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2010 DIGILAW 1753 (BOM)

State Bank of India v. Jigishaben B. Sanghavi

2010-12-08

ANOOP V.MOHTA, D.Y.CHANDRACHUD

body2010
Judgment : ORAL JUDGMENT: (DR. D.Y.CHANDRACHUD, J.) Admit. With the consent of all the Learned Counsel for the parties, the appeal has been taken up for hearing and final disposal. 2. The Learned Single Judge dismissed a Chamber Summons, seeking the rejection of a plaint under Order 7 Rule 11(d) of the Code of Civil Procedure, 1908. The State Bank of India, the First Defendant to the suit, is in appeal. The bar to the maintainability of the suit, according to the Appellant, is Section 34 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. 3. In March 1996, the Appellant sanctioned a financial facility of Rs.70 crores to Crosslink Shipbreakers (P) Ltd. The Second, Third and Fourth Defendants executed letters of guarantee. The Second and Third Defendants are spouses, and the Second Defendant is the Karta of an HUF. The Fourth Defendant is the son of the Second and Third Defendants. The First Plaintiff is the wife of the Fourth Defendant, while the Second and Third Plaintiffs are their children. The Fourth Plaintiff is the daughter of the Second and Third Defendants. The case of the Appellant is that the Second, Third and Fourth Defendants executed a memorandum of deposit of title deeds by which a residential flat – Flat 1402, at Benhur, Narayan Dabholkar Road, Malabar Hill, Mumbai was mortgaged in its favour. The Appellant, on a default in the payment of its dues, instituted an application before the Debts Recovery Tribunal, Ahmedabad for the recovery of Rs.9.56 crores against the Second, Third and Fourth Defendants. The application was allowed by the Tribunal on 17 October 2003. In the recovery proceedings, the flat was attached. A sale proclamation was issued. 4. On 11 December 2004, the Bank issued a notice under Section 13(2) of the Securitisation Act to the principal borrower and to the Second, Third and Fourth Defendants. A writ proceeding was instituted before the Gujarat High Court to challenge the notice, which was dismissed on 31 March 2005. An appeal was dismissed by a Division Bench of the Gujarat High Court on 5 April 2005. The suit before this Court, in which the Appellant moved a Chamber Summons under Order 7 Rule 11(d), was lodged on the same day as the dismissal of the appeal by the Gujarat High Court. 5. An appeal was dismissed by a Division Bench of the Gujarat High Court on 5 April 2005. The suit before this Court, in which the Appellant moved a Chamber Summons under Order 7 Rule 11(d), was lodged on the same day as the dismissal of the appeal by the Gujarat High Court. 5. Order 7, Rule 11(d) provides that the plaint shall be rejected “where the suit appears from the statement in the plaint to be barred by any law”. The plain language of the provision mandates the rejection of the plaint when a case falls within one of the clauses of Rule 11. For clause (d) to apply, the bar to the suit must be under any law and the bar must appear from the statement in the plaint. It is trite law that while considering an application for rejection under Order 7 Rule 11(d), the averments in the plaint as they stand, have to be construed. The pleas of the Defendants in the Written Statement are wholly irrelevant. The plaint has to be construed meaningfully, reading it as a whole to ascertain its true import. These principles are emphasized in the decision of the Supreme Court in Saleem Bhai vs. State of Maharashtra (2003) 1 SCC 557 ). In Popat and Kotecha vs. State Bank of India Staff Association, (2005) 7 SCC 510 ) the Supreme Court, on a review of its earlier judgments, formulated the principle thus: “There cannot be any compartmentalisation, dissection, segregation and inversions of the language of various paragraphs in the plaint. If such a course is adopted it would run counter to the cardinal canon of interpretation according to which a pleading has to be read as a whole to ascertain its true import. It is not permissible to cull out a sentence or a passage and to read it out of the context in isolation. Although it is the substance and not merely the form that has to be looked into, the pleading has to be construed as it stands without addition or subtraction of words or change of its apparent grammatical sense. The intention of the party concerned is to be gathered primarily from the tenor and terms of his pleadings taken as a whole. At the same time it should be borne in mind that no pedantic approach should be adopted to defeat justice on hairsplitting technicalities.” 