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2015 DIGILAW 620 (ORI)

Ranjan Kumar Das v. Punjab National Bank, Puri

2015-11-12

BISWANATH RATH

body2015
JUDGMENT : BISWANATH RATH, J. 1. This present writ petition arises out of an order dated 29-4-2009 passed by the Civil Judge (Senior Division), Puri in C.S. No. 38 of 2008 as at Annexure-9 thereby allowing an application under Order 7, Rule 11 of CPC filed at the instance of defendant No. 1 - Bank for rejecting the plaint. 2. The short fact involved in the case is that the present petitioner as plaintiff filed the suit bearing C.S. No. 38 of 2008 as against the Bank and a private party seeking the following reliefs:- "(A) Let the D. 1 or any one of its behalf be permanently restrained from coming upon the suit land and disturb possession of the plaintiff in any manner whatsoever. (B) Let, a decree be passed declaring D. 2 to have no right, title, interest nor possession in the suit property. (C) Let a decree be passed declaring any property including 'A' schedule property in part and parcel of the ancestral property of late Bhikari. (D) Let, the possession of the plaintiff in the suit land be confirmed and the property mentioned in the notice affixed on behalf of D. 1 be declared to have no connection with subject matter of the suit. (E) Let, the cost of the suit be decreed. (F) Let, any other relief considered available to the plaintiff be decreed." The suit was based on the following pleadings alleging fraud played by defendant No. 2. "That, it is further seen that the D. 2 and the said Uma, being the eldest male members were regularly and in discriminatingly dealing with ancestral property and funds without giving vent to other members namely the plaintiff, the youngest male member and their mother Pankajini. "That, it is further seen that the D. 2 and the said Uma, being the eldest male members were regularly and in discriminatingly dealing with ancestral property and funds without giving vent to other members namely the plaintiff, the youngest male member and their mother Pankajini. It may be submitted here that those two senior members joint their soiled hands to deal with the property illegally and without the knowledge of their members and to make illegal gain out of the joint family property to bring to the light the illegal and fraudulent intention of the D. 2 here is a glaring instance that although the joint family has in no way been benefited by standing a gurantor to a loanee from D. 1 and entangling the joint property for nothing more than the intention of D. 2 he has practised fraud upon both the D. 1 and by depositing false and fraudulent documents in the office of D. 1 and by falsely implicating this poor plaintiff for the notice so affixed by D. 1 has no bearing to the land owned and possessed by the plaintiff as his residential house with his family members. However, the plaintiff has been in peaceful and exclusive possession having a residential house thereon what he got by way of registered deed of partition to which the D. 2 has put his signature as a share holder and a party to the said registration." 3. After filing of the written statement, the defendant No. 1 filed an application under Order 7, Rule 11, CPC praying therein for rejection of the plaint taking resort to the provisions contained in The Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 hereinafter (in short 'SARFAESI Act, 2002') particularly taking resort to the bar of the suit under the Act. 4. Considering the submissions made by the parties, the trial Court by the impugned order allowed the application under Order 7, Rule 11, CPC seeking rejection of the plaint and thereby rejected the plaint being barred under Section 34 of the SARFAESI Act, 2002. 5. 4. Considering the submissions made by the parties, the trial Court by the impugned order allowed the application under Order 7, Rule 11, CPC seeking rejection of the plaint and thereby rejected the plaint being barred under Section 34 of the SARFAESI Act, 2002. 5. Challenging the impugned order, the learned counsel for the petitioner submits that in view of the clear allegation of fraud and absurdity against the defendant No. 2, the suit is very much maintainable and this nature of suites not coming under the prohibition created under Section 34 of SARFAESI Act, 2002. Relying upon a decision in the case in the between Jyosna Rani Padhi and others v. Smt. Susila Padhi and others as reported in 2008 (2) OLR 243 : AIR 2008 (NOC) 2244 (Ori), learned counsel for the petitioner contended that in view of the involvement of the question in the suit, such matters could not have been decided by way of preliminary issue and this issue should have been decided along with all other issues in the alternate trial of the suit. Mr. Sahoo, learned counsel for the opposite party-Bank submits that in view of specific provision under Section 34 of the SARFAESI Act, 2002 and looking to the Section 17 of the SARFAESI Act, 2002 contends that in view of the clear prohibition of any person to resort to the provision under Section 17 of the SARFAESI Act, 2002, the plaintiff has the only right to prefer an appeal before the Debt Recovery Tribunal under Section 17 of the SARFAESI Act, 2002 and the application of the Defendant No. 1 under Order 7, Rule 11, CPC has been rightly allowed and there is no scope for interfering in the said order. 