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2016 DIGILAW 834 (CAL)

State Bank of India v. Bulbul Gayen

2016-10-06

HARISH TANDON

body2016
JUDGMENT : 1. This revisional application is directed against an Order No. 8 dated 3rd March, 2016 passed by the learned Civil Judge (Junior Division) 6th Court, Howrah in Title Suit No. 192 of 2014 by which an application under Order 7 Rule 11(d) of the Code of Civil Procedure is rejected. 2. Shorn of unnecessary details, the plaintiff / opposite party filed the aforementioned suit claiming decree for declaration of her undivided 1/3rd share in the property described in Schedule A to the plaint with further declaration that the encumbrances to the extent of 16 annas share of the suit property created by the defendant nos. 1 and 2 in favour of the defendant no. 3 is illegal, unauthorized, voidable and not binding upon the plaintiff and permanent injunction restraining the defendant no. 3 from selling the suit property or taking possession of the same to the extent of 16 annas. 3. The case made out in the plaint are that the suit property originally belonged to one Ashalata Sarkar, since deceased, who was the mother of the defendant nos. 1 and 2 by virtue of the registered sale deed dated 28th February, 1958. The mother died intested on 5th April, 2002 leaving behind the plaintiff and the defendant nos. 1 and 2 as her heirs, who succeeded to the estate left by her each having undivided 1/3rd share therein. The suit property is surrounded by a pucca boundary wall on all sides having its entrance on the road side. The said property has not been partitioned by metes and bounds and therefore is still in joint possession of the aforesaid parties. On 6th July, 2014, when the petitioner inspected the suit property and in course of a discussion with the defendant nos. 1 and 2 found a notice issued by the defendant no. 3 / bank affixed on the outer wall containing a declaration that the said property belongs to the bank and borrowers / guarantors are cautioned not to deal with the same. 4. The petitioner further came to learn that the suit property had been encumbered by the defendant nos. 1 and 2 to the defendant no. 3 claiming themselves to be the absolute owners thereof. The petitioner apprehended that the suit property might be sold in auction by the defendant no. 4. The petitioner further came to learn that the suit property had been encumbered by the defendant nos. 1 and 2 to the defendant no. 3 claiming themselves to be the absolute owners thereof. The petitioner apprehended that the suit property might be sold in auction by the defendant no. 3 and therefore a cloud was created on undivided 1/3rd share in respect thereof and therefore it becomes necessary that the declaration of such undivided right, title and interest be declared by the Court. It becomes also necessary to claim that the documents relating to encumbrances in favour of the defendant no. 3 by the aforesaid defendants be declared illegal and not binding on the petitioner to the extent to her undivided 1/3rd share. 5. On the conspectus of the aforesaid facts, an application for temporary injunction was filed and moved for an ex-parte ad interim order. On 22nd December, 2014, the Trial Court refused to pass an ex-parte ad interim order of injunction and directed the issuance of show cause notice against the defendants. After the service of the show cause notice, the defendant no. 3 / bank appeared and filed an application under Order 7 Rule 11(d) of the Code praying for rejection of the plaint as the relief claimed therein is barred by law. In the said application, it is stated that the suit premise is a subject matter of mortgage and therefore the petitioner being the sister of the defendant nos. 1 and 2 was all along aware that the aforesaid defendants being the Director of M/s Dasnagar Engineering Pvt. Ltd. have executed the documents for securing the loan. It is further alleged the plaint is a product of a clever drafting and illusory cause of action is sought to be made out therein. 1 and 2 was all along aware that the aforesaid defendants being the Director of M/s Dasnagar Engineering Pvt. Ltd. have executed the documents for securing the loan. It is further alleged the plaint is a product of a clever drafting and illusory cause of action is sought to be made out therein. It is, thus, stated that S. 34 of the SARFAESI Act (Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002) excludes the jurisdiction of the Civil Court to entertain any suit or a proceeding in respect of any matter which a Debt Recovery Tribunal is empowered by or under the 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 the said Act or under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993. 