6. The intention of the party concerned is to be gathered primarily from the tenor and terms of his pleadings taken as a whole. At the same time it should be borne in mind that no pedantic approach should be adopted to defeat justice on hairsplitting technicalities.” 6. Now, in order to consider whether the Learned Single Judge was correct in dismissing the application for rejection of the Plaint under Order 7, Rule 11(d), the averments contained in the plaint would need to be considered. The Plaintiffs claim to be members of a Hindu Undivided Family together with the Second, Third and Fourth Defendants. According to them, the residential flat was purchased on 1 April 1982 by the Second, Third and Fourth Defendants and by the HUF with a contribution by the HUF. The plaint sets out that the Bank had granted a facility to the principal borrower in which the Second, Third and Fourth Defendants are Directors. The Second, Third and Fourth Defendants had furnished personal guarantees to secure the outstandings. The Bank claimed a purported equitable mortgage created by the Second, Third and Fourth Defendants in respect of the residential flat. Since the HUF is a co-owner/tenant in common, it had permitted the title deeds to be deposited with the Bank for creating a mortgage to the extent of the share of the Third and Fourth Defendants. According to the Plaintiffs, the HUF was not a borrower, guarantor or mortgagor. The Bank, according to the Plaintiffs, was aware of the circumstance that the HUF was a co-owner/tenant in common. However, it is alleged that the Bank has suppressed the fact that the HUF is a co-owner maliciously in all proceedings. The plaint thereafter contains a reference to the institution of the proceedings before the Debts Recovery Tribunal; the issuance of the Recovery Certificate; the initiation of the recovery proceedings and the attachment of the residential flat. The Plaintiffs state that they raised objections to the settlement of the terms of the sale by the Recovery Officer on 22 June 2004. In the meantime, the Bank issued a notice under Section 13(2). The Plaintiffs state that they raised objections to the settlement of the terms of the sale by the Recovery Officer on 22 June 2004. In the meantime, the Bank issued a notice under Section 13(2). The Plaintiffs claim that the notice under Section 13(2) is in “disregard” of the provisions of the Securitisation Act, in the following averments: “Needless to state that action on the part of Defendant No.1 are illegal, highly objectionable and initiated with ulterior motives and malafide intention ignoring statutory provisions and settled principles of law and natural justice. These Plaintiffs further state that the said notice under section 13(2) of the Securitisation Act has been taken out and likely to proceeded further with in complete disregard to the provisions of the Securitization Act itself and is liable to be set aside as per the provisions of law. The Plaintiffs are informed that Defendant No.2 to 4 have filed a Petition in the Hon’ble Gujarat High court and a Letters Patent Appeal is preferred from the order of dismissal of the said Petition.” 7. The case of the Plaintiffs is that there is no legal and valid mortgage, nor is any security created in favour of the Bank as against the rights of the HUF of which the Plaintiffs are members. The mortgage, it is alleged, is defective since the original Share Certificates are not with the Bank. There is, according to the Plaintiffs, no valid basis for the Bank to initiate action under Section 13(4) of the Securitisation Act and the averment in that regard is contained in paragraph 12 thus: “Therefore, Defendant No.1 having no security interest as well as no secured asset, as against the rights of these Plaintiffs’ HUF in the suit premises, upon which this Defendant No.1 can take any action under any law much less under the Section – 13(4) of Securitisation Act. The Plaintiffs repeat that as no legal or valid mortgage can be said to have been created in favour of Defendant No.1 and therefore they cannot claim any remedy as and by way of attachment, possession, sale, etc. in any manner whatsoever as in respect of the suit premises specifically against the rights of the said HUF, more so as the same being only place of residence of these Plaintiffs.” 8. in any manner whatsoever as in respect of the suit premises specifically against the rights of the said HUF, more so as the same being only place of residence of these Plaintiffs.” 