6. Relying on a decision in between Jagdish Singh v. Heeralal as reported in AIR 2014 SC 371 , Mr. Sahoo, learned counsel for the O.P. Bank further submits that in view of the observation of the Hon'ble Apex Court in para-22 and 23, there is otherwise no illegality in the impugned order. 7. 6. Relying on a decision in between Jagdish Singh v. Heeralal as reported in AIR 2014 SC 371 , Mr. Sahoo, learned counsel for the O.P. Bank further submits that in view of the observation of the Hon'ble Apex Court in para-22 and 23, there is otherwise no illegality in the impugned order. 7. Perusal of the pleadings of the plaintiff in the plaint and as recorded in para-15 of the plaint as quoted herein above, it clearly appears that there is a clear allegation of fraud played by defendant No. 2 and the reliefs as claimed in the plaint are based on the allegation of fraud as against the defendant No. 2. Statement of Objects and Reasons of Act-2002: The financial sector has been one of the key drivers in India's efforts to achieve success in rapidly developing its economy. While the banking industry in India is progressively complying with the international prudential norms and accounting practices, there are certain areas in which the banking and financial sector do not have a level playing field as compared to other participants in the financial markets in the world. There is no legal provision for facilitating securitisation of financial assets of banks and financial institutions. Further, unlike international banks, the banks and financial institutions in India do not have power to take possession of securities and sell them. Our existing legal framework relating to commercial transactions has not kept pace with the changing commercial practices and financial sector reforms. This has resulted in slow pace of recovery of defaulting loans and mounting levels of non-performing assets of banks and financial institutions. Narasimham Committee I and II and Andhyarujina Committee constituted by the Central Government for the purpose of examining banking sector reforms have considered the need for changes in the legal system in respect of these areas. These Committees, inter-alia, have suggested enactment of a new legislation for securitisation and empowering banks and financial institutions to take possession of the securities and to sell them without the intervention of the Court. Acting on these suggestions, the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Ordinance, 2002 was promulgated on the 21st June, 2002 to regulate securitisation and reconstruction of financial assets and enforcement of security interest and for matters connected therewith or incidental thereto. Acting on these suggestions, the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Ordinance, 2002 was promulgated on the 21st June, 2002 to regulate securitisation and reconstruction of financial assets and enforcement of security interest and for matters connected therewith or incidental thereto. The provisions of the Ordinance would enable banks and financial institutions to realise long-term assets, manage problem of liquidity, asset liability mismatches and improve recovery by exercising powers to take possession of securities, sell them and reduce non-performing assets by adopting measures for recovery or reconstruction." Purpose - An urgent need was, therefore, felt to work out a statute mechanism through which the dues to the banks and financial institutions caused be realised without delay and that to following a summary procedure. Section 17 of the Act, 2002:- Right to Appeal - (1) Any person (including borrower), aggrieved by any of the measures referred to in sub-section (4) of Section 13 taken by the secured creditor or his authorised officer under this Chapter, (may make an application along with such fee, as may be prescribed,) to the Debts Recovery Tribunal having jurisdiction in the matter within forty-five days from the date on which such measures had been taken: (Provided that different fees may be prescribed for making the application by the borrower and the person other than the borrower) (2) The Debts recovery Tribunal shall consider whether any of the measures referred to in sub-section (4) of section 13 taken by the secured creditor for enforcement of security are in accordance with the provisions of the Act and the rules made thereunder." 8. Looking to the statement of object of the Act, 2002, it clearly points that the creation of the provision for speedy recovery of dues to the bank and further looking to the provision as contended in Section 17 of the Act, 2002 it provides an appeal by any person being aggrieved by any of measures referred to in sub-section (4) of Section 13 taken by the Secured creditor or his authorised officer under this Chapter to D.R.T. having jurisdiction, then D.R.T. shall consider whether any of the measure referred to in sub-section (4) of Section 13 taken by the secured creditor for enforcement of security are in accordance with the provision of this Act. This Court, therefore, observes that the role of Tribunal shall be confined to action of the secured creditor vis-a-vis the loanee and or guarantor taking note of provision contained in Section 13 of the Act, 2002 and under the circumstance, as to whether there is practise of fraud and absurdity and right of third party over the disputed property are completely outside the domain of the Tribunal particularly in exercise of power under Act, 2002. Further, Section 17 of the Act, 2002 referring to any person must confine parties involved in the dues recoverables i.e. the loanee, the guarantor and the financier and further, parties involved in the measures taken by the Bank in exercise of power under Section 13 of the Act and cannot cover third party or the parties who have no involvement in such measures at all. Further in view of the provisions for deciding the proceeding by following summary procedure, there is absolutely no scope to go into the issues under the special category and as such contentious issues can only be decided by the Civil Court which has a wider power. Accordingly bar under Section 34 of the Act, 2002 cannot have any play under the circumstances. 