SBICAP Trustee Company Limited v. United Spirits Limited
2014-07-18
F.M.REIS
body2014
DigiLaw.ai
JUDGMENT:- Heard Mr. F. Devitre, learned Senior Counsel appearing for the appellants, Mr. A. N. S. Nadkarni, learned Senior Counsel appearing for the respondent no.1, Mr. S. Malyekar, learned counsel appearing for the respondent no.2 and Mr. Vineet Naik, learned Senior Counsel appearing for the respondent no.3. 2. Admit. Heard forthwith. 3. The learned counsel for the respondents waive service as the notice was given for final disposal at the stage of admission. 4. The above appeal challenges an order dated 01.11.2013 passed by the learned Civil Judge Senior Division, Mapusa, whereby an application filed by the respondent no. 1 for urgent interim relief came to be allowed and the reliefs as mentioned in the impugned order came to be granted. 5. Before I proceed to examine the rival contentions advanced by the learned Senior Counsels appearing for the appellants and the respondents, I will briefly record the relevant facts of the case. The respondent no.1 filed a suit inter-alia contending that they are the lessee of the subject property situated at Candolim which was given as a security for the loan granted to the respondent no.2 by the appellants herein. The respondent no.1 claiming to be a lessee of such property and for other reasons filed a suit in terms of Section 91 (a) of the Transfer of Property Act, inter-alia alleging that they have a right of redemption of the mortgage created by the respondent no.3 in favour of the appellants herein. In the said suit an application for temporary injunction came to be filed wherein the learned Judge passed an ex-parte adinterim order dated 26.04.2013 interalia granting prayers (b) and (c) of the said application. The said ex-parte order also interalia discloses that the respondent no.1 was directed to deposit a sum of Rs.35 Crores in the Court. The record also reveals that such amount was accordingly deposited. Thereafter, the appellants filed an application on 04.05.2013 inter-alia contending that the order which has been passed cannot come in their way to initiate proceedings under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (herein after referred to as "the SARFAESI Act") which according to them they were entitled in law.
Thereafter, the appellants filed an application on 04.05.2013 inter-alia contending that the order which has been passed cannot come in their way to initiate proceedings under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (herein after referred to as "the SARFAESI Act") which according to them they were entitled in law. The learned Judge after hearing the parties extended the interim order dated 26.04.2013 with a rider to the effect that the appellants are at liberty to proceed in the matter in accordance with law in the meantime if they so desire. The record further reveals that the application for temporary injunction was under consideration before the learned Judge and in the meanwhile the appellants started proceeding in terms of the SARFAESI Act and issued a notice initially under Section 13(2) and thereafter under Section 13(4) of the SARFAESI Act. After the said notice under Section 13(4) of the SARFAESI Act, the respondent no.1 apprehended that the appellants may forcibly dispossess the respondent no.1 of the premises in the subject property claimed to be occupied by them. The respondent no.1 moved the learned Judge on 01.11.2013 by an application for ad-interim relief wherein the impugned order came to be passed. It was averred by the respondent no. 1 that the notice of the said application was also duly served on the Advocate on record of the appellant no.1. It is pointed out that an affidavit of service was also submitted to the learned Judge on the relevant date. The learned Judge thereafter passed the impugned order in terms referred to herein above. Being aggrieved by the said order, the appellants have preferred the present appeal. 6. Both the learned Senior Counsels have advanced their arguments on merits in support of their rival contentions. For the purpose of deciding the above appeal and the view I propose to take in the matter, I find that the correctness or otherwise of such legal submissions on merits of the dispute are not at all required to be considered at this stage of the proceedings. The main grievance appears to be the propriety of the learned Judge in passing the impugned order which would impede the right of the appellant to proceed under SARFAESI Act. 7. Mr.
The main grievance appears to be the propriety of the learned Judge in passing the impugned order which would impede the right of the appellant to proceed under SARFAESI Act. 7. Mr. Devitre, learned Senior Counsel appearing for the appellants has pointed out that the broad and general manner in which the learned Judge has granted the reliefs would imply that any action by the appellants in terms of the SARFAESI Act was being restrained. The learned Senior Counsel further pointed out that in terms of Section 34 of the SARFAESI Act, the jurisdiction of the Civil Court to grant such injunction is barred. The learned Senior Counsel appearing for the appellants disputed the fact that the appellants were duly served with an application filed by the respondent no. 1 wherein the impugned order came to be passed. 8. Mr. Nadkarni, learned Senior Counsel appearing for the respondent no. 1 during the course of his submission however contended that the impugned order passed by the learned Judge on 01.11.2013, by itself does not preclude the appellants from proceeding in accordance with law in terms of the SARFAESI Act. The learned Senior Counsel has taken me through the impugned order as well as the observations of the learned Judge therein to point out that the only relief which was sought by the respondent no.1 was to injunct the appellants from taking coercive steps contrary to law to the prejudice of the claim of the respondent no.1 in the subject property. 9. Upon hearing the learned Senior Counsels for the respective parties, I find that the learned Judge was not justified to note that the appellants were duly served on the application filed by the respondent no.1 on 01.11.2013. Without going into the dispute as to whether the notice was actually served on the Advocate on record appearing on behalf of the appellant no.1 before the Trial Court, I find that an intimation/communication to an Advocate by itself cannot be a substitute to a notice to the opposite party which the Court is required to issue on an application filed by the respondent no.1. In the present case, the notice said to have been issued by the respondent no. 1 would have to be construed as a communication to the Advocate appearing for the appellant intimating the intention of the respondents to move the Court for ex-parte ad-interim reliefs.