8. Even if the Bank has enforceable remedies against the Second to Fourth Defendants, it is not entitled, according to the Plaintiffs, to take possession of the premises from the Plaintiffs, who are not borrowers or guarantors. The Plaintiffs have averred that they are not parties to the transaction between the Third and Fourth Defendants with the Bank. An allegation of fraud which is contained in paragraph 15 of the plaint is as follows: “The Plaintiffs further state that it is in fact a systematic fraud played by Defendant No.1 so as to pressurise these Plaintiffs to succumb to the malafide intentions of Defendant No.1 for enjoying the wrongful gains that in law Defendant No.1 is not entitled to, with its illegal action to deprive them of their valid and settled right, title and interest over the suit premises.” 9. The Plaintiffs claim that it was from the reply filed by the Bank to their objections before the Recovery Officer that they learnt about the memorandum of deposit of title deeds by the Second Defendant as the Karta of the HUF. The mortgage, according to the Plaintiffs, is unenforceable in the absence of legal necessity. The reliefs that are sought in the plaint are: (i) A declaration that the Bank has no right or interest in the residential flat and is not entitled to take any action with respect to the flat under the Securitisation Act; (ii) A declaration that the Bank has no right, title or interest either by way of mortgage or in any other manner to the extent of the share of the HUF in the residential flat; (iii) A declaration that the alienation and/or mortgage created by the Second Defendant in favour of the Bank is, to the extent of the share of the HUF in the premises null and void; (iv) A decree setting aside the alienation and/or mortgage to the extent of the share of the HUF; and (v) A permanent injunction restraining the First Defendant and officers appointed under the Securitisation Act and the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 from disturbing the possession of the Plaintiffs. 10. 10. The bar which is set up by the Bank in its Chamber Summons is under Section 34 of the Securitisation Act which reads as follows: “34. Civil court not to have jurisdiction.- No civil court shall have jurisdiction to entertain any suit or proceeding in respect of any matter which a Debts Recovery Tribunal or the Appellate Tribunal is empowered by or under this Act to determine and no injunction shall be granted by any court or other authority in respect of any action taken or to be taken in pursuance of any power conferred by or under this Act or under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (5 of 1993).” 11. Under Section 34, the jurisdiction of a Civil Court to entertain a suit or proceeding is barred in respect of any matter which the Debts Recovery Tribunal and/or Appellate Tribunal, “is empowered by or under this Act to determine”. The second part of Section 34 bars the grant of an injunction by any Court or authority “in respect of any action taken or to be taken” in pursuance of the power conferred by the Act or by the Recovery of Debts Due to Banks and Financial Institutions Act, 1993. The first part of Section 34 operates as a bar in respect of a Civil Court entertaining any suit or proceeding. The bar applies in respect of a matter which can be determined under the Act by the Debts Recovery Tribunal or the Appellate Tribunal. The second part of Section 34 prohibits the issuance of an injunction by a Court or other authority in respect of an action which has been taken or which is to be taken in pursuance of the Act or the RDDB Act. 12. Now, in evaluating what the Debts Recovery Tribunal or the Appellate Tribunal is empowered by or under the Act to determine, a reference must be made to the provisions of Sections 13 and 17. Section 13 provides for the enforcement of a security interest created in favour of a secured creditor without the intervention of the Court or Tribunal. Subsection (2) of Section 13 contemplates the issuance of a notice by the secured creditor to the borrower in default to fulfill his liability within sixty days failing which the secured creditor is entitled to exercise his rights under subsection (4). Subsection (2) of Section 13 contemplates the issuance of a notice by the secured creditor to the borrower in default to fulfill his liability within sixty days failing which the secured creditor is entitled to exercise his rights under subsection (4). The provisions of Section 13 were amended by Amending Act 30 of 2004 in view of the judgment of the Supreme Court in Mardia Chemicals Ltd. vs. Union of India ( AIR 2004 SC 2371 ). Under subsection 3(a) as amended, on receipt of a notice under subsection (2), the borrower is permitted to raise an objection or make a representation. The