6. The Trial Court dismissed the said application as the plaint is required to be read as a whole not in piecemeal and therefore the segregation or compartmentalization of any particular paragraph from the plaint is impermissible under the law. In essence, the Trial Court held that the plaintiff has not challenged the mortgage created by the defendant nos. 1 and 2 in respect of suit property in its entirety but claims by setting up her independent right, title and interest as an undivided owner to the extent of 1/3rd share therein and therefore such suit cannot be said to be barred under Section 34 of the Act. 7. The learned Advocate appearing for the petitioner submits that the subject properties as described in Schedule ‘A’ to the plaint was mortgage with the bank to secure the loan lent and advanced to the company of which the defendant nos. 1 and 2 were the directors and an action for taking symbolic and physical possession had already been taken and therefore the bar created under Section 34 of the SARFAESI Act applies. 8. It is further submitted that the Civil Court cannot entertain a suit touching any action taken under the SARFAESI Act and the aggrieved person has a remedy under Section 17 thereof, which in fact has been exhausted by the aforesaid defendants. 9. 8. It is further submitted that the Civil Court cannot entertain a suit touching any action taken under the SARFAESI Act and the aggrieved person has a remedy under Section 17 thereof, which in fact has been exhausted by the aforesaid defendants. 9. It is thus submitted that the Debt Recovery Tribunal is competent to decide the questions raised in this suit and therefore the Trial Court committed error in rejecting an application for rejection of plaint. 10. On the other hand, the learned Advocate for the plaintiff / petitioner submits that there is no fetter on the part of the Civil Court in declaring the title of the plaintiff / petitioner which the Debt Recovery Tribunal cannot. It is further submitted that the plaint is required to be read as a whole and not in piecemeal and therefore the plaint is not liable to be rejected simply because the statements have been made in the plaint about the notice being affixed on the entrance of the said property. It is ardently submitted that the action of the bank is not challenged in the said suit in its entirety but such action cannot bind the plaintiff / petitioner to the extent of her share, more particularly when she is neither a signatory to any documents nor stood as a borrower or guarantor to such loan. 11. According to learned Advocate, S. 34 of the SARFAESI Act cannot universally apply in all conceivable situations and does not override the other substantive law and therefore it cannot be said that the Civil Court’s jurisdiction is ousted in all circumstances because of S. 34 thereof as held by Supreme Court in case of Vishal N. Kalsaria Vs. Bank of India reported in (2016) 3 SCC 762. 12. The moot question arises for consideration is whether the jurisdiction of the Civil Court is taken away by virtue of S. 34 of the SARFAESI Act if the subject matter relates to an action taken or contemplated by the secured creditor under the said Act. 13. It would be profitable to reproduce provisions contained under Section 17 and 34 of the SARFAESI Act, which are as follows :- “17. 13. It would be profitable to reproduce provisions contained under Section 17 and 34 of the SARFAESI Act, which are as follows :- “17. 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 this Act and the rules made thereunder. (3) If, the Debts Recovery Tribunal, after examining the facts and circumstances of the case and evidence produced by the parties, comes to the conclusion that any of the measures referred to in sub-section (4) of section 13, taken by the secured creditor are not in accordance with the provisions of this Act and the rules made thereunder, and require restoration of the management of the secured assets to the borrower or restoration of possession of the secured assets to the borrower, it may by order, declare the recourse to any one or more measures referred to in sub-section (4) of section 13 taken by the secured assets as invalid and restore the possession of the secured assets to the borrower or restore the management of the secured assets to the borrower, as the case may be, and pass such order as it may consider appropriate and necessary in relation to any of the recourse taken by the secured creditor under sub-section (4) of section 13. ******************************************************************************* 34. ******************************************************************************* 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.” 14. It is beyond cavil that any person including borrower if felt aggrieved by any of the measures referred to in sub-Section 4 of Section 13 of SARFAESI Act taken by the secured creditor or his authorized officer has a remedy to prefer an appeal / application before the Debt Recovery Tribunal under Section 17 of the said Act within the time limit indicated therein. 