9. The question that whether allegation of fraud can be decided in D.R.T. proceeding and for the provisions in the Act, 2002 whether a suit involving such issues is a bar in view of clear bar under Section 34 of the Act, 2002 has been taken into consideration time and again by the Hon'ble Apex Court. In a three Judges Bench decision in a case between Mardia Chemicals Ltd. v. Union of India, reported in AIR 2004 SC 2371 in para Nos. 51 and 80 (5) has come to hold as follows:- "51. However, to 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, what so-ever 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. We find such a scope having been recognised in the two decisions of the Madras High Court which have been relied upon heavily by the learned Attorney General as well appearing for the Union of India, namely V. Narasimhachariar ( AIR 1955 Mad 135 , p. 143, para 22) (supra) p. 135 at p. 141 and 144, a judgment of the learned single Judge where it is observed as follows in para 22: "The remedies of a mortgagor against the mortgagee who is acting in violation of the rights, duties and obligations are two-fold in character. The 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 the pleadings in an action for restraining a sale by mortgagee must clearly disclose a fraud or irregularity on the basis of which relief is sought Admas v. Scott, (1859) 7 WR (Eng) 213 (249). I need not point out that this restraint on the exercise of the power of sale will be exercised by Courts only under the limited circumstances mentioned above because otherwise to grant such an injunction would be to cancel one of the clauses of the deed to which both the parties had agreed and annul one of the chief securities on which persons advancing moneys on mortgages rely. (See Rashbehary Ghose Law of Mortgages, Vol. II, Fourth Edn. page 784): Para-80(5) As discussed earlier in this judgment, we find that it will be open to maintain a Civil Suit in Civil Court, within the narrow scope and on the limited grounds on which they are permissible, in the matters relating to an English mortgage enforceable without intervention of Court." 10. Similarly, in deciding such an issue in the case of Nitin Gunwant Shah v. Indian Bank and others, as reported in (2012) 8 SCC 305 : AIR 2012 SC 2610 , in the matter of a suit by non-defaulter occupant, Hon'ble Apex Court held that the suit at the instance of such person is very much maintainable. But however, such suits shall be decided subject to framing of an issue on the question of maintainability. In para-22 of the aforesaid decision, the Hon'ble Apex Court held as follows:- "22. But however, such suits shall be decided subject to framing of an issue on the question of maintainability. In para-22 of the aforesaid decision, the Hon'ble Apex Court held as follows:- "22. On the other hand, it is argued by learned counsel for the respondent Bank: (i) that the conduct of the petitioner in allowing his Suit RAD No. 1719/1990 to be dismissed for non-prosecution and filing a fresh suit for the same relief 13 years thereafter while he is comfortably squatting in the property would disentitle the petitioner from raising an objection that until the fresh suit RAD No. 1389/2006 is decided, his possession cannot be disturbed; (ii) the registered mortgage in favour of the respondent Bank for the property in dispute was created on 27-9-1989 whereas the petitioner entered possession of the property, even according to his own assertion, on 23rd February, 1990, i.e. after a lapse of four months after the mortgage is created, (iii) the alleged Leave and License Agreement itself is a bogus and sham transaction, (iv) the petitioner's possession is clearly that of a trespasser, (v) The mortgage in question is in the nature of an English mortgage. In the mortgage deed the respondent No. 4 clearly asserted that he was in the possession of the property in dispute. Therefore, he could not have legally inducted any person into possession of the property in dispute after the execution of the mortgage. (vi) Lastly, the learned counsel submitted that in view of the language and Scheme of the 2nd Schedule to the Income tax Act, which are made applicable to the recovery proceedings under the Recovery Debts Due to Banks and Financial Institutions Act, 1993, more specifically Rule therein, the Recovery Officer is entitled to evict the petitioner, though the petitioner is not either a debtor to the bank or a guarantor to any debtor to the bank irrespective of the fact whether he is a trespasser or a tenant to the property in dispute." 