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2008 DIGILAW 1478 (MAD)

Padmini Sivasubramaniam v. The Comfort Inn, Rep. by its Managing Partner, Tirupur & Others

2008-04-30

R.SUBBIAH, SUDHANSU JYOTI MUKHOPADHAYA

body2008
Judgment :- S.J. Mukhopadhaya, J. This Civil Revision Petition has been preferred by the petitioner-auction purchaser to set aside the appeal bearing S.A.No.1 of 2008 on the file of the Debts Recovery Tribunal-I, Chennai, including the order dated 1. 2008 passed in the said case by the Tribunal. 2. According to the petitioner, the first respondent-Firm was constituted in May 2005 by two partners, namely Satchidanandam and Chandra and alleged to have been reconstituted with two more partners, Kathirvel and A.Sivasubramaniam. Satchidanandam and Chandra allegedly retired from the Firm on 26. 2007, whereinafter, notice under Section 13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act (hereinafter referred to as the SARFAESI Act), was issued by Indian Overseas Bank against the borrower-Firm. The Firm was allegedly re-constituted on 29. 2007 with the induction of the second respondent-Lakshmi Ramanan and Syed. On the same day, two others alleged to have retired from the Firm. Subsequently, steps were taken by the third respondent-Authorized Officer, Indian Overseas Bank, under Section 13(4) of the SARFAESI Act and symbolic possession of the property was taken. Public auction notice was issued on 310. 2007 by the third respondent-Bank in terms of Rules 8 & 9 of the Security Interest (Enforcement) Rules, 2002, bringing to auction the subject property. The notice referred to Satchidanandam and Chandra as the partners. At that stage, the second respondent-Lakshmi Ramanan filed a Writ Petition in W.P.No.36110 of 2007 before this Court, wherein, he claimed to be the Managing Partner of the first respondent-Firm. Prayer was made to quash the possession notice dated 210. 2007 and auction notice dated 310. 2007. This Court, by order dated 30.11.2007, dismissed W.P.No.36110 of 2007, holding that since the law is well settled, the remedy is only to file appeal under Section 17 of the SARFAESI Act. The second respondent-Lakshmi Ramanan was granted liberty to approach the Debts Recovery Tribunal under Section 17 of the SARFAESI Act. The auction-sale was allowed to proceed, which was fixed on 12. 2007. The further case of the petitioner is that the auction-sale was conducted on 12. 2007. As per the law, the appeal under Section 17 of the SARFAESI Act could have been preferred by 12. 2007. But it was not filed by the second respondent. The auction-sale was allowed to proceed, which was fixed on 12. 2007. The further case of the petitioner is that the auction-sale was conducted on 12. 2007. As per the law, the appeal under Section 17 of the SARFAESI Act could have been preferred by 12. 2007. But it was not filed by the second respondent. On the other hand, the second respondent, along with Syed, preferred a suit in O.S.No.525 of 2007 in the District Munsif Court, Tirupur, against Kathirvel and A.Sivasubramaniam on the ground that they are interfering with the Management of the Firm and sought for a declaration that the second respondent-Lakshmi Ramanan and Syed are the only partners of the first respondent-Firm. In the said case, a compromise was filed by Kathirvel and Sivasubramaniam on 112. 2007 for settlement of the suit. Finally, the first respondent-Firm, purported to be represented by Lakshmi Ramanan (second respondent) filed appeal, along with the second respondent, on 1. 2008 under Section 17 of the SARFAESI Act, but it was filed before the Debts Recovery Tribunal, Chennai. Therein, the possession notice, dated 210. 2007, the auction notice, dated 310. 2007 and the auction made on 12. 2007, were challenged. Prayer was also made to stay the confirmation of the sale of immovable secured asset in favour of the auction purchaser. The Debts Recovery Tribunal-I, Chennai, on 1. 2008 in S.A.No.1 of 2008, granted interim stay restraining the third and fourth respondents herein from taking further proceedings under SARFAESI Act and also in respect of the confirmation of sale of the immovable secured asset in favour of the auction purchaser pursuant to the auction held on 12. 2007. It is in the above circumstances, the auction purchaser preferred this Civil Revision Petition. 3. The petitioner has challenged the maintainability of the S.A. before the Debts Recovery Tribunal-I, Chennai. According to the petitioner, the cause of action took place in Namakkal District and the Debts Recovery Tribunal, Chennai has no jurisdiction to entertain the appeal under Section 17 of the SARFAESI Act. As per the Notification dated 1. 