secured creditor has to furnish reasons to the borrower in the event that the objection/representation of the borrower is not accepted. The proviso to subsection 3(a) entails that the communication of reasons of the likely action of the secured creditor at that stage shall not confer a right upon the borrower to prefer an application to the Tribunal under Section 17. Under subsection (4), the secured creditor is entitled to take recourse to various measures to recover the secured debt in the event that the borrower fails to discharge his liability in full within the period specified in subsection (2). Among the powers which are conferred on the secured creditor is the power to take possession of the secured assets including the right to transfer them by assignment or sale. 13. Section 17 provides a right of appeal to the Debts Recovery Tribunal to any person, including a borrower, aggrieved by any of the measures referred to in subsection 4 of Section 13 taken by the secured creditor or his authorised officer. While construing the provisions of Section 34, the crucial words which have a bearing on the bar of jurisdiction of the civil court to entertain a suit or proceeding are “in respect of any matter which the Tribunal or Appellate Tribunal is empowered by or under this Act to determine”. Once a matter is of a description which the Tribunal or Appellate Tribunal is empowered to determine by or under the provisions of the Act, the jurisdiction of the civil court to entertain a suit in respect of that matter is barred. Similarly, no Court or authority can grant an injunction in respect of an action taken or which is to be taken under the Act or the RDDB Act. Similarly, no Court or authority can grant an injunction in respect of an action taken or which is to be taken under the Act or the RDDB Act. The powers of the Debts Recovery Tribunal under Section 17 are powers of width and amplitude. If the Tribunal comes to the conclusion that any of the measures referred to in subsection (4) of Section 13 have not been taken by the secured creditor in accordance with the Act and the Rules, the Tribunal may require the restoration of the management of the business of the borrower or the restoration of the possession of the secured assets to the borrower. The Tribunal is empowered to pass such orders as it may consider appropriate and necessary in relation to the recourse taken by the secured creditor under Section 13(4). This power of the Tribunal includes a power to direct the restoration of the status quo ante in order to provide relief to the borrower against an action which is not in accordance with law. 14. On behalf of the Appellant, it is urged that (i) The Learned Single Judge has erred in coming to the conclusion that the averments contained in paragraphs 3, 4, 12 and 15 of the plaint brought the case of the Plaintiffs within the ambit of the exception carved out by the Supreme Court in paragraph 51 of the judgment in Mardia Chemicals (supra); (ii) Clearly in view of the law laid down by the Supreme Court in Mardia Chemicals, until the Bank had taken recourse to a measure under Section 13(4) no cause of action would have accrued to the borrower or to a third person and the provisions of the Act cannot be rendered nugatory by taking recourse to the Civil Court on the basis that no measure under Section 13(4) has yet been adopted; (iii) Section 17 of the Act confers a remedy of an appeal to any person, including a borrower. The remedy would, therefore, be available even to the Plaintiffs once possession was taken over under Section 13(4); (iv) Admittedly, the Second Defendant is the Karta of the HUF. Whether the mortgage by deposit of title deeds executed by the Second Defendant was for the benefit of the HUF or for compelling legal necessity, is a matter which could and ought to be decided by the Debts Recovery Tribunal under Section 17. Whether the mortgage by deposit of title deeds executed by the Second Defendant was for the benefit of the HUF or for compelling legal necessity, is a matter which could and ought to be decided by the Debts Recovery Tribunal under Section 17. The Debts Recovery Tribunal is competent to decide whether there was a mortgage at all and whether, if a mortgage existed, it would govern the alleged share of the HUF in the residential flat. The averments contained in the plaint, would show that there was both a challenge to the validity of the securitization notice under Section 13(2) besides which, the Plaintiffs claim that there was no valid basis to invoke the provisions of Section 13(4). These are all matters which have to be exclusively decided