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2014 DIGILAW 965 (AP)

State Bank of India v. Archana Adiraju

2014-08-01

L.NARASIMHA REDDY

body2014
Judgment One Sri Srinivas Kumar Mawle, the father of respondent Nos.1 to 3 and husband of respondent No.4 obtained loan from the petitioner for higher studies of respondent No.3 in the United States of America. An item of immovable property bearing house No.3-4-846/1, Barkatpura, Hyderabad was mortgaged for repayment of the loan. The original loanee Srinivas Kumar Mawle died. The loan became non-performing asset (NPA) on account of failure to pay instalments. Therefore, the petitioner got issued a notice dated 10-01-2013 to respondent Nos.1 to 4 for repayment of the loan. Since there was no positive response, O.A No. 303 of 2013 was field before the Debts Recovery Tribunal, Hyderabad (for short ‘the Tribunal’) by invoking the provisions of Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (for short ‘the Act’). Respondent Nos.1 and 2 i.e., the daughter and the son of late Srinivas Kumar Mawle filed O.S No. 2073 of 2013 in the Court of V Junior Civil Judge, City Civil Court, Hyderabad, with a prayer that the transaction of mortgage covered by letter dated 27-12-2006, followed by the deposit of instrument, be declared as null and void. The petitioner herein was shown as defendant No.1 and respondent Nos.3 and 4, as defendant Nos.2 and 3 in the suit. On receipt of the summons in the suit, the petitioner filed I.A No. 364 of 2013 under Order VII Rule 11 CPC, with a prayer to reject the plaint. It was pleaded that the O.A pending before the Tribunal is comprehensive in nature and being a party to that, respondent Nos.1 and 2 can put forward their contentions, including the filing of counter claim. It was pleaded that the filing of a separate suit would lead to several complications. According to the petitioner, the Act is a self-contained code in relation to the loan transactions with banks and once an O.A is filed, any suit in relation to that very dispute is barred. The application was opposed by respondent Nos.3 and 4. They pleaded that the plaint can be rejected only when the circumstances provided for under various clauses of Rule 11 of Order VII CPC are shown to be existing and that such grounds were not even pleaded. It was also pleaded that the Tribunal does not have the jurisdiction to decide the legality or otherwise of a mortgage deed. They pleaded that the plaint can be rejected only when the circumstances provided for under various clauses of Rule 11 of Order VII CPC are shown to be existing and that such grounds were not even pleaded. It was also pleaded that the Tribunal does not have the jurisdiction to decide the legality or otherwise of a mortgage deed. The trial Court dismissed the I.A through order dated 14-03-2014. Hence, the revision. Sri Hari Prasad Podila, learned Standing Counsel for the petitioner submits that the effort of respondent Nos.1 and 2 is to dispute and deny their obligation under the transaction of mortgage and that the same can be urged by filing a counter claim in the O.A. He made extensive reference to Sections 18 and 19 of the Act. Sri G. Rama Chandra Reddy, learned counsel for respondent Nos.1 and 2, on the other hand, submits that the facility of filing a counter claim no doubt exists in an O.A filed under the Act, but the Tribunal is not conferred with the jurisdiction to declare the legality or otherwise of a transaction of mortgage. He submits that respondent Nos.1 and 2 have a definite share in the mortgaged property and mortgage of the property without their participation is null and void and at least, not binding upon them. He submits that the trial Court has taken the correct view of the matter on finding that none of the ingredients of Rule 11 of Order VII CPC are proved, and that the order under revision does not warrant any interference. Late Sri Srinivas Kumar Mawle, the father of respondent Nos.1 to 3 and the husband of respondent No.4 obtained loan from the petitioner for the education of respondent No.3. An item of immovable property was mortgaged for securing repayment of the loan. Srinivas Kumar Mawle died before the loan could be liquidated. The petitioner filed the O.A before the Tribunal against his legal representatives. Respondent Nos.1 and 2 who are parties to the O.A instituted suit O.S No. 2073 of 2013 for declaration to the effect that the mortgage of the immovable property for repayment of the loan obtained by their father is void and illegal. The petitioner who figured as defendant No.1 wanted the plaint in the suit be rejected. It is too well known that rejection of plaint is an extraordinary step to be taken by a Court. The petitioner who figured as defendant