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Rajasthan High Court · body

2010 DIGILAW 921 (RAJ)

Kwality Conduit Pvt. Ltd. v. Vikas Automobiles

2010-04-28

GOVIND MATHUR

body2010
JUDGMENT 1. - The order dated 21.12.2009, passed by learned Addl. Civil Judge (Jr. Div.) No. 2, jodhpur, rejecting the application preferred by the petitioner-defendant as per the provisions of Section 9 read with Order 7, Rule 11 C.P.C., is assailed in this revision petition. 2. The factual matrix, necessary to be noticed, is that the petitioner, a borrower, committed default in payment of secured debt, thus, the secured creditor i.e. the Central Bank of India issued a notice as per provisions of Section 13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as the Act of 2002) for getting the liabilities discharged by the borrower. On failure to discharge such liability the secured creditor proceeded to take over possession of secured asset, thus, sought necessary assistance from the District Magistrate, jodhpur and the same was granted under an order dated 27.10.2009. The secured creditor by notice, issued to all the tenants and other persons having possession over the secured asset, claimed for handing over that to it within a period of fifteen days. 3. The respondent No. 1, a tenant, with the secured asset served a notice upon the petitioner-borrower and the secured creditor for not dispossessing him from premises in question without adhering due process of law. A suit then was filed by the respondent No. I seeking an injunction to restrain the secured creditor and the borrower from getting his dispossession without following due process of law. An application seeking temporary injunction too was filed by the plaintiff-respondent. The petitioner-defendant on receiving the summons immediately preferred an application as per provisions of Section 9 read with Order 7, Rule 11 C.P.C. for rejection of the plaint with assertion that as per provisions of the Act of 2002 the suit is barred by law, and as such, is not maintainable. By the order impugned the Court below rejected the application on the count that the proceedings under the Act of 2002 are between the secured creditor and debtor, whereas the plaintiff is a third party and the issues raised at his instance could be settled only by recording evidence being mixed question of law and facts. 4. By the order impugned the Court below rejected the application on the count that the proceedings under the Act of 2002 are between the secured creditor and debtor, whereas the plaintiff is a third party and the issues raised at his instance could be settled only by recording evidence being mixed question of law and facts. 4. While calling upon correctness, propriety and legality of the order aforesaid the argument advanced is that after initiation of measures as per Section 13(4) of the Act of 2002 no person can invoke jurisdiction of civil Court being barred under Section 34 of the Act aforesaid. On the other hand, on behalf of the plaintiff- respondent the order impugned is defended with contention that plaintiff is stranger under the proceedings as per the Act of 2002 and his rights towards the landlord are required to be protected by way of filing a civil suit only. It is contended that being a third party the remedy prescribed under Section 17 is not available to the plaintiff, the trial Court, therefore, rightly rejected the application preferred as per provisions of Order 7, Rule 11 C.P.C. In support of the arguments aforesaid learned counsel for the plaintiff-respondent placed reliance upon the various judgments including 2009 AIR SCW 6263 (Nahar Industrial Enterprises Ltd. v. Hong Kong and Sanghai Banking Corpn.); RLW (SC) 2 (1996) 147 (Samir Sobhan Sanyal v. Tracks Trade Pvt. Ltd. and Ors. ) and RLW (SC) 2 (1998) 279 (Shreenath and another v. Rajesh and Ors. ) It is also urged that on basis of the contents of plaint it cannot be said that the suit is not maintainable, and therefore, the application under Order 7, Rule 11 C.P.C. itself is misconceived. 5. I have considered the arguments advanced. The Act of 2002 is enacted to regulate securities and reconstruction of financial assets and enforcement of security interest and for the matters connected therewith. The Act enables the banks and financial institutions to realise long-term assets, manage problems of liquidity, asset liability mis-match and improve recovery by exercising powers to take possession of securities, sell them and reduce non-performing assets by adopting measures for recovery of reconstruction. By virtue of Section 13(4) read with Section 13(6) the secured assets shall vest with the bank free from all encumbrances. By virtue of Section 13(4) read with Section 13(6) the secured assets shall vest with the bank free from all encumbrances. Where the creditor has taken action under Section 13(4), it would be open to any person including borrower aggrieved by any of the measures so taken to prefer an appeal to the Debts Recovery Tribunal as per provisions of Section 17. As per Section 35, all the provisions of the Act of 2002 shall have effect, notwithstanding anything inconsistent therewith contained in any other law for the time being in force or any instrument having effect by virtue of any such law. As per Section 34 no civil Court shall have jurisdiction to entertain any suit or proceeding in respect of any matter for which a Debts Recovery Tribunal or the Appellate Tribunal is empowered under the Act of 2002 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 under the Act aforesaid. 