by the Debts Recovery Tribunal; (v) The Supreme Court in its judgment in Mardia Chemicals carved out a limited exception in respect of the maintainability of a civil suit in cases involving fraud on the part of the secured creditor or where the claim is so absurd or untenable that it does not require any probe whatsoever. The mere use in a stray averment in the plaint of the expression “systematic fraud”, would not be sufficient to bring the case within the scope of the exception carved out in Mardia Chemicals since the plaint has to be read and construed as a whole. So construed, it is clear that the case of the Plaintiffs clearly falls within a matter which the Debts Recovery Tribunal is empowered by and under the Act to determine. Moreover, no injunction of the nature sought could be granted by the Court in respect of any action taken or to be taken in pursuance of the Act. 15. On the other hand, it has been urged on behalf of the original Plaintiffs that the order of the Learned Single Judge must be sustained for the following reasons: (i). The suit, in the present case, was instituted before the Bank had taken recourse to the measure under Section 13(4). At that stage, no appeal under Section 17 could have been filed before the Tribunal. The suit, in the present case, was instituted before the Bank had taken recourse to the measure under Section 13(4). At that stage, no appeal under Section 17 could have been filed before the Tribunal. Consequently, there is no bar to the maintainability of the suit, on the date when the suit was instituted since no measure had been taken by the Bank under Section 13(4); (ii) The case of the Plaintiffs is that (a) There is no mortgage in respect of the residential flat; (b) No mortgage was in any event executed by the HUF; (c ) The mortgage, if any, is illegal in respect of the share of the HUF in the residential flat; and (d) No action had been initiated against the HUF before the Tribunal by the Bank, yet the property of the HUF was sought to be taken away; (iii) There are sufficient pleadings to substantiate the case of the Plaintiffs that the action of the Bank was fraudulent. In any event, the exception which is carved out by the Supreme Court in Mardia Chemicals does not cover only a situation of fraud, but includes one where the claim of the secured creditor is so absurd and untenable as to not require any probe whatsoever. Similarly, a suit can be instituted where the power of sale is being exercised in any improper manner contrary to the terms of the mortgage. The averments in the plaint, it was urged, would fall within the purview of the exception carved out in Mardia Chemicals. 16. In the earlier part of this judgment, we have already elicited the extent of the bar which is created by Section 34. The bar, in the first part of Section 34, is in respect of any matter which the Tribunal or the Appellate Tribunal is empowered by or under the Act to determine. When the Tribunal or the Appellate Tribunal is empowered to determine any matter by or under the Act, the jurisdiction of the Civil Court to entertain a suit in respect of that matter is barred. In the second part, the Legislature has used equally comprehensive language when it imposes a prohibition on the issuance of an order of injunction. In that context, the Legislature has adverted “to any action taken or to be taken” in pursuance of the provisions of the Act or the RDDB Act. In the second part, the Legislature has used equally comprehensive language when it imposes a prohibition on the issuance of an order of injunction. In that context, the Legislature has adverted “to any action taken or to be taken” in pursuance of the provisions of the Act or the RDDB Act. An action taken is a course of conduct already adopted. An action to be taken is a course of conduct which is in contemplation, but one which is necessarily referable to the provisions of the Act or the RDDB Act. Section 17 provides a right of appeal to any person, including a borrower. The expression “any person” is broad enough to include not only the borrower, but any person who is aggrieved by a measure which is taken by the secured creditor under subsection (4) of Section 13. This is emphasized in the judgment of the Supreme Court in United Bank of India vs. Satyawati Tondon, (2010(3) Bankers’ Journal 581) at paragraph 17: “The expression ‘any person’ used in Section 17(1) is of wide import. It takes within its fold, not only the borrower but also guarantor or any other person who may be affected by the action taken under Section 13(4) or Section 14.” 