15. In case of Standard Chartered Bank Vs. V. Noble Kumar reported in (2013) 9 SCC 620 , the challenge was made to a legality of the proceeding initiated before the Chief Judicial Magistrate, Chengalpattu under Section 14 of the SARFAESI Act wherein an Advocate Commissioner was appointed to take possession of the secured asset and to hand over the same to the bank. An argument was advanced that the bank cannot bypass S. 13(4) of the SARFAESI Act and invoke the provision of S. 14. In other words, what is sought to be contended that the right to appeal under Section 17 of the SARFAESI Act is available only when an action under Section 13(4) of the said Act is taken; such right of appeal cannot be rendered illusory in such circuitous manner. A further point was raised that if the procedures contemplated under Rule 8 of the Security Interest Rules, 2002 are not followed before activating S. 14, the order passed by the Chief Judicial Magistrate would be contrary to such rules and therefore is liable to be set aside. It was argued at the bar that there are two modes for taking possession; the first is under Section 13(4) and other under Section 14 thereof and if both the courses are open, the election of one procedure cannot be said to be illegal. 16. It was argued at the bar that there are two modes for taking possession; the first is under Section 13(4) and other under Section 14 thereof and if both the courses are open, the election of one procedure cannot be said to be illegal. 16. After noticing the various provisions of the said Act and the legislative intent behind the promulgation thereof the Apex Court held that the possession can be taken by a secured creditor by three ways namely- “36. Thus, there will be three methods for the secured creditor to take possession of the secured assets: 36.1. (i) The first method would be where the secured creditor gives the requisite notice under Rule 8(1) and where he does not meet with any resistance. In that case, the authorised officer will proceed to take steps as stipulated under Rule 8(2) onwards to take possession and thereafter for sale of the secured assets to realise the amounts that are claimed by the secured creditor. 36.2. (ii) The second situation will arise where the secured creditor meets with resistance from the borrower after the notice under Rule 8(1) is given. In that case he will take recourse to the mechanism provided under Section 14 of the Act viz. making application to the Magistrate. The Magistrate will scrutinise the application as provided in Section 14, and then if satisfied, appoint an officer subordinate to him as provided under Section 14(1-A) to take possession of the assets and documents. For that purpose the Magistrate may authorise the officer concerned to use such force as may be necessary. After the possession is taken the assets and documents will be forwarded to the secured creditor. 36.3. (iii) The third situation will be one where the secured creditor approaches the Magistrate concerned directly under Section 14 of the Act. The Magistrate will thereafter scrutinise the application as provided in Section 14, and then if satisfied, authorise a subordinate officer to take possession of the assets and documents and forward them to the secured creditor as under clause 36.2.(ii) above. 36.4. In any of the three situations above, after the possession is handed over to the secured creditor, the subsequent specified provisions of Rule 8 concerning the preservation, valuation and sale of the secured assets, and other subsequent rules from the Security Interest (Enforcement) Rules, 2002, shall apply.” 17. 36.4. In any of the three situations above, after the possession is handed over to the secured creditor, the subsequent specified provisions of Rule 8 concerning the preservation, valuation and sale of the secured assets, and other subsequent rules from the Security Interest (Enforcement) Rules, 2002, shall apply.” 17. A preliminary objection was taken that the remedy of a person aggrieved by an order passed under Section 14 of the SARFAESI Act is available under Section 17 of the said Act and therefore the Writ Petition should not be entertained. It was held that when a secured creditor obtains possession either through the process contemplated under Section 14 or without resorting to such process, it is open to aggrieved person to exhaust remedy under Section 17 of the Act. 18. The expression ‘any person’ appearing in S. 17 of the SARFAESI Act came up for interpretation before the Supreme Court in case of Jagdish Singh Vs. Heeralal reported in (2014) 1 SCC 479 wherein it is held :- “19. The expression “any person” used in section 17 is of wide import and takes within its fold not only the borrower but also the guarantor or any other person who may be affected by action taken under Section 13(4) of the Securitisation Act. Reference may be made to the judgment of this Court in Satyawati Tondon case. 20. 