2006 issued by the Department of Economic Affairs (Banking Division), Ministry of Finance, Government of India, only the Debts Recovery Tribunal at Madurai has jurisdiction to entertain the cases arising from Salem and Namakkal Districts. The third respondent-Authorized Officer, Indian Overseas Bank, who has issued the possession notice dated 210. 2007, is in Salem. As per the Notification dated 1. 2006 issued by the Department of Economic Affairs (Banking Division), Ministry of Finance, Government of India, only the Debts Recovery Tribunal at Madurai has jurisdiction to entertain the cases arising from Salem and Namakkal Districts. The third respondent-Authorized Officer, Indian Overseas Bank, who has issued the possession notice dated 210. 2007, is in Salem. The location of the subject property is Tirupur, Coimbatore District, which has been auctioned. If that is taken into consideration, the jurisdiction would be the Debts Recovery Tribunal at Coimbatore, as per the Notification dated 1. 2006. In any case, the Debts Recovery Tribunal, Chennai has no jurisdiction to entertain the appeal under Section 17 of the SARFAESI Act in regard to the cause of action which has taken place at Namakkal District or Tirupur area of Coimbatore District, where the subject property is located. 4. The other grounds of challenge are as follows: (a) The appeal is beyond the period of limitation of 45 days prescribed under Section 17 of the SARFAESI Act, 2002, and hence, it ought to have been rejected by the Debts Recovery Tribunal, Chennai. (b) The Debts Recovery Tribunal has no jurisdiction to entertain the appeal under Section 17 of the SARFAESI Act against the sale notice issued under the Security Interest (Enforcement) Rules, 2002. (c) The impugned order passed by the Debts Recovery Tribunal, Chennai is stereotyped order, passed mechanically without application of mind, as evident from the series of orders passed by the same Presiding Judge in a number of cases. (d) The second respondent has no locus-standi to file the appeal and is incompetent to challenge the measures taken by the respondents-Bank, he being not the partner, but driver of the partners of the Firm. 5. Learned counsel appearing on behalf of the second respondent, disputed the allegation that the second respondent is the driver of the partners. According to him, he is one of the partners of the Firm. Reliance was also placed on the suit, wherein compromise memo was filed by the parties. Learned counsel appearing on behalf of the second respondent further submitted that the first and second respondents have already paid a sum of Rs.65 lakhs to the third respondent-Bank on 12. According to him, he is one of the partners of the Firm. Reliance was also placed on the suit, wherein compromise memo was filed by the parties. Learned counsel appearing on behalf of the second respondent further submitted that the first and second respondents have already paid a sum of Rs.65 lakhs to the third respondent-Bank on 12. 2007 to regularise the account and till date, they have been paying a sum of Rs.20,000/-per day and as on date, a sum of Rs.2,34,99,450/-is due and payable by them to the third respondent. They are ready and willing to pay the above dues within 12 weeks to the third respondent-Bank and undertake to pay the same. An affidavit has been filed by the first and second respondents on 14. 2008 to the above effect. 6. So far as the Notification relating to the jurisdiction of the Debts Recovery Tribunal is concerned, learned counsel appearing on behalf of the first and second respondents submitted that the said Notification has been challenged by a person in W.P.No.6077 of 2007, wherein, certain interim order has been passed by the Court on 20.2.2007. 7. According to the third respondent-Indian Overseas Bank, the auction was held on 12. 2007 and the petitioner who was the highest bidder, has already remitted a sum of Rs.1,06,00,000/-. The auction was held pursuant to the order of the Court in W.P.No.36110 of 2007. The second respondent, who claims to have become the partner of the first respondent-Firm, is trying to protect the property, but so far as the Bank is concerned, it is interested to recover the dues and the rest of the questions are left for the Court to decide. 