Research › Search › Judgment

Jharkhand High Court · body

2009 DIGILAW 282 (JHR)

Tara Devi Kelanka v. State Bank of India

2009-02-19

D.G.R.PATNAIK

body2009
ORDER :- Petitioners in this writ application have challenged the order dated 09.09.2008 passed by the Sub-Judge-II, Dhanbad in Title (M) Suit No. 87 of 1993 whereby the petitioners’ prayer for an order of injunction restraining the Respondent No. 1 from putting the petitioners’ properties on auction sale and from encashing the cheques obtained from the petitioners, was rejected. 2. Facts of the case lie in narrow compass and stated briefly are as follows : The Respondent No. 1 namely the State Bank of India had filed a suit against the present petitioners/defendants on 22.05.1993 before the Court below for a decree for recovery of a sum of Rs. 1,14,384.92 from the defendants. The claim related to the loan borrowed by the defendants from the plaintiff Bank and the same was sought to be recovered as the outstanding dues assessed by the plaintiff from the defendants. The petitioners/defendants had appeared in the suit and had filed their written statements denying and disputing the claim of the plaintiff. Defendant Nos. 3 and 4 filed a counter claim against the plaintiff Bank in the aforesaid suit for a sum of Rs. 4,93,045.19. The proceedings in the suit had almost reached the stage of final argument, but before that, the respondent Bank had initiated measures under the provisions of Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (Securitisation Act), firstly, by issuing a demand notice to the defendants to pay the outstanding dues and 60 days thereafter, by issuing a notice dated 26.06.2008 to the defendants informing them that the Bank had taken over possession of the properties secured against the debts, with an intent to sell the same for realization of its dues, under the provisions of Section 13(4) of the Securitisation Act. During the pendency of the suit, considering the apprehensions expressed by the parties, the learned Court below had passed an order of injunction on 25.05.1999 restraining the Defendant No. 4 from selling away or transferring in any manner the part of the suit property which was in his possession and custody. On receipt of the notice dated 26.06.2008 under Section 13(4) of the Securitisation Act the petitioners/defendants, filed a petition praying for an order of injunction restraining the plaintiff Bank from interfering with the order of injunction as passed by the Trial Court on 25.05.1999. On receipt of the notice dated 26.06.2008 under Section 13(4) of the Securitisation Act the petitioners/defendants, filed a petition praying for an order of injunction restraining the plaintiff Bank from interfering with the order of injunction as passed by the Trial Court on 25.05.1999. Such prayer was made on the ground that by proceeding to take possession of the suit property and with the intention of selling away the property for realization of its purported dues, the plaintiff Bank was in fact proposing to change the status of the suit property and such act on the part of the plaintiff Bank would amount to violation of the order of injunction passed by the Court. The defendants prayer was contested by the plaintiff Bank on the ground that the plaintiff’s act of taking possession of the suit property was in lawful exercise of its authority under Section 13(4) of the Securitisation Act and further, that the suit property was never transferred to the custody of the Court and had, for all practical purposes, remained in the custody of the Defendant No. 4 and in terms of the conditions of loan availed by the defendants, the plaintiff Bank had every right to take possession of the suit property and sell the same for realization of its outstanding dues from the defendants and if the prayer of the defendants for an order of injunction against the plaintiff Bank is allowed, it would amount to interfering with the powers of the Bank under the Securitisation Act. 3. The learned Court below vide its impugned order, had rejected the defendants’ prayer for injunction on the ground that it has no jurisdiction to entertain any petition filed against the action taken by the plaintiff Bank under the Securitisation Act as per the prohibition under the provisions of Section 34 of the Act. 4. The petitioners/defendants have challenged the aforesaid order of the learned Court below. Assailing the impugned order, Shri Amit Kumar Das, learned counsel for the petitioners would argue that since admittedly the plaintiff Bank had not initiated any action whatsoever before the Debt Recovery Tribunal or the appellate tribunal, the learned Court below could not have relied upon the provisions of Section 34 of the Securitisation Act to reject the petitioners prayer for injunction. Learned counsel argues further that during the pendency of the suit, an order of injunction was passed by the learned Court below restraining the Respondent No. 4 from disposing of the suit property in his possession. Such order, according to learned counsel, amounts the property being custodia-legis becoming the custody legacy and therefore, the attempt on the part of the plaintiff/Respondent No. 1 to take possession and to dispose of the property, would amount not only to violation of the order of injunction passed by the Court, but would also amount to frustrating the counter claim of the petitioners/defendants raised by them in the suit against the plaintiff Bank. Learned counsel would thereafter want to refer to the various issues raised in the suit on the basis of the rival pleadings of the parties and would attempt to emphasize that the plaintiff Bank’s suit against the petitioners/defendants is totally misconceived and not maintainable and the plaintiff bank has no authority to realise any sum of money from the defendants as claimed in the suit. 5. The questions as raised by the petitioners in this writ application are :- (i) Whether in the facts and circumstances of the case, the learned Court below could have relied upon the provisions of Section 34 of the Securitisation Act to reject the prayer of the petitioners/defendants for an order of injunction against the plaintiff Bank ? (ii) Whether the act of the Respondent No. 1 Bank in