6. In the instant matter, it is not in dispute that the measures, as per Section 13(4), were already undertaken and a notice.even to the tenants to vacate the secured assets was already issued. The plaintiff-respondent quite consciously responded the notice aforesaid, and as such, was definitely aware regarding the proceedings undertake as per the provisions of the Act of 2002. It would be appropriate to mention here that as per the provisions of the Act of 2002 a secured creditor is entitled to take actual possession of secured assets from the borrower or from any other person in terms of Section 13(4) without any encumbrances. If such person is aggrieved by an order given as per Section 13(4), he may prefer an appeal to the Tribunal. If dispossession of such person is not in accordance with the settled provisions of law, then the Debts Recovery Tribunal is empowered to look into that matter also and the Debts Recovery Tribunal on adjudication of the issue, if reaches at the conclusion that the dispossession was made in contravention of any mandatory provision, then it is having authority to put the clock back by restoring the status quo ante. 7. 7. From a plain reading, it is quite clear that the remedy under Section 17 is not confined to borrower only but is available to any person including borrower, as such, that is available to a tenant also. As per the provisions of Section 34 no civil suit is maintainable relating to secured asset at the instance of even a tenant after initiation of measures as per provisions of Section 13(4), thus, it is not open for a tenant to have adjudication of his grievance by way of filing a civil suit. 8. The judgments relied upon by learned counsel for the plaintiff-respondent, as a matter of fact, are having no application in the present controversy. Hon'ble Supreme Court in Nahar Industrial Enterprises Ltd. (supra) was dealing with a matter where the existence of debt itself was under the clouds, and therefore it was held that a civil suit would lie unless the debt has become due. In the case in hand default in satisfying the credit is admitted. 9. In Samir Sobhan Sanyats case (supra) Hon'ble Supreme Court was dealing with a case where two parties entered into an agreement regarding transfer of property and in a suit for specific performance a decree was issued to perform the agreement concerned. While performance of that, a tenant already having an assurance from the earlier original owner of the property for not dispossessing him without making alternative arrangement was thrown out of possession without following due process of law. In such circumstances, the Court held that due process of law would be put to ridicule in the estimate of the law-abiding citizens, if the Court cannot blink towards unlawful conduct of a party. That was not the case under the Act of 2002. In the instant case as already stated earlier the plaintiff-respondent, if is having any grievance with the measures taken under Section 13(4) of the Act of 2002, he is at liberty to approach the Appellate Tribunal as per provisions of Section 17. 10. The law laid down by Hon'ble Apex Court in Shreenath and another v. Rajesh and Ors. (supra) too is not applicable in the present set of facts. 10. The law laid down by Hon'ble Apex Court in Shreenath and another v. Rajesh and Ors. (supra) too is not applicable in the present set of facts. In the case aforesaid the Court was dealing with an issue of a third person having independent rights and while doing so it was held that objections and rights of such a person are to be decided by the execution Court. In the present case that is not the position and as already stated above plaintiff-respondent may agitate all his rights and objections before the Debts Recovery Tribunal, by way of filing an appeal under Section 17 of the Act of 2002. 11. For the reasons mentioned above, I am of the considered opinion that where measures have already been taken under Section 13(4) of the Act of 2002 then by virtue of Section 34 a civil suit is barred and all rights of a tenant are required to be determined by way of an appeal only as per the provisions of Section 17(4) of the Act of 2002. 12. In the result this revision petition deserves acceptance, and therefore, the same is allowed. The order impugned dated 21.12.2009 passed by learned Civil judge (jr. Div.) No. 2, jodhpur is quashed. The application preferred by the petitioner-defendant as per Section 9 read with Order 7, Rule 11 C.P.C. is allowed and the plaint submitted by the plaintiff stands rejected. However, a liberty is given to the plaintiff to approach Debts Recovery Tribunal for appropriate relief if he submits an application before the Tribunal within a period of three weeks from the date of receipt of a copy of this order.Revision allowed. *******