In the present case, the notice said to have been issued by the respondent no. 1 would have to be construed as a communication to the Advocate appearing for the appellant intimating the intention of the respondents to move the Court for ex-parte ad-interim reliefs. In such circumstances, the learned Judge was obliged to issue a notice in terms of Civil Procedure Code to the appellants before finally disposing of the said application. There was no order by the learned Judge to that effect. No doubt, the learned Judge considering the exigencies and the prejudice of the applicants therein, if any, can always pass an ad-interim order to protect the parties and direct that notice be issued to the opposite parties for further hearing of such application. But however, taking note of the impugned order passed by the learned Judge, I find that the learned Judge has disposed of the application filed by the respondent no. 1 on the broad assumption that the appellants were duly served and not filed a reply thereon. To that extent, the learned Judge was not justified to make such observation. 10. With regard to the rival contention as to whether the jurisdiction of the Civil Court is barred in terms of Section 34 of the SARFAESI Act, I find that this aspect need not be gone into at this stage of the proceedings before the learned Trial Court considering the narrow dispute remaining to be considered based on the contentions of the learned Senior Counsel appearing for the respective parties. Mr. Nadkarni, learned Senior Counsel appearing for the respondent no. 1 fairly states that the impugned order passed on 01.11.2013 does not in any way preclude the appellants from proceeding in terms of the provisions of the SARFAESI Act. In such circumstances, whether the learned Judge was justified to pass such order need not be gone into as the apprehension of Mr. Devitre, the learned Senior Counsel appearing for the appellants with that regard will not survive and the appellant can proceed in terms of the SARFAESI Act in accordance with law as observed herein below. 11. Be that as it may, the broad manner in which the relief has been granted by the learned Judge would definitely suggest that the action which the appellants could take in terms of the SARFAESI Act would be impeded.
11. Be that as it may, the broad manner in which the relief has been granted by the learned Judge would definitely suggest that the action which the appellants could take in terms of the SARFAESI Act would be impeded. To that extent, the learned Judge was not justified to pass an order in the broad manner in which it was so granted and as such to that extent the impugned order would have to be set aside taking note of the fair concession of Mr. Nadkarni, learned Senior Counsel appearing for the respondent no.1/plaintiff referred to herein above. 12. Mr. Nadkarni, learned Senior Counsel appearing for the respondent no. 1 has thereafter pointed out that when a lessee is in possession of the mortgaged property, it is incumbent upon the borrower to proceed in terms of Section 14 of the SARFAESI Act and not by force. In fact, the Apex Court in the recent judgment reported in (2014) 6 SCC 1: (2014 ALL SCR 2766] in the case of Harshad Govardhan Sondagar V/s International Assets Reconstruction Company Limited and others has observed at para 28 thus: "28. A reading of sub-rules (1) and (2) of Rule 8 of the Security Interest (Enforcement) Rules, 2002 would show that the possession notice will have to be affixed on the outer door or at the conspicuous place of the property and also published, as soon as possible but in any case not later than seven days from the date of taking possession, in two leading newspapers, one in vernacular language having sufficient circulation in that locality, by the authorised officer. At this stage, the lessee of an immovable property will have notice of the secured creditor making efforts to take possession of the secured assets of the borrower.