8. We have heard the learned counsel appearing for the parties, noticed the rival contentions and the Notification regarding the jurisdiction of the Tribunal and also the interim order passed in W.P.No.6077 of 2007, dated 20.2.2007. 9. The questions whether in the facts and circumstances of the case, the auction should have been made or not, whether the second respondent is partner of the Firm or whether the Bank should settle the matter with the respondents by accepting the total amount within the time schedule, are not required to be determined in the present case, being dependent on facts, including the disputed questions of facts. We are only on the issue, whether, in view of the cause of action which has taken place at Namakkal District or Salem District and in view of the fact that the secured asset is situated at Tirupur, Coimbatore District, the Debts Recovery Tribunal, Chennai has jurisdiction to entertain the appeal under Section 17 of the Act or not. 10. It is not in dispute that as per Notification dated 1. 2006, F.No.G.26036/2/2005, the Debts Recovery Tribunal, Chennai has no jurisdiction over the matters related to Namakkal, Salem or Coimbatore Districts, as evident from the said Notification, relevant portion of which is quoted hereunder: DRT & its location Area of jurisdiction Debts Recovery Tribunal, Madurai, 3rd & 4th Floor, Kalyani Towers, 4/162, Madurai Melur Road, Uthangudi, Madurai-625 107. District of Madurai, Kanyakumari, Tirunelveli, Tuticorin, Virudhunagar, Sivaganga, Ramnad,Theni, Erode,Salem, Namakkal, Trichy, Karur and Dindigul Debts Recovery Tribunal-I, Chennai, Spencer Towers, 6th Floor, 770-A, Anna Salai, Chennai-600002. Area under Egmore-Nungambakkam & Mylapore-Triplicane Taluk limits of Chennai and Union Territory of Pondicherry. Debts Recovery Tribunal-II, Chennai, Spencer Towers, 4th Floor, 770-A, Anna Salai, Chennai-600 002. Areas under Tondiarpet & Mambalam Guindy Taluk limits of Chennai. Debts Recovery Tribunal-III, Chennai, Spencer Towers, 5th Floor, 770-A, Anna Salai, Chennai-600 002 Areas under Perambur-Purasawalkam Taluk limits of Chennai and Districts of Kancheepuram, Tiruvallur, Vellore, Villupuram, Cuddalore, Tiruvannamalai, Pudukottai, Thanjavur, Thiruvarur, Nagapattinam, Perambalur and Dharmapuri Debts Recovery Tribunal, Coimbatore 1670, Trichy Road, Ramanathapuram Coimbatore-641. Districts of Coimbatore and Nilgiris 11. From the interim order dated 20.2.2007 passed in W.P.No.6077 of 2007, it would be evident that the said Notification has not been stayed and only the following interim order relating to the transfer of cases has been passed: "The petitioner has questioned the impugned notification in so far as it relates to transferring the area of jurisdiction of Debt Recovery Tribunal, Madurai to Erode, Salem and Namakkal only, on the ground that there are no guidelines for effecting such transfer, and in view of the transfer, ultimately the Public are the sufferers and the transfers are also contrary to Rule 6 of Debts Recovery Tribunal (Rules) 1993. 2. In view of the above, there will be an order of interim stay in so far as the Notification transferring the cases pending before the Debts Recovery Tribunal, Coimbatore, pertaining to the Districts of Erode, Salem and Namakkal, to the file of Debts Recovery Tribunal, Madurai. Notice" 12. 2. In view of the above, there will be an order of interim stay in so far as the Notification transferring the cases pending before the Debts Recovery Tribunal, Coimbatore, pertaining to the Districts of Erode, Salem and Namakkal, to the file of Debts Recovery Tribunal, Madurai. Notice" 12. In view of the fact that the aforesaid Notification has not been stayed by the Court, we hold that the said Notification is in operation and thereby, the Debts Recovery Tribunal, Chennai has no jurisdiction to entertain the appeal in question, as was preferred by the first and second respondents. 13. So far as which Debts Recovery Tribunal, Madurai or Coimbatore, the respondents 1 and 2 should move in appeal, is concerned, it is for them to decide on the basis of the jurisdiction as shown in the Notification and we are keeping it open for them to decide. 2. 14. We accordingly set aside the proceedings in S.A.No.1 of 2008, including the order dated 1. 2008, with liberty to the first and second respondents to move before appropriate Tribunal if they so choose and they may bring to the notice of the Tribunal that they were pursuing the matter before a wrong forum and this Court. 15. The Civil Revision Petition is allowed with the aforesaid observations. No costs. The Miscellaneous Petition is closed.