17. The same view has been taken by a Division Bench of this Court in M/s.Trade Well vs. Indian Bank. (2007(3) AIR Bom R 656 (DB)5 The Division Bench has held that the remedy provided under Section 17 is available to the borrower as well as to a third party. Moreover, the remedy provided under Section 17 is an efficacious alternate remedy available to a third party as well as to the borrower where all grievances can be raised. 18. In Mardia Chemicals vs. Union of India (supra), the Supreme Court held that an opportunity has to be granted to the borrower to furnish his objection on a notice under Subsection (2) of Section 13, in the interest of fairness. Moreover, the Supreme Court held that the reasons for non-acceptance of the objection raised by the borrower must be communicated. The directions of the Supreme Court were statutorily embodied by the amendment which was brought about inter alia by the insertion of Subsection (3a) of Section 13 by Amending Act 30 of 2004. Moreover, the Supreme Court held that the reasons for non-acceptance of the objection raised by the borrower must be communicated. The directions of the Supreme Court were statutorily embodied by the amendment which was brought about inter alia by the insertion of Subsection (3a) of Section 13 by Amending Act 30 of 2004. During the course of its judgment, the Supreme Court held that the reasons communicated of the likely action of the secured creditor cannot at that stage furnish a cause of action for a challenge until it has matured in a measure which is actually taken under Subsection (4) of Section 13. A right, the Supreme Court held, would accrue only after a measure was taken by the secured creditor. 19. The Securitization Act provides a comprehensive scheme, under which initially upon a notice being served under Subsection (2) of Section 13, a remedy is provided, to raise an objection, to the borrower. The objection has to be considered by the secured creditor and reasons for non-acceptance have to be communicated. No cause of action accrues to challenge the action of the secured creditor at that stage. Once a measure is adopted Subsection (4) of Section 13, the Act provides for a remedy of an appeal under Section 17. The scheme which is enunciated under the Act cannot be rendered nugatory by seeking recourse to the jurisdiction either of a Civil Court or, for that matter, in adopting a writ proceeding under Article 226 of the Constitution at the stage where notice is issued under Section 13(2). A challenge at the stage of a notice under Section 13(2) is not envisaged by the legislation and to allow it at that stage is to defeat the law. Such a challenge is barred. When the law expressly contemplates a challenge to a measure taken under Section 13(4) and a challenge before the Tribunal, it bars a challenge at an anterior stage and a challenge before any forum other than that created for hearing an appeal under Section 17 after a measure is taken. Once a measure is adopted under Section 13(4), a statutory remedy is provided not only to the borrower but to any person aggrieved by the taking of a measure. Once a measure is adopted under Section 13(4), a statutory remedy is provided not only to the borrower but to any person aggrieved by the taking of a measure. While enquiring into an appeal under Section 17, the Tribunal is empowered to determine whether the action which is taken by the secured creditor is in accordance with the provisions of the Act and the Rules made thereunder. If the Tribunal comes to the conclusion that the action was invalid, it is vested with wide powers, including both to restore the management of the business or restoration of the possession to the borrower and to pass such orders as it may consider appropriate and necessary in relation to the recourse taken by a secured creditor under Subsection (4) of Section 13. When a person other than a borrower is aggrieved by a measure taken by the secured creditor under Subsection (4) of Section 13, a remedy is equally made statutorily available to such a person. 