At this stage, the lessee of an immovable property will have notice of the secured creditor making efforts to take possession of the secured assets of the borrower. When, therefore, a lessee becomes aware of the possession being taken by the secured creditor, in respect of the secured asset in respect of which he is the lessee, from the possession notice which is delivered, affixed or published in sub-rule (1) and sub-rule (2) of Rule 8 of the Security Interest (Enforcement) Rules, 2002, he may either surrender possession or resist the attempt of the secured creditor to take the possession of the secured asset by producing before the authorised officer proof that he was inducted as a lessee prior to the creation of the mortgage or that he was a lessee under the mortgagor in accordance with the provisions of Section 65-A of the Transfer of Property Act and that the lease does not stand determined in accordance with Section III of the Transfer of Property Act. If the lessee surrenders possession, the lease, even if valid, gets determined in accordance with clause (f) of Section III of the Transfer of Property Act, but if he resists the attempt of the secured creditor to take possession, the authorised officer cannot evict the lessee by force but has to file an application before the Chief Metropolitan Magistrate or the District Magistrate under Section 14 of the SARFAESI Act and. state in the affidavit accompanying the application, the name and address of the person claiming to be the lessee. When such an application is filed, the Chief Metropolitan Magistrate or the District Magistrate will have to give a notice and give an opportunity of hearing to the person claiming to be the lessee as well as to the secured creditor, consistent with the principles of natural justice, and then take a decision. If the Chief Metropolitan Magistrate or District Magistrate is satisfied that there is a valid lease created before the mortgage or there is a valid lease created after the mortgage in accordance with the requirements of Section 65-A of the Transfer of Property Act and that the lease has not been determined in accordance with the provisions of Section III of the Transfer of Property Act, he cannot pass an order for delivering possession of the secured asset to the secured creditor.
But in case he comes to the conclusion that there is in fact no valid lease made either before creation of the mortgage or after creation of the mortgage satisfying the requirements of Section 65-A of the Transfer of Property Act or that even though there was a valid lease, the lease stands determined in accordance with Section III of the Transfer of Property Act, he can pass an order for delivering possession of the secured asset to the secured creditor." Considering the said judgment of the Apex Court and the observations referred to herein above, Mr. Devitre, learned Senior Counsel appearing for the appellants has pointed out that in terms of the said Act the appellants would proceed under Section 14 of the SARFAESI Act to adjudicate the claim of the respondent no.1 before the District Magistrate and for appropriate relief.' In such circumstances, considering that the appellants would have to proceed after following procedure as laid down in the said judgment by the Apex Court and in terms of the provisions of the SARFAESI Act, I find that the apprehension of the respondent no. 1 that the appellants would forcibly dispossess them without taking recourse of law would not survive. In such circumstances, the impugned order dated 01.11.2013 passed by the learned Judge stands modified accordingly. It is however clarified that the interim order operating against the appellants would not affect the rights of the appellants to proceed in terms of the SARFAESI Act in accordance with law. It is however made clear that the learned Judge shall proceed with the suit as well as the application for temporary injunction on its own merits without being influenced by the observations made herein above and in the impugned order. 13. Mr. Nadkarni, learned Senior Counsel appearing for the respondent no. 1 has thereafter pointed out that the proceedings intended to be initiated by the appellants in terms of the SARFAESI Act should not by itself prejudice the learned Judge to decide the suit and the application for temporary injunction on its own merits. Mr. Devitre, learned Senior Counsel appearing for the appellants similarly pointed out that the pendency of the suit and the application for temporary injunction by itself should not prejudice the proceedings intended to be initiated by the appellants in terms of the SARFAESI Act.
Mr. Devitre, learned Senior Counsel appearing for the appellants similarly pointed out that the pendency of the suit and the application for temporary injunction by itself should not prejudice the proceedings intended to be initiated by the appellants in terms of the SARFAESI Act. Taking note of the said contention of both the learned Senior Counsels, it is accordingly clarified that the steps taken by the appellants in terms of the SARFAESI Act by itself shall not prejudice the learned Judge to decide the suit and the application for temporary injunction on its own merits in accordance with law. Similarly, the pendency of the suit and the application for temporary injunction by itself will not prejudice the appellants to initiate the proceedings and take action in terms of the SARFAESI Act in accordance with law. All such proceedings shall be examined by the concerned authorities on its own merits in accordance with law. 14. At this stage, Mr. Devitre, learned Senior Counsel appearing for the appellants has brought to my notice that the respondents have also filed an application under Order 39 Rule 2A and 11 of the Civil Procedure Code alleging that there was a breach of the orders passed by the Court. Mr. Nadkarni, learned Senior Counsel appearing for the respondent no.1/plaintiff points out that the respondent no.1 will withdraw the said application. The learned Judge shall pass an appropriate order accordingly thereafter. 15. Subject to the above and to the extent referred to herein above, the impugned order dated 01.11.2013 passed by the learned Judge stands/quashed and set aside. It is however clarified that the order passed on 26.04.2013 is subject to the order dated 04.05.2013 and shall continue to operate until the disposal of the application for temporary injunction subject to the rights of the appellants to proceed in terms of the SARFAESI Act in the light of the observations made hereinabove in accordance with law. All contentions of both the parties are left open. The appeal stands disposed of accordingly. Ordered accordingly.