Madras High Court, Madurai, (To watch and repot).