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2014 DIGILAW 435 (ORI)

Ellora Mohanty v. State Bank of India, Small & Medium Enterprises City Credit Centre, College Square, Cuttack

2014-07-23

RAGHUBIR DASH

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Judgment R. DASH, J. Being aggrieved by the order dated 4.1.2014 passed by the learned Senior Civil Judge, 1st Court, Cuttack in I.A. No.608 of 2013 arising out of C.S.(I) No.685 of 2013 rejecting the application under Order 39 Rule 1 and 2 C.P.C., the Plaintiff before the learned lower court has preferred this appeal. 2. The Respondent herein is the sole opposite party in the I.A. and arrayed as D.14 in the suit. The appellant has filed the suit praying, inter alia, for partition of the suit schedule property and a declaration that the equitable Mortgage Deed dated 29.3.2008 created in respect of the suit schedule land by her deceased father Tusarkanti Kanungo in favour of the Respondent-Bank is illegal, fraudulent and obtained by misrepresentation. It is pleaded that the common ancestor of Plaintiff-appellant and Defendant Nos.1 to 12, namely, Sachidananda Kanungo had acquired the suit property out of his own earning as well as from the income derived from his ancestral property. He died leaving behind the Plaintiff and D.1 to 12 as his heirs. Sachidananda had three daughters and one son who is father of the Plaintiff and D.2 and 3 and husband of D.1. After the death of his three sisters he, conniving with his eldest son (D.2) to obtain loan from the Respondent-Bank in order to carry on a partnership business in readymade garment in the name and style M/s. SATISFACTION (D.13) with one Naliniprava Das of Friends Colony, Cuttack, created equitable mortgage in respect of the suit schedule property behind the back of the other heirs of the common ancestor and obtained a loan of Rs.22.50 lakhs. When they failed to repay the loan in terms of the loan agreement, the Bank declared it as NPA and issued Demand Notice recalling the loan granted in favour of D.13 for which the Plaintiff’s father was shown to be the guarantor and then proceeded under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short, the Act). The partners of D.13 approached this Court in W.P.(C) No.11446 of 2013 and have obtained an interim order on 17.6.2013 directing not to take any coercive measure against D.13 and the matter is still pending for final disposal. The partners of D.13 approached this Court in W.P.(C) No.11446 of 2013 and have obtained an interim order on 17.6.2013 directing not to take any coercive measure against D.13 and the matter is still pending for final disposal. Apprehending that the Bank would take symbolic possession over the suit schedule premises to put it into public auction under the Act, the Plaintiff filed the suit. 3. In the suit it is contended, inter alia, that the security interest created by the equitable mortgage in respect of the suit property which is joint family homestead cannot bind the Plaintiff and D.1 to 12 except Defendant No.2. Therefore, the Bank has no authority under law to proceed against the shares of plaintiff, D.1, and D.3 to 12 in the suit property. 4. The Respondent-Bank filed objection in the I.A. contending, inter alia, that the suit as well as the application for interim injunction is not maintainable in view of the bar created under the provisions of the Act. It is also contended that the property mortgaged by Tusarkanti Kanungo to secure the loan sanctioned in favour of D.13 Firm is his exclusive property. It is further stated in the objection that this Court having directed the Bank not to take any coercive action against D.13, the Respondent-Bank has stopped contemplating coercive action and for that the Plaintiff has no cause of action to pray for temporary injunction against the Bank. 5. Learned lower Court has dismissed the I.A. on the ground that in view of the bar created under Section 34 of the Act the Respondent-Plaintiff cannot be said to have got a good prima facie case against the Bank. 6. Despite of appearance of the Respondent in response to notice issued in this First Appeal none appeared to participate in the hearing on the appeal memo. Learned counsel for the appellant has cited a number of decisions to support his contention that a suit for partition is not barred under the provisions of the Act and that the learned lower court without going into the merits of the application for interim injunction has dismissed the same in a mechanical manner. Strong reliance has been placed on the following observations of the Hon’ble apex Court in Mardia Chemicals Ltd., etc. etc. v. Union of India and others etc. Strong reliance has been placed on the following observations of the Hon’ble apex Court in Mardia Chemicals Ltd., etc. etc. v. Union of India and others etc. etc., reported in AIR 2004 Supreme Court 2371: To a very limited extent, jurisdiction of the Civil Court can also be invoked, where for example, the action of the secured creditor is alleged to be fraudulent or their claim may be so absurd and untenable which may not require any probe whatsoever or to say precisely to the extent the scope is permissible to bring an action in the Civil Court in the cases of English mortgages. 7. Since the Plaintiff-appellant has not alleged that the secured creditor has acted fraudulently in sanctioning the loan in favour of D.13, the above quoted observation of the Hon’ble apex Court has no application to the case in hand. Section 34 of the Act creating a bar against a Civil Court runs 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. 