19A. In a recent judgment of the Supreme Court in Authorised Officer, Indian Overseas Bank vs. M/s.Ashok Saw Mill, (2009(2) Bankers’ Journal 721) the Supreme Court adverting to the wide powers conferred upon banks and financial Institutions observed that in order to prevent a misuse of those powers and to prevent prejudice to a borrower on account of an error on the part of a bank or financial Institution, certain checks and balances have been introduced in Section 17 which allow any person, including a borrower, who is aggrieved by the measures taken under Section 13(4) by the secured creditor to make an application before the Debts Recovery Tribunal. In that context, the Supreme Court held as follows : “The intention of the legislature is, therefore, clear that while the Banks and Financial Institutions have been vested with stringent powers for recovery of their dues, safeguards have also been provided for rectifying any error or wrongful use of such powers by vesting the DRT with authority after conducting an adjudication into the matter to declare any such action invalid and also to restore possession even though possession may have been made over to the transferee. The consequences of the authority vested in DRT under subsection (3) of Section 17 necessarily implies that the DRT is entitled to question the action taken by the secured creditor and the transactions entered into by virtue of Section 13(A) of the Act. The Legislature by including subsection (3) in Section 17 has gone to the extent of vesting the DRT with authority to even set aside a transaction including sale and to restore possession to the borrower in appropriate cases. .... The action taken by a secured creditor in terms of Section 13(4) is open to scrutiny and cannot only be set aside but even the status quo ante can be restored by the DRT”. 20. Where as in the present case, the grievance by a third person is that : (i) There was no mortgage; (ii) There was no mortgage by the HUF; (iii) The mortgage, if any, is illegal in relation to the share alleged to be that of the HUF; and (iv) No action had been instituted against the HUF before the Tribunal; these are all grounds of challenge which, in substance, can be asserted before the Debts Recovery Tribunal. These are matters which the Debts Recovery Tribunal is empowered by or under the Act to determine. None of the grounds which are sought to be urged in the plaint fall outside the province and jurisdiction of the Debts Recovery Tribunal. Once we come to that conclusion, the necessary corollary is that recourse to proceedings in the form of a civil suit is barred by Section 34. 21. The case, however, which has been sought to be established in these proceedings on behalf of the original Plaintiffs is that the Plaintiffs have in the averments in the plaint brought their case within the purview of the exception carved out by the Supreme Court in Mardia Chemicals. Now, as we have stated earlier, in determining whether such a plea has to be accepted, the Plaint as a whole has to be read. As the Supreme Court observed in Popat and Kotecha (supra), a plaint cannot be compartmentalized or dissected, nor can the averments be read in isolation. The pleading has to be construed as a whole. In Mardia Chemicals, the Supreme Court held that “to a very limited extent, the jurisdiction of the Civil Court can also be invoked” (at para 51, page 2392). The pleading has to be construed as a whole. In Mardia Chemicals, the Supreme Court held that “to a very limited extent, the jurisdiction of the Civil Court can also be invoked” (at para 51, page 2392). The limited exception which is carved out by the Supreme Court is where the action of the secured creditor is alleged to be fraudulent or where the claim of the secured creditor is so absurd and untenable that it would not require any probe whatsoever. Similarly, the Supreme Court held that an exception would be carved out to the extent the scope is permissible to bring an action in a Civil Court in a case involving an English mortgage. In that context, the Supreme Court reiterated the principle which was enunciated by the Madras High Court that a mortgagor can come to the Court before sale with an injunction for staying the sale if there are materials to show that the power of sale is being exercised in a fraudulent or improper manner contrary to the terms of the mortgage. But even in such a case, the pleadings in an action for restraining a sale by a mortgagee must “clearly disclose” a fraud or irregularity on the basis of which the relief is sought. 21A. These observations of the Supreme Court emphasize that the exception which is carved out is a limited exception. Like all exceptions, this exception must be strictly construed. A borrower or a third party cannot be permitted to defeat or to render nugatory the provisions of the Act merely by a stray reference to an allegation of fraud or, as in the present case, by an averment in paragraph 15 of the plaint of “a systematic fraud”. The entirety of the plaint has to be construed. A borrower or a third party cannot be permitted to defeat or to render nugatory the provisions of the Act merely by a stray reference to an allegation of fraud or, as in the present case, by an averment in paragraph 15 of the plaint of “a