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 the 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. 21. Section 34 of the Securitisation Act ousts the civil court jurisdiction. For easy reference, we may extract Section 34 of the Securitisation Act, which is as follows : “34. 21. Section 34 of the Securitisation Act ousts the civil court jurisdiction. For easy reference, we may extract Section 34 of the Securitisation Act, which is 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 (51 of 1993).” 19. It was ultimately held that the Civil Court’s jurisdiction is completely barred so far as the measures taken by the secured creditor under sub-Section 4 of Section 13 of the SARFAESI Act to determine as to whether there has been any legality in such measures taken. It is, therefore clear from the aforesaid decisions that if the challenge is made to the ‘measures’ taken by the secured creditors under Section 13(4) or S. 14 of the said Act, any person who may not be borrower or the guarantor have a right of appeal under S. 17 of the Act. S. 34 of the Act, in explicit terms, does not take away the jurisdiction of the Civil Court which can be exercised within the limited compass more particularly when the ingredients of S. 17(1) of the Act is not satisfied. 20. In the instant case, though it is not stated in explicit words that any measures have been taken under S. 13(4) of the SARFAESI Act by the secured creditor i.e. defendant no. 3 yet from the meaningful reading of the statements made in paragraph 7, 8, 9 and 11 of the plaint, it can be reasonably inferred that an action for taking the physical possession of the property contemplated under S. 13(4) of the Act had been taken. The petitioner had further the factum of notice issued by the authorized officer of the defendant no. 3 in paragraph 13 of the plaint, which clearly indicates that the measures are contemplated under sub Section 4 of Section 13 thereof. 21. The petitioner had further the factum of notice issued by the authorized officer of the defendant no. 3 in paragraph 13 of the plaint, which clearly indicates that the measures are contemplated under sub Section 4 of Section 13 thereof. 21. The decision of the Supreme Court in case of Vishal N. Kalsaria (Supra) has no manner of applicability in the instant suit. The core issue was whether protection under the Maharashtra Rent Control Act, 1999 can be treated as a lessee and whether the provisions of SARFAESI Act will override the provision of the Rent Control Act. An argument was advanced at the behest of the secured creditor that S. 35 of the SARFAESI Act overrides any other law in case of inconsistency or repugnancy and therefore the Rent Restriction Act cannot apply to the rescue of a tenant / lessee. Repealing the aforesaid contention the Apex Court held :- “In view of the above legal position, if we accept the legal submissions made on behalf of the Banks to hold that the provisions of SARFAESI Act override the provisions of the various Rent Control Acts to allow a Bank to evict a tenant from the tenanted premise, which has become a secured asset of the Bank after the default on lean by the landlord and dispense with the procedure laid down under the provisions of the various Rent Control Acts and the law laid down by this Court in catena of cases, then the legislative powers of the state legislatures are denuded which would amount to subverting the law enacted by the State Legislature. Surely, such a situation was not contemplated by the Parliament while enacting the SARFAESI Act and therefore the interpretation sought to be made by the learned counsel appearing on behalf of the Banks cannot be accepted by this Court as the same is wholly untenable in law.” 22. In the instant case, the petitioner is not claiming his title as a tenant protected under the Rent Restriction Act but intended to set up its independent title dehors the defendant nos. 1 and 2 and therefore the aforesaid decision cannot be of any assistance to her. 23. In view of the findings herein above, this Court finds that the Civil Court has no jurisdiction to entertain the suit being barred by law. 24. The order impugned is thus set aside. 25. 1 and 2 and therefore the aforesaid decision cannot be of any assistance to her. 23. In view of the findings herein above, this Court finds that the Civil Court has no jurisdiction to entertain the suit being barred by law. 24. The order impugned is thus set aside. 25. The application under Order 7 Rule 11 of the Code is hereby allowed. 26. The consequences for rejection of plaint shall follow. 27. The revisional application is thus disposed of. 28. However, there shall be no order as to costs.