No.1 wanted the plaint in the suit be rejected. It is too well known that rejection of plaint is an extraordinary step to be taken by a Court. Whenever a suit is filed, its natural course is that it should lead to a decree granting or rejecting the relief, after contest by both the parties. Rejection of plaint leads to termination of the proceedings at the threshold. It is only when the grounds stipulated in Order VII Rule 11 CPC exist, that such an extreme step can be taken. In the instant case, the only basis pleaded by the petitioner was that O.A No. 303 of 2013 filed by them is already pending and if respondent Nos.1 and 2 have any objection for the mortgage deed, it can be canvassed in the O.A itself. Section 19 of the Act prescribes the procedure to be followed by the Tribunal while dealing with an O.A filed before it. Apart from the right to contest in the O.A, the respondents who are the opposite parties are conferred with the power to plead set off or even to present the counter claim. This facility is similar to the one created under the CPC. Therefore, it has to be seen as to how far the existence of facility of filing of counter claim in the O.A would bar a separate suit. The set off or counter claim is a facility created for the benefit of a defendant in a suit, to put forward independent claim against the plaintiff, apart from opposing the suit. In a way, this facility obviates the necessity to file a separate suit by the defendant, against the plaintiff in respect of a matter, which arises mostly out of the same cause of action, which constituted the basis for the suit in which the person figures as a defendant. However, de hors such facility, if a defendant in a suit, files an independent suit, against the plaintiff though he had the facility of filing a counter claim in relation thereto, the suit filed by him does not become barred by law. It is almost an act of election or exercise of option by the defendant to choose between the facilities of filing a counter claim in the suit filed against him, or to file a separate suit against the plaintiff. It is almost an act of election or exercise of option by the defendant to choose between the facilities of filing a counter claim in the suit filed against him, or to file a separate suit against the plaintiff. In the event of a separate suit being filed, the only requirement would be that both the suits must be clubbed together. The person who first filed the suit would not be entitled to file an application under Order VII Rule 17 CPC to reject the plaint in a suit filed against him by the defendant, by pleading the ground that there exists a facility for the defendant to file counter claim. When this is the state of affairs in relation to the proceedings which are exclusively covered by the CPC, the O.A instituted under the Act does not stand on a higher footing. Respondent Nos.1 and 2 were very much justified in choosing a civil Court for the relief of declaration in relation to the transaction of mortgage between their father on the one hand and the petitioner on the other hand. Though the Tribunal is conferred with the power to adjudicate the disputes between the bank or banking institutions; and the persons who are indebted to such banks, its jurisdiction is circumscribed by the provisions of the Act. It has to proceed under the assumption that the deed of mortgage is legal and valid, in all respects. It cannot decide the contentious issues about the very legality of the mortgage. None of the grounds pleaded by the petitioner fit into Order VII Rule 11 CPC. The trial Court has taken note of this fact and dismissed the I.A. No fresh or further grounds are pleaded before this Court. The apprehension of the petitioner is that the pendency of the suit may be cited as a ground to stall the proceedings in the O.A. Even according to respondent Nos.1 and 2, they have 50% share in the mortgaged property. Therefore, they cannot have any objection for the adjudication that may be undertaken by the Tribunal vis-à-vis the balance of 50%. Therefore, the C.R.P is dismissed. It is however directed that it shall be open to the Tribunal to proceed with the matter and if the sale of the mortgaged property becomes necessary, it shall be confined to undivided 50% share. Therefore, the C.R.P is dismissed. It is however directed that it shall be open to the Tribunal to proceed with the matter and if the sale of the mortgaged property becomes necessary, it shall be confined to undivided 50% share. However, if the suit filed by respondent Nos.1 and 2 is dismissed, the mortgage shall be in respect of the entire property. The miscellaneous petitions filed in this revision shall also stand disposed of. There shall be no order as to costs.