8. In Jagdish Singh V. Heeralal and others, reported in AIR 2014 Supreme Court 371, while dealing with the scope of Section 34 of the Act their Lordships in para-22 of the judgment have observed as follows: Statutory interest is being created in favour of the secured creditor on the secured assets and when the secured creditor proposes to proceed against the secured assets, subsection (4) of Section 13 envisages various measures to secure the borrower’s debt. One of the measures provided by the statute is to take possession of secured assets of the borrowers, including the right to transfer by way of lease, assignment or realizing the secured assets. Any person aggrieved by any of the “measures” referred to in sub-section (4) of Section 13 has got a statutory right of appeal to the DRT under Section 17. Any person aggrieved by any of the “measures” referred to in sub-section (4) of Section 13 has got a statutory right of appeal to the DRT under Section 17. The opening portion of Section 34 clearly states that no civil court shall have jurisdiction to entertain any suit or proceeding “in respect of any matter” which a DRT or an Appellate Tribunal is empowered by or under the Securitisation Act to determine. The expression ‘in respect of any matter’ referred to in Section 34 would take in the “measures” provided under sub-section (4) of Section 13 of the Securitisation Act. Consequently if any aggrieved person has got any grievance against any “measures” taken by the borrower under sub-section (4) of Section 13, the remedy open to him is to approach the DRT or the Appellate Tribunal and not the civil court. Civil Court in such circumstances has no jurisdiction to entertain any suit or proceedings in respect of those matters which fall under subsection (4) of Section 13 of the Securitisation Act because those matters fell within the jurisdiction of the DRT and the Appellate Tribunal. Further, Section 35 says, the Securitisation Act overrides other laws, if they are inconsistent with the provisions of that Act, which takes in Section 9, CPC as well. In the said reported case the Bank of India had advanced a loan of Rs.25,00,000/- (Rupees twenty five lakh) to M/s. Guru Om Automobiles through its proprietor, Respondent No.6, and the loan was secured by equitable mortgage executed by Respondent Nos.7 to 9 in respect of a piece of land as well as in respect of three houses which were in the respective names of Respondent Nos.6 to 8. Since there was difficulty in repayment of loan, the Bank issued notice under Section 13(2) of the Securitisation Act and took steps under Section-13(4) of the Securitisation Act. Ultimately, the mortgaged properties were put to auction and the auction was settled in favour of the Appellant in the cited case. After payment of the entire auction price, the sale in favour of the auction purchaser was confirmed. Respondent Nos.7 to 9 challenged the sale notice before the DRT, Jabalpur, which was dismissed. Ultimately, the mortgaged properties were put to auction and the auction was settled in favour of the Appellant in the cited case. After payment of the entire auction price, the sale in favour of the auction purchaser was confirmed. Respondent Nos.7 to 9 challenged the sale notice before the DRT, Jabalpur, which was dismissed. At this juncture, Respondent Nos.1 to 5 filed a civil suit for declaration of title and partition and for permanent injunction against the auction purchaser as well as the Bank and Respondent Nos.6 to 9 claiming that Respondent Nos.1 to 9 constituted a HUF and the mortgaged properties were purchased in the names of Respondent Nos.6 to 9, out of funds of the HUF. The civil court upheld preliminary objection that the suit is not maintainable observing that if the plaintiffs had any right, they ought to have filed an appeal under Section-17 of the DRT Act and not a suit in view of the specific bar contained in Section-34 of the Securitisation Act. Being aggrieved, the plaintiffs in the suit preferred appeal before the High Court of Madhya Pradesh at Indore which was allowed with the observation that on the bare perusal of the contents of the plaint it cannot be suggested at all that the civil suit is barred under any provisions of the Securitization Act or that civil court has no jurisdiction in the matter. Aggrieved by the same, the auction purchaser preferred the appeal before the apex Court. While interpreting the expression ‘any person’ appearing in Section-17(1) of the Securitisation Act, Hon’ble apex Court has observed as follows: Therefore, the expression ‘any person’ referred to in Section 17 would take in the plaintiffs in the suit as well. Therefore, irrespective of the question whether the civil suit is maintainable or not, under the Securitisation Act itself, a remedy is provided to such persons so that they can invoke the provisions of Section 17 of the Securitisation Act, in case the bank (secured creditor) adopt any measure including the sale of the secured assets, on which the plaintiffs claim interest. 9. 9. The appellant’s case stands almost in the same footing as the Respondent Nos.1 to 5 in Jagdish Singh’s case (supra) who filed the civil suit for declaration of title and for partition claiming that Respondent Nos.1 to 9 had constituted a HUF and the mortgaged properties were purchased out of funds of the HUF. The present appellant-plaintiff comes within the expression “any person” referred to in Section 17 of the Act. Therefore, the appellant and so also D.1 to 12 (except D.2) cannot be permitted to take the plea that they being not privy to the loan transaction the bar under the Act is not applicable to the suit for partition. The appellant has filed the suit for partition with a prayer for interim injunction restraining the respondent-Bank from making any attachment or taking over symbolic possession and putting the suit property into sale during pendency of the suit. Since the civil court jurisdiction is completely barred so far as these measures apprehended to be taken by the secured creditor under Section 13(4) of the Act are concerned, the civil court cannot grant temporary injunction restraining the secured creditor from taking such measures under the Act. If at all the appellant is aggrieved by any such measures already taken or to be taken by the Respondent-Bank during pendency of the suit, she may seek appropriate relief under the provisions of the Act. But no interim injunction can be granted restraining the Respondent-Bank from taking any measures under Section 13(4) of the Act. 10. In that view of the matter, the learned lower court has rightly refused to grant interim relief as prayed for by the Plaintiff-appellant. The appeal being devoid of any merit is dismissed.