11. Adjudication of civil disputes and enforcement of the rights of the parties to the disputes in terms of adjudication are matters provided with under the Civil Procedure Code - procedure established by law, the person entitled in law to the possession of any immovable property which is in occupation of some other person where a tenant, licencee or trespassers can evict such tenancy or trespassers by obtaining a decree for eviction from a competent civil Court. Similarly in another decision between Nahar Industrial Enterprises Ltd. v. Hong Kong and Shanghai Banking Corporation at reported in (2009) 8 SCC 646 : AIR 2005 SC (Supp) 2474, Hon'ble Apex Court observed as follows: "Debt Recovery Tribunal cannot pass a decree. It can issue only recovery certificates. (See Sections 19(2) and 19(22) of the Act). The power of the Tribunal to grant interim order is attenuated with circumspection. (See Dataware Design Labs v. State Bank of India, (2005) 127 Comp Cas 176 (Ker) at 184. Concededly in the proceeding before the Debt Recovery Tribunal detailed examination, cross-examinations, provisions of the Evidence Act as also application of other provisions of the Code of Civil Procedure like in terrogatories, discoveries of documents and admission need not be gone into. Taking recourse to such proceedings would be an exception. Entire focus of the proceedings before the Debt Recovery Tribunal centers round the legally recoverable dues of the bank." "It is also difficult to accept the contention of learned counsel for the banks that the civil Court's jurisdiction is not in consonance with the Act. We do not find the same to be correct. On the ground of inconsistency in the procedures contained in the two Acts alone, the jurisdiction of the civil Court cannot be said to have been ousted." "When a person files a civil suit his right to prosecute the same in terms of the provisions of the Code as also his right of appeal by way of first appeal; second appeal etc. are preserved. Such rights cannot be curtailed, far less taken away except by reason of an express provision contained in the statute. Such a provision in the statute must be express or must be found out by necessary implication. In Garikapati Veeraya v. N. Subbiah Choudhry, 1957 SCR 488 : AIR 1957 SC 540 , this Court opined:- "23. are preserved. Such rights cannot be curtailed, far less taken away except by reason of an express provision contained in the statute. Such a provision in the statute must be express or must be found out by necessary implication. In Garikapati Veeraya v. N. Subbiah Choudhry, 1957 SCR 488 : AIR 1957 SC 540 , this Court opined:- "23. From the decisions cited above the following principles clearly emerge: (i) That the legal pursuit of a remedy, suit appeal and second appeal are really but steps in a series of proceedings all connected by an intrinsic unity and are to be regarded as one legal proceeding. (ii) The right of appeal is not a mere matter of procedure but is a substantive right. (iii) The institution of the suit carries with it the implication that all rights of appeal then in force are preserved to the parties thereto till the rest of the career of the suit. (iv) The right of appeal is a vested right and such a right to enter the superior court accrues to the litigant and exists as on and from the date the lis commences and although it may be actually exercised when the adverse judgment is pronounced such right is to be governed by the law prevailing at the date of the institution of the suit or proceeding and not by the law that prevails at the date of its decision or at the date of the filing of the appeal. (v) This vested right of appeal can be taken away only by subsequent enactment, if it so provides expressly or by necessary intendment and not otherwise." 12. In view of the facts and situation involved in the present suits, the citations cite by the learned counsel appearing for the O.R. Bank is not applicable to the present case in hand and the same is thus ignored. 13. It is under the aforesaid facts, provisions of law and provisions as settled by the Hon'ble Apex Court in the above catena of decisions, this Court finds the impugned order is not legally sustainable and this Court further hold that an application under Order 7, Rule 11, CPC under this peculiar facts and circumstances would not be maintainable. 13. It is under the aforesaid facts, provisions of law and provisions as settled by the Hon'ble Apex Court in the above catena of decisions, this Court finds the impugned order is not legally sustainable and this Court further hold that an application under Order 7, Rule 11, CPC under this peculiar facts and circumstances would not be maintainable. As such, while setting aside the impugned order at Annexure-9, this Court restores the C.S. No. 38 of 2008 to its position before deciding the application under Order 7, Rule 11of the Civil Procedure Code and directs the Civil Judge (Senior Division), Puri to decide the suit bearing C.S. No. 38 of 2008 on merit. The writ petition succeeds. 14. Further considering the submissions of Mr. Sahoo, learned counsel appearing for the O.P. Bank that the suit is pending since 2008 the trial court is directed to dispose of the suit as expeditiously as possible, prefer ably within a period of nine months from the date of communication of this order. 15. Petitioner undertakes to supply copy of the order of this Court to the trial Court for reopening the suit and proceeding accordingly. Petition allowed.