systematic fraud”. The entirety of the plaint has to be construed. Essentially, in the present case, the averments in the plaint are that: (i) The HUF was a co-owner/tenant in common of the residential flat; (ii) The Bank has taken recourse to proceedings for recovery to which the HUF was not a party; (iii) The Plaintiffs had, in the course of the recovery proceedings, raised an objection before the Recovery Officer to the tenability of the action taken by the Bank; (iv) The Bank had taken recourse to its remedy under the Securitization Act without awaiting the result of the objection raised by the Plaintiffs; (v) The action under Section 13(2) was initiated in disregard to the provisions of the Securitization Act; (vi) The mortgage executed by the Second, Third and Fourth Defendants was defective because the original Share Certificates were not with the Bank; (vii) The First Defendant had no security interest and no secured assets and, therefore, was not entitled to invoke the provisions of Subsection (4) of Section 13 against the right claimed by the HUF; (viii) A ‘systematic fraud’ was played by the First Defendant to pressurize the Plaintiffs; and (ix) There was an absence of legal necessity which would vitiate the mortgage alleged to have been created by the Second Defendant as Karta of the HUF. The reliefs which are sought in the suit have already been adverted to earlier. These averments, when construed in their entirety, would reveal that the grievance which the Plaintiffs have in the suit is in respect of the validity of the mortgage which is alleged to have been executed by the Second Defendant as Karta of the HUF and of the tenability of the action adopted by the Bank under the Securitization Act, so as to meet the interest of the HUF claimed in the residential flat. The Plaintiffs as third parties have sufficient recourse to challenge the lawfulness of the action of the Bank by invoking their remedies under Section 17. The Plaintiffs as third parties have sufficient recourse to challenge the lawfulness of the action of the Bank by invoking their remedies under Section 17. Thus, clearly within the meaning of Section 34, a suit in respect of any matter which the Tribunal is empowered by or under the provisions of Section 17 to determine is barred. The suit, therefore, in our view, was clearly barred by Section 34. The stray reference to an allegation of fraud in paragraph 15 of the Plaint is not sufficient to bring the case within the scope of the exception carved out by the Supreme Court in Mardia Chemicals. 22. The error, with respect, in the judgment of the Learned Single Judge is that the Court has not construed the ambit of the provisions of Section 34 or of the recourse which is available under Section 17 to a third party, such as the Plaintiffs, against a measure taken under Section 13(4). The Learned Single Judge referred to the decision of the Supreme Court in Mardia Chemicals. We are of the view that the reasons which weighed with the Learned Single Judge in holding that the averments contained in the plaint fall within the purview of the exception carved out are erroneous for the reasons which we have already indicated earlier. 23. For these reasons, we are of the view that the appeal would have to be allowed and is accordingly allowed. The order of the Learned Single Judge dated 15 February 2010 is set aside. The Chamber Summons would accordingly have to be made absolute, by directing, in pursuance of the provisions of Order 7 Rule 11(d) that the Plaint shall stand rejected on the ground that the suit, from the statement contained in the plaint is barred under Section 34 of the Securitization Act, 2002. There shall be, in the circumstances, no order as to costs. 24. On the conclusion of the judgment, Counsel appearing on behalf of the original Plaintiffs seeks a certificate for appeal to the Supreme Court under Section 134A read with Article 133(1). We do not find that the case involves a substantial question of law of general importance. There shall be, in the circumstances, no order as to costs. 24. On the conclusion of the judgment, Counsel appearing on behalf of the original Plaintiffs seeks a certificate for appeal to the Supreme Court under Section 134A read with Article 133(1). We do not find that the case involves a substantial question of law of general importance. On the request of Counsel for the Respondents, however, in order to enable the original Plaintiffs to seek their remedies against this judgment, we direct that the status quo in respect of possession of the residential flat in question shall be maintained for a period of six weeks from today.