proceeding to take possession of the suit properties for the purpose of recovering its outstanding dues from the defendants, under the provisions of Section 13(4) of the Securitisation Act, would amount to violation of the order of injunction passed by the Trial Court in the suit? 6. From the facts of the case, admittedly, the petitioners/defendants had borrowed money from the respondent Bank by way of loan. Against the loan advanced, certain specific properties of the defendants/petitioners were secured creating a charge over the properties in favour of the Bank. Under the terms of agreement of loan, the Bank did have the authority to realize its dues from the borrower by taking possession of the secured assets of the borrower and selling the same. Against the loan advanced, certain specific properties of the defendants/petitioners were secured creating a charge over the properties in favour of the Bank. Under the terms of agreement of loan, the Bank did have the authority to realize its dues from the borrower by taking possession of the secured assets of the borrower and selling the same. On the ground that the defendants/borrowers had not discharged their liability inspite of repeated demand notices, the Bank had filed a suit before the Court below on 22.05.1993 for realization of the outstanding dues from the defendants under the provisions of the Civil Procedure Code. During the pendency of the suit, an order of injunction was passed by the Trial Court restraining the Defendant No. 4 from disposing of the suit property under his possession and custody, during the pendency of the suit. The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act (Securitisation Act) came into force in the year 2002. Under the Act, special provisions were created relating to recovery of debts by the secured creditors subjecting the contract between the parties to be governed by the statutory provisions under the Act. It would, therefore, appear that there is an element of election which would enable the secured creditor to choose between the different modes and forums for recovering its dues. Section 13 of the Securitisation Act gives a right to the secured creditor to enforce the security interest without the intervention of the Court or Tribunal. The provisions of Sub Section 2 and Sub Section 4 of Section 13 of the Act lay down procedure according to which the secured creditor may proceed to enforce the security interest. Sub Section 4 of Section 13 of the Act enables the secured creditor to take possession of the secured assets of the borrowers including the right of transfer by way of lease, assignment or sale for realizing the secured assets. Sub Section 4 of Section 13 of the Act enables the secured creditor to take possession of the secured assets of the borrowers including the right of transfer by way of lease, assignment or sale for realizing the secured assets. Section 34 of the Act lays down that no Civil Court shall have the jurisdiction to entertain any suit or proceeding in respect of any matter which a Debt Recovery Tribunal or an Appellate Tribunal is empowered by or under the Act to determine and no injunction shall be granted by any Court or other authority in respect of any action taken or to be taken in pursuance of any power conferred by or under this Act or under the Recovery of Debts Due to Bank and Financial Institutions Act, 1993. The facts which are undisputed, do categorically declare that the plaintiff Bank has proceeded to exercise its powers under the provisions of Section 13 of the Securitisation Act by resorting to the preliminary steps of issuance of notice to the defendants/borrowers under Section 13(2) of the Act followed by a notice under Section 13(4) of the Act for taking possession of the secured assets of the borrowers. Under such circumstances, as rightly held by the learned Court below, the provisions of Section 34 of the Act would prohibit the Court below from passing any order which would amount to restrain or injunct the Bank from taking any action for realization of its outstanding dues from the borrower, in pursuance of the powers conferred to the Bank under the Securitisation Act. This answers the first question. 7. Coming to the second question, the contention of the petitioner is that the order of injunction restraining the Defendant No. 4 from disposing the suit property in his possession during the pendency of the suit, amounts to the property coming under the custody of the Court. On a plain reading of the order of injunction, it would be manifest that the Trial Court had merely restrained the Defendant No. 4 from alienating the suit property in his possession and custody. The order does no more indicate or suggest that the Court had indicated thereby to take possession of the suit property under its custody. On a plain reading of the order of injunction, it would be manifest that the Trial Court had merely restrained the Defendant No. 4 from alienating the suit property in his possession and custody. The order does no more indicate or suggest that the Court had indicated thereby to take possession of the suit property under its custody. The possession and custody of the property has been left with the Defendant No. 4 though right to alienate the property has been restricted only till the pendency of the suit. Under such circumstances, since the property continues to remain in the possession and custody of the Defendant No. 4, the plaintiff Bank had the authority to take possession of the property in exercise of its right under the provisions of Section 13(4) of the Securitisation Act. Considering the fact of pendency of the suit before the Court below, the Bank would be obliged to intimate the Trial Court regarding its act of taking over possession and to obtain due permission from the Trial Court before proceeding to sell the secured assets of the defendants for realization of its outstanding dues. The mere act of taking possession of the secured assets by the plaintiff Bank, does not thereby amount to violation of the order of injunction of the Trial Court. The second question is answered accordingly. 8. In the light of the above discussion, I do not find any merit in this writ application. Accordingly, this writ application is dismissed.